WEBVTT - Bloomberg Surveillance TV: May 9, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.239 Terminal and the Bloomberg Business app. Joining us now, very 0:00:37.240 --> 0:00:39.720 pleased to say pin and Navarro, the Director of the 0:00:39.720 --> 0:00:42.320 Office of Trade and Manufacturing Policy at the White House 0:00:42.360 --> 0:00:43.800 Dot Navarro, it's been too long, sir. 0:00:43.800 --> 0:00:45.599 It's good to see you. Thanks for being here. 0:00:46.159 --> 0:00:48.400 Been a long time. Joan, it is good to see 0:00:48.400 --> 0:00:48.919 you too, sir. 0:00:49.080 --> 0:00:49.720 Thank you, sir. 0:00:49.800 --> 0:00:52.160 First class digs here, my friend. 0:00:52.159 --> 0:00:53.880 Well, I'm pleased we're looking after you. Let's kick it 0:00:53.920 --> 0:00:55.959 off with these talks this weekend. We just heard from 0:00:55.960 --> 0:00:58.400 the President just moments ago, and he mentioned an eighty 0:00:58.440 --> 0:01:01.240 percent tariff might be about right. Some to the Treasury secretary. 0:01:01.280 --> 0:01:03.640 We understand you won't want to get ahead of those negotiations. 0:01:03.640 --> 0:01:05.760 But I just wonder could you offer some clarity on 0:01:05.840 --> 0:01:09.000 what about right means when the President says eighty percent 0:01:09.120 --> 0:01:11.880 TAF on China seems right, seems right for the talks 0:01:11.880 --> 0:01:14.640 this weekend, or seems right for the foreseeable future. 0:01:16.480 --> 0:01:20.319 Yeah, it was one of three people that was with 0:01:20.440 --> 0:01:23.040 the White House the first term, for all four years. 0:01:23.640 --> 0:01:25.720 One of the big reasons is I never got ahead 0:01:25.760 --> 0:01:29.119 of the president. Let me tell you about Geneva, which 0:01:29.160 --> 0:01:33.560 is kind of I've got a very warm memories. It 0:01:33.640 --> 0:01:37.240 was my finest hour as a negotiator. I went there 0:01:37.319 --> 0:01:41.800 to lead the negotiations for the United Postal Union reforms 0:01:41.800 --> 0:01:46.640 that essentially got China rates fear to We save billions 0:01:46.720 --> 0:01:50.120 on that. But I mentioned this because Geneva has symbolic 0:01:51.440 --> 0:01:55.840 value in this negotiation. It is the headquarters of the 0:01:55.880 --> 0:01:59.360 World Trade Organization. And the scariest thing I ever saw 0:01:59.400 --> 0:02:03.360 in Geneva was the size of the China delegation at 0:02:03.400 --> 0:02:07.240 the World Trade Organization. And they've played the WTO like 0:02:07.280 --> 0:02:10.920 a fiddle. So let's see what happens tomorrow. I'd be 0:02:10.919 --> 0:02:13.799 happy to come back on Monday do the debrief, but 0:02:14.040 --> 0:02:16.120 I don't want to get ahead of the boss or 0:02:16.200 --> 0:02:19.960 Scott Besting. And don't forget Scott's going with Jamison Greer, 0:02:20.080 --> 0:02:24.960 the United States Trade representative. He's the guy who learned 0:02:24.960 --> 0:02:27.480 that the knee of bob bliteheis for the first time around, 0:02:28.160 --> 0:02:30.040 was there for all the China stuff. And he's the 0:02:30.040 --> 0:02:32.840 guy who was the architect, along with Howard Lutnik of 0:02:32.919 --> 0:02:35.880 the UK deal. So let's see what happens. 0:02:36.080 --> 0:02:37.320 It's in the very best. 0:02:37.360 --> 0:02:39.799 We'll sell the pensylin the weekend for the markets. Well, 0:02:39.800 --> 0:02:42.480 pencil in appearance with you for Monday. No worries about that. 0:02:42.520 --> 0:02:44.840 I'm looking forward to that conversation. Just got into the 0:02:44.880 --> 0:02:47.560 weekend and reflected on your experience dealing with the Chinese 0:02:47.880 --> 0:02:50.560 then on the UK. This is not the same relationship. 