1 00:00:05,800 --> 00:00:08,920 Speaker 1: Welcome to a special edition of Fear and Greed, coverage 2 00:00:08,920 --> 00:00:11,680 Speaker 1: of this morning's tariff announcement by US President Donald Trump 3 00:00:11,760 --> 00:00:13,640 Speaker 1: and a look at what it means for Australia. I'm 4 00:00:13,640 --> 00:00:15,680 Speaker 1: Michael Thompson and good morning, Sean Aylmer. 5 00:00:15,880 --> 00:00:17,760 Speaker 2: Good morning, Michael, Sean. 6 00:00:17,800 --> 00:00:19,960 Speaker 1: We knew it was coming. It had been billed as 7 00:00:20,000 --> 00:00:22,720 Speaker 1: Liberation Day, and speaking from outside the White House, the 8 00:00:22,760 --> 00:00:25,840 Speaker 1: President was certainly in a buoyant mood. It described it 9 00:00:25,840 --> 00:00:29,920 Speaker 1: as very good news and a declaration of economic independence. 10 00:00:30,240 --> 00:00:32,680 Speaker 1: Take us through the basics. What exactly did Donald Trump 11 00:00:32,720 --> 00:00:36,440 Speaker 1: announce this morning? A ten percent tariff on all countries. 12 00:00:36,600 --> 00:00:40,080 Speaker 1: Some nations with a large trade surplus with the US, 13 00:00:40,280 --> 00:00:42,680 Speaker 1: as in they sell more to America than America buys 14 00:00:42,680 --> 00:00:45,920 Speaker 1: from them, they'll be hit with much higher tariffs. China 15 00:00:46,000 --> 00:00:50,400 Speaker 1: thirty four percent, India twenty six percent, Japan twenty four percent, 16 00:00:50,520 --> 00:00:55,320 Speaker 1: Vietnam forty six percent, Cambodia forty nine percent, Lecito l 17 00:00:55,360 --> 00:00:59,560 Speaker 1: ees ot hl L fifty percent. It's a landlocked country 18 00:00:59,600 --> 00:01:04,720 Speaker 1: in southa for incredibly poor fifty percent tariffs. There's regal room, 19 00:01:04,800 --> 00:01:08,679 Speaker 1: though these tariffs will remain in effect until such a 20 00:01:08,760 --> 00:01:12,480 Speaker 1: time as President Trump determines that the threat posed by 21 00:01:12,480 --> 00:01:18,080 Speaker 1: the trade deficit and underlying non reciprocal treatment is satisfied, resolved, 22 00:01:18,600 --> 00:01:19,400 Speaker 1: or mitigated. 23 00:01:19,760 --> 00:01:23,839 Speaker 2: Also, Donald Trump could increase the tariff if trading partners retaliate. 24 00:01:24,040 --> 00:01:26,720 Speaker 2: So I'm sure the European Union at the moment is saying, 25 00:01:26,720 --> 00:01:29,959 Speaker 2: do we throw a tariff on the US? Because the 26 00:01:30,040 --> 00:01:34,399 Speaker 2: US has threatened it will increase its tariff. That is 27 00:01:34,400 --> 00:01:36,880 Speaker 2: the lasting we want. It's a tariff for higher and 28 00:01:36,959 --> 00:01:40,920 Speaker 2: higher and higher. He can also decrease them if countries 29 00:01:40,959 --> 00:01:45,479 Speaker 2: take steps too, I quote remedy non reciprocal tariff arrangements 30 00:01:46,600 --> 00:01:46,920 Speaker 2: right now. 31 00:01:47,000 --> 00:01:49,800 Speaker 1: Look, these were this was very wide ranging. They were 32 00:01:49,920 --> 00:01:54,200 Speaker 1: sweeping tariffs right There were a couple of notable exceptions. 33 00:01:54,320 --> 00:01:57,680 Speaker 1: Canada wasn't mentioned. Mexico wasn't mentioned because they've already been 34 00:01:57,760 --> 00:02:00,920 Speaker 1: hit by fairly well, very steep tariffs. Bringing it back 35 00:02:00,960 --> 00:02:03,960 Speaker 1: home though to US Sean, what's it mean for Australia. 36 00:02:04,080 --> 00:02:06,960 Speaker 2: So Prime Minister Anthony Alberezi this morning said he believes 37 00:02:07,000 --> 00:02:10,600 Speaker 2: it's a ten percent tariff on everything. Certainly there will 38 00:02:10,600 --> 00:02:12,840 Speaker 2: be a ten percent tariff on beef. We know that 39 00:02:12,880 --> 00:02:17,040 Speaker 2: because Donald Trump mentioned that. Specifically asked whether Australia got 40 00:02:17,040 --> 00:02:20,320 Speaker 2: off lightly. Alberizi said no one got off lightly, and 41 00:02:20,320 --> 00:02:23,120 Speaker 2: both he and Opposition leader Peter Dutton have very much 42 00:02:23,120 --> 00:02:26,400 Speaker 2: come out against the announcement this morning from Donald Trump. 