WEBVTT - Unpacking Donald Trump’s trade war

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<v Speaker 1>From The Australian. Here's what's on the front. I'm christinamiot.

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<v Speaker 1>It's Tuesday, February four. The biggest business body in the country,

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<v Speaker 1>says Anthony Albanesi has no choice but to revisit his

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<v Speaker 1>government's eighty two percent renewables target. Australian Chamber of Commerce

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<v Speaker 1>and Industry Chief executive Andrew McKellar says business owners want

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<v Speaker 1>gas to play a bigger role as energy prices saw.

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<v Speaker 1>Industry groups, activists, unions and individuals have a plan to

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<v Speaker 1>influence swing voters at the next federal election. They're building

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<v Speaker 1>campaign war chests worth millions of dollars and they'll use

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<v Speaker 1>new technology to target voters where their ballots are needed.

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<v Speaker 1>Most those stories alive right now at the Australian dot

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<v Speaker 1>com dot au. Global politics is in a spin after

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<v Speaker 1>US President Donald Trump slapped hefty tariffs on some of

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<v Speaker 1>America's closest allies and neighbors. So what's this really all about?

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<v Speaker 1>We unpack it in today's episode. Donald Trump loves a tariff,

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<v Speaker 1>and on Sunday he invoked a little known slice of

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<v Speaker 1>the law to slap levies on some of America's biggest

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<v Speaker 1>trade partners.

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<v Speaker 2>We'll see how it is, but it's a lot of

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<v Speaker 2>money coming to the United States.

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<v Speaker 3>They've treated us very unfairly.

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<v Speaker 1>From Tuesday, the US will impose a twenty five percent

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<v Speaker 1>levee on imports from Canada and Mexico, as well as

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<v Speaker 1>a ten percent tariff on energy products from Canada and

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<v Speaker 1>an additional ten percent tariff on China. It's the first

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<v Speaker 1>time the International Emergency Economic Powers Act, which gives the

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<v Speaker 1>president broad powers during crisis situations, has been used to

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<v Speaker 1>impose tariffs. President Trump says it'll stop the flow of

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<v Speaker 1>the highly potent opioid fentanyl into the US.

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<v Speaker 2>Kinda makes the fentanyl, gives it to Mexico, puts it

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<v Speaker 2>through Canada, puts it through different places, mostly Mexico, but

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<v Speaker 2>also a lot through Canada, and so all three haven't.

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<v Speaker 3>Treated us very well.

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<v Speaker 4>I think Donald Trump is HARKing back to a previous

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<v Speaker 4>era of protectionism in the fifties and sixties, when the

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<v Speaker 4>United States was on top economically, militarily, and socially.

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<v Speaker 1>Joe Kelly is The Australian's Washington DC correspondent.

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<v Speaker 3>I think he.

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<v Speaker 4>Thinks that by reverting to protectionism, he might be able

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<v Speaker 4>to adopt a philosophy where America is making everything at home.

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<v Speaker 3>So far, we don't know.

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<v Speaker 4>What measures Canada, Mexico, or China would need to take

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<v Speaker 4>for these tariffs to be lifted. He hasn't spelt that out.

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<v Speaker 4>It's not clear. I think this raises the question about

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<v Speaker 4>whether the tariffs are an end in themselves. And he

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<v Speaker 4>said in his inauguration speech that by putting tariffs on

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<v Speaker 4>other countries, he would enrich America. I think he's aware

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<v Speaker 4>that there are going to be some growing pains associated

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<v Speaker 4>with this philosophy, this approach that he's taken. How this

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<v Speaker 4>all plays out in the end is unpredictable. I don't

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<v Speaker 4>think anybody knows.

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<v Speaker 1>These new duties will apply to everything from fresh produce

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<v Speaker 1>like avocados, to cars and tech products, and they're estimated

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<v Speaker 1>to affect just over two billion US dollars in annual trade.

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<v Speaker 1>It means American importers will pay at tax on whatever

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<v Speaker 1>they're bringing into the country from Canada, China, or Mexico.

