1 00:00:00,080 --> 00:00:02,240 Speaker 1: The will felt awfully edgy this week, didn't it for 2 00:00:02,400 --> 00:00:04,720 Speaker 1: most of the week as the market's gyrated in response 3 00:00:04,760 --> 00:00:08,200 Speaker 1: to the Trump terror plan, if plan is the right word. 4 00:00:08,480 --> 00:00:11,320 Speaker 1: The capitulation came yesterday based on fears around the US 5 00:00:11,360 --> 00:00:15,040 Speaker 1: bond market. We got ninety days to achieve lord knows what. Now. 6 00:00:15,360 --> 00:00:17,959 Speaker 1: Worst hit was Asia? Really, their markets move more than 7 00:00:18,000 --> 00:00:20,120 Speaker 1: anyone else's. China is in a war that's sitting at 8 00:00:20,120 --> 00:00:22,520 Speaker 1: one hundred and forty five percent and counting this morning. 9 00:00:22,840 --> 00:00:25,279 Speaker 1: So we're to Asia Business Correspondent Peter Lewis with us 10 00:00:25,320 --> 00:00:26,239 Speaker 1: PEP Morning to you. 11 00:00:27,160 --> 00:00:28,400 Speaker 2: Good morning, Mike, early. 12 00:00:28,200 --> 00:00:30,120 Speaker 1: Hours of Bangkok, and I do appreciate you getting up 13 00:00:30,160 --> 00:00:33,040 Speaker 1: very early in the morning for us, so just give 14 00:00:33,080 --> 00:00:35,159 Speaker 1: us the vibe broadly speaking in Asia. But how's it 15 00:00:35,200 --> 00:00:37,120 Speaker 1: been handled? How's it been seen? What's the word? 16 00:00:38,360 --> 00:00:42,840 Speaker 2: Well, the markets have obviously reacted very strongly to this. 17 00:00:43,000 --> 00:00:46,559 Speaker 2: The big problem is that there is a lot of uncertainty, 18 00:00:47,080 --> 00:00:51,080 Speaker 2: and uncertainty leads to volatility in the markets, and we've 19 00:00:51,120 --> 00:00:56,360 Speaker 2: seen exactly that, big declines in the stock markets followed 20 00:00:56,400 --> 00:01:00,600 Speaker 2: by huge rallies. Also a big decline in the US 21 00:01:00,680 --> 00:01:04,920 Speaker 2: bomb markets, which is added to the uncertainty, and that 22 00:01:05,040 --> 00:01:09,240 Speaker 2: uncertainty isn't going to end because over the next ninety 23 00:01:09,360 --> 00:01:12,600 Speaker 2: days we're now going to see a whole host of 24 00:01:13,360 --> 00:01:18,000 Speaker 2: leaders trooping over to Washington to try and negotiate their 25 00:01:18,080 --> 00:01:22,280 Speaker 2: own deal on tarifs, and there's no guarantee at all 26 00:01:22,840 --> 00:01:26,800 Speaker 2: that that will work. It could well be that there's 27 00:01:26,840 --> 00:01:30,640 Speaker 2: no deal at all for several countries because trade negotiations 28 00:01:30,760 --> 00:01:35,880 Speaker 2: normally take years, not ninety days. They're very very complex 29 00:01:36,280 --> 00:01:41,080 Speaker 2: sets of negotiations. They involve a lot of considerations, not 30 00:01:41,200 --> 00:01:45,760 Speaker 2: just trade, but a whole host of political issues as well. 31 00:01:46,240 --> 00:01:49,400 Speaker 2: So this is going to be a very difficult ninety days. 32 00:01:49,760 --> 00:01:53,040 Speaker 2: There's going to be a lot more uncertainty and there's 33 00:01:53,080 --> 00:01:55,840 Speaker 2: going to be a lot more volatility. And in particular, 34 00:01:56,400 --> 00:01:59,760 Speaker 2: we have to bear in mind that the tariffs haven't 35 00:01:59,760 --> 00:02:03,200 Speaker 2: gone away. There's still one hundred and forty five percent 36 00:02:03,280 --> 00:02:07,640 Speaker 2: tariffs on China. There's still the ten percent based tariffs 37 00:02:07,960 --> 00:02:12,040 Speaker 2: on every other country in the world. Canada and Mexico's 38 00:02:12,080 --> 00:02:16,720 Speaker 2: tariffs are still there. There's the tariffs on steel and aluminium, 39 00:02:17,080 --> 00:02:20,480 Speaker 2: tariffs on cars. There are a lot of tariffs left. 40 00:02:20,760 --> 00:02:24,119 Speaker 2: And what it means is that the average tariff rate 41 00:02:24,600 --> 00:02:29,960 Speaker 2: now on US imports stands at about sixteen percent. That's 42 00:02:30,000 --> 00:02:33,320 Speaker 2: the highest in over one hundred years. It was three 43 00:02:33,360 --> 00:02:38,239 Speaker 2: percent before Trump's second term started. So we've still got 44 00:02:38,240 --> 00:02:40,799 Speaker 2: a lot to deal with and that's going to lead 45 00:02:40,800 --> 00:02:43,480 Speaker 2: to a lot of voloacility in the markets. 46 00:02:43,520 --> 00:02:46,440 Speaker 1: The one forty five for China is that a completely 47 00:02:46,520 --> 00:02:50,040 Speaker 1: separate thing that will unfold in its own way versus 48 00:02:50,080 --> 00:02:52,639 Speaker 1: the rist of Asia. Do you think or because China 49 00:02:52,760 --> 00:02:54,639 Speaker 1: is China, we're all in this together. 50 00:02:55,880 --> 00:02:58,640 Speaker 2: I think in some ways we're all in this together 51 00:02:58,800 --> 00:03:02,960 Speaker 2: because what happens to the Chinese economy affects the rest 52 00:03:03,000 --> 00:03:09,840 Speaker 2: of Asia. About fifteen percent of China's economy depends upon exports. 53 00:03:10,440 --> 00:03:15,560 Speaker 2: Around fifteen percent of that goes to the US. So 54 00:03:15,639 --> 00:03:19,160 Speaker 2: this could easily shave off a couple of percent off 55 00:03:19,160 --> 00:03:22,760 Speaker 2: of China's GDP because when tariff's are at one hundred 56 00:03:22,760 --> 00:03:28,519 Speaker 2: and forty five percent, effectively trade between those two countries 57 00:03:28,760 --> 00:03:31,400 Speaker 2: has come to a complete halt, and it really doesn't 58 00:03:31,400 --> 00:03:35,600 Speaker 2: matter anymore whether tariff's fifty one hundred, one hundred and 59 00:03:35,640 --> 00:03:39,560 Speaker 2: fifty two hundred percent. At that sort of level, businesses 60 00:03:39,640 --> 00:03:43,760 Speaker 2: cannot export anymore. They simply can't be profitable at that 61 00:03:43,880 --> 00:03:48,240 Speaker 2: level of tariffs. So to all intents and purposes, there's 62 00:03:48,280 --> 00:03:52,840 Speaker 2: been a hard decoupling in trade between the US and China, 63 00:03:53,480 --> 00:03:56,440 Speaker 2: and that affects the rest of Asia and the Asia 64 00:03:56,480 --> 00:04:01,320 Speaker 2: Pacific region, including countries like New Zealand Australia. A slowdown 65 00:04:01,360 --> 00:04:05,200 Speaker 2: in the Chinese economy of that magnitude is a serious 66 00:04:05,200 --> 00:04:08,760 Speaker 2: issue for New Zealand and many other countries in the region. 67 00:04:08,920 --> 00:04:10,840 Speaker 1: I think that the truth. Peter, appreciate your time very much. 68 00:04:10,840 --> 00:04:13,080 Speaker 1: We'll catch up, saying Peter Lewis Asia Business. Correspond with 69 00:04:13,120 --> 00:04:15,320 Speaker 1: us in Benkok, where it's about two thirty in the morning. 70 00:04:15,760 --> 00:04:18,640 Speaker 2: For more from the Mic Asking Breakfast, listen live to 71 00:04:18,760 --> 00:04:19,320 Speaker 2: news talks. 72 00:04:19,320 --> 00:04:22,520 Speaker 1: It'd be from six am weekdays, or follow the podcast 73 00:04:22,560 --> 00:04:23,440 Speaker 1: on iHeartRadio.