Barry Appleton, co-director and senior fellow of the Center for International Law at New York Law School, joined "Forbes Newsroom" to discuss President Donald Trump's tariff negotiations with other world leaders, as well as the tit-for-tat trade war with China.
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00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now
00:07is Barry Appleton, co-director and senior fellow of the Center for International Law at New York
00:12Law School. Barry, thank you so much for joining me. Thanks, Brittany. There is a lot to discuss
00:18today when it comes to tariffs and President Trump's tariff plan, because right now it seems
00:23like we are a little past the initial whiplash and the Trump administration really is focused
00:28on dealmaking. President Trump said his administration is in talks with leaders and
00:33officials from Italy, Mexico and Japan. He also said that while the trade war with China has
00:39escalated, that he is in early talks with China. So where do you think to start off the conversation
00:45we are right now when it comes to tariffs? Well, Brittany, here's what I think people really need
00:51to understand. Tariffs today just aren't about trade. They're really about power. And so we've
00:57moved past an era of marginal tariff tweaks into something that's far more strategic. And what
01:05we're really witnessing is a deliberate shift from globalization to fragmentation, where countries
01:11just aren't trying to export more, but they're really trying to control things like critical
01:15supply chains or innovation and intellectual property, sometimes et cetera, like pharmaceuticals
01:21or semiconductors, but they're now frontline. They're not the footnotes anymore. They're the top
01:26end of what's going on. So this is no longer a trade war in the traditional sense. It's
01:32foundationally a clash of economic models. One side sort of prioritizing national resilience
01:38and reshoring, the other demanding some type of space to do their own thing, space to rise
01:43up and expand and develop their economy. And businesses are really caught in the middle.
01:49They're learning the hard way that economic security is now synonymous with trade policy.
01:55So if you're trying to assess what's next, you can't just watch the tariffs. You have to watch
02:02the rule book that's being rewritten in real time. And that's the difficult part.
02:08That's really interesting that you're saying this is not about trade. It's more about power. So what do you
02:14make of President Trump's overall approach to trade, which seems to be tariff everyone to the highest
02:21degree, then have them come to the table and negotiate after the fact?
02:25Okay, well, first of all, let's be really clear. Today's tariffs in 2025 aren't your 2018 tariffs.
02:32So they're signals. And tariffs are being used as tools of industrial policy and economic leverage
02:39and geopolitical deterrence. We see that in semiconductor. We see that in tech. We see that in AI. And so what
02:46used to be trade skirmishes are part of sort of a broader economic realignment. Once we get the big
02:52idea, then we get to understand what's going on. But without that, we don't really get to see. So these
02:58baseline tariffs, these 10% tariffs on almost everybody, they're about reshoring jobs to America
03:05and visibility. And reciprocal tariffs are the country specific targeted ones. They're about
03:12punishing asymmetry, making it whether it's real or it's perceived that the administration says,
03:19we're going to punish you for being different. And so because we're using tools that have never
03:25been used before, and that adds more uncertainty, right? These emergency proclamations through the
03:31International Emergency Economic Bowers Act, IEPA. This bypasses the normal congressional input
03:38and the exception mechanisms that we normally use day to day in trade. So business has less recourse,
03:44and that creates more volatility. And so tariffs today aren't designed to be temporary pressure.
03:52They're basically the new price of predictability. And that is what we need to get our heads around.
03:58This is different. And so our problem is, is that when we want to understand, and when the other
04:05countries want to understand, they're looking at this with the old ideas of tariffs, what I call the
04:122018 model, when they have to look at a totally new and foundationally disruptive idea in 2025.
04:21What do you make of that? What do you make of this new rulebook that President Trump appears to be
04:26rewriting when it comes to global trade, when it comes to tariffs?
04:29Well, these tariffs, especially let's take these, the Trade Liberation Day tariffs, which then he put
04:36on pause. This is really a pressure valve. So the markets wobble, right? And the allies have pushed
04:43back. We just know that you had to get the person who they thought could be the best Trump whisperer
04:49over to Washington, Italian Prime Minister Maloney. And, you know, there's some lawsuits that are coming
04:56in. And so the White House has now hit the pause button, but only for 90 days. Now, what's interesting
05:03here is China, because China wasn't explicitly excluded from the pause. And so this tells us it's not just
05:12about trade issues, but it's also foundationally about the U.S. relationship with China and perhaps
05:19a policy that's got a little bit about China containment. So you can't read the pause in general
05:24as de-escalation. I tell everybody to think about it as reloading. That's what's going on. The pause is
05:31going on. The talks are happening. And then states are coming over to the U.S. and they're trying to figure
05:39out what's going on. And the thing is, is that right now we're not really seeing progress on deals.
