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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Daybreak Europ podcast, available every morning

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Speaker 2: on Apple, Spotify or wherever you listen. It's Wednesday, the

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Speaker 2: ninth of April in London. I'm Stephen Carroll. Coming up today.

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Speaker 2: Trump's higher rate tariffs take effect as China gets hit

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Speaker 2: with a punit of one hundred and four percent levy.

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Speaker 2: Markets resume their sell off as bonds take the meltdown

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Speaker 2: batton from stocks in a worrying sign for central banks.

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Speaker 2: Plus pharma prepares to swallow a bitter pill. Trump teeses

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Speaker 2: further major tariffs on drug makers. Let's start with a

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Speaker 2: roundup of our top stories. Donald Trump's so called reciprocal

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Speaker 2: tariffs are now in effect as the US President moves

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Speaker 2: forward with his effort to reorder global trade. China faces

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Speaker 2: a one hundred and four percent levy, while imports from

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Speaker 2: the EU will be taxed at twenty percent. In total,

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Speaker 2: around sixty countries run trade surpluses with the US are

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Speaker 2: now subject to higher import charges. This follows the introduction

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Speaker 2: of a ten percent baseline tariff on most American trading partners,

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Speaker 2: which took effect on Saturday. Speaking at a fundraiser. Just

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Speaker 2: before the new charges came into force, Trump was in

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Speaker 2: a jubilant mood.

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Speaker 3: We're making a fortune with tariffs.

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Speaker 4: Two billion dollars a day.

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Speaker 3: Do you believe it? I was told two billion dollars

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Speaker 3: a day. You know, I get hit by the press

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Speaker 3: about tariffs. We're making two billion billion. This is in

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Speaker 3: thirty five million, that's peanuts.

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Speaker 1: Two billion dollars a day.

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Speaker 3: And then they say, gee they or know you know,

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Speaker 3: this is only the enemy can be talking this way.

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Speaker 3: In addition, we have a lot of countries coming to

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Speaker 3: see as they want to make a deal.

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Speaker 2: Trump says that teams from Japan and South Korea were

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Speaker 2: en route to the US to hammer out agreements as

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Speaker 2: nations look to secure reductions to the higher tariff rates.

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Speaker 2: The one hundred and four percent charge on most Chinese

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Speaker 2: goods has drawn a strong response Fromjing. Premier Le Chiang

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Speaker 2: says the country has ample policy tools to fully offset

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Speaker 2: any negative external shocks. That's as the People's Bank of

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Speaker 2: China weakened the yuan's daily reference rate for a fifth

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Speaker 2: straight session in a carefully orchestrated move to blunt some

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Speaker 2: of the economic impact of the trade war without destabilizing

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Speaker 2: financial markets. Senior fellow of the Tiger Institute, Aner Tangan,

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Speaker 2: says the country is positioning itself to wait for US

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Speaker 2: voters to turn on Trump.

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Speaker 5: Let's be frank here. These tariffs are not being paid

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Speaker 5: by China. They're being paid by US consumers. And in

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Speaker 5: two months from now, there's going to be war cries

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Speaker 5: on the street. A lot of people who elected Donald

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Speaker 5: Trump because they thought he can control prices will be

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Speaker 5: calling for his head.

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Speaker 2: Enter Tangan speaking there. The triple digit charge is made

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Speaker 2: up of a previous twenty percent levy tied to fentanyl trafficking,

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Speaker 2: a thirty four percent reciprocal tariff derived from a calculation

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Speaker 2: based on the bilateral trade balance, and an additional fifty

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Speaker 2: percent duty Trump announced after Beijing said it would respond

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Speaker 2: by taxing US exports to China.

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Speaker 6: With the higher tariff.

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Speaker 2: Rates now in effects, the long end of the US

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Speaker 2: treasury market is facing renewed pressures. Investors scramble to raise cash.

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Speaker 2: The thirty year treasure yield jumped to as much as

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Speaker 2: twenty basis points more today in what Bank of America's

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Speaker 2: Mark Cabana called a fire sale. The sharp move is

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Speaker 2: raising fears of a repeat of twenty twenties unwinding of

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Speaker 2: the basis trade, a highly leveraged hedge fund wager. Then

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Speaker 2: the Federal Reserve had to intervene to stabilize the market

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Speaker 2: when markets are tumbling in a broad sell off after

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Speaker 2: the tariff deadline, the dollar fell along with equity index

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Speaker 2: futures for Europe and the US, and oil hit a

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Speaker 2: fresh four year low as investors are gripped by a

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Speaker 2: crisis of confidence in US exceptionalism. Earlier, former US Treasury

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Speaker 2: Secretary Larry Summers warned that the US is now likely

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Speaker 2: headed toward a recession.

