Speaker 1: Bloomberg Audio Studios, podcasts, radio news, and.
Speaker 2: I think Barco did a great job at Munich. I'm
Speaker 2: Sephanie Flanders, head of Government and Economics at Bloomberg. And
Speaker 2: this is Trump Economics, the podcast that looks at the
Speaker 2: economic world of Donald Trump, how he's already shaped the
Speaker 2: global economy and what on earth is going to happen
Speaker 2: next and this week? As we heard at the top
Speaker 2: of the show, President Donald Trump thinks Secretary of State
Speaker 2: Marco Rubio did a great job at the Munich Security Conference.
Speaker 2: But how did European leaders and the world more broadly
Speaker 2: interpret his message? And where did the Munich Summit leave
Speaker 2: us in relation to Europe and its future relations with China. Well,
Speaker 2: I know it happened a few days ago, but I
Speaker 2: thought for once we could linger a little on that conference,
Speaker 2: because it is a good opportunity to take of where
Speaker 2: we are and also to show off the fact that
Speaker 2: our editor in chief had the only sit down interview
Speaker 2: with Marco Rubio, and we also had our head of geoeconomics,
Speaker 2: Jenny Welsh, in attendance, launching lots of exciting research. So
Speaker 2: I am joined by John Mickleswaite, editor in chief of
Speaker 2: Bloomberg News and Jenny Welsh, chief geoeconomics analyst for Bloomberg Economics.
Speaker 2: John as I mentioned, you had the only sit down
Speaker 2: interview with him. What were your kind of personal impressions.
Speaker 2: Had you met him before, what did you think of him?
Speaker 3: I had met him a long time ago when he
Speaker 3: was more in the kind of I suppose neo conservative
Speaker 3: mold than the I love JD Vance mold. I thought
Speaker 3: it was interesting. I think you said style and substance.
Speaker 3: I think if you look at the substance of what
Speaker 3: he said, he was quite careful not to digress too
Speaker 3: much from the kind of Trump agenda, but in terms
Speaker 3: of style, it was said way more nicely and also
Speaker 3: with a lot of kind of common cultural heritage. You know,
Speaker 3: he really believed these things about the rolling Stones and
Speaker 3: beer and Christopher Columbus. That's very much part of the
Speaker 3: kind of Rubio worldview is that we, you know, there's
Speaker 3: this great common civilization and we're much stronger together in
Speaker 3: that way. And that's that's I think the main thing
Speaker 3: that came across, and I think the other bit is
Speaker 3: a degree of self confidence. I mean, remember when he
Speaker 3: went into the Trumpet administration, there was a lot of
Speaker 3: talk about, you know, little Marco's gone to join. Actually,
Speaker 3: as the years have gone by, it he has become
Speaker 3: a much stronger, more significant figure, and you see his
Speaker 3: fingerprints all over things to do with Venezuela most obviously
Speaker 3: and the Americas, but just quite cleverly, you know, deciding
Speaker 3: which bits he's going to have an input into and
Speaker 3: which one. You know, some of the Middle East stuff
Speaker 3: he's he's handed over to wit Coough and things. But
Speaker 3: he's more popular with the State Department people than you
Speaker 3: might have expected a few years ago. He's he's on
Speaker 3: and up, and but people are relentlessly thinking about in
Speaker 3: the presidential side, where you could and out of the
Speaker 3: Trump cabinet. Him and jd. Vance are the two obvious
Speaker 3: people who could head in a presidential direction.
Speaker 2: Jenny. We've had Chris Kennedy on the show a few
Speaker 2: times in the past, and recently he was talking about Venezuela.
Speaker 2: He works for you now as a geoeconomics analyst, but before,
Speaker 2: up until last summer, he was working for Rubio in
Speaker 2: the State Department's policy planning unit. Very much to John's point.
Speaker 2: He wrote an essay for Bloomberg highlighting that he was
Speaker 2: one of the few figures in the administration who'd found
Speaker 2: a line somehow between the America Firsts and the more
Speaker 2: neo conservative wings of the president's coalition. Do you think
Speaker 2: that's going to come under more strain? Did you see
Speaker 2: any of the strains in evidence in Munich?
