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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 1: noon and five pm Eastern on Apple Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Both the equity and pond market having a strong reaction

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Speaker 2: to today's non farm payrolls report just seventy thousand or

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Speaker 2: seventy three thousand jobs added Downwarder visions also something to

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Speaker 2: pay attention to, as we're looking at over the course

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Speaker 2: of the last three months, on average, the slowest jobs

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Speaker 2: growth we have seen since back in the pandemic era,

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Speaker 2: raising the question as to whether or not maybe it

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Speaker 2: was Governor Waller, not Chairman Powell, who was singing the

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Speaker 2: right tune at the Fed's decision this week to not

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Speaker 2: lower interest rates. Waller, of course, was citing concern over

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Speaker 2: the labor market, and as we consider the overall state

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Speaker 2: of the labor we actually had a chance here at

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Speaker 2: Bloomberg TV and Radio to catch up with the Labor Secretary,

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Speaker 2: Lori Shabs Dreamer earlier today, and this is how she

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Speaker 2: characterized the.

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Speaker 3: Figures certainly, we know they could have been better, but

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Speaker 3: you know, we look at the positive because we still

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Speaker 3: have a net positive almost a half a million new

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Speaker 3: jobs since the President took office. What has happened on

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Speaker 3: the ground, the one big beautiful bill by Congress, the

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Speaker 3: President leaning in and keeping the promises made by negotiating

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Speaker 3: fair trade deals for the American workforce. And now what

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Speaker 3: we need is the Federal Reserve to jump in and

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Speaker 3: lower those interest rates. I talked to businesses just yesterday

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Speaker 3: who said, you know, we've invested in our American workers,

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Speaker 3: We're paying attention to our facilities. We're wanting to invest

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Speaker 3: in borrow more money, but they're concerned with borrowing that

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Speaker 3: more money.

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Speaker 4: So how did everybody get this so wrong? Stuart Paul

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Speaker 4: joins us from World headquarters in New York. Bloomberg Economics

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Speaker 4: US economist Stuart, it's not just this month, the worst

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Speaker 4: three months job growth since the pandemic, and when you

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Speaker 4: look back to the past couple of months, here massive revisions,

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Speaker 4: prompting the question how could we be so far off

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Speaker 4: for so long?

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Speaker 5: There are a few things to keep in mind. The

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Speaker 5: first is that, yes, payroll growth has been marked down.

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Speaker 5: We always knew that payrolls were being overstated. In particular,

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Speaker 5: we knew that private payrolls are being overstated. They still

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Speaker 5: probably are being overstated. We saw eighty three thousand additional

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Speaker 5: jobs added in the private sector. The revisions that we

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Speaker 5: saw to pass month's data and the weakness that we

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Speaker 5: saw in the July report was mostly because of government hiring. Now,

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Speaker 5: as you spoke with Molly Smith earlier today and she

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Speaker 5: has a great story about this on the terminal, there

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Speaker 5: are seasonal adjustment factors at play that are affecting particularly

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Speaker 5: state and local employment in the field of education. When

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Speaker 5: those workers were marked as being on payrolls in the

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Speaker 5: month of June, it didn't fully interact with the season

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Speaker 5: adjustment factor perfectly. So it's not a true shock that

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Speaker 5: either payrolls are being marked down or that there are

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Speaker 5: peculiarities in the interaction between actual headcount and some of

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Speaker 5: the seasonal adjustment factors that are estimated at the Bureau

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Speaker 5: of Labor Statistics. Yes, the labor market is cooling. Yes,

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Speaker 5: today's data validates some of the arguments that we heard

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Speaker 5: from Governor Waller just two weeks ago today on Bloomberg TV,

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Speaker 5: where was warning about a cooling labor market. But all

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Speaker 5: things considered, a zero point one percentage point uptick in

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Speaker 5: the unemployment rate is really going to be the thing

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Speaker 5: that matters for the broader swath of members of the

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Speaker 5: Federal Open Markets Committee, for our monetary policy makers. And

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Speaker 5: as we heard just this morning from FED, excuse me

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Speaker 5: from Regional FED President Beth Hammock, she said, Look, hot

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Speaker 5: inflation right now means that the FED is failing more

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Speaker 5: on the price stability side of its mandate then it

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Speaker 5: is on the maximum employment side of its dual mandate,

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Speaker 5: with just a four point two percent on employment rates.

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Speaker 5: So I don't think that either the headline numbers, the

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Speaker 5: revisions to the headline numbers, or the balance of risk

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Speaker 5: for the FED has really materially changed with today's report.

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Speaker 5: I see that markets are pricing in a bit more risk,

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Speaker 5: considerably more risk that the FED would move in September. Yeah,

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Speaker 5: but all things considered, our base case is still for

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Speaker 5: a December move, just twenty five basis points in December.

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Speaker 2: But where could the labor market ultimately be by then

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Speaker 2: stored if the FED stands pat for that long.

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Speaker 5: Well, Look, we've been expecting the unemployment rate to continue rising,

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Speaker 5: it would not come as a major shock to me

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Speaker 5: to see the unemployment rate reaching let's say four and

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Speaker 5: a half percent at that point. That still puts us

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Speaker 5: relatively more bbarrash on the labor market than most forecasters

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Speaker 5: out there. But in terms of where we are in

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Speaker 5: managing the Fed's balance of risks, with persistent core inflation,

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Speaker 5: even a four and a half percent on employment rate

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Speaker 5: might not be enough for the FED to move. And

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Speaker 5: if it's the case that nominal GDP growth is still

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Speaker 5: running well above what would be consistent with let's say

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Speaker 5: the two percent target, that two percent inflation target plus

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Speaker 5: maybe one percentage point of real growth, I think it's

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Speaker 5: fair to say that the FED would remain on hold

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Speaker 5: even if we saw four and a half percent unemployment rate.

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Speaker 2: All right, Stuart, we appreciate it as always. Stort Paul

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Speaker 2: is a US economist for US at Bloomberg Economics. Here

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Speaker 2: with us on Bloomberg TV and radio and joining us

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Speaker 2: now for more in our Washington, d C.

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Speaker 6: Studio. Is Ben Harris.

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Speaker 2: He's vice president and director of Economic Studies at the

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Speaker 2: Brookings Institution, also former Assistant Secretary for Economic Policy and

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Speaker 2: chief economist at the Treasury Department. Ben, great to have

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Speaker 2: you back here and to see you in our studio

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Speaker 2: as we consider these jobs figures today in the downward revisions,

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Speaker 2: knowing that just days ago the Fed made the decision

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Speaker 2: not to ease policy, maybe that would have been a

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Speaker 2: different decision had they had these figures in hand. Do

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Speaker 2: you think Chairman Palam maybe made a mistake this week.

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Speaker 7: I don't think he made a mistake this week. He's

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Speaker 7: been put in this impossible position. You've got a labor

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Speaker 7: market which is clearly in freeze mode. And so my

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Speaker 7: interpretation of today's report is I don't remember a job's

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Speaker 7: report that provides so much clarity because it's not just

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Speaker 7: about the past month, it's about the past three months. Right.

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Speaker 7: So with the revisions, we are clearly in a situation

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Speaker 7: where employers are freezing hiring, they're taking care of the

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Speaker 7: workers they have. We're only adding thirty five thousand jobs

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Speaker 7: or so a month, and most of that is a

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Speaker 7: healthcare sector. So you've got a labor market which is frozen.

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Speaker 7: But on the price's side, it's very clear that we're

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Speaker 7: in the middle of an inflationary episode because of tariffs, right,

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Speaker 7: and so you would expect the normal lag to be

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Speaker 7: three to five months after tariffs are implemented. The Fed

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Speaker 7: is an impossible position. Prices are rising, the labor market

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Speaker 7: is stagnant. So I don't think that Pale made a mistake,

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Speaker 7: but he's been put in this position, a position he

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Speaker 7: did not ask for.

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Speaker 4: How's it going to feel in September if this kind

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Speaker 4: of deterioration continues.

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Speaker 7: So if the labor market is the same and we

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Speaker 7: see the hikes that we're expecting in prices, yeah, it's

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Speaker 7: sort of like, what is the worst case? What's what's

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Speaker 7: the worst shock? So are we seeing prices rise more

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Speaker 7: than we thought? Or we can see core pcee go

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Speaker 7: above three percent? If core pce is above three percent,

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Speaker 7: how can the Fed possibly start cutting? It can't even

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Speaker 7: if even if the U three is at you know,

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Speaker 7: four three four four four five, yes, okay, And so

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Speaker 7: if prices continue to rise, we expect them to I

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Speaker 7: don't think the Fed can cut and markets disagree right now,

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Speaker 7: So you see this big one day change between yesterday today.

