March 7, 2025 • 12 mins
World leaders have been left reeling by the flurry of announcements from Donald Trump since he returned to the White House. The US President has penalised America's allies, made overtures to autocrats, and thrown out international conventions. Markets, too, are increasingly uncertain about what the future holds. Bloomberg's Editor-in-Chief John Micklethwait joins host Stephen Carroll to discuss Donald Trump's approach to international relations.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. I'm Stephen Caroll, and
this is Here's Why, where we take one news story
and explain us in just a few minutes with our
experts here at Bloomberg.
Speaker 2 (00:20):
Six weeks ago, I stood beneath the dome of this
capital and proclaimed the dawn of the Golden Age of America.
Speaker 1 (00:32):
Since Donald Trump has returned to the White House, that
you could be forgiven for thinking that time has somehow
sped up.
Speaker 2 (00:40):
They can't come in and steal our money and steal
our jobs, and take our factories and take our businesses
and expect not to be punished. And they're being punished
by tariffs.
Speaker 1 (00:51):
Donald, even though you're a very smart guy, this is
a very dumb thing to do.
Speaker 2 (00:58):
You're gambling millions of people seeing you're gambling with World
War three. You're gambling with World War three.
Speaker 3 (01:07):
We are in an era of rearmament, and Europe is
ready to massively boost its defense spending.
Speaker 2 (01:16):
The European Union was formed in order to screw the
United States. Supurpose seven.
Speaker 1 (01:24):
If America doesn't just want America first, but something more
along the lines of America alone, then it will be
more difficult world leaders have been left reeling as the
US has penalized its allies, made overtures to autocrats, and
thrown out international conventions. Markets two are increasingly uncertain about
what the future holds. So how should we try to
(01:47):
understand what's happened since the twentieth of January. Here's why
a new Trump world changes everything. Joining us now is
Bloomberg's at in chief John Kuthwaite. John, great to have
you with us now. You've interviewed Donald Trump, you did
in the last election campaign, your, of course overseeing Bloomberg's
(02:08):
coverage of all of the announcements under the Trump administration.
What is different about Trump's worldview in his second term.
Speaker 3 (02:17):
I don't think it's necessarily that different to what it
was in the first term. It's just slightly more a
man who is in a hurry to achieve those aims.
Donald Trump's basic psychology, his basic theory of the way
the world works, as he's always said, is America first.
And this time he's being slightly more persistent and rapid
(02:40):
in terms of trying to enforce that.
Speaker 1 (02:42):
And I suppose one of the things that he has
moved quickly on is the issue of trade when you
spoke to Donald Trump last year, he told her that
tariff was the most beautiful word in the dictionary and
expression we've heard him repeat since. Now that he's actually
started taking action on the trade issues, do we have
a clearer idea of his strategic goal at these measures.
Speaker 3 (03:01):
Well, that's I think trade is one of the areas
where a kind of deeper Trump belief kind of slightly
collides with bits of reality. And we've already seen it
in a sense, and the going backwards and forwards on
tariffs with Mexico and Canada. I do genuinely think that
Donald Trump genuinely thinks that tariffs are good. They're a
(03:23):
way of raising money for the government. He harks back
often to McKinley and a different era where America got
quite a lot of its tax revenue from them, and
he also makes the very legitimate point that they are
in many parts of the world. You know, America faces
more tariffs than it imposes on people itself, so he
(03:45):
seeses an equalization process. The difficulty is that if you
put on tariffs, as we discovered immediately, you have the
threat of inflation at home, because by definition, prices go
up and There is a kind of contrad in the
end between the desire to deal with your budget deficit
by bringing in tariff revenue and your simultaneous desire to
(04:08):
push down imports completely. You can't have both. You either
have more imports or imports with tariffs, which might bring
you some money, or else you're going to have less
cash coming in.
Speaker 1 (04:21):
And fundamentally imposing tariff's erecting trade barriers attacks one of
the fundamental philosophies that has underpinned the world's economy for
many years now. You've written books about globalization, goes back
many years even writing about this subject. If you were
to be writing the next chapter, perhaps for Bloomberg's Weekend edition,
(04:41):
what do you think it would say?
Speaker 3 (04:43):
Globalization? You could argue has been in trouble for quite
a bit. There are good and bad reasons for that.
