welcome to "amanpour" on pbs. tonight, could the president's policy of america first actually make america last, as trump's tough talk on tariffs sparks threats of retaliation from abroad. the former u.s. treasury secretary lawrence summers joins me here in london. plus the national people's congress opens in beijing with delegates expected to back the chinese president's plan to effectively become leader for life. i discuss the perils and the pitfalls with sino-scholars in the united states and beijing. ♪

>> "amanpour" on pbs was made possible by the generous support of rosaland p. walter. good evening, everyone. welcome to the program. i'm christiane amanpour in london. president trump's aggressive move on tariffs are gathering speed and sparking fears of a damaging trade war and of a backlash against the very american workers that he has vowed to protect. today he says he's 100% not backing down. the tariff move already sparked the biggest backlash yet by his fellow republican leads and important members of his cabinet, many of whom are publicly coming out against the plan to impose 25% tariffs on imported steel and 10% on aluminum. the usually supportive "wall street journal" calls it, quote, the biggest blunder of his presidency. senator orrin hatch says the tariffs are a "tax hike the american people cannot afford."

and the house speaker, paul ryan, is urging the white house not to advance with this plan. so why is the president so keen? my guest today, lawrence summers, knows a lot about the economics of all of this and, of course, the presidential decision making that goes into these kinds of big issues. he served as treasury secretary for bill clinton and as director of the white house national economic counsel in the obama administration and is joining me right here. welcome to the program. >> good to be with you. >> is this the beginning of a trade war or is it not as significant as some people are saying? >> there's real risks that this will set off a cycle of escalation and response that could usher in a new major stretch of protectionism at a moment when the global economy seemed like it was coming into the groove this could be enough to knock it off and out of that groove. >> who are the biggest losers? i mean, he has vowed to protect

the most vulnerable american workers. but we're hearing that american workers are going to be the losers, american consumers. >> there are 50 times as many people in the united states who work in steel using industry as in steel producing industries, 50 times. and all of them are losing because the firms they work for are now going to have 25% more expensive inputs. that can't be rational policy. americans buy products that are consumed with steel. alwaytalk about real incomes. that's how much you can buy with yourages. when you push prices up with a tariff like this you make it -- you make those real wages go down. and that is even before you take account of what's going to happen when the rest of the world responds. it is no accident that stocks lost $400 billion in the hour after this decision was announced. it is shooting our economy in

the foot. >> well, i want to ask you to respond directly to what president trump has tweeted. this is over the weekend. when a country, the usa, is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good and easy to win. example, when we're down $100 billion with a certain country and they get cute, don't trade anymore. we win big. it's easy. is that correct? is a trade war easy to win? >> any answer of that kind would get a failing grade -- a failing grade -- in any introductory economics course in virtually any college in the united states. why? trade deficits are about how much you spend. if i run a trade deficit with my grocery store, i buy much more from my grocery store than i sell to my grocery store, that doesn't mean my grocery store is exploiting me.

something similar is true when the united states runs a trade deficit against another country. that's a confusion. it's a further confusion to suppose that these tariffs are going to improve the trade deficit. as i said a moment ago, they're going to screw up the exporting of sectors that are vastly larger than the sectors that are purportedly helped. remember i said the stock market lost $400 billion. the gains steel companies were probably less than 1% of that $400 billion cost in the stock market. so there is no rational construction on which this is a sensible policy. people can argue about enforcing intellectual property more, argue about other countries who are unfairly subsidizing products, but just say the words national security tariff against

canada. that's all you need to know to understand this is probably the most irrational economic policy that any president has introduced in the last half century. >> well, i was going to come to that because it has been enacted, or the plan is on national security grounds. now you heard republican leaders say this is really not a good idea. you have heard all the national security cabinet members say don't do it. >> that is the key point. that is the key point. often we have arguments in our government about what we should do for national security, what we shouldn't do. i have never seen a policy that was opposed by the secretary of defense strongly introduced and then justified on national security grounds. this is indefensible. the damage that will be done to our canadian allies, our european allies, our brazilian allies, is going to do much more to hurt our national security.