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Speaker 7: Yesterday markets thought the cut the Federal cut between one

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Speaker 7: and two times between the end of the year, between

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Speaker 7: twenty five and fifty BIPs. Now markets are certain to

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Speaker 7: cut the federal cut by at least fifty BIPs, maybe

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Speaker 7: seventy five. But I think that maybe they're misinterpreting the

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Speaker 7: impact these these higher prices owing to tariffs.

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Speaker 2: Well, so let's talk about those tariffs. Obviously, it's August first,

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Speaker 2: while the levies aren't actually going to be collected until

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Speaker 2: August seventh, so there's still a bit of wiggle room here.

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Speaker 2: We're looking, according to Bloomberg Economics, and an aggregate rate

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Speaker 2: tariff rate on average that's going to move up to

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Speaker 2: fifteen point two percent. What difference will that ultimately make

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Speaker 2: in the prices people see at the store and how

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Speaker 2: it actually tracks into inflation gauges.

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Speaker 7: So the rule of thumb is that for every percentage

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Speaker 7: point increase in the average tariff rate, you see a

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Speaker 7: point ten increase in the inflation rate. So if you're

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Speaker 7: going from around a rate of around three percent like

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Speaker 7: we saw it to being the Trump administration up to fifteen,

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Speaker 7: we're talking about one point two percentage points increase in inflation,

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Speaker 7: which is a lot in a short period of time,

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Speaker 7: and you know, you're starting to see prices get passed

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Speaker 7: through and exactly the way we would have predicted. So

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Speaker 7: you can look at things like recreational goods, you can

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Speaker 7: look at things like home furnishings. These are things we

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Speaker 7: import from China, and those prices are rising, and so

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Speaker 7: it's very clear that the tariffs are having inflationary impact.

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Speaker 4: We're going to talk with Peter Navarro on the late

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Speaker 4: edition of Balance of Power. He is sat in that

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Speaker 4: chair and argued and he would fight with you right

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Speaker 4: now on the idea that tariffs are inflationary. And you've

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Speaker 4: heard this line from the White House that when you

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Speaker 4: have a one time change in prices, that it's a

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Speaker 4: different phenomenon. You're seeing a trend though that will continue.

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Speaker 7: So I don't agree with Peter Navarro on almost anything, understand,

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Speaker 7: but I do agree that it is a one time shock.

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Speaker 7: And so when I look at tariffs, I think that

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Speaker 7: the real concern with them is not the inflationary impact.

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Speaker 7: For the reasons that Navarro says it's a one time shock.

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Speaker 7: That's bad news, it's terrible timing. It's a time when

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Speaker 7: you'd like to see the fedbiale to cut in a can.

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Speaker 7: The real problem with tariffs are that it has eroded

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Speaker 7: the United States credibility as a trading partner, and you're

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Speaker 7: seeing that in terms of not just trading but also investment.

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Speaker 7: Investment has been stagnant despite this four trillion dollar bill.

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Speaker 7: And so if you look at sort of the average

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Speaker 7: teriff rate on China, they're all over the place. Tariffs

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Speaker 7: start off at ten percent, with twenty percent, they're one

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Speaker 7: hundred and four percent for a while, one hundred and

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Speaker 7: forty five. Now they're down to thirty. I don't know

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Speaker 7: what they're gonna be in three months. Need is Peter

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Speaker 7: Navarrow needed his President Trump? Who would want to trade

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Speaker 7: with someone who is rapidly switching prices like that so frequently.

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Speaker 7: So it's not this one time price shock from tariffs

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Speaker 7: that really concern me. It's the erosion of our credibility

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Speaker 7: as a trading partner.

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Speaker 2: Well, when we consider the investment question which you raised,

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Speaker 2: the White House would contend they've had trillions of dollars

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Speaker 2: in investment pledges coming in from various governments or companies

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Speaker 2: announcing they're going to be building more manufacturing capacity in

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Speaker 2: the US, even if some of that money had already

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Speaker 2: been previously announced as well, Even if it does materialize,

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Speaker 2: how long does it actually take to translate into more

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Speaker 2: demand for labor, more American jobs if it were to

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Speaker 2: work as they say it's designed.

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Speaker 7: So the White House has no credibility on this point.

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Speaker 7: The White House has no credibility on this point because

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Speaker 7: we have an example in the first Trump administration, we

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Speaker 7: had that Phase one deal with China. We had hundreds

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Speaker 7: of billions of dollars of commitments that China had no

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Speaker 7: intention of fulfilling and that the administration did nothing to

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Speaker 7: ensure that it was fulfilled. There's outstanding confusion around these

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Speaker 7: trade deals. Let's just be clear what these trade deals are.

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Speaker 7: They're frameworks. So the usmca A bill that was signed

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Speaker 7: in the first Trump administration was eighteen hundred pages. The

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Speaker 7: trade framework with the UK, which was the most comprehensive

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Speaker 7: so far, was five These are not trade deals. There's

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Speaker 7: massive confusion. You can look at the Japanese trade deal,

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Speaker 7: five hundred and fifty billion dollars in investment pledges. Japan said,

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Speaker 7: you know, these aren't really investment pledges. These are loans

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Speaker 7: at market rates. That's the White House called it a

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Speaker 7: blank check.

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Speaker 4: Yeah, and so what happened six months to a year

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Speaker 4: from now when they're trying to draw down this cash.

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Speaker 7: No one knows, No one knows, and so if I

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Speaker 7: was gonna characterize the US economy right now, it would

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Speaker 7: be chaos and confusion. And you're seeing that in businesses.

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Speaker 7: You're seeing businesses, You're seeing from business leaders. They're saying,

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Speaker 7: I don't know what's going to happen with trade, I

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Speaker 7: don't know what's going to happen with the regulation. So

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Speaker 7: what I'm doing is I'm standing patent til there's some clarity.

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Speaker 7: This is really bad for American business.

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Speaker 2: Well, so should it be bad for American markets or

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Speaker 2: US equity markets? Because until today, where yes, you are

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Speaker 2: seeing some significant downward pressure, we were hovering around record highs.

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Speaker 2: It seemed like everybody was in a a pretty good

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Speaker 2: mood or at the very least willing to look through

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Speaker 2: the president's latest tariffs.

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Speaker 7: Yeah. I think the reason for that is during the

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Speaker 7: transition between administrations, the way that economists and the way

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Speaker 7: the financial markets were looking at the Trump administration was

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Speaker 7: this kind of fight between On the good side, you

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Speaker 7: have this massive tax cut coming, and you've got widespread deregulation,

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Speaker 7: and a lot of executives are really excite about that,

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Speaker 7: and then on the other side you have pretty stark

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Speaker 7: tariffs and a really aggressive anti immigration platform, and so

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Speaker 7: you have this fight between these two different factors. It's

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Speaker 7: clear that the negative impacts of tariffs and going to

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Speaker 7: zero immigration, which we haven't talked about yet, I think

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Speaker 7: is a real factor, is beating the positive impacts of

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Speaker 7: this really expensive tax package and deregulation. So I think

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Speaker 7: that's what you're seeing in equi markets today.

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Speaker 4: Participation in the jobs reports today fell to the lowest

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Speaker 4: level in months. Does that suggest full employment? People are

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Speaker 4: sitting on their hands waiting for something. You add a

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Speaker 4: number of mass deportations, what's that number going to look like,

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Speaker 4: say the end of this year. So in terms of participation,

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Speaker 4: when I'm looking at some of the alternative labor market metrics,

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Speaker 4: you're seeing there are a lot of people who want

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Speaker 4: to work who aren't And after you spend enough time

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Speaker 4: looking for a job, you're eventually going to start dropping out.

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Speaker 4: And so you can expect that to happen. That's what happens,

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Speaker 4: as you guys know, when economies weekend. In terms of immigration,

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Speaker 4: I mean, the answer has to be I don't know.

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Speaker 4: So going back to nineteen ninety Outside of COVID, we

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Speaker 4: have added in net migration in the United States between

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Speaker 4: one million and one point eight million people every single year.

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Speaker 4: This happened during the first Trump administration. It happened during Clinton.

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Speaker 4: We're about to go close to zero.

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Speaker 7: So you look at estimus coming out of my colleagues

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Speaker 7: at Brookings, we think we're going to be anywhere between

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Speaker 7: minus five hundred thousand and plus about one hundred and fifty.

