1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jailey. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,640 --> 00:00:27,880 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg You 5 00:00:27,960 --> 00:00:31,320 Speaker 1: get lucky and we are lucky on Surveillance. Today scheduled 6 00:00:31,440 --> 00:00:34,040 Speaker 1: was Edward him and his course Ever Corps vice Chairman 7 00:00:34,400 --> 00:00:37,560 Speaker 1: and uh Iconic with his I S I and his 8 00:00:37,760 --> 00:00:41,080 Speaker 1: daily economic reports. What you don't know is Mr Hyman 9 00:00:41,120 --> 00:00:44,720 Speaker 1: knows the Newtonian mechanics out of engineering at Texas and 10 00:00:44,840 --> 00:00:49,480 Speaker 1: wandered by the Manstachusetts Institute of Technology a few years ago. 11 00:00:49,560 --> 00:00:51,600 Speaker 1: He joins us this morning, and of course I should 12 00:00:51,600 --> 00:00:54,920 Speaker 1: mention ed you're a board member of the China Institute. 13 00:00:55,040 --> 00:00:58,360 Speaker 1: You are an inter nationalists. Let me show you the 14 00:00:58,400 --> 00:01:01,360 Speaker 1: President's tweet of ten minutes ago. Bring it up if 15 00:01:01,400 --> 00:01:05,520 Speaker 1: you would. And this is absolutely extraordinary. When a country 16 00:01:05,600 --> 00:01:08,160 Speaker 1: is losing many billions of dollars on trade with virtually 17 00:01:08,280 --> 00:01:11,240 Speaker 1: every country it does business with, trade wars are good 18 00:01:11,880 --> 00:01:15,080 Speaker 1: and easy to win. Example, when we are down one 19 00:01:15,080 --> 00:01:18,080 Speaker 1: of your billion with a certain country, they get cute 20 00:01:18,440 --> 00:01:22,640 Speaker 1: don't trade anymore. We win big. It's easy you and 21 00:01:22,680 --> 00:01:25,360 Speaker 1: I read Jacob Weiner a million years ago. This is 22 00:01:25,400 --> 00:01:27,520 Speaker 1: not easy, is it. I'm good to see you. We 23 00:01:27,600 --> 00:01:30,440 Speaker 1: do a great job on this show, but I didn't 24 00:01:30,480 --> 00:01:34,200 Speaker 1: expect this, and I find it really scary. How will 25 00:01:34,240 --> 00:01:37,240 Speaker 1: adjust your view on the American economy? I gotta see 26 00:01:37,240 --> 00:01:40,240 Speaker 1: how it plays out. But the problem is not what 27 00:01:40,280 --> 00:01:44,199 Speaker 1: we do, it's what they do. Is what retaliation comes 28 00:01:44,240 --> 00:01:47,400 Speaker 1: back with. And once you go down this road, uh, 29 00:01:47,440 --> 00:01:51,240 Speaker 1: it gets uh problematic because you can go tip for tat. 30 00:01:52,040 --> 00:01:54,920 Speaker 1: So uh, I just have to sort of go through 31 00:01:54,960 --> 00:01:57,200 Speaker 1: these next few days and see what the tip for 32 00:01:57,240 --> 00:02:00,800 Speaker 1: tat is. But uh, it's it's pretty bad. Within the 33 00:02:00,880 --> 00:02:04,120 Speaker 1: news full last night, the wonderful news that the vice 34 00:02:04,200 --> 00:02:08,560 Speaker 1: Chairman of Economics and Monetary Theory, maybe Richard Clarida of 35 00:02:08,639 --> 00:02:12,079 Speaker 1: Columbia University, all of us can agree that as an 36 00:02:12,160 --> 00:02:17,440 Speaker 1: intelligent appointment for the Fed, how does the federal respond 37 00:02:17,720 --> 00:02:23,040 Speaker 1: if we implement these trade uh, these trade tariffs against 38 00:02:23,040 --> 00:02:26,080 Speaker 1: these nations. The only thing I can go back to 39 00:02:26,280 --> 00:02:30,000 Speaker 1: is a ninety nine Smoot Hawley and then the depression. 40 00:02:30,639 --> 00:02:33,919 Speaker 1: That was sort of my forming views on this topic. 41 00:02:34,440 --> 00:02:36,519 Speaker 1: And so I've always assumed that, you know, trade wars 42 00:02:36,600 --> 00:02:40,480 Speaker 1: were really bad, and then we're talking about Milton Freeman 43 00:02:40,480 --> 00:02:43,480 Speaker 1: a minute ago. Uh, well, Nixon's trade we showed it 44 00:02:43,520 --> 00:02:48,639 Speaker 1: in the last hour, Nixon's speech on terrorists of one. 45 00:02:49,720 --> 00:02:53,160 Speaker 1: But you know after when you when you were in 46 00:02:53,240 --> 00:02:56,959 Speaker 1: nine the equivalent of the Fed funds rate was six 47 00:02:57,160 --> 00:03:00,079 Speaker 1: six was pretty high, and the ol CORB inverted and 48 00:03:00,120 --> 00:03:03,400 Speaker 1: then you had a depression. So I would think that 49 00:03:03,600 --> 00:03:06,840 Speaker 1: if we start to get a trade war, uh, that 50 00:03:07,000 --> 00:03:10,160 Speaker 1: it will put pressure on the Fed to be more 51 00:03:10,240 --> 00:03:14,160 Speaker 1: cautious on raising rates. It'll be difficult because you could 52 00:03:14,200 --> 00:03:17,760 Speaker 1: get inflation picking up from higher prices. Although if it's 53 00:03:17,800 --> 00:03:20,120 Speaker 1: just steel, it's not that big of a piece of 54 00:03:20,160 --> 00:03:22,600 Speaker 1: the Economy's not that big a deal. But then there's 55 00:03:22,600 --> 00:03:24,000 Speaker 1: any number of ways to go here. I've got a 56 00:03:24,040 --> 00:03:27,440 Speaker 1: Paul Krugman comment on this from weeks ago. You assume 57 00:03:27,520 --> 00:03:30,799 Speaker 1: maybe strong dollar for a bit, and then does this 58 00:03:30,960 --> 00:03:35,040 Speaker 1: devolve into lower economic growth and a week dollar policy 59 00:03:35,600 --> 00:03:39,480 Speaker 1: that the president doesn't see. I don't know, it's too 60 00:03:39,560 --> 00:03:42,720 Speaker 1: early to tell. I can't tell whether it's uh, you know, 61 00:03:42,800 --> 00:03:46,200 Speaker 1: more posturing on the administration's part or not. But I 62 00:03:46,280 --> 00:03:52,240 Speaker 1: didn't expect this and it's unsettling. Uh, and introduces a 63 00:03:52,320 --> 00:03:54,520 Speaker 1: new uncertainty that we didn't have, and then puts the 64 00:03:54,560 --> 00:03:56,920 Speaker 1: FED into play that wasn't there before. Here's what I 65 00:03:56,960 --> 00:03:58,520 Speaker 1: want to do. I want to go out with this warning. 66 00:03:58,600 --> 00:04:00,800 Speaker 1: Must reader. We got so much going on today. The 67 00:04:00,880 --> 00:04:03,520 Speaker 1: new slow is extraordinary. What do you have for me? Riley? 