What Trump wants is very, very simple.
Give me money and save me money.
The stakes now for the U .S.
are even more near.
China is the grown -up in the room, and it's responding to the United States in a very sensible way.
I don't think that what he's doing now will create those opportunities.
For the rest of the world, my advice is to buckle up and get ready and embrace yourself more of the shots.
The chat lounge unpacks views and opinions on hot issues in a more casual way.
Some say it's the art of the deal.
Others argue it's merely extortion and blackmail.
Welcome to The Chat Lounge.
And joining our discussion on US President Donald Trump's tariffs are Dr. Joseph Mahoney, a Professor of Politics and International Relations at East China Normal University, Dr. Xu Zhang, Fellow of the Belt and Road Research Center, Minzhu University of China, and Dr. Christis Tombasos, Associate Professor, Department of Economics, Monash University, Australia.
It's a great pleasure to have you all on the chat, gentlemen.
Welcome! outcome. As widely expected, US President Donald Trump has wielded his tariff stick with the first strike hitting America's two neighbors and China.
So the first question goes to you all.
Has any specific part of the first strike surprised you to any extent?
Dr. Tom Bezos, this is your first time on the show.
And as you're from a country that has so far not been hit by the tariff stick, shall begin with you, boys.
What's your response here?
Well, thank you for having me on the show.
So this is exactly what Mr. Trump did in 2019.
He threatened the use of tariffs against Mexico and then accepted a set of pseudo concessions by Mexico as the reason for suspending his decision to implement those tariffs.
By now, Mr. Trump has established a well -known pattern of behavior, a manufacturing crisis, resolve the crisis, take credit for resolving the crisis, and rally his base.
But the danger of oversimplifying much of Mr. Trump's behavior is theatrics.
It is important to recognize that the so -called concessions by Mexico and Canada that allegedly motivated Mr. Trump to suspend implementation of tariffs are anything but concessions.
Let's take Mexico first.
The promise by President Shane Baum that allegedly appeased President Trump was the stationing of 10 ,000 troops at the border.
But Mexico sent 15 ,000 troops to the border in 2019 and again 10 ,000 troops in 2021.
In other words, Shane Baum agreed to do what her country is already doing.
And the case of Canada is very similar.
Mr. Trump's decision to delay his plan to implement Harris against Canada followed the phone call with prime minister Justin Trudeau, in which, as President Trump put it, Canada agreed to implement their 13 billion border plan.
The working here is important.
Mr. Trump did not say that Canada announced a new plan, but rather that Canada would implement their plan.
Note that Canada's 13 billion border plan was announced during the Biden administration.
Of course, all this suggests that Mr. Trump picked a fight, saw the stock market decline, and caved in exchange for nothing.
And this is the standard modus operandi that we observe over the years.
Right, so you're saying that President Trump, what he wants is some obedient attitude from those two countries and make the whole world his theater?
Yeah, you know, I think he's expecting the guys, the message that these countries are obedient to his demands, even though in substance he's achieving absolutely nothing.
Now, admittedly, this perspective oversimplifies certain things.
I think the case of China is quite different, but we'll get to talk about that a little bit later.
Certainly, when it comes to Canada and Mexico, though, I don't think he had any real demands, and he merely wanted the theater, which targets the domestic audience, his voters.
He wanted to appear as the strong leader who makes demands and gets what he wants.
In reality, the demands were rather unclear, imprecise, quite unreasonable, to the extent that they were articulated, and he got literally nothing in return.
What about Dr. Chu, has anything surprised you, to any extent say, less than an expected 10 % rate on some, not all Chinese products?
Well, I think I'm not quite surprised.
Trump is not a hater.
He is a businessman.
A very true businessman.
We can call him and probably his administration everything, but stupid.
I think they are not trying to be crazy.
They're not trying to be stupid.
They just try to shake off their opponent, for example, like China and other countries and even their own alliances.
This is just a tactic.
Well, I think among his administration, among his team, there are many professionals like the Secretary of the Treasury, like the Trade Rap Office.
And they are professionals, they fully understand what they're doing right now.
So I think this is typical and very classic, tactics hold on poker tactic, we call it bluffing.
So by using this they try to negotiate a better deal with you know their opponent.
For example, like China, for example, like Mexico and Canada.
For them, especially with Trump and his role, basically, if they don't have so -called France, they only have the one who can give them benefit or not.
So they try to shake off China for 10 % of the tariff.
It is because the trade surplus is basically too large in America's perspective.
They don't understand this trade surplus in China or trade deficit in America is basically a good manifest of a good economic health status of America.
But they think this is bad, so they try and shake China off, but also they at the same time, they understand if they tried it too hard to push it too far, inflation into America will skyrocket off the roof.
They don't want to do that because that well means a longer -lasting inflation environment and also a more tightened up interest rate environment.
They don't want to see that.
And also for Mexico and for Canada.
I think that these 30 days delay or even more days delay can be also expected.
I don't think Trump really want to do that.
This is also a bluffing tactic, because that can create what we call the shocking wave towards Mexico and Canada to urge and coerce them into doing things that American want them to do.
And also, they can set up an example telling some other third party country that is I'm okay to put up some policy against my own alliance with my own neighbor.
So, I wouldn't hesitate to do the same thing to you if you are not that close to me, at least.
So I think they're doing it right now.
I think Mexico and Canada are basically dancing towards Trump's rhythm.
