Rahm on Trump and China: “He is the worst negotiator.”
Rahm Emanuel returns to ChinaTalk with a characteristically blunt assessment of U.S.-China relations and verdict on year one of Trump 2.0.
We discuss:
The “Fear Factor” in Asia: Why Japan and South Korea are ramping up defense spending not because of Trump’s strength, but because his unpredictability and isolationism have forced them to buy “insurance policies” against a U.S. exit,
Corruption and “Own Goals”: How “draining the swamp” has turned into institutional degradation — and why the Trump family’s entanglement of personal business interests with foreign policy damages U.S. credibility and strategic leverage,
Adversary, Not Competitor: Why the U.S. needs to stop viewing China as a strategic competitor and start treating it as a strategic adversary — one whose win-lose economic model is designed to hollow out global industrial bases,
Education as National Security: Why tariffs are a distraction and the only real way to beat China is a massive domestic push for workforce training,
AI and Inequality: Rahm’s evolving thinking on artificial intelligence — why he’s still learning and why a technology that boosts productivity but widens inequality is a political and social risk.
Plus: why Ari Emanuel’s UFC US-China robot rumble is sound policy, Rahm’s case that he’s now the real free-market capitalist in the room, and rapid-fire takes on J.D. Vance, Marco Rubio, and the 2028 Republican field.
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On Playing Into China’s Hands
Jordan Schneider: Rahm Emanuel, welcome back to ChinaTalk. What a year for US-Asia policy it has been.
Rahm Emanuel: That is the understatement of the year.
Jordan Schneider: In our 2024 show we started out with me asking you questions about, “Oh, look at all this nice stuff you guys did. Rebuilding alliances. Japan and South Korea are friends again.” And now we’ve got all this.
Rahm Emanuel: How did we go downhill so quickly? Is that what you’re asking?
Jordan Schneider: We now have a year-long sample size of “Trump II” taking a very different take from both Biden and Trump I. Really, it’s a departure from the past 70-plus years of US foreign policy when it comes to relations with our treaty allies. What has it been like watching this, Rahm?
Rahm Emanuel: It’s depressing. It’s infuriating. There are a lot of other emotions. Look, it starts from a premise. China’s view is that they are the rising power. America is receding. Their message is, “Either get in line, or we will give you our full China coercion policy.”
Our message is that we’re a permanent Pacific power and presence and you can bet long on the United States. Unfortunately, everything President Trump’s doing is underscoring China’s message with a bunch of exclamation points because of the way we’re behaving.
When President Biden and his team walked in in 2020, China was on their front foot. When we left, they were on their back heel. They were angry at being isolated and it took a strategy of flipping the script. Rather than them isolating Japan or the Philippines, we isolated the isolator through the United States, Japan, Korea, Australia, New Zealand, the Philippines, and India. They knew it on a political, military, and strategic level.
All our military exercises were multinational. Japan was the number one foreign direct investor in the United States and is a long pole of our policy there. We built an alliance that China thought could never be done — and part of their strategy relied on it not being done — between the United States, Japan, and Korea. This culminated in what we accomplished at Camp David. That was, and remains, China’s worst nightmare. Trump basically took it off the page.
We then extended it to Japan, the United States, and the Philippines. If you look at where the Philippine islands are and where the Okinawa islands are, China’s strategy to quarantine Taiwan becomes much more difficult to achieve.
It had a strategic, political, and military level that was unprecedented. Then we had the Quad. We doubled down on the Quad, which Trump had actually pushed along in his first term to his credit. But now he has taken a 35-year project of bringing India into our orbit and totally expelled them for Pakistan’s vanity. It looks like it was done for Pakistan’s economic gifts to the Trump family, the Witkoff family, and the Lutnick family. Specifically to the Trump boys. That’s what it looks like.
China has been trying to force Japan into submission through economic coercion — which they haven’t done since 2010. It took the United States almost two weeks from the get-go to finally do a B-52 air surveillance run with Japan’s F-35s. Crazy. We should have been there immediately to send a direct message, but we didn’t.
At every level, this administration has made America weaker and more vulnerable. It has actually played into China’s message to all the countries we were attempting to pull into the US gravitational pull.
Jordan Schneider: The MAGA retort would be, “Look, we said some mean things, and defense spending in all these countries is going up. What’s not to like about that?”
Rahm Emanuel: First of all, not Japan. Let’s just deal with that. Japan increased their defense budget from the ninth largest to the third largest when I was there. To their credit — I don’t deserve it, and the Biden administration doesn’t deserve it — they did it early on, even before I got there. That wasn’t due to President Trump. They committed to 2% and did it in five years. They were well on their way before President Trump ever put his right hand on the Bible. So that’s calling offsides for what was not true.
Second, they have done things in that defense budget regarding counterstrike capability that pre-date Donald Trump. They just concluded a sale of ships to Australia. They did things they were constitutionally prohibited from doing, also pre-Trump. If anything, their willingness to go above 2% of GDP in defense spending is probably more out of fear of Donald Trump’s failure to show up than it is because of prodding by the Trump administration.
