A MARTÍNEZ, HOST:
The government's negotiations over TikTok and the Federal Reserve's meeting this week are major business stories with political implications for President Trump - and Jon Hilsenrath is here to discuss both. He's a former economics correspondent for the Wall Street Journal and now a visiting scholar at Duke University. Jon, so framework for a deal is not a deal. So what will you be looking for to see if this one actually becomes a deal?
JON HILSENRATH: Well, there are a lot of important details here that need to be explained. There's the question of how the U.S. uses Chinese technology and algorithms that run TikTok. There's the question of the user data - 172 million accounts and what kind of access ByteDance continues to have to them. And then, of course, the very big question of who owns this. We still have to see a lot. So as is the case with the U.S.-China relationship, you know, the devil is always in the details, and it takes some time to work out the details.
MARTÍNEZ: Yeah, we just heard Scott Bessent say that the U.S. has a framework. China needs to confirm it. So is the U.S. done with it? In other words, just waiting for China to decide yea or nay?
HILSENRATH: Well, I mean, I think what we've seen in a lot of these cases, like during the first Trump administration with the tariff deals that were announced, is you announce a framework, but then you've got to get into the details and then the implementation of the framework. And in the case of the tariff deals that were worked out in the Trump administration, they were never actually implemented. So let's hear what they have to say. So far, what we have is a headline about a headline, but there's a lot of - a lot to be filled in here when the president and Xi speak on Friday. And then there's the broader question of are they going to end up meeting. There's a summit in Korea in October. This seems to be moving towards the two of them meeting and having face-to-face conversations in Korea.
MARTÍNEZ: Now, one more thing on this. If this actually becomes a real deal, could this somehow repair the economic relationship between the two countries?
HILSENRATH: In short, no. There are so many - there's so many disputes and areas of contention. There's tariffs. There's the fentanyl disputes. There's the issue of secondary sanctions related to Russia, their export controls. Just this week, the Chinese announced a potential anti-trust case against Nvidia, so this is a damaged relationship. I think the best we could say today is that it's not getting worse.
MARTÍNEZ: All right. Now to the Fed. President Trump's firing of Federal Reserve governor Lisa Cook - or at least his attempt at firing - was blocked by U.S. appeals court, saying that the law only allows a Fed governor to be removed for misconduct while in office. So, Jon, what does this mean for Trump's attempt to have more influence over the Fed?
HILSENRATH: Well, this Lisa Cook case is a very important case. So there are seven governors on the board of the Federal Reserve in Washington, and then there are 12 regional Fed bank presidents. And together, these 19 people make decisions about short-term interest rates. With four governors on that board, the president could effectively seize control of U.S. interest rate policy because the board in Washington has the power to start firing regional bank presidents all over the country. So Lisa Cook was - has been a key character. If she loses the job, then the president has potentially four governor seats in his hands. There was thinking that when Jay Powell leaves next year, he might get that four. But if he was actually successful in firing her, he could get his four seats right away, and that could mean pretty dramatic changes in how interest rates are made in the United States overnight, but it doesn't look like that's going to happen.
MARTÍNEZ: Now, you conducted a survey of former Fed officials and staff for Duke University. What did they tell you about the risk of political interference on the Federal Reserve from the White House?
HILSENRATH: Well, they said that there was a serious risk. So we asked them to characterize the risk of some kind of mistake by the Fed. You know, there's so much talk about Fed independence. It's - you know, how sacred it is. And I think...
MARTÍNEZ: It's supposed to be insulated, right? Insulated from politics.
HILSENRATH: Well, and a lot - yeah, and a lot of people ask, well, you know, that might not mean anything to them. And the reason it's supposed to be insulated from politics is so it doesn't make mistakes that lead to a rise in cost of living, to rising inflation. The Fed was bullied in the 1970s by President Nixon. And it made a lot of mistakes in cutting interest rates too much, unleashing money supply and we had runaway inflation. So it has this independence because it affects the livelihoods and the cost of living for every American. So that's what's at stake here. In terms of the survey, we asked former Fed governors, former Fed regional bank presidents, what is the risk that there's going to be a politically driven mistake? And every one of them said that it was - that there was some level of risk. Some people characterized it as extreme. Most of them characterized it as serious. Some people characterized it as elevated. Nobody said that we're in a state of normalcy right now as it relates to Fed independence.
MARTÍNEZ: Jon Hilsenrath is a visiting scholar at Duke University. Jon, thanks a lot.
HILSENRATH: Thank you.
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