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Speaker 1: Already, and this is the Daily This is the Daily OS. Oh,

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Speaker 1: now it makes sense.

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Speaker 2: Good morning, and welcome to the Daily OS. It's Monday,

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Speaker 2: the fourth of February.

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Speaker 1: I'm Billy, I'm emma.

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Speaker 2: It's been two weeks since US President Donald Trump became president,

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Speaker 2: and there have of course been many headline making moves

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Speaker 2: from the forty seventh president already. One that our audience

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Speaker 2: has been asking us to explain is his policy on tariffs.

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Speaker 2: Over the weekend, Trump signed an executive order to impose

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Speaker 2: new tariffs on Mexico, Canada, and China. Trump claimed the tariffs,

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Speaker 2: which will come into effect this week, will quote stop

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Speaker 2: the flood of illegal aliens and drugs from pouring across

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Speaker 2: our borders. So what does that all mean? We are

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Speaker 2: here today to answer all of your questions, Billy.

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Speaker 1: I think before we get to exactly what's happened, what

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Speaker 1: these tariffs mean, and who they are going to impact,

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Speaker 1: there are a few terms that we need to wrap

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Speaker 1: our heads around some new language. The first is an

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Speaker 1: executive order. Trump has been signing many of them in

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Speaker 1: the last few weeks, hundreds in fact, But what exactly

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Speaker 1: is an executive order? I love it.

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Speaker 2: Let's start with the glossary. Yeah, we're going to go

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Speaker 2: through the terms before we explain exactly what this story is.

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Speaker 2: I mean, you said that he has signed many executive orders.

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Speaker 2: To be exact, he has signed more than three hundred

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Speaker 2: as of the end of January and we are a

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Speaker 2: few days into February.

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Speaker 1: Now, wow, so there are hundreds and correct me if

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Speaker 1: I'm wrong, Billy, but that is more than most US

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Speaker 1: presidents in recent history would have signed in their entire terms.

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Speaker 2: Yes, so that gives you an idea of just how

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Speaker 2: much Trump is saying that he wants to do in

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Speaker 2: his second term as president. In terms of what an

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Speaker 2: executive order is, because we don't have it here in Australia,

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Speaker 2: it is the president's main power. Now, what's interesting about

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Speaker 2: it is that it doesn't require Congress's approval and therefore

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Speaker 2: it's kind of considered like an instant law.

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Speaker 1: So Congress in the US being like their parliament, that's

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Speaker 1: where we've got the two houses of parliament. But in

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Speaker 1: the US that is separate to the executive branch, which

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Speaker 1: is the White House administration the president exactly.

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Speaker 2: So the Senate and the House of Representatives are the

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Speaker 2: two houses in the Congress, and like you said, m

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Speaker 2: that is completely separate to the executive branch, which is

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Speaker 2: what Donald Trump is the head of. So that's kind

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Speaker 2: of a basic way of explaining the parliamentary system in

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Speaker 2: the US. But again, what's important here is this executive order,

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Speaker 2: which is basically just like an instant law. It doesn't

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Speaker 2: need to go through the legislative process that most laws

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Speaker 2: do need to go through.

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Speaker 1: Right, So is there any limit then to the power

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Speaker 1: of an executive order?

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Speaker 2: So there are essentially two things that could stop an

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Speaker 2: executive order from going through. One is Congress and the

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Speaker 2: other is the courts. So even though these executive orders

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Speaker 2: don't need to go through the Congress, which like we

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Speaker 2: said is the Senate and the House of Representatives, Congress

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Speaker 2: could still take action to block these orders. So one

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Speaker 2: way they could do that, for example, is to deny

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Speaker 2: the necessary funding to stop an order from going ahead. However, Trump,

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Speaker 2: as we know, is part of the Republican Party, and

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Speaker 2: the Republican Party is in control of both the House

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Speaker 2: of Representatives and the Senate. So because these are people

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Speaker 2: in his own party who are in control of the Congress,

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Speaker 2: they likely aren't going to stop his executive orders, And indeed,

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Speaker 2: since he has been president, they haven't stopped any of

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Speaker 2: his executive orders.