That has also been true to the credit of the new Korean president. His first set of conversations were with the Japanese because of their fear that the United States is AWOL. The facts just don’t bear out.
Plus, I’m right about India. The Trump administration totally punted on a bipartisan project that was succeeding in making China very nervous. Go look at what they were doing in the Himalayas. They haven’t shown up as it relates to the Philippines and the South China Sea islands.
Then last week, the Trump administration validated the AUKUS submarine project between the United States, Great Britain, and Australia. That all predates them as well. If that’s their argument, they better get some facts to back it up because nothing across six different countries adds up to that argument.
Jordan Schneider: There is a part of this that is downstream of this MAGA worldview that America just isn’t up for it anymore. What do you think about this whole idea of defining down what America can accomplish on the global stage?
Rahm Emanuel: I don’t buy it. A superpower doesn’t pick geographies, which is what they’re trying to do. They failed with Canada, they failed with Panama, they failed with Greenland. We’ll see what happens in Venezuela. The only place you could say they had a success was a $40 billion pledge to Argentina in the middle of cutting healthcare for the United States. I don’t think it should be hemispheric.
As a superpower, does that mean they are going to pull up stakes on the Middle East where Russia has now been kicked out and China is a bit player? That is an important geographic, strategic, and resource-rich area. Dumbing down or strategically pulling back only makes the world more dangerous.
Now, there are reforms that should be made to the alliances. But as you and I are talking about this, for 40 years the United States was telling Europe, “Don’t get economically energy-dependent on Russia.” Now the President of the United States is begging Europe to become more of a vassal energy-wise to Russia. This is in direct competition with our own energy policy and interests.
I’m a former ballet dancer, so I’m proud of being flexible. But these guys redefine flexibility. Here you are saying maybe we should dumb down or restrict ourselves, yet you’re telling Europe to get more dependent on Russia — and less dependent on Texas, Oklahoma, North Dakota, Wyoming, and Colorado. I can’t think of anything more stupid than that.
Also, in the Mideast, Russia has been kicked out of Syria. China has no play. It’s a major geographic area strategically. It’s a major purchaser of defense weapons. It’s a major investor in America’s economy. We have an ally both in Israel and in the Gulf countries, and also in the immediate Arab world. That is to our strategic advantage. Pulling back from that would make America more vulnerable politically, economically, and strategically. It’s foolish without even touching the rest of the world.
Would I say that Latin America and Central America in American foreign policy over the years have been stepchildren? 100%. Focusing on it is the right thing to do, but not at the expense of other regions. America can walk, chew gum, and be a superpower that brings a strategic presence to our policies in the Indo-Pacific, as an example.
Flooding the Swamp
Jordan Schneider: When I was reading that national strategy document, I was trying to make sense of it. You try to get in their worldview and think about how serious it is. But at the same time, you got everyone’s children making billions of dollars on the side. I really think this is a new thing in American history. It makes it very hard to take this new grand vision of how they want America to play in the world all that seriously.
Rahm Emanuel: Well look, I saw this today — it’s a pivot. When they had the big signing in the Sinai and around this ceasefire in Gaza, the Indonesian president says to Trump, “I need to talk to Donald.” The two boys are very upfront about it — they got caught on tape. In the midst of a tariff negotiation, we are mixing our strategic vision with President Trump’s checkbook. They’re not one and the same.
When I got to Congress, I set up a blind trust. First member to do it. Kept it as Chief of Staff. I had to re-up it and change it to meet the executive branch requirements. As Mayor, I filled out massive financial forms. In fact, I got an email about four months after I left saying, “You have to do your exit financial form.” I said, “You guys must be really lonely because you’re chasing me after I’ve left where I have no conflict.”
Meanwhile, you got a bunch of people who just left prison and are now investors. Crazy. Okay? I don’t know if you noticed, but they just left prison.
But you can go through the country. There was an announcement the other day. A startup company on one of the private equity funds from — I’m not sure which of the sons of Donald Trump — won a $700 million contract out of the Pentagon. A startup.
I wrote about this in the Wall Street Journal. The theory of “Broken Windows”is that small crimes create conditions for big crimes. That’s exactly what’s been happening. It’s not just about streets — it’s also about the corporate suite. The kids of Lutnick, Secretary of Commerce Witkoff, the special advisor for everything and anything, and Donald Trump’s kids — their checkbook is bigger today and yours is smaller today because they’re conducting themselves to enrich themselves.
The only envy Donald Trump has of Putin is that that is their business model, and he would like it to be America’s model. He has to work around some legal boundaries, of which the Supreme Court continues to remove for him. It is unbelievable to me what goes on here, having spent a lot of money with lawyers and accountants.
One of the things I’m proud about, starting from Bill Clinton forward, is that I’ve never hired a lawyer for anything I did when I was in public service. What these guys are doing makes me feel like I was a schmuck. I’ve never seen anything like this, and nor has America in American history. We have a lot of competition — and I’m from the city of Chicago — for corruption. But they have not only corrupted in the sense of the money they’re making in public policy, but they’ve corrupted the process of doing it.
