WEBVTT - Trade War Footing 0:00:00.360 --> 0:00:04.040 Hello. Just a quick note about this episode of Stephanomics. 0:00:04.400 --> 0:00:07.680 The segment about Israel was recorded before the news this 0:00:07.760 --> 0:00:11.440 week that Prime Minister Benjamin Netanyahu failed to form a 0:00:11.480 --> 0:00:19.200 new government. Thanks for listening and enjoy the show. Welcome 0:00:19.239 --> 0:00:23.040 to Stephanomics, the podcast that brings the global economy to you. 0:00:23.960 --> 0:00:26.920 My name is Tom Oulick. I'm the chief economist for 0:00:26.920 --> 0:00:30.040 Bloomberg and I'm filling in for this one week for 0:00:30.080 --> 0:00:39.159 your regular and eponymous host, Stephanie Flanders. Back when I 0:00:39.200 --> 0:00:43.000 lived in China, the big concern amongst Chinese economists was 0:00:43.040 --> 0:00:46.800 something they call a horby jen jug, or a currency war. 0:00:47.560 --> 0:00:50.320 The fear in Beijing was that the United States was 0:00:50.360 --> 0:00:53.880 going to weaponize its financial system and the big Wall 0:00:53.920 --> 0:00:58.120 Street banks would come to China promising grace and reform, 0:00:58.160 --> 0:01:01.600 but they would deliver chaos and crisis, the kind of 0:01:01.640 --> 0:01:09.520 meltdown which China's Asian neighbors experienced in and well, it 0:01:09.600 --> 0:01:13.240 turns out those fears were misplaced. There is a conflict 0:01:13.319 --> 0:01:16.360 between the U. S and China, but it's not about currencies. 0:01:16.680 --> 0:01:19.199 It's about trade, and that's going to be the focus 0:01:19.280 --> 0:01:23.520 of today's episode. I'll be speaking with Wendy Cutler, who 0:01:23.560 --> 0:01:26.360 spent her career as one of the most senior trade 0:01:26.440 --> 0:01:30.720 negotiators in the United States, to get her insiders take 0:01:31.040 --> 0:01:34.760 on how trade negotiations between China and the US could evolve. 0:01:35.640 --> 0:01:38.360 And I'll be catching up with Jenny Leonard, one of 0:01:38.400 --> 0:01:42.679 Bloomberg's star trade reporters, to hear what it's like reporting 0:01:42.800 --> 0:01:46.480 from the front line of the trade war. Before we 0:01:46.520 --> 0:01:48.560 get there, though, we're going to go to a part 0:01:48.600 --> 0:01:51.639 of the world which is more familiar through the lens 0:01:51.760 --> 0:01:56.680 of security or human rights than economics. Let's go to Israel, 0:01:57.000 --> 0:02:00.640 and here from Ivan Levingstone about some interesting develops in 0:02:00.680 --> 0:02:16.160 the labor market. A few weeks ago, I visited a 0:02:16.200 --> 0:02:20.400 coworking space in Jerusalem called biz Max. I toward the 0:02:20.440 --> 0:02:24.160 standard mix of open work areas and smaller glass in rooms, 0:02:24.400 --> 0:02:28.720 complete with minimalists, a core and an espresso machine. On 0:02:28.840 --> 0:02:31.440 first take, it could have been any we work style office, 0:02:32.360 --> 0:02:36.079 but there was a key difference. Bis Max is run 0:02:36.120 --> 0:02:41.200 for ultra Orthodox Jewish Men or in Hebrew are dem 0:02:41.200 --> 0:02:44.240 with a kosher kitchen and religious book lying in the shelves. 0:02:44.760 --> 0:02:46.959 It seeks to provide a place for them to get 0:02:47.000 --> 0:02:51.480 businesses off the ground. I went there in late April 0:02:51.800 --> 0:02:55.280 to meet with Yetrak Meyer A Jelovski, a thirty one 0:02:55.320 --> 0:02:57.720 year old father of five who runs his own event 0:02:57.760 --> 0:03:04.320 planning business called a smata. Every day I am going home. 0:03:04.440 --> 0:03:10.280 He's a podcast told me as him unruly like each 0:03:10.200 --> 0:03:13.440 as he goes by met me wearing the traditional garb 0:03:13.480 --> 0:03:18.520 of hardy Jews, black suit, white shirt, long curls falling 0:03:18.560 --> 0:03:21.679 from the corners of his hair. He also brought a 0:03:21.760 --> 0:03:25.440 kosher iPad with some restrictive settings that he manages his 0:03:25.480 --> 0:03:29.800 company on. He's just as busy as any small business 0:03:29.800 --> 0:03:32.359 owner making a go of it, but he also has 0:03:32.400 --> 0:03:36.280 to make time for prayer and religious obligations. I have 0:03:36.440 --> 0:03:40.840 every day about every day one and a half events, 0:03:41.800 --> 0:03:46.040 a big small ones between one twice a week. I 0:03:46.040 --> 0:03:50.800 have a wedding, a big wedding game three under portions. 