1 00:00:02,720 --> 00:00:10,399 Speaker 1: Bloomberg Audio Studios, podcasts, radio news Preston. 2 00:00:10,440 --> 00:00:13,440 Speaker 2: Trump's trade war is now in its fourth month, and 3 00:00:13,520 --> 00:00:17,239 Speaker 2: we're approaching a pivotal moment. Friday is the end of 4 00:00:17,280 --> 00:00:19,840 Speaker 2: the extended pause the President put in place on his 5 00:00:20,000 --> 00:00:24,000 Speaker 2: reciprocal tariffs for promissing a wealth of trade deals an investment 6 00:00:24,040 --> 00:00:26,279 Speaker 2: in US production. On the other side, the. 7 00:00:26,280 --> 00:00:30,560 Speaker 1: Big money we'll start coming in on August first, and. 8 00:00:30,560 --> 00:00:32,560 Speaker 2: This week we'll also get a raft of data that 9 00:00:32,600 --> 00:00:36,440 Speaker 2: will tell us how the US economy is doing GDP data, 10 00:00:36,560 --> 00:00:39,479 Speaker 2: new data on consumer confidence, and a job support for 11 00:00:39,520 --> 00:00:42,400 Speaker 2: the month of July. It's also a very busy week 12 00:00:42,440 --> 00:00:45,159 Speaker 2: for corporate earnings, and in the middle of all of that, 13 00:00:45,280 --> 00:00:48,800 Speaker 2: there's a Federal Reserve meeting, after which reporters will have 14 00:00:48,840 --> 00:00:51,199 Speaker 2: a chance to ask FED Chair Jerome Powell for his 15 00:00:51,360 --> 00:00:54,560 Speaker 2: perspective on how the president's trade war is affecting the 16 00:00:54,640 --> 00:00:55,440 Speaker 2: US economy. 17 00:00:55,640 --> 00:00:58,600 Speaker 1: I guess the entirety of this year, the big word 18 00:00:58,640 --> 00:01:00,360 Speaker 1: has been uncertainty, right. 19 00:01:00,640 --> 00:01:04,000 Speaker 2: Sean Donnan is a senior economics writer at Bloomberg. 20 00:01:03,720 --> 00:01:07,440 Speaker 1: That Donald Trump's tariffs were causing this uncertainty in the 21 00:01:07,560 --> 00:01:10,160 Speaker 1: US and global economy, and that that was going to 22 00:01:10,200 --> 00:01:14,360 Speaker 1: have two effects. One is a drag on investment by 23 00:01:14,440 --> 00:01:18,399 Speaker 1: businesses who don't know where to allocate capital, and the 24 00:01:18,440 --> 00:01:22,360 Speaker 1: second is it drag on hiring. And we are starting 25 00:01:22,400 --> 00:01:24,640 Speaker 1: to see that dragon investment show up. 26 00:01:24,840 --> 00:01:28,120 Speaker 2: Sewn says companies all over the world are cutting costs, 27 00:01:28,280 --> 00:01:33,080 Speaker 2: adjusting supply chains, and rethinking their approach to investments and expansion. 28 00:01:33,280 --> 00:01:37,880 Speaker 1: We've seen import's first swell into the US and then 29 00:01:38,000 --> 00:01:41,280 Speaker 1: kind of tail off. We've seen Chinese exports to the 30 00:01:41,360 --> 00:01:46,240 Speaker 1: United States contract. We've seen a twenty five percent drop 31 00:01:46,440 --> 00:01:51,200 Speaker 1: in exports out of Japan, particularly of cars to the 32 00:01:51,320 --> 00:01:54,120 Speaker 1: US that have been hit by tariffs. We are seeing 33 00:01:54,360 --> 00:01:58,840 Speaker 1: Japan and Canada on the verge of possible recessions. 34 00:01:59,320 --> 00:02:03,360 Speaker 2: All in, Bloomberg Economics estimates the world's GDP will take 35 00:02:03,440 --> 00:02:06,960 Speaker 2: a two trillion dollar hit by the time Trump leaves 36 00:02:07,000 --> 00:02:10,400 Speaker 2: office in twenty twenty eight. So just who is starting 37 00:02:10,400 --> 00:02:16,920 Speaker 2: to feel that crunch the most. I'm David Gera and 38 00:02:16,960 --> 00:02:19,440 Speaker 2: this is the big take from Bloomberg News today. On 39 00:02:19,480 --> 00:02:23,560 Speaker 2: the show, From American consumers to winemakers in Europe, we 40 00:02:23,639 --> 00:02:26,919 Speaker 2: run down the impact so far of President Trump's trade war. 41 00:02:31,240 --> 00:02:34,519 Speaker 2: Shandnin has been working with other Bloomberg reporters all over 42 00:02:34,560 --> 00:02:38,280 Speaker 2: the world to understand how President Trump's tariff policy is 43 00:02:38,400 --> 00:02:39,800 Speaker 2: changing the global economy. 