Latest / The Fourcast / Will Trump’s tariffs cause global economic crash? | Robert Kaplan

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Will Trump’s tariffs cause global economic crash? | Robert Kaplan · The Fourcast

• 0:00
  Hello and welcome to the forecast.
• 0:02
  So Donald Trump has opened fire on a global trade war and
• 0:05
  countries around the world are working out what to do.
• 0:08
  Even the Penguins in Antarctica must be shuffling around
• 0:10
  wondering what they've done to preserve it.
• 0:12
  The UK faces 10% on everything and 25% on cars and steel.
• 0:17
  So what does it mean for us? Where's this heading?
• 0:20
  Does economic war put us on a road to something even worse?
• 0:23
  With us today, the American author Robert Kaplan, whose new
• 0:26
  book is cheerily titled Wasteland, a World in Permanent
• 0:29
  Crisis, and our economics correspondent Helia Ebrahimi.
• 0:33
  Robert, thank you very much indeed for joining us.
• 0:36
  It's a. Pleasure to be here.
• 0:37
  Let's look at this through the prism of how you analyze where
• 0:40
  we are at the moment with sort of strong men, democracy in
• 0:43
  crisis, and where you think this is actually heading.
• 0:47
  Well, I think it's history shows that trade wars can lead to real
• 0:54
  military conflict because trade, free trade cushions the impact
• 1:01
  of bad relations between great powers because they have too
• 1:04
  much at stake economically. But if you put up economic wall
• 1:09
  walls, that increases the likelihood of the probability of
• 1:13
  the military conflict. And I'm thinking about China
• 1:16
  specifically because markets have priced in rather
• 1:21
  impressively, the Gaza war, the Ukraine war.
• 1:25
  Nobody notices a difference on their savings accounts when
• 1:28
  because of those wars, you know, to be brutal about it.
• 1:32
  But if there was a high end military conflict between the
• 1:35
  world's largest economies in the South China Sea or Taiwan, it
• 1:41
  would have a devastating impact on global markets.
• 1:44
  And by putting and starting a tariff regime does not 'cause
• 1:49
  that, but it increases the probability of an of something
• 1:54
  like that happening. Because for decades the US China
• 1:57
  relationship has been cushioned by trade between the two
• 2:01
  countries and and by the fact that each country knows that
• 2:05
  there's too much to lose if there was a real war.
• 2:09
  So that inhibits both parties. Why would that not continue to
• 2:12
  be the case? Well, the problem now is that if
• 2:16
  he's putting high tariffs on China, for instance, as an
• 2:20
  example, the relations go South, you know, the relations get more
• 2:25
  tense and you know, it's Shakespearean, you know, in
• 2:29
  terms of what's going on in the minds of leaders, will they, the
• 2:33
  Chinese just keep finished conducting a military exercise
• 2:36
  involving the occupation of Taiwan.
• 2:39
  And this comes on top of that. So you know it again, it
• 2:43
  increases the likelihood or the probability that that one or
• 2:48
  both leaders will miscalculate. And and if it is Shakespearean,
• 2:52
  then let's look at the characters.
• 2:54
  You know, if you look at Trump and Xi Jinping, yeah, how how do
• 2:58
  the way they are developing that?
• 3:01
  Trump is post literate. I didn't say illiterate.
• 3:05
  I say post literate. He, he can use a smartphone.
• 3:09
  He can he, you know, he can send social media messages, but he
• 3:13
  doesn't read books. He never has.
• 3:16
  So by not reading books, how can he know about the origins of the
• 3:20
  Western alliance or of the treaty alliances in the Pacific,
• 3:24
  which were established 80 years ago?
• 3:27
  It's too long for memory, for a living memory.
• 3:30
  So he has no appreciation of that.
• 3:33
  So he's reduced to like, brutal territoriality.
• 3:37
  And he's surrounded by people who don't tell him neither.
• 3:39
  Right, You know, take Greenland because it's an extension of
• 3:43
  North America. Make Canada subservient, take
• 3:46
  the Panama Canal, you know, create like a greater North
• 3:50
  America on on the map to compete with China and Russia, countries
• 3:55
  that he takes seriously. He doesn't take seriously as
• 3:59
  much the European Union because he sees it as weak and divided
• 4:04
  and has and as I said, has no appreciation for the origins of
• 4:08
  the Western alliance. Now Xi Jinping is, he's a
• 4:12
  Leninist autocrat. China has been different things
• 4:15
  under different leaders. It's had, you know, a
• 4:18
  revolutionary anarchy under Mao, a kind of Mandarin aid, a wise
• 4:23
  Mandarin aid under Deng Xiaoping and Zhang Zeman and Hu Jintao.
