1 00:00:03,120 --> 00:00:07,480 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. 2 00:00:16,480 --> 00:00:18,520 Speaker 2: We're going to bring the companies back. We're going to 3 00:00:18,520 --> 00:00:21,880 Speaker 2: lower taxes so further for companies that are going to 4 00:00:21,880 --> 00:00:25,599 Speaker 2: make their product in the USA. We're going to protect 5 00:00:25,600 --> 00:00:29,720 Speaker 2: those companies with strong tariffs. Because I'm a believer in tariffs. 6 00:00:29,760 --> 00:00:31,600 Speaker 2: I'm not sure that you are. I don't think you are, 7 00:00:31,720 --> 00:00:36,559 Speaker 2: but I congratulate you in your career. But to me, 8 00:00:36,640 --> 00:00:40,720 Speaker 2: the most beautiful word in the dictionary is tariff, and 9 00:00:40,800 --> 00:00:44,080 Speaker 2: it's my favorite word. It needs a public relations. 10 00:00:45,440 --> 00:00:45,720 Speaker 3: Firm. 11 00:00:47,200 --> 00:00:51,199 Speaker 4: Welcome back to Vhotonomics, where politics and markets collide. This year, 12 00:00:51,280 --> 00:00:54,240 Speaker 4: voters around the world have the ability to move markets, countries, 13 00:00:54,240 --> 00:00:57,600 Speaker 4: and economies like never before, so we created this series 14 00:00:57,640 --> 00:00:59,960 Speaker 4: to help you make sense of it all. I'm Stephanie 15 00:01:00,040 --> 00:01:03,160 Speaker 4: Flanders joining you this week from the Bloomberg New Economy 16 00:01:03,200 --> 00:01:04,440 Speaker 4: Forum in South Pawlin. 17 00:01:04,920 --> 00:01:08,399 Speaker 1: I'm Adrian Waldridge and I'm Algra Stratton. And both Adrian 18 00:01:08,440 --> 00:01:10,280 Speaker 1: and I are in the Less Glamorous London. 19 00:01:11,040 --> 00:01:14,800 Speaker 4: So we started the show with that clip from former 20 00:01:14,840 --> 00:01:18,800 Speaker 4: President Donald Trump's conversation with Bloomberg's editor in chief John 21 00:01:18,840 --> 00:01:22,040 Speaker 4: Mickelthwaite at the Economic Club of Chicago last week. For 22 00:01:22,080 --> 00:01:25,600 Speaker 4: about an hour, John asked Trump about his platform. They 23 00:01:25,640 --> 00:01:29,440 Speaker 4: talked about taxes, immigration, but what they talked most about 24 00:01:29,520 --> 00:01:33,360 Speaker 4: and obviously which made voter nomics excited, was tariff's And 25 00:01:33,520 --> 00:01:35,520 Speaker 4: I guess it's not so surprising when, as you just heard, 26 00:01:35,560 --> 00:01:40,360 Speaker 4: tariff is Trump's favorite word. I guess another surprise, Allegra 27 00:01:40,440 --> 00:01:43,440 Speaker 4: and Adria was not just that, but the fact that 28 00:01:43,480 --> 00:01:47,560 Speaker 4: there was so much support in the audience. This Chicago 29 00:01:47,680 --> 00:01:51,240 Speaker 4: Economic Club members respectable business folk. 30 00:01:52,360 --> 00:01:52,560 Speaker 3: You know. 31 00:01:52,640 --> 00:01:55,680 Speaker 4: Some people have said that they must have packed the 32 00:01:55,760 --> 00:01:57,800 Speaker 4: room the Trump people, and there were quite a lot 33 00:01:57,800 --> 00:01:59,840 Speaker 4: of staffers there. But actually I think the main reason 34 00:02:00,080 --> 00:02:03,040 Speaker 4: my colleagues who were sitting at tables during the event 35 00:02:03,080 --> 00:02:05,440 Speaker 4: waiting for them to come on, said no, absolutely, these 36 00:02:05,440 --> 00:02:09,280 Speaker 4: were These were regular, respected members of the Midwest business 37 00:02:09,280 --> 00:02:13,760 Speaker 4: community who really like tariffs, even though most economists think 38 00:02:13,800 --> 00:02:16,639 Speaker 4: that they're bad for business. So I thought it would 39 00:02:16,680 --> 00:02:18,600 Speaker 4: be exciting for the three of us to get into 40 00:02:18,680 --> 00:02:21,000 Speaker 4: whether we should be so surprised by all this. We're 41 00:02:21,040 --> 00:02:23,360 Speaker 4: going to talk to a very distinguished economist about it, 42 00:02:23,440 --> 00:02:27,320 Speaker 4: Danny Roderick, who's not so surprised, And we're going to 43 00:02:27,360 --> 00:02:30,200 Speaker 4: have a chat with John Mickelthwaite about the event itself 44 00:02:30,240 --> 00:02:33,280 Speaker 4: and what he took away from it. But Adrian, you 45 00:02:33,320 --> 00:02:36,000 Speaker 4: think America's history provides part of the answer to this. 46 00:02:36,720 --> 00:02:40,000 Speaker 5: Yeah, yeah, absolutely. I think America has always been a 47 00:02:40,200 --> 00:02:42,520 Speaker 5: very pro tariff country, and I think a lot of 48 00:02:42,880 --> 00:02:45,639 Speaker 5: British people, British free traders in particular, tend to think 49 00:02:45,639 --> 00:02:48,680 Speaker 5: of America as being like a giant version of Britain 50 00:02:48,960 --> 00:02:51,320 Speaker 5: and a giant free trading nation. And I think from 51 00:02:51,360 --> 00:02:56,200 Speaker 5: the foundation of the country, from Alexander Hamilton's infant industry reports, 52 00:02:56,480 --> 00:02:59,560 Speaker 5: America has relied on tariffs. It's relied on tariffs to 53 00:02:59,680 --> 00:03:02,760 Speaker 5: raise revenue because the federal government wasn't allowed initially to 54 00:03:03,560 --> 00:03:06,840 Speaker 5: raise taxes, and also on tariffs to sort of shape 55 00:03:06,880 --> 00:03:10,880 Speaker 5: industrial policy to catch up with the United Kingdom at 56 00:03:10,880 --> 00:03:14,720 Speaker 5: the time. And in particular, the Republican Party has been 57 00:03:14,760 --> 00:03:19,760 Speaker 5: a very tariff focused party. The industrial Republicans have really 58 00:03:19,800 --> 00:03:23,080 Speaker 5: relish tariffs as a way of keeping out British competition, 59 00:03:23,360 --> 00:03:25,919 Speaker 5: Britain then being the most industrialized country in the world. 60 00:03:26,320 --> 00:03:31,040 Speaker 5: One peculiar, rather unpleasant example of this is that during 61 00:03:31,080 --> 00:03:34,600 Speaker 5: the Civil War, the economists had a great internal debate 62 00:03:35,240 --> 00:03:39,280 Speaker 5: as to whether to support the North or the South. 63 00:03:41,840 --> 00:03:44,680 Speaker 5: The Economists magazine, that is, whether to support the North 64 00:03:44,800 --> 00:03:47,520 Speaker 5: or the South. And on the one hand, of the 65 00:03:47,560 --> 00:03:49,720 Speaker 5: North was on the side of abolishing slavery, but on 66 00:03:49,760 --> 00:03:53,520 Speaker 5: the other side, the South was in favor of free 67 00:03:53,520 --> 00:03:56,800 Speaker 5: trade because they depended on trade in cotton, and the 68 00:03:56,840 --> 00:04:00,520 Speaker 5: Economists rather unfortunately came out with the conclusion that free 69 00:04:00,560 --> 00:04:04,080 Speaker 5: trade was a more important principle than abolishing slavery, so 70 00:04:04,120 --> 00:04:07,840 Speaker 5: they decided for a while at least to endorse the South. 71 00:04:07,880 --> 00:04:11,960 Speaker 5: So you get very counterintuitive things. And it's only really 72 00:04:12,000 --> 00:04:15,000 Speaker 5: after nineteen forty five, when America is by far the 73 00:04:15,000 --> 00:04:18,880 Speaker 5: most powerful country in the world that it embraces free 74 00:04:18,880 --> 00:04:22,440 Speaker 5: trade and free trade because it doesn't really have any competition. 75 00:04:22,520 --> 00:04:26,280 Speaker 5: So there is this muscle memory in the United States, 76 00:04:26,279 --> 00:04:29,880 Speaker 5: particularly in the Midwest and particularly in the business community, 77 00:04:30,120 --> 00:04:33,240 Speaker 5: of tariff's being really rather good American things. 78 00:04:33,480 --> 00:04:36,200 Speaker 1: Can you imagine in the UK that being something that 79 00:04:36,320 --> 00:04:38,400 Speaker 1: had a prime minister I will want to be would 80 00:04:38,400 --> 00:04:40,120 Speaker 1: go out and say I'm going to do an hour's interview. 