1
00:00:02,520 --> 00:00:07,000
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:08,800 --> 00:00:11,479
Speaker 2: I'm Stephen Carol and this is Here's Why, where we

3
00:00:11,520 --> 00:00:13,880
Speaker 2: take one new story and explain it in just a

4
00:00:13,920 --> 00:00:19,000
Speaker 2: few minutes with our experts here at Bloomberg. We made

5
00:00:19,040 --> 00:00:22,120
Speaker 2: a deal with probably four or five different countries.

6
00:00:22,200 --> 00:00:24,800
Speaker 1: With the UK, it was a great deal for both

7
00:00:25,400 --> 00:00:26,000
Speaker 1: and we're.

8
00:00:25,840 --> 00:00:28,800
Speaker 2: In the process of making some others. This is unfolding

9
00:00:28,920 --> 00:00:32,720
Speaker 2: exactly like we thought it would. We've got ninety deals

10
00:00:32,720 --> 00:00:36,280
Speaker 2: in ninety days, possibly pending here. We will cut those

11
00:00:36,320 --> 00:00:39,040
Speaker 2: deals as soon as we possibly can. Country by country,

12
00:00:39,120 --> 00:00:41,559
Speaker 2: tailor made deals for each and every country as they

13
00:00:41,600 --> 00:00:45,400
Speaker 2: all propose unique challenges. As always, there's going to be

14
00:00:45,479 --> 00:00:49,920
Speaker 2: a flurry going into the final week as the pressure increases.

15
00:00:51,200 --> 00:00:53,440
Speaker 2: It's a race to the finish line for countries to

16
00:00:53,520 --> 00:00:57,120
Speaker 2: get a deal before Donald Trump's tariff pause elapses on

17
00:00:57,200 --> 00:01:01,520
Speaker 2: the ninth of July. The US President's to redraw global

18
00:01:01,560 --> 00:01:05,119
Speaker 2: trade relations as one of the centerpieces of his election campaign.

19
00:01:05,720 --> 00:01:08,520
Speaker 2: It's a strategy with high stakes for the global economy

20
00:01:08,800 --> 00:01:13,240
Speaker 2: and America's relationships with allies and adversaries alike. But the

21
00:01:13,280 --> 00:01:19,160
Speaker 2: deals announced so far don't resemble traditional trade agreements. Here's why.

22
00:01:19,240 --> 00:01:25,280
Speaker 2: Donald Trump's trade deals are so different this time. Our

23
00:01:25,319 --> 00:01:28,360
Speaker 2: ea ANDS director Rosala Matheson joins me now for more,

24
00:01:29,000 --> 00:01:31,959
Speaker 2: ros remind us what did Donald Trump set out to

25
00:01:32,040 --> 00:01:34,280
Speaker 2: achieve with this trade offensive.

26
00:01:34,840 --> 00:01:39,759
Speaker 1: It's basically amping up make America Great again, his policy

27
00:01:40,000 --> 00:01:44,040
Speaker 1: of MAGA, which is promising voters when he was coming

28
00:01:44,080 --> 00:01:47,480
Speaker 1: into the election that he would bring back jobs, he

29
00:01:47,520 --> 00:01:50,840
Speaker 1: would bring back manufacturing, and he would make America the

30
00:01:50,880 --> 00:01:54,040
Speaker 1: centerpiece of that. And he needs to get the wins

31
00:01:54,200 --> 00:01:56,840
Speaker 1: on the board pretty quickly as a result, to show

32
00:01:56,880 --> 00:02:01,080
Speaker 1: the US people that he is delivering on those election promises.

33
00:02:01,280 --> 00:02:04,080
Speaker 1: Even if the trade deals that he's getting so far

34
00:02:04,200 --> 00:02:07,160
Speaker 1: abroad outlines, he can stack them up and say look

35
00:02:07,160 --> 00:02:09,919
Speaker 1: what I've got for you already in terms of helping

36
00:02:09,960 --> 00:02:14,320
Speaker 1: the economy and American jobs. So there's that aspect to it.

