Trump targets trade partners with new wave of tariffs

**Rahul Tandon** (0:01)
Oil prices are rising again.

**Marco Rubio** (0:04)
Anything that restricts shipping to the Red Sea would be problematic, for the same reasons that the Strait of Hortenose is problematic.

**Christine Lagarde** (0:10)
The full effect of the energy shock have yet to play out.

**Rahul Tandon** (0:14)
It's World Business Report from the BBC World Service. I'm Rahul Tandon. We'll tell you why those oil prices are rising again and what it means for you and the global economy. And we'll take you to Venezuela as the World Bank says the earthquakes in June caused more than 19 billion dollars of damage.
It is one of those days where there is a lot that is happening. We're going to talk about oil prices in a couple of minutes time. But in the last few minutes, we're getting details that the Donald Trump administration is set to impose tariffs of around 10% on goods for more than 80 countries on Friday. They're going to put these new tariffs under Section 301 Kerry Leahy is going to be with us throughout the programme, economist, of course, based at Columbia University. And Kerry, this isn't a surprise, is it? Because some tariffs that Donald Trump had put in place were due to end on July 24th, but the administration is showing once again that they want to use his favourite word in the dictionary, tariffs, as part of their trade policy.

**Kerry Leahy** (1:27)
That's right. And it's no mistake that he picked it after the markets closed. I think the administration is concerned that the market may not take it well, as in the past, when these kinds of sizable, wide-ranging tariffs were implemented. And at least in the short run, they can't really be overturned. Over time, they could be in the courts. The market will probably look at it very pessimistically. This is his favorite word in the dictionary and other than the negotiation.
And so he's used it yet again.

**Rahul Tandon** (1:58)
It's difficult, I think, for our listeners to follow what has been going on with tariffs. They were imposed. Then, of course, case was bought by a number of businesses. And the Supreme Court seemed to say that they shouldn't have been imposed. Just run us through exactly the timeline of all of this.

**Kerry Leahy** (2:17)
Well, the timeline is messy, as you mentioned.
Back in the spring, we had this fairly wide-ranging set of tariffs. They ultimately got overturned in the courts. And I think probably the best way for our listeners to look at it is that five years ago, the average tariff rate and the effective tariff rate in the states was probably about 2 percent. It moved to about 4 or 5 percent when Trump came back into office. And now it's about 15 to 20 percent, which is a sizable number. I think the market can live with that, but numbers bigger than that, it might cause retaliation on the part of those that are being hurt, would certainly not be a plus for the wobbly outlook.

**Rahul Tandon** (3:01)
Yeah.
And we're just getting details of this all beginning to come through. And we're hoping to speak to Anna Swanson of the New York Times, who is one of those who has broken this story a little bit later in the program. But Kerry, final thoughts from you on this. Donald Trump put tariffs in place to rectify the fact that he wasn't happy about the trade imbalances that the US has with many other countries. We've had them in place for a while. Have they worked?

**Kerry Leahy** (3:29)
The answer is no, at least not in the short run. This argument about trade had been adopted by a number of politicians, both Democrats and Republicans, as trying to establish free but fair trade. But that was not the position Trump normally took. He used it as sort of a power play. He didn't say we need tariffs because people are playing unfairly so much, as he was using it as another weapon that if you don't do this, will slap tariffs on you.

**Rahul Tandon** (4:00)
Kerry, stay with us for the rest of the program. Of course, this news is just breaking now, as we came to where the Donald Trump administration will impose tariffs around 10% on goods for more than 80 countries on Friday. Let us return to another significant moment for the global economy, because oil prices have once again risen over $100 a barrel. Why? Well, that's because the Houthis in Yemen have attacked shipping in another strategic waterway, the Red Sea. Let's hear from the US Secretary of State Marco Rubio.

**Marco Rubio** (4:31)
The Houthis have done that in the past, as you know. They've threatened global shipping there in the past. And again, anything that restricts shipping to the Red Sea would be problematic, for the same reasons that the Strait of Hortmoose is problematic. So it's not a new threat. We hope it can be de-escalated.