Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jailie.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. The
Speaker 1: news over the weekend softening the trade war talk was
Speaker 1: the Treasury Secretary Stephen Manu Chin speaking to Fox News
Speaker 1: on Sunday. We're having very productive conversations with the Chinese.
Speaker 1: I'm cautially hopeful that will reach an agreement. Jim Glassman
Speaker 1: with US JP Morgan, head economist of Commercial Banking here
Speaker 1: in New York. Jimmy, you cautiously hopeful that'll reach an
Speaker 1: agreement with the Chinese. Yeah, you know, because obviously we
Speaker 1: don't like the sound of terriffs. Tariffs remind us of
Speaker 1: global trade wars from a hundred years ago, in nineteen thirties.
Speaker 1: But the truth is, if if you really look past
Speaker 1: all the noise, the real argument here is a beef
Speaker 1: with China and intellectual property rights and technology transfers. I've
Speaker 1: been hearing that story from businesses for a long time,
Speaker 1: so I think what we're hoping is this is part
Speaker 1: of a big negotiating strategy and what it's gonna do
Speaker 1: is make China realize they need to work harder to
Speaker 1: figure out how to how to take care of this issue.
Speaker 1: So I think at the end of the day, this
Speaker 1: is not going to spark global trade war. It's not
Speaker 1: in anyone's interest. We would lose as much as anybody
Speaker 1: else would. And I think there's reason to be to
Speaker 1: give them the benefit of the doubt that if this
Speaker 1: actually sets the States for some real negotiations behind these
Speaker 1: on the scenes, and we don't need tariffs, fine, I
Speaker 1: mean we we've already seen many of the still a
Speaker 1: luminate tariffs most countries were exempted from. They have been
Speaker 1: big coughs out for for a lot of countries. There
Speaker 1: is a fairbout Jim, this neghost yadding tactic. If you
Speaker 1: want to frame the approach of this administration, that why
Speaker 1: um gets out of control and wrong and thing's gonna
Speaker 1: be dangerous base case though, Jim, I think the base
Speaker 1: cases there's too much at stake here for both China
Speaker 1: and US and everybody else. Uh. And it's it's it's
Speaker 1: bizarre to me that after having gone through all this
Speaker 1: effort to get the taxed before them and get a U. S.
Speaker 1: Tax code in a line with everybody else, We're gonna
Speaker 1: come along and do something on the trade front to
Speaker 1: totally undermine that it doesn't make sense. So I'm willing
Speaker 1: to I'm willing to give them the benefit of the
Speaker 1: doubt that the real goal here is to try to
Speaker 1: address these violation of intellectual property rights. We've been using
Speaker 1: you this morning, Jim Glass, to give us great international economics.
Speaker 1: We had met on the guard On earlier. We got
Speaker 1: Peter Navarro coming up, Like, folks, I'm gonna get out
Speaker 1: in front of this because Dr Navarro has got some
Speaker 1: real strong views that many of our listeners frankly agree with.
Speaker 1: Their basic idea off of his books is China's bad,
Speaker 1: China's evil, and we got to go head on against China.
Speaker 1: What's the price of a Navarro approach to China. We
Speaker 1: all lose, China loses, us loses. We all lose because
Speaker 1: because what's going on here is Asia is where half
Speaker 1: the world lives. In Asia, they're going through an industrial revolution.
Speaker 1: Are the industrial revolution benefited fift of the world's population Europe,
Speaker 1: In the US what's going on now is benefiting half
Speaker 1: the world's population. But the thing is, it's not just
Speaker 1: benefiting them, it's benefiting all of us. Our business community
Speaker 1: is engaged there, and so if we do something to
Speaker 1: try to stymy what's going on in Asia, we all
Speaker 1: lose out. It's all it's all about future possibilities, future opportunity.
Speaker 1: And I think that's why you kind of be to
Speaker 1: my team. My mind. You kind of have to look
Speaker 1: past I can understand why politicians don't like to do this,
Speaker 1: but there's gonna be a lot of abuses when when
Speaker 1: you have large countries growing rapidly rising, there's gonna be abuses.
Speaker 1: And I'm sure the Brits complained about American businesses stealing
Speaker 1: technology in the old days and a couple of years ago.
Speaker 1: This is just what happens. And I think that over
Speaker 1: time here, as the region rises, we're going to find
Speaker 1: out that there's so much benefit for all of us.
Speaker 1: But Jim, at least just to sit here and say
Speaker 1: that it's okay for one nation to cheat, even if
Speaker 1: they're the second biggest economy on the planet. It's okay
Speaker 1: for that to cheat because the status quo still benefits US. Yeah,
Speaker 1: I think everybody cheats frankly, and it's a question of
Speaker 1: I think it's not surprising that when China is growing
Speaker 1: so rapidly. I remember the complaints about Japan in the
Speaker 1: early days they were copying a lot of processes here
Speaker 1: doing the better. But I think as countries mature, they
Speaker 1: realize that it's important to respect rule of law and
Speaker 1: intellectual property rights because Chinese will be inventing things as well.