Speaker 1: Yeah, I would agree with Chris's take there. And by
Speaker 1: the way, he also has a really great profile of
Speaker 1: Rubio available on the terminal for terminal clients as well,
Speaker 1: and this is something he siloated too. Rubio has played
Speaker 1: his cards exceptionally well over the last year or so.
Speaker 1: He's been given far more responsibilities. He's not just Secretary
Speaker 1: of State, he's also a national security advisor. He's leveraged
Speaker 1: that to his advantage and is especially played a really
Speaker 1: strong hand in US policy towards Venezuela, which Trump regards
Speaker 1: as incredibly successful, especially after the Operation alis Maduro. That
Speaker 1: being said, and this is often a law in Washington,
Speaker 1: the more successful you are, the more powerful you are,
Speaker 1: the more risky your position can be, and especially as
Speaker 1: you start to gain prominence. Right, one of Rubio's I
Speaker 1: think tactics over the last year has been to make
Speaker 1: sure that he doesn't steal the spotlight that he has
Speaker 1: been very careful to follow and implement policy and pay
Speaker 1: respect to the President as kind of the strategists in chief.
Speaker 1: And one of the risks that I think he faces
Speaker 1: is the more his star has risen, the more attention
Speaker 1: there will be to him personally, and that can be
Speaker 1: a very tricky thing to navigate in Washington, but especially
Speaker 1: in the Trump administration.
Speaker 2: So, Jenny, did you find a sort of focused on
Speaker 2: the tone of a speech and much less on a
Speaker 2: pretty uncompromising and still quite conditional approach to the transatlantic
Speaker 2: relationship that was actually in the small print of what
Speaker 2: he said.
Speaker 1: What was interesting to me is that there was widespread recognition.
Speaker 1: You heard this from every European speaker who took the
Speaker 1: main stage. You heard it in the sidimens, You heard
Speaker 1: it in the lounges and in the hallways too, of
Speaker 1: the idea that the world is changing, Europe needs to
Speaker 1: step up, not just because of American pressure to do so,
Speaker 1: but also because of the friction with the United States
Speaker 1: and concerns about reliability there. What still seemed to be
Speaker 1: very much a nascent conversation is how does that actually happen?
Speaker 1: There didn't seem to be very many clear pass forward.
Speaker 1: There was still a lot of discussion about internal divisions,
Speaker 1: and then, obviously, especially for you members, there's addition bureaucratic
Speaker 1: hurdles to overcome that get in the way of everything
Speaker 1: from figuring out how do we develop a more independent,
Speaker 1: self reliant defense industrial base to how do we address
Speaker 1: critical mineral reliance on China issues when we have to
Speaker 1: work more together as a union in the United States
Speaker 1: is kind of a unitary actor that can move much faster,
Speaker 1: So that to me was kind of this interesting contradiction
Speaker 1: of a real strong shared awareness of the issue but
Speaker 1: still not a clear sense of the way to address it.
Speaker 2: That does tend to be the rule with yourop. They're
Speaker 2: really really good at understanding the problem, but analyzing the
Speaker 2: problem slightly less good at solving it.
Speaker 4: Job.
Speaker 2: We're going to play a bit of your interview, but
Speaker 2: I guess we should ask you all the headlines you wanted.
Speaker 3: I think, actually the honest truth is, I went in
Speaker 3: there thinking he'd made quite an impressive speech, did I think,
Speaker 3: pull on lots of issues that matter a lot to
Speaker 3: Rebio and which have always mattered to him, And yet
Speaker 3: he managed to do it in a way that wouldn't
Speaker 3: annoy Donaldrump but also please thee Europeans. I tried to
Speaker 3: push him more into you know what does this mean
Speaker 3: in practice? You know, what do you actually expect the
Speaker 3: Europeans to do?
Speaker 2: Let's hear a bit of it.
Speaker 3: Mary Ruper, Sexuary of State, thank you for talking to Bloomberg.
Speaker 3: You've just made this rather remarkable speech where you talked
Speaker 3: about the destiny of Europe and America always being intertwined.