05:44We're seeing positioning for the next round. So you have about 50 countries at least that have said,
05:50we give up. We're going to give you, I tell everybody that what the administration wants are
05:55crown jewels and trophies. We're going to give you what you want. Leave us and we'll just submit.
06:02So that's the first batch. And the administration is trying to process that. And that's what's going on,
06:07I think, in the 90 days. But then we've got to focus on the other ones. That's the interesting
06:12part. To your point there, President Trump in the White House on Thursday said, we're talking to
06:17everyone, but there are only so many hours in a day. To that point, realistically, how sustainable
06:23is this 90-day pause? Can they talk to these dozens and dozens of nations and hammer out really concrete
06:30deals in three months? Not a chance. There's no way. I was involved in negotiating the NAFTA
06:38agreement and advising on that. And that took us a year and a half. And that was just with three
06:44countries. So what's going on are bilateral deals. And the Trump administration, the president
06:50himself, is highly transactional. So there will be some deals that can get done. There'll be other
06:56deals that won't get done, but they're going to set the process for those deals. And they're going
07:01to take a lot longer. But the issue is going to be not the countries that are submitting.
07:06It's going to be economies that are not. So that takes us to China, Canada, the EU. Those are the
07:15biggest ones that we need to look at. And those ones that are being subjected to what we're calling
07:20sectoral tariffs on semiconductors, on lumber and pharma. Those are the ones that are really the
07:28most interesting. And of course, the biggest one out of all of the elephant in the room has to be
07:34China. But when it comes to the other deals, President Trump has said we have made progress,
07:39but there hasn't been a deal inked yet. And President Trump, it does seem that he views these
07:44trade talks as there's a winner and there's a loser. So what do you think a win is going to look
07:49like, what do you think when a deal gets done? What do you think that really looks like?
07:53Well, first of all, it's not really up to me. It's always up to the president. And the president
07:57believes in winning and he's highly transactional. So at the end of the day, it's very hard to second
08:05get anybody who's tried to second guess the president has gotten it wrong. But I think we also
08:11make a mistake if we don't take the president and the senior members of the administration at their
08:16word so that they've said they want to reformulate the trade map and they want to redo a pile of
08:24economic things. And they have the ability and the authority because Congress hasn't stepped in and
08:29the courts can't step in for some time. Even with these cases that are underway, they have about a year
08:34at least a free space where they can go and do what they want. So you've got to assume that there are
08:40going to be deals that get done. But let's take the EU, for example. They came in, they had a series of
08:46meetings at the beginning of the week, and then they brought in the Trump whisperer yesterday and
08:51Prime Minister Maloney to see if she could. And by the way, that seemed to be a very good talk.
08:55But they can't get a deal. And the reason is that inside the EU, they can't agree on most things.
09:01It's a large number of countries with very different interests. And so it's very hard. The trade rules
09:07have foundationally changed. And we have a low trust environment. The things where we have agreements,
09:14the things that everybody were based on for the last 30 years at least, are now out the window.
09:20So it's making it very difficult to get some progress. But the EU is trying because they don't
09:28want to trade war. But think about it. Their largest imports come from China. Their largest exports go to
09:35the United States. They could decouple from the U.S. just as easily as they could accept and go ahead
09:41with the U.S. So that's an example of where we don't really know where it's going to go.
09:47Take Canada. Canada is 80 percent of its exports to the U.S. And a huge amount of investment in Canada
09:55is from the United States. They have a lot less flexibility. So they have an election. They're
10:00going to have a new elected government in a week and a half. Then that discussion is going to start.
