1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:36,879 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Joining us now 10 00:00:37,000 --> 00:00:39,520 Speaker 2: is the man behind the negotiations, the forty first United 11 00:00:39,560 --> 00:00:42,640 Speaker 2: States Secretary of Commace, Howard Lannik missed the Secretary before 12 00:00:42,680 --> 00:00:44,479 Speaker 2: we get go in a warm congratulations for the team 13 00:00:44,520 --> 00:00:46,880 Speaker 2: here at Bloomberg Surveillance on your confirmation. 14 00:00:48,320 --> 00:00:49,159 Speaker 3: Oh thanks so much. 15 00:00:49,200 --> 00:00:52,440 Speaker 4: It wasn't last night's speech amazing. I really I could 16 00:00:52,440 --> 00:00:55,120 Speaker 4: have been more proud of President Trump. 17 00:00:55,520 --> 00:00:58,000 Speaker 2: We'll get into the niceties on that in just a moment. 18 00:00:58,200 --> 00:01:00,440 Speaker 2: Let's kick it off, sir, with a question about your 19 00:01:00,440 --> 00:01:03,680 Speaker 2: comments yesterday when you suggested that maybe they could be 20 00:01:03,720 --> 00:01:07,160 Speaker 2: a compromise on trade between the United States and Mexico 21 00:01:07,200 --> 00:01:09,840 Speaker 2: and Canada and maybe we'ld hear more about that today. 22 00:01:10,120 --> 00:01:12,320 Speaker 2: Has the President confirmed that is that still the plan? 23 00:01:14,040 --> 00:01:17,480 Speaker 4: Well, I think what happened is you have the trade 24 00:01:17,520 --> 00:01:20,800 Speaker 4: ministers and all the people from Canada really working hard 25 00:01:20,920 --> 00:01:22,639 Speaker 4: with our homeland security people. 26 00:01:22,959 --> 00:01:26,280 Speaker 3: Remember, this is not a trade war. This is a 27 00:01:26,400 --> 00:01:27,000 Speaker 3: drug war. 28 00:01:27,120 --> 00:01:30,440 Speaker 4: We've got fentanyls still pouring into the country and it's 29 00:01:30,480 --> 00:01:31,280 Speaker 4: got to stop. 30 00:01:31,400 --> 00:01:34,440 Speaker 3: So what's happened is they're showing us even more. 31 00:01:34,200 --> 00:01:36,679 Speaker 4: Ways to try to stop the floor of fentanyl and 32 00:01:36,720 --> 00:01:38,280 Speaker 4: if they can stop the floor of fenyl. 33 00:01:38,560 --> 00:01:42,440 Speaker 3: The President is open minded. There are going to be tariffs, let's. 34 00:01:42,200 --> 00:01:45,000 Speaker 4: Be clear, But what he is thinking about is which 35 00:01:45,080 --> 00:01:51,160 Speaker 4: sections of the market that can maybe he'll consider giving 36 00:01:51,160 --> 00:01:54,560 Speaker 4: them relief until we get to of course, April second, 37 00:01:54,560 --> 00:01:56,040 Speaker 4: but I don't want anybody to forget. 38 00:01:56,160 --> 00:01:59,320 Speaker 3: April second is the day that we announced our. 39 00:01:59,240 --> 00:02:03,000 Speaker 4: Reciprocal tarraffs around the world, and so April second is coming. 40 00:02:03,200 --> 00:02:05,360 Speaker 3: But this is about fetnel this month. 41 00:02:05,600 --> 00:02:07,960 Speaker 2: Got that. Just want additional clarity, just to be very 42 00:02:07,960 --> 00:02:10,360 Speaker 2: clear on this. Yesterday when you said I think the 43 00:02:10,400 --> 00:02:12,359 Speaker 2: President's going to figure out you do more and I 44 00:02:12,480 --> 00:02:14,360 Speaker 2: meet you in the middle we're probably going to announce 45 00:02:14,400 --> 00:02:17,360 Speaker 2: that tomorrow as in today. Can we no longer respect 46 00:02:17,360 --> 00:02:18,040 Speaker 2: that announcement? 47 00:02:19,160 --> 00:02:21,520 Speaker 3: No, no, no, no, I didn't say that. I said the 48 00:02:21,560 --> 00:02:22,320 Speaker 3: President is. 49 00:02:22,360 --> 00:02:26,560 Speaker 4: Listening, uh to the offers from Mexico and Canada. He's 50 00:02:26,600 --> 00:02:29,519 Speaker 4: thinking about trying to do something in the middle. He's 51 00:02:29,560 --> 00:02:31,840 Speaker 4: thinking about it. We're talking about it. We're going to 52 00:02:31,919 --> 00:02:33,920 Speaker 4: what I leave here, I'm going to go talk about 53 00:02:33,960 --> 00:02:36,440 Speaker 4: it with him, and I think early this afternoon or 54 00:02:36,520 --> 00:02:39,720 Speaker 4: this afternoon we expect to make an announcement. And my 55 00:02:39,720 --> 00:02:42,000 Speaker 4: my thinking is it's going to be somewhere in the middle, 56 00:02:42,280 --> 00:02:46,000 Speaker 4: so not one hundred percent of all products and not none, 57 00:02:46,120 --> 00:02:49,320 Speaker 4: somewhere in the middle, because I think Mexico and Canada 58 00:02:49,360 --> 00:02:52,040 Speaker 4: are trying the best and let's see where we end up. 59 00:02:52,120 --> 00:02:54,400 Speaker 4: So I do think somewhere in the middle is a 60 00:02:54,600 --> 00:02:55,440 Speaker 4: likely outcome. 61 00:02:55,600 --> 00:02:57,080 Speaker 2: When you say somewhere in the middle, do you mean 62 00:02:57,120 --> 00:02:59,960 Speaker 2: somewhere in the middle on tariffs, as in somewhere between 63 00:03:00,120 --> 00:03:02,960 Speaker 2: zero and twenty five or do you mean that certain groups, 64 00:03:03,000 --> 00:03:05,800 Speaker 2: certain industries will just get a carve out, And would 65 00:03:05,800 --> 00:03:08,160 Speaker 2: that carve out be say the autos, Because the President 66 00:03:08,160 --> 00:03:11,080 Speaker 2: mentioned last night he'd spoken to the auto's CEOs, the 67 00:03:11,120 --> 00:03:12,679 Speaker 2: carve outs we should be thinking about. 68 00:03:12,480 --> 00:03:16,239 Speaker 4: Here, Yeah, I think I think it's by product and 69 00:03:16,280 --> 00:03:20,639 Speaker 4: by regent. Remember the us MCA, right, the United States, 70 00:03:20,800 --> 00:03:24,840 Speaker 4: Mexico and Canada agreement set up some policies that said 71 00:03:24,880 --> 00:03:27,320 Speaker 4: you've got to have a certain amount of US content 72 00:03:27,680 --> 00:03:30,760 Speaker 4: in your products to be USMCA compliant. 73 00:03:31,080 --> 00:03:32,639 Speaker 3: So I think he's thinking. 74 00:03:32,280 --> 00:03:36,200 Speaker 4: About those categories, the us MCA compliant and does not 75 00:03:36,320 --> 00:03:40,360 Speaker 4: make sense to you, Right, if you complied with the agreement, then. 76 00:03:40,240 --> 00:03:41,960 Speaker 3: Maybe you avoid tariffs. And if you. 77 00:03:41,960 --> 00:03:44,600 Speaker 4: Didn't comply with the agreement, well you did sue at 78 00:03:44,600 --> 00:03:47,960 Speaker 4: your own risk. You knew you weren't complying, and therefore 79 00:03:48,000 --> 00:03:50,760 Speaker 4: it seems likely that's a place where the president will go. 80 00:03:51,120 --> 00:03:53,200 Speaker 3: Again, the president gets to make the decision. 81 00:03:53,600 --> 00:03:55,720 Speaker 4: I'm there talking with him about it, and so is 82 00:03:55,760 --> 00:03:59,840 Speaker 4: the team. But our expectation is that it'll be categories. 83 00:03:59,840 --> 00:04:02,680 Speaker 4: It will be twenty five percent, but it'll be there 84 00:04:02,680 --> 00:04:05,480 Speaker 4: will be some categories left out. It could well be autos, 85 00:04:05,840 --> 00:04:10,480 Speaker 4: could be others as well. USMCA go look at that. 86 00:04:10,480 --> 00:04:12,080 Speaker 3: That was the agreement we made with. 87 00:04:12,160 --> 00:04:16,880 Speaker 4: US Mexico and Canada saying those products are exempt. Everyone 88 00:04:16,920 --> 00:04:20,800 Speaker 4: who didn't live under those terms and did so at 89 00:04:20,839 --> 00:04:22,760 Speaker 4: their own risk and knew they were doing it at 90 00:04:22,760 --> 00:04:24,000 Speaker 4: their own risk always. 91 00:04:25,120 --> 00:04:26,480 Speaker 1: Secretary Latna, good morning. 92 00:04:26,520 --> 00:04:29,480 Speaker 5: Would you say right now that you think that US 93 00:04:29,560 --> 00:04:34,919 Speaker 5: autos like GM and Ford are compliant under USMCA. 94 00:04:35,080 --> 00:04:37,760 Speaker 4: That is my understanding is the Big Three say they 95 00:04:37,839 --> 00:04:42,200 Speaker 4: produce cars that are compliant under USMCA, which means they 96 00:04:42,320 --> 00:04:48,080 Speaker 4: have sufficient US content in them to be part of 97 00:04:48,120 --> 00:04:51,720 Speaker 4: the USMCA agreement. So I think that's part of our 98 00:04:51,760 --> 00:04:55,000 Speaker 4: discussion and the President's really thinking about that. 99 00:04:56,160 --> 00:04:59,320 Speaker 5: So it's fair to assume, then, especially given the constituencies 100 00:04:59,520 --> 00:05:02,320 Speaker 5: of autoworkers that the President was able to pick up 101 00:05:02,320 --> 00:05:04,720 Speaker 5: in this past election, that it is the auto industry 102 00:05:04,760 --> 00:05:07,960 Speaker 5: that can potentially get that exemption later this afternoon. 