July 30, 2025 • 25 mins
On this week’s Trumponomics, we unpack the promise and peril for America of Trump’s AI vision. Host Stephanie Flanders is joined by Michael Deng, geoeconomics technology analyst for Bloomberg Economics, and Parmy Olson, a columnist with Bloomberg Opinion and author of the book Supremacy: AI, ChatGPT and the Race That Will Change the World.
Together, they discuss how the administration’s plans when it comes to tariffs, energy and other issues risk isolating the US from the very global tech ecosystem it’s trying to dominate.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
America is the country that started the AI race, and
as President of the United States, I'm here today to
declare that America is going to win it.
Speaker 3 (00:28):
I'm Stephanie Flanders, head of Governments and Economics at Bloomberg,
and this is Trumppnomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy. What on earth is going to happen next.
One thing President Biden and President Trump and any other
elected US politician can agree on is America needs to
(00:49):
win the race for AI supremacy. You just heard Donald
Trump say as much at the administration's recent AI summit,
and he went on to vow to do everything it
takes to achieve that. So we're asking a simple question,
how's he doing. At that summit, he unveiled a twenty
three page AI action Plan, which, to one expert, read
(01:11):
like an industrial scale mobilization order. The emphasis was all
on freeing up companies to move fast and innovate, getting
rid of the red tape in the way of building
data storage centers, junking Biden nearer guardrails on safety, and
pretty much everything that might be standing in the way
of big AI companies doing what they want to do.
(01:31):
So will it work and if so, at what potential cost? Well, naturally,
we have two brilliant Bloomberg voices to tell us the
answer and to consider whether other Trump policies that we
often discuss on this podcast might be working against the
administration's goals on AI. With me in the London studio
is palmey Olsen, the Bloomberg opinion columnist covering technology. She's
(01:55):
a former reporter for The Wall Street Journal at Forbes
and the author, most recently of Supremacy, AI, Chat, GPT
and The Race That Will Change the World. That's the
book that won the Financial Times Business Book of the
Year award in twenty twenty four. Party is so great
to have you on.
Speaker 4 (02:11):
Thank you for having me.
Speaker 3 (02:12):
The last time I saw you may have been at
the awards ceremony. ALF very pleasant surprise for you to win.
And in Washington, D C. Michael DNG joins us. Michael's
the geoeconomics technology analyst for Bloomberg Economics, and he previously
served in the Biden administration as a policy advisor and
Presidential Management Fellow. In the Chips Program Office at the
Department of Commerce, among other things. Michael, welcome to Trumponomics,
(02:35):
your first time too.
Speaker 1 (02:37):
Thank you great to be.
Speaker 3 (02:38):
Here, Parmi, since you have just written this book and
we have heard a lot about deep Seek in the
last six months or so. If the President wants the
US to win the race and AI, is the US
still the leader in this technology or did deep Seek
(02:59):
shows that China had already caught up?
Speaker 4 (03:02):
Well, it depends how you define leader. But I would
say when it comes to AI capabilities, the models, and
how good they are at reasoning and math and coding,
then yes, US models are still ahead of the ones
coming out of China. The thing is they're not ahead
by much. It's a very narrow lead. Now, when it
(03:23):
comes to actual adoption of AI services, I would say
that in China it's much more sort of readily available.
People use AI much more in their daily lives. And
China's ability also to kind of create the energy infrastructure
they need to build AI models. They're able to kind
of spin up the gigawatts that they need. I think
it is something like four hundred gigawatts that they're already
(03:45):
planning for AI that they have available versus you know,
dozens of gigawatts that the US has that certainly puts
them in a very advantageous position. But as it stands,
you know, the US is still ahead. Deep Seek of course,
caused this kind of freak out for Silicon Valley back
in January when that dropped, because here was a model
that was not only as good as chat GPT, but
(04:08):
it was free and the blueprints had been put on
the Internet for anybody to copy and develop on, which
is absolutely what people have done. And that really spoke
to why China's tech sector has moved so quickly, is
there's been this real focus on open source or so
called open weight models. You know, when you keep your
tech proprietary and secret, you kind of have to start
(04:30):
from scratch as a company each time you build AI.
But if it's open, companies are collaborating more with each other,
and they're building on top of one another's innovations, and
then collectively, you know, the whole industry can just move
a lot more quickly. And that's exactly what's happened in China.
But as I say, they haven't completely caught up, but
they're close.
Speaker 3 (04:48):
Okay, So, Michael, we heard at the beginning there at
the summit that Donald Trump at least thought his action
plan was all about maintaining US leadership and winning that race.
What does this administration think is the answer on this?
Speaker 4 (05:03):
Yeah?
Speaker 1 (05:03):
So, I think the AI Action Plan is interesting in
that it does correctly identify some of the key areas
in which the US really needs to develop further and
is falling behind on China if it wants to keep
up and win this AI race. One of the areas
that it really clearly highlights is in power infrastructure. Parmy
has already mentioned that China's being able to build on
the one hundreds of gigawatts scale and is bringing on
(05:25):
much more power than the US is capable of bringing
on to be able to match the demand that data
centers will acquire, and this action Plan specifically accelerates a
lot of the permitting processes required to build these data centers,
though interestingly it doesn't outright call for building new infrastructure.
A lot of it is mainly about accelerating interconnection, optimizing grids,
stabilizing grids, etc. But it's still headed in the right direction.