0:02:50.960 --> 0:02:53.840 The trade relationship is tremendously unbalanced and has been for 0:02:53.840 --> 0:02:55.560 a long long time. Can you frame for us how 0:02:55.560 --> 0:02:58.720 difficult it has been previously for you to negotiate with 0:02:58.800 --> 0:03:00.880 the Chinese and how much long it could take with 0:03:01.000 --> 0:03:06.200 a Chinese relative to set the UK and other tripatas well. 0:03:06.440 --> 0:03:09.680 I could tell you. I think I sat face to 0:03:09.760 --> 0:03:13.679 face with the China team maybe seven times during the 0:03:13.760 --> 0:03:18.079 first term and twice Shi Jinping was there. It was 0:03:18.200 --> 0:03:22.480 G seven. Just give me the G twenty both. I 0:03:22.480 --> 0:03:26.040 think it was Tokyo and h and our Buenos Aires. 0:03:27.200 --> 0:03:31.120 What's interesting, So what's so interesting to me, Jonathan about 0:03:31.639 --> 0:03:35.240 China is that they have continuity. The same people are 0:03:35.240 --> 0:03:38.520 going to be in Geneva or the same people back then. 0:03:38.880 --> 0:03:42.920 And you know, our our regimes change, we we have 0:03:43.040 --> 0:03:45.920 different governments and things like that. But they have the 0:03:46.000 --> 0:03:51.000 advantage of that kind of continuity. But look, it'll be 0:03:51.040 --> 0:03:53.520 interesting again. I don't I don't want to get ahead 0:03:53.520 --> 0:03:57.360 of Scott and Jamison or the president. I think let's 0:03:57.400 --> 0:04:01.960 see what happens. You know, my role, and we've got 0:04:02.160 --> 0:04:06.440 fifteen countries we run enormous trade deficits. With that, we've 0:04:06.480 --> 0:04:09.800 got to renegotiate the whole structure of those deals. And 0:04:09.880 --> 0:04:13.160 there's another one hundred countries that cheat us in some 0:04:13.200 --> 0:04:17.360 ways but smaller ways. My role in the administration on 0:04:17.400 --> 0:04:21.120 all of this is to do the background analytics to 0:04:21.240 --> 0:04:25.120 see how each country's cheating us, which basically sets up 0:04:25.560 --> 0:04:29.160 the terms of the negotiation. And every country like fingerprints, 0:04:29.240 --> 0:04:33.640 like India's the Maharajia tariffs, they have the highest tariffs. 0:04:33.640 --> 0:04:37.200 Of any of our major trading partners, Japan is the 0:04:37.240 --> 0:04:41.039 most clever at protecting its own markets with a combination 0:04:41.160 --> 0:04:47.000 of domestic protectionism non tariff barriers. You know Germany they 0:04:47.040 --> 0:04:51.000 have auto tariffs at ten percent, We have them at 0:04:51.000 --> 0:04:52.840 two and a half percent, but they also have the 0:04:52.920 --> 0:04:56.839 VAT tax which acts as another twenty nine to what 0:04:56.960 --> 0:05:00.440 is it nineteen percent tariff and in exports subject. So 0:05:00.839 --> 0:05:05.000 what I do is do the background and look at 0:05:05.120 --> 0:05:08.120 kind of how these countries are doing what to us, 0:05:08.640 --> 0:05:11.200 and we get great deals from there. People. I think 0:05:11.240 --> 0:05:15.320 the UK deal is very interesting. I think the significance 0:05:15.400 --> 0:05:17.520 is not just that it's a deal, but that's a 0:05:17.600 --> 0:05:20.920 template for the future deals. What we do done is 0:05:21.760 --> 0:05:24.400 there's like four or five verticals we look at. It's 0:05:24.440 --> 0:05:27.640 the tariffs, the non tariff barriers, the digital taxes, and 0:05:27.680 --> 0:05:30.320 then the various kinds of cheating, the dumping, the currency 0:05:30.400 --> 0:05:34.760 manipulation and things like that. And then from there we 0:05:36.120 --> 0:05:39.200 assess what the asks are, what we need and go 0:05:39.279 --> 0:05:42.360 forward from there to see you get to see a 0:05:42.400 --> 0:05:46.800 steady wave of deals. The USTR building is right across 0:05:46.800 --> 0:05:50.960 the street from the White House. It's got the most 0:05:50.960 --> 0:05:56.479 staff negotiating these deals, and it's like you go to 0:05:56.520 --> 0:05:58.200 the Delhi and you have to take a number and 0:05:58.240 --> 0:06:02.200 get in line. Every day there's delegations from around the 0:06:02.240 --> 0:06:06.239 world lining up to meet with Jamison Greer and Howard 0:06:06.320 --> 0:06:10.120 Ludnick and I've seen I looked yesterday at the schedule. 