WEBVTT - Tariff Label Confusion, Eli Manning's Giants Bid, Starbucks Turnaround 0:00:00.080 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:08.880 --> 0:00:13.240 This is Bloomberg Business Week Daily reporting from the magazine 0:00:13.240 --> 0:00:17.840 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.880 --> 0:00:22.800 and trends shaping today's complex economy. Plus global business finance 0:00:22.800 --> 0:00:26.120 and tech news as it happens. The Bloomberg Business Week 0:00:26.239 --> 0:00:31.120 Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg 0:00:31.240 --> 0:00:32.800 Radio Well. 0:00:32.840 --> 0:00:35.280 Amazon said today that it will not display the cost 0:00:35.320 --> 0:00:38.040 of US tariffs on products, after the White House blasted 0:00:38.080 --> 0:00:41.960 the reported move and President Trump called Jeff Bezos to complain. 0:00:42.560 --> 0:00:45.080 The White House earlier Tuesday seized on a brief punch 0:00:45.120 --> 0:00:48.839 Bowl News report that Amazon would quote soon begin displaying 0:00:48.880 --> 0:00:51.600 the cost of US tariffs on individual products next to 0:00:51.640 --> 0:00:54.960 the total listed price. White House Press Secretary of Caroline 0:00:55.040 --> 0:00:57.080 Levitt blasting the purported plans. 0:00:58.000 --> 0:00:59.760 I just got off the phone with the President about 0:00:59.760 --> 0:01:03.880 am Amazon's announcement. Uh, this is a hostile and political 0:01:04.240 --> 0:01:07.520 act by Amazon. It's another reason why we are on 0:01:07.680 --> 0:01:10.520 shoring critical supply chains here at home to shore up 0:01:10.560 --> 0:01:13.880 our own critical supply chain and boost our own manufacturing. 0:01:14.920 --> 0:01:17.759 That was White House Press Secretary Caroline Levitt earlier today 0:01:17.880 --> 0:01:20.320 Matt Day joins us. He's Bloomberg News technology reporter. He 0:01:20.360 --> 0:01:23.520 covers Amazon. He's out there in Seattle. Matt, clear this 0:01:23.640 --> 0:01:25.080 up for us, what's going on here? 0:01:26.160 --> 0:01:28.360 So Amazon says, there's nothing to see here. What they 0:01:28.400 --> 0:01:31.080 say is they do have a program that kind of 0:01:31.080 --> 0:01:35.000 like TAMU will ship parcels cross border from China and hunt. 0:01:35.120 --> 0:01:37.480 This is Amazon Hall, Amazon Hall. 0:01:37.520 --> 0:01:37.920 That's right. 0:01:37.920 --> 0:01:39.440 This is a This is kind of a little known 0:01:39.480 --> 0:01:41.920 service compared to their retail site. They launched it last year. 0:01:42.000 --> 0:01:44.240 So what Amazon says is they were considering for a time, 0:01:44.400 --> 0:01:47.240 you know, putting import duty notices on those products. Right, 0:01:47.800 --> 0:01:51.560 those products you know today are exempt from from duties. 0:01:51.680 --> 0:01:54.200 That's loophole that the Trump administration is playing to close 0:01:54.320 --> 0:01:57.080 as soon as this week. TIMU has already you know, 0:01:57.160 --> 0:02:00.960 shown customers and shoppers, you know, some version of what 0:02:01.000 --> 0:02:03.480 the import duties would be. They were considering doing that. 0:02:03.600 --> 0:02:06.360 The report out this morning from punch Bowl that you 0:02:06.480 --> 0:02:09.040 referenced earlier didn't make that distinction, and that's what the 0:02:09.040 --> 0:02:11.360 White House was responding to. Amazon comes back to us 0:02:11.360 --> 0:02:12.919 today and says, you know, listen, we were never thinking 0:02:12.960 --> 0:02:15.960 about anything for our wide retail site. They also say 0:02:16.000 --> 0:02:18.000 they're not going to implement this for for haul either. 