How Will Last-Minute Trade Negotiations and Tariffs Impact Global Trade?

CGTN Europe

Paulo Nogueira Batista Jr., former Executive Director at the International Monetary Fund (IMF), discusses the uncertainty and disruption of global trade due to increasing tariffs by the U.S., with countries like Brazil being significantly affected.

Transcript

00:00Let's talk now to Paolo Nogueira Batista, Jr., who's former executive director of the International Monetary Fund.

00:06Good to see you again, Paolo. Welcome back to the program.

00:09So, clearly there is some last-minute negotiations going on,

00:13but tariffs for countries that don't have a deal with the United States due to kick in from tomorrow, August 1st.

00:19This is a real moment of uncertainty, isn't it? What could this mean for global trade?

00:23Well, global trade is being disrupted as never before, at least in my lifetime, by the actions of the United States.

00:35The United States is increasing average tariffs considerably.

00:41At the same time, there's no clear prospect of what the tariff levels will be,

00:46because the stance of the U.S. president changes all the time.

00:50It's either up or down. You don't know where he actually is heading to.

00:56But the fact is that trade is already being hurt, because of the uncertainty,

01:02and also because tariffs have indeed risen relatively to what they were before Donald Trump came in.

01:09So, this is a disruption of international trade.

01:12Countries all over the world are being affected.

01:14Even countries like Brazil, that were in the first phase, not very much seen as a target,

01:22have now become, in recent weeks, a major target of the U.S. administration.

01:28And the reasons are quite complicated to understand.

01:32Well, I want to ask you specifically about Brazil, which doesn't have a deal.

01:36So, 50% tariffs will be taking place on imports there.

01:40What does that mean for Brazilian exporters, do you think?

01:43Well, the U.S. is an important market.

01:46It's the second largest economy in the world after China, the second largest trading country after China,

01:53and Brazil exports considerably to the United States.

01:56Now, the confusion is very big, because yesterday, the U.S. government announced that the 50% tariff

02:02will not apply to all Brazilian exports to the U.S.

02:05There are a great number of exemptions, including airplanes, orange juice, and a number of others.

02:15So, the calculations that have been circulating since yesterday are that about half of Brazilian exports

02:21to the United States will be affected by the tariff level of 50%.

02:26Now, who knows what's going to happen?

02:28It was supposed to kick in August 1st, tomorrow, but now it has been delayed in the case of Brazil to August 6th,

02:35apparently because some sectors in the U.S. itself are protesting, are pressuring the government

02:41to not apply so high levels of tariffs to imports that they need for their consumers, for their enterprises.

02:48So, some countries are still working towards a deal.

02:53What about those countries that are still trying to come to an arrangement?

02:56What leverage do they have, if any?

03:00Well, if you look at the deal that was announced with the European Union,

03:04it's very unfavorable to the Europeans, so far as I can perceive.

03:09Tariffs will rise in the U.S. and will remain low in the European Union.

03:13So, the European Union apparently has a fiasco on its hands in terms of negotiations with the U.S.

03:21Now, other countries have been more firm.

03:24China has been, in my opinion, an example of how to respond to a bully like that, like Donald Trump.

03:32You have to be firm and to exert pressure and to act in a counter, in a retaliatory manner, if necessary.

03:41Whether the Brazilian government will do that or not is still open to question.

03:45President Lula has announced that he will apply retaliation measures, if necessary.

03:51And I think, you know, so many countries around the world have been affected by these drastic tariff moves or threats,

03:59that I think there should be more understanding among the countries as to how to respond to the U.S.

04:05I think the best way is the Chinese approach, to be surgical, you know, target specific sectors that can arm the United States

04:16and that are not costly for the country.

04:20This is, I think, the best approach to follow instead of relying on average tariffs, as the U.S. has been doing.

04:26Thank you so much for coming on the programme and for joining us today.

04:30That's Paolo Nogueira Batista, Jr., the former executive director of the International Monetary Fund.

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