In this must-watch discussion, Richard D. Wolff and Michael Hudson analyze China’s response to US tariffs, as former President Trump escalates the trade war once again. With both sides gearing up for new economic tactics, will this bring about a global economic shift? 🌏📉
🔍 Key Insights:
Trump's tariff war and its impact on the global economy
China's countermeasures and their potential consequences
Economic theories by Wolff & Hudson on trade wars
How this dispute might reshape future global trade relations
Will this trigger a new Cold War in economics?
Stay tuned for expert analysis from two of the brightest minds in economic theory. 🧠💡
#TariffWar #ChinaUSTrade #TrumpTariffs #RichardDWolff #MichaelHudson #GlobalEconomy
#TariffWar
#ChinaUSTrade
#TrumpTariffs
#RichardDWolff
#MichaelHudson
#GlobalEconomy
#EconomicAnalysis
#TradeWar2025
#USChinaRelations
#EconomicTheory
#ChinaCounterstrike
#GlobalTrade
#USChinaConflict
#TradeEconomics
#TariffCrisis
#ChinaUSStandoff
#InternationalTrade
#ColdWarEconomics
#EconomicShift
#USChinaEconomicBattle
🔍 Key Insights:
Trump's tariff war and its impact on the global economy
China's countermeasures and their potential consequences
Economic theories by Wolff & Hudson on trade wars
How this dispute might reshape future global trade relations
Will this trigger a new Cold War in economics?
Stay tuned for expert analysis from two of the brightest minds in economic theory. 🧠💡
#TariffWar #ChinaUSTrade #TrumpTariffs #RichardDWolff #MichaelHudson #GlobalEconomy
#TariffWar
#ChinaUSTrade
#TrumpTariffs
#RichardDWolff
#MichaelHudson
#GlobalEconomy
#EconomicAnalysis
#TradeWar2025
#USChinaRelations
#EconomicTheory
#ChinaCounterstrike
#GlobalTrade
#USChinaConflict
#TradeEconomics
#TariffCrisis
#ChinaUSStandoff
#InternationalTrade
#ColdWarEconomics
#EconomicShift
#USChinaEconomicBattle
Category
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NewsTranscript
00:00:00Hi, everybody. Today is Thursday, April 10th, 2025, and our friends Richard Wolff and Michael
00:00:12Hudson are back with us. Welcome back. Glad to be here.
00:00:18When it comes to the conflict right now, the economic conflict between the United States and
00:00:24China, many people are asking what is the main strategy on the part of the Biden administration?
00:00:31And here is the way that the Treasury Secretary of the United States,
00:00:39Scott Besant, is talking about. It's fortunate that the Chinese
00:00:45actually don't want to come and negotiate because they are the worst offenders in the international
00:00:51trading system. They have the most imbalanced economy in the history of the modern world.
00:00:57And I can tell you that this escalation is a loser for them, that they have some very smart
00:01:04economists, the academicians, technocrats within their bureaucracy, and they would be telling the
00:01:11leadership that we do not have the edge here. They are the surplus country.
00:01:16Yeah. What's your take, Michael? Let's start with you. What's your take on the way that the
00:01:25Trump administration is trying to talk about this strategy on their part? Even we've heard that CNN
00:01:30was reporting with talking with GOP Senator Ron Johnson. He said he has no idea what is the strategy.
00:01:40What's your take on that, Michael? Well, when Besant said that China had an unbalanced economy,
00:01:47what it meant was that it was successful. And him, for his idea, a balanced economy is one without
00:01:56any government. And ideally, for Trump, without any income tax. But that's not how China looks at it.
00:02:04China believes that it's a mixed public-private economy, with the government playing the same
00:02:12kind of active role that it played in the United States industrial takeoff in the 19th century,
00:02:18and that it played in Germany's takeoff, and earlier in British mercantilism. China knows that it already
00:02:28is the central provider and refiner of many raw materials that the West needs. And that if indeed,
00:02:40it says, we're not going to be bullied, which is what its foreign minister has said,
00:02:46we're not going to negotiate when somebody says, we're going to hurt you if you don't want what we
00:02:52say, we're going to raise tariffs and prevent you from trade. China's gone rope-a-dope. It says,
00:02:59okay, we're on with that. You want to balance the trade more with us? Well, we're stopping our exports
00:03:09to you of critical materials. We're stopped. We have a whole list of products that we're not going to
00:03:16send to you. These are the products that your industry needs. Without importing from China,
00:03:25American industry, after a few months of depleting its reserves of parts, pharmaceuticals, various
00:03:35chemicals, raw materials, the American economy will have to stop producing. And China has said, well,
00:03:44we're now going to need licenses to get the critical materials that we can produce. And China has the
00:03:53ability to stop, to just interrupt America's production relations and assembly lines and just stop things.