0:02:18.880 --> 0:02:24.080 So Matt, Amazon's response was it directly because they were, 0:02:24.200 --> 0:02:27.880 you know, responding to the White House, or does your 0:02:27.919 --> 0:02:31.919 reporting show that they really weren't ever planning on doing this. 0:02:33.000 --> 0:02:34.960 It's not clear to us how far along these talks were. 0:02:34.960 --> 0:02:36.440 I mean, it is worth noting again that you know, 0:02:36.440 --> 0:02:39.240 people have been throwing around screenshots on TIMU for a 0:02:39.240 --> 0:02:42.000 couple of weeks now showing that for folks getting things 0:02:42.000 --> 0:02:45.600 cross border after the Dominus loophole as they call it, 0:02:45.600 --> 0:02:48.600 gets closed, they were showing them duties. So it would 0:02:48.600 --> 0:02:49.919 make a whole lot of sense for Amazon to be 0:02:49.960 --> 0:02:52.320 considering something like this. We don't know how close it 0:02:52.400 --> 0:02:54.840 was to rolling out and to take Amazon that there 0:02:54.880 --> 0:02:57.079 were this is not something most shoppers would have seen. 0:02:57.080 --> 0:02:59.120 It wouldn't have been on their their main retail site. 0:02:59.160 --> 0:03:01.760 Well, what could show us like, sorry, go ahead, Matt. 0:03:02.240 --> 0:03:03.679 And that definitely looks like they were re spawning to 0:03:03.720 --> 0:03:05.440 the White House. You know, Yes, once the you know, 0:03:05.480 --> 0:03:08.480 before Seattle was awake this morning, the Press Secretariat you know, 0:03:08.639 --> 0:03:10.760 accuse them of a hostile and political act. So they've 0:03:10.800 --> 0:03:12.840 definitely had to had to pick up the microphone on 0:03:12.840 --> 0:03:13.160 this one. 0:03:13.240 --> 0:03:15.960 Yeah, maybe gets the attention of a certain Jeff Bezos 0:03:16.000 --> 0:03:20.800 who spends time in Florida these days. Matt, I'm I'm 0:03:21.120 --> 0:03:24.720 wondering specifically about the Deminimus tax and like what consumers 0:03:24.800 --> 0:03:29.079 might see as a result of these tariffs going into effect, 0:03:29.320 --> 0:03:31.600 Like our prices on Amazon for stuff that we buy 0:03:31.840 --> 0:03:34.280 that is imported, how much are those how much are 0:03:34.280 --> 0:03:35.320 this price is going to go up? 0:03:36.480 --> 0:03:38.120 It really depends. You know. 0:03:38.120 --> 0:03:38.760 It's Amazon. 0:03:38.800 --> 0:03:41.320 They buy things, and they get things to consumers in 0:03:41.320 --> 0:03:43.120 a whole lot of ways, right in addition to the 0:03:43.160 --> 0:03:45.560 direct you know, ta Moose style shipments. You know, they're 0:03:45.600 --> 0:03:48.120 also a classic big old retailer. They buy in bulk, 0:03:48.240 --> 0:03:51.120 you know, just like Target or walmarto home depot. Might 0:03:51.920 --> 0:03:54.360 they import things themselves, you know, some things they're sellers 0:03:54.400 --> 0:03:56.440 import So it is, it is all a big mess. 0:03:56.480 --> 0:03:59.360 You know. We reported that Amazon in some cases has 0:03:59.440 --> 0:04:02.920 asked some of its vendors in China to do the 0:04:02.960 --> 0:04:05.840 importing themselves, right, which seems sort of a first sort 0:04:05.840 --> 0:04:08.800 of negotiating tactic to maybe pressure them into eating some 0:04:08.840 --> 0:04:10.240 of this costs. But we just don't know what the 0:04:10.240 --> 0:04:11.960 bottom line is going to be. For consumers. There's a 0:04:11.960 --> 0:04:13.080 lot of a lot of estimates out there. 0:04:13.120 --> 0:04:16.160 You know what we were speaking earlier with Mike McKee, Emily, 0:04:16.200 --> 0:04:19.000 you brought up this idea of looking at container shipments 0:04:19.040 --> 0:04:21.640 and ships that are going into the US, Matt. At 0:04:21.640 --> 0:04:25.000 this point, are we starting to hear of concerns with 0:04:25.120 --> 0:04:29.880 regard to empty you know, quote unquote shelves, empty storefronts 0:04:29.880 --> 0:04:32.240 on Amazon as a result of a slowdown in shipments 0:04:32.240 --> 0:04:32.799 from China. 