- 5 months ago
- #woosays
The Trade Armistice Illusion: In this episode of #WooSays Professor Emeritus Datuk Woo Wing Thye and Melisa Idris unpack why the deals on tariffs globally might seem like a breakthrough, but it’s more of a temporary timeout than lasting peace. They explore what’s driving the truce, what’s still simmering beneath the surface, and why this moment in history could mark the start of a new trade order.
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00:00hello folks welcome to another episode of wu says this is where we get real about the us china and
00:17everywhere and everything in between it's two superpowers one global story now trump's sweeping
00:25new tariffs are now in effect and the overall average tariff rate for the us is now at its
00:32highest in almost a century so how should we understand the scale and significance of this
00:40i'm lisa idris and joining me to unpack all of this is professor wu winter who has been studying
00:46u.s china relations long before tariffs became headline news so prof woo talk to me a little
00:53bit about this the financial times um called it the dawn of a new trade order and the end of an old
01:02one and i'm quite curious to know what you think of that do you agree with that is this is this an
01:07important turning point for the uh for global trade for the global economy it could be it is definitely
01:15a turning point in the global economy it will mean there's no more free trade with the united states
01:23the important question is would there be continued free trade among the other countries in other
01:32words if the united states imposes such a con insist on collecting tariffs on goods entering the the
01:42country the the important question is how should the other countries operate trade among themselves yes it
01:52could either be a bifurcated world in other words dealing the u.s you pay tariff trading among
02:00ourselves it is the wto system or is it likely that we will just start putting tariffs on each other
02:09and it is the second then it is not only the beginning of a new world order it's also the beginning
02:16of the decline in global prosperity so so some of these tariffs i think um the tariffs hit more than 90
02:25countries um and malaysia is one of them so i'm curious to know how you see malaysia's deal because we had
02:34negotiated the tariffs from 25 percent to 19 but in that trade negotiation there was a lot of give and a
02:45lot of take as well so um how do you see it did did malaysia get a good deal well we got a deal
02:56that trump has arbitrarily benchmarked to indonesia indonesia as you know more than a week before us
03:07got a 19 percent together with the demand that indonesia opens up its agriculture many of its
03:16agricultural markets and to buy airplanes from boeing in the case of malaysia we also have 19 percent
03:28and we just placed uh third an order for 30 more planes from boeing on top of the 23 that we had ordered
03:37before and we are going to uh be taking a new look at the import of halal food from the united states malaysia has had quite
03:55stringent uh uh restrictions on the import of food because of the halal contents halal procedure requirement
04:08and and the americans have now argued that they're just as good in dishing out halal food as we are
04:15and furthermore the negotiations are not all done yet because there are still negotiations on certain
04:24the deregulatory steps that are not specified one thing that the americans have not insisted on
04:34is the amendment of government procurement procedures because right now the government's
04:41procurement practices tends to favor a particular community over other providers which means that
04:50it shuts out the americans as well as some other communities in malaysia this is a red line that i
05:00think anwar talked about and which the americans have chosen not to demand concessions on but this is
05:10you could understand the philippines also got 19 so as cambodia so has thailand so the 19 percent is
05:20clearly uh a line they grew up for this group of potentially these are important countries for u.s
05:29strategic consideration so we will treat them uh unif quite uniformly okay so now it's 20 right there
05:39seems to be as you said um almost like a night like a benchmark right um when indonesia got its deal
05:48you said that now the rest of the region has a benchmark of where what to ask for but the tariff
05:55rate is just one side of the equation the other side of the equation is how much each country is willing to
06:02give up for that 19 percent um so you meant you talked a little bit about indonesia's agriculture
06:09um i'm not sure what the philippines got but but in terms of malaysia what we negotiated and
06:14you said negotiations are not done yet so is there a likelihood that we will have to keep um
06:22uh compromising or um uh buying more or giving up more uh giving up more ground to make sure that we
06:33don't lose this 19 percent tariff well i talk about regulatory changes like for example uh halang and
06:44buying airplanes that's one more thing the americans want you to invest in their country and what does
06:52the investment mean it could be as simple as just buy u.s government bonds because of the tremendous
07:02u.s deficit that is coming trump has just cut taxes that's going to send uh uh uh its deficits soaring
07:13skyward so what's the implication for u.s interest rates so now he has a commitment from most of the
07:21trading partners that you will come invest in the united states so one may have the impression investment
07:28means that you build a production facility that is one the other one is you buy u.s debt and keep our
07:38interest rate low so uh now the question you ask is very good is this the end of u.s demands the tariff
07:51is being used more on an increasing amount of uh as an instrument and for an increasing number of u.s
08:03objectives for example in order to discourage india from buying petrol from russia india now has a tariff
08:14uh 50 of 50 percent and to discourage uh lula of brazil from making bricks stronger and hence
08:27presenting a more united front to the united states on and furthermore to tell lula that you should
08:37uh uh be more tolerant of trump like characters in your country we want you to be soft on the trial of
08:49bolsonaro uh brazil has been punished with a 50 percent tariff rate we could see that the tariff is being
09:01used for more than just addressing what donald trump says to betray imbalances in other words if you don't
09:09bend to our will we will put restrictions on your ability to u.s to to access the u.s market like the
09:21south koreans are being told you have to pay us more it for for the fact that we are stationing troops
09:28in south korea as part of the trade negotiation so it has become an instrument of u.s policy
09:39in general brafu do you think isn't this holding the world hostage i mean do you think that the world
09:47will bend to what trump wants is this essentially a shakedown for for u.s interests
09:55it's a shakedown in very general terms to think to take him at his face value
10:04that the role of the tariff is to reduce u.s trade deficits and to bring jobs back to the united states
10:15is to think that there's more of a pattern to donald trump's more rationality to donald trump's
10:24thinking that that really is because look he even put a 25 percent or is it yeah 25 percent tariff
10:35on copper entering the united states how is that bringing industrial jobs back to the united states
