WEBVTT - Former US Ambassador To EU Talks Tariffs

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Right, let's bring in

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<v Speaker 1>then our conversation and turn our attention to Anthony Gardner,

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<v Speaker 1>who joins US now, who served as US Ambassador to

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<v Speaker 1>the EU between twenty fourteen and twenty seventeen under President Obama. Ambassador,

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<v Speaker 1>good morning, and thank you so much for joining us.

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<v Speaker 1>You are currently a senior advisor at Brunswick Group. I

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<v Speaker 1>know that you've hopped straight from Bloomberg Television to Bloomberg Radio,

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<v Speaker 1>so I really appreciate it. I could not listen in

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<v Speaker 1>to TV, so perhaps I'll be asking you some of

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<v Speaker 1>the same sorts of questions, but I know that our

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<v Speaker 1>audio audience would really like to understand from you in

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<v Speaker 1>your role as you had it. How you see the

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<v Speaker 1>situation now with Donald Trump in the White House saying

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<v Speaker 1>that US harris will definitely be imposed on the EU?

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<v Speaker 1>Is that your expectation. We've seen a flip flop on Canada, Mexico, Columbia,

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<v Speaker 1>but taris imposed on China. Where does the EU stand

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<v Speaker 1>in this?

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<v Speaker 2>Well, it's great to be on the program. I suspect that, yes,

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<v Speaker 2>he will impose tariffs on the European Union because he

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<v Speaker 2>bears a special animus against the European Union. He's described

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<v Speaker 2>them as worse than China, but smaller. He's particularly unhappy

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<v Speaker 2>with the German trade surplus, and in a lot of

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<v Speaker 2>the countries that great trade surplus, and so we all

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<v Speaker 2>know he believes trade surpluses are evidence of cheating. So

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<v Speaker 2>I think he is going to impose tariffs on the EU,

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<v Speaker 2>and I think it's a very sad mistake because when

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<v Speaker 2>I was in office, and by the way, during many

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<v Speaker 2>Republic administrations, the focus was on reducing trade bearers and

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<v Speaker 2>not creating more of them. This time, the European Union

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<v Speaker 2>is more prepared than it was last time. It's got

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<v Speaker 2>lists of retaliation that it can put into place pretty quickly,

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<v Speaker 2>a trade tool kit as they call it, as much

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<v Speaker 2>stronger than it was in the first term. He will

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<v Speaker 2>want to negotiate. It will negotiate that it did in

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<v Speaker 2>the first term. But we'll try to promise and assuage

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<v Speaker 2>Trump by buying more American goods, including like last time,

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<v Speaker 2>soybeans and LNG, probably throwing a bit of defense and weaponry,

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<v Speaker 2>but that probably will not be enough. It will try

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<v Speaker 2>to say, did Donald Trump, look, we're doing more on trade,

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<v Speaker 2>which sorry, on defense, which is what you wanted us

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<v Speaker 2>to do. Look at the statistics. We can work more

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<v Speaker 2>together on a positive extend on China, on export controls,

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<v Speaker 2>on supply chain resilience, and writing the world trading rules

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<v Speaker 2>and standardization organizations. None of that, I think is going

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<v Speaker 2>to be enough for Donald Trump. So I suspect we

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<v Speaker 2>will see tariffs which are going to have a very

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<v Speaker 2>negative effect on many, not only exporters, but on manufacturers.

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<v Speaker 3>President Trump has characteristically been highly vociferous in his criticisms

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<v Speaker 3>of that try deficit with the EU from your US

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<v Speaker 3>right if as someone who was very closely involved in

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<v Speaker 3>transatlantic trade negotiations during your term, are any of his

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<v Speaker 3>complaints about the trade relationship between the two two blocks warranted?

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<v Speaker 2>Well, in some instances, the EU has tariffs hired in

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<v Speaker 2>the United States. But look what he doesn't say. It

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<v Speaker 2>was pretty obvious in the United States is tariffs and

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<v Speaker 2>someone seas is higher than the ones the EU places. Yes,

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<v Speaker 2>it is true that the EU's agricultural market is relatively closed.

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<v Speaker 2>But you know what he doesn't mention, which is also obvious.