0:04:33.800 --> 0:04:35.760 You know, nothing specific to Amazon kind to be on 0:04:35.800 --> 0:04:38.520 those broad reports we've all seen about you know, hey, containers, 0:04:38.720 --> 0:04:40.800 sailings are way way down from you know, this point 0:04:40.800 --> 0:04:43.640 a year ago. I think that's probably still too early 0:04:44.040 --> 0:04:46.560 for an Amazon specific story, given that, you know, we 0:04:46.640 --> 0:04:48.640 haven't seen the calendar roll into May, which is really 0:04:48.640 --> 0:04:51.160 when the first glimpses of this might appear. That's worth 0:04:51.160 --> 0:04:52.960 knowing too, that Amazon hasn't said a whole lot about 0:04:53.000 --> 0:04:54.840 tariffs one way or the other. They really don't want 0:04:54.839 --> 0:04:57.360 to stick their neck out on this, and so that's 0:04:57.400 --> 0:04:59.560 that's part of why today was so interesting, is that 0:04:59.560 --> 0:05:01.320 they've just they're in the conversation, whether they want to 0:05:01.320 --> 0:05:01.680 be or not. 0:05:02.240 --> 0:05:02.520 Matt. 0:05:02.720 --> 0:05:05.000 I'm sure the folks at Amazon today, we're hoping that 0:05:05.120 --> 0:05:08.760 we'd all be talking about something else Amazon related, and 0:05:08.800 --> 0:05:13.800 that's Project Kuiper. It's their first batch of production satellites 0:05:13.800 --> 0:05:16.880 that reach low Earth orbit, and it's a step in 0:05:16.920 --> 0:05:21.600 the company's effort to establish a broadcasting Internet connectivity from space. 0:05:22.160 --> 0:05:25.560 It sounds a lot like SpaceX. Is it a viable 0:05:25.600 --> 0:05:26.800 competitor to SpaceX? 0:05:27.760 --> 0:05:29.360 No, A lot of people are hoping, so, a lot 0:05:29.360 --> 0:05:32.760 of businesses have dreams that it's not just going to 0:05:32.760 --> 0:05:35.640 be elon Musk's Starlink with an Internet from space outfit. 0:05:36.000 --> 0:05:37.920 A lot of government fees as well have banked on 0:05:38.240 --> 0:05:41.360 Kuyper Amazon satellite offering coming online at some point. So 0:05:41.400 --> 0:05:44.039 this is this is much delayed, but it's welcome news 0:05:44.040 --> 0:05:45.880 for the folks at Amazon, and we're plugging away on this. 0:05:45.920 --> 0:05:47.800 They got plans to launch something like three thousand more 0:05:47.800 --> 0:05:49.239 satellites here in the next few years. 0:05:49.440 --> 0:05:54.800 How far ahead of Amazon is SpaceX right now with starlink? 0:05:55.120 --> 0:05:58.440 And also I'm curious about who actually did the launch here, 0:05:58.480 --> 0:06:02.400 because Starlink has SpaceX satellites which can do the launching. 0:06:02.400 --> 0:06:04.800 Besos of course has Blue Origin, but who got these 0:06:04.839 --> 0:06:05.800 satellites into orbit? 0:06:06.600 --> 0:06:09.440 So these ones were sent by United Launch Alliance Workhorse 0:06:09.839 --> 0:06:12.520 Boeing Lockheed joint venture that accounts for a ton of 0:06:12.600 --> 0:06:16.200 US government business. But you're right, because SpaceX has its 0:06:16.200 --> 0:06:18.320 own you know, sort of captive launch arm that is 0:06:18.360 --> 0:06:21.000 the most successful rocket launch outfit in the world right now. 0:06:21.480 --> 0:06:23.360 They've been able to get out to a huge lead 0:06:23.560 --> 0:06:26.240 with their Starlink constellation. You know, they've got more than 0:06:26.279 --> 0:06:28.560 seven thousand satellites. I think it is an orbit. You know, 0:06:28.640 --> 0:06:30.800 Amazon sitting on twenty seven, so they got a whole 0:06:30.839 --> 0:06:32.359 lot of catching up to do just before they're in 0:06:32.400 --> 0:06:34.400 the same conversation as Starlink. 0:06:36.160 --> 0:06:41.440 And I know that retail customers like individuals house Cheryl Masser, 0:06:41.800 --> 0:06:44.840 Karen Massel's using Starlink, She's got Starlink. So is this 0:06:44.920 --> 0:06:48.600 project supposed to also gear towards just regular everyday people 0:06:48.680 --> 0:06:52.440 getting Internet connectivity from space from Amazon? 0:06:53.120 --> 0:06:55.599 It will, Yeah, they plan to offer a regular consumer business. 