00:00Ali Renison is former advisor to the UK's Business and Trade Secretary of State, now with SEC Newgate Consultancy.
00:07Great to have you on Global Business Europe.
00:10Now, some US allies and trade partners say they could be seeking compensation for tariff costs.
00:16How would that work in practice? And has anything like this been done before?
00:21It's interesting that in terms of the compensation route, normally what we're talking about is the ability of trading partners
00:29to go to the World Trade Organization to file sort of suits to allow for retaliatory measures.
00:35In terms of compensation, I think it's a much harder sell.
00:38There's been much more focus on obviously compensating via refunds.
00:42The people that are actually have paid the tariffs, those would be the importers of records.
00:47And that's usually on the US side, depending on contractual arrangements.
00:50So I think that the big sort of challenge for any kind of US trading partner and country sort of
00:56move for compensation is,
00:58are they going to do it together and reach a critical mass or are they going to be left to
01:02do one individually?
01:04And if governments start reimbursing companies for tariff costs, are we potentially entering an era of permanent subsidy wars?
01:12I think, unfortunately, we're pretty much at the start of that era, as you say.
01:17You know, we're in an era really where freight is no longer being seen as a sort of force for
01:22good in and of itself.
01:24It's more about a use of sort of industrial policy.
01:27And so when it comes to industrial policy, there is certainly a race that's sort of afoot of how to
01:32subsidize companies.
01:33And I think that the trade war is just giving it another prong to sort of tackle that with.
01:38China has shown resilience through past tariff episodes.
01:42Is Beijing positioned to come out better off by speeding up, strengthening alternative trade alliances?
01:49Well, China's certainly not alone in doing that.
01:51But it's probably one of the more potentially tried and tested methods of while you try and fight on one
01:57front in terms of dealing with a huge trading partner like the U.S.
02:01On the other hand, you're also trying to beef up your trade agreements with other countries.
02:06And obviously, we've seen that, for example, CPTPP, China is keen to exceed to that as well.
02:12It's already opened its doors to new members like the United Kingdom.
02:15And so there is, I think, it's certainly a path to try to try and buffer itself.
02:21But I think that there's obviously a challenge in terms of if the trade war with the U.S. really
02:25reverberates, how much are these new trade deals going to make up for that?
02:29Ali Renison from SCC Newgate.
02:31Always great to have you on the show.
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