1 00:00:00,080 --> 00:00:13,840 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jailie. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,879 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. The 5 00:00:33,920 --> 00:00:37,199 Speaker 1: news over the weekend softening the trade war talk was 6 00:00:37,240 --> 00:00:41,040 Speaker 1: the Treasury Secretary Stephen Manu Chin speaking to Fox News 7 00:00:41,080 --> 00:00:44,960 Speaker 1: on Sunday. We're having very productive conversations with the Chinese. 8 00:00:45,280 --> 00:00:49,800 Speaker 1: I'm cautially hopeful that will reach an agreement. Jim Glassman 9 00:00:49,840 --> 00:00:52,760 Speaker 1: with US JP Morgan, head economist of Commercial Banking here 10 00:00:52,760 --> 00:00:55,720 Speaker 1: in New York. Jimmy, you cautiously hopeful that'll reach an 11 00:00:55,760 --> 00:00:58,960 Speaker 1: agreement with the Chinese. Yeah, you know, because obviously we 12 00:00:59,040 --> 00:01:01,880 Speaker 1: don't like the sound of terriffs. Tariffs remind us of 13 00:01:02,320 --> 00:01:05,160 Speaker 1: global trade wars from a hundred years ago, in nineteen thirties. 14 00:01:05,600 --> 00:01:08,000 Speaker 1: But the truth is, if if you really look past 15 00:01:08,040 --> 00:01:12,520 Speaker 1: all the noise, the real argument here is a beef 16 00:01:12,560 --> 00:01:16,679 Speaker 1: with China and intellectual property rights and technology transfers. I've 17 00:01:16,680 --> 00:01:19,479 Speaker 1: been hearing that story from businesses for a long time, 18 00:01:19,520 --> 00:01:22,160 Speaker 1: so I think what we're hoping is this is part 19 00:01:22,160 --> 00:01:24,840 Speaker 1: of a big negotiating strategy and what it's gonna do 20 00:01:25,560 --> 00:01:28,280 Speaker 1: is make China realize they need to work harder to 21 00:01:28,319 --> 00:01:30,800 Speaker 1: figure out how to how to take care of this issue. 22 00:01:31,200 --> 00:01:32,720 Speaker 1: So I think at the end of the day, this 23 00:01:32,800 --> 00:01:34,679 Speaker 1: is not going to spark global trade war. It's not 24 00:01:34,760 --> 00:01:37,360 Speaker 1: in anyone's interest. We would lose as much as anybody 25 00:01:37,400 --> 00:01:40,800 Speaker 1: else would. And I think there's reason to be to 26 00:01:40,840 --> 00:01:43,119 Speaker 1: give them the benefit of the doubt that if this 27 00:01:43,640 --> 00:01:46,960 Speaker 1: actually sets the States for some real negotiations behind these 28 00:01:47,160 --> 00:01:49,520 Speaker 1: on the scenes, and we don't need tariffs, fine, I 29 00:01:49,600 --> 00:01:52,240 Speaker 1: mean we we've already seen many of the still a 30 00:01:52,320 --> 00:01:55,600 Speaker 1: luminate tariffs most countries were exempted from. They have been 31 00:01:55,640 --> 00:01:58,760 Speaker 1: big coughs out for for a lot of countries. There 32 00:01:58,840 --> 00:02:02,120 Speaker 1: is a fairbout Jim, this neghost yadding tactic. If you 33 00:02:02,160 --> 00:02:04,400 Speaker 1: want to frame the approach of this administration, that why 34 00:02:04,720 --> 00:02:07,600 Speaker 1: um gets out of control and wrong and thing's gonna 35 00:02:07,600 --> 00:02:10,320 Speaker 1: be dangerous base case though, Jim, I think the base 36 00:02:10,360 --> 00:02:13,040 Speaker 1: cases there's too much at stake here for both China 37 00:02:13,200 --> 00:02:17,160 Speaker 1: and US and everybody else. Uh. And it's it's it's 38 00:02:17,200 --> 00:02:20,320 Speaker 1: bizarre to me that after having gone through all this 39 00:02:21,000 --> 00:02:22,959 Speaker 1: effort to get the taxed before them and get a U. S. 40 00:02:23,000 --> 00:02:25,040 Speaker 1: Tax code in a line with everybody else, We're gonna 41 00:02:25,120 --> 00:02:27,359 Speaker 1: come along and do something on the trade front to 42 00:02:27,360 --> 00:02:30,520 Speaker 1: totally undermine that it doesn't make sense. So I'm willing 43 00:02:30,560 --> 00:02:33,519 Speaker 1: to I'm willing to give them the benefit of the 44 00:02:33,560 --> 00:02:35,720 Speaker 1: doubt that the real goal here is to try to 45 00:02:35,840 --> 00:02:39,080 Speaker 1: address these violation of intellectual property rights. We've been using 46 00:02:39,080 --> 00:02:42,200 Speaker 1: you this morning, Jim Glass, to give us great international economics. 47 00:02:42,240 --> 00:02:43,880 Speaker 1: We had met on the guard On earlier. We got 48 00:02:43,880 --> 00:02:47,120 Speaker 1: Peter Navarro coming up, Like, folks, I'm gonna get out 49 00:02:47,120 --> 00:02:49,200 Speaker 1: in front of this because Dr Navarro has got some 50 00:02:49,240 --> 00:02:52,280 Speaker 1: real strong views that many of our listeners frankly agree with. 51 00:02:52,480 --> 00:02:55,640 Speaker 1: Their basic idea off of his books is China's bad, 52 00:02:56,440 --> 00:02:59,520 Speaker 1: China's evil, and we got to go head on against China. 53 00:03:00,040 --> 00:03:03,920 Speaker 1: What's the price of a Navarro approach to China. We 54 00:03:03,960 --> 00:03:09,280 Speaker 1: all lose, China loses, us loses. We all lose because 55 00:03:09,639 --> 00:03:12,440 Speaker 1: because what's going on here is Asia is where half 56 00:03:12,480 --> 00:03:16,359 Speaker 1: the world lives. In Asia, they're going through an industrial revolution. 57 00:03:16,800 --> 00:03:21,560 Speaker 1: Are the industrial revolution benefited fift of the world's population Europe, 58 00:03:21,600 --> 00:03:24,680 Speaker 1: In the US what's going on now is benefiting half 59 00:03:24,680 --> 00:03:26,680 Speaker 1: the world's population. But the thing is, it's not just 60 00:03:26,720 --> 00:03:29,720 Speaker 1: benefiting them, it's benefiting all of us. Our business community 61 00:03:29,800 --> 00:03:33,120 Speaker 1: is engaged there, and so if we do something to 62 00:03:33,160 --> 00:03:37,120 Speaker 1: try to stymy what's going on in Asia, we all 63 00:03:37,120 --> 00:03:41,680 Speaker 1: lose out. It's all it's all about future possibilities, future opportunity. 64 00:03:41,760 --> 00:03:43,280 Speaker 1: And I think that's why you kind of be to 65 00:03:43,360 --> 00:03:45,440 Speaker 1: my team. My mind. You kind of have to look 66 00:03:45,480 --> 00:03:47,880 Speaker 1: past I can understand why politicians don't like to do this, 67 00:03:48,320 --> 00:03:50,920 Speaker 1: but there's gonna be a lot of abuses when when 68 00:03:50,920 --> 00:03:55,200 Speaker 1: you have large countries growing rapidly rising, there's gonna be abuses. 69 00:03:55,440 --> 00:03:59,560 Speaker 1: And I'm sure the Brits complained about American businesses stealing 70 00:04:00,440 --> 00:04:03,600 Speaker 1: technology in the old days and a couple of years ago. 71 00:04:03,840 --> 00:04:06,320 Speaker 1: This is just what happens. And I think that over 72 00:04:06,360 --> 00:04:09,800 Speaker 1: time here, as the region rises, we're going to find 73 00:04:09,800 --> 00:04:11,600 Speaker 1: out that there's so much benefit for all of us. 74 00:04:11,640 --> 00:04:13,640 Speaker 1: But Jim, at least just to sit here and say 75 00:04:13,680 --> 00:04:16,000 Speaker 1: that it's okay for one nation to cheat, even if 76 00:04:16,000 --> 00:04:18,599 Speaker 1: they're the second biggest economy on the planet. It's okay 77 00:04:18,640 --> 00:04:22,680 Speaker 1: for that to cheat because the status quo still benefits US. Yeah, 78 00:04:22,680 --> 00:04:25,360 Speaker 1: I think everybody cheats frankly, and it's a question of 79 00:04:25,520 --> 00:04:28,960 Speaker 1: I think it's not surprising that when China is growing 80 00:04:29,000 --> 00:04:31,960 Speaker 1: so rapidly. I remember the complaints about Japan in the 81 00:04:32,000 --> 00:04:34,400 Speaker 1: early days they were copying a lot of processes here 82 00:04:34,440 --> 00:04:38,560 Speaker 1: doing the better. But I think as countries mature, they 83 00:04:38,600 --> 00:04:41,400 Speaker 1: realize that it's important to respect rule of law and 84 00:04:41,440 --> 00:04:44,680 Speaker 1: intellectual property rights because Chinese will be inventing things as well. 85 00:04:45,000 --> 00:04:47,680 Speaker 1: So I think I think it's it's hard for politicians 86 00:04:47,680 --> 00:04:49,000 Speaker 1: to do this, but I think if you think about 87 00:04:49,000 --> 00:04:53,000 Speaker 1: the big picture what lies ahead, there's so much possibility 88 00:04:53,080 --> 00:04:55,400 Speaker 1: coming for a world, and honestly, I don't think we 89 00:04:55,440 --> 00:04:58,400 Speaker 1: can stop it. I think when people are poor and 90 00:04:58,440 --> 00:05:00,560 Speaker 1: they found a way to make it happened. I mean, 91 00:05:00,560 --> 00:05:03,159 Speaker 1: it's interesting to me that Chinese love American products. You 92 00:05:03,240 --> 00:05:06,320 Speaker 1: agree with with Brad DeLong and Danny Roderick and others. 