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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 2: We are on watch for Liberation Day, and I wonder

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Speaker 2: if that means this is Liberation Week, because obviously we

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Speaker 2: are already looking ahead to the events planned for Wednesday,

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Speaker 2: which is the announcement long last of the planned April

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Speaker 2: second reciprocal tariffs that President Trump has been promising basically

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Speaker 2: since he took the oval office. The thing is, even

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Speaker 2: though we've known this is coming for a long time,

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Speaker 2: as we've approached the date, we have gotten not as

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Speaker 2: much clarity as to what exactly ultimately this so called

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Speaker 2: Liberation Day will entail, who all will be targeted, what countries,

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Speaker 2: will it have any exceptions or exclusions to this? And

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Speaker 2: exactly what rate of tariff are we talking about here?

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Speaker 3: Does anyone have the answers to those questions? Including Donald Trump?

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Speaker 3: I'm not sure. This does seem like something that's still

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Speaker 3: taking shape, and that's why we're lucky to have Nancy

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Speaker 3: Cook with us at a time like this. You need Bloomberg,

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Speaker 3: senior national political correspondent.

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Speaker 4: It's great to see you. Welcome back. Do you have.

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Speaker 3: Answers to any of these questions? And having covered Trump

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Speaker 3: for as long as you have, do you think he knows?

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Speaker 5: I don't think that he knows what he's going to

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Speaker 5: do with tariffs on Wednesday, and I don't think his

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Speaker 5: staff knows yet either. You know, we have had this

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Speaker 5: discussion before with each tariff deadline. They are really building

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Speaker 5: the plane as they're landing at mid air, and so

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Speaker 5: you know, he has a bunch of different advisors on

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Speaker 5: the tariff and trade issues. They're debating amongst themselves. We've

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Speaker 5: seen Trump himself go back and forth on you know,

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Speaker 5: what it would look like. Would it be reciprocal tariffs?

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Speaker 5: Is it going to apply to you know, fifteen trading

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Speaker 5: partners or more than that where they'll be carve outs.

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Speaker 5: You know, he sort of went back and forth over

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Speaker 5: the past five days, including this weekend, on that, and

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Speaker 5: you know my reporting shows that is still the case.

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Speaker 2: Well, do we have at least a sense that he's

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Speaker 2: narrowing his objectives? What he would like the tariffs to achieve,

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Speaker 2: because obviously he's talked about making trade more fair and balance,

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Speaker 2: but you also have his advisors saying, look at all

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Speaker 2: the revenue this is going to.

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Speaker 6: Raise.

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Speaker 2: And then President Trump is suggesting he'll lighten tariffs on

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Speaker 2: China if they agree to a TikTok deal, suggesting it's

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Speaker 2: still a negotiating tactic. Which of the three is it?

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Speaker 5: Nancy, Well, I think that he does view tariffs still

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Speaker 5: as a major negotiating tactic, and I think trade is

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Speaker 5: something that he actually feels quite strongly about and is

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Speaker 5: less ideologically flexible on trade than he is on some.

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Speaker 6: Other policy areas.

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Speaker 5: But I still think that he is going to want

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Speaker 5: to take some sort of action on April. Second, what

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Speaker 5: I have found very interesting in reporting on trade and

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Speaker 5: tariffs is just that the White House is fielding a

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Speaker 5: bunch of calls from freaked out automakers and businesses, all

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Speaker 5: sorts of businesses affected by the tariffs. And so what

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Speaker 5: I found really interesting is what they are telling the

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Speaker 5: businesses privately, which is sort of like, Okay, this won't

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Speaker 5: be as bad as you think, versus what Trump is

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Speaker 5: saying publicly.

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Speaker 6: And you know it is really interesting.

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Speaker 5: His chief of staff, Susie Wiles, I think, is aware

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Speaker 5: of the political risk that this poses to his presidency,

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Speaker 5: particularly with the midterms next year, and she has become

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Speaker 5: much more involved in the outreach to businesses, trying to

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Speaker 5: sort of soothe their nerves on this.

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Speaker 3: We've been asking frequently and you probably have too, if

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Speaker 3: Donald Trump looks at the markets the way he used to,

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Speaker 3: if he still believes that Wall Street is the metric

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Speaker 3: for his success. And I wonder if a better question

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Speaker 3: is does he just believe that all of that is coming,

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Speaker 3: that once we get through this tariff mess, there'll be

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Speaker 3: another monster rally that he can take credit for.

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Speaker 5: Well, So I have covered him, you know, since twenty sixteen,

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Speaker 5: and I will say that he has really sort of

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Speaker 5: doubled down on trade and tariffs in the last sort

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Speaker 5: of year. When we interviewed him at mar A Lago

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Speaker 5: in June, he was talking about President William McKinley, who

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Speaker 5: was into tariffs. You know. I know he has told

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Speaker 5: a bunch of economic advisors that he needs to read

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Speaker 5: they need to read the MCA book. You know, he's

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Speaker 5: obsessed with McKinley and this idea of tariffs and so

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Speaker 5: I really think that he views sort of enacting a

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Speaker 5: tariff agenda as more important than the markets. And you

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Speaker 5: have to remember, you know, he's not facing reelection this time.

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Speaker 5: There is a different political environment for him, and I

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Speaker 5: think he wants to see it through with these tariffs.

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Speaker 2: So when he told NBC he couldn't care less if

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Speaker 2: auto car prices rise because of his tariffs, we should

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Speaker 2: take him at his word.

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Speaker 6: I think we should take him at his word.

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Speaker 5: And I think that a lot of White House aids

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Speaker 5: around him what they are hoping to do is white

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Speaker 5: knuckle it through the tariff and trade part of this

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Speaker 5: year and hope that cutting taxes at the end of

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Speaker 5: the year can offset some of the economic pain caused

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Speaker 5: by the tariffs.

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Speaker 3: Remember write it like a cowboy during COVID, We're gonna

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Speaker 3: white during the tariffs. Do we believe that Wednesday is

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Speaker 3: sort of an ultimate event though, or do we just

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Speaker 3: kind of have more uncertainty and these tariffs go under

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Speaker 3: another review period and check back in thirty days kind

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Speaker 3: of thing.

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Speaker 6: I think it'll probably be more the latter.

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Speaker 5: I mean, Trump keeps putting up these deadlines, you know,

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Speaker 5: sort of every month or every week, about you know,

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Speaker 5: we're going to see tariffs on Mexico and Canada, and

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Speaker 5: then there's sort of weekend or delayed a month, and

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Speaker 5: so I think that there will be action Wednesday, but again,

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Speaker 5: sort of what that looks like is still up in

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Speaker 5: the air, and I could certainly see him, based on

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Speaker 5: what he's done in the past, you know, sort of

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Speaker 5: backing off or extending that deadline.

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Speaker 2: Well, we're just hearing from his Press secretary Caroline Lovett,

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Speaker 2: who was speaking on Fox right now saying Trump's tariffs

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Speaker 2: will end unfair trade practices. So guess this back to

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Speaker 2: your point, Nancy, about him feeling passionately about the issue

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Speaker 2: of trade and making it more reciprocal and fair. Just finally,

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Speaker 2: do we have an understandings as to when he's talking

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Speaker 2: about getting trade fair if he ultimately his goal is

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Speaker 2: for there to be no tariffs on US imports at all,

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Speaker 2: actually free trade everywhere, is that where this ends?

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Speaker 5: I mean, I think this is a great question about

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Speaker 5: what the end goal is, but I don't think that

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Speaker 5: he knows what the end goal is. I think the

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Speaker 5: end goal in his mind is sort of to put

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Speaker 5: the US on a better footing with different countries. To

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Speaker 5: have what he considers more fairness economically. But I don't

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Speaker 5: think that that necessarily is like a defined thing in

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Speaker 5: his mind, a defined endpoint. He's just looking for the

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Speaker 5: best deal he can get over the next year, before

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Speaker 5: the midterms, when I think Republicans are feeling like they're

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Speaker 5: going to.

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Speaker 6: Be back on their heels.

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Speaker 2: All right, Nancy Cook Bloomberg, senior national politics reporter here

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Speaker 2: with us in our Washington, DC studio. Thank you so much.

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Speaker 2: And we're getting more from White House Press Secretary Caroline Levitch.

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Speaker 2: She says Trump tariffs will ensure reciprocity.

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Speaker 3: Joe, Well, and to your point, maybe that's the goal.

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Speaker 3: We just don't know, because if you're talking about raising

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Speaker 3: massive sums of money revenue, they need to be not

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Speaker 3: only in place, but they need to stay in place.

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Speaker 3: This can't be a bargaining chip. And after what we

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Speaker 3: heard from Peter Navarrow over the weekend, I'm not sure

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Speaker 3: how you square that.

