Loading summary
Transcript88 lines
- [00:01]
Steph McGo
Trade tariffs are back with a vengeance. Trump's told 60 countries they'll face new tariffs of at least 10%, including the UK. So how's he getting away with it given the Supreme Court ruled that the last lot were unlawful? Well, we have self titled trade nerd. Samaya Kane's with us. She's an economist who's co authored the book how to Win a Trade War. We're going to be asking that. Plus, are trade wars always bad? Are we ever going to get back to free trade? And how worried should we be here?
- [00:31]
Robert Pesterman
We're proud to say that the Rest Is Money is powered by Octopus Energy this year and Greg Jackson, the founder
- [00:38]
Steph McGo
and CEO, is with us.
- [00:40]
Robert Pesterman
Greg, I wanted to ask you about heat pumps.
- [00:42]
Steph McGo
Octopus Energy now make them. Why not just import them from China?
- [00:46]
Greg Jackson
You know what? We want to make heat pumps that work, that are designed for British homes and that are cheaper to run, cheaper to install, and actually cheaper for the hardware. And that's what we did. So for example, Octopus created heat pumps that run at up to 70 degrees C, as hot as a gas boiler. So you don't necessarily need to worry about having, you know, excess insulation and changing your heating system. That sort of thing makes them much cheaper for British homes.
- [01:14]
Steph McGo
Nice one, Greg. Thanks for explaining that. Right, we're gonna go to the episode
- [01:20]
Google Chrome Sponsor
this episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block. Or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it, ready to make anything online make sense. There's no place like Chrome. Check Responses Setup required compatibility and availability various 18
- [01:45]
Indeed Sponsored Jobs Sponsor
when you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit@ Indeed.com podcast. That's Indeed.com podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.
- [02:21]
Steph McGo
Hello and welcome to the Rest is Money with me, Steph McGo and with me, Robert Pesterman.
- [02:25]
Financial Journalist (possibly Robert Pesterman or another host)
We are delighted to be joined by Samair Keynes, who writes about economics and trade for the Financial Times. And I'm just going to get the one thing that had been bothering me When I first came across Samara off my chest, which is I wasn't sure her name. Whether her name Keynes was a question of sort of what they call nominative determinism. But actually it turns out she is related to the world's greatest ever economist, Maynard Keynes.
- [02:53]
Robert Pesterman
You're right.
- [02:53]
Steph McGo
The great, great niece. There we have it. So a woman who knows what she's talking about. He's our interview with Samaya Cainz. Samaira, lovely to have you on the show. A very timely chat. I know you've got a book which is all about trade and we're going to come to that, but, I mean, this is the perfect time to talk to you because Trump has announced a new set of of trade tariffs, trying to circumvent, you know, the Supreme Court's rul about his previous trade tariffs being illegal. Do you want to just bring us up to speed tomorrow and tell us, you know, what's happened, what's going on, how is he doing it?
- [03:29]
Samaya Kane
Yeah. So the Trump administration really wants to apply broad tariffs on pretty much all imports. And back in February, the Supreme Court said, no, we don't agree with the way that you've justified that legally. And so this is the Trump administration having another go. And so the justification was that there were countries out there that weren't trying hard enough to stop imports made with forced labor. Right. So suddenly the United States trade representative have become softies, die hard lefties trying to protect workers rights around the world. And that after an investigation has justified these new tariffs, which look pretty similar to the ones that they replaced, at least in terms of the baseline. So what we've got is we've got a broad tariff of between 10 and 12 and half percent on around 60 trading partners. There are hundreds of pages of details of how these are actually going to be implemented because there are a bunch of exemptions. There's a slight difference in the way that the UK's tariffs are going to be applied from the way that the EU's tariffs are going to be applied. But the headline is the baseline tariff of around 10 to 12 and a half percent is there. And now people are going to be looking at that and thinking, oh, well, can we challenge that?
- [04:55]
Financial Journalist (possibly Robert Pesterman or another host)
So I'm going to ask you, it's obviously early days, but do we think these will turn out to be more legally robust?
- [05:02]
Samaya Kane
Yeah. So this is a disputed topic. There are lawyers that are very confident either way. I suspect they're going to be more legally robust than the old kind. But if you look at the details of the investigation, you know, there are some questions, right, because the idea is that this is an investigation into unfair trading practices, that it is hurting U.S. economic interests. And it's quite the leap to say that the UK failing to enforce forced labor rules on, say, imported clothes or something like that really affects US interests so much that it is a proportional move than to whack a 10% tariff on everything. So there are going to be questions, there are going to be complaints. If I had to bet. Oh, I don't want to bet. I think these ones will last longer than the old lot.
