WEBVTT - Here's Why Trump's Trade Deals Are So Different This Time

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>I'm Stephen Carol and this is Here's Why, where we

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<v Speaker 2>take one new story and explain it in just a

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<v Speaker 2>few minutes with our experts here at Bloomberg. We made

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<v Speaker 2>a deal with probably four or five different countries.

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<v Speaker 1>With the UK, it was a great deal for both

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<v Speaker 1>and we're.

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<v Speaker 2>In the process of making some others. This is unfolding

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<v Speaker 2>exactly like we thought it would. We've got ninety deals

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<v Speaker 2>in ninety days, possibly pending here. We will cut those

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<v Speaker 2>deals as soon as we possibly can. Country by country,

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<v Speaker 2>tailor made deals for each and every country as they

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<v Speaker 2>all propose unique challenges. As always, there's going to be

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<v Speaker 2>a flurry going into the final week as the pressure increases.

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<v Speaker 2>It's a race to the finish line for countries to

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<v Speaker 2>get a deal before Donald Trump's tariff pause elapses on

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<v Speaker 2>the ninth of July. The US President's to redraw global

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<v Speaker 2>trade relations as one of the centerpieces of his election campaign.

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<v Speaker 2>It's a strategy with high stakes for the global economy

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<v Speaker 2>and America's relationships with allies and adversaries alike. But the

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<v Speaker 2>deals announced so far don't resemble traditional trade agreements. Here's why.

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<v Speaker 2>Donald Trump's trade deals are so different this time. Our

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<v Speaker 2>ea ANDS director Rosala Matheson joins me now for more,

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<v Speaker 2>ros remind us what did Donald Trump set out to

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<v Speaker 2>achieve with this trade offensive.

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<v Speaker 1>It's basically amping up make America Great again, his policy

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<v Speaker 1>of MAGA, which is promising voters when he was coming

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<v Speaker 1>into the election that he would bring back jobs, he

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<v Speaker 1>would bring back manufacturing, and he would make America the

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<v Speaker 1>centerpiece of that. And he needs to get the wins

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<v Speaker 1>on the board pretty quickly as a result, to show

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<v Speaker 1>the US people that he is delivering on those election promises.

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<v Speaker 1>Even if the trade deals that he's getting so far

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<v Speaker 1>abroad outlines, he can stack them up and say look

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<v Speaker 1>what I've got for you already in terms of helping

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<v Speaker 1>the economy and American jobs. So there's that aspect to it.

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<v Speaker 1>But there's also for Donald Trump, really an underlying belief

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<v Speaker 1>here that he seems to harbor, which is that for

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<v Speaker 1>many years the US gave its leverage away, it let

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<v Speaker 1>other countries take advantage of it when it comes to

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<v Speaker 1>trade an investment, and that the US now needs to

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<v Speaker 1>reorganize that and bring some of that leverage back home.

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<v Speaker 1>And part of this trade offensive is for him about

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<v Speaker 1>leveling that field a bit, and that seems to be

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<v Speaker 1>quite a fundamental belief that he holds underneath all his

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<v Speaker 1>election promises.

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<v Speaker 2>How different is this strategy to what we've seen previous

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<v Speaker 2>presidents do on the trade front.

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<v Speaker 1>There are three things that really stand out there. One

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<v Speaker 1>is that he approaches everybody as a competitor, so whether

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<v Speaker 1>they're a long standing ally in Asia or in Europe

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<v Speaker 1>or an adversary like China. I mean, he was pretty

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<v Speaker 1>tough in his first term, including with Asian allies, but

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<v Speaker 1>he's a lot tougher now and very much doing so publicly.

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<v Speaker 1>So approaching everybody as a competitor, no matter what the

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<v Speaker 1>broader frame is of that relationship. Another thing that he's doing,

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<v Speaker 1>which is different is bundling everything into the conversation. He

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<v Speaker 1>really does blur the lines. You know, other leaders, notably

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<v Speaker 1>Barack Obama and Joe Biden before him, they tried to

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<v Speaker 1>bifurcate things, put them into compartments. So you had trade

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<v Speaker 1>in one bucket and it was independent really from the

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<v Speaker 1>broader relationship. So if you had political tensions that were

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<v Speaker 1>separated out, security matters separated out. Donald Trump keeps it

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<v Speaker 1>all in one soup together. So a trade deal might

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<v Speaker 1>involve in Donald Trump's mind the status of defense contracts,

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<v Speaker 1>for example, So that's very different. And also he's very changeable.

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<v Speaker 1>He's really cutting out bureaucrats a lot, driving this personally

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<v Speaker 1>from the White House with his in a call, and

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<v Speaker 1>he's very hard to read as a result. He can

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<v Speaker 1>change his mind quickly. He can go from happy to

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<v Speaker 1>angry and back again, and that makes negotiating or understanding

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<v Speaker 1>where you lie with the US very difficult.

