Against a backdrop of heightened geopolitical tension and economic uncertainty, Sean Stein, President of the U.S.-China Business Council, delivered a keynote address on May 14 during the second annual China Conference organized by the Stanford Center on China’s Economy and Institutions (SCCEI).
Speaking to an audience of faculty, students, and policy experts, Stein offered a grounded and pragmatic assessment of the evolving U.S.-China relationship, emphasizing the enduring importance of commercial engagement and the need for clear-eyed policymaking in a time of strategic rivalry.
Costly Miscalculations
Stein began by highlighting how U.S. policy makers have misjudged the resilience and retaliatory capacity of the Chinese economy. In particular, he argued that in response to the minimal impact China’s retaliatory efforts had on the U.S. economy during Trump’s first administration, the U.S. underestimated both China’s pain threshold and the pain China can inflict on the U.S. economy, while also overestimating its own leverage. The result, he noted, was an awkward U.S. climbdown on tariffs and significant disruption to the U.S. economy without meaningful strategic gain.
“We’re getting all of the downsides of tariffs and trade wars without getting any of the upside,” Stein remarked. Many U.S.-based companies, faced with soaring costs for component parts sourced from China, were forced to move production to third countries—decisions that are likely irreversible. Stein questioned, “Is some of the damage permanent? Yeah…sometimes, when some manufacturing leaves, it doesn't come back,” which is the exact opposite of what the Trump administration hoped would result from the newly imposed tariffs.