81 00:04:40,200 --> 00:04:42,640 Speaker 1: A you can't imagine that, or not many of them, 82 00:04:42,880 --> 00:04:45,360 Speaker 1: but then B that they would say this is going 83 00:04:45,440 --> 00:04:47,600 Speaker 1: to be my news line, my news line is going 84 00:04:47,640 --> 00:04:50,320 Speaker 1: to be, you know, tariff's the most beautiful world my 85 00:04:50,400 --> 00:04:53,719 Speaker 1: favorite word. And then secondly, I think it really for 86 00:04:53,800 --> 00:04:57,080 Speaker 1: me round home the United Kingdom and the debate in 87 00:04:57,120 --> 00:05:00,440 Speaker 1: this country obviously understandably focused on the budget net week, 88 00:05:00,480 --> 00:05:05,120 Speaker 1: but that we have not processed what the economics of 89 00:05:05,160 --> 00:05:08,400 Speaker 1: the next American president might mean for the United Kingdom. 90 00:05:08,640 --> 00:05:10,600 Speaker 4: You know, this thing that is quite boring. I mean, 91 00:05:10,920 --> 00:05:13,680 Speaker 4: in general, tarifsts have been considered pretty boring. A bit 92 00:05:13,720 --> 00:05:18,000 Speaker 4: of international trade has been very politically potent. There was 93 00:05:18,040 --> 00:05:20,560 Speaker 4: a fantastic bit of research that David Ortor did, the 94 00:05:20,600 --> 00:05:22,840 Speaker 4: economist who had also did a lot to put all 95 00:05:22,880 --> 00:05:26,239 Speaker 4: of the information about the China shock to manufacturing workers 96 00:05:26,279 --> 00:05:28,960 Speaker 4: on the map, and he's looked at whether or not 97 00:05:29,040 --> 00:05:32,400 Speaker 4: the tariffs and the first Trump administration helped employment in 98 00:05:32,440 --> 00:05:35,799 Speaker 4: those protected sectors, those bits of manufacturing, and in fact, 99 00:05:36,800 --> 00:05:39,120 Speaker 4: it didn't sort of help or hurt in those sexes, 100 00:05:39,120 --> 00:05:42,800 Speaker 4: and it definitely hurt in jobs, as you'd imagine, in 101 00:05:42,839 --> 00:05:46,000 Speaker 4: the industries that found that their costs were much higher 102 00:05:46,000 --> 00:05:48,279 Speaker 4: because these imports were now more expensive, whether it's on 103 00:05:48,320 --> 00:05:51,120 Speaker 4: steel or other things. But even though it hadn't been 104 00:05:51,400 --> 00:05:53,920 Speaker 4: economically successful, like it actually hadn't helped the groups it 105 00:05:54,000 --> 00:05:56,200 Speaker 4: was supposed to help, and it had hurt other groups. 106 00:05:56,600 --> 00:05:59,280 Speaker 4: It had been more politically successful. He'd gone to these 107 00:05:59,320 --> 00:06:02,120 Speaker 4: counties and found that there were there were more tariffs, 108 00:06:02,640 --> 00:06:05,560 Speaker 4: there was less support for Democrats, more support for Republicans. 109 00:06:05,640 --> 00:06:08,440 Speaker 4: So you can see why he's continued down this road. 110 00:06:09,040 --> 00:06:12,040 Speaker 5: One reason why America can afford to be pro tariffs, 111 00:06:12,040 --> 00:06:15,360 Speaker 5: of course, is that it's a gigantic internal market. It's 112 00:06:15,360 --> 00:06:19,600 Speaker 5: a huge America when it was hiding behind these tariffs, 113 00:06:19,640 --> 00:06:23,320 Speaker 5: also had behind it the world's biggest market. And you know, 114 00:06:23,560 --> 00:06:27,640 Speaker 5: Europe was absolutely crisscrossed with tiny countries and all of 115 00:06:27,720 --> 00:06:31,200 Speaker 5: which had barriers to trade in tariffs. America was a 116 00:06:31,240 --> 00:06:35,920 Speaker 5: free trading you know, subcontinent hiding behind barriers. The other 117 00:06:35,920 --> 00:06:39,600 Speaker 5: thing about in the early twentieth century, the Republicans and 118 00:06:39,640 --> 00:06:43,240 Speaker 5: the business community were a pro tariff community, but then 119 00:06:43,279 --> 00:06:46,839 Speaker 5: there were a rising power that wasn't really central to 120 00:06:46,880 --> 00:06:49,919 Speaker 5: the world economy. Now they are central to the world economy. 121 00:06:50,000 --> 00:06:55,560 Speaker 5: So the implications of the world's most important country intertwined 122 00:06:55,600 --> 00:06:59,000 Speaker 5: with the rest of the world institutionally and through commerce 123 00:07:00,200 --> 00:07:03,240 Speaker 5: to tariffs is absolutely massive and massively negative. In a 124 00:07:03,279 --> 00:07:04,560 Speaker 5: way that it wasn't historically. 125 00:07:04,800 --> 00:07:06,880 Speaker 4: Yeah, and we'll get into some of that. We're going 126 00:07:06,920 --> 00:07:09,560 Speaker 4: to talk to the Harvard professor, Danny Rodrick, Professor of 127 00:07:09,560 --> 00:07:12,760 Speaker 4: International Political Economy at Harvard Kennedy School. But first we 128 00:07:12,800 --> 00:07:15,000 Speaker 4: thought we should have a quick chat with the man himself, 129 00:07:15,040 --> 00:07:18,600 Speaker 4: John Michaelthwaite. Let's have a reminder first of some of 130 00:07:18,640 --> 00:07:20,760 Speaker 4: all that tariff talk in his interview. 131 00:07:24,280 --> 00:07:28,240 Speaker 6: You're going to basically stop trade with China. You're talking 132 00:07:28,280 --> 00:07:31,040 Speaker 6: about sixty percent trade on that, sixty perent tariffs on that. 133 00:07:31,080 --> 00:07:33,320 Speaker 6: You're talking, as you said, one hundred two hundred percent 134 00:07:33,400 --> 00:07:36,160 Speaker 6: or things you don't really like. You're also talking about 135 00:07:36,160 --> 00:07:38,960 Speaker 6: twenty ten, twenty percent tariffs on the rest of the world. 136 00:07:39,400 --> 00:07:41,120 Speaker 6: That is going to have a serious effect on the 137 00:07:41,160 --> 00:07:43,720 Speaker 6: overall economy. And yes, you're going to find some people 138 00:07:43,920 --> 00:07:47,520 Speaker 6: who were gained from individual tariffs. The overall effect could 139 00:07:47,520 --> 00:07:48,480 Speaker 6: be massive. 140 00:07:48,520 --> 00:07:52,840 Speaker 2: I agree, it's going to have a massive effect. Positive effect. 141 00:07:53,160 --> 00:07:56,400 Speaker 2: It's going to be a positive Let me just no, no, 142 00:07:56,440 --> 00:07:58,560 Speaker 2: let me get me committed. You are to this, and 143 00:07:59,000 --> 00:08:00,960 Speaker 2: it must be hard for you. You know, spend twenty 144 00:08:00,960 --> 00:08:03,200 Speaker 2: five years talking about tariffs has been negative and then 145 00:08:03,280 --> 00:08:06,360 Speaker 2: have somebody explained to you that you're totally wrong. It 146 00:08:06,400 --> 00:08:07,440 Speaker 2: will have a negative. 147 00:08:07,760 --> 00:08:08,440 Speaker 3: It will have. 148 00:08:11,000 --> 00:08:15,280 Speaker 6: If you don't forty million jobs. There's a lot of 149 00:08:15,360 --> 00:08:18,080 Speaker 6: jobs to rely on. They're all coming back. What about 150 00:08:18,120 --> 00:08:22,120 Speaker 6: consumers people out there, they're going to be the biggest critics. Say, 151 00:08:22,160 --> 00:08:24,560 Speaker 6: your tariffs will end up being like a national sales 152 00:08:24,600 --> 00:08:28,480 Speaker 6: tax because the country, if you have America at the moment, 153 00:08:28,480 --> 00:08:31,440 Speaker 6: has three trillion dollars worth of imputs. You're going to 154 00:08:31,480 --> 00:08:33,400 Speaker 6: add tariffs to every single one of them. That is 155 00:08:33,440 --> 00:08:35,640 Speaker 6: going to push up the costs for all those people 156 00:08:35,679 --> 00:08:39,120 Speaker 6: who want to buy foreign goods. Is just simple mathematics, 157 00:08:39,120 --> 00:08:39,679 Speaker 6: President Trump. 158 00:08:39,720 --> 00:08:42,040 Speaker 2: It's not. Yeah, it is, but that the way you've 159 00:08:42,120 --> 00:08:44,359 Speaker 2: figured that was always very good in mathematics. 