0:06:10.240 --> 0:06:12.200 Was kind of fun out the July and it's just 0:06:12.360 --> 0:06:13.560 you know, one after the others. 0:06:13.600 --> 0:06:16.760 Well, Peter looking at the countries lining up. One key 0:06:16.839 --> 0:06:19.799 aspect of the UK deal was of course bringing down 0:06:19.920 --> 0:06:22.320 the auto tariff to ten percent. So right now you 0:06:22.360 --> 0:06:25.400 have a tariff rate that's lower for Bentley's, which is 0:06:25.440 --> 0:06:28.440 a car that most American families can't afford made in 0:06:28.480 --> 0:06:31.039 the UK, where Chevys have a higher rate if they're 0:06:31.040 --> 0:06:34.800 made in Canada or Mexico. Is there an expectation that 0:06:34.839 --> 0:06:38.680 the next trade deals auto tariffs will be coming down 0:06:38.720 --> 0:06:39.360 those rates. 0:06:41.920 --> 0:06:44.080 It's going to be country by country. I mean, the 0:06:44.200 --> 0:06:49.839 beauty about the UK is that very small amount of 0:06:50.080 --> 0:06:52.880 exports they send us and we have a hard cap 0:06:54.360 --> 0:06:57.279 I think it's one hundred thousand units where it goes 0:06:57.360 --> 0:07:00.520 right back up to twenty five percent. And again we're 0:07:00.520 --> 0:07:04.720 trying to do something that's mutually beneficial to both countries 0:07:04.760 --> 0:07:07.359 to get to a better place. Well at the same 0:07:07.440 --> 0:07:11.280 time changing the level of the playing field so that 0:07:11.400 --> 0:07:15.040 it is more level. I think for me, the beauty 0:07:15.080 --> 0:07:18.080 of the UK deal. Besides that was all of the 0:07:18.080 --> 0:07:20.240 good stuff we had for AG. I mean, one of 0:07:20.280 --> 0:07:26.720 the problems we have is this non tariff barriers like FIDO, 0:07:26.920 --> 0:07:30.840 sanitary standards, what's that that's like these things they do 0:07:30.920 --> 0:07:34.520 to keep our pork out, our chicken out, our beef. 0:07:35.880 --> 0:07:38.320 Right now we're going to be able to sell a 0:07:38.360 --> 0:07:42.040 lot more beef, poultry, dairy, and ethanol. I mean, they 0:07:42.040 --> 0:07:45.920 had a really high tariff, almost a lockout tariff on 0:07:45.960 --> 0:07:49.600 ethanol and that's made from corn. So folks in Iowa 0:07:49.840 --> 0:07:52.840 are very happy about that. So this is the way 0:07:52.840 --> 0:07:56.680 we're going to go forward on net The United States 0:07:56.800 --> 0:08:00.240 is going to be far better off, and all we're 0:08:00.240 --> 0:08:02.080 doing is trying to level the playing fielding. I saw 0:08:02.200 --> 0:08:05.720 the EU kind of rattling sabers I think it was 0:08:05.840 --> 0:08:10.400 yesterday about some kind of retaliation, and I would just 0:08:10.440 --> 0:08:13.920 say to anybody who's who's in the European Union, I mean, 0:08:13.920 --> 0:08:15.840 how can you look a US in the face and 0:08:15.920 --> 0:08:20.960 threaten us when your tariffs are higher. You have lost 0:08:21.080 --> 0:08:25.680 cases repeatedly at the wt O on US selling you 0:08:25.960 --> 0:08:30.760 things like beef and poultry, and you won't even honor that. 0:08:31.040 --> 0:08:35.720 So yesterday the President called Ursula Vonderline fantastic, and he 0:08:35.760 --> 0:08:38.480 said he hopes to meet her. But are you saying 0:08:38.520 --> 0:08:40.800 that the European Union is not as high on the 0:08:40.800 --> 0:08:44.319 priority list and say other trading partners like Oria Japan 0:08:45.000 --> 0:08:45.520 not at all? 0:08:45.760 --> 0:08:48.440 I mean the EU to be clear here, we have 0:08:48.600 --> 0:08:54.440 the second highest