The Decisive | Season 3 Ep.21 - What's at Stake in Tariff Negotiations

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Kristen Hallam: You're listening to The Decisive podcast, insights and analysis to empower confident decision making. Hello. My name is Kristen Hallam, and I'll be your host for our discussion today. We're going to take you behind the scenes of global trade negotiations and explore how they are reshaping geopolitical relationships. Because tariff discussions aren't just about trade, they are opportunities for leaders to reaffirm or reset agreements related to security and investment. Tariff discussions are also fueling concerns about jobs and the economy in some countries, influencing policy and election outcomes. To discuss the critical questions that are likely to condition the final negotiations around trade relations, we have the following experts from S and P Global Market Intelligence, John Raines, head of North America Economics and Country Risk, Anton Alifandi, lead country risk analyst for Southeast Asia, Dijedon Merry, Principal Analyst, Europe and CIS, and Jose Enrique Sevilla Macip, senior risk analyst, Latin America. We're going to start with a high-level view.

Kristen Hallam: John, tell us what does The US want to achieve with its trade policy?

John Raines: You know, honestly, it's actually a harder question than you might think. So number one is really that flat rate of 10% around the globe. And that's important because that is actually designed as a revenue earner. That is designed to actually pay for the tax cuts, not only existing tax cuts that expire later this year, but also maybe, you know, Social Security, overtime, tips. Now tariffs are not going to be able to pay for that, but, you know, every little bit helps. And so what that means that the is that really these are nonnegotiable. We're not expecting these to come off anytime soon in the current economic and political environment. So these are likely to last the length of the Donald Trump presidency.

John Raines: Now the second one are those reciprocal tariffs. They're not exactly reciprocal, but it gives you an idea the idea that the administration believes that these other countries have taken advantage of The United States. And, of course, we saw those paused. Now the idea here is that these are actually built for negotiation. Now there was a question as to how quickly The United States would get into these negotiations. We certainly saw some economic policy adviser saying that The United States should wait. But as soon as the bond market started to get hit, all of a sudden we saw that United States said, hey. Listen.

John Raines: This is a good opportunity for us to go ahead and get into conversations. And that's exactly what they've done. And then those final grouping is really those specific foreign policy objectives. Now we've seen those most notably against Colombia early on on the issue of immigration. That was successful. We've also seen them as for secondary tariffs against Venezuela and then the threats against Iran, against Denmark over the issue of Greenland, and then also against the BRICS countries over the issue of currency and the reserve currency. So what we're seeing here is that these are applied somewhat ad hoc. And, again, these are built for negotiation as well.

John Raines: But the difference here between those and the reciprocal is that these negotiations start and, of course, when the interlockler doesn't agree to what The United States is demanding, these are just going to stay on the book. So then, you know, those are after that point, they're really negotiations are not going to reach fruition and probably are not going to be recreated. And, of course, these will be kept on the books as long as the policy you or at least the Trump administration believes is achievable and also is in the benefit of The United States itself.

Kristen Hallam: Thanks, John. Anton, how about Mainland China? What does Mainland China want to achieve?

Anton Alifandi: Yeah. I'm going to take a broader view than John just described and talk about China's broader trade policy. We know that China has become an economic powerhouse that it is today in large part due to its, to international trade, and trade remains an important part of China's growth strategy while also trying to stimulate domestic consumption. So major disruption to international trade like what's happening now would potentially have a significant impact on its economy. And China portrays itself as a champion of the global trade system, especially in light of attempts by the Trump administration to reshape it. We've seen, for example, recent comments by President Xi Jinping on his visit to Southeast Asia where he spoke of the importance of maintaining the stability of the multilateral free trade system. He said that China was ready to sign an upgraded China ASEAN, this is the Association of Southeast Asian Nations, free trade agreement. So we will likely see China proposing an expansion of trade relations with other Asian countries as well as countries across the world as part of its response to the trade dispute with The United States.

