Greenland Tariffs Are Off — Is There a Deal?

Ed Elson sits down with China Decode host and economist Alice Han to break down China’s plunging birth rate and why it poses a serious challenge for the country. Then William Chou, Senior Fellow at the Hudson Institute, joins the show to unpack Japan’s fiscal concerns. Finally, Ed shares his takeaways after President Trump rescinded his Greenland tariff threats at Davos. Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram, X and Substack Follow Scott on Instagram Send us your questions or comments by emailing [email protected] Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:29Ed Elson?

  Today's number? 1,654. That's how many pounds the heaviest taco in history weighed. It also measured 36 feet long and 34 feet wide, making it the largest taco ever. That was until yesterday.

• 1:59Ed Elson?

  Welcome to Profty Markets. I'm Ed Elson. It is January 22nd. Let's check in on yesterday's market vitals. Major indices rallied after President Trump said he would not use force to acquire Greenland and called off his tariff threats. More on that later. The yield on 10-year Treasuries fell. The dollar rose. Gold dropped from record highs. And finally, Intel shares climbed 12% to a four-year high amid optimism for the company's earnings due tonight.

• 2:30Ed Elson?

  Okay, what else is happening? Well, there's no shortage of global news this week, but there is one story you might have missed, and it is a pretty big deal, and that is China's birth rate just hit a record low. New government data revealed that the country's birth rate fell to 5.63 per 1,000 people. That is the lowest rate since the Communist Party took power in 1949. Last year alone, China's population fell by more than 3 million people, and the UN warned that if this trend continues, the country could lose half of its current population by the year 2100. So for more on China's population problem, we're speaking with Profi Media's very own

• 3:11Ed Elson?

  Alice Han, host of the China Decode podcast and China economist at Greenmantle. Alice, thanks for joining us.

• 3:18Alice Han?

  Good to see you, Ed, and happy 2026.

• 3:20Ed Elson?

  Happy 2026. So, I mean, it's hard to focus on China right now, given what's going on in Davos.

• 3:29Alice Han?

  Yeah.

• 3:30Ed Elson?

  And maybe have thoughts on what's happening there, and if so, feel free to discuss. But we wanted to focus on this birth rate, which was just released this week, China's birth rate hitting a record low. Seems like a pretty massive deal to us. I guess my question to you would be, is it?

• 3:50Alice Han?

  It's huge. And just for everyone to get historical perspective, we've seen four consecutive years of population decline. The birth level, 7.93 million births in 2025, that is the lowest level since 1949, the founding of the People's Republic of China. And most of that is driven by the fact that people are effectively having less children. Now, we can dig into the minutia as to why, but what the fundamental takeaway from this is that this is an inevitable change that is going to be extremely difficult for the Chinese government to counteract. We actually have seen a great degree of policy response to the declining birth rate and declining population issue from the Chinese government.

• 4:34Alice Han?

  For instance, they're making it way more flexible to marry. In the past, you had to go to your, the place where you were born to register your marriages. Now you can flexibly marry. They pay $500 a year. For your child until the age of three. They just waived in, in the autumn in 2025, free preschool education for nationwide for all Chinese. And I think that they will continue to act on this with more policy levers to try to boost birth rates. They're even putting back on, on, onto condoms a 13% tax to try to get people to avoid contraception. So I sense that there's a level of policy desperation.

• 5:15Alice Han?

  Because Ed, and as we've discussed in previous podcasts, this is going to be a huge demographic challenge for China. Because it has massive growth implications and massive labor market implications. Now economists debate whether or not having a rapidly aging population is going to be net inflationary or net deflationary. Whether it means older people spend less and ergo it's going to be deflationary. Or it's actually going to tighten labor markets and make things more inflationary. We're actually going to see this play out in China very rapidly. And China is doing it at a rate that is far exceeding what we saw in Korea and Japan and at a poorer level.

• 5:56Alice Han?

  And one thing that I will add just to drive this home is that by 2035, 30% of the population are larger than the size of America's population will be above the age of 60. So you think about what that means for society and for the economy. This is no joke, a huge issue for China.

• 6:13Ed Elson?

