1 00:00:02,759 --> 00:00:07,240 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,000 --> 00:00:10,000 Speaker 2: Now we're going to stay in Washington because that is 3 00:00:10,000 --> 00:00:13,119 Speaker 2: where the IMF Worldbanks Free Meetings are taking place right now. 4 00:00:13,280 --> 00:00:15,360 Speaker 2: And of course, this week we learned that the IMF 5 00:00:15,360 --> 00:00:18,319 Speaker 2: has warned recession risks will increase as long as the 6 00:00:18,440 --> 00:00:21,840 Speaker 2: uncertainty remains. Our very own Lisa Bromwoz is there now 7 00:00:21,880 --> 00:00:23,920 Speaker 2: with the German finance minister. I want to hand things 8 00:00:23,960 --> 00:00:24,320 Speaker 2: off to her. 9 00:00:24,520 --> 00:00:27,480 Speaker 3: Lisa, Hey, Scarlett, thank you so much. I am here 10 00:00:27,560 --> 00:00:31,840 Speaker 3: with Germany's finance minners. Your gookies who is here has 11 00:00:31,920 --> 00:00:34,680 Speaker 3: been here for a number of weeks and said to 12 00:00:34,720 --> 00:00:35,559 Speaker 3: my colleagues this. 13 00:00:35,560 --> 00:00:37,000 Speaker 4: Moment ago, moments ago. 14 00:00:37,440 --> 00:00:40,080 Speaker 3: That you think that it's feasible to get some sort 15 00:00:40,120 --> 00:00:42,800 Speaker 3: of trade deal with the United States within that ninety 16 00:00:42,880 --> 00:00:46,400 Speaker 3: day timeframe. What makes you so optimistic that that can 17 00:00:46,440 --> 00:00:47,360 Speaker 3: be achieved. 18 00:00:47,479 --> 00:00:50,159 Speaker 4: Well, first of all, the European Union is negotiating this 19 00:00:50,320 --> 00:00:53,040 Speaker 4: for us, so Germany has delegated on all the European 20 00:00:53,040 --> 00:00:56,720 Speaker 4: countries have delegated authority to strike trade deals to the 21 00:00:56,760 --> 00:01:00,520 Speaker 4: European level, and we are fully supporting the European Commission 22 00:01:00,520 --> 00:01:02,400 Speaker 4: and the feedback that they are giving to us and 23 00:01:02,440 --> 00:01:05,240 Speaker 4: that's confirmed by the discussions I'm having here in Washington, 24 00:01:05,680 --> 00:01:08,680 Speaker 4: is that the discussions are going very constructively. Of Course, 25 00:01:08,760 --> 00:01:10,560 Speaker 4: the devil is in the detail, and there's still a 26 00:01:10,560 --> 00:01:13,240 Speaker 4: lot of topics that are open and that need to 27 00:01:13,240 --> 00:01:16,160 Speaker 4: be iron out. But there's a willingness on both sides 28 00:01:16,200 --> 00:01:17,680 Speaker 4: to come to an agreement doing. 29 00:01:17,560 --> 00:01:21,120 Speaker 3: A sense of what exactly the demands are from the US. 30 00:01:20,959 --> 00:01:25,399 Speaker 4: Side, well, Europe has said we want industrial tariffs to 31 00:01:25,400 --> 00:01:28,680 Speaker 4: go to zero zero on both sides. The US side 32 00:01:28,680 --> 00:01:30,839 Speaker 4: has responded and said, we also have to talk about 33 00:01:30,880 --> 00:01:32,200 Speaker 4: agriculture and services. 34 00:01:32,800 --> 00:01:34,600 Speaker 1: We also have to talk about non. 35 00:01:34,400 --> 00:01:38,240 Speaker 4: Tariff impediments to trade, and all of those are of 36 00:01:38,280 --> 00:01:41,480 Speaker 4: course fair game and need to be discussed. So those 37 00:01:41,520 --> 00:01:44,640 Speaker 4: are really the issues. And then of course there's some 38 00:01:44,680 --> 00:01:48,120 Speaker 4: sectorial issues, especially in the automotive sector, which is very 39 00:01:48,120 --> 00:01:52,480 Speaker 4: important for Germany, needless to say, but also further sectors. 