44 00:02:40,280 --> 00:02:45,359 Speaker 1: Our colleagues in France rang up the biggest organic wine 45 00:02:45,440 --> 00:02:49,640 Speaker 1: production cooperative in France. It's down in the south of France, 46 00:02:49,639 --> 00:02:52,320 Speaker 1: in the Long Duck kind of region. They literally are 47 00:02:52,440 --> 00:02:56,960 Speaker 1: sitting on two point seven million bottles of wine or 48 00:02:57,000 --> 00:03:00,400 Speaker 1: the equivalent of two point seven million bottles of wine 49 00:03:00,840 --> 00:03:03,919 Speaker 1: that they haven't sold. And a big reason for that 50 00:03:04,639 --> 00:03:08,720 Speaker 1: is that a quarter of all European wine exports head 51 00:03:08,720 --> 00:03:13,760 Speaker 1: for the United States, and those exports have kind of frozen. 52 00:03:13,880 --> 00:03:17,840 Speaker 1: Then you go look at Japanese auto parts producers and 53 00:03:17,840 --> 00:03:21,079 Speaker 1: what we're already starting to see in regions of Japan 54 00:03:21,440 --> 00:03:26,200 Speaker 1: people being laid off at auto parts producers because exports 55 00:03:26,240 --> 00:03:29,160 Speaker 1: from Japan to the United States are following. We're seeing 56 00:03:29,200 --> 00:03:33,040 Speaker 1: a similar impact in Canada and Vietnam. We've had all 57 00:03:33,080 --> 00:03:36,600 Speaker 1: sorts of suppliers who have you know, we're told by 58 00:03:36,680 --> 00:03:38,880 Speaker 1: the American companies that they serve as Okay, hang on 59 00:03:38,920 --> 00:03:43,200 Speaker 1: a second, we've got these tariffs here. Don't send the stuff, Please, 60 00:03:43,800 --> 00:03:46,440 Speaker 1: dear God, do not send the stuff, because we're going 61 00:03:46,480 --> 00:03:48,760 Speaker 1: to face a huge tariff bill if you do. And 62 00:03:48,800 --> 00:03:50,360 Speaker 1: now they've kind of back on and say okay, now 63 00:03:50,480 --> 00:03:52,680 Speaker 1: really send the stuff, Send it as fast as possible 64 00:03:52,720 --> 00:03:53,960 Speaker 1: because the tariffs might go up. 65 00:03:54,160 --> 00:03:56,920 Speaker 2: Sean, When you look at the economic data and you're 66 00:03:57,000 --> 00:04:00,760 Speaker 2: hunting for signs of tariff's damage, how does it show up? 67 00:04:00,800 --> 00:04:03,120 Speaker 2: What's telling you the scale and scope of the damage 68 00:04:03,120 --> 00:04:04,120 Speaker 2: from these tariffs so far. 69 00:04:04,880 --> 00:04:07,320 Speaker 1: Look, the biggest thing I'm looking at is in this 70 00:04:07,440 --> 00:04:10,320 Speaker 1: second quarter and in the third and fourth quarter to come, 71 00:04:10,480 --> 00:04:13,080 Speaker 1: is going to be the business investment figures what's called 72 00:04:13,480 --> 00:04:17,960 Speaker 1: fixed investment or non residential fixed capital investment, right, And 73 00:04:18,160 --> 00:04:21,520 Speaker 1: you see that is the kind of bet on the 74 00:04:21,560 --> 00:04:26,880 Speaker 1: future of the US economy. That's domestic and foreign manufacturers 75 00:04:27,000 --> 00:04:30,120 Speaker 1: and other companies and what they are investing, whether it's 76 00:04:30,120 --> 00:04:34,160 Speaker 1: warehouses or factories and so on. That is the big 77 00:04:34,200 --> 00:04:37,240 Speaker 1: promise from the Trump administration is that these tariffs will 78 00:04:37,279 --> 00:04:40,520 Speaker 1: force producers to come make their stuff here in the 79 00:04:40,600 --> 00:04:42,599 Speaker 1: United States. Well, to do that, they have to invest 80 00:04:42,600 --> 00:04:44,640 Speaker 1: in factories. And that's where we're going to see that. 81 