From Schwartz Media. I'm Ruby Jones. This is seven am today in the Rose Garden at the White House, President Trump will unveil his next round of tariffs.
The Cabinet will be here for the event. It'll be our first Rose Garden events of this administration. So are you old?
He's calling it Liberation Day?
The President will be announcing a tariff plan that will roll back the unfair treed practices that have been ripping off our country for decades.
He's doing the first round of tariffs are already doing damage, and there's more pain to come as the President enacts his radical plan to reshape the entire global financial system. Today, managing editor of the Saturday Paper, Emily Barrett on the economic blueprint behind Trump's tariffs and the chaos to come. It's Wednesday, April two, So Emily, welcome back to seven am.
Thanks Ruby. It's great to be here.
Today is the second of April, or as Donald Trump likes to call it, Liberation Day.
It's a pretty ominous term it is, so what does it actually mean?
We are we have Liberation Day, as you know, on April second, because and I'm not referring to Canada, but many countries have taken advantage of US, the likes of which nobody even thought it was possible for many, many decades.
Liberation Day, as he's called it, is supposedly when he's going to unveil the sweeping tariffs on countries that the administration thinks have an unfair advantage over the US in trade terms.
I think most countries will are agreeing with me. They're actually many of them have actually apologized. They said, look, we have taken advantage, and I don't blame them as much.
Just after his inauguration, Trump ordered his Commerce Department, along with the trade representatives offer YES, to compile a massive report on America's trade relationships around the world, and that's supposed to be the basis for setting tariffs country by country and by sectors based on where the US sees practices that are disadvantaging them. It's been kind of assumed that Trump would focus on countries with trade surpluses, that is that they sell more to the US than they
buy from the US. But in this round, the administration is reportedly also going to be targeting countries that use any measures to protect their own industries. That's measures like regulations that buy US products or subsidies, and he's complained about the sales taxes that almost all countries levy, like OURGST. The administration has also complained about our pharmaceutical benefits scheme.
American medical giants are slamming the Albanese government for its eighteen billion dollar PBS medicine scheme. They're blaming the Australian policy for cutting prices and blocking American exporter US.
That's a scheme in which our government agrees prices with US suppliers and pays those prices so it can keep prices low for consumers here. Our local content quotas for Australian broadcasters have also come under scrutiny, apparently in the US, and as has the News media Bargaining Code, which is what would get companies like Matter and Google to pay for news. He also said that he's considering levies on
things like copper and lumber and meat. That's when Australia started talking to him about the risks of the price of Big Max. He said that there will be secondary tariffs as well, and this is new on all countries that buy exports from supposedly unfair players, and that's things like oil and gas from Venezuela, and most recently on Russia because apparently he's annoyed about Russia's stance on a
ceasefire with Ukraine. It's reported by Politico that people within the administration even don't have the full picture of what's going on. But what we do know is that the uncertainty and the threats and the putting on tariffs and backing off them kept speculation mounting, and that fits Trump's sense of drama.
Okay, So while we're waiting then to hear about the next round of tariffs expected today, can we talk about what has happened so far with the tariffs that have already been enacted on Canada, on Mexico, China, Australia. What has the impact been.
Well, so far, we've sort of seen a lot already imposed. This started with twenty five percent tariffs for Canada and Mexico, which were then delayed and then stalled, and then after some talks they're going to be reimposed. Apparently China was also hit with ten percent, and that was then up to twenty percent, with the threat that they'll continue to rise. And all these accumulative by the way, so some countries will be really racking up the levels of tariffs they're
having to pay. And all of this, by the way, is helping to drive up the price of oil. So what's happened Aside from oil prices rising, We've seen stock markets around the world have driven sharply lower, and that's including in the US. So the S and P five hundred has just marked its worst quarter in three years. US consumer confidence has fallen, and long term inflation expectations have risen pretty sharply. Despite this clear negative reaction, Trump
hasn't backed off so far. In his first administration, he loved to equate the gains in stocks with the success of his presidency, so people sort of expected that this time around there would be what's called a Trump put, meaning that if stocks fell, he'd back off to sort of spare everyone further losses. The fact that he's not done this so far is an unwelcome surprise for a lot of people.