40 00:01:52,120 --> 00:01:53,800 Speaker 1: That are important. There's a lot to unpack there. 41 00:01:53,800 --> 00:01:56,080 Speaker 3: Are you optimistic you could get to zero zero with 42 00:01:56,120 --> 00:01:57,680 Speaker 3: respect to no tariffs on either side? 43 00:01:57,920 --> 00:01:58,160 Speaker 1: Yeah? 44 00:01:58,280 --> 00:02:02,120 Speaker 4: I mean that would be the ideal outcome, and from 45 00:02:02,160 --> 00:02:05,000 Speaker 4: an economic perspective, it would certainly be the most efficient 46 00:02:05,120 --> 00:02:10,040 Speaker 4: outcome for both sides. Whether we actually get there, and 47 00:02:10,080 --> 00:02:14,080 Speaker 4: whether in the United States, if tariffs are reduced, Congress 48 00:02:14,080 --> 00:02:16,880 Speaker 4: would have to approve. So there's a lot of topics 49 00:02:16,880 --> 00:02:20,040 Speaker 4: that are outside of the control of the direct negotiators. 50 00:02:21,400 --> 00:02:25,240 Speaker 1: But at the end of the day, if it's generally the. 51 00:02:25,200 --> 00:02:28,079 Speaker 4: Direction of travel, were for tariffs to come down instead 52 00:02:28,120 --> 00:02:30,320 Speaker 4: of go up, I think the markets would see that 53 00:02:30,360 --> 00:02:31,720 Speaker 4: as a very positive signal. 54 00:02:31,840 --> 00:02:35,519 Speaker 3: How confident are you that the sectorial tariffs, in particular 55 00:02:35,680 --> 00:02:39,520 Speaker 3: on German auto manufacturers, will come down in a way 56 00:02:39,960 --> 00:02:42,000 Speaker 3: that gives them some breathing room. We've heard some pretty 57 00:02:42,040 --> 00:02:43,800 Speaker 3: dire projections from some of their earnings. 58 00:02:44,000 --> 00:02:44,400 Speaker 1: Yeah. 59 00:02:44,440 --> 00:02:49,720 Speaker 4: Well, of course that is still there's still uncertainty around 60 00:02:49,720 --> 00:02:51,400 Speaker 4: that and it will have to be negotiated. 61 00:02:51,520 --> 00:02:53,959 Speaker 1: As I said, there's still differences in views. 62 00:02:54,360 --> 00:02:57,400 Speaker 4: But if you look at the entire package of the 63 00:02:57,440 --> 00:03:03,440 Speaker 4: goal of reducing tariffs overall, of addressing issues outside of 64 00:03:03,480 --> 00:03:07,640 Speaker 4: the tariffs that impede trade, for example, the topics of 65 00:03:07,680 --> 00:03:13,399 Speaker 4: standardization and what's called homologization in technical terms, which essentially 66 00:03:13,440 --> 00:03:16,200 Speaker 4: means if a car is safe to drive in the 67 00:03:16,280 --> 00:03:18,760 Speaker 4: United States, should it be safe to drive in the 68 00:03:18,760 --> 00:03:21,680 Speaker 4: European Union, and vice versa. It would be a huge 69 00:03:21,680 --> 00:03:25,280 Speaker 4: breakthrough if that were achieved, because it would allow economies 70 00:03:25,320 --> 00:03:27,880 Speaker 4: of scale between the United States and Europe to grow 71 00:03:28,280 --> 00:03:32,519 Speaker 4: and would improve the competitiveness of both of our automotive 72 00:03:32,520 --> 00:03:35,960 Speaker 4: industry against China, for example. So there's a lot of 73 00:03:36,000 --> 00:03:39,200 Speaker 4: elements that sound very positive and that go in the 74 00:03:39,240 --> 00:03:43,040 Speaker 4: right direction, and that would be mutually beneficial. But again, 75 00:03:43,160 --> 00:03:45,760 Speaker 