They basically have no choice.
They don't have any state to bargain with Trump.
So I think all things are playing out, according to Trump's playbook.
I think it's very, very smart.
I think only China right now has been fully geared up towards Trump and all his strategy because we've been waiting for this moment for like two years ago.
For the rest of the world, my advice is to buckle up and get ready and embrace yourself more of the shocks.
Because they're coming, they're coming not only on to China but they're coming on to the rest of the whole world.
I think the whole world is well aware of that.
And Dr. Mahoney, you're living in China, were you surprised when you heard that the tariffs on Chinese products was only like 10%.
Because a lot of people were expecting, I think the maximum is like 60 %?
Well, I think we all realize that if you impose 60 % tariffs across the board that it would have destroyed the U .S.
economy, it would have destroyed his position with his own voters and so much as he had offered to try to find solutions to high prices.
And we know that that tariffs simply push cost to consumers.
I would disagree a little bit with my two colleagues, who's lived in China for the last 14 years.
So the extent to which I'm still American, one could definitely question but nevertheless, I find Trump so repulsive, both in terms of the policies that he undertook in his first administration, in terms of how he handled a pandemic, in terms of how he handled foreign relations.
And I don't see anything to suggest that he's a smart guy or that he's doing things better now.
So I would I would disagree slightly with Professor Chu's estimation that those are smart people.
And I would underscore the point that he himself made, which is they don't really seem to understand the position of trade imbalances and what they signal for the US economy, probably later we'll talk about whether or not Trump's efforts really amount to a series attempt to spur the reindustrialization of the United States.
I don't think that what he's doing now will create those opportunities.
So I don't know what he's actually gaining, other than playing to his base, but that doesn't really change things long -term.
At the same time, I would go a little further.
Professor Tom Bozos was a little too kind with some of the detrimental aspects in terms of we've seen.
What we haven't mentioned so far is what happened to Colombia and Panama.
And in the case of Panama, things are still a little vague and we don't yet really know what's going to happen.
But there we basically saw economic coercion and military coercion, the asset threat of invasion, if Panama did not start breaking ties with China, if Panama didn't bring into review Hutchinson port holdings contracts on either end of the canal, which by the way, have nothing to do with the canal itself.
They're completely separate operations.
So, I concur with the idea that Trump creates crises that don't really exist.
But in Panama's case, we did see them break the MOU with China on the BRI.
In Colombia's case, we saw the humiliation of a left -wing leader.
We saw the attempt to humiliate the president of Mexico, who's a left -wing leader.
And we see that the Trump administration also has ambitions to meddle in Canada during a difficult election year where conservatives are expected to make gains and where they were already exploiting Trump's gestures against Canada to further strengthen their hand to show that they would be better capable of dealing with him going forward so I do think that there are other objectives here other than just whether or not he can achieve short -term economic gains I think there's a broader political aspect that we also have to consider and the downsides that he's creating for these countries but I do
agree that there is a topic here it will be interesting to see what comes next in terms of Europe.
We know that Europe is knocking at his door, trying to start some early negotiations to prevent getting hit.
And the White House has promised it Europe.
So, you know, we may be just seeing him setting the stage.
And in this case, I agree with my colleagues.
He's showing how he can discipline others, even if he's just getting some superficial winds.
He may be looking for gains that he can get in other places.
But in terms of China, I think that he he took a softer approach because he couldn't afford to go much further than what he invited the chat lounge.
The chat lounge unpacks views and opinions on hot issues in a more casual way.
Indeed, actually, the elephant is back in the China shop at this time with obviously with more destructive measures.
But back to the tariffs, like you mentioned, Trump agreed to poll tariffs on Mexico and Canada, actually hours before the sweeping actions were enacted.
So Dr. Tom Bezos, what does this dramatic shift tell you?
Well, Joe, I'll go back to the first point that I made.
I mean the dramatic shift, I think, was perhaps part of the plan.
He was looking for an excuse, I believe, to reverse the original decision for 25 % tariffs, which would have been devastating for the American economy.
I think it was merely posturing.
I think the shift was in the mix in the plan from the very beginning.
I do not think that it's President Trump was serious about the 25 % tariff.
The fact that he used only a 10 % tariff in the case of China, I think is perhaps indicative that that is a bit of a different case that perhaps he's more serious about maintaining that type, at least for a while.
China is quite different than Mexico and Canada, not only because it is the third, as opposed to the first or the second trade partner of the United States, but because there is this sentiment in the United States that Chinese imports are affecting adversely the American labor market, and that they are particularly responsible for the expanding wage inequality between skilled and unskilled labor in the United States.
This is an issue that, and you know, if I may make a side point, this is an issue that I've been working on for the last three decades.
In my research, I find that that is not true.
I find that imports from China into the United States are in fact, promoting wage equality, not wage inequality in the United States.
And that is because those imports from China into the United States undergo extensive downstream handling that involves a disproportionate number one skilled workers.
But to go back to the original point, there is this presumption that Chinese imports are destroying American jobs, driving in quality, causing the industrialization of the United States.
And I think this environment gives President Trump a bit of flexibility in terms of maintaining those tariffs.
So I do not believe in the case of China.
He's exhibiting the same interest in theatrics that he is in the case of Canada and Mexico.
And I think that goes back to the fact that I do not believe that Mr Trump or his administration truly understand the way tariffs work.