• 4:28
  And now it is a real hardcore Leninist where you have
• 4:32
  ideologues making complex financial decisions.
• 4:36
  Again, so much power is invested in these two men, to say nothing
• 4:41
  of Putin, that the chances of them to miscalculate are great.
• 4:46
  It's amazing how even markets which are supposed to be
• 4:51
  rational, supposed to be rational, are affected and have
• 4:55
  big downturns because of human error.
• 4:58
  You know I'm talking about human Shakespearean era here.
• 5:02
  I. Mean just on that is there?
• 5:05
  Is it? Is it too much of A stretch to
• 5:07
  say there's a little bit of Leninism in Trump as well?
• 5:11
  You know, in in the sense of a man who who believes in
• 5:14
  punishing the innocent to some degree.
• 5:16
  That's, that's the best way to describe Leninism.
• 5:19
  Don't just punish the guilty 'cause that gets you nothing.
• 5:23
  You have to, you have to strike fear into the hearts of the
• 5:27
  innocent. That way you get total control.
• 5:29
  That was the innovation of Leninism.
• 5:32
  And there's a little bit of that of Trump, but that's not really
• 5:35
  where he is. He's not serious enough to be a
• 5:38
  fascist or an ideal or a Leninist ideal.
• 5:41
  You know, to be a fascist or a Leninist ideologue, you have to
• 5:44
  read, you have to have a program, etcetera, etcetera.
• 5:47
  But it's quite interesting because the the economic vision
• 5:51
  that he has is not really in line with western modern
• 5:57
  economics. You know that he wants to bring
• 6:00
  back AUS economy that belongs to the last century.
• 6:04
  It's fantastic. He's saying he's doing all of
• 6:07
  this because workers have been disrespected.
• 6:10
  He he wants American workers to have respect again.
• 6:13
  He wants manufacturing to come back to the US.
• 6:17
  Now the US has really transitioned from a
• 6:20
  manufacturing nation to a services behemoth.
• 6:24
  You know does. The political problem he's got
• 6:26
  is workers who are worried about their jobs and worried about
• 6:29
  their incomes, and that's what he's playing to.
• 6:31
  Yeah, and he has. No, he has no concept of complex
• 6:35
  global supply chain. And I think that is the problem.
• 6:38
  And he thinks the that you are going to have these massive
• 6:42
  onshoring. You know, he points to, he says,
• 6:45
  well, look, I got Apple to promise, you know, $500 billion
• 6:49
  of reassuring, although poor Apple, they're getting hammered
• 6:53
  in the market today because despite placating Donald Trump
• 6:57
  and saying we're going to bring back all of these jobs to the
• 7:01
  US. You saw the tariffs that were
• 7:03
  hit not just against China, but across Asia, across Vietnam, all
• 7:07
  these countries. To your point, Robert, that
• 7:10
  created that link between these blocks, between the China block
• 7:15
  and the US block, allowing trade to flow the kind of back door
• 7:19
  through China. They've also been massively hit
• 7:23
  with huge, huge, huge tariffs. And I think The thing is that he
• 7:28
  thinks that you're in a wink of an eye going to bring back all
• 7:31
  of these manufacturing jobs and bring back all of this
• 7:35
  investment. But when you talk to companies,
• 7:37
  Chris, they tell you we don't even know where Donald Trump
• 7:40
  stands because he changes his mind so.
• 7:42
  We. Can't have a 10 year plan.
• 7:44
  Exactly. Apple.
• 7:47
  Poor Apple. As you said, you know it's
• 7:49
  supply. Chain that you say that there is
• 7:51
  it. Is so it's supply chain is so in
• 7:55
  so dependent on China, Yes that you know, when Tim Cook made
• 8:00
  this bet, you know, a decade and a half ago to locate in China,
• 8:04
  he had no idea of the character like Xi Jinping coming to power.
• 8:09
  So, you know, so it so it really effects them as well.