4: the question of can we agree on all of this 76 00:03:45,960 --> 00:03:47,800 Speaker 4: needs to be ironed out in the next ninety days. 77 00:03:47,840 --> 00:03:49,200 Speaker 3: Why do you think there's been such a shift in 78 00:03:49,240 --> 00:03:52,000 Speaker 3: tone from this administration over the past couple of days. 79 00:03:52,640 --> 00:03:55,720 Speaker 4: Well, I mean, first of all, when I was in 80 00:03:55,880 --> 00:03:59,720 Speaker 4: Washington that was immediately after the auto tariffs were announced. 81 00:04:00,360 --> 00:04:05,360 Speaker 4: Everyone I spoke to said, we want to see this 82 00:04:05,520 --> 00:04:08,240 Speaker 4: as a beginning and a starting point of a negotiation, 83 00:04:08,320 --> 00:04:09,760 Speaker 4: and we don't want escalation. 84 00:04:10,320 --> 00:04:14,160 Speaker 1: So I do think it was in a way already. 85 00:04:15,440 --> 00:04:21,479 Speaker 4: Incorporated that after the announcement there could be discussions, and 86 00:04:21,520 --> 00:04:26,120 Speaker 4: I think the European Commission reacted in the absolutely correct 87 00:04:26,200 --> 00:04:29,599 Speaker 4: way by saying Plan A is we want to negotiate, 88 00:04:29,680 --> 00:04:31,799 Speaker 4: and we want to strike a deal that is actually 89 00:04:31,880 --> 00:04:36,520 Speaker 4: mutually beneficial and avoids a race upwards in tariffs, which 90 00:04:36,560 --> 00:04:42,040 Speaker 4: would be mutually negative, but we also have plan B. 91 00:04:42,160 --> 00:04:44,440 Speaker 4: If we don't find an agreement, then of course Europe 92 00:04:44,480 --> 00:04:46,320 Speaker 4: will respond with countermeasures. 93 00:04:46,400 --> 00:04:49,440 Speaker 3: You keep talking about Europe and Europe negotiating as a block. 94 00:04:49,880 --> 00:04:51,760 Speaker 1: How much is Europe negotiating as. 95 00:04:51,640 --> 00:04:54,839 Speaker 3: A block versus each individual country? 96 00:04:57,000 --> 00:04:57,840 Speaker 1: There's no doubt. 97 00:04:57,880 --> 00:05:01,919 Speaker 4: I mean, this is a authority that the European Commission 98 00:05:02,640 --> 00:05:05,800 Speaker 4: has and that all member states have given to the Commission. 99 00:05:05,839 --> 00:05:09,440 Speaker 4: It is completely unified, and the European Commission is doing 100 00:05:09,480 --> 00:05:12,600 Speaker 4: a fantastic job, is coordinating with everyone, is keeping everyone 101 00:05:12,640 --> 00:05:16,400 Speaker 4: up to date. So in that sense, this is a 102 00:05:16,560 --> 00:05:20,680 Speaker 4: completely harmonized policy area. And I do think it increases 103 00:05:20,720 --> 00:05:23,600 Speaker 4: the negotiating power of the Commission if it's not only 104 00:05:23,640 --> 00:05:26,919 Speaker 4: negotiating for one country but twenty seven. Of course it 105 00:05:27,040 --> 00:05:30,880 Speaker 4: increases the power because the European Commission controls the access 106 00:05:31,240 --> 00:05:34,120 Speaker 4: to consumer market of four hundred and fifty million people. 107 00:05:34,360 --> 00:05:37,479 Speaker 3: How much is some of the pressure that President Trump 108 00:05:37,520 --> 00:05:40,120 Speaker 3: is putting on the European Union, bringing the European Union 109 00:05:40,200 --> 00:05:44,640 Speaker 3: together close more closely and giving some fuel to more 110 00:05:44,680 --> 00:05:48,320 Speaker 3: of a cohesion in the Financial Union, as well as 111 00:05:48,360 --> 00:05:50,440 Speaker 3: some of the other measures that has been in contention 112 00:05:50,520 --> 00:05:51,000 Speaker 3: for a while. 