00:04:05So it says fine. But I talk often with Chinese policymakers and their view is not that they will
00:04:16lose from the United States, but they think the United States is committing economic suicide. And mostly
00:04:23they think that America is going to end up the loser in this terror war because it doesn't have an
00:04:32industrial policy. Simply imposing tariffs isn't industrial policy. It merely makes it more expensive for
00:04:41companies to import from their affiliates, automobile parts in Canada and Mexico, as we've discussed in
00:04:49that program, but also telephones and iPhones made by Amazon that are made there, shoes,
00:04:58shoes, Vietnam that are imported by the big shoe company, screws, all sorts of things. And China sees above all that,
00:05:14you know, why is America not recognizing why China has been so successful in developing what Americans call
00:05:23unbalanced. And that is because China has kept public infrastructure in the public domain. It hasn't let it be
00:05:33privatized. And the most important public utility that it's kept, that neither America nor other Western countries
00:05:43have kept in the public domain is money. China doesn't have a domestic financial class that makes money by speculating and
00:05:51buying out other companies, buying out industry and de-industrializing or deciding, let's find a cheaper
00:06:01way of doing this to lower the wage costs and make more profits. The whole aim of China is what used to be the
00:06:10aim of the United States, Germany and other countries. You raise wages in order to increase productivity and you
00:06:19provide basic infrastructure to provide basic needs, electricity, communications, you know, railroads,
00:06:29at cost or at a subsidized rate so that the industrial companies don't have to pay their labor high enough wages to
00:06:39afford this services that are monopolized in the United States. So China has made finance part of the
00:06:50industrial growth pattern. And Trump and the United States is not. And Trump doesn't realize why China is
00:07:00developing, but America isn't. He simply says, they're developing and we're not. They're ahead of us and
00:07:07that makes them the rival. We have to stop them. He doesn't say, why don't we're doing what China's doing?
00:07:14Why don't we follow their model that's made them so successful? And the irony is that this model that has made China so
00:07:23successful is exactly the same model that the United States followed in the 19th century to develop its industrial takeoff.
00:07:32It's a model that Germany followed in the 19th century to takeoff. There's a certain logic of how do you industrialize?
00:07:41And you industrialize with a mixed economy and you take the banking system and you use it to finance
00:07:50industrial development, not to create monopolies and create trusts and essentially try to make money at
00:07:59the expense of industry and the rest of the economy. There's no recognition of an industrial policy
00:08:06to back up industrial tariffs. So the result is that Trump thinks that he'll win the war with China and the
00:08:14Chinese say, well, we're looking at who's trading what and who needs what. If he wants to do that, let's
00:08:21let him go right ahead and do what he's doing and we'll see where the American economy stands in three
00:08:30months. Richard? Well, you know, just to piggyback off what Michael said,
00:08:38it's embarrassing. I listened to that clip of our treasury secretary and it's embarrassing what comes
00:08:46out of that man's mouth. I mean, I'm beyond words almost indeed, but let me try. Why is he calling what
00:08:56the Chinese do somehow self-evident? They're technically smart people, he said that, are aware that they
00:09:06shouldn't be doing this, what they're doing. Let me remind everyone, 70 years ago, China was among the
00:09:14poorest countries on this planet. It was an exemplar of the depth of poverty. It was the place that
00:09:25Pearl Buck described in her book, The Good Earth, as almost beyond human suffering, the level of difficulty
00:09:34for their people. And over the last 75 years, and particularly over the last 30 or 35 years, they have
00:09:42become one of the economic powerhouses of the modern world. Why in the world would you want to call that not
00:09:53what it is, what Michael says, success? Of course it's success. They've become the manufacturing center of the
00:10:02world in that period of time. I mean, it blows my mind. I recently saw a map of bullet trains in China,
00:10:14the complex network of their super-fast chains. The only thing in the United States that comes close
00:10:24is the Acela, the train line that runs from Boston to Washington, which is only slightly faster than the
00:10:33convention. We basically have no bullet trains, and they've connected every place in China with bullet
00:10:39trains. By the way, Michael reminds us, what was the big breakthrough of the 19th century? The trains, which
00:10:47unified the country, which opened up the Midwest to the rest of the world, so it could become the food producer,
00:10:55the grain producer, transforming everybody else. The Chinese are the success story of our time. You know, earlier
00:11:06government administrations in the United States wanted to make the Chinese change their regime, change their system.
00:11:17We justified bringing them into the World Trade Organization because that was going to make them like
00:11:24us. But there's no reason for them to be like us. They don't want to have slow economic growth. In 2024,
00:11:36according to the IMF, U.S. economic growth about 2.8 percent, Chinese economic growth about 5 percent.
00:11:45And now I know there'll be the conventional nonsense about how you can't trust Chinese numbers. I have
00:11:52heard that story uninterrupted for 30 years. Now it's beginning to fade away, since obviously it was
00:12:01nonsense all along, and it's nonsense now. And by the way, those are IMF numbers, not numbers from China.
00:12:09So the crucial reality here is that it's the American government that's in trouble. It's the American empire that's declining,
00:12:22and it's the American capitalist system that has dug itself into a hole. If for the last 40, 50 years, you have run a trade
00:12:33imbalance, which we basically have since the 1970s. And you've paid for it by a massive export of dollars
00:12:42that come back as debt. You're deepening a level of debt that will one day lead people to hesitate
00:12:52to absorb more debt. That's what happened on Monday of this week. That's why the bond market freaked them
00:12:59all out. Look, it destroyed a British government two or three prime ministers ago when she, the woman,
00:13:08Liz Truss, when she tried to push beyond the level of debt that people will give London,
00:13:16crippling that economy still further. They're in trouble here. And the imposition of tariffs, I mean,
00:13:24let me take another way of getting it. The president of the United States declared economic war on the
00:13:33whole rest of the world by a tariff on every country, with a handful of exceptions. Nobody has ever done
00:13:42that before. What is this? This is not a sign of a calm, collected, this is desperation economics.