43 00:02:26,840 --> 00:02:32,160 Speaker 2: But the fine print did include carve outs, so goods 44 00:02:32,200 --> 00:02:38,520 Speaker 2: not subject to reciprocal tariffs include copper, pharmaceuticals, really important 45 00:02:38,520 --> 00:02:43,480 Speaker 2: one for Australia, semiconductors, lumber, bullion, gold, another big one 46 00:02:43,480 --> 00:02:46,840 Speaker 2: for Australia energy and certain other minerals. That's certain other minerals. 47 00:02:46,919 --> 00:02:49,200 Speaker 2: You think battery minerals. We've got plenty of those as well. 48 00:02:50,919 --> 00:02:54,440 Speaker 2: Our second is expert's goal. The biggest is pharmaceuticals and 49 00:02:54,480 --> 00:02:57,760 Speaker 2: medical equipment. It's just not really clear whether they're in 50 00:02:57,919 --> 00:02:59,880 Speaker 2: or out now. Alberize did say he thinks it's temp 51 00:03:00,040 --> 00:03:02,880 Speaker 2: and on everything. But if you want to start negotiating quickly, 52 00:03:03,160 --> 00:03:08,160 Speaker 2: I reckon gold, pharmaceuticals, rare earths, those sort of special minerals, 53 00:03:08,480 --> 00:03:10,160 Speaker 2: that's what they'll go for immediately. 54 00:03:11,240 --> 00:03:13,000 Speaker 1: I want to ask you in a moment about kind 55 00:03:13,040 --> 00:03:15,360 Speaker 1: of why Donald Trump is doing this, kind of the 56 00:03:15,400 --> 00:03:18,760 Speaker 1: politics behind it and the logic behind it from his perspective, 57 00:03:19,000 --> 00:03:21,800 Speaker 1: but in terms of Australia in particular, I noticed that 58 00:03:21,880 --> 00:03:26,240 Speaker 1: Anthony Obinezi commented that if this was a true reciprocal tariff, 59 00:03:26,280 --> 00:03:29,360 Speaker 1: then the tariff would be zero because we don't actually 60 00:03:29,360 --> 00:03:32,960 Speaker 1: impose tariffs on US imports. And so does this mean 61 00:03:33,000 --> 00:03:35,960 Speaker 1: then that the US is perceiving the GST to be 62 00:03:36,040 --> 00:03:36,560 Speaker 1: a tariff. 63 00:03:36,960 --> 00:03:39,600 Speaker 2: I don't think it's as subtle as that. That's probably 64 00:03:39,600 --> 00:03:42,400 Speaker 2: the argument. They could make a bunch of things here. 65 00:03:42,520 --> 00:03:45,800 Speaker 2: So the US has been talking about it all along, 66 00:03:46,080 --> 00:03:48,800 Speaker 2: has been saying, you know, we've done this detailed study, 67 00:03:48,960 --> 00:03:52,360 Speaker 2: We're going to pick countries and pick industries. They didn't 68 00:03:52,400 --> 00:03:54,240 Speaker 2: do that, right, They haven't done a detailed study of 69 00:03:54,280 --> 00:03:57,200 Speaker 2: industries within countries. So al ways, talk about the pharmaceutical 70 00:03:57,240 --> 00:04:00,840 Speaker 2: benefit scheme here, the news bargaining co none of that 71 00:04:01,000 --> 00:04:04,320 Speaker 2: was singled out. So you know, maybe you could argue 72 00:04:04,440 --> 00:04:06,520 Speaker 2: the GSTS ten percent, so we get ten percent, but 73 00:04:06,560 --> 00:04:09,520 Speaker 2: everyone got ten percent. So I actually don't think there's 74 00:04:09,560 --> 00:04:12,600 Speaker 2: any of that sort of detailed work being done. It's 75 00:04:12,640 --> 00:04:15,560 Speaker 2: just Donald Trump being tariff man and wanting tariffs. 76 00:04:15,840 --> 00:04:17,440 Speaker 1: So then why is he doing it? 77 00:04:17,760 --> 00:04:21,320 Speaker 2: Well, he believes it will make America great again. That's 78 00:04:21,360 --> 00:04:23,200 Speaker 2: what he says. It's part of the whole maga thing. 