By admin 
Since the presidential election, we have been investigating what a second Trump administration and its policies could mean for the economy. Now we turn our attention abroad.
To help us better understand how a second Trump presidency could impact foreign shores, Marketplace Morning Report host David Brancaccio spoke with Zanny Minton Beddoes, editor-in-chief of The Economist magazine.
The following is an edited transcript of their conversation.
David Brancaccio: First of all, from your perspective as a global publication but with a base in London, you and your people think that Europe will have to intervene as a Trump administration looks more inward and withdraws from alliances and international institutions. What will Europe have to do?
Zanny Minton Beddoes: In the case of Europe, this is a real challenge. The European Union has a trade surplus. Donald Trump and the United States think that when that happens it means the US is being fooled, so he’s not too keen on trade. But perhaps more importantly, whatever he does in terms of imposing a settlement on Ukraine will almost certainly lead to less support for Ukraine. And if, as many fear, he tries to sell out Ukraine, the big question for Europeans is: will they try to close the gap? Are they going to try to move up a notch? And an emboldened Vladimir Putin greatly increases the dangers for Europe. And so Europe must work together to support Ukraine; the underlying economic ingredients are problematic, the country will be hit by tariffs and it will have to pay more for its own security.
Brancaccio: Okay, so lots of challenges for Europe, but also additional challenges for another major US trading partner, Mexico. We’ve explored the President-elect’s intention to impose new tariffs on China, but let’s take a moment to look at the U.S.-Mexico relationship. The new NAFTA will come up for review soon enough, and while the review is overseen by the administration, it is true that the Senate would have to approve actual changes to the treaty.
Minton Beddoes: Mexico will once again face a major challenge as it could find itself in the crosshairs of two of President-elect Trump’s priorities. From his first day on the job we will see a huge focus on deportations, that is becoming increasingly clear. And second, his concern about other countries’ trade surpluses. That will mean that Mexico will basically, I think, be told by President Trump: you close the border, you take these people with you, otherwise I will impose tariffs. Tariffs will immediately be used as a negotiating tool. But more fundamentally, Mexico has benefited in many ways from the tariff war with China during the first Trump administration, as many companies have gone to Mexico and relocated manufacturing there to access the U.S. market. And I don’t think President-elect Trump is very keen on that; he wants the jobs in the United States. And so he will want to rewrite the USMCA, the son of NAFTA that he negotiated in his first term, and I think he will want to make it much less favorable to Mexico.
Brancaccio: And the editor of The Economist, with his history, will not be in favor of tariffs. You have to look at them as potentially inflationary in the United States.
Minton Beddoes: Look, I think they’re potentially inflationary, but much more fundamental. And you’re right: What we’ve been railing against for over 180 years against this free trade worldview is precisely the argument that tariffs tend to lead to more tariffs because there is retaliation. You have tariff wars. They impoverish. They do not spread widespread prosperity. I don’t think this is the recipe for a successful US in the long run, nor for a successful global economy.
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