Speaker 1: From Schwartz Media. I'm Ruby Jones. This is seven am
Speaker 1: today in the Rose Garden at the White House, President
Speaker 1: Trump will unveil his next round of tariffs.
Speaker 2: The Cabinet will be here for the event. It'll be
Speaker 2: our first Rose Garden events of this administration. So are
Speaker 2: you old?
Speaker 1: He's calling it Liberation Day?
Speaker 2: The President will be announcing a tariff plan that will
Speaker 2: roll back the unfair treed practices that have been ripping
Speaker 2: off our country for decades.
Speaker 1: He's doing the first round of tariffs are already doing damage,
Speaker 1: and there's more pain to come as the President enacts
Speaker 1: his radical plan to reshape the entire global financial system. Today,
Speaker 1: managing editor of the Saturday Paper, Emily Barrett on the
Speaker 1: economic blueprint behind Trump's tariffs and the chaos to come.
Speaker 1: It's Wednesday, April two, So Emily, welcome back to seven am.
Speaker 3: Thanks Ruby. It's great to be here.
Speaker 1: Today is the second of April, or as Donald Trump
Speaker 1: likes to call it, Liberation Day.
Speaker 3: It's a pretty ominous term it is, so what does
Speaker 3: it actually mean?
Speaker 4: We are we have Liberation Day, as you know, on
Speaker 4: April second, because and I'm not referring to Canada, but
Speaker 4: many countries have taken advantage of US, the likes of
Speaker 4: which nobody even thought it was possible for many, many decades.
Speaker 3: Liberation Day, as he's called it, is supposedly when he's
Speaker 3: going to unveil the sweeping tariffs on countries that the
Speaker 3: administration thinks have an unfair advantage over the US in
Speaker 3: trade terms.
Speaker 4: I think most countries will are agreeing with me. They're
Speaker 4: actually many of them have actually apologized. They said, look,
Speaker 4: we have taken advantage, and I don't blame them as much.
Speaker 3: Just after his inauguration, Trump ordered his Commerce Department, along
Speaker 3: with the trade representatives offer YES, to compile a massive
Speaker 3: report on America's trade relationships around the world, and that's
Speaker 3: supposed to be the basis for setting tariffs country by
Speaker 3: country and by sectors based on where the US sees
Speaker 3: practices that are disadvantaging them. It's been kind of assumed
Speaker 3: that Trump would focus on countries with trade surpluses, that
Speaker 3: is that they sell more to the US than they
Speaker 3: buy from the US. But in this round, the administration
Speaker 3: is reportedly also going to be targeting countries that use
Speaker 3: any measures to protect their own industries. That's measures like
Speaker 3: regulations that buy US products or subsidies, and he's complained
Speaker 3: about the sales taxes that almost all countries levy, like OURGST.
Speaker 3: The administration has also complained about our pharmaceutical benefits scheme.
Speaker 5: American medical giants are slamming the Albanese government for its
Speaker 5: eighteen billion dollar PBS medicine scheme. They're blaming the Australian
Speaker 5: policy for cutting prices and blocking American exporter US.
Speaker 3: That's a scheme in which our government agrees prices with
Speaker 3: US suppliers and pays those prices so it can keep
Speaker 3: prices low for consumers here. Our local content quotas for
Speaker 3: Australian broadcasters have also come under scrutiny, apparently in the US,
Speaker 3: and as has the News media Bargaining Code, which is
Speaker 3: what would get companies like Matter and Google to pay
Speaker 3: for news. He also said that he's considering levies on
Speaker 3: things like copper and lumber and meat. That's when Australia
Speaker 3: started talking to him about the risks of the price
Speaker 3: of Big Max. He said that there will be secondary
Speaker 3: tariffs as well, and this is new on all countries
Speaker 3: that buy exports from supposedly unfair players, and that's things
Speaker 3: like oil and gas from Venezuela, and most recently on
Speaker 3: Russia because apparently he's annoyed about Russia's stance on a
Speaker 3: ceasefire with Ukraine. It's reported by Politico that people within
Speaker 3: the administration even don't have the full picture of what's
Speaker 3: going on. But what we do know is that the
Speaker 3: uncertainty and the threats and the putting on tariffs and
Speaker 3: backing off them kept speculation mounting, and that fits Trump's
Speaker 3: sense of drama.
Speaker 1: Okay, So while we're waiting then to hear about the
Speaker 1: next round of tariffs expected today, can we talk about
Speaker 1: what has happened so far with the tariffs that have
Speaker 1: already been enacted on Canada, on Mexico, China, Australia. What
Speaker 1: has the impact been.
