WEBVTT - The US and China’s ‘Total Reset’ on Trade

0:00:00.280 --> 0:00:07.200
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:08.800 --> 0:00:11.399
<v Speaker 2>Another stunning turn of events in the trade war between

0:00:11.400 --> 0:00:14.600
<v Speaker 2>the US and China. Early Monday morning, the country said

0:00:14.640 --> 0:00:17.200
<v Speaker 2>in a joint statement that they'd slash tariffs on one

0:00:17.239 --> 0:00:21.000
<v Speaker 2>another for ninety days as they continue talks. The combined

0:00:21.040 --> 0:00:23.360
<v Speaker 2>one hundred and forty five percent tariffs the US had

0:00:23.440 --> 0:00:26.840
<v Speaker 2>levied on Chinese imports are going down to thirty percent

0:00:27.280 --> 0:00:30.160
<v Speaker 2>and China is rolling back It's one hundred and twenty five

0:00:30.160 --> 0:00:32.000
<v Speaker 2>percent tariffs to ten percent.

0:00:32.200 --> 0:00:36.880
<v Speaker 3>Yesterday, we achieved a total reset with China after productive

0:00:36.920 --> 0:00:37.960
<v Speaker 3>talks in Geneva.

0:00:38.240 --> 0:00:41.519
<v Speaker 2>It's a far cry from President Trump's past statements. He

0:00:41.600 --> 0:00:44.680
<v Speaker 2>once called the US's trade relationship with China quote the

0:00:44.760 --> 0:00:47.200
<v Speaker 2>greatest theft in the history of the world.

0:00:47.400 --> 0:00:50.440
<v Speaker 3>The talks in Geneva were very friendly. The relationship is

0:00:50.560 --> 0:00:53.519
<v Speaker 3>very good. We're not looking to hurt China. China is

0:00:53.560 --> 0:00:54.600
<v Speaker 3>being heard very badly.

0:00:54.880 --> 0:00:58.440
<v Speaker 2>On Bloomberg TV this morning, US Treasury Secretary Scott Bessett

0:00:58.560 --> 0:01:02.360
<v Speaker 2>called the current tariffs quote a floor for further negotiations,

0:01:02.800 --> 0:01:05.000
<v Speaker 2>and says there's now a process in place to avoid

0:01:05.080 --> 0:01:05.880
<v Speaker 2>further escalation.

0:01:06.319 --> 0:01:10.479
<v Speaker 4>I think they understand that we are focused on fair trade,

0:01:10.880 --> 0:01:16.040
<v Speaker 4>that this gigantic deficit that we have with them, that

0:01:16.240 --> 0:01:18.840
<v Speaker 4>it didn't happen last year, It didn't happen there before,

0:01:18.959 --> 0:01:20.400
<v Speaker 4>It's happened over decades.

0:01:20.840 --> 0:01:24.320
<v Speaker 2>Stocks rebounded sharply following the news and comments by President

0:01:24.319 --> 0:01:27.119
<v Speaker 2>Trump that he might speak to President Chieshin Ping later

0:01:27.160 --> 0:01:33.600
<v Speaker 2>this week. I'm David Gura, and this is the big

0:01:33.640 --> 0:01:37.360
<v Speaker 2>take from Bloomberg News today. On the show, surprisingly fruitful

0:01:37.400 --> 0:01:41.480
<v Speaker 2>negotiations over the weekend lowered tariffs with China and buoyed markets,

0:01:41.720 --> 0:01:44.880
<v Speaker 2>but a lot of uncertainty remains. I sat down with

0:01:44.880 --> 0:01:48.920
<v Speaker 2>Bloomberg Treasury reporter Dan Flatley to discuss the negotiations and

0:01:48.960 --> 0:01:57.080
<v Speaker 2>what could lie ahead. Well, Dan wall Street is very

0:01:57.080 --> 0:02:00.360
<v Speaker 2>clearly cheering this news. How significant is it this agreement.

0:02:00.720 --> 0:02:02.960
<v Speaker 1>I think it's significant in a couple of ways. One

0:02:03.000 --> 0:02:06.720
<v Speaker 1>is that it far exceeded people's expectations going into this weekend.