Anton Alifandi: China has benefited from the global trade system, but it has also pointed out that the current system favors advanced economies and that it needs to be reformed to consider the interest of developing economies. Again, illustrating China's intention to champion the interests of the, so called global South. Trade has also enabled China to increase its influence globally. China is the most important trade partner for all the major Southeast Asian countries, the region that I cover. And this is also true for many other countries across the world. So China contributes significantly to the economy of many of its trade partners while simultaneously increasing its political influence globally. So these are some of the aims of China's trade policy and how China uses trade as an instrument in international relations, Kristen.

Kristen Hallam: Thanks, Anton. Time for Europe to enter the chat. Dijedon, what does Europe want to achieve with its trade policy?

Dijedon Imeri: Yes. Thank you, Kristen. When it comes to trade policy, a lot of that is run by the European Commission. And, essentially, the European Commission operates under two principles, which at face value can seem contradictory. At the general level, you know, it's still very much committed to multilateralism. The EU is still operating under an open trade regime, more open than The US, and is so therefore, more dependent on trade for economic growth compared to The US. For this reason, in the context of US tariffs and the current situation, its objective in this regard is to try to negotiate and preserve as much of that trade with The US as possible using a mixture of concessions, so carrots, as well as the threat of using sticks in order to reach some sort of long-term deal with The United States. And where that isn't feasible, basically looking elsewhere to try to conclude new free trade agreements or deepen existing trade ties with other economic blocs and countries.

Dijedon Imeri: The other principle, which is more at the sector level, is more animated by economic security concerns. This is especially true for sectors where the EU has identified these sectors as being very strategic for things like the green transition, so clean tech and renewables, or sectors which are very important for political and social stability. So, you know, they employ a lot of people, for example, automotives. And here, it's more likely that we'll see more protectionist measures being used. Of course, protectionism has always been part and parcel of the European Union, but more so in the agriculture sector. But now increasingly, we're also seeing it in manufacturing in these sectors. And I think this will intensify as a result of the current geoeconomic situation.

Kristen Hallam: Thanks, Dijedon. And how do you see the current tariff slash trade negotiations influencing bilateral relationships between Europe and The US?

Dijedon Imeri: Yeah. I think there are only two things we can say with relative certainty. First is that the old relationship is gone, and secondly, there's something new. And from the perspective of the European Union, more negative is taking its place. But what exactly that is is highly uncertain. But I think that is also the answer to your question. This high degree of uncertainty facing, you know, the political class and business is the new modus vivendi of EU US relations, and this will be the case over the next few months and years even. And in practical terms, that essentially means that the EU will try to continue to engage The US in dialogue and negotiations, as I mentioned, trying to secure a long-term deal.

Dijedon Imeri: But at the very least, you know, as we've seen now, sort of moratoria on tariffs, kicking the can down the road as much as possible. But on the other hand, this also creates an impetus for derisking as well. I thought it was quite telling that last month, the spokesperson for the European Commission mentioned that the EU could not afford to import a lot more LNG from The United States. And in addition to market considerations, you know, this was also from a strategic point of view. And that stands in sharp contrast to what we saw in the immediate wake of Russia's Invasion of Ukraine. You know, then US LNG imports were decisive in weaning the continent off of Russian gas. The promise to buy more US LNG was also the basis for the truce that was struck between the Juncker Commission and the first Trump administration back in 2018. Whereas now buying more is seen in some circles, you know, as being a strategic liability for the European Union.

Dijedon Imeri: And I think that just underscores the rift that we're seeing between the EU and The US.

Kristen Hallam: Thanks, Dijedon. And one more question for you before we move to Latin America. Dijedon, how do you see the negotiations influencing bilateral relationships between Europe and Mainland China?

