Recommended Weekend Reads
The Power Requirements for AI Growth in the U.S., The Future of the USMCA, How Vietnam is Being Impacted By U.S. – China Trade Tensions, and How Russia Sees Trump’s Bid to Buy Greenland
February 7 - 9, 2025
Please find below our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
Energy Requirements for Growing AI Capability
AI’s Power Requirements Under Exponential Growth Rand Corporation
Larger training runs and widespread deployment of future artificial intelligence (AI) systems may demand a rapid scale-up of computational resources (compute) that require unprecedented amounts of power. In this report, the authors extrapolate two exponential trends in AI compute to estimate AI data center power demand and assess its geopolitical consequences. They find that globally, AI data centers could need ten gigawatts (GW) of additional power capacity in 2025, which is more than the total power capacity of the state of Utah. If exponential growth in chip supply continues, AI data centers will need 68 GW in total by 2027 — almost a doubling of global data center power requirements from 2022 and close to California's 2022 total power capacity of 86 GW.
The Western Hemisphere
The Future of the USMCA Peterson Institute for International Economics
Since 2020, the last year of President Donald Trump’s first term in office, the often-quarrelsome trade relations among the three major countries of North America have been governed by the United States-Mexico-Canada trade agreement (USMCA). The pact must be renewed in 2026, but Trump has threatened withdrawing and imposing tariffs on Canada and Mexico, leaving the future of relations with two of the most important US trading partners uncertain. This guide explains why the agreement is under scrutiny, what’s at stake under different scenarios, and possible paths forward for negotiators if the current crisis is defused. This page will be updated as the trade deal is subjected to a new round of disputes and possible adjustments in President Trump’s second term.
Sheinbaum Isn’t Tempering Her Ambitions for Mexico’s Economy World Politics Review
Last month, President Claudia Sheinbaum unveiled “Plan Mexico,” an economic and development roadmap that aims to boost the Mexican economy through new public and private investments in a range of sectors, and new development-friendly policies. Among its principal aims are to create 1.5 million jobs in advanced manufacturing, increase investment as a proportion of GDP by 4 percent and grow Mexico’s economy from the 13th largest in the world currently to 10th by 2030. The plan is undoubtedly ambitious and comes at a time when the Mexican economy faces significant headwinds and uncertainty amid the threat of tariffs from the United States, as well as an overall deceleration of the economy, which grew at a modest pace of 1.8 percent in 2024, below the average of 2.4 percent for Latin America
Canadian Tariffs Will Undermine U.S. Mineral Security Center for Strategic and International Studies
As the United States races to reduce its reliance on China for minerals vital for national, economic, and energy security, tariffs with Canada may drastically undermine these efforts. Canada is the biggest source of the United States mineral imports, providing key sources of uranium, aluminum, nickel, steel copper, and niobium. To put it into perspective, in 2023, Canada accounted for $47 billion of United States mineral imports. China followed with $28.3 billion. The consequences of tariffs would be particularly profound for the defense industry, nuclear energy, and heavy manufacturing. A 25 percent tariff on Canadian mineral imports could cost U.S. off-takers an additional $11.75 billion—a figure that would increase as base metal and uranium prices recover. Canada would likely adopt retaliatory tariffs, as they did when Trump imposed Section 232 tariffs on steel and aluminum imports from Canada in 2018 and 2020 (backing down both times). In 2023, the United States sent $30.7 billion in minerals to Canada. The retaliatory tariffs could lead Canadian firms to pay an estimated additional $7.6 billion in tariffs, encouraging them to turn to other import sources for off-take, further undermining U.S. firms.
What Trump’s Trade War Would Mean, in Nine Charts Council on Foreign Relations
Although President Trump’s threated tariffs on Canada and Mexico have been delayed 30 days, what he has proposed could upend U.S. trade. These nine charts show what’s at stake, what comes next, and why it matters.
Trump’s Greenland Play: The View From Moscow The National Interest
The Russia-U.S. relationship (or lack thereof) has long dominated Arctic geopolitics. Geography makes the two neighbors and stakeholders sharing the challenges of a warming region. President Trump’s enduring interest in acquiring Greenland injects further potential geostrategic challenges in the region’s icy arena. When the idea was floated during his initial term in office, the immediate response from Russian leadership, state-operated media, and the public was a flood of memes. The second time around, however, Russia’s domestic discourse has a more strategic flavor. Discussions now appear to focus less on the “novelty” of such an acquisition and more on understanding the “objectives.” Three potential scenarios for U.S.-Greenland relations are being debated in Moscow in terms of the strategic implications for Russia.
Indo-Pacific
Factors Shaping the Future of China's Military Rand Corporation
China's population is declining, which will cause problems for China but not necessarily for the PLA. Fertility patterns in China are similar to those observed in other countries. This suggests that revoking the one-child policy will continue to have a smaller effect on population size than the Chinese government may have assumed, and that China's population will continue to shrink in the future. Despite this stark change, China's youth population will remain more than three times the size of the United States' youth population in the near term. China's current challenges include how to sustain economic growth as the economy matures and the population ages. Although demographic patterns in China are similar to those seen in other countries, comparisons should be made with caution; China's immense size means that small within-country changes could have large global impacts. The PLA's primary demographic challenge—which includes cultural, social, and political components—will be whether it can build and develop the type of military that Xi envisions.
The Hoover Institution’s Survey of India Hoover Institution/Stanford University
In this comprehensive volume, the authors offer a panoramic and analytical overview of developments in multiple policy arenas in India over the past year while simultaneously providing appropriate historical context. The range of policy issues covered includes politics, demography, the economy, foreign policy, health, education, science, energy, and defense. For each chapter, specialists share historical background, the state of current policy choices, and likely future trends.
China Teeters Ever Closer to a “Lost Decade” Hinrich Foundation/Stewart Paterson
Aggressive economic stimulus measures dished out by China’s financial regulators are doing little to revive a stagnating economy. The decline in the efficiency of Chinese investment has led to a capital stock that is now bloated relative to the returns that it generates, threatening a full-scale financial crisis. As Beijing tries to avoid a Japan-style ‘lost decade’ of growth, the government doesn't appear able to come up with new ideas to solve its conundrum.
Trade Policy and Jobs in Vietnam: The Unintended Consequences of US-China Trade Tensions International Monetary Fund
“We use the US-China tariffs of 2018-19 as an exogenous shock to export opportunities in Vietnam to identify how trade policy affects job creation. Using a difference-in-differences framework, we first show that US tariffs on China increased the range of products exported by Vietnam to the US in the two years after the hikes. We then show using firm level data that this expansion in export opportunities led to job creation. Around 5% extra jobs were created in firms hit with average tariffs above 15%. Results point towards this effect being driven mostly by female employment.”
China and the Future of Global Supply Chains Rhodium Group
In this study, the Rhodium Group reviews China’s role in four major sectors—apparel, consumer electronics, PV, and autos—over the past decade, then consider four plausible scenarios to 2030 and their implications for China’s future role in global trade and investment patterns.
Russia’s War on Ukraine
What the End of Ukraine Gas Transit Means for Kyiv, Moscow, and Europe Carnegie Politika
At 8 a.m. on January 1, 2025, the supply of Russian gas crossing the Ukrainian border on its way to Europe was turned off, ending a sixty-year era. The response to the shutoff was notably calm considering that in 2009, a two-week halt in Russian gas supplies to Europe via Ukraine caused panic and a large-scale crisis. This time around, gas prices in Europe rose slightly, and only Moldova had real problems. But what longer term does it mean for the EU, Ukraine, and Moscow?