0:06:55.640 --> 0:06:58.159 It's going to vary market to market. In some places 0:06:58.160 --> 0:07:00.840 you'll be working with a cellular service provider probably, and 0:07:00.880 --> 0:07:03.039 others they're going to sell direct to consumers. We don't 0:07:03.040 --> 0:07:04.520 know a ton about the business plan, but they've already 0:07:04.560 --> 0:07:06.560 kind of showed off the little terminals you can put 0:07:06.600 --> 0:07:08.280 on your garage or on top of your house. 0:07:08.720 --> 0:07:10.480 All right, Matt Day, gonna leave it there. Thanks for 0:07:10.520 --> 0:07:12.880 clearing all of this up for us. We do appreciate it. 0:07:12.920 --> 0:07:15.320 Matt Day covers Amazon. He's out there in Seattle. He's 0:07:15.320 --> 0:07:17.440 Bloomberg News technology reporter. 0:07:17.920 --> 0:07:21.520 You're listening to the Bloomberg Business Week podcast. Catch us 0:07:21.560 --> 0:07:25.040 live weekday afternoons from two to five pm Eastern. Listen 0:07:25.040 --> 0:07:28.600 on Apple CarPlay and Android Auto with the Bloomberg Business app, 0:07:28.760 --> 0:07:31.640 or watch us live on YouTube. 0:07:33.280 --> 0:07:35.640 Let's chift gears a little bit and talk sports and 0:07:35.680 --> 0:07:39.200 sports business. Because former New York Giants quarterback Eli Manning 0:07:39.680 --> 0:07:41.800 is putting together an investment group to bid for a 0:07:41.840 --> 0:07:44.680 piece of the NFL team. That's according to people with 0:07:44.760 --> 0:07:47.200 knowledge of the matter. Randa Williams is part of the 0:07:47.240 --> 0:07:49.760 team with the Scoop. He's US sports business reporter. He 0:07:49.800 --> 0:07:52.720 joins us here in the Bloomberg Business Week studio Randall. 0:07:52.720 --> 0:07:54.360 Eli wants a piece of the Giants. 0:07:54.640 --> 0:07:57.239 What do we know exactly that? I mean, he's putting 0:07:57.280 --> 0:07:59.720 together a group. He's long express interest. He said it 0:07:59.720 --> 0:08:02.720 on NBC earlier this year. He's told me privately, he 0:08:02.800 --> 0:08:05.360 said it publicly. And there's one team that Eli was 0:08:05.400 --> 0:08:06.760 going to own. It's going to be the team to 0:08:06.760 --> 0:08:07.200 do plays for. 0:08:08.560 --> 0:08:10.679 How much money is this worth? 0:08:10.720 --> 0:08:10.840 Like? 0:08:10.840 --> 0:08:12.800 What give us a sense of the numbers that we're 0:08:12.800 --> 0:08:13.520 talking here? 0:08:13.840 --> 0:08:15.840 So I think we don't know right now. 0:08:15.920 --> 0:08:18.680 But if you look at the previous two transactions, or 0:08:18.680 --> 0:08:20.720 two of the three transactions that the NFL had, the 0:08:20.720 --> 0:08:24.000 Philadelphia Eagles are valued at eight three Philadelphia is obviously 0:08:24.040 --> 0:08:26.600 smaller than New York, and then the Miami Dolphins were 0:08:26.640 --> 0:08:28.720 valued at eight to one when Aries and Joe Sie 0:08:28.720 --> 0:08:30.360 bought a piece of it. So when you think of 0:08:30.400 --> 0:08:33.400 it in that aspect, I would imagine that the Giants 0:08:33.400 --> 0:08:36.280 could go for more. But also when these teams are 0:08:36.320 --> 0:08:38.760 being sold sometimes owners have a little bit of soft 0:08:38.760 --> 0:08:41.120 spot in their heart for former players. They're like, all right, 0:08:41.160 --> 0:08:42.960 i'll sell you a little bit less and we'll have 0:08:43.000 --> 0:08:43.400 to see. 0:08:43.440 --> 0:08:45.680 They are also business people though, I mean we're talking 0:08:45.720 --> 0:08:48.959 about the Mara family and the Tish family. Yeah, where 0:08:49.000 --> 0:08:53.600 would this piece of the asset actually come from? Would 0:08:53.640 --> 0:08:56.240 it come from the Mara family, would come from the 0:08:56.240 --> 0:08:59.040 Tish family. With a little bit of each kind of 0:08:59.080 --> 0:08:59.840 give way here. 0:09:00.000 --> 0:09:03.560 From my understanding they're selling ten percent total, that could 0:09:03.600 --> 0:09:06.000 be five to five. But that's what makes the most sense. 