37
00:02:14,400 --> 00:02:17,680
Speaker 1: But there's also for Donald Trump, really an underlying belief

38
00:02:17,720 --> 00:02:20,480
Speaker 1: here that he seems to harbor, which is that for

39
00:02:20,560 --> 00:02:24,320
Speaker 1: many years the US gave its leverage away, it let

40
00:02:24,400 --> 00:02:27,240
Speaker 1: other countries take advantage of it when it comes to

41
00:02:27,320 --> 00:02:30,520
Speaker 1: trade an investment, and that the US now needs to

42
00:02:30,800 --> 00:02:33,800
Speaker 1: reorganize that and bring some of that leverage back home.

43
00:02:34,000 --> 00:02:36,880
Speaker 1: And part of this trade offensive is for him about

44
00:02:37,120 --> 00:02:39,600
Speaker 1: leveling that field a bit, and that seems to be

45
00:02:39,800 --> 00:02:42,960
Speaker 1: quite a fundamental belief that he holds underneath all his

46
00:02:43,040 --> 00:02:44,040
Speaker 1: election promises.

47
00:02:44,440 --> 00:02:47,720
Speaker 2: How different is this strategy to what we've seen previous

48
00:02:47,800 --> 00:02:49,960
Speaker 2: presidents do on the trade front.

49
00:02:50,480 --> 00:02:53,320
Speaker 1: There are three things that really stand out there. One

50
00:02:53,400 --> 00:02:56,760
Speaker 1: is that he approaches everybody as a competitor, so whether

51
00:02:56,760 --> 00:03:00,560
Speaker 1: they're a long standing ally in Asia or in Europe

52
00:03:00,720 --> 00:03:03,519
Speaker 1: or an adversary like China. I mean, he was pretty

53
00:03:03,520 --> 00:03:06,920
Speaker 1: tough in his first term, including with Asian allies, but

54
00:03:06,960 --> 00:03:10,519
Speaker 1: he's a lot tougher now and very much doing so publicly.

55
00:03:10,800 --> 00:03:14,840
Speaker 1: So approaching everybody as a competitor, no matter what the

56
00:03:14,840 --> 00:03:18,919
Speaker 1: broader frame is of that relationship. Another thing that he's doing,

57
00:03:18,960 --> 00:03:22,320
Speaker 1: which is different is bundling everything into the conversation. He

58
00:03:22,400 --> 00:03:26,240
Speaker 1: really does blur the lines. You know, other leaders, notably

59
00:03:26,480 --> 00:03:29,800
Speaker 1: Barack Obama and Joe Biden before him, they tried to

60
00:03:29,919 --> 00:03:33,120
Speaker 1: bifurcate things, put them into compartments. So you had trade

61
00:03:33,160 --> 00:03:36,200
Speaker 1: in one bucket and it was independent really from the

62
00:03:36,200 --> 00:03:39,320
Speaker 1: broader relationship. So if you had political tensions that were

63
00:03:39,360 --> 00:03:43,160
Speaker 1: separated out, security matters separated out. Donald Trump keeps it

64
00:03:43,200 --> 00:03:47,119
Speaker 1: all in one soup together. So a trade deal might

65
00:03:47,120 --> 00:03:50,960
Speaker 1: involve in Donald Trump's mind the status of defense contracts,

66
00:03:50,960 --> 00:03:54,680
Speaker 1: for example, So that's very different. And also he's very changeable.

67
00:03:54,880 --> 00:03:57,800
Speaker 1: He's really cutting out bureaucrats a lot, driving this personally

68
00:03:57,840 --> 00:04:01,160
Speaker 1: from the White House with his in a call, and

69
00:04:01,280 --> 00:04:03,680
Speaker 1: he's very hard to read as a result. He can

70
00:04:03,760 --> 00:04:06,640
Speaker 1: change his mind quickly. He can go from happy to

71
00:04:06,760 --> 00:04:10,600
Speaker 1: angry and back again, and that makes negotiating or understanding

72
00:04:10,640 --> 00:04:12,720
Speaker 1: where you lie with the US very difficult.