Speaker 3: You talked about an alliance which has stretched all the
Speaker 3: way culturally from Michelangelo to the Rolling Stones, the first
Speaker 3: I suspect for a sexual estate, but a culture that
Speaker 3: has bled and died together. But the very common theme
Speaker 3: of your speech was the need to share the burden,
Speaker 3: the need for Europe and America to do to do
Speaker 3: things together, which was slightly different from the Vice President
Speaker 3: last year. Were you kind of offering a carrot where
Speaker 3: perhaps he was offering a state.
Speaker 4: I think it's the same message.
Speaker 5: I think what the Vice President said last year very
Speaker 5: clearly was that Europe and made a series of decisions
Speaker 5: internally that were threatening to the alliance and ultimately to
Speaker 5: them themselves. Not because we hate Europe or we don't
Speaker 5: like Europeans, But because what is it that we fight for?
Speaker 4: What is it that binds us together?
Speaker 5: And ultimately it's the fact that we are both heirs
Speaker 5: to the same civilization, and it's a great civilization and
Speaker 5: it's one we should be proud of. It's one that's
Speaker 5: contributed extraordinarily to the world, and it's one frankly upon
Speaker 5: which America is built. From our language, to our system
Speaker 5: of government, to our laws, to the food we eat,
Speaker 5: to the name of our cities and towns, all of
Speaker 5: it deeply linked to this Western civilization and culture that
Speaker 5: we should be proud of, and it's worth defending. And
Speaker 5: ultimately that's the point. It is because we understand that
Speaker 5: ultimately our own fate will be intertwined with what happens
Speaker 5: with Europe. We want Europe to survive, We want Europe
Speaker 5: to prosper because we're interconnected in so many different ways,
Speaker 5: and because our alliance is so critical. But it has
Speaker 5: to be an alliance of allies that are capable and
Speaker 5: willing to fight for who they are and what's important.
Speaker 3: You see a parallel. You seem to see a parallel
Speaker 3: between the Cold War, which I think I would argue
Speaker 3: that the America beat the Soviet Union because it had
Speaker 3: a common idea and it had allies on its side.
Speaker 3: You're now in a struggle with China. People say you've
Speaker 3: often been a hawk on that subject. You're want a
Speaker 3: struggle with China. Do you think you absolutely need Europe
Speaker 3: to be able to Yeah.
Speaker 4: I would say two things.
Speaker 5: The first the mentions of the Cold War to remind
Speaker 5: people of everything we've achieved together in the.
Speaker 4: Past and times when there was doubt.
Speaker 5: But it's also a reminder that at the end of
Speaker 5: that era, when we won the Cold War, there was
Speaker 5: this euphoria that led us to make some terrible decisions
Speaker 5: that have now left as vulnerable and de industrialized the West.
Speaker 5: It allowed it left us increasingly dependent on others, including China,
Speaker 5: for our critical supplies, and that needs to be reversed
Speaker 5: in order to safeguard us. And so I do think, yes,
Speaker 5: it would be ideal to have a Western supply chain
Speaker 5: that is free from extortion from anyone. So I think
Speaker 5: we do have a vested interest in that regard. Today
Speaker 5: is different than yesterday, but it has parallels, not in
Speaker 5: that China is the new Soviet Union, but that in
Speaker 5: our future collectively will be stronger if we work on
Speaker 5: these things together.
Speaker 3: There is sort of allies Mark Colony has just been
Speaker 3: to Beijing. Stahmars just beat to Beijing. Mertz is about
Speaker 3: to go there. Do you worry that they're beginning to
Speaker 3: drift off too much in that direction?
Speaker 5: No, I think nation states need to interact with one another. Remember,
Speaker 5: I serve under a president that's willing to meet with anybody.
Speaker 5: I mean, to be frank, I'm pretty confident in saying
Speaker 5: that if the Ayatola said tomorrow he wanted to meet
Speaker 5: with President Trump, the President would meet him, not because
Speaker 5: he agrees with the Ayatola, but because he thinks that's
Speaker 5: the way you solve problems in the world, and he
Speaker 5: doesn't view meeting someone as a concession. Likewise, the President
Speaker 5: intends to travel to Beijing and has already met once
Speaker 5: with President g and in this very forum yesterday I
Speaker 5: met with my counterpart, the Foreign Minister of China. So
Speaker 5: we expect nation states to interact with one another. In
Speaker 5: the end, we expect nation states to act in their
Speaker 5: national interest. I don't think that is excluded that you
Speaker 5: know that in no way runs counter to our desire
Speaker 5: to work together on things that we share in common
Speaker 5: or threats with face in common. But I don't think
Speaker 5: visiting Beijing or meeting with the Chinese is on the country.