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Speaker 2: Yeah, let's listen to mister Navarrow, who of course is

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Speaker 2: a trade advisor to President Trump, and his own words

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Speaker 2: on how much money this will raise over what time horizon.

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Speaker 7: Let's work through the economics of this. First of all,

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Speaker 7: we're going to raise about one hundred billion dollars with

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Speaker 7: the auto tariffs along the other tariffs are going to

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Speaker 7: raise about six hundred billion dollars a year, about six

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Speaker 7: trillion over a ten year period. And we're going to

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Speaker 7: have tax cuts. It's the biggest tax cut in American history.

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Speaker 2: So that's obviously a lot of money. But again it's

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Speaker 2: under the assumption that these tariffs, once in effect, are

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Speaker 2: going to stick. They'll be rolled back once President Trump

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Speaker 2: is able to exact some kind of concession from our

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Speaker 2: training pot ten years.

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Speaker 4: To Peter Navarro's point, we'll see.

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Speaker 2: About that, right, Well, yeah, and I'm sure Doug Ruticker

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Speaker 2: is interested to see about that as well. He's here

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Speaker 2: with us in our Washington, DC studio now founder and

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Speaker 2: managing partner of International Capital Strategies, also former executive a

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Speaker 2: former member of the executive board at the IMF. Welcome

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Speaker 2: back to Balance of Power.

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Speaker 8: Doug, to be here.

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Speaker 2: It's good to see you. Do you have any idea

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Speaker 2: really what we're going to get on Wednesday?

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Speaker 6: Does anyone?

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Speaker 8: No?

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Speaker 9: I think we don't know the who, we don't know,

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Speaker 9: the what, we don't know, the where, we don't know,

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Speaker 9: the when, we don't know the why other than that

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Speaker 9: clear as day. So you know, uncertainty is a big

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Speaker 9: deal in markets, in business, in the real economy and internationally,

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Speaker 9: and this is just fraught with uncertainty. You've got advisors

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Speaker 9: to the president, You've got people who are by statute

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Speaker 9: and otherwise empowered to speak on behalf of this administration

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Speaker 9: on tariffs, which by the way, as an Article one

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Speaker 9: competence vested to Congress.

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Speaker 8: But that's a different issue. It shouldn't be, but it is.

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Speaker 9: And every single one of them went on the shows today, yesterday,

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Speaker 9: the day before and said.

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Speaker 8: We don't know.

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Speaker 9: That's a pretty scary landscape in which to approach, you know,

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Speaker 9: multiple trillions of dollars of trade and economic performance.

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Speaker 3: So do you expect I guess we should then ask it,

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Speaker 3: do you expect clarity this week? Because every time we

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Speaker 3: get a deadline or a big announcement like this, the

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Speaker 3: markets get all worked up, and we've seen a real

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Speaker 3: reaction here in stocks and bonds. The president says, I

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Speaker 3: just got off the phone with somebody, or there's a

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Speaker 3: posting on truth social We're going to kick this back

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Speaker 3: for thirty days for review. When will there be clarity.

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Speaker 9: Well, I don't know if there's going to be clarity

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Speaker 9: on April second. I think there's going to be some

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Speaker 9: clarity on April second. So what I mean by that

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Speaker 9: is they'll be a big announcement. The President has boxed

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Speaker 9: himself in. If he now had his advisors all convince

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Speaker 9: him this is a really bad idea, mister President, the markets,

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Speaker 9: the economy, internationally, strategically, it's really bad.

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Speaker 8: He still boxed himself in.

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Speaker 9: So I think there's going to be a set of

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Speaker 9: big announcements on April second. What happens thereafter is going

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Speaker 9: to be a little bit less certain, meaning the retaliation

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Speaker 9: and the response of a lot of other both domestic

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Speaker 9: and in particular international actors, is as yet uncertain, but

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Speaker 9: that will play out over time. But I do think

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Speaker 9: those who think that you're going to get this kick

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Speaker 9: the can down the road on April second are probably

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Speaker 9: missing that April second is going to be a big deal.

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Speaker 2: Well, I just wonder how big we are thinking when

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Speaker 2: we're talking actual numbers. We just heard Peter Navarro suggesting

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Speaker 2: six hundred billion dollars in revenue raised off of this.

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Speaker 2: What does that suggest about what these actual figures might look.

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Speaker 9: Like, yeah, well, so if you just take Peter Navarro

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Speaker 9: at face value that suggests tariffs of between fifteen and

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Speaker 9: twenty percent. I mean, it's a very back of the

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Speaker 9: holm across the board, because that would be just extrapolating

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Speaker 9: how you get to six hundred billion over each of

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Speaker 9: the next ten years. Obviously, it's a dynamic world that

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Speaker 9: things don't just play out in a linear way, and

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Speaker 9: there will be retaliation. It's interesting in the comment that

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Speaker 9: you played from Peter Navarro, he talked about how this

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Speaker 9: would be a great revenue enhancer without recognizing that the

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Speaker 9: tariffs themselves represent probably the single biggest tax hike in

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Speaker 9: the last thirty plus.

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Speaker 8: Years in this country. Cuts he calls them tax cuts.

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Speaker 9: That doesn't even get to the point where the other

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Speaker 9: countries start to retaliate. So you've got some hesitation on

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Speaker 9: the part of the EU, China and others. They don't

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Speaker 9: want to go down this route. They don't like huge

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Speaker 9: tax hikes, but they're going to be forced to do them,

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Speaker 9: because if Trump is taking this stance, then they're gonna

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Speaker 9: be forced to retaliate. So you are in what is

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Speaker 9: classically defined as a trade war.

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Speaker 4: So this becomes about philosophy.

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Speaker 3: And there's this line that you hear about it's you know,

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Speaker 3: whoever spoke with Donald Trump last. You've got Peter Navarro

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Speaker 3: on one shoulder, maybe Scott Bessen's on another shoulder.

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Speaker 4: Who wins.

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Speaker 9: I'm convinced that Trump really does believe that a wholesale

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Speaker 9: change in the way the American and global economy works

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Speaker 9: is what is needed, and he seems to be willing

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Speaker 9: to pay the price. I'm not sure he himself will

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Speaker 9: pay the price, but Americans and everyone in the world

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Speaker 9: will pay the price. So I'm more leaning towards the

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Speaker 9: I'm gonna do big, I'm gonna do structural. I'm gonna,

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Speaker 9: you know, throw the baby out with the bath water

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Speaker 9: and try and really upend the way the global economy

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Speaker 9: operates and the US role in that economy. And if

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Speaker 9: there's what he would define a short term pain, it's

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Speaker 9: worth the longer term gain. I'm not sure the gain

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Speaker 9: is actually going to be a gain, and I'm certainly

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Speaker 9: don't think it's worth the short term pain.

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Speaker 2: Well, so, when we consider the global economy, which area

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Speaker 2: of it do you think, ultimately regionally is going to

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Speaker 2: feel the impacts of this most detrimentally, because when we

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Speaker 2: put collectively what Trump has talked about, even the threat

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Speaker 2: of secondary tariffs on things like Russian oil, who buys that?

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Speaker 2: India and China, who has big deficits with the US

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Speaker 2: already that Trump doesn't like India and China. A lot

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Speaker 2: of our biggest trade deficits are in Asian countries. Is

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Speaker 2: that actually the area focus or does zerop have equal

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Speaker 2: reason for concern here?

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Speaker 9: I don't think it's even remotely possible to say which

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Speaker 9: region is going to suffer the most, because if you

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Speaker 9: go down the route I described, where Trump is actually saying,

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Speaker 9: I want to upend the global trading system.

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Speaker 8: That's avolimble there existed.

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Speaker 9: So you actually get to the point where the rules

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Speaker 9: of the last eighty years, right after World War Two,

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Speaker 9: we had the GAT nineteen forty seven, then you had

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Speaker 9: the WTO nineteen ninety five.

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Speaker 8: These steps created.

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Speaker 9: A low tariff, free trade environment that everyone benefited from.

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Speaker 9: If you're going to reverse that, then everybody's going to suffer.

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Speaker 9: That doesn't mean I'm saying free trade didn't hurt certain

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Speaker 9: countries in certain interests. Of course it did. There's no

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Speaker 9: such thing as free trade. There shouldn't be. There have

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Speaker 9: got to be checks and balances. But the idea of

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Speaker 9: throwing out the entire system is one that will have

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Speaker 9: global repercussions and it's.

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Speaker 8: Not going to help anyone.

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Speaker 9: Now, one point I would make, it's not clear whether

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Speaker 9: the rest of the world potentially under I can't believe

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Speaker 9: I'm going to say this. Chinese leadership could say we're

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Speaker 9: going to try and recreate a multilateral trading system on

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Speaker 9: the basis of a non US participation in that system.

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Speaker 8: That's not hard. That is hard to imagine.

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Speaker 4: It's not important of failure here.

