Spanish Ambassador DESTROYS US War And Tariff Propaganda | Amb. José Zorrilla

## A turning point in trade: tariffs as strategic reversal The conversation brings into sharp relief a decisive shift in the postwar economic order: tariffs are no longer peripheral policy tools but instruments of geopolitical strategy. What was once an American creed — championing liberalized trade and an open dollar system — is being recast as a protectionist and punitive doctrine. The exchange underscores how this reversal is not merely transactional; it is a historic rupture. For decades the West, led by the United States, built institutions and practices — from the GATT to the WTO — to remove economic frontiers created by older empires and mercantilist logics. Now, tariffs and unilateral trade measures threaten to undo that architecture and thrust global commerce into a period of heightened uncertainty. Ambassador José Zorrilla’s reflections highlight that tariffs are not inherently good or bad; they have historically been used as developmental tools and defensive instruments. But he stresses the anomaly of reverting to high tariffs after the integrated, services-oriented economy of the late 20th and early 21st centuries. The recent move toward punitive tariffs — sometimes so steep as to be effectively prohibitive — suggests objectives that extend beyond protecting domestic industries. This is not simply nostalgia for industrial jobs; it is a deliberate strategy that reshapes alliances, supply chains, and the calculus of what it means to be a reliable trading partner. ## History matters: autarky, the ladder of development, and the postwar bargain Understanding today’s trade politics requires a quick tour through economic history. The discussion repeatedly invokes the idea that countries often use protectionist measures early in their development — the “ladder” that nations climb before dropping tariffs as they mature. Ambassador Zorrilla points to Spain’s experience under autarky and to scholarly treatments such as Ha-Joon Chang’s Kicking Away the Ladder: protectionism can be an instrument of early-stage industrialization. Likewise, the canonical shift in Britain from landed to industrial dominance, ushered in by changes like the repeal of the Corn Laws, shows how trade policy can restructure power within a society. Yet the mid-20th century created a different bargain. The collapse of multi-national empires and the fragmentation of old economic zones led to efforts to erect new transnational frameworks for trade. The GATT and later WTO were projects to reduce the commercial frictions that had made continental economies fragile and conflict-prone. The transatlantic agreement that the U.S. would not prop up imperial preferences marked a new political logic: economic openness was linked to security commitments rather than narrow mercantilism. The current retreat from that logic, as voiced in the exchange, represents not a tweak in policy but a break with the postwar consensus. ## Interdependence: the myth of reindustrialization and the scrambled supply chain A central point made during the conversation is the fundamental transformation of production networks. Modern manufacturing is not a national product; it is an assemblage of components and services produced across continents. Ambassador Zorrilla’s anecdote about a prestigious German optic containing largely Chinese-made parts exemplifies the point: levying tariffs on “German” goods misunderstands how deeply integrated global value chains have become. The imagery of trying to “unscramble the egg” captures the impossibility of rolling back decades of specialization and outsourcing without massive economic dislocation. Even if political will existed to re-shore manufacturing, technological trends diminish the gains from doing so. Automation and robotics reduce the labor component that once motivated protectionist measures. The world’s production model has become capital- and knowledge-intensive, so policies designed to revive mass employment in manufacturing are confronting structural limits. The conversation makes clear that protectionist gestures aimed at reviving a lost economic past will have complex and likely perverse consequences across consumer prices, investment flows, and employment patterns. ## Dollars, liquidity, and the new financial dynamics The conversation moves beyond tariffs to the currency and liquidity dynamics undergirding global trade. The Triffin dilemma — tension between a national currency and its role as a global reserve — is invoked to explain one source of U.S. pressure. But Ambassador Zorrilla argues that the classical formulation no longer fits the contemporary world. The financial crisis of 2008 reshaped the holders of dollar assets: where central banks once dominated, today an enormous and often opaque mass of institutional and private investors in tax havens and shadow financial centers holds sizeable dollar-denominated claims. That shift matters: it renders