the how much is real and how much is bluster? is it runs footprint across the middle. the shrinking, the trump administration is wing options to end the rest of your brain more. but what does it mean for europe? a quizzical look at us politics. the bottom line, the, we're leading eco friendly solutions to come back to our pennies on out you 0 terrorist central to us economic and foreign policy and the new trump administration, the reservation. so this, suppose this chair is it matched only by the shutters of apprehension globally. so what's in store for the us and the world? this is inside story, the

hello welcome to the program on top of the crate, one of the best selling books of all time is a business guide called how's a win, friends, and influence people. how to lose friends and implements. people might perhaps describe us president don't trump's current approach to international trade, to speech, to both houses of congress to sit out his plans with tariffs central to his policies was met with rules of approval like those at a rally. there was very different response. however, from stock markets and world leaders from europe to china that reacted with a mix of despair and define some responding with the own tried taxes. so what the trumps economic plans mean for the us and its trading pond. this both net and far and what might the impact be for the rest of us around the world for las gal pedals that they have use and just a few minutes. but 1st, this report from wilson does that president donald from speech to congress, brought the house down. and by the way, we're going to have good critics at home and abroad and fear the us in global

economy go in the same direction. if he goes all in on his campaign promise to raise tariffs with major trading partners, we have been ripped off for decades by nearly every country owners. and we will not let that happen any longer. what trump costs is america 1st policy revisions forcing companies to base manufacturing in the us, creating more jobs. democrats say his plans are disastrous and will both hurt americans and kill economic growth. his tariffs on allies like canada, will raise prices on energy, lumber, and cars. and start a trade war that will hurt manufacturing and farmers. and if he's not careful, he could walk us right into a recession. just a day after his speech, president trump again reversing some of his trade levies. giving major car manufacturers a one month reprieve. the us auto industry is reliant on parts from factories and mexico and canada. reports suggest

a recent gone terrace on some agricultural products could also be in the pipeline. but the diplomatic damage was already done. europe in china said they were preparing retaliatory measures deployment, that he's going to meet the 1st 10 years have been imposed on a large scale not only against europe on elements and steel. if these that can fund europeans will respond and they will be reciprocal tower. because we need to protect and to defend ourselves. china is also preparing for a trade war with a stimulus plan for effected industries. tony, good internationally, the external environment is becoming more complex and challenging, which may have a greater impact on china, trade, technology, and other sectors. the rise of unilateralism and protectionism is further disrupting global economic circulation. mexico said it would expand its trade relationships with other countries. sea level scott season is unable to, if needed, will look for commercial partners,

anything to protect mexico and mexicans within the framework of suffering t dignity. although most economists say terrace will raise prices. president trump is betting they want, but it's a big gamble with high stakes, not just in the us, but around the world. wilson guys are al jazeera for inside story. let's take a closer look at the tariffs and why president trump wants than the us buys move, and it sounds from his tried, ponders last year. if it was a tried deficit, have one trillion dollars the us and pull him goods with 4 trillion dollars while exports amounts of to just are the 3 trillion dollars. trump wants to reverse that by imposing a 25 percent tax on goods from mexico and canada, and 20 percent on goods from china. some of those measures took effect on tuesday. that companies in the us that rely on products from the broad will have to rise prices, which will affect american consume, is trump. and as for the say,

the high prices will be temporary because more foreign businesses will relocate to the united states. the as well as bring in august now from washington, dc with joins by it. and i'll extend it to a white house columnist for the hill newspaper and your, your cause. demetrius of allots us the chief economist and founding pattern of aurora, macro strategies and advisory firm that focuses on to politics and macro economies . and an henderson, nevada, is william leave, chief economist at the american non profit, think tank, the mil can institute. thank you very much. for joining us whole here on inside story know, it looks like it begin with you straight away. i mean, apart from being an extremely long speech, what did you make of of donald trump? and what do you think the main message was that he was trying to get across? how effective do you think he was? so in terms of this page, this as well, donald trump dos which is gives features the category of paled street. his base,

