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- [00:01]
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This message comes from Capital One. Banking with Capital One helps you keep more money in your wallet with no fees or minimums on checking accounts. What's in your wallet? Terms apply. See capitalone.com bank for details. Capital One NA Member FDIC this is FRESH AIR.
- [00:18]
Terry Gross
I'm Terry Gross. I follow the news pretty carefully, but it used to be that when I'd come across an article about tariffs or free trade, I'd give myself permission to skip over it. I assumed it might be boring and that I wouldn't understand it even if I read it. But now, now Trump's tariffs are high drama. They've upended world markets, and it feels essential to understand their impact on the US and the global economy, how they might have a long term effect on US Relations with our allies and adversaries and and how they'll affect consumer prices and our savings. Here to help me and you better understand what's happening is a journalist who's been covering economic issues for years and recently returned from a reporting trip to China. Zanny Minton Beddoes is the editor in chief of the Economist. She previously was the magazine's business editor and economics editor and is a former economist for the International Monetary Fund. We recorded our interview yesterday morning. Trump's tariffs went into effect at midnight. And this afternoon, as I record this introduction, he's put a 90 day pause on most of the tariffs, but not China's. But who knows what will happen later today. Our interview is about the context and possible consequences of the tariffs, so it will be helpful in understanding the news, whatever twists and turns the story takes. Zanny Minton Beddoes, welcome back to FRESH air.
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Zanny Minton Beddoes
Thank you for having me.
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Terry Gross
If Trump were to say, oops, my mistake, I didn't intend my beautiful tariffs to tank the global economy, let's call the whole thing off and put things back exactly like they were. Would the markets likely recover quickly? Even if he did that, I'm sure.
- [02:08]
Zanny Minton Beddoes
There would be a recovery rally, but I don't think the uncertainty that he's created would go away. I think we've crossed some kind of a Rubicon in the week or so, and we're not going to go back to the world as it was before.
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Terry Gross
What do you mean by that?
- [02:24]
Zanny Minton Beddoes
Well, you know, President Trump has for decades said that he believes in tariffs and he has said that he feels that the global trading system is unfair to America. It's a very long held belief of his. So this whole tariff action of the last week hasn't kind of come out of nowhere. He really believes this. And it's part of a broader sense from this administration that it wants to radically remake the rules of global security, geopolitics, economics. And so even if, and I don't think he would do this, but even if he did what you suggest and said, oops, this was all a terrible mistake, who's to say that he won't change his mind next week or the week after, or in six months? And you can really only go on the best evidence, which is what President Trump has been saying over years and decades, and that is that he believes wrongly, in my view. But he believes that the global trading system doesn't work for America, and he believes that it needs radical change. And I think since he's been saying that for such a long time, we have to believe him. And so I don't think that there will be a fundamental shift. I think there will be negotiations with certain countries. I think the markets will affect his calculus. But I don't think we can suddenly kind of wish away what's happened and go back to the world that we had before, quote, unquote, Liberation Day.
- [03:43]
Terry Gross
You said that tariffs are something that Trump has believed in for a long time, and he recently said that America is being quote, looted, pillaged, raped and plundered by nations near and far. What's your take on that high drama description?
- [03:59]
Zanny Minton Beddoes
I think that this view of the world that President Trump has is, at a big picture level, fundamentally wrong. The US Is the most successful economy in the world. It's the richest economy in the world. And broadly, the global trading system has hugely benefited the U.S. now, that's not to say that there are not certain countries that are not obeying the letter of the global trading system. It's not to say that there are certain products in certain areas where other countries should open up more. So it's not perfect, but broadly, I think the US has absolutely benefited. But I think to understand what President Trump is trying to do, you need to step back a bit. And he has two views, and it's not quite clear which of them is predominant. But one view is that if you look at the United States over the last 30 years, he thinks that the US manufacturing base has been hollowed out and the US has suffered because of unfair trade practices from other countries, and that you need tariffs to re industrialize the United States and that this permanently would mean that behind a tariff wall, you would encourage companies to invest in the United States to create US Jobs, and that therefore, the US Would fundamentally be better off if it permanently had high tariffs. That's kind of one potential view. The other view is that he actually views these tariffs as negotiating tools to get better deals with other countries, and that by threatening, then you negotiate a better deal with the other countries. There could be truth to both of those. But it's not clear what is actually driving President Trump, whether he primarily wants to have a kind of 19th century view where the US in his view, prospered behind a high tariff wall. And I think that's where he's trying to go. But the modern economy is built, as you know, Terry, on long supply chains where companies get supplies from many different countries and where the US has specialized in services and higher value add manufacturers. And if you really think what the consequences would be of this vision, do you think the US Is going to start having factories making T shirts? Is the US Going to start, you know, having factories that make sneakers, all of the things that are bought from countries around the world? It's a very sort of radical shift back to an era where the US Was much less wealthy and successful than it is now. And so at one level, if that's where he wants to go, this is a fundamental break, and it's going to have huge and ongoing consequences for everybody. Alternatively, it's more of a negotiating ploy, and it's designed to get a better deal from certain countries. And within the people around the President, there are different views as to whether these tariffs are really about negotiation or whether they are really about creating the barriers that will bring manufacturing back to the United States. They have different visions, but both of them imply a lot of turmoil, a lot of uncertainty, and a lot of pain for consumers because tariffs are taxes on consumers. The people who pay this, in the end, the cost of the tariffs are people who pay more for the things that they buy.