0:02:06.920 --> 0:02:10.679
<v Speaker 1>Treasury Secretary Scott Bessent kind of downplayed the expectations a

0:02:10.720 --> 0:02:14.239
<v Speaker 1>little bit. Last week. Trump floated this idea of maybe

0:02:14.280 --> 0:02:17.160
<v Speaker 1>taking the tariffs down to eighty percent. Folks that I

0:02:17.200 --> 0:02:19.720
<v Speaker 1>talked to ahead of this weekend were sort of saying

0:02:19.800 --> 0:02:22.320
<v Speaker 1>the Chinese may walk out of this negotiation. They may

0:02:22.440 --> 0:02:24.840
<v Speaker 1>just say this is not worth it to us. I

0:02:24.880 --> 0:02:27.440
<v Speaker 1>think that what we got, and the reason why stocks

0:02:27.440 --> 0:02:29.360
<v Speaker 1>are on a tear right now is because this is

0:02:29.520 --> 0:02:32.400
<v Speaker 1>way below any expectations that we had. So we're talking

0:02:32.480 --> 0:02:35.840
<v Speaker 1>about US tariffs on Chinese goods of about thirty percent

0:02:36.440 --> 0:02:39.160
<v Speaker 1>when you add everything together, that's way down from one

0:02:39.240 --> 0:02:41.600
<v Speaker 1>hundred and forty five percent. It's not nothing. I mean,

0:02:41.600 --> 0:02:44.560
<v Speaker 1>it's more tariffs than existed on January first this year.

0:02:44.919 --> 0:02:47.880
<v Speaker 1>But certainly it seems to indicate and the folks that

0:02:47.919 --> 0:02:50.560
<v Speaker 1>I've heard and talked to in the days an hour

0:02:50.680 --> 0:02:54.240
<v Speaker 1>since this deal was worked on and announced sort of

0:02:54.360 --> 0:02:56.280
<v Speaker 1>seemed to think that this is a sign that there

0:02:56.320 --> 0:02:59.079
<v Speaker 1>will be some deal further on down the line. And

0:02:59.160 --> 0:03:00.880
<v Speaker 1>I think Bessent talk about this a little bit in

0:03:00.880 --> 0:03:03.800
<v Speaker 1>one of his TV appearances this morning, that it's really

0:03:03.840 --> 0:03:07.480
<v Speaker 1>the expectation that there will be some bigger deal down

0:03:07.520 --> 0:03:10.200
<v Speaker 1>the road that has kind of stocks where they are today.

0:03:10.440 --> 0:03:12.359
<v Speaker 2>We'll dig into all of that before we get there.

0:03:12.440 --> 0:03:14.520
<v Speaker 2>Could you just set the scene for us what these

0:03:14.560 --> 0:03:17.720
<v Speaker 2>meetings looked like. They took place in Geneva in Switzerland.

0:03:18.800 --> 0:03:22.480
<v Speaker 1>Yeah, it's interesting the location that was chosen sort of

0:03:22.520 --> 0:03:25.840
<v Speaker 1>neutral territory for both parties. And the way that this

0:03:26.120 --> 0:03:29.040
<v Speaker 1>was initially kind of talked about by the Treasury was

0:03:29.080 --> 0:03:31.600
<v Speaker 1>this idea of, oh, we just were going to be

0:03:31.600 --> 0:03:34.880
<v Speaker 1>in Switzerland anyway, so mine as well meet with the Chinese.

0:03:34.920 --> 0:03:37.880
<v Speaker 1>It was very nonchalant, and I think that was intentional

0:03:37.960 --> 0:03:41.120
<v Speaker 1>because they didn't want to set expectations too high. At

0:03:41.120 --> 0:03:44.840
<v Speaker 1>the same time, the meetings were largely sort of on

0:03:45.040 --> 0:03:48.760
<v Speaker 1>the Chinese's terms, you know, the negotiators from China on

0:03:48.840 --> 0:03:51.200
<v Speaker 1>their terms, in the sense that they didn't want a

0:03:51.200 --> 0:03:55.120
<v Speaker 1>lot of media attention around this. They wanted the negotiations

0:03:55.160 --> 0:03:57.960
<v Speaker 1>to play out behind closed doors. They really were big

0:03:58.000 --> 0:04:01.800
<v Speaker 1>on this idea of the US approaching China with respect,

0:04:02.440 --> 0:04:04.480
<v Speaker 1>and so you saw a little bit of that too

0:04:04.800 --> 0:04:07.920
<v Speaker 1>in how all this was stage managed. And obviously there

0:04:08.000 --> 0:04:11.280
<v Speaker 1>was this idea of Okay, we'll start the talks on Saturday,

0:04:11.480 --> 0:04:13.600
<v Speaker 1>we'll see how things go. If things go well, if

0:04:13.600 --> 0:04:16.279
<v Speaker 1>there's more to discuss, we'll meet on Sunday. They met

0:04:16.279 --> 0:04:19.520
<v Speaker 1>on Sunday. Then they had the announcement early this morning

0:04:19.640 --> 0:04:23.839
<v Speaker 1>US time in Geneva. It was very carefully calibrated and orchestrated,

0:04:24.120 --> 0:04:27.000
<v Speaker 1>and so what I think you see is this idea