Jordan Schneider: There’s big 17th or 18th-century European aristocracy energy here — like the princes marrying each other and doing deals on the side. [Neo-royalism!]
Rahm Emanuel: Here’s the thing. In the last 48 hours, two people were caught — ethics reports for not selling stock or whatever. Who’s going to investigate them? The FTC? The SEC? The Antitrust Division of the Justice Department? The Supreme Court — John Roberts and the rest of those hacks — gave him a carte blanche to go steal.
You basically can appoint members, fire all the Inspector Generals, and appoint or fire whoever you want at these independent agencies. You have a Justice Department and FBI which is a bunch of Keystone Kops. So of course people are going to break the law. You told them they get to write the law for themselves and nobody will enforce it. That’s what John Roberts did — the genius that he isn’t.
Jordan Schneider: I’m old enough to remember, “Drain the swamp”. And it won an election.
Rahm Emanuel: And what they decided was just to make the swamp a little bigger. Take India and Pakistan and the strategic point here, because there are other things relating to the American family’s checkbook being smaller than the Trump family’s. One is getting bigger and one is shrinking.
We have had a project from George Herbert Walker Bush to Bill Clinton to George Bush to Barack Obama to Donald Trump One to Joe Biden — bring India into a closer strategic alliance. Because Modi did not want to play stooge to Donald Trump, he made peace. Trump gets angry. Pakistan waves a bunch of contracts. The Financial Times has a great story about this regarding crypto and mining for the Trump kids.
We’ve abandoned a 35-plus-year project of America’s strategic interest just so the two Trump boys can have a little gold coin. That is what happened. And I stand by it.
Jordan Schneider: I would be remiss not to bring up Hunter’s pardon.
Rahm Emanuel: Bring it up. It was wrong.
Jordan Schneider: I thought it was really gross. It was really disappointing. I actually thought he wouldn’t do it.
Rahm Emanuel: If you want me to live in a glass house before I throw a stone, I ain’t doing it. But I’m going to say this, I never hired a lawyer for something I did. I believe in what Kennedy said about public service. That is not the virtue of this White House. They are stealing in broad daylight and getting away with it because John Roberts gave him a “get out of jail” card.
Who’s the Socialist?
Jordan Schneider: Let’s talk US-China. We had Liberation Day, we had Liberation Day v2. We had rare earths thrown on the table twice. Then the Trump administration backing off. What’s your read on all this, Rahm?
Rahm Emanuel: The whole “Tariffs and Liberation Day” was about drugs one day, then manufacturing the next — whatever the moving target was based on the day. I don’t disagree with the desire to build America’s industrial capacity, but three points of fact illustrate the issue.
When the President walked in, there were 50,000 manufacturing jobs with “Help Wanted” signs that nobody could fill. We would be 50,000 manufacturing jobs ahead today if we had focused on the training side — getting Americans ready to do those jobs. Instead, we’ve lost jobs under Trump.
Number two — this went unnoticed, but two weeks ago, the CEO of Ford said he has thousands of empty jobs today paying six figures because people don’t have the skills — mechanics, electricians, etc. These are not in the corporate suite. They’re on the shop floor, and he cannot fill them. He says it’s only going to grow.
There was a story about China being ahead of us on energy production. One of the big problems for us to compete with China on AI and transmission is that we are short 200,000 electricians. Every one of those is a six-figure job with healthcare and retirement. The Merchant Marines — which are key to building up both economic and security capacity — are short 200,000 jobs over the next decade.
If we had focused on the problem analysis — that you need industrial capacity and a base in the United States to compete — that part is true. But tariffs and looking weak? Of the top five choices, that was number ten. We have Americans looking for work, the ability to buy a home, and a way toward economic independence. We have jobs that would give you a start on that independence — six figures — and every one of those companies is short workers.
Nobody covered what the CEO of Ford said. It was treated like a little thing that happened on the side. If the President had dropped 50,000 “Help Wanted” signs on manufacturing the day he walked in, we’d be a hell of a lot farther ahead on manufacturing than with tariffs — which he calls “the most beautiful word in the English language.”
The President continues to do this. He analyzes a problem not entirely wrong — not always right, but not wrong — but then his solution is far worse than the problem he started to try to solve. It didn’t work against China, it made us look weaker, it divided us from our allies, and he is telling Europe to buy oil and gas from Russia, not from us.
In fact, the oil and gas industry in America has fewer wells today — which means fewer people working, drilling, and transporting — than when he walked in. Even his “drill baby drill” strategy is failing. I find this immensely frustrating from an economic renaissance perspective because we have a challenge that is actually an opportunity and our politics, and specifically how this administration is failing America and Americans, is the issue.
Jordan Schneider: So, forward-looking — we’ve had this rare earths saga. It is clear that big parts of the US economy have — and probably will for the foreseeable future — large dependencies. The economic coercion playbook that China has is significant. What is the international strategy to handle them? And also, how do you spend that money to start to ameliorate those vulnerabilities at home?