  How much of this is a result of the one child policy, which I know is not in place anymore. But it used to be you could only have one child in China. Is this not just that?

• 6:26Alice Han?

  Well, that actually did, I think, respond to rather prudently massive population surges in China, you know, that we saw from the 60s onwards. After the Cultural Revolution, we did see an upswing in population. They brought it in in 71, they got rid of it by 2015. So effectively by 2016, you could have more, more than one child. And now it's pretty much fair game how many children you can have. The, I don't think it really is the one child policy that has created this big demographic challenge. I think it is a far more structural, far more societal and far more cultural in the

• 7:08Alice Han?

  sense that people are deciding they don't want to have kids, they don't want to marry. We've seen marriage rates excluding last year when there was a bit of a surge in the first half of 2025 largely being on a downward trend because millennials like you and me are deciding, I don't want to get married, what's the point? We're getting highly educated women who are opting out of the marriage market saying, I can take care of myself financially.

• 7:32Ed Elson?

  Hmm.

• 7:33Alice Han?

  And think about the knock on impact of the one child policy creating highly educated women who decide, I can focus on my career, I don't need a man in my life. That, all that agglomerated has created a dynamic in which everyday young Chinese people of childbearing age have decided to opt out of the marriage market and opt out of the fertility market.

• 7:56Ed Elson?

  Hmm.

• 7:56Alice Han?

  That, I think, is the number one factor. It's the fact that young people are deciding they don't want to get married and they don't want to have children, even although the government is doing everything it can to try to encourage more births.

• 8:08Ed Elson?

  The stat you said earlier about the share of the population who will be over 60 and just the implications that that would have on the labor force, what it would do to the social safety net. I mean, it sounds like all of America's problems on steroids.

• 8:25Alice Han?

  Yeah.

• 8:25Ed Elson?

  Where does this population issue rank for you in terms of China's macro risks right now? When you look at all of the things that China has to worry about, how big is this one?

• 8:39Alice Han?

  In the short term, Ed, candidly, it's not the biggest issue. The biggest issue is going to be trade with the US and with the rest of the world, which is why what comes out of Davos is going to be interesting. What comes out of the April meeting potentially between Trump and Xi and China will be very, very important. And, and what matters more in the short to medium run is China's technological advancements, especially in the realm of AI and whether or not that can, as the government hopes and aspires to, unlock productivity gains for the economy. Because if AI is able to do this, it can to some extent counteract. The aging demographic problem because you might have a tighter labor market,

• 9:20Alice Han?

  but then you have these deflationary pressures from humanoid robots, from technology that effectively will soak up some of the shortfall in the labor market. They could be used in elderly care, for instance, in factories, in manufacturing, in education, in healthcare. So I think that the technology issue is going to be critical. But if we move into the medium to long term realm, the demographic challenge, when I think about 2035 onwards, is going to be, I think, the top three issue for the Chinese government. Because thus far, they've shown, I think, in the last five years, where they've really focused on this issue, that the government doesn't have the adequate policy toolkit to really ramp up fertility.

• 10:04Alice Han?

  And no other country in the world, I think, has been successful. You look to Korea, where the fertility rate is even lower. You look to Japan, you look to other countries that are actually desperately trying to respond to the aging demographic. No other country, I think, has shown a positive scenario or test case for how to respond. So I think when we zoom out of the short term, we look to the long term, the next decade and more, this is going to be a top three issue for the Chinese government. And here I'm a little bit worried about what it actually means for the labor market, and more importantly, what it actually means for the fiscal burdens of local governments and central governments. Because it is true that historically, we've had a very weak pension system, a very weak

• 10:47Alice Han?

  social security system by Western and East Asian standards. So a lot more of the local and central government balance sheets will need to be dedicated towards creating a more robust social security system for an ever-expanding population of 60-plus-year-olds. And they will have to, I think, continue to increase the retirement age, which, compared to the rest of the world, is so low. I mean, even before last year, the female retirement age was only 55. So if you think about that, that is as much as 10 or even more years lower than some of the other G7 countries. That I think is going to be a low hanging fruit for them to change as well, to try to maintain some degree of robustness in the labour market.

• 11:30Ed Elson?