0:04:27.040 --> 0:04:29.839
<v Speaker 1>of a mechanism, a quote unquote mechanism. That's what Besson

0:04:29.920 --> 0:04:31.960
<v Speaker 1>has talked about, and he's even talked about sort of

0:04:31.960 --> 0:04:34.680
<v Speaker 1>this idea of a Geneva mechanism or some way in

0:04:34.720 --> 0:04:37.480
<v Speaker 1>which these talks can continue. And I think that it

0:04:37.520 --> 0:04:41.359
<v Speaker 1>would reflect broadly this kind of idea, very discrete, carefully

0:04:41.360 --> 0:04:44.440
<v Speaker 1>calibrated language around all of this stuff, which is in

0:04:44.520 --> 0:04:46.200
<v Speaker 1>part what the Chinese have asked for.

0:04:47.279 --> 0:04:49.919
<v Speaker 2>It's about tariffs, but it's about more than that, isn't it.

0:04:50.000 --> 0:04:51.599
<v Speaker 2>I know that they were mentioned here kind of non

0:04:51.680 --> 0:04:53.839
<v Speaker 2>tariff countermeasures that have been put in place.

0:04:54.200 --> 0:04:57.240
<v Speaker 1>Right Besssett has been big on this idea of non

0:04:57.320 --> 0:05:00.040
<v Speaker 1>tariff barriers. And one of the things that he he

0:05:00.440 --> 0:05:02.440
<v Speaker 1>has said and talked about, and that Trump has talked

0:05:02.440 --> 0:05:04.440
<v Speaker 1>about a little bit as well, is that China is

0:05:04.440 --> 0:05:06.720
<v Speaker 1>going to remove some of those non tariff barriers to

0:05:06.920 --> 0:05:10.200
<v Speaker 1>US businesses doing business in China. They want to see

0:05:10.200 --> 0:05:13.599
<v Speaker 1>a rebalancing. They want to see China open its markets

0:05:13.640 --> 0:05:16.720
<v Speaker 1>to US goods. They want to see China balance its

0:05:16.839 --> 0:05:21.040
<v Speaker 1>economic profile toward not just production but also consumption. They

0:05:21.040 --> 0:05:24.520
<v Speaker 1>want to see the US up its production manufacturing production

0:05:24.600 --> 0:05:27.359
<v Speaker 1>here at home and not just focus on consumption. So

0:05:27.400 --> 0:05:29.640
<v Speaker 1>they're trying to strike this balance. So I think if

0:05:29.680 --> 0:05:32.200
<v Speaker 1>you were to ask Scott Bessett what he wants to

0:05:32.200 --> 0:05:33.760
<v Speaker 1>see out of all of this in the end, it

0:05:33.800 --> 0:05:37.280
<v Speaker 1>would be some type of grand rebalancing where you have

0:05:37.360 --> 0:05:40.040
<v Speaker 1>a little bit of a national security overlay to all

0:05:40.080 --> 0:05:42.080
<v Speaker 1>of this, which is about supply chains and so forth,

0:05:42.080 --> 0:05:45.080
<v Speaker 1>but also about economic security. Now, whether we actually get

0:05:45.080 --> 0:05:47.160
<v Speaker 1>to that is a kind of a separate question, and

0:05:47.279 --> 0:05:49.920
<v Speaker 1>the events of this past weekend seem to suggest that

0:05:50.000 --> 0:05:52.520
<v Speaker 1>there is a pain point at which the Trump administration

0:05:52.880 --> 0:05:55.400
<v Speaker 1>may be looking at giving up some of those broader

0:05:55.440 --> 0:05:58.799
<v Speaker 1>goals in order to not do lasting harm to the economy.

0:05:58.800 --> 0:06:00.440
<v Speaker 1>So that's one of the things that we're keeping an

0:06:00.440 --> 0:06:01.760
<v Speaker 1>eye on is all this plays out.

0:06:01.920 --> 0:06:04.240
<v Speaker 2>I want to get back to Treasury Secretary Best and

0:06:04.240 --> 0:06:06.560
<v Speaker 2>subjectives here in a minute. Before we get there. What

0:06:06.720 --> 0:06:08.400
<v Speaker 2>wasn't discussed over the course of the weekend.