160 00:08:44,440 --> 00:08:44,920 Speaker 6: Let me tell you. 161 00:08:44,920 --> 00:08:48,720 Speaker 2: You're saying three trainia those companion dollars and they don't 162 00:08:48,760 --> 00:08:52,560 Speaker 2: have to pay. And the higher the tariff, the more 163 00:08:52,720 --> 00:08:55,040 Speaker 2: likely it is to have them come into. 164 00:08:55,080 --> 00:08:56,840 Speaker 6: The higher the tariff, the more you're going to put 165 00:08:56,840 --> 00:08:59,680 Speaker 6: on the value of that those goods, the higher people 166 00:08:59,679 --> 00:09:01,079 Speaker 6: are going to pay in shops. 167 00:09:03,640 --> 00:09:06,920 Speaker 4: John, thanks so much for joining us on voter nomics. 168 00:09:06,920 --> 00:09:09,320 Speaker 4: You're here with me in South Paulo, where we're both 169 00:09:09,520 --> 00:09:12,760 Speaker 4: interviewing some very exciting people. I have the US Trade 170 00:09:12,800 --> 00:09:16,640 Speaker 4: Representative Catherine tie which I think will be Gates, and 171 00:09:16,679 --> 00:09:18,400 Speaker 4: I think both of those will be quite different from 172 00:09:18,440 --> 00:09:21,679 Speaker 4: your interview with the former President Trump. Now you've said 173 00:09:22,000 --> 00:09:24,280 Speaker 4: you want the interview to stand on its own and 174 00:09:24,320 --> 00:09:26,400 Speaker 4: not do commentary around it, and we're obviously going to 175 00:09:26,440 --> 00:09:29,480 Speaker 4: respect that, but I did want to ask you whether 176 00:09:29,520 --> 00:09:32,680 Speaker 4: you were surprised by the focus on tariffs and sort 177 00:09:32,720 --> 00:09:36,200 Speaker 4: of whether it changed your understanding of how much that 178 00:09:36,320 --> 00:09:39,320 Speaker 4: was going to drive his policy and might continue to 179 00:09:39,360 --> 00:09:42,920 Speaker 4: shape our world if we do see Trump reelected. 180 00:09:43,720 --> 00:09:45,640 Speaker 6: I've left the interview to stand there because I think 181 00:09:45,679 --> 00:09:48,440 Speaker 6: what's important is what he said rather than particularly what 182 00:09:48,520 --> 00:09:51,040 Speaker 6: I think that on the issue of tariff's. I think 183 00:09:51,040 --> 00:09:55,680 Speaker 6: it was a surprise to many people just how clear 184 00:09:56,480 --> 00:09:59,680 Speaker 6: he is about what he wants to do there, and 185 00:09:59,720 --> 00:10:02,000 Speaker 6: I think it makes it quite difficult for people in 186 00:10:02,040 --> 00:10:04,760 Speaker 6: the business community who've sat there saying, well, look, he 187 00:10:04,800 --> 00:10:06,839 Speaker 6: isn't really going to do this, when I think it's 188 00:10:06,880 --> 00:10:10,520 Speaker 6: one of his core beliefs. It's something that goes all 189 00:10:10,520 --> 00:10:13,640 Speaker 6: the way back to his initial opposition to n after 190 00:10:14,320 --> 00:10:17,359 Speaker 6: a long long time ago, when that was very unfashionable 191 00:10:17,360 --> 00:10:19,920 Speaker 6: in the business community. And I think it's something that's 192 00:10:19,960 --> 00:10:21,959 Speaker 6: actually a kind of key part of Donald Trump. And 193 00:10:22,000 --> 00:10:25,320 Speaker 6: I think he feels frustrated that he wasn't able to 194 00:10:25,360 --> 00:10:27,920 Speaker 6: do more in the first in the first term, and 195 00:10:27,920 --> 00:10:29,439 Speaker 6: he's coming back in it. And you look at the 196 00:10:29,480 --> 00:10:34,240 Speaker 6: region where we are, you know, Brazil, Brazil suddenly beginning 197 00:10:34,240 --> 00:10:36,319 Speaker 6: to think about the European Union in a different light. 198 00:10:36,559 --> 00:10:39,240 Speaker 6: You look at what's happening up in Mexico, the idea 199 00:10:39,280 --> 00:10:43,440 Speaker 6: of one thousand percent tariffs landing on particular factories. These 200 00:10:43,440 --> 00:10:45,760 Speaker 6: are things that could change the world fairly dramatically. 201 00:10:46,160 --> 00:10:50,240 Speaker 4: Do you think we're exaggerating the difference between him and 202 00:10:50,480 --> 00:10:55,240 Speaker 4: quite a lot of previous certainly Republican presidents. I mean, 203 00:10:55,280 --> 00:10:57,280 Speaker 4: even in the eighties, you know, there has been often 204 00:10:57,360 --> 00:11:02,600 Speaker 4: been a very transactional approach to trade, and one sided 205 00:11:02,640 --> 00:11:05,120 Speaker 4: deals have been done. Pressure was put on Japan at 206 00:11:05,200 --> 00:11:07,520 Speaker 4: key moments and everything else. I mean, if you were 207 00:11:07,640 --> 00:11:10,320 Speaker 4: just looking at this through an America first lens, could 208 00:11:10,360 --> 00:11:12,520 Speaker 4: an America first lens actually achieved quite a lot for 209 00:11:12,559 --> 00:11:13,480 Speaker 4: the American economy. 210 00:11:13,640 --> 00:11:16,080 Speaker 6: You can argue that it did a bit in the 211 00:11:16,160 --> 00:11:19,160 Speaker 6: first term. Is that it didn't cause as much damage 212 00:11:19,160 --> 00:11:21,840 Speaker 6: as some people thought, but it was just a lot smaller. 213 00:11:21,880 --> 00:11:25,200 Speaker 6: I think it was on three hundred and sixty billion 214 00:11:25,240 --> 00:11:27,839 Speaker 6: dollars worth of goods. Now he's aiming at the whole 215 00:11:27,920 --> 00:11:32,319 Speaker 6: three trillion dollars of imports, which is a much bigger zone, 216 00:11:32,559 --> 00:11:36,280 Speaker 6: I think, compared with previous efforts in this regard. Yes, 217 00:11:36,400 --> 00:11:39,959 Speaker 6: America has always had had something of an industrial policy. 218 00:11:40,000 --> 00:11:42,559 Speaker 6: You can remember the stuff about Japan in the nineteen eighties, 219 00:11:42,960 --> 00:11:45,200 Speaker 6: you can see what they've done on chips more recently, 220 00:11:45,280 --> 00:11:47,800 Speaker 6: and you can just take the basic attitude that there 221 00:11:47,840 --> 00:11:52,080 Speaker 6: isn't a lot of There isn't that much difference between 222 00:11:52,160 --> 00:11:54,760 Speaker 6: what has happened so far because Biden has hung on 223 00:11:54,800 --> 00:11:57,720 Speaker 6: to most of Trunk's tariffs. I think the difference is 224 00:11:57,880 --> 00:12:02,440 Speaker 6: now that he is massively expanding that front. I mean 225 00:12:02,480 --> 00:12:05,200 Speaker 6: that there is a big difference between hitting three hundred 226 00:12:05,240 --> 00:12:07,920 Speaker 6: and sixty billion dollars worth of goods and hitting three trillion. 227 00:12:08,120 --> 00:12:10,760 Speaker 6: I mean that that is much larger. The sort of 228 00:12:10,880 --> 00:12:14,360 Speaker 6: numbers he's implying he's going to do are much bigger. 229 00:12:14,360 --> 00:12:16,920 Speaker 6: And the interesting question will be whether other countries kind 230 00:12:16,920 --> 00:12:21,679 Speaker 6: of cave or whether they unite. Possibly against it. 231 00:12:22,080 --> 00:12:26,520 Speaker 5: John's just said that that tariffs are much deeper in 232 00:12:26,600 --> 00:12:30,600 Speaker 5: the Trump psyche than we perhaps had imagined. It's really 233 00:12:30,600 --> 00:12:34,200 Speaker 5: a core for foundational belief for Trump, and I think 234 00:12:34,240 --> 00:12:36,440 Speaker 5: you could also say that tariffs are much deeper in 235 00:12:36,480 --> 00:12:39,960 Speaker 5: the American psyche than we'd often imagined. If you go 236 00:12:40,080 --> 00:12:45,240 Speaker 5: back to Hamilton and the infant industry's arguments, you know, 237 00:12:45,320 --> 00:12:49,240 Speaker 5: he based his entire text system on tariffs. The federal 238 00:12:49,280 --> 00:12:52,559 Speaker 5: government couldn't tax, so it paid for itself by tariffs. 239 00:12:52,800 --> 00:12:56,280 Speaker 5: You had very high tariffs protecting American industries all the 240 00:12:56,320 --> 00:13:01,240 Speaker 5: way through the nineteenth century. So America's pro tariff country, 241 00:13:01,280 --> 00:13:05,040 Speaker 5: particularly you know, in Chicago and places like that, and 242 00:13:05,080 --> 00:13:09,080 Speaker 5: particularly with the Republican Party. But nevertheless, when you had 243 00:13:09,080 --> 00:13:13,400 Speaker 5: Smooth Hawley coming in in nineteen thirty, which was an 244 00:13:13,520 --> 00:13:17,480 Speaker 5: imposition of new tariffs, a large number of big new 245 00:13:17,520 --> 00:13:21,400 Speaker 5: tariffs on top of already existing tariffs that plunged the 246 00:13:21,440 --> 00:13:25,360 Speaker 5: world economy and the United States into a deeper depression. 