0:03:50.840 --> 0:04:02.080 Portions was in the big hole, was catering. For good reason, 0:04:02.280 --> 0:04:06.000 Israel has earned the nickname startup Nation. The country has 0:04:06.000 --> 0:04:09.480 a burgeoning tech sector driving the economy, but below the 0:04:09.520 --> 0:04:14.280 surface there's trouble. Growth is stabilizing and productivity is sluggish. 0:04:15.040 --> 0:04:18.240 Because unemployment is near record lows the country needs to 0:04:18.279 --> 0:04:23.400 find more workers ideally ones who are highly skilled. There 0:04:23.440 --> 0:04:26.160 are two groups economists have zeroed in on because they 0:04:26.200 --> 0:04:30.039 participate at a lower rate in the workforce, Ultra Orthodox 0:04:30.080 --> 0:04:35.840 men like Eacha and Arab Israeli women. The Hardim present 0:04:35.880 --> 0:04:40.359 a particular challenge with their rapid population growth and lower productivity, 0:04:40.680 --> 0:04:42.960 helping them climb in the workforce as a priority that 0:04:43.040 --> 0:04:48.159 may only intensifying urgency, and in Israel, surrounded by enemies, 0:04:48.520 --> 0:04:53.200 economic challenges become geopolitical ones Without a first rate economy, 0:04:53.360 --> 0:04:57.120 it's hard to maintain a first rate military. Each of 0:04:57.240 --> 0:05:00.880 success building a business came to spite some challenges. He 0:05:01.000 --> 0:05:04.040 got married at age nineteen and soon decided to work 0:05:04.080 --> 0:05:07.440 to help provide for his family, but he was locked 0:05:07.440 --> 0:05:10.760 out of some fields because of his religious education. On 0:05:10.800 --> 0:05:13.160 a visit to his home in Jerusalem, he told me 0:05:13.279 --> 0:05:16.240 what it was like getting started In the beginning. It 0:05:16.360 --> 0:05:20.280 was very hard because of the it's a low income. 0:05:20.800 --> 0:05:24.080 You have to learn everything by yourself. I didn't learn 0:05:24.160 --> 0:05:29.240 ever about the work or any work. Just studied the 0:05:29.320 --> 0:05:32.159 town there, and then I went to start the business 0:05:32.200 --> 0:05:36.120 by seeing every even he went to do events and 0:05:36.400 --> 0:05:39.159 I was I was standing him by the entrance of 0:05:39.160 --> 0:05:43.880 the kitchen took to check out our works. Israel's Harri 0:05:43.960 --> 0:05:46.680 Deem are growing part of the population and also a 0:05:46.800 --> 0:05:51.200 rising political force. As such, they're an increasingly important block 0:05:51.279 --> 0:05:54.240 for Prime Minister Benjamin Netan yahoo in support of his 0:05:54.360 --> 0:05:59.200 right wing governing coalitions. As their political influence rises. Where 0:05:59.200 --> 0:06:02.640 their demographics strength, that bodes well for the subsidies that 0:06:02.680 --> 0:06:07.320 benefit them, like child allowances and scholarships. In a way, 0:06:07.440 --> 0:06:10.880 the government is at odds with itself. Political leaders help 0:06:10.920 --> 0:06:14.039 protect funding that may discourage work, while others are trying 0:06:14.040 --> 0:06:16.760 to bring Haredim into the labor force, seeing it as 0:06:16.800 --> 0:06:21.480 a long term economic issue. At the start of this decade, 0:06:21.600 --> 0:06:24.159 government targets were set with the aim of increasing the 0:06:24.160 --> 0:06:28.559 employment rate of Haredi men and Arab Israeli women. Arab 0:06:28.600 --> 0:06:31.720 women are already close to hitting their goal, but for 0:06:31.720 --> 0:06:35.240 Haredi men the story is different. While they have increasingly 0:06:35.320 --> 0:06:39.240 joined the workforce in recent years, progress is stagnating well 0:06:39.279 --> 0:06:42.599 below the hope for level. One key reason is a 0:06:42.600 --> 0:06:48.000 cultural emphasis on religious study. I met with Av Weiss, 0:06:48.240 --> 0:06:51.240 an economist and president of the TAB Center for Social 0:06:51.240 --> 0:06:54.400 Policy Studies in Israel, to dig into the reasons for 0:06:54.400 --> 0:06:57.920 