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

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Speaker 2: This is the Bloomberg Day Bake your podcast, available every

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Speaker 2: morning on Apple, Spotify or wherever you listen. It's Thursday,

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Speaker 2: the twenty seventh of March in London. I'm Caroline Hepki and.

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Speaker 1: I'm Stephen Carroll. Coming up today, President Donald Trump announces

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Speaker 1: global car tariffs with no carve outs, as the EU

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Speaker 1: prepares for double digit levies in next week's announcement.

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Speaker 2: Wall Street bankers and FED officials warn US policy moves

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Speaker 2: are driving uncertainty and killing confidence.

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Speaker 1: Plus at taxing time to plan for growth. Why Rachel

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Speaker 1: Reeves took a gamble with yesterday's UK Spring statement.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 1: President Donald Trump has announced a twenty five percent tariffs

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Speaker 1: on imports of automobiles into the United States. The levee

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Speaker 1: will apply to all passenger vehicles and light trucks, as

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Speaker 1: well as key parts like engines, transmissions, and electrical components,

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Speaker 1: due to take effects from next Wednesday. The charges will

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Speaker 1: come on top of any duties already in effect. Announcing

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Speaker 1: the new tariffs, Trump said he was not interested in

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Speaker 1: negotiating any exceptions.

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Speaker 3: If parts are made in America and a car isn't.

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Speaker 3: Those parts are not going to be text or tariff,

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Speaker 3: and we'll have very strong policing as far as that's concern.

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Speaker 3: For the most part, I think it's going to lead

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Speaker 3: cars to be made in one location, and right now

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Speaker 3: a car would be made here, sent to Canada, sent

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Speaker 3: to Mexico, sent all over the place. It's ridiculous.

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Speaker 1: Despite Trump's view that Levy's risk disrupting operations for car

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Speaker 1: makers who rely on highly integrated supply chains across North America,

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Speaker 1: shares in General, Motors, Ford, and Toyota have all declined

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Speaker 1: after the news.

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Speaker 2: The car tariffs mark a significant expansion of Donald Trump's

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Speaker 2: trade fight. Doug Ford, the premiere of Ontario, where most

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Speaker 2: of Canada's auto industry is based, says that it's virtually

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Speaker 2: guaranteed that Canada would retaliate. Here's what the country's new

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Speaker 2: Prime Minister, Mark Karney had to say.

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Speaker 4: This is a direct attack, to be clear, a direct attack.

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Speaker 2: Karne didn't announce any new retaliatory measures, saying that he

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Speaker 2: will meet with members of his cabinet first. Within the

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Speaker 2: last few minutes, President Trump writes on truth Social floating

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Speaker 2: the idea of more tariffs on the European Union and

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Speaker 2: Canada if they work against US, according to the President. Meanwhile,

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Speaker 2: Japan's Prime Minister Shiguro Ishiba says that he won't rule

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Speaker 2: out taking countermeasures.

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Speaker 4: We must consider appropriate responses, and naturally all options are

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Speaker 4: on the table. The bottom line is that we must

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Speaker 4: consider what will best serve the national interests.

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Speaker 2: Of Japan, Japan's Prime minister speaking thereafter, repeated in person

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Speaker 2: please by Japanese ministers for an exemption were rejected. Car

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Speaker 2: and car parks accounted for a little over one third

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Speaker 2: of Japan's exports to the US last year.

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Speaker 1: European Commission President our Slavander Lyons says the US decision

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Speaker 1: was regrettable. In a statement, she said the EU will

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Speaker 1: assess the car import levy as well as the broader

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Speaker 1: tariffs expected to be announced next week. Bloomberg Hasler in

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Speaker 1: the European Union expects the US to hit it with

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Speaker 1: double digit tariffs on all goods after no progress was

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Speaker 1: made in talks. James Wilcock has more built to.

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Speaker 5: Screw US freeloaders economic abuses. That's how US President Donald

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Speaker 5: Trump has described the European Union publicly in recent weeks.