247 00:13:25,440 --> 00:13:27,840 Speaker 5: So even if you have a background of tariffs, if 248 00:13:27,840 --> 00:13:32,679 Speaker 5: you exaggerate and increase that predilection, you can you know, 249 00:13:33,040 --> 00:13:36,520 Speaker 5: two enormous damage. He does have a smooth All these 250 00:13:36,559 --> 00:13:37,320 Speaker 5: sort of mindset. 251 00:13:37,800 --> 00:13:39,880 Speaker 6: I mean, it's quite interesting that he is this time. 252 00:13:40,520 --> 00:13:42,280 Speaker 6: You know, he would be taking on many of the 253 00:13:42,320 --> 00:13:47,439 Speaker 6: bedrocks of kind of other people's economies, so German cars, 254 00:13:48,080 --> 00:13:49,440 Speaker 6: that is a very big deal. 255 00:13:49,760 --> 00:13:49,960 Speaker 1: You know. 256 00:13:50,040 --> 00:13:54,960 Speaker 6: He boasted about how he persuaded Macron to kind of 257 00:13:55,440 --> 00:13:59,160 Speaker 6: give in over things, but by mentioning champagne and wine. 258 00:13:59,160 --> 00:14:01,400 Speaker 6: But there's some point where luxury goods. If he goes 259 00:14:01,440 --> 00:14:04,560 Speaker 6: for that again, it's going to be difficult, and I 260 00:14:04,600 --> 00:14:07,960 Speaker 6: think it does. You know, it is the danger you 261 00:14:08,000 --> 00:14:10,840 Speaker 6: mentioned smooth Paulo. The danger of tariffs is that it 262 00:14:10,880 --> 00:14:14,200 Speaker 6: begins to create a narrative, is that there is a 263 00:14:14,280 --> 00:14:18,679 Speaker 6: limit to how much another country can quietly give in. 264 00:14:20,000 --> 00:14:23,320 Speaker 6: I do think in America there are deep antecedents on this. 265 00:14:23,400 --> 00:14:26,720 Speaker 6: As Adrian pointed out, the favorite word which I saw 266 00:14:26,760 --> 00:14:30,760 Speaker 6: Howard Lutnik use on television was, you know, McKinley is 267 00:14:30,800 --> 00:14:33,760 Speaker 6: the is the go to president for a lot of 268 00:14:33,840 --> 00:14:36,280 Speaker 6: the Republican Party at the moment, because it provides a 269 00:14:36,320 --> 00:14:38,200 Speaker 6: reason to say it won't be that bad. This is 270 00:14:38,240 --> 00:14:41,760 Speaker 6: how it's a great strong American tradition, and there is 271 00:14:41,840 --> 00:14:44,560 Speaker 6: you know, there is definitely an advantage in being America 272 00:14:44,640 --> 00:14:47,520 Speaker 6: because the economy is so big, so I think it 273 00:14:47,640 --> 00:14:49,680 Speaker 6: definitely could correct me. I think it's like twenty seven 274 00:14:49,720 --> 00:14:53,200 Speaker 6: percent of the American economy is reliant on trade. I 275 00:14:53,200 --> 00:14:56,040 Speaker 6: think other places it's much much higher because they're small. 276 00:14:56,080 --> 00:14:57,880 Speaker 6: You know, you're Britain, I think you're twice that or 277 00:14:58,080 --> 00:15:01,080 Speaker 6: totally one and a half times that. And the reason 278 00:15:01,120 --> 00:15:03,640 Speaker 6: why is, you know, in Britain is a smaller place 279 00:15:04,400 --> 00:15:09,160 Speaker 6: where you're almost bound to be importing the exporting things. 280 00:15:09,040 --> 00:15:10,680 Speaker 4: Just a bit of Devil's advocate a bit. I mean, 281 00:15:10,720 --> 00:15:14,960 Speaker 4: his view is that America being the biggest still the 282 00:15:15,000 --> 00:15:18,000 Speaker 4: biggest kid on the block in these negotiations. You know, 283 00:15:18,080 --> 00:15:21,080 Speaker 4: we didn't in your interview, didn't explicitly talk about retaliation. 284 00:15:21,200 --> 00:15:22,760 Speaker 4: But of course a lot of the costs that we 285 00:15:22,880 --> 00:15:25,920 Speaker 4: see for the US economy from this from having tariffs 286 00:15:26,360 --> 00:15:28,760 Speaker 4: is the response that other countries would make. You know, 287 00:15:28,760 --> 00:15:31,600 Speaker 4: that it would be harder for US country companies to export. 288 00:15:31,720 --> 00:15:34,120 Speaker 4: So you might be helping some, you might be helping 289 00:15:34,800 --> 00:15:39,200 Speaker 4: some import competing industries, but you would be damaging those exporters. 290 00:15:39,480 --> 00:15:41,960 Speaker 4: I think his implicit line is, well, let them try, 291 00:15:42,120 --> 00:15:44,600 Speaker 4: because we're big enough, we can threaten them with something else, 292 00:15:44,640 --> 00:15:46,720 Speaker 4: we can cut them off swift or whatever it might be. 293 00:15:46,760 --> 00:15:49,080 Speaker 4: You know, he's talking, he thinks everything's on the table, 294 00:15:50,160 --> 00:15:52,960 Speaker 4: you know, short run, that's probably true, I think. 295 00:15:53,120 --> 00:15:55,440 Speaker 6: I think also it's part of a narrative whereby he 296 00:15:55,560 --> 00:16:00,440 Speaker 6: thinks that America has been hoodwinked, has been given everything away. 297 00:16:00,960 --> 00:16:03,920 Speaker 6: Lutlik on the on the television was complaining about the 298 00:16:03,960 --> 00:16:07,080 Speaker 6: Marshall Plan. You know, America is trying to do everything 299 00:16:07,080 --> 00:16:11,360 Speaker 6: for everybody else and it's and again that slightly goes 300 00:16:11,400 --> 00:16:14,360 Speaker 6: against history in the sense of, you know, you look 301 00:16:14,360 --> 00:16:16,120 Speaker 6: at all these things like what happened with Japan, what 302 00:16:16,120 --> 00:16:20,120 Speaker 6: happened with chips. Secondly, quite interestingly, and Faried Sigaria has 303 00:16:20,120 --> 00:16:23,560 Speaker 6: made this point quite entertainingly. If you know, these people 304 00:16:23,600 --> 00:16:26,040 Speaker 6: who think that America has sold itself down the river. 305 00:16:27,600 --> 00:16:31,640 Speaker 6: By virtually every measure, the American economy has grown at 306 00:16:31,680 --> 00:16:34,000 Speaker 6: the expense of the European one. So if the Europeans 307 00:16:34,000 --> 00:16:38,040 Speaker 6: are doing something devious, they're not doing it very well. 308 00:16:38,800 --> 00:16:42,320 Speaker 6: And the worry is that this actually could come back. 309 00:16:42,680 --> 00:16:44,920 Speaker 6: You know, there is a point at which every politician 310 00:16:45,040 --> 00:16:46,720 Speaker 6: cannot keep giving. 311 00:16:46,760 --> 00:16:50,680 Speaker 1: In my reflection, to take two of your points. The 312 00:16:50,960 --> 00:16:54,280 Speaker 1: one you just mentioned there around Trump thinking that you know, 313 00:16:54,400 --> 00:16:58,040 Speaker 1: America's kind of been you know, bailing everyone out or 314 00:16:58,040 --> 00:17:01,680 Speaker 1: whatever is around defense spending, and we've talked about it before, 315 00:17:01,840 --> 00:17:04,000 Speaker 1: talk about it again. But we've got a budget coming 316 00:17:04,320 --> 00:17:07,000 Speaker 1: next week where they may or may not get up 317 00:17:07,040 --> 00:17:09,000 Speaker 1: to two point five percent on defense spending. But the 318 00:17:09,080 --> 00:17:10,879 Speaker 1: question I have and lots of people have, is is 319 00:17:10,920 --> 00:17:13,720 Speaker 1: it going to be enough for a possible second president Trump? 