00:00Ali Renson is a former business and trade advisor to the UK government.
00:04She's currently a director of SEC Newgate, a global strategic communications and advocacy group.
00:09Great to have you on Global Business Europe again.
00:12So one year after Liberation Day, have tariffs made the US economy stronger
00:16or simply more expensive for consumers and businesses?
00:21I think we've seen more impact on businesses than we've seen consumers.
00:25I think a lot of the businesses, particularly in the small and medium-sized space,
00:28are struggling in terms of the cost of access to raw materials,
00:32not only from places like China, but from other Chinese and US trading partners
00:37that have had tariffs lapped on them.
00:39Now, we haven't seen huge increases in consumer prices.
00:43Really, actually, I think consumers are more worried about inflation coming from some of the conflict
00:47in the Middle East at the moment.
00:48But I certainly think from a business perspective,
00:50we've seen a lot of smaller businesses struggling to stay afloat as a result of their impact,
00:54the impact of the tariffs on their access to raw materials.
00:58I want to get on to raw materials in a moment,
01:00but have the tariffs reduced US reliance on China in any meaningful way
01:04or just rerouted trade flows elsewhere?
01:07I think we were starting to see some of that rerouting happening already.
01:11There were some hints, you know, under across successive administrations
01:14that the US wanted to reduce its ostensible dependence and reliance on China.
01:19But ultimately, I don't think that we've seen a huge, certainly, reduction in that dependence.
01:24I think what we've seen is that certain companies are already sort of moving some of their manufacturing
01:29in some Chinese trading partners in the Far East.
01:32But obviously, the US government is taking steps to cut reliance on that.
01:36So it's not really had a huge impact on the diversification that I think Washington is hoping to see.
01:41Let's get back to those rare earths and critical minerals.
01:44How close are they to becoming the next flashpoint in US-China trade?
01:50I certainly think that, you know, there's both a domestic and trading sort of bilateral perspective to some of this.
01:56On the one hand, from the trade perspective, we've seen that China has made it a little bit more difficult
02:01to get access, to be able to export some of these rare earths.
02:04And that's really what the US wants.
02:06And so we saw that when some of the tone and temperature was taken down between Beijing and Washington,
02:11that some of those curves were relaxed a bit, but not considerably.
02:14And so I think what you see is the US is trying to take steps domestically to shore up its
02:18own sort of reserves
02:19and storage of critical minerals, trying to relax some of its environmental regulations that make processing
02:24and extracting it so difficult in America, but also trying to secure access to it with other trading partners
02:30through countries like Australia and other Far East countries.
02:33So it's a bit of a sort of, it's a flashpoint, but it's all the US is trying to get
02:36around it
02:37through work at home and abroad with other trading partners.
02:40Against this crazy geopolitical backdrop, there are so many moving parts.
02:44Are we looking at short-term disruption or the start of a more permanently fragmented global economy?
02:52I think we're starting to see a real retrenchment already where certain countries are looking at reordering their supply chains,
03:00trying to diversify their access to other countries.
03:02Certainly, but the fragmentation that you speak of, I think that we're heading for a more permanent reordering of that.
03:07Let's put the risk at an opportunity.
03:09I think that you're getting countries that are really thinking seriously about what is dependence on certain trading partners
03:14that are unpredictable look like.
03:16But that doesn't mean that they're completely stopping trade altogether.
03:18They're just looking to try and diversify their access to other countries across the world.
03:23Ali Henderson at SCC Newgate.
03:26Always a pleasure.
03:26Thank you very much.
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