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S4 Episode 2: Trump’s tariffs, free trade and the British Empire
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Today, John and Dejan are discussing Trump’s tariffs and the huge effect they have had on the world economy. They compare this with the advantages of free trade and its role in the British Empire. Please follow the podcast and give us a 5 star rating. Also, follow us on YouTube @debatablediscussions1 and on Instagram @debatablediscussionspodcast .
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Transcript
Introduction: The Impact of Trump's Tariffs
00:00:00
Speaker
Hello and welcome back to the Debatable Discussions podcast.
00:00:04
Speaker
Today, me and Diane, amidst the recent panic caused by President Donald Trump, we've decided to reconvene and discuss the big thing that has dominated the news headlines, which is, of course, the tariffs.
00:00:18
Speaker
So, as John said, we're going to be talking about tariffs today, the economic implications as well as the political implications.
00:00:24
Speaker
But first, for some numbers, we're going to be talking about tariffs.
00:00:27
Speaker
In the last week, about $3 trillion have been wiped from the US stock market, which is...
00:00:36
Speaker
one's biggest losses in history.
00:00:38
Speaker
The economy is effectively crashing.
00:00:42
Speaker
But I want to talk a bit more about this formula used.
00:00:46
Speaker
Yeah.
00:00:46
Speaker
So, yes, because as many of the listeners will have seen, Trump's formula did seem a little bit skewed.
00:00:53
Speaker
I mean, I think even sort of basic math students and economists were saying, what is going on here?
Criticism of Tariff Calculations
00:01:00
Speaker
Yeah.
00:01:00
Speaker
Yeah, so basically it's delta Ti, which is just delta Ti as in change in tariff, equals chi i minus mu i, which basically means sort of, which is a trade deficit.
00:01:18
Speaker
Chi, so chi minus mu in Trump's view is the trade deficit.
00:01:23
Speaker
And then on the bottom of the fraction we have...
00:01:27
Speaker
Two Greek letters, we've got epsilon and phi, who each are set at 0.25 and 4.
00:01:33
Speaker
Therefore, when you times them together, they equal 1, cancelling each other out.
00:01:37
Speaker
So they're basically useless, just to provide some more complexity, over MI, so over imports.
00:01:44
Speaker
Basically, Trump has calculated the trade deficit here.
00:01:48
Speaker
This is not a tariff.
00:01:49
Speaker
All that board that he had with, oh, these other terrorist countries are imposing on us, that is simply not true.
00:01:56
Speaker
That is the trade deficit.
00:01:58
Speaker
So I'm going to be reading out some of these because they are sort of...
00:02:07
Speaker
Bizarre.
00:02:09
Speaker
There is no better word to describe them than bizarre.
00:02:13
Speaker
So my favourite one is the 93% tariff on Madagascar.
00:02:19
Speaker
Apparently Madagascar has a 93% tariff on the US.
00:02:22
Speaker
That isn't true.
00:02:23
Speaker
Madagascar simply grows a lot of vanilla and a lot of spices whilst also being a relatively poor country.
00:02:30
Speaker
So they export a lot of vanilla and spices bought by the US and other richer countries but they don't have a lot of things to buy.
00:02:37
Speaker
They don't have a lot of money to buy high-end technology from the US therefore creating a 93% trade deficit.
00:02:44
Speaker
Again, not a tariff.
00:02:46
Speaker
97% on Vietnam and Cambodia.
00:02:49
Speaker
Again,
00:02:51
Speaker
These tariffs aren't tariffs, it's just the trade deficit because a lot of textiles are made in Vietnam and Cambodia, leading to those countries exporting a lot, but again, having a relatively poor economy, not being able to buy the high tech industry, the products made in the US.
00:03:09
Speaker
So...
Adverse Effects of Tariffs
00:03:12
Speaker
just as those three comparisons go, what President Trump has done is a joke.
00:03:19
Speaker
It's, firstly, it's misinformation.
00:03:24
Speaker
The US people have been completely misled.
00:03:28
Speaker
And, you know, if you go on social media now, you'll see people saying Trump is playing chess in a world of checkers.
00:03:34
Speaker
If you'd like to see Anthony's Karen Mucci opinion about Trump playing chess, go back to the last episode.
00:03:39
Speaker
I highly recommend it.