103 00:05:09,279 --> 00:05:12,839 Speaker 4: It's not really the decemption, remember, it's it's we're trying 104 00:05:12,880 --> 00:05:16,920 Speaker 4: to end fentanyl coming into the country. So we're trying 105 00:05:16,960 --> 00:05:20,400 Speaker 4: to send a message that fetanyl has got to end 106 00:05:20,480 --> 00:05:21,880 Speaker 4: coming in from Mexico and Canada. 107 00:05:21,960 --> 00:05:23,640 Speaker 3: It just has to end. 108 00:05:23,920 --> 00:05:26,279 Speaker 4: And they've done a reasonable job on the border, and 109 00:05:26,320 --> 00:05:28,159 Speaker 4: they're going to do a better job on the border. 110 00:05:28,200 --> 00:05:30,800 Speaker 4: But this is memory, it's a key about fentanyl for 111 00:05:30,839 --> 00:05:33,560 Speaker 4: this month April tewcond We could talk about the rest, 112 00:05:33,600 --> 00:05:37,760 Speaker 4: but this month it's about fentanyl, and the President's trying 113 00:05:37,760 --> 00:05:41,560 Speaker 4: to give Mexico and Canada some statement, some move forward 114 00:05:41,600 --> 00:05:45,240 Speaker 4: because they are doing they are trying their hardest, and 115 00:05:45,279 --> 00:05:48,120 Speaker 4: we believe they're trying their hardest. But the fact is 116 00:05:48,640 --> 00:05:52,400 Speaker 4: that we're going to put something on because depths in 117 00:05:52,480 --> 00:05:57,479 Speaker 4: America have not decreased in a way that is sufficient. 118 00:05:57,320 --> 00:05:59,960 Speaker 3: Depths of ferialisms were in America. 119 00:06:01,120 --> 00:06:05,080 Speaker 5: Many families will sympathize with this, remarks me myself, I 120 00:06:05,120 --> 00:06:08,359 Speaker 5: know families who have been at the end of the 121 00:06:08,440 --> 00:06:11,240 Speaker 5: suffering when it comes to fentanyl. But yesterday though, the 122 00:06:11,279 --> 00:06:15,279 Speaker 5: President questioned the fairness of Canadian banks, So what is 123 00:06:15,320 --> 00:06:17,520 Speaker 5: it about. Is it about Canada's banking system or is 124 00:06:17,600 --> 00:06:18,839 Speaker 5: it really about fentanyl? 125 00:06:20,800 --> 00:06:25,760 Speaker 4: So this month, right now is about fentanyl. When we 126 00:06:25,800 --> 00:06:29,400 Speaker 4: talk about April second, we will talk about the bigger 127 00:06:29,520 --> 00:06:33,719 Speaker 4: trade picture between our trading partners Canada and our trading 128 00:06:33,760 --> 00:06:36,719 Speaker 4: partners of Mexico. So April second, I'll be happy to 129 00:06:36,920 --> 00:06:39,840 Speaker 4: come on and talk to you about our thinking and 130 00:06:39,880 --> 00:06:43,760 Speaker 4: our thoughts about a broad trading model. But right now 131 00:06:43,800 --> 00:06:49,320 Speaker 4: it's about fentanyl. This is a drug related issue. Drugs 132 00:06:49,360 --> 00:06:51,760 Speaker 4: coming into the United States of America have got to stop. 133 00:06:51,839 --> 00:06:54,040 Speaker 3: The border. It's got to remain closed. 134 00:06:54,279 --> 00:06:57,760 Speaker 4: That's the key of how you treat your great trading partner. 135 00:06:57,760 --> 00:07:01,000 Speaker 4: You treat your great trading partner with respect, and you 136 00:07:01,160 --> 00:07:03,359 Speaker 4: stop letting sentinel. 137 00:07:02,920 --> 00:07:03,640 Speaker 3: Into the country. 138 00:07:03,680 --> 00:07:07,000 Speaker 4: So my view is the President is thinking about it, 139 00:07:07,279 --> 00:07:11,120 Speaker 4: he's thinking about autos, he's thinking about USMCA. He's going 140 00:07:11,160 --> 00:07:13,120 Speaker 4: to come up with a plan. This afternoon. We're going 141 00:07:13,120 --> 00:07:15,280 Speaker 4: to announce that plan. I think it's going to be 142 00:07:15,440 --> 00:07:18,160 Speaker 4: in the middle somewhere. There's going to be twenty five 143 00:07:18,160 --> 00:07:20,520 Speaker 4: percent tariffs. It's not the middle as in a number. 144 00:07:20,760 --> 00:07:24,680 Speaker 3: I think it's in middle in terms of USMCA, not USMCA. 145 00:07:24,920 --> 00:07:27,720 Speaker 4: But the President will decide that this afternoon and then 146 00:07:27,720 --> 00:07:30,400 Speaker 4: we'll go on from there. But think about that, if 147 00:07:30,400 --> 00:07:34,600 Speaker 4: you were compliant with USMCA, you did what President Trump 148 00:07:34,640 --> 00:07:35,720 Speaker 4: asked in his last term. 149 00:07:36,000 --> 00:07:38,240 Speaker 3: And if you weren't compliant, you did that at your 150 00:07:38,240 --> 00:07:38,760 Speaker 3: own risk. 151 00:07:39,080 --> 00:07:41,720 Speaker 6: Secretary Latnik, I just want to make sure that I 152 00:07:41,840 --> 00:07:44,600 Speaker 6: understand this correctly. You're talking about the idea that this 153 00:07:44,760 --> 00:07:48,160 Speaker 6: all has to do with the drug wars, and at 154 00:07:48,160 --> 00:07:50,440 Speaker 6: the same time, some people have speculated that this could 155 00:07:50,520 --> 00:07:53,280 Speaker 6: lead to a renegotiation of USMCA that. 156 00:07:53,200 --> 00:07:56,480 Speaker 1: Would lead all around to even lower tariffs than before. 157 00:07:56,600 --> 00:07:57,920 Speaker 1: Are you saying that's off the table. 158 00:07:57,960 --> 00:07:59,800 Speaker 6: The tariffs are still part of this at the twenty 159 00:07:59,840 --> 00:08:00,880 Speaker 6: five five percent level. 160 00:08:02,360 --> 00:08:07,679 Speaker 4: Well, remember April second, we begin our reciprocity model, which 161 00:08:07,760 --> 00:08:10,000 Speaker 4: is how you treat us as how we treat you, 162 00:08:10,440 --> 00:08:12,240 Speaker 4: and that is going to be part of his exemption, 163 00:08:12,760 --> 00:08:20,680 Speaker 4: part of his tier policy. And then he's got industries, autos, semiconductors, pharmaceuticals, 164 00:08:21,040 --> 00:08:22,960 Speaker 4: steel and aluminum. 165 00:08:22,480 --> 00:08:26,440 Speaker 3: And copper lumber. These issues need to come home. 166 00:08:26,800 --> 00:08:32,000 Speaker 4: We need to help our domestic industries grow and flourish, 167 00:08:32,160 --> 00:08:36,079 Speaker 4: and so we called out those product sets for extra focus. 168 00:08:36,280 --> 00:08:37,720 Speaker 3: But that's April second. 169 00:08:37,880 --> 00:08:42,200 Speaker 4: So on April second, our reciprocal trade policy will come out. 170 00:08:43,040 --> 00:08:47,840 Speaker 4: In twenty twenty six, we renegotiate USMCA with Canada and Mexico, 171 00:08:47,880 --> 00:08:51,199 Speaker 4: and we're going to have really clear analysis and clear 172 00:08:51,240 --> 00:08:52,679 Speaker 4: focus on how that changes. 173 00:08:53,160 --> 00:08:57,320 Speaker 3: But right today, let's be clear, today is about Fentanel. 174 00:08:57,920 --> 00:08:59,480 Speaker 1: We heard from last night the President. 175 00:08:59,559 --> 00:09:02,640 Speaker 6: He said that he was fine with a little disturbance, 176 00:09:03,080 --> 00:09:06,319 Speaker 6: but going forward, there will be all of these gains realized. 177 00:09:06,800 --> 00:09:07,720 Speaker 1: Secretary Lutnik. 178 00:09:07,800 --> 00:09:11,200 Speaker 6: Are you concerned about the level of uncertainty express not 179 00:09:11,320 --> 00:09:13,480 Speaker 6: just in markets, but just even from people who you 180 00:09:13,600 --> 00:09:15,960 Speaker 6: used to work with, where they're saying, we don't have 181 00:09:16,040 --> 00:09:18,040 Speaker 6: a clear sense of what the goal is. And I 182 00:09:18,120 --> 00:09:20,640 Speaker 6: understand you're saying it'll come on April second, But in 183 00:09:20,679 --> 00:09:23,440 Speaker 6: the meantime people are just putting all plans on hold. 184 00:09:25,360 --> 00:09:28,040 Speaker 4: Well, I'm not seeing all plants at all. In fact, 185 00:09:28,360 --> 00:09:29,520 Speaker 4: I'm seeing the opposite. 186 00:09:29,600 --> 00:09:29,760 Speaker 7: Right. 187 00:09:29,800 --> 00:09:33,200 Speaker 4: We saw Apple commit to five hundred billion dollars. We 188 00:09:33,280 --> 00:09:38,200 Speaker 4: saw open Ai an Oracle commit to five hundred billion 189 00:09:38,280 --> 00:09:39,400 Speaker 4: dollars of investments. 