the divergence. See the difference between the the the Haredi 0:06:57.960 --> 0:07:02.360 men and the Arab women um is it's got to stem, 0:07:02.480 --> 0:07:06.640 bottom line, from desire. That the desire of the Arab 0:07:06.680 --> 0:07:10.800 pubin um really is to improve their lot, to be 0:07:10.880 --> 0:07:12.920 able to do better than than than the past, to 0:07:13.000 --> 0:07:16.480 increase your education, to increase your employment. For the Harediman, 0:07:16.520 --> 0:07:20.040 that's just not necessarily the case. While the Haredim are 0:07:20.080 --> 0:07:24.440 interested in moving upwards spiritually, Arab Israeli women are focused 0:07:24.480 --> 0:07:29.000 on a different kind of upward mobility. Facing challenges including 0:07:29.040 --> 0:07:33.160 discrimination and higher rates of poverty, They're making strides and 0:07:33.280 --> 0:07:36.920 education and at least in high school, increasingly studying fields 0:07:36.960 --> 0:07:41.760 like engineering that leads to more lucrative employment. Such progress 0:07:41.760 --> 0:07:44.520 has come even amid withering criticism of Israel and the 0:07:44.600 --> 0:07:47.840 West for how it treats its Arab citizens, as well 0:07:47.880 --> 0:07:51.120 as for the poor economic state of Palestinians in Gaza 0:07:51.160 --> 0:07:55.760 and the West Bank. But there are some more positive 0:07:55.760 --> 0:07:59.280 stories out there. Kuluta Uti is a twenty nine year 0:07:59.280 --> 0:08:03.320 old Arab israel woman from Jaffa with two daughters. While 0:08:03.320 --> 0:08:06.080 her parents didn't go to university and she married at 0:08:06.080 --> 0:08:08.760 the age of twenty one, she is now finishing a 0:08:08.800 --> 0:08:13.400 degree in political science. In between managing family and studies, 0:08:13.560 --> 0:08:16.880 she's the co sea of an organization called Present Tense, 0:08:17.200 --> 0:08:20.520 which tries to reduce social gaps in marginalized communities in 0:08:20.600 --> 0:08:25.280 Israel through entrepreneurship. I met her for a morning chat 0:08:25.360 --> 0:08:28.800 at a municipal building in Jaffa where her organization host programming, 0:08:29.200 --> 0:08:31.560 and she told me about why Arab Israeli women have 0:08:31.680 --> 0:08:35.400 been challenged joining the labor force. Have all these expectations, 0:08:35.400 --> 0:08:38.480 and you need to to meet all the expectations, and 0:08:38.480 --> 0:08:40.959 then you have to choose what exectation you can to meet, 0:08:41.040 --> 0:08:43.959 because it's so hard because you need to have a home, 0:08:44.000 --> 0:08:46.960 you need to have a get married, and you have children. 0:08:47.000 --> 0:08:49.120 You need to do all of these things and evens. 0:08:49.160 --> 0:08:52.280 And also if you can do a degree and and work, 0:08:52.960 --> 0:08:57.400 it's great, but it's hard. It's tougher for for Arab 0:08:57.440 --> 0:09:01.439 women with a tight labor market and shortages of engineers. 0:09:01.880 --> 0:09:05.800 Israel's future growth. Henderson part on this group. If they succeed, 0:09:05.880 --> 0:09:08.640 it will be a real bright spot, but they're not 0:09:08.720 --> 0:09:11.319 there yet. A lot of women really do break the 0:09:11.480 --> 0:09:14.600 glass city, but a lot of them also stay at home, 0:09:14.760 --> 0:09:17.520 and you can see the stats and it's getting better, 0:09:18.040 --> 0:09:20.960 but still it's not in the in the correct fields 0:09:20.960 --> 0:09:24.560 that can high tech officials admit that the government's programs 0:09:24.559 --> 0:09:27.640 in this area still have a ways to go. Here's 0:09:27.679 --> 0:09:31.520 Julia Eton, head of the Employment and Diversity Administration for 0:09:31.640 --> 0:09:36.120 Israel's Ministry of Labor, Social Affairs and Social Services. It's 0:09:36.240 --> 0:09:39.480 very clear if you're not bridging the gap these two 0:09:39.600 --> 0:09:43.200 populations and believe it to the the productivity of a general population, 0:09:44.400 --> 0:09:47.440 rates of growth of israel economy are not going to 0:09:47.559 --> 0:09:53.319 be sufficient to have a normal level of growth and living. 