S1: From the newsrooms of the Sydney Morning Herald and The Age.
S1: This is the morning edition. I'm Samantha Selinger Morris. It's Wednesday,
S1: April 9th. To say that American President Donald Trump's global
S1: tariffs have sparked chaos around the world is an understatement.
S1: One analyst called the result a self-induced economic nuclear winter.
S1: And that was before the tit for tat trade war
S1: between the United States and China escalated today, with Trump
S1: imposing an additional tariff on China, taking the total to 104%. Today,
S1: international and political editor Peter Hartcher on where this trade
S1: war with China could lead. And the mini rebellion among
S1: Republicans to Trump's tariffs. So, Peter, let's just start with
S1: which countries have actually escaped Trump's tariffs and why have
S1: they been granted these really rare exemptions?
S2: Yes. It's a great point. That's largely been overlooked because
S2: the administration Peter Navarro, Trump's trade adviser, has been insisting
S2: on no exemptions, even testifying before the Congress in the
S2: last day or so. We've seen the US trade Representative,
S2: Jamison Greer, saying, no, we can't have any exemptions because
S2: if you start opening up one, you'll end up with
S2: a Swiss cheese. There'll be holes everywhere and it won't
S2: mean anything. And yet, despite all that rhetoric, in reality
S2: a number of countries have been exempted, including for traditional
S2: enemies of the US. Remarkably, some people have pointed out
S2: that Russia got an exemption, but also Russia's ally, Belarus
S2: was exempted from these new tariffs. So was North Korea,
S2: and so was Cuba. These are countries that the US
S2: has been prepared in the past to put its very
S2: existence on the line, to defeat and to defend against.
S2: And now they're getting special treatment from these so-called universal
S2: Trump tariffs. They're not universal at all. I think the
S2: whole world has puzzled over this, but all the indications
S2: are and continue to be affirmed by things like this
S2: decision that Trump has some strange theological connection with Vladimir
S2: Putin that we don't really understand. But it doesn't matter.
S2: It is obviously a political decision by Donald Trump to
S2: exclude those four traditional US enemies from these new tariffs.
S2: That's a pretty interesting signal to send at a time
S2: when he is antagonizing and harming almost all traditional US allies.
S1: Okay, so that's alarming in itself. But then we've got
S1: to talk about the news that really is exploding on
S1: the day that we're recording, recording this Wednesday morning. And
S1: this is when Trump's additional tariff on China has risen
S1: to 104%. Now, this obviously is a result of an
S1: escalating tit for tat tariff war with the country. So
S1: what's this going to do?
S2: Well, it's I think it's a seismic moment. If Trump
S2: persists with these tariffs and the Chinese retaliate as they've
S2: said they will, unless somebody walks away from this, it's
S2: been likened to a game of chicken with two high
S2: speed trains rushing at each other. Or cars. Which one's
S2: going to veer away unless somebody veers away. We could
S2: look back on this as a pivotal moment in modern history.
S2: And here's the reason. A tariff of 100% plus on
S2: Chinese imports into the US, and there were about $400
S2: billion worth last year. It's the biggest. If you look
S2: at the two way trade between the US and China,
S2: it's the biggest two way trade flow on the planet.
S2: And that's just goods excluding services, $400 billion a year, 100%
S2: tariff on China's imports into the US is effectively an embargo. Effectively,
S2: that will destroy probably the great bulk of China's sales
S2: to America. Now that's pretty dramatic thing to do. That
S2: will deprive China of a lot of export revenue. It
S2: will deprive Chinese companies of a lot of the supply
S2: chains that they've built up. It imposes an impossible new
S2: tax on this very large flow of trade. Now, the
S2: lesson of history here, Samantha, is that when the US
S2: applied an economic embargo, in that case, an oil embargo
S2: on Japan, imperial Japan in 1941 as punishment for Japan's
S2: territorial aggression in the Pacific, that was the tipping point
S2: that brought Japan into the Pacific War. That was the
S2: tipping point where Tokyo decided under a dictatorship of the time,
S2: decided to attack the US, famously at Pearl Harbor, but
S2: also all US and British and Dutch interests throughout the
S2: Pacific that launched the Pacific War. Now, the potential power
S2: of such an aggressive trade embargo on a country that
S2: depends on that trade. Now, it's still we're still a
S2: few steps away from that, but it is a lesson
S2: from history that we should not ignore.
S1: So you're saying this actually is a feasible, possible outcome
S1: from this, is that this trade war could actually lead
S1: to a hot war, in particular between the United States
S1: and China. Like, is that an alarmist question to ask
S1: at this point, or.
S2: Is I don't think it's alarmist at all, because both
S2: countries have been contemplating exactly that for years. We know
S2: that there has been often labelled a Cold War or
S2: a new Cold War evolving. There has been talk of
S2: decoupling de-risking between the US and China for years. And
S2: that's sometimes the political relationship gets better, sometimes worse. So
S2: this clash has been building. XI Jinping for 2 or
S2: 3 years now has been saying repeatedly to the Chinese
S2: people in remarks which would get very rarely reported in
S2: the West. But he's been saying we have to prepare
S2: the Chinese economy and the Chinese people to weather extreme
S2: storms and extreme circumstances. He's had this so-called dual circulation policy.