190 00:09:39,600 --> 00:09:41,160 Speaker 3: TSMC just the. 191 00:09:41,160 --> 00:09:44,160 Speaker 4: Other day saying one hundred billion dollar investment in America. 192 00:09:44,720 --> 00:09:47,840 Speaker 4: Saw Bank two hundred billion dollar investment in America. So 193 00:09:48,400 --> 00:09:51,040 Speaker 4: a trillion, three hundred billion dollars. And you think people 194 00:09:51,080 --> 00:09:53,720 Speaker 4: are waiting on the sidelines. We feel it every day. 195 00:09:53,920 --> 00:09:57,040 Speaker 4: All these companies are coming, they're building in America, they're 196 00:09:57,040 --> 00:09:58,520 Speaker 4: committing to America. 197 00:09:58,840 --> 00:10:01,040 Speaker 3: We agree a April second is coming. 198 00:10:01,120 --> 00:10:03,960 Speaker 4: We have to do our work before we announce our 199 00:10:04,000 --> 00:10:06,840 Speaker 4: plans on April second. Of course, we have to do 200 00:10:06,960 --> 00:10:09,880 Speaker 4: our work and do it properly and do it thoughtfully. 201 00:10:10,120 --> 00:10:14,120 Speaker 4: But in this period of time, America needs a president 202 00:10:14,160 --> 00:10:18,040 Speaker 4: to protect people from fentanyl that shouldn't be killing people 203 00:10:18,080 --> 00:10:22,760 Speaker 4: in our country. China still has fentanyl as a highest 204 00:10:23,080 --> 00:10:24,800 Speaker 4: list of subsidies. 205 00:10:25,240 --> 00:10:25,960 Speaker 3: Subsidies. 206 00:10:26,000 --> 00:10:32,040 Speaker 4: They subsidize the production of precursors, the ingredients to fentanyl. 207 00:10:32,080 --> 00:10:34,680 Speaker 4: They send it to Mexico and Canada and into the 208 00:10:34,679 --> 00:10:38,880 Speaker 4: country it comes. So our president has said enough already, 209 00:10:39,120 --> 00:10:42,360 Speaker 4: enough already, and that's why he's come up with this 210 00:10:42,480 --> 00:10:46,280 Speaker 4: tariff plan today. April second will be a fairness plan. 211 00:10:46,360 --> 00:10:49,360 Speaker 4: And fairness plan is not that hard to figure out. 212 00:10:49,679 --> 00:10:50,960 Speaker 3: If you have a vet look it. 213 00:10:51,000 --> 00:10:53,559 Speaker 5: Can I jump in there on the on the fairness plan? 214 00:10:53,720 --> 00:10:57,520 Speaker 5: Is that an initial, partial assessment and response or will 215 00:10:57,600 --> 00:11:00,760 Speaker 5: tariffs actually hit on April second? 216 00:11:02,120 --> 00:11:04,800 Speaker 4: Well, there are a whole variety of laws in the 217 00:11:04,920 --> 00:11:07,760 Speaker 4: United States of America that we will follow with precision. 218 00:11:08,280 --> 00:11:11,080 Speaker 4: Some tariffs will come on right away, and then some 219 00:11:11,160 --> 00:11:13,880 Speaker 4: tariffs will go be registered and they will take three 220 00:11:13,920 --> 00:11:16,560 Speaker 4: weeks or four weeks, and they will come on in 221 00:11:16,640 --> 00:11:17,200 Speaker 4: due course. 222 00:11:17,480 --> 00:11:20,240 Speaker 3: So there's a process for tariffs in America. 223 00:11:20,280 --> 00:11:23,439 Speaker 4: But we will announce them and we will be negotiating 224 00:11:23,480 --> 00:11:26,680 Speaker 4: with all these countries thereafter, and then they go into 225 00:11:26,720 --> 00:11:30,319 Speaker 4: effect over a period of months, so basically. 226 00:11:29,840 --> 00:11:31,600 Speaker 3: April six, as you know, we will announce them and 227 00:11:31,640 --> 00:11:32,319 Speaker 3: then they come. 228 00:11:32,160 --> 00:11:37,040 Speaker 5: In because there's months of studies, massive report, public opinion. 229 00:11:37,080 --> 00:11:38,800 Speaker 1: This can take a very long time. 230 00:11:39,160 --> 00:11:43,400 Speaker 5: So legally there's no law that's short enough really to 231 00:11:43,440 --> 00:11:44,760 Speaker 5: put tariffs in place. 232 00:11:44,480 --> 00:11:45,160 Speaker 1: On the second. 233 00:11:45,559 --> 00:11:48,800 Speaker 5: So how long between April second till the tariffs actually 234 00:11:48,880 --> 00:11:50,440 Speaker 5: hit do you think we'll see? 235 00:11:51,760 --> 00:11:56,640 Speaker 4: As I said there, we launched our studies on January twentieth, 236 00:11:57,000 --> 00:11:58,000 Speaker 4: so April second of. 237 00:11:58,080 --> 00:11:59,080 Speaker 3: Studies are done. 238 00:11:59,200 --> 00:12:02,720 Speaker 4: Some tariffs can come straight away, some can come weeks later, 239 00:12:03,000 --> 00:12:05,640 Speaker 4: some can come some can take over a month or 240 00:12:05,679 --> 00:12:06,840 Speaker 4: two to come online. 241 00:12:06,880 --> 00:12:10,000 Speaker 3: But it will be very, very. 242 00:12:09,840 --> 00:12:14,240 Speaker 4: Thoughtful, very organized, and we begin on April second. We've 243 00:12:14,280 --> 00:12:17,720 Speaker 4: announced it from January twentieth, that April second was the day. 244 00:12:17,760 --> 00:12:19,120 Speaker 3: We're sticking with our day. 245 00:12:19,520 --> 00:12:23,360 Speaker 4: We're sticking with reciprocity at this time for America to 246 00:12:23,440 --> 00:12:24,640 Speaker 4: be treated fairly. 247 00:12:24,960 --> 00:12:27,200 Speaker 3: And that's what the President Trump is going to do. 248 00:12:27,440 --> 00:12:28,040 Speaker 3: He's going to. 249 00:12:28,040 --> 00:12:31,760 Speaker 4: Make sure we are treated fairly. He's talked about it 250 00:12:31,800 --> 00:12:35,640 Speaker 4: last night. He's made this clear. So Mexico and Canada 251 00:12:35,720 --> 00:12:38,360 Speaker 4: is about fentanyl today for the month of March, but 252 00:12:38,480 --> 00:12:41,840 Speaker 4: on April second, it's about fairness. And yes, that is 253 00:12:41,880 --> 00:12:45,080 Speaker 4: a process that comes in that is strictly specific to 254 00:12:45,120 --> 00:12:47,600 Speaker 4: the laws, but it'll take over a month or two 255 00:12:47,600 --> 00:12:50,480 Speaker 4: months to come in. But once it's in, they will 256 00:12:50,520 --> 00:12:54,880 Speaker 4: stick which is treat us fairly, treat us properly, or 257 00:12:54,920 --> 00:12:55,839 Speaker 4: don't trade with us. 258 00:12:56,320 --> 00:12:58,360 Speaker 2: Missus Secretary, I was a man of my word. I 259 00:12:58,360 --> 00:12:59,720 Speaker 2: am a man of my word, and I promise would 260 00:12:59,720 --> 00:13:01,800 Speaker 2: come back the address last night, So let's finish there. 261 00:13:02,000 --> 00:13:03,960 Speaker 2: The President of the United States talked about a big, 262 00:13:04,000 --> 00:13:06,640 Speaker 2: beautiful job in interest rates. A lot of people in 263 00:13:06,640 --> 00:13:09,360 Speaker 2: this market are curious whether the President is no longer 264 00:13:09,400 --> 00:13:12,240 Speaker 2: sensitive to the deadly gyrations of the equity market, that 265 00:13:12,320 --> 00:13:15,080 Speaker 2: the focus, the emphasis now is on the bond market. 266 00:13:15,280 --> 00:13:17,800 Speaker 2: Is that the shift is that the way to understand things. 267 00:13:19,360 --> 00:13:19,480 Speaker 1: All. 268 00:13:19,840 --> 00:13:23,480 Speaker 4: I think that is too specific. I mean, let's face it, 269 00:13:23,600 --> 00:13:26,600 Speaker 4: if we balance the budget of the United States of America, 270 00:13:27,240 --> 00:13:29,840 Speaker 4: interest rates are going to come smashing down. And I 271 00:13:29,880 --> 00:13:32,760 Speaker 4: don't mean ten basis points, I mean one hundred and 272 00:13:32,800 --> 00:13:35,800 Speaker 4: fifty basis points. You're going to have an explosion in 273 00:13:35,840 --> 00:13:36,720 Speaker 4: the housing market. 274 00:13:36,880 --> 00:13:39,160 Speaker 3: You're going to have an explosion in the equity markets. 275 00:13:39,160 --> 00:13:42,600 Speaker 4: Because this is not a manufactured cut in the interest 276 00:13:42,640 --> 00:13:46,000 Speaker 4: rates like you saw last time with this huge money 277 00:13:46,000 --> 00:13:48,000 Speaker 4: supply which created the vast inflation. 278 00:13:48,400 --> 00:13:50,200 Speaker 3: This is the right way to do it. 279 00:13:50,440 --> 00:13:55,560 Speaker 4: You stop printing money, you stop running deficits, you balance 280 00:13:55,600 --> 00:13:58,400 Speaker 4: the budget of the United States of America. You smash 281 00:13:58,559 --> 00:14:03,120 Speaker 4: interest rates down, produce enormous amounts of energy, drive those 282 00:14:03,160 --> 00:14:06,760 Speaker 4: prices down, and you will see the greatest equity market 283 00:14:07,080 --> 00:14:08,240 Speaker 4: and the greatest. 