she tends to not really bother with such an appeal to the center. i'm and we saw all the concentration on immigration for example, on show called culture. more issues on issues around diversity, diversity, equity, and inclusion initiatives to which he is extremely opposed. now i think the 2 big some stuff to talk to the speech where you pray, you know, one of the titles on the other and we didn't get an enormous amount of clarity on either back. you know, some of his facility toward a lot of mirrors. the landscape but still being on the rest of the path forward and when it comes to tired of talking about the idea that there would be some level of interruption. but oh, well, we can level we're going to focus today, not so much on you trying uh, but on obviously the economic parts of his speech. demetrius from an economic point of view then can you just explain his plan? like, what does he actually trying to do with these tariffs with, with his tribal,

that he's seemingly as intent on, on carrying out? well tom, i'm not sure anyone in the ministration is able to explain the total cost overall economic plan. there are different types of 8 in the speech as he mentioned was addressed to congress. and there are some things that absolutely need to go to congress. i don't think i would change our outlook on fiscal policy. following the speech, we saw a lot of what was on the contain trail and promised not to tax to workers, a promise not to tax overtime promise not to tax, social security payments. and not all these things need to go through congress and the republicans have a very slim majority there. so it's a difficult task. um, i wouldn't really buy. you don't want to pay more attention to. it isn't going to make it more likely that congress will be able to pass water. i feel very expensive measures. so, you know, in regard to the setting uh,

i would pay attention to the physical done on trade to see how he mentioned, you know, the president is not really going to congress to ask for the rotation to those tires. he's doing it by executive authority. he's created a lot of uncertainty and some of the goals, not just bringing manufacturing back to the united states, are actually hamper by the administration to other policies such as on immigration, which will be a worker shortage. so it's very hard to find a coherent narrative to say this is what the administration is driving to work, and i think that's what the warren markets as well. what do you might say? use your shaking your head that what, what were you disagreeing with that demetrius was saying, i'm very surprised to hear what some interest says because the one thing that present shop isn't very clear about us all through his campaign. and even from his 1st administration, is that he likes the use of carriers because cars are one of many policy tools to achieve a set of economic and not a drama object is. and i think has been crystal clear. the terrorists are used

to try to encourage the development of the strategic industries united states and their superior to subsidies that many countries use infected superior to the subsidies that the bike and ministration use like chip side. because a subsidies costs the but the budget money, a cost revenues towers brand revenues and to provide the same amount of protection . and as far as the global engagements concerned, president trump the 1st speak she made especially to the executives at davos, was to say the united states is open to investment from the rest of the world. you come and be a partner with us and you benefit from reduced taxes and a task barrier that protects the production that you set up united states. but if you choose to be a competitor, then you will face a tariff barrier because you choose not to invest the united states. so this really is a very clear as a corollary to the make america great agenda,

which is to maximize domestic employment and domestic incomes. so. so the, the fact that there's uncertainty talked about, i can't imagine any c, e o or that has put in contingencies. the minute donald trump was elected, the terrorists are going to be part of the landscape. and what do we do to re optimize our production? that's the discussion that every board room that i have ever taught talk with and, and in any executive that was surprised by charles. they should have the bonus withheld here. uh no uh i guess uh would even touch on this a little bit. uh with what he was saying the, i mean he trumps claims that he is uh, he has popular opinion at his back saying that americans have given us a mandate for bolden. profound change. he's a but he's basically promised to do these things when he was running, know he's following through on those promises. so should if you want to be aware of that, this is exactly what trump and how he was going to act. no. i think there are 2

separate strands to that question. why is shouldn't people be aware that this as well don't for me please. yes, certainly these are things that he said on the account paying trails. no, you that for the thing about him having the broad mandate, it is true that he want them to go back and we'll college in november and by a mostly comfortable margin. it's also true that he won the popular vote by 1.5 percentage points. does not qualify as a mandate for the enormous kind of changes that he is proposing across the board. there's pretty considerable difference in public opinion in terms of say, emigration of re dos, how widespread support from much more restriction of the policy of or complex, like tar us. we're open use much more split the rule. the law must, for opinion, is extremely split. sure thing need to be cautious. i say he has this blog sweeping monday forever. okay. demetrius, i mean, trump said it is much better to deal with the us as a partner rather than