0:06:08.720 --> 0:06:10.719
<v Speaker 1>Well, one of the things that came up is this

0:06:10.800 --> 0:06:14.680
<v Speaker 1>idea of fentanyl and China shipping precursor chemicals for the

0:06:14.680 --> 0:06:18.520
<v Speaker 1>production of fentanyl to Mexico and other countries in order

0:06:18.560 --> 0:06:21.599
<v Speaker 1>to basically get that drug into the United States, and

0:06:21.680 --> 0:06:25.039
<v Speaker 1>so China sent one of its national security officials to

0:06:25.240 --> 0:06:27.840
<v Speaker 1>Geneva to discuss this issue. The US sent a national

0:06:27.920 --> 0:06:31.440
<v Speaker 1>security official as well to discuss this issue, but it's

0:06:31.480 --> 0:06:35.880
<v Speaker 1>not clear whether the broader national security issues around China

0:06:36.200 --> 0:06:40.240
<v Speaker 1>came up at all visa VI Taiwan semiconductor issues, the

0:06:40.320 --> 0:06:44.360
<v Speaker 1>steel industry, pharmaceuticals is another one. Lots of different items

0:06:44.400 --> 0:06:47.159
<v Speaker 1>that have been talked about in terms of teriffs coming

0:06:47.200 --> 0:06:50.240
<v Speaker 1>on those products or those services or those goods further

0:06:50.279 --> 0:06:52.640
<v Speaker 1>down the road. So that was not really addressed in

0:06:52.680 --> 0:06:55.280
<v Speaker 1>this discussion, and this was narrowly focused on trade.

0:06:55.400 --> 0:06:57.520
<v Speaker 2>Dan, I want to have you describe the backdrop to

0:06:57.640 --> 0:07:00.520
<v Speaker 2>these talks and maybe the forcing mechan and then brought

0:07:00.560 --> 0:07:02.080
<v Speaker 2>these two sides to the table. I don't know if

0:07:02.080 --> 0:07:04.880
<v Speaker 2>we know yet who initiated this in earnest, but how

0:07:04.880 --> 0:07:07.039
<v Speaker 2>did we get here and sort of what was playing

0:07:07.040 --> 0:07:09.760
<v Speaker 2>out more broadly in trade that made this something that

0:07:09.800 --> 0:07:12.080
<v Speaker 2>I think both sides recognized needed to happen.

0:07:12.480 --> 0:07:14.440
<v Speaker 1>So I think there are a couple of things. One

0:07:14.520 --> 0:07:16.280
<v Speaker 1>of the main things that we've been watching is this

0:07:16.360 --> 0:07:20.000
<v Speaker 1>question of empty shelves in the US. So there's been

0:07:20.040 --> 0:07:23.440
<v Speaker 1>reporting and We've done some great reporting on container ships

0:07:23.480 --> 0:07:26.000
<v Speaker 1>cargo ships coming from China that have not either made

0:07:26.000 --> 0:07:27.840
<v Speaker 1>it to US shores or have been held up or

0:07:27.840 --> 0:07:30.720
<v Speaker 1>have turned around, or other issues like that. So I

0:07:30.760 --> 0:07:32.840
<v Speaker 1>do think that that was a real fear, as well

0:07:32.880 --> 0:07:36.000
<v Speaker 1>as what we call rare Earth's basically critical minerals around

0:07:36.480 --> 0:07:38.440
<v Speaker 1>magnets and other sorts of things that go into a

0:07:38.440 --> 0:07:41.440
<v Speaker 1>lot of consumer products and a lot of defense consumer products.

0:07:41.520 --> 0:07:43.400
<v Speaker 1>So I think the US was getting nervous about that.

0:07:43.480 --> 0:07:45.480
<v Speaker 1>I think that Chinese were sort of getting nervous on

0:07:45.520 --> 0:07:49.480
<v Speaker 1>their end about companies like Apple and others potentially pulling out,

0:07:49.960 --> 0:07:52.360
<v Speaker 1>upsetting sort of their long term plans for how they

0:07:52.440 --> 0:07:55.120
<v Speaker 1>want to reorient their economy. So I think that both

0:07:55.160 --> 0:07:57.320
<v Speaker 1>sides had an incentive to come to the table. I

0:07:57.320 --> 0:08:00.800
<v Speaker 1>think long term, as Secretary Best has talked about, the

0:08:00.880 --> 0:08:03.440
<v Speaker 1>US may have had more of an advantage as the

0:08:03.480 --> 0:08:05.520
<v Speaker 1>deficit country, as the country that was buying a lot

0:08:05.520 --> 0:08:07.760
<v Speaker 1>of these goods, whereas China had more of a short

0:08:07.840 --> 0:08:09.960
<v Speaker 1>term advantage in the country that supplies a lot of

0:08:10.000 --> 0:08:10.520
<v Speaker 1>these goods.

0:08:10.640 --> 0:08:13.320
<v Speaker 2>President Trump has teased being open to having a call

0:08:13.360 --> 0:08:16.520
<v Speaker 2>with President she He did that again today on Monday morning.

0:08:16.600 --> 0:08:19.239
<v Speaker 3>The relationship is very, very good. I'll speak to President

0:08:19.360 --> 0:08:21.080
<v Speaker 3>she maybe at the end of the week.