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Speaker 8: Oh.

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Speaker 9: I think that there are so many definitions of failure

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Speaker 9: that I don't even know where to begin. I think

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Speaker 9: the definition of failure is going to be when you

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Speaker 9: see potentially supply chains that are upended and that tariffs

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Speaker 9: lead to and this whole structure leads to inflation, leads

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Speaker 9: to I mean, the big stagflation risk, and countries that

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Speaker 9: are forced into retaliation when.

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Speaker 8: They don't want to do it. There's no reason for this.

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Speaker 2: So you said stagflation, Are you also willing to say recession?

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Speaker 2: Is that a real risk at this point?

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Speaker 9: I mean, if you're defining recession as several quarters of

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Speaker 9: zero to negative growth. Yeah, sure, I mean that's a possibility.

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Speaker 9: I'm not calling for it, but could you see it? Yeah,

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Speaker 9: because I think a lot of people are blissfully hoping

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Speaker 9: that the more pro market Trump administration voices will ultimately

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Speaker 9: win the day. And they could. But in the meantime,

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Speaker 9: let's go back to where we started uncertainty. Is anybody

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Speaker 9: making a new investment? Is anybody doing a new M

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Speaker 9: and A deal? Is anybody doing a new cross border

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Speaker 9: trade deal? Is anybody doing anything right now? Or are

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Speaker 9: they all paralyzed? And if you're paralyzed, that obviously is

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Speaker 9: a direct impact on economic performance and growth that leads

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Speaker 9: to risks of recession.

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Speaker 3: We're just hearing from the Press secretary. It looks like

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Speaker 3: we will be watching all of this rolled out in

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Speaker 3: a rose Garden event on Wednesday. Doug, we're out of time.

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Speaker 3: Is he going to stand there with a list of

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Speaker 3: hundreds of countries and go through all.

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Speaker 8: These uncertain but I think that there. Let me just

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Speaker 8: end with this.

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Speaker 9: There is no legal justification for any of this, right,

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Speaker 9: so what he does is going to be how he

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Speaker 9: manages to balance what he can plausibly get away with

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Speaker 9: with what he really wants to do.

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Speaker 3: Come back and talk to us once we get a

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Speaker 3: sense of what's real here and what isn't. That's Doug

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Speaker 3: Redicker back with us on Bloomberg TV and Radio. Doug,

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Speaker 3: thank you so much. We'll assemble our political panel next

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Speaker 3: with headlines coming from the White House Press Secretary. Give

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Speaker 3: us a better sense of how we're going to learn

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Speaker 3: about these tariffs on Wednesday. We'll have a lot more

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Speaker 3: with Rick Davis than Stephanie Murphy.

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Speaker 10: Next.

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Speaker 1: Right here on Bloomberg, you're listening to the Bloomberg Balance

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Speaker 1: of Power podcast. Catch us live weekdays at noon and

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Speaker 1: five pm Eastern on Apple, Cocklay and Android Auto with

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Speaker 1: the Bloomberg Business App. You can also listen live on

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Speaker 1: Amazon from our flagship New York station. Just say Alexa

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Speaker 1: played Bloomberg eleven thirty.

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Speaker 2: Chances are you already had April second penciled in on

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Speaker 2: your calendar, But I guess now it's safe to say

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Speaker 2: you can go ahead and circle Wednesday with permanent marker,

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Speaker 2: because Caroline Lovett has confirmed that it is Wednesday at

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Speaker 2: an event in the Rose Garden where President Trump will

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Speaker 2: be announcing reciprocal tariff. She's actually speaking to the press

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Speaker 2: at the White House right now and is giving us

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Speaker 2: a little bit more detail as to what exactly Wednesday

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Speaker 2: will entail. While not specifically rates or country, she does

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Speaker 2: say the goal of Wednesday is to announce tariff's country

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Speaker 2: by country, not sectoral tariffs, which she says the President

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Speaker 2: remains committed to, but she said he'll She'll let him

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Speaker 2: be talking.

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Speaker 6: About that later.

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Speaker 3: Well, that answers some of the questions we were asking

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Speaker 3: in in our program today.

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Speaker 4: Will they show up with a list of countries?

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Speaker 3: Will there be a massive map behind the President while

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Speaker 3: he's rolling this out, maybe a pointer because it's going

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Speaker 3: to take some time. We're talking about potentially hundreds of

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Speaker 3: different levies based on what countries are tariffing. The United

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Speaker 3: States will offer specifics, she says. In the announcement, sixty

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Speaker 3: four degrees in Cloudy, producer James says for Wednesday in Washington,

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Speaker 3: d C. So class will be outside for Liberation Day.

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Speaker 2: Yeah, in the Rose Guard in Liberation Day. Of course,

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Speaker 2: what the President is talking about. One of our ranged

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Speaker 2: questions is does that mean Wednesday is the actual day

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Speaker 2: of implementation or the day after, as is the case

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Speaker 2: we understand with the collection of auto tariffs or is

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Speaker 2: this just an announcement in advance of the collection happening

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Speaker 2: at some point.

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Speaker 3: Nothing but questions. It's a new week, it's a day

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Speaker 3: that ends and why? And our political panel thankfully is

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Speaker 3: with us Rick Davis, Bloomberg Politics contributor, or Republican strategist

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Speaker 3: and partner at Stone Court Capital, joined today by former

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Speaker 3: Democratic Congresswoman Stephanie Murphy of Florida. Great to have you

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Speaker 3: both back together here. We want to talk about a

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Speaker 3: couple of things here, Rick, because Donald Trump made a

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Speaker 3: lot of news over the weekend in a simple telephone

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Speaker 3: conversation and then in conversation with reporters on Air Force one.

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Speaker 3: But now that we have a sense of the optics,

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Speaker 3: what do you make of this afternoon time Rosegarden, Donald

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Speaker 3: Trump a map of the world. I'm assuming America will

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Speaker 3: be watching because we're told it's not just the markets,

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Speaker 3: consumers have been changing their behavior ahead of these tariffs

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Speaker 3: taking effect.

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Speaker 11: Yeah, it's a little like we know that there's a

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Speaker 11: big storm coming and they you know, the markets sell

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Speaker 11: out a toilet paper. I mean, it's the craziest kind

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Speaker 11: of reaction. But I don't know anybody who's not talking

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Speaker 11: about tariffs. I mean, do you know that march madness

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Speaker 11: is happening. We're in the final four, and nobody seems.

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Speaker 6: To care about number one seats.

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Speaker 4: They all care about, you know, tariffs.

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Speaker 11: So he's already accomplished one thing, and that is it's

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Speaker 11: on everybody's mind. They think it's going to be an

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Speaker 11: elixir for our financial problems. At least that's the way

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Speaker 11: he's selling it. And uh, and yet Wall Streets scared

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Speaker 11: to death from what I can tell their chiven Air

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Speaker 11: boots as to what's going to happen tomorrow. And as

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Speaker 11: you point out, nobody really knows until we hear it

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Speaker 11: from the big man. So uh, I'm content to wait

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Speaker 11: and see. But the bottom line is, I think we

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Speaker 11: all have to brace for whatever the impact of this is.

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Speaker 11: If they are talking about raising hundreds of billions of

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Speaker 11: dollars through tariff regimes, that means they're not going to

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Speaker 11: be insignificant, they're not going to be pinprick, and they're

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Speaker 11: going to be more permanent than short and that means

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Speaker 11: that the markets are going to have a real hard

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Speaker 11: time digesting that well.

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Speaker 2: And when we consider the revenue raising aspects of this congresswoman.

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Speaker 2: Obviously this is seen and many of his members of

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Speaker 2: his administration have told us, you can't view tariffs separately

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Speaker 2: from taxes, which is a whole other battle. And yet

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Speaker 2: if he wants to cut taxes, that revenue needs to

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Speaker 2: come from somewhere else. Is everything he's planning to do

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Speaker 2: this week just setting the stage for that battle still

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Speaker 2: to come.

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Speaker 12: This is a bit of a shell game, because let's

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Speaker 12: be really honest, these tariffs that they're talking about will

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Speaker 12: be raising hundreds of billions, maybe trillions of dollars. They're

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Speaker 12: raising that money off of the American people. Tariffs are

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Speaker 12: paid by the American consum It tends to be one

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Speaker 12: of the more regressive taxes because lower income families pay

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Speaker 12: a larger percentage of their income towards the higher price

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Speaker 12: of goods. So this is the largest tax increase on

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Speaker 12: the American people. Set that part aside, and let's talk

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Speaker 12: about their plans for a tax cut. So far, the

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Speaker 12: plans for a tax cut predominantly benefit the most wealthy

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Speaker 12: in this country. So at the same time that they're

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Speaker 12: implementing tariffs, essentially a tax increase on the working families.