00:04:45,279 --> 00:04:49,120 Speaker 1: The Atlanta Fed has a what they call GDP now measure, 82 00:04:49,200 --> 00:04:52,680 Speaker 1: which takes in all of the data that comes on 83 00:04:52,760 --> 00:04:57,440 Speaker 1: construction spending and equipment spending and so on. And in 84 00:04:57,480 --> 00:05:02,080 Speaker 1: the second quarter it is showing a increase in investment 85 00:05:02,560 --> 00:05:06,479 Speaker 1: of just zero point one percent. That's going to be 86 00:05:06,520 --> 00:05:11,760 Speaker 1: the contribution to overall growth, and that is pretty subdued. 87 00:05:11,880 --> 00:05:15,720 Speaker 1: That's as slow as it gets without getting into kind 88 00:05:15,760 --> 00:05:19,240 Speaker 1: of recession territory. So if that comes true in the 89 00:05:19,240 --> 00:05:22,880 Speaker 1: GDP numbers that we get this week, then that's going 90 00:05:22,920 --> 00:05:25,240 Speaker 1: to be a big warning sign for the US economy. 91 00:05:25,640 --> 00:05:27,640 Speaker 2: You're getting at a contrast I want you to draw, 92 00:05:27,640 --> 00:05:30,239 Speaker 2: and that's between the rhetoric that we hear from President 93 00:05:30,240 --> 00:05:33,600 Speaker 2: Trump and his economic team about the efficacy of these tariffs, 94 00:05:33,600 --> 00:05:36,159 Speaker 2: the revenue that they're bringing in, the promise that they're 95 00:05:36,160 --> 00:05:38,880 Speaker 2: going to reform the economy here in the US in 96 00:05:38,920 --> 00:05:42,080 Speaker 2: a good way, and what we're seeing in the economic data. 97 00:05:42,120 --> 00:05:43,919 Speaker 2: How stark is that contrast. 98 00:05:43,839 --> 00:05:47,599 Speaker 1: With Donald Trump that there's always been hyperbole, right, A 99 00:05:47,640 --> 00:05:52,000 Speaker 1: big issue for anyone digesting his economic plans has been 100 00:05:52,520 --> 00:05:55,839 Speaker 1: kind of listening to the sales pitch and then kind 101 00:05:55,839 --> 00:05:58,520 Speaker 1: of matching it with reality and what we actually see. 102 00:05:58,560 --> 00:06:02,120 Speaker 1: And consistently, you know, what we see is kind of 103 00:06:02,160 --> 00:06:06,280 Speaker 1: over promising and kind of under delivering on the economy, 104 00:06:06,560 --> 00:06:10,400 Speaker 1: and part of that is a kind of ideological battle 105 00:06:10,520 --> 00:06:14,160 Speaker 1: right between Donald Trump, who is a great American protectionist, 106 00:06:14,200 --> 00:06:16,240 Speaker 1: who believes that if we put this tariff wall up 107 00:06:16,240 --> 00:06:20,919 Speaker 1: around the United States, that that will fix all sorts 108 00:06:21,160 --> 00:06:26,720 Speaker 1: of problems, from the fentanyl crisis to immigration to factory 109 00:06:26,760 --> 00:06:29,320 Speaker 1: employment in places that were hit hard by the China 110 00:06:29,360 --> 00:06:32,800 Speaker 1: shock early this century. That is his answer, and a 111 00:06:32,839 --> 00:06:35,840 Speaker 1: lot of his advisors, like Peter Navarro and Jameson Greer, 112 00:06:35,880 --> 00:06:40,560 Speaker 1: the US Trade Representative, believe that globalization, free trade has 113 00:06:40,560 --> 00:06:42,800 Speaker 1: gone too far. The tariff wall has come down too low. 114 00:06:42,839 --> 00:06:45,080 Speaker 1: We need to raise it again and encourage investment in 115 00:06:45,120 --> 00:06:49,000 Speaker 1: the United States. The reality is economists say, well, there's 116 00:06:49,040 --> 00:06:53,360 Speaker 1: a cost to that, and the cost to that is 117 00:06:54,080 --> 00:06:58,880 Speaker 1: higher prices, not just for consumer goods, but also for 118 00:06:59,080 --> 00:07:01,520 Speaker 1: all of the things we need to make stuff. Right. 