73
00:04:13,160 --> 00:04:15,200
Speaker 2: How can we describe the results then, that have been

74
00:04:15,240 --> 00:04:18,799
Speaker 2: achieved so far? What sort of agreements have been reached?

75
00:04:19,360 --> 00:04:21,840
Speaker 1: The agreements that have been reached are very broad. They're

76
00:04:21,839 --> 00:04:24,719
Speaker 1: almost more like MOUs than a trade deal. They're a

77
00:04:24,760 --> 00:04:27,560
Speaker 1: framework maybe, and we can see that very much in

78
00:04:27,960 --> 00:04:30,919
Speaker 1: the deals that have been struck so far. They have

79
00:04:31,080 --> 00:04:35,160
Speaker 1: general terms normally the headline figures on tariffs, and they

80
00:04:35,320 --> 00:04:38,240
Speaker 1: punt the really hard stuff, the complicated detail that you

81
00:04:38,320 --> 00:04:41,200
Speaker 1: normally see in a trade deal, well down the track.

82
00:04:41,480 --> 00:04:45,520
Speaker 1: And so you get a very general understanding in those

83
00:04:45,560 --> 00:04:48,520
Speaker 1: initial frameworks, and then the senses that the bureaucrats are

84
00:04:48,520 --> 00:04:50,960
Speaker 1: allowed to get down to work in a trade deal.

85
00:04:51,040 --> 00:04:53,800
Speaker 1: Normally it takes many years to get there. These are

86
00:04:54,279 --> 00:04:59,520
Speaker 1: thousands of pages of documents and great complexity throughout. These

87
00:04:59,560 --> 00:05:01,920
Speaker 1: agreements so far are very very general.

88
00:05:02,320 --> 00:05:05,360
Speaker 2: What sort of issues could arise with having these sort

89
00:05:05,360 --> 00:05:09,640
Speaker 2: of framework agreements instead of those deeper trade agreements that

90
00:05:10,000 --> 00:05:12,280
Speaker 2: were things that we were more used to in the past.

91
00:05:13,200 --> 00:05:15,599
Speaker 1: One of the things that you can risk is confusion

92
00:05:15,800 --> 00:05:18,840
Speaker 1: on the implementation side, and in fact, we've seen that

93
00:05:19,000 --> 00:05:22,560
Speaker 1: before with the US and China previous understandings and then

94
00:05:22,640 --> 00:05:27,280
Speaker 1: one country accusing the other of not holding to that understanding,

95
00:05:27,320 --> 00:05:30,200
Speaker 1: and a lot of confusion in the aftermath. Mean, do

96
00:05:30,240 --> 00:05:32,160
Speaker 1: you end up with one country saying, hang on, you're

97
00:05:32,200 --> 00:05:34,520
Speaker 1: not complying and one country is saying, I'm not quite

98
00:05:34,520 --> 00:05:37,400
Speaker 1: sure what we're supposed to be complying too. And if

99
00:05:37,440 --> 00:05:41,600
Speaker 1: those understandings are so general, it's very easy to accuse

100
00:05:41,640 --> 00:05:44,120
Speaker 1: the other country of not making good on it. And

101
00:05:44,200 --> 00:05:46,599
Speaker 1: it might not be because of ill intent, but the

102
00:05:46,680 --> 00:05:49,560
Speaker 1: other country simply doesn't quite know, They have maybe a

103
00:05:49,600 --> 00:05:52,680
Speaker 1: perception in their mind of what the arrangements are versus

104
00:05:53,040 --> 00:05:54,960
Speaker 1: the other. So a real risk in all of this

105
00:05:55,160 --> 00:05:58,159
Speaker 1: is you do get a lot of confusion in implementing

106
00:05:58,760 --> 00:06:03,080
Speaker 1: the agreement even its broadest terms. And also how do

107
00:06:03,120 --> 00:06:05,000
Speaker 1: you then get the meat on the bone. So the

108
00:06:05,040 --> 00:06:07,640
Speaker 1: problem is how do you go from those very broad

109
00:06:07,680 --> 00:06:10,919
Speaker 1: frameworks into something much more detailed, and how do you

110
00:06:10,920 --> 00:06:13,520
Speaker 1: get the impetus for that to go. Donald Trump seemingly

111
00:06:13,680 --> 00:06:16,480
Speaker 1: just wants the headline figures and moves on. But where

112
00:06:16,520 --> 00:06:19,080
Speaker 1: is the push coming to really sit down and tackle

113
00:06:19,120 --> 00:06:20,359
Speaker 1: the more complex issues.