113 00:05:51,160 --> 00:05:56,760 Speaker 4: Yeah, but don't forget the European Union has come to 114 00:05:56,800 --> 00:06:00,840 Speaker 4: the recognition that we have to move closer together, far 115 00:06:01,360 --> 00:06:06,360 Speaker 4: before the US election. So the Drogi Report, the Letter Report, 116 00:06:06,440 --> 00:06:11,040 Speaker 4: all of the documents where that challenged us and said 117 00:06:11,120 --> 00:06:13,080 Speaker 4: we are becoming less and less competitive. 118 00:06:13,520 --> 00:06:15,000 Speaker 1: And the biggest asset that we. 119 00:06:15,040 --> 00:06:17,799 Speaker 4: Have, namely an internal market of four hundred and fifty 120 00:06:17,839 --> 00:06:23,839 Speaker 4: million consumers and companies and citizens, isn't there where it 121 00:06:23,880 --> 00:06:27,160 Speaker 4: needs to be. And we're over bureaucratized. We have too 122 00:06:27,240 --> 00:06:32,080 Speaker 4: much red tape, we have too much regulation in some areas, 123 00:06:32,440 --> 00:06:36,080 Speaker 4: and we need to tone down carefully, but we do 124 00:06:36,200 --> 00:06:39,080 Speaker 4: need to become much more efficient in Europe. That all 125 00:06:39,080 --> 00:06:42,919 Speaker 4: of that predates the election the of President Trump. So 126 00:06:43,000 --> 00:06:45,480 Speaker 4: in that sense, the recognition that we have to do 127 00:06:45,520 --> 00:06:48,479 Speaker 4: a better job in becoming more competitive. 128 00:06:49,880 --> 00:06:52,920 Speaker 1: Has already taken place in the middle of the Biden administration. 129 00:06:53,040 --> 00:06:55,560 Speaker 4: So it's clearly not a linkage of oh, all of 130 00:06:55,600 --> 00:06:57,840 Speaker 4: a sudden, a new president comes up in Europe, all 131 00:06:57,839 --> 00:06:59,080 Speaker 4: of a sudden changes everything. 132 00:07:00,120 --> 00:07:02,640 Speaker 3: Feeling like you have to choose some capacity between the 133 00:07:02,720 --> 00:07:06,800 Speaker 3: US and China, especially given that there is a feeling 134 00:07:06,880 --> 00:07:09,560 Speaker 3: right now that China and the UFS are kind of 135 00:07:09,600 --> 00:07:11,800 Speaker 3: at odds, and that China is going to try to 136 00:07:11,920 --> 00:07:15,480 Speaker 3: use Europe to unleash a whole bunch of goods that 137 00:07:15,520 --> 00:07:17,680 Speaker 3: they cannot sell into the United States quite in the 138 00:07:17,680 --> 00:07:18,080 Speaker 3: same way. 139 00:07:18,360 --> 00:07:21,920 Speaker 4: But it's the wrong choice, I think the if you 140 00:07:22,120 --> 00:07:26,040 Speaker 4: just look at the strategy that China has of dual 141 00:07:26,080 --> 00:07:31,680 Speaker 4: circulation China twenty twenty five, they do not want the 142 00:07:32,040 --> 00:07:38,840 Speaker 4: old German business model of manufacturing cars and chemicals and machines, 143 00:07:39,360 --> 00:07:42,480 Speaker 4: putting them on ships and sending them to ports in 144 00:07:42,600 --> 00:07:44,400 Speaker 4: China as finished goods. 145 00:07:44,920 --> 00:07:46,480 Speaker 1: China doesn't want that anymore. 146 00:07:46,840 --> 00:07:52,040 Speaker 4: They want manufacturing to happen locally in China, and therefore 147 00:07:52,360 --> 00:07:57,679 Speaker 4: now believing that China could become an alternative is just naive. 