1
00:00:00,280 --> 00:00:07,200
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:08,800 --> 00:00:11,399
Speaker 2: Another stunning turn of events in the trade war between

3
00:00:11,400 --> 00:00:14,600
Speaker 2: the US and China. Early Monday morning, the country said

4
00:00:14,640 --> 00:00:17,200
Speaker 2: in a joint statement that they'd slash tariffs on one

5
00:00:17,239 --> 00:00:21,000
Speaker 2: another for ninety days as they continue talks. The combined

6
00:00:21,040 --> 00:00:23,360
Speaker 2: one hundred and forty five percent tariffs the US had

7
00:00:23,440 --> 00:00:26,840
Speaker 2: levied on Chinese imports are going down to thirty percent

8
00:00:27,280 --> 00:00:30,160
Speaker 2: and China is rolling back It's one hundred and twenty five

9
00:00:30,160 --> 00:00:32,000
Speaker 2: percent tariffs to ten percent.

10
00:00:32,200 --> 00:00:36,880
Speaker 3: Yesterday, we achieved a total reset with China after productive

11
00:00:36,920 --> 00:00:37,960
Speaker 3: talks in Geneva.

12
00:00:38,240 --> 00:00:41,519
Speaker 2: It's a far cry from President Trump's past statements. He

13
00:00:41,600 --> 00:00:44,680
Speaker 2: once called the US's trade relationship with China quote the

14
00:00:44,760 --> 00:00:47,200
Speaker 2: greatest theft in the history of the world.

15
00:00:47,400 --> 00:00:50,440
Speaker 3: The talks in Geneva were very friendly. The relationship is

16
00:00:50,560 --> 00:00:53,519
Speaker 3: very good. We're not looking to hurt China. China is

17
00:00:53,560 --> 00:00:54,600
Speaker 3: being heard very badly.

18
00:00:54,880 --> 00:00:58,440
Speaker 2: On Bloomberg TV this morning, US Treasury Secretary Scott Bessett

19
00:00:58,560 --> 00:01:02,360
Speaker 2: called the current tariffs quote a floor for further negotiations,

20
00:01:02,800 --> 00:01:05,000
Speaker 2: and says there's now a process in place to avoid

21
00:01:05,080 --> 00:01:05,880
Speaker 2: further escalation.

22
00:01:06,319 --> 00:01:10,479
Speaker 4: I think they understand that we are focused on fair trade,

23
00:01:10,880 --> 00:01:16,040
Speaker 4: that this gigantic deficit that we have with them, that

24
00:01:16,240 --> 00:01:18,840
Speaker 4: it didn't happen last year, It didn't happen there before,

25
00:01:18,959 --> 00:01:20,400
Speaker 4: It's happened over decades.

26
00:01:20,840 --> 00:01:24,320
Speaker 2: Stocks rebounded sharply following the news and comments by President

27
00:01:24,319 --> 00:01:27,119
Speaker 2: Trump that he might speak to President Chieshin Ping later

28
00:01:27,160 --> 00:01:33,600
Speaker 2: this week. I'm David Gura, and this is the big

29
00:01:33,640 --> 00:01:37,360
Speaker 2: take from Bloomberg News today. On the show, surprisingly fruitful

30
00:01:37,400 --> 00:01:41,480
Speaker 2: negotiations over the weekend lowered tariffs with China and buoyed markets,

31
00:01:41,720 --> 00:01:44,880
Speaker 2: but a lot of uncertainty remains. I sat down with

32
00:01:44,880 --> 00:01:48,920
Speaker 2: Bloomberg Treasury reporter Dan Flatley to discuss the negotiations and

33
00:01:48,960 --> 00:01:57,080
Speaker 2: what could lie ahead. Well, Dan wall Street is very

34
00:01:57,080 --> 00:02:00,360
Speaker 2: clearly cheering this news. How significant is it this agreement.

35
00:02:00,720 --> 00:02:02,960
Speaker 1: I think it's significant in a couple of ways. One

36
00:02:03,000 --> 00:02:06,720
Speaker 1: is that it far exceeded people's expectations going into this weekend.