0:09:54.480 --> 0:09:57.440 That's why it's crucial for us to succeed. But they're 0:09:57.440 --> 0:09:59.959 not alone here. You have communities, you have their ambition, 0:10:00.120 --> 0:10:04.040 you have their beliefs, you have their way of analyzing 0:10:04.160 --> 0:10:10.760 the reality. What early mean Israel is a tiny country 0:10:10.800 --> 0:10:13.040 that doesn't trade with its neighbors and is in a 0:10:13.080 --> 0:10:16.360 state of war with some of them. It's economic edge, 0:10:16.600 --> 0:10:20.160 particularly in the world of tech, is a crucial strategic asset. 0:10:21.520 --> 0:10:25.000 It provides incentives for countries, including the United States and 0:10:25.120 --> 0:10:28.200 those across Africa and Asia, to forge stronger ties with 0:10:28.240 --> 0:10:32.760 the Jewish state, and for Prime Minister Netan Yahoo winning 0:10:32.800 --> 0:10:35.880 on the economy increases the chances that he can keep 0:10:35.920 --> 0:10:51.840 winning period. For Bloomberg News, I'm Ivan Levingstone. I'm delighted 0:10:51.880 --> 0:10:55.600 to be joined for this section by Wendy Cutler. Wendy 0:10:55.800 --> 0:10:59.520 is the vice president of the Asia Society Policy Institute 0:10:59.760 --> 0:11:04.360 at a former deputy at the US Trade Representative. That's 0:11:04.360 --> 0:11:07.480 a lot of words. Basically, what it means is there 0:11:07.520 --> 0:11:09.760 are a few people in the world who know more 0:11:09.760 --> 0:11:14.360 about trade negotiations than Wendy does. Wendy, thanks for joining us. 0:11:14.360 --> 0:11:18.720 Thanks Tom So. Implicit in the Trump administration's approach to 0:11:18.760 --> 0:11:24.360 trade negotiations is the idea that the careful, consensus based 0:11:24.480 --> 0:11:30.040 multilateral approach followed by past administrations basically got it wrong 0:11:30.240 --> 0:11:33.640 and gave China a free ride. Do you agree with 0:11:33.679 --> 0:11:38.640 that assessment? Well, I think over time, various administrations tried 0:11:38.679 --> 0:11:43.720 different approaches towards China. I think supporting China's entry into 0:11:43.760 --> 0:11:47.280 the w t O was an important move, and as 0:11:47.280 --> 0:11:50.320 a result of China joining the w t O, we 0:11:50.440 --> 0:11:54.960 saw them significantly lower their terrorists for US and other imports, 0:11:55.400 --> 0:11:59.440 as well as revived thousands of regulations and laws, and 0:11:59.480 --> 0:12:04.040 we saw an overall opening. But what didn't occur was 0:12:04.120 --> 0:12:08.120 that the reform and market opening that was so vibrant 0:12:08.160 --> 0:12:10.679 in two thousand one when China joined the w t O, 0:12:11.200 --> 0:12:15.839 it just didn't continue, particularly in recent years. And furthermore, 0:12:16.200 --> 0:12:20.199 the w t O was unable to negotiate new rules 0:12:20.280 --> 0:12:24.600 and new terror flowering, which also led to a situation 0:12:24.840 --> 0:12:28.480 where the current WTO rules are really old rules and 0:12:28.520 --> 0:12:32.679 they don't address the challenging practices that China has brought 0:12:32.720 --> 0:12:36.719 to the international training system. So do you think that 0:12:36.840 --> 0:12:41.400 calls for this more direct bilateral approach which the Trump 0:12:41.400 --> 0:12:46.720 administration is now taking, or if you were calling the shots, 0:12:46.960 --> 0:12:51.160 would your first call have been to Brussels and Tokyo 0:12:51.240 --> 0:12:53.920 and Seoul and to the w t O and an 0:12:53.920 --> 0:12:57.960 attempt to kind of martial a multilateral coalition to tackle 0:12:58.040 --> 0:13:03.520 this challenge. Well. Following China's w t O accession, the 0:13:03.559 --> 0:13:08.760 administration tried different administrations trying different approaches to deal with China, 0:13:09.000 --> 0:13:14.480 including dialogues, particularly the ones led by the Treasury Department, 0:13:14.559 --> 0:13:19.079 the Special These Strategic and Economic Dialogue, as well as 0:13:19.120 --> 0:13:22.400 trade dialogues as well, and while some progress was made, 0:13:22.440 --> 0:13:26.640 the progress was incremental and the dialogues let left many 0:13:26.720 --> 0:13:32.280 frustrated the Obamba administration put a real premium on challenging 0:13:34.160 --> 