WEBVTT - Trump Tariffs Spark Quick Retaliation 0:00:02.720 --> 0:00:10.520 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.480 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:18.479 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.600 --> 0:00:21.800 Listen on demand wherever you get your podcasts, or watch 0:00:21.920 --> 0:00:23.480 us live on YouTube. 0:00:24.440 --> 0:00:26.840 Ale Steeler alongside Paul Sweeney. This is Bloomberg in Best 0:00:26.840 --> 0:00:29.080 twenty twenty five. We are down here at the New 0:00:29.120 --> 0:00:32.480 York Financial District. This is where all the big names 0:00:32.479 --> 0:00:36.560 in finance, banking, asset managers, private credit, private equity all 0:00:36.560 --> 0:00:40.280 come together and talk about the way forward. And part 0:00:40.280 --> 0:00:42.280 of that way forward is the policy that's going to 0:00:42.320 --> 0:00:45.120 come out of Washington, d C and any more insight. 0:00:45.159 --> 0:00:47.000 We'll get on that on tonight's State of the Union 0:00:47.080 --> 0:00:48.800 with President Trump. So we want to go to DC 0:00:48.920 --> 0:00:53.760 with Nathan Dean. He's Bloomberg Intelligence senior policy analyst. Nathan. 0:00:53.760 --> 0:00:56.720 There's so much to unpack here, but markets are down, 0:00:57.360 --> 0:01:00.600 trade wars on does President Trump we'll get a stock 0:01:00.600 --> 0:01:01.200 market today? 0:01:03.200 --> 0:01:04.040 No, I don't think so. 0:01:04.120 --> 0:01:06.399 I mean I think President Trump this is a long 0:01:06.480 --> 0:01:09.320 term message from the White House in terms of these tariffs. 0:01:09.840 --> 0:01:11.840 You know, look, you know President Trump has been saying 0:01:11.840 --> 0:01:13.920 for months the tariffs are his favorite word or maybe 0:01:13.959 --> 0:01:16.679 his fourth favorite word, depending on when he talks about it. 0:01:16.720 --> 0:01:19.280 But you know, and I think this was anticipated. I 0:01:19.280 --> 0:01:21.400 mean everybody was thinking, you know, is he going to 0:01:21.440 --> 0:01:23.200 do this? Is he not going to do this? But 0:01:23.240 --> 0:01:24.800 tariff's were going to come. It was just a matter 0:01:24.840 --> 0:01:27.720 of the size and the scope. Now, look, President Trump negotiates, 0:01:27.720 --> 0:01:30.319 That's what he does. There's always going to be a negotiation. 0:01:30.400 --> 0:01:32.520 But the response that we have seen from Ottawa and 0:01:32.560 --> 0:01:35.880 Mexico City today suggests that those negotiations are going to 0:01:35.880 --> 0:01:36.880 be taking place right away. 0:01:37.040 --> 0:01:38.280 This is going to need some time to cook. 0:01:38.319 --> 0:01:39.720 So I think what you're going to see tonight in 0:01:39.720 --> 0:01:41.960 this joint address to Congress is you're going to see 0:01:41.959 --> 0:01:44.520 President Trump double down on this idea of tariffs, an 0:01:44.560 --> 0:01:48.320 idea of bringing back manufacturing jobs to the United States. 0:01:48.600 --> 0:01:51.120 His true social posts about farmers growing stuff in the 0:01:51.200 --> 0:01:53.120 United States to sell in the United States. That's the 0:01:53.160 --> 0:01:55.600 message to which you're going to hear tonight. Wall Street 0:01:55.600 --> 0:01:57.240 probably isn't going to like that, but I don't think 0:01:57.240 --> 0:01:58.840 you're going to see any reaction from the White House 0:01:58.840 --> 0:01:59.760 in terms of Wall Street. 0:02:00.120 --> 0:02:01.320 A couple of weeks at the earliest. 0:02:04.000 --> 0:02:06.080 So, Nathan, what is the feeling in a d C 0:02:06.320 --> 0:02:10.600 amongst you know, Congress, just the system, theocracy about where 0:02:10.639 --> 0:02:11.440 this is all going here. 0:02:12.520 --> 0:02:14.680 Yeah, so there's gonna be a lot of uneasy, especially 0:02:14.680 --> 0:02:16.960 amongst the Republicans in terms of these tariffs. 