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Speaker 12: Every day Americans. They're planning to pay for it, use

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Speaker 12: that money to pay for tax cuts for the wealthiest

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Speaker 12: in this country. So I think there's a real problem

440
00:20:45,640 --> 00:20:48,520
Speaker 12: with that before we even get to what the markets

441
00:20:48,520 --> 00:20:51,600
Speaker 12: are doing, because the markets understand that tariffs go into

442
00:20:51,680 --> 00:20:55,520
Speaker 12: effect today. The idea of bringing a factory back to

443
00:20:55,560 --> 00:20:58,400
Speaker 12: the United States, which we couldn't agree on, is possibly

444
00:20:58,480 --> 00:21:01,639
Speaker 12: a good thing. That takes seven to ten years for

445
00:21:01,720 --> 00:21:05,359
Speaker 12: that to happen, and so the flight from US equities

446
00:21:05,480 --> 00:21:11,040
Speaker 12: happens immediately. The rebuild of the economy that this administration

447
00:21:11,200 --> 00:21:14,320
Speaker 12: is envisioning, if you are generous with the strategy that

448
00:21:14,359 --> 00:21:17,560
Speaker 12: they're approaching, takes a lot longer and is on a

449
00:21:17,600 --> 00:21:20,800
Speaker 12: longer time horizon. So what happens in the interim. What

450
00:21:20,960 --> 00:21:25,400
Speaker 12: happens is everyday Americans pay higher prices, people who are

451
00:21:25,520 --> 00:21:31,520
Speaker 12: on fixed incomes, reliant on the markets and their stock

452
00:21:31,720 --> 00:21:36,879
Speaker 12: portfolio see a significant decline in their income. And that's

453
00:21:36,960 --> 00:21:40,159
Speaker 12: before we even talk about what they're doing to Social Security.

454
00:21:40,600 --> 00:21:43,920
Speaker 12: So I think there are significant impacts to the US

455
00:21:43,960 --> 00:21:47,640
Speaker 12: economy that go well beyond the little sound bites that

456
00:21:47,920 --> 00:21:52,359
Speaker 12: we are hearing from this administration. And I think it

457
00:21:52,520 --> 00:21:57,720
Speaker 12: also takes some honesty about economic principles, to reckon with

458
00:21:57,840 --> 00:22:00,200
Speaker 12: what a tariff is, which is a tax on the

459
00:22:00,240 --> 00:22:01,320
Speaker 12: American people.

460
00:22:02,400 --> 00:22:06,680
Speaker 3: Enter secondary tariffs, Rick Davis on Russian oil. This is

461
00:22:06,720 --> 00:22:09,480
Speaker 3: what President Trump was talking about in a telephone interview

462
00:22:09,800 --> 00:22:13,159
Speaker 3: with NBC News over the weekend, talking about Vladimir Putin

463
00:22:13,280 --> 00:22:16,800
Speaker 3: specifically said he was angry at the Russian president, going

464
00:22:16,880 --> 00:22:20,439
Speaker 3: even further to say, quote, you could say I was

465
00:22:20,600 --> 00:22:24,480
Speaker 3: very angry, pissed off when Putin yesterday said started getting

466
00:22:24,480 --> 00:22:28,600
Speaker 3: into President Vladimir Zelenski's credibility. He's not seeing the progress

467
00:22:28,640 --> 00:22:31,240
Speaker 3: he wanted to in the peace talks. Rick, So he's

468
00:22:31,600 --> 00:22:35,960
Speaker 3: suggesting secondary tariffs. So twenty five percent tariff on all

469
00:22:36,640 --> 00:22:40,320
Speaker 3: other countries that buy oil from Russia. What do you

470
00:22:40,359 --> 00:22:44,560
Speaker 3: make of this more recent proposal and the reverse psychology

471
00:22:44,600 --> 00:22:47,440
Speaker 3: if that's what it is with Vladimir Putin.

472
00:22:48,480 --> 00:22:52,000
Speaker 11: Well, I hope it's not reverse psychology. Reverse psychology would

473
00:22:52,000 --> 00:22:54,560
Speaker 11: have been Hey, buddy, friend, you've been an enemy of

474
00:22:54,600 --> 00:22:56,600
Speaker 11: the United States for a long time, but I'm going

475
00:22:56,680 --> 00:22:58,840
Speaker 11: to make you popular with the rest of the world

476
00:22:58,880 --> 00:23:01,639
Speaker 11: if you just do a deal with me. Shock. Donald Trump,

477
00:23:02,080 --> 00:23:04,480
Speaker 11: you know, was lied to by Vladimir Putin. There is

478
00:23:04,560 --> 00:23:06,639
Speaker 11: no chance Vladimir Putin's going to cut a deal with

479
00:23:06,680 --> 00:23:10,240
Speaker 11: Donald Trump to lay down his arms on the Ukrainian border,

480
00:23:10,359 --> 00:23:13,800
Speaker 11: and so I think it's great. Do the secondary sanctions,

481
00:23:14,160 --> 00:23:17,199
Speaker 11: try to get everybody who's doing business with Russia to

482
00:23:17,240 --> 00:23:18,879
Speaker 11: stop doing it. I thought that was one of the

483
00:23:18,880 --> 00:23:22,680
Speaker 11: failings of the Biden administration is they didn't squeeze hard enough.

484
00:23:23,320 --> 00:23:26,640
Speaker 11: There was always an out for Vladimir Putin on resurrecting

485
00:23:26,680 --> 00:23:29,200
Speaker 11: his economy. If you talk to the folks at the Pentagon,

486
00:23:29,240 --> 00:23:32,480
Speaker 11: they'll tell you within the next twelve months his economy

487
00:23:32,480 --> 00:23:36,359
Speaker 11: will implode. And it's a totally different negotiation than what

488
00:23:36,440 --> 00:23:37,520
Speaker 11: we're trying to do today.

489
00:23:37,640 --> 00:23:39,240
Speaker 4: So I think it's great.

490
00:23:39,680 --> 00:23:44,560
Speaker 11: Keep going, Donald Trump, go after Vladimir Putin, say all

491
00:23:44,560 --> 00:23:48,399
Speaker 11: these things, initiate all these sanctions and tariffs, and I

492
00:23:48,440 --> 00:23:51,000
Speaker 11: think you can stand a better chance of getting a deal.

493
00:23:53,040 --> 00:23:53,240
Speaker 1: Well.

494
00:23:53,280 --> 00:23:56,040
Speaker 2: Given the way that the President has spoken about Vladimir

495
00:23:56,080 --> 00:23:59,800
Speaker 2: Putin in the not so distant past, just up recently,

496
00:23:59,840 --> 00:24:01,919
Speaker 2: up and tell his description of being angry with him

497
00:24:01,960 --> 00:24:04,840
Speaker 2: now compared to how he's been talking about and interacting

498
00:24:04,840 --> 00:24:08,200
Speaker 2: with the Ukrainian President. Vladimir Zelenski, Congressman do you take

499
00:24:08,240 --> 00:24:10,520
Speaker 2: heart in this kind of change of tone here.

500
00:24:11,720 --> 00:24:15,159
Speaker 12: No, it sounds like a lover spurned. I mean he's

501
00:24:15,280 --> 00:24:20,320
Speaker 12: been he has been kaw telling to Putin and is

502
00:24:20,840 --> 00:24:24,800
Speaker 12: admiring of his leadership style, has been trying to work

503
00:24:24,840 --> 00:24:27,040
Speaker 12: a deal, and I think he really went into it

504
00:24:27,119 --> 00:24:30,080
Speaker 12: thinking that, you know, Putin would want this. What he

505
00:24:30,119 --> 00:24:34,880
Speaker 12: doesn't understand about an autocrat and Putin is that when

506
00:24:34,960 --> 00:24:38,080
Speaker 12: he senses the ability to get more than what he

507
00:24:39,880 --> 00:24:42,639
Speaker 12: you know, what's at the table, he's going to do it.

508
00:24:42,680 --> 00:24:45,119
Speaker 12: And so he's pushing him. And so this is Trump

509
00:24:45,320 --> 00:24:48,360
Speaker 12: just responding in the moment that his overtures to his

510
00:24:48,480 --> 00:24:51,479
Speaker 12: buddy didn't work out the way that he wanted them to.

511
00:24:52,000 --> 00:24:55,000
Speaker 12: So yes, I think, you know, if we are strong

512
00:24:55,040 --> 00:24:58,080
Speaker 12: and tough the way that Rick's former boss, Senator McCain

513
00:24:58,320 --> 00:25:01,399
Speaker 12: was towards Russia, and that was the consistent message that

514
00:25:01,480 --> 00:25:05,040
Speaker 12: America was sending. That's one thing. But what we're seeing

515
00:25:05,160 --> 00:25:09,119
Speaker 12: here is just somebody who is disappointed that his strategy

516
00:25:09,160 --> 00:25:10,840
Speaker 12: didn't turn out the way that he wanted it to.