a competitor, but as a basically burning all of this close, those ponds isn't allies in the 1st month. we'll start with of as a 2nd 10. i think that's why i'm a little baffled by the use of the tires. not because they were, you know, we weren't, weren't, of course, we weren't, weren't proud his entire career hispanic desk, you know, talking about tires and thinking about tar says, tools to achieve very subjective. but i'm not entirely sure i understand of williams how national security will be held by imposing types of canada by stoking anti american sentiment. and, you know, our closest allies, i'm not sure. it's not how we'll income's are going to be helped by making products abroad. and more expensive, this is what parents do, and i'm not really sure how the current account this is gonna be helped by importing more at the eye, which counts as negative on the current account. so you know, all these things with being warned about their being implemented in a completely haphazard fashion. we saw

a term being close and kind of the way that bothers might be then. then today we're here and maybe food might be exams and maybe these companies will be exempt or not . and this is not a stable environment. what we're hearing from what perhaps is not oh now is a great time to go invest a lot of money in the united states is how do we supply canada out of the non us producing facilities to avoid the congress? i think this is the kind of rearrangement you are likely to see. so long terrorists are not say implemented by congress with a degree of certainty that they're going to be there for the long run, but rather implemented by executive authority on today off tomorrow. okay. what do you want? i want you to respond to this. as we hear, the tariffs could probably rental supply chains strong and some of the us is most important diplomatic relationships, which are single, ready, and could very likely add significant costs. but american consumers as well as manufacturers, so can you explain what is the upside here?

what is the upside that donald trump is going to have to sell to the american people? let's remember what terms are. they raised the price of imports relative to domestically produce products. so it's a relative price shift and it encourages people to spend their money on domestically produce products rather than important products. so that's the purpose of a terrified is a switch to expenditures and, and the, the fact that we've placed harris on our, our big training partners, canada, and mexico. trump was very clear and explaining. it's to shut off the evasion from the south of illegal immigrants and illegal illicit drugs. and so the purpose of the, of the terrace on canada was really to, to achieve a non economic goal, which is the shut down illegal immigration. and it was the drug of the importation . so as far as a r, r, encouragement of investments are concerned of, that's the one thing that is very good for the united states is very good for the

world because the united states has been the place for the highest rates of return on investment. there's something economy is called the lucas, the fact the lucas paradox. and, and robert lucas, the, the know that laureate, from the rest, you'd probably go quite a while ago. so discovered that capital actually flowed from emerging markets into developed markets like united states. because that's where returns on the highest. and the, the one thing that present trump was trying to encourage is to remind everybody that your investment in united states producing in the united states will be a source of high returns. and will not only benefit americans, but will also benefit the rest of the world because we then create a marketplace where your product, your, your, your investment dollars can be the most productive. so, so i think the, the, the fact that our, our partners are, are right now reacting to the carriers just because of we're trying to level the playing field. we're trying to take away the unfairness of specific taxes on

american products like automobiles and cars. and yes, the average terra between is that all the sentries is pretty low. but when i talked about average stars prison trumpets really trying to target terrace to achieve very specific shifts in strategic industries that will benefit the rest of the world by reallocating resources to better a strategic partners. and in terms of our supply chain is a concern. the one thing we learned from a cobit was we cannot have one single source for important products like pharmaceuticals. and so we, we shifting relative prices is a way of re shifted and, and, and, and duplicating supply chain so that we have security in our supply going forward. okay, a bit on, on the, for, for, for one moment here, but i'm really curious. so hopefully alterations made by our friend from the milk and institute there. he's arguing the title should be used for policy goals, and he said the example canada with illegal immigration and give us

a drug is 911 percent off in the united states is attributable to move on to charleston northern border. it is also a, a much more minor component for immigration is concerned to see us on a cost believe the 25 percent tire ups on canada, or a portion of response to one percent of fentanyl coming across the border within the amount of the amount of fentanyl that comes across the return that people say it's like, you know, about 50 pounds or so that's enough to kill several 1000000 people. fentanyl is a very potent drawing, and actually this is really to get our one on the scale of one percent of the total . what we're talking about, that's of american citizens and at present trouble strides the free market. you're representing a free market organization. as i understand proponent or proposing protectionist, also the in paid a considerable amount of cross border trade for