00:13:51And if you doubted it, the on again, off again, just shows you how desperate they are. Two days of
00:13:59something. Monday, it has to be reversed, because the bond market goes crazy. And then Wednesday,
00:14:05it has to be reversed, because our allies are going to hurt us back. The Chinese showing it, even the
00:14:11Europeans, the Europeans, courage less as they so often nowadays are, are thinking maybe to find some
00:14:23resort. But this is not the United States of the 20th century. This is the United States going down
00:14:31and flailing around with these gestural policies on again, off again. Wow. This is, and the whole world,
00:14:42one last point, the whole world has been given a gift. My old teacher, Georg Wilhelm Friedrich Hegel,
00:14:53would have told me to expect this. Mr. Trump attacks the world for cheating, and hopes it will get him
00:15:04by doing what he's doing. What he has given is a gift to every other leader of every other country,
00:15:13who will now be able to point to the economic problems of his or her country, and blame Mr. Trump.
00:15:23He has taught them. And there'll be a grain of truth to it, because the tariffs make a difference,
00:15:29hurt people in his country, and they're going to yell in every country. And their leaders are going to
00:15:35have to blame someone, and Mr. Trump has shown them how to do that. Blame him. And there'll be more
00:15:42truth to their doing that than there was to Mr. Trump, who initiated it. As Mr. Hegel would have
00:15:49said, his plan was to burden the rest of the world and make them pay for the problems he has.
00:15:58His result? They will blame him. The opposite is buried right in what he did. And he doesn't seem to
00:16:06understand any of that. And he keeps doing it. 90 days were to wait. In other words, the uncertainty
00:16:15of the last few weeks will now be for the next three months. What? May, June, July, nobody knows how to
00:16:25make an investment, where to make it. You won't know what the supply chains are, because you don't know
00:16:31where the tariffs will or will not be, or for how long they'll be, or for what height. How do you make
00:16:37a decision? You don't. You wait. And as Mr. Keynes told us, when the employer class waits, we all discover
00:16:46how capitalism makes the mass of us hostage to what the few of us do with their profits.
00:16:53If they don't roll them over and spend them, we're screwed. And suddenly, what are we looking
00:17:00at? Stagnation from the holding back, from the uncertainty, coupled with inflation from the
00:17:09tariffs, and we get that stagflation horror that comes back to haunt us. This is chaotic economic
00:17:18policy born of desperation, whose likely outcome is going to be a lot of trouble.
00:17:28I don't think it's born of desperation at all. Trump is not desperate. He is quite confident that
00:17:35he has a solution to the problem. And I think if we take a step back, we realize that this whole
00:17:44tariff issue isn't really about tariffs at all. Trump and the Republicans have one political aim
00:17:54above all others, and that's behind what he's doing. They want to cut taxes, above all for the
00:18:01progressive taxation that falls mainly on the highest incomes and on personal wealth. And it seems that
00:18:09at some point, Trump must have asked some economists whether there was any alternative way for governments
00:18:16to finance themselves. He said, how do we cut taxes? What can we do? And somebody must have told them that
00:18:22actually, from the time of American independence in 1776, all the way through the eve of World War I,
00:18:31by far the dominant form of government revenue was customs revenue from tariffs. So you can see that a
00:18:40light bulb went off in Trump's brain. Tariffs don't fall on his own rentier class of real estate,
00:18:47financial, and monopoly billionaires. Tariffs fall primarily on labor, also on industry for imports of
00:18:56necessary raw materials and parts. But the whole idea of introducing tariffs is, he said, the more tariff
00:19:06revenues we can raise, the more income taxes we can cut. And right now, before Congress, the Republicans
00:19:16and Trump are saying it's time to renew all of the vast tax cuts that Trump enacted in his first administration,
00:19:28that is what pushed the US budget into deficit to begin with. Trump claims that tariffs can enable the
00:19:42United States to keep his tax cuts and replace the taxes. And he wants to cut taxes even more
00:19:52on the wealthiest classes, as if somehow this is going to create an incentive for the wealthiest classes,
00:20:02the financial classes, the monopolists, the real estate people, to rebuild American industry.
00:20:10It's as if giving more wealth to the financial managers, they're the ones who've deindustrialized
00:20:16the American economy. Giving them more money will simply repeat the industrial takeoff that was peaking
00:20:24in the 1890s under the president that Trump idealized, William McKinley. Well, what his narrative leaves out of
00:20:35account is that tariffs were merely the precondition for nurturing industry by the government in a mixed
00:20:43public-private economy, just like China has a mixed public-private economy. The government shaped markets
00:20:53in ways that were designed to minimize the cost of living and doing business. And that public nurturing is
00:21:00what gave the United States its competitive international advantage in industry. But given
00:21:09Trump's guiding economic aim to untax himself and his most influential political constituency,
00:21:18what appeals to him is simply the fact that government didn't have an income tax. It was able to finance
00:21:25itself through tariffs. Why can't it do it today? And it's as if all that enabled America's remarkable
00:21:36industrial takeoff to occur was cutting tariffs. And also, what appeals to Trump is the super affluence of
00:21:46a robber baron class in whose rank he can imagine he thinks of himself as joining the ranks of the robber
00:21:53barons. And this self-indulgent class consciousness has a blind spot regarding how its own drives and
00:22:02predatory income and wealth destroy the economy around it. It's as if the robber barons made money
00:22:10by organizing and driving industry. Trump is unaware that the Gilded Age of the 1890s did not emerge as
00:22:21part of America's industrial strategy for success or that the great fortunes were made possible by the
00:22:30failure to regulate monopolies and the failure to tax rentier income. If you read a book, Gustavus
00:22:39Myers, History of the Great American Fortunes, told the story of how railroad and real estate monopolists
00:22:46were carved out at the expense of the economy at large. And the Democrats and Republicans alike
00:22:56in the 1990s said, we've got to prevent this robber baron class. So they passed the Sherman antitrust law
00:23:06in 1890. Then came Teddy Roosevelt, the trust buster, stopping them. And then came the finally an
00:23:15introduction of the American income tax in 1913. And what was so unique about this tax is that it only
00:23:24fell on 2% of the Americans. Only the very rich had to file a tax return. And who were the very rich?