517
00:25:10,920 --> 00:25:13,359
Speaker 12: Because he does want the Ukraine War, just as the

518
00:25:13,359 --> 00:25:15,720
Speaker 12: American people wants the Ukraine War to be over. But

519
00:25:15,800 --> 00:25:20,080
Speaker 12: at what price. So you know, I think I have

520
00:25:20,200 --> 00:25:23,720
Speaker 12: a slightly different take on what exactly is happening here.

521
00:25:23,960 --> 00:25:26,600
Speaker 12: But of course, for the good of Ukraine, for the

522
00:25:26,600 --> 00:25:28,840
Speaker 12: good of the world, we do want to see an

523
00:25:28,920 --> 00:25:31,600
Speaker 12: end to that conflict. We want to see adjust and

524
00:25:31,760 --> 00:25:35,000
Speaker 12: to that conflict that can sustain, and that requires some

525
00:25:35,040 --> 00:25:39,720
Speaker 12: security guarantees which apparently this administration isn't willing to engage in.

526
00:25:40,760 --> 00:25:43,680
Speaker 3: Well, we talk a lot about promises made, promises kept

527
00:25:43,720 --> 00:25:48,520
Speaker 3: around here with regard to Tariff's mass deportations, presumably Trump

528
00:25:48,560 --> 00:25:51,120
Speaker 3: tax cuts depending on how things go on Capitol Hill.

529
00:25:51,520 --> 00:25:54,320
Speaker 3: But Rick, remember one of the initial promises when Donald

530
00:25:54,320 --> 00:25:56,560
Speaker 3: Trump was getting into this race, and even before he

531
00:25:56,600 --> 00:25:58,800
Speaker 3: got into it, was that if I were president, I

532
00:25:58,840 --> 00:26:01,679
Speaker 3: could end this war on day one. He could do

533
00:26:01,760 --> 00:26:05,000
Speaker 3: it in hours, he had it worked out in his mind.

534
00:26:05,119 --> 00:26:08,080
Speaker 3: This is one promise that could be difficult to keep.

535
00:26:08,440 --> 00:26:09,760
Speaker 3: What do you think happens next?

536
00:26:11,040 --> 00:26:13,240
Speaker 11: Yeah, you know, you raise an important point because the

537
00:26:13,280 --> 00:26:17,679
Speaker 11: American public agrees with what Stephanie Murphy just said. They

538
00:26:17,800 --> 00:26:21,440
Speaker 11: want to see this conflict ended, but they also want

539
00:26:21,440 --> 00:26:25,840
Speaker 11: to see it ended properly, and that means that Ukraine

540
00:26:25,960 --> 00:26:29,159
Speaker 11: is able to function as a vibrant democracy, you know,

541
00:26:29,200 --> 00:26:32,080
Speaker 11: with a full economy and acceptance into Europe and NATO.

542
00:26:32,280 --> 00:26:35,000
Speaker 11: So that's what's clear in all the polling. That's what

543
00:26:35,040 --> 00:26:38,200
Speaker 11: our public policy experts, you know, want to see happen.

544
00:26:38,680 --> 00:26:41,199
Speaker 11: And if that doesn't happen, then it's going to be

545
00:26:41,280 --> 00:26:45,919
Speaker 11: a failure of the Trump administration. And right now I

546
00:26:46,000 --> 00:26:48,480
Speaker 11: think that it's too soon to tell how this is

547
00:26:48,520 --> 00:26:53,760
Speaker 11: going to be marked for the midterms. But considering the

548
00:26:53,800 --> 00:26:58,600
Speaker 11: popularity rating of this administration, the precarious nature of the

549
00:26:58,720 --> 00:27:02,480
Speaker 11: division within the House representatives, you really have to wonder

550
00:27:02,520 --> 00:27:04,879
Speaker 11: what the last two years of this administration is going

551
00:27:04,920 --> 00:27:08,399
Speaker 11: to look like if the House flips, the Senate gets tighter,

552
00:27:08,640 --> 00:27:12,439
Speaker 11: and this administration starts to lose the backing of the

553
00:27:12,480 --> 00:27:14,320
Speaker 11: public that supported it to begin with.

554
00:27:16,080 --> 00:27:19,200
Speaker 2: All right, Rick Davis Stone Court, Capital partner in Bloomberg Politics,

555
00:27:19,240 --> 00:27:24,080
Speaker 2: contributor alongside former Democratic Congressman Stephanie Murphy our political panel today,

556
00:27:24,119 --> 00:27:26,280
Speaker 2: Thank you so much. We're going to have much more

557
00:27:26,320 --> 00:27:29,119
Speaker 2: ahead as we consider the Senate trying to take steps

558
00:27:29,119 --> 00:27:31,439
Speaker 2: forward on that tax package we were just discussing with

559
00:27:31,520 --> 00:27:33,760
Speaker 2: the panel. We'll turn to Erica York, Vice President of

560
00:27:33,800 --> 00:27:37,200
Speaker 2: Federal Tax Policy at the Tax Foundation. Next on Bloomberg

561
00:27:37,200 --> 00:27:38,680
Speaker 2: TV and radio.

562
00:27:41,680 --> 00:27:45,160
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

563
00:27:45,200 --> 00:27:48,639
Speaker 1: us live weekdays at noon and five pm Eastern on Apple,

564
00:27:48,720 --> 00:27:52,040
Speaker 1: Cockley and Android Otto with the Bloomberg Business App. Listen

565
00:27:52,119 --> 00:27:55,239
Speaker 1: on demand wherever you get your podcasts, or watch us

566
00:27:55,280 --> 00:27:57,560
Speaker 1: live on YouTube.

567
00:27:57,760 --> 00:28:00,359
Speaker 3: I guess we could say it could be worse line

568
00:28:00,359 --> 00:28:04,639
Speaker 3: on our markets today, Kayley, And there could be worse coming.

569
00:28:04,680 --> 00:28:07,320
Speaker 3: You see Goldman Sachs warning clients now of a thirty

570
00:28:07,359 --> 00:28:11,040
Speaker 3: five percent chance of recession, up from twenty Morgan Stanley's

571
00:28:11,080 --> 00:28:14,960
Speaker 3: Michael Wilson on Bloomberg Surveillance earlier today, pulling back on

572
00:28:15,000 --> 00:28:15,920
Speaker 3: the year end targets.

573
00:28:15,920 --> 00:28:16,520
Speaker 4: What did he say?

574
00:28:16,520 --> 00:28:19,320
Speaker 3: It was fifty eight to fifty nine hundred somewhere. We

575
00:28:19,320 --> 00:28:21,840
Speaker 3: were getting pretty close to fifty five hundred this morning,

576
00:28:21,840 --> 00:28:23,320
Speaker 3: but pulling off the lows here so far.

577
00:28:23,800 --> 00:28:26,439
Speaker 2: Yeah, As we end the first quarter, which obviously has

578
00:28:26,480 --> 00:28:29,720
Speaker 2: been incredibly rocky for equity markets, depending on how we

579
00:28:29,760 --> 00:28:31,440
Speaker 2: close today, it could be a more than five percent

580
00:28:31,480 --> 00:28:33,920
Speaker 2: loss on the quarter for the S and P five hundred,

581
00:28:33,960 --> 00:28:36,120
Speaker 2: and a lot of it has been concentrated in tech,

582
00:28:36,160 --> 00:28:39,520
Speaker 2: in particular the Nasdaq one hundred is obviously the underperformer today,

583
00:28:39,680 --> 00:28:42,600
Speaker 2: and it's the names we know well in video, Microsoft, Amazon, Tesla,

584
00:28:42,640 --> 00:28:45,440
Speaker 2: all of those big magnificent seven stocks are creating a

585
00:28:45,520 --> 00:28:47,640
Speaker 2: drag on the index. So we want to get more

586
00:28:47,680 --> 00:28:49,840
Speaker 2: on this. In turn to Mike Reagan, who was joining

587
00:28:49,920 --> 00:28:52,400
Speaker 2: us from New York, Bloomberg Senior editor. So, Mike, I

588
00:28:52,400 --> 00:28:54,320
Speaker 2: guess there's kind of two ways to look at today,

589
00:28:54,320 --> 00:28:56,680
Speaker 2: one being it's still rough out there for tech, the

590
00:28:56,720 --> 00:28:59,520
Speaker 2: other being it could be rougher for everything else.