monetary and fiscal stability more susceptible to swings in risk appetite and “animal spirits.” Liquidity is abundant and mobile; its movements are not under the neat control of central banks. For diplomacy and policy, this means that trade wars and shocks can transmit rapidly through financial channels, provoking abrupt asset re-pricing and raising the specter of credit or debt crises. The conversation suggests that the United States, whose governance credibility is a pillar of the system, risks undermining the very depth and safety that make the dollar dominant if policy becomes unpredictable and seemingly arbitrary. ## Allies, unpredictability, and the erosion of trust One of the most striking themes is the effect of unpredictable economic policy on alliances. Tariffs applied unevenly — friend versus foe, high levies on traditional partners — do not simply adjust market access; they alter the politics of friendship. The shock of sudden tariff impositions fractures the tacit assurances that trade and security relationships rest upon. Ambassador Zorrilla evokes vivid examples: preferential treatment suddenly withdrawn or changed; industries and national strategies thrown into doubt. The immediate diplomatic consequence is uproar and bewilderment among allies; the strategic consequence is the search for alternatives. Policymakers in Europe, Latin America, Africa, and Asia are forced to calculate whether their alignment with the United States still serves their national interests. If the U.S. can change trade rules overnight, other states naturally seek diversification: new markets, alternate reserve arrangements, and closer ties with other major powers. That reorientation may be incremental, but its cumulative effect erodes the consistency that underpins long-term alliances and the liberal economic order. ## Political aftershocks: polarization, the Global South, and the new spheres The diplomatic and economic shocks have profound political reverberations. The conversation warns of a surge in anti-system, populist parties across Europe and beyond as citizens face job displacement, rising prices, or a diminished sense of national security. Economic contraction and perceived abandonment by traditional allies are fertile ground for political forces promising simple solutions and decisive actors. Amb. Zorrilla suggests that the erosion of the postwar order will not happen in a vacuum: it will interact with deep social anxieties, possibly producing destabilizing outcomes in multiple regions. At the global level, diversionary alignments are already visible. Countries in the Global South, accounting for a large majority of the planet’s population, have little appetite for a binary moral framing in which Western democracies alone define the norms. Emerging economies and populous regions may cluster around alternative centers — Russia, China, India — not necessarily out of ideological solidarity but out of pragmatic interest. The conversation frames this as a demographic and strategic reality: the Glob

Spanish Ambassador DESTROYS US War And Tariff Propaganda | José Zorrilla Today I’m talking for the second time to Ambassador Jose Zorrilla . Ambassador Zorilla joined the Spanish Diplomatic Service in 1973, becoming Consul General to Milano, Shanghai, and Moscow and finally Spain’s Ambassador to Georgia in 2011. Today we want to discuss Trump's tariffs and his “Diplomacy” since becoming president. #M3 I think it all started with the implosion of the USSR. The USSR imploded, and the United States was desperate to see that NATO might disappear. And that was, you know, a constant of the equation: NATO has to survive. And, well, they enlarged NATO against the will and the opinion of very, very erudite people. And the consequences were devastating. And Europe joined in. I had an interview with Mr. Rahr, who is a well-known German intellectual, and he told me that this is a kind of deflected hatred. They are fed up with being considered the bad guys of the world, and what they are doing is projecting this into Europe, another country, and they are projecting this into Russia. #M2 Hello everybody, this is Pascal from Neutrality Studies, and today I'm talking for the second time to Ambassador José Zorrilla. Ambassador Zorrilla joined the Spanish diplomatic service in 1973, becoming Consul General in Milan. Then he went on to work in Shanghai and Moscow, and finally, he became Spain's ambassador to Georgia in 2011. Ambassador Zorrilla last time talked on this channel about his highly interesting experiences in the world, and today we want to talk about his assessment of the, well, diplomacy, if you can call it that, of the Trump administration toward the entire world. So, Ambassador Zorrilla, welcome back to the channel. #M3 Thank you very much, Pascal, for your kind hospitality and for indulging the musings of an old man, you know. But anyway, thank you very much indeed for being so gracious. #M2 I very much appreciate your assessment and