To be basic, the kind of reasonable reason for protesting
about globalization is the fact that by definition, it creates
winners and losers. I think you can make the case
still very strongly that from the point of view of
the overall health of the world, from the point of
(05:05):
view of dragging millions, indeed billions of people out of poverty,
there have been few things that have been as effective
at eliminating the things that most people want to get
rid of than globalization. However, there's no doubt that it
causes problems in particular areas, and the sort of backlash
has come in terms of especially poorer and middle class
(05:26):
people in the West who feel as if they're competing
with people who are cheaper labor. You've got the issue
of dumping and things, which again is some where you
can see genuine reasons to intervene, but in general there
has been a sort of ideological problem with it. And
the second you've had a drift towards regionalization already, which
was happening before Donald Trump. And in some ways what
(05:48):
Donald Trump is doing is he's making that even more acute.
You know, he's looking at not just as you might
argue the NAFTA area. He's looking just completely within everything
from an American first area. And the underlying problem of
globalization is the same as it's been ever since the
days of Robert Peel back in the nineteenth century, is
the gainers from globalization tend to be very diffuse. It
(06:12):
tends to be every single time you go and buy
everything from a piece of chocolate to a car, it
will be cheaper because of the ability to source things
around the world. On the other hand, if you have
a shuttered steel plant, it's got some very identifiable losers,
and that is the problem that goes round. And you
could see that happening right now with the politics in America.
(06:35):
There are lots of people who supported Donald Trump because
he thought he was protecting American jobs. He was out
there to stop this cruel world of globalization. Now suddenly
they discovered that manufacturing jobs do actually depend on these
imports coming in and out of the border very quickly,
especially with Canada. But secondly also rising prices. You know,
(06:57):
another reason why people voted for Donald Trump was they
want to get rid of what he called Biden's inflation.
Well that you know, one of the surest ways to
increase inflation. In fact, it's the definition of inflation is
to increase prices, and tariffs do that.
Speaker 1 (07:12):
So globalization already in trouble, perhaps more so now. If
we were to try and think about the philosophy of
what the direction of the US is going in now,
is it as simple as to say that this is mercantilism,
economic nationalism. Is there a different way we should be
thinking about how the US is placing itself in the world.
Speaker 3 (07:31):
I think there has definitely been a move towards economic nationalism,
and you can't blame Donald Trump for that because Joe
Biden did virtually nothing to rein back what Trump did
in his first term, and actually many times over the
past twenty five years, you would say that the main
opponents of globalization have come from the left rather than
(07:51):
the right. Indeed, the kind of the interesting thing is
the Republicans, who've generally generally been the kind of free
trade party, perhaps more the Democrats, although obviously Bill Clinton
fell in that category. This time they're the ones who
are suddenly coming up with reasons, excuses, whatever you want
to call it, to kind of dump on free trade.
Speaker 1 (08:12):
How do we think about the hostility that Donald Trump
has demonstrated towards multilateral institutions, the WHL, WTO, NATO. Is
this another nail and the coffin of multilateralism? Is it
the end of multilateralism?
Speaker 3 (08:28):
Well, you can argue very clearly that the WTO has
been that's the World Trade Organization has been in retreat
for quite some time, but it still serves a purpose.
If I think that you are dumping products on me,
I can go to the World Trade Organization and complain
about it. But secondly, beyond that, by having common tariffs,
(08:50):
it makes life much easier, as we've all discovered in
Britain thanks to Brexit. You know, these free trade agreements
are not just simply to do with the level of tariffs.
Is to do with the enormous amount of paperwork you
need if you have them, and if you start applying
different rules for different places at different times, then that
causes you real problems. And you can argue, yes, that
(09:13):
if America really pushes through every individual country and it
renegotiates this and renegotiates that, it could indeed get some
better trade deals. But the advantage of the multilateral system
is you have one tariff, you basically had one rate,
so people don't have to spend a lot of time
working out what to do. It's more complicated than that,
(09:35):
but that's one of the basic ideas behind it.
Speaker 1 (09:38):
Do you see this reorientation of the US on all
of these fronts on trade but also on defense. Is
this an irreversible course? Could we see an ex administration
that changes the direction entirely.
Speaker 3 (09:51):
Again, there's always a mixture in these things between a
kind of long term trend, and there has been, as
we've discussed, there's been a long term trend against globalization.