Speaker 3: Well, so far, we've sort of seen a lot already imposed.
Speaker 3: This started with twenty five percent tariffs for Canada and Mexico,
Speaker 3: which were then delayed and then stalled, and then after
Speaker 3: some talks they're going to be reimposed. Apparently China was
Speaker 3: also hit with ten percent, and that was then up
Speaker 3: to twenty percent, with the threat that they'll continue to rise.
Speaker 3: And all these accumulative by the way, so some countries
Speaker 3: will be really racking up the levels of tariffs they're
Speaker 3: having to pay. And all of this, by the way,
Speaker 3: is helping to drive up the price of oil. So
Speaker 3: what's happened Aside from oil prices rising, We've seen stock
Speaker 3: markets around the world have driven sharply lower, and that's
Speaker 3: including in the US. So the S and P five
Speaker 3: hundred has just marked its worst quarter in three years.
Speaker 3: US consumer confidence has fallen, and long term inflation expectations
Speaker 3: have risen pretty sharply. Despite this clear negative reaction, Trump
Speaker 3: hasn't backed off so far. In his first administration, he
Speaker 3: loved to equate the gains in stocks with the success
Speaker 3: of his presidency, so people sort of expected that this
Speaker 3: time around there would be what's called a Trump put,
Speaker 3: meaning that if stocks fell, he'd back off to sort
Speaker 3: of spare everyone further losses. The fact that he's not
Speaker 3: done this so far is an unwelcome surprise for a
Speaker 3: lot of people.
Speaker 2: Right.
Speaker 1: So, as a result of these initial tariffs, stock markets
Speaker 1: have dropped, oil prices or up. Consumers in the US
Speaker 1: are very worried, but regardless, Trump is pushing ahead. So
Speaker 1: why do you think that is, Emily?
Speaker 3: All we know is that at this point, as the
Speaker 3: wheels are starting to fall off, is that the administration
Speaker 3: and a lot of people around the administration are trying
Speaker 3: to make this look deliberate and considered. It's become a
Speaker 3: bit of a parlor game actually for economic experts, you know,
Speaker 3: to try and apply some kind of rationale to what
Speaker 3: Trump is doing.
Speaker 6: First, he wants to use it as a tool to
Speaker 6: get other countries to do what he wants them to
Speaker 6: do right.
Speaker 7: Secondly, he thinks of it as a tool to raise
Speaker 7: lots of revenue.
Speaker 3: Yes, it's as if he wants to cause this period
Speaker 3: of disruption because he thinks there'll be some promise land
Speaker 3: on the other side. Now that may work out, or
Speaker 3: he makes shooting himself in the third what we've seen from.
Speaker 5: History is the periods.
Speaker 6: It's not a trade work. We are going to reset trade.
Speaker 3: Policy on April.
Speaker 6: Second. You've got China's got huge tariffs on us.
Speaker 3: It's kind of like an intellectual exercise that the top
Speaker 3: flight economists have joined in on around the world. But
Speaker 3: it's also raised some hackles among progressive economists, particularly who
Speaker 3: say that this is sane washing, you know, like greenwashing,
Speaker 3: where companies make a dirty climate practice look clean. This
Speaker 3: is making a completely bonker's idea look logical or even bold.
Speaker 1: And this is where the Mari Lago accord comes in.
Speaker 1: This plan that goes some way to explaining Trump's thinking
Speaker 1: about tariffs. So tell me about that.
Speaker 3: It's written by one of Trump's top economic advisors. Let's
Speaker 3: say it's kind of like Project twenty twenty five for
Speaker 3: the American budget. It's basically a pitch to reshape international
Speaker 3: trade and really to reshape the entire global financial system
Speaker 3: that it's based on.
Speaker 1: I mean, as soon as you say the words reshape
Speaker 1: the global financial system, my conspiratorial hackles go up. So
Speaker 1: I mean, is this a real plan? Emily, how seriously
Speaker 1: should we be taking it?
Speaker 3: It's definitely a rationale. It's an offering. I would say
Speaker 3: that if it is a real plan, it's very scary.
Speaker 3: I think that it's important to take it seriously, but
Speaker 3: not literally, as so many people say about Trump.
Speaker 1: Coming up after the break, What exactly is Trump's plan
Speaker 1: to reshape the global financial system?
Speaker 6: Hi, I'm Daniel James seven Am tells stories that need
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Speaker 6: dou slash support. Thanks for listening and supporting our work, Emily.