also your outspokenness that you shared last time. And, you know, I would like to ask you, as a former Spanish diplomat, how do you look at what the -- 1 of 15 -- United States is doing right now? We are recording this on Friday, April 18th. The tariff war is going on, and I think the tariff war is now morphing into something like an outright economic confrontation with China. What's your assessment? #M3 Well, to begin with, I cannot believe what I'm seeing, you know. This is the beginning: incredulity. It's difficult to believe. But I would like—this is a very arcane subject, you know—I would like to begin, if you don't mind, with a little introduction. I'm not a specialist, but, you know, a little introduction because I had to study economic history, just a little, you know. So I would like to begin by saying that I suffered in my country, in my own country, the evil of autarky. It was a Nazi invention, you know. If you import anything from abroad, this is contrary to the national sovereignty of your country. Go figure. Well, Franco maintained this philosophy for 20 years. At the end of this, in '59, you had to change course. There was no money, not even to pay the diplomats. For the best part of one year, Spanish diplomats didn't get any money from Spain because Spain had absolutely run out of foreign currency. So I'm not very friendly to the idea of negative importations— the idea that importing into a country is bad. Definitely not. In fact, tariffs are neither bad nor good. You know, there is a classic on this, an apology of the tariffs by Ha-Joon Chang, "Kicking Away the Ladder." So the idea is that when you begin the curve of development, you have to be sheltered with tariffs from the rest of the world. His philosophy is a classic, "Kicking Away the Ladder." But, you know, once you have left behind all this, the very first part of the curve, then tariffs begin to disappear. It's natural. This happened also in Spain, everywhere. There is a very, very important event in the economic history of the West, in England, when England, at the beginning of more or less the 19th century, decided to change, to alter, decided to go for a paradigm shift. And they introduced the very well- known Corn Laws. Corn Laws mean that the market, the English market, was open to imports from the continent. And that was a great change, because in England it meant that the landed gentry was no longer the very kernel of the country, but rather the industrial barons. It's a very important moment in the economic history of England. But in general, you know, tariffs are considered to be on the dark side of the force. They are not the cup of tea of economists the world over. It's not a good idea. But at the beginning, remember, there's a very famous moment in the history of the West when FDR and Churchill encounter each other for the first time up in the misty waters of the North Atlantic. And it's a matter of public record. FDR asked Churchill, what is going to happen after the war? Because I'm not going to support the British Empire. I'm not going to send my boys to die for an empire. Read it correctly: for a protected part of the world, for a protected with tariffs part of the world. Imperial preferences, you know. I'm not going to send my kids to die for this. And Churchill didn't know what to say. He stammered something like, well, imperial preferences are right. It took a long time to get rid of these tariffs, only in the 70s with the European Union, not before. -- 2 of 15 -- #M2 You're speaking about the tariffs that the British Empire had on what it called at the time the Commonwealth, right? And the Commonwealth was trading within itself but had higher tariffs on non-Commonwealth members. #M3 That's it, imperial preferences. And they maintained imperial preferences until the '70s when they joined the European Union. But this is very important because FDR was determined, "I'm not going to send my boys to die for the British Empire." So you see, tariffs sometimes can be strategic and very important. But the real thing is what happened when the Austro-Hungarian Empire collapsed. The economists, the Austrian school, led at the time by von Mises, saw with alarm that one single unity had become eight or nine sovereign countries. And von Mises was determined to do away with all these frontiers—not national frontiers, but economic frontiers—and create a new world to extend the idea of the Austro-Hungarian Empire to the whole world. That created the Montevideo Round, then the GATT, the General Agreement on Tariffs and Trade, and finally developed into the World Trade Organization. Well, all this is history, Pascal. All this is history. It's incredible. It's true, you know. Trump ignores all this past. And quite frankly, it's a turning point in the history of the West. He wants to go back to the good old days. I think it's very, very difficult. When I was a child, well, something like 17, 18, I learned in college that there is a curve of