Speaker 1: Bloomberg Audio Studios, podcasts, radio news, but our top story
Speaker 1: this morning, President Trump sets a ten percent minimum global tariff.
Speaker 2: There's been a flurry of deal making and deal breaking
Speaker 2: in the run up to President Trump's August first tariff
Speaker 2: deadlineident Trump has announced the framework for a trade deal
Speaker 2: with the United Kingdom. China, of course, emerging from that
Speaker 2: meeting saying an understanding was reached to extend the tariff truce,
Speaker 2: while the US side is still saying nothing is final
Speaker 2: until President Trump signs off. One made a trade deal
Speaker 2: with the European U, Philippines, Indonesia, and the United States
Speaker 2: fifth the largest trading partner, Japan. Late last night, just
Speaker 2: hours before the deadline, Trump signed an executive order announcing
Speaker 2: new US tariffs on dozens of trading partners. Trump said
Speaker 2: the new tariffs will go into effect next week on
Speaker 2: August seventh. Bloomberg Economics reports that if all the announced
Speaker 2: levies are implemented as promised, the average US teriff rate
Speaker 2: will go up to more than fifteen percent.
Speaker 1: The most surprising thing to me is how President Trump
Speaker 1: has turned people's perspective on trade around completely in just
Speaker 1: a matter of months.
Speaker 2: Brendon Murray has overseen trade coverage for Bloomberg since twenty nineteen.
Speaker 1: Trade deals in the traditional sense are about increasing trade.
Speaker 1: What President Trump is doing is literally designed to lower trade,
Speaker 1: to bring production home, and to sever some of those
Speaker 1: economic ties with countries that we've been doing business with
Speaker 1: for a long time.
Speaker 2: As a world braces for Trump's reciprocal tariffs to actually
Speaker 2: for real this time hit global trade, Brendon says the
Speaker 2: whiplash of the trade war isn't over because many of
Speaker 2: the details of these trade deals are still a moving target.
Speaker 1: What we're seeing is the Trump administration hammering out the
Speaker 1: broad frameworks, trying to get some headline numbers that jump
Speaker 1: off the page, and to get some commitments from countries
Speaker 1: that have been unwilling to open up their markets or
Speaker 1: invest more in the US than they have in the past.
Speaker 2: So is the strategy working. I'm Sarah Holder, and this
Speaker 2: is the big take from Bloomberg News Today. On the
Speaker 2: show Making Sense of Trump's latest trade deadline, I sit
Speaker 2: down with Bloomberg's Global Trade editor Brendan Murray to discuss
Speaker 2: where things stand in the president's ongoing trade war, how
Speaker 2: much work remains, and how Trump has reshaped America's approach
Speaker 2: to trade deals. It can be challenging to keep up
Speaker 2: with the shifting terms of Trump's trade war and all
Speaker 2: the deals his administration is trying to broker. Brennan, how
Speaker 2: have you been making sense of this? Do you have
Speaker 2: a big whiteboard up in the office or something.
Speaker 1: Yeah, I guess you could say it's a whiteboard, but
Speaker 1: it's more like an Excel spreadsheet, a timeline, some post
Speaker 1: it notes, and you know a bunch of sort of
Speaker 1: random things that you know you have to move around.
Speaker 1: This is a very fast moving story. President Trump will
Speaker 1: say he's doing well in trade negotiations with big economies,
Speaker 1: and then the next day he might say, you know,
Speaker 1: deals off. You know, you're facing a tariff of twenty
Speaker 1: percent or whatever.
Speaker 2: You've been overseeing Bloomberg's trade coverage since twenty nineteen. I'm
Speaker 2: wondering how this negotiation process has been different than once
Speaker 2: you've seen before.
Speaker 1: I think it's been very different. The first way it's
Speaker 1: been different is that trade negotiations are notoriously long, grueling.
Speaker 1: They go back and forth, They go between governments, and
Speaker 1: then governments go back to their industries and they go
Speaker 1: line by line and that takes time, and the biggest
Speaker 1: difference with President Trump's trade deals are they're in warp speed.
Speaker 1: They are they're moving in weeks and a couple of
Speaker 1: months rather than a couple of years. So that's just
Speaker 1: the way President Trump operates and did so in the
Speaker 1: private sector, and he's taken that style to governing in
Speaker 1: the White House and using tariffs as kind of the
Speaker 1: big point of leverage that he can use over countries
Speaker 1: in these discussions.
