1 00:00:00,120 --> 00:00:02,679 Speaker 1: Now, the Wall Street Journal is reporting that Donald Trump 2 00:00:02,840 --> 00:00:06,800 Speaker 1: is considering slashing tariffs on Chinese goods by more than half. Now. 3 00:00:06,840 --> 00:00:09,720 Speaker 1: No decisions have been made just yet, reportedly, but that 4 00:00:09,760 --> 00:00:11,960 Speaker 1: would mean that tariffs could come down to between fifty 5 00:00:11,960 --> 00:00:13,960 Speaker 1: and sixty five percent. China, on the other hand, has 6 00:00:14,000 --> 00:00:16,880 Speaker 1: signal it's open to trade talks but won't negotiate under 7 00:00:16,960 --> 00:00:20,000 Speaker 1: juris now. Peter Lewis is our Asia business correspondent with 8 00:00:20,079 --> 00:00:21,000 Speaker 1: US Now have Peter. 9 00:00:21,800 --> 00:00:23,560 Speaker 2: Good Evening, Heather, it. 10 00:00:23,600 --> 00:00:26,280 Speaker 1: Doesn't I mean, nothing is set in stone just yet, 11 00:00:26,320 --> 00:00:27,880 Speaker 1: but it feels like things are calming down. 12 00:00:27,960 --> 00:00:33,360 Speaker 2: Yet they are calming down, but I think from China's perspective, 13 00:00:33,440 --> 00:00:37,519 Speaker 2: the way they're presenting this, particularly that Wall Street Journal 14 00:00:37,600 --> 00:00:41,920 Speaker 2: reports which suggested taroft's on China could be halved, they 15 00:00:42,000 --> 00:00:44,640 Speaker 2: say it as Trump blinking first and it being a 16 00:00:44,720 --> 00:00:49,559 Speaker 2: vindication of presidency's strategy, which is to hang tough there 17 00:00:49,720 --> 00:00:52,040 Speaker 2: as you said earlier, not to be bullied, and not 18 00:00:52,159 --> 00:00:56,960 Speaker 2: to negotiate under dus now. Scott Besson's, the US Treasury Secretary, 19 00:00:57,120 --> 00:01:02,000 Speaker 2: yesterday said that Trump hasn't offer to just remove tariffs 20 00:01:02,040 --> 00:01:05,120 Speaker 2: on his own. There has to be a mutual The 21 00:01:05,319 --> 00:01:09,119 Speaker 2: escalation and tariff's sort of come off together. Well, China 22 00:01:09,120 --> 00:01:12,240 Speaker 2: has made it very clear that that isn't going to happen, 23 00:01:12,280 --> 00:01:15,320 Speaker 2: and it does appear that the White House is misreading 24 00:01:15,360 --> 00:01:19,039 Speaker 2: the room. Again here, China's view has been very much, 25 00:01:19,680 --> 00:01:22,520 Speaker 2: you put these tariffs on. We didn't ask for this, 26 00:01:22,760 --> 00:01:26,319 Speaker 2: we didn't start this trade war. Therefore, you are going 27 00:01:26,360 --> 00:01:28,560 Speaker 2: to have to take them off, and once you do that, 28 00:01:28,720 --> 00:01:31,920 Speaker 2: we are then open to negotiations. But this idea that 29 00:01:31,959 --> 00:01:36,080 Speaker 2: there's going to be some mutual reduction in tariffs over 30 00:01:36,200 --> 00:01:40,040 Speaker 2: time is not what China has been saying. And furthermore, 31 00:01:40,040 --> 00:01:42,240 Speaker 2: they sort of see it as a sign that this 32 00:01:42,319 --> 00:01:45,440 Speaker 2: is an administration in the US that is in some disarray. 33 00:01:45,560 --> 00:01:49,600 Speaker 2: It doesn't have a trade or economic policy. You have 34 00:01:49,720 --> 00:01:53,720 Speaker 2: taris put on one day, then suspended the next, then exemptions, 35 00:01:53,720 --> 00:01:57,800 Speaker 2: a whole bewildering array of exemptions announced. This is very 36 00:01:57,880 --> 00:02:01,160 Speaker 2: much giving the impression to China that there isn't a 37 00:02:01,240 --> 00:02:05,280 Speaker 2: coherent trade policy or strategy. It's being made up as 38 00:02:05,320 --> 00:02:07,560 Speaker 2: they go along on the whim of one man in 39 00:02:07,600 --> 00:02:08,240 Speaker 2: the White House. 