0:09:06.000 --> 0:09:09.000 When the Tish family bought fifty percent some years ago. 0:09:09.040 --> 0:09:11.600 I believe in nineteen ninety one they bought fifty percent, 0:09:11.880 --> 0:09:14.600 So if it's ten, I would imagine that it's five 0:09:14.640 --> 0:09:14.880 to five. 0:09:14.920 --> 0:09:15.559 But I'm not. 0:09:15.480 --> 0:09:17.840 So sure that ten percent numbers. For a reason though, right, 0:09:17.920 --> 0:09:20.120 it's this new rule that allows private equity to buy 0:09:20.160 --> 0:09:20.520 a piece. 0:09:21.000 --> 0:09:24.360 Yeah, most of the teams that are considering selling steaks 0:09:24.360 --> 0:09:24.960 start at ten. 0:09:25.200 --> 0:09:25.360 Now. 0:09:25.360 --> 0:09:27.640 The Buffalo Bills sold ten to Arcdols and then they 0:09:27.679 --> 0:09:30.840 sold another ten to limited partners. Joe Side bought three 0:09:30.880 --> 0:09:33.560 percent and an Ares bought another three So we're seeing 0:09:33.600 --> 0:09:36.880 these NFL teams shed small pieces of steaks, and they're 0:09:36.880 --> 0:09:39.200 not controlling steaks. A lot of times. These partners are 0:09:39.200 --> 0:09:40.839 coming in. I mean, like, I'm happy to own a 0:09:40.840 --> 0:09:43.360 piece of the team. It's a prideful thing, and you know, 0:09:43.360 --> 0:09:44.480 the teams move on from there. 0:09:44.880 --> 0:09:49.640 What's the precedent here for former sports players bidding for 0:09:50.160 --> 0:09:51.800 you know, their own their own teams. 0:09:51.880 --> 0:09:53.880 There's been a lot of them recently. I mean when. 0:09:55.200 --> 0:09:58.600 Rob Penner brought the Denver Broncos. Lewis Hamilton was part 0:09:58.640 --> 0:10:00.840 of that group. You have Venus and Serena Williams, who 0:10:00.840 --> 0:10:04.840 are sort of like the original former athlete owners. You have, 0:10:04.960 --> 0:10:08.040 of course, Dominique Dawes and the Atlanta Falcons, Tom Brady 0:10:08.080 --> 0:10:09.880 and the Raiders along with Richard Seymour. 0:10:09.920 --> 0:10:11.319 You have Vince. 0:10:11.080 --> 0:10:14.360 Carter, Tracy McGrady and Josie Altador with the Buffalo Bills. 0:10:14.400 --> 0:10:16.880 So there's a little bit of a precedent here. But 0:10:16.960 --> 0:10:18.840 Eli and the Giants would obviously be a big deal 0:10:18.880 --> 0:10:20.880 because they have not had much success lately. 0:10:21.080 --> 0:10:23.680 In general, are the controlling owners using this as an 0:10:23.679 --> 0:10:25.679 opportunity and I don't mean the Tisch families of the 0:10:25.679 --> 0:10:28.320 Morrow families right now, but when they sell a piece 0:10:28.360 --> 0:10:30.839 such as this, are they using this as an opportunity 0:10:30.880 --> 0:10:35.040 to kind of gain on the asset appreciation that we've 0:10:35.080 --> 0:10:37.720 seen in recent years and get some cash as a 0:10:37.720 --> 0:10:38.320 result of that. 0:10:38.600 --> 0:10:39.760 It really depends on the group. 0:10:39.840 --> 0:10:42.800 There are some owners who are using this money towards stadium, 0:10:43.200 --> 0:10:46.760 stadium development and training facilities. There's other owners who have 0:10:46.840 --> 0:10:50.439 secession issues. I'm not so sure that the Marraw family 0:10:50.520 --> 0:10:52.120 or the Tisch family have either one of those they 0:10:52.160 --> 0:10:54.640 could just be looking to add owners. If you look 0:10:54.679 --> 0:10:57.760 at what Mark Davis did with Tom Brady, tom Brady's 0:10:57.760 --> 0:11:00.240 helping along with the football operations thing, he's not. I mean, 0:11:00.280 --> 0:11:02.000 the Raiders have a brand new stadium. They have no 0:11:02.120 --> 0:11:04.880 need for that specifically, But Mark Davis is trying to 0:11:04.880 --> 0:11:06.880 have more success. So you bring in the greatest quarterback 0:11:06.880 --> 0:11:09.280 of all time, and surely Tom Brady's going to help 0:11:09.320 --> 0:11:09.600 with that. 0:11:10.000 --> 0:11:13.000 Eli won two Super Bowls. Maybe this will look something similar. 