119 00:07:01,560 --> 00:07:05,120 Speaker 1: If you put a fifty percent tariff on steel, it's 120 00:07:05,200 --> 00:07:08,800 Speaker 1: not just a tariff on imported steel. It also leads 121 00:07:08,880 --> 00:07:12,360 Speaker 1: to higher prices for domestic steel because the domestic producers 122 00:07:12,400 --> 00:07:15,600 Speaker 1: adjust their prices upwards. That means higher prices for everything 123 00:07:15,600 --> 00:07:18,960 Speaker 1: from washing machines to cars. And that's an input that 124 00:07:19,000 --> 00:07:22,960 Speaker 1: we don't know. You don't see immediately. So it's higher prices, 125 00:07:23,000 --> 00:07:29,320 Speaker 1: but it's also slower growth as companies adapt to those 126 00:07:29,520 --> 00:07:32,280 Speaker 1: higher prices, the higher cost of doing business and start 127 00:07:32,360 --> 00:07:34,320 Speaker 1: changing the bets that they make. 128 00:07:36,360 --> 00:07:40,160 Speaker 2: As you say, the president is counting on a surge 129 00:07:40,240 --> 00:07:43,440 Speaker 2: in investment in the country, companies deciding to build more 130 00:07:43,480 --> 00:07:47,040 Speaker 2: factories here, do more manufacturing here. Is there evidence that 131 00:07:47,040 --> 00:07:47,679 Speaker 2: that's happening. 132 00:07:47,800 --> 00:07:50,000 Speaker 1: You know, we've seen the president through around some big numbers. 133 00:07:50,000 --> 00:07:53,880 Speaker 1: He's talked about up to fifteen trillion dollars and promised 134 00:07:53,920 --> 00:07:59,040 Speaker 1: investment just in the initial months of his administration. That 135 00:07:59,080 --> 00:08:02,760 Speaker 1: would be fifty percent of US GDP. That seems unlikely 136 00:08:02,800 --> 00:08:05,120 Speaker 1: to happen in a single year. A lot of these 137 00:08:05,120 --> 00:08:08,560 Speaker 1: things are promises. Right in the deal that was announced 138 00:08:08,560 --> 00:08:10,360 Speaker 1: with Japan, one of the things they've talked about is 139 00:08:10,400 --> 00:08:14,680 Speaker 1: a five hundred billion dollar plus investment fund, But we 140 00:08:14,880 --> 00:08:19,160 Speaker 1: don't know where that investment is going to be, what 141 00:08:19,280 --> 00:08:21,560 Speaker 1: projects is it going to go to. These things take 142 00:08:21,760 --> 00:08:25,440 Speaker 1: years to play out. Now. It could be that the 143 00:08:25,480 --> 00:08:28,560 Speaker 1: tariff wall is so high this time that maybe more 144 00:08:28,600 --> 00:08:32,120 Speaker 1: of this investment will come. The argument from the Trump administration, 145 00:08:32,280 --> 00:08:34,440 Speaker 1: there's you know, it does make sense to a certain extent, 146 00:08:34,480 --> 00:08:38,640 Speaker 1: and that this is the world's largest economy. US consumers are, 147 00:08:39,080 --> 00:08:42,760 Speaker 1: you know, the biggest consumers in the global economy. If 148 00:08:42,760 --> 00:08:46,520 Speaker 1: you want to access that consumption, then come build here 149 00:08:46,520 --> 00:08:48,640 Speaker 1: in the United States. But it's going to take years 150 00:08:48,679 --> 00:08:52,200 Speaker 1: to figure out if that promise has actually come true. 151 00:08:52,400 --> 00:08:54,520 Speaker 1: The flip side of it, what economists would tell you 152 00:08:54,720 --> 00:08:57,840 Speaker 1: is that, well, if you're making producing in the United 153 00:08:57,840 --> 00:09:03,480 Speaker 1: States more expensive, you're actually reducing incentives for investment there, 154 00:09:03,480 --> 00:09:06,439 Speaker 1: because all of a sudden, the US becomes an island 155 00:09:07,040 --> 00:09:07,800 Speaker 1: on its own. 156 00:09:08,920 --> 00:09:12,160 Speaker 2: As the US lives in this new isolation as an island, 157 00:09:12,160 --> 00:09:16,559 Speaker 2: As you said, what's happening with other nations, other trading partners, 158 00:09:16,559 --> 00:09:18,600 Speaker 2: what's happening in the world beyond the US. 159 00:09:19,520 --> 00:09:21,679 Speaker 1: What we're starting