US president Donald Trump unveils extensive 'reciprocal' import tariffs

CGTN Europe

CGTN Europe spoke to Karl Falkenberg, former top trade and environment official at the European Commission.

Transcript

00:00Talk now to Karl Falkenberg, a former EU Deputy Director General for Trade.

00:05Karl, welcome, good to see you.

00:07Look, you're a seasoned observer, a veteran observer of international trade.

00:11First, your reaction to Liberation Day?

00:18Well, one has to have a lot of fantasy to call this liberalization.

00:23It's a complete breach of a negotiated multilateral trading system

00:29that we have been enjoying for the last 30 years.

00:34And it's going to be very, very disruptive.

00:37So I would call it a disruption date, perhaps, but definitely not liberalization.

00:43Do you think this is it, or is everything negotiable?

00:46I mean, we've got a few days before this kicks in on its hard deadline.

00:52Is this the end of the story?

00:56No, I don't think it's the end of the story.

00:58It's the beginning.

01:02I think what we will see is two things.

01:07Either an effective negotiation taking place,

01:12but that would have to be in the direction of reducing, if not eliminating,

01:18what has just been announced in the White House.

01:22And I consider that to be rather unlikely.

01:25The alternative would be that those countries that are targeted by these increases in tariffs,

01:35by the way, the calculation is a voodoo calculation at best,

01:40but those countries will try to withdraw similar concessions

01:47to rebalance the trade relationship with the United States.

01:53And that could then prove to be the beginning of an effective negotiation.

02:03Well, Leo, I don't want to disturb the dog barking in the background,

02:05but let me ask you about what you call the voodoo calculation.

02:09I mean, the president's supporters might well say that he's right.

02:12Who knows?

02:12The International Committee has obviously fainted in an attack of the vapors today

02:17on news of the tariffs.

02:19But Trump might well on this make America great again.

02:22Who knows?

02:23He might be right.

02:25Well, I was talking about the calculation.

02:29The calculation to take a trade deficit and divide it by total trade for countries

02:38is anything but an indication of tariffs applied by those countries,

02:46which the United States now claim to be reciprocating.

02:51That's why I said the calculation is voodoo calculation.

02:57So many other elements come into play to find out

03:02why a specific relationship is in deficit or in surplus.

03:11Will this in the end pay out for the United States?

03:15I think the vast majority would disagree.

03:18I think economically, it is clear that it will have an inflationary push.

03:24I think the expectation that suddenly the means would be there for the United States

03:30to completely reindustrialize within any reasonable period of time

03:36to counter that inflationary pressure is not very realistic.

03:41And I think it's also not realistic to expect that the countries concerned by

03:45these targeted tariffs would simply sit there

03:49and accept that their trade with the United States is totally disrupted.

03:55Obviously, frantic tariff avoidance diplomacy is now presumably underway.

04:00I wonder how it compares to the trade negotiations

04:05and trade discussions of your time in office.

04:08I think we've had, we've always had discussions with the larger trading partners.

04:16And the history of the trade relation with the US has been,

04:21has always been a difficult relationship.

04:25But at the end, we have found solutions that both sides found useful.

04:36Here, we have a situation where everything that has been negotiated between us

04:41in the last 30, 40 years is kind of rejected as something completely unfair.

04:51And so it is a very, very different type of negotiation, I guess.

04:57It is a very difficult start for a negotiation.

05:02Difficult start for a negotiation.

05:05And I think, I fear that we will see withdrawal of equivalent concessions

05:13before a real negotiation may begin.

05:17Karl, good to see you.

05:18Thank you for that.

05:18Karl Fulkenberg, the former EU Deputy Director General for Trade.

05:23You're welcome.

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