- 9 months ago
John Denton, Secretary General of the International Chamber of Commerce, joined Brittany Lewis on "Forbes Newsroom" to discuss the recent legal actions surrounding President Donald Trump’s tariffs and what it means for the international business community.
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00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes.
00:07Joining me now is John Denton, Secretary General of the International Chamber of Commerce.
00:12Secretary General, thank you so much for joining me.
00:14It's great to be with you and thank you on Friday afternoon.
00:17I know it is great to be with you, especially after this whirlwind week regarding tariffs.
00:23So I want to get into it. I want to get into where we are right now, because as we've seen in the past 48 hours,
00:29that could really change. So the U.S. Court of International Trade ruled against President Trump's tariffs on dozens of countries,
00:36saying he exceeded his authority by imposing them. Less than 24 hours later, a federal appeals court ruled the tariffs can stay in effect for now.
00:43So to start off the conversation, what do you make of this legal back and forth regarding the tariffs?
00:49Well, I mean, first of all, it's a challenging legal situation for, I think, the administration to be in,
00:56because I don't think this is where they planned to be.
00:58I think they saw that the reliance on the Emergency Act was actually going to provide them with quite a broad range
01:05and quite a wide set of opportunities in terms of pursuing their agenda.
01:09But clearly, that's been challenged now.
01:12But also, you know, what people thought was written ink is now kind of written pencil.
01:16So that's a complication.
01:17All that being said, and in a way, the legal to and fro could be interesting.
01:22But the reality for business is that all it does is really continue the uncertainty, and in many respects,
01:28multiplies the uncertainty, because now it's unclear what will be the next move outside the legal process.
01:37I know and I've seen that the Office of the President is talking about alternate strategies,
01:43but they're still confident, I think, that if they hear of the matter that was determined against them
01:50in the Court of International Trade taken all the way through the appeal process,
01:54they may still succeed there, because ultimately, you know, what will the Supreme Court decide
01:58if that's where it gets to on the nature and extent of presidential powers?
02:02But as I said, that's kind of a legal, interesting legal issue for people to ponder about.
02:06But as a business person, am I any clearer today about what the environment is in which I'm operating?
02:12If I'm in the U.S. or if I'm in a country seeking to export to the U.S.
02:17or thinking about investment in the U.S.?
02:20No, in fact, my situation is not any better.
02:24Yeah, arguably, there are more questions.
02:26So I'm curious what those questions really are for the international business community,
02:31in your opinion, because there was already plenty of uncertainty.
02:36Now there's even more because, as we know right now, the tariffs are back in effect until at least June 9th.
02:44Let's say this goes to the Supreme Court and the ruling holds that the tariffs are unlawful.
02:48The Trump administration will have to pay back those duties that anyone has paid.
02:52But other than that, I mean, how does the international business community deal with this?
02:56What are the big questions they have?
02:58Well, there's a couple of things.
02:59First of all, with all due respect to the legal process, the president is actually very clear,
03:05as is this administration, that they see the imposition of tariffs as critical
03:11to the long-term strategy they have for rebalancing the U.S. economy.
03:16So I'm not convinced that this one issue, the way it's been handled at one court of first instance,
03:25even though it was obviously three judges there, is actually going to thwart the direction of travel,
03:31which is actually what policies do we need to put in place to enable a rebalancing of the U.S. economy
03:38much more, to a much stronger manufacturing base.
03:41I mean, that's it.
03:42And also, nothing I've seen would say the administration is taking one step back
03:48from engaging in, I suppose, pursuit of how can the U.S. ensure its economic supremacy in the 21st century.
03:56I mean, these are all legitimate policy aims.
03:58These are all, I suppose, the mandate upon which the president was elected.
04:05So I understand that.
04:06But what it means for business is not to just observe all that, is how do we respond?
04:12Because now we just don't know.
04:15We know that's the direction of travel, but we don't know the mechanism that will be used.
04:20We don't know if they're going to seek to apply different forms of negotiating leverage
04:27in order to achieve an outcome.