Rahm Emanuel: Having been Ambassador to Japan, I recall the first critical minerals economic coercion playbook China started was in 2010 against Japan around the Senkaku Islands. We knew about the old playbook and didn’t do squat — both parties. Then, when it came to COVID, they withheld basic medical gloves, masks, etc. That was economic coercion up front, though more for their own self-preservation than just for punishing everyone else. This has been part of their playbook.
You have to look across the system. I wrote a piece in the Washington Post about how we’ve had five helter-skelter national industrial policies. The auto bailout was a national industrial policy. What we did on CHIPS and the IRA under Biden was a national industrial policy. What we did during Warp Speed and COVID was an industrial policy. Some elements of policy are successful and others aren’t.
You quoted the National Security Council producing the NSS. I would have the National Economic Council produce an economic blueprint at the beginning of every administration — that looks out over the horizon. Here are our strengths, here are our weaknesses, here are our vulnerabilities. Today, it’s obviously critical minerals and magnet production. Four years ago it was — and still is — semiconductors and the production of chips, which was the impetus for the CHIPS Act and IRA coming out of the chip wars. Look through the strengths, weaknesses, and vulnerabilities, and then develop a strategy around that.
China has decided that on quantum, AI, life sciences, fusion, and alternative energy, they’re going to kick our ass. They’re not going to compete with America; they’re going to try to beat it. You saw after COVID their vaccine was a debacle. They made a decision that would be the last time. Now, five years later, they are competing, if not superseding us in certain areas, on life sciences and new drugs. You can look at what they did on chips and what they’re doing on alternative energy.
This attack on America’s research foundation, the university system, is an “own goal” of the worst kind. You won’t see the pain today — you’ll see the pain for the next decade. Donald Trump is leaving America far worse off. We should not concede any one of those areas. I spent time as an ambassador helping on quantum computing for America’s competitiveness between the University of Tokyo and the University of Chicago, bringing IBM and Google in to fund that at $150 million.
Pick the areas, compete, and win. Our scientists and our funding mechanism, while not great, keep us at the top of the game. We should not be trying to strangle MIT, Harvard, Stanford, the University of Michigan, or the University of Illinois in competing and winning the innovation war against China. That’s number one.
Number two, the brawn behind the brains. We should be in a massive education push, whether it’s electricians, mechanics, or in jets, so we have the capacity to compete. China’s AI is getting more competitive not because of innovation, but because their electricity is 50% cheaper than ours — because our transmission and energy production are way behind.
Third, related to regulatory reform, there is a place for consensus on legal immigration. We should be very clear about bringing the best scientists, the best engineers, and the best-educated to the United States of America. Each one requires drilling down deeper, but at 10,000 feet, that’s what I would do.
Jordan Schneider: At a principle level, it’s been very interesting to watch. In 2009 and 2010, you guys got screamed at for being socialists for saving GM and Ford. Now we have a Republican administration taking equity bites. We’re doing “national champions” now, I guess. What’s your read on that? And broadly, how far should the government go to mess with these private sector dynamics?
Rahm Emanuel: You have golden shares in Nippon buying US Steel as an example. You have the Intel 10%. I disagreed with Senator Romney on this — then a presidential candidate. He talked about GM and Chrysler going bankrupt. We spent political and financial capital saving the auto industry for a reason. Yes, we were called socialists. We were also called socialists on healthcare. It’s a normal card. I suppose, if you keep playing it, one day you may be right.
Jordan Schneider: We’ll see how many companies Zohran ends up buying.
Rahm Emanuel: What China has done is outright intellectual property theft — some of it explicit, some corrupt. But they invest in certain new technologies and they refuse to let those companies raise money so they can bankrupt them, and then steal all the patents or take them back to China. That is their national strategy. They can’t replicate the beauty of America’s research, innovation, and entrepreneurship, so they steal it through the front door, the back door, and the kitchen window. That’s what’s going on right now.
To me, that’s where we’ve got to sharpen up. To your point about socialism — Solyndra. We invested in this new solar firm and everyone’s like, “Oh my God, oh my God!”, and here are these guys investing in and putting public money in companies with zero operating capacity.
I believe I’m more of a capitalist and a free marketer than the Trump administration and the Republican Party. The Democrats would never take economic stakes in a company. Let me say this — we did bail out GM and Chrysler to save the jobs and the communities that depend on them. We got our money back, plus profit. But the goal was to get out, not to stay in and increase ownership. We did it with AIG, got out, and made a profit.
The goal was not to get in, stay in, and increase your stake. The Secretary of Commerce says we want royalties for our public dollar investments now. I think there’s a way you could pay a system that funds greater research, but what he’s thinking about is ownership — which is the last thing you need. I love politics, but that’s not the type of politics I want.
Jordan Schneider: Here’s a blast from the past. I was a press office intern in the Biden administration. It was during Solyndra, I think it was summer 2012. And what you guys ended up doing was letting journalists see every single email that was sent about it. I had to sit in a room minding all these Politico journalists. We’ve gone from that level of transparency to, like, if Sasha and Malia were on the board of Solyndra or something.