• 8:12
  But but they have tried to work with Trump's, you know, previous
• 8:17
  Trump won type of tariffs and get some of their manufacturing,
• 8:21
  which has happened across not just Apple, but a whole bunch of
• 8:24
  American companies where they've taken Chinese manufacturing and
• 8:28
  parked at somewhere else. And that is also in the
• 8:32
  crosshairs now. But you know, Trump would tell
• 8:35
  you, look, we've got you know, even LVMH has talking about
• 8:39
  beefing uppers production in the US.
• 8:42
  But I think to the core of the economic issue is you said
• 8:46
  there's a political issue because, you know, the Magas
• 8:49
  love those manufacturing jobs. How, how many of those jobs are
• 8:54
  really going to exist? Because if you are going to
• 8:57
  build modern factories, they are not going to be labour
• 9:01
  intensive. They'll.
• 9:02
  Be AI intensive. Exactly, they'll be AI
• 9:05
  intensive. So who are going to get these
• 9:08
  jobs? So at the moment he's because
• 9:10
  his argument when he stood there with his board and he said,
• 9:13
  well, they charge us 67%. Gotta love a man with a board.
• 9:16
  And, you know, and he laid it out.
• 9:17
  You can see why it might have seemed persuasive to some people
• 9:22
  who haven't yet gone to the shops and seen their prices
• 9:26
  going up. When is that going to happen?
• 9:29
  Well, look, in terms of prices, it's going to happen in the US,
• 9:34
  You know, it depends how much the companies pass on.
• 9:38
  Remember that this is a tariff. You know, we're talking about
• 9:42
  potentially $700 billion of tariffs that the US is going to
• 9:47
  collect. So is that a big win for Trump
• 9:51
  or is that $700 billion going to be passed on to US consumers?
• 9:56
  So they're going to have to pay more for car industry.
• 9:59
  For example, analysts think that cars at the top end will now now
• 10:04
  cost $10,000 plus plus plus more.
• 10:08
  And even at the bottom end of the car market, it's going to
• 10:11
  cost one or $2000 more. And it's not just that it will
• 10:16
  cost more, it's that people will stop buying cars.
• 10:20
  It's not just OK Consumers will just, you know, stump it up and
• 10:24
  it'll be out of their pocket. They will actually stop buying
• 10:27
  these products. Very few economic decisions from
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  the average American consumer that have so much of symbolic
• 10:35
  effect on their lives. It's the price of a new car
• 10:38
  because many Americans now lease cars, which means they exchange
• 10:43
  them every three or four years. And if the lease goes up by 1000
• 10:48
  or $2000, that's like when the gas price goes up.
• 10:51
  It could change an election if the gas price goes up.
• 10:55
  So what? You don't, I would say, to keep
• 10:57
  your attention in terms of Trump's popularity as we go
• 11:01
  forward on the bread and butter thing like people's retirement
• 11:07
  savings accounts. We look at the market today, you
• 11:10
  know, the price of cars. Also, he's gutting the Social
• 11:14
  Security Department, the Health and Human Services department.
• 11:19
  So when consumers call up to see because there's a mistake on
• 11:23
  their retirement check, there's nobody to answer the phone.
• 11:27
  They they're on hold for five hours.
• 11:29
  Those are the things that change votes.
• 11:32
  And, and you've got, so you've got these first round effects,
• 11:35
  Chris, which is, you know, prices are going to go up.
• 11:37
  If companies don't, you know, swallow the hit and have less
• 11:41
  margin, they pass it on to consumers.
• 11:44
  And at the moment, analysts are talking about inflation going up
• 11:47
  to 4%. You know, that is quite
• 11:48
  considerable. I'm predicting a recession now.
• 11:51
  Predicting materially a bigger risk of recession.
• 11:55
  So one of one of the caveats I would say, and there's been a
• 11:58
  bit of chatter from the administration today is look at
• 12:01
  the markets. Don't look at the markets
• 12:02
  because we're going to give all of that money back to you, the
• 12:08
  US citizen through tax cuts. So I think that is an
• 12:11
  interesting thing to watch and will impact how you know bigger
• 12:16
  risk for recession there is. And tax cuts will generate a
• 12:20
  higher deficit, which is which is such a, you know, the the
• 12:25
  building the deficit is like high blood pressure.
• 12:29
  It's the silent killer. You know, people just it's an
• 12:33
  abstract mathematical story that nobody bothers to read, but it
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  really impacts the health of a nation going.
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  But what do they do? If they pay down U.S.