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Speaker 1: Yeap.

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Speaker 2: Now, like I said, there's another way that an executive

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Speaker 2: order could be stopped, and that is through the courts.

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Speaker 2: So that would be if one of the executive orders

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Speaker 2: is deemed unconstitutional. Now, I've actually already seen an example

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Speaker 2: of this happening and the court's intervening.

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Speaker 1: Billy, when you say the courts in the context of

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Speaker 1: halting these executive orders, are we talking about the US

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Speaker 1: Supreme Court.

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Speaker 2: So it can be the Supreme Court, but it usually

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Speaker 2: won't start in the Supreme Court. It will usually start

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Speaker 2: in a federal court. And then if the federal court

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Speaker 2: makes a decision and then Trump appeals that it will

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Speaker 2: then go to the Supreme Court. Okay, Yes, the Supreme

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Speaker 2: Court is usually the court that is in charge of

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Speaker 2: making sure that the laws in the US are in

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Speaker 2: line with the Constitution. But it usually won't stop there.

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Speaker 2: But they are the highest court in the land, so

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Speaker 2: kind of the buck stops with them.

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Speaker 1: So there has already been some intervention at a court

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Speaker 1: level to do with an executive order issued by Trump.

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Speaker 2: Yes, so Trump issued an executive order to stop some

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Speaker 2: children from becoming citizens at birth in the US. So

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Speaker 2: this is because under the US Constitution, children born to

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Speaker 2: parents who migrated to the country are granted citizenship as

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Speaker 2: their birthright. And Trump signed in executive order to stop

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Speaker 2: some children from having that birthright citizenship, and that led

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Speaker 2: to a number of states immediately taking legal action to

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Speaker 2: stop the order from coming into effect, and a federal

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Speaker 2: court judge.

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Speaker 1: So lower than the Supreme Court.

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Speaker 2: Yes, lower than the Supreme Court. So a federal court

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Speaker 2: judge in the state of Washington approved the legal request

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Speaker 2: to temporarily block Trump's executive order, and so that is

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Speaker 2: a TBC. We're still waiting to see what the final

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Speaker 2: outcome of that will be.

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Speaker 1: Okay, and so then that executive order, which has been

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Speaker 1: temporarily blocked, that could end up going to the Supreme

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Speaker 1: Court for final decision on Okay, I've got it. Thank

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Speaker 1: you so much for explaining, Billy, just feed on the

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Speaker 1: glossary for that one. My next question for Philly's definition's

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Speaker 1: glossary for today might be a bit of an obvious one,

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Speaker 1: but I think a lot of people are wondering, so

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Speaker 1: I'll ask the silly questions, what is a tariff actually though.

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Speaker 2: There are absolutely no silly questions, as you know at

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Speaker 2: the daily OS. And this takes me right back to

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Speaker 2: year ten geography. I remember very specifically learning about tariffs

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Speaker 2: in geography. To put it very simply, it is a

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Speaker 2: tax on imports. So when goods are brought into another

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Speaker 2: country from overseas, they are typically subject to fees or

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Speaker 2: duties that are known as tariffs, and that means that

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Speaker 2: the taxes imposed on those goods make it more expensive. Now,

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Speaker 2: the taxes are usually absorbed by the consumer, so usually

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Speaker 2: it means that we as consumers will be paying more

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Speaker 2: for overseas goods. It doesn't necessarily have to be absorbed

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Speaker 2: by the consumer, it's up to every individual business, but

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Speaker 2: typically it usually is. So this would mean that if

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Speaker 2: Trump is imposing tariffs overseas, it would mean the foreign

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Speaker 2: made goods bought by US citizens is more expensive than

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Speaker 2: if they are buying a good that is made in

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Speaker 2: the US. Okay, but I think I've jumped the gun,

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Speaker 2: so we'll get into more of them. The general purpose

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Speaker 2: is to encourage citizens to buy local products instead of

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Speaker 2: products from overseas, because rather than absorb the cost of

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Speaker 2: these import fees on foreign goods, consumers may be more

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Speaker 2: encouraged to purchase domestic goods, which will be cheaper.

