U.S. Military Readiness and Industrial Base

Today we had the pleasure of hosting Eyck Freymann, Hoover Fellow at Stanford University and author of Defending Taiwan: A Strategy to Prevent War with China, published April 15 (linked here). His research focuses on strategies to preserve peace and protect U.S. interests and values in an era of systemic competition with China. He holds four degrees in history and China Studies form Oxford, Cambridge, and Harvard. In Defending Taiwan, Eyck outlines an integrated strategy to deter war with China and preserve an honorable peace. We appreciated the opportunity to explore the book’s key themes and hear Eyck’s perspective on a highly intricate geopolitical environment.
 
In our conversation, we explore the evolving geopolitical landscape surrounding China, Taiwan, and the broader U.S.-China strategic competition. Eyck shares his perspective that Taiwan is less the end goal and more the first “real test” of a much larger ambition by China to reshape the global order across technology, energy, and institutions. We discuss how Xi Jinping’s centralized leadership and long-term vision are shaping China’s approach and why understanding the motivations of a single decision-maker is increasingly important in assessing risk. We examine how deterrence is changing in this environment, with Eyck outlining the need for a more layered approach that spans diplomatic, military, economic, and strategic dimensions. We discuss how the longstanding policy of strategic ambiguity is being tested as the balance of power evolves, and what it means to deter not just a system, but a leader who may perceive a viable path to success under certain conditions.
 
We explore how a potential conflict over Taiwan may not begin with a traditional military invasion, but rather through more indirect forms of pressure, such as economic or regulatory actions that could force global companies to respond. Eyck highlights how these “gray zone” scenarios, alongside the strategic importance of Taiwan’s role in global semiconductor supply chains, could create difficult choices for the U.S. and its allies, particularly if escalation occurs outside of conventional military frameworks.
 
We also discuss the broader structure of an increasingly competitive and interconnected global system, as well as the growing importance of economic strategy, supply chains, and alliances in shaping outcomes. Eyck shares his view on the concept of “avalanche decoupling” as a more realistic pathway forward, alongside the need for stronger coordination with allies, a more robust defense industrial base, and renewed focus on domestic capacity. We also touch on the role of economic and financial pressure as a potential alternative to kinetic conflict, as well as the evolving dynamics between China and Russia. It was a dense and insightful conversation, and we’re thankful to Eyck for joining.
 
Mike Bradley started the show by noting that equity markets were moving sideways this week. In fixed income, he highlighted that 10-year Treasury yields were trading around 4.35%, driven by a better-than-expected consumer sentiment report. Looking ahead, Wednesday’s FOMC meeting is expected to result in no change to interest rates. However, Chairman Powell’s press conference will be closely watched, particularly for commentary on global supply chain disruptions stemming from the Iran conflict and the potential implications for both near- and longer-term inflation. In equities, markets continue to hover near all-time highs, with many investors viewing conditions as technically overbought and reflecting optimism around a potential resolution to the Iran conflict. In oil markets, WTI was trading near $100/bbl (up $8/bbl from last Tuesday’s COBT), largely due to the absence of a finalized Iran deal. Within the energy sector, investor focus has cent