- [06:04]
Steph McGo
And can I just ask then, when we're talking about forced labour, this is unethical working conditions. Surely these countries, like us, for example, can just say, no, we don't. Here's the evidence.
- [06:14]
Samaya Kane
This is a really hard area of trade law. Right. Because to be clear, it's not that the Trump administration is accusing us of using forced labor in the uk, the Trump administration is accusing us of not working hard enough to protect imports coming in from other countries using forced labor. Right, that's the complaint. And the problem is that, of course, when something comes across the border, there isn't a label saying used forced labor. Right. It's really, really hard to detect. There are certain methods that you can use if it comes from certain regions, certain areas where forced labor is particularly, that can be used as evidence. But, you know, the way that international supply chains work, it's just often very hard to know.
- [07:02]
Steph McGo
Yeah, And I get that. I get we can prove that we don't. But I mean, as in, surely our. Because we have our own rules about, you know, what we bring into the country. So surely we would be able to prove it on the basis of the fact that we don't, you know, want to bring in unethical, unethically made products. So wouldn't we have proof in that way to then put against them?
- [07:23]
Samaya Kane
So the US's complaint is that we're not enforcing our rules carefully enough. Right. And so they'll point to cases, particular products that they've banned the importation of, that we haven't acted as aggressively towards.
- [07:40]
Financial Journalist (possibly Robert Pesterman or another host)
Putting to one side that this is obviously just a device, a ruse for Trump to essentially get his way on tariffs for a period, at least in all the pages of documentation, is there anything that's actually quite useful to humane countries like ours in the sense of genuinely fundamental research into those nations where forced labor is being used to a horrific extent? Have they actually done the research?
- [08:14]
Samaya Kane
So I think, honestly, the United States Trade Representative is quite a small office. I don't know that they were doing, you know, fresh reporting, going out to places where forced labor is a concern. This is an area where the US has, you know, been active in the past, right? I mean, you know, they were very active when it came to concerns about forced labor in Xinjiang, stopping imports from there. So there is a body of work that they are relying on. One really interesting thing in the tariff schedule, though, in the details of these tariffs, is that there are two different levels of tariffs, right? There's the 12 and a half percent level and then there's the 10% level. So the EU, the UK have this lower 10% level, and that seems to be a kind of carrot, right? If you want to introduce laws restricting imports of forced labor or enforce them a bit harder, then you get this lower tariff rate. So there is a big of an inducement there. But I think, as you say, we all know this is a ruse, right? We all know they just want to put up tariffs and this is their excuse.
- [09:29]
Financial Journalist (possibly Robert Pesterman or another host)
And can I ask in respect of the impact on differential parts of the world, I see some people in the uk, I think the British Chambers of Commerce have said this, that any advantage that the UK had in respect of tariffs with the US vis a vis the EU has gone. Is that right?
- [09:54]
Samaya Kane
So there is a difference in the way that the tariffs are applied to the UK and the eu, which is. Which is a bit unfavorable to the uk. So when it comes to the uk, there were some previous tariffs, right? Those are called MFN tariffs, most Favored nation tariffs. Those are the tariffs that applied before Trump came on the scene, right? So I don't know, take a widget 3% tariff, and that would have applied both to the UK and the EU. The way that the UK tariffs are being applied is the new 10% tariff stacks on top, right? So if the tariff before was 3%, now our tariff is 13%. The way that the EU's tariff applies is it's a 10% floor, right? So on that 3% tariff, their tariff will be 10%, right? It won't be 13%. It doesn't stack in the same way. Now, if the original tariff was already over 10%, then that's just the tariff they get. But that means that on average, when it comes to these newer tariffs, the UK tariff rate is a little bit higher than the EU's one. Now, you know, we have negotiated various exceptions. There are many, many exceptions to these new tariffs. Scotch Whiskey. Not. Not included in the new one. So there are areas where we've done okay, but yeah, the we got on late Thursday night did show a slight advantage to the EU in many areas. Cars are special because cars are included in a different legal investigation. So cars are not covered by these newer tariffs. They still get the older, other ones. There are many, many bits of tariffs. It is a nightmare to keep track of them all.
- [11:33]
Steph McGo
So is it not a case though, that because the previous tariffs were ruled to be unlawful, that it's like day one again, so everything went before is forgotten about? It isn't that case. It's still. Which makes it even more complicated for businesses to get their head around, doesn't it?