think about this, christiane. the military uses 3% of our steel and we produce 70% of our steel in the united states, and the rest comes heavily from countries like canada. so what is the national security problem that is imagined here? >> well, you know, i was going to say this is what we're trying to grapple with because it's the very countries that our nato allies and others who are going to get hurt the most. and europe today or over the weekend has come out and said basically the following, the europeanommission chief responded to the eu tariffs saying they're going to have to respond. >> translator: so now we will also impose import tariffs. this is basically a stupid process, the fact we have to do this, but we have to do it. we will now impose tariffs on motorcycles, harley-davidson, on blue jeans, levi's, on bourbon.

we can also do stupid. we also have to be this stupid. >> it's almost embarrassing. >> they're embarrassed -- the rest of the world is used to disagreeing with the united states. it's used to finding the united states a bit of a bully. it's not used to the united states doing things that don't make sense even on the terms they're advocated, tariffs against canada, raising prices for 6.5 million workers. >> 6.5 million workers you just said. >> work in sectors that centrally use steel compared to about 150,000 -- 130,000 who work in the steel industry. people aren't used to seeing the united states do things that are irrational on almost any measure. >> before i get to where you come in as well as many other

issues, the presidential decision making, the cabinet decision making, i want to ask you about china because clearly the president's signal during the campaign that he was going to get tough on china. apparently this actually doesn't hurt china. they're not exporting to us. >> a pinprick to china because their exports go to places other than the united states. sure, there's -- i might or might not agree on the details -- but there's a case for more aggressive trade policies with respect to china, but that is not what this is. this is a hurt our allies first policy. that is the central principle behind the policy. >> the chinese only exports like 2%. >> 2% of their exports go to -- we are 2% of their exports. >> so what goes into this kind of dramatic in the ft, a fairly center-right newspaper, has said the president has crossed a line and is, quote, playing with

fire. what goes into the discussions that are happening in the cabinet room? we understand, i think, gary kern, one of the main economic leaders threw up his hands in frustration to the others and said, where are your facts? >> look, i wasn't in the room, but from what i understand this was driven by the president's rage over a whole set of things, frustrations from inions, frustrations from bad press that he w getting. frustrations that he hadn't been able to assert himself. never before has the president, that i've known in the two administrations i was part of, the five administrations i followed closely, i've never seen a major presidential announcement of a policy when

there had not yet been a piece of paper produced by the administration defining what that policy was and describing that policy. this was a -- this was presidential policy on a consequential global national security issue made out of spasmodic anger. >> yet -- >> when you make policies out of spasmodic anger once, you're going to make them again. >> this is what paul krugman, the opposite version of "the wall street journal," but his take from his column, in themselves these tariffs aren't that big a deal. if they're a sign of what future policy is going to look like, they're really, really bad. >> yeah, that's exactly right. in the grand scheme of our $17 trillion, $18 trillion economy, these tariffs aren't that much. and even when they retaliate on $4 billion of product, that's really not that much relative to $17 trillion. but that's how wars start.

they start with small provocations on both sides. and then there's escalation. and it's very difficult to contain the escalation. it's also very difficult to contain the perception of wilder rationality. and if you can have that once, you can have it again. so i was very troubled to see what had happened. there are other policies that the administration has proposed that i strongly oppose, the tax cuts, for example. but those tax cuts, frankly, quite likely would have been legislated by a different republican administration. if there had been a different republican administration in power. but i cannot imagine any administration other than this one that would have engaged in these tariff policies.