Dijedon Imeri: I think, first of all, we need to remember that the European Union has its own concerns with China, especially Chinese industrial and trade practices. These predate the reelection of Trump, and they haven't gone away just because of The US tariffs. But the scale and the nature in which tariffs are being imposed on the EU by The US is creating space for the Chinese government to go on a charm offensive. And we're already seeing signs of that. Last week, the Chinese government announced that they were going to lift sanctions on European Parliament MEPs on the condition that the EU and China cooperate on trade. And even the European Union has said that, you know, although they are looking towards alignment with The US to address things like Chinese overcapacity, they're not going to mirror The US position on China. This was also true during the Biden administration, but it's also true now. Obviously, the sort of Atlanticist instincts and DNA run too deep in Europe for there to be, you know, a partnership or alliance between the EU and China.

Dijedon Imeri: But there are a lot of commonalities in terms of, you know, prioritizing things like the green transition. And like I said, if things continue to escalate between the EU and The US and China, I think that does potentially open up an opening for convergence in some policy areas between the EU and China.

Kristen Hallam: Alright. Thank you, Diadon. Now we have a good picture of what the three main trading blocks want. Let's bring in Jose Enrique to talk about Latin America. Jose Enrique, which countries in the region have the most at stake in their trade relationships with the three players we've just talked about, Europe, Mainland China, and The US?

Jose Enrique Sevilla Macip: Sure, Kristen. Thanks for having me. Well, I mean, the stakes for Latin America vary significantly depending on the specific trade relations that each country has with Europe, with The US, or with Mainland China. If we exclude Mexico, since 2018, mainland China has been Latin America's top trading partner. However, this doesn't mean that in face of the current tariff negotiations and the change in US trade policy, most countries have been trying to protect its relations with its top trading partner, that is Mainland China. But most countries have tried to strike a balance between the relations with China and The US. For South America, for example, Argentina and Brazil only have moderate stakes at play here because the tariff policy from The US would only have medium impact in economic terms. Other South American countries, for instance, Chile, Peru, Colombia, the economic impact would be even lower than for Argentina and Brazil.

Jose Enrique Sevilla Macip: So they have a wider margin of action to strike this balance between the two. Obviously, if we want to think of the country with the most at stake in the current reshuffling of global trade, this is certainly Mexico. On the one hand, Mexico is heavily dependent on its trade relationship with The US. Mexico's -- 64% of Mexico's total foreign trade is with The US. If we think only about exports, the dependence is even larger. 86% of Mexican exports in 2024 were shipped to The US. Now just as a point of comparison, we have Central American economies, which are also heavily dependent on trade with The US, but the concentration of their trade with The US ranges between 30% or 40%. As we saw, Mexico is more than double of this, so dependence is huge.

Jose Enrique Sevilla Macip: Now on the other hand, Mexico has also been singled out by the Trump administration as part of this tariff policy. I mean, sure, Mexico was spared in this reciprocal tariff plan announced on April 2, but Mexico had already been hit with 25% tariffs since March for all Mexican exports that aren't compliant with rules of origin of the USMCA, of The US Mexico Canada trade agreement. What does this means? Well, basically, 50% of Mexican exports to The US do not comply with this rule of origin in 2024 and, thus, are being as we speak, are being subject to this 25% tariffs. Mexico wasn't spared of the universal 25% tariffs for steel and aluminum. Originally, it wasn't also spared completely on the automotive tariffs. Mexico has been negotiating to and has achieved some exemptions for the auto sector. But, I mean, long story short, it's very clear that the country with most at stake in this global trade reshuffling and in face of this new US tariff policy is Mexico. Just a final note, perhaps another country with high stakes at play here is also Venezuela because Venezuela has been also hit with specific tariffs as part of the reciprocal tariff plan, but also the so-called secondary tariffs that are likely going to hinder Venezuelan oil exports and has, for example, pushed us into downgrading our forecast for Venezuela's growth rate.

Jose Enrique Sevilla Macip: We are currently forecasting a 4.5% contraction of Venezuelan GDP in 2025 as an almost direct response or a direct consequence of these changes in trade policy.

Kristen Hallam: Alright. Thank you for that, Jose Enrique. Now what would you say are the biggest factors at play for these countries that you just talked about as they navigate these trade discussions with The US?

