299. Trump’s new tariffs - can anyone win a trade war?
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How did the US announce its new tariffs and who is affected?
Trade tariffs are back with a vengeance. Trump's told 60 countries they'll face new tariffs of at least 10%, including the UK. So how's he getting away with it, given the Supreme Court ruled that the last lot were unlawful? Well, we have self-titled trade nerd, Samaya Cain's with us. She's an economist who's co-authored the book, How to Win a Trade War. We're going to be asking that. Plus, are trade wars always bad? Are we ever going to get back to free trade? And how worried should we be here? We're proud to say that the rest is money is powered by Octopus Energy this year. And Greg Jackson, the founder and CEO, is with us. Greg, I wanted to ask you about heat pumps. Octopus Energy now make them. Why not just import them from China?
You know what? We want to make heat pumps that work. that are designed for British homes and that are cheaper to run, cheaper to install, and actually cheaper for the hardware. And that's what we did. So, for example, octopus-created heat pumps that run at up to 70 degrees C, as hot as a gas boiler, so you don't necessarily need to worry about having excess insulation and changing your heating system. That sort of thing makes them much cheaper for British homes.
Nice one, Greg. Thanks for explaining that. Right, we're going to go to the episode.
Hello and welcome to The Rest Is Money with me, Steph McGovern.
And with me, Robert Perston. And we're delighted to be joined by Samir Keynes, who writes about economics and trade for the Financial Times. And I'm just going to get the one thing that had been bothering me when I first came across Samir off my chest, which is I wasn't sure whether her name Keynes was a question of sort of what they call nominative determinism. But actually, it turns out she is related to the world's greatest ever economist, Maynard Keynes.
You're right. The great, great niece. There we have it. So a woman who knows what she's talking about. Here's our interview with Samaya Keynes. Samir, lovely to have you on the show. A very timely chat. I know you've got a book which is all about trade and we're going to come to that. But I mean, this is the perfect time to talk to you because Trump has announced a new set of trade tariffs, trying to circumvent, you know, the Supreme Court's ruling about his previous trade tariffs being illegal. Do you want to just bring us up to speed to me and tell us, you know, what's happened? What's going on? How's he doing it?
Yeah, so the Trump administration really wants to apply broad tariffs on pretty much all imports. And back in February, the Supreme Court said, no, we don't agree with the way that you've justified that legally. And so this is the Trump administration having another go. And so the justification was that there were countries out there that weren't trying hard enough to stop imports made with forced labor. Right? So suddenly, the United States Trade Representative have become softies, die-hard lefties, trying to protect workers' rights around the world. And that, after an investigation, has justified these new tariffs, which look pretty similar to the ones that they replaced, at least in terms of the baseline.
So what we've got is we've got a broad tariff of between 10% and 12.5% on around 60 trading partners. There are hundreds of pages of details of how these are actually going to be implemented because there are a bunch of exemptions. There's a slight difference in the way that the UK's tariffs are going to be applied from the way that the EU's tariffs are going to be applied. But the headline is... The baseline tariff of around 10% to 12.5% is there. And now people are going to be looking at that and thinking, oh, well, can we challenge that?
So I'm going to ask you, it's obviously early days, but do we think these will turn out to be more legally robust?
Yeah, so this is a disputed topic. There are lawyers that are very confident either way. I suspect they're going to be more legally robust than the old kind. But if you look at the details of the investigation, you know, there are some questions, right?
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