Speaker 1: So I think I think it's it's hard for politicians
Speaker 1: to do this, but I think if you think about
Speaker 1: the big picture what lies ahead, there's so much possibility
Speaker 1: coming for a world, and honestly, I don't think we
Speaker 1: can stop it. I think when people are poor and
Speaker 1: they found a way to make it happened. I mean,
Speaker 1: it's interesting to me that Chinese love American products. You
Speaker 1: agree with with Brad DeLong and Danny Roderick and others.
Speaker 1: At the heart of the matter here is we we
Speaker 1: had an agreement with the American worker that if we
Speaker 1: did globalization, you'd somehow be compensated for the loss of
Speaker 1: your blue collar manufacturing job in North Carolina. That's the failure.
Speaker 1: That's the failures failure. We all failed. We so we
Speaker 1: we we economys tend to look at I really think
Speaker 1: the problem for the guy in Ohio and and the
Speaker 1: guy working the auto plant is automation. We saw that
Speaker 1: coming and we think, well, that's the great that's the
Speaker 1: way it always is, and we forget that it's disruptive
Speaker 1: and people lose jobs and lose opportunity. And I think
Speaker 1: the failure was not working hard to find alternatives for
Speaker 1: people and helping them get skilled up. And then a
Speaker 1: lot of that work used to be done by unions,
Speaker 1: so we don't do that. To be clear, and you're
Speaker 1: wonderful power points you put together, and then all the
Speaker 1: work that JP Morgan does with the Chasman team, what
Speaker 1: is the mix of domestic economic growth near boom and
Speaker 1: the foreign dampening that comes from larger large imports lesser exports.
Speaker 1: You know, it's it's really hard to tell because our
Speaker 1: exports have risen a huge amount too. So what that
Speaker 1: means is um if we could somehow close the trade
Speaker 1: gap and not harm everybody else, we would probably be
Speaker 1: able to There would be more jobs here. But the
Speaker 1: problem is this process of letting free trade open up,
Speaker 1: even though it means trade deficits, it's also creating new jobs,
Speaker 1: and so it's difficult to know exactly. And I think
Speaker 1: that's the problem for most Americans. They see the jobs
Speaker 1: that might have migrated to Michigan, I mean, to to
Speaker 1: to Mexico or to China, but they can't see the
Speaker 1: jobs that are getting created by this globalization that's happening
Speaker 1: around us. If the world if the problem is it's
Speaker 1: not a zero sum pie. The world pie is growing,
Speaker 1: and so we are an important part of that. And
Speaker 1: I think you know, you look at how the U. S.
Speaker 1: Economy is performing. We're doing really well. Now we're back
Speaker 1: to we're close to full employment. The big challenge has
Speaker 1: been for people who are working in the industries where
Speaker 1: automation is displacing routine work. Jim Glassman, thank you so much,
Speaker 1: greatly appreciative. He charges in with hostile intent for over
Speaker 1: after over, He even races back to his mark with
Speaker 1: unrelenting purpose. Wagner took just three wickets in the match,
Speaker 1: but one of them critically with his last ball before dinner,
Speaker 1: was that of Stokes. John. Let's do cricket for like
Speaker 1: thirty seconds. We're here with the Consul General of the
Speaker 1: United Kingdom, and sir, you're apault. Is it an international
Speaker 1: incident that Australia Tampa the ball and England can't beat
Speaker 1: New Zealand? Is this like international? Is this risen to
Speaker 1: an international event? No? I don't think it has. I
Speaker 1: think the ball tempering is pretty appalling, but I can't
Speaker 1: put it better than the Australian Prime minister. And as
Speaker 1: for US losing to New Zealand, world, there's a second
Speaker 1: test soon and as I once said before on Bloomberg,
Speaker 1: at least the baseball season starts soon. There you go
Speaker 1: in basic, can you tamper with the ball in base Oh?
Speaker 1: We got, yes, we got that. A spit and a
Speaker 1: spinder used to be legal, and then it was made
Speaker 1: ill you can't do. Then you would sit in the
Speaker 1: backyard and practice it, and then your father would cuff
Speaker 1: you across the head and say, if you do a
Speaker 1: spinner in little league, you will not eat for a week. Interesting.
Speaker 1: I wonder if Anthony Phillipson would prefer to talk about
Speaker 1: cricket or Brexit politics Anthony in the United Kingdom, this
Speaker 1: conversation about the city of London improved equivalence. I think
Speaker 1: is the jargon for improve the covalence. Is that right?