04:29We don't know if the baseline 10% can actually be held on to.
04:35We don't know, for example, if you were the U.K. government and you signed that arrangement,
04:39which actually had the 10% in there, that might almost be like vanishing now.
04:45They will disappear.
04:47How do we make a decision about the nature and the extent of goods that we actually need to
04:52stockpile in order to prepare ourselves to actually engage in supply chains which touch the U.S.?
04:58So all these elements are uncertain.
05:00So what we're trying to do with the business community is find those points of certainty.
05:04I think the direction of travel is very clear from the president.
05:07But I think we then have to look at the reality that the U.S. only accounts for 13% of global trade.
05:15What that says, Brittany, is that 87% of the rest of global trade is actually governed by governments
05:22that actually want to continue with an effective and functioning rules-based multilateral trading system.
05:29So our job is to recognize that reality and continue to see how we can make that work
05:36and to stop a global trade war because that would be devastating.
05:38And what that reality just sounded like to me is, hey, the U.S. economy, it's the biggest economy,
05:44but it's only a sliver.
05:46I mean, are you saying then that international business community is almost going to push
05:52the United States aside and all work together without them?
05:55No, what we're saying is that we actually want a system that operates.
05:59We would be delighted if the U.S. administration worked with us to ensure that system also reflected
06:06what they needed.
06:07And the U.S. administration has legitimate gripes and complaints about the way the system
06:13currently operates.
06:14And we are working to actually revitalize that system to make it relevant.
06:20But that's the U.S. administration.
06:22The fact is, U.S. business also wants to participate in a global trading system.
06:28They actually also have an interest.
06:29They have subsidiaries in Indonesia.
06:31They have partnerships in Zambia.
06:34All around the world.
06:34They don't want those economies to crater.
06:37They also want those subsidiaries and partnerships and joint ventures and investments to be successful.
06:42So it's important for them that the system continues to function to enable the economies in which
06:47those entities in which they're invested can actually continue to prosper.
06:50What we've got is not any attempt by the global business community to do anything other than seek to engage with the U.S. administration
07:00to understand better how we can revitalize the system to align with interests.
07:05But at this point in time, we just need to keep the system functioning.
07:10So stabilizing the system is really important and also stopping the threat of a global trade war.
07:17The reality is that the U.S. on its own can't actually, at 13 percent, create a global trade war.
07:24That'll only happen if everyone retaliates.
07:26Well, what we're saying and what we're urging is do not retaliate.
07:30Do what the Australians have done and said we will not retaliate.
07:33Do what the Brits have done and said we will not retaliate.
07:35But ASEAN countries have said they won't retaliate.
07:38So we've got to a point now where we think we can avoid the risk of a global trade war.
07:44There's certainly going to be interruptions.
07:45But a global trade war would have been devastating and knocked GDP growth out of the park in terms of a negative.
07:53And if I was a business leader, what I would be doing is, as you said, in this time of uncertainty,
07:58and clearly these legal battles have added another layer to that uncertainty, I'd be looking for the points of certainty.
08:05As you said, I would also have my eye on the potential negotiations here.
08:09And after the court ruled that the tariffs were unlawful and before the appeals court struck down that ruling,
08:15the National Economic Council director, Kevin Hassett, said this,
08:19that the administration is on the cusp of three trade deals and many more are on the way.
08:24I mean, what do you make of that?
08:25Well, two things.
08:28First of all, just on the issue of what I'd be doing is business looking for certainty.
08:32But I would also be pulling back from any big decisions on capital allocation.
08:38There is actually, we would call it a tax on uncertainty because what's happening is people are slowing down decision making,
08:45which will actually slow down economic growth.
08:47With respect to the negotiating consequences that flow from the decision by the court of international trade,
08:54well, clearly it changes some of the leverage, doesn't it?
08:57I mean, it's just...
08:59I was going to say, I was going to ask that.
09:01I mean, if I'm another country and I hear that two federal courts in the span of less than 24 hours said,
09:07hey, the tariffs are unlawful, suddenly I feel like I have a little more leverage,
09:10a little more negotiating power, no?
09:13Yeah, well, that's right.
09:14But the reality is also, I think you're seeing this in statements by the European Union and others.
09:19Look, people want to have a good relationship and a productive relationship with the U.S.
09:25They're not going to play silly games around this.
09:28They know that in the end, they'll need to enter into some form of arrangement,
09:32whether it's a full agreement, a bonding agreement.
09:35But the thing that everything's changed a little bit, and I think that's what we're going to see again.
09:39But I wouldn't bank for my full negotiating position on the first decisions we've seen.
09:46There's a whole process to be gone through.
09:47And as I said, the administration is perfectly within its rights to try to seek to achieve their aims by alternate methods,
09:54and they'll continue to do that.
09:56So I'd be very careful about the whole process of using that additional leverage,
10:01other than actually realizing that you have it.
10:04And that gives you some power in negotiations as well.
10:06You posted something on X back in April regarding the impact of global tariffs,
10:11and I would love to talk about it now.
10:12You posted this, quote,
10:14Businesses need practical, forward-looking solutions to rebuild trust and stability in global trade.
10:19If the tariffs are ultimately struck down, would that rebuild trust and stability?
10:23What does that look like?
10:25There's an opportunity.
10:26As I said, the reality here is the U.S., even though it makes up only 13% of global trade,
10:32is the greatest economy in the world.
10:34Everybody wants to deal with the U.S. to the extent they can.
10:38So it's in the interest of parties to find the basis for trust.
10:42And the basis for trust is really about economic growth,
10:45because we all know that economic growth feeds and fuels opportunity for cities, families, businesses, all over the place.
10:55So there is common cause here.
10:57The question is, can we take that common cause and build it out to actually enable a system that can operate to the interests of the U.S. and the global world?
11:07We already have a system that does that.
11:09The reality is that system is actually not as relevant as it must be for the 21st century.
11:15It needs to be revitalized.
11:17It's in everyone's interest to revitalize the multilateral trading system.
11:22For heaven's sake, it's that trading system that's allowed so many people globally to come out of poverty.
11:28I mean, you know, with the challenges to development systems, a double whammy with an erosion of the system will have a devastating effect in developing emerging economies in Africa, Latin America and Asia.
11:42I want to get your reaction to something that President Trump was asked earlier this week,
11:51because apparently, reportedly, Wall Street analysts are calling his chaotic, his on-again, off-again tariff policies taco trade, meaning Trump always chickens out.
12:03Is that how the international business community views him?
12:06Because we saw this last week with the EU.
12:08He threatens 50 percent tariffs on the EU.
12:10A few days later, he walks that back.
12:13He takes that down.
12:14Does the international business community think that he's constantly turning this off, turning this on and chickening out?
12:22Well, look, let me be very clear.
12:24I mean, we respect enormously the elected president of the United States of America.
12:29That office is one which we admire, respect and have confidence in.
12:34And, of course, the president is Donald Trump.
12:37So, you know, as night follows day, we respect the president.
12:41The reality is that the way in which he is approaching this process to seek leverage for the U.S.
12:48is causing a lot of the confusion and uncertainty.
12:51Now, is that the intent or is the intent simply for leverage for negotiation?
12:56I don't think the intent is to stymie and limit economic growth globally or even for the U.S.
13:02We've already seen some of the numbers come off in the U.S.
13:05So we really need to understand better what the framework is that will ultimately emerge here.
13:11What the rest of the world is really saying is that they want to engage with the U.S., but they also want to engage on a rules-based nature with the U.S., not a power-based nature with the U.S.
13:23And they want agreements they reach to be enforceable.
13:27I'm curious, as someone who has such a network with the international business community, what do you think is missing from the conversation when it comes to tariffs, when it comes to these legal challenges facing them, when it comes to the trade negotiations?
13:41I mean, what do you think is really missing, especially from the American perspective?