0:11:13.320 --> 0:11:14.680 That's what I wanted to ask about. 0:11:14.960 --> 0:11:18.640 What would you expect Eli Manning's plans to be here 0:11:18.720 --> 0:11:19.480 as an owner. 0:11:19.679 --> 0:11:20.920 Would it be more just to. 0:11:20.880 --> 0:11:23.840 Earn an investment return or to actually get involved with 0:11:23.960 --> 0:11:25.480 the operations of the team. 0:11:25.600 --> 0:11:27.680 Well, if you're a limited partner, I think that the 0:11:27.800 --> 0:11:30.800 NFL's business has proven to be invincible in some aspects. 0:11:30.800 --> 0:11:32.560 I mean, when you think about the Super Bowl that 0:11:32.720 --> 0:11:35.480 just happened, it had one hundred and twenty seven million viewers, 0:11:35.520 --> 0:11:37.199 and that was a blowout game. At one point it 0:11:37.280 --> 0:11:39.840 was forty to six, and that's the pinnacle of things. 0:11:40.040 --> 0:11:42.160 So the business of the Giants is going to continue 0:11:42.160 --> 0:11:45.080 to grow. But for Eli, as far as his role 0:11:45.120 --> 0:11:47.079 with the Giants, that's going to have to be negotiated 0:11:47.120 --> 0:11:50.120 with the Damar and Tisch family, these limited partners. It 0:11:50.200 --> 0:11:53.920 depends on how sensitive a controlling owner is. Sometimes these 0:11:53.920 --> 0:11:56.200 owners will be like, yes, absolutely, help me. I have 0:11:56.240 --> 0:11:58.640 no idea what I'm doing. But La Mar and Tisch 0:11:58.640 --> 0:12:00.199 family have won two Super Bowls in a life last 0:12:00.200 --> 0:12:03.880 twenty years and four in the last thirty or forty. 0:12:03.920 --> 0:12:06.160 I think their first super Bowl was in eighty seven, 0:12:06.240 --> 0:12:07.319 so they've had some success. 0:12:07.360 --> 0:12:10.120 We only have like ten seconds, but the business of 0:12:10.160 --> 0:12:12.880 sports doing in general doing very well, as we've seen 0:12:12.920 --> 0:12:15.160 other assets move lower in the last few months. 0:12:15.240 --> 0:12:16.520 Absolutely, sports is fun. 0:12:16.640 --> 0:12:19.440 Okay, everything's fine. You've heard it from Randa Williams, US 0:12:19.480 --> 0:12:22.320 Sports business for now. That's the caveat. He's US Sports 0:12:22.320 --> 0:12:25.240 business reporter. Check out his reporting and the team's reporting 0:12:25.240 --> 0:12:30.120 on the Bloomberg terminal, and of course, at Bloomberg dot com. 0:12:30.360 --> 0:12:34.120 This is the Bloomberg Business Week Podcast. Listen live each 0:12:34.160 --> 0:12:37.880 weekday starting at two pm Eastern on Applecarplay and Android 0:12:37.920 --> 0:12:40.840 Auto with the Bloomberg Business app. You can also listen 0:12:40.920 --> 0:12:43.839 live on Amazon Alexa from our flagship New York station, 0:12:44.320 --> 0:12:48.120 just Say Alexa played Bloomberg eleven thirty. 0:12:49.400 --> 0:12:51.520 We'll let shift gears and talk about what's going on 0:12:51.800 --> 0:12:55.959 in China, because Shijinping has faced growing skepticism and discontent 0:12:56.559 --> 0:12:59.720 within China due to strict COVID lockdowns, a slowing economy, 0:12:59.720 --> 0:13:02.960 and a time hacks on entrepreneurs. Now Donald Trump has 0:13:02.960 --> 0:13:06.440 handed him a gift to rally support at home an 0:13:06.440 --> 0:13:12.240 external enemy. Jennifer Welch is chief geoeconomics analyst for Bloomberg Economics. 0:13:12.240 --> 0:13:14.880 She joins us here in their New York studio for 0:13:15.040 --> 0:13:19.520 Bloomberg Business Week. It's the Bloomberg Interactive Brookers Studio. Jennifer, 0:13:19.520 --> 0:13:20.800 good to see you. We've been trying to get an 0:13:20.880 --> 0:13:24.680 understanding about what's happening on the ground in China. I 0:13:24.720 --> 0:13:27.800 had the I've been there once. It was pre pandemic, 0:13:27.880 --> 0:13:30.680 it was twenty nineteen. I believe there was this view 0:13:30.720 --> 0:13:36.640 that during the pandemic the COVID lockdowns, sentiment among Chinese 0:13:36.640 --> 0:13:40.800 locals was