#trumptradewar

0:29in fact 9:30 a.m today India's tariffs

0:32have kicked in at 26% uh the other

0:35worrying aspect that's come in overnight

0:37is President Trump reiterating the call

0:39on tariffing pharmaceuticals remember

0:41pharmaceuticals have been exempt so far

0:43but this is the second time in the last

0:45few days that President Trump has talked

0:46about tariffing pharmaceuticals like

0:49we've never seen before in his words

0:51president uh Trump also speaking at a

0:54dinner last night uh and claiming that

0:57countries were calling him up leaders

0:59were call were calling him up to try and

1:01get deals done uh the USR of course

1:04making it clear at this point in time

1:06that there will be no exclusions uh to

1:08what has been proposed by the US as far

1:11as tariffs are concerned but to talk us

1:13through what we should now expect as far

1:15as America's intent to do business with

1:18the world is concerned the impact of all

1:20of this on the global economy and more

1:22importantly how India finds itself

1:24positioned in the global markets is

1:26noted economist and a very vocal critic

1:28of the tariff policies jeffrey Saxs

1:31thank you very very much for joining us

1:32here on CNBC TV18 a lot has happened

1:35over the last few days a lot has

1:37happened overnight as I pointed out as

1:39you look at these tariffs and playing

1:42themselves out what worries you the most

1:44today uh if something wipes out 10

1:48trillion dollars of market

1:50capitalization in two days you're

1:52probably on the wrong track the United

1:55States is uh on the path of wrecking the

1:58world economy once again i say once

2:01again because the US has a bad habit of

2:03wrecking the world economy it did it in

2:061930 with tariff increases the infamous

2:11Smoot Holly tariffs which were one of

2:14the major provocations that led to the

2:17worldwide great depression of the 1930s

2:20it did it in 2008 by blundering in uh

2:25its uh forced bankruptcy of Lehman

2:27Brothers on September 14th 2008 and that

2:32put the world into a tail spin the Great

2:35Recession now it's doing it a third time

2:38this is out of the fervid imagination of

2:41one person this is not US policy this is

2:45not congressional policy this is not US

2:48public policy this is Donald Trump's

2:51policy he is singlehandedly wrecking the

2:55world economy uh and I think uh the

2:58damage is going to be done before it

3:02gets undone so we're not in a good

3:05situation the markets are not the only

3:08ones telling us that we're hearing from

3:10business people all over the world that

3:14longmade value chains supply chains for

3:18critical commodities for consumer goods

3:22for industrial products for making uh

3:25automobiles for making smartphones you

3:28name it are being profoundly disrupted

3:32and uh we have uh somebody uh laughing

3:36as the world economy burns uh and that

3:40is our president so this is not at all

3:44uh a case with the silver lining

3:47unfortunately well it doesn't look like

3:49there is any silver lining at this point

3:51in time professor Saxs but you know you

3:53talked about the wrecking ball approach

3:55that President Trump seems to have taken

3:57and the impact it's going to have as far

3:58as global growth is concerned but let's

4:00talk about America uh you know Larry

4:02Frink saying we're already in a

4:04recession bill Aman one of the biggest

4:06supporters of President Trump coming out

4:08and saying we're headed into a long

4:10winter now uh as far as the economy is

4:13concerned the impact so far has largely

4:15been felt in the financial markets uh

4:18when do you start to see this impact the

4:20real economy

4:23if the survey data uh are correct uh

4:27we're going to see it in consumer

4:29purchases declining sharply in the

4:32coming months because consumer

4:34sentiments are falling through the floor

4:37uh that means that we're going to have a

4:40significant demand shock in addition to

4:43all the multiple supply shocks of

4:46disruption of global supply chains

4:50these businessmen expected to be making

4:52fortunes at a businessfriendly

4:55administration for them to be speaking

4:57out after they invested so much money to

5:00buy the presidency for this person uh is

5:02also indicative of their state of mind

5:06so I think what we're hearing again I'm

5:11not a short-term macro forecaster but

5:13we're hearing that the odds now are odds

5:17on for a US recession uh in 2025 odds on

5:22on a US recession in 2025 but let's talk

5:25about the latest development with

5:27respect to China and the president

5:29saying that China is going to be

5:30tariffed higher another 50% which takes

5:33the total quantum to over 100% china

5:36saying it will retaliate with counter

