Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: President Donald Trump is doubling down on global tariffs, even
Speaker 2: after his signature tariff strategy was ruled illegal by the
Speaker 2: Supreme Court. I will sign in order to impose a
Speaker 2: ten percent global tariff under Section one twenty two. Immediately
Speaker 2: after the Court decided that the President couldn't use broad
Speaker 2: emergency powers to impose tariffs, Trump announced a new ten
Speaker 2: percent global levy using a different justification, and just a
Speaker 2: day later, Trump said he would ratchet up the tariff
Speaker 2: rate to fifteen percent for one hundred and fifty dates,
Speaker 2: the legal maximum that can be in place without congressional approval.
Speaker 3: Now he's focused on a new statute never been tested before,
Speaker 3: that would allow him to raise tariffs to fifteen percent,
Speaker 3: but only in certain situations.
Speaker 2: The Trump administration has also the US Trade Representative to
Speaker 2: launch new accelerated Section three oh one investigations, which would
Speaker 2: allow the US to impose retaliatory tariffs on countries whose
Speaker 2: actions it deems unreasonable or discriminatory against US trade. For
Speaker 2: US trading partners around the world, it's causing tariff whiplash
Speaker 2: all over again. On Monday, the European Union postponed a
Speaker 2: vote on the trade deal and negotiated with the US
Speaker 2: late last year, saying it needs clarity on the Trump
Speaker 2: administration's trade policies first. India's trade delegation has also postponed
Speaker 2: a trip to the US to finalize a trade deal,
Speaker 2: which had been set for later this week.
Speaker 4: I don't think we're going to see completely fully renegotiated deals,
Speaker 4: but the countries that are in this process are going
Speaker 4: to want to know the details of what they're going
Speaker 4: to roll out before they sign on the dotted line
Speaker 4: of anything with the Trump administration.
Speaker 2: Brendan Murray oversees Bloomberg's trade coverage from London.
Speaker 4: If you're sitting in Brussels or Beijing right now, you're saying,
Speaker 4: perhaps maybe we have more leverage than we did last week.
Speaker 1: If you're Beijing, you're sort of now on a level
Speaker 1: playing field with US allies.
Speaker 2: And Jenny marsh oversees Bloomberg's coverage of Greater China's economy
Speaker 2: and politics.
Speaker 1: You've gone from the biggest target when Trump first came
Speaker 1: into now sort of you know, you have a fairly
Speaker 1: level playing ground.
Speaker 2: She says, Like the EU, China sees the Supreme Court's
Speaker 2: decision as a loss of leverage for the US and
Speaker 2: a major win for China's trade ambitions, head of a
Speaker 2: high stakes meeting between President Trump and President shi Jinping
Speaker 2: late next month.
Speaker 5: So what was achieved by the trade war?
Speaker 1: Yea, what was achieved? I think China realized is not
Speaker 1: half as dependent on America as everyone thought.
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah
Speaker 2: Holder today and on the show, my colleague Wan Ha
Speaker 2: who hosts The Big Take Asia podcast sits down with
Speaker 2: Brendan Murray in London and Jenny Marsh in Hong Kong
Speaker 2: to discuss what the end of the US's reciprocal tariffs
Speaker 2: and the potential for a new global tariff rate needs
Speaker 2: for America's trading partners across Asia and around the world.
Speaker 5: Thank you so much, both of you for making time
Speaker 5: to join us. Between the three of us, we've got
Speaker 5: big parts of the world covered. Rendon, you're based in London, Jenny,
Speaker 5: you're here with me in Hong Kong. Before we get
Speaker 5: into what this ruling means for countries and manufacturers, I
Speaker 5: have to ask what's been the reaction to the Supreme
Speaker 5: Court ruling on the ground where you are.
Speaker 4: I think a lot of people have more questions right
Speaker 4: now than they do answers. President Trump came out pretty
Speaker 4: assertively after the Supreme Court ruled against him and said,
Speaker 4: in effect, nothing's changed. I still have tariff authorities, and
Speaker 4: I may even use them to a greater degree than
Speaker 4: I did before. The story is the same. The US
Speaker 4: is going to use tariffs to try to reshore manufacturing,
Speaker 4: create factory jobs, and essentially, as President Trump would say,
Speaker 4: rebalance the global trading system back in the US's favor.
Speaker 5: That's interesting. So he's trying to say nothing's changed here.
