Jacob, Kim, and Michael recorded a Big Three policy video update focusing on tech, trade, macroeconomic, and AI regulatory and broader competition issues in the US, China, and Europe. You can find a link to the video HERE.
This email summarizes key points of each speaker and is our invitation for one or all analysts to speak with you or your team about our views on these and related topics. Please contact your 22V sales partner anytime. Notes following appear in order of speaker presentation.
Kim Wallace (Washington Policy)
Knowledge regulation became an active element of industrial policy after WWII. In the US, this development has been characterized by sanctions, tariffs, and export controls.
- Bookended by the pandemic and Hormuz Strait supply chain shocks, artificial intelligence is the most recent US industrial policy catalyst.
- Policy lags AI capital formation, technology advancement, and operational deployment. Both bottom-up and national pressures force policymakers into a more active role, likely to be more prevalent after the 2026 midterm elections (esp data centers).
Michael Hirson (China Strategy)
AI-related exports are about half of total China export growth this year putting a fine point on US-China economic policy relations.
- US Section 301 tariff outlook and President Trump’s Board of Trade discussions represent low risk to the ongoing trade truce achieved 2H25-1Q26.
- Maintaining the truce around supply chains – US semiconductor export controls and China’s restrictions on rare earths – will be more challenging, especially as Chinese AI models win acceptance in the United States.
- These channels reveal a tightly intertwined data center supply chain running between China and the United States.
- China’s macroeconomic outlook, particularly domestic demand, will remain subdued with Bejing unlikely to implement forceful economic stimulus.
Jacob Funk Kirkegaard (European Strategy/Geopolitics)
For the remainder of this year, macroeconomic policy matters more in the Eurozone than AI competition.
- ECB lacks data supporting another hike this month; absent another sustained US military push in Iran this summer (which Jacob des not expect), energy prices likely will not force tightening.
- Brussels is much more focused on trade issues than AI in negotiations this week with China.
- US AI frontier model export restrictions along with purchase and training costs makes China’s models a more reliable product.
- Crimea is the summer watch point in Ukraine/Russia hostilities, likely leading Putin to a 300-500k mobilization after fall Duma elections. 300-500k.