S2: The dual circulation policy is effectively trying to create a
S2: self-dependency in as many areas of food and other supplies
S2: as possible. He's been girding for this moment. He's been
S2: girding for a hot potential. Hot war. He's been girding
S2: for a crisis. And now XI Jinping cannot and will
S2: not step back from a confrontation with Trump. It's a
S2: matter of national pride. And for him, political survival. If
S2: he's seen to be backing down to the US, that
S2: will be cataclysmic for XI Jinping's leadership. And Trump has
S2: now put his credibility on the line, such as it
S2: is as well.
S1: We'll be right back. Which is so interesting. And it
S1: brings me to my next question, because there's been so
S1: much focus, of course, on the economic global chaos that
S1: has resulted from Trump's tariffs. But I am wondering if
S1: perhaps on the Trump side, if these tariffs are perhaps
S1: more about Trump showing off his, you know, unfettered power
S1: or cementing that in the minds of leaders around the globe?
S1: Do you think that's possibly the case here?
S2: I think it's all the indications are. And analyzing Donald
S2: Trump's motivations is always fraught. It is. But if you
S2: look at what he's what he's said and done, it
S2: is about flexing his political and egotistical, megalomaniacal, if you like,
S2: power in front of the American public, but also and
S2: doing that by imposing his will on foreign countries. And
S2: it's in his rhetoric as well, where he says, now
S2: that he's doing this, he's asserting an American vengeance against
S2: these countries that have been raping and pillaging the US
S2: for years, and that they have to come to him.
S2: I'm not going to go to them, he says. They
S2: have to come to me. In other words, they have
S2: to bend the knee and capitulate before I'll deal with them.
S2: So that's absolutely about asserting some sort of macho power
S2: over foreign countries as a way of asserting dominance, but
S2: also impressing the MAGA crowd and the American public in general.
S2: I think that's central to the motivation for this, and
S2: it's been building in his mind for a long time.
S2: And finally he's here. And as he said, just in
S2: the last few hours, he said nobody but me would
S2: do this, and that's for sure.
S1: That is for certain. But let's talk about what pushback
S1: there's been within the United States to what Trump's been doing,
S1: because I did want to ask you about what may
S1: be called a burgeoning mini rebellion, I guess, from within
S1: the Republican Party against Trump's tariffs, because we know that
S1: there is a bipartisan bill to give Congress the final
S1: veto on Trump's tariffs. Right. So tell me about that.
S2: That's true in both the House and the Senate. A
S2: bipartisan groups of legislators have got together to put up
S2: bills which insist on the congressional prerogative of deciding tariff
S2: policy as set out in the US Constitution, and that
S2: Trump is trying to do some sort of end run
S2: around the Constitution by using an Emergency Economic Power Act,
S2: which they think would not stand up in court. So
S2: Congress is saying, no, it's our power, not yours, and
S2: we don't trust the way you're implementing it. However, at
S2: this particular moment, it doesn't seem to be enough support
S2: in either house for those to pass. And Donald Trump
S2: is threatening to veto such a bill anyway. Now they
S2: could counter a presidential veto veto, but they would need
S2: a supermajority in both houses, which looks on the current
S2: numbers are unlikely. But, you know, if we're going to
S2: talk about a future possibilities, we also have to think
S2: about other possible developments in the meantime. Look at what's happening,
S2: the carnage in the world. Financial markets, which as we speak,
S2: has just dramatically been aggravated by the developments with the
S2: extra tariff on China as we speak. There was a
S2: tentative recovery in financial markets today that's evaporated. Stocks are falling.
S2: Commodity prices are falling. The iron ore price, the oil
S2: price are all indicating growing investor expectations that we are
S2: heading into a global recession. So unless these tariffs are
S2: wound back fairly briskly, that is where we are heading now.
S2: That sort of pressure on the Republicans on the US voter,
S2: as their 401 K life savings start to collapse under
S2: the weight of these market falls. That could change the
S2: sentiment in the Congress and that that could well change
S2: the balance. But this is the future, and that's all
S2: always speculative.
S1: Yeah, it is. But I did want to add to
S1: that that it's not just this bipartisan bill. You know,
S1: we've also seen a bit of pushback from other forces,
S1: you know, supporters of the Republican Party, because we saw
S1: a tweet the other day from American billionaire Bill Ackerman.
S1: He helped fund the Trump campaign, and he was calling
S1: for a pause in tariffs. And then Elon Musk, too,
S1: has said he wants a world of zero tariffs between
S1: the U.S. and the EU specifically. So I know this
S1: is conjecture here, Peter, but I do wonder, I mean,
S1: could we reach a tipping point where this just becomes
S1: too much even for MAGA supporters?