284 00:14:07,800 --> 00:14:09,400 Speaker 3: Economy in the United States of America. 285 00:14:09,559 --> 00:14:12,400 Speaker 4: Now, remember this president is worried about the United States 286 00:14:12,400 --> 00:14:15,440 Speaker 4: of America. Sometimes I get asked questions about am I 287 00:14:15,480 --> 00:14:17,760 Speaker 4: worried about Canadam I worried about Mexican And am I 288 00:14:17,800 --> 00:14:21,480 Speaker 4: worried about Peu? My president is worried about the United 289 00:14:21,520 --> 00:14:23,960 Speaker 4: States of America. And you are going to see the 290 00:14:24,040 --> 00:14:28,120 Speaker 4: greatest equity market and bond markets under President Trump. 291 00:14:28,160 --> 00:14:30,560 Speaker 2: Well, let's want to be apparently American data right now, 292 00:14:30,560 --> 00:14:33,040 Speaker 2: because equities have rolled over just a little bit, you 293 00:14:33,120 --> 00:14:34,800 Speaker 2: know the market. Well, I won't make a big deal 294 00:14:34,840 --> 00:14:36,240 Speaker 2: of it. We're just a bit software at the back 295 00:14:36,280 --> 00:14:39,200 Speaker 2: of this data from ADP, which is a downside surprise 296 00:14:39,240 --> 00:14:42,360 Speaker 2: at seventy seven K the estimate was one forty so 297 00:14:42,400 --> 00:14:44,200 Speaker 2: with sub one hundred we'll see what we get on 298 00:14:44,200 --> 00:14:47,160 Speaker 2: the m later on this morning and on payrolls on Friday. 299 00:14:47,320 --> 00:14:49,560 Speaker 2: But as you know, mister Secretary, the data over the 300 00:14:49,640 --> 00:14:52,880 Speaker 2: last few weeks hasn't been great. The survey data has 301 00:14:52,960 --> 00:14:55,560 Speaker 2: been softer, and a lot of these companies in these 302 00:14:55,600 --> 00:14:59,600 Speaker 2: surveys have pointed to tariff uncertainty. Do Youmick scept that 303 00:14:59,600 --> 00:15:03,920 Speaker 2: the business community needs some clarity or whether it's twenty five, fifteen, ten, whatever, 304 00:15:03,960 --> 00:15:06,560 Speaker 2: the number is going to be, that the volatility around 305 00:15:06,600 --> 00:15:10,800 Speaker 2: the trade story, the cumulative effect of persistent uncertainty is 306 00:15:10,840 --> 00:15:12,480 Speaker 2: trying to wink into this economy a little bit. 307 00:15:14,200 --> 00:15:14,720 Speaker 3: No way. 308 00:15:14,960 --> 00:15:17,080 Speaker 4: I mean, the President spoke about him last night. He 309 00:15:17,120 --> 00:15:22,080 Speaker 4: said Biden left him a pile of poop. Okay, he 310 00:15:22,200 --> 00:15:24,680 Speaker 4: left him a louse of the economy that he's trying 311 00:15:24,720 --> 00:15:25,120 Speaker 4: to fix. 312 00:15:25,440 --> 00:15:28,280 Speaker 3: You're looking at data that's Biden data. 313 00:15:28,720 --> 00:15:34,520 Speaker 4: Do not try to besmirch my President Trump with Biden's nonsense. 314 00:15:34,520 --> 00:15:37,200 Speaker 2: Do you think the manufacturing number is Biden date? So 315 00:15:37,280 --> 00:15:38,840 Speaker 2: I just want to be very clear, that's your opinion. 316 00:15:38,920 --> 00:15:40,960 Speaker 2: You're entitled to it. You think that's his dates. 317 00:15:41,720 --> 00:15:45,760 Speaker 3: My opinion, Okay, what possible could change? Seriously, we are 318 00:15:45,920 --> 00:15:50,280 Speaker 3: in early March. My president took over January twentieth. 319 00:15:50,640 --> 00:15:54,960 Speaker 4: You think economic data coming out in early March is 320 00:15:55,040 --> 00:15:57,960 Speaker 4: Donald Trump related data monthly surveys. 321 00:15:58,000 --> 00:16:04,280 Speaker 2: I'm to be kidd mister Secretary, are you suggesting about it? 322 00:16:04,360 --> 00:16:08,320 Speaker 2: You suggesting so when Bonyard's drop in a market that's 323 00:16:08,320 --> 00:16:11,360 Speaker 2: worth trillions of dollars and investors place bets off the 324 00:16:11,440 --> 00:16:14,200 Speaker 2: back of that economic data, that that data doesn't count 325 00:16:14,240 --> 00:16:16,640 Speaker 2: front of thing, that that data somehow misleading. 326 00:16:18,480 --> 00:16:19,080 Speaker 3: I think that. 327 00:16:19,080 --> 00:16:22,920 Speaker 4: Data is leading you to understand if Joe Biden was 328 00:16:22,960 --> 00:16:25,000 Speaker 4: still in charge, you'd be in trouble. 329 00:16:25,240 --> 00:16:27,400 Speaker 3: But you have a new president. There's a new sheriff 330 00:16:27,440 --> 00:16:28,119 Speaker 3: in town. 331 00:16:28,280 --> 00:16:31,280 Speaker 4: And I would bet, I would bet on the economic 332 00:16:31,320 --> 00:16:33,320 Speaker 4: growth that is coming from Donald Trump. 333 00:16:33,640 --> 00:16:36,520 Speaker 3: You see the investments. You see it already. 334 00:16:36,720 --> 00:16:41,200 Speaker 4: There's trillions of dollars of manufacturing moving to America. 335 00:16:41,320 --> 00:16:45,320 Speaker 3: It's moving to America. That means the cavalry is coming. 336 00:16:45,360 --> 00:16:46,960 Speaker 3: For every trillion. 337 00:16:46,600 --> 00:16:49,520 Speaker 4: Dollars that invests in the United States of America that 338 00:16:49,600 --> 00:16:53,160 Speaker 4: produces one percent of GDP growth, imagine that you have 339 00:16:53,240 --> 00:16:58,720 Speaker 4: a president bringing GDP growth directly to his economy. 340 00:16:58,880 --> 00:16:59,800 Speaker 3: That's amazing. 341 00:17:00,280 --> 00:17:03,040 Speaker 2: It's the Secretary, We appreciate your time and your opinion 342 00:17:03,080 --> 00:17:05,920 Speaker 2: as always. The US Commerce Secretary Howard love Nick there 343 00:17:05,960 --> 00:17:08,920 Speaker 2: on the economic data, financial markets, and what's going to 344 00:17:08,960 --> 00:17:21,040 Speaker 2: happen with trade, joining us now to discuss JP Morgan 345 00:17:21,080 --> 00:17:24,040 Speaker 2: Act managements. But Michael Bob, good morning, good morning. We've 346 00:17:24,040 --> 00:17:25,640 Speaker 2: got a lot to get through. We're getting Europe quickly, 347 00:17:25,680 --> 00:17:27,040 Speaker 2: but I want to start with the United States. Does 348 00:17:27,080 --> 00:17:28,600 Speaker 2: it bring you comfort that the White House seems to 349 00:17:28,600 --> 00:17:31,480 Speaker 2: be more interested in your bond market than the equity market. 350 00:17:32,320 --> 00:17:36,160 Speaker 8: It does to some extent. I think bond investors are 351 00:17:36,160 --> 00:17:39,359 Speaker 8: going to go through a period of discomfort, to borrow 352 00:17:39,400 --> 00:17:42,879 Speaker 8: a phrase from the President, where probably yields have gotten 353 00:17:42,880 --> 00:17:45,960 Speaker 8: a little ahead of themselves. So you know, any kind 354 00:17:45,960 --> 00:17:49,320 Speaker 8: of backup to the mid fours looks like a good 355 00:17:49,400 --> 00:17:50,520 Speaker 8: level for us to get in. 356 00:17:50,600 --> 00:17:53,800 Speaker 2: So you're not a buyer here, not right now, you're 357 00:17:53,800 --> 00:17:55,560 Speaker 2: a buyer of buns here. Can we bring up the curve. 358 00:17:55,600 --> 00:17:57,560 Speaker 2: Let's get back to the German curve two year, ten year, 359 00:17:57,640 --> 00:18:01,000 Speaker 2: thirty year, double digit move we're seeing over in Germany 360 00:18:01,000 --> 00:18:03,040 Speaker 2: off the back of the prospect of a lot more supply. 361 00:18:03,400 --> 00:18:05,600 Speaker 2: The ten Europe by twenty basis points. Where do you 362 00:18:05,600 --> 00:18:06,320 Speaker 2: stand on Europe? 363 00:18:06,320 --> 00:18:10,399 Speaker 8: Now I think you're looking at steeper curves in Europe. 364 00:18:10,400 --> 00:18:12,919 Speaker 8: I think you're going to see a lot of issuance. 365 00:18:13,760 --> 00:18:17,359 Speaker 8: They've thrown fiscal austerity to the side. They've looked at 366 00:18:17,359 --> 00:18:19,520 Speaker 8: what's going on in China and the US and they 367 00:18:19,520 --> 00:18:22,040 Speaker 8: want to join the party and they're going to I 368 00:18:22,080 --> 00:18:25,439 Speaker 8: still see the ECB bringing rates down towards two percent, 369 00:18:25,760 --> 00:18:28,080 Speaker 8: but I think with the amount of supply that's potentially 370 00:18:28,080 --> 00:18:31,040 Speaker 8: coming in Germany, you're going to drift up towards three percent. 