After Donald Trump announced sweeping tariffs on US trade partners across the world, China retaliated with a reciprocal 34 per cent levy on US imports, escalating tensions amid a looming trade war.
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00:00The biggest topic of conversation the world over in boardrooms, in offices, in governments
00:07is Donald Trump's reciprocal tariffs and the impact this has on the US economy, on
00:15global growth and for a country like India the impact this has on the India economic
00:20growth story and on Indian exports and most importantly what happens from here, what follows
00:26what Trump calls Liberation Day. To try and make sense of a very uncertain evolving situation
00:32I'm joined by a man whose expertise it is to try and make sense when sense is tough
00:38to make. Ian Bremmer joins us, President of the Eurasia Group, one of the world's leading
00:44experts on risk. Thank you very much Mr. Bremmer for your time, I appreciate it.
00:48Good to see you again.
00:50I want to start by asking you about what follows. Everyone's already seen the headlines, tried
00:55to get a sense of what Donald Trump has done. Given what the state of play is at this moment,
01:01what are you expecting will happen next?
01:04The immediate response came from China and maybe not such a surprise. It's the most adversarial
01:11of countries towards the US that received a significant tariff, at least among the major
01:17economies in the world. They've got a government that feels very capable of playing long term
01:24against the United States. And Xi Jinping has no immediate plans for a meeting with
01:32Trump and vice versa. So, I mean, 34% from the United States, the Chinese immediately
01:37levied 34% back against all Chinese exports to the United States. These are the two largest
01:43economies in the world that are now directly in a trade war with each other. So, I mean,
01:50that is your initial consequence and it's a pretty significant one.
01:55Let's spend some time talking about this growing trade rivalry between the United States and
02:01China. We're seeing some unlikely groupings, South Korea, Japan, China seeming to be in
02:08concert despite all the conflicts which seem visible on the surface. How do you see the
02:14rest of the world react to Trump's status? How does this change the global geoeconomic
02:18order?
02:19Well, for the last 20, 30 years, Rahul, when we've talked about challenges to globalization,
02:28we've principally talked about China. We've talked about de-risking from China, decoupling
02:33from China, because China had an opaque economic system and political system. The state was
02:40the principal actor in the economy. They don't have rule of law. They massively promote and
02:47subsidize their own national champions and state-owned enterprises. In the last 48 hours,
02:54so many of the world leaders I've spoken to, so many of the corporate CEOs I've spoken
02:58to have talked about de-risking from the United States. In other words, that the U.S. has
03:06a system that increasingly is incredibly opaque, incredibly volatile, incredibly state-driven.
03:13This is meant to be the biggest free market in the world. And increasingly, it is industrial
03:19policy. It is creating a tariff wall around the United States. And of course, the U.S.
03:25as the most powerful country with a lot of things that are not easily substitutable.
03:31So I mean, if you're an ally of the U.S., you can't easily substitute American military
03:36support. If you rely on the U.S. for technology, you can't substitute from the American hyperscalers
03:43you know, the Googles and the Microsofts and the Metas. So there are a lot of ways that
03:48you can't unwind your relationship with the U.S. You can't decouple, but you can de-risk.
03:55And I do think that in addition to lots of governments that will try to see if now a
04:01deal can be had, if Trump can be backed down from these enormous historic announcements
04:09that he made on April 2nd, but they also will be trying to see how they can mitigate
04:18the risks that they will face from the level of exposure that they presently have from
04:23the U.S. market, from U.S. consumer demand, from U.S. production.
04:29You speak to a whole cross-section of important operators in world capitals. From what you've
04:34gathered, how are the trade talks between India and the United States coming along and
04:38what's your impression of how Minister Goel, Prime Minister Modi and the Indian government
04:43have been trying to handle the global bully?
04:47Well, of course, in advance, they said that they were going to reduce a significant number
04:55of tariffs as a goodwill offer. There's been a lot of talk about wanting to more firmly
05:00integrate India's own military capabilities with the U.S. with more technology, more production
05:06happening in India, more willingness to purchase American weapon systems. We've seen that more
05:12broadly in the tech sector. And the relationship between Modi and Trump continues to be, I
05:18would say, one of the more positive on the global stage. But that didn't take India out
05:25of the equation in terms of additional tariffs. And I mean, every country around the world
05:30is facing this. Israel, which has got the big exception as the U.S. cut off military
05:36aid from almost every country in the world. Israel still got their support. Egypt still
05:41got their support. Israel took all of their sanctions. They zeroed their tariffs out against
05:48the United States. And the U.S. response was 17 percent.
