US Is On The Path Of Wrecking The World Economy: Prominent Economist Jeffrey Sachs On Tariff War
26,765 views Premiered Apr 10, 2025 #trumptradewar#trumpreciprocaltariffs#trumptariffs
26,765 views • Premiered Apr 10, 2025 • #trumptradewar #trumpreciprocaltariffs #trumptariffsJeffrey Sachs, Professor, Economics at Author & Educator, has cautioned India against adopting an anti-China stance to gain favour with the United States.
Transcript
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0:19hello and welcome to this CNBC TV18
0:21special the global markets have been in
0:23a state of mayhem ever since President
0:25Trump decided to go through with his
0:27tariff policies
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
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