Sprawl of duty: Trump’s tariff drama

0:02The Economist

0:10Hello and welcome to The Intelligence from The Economist. I'm your host, Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world.

0:24There was a time when one country dominated global football, Brazil. These days, it can barely hold its own against regional minnows. We look at how it's gone wrong and spot a very economist fix for its national governing body, structural reform. And more than most countries, England just loves a lawn. It's a product of the weather and the preponderance of sheep, but also, in true English fashion, a status symbol. Fashions change eventually, and the love of the lawn isn't what it once was.

1:01First up, though.

1:09A memorable line from the author Douglas Adams says, I love deadlines. I love the whooshing noise they make as they go by. Today, what whooshed by was a deadline that President Donald Trump set back in April. Countries were to negotiate trade deals with America before steep tariffs went into effect. 25 to 40 percent tariffs. But this week, Mr. Trump kicked the can down the road yet again and threw in some new, shockingly high levies to maintain high levels of confusion and drama. The soap opera that is Donald Trump's trade war continues. Wachana Schenbog is our business affairs editor. The administration had said that it wanted to strike 90 deals in 90 days, but that has proved to be greatly exaggerated.

2:02So to buy himself and his negotiating partners more time, Donald Trump has extended the window for talks out to August 1st. So where do things stand at the moment? What are the most recent episodes of the soap opera? Well, it's had lots of twists and turns, Jason. As soap operas do. As the best soap operas do. So this week, Jason, we've seen two types of actions from the president. The first involves sending letters to trading partners. So on Monday, he sent letters to 14 countries saying that he wanted negotiations to carry on, wanted to shrink America's trade deficit with those countries, to talk about investment into America by these countries and threatening to levy a tariff on the 1st of August if talks had not made progress and also to levy an even higher tariff if goods were transshipped to America through that country.

3:06So more letters are expected to go out today and Japan and South Korea for example have been threatened with a tariff of 25 percent. Others such as Cambodia and Thailand face tariffs of 36%. So that's one category of actions from Donald Trump. Another category relates to so-called sectoral tariffs. And the timing is still not clear, but the president has said that he would impose a 50 % tariff on imports of copper coming into the country. And also he has said that tariffs on imports of pharmaceutical products would go up to 200 % in the next 18 months. Well, this is exactly the confusion about these matters that we've been now talking about for months.

3:52Let's take a step back here and talk about what might be called done deals or even perhaps as far as successes. That's a good question. So trade negotiators have been traveling back and forth to America, as you can imagine. So far, two, in inverted commas, framework agreements have been struck with Britain and Vietnam. And there are lots of issues that they don't address. Trade negotiations generally take months and months and months to agree. So these are very expedited and shallow deals. The other thing that has been struck is a trade truce with China, which averted, as you might remember, triple digit tariffs on Chinese goods going into America and then American goods going to China.

4:36So those are the, if you like, successes that have been achieved in the past 90 days. Thin gruel, if you're expecting 90 deals in 90 days. That's right. I think this 90 deals in 90 days claim really collided with reality quite quickly. As you might remember back in April, Jason, for example, Japan was said to be at the front of the queue, that negotiations were progressing really well. But we've had seven rounds of talks in three months and the trade negotiations are still ongoing. Trade is just a very politically sensitive subject and it's not so easy to strike agreement on things like tariffs on farm products.

5:20Donald Trump is very exercised by Japanese tariffs on rice, for example, but rice is a very politically sensitive topic in Japan and there are upper house elections approaching later this month. So that makes making concessions on this really hard. Negotiating a deal is hard, Jason, as it is. And it's even harder when you don't know what the other side wants. And I think this is the experience of South Korea. South Korea has a free trade agreement with America. There are no tariffs on American goods going into South Korea. And it seems like there's lots of things being put on the table. So, for example, shrinking trade deficits, digital taxes on tech firms, cost sharing for troops, South Korean investment in America.

6:06and this is just such a confusion of objectives that negotiators just find themselves kind of stuck trying to figure out exactly what it is that the administration wants from them. Well, exactly. If there are all of these amping up and climbing down, if there is sudden negotiations about things like how much Netflix costs, surely some of these countries are getting frustrated, throwing their hands up, maybe even just simply calling bullshit here. I think even sort of neutral observers are reaching the point of despair here watching the trade war. If you're a trade negotiator I think the stakes still feel high.

6:44You don't want to find that in fact the tariffs do go on and only your country has high tariffs and nobody else's does. And especially if you're an export-oriented economy you want to minimise the risk that those Liberation Day tariffs do eventually go on. So I think negotiators will still be trying to strike a deal in the next three weeks. The big one to watch is the EU and what happens there, because that's a lot of trade that travels across the Atlantic. And the EU has been trying very hard to reach a deal. The question is, what will satisfy the administration? And so countries will be trying to work out what's the minimum amount of concessions that they can make that will keep the administration happy and mean that they don't have to be lurching from deadline to deadline with the uncertainty of tariffs hanging over them.