93 00:05:06,320 --> 00:05:08,920 Speaker 1: At the heart of the matter here is we we 94 00:05:09,000 --> 00:05:12,840 Speaker 1: had an agreement with the American worker that if we 95 00:05:12,880 --> 00:05:17,440 Speaker 1: did globalization, you'd somehow be compensated for the loss of 96 00:05:17,480 --> 00:05:21,839 Speaker 1: your blue collar manufacturing job in North Carolina. That's the failure. 97 00:05:22,120 --> 00:05:25,320 Speaker 1: That's the failures failure. We all failed. We so we 98 00:05:25,320 --> 00:05:27,440 Speaker 1: we we economys tend to look at I really think 99 00:05:27,560 --> 00:05:29,720 Speaker 1: the problem for the guy in Ohio and and the 100 00:05:29,760 --> 00:05:33,159 Speaker 1: guy working the auto plant is automation. We saw that 101 00:05:33,279 --> 00:05:35,200 Speaker 1: coming and we think, well, that's the great that's the 102 00:05:35,240 --> 00:05:37,839 Speaker 1: way it always is, and we forget that it's disruptive 103 00:05:37,839 --> 00:05:40,839 Speaker 1: and people lose jobs and lose opportunity. And I think 104 00:05:40,880 --> 00:05:45,480 Speaker 1: the failure was not working hard to find alternatives for 105 00:05:45,520 --> 00:05:48,200 Speaker 1: people and helping them get skilled up. And then a 106 00:05:48,200 --> 00:05:49,919 Speaker 1: lot of that work used to be done by unions, 107 00:05:50,160 --> 00:05:52,440 Speaker 1: so we don't do that. To be clear, and you're 108 00:05:52,480 --> 00:05:54,880 Speaker 1: wonderful power points you put together, and then all the 109 00:05:54,920 --> 00:05:58,599 Speaker 1: work that JP Morgan does with the Chasman team, what 110 00:05:58,839 --> 00:06:04,160 Speaker 1: is the mix of domestic economic growth near boom and 111 00:06:04,240 --> 00:06:09,520 Speaker 1: the foreign dampening that comes from larger large imports lesser exports. 112 00:06:09,920 --> 00:06:13,080 Speaker 1: You know, it's it's really hard to tell because our 113 00:06:13,120 --> 00:06:16,080 Speaker 1: exports have risen a huge amount too. So what that 114 00:06:16,160 --> 00:06:20,719 Speaker 1: means is um if we could somehow close the trade 115 00:06:20,720 --> 00:06:24,680 Speaker 1: gap and not harm everybody else, we would probably be 116 00:06:24,720 --> 00:06:26,560 Speaker 1: able to There would be more jobs here. But the 117 00:06:26,560 --> 00:06:29,960 Speaker 1: problem is this process of letting free trade open up, 118 00:06:30,000 --> 00:06:33,360 Speaker 1: even though it means trade deficits, it's also creating new jobs, 119 00:06:33,400 --> 00:06:37,000 Speaker 1: and so it's difficult to know exactly. And I think 120 00:06:37,000 --> 00:06:39,800 Speaker 1: that's the problem for most Americans. They see the jobs 121 00:06:39,839 --> 00:06:42,400 Speaker 1: that might have migrated to Michigan, I mean, to to 122 00:06:42,400 --> 00:06:44,920 Speaker 1: to Mexico or to China, but they can't see the 123 00:06:45,040 --> 00:06:49,240 Speaker 1: jobs that are getting created by this globalization that's happening 124 00:06:49,240 --> 00:06:52,440 Speaker 1: around us. If the world if the problem is it's 125 00:06:52,440 --> 00:06:55,800 Speaker 1: not a zero sum pie. The world pie is growing, 126 00:06:56,360 --> 00:06:58,880 Speaker 1: and so we are an important part of that. And 127 00:06:58,920 --> 00:07:02,240 Speaker 1: I think you know, you look at how the U. S. 128 00:07:02,279 --> 00:07:04,440 Speaker 1: Economy is performing. We're doing really well. Now we're back 129 00:07:04,440 --> 00:07:07,160 Speaker 1: to we're close to full employment. The big challenge has 130 00:07:07,200 --> 00:07:10,240 Speaker 1: been for people who are working in the industries where 131 00:07:10,280 --> 00:07:15,160 Speaker 1: automation is displacing routine work. Jim Glassman, thank you so much, 132 00:07:15,160 --> 00:07:34,239 Speaker 1: greatly appreciative. He charges in with hostile intent for over 133 00:07:34,360 --> 00:07:37,480 Speaker 1: after over, He even races back to his mark with 134 00:07:37,720 --> 00:07:42,080 Speaker 1: unrelenting purpose. Wagner took just three wickets in the match, 135 00:07:42,160 --> 00:07:46,200 Speaker 1: but one of them critically with his last ball before dinner, 136 00:07:46,840 --> 00:07:50,840 Speaker 1: was that of Stokes. John. Let's do cricket for like 137 00:07:50,960 --> 00:07:53,440 Speaker 1: thirty seconds. We're here with the Consul General of the 138 00:07:53,520 --> 00:07:57,840 Speaker 1: United Kingdom, and sir, you're apault. Is it an international 139 00:07:57,920 --> 00:08:02,040 Speaker 1: incident that Australia Tampa the ball and England can't beat 140 00:08:02,120 --> 00:08:05,720 Speaker 1: New Zealand? Is this like international? Is this risen to 141 00:08:05,760 --> 00:08:08,920 Speaker 1: an international event? No? I don't think it has. I 142 00:08:08,960 --> 00:08:11,560 Speaker 1: think the ball tempering is pretty appalling, but I can't 143 00:08:11,560 --> 00:08:13,840 Speaker 1: put it better than the Australian Prime minister. And as 144 00:08:13,880 --> 00:08:15,840 Speaker 1: for US losing to New Zealand, world, there's a second 145 00:08:15,880 --> 00:08:18,280 Speaker 1: test soon and as I once said before on Bloomberg, 146 00:08:18,640 --> 00:08:20,800 Speaker 1: at least the baseball season starts soon. There you go 147 00:08:21,120 --> 00:08:24,040 Speaker 1: in basic, can you tamper with the ball in base Oh? 148 00:08:24,080 --> 00:08:26,560 Speaker 1: We got, yes, we got that. A spit and a 149 00:08:26,640 --> 00:08:29,160 Speaker 1: spinder used to be legal, and then it was made 150 00:08:29,200 --> 00:08:31,440 Speaker 1: ill you can't do. Then you would sit in the 151 00:08:31,480 --> 00:08:35,360 Speaker 1: backyard and practice it, and then your father would cuff 152 00:08:35,400 --> 00:08:38,040 Speaker 1: you across the head and say, if you do a 153 00:08:38,080 --> 00:08:42,160 Speaker 1: spinner in little league, you will not eat for a week. Interesting. 154 00:08:42,360 --> 00:08:44,959 Speaker 1: I wonder if Anthony Phillipson would prefer to talk about 155 00:08:44,960 --> 00:08:48,719 Speaker 1: cricket or Brexit politics Anthony in the United Kingdom, this 156 00:08:49,000 --> 00:08:52,680 Speaker 1: conversation about the city of London improved equivalence. I think 157 00:08:52,760 --> 00:08:56,760 Speaker 1: is the jargon for improve the covalence. Is that right? 