0:02:16.960 --> 0:02:19.320 You know, Senator Rampaul even just tweeted two. 0:02:19.200 --> 0:02:23.040 Hours ago that look, tariffs are going to increase prices, 0:02:23.080 --> 0:02:25.840 and he cited automobiles that you know, auto prices are 0:02:25.880 --> 0:02:27.800 going to go up as a result of these tariffs. 0:02:28.000 --> 0:02:31.639 Senator Grassley from Iowa, he's gonna have any problem this 0:02:31.639 --> 0:02:33.720 this tonight as well, because, as President Trump says in 0:02:33.760 --> 0:02:36.040 the speech, look what I did in terms of the tariffs, 0:02:36.120 --> 0:02:38.799 will China put retialitary tariffs on soybeans? And there's a 0:02:38.840 --> 0:02:41.960 lot of soybeans that go to China from the United States. 0:02:42.120 --> 0:02:43.679 So I think what's going to happen is over the 0:02:43.760 --> 0:02:45.160 next few days. In terms of this. 0:02:45.280 --> 0:02:48.240 Republican response is they're going to wait and wait to 0:02:48.280 --> 0:02:49.040 see what happens. 0:02:49.040 --> 0:02:49.200 Now. 0:02:49.240 --> 0:02:51.400 Target is best and Best Buy have already said the 0:02:51.520 --> 0:02:53.240 price increases are probably going to be coming in the 0:02:53.240 --> 0:02:55.560 next few days. Is this enough to get President Trump 0:02:55.600 --> 0:02:56.280 to change his mind. 0:02:56.480 --> 0:02:56.960 Probably not. 0:02:57.200 --> 0:02:59.880 But as these farmers talk to folks like Senator Grassley, 0:03:00.160 --> 0:03:02.840 they're going to be saying, look, soybeans are down, we don't. 0:03:02.720 --> 0:03:04.280 Have a place to sell. So if you're not going 0:03:04.360 --> 0:03:05.800 to give us a tariff relief. 0:03:05.560 --> 0:03:07.640 Then you have to give us subsidies via a farm 0:03:07.639 --> 0:03:10.680 bill package. So there's a lot of unease negotiations here 0:03:10.720 --> 0:03:12.720 to be taking place between Congress and the White House 0:03:12.919 --> 0:03:14.239 over this tariff policy. 0:03:16.400 --> 0:03:18.840 Which is what we heard from Justin Trudeau of Canada 0:03:18.880 --> 0:03:20.959 saying we're going to support businesses that are going to 0:03:21.000 --> 0:03:23.640 be hit by these tariffs when he was speaking earlier today. 0:03:24.080 --> 0:03:26.799 So this all comes ahead of the State of the Union. Nathan, 0:03:27.000 --> 0:03:29.000 what's going to be say the top one or two 0:03:29.120 --> 0:03:32.560 things that you need to hear to help I don't know, 0:03:32.680 --> 0:03:35.560 make a policy decision, have conviction on where we're headed. 0:03:36.520 --> 0:03:40.040 Yeah, So when it comes to tariffs in particular, I'm 0:03:40.080 --> 0:03:42.520 not exactly sure what President like, Look, we're going to 0:03:42.560 --> 0:03:44.560 be seeing if there's any nuggets that President Trump says 0:03:44.560 --> 0:03:46.880 in this speech that Canada and Mexico can come back with. 0:03:47.120 --> 0:03:49.280 Now President Trump has always said this is about fentanyl. 0:03:49.560 --> 0:03:51.680 You know, I'm not exactly sure if I believe that 0:03:51.840 --> 0:03:53.840 the reason being is is that, you know, the Canada 0:03:53.840 --> 0:03:56.440 and Mexico agreement from one month ago, ten thousand troops 0:03:56.480 --> 0:03:58.760 on the border and so forth. Prime Minister Trudeau even 0:03:58.840 --> 0:03:59.840 just said this morning that. 0:04:00.040 --> 0:04:00.600 They've done that. 0:04:00.920 --> 0:04:02.760 What I need to see from President Trump is this 0:04:02.880 --> 0:04:05.720 idea of is there any way that we could scale 0:04:05.800 --> 0:04:08.920 down the Canada and Mexico tariffs, Because if you remember 0:04:08.960 --> 0:04:11.640 over the weekend, Howard luck Nick was saying that potentially 0:04:11.680 --> 0:04:14.880 there's some flexibility here, and so I'm looking to see 0:04:14.920 --> 0:04:17.679 if there's any additional statements that he says that Mexico 0:04:17.680 --> 0:04:20.040 and Canada can do. But I also remind folks that 0:04:20.120 --> 0:04:22.880 on April second, we have reciprocal tariffs. So