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Speaker 1: We'll see an extra two million people be unemployed. We'll

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Speaker 1: see losses in household income that are five thousand dollars

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Speaker 1: of family or more. We are very likely, in the

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Speaker 1: context of a recession, to see markets reach levels significantly

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Speaker 1: below their current levels.

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Speaker 2: Summers added he didn't yet see a bottom for the market.

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Speaker 2: The losses come after a day of relatively calm trading

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Speaker 2: was shattered by the White House saying it would double

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Speaker 2: down on its tariff approach. Bloomberg has learned the White

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Speaker 2: House's top economic team argued over plans to impose even

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Speaker 2: bigger tariffs. Trade advisor Peter Navarro was among the US

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Speaker 2: administration's more hawkish members who pushed for a flat twenty

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Speaker 2: five percent levy on all countries, whereas privately, Treasury secretaries

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Speaker 2: got bessent and Commerce Secretary Howard Lutnik tried to moderate

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Speaker 2: the plan's warning of a stock market reaction. White House

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Speaker 2: spokesperson Caroline Levitt was asked about public comments Elon Musk made,

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Speaker 2: calling Navarro quote dumber than a sack of bricks.

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Speaker 7: Look, these are obviously two individuals who have very different

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Speaker 7: views on trade and on tariff's. Boys will be boys,

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Speaker 7: and we will let their public sparring continue. And you

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Speaker 7: guys should all be very grateful that we have the

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Speaker 7: most transparent administration in history. And I think it also

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Speaker 7: speaks to the President's willingness to hear from all sides

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Speaker 7: that he has people at the highest levels of dis

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Speaker 7: government in this White House who have very diverse opinions

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Speaker 7: on very diverse issues.

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Speaker 2: Levitt added, everyone who was involved in making the tariff

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Speaker 2: plan will be involved in bilateral negotiations going forward. American

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Speaker 2: consumers are attempting to get ahead of the tariffs, stucking

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Speaker 2: up on imported products. Bloomberg's Ewan Potts has more.

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Speaker 6: From Italian olive oil to bigger purchases like cars and smartphones.

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Speaker 6: President Trump's tarifts are pushing many US consumers to try

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Speaker 6: and get ahead of any price rises. Staff Paul saw

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Speaker 6: supported a bump a weekend last week, and data from

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Speaker 6: Bloomberg second measure, which tracks credit and debit card purchases,

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Speaker 6: showed electronics retailer best Buy had its best monthly performance

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Speaker 6: since twenty twenty one. Car showroom's also very busy. One

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Speaker 6: Californian Cellar of Outdoor Gears even running a special promotion

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Speaker 6: with the activation code tariffs suck in London, Imune pots

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Speaker 6: Bloomberg Radio.

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Speaker 2: President Trump said long promised tariffs on pharmaceutical drugs will

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Speaker 2: be coming soon. The move is just the latest signal

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Speaker 2: that he plans to press ahead with more sectoral tariffs

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Speaker 2: despite market fallout from his global levies. Trump has long

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Speaker 2: bemoaned a lack of domestic pharmaceutical production and has repeatedly

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Speaker 2: promised tariffs to bring more capacity into the country. Here

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Speaker 2: he was speaking yesterday.

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Speaker 3: We're going to teriff our pharmaceuticals because with a big market,

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Speaker 3: the advantage we have over everybody is that we're the

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Speaker 3: big market. So we're going to be announcing very shortly

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Speaker 3: a major TERRRIF for on pharmaceuticals.

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Speaker 2: In addition to pharmaceutical drugs, Trump's administration has separately pledged

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Speaker 2: additional sectoral levees, including on lumber and semiconductor chips, though

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Speaker 2: timing and details are unclear. Those are your top stories

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Speaker 2: on the markets. The ten year treasure yield fourteen basis

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Speaker 2: points high at four point four to three percent, the

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Speaker 2: thirty year yield now sixteen basis point higher at four

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Speaker 2: point nine three percent. In eight In equity markets, Themscirish

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Speaker 2: specific Inexus down two point five percent, the NICK and

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Speaker 2: Tokyo down by four point six percent. Eurostock fifty futures

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Speaker 2: are plummeting as well, down four point four percent. For

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Speaker 2: two one hundred futures are down by three point four percent.