371 00:18:31,400 --> 00:18:36,360 Speaker 8: I think that's fantastic for bond investors. Again, discomfort ear term, 372 00:18:36,760 --> 00:18:40,040 Speaker 8: but the ability to have a bond market that has 373 00:18:40,119 --> 00:18:42,480 Speaker 8: yield to it and that's durable fantastic. 374 00:18:42,640 --> 00:18:45,320 Speaker 6: There's a fantastic bond market for investors, and they're fantastic 375 00:18:45,359 --> 00:18:48,760 Speaker 6: bond markets for traders. A fantastic bond market for investors 376 00:18:48,800 --> 00:18:51,560 Speaker 6: is one where there's actual coupon, there's actual yield. A 377 00:18:51,600 --> 00:18:54,880 Speaker 6: fantastic bond for traders. Bond market for traders is when yield. 378 00:18:54,720 --> 00:18:56,680 Speaker 1: Are going down. Is that move over? 379 00:18:56,840 --> 00:19:00,880 Speaker 6: Is it not any longer a fantastic market for traders. 380 00:19:01,640 --> 00:19:03,880 Speaker 8: I think there's potential for a yield to go down 381 00:19:03,920 --> 00:19:06,600 Speaker 8: in the front end of curves. I think central banks, 382 00:19:06,600 --> 00:19:08,960 Speaker 8: whether it's the ECBER, the FED, or looking for that 383 00:19:09,080 --> 00:19:12,520 Speaker 8: opportunity to bring yields down a little bit get closer 384 00:19:12,560 --> 00:19:15,399 Speaker 8: to what they perceive is neutral. But I think the 385 00:19:15,440 --> 00:19:18,080 Speaker 8: long end is going to stay about where it is. 386 00:19:18,520 --> 00:19:22,720 Speaker 8: We're having conversations every day with plan sponsors who want 387 00:19:22,760 --> 00:19:25,360 Speaker 8: to get into this bond market. They're looking at it 388 00:19:25,440 --> 00:19:27,440 Speaker 8: as the anchor in the storm. They like the fact 389 00:19:27,720 --> 00:19:30,119 Speaker 8: they can buy the US aggregate bond market at a 390 00:19:30,240 --> 00:19:33,600 Speaker 8: yield of close to five percent. They're looking to bring 391 00:19:33,680 --> 00:19:36,960 Speaker 8: money out of cash and out of risk assets, whether 392 00:19:37,040 --> 00:19:40,800 Speaker 8: it's privates or equities, and go into the market. Fantastic. 393 00:19:40,920 --> 00:19:42,760 Speaker 1: You said this bond market. 394 00:19:42,800 --> 00:19:46,320 Speaker 6: Are you talking about the United States or develop markets 395 00:19:46,400 --> 00:19:48,800 Speaker 6: more broadly? At a time where we were just talking 396 00:19:48,840 --> 00:19:51,160 Speaker 6: with a number of guests, Peter Share among them saying 397 00:19:51,600 --> 00:19:54,560 Speaker 6: maybe Europe is going to draw capital away from the 398 00:19:54,640 --> 00:19:57,960 Speaker 6: United States, I think it's all bond markets. 399 00:19:58,040 --> 00:20:00,800 Speaker 8: I think when you look at what equities have done, 400 00:20:00,960 --> 00:20:05,960 Speaker 8: they've become lopsided in terms of portfolio allocations. The plans 401 00:20:06,000 --> 00:20:08,680 Speaker 8: that we're talking to are looking to do some rebalancing 402 00:20:09,080 --> 00:20:12,200 Speaker 8: and they're embracing yields where they are I met as 403 00:20:12,200 --> 00:20:14,480 Speaker 8: I said, I met with a plan yesterday. I met 404 00:20:14,480 --> 00:20:17,399 Speaker 8: with them. Five years ago, the aggregate bond market was 405 00:20:17,440 --> 00:20:20,119 Speaker 8: yielding two two and a quarter percent. They didn't invest. 406 00:20:20,400 --> 00:20:24,120 Speaker 8: Now today they've won. Yields have doubled from where they are. 407 00:20:24,119 --> 00:20:28,080 Speaker 8: They're coming in and we're hearing that everywhere from every 408 00:20:28,119 --> 00:20:29,159 Speaker 8: channel around the world. 409 00:20:29,240 --> 00:20:31,280 Speaker 6: You said that you think that yields on the long 410 00:20:31,400 --> 00:20:33,840 Speaker 6: end are probably where they're going to stay, at least 411 00:20:33,880 --> 00:20:36,800 Speaker 6: in the United States. They're not going to go significantly lower. 412 00:20:37,160 --> 00:20:40,880 Speaker 6: Do you see them going significantly higher now? 413 00:20:41,240 --> 00:20:44,280 Speaker 8: I think you're stuck in the force. We're probably a 414 00:20:44,320 --> 00:20:49,560 Speaker 8: buyer in the mid forest because with another round of 415 00:20:49,600 --> 00:20:54,080 Speaker 8: tariffs coming and the blizzard of policies that come out 416 00:20:54,080 --> 00:20:57,160 Speaker 8: of Washington, there's going to be a lot of volatility, 417 00:20:57,520 --> 00:20:59,680 Speaker 8: and there may be a period where people run to 418 00:20:59,760 --> 00:21:03,879 Speaker 8: trades and you get down towards three ninety or four percent. 419 00:21:04,080 --> 00:21:05,840 Speaker 8: But I think we're going to look back on twenty 420 00:21:05,920 --> 00:21:09,000 Speaker 8: twenty five and they're going to have spent almost all 421 00:21:09,040 --> 00:21:11,880 Speaker 8: of their time either side of four and a half percent. 422 00:21:11,800 --> 00:21:14,439 Speaker 2: A period when we run to treasuries. Let's build on that. 423 00:21:14,680 --> 00:21:15,960 Speaker 2: Could we be going to get to a period where 424 00:21:15,960 --> 00:21:18,920 Speaker 2: we run away from dollar denominated assets. Certainly not my view, 425 00:21:18,960 --> 00:21:21,320 Speaker 2: but of you that is out there, people who believe 426 00:21:21,359 --> 00:21:23,359 Speaker 2: that maybe the policy mix of the United States at 427 00:21:23,400 --> 00:21:26,040 Speaker 2: the moment pushes capital away. We've had that a few 428 00:21:26,040 --> 00:21:28,600 Speaker 2: times already this morning. What do you stand on that call? 429 00:21:28,800 --> 00:21:32,160 Speaker 8: It should be your view, John. I think dollar exceptional 430 00:21:32,200 --> 00:21:36,000 Speaker 8: lensum has ended this week. We've done a lot of work. 431 00:21:36,040 --> 00:21:39,840 Speaker 8: We've gone back and we've looked at Trump version one, 432 00:21:40,400 --> 00:21:43,480 Speaker 8: and we see a similar path where the dollar peaks 433 00:21:43,920 --> 00:21:47,440 Speaker 8: early a couple months into the term and then tends 434 00:21:47,480 --> 00:21:51,080 Speaker 8: to come off. We've talked about the dollar being overvalued 435 00:21:51,080 --> 00:21:53,360 Speaker 8: for a year or so now, and I think now 436 00:21:53,400 --> 00:21:57,520 Speaker 8: you're looking at fiscal spend in China, you're looking at 437 00:21:57,520 --> 00:22:00,760 Speaker 8: fiscal spend across Europe, and we're looking looking at we 438 00:22:00,760 --> 00:22:03,760 Speaker 8: didn't talk about Japan. We're looking at close to one 439 00:22:03,800 --> 00:22:07,080 Speaker 8: and a half percent ten year JGB yields. I don't 440 00:22:07,119 --> 00:22:08,720 Speaker 8: even remember when I last saw that. 441 00:22:08,880 --> 00:22:11,840 Speaker 2: When you say a period of dollar exceptionalism is over, 442 00:22:12,320 --> 00:22:15,320 Speaker 2: do you mean for the currency specifically, or do you 443 00:22:15,400 --> 00:22:17,560 Speaker 2: mean the dollar long that we've built up over the 444 00:22:17,600 --> 00:22:21,439 Speaker 2: last decade in dollar denominated assets across fixed income and 445 00:22:21,520 --> 00:22:23,200 Speaker 2: equities alike. Would you go that far? 446 00:22:24,000 --> 00:22:26,719 Speaker 8: I think yes, I would go that far. I think 447 00:22:27,280 --> 00:22:32,280 Speaker 8: everyone has talked about how expensive US markets have gotten 448 00:22:32,400 --> 00:22:36,919 Speaker 8: relative to non US markets, but nobody wanted to step 449 00:22:36,960 --> 00:22:39,520 Speaker 8: in front of the steam roller. And now the steam 450 00:22:39,600 --> 00:22:43,000 Speaker 8: rollers rolling the other way. And I think you're going 451 00:22:43,080 --> 00:22:46,480 Speaker 8: to see this flow out of dollar denominated assets, and 452 00:22:46,520 --> 00:22:48,479 Speaker 8: I think the dollar comes off from where it is. 453 00:22:48,720 --> 00:22:52,200 Speaker 2: I think that process is underway substantially, if you're correct 454 00:22:52,200 --> 00:22:56,120 Speaker 2: at leasta, these are huge changes potentially for financial markets worldwide. 455 00:22:56,200 --> 00:22:58,199 Speaker 6: I just wonder how much it reduces some of the 456 00:22:58,200 --> 00:23:00,880 Speaker 6: flows into US risk markets, and I wonder how much 457 00:23:00,960 --> 00:23:04,400 Speaker 6: that gives more fuel to what we've already seen, particularly 458 00:23:04,400 --> 00:23:06,520 Speaker 6: with some of the most consensus bests, which is the 459 00:23:06,600 --> 00:23:07,359 Speaker 6: technology firms. 