a very minor effect on the overall problem that are performed in to address. the fact that you focus on china the shows that you're really are missing the point here. the, the, the truck driven is trans policies is to try to effect changes in the system that has not been able to be done before. because of too many invested interest and, and if you look at the overall package, we focus on tears. but remember, for his insurance package is to reduce the size of government. do you regulate the economy and encourage foreign investments united states and the different bank on a list of drugs and immigration? neither of which are a major issue in relation to the board or the jewish focusing on types of them and your call doctor trying to divert into other areas. can we focus on the rest of the tariff package and rather than just looking at canada, that's yes, canada and, and the us of got other issues the worked out and i agree with you. there's

a lot of political stuff behind that. the truth of government isn't big trouble right now. and, and, and right now they're trying their best to have national so kind of national agenda against the united states to try to rub up his political position. the canada is also the, the, the largest uh, the strongest ally of america. so it is obviously very putting into this conversation that trump would think allows the closest ally to the us. demetrius i want to come to your other comments. secretary, how would let next? it, the tariffs will lead to high prices on certain products for a short period of time. i mean, how long can that be sustained before there is significant pushback from the american people? i think, i think that's a political question and you know, it is up to the american people of course, to if they want to vote for tyrants and higher prizes been and they'll do that. but i'm not entirely sure that's what they were after. it would be very dangerous for any economist or quotation coming out the inflation cycle we've just seen all

around the world. i'll remind you where we're heading 7 percent inflation. only 3 years ago, the people were dismissing as trying to trade. and if this one off shock and it's just totally the don't worry about it, i think it would be very dangerous for an economist like football additions to say, well this is just a one off. in fact, if we look at consumer surveys that have come this year, what consumers are worried about are considerably higher inflation expectations. and this is a big problem for monetary policy. and this is a big problem for all the laudable things that the trumpet ministrations trying to achieve. they're not going to be able to achieve then, if they cause significant concern of all consumers straight out of the gate and by implementing types that i think we can all agree our target are pretty much any random policy objective that comes out on the president's agenda and william obviously, uh, another big part of this is the, is the stock market and there was a concern there just around the amount of uncertainty that has already shrouded

trumps of this month. also in power. uh, i mean, he sees the stock market as a barometer of his success really so. so what happens if it does keep bullying and how far will he allow that to happen before he has to act? the, let's remember the volatility in stock market has been going on for just about the last month or so. but the stock market itself is really edits it's historic holidays. and as far as the uncertainty is, can started and inflation was mentioned. and let me put that to rest again, relative price changes, that's what charged it with the change relative prices, not absolute price. when things become more expensive, you spend less money on those things and more money on other things. the overall spending still stays the same because that's constrained by your domestic income, your family income. so, so in terms of is the taxes, the tax being slightly more time. okay, that's what it is though, but i think the prices are higher, all the places become lower when you click back on expenditures, those prices cannot be sustained in any business man worth. the salt will low the

price, the cheapest market share. so, so let's, let's do basic economics one a, one tariffs or not inflation, or they raise some prices. they lower all the prices so, so again, it's a relative price change, not in inflation issue. demetrius i, i just think that the flight overall, i mean we're about to impose this 10 percent tax on canadian oil that's going to show up at the bottom. can you explain to me how the sales tax on gasoline profit is going to raise american williams? and what are people gonna spend their money on? that's going to be cheaper when gas prices are more expensive. with gas prices more expensive, people will consume less gasoline for producers will produce more gasoline based on americans, oil and, and in terms of, again, in terms of the, the overall expenditures, the prices that become relatively cheaper are the ones that are a, produce the united states the united states is relatively close economy. freight itself is spelled out, exports are in ports about 50 percent,

each of total g d p. so in terms of the overall impact on prices, when we saw president trump's 1st administration, then the tabs that within their the cpr, it went up quite a port percentage point over 2 years, hardly noticeable. so we have not seen any experience at all, anywhere around the world where terrorists themselves, cause inflation monitoring and see going desert causes inflation and, and, and, and the fiscal spending going bizarre as biting did, causes inflation. okay, what is my patient went up and cause administer prices, insurance prices, car mechanics, a lot of things that are not anything to do with imports at all. yeah. okay, well we need to put in this out a little bit more because obviously all of this impacts the rest of the world. no, the chinese embassy tweeted out of the us and basically said that if war is what the us wants be at a tara, for tribal or any other type of war, we're ready to fight to begins. i mean, one can be made of it from