if President 0:04:22.920 --> 0:04:25.520 Trump double downs and says, look, reciprocal tariffs are coming, 0:04:25.720 --> 0:04:27.080 I don't think you're going to see much of the 0:04:27.120 --> 0:04:30.279 way of this trade war ending anytime soon. The other 0:04:30.279 --> 0:04:32.360 thing that I think investors should pay attention to tonight 0:04:32.440 --> 0:04:35.039 is this tax reform debate, because President Trump has said 0:04:35.080 --> 0:04:37.120 certain things like, look, I don't want I want to 0:04:37.120 --> 0:04:39.719 make these four point five trillion dollars in tax cuts permanent. 0:04:39.920 --> 0:04:41.240 But at the same time, I don't want to touch 0:04:41.279 --> 0:04:42.120 medicaid spending. 0:04:42.440 --> 0:04:44.920 So I want to see direction from President Trump towards 0:04:45.000 --> 0:04:48.160 Congress and specifically those House Republicans, to see if he's 0:04:48.200 --> 0:04:50.560 going to put any leverage on them to support his 0:04:50.640 --> 0:04:51.239 goals there. 0:04:54.080 --> 0:04:57.840 So, what is the status of the tax package and 0:04:57.839 --> 0:05:00.320 the various economic packages, because a lot of folks Nathan 0:05:00.279 --> 0:05:02.560 and to telling me this is when the rubber's going 0:05:02.640 --> 0:05:06.479 to hit the road in terms of Democratics responses. 0:05:07.600 --> 0:05:10.160 Yeah, so you know, in terms of this tax passage, 0:05:10.200 --> 0:05:12.440 where we are is the House passed their budget resolution 0:05:12.520 --> 0:05:15.400 last week. Now, this wasn't a bill, this wasn't legislation. 0:05:15.480 --> 0:05:18.280 This was essentially a blueprint. And so what they said 0:05:18.400 --> 0:05:21.279 is here, go forth, and this gave instructions to eight 0:05:21.279 --> 0:05:23.680 House committees to go forth and look for two trillion 0:05:23.680 --> 0:05:26.480 dollars worth of tax or two trillion dollars worth of 0:05:26.880 --> 0:05:30.479 deficit reductions to offset the four point five trillion and 0:05:31.120 --> 0:05:33.560 the tax cuts are going to cost. Now, there's economic growth, 0:05:33.560 --> 0:05:36.239 there's tariff money, and all of it should come approximately close. 0:05:36.560 --> 0:05:39.520 The challenge is is that even though the House says 0:05:39.520 --> 0:05:41.240 that they want to get something done in April, if 0:05:41.279 --> 0:05:43.160 not May, the challenge is how are you going to 0:05:43.240 --> 0:05:44.640 pay for this and how are you going to get 0:05:44.640 --> 0:05:48.440 the entire caucus on CREED Because if you cut Medicaid, 0:05:48.560 --> 0:05:52.560 you've already lost several constituencies. If you increase the deficit, 0:05:52.640 --> 0:05:55.400 you lost others. So, you know, Speaker Johnson has this 0:05:55.440 --> 0:05:57.880 really tricky situation of trying to get everybody on the 0:05:57.880 --> 0:06:00.320 same page. What we're telling our clients is, look, there's 0:06:00.400 --> 0:06:02.960 no deadline here that's going to force the House Republicans 0:06:03.080 --> 0:06:05.120 to come up with a solution until the end of 0:06:05.160 --> 0:06:07.440 the year, So they have all this year to figure 0:06:07.480 --> 0:06:09.000 it out. So we don't think this is going to 0:06:09.000 --> 0:06:11.560 happen until the fourth quarter. We do think a package 0:06:11.600 --> 0:06:13.719 will eventually come together. We do think will you know, 0:06:13.760 --> 0:06:16.160 extend these Trump Are tax cuts, But we don't think 0:06:16.160 --> 0:06:18.400 it's going to change the Inflation Reduction Act all that much. 0:06:18.440 --> 0:06:20.400 We probably don't think it's going to change medicate all 0:06:20.400 --> 0:06:22.920 that much, you know. But again, it's hard to come 0:06:23.000 --> 0:06:24.719 up with specifics because they have the rest of the 0:06:24.800 --> 0:06:26.680 year to figure it out. It's just not going to 0:06:26.720 --> 0:06:28.960 happen in the timeframe that they're currently saying it's going to. 0:06:31.480 --> 0:06:33.599 Right and that therein lies the issue for the market. 