trade deficit with the EU, behind China, 0:08:54.880 --> 0:08:57.800 so they're very high on the list. All I'm saying 0:08:57.840 --> 0:09:01.480 here is that I I thought I found it unfortunate 0:09:01.520 --> 0:09:04.600 that the EU kind of fired I think some term 0:09:04.720 --> 0:09:08.560 was fired shots across our bow. It's like retaliation will 0:09:08.559 --> 0:09:10.920 not work against the United States. We shouldn't have that. 0:09:11.000 --> 0:09:13.760 Let's talk, Let's figure this out, and it would be 0:09:13.960 --> 0:09:16.960 nice here. Let's give peace a chance here. All we're 0:09:17.000 --> 0:09:20.800 asking for here in the United States of America is fairness. 0:09:20.880 --> 0:09:23.120 I mean, hold on, would you agree? Is there any 0:09:23.120 --> 0:09:26.600 disagreement on this set or on your set that the 0:09:26.679 --> 0:09:29.680 tariffs of the EU are higher, and that the non 0:09:29.720 --> 0:09:34.600 tariff bearers are higher, and that the wt O in 0:09:34.760 --> 0:09:39.120 Geneva is basically sanctioning that through tuesdays one is the 0:09:40.320 --> 0:09:41.920 But would you agree with that? 0:09:42.000 --> 0:09:45.160 I think there's a bigger question FactCheck there. There's a 0:09:45.160 --> 0:09:47.720 bigger question here. There's a bigger question here. And this 0:09:47.760 --> 0:09:49.800 is something that the German Finance Minister has come out 0:09:49.800 --> 0:09:52.120 and talked about, which is they'd be willing to drop 0:09:52.440 --> 0:09:54.640 all tariffs to zero if the US were willing to 0:09:54.720 --> 0:09:57.560 drop all tariffs to zero, there is a willingness to 0:09:57.640 --> 0:10:01.760 negotiate aground the board to a lower tariff regime. Would 0:10:01.760 --> 0:10:02.719 that be acceptable to you? 0:10:02.800 --> 0:10:03.440 Or is ten percent? 0:10:04.000 --> 0:10:07.880 So stay with that. See that's such a misdirection. Okay, 0:10:08.600 --> 0:10:12.439 it's the non tariff barrier. Stupid to kind of paraphrase 0:10:13.160 --> 0:10:17.240 Bill Clinton. It's like, it's the non tariff barriers. So 0:10:17.280 --> 0:10:22.160 when countries like Vietnam or entities like the EU say 0:10:22.200 --> 0:10:24.800 to US, oh, let's all go to zero tariffs and 0:10:25.120 --> 0:10:28.720 everything will be okay, that's not the problem. It's part 0:10:28.800 --> 0:10:32.840 of the problem. But the bigger problem is the non 0:10:33.040 --> 0:10:35.920 tariff barriers in Europe. It's the vat tax. I mean, 0:10:36.559 --> 0:10:38.120 I don't know if you know this, but the United 0:10:38.120 --> 0:10:41.640 States has tried going back to the nineteen seventies to 0:10:41.720 --> 0:10:46.840 get equity treatment for the that tax which most countries 0:10:46.880 --> 0:10:49.439 of the world use versus the income tax which we use. 0:10:49.840 --> 0:10:53.160 We haven't been able to get it because the WTO 0:10:53.840 --> 0:10:56.520 has a majority of people who benefit from sticking it 0:10:56.559 --> 0:11:00.000 to the United States, so they do so. The zero 0:11:00.160 --> 0:11:03.800 road tariff thing, that's that's misdirection and on your set, 0:11:03.840 --> 0:11:07.240 you should call it on that. Let's lower the bad 0:11:07.400 --> 0:11:10.560 terror barriers and let's let's let's give you relief on 0:11:10.640 --> 0:11:13.480 the VAT tax. Now we're talking the VAT. 0:11:13.280 --> 0:11:15.960 Tax is a slightly different mechanism. This is all going 0:11:16.000 --> 0:11:17.400 to take a long time, and there are a lot 0:11:17.400 --> 0:11:20.760 of competing factors here in terms of who can possibly 0:11:21.120 --> 0:11:23.400 pull these levers. And I'm just wondering, we've got two 0:11:23.480 --> 0:11:27.440 months left in this ninety day negotiating period that is 0:11:27.640 --> 0:11:30.560 paused for the retaliatory tariffs. Does that just get extended 0:11:30.600 --> 0:11:32.400 