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Speaker 7: We have never seen anything like that, and I don't

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Speaker 7: know what that means. I don't know what that means

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Speaker 7: for housing markets. It's probably bad for certain industries like agriculture, fishing,

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Speaker 7: some manufacturing. But this is this is an unprecedented experiment,

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Speaker 7: and we're all gonna go in a bit of a

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Speaker 7: right here.

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Speaker 4: We need to stay in touch on a lot of

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Speaker 4: things here. Ben Harris, it's great to have you back.

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Speaker 4: Thanks for having with Brookings now of course a veteran

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Speaker 4: of the Biden Administration's Treasury Department. Great analysis on this

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Speaker 4: jobs Day and Tariff's day. What are we calling this?

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Speaker 4: Is this liberation dig again or that's a week from now.

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Speaker 2: If it is, it would have to be like.

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Speaker 4: August seven, is when they take effect, right, Okay, so

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Speaker 4: we'll call it that again in a week.

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Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

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Speaker 1: us live weekdays at noon and five pm Eastern on

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Speaker 1: Apple Cocklay and Android Auto with the Bloomberg Business App.

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Speaker 1: flagship New York station, Just say Alexa Play Bloomberg eleven thirty.

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Speaker 4: We've been having a little trouble on Wall Street following

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Speaker 4: the jobs report this morning, the earnings news that you've

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Speaker 4: been hearing Charlie talk about, and what a busy Friday

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Speaker 4: this has become Friday news dump. The Corporation for Public

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Speaker 4: Broadcasting is closing down. We did learn that today, along

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Speaker 4: with the tariff rates that will be taking effect a

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Speaker 4: week from now. One of the more important stories that

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Speaker 4: you may not hear about, and I'm looking at you, Boston,

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Speaker 4: if you're listening to us now on ninety two nine FM.

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Speaker 4: It's called DRIVE, a new initiative by the Governor of

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Speaker 4: Massachusetts and it has everything to do with federal funding

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Speaker 4: or the lack thereof. DRIVE stands for Discovery, Research and

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Speaker 4: Innovation for a vibrant economy and Governor Mara Heely is

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Speaker 4: pushing this idea right now, joining us live from my

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Speaker 4: former hometown of Boston. Governor Healey, it's great to see you.

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Speaker 4: Welcome back to Bloomberg TV and Radio. You've carved out

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Speaker 4: four hundred million dollars here an investment pool to help

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Speaker 4: create jobs, to help fund research. Anyone who's been to

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Speaker 4: Boston knows the dozens of research hospitals that are there,

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Speaker 4: never mind the scores of universities that you have in

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Speaker 4: the city and across the state. Is this a direct

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Speaker 4: response to the cuts that have come from the Trump

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Speaker 4: White House.

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Speaker 8: Well, Joe, thanks for having me on, and I'm really

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Speaker 8: excited about this.

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Speaker 6: This is what this is about.

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Speaker 8: This is an investment in the Massachusetts economy. It's about

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Speaker 8: job creation, and it's about the recognition that one in

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Speaker 8: ten research and development jobs in the United States, one

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Speaker 8: in ten are here in Massachusetts. We have the highest

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Speaker 8: percentage of STEM graduates per capital, We receive the greatest

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Speaker 8: amount of venture funding. We also receive the greatest amount

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Speaker 8: of NIH funds. Research drives and powers the Massachusetts economy,

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Speaker 8: and in the face of some uncertainty from the federal

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Speaker 8: government and sure funding going away.

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Speaker 6: In some respects.

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Speaker 8: I thought it was really important to lean in and

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Speaker 8: to send a message not.

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Speaker 6: Just to the United States, but to the world.

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Speaker 8: If you're an innovator, an entrepreneur, a scientist, a researcher,

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Speaker 8: Massachusetts is where you want to be.

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Speaker 6: We will continue to be.

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Speaker 8: A place that powers the world with our research, with

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Speaker 8: our science, we will continue to be the place that

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Speaker 8: incubates all those cures and treatments and discoveries that have

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Speaker 8: really transformed the world. And that is the message that

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Speaker 8: I'm trying to send with this public investment in research,

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Speaker 8: which we hope to leverage with additional private dollars to

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Speaker 8: really make this thing go. I'm very excited about it

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Speaker 8: and what it's going to mean, not just for Massachusetts

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Speaker 8: but for the United States.

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Speaker 2: Well, Governor, that's what I wanted to ask you, is

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Speaker 2: you talk about this being about job creation, but in

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Speaker 2: some degree, if funding is going down, it also has

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Speaker 2: to be about protecting existing jobs. So is do you

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Speaker 2: see the need here for this four hundred million dollars

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Speaker 2: to actually grow to something much more substantial. Does that

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Speaker 2: number need to get higher ultimately?

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Speaker 8: Well, you know, Kaylee, I'd love to see it grow.

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Speaker 8: It's also the case. Let me just explain when I

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Speaker 8: talk about research jobs, know that for every research job

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Speaker 8: here that is funded, that is supported, that is spinning

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Speaker 8: off so many other jobs, and can instruction in real

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Speaker 8: estate and hospitality, in restaurants and retail. So it's such

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Speaker 8: an important catalyst for so much. And when I think

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Speaker 8: about our incredible teaching hospitals, our colleges and universities, they've

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Speaker 8: had funding hits, as you know, and that directly impacts

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Speaker 8: economic growth and progress, not just for Massachusetts but for

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Speaker 8: the United States because we're competing against China. China is

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Speaker 8: the one who's looking to recruit our scientists and our

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Speaker 8: researchers and those who are in our labs today. I

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Speaker 8: want those folks staying in Massachusetts, staying in the United States,

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Speaker 8: and I want them to be part, to continue to

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Speaker 8: be part of what has been so essential to American

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Speaker 8: GDP and growth and dominance around the world.

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Speaker 4: I guess my question for you in this case, Governor,

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Speaker 4: is would this be necessary if the federal government maintained

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Speaker 4: the funding that Massachusetts was already injoin or was this

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Speaker 4: something that you wanted to reach for beyond the federal

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Speaker 4: funding that you've seen come into Beacon Hill and do

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Speaker 4: something more for research in Massachusetts. Was this idea underway

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Speaker 4: before President Trump and the DOGE and the cuts.

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Speaker 8: Well, I'll say that the DOGE and the NIH cuts

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Speaker 8: certainly put a focus on this and not only the

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Speaker 8: primacy of research here, but the need now to make

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Speaker 8: sure that is really supported. It's also the case that

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Speaker 8: we did not see prior to Donald Trump's actions, the

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Speaker 8: efforts to recruit on our campuses, at our teaching hospitals,

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Speaker 8: at our pre eminent, world renowned research institutions here in Massachusetts,

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Speaker 8: the presence of so many people from so many countries

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Speaker 8: looking to lure American talent and intellectual assets away. So

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Speaker 8: it absolutely has been precipitated by what we've seen for

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Speaker 8: the federal government.

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Speaker 6: That said, as governor, I would have wanted to.

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Speaker 8: Make this investment any ways, because this is about growth

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Speaker 8: and innovation in our economy, which has always driven Massachusetts

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Speaker 8: jobs and economic success here.

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Speaker 2: Governor. As you well know, President Trump and his administration

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Speaker 2: are in a bit of a battle with Harvard University specifically,

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Speaker 2: and there has been reporting in recent days that Harvard

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Speaker 2: is looking to spend or open to spending at least

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Speaker 2: up to five hundred million dollars to settle with the administration.

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Speaker 2: A group of House and Senate Democrats have now sent

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Speaker 2: a letter to Harvard suggesting there will be a rigorous

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Speaker 2: investigation if the school ultimately cuts a deal such as that.

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Speaker 2: What would you advise Harvard to do here?

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Speaker 8: Well, I haven't spoken with Harvard about this, and my

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Speaker 8: hope is Harvard will make a decision that is in

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Speaker 8: the best interests of academic freedom. I think that's really

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Speaker 8: important and central to American higher ed. So we'll see

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Speaker 8: how that goes. But you know, I have expressed my

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Speaker 8: concerns about what the Trump administration has done in weaponizing,

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Speaker 8: whether it's DOJ or other things against Harvard and other

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Speaker 8: universities in an attempt to essentially silence critics, silence academic freedom.

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Speaker 6: And you know that's just to me an American governor.

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Speaker 4: Heally, you've been pretty outspoken about your opposition toward the

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Speaker 4: President's tariff regime as well, with Canada specifically in mind.

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Speaker 3: Here.

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Speaker 4: You launched the Tariff Response and Business Operations Support initiative

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Speaker 4: to support local business, and you gathered a bunch of

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Speaker 4: Northeastern governors and Canadian premiers back in June to talk

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Speaker 4: about this. Canada is really feeling it. They're at thirty

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Speaker 4: five percent.