0:06:33.760 --> 0:06:36.920 So the stuff that's negatively impacting the markets, like tariffs, 0:06:36.920 --> 0:06:39.839 Trump can do on his own and have an immediate effect. 0:06:40.120 --> 0:06:42.039 But the stuff you're talking about, like tax cuts that 0:06:42.040 --> 0:06:44.680 can have a stimulati effect on the markets can't be 0:06:44.800 --> 0:06:47.279 just done by President Trump, has to be done by Congress. 0:06:47.320 --> 0:06:50.000 So the longer that gap is, you have to wonder 0:06:50.000 --> 0:06:52.720 if it's going to be harder for the markets to digest. 0:06:53.720 --> 0:06:54.640 Yeah, absolutely so. 0:06:54.680 --> 0:06:57.279 If you think about twenty twenty five and think about catalysts, 0:06:57.400 --> 0:06:59.479 key things that are happening, you know, right now we're 0:06:59.480 --> 0:07:01.520 going through the tree. The trade war is probably the 0:07:01.600 --> 0:07:04.640 most important thing that's to the markets at this point 0:07:04.839 --> 0:07:07.000 because look, we're seeing it in real time. You know, 0:07:07.000 --> 0:07:08.880 we're seeing companies saying prices are going to go up. 0:07:08.880 --> 0:07:11.280 We're seeing the peso and the Canadian dollar go down. 0:07:11.640 --> 0:07:13.640 But then if you get longer term, we have you know, 0:07:13.640 --> 0:07:16.520 we have a government shutdown coming up March fourteenth, very 0:07:16.560 --> 0:07:19.280 little impact in markets. In fact, every single time this happens, 0:07:19.560 --> 0:07:22.360 we put out notes essentially saying there's no market impact 0:07:22.400 --> 0:07:24.680 from a government shutdown. Next after that you have the 0:07:24.720 --> 0:07:27.360 debt ceiling. This is probably June July you know, obviously, 0:07:27.400 --> 0:07:29.440 if you're on the fixed income side, you care very 0:07:29.520 --> 0:07:31.720 much about the debt ceiling. We think there's an eighty 0:07:31.720 --> 0:07:34.280 percent chance that debt ceiling is resolved with so weekend. 0:07:34.440 --> 0:07:36.280 Don't think it a lot of headline risk. We don't 0:07:36.280 --> 0:07:38.200 think there's really all that much to be concerned about. 0:07:38.360 --> 0:07:40.320 But then the next one is this tax reform debate 0:07:40.400 --> 0:07:42.600 that takes place towards the end of this year. 0:07:42.920 --> 0:07:45.239 So this terrify argument in terms of market angst. 0:07:45.560 --> 0:07:48.160 This is going to continue throughout the year because ultimately 0:07:48.200 --> 0:07:51.960 it's President Trump's decision on when in this trade war ends, 0:07:52.360 --> 0:07:54.920 and so there's a lot of uncertain certainties that are 0:07:54.920 --> 0:07:56.560 coming out from Washington right now. 0:07:59.480 --> 0:08:01.440 All Rightandean, thank you so much. We appreciate that. 0:08:01.560 --> 0:08:04.880 Nathan Dean, a Bloomberg Intelligence Senior policy analyst. 0:08:06.520 --> 0:08:10.239 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:10.320 --> 0:08:13.679 weekdays at ten am Eastern on Applecarplay and Android Otto 0:08:13.800 --> 0:08:16.880 with the Bloomberg Business App. Listen on demand wherever you 0:08:16.920 --> 0:08:20.800 get your podcasts, or watch us live on YouTube. 0:08:20.960 --> 0:08:23.400 We're at the Bloomberg invest Conference twenty twenty five. Are 0:08:23.400 --> 0:08:26.080 down there Lower Manhattan World Financial Center now known as 0:08:26.120 --> 0:08:30.640 Brookfield Place. Lots of smart people at this conference giving 0:08:30.720 --> 0:08:32.199 us the latest thoughts on what's going on in the 0:08:32.240 --> 0:08:35.439 world of global finance, including our next guest, Robert Rubin, 0:08:35.640 --> 0:08:38.520 senior counselor at Center View Partners send me to the 0:08:38.800 --> 0:08:41.720 US Secretary of the Treasury and also former a senior 0:08:41.760 --> 0:08:43.760 partner at Goldman Sachs. 