Jose Enrique Sevilla Macip: Well, again, this varies significantly depending on the on the country that we're talking about. But, for example, trying to find the common ground here, I could think of migration. Because as we know, one of President Trump's policy priorities is migration. Not only to stop the flows, illegal migration flows towards The US, but also to deport migrants from The US. And this has been an issue at play in tariff negotiations over the past months. As we remember, John mentioned the case of the threat of 25% tariffs and some other sanctions to Colombia when President Petro protested against the modus operandi, in which The US was transporting deportees towards Latin America. So migration is a factor that's deeply embedded in tariff negotiations. Most Latin American countries have accommodated US demands, not only of receiving their own nationals, but in many cases and I can think here of Mexico, Panama, El Salvador, and even Guatemala that have been willing to receive third country nationals deported by The United States.

Jose Enrique Sevilla Macip: And the other topic that I can think about is security and particularly organized crime and drug cartels. These drug cartels and organized crime has significant presence across Latin America, but, again, the country most impacted by this factor and its relationship with tariff negotiations is, again, Mexico. Because I was mentioning these 25 tariffs on Mexican export that do not comply with USMCA rules. Well, these tariffs were imposed as part of this bargain in which The US wants Mexico to step up its efforts on migration containment, but also on curtailing fentanyl trafficking to The US. And what we have seen so far is that Mexico is completely willing to accommodate these US demands as long as it is able to achieve some sort of advantages or to keep its preferential access to The US market. Mexico has significantly increased fentanyl seizures. Mexico has significantly increased the detention of migrants, transiting through its territory towards The US, and we expect that to continue as, again, Mexico's core objective on this regard is to ensure preferential market access in The US.

Kristen Hallam: Thank you for that. What would you say the long-term strategies are that you see countries adopting to mitigate the risks associated with tariff escalations, particularly in terms of diversifying trade partnerships and attracting foreign investment, Jose Enrique?

Jose Enrique Sevilla Macip: Obviously, diversification has been the stated objective of many Latin American countries, but some are in a better position to pursue this diversification than others. For example, I can think of Brazil. Brazil has had diversification as a policy objective for a long time. And, what we are expecting is that it would accelerate these efforts for trade diversification. For example, Brazil has already initiated talks and efforts to seek new markets in Asia and also within Latin America. And also, for example, we've seen from President Lula a renewed interest in pushing forward this free trade agreement between Mercosur and the EU. This trade agreement that has taken decades for negotiations with the sudden shift in the global trade environment, Brazil, as well as other Mercosur members, are looking forward to accelerate this deal as an alternative in terms of diversification. You know? So I think we can see this very good example of Brazil, which is in a better position to pursue this diversification.

Jose Enrique Sevilla Macip: On the other extreme way, again, we have Mexico because, I just mentioned the heavy dependence of Mexico on The US. Mexico has stated, Mexico President Sheinbaum, has stated that diversification is also a long-term strategy, but it's going to be much more difficult. In parallel with diversification, for example, Mexico is also trying to expand its domestic market. In January, Mexico announced a new industrial policy, which has basically two core objectives. One is expanding Mexican domestic market in order not to be so dependent on foreign trade, and on the other hand, aim for import substitution, particularly of goods that are currently imported from Asia and Mainland China. Here again, even stakeholders from the Mexican private sector have indicated that the achievement of these goals, at least in the five-year outlook, is unlikely. They're being accepted. Mexico imposed tariffs on some textile imports from Mainland China in December.

Jose Enrique Sevilla Macip: After a couple of months, it was the Mexican private sector that requested the partial removal of some of these tariffs because they couldn't cope without inputs from Asia. So this is a very long-term strategy, and given Mexico's particular position, vis a vis, not only The US, but also the import flows from China, it's unlikely for that strategy to pay off within the five and even the ten-year outlook.

Kristen Hallam: Alright. Now, Jose Enrique, you've done a really good job of clearly outlining how the how what's at stake varies from country to country in the region. But it also begs the question, how do you see these tariff negotiations impacting the cohesiveness of the region?