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Speaker 7: Now.

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Speaker 4: It looks like outside of the USMCA, we looked at

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Speaker 4: the numbers here. Massachusetts exported three billion dollars in goods

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Speaker 4: to Canada in twenty twenty four, making it the state's

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Speaker 4: third largest trading partner. What will these tariffs on Canada

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Speaker 4: mean for your economy?

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Speaker 6: Well, tariff's air tax.

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Speaker 8: And you know, I'm a governor who is trying to

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Speaker 8: build housing as quickly as possible in my state. My

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Speaker 8: lumber comes from Canada, right, So you know that's just

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Speaker 8: one example of how reckless this is. Canada is our

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Speaker 8: largest trading partner, of course, and you know the reason

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Speaker 8: I brought together Canadian premiers and the North Northeast governors

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Speaker 8: a few weeks ago was to send a message, we

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Speaker 8: are your friends, we are your allies. We want to

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Speaker 8: continue to do business with you, We want to continue

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Speaker 8: to structure energy deals and you know, support tourism and

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Speaker 8: support trade. I mean, it is so integral to our

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Speaker 8: economies on both sides of the border. So you know,

438
00:22:33,840 --> 00:22:38,280
Speaker 8: it's terribly disappointing, terribly frustrating to see the President continue

439
00:22:38,320 --> 00:22:41,560
Speaker 8: to hammer on our great friends to the north, and

440
00:22:41,600 --> 00:22:43,880
Speaker 8: it's going to hurt households and businesses here. And that's

441
00:22:43,880 --> 00:22:47,080
Speaker 8: why I've tried to be proactive, reaching out, meeting with

442
00:22:47,160 --> 00:22:51,159
Speaker 8: my Canadian allies and colleagues, working together with other governors

443
00:22:51,200 --> 00:22:54,320
Speaker 8: on this issue, and also supporting our businesses.

444
00:22:53,880 --> 00:22:56,400
Speaker 6: Here who are already feeling it. You know, I'm all

445
00:22:56,480 --> 00:22:57,280
Speaker 6: for reshoring.

446
00:22:57,400 --> 00:23:01,199
Speaker 8: Okay, let's let's let's but let's let's be sensible and

447
00:23:01,280 --> 00:23:04,840
Speaker 8: smart about what it is that's practical to reshore and

448
00:23:04,920 --> 00:23:08,360
Speaker 8: what isn't. And you know, as governor, I'm very focused

449
00:23:08,359 --> 00:23:11,479
Speaker 8: on this and just continue to be really dismayed at

450
00:23:11,520 --> 00:23:15,600
Speaker 8: the devastation caused by this because it's also the uncertainty.

451
00:23:15,760 --> 00:23:17,960
Speaker 8: Right you don't have capital deployed in your state or

452
00:23:17,960 --> 00:23:20,840
Speaker 8: in this country. You have people turning away from the

453
00:23:20,960 --> 00:23:25,560
Speaker 8: United States for investment. That's not good for American competitiveness,

454
00:23:25,840 --> 00:23:27,720
Speaker 8: that is not putting America first.

455
00:23:29,840 --> 00:23:33,200
Speaker 2: Well, when we consider the uncertain nature of the president's

456
00:23:33,200 --> 00:23:36,400
Speaker 2: tariff policy, knowing how frequently governor that they have changed

457
00:23:36,640 --> 00:23:40,359
Speaker 2: or deadlines have moved, is it so simple for businesses

458
00:23:40,400 --> 00:23:43,120
Speaker 2: in Massachusetts the tariffs go away? Okay, great, we can

459
00:23:43,119 --> 00:23:45,880
Speaker 2: make a different decision or do they have to think

460
00:23:45,920 --> 00:23:48,399
Speaker 2: differently about that. I just wonder to what extent the

461
00:23:48,440 --> 00:23:51,360
Speaker 2: impact will be permanent, regardless of the decisions of the president.

462
00:23:51,960 --> 00:23:52,439
Speaker 6: I Cayley.

463
00:23:52,520 --> 00:23:55,240
Speaker 8: That's a great point, because you have to make decisions

464
00:23:55,320 --> 00:23:59,280
Speaker 8: judgments in real time about orders right for parts, for supplies,

465
00:23:59,800 --> 00:24:01,960
Speaker 8: figure out how you're going to source things, and it

466
00:24:02,000 --> 00:24:06,200
Speaker 8: has become incredibly difficult for so many companies to try

467
00:24:06,240 --> 00:24:07,160
Speaker 8: to figure this out.

468
00:24:07,200 --> 00:24:09,480
Speaker 6: It's hard for the largest.

469
00:24:09,160 --> 00:24:13,040
Speaker 8: Companies, right, and imagine all the small businesses who have

470
00:24:13,160 --> 00:24:17,359
Speaker 8: been affected in Massachusetts and elsewhere. I'll also give you

471
00:24:17,359 --> 00:24:19,840
Speaker 8: an example because looking out behind me as the beautiful

472
00:24:19,840 --> 00:24:22,639
Speaker 8: Boston skyline, this is the time of year where we

473
00:24:22,840 --> 00:24:25,080
Speaker 8: like a lot of people to come tourists, visit New England,

474
00:24:25,200 --> 00:24:26,280
Speaker 8: visit Massachusetts.

475
00:24:26,680 --> 00:24:28,359
Speaker 6: All of us are getting killed.

476
00:24:28,880 --> 00:24:31,760
Speaker 8: Tourism numbers are off in New England between twenty and

477
00:24:31,840 --> 00:24:35,760
Speaker 8: sixty percent as a result of our treatment, mistreatment of

478
00:24:35,760 --> 00:24:39,760
Speaker 8: our Canadian friends who we count on to come here.

479
00:24:39,840 --> 00:24:43,359
Speaker 8: So I'll still reach out my hand and hope to

480
00:24:43,400 --> 00:24:46,280
Speaker 8: continue to find ways to do business, working with other governors,

481
00:24:46,560 --> 00:24:51,399
Speaker 8: working with Canadian premiers, encouraging that because we are in

482
00:24:51,440 --> 00:24:55,760
Speaker 8: a global economy, Massachusetts is certainly in a global economy,

483
00:24:55,880 --> 00:24:58,360
Speaker 8: and we need certainty, and we need.

484
00:24:58,160 --> 00:25:00,760
Speaker 6: This insanity to be put to bed and rent.

485
00:25:00,840 --> 00:25:04,119
Speaker 4: And I want to ask you, lastly, Governor, about the

486
00:25:04,200 --> 00:25:08,200
Speaker 4: effort to read districts in the state of Texas, and

487
00:25:08,280 --> 00:25:11,159
Speaker 4: a trend that might become a national one, as Republicans

488
00:25:11,160 --> 00:25:14,040
Speaker 4: in Texas redraw the congressional map in an effort to

489
00:25:14,080 --> 00:25:17,320
Speaker 4: generate five more seats that President Trump has asked for

490
00:25:17,840 --> 00:25:20,879
Speaker 4: that are expected to be Republican seats, an effort to

491
00:25:20,920 --> 00:25:24,040
Speaker 4: maintain the Republican majority of every thin majority.

492
00:25:23,880 --> 00:25:24,520
Speaker 7: In the House.

493
00:25:24,880 --> 00:25:27,040
Speaker 4: I bring this up with you because not only are

494
00:25:27,080 --> 00:25:30,040
Speaker 4: you a Democratic leader in this country, but we talked

495
00:25:30,040 --> 00:25:33,040
Speaker 4: to Senator Ted Cruz about this last night and he

496
00:25:33,080 --> 00:25:36,320
Speaker 4: brought up your state of Massachusetts. Listen to what he said.

497
00:25:37,320 --> 00:25:40,199
Speaker 9: I'm in particular amused at the Democrats who are clutching

498
00:25:40,240 --> 00:25:43,840
Speaker 9: their pearls, because the Democrats have always been much much

499
00:25:43,880 --> 00:25:47,280
Speaker 9: more ruthless in jerrymandering. I'll give you an example the

500
00:25:47,320 --> 00:25:50,919
Speaker 9: state of Massachusetts. State of Massachusetts, about thirty five percent

501
00:25:50,920 --> 00:25:54,000
Speaker 9: of Massachusetts votes Republican, about sixty to sixty five percent

502
00:25:54,080 --> 00:25:58,200
Speaker 9: votes Democrat. Do you know what percent of Massachusetts congressional

503
00:25:58,240 --> 00:26:01,560
Speaker 9: delegation is Republican at zero.