- [07:09]
Terry Gross
It's ironic that Trump wants to lower taxes, but at the same time, the tariffs will create high taxes. So the billions that Trump says we'll be getting from tariffs is that money that we, the consumers, will be paying to the government.
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Zanny Minton Beddoes
Let me try and give the best possible explanation that I can of what I think is the logic of the administration. The administration's logic is we want more things to be built and produced in the United States. We want manufacturing back so we can create the kind of jobs that existed in the middle of the 20th century. And so we are going to have high tariffs which will encourage companies to come and invest and produce in America. And another way of encouraging to do that is that we'll offer lower taxes. And for American consumers, we we'll get more revenue from tariffs so we can lower other kinds of taxes. That's what you hear from administration officials, and they will point to the late 19th century when America, it's true, had very high tariffs. And it's also true that that was the main source of fiscal revenue. The income tax wasn't invented until 1913. But to think that you can recreate that now or that it would be a good thing, I think are both very mistaken. First of all, if you go back to the 19th century, most of the best scholarship suggests that actually the McKinley tariffs were, if anything, a detriment to the US economy would have done even better without them.
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Terry Gross
Are you talking about the tariff of 1930?
- [08:39]
Zanny Minton Beddoes
No, I'm talking about the late 19th century, the McKinley era, when the US had high tariffs and was growing very fast. The 1930s are another powerful history lesson because there the smoot hauley tariffs were increased. And although it wasn't the main reason for the Depression, it certainly didn't help. And other countries retaliated. And that tit for tat retaliatory tariff made the depression worse. It certainly didn't help it. That's one of the reasons why after 1945, there was a decision made to never again have that kind of a tariff war and to create a sort of stable global system for trade, which is the one that President Trump is essentially now blowing up. The question for US Consumers and indeed for the US Economy is to say, has the US Economy overall really been hurt by the current system? My answer would be, no, it hasn't. It's the richest, most successful economy in the world. US Consumers have an extraordinary range of choice. They are better off from the competitive environment that comes from a low tariff economy. If tariffs are raised, consumers pay more. US Companies have higher costs. That's why you see this incredible turmoil in the stock market right now. I don't think you end up with a system where the US Is better off. Nobody gains from a tariff war. And the other part of this is that countries will retaliate. We've already seen China announcing retaliation. I think others will retaliate too. And so you end up with a situation which is really lose, lose. And the goal of it is one that I think is not only unattainable, is not really advisable. We're in 2025. The US s strengths are in high tech. The US s strengths are in services. The US s strengths are not in going back to making garments into sewing sneakers. That's not what the US Economy is at. And trying to force it back through tariffs, I think is a very damaging and dangerous direction to go in in.
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Terry Gross
Terms of tech innovation, like you were saying, that the US Strength is in tech, in the service industry, and in research. But the Trump administration has been cutting research and cutting agencies that do research, cutting universities that do research. So if our strength in terms of the the financial system is in innovation, and we're decreasing the funding intentionally of innovation, where does that leave us?