Jose Enrique Sevilla Macip: Well, I mean, so far, we've seen little interest in the region to seek a coordinated approach here. Most countries are working on their own seeking bilateral arrangements with The US. A very good example of this and a very eloquent example occurred in these negotiations regarding deportations between January and February. Back then, Honduras, which is currently the chair of the Latin American and Caribbean states community, called for an emergency summit to develop unified stance within Latin America to negotiate migration issues and deportation issues with The US. Three days after the summit was summoned, the summit was canceled because there wasn't any agreement on this. And according to the Honduran government, some countries within Latin America were actively boycotting the efforts to achieve a coordinated approach. So, basically, I mean, historically, Latin America has had difficulties in achieving regional agreement and act as a region vis a vis other geopolitical actors. This is not going to be an exception.

Jose Enrique Sevilla Macip: We are basically expecting all countries to seek ad hoc bilateral arrangements with The US and with any other trading partner.

Kristen Hallam: Alright. Interesting. Anton, how significant would you say security or defense guarantees are in the context of these tariff discussions?

Anton Alifandi: Very significant for a lot of the Asian economies that I spoke about earlier. Japan, South Korea, and Taiwan rely explicitly or implicitly on security guarantees from The US to deal with external threats. Japan and South Korea have increased their defense spending and contributed more to US military presence and will probably buy more US defense equipment to reduce their trade surplus with The US. And despite their frequently from President Trump complaining that Japan and South Korea should contribute more to their alliance, with The US, these two countries and other US allies in Asia are probably encouraged by US actions that appear to indicate continued US commitment to the region. The US continues to provide defense assistance to Taiwan and The Philippines, for example, and The US continues to carry out freedom of navigation operations in the South China Sea. So there are no indications of US significantly withdrawing from Asia under the Trump administration.

Kristen Hallam: Thanks for that, Anton. And what long term strategies do you see countries adopting to mitigate risks associated with tariff escalations, particularly in terms of diversifying trade relationships and attracting foreign investments?

Anton Alifandi: Yeah. I think you've mentioned it there, Kristen. Trade diversification is a key element. In individual ASEAN countries, for example, like Indonesia, Malaysia, and Thailand are likely to expedite their ongoing FTA negotiations with the European Union. Vietnam and Singapore already have FTAs with the EU. ASEAN is also looking to upgrade its intra ASEAN trade in goods agreement. The aim is to get the updated agreement completed by the end of this year. And as we've probably heard, China, South Korea, and Japan are seeking to expand trade between them.

Anton Alifandi: Another policy tool that has been sort of accelerated by the tariff issue is updating domestic policy to make their economies more competitive. For example, by providing incentives to foreign investors in line with the development goals, for example, in the case of Vietnam and lowering domestic content requirement on government procurement in the case of Indonesia. So we may also see ASEAN countries trying to compete with each other on offering lower tax to foreign investors. The US withdrawal from the 15% global minimum tax initiative has weakened this international arrangement. And, we may see a return to competition between Southeast Asian economies in terms of offering tax incentives to foreign investors, Kristen.

Kristen Hallam: You've kind of given us a hint as to what the answer to this next question might be there, Anton. But how do you see these tariff negotiations impacting the cohesiveness of the ASEAN countries?

Anton Alifandi: We know that the Trump administration prefers to deal with individual countries, and ASEAN countries have to date been negotiating individually as their interests do not always converge, and that's another reason. And I mentioned earlier steps to upgrade rules to encourage intra ASEAN trade. So there will be moves on that direction. Malaysia's Prime Minister, who currently holds ASEAN's chairmanship this year, has been active in trying to get a common response. But similar, I guess, to Latin America, it's not always easy to get a common response beyond, perhaps, you know, statements and, you know, principles articulated defending international trade. There are limitations to what ASEAN as a group can achieve. Aside from the individual economic interests, ASEAN countries have different views on how they see The US and China in geopolitical terms. Philippines, for example, and also Thailand, they're both US allies, treaty allies.