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Speaker 1: Okay, So tariffs could question for example, then be used

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Speaker 1: by governments maybe to boost local manufacturing. Exactly. If you

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Speaker 1: put these tariffs on importing foreign made goods, they could

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Speaker 1: become more expensive for customers. So customers might say, hey,

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Speaker 1: actually would rather buy something that was made here in

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Speaker 1: this country that I'm in because it's cheaper, exactly.

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Speaker 2: And that is the primary purpose of tariffs.

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Speaker 1: But there is another purpose of tariffs that we are

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Speaker 1: going to get to a bit later that has a

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Speaker 1: little bit more to do with diplomacy or political tensions.

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Speaker 1: So what has been announced in terms of tariffs and

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Speaker 1: this Trump administration that we are now talking about today.

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Speaker 2: So over the weekend on Saturday, President Trump signed an

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Speaker 2: executive order to impose new tariffs on three countries. They

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Speaker 2: are Mexico, Canada, and China. Now, Trump said he will

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Speaker 2: impose a ten percent tariff on China and then a

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Speaker 2: twenty five percent tariff on Mexico and Canada. And those,

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Speaker 2: for contexts, are the US's three largest trading partners. So

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Speaker 2: that's pretty huge. It's a massive announcement.

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Speaker 1: Yeah, and a twenty five percent increase on these taxes

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Speaker 1: applied to goods coming into the US from Canada and Mexico.

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Speaker 1: I think it's also interesting to point out that just geographically,

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Speaker 1: you know, to go back to year ten giography with Billy,

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Speaker 1: that they are on the map. You know, countries that

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Speaker 1: you can drive to from the US. We've got North

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Speaker 1: and Central America. They share borders.

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Speaker 2: They share borders with the US, so they are neighbors.

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Speaker 1: Which traditionally can mean that the tariffs are lower, that

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Speaker 1: there are less barriers to importing.

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Speaker 2: But not anymore. No one wants to get into a

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Speaker 2: fight with their neighbors, but apparently Donald Trump does with

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Speaker 2: Canada and Mexico.

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Speaker 1: So to be really clear, then all of the goods

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Speaker 1: coming from Mexico and Canada into the US will now

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Speaker 1: be subject to those tariffs, and the same for goods

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Speaker 1: from China.

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Speaker 2: Yes, pretty much all goods. There is one exception on

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Speaker 2: energy products coming from Canada. They will be subject to

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Speaker 2: a lower tariff of ten percent, But for all other

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Speaker 2: goods coming from Canada, Mexico and China there will be

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Speaker 2: this increased tariff. To give you an example of how

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Speaker 2: this will impact people, in the US and also people

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Speaker 2: in those three countries. I'm just going to use this

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Speaker 2: one very small example, but most of the avocados in

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Speaker 2: the US are imported from Mexico, so something like avocados

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Speaker 2: will now become much more expensive in the US. We

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Speaker 2: said before that the primary goal of these tariffs is

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Speaker 2: to encourage more local production, but the US can't actually

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Speaker 2: doesn't have enough farms to produce all of the avocados

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Speaker 2: that citizens consume there. So it's not as simple as

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Speaker 2: saying that we should just make everything in the US,

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Speaker 2: because of course there are limitations and how much you

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Speaker 2: can do that.

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Speaker 1: You said that that was a small example, Billy, but

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Speaker 1: I think for anyone who cares about avocados, yes, that

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Speaker 1: would be a significant one. Yeah.

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Speaker 2: And another thing is the price of cars will likely

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Speaker 2: go up because Mexico is all so the largest autoparts

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Speaker 2: exporder in the US.

