Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: I'm Stephen Carol and this is Here's Why, where we
Speaker 2: take one new story and explain it in just a
Speaker 2: few minutes with our experts here at Bloomberg. We made
Speaker 2: a deal with probably four or five different countries.
Speaker 1: With the UK, it was a great deal for both
Speaker 1: and we're.
Speaker 2: In the process of making some others. This is unfolding
Speaker 2: exactly like we thought it would. We've got ninety deals
Speaker 2: in ninety days, possibly pending here. We will cut those
Speaker 2: deals as soon as we possibly can. Country by country,
Speaker 2: tailor made deals for each and every country as they
Speaker 2: all propose unique challenges. As always, there's going to be
Speaker 2: a flurry going into the final week as the pressure increases.
Speaker 2: It's a race to the finish line for countries to
Speaker 2: get a deal before Donald Trump's tariff pause elapses on
Speaker 2: the ninth of July. The US President's to redraw global
Speaker 2: trade relations as one of the centerpieces of his election campaign.
Speaker 2: It's a strategy with high stakes for the global economy
Speaker 2: and America's relationships with allies and adversaries alike. But the
Speaker 2: deals announced so far don't resemble traditional trade agreements. Here's why.
Speaker 2: Donald Trump's trade deals are so different this time. Our
Speaker 2: ea ANDS director Rosala Matheson joins me now for more,
Speaker 2: ros remind us what did Donald Trump set out to
Speaker 2: achieve with this trade offensive.
Speaker 1: It's basically amping up make America Great again, his policy
Speaker 1: of MAGA, which is promising voters when he was coming
Speaker 1: into the election that he would bring back jobs, he
Speaker 1: would bring back manufacturing, and he would make America the
Speaker 1: centerpiece of that. And he needs to get the wins
Speaker 1: on the board pretty quickly as a result, to show
Speaker 1: the US people that he is delivering on those election promises.
Speaker 1: Even if the trade deals that he's getting so far
Speaker 1: abroad outlines, he can stack them up and say look
Speaker 1: what I've got for you already in terms of helping
Speaker 1: the economy and American jobs. So there's that aspect to it.
Speaker 1: But there's also for Donald Trump, really an underlying belief
Speaker 1: here that he seems to harbor, which is that for
Speaker 1: many years the US gave its leverage away, it let
Speaker 1: other countries take advantage of it when it comes to
Speaker 1: trade an investment, and that the US now needs to
Speaker 1: reorganize that and bring some of that leverage back home.
Speaker 1: And part of this trade offensive is for him about
Speaker 1: leveling that field a bit, and that seems to be
Speaker 1: quite a fundamental belief that he holds underneath all his
Speaker 1: election promises.
Speaker 2: How different is this strategy to what we've seen previous
Speaker 2: presidents do on the trade front.
Speaker 1: There are three things that really stand out there. One
Speaker 1: is that he approaches everybody as a competitor, so whether
Speaker 1: they're a long standing ally in Asia or in Europe
Speaker 1: or an adversary like China. I mean, he was pretty
Speaker 1: tough in his first term, including with Asian allies, but
Speaker 1: he's a lot tougher now and very much doing so publicly.
Speaker 1: So approaching everybody as a competitor, no matter what the
Speaker 1: broader frame is of that relationship. Another thing that he's doing,
Speaker 1: which is different is bundling everything into the conversation. He
Speaker 1: really does blur the lines. You know, other leaders, notably
Speaker 1: Barack Obama and Joe Biden before him, they tried to
Speaker 1: bifurcate things, put them into compartments. So you had trade
Speaker 1: in one bucket and it was independent really from the
Speaker 1: broader relationship. So if you had political tensions that were
Speaker 1: separated out, security matters separated out. Donald Trump keeps it
Speaker 1: all in one soup together. So a trade deal might
Speaker 1: involve in Donald Trump's mind the status of defense contracts,
Speaker 1: for example, So that's very different. And also he's very changeable.
Speaker 1: He's really cutting out bureaucrats a lot, driving this personally
Speaker 1: from the White House with his in a call, and
Speaker 1: he's very hard to read as a result. He can
Speaker 1: change his mind quickly. He can go from happy to
Speaker 1: angry and back again, and that makes negotiating or understanding
Speaker 1: where you lie with the US very difficult.