591
00:29:00,000 --> 00:29:01,760
Speaker 13: I think, so, Kelly, and I'm glad you brought up

592
00:29:01,800 --> 00:29:04,160
Speaker 13: the quitter end because I think that is part of

593
00:29:04,200 --> 00:29:06,880
Speaker 13: the market action today most likely. If you look at

594
00:29:06,920 --> 00:29:10,600
Speaker 13: the year to date winners and losers among the main

595
00:29:11,120 --> 00:29:13,680
Speaker 13: industry groups, say in the S and P five hundred,

596
00:29:14,280 --> 00:29:17,160
Speaker 13: today basically looks like a snapshot of the year. As

597
00:29:17,200 --> 00:29:20,920
Speaker 13: you point out, tech and consumer discretionary sectors, you know,

598
00:29:20,960 --> 00:29:24,280
Speaker 13: the sectors that house the so called mag seven, you know,

599
00:29:24,360 --> 00:29:27,920
Speaker 13: the alphabets and Tesla's and videos of the world are

600
00:29:27,960 --> 00:29:31,400
Speaker 13: weak today and they are the leaders on the downside

601
00:29:31,440 --> 00:29:33,960
Speaker 13: for the whole year. What's really interesting, even though we

602
00:29:34,080 --> 00:29:36,280
Speaker 13: are about down about six percent on the year for

603
00:29:36,320 --> 00:29:38,360
Speaker 13: the S and P five hundred. Most of the main

604
00:29:38,400 --> 00:29:41,000
Speaker 13: industry groups are actually up. Seven of the eleven are up,

605
00:29:41,000 --> 00:29:44,680
Speaker 13: but those tech and consumer discretionaries are really the heavyweights

606
00:29:44,720 --> 00:29:47,240
Speaker 13: in the index, and that's why we were seeing the

607
00:29:47,280 --> 00:29:49,400
Speaker 13: index down for the year, even though most of its

608
00:29:49,400 --> 00:29:52,320
Speaker 13: sectors are up. And I think what happens on the

609
00:29:52,400 --> 00:29:54,560
Speaker 13: end of a quoter like this, on this last day,

610
00:29:54,680 --> 00:29:56,760
Speaker 13: you might have you know, what they call window dressing,

611
00:29:56,840 --> 00:30:00,160
Speaker 13: where portfolio managers want to send a letter out out

612
00:30:00,160 --> 00:30:02,280
Speaker 13: to their investors at the end of the quarter saying, hey,

613
00:30:02,320 --> 00:30:05,000
Speaker 13: we we own the winners, you know, and we sold

614
00:30:05,040 --> 00:30:07,920
Speaker 13: the losers. And sometimes that gets you a day like

615
00:30:07,960 --> 00:30:09,760
Speaker 13: today at the end of the quarter where it really

616
00:30:09,760 --> 00:30:14,280
Speaker 13: looks like a reflection of the quarter to date, because

617
00:30:14,400 --> 00:30:17,760
Speaker 13: there really wasn't any specific news, especially out of DC,

618
00:30:17,960 --> 00:30:19,600
Speaker 13: to turn this market around. I mean, the S and

619
00:30:19,600 --> 00:30:21,880
Speaker 13: P five hundred was down about as much as one

620
00:30:21,880 --> 00:30:25,840
Speaker 13: point seven percent early in the morning, the Nasdaq one

621
00:30:25,960 --> 00:30:27,880
Speaker 13: hundred it was down about two and a half percent.

622
00:30:28,480 --> 00:30:31,480
Speaker 13: It's cut its dropped to one percent, the SMP's cut

623
00:30:31,480 --> 00:30:34,479
Speaker 13: its dropped to about half a percent, but really not

624
00:30:34,560 --> 00:30:36,920
Speaker 13: any specific news or headlines to trigger that. So I

625
00:30:36,960 --> 00:30:41,360
Speaker 13: do think that quarter and trading might be what is

626
00:30:41,600 --> 00:30:44,680
Speaker 13: explaining this little bit of pairing of losses that we've seen.

627
00:30:44,720 --> 00:30:48,160
Speaker 13: And Tomorrow's a new day, a new quarter, and I'm

628
00:30:48,160 --> 00:30:51,440
Speaker 13: not convinced that the market has priced in everything it's

629
00:30:51,440 --> 00:30:54,440
Speaker 13: bound to price in from these tariff announcements that we're

630
00:30:54,440 --> 00:30:55,520
Speaker 13: expecting on April second.

631
00:30:56,560 --> 00:31:00,160
Speaker 3: Well, I guess that answers my question, Michael, whether we're

632
00:31:00,200 --> 00:31:03,600
Speaker 3: going to have a clarifying moment on Wednesday, if in

633
00:31:03,680 --> 00:31:06,000
Speaker 3: fact that is as big a deal to Wall Street

634
00:31:06,120 --> 00:31:09,080
Speaker 3: as it is to Washington. The uncertainty may not end

635
00:31:09,880 --> 00:31:11,560
Speaker 3: on Wednesday, So how do we plan for that?

636
00:31:11,840 --> 00:31:14,000
Speaker 13: Yeah, I mean, certainly there will be a little bit

637
00:31:14,000 --> 00:31:15,880
Speaker 13: more clarity than we have today. Joe. You know, I

638
00:31:15,920 --> 00:31:19,920
Speaker 13: think the frustration now, and in fact, the headline on

639
00:31:19,960 --> 00:31:23,440
Speaker 13: a story my colleagues did was fit frustration and fatigue

640
00:31:23,760 --> 00:31:26,720
Speaker 13: in quotes is sort of capturing the zeitgeist of how

641
00:31:26,760 --> 00:31:30,920
Speaker 13: traders are feeling about this with this market in recent weeks. So,

642
00:31:32,000 --> 00:31:36,040
Speaker 13: and the frustration is with not knowing exactly what we'll

643
00:31:36,080 --> 00:31:40,360
Speaker 13: be announced on April second, on Wednesday. In the Rose Garden,

644
00:31:40,880 --> 00:31:44,479
Speaker 13: we do know, as our colleagues have reported that there

645
00:31:44,520 --> 00:31:47,240
Speaker 13: will be a Rose Garden announcement, you know, and I

646
00:31:47,280 --> 00:31:51,360
Speaker 13: think that suggests, you know, how seriously Trump is committed

647
00:31:51,360 --> 00:31:54,960
Speaker 13: to these tariffs, and that he's not going to back

648
00:31:55,000 --> 00:31:58,360
Speaker 13: down between now and then, and likely not soften his

649
00:31:58,400 --> 00:32:00,800
Speaker 13: approach on the tariffs very much between now and then.

650
00:32:00,840 --> 00:32:02,880
Speaker 13: But certainly there will be a little at least a

651
00:32:02,920 --> 00:32:06,640
Speaker 13: little bit more clarity on Wednesday. You know, how long

652
00:32:06,720 --> 00:32:09,120
Speaker 13: that clarity lasts is anyone's guest. As we know, Trump

653
00:32:09,640 --> 00:32:13,440
Speaker 13: does not really set anything in stone. He likes to

654
00:32:13,600 --> 00:32:15,920
Speaker 13: sort of adjust the tariffs or even cancel them or

655
00:32:15,960 --> 00:32:19,320
Speaker 13: make them worse, depending on how he feels he's being

656
00:32:19,320 --> 00:32:21,760
Speaker 13: treated on the other side of the negotiating table. So

657
00:32:22,040 --> 00:32:25,600
Speaker 13: it's unlikely that will get pure one hundred percent clarity

658
00:32:25,960 --> 00:32:28,920
Speaker 13: on what to expect from tariffs. But the market is

659
00:32:28,960 --> 00:32:31,480
Speaker 13: at least hoping for a little bit more meat on

660
00:32:31,520 --> 00:32:33,880
Speaker 13: the bone as far as what to expect with this

661
00:32:33,920 --> 00:32:35,000
Speaker 13: announcement on Wednesday.

662
00:32:36,160 --> 00:32:38,760
Speaker 3: It's great to have you back, Michael Reagan, Bloomberg Senior Editor,

663
00:32:39,160 --> 00:32:41,080
Speaker 3: Thanks for the insights here as we had the voice

664
00:32:41,080 --> 00:32:44,000
Speaker 3: of Erica York, Vice President Federal tax Policy at the

665
00:32:44,040 --> 00:32:44,880
Speaker 3: Tax Foundation.

666
00:32:45,320 --> 00:32:47,320
Speaker 4: Thanks for coming back, Erica. It's good to see you

667
00:32:47,520 --> 00:32:49,400
Speaker 4: here on Bloomberg TV and radio.

668
00:32:49,520 --> 00:32:53,719
Speaker 3: Peter Navarro, the President's advisor, one of them on the

669
00:32:53,760 --> 00:32:59,360
Speaker 3: economy and specifically on tariffs, was on Sunday Morning television.

670
00:32:58,840 --> 00:33:02,400
Speaker 4: Referring to these terrors as tax cuts. Do you see

671
00:33:02,400 --> 00:33:04,360
Speaker 4: them that way?

672
00:33:04,600 --> 00:33:05,160
Speaker 6: Not at all.