(05:47):
The contradiction there, however, is that you know, last year
ninety percent of new power generation capacity added to the
US was all came from renewables, and the Big Beautiful
Bill explicitly rolled back a lot of the clean energy
tax credits that was going to support that sector of
the economy. And another wrinkle in the AI action planet
itself is that the aversion to the solar and wind
(06:08):
is still very clear. In the text there, you'll notice
that they highlight nuclear fission, geothermal and fusion as the
only new sources of energy they think should be developed further,
while excluding solar, wind, clean battery storage, et cetera. So
it doesn't really make sense, especially mentioning fusion, which is
not close to being technically viable at this point. On
workforce itself, it does target a long standing gap in
(06:30):
the US ecosystem in that it's trying to build up
that vocational workforce to operate and deploy AI. The issue
there being, however, that you know a lot of President
Trump's recent actions in the past few months have targeted
that high end research talent pipeline that's really critical or
for advancing the frontier of AI research, universities, government funding,
(06:51):
and also immigration. Jensen Huanga said something of you know,
fifty percent of all AI researchers are Chinese, So while
you're building up the vocational workforce, you're undercutting or undermining
the elite research workforce. You need to really advance that frontier.
And so again a mixed bag on what it's actually doing.
And the last thing I'll bring up is expert controls,
which is a massive topic. Lots of implications for foreign policy.
(07:14):
How presidentrop has acted so far in the past six
months towards a partners Tariffs are involved as well, so
very big topic.
Speaker 3 (07:20):
Right. Well, you have introduced the idea that there might
be some tensions within the plan, but certainly between the
plan announced at the summit and other aspects of Donald
Trump's policies, and we are going to get into that.
But Palmi, you described this as a gift to big tech.
We know that the people involved in this seem to
(07:41):
have played a central role in devising this plan. Your
book is all about the people behind AI. I suspect
that you have some insight into them.
Speaker 4 (07:49):
Well, that's the most interesting part. I think one of
the most important people behind this plan is Jensen Huang,
who is the CEO of Nvidia, and Jensen see him
on stage walking around with this leather jacket. He is
not someone who likes doing lobbying in Washington, DC, but
he's had to do that in the last few months
after the Trump administration came into power. And first of all,
(08:12):
back in April, the White House enact the ban on
in Nvidia's chip sales to China. That's a huge problem
for Nvidia because it said it would cost fifteen billion
dollars in revenue. And so there came now this effort
from Huang to try and turn that view around, and
he kind of found an ally in the Trump administration
in David Sachs, who is the so called crypto and
(08:34):
Ai zar, and both of them were really pushing this
idea that actually, we need to continue selling to China
because if we don't, China's gonna and Huawei are gonna
build their own chips, and then they're going to build
their own AI services on top of that, and guess what,
They're going to sell all that AI technology to other
countries around the world and they're going to be the
(08:55):
world's leading AI provider. What we need to do is
kind of clutter the market in China with our own
tech within Vidia chips, so that Chinese companies become reliant
on our own infrastructure. And it's really interesting that this
is actually fundamentally a very Silicon Valley worldview, this idea
that if you kind of blit scale your product or
(09:18):
service dominate the market. Eventually consumers, businesses, your customers get
locked in into your ecosystem. And we've all kind of
experienced that with Apple Life Songs and Microsoft Cloud the hyperscalers,
you know, cloud services. It's actually hard for their customers.
They feel they're locked in. And so this was the
idea that Huang and Saks really pushed in the Trump administration. Eventually,
(09:41):
Howard Lutnik, the Commerce Secretary, also picked up on that,
and we saw that play out with this big U
turn that Trump made on the ban on in Nvidia chips.
He lifted it, so in Vidia is now able to
continue selling specialized sort of export controlled chips called the
AH twenties. They're kind of framed as being low power,
not as good as the ones that American companies can use,
(10:03):
but actually they're still pretty powerful and Chinese companies can
still do a lot with them. And so I think
that's raised a lot of questions in Washington among kind
of traditional China hawks and the administration about is this
really a good idea?
Speaker 3 (10:17):
And I think, Michael, you've described this as a strategic
pivot from technology denial to export dominance. You know, this
idea that instead of trying to keep China from getting
the technology, you make everybody, the whole world, including China,
absolutely dependent on it. I mean that seems to me
a major shift, not just from policy a few months ago,
but actually from the Biden administration's kind of instincts on
(10:38):
this of actually trying to put controls on technology. But
I know that there's different levels of export control involved here.
So just talk me through it a bit, Michael. Is
this a complete change of strategy or is it a
bit murkier than that?
Speaker 1 (10:52):
Absolutely, I would characterize it as very murky in the
sense that if you notice in the Air Action Plan itself,
there's a spection specifically for export controls, and that section
almost looks like it was written by the same Biden
administration export control specialists and thinkers use alongside exactly In
that one, it hints and signals at targeting component subsystems
(11:16):
of semiconductor tools. And what that means is, if you
think about the progression of export controls over the past
few years. We essentially went from controlling the chips then
to controlling the tools, and now the administration is thinking
about controlling the components that go into those tools. So
again with those components, there's a heavy reliance on the
US and Western suppliers. So it is an avenue of
vulnerability for China in terms of building up their domestic
(11:38):
semiconductor manufacturing ecosystem. But this has been a direction that
export controls have been going into for a while and
those in the field have been seeing if this was
going to happen. But it really does seem to be
at odds with letting H twenty chips go to China,
and now I can see maybe like a targeted strategy
of will deny them access to building up their own
(11:58):
manufacturing ecosystem while still letting them have access to chips,
so a Huai competitor doesn't build up. But on the
flip side, what it now means is you've enabled the
entire Chinese AI ecosystem to build off of that. And
if you notice what Anthropic and Open Ai have said,
they've always been fairly pro export control. Anthropic in particular
has gotten into it publicly with Nvidia sometimes around export controls,
(12:21):
because they understand that if you give age twenties and
advanced compute to China, you're empowering their AI companies to
become more competitive, and Tom directly with deep Seek with
Ali Baba with USAI companies.