68 00:04:03,600 --> 00:04:05,440 Speaker 1: Bring up one of the essays that our team has 69 00:04:05,440 --> 00:04:08,960 Speaker 1: worked one. This is Navarro knows is Paul Kruegman. Excuse me, 70 00:04:09,080 --> 00:04:12,040 Speaker 1: We've got Paul Kruegman up. Let's stay with that. This 71 00:04:12,240 --> 00:04:15,040 Speaker 1: is a really wonderful essay. How does the country make 72 00:04:15,080 --> 00:04:19,239 Speaker 1: its eventual transition from trade deficit to trade surplus? Trump 73 00:04:19,360 --> 00:04:22,480 Speaker 1: tariff that people expect to see rescinded by a future 74 00:04:22,720 --> 00:04:26,040 Speaker 1: saying president would drive the dollar up temporarily, but the 75 00:04:26,120 --> 00:04:31,120 Speaker 1: prospect of future depreciation would inhibit investments. This is so important, 76 00:04:31,279 --> 00:04:33,800 Speaker 1: ed Hyman, that Professor Krugman says this is a one 77 00:04:33,880 --> 00:04:37,640 Speaker 1: off that if this president goes through with this, later 78 00:04:37,839 --> 00:04:41,400 Speaker 1: presidents will reverse these tariffs as proposed. Do you have 79 00:04:41,520 --> 00:04:45,720 Speaker 1: faith in that? No. First, I'm living in the present 80 00:04:46,160 --> 00:04:50,320 Speaker 1: and I'll deal with markets and investors, and uh, maybe 81 00:04:50,400 --> 00:04:51,920 Speaker 1: the next president will do it. But I gotta get 82 00:04:51,960 --> 00:04:56,040 Speaker 1: through this this year and next year. And uh, it's 83 00:04:56,160 --> 00:05:00,320 Speaker 1: it's a it's a difficult situation. I will say that 84 00:05:00,480 --> 00:05:04,120 Speaker 1: the U. S. Economy is doing exceedingly well. I saw 85 00:05:04,160 --> 00:05:08,520 Speaker 1: your chart this morning. It looks exceedingly bad. But no, 86 00:05:08,680 --> 00:05:11,640 Speaker 1: but you mentioned disposable income doing really quite well income 87 00:05:11,880 --> 00:05:17,080 Speaker 1: and uh the unemplumber claims this week extraordinary. Okay, well, 88 00:05:17,120 --> 00:05:19,200 Speaker 1: let's come back Edeyman with us with just just as 89 00:05:19,240 --> 00:05:22,240 Speaker 1: I said, folks, amazing newsflow. Massive shout out from me 90 00:05:22,320 --> 00:05:25,000 Speaker 1: and Francy to our team. It's blown everything up in 91 00:05:25,080 --> 00:05:32,160 Speaker 1: the last eighteen hours. This is what gives us goose 92 00:05:32,200 --> 00:05:35,240 Speaker 1: pumps here at Bloomberg Surveillance. When don't we have guests 93 00:05:35,360 --> 00:05:39,080 Speaker 1: of esteem and always of controversy who really make an 94 00:05:39,120 --> 00:05:42,520 Speaker 1: effort to join us on historic days like today. Jeffrey 95 00:05:42,560 --> 00:05:46,279 Speaker 1: Sachs is at Columbia University. He has been way out 96 00:05:46,400 --> 00:05:49,440 Speaker 1: front on the dumbing down of America. He has been 97 00:05:49,560 --> 00:05:53,000 Speaker 1: way out front on any debate of climate change, whether 98 00:05:53,160 --> 00:05:57,000 Speaker 1: you agree or disagree with him, But far more is 99 00:05:57,120 --> 00:06:02,560 Speaker 1: his foundation of international economics. He is again at Columbia 100 00:06:03,160 --> 00:06:07,080 Speaker 1: University and joins us from Bogata Columbia UH this morning. 101 00:06:07,320 --> 00:06:09,560 Speaker 1: Professor Sex, thank you so much for the effort to 102 00:06:09,680 --> 00:06:13,760 Speaker 1: join us UM this morning. Twenty years ago you wrote 103 00:06:13,800 --> 00:06:16,880 Speaker 1: two essays for Foreign Policy. One was a brief history 104 00:06:16,960 --> 00:06:21,719 Speaker 1: of Panic and the other was Unlocking the Mysteries of globalization. 105 00:06:22,320 --> 00:06:26,560 Speaker 1: Is President Trump's trade action his effort and a good 106 00:06:26,640 --> 00:06:32,920 Speaker 1: effort against the new globalization. This is one of the 107 00:06:33,040 --> 00:06:37,720 Speaker 1: most reckless policies tom one can imagine, and he is 108 00:06:37,839 --> 00:06:43,240 Speaker 1: going to have major adverse reverberations. As it is around 109 00:06:43,279 --> 00:06:47,279 Speaker 1: the world. We probably shed maybe it is a trillion 110 00:06:47,360 --> 00:06:51,800 Speaker 1: dollars of stock market capitalization in the last twenty four hours. 111 00:06:52,400 --> 00:06:56,640 Speaker 1: That is a pretty good sign of UH market sentiment 112 00:06:57,440 --> 00:07:01,520 Speaker 1: and the few of what Trump has done. He's smashing 113 00:07:01,800 --> 00:07:05,400 Speaker 1: the global trade rules and it's very, very dangerous. We 114 00:07:05,520 --> 00:07:08,000 Speaker 1: have done a little bit of the history, Professor Sachs, 115 00:07:08,080 --> 00:07:10,640 Speaker 1: the history that you're expert in this morning, going back 116 00:07:10,680 --> 00:07:13,520 Speaker 1: to the courage of Sir Robert Peel in the corn 117 00:07:13,640 --> 00:07:17,760 Speaker 1: Laws of eighteen forty two. Call it Nixon's effort in 118 00:07:17,880 --> 00:07:22,160 Speaker 1: nineteen seventy one on a ten percent import text. Let's 119 00:07:22,160 --> 00:07:26,320 Speaker 1: go to Nixon. What did Jeff Sacks learn in studying 120 00:07:26,440 --> 00:07:32,160 Speaker 1: the Nixon tariffs of the early seventies. Well, when Nixon 121 00:07:32,400 --> 00:07:38,120 Speaker 1: uh not only raised the tariffs but broke the Bretton 122 00:07:38,160 --> 00:07:43,720 Speaker 1: Woods exchange rate system unilaterally. It led to a decade 123 00:07:43,760 --> 00:07:49,120 Speaker 1: of chaos. Uh. And I would go back to nineteen 124 00:07:49,200 --> 00:07:52,320 Speaker 1: thirty in fact, Tom uh and you know the history 125 00:07:52,400 --> 00:07:57,640 Speaker 1: well of the Holly Smokes tariff of July. That was 126 00:07:58,000 --> 00:08:04,040 Speaker 1: another uni ladder US actions uh, smash in the face 127 00:08:04,160 --> 00:08:10,520 Speaker 1: of world trade, and it had devastating consequences for pushing 128 00:08:10,640 --> 00:08:17,680 Speaker 1: US deeper into what became depression, prolonging the Great Depression, 129 00:08:18,480 --> 00:08:22,760 Speaker 1: intensifying it. And I'm not saying that that's the inevitable 130 00:08:22,840 --> 00:08:27,520 Speaker 1: consequence of this dumb move of the of the Trump, 131 00:08:27,920 --> 00:08:32,800 Speaker 1: But this is a dumb, dangerous, reckless move, and it's 132 00:08:32,880 --> 00:08:39,040 Speaker 1: based on it's based on a level of economic illiteracy 133 00:08:39,200 --> 00:08:43,559 Speaker 1: that is absolutely shopping and that is shown by his 134 00:08:44,040 --> 00:08:48,120 Speaker 1: morning tweets. Uh. He really believes that if you are 135 00:08:48,240 --> 00:08:52,280 Speaker 1: running a trade deficit, it means that you're being swindled 136 00:08:52,800 --> 00:08:58,439 Speaker 1: by the surplus countries. It's a kind of it's a 137 00:08:58,600 --> 00:09:04,040 Speaker 1: kind of