504
00:26:02,160 --> 00:26:02,920
Speaker 4: Yeah, they drew it.

505
00:26:04,600 --> 00:26:05,240
Speaker 9: Hit is elected.

506
00:26:06,440 --> 00:26:09,639
Speaker 4: I reminded him of some of the other redistricting phenomena

507
00:26:09,680 --> 00:26:14,159
Speaker 4: that have happened that redistricts a couple of lawmakers right

508
00:26:14,200 --> 00:26:17,159
Speaker 4: out of their own districts. I'm just wondering if he

509
00:26:17,240 --> 00:26:19,879
Speaker 4: has a point there, Governor, and where you'd put the

510
00:26:19,920 --> 00:26:22,800
Speaker 4: Republican seat in Massachusetts.

511
00:26:24,280 --> 00:26:27,640
Speaker 6: Well, first of all, I'm not questioning my pearl's senator.

512
00:26:28,160 --> 00:26:31,080
Speaker 8: What I am as a governor who believes in fair representation,

513
00:26:31,200 --> 00:26:33,439
Speaker 8: and what's going on in Texas is just you know,

514
00:26:33,480 --> 00:26:37,199
Speaker 8: it's an abomination right now, the effort to redraw those maps.

515
00:26:37,600 --> 00:26:40,919
Speaker 8: The Senator himself made the point, which is that sixty

516
00:26:40,920 --> 00:26:43,600
Speaker 8: five percent of the voters in Massachusetts happened to not

517
00:26:43,680 --> 00:26:46,320
Speaker 8: be Republicans. So we end up with a delegation that

518
00:26:46,440 --> 00:26:50,880
Speaker 8: is right now all Democrat. But you know, I will

519
00:26:50,920 --> 00:26:53,879
Speaker 8: do everything as governor to always ensure that there is

520
00:26:53,960 --> 00:26:57,000
Speaker 8: fair play and fair representation. Clearly, you know there are

521
00:26:57,040 --> 00:26:59,600
Speaker 8: governors elsewhere a Governor Abbott working together with a g

522
00:26:59,720 --> 00:27:02,639
Speaker 8: pack that are not about that. They are about playing

523
00:27:02,680 --> 00:27:05,280
Speaker 8: games right now and playing politics to try to retain

524
00:27:05,560 --> 00:27:07,200
Speaker 8: a very thin House majority.

525
00:27:07,240 --> 00:27:10,480
Speaker 6: That's what's happening, all right.

526
00:27:10,520 --> 00:27:12,560
Speaker 2: Governor, We thank you so much for joining us here

527
00:27:12,600 --> 00:27:16,320
Speaker 2: on Bloomberg TV and Radio Live firm our Boston Bureau.

528
00:27:16,400 --> 00:27:19,159
Speaker 2: The Governor of Massachusetts more heally here with us on

529
00:27:19,320 --> 00:27:21,760
Speaker 2: balance of power, talking not just redistricting, but of course

530
00:27:21,800 --> 00:27:24,760
Speaker 2: the economic impact being felt in Massachusetts by the policies

531
00:27:25,040 --> 00:27:28,320
Speaker 2: of the Trump administration, be it cuts to funding for

532
00:27:28,440 --> 00:27:31,639
Speaker 2: things like research, or of course the tariff policy of

533
00:27:31,680 --> 00:27:34,119
Speaker 2: the President, which is in focus today as we have

534
00:27:34,200 --> 00:27:37,000
Speaker 2: the announcement but not necessarily the collection yet of these

535
00:27:37,080 --> 00:27:40,080
Speaker 2: duties on a number of our trading partners terras ranging

536
00:27:40,080 --> 00:27:42,159
Speaker 2: from a ten percent baseline all the way up to

537
00:27:42,280 --> 00:27:45,720
Speaker 2: around forty percent going into effect as of August seventh,

538
00:27:45,720 --> 00:27:47,200
Speaker 2: on the very same day that we get a softer

539
00:27:47,280 --> 00:27:50,040
Speaker 2: than expected jobs are for it at just seventy three

540
00:27:50,080 --> 00:27:51,960
Speaker 2: thousand jobs. So for more on this we turn to

541
00:27:52,000 --> 00:27:55,359
Speaker 2: our political panel. Gy Schianzeno is with us Democratic analyst,

542
00:27:55,400 --> 00:27:58,240
Speaker 2: Bloomberg Politics contributor and senior Democracy Fellow at the Center

543
00:27:58,280 --> 00:28:00,960
Speaker 2: for the Study of the Presidency in Congress, alongside Lisa

544
00:28:01,000 --> 00:28:04,480
Speaker 2: Kamusa Miller, Republican strategist, former R. And C communications director

545
00:28:04,720 --> 00:28:08,320
Speaker 2: and host of the Friday Reporter podcast, Lisa, When we

546
00:28:08,359 --> 00:28:11,600
Speaker 2: consider the President obviously stands by his economic policies. He

547
00:28:11,600 --> 00:28:15,200
Speaker 2: has touted the strong gdprefigures we got earlier this week.

548
00:28:15,200 --> 00:28:17,439
Speaker 2: He believes tariffs are a good thing for America, not

549
00:28:17,560 --> 00:28:20,080
Speaker 2: a bad thing when you put them together with what

550
00:28:20,080 --> 00:28:23,280
Speaker 2: we just heard from Governor Healy about how it's already

551
00:28:23,280 --> 00:28:28,120
Speaker 2: impacting businesses and potentially hiring decisions with the softer jobs report.

552
00:28:28,160 --> 00:28:30,920
Speaker 2: Is he about to face the need to u turn

553
00:28:31,080 --> 00:28:31,960
Speaker 2: on this once again.

554
00:28:33,200 --> 00:28:36,000
Speaker 10: Oh, he'll never admit that what he's put in place

555
00:28:36,119 --> 00:28:39,040
Speaker 10: is something that should be reversed, but he certainly will

556
00:28:39,440 --> 00:28:41,400
Speaker 10: keep an eye on the markets and try to do

557
00:28:41,440 --> 00:28:44,440
Speaker 10: everything he can to make it appear like he has won,

558
00:28:44,600 --> 00:28:46,720
Speaker 10: that his policies are winning, and that they're doing the

559
00:28:46,800 --> 00:28:49,840
Speaker 10: right thing for the American economy. I think, though, that

560
00:28:49,920 --> 00:28:53,560
Speaker 10: the market itself this morning reacted not only to the

561
00:28:53,840 --> 00:28:56,440
Speaker 10: announcements that he offered last night as it relates to

562
00:28:56,520 --> 00:28:59,680
Speaker 10: last minute trade activity, but also this morning keeping a

563
00:28:59,680 --> 00:29:02,760
Speaker 10: close on how that's going to all change and react

564
00:29:03,200 --> 00:29:05,160
Speaker 10: in a real time. I think that the President probably

565
00:29:05,160 --> 00:29:08,000
Speaker 10: is paying very close attention and will continue to retool,

566
00:29:09,040 --> 00:29:11,920
Speaker 10: not a retreat, but more in a way to say

567
00:29:11,960 --> 00:29:14,040
Speaker 10: he's watching and he's paying attention. He's going to do

568
00:29:14,080 --> 00:29:16,400
Speaker 10: whatever it can to make the economy a winner.

569
00:29:17,600 --> 00:29:17,920
Speaker 7: Genie.

570
00:29:18,160 --> 00:29:20,920
Speaker 4: Does Morihieley have a model there for other states around

571
00:29:20,960 --> 00:29:23,440
Speaker 4: the country to make up for the lack of federal

572
00:29:23,440 --> 00:29:26,600
Speaker 4: funding or is this a Massachusetts specific issue when it

573
00:29:26,640 --> 00:29:30,000
Speaker 4: comes to the many universities and research hospitals in that state.

574
00:29:31,840 --> 00:29:34,600
Speaker 11: You know, it really struck me listening to your conversation

575
00:29:34,720 --> 00:29:38,000
Speaker 11: with Governor Keeley. What a breath of fresh air. And

576
00:29:38,040 --> 00:29:40,240
Speaker 11: this is what you hear more and more from voters.