Speaker 1: There is a document, a blueprint if you like, that
Speaker 1: might help explain the thinking behind Donald Trump's trade wars.
Speaker 1: Tell me more about what it is exactly and why
Speaker 1: people are paying attention to it right now.
Speaker 3: So this is a paper written by Stephen Murraan. He
Speaker 3: was recently pointed the chair of the US Council of
Speaker 3: Economic Advisors. Those are the president's top economic advisors.
Speaker 8: Stephen, you are one of the top economists at the
Speaker 8: White House right now. Welcome to Bloomberg. You're serving in
Speaker 8: this role at a tenuous moment for the economy. We
Speaker 8: saw last week the federal reserves.
Speaker 3: So a week after Trump's election win in November, he
Speaker 3: published this forty page paper that was called a User's
Speaker 3: Guide to Restructuring the Global Trading System.
Speaker 8: You talk about some unorthodox policies like revaluing US gold stocks,
Speaker 8: applying a user fee to treasuries and a new global
Speaker 8: currency accord. Can you tell me how much of this
Speaker 8: is in the works now?
Speaker 7: Yeah, So I'm glad you brought that up, because this
Speaker 7: paper seems to have taken on a life of its
Speaker 7: own against all my intents. Look, I'm pretty clear in
Speaker 7: that paper that it's a catalog of available options.
Speaker 3: So what they think America should be doing is slashing
Speaker 3: government spending and borrowing, repare the trade deficit by attracting
Speaker 3: more investment and sell more to the rest of the world,
Speaker 3: and with that rebuild the manufacturing sector. The focus on
Speaker 3: America's poor finances is entirely reasonable. America's debt, just to
Speaker 3: sort of put this in perspective, is one hundred and
Speaker 3: twenty three percent of its total GDP. Australia is, by comparison,
Speaker 3: is less than fifty percent. And this debt pile for
Speaker 3: the US is growing many times faster than its economy
Speaker 3: is growing. So debt service costs are the second largest
Speaker 3: line item in the federal budget. It's borrowing to pay
Speaker 3: its own debt, and Stephen Myron is aligning with Trump's
Speaker 3: idea that the US is not getting enough out of
Speaker 3: world dominance. Basically, the main plank of the solution, as
Speaker 3: they see it, is to weaken the dollar, and that
Speaker 3: would make US exports more competitive and imports more expensive,
Speaker 3: so it's supposed to sort of head off this flood
Speaker 3: of cheaper offshore products. The thing is, you can't just
Speaker 3: weaken the dollar because this is a market that in
Speaker 3: daily trade is worth sort of seven trillion in trans
Speaker 3: actions each day. So you can't do this alone. You
Speaker 3: have to have an agreement, a multilateral agreement with other
Speaker 3: countries all involved in it. And the US has done
Speaker 3: this in the past. So in the nineteen eighty five
Speaker 3: there was the Plaza Accord. This was with Japan, France,
Speaker 3: West Germany, and Britain, and it was supposed to reduce
Speaker 3: the US deficit and pull the country out of recession.
Speaker 6: So this was a.
Speaker 3: Huge deal for the US and it worked. Failing an accord, though,
Speaker 3: tariffs are supposed to be the stick that is supposed
Speaker 3: to encourage countries to work with the US. But Myron's
Speaker 3: blueprint has got other measures. The first one is cutting
Speaker 3: federal spending, and that's what DOJE is supposed to be
Speaker 3: all about. The really difficult bit that's also laid out
Speaker 3: in Myron's blueprint is lowering borrowing costs for the US.
Speaker 3: So that's interest rates, it's tied to the massive amount
Speaker 3: of US debt that we've talked about. His suggestion to
Speaker 3: cut debt service costs is to force other countries that
Speaker 3: have government debt from the US to switch those out
Speaker 3: for bonds that essentially don't pay. Instead, they will extend
Speaker 3: out to own these very long dated bonds that eventually
Speaker 3: sort of in fifty two hundred years, they'll get their
Speaker 3: money back. And that terrible to heal is supposed to
Speaker 3: be in exchange for military protection for all of the
Speaker 3: benefits of having the US answer a call when you're
Speaker 3: in trouble. The problem with that is that most US
Speaker 3: government debt is actually held by American banks and by funds,
Speaker 3: like the vast majority of it. If you do a
Speaker 3: deal like that, then you're ruining the credit of the
Speaker 3: US government and those bonds are instantly devalued. And not
Speaker 3: only that, it would crash the US financial system.