05:52So I think what happened, Rahul, and you may remember this, when the January 6th pardons
05:59came down and Trump had talked about them for a long time, you may wonder why I'm bringing
06:04this up. It's relevant because there were lots of advisers around Trump saying, oh,
06:09well, you've got to you can't put this person, you know, with a pardon. Oh, you've got to
06:14make sure this person gets a pardon. There was enormous debate. He had originally said
06:18I, there are people that are unfairly treated, but but the violent ones, they're not going
06:24to get pardons. He got upset because all of these advisers were saying different things,
06:29getting stuck in the weeds. And he's having these internal nuanced policy debates, which
06:35he hates. So he finally puts his foot down and said, I'm just pardoning everybody. That's
06:39exactly what happened on tariffs. You know, there were all of these different advisers
06:45around him and Treasury and Commerce and USTR and the White House. And they're all making
06:50their arguments for their favorite, their most favored nation, their most favored sector,
06:55their their, you know, their pet corporations. And Trump's hearing it and hearing it. And
06:59he's not coming to agreement. And finally, he just decides, he says, that's it. I'm putting
07:03tariffs on everybody. And I want one. I want one equation. I want one formula. And that's
07:10what we're going to do. And that's what he got. And the formula, you know, he said this
07:14is reciprocal tariffs. But Rahul, I mean, I think your audience will probably be pretty
07:19shocked about this, that it's not reciprocal at all. The way they figured out the way they
07:24calculated the tariffs is they just tried to figure out, OK, what are the trade deficits
07:30that the US is running with all these different countries around the world? And we're going
07:35to look and we're going to put a tariff on that will be the equivalent of what would
07:40bring that that that that deficit into parity. And then Trump said, well, only make it half
07:47of that. That's that's how they came up with the equation. And if the US was running a
07:52trade surplus, they said, well, it'll be 10 percent then. So this there's no parity anywhere.
07:57The US is actually now putting dramatically higher tariffs on pretty much every country
08:03in the world than those countries themselves levy about the United States.
08:08But as you realize where you're in here, yes, Rahul, the irony here is that China is now
08:14in response to Trump actually moving to parity. They're moving to the reciprocity that Trump
08:20said he wanted. But the big risk with the manner in which this calculation is done is
08:26that trade generally historically is never evenly balanced. There's always some kind
08:31of a deficit one way or the other. And if you make that the yardstick that you want
08:36to balance the trade out, then if that doesn't happen, this is then a moving target from
08:4227 to 29 to 31. And how does then any company make their projections, their plans? It just
08:50creates economic tumult of a kind we haven't seen.
08:54It does. And I wish it was only the problem that you just mentioned, which is significant.
09:00But I mean, it's also some of these tariff deficits are structural. I mean, Bangladesh,
09:07you know, exports a lot of inexpensive textiles to the United States. The Bengalis don't have
09:13the money to buy American products. That's the reason there's a deficit. It's not because
09:17the tariffs are so high. It's because they're a very poor country. Lesotho, which has a
09:22GDP of two billion, the Americans just threw 50 percent tariffs on this tiny, impoverished,
09:29mountainous African nation that exports textiles to the United States. Why the hell would you
09:35do that? I mean, it literally makes no sense. And there are so many CEOs now who do global
09:43business, who source their inputs, their chemicals, their, you know, base basic commodities from
09:50all over the world. There's no way to hedge this. You know, what are you going to do?
09:55You're going to raise your prices. What are you going to do? You're going to reduce your
09:58margins. You're going to make less money. Your stock's going to go down. I mean, that's
10:03what your reaction is going to be. It's not like you can hedge away from this.
10:08Your teams are looking very closely at the possibility of Trump having increased the
10:12probability of America slipping into recession. I saw the Goldman Sachs report and others
10:17which say that the probability is almost doubled from what it was earlier. What's your assessment
10:22at the Eurasia Group about the chances of the U.S. slipping into recession and how soon
10:27do you think this may happen?