to see, and some of this was 160 00:09:21,720 --> 00:09:25,120 Speaker 1: actually happening last year during the election, is other countries 161 00:09:25,200 --> 00:09:27,480 Speaker 1: just talking to each other and starting to hatch their 162 00:09:27,480 --> 00:09:31,520 Speaker 1: own trade deals. So the EU has won that it's 163 00:09:31,559 --> 00:09:35,760 Speaker 1: been negotiating for years, feels like decades with Latin American 164 00:09:35,800 --> 00:09:39,720 Speaker 1: Economic Block, they're finally getting close to the closing that deal. 165 00:09:39,840 --> 00:09:44,359 Speaker 1: That is an enormous trade agreement. We've seen the Transpecific Partnership, 166 00:09:44,800 --> 00:09:48,600 Speaker 1: which the US pulled out of in the first Trump administration. 167 00:09:49,120 --> 00:09:52,520 Speaker 1: We've seen that expand the United Kingdom, which is not 168 00:09:52,600 --> 00:09:55,960 Speaker 1: a Pacific country, but it has joined the Transpacific Partnership, 169 00:09:56,000 --> 00:09:58,720 Speaker 1: which now has a new name, and that is growing. 170 00:09:58,840 --> 00:10:02,080 Speaker 1: We need to remember that the United States is the 171 00:10:02,080 --> 00:10:06,079 Speaker 1: world's largest economy. It's a thirty trillion dollar economy, but 172 00:10:06,280 --> 00:10:10,080 Speaker 1: that's a thirty trillion dollar economy in one hundred trillion 173 00:10:10,120 --> 00:10:13,920 Speaker 1: dollar plus global economy. It's not the only game in town. 174 00:10:14,040 --> 00:10:17,760 Speaker 1: And we've already seen with Chinese exports, for example, some 175 00:10:17,840 --> 00:10:21,320 Speaker 1: signs that they are finding other markets to replace the 176 00:10:21,440 --> 00:10:23,880 Speaker 1: United States. So you know, the rest of the world 177 00:10:23,960 --> 00:10:27,320 Speaker 1: is kind of getting on with its business and trying 178 00:10:27,360 --> 00:10:29,920 Speaker 1: to find alternatives to the US market. And for a 179 00:10:30,000 --> 00:10:32,520 Speaker 1: lot of people, that's the scariest prospect. 180 00:10:33,840 --> 00:10:36,679 Speaker 2: What happens to the global economy if the US continues 181 00:10:36,720 --> 00:10:40,760 Speaker 2: its protectionist trade policies. Plus what this week's economic data 182 00:10:40,760 --> 00:10:43,040 Speaker 2: will tell us about the health of the labor market, 183 00:10:43,520 --> 00:10:57,000 Speaker 2: that's after the break. Tracking the impact of President Trump's 184 00:10:57,000 --> 00:11:00,600 Speaker 2: trade war in real time isn't easy. This week, we're 185 00:11:00,600 --> 00:11:03,640 Speaker 2: getting a lot of new economic data and updates from 186 00:11:03,640 --> 00:11:06,400 Speaker 2: some of the largest companies in the world. That'll give 187 00:11:06,480 --> 00:11:09,760 Speaker 2: us a clearer picture of just how consumers and businesses 188 00:11:09,960 --> 00:11:13,000 Speaker 2: are responding to the trade war. For a guy like you, Shawn, 189 00:11:13,080 --> 00:11:15,440 Speaker 2: who is on the front lines of this trade war 190 00:11:15,480 --> 00:11:19,160 Speaker 2: covering what's been going on, how important is this week we're. 191 00:11:18,960 --> 00:11:22,840 Speaker 1: Going to get a real snapshot of the impact of 192 00:11:23,440 --> 00:11:27,520 Speaker 1: the tariffs on the US economy, and that is going 193 00:11:27,600 --> 00:11:29,400 Speaker 1: to be you know, the first evidence that we see 194 00:11:29,440 --> 00:11:32,720 Speaker 1: in the second quarter numbers for GDP. We'll also see 195 00:11:32,720 --> 00:11:35,400 Speaker 1: that in the jobs side. Remember that the last jobs 196 00:11:35,480 --> 00:11:38,920 Speaker 1: numbers we had were stronger than expected at the headline level, 197 00:11:38,920 --> 00:11:40,640 Speaker 1: but when you kind of went below the surface, you 198 