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<v Speaker 1>It's a lot for small businesses, in particular to cop

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<v Speaker 1>and that means they'll likely pass the extra costs along

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<v Speaker 1>to consumers.

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<v Speaker 3>Tariffs still calls inflation.

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<v Speaker 2>They're caused success, and so we're going to have great success.

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<v Speaker 2>There could be some temporary, short term disruption. But the

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<v Speaker 2>tariffs are going to make us very rich and very strong,

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<v Speaker 2>and we're going to treat other countries very fairly.

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<v Speaker 5>Joe.

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<v Speaker 1>Donald Trump acknowledged that these tariffs could push consumer prices up,

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<v Speaker 1>but he said they'll be beneficial in the long run.

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<v Speaker 1>How does that play for him among an electric that

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<v Speaker 1>arguably elected him based on a belief that he would

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<v Speaker 1>bring inflation down and lift everyday Americans out of a

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<v Speaker 1>cost of living crisis.

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<v Speaker 4>The honest answer to that question is no one's sure

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<v Speaker 4>how it's going to play out. But Donald Trump was

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<v Speaker 4>very clear about his commitment to implement tariffs during the

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<v Speaker 4>presidential election campaign.

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<v Speaker 3>So this is what Americans voted for.

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<v Speaker 4>Of course, they can still be used as a tool

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<v Speaker 4>to extract concessions, but this means that real pain will

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<v Speaker 4>be inflicted, and that pain will also fall upon American workers.

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<v Speaker 4>There are estimates that have been done by think tanks

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<v Speaker 4>over here suggesting that potentially hundreds of thousands of American

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<v Speaker 4>jobs could be lost based upon the tariffs that are

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<v Speaker 4>now being implemented.

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<v Speaker 1>Mexican President Claudia Sinbaum says she's prepared to open up

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<v Speaker 1>a dialogue with President Trump about the tariffs.

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<v Speaker 3>There's fundamental relasion.

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<v Speaker 1>Beijing hasn't said much at all outside of its pledge

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<v Speaker 1>to protect its trade interests. But on Monday, Canadian Prime

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<v Speaker 1>Minister Justin Trudeau returned fire in Donald Trump's new trade war.

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<v Speaker 6>Unfortunately, the actions taken by the White House split US

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<v Speaker 6>apport instead of bringing us together. Tonight, I am announcing

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<v Speaker 6>Canada will be responding to the US trade action with

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<v Speaker 6>twenty five percent tariffs against one hundred and fifty five

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<v Speaker 6>billion dollars worth of American goods.

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<v Speaker 1>Trudeau's former finance minister, Christia Freeland, who's going to replace

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<v Speaker 1>him as Canada's leader when he steps down later in

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<v Speaker 1>the year, didn't hold back either.

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<v Speaker 7>I think we as Canadians need to really recognize the

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<v Speaker 7>gravity of what has just happened. This is an illegal

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<v Speaker 7>and unjustified action.

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<v Speaker 6>This is a.

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<v Speaker 7>Betrayal of America's closest friend and best ally. This is

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<v Speaker 7>economic warfare, and it is incredibly important for us to

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<v Speaker 7>hit back, and to hit back hard.

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<v Speaker 1>In opposed to truth, social Donald Trump said the solution

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<v Speaker 1>was simple, become America's fifty first state. What's the calculus

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<v Speaker 1>for Donald Trump here? Does he actually want Canada to

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<v Speaker 1>be part of the United States or is something else

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<v Speaker 1>going on.

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<v Speaker 3>This is just the starting point.

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<v Speaker 4>This trade war could escalate, and it could escalate rapidly

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<v Speaker 4>from here. I think there's a general opinion that hopefully

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<v Speaker 4>this trade war can be de escalated and it can

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<v Speaker 4>be ended. But that's going to be difficult. If there's

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<v Speaker 4>a three way standoff and you've got all these countries

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<v Speaker 4>putting tariffs on one another, Donald Trump will want something

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<v Speaker 4>in return for taking the tariffs off.