Anton Alifandi: Singapore allows US warships and aircraft to make use of its facilities, while Indonesia, Malaysia, and Vietnam are determined not to take sides on this issue. So that's where we are with ASEAN, Kristen.

Kristen Hallam: Alright. Thanks, Anton. Let's pivot back to Europe now. Dijedon, which countries in the region have the most at stake in this balancing act between The US and China?

Dijedon Imeri: Yeah. From an economic point of view, I think that's pretty straightforward answer. You know, those member states, you know, member states that have created an economic growth model that relies on globalized supply chains and international trade, they're the ones that are most exposed to this trade conflict. You know, these would include the Nordic countries, The Netherlands, Germany, and the ecosystem of Eastern European jurisdictions that form the backbone of the German companies' supply chain network. But at the same time, there are also opportunities for some of these countries because a lot of them are best positioned to make the transition to a green economy. And, you know, it wasn't too long ago if you'll remember that a lot of Europeans were nervous about the implications of The US inflation reduction act. And to the extent that the Trump administration is turning its back on the green transition, even partially, I think that will make it easy for them to carve out that space in international markets with things like clean tech renewables.

Kristen Hallam: Dijedon, how significant are security or defense guarantees in the context of tariff discussions between Europe and The US?

Dijedon Imeri: I think very significant because there are two sides of the same coin, which is The US push to renegotiate and reshape the EU US relations across the spectrum. So, you know, it affects security as well as trade policy. And as a result, these two policy areas influence and reinforce each other. So, for example, the fear or the potential of US withdrawing its security guarantees and commitment to not just NATO and underwriting European security, but also supporting Ukraine militarily and financially, that in the context of trade negotiations just reinforces this idea of The US being an unreliable partner to the European Union. And that creates further impetus to derisk from The United States in certain sectors, including when it comes to defense policy. And then if we look at the other direction of travel, you know, the prospect of tariffs inducing a recession or economic slowdown adds an economic rationale to increasing defense spending as a way of trying to counteract that. And that doesn't just mean spending more on defense. It means also prioritizing European arms manufacturers, much to the dismay of the US administration, which has already voiced its concerns and criticisms of this.

Dijedon Imeri: And so that kind of sets the stage for defense procurement and security guarantees also being part of the overall negotiations between the EU and US in reshaping their overall relationship.

Kristen Hallam: And what long term strategies do you see countries in Europe adopting to mitigate the risks associated with tariff escalations?

Dijedon Imeri: You know, it's a lot about trade diversification. The EU already holds the record in terms of the number of free trade agreements, but they will look towards signing new ones as well and deepening existing trade ties. And I think, political obstacles towards ratifying some of these have never been, you know, it's never been as politically feasible as it is now. I'm thinking, for example, the free trade agreement between the EU and Mercosur. That's been held back by French fears about the impact that that would have on French agriculture. But the current geopolitical and geoeconomic constellation might push France towards accepting this free trade agreement. So that's one thing, trade diversification. Another one, similar to the Asian countries, is to try to attract foreign investment, especially in areas, you know, they can facilitate technological transfers.

Dijedon Imeri: And this is kind of the irony of this current situation that we see a reversal in some instances compared to the situation that we saw between the EU and China A Couple Of Decades ago. Now I think it's the EU that's looking to facilitate technological transfer from Chinese companies. So trying to incentivize them to set up shop, especially when it comes to electric vehicles, for example, in the EU to transfer that know how. I think that's how we should read that decision to reopen talks on replacing the anti subsidy duties on Chinese EVs that was introduced last year and replacing them with a minimum price. And then finally, at the member state level, a lot of what's being done now is to prepare fiscal packages to assist businesses and households and also reviving some of the programs and mechanisms that we saw during COVID. Like Spain, for example, has revived its furlough system. So I think we'll see a lot of that as well.

Kristen Hallam: Alright. Thanks, Doni. John, we started with you. Coming back to you, we're currently in a period of watching and waiting as some of the tariffs have been paused. What is happening in Washington, and when can we expect the next shoe to drop?

