0:00

This BBC podcast is

0:02

supported by ads outside

0:04

the UK. Don't miss out Don't

0:07

miss out on Springfest savings happening

0:09

now at Lowe's. Get up

0:11

to 40% off select major

0:13

appliances. Plus, save an additional

0:15

$100 on every $1,000 you

0:17

spend on select major appliances.

0:19

Lowe's, we help, you save.

0:21

Valor to selection varies by

0:23

location while supplies last. See

0:25

Lowe's.com for more details and

0:27

qualifying items. Visit your nearby Lowe's

0:30

on East Waterfront Drive in

0:32

Munhall. a

0:35

business? You might think you need a team

0:37

of So you want to start a

0:39

business. You might think you need a

0:42

team of people and fancy tech skills,

0:44

but listen to me when I say you

0:46

don't. You just need Go Daddy Arrow.

0:48

I'm Walton Goggins, an actor. And I

0:51

like the sound of starting my own

0:52

But I couldn't do this on business, Walton

0:54

Goggins, my own. GoDaddy Arrow uses AI to create everything

0:56

you need to grow a business. a actor. And I like the sound of starting my own

0:58

business. Walton It'll make you a unique logo. It'll create

1:00

a custom website. Goggins, Gogglasses. But I couldn't do this It'll write social posts

1:03

for you and even set you up with

1:05

a social media calendar. How cool is that?

1:02

on my own. Go Daddy Arrow uses

1:04

you up with a social media

1:06

calendar. How cool. We'll listen to this. For a

1:09

limited time you can get arrow

1:11

all access for just a dollar

1:13

a week for 12 weeks. We're

1:15

talking all the AI power

1:17

of GoDaddy Arrow plus a

1:19

domain, e-commerce store, payments, professional

1:22

email, a unified inbox, all

1:24

for less money than I spend

1:26

on deep tanning lotion while

1:28

sunbathing off the almafi coast.

1:30

You know what that sounds like?

1:33

A plan. Get started at godaddy.com.

1:36

Terms Apply. Harford.

1:48

Now unless you've had your head

1:50

stuck down a rabbit hole, and

1:52

honestly I envy you, you will

1:54

know that Wednesday the second of

1:56

April was Liberation Day, aka the

1:58

day President Trump dropped this... economic

2:00

bombshell on the planet. In a

2:03

few moments, I will sign a

2:05

historic executive order instituting reciprocal tariffs

2:07

on countries throughout the world reciprocal.

2:10

That means they do it to

2:12

us and we do it to

2:14

them. Very simple. Can't get any

2:16

simpler than that. For years, hardworking

2:19

American citizens were forced to sit

2:21

on the sidelines as other nations

2:23

got rich and powerful. Much of

2:26

it at our expense. But now

2:28

it's our turn to prosper. You're

2:30

the largest economy in the world

2:33

by most measures, but okay. The

2:35

president came armed with a lovely

2:37

board that claimed to show the

2:39

tariffs other countries impose on US

2:42

goods and the new tariff that

2:44

the US will put on their

2:46

goods. This reciprocal tariff is said

2:49

to be only half of what

2:51

the US exporters must endure from

2:53

those dastardly foreigners. They rip us

2:56

off. It's so sad to see.

2:58

It's so pathetic. Right. Right. Some

3:00

of these alleged tariffs are big,

3:02

implausibly big. China, 67 percent. That's

3:05

tariffs charged to the USA, including

3:07

currency manipulation and trade barriers. So

3:09

it's 67 percent, so we're going

3:12

to be charging a discounted reciprocal

3:14

tariff of 34 percent. Cambodia, oh

3:16

look at Cambodia, 97 percent. We're

3:19

going to bring it down to

3:21

49 and they made a fortune

3:23

with the United States. It all

3:25

gets a bit weirder, because also

3:28

on Trump's tariff list are the

3:30

tiny and uninhabited, herd and McDonald

3:32

Islands, an Australian external territory 1,000

3:35

kilometers north of Antarctica. I say

3:37

uninhabited, but they are of course

3:39

home to plenty of penguins, whether

3:42

they're eastern rock-hopper penguins, king penguins,

3:44

or my personal favourite macaroni penguins.

3:46

Have a Google who is worth

3:48

it. Anyway, all these lovely penguins

3:51

have been slapped. with Trump's 10%

3:53

minimum tariff, which is bad news

3:55

for their fledgling semiconductor industry. What

3:58

on earth is going on? Thomas

4:00

Sampson is an associate professor at

4:02

the London School of Economics. Thomas,

4:04

when I saw the presentation by

4:07

the president, I was very confused

4:09

because... he was talking about imposing

4:11

reciprocal tariffs, all these very high

4:14

tariffs that other countries impose on

4:16

America, and America is just going

4:18

to respond in a measured way

4:21

by just imposing half the tariff

4:23

that the rest of the world

4:25

imposes on it. But then when

4:27

I saw these numbers, none of

4:30

them made any sense, they didn't

4:32

bear any resemblance to any of

4:34

the tariff numbers that I could

4:37

think of. So could we just

4:39

say, is it true that the

4:41

rest of the world imposes huge

4:44

tariffs on American products? No, it's

4:46

not true. And the tariffs that

4:48

the rest of the world imposes

4:50

on America haven't factored into this

4:53

calculation. In fact, most countries impose

4:55

relatively low tariffs on US exports.

4:57

For example, the average tariff the

5:00

EU imposes is in the low

5:02

single digits. So the numbers that

5:04

Trump has announced, they are not

5:07

reflective of the tariffs that US

5:09

exporters face abroad. The EU, by

5:11

the way, will be facing a

5:13

20% tariff from the US. Okay,

5:16

so if they're not worked out

5:18

in retaliation for other countries' actual

5:20

tariffs, how are they calculated? So

5:23

the way they have calculated these

5:25

tariffs is to take each country's

5:27

trade deficit with the US, so

5:30

how much it exports to the

5:32

US, minus how much it imports

5:34

from the US, then express that

5:36

as a share of its exports

5:39

to the US, so you get

5:41

a number in percentage terms, and

5:43

then they divided that by two.

5:46

and that's the tariff you you

5:48

face. Right. So if you exported

5:50

a bunch of stuff to the

5:53

US and you didn't have any

5:55

imports, that number would be 100%

5:57

and you would get a 50%

5:59

tariff. you exported twice as much

6:01

to the US as you imported, the

6:03

number would be 50% I think and

6:06

you'd get a 25% tariff is

6:08

that right? Yeah that's right and

6:10

then there's one little extra add-on

6:12

they've done which is that there's

6:14

a floor of 10% so if

6:16

your number comes in negative or

6:18

less than 10% you still get a

6:20

10% tariff which is the situation the

6:22

UK is in. Do these numbers apply

6:24

to all imports and exports or

6:27

is it only physical goods? So

6:29

the tariffs are only for goods.

6:31

The UK and the US are

6:33

kind of two of the

6:35

biggest service exporters and they've

6:37

just excluded all those services

6:39

exports from these calculations. And

6:41

they are calling their tariffs

6:43

reciprocal on the basis that

6:45

if there's a trade deficit

6:47

there must be some kind

6:49

of trade barrier even if

6:51

it's not an explicit tariff.

6:54

Does that logic stand up? Unfortunately,

6:56

it really doesn't. There's no direct

6:59

way of linking these tariffs they've

7:01

come up with to trade barriers

7:03

that the US faces when exporting

7:05

to these markets. There are many

7:07

different reasons why a country may

7:09

run a trade surplus with the

7:11

US. All of those different effects

7:13

have gone into this tariff calculations.

7:15

It would be a mistake to

7:17

think of them as reciprocal tariffs.

7:19

It's just they've converted the trade

7:21

deficit into a tariff, regardless of

7:23

why there's a trade deficit. If you

7:25

want a good example of

7:28

this, take the small landlocked

7:30

African nation of Lesotho. Lesotho is

7:32

a very poor country, so

7:34

at that level of income

7:36

they're simply not able to

7:38

buy much from America. Consumers

7:40

in Lesotho don't typically want

7:42

to buy the kind of

7:44

goods that American firms produce.

7:46

At the same time, Lesotho's

7:48

modern export is diamonds. So

7:50

it does export a reasonable

7:53

amount of diamonds to the

7:55

US and this leads to

7:57

it having a very large

7:59

bilateral trade. surplus with the US.

8:01

So they're selling diamonds to

8:03

the US but they're not using

8:06

the proceeds to buy iPhones or

8:08

Ford pickup trucks. They're spending the

8:10

proceeds presumably on buying food and

8:13

commodities more locally. Yeah, absolutely. So

8:15

what drives the imbalance is not

8:18

trade barriers that the Soto has

8:20

put on the US. It's just

8:22

that they are two countries at

8:25

very different levels of development. that

8:27

want to buy different things. But

8:30

by the President's logic, Lesotho

8:32

has been raping and pillaging

8:34

the poor United States and

8:36

as a result those diamonds

8:38

and the textiles they also

8:40

export will have a 50%

8:42

tariff slapped on them. The more

8:44

general point is that these bilateral

8:47

trade balances don't really tell you

8:49

much about anything. Imagine three

8:51

countries which all trade with each

8:53

other in a triangle. A sells

8:55

oil to B. B uses that oil to

8:57

make steel, which it sells to C.

9:00

C uses the steel to make oil

9:02

rigs, which it sells to A. By

9:04

Trump's logic, each country would have

9:06

a terrible trade deficit with one

9:08

of its neighbours. But the whole

9:10

thing works just fine and

9:12

nobody is pillaging anybody. It's

9:14

the economy stupid. Fundamentally, bilateral

9:16

trade deficits don't tell us

9:18

anything about whether one country

9:20

is taking advantage of another

9:22

country or what barriers it's

9:24

imposing on imports from that

9:27

country. They just tell us

9:29

about which country produces stuff

9:31

that other countries want to buy.

9:33

One of the curious things about this is

9:35

that rather than focusing on the US trade

9:37

deficit as a whole, it seems to be

9:39

aiming to put the US in

9:42

trade balance with every individual country

9:44

in the world. That's interesting. Yes,

9:46

it's an unusual way to think

9:48

about these issues. There's no real

9:50

economic logic behind it. I

9:52

think it purely reflects the fact

9:55

that President Trump for a long

9:57

time has been obsessed with these

9:59

countries. trade deficits, but fundamentally it

10:02

doesn't make sense to target

10:04

them as a policy outcome.

10:06

Our thanks to Thomas Sampson

10:08

from the London School of Economics.

10:10

That is it for this week,

10:12

but please keep your questions and

10:14

comments coming in to more or

10:17

less at BBC.co. UK. And for

10:19

those of you who are expecting

10:21

a fascinating interview with Jenny Cleman

10:23

on the Price of Life, fear

10:25

not, that will be here next

10:27

time. Until next week. Goodbye. This

10:30

is Steve Covino from Covino

10:32

and Rich. Here to tell you, Toyota's

10:34

legacy has been standing

10:36

This is Steve Cavino from Cavino Enrich.

10:38

Here to tell you, Toyota's legacy

10:40

has been standing tall for generations.

10:42

From pioneering hybrid technology to

10:45

redefining the standards of safety

10:47

and efficiency. With each innovation, a

10:49

commitment to progress. And with the

10:51

legendary lineup of in-stock trucks, including

10:53

the ultra-rug and new Tacoma and

10:56

heavy-duty half-ton tundra, you can experience

10:58

the legacy of Toyota for yourself.

11:00

Visit buy at toyota.com the official

11:02

website for deals to find out more.

11:04

Toyota, Let's Go Places! So you want

11:07

to start a business. You might think

11:09

you need a team of people and

11:11

fancy tech skills, but listen to

11:13

me when I say you don't. You just need

11:15

Go Daddy Arrow. I'm Walton Goggins, an

11:18

actor. And I like the sound of

11:20

starting my own business, Walton

11:22

Goggins, a actor. And But I couldn't do this

11:24

on I like the sound of starting my own

11:26

business. Walton my own. GoDaddy Arrow uses AI to create everything you need to grow a

11:29

business. Goggins, Gogglasses. But I couldn't do this It'll make you a unique logo.

11:31

It'll create a custom website. on my own. Go Daddy Arrow uses you

11:33

up with a social media calendar.

11:35

How cool. It'll write social posts for you and even set you up with a social media calendar. How

11:37

cool is that? to this. For a limited

11:39

time, you can get Arrow All Access

11:41

for just a dollar a week for 12 weeks.

11:44

We're talking all the AI power of

11:46

GoDaddy Arrow plus a domain, e-commerce, e-professional,

11:48

a unified inbox. all for

11:50

less money than I spend

11:52

on deep tanning lotion while

11:54

sunbathing off the Amalfi coast. You know

11:56

what that sounds like? A plan. Get

11:59

started at Go... terms

12:01

apply.