Speaker 2: How can we describe the results then, that have been
Speaker 2: achieved so far? What sort of agreements have been reached?
Speaker 1: The agreements that have been reached are very broad. They're
Speaker 1: almost more like MOUs than a trade deal. They're a
Speaker 1: framework maybe, and we can see that very much in
Speaker 1: the deals that have been struck so far. They have
Speaker 1: general terms normally the headline figures on tariffs, and they
Speaker 1: punt the really hard stuff, the complicated detail that you
Speaker 1: normally see in a trade deal, well down the track.
Speaker 1: And so you get a very general understanding in those
Speaker 1: initial frameworks, and then the senses that the bureaucrats are
Speaker 1: allowed to get down to work in a trade deal.
Speaker 1: Normally it takes many years to get there. These are
Speaker 1: thousands of pages of documents and great complexity throughout. These
Speaker 1: agreements so far are very very general.
Speaker 2: What sort of issues could arise with having these sort
Speaker 2: of framework agreements instead of those deeper trade agreements that
Speaker 2: were things that we were more used to in the past.
Speaker 1: One of the things that you can risk is confusion
Speaker 1: on the implementation side, and in fact, we've seen that
Speaker 1: before with the US and China previous understandings and then
Speaker 1: one country accusing the other of not holding to that understanding,
Speaker 1: and a lot of confusion in the aftermath. Mean, do
Speaker 1: you end up with one country saying, hang on, you're
Speaker 1: not complying and one country is saying, I'm not quite
Speaker 1: sure what we're supposed to be complying too. And if
Speaker 1: those understandings are so general, it's very easy to accuse
Speaker 1: the other country of not making good on it. And
Speaker 1: it might not be because of ill intent, but the
Speaker 1: other country simply doesn't quite know, They have maybe a
Speaker 1: perception in their mind of what the arrangements are versus
Speaker 1: the other. So a real risk in all of this
Speaker 1: is you do get a lot of confusion in implementing
Speaker 1: the agreement even its broadest terms. And also how do
Speaker 1: you then get the meat on the bone. So the
Speaker 1: problem is how do you go from those very broad
Speaker 1: frameworks into something much more detailed, and how do you
Speaker 1: get the impetus for that to go. Donald Trump seemingly
Speaker 1: just wants the headline figures and moves on. But where
Speaker 1: is the push coming to really sit down and tackle
Speaker 1: the more complex issues.
Speaker 2: Could other countries take the same approach that Donald Trump
Speaker 2: and the United States have taken to trade? Could this
Speaker 2: actually be a new form of trade relations that's now emerging.
Speaker 1: Well, it does seem that getting just something on paper
Speaker 1: may be an approach that other countries take too, sort
Speaker 1: of a trade light approach and MoU you know, keep
Speaker 1: the detail for later and at least get something down
Speaker 1: so you avoid an escalating trade war with other countries.
Speaker 1: And so you know, for a lot of countries, things
Speaker 1: around the movement of people services, that's all very complex.
Speaker 1: So that might be one way to get something down initially.
Speaker 1: But again it's all about your leverage. It's easy for
Speaker 1: Donald Trump to take this approach, which is quite a
Speaker 1: lot of stick and using the clout of the US
Speaker 1: to force things over the line, when you're the biggest
Speaker 1: player in the room, if you're a much smaller country,
Speaker 1: your leverage is a lot smaller and your ability to
Speaker 1: negotiate even these kinds of frameworks diminishes. I mean, if
Speaker 1: you're a big block like the EU, a country like China,
Speaker 1: but even a country like Japan has had a lot
Speaker 1: of struggles here with the US despite being a massive
Speaker 1: investor in the US, despite having that trade clout. Canada equally,
Speaker 1: and if those big countries are struggling, then the smaller
Speaker 1: ones definitely will, and it doesn't feel like it's a
Speaker 1: template therefore that they could adopt.
Speaker 2: Okay, rosellad mason Er, EMEA news director. Thank you very much.
Speaker 2: For more explanations like this from our team of three
Speaker 2: thousand journalists and analysts around the world, go to Bloomberg
Speaker 2: dot com slash explainers. I'm Stephen Carroll. This is here's why.
Speaker 2: I'll be back next week with more. Thanks for listening.
Speaker 1: Dus