00:11:40,679 --> 00:11:43,040 Speaker 1: realize that the private sector hiring looked pretty soft. So 199 00:11:43,120 --> 00:11:47,040 Speaker 1: we'll see how the labor market is holding up at 200 00:11:47,040 --> 00:11:49,360 Speaker 1: the end of the week. But we're also you know, 201 00:11:49,360 --> 00:11:52,280 Speaker 1: there's this August first deadline that President Trump has wielded, 202 00:11:52,320 --> 00:11:55,560 Speaker 1: and what we're also going to be seeing is just 203 00:11:55,640 --> 00:11:59,239 Speaker 1: how far he's willing to go, whether he extends that deadline. 204 00:11:59,280 --> 00:12:02,319 Speaker 1: For India is still out there. We thought that they 205 00:12:02,360 --> 00:12:04,760 Speaker 1: were going to be one of the first big economies 206 00:12:04,800 --> 00:12:06,280 Speaker 1: to get a deal with the United States. We're still 207 00:12:06,280 --> 00:12:08,720 Speaker 1: waiting to that, and you know, we're going to see, 208 00:12:09,360 --> 00:12:12,480 Speaker 1: if everything goes to the plans that Trump and his 209 00:12:12,559 --> 00:12:15,160 Speaker 1: aides have laid out, We're going to see an increase 210 00:12:15,240 --> 00:12:18,679 Speaker 1: in US tariffs by another step up at the end 211 00:12:18,720 --> 00:12:21,640 Speaker 1: of the week, and that will then have a further 212 00:12:21,760 --> 00:12:25,080 Speaker 1: impact into the third quarter going forward. I think one 213 00:12:25,120 --> 00:12:27,520 Speaker 1: of the things that maybe and maybe this explains why 214 00:12:27,640 --> 00:12:31,520 Speaker 1: markets have to a lot of economists look complacent about 215 00:12:32,400 --> 00:12:34,920 Speaker 1: the damage that tariffs are doing. I think one of 216 00:12:34,920 --> 00:12:37,000 Speaker 1: the reasons is you need to think of the impact 217 00:12:37,000 --> 00:12:41,000 Speaker 1: of tariffs as a kind of a really bad cold 218 00:12:41,559 --> 00:12:44,720 Speaker 1: right or it's something that that just kind of hangs 219 00:12:44,800 --> 00:12:48,559 Speaker 1: around that isn't going away. You're operating at like eighty 220 00:12:48,640 --> 00:12:53,400 Speaker 1: ninety percent of your best. It's not a sudden, dramatic 221 00:12:53,559 --> 00:12:57,200 Speaker 1: shock to the system. It's this kind of chronic impact 222 00:12:57,200 --> 00:12:59,560 Speaker 1: that just kind of drags on, which means that the 223 00:12:59,679 --> 00:13:02,800 Speaker 1: US and global economies are just going to grow slightly slower, 224 00:13:02,960 --> 00:13:06,360 Speaker 1: are just going to be less dynamic than they were beforehand. 225 00:13:06,559 --> 00:13:09,640 Speaker 1: Can the world to adapt to that? Of course, the 226 00:13:09,679 --> 00:13:12,600 Speaker 1: world will find a way to survive. The US economy 227 00:13:12,640 --> 00:13:14,640 Speaker 1: will find a way to survive. Companies will find a 228 00:13:14,640 --> 00:13:19,120 Speaker 1: way to survive. You know, general Motors paid one point 229 00:13:19,160 --> 00:13:24,320 Speaker 1: one billion dollars in tariffs just in the second quarter alone, 230 00:13:24,360 --> 00:13:26,240 Speaker 1: and it said that for the full year it expects 231 00:13:26,280 --> 00:13:30,160 Speaker 1: to pay four to five billion dollars in tariffs. Can 232 00:13:30,240 --> 00:13:32,400 Speaker 1: it keep doing that forever? No, it will find a 233 00:13:32,440 --> 00:13:34,800 Speaker 1: way to adapt it. We'll do different things. But in 234 00:13:34,840 --> 00:13:38,640 Speaker 1: the meantime, it's going to have reduced profitability, it's going 235 00:13:38,679 --> 00:13:41,760 Speaker 1: to have less capital to invest in new projects, it's 236 00:13:41,800 --> 00:13:43,200 Speaker 1: probably going to hire few people. 