0:08:21.480 --> 0:08:25.360
<v Speaker 2>You mentioned that Geneva mechanism, this agreement to continue talking,

0:08:26.120 --> 0:08:29.160
<v Speaker 2>and I wonder if that's kind of as important. We're

0:08:29.160 --> 0:08:31.600
<v Speaker 2>almost as important as reducing these tariffs. Just this agreement

0:08:31.640 --> 0:08:33.640
<v Speaker 2>that dialogue is going to continue here.

0:08:33.960 --> 0:08:37.120
<v Speaker 1>Whatever we got today, the more important thing going forward

0:08:37.200 --> 0:08:39.760
<v Speaker 1>is this idea that these two sides will continue to talk.

0:08:39.800 --> 0:08:42.200
<v Speaker 1>Trump has actually talked about the European Union as being

0:08:42.200 --> 0:08:45.360
<v Speaker 1>potentially a harder party to negotiate with than China. But

0:08:45.440 --> 0:08:47.439
<v Speaker 1>as all of this plays out, the big question was

0:08:47.480 --> 0:08:49.600
<v Speaker 1>what happens with China, And just the fact that these

0:08:49.640 --> 0:08:52.280
<v Speaker 1>two sides are talking now suggests that there will be

0:08:52.840 --> 0:08:55.360
<v Speaker 1>some resolution to this agreement that's not going to do

0:08:55.480 --> 0:08:57.640
<v Speaker 1>lasting harmed to global economy at some point. So I

0:08:57.640 --> 0:08:59.360
<v Speaker 1>think that that is one of the things that, more

0:08:59.400 --> 0:09:02.679
<v Speaker 1>than anything else, has given markets some encouragement.

0:09:04.880 --> 0:09:07.320
<v Speaker 2>After the break. What a trade truce means for the

0:09:07.320 --> 0:09:10.880
<v Speaker 2>future of the US China relationship, plus what the upcoming

0:09:10.920 --> 0:09:22.080
<v Speaker 2>G seven meeting could reveal about the administration's approach to trade.

0:09:25.120 --> 0:09:27.600
<v Speaker 2>What does Secretary beston, what does President Trump want this

0:09:27.679 --> 0:09:30.719
<v Speaker 2>relationship to look like going forward the relationship between the

0:09:30.840 --> 0:09:32.679
<v Speaker 2>US and China. Have they been explicit about that.

0:09:33.480 --> 0:09:35.079
<v Speaker 1>I think they have been explicit about it in a

0:09:35.120 --> 0:09:37.959
<v Speaker 1>couple of ways. One thing is that they've talked about

0:09:37.960 --> 0:09:41.480
<v Speaker 1>this idea of certain goods being critical. You know, Besson

0:09:41.520 --> 0:09:43.640
<v Speaker 1>has talked a lot about critical minerals. He's talked about

0:09:43.640 --> 0:09:47.679
<v Speaker 1>these ingredients that go into very high end weapons systems

0:09:47.679 --> 0:09:49.640
<v Speaker 1>and things like that as being something that the US

0:09:49.760 --> 0:09:53.400
<v Speaker 1>needs to have access to no matter what happens in

0:09:53.480 --> 0:09:56.240
<v Speaker 1>terms of global trade. And right now, China does most

0:09:56.280 --> 0:09:59.559
<v Speaker 1>of the world's production around those types of elements and

0:09:59.559 --> 0:10:02.040
<v Speaker 1>those types of minerals, and so the US definitely wants

0:10:02.120 --> 0:10:04.640
<v Speaker 1>to see a lot of that production and processing it

0:10:04.720 --> 0:10:06.840
<v Speaker 1>and those sorts of things moved out of China, potentially

0:10:06.880 --> 0:10:09.240
<v Speaker 1>to the US, but maybe to some friendlier countries. And

0:10:09.280 --> 0:10:12.240
<v Speaker 1>that's been a longstanding issue for not just the Trump

0:10:12.240 --> 0:10:15.040
<v Speaker 1>administration but also the Biden folks as well. There's also

0:10:15.240 --> 0:10:19.240
<v Speaker 1>questions around semiconductors, steel industry. I think Bestent said earlier

0:10:19.240 --> 0:10:21.680
<v Speaker 1>today that they're going to protect the US steel industry.