320 00:17:14,080 --> 00:17:17,160 Speaker 1: And then the second point is the effect for Britain, 321 00:17:17,560 --> 00:17:20,080 Speaker 1: an open economy, of being in the middle of what 322 00:17:20,119 --> 00:17:23,439 Speaker 1: could end up being a trade war. We're having this 323 00:17:23,560 --> 00:17:26,560 Speaker 1: debate about a set of fiscal numbers and budget that 324 00:17:26,720 --> 00:17:32,160 Speaker 1: feels slightly like it's not even processed. The content of 325 00:17:32,200 --> 00:17:33,920 Speaker 1: your interview last week, John. 326 00:17:34,119 --> 00:17:36,359 Speaker 6: You could argue that no country in the world is 327 00:17:36,440 --> 00:17:38,800 Speaker 6: kind of more exposed in some ways to trump Ism 328 00:17:39,119 --> 00:17:42,800 Speaker 6: than Britain. In this way, because it is possible, or 329 00:17:42,920 --> 00:17:45,760 Speaker 6: it would be very difficult, it's possible for the European 330 00:17:45,880 --> 00:17:48,680 Speaker 6: Union to kind of unite around the idea that they 331 00:17:48,760 --> 00:17:51,160 Speaker 6: also have a market and maybe they can do deals 332 00:17:51,200 --> 00:17:56,200 Speaker 6: with countries like Brazil and Mercers or Africa. Then they 333 00:17:56,200 --> 00:17:59,080 Speaker 6: can have a big enough, free enough market to get 334 00:17:59,400 --> 00:18:01,359 Speaker 6: quite a lot of the benefits of free trade. In 335 00:18:01,400 --> 00:18:03,479 Speaker 6: the same way as if America cuts itself off from 336 00:18:03,480 --> 00:18:06,480 Speaker 6: the world, it can do fairly well. The one the 337 00:18:06,480 --> 00:18:10,640 Speaker 6: one country Britain is, you know, possibly alongside places like Singapore, 338 00:18:10,760 --> 00:18:14,440 Speaker 6: is very badly based on that because we were part 339 00:18:14,480 --> 00:18:18,359 Speaker 6: of this big market where we could have been really 340 00:18:18,400 --> 00:18:22,080 Speaker 6: quite that might even have worked somewhat in Britain's favor 341 00:18:22,359 --> 00:18:26,159 Speaker 6: if we were still part of the European Union. Now 342 00:18:26,280 --> 00:18:27,760 Speaker 6: it's much much harder. 343 00:18:28,440 --> 00:18:30,000 Speaker 4: Well, the only thing I would say is I think 344 00:18:30,040 --> 00:18:32,560 Speaker 4: the one thing that could protect the UK, which I 345 00:18:32,600 --> 00:18:35,200 Speaker 4: agree is otherwise very vulnerable to a global trade war 346 00:18:36,359 --> 00:18:39,080 Speaker 4: is the fact that Donald Trump does seem to see 347 00:18:39,119 --> 00:18:41,880 Speaker 4: in his transactional approach he judges where the country has 348 00:18:41,920 --> 00:18:45,320 Speaker 4: good trade policies by what the trade balances with the US, 349 00:18:45,760 --> 00:18:47,720 Speaker 4: and we are one of very few countries that actually 350 00:18:47,800 --> 00:18:50,959 Speaker 4: has a has a deficit with the US, so he 351 00:18:51,000 --> 00:18:54,000 Speaker 4: may he may let the u UK off, whereas he's 352 00:18:54,000 --> 00:18:55,960 Speaker 4: definitely you could tell from the interview he's got Europe 353 00:18:55,960 --> 00:18:59,639 Speaker 4: in his sites, because there's there's a big, big surplus 354 00:19:00,080 --> 00:19:03,640 Speaker 4: of a lot more goods coming in from Europe than 355 00:19:03,680 --> 00:19:06,080 Speaker 4: going out to Europe. From the US John Mick, thank 356 00:19:06,119 --> 00:19:06,680 Speaker 4: you very much. 357 00:19:07,080 --> 00:19:07,439 Speaker 6: Thank you. 358 00:19:11,480 --> 00:19:15,120 Speaker 4: Let's talk now to Danny Roderick. Danny is a widely 359 00:19:15,160 --> 00:19:19,760 Speaker 4: respected economist Ford Foundation Professor of International Political Economy at 360 00:19:19,760 --> 00:19:23,199 Speaker 4: the Kennedy School of Government at Harvard, also the author 361 00:19:23,240 --> 00:19:28,600 Speaker 4: of many books on globalization, trade, and related subjects. Danny Roderick, 362 00:19:28,840 --> 00:19:31,720 Speaker 4: thank you so much for joining us. We've just been 363 00:19:31,760 --> 00:19:35,280 Speaker 4: hearing some of the snippets from our edister in chief's 364 00:19:35,320 --> 00:19:40,320 Speaker 4: conversation with Donald Trump last week, which was surprisingly to 365 00:19:40,400 --> 00:19:44,119 Speaker 4: some dominated by talk of tariffs, and it certainly I 366 00:19:44,119 --> 00:19:47,679 Speaker 4: think brought home that interview how much the America First 367 00:19:47,760 --> 00:19:53,119 Speaker 4: approach frames his way of looking at a lot of policy, 368 00:19:53,160 --> 00:19:56,399 Speaker 4: and certainly international policy. And we hear a lot about 369 00:19:56,800 --> 00:19:59,640 Speaker 4: how terrible that is and all the risks and downsides 370 00:19:59,680 --> 00:20:03,520 Speaker 4: from sort of traditional economic standpoint. But I'm interested, given 371 00:20:03,640 --> 00:20:09,600 Speaker 4: your record of being quite open minded and often critical 372 00:20:09,800 --> 00:20:13,639 Speaker 4: of the mainstream approach to globalization and global integration, I 373 00:20:13,720 --> 00:20:18,840 Speaker 4: just wondered where you thought that his approach might be 374 00:20:18,880 --> 00:20:23,879 Speaker 4: getting it right, and whether protectionism more generally, you know, 375 00:20:24,119 --> 00:20:26,560 Speaker 4: maybe has its place in a more balanced view of 376 00:20:26,600 --> 00:20:27,520 Speaker 4: global integration. 377 00:20:28,359 --> 00:20:31,200 Speaker 3: Yeah. Actually I don't think, you know, he's getting it right. 378 00:20:31,280 --> 00:20:35,639 Speaker 3: It's not because I think tariffs are going to be 379 00:20:35,800 --> 00:20:40,040 Speaker 3: tremendously costly. I think it's more because I think a 380 00:20:40,080 --> 00:20:43,679 Speaker 3: strategy that focuses on tariffs is just going to miss 381 00:20:44,160 --> 00:20:46,880 Speaker 3: the bigger picture, and it's just going to be frankier 382 00:20:46,920 --> 00:20:50,800 Speaker 3: distraction from the agenda that does need to be pursued 383 00:20:50,840 --> 00:20:53,639 Speaker 3: to revive of the middle class and create good jobs 384 00:20:53,680 --> 00:20:57,680 Speaker 3: and strengthen the uran's economy. I don't think there's anything 385 00:20:57,960 --> 00:21:02,280 Speaker 3: wrong per se with in a Matria first policy. I 386 00:21:02,280 --> 00:21:05,600 Speaker 3: don't think there's anything wrong per se with economic nationalism. 387 00:21:05,640 --> 00:21:09,919 Speaker 3: In fact, I think all elected governments are elected to 388 00:21:10,080 --> 00:21:13,760 Speaker 3: advance the interests of their nation, the interests of their 389 00:21:13,760 --> 00:21:18,400 Speaker 3: own national economies. When they do it right, actually they 390 00:21:18,440 --> 00:21:20,600 Speaker 3: do a service not only do their own electorate, they 391 00:21:20,640 --> 00:21:23,440 Speaker 3: do service for the world economy as a whole. I think, 392 00:21:23,600 --> 00:21:27,000 Speaker 3: especially for an economy that's systemically as important as the 393 00:21:27,080 --> 00:21:31,600 Speaker 3: United States, there's no creator gift that a US president 394 00:21:31,640 --> 00:21:34,919 Speaker 3: can provide to the rest of the world than by 395 00:21:35,400 --> 00:21:40,840 Speaker 3: generating a strong, thriving, innovative US economy. But I think 396 00:21:40,920 --> 00:21:44,479 Speaker 3: the problem with tariffs is that it's just not the 397 00:21:44,520 --> 00:21:47,080 Speaker 3: way to go about do that. And I can get 398 00:21:47,080 --> 00:21:49,639 Speaker 3: into the details if you want, but I think the 399 00:21:49,680 --> 00:21:52,000 Speaker 3: main point is that tariffs are a distraction. 400 00:21:52,680 --> 00:21:54,320 Speaker 4: Well, I just just to follow up on that, because 401 00:21:54,359 --> 00:21:56,520 Speaker 4: I saw you'd also written a piece about sort of 402 00:21:56,560 --> 00:21:59,320 Speaker 4: being a bit more when you talk about countries moving 403 00:21:59,320 --> 00:22:04,560 Speaker 4: in a more nationalistic direction economically and specifically policies, which 404 00:22:04,600 --> 00:22:07,480 Speaker 4: are you know, we've sort of got used to thinking 405 00:22:07,520 --> 00:22:09,439 Speaker 4: that a level playing field. We must be looking for 406 00:22:09,480 --> 00:22:11,800 Speaker 4: a level playing field at all times, and then when 407 00:22:11,880 --> 00:22:14,840 Speaker 4: countries introduce policies that seem to try and skew the 408 00:22:14,880 --> 00:22:20,080 Speaker 4: playing field or are very supporting their producers over others, 409 00:22:20,720 --> 00:22:24,480 Speaker 4: we've tended to always just condemn that as against free 410 00:22:24,520 --> 00:22:27,320 Speaker 4: trade and against integration. But you suggested we should be 411 00:22:27,359 --> 00:22:29,960 Speaker 4: more nuanced in the way we look at those kind 412 00:22:29,960 --> 00:22:31,400 Speaker 4: of more nationalistic policies. 