0:08:43.960 --> 0:08:45.280 Bob, thanks so much for joining us here. 0:08:45.280 --> 0:08:47.720 There's a million topics we could go with you, but 0:08:48.080 --> 0:08:50.040 for better or worse, Bob, I think today is going 0:08:50.080 --> 0:08:52.040 to be known as tariff Tuesday when the tariffs hit. 0:08:52.480 --> 0:08:54.720 Financial markets are really waking up over the last several 0:08:54.800 --> 0:08:57.040 days and weeks about what this could mean for our 0:08:57.040 --> 0:08:58.599 economy in terms of growth. 0:08:58.360 --> 0:08:59.200 In terms of inflation. 0:09:00.000 --> 0:09:02.360 How do you think about tariffs in general and maybe 0:09:02.400 --> 0:09:04.200 how they're being used by this administration. 0:09:04.360 --> 0:09:06.480 Yeah, I think I think terriffs are exactly what you 0:09:06.520 --> 0:09:08.480 just said. I think they create a very serious risk 0:09:08.559 --> 0:09:11.880 of inflation, not only because prices of imported good will 0:09:11.880 --> 0:09:14.079 be higher, but domestic producers will be able to raise 0:09:14.120 --> 0:09:17.320 prices because their competitive prices will be higher. But also 0:09:17.360 --> 0:09:20.600 I think it's a substantial threat to growth because it 0:09:20.679 --> 0:09:23.400 can adversely affect productivity since you can no longer have 0:09:23.800 --> 0:09:25.920 access to whatever is the most efficient producer of good 0:09:25.960 --> 0:09:28.840 and services. And as you can see from today's papers, 0:09:29.120 --> 0:09:31.319 there's a very serious risk of retaliation, you know. More 0:09:31.360 --> 0:09:34.960 broadly though, and that's a serious set of risks right. 0:09:35.120 --> 0:09:37.000 More broadly, I think there's the risk of a trade war, 0:09:37.640 --> 0:09:40.000 and trade war could be tremendously against ours. This whole 0:09:40.040 --> 0:09:43.960 thing is against our self interest. And there's one more 0:09:44.000 --> 0:09:46.160 aspect to it though that unfortunately has not gotten much 0:09:46.280 --> 0:09:50.120 front focus. But should we have treaty agreements with Maganada 0:09:50.120 --> 0:09:53.520 and Mexico. We are now violating our commitments, our treaties, 0:09:53.800 --> 0:09:55.320 and what is that going to do to our credibility 0:09:55.320 --> 0:09:58.280 around the world, not only expect economic issues, but geopolitical interest. 0:09:58.400 --> 0:10:00.000 This is massively against our self interests. 0:10:00.320 --> 0:10:02.480 At the heart of what the trub administration is trying 0:10:02.520 --> 0:10:06.839 to do economically is pivot from fiscally funded economy to 0:10:06.920 --> 0:10:10.240 a privately funded economy, right at the heart. No, you 0:10:10.280 --> 0:10:11.160 don't think that's true. 0:10:11.240 --> 0:10:12.480 I have no idea what they're trying to do. 0:10:13.559 --> 0:10:15.360 There is an argument to be made, sure they know 0:10:15.400 --> 0:10:16.680 what they're trying to but there's an argument to be 0:10:16.720 --> 0:10:19.440 made that that's what they prefer, right, less fiscal stimulus 0:10:19.440 --> 0:10:20.400 and more private investment. 0:10:20.440 --> 0:10:22.400 And that's why Wait now, but wait a second, you 0:10:22.400 --> 0:10:25.440 say less fiscal stimulus. Yes, assuming that they get what 0:10:25.480 --> 0:10:27.880 they want in the reconciliation bill, that is to say, 0:10:28.320 --> 0:10:31.040 they get these large additional tax or the continuation of 0:10:31.040 --> 0:10:33.800 the tax cuts which would otherwise expire this year, that 0:10:33.800 --> 0:10:38.920 will substantially increase our deficits. The projections are that, independently 0:10:38.960 --> 0:10:41.040 of them, deficits going to continue to go up substantially, 0:10:41.080 --> 0:10:43.319 and with them even more so. So I would say 0:10:43.320 --> 0:10:46.920 they're on a fiscally irresponsible and I think very dangerous paths. Well, 0:10:46.960 --> 0:10:50.160 that's a continuation of conditions have been they're making the worse. 