460 00:23:07,359 --> 00:23:09,000 Speaker 2: All these things we've been asking for for such a 461 00:23:09,000 --> 00:23:12,080 Speaker 2: long time. China needs to do more deficit spending headline overnight, 462 00:23:12,160 --> 00:23:14,600 Speaker 2: You're going to get it. Germany needs to invest more 463 00:23:14,600 --> 00:23:17,719 Speaker 2: in infrastructure, in defense headlines in the last twenty four hours, 464 00:23:17,840 --> 00:23:20,440 Speaker 2: You're going to get it. Deutsche Banks George Soravellos talked 465 00:23:20,520 --> 00:23:22,960 Speaker 2: about it about twenty minutes ago. Put it perfectly. You 466 00:23:23,040 --> 00:23:26,000 Speaker 2: cannot overstate the changes we're seeing in the global economy. 467 00:23:26,000 --> 00:23:27,159 Speaker 2: I know a lot of people sit here in the 468 00:23:27,200 --> 00:23:29,320 Speaker 2: media every single day and say, big wee, come guilty 469 00:23:29,320 --> 00:23:32,280 Speaker 2: of it, big wee coming up payrolls Friday. Forget payrolls, 470 00:23:32,680 --> 00:23:35,719 Speaker 2: forget the data. These are massive policy shifts. 471 00:23:36,000 --> 00:23:38,000 Speaker 6: This is the time, and this is something Jim Reid 472 00:23:38,040 --> 00:23:41,560 Speaker 6: says every morning that years happen in the period of days. 473 00:23:41,640 --> 00:23:45,040 Speaker 6: And we've seen that again and again, reshifting expectations. There's 474 00:23:45,040 --> 00:23:47,800 Speaker 6: a lot to be determined. But my big question is 475 00:23:47,960 --> 00:23:51,160 Speaker 6: how much how far does this go in rearranging tradelines 476 00:23:51,520 --> 00:23:51,960 Speaker 6: kind of. 477 00:23:51,840 --> 00:23:54,840 Speaker 1: What Donald Trump wanted. So this is the new world. 478 00:23:54,960 --> 00:23:57,760 Speaker 2: Payroll still important. Friday, eight thirty Eastern time, right, don't 479 00:23:57,760 --> 00:23:59,920 Speaker 2: forget payroll. So take that back. But Michael a JP 480 00:24:00,080 --> 00:24:02,640 Speaker 2: Organ Asset Management, Bob some big calls. I appreciate your time, sir. 481 00:24:02,720 --> 00:24:15,159 Speaker 2: Thank you. George Saravellas of Deutsche Bank writing it is 482 00:24:15,200 --> 00:24:18,159 Speaker 2: hard to overestimate the scale of change taking place in 483 00:24:18,200 --> 00:24:22,760 Speaker 2: global economic and geopolitical relations in just a matter of days. 484 00:24:23,040 --> 00:24:25,240 Speaker 2: George joins us now for more. George, welcome to the program. 485 00:24:25,320 --> 00:24:27,480 Speaker 2: Let's start with the call of the euro talk to 486 00:24:27,480 --> 00:24:28,360 Speaker 2: me about the change. 487 00:24:30,000 --> 00:24:32,080 Speaker 7: So there's really two key components, John. 488 00:24:32,200 --> 00:24:33,480 Speaker 9: The first one is. 489 00:24:33,600 --> 00:24:37,280 Speaker 7: Very much this shift coming out of Germany, which I 490 00:24:37,320 --> 00:24:38,520 Speaker 7: would call generational. 491 00:24:39,359 --> 00:24:40,440 Speaker 9: We have been. 492 00:24:41,000 --> 00:24:43,960 Speaker 7: Expecting some sort of shift over the last two weeks. 493 00:24:44,000 --> 00:24:46,359 Speaker 7: As soon as the election was over. It looked like 494 00:24:46,400 --> 00:24:47,600 Speaker 7: the ingredients were building. 495 00:24:48,160 --> 00:24:50,560 Speaker 9: But even we and we've been on the. 496 00:24:50,480 --> 00:24:54,560 Speaker 7: Optimistic end, were very surprised with the magnitude of the 497 00:24:54,600 --> 00:24:58,000 Speaker 7: fiscal shift that was announced. From my perspective, it's the 498 00:24:58,040 --> 00:25:01,679 Speaker 7: biggest shift in fiscal po I've seen in my career, 499 00:25:01,800 --> 00:25:04,920 Speaker 7: both in terms of magnitude and pace, and this has 500 00:25:05,040 --> 00:25:12,800 Speaker 7: huge consequences for both growth, the ECB and even Europe's strategic. 501 00:25:12,280 --> 00:25:13,720 Speaker 9: Autonomy versus the US. 502 00:25:14,640 --> 00:25:17,639 Speaker 7: So that is one component, and I would say that 503 00:25:17,920 --> 00:25:21,679 Speaker 7: policy is increasing shifting to be cyclically relevant even in 504 00:25:21,760 --> 00:25:25,280 Speaker 7: coming quarters, rather than just structurally relevant. And then on 505 00:25:25,320 --> 00:25:27,639 Speaker 7: the flip side, you have a situation in the US 506 00:25:28,600 --> 00:25:32,000 Speaker 7: where tariff policy is taking place in such a haphazard 507 00:25:32,040 --> 00:25:36,359 Speaker 7: way it ends up creating self inflicted damage to the 508 00:25:36,440 --> 00:25:39,200 Speaker 7: US economy. I think that is one reason why FED 509 00:25:39,240 --> 00:25:42,439 Speaker 7: expectations and US heels are coming down and the broader 510 00:25:42,480 --> 00:25:44,439 Speaker 7: fiscal picture remains very murky. 511 00:25:44,880 --> 00:25:47,240 Speaker 9: So we have a situation which is the complete. 512 00:25:46,920 --> 00:25:49,879 Speaker 7: Opposite from what I personally would have expected at the 513 00:25:49,880 --> 00:25:53,119 Speaker 7: start of the year. But when the facts change, we 514 00:25:53,240 --> 00:25:55,840 Speaker 7: change our minds, and that's what's happened over the last 515 00:25:55,880 --> 00:25:56,280 Speaker 7: few weeks. 516 00:25:56,400 --> 00:25:58,200 Speaker 2: So George, let's talk about a couple of things. Let's 517 00:25:58,200 --> 00:26:00,600 Speaker 2: talk about this first on Wall Street. As you know, 518 00:26:00,640 --> 00:26:03,080 Speaker 2: there are certain phrases the scare people. One of them 519 00:26:03,160 --> 00:26:05,960 Speaker 2: is this time is different. George, why is this time 520 00:26:06,359 --> 00:26:09,440 Speaker 2: so different? Why should we really believe this is hamnik? 521 00:26:11,520 --> 00:26:14,679 Speaker 7: I think the first reason is it's now been announced, 522 00:26:15,280 --> 00:26:19,600 Speaker 7: it has cross party support. What I found the most 523 00:26:19,680 --> 00:26:24,480 Speaker 7: interesting in Murcher's statements yesterday is he used. 524 00:26:24,320 --> 00:26:26,280 Speaker 9: The phrase whatever it takes. 525 00:26:26,880 --> 00:26:30,159 Speaker 7: But take note it wasn't used in German, it was 526 00:26:30,200 --> 00:26:33,840 Speaker 7: in English, and it was also posted on x on 527 00:26:33,880 --> 00:26:37,400 Speaker 7: his feed. And this is a very conscious message by 528 00:26:37,440 --> 00:26:41,040 Speaker 7: the Chancellor in waiting of wanting to reflect on what 529 00:26:41,200 --> 00:26:45,399 Speaker 7: Dragie did and sending the same message for Germany. So 530 00:26:46,080 --> 00:26:49,320 Speaker 7: it does have to go through parliamentary approval. We have 531 00:26:49,359 --> 00:26:52,360 Speaker 7: a fairly high degree of confidence that it will, and 532 00:26:52,440 --> 00:26:55,960 Speaker 7: once it does, we are speaking of immense amounts in 533 00:26:56,040 --> 00:26:59,480 Speaker 7: terms of orders of magnitude. So you discussed earlier on 534 00:26:59,560 --> 00:27:03,680 Speaker 7: the show the shift around the big infrastructure fund, the 535 00:27:03,720 --> 00:27:05,640 Speaker 7: potential unlimited defense spending. 536 00:27:06,040 --> 00:27:07,960 Speaker 9: I would also add they're. 537 00:27:07,800 --> 00:27:10,679 Speaker 7: Going to reform the debt break to allow a greater 538 00:27:10,760 --> 00:27:14,600 Speaker 7: degree of fiscal spend at the state level, which provides 539 00:27:14,600 --> 00:27:15,960 Speaker 7: cyclical steamulus as well. 540 00:27:16,320 --> 00:27:18,159 Speaker 9: So if you add all of these. 541 00:27:17,920 --> 00:27:22,800 Speaker 7: Things up, they are going to have a very material 542 00:27:23,400 --> 00:27:27,119 Speaker 7: economic impact on Germany and by extension, I think the 543 00:27:27,160 --> 00:27:27,800 Speaker 7: whole of Europe. 544 00:27:28,200 --> 00:27:30,520 Speaker 6: George, if you had so much conviction, why is your 545 00:27:30,560 --> 00:27:32,560 Speaker 6: euro usd target one ten? 546 00:27:32,800 --> 00:27:33,800 Speaker 1: Why isn't it higher? 