Andrzej Skiba, Head of BlueBay U.S. Fixed Income at RBC Global Asset Management, joined Forbes Newsroom to discuss how the Trump Administration should work with the European Union to negotiate tariffs.
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NewsTranscript
00:00Let's talk about those key trade partners. As you look at the long list of countries and territories that will be, according to President Trump, the recipients of these reciprocal tariffs, what are the two, three or five that most stand out to you and or are most concerning?
00:18Well, look, when you look at the volume of U.S. imports, two countries or blocks really stand out. The first one being European Union, the other one being China.
00:32So between those two partners, you already have around a third of our trade accounted on the import side. Canada and Mexico account for another 30 percent, although, as we mentioned, they were largely spared.
00:49So, you know, when we're looking at the detail, focus is clearly on some of the largest trading partners for the U.S. So European Union, China, Japan, South Korea, UK being good examples of those trading partners where tariffs placed on goods coming from those partners are material enough to move the needle for the overall tariff that we will face.
01:17So if you were President Trump and you were to make a deal with any of the areas, blocks or countries that you just mentioned, or if you were a leader of one of the areas, countries or blocks that you just mentioned, who's the first phone call?
01:32What if we could fix one? What's what's the one that you would identify as? Let's let's make something happen here so we can lower these percentages or get rid of it entirely.
01:42Well, thankfully, I'm not in a position of U.S. negotiators as we will try to address this situation.
01:50But I think, you know, in terms of agreements that could be easier to be made could be one with Europe, for example.
02:00Europe is looking to Europe is looking to find a partnership with the U.S. in the context of its rearming.
02:11And as Europe is trying to respond to the challenges that the continent is facing, U.S. is a partner that Europe needs.
02:19So we do believe there is a compromise to be found between EU and the U.S.
02:26We also absolutely believe that not just to do with Europe, but with a variety of trade partners, there will be almost like a two track process happening right now.
02:38One being retaliation measures taken by those countries and then looking to U.S. trade team to respond to those.
02:49But at the same time, conversations about potential concessions, about ways to reduce the tariff burden to actually find an agreement that lowers some of the rates that were announced yesterday.
03:01So it could be this two track process where first you have headlines about retaliation.
03:08And that is something that we believe market will be spooked by.
03:12But then the work of finding compromise, finding ways to reduce the burden will ensue.
03:20We do believe, however, that the end state when it comes to the average level of tariffs that we will see is probably not too dramatically lower compared to what we've seen yesterday.
03:32So there is some room for improvement, but we don't think that you will see a dramatic reduction in the level of tariffs that are charged in the months ahead.