• 12:43
  Debt, then they definitively will have a big so their choice.
• 12:47
  Just to be clear, their choice is to either pay down the debt
• 12:50
  or to give it back to people in tax cuts.
• 12:52
  And what Trump said last night is we're going to give it back
• 12:53
  to you. And so consumers will be will be
• 12:57
  expecting that, but that is going to be quite challenging.
• 13:01
  And you've got to think, Chris, that because I was talking about
• 13:04
  first round and second round effects.
• 13:05
  So the first round, as prices go up, you people who are Trump
• 13:09
  voters go into their supermarket and go hang on a moment.
• 13:13
  I no, I don't like this. I don't want to pay more for
• 13:16
  buying groceries. That's not nice.
• 13:18
  I don't want to pay more for my cars in this field, you know,
• 13:21
  suddenly unhelpful. And then all of a sudden,
• 13:24
  businesses invest less and the economy starts to shrink.
• 13:29
  And that's going to happen not just in the US but, you know,
• 13:33
  that story of the US sneezes and the whole world catches a cold.
• 13:36
  It's amazing that we live in a world of so many brilliant
• 13:40
  financial experts and yet and yet democracy has produced
• 13:47
  someone who's an economic illiterate in some respects.
• 13:50
  So how, how do you get Robert from that?
• 13:53
  Because you know, the, the natural reaction to that as
• 13:56
  well. It's all going to go wrong quite
• 13:57
  quickly. Surely the American voters will
• 13:59
  see this and Trump will be forced either into a climb down
• 14:02
  or they'll be swept out of power and the world can can reset.
• 14:06
  Why do you not think things are going to go that well?
• 14:12
  I think. From your point of.
• 14:13
  View I think things are not going to go well.
• 14:17
  Remember, the president is in power in the American system for
• 14:20
  four years. He may lose the midterms
• 14:23
  dramatically, but he still has enormous power in foreign
• 14:27
  policy, even if he loses both houses in the midterm.
• 14:31
  And I think we're entering an era of real where all great
• 14:37
  powers are threatened. As I layout in my book, they're
• 14:42
  all in decline, but at different rates and in a very slow way and
• 14:47
  in different ways. And great powers in decline have
• 14:51
  a tendency to lash out and take risks.
• 14:54
  I mean, there's nothing more dangerous than a China where
• 14:57
  billions of dollars are fleeing the country and at the same time
• 15:01
  they're planning on invading Taiwan.
• 15:05
  But interesting isn't it, when we talk about kind of the
• 15:08
  spheres of influence that just last week you had a meeting, I
• 15:12
  think the first in five years between China, South Korea and
• 15:17
  Japan talking about trade, you know, and that is the these are
• 15:21
  the kind of shifting tides of what's going to go on.
• 15:25
  Right, There's an important point to make with that, which
• 15:29
  is that, you know, China is there.
• 15:32
  It is the geographical, economic, debt, demographic
• 15:36
  organizing principle of East Asia and the Western Pacific.
• 15:40
  America is 1/2 a world away in a real clash between the US and
• 15:45
  China, with the US providing its allies with less assurances than
• 15:50
  in previous administrations. Countries from Japan and the
• 15:54
  North to Australia and the South can slowly, gradually, without
• 15:59
  admitting it, be captured by China, you know, move in the
• 16:02
  direction of China. You know, to to the extent that
• 16:06
  Trump may be helping China created the its old tribute
• 16:09
  system, which is not exactly imperialism.
• 16:13
  It's something more subtle than that.
• 16:15
  Well, I mean, it's, it's, it's very interesting.
• 16:16
  I mean, they, they are relatively small countries to
• 16:18
  worry about, I suppose. But when you look at, for
• 16:21
  example, what's happened with Australia, yeah, you had a
• 16:23
  situation where the Biden administration had pulled
• 16:25
  Australia in. Right, exactly.
• 16:27
  Created orcas they were going to get nuclear powered submarines.
• 16:30
  Suddenly Australia is pulled away from China, yes, which is
• 16:33
  what, you know, it had been growing, growing, you know,
• 16:36
  increasingly under China cell over the last 10 years.
• 16:38
  But that's kind of now blown out the water because China's now
• 16:41
  saying these are not the actions of a friend.
• 16:43
  Yeah, remember, Australia had it good for decades.
