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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Front

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Speaker 1: and center. Though, are those terrorists that are set to

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Speaker 1: come from the United States of America? President Trump deciding

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Speaker 1: to impose new terrorists of on imports of steel elsewhere

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Speaker 1: you may see ten percent on imports of aluminum. The

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Speaker 1: President out this morning swinging when a country is losing

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Speaker 1: many billions of dollars on trade with virtually every country

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Speaker 1: it does business with. Trade wars are good and easy

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Speaker 1: to win. That's the message coming from the President of

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Speaker 1: the United States of a twitter this morning to discuss

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Speaker 1: Chad bound Peterson Institute for International Economics, a senior fellow there,

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Speaker 1: and and the current I'm police to say staying up

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Speaker 1: late in Asia four US. So Bloomberg Chief Asia Economics correspondent, Chad,

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Speaker 1: let's just begin with this and begin with a story

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Speaker 1: that you've written on the Washington Post and pointing out

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Speaker 1: quite rightly what the common Secretary Wilbert Ross has concluded,

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Speaker 1: it's that imports of steel and aluminum threats in America's

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Speaker 1: national security. How do they threaten America's national security? Chat Well,

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Speaker 1: I think it's a really big argument that they do

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Speaker 1: actually pose a threat to American national security. Most of

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Speaker 1: the steel in the aluminum that the United States imports

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Speaker 1: are from key ally countries, Canada, Europe, Mexico. There's still

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Speaker 1: considerable domestic steel production, especially in the United States. So

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Speaker 1: this is very much looked upon as a as a

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Speaker 1: relatively bogus argument for implementing import protection. And you really

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Speaker 1: only go down this half when you run out of

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Speaker 1: all other potential explanations for why you would want to

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Speaker 1: impose tariffs and the current what's the response in China

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Speaker 1: so far? Actually the response has been a little bit

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Speaker 1: more subdued in it would have thought, Jonathan, that's your

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Speaker 1: speaker's previous point. There's a sense and age that it

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Speaker 1: hurts the U S allies more than China. We've had

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Speaker 1: complained from South Korea, Japan, Australia. Japan in fact had

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Speaker 1: to remind the US that they are not a threat

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Speaker 1: to American national security. China's Foreign Ministry in Beijing did

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Speaker 1: say they want America to play by the rules. But interestingly,

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Speaker 1: our colleagues in Beijing have reported that Lou her who

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Speaker 1: is the top Chinese economic emissary who's in Washington, has

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Speaker 1: presented the US officials with a said of demands, and

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Speaker 1: one of which includes, give me a list in terms

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Speaker 1: of what you want. So the Chinese are seeking clarity

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Speaker 1: from the US in terms of what kind of trade

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Speaker 1: concessions they want. I think that's why the response has

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Speaker 1: been relatively muted so far. They're probably trying to see

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Speaker 1: how these talks in Washington play out Chad, and that

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Speaker 1: brings up a brilliant point. It's a point that a

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Speaker 1: lot of people are making. If this is to address China,

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Speaker 1: then it doesn't really do that in isolation at all,

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Speaker 1: does it. It hurts allies probably more than it hurts China.

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Speaker 1: What would be the best way of really recalibrating this

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Speaker 1: policy to direct this specifically at the problem, at least

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Speaker 1: for what the administration sees as the problem. Well, it's

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Speaker 1: exactly right. So the United States already has tremendous import

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Speaker 1: restrictions already in place on steel and aluminium from China,

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Speaker 1: and what that means is most of what we import

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Speaker 1: comes from allies, and therefore, if we're going to impose Paris,

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Speaker 1: the allies are the ones that are going to get hit.

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Speaker 1: To my mind, what you need to do to address

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Speaker 1: the underlying problem of the story, which is over capacity

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Speaker 1: in steel in aluminum coming out of China, you need

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Speaker 1: to engage with the American allies that are suffering the

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Speaker 1: same sorts of problems we've already seen. The Europeans announced

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Speaker 1: that they're probably going to have to impose the same

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Speaker 1: set of import restrictions the United States is, but under

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Speaker 1: a conventional law, not this bogus national security argument, but

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Speaker 1: on a standard safeguard law. For imposing trade barriers, you

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Speaker 1: need the kind of cooperation between these countries, and that's

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Speaker 1: what the Trump administration is really under mining by choosing

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Speaker 1: this sort of path. And I just wonder how this

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Speaker 1: has been taken in Asia at the moment. You've said

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Speaker 1: that the reaction from China is actually being quite subdued.