0:13:37.760 Chinese practices that were inconsistent with the w t O 0:13:38.679 --> 0:13:41.640 two dispute settlement in the w t O and scored 0:13:41.679 --> 0:13:45.280 some important victories, but still a lot of the problem 0:13:45.360 --> 0:13:49.960 problematic practices that China followed continued, so a new approach 0:13:50.160 --> 0:13:53.360 was needed, and I think in some respects, President Trump 0:13:53.400 --> 0:13:57.280 has gone it right by imposing tariffs, whether I support 0:13:57.360 --> 0:13:59.680 them or not, they have brought to China to the 0:13:59.720 --> 0:14:04.559 newociating table. However, I think what has been really flawed 0:14:04.720 --> 0:14:08.800 in the President's approach to dealing with China is the 0:14:08.840 --> 0:14:11.920 fact that we're going it alone. We're relying on unilateral 0:14:12.000 --> 0:14:17.960 measures on bilateral negotiations without trying to bring other countries 0:14:18.120 --> 0:14:23.239 on board with our approach, who also share similar concerns 0:14:23.560 --> 0:14:27.040 that the United States has with China. So I think 0:14:27.120 --> 0:14:29.800 we could be doing a much better job working with 0:14:29.840 --> 0:14:32.920 our allies and friends both in Asia and around the world, 0:14:33.680 --> 0:14:37.760 and together telling China that it needs to change its 0:14:37.800 --> 0:14:44.880 practices and pursue more, more market opening um measures. And unfortunately, 0:14:44.920 --> 0:14:48.680 the Trump administration has decided not only to take on China, 0:14:49.000 --> 0:14:51.160 but also to take on our friends and allies, and 0:14:51.240 --> 0:14:56.800 as a result, trying to establish a multilateral coalition to 0:14:57.160 --> 0:15:02.280 approach China has been very hard to construct. And it's 0:15:02.320 --> 0:15:07.920 not just the muscular bilateralism or the muscular unilateralism of 0:15:07.960 --> 0:15:12.480 the Trump administration which sets it apart from past administrations. 0:15:13.000 --> 0:15:16.400 It's also the personal role which Donald Trump is taking 0:15:16.640 --> 0:15:19.800 that that positioning of I'm the only one who makes 0:15:19.840 --> 0:15:24.600 the decisions, that public approach with the tweets to declare 0:15:24.640 --> 0:15:29.720 policy changes and the lack of predictability. Now you're someone 0:15:29.760 --> 0:15:32.040 who's really been at the center of some of the 0:15:32.080 --> 0:15:36.520 most high profile, most delicate trade negotiations which the US 0:15:36.600 --> 0:15:40.760 has has conducted in in recent years. And what's your 0:15:40.800 --> 0:15:45.640 take on that very personal approach which the president is taking. 0:15:45.880 --> 0:15:49.800 Does that strengthen the hand of his negotiators or do 0:15:49.920 --> 0:15:54.760 the costs of unpredictability outweigh the benefits. What's kind of 0:15:54.760 --> 0:15:57.600 a mixed picture. I think in every negotiation a dose 0:15:57.640 --> 0:16:01.880 of unpredictability is useful. If your counterparts think they know 0:16:02.000 --> 0:16:04.760 your every move, they'll just game it all out, So 0:16:04.840 --> 0:16:08.480 some unpredictability could be useful. Um, but I think the 0:16:08.520 --> 0:16:12.320 President has gone way too far on that score. And 0:16:12.400 --> 0:16:15.520 as a result, our trading partners are left scratching their heads, 0:16:16.000 --> 0:16:19.600 not really knowing what they're being asked to do. Also, 0:16:19.920 --> 0:16:23.680 I think being really public UM, particularly in the final 0:16:23.800 --> 0:16:29.720 stages of trade negotiations, is not a great approach. What 0:16:30.040 --> 0:16:33.360 I often would find at the end of trade negotiations 0:16:33.400 --> 0:16:37.920 that having private conversations would be much more useful once 0:16:37.960 --> 0:16:40.880 you're public. And we're seeing this now in the volley 0:16:40.920 --> 0:16:46.600 of words between Beijing and Washington. Both sides are are 0:16:46.760 --> 0:16:51.120 setting up high expectations for their domestic publics and what 0:16:51.200 --> 0:16:54.840 they might be able to achieve, and also they're reducing 0:16:54.880 --> 0:16:59.320 their flexibilities to find common ground. Now, maybe