Mr Trump is somebody who would disagree with my colleague that he's a shoot business man, I think he's rather mediocre, businessman.
This is somebody who thinks of the world as a zero -sum game where deficits, significant losses and surpluses gains, and these are the lenses through which he is looking at the trade relationship between the United States and China.
And that goes back to something that my colleague, Professor Mahoney, mentioned.
It is evident that President Trump is under the impression that the American trade deficit, bilateral trade deficit with China, he thinks of that as a negative, and that is a ridiculous has way to look at the world.
Bilateral deficits characterize the overwhelming number of economic transactions in the world.
We visit the restaurant for a meal.
We pay for the meal and sell nothing back to the restaurant in return.
That is we import a meal from the restaurant and export nothing.
This is a bilateral trade deficit between the diner and the restaurant, which of course means absolutely nothing.
Bilateral trade relationships across countries are very similar and they are no indication of the health, of the effectiveness, or of the fairness of cross -border transactions.
So I believe that Mr. Trump and his administration lack knowledge and expertise in terms of how international trade and tariffs work.
They impose tariffs, thinking that they are paid by China, whereas, in fact, the overwhelming percentage of the price increases of the tariff in effect, is paid by the American consumer.
And that, I think, is what might be going on here.
Right. Maybe he and his officials don't have a good idea how the way tariffs work.
But he obviously knows how bluffing may work.
He was quite confident that Canada and Mexico, or most countries he tries to coerce with tariffs maybe, would concede.
But when it comes to China, it's another story.
But can Americans - If I may interrupt, I agree with the sentiment that you know something about bluffing, but when you bluff, you should bluff for a meaningful stake.
What are you bluffing for?
To be complaining about the bilateral trade deficit with China is crazy.
That is something that cannot be ameliorated.
It is what it is. You cannot blackmail China to buy more of your goods if you don't produce the kind of quality goods that China requires.
So I think that he's successful in bluffing, but he's not successful in knowing what to bluff for.
Indeed. He might think that Americans can't stand this 10 % price hike on Chinese goods, but how long they can stand with increasing inflation caused by the tariffs is another story, but we'll come to that later on.
What may come next?
Mexico and Canada have been given at least one month of grace.
What's going to happen after that?
Will President Trump come up with more aggressive demands on its two neighbors?
Dr. Qi, what's your take?
I do think they will have more of this kind of move coming after that as Mr. Bezos just mentioned.
Bluffing is just a tactic, it's just a move.
There is a purpose behind it.
We have a saying, that is you wouldn't set up a table for nothing.
It means you've set up all this table, you made all the stuff.
We definitely want something after that, so I think it's the same thing for Trump.
Trump is making a lot of a very very shocking and all in a move towards the whole world.
For example, clinging on the territory of Greenland of Canada as the 51 states and you know everything can also about this high tariff against their own trade partners especially the alliances and everything and I think he set up a very very large and a weird table in there.
so the thing is what kind of food is expecting to be served on the table and I think there are going to be more things to be you know put on the table and I think number one is about immigration across the border from the south to the north illegal immigrants and all kinds of illegal products that can be smuggled across the border.
They can't be the purpose that Trump would like to urge those two countries to help him to clear the borders, controlling the drug trafficking, population trafficking.
And this is something that the two nations, I think they would like to cooperate because this is just lowest hanging fruit.
I think Trump really understands about human nature.
That's a reason he can have this landslide in the election.
But he knows if I'm a threatening, if I want to force you to cooperating with me, first of all, I will make a threat that I can't believe.
For example, like 25 % of the tariff.
Yes. This is something is very realistic that I can deliver immediately within my own power.
But when I say 25%, or even 35, 45%, but eventually I give you like 10 % or I give you a 30 day delay.
So you will feel as a victim, you probably will feel, okay, he is not that bad after all.
There is a negotiation space for us.
So you will feel good or feel better about him.
What we call this is a Stockholm syndrome, which means you can sympathize with the one who put up all this for you.
So that's a very very tricky mind game that a good shrew negotiator knows how to play.
So you see that's already been happening when Trump granted them 30 days to play and two presidents in the North and the South immediately are showing good gestures.
Even though this threat shouldn't be there in the first place, they never will if Trump did not set up this table.
Those two countries will never feel any gratitude or have any kind of this lucky feeling until the Trump threatened them in the first place and then removed the threat temporarily.
So I think this is actually very, very smart mind game.
And do you think Trump will stop there by that?
I don't think so because those two nations has already been cooperating with Trump, there's also something they can deliver.
If Trump is very reasonable, they are not asking, okay, if I stop this, 25 % of the tariff, or if I immediately will implement this tariff, you should, you know, If you can cooperate with us, otherwise, I would take you in as my 51st estate.
Well, I probably think Canada wouldn't cooperating that soon.
But Trump asked some favor that Canada can deliver and it wouldn't hurt Canada's integrity.
For example, cooperating with them, controlling the border, controlling the people or the productler smuggling.
Well, Canada think, this is something fair enough.
We can do that in order to avoid that, you know, so kind of a stupid tariff.
of. So they cooperated.
And that's the purpose and that's step one or the lowest hanging fruit has been picked up by Trump already.
And what comes next, if they know how to threaten people and coerce people to cooperate with them, they will have escalated to threaten after that, for example, more of the tariff more sanctions, more of the other requirement and more of the favor, you know, the Canada have to deliver for America, same as Mexico or the land of Canada.