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Zanny Minton Beddoes
Well, I would say that that's a big mistake, and it will leave the US Worse off, Terry, if we stand back. I think the simplest way of encapsulating this is that in 2025, the US is the most successful economy in the world. This administration wants to radically reshape the rules of global trade in order to put a large tariff wall around the United States, which it thinks will lead to a much stronger US Economy. As companies invest behind that tariff wall, it's not clear that companies will invest because the most important aspect of this current moment is just how much uncertainty there is. And no one knows if this approach of President Trump is going to last or if these tariffs will be be negotiating tools and therefore won't go. So I think the most likely thing is that companies don't actually invest. They just wait and see. But even if they did, and some companies did come back, it would be a US Economy behind a tariff barrier that is less efficient, less productive than it would be without that barrier. And my view, and this won't surprise you since I, you know, run a magazine that for 183 years has fought for free trade. But my view is that the best recipe for the US to support succeed in the 21st century is not to hide behind a barrier of tariffs, but to double down on its economic strengths. And those strengths, as you say, are its strengths in technology, its strengths in innovation. It attracts the smartest, brightest people from around the world. It has the deepest, most liquid capital markets. These are incredible strengths that I think the US should play to. And it has every possibility of carrying on being the most successful economy in the world. The bit that I would add is that I think much, much more needs to be done to help those people who have been left behind by not just trade, but also technology. So I think there is a big to do list in the United States, whether it's education, whether it's training, whether it's a much more focus on people who really have suffered. But I don't think hiding behind tariff Barriers or reshaping the global trading system is going to be the route to long term success for the US Economy.
- [13:32]
Terry Gross
Trump's approach to the tariffs is to put a 10% tariff as a minimum on everybody, like every country, and then individually, you know, have a formula so that he can individually place tariffs on all of our trading partners. And it's all happening simultaneously and it's all happening with a very fast deadline. Is that usually the way tariffs are done? Like how have tariffs traditionally been instated on countries?
- [14:02]
Zanny Minton Beddoes
No, this is absolutely not. This is without a doubt the biggest trade policy shock, I think in history. Because if you look at back to the late 19th century, the increase in tariffs under McKinley was less big than this. Even Smoot Hawley was smaller. You know, presidents from Reagan and indeed to President Biden have increased tariffs on individual goods or individual sectors, but nothing like this. So this is off the charts in terms of scale. It's off the charts in terms of speed and uncertainty.
- [14:36]
Terry Gross
Considering what's happening in the markets, I'm surprised that people in finance, people in the banking system, people in hedge funds and just, you know, major investors aren't complaining more, aren't objecting more, because they're losing a fortune and a lot of corporations, I mean, are losing millions or billions in terms of their stock prices.
- [15:08]
Zanny Minton Beddoes
Well, first of all, some people are now beginning to speak out publicly. You will have seen that Bill Ackman, for example, a very prominent investor, is worried about an economic nuclear winter, thinks this is a mistake. Other people, other prominent wealthy investors have started to speak out. I think you're also hearing from senators, Senator Ted Cruz publicly coming out that these were a bad idea. You're hearing it from more Republican senators. So I think people are beginning to speak out behind the scenes. People are somewhere between, you know, baffled, alarmed, befuddled, you know, because firstly, the scale of this has, has really shocked people. But I think no one is quite sure what the administration's endgame is because as we were discussing, there are three not necessarily compatible goals and the administration's logic switches between them. Is this about fundamentally changing the global system so that the US re industrializes behind a high tariff wall? In that case, these tariffs are here to stay because it won't happen unless they stay. And it's going to be extraordinarily painful. I would say a very bad idea. But they have to stay. Is it primarily to raise revenue? Because if that's the main goal, then you actually don't want too many factories to come back because obviously if they come back, they're no longer paying the tariffs. You only pay the tariffs if you're importing stuff. And thirdly, is it really a negotiating tool, in which case there'll be a bunch of turbulence? But perhaps this is only a temporary phenomenon, and it really isn't clear. I think there's a division between the president's advisers. President Trump, if you look at what he's said for the last 30 years, you think probably he thinks the US would be better off permanently behind a high tariff wall. But he also loves to deal. So because we have no clarity about what the goal is, or at least because there are different goals, that makes it even more uncertain about where this is going from here. Then you have the question of how will other countries react? And right now, there's a big difference between countries like Japan, which have already been knocking on the door saying they want to do a deal, and China, which has, you know, reacted with high counter tariffs and other measures. So this is really a tariff war in the making. That's a different approach to that taken by Japan and others.
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Terry Gross
What does a tariff war look like? Like, take the example of the US And China, and I don't think President Xi is likely to back down. President Trump says he's not going to back down. So if there's a tariff war, say, between China and the U.S. what does that look like?