00:23:34They were the monopolists. They were the real estate magnets. And most of all, they were the bankers
00:23:42and the financiers who were trying to turn the economy into a trust economy and who were trying
00:23:50to fight against government regulation, against government policy to shape an industrial economy.
00:23:58And so what Trump admires in the 1890s and the late 19th century is everything that ended this whole
00:24:11century-long development of an industrial philosophy and policy to enrich America. So he's admiring
00:24:19the dismantling of the dynamic of monopolization, of financialization, of anti-government legislation
00:24:31that is the opposite of what made America rich. That's what makes all of this so ironic.
00:24:36Richard, just Richard, here is what Donald Trump said about the why has he decided to
00:24:47to pause tariffs on some countries. And we know that China is not one of them.
00:24:52It's not a question of that. You have to have flexibility. I could say here's a wall and I'm
00:25:09going to go through that wall. I'm going to go through it no matter what. Keep going and you can't
00:25:14go through the wall. Sometimes you have to be able to go under the wall, around the wall or over the
00:25:18wall. These guys know that better than anybody, right? You got to go around them sometimes. You're
00:25:22not going to go through them. So I consider, you know, I think in financial markets because they
00:25:28change. Look how much it changed today. We went from, you know, pretty moderate today, but over the
00:25:35last few days, it looked pretty glum to, I guess they say it was the biggest day in financial history.
00:25:42That's a pretty big change. And I think the word would be flexible. You have to be flexible,
00:25:48like he said. Richard, how do you characterize the U.S. donor class as Michael was talking about
00:25:57and its influence on policy? Well, they seem to me to live in a fantasy world, that they can do
00:26:06things that clearly they can't do anymore. For me, the overwhelmingly interesting thing is,
00:26:14as I keep saying, that they live in a world in which the United States' economic, political,
00:26:21ideological, cultural, and military position are weakening. That's why the military strategists keep
00:26:29saying time is on China's side, not ours in this conflict. But he doesn't want to face any of that.
00:26:37He's going to do this, that, and the other thing. No, he isn't. It isn't going to work for him.
00:26:44A declining empire does not have the options that a rising empire does. The last time we tried with
00:26:52the tariffs was in a time of the rising U.S. empire. That's gone. That's over. We didn't have a major
00:26:59competitor on the scale that the Chinese are today back then. And by the way, Mr. McKinley got the
00:27:07tariff through when he was a representative. By the time he became a president, he turned against the
00:27:12policy of tariffs because he got into too much difficulty from the very class that Michael is
00:27:20talking about. Michael is right. There's no question that deep below all of the rest of this BS is a
00:27:28desire to avoid what for him is a catastrophe, which is the expiration of the tax cut that was passed in
00:27:382017. If that is allowed to expire and that legislation has a self-ending, I believe on the 31st of December
00:27:47of this year. So if he doesn't get that problem solved, his donor class will get an enormous tax
00:27:55increase comparable to the one they decrease that they got eight years ago. So he has to deal with
00:28:03that. And Michael is also right. He's promised more tax cuts on top of making sure that that other tax
00:28:11tax cut doesn't expire. And given that we are already projected to have almost a two trillion dollar
00:28:18deficit now, he's looking at unbelievable risks of a bond market breakdown because people won't lend to
00:28:29the United States anymore because it's too dangerous to do. It is what happened to Liz Truss in England
00:28:36not so long ago. She tried to come up with a budget that looked like, oh, we will borrow more. No,
00:28:43said the bond market, we're not going to lend you any more. And her proposal disappeared and she
00:28:49disappeared. She's gone out of political politics, out of politics in Britain. I don't make predictions,
00:28:58but Mr. Trump, who has had in the long historical sweep of things, a meteoric rise to the top,
00:29:07could very well now be on the cusp of an equally meteoric rise down into oblivion because this doesn't
00:29:18work. There is an element here that people should understand. To the degree that people and businesses
00:29:27around the world lower their prices lower their prices in order to hold on to the American market,
00:29:35despite the tariffs, then Mr. Trump will have achieved at least a part of what he's after. He will have
00:29:45made the rest of the world pay a tribute to the United States because that's what it is. You want to do
00:29:53business here. You pay us. And the way you pay us is you lower the price of your exports here.
00:30:01That way the American people can keep buying them. The price will not go up and the revenues from the
00:30:08tariffs will be paid to the American government and it will be at the expense of the foreigners.
00:30:16They don't want it. They will be looking to every way to evade it. They will be likely to be successful.
00:30:24So the end result is that Mr. Trump will get a small portion of the fantasy he thinks is waiting there
00:30:33for him. That's for me what's going on. And again, they only get it if the rest of the world
00:30:42pays tribute. And that is going to make every other leader receive the rage and the bitterness of
00:30:51all those other countries who are being required to pay that tribute. And that's a wellspring of
00:30:59hostility that makes the United States, not China, the world's rogue nation in everybody's mind.