But you can just keep my word for that.
Right, maybe President Trump is painting his eyes on the land of those two countries already, but Dr. Mahoney, what's your take there then?
What do you expect Trump to further demand those two neighbours come up with?
I think he's going to watch and see what happens in Canada and Mexico over the next month.
Again, I think that he has ambitions that go beyond simply posturing, in terms of the threats that he made.
I do think he is trying to meddle in the internal politics of both of those countries, especially Canada, and I think that he's done this not only with the tariffs, but he's also done it with calling Canada the 51st state.
I've spoken to Canadians who are really quite furious with Trump.
I don't think there's a Stockholm syndrome effect.
I think a lot of people feel insulted and betrayed that Trump is trying to humiliate them and whether or not he gets real or substantial concessions from them or not.
And so I think it's creating some deep resentment.
And if we see increasing pressure from Washington.
If Canada doesn't somehow pass the 30 -day test then that invites more aggression from Trump then we will see more revulsion in Canada.
At the same time I think there was already deep unhappiness with Trudeau and of course he's on his way out and we do expect a conservative government to win power.
The question here is how is Trump going to play this going forward to ensure that he doesn't endanger conservatives taking power and And how does he give conservatives in Canada a win a month from now, as opposed to giving a Trudeau party a win?
So I think that it's a little more complicated than just pandering to the American base, or just getting a superficial win.
At the same time, there is, sort of, again, the broader perspective of what is he playing for on the world stage.
I do think that there is one thing that Trump understands, whether or not he understands tariffs, or basic economics or trade imbalances, I think it's very wise not to underestimate him or anyone in his administration.
So on the one hand, I think that what they're doing is stupid policies.
But I don't think that they're stupid people.
I think we have to consider that they have other strategic goals in mind.
And one of the things that I think that he's very, very clear on, and we've seen this in several statements that he's made, is that above all he has to protect the power of the US dollar as the global currency, and he has to try to sustain American hegemony over the global financial system.
So to what extent is he trying to set the table to go to Professor Chu's analogy to find deals ultimately that preserve the dollar and prevent de -dollarization, which is coming sooner or later.
But once it does come, I think the broad perception is that the U .S.
economy is a house of cards built on the dollar, the dollar's relationship to deficit financing the U .S.
military. So once that falls, then the U .S.
falls as a global power substantially.
This has been the Child Lounge.
When we come back, we'll check out the outlook for Trump achieving the vision of revitalizing America's manufacturing!
Stay with us! happening in China and around the world.
Welcome back to the Chat Lounge.
We continue our chat on US President Donald Trump's tariffs, Dr. Mahoney.
Then how do you expect smart people of President Trump to respond to China's moves?
Obviously, we've seen, like we said, Beijing, or China's another story and Beijing has announced a flurry of countermeasures, including additional tariffs of 10 % to 15 % on liquefied natural gas, coal, farm machinery and other products from the US as well as restrictions on the export of more critical minerals, so how do you think they will respond?
You know, I was interviewed by Bloomberg and the piece that they ran, I didn't like the title, it was you know, China is taking a very moderate response because China has more to lose.
I don't think that's, I mean that wasn't just what I, the broader comments that I gave them, but I think China has responded in a responsible and modest way without trying to up the ante, to provoke a spiral.
Because I think on the one hand, no one can afford that, neither China nor the United States, although China is prepared to go down that road, much better prepared now than it was eight years ago or six or seven years ago, when Trump started this mess.
That said, I do think that when we talk about setting the stage for a trade deal, an eventual trade deal, between China and the US, which we realized that Trump did reach a trade deal with China before.
It just got sidetracked by the pandemic and him losing reelection that the stakes now for the US are even more dear.
It's clear that tariffs didn't and new mercantilist policies didn't lead to the reindustrialization of the United States.
It's clear that efforts to foster tech decoupling and the stymie of China's technological advancement have not succeeded.
It's clear, I think that the containment strategies even in the Asia Pacific region probably failed sometime in 2023, General Ramon or way out of office or a couple of weeks after even said that, you know, all that they had done to try to prevent China's tech advance had had basically failed.
So I think, you know, after looking at the advances that we've seen in Chinese AI, in the past several weeks after we've seen China just continuing to move forward, in ways I think are not that strange to people who live in China, but are in some ways a stunning reality for those elsewhere, that what the US really needs more than anything else is to buy time.
And in terms of empires or imperial control, on the one hand, I do you think that what we're seeing is a strategic retreat in terms of drawing back to the Western Hemisphere, especially in the northern hemisphere, we've seen Rubio saying, OK, the realities that we live in are multi -polar world, that's sort of a powerful concession, perhaps.
But at the same time, the US needs to sort of sustain the position of the dollar and the position of the US military.
When you go back and you look at old histories or the history of the Roman Empire, inevitably what happens to these empires, they end up with internal contradictions that are part of their imperial system, but these contradictions just keep getting worse and worse and they're not able to really reform themselves.
So eventually they exhaust themselves.
And the U .S. seems to be stuck in this same kind of spiral, but, no, I don't want to be so ahistorical to directly compare Rome or other of these empires to the U .S.
But we go back, and we see that what empires start doing as they reach the end of their life is they realize that they can't really reform their system because to do so would mean that they basically have to crash the things that are holding themself already.