0:10:21.840 --> 0:10:23.880
<v Speaker 1>There's a lot of these sort of national security focused

0:10:23.920 --> 0:10:26.640
<v Speaker 1>supply chain things that they really want to focus on

0:10:26.679 --> 0:10:28.880
<v Speaker 1>and that are sort of existing somewhere outside of this

0:10:29.000 --> 0:10:32.000
<v Speaker 1>idea of consumer goods. Now, it's interesting to hear them

0:10:32.040 --> 0:10:35.040
<v Speaker 1>talk about those things in those terms, because again, this

0:10:35.080 --> 0:10:37.959
<v Speaker 1>has been a long standing issue for successive US administrations,

0:10:38.000 --> 0:10:40.480
<v Speaker 1>going back to the first Trump administration, so it's not

0:10:40.640 --> 0:10:43.760
<v Speaker 1>something that's totally new. What we see more of is

0:10:43.800 --> 0:10:47.199
<v Speaker 1>this idea of rebalancing consumption and production, and that's really

0:10:47.240 --> 0:10:50.400
<v Speaker 1>something that's unique to Bessent and Trump, and you kind

0:10:50.400 --> 0:10:52.400
<v Speaker 1>of have to look at what the administration said that

0:10:52.440 --> 0:10:54.640
<v Speaker 1>they were going to do when they started this whole thing,

0:10:54.640 --> 0:10:57.760
<v Speaker 1>which was to move more manufacturing to the US and

0:10:57.960 --> 0:11:00.520
<v Speaker 1>using terris as sort of a wall to encourage companies

0:11:00.559 --> 0:11:02.800
<v Speaker 1>to come here to do that. What we're seeing now

0:11:02.880 --> 0:11:05.080
<v Speaker 1>is sort of a hybrid where we're not seeing as

0:11:05.120 --> 0:11:07.559
<v Speaker 1>much of an emphasis on that, but more this idea

0:11:07.640 --> 0:11:10.560
<v Speaker 1>of free trade and opening up foreign markets to US goods.

0:11:10.640 --> 0:11:12.800
<v Speaker 1>So it's kind of an open question about exactly what

0:11:12.840 --> 0:11:15.320
<v Speaker 1>the Trump administration wants when it comes to this sort

0:11:15.320 --> 0:11:18.480
<v Speaker 1>of economic policy. Do they want to have a very

0:11:18.520 --> 0:11:22.120
<v Speaker 1>protectionist agenda that's going to see more manufacturing move to

0:11:22.120 --> 0:11:25.120
<v Speaker 1>the US, or do they want more free trade where

0:11:25.160 --> 0:11:27.400
<v Speaker 1>you see foreign markets like China open up more to

0:11:27.520 --> 0:11:30.520
<v Speaker 1>US goods and products. So where this all kind of

0:11:30.559 --> 0:11:32.120
<v Speaker 1>ends up at the end of the day is a

0:11:32.160 --> 0:11:34.080
<v Speaker 1>little tricky. And one thing we always need to keep

0:11:34.120 --> 0:11:36.320
<v Speaker 1>in mind is the midterm elections coming up next year,

0:11:36.600 --> 0:11:38.640
<v Speaker 1>and so if we have some type of an economic

0:11:38.679 --> 0:11:42.400
<v Speaker 1>downturn that affects the way people are feeling in terms

0:11:42.400 --> 0:11:45.439
<v Speaker 1>of what they're paying for, how they're feeling in terms

0:11:45.440 --> 0:11:48.880
<v Speaker 1>of their economic security, that could affect the political outlook

0:11:48.920 --> 0:11:51.000
<v Speaker 1>for the final two years of Trump's last term in

0:11:51.040 --> 0:11:53.520
<v Speaker 1>office as far as we know. So that's all the

0:11:53.679 --> 0:11:55.000
<v Speaker 1>sort of things that are kind of hanging in the

0:11:55.080 --> 0:11:57.480
<v Speaker 1>balance as this deal is announced today.

0:11:58.200 --> 0:11:59.920
<v Speaker 2>I want to ask you what's likely to play at

0:12:00.080 --> 0:12:03.400
<v Speaker 2>out over the next ninety days. What is the US

0:12:03.440 --> 0:12:06.720
<v Speaker 2>looking for in specific? Is it just more good faith negotiation?

0:12:07.080 --> 0:12:09.280
<v Speaker 1>I think that they want to keep the talks going.

0:12:09.520 --> 0:12:12.320
<v Speaker 1>Number One, There's going to be a few sort of

0:12:12.360 --> 0:12:15.840
<v Speaker 1>international fora coming up where Bessant will have a chance

0:12:15.880 --> 0:12:20.160
<v Speaker 1>to interact with some representatives from China's government and also

0:12:20.280 --> 0:12:22.800
<v Speaker 1>from some other foreign governments. We have the G seven

0:12:22.840 --> 0:12:25.440
<v Speaker 1>Finance ministers meeting coming up in Canada in about a

0:12:25.480 --> 0:12:28.160
<v Speaker 1>week or so where he'll meet with the other G

0:12:28.280 --> 0:12:30.360
<v Speaker 1>seven nations, he'll have a chance to talk to some

0:12:30.440 --> 0:12:34.040
<v Speaker 1>of his EU counterparts about trade deals with the EU.