• 16:46
  It was getting rich off China and it was protected by the US
• 16:50
  Navy and Air Force. So it was kind of hedging a bit
• 16:54
  while being in the western camp. August, as you say, you know,
• 16:58
  which is the treaty to provide Australia with nuclear powered
• 17:01
  submarines has shifted Australia to the to the to the western
• 17:06
  side. But some but.
• 17:07
  Some of this could change. This could change everything.
• 17:10
  But some of the kind of economic philosophy of what the Trump
• 17:14
  administration are doing so bizarre.
• 17:16
  Like you, Yeah, Lutnick today was talking about Australia.
• 17:19
  Well, why did you, you know, slap Australia with 10% tariffs?
• 17:23
  Oh, well, you know, they just buy LNG from us.
• 17:27
  We don't want to sell them LNG. That's what they want.
• 17:30
  But hang on a moment. That is not how the global
• 17:32
  economy works. That is how a managed economy
• 17:35
  works. They're so concerned about we
• 17:37
  want to sell our beef. We want to sell our agriculture,
• 17:40
  which I don't know if yes, it that will resonate, as you said,
• 17:45
  Chris, with a contingent of American MAGA or, you know,
• 17:48
  voting, but it's not all of America because they they're
• 17:52
  more interested in the wider, you know, U.S. economy than just
• 17:56
  agriculture. There is something deeper going
• 17:59
  on, which is this happened in the Weimar Republic, where you
• 18:03
  had a lot of smart people at the end who were experts.
• 18:08
  And all of that gets swept in. You know, it's swept gradually
• 18:12
  into the Nazi Party, saying things that they didn't really
• 18:16
  believe. But we're so interested in their
• 18:18
  careers in power. And we're seeing some.
• 18:22
  Yeah, they're enthralled by the proximity to power.
• 18:26
  And we're seeing some of that with people who should know
• 18:29
  better are saying things. Remember, Marco Rubio was in It
• 18:33
  was a neoconservative 12 years ago.
• 18:36
  Where's that gone? Yeah, that's nowhere in this in
• 18:39
  administration. Exactly.
• 18:41
  It's all about proximity to power.
• 18:44
  I mean, you look at these tech billionaires, that tableau of
• 18:47
  the inauguration. Never has there been this much
• 18:51
  collusion between massive wealth and political power as now where
• 18:56
  you take people who are worth 10s of billions of dollars.
• 18:59
  Yet they feel the necessity to get on their hands and knees
• 19:03
  before Trump, who may be broke for all for all.
• 19:07
  We know his finances are so complex.
• 19:10
  The the other thing about this that that you know, that makes
• 19:12
  you wonder is quite, quite a lot of the theoretical upsides are
• 19:17
  long term. They are not likely to
• 19:19
  materialize in the next two to three years.
• 19:21
  Yeah. So these do not look like the
• 19:23
  economic plans of a man or a movement who think they're going
• 19:26
  anywhere. Yeah, that's absolutely true.
• 19:29
  Trump and well, in this sense, JD Vance, who in the vice
• 19:35
  president, who in some respects is more extreme than Trump, when
• 19:39
  you actually look at his. Yeah, he really believes a lot
• 19:42
  of this is, you know, he's only in his mid 40s.
• 19:47
  He can run for president. You know, he could be a
• 19:50
  president for eight years. And that, you know, the, the
• 19:53
  Trump, the Trump, the Trump party could be in power for 12
• 19:57
  years. But Trump, as you said, is not
• 19:59
  laying the groundwork for that with this.
• 20:02
  But the rhetoric will be there, Chris, you know that I, I
• 20:05
  proved, you know, I brought these many.
• 20:07
  Jobs, you mean by your comparisons to Weimar and sort
• 20:11
  of where that really takes us with a with?
• 20:13
  A well, Weimar, Weimar led to Hitler.
• 20:16
  The the world, the United States and the world are not going to
• 20:19
  have another Hitler. But if you look at the look at
• 20:23
  the patterns of how the Weimar system, you know, ended and how
• 20:28
  the Remember, Hitler was very popular.