10:30So on any given year, the likelihood of the U.S. hitting recession is 10 to 15 percent,
10:35just in terms of how likely recessions are. At the beginning of this year, that was probably
10:39more like 20. Right now, you're looking more at maybe 40, 50, 60. So it's doubled to tripled
10:46and it's purely self-inflicted. The U.S. economy was very strong, low unemployment, inflation
10:52coming down, fairly substantial growth, incredible market response as a consequence of all of
10:58And in just over two months, on the basis of singular decisions by one man, President
11:05Trump, not particularly advised or constrained by his own economic team, he's made it reasonably
11:12likely the U.S. will end up in recession. That's pretty impressive for one guy. And
11:18not only that, but he's managed to be an incredible unifier, not in the United States, but he's
11:24truly unified. Mexico, 86 percent approval for the Mexican president right now. He's
11:28unified Canada. It's become the most important issue. He's unifying the Europeans. I mean,
11:33all over the world, Trump has become an incredible unifier. So, I mean, you really do have to
11:37look at just how much of a revolutionary and historic figure that Trump has managed to
11:41become for other countries.
11:43You're saying there's a 40 to 60 percent chance of America going into recession. I was speaking
11:47to a top economist at HSBC yesterday, and she said that Indian growth could slip by
11:52about half a percentage point on account of the spiral impact of these new Trump tariffs.
11:59What's your best understanding of the impact on global growth for this year? What's your
12:02forecast and what impact do you think this could have in your assessment on India's growth?
12:07Well, I mean, you keep in mind that half a point that your guest spoke to you about,
12:14that's on the back of the Trump tariffs. Then what happens when there's reciprocity? I mean,
12:19if you had that conversation yesterday, that didn't include the Chinese 34 percent. So,
12:24you know, add a few bips on that. I mean, that didn't talk about what the Europeans
12:29are going to do. Add some for that. Now, I mean, the uncertainty is whether the reciprocity
12:36will be significantly leavened by large scale deals that are cut. And the countries that
12:42are most likely to get to deals are the Mexicans, the Canadians and the Europeans, because they
12:47have so much at stake and they do have fairly robust ongoing conversations with the Americans
12:52on trade. They also have a lot of competency in those issues, but it's going to take a
12:58long time. It's not going to happen in a week. So I think it's not just a question of how
13:03big the hit will be, but a lot of that hit is going to be front loaded. So the hit's
13:07going to be massive in the next quarter. And then hopefully it'll start to reduce as you
13:14see climb downs on the back of engagement that's more constructive between the U.S.
13:20and other countries. But those will be very episodic. It won't be everybody and they won't
13:26be successful across the board. So this is, again, because you can't hedge it, the corporate
13:32earnings are going to get crushed. And this isn't just one or two sectors. It's every
13:36sector because you're talking about a trade war between the two largest economies in the
13:40world and you're talking about the largest economy unwinding its support for globalization,
13:46putting a tariff wall around the country.
13:48This idea, this reverse globalization, the idea of the world getting divided into two
13:53blocks, China and the United States with their tensions increasing. How do you see that being
14:00likely to pan out beyond just these reciprocal tariffs by China? Is the divide deepening
14:05as a result of this more structurally and fundamentally, or is China also responding
14:09more tactically to what's happening in the horizon right now?
14:14There are opportunities for China long term. As the Americans shut down USAID, the Chinese
14:21were already dominant across many countries in the global south in terms of trade. This
14:25is a big opportunity. The U.S. pulls out of the World Health Organization. The Chinese
14:29become dominant. The U.S. pulls out of Paris Climate Accord and puts cabinet officials
14:35in charge of energy that are climate deniers. And, you know, China then becomes the dominant
14:40voice at the COP summits going forward on energy transition. So, I do think there is
14:45a long term strategic play for China that will improve their diplomatic influence around
14:53the world. I think it also makes a fight over Taiwan more likely. The Taiwanese got major
14:59tariffs on that list of countries. I'm sure they weren't paying attention to that among
15:04the U.S. economic advisors. Almost as high as China. Taiwan is feeling under the gun
15:10from the Americans, not just from mainland China. And that's an opportunity for China
15:14to test how much the Americans care about Taiwan going forward. So, all of these things
15:20are big problems. But long term, you know, about it was in 2012 when I talked about the
15:27world heading towards a G0, not a G7, not a G20, but an absence of global leadership
15:33that the Americans were increasingly abdicating their leadership of U.S. led multilateral
15:39institutions and no other country or group of countries were capable or willing to really
15:46take the place of the U.S. China is absolutely interested in profiting from America's absence,
15:54but they're not prepared to lead globally. They have too many problems themselves. They
15:58have their economy is doing very badly. Their own consumption is very poor and they need
16:04to focus more inward on manufacturing, on supply chain, on consumer trust, on avoiding
16:10bankruptcies across all of their provinces. The Europeans don't have a growth model, don't
16:15have a technology model. India is doing incredibly well, but it's still very far from global
16:20leadership. So, for the next five, 10 years, I think embracing this G0, this geopolitical
16:27recession that we have all entered, that's what the world is going to look like. And
16:31that is a very expensive world. It's an inefficient world. It has a lot of volatility. It has
16:38a lot of conflict.