114
00:06:20,680 --> 00:06:24,160
Speaker 2: Could other countries take the same approach that Donald Trump

115
00:06:24,200 --> 00:06:26,880
Speaker 2: and the United States have taken to trade? Could this

116
00:06:26,960 --> 00:06:30,600
Speaker 2: actually be a new form of trade relations that's now emerging.

117
00:06:31,240 --> 00:06:34,280
Speaker 1: Well, it does seem that getting just something on paper

118
00:06:34,320 --> 00:06:37,039
Speaker 1: may be an approach that other countries take too, sort

119
00:06:37,040 --> 00:06:40,320
Speaker 1: of a trade light approach and MoU you know, keep

120
00:06:40,320 --> 00:06:43,000
Speaker 1: the detail for later and at least get something down

121
00:06:43,080 --> 00:06:47,080
Speaker 1: so you avoid an escalating trade war with other countries.

122
00:06:47,520 --> 00:06:49,200
Speaker 1: And so you know, for a lot of countries, things

123
00:06:49,240 --> 00:06:52,440
Speaker 1: around the movement of people services, that's all very complex.

124
00:06:52,520 --> 00:06:56,360
Speaker 1: So that might be one way to get something down initially.

125
00:06:56,680 --> 00:07:00,200
Speaker 1: But again it's all about your leverage. It's easy for

126
00:07:00,240 --> 00:07:02,720
Speaker 1: Donald Trump to take this approach, which is quite a

127
00:07:02,760 --> 00:07:05,479
Speaker 1: lot of stick and using the clout of the US

128
00:07:05,520 --> 00:07:08,120
Speaker 1: to force things over the line, when you're the biggest

129
00:07:08,160 --> 00:07:10,880
Speaker 1: player in the room, if you're a much smaller country,

130
00:07:10,920 --> 00:07:14,280
Speaker 1: your leverage is a lot smaller and your ability to

131
00:07:14,680 --> 00:07:18,440
Speaker 1: negotiate even these kinds of frameworks diminishes. I mean, if

132
00:07:18,440 --> 00:07:21,239
Speaker 1: you're a big block like the EU, a country like China,

133
00:07:21,640 --> 00:07:23,640
Speaker 1: but even a country like Japan has had a lot

134
00:07:23,680 --> 00:07:26,679
Speaker 1: of struggles here with the US despite being a massive

135
00:07:26,720 --> 00:07:31,320
Speaker 1: investor in the US, despite having that trade clout. Canada equally,

136
00:07:31,600 --> 00:07:33,960
Speaker 1: and if those big countries are struggling, then the smaller

137
00:07:34,000 --> 00:07:36,640
Speaker 1: ones definitely will, and it doesn't feel like it's a

138
00:07:36,720 --> 00:07:38,640
Speaker 1: template therefore that they could adopt.

139
00:07:39,240 --> 00:07:42,559
Speaker 2: Okay, rosellad mason Er, EMEA news director. Thank you very much.

140
00:07:43,360 --> 00:07:46,000
Speaker 2: For more explanations like this from our team of three

141
00:07:46,040 --> 00:07:49,120
Speaker 2: thousand journalists and analysts around the world, go to Bloomberg

142
00:07:49,160 --> 00:07:54,440
Speaker 2: dot com slash explainers. I'm Stephen Carroll. This is here's why.

143
00:07:54,600 --> 00:07:57,200
Speaker 2: I'll be back next week with more. Thanks for listening.

144
00:08:00,600 --> 00:08:01,040
Speaker 1: Dus