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Speaker 2: On Wall Street SMPE minis are down by two point

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Speaker 2: three percent as well, and we are have just the

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Speaker 2: news as well. The Japan's Ministry of Finance on the

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Speaker 2: Bank of Japan with financial regulators are going to hold

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Speaker 2: a meeting this afternoon their time as well, so later

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Speaker 2: this morning in London as the forty year yield has

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Speaker 2: risen thirty two base points to the highest since its

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Speaker 2: debut in two thousand and seven. As well, we've had

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Speaker 2: the yen trimming its strengthening after we've had news of

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Speaker 2: that upcoming meeting between the Ministry of Finance and regulators

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Speaker 2: as well well. In a moment, we'll bring you more

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Speaker 2: on the tariffs as Donald Trump's new levies come into

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Speaker 2: forest pustock through the market reaction. But while investors are

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Speaker 2: giving their verdict on Trump's trade war, David M. Druker

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Speaker 2: has been writing for Bloomberg Opinion about how American voters

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Speaker 2: are considering the tariffs. He points to a pole conducted

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Speaker 2: last week and the run up to the big tariff

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Speaker 2: announcement showing a majority of Republican voters approve of the

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Speaker 2: president's handling of jobs, trade, and the economy. Only on

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Speaker 2: inflation was his support softer, and Dave Druker writes that

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Speaker 2: you should expect those voters to retain a substantial amount

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Speaker 2: of trust in Trump's management of the economy, and he

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Speaker 2: says that's partly down to how Trump is selling these

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Speaker 2: measures as restoring fairness to the American economy, a message

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Speaker 2: that resonates in places where the outperformance of the US

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Speaker 2: hasn't been felt and key swing states. The challenge, though,

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Speaker 2: David Andruka writes, is for Trump that the tariffs have

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Speaker 2: never worked, including in the eighteen hundreds when they were

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Speaker 2: more common, and that's contrary to the claims the President

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Speaker 2: made while unveiling the new policy. It's among the reasons

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Speaker 2: most economists are not just sharply critical, but downright incredulous.

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Speaker 2: But David writes that for now, Trump has the political

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Speaker 2: leeway to prove his critics and history wrong. But the

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Speaker 2: risk is that if his efforts to transform the global

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Speaker 2: economy take too long or never materialize, how will that

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Speaker 2: go down with his supporters. It's a great piece you

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Speaker 2: can read at Bloomberg dot com, Forward Slash Opinion. Well,

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Speaker 2: let's bring you the latest on the tariff's story. As

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Speaker 2: those higher rates come into effect for around sixty of

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Speaker 2: America's trading partners, including twenty percent on the European Union,

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Speaker 2: China now facing a one hundred and four percent levy

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Speaker 2: on its exports to the United States. Our trades are

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Speaker 2: Brendan Murray joins us. Now for more, Brenda, let's start

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Speaker 2: with China than what does is a one hundred and

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Speaker 2: four percent tariff. Due to that trading relationship.

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Speaker 8: It will slowly disintegrate it if not to do more

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Speaker 8: damage quickly. Basically, if you're an importer in the US

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Speaker 8: right now and you have one hundred thousand dollars worth

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Speaker 8: of Chinese products that are on the ocean headed toward

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Speaker 8: the US, you're now going to have to pay more

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Speaker 8: than two hundred thousand for those a few factor in

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Speaker 8: the tariff. So the trading relationship will be under an

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Speaker 8: enormous amount of stress. A lot of trade will be

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Speaker 8: diverted to other countries. But in the short run, many

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Speaker 8: companies would would just basically cancel their orders and wait

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Speaker 8: to see if this is a long term issue that's

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Speaker 8: going to require different suppliers from different countries, or it's

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Speaker 8: just a short term issue that's going to be resolved

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Speaker 8: in a month or two through talks. But the bottom

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Speaker 8: line is it just creates an enormous amount of uncertainty

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Speaker 8: for you know, one of the biggest trading relationships in

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Speaker 8: the world.