79 00:04:23,480 --> 00:04:26,080 Speaker 2: He says it will help the manufacturing base in the US. 80 00:04:26,560 --> 00:04:28,920 Speaker 2: That is the bottom line for him. The manufacturing base 81 00:04:29,320 --> 00:04:33,520 Speaker 2: massive job creator, actually a massive job destroyer in recent decades, 82 00:04:33,560 --> 00:04:36,440 Speaker 2: as countries like Vietnam and Cambodia and China have been 83 00:04:36,440 --> 00:04:39,599 Speaker 2: able to manufacture stuff much cheaper. Same with Canada, same 84 00:04:39,640 --> 00:04:42,880 Speaker 2: with Mexico, particularly Mexico. Trump says it will help critical 85 00:04:42,880 --> 00:04:47,080 Speaker 2: supply chains. Don't understand that one, and stop the US's 86 00:04:47,120 --> 00:04:51,080 Speaker 2: defense capability being dependent on other countries. And in short, 87 00:04:51,640 --> 00:04:55,520 Speaker 2: he says tariff's and needed to ensure fair trade, notwithstanding 88 00:04:55,640 --> 00:04:59,039 Speaker 2: it's actually the polar opposite. But ensure fair trade, protect 89 00:04:59,080 --> 00:05:03,080 Speaker 2: American workers, and reduce the trade deficit. So is he 90 00:05:03,120 --> 00:05:07,840 Speaker 2: correct on this No, Ultimately tariffs will be born by 91 00:05:07,960 --> 00:05:11,120 Speaker 2: US consumers. They'll also result in a slow down in 92 00:05:11,160 --> 00:05:13,919 Speaker 2: global trade and growth, and that will hit the US 93 00:05:14,000 --> 00:05:17,159 Speaker 2: economy as well. Maybe this could have worked in the 94 00:05:17,200 --> 00:05:20,320 Speaker 2: early nineteen hundreds when you just didn't have the global 95 00:05:20,400 --> 00:05:24,440 Speaker 2: trade flows you have today, But now consumers will just 96 00:05:24,480 --> 00:05:26,760 Speaker 2: have to pay much more for goods they buy. You 97 00:05:26,839 --> 00:05:30,920 Speaker 2: know that were manufacturing Cambodia, Vietnam, China. Global trade flows 98 00:05:30,960 --> 00:05:36,599 Speaker 2: are such that Cambodia, Vietnam, China, they'll start finding other 99 00:05:36,680 --> 00:05:40,279 Speaker 2: markets and the US consumer will have to buy home 100 00:05:40,520 --> 00:05:42,560 Speaker 2: made goods and they'll be more expensive. 101 00:05:43,480 --> 00:05:44,800 Speaker 1: The President may be in for a bit of a 102 00:05:44,800 --> 00:05:48,200 Speaker 1: shock over this, then, because during his press conference he 103 00:05:48,320 --> 00:05:51,400 Speaker 1: talked about the fact that this is restoring the economic 104 00:05:51,440 --> 00:05:53,560 Speaker 1: prosperity of the United States. In fact, he said it 105 00:05:53,600 --> 00:05:56,359 Speaker 1: will make America wealthy again. Was that the line that 106 00:05:56,400 --> 00:05:58,800 Speaker 1: he used, and he's portraying it, presenting it very much 107 00:05:58,880 --> 00:06:01,839 Speaker 1: as an emergency. I mean, these tariffs are being introduced 108 00:06:02,120 --> 00:06:04,240 Speaker 1: under emergency legislation. 109 00:06:04,839 --> 00:06:07,280 Speaker 2: Yeah, I mean, so he's used legislation from I think 110 00:06:07,320 --> 00:06:11,240 Speaker 2: was nineteen seventy seven it was introduced, which is emergency legislation. 111 00:06:11,920 --> 00:06:16,200 Speaker 2: The argument who those who are generous to Trump argue 112 00:06:16,240 --> 00:06:18,640 Speaker 2: that he's going to and he kind of referred to 113 00:06:18,680 --> 00:06:21,400 Speaker 2: this in the press conference income tax He doesn't like 114 00:06:21,480 --> 00:06:24,680 Speaker 2: income taxes, and he actually talked about, you know, income 115 00:06:24,680 --> 00:06:26,680 Speaker 2: taxes being set up one hundred years ago and what 116 00:06:26,760 --> 00:06:29,640 Speaker 2: a bad way to go after Great Depression. Things like that. 117 00:06:30,080 --> 00:06:36,200 Speaker 2: He wants to raise money from other countries via tariffs 118 00:06:36,520 --> 00:06:40,640 Speaker 2: and reduce income taxes. So it's like a shift, I mean, 119 00:06:40,640 --> 00:06:43,279 Speaker 2: its tax reform. You can argue that in a sense. 