Rahm Emanuel: Let me just be really clear. You had us investing in a startup to jumpstart a technology in America and that was called socialism. Today, you have the United States investing and owning pieces of companies. Back then you had journalists who actually cared about what was going on. Today, if you did that, you’d get fired from your corporate leadership because you were “offensive” to the President. So the world’s gone full circle. You’re not crazy. It’s just gone upside down.
“We’re Now Adversaries”
Jordan Schneider: So let’s do the US-China piece a little bit. This idea of America losing escalation dominance — we had a Biden administration that was able to slowly start to boil the frog when it came to a lot of these technology controls without necessarily having China snap back in an aggressive fashion that would affect America’s economy. And now that dynamic has shifted. So what happens next, Rahm? What’s the smart play here?
Rahm Emanuel: Look, I’d just be forthright and honest. I would tell China: “You wanted to be strategic competitors, but you have decided you want to be a strategic adversary. You have decided to go into our entire infrastructure — our utilities, our waters, and our systems. You’re also in our software, in our government agencies. That’s not a competitor — that’s an adversary. So if you want to go back to the competitive era, I’m ready. Everything you’ve done to endanger America — get out of here. We’ll compete, but we’re gonna go to a different level if you want to be adversaries.”
In this challenge, we don’t have an American to waste or a community to overlook. We made a mistake in 2012 thinking that Battle Creek can battle Beijing on their own. It’s going to take an all-country effort. I’m talking about what Ford said. I talked to you about other industries that have job openings and nobody there to fill them. We have thousands of young men and women looking for purpose and looking for economic independence, and every one of these jobs they can do. So I would go on a massive training push.
And I would be clear both on a technological level and a strategic level to our allies — “We have a certain period of time we have to buy. Our allies can play a bigger role in that effort so we can get to a point of competitiveness and a point of making China as deterred as they have done to us under President Trump.”
Don’t lose sight of Liberation Day and how we backed off. How much degradation to our deterrence posture was created when the President — after his talk with Xi, which he does first—then calls the Prime Minister of Japan (our number one ally) and never mentions Taiwan? And then for two weeks, while China is intimidating Japan, we don’t do anything. How much does that deterrence get degraded?
And while it’s being done to Japan, if you’re in the Blue House in Korea, you’re in Melbourne in Australia, you’re in New Delhi in India, you’re in Manila in the Philippines — you’re looking at what the United States doesn’t do with Japan and you’re saying, “There I go but for the grace of God.” So you bet you start to buy your insurance policy. You start to say — “Okay, the United States can’t be trusted. So what do I do?” That’s what’s dangerous here.
Jordan Schneider: The nuclear proliferation arc, which we haven’t quite seen yet, but I mean it’s coming, right?
Rahm Emanuel: When I got back early in February, I wrote this — if you think non-proliferation was expensive, wait till you see the bill for proliferation.
We spent a good time — not me directly, but in the region — convincing South Korea not to go independent on a nuclear weapon. We made a lot of assurances, too. You look at what’s happening now; it’s going to be hard to convince South Korea, given North Korea and China, to stay nuclear-free much longer. Not saying it’s not possible, but they’re going to look around. Part of their strategic overview is a nuclear and military guarantee and support from the United States. You look at what’s been going on in the last year, you’re going to sit there in the Blue House in Seoul and say, “Well, we can’t keep it like this now.”
If South Korea were to go nuclear, other countries like Japan would sit there and go, “Wait a second.” You have China building up nuclear capacity massively. North Korea, we know. And India and Pakistan. What if you add in South Korea and Japan? What could go wrong with six nations in a small geographic space — all who have 800 years of history and animosities — what could possibly go wrong? This is insane at every level.
Jordan Schneider: Well, we haven’t even talked about Iran, Saudi, UAE...
Rahm Emanuel: Can I say one thing that’s underappreciated in the strategic world and doesn’t get a lot of coverage unless you’re like a weirdo like me and read it? Iran is going through one of the biggest social-cultural revolutions since the Ayatollah walked into Tehran in 1979. They’re allowing concerts because they can’t control the youth. Women are openly totally disregarding the cultural norms of the ruling government. Because of a water shortage and corruption, they’re thinking of moving the capital out of Tehran.
I get Tehran has a strategic vision of themselves in that Shiite arc from Tehran to Beirut. There is a slow-boil implosion happening in Tehran right now. I don’t know how it manifests itself, I don’t know where the ball bounces, but there’s a cultural revolution going on — and I use “revolution” with a small ’r,’ not big. Given the demographics of the country — it’s dominated by people aged 30 and younger who so much want to be part of the rest of the world and believe the ruling class is holding them back economically, politically, and culturally.
There’s something going on in Iran and in a year from now, or maybe two —I’m going to look prescient saying what I just said. Something is happening there that we’re not seeing. And one day we’re going to wake up and say, “Who knew?” But you can’t have a ruling class all of a sudden — because of political vulnerability — say to the kids, “Right. You want to have all these concerts and go out and do all this that are not part of the norms? Go ahead.” Once you do that, that genie’s out of the bottle. If that genie’s out of the bottle, there’s going to be another genie out of the bottle. That’s the one thing we know from cultural history.