John Raines: Yeah. I mean, we don't know yet. Right? I mean, we are we are waiting kind of with bated breath. We hear hints that we know that negotiations are going on. A lot of countries have actually submitted proposals, and so it seems like things are moving forward. Big date to watch out for is in early July. That's where that ninety day pause is going to end. At that point, you know, a decision will have to be made.

John Raines: Do they have another pause? Maybe until August, that's when the Office of Management and Budget is going to release report on the impacts of these tariffs, or do they go with something longer? Or do they do something completely different, which is, do they do something where they start reapplying some of these reciprocal tariffs? Our current, you know, view here is that most countries out there are going to find some type of quote, unquote deal. These are going to be memorandums of understanding. So these are not trade deals. These are going to be kind of broad in nature saying that they're going to attempt to rebalance trade in some form or fashion including, you know, tariffs, non tariff barriers, investments in The US, purchases of US products, maybe LNG, things of that nature. But then they're going to be a bit vague, and what they're going to do is going to utilize that as an advancement to looking for broader trade agreements in the future. So that's kind of our view. Now, again, the countries that are most likely to get those are some of the ones that I think have been spoken about by my colleagues here, which is smaller countries heavily reliant either on exporting to The United States or in the Western Hemisphere importing from The United States. And those are going to be the ones where I think, you know, most likely are going to get deals.

John Raines: These bigger economies that have either, one, had retaliation against The US, or two, have the wherewithal to stand up, those are the ones that are going to be a little bit more difficult because The US asked there are going to be a little bit more difficult for them to be able to achieve. In those type of cases, we might see some reciprocal tariffs get applied. We're probably not seeing the ones that we saw before at that those levels. But it does mean that maybe trade friction between those two parties are likely to continue for quite some time. Maybe for several months, maybe some years, but certainly, maybe not the levels that we saw originally in April when those were relatively, I think, really surprised the market at how high they actually were.

Kristen Hallam: Alright. Thanks, John. I've got one more question for you. But what would you say are the guardrails or pain points, if you will, that are likely to nudge President Trump in one direction or another on some of these negotiations that you were just telling us about?

John Raines: Yeah. I mean, we've already seen them in some ways. We've seen markets really impact the tariffs that have been levied on Mexico and Canada already within the auto sector. I think these are getting a continued to play a role much along the way. We saw the reciprocal tariffs getting paused mainly due to the fact of the impact on the bond market. So things of that nature certainly kind of enter into his frame of mind and are going to be critical. Also, individual industries, big companies approaching the White House being able to lobby saying, Hey, I need something here. You don't understand. We're going to have scarcity issues. We're going to have much higher prices. Can you help me out here? I think that's going to be instrumental too. And then finally, this, you know, economic imperative. So, like, do we see higher inflation? Do we see losses of jobs there? Higher unemployment? I think one of the reasons why he's gone back to kind of promoting tariffs over the last week or two is we did have that strong jobs report, just recently. So in some ways, he was able to say, Hey, maybe the sky's not falling here.

John Raines: Maybe I can kind of continue on this protectionist trend that I had originally. I don't have to divert myself entirely fine." And then I think one last thing to remember is just looking at the polls. I mean, he started off his presidency with the favorability above 50%. Right now, it's about 40, low forties, you know, around there. If we start seeing this really dipping into the thirties, low thirties, we're going to see political pressure from Washington. We're certainly not there at this point, but certainly, if we start to reach those levels, we're going to have Congress been calling them up at the White House and saying, hey, you know, I think there's a chance here that we need to actually reconsider where this is actually going here, trade wise, on the policy front.

Kristen Hallam: Alright. And on that note, that is all the time we have for today. Thanks to John, Anton, Dijedon, and Jose Enrique for sharing their insights with us. Thank you for listening to the Decisive podcast from S and P Global. Please subscribe and join us for next week's episode. Until then, stay curious and stay informed.