illiteracy. Don't even imagine. Uh. That is now 138 00:09:04,760 --> 00:09:08,559 Speaker 1: a few held by this confused man who happens to 139 00:09:08,640 --> 00:09:11,800 Speaker 1: be president of the United States, and then he tweets 140 00:09:11,840 --> 00:09:15,240 Speaker 1: this morning that the trade war is the simplest thing 141 00:09:15,280 --> 00:09:19,040 Speaker 1: in the world to win, because he also views everything 142 00:09:19,240 --> 00:09:23,720 Speaker 1: is winners and losers, whereas trade is about win win 143 00:09:24,040 --> 00:09:29,479 Speaker 1: and closing trade is about lose loose. So I'm I'm astounded, 144 00:09:30,640 --> 00:09:36,600 Speaker 1: Tom that we don't have uh any institutional break right now. 145 00:09:37,960 --> 00:09:41,560 Speaker 1: I would expect and I would uh, well, we'll see, 146 00:09:41,760 --> 00:09:44,000 Speaker 1: I would expect people like Gary Collen to leave the 147 00:09:44,080 --> 00:09:47,959 Speaker 1: White House because he really wanted to do, and that 148 00:09:48,160 --> 00:09:53,080 Speaker 1: with this kind of shocking behavior. On that note, let 149 00:09:53,160 --> 00:09:57,559 Speaker 1: me bring in my colleague Pimples. Yeah, Professor Sex, just 150 00:09:57,679 --> 00:10:00,280 Speaker 1: to play devil's advocate here. Is it possible that this 151 00:10:00,520 --> 00:10:04,839 Speaker 1: is part and parcel of a negotiating tactic, and that 152 00:10:05,160 --> 00:10:08,959 Speaker 1: what tariffs can be imposed, tariffs can be removed, and 153 00:10:09,360 --> 00:10:13,320 Speaker 1: that there will be further negotiations that we don't know about, 154 00:10:13,720 --> 00:10:17,080 Speaker 1: but that this is a new tactic in the way 155 00:10:17,200 --> 00:10:21,120 Speaker 1: that the administration is indeed dealing with what it perceives 156 00:10:21,200 --> 00:10:27,080 Speaker 1: to be unfair trade practices against the United States. Well, 157 00:10:27,200 --> 00:10:30,160 Speaker 1: I know what it perceives that the unfair trade practices. 158 00:10:30,240 --> 00:10:33,440 Speaker 1: Donald Trump thinks, as he even wrote this morning says 159 00:10:33,480 --> 00:10:37,400 Speaker 1: we're running a trade deficit against nearly everybody. We must 160 00:10:37,440 --> 00:10:41,199 Speaker 1: be being cheated by nearly everybody. But it's the kind 161 00:10:41,320 --> 00:10:45,959 Speaker 1: of duh. Why are we running a trade definite against everybody? Well, 162 00:10:46,080 --> 00:10:48,520 Speaker 1: that's because we don't save in our country. We have 163 00:10:48,679 --> 00:10:53,120 Speaker 1: a saving investment deficits we borrow from the rest of 164 00:10:53,200 --> 00:10:58,600 Speaker 1: the world. And done is very way opposing. The question 165 00:10:59,200 --> 00:11:02,920 Speaker 1: exposes the silliness of it is if every country that 166 00:11:03,040 --> 00:11:06,240 Speaker 1: we run a bilateral trade does it is somehow doing 167 00:11:06,440 --> 00:11:11,800 Speaker 1: us wrong. He just doesn't get it. Uh. Maybe it 168 00:11:11,880 --> 00:11:16,160 Speaker 1: won't spiral out of control, though, And China has been 169 00:11:16,240 --> 00:11:20,920 Speaker 1: extremely mature in its response, which is just to say 170 00:11:21,040 --> 00:11:24,959 Speaker 1: we hope the US does not undermine the international trade rules. 171 00:11:25,360 --> 00:11:29,040 Speaker 1: European Union was far more direct, saying that there will 172 00:11:29,120 --> 00:11:32,559 Speaker 1: of course have to be retaliation, uh, and that this 173 00:11:32,840 --> 00:11:36,520 Speaker 1: is how we just Many others have noted that it 174 00:11:36,720 --> 00:11:40,640 Speaker 1: is a complete break of post World War two practice 175 00:11:40,720 --> 00:11:46,440 Speaker 1: to invoke national security to slam against the international trade rules. 176 00:11:46,880 --> 00:11:51,559 Speaker 1: So the answer Kim is yes, maybe it won't be 177 00:11:52,440 --> 00:11:55,920 Speaker 1: so bad in the end because some grown up someplace 178 00:11:56,080 --> 00:12:00,160 Speaker 1: will turn this off. But not because there's any being 179 00:12:00,679 --> 00:12:04,200 Speaker 1: clever in this. Just because this is an idiotic move 180 00:12:04,360 --> 00:12:09,079 Speaker 1: that is very dangerous. And and and Mayet tamped down 181 00:12:09,480 --> 00:12:12,760 Speaker 1: because most of his advisers are telling him that this 182 00:12:12,960 --> 00:12:19,480 Speaker 1: is a dangerous that this is a dangerous move. Jeffrey 183 00:12:19,559 --> 00:12:22,559 Speaker 1: Sachs with us from Boga to Columbia. We are honored, 184 00:12:22,640 --> 00:12:26,120 Speaker 1: Professor Sachs at your effort to be with us. And 185 00:12:26,200 --> 00:12:28,839 Speaker 1: there is a rumor once at Columbia that Sachs was 186 00:12:28,920 --> 00:12:33,640 Speaker 1: so angry teaching trade economics to a graduate class that 187 00:12:33,800 --> 00:12:36,600 Speaker 1: he took a copy of Dougger wins Against the Tide 188 00:12:37,040 --> 00:12:39,400 Speaker 1: and threw it by some guy's ear, hit the wall, 189 00:12:39,440 --> 00:12:41,920 Speaker 1: and he said, shut up and read this this weekend, 190 00:12:42,000 --> 00:12:45,720 Speaker 1: jeff Sacks. As you know, Douglas, Irwin and Dartmouth wrote 191 00:12:45,760 --> 00:12:49,360 Speaker 1: a classic decades ago Against the Tide. You and I 192 00:12:49,440 --> 00:12:53,240 Speaker 1: can dip into that with President Trump and learn about trade. 193 00:12:53,720 --> 00:12:59,160 Speaker 1: Let's begin with the English mercantilis literature. Jacob Winer wrote 194 00:12:59,200 --> 00:13:03,200 Speaker 1: the classic what the essay on this is America now? 195 00:13:03,880 --> 00:13:07,720 Speaker 1: Is mercantilist? With President Trump is they were in England 196 00:13:08,200 --> 00:13:17,360 Speaker 1: many years ago. Well, yes, Trump has some uh strange idea. 197 00:13:18,240 --> 00:13:23,360 Speaker 1: First of all, that again, if you're running a trade deficit, 198 00:13:23,600 --> 00:13:28,160 Speaker 1: you're im cheated. So this is his first point. Second point, 199 00:13:28,240 --> 00:13:34,800 Speaker 1: and this is also part of this is the terrible 200 00:13:35,320 --> 00:13:40,360 Speaker 1: worldview that the United States is both in a position 201 00:13:40,440 --> 00:13:45,280 Speaker 1: to and should act to rush China. The China is 202 00:13:45,600 --> 00:13:50,880 Speaker 1: the big trend, so we have to somehow now stop 203 00:13:51,000 --> 00:13:55,040 Speaker 1: our cooperation and trade with China. That's of course the 204 