We saw this to you and I know you're familiar with the late Qing history.
The Qing tried to hold on the power for so long that when they finally came time to try to reform themselves, it was their undoing.
So in this case, I think the U .S.
is trying to buy time in terms of buying time that the number one thing it needs is some sort of commitment from China to continue to protect the dollar and not to accelerate efforts that Russia wants, Iran wants that other countries are maybe thinking they might want in terms of de -dollarization.
so I think we're setting at the table for that kind of deal sometime in the next year or so Because that's really the only thing that I think will work for the US at this point in time Yeah, maybe a lot of people are saying that the United States of today Resembles a lot of the late Qing dynasty, but apart from buying time.
I think maybe Washington also wants others to buy from them, especially, you know, they're European Well, you know, I know because if the US would sell its best products of China, then the trade cap would narrow substantially.
The trade deficit will.
The US restricts a lot of the products that China wants to buy.
So that's kind of silly.
But it does that out of fears of strategic competition militarily.
The other thing is, you know, why buy time?
Is it just to buy time so you can stay on the top for a little bit longer?
You're sort of in a perpetual crisis mode.
Perhaps another side of it is, you know, there are other things that are happening when we look at, you know, the mounting singularities associated with tech, but also climate change and pandemics.
These are also moving us down a dark path, and we know that the global south, where China is really building its position now, and China itself are some of the countries that are most vulnerable to these types of challenges.
The global north has a little bit more protection from climate change, so there could be all sorts of strategic end games that are being played here.
So, the US could buy itself another 5, 10, 15 years.
You know, how does the dark art of climate change, rather, change China's position, what happens when the that we have these generational shifts in China, so forth and so on.
So, there are a lot of other factors and variables that People start dreaming up when they're trying to buy time right a fine time so that they can you know push China further down but when it comes to Europe as we speak Trump hasn't given any order to impose tariffs on Europe, but he has said tariffs will happen with the European Union and when it comes to Britain He suggested Britain may be able to avoid extra tariffs from the US Dr. Tom Bezos, what do you expect Trump to demand from the EU and Britain respectively?
I know you're originally from Greece, maybe you have a better clear conclusion.
So if I'm happy to answer your question but before I do, I'm wondering if I may say one or two words about some of the things that Dr. Chiu and Professor Mahoney mentioned.
I think that both of my colleagues are crediting the Trump administration with a greater degree of rational thought than is evident.
You know, Professor Mahoney's thesis is particularly smart and very, very interesting, the buying time thesis.
It is what he puts forth is perfectly reasonable, and logical, and thoughtful.
And indeed an American president would be behaving very much in accordance with Professor Mahoney's framework if that president were sufficiently thoughtful and sensible.
I just doubt that this administration is as strategic and thoughtful as perhaps suggested in the buying time scenario.
You know it has been said that the greatest mistake an adversary may do is to underestimate their opponent.
I think that we are doing exactly the opposite with Mr. Trump.
I think we are over -estimating his thoughtfulness and abilities.
He's not really playing three dimensional chess.
He's playing checkers.
And yet we look at him playing checkers and we interpret what he does as if he's playing three dimensional chess.
And I do not believe that he does.
You know, Dr. Chu also, I believe, gives a lot of credit to the administration.
He said that, you know, the administration plays a smart mind game that resulted in good gestures by the leaders of Mexico and Canada.
But, you know, Dr. Chu, what are those good gestures.
On behalf of Canada, the good gesture was to implement a plan that, in fact, was already in place.
What sort of gesture is that?
To implement a plan that you've already voted for and allocated a budget for.
That's not a good gesture.
That's actually nothing.
How about Mexico? Mexico promised to have 10 ,000 troops stationed, but it has already 25 ,000 troops.
So, what is the good gesture?
Nothing. So, I think that President Trump is, in fact, far less thoughtful than we give him credit.
So, that was by way of responding to some of the comments that my colleagues made.
Now, going back to your question on Europe, again, he's threatening tariffs without articulating demands, at least demands that make sense.
I believe that in relation to the European Union, he mentioned only a couple of different things.
He mentioned the European Union's treatment of American digital technology, and he'd like some of those taxes to decrease.
And he is complaining about the imbalance between American and European car trade.
I mean, these are, first of all, the car trade issue, you know, cannot be resolved.
The Americans no longer make quality cars, no European wishes to buy American cars, Whereas Europe makes the best cars in the world, together, of course, in Japan and China and so on.
But some of the best cars in the world.
So those kind of complaints are just childish.
What about agricultural products, then?
There is a third point.
And immediately, when it comes to agricultural products, Europe is perhaps more protective than it should be.
I believe that it should be far less protective than it is.
But agricultural products is not really the highlight, or it gets lost.
Even if we accept that that might be a legitimate thing to to put on the table, he gets lost in the mix of talking about car trading balances and digital technology, taxes, and so on.
So what is he demanding then?
Maybe European car makers or investors investing in the States?
Yeah, I don't believe that the administration articulated exactly what they expect from Europe in relation to this.
I've only seen the grievances but not a specific plan of action that they would like to invest implement.
I think that in relation to Europe, it's a case of Mr. Trump posturing for internal consumption in the hope that something good may come out of it.
The world has a significant experience when it comes to trade negotiations.
We know that good outcomes result from sensible, good, healthy international relationships, not from Threats, threats to not achieve much.
They humiliate the adversary without generating proper outcomes.