673
00:33:05,240 --> 00:33:08,800
Speaker 10: He's completely incorrect. A tariff is a tax increase. It's

674
00:33:08,840 --> 00:33:12,040
Speaker 10: a tax that applies to imported goods in the United States,

675
00:33:12,080 --> 00:33:15,800
Speaker 10: so it burdens US importers. There's no way that it's

676
00:33:15,800 --> 00:33:18,720
Speaker 10: a tax cut. It increases revenue. It increases the tax

677
00:33:18,720 --> 00:33:20,040
Speaker 10: burden in the US economy.

678
00:33:21,920 --> 00:33:24,560
Speaker 2: Okay, but the increasing revenue part is what they're trying

679
00:33:24,640 --> 00:33:27,000
Speaker 2: to sell here. Peter Navarro says this, this is going

680
00:33:27,040 --> 00:33:30,600
Speaker 2: to bring in six hundred billion dollars a year potentially, Erica.

681
00:33:30,640 --> 00:33:33,320
Speaker 2: Do these, regardless of whether or not they're going to

682
00:33:33,360 --> 00:33:36,320
Speaker 2: be actually considered by the Congressional Budget Office, because this

683
00:33:36,400 --> 00:33:38,959
Speaker 2: is coming from the executive branch, not from Congress, make

684
00:33:39,040 --> 00:33:42,160
Speaker 2: the whole debate around the tax cuts the President would

685
00:33:42,200 --> 00:33:43,200
Speaker 2: like to see easier.

686
00:33:45,080 --> 00:33:48,640
Speaker 10: I think they make it more difficult. First, Navarro's revenue

687
00:33:48,720 --> 00:33:51,440
Speaker 10: estimate on tariff's is wrong. If you look at the

688
00:33:51,480 --> 00:33:54,200
Speaker 10: math that he's doing it implies they're potentially looking at

689
00:33:54,240 --> 00:33:59,280
Speaker 10: a twenty percent universal tariff. The revenue estimate for that

690
00:33:59,400 --> 00:34:01,920
Speaker 10: is close are in the three trillion to four trillion

691
00:34:01,960 --> 00:34:05,840
Speaker 10: dollar range over a decade, not six trillion. If it

692
00:34:05,880 --> 00:34:09,840
Speaker 10: was six trillion, that implies that the administration thinks imports

693
00:34:09,840 --> 00:34:13,000
Speaker 10: won't fall at all, which is just nonsensical. But I

694
00:34:13,000 --> 00:34:16,120
Speaker 10: think it makes the debate in Congress tougher because while yes,

695
00:34:16,360 --> 00:34:21,280
Speaker 10: you potentially generate some revenue, you also damage the American economy.

696
00:34:21,360 --> 00:34:24,960
Speaker 10: You also increase the tax burden on Americans, particularly on

697
00:34:25,080 --> 00:34:27,960
Speaker 10: lower and middle income Americans, and they're not going to

698
00:34:28,040 --> 00:34:32,120
Speaker 10: feel better off if Congress just continues the tax system

699
00:34:32,160 --> 00:34:34,600
Speaker 10: that they're paying today. And on top of that, they

700
00:34:34,640 --> 00:34:38,279
Speaker 10: have to pay significant increases in the prices they pay,

701
00:34:38,400 --> 00:34:41,600
Speaker 10: or they see reductions in their income, we see increased

702
00:34:41,680 --> 00:34:44,920
Speaker 10: unemployment because there's also a trade war going on. So

703
00:34:44,960 --> 00:34:47,440
Speaker 10: I don't think tariffs are the easy answer to how

704
00:34:47,440 --> 00:34:50,640
Speaker 10: do we pay for tax cuts Erica.

705
00:34:50,680 --> 00:34:53,120
Speaker 3: There's a worry right now that the X date as

706
00:34:53,120 --> 00:34:55,600
Speaker 3: we call it, when we bump into the debt ceiling,

707
00:34:55,960 --> 00:34:59,120
Speaker 3: may move up in a world where the IRS pulls

708
00:34:59,160 --> 00:35:01,120
Speaker 3: in less revenue, and that could be due to any

709
00:35:01,200 --> 00:35:04,360
Speaker 3: number of issues from people simply making less. We're going

710
00:35:04,400 --> 00:35:06,200
Speaker 3: to get a jobs report this week that might tell

711
00:35:06,239 --> 00:35:09,200
Speaker 3: us more about that, and DOGE cuts and so forth.

712
00:35:09,520 --> 00:35:11,319
Speaker 3: Do you see that happening and do you have a

713
00:35:11,400 --> 00:35:13,719
Speaker 3: sense a worthy X date will land.

714
00:35:15,000 --> 00:35:18,160
Speaker 10: There's a lot of uncertainty around the X date. You know,

715
00:35:18,200 --> 00:35:23,080
Speaker 10: we just have the usual uncertainty that there's always different

716
00:35:23,120 --> 00:35:26,200
Speaker 10: types of disaster relief which allow people to apply for

717
00:35:26,320 --> 00:35:30,239
Speaker 10: extensions in actually paying that the tax liability due. I

718
00:35:30,280 --> 00:35:34,000
Speaker 10: believe we have that applicable in about twelve states right now.

719
00:35:34,680 --> 00:35:37,080
Speaker 10: You know, storm season is coming up, which means we

720
00:35:37,160 --> 00:35:40,080
Speaker 10: could see even more disaster tax relief. So in addition

721
00:35:40,239 --> 00:35:44,759
Speaker 10: to the DOGE uncertainties, the economic uncertainties, we also have

722
00:35:44,920 --> 00:35:48,040
Speaker 10: tax relief uncertainties that could mean revenues come in lower,

723
00:35:48,600 --> 00:35:51,680
Speaker 10: which could mean the X date pushes closer in the summer.

724
00:35:51,719 --> 00:35:54,319
Speaker 10: The Congressional Budget Office has said it's probably going to

725
00:35:54,320 --> 00:35:58,439
Speaker 10: happen sometime between August and September, which puts even more

726
00:35:58,440 --> 00:36:02,719
Speaker 10: pressure on Congress to hurry up with this budget reconciliation

727
00:36:02,880 --> 00:36:07,799
Speaker 10: process and include an increase in the debt limit in

728
00:36:07,840 --> 00:36:12,920
Speaker 10: that package. All of that remains uncertain the timeline for

729
00:36:13,120 --> 00:36:18,160
Speaker 10: finishing that budget reconciliation process, given differences in the House

730
00:36:18,200 --> 00:36:20,000
Speaker 10: and the Senate and the approaches they're taking on the

731
00:36:20,040 --> 00:36:24,360
Speaker 10: tax cuts, could spell trouble legislatively for that, which means

732
00:36:24,440 --> 00:36:28,080
Speaker 10: they may have to turn to bipartisan solution, which comes

733
00:36:28,080 --> 00:36:31,440
Speaker 10: with its own difficulties. So on all of these fronts, tariffs,

734
00:36:31,520 --> 00:36:35,239
Speaker 10: tax cuts, the X state, the theme is uncertainty, which

735
00:36:35,360 --> 00:36:37,680
Speaker 10: is not good for growth, not good for markets, not

736
00:36:37,719 --> 00:36:38,719
Speaker 10: really good for anybody.

737
00:36:40,040 --> 00:36:41,880
Speaker 2: Well, I want to zero in on what exactly the

738
00:36:41,920 --> 00:36:43,879
Speaker 2: Senate is doing to try to hurry up and get

739
00:36:43,880 --> 00:36:47,160
Speaker 2: a tax package through. This week, Eric, we are expecting

740
00:36:47,160 --> 00:36:51,320
Speaker 2: they may have a vote on a budget resolution trying

741
00:36:51,320 --> 00:36:53,600
Speaker 2: to bridge some of the gaps between the House and

742
00:36:53,640 --> 00:36:55,440
Speaker 2: the Senate, although they still will look very different in

743
00:36:55,520 --> 00:36:57,840
Speaker 2: terms of spending, cut targets and what have you. The

744
00:36:57,880 --> 00:37:00,600
Speaker 2: problem is they can't actually move forward with that vote

745
00:37:00,640 --> 00:37:03,839
Speaker 2: until they get a ruling from the Senate parliamentarian as

746
00:37:03,840 --> 00:37:07,520
Speaker 2: to whether or not they can use the current policy baseline.

747
00:37:07,560 --> 00:37:10,000
Speaker 2: Can you just walk us through what implication that has

748
00:37:10,200 --> 00:37:13,080
Speaker 2: has and whether it's intellectually honest and assessing how much

749
00:37:13,160 --> 00:37:15,360
Speaker 2: ultimately these tax cuts will cost.