- [11:50]
Samaya Kane
It's an absolute nightmare. There are many, many different investigations, you know, tariffs coming out of those exemptions. There's huge amounts of confusion about, you know, how what applies, what doesn't apply anymore. And that's why this new ruling had so many pages of exemptions are attached to it.
- [12:10]
Financial Journalist (possibly Robert Pesterman or another host)
So if I could ask you about the broader economic impact of all of this. One of the striking things about Liberation Day, the initial tariffs is pretty much every conventional economist said this is the end of the world, the global economy is going to crash, inflation is going to go through the roof. And although there was a short term, very big impact on stock markets or financial markets, they pretty quickly recovered. And actually in the end, the impact on inflation, yeah, a little bit higher, interest rates, a bit higher as a result, growth possibly a bit slower, but partly because of the sort of massive AI related infrastructure build out which was keeping American growth at a pretty hefty pace. In fact, the impact on America and the rest of the world was significantly less than people feared it would be. But right now with these tariffs, we've got Trump's war in Iran with the oil price back at $100 or so, there are widespread concerns that we may see some kind of AI related financial crash. The volatility in markets at the moment over whether or not there's a significant element of bubble in stock and other financial markets is a lot of anxiety around all of that. Do you think weirdly, these tariffs that have been completely anticipated could end up having a sort of bigger negative impact on our prosperity and a bigger impact on inflation than the ones everybody was terrified of?
- [13:52]
Samaya Kane
It's a good question. I mean, I think it might be worth just being specific about why those first tariffs weren't quite as bad as everyone feared. Right. And the answer is retaliation to a large extent. So the big concern was that other countries would hit back and that would drag the economy into a tit for tat spiral, crashing confidence, massively raising uncertainty. Those are the mechanisms behind the most dire warnings. And the retaliations didn't happen. China did retaliate. China is the exception. But that, but it retaliated so effectively that actually it stopped the escalation. Right. The U.S. essentially realized that the Chinese weapon of restricting rare earths exports was so powerful that it really couldn't raise tariffs higher and higher and higher. Right. And so the tariffs on China peaked and then they fell. The other reason why the tariffs weren't as bad as many people feared is because actually there were so many exemptions applied that, you know, if you look at the data, the applied tariff rates of, you know, the rates that were actually collected, if you just compare revenue and total imports were much lower than those statutory tariff rates, which are the, you know, the legal, the legal rates. So that, that's some of why that, you know, that didn't lead to the end of the world that time. But I think more generally, you know, my takeaway from reading all the research and going through this is, is that tariffs in the same way that trade liberalization doesn't set your economy on fire, right. It doesn't provide that kind of immediate growth boost. Closing off to trade isn't going to crash the economy. The effects, when they come, are much slower. Right. We think that actually the biggest effects of trade come with this sense that actually you're trading ideas, you're. Or when you're closing off to trade, you're threatening innovation, productivity. Right? And over the long run, that's really the most potentially damaging thing associated with trade.
- [16:04]
Steph McGo
So Trump sold Liberation Day, this day in April 2025, when he introduced these trade tariffs as being about other countries making loads of money out of the Americans and him wanting to bring jobs back and prosperity by bringing in these tariffs, it's going to get rid of the trade deficit. But is that true? Is export equal in imports going to do that for a country?
- [16:29]
Samaya Kane
So I think there are two questions in there. So one is, what's the right level of the trade deficit? And was Trump right to be so concerned about the trade deficit? And then there's a second question about do tariffs help? So on that first question, I have a bit of a regret because I feel like the first Trump administration was spent yelling at President Trump for being so silly for caring about bilateral trade deficits. So he was obsessed with the bilateral trade deficit with China, and economists, pundits were just screaming, don't you realize that if you squash one bilateral trade deficit, it'll just pop up somewhere else. If you import less from China relative to exports, you're just going to end up, you know, all that's going to end up shifting to, say, Vietnam or Mexico, which is largely what happened. We spent so much energy criticizing President Trump for obsessing over those bilateral trade deficits justifiedly, but we didn't spend enough time asking bigger questions and trying to move the public debate on about overall economic imbalances. Because if you look at the US and their kind of accounts with the rest of the world, there is a problem there, right? They have a big current account deficit. This can get really technical really fast. But their net international investment position, which is kind of an indicator of their sort of external wealth, that has deteriorated dramatically over the past couple of decades. It's the biggest negative position of any country in the world. It's extraordinary. And so it is reasonable to think that as a problem and to want to do something about it just for the basic reason that it could, you know, sow the seeds of a financial crisis. But the next question is, okay, if you do think that's a challenge, and many, many, you know, the IMF thinks it's a concern. Many, many people think it's a concern, are tariffs the way to fix it? And there, you know, the experience of Liberation Day suggests not really. So if you just now look at the narrow trade deficit in goods, say, that was basically the same in 2025 as it was the previous year. It hasn't, it hasn't fallen despite a really dramatic increase in tariffs. And when you look at the, you know, the academic research on this, you know, I wouldn't claim that there is no relationship between trade barriers and the trade deficit. Right. In an extreme case, you could, you could increase tariffs to a million percent, you could crash imports to zero, and then, sure, that might reduce your deficit. But short of doing that, it's just an incredibly unreliable relationship. There are all sorts of other factors that could overwhelm the effects of your trade policy. And actually, really what's going on in the US Is that the federal government has a big borrowing problem, and that's the thing that's driving lots of these external imbalances.