37
00:02:06,920 --> 00:02:10,679
Speaker 1: Treasury Secretary Scott Bessent kind of downplayed the expectations a

38
00:02:10,720 --> 00:02:14,239
Speaker 1: little bit. Last week. Trump floated this idea of maybe

39
00:02:14,280 --> 00:02:17,160
Speaker 1: taking the tariffs down to eighty percent. Folks that I

40
00:02:17,200 --> 00:02:19,720
Speaker 1: talked to ahead of this weekend were sort of saying

41
00:02:19,800 --> 00:02:22,320
Speaker 1: the Chinese may walk out of this negotiation. They may

42
00:02:22,440 --> 00:02:24,840
Speaker 1: just say this is not worth it to us. I

43
00:02:24,880 --> 00:02:27,440
Speaker 1: think that what we got, and the reason why stocks

44
00:02:27,440 --> 00:02:29,360
Speaker 1: are on a tear right now is because this is

45
00:02:29,520 --> 00:02:32,400
Speaker 1: way below any expectations that we had. So we're talking

46
00:02:32,480 --> 00:02:35,840
Speaker 1: about US tariffs on Chinese goods of about thirty percent

47
00:02:36,440 --> 00:02:39,160
Speaker 1: when you add everything together, that's way down from one

48
00:02:39,240 --> 00:02:41,600
Speaker 1: hundred and forty five percent. It's not nothing. I mean,

49
00:02:41,600 --> 00:02:44,560
Speaker 1: it's more tariffs than existed on January first this year.

50
00:02:44,919 --> 00:02:47,880
Speaker 1: But certainly it seems to indicate and the folks that

51
00:02:47,919 --> 00:02:50,560
Speaker 1: I've heard and talked to in the days an hour

52
00:02:50,680 --> 00:02:54,240
Speaker 1: since this deal was worked on and announced sort of

53
00:02:54,360 --> 00:02:56,280
Speaker 1: seemed to think that this is a sign that there

54
00:02:56,320 --> 00:02:59,079
Speaker 1: will be some deal further on down the line. And

55
00:02:59,160 --> 00:03:00,880
Speaker 1: I think Bessent talk about this a little bit in

56
00:03:00,880 --> 00:03:03,800
Speaker 1: one of his TV appearances this morning, that it's really

57
00:03:03,840 --> 00:03:07,480
Speaker 1: the expectation that there will be some bigger deal down

58
00:03:07,520 --> 00:03:10,200
Speaker 1: the road that has kind of stocks where they are today.

59
00:03:10,440 --> 00:03:12,359
Speaker 2: We'll dig into all of that before we get there.

60
00:03:12,440 --> 00:03:14,520
Speaker 2: Could you just set the scene for us what these

61
00:03:14,560 --> 00:03:17,720
Speaker 2: meetings looked like. They took place in Geneva in Switzerland.

62
00:03:18,800 --> 00:03:22,480
Speaker 1: Yeah, it's interesting the location that was chosen sort of

63
00:03:22,520 --> 00:03:25,840
Speaker 1: neutral territory for both parties. And the way that this

64
00:03:26,120 --> 00:03:29,040
Speaker 1: was initially kind of talked about by the Treasury was

65
00:03:29,080 --> 00:03:31,600
Speaker 1: this idea of, oh, we just were going to be

66
00:03:31,600 --> 00:03:34,880
Speaker 1: in Switzerland anyway, so mine as well meet with the Chinese.

67
00:03:34,920 --> 00:03:37,880
Speaker 1: It was very nonchalant, and I think that was intentional

68
00:03:37,960 --> 00:03:41,120
Speaker 1: because they didn't want to set expectations too high. At

69
00:03:41,120 --> 00:03:44,840
Speaker 1: the same time, the meetings were largely sort of on

70
00:03:45,040 --> 00:03:48,760
Speaker 1: the Chinese's terms, you know, the negotiators from China on

71
00:03:48,840 --> 00:03:51,200
Speaker 1: their terms, in the sense that they didn't want a

72
00:03:51,200 --> 00:03:55,120
Speaker 1: lot of media attention around this. They wanted the negotiations

73
00:03:55,160 --> 00:03:57,960
Speaker 1: to play out behind closed doors. They really were big

74
00:03:58,000 --> 00:04:01,800
Speaker 1: on this idea of the US approaching China with respect,

75
00:04:02,440 --> 00:04:04,480
Speaker 1: and so you saw a little bit of that too

76
00:04:04,800 --> 00:04:07,920
Speaker 1: in how all this was stage managed. And obviously there

77
00:04:08,000 --> 00:04:11,280
Speaker 1: was this idea of Okay, we'll start the talks on Saturday,

78
00:04:11,480 --> 00:04:13,600
Speaker 1: we'll see how things go. If things go well, if

79
00:04:13,600 --> 00:04:16,279
Speaker 1: there's more to discuss, we'll meet on Sunday. They met

80
00:04:16,279 --> 00:04:19,520
Speaker 1: on Sunday. Then they had the announcement early this morning

81
00:04:19,640 --> 00:04:23,839
Speaker 1: US time in Geneva. It was very carefully calibrated and orchestrated,

82
00:04:24,120 --> 00:04:27,000
Speaker 1: and so what I think you see is this idea

83
00:04:27,040 --> 00:04:29,839
Speaker 1: of a mechanism, a quote unquote mechanism. That's what Besson

84
00:04:29,920 --> 00:04:31,960
Speaker 1: has talked about, and he's even talked about sort of

85
00:04:31,960 --> 00:04:34,680
Speaker 1: this idea of a Geneva mechanism or some way in

86
00:04:34,720 --> 00:04:37,480
Speaker 1: which these talks can continue. And I think that it

87
00:04:37,520 --> 00:04:41,359
Speaker 1: would reflect broadly this kind of idea, very discrete, carefully

88
00:04:41,360 --> 00:04:44,440
Speaker 1: calibrated language around all of this stuff, which is in

89
00:04:44,520 --> 00:04:46,200
Speaker 1: part what the Chinese have asked for.