Speaker 5: I think it would be irresponsible for great powers not
Speaker 5: to have relations ships and talk tough things and to
Speaker 5: the extent possible and avoid unnecessary conflict. But there will
Speaker 5: be areas we'll never agree on, and those are the
Speaker 5: areas that I hope we can work together on.
Speaker 3: So you think the rupture that many people have spoken
Speaker 3: about is illusory that hasn't happened yet, Well, there's.
Speaker 5: No I mean, even as I speak to you now,
Speaker 5: there are US troops deployed here on this continent, on
Speaker 5: behalf of NATO. There are still all kinds of cooperation
Speaker 5: that go on at every level, from intelligence to commercial
Speaker 5: and economic.
Speaker 4: The links remain.
Speaker 5: I think there is a readjustment that's happening because I
Speaker 5: think we have to understand that we want to reinvigorate
Speaker 5: this This alliance has to be about different things than
Speaker 5: it's been in the past, because the challenges of the
Speaker 5: twenty first century are different than the challenges of the
Speaker 5: twentieth thanks.
Speaker 3: But that's being most obviously tested at the moment as Ukraine,
Speaker 3: you see all these numbers from the front where the
Speaker 3: Ukrainians do seem to be doing better in terms of
Speaker 3: what's happening in the Russians. Do you think Ukraine or
Speaker 3: do you think Russia is still winning that war or
Speaker 3: where do you place it militarily?
Speaker 5: I think that's a difficult order to say anyone is winning.
Speaker 5: The Russians are losing seven to eight thousand soldiers.
Speaker 4: A week, a week, not not wounded dead.
Speaker 5: Ukraine has suffered extraordinary damage, including you know, overnight and
Speaker 5: again to its energy infrastructure, and it will take billions
Speaker 5: of dollars in years and years to rebuild that country.
Speaker 4: So I don't think anyone can claim to be winning it.
Speaker 5: I think that both sides are suffering tremendous damage, and
Speaker 5: we'd like to see the war come to an end.
Speaker 5: It's a senseless war, and our view, the president believes
Speaker 5: that very deeply. He believes the war would have never
Speaker 5: happened that he'd been president at the time.
Speaker 4: So we're doing two things.
Speaker 5: So obviously we continued, Look, we don't provide arms to Russia,
Speaker 5: we provide arms to Ukraine.
Speaker 4: We don't sanction Ukraine. We sanctioned Russia.
Speaker 5: But at the same time, we find ourselves in a
Speaker 5: unique position of serving as probably the only nation on
Speaker 5: Earth that can bring the two sides to discuss the
Speaker 5: potential for ending this war on negotiated terms.
Speaker 4: And it's an obligation we haven't.
Speaker 5: We won't walk away from because we think it's a
Speaker 5: very unique one to have. It may not come to fruition, unfortunately.
Speaker 5: I hope it does, and I think there are days
Speaker 5: when I feel more optimistic about it than others. But
Speaker 5: we're going to keep trying because that is in the end,
Speaker 5: this war will not be solved militarily. It will be
Speaker 5: in the end, it will come to a negotiated settlement.
Speaker 5: We'd like to see that happen as soon as possible.
Speaker 3: Marco Rubio, thank you very much for talking to Bloomberg.
Speaker 4: Thank you, and.
Speaker 2: So John. We've obviously we talked quite a lot about
Speaker 2: Marco Ruby, but I wanted to also use this a
Speaker 2: chance to kind of take stock of how Europe was
Speaker 2: responding to this new world that Trump has been helping
Speaker 2: to shape. And one of the issues that was discussed
Speaker 2: a lot is defense and even talk of the sharing
Speaker 2: of the nuclear umbrella between Germany and France. That seemed
Speaker 2: like a new stage. It wasn't just they're going to
Speaker 2: spend more on defense, but they're going to actually be
Speaker 2: seriously thinking about alternatives to the US or some kind
Speaker 2: of diversification away from the US if they're thinking about
Speaker 2: defending themselves from Russia.