413 00:22:32,440 --> 00:22:36,679 Speaker 3: I think all successful economic strategies are a mix of 414 00:22:36,800 --> 00:22:39,720 Speaker 3: letting markets and private firms in their thing, and then 415 00:22:40,160 --> 00:22:45,359 Speaker 3: governments giving them a little nudge here and there. Sometimes 416 00:22:45,359 --> 00:22:49,679 Speaker 3: it takes a form of subsidizing them. Occasionally in the 417 00:22:49,760 --> 00:22:53,639 Speaker 3: past is taking the form of trade restrictions. So I 418 00:22:53,680 --> 00:22:57,520 Speaker 3: think we need to be open minded. I think the 419 00:22:57,640 --> 00:23:02,000 Speaker 3: problem with just focusing on town first and foremost is 420 00:23:02,040 --> 00:23:06,640 Speaker 3: that it just doesn't give the necessary note. You basically 421 00:23:06,720 --> 00:23:09,359 Speaker 3: are just telling producers I'm going to allow you to 422 00:23:09,480 --> 00:23:12,680 Speaker 3: raise prices, and generally speaking, if you allow them to 423 00:23:12,760 --> 00:23:15,600 Speaker 3: raise prices, they might produce a little bit more so 424 00:23:15,640 --> 00:23:18,879 Speaker 3: you might get a domestics supply response for those industries 425 00:23:18,920 --> 00:23:22,159 Speaker 3: that will receive the trade protection. But there's nothing in 426 00:23:22,200 --> 00:23:24,879 Speaker 3: tariffs per se that will get them to innovate, to 427 00:23:24,960 --> 00:23:29,720 Speaker 3: create good jobs, to bring online the industries of the 428 00:23:29,760 --> 00:23:32,919 Speaker 3: future and technologies of the future. Tariffs are okay as 429 00:23:32,960 --> 00:23:37,359 Speaker 3: a temporary shield when you have a genuine industrial strategy 430 00:23:37,440 --> 00:23:41,000 Speaker 3: or a genuine economic strategy that is targeting all the 431 00:23:41,119 --> 00:23:43,600 Speaker 3: challenges of our day, whether it's good jobs or climate 432 00:23:43,680 --> 00:23:47,760 Speaker 3: change or addressing the needs of lagging regions. But on 433 00:23:47,800 --> 00:23:52,440 Speaker 3: their own, they're just a very instrument. They're lack essentially 434 00:23:52,480 --> 00:23:54,280 Speaker 3: any power to achieve those ends. 435 00:23:54,520 --> 00:23:57,000 Speaker 5: Danny Cauld ask you a little bit about about history, 436 00:23:57,000 --> 00:24:00,080 Speaker 5: because I think the British in particular, but also the 437 00:24:00,119 --> 00:24:04,240 Speaker 5: economic profession in general, tend to think of America historically 438 00:24:04,280 --> 00:24:06,840 Speaker 5: as being like a big version of Britain, and they 439 00:24:06,840 --> 00:24:09,760 Speaker 5: think if it's as being a free trading nation. But actually, 440 00:24:09,800 --> 00:24:14,640 Speaker 5: surely tariffs have been central to American history, the free 441 00:24:14,720 --> 00:24:18,080 Speaker 5: trading regimes relatively recent, and so if you saw the 442 00:24:18,119 --> 00:24:22,200 Speaker 5: reaction to Trump's talking about tariffs, that hits something quite 443 00:24:22,240 --> 00:24:24,000 Speaker 5: deep in the American psyche, doesn't it. 444 00:24:24,359 --> 00:24:26,560 Speaker 3: I think that's right. I think it is good to 445 00:24:26,560 --> 00:24:30,400 Speaker 3: bring in history. And it's true that America basically caught 446 00:24:30,480 --> 00:24:34,200 Speaker 3: up and surpassed Britain the second half of the nineteenth 447 00:24:34,240 --> 00:24:38,159 Speaker 3: century behind very high levels of tariffs. But if you 448 00:24:38,560 --> 00:24:41,199 Speaker 3: looked at that experience and you thought it was just 449 00:24:41,520 --> 00:24:44,400 Speaker 3: the tariffs that did it, you would really mess everything 450 00:24:44,400 --> 00:24:48,600 Speaker 3: else that was taking place, whether it's the land grand colleges, 451 00:24:48,760 --> 00:24:53,840 Speaker 3: whether it's the investment in public infrastructure, whether it was 452 00:24:54,200 --> 00:24:59,600 Speaker 3: or the other encouragements to domestic industries that was taking place. 453 00:25:00,000 --> 00:25:03,000 Speaker 3: They don't like to be doctrinaire about tariffs, and I 454 00:25:03,080 --> 00:25:06,199 Speaker 3: do think that much of the discussion today about the 455 00:25:06,320 --> 00:25:10,600 Speaker 3: cost of Trump's tarffs really paint a picture that sort 456 00:25:10,600 --> 00:25:13,120 Speaker 3: of it's the worst possible outcome. I mean, I can 457 00:25:13,480 --> 00:25:17,240 Speaker 3: give you a scenario where Trump's tariffs, let's say ten 458 00:25:17,280 --> 00:25:22,200 Speaker 3: percent across the board tariffs on all imports could generate 459 00:25:22,240 --> 00:25:25,840 Speaker 3: a catastrophe. But I sort of think it's unlikely that 460 00:25:25,840 --> 00:25:29,560 Speaker 3: that's what will happen. I think again, what I worry 461 00:25:29,600 --> 00:25:32,840 Speaker 3: about is that that becomes the US strategy. 462 00:25:33,080 --> 00:25:35,800 Speaker 5: But just to repeat a historical point, you could easily 463 00:25:35,920 --> 00:25:40,120 Speaker 5: argue that the Republican Party is essentially historically a protectionist party. 464 00:25:40,400 --> 00:25:42,800 Speaker 5: It was a protectionist party in the late nineteenth century, 465 00:25:43,040 --> 00:25:45,920 Speaker 5: it was a protectionist party in the nineteen twenties. There 466 00:25:45,920 --> 00:25:49,600 Speaker 5: was an aberration with Reagan. But basically Trump is taking 467 00:25:49,600 --> 00:25:51,560 Speaker 5: that party back to its roots, which is why the 468 00:25:51,560 --> 00:25:53,280 Speaker 5: guys in Chicago were cheering him. 469 00:25:53,400 --> 00:25:55,879 Speaker 3: That is true. So the Republicans were, of course the 470 00:25:55,920 --> 00:26:00,400 Speaker 3: party of high tariffs because they were the party of business, 471 00:26:00,400 --> 00:26:02,720 Speaker 3: and business were you know, trying to was trying to 472 00:26:02,760 --> 00:26:06,440 Speaker 3: compete with Britain, which was of course the major economic 473 00:26:06,480 --> 00:26:09,200 Speaker 3: power of the day. But there's another tradition in US 474 00:26:09,240 --> 00:26:12,359 Speaker 3: economic history, which is actually a free trade tradition that 475 00:26:12,520 --> 00:26:16,879 Speaker 3: comes from a somewhat different side. Historically, one of the 476 00:26:16,920 --> 00:26:20,760 Speaker 3: most significant populist traditions was the one that rose to 477 00:26:20,840 --> 00:26:23,880 Speaker 3: the four in the United States in the eighteen nineties 478 00:26:23,920 --> 00:26:25,440 Speaker 3: with the US People's Party. 479 00:26:25,640 --> 00:26:28,679 Speaker 5: Norman It's almost the great socialist presidential candidate. I think 480 00:26:28,720 --> 00:26:31,240 Speaker 5: six times presidential candidate it was a free trader, and 481 00:26:31,359 --> 00:26:34,000 Speaker 5: Cootel Holl of course is a free trade it's much 482 00:26:34,000 --> 00:26:37,000 Speaker 5: more on the left, the free trading tradition and the 483 00:26:37,080 --> 00:26:38,480 Speaker 5: rights much more protectionist. 