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Speaker 5: So Bloomberg's reporting that private trade talks between the EU's

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Speaker 5: Trade chief Maraschefkevich and US Commerce Secretary Howard Lutnik were

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Speaker 5: a non starter might come as little surprise. But the

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Speaker 5: US President yesterday said tariffs would be lower than many expects.

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Speaker 3: Now we're going to make it all countries, and we're

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Speaker 3: going to make it very lenient. I think people are

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Speaker 3: going to be very surprised. It'll be, in many cases

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Speaker 3: less than the tariff that they've been judging us for daycades.

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Speaker 3: So I think people are going to be very, very surprised.

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Speaker 5: The EU says they'll react firmly and proportionally if levies

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Speaker 5: are imposed next week in London. James Orcock Bloomberg Radio.

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Speaker 2: Now, the policy uncertainty in the US is forcing a

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Speaker 2: slowdown in mergers and acquisitions. Top dealmakers at Morgan Stanley,

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Speaker 2: UBS and a host of other Wall Street firms have

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Speaker 2: told Bloomberg that many bars and sellers are in wait

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Speaker 2: and see mode. The bullback comes as Federal Reserve officials

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Speaker 2: are also sounding an alarm on the broader impact of

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Speaker 2: the Trump administration's actions. Here is the Minneapolis Fed President

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Speaker 2: Neil Kashkari bet.

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Speaker 6: They're fed for ten years. And this is the most

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Speaker 6: dramatic shift in confidence that I can recall, except for

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Speaker 6: when COVID hit in March of twenty twenty. A lot

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Speaker 6: of is uncertainty around the tariffs right now. Nobody knows

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Speaker 6: how high are the tariff's going to go, what are

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Speaker 6: they going to get applied to, what are other countries

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Speaker 6: going to do? And how long are they going to

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Speaker 6: be sustained? So that's created uncertainty.

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Speaker 2: That's two extracts there form an event that Neil Kashkari

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Speaker 2: was speaking at in Minnesota. In a separate speech, the

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Speaker 2: Saint Louis FED president Alberta Musselm warned that it's not

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Speaker 2: clear if the inflationary impact from taris will actually prove temporary,

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Speaker 2: adding that interest rates may need to stay higher for longer.

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Speaker 1: The UK's Chancellor, Rachel Reeves restored her fiscal headroom with

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Speaker 1: public spending cuts worth billions. Speaking in Parliament, Reeves said

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Speaker 1: cuts to welfare payments and government running costs would help

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Speaker 1: to fill a gap created by higher borrowing costs and

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Speaker 1: weaker growth.

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Speaker 7: From two percent in the autumn to one percent today.

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Speaker 7: I am not satisfied with these numbers, and that is

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Speaker 7: why we on this side of the House are serious

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Speaker 7: about taking the action needed to grow our economy.

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Speaker 1: Rachi Reeves was speaking in Parliament to Britain's independent budget

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Speaker 1: watchdog still puts her odds of running over budget at

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Speaker 1: nearly fifty percent. That means many economists suspect the government

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Speaker 1: will have to put up taxes in the autumn to

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Speaker 1: raise more revenue.

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Speaker 2: European leaders are gathering for an impromptu defense summit in

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Speaker 2: Paris to discuss their role in the US led Russia

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Speaker 2: Ukraine cease fire talks. Ahead of the meeting, French President

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Speaker 2: and In Macco announced a new package of two billion

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Speaker 2: euros in military aid for Kiev.

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Speaker 8: Russia shall have no right of say regarding the support

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Speaker 8: we are providing and will provide Ukraine, nor shall Russia

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Speaker 8: set the conditions for this sustainable, lasting peace, because it

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Speaker 8: is about Ukraine and it is about the security all Europeans.

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Speaker 2: President Macroll, speaking there, Vira translator went on to say

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Speaker 2: that leaders will use the meeting to discuss what he's

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Speaker 2: labeled a reassurance force of European soldiers to maintain peace.

