1 00:00:00,080 --> 00:00:02,360 Speaker 1: Peter Lewis our Asia Business correspondents with US. 2 00:00:02,360 --> 00:00:04,360 Speaker 2: Hey, Peter, Good evening, Heather. 3 00:00:04,640 --> 00:00:07,720 Speaker 1: Now, Peter, obviously Trump's tariffs are going to come down 4 00:00:07,800 --> 00:00:10,080 Speaker 1: on China. But is it because he's said as much. 5 00:00:10,119 --> 00:00:11,880 Speaker 1: But will it happen after this weekend? 6 00:00:13,560 --> 00:00:15,760 Speaker 2: It's hard to know. I think we've got to sort 7 00:00:15,760 --> 00:00:19,160 Speaker 2: of temper our expectations a bit about this weekend because 8 00:00:19,640 --> 00:00:24,239 Speaker 2: these aren't really negotiations about trade. Their talks about having 9 00:00:24,400 --> 00:00:28,600 Speaker 2: talks and whether or not the right circumstances can exist 10 00:00:28,840 --> 00:00:33,199 Speaker 2: whereby they can start having some substantive discussions about trade. 11 00:00:33,640 --> 00:00:36,000 Speaker 2: And the sticking point at the moment is that China 12 00:00:36,000 --> 00:00:39,479 Speaker 2: has been insisting all along that before there can be 13 00:00:39,560 --> 00:00:45,080 Speaker 2: those discussions, Trump needs to remove his tariffs on Chinese goods. Now, 14 00:00:45,120 --> 00:00:47,360 Speaker 2: it's hard to imagine that Donald Trump is going to 15 00:00:47,400 --> 00:00:52,720 Speaker 2: remove them in their entirety. Maybe he might partially reduce 16 00:00:52,760 --> 00:00:55,840 Speaker 2: them and say come down. Instead of imposing one hundred 17 00:00:55,840 --> 00:01:00,960 Speaker 2: and twenty five percent tariffs, maybe impost fifty percent or 18 00:01:01,000 --> 00:01:03,880 Speaker 2: something like that. So the question is is that going 19 00:01:03,920 --> 00:01:08,800 Speaker 2: to be enough to get China to the negotiating table. 20 00:01:08,880 --> 00:01:10,320 Speaker 2: And I think this is what we're going to hear 21 00:01:10,680 --> 00:01:13,120 Speaker 2: a lot of the discussion will be about over the 22 00:01:13,120 --> 00:01:16,880 Speaker 2: weekend to try and create those conditions where they can talk. 23 00:01:17,360 --> 00:01:20,760 Speaker 2: But even if they do get to the point, we 24 00:01:20,880 --> 00:01:24,240 Speaker 2: now have a template for what Donald Trump thinks a 25 00:01:24,280 --> 00:01:28,240 Speaker 2: trade deal ought to look like, and that's the US 26 00:01:28,319 --> 00:01:31,920 Speaker 2: trade deal that was announced yesterday. Now that is not, 27 00:01:32,080 --> 00:01:35,760 Speaker 2: in any way, shape or form a trade deal as 28 00:01:35,800 --> 00:01:39,040 Speaker 2: you would imagine it. What it is is a tariff 29 00:01:39,080 --> 00:01:42,480 Speaker 2: reduction agreement. In other words, I've put one hundred and 30 00:01:42,480 --> 00:01:45,040 Speaker 2: twenty five percent tarofts on you, or whatever they are 31 00:01:45,040 --> 00:01:47,840 Speaker 2: in the UK's case, and I'll reduce some of them 32 00:01:48,040 --> 00:01:50,960 Speaker 2: across certain sectors. But at the end of it, tarotts 33 00:01:50,960 --> 00:01:53,440 Speaker 2: are still much higher than when Donald Trump came to 34 00:01:53,480 --> 00:01:58,040 Speaker 2: office in January. Now, is that going to be workable 35 00:01:58,040 --> 00:02:00,720 Speaker 2: with China? I think not becase because, first of all, 36 00:02:00,760 --> 00:02:03,840 Speaker 2: those types of deals where you sort of swap tariff 37 00:02:03,920 --> 00:02:08,120 Speaker 2: arrangements on certain limited sectors only really work where you 38 00:02:08,240 --> 00:02:10,880 Speaker 2: have balanced trade or maybe a trade surplus. But the 39 00:02:11,000 --> 00:02:14,360 Speaker 2: US has a huge deficit with China, so that isn't 40 00:02:14,360 --> 00:02:16,880 Speaker 2: going to be the right templates in any way. It's 41 00:02:16,919 --> 00:02:19,799 Speaker 2: not going to be of any interest to China whatsoever 42 00:02:20,320 --> 00:02:23,280 Speaker 2: they want to have tariffs removed and they want to 43 00:02:23,320 --> 00:02:26,960 Speaker 2: have a much more encompassing broad trade agreement, which will 44 00:02:27,000 --> 00:02:30,840 Speaker 2: take many, many months to get to pieces. 