00:13:55,160 --> 00:13:59,280 Speaker 1: subtext of all of this as well. He's are incredibly 205 00:13:59,440 --> 00:14:06,280 Speaker 1: naive US, but worse than nine, they're they're dangerous. And 206 00:14:08,160 --> 00:14:13,800 Speaker 1: I think the markets are signaling basically immediately two percent 207 00:14:13,960 --> 00:14:18,840 Speaker 1: off the global activities yesterday and today. That's a about 208 00:14:19,520 --> 00:14:23,480 Speaker 1: a trillion dollars of the par boss. But this is 209 00:14:23,600 --> 00:14:27,520 Speaker 1: just a stupid idea, which I think is by now. 210 00:14:27,680 --> 00:14:30,480 Speaker 1: Right now, let's move forward to this conversation with Professor 211 00:14:30,600 --> 00:14:32,080 Speaker 1: Sax And I want to make clear I'm going to 212 00:14:32,200 --> 00:14:36,480 Speaker 1: send out across my social media against the tide. In 213 00:14:36,560 --> 00:14:40,120 Speaker 1: Intellectual History of Trade by the good professor from Dartmouth. 214 00:14:40,160 --> 00:14:42,400 Speaker 1: I read it years ago and it's it's one of 215 00:14:42,440 --> 00:14:46,320 Speaker 1: those books, pim Fox. It was written years ago, dugger, 216 00:14:46,400 --> 00:14:48,200 Speaker 1: when I think it was like twenty two years old, 217 00:14:48,880 --> 00:14:51,440 Speaker 1: and and it's an extraordinary book. Pen Fox. Why don't 218 00:14:51,440 --> 00:14:53,560 Speaker 1: you jump in with Professor sax Well, I just want 219 00:14:53,600 --> 00:14:56,960 Speaker 1: to understand Professor sax maybe the history of these tariffs 220 00:14:57,040 --> 00:14:59,640 Speaker 1: and the tariff reductions that took place because of the 221 00:14:59,680 --> 00:15:04,920 Speaker 1: World Trade Organization, and whether the consequences of lowering industrial 222 00:15:05,080 --> 00:15:10,120 Speaker 1: tariffs was something that was not foreseen, because it seemed 223 00:15:10,160 --> 00:15:14,560 Speaker 1: as though the plan to reduce agriculture trade restrictions were 224 00:15:14,800 --> 00:15:20,840 Speaker 1: not really fully understood either. Well. I think the reductions 225 00:15:20,920 --> 00:15:25,400 Speaker 1: of the trade barriers expanded trade and expanded the world economy. 226 00:15:26,240 --> 00:15:31,480 Speaker 1: What they also did was shift labor markets and income 227 00:15:31,560 --> 00:15:36,640 Speaker 1: distribution within the United States. They were especially good for capital, 228 00:15:37,240 --> 00:15:42,000 Speaker 1: especially good for high tech, and if we were a 229 00:15:42,120 --> 00:15:45,280 Speaker 1: fair society, we would be sharing the benefits of this 230 00:15:45,520 --> 00:15:50,400 Speaker 1: expanded US and world economy more fairly. But there's nothing 231 00:15:50,640 --> 00:15:53,600 Speaker 1: untoward about what's happened with trade. Trade expanded the world 232 00:15:53,680 --> 00:15:57,240 Speaker 1: economy just as as it should. And if you try 233 00:15:57,320 --> 00:16:01,720 Speaker 1: to close down trade, well we'll close an important part 234 00:16:01,800 --> 00:16:05,160 Speaker 1: of world economic growth. That's why the markets are down 235 00:16:05,240 --> 00:16:07,920 Speaker 1: so sharply right now, because this is bad news for 236 00:16:08,160 --> 00:16:13,320 Speaker 1: the world economy. Jeff, how should Democrats respond? There's gonna 237 00:16:13,360 --> 00:16:15,920 Speaker 1: be a roaring battle over this, But what is the 238 00:16:16,080 --> 00:16:20,800 Speaker 1: intelligent free trade response? Of Democrats, is they are so 239 00:16:21,040 --> 00:16:27,640 Speaker 1: fractious this two thousand and eighteen. Well, Democrats have also 240 00:16:28,160 --> 00:16:31,680 Speaker 1: had this protectionist street, of course, and some Democrats in 241 00:16:31,760 --> 00:16:34,120 Speaker 1: the Midwest have already said this is good, it will 242 00:16:34,160 --> 00:16:39,200 Speaker 1: protect our steel industry. This is a very naive of politics. 243 00:16:40,400 --> 00:16:45,080 Speaker 1: A smart approach for both parties would be open trade 244 00:16:45,640 --> 00:16:50,160 Speaker 1: and fairness in our society, making sure we have good education, 245 00:16:50,640 --> 00:16:55,920 Speaker 1: good skills, help for those who are uh A are 246 00:16:56,080 --> 00:17:00,160 Speaker 1: hurt by international trade, and those are real grouts, but 247 00:17:00,320 --> 00:17:04,600 Speaker 1: can so many are benefited, the winners can help the losers. 248 00:17:04,680 --> 00:17:07,560 Speaker 1: That's the first principle of international trade, going back to 249 00:17:07,640 --> 00:17:11,680 Speaker 1: David Ricardo uh and the two centuries ago and pauls 250 00:17:12,160 --> 00:17:16,480 Speaker 1: In a century ago. So the basic point should be 251 00:17:16,680 --> 00:17:21,080 Speaker 1: for both Democrats and Republicans, the international trading system has 252 00:17:21,160 --> 00:17:23,639 Speaker 1: been good for the world. It's been good for peace, 253 00:17:23,720 --> 00:17:26,720 Speaker 1: has been good for the US economy, it's been good 254 00:17:26,800 --> 00:17:32,119 Speaker 1: for the global economy. But of course all functioning marget 255 00:17:32,160 --> 00:17:36,960 Speaker 1: economies need to ensure fats need to ensure investments in 256 00:17:37,920 --> 00:17:41,800 Speaker 1: skills and infrastructure, and so we need that kind of balance. 257 00:17:41,920 --> 00:17:44,119 Speaker 1: We don't have any balance right now. We have a 258 00:17:44,280 --> 00:17:50,840 Speaker 1: president railing against the world and positively hurdering who wanted 259 00:17:51,160 --> 00:17:55,720 Speaker 1: the reaction which would be extremely dangerous for everybody. Uh 260 00:17:56,400 --> 00:18:00,840 Speaker 1: and is quite possibly going to happen. Well, we have 261 00:18:01,080 --> 00:18:06,639 Speaker 1: the protectionists who aimed for you know, very narrow games. Uh. 262 00:18:06,800 --> 00:18:13,640 Speaker 1: And people should remember economic protectionism has Jeff, unilateralism has 263 00:18:13,680 --> 00:18:16,560 Speaker 1: been a disaster. Okay, Jeff Sex, thank you so much. 264 00:18:16,600 --> 00:18:23,760 Speaker 1: We really appreciate it. From Bogata, Colombia this morning, what 265 00:18:24,119 --> 00:18:27,440 Speaker 1: is sporting is futures as we speak, new lows for 266 00:18:27,480 --> 00:18:30,040 Speaker 1: the day, three days down in a row. That was 267 00:18:30,080 --> 00:18:33,600 Speaker 1: a great band. Three days down, um and Uh, futures negative, 268 00:18:33,600 --> 00:18:37,200 Speaker 1: twenty two down, futures negative to five Right now, John Ferrell, 269 00:18:37,240 --> 00:18:39,879 Speaker 1: would you suggest that the break we saw this morning 270 00:18:40,200 --> 00:18:42,240 Speaker 1: was off the tweet you're gonna read right now. Yeah, 271 00:18:42,280 --> 00:18:43,600 Speaker 1: we were soft and then we got a whole lot 272 00:18:43,680 --> 00:18:45,600 Speaker 1: softer when this one came out on Twitter from the 273 00:18:45,640 --> 00:18:48,320 Speaker 1: President of the United States. When a country is losing 274 00:18:48,359 --> 00:18:50,840 Speaker 1: many billions of dollars on trade with virtually every country 275 00:18:50,880 --> 00:18:54,240 Speaker 1: it does business with, trade wars are good and easy 276 00:18:54,720 --> 00:18:57,080 Speaker 1: to win. Trade wars are the one thing people are 277 00:18:57,080 --> 00:18:59,280 Speaker 1: concerned about this morning. And when the President says they're 278 00:18:59,320 --> 00:19:01,080 Speaker 1: good and they're easy eats of win. Well, it's gonna 279 00:19:01,119 --> 00:19:03,159 Speaker 1: hot and concern, and you saw that reflected in the 280 00:19:03,280 --> 00:19:05,960 Speaker 1: market very quickly. Our team working on getting in a 281 00:19:06,040 --> 00:19:08,280 Speaker 1: great set of guests, many of them waking up into 282 00:19:08,359 --> 00:19:12,000 Speaker 1: this as it was happening last evening right now, Mark Chandler, 283 00:19:12,080 --> 00:19:14,000 Speaker 1: where this thrill down? Whether this with the Brown Brothers 284 00:19:14,359 --> 00:19:19,240 Speaker 1: Harriman easy to win John Mark, Mark Chandler. How do 285 00:19:19,440 --> 00:19:22,560 Speaker 1: you win or lose a trade board? You need our 286 00:19:22,600 --> 00:19:25,840 Speaker 1: tillery And as I think, here's how I would read 287 00:19:25,880 --> 00:19:28,720 Speaker 1: this is that I sort of take a chump seriously 288 00:19:28,920 --> 00:19:31,240 Speaker 1: at his art of the deal, and I think about, like, 289 00:19:31,800 --> 00:19:33,280 Speaker 1: I want to gonna buy my tis not a car 290 00:19:33,440 --> 00:19:35,680 Speaker 1: for HEAs in college doing good, doing well. I was 291 00:19:35,680 --> 00:19:37,360 Speaker 1: gonna get in a car. We we've got a used 292 00:19:37,359 --> 00:19:39,480 Speaker 1: car lot and a car lot dealer comes up to 293 00:19:39,560 --> 00:19:41,119 Speaker 1: us as my sun kicks out the car. And the 294 00:19:41,200 --> 00:19:44,240 Speaker 1: first thing I do is complain about the car. I 295 00:19:44,320 --> 00:19:46,399 Speaker 1: complain about everything about it, and then my son kicks me. 296 00:19:46,400 --> 00:19:48,040 Speaker 1: He says me, but Dad, I want to buy that car. 297 00:19:48,480 --> 00:19:50,399 Speaker 1: I said, yes, This is negotiations, and I think this 298 00:19:50,480 --> 00:19:52,920 Speaker 1: is what chump is doing. It's it's a bluster and 299 00:19:53,000 --> 00:19:54,680 Speaker 1: which is a none of these kind of things, He says, 300 00:19:54,680 --> 00:19:57,280 Speaker 1: it's mostly bluster. A trade war is not easy to win, 301 00:19:57,520 --> 00:19:59,680 Speaker 1: it's not desirable, and it's not right that we're gonna 302 00:19:59,680 --> 00:20:01,800 Speaker 1: trigger it trade war. Mark, you are perfect to talk 303 00:20:01,840 --> 00:20:04,639 Speaker 1: to us about with your sense of political history and 304 00:20:04,760 --> 00:20:07,600 Speaker 1: folding it into economics. Moments ago, the President of the 305 00:20:07,720 --> 00:20:11,720 Speaker 1: United States a short tweet, we must protect our country 306 00:20:11,920 --> 00:20:15,840 Speaker 1: and our workers. Our steel industry is in bad shape. 307 00:20:16,359 --> 00:20:20,400 Speaker 1: If you don't have steel, you don't have a country 308 00:20:20,480 --> 00:20:24,119 Speaker 1: that's in all caps. If you don't have steel, you 309 00:20:24,280 --> 00:20:28,320 Speaker 1: don't have a country, Mark Chandler, within your books, is 310 00:20:28,400 --> 00:20:32,000 Speaker 1: this is Is this a president steeped in nostalgia? Or 311 00:20:32,160 --> 00:20:37,440 Speaker 1: is that an accurate phrase for America two thousand thirty. Yes, 312 00:20:37,640 --> 00:20:39,200 Speaker 1: I can't. I can't really go along with it. But 313 00:20:39,440 --> 00:20:41,159 Speaker 1: here's what I would think the focus should be is 314 00:20:41,440 --> 00:20:43,879 Speaker 1: think about a country like Canada. So we get the 315 00:20:44,040 --> 00:20:47,680 Speaker 1: US gets about a sixth of its steel imports from Canada, 316 00:20:47,880 --> 00:20:50,560 Speaker 1: but the US exports half of our steel to Canada. 317 00:20:51,720 --> 00:20:54,600 Speaker 1: Canada said they run a two billion dollar year trade 318 00:20:54,680 --> 00:20:58,560 Speaker 1: definity with the US on steel, and Canada's been recognized 319 00:20:58,600 --> 00:21:02,080 Speaker 1: by US law and part of the US National Technology 320 00:21:02,200 --> 00:21:07,200 Speaker 1: Industrial based for national defense. So with producing Canada was 321 00:21:07,240 --> 00:21:11,000 Speaker 1: producing our allies, should that counts for production for the US. 322 00:21:11,480 --> 00:21:13,320 Speaker 1: And I think that this is by the national security 323 00:21:13,320 --> 00:21:15,639 Speaker 1: issue is so interesting and why it needs to be 324 00:21:15,720 --> 00:21:17,440 Speaker 1: explored just the way I would. I would hope that 325 00:21:17,560 --> 00:21:20,280 Speaker 1: some mayors in the US, mayors of US cities explore 326 00:21:20,320 --> 00:21:23,400 Speaker 1: eminent domain. These are like areas of law that could 327 00:21:23,440 --> 00:21:26,040 Speaker 1: be could be used to have some to do some good. 328 00:21:26,440 --> 00:21:29,520 Speaker 1: And so I think what this there is unknown like 329 00:21:29,680 --> 00:21:34,119 Speaker 1: unclear legal area about national trade, national security and trade. 330 00:21:34,359 --> 00:21:37,760 Speaker 1: And hopefully by challenging it like this, it gets clear 331 00:21:37,920 --> 00:21:41,760 Speaker 1: that countries cannot use these kind of pretenses for protectionism 332 00:21:42,040 --> 00:21:44,639 Speaker 1: mark bottom line. When Tom read out those comments from 333 00:21:44,640 --> 00:21:47,160 Speaker 1: the President of the United States, I didn't think about economics. 334 00:21:47,240 --> 00:21:50,439 Speaker 1: I didn't think about the markets. I just thought about politics. 335 00:21:50,840 --> 00:21:53,560 Speaker 1: If you don't have steel, you don't have a country. 