I think you could argue that within that, Donald Trump
represents a kind of completely new edge to that, because
I think there was quite a lot of people in
(10:11):
America who were fed up with some parts of the
world trading system. But you certainly wouldn't find anybody from
the business side who thought that it was particularly bad.
And as various people have pointed out, you know, this
is despite the fact that America has been quote unquote
penalized by this system, that this has been a time
when America has pulled far, far ahead of other places,
(10:35):
especially Europe. There's a supreme irony in Donald Trump claiming
that Europe have won when it comes to trade. When
you look at pretty much by every economic measure, it's
America that has surged ahead. Because again, to go back
to the fundamentals of the argument, this is not just
about tariffs. It's about an attitude. It's about competition. And
(10:56):
this is where you see people like Elon must come
in because they do make the case sometimes now with
more sotto vocho than they used to do. That if
you protect things, you get flabby, you get less willing
to do things. The whole beauty of places like Silicon
Valley has been that you have dog eat dog capitalism
(11:18):
and people compete very, very hard against each other. The
very definition of tariffs is you're providing protection. You're stopping
that cruel magic working. So you could argue from all
those points of view. It's harder, but the arguments about
globalization and the political arguments the moment are more about
the losers than the winners. But you can see a
time over the next few years when the argument begins
(11:41):
to turn from what happened in terms of protecting these
individual jobs as to why is my grocery bill so
much higher? Why is my car costing so much more?
And in a strange way, that is a sort of
circular way in which the arguments about globalization have ever happened.
You know the birth of free trade that was back
(12:03):
in the Britain in the nineteenth century, and that was
around things like the corn laws, which were fantastic for
landowners but terrible for the new sort of emerging middle
and working class in the cities of Britain, and you
saw people, especially Robert Peel, go out and give speeches
to people and say this will bring you cheaper bread. Well,
you can imagine a system where by globalization becomes part
(12:26):
of that argument again, but you're not going to see that.
I would imagine in the next couple of years.
Speaker 1 (12:32):
Okay, but definitely something to watch. Bloomberg's editor in chief,
John mccathwaite. Thank you. For more explanations like this from
our team of three thousand journalists and analysts around the world.
Go to bloomberg dot com, Forward slash Explainers. I'm Stephen Carroll.
This is here's why. I'll be back next week with more.
Thanks for listening.
Bloomberg Audio Studios, Podcasts, radio News. I'm Stephen Caroll, and
this is Here's Why, where we take one news story
and explain us in just a few minutes with our
experts here at Bloomberg.
Speaker 2 (00:20):
Six weeks ago, I stood beneath the dome of this
capital and proclaimed the dawn of the Golden Age of America.
Speaker 1 (00:32):
Since Donald Trump has returned to the White House, that
you could be forgiven for thinking that time has somehow
sped up.
Speaker 2 (00:40):
They can't come in and steal our money and steal
our jobs, and take our factories and take our businesses
and expect not to be punished. And they're being punished
by tariffs.
Speaker 1 (00:51):
Donald, even though you're a very smart guy, this is
a very dumb thing to do.
Speaker 2 (00:58):
You're gambling millions of people seeing you're gambling with World
War three. You're gambling with World War three.
Speaker 3 (01:07):
We are in an era of rearmament, and Europe is
ready to massively boost its defense spending.
Speaker 2 (01:16):
The European Union was formed in order to screw the
United States. Supurpose seven.
Speaker 1 (01:24):
If America doesn't just want America first, but something more
along the lines of America alone, then it will be
more difficult world leaders have been left reeling as the
US has penalized its allies, made overtures to autocrats, and
thrown out international conventions. Markets two are increasingly uncertain about
what the future holds. So how should we try to
(01:47):
understand what's happened since the twentieth of January. Here's why
a new Trump world changes everything. Joining us now is
Bloomberg's at in chief John Kuthwaite. John, great to have
you with us now. You've interviewed Donald Trump, you did
in the last election campaign, your, of course overseeing Bloomberg's
(02:08):
coverage of all of the announcements under the Trump administration.
What is different about Trump's worldview in his second term.
Speaker 3 (02:17):
I don't think it's necessarily that different to what it
was in the first term. It's just slightly more a
man who is in a hurry to achieve those aims.
Donald Trump's basic psychology, his basic theory of the way
the world works, as he's always said, is America first.