Speaker 3 (12:34):
So Pami, I would imagine other parts of the sort
of AI ecosystem are a bit concerned. I guess on
two fronts that there's this quite abrupt change of strategy
from the US, and also that it is in itself
a bit inconsistent and seemingly unstable. We often talk about
in Trumponomics about the sort of uncertainty being costly for
(12:54):
trade and for the real economy, but I imagine it's,
if anything, more costly if you're trying to think about
AI investments.
Speaker 4 (13:01):
Absolutely, I'm sorry you said inconsistent, seemingly unstable. I feel
like that should be the tagline for the Trump administration.
And that's precisely like as Michael was saying. You know,
when you read the action plan, the actual behavior of
Trump doesn't correspond to what is being said in this plan.
You know, tough talk on export controls, and yet he hasn't.
Speaker 3 (13:20):
On the most important one, all the biggest, most obvious.
Speaker 4 (13:23):
Arguably the most important one. Yeah, I think this kind
of uncertainty is perhaps not great for companies. But on
the other hand, in Silicon Valley there's this term accelerationist.
So if you're an AI accelerationist, you want to move
fast and break things. Essentially, you believe the AI development
should speed up because the benefits to humanity will outweigh
whatever risks and problems come up along the way. And
(13:45):
what seems to be happening is the White House is
adopting this accelerationist approach that has taken hold in Silicon Valley.
You know, just even a year and a half ago,
so called AI doomers we're lobbying very hard in Washington
for more guardrails out of concern that AI could bring
existential risk to human civilization. Those voices are now completely quiet.
(14:08):
They've been drowned out by the accelerationists. So yes, well,
the uncertainty isn't great I think for tech companies. You know,
AMD is another one in Silicon Valley, anyone making hardware,
anyone selling to China. This is really good news.
Speaker 3 (14:21):
Michael, I do want to go back to you on
how some of this sits within the broader economic policies,
broader trumponomics that we've seen over the last few months,
and you reference some of it at the beginning. Just
taught me through how important the negatives have been so
far on the issues that really matter to the development
(14:41):
of AI, and how that might sort of stack up
against anything that was said at the summit.
Speaker 1 (14:46):
Yeah, absolutely so. I think the biggest issue with a
lot of this is the Air Action Plan lays out
very ambitious objectives and correctly diagnoses the areas on which
the US needs to work, but the environment and the
ecosystem currently that the Trump administration has created with many
of their policies is not conducive to running as fast
as possible on AI. I've talked about the workforce issues already.
(15:09):
I've talked about the energy issues already. But even if
we're speaking about globally, for example, on export controls, you
need close collaboration with a lot of these suppliers in
other countries to be able to set up a regime
that actually keeps China out of these technology choke points.
And the aaction plane itself have some very coercive and
muscular language and essentially saying that we welcome allies to
(15:31):
collaborate with US, and if not, we're going to use
secondary tariffs the foreign direct Product rule to induce allies
to participate in this export control regime. And so that
was something that really surprised me when I read it.
It wasn't something that the Biden administration when I was there,
ever seriously considered, though when negotiations got tough it came
close a few times. I will say it essentially shows
(15:52):
this Trump administration's view that they can force US tech
supremacy on the rest of the world. They're going to
do that through the expert packages that they've contemplated, despite
the fact that this is at the end of the day,
a very global industry, a very global ecosystem, and so
it's very unclear to me how exactly they're going to
make the US outrun China on this a supremacy race
(16:13):
if they're going to be so unilateral in their approach.
Speaker 3 (16:17):
Just a small footnote to that, and you've made the
point in other analysis that you've done, if you're also
making the US itself a more closed economy, it's going
to be this sort of inside the Fortress America. You're
going to build all this stuff, and that's going to
sustain the supremacy, but you're making it harder for those
crucial inputs. I remember, Michael, you highlighted just that copper tariff.
(16:38):
Just remind us that even that one piece is going
to make things harder for a certain bit of the
chips industry.
Speaker 1 (16:45):
Yeah. Absolutely, Donald Trump in this Air Action Plan talks
about building out AI infrastructure, data center semiconductor fabs. All
of those require a lot of inputs from a broad
imported data centers use immense amounts of copper in power
and cooling. Sem enter fabs even more so, you know,
copper just for power and cooling, but coppers found in
ships themselves, and not just to talk about copper. Were
(17:07):
contemplating Section two thirty two sectoral tariffs on semiconductors, and
those might involve semiconductor tools themselves. All the different consumables
and materials that will go into these fabs being built
in the US that they need to actually produce the
chips that go into AI. At the end of the day,
chip manufacturing and aidentist data centers require a lot of
global inputs that just doesn't square with this vision of
a fortress America, this unilateral vision that Trump is all in.
Speaker 3 (17:31):
For Palmy, I mean, you weren't at the summit, though,
I imagine that you had your spies there in one
for or another. And was any of this these sort
of tensions, parent contradictions voice there. I mean, even the
sort of basic fact that all that he's talking about
building this stuff and getting rid of red tape and
know the bureaucracy at the same time as actually the
(17:53):
important components that you really need to make this stuff
as becoming more and more expensive and harder to get.
Was there anybody who was saying, hang on a minute.
Speaker 4 (18:00):
Not that I could see. I mean, I was checking
out a lot of social media. There's a there's a
website called tech Meme that aggregates all the chatter about
any particular topic, and everything that was going on Twitter
was pretty much praising the bill, And I mean that's
just a kind of cacophony of voices from Silicon Valley
are just happy to see things moving head so quickly,
(18:21):
you know, because the whole plan covers so many different things,
so it's it's kind of hard to look deep into
the weeds, as Michael has noted, all these very important contradictions,
and so my sense is that actually people aren't taking
much note of those potential limitations.