158 00:08:57,240 --> 00:08:59,800 Speaker 1: What is that? So? I think I would take us 159 00:08:59,800 --> 00:09:02,560 Speaker 1: back to the Chancellor made a speech in the City 160 00:09:02,559 --> 00:09:05,480 Speaker 1: of London on March seventh where he set out in 161 00:09:05,559 --> 00:09:10,520 Speaker 1: some detail what our our proposals were for the new 162 00:09:10,559 --> 00:09:12,360 Speaker 1: relationship between the UK and the EU and the area 163 00:09:12,400 --> 00:09:15,520 Speaker 1: financial services and talked a lot about a system of 164 00:09:15,559 --> 00:09:20,240 Speaker 1: reciprocal regulatory equivalents with a degree of common supervision, common 165 00:09:20,280 --> 00:09:24,120 Speaker 1: dispute resolution mechanism, etcetera, etcetera, all designed to sort of 166 00:09:24,200 --> 00:09:26,920 Speaker 1: ensure that as we remain engaged, which is our ambition, 167 00:09:27,280 --> 00:09:31,080 Speaker 1: there will continue to be sort of the necessary degree 168 00:09:31,080 --> 00:09:33,719 Speaker 1: of financial stability expurence in both directions. So if you're 169 00:09:33,720 --> 00:09:36,080 Speaker 1: a bank in the City of London and this is 170 00:09:36,080 --> 00:09:40,080 Speaker 1: the agreement, are they going to get the certainty they need? Well? 171 00:09:40,080 --> 00:09:42,640 Speaker 1: I think they will, and maybe in two regards. First 172 00:09:42,679 --> 00:09:44,680 Speaker 1: of all, one thing that they will get through the 173 00:09:44,679 --> 00:09:49,679 Speaker 1: implementation period is certainty and clarity out to December twenty twenty, 174 00:09:49,679 --> 00:09:52,160 Speaker 1: by which time we will have the new partnership ready 175 00:09:52,200 --> 00:09:55,280 Speaker 1: to come into place. And then if we achieve our 176 00:09:55,320 --> 00:09:57,280 Speaker 1: ambition has set out as a say in the Chancellor speech. 177 00:09:57,320 --> 00:09:59,520 Speaker 1: But also I would say reflected in the guidelines that 178 00:09:59,520 --> 00:10:02,679 Speaker 1: the counts all the twenty seven member states meeting as 179 00:10:02,679 --> 00:10:05,439 Speaker 1: the Council on Friday issue to the commissioned and I 180 00:10:05,480 --> 00:10:07,160 Speaker 1: think will be in a good place. Is it up 181 00:10:07,200 --> 00:10:09,800 Speaker 1: for the Europeans post twenty to just decide on a 182 00:10:09,840 --> 00:10:13,480 Speaker 1: whim whether there is equivalence or not. Well, that's why 183 00:10:13,520 --> 00:10:15,800 Speaker 1: I think we need this, this mechanism that has both 184 00:10:15,800 --> 00:10:18,320 Speaker 1: sides with with a stake in the discussion, because we 185 00:10:18,360 --> 00:10:20,920 Speaker 1: need the certainty and we need we need both sides 186 00:10:20,960 --> 00:10:23,920 Speaker 1: to have the necessary certainty in order to to provide 187 00:10:23,920 --> 00:10:26,720 Speaker 1: that assurance going forward. It's become very, very difficult to 188 00:10:27,120 --> 00:10:29,120 Speaker 1: make an agreement with the Europeans at a time when 189 00:10:29,280 --> 00:10:31,880 Speaker 1: the United States is pushing for agreements new agreements from 190 00:10:32,000 --> 00:10:36,480 Speaker 1: from almost everyone has Brexit politics and making trade agreements 191 00:10:36,480 --> 00:10:41,520 Speaker 1: got harder over the last weeks and not easier. I 192 00:10:41,559 --> 00:10:43,679 Speaker 1: don't know. I'm not sure it's as a binary sort 193 00:10:43,679 --> 00:10:44,800 Speaker 1: of one way or the other. I mean, it's a 194 00:10:44,880 --> 00:10:48,160 Speaker 1: very fluid situation. International trade has always been quite fluid. 195 00:10:48,200 --> 00:10:51,240 Speaker 1: I would say the UK, we have our objectives with 196 00:10:51,280 --> 00:10:53,679 Speaker 1: regard to that. You we have our objectives with regard 197 00:10:53,679 --> 00:10:55,760 Speaker 1: to the US, and we'll gear up for and drive 198 00:10:55,840 --> 00:10:58,640 Speaker 1: momentum towards as we as we prepare and then leave 199 00:10:59,040 --> 00:11:01,400 Speaker 1: the EU, and we'll continue to sort of push in 200 00:11:01,400 --> 00:11:04,480 Speaker 1: both directions at once. How do you sell exports in 201 00:11:04,520 --> 00:11:07,839 Speaker 1: the United States? How do you get US? I mean, 202 00:11:08,000 --> 00:11:10,559 Speaker 1: you want us to buy hardware and all the fancy 203 00:11:10,640 --> 00:11:13,600 Speaker 1: value add stuff. But how do you get those cookies 204 00:11:13,640 --> 00:11:15,240 Speaker 1: they have in Herod's as you go in and you 205 00:11:15,280 --> 00:11:17,280 Speaker 1: go back three rooms. How do you move more of 206 00:11:17,280 --> 00:11:20,920 Speaker 1: those in the United States? Well, one thing I would 207 00:11:20,920 --> 00:11:22,840 Speaker 1: point out is that we've been quite successful at this 208 00:11:23,120 --> 00:11:25,640 Speaker 1: for a while. I mean, the US single biggest export 209 00:11:25,679 --> 00:11:28,520 Speaker 1: market across the whole variety of sectors. How about that 210 00:11:28,640 --> 00:11:31,880 Speaker 1: Blackhead we put up against the Confederacy in eighteen sixty three. 211 00:11:32,000 --> 00:11:34,920 Speaker 1: That worked out well. We all learn lessons from history, um, 212 00:11:35,040 --> 00:11:38,120 Speaker 1: so as we look forward. I think there's actually one 213 00:11:38,160 --> 00:11:40,480 Speaker 1: thing I would say in Washington last week we did 214 00:11:40,480 --> 00:11:43,760 Speaker 1: with our colleagues at USTR and Commerce set up a 215 00:11:43,800 --> 00:11:46,920 Speaker 1: really good and sort of successful sm dialogue. And the 216 00:11:47,080 --> 00:11:49,520 Speaker 1: reason I mentioned that is because even before we leave 217 00:11:49,600 --> 00:11:51,120 Speaker 1: the EU, there's so much that we can do to 218 00:11:51,160 --> 00:11:53,840 Speaker 1: continue to help UK companies exports to the US and 219 00:11:53,920 --> 00:11:56,600 Speaker 1: US companies export to the UK, and some of it 220 00:11:56,640 --> 00:11:58,240 Speaker 1: is just sort of explaining to each other how our 221 00:11:58,280 --> 00:12:00,680 Speaker 1: systems work and what the benefit are of being in 222 00:12:00,720 --> 00:12:03,320 Speaker 1: each other's. Well, what's your reciprocity headache? Right now? The 223 00:12:03,320 --> 00:12:06,880 Speaker 1: President was mental about China reciprocity. We have an issue. 224 00:12:06,880 --> 00:12:09,600 Speaker 1: What's a product in the United Kingdom where the United 225 00:12:09,600 --> 00:12:14,319 Speaker 1: States are better? Out of shape about reciprocity. I think 226 00:12:14,480 --> 00:12:16,560 Speaker 1: if okay, if I had to pick one, I probably 227 00:12:16,600 --> 00:12:18,120 Speaker 1: would say that one of the things that our companies 228 00:12:18,160 --> 00:12:22,920 Speaker 1: wrestle with are things like federal and state level procurement rules. Um. 229 00:12:22,960 --> 00:12:26,599 Speaker 1: You know, there are things that are a an impediment 230 00:12:26,679 --> 00:12:28,880 Speaker 1: to trade investment between US and there's those are the 231 00:12:28,920 --> 00:12:30,800 Speaker 1: sorts of things. Now I'm believing I'm not saying that 232 00:12:30,840 --> 00:12:32,679 Speaker 1: I expect the US to sort of remove their procurement 233 00:12:32,720 --> 00:12:35,000 Speaker 1: rules entirely. It's one of the reasons why we encourage 234 00:12:35,000 --> 00:12:36,800 Speaker 1: sort of UK companies to invest here and then they 235 00:12:36,840 --> 00:12:39,560 Speaker 1: become effectively sort of U S entities and and can 236 00:12:39,800 --> 00:12:43,440 Speaker 1: can invent themselves in local economy. Um. I mean another 237 00:12:43,480 --> 00:12:46,559 Speaker 1: report we did recently is we we mapped by congressional 238 00:12:46,600 --> 00:12:50,120 Speaker 1: district the exports from those districts to the UK and 239 00:12:50,160 --> 00:12:53,240 Speaker 1: the US jobs that rely on them, and we're talking 240 00:12:53,240 --> 00:12:55,400 Speaker 1: a hundreds of thousands. With the statistic we like to use, 241 00:12:55,440 --> 00:12:57,120 Speaker 1: is it every day a million brands going to work 242 00:12:57,120 --> 00:12:58,880 Speaker 1: for American companies and a million Americans got to work 243 00:12:58,880 --> 00:13:00,840 Speaker 1: for British company Council Journal will thank you so much, 244 00:13:00,920 --> 00:13:04,400 Speaker 1: Mr Phillipson. It's with the United Kingdom and Consulate General 245 00:13:04,760 --> 00:13:20,840 Speaker 1: offices here in New York. Joining us now Peter Navarro. 