Speaker 1: What is that? So? I think I would take us
Speaker 1: back to the Chancellor made a speech in the City
Speaker 1: of London on March seventh where he set out in
Speaker 1: some detail what our our proposals were for the new
Speaker 1: relationship between the UK and the EU and the area
Speaker 1: financial services and talked a lot about a system of
Speaker 1: reciprocal regulatory equivalents with a degree of common supervision, common
Speaker 1: dispute resolution mechanism, etcetera, etcetera, all designed to sort of
Speaker 1: ensure that as we remain engaged, which is our ambition,
Speaker 1: there will continue to be sort of the necessary degree
Speaker 1: of financial stability expurence in both directions. So if you're
Speaker 1: a bank in the City of London and this is
Speaker 1: the agreement, are they going to get the certainty they need? Well?
Speaker 1: I think they will, and maybe in two regards. First
Speaker 1: of all, one thing that they will get through the
Speaker 1: implementation period is certainty and clarity out to December twenty twenty,
Speaker 1: by which time we will have the new partnership ready
Speaker 1: to come into place. And then if we achieve our
Speaker 1: ambition has set out as a say in the Chancellor speech.
Speaker 1: But also I would say reflected in the guidelines that
Speaker 1: the counts all the twenty seven member states meeting as
Speaker 1: the Council on Friday issue to the commissioned and I
Speaker 1: think will be in a good place. Is it up
Speaker 1: for the Europeans post twenty to just decide on a
Speaker 1: whim whether there is equivalence or not. Well, that's why
Speaker 1: I think we need this, this mechanism that has both
Speaker 1: sides with with a stake in the discussion, because we
Speaker 1: need the certainty and we need we need both sides
Speaker 1: to have the necessary certainty in order to to provide
Speaker 1: that assurance going forward. It's become very, very difficult to
Speaker 1: make an agreement with the Europeans at a time when
Speaker 1: the United States is pushing for agreements new agreements from
Speaker 1: from almost everyone has Brexit politics and making trade agreements
Speaker 1: got harder over the last weeks and not easier. I
Speaker 1: don't know. I'm not sure it's as a binary sort
Speaker 1: of one way or the other. I mean, it's a
Speaker 1: very fluid situation. International trade has always been quite fluid.
Speaker 1: I would say the UK, we have our objectives with
Speaker 1: regard to that. You we have our objectives with regard
Speaker 1: to the US, and we'll gear up for and drive
Speaker 1: momentum towards as we as we prepare and then leave
Speaker 1: the EU, and we'll continue to sort of push in
Speaker 1: both directions at once. How do you sell exports in
Speaker 1: the United States? How do you get US? I mean,
Speaker 1: you want us to buy hardware and all the fancy
Speaker 1: value add stuff. But how do you get those cookies
Speaker 1: they have in Herod's as you go in and you
Speaker 1: go back three rooms. How do you move more of
Speaker 1: those in the United States? Well, one thing I would
Speaker 1: point out is that we've been quite successful at this
Speaker 1: for a while. I mean, the US single biggest export
Speaker 1: market across the whole variety of sectors. How about that
Speaker 1: Blackhead we put up against the Confederacy in eighteen sixty three.
Speaker 1: That worked out well. We all learn lessons from history, um,
Speaker 1: so as we look forward. I think there's actually one
Speaker 1: thing I would say in Washington last week we did
Speaker 1: with our colleagues at USTR and Commerce set up a
Speaker 1: really good and sort of successful sm dialogue. And the
Speaker 1: reason I mentioned that is because even before we leave
Speaker 1: the EU, there's so much that we can do to
Speaker 1: continue to help UK companies exports to the US and
Speaker 1: US companies export to the UK, and some of it
Speaker 1: is just sort of explaining to each other how our
Speaker 1: systems work and what the benefit are of being in
Speaker 1: each other's. Well, what's your reciprocity headache? Right now? The
Speaker 1: President was mental about China reciprocity. We have an issue.
Speaker 1: What's a product in the United Kingdom where the United
Speaker 1: States are better? Out of shape about reciprocity. I think
Speaker 1: if okay, if I had to pick one, I probably
Speaker 1: would say that one of the things that our companies
Speaker 1: wrestle with are things like federal and state level procurement rules. Um.
Speaker 1: You know, there are things that are a an impediment
Speaker 1: to trade investment between US and there's those are the
Speaker 1: sorts of things. Now I'm believing I'm not saying that
Speaker 1: I expect the US to sort of remove their procurement
Speaker 1: rules entirely. It's one of the reasons why we encourage
Speaker 1: sort of UK companies to invest here and then they
Speaker 1: become effectively sort of U S entities and and can
Speaker 1: can invent themselves in local economy. Um. I mean another
Speaker 1: report we did recently is we we mapped by congressional
Speaker 1: district the exports from those districts to the UK and
Speaker 1: the US jobs that rely on them, and we're talking
Speaker 1: a hundreds of thousands. With the statistic we like to use,
Speaker 1: is it every day a million brands going to work
Speaker 1: for American companies and a million Americans got to work
Speaker 1: for British company Council Journal will thank you so much,
Speaker 1: Mr Phillipson. It's with the United Kingdom and Consulate General
Speaker 1: offices here in New York. Joining us now Peter Navarro.