Speaker 3 (18:38):
And is it just because they're so lofty and big
picture that they don't really think about how do you
actually build lotty?
Speaker 4 (18:44):
They're not lofty, they're galactic. I mean, people in Silicon
Valley are. They're living in the future. And that's kind
of what makes the regions so successful is they don't
see themselves constrained by traditional limits that might limit people
and entrepreneurs in other parts of the world. There's just
an incredible amount of belief that has helped propel so
many of these businesses, not alongside anti competitive practice, of course,
(19:06):
as they get bigger.
Speaker 3 (19:08):
I mean historically people animated by just a vision of
the future. It hasn't always gone well, but aside, oh absolutely,
But the I mean, just to come back on this
safety point, and I just noticed, I mean, there's lots
of people who are writing about it, but asimas Are,
who's the British kind of blogger and tech entrepreneur who
writes often about these issues, he had a sort of
quite a nice line. He said, the upside of all
(19:29):
this is speed. The downside, mainly for the rest of
the world, is a regulatory vacuum primed for social, environmental,
and geopolitical blowback. Do you think that's right, Oh one.
Speaker 4 (19:40):
But I think at the same time, even in a
place like Europe, where we have the European Union's AI
Act that still has a lot of problems. The act
in itself is incredibly vague, It's got loopholes. I think,
just very briefly, one of the biggest problems we're seeing
today with AI is addiction to AI companions, people forming
(20:00):
emotional bonds with them, getting emotionally manipulated, some people experiencing psychosis.
There have been many, many stories about people getting chatchypt
induced psychosis.
Speaker 3 (20:10):
No, you wrote a very good I'd recommend everybody in
your column about it, which made me think about it.
But it was also even for people who don't get
psychotic episodes, you lose your critical thinking capacity.
Speaker 4 (20:19):
But that's because these models are kind of in much
the same way social media was optimized for engagement to
keep you talking, and so many of them in Chatgypt
in particular, tend to validate the user, and so you
have these unintended consequences that it would have been impossible
to predict a year ago even and so writing regulation
is really like chasing a bullet. And so, yes, we're
(20:42):
in a regulatory vacuum, made worse by the fact now
that these companies are moving so quickly and deploying so quickly,
and we're really I mean, that's why I think the
UK really needs to step up its own regulatory efforts here,
because I think the UK is a great tech regulator.
Speaker 3 (20:57):
Well, I know that there were some of these basic
issues they've really struggled with, including AI safety. So I
wouldn't hold your breath, but hope, maybe Michael was one
thing I wanted to mention that we haven't touched on.
And then we're going to run out of time. We've
said all the way through. The trade off that's been
made with this action plan is over sort of speed
over safety and the junking of the sort of a
lot of the guardrails around ethics and AI safety that
(21:22):
President Biden at least tried to begin to develop, But
there's one area where they are still focused on safety.
They want to keep us safe from being forced to
think about climate change and from the woke mind virus.
So just talk us through that, because there's a lot
in here which is actually about getting that out of AI.
Speaker 1 (21:40):
Yeah. So I remember reading that section and trying to
understand how exactly they were going to implement it, and
the executive order also just came out that still doesn't
go into much detail about it. I think this fundamentally
is entirely a political move to, you know, highlight a
issue that I think with an AI is a major
(22:02):
area of concern.
Speaker 3 (22:03):
Palmi, I guess just to give you the last word,
and I may be miss characterizing, but one of the
columns that you wrote, I think immediately after Deep Seat
came out or soon afterwards, and you're sort of reflecting
on how significant that was and changing our view of
how the AI race might turn out. And you suggested
that actually the AI not being US dominated and being
(22:28):
more open source or at least open weight, might be
healthier for the world. Do you still think that, And
I guess there's a risk that you know, China could
have won, it might be China dominated.
Speaker 4 (22:37):
Yeah, And I think I don't agree with the kind
of state controlled aspect of Chinese AI. But I think
the best thing about Deep seek was that it raised
the specter of more competition, and it raised this notion
that maybe the Western Silicon Valley companies weren't the guaranteed
winners of this AI race. Here were these other companies
(22:58):
coming out of China that were cheap, that we're free,
and that we're just as good. This isn't really an
issue about American companies. This is more about companies that
dominate the market, as we've seen already with cloud companies
from Silicon Valley e commerce companies. You know, it's almost
impossible now to open an e commerce business because of Amazon,
and so many parts of the wider market have absolutely
(23:20):
been warped by the anti competitive and monopolistic behavior of
big tech. And what would be terrible would to just
see that continue. With AI and AI being so transformative,
so emotionally powerful, cognitively powerful, it can influence how people
think about things. People are using it to make daily
(23:41):
life decisions and write their own emails and reports. That
leaves an incredible amount of power in the hands of
just a few companies who are building these models. And
so if there are more on the market, I think
that's a great thing. I think there needs to be
more competition. Whether that will actually continue to play out
as it's still playing out now, I think is an
(24:01):
open question.
Speaker 3 (24:03):
Well, it's still playing out. There's some very wise words
from both of you, some of which I suspect the
President would think we're bordering on trees, treacherous, oh the
prospect of you know, non American leadership. But thank you
very much, both of you. Thank you, thank you, thanks
(24:26):
for listening to Trumponomics from Bloomberg. It was hosted by
me Stephanie Flanders, and I was joined by Bloomberg's Pame
Olsen and Michael Deng. Trumponomics is produced by Samasadi and
Moses and with help from Amy Keene and special thanks
this week to Nervy Shavin. Sound design is by Blake
Maples and Sage Bowman is the head of Bloomberg Podcast.