90
00:04:47,279 --> 00:04:49,919
Speaker 2: It's about tariffs, but it's about more than that, isn't it.

91
00:04:50,000 --> 00:04:51,599
Speaker 2: I know that they were mentioned here kind of non

92
00:04:51,680 --> 00:04:53,839
Speaker 2: tariff countermeasures that have been put in place.

93
00:04:54,200 --> 00:04:57,240
Speaker 1: Right Besssett has been big on this idea of non

94
00:04:57,320 --> 00:05:00,040
Speaker 1: tariff barriers. And one of the things that he he

95
00:05:00,440 --> 00:05:02,440
Speaker 1: has said and talked about, and that Trump has talked

96
00:05:02,440 --> 00:05:04,440
Speaker 1: about a little bit as well, is that China is

97
00:05:04,440 --> 00:05:06,720
Speaker 1: going to remove some of those non tariff barriers to

98
00:05:06,920 --> 00:05:10,200
Speaker 1: US businesses doing business in China. They want to see

99
00:05:10,200 --> 00:05:13,599
Speaker 1: a rebalancing. They want to see China open its markets

100
00:05:13,640 --> 00:05:16,720
Speaker 1: to US goods. They want to see China balance its

101
00:05:16,839 --> 00:05:21,040
Speaker 1: economic profile toward not just production but also consumption. They

102
00:05:21,040 --> 00:05:24,520
Speaker 1: want to see the US up its production manufacturing production

103
00:05:24,600 --> 00:05:27,359
Speaker 1: here at home and not just focus on consumption. So

104
00:05:27,400 --> 00:05:29,640
Speaker 1: they're trying to strike this balance. So I think if

105
00:05:29,680 --> 00:05:32,200
Speaker 1: you were to ask Scott Bessett what he wants to

106
00:05:32,200 --> 00:05:33,760
Speaker 1: see out of all of this in the end, it

107
00:05:33,800 --> 00:05:37,280
Speaker 1: would be some type of grand rebalancing where you have

108
00:05:37,360 --> 00:05:40,040
Speaker 1: a little bit of a national security overlay to all

109
00:05:40,080 --> 00:05:42,080
Speaker 1: of this, which is about supply chains and so forth,

110
00:05:42,080 --> 00:05:45,080
Speaker 1: but also about economic security. Now, whether we actually get

111
00:05:45,080 --> 00:05:47,160
Speaker 1: to that is a kind of a separate question, and

112
00:05:47,279 --> 00:05:49,920
Speaker 1: the events of this past weekend seem to suggest that

113
00:05:50,000 --> 00:05:52,520
Speaker 1: there is a pain point at which the Trump administration

114
00:05:52,880 --> 00:05:55,400
Speaker 1: may be looking at giving up some of those broader

115
00:05:55,440 --> 00:05:58,799
Speaker 1: goals in order to not do lasting harm to the economy.

116
00:05:58,800 --> 00:06:00,440
Speaker 1: So that's one of the things that we're keeping an

117
00:06:00,440 --> 00:06:01,760
Speaker 1: eye on is all this plays out.

118
00:06:01,920 --> 00:06:04,240
Speaker 2: I want to get back to Treasury Secretary Best and

119
00:06:04,240 --> 00:06:06,560
Speaker 2: subjectives here in a minute. Before we get there. What

120
00:06:06,720 --> 00:06:08,400
Speaker 2: wasn't discussed over the course of the weekend.