Dr. Joo, do you think that Europeans have to worry about that?
If it's like what Dr. Tom Bezos just said, President Trump actually doesn't know what he actually wants from the Europeans?
Well, yes, agree, but also disagree.
Because I think Trump, while have a bigger picture, the bigger picture is a shake off everybody for money.
Well, I don't think he's a hater, but basically he's, still, you know, trying to money making purpose.
So, I think Trump right now, well, as I just said, he's going to, going after the Mexico and Canada as well further.
And later I don't think European Union can rest assured.
I think European Union will also face such kind of blackmailing or threatening for the similar purpose.
I think what Trump wants is very, very simple.
Give me money and save me money.
That's it. How to do that?
I don't think he has quite a fluke.
And also among the people around him and Amaro Largo, I think there are many different voices.
According to my intel, that he's a team of staff and the team of Elon Musk, team of Silicon Valley giants.
And all those people have a different opinion of how to do things.
And all the three forces, or even four and five were different more forces, surrounding Trump, pull them to different directions and eventually make his move unpredictable.
Trump is a person who, you know, do not like to make very, very tactical, detailed plans or agendas.
He's not a techno -crat.
He wants something clear and simple, and he orders that.
No matter who can deliver that, well, if he likes you, he will do what if you tell him to do.
If you don't trust you or don't like you, you probably wouldn't buy it, and that's how he is.
So he's not a person that details, which makes his move very unpredictable, because all his details Well be implemented by the underlings well probably with three or four different sects and they will have their own agenda Very very hidden agenda and a very different way of doing things Which makes European Union or Canada or rest of the world?
Should be really really stay alert of because you will never know where the next step is coming from and the way he's going To but just a mind that he wants you to give them money And that's it no matter how much you're gonna pay or how much America people is gonna pay I don't think Trump have any plan about that maybe more military spending by those European or NATO countries in Europe.
Yes, that can be true.
The Chat Lounge... The Chat Lounge un -packs views and opinions on hot issues in a more casual way.
We are seeking actually early talks with the US to avert Trump's tariffs.
What if they fail? Which country would be most affected than Dr. G?
I think the most affected countries can be Germany and France.
So to be very frankly, I don't think Trump likes the current person in charge of the German in France.
Macron is definitely not the one who is in the liking of Trump.
And also, you know, the chancellor of Germany, Olaf is basically also not, you know, who Trump is like to associate with.
So I think right now there is a trend in German politics and also in French politics, that the right wing is coming into power and it's going up very, very quickly.
And if you can see the current, you know, activities of the Elon Musk has been, you know, stand out and speak out for the right wind and the German politics a lot.
So it keeps us in asking who is behind that?
I think eventually Trump is behind that.
Trump wants to see German term right, wants to see France term right.
And I think those two countries really have to be very careful because they are the two leading engine of European Union's economy.
Well, I think there's a certain engine that's Italy.
But Italy has already been turning to extreme bride with the Malini in the office.
And everything turns to be very, very conservative, considering that Italy still are not that influential like German politicians and French politicians.
So there's still a space to rewind a little bit.
But if in France and in Germany, those engine or those leading nations in European Union, if they turn right, and I think it's gonna be very, very bizarre situation we're gonna see you know very different from the past 20 years.
It also have to remind you that in a Nordic country, in Norway, in Sweden, there is a trend and sign that their politics also turning right.
So I think if the trend continues, like today, I think within three or four years the European Union will have a major right turn and also the whole world of political and economic scenario is going to be changed for good.
And a quick question to Dr. Tom Bezos, What other nations or blocks do you expect Trump to target with tariffs, India, Japan, or Australia?
Well you know as I argued throughout this discussion mr.
Trump is not a rational agent.
In this light we may only speculate I would not be surprised if he threatened tariffs against countries such as Colombia to curb the outflow of migrants to the US and perhaps even Egypt and Jordan to accept more Palestinian refugees which it would facilitate his plans to ethnically cleanse and take over Gaza, as we found out last night.
So, you know, it is difficult to predict these things.
But he seems to be a big fan of tariffs.
And I wouldn't be surprised if he uses them in other negotiations around the world.
And then to the direct impact, as an economist, Dr. Tom Bezos, how would you expect President and Trump's behavior to affect the global economy.
Actually last month, the World Bank released its Global Economic Prospect, predicting global growth will hold steady at 2 .7 % in 2025 -26, and the International Monetary Fund said in its report, global growth was projected at 3 .3 % in 2025 -26, broadly unchanged from the outlook forecast in October, with an upward revision in the U .S., offsetting downward revisions elsewhere.
So given what's happened over the past few weeks, Dr. Tom Bezos, do you expect the institutions may have to revise their forecasts?
Well, you know, I believe they already are revised in their forecasts.
I have seen a report that a recent report by the World Bank and the IMF, a joint report that looks at the state war and finds or estimates that it is expected to reduce global GDP by 0 .5 to 1%.
That is by about a trillion US dollars.
I mean, this is quite unprecedented and remarkable.
And it will be a direct result of what the Wall Street Journal refers to as the dumbest trade war in history.
These kind of trade wars have profound and significant implications on the world economy for a host of reasons.
Tariffs raised the price of imported goods that reduces consumer spending.
It reduces corporate profits.
Its loss of economic growth.
Companies are nowadays reliant on global supply chains.
