How a second Trump presidency may influence economies abroad
How a second Trump presidency may influence economies abroad
Since the presidential election, we’ve been exploring what a second Trump administration and its policies could mean for the economy. Now, we turn our attention overseas.
To help us better understand how a second Trump presidency may affect shores abroad, “Marketplace Morning Report” host David Brancaccio spoke with Zanny Minton Beddoes, editor-in-chief of The Economist magazine.
The following is an edited transcript of their conversation.
David Brancaccio: First of all, from your perspective as a global publication, but with a base in London, you and your people are thinking Europe is going to have to step in as a Trump administration looks more inwardly and pulls back from alliances and international institutions. Europe will have to step up to do what?
Zanny Minton Beddoes: In Europe’s case, it is a real challenge. The European Union has a trade surplus, Donald Trump with the United States thinks that when that happens it means the U.S. is being taken for a ride, so on trade he’s not very keen. But perhaps more importantly, whatever he does in terms of imposing some kind of settlement on Ukraine, is almost certainly going to mean less support for Ukraine. And if he does, as many fear, try and sell out Ukraine, then the big question for the Europeans is, are they going to try and breach the gap? Are they going to try and step up? And an emboldened Vladimir Putin, massively increases the dangers for Europe. And so Europe has to come together to support Ukraine, its underlying economic ingredients are problematic, it’s going to be hit by tariffs, and it’s going to have to pay more for its own security.
Brancaccio: All right, so a lot of challenges for Europe, but also extra challenges for another big U.S. trading partner that would be Mexico. We’ve been exploring the president-elect’s intention to apply new tariffs to China, but let’s take a moment to look at that U.S.-Mexico relationship. The new NAFTA comes up for review soon enough, an although the review is controlled by the administration, it is true that the Senate would have to approve any actual changes to the treaty.
Minton Beddoes: Mexico, again, is going to face a very big challenge, because it could come into the crosshairs of two of president-elect Trump’s priorities. From his first day in office, we’re going to see a huge focus on deportations, that’s increasingly clear. And secondly, his concern about other countries’ trade surpluses. That will mean that Mexico will basically, I think, be told by President Trump, you close the border, you take these people, otherwise I’m imposing tariffs. Tariffs will be used as a negotiating tool right away. But then, more fundamentally, Mexico actually benefited in many ways from the tariff war with China in the first Trump administration, because lots of companies went to Mexico and put manufacturing there in order to get into the United States market. And I don’t think President-elect Trump is very keen on that, he wants the jobs in the United States. And so he will want to rewrite the USMCA, which is the son of NAFTA that he negotiated in his first term, and I think will want to make it much less beneficial for Mexico.
Brancaccio: And the editor of The Economist, with its history, is not going to be in favor of tariffs. You must view them as potentially inflationary in the United States.
Minton Beddoes: Look, I think they are potentially inflationary, but much more fundamentally. And you’re right, what more than 180 years we’ve been railing against this world view, championing free trade, is precisely the argument that tariffs tend to lead to more tariffs, because there is retaliation. You have tariff wars. They impoverish. They do not spread broad prosperity. It is not the recipe, I think, for a successful U.S. in the long term, nor for a successful global economy.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
