WEBVTT - David Malpass, Former World Bank President, Talks  Tariffs and Trade

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. I'm Marie joined us

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<v Speaker 1>now in Washinton with a special guest. I am Marie.

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<v Speaker 1>Good morning John.

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<v Speaker 2>That's right, I'm joined with a friend of the show,

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<v Speaker 2>David Malpass.

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<v Speaker 1>He's the former head of a World Bank.

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<v Speaker 2>Of course, he was the head of the bank when

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<v Speaker 2>Trump was in office in twenty nineteen.

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<v Speaker 1>David, thank you so much for joining us.

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<v Speaker 2>So we were talking about all morning this trade anxiety

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<v Speaker 2>really going into the weekend because Trump yesterday said that

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<v Speaker 2>when it comes to the pause on Canada Mexico, the

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<v Speaker 2>twenty five percent those tariffs will go through, and then

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<v Speaker 2>he added an additional ten percent on China.

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<v Speaker 1>How should we be reading this?

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<v Speaker 3>A big change in the direction of trade, But then

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<v Speaker 3>the trading system wasn't working, and.

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<v Speaker 1>So you think those tariffs hold for true?

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<v Speaker 3>I think those this time the tariffs will hold. But

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<v Speaker 3>that also begins this process of trying to adjust the

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<v Speaker 3>whole global trading system into one that works better and

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<v Speaker 3>specifically better for the US. This is going to quickly,

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<v Speaker 3>I think, get into intellectual property rights and the other

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<v Speaker 3>trading practices that China has been involved in, also transhipment

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<v Speaker 3>and the issues of back doors into the United States

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<v Speaker 3>with trade. So I think those will go on for months.

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<v Speaker 2>We already know those conversations are happening in terms of

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<v Speaker 2>the back door between Mexico and China.

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<v Speaker 1>Almost sixty percent of.

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<v Speaker 2>US adults though Bloomberg did a survey with Harris Pohl,

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<v Speaker 2>almost sixty percent of US adults expect Trump's tariffs will

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<v Speaker 2>lead to higher prices. How concerned review about this stoking

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<v Speaker 2>inflation and potentially stagflationary fears creeping into this economy.

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<v Speaker 3>Products are going up and down all the time, so

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<v Speaker 3>some products will go up. But then the question is

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<v Speaker 3>what does the US economy, this amazing economy that we have,

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<v Speaker 3>what does it do to react? And I think there

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<v Speaker 3>will be a huge rush by US companies to make

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<v Speaker 3>things in the US and also to find other sources.

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<v Speaker 3>They're already doing that. Companies are preparing. They've known this

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<v Speaker 3>is coming. There's been some preparation time, and so they'll

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<v Speaker 3>make adjustments and that will create jobs in new areas,

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<v Speaker 3>which is the point on net. You get that. Plus

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<v Speaker 3>the bigger changes that President Trump is doing is on

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<v Speaker 3>the regulatory side, on the tax side, those are positive

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<v Speaker 3>for output in the US. One of the important spots

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<v Speaker 3>is energy, and I think there really will be a

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<v Speaker 3>lot more energy produced by the US, which also is

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<v Speaker 3>stimulative for growth.

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<v Speaker 2>So you see the economy right now in a good place.

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<v Speaker 2>So do you think the FED then should be on

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<v Speaker 2>hold for the rest.

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<v Speaker 1>Of the year.

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<v Speaker 3>I would like to see a lower yield curve across

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<v Speaker 3>the board, that's on the short end and the long end,

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<v Speaker 3>and I think to do that you have to exude

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<v Speaker 3>confidence in the US dollar and in your ability to

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<v Speaker 3>control your spending. That wasn't being done in the previous administration.

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<v Speaker 3>So there are opportunities now to get a lower yield

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<v Speaker 3>curve across the board. They're not embarked on that yet.

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<v Speaker 3>It's maybe a little early.

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<v Speaker 1>But we know what Treasury Secretary said.

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<v Speaker 2>He wants a lower ten yure yield, and that seems

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<v Speaker 2>to be a key point in the markets that this

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<v Speaker 2>administration is watching. What do you think they want to

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<v Speaker 2>see and how can they achieve it?

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<v Speaker 3>Stick with the eye on the prize that is abundance

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<v Speaker 3>and you want common sense. If you really apply those

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<v Speaker 3>two things, you will get a lower yield curve. That's

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<v Speaker 3>because the US economy is so strong. What we're talking

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<v Speaker 3>about with treasury rates both shortened and to an extent.

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<v Speaker 3>Long end is is that your your confidence in your

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<v Speaker 3>ability to pay and to pay on that and be consistent,

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<v Speaker 3>and the US can up that these are supposed to

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<v Speaker 3>be the riskless rates, so they can be lower if

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<v Speaker 3>you if you create confidence within the economy and within

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<v Speaker 3>the dollars.

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<v Speaker 2>Do you think the FED should be cutting into a

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<v Speaker 2>good economy.

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<v Speaker 3>We can hope that the deregulation is implemented, the energy

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<v Speaker 3>production is implemented, and the FED will have an opportunity

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<v Speaker 3>to be cutting into a deregulating, faster, growing, more efficient economy.

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<v Speaker 1>Yes, we have seen with the jojeffect.

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<v Speaker 2>President Slash take the US out of the who usaid commitments.

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<v Speaker 1>You used to run the World Bank. Do you think

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<v Speaker 1>the World Bank is next?

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<v Speaker 3>I think there'll be a look at all of the

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<v Speaker 3>international organizations. What is the US getting for them, what's

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<v Speaker 3>the governance structure of them? And are they doing work

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<v Speaker 3>that's actually necessary for governments to be doing. One challenge

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<v Speaker 3>for the IMF and the World Bank is they were

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<v Speaker 3>created in nineteen forty four, so you can imagine that

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<v Speaker 3>their mission has grown vague, that they're older. They served

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<v Speaker 3>the purpose that they were originally set up to. So

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<v Speaker 3>one of the challenges for all these organizations is to

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<v Speaker 3>stay small and stay on mission, and I think that

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<v Speaker 3>needs to be done.

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<v Speaker 1>David, thanks so much for your time this morning.

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<v Speaker 2>Jonathan, of course the former head of the World Bank

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<v Speaker 2>under Trump one point zero David Malpass ending there that

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<v Speaker 2>potentially imf World Bank maybe maybe next when it comes

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<v Speaker 2>to how much the US might support them.

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<v Speaker 1>Amory, I appreciate the update, Amrie that down in Washington,

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<v Speaker 1>d C.