- [17:58]
Zanny Minton Beddoes
So we're already, I think, in the early stages of a tariff war between China and the U.S. i mean, if you just backtrack a bit, there were tariffs imposed by President Trump in the first Trump administration, to which China retaliated somewhat. Then President Biden kept those tariffs in place, but this was relatively modest amounts, and they didn't really have a huge amount of impact on the US Economy. Now, we've had President Trump, first of all, putting 20% tariffs on China earlier in the administration because the they, in his view, were not doing enough to stop the precursors of fentanyl being shipped to Mexico. Last week, he added another 34% tariffs as part of his broad reciprocal tariffs. The Chinese then very robustly announced a retaliation the following day. They said they would impose 34% tariffs on US exports to China and also announced another set of measures. They were going to restrict certain rare earth exports. They put a number of US Companies on what they call their unreliable entity list. They used other tools to retaliate. And now President Trump has said, well, in response to that retaliation, he's going to increase tariffs on China by a further 50%. Now, this is a tariff war, tit for tat. The impact of all of this is that tariffs on Chinese goods coming into the US Will I think, be somewhere in the order north of 100%. The knock on effect of this. Now China is more dependent on the United States for its exports than vice versa. So it will suffer more, but it can retaliate with all manner of other potential. If we really get into a kind of economic war, then, for example, Apple produces a huge number of its phones in China which are now going to be hit by these tariffs. But China could put all kinds of restrictions on Apple, China could put all kinds of restrictions on other kinds of critical minerals that it exports. You can get into a very nasty tit for tat economic battle from which nobody wins and it becomes quite hard to get out of because whatever the economic logic, this starts then becoming a matter of national and political pride.
- [20:16]
Terry Gross
Well, let me reintroduce you again. If you're just joining us, my guest is Zanny Minton Beddoes, editor in chief of the Economist. We're talking about Trump's tariffs and their impact on everything from the global economy to our daily lives. We'll talk more after we take a short break. I'm Terry Gross and this is FRESH air.
- [20:34]
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Terry Gross
You recently returned from a reporting trip to China. What kind of information did you pick up there about China's economy and how it's going to react to Trump tariffs?
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Zanny Minton Beddoes
So I had been expecting to find China angry and worried because it was clear to me before any tariffs were imposed on Liberation Day that China was likely to be a big target of the Trump administration. And when I'd been in China, I go pretty much every year around this time. And the mood two years ago was very, very grim. There was a sense that China and US relations were getting ever worse and they were sort of slipping to a place where you worry about war. Last year the mood was very grim because the Chinese economy was in very, very weak shape. And so this year I was thinking, oh my goodness, this is going to be even worse. But actually I found a quiet confidence in China that they could weather a tariff war with the United States if it happened. They were feeling more optimistic partly because of, I don't know if you remember a few weeks ago there was the release of a Chinese AI model called Deep Seq, which the Deep Seq moment, Deepseek is an LLM, a large language model that is almost as good as those produced by the best American companies like OpenAI and much more efficient and doesn't need as much compute power as the Americans one have. And it gave an enormous sort of sense of confidence and ability in China that, gosh, despite the US controls on exports of high end chips, we can actually make serious progress. So that was one reason for confidence. But the other was that I think there was a recognition amongst many in Beijing that the Chinese economy, which has been flat on its back because it has been going through a very protracted housing bust and debt overhang that the government hadn't really been addressing, but instead it had been relying a lot on exports, that if there was a full on tariff war with the United States, that would hurt very hard, but it would push China towards the kinds of the reforms that everyone knows, including the Chinese government, they need to do, which is to focus their economy away from exports and more on domestic consumers, to increase Chinese consumer spending at home, to provide Chinese people with more of a social safety net, to give them more resources to spend at home to boost the domestic economy. And that's the kind of big shift that China's economy needs to do. And I think there is a sense in Beijing that if President Trump launches a big tariff war against China, yes, they will be hit, but they will react by boosting domestic consumption. And that because that is something that the economy needs, it's actually an opportunity for China.
- [24:48]
Terry Gross
I think there's another way that this might be an opportunity for China. China sees itself, I think, as a major competitor with the US globally. And China's been doing its best to make inroads in countries that have minerals and other things that China needs. So if the US Makes a lot of enemies in these trading wars and has trouble trading with traditional trading partners, how can that create an opportunity for China?
- [25:19]
Zanny Minton Beddoes
Absolutely. So as you say, the United States, by imposing tariffs on everybody, friends and foes alike, is undermining, I think one of the core aspects of its strength, which is its alliance system and the fact that it does have very strong relations with a large number of countries. And it has the reputation of being the country that set up and upheld this system of global, global trade and security rules, whereas now it seems to be turning its back on that. And that is an opportunity geopolitically for China. It was really ironic, you know, being in China and hearing Chinese officials say, we believe in the rules based order, we believe in multilateralism. You know, it's the law of the jungle in the U.S. and of course, that's not entirely true because China, as we all know, has abided by the, you know, perhaps the letter of trade rules, but not the spirit. I mean, it has had some very questionable trade practices. And no one would deny that, that it is certainly not played by the rules, but it is now because the US Is behaving in this way. You know, China is able to say, well, we, we, we are upholders of this rules based system. And the, the real bully, the real, you know, bad actor here is the United States.