Speaker 2: How do geopolitics come into play when we're talking about
Speaker 2: the trade deals of the Trump presidency versus how trade
Speaker 2: deals have historically been negotiated.
Speaker 1: Yeah, I think what we're seeing emerging is President Trump
Speaker 1: see tariffs as a way to not only reorder the
Speaker 1: global trading system that he's complained about since the nineteen eighties,
Speaker 1: but to get countries in line with what he thinks
Speaker 1: that the US priorities are. We've seen it on a
Speaker 1: number of cases recently. We've seen it with Brazil when
Speaker 1: he's threatened Brazil with a fifty percent tariff because of
Speaker 1: some things going on in their domestic politics. We've seen
Speaker 1: it recently with India where he says we're going to
Speaker 1: put a twenty five percent tariff on you across the board,
Speaker 1: and we're going to penalize you for buying Russian oil.
Speaker 1: He's also intervened in the Cambodia Thailand conflict and said,
Speaker 1: you know, trade is going to be painful for you
Speaker 1: if you don't call a ceasefire. And so he's really
Speaker 1: using tariffs as a tool of foreign policy, not just
Speaker 1: of economic policy anymore.
Speaker 2: Do you think that strategy will be able to be
Speaker 2: used in the same way even after these deals are
Speaker 2: set in stone or is the answer that they'll never
Speaker 2: be set in stone.
Speaker 1: Yeah, I don't think they're really ever going to be
Speaker 1: set in stone. President Trump is feeling pretty emboldened by
Speaker 1: these trade deals that are coming together. They kind of
Speaker 1: feed on themselves. Once you get Japan, then you've got
Speaker 1: leverage over South Korea, And once you get leverage over
Speaker 1: South Korea, then you get leverage over other countries in
Speaker 1: Southeast Asia. The same goes for the European Union. You know,
Speaker 1: once you can get Germany on side, then you know
Speaker 1: France has to go along with it. So I think
Speaker 1: there's a sense that this isn't going to end after
Speaker 1: August first, that this is going to be an ongoing
Speaker 1: way that President Trump conducts his diplomacy as tariffs that
Speaker 1: he can use to accomplish what he's trying to accomplish
Speaker 1: in the world of geopolitics as well.
Speaker 2: After the break, how Trump's trade goals stack up against
Speaker 2: reality on the global stage. Trump's so called Liberation Day
Speaker 2: unleashed tariffs and chaos into the global economy in April.
Speaker 2: Since then, his administration has announced a handful of new
Speaker 2: trade deals with details that are changing by the day.
Speaker 2: So Brendan, when you think about the president's stated goals,
Speaker 2: and when you think about the effect that this trade
Speaker 2: negotiation strategy has already had on our relationships with other
Speaker 2: countries and on the economy, both domestically and abroad, is
Speaker 2: the strategy working.
Speaker 1: Well so far? I'll tell you up a few of
Speaker 1: what we have so far. We have deals with big
Speaker 1: economies like the European Union, Japan, the UK, South Korea,
Speaker 1: and a handful of countries in Asia. And the total
Speaker 1: of those announced deals so far that's about twenty five
Speaker 1: percent of the global economy. So that's not a small number.
Speaker 1: Most people would say those are accomplishments, but getting those
Speaker 1: from fact sheets and social media posts into actual enforceable
Speaker 1: binding agreements is a whole nother step that we're still
Speaker 1: going to have to see play out. Because you see
Speaker 1: these big numbers thrown out from Japan or Korea or
Speaker 1: the European Union, these purchase agreements where they say we'll
Speaker 1: buy this hundreds of billions of dollars worth of American products,
Speaker 1: American energy products for instance. Those are going to take
Speaker 1: a lot of calculating to even see if there's the
Speaker 1: capacity to do that. But this strategy isn't working for everyone.
Speaker 1: The most obvious example of that is India. India was
Speaker 1: in the lead pack a couple of months ago when
Speaker 1: these negotiations started off. President trub said nobody's ever done
Speaker 1: a deal with India. I'm going to do a deal
Speaker 1: with India. And he came out recently and said, you know,
Speaker 1: no deal twenty five percent tariff. Now, he did leave
Speaker 1: that open to further negotiations. But it's a strategy that's
Speaker 1: had mixed success and there's a lot still to verify
Speaker 1: and to see how it's executed to say that it's
Speaker 1: working and then it's actually successful.