246 00:13:20,960 --> 00:13:24,719 Speaker 1: He is Assistant to the President for Trade and Manufacturing 247 00:13:24,800 --> 00:13:28,240 Speaker 1: policy and has been a lightning rod of debate and 248 00:13:28,280 --> 00:13:32,120 Speaker 1: criticism as we have moved to a new trading strategy. 249 00:13:32,200 --> 00:13:35,440 Speaker 1: Dr Navarro, wonderful day have you with us right now? 250 00:13:35,880 --> 00:13:40,240 Speaker 1: Your arch critics would suggest that you and the Secretary 251 00:13:40,320 --> 00:13:44,520 Speaker 1: Commerce Mr Ross are immune to the game theory the 252 00:13:44,720 --> 00:13:49,640 Speaker 1: responses that are made to us action. What will be 253 00:13:49,720 --> 00:13:53,560 Speaker 1: the game theoretic response of China to the events you 254 00:13:53,640 --> 00:13:59,160 Speaker 1: have proposed and now the actions we see from the President. Well, Tom, 255 00:13:59,160 --> 00:14:02,160 Speaker 1: I'm good to be here with you. First of all, Um, 256 00:14:02,440 --> 00:14:04,240 Speaker 1: not in a world of game theory. We're in a 257 00:14:04,320 --> 00:14:07,920 Speaker 1: real world and we have, as we're speaking, efforts by 258 00:14:08,240 --> 00:14:12,560 Speaker 1: the Secretary of Treasury Steve Anusian and Ambassador Robert Leichheiser 259 00:14:12,720 --> 00:14:17,199 Speaker 1: to continue to engage the Chinese side, which we've been 260 00:14:17,200 --> 00:14:22,600 Speaker 1: doing since they wanted this administration, seeking to address a 261 00:14:22,680 --> 00:14:25,840 Speaker 1: couple of things. One is the massive trade imbalance we 262 00:14:25,960 --> 00:14:29,960 Speaker 1: have with China, which costs US factories, jobs, wages, and 263 00:14:30,040 --> 00:14:35,880 Speaker 1: the like. But also this pernicious practice of the transfer 264 00:14:36,080 --> 00:14:40,360 Speaker 1: of US technology and electoral property to China, not just 265 00:14:40,520 --> 00:14:44,960 Speaker 1: through theft, which most Americans understand that China engages in, 266 00:14:45,880 --> 00:14:49,080 Speaker 1: but also through this pernicious practice of what's called forced 267 00:14:49,400 --> 00:14:54,320 Speaker 1: technology transfer, whereby an American corporation which goes to China 268 00:14:54,840 --> 00:14:57,640 Speaker 1: to try to sell into that market sincerely must be 269 00:14:57,680 --> 00:15:02,480 Speaker 1: a minority partner and surrender their case. Okay, this is unacceptable. 270 00:15:02,560 --> 00:15:05,720 Speaker 1: Well it's unacceptable, but but but Dr Navarro, there seems 271 00:15:05,760 --> 00:15:08,280 Speaker 1: to be a shift and discourse and rhetoric. Here. We 272 00:15:08,280 --> 00:15:11,600 Speaker 1: went after aluminum and steel, we backed away from that 273 00:15:11,680 --> 00:15:14,600 Speaker 1: with all sorts of trading partners, and now we're going 274 00:15:14,680 --> 00:15:19,040 Speaker 1: after a tariff theory to then go after the intellectual 275 00:15:19,080 --> 00:15:21,640 Speaker 1: property debate. Why do we need to screw around with 276 00:15:21,720 --> 00:15:25,000 Speaker 1: tariffs if the real issue is to go after intellectual 277 00:15:25,040 --> 00:15:29,920 Speaker 1: property and forced technology transfer? Uh? Tom whot me? You 278 00:15:29,960 --> 00:15:34,000 Speaker 1: first address the the aluminum steel because because when you 279 00:15:34,200 --> 00:15:38,000 Speaker 1: dismissed that, I think is is U doesn't do justice 280 00:15:38,040 --> 00:15:41,680 Speaker 1: to the situation. Um. What we've done with aluminum steel 281 00:15:41,760 --> 00:15:45,760 Speaker 1: is imposed tariffs across the board. Uh and for a 282 00:15:45,880 --> 00:15:50,360 Speaker 1: very temporary period through May one, we're giving a selecting 283 00:15:50,440 --> 00:15:56,320 Speaker 1: number of countries the opportunity to negotiate a better deal 284 00:15:56,720 --> 00:15:59,000 Speaker 1: that will be in the interest in national security. But 285 00:15:59,360 --> 00:16:01,960 Speaker 1: and this is a egg butt, Tom, the proviser is 286 00:16:02,000 --> 00:16:05,440 Speaker 1: going to be that any country that does not be 287 00:16:05,600 --> 00:16:09,840 Speaker 1: subject to the tariffs have a quota or some other 288 00:16:09,880 --> 00:16:12,600 Speaker 1: strict restrictions so that we can maintain the defense of 289 00:16:12,640 --> 00:16:16,520 Speaker 1: our aluminum stealingscry. So there's no letting people out the door, 290 00:16:16,560 --> 00:16:19,960 Speaker 1: willy nilly. This is a very calculated, important strategy for 291 00:16:20,000 --> 00:16:23,880 Speaker 1: the American people with respect to your question of how 292 00:16:23,920 --> 00:16:28,240 Speaker 1: to address the Chinese problem with respect to the the intellectual property. 293 00:16:28,280 --> 00:16:31,960 Speaker 1: It's a two prompt strategy. One carreiffs, the other is 294 00:16:32,040 --> 00:16:37,480 Speaker 1: investment restrictions, which Secretary Treasury Steven Nutin will be vailing 295 00:16:37,960 --> 00:16:40,520 Speaker 1: in the not too distant future. Why do we need 296 00:16:40,520 --> 00:16:43,440 Speaker 1: to caress the reason why we need fifty billion dollars 297 00:16:43,440 --> 00:16:46,520 Speaker 1: worth of tariffs is because that's the harm that China 298 00:16:46,640 --> 00:16:49,160 Speaker 1: does to us annually. You can think of it as 299 00:16:49,280 --> 00:16:53,600 Speaker 1: a compensatory damages, and it is quite damaging. And it 300 00:16:53,680 --> 00:16:56,640 Speaker 1: doesn't even take into account the hundreds of billions of 301 00:16:56,680 --> 00:17:00,200 Speaker 1: dollars that have been estimated to cost the American bill 302 00:17:00,240 --> 00:17:05,240 Speaker 1: annually from other types of transfer like cyberstp SO tariffs 303 00:17:05,280 --> 00:17:10,240 Speaker 1: to recover damages. Investment restrictions basically focus on what is 304 00:17:10,640 --> 00:17:14,119 Speaker 1: a very large pool of Chinese money coming into the 305 00:17:14,200 --> 00:17:20,680 Speaker 1: United States and targeting strategically key technology industries, not so 306 00:17:20,720 --> 00:17:22,560 Speaker 1: that they can make a rate to return like you 307 00:17:22,640 --> 00:17:25,639 Speaker 1: and I would normally do in a free market, but 308 00:17:25,800 --> 00:17:29,399 Speaker 1: you're doing that for strategic purposes to enhance their military 309 00:17:29,480 --> 00:17:33,159 Speaker 1: security and their eco security at expense. If you're just 310 00:17:33,240 --> 00:17:35,480 Speaker 1: joining us as Peter Navar with this Assistant to the 311 00:17:35,480 --> 00:17:38,600 Speaker 1: President for Trade and Manufacturing policy, and we're thrilled to 312 00:17:38,680 --> 00:17:41,359 Speaker 1: have Washington join us right now Bloomberg Daybreak in a 313 00:17:42,840 --> 00:17:45,919 Speaker 1: FM Washington as well. We welcome all of you worldwide 314 00:17:45,920 --> 00:17:50,520 Speaker 1: and across this UH nation. Peter Navarro, what's the common 315 00:17:50,600 --> 00:17:56,200 Speaker 1: ground of Peter Navarro with Lawrence cut Love, Oh, Larry. 