5:38measures now do you believe uh that the

5:41possibility of China selling US bonds it

5:44holds about 800 billion in US bonds

5:46directly uh you know there are many in

5:49the market who believe that that will be

5:51the option of last resort how do you

5:53believe China is likely to play this out

5:57china of course has been diminishing the

6:00share of its foreign exchange reserves

6:02held in dollars for several years now

6:05china is not naive when it sees that the

6:09US has confiscated the reserves of

6:12several countries now in which the US

6:15has geopolitical

6:17uh opposition so the

6:19US took and froze of course the more

6:23than $300 billion dollars of Russian

6:25reserves technically in Belgium and

6:28Euroclear uh the US grabbed the foreign

6:32exchange reserves of Venezuela it did

6:34the same for Iran it did the same for

6:36Afghanistan it did the same for North

6:39Korea the US weaponized the dollar well

6:43before this latest uh round of trade

6:48hang grenades so China already has been

6:52diminishing its holdings of dollars the

6:54bricks have been uh working on and I

6:58hope that they accelerate uh non-dollar

7:01payments because we're going to need the

7:03world's going to need alternative ways

7:05to make payments when you have this kind

7:08of obstreporous and uh unstable uh

7:13government at what is now the core of

7:15the payment system in the world um so

7:19China definitely will not just sit there

7:21with its forex reserves and dollars

7:24whether it will act abruptly uh in a

7:29reaction or whether it will gradually

7:31continue the direction of selloff I

7:34don't know but it will continue in the

7:37direction of of disgorging itself of US

7:41denominated assets you know the question

7:43is whether this is the end of American

7:45exceptionalism and you certainly seem to

7:47believe that it is but is it also the

7:49end of China's isol isolationism uh has

7:54the Trump administration the unintended

7:56consequences of this tariff policy as

7:59well as the way that he's going about

8:01addressing friends and foes will it push

8:04people to actually re-engage with China

8:06well first it's not the end of American

8:08exceptionalism and that what America is

8:10doing is absolutely exceptional just

8:12exceptionally damaging so it's the end

8:15of a different a different kind of

8:17exceptionalism it's the end of American

8:18leadership i would say it's the end of

8:21other countries looking to the United

8:23States as a

8:25stabilizer as a rule-based order

8:28although that was quite frayed already

8:31but now no one could utter those words

8:35with regard to the United States

8:38similarly China was not in any way

8:40isolationist it was the ma major trade

8:43partner of probably 150 countries in the

8:46world but China has aimed for the last

8:50decades to be a

8:53responsible participant in the

8:55international system not to put its head

8:58out too far uh in uh in leadership uh

9:03Dong Xiaoping famously advised China b

9:07your time keep your head down we need to

9:10rebuild after a

9:13long century and a half of economic

9:17difficulty what they call the century of

9:19humiliation um and so Dong Xiaoing said

9:22"Keep your head down." Now China can't

9:24quite keep its head down uh China is

9:26under direct attack by the Trump

9:30policies and this is uh one of the core

9:34dimensions of the Trump policy part is

9:37protecting

9:38uh American uh economy in a very naive

9:42and I think doomed to fail way but part

9:45of it also is a hostile action visav

9:49China especially uh which is that China

9:54must be broken in its global success

9:57story because it's a uh a competitor

10:00with the United States so China now has

10:04to take a more uh leadership role i

10:08think China will have to uh enable the

10:11Renman B to play a more international

10:14currency role it's been very gradual

10:17step by step but I think it's going to

10:19have to accelerate china I think

10:22will accelerate the calls for the bricks

10:25of which of course India is a founding

10:28crucial member to play

10:31a somewhat of a balancing role to the

10:34United States in the international scene

10:37especially calling on the bricks to

10:39reinforce their open trade with each

10:41other because after all the bricks is

10:43more than 40% of the world economy it's

10:47about half the world population it

10:49matters a And so I think that grouping

10:52is going to play a more important role

10:54so I believe that

10:57China reflected on this and said we're

11:00we're not going to be bullied we're not

11:03going to be blackmailed we're not going

11:05to be cornered by the United States and

11:07so the brawl is very real right now and

11:10very dangerous