0:12:34.559 --> 0:12:37.320
<v Speaker 1>With China, I think that it's going to be almost

0:12:37.320 --> 0:12:40.640
<v Speaker 1>on this separate track, and it is really the critical track.

0:12:40.720 --> 0:12:44.079
<v Speaker 1>So Bessant has talked about fifteen to eighteen nations that

0:12:44.320 --> 0:12:47.720
<v Speaker 1>the US runs large trade deficits with, and the eighteenth

0:12:47.800 --> 0:12:50.280
<v Speaker 1>nation is China. And for a long time they were

0:12:50.320 --> 0:12:53.439
<v Speaker 1>talking about China being sort of on the side, something

0:12:53.480 --> 0:12:56.640
<v Speaker 1>that was happening separately from the other negotiations. And I

0:12:56.640 --> 0:12:59.480
<v Speaker 1>think you'll continue to see that. And you see how

0:12:59.840 --> 0:13:03.839
<v Speaker 1>the the UK announcement was made with Keir Starmer calling

0:13:03.880 --> 0:13:06.520
<v Speaker 1>into the Oval office Trump sort of stage managing all

0:13:06.559 --> 0:13:08.959
<v Speaker 1>of that. The China negotiations were very different. A couple

0:13:09.000 --> 0:13:11.880
<v Speaker 1>of representatives from the US government, high level representatives but

0:13:12.120 --> 0:13:15.280
<v Speaker 1>not President Trump, went to Geneva, went to a third

0:13:15.400 --> 0:13:19.960
<v Speaker 1>country location, met with their interlock uters from China, did

0:13:20.000 --> 0:13:23.160
<v Speaker 1>all this behind closed doors, came out with a major

0:13:23.400 --> 0:13:26.079
<v Speaker 1>concession on both sides to the current state of play,

0:13:26.559 --> 0:13:29.040
<v Speaker 1>and then with a promise to continue to talk. Now,

0:13:29.040 --> 0:13:31.560
<v Speaker 1>what is going to be somewhat elusive is what the

0:13:31.600 --> 0:13:34.560
<v Speaker 1>grand bargain would look like. And again that's where you

0:13:34.640 --> 0:13:36.480
<v Speaker 1>kind of get all of this coming into play. What

0:13:36.520 --> 0:13:39.280
<v Speaker 1>does Trump actually want out of this deal? And how

0:13:39.280 --> 0:13:42.079
<v Speaker 1>do politics play into that as well, because you may

0:13:42.120 --> 0:13:44.920
<v Speaker 1>have to not let the perfect be the enemy of

0:13:44.960 --> 0:13:48.600
<v Speaker 1>the good and get something that is serviceable to get

0:13:48.600 --> 0:13:51.439
<v Speaker 1>through the midterms and to get to the next presidential election.

0:13:52.040 --> 0:13:53.680
<v Speaker 2>Dan, I want to get a sense from you of

0:13:53.679 --> 0:13:57.040
<v Speaker 2>what this means for companies who have been dealing with

0:13:57.040 --> 0:14:01.679
<v Speaker 2>this dramatic increase in uncertainty. Bloomberg Economics estimating that the

0:14:01.720 --> 0:14:04.320
<v Speaker 2>new tariffs could still lead to nearly seventy percent drop

0:14:04.320 --> 0:14:06.440
<v Speaker 2>and bilateral trade between the US and China and the

0:14:06.440 --> 0:14:10.160
<v Speaker 2>medium term. We see the market reaction, But what does

0:14:10.200 --> 0:14:13.240
<v Speaker 2>this do to allay that sense that they that companies

0:14:13.280 --> 0:14:14.800
<v Speaker 2>really don't know how this is going to play on?

0:14:15.640 --> 0:14:18.440
<v Speaker 1>Well, I don't think it helps in that regard, David.

0:14:18.760 --> 0:14:20.320
<v Speaker 1>You know a couple of things to keep in mind

0:14:20.320 --> 0:14:22.760
<v Speaker 1>with all of this. What we've heard from companies is

0:14:22.840 --> 0:14:25.960
<v Speaker 1>essentially they're frozen in place. They don't know, for instance,

0:14:25.960 --> 0:14:29.480
<v Speaker 1>whether they should continue investing, whether they should lay people off,

0:14:29.720 --> 0:14:31.480
<v Speaker 1>what moves that they should make because they don't know

0:14:31.520 --> 0:14:33.720
<v Speaker 1>whether the tariffs are going to be permanently in place

0:14:34.160 --> 0:14:37.080
<v Speaker 1>or whether they're going to be part of a trade negotiation.

0:14:37.720 --> 0:14:40.000
<v Speaker 1>So all of that is kind of locked in place.