Jordan Schneider: One more foreign policy one for you. Let’s do a little bureaucratic reform talk. Someone’s going to have to rebuild the civil service. Say you’re Secretary of State 2029. What do you do with the place?
Rahm Emanuel: You know, it’s interesting you say this. I was down in Austin about three weeks ago, and I grabbed lunch with two very, very good top national security former generals. I don’t want to use their names — I don’t want to get them in any trouble if they’re doing any kind of advisory board for the government. Very smart people that I’ve worked with who rose to the highest levels in their roles out of the national security institution.
And I asked this question, “Okay, you got all this chaos. We all operated in this. If we have the opportunity here — you got a clean legal path — how would you reorganize this?” I was thinking, you know, move this here, move that there, which is the thrust behind your question. Basically, I was in the same kind of zeitgeist you are.
Their response was interesting. I’m not saying they’re right, but it was actually interesting and not what I expected. They said, “You hire good people at the top. It does two things — lifts morale and brings the talent that’s left back in. If you start changing things and moving furniture around, it’s just all this energy on something else, when the immediate thing you have to do for the next couple of years is get the intellectual capacity back in. That means the top of the org chart. No B’s, no B-minuses, no B-pluses. You got to get A’s. They’ll get the morale up, and they’ll get talent to come back in and do public service.”
I gotta be honest, I was surprised because I thought, “Oh God, it’s a clean slate. We could do this.” But they said, from a capacity to run while you’re fixing something in chaos, talent is the number one goal. They said some other things which are true, like the intel operation capacity over the State Department, and the anti-terrorism financial end of the Treasury — both underappreciated in the intelligence world and swinging way above their weight class and they should be at the big boys’ table, not at the kids’ table anymore.
Those were just two observations from the national security side that I thought were persuasive. So I posit that that’s how I would approach it. Go with a talent at the top, get morale up, and make it a magnet for other types of talent to come back in.
Jordan Schneider: All right, rapid fire round. Selling chips to China?.
Rahm Emanuel: No.
He is the worst negotiator. I’m going to give you a story. We’re negotiating a balanced budget. It’s Erskine Bowles, myself, Gene Sperling, Bruce Reed, John Podesta, Sylvia Mathews, and I’m senior advisor. So one day in the morning I go to the Oval Office and I said, “Mr. President, every night Gingrich is calling you and you’re giving away the store. We spend the first three hours clawing back stuff you’ve given away. I’m just going to tell you, if you’re negotiating, Rule One is the other side has to know that you can live with the ‘No.’ You want to get to a ‘Yes.’ Everything you do is to convince the other side you are very comfortable with a ‘No’ as much as you are with a ‘Yes.’” I said, “We cannot have you doing this. We’re going to get to a balanced budget agreement. We have the upper hand here, but we are giving it away and diminishing it.”
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Anyway, the lesson here is Donald Trump is so solicitous of trying to get a deal that he’s selling the family jewels to get it, and the Chinese know it. He’s going to run around on some soybean deal — which is his problem — or fentanyl and a couple other things. I’m not disregarding the fentanyl issue, but he’s so hungry for a deal, the Chinese are going to play him. And they’re playing him now — and they haven’t even gotten to a deal yet. And you can see it.
He just gave away the chips for what? What’d you get? He gave away something he could have gotten at the table for something else. What did we get? They just did a military exercise with Russia around Japan, your ally, forcing you to come out of the closet and finally do your B-52 covers with the F-35s. What did you get for that chip deal? Bupkis. As my grandmother used to say, “Bupkis”. The worst negotiators I’ve ever seen.
China’s Win-Lose Model
Jordan Schneider: Where is the Democratic Party on China?
Rahm Emanuel: There’s no uniformity. Having spent some time on this, I’ve come to the conclusion that we have a fundamental problem. They’re not strategic competitors — they’re strategic adversaries. They’re trying to bury us. Your competitors don’t get buried into the infrastructure, technology, and systems to destroy this country. God forbid we ever get to something kinetic. We don’t steal private information from government officials like they do, or steal from Google. We’re not stealing Huawei’s IP.
Second, we believe(d) — until Trump — in the rule of law. As part of their business model, they’re open to economic espionage and intellectual property theft. It’s very hard to have two economic models integrated where one believes in the rules and one believes the law doesn’t apply.
Third, our economy, even with the tariffs and Liberation Day, is integrated. The world is dependent on America. Their economic model is that the world becomes dependent on China, and China becomes independent of the world. That is why they’re exporting and crushing every other country’s industrial base — developed or developing world — whether it’s steel, toys, or EV cars.
It’s very hard to have an integrated model where destroying the other side is the goal. It’s one thing if you want to trade and it’s one thing if you want to compete. It’s another thing if the goal is “I win, you lose.” There has never been a “win-win” in China’s model. I don’t say that because I’m angry at them. That’s a fact.