00:31:08U.S. allies and enemies alike. This is an extraordinarily risky ploy to undertake.
00:31:20Yep. Michael, we had some analysis in the mainstream media that it says that if iPhone,
00:31:29for example, iPhone is produced in the United States, it would triple the price of iPhone to
00:31:353,500. And how might Trump's tariff policies affect American labor and consumers?
00:31:45Well, he could do that by rolling back history for 100 years or so. There's a reason that the United
00:31:55States is so expensive. And we've discussed that in the last few shows, that the economy's been
00:32:03financialized. That if a product is made in the United States, you have to employ American labor.
00:32:11And you have to pay it a living wage. And as we've discussed before, American labor has to pay
00:32:18enormous housing costs that are higher than those of any other country. It has to pay rising consumer
00:32:26prices for prices, largely for products that have been monopolized, as the American economy has been.
00:32:33There's been a tax shift off the financial sector, off real estate, and off monopolies, off rentier income,
00:32:41on to labor. All of that has to be done here. The whole American neoliberal plan since the 1980s,
00:32:52of Thatcherism, Reaganomics, and neoliberalism has been to make money for the wealthiest 10% and above
00:33:03all the 1% at the expense of the American economy. So you've seen, as we've said before, since 2008,
00:33:12the 50% of Americans have a teeny share of wealth that has not increased at all.
00:33:20All of the increase in wealth since 2008, really almost since the 1980s, has accrued to the 10%. This
00:33:31wealth has added to the cost of production for the 90% for the employers. And so if you look at
00:33:40the stock market, look at how wonderful the stock market has been doing. See, American economy is
00:33:46successful. Well, the stock market, because it's owned basically by the 10%, that's not the economy.
00:33:57The real economy is the employment of labor to produce goods and services, and that's become
00:34:06offshored and essentially financialized in a way that's increased the cost of doing business.
00:34:14So what Trump would have to do would be to have an industrial plan and say,
00:34:20my economic class, my donor class has done it all wrong for the last 50 years. We've got to get rid of
00:34:27the donor class. We've got to restore progressive taxation and tax away all of their predatory income.
00:34:35We've got to tax away the real estate rent by a land tax. We've got to tax away monopoly rent by
00:34:45restoring monopolies as public utilities in the public domain so that they can provide their services
00:34:54at a cost or a subsidized rate instead of at the monopoly rates. We've got to have public health
00:35:01insurance so that people don't have to spend 18% of GDP on health insurance costs. And if employers
00:35:10don't have to contribute to their employee health insurance plan, they can lower the cost of production
00:35:16so that it's not going to cost so much to produce. The government can say, we can go back to the original
00:35:24democratic plan of public education. Everyone has a right to a college education at public expense,
00:35:32paid for by the rentier class, instead of having student debt that is so high that employers have,
00:35:40when they hire people, have to pay the employees enough to pay all the debt that they've taken on
00:35:46in order to get the job in the first place. All of these factors are what has made America a failed
00:35:58economy and a failed state. And in contrast to China, which has done exactly what the United States
00:36:07and other countries did to industrialize. There's a logic to industrialize. You want to increase labor
00:36:13productivity by increasing the educational status of labor, increasing its housing, lowering the cost
00:36:22that it has to pay for basic utilities. And that's how China has made a low-cost economy. That's why Asian
00:36:32labor doesn't have to pay the wages that American employers have to pay, because they don't have to
00:36:40pay the medical costs, the housing costs, the monopoly prices that America has to pay. And
00:36:51the likelihood is that America's trade deficit is going to get, over time, much worse and will achieve
00:37:01exactly the opposite of what Trump says is going to do. Trump says that as a result of these tariffs,
00:37:12other countries are going to want to move to the United States to produce here to cut the costs. Well,
00:37:18there's no way that they can do that because he's sort of Democles over the heads of foreign investors.
00:37:29If they are successful, somehow, America's going to say, well, we're going to do to you what we did to
00:37:38China with TikTok. You've built a nice affiliate here. And now, you've got to sell it to American
00:37:46investors so that we can buy it. We're forcing you to sell on national security grounds. Any
00:37:53dependency on a foreign investment, and that would include Volkswagen, BMW, Germany, if Trump decides
00:38:00that he doesn't like what Europe is doing. Everything is national security, meaning whatever
00:38:08the president wants to impose as a takeover to reward his campaign contributors by turning trade policy
00:38:21into a weaponized tool of foreign policy. Now, just imagine, I think we've said this before, Volkswagen and
00:38:30BMW have relocated the United States. Trump is now essentially forcing them to disinvest because,
00:38:43he said, well, we're going to impose high tariffs on the engines you make. Yes, you may produce the
00:38:49cars in the United States by adding to the chassis and putting on the tires and assembling them, but the
00:38:56largest cost of an automobile in the United States is the engine. And we're going to keep the taxes on
00:39:03the engines that you're importing, just like we do for Canada and Mexico. What Trump is doing is saying,
00:39:13we're going to prevent you from making the lower priced key to automobiles, the engines in Europe. And
00:39:24on top of that, you're going to have to pay all of the high wage economy that we've created in America.
