Trump's trade war: How risky a game is he playing?
Nov 27, 2024
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Gavin Esler chats with Mary Lovely, a senior fellow at the Peterson Institute specializing in US-China trade, and Rebecca Harding, a trade economist with the British Foreign Policy Group. They dissect the implications of Trump's proposed tariffs and their potential to ignite a trade war. The conversation highlights concerns over rising inflation, the risks to American consumers, and how these policies may reshape global relations. They also explore China's strategic responses and the overarching shift from globalization to fragmentation in international trade.
Trump's proposed tariffs could significantly burden American consumers, leading to higher prices and reduced purchasing power amid economic instability.
The geopolitical landscape is shifting towards nationalism, risking decreased global cooperation on critical issues like climate change due to rising tensions.
Deep dives
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Understanding Tariffs
Tariffs, as explained, are taxes imposed on imported goods that are ultimately paid for by American consumers rather than foreign producers. With proposals for significant tariffs on Chinese goods, the discussion centers around the economic burden on American importers and the potential increase in prices for everyday products. Despite prior assumptions that the U.S. could negotiate these costs down, evidence from past trade wars shows that this expectation did not materialize. Consequently, American households and companies might shoulder the financial impact of these tariff policies, affecting their purchasing power.
The Challenges of Reshoring
The concept of reshoring jobs back to America from low-wage countries like China raises concerns about economic viability and inflationary pressures. While some job creation occurs in sectors like steel, many industries suffer due to increased operational costs, leading to job loss elsewhere. Moreover, the transition may not yield the desired employment outcomes, as businesses often shift operations to other countries with competitive labor costs, like Vietnam or Mexico. The overall economic implications suggest that reshoring may not provide the intended benefits and could instead exacerbate inflation.
Fragmentation of Globalization
The podcast discusses the emergence of geopolitical fragmentation as a response to rising tensions between the United States and China, shifting towards a more nationalistic and protectionist approach. The interdependencies that once characterized globalization are now perceived as vulnerabilities amid competition, leading to a decline in multilateral cooperation. As nations focus on self-interest, there are worries about diminished collaboration on global challenges, such as climate change, which require collective efforts. This trend raises crucial questions about whether the world can navigate issues collectively or will continue down a path of isolationism.
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Donald Trump’s talk of boosted tariffs has sparked concerns of a major trade war with America’s rivals. The Chinese government has responded that “no one will win a trade war” and with economists warning that tariffs are liable to increase inflation, who will be the losers of Trump’s trade policies? And how would tariffs affect global relations in an already unstable world?
To discuss the potential economic and geopolitical impacts of Trump’s tariffs, Gavin Esler talks to US-China trade expert Professor Mary Lovely, a senior fellow at the Peterson Institute for International Economics, and trade economist Dr Rebecca Harding, senior fellow at the British Foreign Policy Group.
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Written and presented by Gavin Esler. Produced by Robin Leeburn. Original theme music by Paul Hartnoll – https://www.orbitalofficial.com. Executive Producer Martin Bojtos. Group Editor Andrew Harrison. This Is Not A Drill is a Podmasters production.