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<v Speaker 2>How can we describe the results then, that have been

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<v Speaker 2>achieved so far? What sort of agreements have been reached?

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<v Speaker 1>The agreements that have been reached are very broad. They're

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<v Speaker 1>almost more like MOUs than a trade deal. They're a

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<v Speaker 1>framework maybe, and we can see that very much in

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<v Speaker 1>the deals that have been struck so far. They have

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<v Speaker 1>general terms normally the headline figures on tariffs, and they

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<v Speaker 1>punt the really hard stuff, the complicated detail that you

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<v Speaker 1>normally see in a trade deal, well down the track.

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<v Speaker 1>And so you get a very general understanding in those

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<v Speaker 1>initial frameworks, and then the senses that the bureaucrats are

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<v Speaker 1>allowed to get down to work in a trade deal.

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<v Speaker 1>Normally it takes many years to get there. These are

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<v Speaker 1>thousands of pages of documents and great complexity throughout. These

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<v Speaker 1>agreements so far are very very general.

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<v Speaker 2>What sort of issues could arise with having these sort

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<v Speaker 2>of framework agreements instead of those deeper trade agreements that

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<v Speaker 2>were things that we were more used to in the past.

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<v Speaker 1>One of the things that you can risk is confusion

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<v Speaker 1>on the implementation side, and in fact, we've seen that

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<v Speaker 1>before with the US and China previous understandings and then

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<v Speaker 1>one country accusing the other of not holding to that understanding,

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<v Speaker 1>and a lot of confusion in the aftermath. Mean, do

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<v Speaker 1>you end up with one country saying, hang on, you're

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<v Speaker 1>not complying and one country is saying, I'm not quite

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<v Speaker 1>sure what we're supposed to be complying too. And if

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<v Speaker 1>those understandings are so general, it's very easy to accuse

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<v Speaker 1>the other country of not making good on it. And

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<v Speaker 1>it might not be because of ill intent, but the

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<v Speaker 1>other country simply doesn't quite know, They have maybe a

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<v Speaker 1>perception in their mind of what the arrangements are versus

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<v Speaker 1>the other. So a real risk in all of this

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<v Speaker 1>is you do get a lot of confusion in implementing

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<v Speaker 1>the agreement even its broadest terms. And also how do

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<v Speaker 1>you then get the meat on the bone. So the

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<v Speaker 1>problem is how do you go from those very broad

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<v Speaker 1>frameworks into something much more detailed, and how do you

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<v Speaker 1>get the impetus for that to go. Donald Trump seemingly

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<v Speaker 1>just wants the headline figures and moves on. But where

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<v Speaker 1>is the push coming to really sit down and tackle

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<v Speaker 1>the more complex issues.

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<v Speaker 2>Could other countries take the same approach that Donald Trump

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<v Speaker 2>and the United States have taken to trade? Could this

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<v Speaker 2>actually be a new form of trade relations that's now emerging.

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<v Speaker 1>Well, it does seem that getting just something on paper

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<v Speaker 1>may be an approach that other countries take too, sort

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<v Speaker 1>of a trade light approach and MoU you know, keep

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<v Speaker 1>the detail for later and at least get something down

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<v Speaker 1>so you avoid an escalating trade war with other countries.

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<v Speaker 1>And so you know, for a lot of countries, things

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<v Speaker 1>around the movement of people services, that's all very complex.

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<v Speaker 1>So that might be one way to get something down initially.

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<v Speaker 1>But again it's all about your leverage. It's easy for

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<v Speaker 1>Donald Trump to take this approach, which is quite a

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<v Speaker 1>lot of stick and using the clout of the US

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<v Speaker 1>to force things over the line, when you're the biggest

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<v Speaker 1>player in the room, if you're a much smaller country,

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<v Speaker 1>your leverage is a lot smaller and your ability to

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<v Speaker 1>negotiate even these kinds of frameworks diminishes. I mean, if

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<v Speaker 1>you're a big block like the EU, a country like China,

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<v Speaker 1>but even a country like Japan has had a lot

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<v Speaker 1>of struggles here with the US despite being a massive

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<v Speaker 1>investor in the US, despite having that trade clout. Canada equally,

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<v Speaker 1>and if those big countries are struggling, then the smaller

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<v Speaker 1>ones definitely will, and it doesn't feel like it's a

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<v Speaker 1>template therefore that they could adopt.

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<v Speaker 2>Okay, rosellad mason Er, EMEA news director. Thank you very much.

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<v Speaker 2>For more explanations like this from our team of three

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<v Speaker 2>thousand journalists and analysts around the world, go to Bloomberg

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<v Speaker 2>dot com slash explainers. I'm Stephen Carroll. This is here's why.

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<v Speaker 2>I'll be back next week with more. Thanks for listening.

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<v Speaker 1>Dus