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Speaker 1: And also the manufacturing of automobiles in the US is

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Speaker 1: an industry that died a long time ago. So like

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Speaker 1: the avocado farms, I suppose that infrastructure isn't automatically in

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Speaker 1: place to replace it. So what has Trump said in

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Speaker 1: terms of why he's introduced these tariffs has he sort

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Speaker 1: of addressed these concerns.

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Speaker 2: At a very top line level. Trump says it's because

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Speaker 2: of two reasons. The first one is he says that

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Speaker 2: these countries are allowing too many undocumented immigrants into the US.

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Speaker 2: And the second is because he claims that they are

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Speaker 2: also allowing too many illegal drugs to enter the US.

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Speaker 1: Which speaks to the shared borders that we spoke about earlier.

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Speaker 2: Exactly so with the undocumented immigrants, he said that it

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Speaker 2: is not confined to just Mexico. These undocumented immigrants come

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Speaker 2: into the US, but it's also he says, happening in Canada,

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Speaker 2: and that there are a rising number of Chinese nationals

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Speaker 2: two and he says, quote people on the terror watch

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Speaker 2: list who are coming into the US from those countries.

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Speaker 2: And then on the illegal drug side, he says that

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Speaker 2: the Mexican government is in an alliance with Mexican drug

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Speaker 2: trafficking organizations, and he says Canada too has allowed quote

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Speaker 2: a growing presence of Mexican cartels operating fentanyl labs that

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Speaker 2: has increased the number of drugs going into the US.

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Speaker 1: Now fentanyl, we're talking about synthetic opioids, the sort of

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Speaker 1: painkiller crisis that has become a huge problem across North America.

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Speaker 1: If people haven't heard that term fentanyl. What about China?

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Speaker 1: Obviously China is an outlier here geographically.

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Speaker 2: Yeah, exactly what he says about China is that Chinese

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Speaker 2: officials quote, have failed to take the actions necessary to

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Speaker 2: stem the flow of pre chemicals to known criminal cartels

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Speaker 2: and shut down money laundering by transnational criminal organizations. Now,

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Speaker 2: it's interesting about all of this. Again, before I said

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Speaker 2: that the primary use of tariffs is to promote domestic production,

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Speaker 2: but here, obviously none of the reasonings that he is

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Speaker 2: giving is because of that. He is basically using it

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Speaker 2: as a bargaining chip to make these three countries do

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Speaker 2: things that aligned with his policies, and he's saying that

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Speaker 2: if you don't do this, then these severe penalties will

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Speaker 2: be placed on imports coming from your country. And he

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Speaker 2: has said that these tariffs will be in place until

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Speaker 2: the crisis is alleviated. So he's not saying that these

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Speaker 2: are forever. We don't know how long they will be.

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Speaker 2: But again, he's using it as a bargaining chip to say,

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Speaker 2: until you do what I want you to do, these

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Speaker 2: tariffs will remain in place.

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Speaker 1: So it's an example of how tariffs can be used

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Speaker 1: for more political interests or for these kind of political conversations.

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Speaker 1: I think in Australia, a recent example of that is

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Speaker 1: during COVID, the diplomatic relationship between Australia and China became

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Speaker 1: a little bit more tense concerns over China's handling of COVID,

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Speaker 1: and the Australian government was essentially punished by the Chinese

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Speaker 1: government for some of the comments it had made in

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Speaker 1: the form of high tariffs from Australian goods being imported

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Speaker 1: over to China. Things have since eased, so I suppose

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Speaker 1: that is a bit of an example closer to home

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Speaker 1: about how these kind of tensions can ignite and eventually

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Speaker 1: be resolved. But very different circumstances in the US and

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Speaker 1: big claims from US President Donald Trump about the illegal immigrants,

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Speaker 1: the drug trafficking, the drug cartels and money laundering, etc.

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Speaker 1: What has been the response from the governments of these countries.