45 00:02:30,840 --> 00:02:34,800 Speaker 1: So at the same time and obviously amidst the trade worries, 46 00:02:35,040 --> 00:02:36,680 Speaker 1: China Central Bank is doing a whole bunch of things 47 00:02:36,680 --> 00:02:39,160 Speaker 1: to trying to stimulate the economy. Now are they doing 48 00:02:39,200 --> 00:02:42,280 Speaker 1: it to stimulate what they are already seeing happen, like 49 00:02:42,320 --> 00:02:44,720 Speaker 1: the impact they're already seeing, or are they doing this 50 00:02:44,760 --> 00:02:47,800 Speaker 1: to prepare for the impact of these tariffs actually staying 51 00:02:47,800 --> 00:02:48,840 Speaker 1: in place for a long time. 52 00:02:50,080 --> 00:02:52,120 Speaker 2: I think both. I mean, at the moment, they are 53 00:02:52,160 --> 00:02:56,120 Speaker 2: suffering an impact of this. It's hitting the economy because 54 00:02:56,200 --> 00:02:59,920 Speaker 2: trade between the world's two largest economies has just completely 55 00:03:00,320 --> 00:03:02,280 Speaker 2: ground to a halt, and you look at you see 56 00:03:02,280 --> 00:03:04,480 Speaker 2: that in things like the shipping numbers. If you look 57 00:03:04,480 --> 00:03:07,160 Speaker 2: at the port of Los Angeles, for example, where most 58 00:03:07,240 --> 00:03:11,440 Speaker 2: Chinese ships go through to bring their products to the US, 59 00:03:12,160 --> 00:03:15,200 Speaker 2: trade is down about thirty percent compared to this time 60 00:03:15,600 --> 00:03:18,760 Speaker 2: last year. So it's hitting Chinese exports, which is a 61 00:03:18,760 --> 00:03:22,480 Speaker 2: big part of the Chinese economy. So it is absolutely 62 00:03:23,120 --> 00:03:26,920 Speaker 2: hurting the Chinese economy at the moment. So this is 63 00:03:27,080 --> 00:03:30,200 Speaker 2: partly to deal with what it's already seeing. But I 64 00:03:30,200 --> 00:03:33,040 Speaker 2: think it does fear that this can only get worse 65 00:03:33,080 --> 00:03:36,080 Speaker 2: because the longer this goes on where the two countries 66 00:03:36,080 --> 00:03:39,680 Speaker 2: are not doing any trade with each other, it's going 67 00:03:39,760 --> 00:03:42,360 Speaker 2: to hurt both economies. It's going to hurt the US consumer, 68 00:03:43,000 --> 00:03:46,280 Speaker 2: and it's going to hurt the Chinese exporter and particularly 69 00:03:46,320 --> 00:03:50,400 Speaker 2: small manufacturers who provide lots of the goods and components 70 00:03:50,880 --> 00:03:54,720 Speaker 2: that US firms need to put together products for their 71 00:03:54,760 --> 00:03:58,040 Speaker 2: consumer base. So China is assuming this is going to 72 00:03:58,120 --> 00:04:00,680 Speaker 2: get worse, but I think it's in for the long 73 00:04:00,800 --> 00:04:04,840 Speaker 2: term here. It's assuming the worst at the moment, and 74 00:04:04,880 --> 00:04:08,200 Speaker 2: in the meantime it's looking for other markets. And if 75 00:04:08,240 --> 00:04:12,480 Speaker 2: you look at Chinese trade, for example, with Southeast Asian nations, 76 00:04:12,720 --> 00:04:15,760 Speaker 2: it's holding up reasonably well. So they are looking for 77 00:04:15,920 --> 00:04:19,480 Speaker 2: other areas where they can try and find replacement markets 78 00:04:19,520 --> 00:04:21,920 Speaker 2: for what they're assuming is going to be a permanent 79 00:04:21,960 --> 00:04:25,839 Speaker 2: loss of the US market. The problem is these measures 80 00:04:26,160 --> 00:04:29,240 Speaker 2: that they've announced, which is a twenty five basis point 81 00:04:29,320 --> 00:04:32,920 Speaker 2: interest rate cut and also a cut in the reserve 82 00:04:33,000 --> 00:04:35,400 Speaker 2: requirement ratio, which is the amount of money banks have 83 00:04:35,520 --> 00:04:39,760 Speaker 2: to put aside to guarantee loans and things. It's not 84 00:04:39,800 --> 00:04:41,760 Speaker 2: going to be enough, so China is going to have 85 00:04:41,800 --> 00:04:43,719 Speaker 2: to do a lot more if it wants to, in 86 00:04:43,760 --> 00:04:47,360 Speaker 2: particular stimulate its domestic economy to try and make up 87 00:04:47,560 --> 00:04:49,400 Speaker 2: for the loss of exports good stuff. 88 00:04:49,400 --> 00:04:50,720 Speaker 1: Peter, it was always good to talk to you. Thank 89 00:04:50,720 --> 00:04:52,160 Speaker 1: you so much. We'll chat to you again next week. 90 00:04:52,160 --> 00:04:55,520 Speaker 1: That's Peter Lewis Out Asia Business Correspondent. For more from 91 00:04:55,600 --> 00:04:58,679 Speaker 1: Hither Duplassy Alan Drive, listen live to news talks. 92 00:04:58,680 --> 00:05:01,880 Speaker 2: It'd be from four pm weekdays, or follow the podcast 93 00:05:01,960 --> 00:05:02,960 Speaker 2: on iHeartRadio.