Peter Thiel, the sole prominent Silicon Valley figure to back Trump in 2016, told fellow billionaire tech investor and American Optimist host Joe Lonsdale that while he's cautious about commenting on the details of Trump's trade tariffs on China, he supports the need for a "reset" in relations with the communist regime.

"I'm hesitant to comment since obviously it's a very, very fluid situation, but something like the sort of reset that they're talking about now seems where we're going, where you need a very drastic reset with China," Thiel told Lonsdale. "In theory you need to reset with other people, but what we really need to get them to do is also reset things with China."

However, Thiel acknowledged the efficiency of certain economic ties with China, such as low-cost labor at factories like Foxconn, but emphasizes the need to address the broader geopolitical rivalry that economists often fail to adequately consider.

"There are ways the economic relationship with China is fairly efficient," Thiel said. "If people are working for a dollar and a half an hour in a Foxconn factory, we don't really want to get those jobs in Wisconsin."

"But it is this geopolitical rivalry where you have to somehow factor in that the economists never are able to factor in properly with China," the investor continued.

"I'm not sure I would call this the optimistic plan, but the reset in trade that seems desirable to me would be that we radically changed the relationship with China and we sort of induce a lot of other countries to radically change their relationship with China," he added. "Maybe that's how we build a stronger western alliance of the free world."

Thiel then suggested that leveraging AI and reforming anti-business policies could enable some manufacturing to return to the U.S., while also advocating for shifting production from China to countries like Vietnam, which, despite its flaws, poses less of a global geopolitical threat.

"I think there are some parts that can be moved to the US with AI. Maybe also if you change some of the environmental rules and some of the other anti-industrial policies we have in the US," Thiel told Lonsdale. "But then if parts of this are moved to other emerging market countries. Vietnam is a communist country."