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<v Speaker 2>There are many parts of our economy the United States,

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<v Speaker 2>which are pretty close too. I'm picking public procurements and

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<v Speaker 2>by American and buy America, maritime trade, coastal trade, which

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<v Speaker 2>is the Jones Act. There are many other areas which

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<v Speaker 2>this administration ever mentioned. It is false to say the

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<v Speaker 2>EU is a completely closed market. It's still relatively open

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<v Speaker 2>on public procurement. I would argue it's more open than

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<v Speaker 2>the United States. So, you know, we can go back

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<v Speaker 2>and forth on a ping pong you know, discussion of

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<v Speaker 2>who's more open and who's not. But what's fundamentally false

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<v Speaker 2>is to say they want to country runs a trade

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<v Speaker 2>surplus with another country, that means it is cheating. It's

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<v Speaker 2>just not the case. There are many other reasons why

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<v Speaker 2>the United States runs a massive trade deficit with almost

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<v Speaker 2>the entire world, and it has nothing to do with

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<v Speaker 2>who is cheating and who isn't. So my view is

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<v Speaker 2>we should be putting more efforts into addressing specific you know,

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<v Speaker 2>arguments about you know, certain tariffs, making trade liberalized, and

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<v Speaker 2>not just on tariffs. By the way, there are a

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<v Speaker 2>lot of things that we can be working on to

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<v Speaker 2>facilitate trade transatlantically with our best partner. And by the way,

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<v Speaker 2>one of the things that trade does that Trump doesn't like,

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<v Speaker 2>and here I would agree is in some instances countries

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<v Speaker 2>are not respecting high degree of protection, whether it's on

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<v Speaker 2>labor or well under the deministration, was the environment and

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<v Speaker 2>IP those are the kind of restrictions that we should

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<v Speaker 2>be tearing down to ensure that the level you know

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<v Speaker 2>that there's a level play field.

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<v Speaker 1>HM. But reasoned arguments have not particularly worked. What has

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<v Speaker 1>worked is caving to a very transactional relationship. If you

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<v Speaker 1>look at the you know, the phone call between Shinebaum

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<v Speaker 1>and Trump or between Canada and the US. That is

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<v Speaker 1>what has actually worked. What would be the most effective

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<v Speaker 1>pain point for Europe to target Trump with if it

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<v Speaker 1>wants their message to be heard.

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<v Speaker 2>Well, services trade. You know, the US runs a surplus

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<v Speaker 2>with Europe on services. It runs a deficit on goods trade,

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<v Speaker 2>but services is the opposite. So no doubt the EU

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<v Speaker 2>is looking at services trade. If it really really wanted

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<v Speaker 2>to get tough, they could do something on procurement because

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<v Speaker 2>this is a massive market in Europe and is relatively

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<v Speaker 2>more open. And I think the the United States could say, look,

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<v Speaker 2>if Americans, the US companies want to participate in the

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<v Speaker 2>massive procurement market EU, you have to drop tariff that

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<v Speaker 2>gets pretty that gets pretty tough and aggressive. I think

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<v Speaker 2>they want to avoid that, but it's there.

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<v Speaker 3>And let's assume for a moment then that the tariffs

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<v Speaker 3>do get imposed in some form or other on a

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<v Speaker 3>you goods A lot of them are you know, the

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<v Speaker 3>goods the EU exports the US are extremely popular. I'm

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<v Speaker 3>thinking here particularly say cars, What impact do you expect

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<v Speaker 3>that they would actually have? Will consumers US consumers stop

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<v Speaker 3>buying your pin cars?

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<v Speaker 2>Well, you know, the picture there is extremely complex, as

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<v Speaker 2>you know and your listeners know, because a lot of

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<v Speaker 2>europe manufacturers actually manufactured cars in the United States. So

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<v Speaker 2>it depends on the manufacturing question. Some are more exposed

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<v Speaker 2>partly there, importing both cars and car parts from Mexico

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<v Speaker 2>and Canada and so forth, so they may get impacted more.

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<v Speaker 2>Some European manufacturers do in DBA export cars from Europe

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<v Speaker 2>the United States, but more and more many of them

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<v Speaker 2>have been making significant number of cars in the United States.

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<v Speaker 2>So yes, there will be a shift to probably more

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<v Speaker 2>production in the United States if you manufacturers have made

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<v Speaker 2>those announcements recently. But that doesn't mean that you know,

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<v Speaker 2>tariffs could be These are great things. More jobs in

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<v Speaker 2>that state because over the longer term, it makes us

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<v Speaker 2>less competitive and it will make prices rise. You know,

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<v Speaker 2>taxes that sorry tariffs are a regressive tax, a tax

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<v Speaker 2>that's the least well off pay more in general. So

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<v Speaker 2>it'll be interesting to see when people actually feel this

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<v Speaker 2>in their pocket book. It may not be immediate, but

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<v Speaker 2>it will happen.

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<v Speaker 1>In terms of the UK, do you think that Britain

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<v Speaker 1>is really going to be excluded or is it a

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<v Speaker 1>matter of time? Is it something that comes in perhaps

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<v Speaker 1>further down the line when the US looks at this.