• 20:30
  Had he died in 1938, he would have gone down in history as a,
• 20:35
  you know, as a fairly popular German leader who got back lost
• 20:39
  territories, revived the economy and and, you know, and did
• 20:43
  things like that. So it's like Weimar in the sense
• 20:47
  that, you know, it's it's a human proclivity that people
• 20:51
  brilliant but are but are absolutely obsessed with their
• 20:54
  careers and their social position get swept into this
• 20:59
  wave. And I think the Lutnick comment
• 21:02
  is is is very symbolic of this because he should know better of
• 21:06
  all people. And, you know, the, the, the
• 21:09
  language that the administration using is that America has
• 21:13
  somehow been ripped off. I mean, if we've been ripping
• 21:17
  them off, we've not done a very good job because they're the
• 21:19
  wealthiest nation in the world. But that they're being abused
• 21:23
  that the whole global economic system is built on the back of
• 21:27
  ripping Americans off. This morning they were saying
• 21:30
  again that, you know, it's not just tariffs that are problem.
• 21:33
  It's all all the rules that different countries bring in,
• 21:37
  you know, that are barriers that somehow subsidized our national
• 21:42
  interests above US interests. And then that is the dragon that
• 21:46
  Trump and Trump's administration has to say that was not
• 21:49
  realistic, that kind of portrait of what's happened.
• 21:54
  But. There is also a logic for the
• 21:56
  MAGA crowd. If you look at the trade
• 21:59
  restrictions India imposes on America and.
• 22:02
  Yeah, they don't buy. They don't buy American corn,
• 22:04
  you know, So that's why. Or whatever it might be that you
• 22:08
  go, well, hang on what you know, why are we not charging
• 22:11
  something similar? You know that that is a
• 22:13
  difficult one to answer, I think, when you look at the
• 22:16
  protectionist policies of other countries.
• 22:19
  You know, one of the things that Trump realized before other
• 22:23
  politicians back in 2014, 2015, was that the elites, Republicans
• 22:30
  and Democrats were all in favor of free trade.
• 22:33
  And he saw how free trade was making life more difficult for
• 22:38
  American workers. It wasn't just jobs,
• 22:41
  manufacturing jobs in the northern Midwest lost to China.
• 22:45
  It was, it was the, you know, it was, it was other things as well
• 22:49
  that that, that there were less good paying jobs.
• 22:54
  And the states that lost the most jobs to China in 2016 were
• 22:58
  the states he carried by thin margins, which enabled him to
• 23:02
  beat Hillary Clinton. So from his perspective, he's
• 23:07
  been ahead of the curve when you know, when he looks back at it,
• 23:11
  that because he started attacking free trade before
• 23:14
  almost anyone did. And, and it resonates with
• 23:17
  voters. And I mean, in that way, it's
• 23:19
  quite interesting because it, you know, it, it could be a
• 23:22
  traditional very left wing philosophy that we need to, you
• 23:27
  know, that it's not a very, as you were saying, but not a very
• 23:30
  Republican kind of economic ideology.
• 23:35
  And it does resonate with people.
• 23:36
  You know, he's going to be able to say, look, Louisiana, I got
• 23:39
  Hyundai to bring steel manufacturing and invest, you
• 23:44
  know, six billion, 6 1/2 billion dollars there.
• 23:46
  That will win votes. That will bring people on side.
• 23:51
  But just because people, you know, it resonates with voters,
• 23:55
  it doesn't mean that that is an accurate reflection of the US as
• 23:59
  trade situation. What's happened in America is
• 24:04
  that there's no center anymore. You have the the the far right
• 24:09
  Trumpian right, not the center right of the old Republican
• 24:13
  Party. And you have a progressive left,
• 24:16
  not the center left of the old Democratic Party.
• 24:20
  And the center has been lost, I would argue, because of two big
• 24:25
  reasons. You can name 20, but I'll name
• 24:27
  21 is globalization has split American Society down the
• 24:32
  middle. It's it's created a globalized,
• 24:35
  cosmopolitan, multilingual wine sipping class of people dreaming
• 24:41
  of European vacations and stuff. And then there's the other half
• 24:45
  that has been left behind in the old nation state in the fly over
• 24:49
  states of Kansas and Nebraska and etcetera.
• 24:52
  So globalization divided America as it has some other countries
• 24:56
  as well. I mean, there was a bit of this
• 24:58
  in Brexit. And the other thing I would
• 25:02
  mention is the change in the media environment.