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Speaker 2: Ukrainian President Vladimir Zelinski will attend the summit and is

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Speaker 2: expected to discuss the recent talks in Saudi Arabia, where

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Speaker 2: Ukraine agreed to a partial cease far Meanwhile, US Treasury

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Speaker 2: Sectary Scott best Since told Fox News yesterday that Ukraine

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Speaker 2: is reviewing a new economic partnership proposal from Washington, which

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Speaker 2: could be signed as soon as next week.

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Speaker 1: Those are your top stories on the markets in Asia today.

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Speaker 1: Shares falling on the back of that announcement of tariffs

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Speaker 1: on the car industry. So the Nikko twoty five in

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Speaker 1: Tokyo down nine tenths of one percent, the topics half

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Speaker 1: a percent lower, the Cospy in sold down by one

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Speaker 1: point five percent. European stock futures in the red as well,

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Speaker 1: down half of one percent for eurostock's fifty futures. We

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Speaker 1: worked dollar spot index actually a tenth of one percent

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Speaker 1: weeker this morning, and a bit of a rebend in

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Speaker 1: the euro up two tenths of one percent against the

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Speaker 1: dollar one oh seven seventy five.

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Speaker 2: Now, in a moment, we'll bring you more on the

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Speaker 2: tariffs announced by President Donald Trump, plus analysis of the

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Speaker 2: Spring statement from the chance of hearing the UK Rachel Reeves.

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Speaker 2: Before we get to that, though, an interesting read this

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Speaker 2: morning about random numbers and whether they are truly random

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Speaker 2: or not.

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Speaker 4: An you break through.

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Speaker 1: Yeah, I know, I didn't know this, but apparently what

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Speaker 1: we thought of as being random numbers generally aren't because

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Speaker 1: the computer sequences that generate them are predetermined, which increases

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Speaker 1: a risk that hackers that have increasingly sophisticated computers could

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Speaker 1: actually crack the encryption codes that are meant to be random.

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Speaker 1: But our colleague Isabell Award has been writing about JP

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Speaker 1: Morgan's announcement that it's generated and certified, most importantly, a

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Speaker 1: truly random number using a quantum computer, and it's a

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Speaker 1: world first. The bank hopes worll of applications for security

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Speaker 1: and much more as well.

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Speaker 2: Yeah, not just for lotteries, but for all sorts of

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Speaker 2: other kind of financial applications, maybe even one day for derivatives.

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Speaker 2: Researchers creating the sequence using a quantum computer built by

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Speaker 2: Honeywell's Quantinum. But this of course perhaps beyond my mass skills,

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Speaker 2: but a new breakthrough, which is very interesting.

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Speaker 1: Let's bring in more details than on our top story

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Speaker 1: this morning. The announcement of tariffs from Donald Trump's White

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Speaker 1: House on all auto imports from next week. Bloomberg TV

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Speaker 1: Ancho Crity groups with us for more on this, Christie.

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Speaker 1: We had been expecting an announcement on this. Is it

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Speaker 1: better or worse than the industry at fears.

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Speaker 9: It's definitely worse because it is. We were largely expecting

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Speaker 9: these auto imports to hit a lot of the not

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Speaker 9: only European car makers and Japanese car makers, but of

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Speaker 9: course even US car makers as well. And now you're

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Speaker 9: getting almost a double whaemie on tariffs. Let me explain

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Speaker 9: here on April third, at twelve oh one am April third,

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Speaker 9: these are when the tariffs on whole cars are going

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Speaker 9: to be taking effect. The bad part, or I say

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Speaker 9: the worst part of this news from an economic standpoint,

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Speaker 9: is that that's only part one of the entire move

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Speaker 9: on the auto space. Part two comes about a month

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Speaker 9: later in early May, when you not only have tariffs

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Speaker 9: on the whole car, but tariffs on the car parts

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Speaker 9: as well. And I think the context is really important

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Speaker 9: here because for a lot of made in America cars

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Speaker 9: by the likes of GM Ford and other global car

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Speaker 9: makers to operate in the US space, A lot of

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Speaker 9: the parts and the majority ninety ninety five percent of

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Speaker 9: the vehicle is actually made elsewhere, and the final assembly

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Speaker 9: takes place on US soil. The final assembly is how

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Speaker 9: they're able to say this car was made in America.

