How to Win a Trade War: Build First, Negotiate Second: All into Account Podcast

Research evidence excerpt

How to Win a Trade War: Build First, Negotiate Second: All into Account Podcast

15 June 2026

Figure 2: Manufactured goods surplus Figure 3: China’s export by market

Chinese customs (GACC) data with SITC categories, % global GDP % of total, sa 3mma

Source: Brad Setser/Volkmar Baur, CFR (cfr.org/blog/setser) Source: CEIC, J.P. Morgan

2. Self-sufficiency and alternative sourcing are real goals but

slow to deliver

Supply chain resilience is moving from rhetoric to action, but policy ambition is

outrunning physical capacity in many sectors. Time horizons are long and uneven by

sector. Mining projects can take 29 years from initiation to commercial production in the

US context, while pharmaceuticals face extended timelines due to regulatory

requirements. Targeted interventions have had only a modest impact. In 2025, the

administration was seen as making “significant progress” through equity stakes and

subsidies for a number of companies in response to rare earth and permanent magnet

risks, including mechanisms to stabilize prices.

To counter China’s economic ambitions, including its export restrictions on rare

earths, the US needs to use industrial policy with allies to quickly establish

alternative sources of reliable supplies and reduce extreme dependencies. The

importance of collaborating with allies is highlighted in a recent report issued by

JPMorganChase’s Center for Geopolitics, illustrating the lead that the US, along with its

allies and partners, maintains over China in many layers of the hardware stack powering

frontier AI models (see Beyond the Benchmarks: A Systemic View of US-China AI

Competition, JPMorganChase Center for Geopolitics, May 2026).

The binding constraint is affordability. Building redundant capacity and shifting