China hits back hard in global trade war with a 34% tariff on imports of all U.S. products

Our then World Markets Friday took another hit in response to Donald Trump's sweeping tariff announcements this week

Shares across Asia and Europe slid at the start of trading with everything from crude oil and big tech stocks to the value of the U.S. dollar, even gold falling in reaction

Well, despite what for many is viewed as just the start of what could be a long lasting widespread wave of economic turmoil

the U.S. president defended his trade war, insisting that it'll bring prosperity to the United States

Take a listen. I think it's going very well. It was an operation like when a patient gets operated on

And it's a big thing. I said this would exactly be the way it is

We have six or seven trillion dollars coming into our country. And we've never seen anything like it

The markets are going to boom. The stock is going to boom. The country is going to boom

And the rest of the world wants to see, is there any way they can make a deal? They've taken advantage of us for many, many years

For many years, we've been at the wrong side of the ball. And I'll tell you what, I think it's going to be unbelievable

The thing that people have to talk about, we're up almost to $7 trillion of investment

coming into our country. And you'll see how it's going to turn out

Our country's going to boom. Well, the European Union, meanwhile, is expected to take a particularly brutal hit

leaders from Germany, Spain and France describing Trump's tariffs respectively as fundamentally wrong

a unilateral attack and likely to have a massive impact on the economy

Now, few sectors will be spared the effects of the 20 percent levies on EU goods

from food and beverage to aeronautics, cars and luxury goods. Here in France, Emmanuel Macron made an appeal to economic patriotism

urging companies to suspend their investments in the US. For more on this trade war in general, then we're going to speak now to Moshe Lander

economics professor at Concordia University in Montreal, Canada. Thank you for joining us today

Moshe. So China just announced its retaliatory measures, 34 percent tariffs on imports of all

U products What do you expect the consequences of this to be Well we heading for a global trade war We haven seen anything like this in about a century This was what happened after the stock market collapse in 1929

and the Americans led the way then by increasing tariffs, and everybody followed suit

I'm not saying that it's going to end with a depression. I'm not saying it's going to end with a world war

but it's certainly not the type of thing that we've seen over the last 80 years as countries have tried to move

towards more integration and less tariffs. So China obviously sells far more to the United States than it buys

So who stands to lose the most from these two countries kind of competing tariffs

Well, I think that the U.S. is probably going to be the bigger loser because China has a little more history and experience being more isolationist and looking at exports are the only thing that were interesting to them and imports were something that they were looking to avoid

So that mercantilist sort of approach might actually serve them well because they have history on their side

The Americans are not as much of a trader as you would think the size of their economy would suggest, but they are much more engaged with the rest of the world, both as exporters and importers

So when they're lashing out at other countries, the anger towards the U.S. is probably going to be greater than in the other direction

I think American citizens are just going along with this for lack of information that this is really an issue

I mean, when you consider that the United States is, of course, the largest importer of goods in the world, what do you think the Trump administration's objective is here

I mean, we heard him talking earlier about, you know, this is going to bring trillions of dollars into the United States

It's going to make the United States richer. Is that realistic? What are they trying to do

I don't know what they're trying to do. I don't think a lot of people know what they're trying to do, which is why European leaders among many are saying, what are you doing

Look, Donald Trump has been in the public eye for 40 years. He was a property mogul in New York

He gained fame for just being famous. He was kind of the early stage Kardashian

But the one thing that he's always been consistent on for 40 years is he does not like free trade

I think he sees it as a zero sum game that if one country is winning, another country must be losing

And if you look at a lot of his rhetoric, he keeps talking about how other countries are taking advantage of the U.S

All that means is that they have some sort of trade surplus with the U But guess what I have a trade surplus with my employer I sell them more stuff that I get back in return but I have trade deficits with every retailer that I do business with

At the end of the day, there's nothing wrong with either. I think he misses that in order to be rich, you have to be engaged in trade

He might have been missing that class when he went to university. So from a consumer perspective, because we've spoken a lot about how this is affecting the

markets, how investors see these tariffs. I want to know, again, from the standpoint of consumers, what do you think is the most harmful thing that we see happening

The tariffs themselves, or is it the turmoil that's kind of generated increasingly by the uncertainty linked to the back and forth about these tariffs that we've seen over the past couple of months

So initially, it's going to be the uncertainty. Right now, nobody knows what's going on, and you have people like me on trying to explain it, but even I'm at a loss for words as to what's going on

So whenever you have uncertainty, consumers are going to cut back on their spending. But at some point, those tariffs are going to come in and start having a price effect as well

And at that point, then, whatever cost of living and affordability issues many people around the world are having these days are just going to be magnified by the inability to get the goods and services that they were normally getting

And the goods and services that they can get are going to be at a higher price. So I think it's going to happen in two stages here

But, of course, there's always the potential that Trump walks this back, given the way that stock markets are reacting, given that he likes to think of himself as an elite business person

And if he realizes that universally business is saying this is a bad idea and he walks it back, we might not see the price effect

But we will continue to see the uncertainty because who's to say that he's not going to give us a 30 day reprieve and come back in May and do this all over again

At least in the long term, do you think that it could actually that these tariffs could actually have a positive impact if we if we put the market instability aside for for now

at least in terms of revamping domestic production, especially in strategic industries

or even from a climate perspective? I mean, we know this is going to affect clothing

fast fashion, things like that, that Americans have that are, you know, consume, but aren't

necessities. So do you think that this could bring positive changes in either of those fronts

It could bring positive change but not in the way that you suggesting The EU is an incomplete project They went a long way towards integrating their economies They did a lot towards eliminating tariffs on a lot of things but it incomplete Services in certain sectors continue to remain protected One of the things that we focusing

on here in Canada right now is that we have a lot of interprovincial barriers that have been there

for decades, but nobody's paid attention to. If you can remove those barriers and complete the

Canadian integration project, there's billions of dollars that are being left on the table

I would suggest that the EU has billions more than what even Canadians have if you can find a way to try and realize that maybe the US is not going to be a reliable partner going for it or maybe it's going to be a situational partner going for it

So what the EU should be doing right now is not looking to try and onshore domestic production

But what they should be looking to do is deepen that integration among the countries and remove whatever barriers do exist so that they're a little more insulated the next time this should flare up

As a final question for you, sir, this this brewing trade war has been described as the end of globalization as we know it

Do you think that that's an accurate way to frame what we see happening or do you see it more as something where the United States kind of increasingly just becomes an isolated actor on a much larger world where commerce is where trade is increasing amongst other global powers

well it does give the potential for the end of globalization to happen if some of the farther

right parties that are coming to dominate the european landscape uh decide that they want to

pull up the drawbridge as well it could be a problem i would remind anybody in europe though

that at the end of the second world war france and germany were not exactly on the best of terms

but within 40 years the french president and the german chancellor are literally walking linked

arm in arm to show the unity of those two countries so uh there is the potential for

bygones to be bygones at some point. I hope it's not going to take 40 years, but it also isn't two

world wars that we fought over this trade war. So it's going to be a bit of a hurdle to overcome

I have a feeling that it will not survive this president, or if it does outlast this president

it's not going to last in a permanent sort of way. And people will realize that we do need each

other and we do need that increased globalization. Maybe this is the push that we needed

Professor Moshe Lander of Concordia University, thank you very much for speaking to us today