Semafor World Economy Summit: Views from policymakers and CEOs on global trade and tariffs

On China’s domestic economy: China has seen a collapse in consumer confidence and economic growth since the COVID-19 pandemic, Irigoyen said, and Beijing now faces the challenge of rebalancing its economy in the face of lower US exports. “[Chinese officials] need to deal with the fact that the excess capacity that they have cannot be just dumped into the rest of the world and expect the rest of the world to be happy about it,” he said, adding that tariffs could function as a “backstop.” While the future trade relationship between the US and China remains unclear, Irigoyen said the effect on China’s relationship with Europe will be of particular interest.

On whether the euro could replace the dollar as the global reserve currency: “The euro can be an alternative,” to the US dollar, Lombard said, stressing, however, that the “euro is not challenging the US dollar.” He added that the stability the dollar has enabled is important to the world economy’s growth, and “that current balance is a good balance for the global economy.”

On the prospects for a US-EU trade deal: Lombard said the EU is seeking a negotiated solution, arguing that a free-trade agreement would be of mutual benefit to Washington and the bloc. “Nonetheless, the EU is working on a targeted and measured response in case we cannot reach a deal rapidly,” he cautioned. Lombard emphasized that the EU “very much” hopes to avoid that kind of response, however, by reaching a deal.

On the need to balance the French budget: Lombard said that France is focused on cutting its budget, while also balancing necessary costs like state-sponsored health care and a defense spending hike. “The United States rightly said to us, you have to take care of your own defense,” he said, nodding to the Trump administration’s criticism that European NATO members are not meeting the alliance’s military spending targets. French President Emmanuel Macron has also said that the country must increase its defense spending; Lombard said that those pressures mean “we have to cut the rest proportionally. And we believe we can do that, and we will do that.”

On Japan’s ties to the US: Japan is “very highly dependent” on the US economy performs, Otsuka said. “Japan is the largest US government bond holder,” and “the largest foreign direct investor into the US market,” he said, adding that, alongside Tokyo’s longstanding security agreement with Washington, the relationship is effectively “inseparable.” Otsuka said that closeness meant Japanese officials feel “very optimistic” about the prospects of a US-Japan trade deal, and emphasized Japan’s “frontrunner” status in Washington’s negotiations with world nations.

On being a US company with no Chinese presence: “Fifteen years ago, everyone thought [a presence in China] was existential,” Sarandos said, adding that he had “put it in a couple of years of trying to do it.” It was a “big mistake,” he said. Chinese laws meant that all Netflix programming had to pass a censor, “and in three years, not a single episode of a single Netflix show cleared the censorship board.” Since then, he said he has watched other media companies “grinding out all of their time to get there, and ultimately ended up in the same place I did, which is nowhere.”

On hope for international data agreements: Schwimmer pointed to data deals from the first Trump administration as a possible reason for hope that the second term could see similar agreements enshrined. “The renegotiation of the USMCA included a very forward-looking digital-trade agreement,” he said, referring to Donald Trump’s renegotiation of the North American Free Trade Agreement, which became law in 2020. Schwimmer also cited a digital trade deal with Japan. Looking ahead, he said, “I think there is meaningful opportunity there, and that’s in contrast with what you have seen in some other countries, where data sovereignty has been more restrictive.”

On treating teams like family to see success: Leonsis owns the Washington Capitals, whose star, Alex Ovechkin, recently set the National Hockey League’s careers goals record. He discussed the importance of treating players like family to create a successful culture. “I can’t tell you how many times people said, ‘Well, you should trade Alex Ovechkin’” before he got too old, he said. “I wouldn’t have that conversation with my wife; I hope my wife doesn’t have that conversation on me. We’re not transactions here.”

On cuts to US government aid and research funding: Walker serves on the Ford Foundation’s board of trustees, and emphasized that some nonprofits and donors would be “wise” to recalibrate how to make sure their investments get the most return on investment, given US federal aid and funding cuts. “Private philanthropy has an important role to play, but it can’t fill the hole of the US government,” he said, particularly around international aid.