out another ninety days as you have to deal with 0:11:32.440 --> 0:11:35.920 different legislative bodies to possibly remedy what you. 0:11:35.840 --> 0:11:41.600 See, Well, we don't have to deal with legislative body. Well, okay, 0:11:41.720 --> 0:11:44.839 in the EU perhaps, but you know, like coin a 0:11:44.960 --> 0:11:47.200 term in Trump time, which is to say do it 0:11:47.200 --> 0:11:50.120 as fast as possible without screwing it up. And that's 0:11:50.160 --> 0:11:52.120 all we're trying to do. I go back to the 0:11:52.160 --> 0:11:56.880 observation that the United States trade representative and that building, 0:11:56.920 --> 0:11:59.760 which is historic building, by the way, beautiful to see 0:11:59.800 --> 0:12:02.800 if you ever get there. The lines, you know, they're 0:12:02.840 --> 0:12:05.320 they're coming in and out. We're talking, and we're talking, 0:12:05.920 --> 0:12:08.040 and you know, let's as the Boss says, let's see 0:12:08.080 --> 0:12:10.760 what happens. I mean, it's in everybody's interests around the 0:12:10.760 --> 0:12:14.600 world to level the playing field with the United States 0:12:14.640 --> 0:12:18.320 in a way which allows us to restructure this international 0:12:18.360 --> 0:12:22.679 trade environment which is fundamentally skewed against the United States. 0:12:22.679 --> 0:12:25.839 I mean, we're losing because of this system. The United 0:12:25.840 --> 0:12:29.640 States is losing our manufacturing base, We're losing our defense 0:12:29.679 --> 0:12:32.959 industrial base. And when push comes to shev and folks 0:12:33.000 --> 0:12:35.640 around the world are looking for the United States to 0:12:35.800 --> 0:12:38.320 help defend them. I mean, we get to a point 0:12:38.320 --> 0:12:41.280 where we can't do that, what good is that? So trade? 0:12:41.679 --> 0:12:44.560 Trade economic security is national security is one of the 0:12:44.559 --> 0:12:48.000 guiding principles of President Trump in this administration. So we're 0:12:48.040 --> 0:12:51.280 we're just trying to get fairness here, give give fairness 0:12:51.280 --> 0:12:53.200 a chance here, and work with. 0:12:53.160 --> 0:12:54.920 Us looking forward to an update on Mondays. 0:12:55.240 --> 0:12:57.160 It's going to see it once again, sir, Thank you, 0:12:58.440 --> 0:13:01.480 Director of the Office of Trade a Manufacturing Policy at 0:13:01.520 --> 0:13:13.920 the White House. Heading into the weekend, we can extend 0:13:13.920 --> 0:13:17.640 the conversation with Sarah Pianke of eviCore. Sarah, we've had 0:13:17.679 --> 0:13:20.840 positioning now for weeks ahead of these talks. Here they are, 0:13:21.000 --> 0:13:22.760 who's got the leverage? 0:13:24.480 --> 0:13:27.240 Well, look at this point, look, I think China has 0:13:27.240 --> 0:13:29.800 a bit more leverage. But the reality is both sides 0:13:29.840 --> 0:13:32.680 would like these tariffs to come down from these levels that, 0:13:32.760 --> 0:13:36.200 as they all say, are basically an embargo. So I 0:13:36.240 --> 0:13:40.280 think both sides will be delighted to you know, just 0:13:40.400 --> 0:13:43.400 use even good mood music out of these talks to 0:13:43.440 --> 0:13:46.520 take things down to the escalator. So I do expect 0:13:46.520 --> 0:13:48.600 at some point next week we'll see these tariffs come 0:13:48.640 --> 0:13:51.560 down to the sixty percent ranging on the US side, 0:13:51.600 --> 0:13:55.920 and I think I do think China will we'll matchine 0:13:56.360 --> 0:13:56.880 in some way. 0:13:57.160 --> 0:13:58.880 Sarah, how are you thinking about this weekend? Is it 0:13:58.920 --> 0:14:01.199 talks about talks or do you really think that they 0:14:01.200 --> 0:14:03.400 are going to hash out some trade issues. 0:14:05.480 --> 0:14:08.360 I think they are going to hash out minimal trade issues. 