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Donald Trump has warned he can still do “absolutely ‘terrible’ things to foreign countries” in a fresh tirade against the Supreme Court after it ruled that his ‘reciprocal tariffs’ were illegal.
In a further sign that the court’s decision will lead to more trade uncertainty, the US President said the court had “unwittingly” handed him “far more powers and strength” to levy fresh tariffs than before the ruling.
City AM journalists Maisie Grice, Sam Norman and Mauricio Alencar discuss what the new tariff regime means for the UK.
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0:00
Trump's tariffs are back at the top of
0:02
the agenda. A US Supreme Court ruling on
0:04
Friday struck down the president's
0:06
sweeping levies from over the last year,
0:08
arguing that the authority Trump used
0:10
fell short. It was a major act of
0:13
dissension with the conservativeleaning
0:15
court going against Trump. But it's also
0:17
opened the floodgates to a new wave of
0:19
trade drama. Now Trump reacted as one
0:22
would expect. He took to Truth Social,
0:24
announcing a new sweeping 15% tariff
0:26
across trading partners. For the UK,
0:28
this is bad news. The government has
0:30
secured what they call a preferential
0:32
deal with the US with tariffs sitting at
0:34
10%. But the legislation used for new
0:37
tariffs require them to be inflicted
0:39
with no discrimination, meaning the UK
0:41
has no choice but to get caught in the
0:43
crossfire. I'm joined here with our
0:44
economics and politics reporter,
0:45
Mauricio Alenar, and our investment
0:47
reporter, Maisy Grace, and we're going
0:48
to get into the latest on the Trump
0:50
tariff drama. So, Mauricio, how is the
0:52
UK economy reacting to this latest trade
0:55
onslaught? Well, it's quite hard to see.
0:57
So, Alan Taylor, who's a MPC on the a
1:01
member on the Bank of England, a
1:02
monetary policy committee member, he
1:04
sets interest rates along with eight
1:06
other MC members. And he gave a speech
1:08
this morning um sort of talking about
1:11
lots of areas around inflation and
1:13
unemployment. And he was asked about,
1:15
you know, what do Trump's tariffs mean
1:16
for the UK economy? and he said well
1:19
look this new announcement actually
1:21
doesn't change the average tariff rate
1:23
all that much but it's just yet more
1:25
evidence that shows that tariffs are
1:27
here to stay you know make comparison to
1:29
1930s US America when you know different
1:33
tariff regime came in after the great
1:35
depression um so you know he was saying
1:38
that also that kind of shock from the
1:40
tariffs were you know would take some
1:42
time to kick in for example he's also
1:44
spoken in the past about the effect of
1:46
tra trade diversion from China. So, you
1:49
know, less less exports making their way
1:52
from China to to the US because of
1:54
tariffs coming into the UK. He said he
1:57
has argued in the past along with
1:58
another MPC member that that would sort
2:01
of decrease the inflation rate um for
2:03
the UK, but you know, it could be
2:04
damaging for some businesses that get
2:07
compet.
2:08
>> Quite an optimistic look for Bank of
2:09
England, what we're seeing. Uh well it
2:11
depends how I think there's a lot of
2:13
different sort of um arguments on on the
2:17
impacts from supply chains whether that
2:18
could raise costs and or whether you
2:21
know trade diversion can lower inflation
2:23
um you know if it does materially lower
2:25
inflation in the medium to long term
2:28
that would sort of push the Bank of
2:30
England to push for more interest rate
2:32
cuts but you know in previous Bank of
2:35
England meetings they haven't really
2:36
sort of talked about it all that much.
2:38
Kevin, you know, I think there was one
2:40
um meeting in late last year where they
2:43
said the sort of geopolitical events of
2:45
the world hadn't had actually a material
2:48
impact on the decisions at the Bank of
2:50
England.
2:50
>> Now, do you think this is a view that's
2:51
spreading across the UK? As we saw, I
2:53
think it was on Saturday once the
2:55
announcement came out, the BCC, the
2:56
British Chamber of Commerce, they were
2:57
quick to issue a statement. They say any
2:59
difference in these tariffs, 5%, it's a
3:02
big thing for businesses and it's still
3:03
going to be a hit. How do you think this
3:05
kind of optimism or this sort of outlook
3:07
from the Bank of England is spread
3:08
across the wider economy and businesses?
