Andrew Wilson, Deputy Secretary-General and Global Policy Director at the International Chamber of Commerce, joined Brittany Lewis on "Forbes Newsroom" to discuss the framework for the trade deal between the U.S. and the U.K., as well as the temporary agreement between the U.S. and China to majorly roll back tariffs.
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00:00Hi everybody, I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now is Andrew
00:08Wilson, Deputy Secretary General and Global Policy Director at the ICC. Andrew, thank you so much for
00:14joining me once again. Great to be with you, Brittany. Within the past week, we have gotten
00:20two major developments when it comes to trade. So I would love to talk with you about them both.
00:25First, last week, President Trump unveiled details of the framework for a new trade deal between the
00:30U.S. and the U.K. And just over the weekend, the United States and China agreed to temporarily
00:35majorly reduce tariffs for 90 days as negotiations between the two countries continue on. So to start
00:42off the conversation, what are your takeaways from the last week when it comes to trade negotiations?
00:48Well, it's a dramatic time to be working in the area of trade policy, that's for sure. I've never
00:53experienced anything like that in my circa 20-year career. I think it's quite interesting to look
01:01at what we're seeing today on Wall Street following the U.S.-China announcement. Clearly, I think the
01:08financial markets are breathing a huge sigh of relief that the potential decoupling between the world's
01:15two largest economies can be averted. That's a tremendously important signal, without any
01:22shadow of a doubt. I think when we talk to businesses, though, across our network, the response
01:29to both the U.S.-China deal and also the smaller deal with the United Kingdom is a little bit more
01:35muted, to be perfectly honest. And I know the administration has called these major deals,
01:41and I entirely understand why they use that rhetoric. But I think if you look at this from
01:47a business perspective, I think there are three things to know. The first is tariffs are still
01:53substantially higher than they were at the start of 2025. The 10% tariff seems to be set in stone,
02:02and essentially we seem to be working up from there. Second thing is there's still a huge amount of
02:09uncertainty left by these deals. And I know there are many details to fill in, both on the U.K. and
02:14China. But people are asking questions like what rates will apply to certain products? How do different
02:20tariffs stack up? I think we're seeing just this morning, capital economics are suggesting the
02:26effective tariff rate on China may be closer to 40% than 30%. So a lot of unanswered questions in the
02:33real economy. And I think the other thing is, certainly with the China deal, it is only a
02:39temporary reprieve. It's 90 days, and we really need to see what can happen in terms of future
02:45negotiations. Clearly, as well with the U.K., there need to be follow-on negotiations in a number of
02:52strategically important areas for the economy and for the U.K. in particular. And I think more broadly,
02:58the U.K. deal is relatively limited. And I think many people are saying, we now have the United
03:03States engaged with a large number, maybe upwards of 70 countries negotiating deals. If a close ally
03:11of the United States and a country with relatively balanced trade, and you could say the U.S. has a
03:18trade surplus if you include services, if that's the best deal that they can get, what are we looking at
03:24in terms of the deals that will be struck with other economies? And I fear that we're turning the
03:29economic clock back to the 1930s or the early 1900s, where tariffs become a much more predominant
03:36feature of the global economy. And for businesses, it's a huge source of uncertainty. And it is a huge
03:43concern to many companies.
03:47I want to first touch on that disconnect you talked about between Wall Street and businesses,
03:51because U.S. stocks surged upon the announcement of the U.S.-China tentative agreement, as well as
03:58the framework for the U.K.-U.S. deal. But you're saying businesses are having a much more muted
04:03reaction. Treasury Secretary Besson said about the China deal that neither side wants a decoupling,
04:09and the high tariffs before were essentially a trade embargo. But right now, the tariffs, China's
04:15slashing tariffs from 125% to 10%, and the U.S. is cutting them from 145% to 30%. So is that, I mean, I know
04:24that's not a complete embargo, but how much tougher is that going to be for businesses with that tariff rate
04:29than pre-2025?
04:32Look, I think it's positive in terms of the U.S.-China trade relationship. It is only a temporary reprieve,
04:40so that the uncertainty does still exist. But tariffs at 30% or maybe 40%, if the analysts are
04:47right, is certainly more workable. So trade will start flowing again. And essentially, the kind of
04:54temporary decoupling that I think we started to see in recent weeks should diminish. And I suspect we'll
05:01see a surge in exports from China to the U.S. as companies look to fill up their inventories.
05:07The one thing it will mean, though, at a 30% tariff is supply chains will not be able to eat
05:12those costs in their entirety. 10% companies usually say is manageable. 20%, depending on the
05:19sector, added push. 30%, we're probably looking at significant pass-through costs to American
05:26consumers. And that will have an impact on the U.S. economy. It's only U.S. inflation and consumer
05:33behavior. Each side, when it came to the U.K.-U.S. deal, touted this as a victory. The United States
05:40certainly touted the tentative China-U.S. agreement as a victory. Who do you see as the real winners of
05:47this deal? From the United States' perspective, do you think it was worth it for them to have this
05:53tariff whiplash for a few months and then these are the deals that are starting to emerge?