  You mentioned one of the risks being the relationship with the US right now, at least in the short term, and how that's relevant at Davos. Just before you go, what have you made of what we've seen in Davos? How does any or all of it relate to China?

• 11:50Alice Han?

  So I sense that after the rare earth fiasco that we saw towards the second half of 2025, that China feels very vindicated in its US strategy. It feels that it can continue to use the rare earth card if Trump doesn't play nice with them from their perspective on trade talks. We've seen a response from the Trump team, including Besen, I think a far more dovish approach to China on trade talks. So from Beijing's standpoint, they look at the unrest in Venezuela, they look at the unrest in other parts of the world, and now the fiasco of Greenland, and they go, well, this is good. This means that the US is going to be distracted from the China challenge. It's going to be distracted from

• 12:34Alice Han?

  dealing with its own domestic issues, which, oh, by the way, keep growing. And this actually plays into Xi's strategy, which is to divide and conquer. In my view, he is using the Carney playbook, Carney going to China, and using that to effectively create what the communists would call contradictions in the West. So to divide the G7 countries from America and encourage them through a degree of panda diplomacy, you know, for instance, lowering tariffs or agreeing to bilateral trade and investment flows, using that lever to try to get the Canadians, the Europeans and the Brits to reset their relationship, quote unquote, with China. The next thing we'll have to watch is Starmer's trip. It

• 13:19Alice Han?

  should be at the end of January to Beijing, where it seems there are rumours that he also wants to reset the relationship and go back to some degree of the David Cameron golden era relationship. So I think this is the trajectory that China is on. And certainly right now, the more that the US focuses on Greenland and invokes the ire of the Europeans, I think the more likely it is that the Europeans say, hey, China, we're willing to compromise maybe further when it comes to the EV price minimums. Maybe we'll be more open to Chinese investment in Europe in a way that we weren't, say, even last year or a couple of years ago. So I sense that China feels that it is vindicated. Whether or not that maintains as a theme through 2026 remains to be seen.

• 14:03Ed Elson?

  Yeah, it seems like if anyone's celebrating what's happening in Switzerland right now, it's China, Xi Jinping. I can't see any winners coming out of this other than them. Lots more to discuss another time. Alice Han, host of the China Decode podcast, China columnist at Green Mantle. Alice, thank you very much for your time.

• 14:22Alice Han?

  Thanks so much, Ed. Talk soon.

• 14:26Ed Elson?

  After the break, a look at a bond sell-off in Japan and also another talker. And for even more markets content, you can subscribe to my new weekly newsletter, simply put at edwardelsin.substack.com.

• 14:47Speaker 00

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• 16:19Ed Elson?

  We're back with property markets. Japan's government bond yields surged to record highs on Tuesday amid fears of a looming debt crisis. The massive sell-off came after Prime Minister Sanai Takeuchi pledged to cut taxes and ramp up spending without explaining how she'd pay for it. The turbulence in Japan, combined with the heightened tensions over Greenland, sent US Treasuries tumbling, while Japan's long-term bonds rebounded yesterday. Analysts warned that stability is unlikely until Tokyo provides a credible path toward deficit control. Okay. Joining us to tell us what on earth is going on in Japan and how this all relates to global

• 17:00Ed Elson?

  markets, we're speaking with William Chou, Senior Fellow and Deputy Director of the Japan Chair at the Hudson Institute. William, welcome back to Property Markets.

• 17:10Speaker 08

  Yeah, great to be back here.

• 17:12Ed Elson?

  So last time we spoke, Japan had just elected their new Prime Minister, Sanai Takeuchi. We talked a little bit about who she is and also the market's reaction, which was pretty positive. Here we are three months later. It appears that there's some sort of meltdown happening in the Japanese bond market. It appears it has something to do again with Prime Minister Takeuchi. What is happening in Japan right now? What triggered this and how did we get here?

• 17:42Speaker 08

  I think what's going on right now is that so she had essentially all but declared that she will call snap elections once the diet comes back to session on January 23rd. The elections are set for February 8th. That is essentially an election to affirm her mandate to govern. And I think very much in terms of her priorities is, one, the issue of Just building up political support and focusing on issues of affordability. That's obviously plaguing other countries other than just Japan and cutting the consumption tax. Right. The expectation expectation there is that it will cause Japanese debt levels to rise.