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Terry Gross
What's another way of dealing with China beyond tariffs in terms of trade?
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Zanny Minton Beddoes
Well, if you wanted to deal with China's not fully playing by the rules, then surely the sensible thing to do would be for the United States to act in concert with its allies to put pressure on China. But that is not what's happening. What's happening instead is that the US Is putting tariffs on everybody, allies and foes alike. If you wanted to really put pressure on China, you would, you would act much more in concert, which was sort of what the Biden administration was trying to do. Right? The Biden administration, you know, kept the economic pressure on China, but it also made a big effort to build up alliances in the rest of Asia.
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Terry Gross
I want to talk about Vietnam for a minute and its relationship to China in this trade war. Vietnam has a 40 plus percent tariff that's being imposed on it, and Vietnam wants to negotiate that down. But the Vietnam tariff has to do with China. Can you explain that connection?
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Zanny Minton Beddoes
So in Trump's first administration, when he first imposed tariffs on China, many Chinese companies, in order to avoid those tariffs, moved their operations to other countries, particularly Vietnam, but also Cambodia, some to Mexico and then exported them to the United States. And because those exports came from Vietnam and not from China, they were not subject to the tariffs. But it was essentially Chinese companies just doing the manufacturing somewhere else. And actually also because labor costs were lower in Vietnam than they were in China, by now increasing tariffs so heftily on Vietnam, essentially Trump is trying to prevent Chinese companies from exporting to the US by shifting their manufacturing to Vietnam. That's the logic. But he's not just Vietnam, he's increased tariffs on pretty much every country. And, you know, also a couple of islands only with penguins on them. You know, it's a universal approach.
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Terry Gross
I just want to say you mentioned the islands with only penguins on them near Antarctica. The rationale apparently is. And was it Howard Lutnick who said this, that this is so that China can't use these islands to get around tariffs?
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Zanny Minton Beddoes
I don't think that was serious. What I think really happened is that they essentially used an AI program to basically apply these things to pretty much every country. And these islands have a separate, I think it's a separate URL. They come up as separate jurisdictions. And so they got a tariff. The logic, if you will, and it was Howard Lutning, the logic of what he said was, well, just as China moved its production to Vietnam, you know, we want to make sure it's not moving its production to these countries like the ones in the southern, near the Antarctic. But if you've looked at these islands, they're tiny and they literally have penguins on them. So the notion that any Chinese company is going to be, you know, moving an assembly factory there is, you know, ludicrous. But the underlying point is, I suppose to by imposing tariffs across the board, you prevent Chinese companies from avoiding these tariffs by moving their production elsewhere. That's the serious point. But it comes at huge, huge cost.
- [29:52]
Terry Gross
Let me reintroduce you here. If you're just joining us, my guest is Zanny Minton Beddoes, editor in chief of the Economist. We'll talk more about the Trump tariffs after a break. This is FRESH air. Psychologist Dolly Chug studies the lengths we will go to protect the way we see ourselves.
- [30:10]
Zanny Minton Beddoes
We care about whether we're seen as a good person, whether others see us as a good person and whether we feel like good people.
- [30:18]
Terry Gross
Ideas about our self image. That's on the TED Radio hour podcast from npr.
- [30:27]
D
Imagine, if you will, a show from NPR that's not like npr, a show that focuses not on the important but the stupid, which features stories about people smuggling animals in their pants, incompetent criminals, and ridiculous science studies. And call it Wait, Wait, Don't Tell Me, because the good names were taken. Listen to NPR's Wait, Wait, Don't Tell Me. Yes, that is what it is called. Wherever you get your podcasts.
- [30:51]
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- [31:10]
Terry Gross
I'm going to quote President Trump and use a word that I don't traditionally use on the radio. Trump said that the EU was created to, quote, screw Americans. The eu, meanwhile, is trying to figure out a way to counteract these tariffs, to negotiate. I don't know what their plans are, but are we creating adversaries out of allies?