- [19:35]
Financial Journalist (possibly Robert Pesterman or another host)
So I completely agree that this massive negative balance that the US has built up is potentially an enormous accident, not just for America waiting to happen, but for the world, and that one should be concerned about it. So what is a route towards putting the US and indeed the global economy into a more sustainable position? If Trump Unilateral tariffs have made no positive impact. And as you say, the evidence suggests there's been no positive impact. In fact, I would argue the reverse is true. There was a period when international investors did not want to hold dollar assets last year. And that was really scary because at that point you were staring at that possible financial Armageddon. Now, that's to an extent been rectified. But what is the way to do something about these rather scary imbalances?
- [20:41]
Samaya Kane
All the leaders of all the global economies would get together, have a nice meeting, and agree some kind of rebalancing. So the challenge in the global economy right now is you've got this big imbalance, right? Americans on average are spending too much. And we've got the Chinese, they're the big surplus country. They are spending too little. And this is showing up in global, in global economic imbalances. Now, there are things you could do, right? There is a powerful argument that actually part of the problem is that the Chinese currency is undervalued. So they could allow that to appreciate. You could fundamentally change the Chinese Social Security system. You could fix their domestic housing problems. In the us, if you're the government, you could borrow a bit less, Right. You could make the decision that if we want nice things, we've got to pay for them, rather than relying on international investors to fund that gap. None of it's easy. And there is a sense in which this is a domestic US problem. This is an imbalanced situation. But this isn't just the US's problem, right? If the US suddenly rode back their consumption, right? Suppose the US, you know, President Donald Trump gets out of bed tomorrow morning, has a change of heart and says, oh, I've got it right. The problem is that the government is spending too much. We need to fix the problem by changing that. Then the rest of the world would have a massive problem in terms of where all that demand is then going to come from.
- [22:16]
Financial Journalist (possibly Robert Pesterman or another host)
No president is going to opt for recession, which is broadly what we're talking about here.
- [22:21]
Samaya Kane
Yeah. In which case we're going to kind of wait it out. Right. I mean, at some point maybe investors will decide that the US doesn't look that attractive anymore. I mean, so far the US has benefited from being the least bad option, Right. They're offering returns. And so investors are, you know, they're putting their money there because it's giving them returns. We could just wait and I suppose rely on the private sector to discipline the US at some point. But as you say, it's quite risky because if they all do decide to discipline the US at the same time and something in the plumbing breaks, I don't want to be there for that. That sounds scary. I suppose as a financial journalist, I should say I do want to be there for that because it would be a great economic story, but for my own well being, not that keen.
- [23:14]
Financial Journalist (possibly Robert Pesterman or another host)
Look, it's not at all surprising we've concentrated on Trump since to an extent he is bossing this argument at the moment. But there are lots of other really important issues around all this for our way of life and our standard of living, and we'll cover those after the break.
- [23:34]
Robert Pesterman
This episode is brought to you by Vanguard. Look, if you're listening to a podcast about finances, you likely already know that
- [23:42]
Steph McGo
your money could be working harder. But we know it can feel overwhelming.
- [23:47]
Robert Pesterman
Knowing where to get started and even dipping your toe into investing can make you feel out of your depth. It's a mindset that's pretty hard to shake without the right guidance. You might even find yourself wishing you could just get the pros to invest
- [24:01]
Steph McGo
your money for you.
- [24:02]
Robert Pesterman
Well, you can. With their Managed isa, Vanguard's experts do the hard work for you. They'll match you to an investment plan that feels right for you, and they'll handle the rest. No second guessing, just smart professional management. So stop wondering how to start investing and start making your money work harder. Search Vanguard Managed ISA to find out more when investing your capital is at risk, tax rules apply.