• 18:21Speaker 08

  There's also other considerations in terms of just in terms of her own plans on economic investment, defense buildup, all things that will also put more pressure on long term Japanese debt. So I think that those are the various issues at play. Related to that is also, I think the opposition are trying to build up

• 18:46Speaker 08

  pressure in terms of like merging two opposition parties to create a centrist opposition bloc. And so I think, you know, that's creating more political pressure for her to address these more kitchen table affordability issues like cutting the consumption tax.

• 19:03Ed Elson?

  Some people are calling this Japan's Liz Truss moment. That's something we've seen, and this is a reference to the former Prime Minister of Britain Liz Truss, who left office, she planned this big package of all these unfunded tax cuts. There was this big sell off in the bond markets.

• 19:26Ed Elson?

  Is that an accurate description? Should people be making that comparison? Is this different?

• 19:32Speaker 08

  From what I understand, certainly of Liz Truss's policies, I think Sanaa Takahichi has a much clearer policy vision. I think in her case, it's not just, you know, unfunded tax cuts or consumption tax cuts for no political purpose. It is, one, there is a political purpose, which is to actually build up the ruling party majority, which she needs to push in, push through some of her other more ambitious plans. And those ambitious fans involve economic security, basically investment in 17 key strategic areas that will allow for.

• 20:07Speaker 08

  Well, Alice, it's designed for long-term Japanese economic growth and innovation, as well as defense spending, which obviously the China backlash has demonstrated to Japan that it needs to seriously invest in. And obviously, there's also some pressure from the United States for Japan to spend more on defense. And so I think she's doing this for very reasonable reasons, right? These are all necessary reasons. So I think for Alice on the policy side, it makes sense. Is it a risk? Yes. But these are also things that she needs to do policy-wise. So I would push back on the sort of the Liz trust comparison. I think Sonae Takichi has a solid policy head on her shoulders, even if it is definitely running some risks.

• 20:52Ed Elson?

  There's one last question before we let you go. We've been seeing a lot of activity up and down in the stock market, in the wider stock market, in the US stock market. Given what's happening in Davos, all the conversations about Greenland. Scott Besant said the other day, when we saw all of the selling, he said that this isn't about Greenland, this is about Japan. It seems like that's probably not the case, given what happened after Trump basically tackled just recently. But I guess it sort of introduces a larger question, which

• 21:30Ed Elson?

  is, how important is the Japanese bond market to the rest of the market? Like, why does this matter, if at all, to US investors?

• 21:44Speaker 08

  Sure. So I think the connection there is, there's one primary and there's one secondary. One is that Japanese bond markets have always been stable, right? Like, the fact that Japan can carry some of the highest levels of debt in the world is because so much of the debt is actually held internally in Japan. And so, you know, they're bought and rebought and resold within Japan. So that that provides a certain level of stability. That that that that allows for the Japanese government to essentially function on a deficit as they have for many years. And I think there is a lot of appeal to foreign investors because of Japanese bond market and more broadly, the political economic system is fairly stable.

• 22:26Speaker 08

  So I think that's the appeal. I think what the US rhetoric on Greenland has done is obviously it's, you know, it's certainly created some spikes in the market and also in both in the stock and the bond market. I think what it really does, at least in terms of connection, Japan is it create concern in Japan about, well, if the US is focused on Venezuela or it's a focus on Iran or it's focused on Greenland, you know, we, the Japanese are raising questions of like, you know, if something happens with China, especially given the recent China blowback against Sakaichi over Taiwan, you know, like, do we have to spend more on defense because the US might be overstressed or it's just unable to get around, come over? These are

• 23:10Speaker 08

  Japanese concerns, right? These are not my own personal concerns. But that is the way that they are voicing a lot of these concerns through, I think, the both the bond, the expectation is that Japan will have to spend more on defense and security, hence driving the long-term bond yields up while also driving the stock market up because there is expectation that there's going to be short-term money flowing into the security and defense sector, both because of its own needs immediately as well as sort of like long-term trends over US presence in the in the Pacific.

• 23:46Ed Elson?