Right.
So, as a result of these initial tariffs, stock markets have dropped, oil prices or up. Consumers in the US are very worried, but regardless, Trump is pushing ahead. So why do you think that is, Emily?
All we know is that at this point, as the wheels are starting to fall off, is that the administration and a lot of people around the administration are trying to make this look deliberate and considered. It's become a bit of a parlor game actually for economic experts, you know, to try and apply some kind of rationale to what Trump is doing.
First, he wants to use it as a tool to get other countries to do what he wants them to do right.
Secondly, he thinks of it as a tool to raise lots of revenue.
Yes, it's as if he wants to cause this period of disruption because he thinks there'll be some promise land on the other side. Now that may work out, or he makes shooting himself in the third what we've seen from.
History is the periods.
It's not a trade work. We are going to reset trade.
Policy on April.
Second. You've got China's got huge tariffs on us.
It's kind of like an intellectual exercise that the top flight economists have joined in on around the world. But it's also raised some hackles among progressive economists, particularly who say that this is sane washing, you know, like greenwashing, where companies make a dirty climate practice look clean. This is making a completely bonker's idea look logical or even bold.
And this is where the Mari Lago accord comes in. This plan that goes some way to explaining Trump's thinking about tariffs. So tell me about that.
It's written by one of Trump's top economic advisors. Let's say it's kind of like Project twenty twenty five for the American budget. It's basically a pitch to reshape international trade and really to reshape the entire global financial system that it's based on.
I mean, as soon as you say the words reshape the global financial system, my conspiratorial hackles go up. So I mean, is this a real plan? Emily, how seriously should we be taking it?
It's definitely a rationale. It's an offering. I would say that if it is a real plan, it's very scary. I think that it's important to take it seriously, but not literally, as so many people say about Trump.
Coming up after the break, What exactly is Trump's plan to reshape the global financial system?
Hi, I'm Daniel James seven Am tells stories that need to be told. Our journalism is founded on trust and independence, and now we're increasing our coverage every Saturday until the election will bring you an extra episode to break down the biggest political moments of the week. If you enjoy seven Am, the best way you can support us is by making a contribution at seven am podcast dot com dou slash support. Thanks for listening and supporting our work, Emily.
There is a document, a blueprint if you like, that might help explain the thinking behind Donald Trump's trade wars. Tell me more about what it is exactly and why people are paying attention to it right now.
So this is a paper written by Stephen Murraan. He was recently pointed the chair of the US Council of Economic Advisors. Those are the president's top economic advisors.
Stephen, you are one of the top economists at the White House right now. Welcome to Bloomberg. You're serving in this role at a tenuous moment for the economy. We saw last week the federal reserves.
So a week after Trump's election win in November, he published this forty page paper that was called a User's Guide to Restructuring the Global Trading System.
You talk about some unorthodox policies like revaluing US gold stocks, applying a user fee to treasuries and a new global currency accord. Can you tell me how much of this is in the works now?
Yeah, So I'm glad you brought that up, because this paper seems to have taken on a life of its own against all my intents. Look, I'm pretty clear in that paper that it's a catalog of available options.
So what they think America should be doing is slashing government spending and borrowing, repare the trade deficit by attracting more investment and sell more to the rest of the world, and with that rebuild the manufacturing sector. The focus on America's poor finances is entirely reasonable. America's debt, just to sort of put this in perspective, is one hundred and twenty three percent of its total GDP. Australia is, by comparison,
is less than fifty percent. And this debt pile for the US is growing many times faster than its economy is growing. So debt service costs are the second largest line item in the federal budget. It's borrowing to pay its own debt, and Stephen Myron is aligning with Trump's idea that the US is not getting enough out of
world dominance. Basically, the main plank of the solution, as they see it, is to weaken the dollar, and that would make US exports more competitive and imports more expensive, so it's supposed to sort of head off this flood of cheaper offshore products. The thing is, you can't just weaken the dollar because this is a market that in daily trade is worth sort of seven trillion in trans actions each day. So you can't do this alone. You have to have an agreement, a multilateral agreement with other
countries all involved in it. And the US has done this in the past. So in the nineteen eighty five there was the Plaza Accord. This was with Japan, France, West Germany, and Britain, and it was supposed to reduce the US deficit and pull the country out of recession.
