1 00:00:02,360 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,240 Speaker 2: Terminal and the Bloomberg Business App. Libby Cancell and Pimco 10 00:00:37,360 --> 00:00:39,760 Speaker 2: writing the adage that war is e to the start 11 00:00:39,760 --> 00:00:41,760 Speaker 2: but hard to finish, seems to be playing out despite 12 00:00:41,760 --> 00:00:44,519 Speaker 2: President Trump wanting to bring the conflict to an end. 13 00:00:44,600 --> 00:00:46,840 Speaker 2: Lebby joins us now for more. Libby, good morning, Good morning. 14 00:00:46,880 --> 00:00:49,120 Speaker 2: Apparent contradictions and some of the statements we've seen. Do 15 00:00:49,159 --> 00:00:51,479 Speaker 2: you feed that at strategic cambiguity or just the lack 16 00:00:51,520 --> 00:00:52,200 Speaker 2: of a strategy. 17 00:00:53,200 --> 00:00:55,400 Speaker 3: Well, look, I think that the president very much wants 18 00:00:55,400 --> 00:00:59,440 Speaker 3: an framp. I think he realizes that politically and domestically 19 00:00:59,560 --> 00:01:03,880 Speaker 3: that this is presenting quite a headwind to his party. 20 00:01:04,520 --> 00:01:09,400 Speaker 3: I think the question is whether he can declare victory without. 21 00:01:09,120 --> 00:01:10,319 Speaker 4: The strait of her moves opening. 22 00:01:11,280 --> 00:01:14,479 Speaker 3: I think he might be trying to, but does that 23 00:01:14,520 --> 00:01:18,800 Speaker 3: actually translate to market action? And then, also importantly, from 24 00:01:18,840 --> 00:01:22,240 Speaker 3: a voter's perspective, does it actually translate to a decline 25 00:01:22,280 --> 00:01:25,200 Speaker 3: in gas prices? Because, as we know, gas and groceries 26 00:01:25,560 --> 00:01:28,560 Speaker 3: the two things that really matter to voters, particularly on 27 00:01:28,600 --> 00:01:31,760 Speaker 3: the heels of the twenty twenty four election the a 28 00:01:31,800 --> 00:01:34,560 Speaker 3: bout of inflation in twenty twenty two. I mean, voters 29 00:01:34,600 --> 00:01:37,080 Speaker 3: really care about affordability, and so I think this is 30 00:01:37,120 --> 00:01:38,759 Speaker 3: sort of the question. I think he wants to end 31 00:01:38,760 --> 00:01:42,560 Speaker 3: this understandably, but I think really the bigger question is 32 00:01:42,600 --> 00:01:45,479 Speaker 3: can he and can he do this without ground troops? 33 00:01:45,520 --> 00:01:48,080 Speaker 4: I mean, can you Is it enough? 34 00:01:48,240 --> 00:01:51,400 Speaker 3: Is it sufficient enough just to declare victory rhetorically without 35 00:01:51,400 --> 00:01:53,200 Speaker 3: actually having sort of the substance behind it. 36 00:01:53,240 --> 00:01:55,440 Speaker 1: You started by saying that it's clear that the president 37 00:01:55,440 --> 00:01:58,080 Speaker 1: wants an off ramp. Is it because we're reaching up 38 00:01:58,120 --> 00:02:00,480 Speaker 1: against the four to six week time frame or is 39 00:02:00,480 --> 00:02:03,560 Speaker 1: it because of the market response that we've seen and 40 00:02:03,640 --> 00:02:06,000 Speaker 1: increasing pressure from the Republican Party. 41 00:02:06,320 --> 00:02:08,320 Speaker 3: I think it's all of the above, honestly, and I 42 00:02:08,320 --> 00:02:12,640 Speaker 3: think the president, I mean, President Trump has had a 43 00:02:12,680 --> 00:02:18,040 Speaker 3: deep ideology around you know, lack of US intervention uh 44 00:02:18,080 --> 00:02:19,519 Speaker 3: and wanting. 45 00:02:19,240 --> 00:02:20,840 Speaker 4: To end these you know, forever wars. 46 00:02:21,360 --> 00:02:23,760 Speaker 3: And I think that there may have been a miscalculation 47 00:02:24,000 --> 00:02:27,480 Speaker 3: that you know, sort of translating the success that he 48 00:02:27,560 --> 00:02:32,040 Speaker 3: had in Venezuela was going to be transferable to Iran. 49 00:02:32,240 --> 00:02:34,680 Speaker 3: And you know, whether that was naive or what have 50 00:02:34,760 --> 00:02:37,240 Speaker 3: you, you know, say what you will about it, but I 51 00:02:37,240 --> 00:02:39,600 Speaker 3: think it was a miscalculation. And now I think that 52 00:02:39,639 --> 00:02:43,560 Speaker 3: the you know, the president is likely wanting to end this. 53 00:02:44,360 --> 00:02:47,119 Speaker 3: But again I think the question is just will uh 54 00:02:47,240 --> 00:02:49,040 Speaker 3: you know again And I said this to our to 55 00:02:49,120 --> 00:02:51,960 Speaker 3: our traders yesterday. This is not like tariffs, right, I mean, 56 00:02:51,960 --> 00:02:55,080 Speaker 3: he he had utilateral control around tariffs. He could impose 57 00:02:55,160 --> 00:02:58,040 Speaker 3: tariffs and then walk back from tariffs. This obviously just 58 00:02:58,120 --> 00:03:00,680 Speaker 3: much more complicated and much more complex. And so even 59 00:03:00,720 --> 00:03:02,639 Speaker 3: though I think again the desire is to do that, 60 00:03:02,760 --> 00:03:05,760 Speaker 3: it is to decrease the conflict, I think it's just 61 00:03:05,760 --> 00:03:07,160 Speaker 3: a question of whether he's going to be able to 62 00:03:07,240 --> 00:03:10,040 Speaker 3: At what point is a fiscal constraint also becoming an 63 00:03:10,080 --> 00:03:14,160 Speaker 3: issue given the fact of recent reporting talking about demands on. 64 00:03:14,160 --> 00:03:18,560 Speaker 1: Saudi Arabia to help pay for some of the further 65 00:03:18,600 --> 00:03:21,840 Speaker 1: incursion to try to solidify the strait of our booze 66 00:03:21,919 --> 00:03:22,959 Speaker 1: out of Iran's reach. 