316 00:17:56,480 --> 00:17:58,199 Speaker 1: Larry is a very good friend of mine, we go 317 00:17:58,320 --> 00:18:01,520 Speaker 1: back more than a deck a when when I was 318 00:18:01,600 --> 00:18:04,360 Speaker 1: on him, was on his show frequently in that Yeah, 319 00:18:04,359 --> 00:18:06,360 Speaker 1: but he's a free trade guy. He's going to tell 320 00:18:06,440 --> 00:18:09,159 Speaker 1: you stop at China is not evil, that there's a 321 00:18:09,280 --> 00:18:12,320 Speaker 1: joint price to going after China where it's going to 322 00:18:12,359 --> 00:18:16,600 Speaker 1: be the common ground with you with let's step back 323 00:18:16,680 --> 00:18:22,320 Speaker 1: and look at four point program for the president's. President 324 00:18:22,320 --> 00:18:26,879 Speaker 1: Trump's brilliant economic plan is deregulation. Check that box with 325 00:18:27,000 --> 00:18:30,040 Speaker 1: Larry and I. Tax cuts, and check that box with 326 00:18:30,160 --> 00:18:34,040 Speaker 1: Larry and I. Unleashing the energy sector so we're gonna 327 00:18:34,040 --> 00:18:37,240 Speaker 1: have low cost for our manufacturers and consumers. Check that 328 00:18:37,280 --> 00:18:40,080 Speaker 1: box with Larry and I. When it comes to trade, 329 00:18:40,520 --> 00:18:44,000 Speaker 1: Larry has been quite vocal about the China issue. He 330 00:18:44,160 --> 00:18:47,720 Speaker 1: has said, as we all have in this administration, that 331 00:18:48,000 --> 00:18:52,959 Speaker 1: China basically needs to become a free trader, not an 332 00:18:53,040 --> 00:18:56,280 Speaker 1: unfair trader. And so a lot of common ground with 333 00:18:56,480 --> 00:19:00,119 Speaker 1: Larry Cudlow and I on the China issue. But and 334 00:19:00,200 --> 00:19:02,199 Speaker 1: he said that it's gonna be great to be in 335 00:19:02,840 --> 00:19:05,800 Speaker 1: with the President and have discussions where there's different points 336 00:19:05,800 --> 00:19:08,840 Speaker 1: of view, and that's you didn't have different points whatever. 337 00:19:09,040 --> 00:19:11,520 Speaker 1: And I will suggest as Dr Navars. You and I 338 00:19:11,520 --> 00:19:14,120 Speaker 1: have known each other for well over a decade. You 339 00:19:14,400 --> 00:19:18,360 Speaker 1: came advertised with your books. Now the Coming China Wars 340 00:19:18,800 --> 00:19:21,440 Speaker 1: was one of your most successful books. You have a 341 00:19:21,560 --> 00:19:25,800 Speaker 1: chapter They're Made in China, the ultimate warning label. Are 342 00:19:25,840 --> 00:19:28,480 Speaker 1: you going to change with your policy with the President? 343 00:19:28,920 --> 00:19:34,359 Speaker 1: That label made in China? I don't understand that question 344 00:19:35,520 --> 00:19:37,960 Speaker 1: here and Tom, but my job here in the White 345 00:19:37,960 --> 00:19:43,000 Speaker 1: House is to create manufacturing jobs for the men and 346 00:19:43,040 --> 00:19:46,199 Speaker 1: women of America, doing the best things I can and 347 00:19:46,280 --> 00:19:49,560 Speaker 1: providing the best possible advice I can to the President, 348 00:19:49,640 --> 00:19:53,880 Speaker 1: and he gets advice from many different quarters. Key, President Trump, 349 00:19:54,119 --> 00:19:57,240 Speaker 1: this is his vision, right, he is his own man. 350 00:19:58,280 --> 00:20:01,160 Speaker 1: I will agree with that, that's true. What how can 351 00:20:01,200 --> 00:20:05,480 Speaker 1: you think anybody that I somehow be able to push 352 00:20:05,560 --> 00:20:08,200 Speaker 1: him in one direction or another. That's silly. He just 353 00:20:08,400 --> 00:20:16,600 Speaker 1: wants advice. But Dr Devar, is his vision for a 354 00:20:16,640 --> 00:20:23,159 Speaker 1: mercantilist America? Absolutely not, Tom. We are free traders. We 355 00:20:23,240 --> 00:20:26,439 Speaker 1: are free traders. But what the President has said is 356 00:20:26,480 --> 00:20:29,520 Speaker 1: that we have a structural problem in the global economy, 357 00:20:29,920 --> 00:20:33,800 Speaker 1: massive trade imbalances which are fueled by unfair and non 358 00:20:33,840 --> 00:20:38,160 Speaker 1: reciprocal trade. And the President Trump's vision, which is brilliant 359 00:20:38,560 --> 00:20:41,320 Speaker 1: is the restructure of the global trading environment in a 360 00:20:41,359 --> 00:20:44,399 Speaker 1: way where trade is pair and reciprocal. There's no reason 361 00:20:44,960 --> 00:20:48,200 Speaker 1: why the United States has to face fire terrace when 362 00:20:48,240 --> 00:20:51,399 Speaker 1: it sends its cars to China or Europe than those 363 00:20:51,800 --> 00:20:55,000 Speaker 1: countries in that block does when it sends them here. 364 00:20:55,000 --> 00:20:56,760 Speaker 1: It's silly. I mean, if you want to sell sell 365 00:20:56,760 --> 00:20:59,920 Speaker 1: a car from Detroit to China, you pay a twenty 366 00:21:00,040 --> 00:21:02,840 Speaker 1: five percent. If they want to sell a car from 367 00:21:02,840 --> 00:21:07,080 Speaker 1: Shanghai here, it's two point five percent. And when you 368 00:21:07,200 --> 00:21:09,720 Speaker 1: try to sell a guard to Europe you have a 369 00:21:09,840 --> 00:21:13,639 Speaker 1: similar kind of the disadvantage. It's it's not quite of 370 00:21:13,680 --> 00:21:18,359 Speaker 1: the same magnitude, but it's very significant. That's not fair trade. 371 00:21:18,680 --> 00:21:21,840 Speaker 1: And and Tom, I mean, look, do you think that 372 00:21:21,920 --> 00:21:24,320 Speaker 1: China should be stealing our I p of course not. 373 00:21:24,640 --> 00:21:27,480 Speaker 1: Do you think that they should force Americans? But I 374 00:21:27,480 --> 00:21:31,000 Speaker 1: would suggest respectfully that in the last two weeks, Start Navarra, 375 00:21:31,119 --> 00:21:35,359 Speaker 1: we have conflated a tariff debate with an intellectual property debate. 376 00:21:35,440 --> 00:21:37,400 Speaker 1: Let me do this, Peter naviar We want to continue 377 00:21:37,440 --> 00:21:40,000 Speaker 1: this conversation, and we can do that by bringing in 378 00:21:40,040 --> 00:21:43,399 Speaker 1: my colleague John Farrell. John Farrell with Peter Navarral coast 379 00:21:43,400 --> 00:21:46,359 Speaker 1: to coast Dotor Navarre. We've spoken before, of course, and 380 00:21:46,400 --> 00:21:49,160 Speaker 1: you've identified a problem that I think most economists would 381 00:21:49,160 --> 00:21:52,359 Speaker 1: agree with, and that's China has cheated the international system. 382 00:21:52,359 --> 00:21:54,560 Speaker 1: I think there's a real debate about the approach at 383 00:21:54,560 --> 00:21:57,480 Speaker 1: the moment, about whether this approach actually brings China to 384 00:21:57,600 --> 00:22:01,080 Speaker 1: the negotiation table or forced to China the other way. 385 00:22:01,160 --> 00:22:03,240 Speaker 1: How confident are you that this actually brings them to 386 00:22:03,280 --> 00:22:07,680 Speaker 1: the negotiating typo. Well, there there, we are already at 387 00:22:07,680 --> 00:22:12,720 Speaker 1: the negotiating table. As the Secretary of the Treasury, Stevenutchen 388 00:22:12,760 --> 00:22:16,840 Speaker 1: said over the weekend, he and Ambassador Robert Leightheiser actively 389 00:22:16,880 --> 00:22:19,960 Speaker 1: engaged with the Chinese side. Add we have been engaged 390 00:22:19,960 --> 00:22:23,240 Speaker 1: with the Chinese side since day one of this administration. 391 00:22:23,320 --> 00:22:27,880 Speaker 1: Remember in April there was the Mari Lago Summit. Then 392 00:22:28,200 --> 00:22:31,760 Speaker 1: a hundred days later we revisited these issues, and all 393 00:22:31,760 --> 00:22:34,200 Speaker 1: along the way we've been talking. But the problem is 394 00:22:34,520 --> 00:22:38,000 Speaker 1: talk isn't cheap with the Chinese side. It's been very expensive. 395 00:22:38,280 --> 00:22:42,640 Speaker 1: And the history of dialogue with the Chinese, precisely over 396 00:22:42,680 --> 00:22:45,720 Speaker 1: these issues dates back to two thousand three and the 397 00:22:45,760 --> 00:22:51,320 Speaker 1: Bush administration, when the Bush administration instituted these annual dialogues 398 00:22:51,400 --> 00:22:53,840 Speaker 1: with the Chinese. They went on for every year right 399 00:22:53,920 --> 00:22:57,640 Speaker 1: up until the Trump administration, and all of its happened. 