Speaker 1: Okay, so they have this plan which is to weaken
Speaker 1: the American dollar. The idea being that if you do,
Speaker 1: you'll bring back manufacturing and bring back jobs. But as
Speaker 1: you've outlined, it could also have these significant consequences for
Speaker 1: the American financial system. So, Emily, what impact do you
Speaker 1: think this will have on the American people?
Speaker 3: So we're already starting to see this play out in
Speaker 3: unfortunate ways for Americans. We've got to ask, really, all
Speaker 3: of this for what kind of chance of success. Even
Speaker 3: Stephen Myron and his piece says that it's a pretty
Speaker 3: narrow path to success. Right the stated aim of bringing
Speaker 3: back well paid jobs, it's not going to put the
Speaker 3: manufacturing sector where it was back in its peak in
Speaker 3: nineteen seventy nine. You know, that's when the most manufacturing
Speaker 3: jobs were seen in the US. The thing is that
Speaker 3: the tariff part of the planet they've outlined, even if
Speaker 3: you assume it can be implemented, is no kind of
Speaker 3: quick fix. In the meantime, we've got inflation is a
Speaker 3: real risk. Most companies that have higher import or production
Speaker 3: costs because of tariffs will simply pass those costs onto consumers.
Speaker 3: One thing that Myron points out in his paper is
Speaker 3: that these tariffs must be applied carefully so that there
Speaker 3: is no retaliation, because if you get reached retaliation, you
Speaker 3: get a trade war that can go on ad infinitum.
Speaker 3: But we've already seen retaliation from Europe, from China, from Canada,
Speaker 3: We've seen those rates on tariffs pushing up higher. Stephen
Speaker 3: Myron also said that once you get above twenty percent tariffs,
Speaker 3: you start to see them becoming counterproductive. That's when you
Speaker 3: start to see the economic impacts coming back and biting Americans.
Speaker 1: Okay, and you said that the peak of American manufacturing
Speaker 1: was in nineteen seventy nine, So how much of this
Speaker 1: plan is really about imagining a more traditional past. What
Speaker 1: does this document tell you about the type of America
Speaker 1: that Trump is working towards in the social sense as
Speaker 1: well as the economic. If we start off by looking
Speaker 1: at it in policy terms, this is revenge politics, as
Speaker 1: Jillian Tet has said at the Financial Times, and that's
Speaker 1: arguably what drove all of the economic pain that led
Speaker 1: to the last World War.
Speaker 3: And in social terms, it's really to know what kind
Speaker 3: of nostalgia Trump has in mind when he's thinking about
Speaker 3: making America great again. There's a lot about this platform
Speaker 3: that would take the country back to perhaps his early
Speaker 3: adult years in the seventies, when America was the manufacturing giant.
Speaker 3: Maybe he's romanticizing about those well paid jobs when men
Speaker 3: worked and women stayed at home. But I'd suggest that
Speaker 3: the world that Trump really has in mind, it's imperialist.
Speaker 3: It's imposing itself on every other country's decision making. And
Speaker 3: if we kind of halt that sane washing cycle for
Speaker 3: a second, this is the world that allows him to
Speaker 3: continue performing and to seize the world's attention. He's gathering
Speaker 3: power to himself and he's capitalizing on it, and that's
Speaker 3: just for him.
Speaker 1: The US President, Emily, thank you so much for your time.
Speaker 3: Thank you so much.
Speaker 6: Ruby.
Speaker 1: Also in the news today, the ABBA has left the
Speaker 1: cash rate unchanged at four point one, as expected. In
Speaker 1: a statement accompanying the decision yesterday, the board said inflation
Speaker 1: has fallen substantially since the peak in twenty twenty two
Speaker 1: as a result of higher interest rates. The Board is
Speaker 1: now expected to cut rates at the next meeting in May,
Speaker 1: according to analysts, and former Prime Minister Malcolm Turnbull has
Speaker 1: told politicians to get off their knees and stand up
Speaker 1: to President Trump. In an address at the Press Club yesterday,
Speaker 1: mister Turnbull mimicked the US President and said both Anthony
Speaker 1: Abeneze and Peter Dutton have failed to properly respond to
Speaker 1: the changed reality of American foreign policy. He also suggested
Speaker 1: Australia withdraw a recently announced three billion dollar payment to
Speaker 1: prop up America's submarine building capability, and consider withdrawing American
Speaker 1: access to Australian naval bases. I'm Ruby Jones. This is
Speaker 1: seven am. See you tomorrow.