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Speaker 1: I wonder how this is being seen because many people

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Speaker 1: are asking whether this is the first shot at the

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Speaker 1: beginning of a trade war. Well, is that how you

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Speaker 1: see things in Asia looking into the United States? At

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Speaker 1: the moment, Jonathan, if you think about it, there's a

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Speaker 1: bit of a trend emerging here. It appears that Mr

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Speaker 1: Trump is hurting his allies more than China. We had

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Speaker 1: the US exiting from TPP that bolster China's position in

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Speaker 1: the region. We had the US slapping tariffs and washing

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Speaker 1: machines that hurt allies such as South Korea. And now

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Speaker 1: we have this move on steel which has people from

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Speaker 1: Australia to Tokyo asking, hang on a second, this is

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Speaker 1: not about US. So there's a real sense of unpredictability,

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Speaker 1: but unpredictability about where this is heading. And I think

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Speaker 1: the real danger is who starts to retaliate when and how,

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Speaker 1: And in particular, the next step is if Mr Trump

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Speaker 1: goes after much broader merchandise goods out of China, like electronics, goods,

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Speaker 1: textiles and shoes, footwear and the like, then we're starting

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Speaker 1: to head down a very difficult road where you likely

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Speaker 1: would see China retalia it retaliate hard. Chad I was

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Speaker 1: thunderstruck by the President's follow on tweet this morning. To

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Speaker 1: be clear, folks, it's a zero sum America and Chad bound,

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Speaker 1: I would say out of your studies at Wisconsin and

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Speaker 1: your work at Bucknell and Peterson Institute. He wants a

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Speaker 1: mercantil list America. Am I off the mark. No, you're

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Speaker 1: You're exactly right, Tom. What President Trump still unfortunately does

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Speaker 1: not understand is that international trade is not derosum. It's

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Speaker 1: a win win situation if you keep markets open. And

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Speaker 1: but this path that he's heading us down, UH is

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Speaker 1: really taking us away from what the American experience. American

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Speaker 1: leadership in developing an international system of cooperation of open

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Speaker 1: markets is now going to potentially result in US exporters

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Speaker 1: in areas that have nothing to do with stealing aluminum

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Speaker 1: getting caught up in this and getting retaliated again. You

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Speaker 1: and I staggered through Jacob Viner, who folks invented the

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Speaker 1: courage to not be mercantil list coming out of World

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Speaker 1: War Two, studies in the theory of international trade was

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Speaker 1: something everybody had to read a gunpoint. Is trump mercantilism

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Speaker 1: different than the mercantilism that Jacob Wiiner fought against in

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Speaker 1: the nineteen thirties. I'm not sure how different it is.

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Speaker 1: It is equally worrisome. You know, he seems solely focused

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Speaker 1: on bilateral trade deficits and and seeming that he can

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Speaker 1: and seemingly thinking that he can use trade policy to

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Speaker 1: tackle those. The administration has recognized that steel and aluminum

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Speaker 1: over capacity is a problem. It's really just the approach

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Speaker 1: that they're choosing to tackle it. By inflaming tensions with

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Speaker 1: all of our key allies and trading partners with which

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Speaker 1: we need to have a partnership to engage with China

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Speaker 1: on this issue, he's really undercutting his own effort trying

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Speaker 1: to get something done. Chat. As you've mentioned, another's have

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Speaker 1: touched on downstream. The Nited States of America, in terms

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Speaker 1: of end usage of steel is a whole lot bigger

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Speaker 1: in this economy than upstream. The still produces the steel,

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Speaker 1: uses the auder makers, the likes of the brewery companies

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Speaker 1: as well. It's massive. Whether you save some jobs in steel,

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Speaker 1: how much damage could be done downstream. That is another

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Speaker 1: really really big concern. There are so many more, uh,

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Speaker 1: you know, consuming industry jobs, whether you're talking about automobiles

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Speaker 1: or infrastructure construction, that are all going to be hurt

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Speaker 1: by the fact that input costs are now gonna be

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Speaker 1: so much higher with these steal and and aluminum tariffs.