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Zanny Minton Beddoes
Creating an adversary is a very strong phrase that you use there. I don't think the Europeans think of the US as an adversary yet, but the shocks of the past two months, which are not just about trade, but they are about, you know, Vice President Vance coming to Europe a few weeks ago to the Munich Security Conference and essentially delivering sort of outright hostile speech, accusing the Europeans of not dealing with the enemy within, of not allowing free speech, and essentially pointing to extreme right wing parties like the AfD in Germany and essentially giving them his support. It was a very striking moment where he spoke to Europeans, intervened in European politics and did so in a kind of outright hostile way. Then, remember in the controversy about the signal messages that were made public, you know, he said that the Europeans were pathetic. There is a sense in Europe that this administration is hostile to Europe. There is a sense that they want, not just that they want Europeans to spend more on defense, which is absolutely right and the Europeans should. But they, you know, want to get out of Europe or they want to reduce the US Commitment to Europe. And in economic terms, as you say, that President Trump thinks that the European Union is somehow designed to hurt the United States, none of which is true. And all of which has caused in Europe something like a sort of accelerated version of the stages of grief. First of all shock, anger, and then acceptance of, okay, this is the new world we're in. We can no longer rely on the United States. We thought the transatlantic relationship was immutable, but we can't. What are we now going to do? And if you look at European politics, there's been a huge rise in sort of skepticism of America in European countries. And the European officials are trying to work out how best to navigate this. How do you minimize the hit to the European economy? How do you make sure Europe is less reliant on the United States? And just as with China, actually this is a big opportunity for Europe. Europe can do more to boost its own economy. Europe can do more to integrate with other countries. Europe can do more to boost its own defense. And it's important to remember the United States is powerful, very powerful, but it is not the only power around. And the United States only adds up to 15% of global trade. The vast majority of trade globally is by countries outside the U.S. so if the rest of us want to continue with a global trade rules based trading order, I think it's incumbent on us to do so. If the United States wants to hide behind a tariff wall, it's going to hurt everyone, but so be it. The point then for everybody else is how to retain a system that, that I think we all agree is a much better system for leading to prosperity and economic success.
- [34:28]
Terry Gross
Would that shut out the U.S. are you describing a system in which the U.S. is weaker, not stronger?
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Zanny Minton Beddoes
We wouldn't shut out the U.S. but if the U.S. wants to have these high tariffs, that doesn't mean everybody else has to follow suit. I think the real challenge now will be to ensure that the rest of the world salvages a global trading system, notwithstanding what the US Is doing.
- [34:49]
Terry Gross
So the EU is talking about going after tech like Google in retaliation for the tariffs. And I'm trying to understand what a tech retaliation would look like.
- [35:00]
Zanny Minton Beddoes
So the EU has a mechanism that it created, an instrument for itself which is called, I think, the economic coercion instrument, which it created a few years ago, ironically because it wanted to have a way of retaliating against China, because it thought China was the biggest sort of most dangerous actor in the global trading system. And this mechanism allows it to use retaliation in areas that are not tariffs, basically in any other area. The one area where many people think the EU will retaliate is on tech companies. And the reason is because the US exports a huge amount of services to the European Union. We've talked in this conversation, Terry, about trade in goods, because President Trump is very focused on trade in goods, where it's true that the US runs a big deficit, but services, which is things like, you know, selling technology services, selling creative industry services, selling legal services, all manner. And the services are a huge part of the 21st century economy. America is very strong in selling services and so the Europeans are thinking, well, maybe that's where we can push back. And so, for example, the Europeans have a digital services tax which they could apply more forcefully. They could impose some constraints on data sharing. There are all manner of ways in which they could hit US Tech companies where US Tech companies make an awful lot of their revenue in Europe.
- [36:29]
Terry Gross
You know, Zanny, this interview and just like reading the news in general is really making my head spin because there's just so many changes that the Trump administration wants to make to the dollar, to the global economy, to the American economy. And, you know, who knows how that will work out.
- [36:51]
Zanny Minton Beddoes
This is my first trip to D.C. since the inauguration. I've been thinking about nothing other than pretty much this administration for months, it seems. And like you, my head is spinning. And whether it's the economy, whether it's trade, whether it's geopolitics everywhere, it seems that this administration is determined to kind of be revolutionary. I think the best way to think about this is this is a self proclaimed revolutionary administration that wants to rip things up and wants to have a radical break from what it sees as a status quo that is hurting its base, hurting American workers, hurting the MAGA base, hurting America. And when you start from that position, then I think you sort of begin to understand the scale of what they're trying to do, whether it's with tariffs, whether it's with financial markets, whether it's with universities, whether it's with all of the whether it's the size of government and Elon Musk and his doge efforts. It's rip things up, start again kind of ground zero mentality. The reason it's so hard to get your head around the consequences of that is not just the scale of what they're doing and the speed of what they're doing, but because there is a lack of clarity and I think actually a lack of agreement on what the end goal is.