3:10
>> Yeah. No, I think from a business and
3:12
industry group perspect perspective,
3:13
it's it's obviously hugely confusing.
3:16
It's it's adding to uncertainty. I think
3:18
the BCC came up with that sort of 2
3:20
billion pound or more um cost to the UK
3:23
economy. Um so I mean every business
3:26
group has different interests. you know,
3:28
I guess, you know, for example, car
3:31
makers um were sort of relatively
3:34
pleased with the sort of preferential
3:36
trade deal struck by the UK and the US
3:38
in May last year after liberation day.
3:41
Um
3:43
there's a sort of kind of uncertainty
3:45
there. What you know, what did do these
3:47
new this new flat tariff regime mean for
3:49
businesses? How does the UK compare in
3:52
its tariff regime um to other countries
3:55
to other major European countries you
3:57
know which have big sort of car making
4:00
um industries as well as China of course
4:03
so it you know for once where the UK was
4:06
in kind of poor position there now it's
4:09
pretty unclear um and you know I think
4:11
there's a lot to figure out a lot to
4:13
flesh through for the government to try
4:15
and understand does that trade deal from
4:18
last year still stick Um, I think
4:21
they're working through that. I think
4:22
Peter Kyle, the business secretary, has
4:24
been talking to Jamie Greer. Um, he's a
4:27
US trade envoy. I think Jamie Greer has
4:29
said that the sort of previous trade
4:31
deals would stick. Um, you know, you
4:34
never know what you're going to get with
4:35
President Trump.
4:36
>> And just on that, I mean, we saw Bridget
4:37
Phillips was this weekend doing the
4:39
political rounds. Her view has been this
4:41
discussions are ongoing. We we've had
4:42
this preferential deal. We want to stick
4:44
to that. What kind of is the lines
4:45
coming out of Downing Street that you're
4:46
hearing?
4:47
>> Yeah. So it was quite interesting this
4:49
morning where lobby and where all the
4:51
journalists who have come in for their
4:52
sort of daily briefing with number 10
4:54
and you know you get that sort of common
4:57
number 10 line of you know we want the
4:59
best outcome for British businesses,
5:01
British consumers. Um well, you know,
5:03
it's a we're not going to provide
5:04
running commentary. Um we're working to
5:08
engage with the US administration. But
5:10
then at the same time they they they did
5:13
say and they have said this in the past
5:15
that nothing was off the table. But they
5:16
did actually make a bit more of an
5:18
emphasis this morning on that point. Um
5:21
you know that's comes to reciprocal
5:22
tariffs. So the UK whereas the EU have
5:24
always sort of kept that option well on
5:27
the table of um you know let's we might
5:31
actually come back with reciprocal
5:32
tariffs that the UK have always followed
5:34
and said that's not our preference. And
5:36
I think the government has said that
5:37
again this morning. you know, we don't
5:39
we're not looking for an escalation of a
5:41
trade war, but you know, that's still
5:44
that's still an option for them to to
5:45
take if if you know, if Trump does keep
5:48
the these sort of tariff um rates on the
5:51
UK at higher rate than you know, he's
5:53
levied on other countries such as China
5:55
or Brazil. Um you know, we could see and
5:59
you know, and Sama has has enjoyed a
6:02
bounce in previous times from you know,
6:04
standing up to Trump after Greenland
6:06
when he said, "I will not yield." Um I
6:08
think you know Stalman enjoyed a little
6:10
bit of an approval support there. This
6:12
is kind of an opportunity for him to
6:14
stand stand up to Trump and you know if
6:16
I guess reciprocal tariffs is one way a
6:18
risky way of doing that but shows that
6:21
you know won't get pushed around in the
6:22
special relationship.
6:24
>> Interesting. So Ma, let's bring you in
6:25
here for this one. So we we're seeing
6:27
businesses they're scrambling now.
6:28
They're checking their supply chains.
6:30
They're seeing who's exposed.
6:31
Governments they're scrambling to check
6:32
their trade deals.