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Speaker 1: That's going to be lost jobs as well, and so

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Speaker 1: you know to the extent that that's an additional source

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Speaker 1: of political concern for the president. You would hope that

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Speaker 1: this would weigh in on on his decision making, but

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Speaker 1: it doesn't seem to have resonated with him so far. Chad,

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Speaker 1: thank you for the early morning conversation with the Peterson Institute.

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Speaker 1: No doubt Adam Posing and company will be writing up

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Speaker 1: a storm on this. We continue now with our coverage

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Speaker 1: of these momentous times of a mercantilis policy of Pennsylvania Avenue,

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Speaker 1: and to give us perspective and a gentleman who understands

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Speaker 1: the astronomy of our political economics, Mark Chandler, not only

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Speaker 1: at Brown Brothers Harriman, where he puts out important notes

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Speaker 1: on currency dynamics, but he also writes books that fill

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Speaker 1: in our political economics and our economic history. Mark Chandler,

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Speaker 1: can the President of the United States see the stars

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Speaker 1: of our greater political economy? Good question, I'm not so sure.

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Speaker 1: But I'm not so sure that I would go with it.

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Speaker 1: This is a necessarily a little break from the past.

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Speaker 1: Remember we had a president Georgie bus who put a

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Speaker 1: terrify and so I think that almost every US president

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Speaker 1: that I could think of has put on some kind

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Speaker 1: of protectionism, some kind of heariffs that can get challenged.

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Speaker 1: And this is I think them pointing. But I don't

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Speaker 1: think that we're really at the necessarily headed for a

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Speaker 1: trade war. How did countries respond to bushes paraf on steel? Right, Nope,

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Speaker 1: they didn't. They didn't go for for tech strategy that

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Speaker 1: is a current that is a trade war. What they

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Speaker 1: did was they appealed. They took the U s to

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Speaker 1: the w t O. The US lost the cases of

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Speaker 1: w t O. It had to resend the tariffs. This

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Speaker 1: is what I think countries are going to do that

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Speaker 1: Okay for tech strategy, but support the multilateral trading system.

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Speaker 1: The distinction mark Chandlers starting last evening into the morning

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Speaker 1: and met Paul Krugman Laureate mentioning it as well, but

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Speaker 1: conservatives as well. Is this national security distinction that that

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Speaker 1: as Secretary uh Maddest so upset as well. George Bush

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Speaker 1: didn't make this anatural national security issue, did he? Now?

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Speaker 1: I think that's a very important pot that's in a

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Speaker 1: point distinction here. But what happens I think is that

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Speaker 1: so we make we the U s makes his claim

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Speaker 1: we're gonn protect these industries for national security grounds. This

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Speaker 1: has to be tested in the court of law, and

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Speaker 1: that is in the w t O. And with a

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Speaker 1: w t O, I think if I was going to

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Speaker 1: be on the side of Canada and Europe and Japan

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Speaker 1: and Korea, what I would say would be my first

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Speaker 1: piece of evidence would be exactly what you say. That is,

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Speaker 1: the Defense Department in the US says that they do

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Speaker 1: not want these tariffs. So they the Defense Department either

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Speaker 1: being therelected their duties or it's not for national security.

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Speaker 1: Here's a question for you. Does this administration respect the

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Speaker 1: w C Well, I think that's an interesting question, and

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Speaker 1: of course these Trump administrations has been come on they don't, right, No,

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Speaker 1: But I'd say I'd say this though, that the present

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Speaker 1: the US cannot President cannot unilaterally withdraw from the w

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Speaker 1: t O. This is a commiss and this is the

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Speaker 1: next step that's going to happen. Just like Congress has

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Speaker 1: limited the president's power to repeal sanctions on Russia and Iran,

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Speaker 1: Congress is talk Commers can take some actions to reduce

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Speaker 1: the president's unilateral power on trade. Are they going to

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Speaker 1: do that? Well, I think it's I think it depends

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Speaker 1: on what happens. But I think that give me, let

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Speaker 1: me tell me the outcome of November's elections, and I

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Speaker 1: think that let's just take a stand back. Secretary Matts

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Speaker 1: has made it pretty clear. I understand from within the

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Speaker 1: White House, likewise for Secretary Tillison, likewise with Gary Cohan,

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Speaker 1: they didn't want to see this. We're seeing it. So

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Speaker 1: what's stopping is from seeing the next things play out? Well,

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Speaker 1: I think yes, So what's the next step of playoff?