- [24:29]
Facebook Sponsor
This episode is brought to you by Facebook. So you were scrolling on Marketplace and there it was, the bike you'd been searching for. You sent a message and it turned out the seller was super chatty, kind of funny, and an avid cyclist. The next thing you know, you're in a cycling crew. Well, a community cycling group. The thing about Facebook, you might find more than what you're looking for. From a browse to a bike ride this summer. Find more on Facebook.
- [25:00]
State Farm Sponsor
This episode is brought to you by State Farm. Listening to this podcast instead of doom scrolling Smart move, Another smart move getting help from one of State Farm's 19,000 local agents when you choose to bundle home and auto bundling. Just another way to save with the personal price plan. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings and eligibility vary by state.
- [25:32]
Steph McGo
When you look at Trump and the way he thinks of things, you know he always thinks about winning and losing, doesn't he? And so in this sense, it's like he's Going to win the trade war. But what does it actually mean to win the trade? What can anyone win a trade war, and are they any good for us, or is it ultimately a bad thing?
- [25:49]
Samaya Kane
Yeah, it's a good question. So, obviously, you know, I wrote this book, how to Win a Trade War, which suggests that you can win a trade war. And, you know, I was telling people that I was writing this book, and the number of people who said is the answer, don't fight a trade war. They all thought they were being hilarious, and I had to pretend that they were hilarious every time. So the standard line is no one wins a trade war because they are costly, they are disruptive, they kill investment, they are bad news. And fundamentally, I agree with that statement. I think, though, given where we are now in the global economy, the kind of tense times that we're living in, in this, this era of geoeconomic conflict, we're not in a position to say that, oh, you can't win a trade war, therefore we're not going to fight. Right. Actually, we need to expand our definition of winning a trade war to mean minimizing your wounds. Now, President Trump is not thinking in that way. Right. President Trump still thinks it is possible to win a trade war and genuinely be better off for having deployed all these tariffs. And to that, I would say tariffs are an extremely blunt tool. They have all sorts of unintended consequences. And if you think they are the answer to everything, then that is a foolish thing to think. There are some specific problems where you may need to use them. So, stepping back, I think that the Chinese have effectively been fighting a trade war for much longer than the Trump administration. They've just been doing it much more quietly. And so there are cases in which maybe you would want to use some kind of tariff policy or a trade barrier to cope with that. And in that framing, yeah, then winning is doing as best as you can given a difficult situation. It's not making everyone better off than they would have been had there not been any kind of trade fighting.
- [27:44]
Financial Journalist (possibly Robert Pesterman or another host)
I mean, the one respect in which, slightly to my chagrin, I think Trump has sort of won this trade war, despite the fact that I think it's very difficult to argue that the American economy has benefited at all. Is that for me, and I said this repeatedly very early on, after Liberation or in and around Liberation Day, I thought the rational response for the rest of the world was essentially every other trading nation to get together and essentially agree a giant free trade area that excluded America. Because at the end of the day, although we're all brought up in this idea that you want free trade for the whole world. Actually, broadly, if US and Japan and the European Union and Canada and Korea and even China just got together and said, right, okay, we're going to exclude America, but we're going to have a giant free trading area and we're going to actually eliminate quite a lot of the residual tariffs that we've got. That would have posed quite a big economic challenge to America, essentially. If we put a wall around ourselves and just told them to piss off, that didn't happen. I mean, one of the things that was quite interesting to me was that individual nations, actually there was. I mean, you'd have thought there'd have been more bilateral cooperation between nations in the face of this, let alone multilateral cooperation, but none of that. Every area and every country simply played the game on Trump's terms and tried to negotiate on a one to one basis with Trump, which was crazy.
- [29:34]
Samaya Kane
Yeah. I mean, there were suggestions that governments might cooperate. There were glimmers. There were some leaders in Asia that, that said maybe we should negotiate as a group. And as you say, they went absolutely nowhere. I think one of the forces that led to that outcome was the fact that governments wanted to undercut their trading partners. Right. Maybe it matters less that you've got a tariff going into America, then you've got a slightly lower tariff than your rivals, and that was the prize that governments were going for. I think there's also another factor which is that the US is an important provider of national security around the world. Right. And you could argue that that's less and less the case. But there are many countries with very close security relationships with the US and they didn't want to risk blowing that up over a trade dispute. Ultimately, that was more important. So I think that was another factor. But then also I think, you know, you mentioned China in there. I think really what's going on is outside the U.S. you know, the EU in particular is increasingly waking up to the fact that actually it's got a problem with China. And so I think the idea that they would have been in a big free trade area altogether is, I think that's decreasingly likely given the EU's problems. So if there was going to be some kind of joint action against the us, maybe it doesn't include China, then they've got to worry about retaliation from the Chinese. You've got all these collective action problems, just preventing that kind of joint action.