development. And then, in the curve of development, the very first element was agriculture. The second was industry. And the third were the services. So manufacture is the second part of the leg. And you cannot go back. I mean, time has an absolute meaning. Einstein notwithstanding. This is Newton. So it goes this way, this way, and you cannot go back. Besides, even if you try to bring back manufacturing to your country, you have to realize that workers are no longer there. Robots are the fashion of the day. Look, see any factory now. There are no people working, no workers. You remember Chaplin's "Modern Times"? This is over. Robots do it, you know. It doesn't make any sense anyway. It made sense in the days of nation-states. Say, Germany is Germany, self-contained. France is France. England, well, England also is different, but anyway, Italy is Italy. And then every now and then there is a war. If my memory serves me right, I think this is how the world is described in "The Magic Mountain" by Thomas Mann, you know? But in those days, of course, you could put tariffs on Italian goods because you wanted to sell your cars, and then the Ferraris, you know, made an unwanted challenge. Right. Good. Understood. But right now, look, you hold in your hands this wonder of optics, which is a Leica binocular. Would you believe that most of this is Chinese? So this great German optics, yeah, the optic is probably German, made in Germany, but the rest is not. All is Chinese. So it doesn't make a lot of sense to -- 3 of 15 -- tariff the German good because the German good is not German. You know, everything is interconnected. It's like, you know, trying to deconstruct a mayonnaise sauce. You can't. You know, everything is a kind of unit. You... #M2 You have an unscrambling of the egg, right? If that was the goal. Because, as you said, the United States was for the longest time the champion of free trade. And it was the champion because it benefited from that so much. And that is, of course, kicking away the ladder. Because the ladder was using tariffs at the beginning, to build up national champion industries, and then, you know, go through the different stages of development, right? And once you are then more or less rich, you do away with the tariffs and you benefit from cheaper labor abroad. And the United States for the longest time said other countries must not protect their markets. It's evil. It's evil to protect your markets. You are a communist if you do so. You are the worst of the worst. And that was the last 30 years. And now it has changed into its opposite, right? But even worse than that, it seems that protection of the U.S. market is not the only objective anymore, because a tariff of 145% is not a protective tariff. That is a prohibitive tariff. What do you think they are after? #M3 We will discuss it later. You were right when you said it. Bismarck, the German statesman, put it very well when he said, free trade is the weapon of the powerful. Don't forget it. So to raise tariffs means that you are no longer the strongest on the earth. After this introduction, we will go to China, to the Chinese problem. But historically, all this comes... According to Trump, all this comes from the fact that the dollar is a global reserve currency. Everybody wants to have dollars because it's the general global currency, and that keeps the dollar abnormally high. You get the idea. So the export of the country suffers. The current account has deficits, permanent deficits, and this is unacceptable. This has to come to an end. And, well, the idea is that tariffs are going to help. Well, you know, this is called the Triffin dilemma. Triffin was an economist, and he said that, well, between being a universal currency and having exports, there is a contradiction. That is no longer the case, Pascal. I'm sorry to disappoint you, but that is no longer the case. Back in the days of the crisis in 2008, 40% of all the dollars were in the hands of central banks. Now it's only 16%. And where is all this money? #M3 Well, institutional investors from shady places, Cayman Islands, Luxembourg, all this. They have all the dollars in the world. They are the ones who bought the treasuries, not the central banks. So the problem is not the scarcity of money, which every now and then is helped by central banks with -- 4 of 15 -- shots of liquidity. That's over. The problem is the opposite. There is a lot of money without control because it's not in the hands of the central banks. The rules that apply to this impressive amount of money are the rules that the genius of Keynes called the animal spirits and the liquidity trap. So it can happen anytime, and it is not under the control of any central bank. Central banks are very serious institutions, you know, the Fed, you know. They know the ropes. They know what to do, absolutely. But this is no longer the world of central banks with the scarcity of money. It's the other way around. It's overabundant liquidity. In a