Speaker 3: There's one European leader who rather nicely told me, and
Speaker 3: I'm going to get it slightly wrong, that you know,
Speaker 3: the way in which Europe proceeded was you have lethar
Speaker 3: G the event, have crisis chaos, and then you end
Speaker 3: up with a suboptimal solution of sorts. And I think
Speaker 3: they're somewhere in the kind of chaos towards the suboptimal
Speaker 3: solution stage of it. At the moment, I think that Greenland,
Speaker 3: no matter how often the Trump administration out all people
Speaker 3: around the Trump administration tried to say, oh, it really
Speaker 3: didn't matter that much, I think it really did matter.
Speaker 3: I think it struck through right into some of the
Speaker 3: main leaders in Europe that they realized that they they
Speaker 3: can't rely on America. Many of them might hope that
Speaker 3: a different administration would be more supportive, and many of
Speaker 3: them might even have looked at Ruby and thought, well,
Speaker 3: if he was running it, this would be we could
Speaker 3: deal with this. But the idea that they can necessarily
Speaker 3: one hundred percent rely on that, I think is now out.
Speaker 3: You've even got Germany looking at you know, what the
Speaker 3: nuclear options are for it, You've got Britain talking to
Speaker 3: France about its nucleus. Suddenly a lot of things are
Speaker 3: on the table that weren't there before in terms of
Speaker 3: where they've got to on that sort of voyage. Yes,
Speaker 3: you've got you know, Germany is going to build Europe's
Speaker 3: biggest army. You've got more money going back into defense
Speaker 3: in several different areas. But it's the sort of next
Speaker 3: stage where you get the suboptimal solutions.
Speaker 4: You know.
Speaker 3: One really obvious point is Europe has countless defense manufacturers
Speaker 3: and different priorities in each part of different armies and
Speaker 3: different versions of tanks and different simplifying all that would
Speaker 3: not only save a fortune, it would also end up
Speaker 3: with a much kind of better fighting force at the end.
Speaker 3: And they don't seem to be getting there.
Speaker 2: And it was very striking to me some of that
Speaker 2: conversation about the nuclear deterrent and potential options involving the
Speaker 2: French and potentially the British or indeed a sort of
Speaker 2: pan European Jenny, I was wondering, how seriously do you
Speaker 2: take that?
Speaker 1: I think it's important to take it seriously. The other
Speaker 1: thing that comes to mind that I think is really
Speaker 1: striking here is the timing of this. This is coming
Speaker 1: after the expiration of the last major arms limitation treaty
Speaker 1: between the US and Russia. A new start expired earlier
Speaker 1: this month, and I think the world has yet to
Speaker 1: fully appreciate or reckon with the idea that we're going
Speaker 1: to see a new wave of nuclear proliferation. I think
Speaker 1: the europe context is obviously unique and driven in part
Speaker 1: by these frictions with Washington, but it is taking place
Speaker 1: against the backdrop of this broader nuclear movement where I
Speaker 1: think we're going to see not just the US and
Speaker 1: Russia because the expiration of this treaty, China has already
Speaker 1: been embarking on a major nuclear weapons expansion, but also
Speaker 1: other countries. And the consequences of that for geopolitical stability
Speaker 1: and the consequences of conflict are immense. And you can't
Speaker 1: get more dangerous and more impactful than nuclear conflict, right,
Speaker 1: And that's the world in which we are going to
Speaker 1: increasingly live in.