400 00:22:57,760 --> 00:23:00,639 Speaker 1: Is the deficit with China has swelled Olden. They just 401 00:23:00,720 --> 00:23:04,160 Speaker 1: keep stealing our stuff and forcing the transfer it. If anything, 402 00:23:04,920 --> 00:23:06,800 Speaker 1: it's gotten a lot worse. And when you have the 403 00:23:06,800 --> 00:23:10,520 Speaker 1: American Chamber of Commerce and the European Chamber of Commerce 404 00:23:10,880 --> 00:23:15,280 Speaker 1: and Capitol Hill and everybody else in between basically saying 405 00:23:15,320 --> 00:23:20,000 Speaker 1: the same thing that China is taking advantage of this country, 406 00:23:20,240 --> 00:23:22,800 Speaker 1: we have now a president with the courage and vision 407 00:23:23,080 --> 00:23:27,119 Speaker 1: to basically address that situation. I don't disagree with you. 408 00:23:27,119 --> 00:23:29,359 Speaker 1: I think that's exactly where we're at. People on Wall 409 00:23:29,400 --> 00:23:33,040 Speaker 1: Street who have acknowledged this problem for years but never 410 00:23:33,119 --> 00:23:34,879 Speaker 1: come up with a solution. I don't want to have 411 00:23:34,920 --> 00:23:36,880 Speaker 1: to debate about whether it's a problem or not, because 412 00:23:36,960 --> 00:23:39,399 Speaker 1: most people listen to this program agree with you that 413 00:23:39,400 --> 00:23:42,400 Speaker 1: there's a problem. The Treasury Secretary of the way Ken 414 00:23:42,480 --> 00:23:45,440 Speaker 1: says he's cautiously hopeful we'll reach an agreement. Can you 415 00:23:45,480 --> 00:23:48,680 Speaker 1: tell me what we're cautiously hopeful for. I want to 416 00:23:48,720 --> 00:23:51,159 Speaker 1: talk about the results you expect to get in the 417 00:23:51,200 --> 00:23:54,960 Speaker 1: coming weeks and months. What are you looking for, Dr Navarro? Well, 418 00:23:54,960 --> 00:23:57,399 Speaker 1: it's not what I'm looking for. The President has said 419 00:23:57,560 --> 00:24:01,320 Speaker 1: quite clearly two things. One like to see a hundred 420 00:24:01,320 --> 00:24:06,040 Speaker 1: billion dollar reduction in the trade deficit this year. And 421 00:24:06,200 --> 00:24:09,960 Speaker 1: he would also like to see a China which respects 422 00:24:09,960 --> 00:24:15,159 Speaker 1: our intellectual property rights and basically becomes part of a 423 00:24:15,200 --> 00:24:19,000 Speaker 1: global trading system where we have fair and reciprocal trade. 424 00:24:19,040 --> 00:24:22,680 Speaker 1: I mean, it's not too much to ask, but look, 425 00:24:23,640 --> 00:24:26,680 Speaker 1: we have a trade deficit in goods with China. That's 426 00:24:26,680 --> 00:24:29,399 Speaker 1: sword now, the three hundred and seventy billion dollars a 427 00:24:29,480 --> 00:24:33,359 Speaker 1: year by some calculations, one billion dollars of the trade 428 00:24:33,359 --> 00:24:37,840 Speaker 1: deficit due to unfair trade practices, basically exports six thousand 429 00:24:37,920 --> 00:24:41,000 Speaker 1: American jobs to China. If you if you just tallly 430 00:24:41,160 --> 00:24:45,679 Speaker 1: that up, that's over two million jobs, good manufacturing jobs 431 00:24:45,720 --> 00:24:48,520 Speaker 1: we've sent off shore to China a year because of 432 00:24:48,560 --> 00:24:52,119 Speaker 1: that deficit, and it pushes down our wages. I mean, 433 00:24:52,400 --> 00:24:54,919 Speaker 1: since China joined the World Trade Organization, let me just 434 00:24:54,960 --> 00:24:57,800 Speaker 1: give you the statistic, because it's stunning. There's China joined 435 00:24:57,800 --> 00:25:00,600 Speaker 1: the World Trade Organization two thousand one econ. He has 436 00:25:00,640 --> 00:25:05,639 Speaker 1: grown from one trillion a year to twelve trillion growth 437 00:25:05,720 --> 00:25:10,480 Speaker 1: rate where we went into an era basically the new 438 00:25:10,520 --> 00:25:14,040 Speaker 1: normal two percent growth rate when the previous five gotta 439 00:25:14,119 --> 00:25:16,520 Speaker 1: come on, Come on, we're but we're coming off of 440 00:25:16,600 --> 00:25:21,119 Speaker 1: a hugely larger base. Dr Navarro, John B. Taylor, Stanford 441 00:25:21,200 --> 00:25:25,160 Speaker 1: University and Paul Krugman of Princeton don't agree on whether 442 00:25:25,200 --> 00:25:28,040 Speaker 1: the sun comes up in the East, but they both 443 00:25:28,200 --> 00:25:31,919 Speaker 1: agree that Navarro econ. Yeah, they don't. I mean, good morning, 444 00:25:32,000 --> 00:25:35,320 Speaker 1: Dr Taylor listening out in Stanford and Paul Krugman listens 445 00:25:35,359 --> 00:25:39,679 Speaker 1: every day, Okay, but they both agree that naviro economics 446 00:25:39,800 --> 00:25:42,880 Speaker 1: is flawed. How do you respond to the laureate from 447 00:25:42,920 --> 00:25:46,520 Speaker 1: Princeton and the gentleman from Stanford that invented a lot 448 00:25:46,520 --> 00:25:50,520 Speaker 1: of our monetary economics when they say naviro economics is wrong? 449 00:25:50,760 --> 00:25:57,040 Speaker 1: How do you respond? It's quite simple. I'm of the belief, 450 00:25:57,400 --> 00:26:01,560 Speaker 1: the strong belief, based on analytics, that trade deficits and 451 00:26:01,640 --> 00:26:06,880 Speaker 1: trade imbalances create unemployment and low wages in the United States, 452 00:26:06,960 --> 00:26:10,000 Speaker 1: and in doing so, they threaten our manufacturing base, a 453 00:26:10,040 --> 00:26:13,240 Speaker 1: defense industrial base. And I'll tell you this. When I 454 00:26:13,280 --> 00:26:16,399 Speaker 1: wrote that book you referenced earlier to come in China Wars, 455 00:26:16,440 --> 00:26:20,159 Speaker 1: in two thousand six, everybody accused me of hyperbole. The 456 00:26:20,280 --> 00:26:23,719 Speaker 1: right now, it's the conventional wisdom. So I would say 457 00:26:23,920 --> 00:26:26,800 Speaker 1: Mr Taylor and Mr Kruman need to stop looking in 458 00:26:26,920 --> 00:26:30,719 Speaker 1: their rear view mirror and start looking at what reality is. 459 00:26:31,520 --> 00:26:34,480 Speaker 1: It's ironic to me that the American people as a 460 00:26:34,480 --> 00:26:37,280 Speaker 1: whole are much better economists than a lot of people 461 00:26:37,320 --> 00:26:41,680 Speaker 1: in my professions. American people understand that they're getting hammered 462 00:26:41,920 --> 00:26:44,720 Speaker 1: by unfair and non reciprocal trade, which is why they 463 00:26:44,720 --> 00:26:47,840 Speaker 1: elected a visionary and creation and President Trump. So if 464 00:26:47,880 --> 00:26:50,800 Speaker 1: we wander back to Helping twelve and David Ricardo and 465 00:26:50,840 --> 00:26:54,879 Speaker 1: we look at comparative advantage, I mean, but okay, so 466 00:26:55,040 --> 00:26:57,040 Speaker 1: you don't want to go forward with the David Ricardo, 467 00:26:57,119 --> 00:27:00,920 Speaker 1: I understand. I get that, but it's gonna be what's 468 00:27:00,960 --> 00:27:05,119 Speaker 1: the comparative advantage of China. The comparative advantage of China 469 00:27:05,200 --> 00:27:08,000 Speaker 1: over the rest of the world is they steal our stuff. 