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Speaker 2: Brenton China this time yesterday was promising to fight to

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Speaker 2: the end in this trade war. But can China retaliate

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Speaker 2: in a meaningful way against the US and do they

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Speaker 2: look likely to, Well.

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Speaker 8: They haven't so far, which is a bit surprising. They

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Speaker 8: did very quickly the previous two times that Trump imposed

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Speaker 8: tariffs of ten percent each, and so they could be

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Speaker 8: playing the game here where they announced something right before

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Speaker 8: the US market opens for maximum impact. But it's definitely

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Speaker 8: curious that they haven't announced anything so far. But surely

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Speaker 8: that's only a matter of time. This will not drive

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Speaker 8: China to the negotiating table. They are notoriously unwilling to

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Speaker 8: negotiate under duress, and so they're going to have to

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Speaker 8: diffuse the situation here before they'll be, as they would say,

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Speaker 8: bullied to the bargaining table.

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Speaker 2: Of course, it's not just China being affected here. Dozens

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Speaker 2: of other countries are saying higher tariffs come into fourth today.

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Speaker 2: I mean, how significant is this in the escalation of

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Speaker 2: tariffs that we've seen and the reordering of the global

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Speaker 2: trade relationships that Donald Trump is trying to orchestrate.

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Speaker 8: Yeah, exactly, So every into the US from the European

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Speaker 8: Union is now twenty percent more expensive given the rate

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Speaker 8: that the Trump administration has applied to the EU and

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Speaker 8: ten percent for the UK. So the global trading system

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Speaker 8: has taken many decades to form these trading relationships through

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Speaker 8: trade agreements, through certain treaties between countries, and we're watching

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Speaker 8: them all of this kind of unravel before our eyes

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Speaker 8: in a matter of days or week.

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Speaker 2: What hopes are there for negotiations? Now? We see some

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Speaker 2: countries being singled out by Donald Trumps as having envoys

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Speaker 2: on the way for talks.

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Speaker 8: So Japan, Korea, and India seemed to be the first

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Speaker 8: in line to start the negotiations. The Trump administration thinks

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Speaker 8: that these can be these kinds of talks can be

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Speaker 8: held on short order, in a number of weeks or

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Speaker 8: maybe a.

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Speaker 4: Month or two.

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Speaker 8: But the experience and history has shown that trade relationships

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Speaker 8: are incredibly complex. They're usually written on thousands and thousands

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Speaker 8: of pages of of documents with legal ees that you

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Speaker 8: know are really hard to decipher. So once you start

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Speaker 8: getting down to the nitty gritty of it, that's where

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Speaker 8: the real real hard work begins. So it's easy to

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Speaker 8: get parties to the negotiating table, it's much more difficult

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Speaker 8: to actually pull this off and reach an agreement where

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Speaker 8: both sides are happy.

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Speaker 2: Okay, Brandon Murray, our trades are thank you very much.

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Speaker 2: We've seen further dramatic moves on markets as these tariffs

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Speaker 2: come into force, Treasury selling off further stocks, also dropping

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Speaker 2: in Asia. Let's bring in our markets live stress as

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Speaker 2: Mark Cranfield for more. Mark, First of all, let's start

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Speaker 2: with treasuries yield spiking again today. Is this a fire sale,

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Speaker 2: as Mark Bank of America's calling.

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Speaker 4: Us, yeah, or a bias strike. It's what Lombard Odia

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Speaker 4: I've also described it as. And one of the issues,

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Speaker 4: of course, is that the US Treasury has to continue

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Speaker 4: with its auctions even though we've got these huge dislocations

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Speaker 4: in markets. They had a three year auction last night

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Speaker 4: didn't go that well. We have a ten year to

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Speaker 4: day in a thirty year the day after these is

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Speaker 4: going to be a very big test for the market,

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Speaker 4: particularly as people are watching what the international participation is.

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Speaker 4: Everyone knows that Japan and China are two of the

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Speaker 4: largest holders of US treasuries, and if they decide that

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Speaker 4: they don't want to show up an auction, particularly along

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Speaker 4: dated sale, it's going to be very tricky and we'll

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Speaker 4: put everything back on to the war street players. They'll

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Speaker 4: have to take the bulk of the bonds if that's

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Speaker 4: the case. So it's a very dicest situation, a bit

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Speaker 4: like having a bunch of land mines in front of you.