484 00:26:38,520 --> 00:26:41,679 Speaker 3: I think, you know. So there has been in the 485 00:26:41,760 --> 00:26:45,399 Speaker 3: progressive tradition certainly a kind of a free trade, strong 486 00:26:45,440 --> 00:26:47,960 Speaker 3: free trade stream, and part of it is as the 487 00:26:48,080 --> 00:26:52,119 Speaker 3: US progressive believes that Tariff's high tariffs were actually a 488 00:26:52,160 --> 00:26:56,040 Speaker 3: giveaway to the business. And that's why US progressives, for example, 489 00:26:56,080 --> 00:26:58,560 Speaker 3: didn't like Taris because they thought there was a pro 490 00:26:58,720 --> 00:27:00,920 Speaker 3: business it was a kind of it was a pro 491 00:27:00,960 --> 00:27:01,960 Speaker 3: elite policy. 492 00:27:02,280 --> 00:27:04,120 Speaker 5: So what I'm trying to get at is that Trump 493 00:27:04,280 --> 00:27:07,560 Speaker 5: is not necessarily this great aberration for the Republican party. 494 00:27:07,600 --> 00:27:11,400 Speaker 5: He's actually going back to quite a deep Republican business 495 00:27:11,440 --> 00:27:12,840 Speaker 5: tradition of protectionism. 496 00:27:13,440 --> 00:27:16,240 Speaker 3: Well, yes and no. But again, I think the US 497 00:27:16,240 --> 00:27:19,520 Speaker 3: position in the world economy has changed so much that 498 00:27:19,640 --> 00:27:22,920 Speaker 3: I think it's difficult to draw a very I think 499 00:27:22,960 --> 00:27:27,400 Speaker 3: the reason that the US conservative establishment and the business 500 00:27:27,480 --> 00:27:31,040 Speaker 3: established and became free trader after the Second World War 501 00:27:31,200 --> 00:27:33,840 Speaker 3: was just the sense that the US economy was on 502 00:27:33,880 --> 00:27:35,960 Speaker 3: top of the world, that their interests were going to 503 00:27:36,000 --> 00:27:39,200 Speaker 3: be best served by free trade, So maybe going back 504 00:27:39,240 --> 00:27:42,040 Speaker 3: to that tradition is also party that the US has 505 00:27:42,080 --> 00:27:44,520 Speaker 3: lost ground that is balling behind. 506 00:27:45,320 --> 00:27:48,440 Speaker 4: Denny, you've made a name over the years for pointing 507 00:27:48,440 --> 00:27:53,320 Speaker 4: out the sort of inconvenient truths about international economics and 508 00:27:53,400 --> 00:27:57,560 Speaker 4: highlighting when there were several objectives that we'd like to 509 00:27:57,600 --> 00:27:59,399 Speaker 4: think we can achieve all at the same time, and 510 00:27:59,400 --> 00:28:01,400 Speaker 4: you would say, no, you can only achieve two out 511 00:28:01,400 --> 00:28:04,560 Speaker 4: of three. You talked about trilemmas. There was a very 512 00:28:04,560 --> 00:28:07,480 Speaker 4: famous one more years ago about globalization, which I don't 513 00:28:07,480 --> 00:28:11,280 Speaker 4: want to get into. But more recently you've highlighted that 514 00:28:12,440 --> 00:28:16,320 Speaker 4: if we have countries like the US but also European 515 00:28:16,440 --> 00:28:20,720 Speaker 4: Union it's now imposing tariffs on China other countries concerned 516 00:28:20,760 --> 00:28:26,760 Speaker 4: about restoring the middle class in advanced economies, countries can't 517 00:28:26,800 --> 00:28:31,959 Speaker 4: do that and combat climate change and still provide a 518 00:28:32,040 --> 00:28:36,439 Speaker 4: sort of path to development for places like China but 519 00:28:36,520 --> 00:28:39,280 Speaker 4: also other developing countries. You can't do all three of those, 520 00:28:39,360 --> 00:28:42,200 Speaker 4: you've suggested, you could only do two out of the three. 521 00:28:42,440 --> 00:28:44,080 Speaker 4: I just wondered if you could go into that a 522 00:28:44,120 --> 00:28:46,840 Speaker 4: bit more, and I guess sort of highlight you know, 523 00:28:47,440 --> 00:28:50,560 Speaker 4: if whatever we think about Donald Trump's policies. He's not 524 00:28:50,640 --> 00:28:57,200 Speaker 4: alone in wanting to support and sort of re level 525 00:28:57,280 --> 00:29:01,640 Speaker 4: the playing field in favor of advanced economies and to 526 00:29:01,640 --> 00:29:06,240 Speaker 4: some extent protect the middle class from competition from developing countries. 527 00:29:06,280 --> 00:29:10,160 Speaker 4: That's pretty damaging for the countries that have yet to develop. 528 00:29:10,720 --> 00:29:12,960 Speaker 3: Yeah, I mean, I think there's there's there are two 529 00:29:13,000 --> 00:29:15,520 Speaker 3: paths here. I mean one and the one that I 530 00:29:15,640 --> 00:29:19,360 Speaker 3: worried about when I wrote about this new trilemma is 531 00:29:19,440 --> 00:29:22,880 Speaker 3: that if we go down a path where we basically 532 00:29:22,920 --> 00:29:26,520 Speaker 3: say the only way that we can lift up the 533 00:29:26,520 --> 00:29:31,120 Speaker 3: middle class and address climate issues in the United States 534 00:29:31,160 --> 00:29:36,640 Speaker 3: and Europe is through trade restrictions and through industrial policies 535 00:29:36,680 --> 00:29:40,520 Speaker 3: that significantly discriminate against the rest of the world, then 536 00:29:40,560 --> 00:29:42,840 Speaker 3: we're at the heart of that trilemma because we're going 537 00:29:42,880 --> 00:29:45,440 Speaker 3: to really make it very difficult for the rest of 538 00:29:45,480 --> 00:29:50,240 Speaker 3: the world, especially in low income countries, to access markets 539 00:29:50,440 --> 00:29:54,440 Speaker 3: in the rich countries. And so that's essentially the core 540 00:29:54,520 --> 00:29:58,000 Speaker 3: of the trilemma. The other path is to realize that, 541 00:29:58,080 --> 00:30:01,040 Speaker 3: in fact, if you wanted to add resk climate change 542 00:30:01,120 --> 00:30:05,600 Speaker 3: and restore the middle class, you know, trade restrictions and 543 00:30:05,720 --> 00:30:08,520 Speaker 3: this communitary industrial policies is not really the way you 544 00:30:08,560 --> 00:30:11,040 Speaker 3: would go about it. And so that's why I want 545 00:30:11,080 --> 00:30:14,240 Speaker 3: to stress this is a trilemma that can be overcome 546 00:30:14,800 --> 00:30:19,480 Speaker 3: if we manage to overcome two fetishes that we're having currently. 547 00:30:20,000 --> 00:30:23,200 Speaker 3: One is a manufacturing fetish, the other is a kind 548 00:30:23,240 --> 00:30:26,840 Speaker 3: of an overblown fear of China in the West. I 549 00:30:26,880 --> 00:30:30,120 Speaker 3: think the manufacturing fetish shows up that in the idea 550 00:30:30,200 --> 00:30:33,360 Speaker 3: that to create good jobs and show up the middle 551 00:30:33,360 --> 00:30:36,640 Speaker 3: class you need protectionism. But of course there are very 552 00:30:36,640 --> 00:30:40,440 Speaker 3: few jobs in manufacturing today. Around eight percent of full 553 00:30:40,520 --> 00:30:43,560 Speaker 3: labor force in the United States are in manufacturing, and 554 00:30:43,600 --> 00:30:46,560 Speaker 3: there's no way no amount of protectionism is going to 555 00:30:46,600 --> 00:30:49,400 Speaker 3: make a huge amount of difference to that. So if 556 00:30:49,400 --> 00:30:52,600 Speaker 3: you want to address the middle class, both in the 557 00:30:52,680 --> 00:30:55,600 Speaker 3: United States and Europe, you have to pursue policies that 558 00:30:55,640 --> 00:30:59,880 Speaker 3: are very different from trade policies or industrial policies that 559 00:31:00,040 --> 00:31:03,520 Speaker 3: focus on manufacturing or high tech. And I think on 560 00:31:03,600 --> 00:31:05,959 Speaker 3: climate change, there's no way you're going to address your 561 00:31:06,000 --> 00:31:11,760 Speaker 3: climate change objectives without managing to allow developing countries to 562 00:31:11,800 --> 00:31:15,200 Speaker 3: access the kinds of technologies and renewables and new kinds 563 00:31:15,200 --> 00:31:17,760 Speaker 3: of investments that the US and Europe are trying to 564 00:31:17,760 --> 00:31:20,480 Speaker 3: incentivize to their own industrial policy, so you'll have to 565 00:31:20,520 --> 00:31:24,760 Speaker 3: facilitate that as well. So there is a trilemma on 566 00:31:24,800 --> 00:31:27,960 Speaker 3: the path that we're on. But it's in many ways 567 00:31:27,960 --> 00:31:30,760 Speaker 3: it's kind of a false trialams it's driven by a 568 00:31:30,840 --> 00:31:35,000 Speaker 3: kind of a false consciousness of manufacturing fetishism, an excessive 569 00:31:35,160 --> 00:31:38,560 Speaker 3: concern about China, which sort of is driving is in 570 00:31:38,600 --> 00:31:41,080 Speaker 3: fact a large part of this economic nationalism. 