Speaker 3: Just just to follow what Jenny said, if you look
Speaker 3: at if you remember in the Ukraine War, fairly early on,
Speaker 3: there was this issue about whether Putin would use tactical
Speaker 3: nuclear weapons, and the Chinese immediately jumped or supposedly jumped
Speaker 3: on his back and said, absolutely, no way, that's sort
Speaker 3: of a road we're going to pass over. I think
Speaker 3: by the same token, you know, the idea that Germany
Speaker 3: would ever think of sort of turning to people or
Speaker 3: other than America to protect it, the idea that Germany
Speaker 3: might in the end even consider doing it itself. You know,
Speaker 3: this is a this is a very different world. And
Speaker 3: it's that thing where Donald Trump has thrown a stone
Speaker 3: in the pool and the ripples still heading out. And
Speaker 3: again a lot of these things may not happen, but
Speaker 3: the mere fact people are thinking about it is a really,
Speaker 3: really big deal.
Speaker 2: Jenny, you mentioned China. That's another thing that's changed out
Speaker 2: the Munich Security Conference. You were telling us earlier you
Speaker 2: used to be very much focused on transatlantic ties, but
Speaker 2: you now see much more. There's more people there from Asia,
Speaker 2: and you know, clearly there's now more focus in Europe
Speaker 2: from a kind of strategic standpoint as well as an
Speaker 2: economic standpoint on China. So, you know, do you feel
Speaker 2: that you've got a clearer sense of how Europeans were
Speaker 2: thinking about China, Because a few years ago it would
Speaker 2: have been all about de risking and reducing their vulnerability
Speaker 2: to China in terms of supply chains, as we discussed
Speaker 2: on the program a couple of weeks ago. Now almost
Speaker 2: it's the opposite. Now people are talking about building ties
Speaker 2: with China.
Speaker 1: Absolutely, and as you're noting there, it's very complex. Europe
Speaker 1: is really facing difficult choices on both sides. On one hand,
Speaker 1: the frictions with Washington do lead them to naturally consider
Speaker 1: the other major power in the world. On the other hand,
Speaker 1: they're extremely frustrated with China for what they see as
Speaker 1: China's ongoing support for Russia during its war in Ukraine.
Speaker 1: And this was a question that got pitched to the
Speaker 1: Chinese Foreign Minister Wangi after his remarks, which by the way,
Speaker 1: they purposely put right after Rubio so couldn't underscore more
Speaker 1: clearly the idea that there's a contrast being painted here
Speaker 1: between the United States and China. Is the two major
Speaker 1: powers in the world, and his response I think left
Speaker 1: many Europeans deeply unsatisfied, which is essentially China remains very
Speaker 1: committed to the peace process, but no comments on questions
Speaker 1: about supporting Russia's war machine and ongoing strong economic and
Speaker 1: strategic ties. The other challenge that Europe faces with China
Speaker 1: is Preussia from Chinese exports and Chinese silver capacity, and
Speaker 1: that's something that continues to be a strain that we
Speaker 1: heard from European leaders and itamans from other Europeans as well,
Speaker 1: And again I think it's it's one of those examples
Speaker 1: of recognition of the problem, a frustration with the problem,
Speaker 1: but no clear sense of the way for in part
Speaker 1: because they're navigating these difficult trade offs with Washington, and
Speaker 1: that's something I think we're going to continue to see
Speaker 1: to play out.
Speaker 2: And John, there's been a lot of focus on the
Speaker 2: quality of speeches in recent weeks. People were very impressed
Speaker 2: by Mark Carney's speech in Devils. You were saying that
Speaker 2: you thought Rubio's speech was very good, A sort of
Speaker 2: blockbuster speech is not what you ever expect from a
Speaker 2: Chinese foreign minister. But did you get the sense that
Speaker 2: there were more substantive meetings happening behind closed doors.
Speaker 3: There's definitely a kind of flirtation going on in that direction.
Speaker 3: And that there's two bits. I mean, very clearly, one
Speaker 3: of privately, one of Europe's leaders, when asked what happens
Speaker 3: in Ukraine, they said very clearly that, you know, the
Speaker 3: only three people who can stop the war in Ukraine
Speaker 3: are Vladimir Putin, Donald Trump and Jiujinping, because Jujing Pin
Speaker 3: could just simply turn off the support and then Russia
Speaker 3: would have to give in. And so I think there
Speaker 3: is a kind of realization, certainly at the top of
Speaker 3: Europe that this is a relationship you go into carefully.