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Speaker 4: Nobody wants to step on them. And that's partly the

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Speaker 4: reason why we're having this huge volatility today. Unusual in

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Speaker 4: Asia to see treasury yields rising so quickly, but clearly

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Speaker 4: people are thinking that there is a higher risk that

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Speaker 4: treasury auctions do not go as smoothly as usual.

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Speaker 2: We're also seeing other authorities elsewhere in the world reacting

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Speaker 2: to this. Japan holding a meeting the central Bank and

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Speaker 2: the finance Ministry and regulators meeting later on today after

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Speaker 2: a big jump in their bond yeals. What should we

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Speaker 2: be thinking about looking ahead to that meeting.

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Speaker 4: It's all about disorderly markets. No central bank likes to

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Speaker 4: think that any part of their financial market is at

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Speaker 4: risk of becoming disorderly. Some of the moves in Japanese

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Speaker 4: bonds today are teetering on that. Very unnerving if you're

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Speaker 4: someone in charge of looking after those kind of markets.

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Speaker 4: And also the equity market as well in Japan has

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Speaker 4: taken a fearful bashing as well this week, as well,

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Speaker 4: so they've got plenty of reason for coming together, which

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Speaker 4: they typically will do after high volatility. You won't just

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Speaker 4: be in Japan. Other countries will be doing the same thing.

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Speaker 4: They'll want to make sure that all their mechanisms are

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Speaker 4: in place, all the structures are secure, they have the

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Speaker 4: liquidity they need. Should they need to quickly come into

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Speaker 4: the market to reassure everybody that they're still in control

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Speaker 4: and that it's nothing to worry about, it's probably you

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Speaker 4: would think it might sound a little bit overkill, the

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Speaker 4: fact that they've publicized the fact that they're having this meeting,

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Speaker 4: But you can expect other countries will be doing exactly

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Speaker 4: the same thing because volatility is extreme across esset classes.

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Speaker 2: We've been watching the pbocs move on the yuan as well,

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Speaker 2: weakening the fix again. I mean, how much pressure is

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Speaker 2: on the y one given the China is at the

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Speaker 2: focus point of these trade tariffs now.

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Speaker 4: The Central Bank in China is managing it very carefully.

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Speaker 4: The market is trying to push them further because you

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Speaker 4: have this situation of an offshore yuan and an onshore

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Speaker 4: and the offshore in theory has no limits to it. It

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Speaker 4: can go can move as far as any other currency,

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Speaker 4: and typically that's what you're seeing is if people want

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Speaker 4: to speculate against the risk of a much weaker Yuan,

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Speaker 4: they tend to use the offshore currency. We saw overnight

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Speaker 4: there was a huge spread between the offshore and the onshore.

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Speaker 4: That's narrowed a bit during the day to day. It

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Speaker 4: will probably widen again tonight as we get into London

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Speaker 4: and New York trading. The Central Bank, on the other

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Speaker 4: side is very gradually lifting the daily fixing rate. They're

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Speaker 4: showing the rest of the world very clearly that they're

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Speaker 4: in control, but they're also guiding the currency to lower

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Speaker 4: ground as well. But they're doing it at their own speed.

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Speaker 4: There's probably quite a way to go, considering that they're

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Speaker 4: about to be hit with a lot of new tariffs

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Speaker 4: from the United States.

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Speaker 2: Well as we're thinking about the European open in a

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Speaker 2: couple of hours time, mark what should we be watching.

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Speaker 9: Out for.

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Speaker 4: Everything. It's been a complete mess across Asia markets. Equities

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Speaker 4: are down across the board. If you look at what

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Speaker 4: the European futures are suggesting, they're looking at a very

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Speaker 4: big decline, probably a four percent decline at the open

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Speaker 4: and for European markets, although German futures are doing pretty well,

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Speaker 4: they're actually quite solid. There is no sell off in

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Speaker 4: German one futures and completely unlike what it's seeing Australia,

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Speaker 4: Treasure is and JGB. So that's one good point, and

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Speaker 4: the eurocurrency is having a pretty good start to the

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Speaker 4: day as well. But equity markets there seems to be

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Speaker 4: nowhere to hide for them, so do expect pretty weak

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Speaker 4: opening in European equities.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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