>> thanks for being here. so, as you heard, when it comes to trade, one country more than any other has been the target of trump's rhetorical wrath and that's china but my next guests tell me the promised tariffs won't bother china much as we've been discussing. and, anyway, they, in china, are dealing with much more important things. like the proposal for the rubber stamp party congress which starts its new session today to change the constitution and lift all term limits on president xi jinping. effectively making him president for life. i've been talking to the author of how china's leaders think and is host of a show on the government run cctv news channel in beijing. gentlemen, welcome to you both. let me start by asking you in beijing, from the chinese

government perspective these tariffs the president of the united states has announced, how much does it concern beijing? >> certainly it's a concern but i would call it a minor annoyance as opposed to something serious. they have a lot on their plate here. the last thing they want is a trade war with the u.s. they have to react if the u.s. does something there has to be something they will do in retaliation. they will ratchet it down. they will signal they do not want to accelerate this. to save face and be appropriate they'lhave to match it >> how do you see this playing out? >> china is waiting for the other shoe to drop. steel tariffs will not affect china a great deal. china is watching what is going to happen with the yuan investigations. these look into chinese behavior regarding intellectual property rights. if the investigations find china

at fault or guilty of some practices, then the u.s. has a wide range of options to punish china on the trade front. if these things happen, then u.s./china trade war will take place. another thing i want to say is u.s./china relations have turned a corner. this is a relationship that is headed for a long period of confrontation and adversarial. it's not of competition. >> of course this is happening in the atmosphere of the announcement last week that it looks like the term limits are going to be lifted on the presidential terms, and that this is going to be ratified this week which could lead to president xi being in office for life. is that what you expect? and why this change?

there were very clear term limits the past few presidents have adhered to. >> the event itself is less important than it seems. when xi was appointed by the central committee of the party in 2016, when he was core, that effectively undermined the traditional collective leadership and put him in a much superior position. but this announcement, what it does, the intended consequence, is make it clear he will be the one to see through his grand vision for china 2050 and china 2035 this great modernized that they say will be prosperous, strong, democratic, culturally advanced, harmonious and beautiful if i got it all right. and so he wants to be the one to make that happen and to, in the short term, deal with the ecific proems china has to break through interest groups

and to let anybody know if they think they can wait hmm out for his next term, they're wrong because they can't. >> let me put that to you. in the greater interests of china and that it's no real big deal, how do you see it from your perch in california teaching government? >> it is quite a big deal. in fact, mr. xi signaled his intention to break the term limits in october of last year when he did not appoint a successor. first of all, this will really mess up the party's own term limit system. let's remember this is the term limit applies not just to the

top person in the party state. it applies to everybody who is something in that system. so if the top leader does not have term limits, how are you going to persuade people throughout this hierarchy to retire after two terms? so there's likely to be a lot of confusion, resentment afterwards. the other downside i see is it if he can deliver, he will be china's most effective leader. but if he cannot deliver in the next five, ten years, then it will be his responsibility -- his whole responsibility. >> so let me ask you, the economist in its cover article, the latest one, says the west got it wrong. they bet wrong on china. they believed it was going to move incrementally to a more uralistic syem and a market economy, a much more open econ they are also saying that with this decision china moves from autocracy to dictatorship. how would you sum up the type of leadership we're about to see?

>> i don't care what kind of title you call mr. xi or what kind of label you apply to china. all we want to look at is the policies president xi has been pursuing or the direction in which china is moving. if you look at the last 25 years for roughly about 10, 15 years china was more or less moving in the right direction. the society was opening up. the economy was becoming more liberalized, and engagement with the west. with the rest of the world was also moving in the right direction. you cannot say this about china for the last ten years or especially for the last five years when chinese society is becoming more closed. politics is much more repressive.