this is intentional, 0:16:59.400 --> 0:17:02.480 Maybe both sides have decided that they don't want a 0:17:02.560 --> 0:17:07.399 deal because they're certainly acting like that. But again, UM, 0:17:07.440 --> 0:17:12.199 I think being too public and too hard hitting UM 0:17:12.440 --> 0:17:15.679 in the public with with strong words is not a 0:17:15.760 --> 0:17:21.040 great way to bring talks to to closure. That hardening 0:17:21.080 --> 0:17:26.879 of rhetoric could bring some real costs to the negotiations. UM, Wendy, 0:17:26.920 --> 0:17:29.159 I want to I want to focus the conversation on 0:17:29.160 --> 0:17:32.240 one of the specific moments in the last few weeks, 0:17:32.520 --> 0:17:35.520 which was that moment where Leo her was on his 0:17:35.560 --> 0:17:38.560 way to Washington, d C. And it seemed like a 0:17:38.640 --> 0:17:41.760 deal was going to be signed, and then suddenly we 0:17:41.880 --> 0:17:45.720 heard from the US side, No, China's tried to pull 0:17:45.840 --> 0:17:49.520 back from there from their previous commitments. They're trying to 0:17:49.560 --> 0:17:53.040 pull their chips off the table, and that's not acceptable 0:17:53.080 --> 0:17:54.920 to us. So we're not going to sign a deal. 0:17:55.400 --> 0:17:59.000 Um now. As someone who's been inside these kind of 0:17:59.040 --> 0:18:03.160 trade negotiating sans, what's your take on that. Is it 0:18:03.440 --> 0:18:08.280 common to see substantial changes in negotiating position behind the 0:18:08.280 --> 0:18:11.679 scenes from one or both sides in the final days 0:18:11.720 --> 0:18:16.080 before a deal is signed. Well, unfortunately it is. And 0:18:16.160 --> 0:18:19.640 this is not the first time a country has come 0:18:19.800 --> 0:18:22.720 to the negotiating table in the final stage and taken 0:18:22.800 --> 0:18:27.200 things off the table, or has moved goalposts and asked 0:18:27.200 --> 0:18:29.919 the other and the other country to do more. What 0:18:30.040 --> 0:18:33.120 happens at the end of a trade negotiation is both 0:18:33.160 --> 0:18:35.240 sides and their capital as I think, look at the 0:18:35.440 --> 0:18:38.840 entire deal and try and figure out is this a 0:18:38.920 --> 0:18:43.640 deal that will garner public support? Is this deal viable, incredible? 0:18:43.960 --> 0:18:47.040 And will I be able to withstand the criticism? And 0:18:47.080 --> 0:18:49.440 I think that leads both sides at the end of 0:18:49.480 --> 0:18:53.199 a negotiation to do things like taking things off the 0:18:53.240 --> 0:18:57.280 table or asking the other country to do more. However, 0:18:57.560 --> 0:19:00.920 given the high stakes of this negotiation, and I think 0:19:00.960 --> 0:19:05.960 these last minute moves were extremely consequential and really led 0:19:06.000 --> 0:19:10.679 the US to question whether China was acting in good faith. 0:19:10.880 --> 0:19:13.879 In the US view, China had agreed to many of 0:19:13.880 --> 0:19:18.040 the provisions already that it it, you know, took off 0:19:18.040 --> 0:19:22.560 the table in the final stages. Um. And again, I 0:19:22.600 --> 0:19:27.360 think I think these issues can I don't think they're insurmountable. 0:19:27.400 --> 0:19:33.480 I think with creativity they can be worked through. However, Um, 0:19:33.520 --> 0:19:36.400 if both sides continued to be very public in their 0:19:36.440 --> 0:19:40.720 rhetoric and very hard line. Um, with each passing day, 0:19:40.800 --> 0:19:44.280 this deal is going to be more difficult to conclude. Wendy, 0:19:44.359 --> 0:19:48.479 let's let's let's throw it forwards. Um, how do you 0:19:48.520 --> 0:19:52.240 see this playing? The markets think maybe there's a deal 0:19:52.280 --> 0:19:56.440 at Osaka with President Trump and President She sitting down 0:19:56.480 --> 0:19:59.960 at that G twenty meetsing. There's also, as you mentioned, 0:20:00.040 --> 0:20:04.919 and hardening rhetoric on both sides, the threat of more tariffs, 0:20:04.960 --> 0:20:08.960 the threat of sanctions on Chinese firms. It feels like 0:20:09.400 --> 0:20:12.000 if we don't get a deal in Osaka, this could 0:20:12.040 --> 0:20:17.520 be messy, extended, and expensive for both sides. Um, could 0:20:17.560 --> 