67 00:03:23,560 --> 00:03:27,000 Speaker 3: Hey, look, we were coming into twenty twenty six running 68 00:03:27,280 --> 00:03:30,120 Speaker 3: deficit of around six point three percent of GDP more 69 00:03:30,200 --> 00:03:33,400 Speaker 3: or less. If you take off some of the tariff revenue, 70 00:03:33,440 --> 00:03:35,640 Speaker 3: you know, having to pay some of that back, you know, 71 00:03:35,720 --> 00:03:37,800 Speaker 3: that bumps up the deficit to sort of six and 72 00:03:37,840 --> 00:03:40,320 Speaker 3: a half six point seven percent. And then if you 73 00:03:40,480 --> 00:03:44,040 Speaker 3: also overlay a two hundred billion dollars supplemental request that 74 00:03:44,040 --> 00:03:48,040 Speaker 3: the Pentagon has suggested that they will be asking Congress for, 75 00:03:48,400 --> 00:03:50,440 Speaker 3: I mean, then you're bumping up to seven percent deficit. 76 00:03:50,520 --> 00:03:53,680 Speaker 3: So I do think the fiscal here is going to 77 00:03:53,760 --> 00:03:56,920 Speaker 3: be a constraint. I don't think Congress. I don't think 78 00:03:56,920 --> 00:03:59,400 Speaker 3: the President will have the votes in Congress to. 79 00:03:59,360 --> 00:04:01,480 Speaker 4: Approve that two hundred billion dollars supplemental. 80 00:04:02,120 --> 00:04:03,640 Speaker 3: I think that they're going to I think Congress will 81 00:04:03,680 --> 00:04:06,000 Speaker 3: likely slow walk this. So yes, I do think the 82 00:04:06,000 --> 00:04:08,920 Speaker 3: fiscal is an issue. I think part of the reason 83 00:04:08,960 --> 00:04:11,240 Speaker 3: why you've seen some of the you know, the you'll 84 00:04:11,280 --> 00:04:14,360 Speaker 3: curve do what it has is because of concerns about 85 00:04:14,400 --> 00:04:16,040 Speaker 3: you know, deficits once again, let me just. 86 00:04:15,960 --> 00:04:17,680 Speaker 2: To find out what if you can on this relationship 87 00:04:17,880 --> 00:04:20,719 Speaker 2: with the Europeans, the President lashing out of France, calling 88 00:04:20,760 --> 00:04:23,240 Speaker 2: France very unhow full, taking a dick at the UK. 89 00:04:23,640 --> 00:04:25,640 Speaker 2: Of course, the UK's will really drank their feet on 90 00:04:25,760 --> 00:04:29,279 Speaker 2: showing any willingness to get involved in this war. The 91 00:04:29,320 --> 00:04:31,440 Speaker 2: Italians saying just months ago there are no tensions with 92 00:04:31,520 --> 00:04:34,680 Speaker 2: the US over the ministry based use. Europe's very divided 93 00:04:34,720 --> 00:04:37,559 Speaker 2: on this issue right now, does Europe have one voice 94 00:04:37,560 --> 00:04:40,200 Speaker 2: and what does this relation look relationship look like twelve 95 00:04:40,279 --> 00:04:41,600 Speaker 2: months sou I mean. 96 00:04:41,520 --> 00:04:43,920 Speaker 3: I think that is obviously a very good question and 97 00:04:44,080 --> 00:04:45,960 Speaker 3: open question. I mean, if you just looked at the 98 00:04:46,160 --> 00:04:49,360 Speaker 3: National Security Strategy sort of the document that the administration 99 00:04:49,480 --> 00:04:51,560 Speaker 3: put out at the end of last year sort of 100 00:04:51,560 --> 00:04:54,920 Speaker 3: regarding relationships around you know, around the world, I mean, 101 00:04:54,920 --> 00:04:58,880 Speaker 3: they were very critical of Europe just in terms of, 102 00:04:59,000 --> 00:05:01,400 Speaker 3: you know, from lots of friend dimensions, but particularly around 103 00:05:01,400 --> 00:05:04,200 Speaker 3: the security guarantee that your needs to be spending more 104 00:05:04,240 --> 00:05:06,320 Speaker 3: that they need to be, you know, focused on their 105 00:05:06,320 --> 00:05:07,039 Speaker 3: own security. 106 00:05:07,320 --> 00:05:08,960 Speaker 4: And so obviously this issue. 107 00:05:08,600 --> 00:05:11,159 Speaker 3: Has just to even cracked that that that issue even 108 00:05:11,200 --> 00:05:13,039 Speaker 3: farther open so I think it. 109 00:05:13,160 --> 00:05:14,560 Speaker 4: You know, it remains to be seen. 110 00:05:14,640 --> 00:05:18,560 Speaker 3: Of course, this is you know, unconventional and somewhat unprecedented 111 00:05:18,640 --> 00:05:21,600 Speaker 3: that the US and Europe you know so strongest ally, 112 00:05:22,200 --> 00:05:24,800 Speaker 3: uh you know, as having this sort of following, and the. 113 00:05:24,800 --> 00:05:28,360 Speaker 2: Far left Spanish councilment isn't exactly halving on that front either. Well, 114 00:05:28,480 --> 00:05:29,880 Speaker 2: I left them out of as regot it. 115 00:05:30,200 --> 00:05:32,160 Speaker 1: That's a whole other ball of wax that I think 116 00:05:32,160 --> 00:05:33,479 Speaker 1: will be tellt with at another time. 117 00:05:34,080 --> 00:05:37,520 Speaker 2: Stay with US multile Impex. Savan's coming up off to this. 118 00:05:46,839 --> 00:05:49,159 Speaker 5: An individual who just met with a number of the 119 00:05:49,279 --> 00:05:52,479 Speaker 5: US trade partners at a WTO meeting and Cameroon is 120 00:05:52,560 --> 00:05:56,560 Speaker 5: Ambassador Jamison Greer, the United States Trade representative. Ambassador gear 121 00:05:56,600 --> 00:05:58,240 Speaker 5: Good morning, Thank you so much for joining me. 122 00:05:58,320 --> 00:05:59,440 Speaker 6: Good morning, great to be here. 123 00:05:59,640 --> 00:06:02,599 Speaker 5: So you just got back from meeting with a number 124 00:06:02,600 --> 00:06:04,960 Speaker 5: of trade partners, and at the moment, global trade is 125 00:06:05,040 --> 00:06:07,000 Speaker 5: upended by what's going on in the Strait of Hermose. 126 00:06:07,520 --> 00:06:10,320 Speaker 5: Did you have an update to give American trading partners 127 00:06:10,360 --> 00:06:12,800 Speaker 5: about the flow of trade through that critical waterway. 128 00:06:13,400 --> 00:06:15,960 Speaker 6: Well, right now, I think the thing to understand is 129 00:06:15,960 --> 00:06:19,280 Speaker 6: that the United States is generally insulated from a lot 130 00:06:19,279 --> 00:06:22,640 Speaker 6: of the supply chain effects when it comes to direct 131 00:06:22,960 --> 00:06:25,360 Speaker 6: commodities and things like that. For a lot of that, 132 00:06:25,680 --> 00:06:28,200 Speaker 6: we have domestic sourcing. We have sourcing from our partners 133 00:06:28,240 --> 00:06:30,240 Speaker 6: to the north and south of US and other places. 134 00:06:30,560 --> 00:06:33,960 Speaker 6: But obviously we're aware that this has an impact. And 135 00:06:34,000 --> 00:06:37,200 Speaker 6: in other countries, particularly in Asia, we know that their 136 00:06:37,240 --> 00:06:40,200 Speaker 6: supplies are tight, and so we're watching that really closely. 137 00:06:40,600 --> 00:06:42,760 Speaker 6: When I was meeting with all of them, this was 138 00:06:42,800 --> 00:06:45,960 Speaker 6: not particularly high on their agenda things to discuss with 139 00:06:46,000 --> 00:06:48,680 Speaker 6: me because we were meeting for other reasons. But we're 140 00:06:48,720 --> 00:06:53,159 Speaker 6: monitoring the situation given that the supplies of commodities coming 141 00:06:53,160 --> 00:06:56,120 Speaker 6: out of the Gulf can affect our trading partners longways. 142 00:06:56,160 --> 00:06:59,279 Speaker 5: And it's not just crude, it's localified petroleum gas, which 143 00:06:59,279 --> 00:07:02,400 Speaker 5: you need, especially in countries like India to cook, it's fertilizer. 144 00:07:02,640 --> 00:07:05,120 Speaker 5: Do you have a sense of a timeline. 145 00:07:05,000 --> 00:07:07,839 Speaker 6: Well, you know, first of all, any kind of operation, 146 00:07:08,000 --> 00:07:09,760 Speaker 6: you're focused on objectives and you don't want to set 147 00:07:09,840 --> 00:07:13,000 Speaker 6: artificial timelines. When I hear from the Secretary of State 148 00:07:13,040 --> 00:07:16,320 Speaker 6: of sectur of Defense, they talk about, you know, operations 149 00:07:16,360 --> 00:07:19,440 Speaker 6: in terms of weeks. We hope that's the case. The 150 00:07:19,960 --> 00:07:22,000 Speaker 6: Trump administration has made a lot of headway and its 151 00:07:22,000 --> 00:07:25,280 Speaker 6: objectives in Iran in terms of destroying ballistic missiles, destroying 152 00:07:25,280 --> 00:07:27,480 Speaker 6: the navy, and making progress to make sure that they 153 00:07:27,520 --> 00:07:28,840 Speaker 6: don't obtain a nuclear weapon. 154 00:07:29,040 --> 00:07:32,800 Speaker 5: You met on the sidelines with your Chinese counterpart. China 155 00:07:32,880 --> 00:07:36,520 Speaker 5: buys the lion's share of Iranian crude. We have seen 156 00:07:36,600 --> 00:07:40,120 Speaker 5: Chinese vessels given safe passage to the Strait. Did this 157 00:07:40,360 --> 00:07:42,320 Speaker 5: become a focal point of that conversation. 158 00:07:43,000 --> 00:07:43,400 Speaker 4: It did not. 159 00:07:43,600 --> 00:07:47,280 Speaker 6: When I met with my counterpart, Minister Wong, the Ministry 160 00:07:47,280 --> 00:07:50,080 Speaker 6: of Commerce minister, this did not come up. We were 161 00:07:50,120 --> 00:07:53,440 Speaker 6: focused on preparing for the Leader's meeting, which will occur 162 00:07:53,960 --> 00:07:56,880 Speaker 6: in mid May. We were talking about the who itself 163 00:07:56,920 --> 00:07:59,320 Speaker 6: and the future of it, or potentially lack thereof. It's 164 00:07:59,360 --> 00:08:00,400 Speaker 6: the case maybe and. 165 00:08:00,440 --> 00:08:03,040 Speaker 4: Sock their up. You thinking about getting out, well. 166 00:08:02,880 --> 00:08:04,800 Speaker 6: I wouldn't say that. I would just say that the 167 00:08:04,840 --> 00:08:07,480 Speaker 6: ability of the World Trade Organization to meet the needs 168 00:08:07,480 --> 00:08:13,320 Speaker 6: of the moment, addressing structural imbalances, currency issues, huge export 169 00:08:13,400 --> 00:08:16,440 Speaker 6: driven surpluses by other countries, that WTO has never been 170 00:08:16,480 --> 00:08:18,800 Speaker 6: able to address those things and it won't be going forward. 171 00:08:18,800 --> 00:08:22,000 Speaker 6: It can barely address issues on its current agenda. 172 00:08:21,480 --> 00:08:24,960 Speaker 5: So potentially you want a revamp of the WTO. 173 00:08:25,000 --> 00:08:25,800 Speaker 4: Is that what you're calling for. 174 00:08:26,160 --> 00:08:28,120 Speaker 6: I will tell you that we have called for reform. 175 00:08:28,280 --> 00:08:31,760 Speaker 6: The Trump administration has put in many proposals, concrete proposals 176 00:08:31,800 --> 00:08:35,720 Speaker 6: about reform, about how to graduate countries to take on 177 00:08:35,760 --> 00:08:39,000 Speaker 6: more obligations as they become more developed. We've talked about 178 00:08:39,080 --> 00:08:42,800 Speaker 6: making sure that countries can adjust their tariff schedules to 179 00:08:42,880 --> 00:08:46,560 Speaker 6: account for national core interests. And we put forward a 180 00:08:46,559 --> 00:08:49,640 Speaker 6: reform plan together with a bunch of trading partners at 181 00:08:49,679 --> 00:08:52,599 Speaker 6: a recent meeting and Cameroon, and there was near consensus 182 00:08:52,600 --> 00:08:56,160 Speaker 6: on this. Countries like Brazil and Turkey eventually opposed the 183 00:08:56,200 --> 00:08:58,880 Speaker 6: closing package, which is unfortunate, but it's also kind of 184 00:08:58,920 --> 00:09:02,760 Speaker 6: exhibit a who's unable to address these core challenges. 185 00:09:02,559 --> 00:09:03,679 Speaker 4: Back to the Straight. 186 00:09:03,720 --> 00:09:06,360 Speaker 5: In your conversation with your Chinese counterpart, the President has 187 00:09:06,400 --> 00:09:08,880 Speaker 5: been pretty direct to European allies. If you want the 188 00:09:08,880 --> 00:09:11,280 Speaker 5: Straight to open, you should also help us. Send vessels, 189 00:09:11,320 --> 00:09:13,440 Speaker 5: send a mind sweeper, send your navy. 190 00:09:13,520 --> 00:09:14,800 Speaker 4: If China is the one that's. 191 00:09:14,640 --> 00:09:17,400 Speaker 5: Benefiting the most in terms of they're the ones that 192 00:09:17,520 --> 00:09:20,760 Speaker 5: for years have been supporting this brutal regime, should they 193 00:09:20,840 --> 00:09:23,360 Speaker 5: also not be on the hook to reopen the street. 194 00:09:23,679 --> 00:09:26,160 Speaker 6: Well, listen, this is a decision for China, and I'll 195 00:09:26,160 --> 00:09:28,920 Speaker 6: obviously let the President and Secretary of State and Secretary 196 00:09:28,920 --> 00:09:31,240 Speaker 6: of Defense decide how they're going to line with other 197 00:09:31,280 --> 00:09:35,720 Speaker 6: countries in reacting to the straight of Hormuz closing. Again, 198 00:09:35,880 --> 00:09:38,240 Speaker 6: it affects these other countries much more than affects US. 199 00:09:38,559 --> 00:09:41,280 Speaker 6: Other countries have been working with Iran to figure out 200 00:09:41,360 --> 00:09:43,880 Speaker 6: arrangements to get out oil, gas, fertilizer and all these 201 00:09:43,920 --> 00:09:46,959 Speaker 6: other things. But it is clearly in the interest of 202 00:09:47,080 --> 00:09:49,480 Speaker 6: the world community to make sure not only to make 203 00:09:49,520 --> 00:09:52,480 Speaker 6: sure that the Strait is open, but to make sure 204 00:09:52,640 --> 00:09:55,760 Speaker 6: that Iran doesn't get a nuclear weapon, Iran doesn't empower 205 00:09:55,760 --> 00:09:58,319 Speaker 6: its terror proxies in the region. The world would be 206 00:09:58,400 --> 00:10:00,880 Speaker 6: much safer if the world was alive on taking care 207 00:10:00,920 --> 00:10:01,720 Speaker 6: of your own issue. 208 00:10:01,760 --> 00:10:03,800 Speaker 5: As you prepare for this trip, there's a lot of 209 00:10:03,800 --> 00:10:07,439 Speaker 5: reporting that China, like Russia, is helping Iran even when 210 00:10:07,480 --> 00:10:10,760 Speaker 5: it comes to not just supply chains but targeting US troops. 211 00:10:11,240 --> 00:10:13,320 Speaker 5: Is this going to be on the agenda when the 212 00:10:13,360 --> 00:10:16,800 Speaker 5: President meets? Is this even potentially a reason why the 213 00:10:16,840 --> 00:10:19,320 Speaker 5: trip could maybe get postponed. 214 00:10:19,240 --> 00:10:22,319 Speaker 6: In past meetings between the presidents, they've always talked about 215 00:10:22,360 --> 00:10:25,720 Speaker 6: conflicts and hotspots. In the past, they've talked about Ukraine 216 00:10:25,760 --> 00:10:28,560 Speaker 6: and Russia. They've talked about Iran. I assume that they'll 217 00:10:28,559 --> 00:10:31,720 Speaker 6: talk about these things again. With respect to your question, 218 00:10:32,120 --> 00:10:34,240 Speaker 6: is there going to be a delay in the meeting. 219 00:10:34,360 --> 00:10:37,400 Speaker 6: I haven't heard talk about that either internally. I didn't 220 00:10:37,400 --> 00:10:39,840 Speaker 6: hear that from my Chinese counterpartment. I talked to him 221 00:10:39,880 --> 00:10:40,319 Speaker 6: last week. 222 00:10:40,520 --> 00:10:43,120 Speaker 5: When it comes to the tariffs right now, there's Section 223 00:10:43,200 --> 00:10:45,400 Speaker 5: three oh one tariffs that you're looking into when it 224 00:10:45,440 --> 00:10:48,280 Speaker 5: comes to China, and we've seen China actually have their 225 00:10:48,320 --> 00:10:51,800 Speaker 5: own announcement that they're going to investigate US companies. This 226 00:10:52,000 --> 00:10:54,640 Speaker 5: tit for tat we might see in the trade between 227 00:10:54,720 --> 00:10:57,080 Speaker 5: Beijing and Washington back to where we're almost what it 228 00:10:57,080 --> 00:10:59,760 Speaker 5: feels like a year ago. Do you think that's going 229 00:10:59,800 --> 00:11:02,360 Speaker 5: to hinder the US from getting back to the twenty 230 00:11:02,400 --> 00:11:04,960 Speaker 5: percent level they were at before ever it was struck down. 231 00:11:05,400 --> 00:11:07,480 Speaker 6: I don't think so. When you look back to the 232 00:11:07,520 --> 00:11:11,080 Speaker 6: Busan agreements, the agreements we achieved with the Chinese last year, 233 00:11:11,440 --> 00:11:15,000 Speaker 6: we were seeking stability. We were seeking to receive, you know, 234 00:11:15,040 --> 00:11:18,080 Speaker 6: achieve a level of teriff application on one side and 235 00:11:18,120 --> 00:11:21,439 Speaker 6: the flow of rare minerals and things from the other side. 236 00:11:21,800 --> 00:11:24,880 Speaker 6: Both sides want stability. Both sides want to see continuity. 237 00:11:24,960 --> 00:11:27,040 Speaker 6: The Chinese know that the United States is trying to 238 00:11:27,160 --> 00:11:30,079 Speaker 6: control for our giant trade deficit we've had with China 239 00:11:30,120 --> 00:11:32,440 Speaker 6: for a long time, which went down by thirty percent 240 00:11:32,520 --> 00:11:34,400 Speaker 6: last year, by the way, so I don't think it's 241 00:11:34,400 --> 00:11:34,720 Speaker 6: going right. 242 00:11:34,840 --> 00:11:38,640 Speaker 5: But China's imports to other countries into the un I 243 00:11:38,679 --> 00:11:40,719 Speaker 5: went up, and then those countries are important to the 244 00:11:40,840 --> 00:11:42,840 Speaker 5: United States. Don't you have an issue with transhipment at 245 00:11:42,840 --> 00:11:43,160 Speaker 5: the moment. 246 00:11:43,320 --> 00:11:45,559 Speaker 6: So there's always been an issue with transhipment. But when 247 00:11:45,600 --> 00:11:48,080 Speaker 6: you look at our shipments from third countries outside of 248 00:11:48,160 --> 00:11:52,840 Speaker 6: China since April, right since Liberation Day, that deficit has 249 00:11:52,880 --> 00:11:55,120 Speaker 6: gone down by seventeen percent. So while there may be 250 00:11:55,200 --> 00:11:57,880 Speaker 6: some transhipment, overall, our trade deficit is going down, so 251 00:11:58,000 --> 00:11:59,400 Speaker 6: down with China, it's going down with the rest of 252 00:11:59,400 --> 00:12:02,839 Speaker 6: the world exactly the right production direction. At the same time, 253 00:12:02,880 --> 00:12:05,400 Speaker 6: wages are going up in America, productivity is going up. 254 00:12:05,600 --> 00:12:06,880 Speaker 5: Do you think you're going to get to the twenty 255 00:12:06,920 --> 00:12:07,559 Speaker 5: percent level? 256 00:12:08,160 --> 00:12:10,800 Speaker 6: Well, I can't prejudge the investigations right at Section three 257 00:12:10,840 --> 00:12:12,720 Speaker 6: to one. We have to go through the legal process. 258 00:12:12,800 --> 00:12:15,800 Speaker 6: We have to collect information. It's quite public, it's quite transparent. 259 00:12:16,400 --> 00:12:18,040 Speaker 6: You know, we know what the nature of the deal 260 00:12:18,080 --> 00:12:21,160 Speaker 6: is that we struck with the Chinese, so we will see. 261 00:12:21,200 --> 00:12:23,480 Speaker 6: All I know is that the President for sure is 262 00:12:23,520 --> 00:12:25,960 Speaker 6: going to keep protecting our economy, is going to protect 263 00:12:25,960 --> 00:12:28,560 Speaker 6: our producers so we can continue to have increased production 264 00:12:28,600 --> 00:12:30,280 Speaker 6: in the US increase wages here. 265 00:12:30,160 --> 00:12:33,360 Speaker 5: If China plays hardball though not just with their own investigations, 266 00:12:33,360 --> 00:12:36,559 Speaker 5: but potentially bringing rare earths back into the foray, I 267 00:12:36,600 --> 00:12:38,600 Speaker 5: know they have basically till October. 268 00:12:38,600 --> 00:12:39,640 Speaker 4: There's a deal on the table. 269 00:12:40,000 --> 00:12:43,679 Speaker 5: Potentially, then would you look to maybe decrease the tariff level. 270 00:12:44,120 --> 00:12:48,280 Speaker 6: Well, you know, from our perspective, we're looking for stability. 271 00:12:48,920 --> 00:12:51,240 Speaker 6: We're trying to achieve we're trying to get the trade 272 00:12:51,240 --> 00:12:55,679 Speaker 6: deficit reduced, we're trying to increase manufacturing in the United States, 273 00:12:55,720 --> 00:12:57,520 Speaker 6: and we're trying to increase real wages and all of 274 00:12:57,520 --> 00:12:59,599 Speaker 6: that is happening. So we don't see a need to 275 00:12:59,640 --> 00:13:02,160 Speaker 6: change our policy that Chinese wants stability. 276 00:13:02,200 --> 00:13:03,160 Speaker 4: We want stability. 277 00:13:03,240 --> 00:13:05,760 Speaker 6: I actually see a positive agenda with China going forward 278 00:13:05,760 --> 00:13:07,800 Speaker 6: where we learn to manage our trade with each other, 279 00:13:08,160 --> 00:13:10,400 Speaker 6: where we pick the kinds of things we want to 280 00:13:10,440 --> 00:13:13,679 Speaker 6: be selling to each other, things that are mostly non sensitive, 281 00:13:13,920 --> 00:13:16,680 Speaker 6: to avoid some of the national security elements that prove 282 00:13:16,760 --> 00:13:20,960 Speaker 6: challenging and negotiations. I see stability with China over the next. 283 00:13:20,880 --> 00:13:23,160 Speaker 5: Year when it comes to this extension on rare earths? 284 00:13:23,200 --> 00:13:25,719 Speaker 5: Are you going to need one in October? Or will 285 00:13:25,760 --> 00:13:27,360 Speaker 5: you think the United States is in a place where 286 00:13:27,400 --> 00:13:28,600 Speaker 5: we don't need an extension. 287 00:13:28,640 --> 00:13:30,840 Speaker 6: Well, we've made a lot of progress. We have a 288 00:13:30,840 --> 00:13:32,920 Speaker 6: few months, so I think we'll assess that down the road. 289 00:13:33,520 --> 00:13:35,760 Speaker 6: You know, we have Project Vault where we're stockpiling a 290 00:13:35,800 --> 00:13:38,079 Speaker 6: lot of critical minerals and rare earths. We have new 291 00:13:38,080 --> 00:13:41,080 Speaker 6: projects in the United States to mind process and manufacture 292 00:13:41,120 --> 00:13:44,800 Speaker 6: rare earths, including permanent magnets that we need for different motors. 293 00:13:45,080 --> 00:13:48,680 Speaker 6: We're working with our counterparts and our trading partners Australia, 294 00:13:48,720 --> 00:13:51,600 Speaker 6: the EUGE, Pan, Mexico to find projects we can do 295 00:13:51,679 --> 00:13:53,560 Speaker 6: together to increase supply chain security. 296 00:13:53,800 --> 00:13:55,600 Speaker 5: How much will where Earth's be on the table this 297 00:13:55,640 --> 00:13:57,680 Speaker 5: discussion with the President in Shijingpang in. 298 00:13:57,600 --> 00:14:01,199 Speaker 6: May, so when we met in Paris with our Chinese counterparts. 299 00:14:01,200 --> 00:14:03,560 Speaker 6: A couple of weeks ago we talked about rare earths. 300 00:14:04,320 --> 00:14:07,160 Speaker 6: The process with the Chinese is working fairly well. There 301 00:14:07,200 --> 00:14:09,200 Speaker 6: are a few things here and there where we highlighted 302 00:14:09,240 --> 00:14:11,440 Speaker 6: that we didn't feel like we were getting rare earths 303 00:14:11,440 --> 00:14:14,680 Speaker 6: in a timely fashion, and we highlighted that to our partners. 304 00:14:14,800 --> 00:14:17,000 Speaker 6: They took note of that and have it under consideration. 305 00:14:17,200 --> 00:14:19,800 Speaker 6: So the presidents will talk about it if they need to. 306 00:14:20,200 --> 00:14:22,440 Speaker 6: Our hope and expectation is that we're able to manage 307 00:14:22,480 --> 00:14:23,920 Speaker 6: a lot of it between now and then. At the 308 00:14:23,960 --> 00:14:24,600 Speaker 6: staff level. 309 00:14:24,760 --> 00:14:26,600 Speaker 5: Do you think you're going to have to meet your 310 00:14:26,640 --> 00:14:29,920 Speaker 5: counterparts again before the big leader meeting in Beijing. 311 00:14:30,240 --> 00:14:31,800 Speaker 6: I don't think we're going to need to do that, 312 00:14:32,320 --> 00:14:35,400 Speaker 6: Particularly when we were in Paris, we reached general agreement 313 00:14:35,480 --> 00:14:38,160 Speaker 6: on the types of outcomes we want for the leader's meeting, 314 00:14:38,160 --> 00:14:41,120 Speaker 6: and right now our deputies and our staff community are 315 00:14:41,120 --> 00:14:45,080 Speaker 6: in regular communication to try to land all those outcomes. 316 00:14:45,240 --> 00:14:47,120 Speaker 5: Can you give us any sense of what the main 317 00:14:47,200 --> 00:14:48,800 Speaker 5: deliverables are going to be in Beijing? 318 00:14:49,320 --> 00:14:51,920 Speaker 6: I think that one of them in people. There's been 319 00:14:51,960 --> 00:14:53,560 Speaker 6: a little bit of coverage on this. We've been talking 320 00:14:53,600 --> 00:14:56,200 Speaker 6: about a Board of Trade, a US China Board of Trade, 321 00:14:56,320 --> 00:14:59,120 Speaker 6: which really will be a mechanism to help manage trade 322 00:14:59,240 --> 00:15:01,040 Speaker 6: over the past ten in years or so, as the 323 00:15:01,120 --> 00:15:04,520 Speaker 6: United States has tried to eliminate its trade deficit with 324 00:15:04,600 --> 00:15:08,680 Speaker 6: China figure out its export control situation, if we can 325 00:15:08,760 --> 00:15:11,360 Speaker 6: formalize the mechanism a little bit to make sure that 326 00:15:11,480 --> 00:15:14,240 Speaker 6: we are we can agree on things we are selling 327 00:15:14,240 --> 00:15:15,880 Speaker 6: to each other. For the US, we want to be 328 00:15:15,920 --> 00:15:20,400 Speaker 6: selling boeings, We want to be selling medical devices, pharmaceuticals, 329 00:15:20,440 --> 00:15:23,280 Speaker 6: ag products, things like that. You know, the Chinese want 330 00:15:23,320 --> 00:15:24,920 Speaker 6: to be selling things to us, and we're willing to 331 00:15:24,920 --> 00:15:27,440 Speaker 6: buy things like, you know, low tech consumer goods and 332 00:15:28,000 --> 00:15:30,280 Speaker 6: things like that, certain commodities that maybe the Chinese have 333 00:15:30,360 --> 00:15:33,800 Speaker 6: that we don't. And so coming, you know, establishing that 334 00:15:33,880 --> 00:15:36,720 Speaker 6: type of mechanism at the leader's meeting and then going 335 00:15:36,720 --> 00:15:39,000 Speaker 6: through a process of figuring out how to optimize trade 336 00:15:39,040 --> 00:15:41,400 Speaker 6: with each other, that's going to be a big deliverable. 337 00:15:41,480 --> 00:15:54,520 Speaker 2: Stay with US. Mulblenberg surveanans coming up after this create 338 00:15:54,560 --> 00:15:57,120 Speaker 2: this morning, holding on to triple digits following reports the 339 00:15:57,280 --> 00:15:59,760 Speaker 2: US could look to wind down hostilities in the Middle 340 00:15:59,760 --> 00:16:02,360 Speaker 2: East because the Veda of Macquarie, writing the market is 341 00:16:02,400 --> 00:16:05,840 Speaker 2: still expecting President Trump to soon declare victory, but noting 342 00:16:06,080 --> 00:16:08,840 Speaker 2: should the war continue until the end of June, CREWD 343 00:16:08,880 --> 00:16:12,080 Speaker 2: could reach two hundred dollars a barrel. Because we've got 344 00:16:12,080 --> 00:16:13,560 Speaker 2: a lot to talk about, buddy. So let's take it 345 00:16:13,560 --> 00:16:15,720 Speaker 2: from the stop. Imagine from the top. I imagine you've 346 00:16:15,760 --> 00:16:18,680 Speaker 2: asked been asked this question already this morning, the story 347 00:16:18,680 --> 00:16:21,080 Speaker 2: on the Wall Street Journal. When I ask you what 348 00:16:21,160 --> 00:16:23,560 Speaker 2: would happen. Let's say this is right, the President pulls back, 349 00:16:23,640 --> 00:16:27,360 Speaker 2: ends the campaign, cause it successful, mission complete, but then 350 00:16:27,440 --> 00:16:30,520 Speaker 2: leaves the straight of onus largely closed for everyone else 351 00:16:30,520 --> 00:16:31,120 Speaker 2: to figure out. 352 00:16:31,240 --> 00:16:32,760 Speaker 4: What would it mean for this market. 353 00:16:34,800 --> 00:16:38,360 Speaker 7: That situation had Obviously, you know we're asking about it, 354 00:16:38,400 --> 00:16:40,280 Speaker 7: We're talking about it this morning. The odds of that 355 00:16:40,320 --> 00:16:44,560 Speaker 7: are rising. That situation would take some of the risk 356 00:16:44,600 --> 00:16:46,560 Speaker 7: premium out of the market, but it wouldn't fix the 357 00:16:46,560 --> 00:16:52,000 Speaker 7: physical challenge. Right, the physical market is already too tight, 358 00:16:52,760 --> 00:16:55,640 Speaker 7: and we think it'll just keep getting tighter unless the 359 00:16:55,680 --> 00:16:59,840 Speaker 7: straight reopens with a US declaration that you know, the. 360 00:16:59,800 --> 00:17:00,520 Speaker 4: War is over. 361 00:17:00,960 --> 00:17:05,200 Speaker 7: Without those two going together, you will start running through 362 00:17:05,600 --> 00:17:12,480 Speaker 7: the sprs and other mitigation, right, So that will we think, 363 00:17:12,640 --> 00:17:15,959 Speaker 7: just continue to put upward pressure, but it may not 364 00:17:16,040 --> 00:17:19,920 Speaker 7: be exactly what it initially it looks like. The real 365 00:17:20,040 --> 00:17:24,239 Speaker 7: challenge maybe on refining margins. You know, we've already had 366 00:17:24,320 --> 00:17:27,800 Speaker 7: record refining margins, but it may still be cheap right now? 367 00:17:28,080 --> 00:17:29,840 Speaker 2: Can I ask you about how big the cushion is 368 00:17:29,960 --> 00:17:32,359 Speaker 2: at the moment? We spoke to sulk Jen and Michael 369 00:17:32,400 --> 00:17:35,240 Speaker 2: Haig in the previous hour and he said the final 370 00:17:35,320 --> 00:17:37,679 Speaker 2: vessel carrying jet fuel into the UK is going to 371 00:17:37,720 --> 00:17:40,880 Speaker 2: get there in forty eight hours. He was in the UK, 372 00:17:41,080 --> 00:17:43,360 Speaker 2: was talking about that market specifically, but we're seeing other 373 00:17:43,440 --> 00:17:47,040 Speaker 2: problems elsewhere. Given that you've got visibility on this, you 374 00:17:47,040 --> 00:17:48,800 Speaker 2: can see the tank is literally moving. You can see 375 00:17:48,800 --> 00:17:50,399 Speaker 2: what's going to arrive and what's not going to arrive 376 00:17:50,680 --> 00:17:53,280 Speaker 2: over the next several weeks. How big is the cushion 377 00:17:53,359 --> 00:17:55,679 Speaker 2: right now? When do the shortages start to turn up 378 00:17:55,720 --> 00:17:57,080 Speaker 2: in some of these bigger markets. 379 00:17:59,560 --> 00:18:02,240 Speaker 7: He's correct, You know a lot of the refined products 380 00:18:02,280 --> 00:18:05,919 Speaker 7: going into Europe, the last cargoes will be arriving in 381 00:18:05,920 --> 00:18:09,800 Speaker 7: the next couple of days. Globally, for crude oil, a 382 00:18:09,800 --> 00:18:12,560 Speaker 7: lot of the last cargoes that left before the conflict 383 00:18:12,640 --> 00:18:15,399 Speaker 7: going to Asia will be arriving in the next really 384 00:18:16,080 --> 00:18:19,439 Speaker 7: seven to ten days, so after that you will have 385 00:18:19,520 --> 00:18:23,040 Speaker 7: to start drawing down on stocks that are both on 386 00:18:23,119 --> 00:18:27,080 Speaker 7: shore and offshore. That is a decent cushion, though it's 387 00:18:27,280 --> 00:18:31,600 Speaker 7: it's I think you can handle that for another month. 388 00:18:32,080 --> 00:18:34,719 Speaker 7: Opek does have a couple of hundred million barrels that 389 00:18:34,720 --> 00:18:37,360 Speaker 7: were outside of the Middle East available for this kind 390 00:18:37,359 --> 00:18:41,080 Speaker 7: of situation. They're using that already and that's that's going 391 00:18:41,160 --> 00:18:43,960 Speaker 7: to help as well. And then the sprs around the 392 00:18:44,000 --> 00:18:47,880 Speaker 7: world will start to be available. So all of these 393 00:18:47,920 --> 00:18:51,040 Speaker 7: mitigation items will be helpful, but they're not enough. You know, 394 00:18:51,040 --> 00:18:54,280 Speaker 7: by our balances, you still need something on the order 395 00:18:54,320 --> 00:18:56,920 Speaker 7: of four to five million a day of run cuts 396 00:18:56,960 --> 00:19:00,119 Speaker 7: in the refining sector to rebalance the oil market. But 397 00:19:00,400 --> 00:19:02,960 Speaker 7: if you do that, you're going to end up even 398 00:19:03,000 --> 00:19:06,240 Speaker 7: shorter and shorter on those very fuels, like you mentioned 399 00:19:06,320 --> 00:19:08,800 Speaker 7: jet fuel being one of the big ones. 400 00:19:09,600 --> 00:19:12,639 Speaker 1: How quickly could some of that get restocked? Right? You 401 00:19:12,640 --> 00:19:14,920 Speaker 1: said that if we wait for a month, we might 402 00:19:15,000 --> 00:19:18,760 Speaker 1: work through the ongoing stores that are available in some 403 00:19:18,840 --> 00:19:22,000 Speaker 1: of these regions. What about you know, three weeks, if 404 00:19:22,400 --> 00:19:24,320 Speaker 1: let's say the conflict ends and the Strait of Removes 405 00:19:24,400 --> 00:19:28,800 Speaker 1: opens up, how fast could production, get back into tankers, 406 00:19:29,000 --> 00:19:30,480 Speaker 1: get back over to these places. 407 00:19:32,960 --> 00:19:35,040 Speaker 7: The production that's shut in right now, which we think 408 00:19:35,080 --> 00:19:37,440 Speaker 7: is around twelve million barrels a day, will be able 409 00:19:37,480 --> 00:19:40,760 Speaker 7: to come back quickly. The geology and the logistics in 410 00:19:40,800 --> 00:19:43,520 Speaker 7: the Middle East, you know, anything that's not damaged and 411 00:19:43,560 --> 00:19:46,240 Speaker 7: mostly it's not on the production side, we'll be able 412 00:19:46,280 --> 00:19:49,200 Speaker 7: to come back, and really within a couple of weeks 413 00:19:49,200 --> 00:19:53,439 Speaker 7: things should start to normalize. There is a lot of 414 00:19:53,440 --> 00:19:56,360 Speaker 7: oil on tankers right now that could be made available 415 00:19:56,400 --> 00:19:59,080 Speaker 7: the minute they can transit or moves. They'll do that, 416 00:19:59,400 --> 00:20:02,359 Speaker 7: so you'll get a nice surge or resupply, but you 417 00:20:02,400 --> 00:20:04,840 Speaker 7: still have to cover the transit time. Right that's still 418 00:20:04,920 --> 00:20:10,240 Speaker 7: four to six weeks, depending on where so the availability 419 00:20:10,240 --> 00:20:13,560 Speaker 7: of those cargoes for refiners may be. You can think 420 00:20:13,560 --> 00:20:18,000 Speaker 7: about it as from the time transit is okay, it 421 00:20:18,000 --> 00:20:20,880 Speaker 7: could take four to six more weeks for those barrels 422 00:20:20,880 --> 00:20:25,000 Speaker 7: to actually start showing. On the refining side, however, we 423 00:20:25,040 --> 00:20:27,800 Speaker 7: think it could be tougher because we don't know the 424 00:20:27,880 --> 00:20:31,320 Speaker 7: damage right now. We don't even know how many barrels 425 00:20:31,359 --> 00:20:33,359 Speaker 7: a day are out. We know it's a lot, you know, 426 00:20:33,359 --> 00:20:38,520 Speaker 7: we think it's the run cuts from managing storage is 427 00:20:38,520 --> 00:20:41,959 Speaker 7: probably about three million a day globally, mostly in Asia, 428 00:20:42,359 --> 00:20:45,680 Speaker 7: and then the damages are probably another three to four 429 00:20:45,920 --> 00:20:49,240 Speaker 7: million that's out largely in the Middle East. Those could 430 00:20:49,240 --> 00:20:52,840 Speaker 7: take quite a bit more time to get back up 431 00:20:52,840 --> 00:20:56,760 Speaker 7: and running and then deliver those finished fuels versus crudit. 432 00:20:57,760 --> 00:21:01,320 Speaker 2: This is the Bloomberg Survendments podcast, bringing you the best 433 00:21:01,359 --> 00:21:04,399 Speaker 2: in markets, economics, a gient politics. You can watch the 434 00:21:04,440 --> 00:21:07,440 Speaker 2: show live on Bloomberg TV weekday mornings from six am 435 00:21:07,600 --> 00:21:10,720 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 436 00:21:11,000 --> 00:21:13,840 Speaker 2: Spotify or anywhere else you listen, and as always, on 437 00:21:13,880 --> 00:21:16,360 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app.