Doug Rediker on Global Impact of Trump's Economic Agenda

Of course, the president-elect has put forward a lot of ideas around tariffs on the campaign trail from a blanket tariff on all imports to 100% tariffs, in some cases, in some goods coming from some countries. For all of that, what's likely to actually become reality? Well, first of all, Trump has been very obvious, very blatant, very clear that he believes that tariffs are his favorite word in the English language, and costs. And whether it's his favorite word or not, I can't really say, but they are certainly not costless. So as he's gone from 10% to 20%, as he's gone from, at one point it was John Deere, I think, 100%, then 200%, then at one point he said 1,000%. These are figures that are just rhetorical, we hope, in terms of the approach. The approach is, I'm going to use a very blunt weapon, I'm going to use tariffs to advance American primacy in the world, and I'm daring anybody else to come back and reciprocate, retaliate. And, of course, everybody else is probably going to do exactly that. So I think what we can expect is an immediate imposition of across-the-board tariffs within the first days or weeks upon Trump taking office in January, probably under IEPA, that's the International Economic Emergency Policy Act, which basically allows the president almost unilateral discretion without any limits whatsoever if he declares an international economic emergency. If he does that, that's across the board, that's pretty dangerous, that's pretty debilitating to a lot of specific interests, but where it's really going to hit the road is when everybody else comes back and retaliates. So on that basis, I expect Europe to be the primary target, and Europe to be one of the first to come back and retaliate. On China specifically, there's this other pool of up to 60% tariffs that he's discussed, and that's a whole different ballgame. There are different authorities he would use to actually impose that, but China has a very big presence, not only in the U.S., but obviously as an economic player around the world. And if Trump decides to go head-to-head with China, I think the first term of Trump, China was reluctant to engage on a tit-for-tat basis. I'm not sure they're going to show that reluctance this time. In fact, I think a lot of people misunderstand what it is China can do back. It's not just tariffs for tariffs. They have their own new, the equivalent of export controls that they can levy across the board, across the world. It's going to be very dangerous if they go down this route. Across the world is the point here, Doug Redeker. Say Donald Trump takes office and signs a flurry of executive actions on his first day, the way we saw in 2016. The Trump sharpie is back across the board tariffs. Knowing the isolationist approach, if I can use that word, of this campaign become administration and knowing the isolationist trends that we're seeing throughout Europe and around the world, are we on the precipice of a geopolitical ice age? Oh, I don't think it's an ice age. I think you're going to see some reversion to previous iterations of different alliances. I think that the U.S.-led world order, so let's call it the halcyon days of after the fall of the Berlin Wall and when the U.S. was the world's sole superpower, I think those days are over. Not only because China poses a threat as a competing superpower, but because we're not really stepping up our game. In fact, under some of the rhetoric and the policies we expect, we will probably be looking at a number of countries that would normally have been in the U.S. camp that will scratch their heads and say, well, wait a minute. If you're treating us as if not antagonists, at least certainly not allies, then should we play a little bit more of a non-aligned role, even if they don't call it that? So I think you're looking at a world in which a lot of alliances, again, alliances being the operative word here, I don't think Donald Trump applies his alliances. I think he used most relationships as bilateral and win-lose. So if you can negotiate a deal and Trump feels he got the better end of it, that's good. If it's a multilateral alliance thing, then he sort of shuns that. So I think in general, you're looking at an upended world order. You're looking at a world order in which the U.S. certainly plays a dominant role, but it's not going to be the dominant role. And I think we're going to be up for some surprises when countries we've always relied upon suddenly have to be a little more nuanced. Give you a quick example. If we do this tariff thing, you could see the EU, Canada, Japan and China ally against us in taking a claim that we did this in violation of WTO rules at the WTO. That's a pretty strange alliance. We have the EU, the UK, Japan, Canada and China allying against us. It's quite a world to imagine. I want to add another part of the world into the conversation as well. When we look at the Middle East, the open arms with which Benjamin Netanyahu accepted this news of Donald Trump becoming president-elect. I wonder how you're looking at policy there in particular, knowing how crucial stability in that region is for the global flow of energy, things that do have an impact on inflation. Yeah, how much time you got? I wish we had more, Doug. The Middle East is going to be one of the most important and complicated areas because Trump and Netanyahu have a very nuanced relationship. It's not just because Netanyahu called Biden and congratulated him, but the US-Saudi relationship is tough. Obviously, there's the Abraham Accords, which Trump takes full credit for and deserves it. But the relationship with Iran, we've already heard that there's going to be the maximum pressure campaign possibly ramping up again. So all of this is extremely complicated, and I'm not sure that we know where it's going to go. I don't think that Trump wants to inherit a fragmented Middle East. I think he'd much prefer to have it, quote, settled before he takes office. But I'm not sure that the Bridge Colby view of the world, one of the possible Trump administration officials, who wants us to move away from the Middle East and focus solely on China, I'm not sure that's just going to be able to be implemented given the facts on the ground in the Middle East. It's too complicated. Does Donald Trump lower sanctions or eliminate sanctions against Russia or help it reconnect with the international banking system? I think Trump views everything as a deal that's just waiting to be had. And I think that the end of the Ukraine war, if it comes, will include some element of sanctions because Russia is going to insist upon it. But remember, those sanctions are imposed not just by the U.S., but they're imposed by the EU and other G7 allies as well. So this is going to be, again, much more complicated. And there are a number of sanctions against Russia that could, and I emphasize the word could, be ramped up by the Biden administration in the way in the coming days. And some of those are going to be harder to roll off than simply an executive order. But let's see. I think it's going to be on the table, but I don't think Trump's going to give it away. I think he could give it away, but he's not going to give it away right away.