00:39:34But what's so ironic is the slogan for America's industrial takeoff that the protectionists used was
00:39:42the economy of high wages. And their idea was to make wages
00:39:48high in order to increase the productivity. Well, the problem is that the industrial capitalists
00:39:59didn't want to pay high wages, say there was a pretty vicious class war in the 1980s, 1990s, and
00:40:07riots. That's what led to the populist party and ultimately to socialism. And so the government had a
00:40:16solution. It said, all right, you industrialists will not have to pay labor high wages. Labor is going to
00:40:25get high wages because we are going to have public investment to provide the services that labor needs
00:40:34to live. As I said, education, public health care, social spending, social structure,
00:40:42public subsidized transportation, public subsidized communication, all of these things so that labor's
00:40:51living standards can rise without the industrialists having to actually pay more. Well, that was a mixed
00:40:59public private economy that with the government taking over more and more of the expenses and the
00:41:08provision of services that labor needed to increase its living standards, industrialists were able to
00:41:17avoid having to pay these costs themselves. Well, look at what privatization has done. By privatizing
00:41:26education, healthcare, communications, transportation, public utilities, they've been turned into monopolies,
00:41:34and their owners now charge monopoly rents on top of profits. And the financial sector has financed
00:41:45investment takeovers. They borrowed money to take firms private or borrow money just to buy control of firms,
00:41:54adding the debt service and interest charges that companies have to pay to provide hitherto public
00:42:02services. You have interest charges, you have medical insurance charges, you have monopoly profits,
00:42:09monopoly rents over and above profits. That's what's made the American economy so high priced. And without
00:42:19recognizing that what we're living in today is not the industrial capitalism of the 19th century,
00:42:27but the finance capitalism that's been put in place over the last 50 years, that makes its money by carving
00:42:36up and de-industrializing the economy, not by industrializing it. It's a whole different kind of
00:42:42capitalism that nobody in the 19th century imagined could actually develop to untrack
00:42:51the progressive line that industrial capitalism seemed to be taking prior to World War I.
00:42:58Richard, it seems that Donald Trump and his Treasury Secretary are totally confused on the way that
00:43:07China has responded to the United States. How do you see the response coming out of China? We know that
00:43:16it's totally different from what it was in Donald Trump's first term. And what is that about the confidence
00:43:24that China possess right now? Is that about the huge changes, geopolitical changes that has happened
00:43:31since then? Or how do you see that? Yes, I think that the Chinese have become much more confident
00:43:40because they ought to. It's the logical inference from what they have experienced. At least as far back
00:43:48as Obama, we know from the statements made by Obama, those around him, and everybody in power since,
00:43:58that we need to quote unquote pivot to Asia, that the American adversary now is China. And everything has
00:44:09been done imaginable. Whether it's stationing the the seventh fleet in the South China Sea,
00:44:16or rediscovering this dead horse called Taipei, you know, Taiwan, and that issue, or the series of
00:44:27sanctions, the series of tariffs by Trump, then worsened by Biden. I want to remind people,
00:44:34Biden not only did not undo what Trump did, he raised it. In the case of the electric cars that
00:44:42I think I've mentioned before on our program, the BYD company's electric cars have 100% tariff. They've had
00:44:50it already from Mr. Biden. They didn't wait for this crazy last few days. 100% was already a democratic
00:44:59contribution. And what do the last 10 or 15 years, because that's what it's been. 10 or 15 years
00:45:08of effort to slow, to stop Chinese growth. It has failed. It hasn't done that. China is a bigger
00:45:16and more powerful force now than it was 10 years ago, or 15 years ago, or five years ago.
00:45:24The alliance it has constructed, the BRICS, is a bigger alliance, more powerful than before.
00:45:33You know, the BRICS produce now about 35% of total GDP in the world, whereas the G7,
00:45:42the United States and its major allies, produce about 27-28%. And that gap is growing each year.
00:45:50The United States is not the dominant economic power anymore. That is the most, for me, the most
00:45:59important difference undermining everything. So yeah, the Chinese are very confident now. And you can see
00:46:07it. Their response to these tariffs is much more confident than the ones that they suffered,
00:46:14you know, in the first term of Mr. Trump, when he did that sort of thing. It doesn't seem to work.
00:46:21They're able to maintain much faster rate of growth. I mean, the United States now has to even,
00:46:29and hence, you know, I'll go back and bother Michael again by saying desperation. But you know,
00:46:35when you turn on your allies in Europe and Canada and Mexico, that's another sign of desperation.
00:46:42You know, here's a little statistic to remember. The United States has 4.5% of the world's people.
00:46:52The BRICS alliance around China has 60% of the world's people. I mean, you need unspeakable
00:47:03advance odds industrially and even militarily to offset that. That's not going to happen.
00:47:13The United States is losing each day that this continues. And around the world, the question
00:47:22really is, given that what the United States still has is perhaps a military preponderance.
00:47:32Although I must say, the Ukraine war to date, which a couple of weeks ago, the New York Times revealed
00:47:39has been a US versus Russia war all along, in terms of the level extent of American military
00:47:48control of operations over there. Even that may be atrophying. We are not in a strong position.
00:47:57And that's what I see here. I see economic policy, you know, crazy stuff, Hail Mary passes,
00:48:06long shots that are taking enormous risks with very dubious chances of succeeding.