10:07And that is likely going to have impacts on Americans because there will be affordability
10:13issues. There will be impacts of tariffs. And I think that's all going to start around the 3rd of
10:18May. The Canadian election is the 28th of April. So that's going to happen. And for sure, there's
10:23going to be renegotiations on the new USMCA. The Canadians have said, we can't follow the old
10:30agreement anymore. So for sure, that's going to happen. And that's going to take some time. So
10:35the Canada position is different. The Mexican position is a little different. They've been
10:40quiet. We all expected them to come out the strongest. But the president, the China bomb
10:46has been saying, we'll listen and we won't retaliate first. But they're obviously very unhappy. Right.
10:53So there's there are three different processes going on here. Right. The EU, Canada, Mexico. And then,
11:01of course, when we got there, there's China. And it's it's a different thing completely again. So
11:06that's where that's where the real focus, I think, is going to be. And in the meantime,
11:12the administration is going to try to deal with the rest. And the market needs to understand and
11:17businesses need to understand where that works.
11:20You said you were involved in NAFTA talks. I'm curious, because you're saying that there's a lot
11:25of low trust now because the rules of the road have changed. This traditional playbook when it
11:30comes to tariff and trade is being rewritten. How does that low trust now change this dynamic and
11:37our talks with other countries? Well, I think the easiest way to deal with it is to think about
11:45what happens with what with all Americans. We all get together at Thanksgiving. Right. We have a big
11:50dinner. We invite everybody over. And it's a family thing. Right. So sometimes we invite over a crazy
11:56uncle. The uncle is going to say all types of things. Nobody's going to listen to the uncle, but
12:01everybody invites the uncle to the dinner. Right. That's how it works. That's what's going on right
12:08now. I mean, there's going to be a G7 meeting. Canada's the chair, and it's going to take place in
12:13June. And the U.S. is going to be there. But all the other members of the G7 have agreements with each
12:19other. And they have higher trust amongst each other than they do with the U.S. So we're not just
12:24in a trade war. We're in a system redesign. The WTO is sidelined. The foundational agreements that we
12:32have, not just on tariffs, but on intellectual property. We call that the TRIPS agreement or the
12:37pharma agreements that's being fragmented. So deals, if they happen, are likely to be what we
12:44regional. We have a fancy word, plurilateral. They're not going to be global. And the world
12:50is splitting into regulatory blocks with the U.S. and allies on one side. China on the other. It has
12:57this Belt and Road initiative, which is making a big difference. And the winners are going to be those
13:03countries that have agility with their supply chains, that may have control about their IP,
13:08and the ability to shift between trusted jurisdictions. And so brand America and trust
13:15in America are really a cost out of all of this. And so that's our problem. Because everyone's
13:22asking, when are the tariffs going to end? And instead, we really need to think of who's going
13:28to rewrite the rules of this post-global system. The post-global system is really what's at stake.
13:34And that's the big issue. So from your story there, do you think that the United States
13:41right now is the crazy uncle at Thanksgiving? Yes, for sure. I'm speaking to you from Vienna in
13:48Europe. I was just out here for meetings. I was at meetings at the OECD last week in Paris.
13:53For sure, everybody can't understand why America that led the post-war and was so successful
14:02now wants to change the rules. But they do. So since the rules are going to get changed,
14:09and the markets don't like that either, we all have to think about what that looks like. And if
14:14we just didn't worry about the change, we're going to miss the opportunity to be able to actually deal
14:20with what the change is. And so I tell everybody, be the change rather than fear the change.
14:26President Trump has really set his sights on one country in particular in this tariff plan,
14:33and that country is China. And we have seen a tit-for-tat escalation when it comes to China.
14:38The tariff rates right now are on China as high as 245 percent. China has said that hike was a
14:44meaningless tariff numbers game. What do you make of this back and forth with China right now?
14:49Okay. Well, first of all, look, the American tariff on China is 145 percent. China said we're going to
14:56be reasonable and we're going to put a limit of 125 percent. For sure, American companies that were
15:03importing goods from China, and I've talked to them, they could survive at 10 percent. They could
15:10figure out maybe at 20 percent. After 20 percent, there's no more business. Okay. They are stopping
15:17the shipments. The warehouses are full everywhere. That isn't happening. So part of our problem,
15:23though, is classic game theory and signaling. The president said he would only start talking to
15:30China if China came to him. And so the problem is China is very focused on respect, and they actually
15:40believe in the rules of the game. Unlike Russia, which didn't follow the rules in trade,
15:46China scrupulously tries to follow the rules. So both sides have been saying the ball's in your
15:52court, and no one's been playing. And that has started to change in the last two days.