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Speaker 9: That's ultimately the issue and the kind of breakdown the

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Speaker 9: economics the Trump administration is trying to get after.

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Speaker 2: This is having widespread impact on companies and on countries

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Speaker 2: from Toyo to Honda, Nissan, Silanti's, GM Food and various

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Speaker 2: different countries affected by this absolutely.

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Speaker 9: I mean, we'll just start from east to west if

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Speaker 9: we can. Japan is the big one, of course, and

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Speaker 9: we know that has been a expertise and a history

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Speaker 9: that Japan has had in the automaking space dating back

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Speaker 9: to the seventies really when there was, of course, a

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Speaker 9: Japan kind of held that position that China now holds

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Speaker 9: in the world now from an economic standpoint, in terms

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Speaker 9: of economic and manufacturing powerhouse. Continuing the journey west, you've

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Speaker 9: got of course Germany you have still Antis as you

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Speaker 9: mentioned in Italy as well. Spain is the number two

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Speaker 9: cars manufacturing hub in Europe. So Barcelona is a big

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Speaker 9: kind of autos piece Germany gets all the attention, but

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Speaker 9: Barcelona is right up there as well. You have a

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Speaker 9: little bit here right here in the UK. So there's

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Speaker 9: someenty of that to be discussed as well, and I

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Speaker 9: think Rachel Reeves is going to have her work cut

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Speaker 9: out for her as well in terms of addressing that

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Speaker 9: in the months to come. Then moving to the west,

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Speaker 9: further over to the western hemisphere, Canada and Mexico as well.

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Speaker 9: So twenty percent of most autos that are ultimately sold

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Speaker 9: in the United States come from Canada and Mexico, and

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Speaker 9: that simply has to do with the border, so so

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Speaker 9: much of the assembly happens in Mexico is brought over

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Speaker 9: to the border. Same story on the Canadian border by

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Speaker 9: Detroit and it comes back down.

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Speaker 4: So truly a global story, I'm gritty.

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Speaker 1: There's more to come as well.

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Speaker 4: Of course.

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Speaker 1: The broader announcement on tariff's expected next week, what Donald

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Speaker 1: Trump has referred to as reciprocal tariffs, and our source

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Speaker 1: is telling us that the EU is expecting that to

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Speaker 1: be a double digit tariff on EU imports.

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Speaker 9: There is that expectation, of course, nobody knows until it

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Speaker 9: actually comes, in fact, in just the last hour or

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Speaker 9: so Donald Trump has posted on truth social basically saying

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Speaker 9: that he plans even higher tariffs if the EU works

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Speaker 9: with Canada against US. This idea that if Ursula Vonderlin

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Speaker 9: or whoever the new prime of Canada tends to be

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Speaker 9: Mark Carney at the moment, does give some sort of

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Speaker 9: recipral tariffs to the United States, it is going to

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Speaker 9: be matched and matched in force. So that's going to

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Speaker 9: be something to be watching. We shoul also mention just

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Speaker 9: in the global automaking space right now, consolidation has been

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Speaker 9: a big, big story because basically, there are more cars

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Speaker 9: being made in the world than being sold in the

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Speaker 9: world right now, So a lot of automakers globally have

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Speaker 9: been suffering when it comes to their bottom line. This

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Speaker 9: could there's one argument out there that this could be

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Speaker 9: some sort of solution that not an ideal one, of course,

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Speaker 9: but one that would come at the perfect time where

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Speaker 9: an automaker is already struggling because of oversupply.