7:38Do you think the net result of all of this after a great many months is that things balance out to not so different from before, but somehow the Trump administration finds a way to claim it as a win, having had all the hue and cry in the meantime? I think there's so much noise that it's really worth taking a step back and seeing what's happened so far. And you were talking about whether trade negotiators or trading partners of America would start calling bullshit. It's clear that financial markets are starting to call bullshit. There hasn't been much reaction in the markets over the past week to these ups and downs in trade war and Liberation Day tariffs.

8:16It is worth remembering, though, that America's tariffs have gone up. America now has a 25 % tariff on cars. There's a tariff on steel. and aluminium going into the country. There's a decent chance, I think, that there will be some tariffs on copper as well going in. There's now a 10 % minimum tariff on all goods coming in, regardless of what country they come in from. America's average tariff rate is four times higher than it was before January 20th. And so something has changed here. Tariffs have gone up and they are attacks on America's consumers and America's businesses who are buying in inputs from abroad.

8:57Now, there hasn't been an effect yet on America's economy because there's a lot of momentum and resilience in the economy. But in time, you might start to see some effect, both of the tariffs and this lurching uncertainty as well. Rachana, thanks very much for your time. Thank you, Jason. See you back here soon. See you for the next episode.

9:48I'll see you next time. kinds of new features that I'm not supposed to mention yet. Point being, it's a great listening experience. And best of all, when you listen in the app, there's no ads. Like this one.

10:10The football was born in England. Its home is Brazil. At least according to the Brazilians. Ana Lankas is our Brazil bureau chief. The national team, the Selecção, has won the World Cup a record five times and produced some of the best players ever to play the beautiful game. Yes, there it is! There it is! Yes, there it is! That's the touch of a master!

10:40But all is not well. Remember when Brazil lost to Germany 7-1 in the 2014 World Cup?

10:54That was a bad moment. But right now, Brazil's national team is going through an even worse moment. A few months ago, it lost 4-1 to its arch-rival Argentina in a qualifying match for next year's World Cup. And after that humiliating loss, Brazil qualified in third place for the World Cup, behind Argentina and puny Ecuador. I've been told this is the worst moment in history for Brazil's national team. But Ana, Brazil has historically anyway had an absolutely world-class, amazing football side. What's happened here? Though Brazil has won five times in history, it hasn't won for the last 20 years.

11:39And what's happened is a combination of things. One is that two generations of legendary football players have retired. So now it's kind of just a reversion to the mean. Two is that Brazil's football governing body, which is called the CBFE, is an absolute dysfunctional mess. On top of all of that, Brazilians have soured on their national team. So over the past 10 years, far right groups have hijacked the national jersey, the yellow jersey. So many people don't even identify anymore with the Cérexel. So when you say the Domestic Football Federation is a mess, what do you mean? Why? So in the early 2010s, a series of investigations basically revealed massive graft in FIFA, which is the football governing body based in Switzerland.

12:26And those investigations showed that bribery greased FIFA's dealings, basically, from clothing sponsorship contracts to selecting the World Cup host countries to selecting the president of the body. And as a result of those investigations, the longtime head of Brazil's National Football Association, the CBF, was ousted. He was called Ricardo Teixeira. Two of his successors got caught up in the corruption scandals. One of them was sent to jail. The other one was banned from football for 20 years. And a third successor was removed after accusations of sexual harassment. All three maintained their innocence, though.

13:06Now, a fourth successor, Ednaldo Rodriguez, was booted out in May after a court found that a signature on his contract may have been forged. So there was a lot of administrative dysfunction over the past few years. And on top of that, the coach of the national team changed four times in two years and a lot of money was misspent. So none of this has helped the team. But all that FIFA scandal stuff was, as you say, some years ago. Why are these issues still affecting Brazilian football now? So all the problems at the national level are compounded by problems at the subnational level. Brazil has an absolutely crazy football league structure.

13:45You have the CBFE and then you have football leagues from Brazil's 27 states. And many of them have multiple tiers. So the CBFE organizes all football matches in the country and also of the national team. But power within it is skewed. So, for example, in the elections of the CBFE, the state federation chiefs votes are worth three points. The votes of teams from the first division are worth two points and votes from the second division are worth one point. Now, that is a mad system and it was basically cooked up to protect small clubs from tiny state federations just so that they wouldn't lose relevance and investment.

14:21But it doesn't make any sense. And what it means is that Brazilian teams have to play way more matches than basically anywhere else. So the fixtures calendar is mad. Brazil's top clubs at the start of this year played a match every three days compared to every five days for Real Madrid and every six days for Liverpool. So Brazilian players are often just exhausted and undertrained. And all of this happens just to keep the state federations happy. So this being a podcast from The Economist, surely the thing to suggest is structural reform. That's right. And that is already happening because the top clubs in Brazil in the past few years have been getting way more money.

