How Trump's trade war is changing everything

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A killing in the night.

Dmitry Grozoubinski (0:09)

Where's Simone?

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20 years later, police still haven't solved the case, and I want to know why.

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Did you kill Simone Straitville? No, never. If you lied about one thing, you may lie about other things.

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This week's That's Business is all about trade, which Donald Trump has turned into the topic of the moment. So we're talking to Dmitry Grozoubinski, who was a former Australian trade negotiator and diplomat. He's now based in Geneva, where we spoke to him this week, and he serves there as the Executive Director of the Geneva Trade Platform and founder of a consultancy called Explain Trade, which he did in a book with the title, Why Politicians Lie About Trade and What You Need to Know About It, which was in 2024 It's a very good explainer about trade. That book, although I'm not sure he explains exactly why politicians lie about trade. Anyway, we'll ask him about that. So here's Dmitry Grozoubinski, former Australian trade negotiator.

Dmitry, thanks for joining us on That's Business.

Dmitry Grozoubinski (1:32)

Pleasure to be here.

Alan Kohler (1:33)

Now, the title of your book is Why Politicians Lie About Trade. So Dmitry, we want to know which politicians are lying. We want some names.

Dmitry Grozoubinski (1:43)

Oh gosh, most of them really. How long do you have? I think this is only a half an hour podcast.

Alan Kohler (1:48)

All right, really. So you're saying that all most or all politicians lie about trade. So why do they lie about trade? That's the title of your book. Why do they?

Dmitry Grozoubinski (1:57)

I think the most honest answer is that in all of our countries, there are very, very large challenges from income inequality through to the environment, through to changing natures of production. These are really, really big problems.

And the solutions that they require are often beyond the scope of the political capital available to leaders, or they take too long. You know, if you want to fix some of these massive problems, some of them we don't know how to fix, some of them would require billions of dollars, we don't have or don't want to borrow, and so on and so forth. And so increasingly, governments are looking around and political leaders are looking around, and they're asking themselves, what is something that I can present as a solution that will be politically popular and will seem like decisive action on a massive problem? And trade, which when you start interfering with it, can be sold as something that hurts foreigners, that by definition don't vote in our elections, or something that you can do unilaterally, you can as your own country control your own borders.

It offers them an ability to tell a story, to say, I can see this massive problem and I'm taking decisive action by doing this and this at the border, and that will fix it. And so I think they lie because it gives them that ability to be seen to be doing something and to be taking decisive action. And the general public, for entirely legitimate reasons, can't always see through the fact that it's never that simple, and it's never that easy.

Alan Kohler (3:38)

So Donald Trump has come up with a novel sort of framing of trade, which is that when there's a trade deficit, as America consistently has, then it's losing, right? And also his other thing is that tariffs involve a charge on another country, that the other country is paying it, right? So do you think that he and the administration of the United States now believe that, or is it just another lie?

Dmitry Grozoubinski (4:03)

So I never try to guess what is inside someone's head.

I think the president of the United States has especially one mind you don't want to delve into necessarily too deeply for their in life madness. But I will say that certainly this is something he has been saying for 20 years.

Well before he ever ran for political office, he has been saying, writing in newspapers, going on TV to say, Americans are being ripped off because they buy more from the world in terms of goods, products, physical products, than they sell to the rest of the world. And that tariffs, taxing American purchases of these foreign goods, could help redress that balance and bring factories back to the United States. Now, that hasn't necessarily happened. And economists told him that it wouldn't. And you can argue that it is somewhat inevitable that a country, which is where the average citizen, is on average vastly wealthier than anyone else in the world and spends a lot more in terms of the money they take in than anyone else in the world, is going to buy more things from the rest of the world than they sell to the world. That's just sort of how math works. But none of that has stopped him selling this idea that both America has been cheated and that an industrial renaissance lies through taxing products at the border.