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Speaker 1: Some people talking about some resignations coming, which would seem

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Speaker 1: to me to surrender the leverage of power to exactly

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Speaker 1: the protectionists that are also in the White House and

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Speaker 1: in the administrations. So I'm not sure how it's gonna

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Speaker 1: play out. It could be some resignations, but also the

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Speaker 1: shift of power with the administration. Uh. But again, my

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Speaker 1: point is that this does not necessarily have to trigger

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Speaker 1: a trade war. If it's not for Ted, it's not

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Speaker 1: necessarily going to stand up at the w t O.

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Speaker 1: And I'm not convinced that the inflationary nature of it.

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Speaker 1: You know, people are talking about this, we're could be

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Speaker 1: boosting inflation. But I think what happened if we if

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Speaker 1: we do get writing prices, which there's a quote from

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Speaker 1: General Motors, a guy who is one of the buyers

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Speaker 1: saying that GM at Ford Stores is stealing illumin in

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Speaker 1: the US. Okay, but Mark, I think the literature in

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Speaker 1: the last eighteen hours clearly agrees with Mark Chandler that

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Speaker 1: inflation delta is not the big issue here. But within

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Speaker 1: the model, our international Mondel Fleming blah blah blah model,

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Speaker 1: it goes over to economic growth. Can you suggest that

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Speaker 1: if we don't see the impulse in inflation, we will

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Speaker 1: see it over two in five years in diminished economic

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Speaker 1: growth because of retaliation. Well, yeah, again, I'm not convinced

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Speaker 1: it's gonna be retaliation like there wasn't for against George Bush.

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Speaker 1: But I do agree with you that this isn't. To me,

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Speaker 1: the biggest challenge that world trading system is not just

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Speaker 1: these tarraffs. The biggest challenge that the US has really

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Speaker 1: have it to the global trading system is not is

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Speaker 1: really blocking the appointment of judges to these conflict resolution

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Speaker 1: mechanisms at the w t O. That to me is

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Speaker 1: a much more serious case of that country. You know,

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Speaker 1: the US the biggest trading partners in the world, and

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Speaker 1: there's always little dispute ave frictions. This is part of trade,

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Speaker 1: but we wanted a strong conflict resolution mechanism. As long

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Speaker 1: as that's strong, the global free traits that can be resilient,

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Speaker 1: flows are going to slow down. Mark. I think that's

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Speaker 1: the opinion of a lot of people. And and we

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Speaker 1: can look beneath the service away from these headline things

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Speaker 1: about tariffs, and just look at CERFIUS, the Committee on

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Speaker 1: Foreign Investment in the United States. They are looking at

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Speaker 1: inbound investment coming from places like China. They may well

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Speaker 1: change this and develop the role of Cyphius to actually

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Speaker 1: look at outbound investments. So companies in the United States

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Speaker 1: looking to invest in China may well have to get

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Speaker 1: things approved by Cyphius as well. There are things happening

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Speaker 1: in the background here beyond just tariffs that make this

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Speaker 1: a more protectionist administration, oh for sure. And I don't

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Speaker 1: I don't like saying this. It's not I'm just thinking

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Speaker 1: that the system of checks and balances and resiliency, other

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Speaker 1: global system and of our own checks and balances within

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Speaker 1: the US are more resilient than than what a president

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Speaker 1: can do in the first eighteen months in office. Big

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Speaker 1: question emerging Marcus effects when President Donald Trump was elected,

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Speaker 1: got battered, then it ripped. Do we need to actually

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Speaker 1: have another look at this? Is this an inflection point

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Speaker 1: or not marked for you for emerging market currencies? I

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Speaker 1: don't think it is. I think they're more important for

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Speaker 1: the for the emerging market currencies. It doesn't seem like

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Speaker 1: FED policies the key. Feel like global growth is the key,

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Speaker 1: and I think for me that's a concern. Latest data,

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Speaker 1: and not only from the US, but from Europe, from Japan,

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Speaker 1: is showing that maybe the strong core strong momentum we

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Speaker 1: had and the synchronized global upturn might have peaked at

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Speaker 1: the end of last year. Okay, Mark, this is all

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Speaker 1: a bunch of fancy eco babble. Should I initiate strong

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Speaker 1: end trades this morning? I think it's a bit late

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Speaker 1: to the party, but I'd be watching this one oh

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Speaker 1: five level. I mean we've come down, right, we come