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Speaker 2: Okay, you officials meeting with US counterparts in Washington, d C.

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Speaker 2: This week, they're not certain, very doubtful that they'll get

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Speaker 2: any carve out or exceptions. Christy Gibt, thank you so

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Speaker 2: much for being with us this morning put a big

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Speaker 2: TV anca.

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Speaker 4: Here in the UK.

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Speaker 1: The Chancellor's efforts to preserve her credibility with markets seem

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Speaker 1: to have worked. Government borrowing costs fell after Rachel Reeves

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Speaker 1: announced a plan to fourteen billion pounds in to restore

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Speaker 1: her slim fiscal headroom. Are UK correspondent Lizzie Burden is

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Speaker 1: with us now for more? Is this a win for

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Speaker 1: Rachel Reeves? Then a positive market reaction?

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Speaker 10: Well, what a difference from October, Stephen, when yields rose

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Speaker 10: the moment Rachel Reeves sat down, And of course what

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Speaker 10: a different market reaction to Lisz Trust's mini budget, which

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Speaker 10: Reeves repeatedly pointed to and why that episode forces her

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Speaker 10: to focus on fiscal stability. In fact, Gil's had one

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Speaker 10: of their best days of the year so far yesterday

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Speaker 10: because borrowing rose less than expected. But look, it's revealing

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Speaker 10: that Reeves is so focused on those fiscal rules that

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Speaker 10: she restored her headroom to exactly the same size as

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Speaker 10: she left it in October, which was the third smallest

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Speaker 10: in history nine point nine million pounds. And we know

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Speaker 10: that that headroom was eroded between October and March, so

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Speaker 10: there's a good chance. As you've said that it's eroded again.

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Speaker 10: She's hostage to fortune. And I think about April the second,

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Speaker 10: as Kritty was just talking about tariff Day. What if

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Speaker 10: yields spike again. If the Chancellor is so wedded to

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Speaker 10: these fiscal rules, then markets can only assume more tax

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Speaker 10: rises are coming because we've been told that would be

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Speaker 10: her preference, and more spending cuts would be politically toxic.

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Speaker 2: The OBR, though, is warning of the risks to some

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Speaker 2: of the Chancellor's plans.

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Speaker 10: Yeah, I mean the OBR put the odds of the

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Speaker 10: Chancellor running over budget at nearly fifty percent. And in

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Speaker 10: terms of growth, the OBR halved its growth forecast for

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Speaker 10: this year, although it did raise it by twenty twenty nine.

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Speaker 10: The trouble is, Caroline, the OBR is more optimistic about

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Speaker 10: UK growth than all other forecasters, and there are a

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Speaker 10: lot of raised eyebrows about this. If the OBR in

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Speaker 10: the autumn reviews its models, the next budget is going

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Speaker 10: to be brutal. If this wasn't brutal enough and markets

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Speaker 10: really have to brace for that?

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Speaker 1: Is it just going back to a point you made

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Speaker 1: a moment ago about what the next set of decisions

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Speaker 1: will be for the Chancellor. Why would spending cuts be

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Speaker 1: politically toxic on top of what we've heard already?

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Speaker 10: Yeah, I mean the government's own assessment of those new

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Speaker 10: welfare cuts came out yesterday and they say it's going

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Speaker 10: to drive a quarter of a million people, including fifty

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Speaker 10: thousand children, into relative poverty by twenty thirty. And that

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Speaker 10: is for many labor MPs completely at odds with what

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Speaker 10: they stand for. Whether or not this is austerity. So

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Speaker 10: Reeves is clinging to herself imposed fiscal rules, I'll say,

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Speaker 10: but it's at painful cost, political disquiet, and the outlook

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Speaker 10: is now inherently uncertain. This, I would say, is the

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Speaker 10: opposite of hitting the reset button. It's much more like

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Speaker 10: kicking the can down the road.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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