(24:48):
Please help others find it and enjoy it by rating
and reviewing Trumponomics wherever you listened.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
America is the country that started the AI race, and
as President of the United States, I'm here today to
declare that America is going to win it.
Speaker 3 (00:28):
I'm Stephanie Flanders, head of Governments and Economics at Bloomberg,
and this is Trumppnomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy. What on earth is going to happen next.
One thing President Biden and President Trump and any other
elected US politician can agree on is America needs to
(00:49):
win the race for AI supremacy. You just heard Donald
Trump say as much at the administration's recent AI summit,
and he went on to vow to do everything it
takes to achieve that. So we're asking a simple question,
how's he doing. At that summit, he unveiled a twenty
three page AI action Plan, which, to one expert, read
(01:11):
like an industrial scale mobilization order. The emphasis was all
on freeing up companies to move fast and innovate, getting
rid of the red tape in the way of building
data storage centers, junking Biden nearer guardrails on safety, and
pretty much everything that might be standing in the way
of big AI companies doing what they want to do.
(01:31):
So will it work and if so, at what potential cost? Well, naturally,
we have two brilliant Bloomberg voices to tell us the
answer and to consider whether other Trump policies that we
often discuss on this podcast might be working against the
administration's goals on AI. With me in the London studio
is palmey Olsen, the Bloomberg opinion columnist covering technology. She's
(01:55):
a former reporter for The Wall Street Journal at Forbes
and the author, most recently of Supremacy, AI, Chat, GPT
and The Race That Will Change the World. That's the
book that won the Financial Times Business Book of the
Year award in twenty twenty four. Party is so great
to have you on.
Speaker 4 (02:11):
Thank you for having me.
Speaker 3 (02:12):
The last time I saw you may have been at
the awards ceremony. ALF very pleasant surprise for you to win.
And in Washington, D C. Michael DNG joins us. Michael's
the geoeconomics technology analyst for Bloomberg Economics, and he previously
served in the Biden administration as a policy advisor and
Presidential Management Fellow. In the Chips Program Office at the
Department of Commerce, among other things. Michael, welcome to Trumponomics,
(02:35):
your first time too.
Speaker 1 (02:37):
Thank you great to be.
Speaker 3 (02:38):
Here, Parmi, since you have just written this book and
we have heard a lot about deep Seek in the
last six months or so. If the President wants the
US to win the race and AI, is the US
still the leader in this technology or did deep Seek
(02:59):
shows that China had already caught up?
Speaker 4 (03:02):
Well, it depends how you define leader. But I would
say when it comes to AI capabilities, the models, and
how good they are at reasoning and math and coding,
then yes, US models are still ahead of the ones
coming out of China. The thing is they're not ahead
by much. It's a very narrow lead. Now, when it
(03:23):
comes to actual adoption of AI services, I would say
that in China it's much more sort of readily available.
People use AI much more in their daily lives. And
China's ability also to kind of create the energy infrastructure
they need to build AI models. They're able to kind
of spin up the gigawatts that they need. I think
it is something like four hundred gigawatts that they're already
(03:45):
planning for AI that they have available versus you know,
dozens of gigawatts that the US has that certainly puts
them in a very advantageous position. But as it stands,
you know, the US is still ahead. Deep Seek of course,
caused this kind of freak out for Silicon Valley back
in January when that dropped, because here was a model
that was not only as good as chat GPT, but
(04:08):
it was free and the blueprints had been put on
the Internet for anybody to copy and develop on, which
is absolutely what people have done. And that really spoke
to why China's tech sector has moved so quickly, is
there's been this real focus on open source or so
called open weight models. You know, when you keep your
tech proprietary and secret, you kind of have to start
(04:30):
from scratch as a company each time you build AI.
But if it's open, companies are collaborating more with each other,
and they're building on top of one another's innovations, and
then collectively, you know, the whole industry can just move
a lot more quickly. And that's exactly what's happened in China.
But as I say, they haven't completely caught up, but
they're close.
Speaker 3 (04:48):
Okay, So, Michael, we heard at the beginning there at
the summit that Donald Trump at least thought his action
plan was all about maintaining US leadership and winning that race.
What does this administration think is the answer on this?
Speaker 4 (05:03):
Yeah?
Speaker 1 (05:03):
So, I think the AI Action Plan is interesting in
that it does correctly identify some of the key areas
in which the US really needs to develop further and
is falling behind on China if it wants to keep
up and win this AI race. One of the areas
that it really clearly highlights is in power infrastructure. Parmy
has already mentioned that China's being able to build on
the one hundreds of gigawatts scale and is bringing on
(05:25):
much more power than the US is capable of bringing
on to be able to match the demand that data
centers will acquire, and this action Plan specifically accelerates a
lot of the permitting processes required to build these data centers,
though interestingly it doesn't outright call for building new infrastructure.
A lot of it is mainly about accelerating interconnection, optimizing grids,
stabilizing grids, etc. But it's still headed in the right direction.