Speaker 3: It's quite interesting that Rubio and I asked him about that,
Speaker 3: said no, that's fine. It's completely logical that the Europeans
Speaker 3: should also have a foreign policy towards China, which slight
Speaker 3: tension between that and what Trump has said a few times,
Speaker 3: but that was what he said. Now you can make
Speaker 3: an argument about how long the particularly Trumpish version of
Speaker 3: foreign policy in America continues. At some point, what gets
Speaker 3: impression the likelihood is it is going to move away
Speaker 3: from that. And I think when it stops being so
Speaker 3: quite so keen to go and beat up the Europeans
Speaker 3: and starts thinking we are in a competition with China
Speaker 3: and we're going to need allies. I think that is
Speaker 3: where there is quite a difficulty, because I think people
Speaker 3: will forgive American leaders, will forgive Europe doing stuff if
Speaker 3: it's purely just a kind of reflect to what Trump
Speaker 3: has been up to. But if you come out of
Speaker 3: it with Europe seemed to have deeper ties with China,
Speaker 3: that's going to really complicated the Transatlantic relationship. So I
Speaker 3: think the europe has to be a bit careful on that.
Speaker 3: I think, Jenny, we're going.
Speaker 2: To run out of time, but I do want to
Speaker 2: just touch on because you were presenting this research at Munich,
Speaker 2: and of course it's a subject close to your heart
Speaker 2: because you were very focused on China and Taiwan policy
Speaker 2: when you're at the National Security Council. It's not as
Speaker 2: if the US policy towards China is completely straightforward at
Speaker 2: this point, and in fact, we are seeing a lot
Speaker 2: of mixed messages in terms of, you know, the doing
Speaker 2: of economic deals, the sort of hard talk. But also
Speaker 2: there's somehow the suggestion that there's kind of less support,
Speaker 2: for example, for Taiwan and you had I mean just
Speaker 2: for a sort of couple of headlines. I mean, you've
Speaker 2: highlighted in that report, you and the team what the
Speaker 2: economic consequences would be of the US. Just stepping back
Speaker 2: from Asia.
Speaker 1: We were very fortunate that the Munich security conferences here
Speaker 1: chose a theme of under destruction. Played quite well for
Speaker 1: our new report that looks at the potential economic consequences
Speaker 1: were conflict to break out in these major hotspots around
Speaker 1: the world, including the Taiwan Street, where we estimate a
Speaker 1: conflict there could cost the global economy about ten trillion dollars.
Speaker 1: That's almost ten percent of global GDP, more than the
Speaker 1: covid pandemic, more than the global financial crisis, and candidly
Speaker 1: that's probably a conservative estimate when you look at the
Speaker 1: really critical role that Taiwan plays in producing advanced semit
Speaker 1: conductors that are just going into more and more things
Speaker 1: from our smartphones, to our smart home appliances, to our
Speaker 1: cars and increasingly feeding the beast of ai right, which
Speaker 1: is also very important and increasingly important at least in
Speaker 1: the US stock market. I think the risk that we're
Speaker 1: highlighting in that report and that we're seeing in just
Speaker 1: the headlines today, right, is not necessarily that the US
Speaker 1: will overtly give up Taiwan, although that's something President she
Speaker 1: to be a certain going to be pressing for in
Speaker 1: his meeting in April with President Trump. But even just
Speaker 1: the risk of an inadvertent sort of strategic distraction from Asia,
Speaker 1: that the US is being pulled into the Middle East.
Speaker 1: It's very focused on the Western hemisphere, and when you're
Speaker 1: dealing with China that is fully focused on the Indo
Speaker 1: Pacific and that has tremendous resources to bear, strategic distraction
Speaker 1: can become strategic defeat. So that was essentially the premise
Speaker 1: of our report. Again played in very well to the
Speaker 1: themes that Munich that identified as well.
Speaker 2: So, John, I wanted to ask you what I might
Speaker 2: be a kind of final takeaway from Munich. You mentioned
Speaker 2: that there was this was a real rupture to coin
Speaker 2: a phrase, to have Germany thinking about alternatives to the US.