Speaker 2: Well, we've also seen a lot of headlines on countries
Speaker 2: agreeing to something seemingly not related to the trade deal,
Speaker 2: like a promise to buy more gas, for example, or
Speaker 2: these investment deals and purchasing agreements that you mentioned with
Speaker 2: details to be hammered out later. How atypical is that
Speaker 2: to see these kinds of ancillary agreements being made on
Speaker 2: top of trade negotiations.
Speaker 1: Well, it's pretty atypical. Well if you compare it to
Speaker 1: the way trade has operated for the past several decades.
Speaker 1: Trade in the globalized system that emerged from the Second
Speaker 1: World War was based on a consistent lowering of tariffs
Speaker 1: and a sense of the more we trade with each other,
Speaker 1: the better off we are. What we're seeing from the
Speaker 1: Trump administration increasingly in these agreements to purchase certain goods
Speaker 1: from the US is something called managed trade. It's basically
Speaker 1: the government saying here's how much you should buy, rather
Speaker 1: than the companies that need these materials deciding for themselves.
Speaker 1: Some would say it's coercive. It's what China has done
Speaker 1: is kind of push its weight around and with smaller countries,
Speaker 1: and it's leading down a road, the critics would say,
Speaker 1: to where it's less efficient for the economy. It's not
Speaker 1: the most effective way to run the global trading system.
Speaker 2: Is it fair to say that managed trade kind of
Speaker 2: flies in the face of free trade? Is managed trade
Speaker 2: free trades opposite?
Speaker 1: Yeah, I mean, I think there's all sorts of different
Speaker 1: kinds of mechanisms for managed trade. But this is a
Speaker 1: government dictating to a certain extent what one country should
Speaker 1: purchase from it, rather than the private sector deciding what
Speaker 1: it should purchase from abroad. So it is a big
Speaker 1: sea change from the way things have run in the past. Now,
Speaker 1: it's not uncommon for countries to agree to say we
Speaker 1: will purchase your supplies over another country's supplies because that
Speaker 1: country is an adversaries. Defense weapons is a good example
Speaker 1: of that. But to have it applied broadly to a
Speaker 1: trading relationship is something that we haven't seen for a
Speaker 1: long time. Brennan.
Speaker 2: You've talked us through the fact that trade deals often
Speaker 2: take years to hammer out, and these new deals have
Speaker 2: been figured out in a matter of months. Has this
Speaker 2: process fundamentally changed the way trade negotiations might unfold? Is
Speaker 2: this going to be a hallmark of the Trump administration
Speaker 2: or could it ripple beyond it?
Speaker 1: Well, so far, none of the other countries that Trump
Speaker 1: is engaged with have gone toe to toe with him
Speaker 1: and adopted this approach. This is the approach Donald Trump
Speaker 1: brought to the White House from his experience as a
Speaker 1: real estate developer. I'm not sure we're going to see
Speaker 1: other countries that are still committed to a globalized free
Speaker 1: trading system suddenly turn protectionists and start adopting the same approach.
Speaker 1: There's a lot of analysts who would say, you know,
Speaker 1: the US is a big economy, but there's another seventy
Speaker 1: five percent of global GDP out there for US to
Speaker 1: do business with, and a lot of countries will just
Speaker 1: do less trade with the United States and we'll try
Speaker 1: to find some others where we can continue along the
Speaker 1: principles of a rules based trading system geared toward lower
Speaker 1: tariffs without the US in the picture.
Speaker 2: Does that scare the analysts you speak to.
Speaker 1: A lot of people see this as the free trade
Speaker 1: pendulum swinging back in the other direction under President Trump.
Speaker 1: But how far that swings, you know, whether that takes
Speaker 1: the whole world with it is still an open question.
Speaker 1: We're watching this experiment in real time, and it's nobody
Speaker 1: really knows where it's going to end up.
Speaker 2: This is the big take from Bloomberg News. I'm Sarah Holder.
Speaker 2: The show is hosted by Me, David gera wanj and
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Speaker 2: for listening. We'll be back on Monday.