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Speaker 2: To put it very simply, they're not happy. I'll go

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Speaker 2: to Canada first because they have made the most concrete

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Speaker 2: or most specific announcement about how they will retaliate. So

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Speaker 2: they have announced that starting from today Tuesday, they are

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Speaker 2: imposing tarifs on thirty billion dollars worth of goods imported

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Speaker 2: from the US, on things like orange juice, peanut butter, wine, coffee, footwear, cosmetics,

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Speaker 2: and other similar things. So they're not saying everything. They're

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Speaker 2: not saying all goods, but they have released a list

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Speaker 2: of goods that it will impact.

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Speaker 1: And some pretty sort of staple essential items that they're

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Speaker 1: saying to US importers, hey, this is going to cost

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Speaker 1: you more to bring it into our country now.

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Speaker 2: Yeah. They said explicitly in their announcement that this will

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Speaker 2: make these products less desirable for Canadian consumers to purchase,

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Speaker 2: and they said that this should send a message to

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Speaker 2: US businesses and the US government on the need to

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Speaker 2: reverse the imposition of tariffs for the benefit of both

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Speaker 2: Canadians and Americans. Now, Mexico has also responded. Their government

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Speaker 2: has said that they don't want confrontation and that they

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Speaker 2: would have rather deal with this through negotiation and discussion.

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Speaker 2: But they say now they've been left with no other

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Speaker 2: choice and that they will introduce tariffs. We don't know

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Speaker 2: the exact rate of the tariffs that they are saying

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Speaker 2: they will introduce or what goods will be impacted, at

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Speaker 2: least at the time of recording, but they have said

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Speaker 2: that tariffs will be introduced. In terms of China, they've

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Speaker 2: taken a little bit of a different approach. Their Commerce

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Speaker 2: ministry has promised a legal case at the World Trade

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Speaker 2: Organization WOW, and also they've said that there will be

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Speaker 2: corresponding countermeasures. So we don't know too many further details,

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Speaker 2: but it looks like they're going down the legal route,

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Speaker 2: and Canada and Mexico are going down the retalitory route.

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Speaker 1: Okay, So we're seeing kind of in real time this

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Speaker 1: response play out. Trump had touted these tariffs for a

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Speaker 1: long time, particularly heavy time Paris for China. He'd spoken

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Speaker 1: about them a lot during the run up to the

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Speaker 1: election last year. But I suppose the conversation has now

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Speaker 1: turned in the other direction that as much as it

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Speaker 1: will become more expensive for other countries to import US goods,

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Speaker 1: it will also become more expensive for US manufacturers to

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Speaker 1: take their goods to sell to other countries. So given

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Speaker 1: that kind of knock on effect, do we know if

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Speaker 1: this could impact Australia.

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Speaker 2: So Trump hasn't explicitly said that there will be any

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Speaker 2: new tariffs announced for Australia, so that could be seen

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Speaker 2: as a promising sign for US here in Australia, but

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Speaker 2: all the experts, of course say that we never know

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Speaker 2: what's going to happen, what Donald Trump is thinking.

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Speaker 1: Foreign Minister Penny Wong was actually in Washington, DC just

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Speaker 1: last week and released a statement sort of describing the

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Speaker 1: strength of Australia's relationship with the US, and in part

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Speaker 1: of how strong our relationship is, she specifically called out

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Speaker 1: the trade relationship between the two countries. So you could

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Speaker 1: argue maybe there that the Foreign Minister was trying to

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Speaker 1: kind of soften or speak up the relationship between the

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Speaker 1: alliance between Australia and the US to avoid being caught

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Speaker 1: up in this.

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Speaker 2: Yeah, the Australian government, in everything I've seen, every time

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Speaker 2: they've spoken about US and Australia's relationship after Donald Trump

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Speaker 2: was elected, they've really been at pains to emphasize the

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Speaker 2: relationship between the US and Australia has never been stronger, etc.

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Speaker 1: Etc.

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Speaker 2: And trade is also strong and that we won't be impacted.