16:39There's a lot of conversation in India about whether this can be an opportunity for India
16:44to leverage. Do you have thoughts for Indian policymakers and those watching about how
16:48India could turn this trade crisis into an opportunity to benefit in the medium to long
16:53run?
16:56This isn't good news for India, Rahul. I mean, you're losing growth. You're getting
17:02squeezed by the Americans who you need to be partnering with. It's a cost. And at a
17:09time that India is trying to globalize, trying to open up more to the world, India is trying
17:15to be engaged and be supported by more efficiency. You know, some of the best entrepreneurs in
17:21the world are Indians that have left the country and made success in the United States. And
17:27they've, as a consequence, been able to show the world what Indian talent brings to the
17:30table. All of those things are going to be under threat. Now, I do think that it'll be
17:36easier for India to keep a lot of its own top talent. And that's a positive. And a lot
17:44of people will see India as a comparatively good and stable governance model. That's a
17:50positive, too. But overall, India doesn't benefit from any of the trends that we're
17:57seeing right now. This is bad news for your country.
18:00What's your reading of the current dynamic between the United States's president and
18:06Russia's President Putin? We're seeing Donald Trump talk about wanting to enforce some kind
18:12of ceasefire, some kind of peace. How do you see that pan out beyond what we already know
18:17in the public domain?
18:19What we know is that Trump is very interested in having a rapprochement with Russia and
18:26with Putin specifically. And he's not coordinating that with the Europeans at all. He's been
18:33willing to talk about many issues with the Russians, including coordinating in the Arctic,
18:38coordinating in the Middle East, starting arms control talks again, all of that. But
18:43he wants a ceasefire. He wants a ceasefire in Ukraine. And the Russians have heretofore
18:50been unwilling to give him one. And I don't think that Trump is going to be willing to
18:58full on embrace a new a new reset with the Russians the way that, you know, Obama did
19:06in the past and others, unless the fighting in Ukraine stops. And so Putin has a decision
19:14to make. He's got a big long term opportunity with the United States. He can undermine the
19:19EU. He can divide and fragment the Europeans. But to do that, he's going to have to give
19:25up on fighting in a country that he's been trying to take over really since the Soviet
19:32Union collapse.
19:33So what's your reading of Putin's mind at this moment?
19:38I think that he has believed that he can string Trump along because Trump has been giving
19:44his, you know, he's got carrots and sticks, but the sticks have all been used against
19:48the Ukrainians. You know, the suspension of intelligence, the suspension of military support,
19:54while the carrots have all been used with Putin. And I think Putin wants to see if he
20:00can if he can keep that going, extend and pretend. I think that's the strategy. And
20:05Trump is starting to get a little angry. Right. Trump is now saying, well, you know, if the
20:09Russians are losing patience, I'm going to put sanctions against against all Russian
20:14oil export, which would hit China, would hit India pretty badly because, you know, so much
20:19low cost Russian oil goes directly to India more than goes to China, actually. So, I mean,
20:26Putin has to figure out if Trump is serious. And, you know, there have been in the last
20:3324 hours, there have been a number of Trump advisers that have recommended that Trump
20:38not do another phone call with Putin until a ceasefire is in place. Now, is Trump going
20:43to listen to those advisers? We'll see. We'll see. I mean, I fear and I hate to say this
20:49because it's embarrassing as an American, but I do fear that part of the reason Trump
20:55is interested in doing a deal with Putin is because he thinks that he and his family
21:01will benefit financially from such a deal. I mean, we've seen that with the Saudis historically,
21:07of course, and that that that was a big piece of why Trump goes first to Saudi Arabia in
21:13his first presidency is going to go first to Saudi Arabia in his second presidency.