0:20:22.080 you handicap those probabilities for US? Yes? So, in my view, 0:20:22.160 --> 0:20:26.919 I think both sides right now think that they can 0:20:28.359 --> 0:20:31.680 outlive the other with respect to having no trade deal. 0:20:31.920 --> 0:20:35.240 The US feels their economy is strong and that China's 0:20:35.240 --> 0:20:38.040 economy is weak, and therefore that the US has the 0:20:38.080 --> 0:20:41.639 negotiating leverage. I think China feels that it has the 0:20:41.640 --> 0:20:45.679 political and economic tools that it needs to ensure that 0:20:45.760 --> 0:20:50.040 its citizens can survive this trade war, and in their view, 0:20:50.160 --> 0:20:54.520 history proves that. But the other development that's going to 0:20:54.640 --> 0:20:58.240 happen soon is that on June one, China is going 0:20:58.280 --> 0:21:01.439 to impose the next round of it's tariff hikes on 0:21:01.560 --> 0:21:05.600 sixty billion dollars worth of US imports, and the full 0:21:05.680 --> 0:21:10.000 impact of the US tariff escalation on two billion dollar 0:21:10.119 --> 0:21:14.160 worth of Chinese imports will be felt by June one. 0:21:15.040 --> 0:21:17.560 And if you recall the last time the two leaders 0:21:17.720 --> 0:21:20.679 met on December one, in the lead up to that meeting, 0:21:20.920 --> 0:21:24.840 those tariffs started to have a very destructive effect on 0:21:24.880 --> 0:21:29.280 the both both sides economies. So at last December one, 0:21:29.280 --> 0:21:32.840 both leaders when they met, agreed to launch talks for 0:21:32.920 --> 0:21:36.600 ninety days, so if you ask me now, I would 0:21:36.920 --> 0:21:41.520 My sense is that come the meeting between Presidents Trump 0:21:41.600 --> 0:21:44.040 and She on the margins of the G twenty meeting 0:21:44.080 --> 0:21:48.639 in Osaka, um perhaps they will agree that both sides 0:21:48.760 --> 0:21:52.480 need to resume the negotiations and pick up from where 0:21:52.480 --> 0:21:56.560 they where they left the talks um in early May. 0:21:56.600 --> 0:21:59.679 But I don't see the deal coming together by the 0:21:59.720 --> 0:22:03.119 time of the G twenty meeting. I think President Trump 0:22:03.200 --> 0:22:06.920 was very clear when he said in Japan just yesterday 0:22:06.960 --> 0:22:10.159 that he's in no rush to conclude these talks. But 0:22:10.280 --> 0:22:12.480 perhaps a month from now he will feel like he's 0:22:12.520 --> 0:22:17.040 in a different position when these tariff the new tariff 0:22:17.240 --> 0:22:21.440 actions start having a real bite for US consumers, workers, 0:22:21.520 --> 0:22:27.640 farmers and businesses. Okay, no deal in Osaka, but potentially 0:22:27.960 --> 0:22:32.520 an agreement to agree. Wendy Cutler from the Asia Society, 0:22:32.800 --> 0:22:35.000 thank you very much for your time and your insights. 0:22:35.560 --> 0:22:45.720 Thank you, Tom. The trade team at Bloomberg News is 0:22:45.800 --> 0:22:49.040 one of the scoop eest teams in the newsroom, and 0:22:49.320 --> 0:22:54.200 on that team, few are scoopia than Jenny Leonard. Jenny's 0:22:54.240 --> 0:22:57.000 joining me in the studio now to talk about her 0:22:57.000 --> 0:23:00.920 experience of reporting the trade war UM and her take 0:23:01.000 --> 0:23:03.480 on how things are going to evolve. Jenny, Thanks for 0:23:03.560 --> 0:23:06.359 joining us, Thanks for having me so. Jenny, you've been 0:23:06.400 --> 0:23:09.880 reporting this trade war from the start. Can you give 0:23:09.960 --> 0:23:12.600 us a sense of how the mood on the U 0:23:12.720 --> 0:23:15.560 S side, the people around the president who are trying 0:23:15.600 --> 0:23:18.240 to shape policy, How is the mood in that group 0:23:18.280 --> 0:23:22.280 shifted from that first declaration from from the president that 0:23:22.359 --> 0:23:24.840 trade wars are good and easy to win to the 0:23:24.880 --> 0:23:28.879 situation we find ourselves in today. So actually, I think 0:23:28.960 --> 0:23:32.680 it hasn't evolved that much. The people who are closest 0:23:32.720 --> 0:23:36.160 to the president, I think, would still stand by that 0:23:36.200 --> 0:23:38.800 declaration that trade wars are good and easy to win. 0:23:39.480 --> 0:23:41.800 