And this time he's being slightly more persistent and rapid
(02:40):
in terms of trying to enforce that.
Speaker 1 (02:42):
And I suppose one of the things that he has
moved quickly on is the issue of trade when you
spoke to Donald Trump last year, he told her that
tariff was the most beautiful word in the dictionary and
expression we've heard him repeat since. Now that he's actually
started taking action on the trade issues, do we have
a clearer idea of his strategic goal at these measures.
Speaker 3 (03:01):
Well, that's I think trade is one of the areas
where a kind of deeper Trump belief kind of slightly
collides with bits of reality. And we've already seen it
in a sense, and the going backwards and forwards on
tariffs with Mexico and Canada. I do genuinely think that
Donald Trump genuinely thinks that tariffs are good. They're a
(03:23):
way of raising money for the government. He harks back
often to McKinley and a different era where America got
quite a lot of its tax revenue from them, and
he also makes the very legitimate point that they are
in many parts of the world. You know, America faces
more tariffs than it imposes on people itself, so he
(03:45):
seeses an equalization process. The difficulty is that if you
put on tariffs, as we discovered immediately, you have the
threat of inflation at home, because by definition, prices go
up and There is a kind of contrad in the
end between the desire to deal with your budget deficit
by bringing in tariff revenue and your simultaneous desire to
(04:08):
push down imports completely. You can't have both. You either
have more imports or imports with tariffs, which might bring
you some money, or else you're going to have less
cash coming in.
Speaker 1 (04:21):
And fundamentally imposing tariff's erecting trade barriers attacks one of
the fundamental philosophies that has underpinned the world's economy for
many years now. You've written books about globalization, goes back
many years even writing about this subject. If you were
to be writing the next chapter, perhaps for Bloomberg's Weekend edition,
(04:41):
what do you think it would say?
Speaker 3 (04:43):
Globalization? You could argue has been in trouble for quite
a bit. There are good and bad reasons for that.
To be basic, the kind of reasonable reason for protesting
about globalization is the fact that by definition, it creates
winners and losers. I think you can make the case
still very strongly that from the point of view of
the overall health of the world, from the point of
(05:05):
view of dragging millions, indeed billions of people out of poverty,
there have been few things that have been as effective
at eliminating the things that most people want to get
rid of than globalization. However, there's no doubt that it
causes problems in particular areas, and the sort of backlash
has come in terms of especially poorer and middle class
(05:26):
people in the West who feel as if they're competing
with people who are cheaper labor. You've got the issue
of dumping and things, which again is some where you
can see genuine reasons to intervene, but in general there
has been a sort of ideological problem with it. And
the second you've had a drift towards regionalization already, which
was happening before Donald Trump. And in some ways what
(05:48):
Donald Trump is doing is he's making that even more acute.
You know, he's looking at not just as you might
argue the NAFTA area. He's looking just completely within everything
from an American first area. And the underlying problem of
globalization is the same as it's been ever since the
days of Robert Peel back in the nineteenth century, is
the gainers from globalization tend to be very diffuse. It
(06:12):
tends to be every single time you go and buy
everything from a piece of chocolate to a car, it
will be cheaper because of the ability to source things
around the world. On the other hand, if you have
a shuttered steel plant, it's got some very identifiable losers,
and that is the problem that goes round. And you
could see that happening right now with the politics in America.
(06:35):
There are lots of people who supported Donald Trump because
he thought he was protecting American jobs. He was out
there to stop this cruel world of globalization. Now suddenly
they discovered that manufacturing jobs do actually depend on these
imports coming in and out of the border very quickly,
especially with Canada. But secondly also rising prices. You know,
(06:57):
another reason why people voted for Donald Trump was they
want to get rid of what he called Biden's inflation.
Well that you know, one of the surest ways to
increase inflation. In fact, it's the definition of inflation is
to increase prices, and tariffs do that.
Speaker 1 (07:12):
So globalization already in trouble, perhaps more so now. If
we were to try and think about the philosophy of
what the direction of the US is going in now,
is it as simple as to say that this is mercantilism,
economic nationalism. Is there a different way we should be
thinking about how the US is placing itself in the world.