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<v Speaker 3>He'll want to be seen to win the trade war.

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<v Speaker 4>Both Canada and Mexico, in their responses, express disappointment that

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<v Speaker 4>the United States had chosen confrontation rather than collaboration. Both

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<v Speaker 4>say they are willing to work with America to try

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<v Speaker 4>and address that problem as partners, and they're disappointed that

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<v Speaker 4>the approach America's taken under Donald Trump is one of confrontation.

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<v Speaker 4>I'm not saying that Donald Trump will always choose confrontation

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<v Speaker 4>rather than partnership, but he's showing that he's prepared to

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<v Speaker 4>use confrontation even in dealing with close allies.

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<v Speaker 1>Coming up, what our journalists make of Donald Trump's new

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<v Speaker 1>trade war. There are a lot of moving parts and

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<v Speaker 1>a lot of unknowns in this new trade war. So

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<v Speaker 1>I called up some of the Australian's experts to get

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<v Speaker 1>their take on it. Judith Loan is an economist and

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<v Speaker 1>a company director, and it's safe to say she's not

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<v Speaker 1>a fan of tariffs.

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<v Speaker 8>Well, of course, economists are opposed to tarriff's because basically

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<v Speaker 8>we think they distore prices and distort trade and in

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<v Speaker 8>the end, the country that's imposing.

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<v Speaker 9>The tariff sense up worse off.

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<v Speaker 5>He doesn't seem to understand that when two parties trade

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<v Speaker 5>with each other, both the seller and the buyer benefit.

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<v Speaker 5>His view seems to be that if America's buying goods

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<v Speaker 5>and services that America could produce, that is somehow a

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<v Speaker 5>form of theft or undesirable and then he seems to

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<v Speaker 5>link this to be in flow of fentanyl and illegal immigrants.

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<v Speaker 5>But there's no what i'd call KPI to this. It's

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<v Speaker 5>not clear what the Canadians need to do the extent

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<v Speaker 5>to their actions to discourage those things which would allow

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<v Speaker 5>Trump to change his mind.

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<v Speaker 1>Trump does have a point, up to a point.

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<v Speaker 5>So economists were very big on what we call the

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<v Speaker 5>rules based order, the World Trade Organization, people complying with

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<v Speaker 5>agreements that they make. But the reality of that world

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<v Speaker 5>was that it was a crooked world, and people cheated,

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<v Speaker 5>countries cheated, countries entered into trade agreements that they then broke.

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<v Speaker 5>So Trump has a point in the sense that in

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<v Speaker 5>his world, he's not replacing something that's perfect. He's replacing

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<v Speaker 5>something that actually is relatively dodgy. Now, my argument would be, well,

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<v Speaker 5>let's see how we can work to improve that world

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<v Speaker 5>and how we can improve compliance with the rules, because

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<v Speaker 5>everyone benefits of that happens. But you know, Trump's going

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<v Speaker 5>in the opposite direction and saying, well, look, I don't

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<v Speaker 5>think we can fix that world. I'm creating another world.

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<v Speaker 1>The thing is it might all be for naught.

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<v Speaker 9>He's such a sort of unpredictable character. He could easily

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<v Speaker 9>lift the tariffs as he's imposed there quite quickly as well.

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<v Speaker 9>So it's a very very volatile environment at the moment.

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<v Speaker 1>Our Foreign editor Greg Sheridan reckons the whole thing is

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<v Speaker 1>a bit silly, but that doesn't mean it won't be

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<v Speaker 1>a win for President Trump. Two point zero.

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<v Speaker 10>With Trump, everything is a negotiation, and these tariffs I

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<v Speaker 10>think are also the starting point of a negotiation. On

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<v Speaker 10>the other hand, it strikes me as pretty silly for

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<v Speaker 10>the United States to embark on a trade war with Canada,

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<v Speaker 10>a fellow NATO ally and its closest neighbor and fellow

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<v Speaker 10>liberal democracy and so. And that's one of the weaknesses

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<v Speaker 10>of Trump, that he tends to beat up on allies

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<v Speaker 10>even more than he beats up on adversary. Is Having

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<v Speaker 10>said all that, it's rather unpredictable. Trump wants to re

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<v Speaker 10>direct foreign investment because of tariffs to make it more

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<v Speaker 10>profitable to build things in America for the American market.