0:14:08.360 --> 0:14:10.720 As you know, the one thing we've been saying in 0:14:10.760 --> 0:14:13.880 all these countries is trade. Actual trade talks is hard 0:14:13.920 --> 0:14:17.280 and long, but this is not hard. This is trying 0:14:17.360 --> 0:14:21.400 to get down to something just manageable. While they begin talk, 0:14:21.520 --> 0:14:24.320 so I think they'll they will talk about rare earths, 0:14:24.360 --> 0:14:27.720 they will talk about some of these other issues, perhaps 0:14:27.720 --> 0:14:31.600 if you purchase agreements, but in general, everybody wants this 0:14:31.640 --> 0:14:35.320 to come down from these unsustainable levels and then which 0:14:35.320 --> 0:14:39.200 by the way, sixty to fifty percent still really really high, 0:14:39.320 --> 0:14:42.000 then that can at least, do you know, put us 0:14:42.000 --> 0:14:45.320 on a path for an actual discussion, an actual outline 0:14:45.520 --> 0:14:46.400 of what they're trying. 0:14:46.240 --> 0:14:47.720 To achieve to drop that rate. 0:14:47.800 --> 0:14:50.000 Does the US need to see a concession from Beijing. 0:14:51.960 --> 0:14:54.200 I don't think so. I think, look, they have to 0:14:54.240 --> 0:14:57.320 make sure it doesn't appear that it's just a purely 0:14:57.520 --> 0:15:00.520 unilateral a walk away. But I I think they can 0:15:00.600 --> 0:15:03.640 use the cover of a good conversation, a commitment on 0:15:04.320 --> 0:15:06.600 a small commitment on fetanol. I think it can be 0:15:06.720 --> 0:15:11.640 largely symbolic or policies that perhaps are already in place. 0:15:11.720 --> 0:15:14.800 Pretty much. I don't think there's a lot here, because 0:15:14.880 --> 0:15:18.720 again I think Beijing has a lot more patience and 0:15:19.080 --> 0:15:22.240 pain tolerance in the United States. But nobody's really happy 0:15:22.280 --> 0:15:23.280 with where we're at right now. 0:15:23.440 --> 0:15:23.640 Sarah. 0:15:23.680 --> 0:15:26.160 We're hearing from the President right now saying China should 0:15:26.200 --> 0:15:28.320 open up its market to the USA. It would be 0:15:28.360 --> 0:15:31.360 good for them. Closed markets don't work anymore. 0:15:31.720 --> 0:15:32.040 Sarah. 0:15:32.120 --> 0:15:34.480 You lift some of these negotiations with the Chinese before 0:15:34.960 --> 0:15:38.480 as the deputy US trained representative in a previous administration. 0:15:38.920 --> 0:15:41.280 How difficult is it to get China to move to 0:15:41.320 --> 0:15:43.200 where the US would like it to be. What is 0:15:43.240 --> 0:15:45.080 it that they're refusing to open up that we'd like 0:15:45.160 --> 0:15:46.520 to see them open up? 0:15:49.280 --> 0:15:51.760 Well, I'm not sure that opening up is really kind 0:15:51.760 --> 0:15:56.000 of what honestly, what where the tensions really are? To 0:15:56.000 --> 0:15:59.880 be honest, last time the President got trying to agree 0:16:00.040 --> 0:16:03.160 to a bunch of purchase agreements, a particularly around ag 0:16:03.840 --> 0:16:07.560 I had the honor of trying to see if those 0:16:07.600 --> 0:16:10.720 were enforceable. There was not a lot. There was pretty 0:16:10.720 --> 0:16:12.800 clear that China wasn't going to do that, And so 0:16:12.880 --> 0:16:15.160 one of the challenges is not just what the agreement is, 0:16:15.200 --> 0:16:19.200 but does anybody actually ever listen to it? The truth is, 0:16:19.240 --> 0:16:22.320 what China really wants from the US is more access 0:16:22.320 --> 0:16:25.520 to some of our technology and chips, and that's why 0:16:25.560 --> 0:16:29.000 we always think this quote grand bargain is very very difficult. 0:16:29.600 --> 0:16:31.160 We think the best you can do is sort of 0:16:31.200 --> 0:16:34.880 a package of trades and exchanges and maybe a little 0:16:34.880 --> 0:16:38.040 bit more market opening, but that's really not the core 0:16:38.040 --> 0:16:38.720 of the issue. 