00:00I don't think at the moment you've got reason to believe they'll get much worse.
00:04It's got worse.
00:06You know, the thing that the government really wanted, I think,
00:10was to get a deal on autos, which it's got.
00:14And that's under a provision which has not been affected by the Supreme Court.
00:19I don't think.
00:20I mean, it remains to be seen whether in actual fact there are some obscure legal reason why that's an
00:24issue,
00:24but I'm not aware of it at the moment.
00:27And for the rest of it, everybody else just had to kind of grit their teeth
00:30and put up with the ordinary tariffs that the U.S. was living.
00:33Now, they've gone up.
00:34They've gone, as you say, from 10% to 15%.
00:36So if you're a whiskey producer or a toy producer or do ordinary manufacturing products
00:42that aren't subject to what are called 232 tariffs,
00:46you're now, it would appear, going to have to pay 5 ad valorem percent more.
00:50But in many ways, it's like a 50% increase on the import tax.
00:53It's gone from 10% to 15%.
00:55So, yeah, that's hurtful.
00:58It's hard enough to climb over 10%.
01:00To get over 15% is quite a lot worse.
01:04So, yeah, it is worse.
01:05It's not the end of civilization as we know it,
01:08but it's going to make it much tougher for particularly small and medium-sized businesses
01:12trying to do business with the U.S. from the U.K.
01:16And, yeah, the Australians have copped the same effect.
01:19I mean, the Europeans will still complain.
01:22I don't think they've been affected quite as badly as the U.K.,
01:26but they've gone from, you know, what was 15% to 15% on top of the pre-existing tariff.
01:34So, they are paying a bit more than they would have been paying under their so-called deal with the
01:39U.S.
01:40So, everybody on that side of the ledger has been affected,
01:44but others are doing better because if you were Indonesia or India and you did the deal with the U
01:49.S.,
01:49you would have been paying a higher rate than 15%.
01:53So, yeah, we're on the slight loser side of the ledger at the moment,
01:58and I'm sure the government will have to be moving heaven and earth to find a way to at least
02:03get back to what it was before,
02:05ideally to do better than that, and that's probably a medium-term goal.
02:09So, I expect the phones will be running hot.
02:11Whether they're being answered is another question.
02:13Yeah, well, exactly.
02:14What does moving heaven and earth mean in practical terms for how the U.K. government can try to get
02:19a U.S. exemption
02:20or try to move forward and get a better, you know, agreement?
02:24Well, you know, I mean, I'm sure that what the U.S. is saying is,
02:28oh, this provision of the legislation requires us to apply the same tariff to everybody,
02:34to which the answer, I think, would quite reasonably be,
02:37well, look, that piece of legislation probably shouldn't be being relied on anyway
02:43because it dates back to a period of fixed exchange rates,
02:48and there is no balance of payments problem in the U.S.
02:51You might have a trade deficit problem.
02:53You don't have a balance of payments problem.
02:55So, you know, this is not a legitimate use of the legislation.
02:58So don't tell me you've got a legal obligation
03:01when, in actual fact, the legal basis is extremely dodgy to begin with.
03:05And I should think that that would be about as effective as, you know,
03:09trying to command the blizzard in New York to stop.
03:13So you've just got to haggle with them and see if there's anything that can be done.
03:16And it may well be that you have to endure this for 150 days
03:21and hope that for the next period of time we get back to something closer to what we had before.
03:27And ideally something better.
03:29Don't forget that there has been a process in place,
03:32which has been between the U.K. and the U.S.,
03:34which is leading to a more comprehensive agreement.
03:37Now, the U.S., before this, had suspended it
03:41because they said they were unhappy with the progress they were making.
03:45But let's not forget that that is still something for the longer term that's rather important,
03:51although how you can really rely on the U.S. to negotiate anything these days is rather unclear.
04:00Is that going to be key to how the U.K. should respond at this point, though,
04:06given that there are broader negotiations going on?
04:09Does a sort of softly, softy response to this actually potentially yield better results down the line,
04:15given that there is kind of more at stake than what happens over the next 150 days?
04:20Well, look, I mean, behind the scenes you could be quite firm.
04:24The question of whether you want to go hard in public is really a political question,
04:29depending on how much heat you're getting domestically.
04:31You can see that in Brussels, Brussels is responding in what I would say
04:35is probably a more aggressive way to what they've had to deal with.
04:41And that reflects the fact that politically it's quite difficult for the Commission
04:45to just simply say, leave it to us, we'll try and thrash out the best deal we can get.
04:50Whereas in the U.K., you know, it's a bit more likely that you can get away with that.
04:55Whether, in fact, the sense of business dissatisfaction with what's happened
05:01is such that they have to be more aggressive and public remains to be seen.
05:05But at the end of the day, you've got to persuade the U.S.
05:08to actually try and cut this back to something that's more manageable.
05:12OK. Do you think that this is President Trump's tariff agenda unravelling,
05:17the beginning of it unravelling?
05:19He said, you know, over the, on Friday and on Saturday when he was speaking,
05:22you know, what I say goes effectively.
05:24He was, you know, saying he doesn't need Congress,
05:28that everything that he says is a certainty and a sure thing.
05:34Unravelling's an ambiguous term because it implies that eventually it unravels.
05:37And I'm to the end.
05:39And I'm not, I don't think that will happen under his watch.
05:43But I don't think there's any doubt that this is a body blow.
05:48He's not on the canvas.
05:49But you can see they are scrambling now that they've lost this.
05:54And secondly, you can look at it objectively.
05:56There is no question that even though the U.K. is going to pay a bit more
06:01and the Australians are going to pay a bit more,
06:04overall his tariff take from using an alternative is down.
06:08So I don't think you should be naive and think that, oh yeah,
06:11this is going to go away.
06:13Far from it.
06:13They're going to find as many ways in which they can try to make this work for them.
06:19But I do think that it's had a major setback.
06:21I don't think it means that it's gone.
06:23And I don't think we're going to go back to the status quo ante at all under this administration.
06:27But I don't think that I would buy the argument that they've got so many other options
06:34they can just keep on doing exactly what they were doing before.
06:38They can certainly behave quite badly under Section 301 and Section 232.
06:43Don't get me wrong.
06:44It's not as if it's risk-free.
06:46But the freedom that they sought to have under this power that he asserted that he had has gone.
06:54They are much more constrained now.
06:56So I wouldn't say unravel, but I would say they're going to have to take some steps backward.
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