Now we have to figure out where we’re going to go from here. They just passed a trillion dollars in trade, and their imports from other countries are down. South Korea’s only steel plant closed. Chile’s only steel plant closed — 20,000 jobs. That’s not the United States. That’s China. They’re doing it across the board. If Europe doesn’t protect itself, its auto industry will be destroyed.
We’re on a win-win model. Sometimes we win, sometimes we lose. They’re on a win-lose model based on economic espionage and intellectual property theft. There’s a case where they were stealing AI secrets from Google and from ASML, which is Dutch. They were caught stealing intellectual property.
I have not seen our companies that are into chip manufacturing stealing intellectual property from companies of other countries. I’m willing to stand corrected and say I’m wrong if there are suits on patents, but not outright government-sanctioned, government-sponsored intellectual property theft. As an example, Tokyo Electron, which makes chip manufacturing machinery, competes against ASML. Neither one has been found cheating and stealing IP from the other. China has been caught stealing and cheating from both of those companies.
Jordan Schneider: Rahm, your brother’s got a role to play in all this. Ari pitched the UFC on having an event in China, and they took him to a robot demo. He said this on a podcast — maybe we should have American and Chinese robots fight in a cage. America needs to see our robots getting their asses handed to them because right now, it’s not salient just how good China is getting at all these emerging technologies. You don’t see the cars on the road, you’re not really using the AI models. It just shows up in trade numbers and in factories closing. Having that as a primetime thing on Paramount Plus — there’s something to this, Rahm.
Rahm Emanuel: Let me just say this. Since I usually tell Ari and Zeke at family meals and holidays to just shut up, I’ll let Ari know that you think he has a good policy idea. But it will not come from me complimenting him, because there’s very little space I’ll give Ari in the policy world. The worst thing to do is tell somebody in Hollywood they have a good idea because they think they’re brilliant.
Jordan Schneider: Unless you’re George Clooney.
Rahm Emanuel: Yeah.
AI and Education
Jordan Schneider: Ok, domestic politics of AI. This dog hasn’t really started biting yet. But by 2028, it’s gotta be one of the top three things just from an education, social change, and job displacement perspective alone. You just pitched that we should be banning social media for kids under 16. What’s your take on all this?
Rahm Emanuel: You wanna talk about kids, poverty — I’ve got ideas. I’m learning about AI. I had a lunch today with somebody I consider very, very smart who discussed the confusion between OpenAI and open weights, and how the real challenge is in open weights where there are no firm protocols.
I want to be clear: I don’t have the answer. I know it’s important. I’m learning as we go. I’m trying to figure out who really knows their stuff.
While AI is important to the future and productivity, I have two cautionary notes. One, we have to figure out our energy production in the United States. China adopted the Obama “all of the above” strategy. We walked away from it in 2016 under “Drill Baby Drill.” We’re now paying the price because our electricity costs are two times China’s. They decided to go with an “all-in” approach, and we decided to go with a singular approach. Full stop.
Two, we’re short of the workforce to build out that energy capacity, to build out this chip capacity, and to build out the AI language capacity because we don’t have the workforce we need — from brawn to brain. Energy is going to be essential to the success, not just how small the chip is, but how much energy you produce.
Third, regarding AI, there is a cautionary note from the last 30 years. While globalization and technology worked, they didn’t work across the board. They worked for you, they worked for me, but they didn’t work for everybody. If you want a new technology to benefit society, it has to benefit everybody in the society. If it doesn’t, then you have to figure out ways to ensure there’s a better level playing field.
And we did. That doesn’t mean you could have stopped the clock and said “no Internet, no trade.” The question is, if you’re going to go forward — to quote President Clinton — how does everybody cross the bridge to the 21st century? You don’t have a queue where just some people make it and other people stand in line. That’s my cautionary note about AI — it will have an impact on productivity, and it will also have an impact on the people that lose their jobs because of that productivity.
What’s the strategy behind that technology to keep America competitive while ensuring all Americans are part of that? I don’t have it figured out yet. If I told you I did, I’d be full of crap. I know what the opportunities are. I know what the challenges are. I know how we have to start to think about it. Who has got the best thoughts on it? I don’t know.
Jordan Schneider: Two pitches for you on that. The education adoption side is the piece I’m most worried about. The productivity diffusion — the free market is going to figure out how to make workers more impactful, do their jobs better and faster. But the promise of having the greatest tutor that humanity has ever invented tailored to every single child, exactly where they are in their learning journey, is a world-historic opportunity. You’re talking about the haves and have-nots here. You fought teachers’ unions in the House. There’s going to be a lot of mess, a lot of hesitancy, and a lot of fear.
Rahm Emanuel: There’s a lot of fear. That’s not illegitimate. When I was mayor, we had the shortest school day and the shortest school year in the entire United States of America. I said, “What are we fighting about? You have great teachers. I want more time with the kids with the great teachers.”