13:47Well, I mean, what's missing here is an understanding that the unintended consequences of the approach that's being taken is to hurt families.
13:59People do not know in their local communities and in the businesses which are part of those communities and those businesses that are part of broader economies, supply chains, what is going to happen next.
14:12So that makes it very difficult for them to act with certainty.
14:15And, of course, that delays thing, as I said before, that is a drag on growth.
14:19It's stopping people filling positions.
14:22It's actually forcing people into stress and anxiety.
14:26That's what's missing from this equation.
14:28It's the human context.
14:31It's the human implications.
14:33And I genuinely believe that it's better understood that the global business community, the business community in the United States, the business community in Zambia, the business community in Argentina, they simply want to get on, build better businesses, create prosperity, and allow the families that they support to prosper.
14:53That is a really important dimension here.
14:54It's almost too abstract.
14:56It's almost always about negotiating positions.
14:59There are real people involved and real people in the real economy are getting really hurt.
15:04And to that point, I cover politics.
15:07And a lot of the conversations I have regarding President Trump's policies, not just when it comes to trade, when it comes to other things, too, is this phrase, unintended consequences of this happens because of X, Y happens.
15:21And that's not even what was supposed to happen here.
15:24So what do you think is the biggest unintended consequence here, A?
15:28And B, from what you're saying, it sounds like the international business community really feels like they're almost stuck in the mud here trying to figure out what's President Trump's next move, when they can make their next move.
15:40When do you think that they can just get on with it and make their next move?
15:45Oh, I think when there's greater clarity.
15:48I mean, I think everyone was hoping there's a G7 finance ministers meeting coming up presently.
15:53I think everyone was hoping there would be a lot more clarity that would emerge from the U.S. position.
15:58I think Secretary Besson has made an incredibly effective interlocutor in the global business community about the intentions here.
16:06So we're looking for those sort of signals with a kind of to and fro around the judicial process here and the legal underpinnings.
16:13They'll probably be harder to deliver in Canada at the G7 meeting.
16:18We would hope that by the time we get to the G20 meeting at the end of the year, there's a lot more clarity here.
16:26But, you know, nothing is in a way taken for granted.
16:31I mean, just when you think you have all the answers, a different set of questions are emerging.
16:35And it's really straining business.
16:37Even the largest businesses that are able to have war rooms, do scenario planning, they actually would admit that they themselves did not imagine the consequences that they're seeing now.
16:48Think about small businesses.
16:50They don't have those resources.
16:51They just want to know for the next six months what they can do.
16:56So then to that point, what is your biggest question that you have right now?
16:59Oh, well, frankly, from our perspective is when will the U.S. and on what terms will the U.S. be able to participate in a revitalization of the multilateral trading system?
17:12Because that recognition that the system and the parties that actually operate it, businesses want that to happen, would be very valuable for us.
17:21We would like the willing participation of the U.S. in ensuring that a rules-based multilateral system, which enables trade to take place with certainty across borders and increase economic opportunity and development, absolutely happens.
17:37And between now and then, I mean, what signals are you looking out for to see if the United States is moving in that direction?
17:44Well, I think that we're seeing a continued commitment by the president and the administration to try to find the leaders for economic growth and opportunity for the U.S.
17:55And I think that there's a legitimate position that is held that if the U.S. grows, then the global economy will grow.
18:02But that alignment is not taking place at the moment.
18:05The U.S. economy is not growing at the pace of what people would like.
18:08If the U.S. economy becomes less engaged or connected to the global economy, then it won't have the positive impact.
18:15So we would like to see that kind of holistic view about the growth of the U.S. economy driving and supporting the growth of the rest of the global economy become integral to the discussions and the statements made by the administration.
18:29Secretary General, I appreciate your insights today.
18:33And as we see more movement when it comes to tariffs, when it comes to global trade, which honestly, the updates seem to be coming in by the minutes these days, I hope you come back on and break them down with me.
18:43Thank you so much for your time today.
18:45You're welcome back anytime.
18:47Thanks for your time.
18:48Great to meet you.
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