And a particular commodity may cross borders multiple times, because one country may add a particular component on the product, another country may add another component, and so on and so forth.
And every time these components change hands, a tariff is left on top of that.
So these tariffs are going to disrupt the supply chains, they will increase costs, they will create all sorts of logistical challenges affecting the operations and profitability of different companies around the world and of course retaliatory measures limit access to key markets affecting sales and revenue growth and so on.
But at the end of the day perhaps the most important effect of tariffs is that they contribute to a climate or uncertainty leading investors to adapt a risk -averse stance.
So investors walk away from the market, sell stocks, and that is in fact what we already observed.
When President Trump announced his intention to impose a 25 % tariff against Mexico and Canada, the stock marketed in the U .S.
near collapsed. So I'm expecting the economic effects to be significant regardless of the extent to which countries around the world retaliate.
Now that I mentioned retaliation, I'd like to point out something in relation to an earlier discussion in terms of what China is doing at the moment.
Well, the first thing I'd like to point out is that China is the grown -up in the room and is responding to the United States in a very sensible way.
Trade wars are unfortunate, of course, but I do not think that Beijing has a choice, but to retaliate, and their approach to their retaliatory actions is quite sensible.
It is not over the top, it is measured, it is controlled, and it is intended to send the message that these trade wars do not benefit anyone.
So I commend China for being reserved and not escalating the trade war beyond the extent to which it has to be escalated.
Thinking about retaliation, I am wondering how the United States would react if China would say impose a tariff against certain Tesla models, such as Model S and Model X, which are in fact not manufactured in China or in Berlin, but rather in Fremont, California.
I would imagine that a simple tariff on specific Tesla models would get the message through to President Trump that these kind of trade wars are not benefiting anyone.
In fact, I would imagine that something like this would resolve the trade war in about 24 hours, when Elon Musk understands that these trade war nonsense is in fact affecting everyone, and causing significant problems for the American economy and himself in particular.
You said China is grown up in the room, so I suppose China wouldn't do that, because it knows that it's a double -edged sword.
Then, how do you expect Trump's behavior to affect Chinese economy then very briefly?
Well, I mean, it would certainly have a negative effect on the Chinese economy.
Heavily affected? I would say modestly affected.
All right. Turning to the impact on the US itself, we already said that maybe the 10 percent price hike on Chinese goods or on any goods from other countries is bearable for the moment.
Though President Trump has already said there must be some pain.
Then the question is how long can Americans stand with such a pain the Trump administration said is worth the price Dr. Mahoney I'd like to respond to a couple of earlier points and then I'll try to circle back to what you've what you've raised So the first one is I think the last thing that China wants to do is to alienate Elon Musk we saw some provocative tweets from Musk in the past week or two against China and I think there there is sort of a administration, as opposed to what people generally perceive that is that he's a friend of China because he's got an exposed position with Tesla.
There's an alternative analysis that holds that Musk has already soured on Tesla, that he realizes that Tesla can't compete with Chinese models, and that he may be moving to his more profitable businesses at this point, which depends on a closer relationship with the US government, SpaceX, and his AI company and others.
So, I don't think that they would target Tesla in California, also because Beijing has tried to maintain a positive relationship with Gavin Newsom.
In terms of your question, can you bring me back to what your direct question was?
Yeah, how long can Americans put up with the pain the Trump administration said is worth the price?
Well, I haven't seen what the pain will be with regard to the modest tariffs they've put in place with China.
It's going to take a while for those to buy it in fact.
They don't even take effect until the 10th, if I remember correctly.
And the tariffs with Mexico and Canada were put on hold.
So I don't think there's been anything yet that is coming down the pike other than uncertainty that, as Tambalzos mentioned, can roil the markets and increase risks and have longer -term effects.
Again, I do think that Trump is playing for something else or the system that supports him, which is far more organized and disciplined at the start of this term in office versus where it was when he began his previous term.
and so much as he had gone to war with the Republican establishment and didn't have enough support for him in the place, that has now changed.
There's much more of an institutional foundation that's behind him.
The key is, I think, he needs to see some sort of significant win, not just ceremonial wins, but some sort of significant win that he can promote to the American people to ensure that Republicans continue to hold power in Congress past the midterms.
And, you know, I think the various things that he's doing now haven't offered that sort of win.
So he's going to need some sort of big real deal that will at least give a short term boost or even buy some time, as we were saying earlier.
Otherwise he risk losing the midterms and being a lame duck for his last two years in office, which I think he desperately wants to avoid, even if he doesn't understand the fine art of economics.
And the last question also to you all, it's the outlook, although I think some of you already touched on this earlier in the show about Trump has emphasized using tariffs to bolster America's reindustrialization and encourage foreign businesses to establish factories within the U .S.
So how far do you expect him to go with this strategy?
Could there be any U -turn, or he stopped what he's doing abruptly?
And what's the outlook of Trump achieving his vision?
And let's begin with Dr. Chu.
Well, I think right now, what Trump really want to achieve is, you know, a memberulism, You know, isolate America and just try to do what he's promised the mega American first and they don't make Americans, so Called great again, and I believe by shaking of the others and he can achieve this purpose But he's more in one factor American has to be today's American is based on the international orders and globalization Only by enabling others only by you know cooperating with the other partner up within others and I think America You know has benefited so much as a global Empire as it today But if Trump
want to reverse this trend Even though what he means is to do good for American people, but actually he will drag down America to another, you know, swamp, the swamp he wants to drain himself.