S2: Yes, absolutely. Because as their life savings in those 401
S2: K accounts, Australian equivalent of which is your super account,
S2: as those life savings fall and the economy in the US,
S2: contracts and prices on shop shelves rise, that will exert
S2: a lot of pressure on Middle America. It will test
S2: the MAGA mob's confidence in Donald Trump. Remember, this administration
S2: is only three months old and most of the MAGA
S2: sentiment is still with Trump. But the majority of the
S2: American public now say they do not like tariffs. Trump's
S2: economic approval ratings are falling. So this is all now
S2: in play. The big question that is bruited everywhere around
S2: the world, including to Trump directly in the last hours,
S2: is are these tariffs temporary? Is this just a negotiating
S2: front that you're putting up and you're prepared to retreat
S2: as you extract concessions from trading partners? Or is this permanent?
S2: And Trump has said both can be true. Confronted with
S2: that question is this permanent or temporary? He said both
S2: can be true. So riddle me that, Samantha.
S1: Yeah. That's right. I guess we're back to the madman
S1: theory of foreign diplomacy that, you know, many think that
S1: he subscribes to. But, Peter, let's turn to Australia, because
S1: I wanted to ask you about the attempts that our
S1: leaders have been making behind the scenes, because you've just
S1: written about this to strike a deal with Trump. So
S1: tell me what they are.
S2: So we know that the Friday before Liberation Day, so-called
S2: liberating Americans from their life savings. That's right. When Trump
S2: announced his tariff impositions that Kevin Rudd, as ambassador to Washington,
S2: presented to cabinet level officials of the Trump administration, the
S2: US Trade Representative Greer and the Commerce Secretary, Howard Lutnick,
S2: with a package of proposals, a deal that they were
S2: seeking to exempt Australia from the tariffs. And the feedback
S2: that and I, Don Farrell, the Australian trade Minister, went
S2: on the record to discuss this with me. We thought
S2: there was a real chance we would get an exemption.
S2: But then they stopped answering their phones over the subsequent
S2: days and the Australians realized that the deal had been overruled.
S2: And they heard that Pete Navarro, trade adviser to Trump,
S2: had overruled the two cabinet level secretaries and said, no,
S2: there can be no exemptions, which of course we now
S2: know to be not true. Ridiculous. But it was applied
S2: to Australia and that stuck. So now what are the
S2: elements of that proposal. And it remains relevant because that proposal,
S2: Don Farrell told me, is still on the table in
S2: on Trump's desk, if he should choose to take it. Now,
S2: the only component of it we know for sure is
S2: that there is some offer to jointly develop critical minerals,
S2: and including rare earths, that Australia has in abundance, to
S2: give the US a reliable supply chain. That's valuable to
S2: the US because they are very exposed to China's stranglehold
S2: on current global supply. But then there are other elements
S2: we don't know about. The government is keeping quiet, but
S2: Don Farrell told me they are not trade related. And
S2: he said we are certainly not discussing or considering concessions
S2: on any of the non-tariff barriers, as the Americans have
S2: complained about, such as the Pharmaceutical Benefits Scheme or other
S2: sensitive issues like that, Farrell says. They're not on the table.
S2: But other items are. And because it's a current offer
S2: and we don't want to blow up the negotiation where
S2: we're not going to tell you what they are.
S1: Okay. Well, this is something I really wanted to end on, Peter,
S1: because when I read this in your piece, I thought, well,
S1: is there any pressure on the government or do you
S1: feel we may see some soon to reveal what these
S1: elements are? Because I would have thought the electorate I mean,
S1: I certainly want to know so close to a federal election,
S1: just how our government plans to further align itself to
S1: Donald Trump and the United States.
S2: Yes, it's a great question. There seems to be minimal
S2: pressure on Albanese. The opposition is not asking him to
S2: disclose what the other elements of the deal might be.
S2: I think Dutton has learned from his early association, his
S2: early flirtation, perhaps, with trying to out tough Albanese in
S2: standing up to America, that that wasn't playing very well
S2: for him. And he's taken a much more Bipartisan approach.
S2: More rallying around the flag and thereby government and the
S2: Prime Minister is much less critical now of Albanese and
S2: the 10% tariff, and doesn't seem to be much pressure
S2: on Albanese to disclose. And there doesn't seem to be
S2: much awareness that this this offer is still current on
S2: Donald Trump's desk.
S1: Yeah. I mean, I didn't know that until I read
S1: your column. Like, what did you do? Yeah. That's right.
S1: So what did you think? And when Don Farrell, you know,
S1: told you on the record. Yeah. I mean, this offer
S1: is still on the table. Many of the elements of
S1: what's on the offer is confidential.
S2: Well, I was intrigued, and I asked what they were,
S2: and he wasn't going to tell me, and I haven't
S2: been able to find out. Yes, but also the fact
S2: that there was no the Australian government to this point
S2: has still not received a response or a formal response
S2: to that deal tells you that Trump was not interested
S2: in giving Australia an exemption from the beginning, that in
S2: this case, at least in this relationship, it wasn't about
S2: a bargain and it wasn't about a negotiation. They decided
S2: they were going to do it and that's it.
S1: Well, thank you so much, Peter, for your time.
S2: Always a pleasure, Samantha.
S1: Today's episode of The Morning Edition was produced by myself
S1: and Josh towers, with technical assistance by Tom Compagnoni. Our
S1: executive producer is Tammy Mills. Tom McKendrick is our head
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