6:33
>> The investors are they feasting on
6:35
tacos? And now let's just clarify the
6:37
taco statement that comes back to a term
6:39
we coined the investor the markets
6:41
coined last year. Trump always chickens
6:43
out because he would come out with these
6:45
erratic trade policies liberation day
6:47
famously last April and then weeks
6:49
months later would row back on them and
6:51
think it was all the art of the deal. I
6:53
mean this morning correct me if I'm
6:54
wrong it was a 0.1% 0.2% dip for open.
6:57
So what's the sort of investor
6:58
sentiment? Yeah, as you were saying,
7:00
this is not the first time that
7:00
investors have sort of dealt with these
7:02
shock waves after one of Trump's latest
7:04
announcements, liberation day,
7:05
subsequent trade deals. You know, this
7:07
is not their first time playing the
7:08
game. And you're right, the foots did
7:09
open around 0.1% drop. The footsy 250
7:12
als had a bit of drop as well, but you
7:14
know, it wasn't as bad as maybe it could
7:17
have potentially been because you're
7:18
saying we're used to it now. They know
7:19
how to play the game. They can wait it
7:21
out. So it opened flat but market
7:24
analysts are seeming to be quite like
7:25
keen on when the dust settles we might
7:27
see a bit of a recovery and of course in
7:29
the footsie there were certain names
7:30
that did see quite a few drops and quite
7:32
a few falls. You know among them
7:34
Astrogenica had a bit of a dip. So did
7:35
JSK companies who export to America also
7:38
suffered quite a bit of a dip. The pound
7:40
also rose against the dollar. So again
7:42
that's going to affect those who export
7:43
across. But then you know in contrast
7:45
gold miners mining companies did great.
7:47
>> So it was a mixed bag.
7:48
>> Yeah. So talk to us about gold.
7:50
Obviously, gold in these sort of
7:51
situations tends to do well. What's been
7:53
what's gold looking like today? And
7:54
what's it telling us?
7:55
>> This morning, gold rallied. So, a little
7:57
bit of a dip this afternoon, but nothing
7:58
that I would deem too critical. I don't
8:00
see the run ending north of silver. At
8:02
times like this, investors, both
8:04
seasoned and new, want to get their
8:05
hands on a safe haven asset that is not
8:07
going to end. You know, amid all the
8:08
turmoil, that is the one place that they
8:10
know they can go to and they won't
8:12
suffer too much of a dip or a loss. So,
8:14
miners will do well and so will it
8:15
there.
8:15
>> And that's and I think that's the thing
8:16
with the miners. This is one thing the
8:18
Footsie 100's known for. It's it's
8:19
commodity driven stocks. I mean the
8:21
amount of mining mining blue chips we
8:23
have. So what's it looking like this
8:24
morning? Well, this afternoon this day
8:26
session for the miners on the footsie.
8:28
>> Miners are still doing really really
8:29
well. They're both up Fresnilo Endeavor.
8:30
I can see that quite keeping them going
8:32
quite strong again. See what happens.
8:34
But for now they're doing quite well.
8:36
Again towards commodities towards maybe
8:38
towards the consumer goods end they sort
8:39
of did a bit of a dip which is quite
8:41
surprising because in times of
8:42
volatility people tend to look for
8:44
consumer goods. But again I'm quite
8:46
hopeful for tomorrow morning to see what
8:47
happens. I think it's an interesting
8:49
one. Mercy, maybe if you want to come
8:50
back in on this. The difference with
8:51
with these tariffs and where we are at
8:53
the moment. There is a bit of unclear
8:56
how much is covered. I mean, these
8:58
tariffs over the last year, they date
8:59
back to the Supreme Court ruling. It
9:01
dates back to the February tariffs which
9:02
he put on Mexico and I think one of the
9:05
others might have been China. And then
9:06
since then, we've seen so many different
9:08
erratic trade policies across aluminium,
9:10
steel, lumber. Uh farmer was a big one.
9:13
Um, correct me if I'm wrong, but as far
9:16
as I'm familiar, the tariffs he put on
9:18
steel and aluminium actually weren't
9:19
under the same authority that had been
9:20
struck down by the Supreme Court. So, I
9:22
think it's left a lot up in the air of
9:24
where we actually go next and who's
9:26
actually going to be included in this.