15:06There have been two important legal changes since 2018. First, sports betting was allowed. And second, in 2021, football clubs were able to incorporate and become public limited companies. Before that, they were run as not-for-profit associations. And obviously, the best clubs are getting even more money and more attention. And that's giving them more power. and they're demanding changes at the CBFE. So they demand changes to the weighting of votes in the CBFE elections. They are demanding financial fair play rules, which already exist in much of the rest of the world. And what they do is basically just make sure that a club can't spend more money than it earns.

15:44So they're demanding all sorts of changes. And eventually, I think what's going to happen is that the CBFE is going to lose power and the clubs are going to control this and have a much more normal fixtures calendar and become more competitive once again. I will say many of these changes, like financial fair play rules, already exist in Europe. And the fact that clubs can incorporate as other limited companies. And that has helped European clubs to come better over the past 20 years. So what Brazil's doing right now is just catching up. And in so doing, maybe in the longer run, gets back to its top of the world status?

16:17That's right. And there's a lot of excitement right now in Brazil because one thing in particular could help turn things around. The hiring of Carlo Ancelotti, who's an Italian superstar trainer. And the CBF has enticed him with a huge salary. It's like 10 million euros a year. And he gets a 5 million euro bonus if Brazil wins the World Cup. Note that this is the first time in history that Brazil has a non-Brazilian manager leading the World Cup team. So this was a big deal in Brazil. And it's kind of seen as a moment of them recognizing that they've really fallen behind and need to turn things around.

16:54Ancelotti now has all the ingredients to work his magic, but he just needs a sebefi to keep out of his way. Anna, thanks very much for joining us. Thanks for having me, Jason.

17:13England is the land of the lawn. Catherine Nixie is a culture correspondent. In English literature, history and life, the lawn looms large. Visiting an old country house, it'll probably be surrounded by lawns. Playing tennis or cricket, guess what? You'll need a lawn for that. Read Evelyn Waugh or P.G. Woodhouse and you will find their characters lolling on lawns, drinking on them, playing on them. Lawns are a fad that have endured in England.

17:48The craze is partly history. In the mid-18th century, the landscape designer Capability Brown ditched fancy French-style geometry for sweeping gardens. Partly also its geography. Dull English skies keep these lawns well-watered. And partly it's biology. We've got sheep, and sheep like to eat grass. A lawn is just a pretty pasture that's been mown by a lawnmower, not a sheep. It's also status. Keeping grass cut short costs money. In a low-tech era, it cost because sheep weren't cheap and scything was heavy and slow. But even when the first lawnmower was invented in Britain in 1830, it cost over$1 ,000 in today's money.

18:34And you needed horses to pull it.

18:39Jump forward to today, and at Wimbledon you can still see how much care is taken. Near the keep-off-the-grass signs on Centre Court, stray grass strands are cut by a man holding a big pair of scissors. It's a horticultural haircut, and given London wages, it's a really expensive one. They don't only cut their lawns, they also laser level them, water them, measure their statistics under microscopes. And, when the competition ends, to ensure infections don't occur, they murder them. They heat steam to 190 degrees and then apply it to the lawn. It's so hot that the water in the topsoil boils. Every single strand of grass dies, and then it can grow back fresh next year.

19:21However, English lawns are changing.

19:27Rewilding is becoming fashionable. Think of No Mo May or Let It Bloom June. I went to King's College, Cambridge, and saw just how much things are changing there. This meadow is a signpost for what we should be doing. And also it's a thought-provoking exercise that reminds us of our roots. Meadow is the key word being used there by Steve Coghill, the head gardener at King's College. In 2018, King's chose to turn part of its famous lawn into meadow. Now it waves in the breeze, it's filled with butterflies and bees. If you walk through it, it smells of marjoram and it tangles with your toes. It's so different to a lawn.

20:09And in true Cambridge style, they didn't just let the grass grow. They also involved soil scientists, botanists, ecologists, every kind of ist, to ensure that the right seeds were sown in the right way. The difference between it and Wimbledon is remarkable. While Wimbledon executes plants, King's has resurrected them. This is the sort of meadow that you'd have found associated with East Anglian hay crops, you know, right the way back to Neolithic times, really, or from forward when we became hunter-gatherers. Steve told me that there are residual seeds in the Cambridge soil. Lying in the lawn, he says, is the memory of another era.

20:49Soil has a memory. It has a huge memory. It's a big memory bank of everything that's been there before, and that's what makes it so incredibly fascinating. And at one edge of that new meadow, there is another memory of another era. A keep off the grass sign, which is now so thoroughly hidden by thistles it's barely legible. Perhaps a sign of how the lawn has changed completely.

21:32That's all for this episode of The Intelligence. We'll see you back here tomorrow.