very low. There was the property crisis. There 0:13:40.840 --> 0:13:44.960 is the property crisis, and suddenly fast forward to you know, 0:13:45.120 --> 0:13:50.040 close to halfway through twenty twenty five, we're seeing incredible 0:13:50.040 --> 0:13:53.480 developments when it comes to evs in China. We're seeing 0:13:53.760 --> 0:13:57.679 an essential silence when it comes to negotiations with President 0:13:57.720 --> 0:14:01.439 Donald Trump. What is the environment right now now in 0:14:01.920 --> 0:14:06.680 terms of how the Chinese consumers doing and the power 0:14:07.200 --> 0:14:08.000 that chijin Ping. 0:14:08.000 --> 0:14:10.440 Has well, I think all of the challenges that you 0:14:10.520 --> 0:14:13.199 laid out are still there. There's still the property bubble 0:14:13.240 --> 0:14:15.720 that they're dealing with, There's still the weakend sentiment, there's 0:14:15.720 --> 0:14:19.920 still the sort of overhanging of the COVID pandemic lockdowns 0:14:19.960 --> 0:14:22.240 and recovering sentiment and animal spirits. 0:14:22.280 --> 0:14:23.840 All of that is still very much there. 0:14:24.160 --> 0:14:27.240 But I think what has lit a fire under Chinese 0:14:27.280 --> 0:14:31.480 people's sort of sense of consumer sentiment and economic nationalism 0:14:31.560 --> 0:14:33.600 has been this trade war with the United States. And 0:14:33.680 --> 0:14:37.360 it's been kind of conveniently time from Beijing's perspective to 0:14:37.560 --> 0:14:41.080 kind of distract attention from those problems and really draw 0:14:41.200 --> 0:14:44.440 a lot of unity around this idea of standing strong 0:14:44.480 --> 0:14:46.840 in the face of this US trade war and these 0:14:47.000 --> 0:14:48.040 massive tariffs. 0:14:48.520 --> 0:14:52.720 Talk a little bit more about just what makes Chinese 0:14:53.280 --> 0:14:58.200 consumers manufacturers excited in this environment, What is there to 0:14:58.280 --> 0:14:59.040 rally around. 0:14:59.520 --> 0:15:02.480 I think it's US excitement so much as in Chinese 0:15:02.520 --> 0:15:04.920 you would say true cool or eating bitter, like being 0:15:04.960 --> 0:15:07.960 prepared to kind of dig their heels in and hold 0:15:07.960 --> 0:15:10.320 out in the face of what they see is US 0:15:10.400 --> 0:15:12.400 aggression in the form of this trade wark. Right from 0:15:12.480 --> 0:15:16.400 Beijing's perspective, from the Chinese people's perspective, they didn't do anything. 0:15:16.440 --> 0:15:18.840 The US just kept ratcheting up terrace, and now we're 0:15:18.880 --> 0:15:21.880 at unprecedented high levels. I think people are sober about 0:15:21.880 --> 0:15:23.760 the fact that this is going to cause a lot 0:15:23.760 --> 0:15:26.280 of economic pain at home, especially at a time of 0:15:26.280 --> 0:15:30.400 economic weakness for China. But at the same time, they're 0:15:30.480 --> 0:15:33.760 not willing to kind of engage with the idea of 0:15:33.800 --> 0:15:36.120 looking weak in the face of that. And so that's 0:15:36.160 --> 0:15:39.280 what I think, is this rally around the flag phenomenon 0:15:39.320 --> 0:15:41.400 that we're seeing and that the piece talked about. 0:15:41.840 --> 0:15:43.640 One question that I still don't know the answer to 0:15:43.880 --> 0:15:47.120 is who has the cards in this negotiation. On the 0:15:47.120 --> 0:15:50.560 one hand, the US consumer is incredibly powerful, and no 0:15:50.680 --> 0:15:54.600 question China wants access to the consumer. Speaking of that 0:15:54.640 --> 0:15:58.360 we love to buy things, those things often come from China. 0:15:58.440 --> 0:15:59.520 Who has the power here? 0:16:00.000 --> 0:16:02.040 I think in a sense everybody loses. I think it's 0:16:02.080 --> 0:16:04.640 a question is that's not good in time frames right? 