So this was a.
Huge deal for the US and it worked. Failing an accord, though, tariffs are supposed to be the stick that is supposed to encourage countries to work with the US. But Myron's blueprint has got other measures. The first one is cutting federal spending, and that's what DOJE is supposed to be all about. The really difficult bit that's also laid out in Myron's blueprint is lowering borrowing costs for the US. So that's interest rates, it's tied to the massive amount
of US debt that we've talked about. His suggestion to cut debt service costs is to force other countries that have government debt from the US to switch those out for bonds that essentially don't pay. Instead, they will extend out to own these very long dated bonds that eventually sort of in fifty two hundred years, they'll get their money back. And that terrible to heal is supposed to be in exchange for military protection for all of the benefits of having the US answer a call when you're
in trouble. The problem with that is that most US government debt is actually held by American banks and by funds, like the vast majority of it. If you do a deal like that, then you're ruining the credit of the US government and those bonds are instantly devalued. And not only that, it would crash the US financial system.
Okay, so they have this plan which is to weaken the American dollar. The idea being that if you do, you'll bring back manufacturing and bring back jobs. But as you've outlined, it could also have these significant consequences for the American financial system. So, Emily, what impact do you think this will have on the American people?
So we're already starting to see this play out in unfortunate ways for Americans. We've got to ask, really, all of this for what kind of chance of success. Even Stephen Myron and his piece says that it's a pretty narrow path to success. Right the stated aim of bringing back well paid jobs, it's not going to put the manufacturing sector where it was back in its peak in nineteen seventy nine. You know, that's when the most manufacturing
jobs were seen in the US. The thing is that the tariff part of the planet they've outlined, even if you assume it can be implemented, is no kind of quick fix. In the meantime, we've got inflation is a real risk. Most companies that have higher import or production costs because of tariffs will simply pass those costs onto consumers.
One thing that Myron points out in his paper is that these tariffs must be applied carefully so that there is no retaliation, because if you get reached retaliation, you get a trade war that can go on ad infinitum. But we've already seen retaliation from Europe, from China, from Canada, We've seen those rates on tariffs pushing up higher. Stephen Myron also said that once you get above twenty percent tariffs,
you start to see them becoming counterproductive. That's when you start to see the economic impacts coming back and biting Americans.
Okay, and you said that the peak of American manufacturing was in nineteen seventy nine, So how much of this plan is really about imagining a more traditional past. What does this document tell you about the type of America that Trump is working towards in the social sense as
well as the economic. If we start off by looking at it in policy terms, this is revenge politics, as Jillian Tet has said at the Financial Times, and that's arguably what drove all of the economic pain that led to the last World War.
And in social terms, it's really to know what kind of nostalgia Trump has in mind when he's thinking about making America great again. There's a lot about this platform that would take the country back to perhaps his early adult years in the seventies, when America was the manufacturing giant. Maybe he's romanticizing about those well paid jobs when men worked and women stayed at home. But I'd suggest that the world that Trump really has in mind, it's imperialist.
It's imposing itself on every other country's decision making. And if we kind of halt that sane washing cycle for a second, this is the world that allows him to continue performing and to seize the world's attention. He's gathering power to himself and he's capitalizing on it, and that's just for him.
The US President, Emily, thank you so much for your time.
Thank you so much.
Ruby.
Also in the news today, the ABBA has left the cash rate unchanged at four point one, as expected. In a statement accompanying the decision yesterday, the board said inflation has fallen substantially since the peak in twenty twenty two as a result of higher interest rates. The Board is now expected to cut rates at the next meeting in May, according to analysts, and former Prime Minister Malcolm Turnbull has told politicians to get off their knees and stand up
to President Trump. In an address at the Press Club yesterday, mister Turnbull mimicked the US President and said both Anthony Abeneze and Peter Dutton have failed to properly respond to the changed reality of American foreign policy. He also suggested Australia withdraw a recently announced three billion dollar payment to prop up America's submarine building capability, and consider withdrawing American access to Australian naval bases. I'm Ruby Jones. This is seven am. See you tomorrow.