• 25:04
  America was a great mass democracy in what I call the
• 25:09
  print and typewriter era when people got their news from
• 25:13
  centrist and their and you know, got not only got their news, but
• 25:18
  their whole outlook on the world from centrist Fact Check,
• 25:22
  professionally written long, you know, long articles and
• 25:28
  newspapers that provided people with complexity and context that
• 25:32
  they could understand. The digital video era has erased
• 25:36
  that. It's created a social media
• 25:38
  environment of passion, ideology and simplicity.
• 25:43
  Simplistic narrative, so and. Trump rise that very well, yeah,
• 25:47
  but the genie is out of the bottle now, isn't it?
• 25:49
  You can't. You can't put.
• 25:49
  That no, you can't put that. And what that goes with also is
• 25:52
  the hollowing out of of the of the American bureaucracy, which
• 25:56
  Trump is sort of slashing and burning.
• 25:58
  And and that is really weakening US power, the hollowing out of
• 26:02
  the bureaucracy, because what we see of American foreign policy
• 26:06
  is like an iceberg. You see the top, you don't see
• 26:09
  everything's underwater, everything that's underwater.
• 26:12
  And what's underwater is the 10s of thousands of foreign service
• 26:16
  officers working in complex, troubled countries like
• 26:20
  Pakistan, Nigeria, Colombia, etcetera, etcetera, who are
• 26:25
  solving crises on a daily basis so that they never reach up to
• 26:30
  the newspapers. It's amazing what the US Foreign
• 26:34
  Service accomplishes, keeping the world at Bay so that the
• 26:38
  president only has to deal with the three or four top foreign
• 26:42
  policy issues on a daily basis. And Trump is hollowing this out.
• 26:46
  What what do you think in terms of the geopolitics happens to
• 26:49
  Britain, Europe, the sort of the medium sized players, if you
• 26:53
  like? We're not superpowers, we're
• 26:54
  never going to be. And we're trying to sort of find
• 26:57
  a role in this, in this new world.
• 27:00
  And Britain sort of sees its role as sort of convening,
• 27:04
  trying to be the glue, trying to be a sort of a a player that
• 27:07
  sort of punches above its weight and size.
• 27:11
  Does that get anywhere in this new?
• 27:14
  For so many decades, Europe less so Britain, less so France.
• 27:19
  But Europe has has been in a state of dependency on the
• 27:22
  United States for its security and that's lasted 80 years and
• 27:28
  80 years is a long time, you know, And so getting its act
• 27:32
  together to, you know, to produce a military, you know, a
• 27:37
  capable your pan European military.
• 27:40
  It's not just a matter of budget procurements.
• 27:43
  It's a matter of a mentality of producing a military that
• 27:46
  actually fights, not just like Aun toy soul soldiers in
• 27:51
  southern Lebanon, you know? So that I think that's the
• 27:54
  Silver Linings argument is could everything that Trump is doing
• 27:59
  all, are there some repercussions that could be
• 28:02
  positive in terms of defence? Has it catalysed Europe to do
• 28:07
  what it should have done a very long time ago?
• 28:11
  Does it catalysed Europe to think economically very
• 28:14
  differently? We had the Dragu report a while
• 28:17
  ago saying Europe was inefficient.
• 28:20
  Maybe, maybe this is an opportunity to say what can we
• 28:24
  do to be a kind of economic force of the next century?
• 28:28
  You know, you think about kind of American hegemony, and a lot
• 28:33
  of it has been through the big tech companies.
• 28:36
  Something that has SAT politically a little bit
• 28:39
  uncomfortably with Europe is now the moment where the economics
• 28:43
  and the politics work side by side.
• 28:46
  But this? Is where I think this is
• 28:47
  slightly sort of fairy land because in your argument and all
• 28:51
  the great powers are in decline. Yeah.
• 28:53
  And the truth is so, so, so are the medium sized and small ones.
• 28:57
  There's there's nobody really in the ascendancy in this, in this
• 29:00
  world is that. I don't see it the the 1 silver
• 29:04
  lining that I see that's going to happen over the next five
• 29:08
  years and it's a region wide thing.
• 29:10
  It's not a global wide thing is I think that of all places that
• 29:15
  can have a democratic trending upheaval and get rid of a tired
• 29:20
  regime, it's Iran. And Iran has 85 million people
• 29:25
  highly educated waiting to be unleashed into the global
• 29:29
  economy. And I think Iran is at the end
• 29:33
  of what will go down in Persian history is the most destructive
• 29:37
  tragic regime in, in, you know, in, in, in memory and that.