05:57I think the jury is out on that, to be perfectly honest. And I start from the position that
06:04the United States and the administration have some legitimate concerns about the trade practices
06:10of the U.S.'s trading partners. China most notably, but certainly not uniquely. So I think
06:19it's absolutely understandable that this administration should wish to seek
06:23or essentially take a more assertive stance when it comes to trade policy. The question I think we
06:32have fundamentally, and many business leaders feel precisely the same, is are tariffs the right way
06:38to go about this? Or are there better ways to seek concessions from trading partners? And would it be
06:45better rather than doing all of this bilaterally through brute force, would it be better to seek
06:51multilateral solutions? Our view very clearly is no one will win out of a trade war. No one will win
07:00from substantially higher tariffs. They will act fundamentally as a drag on business investment,
07:07job creation, and growth. They pose significant risks for the U.S. economy, particularly in terms of
07:13inflation and consumer behaviour. So I think really, I think the analysis that the administration has
07:23applied is right in many ways. The prescription that they're now applying to the global economy in
07:29the form of tariffs just is not workable as far as we're concerned. So I think it is positive that we're
07:37seeing the U.S. now seeking to negotiate bilateral deals. I think to determine whether that is ultimately
07:44a good thing for the global economy, we ultimately will need to see the substance of what's in them
07:50beyond the headlines of what's been announced so far on the U.K. and China.
07:55I know that you said something that stuck out to me earlier in this conversation,
07:59is that these tariffs are turning the economic clock back to the early 1900s. So from that perspective,
08:07and I know that there are details missing in both of these trade deals,
08:11but what is the impact here on these on the global economy?
08:18Look, I think
08:18what we're seeing is in many ways an unprecedented experiment applying the blunt tool of tariffs,
08:31which in large part kind of disappeared from global commerce as a key barrier to enormously
08:42complex and interdependent supply chains that have built up over many, many years,
08:49based in part on historical tariff policies, including and probably most notably from the U.S.
08:57I think if we end up in a situation in 90 days or in a year's time where tariff levels are
09:05substantially higher from the U.S. and potentially that could trigger other countries to raise their
09:11own tariffs, if not against the U.S. then perhaps against other trading partners,
09:15that I think economic history tells us very clearly that that will lead to lower growth,
09:22lower innovation, job losses for sure, and in some economies it will result in inflation. And I think
09:31the yield analysis of the Liberation Day announcements is pretty solid. They predict inflationary pressures of
09:39upwards of 4% this year alone. BNP Paribas and other major banks, I think, have made similar projections
09:47looking forward to 2026. So there are huge downside risks if the tariffs persist. And I think what we
09:54have to hope is the negotiations the U.S. is now entered into will substantially relieve those pressures and
10:02allow a lowering, probably to 10%, which now seems an infiable rule. But if that can be done, then I think that
10:12that does lift the cloud of trade barriers and the risks of a broader trade wall.
10:19I think the theme really in the past couple of months has been uncertainty because we have seen
10:25multiple 90-day pauses throughout this whole tariff back and forth. There's scanty tales coming out of
10:32these negotiations except, you know, the bulk headlines. You're saying lower growth, inflation, potential for
10:39job loss. I mean, if I'm the everyday consumer, what should I be thinking right now?
10:47I think many consumers and many businesses and small business owners are deeply concerned by
10:55by the uncertainty and not just in the United States. I mean, Europe, we see it here as well.
11:00I think what we really have to genuinely hope is that this is part of a grand plan, part of a clever
11:10negotiating strategy to extract trade concessions from the U.S.'s trade partners and that the tariffs can
11:18come down. And I think the message we really need to get across is tariffs are not necessarily an
11:28effective instrument to achieve what the U.S. very understandably wants to achieve in terms of
11:34rebalancing and reconfiguring global trade. Is that the global perspective that you're in Europe right
11:41now? Are most Europeans thinking that that tariffs aren't the right way to go about this? I mean,
11:47what is their feeling right now towards the Trump administration and these tariff policies?
11:51I think there's certainly in terms of the policy makers, the ministers, the business leaders we speak to,
12:01there's widespread shock. I think you said the word rightly earlier, uncertainty, which is clouding
12:09business operational investment decisions. And I think there's a sense that, you know, we've kind of gone back to the
12:17future. As I said earlier, we've turned the clock of economic history back to the 1930s. And then
12:24policy tools that were right, were widely considered outdated, ineffective, highly dangerous,
12:32have now come back to the fore of international economic policy. And I think it's striking that
12:38I remember after the global financial crisis, there was widespread concern that countries could
12:43turn inwards and start to enact protectionist measures, just as they did in the 1930s during
12:52the Great Depression. And very quickly, governments came out in unison to reject protectionism, to say,
13:00we need to keep markets open, we need to keep trade flowing. So this is really a fundamental reversal
13:06in international economic policy driven by the United States. As I say, I think the objectives,
13:12they're aiming for are entirely understandable. There are issues in the international trading
13:18system, there are issues with other countries conduct. The question is, can you do so by other
13:25means, rather than using the blunt force of tariffs, which are not a recipe for success?