750
00:37:17,320 --> 00:37:19,720
Speaker 10: So if the Senate gets to move to the current

751
00:37:19,760 --> 00:37:23,840
Speaker 10: policy baseline that will attach a score of zero to

752
00:37:24,160 --> 00:37:27,920
Speaker 10: extension of the tax cuts, because a current policy baseline

753
00:37:27,960 --> 00:37:31,719
Speaker 10: assumes that what is current policy today will continue, so

754
00:37:31,840 --> 00:37:34,319
Speaker 10: it looks free as far as the score attached to

755
00:37:34,360 --> 00:37:37,799
Speaker 10: the legislation. It doesn't change the real world implications of

756
00:37:38,040 --> 00:37:41,200
Speaker 10: extending tax cuts. They will still reduce revenue, they will

757
00:37:41,200 --> 00:37:44,319
Speaker 10: still increase deficits compared to where they would have been

758
00:37:44,360 --> 00:37:47,840
Speaker 10: if the tax cuts expire. So really it's a budgeting

759
00:37:47,880 --> 00:37:51,760
Speaker 10: and procedural tool. It's not a way to truly offset

760
00:37:51,800 --> 00:37:55,560
Speaker 10: the deficit impact of tax cuts. It also may create

761
00:37:55,719 --> 00:37:58,840
Speaker 10: disagreements with the House and deficit hawks in the House

762
00:37:58,840 --> 00:38:03,040
Speaker 10: who are interested and offsetting most but not all, of

763
00:38:03,080 --> 00:38:07,040
Speaker 10: the deficit impact if the Senate is using current policy

764
00:38:07,080 --> 00:38:09,000
Speaker 10: to say, hey, we don't need to pay for this.

765
00:38:09,719 --> 00:38:12,400
Speaker 10: So it's not clear even if they do get the

766
00:38:12,400 --> 00:38:15,600
Speaker 10: blessing of the Parliamentarian and they move forward with the

767
00:38:15,680 --> 00:38:19,759
Speaker 10: current policy baseline and pass the resolution this week, it's

768
00:38:19,800 --> 00:38:22,360
Speaker 10: not clear that the House would be on board with

769
00:38:22,480 --> 00:38:25,879
Speaker 10: that approach if it's an approach that doesn't include significant

770
00:38:25,880 --> 00:38:27,000
Speaker 10: spending cuts as well.

771
00:38:28,160 --> 00:38:30,640
Speaker 3: You know what I haven't heard about for a while, Erica,

772
00:38:30,880 --> 00:38:34,120
Speaker 3: I haven't heard anybody talk about salt very loudly. I

773
00:38:34,120 --> 00:38:37,719
Speaker 3: haven't heard a lot about taxes on tips or over time.

774
00:38:37,800 --> 00:38:39,800
Speaker 4: Will all of this land in a final package.

775
00:38:41,000 --> 00:38:44,360
Speaker 10: Yeah, The debate so far has been about procedure. Once

776
00:38:44,400 --> 00:38:46,600
Speaker 10: we get to an agreement on procedure, then I think

777
00:38:46,640 --> 00:38:49,759
Speaker 10: we'll see that policy debate kickoff. I do think we

778
00:38:49,880 --> 00:38:54,040
Speaker 10: will see the president's campaign promises come back, because he

779
00:38:54,160 --> 00:38:56,920
Speaker 10: campaigned so hard on them. We've even seen the Speaker

780
00:38:56,920 --> 00:38:59,319
Speaker 10: of the House talking about them, so I think they

781
00:38:59,320 --> 00:39:02,560
Speaker 10: come back. The question is in what form and fashion,

782
00:39:02,719 --> 00:39:06,120
Speaker 10: Because just extending the expiring tax cuts alone has a

783
00:39:06,120 --> 00:39:08,520
Speaker 10: price tag of about four and a half trillion. If

784
00:39:08,600 --> 00:39:11,520
Speaker 10: you tack on no tax on tips, no tax on overtime,

785
00:39:11,719 --> 00:39:14,840
Speaker 10: no tax on social Security, or some type of benefit

786
00:39:14,920 --> 00:39:18,879
Speaker 10: for seniors, deductibility of auto loan interests, some of these

787
00:39:18,960 --> 00:39:23,400
Speaker 10: other business provisions the President mentioned, you get to a

788
00:39:23,440 --> 00:39:26,520
Speaker 10: price tag of somewhere around seven to eight trillion dollars,

789
00:39:26,600 --> 00:39:30,480
Speaker 10: which is just unfathomable. So it means lawmakers are probably

790
00:39:30,520 --> 00:39:33,200
Speaker 10: going to pair back the design of some of those

791
00:39:33,239 --> 00:39:38,120
Speaker 10: campaign promises. There's also the salt issue because of the

792
00:39:38,120 --> 00:39:40,800
Speaker 10: tight margins in the House, the so called salt Caucus.

793
00:39:40,800 --> 00:39:43,640
Speaker 10: We'll also get to say here and I don't think

794
00:39:43,680 --> 00:39:45,960
Speaker 10: we're going to see a ten thousand dollars salt cap.

795
00:39:46,000 --> 00:39:48,040
Speaker 10: I think we'll see it go up from there. The

796
00:39:48,120 --> 00:39:50,840
Speaker 10: question is how far does it go and what's the

797
00:39:50,880 --> 00:39:54,520
Speaker 10: budgetary impact of that. All of this becomes a really

798
00:39:54,520 --> 00:39:58,000
Speaker 10: tough math problem, and it could mean we see some

799
00:39:58,160 --> 00:40:02,280
Speaker 10: creative policymaking to hit the math targets rather than good

800
00:40:02,480 --> 00:40:06,640
Speaker 10: policy making to boost incentives to invest in work and

801
00:40:06,840 --> 00:40:08,160
Speaker 10: simplify the tax code.

802
00:40:09,600 --> 00:40:11,399
Speaker 2: And we just have a minute left to your Erko.

803
00:40:11,480 --> 00:40:14,680
Speaker 2: But to that point, are those extra tax cuts we're

804
00:40:14,719 --> 00:40:17,120
Speaker 2: talking about really the only ones that stand a chance

805
00:40:17,160 --> 00:40:20,000
Speaker 2: to be stimulative if everything else is just an extension

806
00:40:20,000 --> 00:40:22,720
Speaker 2: of existing tax policy.

807
00:40:23,440 --> 00:40:24,960
Speaker 6: So there's a couple ways to think about it.

808
00:40:25,000 --> 00:40:29,120
Speaker 10: There's the fiscal impulse, the stimulus that happens. There's also

809
00:40:29,360 --> 00:40:31,960
Speaker 10: what's happening to incentives for work and investment in the

810
00:40:32,000 --> 00:40:35,640
Speaker 10: long run. Right now, businesses, for instance, don't have the

811
00:40:35,680 --> 00:40:40,000
Speaker 10: certainty they need to respond to, say bonus appreciation that

812
00:40:40,120 --> 00:40:42,399
Speaker 10: was at one hundred percent, but it's been phasing out

813
00:40:42,400 --> 00:40:44,400
Speaker 10: and it's set to go to zero. So you're not

814
00:40:44,400 --> 00:40:46,840
Speaker 10: going to make long term investments in the United States

815
00:40:47,280 --> 00:40:51,080
Speaker 10: because of a temporary tax policy. If Congress makes that permanent, though,

816
00:40:51,120 --> 00:40:54,520
Speaker 10: we do see a permanent improvement in investment incentives, so

817
00:40:54,600 --> 00:40:57,680
Speaker 10: you still would expect a benefit to long run growth

818
00:40:57,760 --> 00:41:01,040
Speaker 10: from some of these permanent provisions that decrease the cost

819
00:41:01,080 --> 00:41:06,040
Speaker 10: of capital going forward. So it's that different channel that

820
00:41:06,200 --> 00:41:09,080
Speaker 10: requires Congress to do it permanently, not to do another

821
00:41:09,239 --> 00:41:10,280
Speaker 10: temporary exchansion.

822
00:41:11,040 --> 00:41:13,520
Speaker 2: Well, and that again speaks to the battle still ahead.

823
00:41:13,640 --> 00:41:15,920
Speaker 2: Erica York of the Tax Foundation joining us here on

824
00:41:15,960 --> 00:41:17,520
Speaker 2: Balance of Power. Thank you so much.

825
00:41:21,880 --> 00:41:24,319
Speaker 4: Thanks for listening to the Balance of Power podcast.

826
00:41:24,920 --> 00:41:28,040
Speaker 3: Make sure to subscribe if you haven't already, at Apple, Spotify,

827
00:41:28,160 --> 00:41:30,719
Speaker 3: or wherever you get your podcasts, and you can find

828
00:41:30,800 --> 00:41:34,040
Speaker 3: us live every weekday from Washington, DC at noontime Eastern

829
00:41:34,320 --> 00:41:35,720
Speaker 3: at Bloomberg dot com.