- [31:15]
Financial Journalist (possibly Robert Pesterman or another host)
So Trump is right.
- [31:16]
Samaya Kane
Might is right to an extent. Right. So the Trump administration's objectives have been relatively narrow. Right. In a sense, they've given up on really trying to fix the Chinese problem at its source.
- [31:34]
Facebook Sponsor
Right.
- [31:34]
Samaya Kane
They're trying to kind of manage the effects of its economy on the us. They have managed to bully some smaller countries into submission, or in the EU's case, bully a collection of smaller countries into submission. We are ultimately moving back to a power based system. Now. I think, you know, the rule lovers among the trade nerds would say that, you know, how much more could they have achieved had there been some kind of coordination? Could you have a much more coherent response to China's economic actions if you were to go together? But I think at this point we'll never know.
- [32:17]
Steph McGo
Are there any countries, Samur, who are getting this right on trade? You know, we're talking about America's got a massive deficit, China has got a surplus. Is there anyone who's like kind of nailing the trade side of stuff?
- [32:28]
Samaya Kane
So I think I'd probably not use the trade deficit or the surplus as a kind of measure of success of their trade policy. Right. Mostly because China and the US are the biggest ones. Right. And the UK has a pretty big current account deficit. So on that measure we're not doing great. I'm not sure that reflects our sort of tariff policy. I think the EU is really trying to do the right thing. So the challenge when it comes to China is it's this massive economy, it's creating all of these spillovers for the rest of the world. And the danger is that if you try to respond to that by protecting yourself, you go too far and you just descend into protectionism, you descend into kind of bilocal nationalist economic policies and that can ultimately make you poorer. And I think the EU is, you know, it's muddling along, it's not doing it perfectly. And, you know, there are stumbles, there are stumbles along the way, but it is trying to be targeted in its trade restrictions, in its response to the challenge of China. It is trying to target the problem rather than go, you know, big, bold and brash in the way that the US did. Now there are forces pushing for that big, big, bold, brash outcome, but so far, at least, they're trying to tread carefully.
- [33:48]
Financial Journalist (possibly Robert Pesterman or another host)
So here in the uk, we've obviously got Andy Burnham joining the bandwagon against what he calls neoliberalism. And since he happens to be our Prime Minister, we've got to take it seriously. And I guess therefore, the question for me is whether, weirdly, Trump has got us into A better place where we're all being a bit more pragmatic about trade negotiations, because I think we were naive for years about how China joining the World Trade Organization was a good thing, because, of course, Chinese manufactured goods were so much cheaper than the goods we could manufacture, so all our money went further. But, of course, China's rise was associated with the absolute terrible destruction of communities in the UK and much of Europe and the US as those manufacturing jobs went to China and weren't replaced. So I guess we may think that the extreme way in which Trump has fought the trade war has been bad. But are we actually in a healthier place where we all recognize that we can't just naively say free trade is good for all of us?
- [35:07]
Samaya Kane
The reason I wrote the book is because I felt that debates about trade can very quickly devolve into screaming matches where you've got, on one side, people yelling that globalization is horrific and it should be reversed and China is evil and Trump is a crazy man. And then the other side, you have people yelling, free trade is amazing. Tariffs just cost consumers. Liberalization has lifted millions and millions of people out of poverty. Why are we messing that up? Because I think that the middle is kind of where we need to be, right? So I think it is the case that going back to the 2000s, the very fast liberalization, the very fast entry of China into the global trading system was very disruptive for communities. We've got academic evidence linking places that were particularly affected by imports from China with votes for Brexit. People were reacting to that even years later. However, it is also possible to kind of go too far, right? So now, if the reaction is, okay, great, we just need to close off and start making our own sippy cup cups again. I'm not necessarily sure that is a great economic strategy. If you look at manufacturing jobs and what people think of manufacturing jobs, the kind of job satisfaction in those jobs, they're not very fun jobs. They can be very repetitive. You can get not a lot of autonomy. I think working in a warehouse was the only area that had worse job satisfaction than manufacturing. So I think there is a risk of putting manufacturing jobs on this pedestal as these. These amazing things that we should all go back to. I think today we need to be asking questions about whether it is healthy for so much of the world's manufacturing capacity to be in one place and what that means if there is a future conflict, what it means if one country has so much power over a supply chain that they can use that for economic coercion. And that's a little bit more nuanced than this kind of simple globalization. Good or evil.