foreign policy is creating a lot of tensions with the rest of the world. so if you look at those things then you really have to ask that question. did the west get china wrong? or is the direction china is moving in good for china or the rest of the world? >> you clearly disagree? >> i do think this is a big deal. we need to look at this in a more fine grain manner. people seem to do it very coarse grain in terms of the political controls and stringencies that have been on soety. you have to look at the campaign under xi jinping 100 million people, 30 million more to go by 2020, there won't be any more extreme poverty in china. you have to look at rule of law which is underappreciated in the west, what is being done. it's not to supersede the party in the u.s. system but for 99% of the people, the control of the courts is now away from the local party. the reform in the system in

terms of the economy. there are many very specific things that are going on that are very good for china's development. it's important to look at both sides. the political side, which i agree with what was said but there are many other positive things going on. china is a complex society. it now has one leader and, as we've said, he will be responsible for the successes and the failure. there's no place else to look. >> what i'd like to do now is play you a piece of tape, some sound, that was taken from president trump addressing republican donors over the weekend. >> -- xi is a great gentleman. he's now president for life. [ laughter ] [ applause ] no, he's great. look, he was able to do that.

i think it's great. maybe we'll have to give that a shot some day. [ laughter ] >> so minxin, do you think president trump was joking or how do you read and analyze what president trump said? >> i think on the surface he obviously was joking, but it certainly reflects some kind of admiration he has for strong leaders in a democratic system. this is consistent with his past rhetoric, past behavior, straw man in a nondemocratic system so i'm not surprised. >> and robert lawrence kuhn, how do you think that is being digested by president xi and the leadership there? >> i don't think they take president trump's comments too seriously. trump may have been joking but he is obviously envious. i think one has to be wary if

one is in china if the only prominent person that gives applause to your -- to this new policy is trump. china is not going to be motivated one way or another by what trump says. they have their own approach. >> if this is all so kind of hunky-dory, why do you think president xi or the leadership, whoever it is, went so heavy handed after this announcement last week? i mean, banning references to winnie the pooh because some people think his shape looks like that famous cartoon bear, banning references to the letter n, all these kinds of things that just bolster what's been going on which is an increasingly repressive, increasingly anti-dissent, and an increasing collective -- rather an increasing surveillance state? why go through banning those kind of, what we think as silly?

>> what i'm saying is there are two big sides to this picture. one are the accomplishments that can happen, which a great many -- a high percentage of the chinese people support, and the other side are the unintended consequences. the brittleness of the system, china is super sensitive to anything that affects its leaders or the party and will jump -- they're very sensitive to what happened to the old soviet union. they've studied that very carefully, and they will be extremely repressive to anything that threatens the system, and it's an experiment to see if that is possible if you can have such absolute control and eliminate dissent and put anybody who has a remote kind of dissent in prison or whatever and restrict the media. to do that at the same time that you're promoting innovation and the work reported to the government today there were two or three major sections on

innovation. it was one of the biggest changes that china wants to do in terms of universities and science and technology and freeing up businesses and eliminating red tape in bureaucracies. a huge program to focus on innovation. can you do that at the same time you're having this political control that you've described correctly? that is an unknown experiment. it's the first time it's been tried. >> and just to sum up, what concerns you most about xi and his latest moves, minxin? >> he has bet a great deal of his political capital very hardline nationalistic foreign policy that does not take into account the interests of the u.s. and how this policy has really put china and the u.s. on a collision course. and whether he can walk back from that policy. of course he has enough political power to walk away from the policy, but he will

also pay a huge cost. so we're all waiting to see whether he can make me rategic adjustment right now to avoid getting into a long-term conflict with the u.s. >> minxin pei and lawrence kuhn, thank you for joining me on this important day. >> thank you. >> that is it for our program tonight. thanks for watching "amanpour" on pbs and join us again tomorrow night. ♪ >> "amanpour" on pbs was made possible by the generous support of rosaland p. walter.

♪ >> you're watching "beyond 100 days." italy's election produces only radical options. >> italian voters said no to the traditional parties and yes to the populist groups. without that leaves the country isn't clear. >> both the main antiestablishment leaders say they have won the right to govern but it could take weeks to sort this out. donald trump blames the u.s. is getting ripped off by virtually every country in the world as he pushes ahead with his america first strategy. >> also, a major security incident declared in salisbury, after the suspected poisoning of a russian man who once spied for britain