237 00:13:43,679 --> 00:13:45,559 Speaker 2: Sean, I'm glad you bring up the auto sector, because 238 00:13:45,600 --> 00:13:49,480 Speaker 2: there's GM, there's Stillantis, there's Volkswagon. All of them issued 239 00:13:49,520 --> 00:13:52,160 Speaker 2: kind of similar warnings and said they've paid a ton 240 00:13:52,559 --> 00:13:55,640 Speaker 2: because of these tariffs. I wonder are there any other 241 00:13:55,679 --> 00:13:58,439 Speaker 2: sectors you want to flag where, either in earnings reports 242 00:13:58,520 --> 00:14:02,200 Speaker 2: or in commentary, you've seen broad trends emerging about how 243 00:14:02,280 --> 00:14:03,800 Speaker 2: much tariffs are impacting business. 244 00:14:04,160 --> 00:14:06,360 Speaker 1: You know, there's more tariffs to come, and we also 245 00:14:06,400 --> 00:14:08,800 Speaker 1: need to remember that. And you know President Trump has 246 00:14:08,840 --> 00:14:12,640 Speaker 1: promised big tariffs on pharmaceuticals, so the pharmaceutical industry is 247 00:14:12,679 --> 00:14:15,400 Speaker 1: waiting to see what those tariffs are going to be. 248 00:14:15,559 --> 00:14:17,080 Speaker 1: The other big one that I try to get my 249 00:14:17,120 --> 00:14:20,000 Speaker 1: head around every day, just because it's something that is 250 00:14:20,040 --> 00:14:23,800 Speaker 1: part of all of our lives every day, is semiconductors. 251 00:14:24,000 --> 00:14:28,960 Speaker 1: President Trump ordered up a investigation into the national security 252 00:14:28,960 --> 00:14:33,240 Speaker 1: impact of importing semiconductors, and we are going to see 253 00:14:33,640 --> 00:14:36,840 Speaker 1: we've got steel, we've got aluminum. We're waiting for the 254 00:14:36,880 --> 00:14:41,120 Speaker 1: results of a national security investigation on critical minerals. It's 255 00:14:41,160 --> 00:14:43,440 Speaker 1: hard to single out sectors, although I have single out 256 00:14:43,480 --> 00:14:46,560 Speaker 1: pharmacicols a big back, because it's kind of everything in 257 00:14:46,600 --> 00:14:49,120 Speaker 1: our lives. Right The shirt I'm wearing I looked up 258 00:14:49,160 --> 00:14:51,160 Speaker 1: this morning. It was made in China. I didn't realize that. 259 00:14:51,280 --> 00:14:53,760 Speaker 1: But you know that's going to be more expensive next 260 00:14:53,760 --> 00:14:55,600 Speaker 1: time around, or it's going to come from somewhere else. 261 00:14:55,640 --> 00:14:57,800 Speaker 1: I don't think it's going to be suddenly made in 262 00:14:57,880 --> 00:15:02,120 Speaker 1: North Carolina. So it's this kind of CROs price increase 263 00:15:02,520 --> 00:15:04,840 Speaker 1: that we're going to get used to. And for a 264 00:15:04,880 --> 00:15:09,920 Speaker 1: long time, the value of free trade and free markets 265 00:15:10,480 --> 00:15:13,960 Speaker 1: was held up with two examples of economies in history, 266 00:15:14,000 --> 00:15:16,640 Speaker 1: and that was in the nineteen twenties. Argentina and the 267 00:15:16,800 --> 00:15:21,680 Speaker 1: United States were roughly equivalent in size as economies. One 268 00:15:21,840 --> 00:15:26,480 Speaker 1: chose a path of protection and import substitution. That's Argentina 269 00:15:27,080 --> 00:15:30,040 Speaker 1: and in the one hundred years since, I think it's 270 00:15:30,120 --> 00:15:32,560 Speaker 1: fair to say that Argentina has been the less successful 271 00:15:32,600 --> 00:15:35,560 Speaker 1: economy than the United States, and the other chose a 272 00:15:35,640 --> 00:15:40,440 Speaker 1: path of opening up and of encouraging other economies to 273 00:15:40,520 --> 00:15:44,080 Speaker 1: open up, and the US economy became the world's largest 274 00:15:44,120 --> 00:15:47,600 Speaker 1: economy on the back of that. Now the question is, 275 00:15:47,600 --> 00:15:50,480 Speaker 1: over the next one hundred years, are we going to 276 00:15:50,520 --> 00:15:54,080 Speaker 1: continue the dynamism of the last century in the United 277 00:15:54,120 --> 00:15:57,040 Speaker 1: States or is it going to become a lesser version 278 00:15:57,360 --> 00:15:58,040 Speaker 1: of itself. 