13:32And especially the blunt force of tariffs amongst friends. I mean, the UK and the US have been
13:38longstanding allies, and the US has a trade surplus with the UK. So when you're seeing that framework,
13:44you see the baseline 10% still in effect, amongst other details. So what does that signal to you,
13:51if anything, about future trade agreements with other major trading partners?
13:55As I say, if the deal that was announced last week with the UK is the best that a longstanding ally
14:06with pretty balanced trade relations can achieve, then it suggests that other countries are looking
14:12at substantially higher tariff levels. We simply don't know what other countries will be able to
14:18offer the United States administration to get those reduced down to the 10%. But I think that the 10%
14:27baseline as it's now become is really quite interesting. It's almost as if
14:33the administration sees this as free money. It's not. It's a 10% tax on American consumers. Some of
14:42those costs will be passed on. We know that from previous tariff increases from the first Trump
14:47administration under George W. Bush after 9-11, there are pass-through costs. That is an economic risk.
14:56And it will make the US market a less attractive environment for investment. And I think that the
15:03bigger picture from this as well is tariff instability is not a recipe to resurrect US
15:12domestic manufacturing capacity, if that is one of the key policy objectives, which again,
15:17is completely understandable. But if your tariff rate today is 40%, you may look at making an investment.
15:26But only if you know the tariff rate is going to stay there for a long time, because it may take you 10
15:31years, 20 years to actually make money off the facility you plan to build in the US. But if you have tariffs
15:40imposed by way of executive order, that could change tomorrow, or could change in a year's time,
15:47or could change in four years under a subsequent president, then I think many businesses will be
15:54reluctant or nervous about making those big investments in domestic manufacturing in the US, because
16:01you don't know what the tariff rate is going to sit tomorrow, let alone in four or five years time.
16:06And that's obviously a message that the Trump administration is not echoing. They're saying,
16:13hey, now is a great time for investment in the United States. They're not saying that the US market is
16:18undesirable. So when you're looking at that, I mean, what specifically are you looking out for next?
16:23Because I know that you don't have a crystal ball. You can't read into the future. There is a lot of
16:28uncertainty here. But you know, you're, you seem to be a student of history here based on past tariff
16:34policies. So knowing that, I mean, what are you looking out for next?
16:38So I think, you know, I am slightly sceptical about some of the announcements that have been made on
16:47inward investment. Because I just wonder, will companies really pull the trigger on substantial
16:55investments in the US, if you don't know what the tariff rate is going to be tomorrow, or in a
17:00week's time. So I think that uncertainty will continue to cloud investment decisions. I think
17:08what we have seen, which is positive, is clearly the administration is not blind to the markets.
17:14The President has spoken about the need for American consumers or American voters to experience some
17:22pain as part of a readjustment. But clearly, they are sensitive to what the markets and what business
17:29leaders are telling them. So I think our fundamental hope is that they will continue to be alert to the
17:36downside risks to the economy and to the financial markets. And that we can find a way to negotiate
17:42our way out of the tariff increases we've seen over the first part of this year. And that the US can
17:49really start to rethink or the US administration can start to rethink how it approaches trade policy.
17:56And, you know, I'll give you an example. If you're concerned that countries are manipulating their
18:02currencies, and I think there's good reason to think that some have in the past to boost their export
18:09performance, then okay, one way is to threaten them with tariffs and get them to appreciate their own
18:16currencies. Another way is to form coalitions through the International Monetary Fund, through the
18:22World Trade Organization, and how they can be held to account with new rules, new enforcement mechanisms,
18:29new ways of dispute settlement, that could fundamentally address the issue that clearly many people, including
18:37the President's lead economic advisor, are very, very concerned about. So I think, you know, the answer has to be, I think, in the long term,
18:46about a shift in the solutions that the administration is offering. Tariffs are unlikely to work in any substantial way.
18:56There are other solutions that can be found, whether it's on currency, whether it's on
19:01excessive subsidization of domestic industries, that can be found through multilateral pathways. And I think
19:07many of the United States allies and trading partners will be very, very keen to join an effort of that kind.
19:15Well, there's certainly a lot to look out for as we see more deals coming through. And I hope as we do,
19:21you come back on and provide your perspective on them. Andrew, thank you so much for joining me.
19:25You are welcome back anytime. Thank you, Brittany.