10:44it is basically encouraging the set the the expansion of copper mining in the united states and that is
10:52certainly not manufacturing jobs and the united states has allowed nippon steel to acquire u.s steel
11:06which is the uh the the last remaining large steel producer in the united states in order for
11:16u.s steel to do that no united order for nippon steel to do it nippon has to give the united states
11:25a golden share uh let me think of what's the right word is basically the united states government
11:34government gets to be a co-investor in the firm just like nvidia will have to pay this was announced a few
11:46hours ago nvidia and advanced micro devices will now pay 15 percent of its sales of chips to china
11:59so it's a shakedown of its own companies too and why because the u.s uh budget deficit
12:12has just been greatly increased by the big beautiful bill that donald trump has bamboozled the u.s congress to pass
12:23okay so when you talk about this um this objective of trump wanting to bring jobs and manufacturing back
12:33to america one of the ways he said he wanted to do that was through threatening a tariff of a hundred
12:40percent on imports of semiconductors but it won't apply for companies that are setting up shop in the
12:45u.s right or have committed to do so and do you think this is a wise move i mean economically speaking
12:53will the strategy work in bringing jobs and manufacturing back to america i remember you
13:02talking about the more it's more struck there are more structural issues at play here than just
13:08having companies invest in america well it is unlikely that it will be able to attract
13:18uh the low value added chips back to the united states largely because that's extremely labor intensive
13:27and the and the americans would not be able to produce it even if there is a hundred percent tariff on
13:36imported chips but what is unknown is how about existing operations that u.s multinationals have set up in
13:50foreign countries like penang malaysia all of that is unknown and let's see what the shake down of that will be
14:03it is very unfortunate that almost uh every week a new demand comes up and the issue is how long would it take
14:15take the rest of the world especially the rest of the west which is basically think of the g uh think of the oecd
14:28or or think of the g7 or or think of the g7 minus the united states when will they decide
14:36that if the if the united states once continues to behave this way
14:44will they therefore mobilize the rest of the world to act in defense of free trade the question is would
14:56they ever be able to get together and as we have seen it has been quite hard largely because most of the
15:06western european countries would naturally be spearheading such uh rest of the world uh team up
15:14is that they depend they are dependent on the u.s security umbrella against russia
15:23so they will continue to put up with it until the the cost become too heavy
15:32and i think that it should be a process that should hurry up that the rest of the west
15:40should reach out to what i call the rest of the global south the global south should really be split
15:49into two parts what we see as a global south now should be divided into the global east which is china
15:57and the so web union and the rest you could call the true global south and the west as we know if you
16:07minus the united states is what we call the rest of the west now if there could ever be um an alliance
16:20of the rest of the global south and the rest of the west that would be the only time when the united
16:28states would not be in the united states would not be in a position to keep up to be the bully that keeps on
16:35ratcheting up its list of demands
16:39it's very worrying because national security has become uh used in a very
16:48capricious manner that the the the objective in order to extort the world and i think all of this could be
17:01settled in a less damaging manner the world is heading towards an economic cliff
17:10what you if you look at businesses all over the world with such arbitrary uh appearances of tariff
17:23investors certainly holding back on putting their money down on anything the only thing that they are
17:30not holding back on putting money down is in ai uh investments
17:37and if you look at the stock market boom that's going it's not because of optimism from the tariff
17:44there's definitely pessimism from the tariff but it's because of ai now the question is would ai
17:54be able to continue powering the world through this collapse in investment in all the other activities
18:05wow that so that's a really interesting point i i do feel like um there's a disconnect between
18:14what's happening with the stock market and the global uncertainty with um business sentiment around
18:20the world you you said that you don't think um this is going to be the end that you don't think this
18:27is going to be settled that there will be more and more demands coming from the u.s going forward
18:33so can i then ask you what do we do with this information at this point in time when we know
18:41for the only certainty we know is that there will be more uncertainty going forward so are you looking
18:48out for anything that will um form your opinions what are your data points that you're looking at in
18:55in terms of where this is going to be headed over the next few months i think that the next few months
19:03when we west as i said we're still negotiating with the united states over malaysian uh deregulation
19:11at some point that the standard would be restrictions on chinese investments in southeast asia
19:22and restrictions on economic uh integration into the chinese economic sphere this i think is almost
19:35inevitable given the importance of u.s geostrategic concern and there is no doubt that is an explicit objective
19:50to contain china and we in the neighborhood are not only economic partners of china
20:01we are also potentially allies of china in a part of the world which right now is very pro u.s and uh
20:17the desire would be to consolidate that military alliance in which uh
20:25uh it would be a very sorry day for the world not only just for china and southeast asia when we'll be forced
20:36to make a choice of access to the u.s market in exchange for our uh reduction in economic relations with china
20:53and this is where so this is where we have to be able to act as a group to say we'll be friends to both
21:00sides and this will require um asian unity and that alone would not be enough because asian is actually
21:10quite 700 million people but uh it would even be more effective if you have western europe japan and korea
21:22standing standing with us which as i've said before a hard thing to do to mobilize the rest of the world
21:32but seeing what lies ahead which is that we should cut our economic ties with china what would that do to us
21:42it would certainly make us poorer it will be better for the whole world including for the united states
21:52for malaysia western europe china and korea to maintain a neutral position with respect to both
22:04countries all right well prof wu thank you so much for breaking that down for us and getting real about
22:13what's happening in the us china and everywhere and everything in between so thank you so much and
22:18that's it from this episode of who says i'm melissa adris and i'll see you in the next one bye-bye folks
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