The Trump administration is refortifying its tariff wall after a Supreme Court ruling earlier this year.
The Office of the US Trade Representative proposing new levies of up to 12.5% on its trading partners, citing forced labor concerns as well as a separate probe into industrial overcapacity.
While this aggressive push does replace the temporary tariffs that are expiring in July, creating a high stakes mix of rising producer costs as well.
Supply chain scrambles and all of the time of shifting global monetary policy.
Well joining us to discuss the macro impact is Steven Okun, CEO of APAC Advisors.
Well, good morning from New York and good evening to you.
So first and foremosts are not in the rearview mirror here.
So is this going to drive up costs for Americans and do you think the price of daily goods will be affected here stateside.
Look, the tariffs are here to stay, and if anybody had any doubt about this, that should be long over.
And certainly the actions that the administration is taking now, adding these 10 to 12.5% tariffs on for forced labor concerns, we're going to get another 10% or more tariffs coming on excess capacity that they're finding in an investigation.
They will find.
Against 16 countries, so the higher prices consumers pay in the US, they're going to be here to stay.
Anybody who thought that the Trump administration was going to pull back because of the midterms to try and help Republican candidates is just mistaken.
Look, this president believes in tariffs, and we are going to have them, and we're going to have them for the next few years at least.
Steven, while I have you here, I do want to get your take on what this means long term when it comes to trade policy, especially since you did mention that higher tariffs are expected to become more of a permanent fixture here.
Yeah, well, what people are focused on in the short term is U.S.China, the stalemate that's going between the US and China right now.
It is not a trade truce.
We are in a stalemate with China.
China still has its leverage over the US on rare earths.
The US is still taking action, putting more tariffs on China.
They're going to put more export controls on China.
So this trade war is still very much alive.
The vibes are better than were before.
So you have to take into account what's happening on US and China and what the rest of the world is trying to do, and they're trying to do this quietly, is to diversify away from the US and China.
They're following Mark Carney's advice that he gave in Davos for the middle powers to come together, but they're not being as loud as he's been.
They're not being as public as he's been, but you're starting to see.
Countries look to get around the US and China.
Both of those markets are essential.
They're always going to be there, but you're starting to see a new architecture coming into place.
You saw that a couple months ago with the EUIndia agreement.
Maybe we'll see some agreement between the Europeans and ASEAN, the countries here in Southeast Asia, or even the big, big agreement which would be the EU joining.
CPTPP, which includes much of the Asia Pacific, Canada, Mexico, Japan, Australia, and not the United States and not China.
So long term we're seeing the beginnings of a restructuring of the global rules-based order that was, look, it was started to get chipped away by China 1015 years ago.
Donald Trump put an end to it, and now we're starting to see what's going to replace it.
And Steven, finally, before I let you go, you mentioned the other alliances that are being formed as we speak and at the same time this is affecting the global economic policy outlook.
So what does this mean for rate differentials in the long term?
Well, you have to, you have to think about this, and the big question, of course, is what's going to happen in Iran.
You know, we have this quote unquote ceasefire, which isn't really a ceasefire, but how is, how is this going to end?
Are we going to experience the worst of, of COVID and the Russian invasion of Ukraine?
Because, you know, with COVID, we had, you know, we had a price shock.
I mean a supply.
Shock that came in when, when, when all that manufacturing ended when Russia invaded Ukraine, we had a price shock.
Are we going to get a double whammy of a price shock and a supply shock coming together?
If that happens, if the strait remains closed, if we don't get the oil flowing and as countries become more and more self-reliant, they're going to drive up prices and we're going to be in a period of increased inflation.
What is that going?
To monetary monetary policy.
So you've got tariffs being put on the by the United States on the countries that are being harmed very much so by what's happening with the US and Israel in the Strait, and that is just such an unknown.
It's really impossible right now to figure out where monetary policy's going to go, and we don't know how inflationary we're going to have with supply shocks coupled on top of it.
Well Steven, it was great to have you join us today.
So thank you so much for sharing your perspective when it comes to geopolitics, monetary policy, as well as tariffs today.
Thank you.