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Speaker 1: down to almost one oh eight. I think we're one

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Speaker 1: of seven seventy at Monday. We'll be missing the point. Mark,

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Speaker 1: Tom and I sal bottoms. We buy tops. That's what

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Speaker 1: we do Mark, You've got to understand, you know how

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Speaker 1: you know, like John Farrell has a grand Big I've

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Speaker 1: got a grand Big sixteen. It's a dinghy and the

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Speaker 1: name of the boat is called late to the party,

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Speaker 1: my chandler. If it's not the haven fit that drives

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Speaker 1: the Japanese the end story forward from here. How important

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Speaker 1: were the comments from Governor Kuroda about an exit from

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Speaker 1: stimulus next year? Yeah, I think I don't surprise me, right,

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Speaker 1: So Corota says, we're not changing policy now, even though

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Speaker 1: we've stopped, we've slowed down our acid purchases, and we're

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Speaker 1: not even to talk about an exit until next April.

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Speaker 1: And the market was spotted almost like it was in

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Speaker 1: this April. I think that the market is getting ahead

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Speaker 1: of itself. And I think that the reason that the

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Speaker 1: boj might talk about it next April but probably won't

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Speaker 1: do anything, is because next October October, the Japanese gonna

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Speaker 1: put in a high retail sales tax from eight and

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Speaker 1: whenever Japan has played around with the retail saling given

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Speaker 1: the economy down, I mean, that's a really important insight.

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Speaker 1: What are the ramifications if even if you don't think

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Speaker 1: we'll get there. If we get to a nine point

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Speaker 1: nine nine strong end print, I mean that's five figures away. Yeah,

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Speaker 1: I think that. I mean, which isn't not completely like

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Speaker 1: lost right, I mean it's not completely impossible to see that.

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Speaker 1: And I think that they have people really adjust head issues.

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Speaker 1: And another question happened is that the dollar is falling

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Speaker 1: like this, We've got this protectionist sentiment growing where people

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Speaker 1: still fund the US, growing current account deficit. Mark Chander,

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Speaker 1: stay with us, please, Mark Chander. Wilson, the Brown Brothers

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Speaker 1: Harriman really important depth. I can't say enough about Mr

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Speaker 1: Chandler's books, particularly on the template of the astronomy of

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Speaker 1: our global political economy. We bring in now Francie mccoi,

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Speaker 1: who is in Rome on a Roman holiday through the weekend,

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Speaker 1: but then France seeing a very very important Sunday morning.

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Speaker 1: How do they vote in Italy? Is it? Is it

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Speaker 1: by paper ballot? Is it a modern digital system? What's

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Speaker 1: the process? It begins Sunday morning? Good morning Tom. It

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Speaker 1: is definitely by paper ballot. It's actually very old school.

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Speaker 1: You're you find yourself in a booth and this time

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Speaker 1: you have between seven and eight parties that you have

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Speaker 1: to choose. Now, remember John, this is also the electoral law,

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Speaker 1: so you could argue that this is the first time

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Speaker 1: that the Italian economy test its engine. So you don't

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Speaker 1: really know how will plan out. Part of the electoral

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Speaker 1: laws a proportionate system, part of it is direct. So

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Speaker 1: it actually makes think a little bit more complicated because

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Speaker 1: it's very difficult to look at the polls, which, by

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Speaker 1: the way, we can't talk about, but it's very kind

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Speaker 1: of difficult at this point to see whether, you know,

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Speaker 1: the coalisition could actually perform depending on how much the

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Speaker 1: parties get. Will weather play into the election. I'm watching

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Speaker 1: a plane actually land in the heavy winds of Washington

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Speaker 1: Air Force one as often the distance and really from

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Speaker 1: Washington to Maine, we have extraordinary weather. You saw that

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Speaker 1: in London. How is the weather across Italy? Um, it's

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Speaker 1: a little bit better then we had very high winds today.

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Speaker 1: And you're right. Weather always plays a part in the turnouts.