(05:47):
The contradiction there, however, is that you know, last year
ninety percent of new power generation capacity added to the
US was all came from renewables, and the Big Beautiful
Bill explicitly rolled back a lot of the clean energy
tax credits that was going to support that sector of
the economy. And another wrinkle in the AI action planet
itself is that the aversion to the solar and wind
(06:08):
is still very clear. In the text there, you'll notice
that they highlight nuclear fission, geothermal and fusion as the
only new sources of energy they think should be developed further,
while excluding solar, wind, clean battery storage, et cetera. So
it doesn't really make sense, especially mentioning fusion, which is
not close to being technically viable at this point. On
workforce itself, it does target a long standing gap in
(06:30):
the US ecosystem in that it's trying to build up
that vocational workforce to operate and deploy AI. The issue
there being, however, that you know a lot of President
Trump's recent actions in the past few months have targeted
that high end research talent pipeline that's really critical or
for advancing the frontier of AI research, universities, government funding,
(06:51):
and also immigration. Jensen Huanga said something of you know,
fifty percent of all AI researchers are Chinese, So while
you're building up the vocational workforce, you're undercutting or undermining
the elite research workforce. You need to really advance that frontier.
And so again a mixed bag on what it's actually doing.
And the last thing I'll bring up is expert controls,
which is a massive topic. Lots of implications for foreign policy.
(07:14):
How presidentrop has acted so far in the past six
months towards a partners Tariffs are involved as well, so
very big topic.
Speaker 3 (07:20):
Right. Well, you have introduced the idea that there might
be some tensions within the plan, but certainly between the
plan announced at the summit and other aspects of Donald
Trump's policies, and we are going to get into that.
But Palmi, you described this as a gift to big tech.
We know that the people involved in this seem to
(07:41):
have played a central role in devising this plan. Your
book is all about the people behind AI. I suspect
that you have some insight into them.
Speaker 4 (07:49):
Well, that's the most interesting part. I think one of
the most important people behind this plan is Jensen Huang,
who is the CEO of Nvidia, and Jensen see him
on stage walking around with this leather jacket. He is
not someone who likes doing lobbying in Washington, DC, but
he's had to do that in the last few months
after the Trump administration came into power. And first of all,
(08:12):
back in April, the White House enact the ban on
in Nvidia's chip sales to China. That's a huge problem
for Nvidia because it said it would cost fifteen billion
dollars in revenue. And so there came now this effort
from Huang to try and turn that view around, and
he kind of found an ally in the Trump administration
in David Sachs, who is the so called crypto and
(08:34):
Ai zar, and both of them were really pushing this
idea that actually, we need to continue selling to China
because if we don't, China's gonna and Huawei are gonna
build their own chips, and then they're going to build
their own AI services on top of that, and guess what,
They're going to sell all that AI technology to other
countries around the world and they're going to be the
(08:55):
world's leading AI provider. What we need to do is
kind of clutter the market in China with our own
tech within Vidia chips, so that Chinese companies become reliant
on our own infrastructure. And it's really interesting that this
is actually fundamentally a very Silicon Valley worldview, this idea
that if you kind of blit scale your product or
(09:18):
service dominate the market. Eventually consumers, businesses, your customers get
locked in into your ecosystem. And we've all kind of
experienced that with Apple Life Songs and Microsoft Cloud the hyperscalers,
you know, cloud services. It's actually hard for their customers.
They feel they're locked in. And so this was the
idea that Huang and Saks really pushed in the Trump administration. Eventually,
(09:41):
Howard Lutnik, the Commerce Secretary, also picked up on that,
and we saw that play out with this big U
turn that Trump made on the ban on in Nvidia chips.
He lifted it, so in Vidia is now able to
continue selling specialized sort of export controlled chips called the
AH twenties. They're kind of framed as being low power,
not as good as the ones that American companies can use,
(10:03):
but actually they're still pretty powerful and Chinese companies can
still do a lot with them. And so I think
that's raised a lot of questions in Washington among kind
of traditional China hawks and the administration about is this
really a good idea?
Speaker 3 (10:17):
And I think, Michael, you've described this as a strategic
pivot from technology denial to export dominance. You know, this
idea that instead of trying to keep China from getting
the technology, you make everybody, the whole world, including China,
absolutely dependent on it. I mean that seems to me
a major shift, not just from policy a few months ago,
but actually from the Biden administration's kind of instincts on
(10:38):
this of actually trying to put controls on technology. But
I know that there's different levels of export control involved here.
So just talk me through it a bit, Michael. Is
this a complete change of strategy or is it a
bit murkier than that?
Speaker 1 (10:52):
Absolutely, I would characterize it as very murky in the
sense that if you notice in the Air Action Plan itself,
there's a spection specifically for export controls, and that section
almost looks like it was written by the same Biden
administration export control specialists and thinkers use alongside exactly In
that one, it hints and signals at targeting component subsystems
(11:16):
of semiconductor tools. And what that means is, if you
think about the progression of export controls over the past
few years. We essentially went from controlling the chips then
to controlling the tools, and now the administration is thinking
about controlling the components that go into those tools. So
again with those components, there's a heavy reliance on the
US and Western suppliers. So it is an avenue of
vulnerability for China in terms of building up their domestic
(11:38):
semiconductor manufacturing ecosystem. But this has been a direction that
export controls have been going into for a while and
those in the field have been seeing if this was
going to happen. But it really does seem to be
at odds with letting H twenty chips go to China,
and now I can see maybe like a targeted strategy
of will deny them access to building up their own
(11:58):
manufacturing ecosystem while still letting them have access to chips,
so a Huai competitor doesn't build up. But on the
flip side, what it now means is you've enabled the
entire Chinese AI ecosystem to build off of that. And
if you notice what Anthropic and Open Ai have said,
they've always been fairly pro export control. Anthropic in particular
has gotten into it publicly with Nvidia sometimes around export controls,
(12:21):
because they understand that if you give age twenties and
advanced compute to China, you're empowering their AI companies to
become more competitive, and Tom directly with deep Seek with
Ali Baba with USAI companies.