At least they still believe that the US has the 0:23:41.840 --> 0:23:44.680 resolve to actually come out as the winner of this. UM. 0:23:44.720 --> 0:23:48.359 I would say that the advisors around the President and 0:23:48.359 --> 0:23:51.720 the Vice President and the President himself are hearing more 0:23:51.760 --> 0:23:55.080 and more from Republicans on the hill, from farmers from 0:23:55.080 --> 0:23:59.880 constituencies that this is starting to bite and they might 0:24:00.000 --> 0:24:03.280 not want to see this go on much longer. So 0:24:03.600 --> 0:24:06.119 we might see a shift. We might start seeing a 0:24:06.160 --> 0:24:09.240 shift sometime in the near future. But at this point, 0:24:09.280 --> 0:24:13.440 I think his advisors. The mood is still very much 0:24:13.920 --> 0:24:16.960 um like it was a couple a couple of months ago, 0:24:17.600 --> 0:24:19.760 and can you help us put a bit of a 0:24:19.840 --> 0:24:25.040 structure around are thinking on who those advisors are, um 0:24:25.520 --> 0:24:28.399 who are the hawks, Who are the doves? Who are 0:24:28.440 --> 0:24:31.679 the people who see China as a kind of existential threat? 0:24:31.720 --> 0:24:33.080 Who are the people who just want to get a 0:24:33.119 --> 0:24:37.040 deal done? So I think we've reported extensively on the 0:24:37.160 --> 0:24:39.800 sort of the two camps, the hawks and the doves, 0:24:39.880 --> 0:24:43.880 and um my sources are very adamant in pointing out 0:24:43.960 --> 0:24:48.360 that Peter Navarro, who's the trade advisor that's very far 0:24:48.440 --> 0:24:51.000 on the hawker side, is not in the same place 0:24:51.080 --> 0:24:54.360 as Ustr Lighthouser, who's also seen as a hawk. But 0:24:54.400 --> 0:24:57.280 Peter Navarre really sees China as an existential threat. He 0:24:57.280 --> 0:25:00.720 wrote books about China. Robert Lighthegh or the U s 0:25:00.800 --> 0:25:04.640 TR is more of a trade hog. He's, for you know, decades, 0:25:04.680 --> 0:25:09.000 has fought countries unfair subsidies and training practices, and China 0:25:09.040 --> 0:25:11.240 obviously is on the forefront of that. But he's not 0:25:11.320 --> 0:25:14.360 obsessed with China as maybe Peter Navarro is. And then 0:25:14.400 --> 0:25:17.720 we have the the doves may be led by Treasury 0:25:17.720 --> 0:25:20.360 Secretary Minuchin, who obviously gets a lot of calls from 0:25:20.359 --> 0:25:24.119 Wall Street who, um, would really like to see a 0:25:24.160 --> 0:25:27.920 deal done? Student. And then we have the National security 0:25:28.040 --> 0:25:33.680 advisors like John Bolton, who actually their voices has been 0:25:33.680 --> 0:25:37.199 elevated a lot in this administration and they have a 0:25:37.320 --> 0:25:40.840 say in trade decisions now, which wasn't the case in 0:25:40.920 --> 0:25:47.159 previous administrations. And when something like the sanctions on Huawei happened, Jenny, Um, 0:25:47.320 --> 0:25:52.000 is that coming, in your sense, from an integrated policy 0:25:52.440 --> 0:25:56.320 the trade negotiators aware that those Huawei sanctions are going 0:25:56.359 --> 0:25:59.000 to drop, or is that coming out of left field 0:25:59.080 --> 0:26:03.280 from a different of the administration? Yeah, good question. I 0:26:03.320 --> 0:26:07.439 think it's Um, It's a little bit of both. In 0:26:07.480 --> 0:26:11.080 that the Huawei sanction sanctions have been discussed for a 0:26:11.080 --> 0:26:13.399 long time, so it shouldn't come as a surprise to 0:26:13.440 --> 0:26:17.320 anyone on the trade team that someone like John Bolton 0:26:17.400 --> 0:26:22.600 has been pushing for that. But then when it actually happened, uh, 0:26:22.760 --> 0:26:25.640 last week or two weeks ago, you know, our reporting 0:26:25.680 --> 0:26:29.959 showed that everyone was overwhelmed with actually rolling out and 0:26:30.040 --> 0:26:34.680 implementing that those sanctions because it did come out of nowhere. 0:26:34.920 --> 0:26:38.320 Too many people who weren't involved in these discussions that 0:26:38.440 --> 0:26:41.000 John Bolton had with the President about this and which 0:26:41.000 --> 0:26:43.439 group do you put the president in? Is he an 0:26:43.440 --> 0:26:46.199