577
00:29:40,280 --> 00:29:42,760
Speaker 11: They are not turning to the federal government. They are

578
00:29:42,800 --> 00:29:46,000
Speaker 11: turning to their local and state officials like Governor Keeley,

579
00:29:46,480 --> 00:29:49,040
Speaker 11: to say what do we do at this time of

580
00:29:49,240 --> 00:29:53,240
Speaker 11: enormous uncertainty. And she does have a plan with this

581
00:29:53,400 --> 00:29:57,640
Speaker 11: drive to address what has been taken from the state

582
00:29:57,720 --> 00:30:00,840
Speaker 11: as a result of Doze cuts and others. And I

583
00:30:00,880 --> 00:30:05,320
Speaker 11: think we will see other governors left and right, Republican

584
00:30:05,360 --> 00:30:08,880
Speaker 11: and dencre try to emulate that. But you know, even

585
00:30:08,920 --> 00:30:12,440
Speaker 11: more than the specifics, I feel like listening to her

586
00:30:12,640 --> 00:30:16,480
Speaker 11: in a very common sense, calm way, she's talking about

587
00:30:16,560 --> 00:30:18,960
Speaker 11: what so many people are feeling today as a result

588
00:30:19,040 --> 00:30:24,200
Speaker 11: of tariffs, you know, the cuts to the Corporation for

589
00:30:24,240 --> 00:30:27,520
Speaker 11: public broadcasting, so much unease. Going on to hear that

590
00:30:27,560 --> 00:30:30,480
Speaker 11: there are leaders on the ground who know what people

591
00:30:30,480 --> 00:30:33,680
Speaker 11: are feeling and are prepared to address those is a

592
00:30:33,800 --> 00:30:38,200
Speaker 11: reassuring and much reassuring needed conversation to have. So I

593
00:30:38,240 --> 00:30:40,800
Speaker 11: was very grateful to listen to you all talk to

594
00:30:40,880 --> 00:30:43,840
Speaker 11: her about what she's doing for her states so close

595
00:30:43,880 --> 00:30:46,600
Speaker 11: to the Canadian border at this time of uncertainty.

596
00:30:46,680 --> 00:30:50,160
Speaker 4: Yeah, well, we appreciate going overtime with our panel here.

597
00:30:50,200 --> 00:30:52,960
Speaker 4: Many thanks to Jeanie Shan Say No, Bloomberg Politics contributor

598
00:30:53,120 --> 00:30:56,360
Speaker 4: at Lisa Kumuso Miller, former RNC Comms director look for

599
00:30:56,360 --> 00:30:59,360
Speaker 4: her Friday Reporter podcast. Many thanks to you both for

600
00:30:59,400 --> 00:31:00,320
Speaker 4: the insights.

601
00:31:02,360 --> 00:31:05,840
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

602
00:31:05,920 --> 00:31:09,400
Speaker 1: us live weekdays at noon and five pm Eastern on Apple,

603
00:31:09,440 --> 00:31:12,440
Speaker 1: Cocklay and Android Auto with the Bloomberg Business app. You

604
00:31:12,480 --> 00:31:15,960
Speaker 1: can also listen live on Amazon Alexa from our flagship

605
00:31:16,040 --> 00:31:20,680
Speaker 1: New York station, Just Say Alexa Play Bloomberg eleven thirty.

606
00:31:21,240 --> 00:31:23,640
Speaker 4: Market's a big part of the story today in Washington,

607
00:31:23,640 --> 00:31:26,840
Speaker 4: as the tariff rates are rolled out. Charlie just mentioned it.

608
00:31:26,920 --> 00:31:29,040
Speaker 4: We got a big pile of paper end of the

609
00:31:29,120 --> 00:31:32,000
Speaker 4: day yesterday. More of this rolled through the evening here

610
00:31:32,040 --> 00:31:33,640
Speaker 4: and we got a whole new date. I was going

611
00:31:33,720 --> 00:31:36,360
Speaker 4: to say, you know, happy Liberation Day or whatever this is,

612
00:31:36,400 --> 00:31:41,160
Speaker 4: but circle August seven on your calendar. That's the actual date.

613
00:31:41,360 --> 00:31:43,560
Speaker 4: I guess this takes hold at twelve oh one am

614
00:31:43,600 --> 00:31:47,040
Speaker 4: August seven, So you got a week you still want

615
00:31:47,040 --> 00:31:49,920
Speaker 4: to make a deal. Of course, this was all supposed

616
00:31:49,920 --> 00:31:53,120
Speaker 4: to take effect today, but we understand that the extra

617
00:31:53,200 --> 00:31:56,720
Speaker 4: week was needed for Customs and Border Protection to update

618
00:31:56,760 --> 00:32:01,240
Speaker 4: the tariff schedule with all of these new numbers. Fifteen percent,

619
00:32:01,760 --> 00:32:05,720
Speaker 4: the big industrialized economies, European Union, in Japan, South Korea.

620
00:32:05,760 --> 00:32:09,680
Speaker 4: We talked about that those with a small trade deficit

621
00:32:09,880 --> 00:32:14,800
Speaker 4: get fifteen percent, Countries with which the US runs a

622
00:32:14,880 --> 00:32:19,120
Speaker 4: trade surplus get ten percent. And if you Canada, well

623
00:32:19,280 --> 00:32:24,040
Speaker 4: just I don't know. Called back another time. Jamison Greer

624
00:32:24,320 --> 00:32:26,440
Speaker 4: was on Bloomberg TV and radio this morning. The US

625
00:32:26,480 --> 00:32:28,640
Speaker 4: Trade representative, of course, had a lot to do with

626
00:32:28,720 --> 00:32:30,000
Speaker 4: the outcome. Here's what he said.

627
00:32:30,480 --> 00:32:33,040
Speaker 12: We'll be finishing the paperwork in the next weeks and

628
00:32:33,120 --> 00:32:36,000
Speaker 12: maybe a couple of months. But these deals are pretty

629
00:32:36,040 --> 00:32:38,920
Speaker 12: much set. They are set right. We wouldn't make an

630
00:32:38,960 --> 00:32:40,960
Speaker 12: agreement unless we all knew the contours of it and

631
00:32:41,000 --> 00:32:43,560
Speaker 12: the countries knew it. And it's an exciting time because

632
00:32:43,600 --> 00:32:46,440
Speaker 12: the president has essentially reset the global trading system, and

633
00:32:46,520 --> 00:32:49,040
Speaker 12: so we'll be you know, finalizing everything that's been agreed

634
00:32:49,080 --> 00:32:52,240
Speaker 12: to on paper and then monitoring compliance going forward.

635
00:32:53,640 --> 00:32:56,640
Speaker 4: It doesn't look like Wall Street is in love with this.

636
00:32:56,800 --> 00:32:58,640
Speaker 4: Not that a lot of this is a surprise. You know,

637
00:32:58,680 --> 00:33:01,960
Speaker 4: we've got jobs data that you've been hearing about kind

638
00:33:02,000 --> 00:33:04,240
Speaker 4: of confusing things a little bit too. But it's decidedly

639
00:33:04,520 --> 00:33:07,120
Speaker 4: lower today. The S and P five hundred is down

640
00:33:07,120 --> 00:33:09,760
Speaker 4: seventy five points, more than one percent. Nasdac's down three

641
00:33:09,920 --> 00:33:13,160
Speaker 4: fifty one and a half percent. We've got a big

642
00:33:13,160 --> 00:33:15,120
Speaker 4: move in the bond market here. The Vicks is back

643
00:33:15,200 --> 00:33:19,360
Speaker 4: above nineteen. Even the companies with good earnings look at

644
00:33:19,440 --> 00:33:22,200
Speaker 4: Exon Mobile turning negative, down a couple of dollars. Apple

645
00:33:22,240 --> 00:33:25,080
Speaker 4: had a nice story to tell. It's down almost five dollars.

646
00:33:25,720 --> 00:33:28,120
Speaker 4: And if you miss estimates, boy, you're going to be punished.

647
00:33:28,160 --> 00:33:32,800
Speaker 4: Amazon not inspired by the forecast. It's down eighteen dollars

648
00:33:32,920 --> 00:33:36,200
Speaker 4: or eight percent. So we've got a lot at play here,

649
00:33:37,040 --> 00:33:38,400
Speaker 4: but we want to talk about the fact that we

650
00:33:38,440 --> 00:33:41,560
Speaker 4: actually have these numbers now, the tariffs, and as well,

651
00:33:41,920 --> 00:33:45,600
Speaker 4: what's happening on Capitol Hill. With our good friend Patrick McHenry,

652
00:33:45,600 --> 00:33:48,360
Speaker 4: Bloomberg Politics contributor. I always love saying that the former

653
00:33:48,400 --> 00:33:52,160
Speaker 4: Republican congressman, former Chair Financial Services who actually held the

654
00:33:52,160 --> 00:33:55,360
Speaker 4: speaker's gavel for a short time. Mister mckenry, Great to

655
00:33:55,360 --> 00:34:00,640
Speaker 4: see you. Happy Friday. The President was talking about Powell

656
00:34:01,360 --> 00:34:03,800
Speaker 4: earlier today on Truth Social as he's been known to

657
00:34:03,800 --> 00:34:07,320
Speaker 4: do too little, too late, He writes, Jerome too late.