He will create a bigger, deeper and the worst swamp himself.
This is the problem that he is facing.
I'm going to continue with this agenda.
For the question about it, the only problem is that.
How many problems are going to create and how much of the uncertainty he's going to make for the rest of the world?
And Dr. Tom Bezos, please.
There is no prospect to reindustrialize the United States.
In economics, there is a very, very large literature on the use of tariffs in efforts to industrialize.
This literature comes under the title of import substitution, industrialization, and works like this.
Because you impose a tariff in an area that you would like to expand, let's say an industry of vital interest, the tariff keeps foreign imports out of the country that allows the domestic industry to expand, to cover the space that was previously occupied by foreign imports.
And the hypothesis is that that is how you achieve industrialization.
Now, there have been countless economic experiments over the years.
This theory was very popular in the 1940s.
It was used in the 1950s extensively, 60s, 70s and so on, when it was understood that it simply does not work.
Yes, you can use this policy to force resources to flow from certain sector of the economy to other sectors that you can achieve, but that is not industrialization.
That will not give you the comparative advantage that is required to be able to stay in business in the absence of government protection.
For that, you require technology.
You require education.
You require a healthy economy that engages in free trade.
Free trade, in fact, is the greatest disciplining mechanism that we know.
If you engage in an environment of free trade, you need to be the best at what you do.
You need to stay competitive, adapt the latest technologies, the latest logistical mechanisms, the latest distribution frameworks, because otherwise, you lose your business.
If the United States can straighten up or come up with a better development of those sectors, technology, education, like what you just mentioned, can they get re -industrialized?
The Institute for Supply Management said U .S.
manufacturing actually grew for the first time in more than 2 years.
In January, its PMI increased to 50 .9 last month.
Isn't it some of a good sign there?
Right. Absolutely. But that is an outcome that you achieve by providing technology, facilitating the development of technology, by facilitating education, by facilitating industrial training, not through tariffs.
Tariffs are not going to achieve that outcome.
Tariffs are merely able to shift resources in the economy from the efficient sectors to the inefficient sectors but they do nothing to correct or improve the inefficiency of the sectors themselves whereas technology education and so on are the catalyst for industrializing and improving the performance of any economy and I believe those numbers that you mentioned pertaining to the recent performance of the American manufacturing sector where the result of the Biden administration's very heavy emphasis on facilitating those inputs that are required for industry to become efficient and productive.
All right, and last but not least, Dr. Mahoney, please.
Yeah, I think, you know, it's funny because I wrote my undergraduate pieces on Jitúlio Vargas's ISI policies, and the one thing that I recall is that they don't work.
We all know what happened to him politically, or at least we should.
But in any event, I think one of the things we look at, a couple of things.
The first is, we saw the United States pursuing these policies where they were pressuring companies companies like TSMC to locate bigger operations in the US.
And it's interesting that these firms have really struggled to establish and begin producing, even though something like CHIPs manufacturing is something that's so important to the American Strategic Worldview, what they find is that American workers and local jurisdictions are finding it very, very difficult to actually work in those industrial models.
The second thing is, I think there's been some speculation that maybe Trump wants to induce Chinese investment in Chinese manufacturing in the United States, and that could include EVs.
And of course, I'm sure his good friend Elon Musk might be disappointed by that.
But Trump has betrayed and abandoned comrades -at -arms in the past.
That said, I've been to the most advanced Chinese EV plants in China that are more advanced than Musk's gigafactory here in Shanghai.
And you can have an entire factory line that has only three workers on it.
So we're not talking about bringing a lot of jobs to the US if you start seeing these types of investments.
And if you're going further down the value chain, then of course, you're looking at other issues.
The final point is that when Vargas and others were pursuing ISI policies, they weren't living with the recognition of what reality they were in.
And I think one of the things that whether Trump understands it or those around him understand it or not, we're in this period that is referred to by many as the fourth industrial revolution.
So the idea that you would industrialize, the idea that you would be able to rebuild your infrastructure and compete with China which is already so much further ahead, already has the foundation is much further ahead in tech development than many people realize, but not just that how China functions as an advanced technological society in terms of how it organizes and leverages infrastructure, people, government, industries in a way that produces these highly efficient manufacturing and supply chains and logistics and so forth.
So you know we're now in china transitioning to the next thing.
We're moving up the value chain.
So the idea that the US wants to re -industrialize is sort of a 19th century or 20th century way of thinking that was disproved in the 50s and 60s even in the 40s.
So I don't know where that ends up but the prospects are not very good.
Adding to what you've just said before we sign off.
I don't want to end with some negative note but let me quote Mao Zedong the founding father of the People's Republic of China who said in his 1940 speech New Democratic Constitutional Government.
Who ever tries to profit at others expense will come to no good end.
With that, we wrap up this session of the chat lounge.
Many thanks to Dr. Joseph Mahoney, Professor of Politics and International Relations at East China Normal University, Dr. Chris De Stompasos, Associate Professor, Department of Economics, Monash University, and Dr. Qiu -chang, Fellow of the Belt and Road Research Center, means to the University of China for sharing her insights.
The show is available on all major podcast platforms.
Please email us at radio at cjdn .com.
I'm Tuyen. Thank you for listening.
We'll have more chat at the chat lounge next week.