Speaker 3 (07:31):
I think there has definitely been a move towards economic nationalism,
and you can't blame Donald Trump for that because Joe
Biden did virtually nothing to rein back what Trump did
in his first term, and actually many times over the
past twenty five years, you would say that the main
opponents of globalization have come from the left rather than
(07:51):
the right. Indeed, the kind of the interesting thing is
the Republicans, who've generally generally been the kind of free
trade party, perhaps more the Democrats, although obviously Bill Clinton
fell in that category. This time they're the ones who
are suddenly coming up with reasons, excuses, whatever you want
to call it, to kind of dump on free trade.
Speaker 1 (08:12):
How do we think about the hostility that Donald Trump
has demonstrated towards multilateral institutions, the WHL, WTO, NATO. Is
this another nail and the coffin of multilateralism? Is it
the end of multilateralism?
Speaker 3 (08:28):
Well, you can argue very clearly that the WTO has
been that's the World Trade Organization has been in retreat
for quite some time, but it still serves a purpose.
If I think that you are dumping products on me,
I can go to the World Trade Organization and complain
about it. But secondly, beyond that, by having common tariffs,
(08:50):
it makes life much easier, as we've all discovered in
Britain thanks to Brexit. You know, these free trade agreements
are not just simply to do with the level of tariffs.
Is to do with the enormous amount of paperwork you
need if you have them, and if you start applying
different rules for different places at different times, then that
causes you real problems. And you can argue, yes, that
(09:13):
if America really pushes through every individual country and it
renegotiates this and renegotiates that, it could indeed get some
better trade deals. But the advantage of the multilateral system
is you have one tariff, you basically had one rate,
so people don't have to spend a lot of time
working out what to do. It's more complicated than that,
(09:35):
but that's one of the basic ideas behind it.
Speaker 1 (09:38):
Do you see this reorientation of the US on all
of these fronts on trade but also on defense. Is
this an irreversible course? Could we see an ex administration
that changes the direction entirely.
Speaker 3 (09:51):
Again, there's always a mixture in these things between a
kind of long term trend, and there has been, as
we've discussed, there's been a long term trend against globalization.
I think you could argue that within that, Donald Trump
represents a kind of completely new edge to that, because
I think there was quite a lot of people in
(10:11):
America who were fed up with some parts of the
world trading system. But you certainly wouldn't find anybody from
the business side who thought that it was particularly bad.
And as various people have pointed out, you know, this
is despite the fact that America has been quote unquote
penalized by this system, that this has been a time
when America has pulled far, far ahead of other places,
(10:35):
especially Europe. There's a supreme irony in Donald Trump claiming
that Europe have won when it comes to trade. When
you look at pretty much by every economic measure, it's
America that has surged ahead. Because again, to go back
to the fundamentals of the argument, this is not just
about tariffs. It's about an attitude. It's about competition. And
(10:56):
this is where you see people like Elon must come
in because they do make the case sometimes now with
more sotto vocho than they used to do. That if
you protect things, you get flabby, you get less willing
to do things. The whole beauty of places like Silicon
Valley has been that you have dog eat dog capitalism
(11:18):
and people compete very, very hard against each other. The
very definition of tariffs is you're providing protection. You're stopping
that cruel magic working. So you could argue from all
those points of view. It's harder, but the arguments about
globalization and the political arguments the moment are more about
the losers than the winners. But you can see a
time over the next few years when the argument begins
(11:41):
to turn from what happened in terms of protecting these
individual jobs as to why is my grocery bill so
much higher? Why is my car costing so much more?
And in a strange way, that is a sort of
circular way in which the arguments about globalization have ever happened.
You know the birth of free trade that was back
(12:03):
in the Britain in the nineteenth century, and that was
around things like the corn laws, which were fantastic for
landowners but terrible for the new sort of emerging middle
and working class in the cities of Britain, and you
saw people, especially Robert Peel, go out and give speeches
to people and say this will bring you cheaper bread. Well,
you can imagine a system where by globalization becomes part
(12:26):
of that argument again, but you're not going to see that.
I would imagine in the next couple of years.
Speaker 1 (12:32):
Okay, but definitely something to watch. Bloomberg's editor in chief,
John mccathwaite. Thank you. For more explanations like this from
our team of three thousand journalists and analysts around the world.
Go to bloomberg dot com, Forward slash Explainers. I'm Stephen Carroll.
This is here's why. I'll be back next week with more.
Thanks for listening.
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