0:10:51.080 --> 0:10:55.280 So you mentioned the debt annual deficits. I've been on 0:10:55.280 --> 0:10:57.200 a wall street since nineteen eighty six. That's been a 0:10:57.240 --> 0:10:59.760 story since nineteen eighty six. It's probably well before. That 0:11:00.760 --> 0:11:03.440 is our scenario where we really have to pay attention to. 0:11:03.640 --> 0:11:06.120 Yeah, I think I think we're really I think we've 0:11:06.160 --> 0:11:08.640 been at that point for quite some time. But but 0:11:08.640 --> 0:11:12.960 but the we are about we're in new territory now. 0:11:13.440 --> 0:11:15.680 Roughly speaking, we're at historic highs in terms of the 0:11:15.679 --> 0:11:18.840 debt GDP ratio. The CBO projects that they're going to 0:11:18.840 --> 0:11:20.559 go from the current hundred percent to about one hundred 0:11:20.559 --> 0:11:23.959 and twenty percent ten years from now. But add independent 0:11:23.960 --> 0:11:27.320 analysts by looking at increase or likely increases in defense 0:11:27.360 --> 0:11:29.800 and interest rates, and it's costuil, et cetera. I think 0:11:29.960 --> 0:11:31.480 one hundred and thirty to one hundred and thirty five 0:11:31.520 --> 0:11:34.200 percent is more likely. I think it is enormously dangerous. 0:11:34.240 --> 0:11:37.840 And the policies of this administration, at least as currently projected, 0:11:38.000 --> 0:11:38.959 are going to make that worse. 0:11:39.320 --> 0:11:40.800 So how do we fix it? I mean, Ray Dalio 0:11:40.840 --> 0:11:43.120 said yesterday the debt crisis in three years could look 0:11:43.120 --> 0:11:43.840 like a heart attack. 0:11:43.960 --> 0:11:46.000 Yeah, I saw, I saw raise coment, So I'm not 0:11:46.040 --> 0:11:47.880 sure exactly where he gets that from, but anyway, but 0:11:47.960 --> 0:11:49.800 I think but I think it's sort of conception. At 0:11:49.880 --> 0:11:52.080 least he's right with the heart attack. I'm not sure 0:11:52.080 --> 0:11:54.000 I would use that analogy. I think Taylor and I 0:11:54.040 --> 0:11:56.719 think is more likely than raise will raise are very 0:11:56.760 --> 0:11:58.880 perceptive and stute observation observer. 0:11:59.160 --> 0:11:59.199 No. 0:11:59.360 --> 0:12:02.319 I think more likely is you'll have a higher interest rates, 0:12:02.360 --> 0:12:06.040 You'll have a reduced business confidence, you'll have fewer resources 0:12:06.040 --> 0:12:08.320 for public investment and national security, and that will happen 0:12:08.400 --> 0:12:10.400 over time. The risk is that at some point it 0:12:10.440 --> 0:12:13.120 becomes what Ragios said, which is a fiscal crisis. The 0:12:13.200 --> 0:12:17.880 problem is to deal with this. We can cut some expenses, 0:12:18.120 --> 0:12:19.800 but there's not that much to be cut. As a 0:12:19.840 --> 0:12:22.719 practical matter, it is very limited. Which you predominantly need 0:12:22.760 --> 0:12:26.360 are more revenues, and the politics of that are terrible. 0:12:27.400 --> 0:12:30.320 This administration says the tariffs because the more revenues. Two 0:12:30.360 --> 0:12:33.520 problems there. One is the rift will provide revenues, but 0:12:33.559 --> 0:12:35.760 same time they're going to adversely affect growth most likely, 0:12:35.840 --> 0:12:37.240 and if you look at models, and I have looked 0:12:37.280 --> 0:12:40.320 at models of this, the net effect is very small 0:12:40.600 --> 0:12:44.120 and secondly is highly adverse with respect to growth and inflation. 0:12:44.920 --> 0:12:47.719 And as I said a moment ago, it means a 0:12:47.800 --> 0:12:50.920 violation or that's what we're doing, a violation of treaty obligations, 0:12:50.960 --> 0:12:53.120 which then can affect our credibility around the world, which 0:12:53.160 --> 0:12:55.480 can affect us both that geo politically and economically. 