00:00Let's talk now to Paolo Nogueira Batista, Jr., who's former executive director of the International Monetary Fund.
00:06Good to see you again, Paolo. Welcome back to the program.
00:09So, clearly there is some last-minute negotiations going on,
00:13but tariffs for countries that don't have a deal with the United States due to kick in from tomorrow, August 1st.
00:19This is a real moment of uncertainty, isn't it? What could this mean for global trade?
00:23Well, global trade is being disrupted as never before, at least in my lifetime, by the actions of the United States.
00:35The United States is increasing average tariffs considerably.
00:41At the same time, there's no clear prospect of what the tariff levels will be,
00:46because the stance of the U.S. president changes all the time.
00:50It's either up or down. You don't know where he actually is heading to.
00:56But the fact is that trade is already being hurt, because of the uncertainty,
01:02and also because tariffs have indeed risen relatively to what they were before Donald Trump came in.
01:09So, this is a disruption of international trade.
01:12Countries all over the world are being affected.
01:14Even countries like Brazil, that were in the first phase, not very much seen as a target,
01:22have now become, in recent weeks, a major target of the U.S. administration.
01:28And the reasons are quite complicated to understand.
01:32Well, I want to ask you specifically about Brazil, which doesn't have a deal.
01:36So, 50% tariffs will be taking place on imports there.
01:40What does that mean for Brazilian exporters, do you think?
01:43Well, the U.S. is an important market.
01:46It's the second largest economy in the world after China, the second largest trading country after China,
01:53and Brazil exports considerably to the United States.
01:56Now, the confusion is very big, because yesterday, the U.S. government announced that the 50% tariff
02:02will not apply to all Brazilian exports to the U.S.
02:05There are a great number of exemptions, including airplanes, orange juice, and a number of others.
02:15So, the calculations that have been circulating since yesterday are that about half of Brazilian exports
02:21to the United States will be affected by the tariff level of 50%.
02:26Now, who knows what's going to happen?
02:28It was supposed to kick in August 1st, tomorrow, but now it has been delayed in the case of Brazil to August 6th,
02:35apparently because some sectors in the U.S. itself are protesting, are pressuring the government
02:41to not apply so high levels of tariffs to imports that they need for their consumers, for their enterprises.
02:48So, some countries are still working towards a deal.
02:53What about those countries that are still trying to come to an arrangement?
02:56What leverage do they have, if any?
03:00Well, if you look at the deal that was announced with the European Union,
03:04it's very unfavorable to the Europeans, so far as I can perceive.
03:09Tariffs will rise in the U.S. and will remain low in the European Union.
03:13So, the European Union apparently has a fiasco on its hands in terms of negotiations with the U.S.
03:21Now, other countries have been more firm.
03:24China has been, in my opinion, an example of how to respond to a bully like that, like Donald Trump.
03:32You have to be firm and to exert pressure and to act in a counter, in a retaliatory manner, if necessary.
03:41Whether the Brazilian government will do that or not is still open to question.
03:45President Lula has announced that he will apply retaliation measures, if necessary.
03:51And I think, you know, so many countries around the world have been affected by these drastic tariff moves or threats,
03:59that I think there should be more understanding among the countries as to how to respond to the U.S.
04:05I think the best way is the Chinese approach, to be surgical, you know, target specific sectors that can arm the United States
04:16and that are not costly for the country.
04:20This is, I think, the best approach to follow instead of relying on average tariffs, as the U.S. has been doing.
04:26Thank you so much for coming on the programme and for joining us today.
04:30That's Paolo Nogueira Batista, Jr., the former executive director of the International Monetary Fund.
Comments