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Speaker 2: I guess time will tell, but in the more immediate future,

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Speaker 2: I would say the most tangible impact it has had

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Speaker 2: already is on the share market. So the Australian Stock

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Speaker 2: Exchange went down yesterday and also the Aussie dollar dropped

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Speaker 2: to sixty one US since yesterday. And I might throw

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Speaker 2: to you because you actually recently did a deep dive

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Speaker 2: into why the Aussie dollar is dropping.

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Speaker 1: Yeah, what did you find? So we started looking into

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Speaker 1: this because the Aussie dollar had dropped significantly and at

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Speaker 1: the surface level it's sort of, you know, bad news

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Speaker 1: for Australians who are planning to travel to America for

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Speaker 1: a holiday. Maybe. But we spoke to some experts and

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Speaker 1: we figured out this link between sort of tariffs they're

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Speaker 1: changing dollar fluctuating currencies and the Chinese economy, which actually

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Speaker 1: has a lot to do with it. And of course

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Speaker 1: we're talking about China having tariffs imposed on it by

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Speaker 1: the US. The Chinese economy has been struggling more broadly,

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Speaker 1: so aside from concerns about tariffs, and this is down

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Speaker 1: to many factors. But there's been falling house prices, high

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Speaker 1: youth unemployment, so China's currency actually dropped to a sixteen

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Speaker 1: month low this year earlier in January, and demand for

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Speaker 1: Australian exports to China has declined as a result. So

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Speaker 1: one of Australia's highest earning exports is iron ore. It's

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Speaker 1: worth over one hundred billion dollars a year. But the

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Speaker 1: Chinese economy is not doing well, so the demand for

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Speaker 1: iron ore, or how much iron ore it can afford

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Speaker 1: from Australia has dropped. And experts say the Australian dollar

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Speaker 1: is really viewed by investors as an indicator of how

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Speaker 1: well China is doing, because generally we know that if

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Speaker 1: the Chinese economy is strong, the Australian economy is also

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Speaker 1: probably doing pretty well. Now, how this kind of circles

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Speaker 1: back around into Trump's tariffs is that they present an

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Speaker 1: added level of uncertainty for the Chinese economy, which is

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Speaker 1: already hurting, and you know, by the metric of what

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Speaker 1: we've just talked about, Australia as a result could hurt

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Speaker 1: economically even more. And this all comes at a time

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Speaker 1: when America's economy in comparison, is relatively stable, so no

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Speaker 1: one knows what's happening next. But Australia really could get

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Speaker 1: caught up in economic uncertainty if things become more unstable

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Speaker 1: for China because of these US China trade tensions.

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Speaker 2: I am no expert on the sheaf market, but I

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Speaker 2: feel like the one thing I do know is that

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Speaker 2: uncertainty or extreme uncertainty is never a good thing for

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Speaker 2: the share market. Soone knows what's going to happen next.

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Speaker 2: That's when there does seem to be these sudden downturns

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Speaker 2: or downturns over time. But I don't know. Like I said,

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Speaker 2: I'm not an expert on specifically share market.

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Speaker 1: Well, I think you're more of an expert than you think, Billy.

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Speaker 1: And certainly the volatility of these kind of international diplomatic

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Speaker 1: relationships when we have global leaders taking big swings in

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Speaker 1: terms of tariffs, that has to lead to that uncertainty,

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Speaker 1: but we will keep a close eye on it as always.

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Speaker 2: Thank you so much for listening and thanks for joining

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Speaker 2: us em.

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Speaker 1: Thank you so much, Billy.

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Speaker 3: That was a great explainer, thanks to your ten geography

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Speaker 3: lessons very much did me. Well, just quickly before you

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Speaker 1: Thanks again for listening to today's episode. We will be

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Speaker 1: back again this afternoon with some headlines, but until then,

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Speaker 1: have a great day.

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Speaker 2: My name is Lily Maddon and I'm a proud Arunda

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