- [37:31]
Steph McGo
Can I just jump in at this point? Point, because I started my career in manufacturing and worked for a factory up in the Northeast. A really fun place to work, you know, it was. And I, I get really cross when I hear everyone talk about how manufacturing is this dirty industry where everyone hates their job. There are elements of of course on production lines where people are in monotonous jobs. There's also factories in this country still now where people are, are really happy. They've got generations of their family who work there. You know, there's a real sense of like achievement because you've got something tangible that you are part of. And I get we're not going to go back to suddenly manufacturing nodes, but Robert's heard me do this before. But I get really cross at this assumption that, you know, work in the city and earn loads of money and that's really fun. Don't work in manufacturing. If you don't do well at school, you'll end up in a factory. I know way more people who work in engineering who are happier than people who work in banking. So I get. But that there is that sense. You're right, what you both said, this isn't a question, this is more of a rant. But that point you made about when I saw that factory that I worked in, claws and all those jobs go to China and own. The only bit that we really kept in the Northeast is the design side of things because we're better at design and, and that level. It was really sad. And it is the reason why, why people felt, because nothing replaced it. You know, all those skills were lost and lots of people felt like they, you know, weren't valued. And we do have a problem with that in this country with valuing those kind of technical jobs in the same way we do people in the services sector, you know that it's not binary, is it? It's there, there are some really high end brilliant jobs that could be here in manufacturing that we have lost that could, you know, that we could re engineer, I guess using AI and everything else. And that could be just as, as, as meaningful and rewarding and high paid as, you know, what, what we've lost. And I think, I mean, I don't know that this is just, I just don't think it's binary when we look at this and go, right, yeah, let's not go back to manufacturing things because everyone hated it.
- [39:42]
Samaya Kane
Yeah, I mean, you know, clearly there are many people who have great jobs in manufacturing. You know, there are many amazing manufacturing brands, businesses in the UK that really high value added. You know, I guess I worry that, you know, if, if as a, as a government policy we're trying to grow the sector, you know, is, is it the kind of jobs that will come back, Will they be exactly the same? You know, could they be much more intense? Could they be, you know, much more automated? You know, it's, it's a hard thing to do.
- [40:15]
Financial Journalist (possibly Robert Pesterman or another host)
But I mean, I think, I think where we all agree is when we're looking at businesses which any government would want to promote, what you're looking at is promoting those with highest skills where there's the potential for highest both job satisfaction and rewards. And in today's high tech manufacturing world, they could be in manufacturing. And certainly in my personal experience, I know lots of very depressed people, people working in hedge funds and banks.
- [40:44]
Steph McGo
Yes. And also I always like to challenge what is skill, what's high skill and what's low skill. Because quite frankly some of the skills you think that are low, like being able to communicate, I actually think are much more highly skilled than people give them credit for. So anyway, I'm not going to get into the rant about the definition of low skill and high skill, but that's another beef that I have.
- [41:05]
Financial Journalist (possibly Robert Pesterman or another host)
It's a different, that's a different episode. Steph, let's, let's move on.
- [41:09]
Steph McGo
It is, is, it is. Again, it does my Eddie, when people call jobs law skilled.
- [41:14]
Financial Journalist (possibly Robert Pesterman or another host)
Yes. Okay, we agree, we agree.
- [41:17]
Steph McGo
You both would be terrible on a production line. You both would be terrible. You're right.
- [41:24]
Samaya Kane
I completely agree.
- [41:25]
Financial Journalist (possibly Robert Pesterman or another host)
I completely agree. I'm not gonna disagree.
- [41:28]
Samaya Kane
No, I'd be amazing. I have, I have great fine motor skills. When I was a child, my mum got me beading hair clips and I made like 50 for the school fair and like it was child labor but I was absolutely incredible at it.
