Valuetainment - April 10, 2025


＂Trump Has A Point＂ - Richard Werner BREAKS DOWN How US-China Tariff Tactics Will Shape Global Trade


Episode Stats

Length

13 minutes

Words per Minute

170.50691

Word Count

2,220

Sentence Count

27

Hate Speech Sentences

4


Summary


Transcript

00:00:00.000 if china agrees and say you know what reciprocal tariff zero
00:00:04.720 we're not going to put any on you you put nothing on us
00:00:08.880 if that was to be agreed upon who loses more and who wins more
00:00:14.660 actually that is the best scenario and and that's where actually the standard international trade
00:00:24.640 theory has a bit of a point unusually you know i'm usually quite critical of mainstream economics
00:00:29.520 but that's the one point where they're perhaps slightly stronger um everyone would win because
00:00:36.220 you see tariffs the reason is the following trade is really the source of wealth creation
00:00:43.620 for everyone trade whether it's internal trade or external trade but actually when you then
00:00:48.180 have the country divisions and you look at how countries are doing compared to each other
00:00:51.840 you will see that international trade is the main source of wealth creation between countries
00:00:58.220 so trade is extremely valuable now most economists very simplistically follow from that that you
00:01:04.940 should never have tariffs not even unilateral tariffs not even if the other guys have lots of
00:01:09.880 tariffs against you you should not respond by putting tariffs on is always better not to have tariffs
00:01:14.500 that's the official mainstream economics response and they're very clear cut about this that's not
00:01:20.520 entirely true and therefore to some extent you know president trump has a bit of a point um namely
00:01:26.480 tariffs have proven in history to be extremely successful and in fact necessary when you are a developing
00:01:36.100 economy that wants to move up to the next level and you want to um raise the level of value added of
00:01:44.860 your entire domestic economy the principle to be successful as an economy is through international
00:01:52.580 trade and you have to follow the rule of mainly importing raw materials that means low value added
00:01:58.320 goods then you do the adding of value and you export high value added goods and the u.s is very good
00:02:05.360 with certain high value added goods and services are included of course particularly the services u.s is very
00:02:11.160 good and there's you know high value added whether it's software you know technology related um and
00:02:17.140 telecommunications and and it and and so on um that's the principle that applies throughout history to all
00:02:24.640 countries at all time periods um and that's where tariffs can be very useful if you want to move up to the
00:02:32.520 next level and you put on tariffs such that you enhance that pattern of
00:02:40.920 you know basically you want to get raw materials very cheaply so you'd never put tariffs on raw
00:02:46.700 materials that you're importing uh import tariffs you'd never have that and on raw materials but of
00:02:53.440 course if the other country is mainly exporting finished goods that you are also trying to you know
00:02:59.940 manufacture yourself or services you know they're offering services that you are trying to offer that's
00:03:05.040 where the tariffs make sense if behind this tariff wall if you want or tariff protection i mean it's
00:03:12.060 only a partial protection because you're not banning those you know it's just getting slightly more
00:03:15.440 expensive depending on the percentage if you behind this protection you make sure that industry and
00:03:23.040 your domestic um players are actually stepping up to the plate and are getting ready because in the future
00:03:29.540 you want to take this off and then let them roam freely and let the foreign uh things come come in
00:03:35.640 freely um and that pressure has to be there and then it can be extremely successful that's how japan
00:03:43.700 was in the 20th century the country that had the the most dramatic economic development only overtaken
00:03:50.520 towards the end of the 20th century and then beginning of 21st by china uh although if you take the
00:03:55.440 whole country because you know it's huge and and you know rural areas some are still not so developed
00:04:00.080 you know it's a bit of a mixed uh batch but big chunks of china did um you know beat japan on on
00:04:06.120 in that respect but they all followed the same pattern and it's also true if you go further back in
00:04:10.780 history german economic development in the 19th century the u.s development in the 19th century
00:04:16.180 overtaking number one economic power britain happened with the same um with the same pattern namely
00:04:22.600 very selective tariffs so that this trade pattern was encouraged where you get your raw material imports
00:04:31.000 cheaply and you have development of your domestic high value added goods and service industry
00:04:37.560 and you then encourage the exports and so you usually it's a combination of tariffs and subsidies
00:04:44.580 to to to work on that pattern but it's only justified because it is you know it is a government
00:04:50.260 intervention you know that's quite clear this is a government intervention tariffs and normally
00:04:55.200 a free market is preferred but if you do it cleverly you combine this intervention with
00:05:01.520 incentives for the private sector to step up to the plate and deliver you know shift to the higher
00:05:08.260 level manufacturing or service sector value added activities then it's extremely successful and has
00:05:14.460 been in history consistently that's how the u.s overtook britain yeah but the question for me okay
00:05:20.240 so who's the biggest loser so i went while you're speaking i'm trying to see what chad gbt is going
00:05:26.020 to tell me the biggest winners and losers are if they agree to zero percent tariffs rob if you're going
00:05:31.000 to pull this up and ask the question who are the biggest winners and losers if the trade if the
00:05:38.200 tariff on china and u.s goes to zero reciprocal tariffs goes to zero who are the biggest winners and