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Speaker 1: But even before the weather concerns and east from the Beast,

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Speaker 1: which has touched it to about five six days ago,

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Speaker 1: there was a lot of concern about very low voter

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Speaker 1: turnouts and Tom, to put it very simply, there is

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Speaker 1: a concern that basically, although the European economy bringing Italy

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Speaker 1: with it, is getting better, Italians are just not benefiting

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Speaker 1: from this broadening recovery France in Lacroix in Rome. I

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Speaker 1: don't know, Francine, if you're able to hear Prime Minister

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Speaker 1: May's important comments at Mansion House, I would not Francine

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Speaker 1: that she has garbed in black today. What is Prime

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Speaker 1: Minister May morning? Is she gives us an update on

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Speaker 1: Brexit theory. I mean, you know, she may be morning

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Speaker 1: rebels on both sides, has a very tough task. On

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Speaker 1: the one hand, she needs to deal with the Commissioner

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Speaker 1: Yunker and Commissioner Barney. At the other hand, she has

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Speaker 1: to placate her rebels that are pro Brexit and the

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Speaker 1: ones that are pro remain. So I think maybe, you know,

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Speaker 1: all black all around makes sense for a top prime

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Speaker 1: minister going to the multiple times. What have you heard

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Speaker 1: in Italy about the discussion of the President the United

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Speaker 1: States on mercantilist theory. I know it's to talk everywhere worldwide.

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Speaker 1: The Prime Minister actually making comments two hours ago or so,

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Speaker 1: future is improving. Folks who are negative to seventy were

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Speaker 1: now negative one better tape in the last twenty minutes.

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Speaker 1: But Francine, what have you heard from your guests and

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Speaker 1: off Mike in Italy on mercantilism and American trade. Well,

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Speaker 1: tom ad is worried. A lot of Italian politicians are worried,

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Speaker 1: a lot of Italian CEOs are worried. Remember, this is

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Speaker 1: an economy that grew one point five percent last year,

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Speaker 1: but it's mainly thanks to exports, and a lot of

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Speaker 1: these exports go to the US. Now the most percentage

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Speaker 1: wise actually goes within the European Union. So a lot

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Speaker 1: of the chief executives that I was speaking to you

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Speaker 1: who are saying, look, it's not good for world trade

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Speaker 1: because if it has an impact on GDP, it will

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Speaker 1: also bring back to acting of it. They're concerned about

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Speaker 1: exports to the US. But you know, as long as

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Speaker 1: the European block stays together, it's the will you know

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Speaker 1: whether the trade war storm for instance, quote thank you

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Speaker 1: so much. Of course, safe travels have a great Roman

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Speaker 1: holiday in Rome for the elections. Uh, this is what

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Speaker 1: gives us goose bumps here at Bloomberg Surveillance. Why don't

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Speaker 1: we have guests of esteem and always of controversy. Who

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Speaker 1: really make an effort to join us on historic days

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Speaker 1: like today. Jeffrey Sachs is a Columbia University. He has

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Speaker 1: been way out front on the dumbing down of America.

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Speaker 1: He has been way out front on any debate of

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Speaker 1: climate change, whether you agree or disagree with him. But

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Speaker 1: far more is his foundation of international economics. He is

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Speaker 1: again at Columbia University and joins us from Bogata, Columbia

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Speaker 1: UH this morning. Professor Sas, thank you so much for

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Speaker 1: the effort to join us UM this morning. Twenty years

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Speaker 1: ago you wrote two essays for Foreign Policy. One was

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Speaker 1: a brief history of panic and the other was Unlocking

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Speaker 1: the mysteries of globalization. Is President Trump's trade action his

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Speaker 1: effort and a good effort against the new globalization. This

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Speaker 1: is one of the most reckless policies tom one can imagine,

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Speaker 1: and he is going to have major at first reverberation

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Speaker 1: as it is around the world. We've probably shed maybe

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Speaker 1: it's a trillion dollars of the stock market capitalization in

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Speaker 1: the last twenty four hours. That is a pretty good

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Speaker 1: sign of UH market sentiment and the view of what

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Speaker 1: Trump has done. He's smashing the global trade rules, and

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Speaker 1: it's very, very dangerous. We have done a little bit

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Speaker 1: of the history, Professor Sachs, the history that you're expert

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Speaker 1: in this morning, going back to the courage of Sir

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Speaker 1: Robert Peel in the corn Laws of eighteen forty two,

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Speaker 1: call it Nixon's effort in nineteen seventy one on a

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Speaker 1: ten percent import text. Let's go to Nixon. What did

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Speaker 1: Jeff Sax learn in studying the Nixon tariffs of the

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Speaker 1: early seventies. Well, when Nixon UH not only raised the