121
00:06:08,720 --> 00:06:10,719
Speaker 1: Well, one of the things that came up is this

122
00:06:10,800 --> 00:06:14,680
Speaker 1: idea of fentanyl and China shipping precursor chemicals for the

123
00:06:14,680 --> 00:06:18,520
Speaker 1: production of fentanyl to Mexico and other countries in order

124
00:06:18,560 --> 00:06:21,599
Speaker 1: to basically get that drug into the United States, and

125
00:06:21,680 --> 00:06:25,039
Speaker 1: so China sent one of its national security officials to

126
00:06:25,240 --> 00:06:27,840
Speaker 1: Geneva to discuss this issue. The US sent a national

127
00:06:27,920 --> 00:06:31,440
Speaker 1: security official as well to discuss this issue, but it's

128
00:06:31,480 --> 00:06:35,880
Speaker 1: not clear whether the broader national security issues around China

129
00:06:36,200 --> 00:06:40,240
Speaker 1: came up at all visa VI Taiwan semiconductor issues, the

130
00:06:40,320 --> 00:06:44,360
Speaker 1: steel industry, pharmaceuticals is another one. Lots of different items

131
00:06:44,400 --> 00:06:47,159
Speaker 1: that have been talked about in terms of teriffs coming

132
00:06:47,200 --> 00:06:50,240
Speaker 1: on those products or those services or those goods further

133
00:06:50,279 --> 00:06:52,640
Speaker 1: down the road. So that was not really addressed in

134
00:06:52,680 --> 00:06:55,280
Speaker 1: this discussion, and this was narrowly focused on trade.

135
00:06:55,400 --> 00:06:57,520
Speaker 2: Dan, I want to have you describe the backdrop to

136
00:06:57,640 --> 00:07:00,520
Speaker 2: these talks and maybe the forcing mechan and then brought

137
00:07:00,560 --> 00:07:02,080
Speaker 2: these two sides to the table. I don't know if

138
00:07:02,080 --> 00:07:04,880
Speaker 2: we know yet who initiated this in earnest, but how

139
00:07:04,880 --> 00:07:07,039
Speaker 2: did we get here and sort of what was playing

140
00:07:07,040 --> 00:07:09,760
Speaker 2: out more broadly in trade that made this something that

141
00:07:09,800 --> 00:07:12,080
Speaker 2: I think both sides recognized needed to happen.

142
00:07:12,480 --> 00:07:14,440
Speaker 1: So I think there are a couple of things. One

143
00:07:14,520 --> 00:07:16,280
Speaker 1: of the main things that we've been watching is this

144
00:07:16,360 --> 00:07:20,000
Speaker 1: question of empty shelves in the US. So there's been

145
00:07:20,040 --> 00:07:23,440
Speaker 1: reporting and We've done some great reporting on container ships

146
00:07:23,480 --> 00:07:26,000
Speaker 1: cargo ships coming from China that have not either made

147
00:07:26,000 --> 00:07:27,840
Speaker 1: it to US shores or have been held up or

148
00:07:27,840 --> 00:07:30,720
Speaker 1: have turned around, or other issues like that. So I

149
00:07:30,760 --> 00:07:32,840
Speaker 1: do think that that was a real fear, as well

150
00:07:32,880 --> 00:07:36,000
Speaker 1: as what we call rare Earth's basically critical minerals around

151
00:07:36,480 --> 00:07:38,440
Speaker 1: magnets and other sorts of things that go into a

152
00:07:38,440 --> 00:07:41,440
Speaker 1: lot of consumer products and a lot of defense consumer products.

153
00:07:41,520 --> 00:07:43,400
Speaker 1: So I think the US was getting nervous about that.

154
00:07:43,480 --> 00:07:45,480
Speaker 1: I think that Chinese were sort of getting nervous on

155
00:07:45,520 --> 00:07:49,480
Speaker 1: their end about companies like Apple and others potentially pulling out,

156
00:07:49,960 --> 00:07:52,360
Speaker 1: upsetting sort of their long term plans for how they

157
00:07:52,440 --> 00:07:55,120
Speaker 1: want to reorient their economy. So I think that both

158
00:07:55,160 --> 00:07:57,320
Speaker 1: sides had an incentive to come to the table. I

159
00:07:57,320 --> 00:08:00,800
Speaker 1: think long term, as Secretary Best has talked about, the

160
00:08:00,880 --> 00:08:03,440
Speaker 1: US may have had more of an advantage as the

161
00:08:03,480 --> 00:08:05,520
Speaker 1: deficit country, as the country that was buying a lot

162
00:08:05,520 --> 00:08:07,760
Speaker 1: of these goods, whereas China had more of a short

163
00:08:07,840 --> 00:08:09,960
Speaker 1: term advantage in the country that supplies a lot of

164
00:08:10,000 --> 00:08:10,520
Speaker 1: these goods.

165
00:08:10,640 --> 00:08:13,320
Speaker 2: President Trump has teased being open to having a call

166
00:08:13,360 --> 00:08:16,520
Speaker 2: with President she He did that again today on Monday morning.

167
00:08:16,600 --> 00:08:19,239
Speaker 3: The relationship is very, very good. I'll speak to President

168
00:08:19,360 --> 00:08:21,080
Speaker 3: she maybe at the end of the week.

169
00:08:21,480 --> 00:08:25,360
Speaker 2: You mentioned that Geneva mechanism, this agreement to continue talking,

170
00:08:26,120 --> 00:08:29,160
Speaker 2: and I wonder if that's kind of as important. We're

171
00:08:29,160 --> 00:08:31,600
Speaker 2: almost as important as reducing these tariffs. Just this agreement

172
00:08:31,640 --> 00:08:33,640
Speaker 2: that dialogue is going to continue here.

173
00:08:33,960 --> 00:08:37,120
Speaker 1: Whatever we got today, the more important thing going forward

174
00:08:37,200 --> 00:08:39,760
Speaker 1: is this idea that these two sides will continue to talk.

175
00:08:39,800 --> 00:08:42,200
Speaker 1: Trump has actually talked about the European Union as being

176
00:08:42,200 --> 00:08:45,360
Speaker 1: potentially a harder party to negotiate with than China. But

177
00:08:45,440 --> 00:08:47,439
Speaker 1: as all of this plays out, the big question was

178
00:08:47,480 --> 00:08:49,600
Speaker 1: what happens with China, And just the fact that these

179
00:08:49,640 --> 00:08:52,280
Speaker 1: two sides are talking now suggests that there will be

180
00:08:52,840 --> 00:08:55,360
Speaker 1: some resolution to this agreement that's not going to do

181
00:08:55,480 --> 00:08:57,640
Speaker 1: lasting harmed to global economy at some point. So I

182
00:08:57,640 --> 00:08:59,360
Speaker 1: think that that is one of the things that, more

183
00:08:59,400 --> 00:09:02,679
Speaker 1: than anything else, has given markets some encouragement.

184
00:09:04,880 --> 00:09:07,320
Speaker 2: After the break. What a trade truce means for the

185
00:09:07,320 --> 00:09:10,880
Speaker 2: future of the US China relationship, plus what the upcoming

186
00:09:10,920 --> 00:09:22,080
Speaker 2: G seven meeting could reveal about the administration's approach to trade.

187
00:09:25,120 --> 00:09:27,600
Speaker 2: What does Secretary beston, what does President Trump want this

188
00:09:27,679 --> 00:09:30,719
Speaker 2: relationship to look like going forward the relationship between the

189
00:09:30,840 --> 00:09:32,679
Speaker 2: US and China. Have they been explicit about that.

190
00:09:33,480 --> 00:09:35,079
Speaker 1: I think they have been explicit about it in a

191
00:09:35,120 --> 00:09:37,959
Speaker 1: couple of ways. One thing is that they've talked about

192
00:09:37,960 --> 00:09:41,480
Speaker 1: this idea of certain goods being critical. You know, Besson

193
00:09:41,520 --> 00:09:43,640
Speaker 1: has talked a lot about critical minerals. He's talked about

194
00:09:43,640 --> 00:09:47,679
Speaker 1: these ingredients that go into very high end weapons systems

195
00:09:47,679 --> 00:09:49,640
Speaker 1: and things like that as being something that the US

196
00:09:49,760 --> 00:09:53,400
Speaker 1: needs to have access to no matter what happens in

197
00:09:53,480 --> 00:09:56,240
Speaker 1: terms of global trade. And right now, China does most

198
00:09:56,280 --> 00:09:59,559
Speaker 1: of the world's production around those types of elements and

199
00:09:59,559 --> 00:10:02,040
Speaker 1: those types of minerals, and so the US definitely wants

200
00:10:02,120 --> 00:10:04,640
Speaker 1: to see a lot of that production and processing it

201
00:10:04,720 --> 00:10:06,840
Speaker 1: and those sorts of things moved out of China, potentially

202
00:10:06,880 --> 00:10:09,240
Speaker 1: to the US, but maybe to some friendlier countries. And

203
00:10:09,280 --> 00:10:12,240
Speaker 1: that's been a longstanding issue for not just the Trump

204
00:10:12,240 --> 00:10:15,040
Speaker 1: administration but also the Biden folks as well. There's also

205
00:10:15,240 --> 00:10:19,240
Speaker 1: questions around semiconductors, steel industry. I think Bestent said earlier

206
00:10:19,240 --> 00:10:21,680
Speaker 1: today that they're going to protect the US steel industry.

207
00:10:21,840 --> 00:10:23,880
Speaker 1: There's a lot of these sort of national security focused

208
00:10:23,920 --> 00:10:26,640
Speaker 1: supply chain things that they really want to focus on

209
00:10:26,679 --> 00:10:28,880
Speaker 1: and that are sort of existing somewhere outside of this

210
00:10:29,000 --> 00:10:32,000
Speaker 1: idea of consumer goods. Now, it's interesting to hear them

211
00:10:32,040 --> 00:10:35,040
Speaker 1: talk about those things in those terms, because again, this

212
00:10:35,080 --> 00:10:37,959
Speaker 1: has been a long standing issue for successive US administrations,

213
00:10:38,000 --> 00:10:40,480
Speaker 1: going back to the first Trump administration, so it's not

214
00:10:40,640 --> 00:10:43,760
Speaker 1: something that's totally new. What we see more of is

215
00:10:43,800 --> 00:10:47,199
Speaker 1: this idea of rebalancing consumption and production, and that's really

216
00:10:47,240 --> 00:10:50,400
Speaker 1: something that's unique to Bessent and Trump, and you kind

217
00:10:50,400 --> 00:10:52,400
Speaker 1: of have to look at what the administration said that

218
00:10:52,440 --> 00:10:54,640
Speaker 1: they were going to do when they started this whole thing,

219
00:10:54,640 --> 00:10:57,760
Speaker 1: which was to move more manufacturing to the US and

220
00:10:57,960 --> 00:11:00,520
Speaker 1: using terris as sort of a wall to encourage companies

221
00:11:00,559 --> 00:11:02,800
Speaker 1: to come here to do that. What we're seeing now

222
00:11:02,880 --> 00:11:05,080
Speaker 1: is sort of a hybrid where we're not seeing as

223
00:11:05,120 --> 00:11:07,559
Speaker 1: much of an emphasis on that, but more this idea

224
00:11:07,640 --> 00:11:10,560
Speaker 1: of free trade and opening up foreign markets to US goods.

225
00:11:10,640 --> 00:11:12,800
Speaker 1: So it's kind of an open question about exactly what

226
00:11:12,840 --> 00:11:15,320
Speaker 1: the Trump administration wants when it comes to this sort

227
00:11:15,320 --> 00:11:18,480
Speaker 1: of economic policy. Do they want to have a very

228
00:11:18,520 --> 00:11:22,120
Speaker 1: protectionist agenda that's going to see more manufacturing move to

229
00:11:22,120 --> 00:11:25,120
Speaker 1: the US, or do they want more free trade where

230
00:11:25,160 --> 00:11:27,400
Speaker 1: you see foreign markets like China open up more to

231
00:11:27,520 --> 00:11:30,520
Speaker 1: US goods and products. So where this all kind of

232
00:11:30,559 --> 00:11:32,120
Speaker 1: ends up at the end of the day is a

233
00:11:32,160 --> 00:11:34,080
Speaker 1: little tricky. And one thing we always need to keep

234
00:11:34,120 --> 00:11:36,320
Speaker 1: in mind is the midterm elections coming up next year,

235
00:11:36,600 --> 00:11:38,640
Speaker 1: and so if we have some type of an economic

236
00:11:38,679 --> 00:11:42,400
Speaker 1: downturn that affects the way people are feeling in terms

237
00:11:42,400 --> 00:11:45,439
Speaker 1: of what they're paying for, how they're feeling in terms

238
00:11:45,440 --> 00:11:48,880
Speaker 1: of their economic security, that could affect the political outlook

239
00:11:48,920 --> 00:11:51,000
Speaker 1: for the final two years of Trump's last term in

240
00:11:51,040 --> 00:11:53,520
Speaker 1: office as far as we know. So that's all the

241
00:11:53,679 --> 00:11:55,000
Speaker 1: sort of things that are kind of hanging in the

242
00:11:55,080 --> 00:11:57,480
Speaker 1: balance as this deal is announced today.

243
00:11:58,200 --> 00:11:59,920
Speaker 2: I want to ask you what's likely to play at

244
00:12:00,080 --> 00:12:03,400
Speaker 2: out over the next ninety days. What is the US

245
00:12:03,440 --> 00:12:06,720
Speaker 2: looking for in specific? Is it just more good faith negotiation?

246
00:12:07,080 --> 00:12:09,280
Speaker 1: I think that they want to keep the talks going.

247
00:12:09,520 --> 00:12:12,320
Speaker 1: Number One, There's going to be a few sort of

248
00:12:12,360 --> 00:12:15,840
Speaker 1: international fora coming up where Bessant will have a chance

249
00:12:15,880 --> 00:12:20,160
Speaker 1: to interact with some representatives from China's government and also

250
00:12:20,280 --> 00:12:22,800
Speaker 1: from some other foreign governments. We have the G seven

251
00:12:22,840 --> 00:12:25,440
Speaker 1: Finance ministers meeting coming up in Canada in about a

252
00:12:25,480 --> 00:12:28,160
Speaker 1: week or so where he'll meet with the other G

253
00:12:28,280 --> 00:12:30,360
Speaker 1: seven nations, he'll have a chance to talk to some

254
00:12:30,440 --> 00:12:34,040
Speaker 1: of his EU counterparts about trade deals with the EU.

255
00:12:34,559 --> 00:12:37,320
Speaker 1: With China, I think that it's going to be almost

256
00:12:37,320 --> 00:12:40,640
Speaker 1: on this separate track, and it is really the critical track.

257
00:12:40,720 --> 00:12:44,079
Speaker 1: So Bessant has talked about fifteen to eighteen nations that

258
00:12:44,320 --> 00:12:47,720
Speaker 1: the US runs large trade deficits with, and the eighteenth

259
00:12:47,800 --> 00:12:50,280
Speaker 1: nation is China. And for a long time they were

260
00:12:50,320 --> 00:12:53,439
Speaker 1: talking about China being sort of on the side, something

261
00:12:53,480 --> 00:12:56,640
Speaker 1: that was happening separately from the other negotiations. And I

262
00:12:56,640 --> 00:12:59,480
Speaker 1: think you'll continue to see that. And you see how

263
00:12:59,840 --> 00:13:03,839
Speaker 1: the the UK announcement was made with Keir Starmer calling

264
00:13:03,880 --> 00:13:06,520
Speaker 1: into the Oval office Trump sort of stage managing all

265
00:13:06,559 --> 00:13:08,959
Speaker 1: of that. The China negotiations were very different. A couple

266
00:13:09,000 --> 00:13:11,880
Speaker 1: of representatives from the US government, high level representatives but

267
00:13:12,120 --> 00:13:15,280
Speaker 1: not President Trump, went to Geneva, went to a third

268
00:13:15,400 --> 00:13:19,960
Speaker 1: country location, met with their interlock uters from China, did

269
00:13:20,000 --> 00:13:23,160
Speaker 1: all this behind closed doors, came out with a major

270
00:13:23,400 --> 00:13:26,079
Speaker 1: concession on both sides to the current state of play,

271
00:13:26,559 --> 00:13:29,040
Speaker 1: and then with a promise to continue to talk. Now,

272
00:13:29,040 --> 00:13:31,560
Speaker 1: what is going to be somewhat elusive is what the

273
00:13:31,600 --> 00:13:34,560
Speaker 1: grand bargain would look like. And again that's where you

274
00:13:34,640 --> 00:13:36,480
Speaker 1: kind of get all of this coming into play. What

275
00:13:36,520 --> 00:13:39,280
Speaker 1: does Trump actually want out of this deal? And how

276
00:13:39,280 --> 00:13:42,079
Speaker 1: do politics play into that as well, because you may

277
00:13:42,120 --> 00:13:44,920
Speaker 1: have to not let the perfect be the enemy of

278
00:13:44,960 --> 00:13:48,600
Speaker 1: the good and get something that is serviceable to get

279
00:13:48,600 --> 00:13:51,439
Speaker 1: through the midterms and to get to the next presidential election.

280
00:13:52,040 --> 00:13:53,680
Speaker 2: Dan, I want to get a sense from you of

281
00:13:53,679 --> 00:13:57,040
Speaker 2: what this means for companies who have been dealing with

282
00:13:57,040 --> 00:14:01,679
Speaker 2: this dramatic increase in uncertainty. Bloomberg Economics estimating that the

283
00:14:01,720 --> 00:14:04,320
Speaker 2: new tariffs could still lead to nearly seventy percent drop

284
00:14:04,320 --> 00:14:06,440
Speaker 2: and bilateral trade between the US and China and the

285
00:14:06,440 --> 00:14:10,160
Speaker 2: medium term. We see the market reaction, But what does

286
00:14:10,200 --> 00:14:13,240
Speaker 2: this do to allay that sense that they that companies

287
00:14:13,280 --> 00:14:14,800
Speaker 2: really don't know how this is going to play on?

288
00:14:15,640 --> 00:14:18,440
Speaker 1: Well, I don't think it helps in that regard, David.

289
00:14:18,760 --> 00:14:20,320
Speaker 1: You know a couple of things to keep in mind

290
00:14:20,320 --> 00:14:22,760
Speaker 1: with all of this. What we've heard from companies is

291
00:14:22,840 --> 00:14:25,960
Speaker 1: essentially they're frozen in place. They don't know, for instance,

292
00:14:25,960 --> 00:14:29,480
Speaker 1: whether they should continue investing, whether they should lay people off,

293
00:14:29,720 --> 00:14:31,480
Speaker 1: what moves that they should make because they don't know

294
00:14:31,520 --> 00:14:33,720
Speaker 1: whether the tariffs are going to be permanently in place

295
00:14:34,160 --> 00:14:37,080
Speaker 1: or whether they're going to be part of a trade negotiation.

296
00:14:37,720 --> 00:14:40,000
Speaker 1: So all of that is kind of locked in place.

297
00:14:40,040 --> 00:14:42,680
Speaker 1: And I was reading an economic analysis earlier today that

298
00:14:42,760 --> 00:14:48,040
Speaker 1: suggested before any rigorous analysis can be made of this

299
00:14:48,080 --> 00:14:51,080
Speaker 1: weekend's agreement, this all needs to be listed in the

300
00:14:51,080 --> 00:14:55,160
Speaker 1: federal register. That's not how Trump works. His approach to

301
00:14:55,200 --> 00:14:58,200
Speaker 1: these matters is to get things done quickly, to get

302
00:14:58,200 --> 00:15:01,160
Speaker 1: them done expeditiously, to get them done on terms that

303
00:15:01,200 --> 00:15:03,920
Speaker 1: he sees as most favorable to the United States. And

304
00:15:03,960 --> 00:15:07,360
Speaker 1: these sort of niceties of government process, listing things in

305
00:15:07,400 --> 00:15:10,960
Speaker 1: their federal register, rolling out policy in a very measured

306
00:15:10,960 --> 00:15:13,720
Speaker 1: and methodical way, That's not how he operates. And so

307
00:15:13,880 --> 00:15:16,800
Speaker 1: I think businesses are looking to see how this will

308
00:15:16,800 --> 00:15:18,760
Speaker 1: all play out, and as they're trying to read the

309
00:15:18,800 --> 00:15:21,360
Speaker 1: tea leaves, they have to go by what they're hearing

310
00:15:21,400 --> 00:15:24,880
Speaker 1: and seeing from Trump administration officials. And so the idea

311
00:15:24,920 --> 00:15:27,000
Speaker 1: that we have a deal or some kind of agreement

312
00:15:27,080 --> 00:15:29,920
Speaker 1: to take down the temperature for a period of time

313
00:15:30,000 --> 00:15:33,400
Speaker 1: seems to suggest that there will be some deal in

314
00:15:33,440 --> 00:15:36,520
Speaker 1: the end, that things are moving in that direction because Otherwise,

315
00:15:36,560 --> 00:15:38,960
Speaker 1: why would you even do a ninety day pause. There

316
00:15:38,960 --> 00:15:41,200
Speaker 1: would be no point in doing that. So I think

317
00:15:41,240 --> 00:15:44,440
Speaker 1: that that is one of the things that businesses corporate

318
00:15:44,560 --> 00:15:48,880
Speaker 1: entities are digesting and trying to suss out. But again,

319
00:15:49,280 --> 00:15:51,400
Speaker 1: let's keep in mind that no matter what happens, there's

320
00:15:51,440 --> 00:15:53,920
Speaker 1: still going to be elevated tariff rates, and so that

321
00:15:54,080 --> 00:15:57,480
Speaker 1: is going to have an impact on the economy. Exactly

322
00:15:57,520 --> 00:16:00,240
Speaker 1: how all that plays out with these deals that are

323
00:16:00,240 --> 00:16:02,600
Speaker 1: being negotiated and including with China as yet to be seen,

324
00:16:02,640 --> 00:16:04,480
Speaker 1: but that's sort of the state of play at the moment.

325
00:16:05,560 --> 00:16:12,240
Speaker 2: Dan, Thank you very much. Thanks David, this is the

326
00:16:12,240 --> 00:16:15,440
Speaker 2: Big Take from Bloomberg News. I'm David Gera. This episode

327
00:16:15,480 --> 00:16:18,960
Speaker 2: is produced by Julia Press with support from Eleanor Harrison Dengate.

328
00:16:19,480 --> 00:16:22,600
Speaker 2: It was edited by Tracy Samuelson and Sarah Halzac. It

329
00:16:22,640 --> 00:16:25,120
Speaker 2: was fact checked by Rachel Lewis Chrisky and mixed and

330
00:16:25,160 --> 00:16:28,320
Speaker 2: sound designed by Alex Segura with Julia Weaver. Our deputy

331
00:16:28,360 --> 00:16:32,120
Speaker 2: executive producer. Our senior producer is Naomi Shaven. Our senior

332
00:16:32,240 --> 00:16:35,880
Speaker 2: editor is Elizabeth Ponso. Our executive producer is Nicole Beemster

333
00:16:35,920 --> 00:16:39,440
Speaker 2: Boor Sage Bauman is Bloomberg's head of podcasts. If you

334
00:16:39,520 --> 00:16:41,640
Speaker 2: liked this episode, make sure to subscribe and review The

335
00:16:41,640 --> 00:16:44,240
Speaker 2: Big Take wherever you listen to podcasts. It helps people

336
00:16:44,280 --> 00:16:47,280
Speaker 2: find the show. Thanks for listening. We'll be back tomorrow