120 00:06:43,720 --> 00:06:45,800 Speaker 2: And so if it is tax reform, it's still the 121 00:06:45,880 --> 00:06:48,440 Speaker 2: US consumer that pays. Oh, that's the point, because it's 122 00:06:48,480 --> 00:06:54,720 Speaker 2: not actually the Vietnamese manufacturer. It's the US consumer that pays. 123 00:06:55,279 --> 00:06:57,960 Speaker 2: So if you're going to be kind to Trump, you're saying, well, 124 00:06:58,000 --> 00:07:00,359 Speaker 2: he's doing tax reform. He's shifting a long as he 125 00:07:00,360 --> 00:07:03,760 Speaker 2: can institute income tax reform, and the money that the 126 00:07:03,839 --> 00:07:08,039 Speaker 2: US raises will come from it's more like a GST 127 00:07:08,160 --> 00:07:10,280 Speaker 2: style thing. People who are buying a user pays tax. 128 00:07:10,560 --> 00:07:13,120 Speaker 2: So he could say that he also needs to cut spending, 129 00:07:13,120 --> 00:07:17,160 Speaker 2: which is what DOGE is all about. That will depreciate 130 00:07:17,200 --> 00:07:21,000 Speaker 2: the US dollar. Theoretically that'll give that a kickstart. So 131 00:07:21,680 --> 00:07:24,440 Speaker 2: there is a theory behind it, right. The problem is 132 00:07:24,920 --> 00:07:26,160 Speaker 2: to get there you might have to go into a 133 00:07:26,160 --> 00:07:29,320 Speaker 2: massive recession, which would be a global recession, which means 134 00:07:29,320 --> 00:07:30,040 Speaker 2: this wouldn't work. 135 00:07:30,880 --> 00:07:33,120 Speaker 1: And keep in mind that we are still within the 136 00:07:33,120 --> 00:07:38,400 Speaker 1: first one hundred days of Donald Trump's presidency. So if 137 00:07:38,400 --> 00:07:40,120 Speaker 1: this is, as you say, a tax reform, it is 138 00:07:40,280 --> 00:07:43,120 Speaker 1: tax reform at lightning speed and likely with a sledgehammer 139 00:07:43,240 --> 00:07:46,320 Speaker 1: as well. Tailing bottom line for Australias on. 140 00:07:46,840 --> 00:07:48,880 Speaker 2: Oh, well, that's a sixty four dollars question, isn't it. 141 00:07:48,880 --> 00:07:51,800 Speaker 2: We may end up getting access to manufactured goods cheaper 142 00:07:51,840 --> 00:07:54,480 Speaker 2: than previously, so he could actually have a downward pressure 143 00:07:54,480 --> 00:07:58,120 Speaker 2: inflation in Australia. Obviously, our beef exporters will need new markets, 144 00:07:58,400 --> 00:08:01,280 Speaker 2: but I actually think they'll find them Asia, Middle East, 145 00:08:01,440 --> 00:08:06,320 Speaker 2: you know, countries like Indonesia which is not just urbanizing 146 00:08:06,360 --> 00:08:09,360 Speaker 2: but moving up the socioeconomic path. That's when they tend 147 00:08:09,400 --> 00:08:13,440 Speaker 2: to demand more high value goods like beef. So our 148 00:08:13,480 --> 00:08:16,000 Speaker 2: winemakers did it when China put tariffs on them. I 149 00:08:16,000 --> 00:08:18,560 Speaker 2: think our beef makers will do it as well. The 150 00:08:18,600 --> 00:08:20,880 Speaker 2: big issue for US is a global economic slow down. 151 00:08:21,160 --> 00:08:22,400 Speaker 2: Absolutely no winners from that. 152 00:08:23,000 --> 00:08:25,640 Speaker 1: Indeed, all right, we'll have more later today with the 153 00:08:26,200 --> 00:08:28,840 Speaker 1: reactions and the responses with the afternoon report, and again 154 00:08:28,880 --> 00:08:31,200 Speaker 1: tomorrow morning with the full edition of Fear and Greed. 155 00:08:31,200 --> 00:08:32,720 Speaker 1: Thank you very much, Sean, Thank you. 156 00:08:32,760 --> 00:08:33,080 Speaker 2: Michael. 157 00:08:33,320 --> 00:08:35,559 Speaker 1: I'm Michael Thompson and this was a special edition of 158 00:08:35,600 --> 00:08:39,280 Speaker 1: Fear and Greed. Have a great day.