a political point of view when a power such as china uh, basically comes out uh by saying with binding words like that it is, i guess all of us, i don't think that necessarily means that china, the united states are about to fight a shooting war and things like that, but it is obviously all of a sudden all basically speaks to a rock shooting all international tensions. now president trump would argue that his tire on top of all occasions being used to tractor a list of policy games from other countries. i don't dispute that at all. but if you change the view that the freest possible trinity is overall over a net good thing for the united states, that obviously this is not a good thing. the possibility of a trade war is one of the things that is for getting the market at the moment that you know, if that continues about, it certainly continues. if those tensions continue to shut off the,

obviously that's a problem. demetrius, what can a lot of these other countries actually do from here? is there any way for them to unify and actually maybe increase, try between one another and, and kept the united states out as possible. i mean, i agree with what william said, the united states is a large, close the car, me trade as a percent r t p here is actually not that high. other countries have much higher trade flows . and of course, in economic modeling, we expect them to trade more with each other and less with the united states as a consequence of raising categories between the us and the rest of the world. so my expectation would be, and we saw a little bit of that, you know, you're being manufacturers, you're be a multi national saying we're, we're switching production for canadian consumption from the us to the you where it's not gonna face power. so i think you can confidently expect, you know,

some compensating effects. of course, it's not going to completely make out for the loss of consumer surplus that we're going to see by opposing those tires and the counter charges that all the other countries will impose on the united states as a consequence. but it will be a mitigating effect for and that exporters light b e u, or china is william is also obviously, as well as any economic impact is going to be a diplomatic full out as well as we have seen with some of america's closest allies . how do you factor that into what could potentially happen in the next 3 to 6 months? it's what i anticipate that the political reaction is going to be is that they will come to the bargaining table probably in groups, small groups or by laterally, an arrange free trade agreements with united states and say, look, let it, let us together level the playing field between a one or 2 countries or, or a set of countries. the one thing that present trump the wants to avoid all these large multi level trade agreements that take a long time to put together, take a long time to change and,

and adapt to circumstances as they do change. and so free trade agreements and more by level agreements with united states, i r r a certainly in the future and especially investment deals. so to get around the tower ferry, the present trump is putting up, he's gonna say, bring your money here. and let's talk deals, and i think you're gonna see much more in the way of bilateral and regional engagement with the united states with the rest of the world. and that will be the benefit to everybody know, 11 to finish with you. a lot of his donald trump support his side that his behavior is intended to be unpredictable. that is the sort of chaos is deliberate kyle's around to put people off balance. do you think that he is playing 3 d cheers while everyone else is playing chickens or, or do you think everyone, he's making it off as he goes along on this type of century? i think he's making it up as he goes along because i am not convinced he really understands the fundamentals of holly tire of work. and i think she also longer

estimates the time it will take for manufacturing to move in a significant way for enter the united states in a, in a revitalized way. if the boss is actual goals, there will be enormous turbulence before the point is arrived. uh, yeah, some companies or something companies extrusion are making plans to have a plan for taking move here. but the kind of widespread revitalization of american manufacturing is extremely difficult to accomplish. and if you're trying to accomplish up to 3 times, you're going to risk serious inflation in factors adjusting widespread disruption. okay, well, have to leave it there, but no doubt, whatever happens next is going to be unpredictable. i'm pretty sure of that. no, i'll demetrius and william, thank you so much for joining us here on inside story. we really do appreciate that . well, thank you for watching. you can see the program again any time by visiting our website. that's l. just air adults. com to further discussion. good about facebook page. that's facebook dot com, forward slash

a j inside story can also join the conversation on x. l handle is at a inside story. to meet on the cry and the whole team here. good bye for now. the during the fall. as the cool ones are whether continue a sibling, because i have no choice, but to find what little shows or they come out to see it was teams across the world . when you closer to the house of the story the, there's no limit to have a dream container stuff in your own event, you know,

counter and things the . ready ready know, i'm elizabeth donovan, joe hall with the top stories on i will just say are the police chief of city as main port city of lucky a has told elder 0, it's being secured. and the siege of security and military sites lifted that sanctioned thousands of people were killed in violence between security forces and fights as loyal to ally to president bush as a sub. the chief says remnants of the former regime had been removed from the city because you has been extended at the close to city of thought of foot was flashing, continues beth and several other areas like you and.