571 00:31:42,400 --> 00:31:45,880 Speaker 4: I can't imagine, given the sort of tone of the conversation, 572 00:31:46,000 --> 00:31:48,080 Speaker 4: what would have happened if our editor in chief had 573 00:31:48,120 --> 00:31:51,160 Speaker 4: accused Donald Trump of having a manufacturing fetish I think 574 00:31:51,200 --> 00:31:54,200 Speaker 4: the conversation could have done a whole different direction. And 575 00:31:54,760 --> 00:31:56,880 Speaker 4: I know you're particularly interested in the climate agenda. I 576 00:31:56,880 --> 00:31:58,040 Speaker 4: wonder what you thought of well. 577 00:31:58,400 --> 00:32:00,280 Speaker 1: I mean, the thing that we discussed in the hey 578 00:32:00,480 --> 00:32:03,400 Speaker 1: was something called the carbon border adjustment mechanisms. So I 579 00:32:03,400 --> 00:32:06,120 Speaker 1: think you can do two of your three, which is essentially, 580 00:32:06,440 --> 00:32:08,680 Speaker 1: if you make the import of goods that have relied 581 00:32:08,720 --> 00:32:11,160 Speaker 1: on that appear to be cheap, that's because you've not 582 00:32:11,200 --> 00:32:14,000 Speaker 1: priced carbon. If you make them more expensive, then you 583 00:32:14,040 --> 00:32:17,080 Speaker 1: can then make more competitive goods that could be made 584 00:32:17,120 --> 00:32:19,600 Speaker 1: within the United Kingdom, and so you create jobs and 585 00:32:19,640 --> 00:32:21,480 Speaker 1: so on. So you can see that two of your 586 00:32:21,520 --> 00:32:24,040 Speaker 1: three have been hit. In that way, you have reduced 587 00:32:24,040 --> 00:32:26,400 Speaker 1: the amount of carbon that's being imported, and you have 588 00:32:26,480 --> 00:32:28,560 Speaker 1: also beefed up the number of jobs that you're making 589 00:32:28,600 --> 00:32:30,920 Speaker 1: within in our case the United Kingdom, but it's relevant 590 00:32:31,040 --> 00:32:33,840 Speaker 1: for lots of different countries. What you're then needing to 591 00:32:33,880 --> 00:32:35,960 Speaker 1: do to be able to try and get anywhere close 592 00:32:36,000 --> 00:32:39,160 Speaker 1: to the third you know, lever or the third leg 593 00:32:39,200 --> 00:32:42,200 Speaker 1: of the trilema or lemma of the trial memor or 594 00:32:42,240 --> 00:32:44,640 Speaker 1: whatever we call it is. You're then having to think 595 00:32:44,680 --> 00:32:48,320 Speaker 1: about how you use either the aid budget or other 596 00:32:49,720 --> 00:32:53,240 Speaker 1: levers to support the international community, as you say, with 597 00:32:53,280 --> 00:32:57,640 Speaker 1: their transition to lower carbon technology. Some of the wealthier 598 00:32:57,680 --> 00:33:01,360 Speaker 1: developing nations will do it without needing the support of 599 00:33:01,480 --> 00:33:04,479 Speaker 1: rich nations because they're getting very rich themselves, but some 600 00:33:04,560 --> 00:33:06,320 Speaker 1: of them will not be able to When you have 601 00:33:06,440 --> 00:33:09,480 Speaker 1: what we have seen occasionally in the United Kingdom, which 602 00:33:09,520 --> 00:33:12,280 Speaker 1: is this kind of worry about the eight budget being 603 00:33:12,280 --> 00:33:14,520 Speaker 1: too generous and so on, that becomes difficult. 604 00:33:14,840 --> 00:33:17,840 Speaker 3: But I think that's a great example of both in 605 00:33:17,880 --> 00:33:21,640 Speaker 3: the trial eva under our current path and the mist opportunity. 606 00:33:21,640 --> 00:33:24,640 Speaker 3: In terms of the alternative path I presented the mist 607 00:33:24,720 --> 00:33:29,440 Speaker 3: opportunity here is that the carbon border adjustment mechanism is 608 00:33:29,480 --> 00:33:35,120 Speaker 3: actually raising revenue for the EU, and the point of 609 00:33:35,280 --> 00:33:38,280 Speaker 3: the adjustment mechanism was not to generate revenue, was to 610 00:33:38,320 --> 00:33:42,880 Speaker 3: actually protect domestic industries. So why not use that revenue 611 00:33:42,920 --> 00:33:47,280 Speaker 3: to rebate them directly to the countries exporting countries that 612 00:33:47,520 --> 00:33:52,320 Speaker 3: will be harmed by these higher border tariffs and essentially 613 00:33:52,880 --> 00:33:58,200 Speaker 3: providing an immediate plank between these revenues and incentivizing them 614 00:33:58,200 --> 00:34:01,000 Speaker 3: through this transfer of the rebates of these revenues that 615 00:34:01,040 --> 00:34:04,080 Speaker 3: you are being countries to incentivize them to engage in 616 00:34:04,080 --> 00:34:05,880 Speaker 3: investments in renewrmal. 617 00:34:05,840 --> 00:34:09,200 Speaker 1: I suppose Professor Roderick, because one of the things that 618 00:34:09,280 --> 00:34:11,400 Speaker 1: particular when we think about it with the United Kingdom 619 00:34:11,440 --> 00:34:13,600 Speaker 1: hat on, and this is true some European countries, is 620 00:34:13,640 --> 00:34:17,520 Speaker 1: that those countries electorates don't feel very rich. We're about 621 00:34:17,560 --> 00:34:19,719 Speaker 1: to have a budget in the UK next week which 622 00:34:19,760 --> 00:34:23,279 Speaker 1: will be fraud and it is not obvious how they 623 00:34:23,320 --> 00:34:25,440 Speaker 1: can raise money in a way that is not painful 624 00:34:25,520 --> 00:34:28,319 Speaker 1: to some part of the electorate. So even though you know, 625 00:34:28,520 --> 00:34:31,160 Speaker 1: compared to developing nations and so on, it's you know, 626 00:34:31,560 --> 00:34:35,480 Speaker 1: in the United Kingdom, population is comfortable it's a fraud 627 00:34:35,960 --> 00:34:37,160 Speaker 1: public debate. 628 00:34:37,280 --> 00:34:39,440 Speaker 3: And clearly in the UK has A has a bigger 629 00:34:39,560 --> 00:34:42,360 Speaker 3: problem here because of I think an artificial sense of 630 00:34:42,440 --> 00:34:46,360 Speaker 3: the pytical constraint. But for certainly the EU is something 631 00:34:46,360 --> 00:34:48,640 Speaker 3: could have done that because the revenues were not a 632 00:34:48,640 --> 00:34:52,920 Speaker 3: big part of the consideration in putting in in phasing 633 00:34:53,000 --> 00:34:56,600 Speaker 3: in the border adjustment mechanism. 634 00:34:56,760 --> 00:34:59,080 Speaker 4: Daniel Rodgers, that was fantastic. I think we could have 635 00:34:59,080 --> 00:35:01,839 Speaker 4: carried on a lot long and gone back into more 636 00:35:01,880 --> 00:35:04,200 Speaker 4: of your analysis over the years of all these things, 637 00:35:04,239 --> 00:35:06,680 Speaker 4: which has often predicted some of these debates, although I 638 00:35:06,719 --> 00:35:09,760 Speaker 4: guess you probably didn't exactly predict Donald Trump, but certainly 639 00:35:09,760 --> 00:35:14,120 Speaker 4: you predicted some of the tensions that produced him. But 640 00:35:14,160 --> 00:35:20,960 Speaker 4: thanks very much, thank you, thank you, thanks for listening 641 00:35:21,000 --> 00:35:23,600 Speaker 4: to this week's vogion Nomics from Bloomberg. This episode was 642 00:35:23,640 --> 00:35:27,120 Speaker 4: hosted by me Stephanie Flanders in South Paulo, with help 643 00:35:27,120 --> 00:35:30,480 Speaker 4: from Adrian Waldridge and alegra Stratton. It was produced by 644 00:35:30,520 --> 00:35:34,160 Speaker 4: some of Sadie, with production support from Isabella Ward and 645 00:35:34,280 --> 00:35:38,600 Speaker 4: sound design by Moses and special thanks to John Mickelthwaite 646 00:35:38,680 --> 00:35:43,240 Speaker 4: and Professor Danny Rodrick. Please subscribe, rate and review highly 647 00:35:43,480 --> 00:35:45,600 Speaker 4: this podcast, wherever you listen to it,