21:17And back in the Riyadh meetings between the U.S. and Russia, there were three members
21:22of the Russian high level delegation, two cabinet members, and then one business adviser,
21:27Putin. You say, why was he there? Well, because he would he bought an apartment from Trump
21:32for tens of millions of dollars, far more than it was actually worth market value. And,
21:37you know, that's a pretty strong message that the cash register is open if if a deal is
21:43done. And and, you know, one of the things we know about Trump is that he's very transactional.
21:49If you if you pay him, if you give money to his campaign, if you support his cryptocurrency,
21:55if you help his family, that he will do things directly for you using policy. And in that
22:00regard, the American president puts himself before the American people, which is something
22:06no president should ever do. But that is where we are right now.
22:09Let's extend the let's extend to the maximum possible the limits of your knowledge. And
22:16on the basis of what you know, Mr. Bremer, what follows Trump? I mean, there's still,
22:21you know, three and a half years of Trump to go. Will we look then at, say, four years
22:27of Trump light or Trump on steroids like once? Or do you think the Democrats can actually
22:33come back? The question I'm asking essentially is, are these temporary changes or is America
22:39in the way that it was in the eyes of the world changing forever?
22:43I don't think India is actually ready for the answer to that question. I mean, you look
22:48at how extraordinary the changes have been in the U.S. and in the world in in just over
22:55two months since Trump has been inaugurated. And now you're trying to think about what
23:00comes after four years. You're not ready about what comes in another another two months.
23:03Right. I mean, you think about the instability. You think about whether rule of law is going
23:09to continue to hold in the United States. You think about whether there's still going
23:12to be NATO and a transatlantic relationship in four years time. I mean, these are these
23:17are huge questions that are much bigger, frankly, much more consequential than what comes in
23:23twenty twenty nine in the United States. Well, it's an absolutely uncertain world, and I'm
23:31quite shocked how prescient your title G-Zero turned out to be, because when you thought
23:37of it, you know, there was no Trump on the horizon at that time and the order wasn't
23:41disintegrated in the way that it is. What's, before I end, your suggestion to Indian government
23:48policymakers and those watching about how India should try and navigate the current
23:54choppy waters? Well, this is a time not for leadership, but for defense. You know, you're
24:01trying to understand in very choppy waters, you know, what do you need to save? What are
24:07the things that are utterly critical? That means vigilance. It's very tiring. It's not
24:13fun. It means knowing what territory you need to concede. It means staying out of the headlines.
24:19This would not be a good time to try to do like a big trip to go see Trump in the White
24:24House or do a rally or something like that. And it means understanding what your core
24:28values and national interests are and making sure that you are firm and resolute in your
24:35support for them, both privately and publicly. That's again, that's not it's not the kind
24:40of advice that people want to hear. It's like eat your vegetables kind of advice. But but
24:47for a country with an awful lot of vegetarians, maybe it's it's one you guys are particularly
24:52well suited to to listen to. Interestingly put, it's a time for defense. It's not a time
24:57for attack or for leadership. You know, Team Trump has been talking about taking over Greenland
25:03again and again. The vice president was there. How do you see that actually play out? Because
25:08that if that happens, it creates a real door for Xi Jinping to make a march in Taiwan.
25:13Yeah, it's a it's a non-issue. It's an embarrassment for Trump. It's led to a unity
25:20among Greenlanders that they are slow walking their own independence referendum. And they
25:26certainly don't want to join the United States. It has led to a rapprochement, a warm greeting
25:33of the Greenland premier with the Danish prime minister just in the last 48 hours.
25:39The Danish PM and her government have been well advised to not make too much out of this and allow
25:46the United States to to cause their own problems and help resolve it on the ground. And that is
25:54what is happening. And you saw that Vance and his wife had to cancel much of their own expected
26:00itinerary because no one in Greenland wanted to visit them, wanted to see them. That's I mean,
26:06for a strong ally of the United States, historically, it was a small but quite
26:12profound embarrassment, sort of a slap in the face to the US president and his administration.
26:18Mr. Bremer, for taking your time early this morning and for joining us.
26:22Thank you very much. Always fascinating to hear your insights. Thank you, sir.