279 00:15:58,720 --> 00:16:01,000 Speaker 2: I want to end with market complacency what you brought 280 00:16:01,080 --> 00:16:03,800 Speaker 2: up a few minutes ago. We're seeing the stock market 281 00:16:03,920 --> 00:16:08,080 Speaker 2: at all time highs. Underneath that, how much anxiety is 282 00:16:08,120 --> 00:16:13,360 Speaker 2: there among investors about the United States's economic prospects. Are 283 00:16:13,400 --> 00:16:15,840 Speaker 2: we seeing indications that there is less of an appetite 284 00:16:15,880 --> 00:16:19,040 Speaker 2: for investment in the US in light of this trade war, 285 00:16:19,160 --> 00:16:21,120 Speaker 2: and as you've laid out what could be coming here 286 00:16:21,120 --> 00:16:22,480 Speaker 2: in the next few months, I. 287 00:16:22,400 --> 00:16:24,720 Speaker 1: Think it's really hard to figure out from equity markets 288 00:16:24,840 --> 00:16:27,200 Speaker 1: what they are for telling, partly because of the influence 289 00:16:27,240 --> 00:16:29,360 Speaker 1: of the big tech company is but you can see 290 00:16:29,400 --> 00:16:34,040 Speaker 1: the anxiety in the reaction, for example, to General Motors' earnings. 291 00:16:34,240 --> 00:16:37,880 Speaker 1: The shares were down after the company came out and said, 292 00:16:37,960 --> 00:16:40,680 Speaker 1: as a result of tariffs are profits in the second quarter, 293 00:16:40,720 --> 00:16:43,760 Speaker 1: we're thirty five percent less than they would have been otherwise. 294 00:16:44,320 --> 00:16:46,240 Speaker 1: So we're going to see that build and we'll see 295 00:16:46,280 --> 00:16:49,800 Speaker 1: it in individual stocks there. The other kind of corner 296 00:16:49,800 --> 00:16:52,840 Speaker 1: of financial markets has been so fascinating has been currency markets, right, 297 00:16:52,880 --> 00:16:55,520 Speaker 1: and what's happened with the dollar in the first half 298 00:16:56,000 --> 00:17:02,520 Speaker 1: of this year. The dollar had its worst performance since 299 00:17:02,640 --> 00:17:06,360 Speaker 1: nineteen seventy three. Now, what happened in nineteen seventy three, 300 00:17:06,440 --> 00:17:09,200 Speaker 1: That's when you saw the kind of final pull out 301 00:17:09,240 --> 00:17:12,080 Speaker 1: of the Bretton Woods currency system, which pegged the dollar. 302 00:17:12,119 --> 00:17:14,600 Speaker 1: It's a goal by Richard Nixon, and there was a 303 00:17:14,600 --> 00:17:17,160 Speaker 1: whole repricing of the dollar, and that was the goal 304 00:17:17,200 --> 00:17:20,040 Speaker 1: at the time. The fact that we've seen that impact 305 00:17:20,320 --> 00:17:22,360 Speaker 1: in the first half of this year tells me that 306 00:17:22,680 --> 00:17:25,080 Speaker 1: some parts of the financial market are more worried about 307 00:17:25,119 --> 00:17:28,080 Speaker 1: tariffs than perhaps equity markets are. 308 00:17:29,320 --> 00:17:31,359 Speaker 2: John, Thank you very much, Thank you so much for 309 00:17:31,359 --> 00:17:39,600 Speaker 2: having me. This is the Big Take from Bloomberg News. 310 00:17:39,640 --> 00:17:41,880 Speaker 2: I'm David Gurra. To get more from the Big Take 311 00:17:41,960 --> 00:17:45,399 Speaker 2: and unlimited access to all of bloomberg dot com. Subscribe 312 00:17:45,440 --> 00:17:49,280 Speaker 2: today at bloomberg dot com Slash podcast offer. If you'd 313 00:17:49,280 --> 00:17:51,480 Speaker 2: liked this episode, make sure to follow and review The 314 00:17:51,480 --> 00:17:54,000 Speaker 2: Big Take wherever you listen to podcasts. It helps people 315 00:17:54,040 --> 00:17:55,800 Speaker 2: find the show. Thanks for listening. 316 00:17:55,960 --> 00:18:01,840 Speaker 1: We'll be back tomorrow