336 00:21:54,000 --> 00:21:57,320 Speaker 1: That sounds like a campaign message. That's not an economic policy, 337 00:21:57,440 --> 00:22:01,119 Speaker 1: is it. That's a campaign message? This is politics. Yeah, exactly. 338 00:22:01,119 --> 00:22:02,760 Speaker 1: I think there's most of a politicive. That's That's the 339 00:22:02,840 --> 00:22:05,280 Speaker 1: unfortunate thing for me is that we have too You 340 00:22:05,320 --> 00:22:08,160 Speaker 1: can break down the economy two parts, consumers and producers, 341 00:22:08,640 --> 00:22:12,600 Speaker 1: and these kind of protections and favorite producers over consumers, 342 00:22:12,680 --> 00:22:14,639 Speaker 1: and yet we're more of a nation of consumers of 343 00:22:14,720 --> 00:22:17,000 Speaker 1: these types of things. How wow does this play with 344 00:22:17,040 --> 00:22:20,040 Speaker 1: the base this morning? Mark, I don't think the base 345 00:22:20,160 --> 00:22:21,520 Speaker 1: is going to be affected by this. I think that 346 00:22:21,960 --> 00:22:24,520 Speaker 1: that Trump has a solid third, maybe a little bit 347 00:22:24,600 --> 00:22:27,320 Speaker 1: more people who will vote for him almost regardless of 348 00:22:27,400 --> 00:22:29,320 Speaker 1: what he does, as long as it's seem to be 349 00:22:29,440 --> 00:22:32,000 Speaker 1: like sticking a finger in the eye of the elite 350 00:22:32,119 --> 00:22:35,320 Speaker 1: or of the traditions or of establishment. But will it 351 00:22:35,520 --> 00:22:41,000 Speaker 1: reduce economic output even by tens of points? And again, Mark, 352 00:22:41,160 --> 00:22:45,600 Speaker 1: I agree with you that the specific threats maybe aren't 353 00:22:45,640 --> 00:22:51,080 Speaker 1: that important, but there's gotta be not on effects in retaliation. Correct, 354 00:22:51,760 --> 00:22:53,240 Speaker 1: they could be, but I think that the country are 355 00:22:53,240 --> 00:22:55,560 Speaker 1: gonna hold off Italian to go through the w t O. 356 00:22:55,640 --> 00:22:57,680 Speaker 1: But I do agree with you Tom at the economy, 357 00:22:58,000 --> 00:22:59,560 Speaker 1: I sort of would think that when you look at 358 00:22:59,600 --> 00:23:02,080 Speaker 1: the trunk month moving average in non farm payrolls, you 359 00:23:02,119 --> 00:23:04,240 Speaker 1: look at twelve month moving out of auto sales, you 360 00:23:04,280 --> 00:23:06,920 Speaker 1: look at the higher rates of delinquency on credit cards, 361 00:23:07,080 --> 00:23:09,080 Speaker 1: and we've got a lot of symptoms already of late 362 00:23:09,200 --> 00:23:12,719 Speaker 1: psycho economic activity, and these tear ups and this kind 363 00:23:12,760 --> 00:23:16,040 Speaker 1: of uncertainty might be enough to do just further along 364 00:23:16,119 --> 00:23:18,960 Speaker 1: the curve. Let's recast as quickly. I know John Farrell 365 00:23:19,000 --> 00:23:21,280 Speaker 1: wants to dive in. What is your twelve month call 366 00:23:21,400 --> 00:23:24,400 Speaker 1: on us g d P that you're using off your 367 00:23:24,480 --> 00:23:28,280 Speaker 1: FX desk at Brown Brothers. Airman, we start the penciling 368 00:23:28,320 --> 00:23:30,440 Speaker 1: in not far from what the feed is. The FETE 369 00:23:30,480 --> 00:23:32,560 Speaker 1: I think is two point eight for this year, and 370 00:23:32,600 --> 00:23:37,119 Speaker 1: we're about two point five slower growth. Excuse me. Chairman 371 00:23:37,119 --> 00:23:40,360 Speaker 1: Pound wakes up Tuesday morning full of optimism and confidence 372 00:23:40,520 --> 00:23:42,520 Speaker 1: guys in front of the house and says how great 373 00:23:42,560 --> 00:23:44,280 Speaker 1: things are going to be through this year and how 374 00:23:44,359 --> 00:23:47,440 Speaker 1: much better things are since December. How's Chairman Pound fitting 375 00:23:47,440 --> 00:23:49,639 Speaker 1: at the end of the week. Yeah. I think he 376 00:23:49,680 --> 00:23:52,600 Speaker 1: probably gives himself good marks for his presentation to Congress, 377 00:23:53,359 --> 00:23:56,200 Speaker 1: having corrected the stuff of the stuff about the overheating 378 00:23:56,240 --> 00:23:59,919 Speaker 1: and that there's no uh no signs of wage pressure accelerating. 379 00:24:00,080 --> 00:24:02,119 Speaker 1: But I think this tear of stuff is as scary, 380 00:24:02,720 --> 00:24:05,560 Speaker 1: especially some people who embraced like the free markets and 381 00:24:05,680 --> 00:24:09,000 Speaker 1: the the global liberal trading system power. I think as 382 00:24:09,000 --> 00:24:11,239 Speaker 1: part of that tradition, Chairman Pow we thought was going 383 00:24:11,280 --> 00:24:13,800 Speaker 1: to be a low rates guy and soft on regulation. 384 00:24:14,119 --> 00:24:16,080 Speaker 1: I don't see those two boxes being ticked over these 385 00:24:16,160 --> 00:24:19,240 Speaker 1: last two days of testimon each arc, do you. I 386 00:24:19,280 --> 00:24:20,800 Speaker 1: don't know. I'm not so sure. I mean the markets. 387 00:24:20,920 --> 00:24:23,399 Speaker 1: I mean, for me, if taking Powell to convince the 388 00:24:23,480 --> 00:24:26,280 Speaker 1: market that Yelling was right, Yelling told us in December, 389 00:24:26,359 --> 00:24:28,920 Speaker 1: those dot plots showed us three rate hikes this year. 390 00:24:29,160 --> 00:24:32,160 Speaker 1: The markets finally came around to it on Powell's testimony 391 00:24:32,200 --> 00:24:36,480 Speaker 1: on Tuesday March. Chandler Jeffrey Sachs will join us later 392 00:24:36,600 --> 00:24:42,040 Speaker 1: of Columbia University, an acclaimed international economist, and he's talked 393 00:24:42,080 --> 00:24:45,320 Speaker 1: about and this goes more to more to ecology, the 394 00:24:45,480 --> 00:24:50,400 Speaker 1: economics of a crowded planet? Is the planets so different now, 395 00:24:50,600 --> 00:24:54,959 Speaker 1: so crowded that the template of trade of George Bush Sr. 396 00:24:55,560 --> 00:24:59,280 Speaker 1: Can't work? Now? I don't know. I thought I wonder 397 00:24:59,320 --> 00:25:02,120 Speaker 1: about like this overcrowded. This if her if her mother 398 00:25:02,240 --> 00:25:05,359 Speaker 1: goes to her cupboard she's trying to feed three children, 399 00:25:05,480 --> 00:25:07,520 Speaker 1: she finds that she has only two pork chops? Does 400 00:25:07,560 --> 00:25:10,359 Speaker 1: she have too many children? And I think definitely the issue. 