658
00:34:07,360 --> 00:34:10,399
Speaker 4: Powell is a disaster. Drop the rate. It's funny Donald

659
00:34:10,440 --> 00:34:12,960
Speaker 4: Trump never, i guess, talks like this to his face.

660
00:34:13,800 --> 00:34:16,920
Speaker 4: But is he starting to sound like he's on the

661
00:34:16,960 --> 00:34:20,319
Speaker 4: right side of history. It's time to start cutting. What

662
00:34:20,320 --> 00:34:22,640
Speaker 4: do you think, well, I.

663
00:34:22,640 --> 00:34:25,560
Speaker 13: Think it is. But look, the Federal Reserve is an

664
00:34:25,600 --> 00:34:30,600
Speaker 13: independent monetary authority in our system. It's well designed that way.

665
00:34:30,640 --> 00:34:35,120
Speaker 13: The Supreme Court degrees this is long standing a practice

666
00:34:35,960 --> 00:34:39,880
Speaker 13: for the United States. That's one. Two. There is the

667
00:34:39,920 --> 00:34:44,000
Speaker 13: political effect here, which is when the American people see

668
00:34:44,000 --> 00:34:47,160
Speaker 13: an economy that they don't like, who is to blame

669
00:34:48,080 --> 00:34:50,880
Speaker 13: in the presence, reminding them to blame the Federal Reserve,

670
00:34:51,960 --> 00:34:57,279
Speaker 13: not the Republicans they elected to run Washington. So that

671
00:34:57,400 --> 00:34:59,960
Speaker 13: is a useful political tool, that is at the present

672
00:35:00,080 --> 00:35:03,960
Speaker 13: it disposal that this president is use more than other presidents.

673
00:35:03,960 --> 00:35:06,960
Speaker 13: But he's not the only one to use this. They

674
00:35:06,960 --> 00:35:10,920
Speaker 13: complain of the Federal Reserve system LBJ and FDR. We're

675
00:35:11,000 --> 00:35:14,319
Speaker 13: quite notable in using it as well. So he's not

676
00:35:14,400 --> 00:35:16,880
Speaker 13: the first, but he is obviously the loudest and the

677
00:35:16,880 --> 00:35:20,200
Speaker 13: most adept at stoking those flames.

678
00:35:21,600 --> 00:35:24,160
Speaker 4: We tend to think of Patrick McHenry as an old

679
00:35:24,200 --> 00:35:29,040
Speaker 4: style conservative Republican Allah Ronald Reagan, correct me if I'm wrong.

680
00:35:29,880 --> 00:35:31,480
Speaker 7: Congressman's that's about right.

681
00:35:32,760 --> 00:35:37,080
Speaker 4: Tariffs are not part of that ideology. Where are you

682
00:35:37,120 --> 00:35:40,440
Speaker 4: with this tariff regime now that we actually have the numbers,

683
00:35:40,480 --> 00:35:42,200
Speaker 4: and how worried are you about what happens to the

684
00:35:42,200 --> 00:35:43,600
Speaker 4: economy in the second half of the year.

685
00:35:45,080 --> 00:35:50,360
Speaker 13: Well, there are two issues here. One is allowing China

686
00:35:50,440 --> 00:35:56,400
Speaker 13: to come into the first world trading regime but getting

687
00:35:56,440 --> 00:36:00,000
Speaker 13: the rules of the third World. And so I think

688
00:36:00,000 --> 00:36:04,200
Speaker 13: think some of our trading agreements have benefited other countries

689
00:36:04,640 --> 00:36:09,960
Speaker 13: to a much more substantial impact to them than to us.

690
00:36:10,800 --> 00:36:15,279
Speaker 13: We've given away a lot of our native industries and

691
00:36:15,400 --> 00:36:18,040
Speaker 13: some of these deals. So while you could be a

692
00:36:18,040 --> 00:36:20,319
Speaker 13: free trader, you don't have to necessarily agree with the

693
00:36:20,360 --> 00:36:23,080
Speaker 13: contours of each one of the trading regimes that we

694
00:36:23,160 --> 00:36:26,560
Speaker 13: set up each negotiation. The president's resetting that, and he

695
00:36:26,640 --> 00:36:29,359
Speaker 13: believes by resetting these tariffs we were going to get

696
00:36:29,400 --> 00:36:34,640
Speaker 13: back to a much more normative set of competition and

697
00:36:34,920 --> 00:36:38,319
Speaker 13: in this global trading regime. So some of this is

698
00:36:38,480 --> 00:36:42,160
Speaker 13: quite practical. This is why you haven't seen Hill Republicans

699
00:36:42,200 --> 00:36:46,320
Speaker 13: who are free traders speak up in any organized fashion.

700
00:36:47,280 --> 00:36:49,600
Speaker 13: So that is what he's speaking to. Now how he

701
00:36:49,680 --> 00:36:52,520
Speaker 13: does it, of course, Look, I mean as somebody who

702
00:36:52,800 --> 00:36:57,360
Speaker 13: thinks we have benefited overall by being the biggest trading

703
00:36:57,400 --> 00:37:00,520
Speaker 13: partner in the world. That has given us the ability

704
00:37:00,520 --> 00:37:04,160
Speaker 13: of a strong dollar, policy, has made us the reserve

705
00:37:04,239 --> 00:37:06,680
Speaker 13: currency for the world, has given us a greater part

706
00:37:06,800 --> 00:37:08,840
Speaker 13: borrowing power. There are a lot of benefits that have

707
00:37:08,920 --> 00:37:13,480
Speaker 13: come from our strength as a trading part I think

708
00:37:13,520 --> 00:37:15,279
Speaker 13: we have to maintain that edge, and we have to

709
00:37:15,320 --> 00:37:19,279
Speaker 13: be the place that people want to come to. That

710
00:37:19,320 --> 00:37:24,240
Speaker 13: people intellectual property come to place for capital and also

711
00:37:24,440 --> 00:37:28,080
Speaker 13: a place that leads the world in trade, and we

712
00:37:28,120 --> 00:37:31,640
Speaker 13: don't want to undermine that. So that's the countervailing piece

713
00:37:31,680 --> 00:37:34,840
Speaker 13: that I think has not been hotly pushed back on

714
00:37:35,800 --> 00:37:39,440
Speaker 13: this administration. I think it should be sharpened up.

715
00:37:40,600 --> 00:37:43,040
Speaker 4: Interesting. Well, you know, we love talking to you because

716
00:37:44,080 --> 00:37:46,680
Speaker 4: you have a real sensitivity to the economy here and

717
00:37:46,960 --> 00:37:49,560
Speaker 4: of course, following your chairmanship, you have such a good

718
00:37:49,600 --> 00:37:52,759
Speaker 4: sense of what this means for the Federal Reserve when

719
00:37:52,760 --> 00:37:55,239
Speaker 4: we start talking about interest rates, the idea that this

720
00:37:55,320 --> 00:37:58,239
Speaker 4: could creep into the data, but we've also got this

721
00:37:58,320 --> 00:38:00,600
Speaker 4: software that expected jobs report to and you know a

722
00:38:00,600 --> 00:38:02,799
Speaker 4: lot of people the narrative out there is j Powell

723
00:38:02,800 --> 00:38:04,600
Speaker 4: would have been cutting in February if it were not

724
00:38:04,640 --> 00:38:08,160
Speaker 4: for Donald Trump himself and the tariff regime. Do you

725
00:38:08,200 --> 00:38:10,360
Speaker 4: believe that? And do you think that we do see

726
00:38:11,120 --> 00:38:13,760
Speaker 4: some kind of inflation spike in the next few months.

727
00:38:14,800 --> 00:38:16,640
Speaker 13: Well, I think that's what the market's trying to figure out.

728
00:38:17,160 --> 00:38:19,479
Speaker 13: But the president has been given the benefit of doubt

729
00:38:19,640 --> 00:38:24,600
Speaker 13: by elected official, like by other Republicans in Washington, because

730
00:38:24,760 --> 00:38:29,840
Speaker 13: you've not seen the economic harm of this tariff fight.