00:03:40
Speaker
But again,
00:03:43
Speaker
What has happened the last couple of days has been absolutely horrendous.
00:03:48
Speaker
So John, can you tell us more about the implications that have happened as a result of these tariffs?
00:03:55
Speaker
Yeah.
00:03:56
Speaker
I mean, so Wednesday, the 2nd of April was, as Trump coined it, Liberation Day.
00:04:02
Speaker
But I think firstly, with the tariffs, it's important to say is that they are far worse than anticipated.
00:04:07
Speaker
Because I remember back to the US election, back to those presidential debates where Trump mentioned tariffs and Harris wasn't really too strong about them.
00:04:17
Speaker
I mean, Biden did introduce some more tariffs in his presidency,
00:04:22
Speaker
And, you know, she was slightly hesitant towards the level Trump wanted, but there wasn't a great level of hesitance.
00:04:29
Speaker
However, Liberation Day turned out to be so much far worse, so much worse than anticipated significantly.
00:04:37
Speaker
And you can see that with the effect on the global economy.
00:04:41
Speaker
Simply firstly, because I've got the stats here, but the measures will increase aggregate consumer prices by between one and a half percent.
00:04:50
Speaker
Similarly, there'll be a reduction in GDP growth in the USA.
00:04:55
Speaker
This is also expected to happen in countries across the globe.
00:04:59
Speaker
But focusing on the USA, the consumer market is also going to be brutally affected.
Tariffs in a Modern Economy
00:05:05
Speaker
I've got to say in the light of these tariffs, I've sort of become quite interested in that sort of side of economics.
00:05:11
Speaker
And one thing which sort of surprised me to find out is that actually you think that by increasing tariffs, you actually mean that US industries can survive more easily.
00:05:24
Speaker
But that isn't the tech, isn't the case.
00:05:26
Speaker
It's overall far more expensive for consumers.
00:05:29
Speaker
And domestic industries match the foreign market.
00:05:32
Speaker
price.
00:05:33
Speaker
Yeah, I do agree.
00:05:34
Speaker
I mean, I think tariffs were a great idea maybe in the 19th century.
00:05:38
Speaker
when trade wasn't as, I don't know, as sort of global in a way.
00:05:45
Speaker
Countries didn't rely incredibly on China, basically.
00:05:50
Speaker
They didn't rely on Asia mostly for a lot of products.
00:05:55
Speaker
I'm sure we'll get onto that later.
00:05:57
Speaker
But I think in 2025, imposing tariffs is going to do nothing else apart from rates, prices, prices,
00:06:03
Speaker
We've seen many American businessmen, such as Elon Musk's brother, say that their products are going to go up by 25%, 30%.
00:06:13
Speaker
Ford as well has said that their prices are going to have to go up because they need parts from China.
Potential Global Trade War
00:06:19
Speaker
They physically cannot build a car without getting things in from China or from other countries.
00:06:25
Speaker
Yeah.
00:06:26
Speaker
Yeah, I've got to say, yeah, as well, the whole sort of argument of, oh, it's going to create more jobs, it's going to revive domestic industries, let's say in the Rust Belt, it's an expensive way to make jobs tariffs.
00:06:39
Speaker
Okay, yes, you may make 2,000 jobs in the US steel industry or in the US textiles manufacturing industry, but the effect that it has on consumer markets is so considerable that it just totally eliminates the
00:06:52
Speaker
this, oh, we're going to help revive some domestic industries.
00:06:55
Speaker
Yeah, and I mean, now we're basically going to get into a trade war.
00:06:58
Speaker
I mean, I've...
00:07:02
Speaker
So listening today, what's going on in Europe?
00:07:05
Speaker
The EU is planning to impose maybe some sanctions back.
00:07:08
Speaker
They haven't actually made their mind up, but China's definitely going to.
00:07:12
Speaker
They've made statements that this is bullying, this is blackmail, it's a trade war, and that they'll fight to the death.
00:07:18
Speaker
I don't think for any moment that President Xi or any of the Chinese finance ministers are going to
00:07:24
Speaker
back down at this sort of tariff.
00:07:26
Speaker
They're just going to impose high tariffs in the US.
00:07:29
Speaker
Going to go into a sort of global trade war, which is the last thing we need.
00:07:37
Speaker
I mean, it's pretty much already on the horizon.