547 00:27:35,720 --> 00:27:38,320 Speaker 9: That's a great question. I would say, one step at 548 00:27:38,320 --> 00:27:38,680 Speaker 9: a time. 549 00:27:39,760 --> 00:27:44,560 Speaker 7: Every day we're seeing newsflow that would usually take years 550 00:27:44,640 --> 00:27:47,080 Speaker 7: or even decades to potentially feed through. 551 00:27:48,040 --> 00:27:50,400 Speaker 9: So I would say what we need to. 552 00:27:51,880 --> 00:27:56,680 Speaker 7: Argue for an even weaker dollar is for persistent economic 553 00:27:56,720 --> 00:27:58,840 Speaker 7: weakness in the US. That's going to be a function 554 00:27:59,040 --> 00:28:03,240 Speaker 7: of what happens from the administration overcoming weeks. Do we 555 00:28:03,240 --> 00:28:06,800 Speaker 7: see a reversal in the tariff policy? So I think 556 00:28:06,800 --> 00:28:09,720 Speaker 7: there's still a tremendous degree of uncertainty on the US side, 557 00:28:10,000 --> 00:28:12,520 Speaker 7: and how much the recent weekends continues. It is a 558 00:28:12,520 --> 00:28:16,480 Speaker 7: function of fiscal in the US and tariff and then 559 00:28:16,680 --> 00:28:18,560 Speaker 7: there is some execution. 560 00:28:18,200 --> 00:28:19,879 Speaker 9: Risk as we discussed around Europe. 561 00:28:20,600 --> 00:28:23,440 Speaker 7: But it is the first step one ten, and we're 562 00:28:23,600 --> 00:28:25,800 Speaker 7: very open minded in terms of how we think about 563 00:28:25,880 --> 00:28:26,400 Speaker 7: the outlook. 564 00:28:26,520 --> 00:28:27,880 Speaker 2: I think they've got to be up and minded about 565 00:28:27,880 --> 00:28:30,560 Speaker 2: everything right now, George, including the United States. So let's 566 00:28:30,560 --> 00:28:32,560 Speaker 2: finish on the US. You mentioned the US side of things, 567 00:28:32,680 --> 00:28:35,159 Speaker 2: a question we've gone back to repeatedly on this program 568 00:28:35,200 --> 00:28:37,320 Speaker 2: ever since the election. Do you see a policy mix 569 00:28:37,359 --> 00:28:39,880 Speaker 2: that attracts capital to the United States or a policy 570 00:28:39,880 --> 00:28:42,480 Speaker 2: makes that pushes it away. I asked that question earlier 571 00:28:42,520 --> 00:28:44,960 Speaker 2: this morning. George. What's your call on that now and 572 00:28:45,000 --> 00:28:45,640 Speaker 2: has it changed? 573 00:28:47,320 --> 00:28:47,520 Speaker 3: Well? 574 00:28:47,560 --> 00:28:50,320 Speaker 7: I think it's becoming a bit more ambivalent over the 575 00:28:50,400 --> 00:28:52,800 Speaker 7: last couple of months, And I would say there's two 576 00:28:52,880 --> 00:28:53,680 Speaker 7: drivers around that. 577 00:28:54,880 --> 00:28:57,480 Speaker 9: One just relates to the policy mix itself. 578 00:28:58,280 --> 00:29:03,560 Speaker 7: That is, it's less about the specifics and it's almost 579 00:29:03,640 --> 00:29:06,320 Speaker 7: about the lack of specifics and the uncertainty around the 580 00:29:06,360 --> 00:29:10,360 Speaker 7: reaction function. Now, if you're putting twenty twenty five percent 581 00:29:10,440 --> 00:29:13,080 Speaker 7: tariffs on half of your imports and you don't know 582 00:29:13,160 --> 00:29:14,560 Speaker 7: are they going to be there the next day, are 583 00:29:14,600 --> 00:29:17,000 Speaker 7: they going to be removed? That is naturally going to 584 00:29:17,000 --> 00:29:20,160 Speaker 7: be creating economic uncertainty and I think we're seeing that 585 00:29:20,240 --> 00:29:24,000 Speaker 7: materialize and that is why US risk markets are underperforming. 586 00:29:24,560 --> 00:29:25,720 Speaker 9: So that's one aspect. 587 00:29:26,120 --> 00:29:29,240 Speaker 7: The second one is broader, and you could even call 588 00:29:29,280 --> 00:29:32,200 Speaker 7: it a positive but to the extent that President Trump 589 00:29:32,600 --> 00:29:36,320 Speaker 7: is encouraging other countries to build strategic autonomy and is 590 00:29:36,440 --> 00:29:39,960 Speaker 7: encouraging other countries to spend all of a sudden, you 591 00:29:40,040 --> 00:29:42,920 Speaker 7: have an investment thesis potentially for Europe. 592 00:29:43,360 --> 00:29:46,920 Speaker 9: Now that's the more positive angle. The more negative angle is. 593 00:29:46,840 --> 00:29:49,840 Speaker 7: The policy uncertainty in the US itself, which I think 594 00:29:50,000 --> 00:29:51,920 Speaker 7: deshually needs a bit more clarity. 595 00:29:52,120 --> 00:29:54,760 Speaker 2: Hey, George, appreciate your time. Joe Saravella staf toutsche Bank 596 00:29:54,800 --> 00:30:06,960 Speaker 2: looking for one ten on EU Rotllar. Monica Querra of 597 00:30:07,000 --> 00:30:09,720 Speaker 2: Morgan Stanley writing the market could be undercounting the long 598 00:30:09,800 --> 00:30:14,160 Speaker 2: term impact of tariffs because of policy uncertainty. Monica joined 599 00:30:14,240 --> 00:30:16,160 Speaker 2: US now for more Monica and Mornic, good morning. I'm 600 00:30:16,160 --> 00:30:17,680 Speaker 2: so pleased you went there because I think this is 601 00:30:17,720 --> 00:30:21,000 Speaker 2: so important, whether the tariffs at twenty five, twenty fifteen, 602 00:30:21,160 --> 00:30:23,200 Speaker 2: or ten. I think the business community just wants to 603 00:30:23,200 --> 00:30:26,000 Speaker 2: know and have certainty and starts a plan for the 604 00:30:26,000 --> 00:30:29,600 Speaker 2: next year several years. That uncertainty that volatility of the 605 00:30:29,600 --> 00:30:31,920 Speaker 2: policy itself. How much damage could we see off the 606 00:30:31,960 --> 00:30:32,600 Speaker 2: bank of that. 607 00:30:33,160 --> 00:30:36,080 Speaker 10: The policy itself, I think could you know, have significant 608 00:30:36,120 --> 00:30:39,280 Speaker 10: implications depending on the different industries that it's impacting. 609 00:30:39,760 --> 00:30:40,800 Speaker 1: When we're thinking. 610 00:30:40,520 --> 00:30:46,240 Speaker 10: About the policy uncertainty piece not under essentially undercounting potential impacts. 611 00:30:46,520 --> 00:30:48,880 Speaker 1: It's what happens next, you know. Now with. 612 00:30:50,320 --> 00:30:53,240 Speaker 10: Mexico and Canada, we spoke last week. We thought that 613 00:30:53,360 --> 00:30:58,200 Speaker 10: something like this might happen, right that the tariffs could 614 00:30:58,320 --> 00:31:02,360 Speaker 10: be implemented, they could be renegotiated. You have USMCA potentially 615 00:31:02,440 --> 00:31:06,600 Speaker 10: pulled forward into twenty twenty five. That situation, our relationship 616 00:31:06,640 --> 00:31:10,680 Speaker 10: with our neighbors is incredibly dynamic. It's what happens in April, 617 00:31:10,920 --> 00:31:14,280 Speaker 10: and I think that staying on top of potential tariff 618 00:31:14,360 --> 00:31:15,400 Speaker 10: risk is important. 619 00:31:16,040 --> 00:31:18,920 Speaker 6: There's a question about who President Trump is speaking to, 620 00:31:19,000 --> 00:31:22,440 Speaker 6: because Marcus had just expected heading into this year that 621 00:31:22,480 --> 00:31:24,760 Speaker 6: he would be catering to them on some level, that 622 00:31:24,840 --> 00:31:27,400 Speaker 6: he'd be looking for market approval. Seems like that's not 623 00:31:27,440 --> 00:31:30,080 Speaker 6: the case. With a little bit of disturbance being just fine, 624 00:31:30,440 --> 00:31:33,360 Speaker 6: do we have a sense of where President Trump is 625 00:31:33,400 --> 00:31:35,920 Speaker 6: looking to sort of get that approval? 626 00:31:36,720 --> 00:31:39,760 Speaker 10: So the little bit of disturbance piece I think is 627 00:31:39,880 --> 00:31:43,239 Speaker 10: key because the selloff we saw was you know, just 628 00:31:43,440 --> 00:31:45,440 Speaker 10: in the you know, the range of two five or 629 00:31:45,480 --> 00:31:48,480 Speaker 10: on the day on the second right when the tariffs 630 00:31:48,480 --> 00:31:51,840 Speaker 10: were implemented, you saw you know, the biggest hits right 631 00:31:51,920 --> 00:31:56,000 Speaker 10: to tech and energy given the types of tariffs that 632 00:31:56,000 --> 00:32:00,280 Speaker 10: were being you know, proposed. Now, what's important here is 633 00:32:00,320 --> 00:32:03,360 Speaker 10: that that's not this big market downturn. If you had 634 00:32:03,440 --> 00:32:06,680 Speaker 10: a greater correction on that that was prolonged, that I 635 00:32:06,720 --> 00:32:11,520 Speaker 10: think would get the president's attention. But a day point 636 00:32:11,520 --> 00:32:16,600 Speaker 10: in time, momentary response is expected and something that I think, 637 00:32:16,640 --> 00:32:18,960 Speaker 10: you know, he's saying we can all live with that. 638 00:32:19,160 --> 00:32:20,400 Speaker 1: Markets are rebounding. 