0:16:38.880 --> 0:16:41.520 Sarah, I appreciate your time, as always, so Yankee out 0:16:41.560 --> 0:16:54.280 of the call with this around of table relationship of 0:16:54.400 --> 0:16:56.440 being my wilth alisiha good moniic in warning you were 0:16:56.440 --> 0:16:58.320 following that conversation he said he didn't want to get 0:16:58.320 --> 0:17:01.120 ahead of negotiations this week, and what's the best case 0:17:01.480 --> 0:17:02.240 Monday morning? 0:17:02.480 --> 0:17:03.440 What do we waking up to? 0:17:04.040 --> 0:17:06.760 So you know, at six am the best case was 0:17:06.800 --> 0:17:10.159 a fifty or sixty percent tariff rate and ten percent universal, 0:17:10.760 --> 0:17:13.560 and then an hour later it was eighty percent tariffs 0:17:13.800 --> 0:17:17.760 on China. The news changes quickly. Interestingly, the markets have 0:17:17.840 --> 0:17:19.840 been hanging in there. I mean, the futures actually have 0:17:19.960 --> 0:17:23.280 not reacted to that, And I think the message that 0:17:23.359 --> 0:17:26.800 the markets have learned is that this is one grand 0:17:26.800 --> 0:17:30.360 negotiating strategy and there's good cop bad cop in the administration. 0:17:30.840 --> 0:17:33.560 And it's very clear with what the direction of travel is, 0:17:33.600 --> 0:17:36.800 and the direction of travel is lowering of the tariffs 0:17:37.080 --> 0:17:40.360 and getting to deals. I think it's also no accident 0:17:40.400 --> 0:17:43.879 that doctor Navarro was on today before the negotiations in 0:17:43.880 --> 0:17:47.479 Switzerland this weekend, since he has seen to be the 0:17:47.520 --> 0:17:51.800 most hawkish when it comes to tariffs and particularly on China. 0:17:51.880 --> 0:17:55.760 So if this is part of a negotiating strategy, I 0:17:55.760 --> 0:17:58.400 think the markets have learned it's a negotiating strategy. 0:17:58.480 --> 0:17:59.760 So what do you make. 0:17:59.600 --> 0:18:01.360 Of that idea that there's been sort of I don't 0:18:01.400 --> 0:18:04.000 want to say benumbing of markets, but the response to 0:18:04.040 --> 0:18:06.520 headlines has been coming in again and again. Does that 0:18:06.600 --> 0:18:07.879 give you actually a sense of comfort? 0:18:08.080 --> 0:18:08.199 Oh? 0:18:08.280 --> 0:18:11.760 Yes, I mean, look what really happened, you know somehow 0:18:11.880 --> 0:18:15.280 April ninth was the ninety day pause. Was the message 0:18:15.280 --> 0:18:18.840 to markets that were moving the whole probability curve over 0:18:18.920 --> 0:18:22.560 to the right and the worst tailed scenario, that highest 0:18:22.640 --> 0:18:25.240 risk tail scenario is actually off the table. That's why 0:18:25.280 --> 0:18:28.439 the markets were able to rally and bounced off the lows. 0:18:29.160 --> 0:18:31.040 That continues to be the case. And if you think 0:18:31.040 --> 0:18:33.080 about it just in terms of numbers, because this business 0:18:33.119 --> 0:18:37.840 is all about numbers. The original tariffs of April seconds 0:18:38.200 --> 0:18:42.640 were about six hundred billion worth of tariffs six hundred 0:18:42.680 --> 0:18:47.320 billion dollars, which was basically attacks of two percent on 0:18:47.400 --> 0:18:49.840 the US economy. US economy is about thirty trillion dollars 0:18:49.880 --> 0:18:53.000 of GDP, so six hundred billion in tariffs was about 0:18:53.000 --> 0:18:55.879 two percent hit, which is why you had the odds 0:18:55.880 --> 0:18:58.359 of recession go straight up, because if you think growth 0:18:58.400 --> 0:19:00.359 rates are about two percent, you put it too percent 0:19:00.480 --> 0:19:03.360 tax on it, you get to zero. Now, with all 0:19:03.400 --> 0:19:07.720 the walkbacks, worried about four hundred billion in tarras. Okay, 0:19:07.760 --> 0:19:09.800 so we've walked back about one third of that, and 0:19:09.840 --> 0:19:12.080 I think ultimately we get to somewhere of