• 29:43
  And if Iran changes, the whole Middle East change.
• 29:46
  Well, there's some speculation that that that might also be
• 29:48
  what Trump has in the mind as well.
• 29:51
  That's, you know, that sort of military action on Iran.
• 29:54
  Well, I'm not talking about a military action because of
• 29:58
  country of 85,000,000. You're not going to invade and
• 30:01
  dominate. I'm talking about an internally
• 30:03
  driven upheaval that is very possible.
• 30:07
  Remember, Iran is the land of demonstrations.
• 30:10
  They demonstrate all the. Demonstrations that have been
• 30:13
  brutally. Suppressed, but it's But we
• 30:15
  haven't had a big wave of demonstrations since the
• 30:19
  Israelis attacked Iran, since Hezbollah has been virtually
• 30:23
  destroyed, since Hamas has been virtually destroyed, the the
• 30:27
  regime is perceived to be in a much weaker and more vulnerable
• 30:31
  position than it was before. At some point, demonstrations
• 30:35
  may topple. Robert, you're both
• 30:36
  simultaneously very positive and actually out glooming me on the
• 30:41
  global economy. I mean, I, I, I think there is
• 30:44
  chance for Europe to collect itself.
• 30:48
  You know, these these are moments where big leaders, big
• 30:52
  thinkers can make a difference. Look at the German economy and
• 30:55
  the two big assumptions they made, which was that we will
• 30:59
  have US security forever and ever and we will be able to rely
• 31:03
  on Russian energy forever and ever.
• 31:06
  That was a mistake. That is not the new world.
• 31:09
  But we are in an environment where technology is changing.
• 31:13
  Look at what's happening with AI.
• 31:15
  You know, US search is not necessarily dominant.
• 31:19
  Look at what DeepSeek is doing. It shows that there is a
• 31:22
  potential, the shift, the the kind of technological.
• 31:26
  I know you're saying this is all fairy and we haven't done it,
• 31:30
  Europe hasn't managed to do it yet, but that is because it was
• 31:34
  only a political ambition. And what I'm saying is there is
• 31:37
  now an opportunity where you say if your back is against the
• 31:41
  wall, all these decisions suddenly become more attractive
• 31:45
  to investment. My fear is that it's all
• 31:47
  different levels of negative, you know, and, and, and that
• 31:50
  that none of this is really, you know, there are no winners here.
• 31:54
  This is all. Just Mark Carney might disagree
• 31:56
  with you. Well, he would, but I mean, he's
• 31:59
  well, yeah. We'll look at the position
• 32:01
  they're in and you know, when it comes to do doing deals now with
• 32:07
  Trump, if that, you know, Britain's going to try and
• 32:09
  improve its position. There is no win.
• 32:11
  It's just different degrees of cost.
• 32:13
  We're going to either lose tax revenue by giving it back to the
• 32:16
  tech Bros. We're going to flood our markets
• 32:18
  with American agricultural goods.
• 32:20
  You know there is nothing good that comes out of this.
• 32:22
  What if it what if it's closer relation?
• 32:25
  What if it is to catalyse us to have closer ties to Europe?
• 32:30
  And that, that I'm not, I'm not disagreeing with you, but the
• 32:33
  reality is that Trump is empowered.
• 32:35
  This is these are the actions he's taking.
• 32:37
  I think it's up to the world to respond in a way and think of
• 32:41
  where are the opportunities. Just finally, I mean, you know,
• 32:45
  if you think that you know the these dips, you know, if this is
• 32:50
  a vimar period, the response will eventually be to turn
• 32:54
  around and rebuild institutions and rebuild democracy.
• 32:58
  Can that be done without, you know, a horrific dip first, You
• 33:03
  know, a terrible war, You know, a terrible calamity, terrible
• 33:06
  economic crisis? Well, one would hope.
• 33:08
  But what often happens is things have to get worse before they
• 33:12
  get better until, until the, you know, America is a mass
• 33:16
  democracy still, even though Trump is taking a hatchet to
• 33:19
  institutions, but it is a mass democracy still.
• 33:23
  And until Americans feel the pain more, there's going to be
• 33:27
  no curtailing effect on Trump's on Trump's actions.
• 33:33
  Robert Kaplan, Helia, thank you very much indeed.
• 33:36
  That's it for this edition of the FORECAST.
• 33:37
  Until next time, bye bye.