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An interesting element of this whole steel saga is whether Donald Trump's decision to ramp up tariffs has sped up the process of the government needing to step in and act
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Because, of course, still going to the US now has 10 percent or higher tariffs, in fact
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Has that fuelled the urgency with which ministers are now having to act to save British steel
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We'll put that to a government minister in a few minutes time. First, though, let's look at the wider issue here, because, of course, Donald Trump has backed down to a degree on most tariffs that he introduced 10 days or so ago, but not with China
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The trade war between the US and China continuing to ratchet up
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China now responding by whacking tariffs of 125% on goods coming in from America
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That after Trump increased his tariffs on China to 145%. So this is a really, really significant economic battle going on between Washington and Beijing
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At what consequence to the rest of the world Dr Michael Keating is Professor of International Political Economy at Richmond American University of London Michael good to have you with us on the programme this morning Who going to blink first do you think
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Oh, well, it won't be the Chinese. I mean, Donald Trump is blinking left, right and centre here
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He's changing his mind all of the time. And in a way, that's a bigger problem. What usually
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happens. The government makes a big policy announcement on tariffs or on taxes or on
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anything and the market sort of then costs that in. It adjusts and then gets on with life. But if
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you keep changing the policy settings every 12 days or four hours or whatever it is, it just
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creates mass uncertainty. And that means the economic turmoil is in part being caused not by
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the tariffs, but by the changing of the policies all the time. This trade war between the US and
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China. I mean, it's pretty much unprecedented in recent years, at least
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Who stands to lose most And I guess sort of the implication of that is who will need to back down first do you think It depends whether if Donald Trump is fighting a trade war on every front that massively problematic for the United States of America
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If it wants to have a trade war just with China, the implications are completely different. If you're
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having a trade war with China, the impact is going to be trade diverting. America is going to need
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other trade partners. China is going to need other trade partners. But if America and that's easy for
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China because it's not putting tariffs on everybody else. But for America, if they're losing partners
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left, right and centre, then I think the, especially because these are generalised tariffs, they're not
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just tariffs on industrial goods or key strategic goods. It's not just the steel industry. It's
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everything across the board. And I think that's where a lot of the problems for the United States
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of America come from. It's also a democracy. They're going to have an election in 18 months
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time in their midterms. They'll probably get a shellacking because that tends to happen anyway
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But when you've caused a recession, that makes that up. China doesn't have those problems
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What does this mean for all of us Michael Because clearly this is you know the 125 tariffs 145 on China make our own 10 look pretty minor But this is of course a war between an economic war between
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the two richest countries in the world. How will it affect Britain? It's a good question. I mean, again, some of the trade diverting effects could be good for Britain
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But the question is, does it cross over into other sorts of financial and economic conflict
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If you could imagine it becomes a currency war, that can have other sorts of implications
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If the US dollar collapses or if the Chinese dollar, if they continue to, you know, trend downwards, things can become cheaper for us
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Things could become more expensive for us. It's a really interesting sort of case
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I think a lot of it depends on whether he continues to fight and demand tariff increases on Britain, on America, on Europe, on Australia
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that's really where the impact is going to be felt, I think, more for us
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Very interesting, Dave. Thank you very much for coming on, Dr. Michael Keating, Professor of International Political Economy at Richmond American University of London