0:12:55.960 --> 0:13:00.400 Another pillar of this administration is immigration, getting a maybe 0:13:00.400 --> 0:13:03.720 a stronger handle on immigration, legal and illegal, maybe even 0:13:03.760 --> 0:13:07.760 deporting some workers back. A lot of economists will say 0:13:07.960 --> 0:13:10.120 that's not good for the economy either. Because these folks 0:13:10.160 --> 0:13:13.080 are working, they're paying their Social Security taxes, they're doing 0:13:13.120 --> 0:13:15.600 jobs that Americans don't do. It's actually additive to the 0:13:15.679 --> 0:13:19.199 economy and keeping inflation down from wage inflation. 0:13:19.559 --> 0:13:20.440 How does that play into it? 0:13:20.440 --> 0:13:22.000 How do you? I think you that exactly right. 0:13:22.080 --> 0:13:23.800 If you look at the numbers over the last few 0:13:23.840 --> 0:13:26.040 years and you look at the growth we've had, which 0:13:26.040 --> 0:13:28.480 has been very good growth, some fair portion of that 0:13:28.600 --> 0:13:31.800 is because of immigration and the increase in the labor force. Furthermore, 0:13:31.840 --> 0:13:34.600 we've been having on the legal immigration side, people of 0:13:34.679 --> 0:13:37.360 all skill levels and a lot of very very highly 0:13:37.400 --> 0:13:40.439 skilled people have come into particular tech, but also across 0:13:40.480 --> 0:13:45.640 our economy. The illegal immigrants are more complicated question. But 0:13:45.720 --> 0:13:47.000 I think what you need to do is you need 0:13:47.000 --> 0:13:49.880 to approach that not from an ideological perspective, which I 0:13:49.880 --> 0:13:52.680 think is what's happening, but rather from an economic perspective 0:13:52.679 --> 0:13:55.400 and decide what, from a cost benefit perspective is in 0:13:55.480 --> 0:13:57.120 our self interest. And the answer to that is going 0:13:57.200 --> 0:14:02.440 to be I think at least a substantial you'll increase 0:14:02.440 --> 0:14:05.440 maybe the wrong word, but a robust policy respect legal immigration, 0:14:05.760 --> 0:14:07.520 and then an approach to those who are illegals who 0:14:07.679 --> 0:14:10.160 hear that it's based on the economic effects of. 0:14:10.080 --> 0:14:10.480 What we do. 0:14:11.400 --> 0:14:13.200 I am judging myself for asking you this question, but 0:14:13.240 --> 0:14:14.600 I feel like I have to because this is what 0:14:14.600 --> 0:14:16.920 people are actually talking about in terms of trun policy, 0:14:16.960 --> 0:14:20.320 and that's the mar A Lago accord idea that potentially 0:14:20.320 --> 0:14:23.320 you'll see, you know, a big deal among major economies 0:14:23.360 --> 0:14:26.000 to address the exchange rate and trade imbalances. You can 0:14:26.080 --> 0:14:28.520 have a trade war and not have a stronger dollar, 0:14:28.600 --> 0:14:31.840 et cetera. Is anything like that something that you are 0:14:31.880 --> 0:14:35.480 listening to talking about, like a Plaza accord a lla 0:14:35.800 --> 0:14:36.440 decades ago. 0:14:36.520 --> 0:14:39.520 Well, a Plasa acord wasn't. It was a very different 0:14:39.520 --> 0:14:41.640 set of circumstances. I'm not sure what they're driving at, 0:14:41.640 --> 0:14:43.400 but whatever it is, I don't think they're going to 0:14:43.520 --> 0:14:44.160 get there this. 0:14:44.120 --> 0:14:44.960 Way, you know. 0:14:45.000 --> 0:14:47.080 Aside from which I think there's a lot of ideology 0:14:47.080 --> 0:14:49.720 about all of this. If you have trade deficits, and 0:14:49.760 --> 0:14:51.800 what's happening is you have an influx of capital and 0:14:51.800 --> 0:14:55.640 then it goes into investment that actually improves growth in 0:14:55.640 --> 0:14:57.520 the United States and is good for US. Now, if 0:14:57.520 --> 0:15:00.040 it goes into consumption, then eventually you build up and 0:15:00.080 --> 0:15:02.280 if course into investment, then you have additional growth and 0:15:02.320 --> 0:15:04.240 you can pay back the debt. If it goes into consumption, 0:15:04.480 --> 0:15:06.000 then you don't have the growth. Then you don't be 0:15:06.040 --> 0:15:08.040 able to pay back in over time. That creates a problem. 