Trump tariffs "a gift to the enemies of the United States"
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Welcome to The World in 10. In an increasingly uncertain world, this is The Times' daily podcast dedicated to global security. I'm Laura Cook and today with Toby Gillis. Any hopes Canada, Mexico and China had that Donald Trump's campaign plans for huge tariffs against them have proven fruitless?

25% for the former pair, 10% for the Chinese. Canada and Mexico have retaliated with the same. It's likely China will do similar. Next on the US president's agenda, tariffs against the European Union. So what's the big picture here? And how big a risk is Trump taking amid some suggestions the biggest winners in these trade wars will be America's enemies?

Our guest today is a senior research fellow in the Global Economy and Finance Programme at Chatham House, David Lubin. David, is Trump making these decisions based on the right information? I mean, he says the EU's trade deficit is $300 billion. Others say it's less. Are his numbers right and what are the likely impacts?

There's lots of things going on. I mean, the immediate trigger or the sort of legal trigger for the tariffs being imposed on Mexico, Canada and China is

have to do with an international emergency related to the inflow of drugs and illegal immigrants into the United States. So the legal basis for the current round of tariffs is about dealing with what the White House describes as an international emergency. And it's the use of the International Emergency Economic Powers Act that allows Donald Trump to impose these tariffs immediately without going to Congress, without producing reports, without sort of getting consultation across the government.

But, A, it's questionable whether this is an immediate international emergency that, you know, to which tariffs is the right response.

particularly given the fact that we know that in the background, Donald Trump's approach to trade is intensely mercantilist. In other words, he believes that, you know, that when the U.S. runs a trade deficit with another country, the U.S. is effectively subsidizing that country, that deficits somehow emasculate the United States. Now, the

That very important in terms of answering your question about the European Union, because without question, the EU these days has the second biggest trade deficit with the United States after actually, I think I'm right in saying that the EU actually has a bigger trade surplus these days with the United States than China does. So the fact that the EU so far

has been excluded from the announcements over the weekend doesn't by any means mean that the EU is out of the woods. In fact, tariffs on imports coming from the EU, I would have thought, would be extremely likely. I wonder actually if this policy is more America alone than America first. I mean, other alliances will surely get stronger here, won't they? Be they the UK with the EU or maybe, more concerningly, China with Russia.

Yes, I mean, that's ironic, given that Trump's, you know, one of Trump's grand geopolitical objectives is to what he calls ununite Russia from China. Yes, I think the sort of global hostility

towards Trump's trade policy does run the risk of bringing Trump's enemies closer together, does run the risk of pushing the global south further away from anything that could be described as Washington's sphere of influence. And so the geopolitical implications of what was announced over the weekend and what's likely to be announced over the next few months vis-a-vis all sorts of other countries are very serious indeed.

What happened after the 2018 tariffs that Trump imposed on exports from China was a kind of reallocation of global trade. So, you know, U.S. imports continue to grow strongly because the U.S. is growing very strongly and U.S. imports at the end of the day are a function of how strongly the U.S. economy is growing. But what we saw is a kind of diversion

or a reallocation of the source of US imports, not from China so much, but from other countries, Mexico, Vietnam, the European Union. And so although China's surplus with the United States declined after the US imposed tariffs on China in 2018, all that happened was like a tube of toothpaste that the source of US imports just redistributed itself.

And so the question I think now is whether Trump will end up playing a game of kind of whack-a-mole. If goods that had previously come to the United States from China

are now coming from Vietnam, for example. The fact that that happened in the wake of the 2018 tariffs on China will, I think, not survive because Trump is alert to this. And so there'll be a kind of whack-a-mole process where imports to the United States from Vietnam have risen massively because we put all these tariffs on China. Let's now put tariffs on imports from Vietnam. So the risk is that this effort to use tariffs

to change the structure of the US's trading relationship with the rest of the world is going to be a story that we'll be living with for quite some time now. David, the EU's foreign policy chief said today that China would be laughing, that's the quote, if Trump's tariffs cause a trade war between Brussels and Washington. What do you think she meant and how exactly does that happen?

Well, I think, I mean, it suits China for the West to be divided. So from that point of view, Beijing does score a strategic win with a Trump administration determined to weaken its alliances with similarly democratic powers.

In a way, the big victory of the Biden administration, I think, particularly in the wake of the Russian invasion of Ukraine, was to unite the West. The display of unity, particularly over the imposition of sanctions on Russia after its invasion, was, I think, a terribly unwelcome.

from the point of view of Beijing, because what unites the West is disadvantageous to China. And so I think what that comment that you refer to is probably getting at is that the more the US does to strain its ties with its traditional allies in the European Union, the more a kind of geopolitical advantage is scored by Beijing.

David, Donald Trump is continually asking for NATO members to spend more on defence spending. If he damages their GDPs with these tariffs, even if they increase spending as a percentage of GDP, in actual cash terms, that's a spending reduction. Is he doing damage to his other plans by bringing this in? I think that's probably the case. I mean, you know, in a way, the more immediate response

way of kind of asking that question that you just posed is about the United States itself. You know, it's important to remember, it's US consumers and US businesses that pay the tariff. And, you know, across the entire level of imports that the US buys from Canada, China and Mexico, I mean, that's about $1.2 trillion worth of imports.

roughly speaking, these numbers are difficult because you don't know to what extent trade will be shrunk as a result of the imposition of these tariffs. But, you know, 25% tariff on imports coming from Mexico, on imports coming from Canada, with the exception of oil imports, and 10% tariff on imports coming from China, that's something north of $200 billion in

that US businesses and consumers will pay as a tariff that will be income to the US government.

But that's a transfer of income from the American private sector to the American government. Now, Trump wants those tariff revenues because it will help him finance the income tax cuts that he wants to extend after the current income tax regime ends at the end of this year. But the domestic economic consequences for the United States are

are probably not to strengthen the economy. If anything, they're probably going to weaken the economy. So it's difficult to see who the winner is, except if you really, unless you really believe, as Donald Trump certainly does, that the US strategic position in the world is enhanced, the smaller the US trade deficit is.

Suppose he's wrong on that, David. You pose there that it's difficult to find the winner here. I'm wondering if it might be Vladimir Putin. I think that, as I said, you know, I think that the extent to which Trump's actions end up disuniting the West is kind of a gift to the enemies of the United States.

Whether that's whether that's China or Russia or the whole axis of of of powers that, you know, wants to upend the global order that the US has been presiding over in the last 80 years. I don't know how to allocate points, if you like.

to different countries within that group. But I think that, yes, as I said, any actions that end up disuniting the West are probably good news for the West's antagonists, and that includes Russia and China.

Okay, David Lubin, Senior Research Fellow in the Global Economy and Finance Program at Chatham House. Thank you for joining us. And thank you for taking 10 minutes to stay on top of the world with the help of The Times. See you tomorrow. Struggling with dry eye? You're not alone. Dry eye is increasingly common and can range from occasional symptoms to a chronic condition known as dry eye disease. If you're one of the 38 million Americans experiencing dry eye symptoms you can't shake...

It may be the result of too much tear evaporation and or underlying inflammation of the eye, two common causes of dry eye, among other factors. Before symptoms get worse, talk to an eye doctor about possible treatment options and visit knowyourdryeye.com to learn more. ACAST powers the world's best podcasts. Here's a show that we recommend. ACAST.

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