What Trump’s tariff tantrum will do to world trade

This episode explores the global fallout from Donald Trump's tariffs and their impact on the international trading system. Against the backdrop of Trump's unpredictable tariff policies, including levies on various countries and subsequent postponements, the discussion centers on predicting future trade dynamics. More significantly, the interviewee, Professor Simon Evenett, suggests that current elevated tariff levels are unlikely to persist, with some countries negotiating reductions while others, like the European Union, might face higher tariffs. For instance, he anticipates that US-China tariffs will remain high, potentially above 60%, leading to economic decoupling. As the discussion pivoted to the nature of these "deals," Evenett clarifies that they are likely to be one-sided arrangements, with trading partners offering concessions in exchange for tariff reductions, rather than reciprocal agreements. In contrast to the expectation of fully-fledged trade deals, these are viewed as temporary truces, highlighting the unpredictable nature of the situation. The interview concludes with a sobering assessment of the US's vulnerability to retaliation in the services sector, where it holds a significant export surplus, and the potential for other countries to target US multinational investments abroad. What this means for the future of the global trading system is a complex picture of potential instability and distortion, with the possibility of an "oasis of stability" forming among countries outside the US-China dynamic.