We had no kindergarten, no Pre-K, no recess, no lunchtime, no gym time, and no arts class. I said, “What are you talking about here? It’s the shortest school day. Kids are being cheated.” I said to the head of the union, “I can’t believe we’re arguing about this. We have no recess, no arts education, reading is down to 40 minutes a day. We have no money for kindergarten, no money for Pre-K.” All the things that we eventually took care of. I said, “You believe in this? Why are we arguing? This makes no sense to me.”
Jordan Schneider: When we did our first show, my wife was five months pregnant. We now have a one-and-a-half-year-old. We spent this morning at preschool interviews for twos programs. I came out a little nauseated because, you’re right, Rahm, I have resources that not everyone has in this city. Walking through this incredible place — which is, again, a twos program — Pre-K starts for free in the US when your kid is four. They have the paints and ceramics, and literally, the ceramics are from the nicest ceramic store that you’d find in a $10 million apartment. I’m sitting here thinking, “This is gross.” It’s going to be the same for middle and high school, but it’s going to be an even bigger deal because they’re going to have access to $20,000-a-month AI tutors.
Rahm Emanuel: When I became mayor, there was no universal kindergarten and no Pre-K. We made every five-year-old get a full day across the city and every four-year-old get a full day across the city. But the biggest accomplishment was on the other end, in high school.
We did three things in high school that we haven’t changed since we first brought it along.
One, if you get a B average in high school, we made community college free — tuition, books, and transportation.
Two, we brought college into high school. 50% of our kids were graduating with college credit so they didn’t have to pay for it later on, and they got the confidence they could do college-level work.
Three — the most important thing we did — to receive your high school diploma, you had to have shown us a letter of acceptance from a college, community college, a branch of the armed forces, or a vocational school. It was a requirement. 97.8% of our kids met that requirement. When you walked on graduation day, you had to be able to show us where you were walking to.
Not just your child who is young. Mine are all grown up past those years. Two are in the military — one full time, one reserve. They all went to college. They knew where they were going. I don’t really care whether you’re going to Michigan, or to be a bricklayer, an electrician, the Air Force, or Harold Washington Community College. I don’t care. But you are not stopping when you’re 17. And that to me made my time in public life worth it.
Stanford said that the Chicago public school system was the best of the big 100 — the best. When I walked in, William Bennett had called it to the worst. But what Dr. Janice Jackson and I did in reforming the high school years was fundamental to the trajectory of these kids’ lives. 20,000 went to community college for free.
Jordan Schneider: I got one more pitch and then a final question. You talked about banning social media. The other thing to watch is AI companions. Everyone’s saying these AI are going to be better friends than people. That is a whole different thing from what Instagram was.
Rahm Emanuel: I will keep my eye on it, but I’m going to stake my battle on what I know. Chicago, under my tenure, had the most restrictive policies on tobacco sales to teens, and we took teen smoking down to single digits. As I told you, we did the same with Pre-K and kindergarten. When I was Senior Advisor to President Clinton, I negotiated the Children’s Health Insurance Program for 10 million children whose parents worked but didn’t have health care.
If it relates to kids and teens, that’s where I’m going to put my energy. It’s the future. My dad was a pediatrician — that may be my own desire regarding what I think is important. I’m not saying other issues aren’t important, but that’s where I’m going to spend my time. Given what Australia is doing, and given what I think you can do technologically to turn the algorithm into an ally rather than an adversary, that’s where I’m going to spend my time. I’m not saying the issue you raised isn’t important, but I’m not diffusing my energy.
Hot Takes on the GOP Field
Jordan Schneider: Everyone on all these other podcasts asks you if you’re running, and they ask you about all the other Dem candidates. I want to talk about the Republican ones. We’re going to just go down the list. Kalshi has J.D. Vance at 50% to be the Republican nominee. What’s your take?
Rahm Emanuel: Politics is crazy these days, but it is very hard to knock off a sitting Vice President. My guess is it’s probably right.
Jordan Schneider: Aside from electability, what do you think of him as a politician?
Rahm Emanuel: Likability is an important factor, and I think that’s a vulnerability for him. That’s all I’ll say.
Jordan Schneider: Rubio, 9% right now.
Rahm Emanuel: Part of leadership, in my view — and I’ve said this repeatedly — is you got to know why you’re doing what you’re doing and have the strength to get it done. You can infer from that anything you want.
Jordan Schneider: DeSantis, 4%.
Rahm Emanuel: That’s generous.
Jordan Schneider: Tucker, also at 4%.
Rahm Emanuel: That’s overly generous.
Jordan Schneider: And how about Donald Jr. rounding out our top five, also at 3%?
Rahm Emanuel: I can’t wait for him to do the financial disclosure form.
Jordan Schneider: Rahm Emanuel, it’s been an absolute pleasure. Thank you so much for being a part of ChinaTalk.
Rahm Emanuel: Can I say one thing?
Jordan Schneider: Yeah, of course.
Rahm Emanuel: I have three kids — 28, 27, and 25. You’re about to experience the greatest journey of life with a lot of hits and a lot of misses. But you have two parents who are role models. You’re going to be great at it, and it’s going to be a great journey. Mazel Tov. Thank you so much.
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