148 00:07:57,760 --> 00:08:01,240 Speaker 4: I mean, Germany exported more goods and services to Poland 149 00:08:01,360 --> 00:08:05,440 Speaker 4: last year than to China, and that trend is not 150 00:08:05,480 --> 00:08:07,640 Speaker 4: going to I don't. I think it would be very 151 00:08:07,720 --> 00:08:11,680 Speaker 4: naive to think, given the clear message from the top 152 00:08:12,400 --> 00:08:15,040 Speaker 4: in China, from the President to the Prime Minister to 153 00:08:15,080 --> 00:08:19,120 Speaker 4: the Trade minister on down, implemented everywhere in China that 154 00:08:19,200 --> 00:08:23,600 Speaker 4: they want the manufacturing base in China to grow and 155 00:08:23,680 --> 00:08:27,560 Speaker 4: become much bigger, to believe that Germany could now instead 156 00:08:27,560 --> 00:08:29,640 Speaker 4: of exporting to the United States all of a sudden, 157 00:08:29,720 --> 00:08:33,239 Speaker 4: go back to the old days, the good old days 158 00:08:33,320 --> 00:08:34,480 Speaker 4: of exporting to China. 159 00:08:34,520 --> 00:08:36,840 Speaker 1: It's naive what would work. 160 00:08:37,120 --> 00:08:39,920 Speaker 4: And I'm convinced that that's the strategy, and we're pushing 161 00:08:39,920 --> 00:08:41,439 Speaker 4: the European Commission to do that. 162 00:08:41,880 --> 00:08:42,920 Speaker 1: That if we were. 163 00:08:42,760 --> 00:08:49,520 Speaker 4: To conclude trade agreements with India, with Indonesia, the already 164 00:08:49,600 --> 00:08:53,000 Speaker 4: signed trade deal with mercoa store in Latin America, to 165 00:08:53,160 --> 00:08:56,880 Speaker 4: get it ratified and finalized, that would be a great alternative. 166 00:08:57,440 --> 00:09:01,360 Speaker 3: Just thirty seconds going forward, how come arregu given that 167 00:09:01,400 --> 00:09:03,160 Speaker 3: there is likely to be some sort of trade deal 168 00:09:03,200 --> 00:09:06,160 Speaker 3: in the next ninety days, that Germany can avoid recession 169 00:09:06,160 --> 00:09:06,520 Speaker 3: this year. 170 00:09:06,840 --> 00:09:09,640 Speaker 1: Well, that is the biggest hurdle that we have. 171 00:09:09,840 --> 00:09:13,360 Speaker 4: The other big hurdle is the economic reform program with 172 00:09:13,440 --> 00:09:16,880 Speaker 4: the fiscal spending and the structural reforms that are agreed 173 00:09:16,920 --> 00:09:19,800 Speaker 4: in the coalition contract. And we are working day and 174 00:09:19,880 --> 00:09:23,960 Speaker 4: night now in the outgoing government so that the incoming 175 00:09:24,000 --> 00:09:28,360 Speaker 4: government can immediately unleash both the fiscal power of the 176 00:09:28,400 --> 00:09:34,280 Speaker 4: military and infrastructure spending and start legislating the economic reform 177 00:09:34,320 --> 00:09:39,480 Speaker 4: program to give a clear message to our businesses and 178 00:09:39,520 --> 00:09:43,040 Speaker 4: consumers that We are serious about economic reform and getting 179 00:09:43,040 --> 00:09:44,960 Speaker 4: back to the growth path, and there's a very high 180 00:09:45,040 --> 00:09:48,040 Speaker 4: chance of doing that because the new majority in the 181 00:09:48,080 --> 00:09:53,840 Speaker 4: Parliament has already signed agreed on a contract to implement 182 00:09:53,920 --> 00:09:56,000 Speaker 4: exactly that and implement it quickly. 183 00:09:56,320 --> 00:09:58,280 Speaker 3: Minister Koukies, thank you so much for being with us. 184 00:09:58,320 --> 00:10:00,560 Speaker 3: That was the foreign minister of Germany.