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<v Speaker 1>I mean that the government at the moment is trying

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<v Speaker 1>to focus on the advantages of being both close to

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<v Speaker 1>the EU and the US. Is obviously an argument that

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<v Speaker 1>the UK could end up isolated by these massive kind

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<v Speaker 1>of partners trading blocks.

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<v Speaker 2>What's your view on the UK now, Well, yeah, I

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<v Speaker 2>don't agree with that argument. You know, there was a

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<v Speaker 2>lot of comfort that the UK had for being inside

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<v Speaker 2>a big tent. And it's not only because the EU

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<v Speaker 2>is an effective trade negotiator. It can get much more

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<v Speaker 2>leverage in the trade negotiations. Look, we saw it recently

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<v Speaker 2>with Amercrosore. We started recently with the EU's updated agreement

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<v Speaker 2>with Mexico, the ease negotiating a lot of other agreements

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<v Speaker 2>across the world. Yes, the UK is doing it as well,

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<v Speaker 2>but the EU drives a much much better bargain. Being

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<v Speaker 2>inside that tent, it gave the UK a certain amount,

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<v Speaker 2>a certain number of significant benefits. So the UK is

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<v Speaker 2>now out. So yes, it's trying to do the splits,

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<v Speaker 2>striving a little bit of each. I suspect the US

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<v Speaker 2>whether Trump will say to the UK, make a choice

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<v Speaker 2>either with US or against US. And by the way,

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<v Speaker 2>that means not aligning with any of the E regulations,

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<v Speaker 2>but aligning with US regulations on a number of issues,

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<v Speaker 2>including on food, on agrifood. That's going to be a

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<v Speaker 2>really difficult moment for the UK because then it will

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<v Speaker 2>bear a significant price in terms of goods experts to

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<v Speaker 2>its biggest market, which is the EU market. So the

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<v Speaker 2>answer to your question is, this is a really tough

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<v Speaker 2>line to walk, and it's not without a price.

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<v Speaker 3>And on that then on on the UK again, let's

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<v Speaker 3>let's let's assume that that the premise doesn't manage to

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<v Speaker 3>walk that that very tough line, and that some form

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<v Speaker 3>of tariffs are slapped on UK goods. What are the

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<v Speaker 3>potential sort of pinch points for the UK line to

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<v Speaker 3>be Where where might the Trump administration target and similarly,

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<v Speaker 3>what sort of retaliatory measures might we anticipate.

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<v Speaker 2>Gosh, I don't want to speculate on that. I mean,

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<v Speaker 2>we saw already last time, you know, tariffs. I think

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<v Speaker 2>it was on some drinks trade and so on. But

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<v Speaker 2>I don't want to speculut which things are going to

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<v Speaker 2>be selected by the Trump nor what kind of retaliation

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<v Speaker 2>there will be, So I will I will respectfully pass

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<v Speaker 2>on that question. I hope we can avoid it because

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<v Speaker 2>it is, as I mentioned, I think it's a destructive

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<v Speaker 2>to a causeitive trading relationship.

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<v Speaker 1>Ambassador, just briefly, and lastly, do you think that the

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<v Speaker 1>role of US ambassadors is changing? Obviously, you know it

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<v Speaker 1>was a job that you held and clearly enjoyed for

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<v Speaker 1>a long time. Do you think that the role of

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<v Speaker 1>US ambassadors will change onto the second Trump administration?

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<v Speaker 2>Oh, that's a very sad question. Look, the role of

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<v Speaker 2>ambassadors has been evolving, not just under Trump, by the way,

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<v Speaker 2>It's been kind of a bipartisan issue for a long time.

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<v Speaker 2>We are sending, unfortunately too often abroad envoys who know

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<v Speaker 2>very very little and are there just because they gave money,

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<v Speaker 2>contributed to campaigns or to the inauguration so forth. This

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<v Speaker 2>is a very very negative trend. You know, in some

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<v Speaker 2>cases it doesn't matter because the relationship with a particular

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<v Speaker 2>country is so strong that you can you with it

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<v Speaker 2>with professionals from the home base s iety Washington. But

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<v Speaker 2>in some cases where things get heated, and obviously we're

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<v Speaker 2>about to hit that kind of a situation very soon

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<v Speaker 2>with Europe and potentially with the UK, you do need

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<v Speaker 2>envoys who actually know what they're talking about, and who

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<v Speaker 2>can have be the eyes and ears and be the

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<v Speaker 2>intelligent set of eyes and ears beyond what Washington can

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<v Speaker 2>already gather