On shift of investment away from the US: Neuberger has seen clients looking increasingly beyond the US, Walker said, as a result of the prevailing economic uncertainty and the lack of clarity around US President Donald Trump’s economic agenda. That could be a “real positive” for Europe, he said, and especially for Germany. “Europe on the margin might be more attractive relative to other places, until we have clarity,” he said.

On clarity on US trade negotiations: Dombrovskis said the European Union is hoping for “more clarity on expectations on the US side,” adding that the bloc has been actively engaging with US officials to reach a solution: “What we know is the negative economic effects of the tariffs, and that is what we want to avoid.” The EU has proposed various new trade deals to avert US tariffs on exports, including a “zero-zero” agreement that would see no import duties on cars and industrial goods, he said. “So far, we haven’t gotten any positive feedback on this proposal,” Dombrovskis cautioned.

On strategic geopolitical relationships: Cuerpo spoke about Spain’s need to “engage with the main economic powers” of the world, and particularly Europe, in order to reach a “fair” trade deal with other world powers: “We have less strength when it comes to a fair and balanced trade deal with the US or other partners… we need the strength of the scale, of the force, of the whole EU.” He added that Spain needs to rally behind the European Commission, and to expand its network of allies further afield. “We know that China is a rival, [and] a competitor in many areas, but it also has to be a strategic ally to the extent possible,” he said.

On attracting diversity: Rogers said that companies are feeling “pressure” around rolling back diversity initiatives following US President Donald Trump’s January executive order targeting diversity, equity, and inclusion policies across institutions. Yet most firms “are still working on [diversity] and still focused on it,” Rogers said, adding that “there’s some management teams that probably never believed in [DEI] and this has been an excuse for them to drop it and move on.” Still, he said many firms understand that their customers and their own employees are becoming more diverse. “I tell the companies we invest in, if you look like a 1940s company in the 21st century, it’s hard for us to invest with you,” he said.

On investment strategy: Yoseloff said his investment firm, which has $36 billion under management, tends to get “protective,” and focuses on debt during uncertain economic periods. “Assets can weather a storm, so you might be talking about buying debt at 60 or 70 cents on the dollar,” he said. “Often in an upside case, you get paid par.” And if the investment doesn’t turn out as well as you’d hoped, then an investor might take control of the asset, which can have its own benefits, he added.

On American manufacturing: Griffin said that despite the “romanticism” many in the US feel for American-made products, polls suggest that few people actually want to work in manufacturing. “Dave Chappelle roughly said, ‘I’d rather wear Nikes than make Nikes,’ and that really does sum up where we stand as a country,” he said. And the Trump administration’s trade war — which Griffin described as having “devolved into a nonsensical place” — won’t help reshore manufacturing or bolster confidence among domestic makers, either. “People are not going to race to build manufacturing in America, because with the policy volatility, you actually undermine the very goal you’re trying to achieve,” Griffin said.

On market volatility: Griffin described the last month as “pretty tumultuous” for markets, adding that America’s longstanding commitment to multilateralism and free trade has been called into question. “If we were Europeans looking at our US assets, we’ve lost 20% of our value in four weeks.” Looking at the US economy another way, he said, “if you use the euro as a reference currency, we’ve become 20% poorer in four weeks. There’s not a lot of money being made in that environment.” Given the volatility, “all you’re trying to do is tread water and not drown,” Griffin said.

On the American brand: Amid all the financial and political tumult, Griffin said the diminishment of America’s international stature has become his gravest concern. “The United States is more than just a nation. It’s a brand, a universal brand,” he said. “And we’re eroding that brand right now.” A big piece of that brand, he added, is US Treasurys. “In the financial markets, no brand compared to the brand of the US Treasurys, the US Treasury market, the strength of the US dollar, and the strength, the creditworthiness of the US Treasurys. No brand came close. We put that brand at risk.” Griffin warned that it can take a “very long time to remove the tarnish on a brand.”