9:27
And like you said, maybe with the trade
9:28
deals as well.
9:29
>> Yeah, I think that the government is
9:30
biting their tongue a little bit um, you
9:32
know, to figure out actually what does
9:34
Trump mean now.
9:35
>> You know, there's there's also
9:37
legalities again. Always everything's at
9:39
play here. It's always at play with
9:41
President Trump. Um, so I think you know
9:45
on the one hand there's always some
9:47
little political wins maybe from
9:48
standing up to Trump as I said earlier
9:50
on. Um, but you know I I guess the the
9:53
the real strategy behind the sort of
9:56
Stara project is hard diplomacy you know
9:58
winning over Trump. Obviously there's
10:00
been changes in US ambassador they're
10:03
posting in Washington. Um so I mean
10:06
that's also a complexity in itself and
10:08
how you deal with you know new sort of
10:10
communications lines and the the trust
10:12
there between the two leaders. Um but
10:16
yeah it's really figuring through
10:18
exactly where the tariffs fall because a
10:20
lot of it comes through truth social and
10:22
you know that's not legis you know
10:24
that's not a executive order is it? I
10:27
think I think we saw I mean maybe just
10:29
hours ago Trump took to truth social
10:31
warned again. I've got a something on.
10:33
I've got a lot of weapons in my arsenal.
10:34
I can inflict a lot of harm if I choose
10:36
to. I mean there there is a lot worse.
10:38
We've seen it get a lot worse. I'm
10:39
looking thinking back to a year ago when
10:42
that trade war really ramped up and we
10:43
saw the heights of it with the China
10:45
Trump trade war and we're looking at
10:46
tariffs of 100% on each other. Do you do
10:49
you see this going back to that level? I
10:50
mean we're at 15% now. It sort of camps
10:53
a little bit higher than the UK was in
10:54
their preferential deal. Do you see this
10:56
progressing further?
10:57
>> Well, was that a true social post within
10:58
the AI image of him playing hockey
11:00
against Canada? I think you know which
11:01
one you mean. Um, I think he certainly
11:04
has more scope to go back to the way he
11:05
was. He doesn't love taking no for an
11:08
answer. I think that's been proven. I
11:09
know his administration are going to
11:11
probably back him up on that. JD Vance
11:13
already has again. I think it was a
11:14
tweet on Saturday. So, there definitely
11:16
is room for him to run and I don't see
11:19
certain nations such as saying China
11:21
backing down. They didn't back down
11:22
previously. I can't see that happening
11:24
again. The UK again may probably take a
11:26
bit more diplomatic approach than Micros
11:27
was saying. But for those nations where
11:30
>> you know they also have a lot of exports
11:31
here. They can afford to play the ball.
11:33
You know, Asian markets in particular
11:35
are going to I think are going to do
11:36
quite well here. They're not going to
11:38
>> We've also seen the EU today threatening
11:39
to halt their trade deal with I mean all
11:41
these months of last year going towards
11:44
these trade deals, negotiations, um
11:46
conversations back and forth, tariffs
11:48
getting increased back and forth to then
11:49
reach these trade deals like the bigger
11:51
EU one. Where where does that end now?
11:53
Well, the EU EU has taken a far more
11:55
active stance on Trump and Trump's sort
11:58
of rhetoric than other countries such as
12:01
the United Kingdom. Um, you know, where
12:04
has that landed EU in a slightly
12:06
sometimes is slightly prejudiced them in
12:08
in many ways? They haven't managed to
12:10
secure the sort of preferential deals
12:12
that I guess the the British government
12:14
has has managed to strike. They haven't
12:16
also actually sort of always followed
12:18
through as well on their own reciprocal
12:20
tariffs. Um but then again, Trump does
12:23
listen to people who play hard ball
12:26
against him. Um so I there's different
12:29
political calculations for different
12:30
blocks and different countries. Um, you
12:33
know, I think the UK after Brexit is
12:35
both in a privileged position being able
12:38
to negotiate its own way, but also, you
12:40
know, maybe has less scope for using its
12:44
own hard power given um, you know, it's
12:47
even closer trade trading ties with the
12:49
US um, in the years since 2016. So, you
12:53
know, I think it's a it's a quite
12:54
complex um, geopolitical dynamic there.