00:48:15Okay, let's go with Richard's point of desperation and what they have to be desperate about. The problem,
00:48:24you can say, how can the United States recover its former international dominance if it's no longer
00:48:32an industrial power? If it's industrially dependent, it's as if it's a weaponized trade
00:48:40against itself. How can it recover dominance when it's become an international debtor, not an international
00:48:48creditor? And most of all, there's a moral issue here. The United States in 1945 was able to pretend that its
00:48:58self interest in creating a new system of world trade, of world finance through the US dominated
00:49:06International Monetary Fund and the World Bank, they could say that this is creating a level playing
00:49:13field, the word they love to use, so that all nations are treated as equal. That's been the ideal of
00:49:22international law ever since 1648. And other countries thought that the United States was wealthy enough
00:49:32that it could actually afford to believe that in spreading democracy, meaning you have regime change to
00:49:40assassinate or remove any government that doesn't support the United States, democracy like you have in
00:49:48Ukraine under Zelensky, that somehow this was going to let other countries trust the United States.
00:49:59Trump has destroyed the trust in a way that is irreversible. What he said is that the United
00:50:07States has to be the gainer in every trade agreement or economic agreement or loan agreement or military
00:50:18agreement that it makes. Everything is a win-lose situation. Well, right after the initial market plunge,
00:50:30after he announced the enormous increase in tariff rates, he said, well, all of this is open for
00:50:36negotiation. And that, of course, is what he just said the other day. He said, well, all right, we'll
00:50:41give you three months, so I'm going to suspend the tariffs and I've told you how much I can hurt you.
00:50:47That's what America has to offer the world. As we've said before, America has the ability to maintain
00:50:54the power it had in 1945 by its ability to hurt other countries, by weaponizing foreign trade,
00:51:02by weaponizing international finance, grabbing Russia's $300 billion of saving, grabbing Venezuela's
00:51:11gold, grabbing Iran's foreign reserves when the Shah was overthrown. Trump says, we can hurt you
00:51:20if you don't do what we want. Well, if other countries say, any agreement we make with the United
00:51:28States, we're going to be hurt and we're going to be the losers. Can't we try to make a different
00:51:37arrangement? There must be an alternative. Well, they've been trying for an alternative ever since the
00:51:44Bandung Conference in Indonesia in the 1950s under Asikarno. But as we've said before, they couldn't achieve
00:51:53an alternative because they didn't have a critical mass. Now, thanks largely to China's growth and also
00:52:00the post-Soviet growth of Russia, they have an alternative. This is why the United States says
00:52:07China is our number one enemy, that the size and magnitude of China and its alternative economic
00:52:16philosophy to that of American and European neoliberalism is what makes it a threat that for
00:52:25the first time now, other countries have an alternative. They can join together with mutual
00:52:32arrangements. And that's just what they're doing. You're already having Asian countries, South Korea,
00:52:39Japan, other countries trying to say, isn't there a way that we can trade with each other?
00:52:45And do without the American market? Well, obviously, there's going to be pain in a three-month or
00:52:53even one-year changeover from trade with the United States to trade with each other.
00:52:59But now they see that mutual trade with each other, with the BRICS, with the Global Majority,
00:53:06with the Global South, that are consolidating their trade. They don't need the United States
00:53:12because what Trump has done in trying to isolate other countries, by trying to divide and conquer
00:53:21every single country by making one deal with you, one deal with you, with having no unified tariff
00:53:28policy, but just a, what can we do to hurt each country in order? Other countries can say,
00:53:34we can make the kind of world that seemed to be promised back in 1945, a world where countries are
00:53:44equal, where they follow the same economic rules, and where we don't have to go down the track that is
00:53:54untracked the American and European economies by financialization, monopolization, untaxing the
00:54:03wealthy and shifting the tax burden onto labor, and making America and Europe an uncompetitive,
00:54:11high-cost economy where only the 10% and behind them the 1% are really able to suck up all of the
00:54:20wealth into their own hands. We can follow an economy that actually enriches our overall population,
00:54:27and that will make our whole economy, including the wealthiest classes, rich. There will be, of course,
00:54:34there will be some millionaires and probably many millionaires, but these millionaires are going to
00:54:40be subject to social rules and structuring and tax policies that oblige them to use their wealth
00:54:51as part of a system of increasing the prosperity of the overall country, not using their wealth to take
00:54:58over other corporations to raid them and become robber barons, not to try to take over government
00:55:07and privatize it and turn public services into opportunities for monopoly, but the kind of growth
00:55:14that really the whole 19th century of economists, from Adam Smith to John Stuart Mill to the last great
00:55:21classical economists Marx, all developed and explained. That's their alternative, and Trump has driven them
00:55:32together just like he's driven Russia and China together. His tariff policy and his threat to treat
00:55:41every other country as an economic opponent to be exploited so that he can end up the winner, his doing this,
00:55:50has driven them together to finally seek an alternative. He's a revolutionist.
00:55:59Two little amendments and then an inference from it. One of the great beneficiaries of every one of these
00:56:08tariffed countries around the world, as they try to evade, avoid, minimize the impact of their tariff on them,
00:56:18and they look for new trading partners in just the way Michael said. One of the first places they're going to go
00:56:26is China, because that's a place you can sell. That's a place that produces lots of things you need to buy.
00:56:34That's the biggest alternative to the United States there is right now. So if you cut off your connection,
00:56:41or even if you just reduce your connection to the United States, China will benefit,
00:56:47because they're going to be approached to do the replacement activity. And if they have half a brain,
00:56:54and they do, they will make good deals. They will take advantage. They'll give you a good
00:57:00deal this year and maybe have to pay a bit more next year, but help you make the transition now. That's
00:57:06goodwill. That's political. I mean, just look at it. And if you wanted to wonder
00:57:12whether the replacement for the U.S. dollar, how it will be affected, it'll of course be speeded up.