Speaker 3 (12:34):
So Pami, I would imagine other parts of the sort
of AI ecosystem are a bit concerned. I guess on
two fronts that there's this quite abrupt change of strategy
from the US, and also that it is in itself
a bit inconsistent and seemingly unstable. We often talk about
in Trumponomics about the sort of uncertainty being costly for
(12:54):
trade and for the real economy, but I imagine it's,
if anything, more costly if you're trying to think about
AI investments.
Speaker 4 (13:01):
Absolutely, I'm sorry you said inconsistent, seemingly unstable. I feel
like that should be the tagline for the Trump administration.
And that's precisely like as Michael was saying. You know,
when you read the action plan, the actual behavior of
Trump doesn't correspond to what is being said in this plan.
You know, tough talk on export controls, and yet he hasn't.
Speaker 3 (13:20):
On the most important one, all the biggest, most obvious.
Speaker 4 (13:23):
Arguably the most important one. Yeah, I think this kind
of uncertainty is perhaps not great for companies. But on
the other hand, in Silicon Valley there's this term accelerationist.
So if you're an AI accelerationist, you want to move
fast and break things. Essentially, you believe the AI development
should speed up because the benefits to humanity will outweigh
whatever risks and problems come up along the way. And
(13:45):
what seems to be happening is the White House is
adopting this accelerationist approach that has taken hold in Silicon Valley.
You know, just even a year and a half ago,
so called AI doomers we're lobbying very hard in Washington
for more guardrails out of concern that AI could bring
existential risk to human civilization. Those voices are now completely quiet.
(14:08):
They've been drowned out by the accelerationists. So yes, well,
the uncertainty isn't great I think for tech companies. You know,
AMD is another one in Silicon Valley, anyone making hardware,
anyone selling to China. This is really good news.
Speaker 3 (14:21):
Michael, I do want to go back to you on
how some of this sits within the broader economic policies,
broader trumponomics that we've seen over the last few months,
and you reference some of it at the beginning. Just
taught me through how important the negatives have been so
far on the issues that really matter to the development
(14:41):
of AI, and how that might sort of stack up
against anything that was said at the summit.
Speaker 1 (14:46):
Yeah, absolutely so. I think the biggest issue with a
lot of this is the Air Action Plan lays out
very ambitious objectives and correctly diagnoses the areas on which
the US needs to work, but the environment and the
ecosystem currently that the Trump administration has created with many
of their policies is not conducive to running as fast
as possible on AI. I've talked about the workforce issues already.
(15:09):
I've talked about the energy issues already. But even if
we're speaking about globally, for example, on export controls, you
need close collaboration with a lot of these suppliers in
other countries to be able to set up a regime
that actually keeps China out of these technology choke points.
And the aaction plane itself have some very coercive and
muscular language and essentially saying that we welcome allies to
(15:31):
collaborate with US, and if not, we're going to use
secondary tariffs the foreign direct Product rule to induce allies
to participate in this export control regime. And so that
was something that really surprised me when I read it.
It wasn't something that the Biden administration when I was there,
ever seriously considered, though when negotiations got tough it came
close a few times. I will say it essentially shows
(15:52):
this Trump administration's view that they can force US tech
supremacy on the rest of the world. They're going to
do that through the expert packages that they've contemplated, despite
the fact that this is at the end of the day,
a very global industry, a very global ecosystem, and so
it's very unclear to me how exactly they're going to
make the US outrun China on this a supremacy race
(16:13):
if they're going to be so unilateral in their approach.
Speaker 3 (16:17):
Just a small footnote to that, and you've made the
point in other analysis that you've done, if you're also
making the US itself a more closed economy, it's going
to be this sort of inside the Fortress America. You're
going to build all this stuff, and that's going to
sustain the supremacy, but you're making it harder for those
crucial inputs. I remember, Michael, you highlighted just that copper tariff.
(16:38):
Just remind us that even that one piece is going
to make things harder for a certain bit of the
chips industry.
Speaker 1 (16:45):
Yeah. Absolutely, Donald Trump in this Air Action Plan talks
about building out AI infrastructure, data center semiconductor fabs. All
of those require a lot of inputs from a broad
imported data centers use immense amounts of copper in power
and cooling. Sem enter fabs even more so, you know,
copper just for power and cooling, but coppers found in
ships themselves, and not just to talk about copper. Were
(17:07):
contemplating Section two thirty two sectoral tariffs on semiconductors, and
those might involve semiconductor tools themselves. All the different consumables
and materials that will go into these fabs being built
in the US that they need to actually produce the
chips that go into AI. At the end of the day,
chip manufacturing and aidentist data centers require a lot of
global inputs that just doesn't square with this vision of
a fortress America, this unilateral vision that Trump is all in.
Speaker 3 (17:31):
For Palmy, I mean, you weren't at the summit, though,
I imagine that you had your spies there in one
for or another. And was any of this these sort
of tensions, parent contradictions voice there. I mean, even the
sort of basic fact that all that he's talking about
building this stuff and getting rid of red tape and
know the bureaucracy at the same time as actually the
(17:53):
important components that you really need to make this stuff
as becoming more and more expensive and harder to get.
Was there anybody who was saying, hang on a minute.
Speaker 4 (18:00):
Not that I could see. I mean, I was checking
out a lot of social media. There's a there's a
website called tech Meme that aggregates all the chatter about
any particular topic, and everything that was going on Twitter
was pretty much praising the bill, And I mean that's
just a kind of cacophony of voices from Silicon Valley
are just happy to see things moving head so quickly,
(18:21):
you know, because the whole plan covers so many different things,
so it's it's kind of hard to look deep into
the weeds, as Michael has noted, all these very important contradictions,
and so my sense is that actually people aren't taking
much note of those potential limitations.
