Transcription
Donald Trump says he is open to talks with Chinese President Xi Jinping, after imposing an even higher tariff of 125% on China. In a dramatic shift in policy, the US president has paused higher tariffs on goods entering the US, with the exception of China, which has announced retaliatory tariffs of 84% on US goods. That came into effect just over an hour ago. Mr. Trump accused Beijing of showing a lack of respect by retaliating.
These are the tariffs that took effect on Wednesday, affecting dozens of countries. However, just hours after their implementation, President Trump announced all those would be pulled for 90 days and rolled back to a baseline of 10%. President Trump says he can't imagine he'd have to raise tariffs on China further, and he has no concerns of any escalations in relations beyond trade.
Here's our North America correspondent, Peter Bose. Unthinkable at the start of the week, but Wall Street had something to celebrate at last night's closing bell. It was all smiles and cheers as the financial markets soared. Stock prices jumped with one of the biggest one-day gains in history as soon as Donald Trump revealed a 90-day pause. Share prices in Asia also rebounded strongly in early trading, recovering after a tumultuous week.
The news that sparked a global sigh of relief came in a social media post from President Trump: a substantially lowered reciprocal tariff of 10%, effective immediately. That baseline stays for everyone except Mexico, Canada, and China, with Beijing being slammed harder than ever with a levy of 125%—way above everyone else. The president said he'd been thinking about his new plan for a few days and had noticed people were getting a little queasy. "It was written from the heart," he said. "It was written, uh, as something that I think was very positive for the world and for us, and we don't want to hurt countries that don't need to be hurt, and they all want to negotiate. The only problem is, you know, you can only do so many at one time. It's like, it's uh, we want to do it right, we want to get it right."
Given what Mr. Trump has said in the last few days, his apparent change of heart came out of the blue. But was it always the president's plan to rattle the world's markets, and especially China, to get his way? The US Treasury Secretary seems to think it was. "This was his strategy all along," he said, "and that, you know, you might even say that he goaded China into a bad position. They responded; they have shown themselves to the world to be the bad actors."
Donald Trump insists he's doing what his predecessors should have done decades ago to get a better deal for America. He says China's leader will eventually come to the table. "I think President Xi is a very smart guy, and I think we'll end up making a very good deal for both, but you know, we've been treated so badly for so many years. Again, we allow that to happen." For now, the White House says it's working on at least 75 requests from other countries to negotiate new trade deals for American consumers. The latest twist could be welcome news that prices in the shops may not rise as much as they'd feared. Peter Bose, BBC News, Washington.
"Well, I talked to Daniel Lipman, who's the White House reporter at Politico," Bose continued. "I asked him for his assessment on the pause of the higher tariffs. It looks like, uh, he did not want to have a depression or a major recession on his hands, where he would be the only person who would get blamed for that. So his Treasury and Commerce Secretary were with him almost 24 hours ago in the Oval Office, explaining that financial markets were on the verge of seizing up, uh, and that he had to reverse course. And he's gotten so much criticism from Republican senators, even top supporters like Ted Cruz, uh, who said this could have been a ma—a massive mistake if we had kept these tariffs on. And so that clearly spooked him, and he didn't want, uh, to get that type of blame, which is really interesting because he till that point had been saying, 'We have to endure the pain. Yes, markets are explosive; we're seeing reaction, but we're going to see this one through. I've got the courage to do that.' But actually, he didn't have a choice in the end. Yeah, I don't think he had the courage because, uh, he doesn't want to have Republicans lose out big in the midterm elections, uh, next November, uh, next year, uh, and he remembers he was elected on a basis of reducing prices, uh, and combating inflation. He had blamed Joe Biden for that, uh, and so for prices to go up wildly, uh, with iPhones and every good basically coming into the US except for, uh, some select goods from Canada and Mexico, uh, he was not willing to, uh, see that through. And so we should remember he loves to keep people on their toes. He remembers he had *The Apprentice*, uh, and so he views every day as almost a TV show episode, a new episode, and and so, uh, he wants to kind of keep people tuning in, uh, and having lots of suspense and wild twists and turns. And so today, well, he certainly delivered on that for sure. And the question is, what damage has that done? Because because now in terms of, uh, trading partners, countries around the world, there is a lot of distrust, yeah, because it makes it very hard for companies, multinationals, to invest in the US because we don't know what's going to happen at the end of those 90 days, uh, if there are some countries that don't make deals, uh, and so they can't just plan with every week, uh, with new policies, uh, and so I think they're kind of having to get used to that. This is how Trump operates, uh, and we could still, well, see a recession, uh, but I think that he's hoping to have more announcements of new manufacturing facilities in the US, uh, but it just makes it much very hard for companies, uh, who have long-term planning to actually make investments in the US and abroad because they see that policy just changes on a dime."
"And Daniel, what are you hearing, you know, what what's the gossip about how all this has been going down in the White House in terms of the team? Elon Musk and others," Bose asked. "Elon Musk has been very vocal as ever about his criticism about various members of Trump's team, uh, during this process of this week, which has been tumultuous. How has it impacted his team?"
"I think that we've seen more divisions on this issue than almost any other issue," Lipman responded. "Most of their issues, they are totally aligned on. They want to cut taxes; they want to reduce regulations, uh, but for Elon Musk, he has a lot of business operations in China. He makes a lot of Teslas there, so he hasn't been thrilled about the tariffs there, uh, he has called for a zero tariffs with the US and Europe, uh, just in the last few days, and, uh, he got in squables with the trade adviser Peter Navarro, where the White House press secretary said, 'Oh, boys will be boys, because they're arguing about tariffs.' And so, uh, Trump kind of has angels and demons on both sides of his, uh, shoulder, and he every day he kind of listens to one side or the other." Daniel Lipman, White House reporter for Politico, just explaining what's going on within the White House at the moment.
"Let's then go to our Asia business hub," Bose said. "Nick Marsh is watching markets for us now. Hello to you, Nick."
"Just looking at Japan, it's still up something like 8.6%," Marsh replied. "The rally continues."
"Certainly does," Bose affirmed. "They're recouping those huge losses that we saw yesterday. It's the same picture in Seoul, in in Taipei, in Australia, uh, as well. You know, these are key manufacturing hubs that we're talking about, big exporters to the United States. They're going to start negotiations, uh, with Washington to see what can be done there. The big exception, obviously, that you've been covering all morning is, of course, China. That's facing this incredible 125% tariffs, uh, after Beijing said that it wouldn't, uh, be negotiating. Now, clearly that is a blow to China. They had been hoping to unite the rest of the world against what they called, uh, Trump's trade tyranny. Doesn't seem like that's going to happen now. Doesn't mean though that there is an appetite for a fight in Beijing. I mean, we know that the policymakers there have been preparing for this sort of scenario—a second Trump term, an all-out trade war—for many, many years now. And the simple calculation is that basically the United States needs China more than China needs the United States. If American consumers aren't going to buy Chinese goods—cheap Chinese goods—where are they going to buy them from? If American farmers aren't going to sell to China, where are they going to sell to? And the thinking goes that Chinese—the Chinese manufacturers—can sell to their own vast domestic market; they can sell to other countries. Can the United States quite do the same? Uh, that is the thinking, of course. So we're going to have to see, uh, clearly how this plays out. That is basically what underpinned Trump's entire philosophy in the first place—that the US is too reliant on China, and this is why he's come in with these, you know, sort of sledgehammer tariffs. So although there has been a measure, let's say, of resolution for at least 90 days in some Asian countries, China is obviously the big exception, and China is by far the most important player, not just in the regional economy but in the world economy when it comes, uh, to the United States trade policy."
"Yes, and, uh, tariffs on China did not come as a surprise, of course," Bose added. "Triple-digit tariffs is is is hard to stomach for China, but when it comes to the other economies in Asia—Japan, South Korea, uh, Taiwan—many of whom are seen as key allies to the US, big investors in the United States, it was a shock to them to be on the receiving end. So now all those governments, I assume, are hoping to broker a good deal before the 90 days is up."
"Well, the Japanese government couldn't quite believe it," Marsh said. "I mean, their position was, 'We are the biggest investor worldwide into the United States. This isn't really how you should treat the biggest investor into your country and an earwall ally as well, coming in with, you know, 25% odd tariffs,' um, so there's been a pause there, um, they obviously, you know, want to avoid tariffs as much as possible. Manufacturing is such an important, uh, part of their economy, but there's another problem now, Sally, and that is if China isn't able to sell to the United States, where is it going to sell? Is it then going to start dumping lots of cheap goods onto other countries? So this is kind of like a a secondary ricochet effect, uh, of this trade war. So manufacturers, um, in places, well, here in Southeast Asia, you know, you know Vietnam and Thailand, Cambodia and so on, they're kind of bracing themselves from an influx—deluge—of goods coming from China that could put noses out of joint when it comes to domestic manufacturing, domestic jobs as well. We know that Europe is kind of bracing itself for a similar secondary effect, um, so, you know, this is just one aspect of a much wider ranging, um, series, um, of knock-on effects from this trade war."
"Okay, Nick, thank you so much," Bose concluded. "Nick Marsh there in Singapore."