0:16:04.880 --> 0:16:08.240 You know, for example, from the US perspective, those prices 0:16:08.240 --> 0:16:10.440 are going to start to hit a pretty dramatic spike 0:16:10.760 --> 0:16:14.600 once the stockpiling and other kind of advanced efforts that 0:16:14.640 --> 0:16:17.280 we saw ahead of these tarifts coming into play start 0:16:17.320 --> 0:16:19.280 to run out, and now companies have to deal with 0:16:19.320 --> 0:16:23.440 the tariffs themselves, right. I think the other question is 0:16:23.480 --> 0:16:27.320 a political question, right. Of Again, from China's perspective, they 0:16:27.360 --> 0:16:29.280 didn't start this trade war. They're on the kind of 0:16:29.400 --> 0:16:31.720 receiving end of it, and that's allowing them to dig 0:16:31.760 --> 0:16:33.360 their heels in a little bit. I think a lot 0:16:33.400 --> 0:16:36.080 of Americans feel like, sure, we knew President Trump was 0:16:36.120 --> 0:16:38.040 going to do tarifts at some point. He was talking 0:16:38.040 --> 0:16:41.040 about that pretty frankly on the campaign trail. This isn't 0:16:41.040 --> 0:16:46.400 necessarily the trade war that Americans wanted, right, and on 0:16:46.440 --> 0:16:49.360 your largest source of goods, right. And I think the 0:16:49.400 --> 0:16:51.240 pain when it starts to hit in a month or 0:16:51.280 --> 0:16:53.600 two from now, when those stockpiles run out, then the 0:16:53.640 --> 0:16:56.280 key question is who has sort of the political will 0:16:56.600 --> 0:16:59.480 to withstand that economic need. But to be clear, the 0:16:59.560 --> 0:17:02.120 economic paying for China is going to be very tough, 0:17:02.480 --> 0:17:05.640 especially if the US is successful and convincing other countries 0:17:05.720 --> 0:17:09.120 not to let those Chinese goods just flow through other markets. 0:17:09.400 --> 0:17:12.920 So what is the Chinese government's role here, I guess 0:17:12.920 --> 0:17:15.880 in shaping public opinion within China. 0:17:16.359 --> 0:17:19.480 So we saw the propaganda machine going to overdrive pretty 0:17:19.520 --> 0:17:23.119 soon after Liberation Day, facing in two fronts, the internal front, 0:17:23.200 --> 0:17:26.360 building up that China national sentiment, which again they had 0:17:26.400 --> 0:17:29.119 a little bit of an easy role to play in 0:17:29.160 --> 0:17:31.560 that because the people were already predisposed to being upset 0:17:31.560 --> 0:17:34.639 at the United States, but also externally taking advantage of 0:17:34.680 --> 0:17:37.280 Liberation Day tariffs to say to the rest of the world, 0:17:37.359 --> 0:17:40.200 the US is not a reliable partner. Work with us, 0:17:40.400 --> 0:17:43.280 don't work with the US to counter US, and let's 0:17:43.400 --> 0:17:45.719 join up on sides. Now, I think that effort's going 0:17:45.760 --> 0:17:48.040 to be a lot more difficult in this ninety day pause, 0:17:48.080 --> 0:17:51.119 where if I'm Vietnam, I'm enjoying right now a pretty 0:17:51.119 --> 0:17:53.200 good tariff differential with China. 0:17:53.280 --> 0:17:54.760 When you were saying external pr I thought you were 0:17:54.760 --> 0:17:56.800 going to talk about those videos that went viral of 0:17:56.880 --> 0:17:59.879 like the AYI generated Americans actually making things. 0:18:00.080 --> 0:18:02.800 There's that there's the sort of like peace in our 0:18:02.880 --> 0:18:04.480 time video saw. 0:18:04.440 --> 0:18:05.560 This, Yeah, everybody saw this. 0:18:05.960 --> 0:18:09.280 Very overweight people like making Yes, they've got a very 0:18:09.640 --> 0:18:12.679 effective AI video generation scheme over. 0:18:12.560 --> 0:18:14.719 There, Hey, you got to run. We really appreciate you 0:18:14.760 --> 0:18:17.720 staying late to hang out with us. Jennifer Welch's chief 0:18:17.840 --> 0:18:20.480 geoeconomics analyst for Bloomberg Economics, strening us here in the 0:18:20.480 --> 0:18:22.280 Bloomberg Interactive Brokers studio. 0:18:22.800 --> 0:18:26.399 You're listening to the Bloomberg Business Week Podcast. Catch us 0:18:26.480 --> 0:18:29.920 live weekday afternoons from two to five pm Eastern. Listen 0:18:29.960 --> 0:18:33.440