The other side of trade

Rob Armstrong (0:06)

Pushkin.

Katie Martin (0:09)

Look, we try not to talk about Donald Trump on this show all the time, but two things. One, he's the leader of the free world. Two, he has a whole bunch of economic policies up his sleeve that matter enormously to markets, and that is very much our jam. And the latest curveball has landed on the market for metals. The president wants a massive 25% tax on all US imports of steel and aluminum. Or aluminum, if you prefer. Wherever it comes from, China, Europe, UK, whatever. This has sent metals markets a little bit bananas. Today on the show, we're breaking down for you what is going on here, why we should all care and how this fits into the broader trade strategy.

This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist at the FT in London, and I'm joined by a dynamic duo today in the blue corner, down the line from New York City, the bruiser from the Unhedged newser, Rob Armstrong.

Rob Armstrong (1:13)

Greetings.

Katie Martin (1:13)

But also in the red corner, a newbie on this podcast, the undisputed heavyweight trade nerd of the FT, Alan Beattie here in the London studio with me. Alan, welcome to the show.

Alan Beattie (1:27)

Thank you. Why am I in the red corner?

Katie Martin (1:29)

I don't know.

Alan Beattie (1:29)

Okay.

Katie Martin (1:30)

So, all these years, you've been nerding out on trade, and now suddenly, are these the best of days or the worst of days for you?

Alan Beattie (1:38)

Someone in the trade world said, it's kind of like we've all been working in this quiet corner of the library. Nobody's bothered us. No one else wanted to take those books out. And suddenly, the doors open, all these people crash in, pulling books off the shelves and all the rest of it. You've got to suppress the temptation just to go, shh.

Katie Martin (1:53)

Yeah. And also, these are my books. Get out of here.

Alan Beattie (1:56)

Get out of here. Instead of which, you've got to try to open up, turn around and go, let me tell you about tariffs.

Katie Martin (2:01)

Now, children, sit down while I explain to you what's going on. So, let's start with the metal stuff. What is the latest proposal and is it serious?

Alan Beattie (2:12)

There's a thing I always say about trade under Donald Trump, which is what the screenwriter William Goldman, who wrote The Princess Bride, among other things, said, which is, in Hollywood, nobody knows anything. Nobody knows anything. Because with Trump, he thinks about five contradictory things. He has about eight people around him who also think things that contradict each other and indeed themselves. So, who knows? What is true is that he did put on steel and aluminum tariffs in his first term, 25 percent for steel and 10 percent for aluminum. Now, he suspended a bunch of those. Biden negotiated some suspensions and loopholes and so forth. But he does have form in putting them on.

Katie Martin (2:49)

Yeah, so there's all sorts of little kind of loopholes and exemptions and whatnot that came in the last administration. And now he's saying, right, all that has gone, 25 percent and everything.

Rob Armstrong (2:58)

Alan, why steel and aluminum? Why not pears and stuffed animals, if you know what I mean? Why this?

Alan Beattie (3:04)

It's always, always steel. Steel screws up the entire global trading system for everyone else. I annoy people massively when I say this. I actually have people from the Biden administration saying, Alan, if you understood the lives of steel workers, you might not be so dismissive about it. I grew up 10 miles away from a steel mill. I know what steel mills are. They grown up about 600 miles away from a steel mill. This is why I had no friends in the Biden administration. But it is a symbol of industrial strength. It's a symbol of manufacturing.

Katie Martin (3:31)

It's men doing things in hot places with big hammers and stuff.

Alan Beattie (3:34)

We all think steel is cool. It's also really concentrated. If a steel mill closes down as it did near me, and you get 3, 4, 5, 6,000 jobs gone bang in a day, that's really dramatic in a way that losing jobs across the service sector is not.

Rob Armstrong (3:48)

It's not only dramatic, it attaches to a very specific political power center. That representative, that senator, whatever, has a serious bone to pick.

Alan Beattie (3:59)

Certainly true in the US, not everywhere, but certainly in the US. That's the other thing, Wisconsin, Pennsylvania, these are the swing states. I mean, it's absolutely true that the Biden administration, Catherine Tai, according to people who have spoken to her, they told me that she or certainly USGI explicitly said to them, you've got to help us win Pennsylvania. You've got to give us what we want on steel because you've got to help us win Pennsylvania.