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Speaker 1: So I think we've covered off most of the countries

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Speaker 1: that are severely hit from various correspondents, but the Irish

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Speaker 1: PM's not happy.

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Speaker 2: There is no doubt that the imposition of tariffs by

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Speaker 2: the US.

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Speaker 3: Will have an adverse impact.

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Speaker 2: Ireland's priority is the protection of jobs and our economy.

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Speaker 1: The US Treasury Secretary is doing his best.

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Speaker 2: Prices will go up for Americans in the short term,

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Speaker 2: right they could, they don't have to, and the President

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Speaker 2: Trump's first administration prices didn't go up, so the businesses

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Speaker 2: don't have to pass them on or the producers and

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Speaker 2: the other countries can eat the tariffs, and traditionally the

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Speaker 2: dollar adjusts. So it's a very complicated calculus to see

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Speaker 2: where we end up.

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Speaker 1: Well, none of that happens. So as far as this

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Speaker 1: is all concerned, do we see retaliation, what happens next?

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Speaker 1: Does it reshape global trade? Does the Trump administration pay

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Speaker 1: a heavy political price for increasing the cost of living?

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Speaker 1: If not engineering a potential recession? Form the US Department

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Speaker 1: of Treasury economists bread Sister is with us. Bread morning

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Speaker 1: to you.

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Speaker 3: Oh well, good afternoon in my time, but good morning

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Speaker 3: to you.

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Speaker 1: What do you make of it?

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Speaker 3: Well, It's a shockingly radical shift in policy. I mean,

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Speaker 3: I think everyone knew that President Trump wanted to raise tariffs,

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Speaker 3: But even in a context where there was an understanding

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Speaker 3: that President Trump wanted to raise tariffs, he wrote increased

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Speaker 3: tariffs on a host of trading partners by more than expected.

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Speaker 3: This is a fundamental break in the post World War

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Speaker 3: two US international economic policy approach, and it's an enormous

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Speaker 3: political and economic risk for President Trump. I mean, the

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Speaker 3: magnitude of the tariff increase does, in my view, threaten

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Speaker 3: to push the US into a recession. It's such a

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Speaker 3: big increase, so broad base, so poorly targeted.

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Speaker 1: Do you expect what happened yesterday to be followed by

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Speaker 1: a lot of phone calls and a lot of negotiation

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Speaker 1: and a lot of carbouts. And what we're seeing this

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Speaker 1: morning is not what we'll see in a couple of months.

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Speaker 3: Look, I think, on one hand, there's still a set

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Speaker 3: of tariffs that are in the works that haven't yet

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Speaker 3: been imposed, tariffs on semiconductor is, tariffs and pharmaceuticals. So

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Speaker 3: on one hand, we know there are more terriffs in

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Speaker 3: the works. We haven't seen the end of the tariff

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Speaker 3: onslot On the other hand, certainly some in the administration,

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Speaker 3: not all, are open to the idea of negotiating some

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Speaker 3: of these terraffs down in return for concessions from America's

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Speaker 3: trading partners. But I think the clear signal is that

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Speaker 3: you're negotiating the tariff down, you're not going to get

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Speaker 3: the tariff taken off. The ten percent baseline tariff seems

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Speaker 3: to be a minimum that everyone's going to have to pay.

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Speaker 3: And we don't yet know whether the administration is willing

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Speaker 3: to do realistic deals, whether they just are going to

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Speaker 3: say they are open to negotiation, but in practice their

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Speaker 3: terms are not going to be suitable for our trading partners.

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Speaker 1: Do does the average American understand? Of course, we from

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Speaker 1: New Zealand come from a pretty free trading sort of environment,

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Speaker 1: and the bits we don't understand is that we've got

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Speaker 1: a balanced trade portfolio with America. Australia's got a pretty

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Speaker 1: balanced trade portfolio. Israel drops all their tariffs the day

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Speaker 1: before the announcement, they still get whacked with seventeen percent.

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Speaker 1: Does American or do Americans understand that the whole world

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Speaker 1: is not going to relocate to America and build factories

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Speaker 1: and build you everything you need at prices you can afford.

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Speaker 1: And that's just basically bs.

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Speaker 3: No. I don't think most Americans yet realize how radical

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Speaker 3: this policy is, how much it's going to raise prices,

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Speaker 3: how the cost of living is, which was a big

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Speaker 3: issue in the recent president election, is going to go

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Speaker 3: up for most people. So I don't think most Americans

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Speaker 3: recognize it. I don't think the administration recognizes how hard

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Speaker 3: it's going to be to relocate production into the US when,

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Speaker 3: as you said, for many goods, the US is going

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Speaker 3: to be a high cost producer and this production is

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Speaker 3: only going to be viable with permanent protection. So I

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Speaker 3: do think that the cost of this policy shift had

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Speaker 3: been underestimated. And I completely understand how countries that have

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Speaker 3: had balance trade with the US are wondering why they're

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Speaker 3: on this list. And I think the answer is that

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Speaker 3: balance trade isn't enough. President Trump wants to get some

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Speaker 3: revenue and ten percent is basically the minimum. So Australia

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Speaker 3: should take comfort, in President Trump's view, from the fact

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Speaker 3: that their rate is only ten percent, and the best

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Speaker 3: probably Europe can hope to get out of negotiation is

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Speaker 3: going from say twenty to ten. I think it's just

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Speaker 3: a new world.

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Speaker 1: If I don't know in your wheelhouse, but if it

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Speaker 1: gets udly economically in America and you got the midterms,

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Speaker 1: do the Republicans freak out? And it's not to implode.

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Speaker 3: I don't know they implode, but you could certainly see

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Speaker 3: a split between the congressional Republicans, some of whom are

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Speaker 3: not that keen on this policy privately, and President Trump.

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Speaker 3: President Trump's all in, but I think there is yet

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Speaker 3: still a strong contingent of traditional free trade Republicans that

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Speaker 3: would break from President Trump. If President Trump's approval rating

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Speaker 3: falls significantly and the Senate candidate or the House candidate

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Speaker 3: feels like the tariffs are dragging their prospects down, that

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Speaker 3: would be a fracture in the party. But it's the

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Speaker 3: kind of fracture that happens when you have a president who,

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Speaker 3: at least under conventional terms, is not up for re

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Speaker 3: election and his power will start to wane further into

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Speaker 3: a story.

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Speaker 1: Great to check to you, but I appreciate it very much.

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Speaker 1: Brad Sitzer, who's a former US Department Treasury economist. For

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Speaker 1: more from The Mic Asking Breakfast, listen live to News

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Speaker 1: Talks at B from six am weekdays, or follow the

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Speaker 1: podcast on iHeartRadio