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00:00Joining me to discuss is Peter Trubowitz, a professor of international relations and
00:04associate fellow at Chatham House. It's great to have you with us on the program today. Now,
00:09Canada, Mexico and China account for more than a third of the products brought into the U.S.,
00:15so help us understand the magnitude of Trump's decision.
00:20Well, it's huge and it's why you're covering it and every other news outfit across the planet
00:28is covering it. I mean, these are America's two biggest trading partners, Canada and Mexico.
00:36A lot of goods travel across the border, both directions. They're three highly integrated
00:43economies and so this is a very significant move by Donald Trump. I think it's motivated as much
00:49by politics as it is economics. And we can get into that, but there's no game saying it's a
00:57significant 25 percent across the board is a significant tariff. And what are Donald Trump's
01:04tariffs really about then? You know, I mean, Trump has cited the threat of legal immigration
01:09and drugs as the reason behind this decision. But are they as out of control as he suggests?
01:14Well, so he has definitely identified that fentanyl and migrants coming across the border
01:24as the main reason for pursuing tariffs. But I think this is really vintage Trump. It's as much
01:32about politics as it is anything else. Last week was a bad week for Donald Trump politically in
01:39the United States and he needed to change the subject and he needed to change it fast. And
01:45that's one reason that he announced midweek that the tariffs were coming. And I think it's pretty
01:51much succeeded in that sense. No one's talking about freezes on foreign assistance or the purges
01:57at the FBI or the firing of inspectors generals or the effort to slash federal funding. Everybody's
02:04talking about tariffs and trade wars, including us. But let me just say there's another purpose
02:10behind this. Trump sees the tariffs as a way to extend the tax cuts that were approved in 2017
02:20during its first term. And that is a high priority item for him. The problem he has to be able to
02:28extend those tax cuts, he's going to have to generate revenue to make up for the shortfall
02:34that will come from the tax cuts. And what his team is claiming is that the tariffs will generate
02:41much of the revenue, much of the lost revenue from the tax cuts. And this will be essential,
02:48whether it's true or not, to being able to push the tax cuts through Congress.
02:53So there are many things going on here. It has something to do with fentanyl and migrants,
03:00drugs and migrants, but there are other things involved as well.
03:05Now, Canada and Mexico have swiftly responded with tariffs of their own.
03:10Canada has announced a matching 25% tariffs on the US. It seems they're facing this head on.
03:17Yes, absolutely. And I think they're going to hit the US where it hurts, or put this quite
03:22differently, they're going to hit members of the Republican Party, lawmakers in Congress
03:28where it hurts. Because what they're going to do is they're going to target districts and states
03:34that are heavily Republican in an attempt to ratchet up the heat. And at the same time,
03:41you're going to have Democrats jumping up and down about the potential inflationary implications
03:48of Trump's tariffs. So this could go a couple of rounds. Trump has already threatened
03:57to retaliate again to ratchet up higher if Mexico and Canada impose tariffs,
04:04which they've already announced that they will do. And of course, there's still
04:08China. China has indicated that it will probably impose tariffs as well,
04:14but it's kind of held its fire for now. Now, Trump has often declared his love of
04:20tariffs. During his first term in office, he imposed them primarily against China.
04:24But how do those differ from his new round of tariffs?
04:29Well, I think one thing about these tariffs that are significantly different is he is leaving aside
04:37China. The bulk of this, the heaviest tariffs are being aimed at America's allies. This is
04:45different. He is going after America's allies first. It reminds me of that old Henry Kissinger
04:51line. It may be dangerous to be America's enemy, but it can be fatal to be its friend. I mean,
04:58none of what is unfolding right now is supposed to happen under the U.S.-Mexico-Canada trade
05:05agreement that Mr. Trump negotiated and signed in his first term. Trump has basically set aside
05:12America's treaty obligations, figuring, I think, that America's allies, for America's allies,
05:19access to the American market is more important than America's word. And I think that's what's
05:26different here. Peter Trubowitz, Professor of International Relations and Associate Fellow
05:31at Chatham House, thank you so much for sharing your analysis with us on the program today.
05:35Great to be with you. Thank you.