Speaker 1: He is Assistant to the President for Trade and Manufacturing
Speaker 1: policy and has been a lightning rod of debate and
Speaker 1: criticism as we have moved to a new trading strategy.
Speaker 1: Dr Navarro, wonderful day have you with us right now?
Speaker 1: Your arch critics would suggest that you and the Secretary
Speaker 1: Commerce Mr Ross are immune to the game theory the
Speaker 1: responses that are made to us action. What will be
Speaker 1: the game theoretic response of China to the events you
Speaker 1: have proposed and now the actions we see from the President. Well, Tom,
Speaker 1: I'm good to be here with you. First of all, Um,
Speaker 1: not in a world of game theory. We're in a
Speaker 1: real world and we have, as we're speaking, efforts by
Speaker 1: the Secretary of Treasury Steve Anusian and Ambassador Robert Leichheiser
Speaker 1: to continue to engage the Chinese side, which we've been
Speaker 1: doing since they wanted this administration, seeking to address a
Speaker 1: couple of things. One is the massive trade imbalance we
Speaker 1: have with China, which costs US factories, jobs, wages, and
Speaker 1: the like. But also this pernicious practice of the transfer
Speaker 1: of US technology and electoral property to China, not just
Speaker 1: through theft, which most Americans understand that China engages in,
Speaker 1: but also through this pernicious practice of what's called forced
Speaker 1: technology transfer, whereby an American corporation which goes to China
Speaker 1: to try to sell into that market sincerely must be
Speaker 1: a minority partner and surrender their case. Okay, this is unacceptable.
Speaker 1: Well it's unacceptable, but but but Dr Navarro, there seems
Speaker 1: to be a shift and discourse and rhetoric. Here. We
Speaker 1: went after aluminum and steel, we backed away from that
Speaker 1: with all sorts of trading partners, and now we're going
Speaker 1: after a tariff theory to then go after the intellectual
Speaker 1: property debate. Why do we need to screw around with
Speaker 1: tariffs if the real issue is to go after intellectual
Speaker 1: property and forced technology transfer? Uh? Tom whot me? You
Speaker 1: first address the the aluminum steel because because when you
Speaker 1: dismissed that, I think is is U doesn't do justice
Speaker 1: to the situation. Um. What we've done with aluminum steel
Speaker 1: is imposed tariffs across the board. Uh and for a
Speaker 1: very temporary period through May one, we're giving a selecting
Speaker 1: number of countries the opportunity to negotiate a better deal
Speaker 1: that will be in the interest in national security. But
Speaker 1: and this is a egg butt, Tom, the proviser is
Speaker 1: going to be that any country that does not be
Speaker 1: subject to the tariffs have a quota or some other
Speaker 1: strict restrictions so that we can maintain the defense of
Speaker 1: our aluminum stealingscry. So there's no letting people out the door,
Speaker 1: willy nilly. This is a very calculated, important strategy for
Speaker 1: the American people with respect to your question of how
Speaker 1: to address the Chinese problem with respect to the the intellectual property.
Speaker 1: It's a two prompt strategy. One carreiffs, the other is
Speaker 1: investment restrictions, which Secretary Treasury Steven Nutin will be vailing
Speaker 1: in the not too distant future. Why do we need
Speaker 1: to caress the reason why we need fifty billion dollars
Speaker 1: worth of tariffs is because that's the harm that China
Speaker 1: does to us annually. You can think of it as
Speaker 1: a compensatory damages, and it is quite damaging. And it
Speaker 1: doesn't even take into account the hundreds of billions of
Speaker 1: dollars that have been estimated to cost the American bill
Speaker 1: annually from other types of transfer like cyberstp SO tariffs
Speaker 1: to recover damages. Investment restrictions basically focus on what is
Speaker 1: a very large pool of Chinese money coming into the
Speaker 1: United States and targeting strategically key technology industries, not so
Speaker 1: that they can make a rate to return like you
Speaker 1: and I would normally do in a free market, but
Speaker 1: you're doing that for strategic purposes to enhance their military
Speaker 1: security and their eco security at expense. If you're just
Speaker 1: joining us as Peter Navar with this Assistant to the
Speaker 1: President for Trade and Manufacturing policy, and we're thrilled to
Speaker 1: have Washington join us right now Bloomberg Daybreak in a
Speaker 1: FM Washington as well. We welcome all of you worldwide
Speaker 1: and across this UH nation. Peter Navarro, what's the common
Speaker 1: ground of Peter Navarro with Lawrence cut Love, Oh, Larry.