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Speaker 1: terroffs but broke the Bretton Woods exchange rate system unilaterally,

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Speaker 1: it led to a decade of the chaos UH. And

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Speaker 1: I would go back to in fact, Tom uh and

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Speaker 1: you know the history well of the Holly Smoked tariff

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Speaker 1: of July. That was another unilateral US action, a smash

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Speaker 1: in the face of the world trade and it had

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Speaker 1: devastating consequences for pushing US UH deeper into what became depression,

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Speaker 1: prolonging the Great Depression, intensifying it. I'm not saying that

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Speaker 1: that's the inevitable consequence of this dumb move of the

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Speaker 1: of the Trump but this is a dumb, dangerous, reckless

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Speaker 1: move and it's based on it's based on a level

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Speaker 1: of economic illiteracy that is absolutely shopping, and that shown

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Speaker 1: by his morning tweets, he really believes that if you

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Speaker 1: are running a trade deficit, it means that you're being

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Speaker 1: swindled by the surplus countries. It's a kind of it's

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Speaker 1: a kind of deliteracy. You can't even imagine that is

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Speaker 1: now a view held by this confused man who happens

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Speaker 1: to be President of the United States. And then he

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Speaker 1: tweets this morning that the trade war is the simplest

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Speaker 1: thing in the world to win, because we also use

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Speaker 1: everything is winners and losers, whereas trade is about win

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Speaker 1: win and closing trade is about lose loose. So I'm

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Speaker 1: I'm astounded, Tom that we don't have uh any institutional

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Speaker 1: break right now. I would expect and I would well,

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Speaker 1: we'll see, I would expect people like Gary Cohen to

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Speaker 1: leave the White House because he really want to do

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Speaker 1: well that this kind of shocking behavior. On that note,

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Speaker 1: let me bring in my colleague Pimphile Jeffrey Sax, Yeah,

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Speaker 1: Professor Sax, just to play devil's advocate here, is it

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Speaker 1: possible that this is uh part and parcel of a

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Speaker 1: negotiating tactic, and that what the tariffs can be imposed,

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Speaker 1: tariffs can be removed, and that there will be further

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Speaker 1: negotiations that we don't know about, but that this is

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Speaker 1: a new tactic in the way that the administration is

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Speaker 1: indeed dealing with what it perceives to be unfair trade

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Speaker 1: practices against the United States. Well, I know what it

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Speaker 1: perceives trade practices. Donald Trump thinks, as he even wrote

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Speaker 1: this morning, says we're running a trade deficit against nearly everybody.

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Speaker 1: We must be being cheated by nearly everybody. But it's

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Speaker 1: the kind of stuff. Uh, why are we running a

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Speaker 1: trade deficit against everybody? Well, that's because we don't save

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Speaker 1: in our country. We have a saving investment deficits we

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Speaker 1: borrow from the rest of the world. And done his

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Speaker 1: very way of posing the question exposes the silliness of

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Speaker 1: it is that every country that we run a bilateral

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Speaker 1: trade does that is somehow doing us wrong. He just

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Speaker 1: doesn't get it. Uh, maybe it won't spiral out of

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Speaker 1: control though, And China has been extremely mature in its response,

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Speaker 1: which is just to say, we hope the US does

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Speaker 1: not undermine the international trade rules. European Union was far

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Speaker 1: more direct, saying that there will of course have to

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Speaker 1: be retaliation uh, and that this is how we just

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Speaker 1: Many others have noted that it is a complete break

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Speaker 1: of post World War two practice to invoke MA sational

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Speaker 1: security to slam against GET. The national tradis so the answer,

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Speaker 1: Kim is yes, maybe it won't be so bad in

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Speaker 1: the end because some grown up someplace will turn this off.

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Speaker 1: But not because there's anything clever in this. It's just

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Speaker 1: because this is an idiotic move that is very dangerous

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Speaker 1: and and may get tamped down because most of his

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Speaker 1: advisers are telling him that this is a dangerous the

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Speaker 1: republic most that this is a dangerous move. Okay, Jeff Sex,

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Speaker 1: thank you so much. We really appreciate it. From Vogata,

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Speaker 1: Columbia this morning. Thanks for listening to the Bloomberg Surveillance podcast.

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Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

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Speaker 1: whichever podcast platform you prefer. I'm on Winter at Tom

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Speaker 1: Keane before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio