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Speaker 2: Here on Tariff Tuesday, Welcome to the fastest show in politics.
Speaker 2: It's the Tuesday edition of Balance of Power here on
Speaker 2: Bloomberg Radio, on the satellite radio channel one twenty one,
Speaker 2: and on YouTube, where you can find us right now
Speaker 2: search Bloomberg Business News Live. As we count down to
Speaker 2: the big speech nine ten pm Eastern, they tell us,
Speaker 2: but things have a way of sliding when everybody wants
Speaker 2: to handshake and a hug coming down the aisle. We
Speaker 2: will have special coverage of the President's addressed to Congress
Speaker 2: starting eight pm Eastern Time tonight on Bloomberg TV and
Speaker 2: Radio on Tariff Tuesday. They took effect earlier today. The
Speaker 2: President said this, as you heard live on Bloomberg yesterday,
Speaker 2: twenty five percent tariffs on Canada and Mexico. Here is
Speaker 2: the President of the United States.
Speaker 3: Twenty five percent on Canada and twenty five percent on
Speaker 3: Mexico and that'll start. So they're going to have to
Speaker 3: have a tariffs so they can't come in and steal
Speaker 3: our money and steal our jobs and take our factories
Speaker 3: and take our businesses and expect not to be punished.
Speaker 3: And they're being punished by tariffs.
Speaker 2: Well they are as of now. Mexican President Claudia Scheinbaum says,
Speaker 2: give me it till Sunday, having said we've got planned
Speaker 2: BC and D ready. That's when countermeasures, as we reported
Speaker 2: here at Bloomberg, will be announced. Canadian Prime Minister Justin
Speaker 2: Trudeau not waiting around. In fact, he spoke a short
Speaker 2: time ago as you heard live here on Bloomberg.
Speaker 4: Let's listen, there is absolutely no justification or need whatsoever
Speaker 4: for these tariffs today. Now, the legal text your government
Speaker 4: is using to bring in these tariffs is that Canada
Speaker 4: is apparently unwilling to help in the fight against illegal fentanyl. Well,
Speaker 4: that is totally false.
Speaker 2: Really interesting to hear the Commerce Secretary Howard Lutnick on
Speaker 2: the other network this morning saying this is not a
Speaker 2: trade war, this is a drug war. Resetting the trade
Speaker 2: policy is what comes April second. The reciprocal tariffs we're
Speaker 2: talking about if this is all about fentanyl, we know
Speaker 2: that Canada and Mexico are into very different places. And
Speaker 2: that's where we start our conversation with Josh Wingrove Bloomberg,
Speaker 2: White House correspondent. With us at the table, it must
Speaker 2: be a big day if you're here in person. Thanks
Speaker 2: for joining us. You know, there's nothing they can do
Speaker 2: in the meantime, apparently to prove that they've made good
Speaker 2: on some of these concerns. As justin Trudeau outlined the
Speaker 2: measures that have been taken to stop the flow of fentanyl,
Speaker 2: the money spent on securing the border. What is it
Speaker 2: that Donald Trump wants?
Speaker 5: I mean, it is the Prime Minister's believe. You heard
Speaker 5: him say today that this has been essentially a ruse,
Speaker 5: that there was no sincere effort on fentanyl that could
Speaker 5: have alleviated these He said he'd been holding out hope
Speaker 5: that it was you know, merely a bargaining chip or
Speaker 5: negotiating tactic. Obviously that has not been the case, or
Speaker 5: at least as we sit here now, is not the case.
Speaker 5: And so you know he's moving to essentially sort of
Speaker 5: trade war footing. And it's you know, the clip that
Speaker 5: you played from President Trump, Well, is it about factories
Speaker 5: being stolen or is it about fentanyl? You know, it
Speaker 5: is tough to say. And then Secretary of latink this
Speaker 5: morning saying this is a drug war, not a trade war.
Speaker 5: The trade war is just three weeks away. So I mean,
Speaker 5: all these things are kind of coming in together. And
Speaker 5: for those people who are just tuning in to these threats,
Speaker 5: I think a lot of people have been tuning this
Speaker 5: out right. Trump makes a lot of tariff threats, a
Speaker 5: lot of teriffreats. In the first term, he made a
Speaker 5: lot of them. The scale is so much bigger now.
Speaker 5: I think that's really important to understand. This is not
Speaker 5: just hitting steel aluminum, and in particular, only certain countries
Speaker 5: with steel and aluminum today has enacted these tariffs twenty
Speaker 5: five percent Canada, Mexico mostly, ten percent Canadian Energy, twenty
Speaker 5: percent on China, on the three biggest trading partners, also
Speaker 5: the three biggest customers of US products. He's picking a
Speaker 5: fight with the three countries that have the broadest firepower
Speaker 5: to fireback. This is structural and there's more stuff coming
Speaker 5: down the pipe next month or excuse me, next week. Yes,
Speaker 5: steal illuminum tariffs twenty five percent, potentially rising above that
Speaker 5: following that aprilsecond, both the reciprocal tariffs and the sectoral ones,
Speaker 5: both of which could pile on to Mexico and Canada
Speaker 5: by the way, and fuel these responses that we're already seeing.
Speaker 2: So we're in it right now while we're considering conditions
Speaker 2: that could be met. The first time I've heard this
Speaker 2: was in that interview with Lutnik earlier today. We need
Speaker 2: to see material reduction in autopsied deaths from opioids. You
Speaker 2: cover this White House closer than anyone I know. Have
Speaker 2: you ever heard that line before? Is that the new metric?
Speaker 5: The first time we heard that metric was about a
Speaker 5: week ago, okay, and that felt What does that mean
Speaker 5: to the Canadians like a goalpost, moving scenarios?
Speaker 2: What's material?
Speaker 5: They want to see a reduction and fentanyl deaths in
Speaker 5: the US, which of course everything why include I mean,
Speaker 5: I'll leave it to the secretary to say why he
Speaker 5: said that. A week ago, what we were told by
Speaker 5: White House official is fentanyl deaths in America need to
Speaker 5: come down before these tariffs go away. That was what
Speaker 5: we reported to the Canadians and Mexicans. That was new
Speaker 5: to them, because not only have they been saying, well,
Speaker 5: it's kind of unclear what we've been asked to do,
Speaker 5: but the public reasons were things like fentanyl at the border,
Speaker 5: in other words, seizures, border enforcement, that kind of thing,
Speaker 5: as opposed to domestic fentinel deats. I should note Canada,
Speaker 5: like many other Western nations, has its own problem with
Speaker 5: fentanyl deaths that they're trying to you know, most countries,
Speaker 5: developed economies are grappling with the scourge of this. So
Speaker 5: that was to the eyes of many Canadians a goalpost shift.
Speaker 5: To the eyes of the Americans, that is the current
Speaker 5: metric saying these tariffs are staying in place until that.
Speaker 5: So I should note, if you were friends the Canadian
Speaker 5: steel producer, you might be facing tariffs of twenty five
Speaker 5: on steel plus twenty five on allegedly on drugs today,
Speaker 5: plus the reciprocal tariff, which, by the way, Secretary Lutinik
Speaker 5: made clear today is still coming down as well. And
Speaker 5: we'll count for instance, the Canadian GST, which is a
Speaker 5: federal sales tax on all goods imported or not, as
Speaker 5: a tariff in responding kind. So you could have three
Speaker 5: tariffs if you're a Canadian steel producer, you can imagine
Speaker 5: what that does for ins and Stelco recently bought by
Speaker 5: Cleveland Cliffs, based in Ohio, home to say the vice president,
Speaker 5: wonder what they think about all this?
Speaker 2: Well, you know, we've heard from Canada that this could
Speaker 2: mean an immediate recession in the Canadian economy. But what's
Speaker 2: going on here? Look at this market, biggest loss yesterday
Speaker 2: of the year, the S and P five hundred back
Speaker 2: to where it was before the election, and we're not
Speaker 2: slowing down. Even crypto is falling. You've seen the reaction
Speaker 2: on the bond market. Donald Trump seems to pay attention
Speaker 2: to that. What does he think of this Wall Street reaction?
Speaker 5: Many of the president's close supporters that I talked to
Speaker 5: will say that the market reaction is one of the
Speaker 5: few things that is a true metric for him, that
Speaker 5: he believes strongly in it, and so you have to
Speaker 5: think that he's taking this seriously. But they're also saying, look,
Speaker 5: there could be some temporary pain. So I think some
Speaker 5: people in his administration kind of expected an initial reaction
Speaker 5: and the question is is it more prolonged or deeper?
Speaker 5: But I do think that President Trump just has been
Speaker 5: talking about this for a while. On the Canada stuff.
Speaker 5: He keeps raising Canada. He's not asked about Canada, Joe.
Speaker 5: You know, I'm Canadian and I'm in these rooms. You know,
Speaker 5: no one's asking about Canada. He just keeps circling back
Speaker 5: to it. And so I think that it is clear
Speaker 5: that Canada on is on his mind and he wants to,
Speaker 5: you know, pressure the country. And we should also know
Speaker 5: that in about a week there'll be a new prime
Speaker 5: minister and then potentially a couple months after that, maybe
Speaker 5: even another new one. So this is coming at a
Speaker 5: point of you know, transition in the leadership of the
Speaker 5: federal government in Canada.
Speaker 2: Some have suggested he could help to get Trudeau's party
Speaker 2: reelected as a political back last.
Speaker 5: Year, Trudeau's party was on the matt in polling. That
Speaker 5: has completely rebounded because of where we're going, and now
Speaker 5: it is a much closer election between the Conservative Party,
Speaker 5: which had looked like it was primed to be sort
Speaker 5: of like cruising to a strong majority government mandate, and
Speaker 5: now it.
Speaker 2: Fascinus to say, we've only got about a minute left.
Speaker 2: Of course, saving all the good stuff for the end here,
Speaker 2: but this big speech tonight. The talking about two hours
Speaker 2: is that real?
Speaker 5: What's I mean? A standard Trump speech is like an hour?
Speaker 2: You know, Oh, that's true. Democrats are talking about bringing
Speaker 2: noisemakers into the hall of night. What are we in for?
Speaker 5: I'm thinking of getting pizza, so I'll just speak for myself,
Speaker 5: you know. Look, he wants to do a few things.
Speaker 5: He wants to give a victory lap. Obviously the current
Speaker 5: market reaction will dampen that. Yeah, he does want to
Speaker 5: call for things, including additional border funding. We've heard, you know,
Speaker 5: Tom Holman talk about the need for further resources, so
Speaker 5: he is coming with a wish list, not just you know,
Speaker 5: a celebration of what's being done. But other than that,
Speaker 5: we're gonna hear a lot about the border. We're gonna
Speaker 5: hear a lot about a team of restoring the American Dream,
Speaker 5: which will dovetail on tariffs. We will hear stuff on Ukraine.
Speaker 5: Will be watching closely for a response to what we've
Speaker 5: heard President's landscap about an hour and a half ago,
Speaker 5: sort of opening the door again to further talks. So
Speaker 5: there'll be a lot of news in it. I think,
Speaker 5: uh It likes to make an ounse.
Speaker 2: He likes to make announcements, but if you want to
Speaker 2: get like, get in the in the mix with Democrats.
Speaker 2: Does he want to get into a little call and
Speaker 2: response all on Joe Biden.
Speaker 5: I mean, I guess we'll see. I guess we'll see.
Speaker 2: This could be a night.
Speaker 6: Huh.
Speaker 5: Yeah. He doesn't have Pelosio over his shoulder now, so
Speaker 5: it's a little bit of a different dynamics.
Speaker 2: So much body language to watch and of course much
Speaker 2: messaging ahead today. Josh Win Grove, thank you so much,
Speaker 2: Bloomberg White House correspondent, setting us up for the big
Speaker 2: speech on this tariff Tuesday. Our special covered starts eight
Speaker 2: pm Eastern Time. Stay with us on the fastest show
Speaker 2: in politics. I'm Joe Matthew. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Balance of Power Podcast. Catch
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Speaker 2: Speech doesn't start till after nine o'clock tonight, and we
Speaker 2: could be sitting here with Rick and Genie around midnight
Speaker 2: on Bloomberg TV and Radio. Now'll call it the State
Speaker 2: of the Union. Because it's his first year. The President
Speaker 2: will deliver his address to Congress tonight, having said it
Speaker 2: will be big, remember truth, social I will tell it
Speaker 2: like it is, said Donald Trump, And well, we're just
Speaker 2: going to have to get together around nine o'clock to
Speaker 2: find out. That's when it starts. Our special coverage begins
Speaker 2: at eight pm Eastern time. The theme tonight the renewal
Speaker 2: of the American Dream. According to the White House, it's
Speaker 2: not planning to leave the Capitol and it's till almost
Speaker 2: eight make that eleven thirty Eastern time tonight, so we're
Speaker 2: in for the long haul. I suspect it's going to
Speaker 2: not only be a lot of handing in backslap, but
Speaker 2: maybe some deal making. I'll remind you the government runs
Speaker 2: out of money in ten days. First term Senator Elissa Slatkin,
Speaker 2: Democrat Michigan in the crosshairs on this tariff Tuesday. We'll
Speaker 2: be delivering the official party response will carry that as well.
Speaker 2: Does America have a State of the Union so called?
Speaker 2: And an Oscars ceremony in it? In the same week
Speaker 2: thirty two million people tune in to see Joe Biden's
Speaker 2: last date of the Union in twenty twenty four. It'll
Speaker 2: be interesting to see what happens here. It's Canada we're
Speaker 2: watching today and Mexico, of course, on this tariff Tuesday,
Speaker 2: twenty five percent in each direction north and south. And
Speaker 2: the retaliation, as I mentioned, has already begun. We heard
Speaker 2: from Justin Trudeau a little while ago here and they
Speaker 2: didn't wait, as I mentioned, implementing retaliatory terriffs of nearly
Speaker 2: one hundred billion dollars of imported US goods thirty billion
Speaker 2: effective immediately, another one hundred and twenty five billion in
Speaker 2: three weeks time. And Justin Trudeau, you know, he has
Speaker 2: a bit of a light touch, although he was clearly
Speaker 2: not very happy when he spoke to the press this morning.
Speaker 2: Doug Ford was smiling, the leader of Ontario, the Premiere
Speaker 2: of Ontario, smiling as he suggests cutting off energy for America.
Speaker 2: Here he is.
Speaker 7: A terrify on Canada, is a tacks on Americans. If
Speaker 7: they want to try to annihilate Ontario, I will do everything,
Speaker 7: including cut off their energy with a smile on my face.
Speaker 7: So and I'm encouraging every other province to do the same.
Speaker 2: Well, it wasn't actually smiling, but you get the point.
Speaker 2: Ontario Premiere says Starlink deal has been canceled. We'll add
Speaker 2: another log on the fire here, raising great questions about
Speaker 2: what tariffs mean for energy. Of course, Donald Trump tonight
Speaker 2: is going to say drill, baby, drill right. That was
Speaker 2: the centerpiece of his approach to inflation. Production ramped up.
Speaker 2: There's been some talk and we'll get to this with
Speaker 2: Tom Close about what Russia might be able to do
Speaker 2: to lower oil prices. But let's get into this conversation
Speaker 2: right now with the global head of Energy Analysis at OPUS,
Speaker 2: an authority on these matters, and always great to have
Speaker 2: Tom Close it with us here on Bloomberg, Tom, Happy
Speaker 2: tariff Tuesday. We're looking at the reaction in the markets
Speaker 2: here the world WTI West Texas crew has blow sixty
Speaker 2: eight dollars a barrel. What are we worried about?
Speaker 8: Well, I think that yesterday's news from the OPEC group
Speaker 8: about increasing production in April has really, I hate to
Speaker 8: use this verb, trumped the tariff to rade for now
Speaker 8: because oil price has moved into the sixties substantially for
Speaker 8: both Brent and WTI on that news. We're not seeing
Speaker 8: that much of a reaction right now for Eightien companies
Speaker 8: and for the US companies that import from Canada. There's
Speaker 8: one exception, and that's in New England where Irving Oil,
Speaker 8: which has a three hundred and twenty thousand barrel of
Speaker 8: day refinery in the Maritimes, raised prices by twenty to
Speaker 8: twenty seven cents overnight. But it's pretty limited. Nothing to
Speaker 8: observe in the Mid continent. And the discount for Canadian crude,
Speaker 8: which has been about twelve to fifty to thirteen dollars,
Speaker 8: is about twelve eighty five right now. So if you
Speaker 8: didn't know about all of this stirm and drying with
Speaker 8: the tariffs, you would think that crude oil is reacting
Speaker 8: to other elements as they should with the OPEK plus agreement.
Speaker 2: That's something. How much does Donald Trump have to do
Speaker 2: with that decision, that announcement from OPEK.
Speaker 8: I don't know if he has anything to do with it.
Speaker 8: You know, the year was setting up to be a
Speaker 8: very very cheap year for liquid oil, and I think
Speaker 8: it still sets up that way. And make the argument
Speaker 8: that the tariffs and the impact from that from a
Speaker 8: trade war is very deleterious to sort of global GDP.
Speaker 8: And there's nothing that impacts petroleum demand like global GDP growth.
Speaker 8: If you take the job cuts and you take the tariffs,
Speaker 8: you can probably cut into that growth, which most people
Speaker 8: thought would be somewhere between seven hundred and fifty thousand
Speaker 8: and one point two million barrels a day this year.
Speaker 2: What's going to be the real impact of this tariff program?
Speaker 2: And I know we're still trying to get our heads
Speaker 2: around it, Tom close up. Markets have been moving in
Speaker 2: a couple of different directions. You heard doug Ford there.
Speaker 2: If they want to annihilate Ontario, he says, I'll do everything,
Speaker 2: including cutting off their energy, with a smile on my face.
Speaker 2: What does it really mean for the industry though?
Speaker 8: On prices, well, if he were the premier or the
Speaker 8: governor or whatever of Alberta, it would mean a lot
Speaker 8: more because most okay, well that we get the heavy
Speaker 8: creud is from Alberta, from hardesty, and right now that's
Speaker 8: trading for about what it did beforehand, and you know,
Speaker 8: probably scraping around fifty five dollars a barrow right now.
Speaker 8: So the tariff ostensibly would add about five dollars and
Speaker 8: fifty cents to that, But we're not seeing it manifest
Speaker 8: itself in downstream markets yet.
Speaker 2: Interesting. Now, let's say they stay in place a couple
Speaker 2: of months, because we don't have a great sense of
Speaker 2: what it would take to bring them down, and we're
Speaker 2: looking at Canada specifically here. I guess when it comes
Speaker 2: to crude oil, could this create a disruption in that trajectory,
Speaker 2: that lower price trajectory that you're talking about.
Speaker 8: Oh yeah, it can mean that the people in the
Speaker 8: mid continent, who typically have the cheapest energy prices and
Speaker 8: they might have the most expensive. Canada is a stranded seller.
Speaker 8: In other words, you know, they export four million barrels
Speaker 8: a day or just a little bit under that to
Speaker 8: the US, and they really don't have many other choices.
Speaker 8: They can move some stuff to tidal water on the
Speaker 8: Trans Mountain pipeline, but not a great deal more. The
Speaker 8: other problem is the US refiners in the center of
Speaker 8: the country are stranded buyers. It's going to be very
Speaker 8: very difficult for them to come up with crude oil
Speaker 8: they prefer if Canada is not selling it. But I
Speaker 8: think the sense out there and the oil markets down
Speaker 8: the energy markets is that the tariffs on Canada are
Speaker 8: going to be measured in days, not in weeks or months.
Speaker 8: I could be wrong on that. Mexico is a little
Speaker 8: bit more complicated because Mexico it is twenty five percent
Speaker 8: and a lot of the Mexican crewed goes into foreign
Speaker 8: trade zones, which is US refinery complexes that ostensibly could
Speaker 8: run Mexican crude and not have to pay the tariff
Speaker 8: because they'll be exporting refined products gasoline and diesel.
Speaker 2: Huh wow, fascinating Before I run out of time here, Tom,
Speaker 2: I heard a fascinating conversation of which earlier today on
Speaker 2: Bloomberg with Don Fitzpatrick. This is the chief investment officer
Speaker 2: at Soros Fund Management, considering the impact that Russia could
Speaker 2: have on this whole picture if we got a peace
Speaker 2: deal in Ukraine. Here's what she said on Bloomberg.
Speaker 9: The US really can't drill more. It's not in Saudi
Speaker 9: Arabia's best interests to produce a lot more. They need
Speaker 9: about ninety dollars a barrel to balance their budget. So
Speaker 9: the lever he can really pull there is Russia. And
Speaker 9: one kind of wild card would be Russia dropping out
Speaker 9: of Opek, and that would have a real impact on
Speaker 9: oil price in the context of moving it lower.
Speaker 2: Speaking this morning at the Bloomberg invest summit, how does
Speaker 2: that hit you, Tom Closa?
Speaker 8: I agree that that's a significant tail risk. If there's
Speaker 8: a raw prochemund with Russia, we're going to get Russian
Speaker 8: molecules of liquids or natural gas, and that could be very,
Speaker 8: very harmful to sort of the oil price universe at
Speaker 8: the moment. Now, that's probably a second half twenty twenty
Speaker 8: five event, if it's out there at all. But you know,
Speaker 8: there's some banks who retain bullish views and they go, well,
Speaker 8: Russia will comply with Opek. What in history has ever
Speaker 8: suggested that they would comply with restrictions that are placed
Speaker 8: upon them. So I agree with Dawn. I think she'd
Speaker 8: spot on on that.
Speaker 2: What would that mean for crude oil in the second
Speaker 2: half of the price of crude?
Speaker 8: You know, I think that with a Russian rop brochmant
Speaker 8: and with let's say an end to some of the
Speaker 8: tariffs for Canada, I think you're talking about crude oil,
Speaker 8: you know, having some trades at below sixty dollars a barrel.
Speaker 8: That's for WTI. Maybe about three or four dollars higher
Speaker 8: for Brent.
Speaker 2: Fascinating.
Speaker 8: It's hard to be bullish about crude oil right now,
Speaker 8: very very hard.
Speaker 2: Right despite the Well, you're gonna hear drill, baby, drill
Speaker 2: tonight for sure, Tom Close, in our remaining moment, what
Speaker 2: else do you want to hear that might make you
Speaker 2: feel better about prices this year?
Speaker 8: I don't know. You know, we're going to hear about
Speaker 8: energy dominance, but you know, ironically, we achieved energy dominance
Speaker 8: during the Biden administration despite an adversarial relationship. So I
Speaker 8: don't think that most companies are going to be interested
Speaker 8: in bringing more hydrogardons to the market, with the exception
Speaker 8: of natural gas they can explore. So I think we'll
Speaker 8: get a lot of rhetoric and we'll get hyperbole, which
Speaker 8: is very predictable, but I don't think we'll get much
Speaker 8: in terms of policy change.
Speaker 2: It's always great to have you, Tom, I appreciate it
Speaker 2: very much. Tom Close, a global head of Energy Analysis
Speaker 2: at Opus. The straight take ahead of the address to
Speaker 2: Congress later It starts a little after nine pm West
Speaker 2: Texas crewed sixty seven eighty four. We're down about one
Speaker 2: percent today and apparently heading lower yet if Tom close
Speaker 2: A has the right take on things.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch
Speaker 1: us live weekdays at noon and five pm Eastern on
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Speaker 2: We're talking about Canada because we've heard about their retaliation.
Speaker 2: Sunday is when we'll hear from Mexico. Claudia Scheinbaum says
Speaker 2: her retaliation will be spelled out. She said she had
Speaker 2: a plan B, A C and a D. What are
Speaker 2: we in for from Mexico.
Speaker 10: Look, I mean one of the things that is really
Speaker 10: in plan and is going to be hit hard here
Speaker 10: as the auto sector. Right, we import cars from Mexico,
Speaker 10: We import auto parts from Mexico. We also export auto
Speaker 10: parts to Mexico that go into a lot of those cars.
Speaker 2: That come back in.
Speaker 10: If those are then hit by tariffs on the Mexican side,
Speaker 10: it's just going to raise the costs even more than
Speaker 10: these US tariffs are. And you know, we'll see how
Speaker 10: it escalates if we move from plan A to B,
Speaker 10: to C to D. As things escalate, that the damage
Speaker 10: is just.
Speaker 11: Only going to grow, all right, Seawandan and Bloomberg Senior
Speaker 11: writer for Economics here with us as we digest all
Speaker 11: of this tariff news. Thank you so much joining us
Speaker 11: here on bal Power on Bloomberg TV and Radio, and
Speaker 11: joining us now on the program live from Capitol Hill.
Speaker 11: As Republican Congressman Mark Alford of Missouri, who sits on
Speaker 11: the Small Business Committee. Congressman, welcome back to Bloomberg. It's
Speaker 11: good to have you, sir. When you consider what small
Speaker 11: businesses may be thinking today in the face of news
Speaker 11: of these tariffs, wondering what will happen to the cost
Speaker 11: they are facing and their ability to pass those costs
Speaker 11: on to the people who purchase goods and services from them,
Speaker 11: what would you tell them?
Speaker 12: Interesting, you should bring up small business. We just had
Speaker 12: a meeting with a new administrator, Senator Kelly Luffler, who
Speaker 12: is intent on getting small business representatives into the rural
Speaker 12: parts of America. In particular, we requested that in our
Speaker 12: district just south of Kansas City. And I'll tell you
Speaker 12: what our small business owners are saying. Look, we know
Speaker 12: that they are going to be some price increases that
Speaker 12: they're going to have to pass on to consumers. But
Speaker 12: it is worth it if we can save one hundred
Speaker 12: thousand lives a year through the fentanyl poisoning. This past administration,
Speaker 12: the Biden administration, with the poorest borders, we're allowing this
Speaker 12: fentanyl poison to come up, and this toxins to poison
Speaker 12: and kill.
Speaker 13: Our young people.
Speaker 12: And so look, we get stuff delivered to our house
Speaker 12: just about every day, it seems like, from Amazon, and
Speaker 12: typically cheap goods, immediate gratification from China.
Speaker 13: I'm willing to pay a little bit more if.
Speaker 12: We can stop the poisoning, particularly of our young people
Speaker 12: that's coming through Canada and Mexico.
Speaker 2: Well that's really interesting, Congressman. We appreciate that first hand account.
Speaker 2: If small business owners are telling you that, then they
Speaker 2: are prepared for some short term pain, as Donald Trump
Speaker 2: had previously warned.
Speaker 12: Look, I think small businesses have got kind of the
Speaker 12: short sheeted with the past administration. They have not gotten
Speaker 12: the capital and counseling that they need from the small
Speaker 12: business administration. It seems like Administra at Guzman was more
Speaker 12: concerned about registering Democrat voters than actually getting out with
Speaker 12: representatives and helping small businesses.
Speaker 13: Grow Kelly Leffler is.
Speaker 12: Changing that, and we are going to make sure that
Speaker 12: small businesses thrive. Part of that is going to be
Speaker 12: building small businesses in the rural area.
Speaker 13: We're intent on doing that.
Speaker 12: I know that these tariffs might be a temporary setback,
Speaker 12: but it is a short term pain.
Speaker 13: For a long term gain for America.
Speaker 12: Reciprocal tariffs are what I think that we need to
Speaker 12: write the ship in America to gain the respect on
Speaker 12: the world stage, and Donald Trump is going to do
Speaker 12: that with my support and the Republican Conference.
Speaker 11: Well, I do wonder how long term is the term
Speaker 11: we're actually talking about here, Congressman, because the President was
Speaker 11: elected to a four year term off the back of
Speaker 11: concerns voters had about the economy, and if you look
Speaker 11: at polls that we've consistently seen in the last several weeks,
Speaker 11: they are concerned he's not doing enough to address the
Speaker 11: prices they are facing now, let alone what they might
Speaker 11: face in the future once you account for the impact
Speaker 11: of tariffs. What does he need to say about that
Speaker 11: tonight when he addresses you and your colleagues.
Speaker 12: I think he's going to talk about his wins already
Speaker 12: opening up oil production in America, shutting down the border,
Speaker 12: essentially securing our border with more than ninety percent reduction
Speaker 12: in illegal crossings into our great nation. That puts such
Speaker 12: a strain on the fabric of America. And I think
Speaker 12: that some of the other wins that he has is
Speaker 12: going to go a long way to bringing down the
Speaker 12: interest rates in America, restoring If we can get this
Speaker 12: Tax Cuts and Jobs Act passed through the House Reconciliation
Speaker 12: and the Senate Reconciliation Bill, that will go a long
Speaker 12: way to restoring confidence in the bond market, and in turn,
Speaker 12: I believe the Federal Reserve will bring down the interest rates.
Speaker 12: I am the chair of the Real Estate Caucus. We
Speaker 12: had a meeting heard from young people here on Capitol
Speaker 12: Hill who want to buy a home and they can't
Speaker 12: because supply shortages, because of over regulation, Inflation Reduction Act regulations,
Speaker 12: climate regulations that are driving some home builders out of business.
Speaker 12: They can't keep up with these regulations. It's adding twenty
Speaker 12: five percent to the cost of a home in Kansas City.
Speaker 12: I firmly believe that the economic policies that Donald J.
Speaker 12: Trump is instilling now is going to turn our economy
Speaker 12: around in a short order. Within the next two quarters
Speaker 12: and get our economy juiced again to where we're not
Speaker 12: going to have to worry about these reciprocal tariffs.
Speaker 2: So if the cost of goods, though, continues to rise
Speaker 2: across the board, and we're looking at now the potential
Speaker 2: for a trade war in the words of Howard Lutnik,
Speaker 2: to begin on April second, how does that help to
Speaker 2: get more young people in affordable homes.
Speaker 12: Well, we raise salaries. I think you're going to see
Speaker 12: that coming. The demand for intellect, the demand for good
Speaker 12: labor is there, and so our workforce. If we provide
Speaker 12: the education they need and the training they need for
Speaker 12: skilled labor, I'm big on that in our district, they're
Speaker 12: going to have good paying jobs and they're going to
Speaker 12: be able to afford. Not the hyper inflation that Joe
Speaker 12: Biden brought about, but I think a reasonable rate of
Speaker 12: inflation that we can all live with with a higher salary,
Speaker 12: higher earning power, and higher confidence in the American economy.
Speaker 11: I do wonder about a potential wage price spiral that
Speaker 11: could stem from that, Congressman, if people are constantly having
Speaker 11: to demand more from their employers so that they can
Speaker 11: afford the cost of goods, and that buying power only
Speaker 11: continues to drive the cost of goods higher. But when
Speaker 11: we're considering people who have jobs or maybe negotiating their wages,
Speaker 11: of course, there are now thousands of federal workers who
Speaker 11: no longer do given the efforts of the Department of
Speaker 11: Government Efficiency. I know you had a town hall last
Speaker 11: week and you had to answer some questions about those
Speaker 11: layoffs and the spending cuts. Is this making your job
Speaker 11: and your communication with your constituents harder? If not the
Speaker 11: concept of reducing the federal government, but the way in
Speaker 11: which this has been done.
Speaker 12: I love talking to our constituents, Democrats, Republicans, independent, politically agnostic.
Speaker 12: I represent seven hundred and seventy two forty seven individuals.
Speaker 12: We give the same level of conciered service in our
Speaker 12: three offices in our district. But look, you've got to
Speaker 12: have a conversation. I want to have a give and
Speaker 12: take with the constituents. We had a lot of people
Speaker 12: show up at this. It was really supposed to be
Speaker 12: a coffee Usually I have ten people show up.
Speaker 13: There was almost two hundred.
Speaker 12: I asked the I had everyone write down their question
Speaker 12: on index cards. I read the question and then when
Speaker 12: I started answering, they would try to shout me down.
Speaker 12: That is not an exchange of ideas. That is not
Speaker 12: answering questions. I want to listen to people, but I
Speaker 12: also want to have a discussion, and that's not happening
Speaker 12: now because of organized disruptors who are trying to.
Speaker 13: Make what we do ineffective.
Speaker 12: And that is not right for our constituents who really
Speaker 12: want to have discussions.
Speaker 2: Just talk about organized disruptors on the other side of
Speaker 2: your isle tonight, Congressmen, Democrats may be bringing props, signs,
Speaker 2: even noisemakers. According to some reports, What will be the
Speaker 2: decorum in the hall later, Well.
Speaker 12: Decorum is a very big part of the Republican Conference.
Speaker 12: We will maintain decorum. I have no control over.
Speaker 2: What the Republicans were doing. A lot of yelling last
Speaker 2: year at Joe Biden.
Speaker 12: Well, there were some, but I think the vast majority
Speaker 12: of the Republican Conference, including myself, we're treating the officer
Speaker 12: of the presidentcy with respect, and I would encourage all members,
Speaker 12: Republicans or Democrats, to do the same, because, listen, this
Speaker 12: is a chance for the chief executive.
Speaker 13: To come in.
Speaker 12: Although technically this is not a state of the Union address,
Speaker 12: it's a chance to hear what's on the President's heart, soul,
Speaker 12: and mind, and then for us as Congress of Body
Speaker 12: to work together where we can to bring about positive
Speaker 12: change for America. I think the president again, whether it's
Speaker 12: Joe Biden, or whether it's Donald J. Trump, President Obama,
Speaker 12: President Clinton, George W. Bush or Ronald Reagan, if you're
Speaker 12: standing out there as a chief executive, you deserve to
Speaker 12: be heard, and we deserve to give our respect to
Speaker 12: that office and.
Speaker 11: Our final moment together. Congressman, as you talk about working
Speaker 11: together where you can, is one of those areas going
Speaker 11: to be keeping the government funded beyond ten days from now?
Speaker 11: How will shut down be averted?
Speaker 13: Well, I certainly hope so.
Speaker 12: I was with the Chairman of the Appropriations Committee, Tom
Speaker 12: Cole yesterday. I'm now in the Appropriations Committee. We were
Speaker 12: talking about he has tried in earnest to work with
Speaker 12: his counterparts in the House and in the Senate to
Speaker 12: keep the government open by passing the twenty twenty five Yes,
Speaker 12: we're still trying to pass the twenty twenty five budget.
Speaker 12: We're a year behind, and they reached the top line number,
Speaker 12: but they wanted to hobble the President and Elon Muskin
Speaker 12: doge from doing their job of weeding out waste, abuse
Speaker 12: and fraud in the government and finding these savings reasonable
Speaker 12: savings for America. And we're just not willing to do that.
Speaker 12: Tom Cole, the Appropriation Share is not willing to do that.
Speaker 12: He did not walk away from negotiating. That is something
Speaker 12: that the Democrats put out there to try to win
Speaker 12: people over. I am I'm thinking now, and I think
Speaker 12: Senator Schumer put out a statement on social media today
Speaker 12: that they might be going for a shutdown, and if
Speaker 12: they do that as a Schumer shutdown, we under the
Speaker 12: direction of our leadership, I think, are going to move
Speaker 12: towards a continuing resolution that will fund the government to
Speaker 12: the end of September.
Speaker 13: Let's finish out September.
Speaker 2: Keeping in mind Republicans do control both houses. It's great
Speaker 2: to have you back, Mark Alford, Republican from Missouri. As
Speaker 2: we look ahead to the speech tonight, we'll assemble our
Speaker 2: panel next Right here on Bloomberg.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch
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Speaker 1: flagship New York station, Just Say Alexa played Bloomberg eleven.
Speaker 11: Thirty checking on the S and P five hundred at
Speaker 11: levels that we haven't seen since November fifth, twenty twenty four.
Speaker 11: And I seem to believe Joe that something pretty important
Speaker 11: was happening on that day, and that was in fact
Speaker 11: election day, when, of course Donald Trump was overwhelmingly by
Speaker 11: electoral college standards and the popular vote elected president of
Speaker 11: the United States, and in doing so helped precipitate what
Speaker 11: had been a pretty remarkable market rally, with the S
Speaker 11: and P five hundred as recently as a few weeks
Speaker 11: ago at record highs, something he touted when speaking at
Speaker 11: the Saudi Investment Forum FII in Florida just earlier this month.
Speaker 11: And now here we are back at levels from before
Speaker 11: we knew that it was Donald Trump who would be
Speaker 11: the next president of the United States. And I can't
Speaker 11: imagine that is sitting extraordinarily well with him as he
Speaker 11: gets prepared to address the nation in a joint session
Speaker 11: of Congress this evening at.
Speaker 2: The yeah that prompted a big old rally as we
Speaker 2: saw following the election. To the think that we have
Speaker 2: done a round trip like this and so quickly, so precipitously,
Speaker 2: is certainly freaking out a lot of investors. As we
Speaker 2: watch the markets here, it's kind of turned into a
Speaker 2: split screen once again. If you remember Donald Trump toward
Speaker 2: the end of his first term, every day he'd be
Speaker 2: out speaking about remember it was COVID. There'd typically be
Speaker 2: an update on COVID, on vaccines and so forth, and
Speaker 2: there'd be a split screen on every cable news screen
Speaker 2: with the financial markets. And we may be back in
Speaker 2: a world like that as indeed, the President addresses Congress
Speaker 2: later and it's where we start our conversation with our
Speaker 2: signature panel. They're in for the long haul today. Rick
Speaker 2: and Jeanie with us right now. Rick Davis, partner at
Speaker 2: Stone Court Capital, republican strategist, and Genie Shanzo are democratic
Speaker 2: analyst and senior Democracy Fellow with the Center for the
Speaker 2: Study of the Presidency and Congress. What's your thought on that, Genie,
Speaker 2: knowing that Donald Trump thinks that the stock market is
Speaker 2: really the ultimate metric when it comes to his success,
Speaker 2: and the split screen, even if implied as he addresses
Speaker 2: Congress and the American people tonight means what.
Speaker 14: Yeah, I mean, rationally, you would think he looks at
Speaker 14: these numbers and sees all that red and says, gosh,
Speaker 14: I didn't mean about those tariffs. Let's go back and
Speaker 14: pull back on that. Because the stunning thing about this
Speaker 14: is the gains that were made, as you guys were
Speaker 14: just talking about, have all been lost. And this is
Speaker 14: a self inflicted wound. This was not a natural disaster.
Speaker 14: It is not some kind of calamity that has befallen
Speaker 14: like so many presidents have dealt with. He has done
Speaker 14: this to himself and to the economy so far. You know,
Speaker 14: there is an old statement civilizations decline when you forget
Speaker 14: what's obvious. And what's obvious that we know is tariffs
Speaker 14: are really really bad for a good economy. Nobody outside
Speaker 14: of the administration and probably a lot of people in
Speaker 14: the administration disagrees with that. And so why he is
Speaker 14: doing this and if he keeps it up given these number,
Speaker 14: I just can't imagine that he will. But so far
Speaker 14: he is all.
Speaker 11: In Well, Rick, we often here said and say it
Speaker 11: ourselves at Bloomberg that the stock market is not the
Speaker 11: economy that fundamentally they are very different things. And yet
Speaker 11: it does seem what the stock market is reflecting, at
Speaker 11: least right now, is concerned about the economy. So I
Speaker 11: do wonder what your take is on how Donald Trump
Speaker 11: is going to speak about this this evening, not just
Speaker 11: thinking of like where asset prices actually are, but what
Speaker 11: it is signaling about what his policies may do to
Speaker 11: what everyday Americans are experiencing when they go to the
Speaker 11: grocery store to take a look at their bills.
Speaker 15: Yeah, I think he's going to double down on this
Speaker 15: notion that he can reverse the current course of a
Speaker 15: general economic slowdown and ramp it up. He's got a
Speaker 15: little bit of success to talk about around oil prices,
Speaker 15: gas pumps, but you know, he's not going to let
Speaker 15: facts get in the way of a good story, right,
Speaker 15: So you know, he's going to talk about how already
Speaker 15: the country is moving forward in a better economic direction,
Speaker 15: and there are you know, some successes. Inflation has been
Speaker 15: held down and so on those things that is positive,
Speaker 15: he'll take full credit for that. And for all those
Speaker 15: negative things, I think they'll be in the basket of
Speaker 15: Joe Biden problems that he inherited, And I think Joe
Speaker 15: Biden will show up quite a.
Speaker 13: Bit in the speech.
Speaker 15: He's been sort of going back to his campaign rhetoric
Speaker 15: recently and using Joe Biden as the person that caused
Speaker 15: all this havoc in the United States. And I wouldn't
Speaker 15: be surprised that all these things that are negative related
Speaker 15: to the economy are going to be Biden problems that
Speaker 15: he inherited.
Speaker 2: Does he speak rick maybe to the temporary pain that
Speaker 2: he referred to at one point the way Mark Alford
Speaker 2: just did a moment ago that this is about something
Speaker 2: bigger than the stock market or making money, that he's
Speaker 2: trying to save American lives by stopping fent I left
Speaker 2: the border.
Speaker 15: Yeah, there's no question fentanyl will be the reason that
Speaker 15: these punitive tariffs have been put on Mexico, China, and
Speaker 15: uh in Canada. I mean, honestly, I mean, you know,
Speaker 15: the broad brush on this is awful, hard to swallow.
Speaker 15: I mean, Canada is not the reason millions of people
Speaker 15: or one hundreds of thousands of people have been dying
Speaker 15: from fentanyl, and yet they get tarred with the same
Speaker 15: brush as people who have been part of the poorest
Speaker 15: problem and that's Mexico and China.
Speaker 13: So uh I do.
Speaker 15: I did see though that the China retaliatory tariffs want
Speaker 15: in effect kind of mimic that, you know, they're blaming
Speaker 15: bark beetles for bannon our lumber and and soybean fung
Speaker 15: guy for you know, the reason that they're they're going
Speaker 15: to raise tariffs on soybeans. I mean, they're not saying
Speaker 15: these are retaliatory tariffs. They're saying, oh, we've got defective products.
Speaker 15: And so this whole tariff war, you know, is turning
Speaker 15: into the sort of level of of sublime idiocy. I mean,
Speaker 15: like we're going to start blaming things on beetles and
Speaker 15: fungui and not really addressing the current problem. So I
Speaker 15: don't think Donald Trump is going to shy away from
Speaker 15: both the economic argument. These countries have been living off
Speaker 15: of our trade surpluses and you know, living off of
Speaker 15: our trade deficit, and in the meantime they've also been
Speaker 15: hurting our country. So he's going to unload both barrels tonight.
Speaker 15: I have no doubt about that.
Speaker 2: Well.
Speaker 11: And to Rick's point on Canada, as we're hearing this
Speaker 11: administration frame it not as a trade war but as
Speaker 11: a drug war. According to Customs and Border Patrol data,
Speaker 11: that amount of fentanyl that crossed the Canadian border last
Speaker 11: year was just forty three pounds compared to the twenty
Speaker 11: one thousand pounds that crossed over the southern border. So
Speaker 11: we should just bear those facts in mind as we
Speaker 11: consider not just only the justification for these tariffs that
Speaker 11: the President is using, but also the way in which
Speaker 11: it will afform inform what moves forward. Because Genie, if
Speaker 11: these tariffs are to be taken lower, presumably it would
Speaker 11: be because he sees some progress. Have we yet seen
Speaker 11: to find what kind of progress he is looking for?
Speaker 11: What is going to be enough for him to say,
Speaker 11: all right, now you've done what I asked.
Speaker 13: Here we go.
Speaker 11: The tariffs have taken them down?
Speaker 14: So far we have not seen that. And if they're
Speaker 14: going to continue, as Howard Lutnick said that this is
Speaker 14: and you just were talking about fentanyl. This is a
Speaker 14: drug war, not a trade war. How much lower could
Speaker 14: Canada go in terms of ventanyl? They are just one
Speaker 14: percent of the fentanyl intercepted at the US border. You
Speaker 14: don't get much better than that. I mean, certainly we'd
Speaker 14: all like it to be zero but that is not
Speaker 14: the problem. But they're saying that's the problem. So how
Speaker 14: does Canada repair that? There's no way to go, And
Speaker 14: this gives lie to what they have been talking about.
Speaker 14: You know, Donald Trump seems to be responding to a huge, huge,
Speaker 14: real challenge, and that is the loss of manufacturing many
Speaker 14: many decades in the making. But he is not going
Speaker 14: to be able to repair that with a trade war
Speaker 14: against our closest allies without real pain. And I think
Speaker 14: in your great conversation with the congressman, we just heard
Speaker 14: how difficult it is going to be for members of
Speaker 14: Congress to defend that to their constituencies. I mean, we
Speaker 14: even heard Ron Johnson, a fairly conservative, very very conservative guy,
Speaker 14: say his state is going to feel pain as it
Speaker 14: pertains to agriculture and manufacturing as a result of this
Speaker 14: trade war. There is no win here. And Donald Trump
Speaker 14: is not the kind of politician who's going to stand
Speaker 14: up and say we're going to take short term pain
Speaker 14: for long term gain. I don't see him doing that.
Speaker 14: And he can try to blame Biden. I'm sure Rick
Speaker 14: is right he will, but the reality is this is
Speaker 14: a self inflicted Donald Trump wound and it's a wound
Speaker 14: to him politically, and it's a wound to the economy
Speaker 14: and the market that he's going to have to turn around.
Speaker 14: I think he'll be able to do that, but he's
Speaker 14: got to look at what's happening and see the lie
Speaker 14: of what he has been believing so long that you
Speaker 14: can correct the manufacturing decline in the US by a
Speaker 14: trade war?
Speaker 13: Rick?
Speaker 2: Is all this going to make people want to watch
Speaker 2: thirty two million tuned in to see Joe Biden's last
Speaker 2: State of the Union in twenty twenty four? And you
Speaker 2: know that, other than the stock market, I guess TV
Speaker 2: ratings are the closest thing to a metric of success
Speaker 2: for Donald Trump. How much show business do we have
Speaker 2: to consider here?
Speaker 15: Well, he always gets the eyeballs, whether it was you know,
Speaker 15: in the days of Apprentice or in his own political career.
Speaker 15: So I have no doubt we could be breaking records tonight.
Speaker 15: Plus the onslaught of his policies in the last five
Speaker 15: weeks is you know, unprecedented in Washington for a new administration.
Speaker 15: So I am pretty confident based on just my own
Speaker 15: poll of talking to people I know wondering like, what's
Speaker 15: next They're going to want to tune in and see
Speaker 15: what news makes tonight because it could impact you wherever you.
Speaker 11: Are well well as many people stick around for the
Speaker 11: Democratic response, Genie, it's going to be delivered by the
Speaker 11: new Democratic Senator, Alissa Slotkin of Michigan was able to
Speaker 11: win her Senate seat in a state that Donald Trump
Speaker 11: carried in November. What is her message going to be?
Speaker 14: I think her message is going to be about kitchen
Speaker 14: table issues. She proved she could win a state like
Speaker 14: Michigan that Donald Trump also won. She's got to show
Speaker 14: Democrats a path forward which is appealing to people who
Speaker 14: split their ticket in twenty twenty four because she focused
Speaker 14: like a laser beam on issues that they really care about,
Speaker 14: which are table sorry, kitchen issues. But of course, Kaylee,
Speaker 14: she does not want to be in a kitchen We
Speaker 14: saw that last year round. It's not going to go well.
Speaker 14: So I suspect she'll have another background for the speech tonight.
Speaker 11: Yeah, perhaps not going to take a play out of
Speaker 11: Katie Britt's book. Genie, Shansey and Rick Davis our signature
Speaker 11: political panel with us on the early edition. They'll be
Speaker 11: with us on the late edition of Balance of Power,
Speaker 11: and of course for our special coverage of this address.
Speaker 11: It begins at eight pm Eastern Time right here on
Speaker 11: Bloomberg TV and Radio. And who knows how long it
Speaker 11: will go for the White House is saying that the
Speaker 11: President will be at the Capitol for more than two hours.
Speaker 2: Yeah, eleven twenty. He could still be shaking hands and
Speaker 2: backslap and that's just the way these things go. Questions
Speaker 2: too about whether he might have a couple of meetings
Speaker 2: or more deliberate conversations with ten days left till a
Speaker 2: funding deadline in the government. Interesting you mentioned Senator Slotkin,
Speaker 2: the premiere of Ontario. Dug Ford, who had some pretty
Speaker 2: tough words for Donald Trump today, says he will add
Speaker 2: a twenty five percent tax on electricity that goes to
Speaker 2: states including Michigan.
Speaker 11: Yeah, and he'll do so with a smile, right, He.
Speaker 2: Said that a smile on his face. He wasn't smiling
Speaker 2: when he said it, though.
Speaker 11: Yeah, all right, we'll have more on the tariffs coming
Speaker 11: up in just a moment with someone who used to
Speaker 11: serve at the USTR in the last administration. That's just
Speaker 11: ahead on Balance of power on Bloomberg TV and radio.
Speaker 1: You're listening to the Bloomberg Balance of Power Podcast. Catch
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Speaker 2: On Tariff Tuesday. Thanks for being with us on the
Speaker 2: fastest show in politics. We're live in Washington, where President
Speaker 2: Trump will be addressing a joint session of Congress a
Speaker 2: bit after nine pm Eastern time. We'll have special coverage
Speaker 2: starting at eight and hope you'll be with us. Our
Speaker 2: signature panel will be as well, Rick Davis and Janie Shanzano.
Speaker 2: As we consider the implementation of Tariff's Kayley on Canada
Speaker 2: and Mexico, We've already heard about retaliation from Canada, and
Speaker 2: Donald Trump says we'll just keep on reciprocating. It's an
Speaker 2: interesting moment, though, as the Commerce Secretary Howard Lutnik frames
Speaker 2: this as a drug war, suggesting that the trade war
Speaker 2: doesn't begin until April second.
Speaker 11: Well, in April second is when we're expecting a laundry
Speaker 11: list of other tariffs to take effect. The reciprocal tariffs
Speaker 11: that President Trump was alluding to could impact Canada on
Speaker 11: top of what already has been imposed. Today auto tariffs
Speaker 11: are set to go into effect. He suggested europe tariffs
Speaker 11: of twenty five percent may be implemented in April as well.
Speaker 11: By all accounts, at least at this stage, the President's
Speaker 11: signaling things only go up from here in terms of
Speaker 11: the way in which the United States taxes imports. But
Speaker 11: what we are dealing with right now, and what the
Speaker 11: market is contending with, is the S and P five
Speaker 11: hundred has now erased all gains it made in the
Speaker 11: aftermath of President Trump's election in November. Is the reality
Speaker 11: that our three biggest trading partners now have tariffs of
Speaker 11: at least twenty percent on pretty much every good that
Speaker 11: comes for them, borrowing Canadian energy, which of course is
Speaker 11: at ten percent.
Speaker 2: S ANDP fivert now back below fifty eight hundred today, Kaylee,
Speaker 2: Yesterday was the biggest loss of the year for the
Speaker 2: S and P. The vics is rising, and the market
Speaker 2: wants to know what's next. Maybe we'll learn tonight.
Speaker 11: Well, yes, I'm imagining we're going to get a lot
Speaker 11: more of this from the President's speech, and as we
Speaker 11: look ahead to that and consider or the impact of
Speaker 11: this policy. We turn to Greta High. She's partner at
Speaker 11: Wiley Ryan and former General counsel for the Office of
Speaker 11: the United States Trade Representative. She's been dealing with trade
Speaker 11: issues for many, many years. Greta, thanks for joining us
Speaker 11: here on balance of power. When we consider this notion
Speaker 11: of things getting ratcheted up further, reciprocal tariffs going into
Speaker 11: place in just a few weeks, is it your expectation
Speaker 11: that countries in advance of that may actually lower their
Speaker 11: tariff rate so that they don't face as high a
Speaker 11: levey from the United States or is this just going
Speaker 11: to raise the cost of everything.
Speaker 6: Thank you for having me. I think we don't know.
Speaker 6: I wouldn't expect countries to preemptively lower their tariffs. I
Speaker 6: think because of some uncertainty as to what exactly those
Speaker 6: reciprocal tariffs will look like, what they will count, and
Speaker 6: how they'll be implemented. And so if countries were to
Speaker 6: lower their tariffs today before those acts were taken, it
Speaker 6: would really be negotiating against themselves and trying to predict
Speaker 6: something that that's just unpredictable.
Speaker 13: Right now.
Speaker 6: They don't know exactly what will come out of the
Speaker 6: Trump administration and those reciprocal tariff actions that they've discussed.
Speaker 2: Well, it'll be interesting to hear how Donald Trump frames
Speaker 2: us tonight. We've heard a lot about temporary pain, that
Speaker 2: this will be the cost of saving lives Greta when
Speaker 2: the flow of Fentanyla stopped at our northern and southern borders.
Speaker 2: How temporary would that pain be before the rest of
Speaker 2: Donald Trump's policies, presuming that things are all passed and
Speaker 2: codified on Capitol Hill or put into effects.
Speaker 6: Well, we don't know, in part because we don't know
Speaker 6: what the asks are on the fentanyl and immigration side.
Speaker 6: We haven't seen a lot of news come out about
Speaker 6: the negotiations with Canada and Mexico and what specifically the
Speaker 6: Trump administration is asking in order to resolve these crises
Speaker 6: and make a dent on the fentanyl and immigration issues.
Speaker 6: And then, of course there is the question of what
Speaker 6: comes next with respect to reciprable tariffs and other actions
Speaker 6: that have either started or have been discussed. And so
Speaker 6: I think the name of the game for these trading
Speaker 6: partners and for businesses across the border is uncertainty about
Speaker 6: what the future holds.
Speaker 2: Yeah, well, just to follow up on that quickly, we
Speaker 2: heard from the Commerce Secretary, Howard Lutnik this morning. He
Speaker 2: said that we need to see material reduction in autopsy
Speaker 2: deaths from opioids. That is apparently the metric based on
Speaker 2: your experience working with the USTR. How is that made
Speaker 2: clear and how can our partners reach a goal like that?
Speaker 6: Well, my experience at the US Trade Representative Office, Uh,
Speaker 6: you know it doesn't really uh shed light onto this
Speaker 6: because this is really breaking new ground for this administration.
Speaker 6: They're using new authorities with a new rationale in the
Speaker 6: trade space, sort of crossing over between what we normally
Speaker 6: think of as law enforcement issues public health issues and
Speaker 6: tying them to trade tools. And in this case, you know,
Speaker 6: it's a question how you know what's tied directly to
Speaker 6: our trade relationships with Canada and Mexico and what may
Speaker 6: not be And so you know that again, it just
Speaker 6: raises a question of how, as you put it, how
Speaker 6: do you measure what's the outcome? How do you know
Speaker 6: that this is successful in addressing these issues, and what
Speaker 6: are the actions that they're really looking for here?
Speaker 11: Well, I'm glad, Greta that you raise the authorities with
Speaker 11: which the president is taking this action. We've both Canada,
Speaker 11: through Justin Trudeau, the Prime Minister, as well as China
Speaker 11: suggests that they will be challenging these measures at the
Speaker 11: World Trade Organization? Could this be overturned through that mechanism?
Speaker 11: How binding would any WTO findings be? Is there a
Speaker 11: question around whether President Trump actually has the ability to
Speaker 11: continue enforcing this.
Speaker 6: So yes, I saw the statements around WTO action at
Speaker 6: this stage bringing claims at the World Trade Organization. In
Speaker 6: some respects, it's symbolic. What the World Trade Organization does
Speaker 6: through dispute settlement is give trading partners the sort of
Speaker 6: green light to retaliate for trade actions. Canada is already
Speaker 6: moving forward with its retaliation. Mexico is doing so as well,
Speaker 6: so you can see that they're not waiting for those outcomes.
Speaker 6: They may still go ahead at the WTO to make
Speaker 6: the point that in their view, these are are inconsistent.
Speaker 6: The Trump administration may have arguments that there's exceptions that
Speaker 6: allow them to take this type of action, and we'll
Speaker 6: have to see how that plays out.
Speaker 2: As we spend time with Greta, I want to remind
Speaker 2: our viewers and listeners we have an important conversation on
Speaker 2: the way from Bloomberg invest with Gary cohenevice chair of IBM.
Speaker 2: We're only a couple of minutes away from that, and'd
Speaker 2: be curious to hear his take on this. Greta and
Speaker 2: I want to tap your experience on Capitol Hill because
Speaker 2: you are also Senior International Trade Council for the US
Speaker 2: Senate Committee on Finance, and among the legislation that you
Speaker 2: helped to craft and implement was the Miscellaneous Tariff Bill
Speaker 2: Act of twenty eighteen. Now you must be smirking a
Speaker 2: little bit knowing that the aim of that legislation was
Speaker 2: to reduce or eliminate tariffs on imported goods. Will lawmakers
Speaker 2: have any role in this? Will there be any legislation
Speaker 2: surrounding the implementation of these tariffs? Or is this all
Speaker 2: Donald Trump all the time?
Speaker 6: Well, I think the current is assessment with this Congress
Speaker 6: is that it's unlikely they'll be doing anything legislatively.
Speaker 9: To alter the course.
Speaker 6: It is very difficult to pass trade legislation. They would
Speaker 6: need to do so on a bipartisan basis, overcoming a
Speaker 6: potential veto from the President. I think that said members
Speaker 6: of Congress will hear rising and continuing concerns from constituents, businesses, exporters, importers,
Speaker 6: potentially consumers as these tariffs go into place and as
Speaker 6: they increase, and that political pressure will start to influence
Speaker 6: members and by extension, the White House potentially.
Speaker 11: Well, the White House doesn't seem too influenced by any
Speaker 11: particular political pressure at this time, as it is standing
Speaker 11: by its policies here. Also keeping in mind, Greta, that
Speaker 11: they see this as a means to raise revenue with
Speaker 11: the tariff levels on this quantity of imports that we're
Speaker 11: dealing with now a half one and a half trillion
Speaker 11: dollars worth from our three largest trading partners, with the
Speaker 11: potential for reciprocal tariffs, with the Commerce Secretary suggesting that
Speaker 11: could be another several hundred billion dollars raised. How does
Speaker 11: this mathematically work when looking at what it's going to
Speaker 11: do to the coffers of the United States Treasury.
Speaker 6: Well, certainly it will increase the tariff revenue. You have
Speaker 6: to when you're estimating out the revenue collection from tariffs,
Speaker 6: you have to take into account the fact that imports
Speaker 6: will likely go down, So it's not going to be
Speaker 6: twenty five percent on the current level of trade continuing forever,
Speaker 6: because presumably the current level of imports will go down
Speaker 6: as those imports become more expensive. And I think that
Speaker 6: that's part of the objectives that the administration is looking for,
Speaker 6: so it will be a revenue raiser. I think it's
Speaker 6: a question of does do the tariffs stay in place
Speaker 6: in their current form? Is the administration able to maintain that,
Speaker 6: and will the trades stay at this level or will
Speaker 6: it decrease in a way that really diminishes the amount
Speaker 6: of tariff collection that results.
Speaker 2: I know it's all about Canada today, Greta, but I
Speaker 2: am interested that no one's talking about China very much.
Speaker 2: Donald Trump said he didn't expect Beijing to retaliate too much,
Speaker 2: were his words. But we've got quite the retaliation up
Speaker 2: to fifteen percent of a bunch of farm products here,
Speaker 2: including soybeans, meat, and grains. Are food prices going.
Speaker 6: Up, well, we'll see. So it's interesting because China did
Speaker 6: take strong retaliation, but of course, compared to what the
Speaker 6: tariffs have been put in place so far. I mean,
Speaker 6: we've put in place tariffs now, just in this most
Speaker 6: recent action on over four hundred billion dollars worth of imports,
Speaker 6: and China is retaliating with targeted tariffs on key agricultural
Speaker 6: product in the tens of billions, right, but with real
Speaker 6: impact on those sectors, and so that will cause pain
Speaker 6: in certain congressional districts in certain parts of the country,
Speaker 6: and it will be another cost of this policy.
Speaker 2: All right, Greta, thank you so much for the time.
Speaker 2: Thanks for listening to the Balance of Power podcast. Make
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