- [38:15]
Terry Gross
Let me reintroduce you here. If you're just joining us, my guest is Zanny Minton Beddoes, editor in chief of the Economist. We'll talk more about the Trump tariffs after a break. This is FRESH air.
- [38:26]
Zanny Minton Beddoes
A couple months ago here at Planet Money, we stumbled across our favorite kind of economic mystery.
- [38:32]
Capital One Advertisement
Jeff, what is this?
- [38:34]
Zanny Minton Beddoes
A deal that seemed way too good to be true. What I'm seeing here, at least, is that it's very high clarity. Join us on our adventure.
- [38:42]
Terry Gross
Talk to me.
- [38:43]
Zanny Minton Beddoes
Show me what you got to find out exactly how much a diamond is worth Planet Money from npr, wherever you get your podcasts.
- [38:51]
E
Hey, it's A Martinez. Even as the host of a news show, it can be hard to keep up with the headlines. That is why we make the Up first podcast. Every morning in under 15 minutes, we cover three major stories with context and analysis from reporters around the world. So you can catch up on Lo quetta pasando while getting ready, making desayuno, or going to work. So listen to the up first podcast from npr.
- [39:17]
Terry Gross
So let's talk about Scott Besant, who's the Secretary of the treasury and is by the way, worth over $500 million. He was a hedge fund manager. So what can you tell us about his economic philosophy and how he's regarded by mainstream economists?
- [39:36]
Zanny Minton Beddoes
So I think of those in the administration, he is seen as one of the more mainstream. He's clearly a, a successful investor, successful hedge fund manager, mainstream people. The way I think about it is that I think there are various factions in economic policy and similarly, actually in geopolitics who have different priorities. And I'd put maybe Peter Navarro on the kind of extreme end of we want to create a new system where trade deficits are eliminated, where we decouple the US Economy and we bring all of the goods and manufacturing and jobs back to the United States. And I would put Scott Besant and Kevin Hassett into a slightly different camp, which is more the kind of tariffs on negotiating tools to get a better deal. And so for them, I think they probably don't really think tariffs are that permanently are a good idea, but they see them as an effective negotiating tool for the United States, which is very powerful, to get itself in a better position. And Steve Moran, who is head of the Council of Economic Advisers, has written several papers now, which is the closest you get to a written explanation of the overall strategy, which is basically about trying to get a better deal for the United States in a post war economic system that they believe, as we've been discussing, has kind of disadvantaged the US but more importantly than these people's individual beliefs is the fact that this is a court and it is a court where all that matters is what the king decides to do. President Trump, who obviously is the king in this analogy, he likes having debates amongst his advisors and he likes the sort of chaos and uncertainty that comes from that. And he likes having a world where lots of countries want to negotiate with him. What's less clear to me is that he has a kind of deeply articulated strategy. He clearly has some instincts and I don't for a second think he's not A smart dealmaker. And he wants more jobs and more companies to come back to the United States. He wants more investment in the United States. He wants to do deals which make America strong. But what all of that adds up to in terms of a kind of global economic system, I'm not sure he's spent a huge amount of time thinking about that. And so what worries me is that you have a very powerful king with courtiers around who have different views, but who are basically trying to say what they think he will hear. And that as a result, you have less an economic strategy with a clear goal than you have a sort of cacophony of announcements, drama, negotiation, which will be incredibly destructive of a system that, as we've just been discussing, has been the underpinning of a successful world economy, but most importantly, an underpinning of an incredibly successful U.S. economy. And that this would be interesting and entertaining as a sort of mind exercise. What happens if you rip up the roles of global trade and finance and, you know, start all over again? But in the real world, this has huge consequences, and we've begun to see them in the last week. Not just the dramatic declines in the markets, but this is going to have real impact on real people. And nothing in economic history makes me think that it is going to have a positive impact on most people. This is going to, I think, hurt the US Certainly over the medium term, and is a self inflicted, I think, hugely damaging direction to go.
- [43:20]
Terry Gross
A lot of Trump's money comes from his brand, the Trump brand. How big has that brand been internationally? And how have his money policies and these tariffs impacted it? Or how do the tariffs stand to impact his own brand?
- [43:38]
Zanny Minton Beddoes
So Brand Trump is now really just about Trump the person. And Trump became in his first administration, by far the most kind of prominent US President in recent history, and now even more so in Trump, too. I think broadly, it's hurting people's perceptions of not just President Trump, but of the United States. I mean, we've discussed this, but in Europe in particular, I think people's perceptions of the United States are changing and not for the better. And certainly of President Trump. Now, there are parts of the world where he is still viewed very positively. But I think this kind of unpredictability, this bullying, this attitude that other countries are, in his view, all enriching themselves at the US Expense, that doesn't endear you to people around the world. And so I think the. So not just Brand Trump, but Brand USA is being affected by this. And that's actually, for me one of the potentially longer lasting and very damaging consequences of what we're seeing in this administration. This administration is doing what it's doing because it feels that America has the power to push other countries to do what it wants because it's got the economic clout. We'll see whether it can do that in tariffs. But it's based on a sense that we are the most powerful country in the world and we think the system is stacked against us and we're going to force it to be changed. People don't like that around the world. And people, I think, are increasingly looking the US not as the shining city on the hill, a place which, you know, we all aspired to and certainly held in very high regard, but increasingly as a sort of bullying, swaggering, selfish, transactional country, which, as someone who spent most of my adult life in the US really saddens me.
- [45:31]
Terry Gross
The last time you were on our show was right after Trump was elected. You spoke with FRESH air's Dave Davies and you said, I'm going to be resolutely optimistic about Trump's second term, not least because it's too depressing not to be. And you said you thought it was worth remembering that if you stand back in various areas, he either made clear something that everyone knew and no one was willing to say or actually had some successes. Are you still resolutely optimistic?
- [46:00]
Zanny Minton Beddoes
I am a resolute optimist, so I'm still trying to find the positive. I have to say that the events of the last few weeks have made me more worried that we could have some really, really damaging consequences and that this is a revolutionary administration with revolutionary fervor, and that it could in many areas, domestic and international, really result in the world ending up in a dangerous place. I still think that President Trump, you know, has got some important insights. He's right that Europeans need to spend more on defense. He's right about certain things. On China, what we haven't seen so far is too many successes. We've seen an awful lot of uncertainty. And on the trade thing, I just find it so baffling that he would take such damaging action with such seeming insouciance. And I worry that that can sort of spiral out of control. So despite my resolute optimism, I have to confess that I'm a little more concerned than I was last time I spoke to you a few weeks ago.
- [47:04]
Terry Gross
Zanny Minton Beddoes, thank you so much for coming back to FRESH air.
- [47:08]
Zanny Minton Beddoes
Thank you. And I hope the next time I will be more upbeat again.
- [47:12]
Terry Gross
Zanny Minton Beddoes is the editor in chief of the Economist. We recorded our interview yesterday morning. Tomorrow on FRESH air, our guest will be journalist Gardner Harris, author of a new book investigating Johnson and Johnson called no More Tears. Last month, the company lost a bid to settle lawsuits that claimed its talc powder products, including baby powder, caused cancer. The company faces tens of thousands of claims. I hope you'll join us to keep up with what's on the show and get highlights of our interviews. Follow us on Instagram nprfreshair. FRESH air's executive producer is Danny Miller. Our technical director and engineer is Audrey Bentham. Our managing producer is Sam Brigger. Our interviews and reviews are produced and edited by Phyllis Myers, Annmarie Bodonado, Lauren Krenzel, Teresa Madden, Monique Nazareth, Thea Chaloner, Susan Yakundi and Anna Bauman. Our digital media producer is Molly CV Nesper. Roberta Shorrock directs the show. Our co host is Tanya Moseley. I'm Terry GR.
- [48:20]
Zanny Minton Beddoes
Since Donald Trump took office in January, a lot has happened. The White House Budget Office ordered a pause on all federal grants and loans.
- [48:28]
Terry Gross
The impact of the Trump administration's tariffs.
- [48:31]
Zanny Minton Beddoes
Is already being felt in President Trump's.
- [48:33]
Terry Gross
Efforts to radically remake the federal government.
- [48:37]
Zanny Minton Beddoes
The NPR Politics podcast covers it all. Keep up with what's happening in Washington and beyond with the NPR Politics Podcast. Listen every day.
- [48:45]
Terry Gross
On this week's episode of Wild Card, actress Elizabeth Olsen reflects on being a marvel superstar. I think I haven't always successfully made choices in my work that are aligned with my personal taste, and that is something I feel like I'm still trying to prove. I'm Rachel Martin. Join us for NPR's Wild Card podcast, the show where cards control the conversation.