0:15:08.360 --> 0:15:09.760 But whatever you want to do, you do not want 0:15:09.800 --> 0:15:12.040 to approach it through tariffs, and you don't want to 0:15:12.040 --> 0:15:17.400 approach it through browbeating other countries or taking taking advantage 0:15:17.440 --> 0:15:19.520 of what is a strong position of our economy. 0:15:19.840 --> 0:15:20.120 You want. 0:15:20.200 --> 0:15:21.480 What you want to do is just want to increase 0:15:21.520 --> 0:15:23.360 productivity in this country and increase savings. 0:15:24.160 --> 0:15:24.560 AI. 0:15:24.680 --> 0:15:26.600 You told us offline that you've been really spending a 0:15:26.640 --> 0:15:28.760 lot of time trying to get educated on AI. 0:15:28.880 --> 0:15:30.960 What is your We've got a full minute here. What 0:15:31.000 --> 0:15:31.760 do you think about it? 0:15:32.040 --> 0:15:33.760 I know i'll give you my views. About a year 0:15:33.760 --> 0:15:35.920 and a half ago I thought to myself, Hey, it 0:15:35.960 --> 0:15:37.720 looks to me like it's going to be really important. 0:15:37.880 --> 0:15:39.280 So about a year and a half ago I started 0:15:39.320 --> 0:15:42.040 taking to tutorial. I go twice a week, an hour 0:15:42.080 --> 0:15:46.440 each time, and I don't profess any expertise in it, 0:15:46.480 --> 0:15:49.080 but I think I've become reasonably conversant with it, and 0:15:49.200 --> 0:15:51.040 I think it's going to change life as we know 0:15:51.120 --> 0:15:55.920 it economically, geopolitically and societally. And I think the I 0:15:56.000 --> 0:15:58.240 don't think we're already for all of the effects it 0:15:58.240 --> 0:15:58.640 can have. 0:15:58.800 --> 0:16:01.120 Oh, what's an AI to tour? What do you is it? 0:16:01.240 --> 0:16:02.920 Some guy at your desk like going. 0:16:02.760 --> 0:16:04.200 Over to no, no, tayb what it is? 0:16:04.200 --> 0:16:06.600 It's extremely bright guy and we do it on zoom 0:16:06.640 --> 0:16:08.479 and he's taken me through the underpinnings. 0:16:08.480 --> 0:16:09.160 How does it work? 0:16:09.440 --> 0:16:10.520 And then what are the use cases? 0:16:10.520 --> 0:16:11.440 What effects does it have? 0:16:12.040 --> 0:16:14.760 And the more you get it, I would strongly recommend 0:16:15.120 --> 0:16:17.720 reading a book that's been recently published by Eric Schmitt 0:16:17.840 --> 0:16:21.200 and Eric Kissinger. And what they do is they go 0:16:21.360 --> 0:16:22.880 they go through what AI and when it is, but 0:16:22.920 --> 0:16:25.600 basically it goes to the ramifications the potential effects of AI. 0:16:26.000 --> 0:16:28.280 It's really enormously worth reing. This is going to shape, 0:16:28.320 --> 0:16:31.240 in my opinion, at least have profound effects on pretty 0:16:31.280 --> 0:16:32.480 much everything we do over time. 0:16:32.560 --> 0:16:34.520 Yep, that's what we're hearing from a lot of smart 0:16:34.520 --> 0:16:36.120 people as well. Robert Ribband, thank you so much for 0:16:36.200 --> 0:16:38.400 joining us. Really appreciate it. Robert Ribin, he's a senior 0:16:38.440 --> 0:16:42.880 counselor Centerview partner seventieth US Secretary of Treasury and of course, 0:16:42.880 --> 0:16:45.760 former senior partner at Goldman Sachs. We appreciate getting some 0:16:45.760 --> 0:16:47.240 of his time talking about some of these markets. 0:16:48.880 --> 0:16:52.560 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:52.640 --> 0:16:55.720 weekdays at ten am Eastern on Apple Coarcklay and Android 0:16:55.760 --> 0:16:59.040 Auto with the Bloomberg Business App. Listen on demand wherever 0:16:59.120 --> 0:17:02.680 you get your podcast, or watch us live on YouTube. 0:17:03.120 --> 0:17:05.400 Alex youl Parls we need. This is Bloomberg Intelligence Radio. 0:17:05.480 --> 0:17:08.880 We are broadcasting to you live from the New York 0:17:08.920 --> 0:17:12.240 Financial District with the Bloomberg and Best Conference twenty twenty five, 0:17:12.240 --> 0:17:15.840