00:05:43.600 losers here's what it says winners big u.s retailers walmart tars get amazon would benefit from
00:05:49.860 lower import costs consumers would see cheaper goods electronics clothing furniture toys lower
00:05:56.100 prices equals lower inflation more purchasing power if they go to zero percent tariffs u.s tech
00:06:02.240 companies apple tesla hp which manufacture heavily in china would save on costs and avoid supply chain
00:06:07.820 friction yeah text imports like qualcomm nvidia would expand access to chinese markets okay i just saw a
00:06:14.100 story about how much an iphone will be right now based on what it's going to cost rob if you want to pull
00:06:17.860 that story up this is from five days ago i saw that it would be quite a bit yeah three thousand
00:06:22.740 dollars is what i saw three thousand dollars is what i saw i saw three thousand so this one's saying
00:06:26.580 23 well i think it's three thousand for the one with bigger if you go a little bit lower rob it'll tell
00:06:31.620 you let's go a little bit lower in the story it says all the way up to three thousand i think uh
00:06:36.340 twenty three hundred dollars forty three percent increase with what's going on with tariffs okay so that's
00:06:41.200 that let me continue chinese manufacturers and exporters with u.s tariffs gone chinese firms
00:06:48.080 in electronics machinery textiles regain full access to u.s markets because it's cheaper to get
00:06:52.880 exports increases china's export momentum okay next u.s chinese logistics and shipping firms global
00:06:59.920 financial markets wall street would rally on improve u.s china relations reduce geopolitical risk
00:07:06.080 investor optimism six south asian and global suppliers these are all great winners now let's
00:07:11.600 look at losers u.s domestic manufacturers steel aluminum textile furniture yeah so that means jobs
00:07:17.840 still going to go over there because it's going to be cheaper labor there china substitutes vietnam
00:07:22.640 mexico india these countries benefited from u.s china decoupling the trade war so a lot of us started
00:07:27.840 sending business to vietnam mexico india they would take it so they may not want reciprocal tariffs with
00:07:32.960 u.s and china u.s labor unions which i don't understand these guys these are the protectionist
00:07:37.600 policymakers unions will likely see a betrayal of bring jobs home okay to bring the jobs here okay
00:07:43.440 fine u.s defense hawks and china skeptics companies that relocated from china during trade war domestic
00:07:50.560 industries these are saying who the losers are for you i see more positive on doing reciprocal than not
00:07:56.880 doing it why isn't china agreeing to do it i think we do we do have a political element here and that
00:08:04.720 is and you know on both sides we saw it in the the message from president trump it was the second or
00:08:12.480 third word of his message disrespectful and the chinese have the same attitude they feel what president
00:08:20.400 trump's been doing has been very disrespectful so we do have i mean it's like between between
00:08:24.720 humans you know we're sort of is the oh this has not been the nice way of doing it we're slightly
00:08:30.720 miffed now and we're gonna you know we don't want to be pushed around so there is that element
00:08:36.480 but in principle if you have no tariffs on either side
00:08:41.760 basically each country still has to think is this um a healthy relationship and
00:08:50.160 i mean there's this long history and we're just you know president trump is being
00:08:55.680 quite um you know quite focused on this and willing to have a dramatic policy change because until now all
00:09:03.120 the presidents didn't touch this and they let the the state department and all the trade negotiators
00:09:09.840 work in line with standard trade um orthodox economics um and so there wasn't really hasn't
00:09:18.160 been much of an um dramatic um policy change but the end result has been essentially you know
00:09:27.040 previous administrations overseeing the transfer of labor of u.s jobs to china and that's really
00:09:34.640 essentially also been u.s policy and so the u.s policy has helped in making china very strong
00:09:40.640 because all the u.s companies were more or less encouraged yeah that's fine you do that
00:09:44.560 you know the environment was like that and so president trump is unusual because he's he doesn't
00:09:49.200 care about about all this economic orthodoxy he just sees the jobs going and he wants to reverse it
00:09:55.120 he sees and has seen since the 80s as we saw from that whole interview that there isn't
00:10:00.080 really quite a level playing field when it comes to tariffs and he's just saying hey let's let's uh
00:10:06.320 change that um but in my view there's a slight missing element and and that is
00:10:13.120 one one needs to combine that with a policy that sets the right incentives not not to dictate to
00:10:20.960 anyone at all no but to create the incentive structure for the private sector in the u.s
00:10:26.160 such that you will have still boosted high value added activities expanded in the u.s you want to
00:10:36.320 keep that you want to offshore essentially low value added activities that doesn't you know that's not
00:10:42.640 the big problem and i think where where to draw a line is the question and i think it's been drawn
00:10:49.440 at too high a level so that the u.s has has been quite uh you know successful in the it sector and
00:10:57.520 in software and and things like that but too much of the manufacturing has been offshore and that's
00:11:02.960 where president trump has a point but is this going to change is going to be reversed just through tariff
00:11:10.560 policy and perhaps even this agreement you know if you do this agreement zero zero then it's not going
00:11:15.040 to change actually you you think you don't think zero zero is going to make any difference for this
00:11:20.560 point on this point that really you'd like to have more jobs in the higher value added
00:11:26.720 manufacturing sector in the u.s doesn't create the more jobs here so it doesn't solve for that
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