470 00:27:08,040 --> 00:27:11,760 Speaker 1: They have a sweatshop labor, they don't respect any kind 471 00:27:11,800 --> 00:27:15,919 Speaker 1: of environmental laws, and they engage in massive subsidization of 472 00:27:16,000 --> 00:27:19,720 Speaker 1: their interest industries. And they use their state owned enterprises 473 00:27:20,119 --> 00:27:22,439 Speaker 1: as weapons, not their own race to return but to 474 00:27:22,520 --> 00:27:25,919 Speaker 1: capture industry. If we conflated then I go back to 475 00:27:25,960 --> 00:27:28,639 Speaker 1: my ricardo, I go, that's true. I go back to 476 00:27:28,680 --> 00:27:34,120 Speaker 1: my original idea, which is we've conflated a tariff discussion 477 00:27:34,720 --> 00:27:38,520 Speaker 1: with what you just mentioned, which is technology and intellectual 478 00:27:38,640 --> 00:27:42,960 Speaker 1: property theft. There's no everyone agrees that's going on. But 479 00:27:43,080 --> 00:27:46,760 Speaker 1: if we conflated the two into an ugly trade war 480 00:27:47,040 --> 00:27:52,760 Speaker 1: where they will respond to what the president does, well, 481 00:27:53,040 --> 00:27:56,119 Speaker 1: here's what I was, Well, this is really important what 482 00:27:56,200 --> 00:27:59,600 Speaker 1: I'm about. Please, I think everybody needs to stop talking 483 00:27:59,680 --> 00:28:03,320 Speaker 1: about trade wars and trying to push up these tensions. 484 00:28:03,359 --> 00:28:06,520 Speaker 1: If you look at what happened, for example, with the 485 00:28:06,640 --> 00:28:11,040 Speaker 1: terrorifts that were imposed on solar panels and washing machines 486 00:28:11,080 --> 00:28:14,920 Speaker 1: in January by the Trump administration, we had no trade wars. 487 00:28:14,920 --> 00:28:18,159 Speaker 1: That we had was a significant influx of new foreign 488 00:28:18,200 --> 00:28:23,040 Speaker 1: investment coming in to build American factories and allow American 489 00:28:23,080 --> 00:28:26,720 Speaker 1: workers to make those products. Where we've had with the 490 00:28:26,760 --> 00:28:31,000 Speaker 1: steel and aluminum terrorists. Besides the stout defense now of 491 00:28:31,000 --> 00:28:34,240 Speaker 1: our aluminums steel industry is we're on the verge. It 492 00:28:34,280 --> 00:28:38,720 Speaker 1: looks like of having an historic renegotiation of the Korean 493 00:28:38,920 --> 00:28:42,320 Speaker 1: trade deal UH in a way which will both preserve 494 00:28:42,400 --> 00:28:45,800 Speaker 1: the integrity of the defense of the aluminums steel industries 495 00:28:46,160 --> 00:28:49,600 Speaker 1: and put an end to that awful trade deal. So 496 00:28:49,840 --> 00:28:54,320 Speaker 1: if I mean, look, you're you're on Bloomberg, you're talking 497 00:28:54,320 --> 00:28:56,680 Speaker 1: to investors. If I were to kind of look at 498 00:28:56,680 --> 00:29:00,520 Speaker 1: the global chessboard as an investor, all I see is 499 00:29:00,560 --> 00:29:05,840 Speaker 1: green lights for growth, tax cuts, deregulation, energy, balancing of 500 00:29:05,920 --> 00:29:11,080 Speaker 1: the trade. What every every economic indicator that you're going 501 00:29:11,120 --> 00:29:13,720 Speaker 1: to report this month is going to be strong enough 502 00:29:13,760 --> 00:29:17,280 Speaker 1: the charge. Yeah, I'm gonna run out of time. Dr 503 00:29:17,360 --> 00:29:20,960 Speaker 1: devar One last quick question. Can you support that we 504 00:29:21,040 --> 00:29:24,000 Speaker 1: redo and join the new t P P Should we 505 00:29:24,040 --> 00:29:29,800 Speaker 1: get back on board TPP? The President, in a historic 506 00:29:29,840 --> 00:29:32,960 Speaker 1: decision literally his first business day and office, got out 507 00:29:33,040 --> 00:29:36,160 Speaker 1: of that agreement for one simple reason. As it was structured, 508 00:29:36,480 --> 00:29:39,360 Speaker 1: it would have been a death blow to our manufacturing sector, 509 00:29:39,400 --> 00:29:43,959 Speaker 1: particularly to our auto and auto parts industries. So the 510 00:29:44,000 --> 00:29:48,400 Speaker 1: President has said repeatedly we will negotiate with any country 511 00:29:49,280 --> 00:29:52,280 Speaker 1: trade deals that are fair and reciprocal and then defend 512 00:29:52,280 --> 00:29:56,200 Speaker 1: our manufacturing defense industrial base. And I would not presume 513 00:29:56,360 --> 00:29:58,920 Speaker 1: to put words in the President's mouth other than what 514 00:29:59,000 --> 00:30:01,800 Speaker 1: he has said himself. Dr Navarro, thank you so much 515 00:30:01,840 --> 00:30:06,360 Speaker 1: for the spirited conversation. Greatly appreciated. Peter Navarro is President 516 00:30:07,000 --> 00:30:11,200 Speaker 1: Trump's UH Assistant to the President rather for Trade and 517 00:30:11,320 --> 00:30:14,680 Speaker 1: Manufacturing policy. John, I hope I wasn't too rude there. 518 00:30:15,560 --> 00:30:19,000 Speaker 1: You would have been more gracious than I was. Oh not. 519 00:30:32,560 --> 00:30:35,440 Speaker 1: We have attempted to find at least one of our 520 00:30:35,760 --> 00:30:39,480 Speaker 1: guests who actually read the Spio came in from the cold. 521 00:30:39,560 --> 00:30:43,600 Speaker 1: That Jim Hurtling, who joins us now from London, is well, 522 00:30:43,920 --> 00:30:47,760 Speaker 1: I guess the spies are coming in, Jim, in different cities, 523 00:30:47,880 --> 00:30:52,040 Speaker 1: back and forth. Russia responding quite seriously here in the 524 00:30:52,120 --> 00:30:56,640 Speaker 1: last twenty minutes that they will respond to what they 525 00:30:56,680 --> 00:31:01,080 Speaker 1: call a provocation. We've seen this before. But Jim, if 526 00:31:01,120 --> 00:31:06,000 Speaker 1: we've seen a coordinated effort before, well, we've seen a 527 00:31:06,080 --> 00:31:09,840 Speaker 1: coordinated effort in the form of economic sanctions a few 528 00:31:09,880 --> 00:31:12,960 Speaker 1: years back. And what's interesting about this is that it's 529 00:31:13,040 --> 00:31:18,080 Speaker 1: being you know, the press release and the announcements are coordinated, certainly, 530 00:31:18,200 --> 00:31:20,440 Speaker 1: but you'll recall it was at the use some of 531 00:31:20,520 --> 00:31:24,000 Speaker 1: a few days ago there was hardly unanimity about cracking 532 00:31:24,000 --> 00:31:28,160 Speaker 1: down on on Russia. The Greeks and the the Italians 533 00:31:28,160 --> 00:31:32,959 Speaker 1: certainly expressed them skepticism and and you know Alexa Cippers 534 00:31:33,280 --> 00:31:36,640 Speaker 1: in Greece, you know, made a point of of congratulating 535 00:31:36,680 --> 00:31:39,160 Speaker 1: Putin on his reelection and staying on the phone with 536 00:31:39,240 --> 00:31:43,560 Speaker 1: him for some time. So, um, you know, we've seen, 537 00:31:43,800 --> 00:31:49,160 Speaker 1: we've seen sanctions, we've seen punishment before. Uh. You know, 538 00:31:49,200 --> 00:31:52,680 Speaker 1: the markets certainly seemed relatively nonplussed about it, so you know, 539 00:31:52,680 --> 00:31:55,920 Speaker 1: we shall see, Lisa, here's a tweet from Richard hass 540 00:31:55,960 --> 00:31:58,960 Speaker 1: so frequent guests. He's a president of consul and foreign relations, 541 00:31:59,400 --> 00:32:03,120 Speaker 1: an ambassing let me quote it entirely, Lisa, decision to 542 00:32:03,200 --> 00:32:08,320 Speaker 1: expel Russian diplomats less than optimal or creative, as will 543 00:32:08,360 --> 00:32:12,360 Speaker 1: likely lead to Moscow responding in kind. Better to choose 544 00:32:12,520 --> 00:32:18,920 Speaker 1: asymmetrical response, I eat, targeted economic and travel sanctions, increased 545 00:32:18,960 --> 00:32:24,200 Speaker 1: public diplomacy versus Putin, etcetera. So that costs fall mostly 546 00:32:24,360 --> 00:32:27,400 Speaker 1: on Russia. Although this goes to something that Jim said, 547 00:32:27,520 --> 00:32:31,360 Speaker 1: which is the US is coordinating with the European Union 548 00:32:31,520 --> 00:32:35,240 Speaker 1: and sort of displaying this support that we haven't seen 549 00:32:35,360 --> 00:32:39,040 Speaker 1: to such a decree in the Trump era. I'm wondering, Jim, 550 00:32:39,160 --> 00:32:42,440 Speaker 1: how much is this being viewed from the European Union angle? 