Speaker 1: Larry is a very good friend of mine, we go
Speaker 1: back more than a deck a when when I was
Speaker 1: on him, was on his show frequently in that Yeah,
Speaker 1: but he's a free trade guy. He's going to tell
Speaker 1: you stop at China is not evil, that there's a
Speaker 1: joint price to going after China where it's going to
Speaker 1: be the common ground with you with let's step back
Speaker 1: and look at four point program for the president's. President
Speaker 1: Trump's brilliant economic plan is deregulation. Check that box with
Speaker 1: Larry and I. Tax cuts, and check that box with
Speaker 1: Larry and I. Unleashing the energy sector so we're gonna
Speaker 1: have low cost for our manufacturers and consumers. Check that
Speaker 1: box with Larry and I. When it comes to trade,
Speaker 1: Larry has been quite vocal about the China issue. He
Speaker 1: has said, as we all have in this administration, that
Speaker 1: China basically needs to become a free trader, not an
Speaker 1: unfair trader. And so a lot of common ground with
Speaker 1: Larry Cudlow and I on the China issue. But and
Speaker 1: he said that it's gonna be great to be in
Speaker 1: with the President and have discussions where there's different points
Speaker 1: of view, and that's you didn't have different points whatever.
Speaker 1: And I will suggest as Dr Navars. You and I
Speaker 1: have known each other for well over a decade. You
Speaker 1: came advertised with your books. Now the Coming China Wars
Speaker 1: was one of your most successful books. You have a
Speaker 1: chapter They're Made in China, the ultimate warning label. Are
Speaker 1: you going to change with your policy with the President?
Speaker 1: That label made in China? I don't understand that question
Speaker 1: here and Tom, but my job here in the White
Speaker 1: House is to create manufacturing jobs for the men and
Speaker 1: women of America, doing the best things I can and
Speaker 1: providing the best possible advice I can to the President,
Speaker 1: and he gets advice from many different quarters. Key, President Trump,
Speaker 1: this is his vision, right, he is his own man.
Speaker 1: I will agree with that, that's true. What how can
Speaker 1: you think anybody that I somehow be able to push
Speaker 1: him in one direction or another. That's silly. He just
Speaker 1: wants advice. But Dr Devar, is his vision for a
Speaker 1: mercantilist America? Absolutely not, Tom. We are free traders. We
Speaker 1: are free traders. But what the President has said is
Speaker 1: that we have a structural problem in the global economy,
Speaker 1: massive trade imbalances which are fueled by unfair and non
Speaker 1: reciprocal trade. And the President Trump's vision, which is brilliant
Speaker 1: is the restructure of the global trading environment in a
Speaker 1: way where trade is pair and reciprocal. There's no reason
Speaker 1: why the United States has to face fire terrace when
Speaker 1: it sends its cars to China or Europe than those
Speaker 1: countries in that block does when it sends them here.
Speaker 1: It's silly. I mean, if you want to sell sell
Speaker 1: a car from Detroit to China, you pay a twenty
Speaker 1: five percent. If they want to sell a car from
Speaker 1: Shanghai here, it's two point five percent. And when you
Speaker 1: try to sell a guard to Europe you have a
Speaker 1: similar kind of the disadvantage. It's it's not quite of
Speaker 1: the same magnitude, but it's very significant. That's not fair trade.
Speaker 1: And and Tom, I mean, look, do you think that
Speaker 1: China should be stealing our I p of course not.
Speaker 1: Do you think that they should force Americans? But I
Speaker 1: would suggest respectfully that in the last two weeks, Start Navarra,
Speaker 1: we have conflated a tariff debate with an intellectual property debate.
Speaker 1: Let me do this, Peter naviar We want to continue
Speaker 1: this conversation, and we can do that by bringing in
Speaker 1: my colleague John Farrell. John Farrell with Peter Navarral coast
Speaker 1: to coast Dotor Navarre. We've spoken before, of course, and
Speaker 1: you've identified a problem that I think most economists would
Speaker 1: agree with, and that's China has cheated the international system.
Speaker 1: I think there's a real debate about the approach at
Speaker 1: the moment, about whether this approach actually brings China to
Speaker 1: the negotiation table or forced to China the other way.
Speaker 1: How confident are you that this actually brings them to
Speaker 1: the negotiating typo. Well, there there, we are already at
Speaker 1: the negotiating table. As the Secretary of the Treasury, Stevenutchen
Speaker 1: said over the weekend, he and Ambassador Robert Leightheiser actively
Speaker 1: engaged with the Chinese side. Add we have been engaged
Speaker 1: with the Chinese side since day one of this administration.
Speaker 1: Remember in April there was the Mari Lago Summit. Then
Speaker 1: a hundred days later we revisited these issues, and all
Speaker 1: along the way we've been talking. But the problem is
Speaker 1: talk isn't cheap with the Chinese side. It's been very expensive.
Speaker 1: And the history of dialogue with the Chinese, precisely over
Speaker 1: these issues dates back to two thousand three and the
Speaker 1: Bush administration, when the Bush administration instituted these annual dialogues
Speaker 1: with the Chinese. They went on for every year right
Speaker 1: up until the Trump administration, and all of its happened.