15:58It looks like China and the U.S. have realized that it makes sense to talk to each other.
16:06But if a deal happens, it's not going to be about the usual things. It's not going to be about
16:12soybeans or even about semiconductors. It's going to be about who's going to set the rules for the
16:17next 50 years of economic competition. So these are really big issues. And there's going to be a
16:23really big talk. There's going to be a meeting for sure, a summit between the presidents of China
16:29and the United States. And that's where this is going to get settled.
16:34And I think there's two different conversations. It's who blinks first, because President Trump
16:39said that the United States is starting talks with China. He's saying that he thinks a deal can be
16:44made. But then it's also going to be once those talks happen, who appears the victor in that? So how
16:50do we get to that point, do you think? Well, that's a really good question, right?
16:55And look, part of our problem is, is that it's not just about the tariff numbers. It's about other
17:04things that are going on. And tariffs used to be a trade tool. But now they're a litmus test for
17:09economic sovereignty. So the US-China conflict isn't really about who sells what. It's foundationally
17:17about who leads in innovation, who controls the IP, who sets the digital rules of the road,
17:23who's going to set the standards, and who's the most trustworthy partner. That Chinese are reaching
17:29out to the Europeans and saying, work with us. We're more trustworthy. And those are things that
17:36I never expected as an American to hear anyone say, from China to our allies? Never. That's the new
17:44reality. And so we don't know where that's going to play. But that's going to help us get this fixed
17:50up. In the meantime, everything's going to be more expensive for those of us at home that are buying
17:56things that are coming in from China. You said you're in Vienna right now. Do our allies,
18:02from your perspective, do they now view China as more trustworthy than the US?
18:09It's so difficult. If you had asked me this question four months ago, I would think that this
18:16was science fiction, right? You'd probably be laughing me off the interview here. Yeah.
18:21I would be more polite than that. But I'd be shifting it as quickly as I could.
18:26Up today, China is trying to sell everybody. They are reaching out everywhere. And they're saying,
18:33we have rules and we have follow things and you can trust us. We'll keep our words.
18:38And you can't follow the Americans. That's where I say that brand America is being effective.
18:43Because we led the post-world order. And these are America's allies. And they trusted us.
18:52But we're shifting so many things. It's not just on trade. It's defense. There are other areas.
18:57Could be currency. We're expecting that. And IP. So you put that all together. And China makes a much
19:04more convincing argument now than it could have done four months ago. That's the part,
19:10as somebody who focuses on trade and looks at policy a lot. That's the part that I fear.
19:16And that's really fast moving that in just four months, that can happen this quickly. And as you're
19:22saying, this whole theme of this conversation is the rules of the road are changing. Tariffs now,
19:27you're saying, are a signal. So what specific signal are you looking out for next?
19:31Well, I think the China issue is going to get resolved slower. So I think that I want to see
19:38the signals, first of all, to see if we can find some exit ramps. The first one would be with the
19:44Europeans and the other one with Canada, Mexico. From the United States perspective, for consumers
19:49in the United States, for affordability, right off the bat, so much of our affordability comes from
19:55either Mexico, Canada on one side, and China on the others. So assume China is going to take some time.
20:01Let's focus on Canada, Mexico. And I think we can continue to get some talks with Europeans,
20:08but the Europeans want to retaliate. They are not happy. Okay, like for sure. The Canadians and the
20:14Mexicans know they need to find a deal. So that's what the administration's banking on. They think
20:21they're so vulnerable that they can deal with it in that way. And it may be two deals, not one. It may
20:26not be a new USMCA. It might be a new Canada-US deal, bilateral, and a new US-Mexico deal, bilateral,
20:33so the two of them can't gang up together. But I expect to see a lot of activity starting in May
20:40there. And remember, tariffs keep coming for everybody in July. And that's a very, very
20:48significant negotiating timetable for everybody.
20:51Well, we are seeing so many developments when it comes to tariff talks. And I hope you can come
20:57back on and join me in breaking and break them down as we see them. Professor Barry Appleton,
21:02thank you so much for joining me.
21:04Brittany, it's a pleasure to be here. Thanks so much.