- [41:44]
Financial Journalist (possibly Robert Pesterman or another host)
I don't have. My fire motor skills are not that great and I get bored. So you're right about me. One final sort of biggish question which I really wanted to talk about is if we are now, I think in sort of irreversibly, certainly for a number of years in an era where
- [42:15]
Steph McGo
the
- [42:16]
Financial Journalist (possibly Robert Pesterman or another host)
sort of deification of ever freer trade has just gone and essentially it is about carving out better deals with different parts of the world. Where does the UK sit in all of this? My own view would be that
- [42:44]
Greg Jackson
a
- [42:45]
Financial Journalist (possibly Robert Pesterman or another host)
sort of Trump world where might is right, makes the cost of having left the eu significantly greater in a sense that if we were part of the single market and the customs union, our negotiating position with America, with China, with the bigger economies would just be significantly enhanced vis a vis India. In respect of Japan and Korea, what we have to offer in negotiations with even individual countries is significantly less than our bargaining power would be as part of the eu. But on the other hand, I guess we have more flexibility as an individual nation rather than having to build consensus with the rest of the EU about what kind of relationship we want with a China or a Korea. Where do you stand on this? Do you agree with me that we would be relatively better in trade competitiveness terms if we were part of the EU or not?
- [43:54]
Samaya Kane
Yeah, I mean, in an increasingly power based world, we chose precisely the wrong time to disentangle ourselves from one of the biggest economic actors out there. I guess with a caveat that sometimes the EU punches a bit below its weight because of the internal divisions. I think thinking about the UK's strategy from here on is really interesting though, because in a world in which we're not facing any pressure from other countries, then really the rational thing to do is just to avoid choosing between the various countries. We want to maintain access to the US market, we want to carry on buying cheap Chinese stuff.
- [44:41]
Facebook Sponsor
Right.
- [44:41]
Samaya Kane
That helps with our net zero ambitions and we want to stay close to the eu. My prediction though is that that's going to be increasingly difficult because as the EU moves towards closing off the China, as it moves towards erecting trade barriers, our willingness to join them could become a source of leverage. Right. And so, you know, it could be okay, well, we'll join them in closing off to say Chinese electric vehicles. And that assures us access to parts of the eu.
- [45:13]
Steph McGo
Right.
- [45:13]
Samaya Kane
It's those kinds of bargains that political leaders may be confronted with as they, as they go forward.
- [45:20]
Steph McGo
Samai is so good to talk to you. That was absolutely fascinating. And you've got a brilliant book which you've done the audio version. I listened to the audio version of this book. So it's how to Win a Trade War and you deliver it so brilliant. It's not easy doing your own audiobook. So very much worth a listen, but thank you. You can read the physical book as well, but how to Win A, which you have co authored brilliantly. But thank you also for being part of the show.
- [45:49]
Samaya Kane
Thank you so much for having me.
- [45:50]
Steph McGo
And that's it from us on the Rest is money. Bye bye.
- [45:52]
Financial Journalist (possibly Robert Pesterman or another host)
Goodbye.
- [46:00]
Samaya Kane
Close your eyes. Exhale. Feel your body relax. And let go of whatever you're carrying
- [46:06]
1-800-Contacts Sponsor
Today, while I'm letting go of the worry that I wouldn't get my new contact contacts in time for this class, I got them delivered free from 1-800-contacts. Oh my gosh, they're so fast.
- [46:16]
Samaya Kane
And breathe.
- [46:17]
1-800-Contacts Sponsor
Oh, sorry. I almost couldn't breathe when I saw the discount they gave me on my first order. Oh, sorry. Namaste.
- [46:24]
Samaya Kane
Visit 1-800-contacts.com today to save on your first order.
- [46:28]
Steph McGo
1-800-contacts.
- [46:30]
Ryan Reynolds (Mint Mobile Sponsor)
Hey, it's Ryan Reynolds here from Mint Mobile. Now I was looking for fun ways to tell you that Mint's offer of unlimited Premium Wireless for $15 a month is back. So I thought it would be fun if we made $15 bills, but it turns out that's very illegal. So there goes my big idea for the commercial. Give it a try@mintmobile.com switch upfront payment
- [46:52]
1-800-Contacts Sponsor
of $45 for three months, $90 for six months or $180 for a 12 month plan required $15 per month equivalent taxes and fees. Extra initial plan term only greater than 50 gigabytes. Me slow when network is busy.
- [46:59]
Wayfair Sponsor
See terms that refresh you've been putting off until the right deal came along. It's here. Wayfair's Black Friday in July sale is happening now, so you can finally get the style you've been waiting for. For less. Get up to 80% off area rugs and up to 60% off outdoor and bedroom furniture. Shop Wayfair's huge selection of styles and find the piece to fit your style, budget and space, plus free shipping. Black Friday in July ends July 27. Shop today at Wayfair.com Wayfair Every style, every home.