0:14:40.040 --> 0:14:42.680
<v Speaker 1>And I was reading an economic analysis earlier today that

0:14:42.760 --> 0:14:48.040
<v Speaker 1>suggested before any rigorous analysis can be made of this

0:14:48.080 --> 0:14:51.080
<v Speaker 1>weekend's agreement, this all needs to be listed in the

0:14:51.080 --> 0:14:55.160
<v Speaker 1>federal register. That's not how Trump works. His approach to

0:14:55.200 --> 0:14:58.200
<v Speaker 1>these matters is to get things done quickly, to get

0:14:58.200 --> 0:15:01.160
<v Speaker 1>them done expeditiously, to get them done on terms that

0:15:01.200 --> 0:15:03.920
<v Speaker 1>he sees as most favorable to the United States. And

0:15:03.960 --> 0:15:07.360
<v Speaker 1>these sort of niceties of government process, listing things in

0:15:07.400 --> 0:15:10.960
<v Speaker 1>their federal register, rolling out policy in a very measured

0:15:10.960 --> 0:15:13.720
<v Speaker 1>and methodical way, That's not how he operates. And so

0:15:13.880 --> 0:15:16.800
<v Speaker 1>I think businesses are looking to see how this will

0:15:16.800 --> 0:15:18.760
<v Speaker 1>all play out, and as they're trying to read the

0:15:18.800 --> 0:15:21.360
<v Speaker 1>tea leaves, they have to go by what they're hearing

0:15:21.400 --> 0:15:24.880
<v Speaker 1>and seeing from Trump administration officials. And so the idea

0:15:24.920 --> 0:15:27.000
<v Speaker 1>that we have a deal or some kind of agreement

0:15:27.080 --> 0:15:29.920
<v Speaker 1>to take down the temperature for a period of time

0:15:30.000 --> 0:15:33.400
<v Speaker 1>seems to suggest that there will be some deal in

0:15:33.440 --> 0:15:36.520
<v Speaker 1>the end, that things are moving in that direction because Otherwise,

0:15:36.560 --> 0:15:38.960
<v Speaker 1>why would you even do a ninety day pause. There

0:15:38.960 --> 0:15:41.200
<v Speaker 1>would be no point in doing that. So I think

0:15:41.240 --> 0:15:44.440
<v Speaker 1>that that is one of the things that businesses corporate

0:15:44.560 --> 0:15:48.880
<v Speaker 1>entities are digesting and trying to suss out. But again,

0:15:49.280 --> 0:15:51.400
<v Speaker 1>let's keep in mind that no matter what happens, there's

0:15:51.440 --> 0:15:53.920
<v Speaker 1>still going to be elevated tariff rates, and so that

0:15:54.080 --> 0:15:57.480
<v Speaker 1>is going to have an impact on the economy. Exactly

0:15:57.520 --> 0:16:00.240
<v Speaker 1>how all that plays out with these deals that are

0:16:00.240 --> 0:16:02.600
<v Speaker 1>being negotiated and including with China as yet to be seen,

0:16:02.640 --> 0:16:04.480
<v Speaker 1>but that's sort of the state of play at the moment.

0:16:05.560 --> 0:16:12.240
<v Speaker 2>Dan, Thank you very much. Thanks David, this is the

0:16:12.240 --> 0:16:15.440
<v Speaker 2>Big Take from Bloomberg News. I'm David Gera. This episode

0:16:15.480 --> 0:16:18.960
<v Speaker 2>is produced by Julia Press with support from Eleanor Harrison Dengate.

0:16:19.480 --> 0:16:22.600
<v Speaker 2>It was edited by Tracy Samuelson and Sarah Halzac. It

0:16:22.640 --> 0:16:25.120
<v Speaker 2>was fact checked by Rachel Lewis Chrisky and mixed and

0:16:25.160 --> 0:16:28.320
<v Speaker 2>sound designed by Alex Segura with Julia Weaver. Our deputy

0:16:28.360 --> 0:16:32.120
<v Speaker 2>executive producer. Our senior producer is Naomi Shaven. Our senior

0:16:32.240 --> 0:16:35.880
<v Speaker 2>editor is Elizabeth Ponso. Our executive producer is Nicole Beemster

0:16:35.920 --> 0:16:39.440
<v Speaker 2>Boor Sage Bauman is Bloomberg's head of podcasts. If you

0:16:39.520 --> 0:16:41.640
<v Speaker 2>liked this episode, make sure to subscribe and review The

0:16:41.640 --> 0:16:44.240
<v Speaker 2>Big Take wherever you listen to podcasts. It helps people

0:16:44.280 --> 0:16:47.280
<v Speaker 2>find the show. Thanks for listening. We'll be back tomorrow