551 00:32:42,880 --> 00:32:46,000 Speaker 1: As being a huge vote of confidence in them by 552 00:32:46,120 --> 00:32:50,400 Speaker 1: President Trump, regardless of whatever the reaction is or whatever 553 00:32:50,400 --> 00:32:53,800 Speaker 1: he should have done, perhaps diplomatical, you know, it's seen 554 00:32:53,960 --> 00:32:58,000 Speaker 1: is certainly a welcome vote of confidence. But as we've 555 00:32:58,040 --> 00:33:00,400 Speaker 1: seen with the Trump administration when it comes to Russia 556 00:33:00,720 --> 00:33:04,680 Speaker 1: for the past few months, eighteen months, as long as 557 00:33:04,960 --> 00:33:09,040 Speaker 1: he's been in office, uh, it hasn't There hasn't always 558 00:33:09,040 --> 00:33:11,840 Speaker 1: been a lockstep movement between the president and his own 559 00:33:11,880 --> 00:33:14,920 Speaker 1: administration in terms of foreign policy, in terms of how 560 00:33:14,960 --> 00:33:18,880 Speaker 1: it how it behaves towards traditional friends and foes. Ald 561 00:33:18,920 --> 00:33:21,080 Speaker 1: On of a second, so are you suggesting that this 562 00:33:21,200 --> 00:33:23,960 Speaker 1: move to expel sixty Russian diplomats came from someone other 563 00:33:24,000 --> 00:33:26,920 Speaker 1: than President Trump and that he could potentially take actions 564 00:33:26,960 --> 00:33:31,400 Speaker 1: to undermine that and upcoming down. No, No, this certainly 565 00:33:31,440 --> 00:33:34,560 Speaker 1: seems uh um like it was a unified move by 566 00:33:34,600 --> 00:33:37,320 Speaker 1: the administration. But you know, as we saw as recently 567 00:33:37,360 --> 00:33:41,040 Speaker 1: his last week when his own uh White House leaked 568 00:33:41,120 --> 00:33:45,960 Speaker 1: that he ignored uh instructions not to congratulate Vladimir Putin, 569 00:33:46,000 --> 00:33:48,600 Speaker 1: he has continued on the on one track to try 570 00:33:48,640 --> 00:33:54,040 Speaker 1: and and and so um strong personal relationships with with Putin, 571 00:33:54,720 --> 00:33:57,960 Speaker 1: regardless of what the national security apparatus says and does. 572 00:33:59,720 --> 00:34:02,000 Speaker 1: All right, so what's the next step that the European 573 00:34:02,080 --> 00:34:06,360 Speaker 1: Union is preparing for girding itself for from Russia. Well, 574 00:34:06,360 --> 00:34:09,640 Speaker 1: it'll be probably a tip for tat the UH The 575 00:34:09,719 --> 00:34:14,200 Speaker 1: Russians will probably expelled some some European uh quote unquote 576 00:34:14,239 --> 00:34:21,239 Speaker 1: diplomats stroke spies, and then they'll probably settle into until 577 00:34:21,280 --> 00:34:24,520 Speaker 1: the business returns to normal again because the economic ties 578 00:34:24,560 --> 00:34:29,040 Speaker 1: are are pretty profound and they go both ways. I mean, 579 00:34:29,400 --> 00:34:33,440 Speaker 1: it always comes back to the natural gas debate. It 580 00:34:33,480 --> 00:34:37,040 Speaker 1: gets cold in Europe last I knew, and they provide 581 00:34:37,040 --> 00:34:40,239 Speaker 1: the heat, don't they. I mean, that's the ultimate diplomatic 582 00:34:40,280 --> 00:34:44,399 Speaker 1: and strain is the heating of houses in Europe. Right, 583 00:34:45,320 --> 00:34:49,400 Speaker 1: That's right. And the UK in particular, Um, didn't you 584 00:34:49,440 --> 00:34:53,440 Speaker 1: know they rely on capital flows, international capital flows, Russian 585 00:34:53,440 --> 00:34:57,399 Speaker 1: capital flows into their money management industry. We just saw 586 00:34:57,960 --> 00:35:01,279 Speaker 1: last week our our colleagues here in London did a 587 00:35:01,400 --> 00:35:05,120 Speaker 1: terrific story but pointing out that you know, these UK 588 00:35:05,320 --> 00:35:08,560 Speaker 1: money management firms and in fact Salisbury where that the 589 00:35:08,920 --> 00:35:13,120 Speaker 1: poison attack took place, their money is invested through their 590 00:35:13,160 --> 00:35:16,560 Speaker 1: money managers there. Their money is invested in Russias, Burbank 591 00:35:16,600 --> 00:35:20,359 Speaker 1: and gas Prom and Russian sovereign bonds because you know 592 00:35:20,520 --> 00:35:22,080 Speaker 1: they have to be Now, let me do a quick 593 00:35:22,080 --> 00:35:25,320 Speaker 1: market check here, particularly after what we saw Thursday Friday. 594 00:35:25,320 --> 00:35:27,759 Speaker 1: We welcome all of you worldwide. Jim Hurtling with us. 595 00:35:27,840 --> 00:35:31,400 Speaker 1: James Hurtling off our London desk with Lisa Brando Woodson, 596 00:35:31,400 --> 00:35:34,080 Speaker 1: Tom Keen. If the Dow rather up four hundred seven 597 00:35:34,120 --> 00:35:38,319 Speaker 1: points almost to twenty four thousand seven, and you see 598 00:35:38,320 --> 00:35:40,800 Speaker 1: it with the SMP and up forty one points to 599 00:35:41,040 --> 00:35:45,160 Speaker 1: six to nine on the SMP, the VIX comes in 600 00:35:45,280 --> 00:35:48,359 Speaker 1: two point six big figures twenty two point two nine 601 00:35:49,120 --> 00:35:52,440 Speaker 1: yields up. It's a higher yield environment risk on all 602 00:35:52,440 --> 00:35:54,400 Speaker 1: the way. Lisa, well, we should just point out to 603 00:35:54,560 --> 00:35:57,520 Speaker 1: our seeing huge gains and some mic and some in 604 00:35:57,600 --> 00:36:01,000 Speaker 1: some tech names, Microsoft up more than five percent, even 605 00:36:01,040 --> 00:36:03,520 Speaker 1: Facebook shares gaining, so you have to wonder, oh it's 606 00:36:03,520 --> 00:36:06,960 Speaker 1: now down. It started the day up. But you can see, 607 00:36:07,000 --> 00:36:11,800 Speaker 1: you know, Alphabet for example, also seeing some firmness. So 608 00:36:11,840 --> 00:36:14,439 Speaker 1: it's just sort of interesting reversal and fortunes from from 609 00:36:14,640 --> 00:36:17,799 Speaker 1: last week. Jim her Lane with us here as we 610 00:36:17,840 --> 00:36:21,759 Speaker 1: look at these Russian headlines as well, Jim out with 611 00:36:21,920 --> 00:36:24,520 Speaker 1: free trade. We talked to Peter Navarro this morning and 612 00:36:24,640 --> 00:36:30,120 Speaker 1: Christine Lagarde obviously two very very different views there on trade. 613 00:36:30,480 --> 00:36:34,439 Speaker 1: How is the Trump trade policy playing as you see 614 00:36:34,440 --> 00:36:40,680 Speaker 1: it across the London and European desks. Well, here in Europe, certainly, 615 00:36:40,920 --> 00:36:43,239 Speaker 1: there's certainly some relief that they seem to have have 616 00:36:43,440 --> 00:36:45,920 Speaker 1: dodged the bullet. But you know, when it comes to 617 00:36:45,920 --> 00:36:51,239 Speaker 1: Trump and foreign policy there from Europe, um probably confusion 618 00:36:52,080 --> 00:36:54,399 Speaker 1: is the best word. They don't really know where he's 619 00:36:54,440 --> 00:36:57,360 Speaker 1: coming from, and you know, sort of his his Madman 620 00:36:57,440 --> 00:37:01,399 Speaker 1: theory of foreign policy seems to um be how it's 621 00:37:01,520 --> 00:37:03,560 Speaker 1: how it's seen here. They never know which who was 622 00:37:03,600 --> 00:37:05,840 Speaker 1: going to drop in, which Trump you're gonna get? Sounds 623 00:37:05,880 --> 00:37:07,920 Speaker 1: like New York as well. Jim Wortly, thank you so much. 624 00:37:08,160 --> 00:37:11,280 Speaker 1: We appreciate it. One of our senior editors in London, 625 00:37:11,320 --> 00:37:14,520 Speaker 1: with the decades of perspective in euro about the Paris 626 00:37:14,640 --> 00:37:26,759 Speaker 1: and London as well. Thanks for listening to the Bloomberg 627 00:37:26,760 --> 00:37:32,719 Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 628 00:37:33,080 --> 00:37:37,319 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 629 00:37:37,360 --> 00:37:41,640 Speaker 1: Tom Keane. Before the podcast. You can always catch us worldwide. 630 00:37:42,080 --> 00:37:43,160 Speaker 1: I'm Bloomberg Radio.