00:07:41
Speaker
At the time of recording this episode, Trump and China has dominated the news because obviously Trump increased China's overall tariff to 60%, but then China retaliated with 34% on all goods imported from the USA, which sort of sent equity, sent the financial stock markets into absolute disarray and even further shock.
00:08:03
Speaker
And Trump right now, you can tell he's nervous because,
00:08:08
Speaker
this sort
Economic Turmoil: Stock Market Losses
00:08:09
Speaker
of retaliatory thing, I don't think he was entirely expecting and he definitely was not hoping for.
00:08:15
Speaker
And the potential of the crisis this could have globally is just huge.
00:08:21
Speaker
Yeah, I mean, looking at sort of where the stock market went, I mean, I don't know if our viewers have seen, but on the social networks and news networks,
00:08:33
Speaker
There's a sort of graph of the richest man on the planet, how much they want slash lost.
00:08:39
Speaker
And I mean, their losses are quite big.
00:08:41
Speaker
People lost billions, literally billions.
00:08:45
Speaker
some tens of billions.
00:08:47
Speaker
Buffett, on the other hand, who cashed out all his money two months ago, is making about 12, 15 billion on this crash.
00:08:54
Speaker
But it just shows that the economy has been so heavily affected.
00:09:02
Speaker
I mean, people are saying that Trump is doing this to weaken the dollar.
00:09:08
Speaker
They're saying to weaken the dollar and then to affect banks' interest loans.
00:09:14
Speaker
I don't think he's that clever.
Evaluating Trump's Economic Strategies
00:09:17
Speaker
Me too.
00:09:17
Speaker
He's got no end.
00:09:18
Speaker
I don't think exactly.
00:09:18
Speaker
As Anthony Scammeridge said.
00:09:20
Speaker
Yeah, I don't think he has planned ahead how he's going to coerce several world, international and US institutions into this perfect genius plan that comes out of a Bond movie.
00:09:38
Speaker
It's just not going to work.
00:09:40
Speaker
What I think needs to happen, ASAP, is for basically people to say, like, this is not sustainable.
00:09:49
Speaker
We're going to send Europe, Asia, the States, basically the entire world into a massive trade war.
00:09:56
Speaker
And I mean, you know, we're looking only at developed countries, but what about Madagascar?
00:10:02
Speaker
What are they going to do now?
00:10:03
Speaker
Because their sort of output of vanilla and spices isn't going to change.
00:10:10
Speaker
They need to sell them at half the price.
00:10:12
Speaker
No, they're just going to drive those prices up.
00:10:16
Speaker
And now when you go to buy vanilla in a supermarket, you're going to have to pay double for it because Trump's for these steeply high tariffs.
00:10:23
Speaker
Yeah, I mean, yeah, I totally agree with you there.
00:10:27
Speaker
Tariffs just hurt consumers effectively.
00:10:29
Speaker
That's, if you want a sentence, tariffs hurt consumers and they're almost a false illusion.
00:10:35
Speaker
But it's interesting thinking about tariffs and Trump in general, because I remember back to the US election, we sort of passed our mind back all the way into 2024 in November, people were fairly optimistic for the Trump presidency.
00:10:51
Speaker
people were thinking it will be very different to his first presidency, which in many ways can sort of be summed up as novice.
00:11:00
Speaker
However, Trump's handling of Ukraine, his handling of Gaza, and now the tariffs altogether, those compounded, have just showed how just astoundingly novice, immature his presidency is.
00:11:15
Speaker
I mean, the tariffs, he has no endgame.
00:11:18
Speaker
I think these will go down to be a huge economic mistake.
00:11:22
Speaker
He's not going to revitalise the US as he says he will, no.
00:11:27
Speaker
His handling of Ukraine, it's... I mean, you can see the effects it's had on the UK, for example.
00:11:32
Speaker
Reform UK was potentially... was challenging the Conservatives neck and neck.
00:11:39
Speaker
But Farage's association to Trump has hurt him considerably.
00:11:43
Speaker
And that's sort of a side effect, but it documents how, you know, the wider public image of Trump and how much has decreased due to, firstly, Ukraine, and now these tariffs.
Historical Context of Trade Policies
00:11:56
Speaker
I think looking back now at history, John, you can tell us more about this, but how...
00:12:02
Speaker
How free was trade in the British Empire in the 17th, 18th, 19th century?