Speaker 1: Is the deficit with China has swelled Olden. They just
Speaker 1: keep stealing our stuff and forcing the transfer it. If anything,
Speaker 1: it's gotten a lot worse. And when you have the
Speaker 1: American Chamber of Commerce and the European Chamber of Commerce
Speaker 1: and Capitol Hill and everybody else in between basically saying
Speaker 1: the same thing that China is taking advantage of this country,
Speaker 1: we have now a president with the courage and vision
Speaker 1: to basically address that situation. I don't disagree with you.
Speaker 1: I think that's exactly where we're at. People on Wall
Speaker 1: Street who have acknowledged this problem for years but never
Speaker 1: come up with a solution. I don't want to have
Speaker 1: to debate about whether it's a problem or not, because
Speaker 1: most people listen to this program agree with you that
Speaker 1: there's a problem. The Treasury Secretary of the way Ken
Speaker 1: says he's cautiously hopeful we'll reach an agreement. Can you
Speaker 1: tell me what we're cautiously hopeful for. I want to
Speaker 1: talk about the results you expect to get in the
Speaker 1: coming weeks and months. What are you looking for, Dr Navarro? Well,
Speaker 1: it's not what I'm looking for. The President has said
Speaker 1: quite clearly two things. One like to see a hundred
Speaker 1: billion dollar reduction in the trade deficit this year. And
Speaker 1: he would also like to see a China which respects
Speaker 1: our intellectual property rights and basically becomes part of a
Speaker 1: global trading system where we have fair and reciprocal trade.
Speaker 1: I mean, it's not too much to ask, but look,
Speaker 1: we have a trade deficit in goods with China. That's
Speaker 1: sword now, the three hundred and seventy billion dollars a
Speaker 1: year by some calculations, one billion dollars of the trade
Speaker 1: deficit due to unfair trade practices, basically exports six thousand
Speaker 1: American jobs to China. If you if you just tallly
Speaker 1: that up, that's over two million jobs, good manufacturing jobs
Speaker 1: we've sent off shore to China a year because of
Speaker 1: that deficit, and it pushes down our wages. I mean,
Speaker 1: since China joined the World Trade Organization, let me just
Speaker 1: give you the statistic, because it's stunning. There's China joined
Speaker 1: the World Trade Organization two thousand one econ. He has
Speaker 1: grown from one trillion a year to twelve trillion growth
Speaker 1: rate where we went into an era basically the new
Speaker 1: normal two percent growth rate when the previous five gotta
Speaker 1: come on, Come on, we're but we're coming off of
Speaker 1: a hugely larger base. Dr Navarro, John B. Taylor, Stanford
Speaker 1: University and Paul Krugman of Princeton don't agree on whether
Speaker 1: the sun comes up in the East, but they both
Speaker 1: agree that Navarro econ. Yeah, they don't. I mean, good morning,
Speaker 1: Dr Taylor listening out in Stanford and Paul Krugman listens
Speaker 1: every day, Okay, but they both agree that naviro economics
Speaker 1: is flawed. How do you respond to the laureate from
Speaker 1: Princeton and the gentleman from Stanford that invented a lot
Speaker 1: of our monetary economics when they say naviro economics is wrong?
Speaker 1: How do you respond? It's quite simple. I'm of the belief,
Speaker 1: the strong belief, based on analytics, that trade deficits and
Speaker 1: trade imbalances create unemployment and low wages in the United States,
Speaker 1: and in doing so, they threaten our manufacturing base, a
Speaker 1: defense industrial base. And I'll tell you this. When I
Speaker 1: wrote that book you referenced earlier to come in China Wars,
Speaker 1: in two thousand six, everybody accused me of hyperbole. The
Speaker 1: right now, it's the conventional wisdom. So I would say
Speaker 1: Mr Taylor and Mr Kruman need to stop looking in
Speaker 1: their rear view mirror and start looking at what reality is.
Speaker 1: It's ironic to me that the American people as a
Speaker 1: whole are much better economists than a lot of people
Speaker 1: in my professions. American people understand that they're getting hammered
Speaker 1: by unfair and non reciprocal trade, which is why they
Speaker 1: elected a visionary and creation and President Trump. So if
Speaker 1: we wander back to Helping twelve and David Ricardo and
Speaker 1: we look at comparative advantage, I mean, but okay, so
Speaker 1: you don't want to go forward with the David Ricardo,
Speaker 1: I understand. I get that, but it's gonna be what's
Speaker 1: the comparative advantage of China. The comparative advantage of China
Speaker 1: over the rest of the world is they steal our stuff.