00:57:19They've only made limited progress on that front. They talk a lot. They haven't done all that much.
00:57:25But this will be a spur, since more and more payments will be made without dollars, because
00:57:32everybody's cutting back on dealing with the United States. That means the demand for the use of
00:57:39dollars, the need to hold dollars in reserves, in private accounts, in state accounts, in central
00:57:46banks. Come on, it's going to just speed up whatever steps need to be taken for alternative
00:57:53currencies to become normal in the world, other than the U.S. That's going to happen.
00:58:01And then finally, you know, the whole world is going to figure out. The United States currently has,
00:58:08last time I looked, 800 billionaires, running from Mr. Musk with 300 or 400 billion on down.
00:58:19Okay, 800 people. If you needed to sharply and dramatically reduce the deficit of the United
00:58:30States, simply taxing them such that everyone is reduced to between one and two billion dollars.
00:58:42It means those 800 people will continue to be the richest people in the United States,
00:58:50and likely the world. But the government will get, here we go, trillions of dollars
00:59:00to use to pay, to cover its bet, to not have a deficit for the first time in many years,
00:59:08to have taken dramatic steps to make the United States more credit worthy. And even if they took
00:59:17the money that they got that way, used half of it to retire the deficit, reduce the deficit, and the
00:59:24other half to take all kinds of creative steps to enhance U.S. production, technology, productivity,
00:59:34technical education, all the things currently being cut. I mean, history will look back and say,
00:59:42you know, you actually could have changed the trajectory of your own decline, but you chose
00:59:51not to do it. You put into office leader after leader so beholden to the 800 billionaires that whatever you
01:00:02did had to leave them untouched by all of this. Giving yourself that constraint then hobbled you as to what
01:00:12alternative strategies you might have used. So you're your own worst enemy because you can't do in all
01:00:22likelihood with your steps what you could have done with those 800 who couldn't have done much about it.
01:00:30That's the irony of all of this. It's its own self-imposed constraints that prevent Mr. Trump,
01:00:42or for that matter the Democrats, from even thinking about certain options they've been so excluded from the
01:00:50beginning. That's when you see self-destruction. And the one common theme that most historians have when
01:01:00they look back on the decline of other empires is how easy it is to see what they could have done
01:01:10to prevent or slow that decline. And we all scratch our heads, why didn't they? And the answer is always
01:01:19their own political contradictions blocked them from either seeing or doing what they could have,
01:01:28in fact, done. And we're right there. And that is more evidence of a declining empire problem.
01:01:37Well, Richard, what you've described is that America is facing a similar problem to what Putin
01:01:42faced with the domestic kleptocrats. How is he going to prevent the kleptocrats from taking over and
01:01:49doing what kleptocrats do? Well, he's at least done something to draw them in line.
01:01:56China faced a similar problem. When you had Jack Ma, for instance, become so rich with his innovation,
01:02:04China sort of cut him down to sides. But if the Americans would do that, it wouldn't be America.
01:02:14And you mentioned that Trump has ended up his own worst enemy. Well, there is a historical
01:02:21precedence for this in empires that you've just mentioned. And around the fifth century BC,
01:02:29the richest man in antiquity, Croesus, decided to increase his fortunes by attacking Persia. So he went to the
01:02:41temple at Delphi and said, I want to get even richer and conquer Persia and take over its gold to add to
01:02:50mine. And the Delphi oracle told him, you will destroy a great empire. And Croesus attacked Persia,
01:03:00was defeated, and it turned out the empire that he destroyed was his own. So that sounds pretty much
01:03:10what you've described for the United States. That's what happens to over arrogant empires. That's what
01:03:19happens to hubris. And the wealthiest class, the donor class, the financial rentier class in the
01:03:26American economy combines hubris with the blind spot. They don't see what you and I recommend,
01:03:34that they would have to change who they are, because they say, well, that's who we are. We're
01:03:41not going to change who we are, because we are who we are, and we're in control. That is what has made
01:03:47the United States in danger of falling or already has fallen into a failed economy.
01:03:54Well, you know, there's another way to put the same thing. And if you think about the remarkable
01:04:01fact, if I have this correctly, that there was a million Americans went into the streets this last
01:04:09weekend in many, many cities and towns across the United States to protest Trump's economic policies.
01:04:19I know here in New York City, where I live, there were very sizable demonstrations here.
01:04:26Okay, that leads to the joke that's circulating. But maybe that joke has a lot of serious implications.
01:04:33Here's the joke. The best recruiter for the American left today is Donald Trump. Well,
01:04:42let's expand it. Maybe the best recruiter for the left as an alternative direction for the whole world
01:04:52right now is Mr. Trump. He certainly is a world actor. He has gone from being the center of attention
01:05:00in the United States to making himself the center of attention everywhere. When I read the European
01:05:07newspapers the last few days, he's in the front page every day. He's now the center of attention
01:05:14everywhere, which many people who comment on his personality, I don't, but who do say is something that's
01:05:22very satisfying for him. May it be. I'm not interested. But I am interested in noticing that he is, whatever
01:05:31his intention, mobilizing the world as a critical mass and mobilizing the United States in a rather similar
01:05:41way. And that's more evidence that this may be a very, very transformative moment in American history.
01:05:53And world history. And world history.
01:05:57Thank you so much, Richard and Michael. Great pleasure, as always.
01:06:02Thank you. Take care.