00:12:10
Speaker
How does that era compare to 2025?
00:12:15
Speaker
I think it's quite interesting because historically, looking at empires is perhaps the easiest way to look at trade.
00:12:23
Speaker
But if you go back to the 17th, 16th century, especially in the 17th century, where trade was mercantilist,
00:12:31
Speaker
So this is effectively trade that's based on things like exchanging gold or silver in return for, let's say, tea, porcelain, silk.
00:12:40
Speaker
And this type of trade was basically governed by monopolies.
00:12:45
Speaker
So the East India Company, it's a monopoly, for example, or the VOC, which is the abbreviated way of saying the Dutch East India Company.
00:12:53
Speaker
They effectively all other, they were a monopoly.
00:12:56
Speaker
So almost tariffs in that sort of similar sense.
00:12:58
Speaker
Only they controlled all trade.
00:13:00
Speaker
However, there's a fundamental shift in the 19th century, which totally changed how people perceive trade in general.
00:13:13
Speaker
Now, what happened effectively in the 19th century was that there was a huge shift from mercantilist policies, which endorsed this idea of monopolies, all the way to free trade.
00:13:24
Speaker
And I think the British Empire and Britain documents this very well.
00:13:29
Speaker
So firstly, monopolies had a huge downfall.
00:13:32
Speaker
This is partly due to this emergence of perhaps more liberal classical ideas.
00:13:37
Speaker
So this rise of classical liberalism inspired by economists such as Adam Smith.
00:13:45
Speaker
is partly due to this huge shift, but also the Industrial Revolution itself.
00:13:49
Speaker
This meant that Britain could out-produce slash undersell others, which led to a growing middle class, growing merchant class, which lobbied the government, the British government, to allow more competition and to get rid of these monopolies, which drained away competition.
00:14:05
Speaker
In addition, other events built up, such as the repeal of the Corn Laws in 1846.
00:14:12
Speaker
And this all culminated in effectively the East India Company losing its monopoly in India in 1813, I believe, and then losing it in Hong Kong in the 1830s.
00:14:25
Speaker
So initially the British Empire is mercantilist, it's governed by monopolies.
00:14:30
Speaker
However, we see an era of free trade in the 19th century.
Conservative Criticism of Tariff Policies
00:14:34
Speaker
And this is very successful.
00:14:37
Speaker
Yeah, I mean, I think that's a great comparison because, you know, I think today, if you look at the sort of world economy, free trade definitely massively increased the economy.
00:14:47
Speaker
These tariffs are doing nothing apart from sort of breaking the legs of that free trade.
00:14:54
Speaker
And before we close, I was just, you know a policy is bad if Ben Shapiro starts criticising Trump.
00:15:03
Speaker
Yeah.
00:15:03
Speaker
So that's when you know it's actually serious.
00:15:05
Speaker
Yeah.
00:15:08
Speaker
The one time Because this trade deficit Is not a bad thing Inherently Yeah There is however One time in history Where the USA actually Had a positive Trade deficit And that was The Great Depression
00:15:20
Speaker
So, yeah, I'll say, yeah, I mean, for me, this whole thing has been an advertisement for free trade.
00:15:29
Speaker
And I mean, it's coincided with me sort of studying more about Hong Kong's history.
00:15:34
Speaker
And from that, and from, you see the period when they got rid of their monopolies and Hong Kong is a city built on free trade.
00:15:41
Speaker
Sort of companies like Jardine Matheson, which smuggled opium.
00:15:45
Speaker
They document how countries like Hong Kong are built on free trade.
00:15:50
Speaker
And actually free trade is quite beneficial.
00:15:53
Speaker
And I don't think, I think perhaps someone needs to tell President Trump that before the turmoil unfolds further.
Conclusion and Call to Action
00:16:00
Speaker
Yeah, perfect.
00:16:01
Speaker
I think, you know, a shorter episode this time, but as always, if you enjoyed it, do leave us a comment, do give us a five-star review, follow us on our YouTube, new YouTube channel.
00:16:13
Speaker
As well as this, do listen back to our previous episode of Anthony Scaramucci, some great stuff on Trump, crypto, keeping in the economic world.
00:16:24
Speaker
And thank you for listening.
00:16:26
Speaker
Yes, thank you everyone for listening and we'll see you soon.