Speaker 3 (18:38):
And is it just because they're so lofty and big
picture that they don't really think about how do you
actually build lotty?
Speaker 4 (18:44):
They're not lofty, they're galactic. I mean, people in Silicon
Valley are. They're living in the future. And that's kind
of what makes the regions so successful is they don't
see themselves constrained by traditional limits that might limit people
and entrepreneurs in other parts of the world. There's just
an incredible amount of belief that has helped propel so
many of these businesses, not alongside anti competitive practice, of course,
(19:06):
as they get bigger.
Speaker 3 (19:08):
I mean historically people animated by just a vision of
the future. It hasn't always gone well, but aside, oh absolutely,
But the I mean, just to come back on this
safety point, and I just noticed, I mean, there's lots
of people who are writing about it, but asimas Are,
who's the British kind of blogger and tech entrepreneur who
writes often about these issues, he had a sort of
quite a nice line. He said, the upside of all
(19:29):
this is speed. The downside, mainly for the rest of
the world, is a regulatory vacuum primed for social, environmental,
and geopolitical blowback. Do you think that's right, Oh one.
Speaker 4 (19:40):
But I think at the same time, even in a
place like Europe, where we have the European Union's AI
Act that still has a lot of problems. The act
in itself is incredibly vague, It's got loopholes. I think,
just very briefly, one of the biggest problems we're seeing
today with AI is addiction to AI companions, people forming
(20:00):
emotional bonds with them, getting emotionally manipulated, some people experiencing psychosis.
There have been many, many stories about people getting chatchypt
induced psychosis.
Speaker 3 (20:10):
No, you wrote a very good I'd recommend everybody in
your column about it, which made me think about it.
But it was also even for people who don't get
psychotic episodes, you lose your critical thinking capacity.
Speaker 4 (20:19):
But that's because these models are kind of in much
the same way social media was optimized for engagement to
keep you talking, and so many of them in Chatgypt
in particular, tend to validate the user, and so you
have these unintended consequences that it would have been impossible
to predict a year ago even and so writing regulation
is really like chasing a bullet. And so, yes, we're
(20:42):
in a regulatory vacuum, made worse by the fact now
that these companies are moving so quickly and deploying so quickly,
and we're really I mean, that's why I think the
UK really needs to step up its own regulatory efforts here,
because I think the UK is a great tech regulator.
Speaker 3 (20:57):
Well, I know that there were some of these basic
issues they've really struggled with, including AI safety. So I
wouldn't hold your breath, but hope, maybe Michael was one
thing I wanted to mention that we haven't touched on.
And then we're going to run out of time. We've
said all the way through. The trade off that's been
made with this action plan is over sort of speed
over safety and the junking of the sort of a
lot of the guardrails around ethics and AI safety that
(21:22):
President Biden at least tried to begin to develop, But
there's one area where they are still focused on safety.
They want to keep us safe from being forced to
think about climate change and from the woke mind virus.
So just talk us through that, because there's a lot
in here which is actually about getting that out of AI.
Speaker 1 (21:40):
Yeah. So I remember reading that section and trying to
understand how exactly they were going to implement it, and
the executive order also just came out that still doesn't
go into much detail about it. I think this fundamentally
is entirely a political move to, you know, highlight a
issue that I think with an AI is a major
(22:02):
area of concern.
Speaker 3 (22:03):
Palmi, I guess just to give you the last word,
and I may be miss characterizing, but one of the
columns that you wrote, I think immediately after Deep Seat
came out or soon afterwards, and you're sort of reflecting
on how significant that was and changing our view of
how the AI race might turn out. And you suggested
that actually the AI not being US dominated and being
(22:28):
more open source or at least open weight, might be
healthier for the world. Do you still think that, And
I guess there's a risk that you know, China could
have won, it might be China dominated.
Speaker 4 (22:37):
Yeah, And I think I don't agree with the kind
of state controlled aspect of Chinese AI. But I think
the best thing about Deep seek was that it raised
the specter of more competition, and it raised this notion
that maybe the Western Silicon Valley companies weren't the guaranteed
winners of this AI race. Here were these other companies
(22:58):
coming out of China that were cheap, that we're free,
and that we're just as good. This isn't really an
issue about American companies. This is more about companies that
dominate the market, as we've seen already with cloud companies
from Silicon Valley e commerce companies. You know, it's almost
impossible now to open an e commerce business because of Amazon,
and so many parts of the wider market have absolutely
(23:20):
been warped by the anti competitive and monopolistic behavior of
big tech. And what would be terrible would to just
see that continue. With AI and AI being so transformative,
so emotionally powerful, cognitively powerful, it can influence how people
think about things. People are using it to make daily
(23:41):
life decisions and write their own emails and reports. That
leaves an incredible amount of power in the hands of
just a few companies who are building these models. And
so if there are more on the market, I think
that's a great thing. I think there needs to be
more competition. Whether that will actually continue to play out
as it's still playing out now, I think is an
(24:01):
open question.
Speaker 3 (24:03):
Well, it's still playing out. There's some very wise words
from both of you, some of which I suspect the
President would think we're bordering on trees, treacherous, oh the
prospect of you know, non American leadership. But thank you
very much, both of you. Thank you, thank you, thanks
(24:26):
for listening to Trumponomics from Bloomberg. It was hosted by
me Stephanie Flanders, and I was joined by Bloomberg's Pame
Olsen and Michael Deng. Trumponomics is produced by Samasadi and
Moses and with help from Amy Keene and special thanks
this week to Nervy Shavin. Sound design is by Blake
Maples and Sage Bowman is the head of Bloomberg Podcast.
(24:48):
Please help others find it and enjoy it by rating
and reviewing Trumponomics wherever you listened.
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