401 00:25:10,480 --> 00:25:12,520 Speaker 1: I think that's hard for me to conceive of. Uh, 402 00:25:12,680 --> 00:25:14,520 Speaker 1: you know, we've got the real parm in the West, 403 00:25:14,840 --> 00:25:19,960 Speaker 1: in US, Europe, Japan, uh, China are demographics were just 404 00:25:20,040 --> 00:25:22,479 Speaker 1: not producing fast enough. Parts of the world that are 405 00:25:22,600 --> 00:25:26,920 Speaker 1: producing are Africa and some parts of East Asia, some 406 00:25:27,000 --> 00:25:29,960 Speaker 1: parts of Latin America. More parts are reproducing while the 407 00:25:30,320 --> 00:25:34,760 Speaker 1: while the older European the highly wage economies are weakening. 408 00:25:34,760 --> 00:25:37,159 Speaker 1: And I think that this is you know, maybe uh 409 00:25:37,480 --> 00:25:41,280 Speaker 1: having fewer people is one way to release some ecological damage. 410 00:25:41,400 --> 00:25:43,320 Speaker 1: March on. The final question for you before we have 411 00:25:43,440 --> 00:25:45,960 Speaker 1: to let you go. More importantly, the base case for 412 00:25:46,000 --> 00:25:47,720 Speaker 1: you from listening to you for the last twenty minutes 413 00:25:47,800 --> 00:25:49,760 Speaker 1: or so, is that remain calm. Things are going to 414 00:25:49,840 --> 00:25:52,240 Speaker 1: be okay. This won't escalate. That's the case. Is this 415 00:25:52,359 --> 00:25:54,760 Speaker 1: market falls out of bed this Friday morning, what would 416 00:25:54,760 --> 00:25:56,560 Speaker 1: you be looking to pick up? What pieces would you 417 00:25:56,600 --> 00:25:58,719 Speaker 1: be looking to pick up as this market falls out 418 00:25:58,760 --> 00:26:01,680 Speaker 1: of bed? Now? The good question, I think that probably 419 00:26:01,800 --> 00:26:04,200 Speaker 1: trying to epside the value invest So I'd be looking 420 00:26:04,240 --> 00:26:06,040 Speaker 1: at those stocks. I'd have a list of stocks that 421 00:26:06,119 --> 00:26:08,359 Speaker 1: I think they're the big sell off, they have good value, 422 00:26:09,320 --> 00:26:10,720 Speaker 1: and so those that those that have been beaten up 423 00:26:10,720 --> 00:26:13,320 Speaker 1: pretty badly, and it might be uh so i'd be 424 00:26:13,359 --> 00:26:17,439 Speaker 1: looking at valuation value stocks. We haven't groof stocks. Mark Chandler, 425 00:26:17,560 --> 00:26:23,040 Speaker 1: thank you so much. We have tried all week to 426 00:26:23,119 --> 00:26:27,560 Speaker 1: get perspective on China that is shifted from a two 427 00:26:27,760 --> 00:26:31,119 Speaker 1: term to permanence of President g too. Of course the 428 00:26:31,320 --> 00:26:34,200 Speaker 1: arch themes of the President United States on merc until 429 00:26:34,280 --> 00:26:37,359 Speaker 1: his trade What an honor to have Steve saying with 430 00:26:37,520 --> 00:26:41,720 Speaker 1: us earlier this week, and now we do better. Carrie 431 00:26:41,760 --> 00:26:45,240 Speaker 1: Brown is with us of Chatham House and the Law 432 00:26:45,400 --> 00:26:50,400 Speaker 1: Center China Institute at King's College, who is without question 433 00:26:50,560 --> 00:26:55,320 Speaker 1: the definitive author across the various leaders of China in 434 00:26:55,400 --> 00:26:59,560 Speaker 1: the modern age. There are five six, eight ten books, 435 00:27:00,119 --> 00:27:04,879 Speaker 1: including China's World. What does China? What? What a perfect 436 00:27:05,000 --> 00:27:08,920 Speaker 1: leading Carrie Brown to where we are this morning? What 437 00:27:09,240 --> 00:27:13,960 Speaker 1: does China want with a mercantiler's trade policy of the 438 00:27:14,080 --> 00:27:18,719 Speaker 1: President of the United States? Well, um, I think they 439 00:27:18,760 --> 00:27:22,200 Speaker 1: probably were expecting something like this. Um. When Trump went 440 00:27:22,280 --> 00:27:26,080 Speaker 1: to China late last year. The only discordant note really 441 00:27:26,280 --> 00:27:29,200 Speaker 1: was that he said the imbalances in trade were things 442 00:27:29,240 --> 00:27:31,800 Speaker 1: he wasn't wasn't happy about, And of course he's always 443 00:27:31,840 --> 00:27:34,240 Speaker 1: appealing to his base. That's something that Chinese leaders know 444 00:27:34,440 --> 00:27:37,160 Speaker 1: very well, and this is a sort of symbolic move 445 00:27:37,200 --> 00:27:40,080 Speaker 1: as I understand it. The reports show that only two 446 00:27:40,160 --> 00:27:42,520 Speaker 1: percent of the steel, for instance, in the United States 447 00:27:42,640 --> 00:27:45,000 Speaker 1: is from China. So I mean it's going to probably 448 00:27:45,000 --> 00:27:48,840 Speaker 1: have a bigger impact on UK or European exporters to dates, 449 00:27:49,440 --> 00:27:52,200 Speaker 1: but I don't mean for China. I think it's probably 450 00:27:52,480 --> 00:27:56,359 Speaker 1: going to be interpreted as, yeah, this presidency is really 451 00:27:56,560 --> 00:27:58,720 Speaker 1: kind of serious and keen about this issue, and they 452 00:27:58,800 --> 00:28:01,320 Speaker 1: have got to give some kind of leeway back. What 453 00:28:01,480 --> 00:28:04,919 Speaker 1: for shape that leeway takes, we'll we'll we'll find out 454 00:28:04,960 --> 00:28:08,480 Speaker 1: soon enough. I imagine Park Frogman in an essay after 455 00:28:08,600 --> 00:28:13,760 Speaker 1: the election, uh makes clear that one theme as people 456 00:28:13,960 --> 00:28:19,160 Speaker 1: wait out President Trump is President Gee's plan to wait 457 00:28:19,240 --> 00:28:22,760 Speaker 1: out this president for whatever is on the other side. 458 00:28:24,240 --> 00:28:26,720 Speaker 1: I think China is going at a faster sort of velocity. 459 00:28:26,960 --> 00:28:29,840 Speaker 1: I mean, they've got the hundreds for you know, anniversary 460 00:28:29,880 --> 00:28:31,920 Speaker 1: of the hundred, the anniversary of the Communist Party, in 461 00:28:32,960 --> 00:28:37,240 Speaker 1: the big, big moment that will maybe Trump will have 462 00:28:37,359 --> 00:28:41,080 Speaker 1: gone by them, maybe you know not, so you know, 463 00:28:41,360 --> 00:28:43,240 Speaker 1: they are not going to kind of disrupt their plans 464 00:28:43,800 --> 00:28:47,160 Speaker 1: by you know, the American presidential circle. What they will 465 00:28:47,200 --> 00:28:49,959 Speaker 1: do though, I think is to make sure that they 466 00:28:50,080 --> 00:28:52,400 Speaker 1: have enough to give Trump to look like he's doing 467 00:28:52,440 --> 00:28:54,040 Speaker 1: what he said he would do for his base back 468 00:28:54,040 --> 00:28:57,080 Speaker 1: in the US, they're probably maybe quite soon some of 469 00:28:57,160 --> 00:29:00,320 Speaker 1: the sectors are protected a little bit. In China, they 470 00:29:00,320 --> 00:29:02,520 Speaker 1: will kind of, you know, be able to incrementally do that. 471 00:29:02,840 --> 00:29:04,480 Speaker 1: They're in a position of having quite a bit to 472 00:29:04,520 --> 00:29:07,120 Speaker 1: give away. In an odd way, they have hoarded all 473 00:29:07,240 --> 00:29:10,560 Speaker 1: sorts of goodies, and I think now they realize, okay, 474 00:29:10,720 --> 00:29:14,000 Speaker 1: we'd better give something back, and that rebalancing, I think 475 00:29:14,040 --> 00:29:15,760 Speaker 1: will be the story of the next year or two. 476 00:29:16,040 --> 00:29:18,400 Speaker 1: The thing is whether it satisfies, you know, people in 477 00:29:18,640 --> 00:29:21,200 Speaker 1: particularly America with Trump and elsewhere in the world because 478 00:29:21,240 --> 00:29:24,920 Speaker 1: of these imbalances, these trade imbalances. Professor Brown, And what 479 00:29:25,040 --> 00:29:27,760 Speaker 1: if you could speak to the issue of President j 480 00:29:28,160 --> 00:29:31,440 Speaker 1: Ping of China the removal of the two term limit 481 00:29:31,600 --> 00:29:35,320 Speaker 1: on his presidency and maybe twin that with the concept 482 00:29:35,440 --> 00:29:38,800 Speaker 1: of stability and the reaction of Western leaders to this 483 00:29:39,440 --> 00:29:42,800 Speaker 1: move in China. So the presidency is not really a 484 00:29:42,840 --> 00:29:45,600 Speaker 1: powerful position, it's a symbolic position. So this again is 485 00:29:45,600 --> 00:29:48,320 Speaker 1: also a declaration of intent more than anything, and I 486 00:29:48,400 --> 00:29:51,520 Speaker 1: think it's signaling that this may be a perpetual leadership 487 00:29:52,520 --> 00:29:55,080 Speaker 1: for stability. That means we see a lot of changes 488 00:29:55,120 --> 00:29:57,960 Speaker 1: in the world. Of course, democracies I think in China 489 00:29:58,040 --> 00:30:01,800 Speaker 1: have regarded as being more stables never before, and China 490 00:30:01,920 --> 00:30:03,600 Speaker 1: is this sort of bulwark of you know, kind of 491 00:30:03,640 --> 00:30:06,960 Speaker 1: stability and stable leadership. So the problem really with that 492 00:30:07,160 --> 00:30:09,240 Speaker 1: is of course that everything ends at the sort of 493 00:30:09,320 --> 00:30:12,760 Speaker 1: desk of she Jingping, that highly centralized leadership, lack of 494 00:30:12,800 --> 00:30:16,160 Speaker 1: a real successor as in Russia and similar sort of situation. 495 00:30:16,920 --> 00:30:20,040 Speaker 1: Is you know, kind of probably okay now because you know, 496 00:30:20,160 --> 00:30:23,720 Speaker 1: as she is obviously operating and functioning fine, but there's 497 00:30:23,760 --> 00:30:26,920 Speaker 1: this big question of what were to happen. Should that 498 00:30:27,080 --> 00:30:29,600 Speaker 1: not be the case, should for instance, he being able 499 00:30:29,680 --> 00:30:31,360 Speaker 1: to kind of operate, or whether there will be some 500 00:30:31,480 --> 00:30:35,120 Speaker 1: kind of kind of big change centralized leadership. The course, 501 00:30:35,200 --> 00:30:37,560 Speaker 1: when the weather is good and everything is looking okay, 502 00:30:37,720 --> 00:30:41,280 Speaker 1: is fine. But when there's more complex issues coming along 503 00:30:41,360 --> 00:30:43,600 Speaker 1: and there's blame going around, is not so fine. So 504 00:30:43,760 --> 00:30:46,760 Speaker 1: it's a big gamble. So does this mean that Western 505 00:30:47,040 --> 00:30:51,520 Speaker 1: leaders are okay with Ping because they see China as 506 00:30:51,560 --> 00:30:54,240 Speaker 1: an area of stability compared to much of the rest 507 00:30:54,280 --> 00:30:56,960 Speaker 1: of the world. I think at the moment, all the 508 00:30:57,280 --> 00:31:00,760 Speaker 1: distraction from Brexit in Europe, from you know, the presidency 509 00:31:00,960 --> 00:31:04,040 Speaker 1: in United States, for all of the instability in the 510 00:31:04,120 --> 00:31:07,160 Speaker 1: Middle East, the problems with Russia. I mean, having a 511 00:31:07,280 --> 00:31:10,600 Speaker 1: China which is at least not kind of you know, unstable, 512 00:31:10,600 --> 00:31:15,440 Speaker 1: didn't look unstable relatively economically okay at the moment, you know, 513 00:31:15,600 --> 00:31:18,280 Speaker 1: kind of looks like it's going to be geopolitically quite 514 00:31:18,360 --> 00:31:21,000 Speaker 1: kind of cooperative in areas, most areas, as long as 515 00:31:21,080 --> 00:31:25,000 Speaker 1: they don't impact on its completely. It's very closest region. 516 00:31:26,080 --> 00:31:29,000 Speaker 1: I think most Western leaders would probably think, yes, it's okay. 517 00:31:29,080 --> 00:31:30,720 Speaker 1: I mean, we don't want to have to worry about 518 00:31:30,760 --> 00:31:33,640 Speaker 1: another you know, big, big unknown. I think the only 519 00:31:33,680 --> 00:31:36,000 Speaker 1: problem really is we can be complacent. China is a 520 00:31:36,080 --> 00:31:40,920 Speaker 1: complicated place, is going through extremely difficult, difficult transition. There's 521 00:31:40,920 --> 00:31:43,840 Speaker 1: a lot that go wrong. Levels of debt are high. Um, 522 00:31:44,040 --> 00:31:45,960 Speaker 1: you know, there's a kind of lot that's not really 523 00:31:46,000 --> 00:31:49,000 Speaker 1: known about the stability of the Chinese system. We may 524 00:31:49,080 --> 00:31:51,240 Speaker 1: be kind of banking too much on Mr. She being 525 00:31:51,280 --> 00:31:53,640 Speaker 1: our kind of you know, best bet for a stable 526 00:31:53,800 --> 00:31:56,360 Speaker 1: sort of you know China, and unstable China would be 527 00:31:56,400 --> 00:31:58,960 Speaker 1: a massive problem. Sue, Thank you, so much. We really 528 00:31:59,000 --> 00:32:01,280 Speaker 1: look forward to speaking again and of course visiting with 529 00:32:01,440 --> 00:32:05,880 Speaker 1: you in our London studio Studios Professor Brown Legendary at 530 00:32:05,960 --> 00:32:08,880 Speaker 1: Chatham House, where I'm sure we'll be writing up this weekend. 531 00:32:08,920 --> 00:32:13,360 Speaker 1: I really can't say enough about this consistent output as well. 532 00:32:14,600 --> 00:32:18,680 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 533 00:32:18,880 --> 00:32:24,160 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 534 00:32:24,240 --> 00:32:28,440 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 535 00:32:28,520 --> 00:32:32,320 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg 536 00:32:32,440 --> 00:32:32,680 Speaker 1: Radio