  Okay. William Chou, Senior Fellow and Deputy Director of the Japan Chair at the Hudson Institute. William, thank you. We appreciate your time.

• 23:54Speaker 08

  Of course. Thank you as always, guys. Appreciate it.

• 24:01Ed Elson?

  Well, the big news is obviously the taco. Trump has decided to cancel the tariffs because he has supposedly reached a framework for a future deal for Greenland. There's a lot there. We'll be breaking all of it down with Scott on our Monday episode. But before we go here, I do want to touch quickly on Trump's speech that he gave yesterday at Davos, the speech that preceded the taco. There was a lot of buildup to this speech. It was his first visit to Davos in six years. There was supposedly a 90-minute wait outside the conference room. Everyone wanted to be there because everyone wanted to know what is Donald Trump going to say?

• 24:42Ed Elson?

  And what happened next was notable, and that is, he didn't really say anything. The speech was over an hour long. He clearly hadn't prepared any notes. He rambled from one talking point to the next. There was no coherence. There was no message. There was no agenda. It was basically just a stream of consciousness. I tried to watch it. I could barely get through it because it was so boring. Now, the headlines would indicate that he did say something, specifically that he wouldn't use force against Greenland. And that appears to be what initially moved markets before we saw the taco. The S and P, the Dow and the Nasdaq all rose more than 1%.

• 25:26Ed Elson?

  But let's not forget that in that very same speech, he also confused the country of Greenland with the country of Iceland, not once, not twice, but four times. It was obvious to everyone, he didn't really know what he was talking about. Plus, when he said he wouldn't use force, it didn't sound like an actual policy position, something he'd predetermined and decided to announce. No, it just sounded like the words were appearing in his head, like he realized in real time, oh yeah, I guess using force is a bit much. I guess I won't use force. That was the level of intention and the level of care with which he delivered this supposedly breaking news.

• 26:10Ed Elson?

  Now, this isn't to say that he was lying about Greenland. Maybe it's true. Maybe he won't use force. Rather, this is to say, I'm not sure he actually said anything. I'm not sure there was a takeaway because I don't think even he had one.

• 26:27Ed Elson?

  And this would also inform the taco decision. Just a couple hours later, he decides he's calling off the tariffs because of his framework for a future deal, which of course could mean anything. But more importantly, it probably means nothing. And this is the great irony of this presidency. Most of what he says is actually meaningless. It's basically just shower thoughts. But because he is the most powerful person in the world, we are forced to make meaning out of it. And not just podcasters, but investors, traders, politicians, CEOs, all of us. We have to make business decisions. We have to make investment decisions.

• 27:12Ed Elson?

  We have no choice but to try to understand him. And this is a theme that has played out constantly. We saw it with the tariffs last year where businesses had to spend billions trying to figure out what the hell he actually meant. In fact, according to one estimate from the Fed, that cost will come out to $71 billion each year. We also saw it with his AI chip policy, which ended up costing Nvidia $5.5 billion, only to later be reversed. We even saw it with the Warner Brothers deal. First, Trump says it could be a problem. Then Netflix and Paramount hire an army of Trump whisperers to negotiate with him. Then he decides, actually, he doesn't care either way.

• 27:55Ed Elson?

  The point being, think of all of the time and the money and the effort that we spend trying to figure out what he means, what he is actually saying. But what if he isn't saying anything? What if that speech or his tariff announcement actually tell us nothing about his foreign policy or his plans for Greenland or his relationship with Europe or his economic agenda, you name it? What if it's all actually meaningless? What if it's all just a way to kill the time?

• 28:30Ed Elson?

  I don't know, but regardless of what he says, tariffs, no tariffs, invade Greenland, don't invade Greenland, use force, don't use force. I've seen enough at this point to know what the real takeaway actually is. And it's pretty simple. There is no takeaway.

• 28:51Ed Elson?

  Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Patterson and engineered by Benjamin Spencer. Our research team is Dan Shalane, Isabella Kinsel, Chris Donoghue and Mia Silverio. Thank you for listening to Profty Markets from Profty Media. If you like what you heard, give us a follow. I'm Ed Elson and tune in tomorrow for a conversation with David Solomon.

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