Speaker 1: They have a sweatshop labor, they don't respect any kind
Speaker 1: of environmental laws, and they engage in massive subsidization of
Speaker 1: their interest industries. And they use their state owned enterprises
Speaker 1: as weapons, not their own race to return but to
Speaker 1: capture industry. If we conflated then I go back to
Speaker 1: my ricardo, I go, that's true. I go back to
Speaker 1: my original idea, which is we've conflated a tariff discussion
Speaker 1: with what you just mentioned, which is technology and intellectual
Speaker 1: property theft. There's no everyone agrees that's going on. But
Speaker 1: if we conflated the two into an ugly trade war
Speaker 1: where they will respond to what the president does, well,
Speaker 1: here's what I was, Well, this is really important what
Speaker 1: I'm about. Please, I think everybody needs to stop talking
Speaker 1: about trade wars and trying to push up these tensions.
Speaker 1: If you look at what happened, for example, with the
Speaker 1: terrorifts that were imposed on solar panels and washing machines
Speaker 1: in January by the Trump administration, we had no trade wars.
Speaker 1: That we had was a significant influx of new foreign
Speaker 1: investment coming in to build American factories and allow American
Speaker 1: workers to make those products. Where we've had with the
Speaker 1: steel and aluminum terrorists. Besides the stout defense now of
Speaker 1: our aluminums steel industry is we're on the verge. It
Speaker 1: looks like of having an historic renegotiation of the Korean
Speaker 1: trade deal UH in a way which will both preserve
Speaker 1: the integrity of the defense of the aluminums steel industries
Speaker 1: and put an end to that awful trade deal. So
Speaker 1: if I mean, look, you're you're on Bloomberg, you're talking
Speaker 1: to investors. If I were to kind of look at
Speaker 1: the global chessboard as an investor, all I see is
Speaker 1: green lights for growth, tax cuts, deregulation, energy, balancing of
Speaker 1: the trade. What every every economic indicator that you're going
Speaker 1: to report this month is going to be strong enough
Speaker 1: the charge. Yeah, I'm gonna run out of time. Dr
Speaker 1: devar One last quick question. Can you support that we
Speaker 1: redo and join the new t P P Should we
Speaker 1: get back on board TPP? The President, in a historic
Speaker 1: decision literally his first business day and office, got out
Speaker 1: of that agreement for one simple reason. As it was structured,
Speaker 1: it would have been a death blow to our manufacturing sector,
Speaker 1: particularly to our auto and auto parts industries. So the
Speaker 1: President has said repeatedly we will negotiate with any country
Speaker 1: trade deals that are fair and reciprocal and then defend
Speaker 1: our manufacturing defense industrial base. And I would not presume
Speaker 1: to put words in the President's mouth other than what
Speaker 1: he has said himself. Dr Navarro, thank you so much
Speaker 1: for the spirited conversation. Greatly appreciated. Peter Navarro is President
Speaker 1: Trump's UH Assistant to the President rather for Trade and
Speaker 1: Manufacturing policy. John, I hope I wasn't too rude there.
Speaker 1: You would have been more gracious than I was. Oh not.
Speaker 1: We have attempted to find at least one of our
Speaker 1: guests who actually read the Spio came in from the cold.
Speaker 1: That Jim Hurtling, who joins us now from London, is well,
Speaker 1: I guess the spies are coming in, Jim, in different cities,
Speaker 1: back and forth. Russia responding quite seriously here in the
Speaker 1: last twenty minutes that they will respond to what they
Speaker 1: call a provocation. We've seen this before. But Jim, if
Speaker 1: we've seen a coordinated effort before, well, we've seen a
Speaker 1: coordinated effort in the form of economic sanctions a few
Speaker 1: years back. And what's interesting about this is that it's
Speaker 1: being you know, the press release and the announcements are coordinated, certainly,
Speaker 1: but you'll recall it was at the use some of
Speaker 1: a few days ago there was hardly unanimity about cracking
Speaker 1: down on on Russia. The Greeks and the the Italians
Speaker 1: certainly expressed them skepticism and and you know Alexa Cippers
Speaker 1: in Greece, you know, made a point of of congratulating
Speaker 1: Putin on his reelection and staying on the phone with
Speaker 1: him for some time. So, um, you know, we've seen,
Speaker 1: we've seen sanctions, we've seen punishment before. Uh. You know,
Speaker 1: the markets certainly seemed relatively nonplussed about it, so you know,
Speaker 1: we shall see, Lisa, here's a tweet from Richard hass
Speaker 1: so frequent guests. He's a president of consul and foreign relations,
Speaker 1: an ambassing let me quote it entirely, Lisa, decision to
Speaker 1: expel Russian diplomats less than optimal or creative, as will
Speaker 1: likely lead to Moscow responding in kind. Better to choose
Speaker 1: asymmetrical response, I eat, targeted economic and travel sanctions, increased
Speaker 1: public diplomacy versus Putin, etcetera. So that costs fall mostly
Speaker 1: on Russia. Although this goes to something that Jim said,
Speaker 1: which is the US is coordinating with the European Union
Speaker 1: and sort of displaying this support that we haven't seen
Speaker 1: to such a decree in the Trump era. I'm wondering, Jim,
Speaker 1: how much is this being viewed from the European Union angle?
