Recommended Weekend Reads

Key Takeaways

• US trade deficit with China in machinery fell $70 B in 2025
• Americans' favorable view of China rose to 27%, up 6 points
• China projected to lose 60 M people by 2035, straining pensions
• Mexico faces USMCA rewrite risk; bad deal may cost more than none
• AI sector's commercial incentives now central to U.S. national security strategy

Pulse Analysis

The United States is witnessing a subtle but significant shift in its trade relationship with China. While the overall deficit remains sizable, the machinery and electrical goods gap narrowed by about $70 billion last year, even as the shortfall with ASEAN nations expanded. This rebalancing coincides with President Trump’s scheduled May 14‑15 summit with Xi Jinping, a meeting analysts view with low expectations amid fragile diplomatic ties. Public opinion is also inching toward a softer stance, with a Pew survey showing 27% of Americans now hold a favorable view of China, up six points from the previous year, hinting at a potential easing of consumer‑level tensions.

In the Western Hemisphere, Mexico’s trade outlook is clouded by the upcoming USMCA review. Industry experts warn that a rushed or unfavorable renegotiation could cost Mexico more than a no‑deal scenario, especially as the U.S. Justice Department’s indictment of the Sinaloa governor underscores heightened security pressures. Coupled with a persistent productivity gap across Latin America, these factors threaten to dampen foreign investment and exacerbate wage stagnation, reinforcing the region’s “low‑growth trap.”

Across the technology frontier, artificial intelligence is reshaping both economic and security calculations. A recent NBER paper quantifies the macro‑economic value of trusted statistics, estimating $25 of benefit for every $1 spent on the Bureau of Labor Statistics, underscoring the stakes of data integrity. Simultaneously, the private sector’s drive to commercialize AI is prompting U.S. policymakers to align commercial incentives with national security, while China grapples with a projected loss of 60 million citizens by 2035, threatening its social‑security system. U.S. universities reflect this shift, with enrollment in AI‑intensive majors climbing 8% since 2017, signaling a workforce preparing for an AI‑driven economy.