12:58
you know, you you can't actually divorce
13:00
the sort of trade war realities from
13:02
other the sort of other geopolitical
13:04
sides. I think there's been some
13:06
criticism of Stala from Reform UK over
13:09
you know Star's stance on Iran for
13:11
example and whether how Trump is might
13:13
might use sort of British military bases
13:15
for strikes in Iran. Um has that put you
13:19
know the British government in a
13:20
slightly you know less advantageous
13:23
position? you know, it's there's all
13:25
these kind of different conflicts of
13:27
diplom diplomacy, geopolitical questions
13:30
over running into each other. Um, so
13:32
those dynamics are also really worth
13:34
looking out for, you know, as Trump
13:36
maybe doubles down or or chickens out.
13:39
Um, we'll have to we'll have to keep
13:41
following the other sort of Trump's
13:43
other strategic goals.
13:44
>> I think that's it's interesting point
13:45
you say these external factors as well.
13:47
And when we've seen Trump's use of
13:49
tariffs before, so liberation day, he
13:51
was angry about the trade deficit.
13:53
Earlier this year it was over Greenland.
13:55
He's done it before with the cartels in
13:57
Mexico. This time it's to do with the
14:00
home turf really that obviously these
14:01
the origins of these tariffs are all
14:03
different that this escalation has come
14:05
from I mean how much of how much of this
14:07
is shrunk the Supreme Supreme Court to
14:09
point. Obviously we know the Supreme
14:11
Court have struck down his tariffs. So
14:12
he's gone to this emergency matter for
14:14
these 15%. But how much is of this is
14:16
just escalating to show them points.
14:18
>> You know it's a good argument you're
14:19
saying there. I mean straight away from
14:21
his you know press conference Saturday
14:22
his rebuttal he was speaking out being
14:24
ashamed of them in particular his two
14:26
appointees during his last term. So I
14:28
think you're right when it's saying it's
14:29
this you know sort of showing of power
14:31
to this court like you know I can do
14:33
this. So I get what you're saying then
14:35
the domestic front.
14:36
>> Yeah. and his midterms this year as
14:38
well. Um, you know, any show of power
14:40
and be able to sort of
14:42
>> show to the American people that the
14:44
system is still playing against him.
14:46
>> Um, you know, plays that. So, I guess
14:47
the MAGA base, but um, you know, where
14:51
can diplomacy win out? I mean, we we
14:53
were seeing Jamie Greer is saying, you
14:55
know, these these trade deals struck in
14:57
the past will stick.
14:58
>> Um, so it's a kind of devil in the
15:01
detail kind of situation. Again, you
15:03
know, I think investors have definitely
15:06
learned to not live by what what Trump
15:09
says on Truth Social.
15:11
>> Politicians is a little bit different.
15:13
>> It's a different game, isn't it? I guess
15:15
the biggest takeaway we can get from
15:16
this is regardless of where the
15:19
erraticness is coming from on Trump's
15:20
end. the UK is sort of uh unintended
15:24
victim in this through about 5% whether
15:26
that 5% be a market scare or the scare
15:30
the scare for the economy as we were
15:31
expecting it's still quite a political
15:33
scare and it's not really one that Trump
15:35
had intended to target them directly
15:37
with that they are just a victim of
15:38
circumstance would you both agree with
15:40
that
15:41
>> perhaps but there's other there's other
15:43
you know cats there's other tools that
15:46
Trump can use um you know chaos island
15:49
deal is still sort of in very first.
15:51
There's so many other different sort of
15:54
>> tools in in in Trump's bag. Um tariffs
15:57
is the most sort of obvious arm. So you
16:00
never can never know where his motives
16:02
lie.
16:03
>> Um I wouldn't rule out, you know, Trump
16:05
some of this is quite liberal.
16:06
>> Well, thank you very much. That's
16:08
Mauricio on economics and Maisie on
16:09
investment. Thank you for joining us.
16:11
Keep up to date with the latest on the
16:12
Trump tariff drama on CTAM.
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