Why China could be the winner on ‘Liberation Day’
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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 Toby Gillis, joined today by Alex Dibble. As Donald Trump reveals his sweeping tariffs on what he's called Liberation Day, every nation on the planet is digesting what it means for them and working out how they'll request concessions so the damage can be minimised.

Could there be unintended consequences, though, that'll weaken America's position as the economic and security leader, and even hand an advantage to China? Our guest today is Jonathan Hillman, Senior Fellow for Geoeconomics at the Council on Foreign Relations, who has also served as a senior advisor to three US cabinet officials. Jonathan, where do you stand on Trump's use of tariffs as a first resort to exert global influence, but

but also to establish international equality for normal Americans? So there's a lot of questions about the scope, the scale and the speed of what will be announced. I think the speed part is really important because President Trump has discussed these tariffs sometimes as a negotiating tool. He's talked about them in other ways too, as being maybe more permanent for raising revenue for the government. But as a negotiating tool, the speed part is really important.

And so I'm hoping that there's a little room for negotiation with partners so that we could get into a more predictable, stable place. That's interesting because many think the sweeping, truly global tariffs are actually a show of America first by Trump and that he will quietly allow exemptions fairly quickly. Is Liberation Day a PR thing rather than a true global power play?

Look, there is a lot of theater around this. I mean, the fact that the day has been given a name, that the announcement will be made in the Rose Garden, and that there's been a lot of

and sort of conflicting previewing of this, which I think has been both a reflection of maybe a process that has not been entirely predictable, but also a desire to draw interest and attention to this. So that's definitely an important piece of it. At the end of the day, there will need to be negotiations with trading partners. Those trading partners will also need to know with a little bit greater clarity, what does the U.S. want with

with these tariffs? Is it hoping that countries will reduce their own barriers and then there could be some mutual benefit there? Are these going to be in place for an extended period of time? Then I think the negotiation becomes quite difficult. And then I think we're living in a world of much higher risk of retaliation.

That retaliation will be interesting, won't it? Do you see the potential for sweeping tariffs really to actually backfire on Donald Trump? There's lots of risk. And I think there's lots of risk of unintended escalation.

And there's a lot of risk of uncertainty. We're living in a world right now that has been, parts of it, parts of the business community have been effectively paralyzed by the uncertainty around tariffs. And so even though one of the goals, professed goals of these tariffs is to help attract investment and rebuild manufacturing, most companies are waiting. They need more clarity. They need more predictability.

That doesn't help when some of the announcements that have already been made have then been put on hold or walked back or changed.

And so just that big cloud, the fog of trade war has been, I think, really paralyzing companies that'll have some longer term impacts. There's a whole set of, I think, other economic risks from driving up inflation to, I mean, that's going to be something that average Americans feel when they go to the grocery store to U.S. exporters encountering that higher barriers when they're trying to sell abroad.

So lots of risk here in the economic realm. And then layer on top of that, what you might call diplomatic risk, right, which is partners have been pretty restrained so far in their responses. But their language is quite striking. I mean, we have countries, close US allies like Canada, like the EU, like Australia, saying things like, you know, we need to defend our own interests.

Mark Carney, the new Canadian prime minister, saying things like we need to diversify our trading relationships to do things that were unthinkable and to do them faster than we thought possible. That would all be encouraging if they were talking about readjusting their relationships with China. Right. But they're talking about reacting to the US. So I also am concerned about the diplomatic costs of this. And so, again, hopefully these negotiations will happen. But that is a risk as we go forward.

You mentioned China there, Jonathan. We have some more clarity on Trump's plans for them. They really are, in his mind, his most important target, aren't they?

Yeah, so still some uncertainty about what will be announced further on China. I expect that there will be more to come. But a lot of the attention, I'm kind of struck by this, a lot of the attention has been sort of targeting U.S. partners and allies, you know, Canada and others. And China in some ways, I think, has not maybe received attention.

all of the, you know, it's maybe received not enough attention, comparatively speaking. My guess is that it will get a little bit more attention and that eventually there will be some sort of effort to negotiate a deal. Although I'm somewhat skeptical that such a deal could be concluded and then actually implemented and upheld by both sides. So I think that's where we're headed, but it's going to take us a little bit to get there.

Whether that deal happens or not, do you think there's any way that China actually ends up as a beneficiary of these sweeping tariffs? I'm thinking that if there is a distancing from the US as a reliable trading partner, then nations will look elsewhere, won't they? And China feels, to me at least, an obvious choice for a lot of industries.

So there was an interesting, I think, warning sign of this a couple of days ago. Japan and South Korea had a meeting with China to discuss economic issues in a format that they had not met in for about five years. You know, it's not entirely, not exclusively driven by the United States, but I think that's the type of thing that we could see more of if U.S. trading partners begin to think that there is no road

to a successful negotiation. And so, you know, I think one of the risks for the US here is that it's not only pushing trading partners away and toward each other, but potentially toward adversaries. That would be an incredible oversight by Trump, wouldn't it, if that's the outcome? I mean, literally the last country he would want to benefit from anything he does is China. And you're saying these terrorists might directly do that?

So there could be, I think, a reconfiguration of trading relationships in a way that would disadvantage the United States and could potentially advantage the Chinese. The U.S. has spent a lot of time in recent years trying to work with partners and allies to...

better adapt to and minimize vulnerabilities that China presents economically and in other ways. And so this series of threats, if not controlled and if not led to a successful set of negotiations, does really risk undercutting that and sort of precipitating the opposite.

And on a tangent, Jonathan, you spoke about the negotiations that might take place. Do you think Donald Trump will, for those to whom it's a benefit, tell some nations, you know, accept these tariffs without retaliation and you will gain American security guarantees? And that feels a significant offer that might be worth heeding for, for example, a lot of Europe.

Yeah, depending on the trading partner, that has been part of the list of complaints, I think, that this new administration has had. And look, it's using tariffs sort of like a Swiss army knife to try to fix all challenges, which is, I think, it comes with lots of risks. But one of those challenges is this perception, in some cases warranted, that U.S. allies are not spending enough

on their own defense and a feeling that they've been free riders, that the US has been paying for them and meanwhile has been taking advantage in some other ways. That's the sort of sentiment with varying degrees, I think, of actual accuracy, but that's the sentiment.

That you could imagine some negotiations for some partners, that being something that's on the table. I don't know. I find it difficult to believe that that will be enough because all of these other trading partners have their own constituents, their own stakeholders. They have some of their own

economic grievances with the United States. And so I think it could be a piece of the puzzle. It could be on the negotiating table, but ultimately there's going to be a lot more swirling too, especially economic issues.

OK, Jonathan Hillman, thank you very much for joining us. Now, those potential security guarantees will be watched closely by Russia, of course, which is still deciding exactly how to react to American fury and its stalling over a ceasefire in Ukraine. We examined Vladimir Putin's options in yesterday's episode, which is still well worth a listen if you haven't already. For now, thank you for taking 10 minutes to stay on top of the world with the help of The Times. See you tomorrow.

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