Speaker 1: As being a huge vote of confidence in them by
Speaker 1: President Trump, regardless of whatever the reaction is or whatever
Speaker 1: he should have done, perhaps diplomatical, you know, it's seen
Speaker 1: is certainly a welcome vote of confidence. But as we've
Speaker 1: seen with the Trump administration when it comes to Russia
Speaker 1: for the past few months, eighteen months, as long as
Speaker 1: he's been in office, uh, it hasn't There hasn't always
Speaker 1: been a lockstep movement between the president and his own
Speaker 1: administration in terms of foreign policy, in terms of how
Speaker 1: it how it behaves towards traditional friends and foes. Ald
Speaker 1: On of a second, so are you suggesting that this
Speaker 1: move to expel sixty Russian diplomats came from someone other
Speaker 1: than President Trump and that he could potentially take actions
Speaker 1: to undermine that and upcoming down. No, No, this certainly
Speaker 1: seems uh um like it was a unified move by
Speaker 1: the administration. But you know, as we saw as recently
Speaker 1: his last week when his own uh White House leaked
Speaker 1: that he ignored uh instructions not to congratulate Vladimir Putin,
Speaker 1: he has continued on the on one track to try
Speaker 1: and and and so um strong personal relationships with with Putin,
Speaker 1: regardless of what the national security apparatus says and does.
Speaker 1: All right, so what's the next step that the European
Speaker 1: Union is preparing for girding itself for from Russia. Well,
Speaker 1: it'll be probably a tip for tat the UH The
Speaker 1: Russians will probably expelled some some European uh quote unquote
Speaker 1: diplomats stroke spies, and then they'll probably settle into until
Speaker 1: the business returns to normal again because the economic ties
Speaker 1: are are pretty profound and they go both ways. I mean,
Speaker 1: it always comes back to the natural gas debate. It
Speaker 1: gets cold in Europe last I knew, and they provide
Speaker 1: the heat, don't they. I mean, that's the ultimate diplomatic
Speaker 1: and strain is the heating of houses in Europe. Right,
Speaker 1: That's right. And the UK in particular, Um, didn't you
Speaker 1: know they rely on capital flows, international capital flows, Russian
Speaker 1: capital flows into their money management industry. We just saw
Speaker 1: last week our our colleagues here in London did a
Speaker 1: terrific story but pointing out that you know, these UK
Speaker 1: money management firms and in fact Salisbury where that the
Speaker 1: poison attack took place, their money is invested through their
Speaker 1: money managers there. Their money is invested in Russias, Burbank
Speaker 1: and gas Prom and Russian sovereign bonds because you know
Speaker 1: they have to be Now, let me do a quick
Speaker 1: market check here, particularly after what we saw Thursday Friday.
Speaker 1: We welcome all of you worldwide. Jim Hurtling with us.
Speaker 1: James Hurtling off our London desk with Lisa Brando Woodson,
Speaker 1: Tom Keen. If the Dow rather up four hundred seven
Speaker 1: points almost to twenty four thousand seven, and you see
Speaker 1: it with the SMP and up forty one points to
Speaker 1: six to nine on the SMP, the VIX comes in
Speaker 1: two point six big figures twenty two point two nine
Speaker 1: yields up. It's a higher yield environment risk on all
Speaker 1: the way. Lisa, well, we should just point out to
Speaker 1: our seeing huge gains and some mic and some in
Speaker 1: some tech names, Microsoft up more than five percent, even
Speaker 1: Facebook shares gaining, so you have to wonder, oh it's
Speaker 1: now down. It started the day up. But you can see,
Speaker 1: you know, Alphabet for example, also seeing some firmness. So
Speaker 1: it's just sort of interesting reversal and fortunes from from
Speaker 1: last week. Jim her Lane with us here as we
Speaker 1: look at these Russian headlines as well, Jim out with
Speaker 1: free trade. We talked to Peter Navarro this morning and
Speaker 1: Christine Lagarde obviously two very very different views there on trade.
Speaker 1: How is the Trump trade policy playing as you see
Speaker 1: it across the London and European desks. Well, here in Europe, certainly,
Speaker 1: there's certainly some relief that they seem to have have
Speaker 1: dodged the bullet. But you know, when it comes to
Speaker 1: Trump and foreign policy there from Europe, um probably confusion
Speaker 1: is the best word. They don't really know where he's
Speaker 1: coming from, and you know, sort of his his Madman
Speaker 1: theory of foreign policy seems to um be how it's
Speaker 1: how it's seen here. They never know which who was
Speaker 1: going to drop in, which Trump you're gonna get? Sounds
Speaker 1: like New York as well. Jim Wortly, thank you so much.
Speaker 1: We appreciate it. One of our senior editors in London,
Speaker 1: with the decades of perspective in euro about the Paris
Speaker 1: and London as well. Thanks for listening to the Bloomberg
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane. Before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.