How Trump's tariffs ripped up the global trade order

Good morning from the Financial Times. Today is Monday, march twenty. 30th. And this is your FT News briefing. America's president says the U.S. could take Iran's oil. We'll tell you how all the uncertainty about what happens next in the war is weighing on global markets. Plus, it's Been a year since America's so called Liberation Day. In a special series this week, we're asking has US President Donald Trump actually reshaped global trade.

I'm Victoria Craig and here's the news you need to start your

President Trump spoke to the FT late Sunday about the war in Iran. When asked about his objectives, he said his quote preference would be to take the oil. though he acknowledged he faces resistance at home. He compared the possible move to Venezuela, where the US plans to control the oil industry indefinitely. A decision like that in Iran would involve seizing the country's oil export hub, Carg Island.

On that matter, the president said he has quote a lot of options and that taking it would mean being there, quote, for a while. The president stressed that talks between the US and Iran via what he called Pakistani emissaries were progressing well, and said a ceasefire deal to reopen the vital Strait of Hormuz could be reached, quote, fairly quickly. He noted thirteen thousand targets have been hit in Iran and three thousand remain, but he did not elaborate on what or where those targets are.

The interview with the president comes as oil prices started the week trading near the highs of the conflict so far. A month of war in Iran has left investors with nowhere to hide. That is because global safe haven bonds and by comparison riskier stocks have suffered their biggest combined sell-off since twenty twenty-two.

with no end in sight to the conflict, what's in store for the markets as we head into the second quarter this week. FT Markets columnist Katie Martin joins me now to parse this out. Hi Katie. Hey, how are you doing? I'm good. Thanks for being here. So before we get to our look ahead, let's sort of recap the month so far, because the energy shock that the war in Iran has caused has really been

brutal. So what does it tell us looking at the market that basically everything is falling? We've got stocks, bonds, all in decline. Yeah, this is a bit of a nightmare scenario for investors for a number of reasons. The first reason is we don't really know what we're dealing with here. What we know is that there's an energy shock. But a lot depends on how much higher energy prices go.

And so the longer this goes on for, the more damaging this gets for for investors' portfolios, which we all know are not the most important things in this conflict, but they are important nonetheless. The second reason is that it's really bad for bond markets. So government bond markets are supposed to be the safe bit.

of a portfolio, but bonds hate inflation. And what we could be looking at here from the energy price shock and potential food price shock is another run-up in inflation. And so for investors, nothing is working. One of our colleagues wrote last week about how it's become slightly harder to trade in the thirty trillion dollar US Treasury market. You're talking about bonds, Katie. How worrying is that for the market now?

The US government bond market, which is the biggest and most important of all of them and really underpins global markets and asset markets of all kinds, that has started to become quite unstable. We're having periods where it can be a little bit difficult for investors to get a hold of prices and to get deals done.

These are the early signs that we are seeing quite disjointed markets. And the concern among investors is that when markets get like that, accidents can happen. You can have blow ups. You know, we've already had a situation where a whole bunch of hedge funds have had a really horrible time in UK and European government bonds. None of them were betting that that anything like this would happen. In fact they had the opposite bet on.

So when that hit a wall, they really took a lot of pain very, very quickly. So that's why people are paying attention to Trading conditions, particularly in US government bond markets, because it is very easy for stuff to go wrong when markets are as fragile as this. There's also a growing concern of seeing global stagflation as a phrase that sort of re-entered the lexicon. That's sort of this mix of

faltering growth and rising prices. How big of a risk do you think that is to the global economy at this point? It's really hard to know how to deal with that because Central banks can't raise interest rates to control inflation that comes from energy prices very easily. So it can become a very unpleasant experience for investors, for consumers And it's just difficult to see at this point what puts a stop to it. There is still a hope out there among investors that I speak to that somehow.

we can pick a narrow path that kind of gets us to a point where we can model through this situation. Particularly investors have their eyes on the fact that the US has midterm elections coming up in November. There's an assumption that Trump won't want energy prices to get too high in the run up to that. So there is a hope that that at some point someone will be forced into a solution, but until that happens

This concern that's still hanging over people is that what we already have, which is an unpleasant market environment, could become a really unpleasant market environment on a completely unpredictable basis. It's becoming much more apparent to investors that It's not up to Trump. He can't just flip a switch and make this go away. There has to be some sort of agreement with

Iran and it has a an existential battle on its hands as far as it's concerned. But yeah, Trump's ability to talk this down and to turn this around is clearly troubled. Yeah, well plenty for us to keep our eyes on. Katie Martin, our markets columnist. Thanks so much for your time. Thanks for having me.