639 00:32:20,680 --> 00:32:26,400 Speaker 10: They're looking to the potential of his negotiating tax tactics 640 00:32:26,520 --> 00:32:27,240 Speaker 10: long term. 641 00:32:27,520 --> 00:32:30,000 Speaker 6: You aren't seeing the deals being announced, you actually saw 642 00:32:30,040 --> 00:32:33,880 Speaker 6: them and a volumes fall pretty significantly in February. We've 643 00:32:33,920 --> 00:32:36,640 Speaker 6: talked to a number of executives saying we just don't 644 00:32:36,640 --> 00:32:39,400 Speaker 6: have the certainty and to John's point, that uncertainty drags 645 00:32:39,440 --> 00:32:41,120 Speaker 6: on growth and you're starting to see that some of 646 00:32:41,160 --> 00:32:44,240 Speaker 6: the data in your conversations with people in Washington, DC. 647 00:32:45,120 --> 00:32:48,280 Speaker 6: Is President Trump and his cabinet concerned about that level 648 00:32:48,280 --> 00:32:51,600 Speaker 6: of uncertainty and some of the soft data rolling over now. 649 00:32:51,640 --> 00:32:52,960 Speaker 1: I don't think they're concerned. 650 00:32:53,160 --> 00:32:55,920 Speaker 10: Now what we've seen as far as their strategy and 651 00:32:56,000 --> 00:32:57,840 Speaker 10: Trump one point zero it. 652 00:32:57,920 --> 00:33:02,080 Speaker 1: Was the growth policies for first and then teariff second. 653 00:33:02,880 --> 00:33:03,760 Speaker 1: This is the reverse. 654 00:33:04,280 --> 00:33:08,160 Speaker 10: They're intentionally doing this. They're coming in at a point 655 00:33:08,200 --> 00:33:12,000 Speaker 10: of extreme geopolitical tension and conflicts, so they're looking to 656 00:33:12,080 --> 00:33:17,320 Speaker 10: address that, essentially reinforce the America First agenda, and then 657 00:33:17,520 --> 00:33:19,760 Speaker 10: hoping that off the back of that, the growth policies 658 00:33:19,800 --> 00:33:21,960 Speaker 10: pick up. So when you're thinking about this is where 659 00:33:21,960 --> 00:33:22,720 Speaker 10: budget and. 660 00:33:22,680 --> 00:33:23,360 Speaker 1: Tax come in. 661 00:33:23,800 --> 00:33:26,080 Speaker 10: That if you get the cuts, if you get additional 662 00:33:26,160 --> 00:33:29,720 Speaker 10: cuts to corporates, they're hoping that that's going to create 663 00:33:29,760 --> 00:33:31,920 Speaker 10: tailwinds through twenty twenty six succe that's when they go 664 00:33:31,960 --> 00:33:36,000 Speaker 10: into effect. So twenty twenty five is a restaging, resetting. 665 00:33:35,600 --> 00:33:38,280 Speaker 1: Resizing year. It's going to be choppy. 666 00:33:38,760 --> 00:33:41,520 Speaker 10: This is something we talk to our clients about regularly, 667 00:33:41,600 --> 00:33:43,200 Speaker 10: that this is a bumpy year that. 668 00:33:43,200 --> 00:33:44,239 Speaker 1: You have to see through it. 669 00:33:44,440 --> 00:33:47,640 Speaker 10: And that's what I think the Trump administration is they're 670 00:33:47,680 --> 00:33:49,960 Speaker 10: looking at, too, is what happens in twenty twenty six 671 00:33:49,960 --> 00:33:51,160 Speaker 10: and then legacy going forward. 672 00:33:51,160 --> 00:33:52,960 Speaker 2: At LISTA mentioned this earlier. I think is an important 673 00:33:52,960 --> 00:33:55,880 Speaker 2: point regarding taxes twenty seventeen, we've been talking about text 674 00:33:55,920 --> 00:33:58,680 Speaker 2: cuts twenty twenty five into twenty six, we're talking about 675 00:33:58,720 --> 00:34:02,000 Speaker 2: the extension of tax cuts. How different is that? What 676 00:34:02,160 --> 00:34:05,080 Speaker 2: we get additional cuts beyond just the extension of what 677 00:34:05,120 --> 00:34:06,680 Speaker 2: we did back in seventeen eighteen. 678 00:34:07,400 --> 00:34:09,160 Speaker 1: So they are different. 679 00:34:09,800 --> 00:34:12,640 Speaker 10: If you're looking at it from a budgeting perspective, you 680 00:34:12,760 --> 00:34:14,799 Speaker 10: have to start from where we are now what would 681 00:34:14,840 --> 00:34:17,960 Speaker 10: be the impact long term? So if you extend the 682 00:34:18,000 --> 00:34:20,080 Speaker 10: tax cuts as is, that would add four. 683 00:34:19,960 --> 00:34:22,800 Speaker 1: Trillion just off the bat to the deficit. 684 00:34:23,280 --> 00:34:26,080 Speaker 10: Now, if you get additional cuts, it's likely to be 685 00:34:26,480 --> 00:34:29,440 Speaker 10: you know, to social Security, to you know, no tax 686 00:34:29,480 --> 00:34:33,279 Speaker 10: on tips, those types of giveback to the individual. But 687 00:34:33,320 --> 00:34:36,239 Speaker 10: more importantly, on the corporate side, Trump has said he 688 00:34:36,320 --> 00:34:40,320 Speaker 10: wants corporate income tax top line as low as fifteen percent, 689 00:34:40,760 --> 00:34:44,839 Speaker 10: So that is, you know, significantly stimulative in the long 690 00:34:44,920 --> 00:34:47,600 Speaker 10: run when you're thinking about corporate America. 691 00:34:47,400 --> 00:34:50,359 Speaker 2: Once fifteen with a US production element attached to it. Yes, 692 00:34:50,400 --> 00:34:52,080 Speaker 2: so we really understand what that's going to look like 693 00:34:52,120 --> 00:34:52,800 Speaker 2: and how it works. 694 00:34:53,640 --> 00:34:56,120 Speaker 10: I don't, especially because I think that There is a 695 00:34:56,160 --> 00:34:58,600 Speaker 10: component here that people are missing is that you have 696 00:34:58,680 --> 00:35:00,520 Speaker 10: to pay for those tax cuts somehow. 697 00:35:00,840 --> 00:35:02,280 Speaker 1: Tariffs is one way. 698 00:35:02,120 --> 00:35:05,840 Speaker 10: That they're looking to do that through that external revenue 699 00:35:05,920 --> 00:35:10,680 Speaker 10: service passing through funding right through an accounting adjustment. The 700 00:35:10,760 --> 00:35:13,400 Speaker 10: other thing that people aren't looking at is the potential 701 00:35:13,440 --> 00:35:18,480 Speaker 10: for increased corporate taxes on foreign revenues. So this is 702 00:35:18,520 --> 00:35:21,520 Speaker 10: something they did in twenty seventeen. It's i would say, 703 00:35:21,520 --> 00:35:24,239 Speaker 10: an easy, low hanging fruit if they're looking to raise 704 00:35:24,280 --> 00:35:28,040 Speaker 10: taxes because it speaks to and only trying to reincentivize 705 00:35:28,080 --> 00:35:34,480 Speaker 10: businesses to bring their production, manufacturing, sales home. But it 706 00:35:34,560 --> 00:35:38,400 Speaker 10: also helps offset any top line corporate income tax production. 707 00:35:38,520 --> 00:35:40,200 Speaker 2: And you need the tax paych it to ready fully 708 00:35:40,239 --> 00:35:43,720 Speaker 2: understand the overall effort alongside the trade effort. 709 00:35:43,920 --> 00:35:46,759 Speaker 6: So if for example, some of the auto manufacturers had 710 00:35:46,760 --> 00:35:49,480 Speaker 6: to pay twenty five percent tax on parts from Mexico 711 00:35:49,480 --> 00:35:51,880 Speaker 6: and Canada, it would be offset with a fifteen percent 712 00:35:52,280 --> 00:35:54,799 Speaker 6: tax rate top line tax rate that would come later on. 713 00:35:56,520 --> 00:35:57,800 Speaker 1: It's in theory. 714 00:35:57,880 --> 00:35:59,000 Speaker 2: Yeah, that's how it comes. 715 00:35:58,880 --> 00:36:01,080 Speaker 6: To right, but then sequencing doesn't matter. 716 00:36:01,280 --> 00:36:03,799 Speaker 2: Monitor matters. Yes, we've got to go. I appreciate your 717 00:36:03,840 --> 00:36:06,520 Speaker 2: time as always, Thank you, Monica Quera there of Morgan Stanley. 718 00:36:25,440 --> 00:36:26,040 Speaker 9: This is the. 719 00:36:26,040 --> 00:36:30,239 Speaker 2: Bloomberg Sevems podcast, bringing you the best in markets, economics, 720 00:36:30,280 --> 00:36:33,240 Speaker 2: and geopolitics. You can watch the show live on Bloomberg 721 00:36:33,239 --> 00:36:36,400 Speaker 2: TV weekday mornings from six am to nine am Eastern. 722 00:36:36,719 --> 00:36:40,080 Speaker 2: Subscribe to the podcast on Apple, Spotify, or anywhere else 723 00:36:40,120 --> 00:36:42,759 Speaker 2: you listen, and, as always, on the Bloomberg Terminal and 724 00:36:42,840 --> 00:36:44,040 Speaker 2: the Bloomberg Business app.