Speaker 2: That certainly was the feel sort of throughout most of
Speaker 2: the last year that the feeling among Europeans was this
Speaker 2: is a lasting thing. There was the loss of trust
Speaker 2: in the US as an Now, you know, it may
Speaker 2: have been unpredictable, but the fact that you now can't
Speaker 2: rely on the US as an ally is something that
Speaker 2: will outlast Donald Trump, just as the sort of suspicion
Speaker 2: of China from the US is potentially going to outlast
Speaker 2: Donald Trump. There were an awful lot of sort of
Speaker 2: democratic democratic hopefuls in Munich and others and senators who
Speaker 2: all seemed to be in who were at the summit
Speaker 2: and seemed to be wanting to say the opposite. You
Speaker 2: know that this too will pass. Do you think that
Speaker 2: the Europeans were buying that or do you think that
Speaker 2: it is going to be very difficult for any future
Speaker 2: president to be trusted in the same way.
Speaker 3: It's a very good question. I think that the Europeans
Speaker 3: were all looking sort of hopefully towards towards the kind
Speaker 3: of democrats and you know, this is the answer will
Speaker 3: get us out of this mess. And I think also
Speaker 3: towards people like Glenn Younkin, who was also there, sort
Speaker 3: of Republican moderates. Although you probably wouldn't thank me for
Speaker 3: saying that that all those sort of people, Yes, the
Speaker 3: Europeans were looking at them. But I think there is
Speaker 3: this sort of big debate amongst the Europeans which in
Speaker 3: one good way is sort of coming to an end.
Speaker 3: It's been this endlessly waiting for the world after Trump.
Speaker 3: I think the good news is because it's good for
Speaker 3: Europe full stop to be doing this stuff. Is that
Speaker 3: Europe now has been bullied by Trump and by the
Speaker 3: possibility that Trump some elements of Trumpery could survive Trump
Speaker 3: into thinking we absolutely need to focus on defense, We
Speaker 3: need to actually start building things. We need to work
Speaker 3: out how to do some of the stuff with competition
Speaker 3: that they haven't done before. In a weird way, one
Speaker 3: of the main consequences of Trump andnomics straightforwardly could be
Speaker 3: the economics of Europe, because you're now finding people inside Germany,
Speaker 3: inside some of the other big countries saying, look, we
Speaker 3: just need to get on with this stuff to do
Speaker 3: with competition Europe our economy. The reason why we are
Speaker 3: so powerless when we negotiate with the Americans is that
Speaker 3: our economy is not growing anywhere near as quickly as theirs,
Speaker 3: and we need to get on with it. And some
Speaker 3: people now talking about coalitions of the willing and all
Speaker 3: those sort of things. So not taking the full twenty
Speaker 3: seven along with them definitely leaving Victor Orbam behind, but
Speaker 3: also potentially leaving the French behind as well. You know
Speaker 3: that that is a very different way of thinking about it,
Speaker 3: and it is you know, as I said, it's funny
Speaker 3: that Trump and Onmic, one of the main long term
Speaker 3: consequences of trump Andomics could be what actually what happens
Speaker 3: in Europe rather than anywhere else. And I think that
Speaker 3: that is quite a sort of fundamental thing. Wait to
Speaker 3: see what happens.
Speaker 2: I think you've given us a very elegant ending to
Speaker 2: the program, John, not least but giving a justification for
Speaker 2: why a supposedly economic podcast would have spent half an
Speaker 2: hour talking about politics. Finally, finally, because it does that
Speaker 2: Trumpnomics indeed is bleeding into all these areas. But John, Miickalthwaite,
Speaker 2: and Jennifer wh thank you so much, Thank you so much,
Speaker 2: thank you, thanks for listening to Trump Noomics from Bloomberg.
Speaker 2: It was hosted by me Stephanie Flanders. I was joined
Speaker 2: by Bloomberg News as editor in chief John Nichol, Fwaite
Speaker 2: and Bloomberg Economics Chief geoeconomics analyst Jennifer Welch. Trumpnomics was
Speaker 2: produced by summersadi In, Moses and Dan with help from
Speaker 2: Amy Keene and special thanks this week to Rachel Lewis
Speaker 2: Chriski to help let us find the show. Please rate
Speaker 2: and review it highly wherever you listen to podcasts