about two 0:19:12.160 --> 0:19:15.320 hundred billion in Tariff's still very high, but it's not 0:19:15.359 --> 0:19:17.080 a two percent hit to the economy. And that's what 0:19:17.119 --> 0:19:19.560 the market's been pricing in the whole time. Earnings are 0:19:19.600 --> 0:19:22.640 probably higher for next year than that immediate base case 0:19:22.680 --> 0:19:26.520 in April second, and at some point the markets are 0:19:26.520 --> 0:19:29.040 going to look to twenty twenty six, and by the 0:19:29.080 --> 0:19:31.560 summer we're looking at twenty six and not twenty five anymore. 0:19:31.560 --> 0:19:33.000 And I think that's what's happening in the market. 0:19:33.119 --> 0:19:35.480 Weekend, and a weekend this weekend doesn't feel like it 0:19:35.480 --> 0:19:36.640 doesn't not in this business. 0:19:36.720 --> 0:19:39.239 I mean, I mean, look, we've all glued to our 0:19:39.280 --> 0:19:41.760 screens for a long time. So there's now weekend, there's 0:19:41.800 --> 0:19:43.360 the Sunday nights checking the futures. 0:19:43.760 --> 0:19:44.760 We're going to do that again. 0:19:45.840 --> 0:19:49.200 But I think the intensity of it, as I said, 0:19:49.720 --> 0:19:52.480 the markets have learned, this is negotiating. This is a 0:19:52.520 --> 0:19:56.520 negotiation with doctor Navarro on to set the stake in 0:19:56.560 --> 0:20:01.000 the ground, to commit the US on unnegotiating. 0:20:01.040 --> 0:20:13.840 Saturday, Denis went bust ranking. We're saying China tech waking 0:20:13.960 --> 0:20:17.360 up to the revolution with the US Chinese trite sensions 0:20:17.520 --> 0:20:20.080 abound down John's staff for more. Alongside of Leasha to 0:20:20.680 --> 0:20:22.920 NY Town, it's going to say a sink we kind 0:20:22.920 --> 0:20:24.760 of tried tos Why does tech fits in? 0:20:25.000 --> 0:20:25.639 It's all of this. 0:20:26.240 --> 0:20:28.719 Look, I think Tech news that they're walking back from 0:20:28.800 --> 0:20:30.720 the cliff in terms of what they're going to need 0:20:30.760 --> 0:20:35.159 to do right because the reality is that that's the hearts. 0:20:34.880 --> 0:20:36.040 And lungs of the supply chain. 0:20:36.160 --> 0:20:39.800 And I think what you've seen the Nvidia moment really 0:20:40.000 --> 0:20:44.000 essentially giving Huawei the China market. I think that was 0:20:44.040 --> 0:20:45.960 really that was the start of this. I think it 0:20:46.040 --> 0:20:48.080 was the start of the administration recognized they're gonna have 0:20:48.119 --> 0:20:51.399 to pull back, pull back, and look, you can't you 0:20:51.480 --> 0:20:52.639 can't argue with the data. 0:20:53.119 --> 0:20:56.640 How self sufficient is Chinese tech without US tech? 0:20:57.359 --> 0:21:00.280 Look, they need US tech. But which is be someone 0:21:00.320 --> 0:21:02.200 that spends so much time in China. I mean if 0:21:02.280 --> 0:21:05.360 you put them in a room with a Selser bottle, 0:21:05.600 --> 0:21:08.560 toothpick and you know, in a straw, they come out 0:21:08.600 --> 0:21:11.000 with an AI chip. So the problem is is that 0:21:11.640 --> 0:21:14.840 you don't want to put China in the situation that 0:21:15.000 --> 0:21:18.680 they're going to have to ultimately innovate, because it's my view, 0:21:18.840 --> 0:21:20.760 for the first time in thirty years, the US has 0:21:20.800 --> 0:21:23.800 been ahead of China when it comes to tech. So 0:21:23.840 --> 0:21:25.680 the last thing you want to do is cut US 0:21:25.800 --> 0:21:28.240 tech off at the knees. And I think now the 0:21:28.320 --> 0:21:31.800 administration is part what we're seeing in the market. They've 0:21:31.840 --> 0:21:34.439 taken steps back and I think now at least getting 0:21:34.840 --> 0:21:38.400 to some sort of balance. But still look, a lot 0:21:38.400 --> 0:21:40.840 of you know, definitely allow more wood to chop ahead. 0:21:40.920 --> 0:21:43.439