40 00:02:08,639 --> 00:02:13,400 Speaker 1: What is China prepared to give, Well, it's. 41 00:02:13,240 --> 00:02:16,200 Speaker 2: Prepared to try and see if there can be some 42 00:02:16,280 --> 00:02:21,079 Speaker 2: more balanced trade. It agrees that, you know, there are 43 00:02:21,080 --> 00:02:24,560 Speaker 2: some problems in the global economy, and it can offer 44 00:02:24,639 --> 00:02:28,639 Speaker 2: to buy more things from the US. But the problem 45 00:02:28,760 --> 00:02:33,000 Speaker 2: is that if the ultimate aim here is to reduce 46 00:02:33,120 --> 00:02:36,880 Speaker 2: the US trade deficit with China and either put it 47 00:02:36,919 --> 00:02:40,919 Speaker 2: into balance or bring it in somehow into surplus, China 48 00:02:40,960 --> 00:02:44,320 Speaker 2: has made the calculation quite correctly in my view, that 49 00:02:44,360 --> 00:02:47,120 Speaker 2: there is going to be pain on both sides, but 50 00:02:47,360 --> 00:02:51,000 Speaker 2: China and its consumers are far more willing and far 51 00:02:51,080 --> 00:02:54,040 Speaker 2: more able to bear that pain. Because if you want 52 00:02:54,080 --> 00:02:55,919 Speaker 2: to reduce a trade deficit, you have to bear in 53 00:02:56,000 --> 00:02:59,000 Speaker 2: mind that trade is one side of the coin. On 54 00:02:59,040 --> 00:03:00,880 Speaker 2: the other side of the co in they are all 55 00:03:00,919 --> 00:03:04,639 Speaker 2: the capital flows, and these have to balance. So if 56 00:03:04,680 --> 00:03:07,359 Speaker 2: you reduce the trade deficits, what it means is that 57 00:03:07,680 --> 00:03:11,760 Speaker 2: there is less money going into the US. So Americans 58 00:03:11,800 --> 00:03:14,320 Speaker 2: are going to have to save more. They're going to 59 00:03:14,320 --> 00:03:17,240 Speaker 2: have to buy less, not just the foreign goods but 60 00:03:17,360 --> 00:03:20,079 Speaker 2: of their own but of their own goods, and there's 61 00:03:20,120 --> 00:03:23,320 Speaker 2: going to have to be more domestic investment into manufacturing 62 00:03:24,040 --> 00:03:27,640 Speaker 2: in the US. Now, we know that Americans love to spend, 63 00:03:27,919 --> 00:03:30,200 Speaker 2: and they love to spend on borrowed money, They've been 64 00:03:30,240 --> 00:03:32,840 Speaker 2: doing it for years, so this is going to be 65 00:03:32,840 --> 00:03:36,560 Speaker 2: a major change if they want to reduce the trade deficits. 66 00:03:36,840 --> 00:03:38,960 Speaker 2: And it's also going to have implications for the dollar 67 00:03:39,000 --> 00:03:41,680 Speaker 2: because I said that capital flows at the other side 68 00:03:41,680 --> 00:03:44,920 Speaker 2: of this. If you have a lower trade deficit, then 69 00:03:44,960 --> 00:03:48,280 Speaker 2: there is less demand for the dollar around the world. 70 00:03:48,520 --> 00:03:53,800 Speaker 2: And you cannot damage China's trading capabilities without also damaging 71 00:03:53,840 --> 00:03:57,600 Speaker 2: its ability to either want or require US dollars. So 72 00:03:57,680 --> 00:03:59,880 Speaker 2: this is going to weaken the US dollar over time 73 00:04:00,200 --> 00:04:04,760 Speaker 2: and ultimately threaten its status as the world's reserve currency. 74 00:04:05,280 --> 00:04:08,160 Speaker 2: Is the US really prepared to pay that price? I 75 00:04:08,240 --> 00:04:08,800 Speaker 2: suspect not. 76 00:04:09,120 --> 00:04:11,360 Speaker 1: Yeah, Peter, Hey, thank you as always really appreciated, look 77 00:04:11,360 --> 00:04:14,880 Speaker 1: after yourself. That's Peter Lewis, our Asia Business correspondence. For 78 00:04:15,000 --> 00:04:18,599 Speaker 1: more from Hither Duplessy Allen Drive listen live to news talks. 79 00:04:18,600 --> 00:04:21,800 Speaker 1: It'd be from four pm weekdays, or follow the podcast 80 00:04:21,880 --> 00:04:22,880 Speaker 1: on iHeartRadio.