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<v Speaker 10>For that to work, really you have to have tariffs

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<v Speaker 10>in place for a long time, whereas I don't think

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<v Speaker 10>these tariffs will be in place for a long time,

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<v Speaker 10>although it's very hard to say. One of the weird

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<v Speaker 10>things about this is that his objection to Mexican and

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<v Speaker 10>Canadian behavior is not really trade behavior. It's policing illegal

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<v Speaker 10>immigrants entering into the US and policing the trafficking of

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<v Speaker 10>fenanyl across their borders. That makes it very difficult for

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<v Speaker 10>either country to know what actions would take that would

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<v Speaker 10>be sufficient for Trump to lift the tariffs, so it's

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<v Speaker 10>very messy. The long term consequences that have been unclear.

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<v Speaker 10>You would expect because Mexico and Canada in the United

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<v Speaker 10>States are so deeply integrated economically, that the Mexicans and

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<v Speaker 10>the Canadians will find a way to placate Trump and

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<v Speaker 10>the tariffs will be lifted relatively quickly. And the other

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<v Speaker 10>reason for expecting that is because a certain number of

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<v Speaker 10>American jobs, not a trivial number, some tens of thousands,

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<v Speaker 10>would be affected by tariffs, especially on Canadian energy exports

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<v Speaker 10>to the United States. The situation is pretty much as

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<v Speaker 10>clear as mud, and as with most things with Trump,

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<v Speaker 10>there's a genuine a grievance that he's addressing. He is

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<v Speaker 10>likely to get Canada and Mexico to do what he wants,

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<v Speaker 10>but these tariffs are an incredibly messy and potentially counterproductive

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<v Speaker 10>way to go about it.

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<v Speaker 1>The Australian's Policy editor Tom Ducivic put a local spin

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<v Speaker 1>on things.

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<v Speaker 11>For me, tariffs are dumb and depending on the second

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<v Speaker 11>round effects as countries impose their own penalty taxes on

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<v Speaker 11>US goods, it marks up supply chains, hurts trade and growth,

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<v Speaker 11>and could be inflationary RBA Governor Michelle Bullock said before Christmas,

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<v Speaker 11>when the details weren't yet known that ultimately, if it's

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<v Speaker 11>not good for the Chinese economy, it isn't good for

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<v Speaker 11>us either. But if China is forced to divert trade

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<v Speaker 11>away from the US, then we may be the beneficiaries

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<v Speaker 11>of cheaper prices, for instance, as China's got to do

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<v Speaker 11>a fire sale of the sorts of things that might

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<v Speaker 11>sell into America. And if China's economy is hit hard,

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<v Speaker 11>then Beijing might respond with huge government spending that could

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<v Speaker 11>benefit our exports of commodities. So we won't know for

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<v Speaker 11>quite some time how that will play out those second

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<v Speaker 11>round effects. But we're not really in the gun, so

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<v Speaker 11>to speak, because we run a trade deficit with America.

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<v Speaker 11>They run a trade surplus with so we're not going

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<v Speaker 11>to be on their radar as a sort of trouble

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<v Speaker 11>nation that they need to muscle around with trade sanctions

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<v Speaker 11>like tariffs.

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<v Speaker 1>Tom Ducivic is The Australian's Policy editor. Greg Sheridan is

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<v Speaker 1>our foreign editor, Judith Sloan is a contributing economics editor,

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<v Speaker 1>and Joe Kelly is The Australian's correspondent in Washington. DC.

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<v Speaker 1>You can read all their reporting and analysis of Donald

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<v Speaker 1>Trump's tariff war right now at the Australian dot com

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<v Speaker 1>dot au