731
00:38:31,440 --> 00:38:34,600
Speaker 13: And I think there is a notion in understanding that

732
00:38:34,800 --> 00:38:40,600
Speaker 13: the real culmination of all this discussion about tariffs is

733
00:38:40,640 --> 00:38:44,480
Speaker 13: the trading relationship with China and the world, and everything

734
00:38:44,480 --> 00:38:48,719
Speaker 13: that the President has done this year with the national security,

735
00:38:48,800 --> 00:38:55,640
Speaker 13: international presence and security negotiations and endeavors and tariff conversations

736
00:38:55,840 --> 00:38:58,920
Speaker 13: are all laying the predicate for a big deal with China,

737
00:38:59,440 --> 00:39:01,400
Speaker 13: and so they want to see that. They want to

738
00:39:01,440 --> 00:39:03,920
Speaker 13: see that big deal, and they're willing to go along

739
00:39:04,000 --> 00:39:09,480
Speaker 13: with you know, less optimistic economic data in order to

740
00:39:09,520 --> 00:39:12,319
Speaker 13: get to that deal. I think the markets see that.

741
00:39:13,640 --> 00:39:16,319
Speaker 13: But the data is now showing that this uncertainty and

742
00:39:16,400 --> 00:39:20,759
Speaker 13: this cost structure is creating a burden on the US economy.

743
00:39:21,239 --> 00:39:23,479
Speaker 13: The question is to the extent, and I think that

744
00:39:23,480 --> 00:39:26,799
Speaker 13: that's why the market is I think that's why you're

745
00:39:26,800 --> 00:39:31,239
Speaker 13: seeing VIS up and Congress is out, and so I

746
00:39:31,239 --> 00:39:35,680
Speaker 13: don't think you're going to hear much until September about

747
00:39:35,760 --> 00:39:39,200
Speaker 13: tariffs or any discussion about the effects.

748
00:39:39,880 --> 00:39:43,080
Speaker 4: Well, of course, the whole conversation when members come back

749
00:39:43,160 --> 00:39:44,680
Speaker 4: is going to be about a shutdown. I know you're

750
00:39:44,719 --> 00:39:46,799
Speaker 4: hearing this as well as we are. Democrats say they're

751
00:39:46,840 --> 00:39:48,799
Speaker 4: out because of the decisions package. Do you think we

752
00:39:48,840 --> 00:39:49,359
Speaker 4: shut down.

753
00:39:49,280 --> 00:39:49,719
Speaker 7: In the fall.

754
00:39:50,600 --> 00:39:53,440
Speaker 13: I think so. I think you need Democratic votes to

755
00:39:53,520 --> 00:39:55,799
Speaker 13: the Senate United States Senate in order to keep the

756
00:39:55,840 --> 00:39:59,000
Speaker 13: government open. I think what you will see as a

757
00:39:59,040 --> 00:40:02,279
Speaker 13: move for a continued to keep the government open, and

758
00:40:02,320 --> 00:40:04,640
Speaker 13: that passed the House, and then it gets to the Senate,

759
00:40:04,719 --> 00:40:08,359
Speaker 13: and it's really up to the Senate minority, the Democrats,

760
00:40:08,680 --> 00:40:10,920
Speaker 13: on whether or not they're going to allow that to

761
00:40:10,960 --> 00:40:13,920
Speaker 13: go to the president's desk. I think theirve the incentives

762
00:40:14,000 --> 00:40:17,799
Speaker 13: right now for Chuck Schumer and the Democrat leadership in

763
00:40:17,880 --> 00:40:20,239
Speaker 13: Washington is to show they have some fight, that they're

764
00:40:20,239 --> 00:40:24,080
Speaker 13: going to fight President Trump, and so they're going to

765
00:40:24,360 --> 00:40:26,799
Speaker 13: try to lay the blame of a government shut down

766
00:40:27,360 --> 00:40:29,399
Speaker 13: at the president's fee. It's going to be a huge

767
00:40:29,400 --> 00:40:31,280
Speaker 13: battle for the fall, and I think that will cloud

768
00:40:32,200 --> 00:40:34,920
Speaker 13: the rest of the debate, the public policy debate that

769
00:40:34,960 --> 00:40:36,680
Speaker 13: could otherwise be quite bipartisan.

770
00:40:37,680 --> 00:40:42,360
Speaker 4: It's amazing how predictable this seems to be here. Patrick McHenry,

771
00:40:42,360 --> 00:40:43,520
Speaker 4: I have to ask you about what's going on in

772
00:40:43,560 --> 00:40:45,200
Speaker 4: your home state before you leave us. There's a new

773
00:40:45,239 --> 00:40:48,759
Speaker 4: poll out on the North Carolina Senate race now that

774
00:40:49,239 --> 00:40:52,440
Speaker 4: your former governor Roy Cooper has jumped in here. Emerson

775
00:40:52,640 --> 00:40:57,960
Speaker 4: College Polling finds Cooper with a six point lead in

776
00:40:58,000 --> 00:41:04,120
Speaker 4: this race over Michael Wattley to you've got twelve percent undecided.

777
00:41:04,239 --> 00:41:07,200
Speaker 4: Does this sound right to you? And how much of

778
00:41:07,239 --> 00:41:09,759
Speaker 4: an uphill battle will Michael Whatley have in this race?

779
00:41:10,800 --> 00:41:14,319
Speaker 13: So two things, there's something for everyone in this poll.

780
00:41:15,200 --> 00:41:17,200
Speaker 13: If you're Roy Cooper, you said, well, look, I'm leading

781
00:41:17,960 --> 00:41:20,479
Speaker 13: got in the race. Now you have a Democratic lead

782
00:41:20,600 --> 00:41:24,319
Speaker 13: for what is a current Republican held seat, So they

783
00:41:24,400 --> 00:41:28,080
Speaker 13: get to have that narrative. But the Republicans have the

784
00:41:28,160 --> 00:41:30,319
Speaker 13: narrative of saying, we've got a guy who's never been

785
00:41:30,320 --> 00:41:35,279
Speaker 13: elected to anything and he's within six points of a

786
00:41:35,400 --> 00:41:40,600
Speaker 13: popular two term Democratic governor this and so therefore, what

787
00:41:40,760 --> 00:41:43,279
Speaker 13: we know is that this will be a very expensive,

788
00:41:44,200 --> 00:41:47,799
Speaker 13: probably the most expensive Senate race in the country this

789
00:41:47,880 --> 00:41:50,759
Speaker 13: election cycle, and it will be a nasty dog fight

790
00:41:51,520 --> 00:41:54,240
Speaker 13: based off the fact that we are a narrowly Republican.

791
00:41:54,280 --> 00:41:58,200
Speaker 13: North Carolina is a narrowly divided state. So watch out.

792
00:41:58,520 --> 00:42:01,240
Speaker 13: It's going to be long, long and nasty.

793
00:42:02,320 --> 00:42:04,400
Speaker 4: God knows that. We heard from Donald Trump on this.

794
00:42:04,440 --> 00:42:07,560
Speaker 4: He posted about this as well on truth Social Michael

795
00:42:07,600 --> 00:42:10,440
Speaker 4: Wattley has my complete and total endorsement. This is the

796
00:42:10,440 --> 00:42:13,399
Speaker 4: bottom of a very long post. He will never let

797
00:42:13,480 --> 00:42:17,080
Speaker 4: you down. All caps, exclamation point. We're gonna have to

798
00:42:17,120 --> 00:42:19,239
Speaker 4: keep talking about this one. Patrick McHenry, I hope you're

799
00:42:19,239 --> 00:42:21,440
Speaker 4: having a great summer, and thank you for chiming in

800
00:42:21,520 --> 00:42:25,400
Speaker 4: as always, Bloomberg Politics contributor former Republican Congressman Patrick McHenry

801
00:42:25,800 --> 00:42:28,080
Speaker 4: with his view on the Friday edition here of Balance

802
00:42:28,080 --> 00:42:31,560
Speaker 4: of Power. Really fascinating to look at these polling results

803
00:42:31,600 --> 00:42:34,600
Speaker 4: in again, what will likely be the most expensive Senate

804
00:42:34,680 --> 00:42:37,880
Speaker 4: contest is going to have to be between North Carolina

805
00:42:37,960 --> 00:42:43,760
Speaker 4: and Texas here right. Thanks for listening to the Balance

806
00:42:43,760 --> 00:42:47,400
Speaker 4: of Power podcast. Make sure to subscribe if you haven't already,

807
00:42:47,400 --> 00:42:50,759
Speaker 4: at Apple, Spotify, or wherever you get your podcasts, and

808
00:42:50,800 --> 00:42:53,399
Speaker 4: you can find us live every weekday from Washington, DC

809
00:42:53,560 --> 00:42:56,280
Speaker 4: at noontime Eastern at Bloomberg dot com.