00:00financial market disruptions could we expect in other countries such as the UK?
00:04Undoubtedly for Canada and Mexico this is not a light matter. They are the most deeply implicated
00:10and in terms of a side you know China is also almost equally deeply implicated but China is a
00:16much bigger economy but Canada and Mexico in terms of their relative importance of the trade to the
00:23United States it's much higher for them so they're going to have a nasty shock they may suffer a
00:27recession but the point is that discussions are underway and I'm paying more attention to Canada
00:33than Mexico but I have no doubt similar discussions are taking place in Mexico about essentially using
00:39this moment not to just respond to an emergency but to conduct a transformation of Canada's
00:47relations with the rest of the world economy and I think that this transformation is already
00:52occurring like I say within Canada important changes are occurring so that's why I say that
00:57the broader implications will be much more for the US and they will be much more adverse than
01:06Trump imagines and I also suspect that as a result I think Trump's course in this trade war
01:13is going to be anything but straight. I think he's going to have to do some pretty fancy footwork
01:18to avoid the worst results of what he's proposing and you asked what would be the some of the
01:25implications for I think US financial markets and so on I would say that it is very likely
01:31that financial markets are not going to like this there may be direct impacts on falls in the stock
01:38markets as indeed we saw last week already and that is not going to be liked by the enormous
01:45by the small number of people who hold so much political power in the United States whose wealth
01:51rests on these markets being up and the second reason that markets are not going to like it is
01:57that invariably contrary to what Trump says the cost of these tariffs will be borne by American
02:04consumers this will lead to inflation going up this will prevent the Federal Reserve from lowering
02:11interest rates and unless the Federal Reserve is able to lower interest rates the wealth of the
02:17really wealthy in the United States which rests on borrowing cheaply from banks in order to engage
02:26in leverage trading of vast quantities of money in various asset markets this wealth will eventually
02:33diminish and you may even see potentially a financial market crash if the Federal Reserve
02:38is not able to contain inflation and not able to decrease interest rates.
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