A lot has happened in the first year of US President Donald Trump's second term, new global conflicts, fresh rifts with allies. New tariff regimes. Over the next week, we're zooming in on that last one because this week marks one year since the president's so-called Liberation Day announcement. April second, twenty twenty five will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed. and the day that we began to make America wealthy again.

That Rose Garden speech last April was the official unveiling of a set of tariffs that would be enacted on countries around the world based on something called AIPA, the International Emergency Economic Powers Act. It was a big deal, but it was an even bigger deal when the Supreme Court this year ruled all of those tariffs illegal.

So here on the news briefing, we're taking a deep dive into how global trade has changed with Trump's whims. And for the first installment today, we're bringing in Alan Beattie. He's a senior trade writer for the FT who pens our weekly Trade Secrets newsletter. Hi, Alan. Hi. So whip sod, I think, is the word that comes to my mind when I think of US tariff policy over the last year or so. How do America's trading partners feel?

I think also whipsawed possibly traumatized. I think one of the problems is that they've thought there's a lot more logic to him than there actually is. So he will announce all of these things and they say what do you want? Rydyn ni'n ymwneud hynny'n ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud. mechanism finds it difficult to negotiate with somebody whose objectives keep changing and who can't really be relied to um keep a promise anyway.

Yeah, and I think on that note, I mean, does that mean that Trump's various tariff programs have really upended, rerooted, or changed global trade in a meaningful way? on a permanent basis, or is this all sort of just temporary until things settle out or even until another administration comes in? So the two things I think, you know, during his first term what we saw was China continuing to export to the US just via

third countries. And then Trump was extremely keen that that wouldn't happen again. As far as we can tell, he hasn't really succeeded because Chinese exports are still roaring away. It's still running a huge surplus with the rest of the world.

But the bilateral deficit with the US or US's bilateral deficit with China, rather, has fallen. So as far as we can tell, the same pattern is there. China is such an incredibly Competitive exporter in so many ways and increasingly in high tech goods and things that that other countries actually can't do that the sort of the logic of market forces means it will continue to export and those things will find their way to the US somehow.

Now in terms of the trading system, one thing that's really striking is that we have not had a sort of worldwide surge to protectionism. There just hasn't been a lot of of other countries Cutting off trade between themselves. In fact, if anything, somewhat the opposite. Countries have continued to sign trade deals. I think it's a a bit like Brexit in the UK, that the UK left the European Union and everyone wondered, would other countries follow it out?

That's the same with Trump. He's pulling the US to some extent out of the trading system. Everyone else has looked at it and said, Oh my goodness, whatever we do, we're not going to do that. When it comes to how the US behaves, the Supreme Court struck down the IEPA-based tariffs, and that was seen as a huge blow to the president's tariff strategy, but has it done anything to actually derail the administration's ultimate goal?

I don't think it will change the way they've responded. I mean, they signalled very clearly in advance of the decision what they were going to do, which is recreate the tariff wall. using a bunch of other legal authorizations, specifically one which is supposed to deal with balance of payments crises, one which is supposed to deal with national security, and one which is supposed to do with unfair trade. They are areas in which

the Supreme Court has traditionally deferred more to the president. So it seems fairly likely that they will be able to rebuild that tariff wall. to more or less what it was before the Supreme Court ruling. Finally, for America's trading partners over the next two and a half years that we have President Trump in office, is there any certainty about what trade will look like given he can really change on a whim? It can, but

I think one of the things that the governments have discovered, Trump puts tariffs on and trade finds its way round. You know, the US is quite a closed economy. It's probably only fifteen or seventeen percent of global import. If the US wants to remove itself Peak tariff. I think he has tried to remake the world trading system with them. He has failed. He has tried to close the US.

trade deficit with them, he has failed. Unless he goes completely insane and tries to cut off the US from the rest of the world altogether, I think there's a limited amount that he could do That he hasn't already done and which is actually feasible for him to do. Wow, peak tariff. You heard it here first, folks. Alan Beattie, our senior trade writer and author of the Trade Secrets newsletter. Thanks so much for your time. Thank you very much.

Our trade series rolls on tomorrow with a closer look at how the Supreme Court is reshaping the Trump administration's global tariff policy. So be sure to catch that one right here in the podcast feed. And one more thing before we go, you are listening to the two thousandth episode of the FT News Briefing. I know somewhere Mark Filipino has dug out his celebratory Y two K glasses just for this occasion.

As for me, it's been a pleasure to bring you the latest business and economics news from all around the world each and every Monday morning. So, from all of us here, thanks so much for listening. And as always, you can read more on all of the stories in today's podcast for free when you click the links in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news. Bloggare, bagare eller bokvindare.

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