Speaker 4: Yeah, nothing's changed, but you know, in a sense, a
Speaker 4: lot of things have changed. The President Trump, by most accounts,
Speaker 4: has lost a lot of leverage here.
Speaker 5: Jenny, what about here in Hong Kong and broadly in China.
Speaker 5: What's been the reaction.
Speaker 1: It's been pretty mute in measured, I would say. But
Speaker 1: also when you sort of look at this, China sort
Speaker 1: of came out from the ruling as one of the winners.
Speaker 1: So you know, in a way, it's half of them
Speaker 1: to sort of come out sort of threatening anything because
Speaker 1: they've probably benefited from the Supreme Court ruling. I think
Speaker 1: you know, particularly ahead of the she Trump summit as well,
Speaker 1: they have to be thinking this sort of weekends Trump's hand,
Speaker 1: just a couple of weeks before he flies into Beijing.
Speaker 1: I think that being said, China realizes this still is
Speaker 1: a Section and three zero one investigation pending against them,
Speaker 1: so in that sense they're actually weaker than other countries,
Speaker 1: and that this sort of investigation has already sort of
Speaker 1: been in trained for months that could be expedited now
Speaker 1: so they could quickly see more tariffs, and those tariffs
Speaker 1: under that investigation have no upper limit and they're pretty sticky.
Speaker 1: The ones imposed under Section three zero one from Trump's
Speaker 1: first term is still in place, so I think that
Speaker 1: probably also is why they're sort of waiting and seeing
Speaker 1: before coming out with a sort of a strong reaction.
Speaker 1: And then I think for exporters in this region, particularly
Speaker 1: sort of ones that had the China plus one strategies
Speaker 1: for them, I think there's a big question mark now
Speaker 1: over was it a good idea to invest in new
Speaker 1: factories in Cambodia and Vietnam? Is it as useful as
Speaker 1: I thought it was going to be?
Speaker 5: Jenny, who are the winners in this? And what does
Speaker 5: this victory mean for them.
Speaker 1: The biggest one is so far is China, India, and Brazil.
Speaker 1: They were facing the highest tariffs and they're the ones
Speaker 1: that have seen the biggest sort of percentage point decreases.
Speaker 1: But I think everyone's aware that this is just the
Speaker 1: holding pattern, right. This is what Trump has done is
Speaker 1: sort of to bridge the gap until he can sort
Speaker 1: of then use his other tools to get tariffs really
Speaker 1: where he wants them, And it's going to be much
Speaker 1: more complicated and harder for business to navigate because rather
Speaker 1: than the sort of broad tariffs, it's going to be
Speaker 1: this sort of like jumble of different sort of sectorial tariffs.
Speaker 1: So Japan, South Korea, and Taiwan the big thing they
Speaker 1: are looking at still now is a section two three
Speaker 1: two investigation into chips, And for Taiwan, actually that was
Speaker 1: always the case because the trade deal they struck had
Speaker 1: a carve out for chips, which is sort of the
Speaker 1: biggest thing in the export to the US. So in
Speaker 1: some respects it was always going to be around these
Speaker 1: specific investigations into sort of really contentious sectors, and I
Speaker 1: think that hasn't really changed. So even though it's sort
Speaker 1: of a headline win in some of these ways. For
Speaker 1: some of these countries there are sort of more potent
Speaker 1: measures down the pipeline and Brendan.
Speaker 5: If we talk about winners someone's losing, which countries would
Speaker 5: you place on that list and why?
Speaker 4: The United Kingdom for months has said we negotiated the
Speaker 4: best deal of a ten percent rate with President Trump
Speaker 4: last year. Now this across the board fifteen percent. Does
Speaker 4: that mean they're one of the losers in this? Are
Speaker 4: they going to get a special carve out in however
Speaker 4: the implementation from the White House goes ahead. We haven't
Speaker 4: talked yet about Canada and Mexico. They've been carved out
Speaker 4: of the fifteen percent because they're USMCA partners with the US,
Speaker 4: so in that case they're not really delta setback. But
Speaker 4: they are in the process of renegotiating that North American
Speaker 4: Free Trade Agreement, and Trump, with all of his displeasure
Speaker 4: with the Supreme Court, may find Canada and Mexico as
Speaker 4: outlets to vent his frustration at because he has really
Speaker 4: gone after Canada recently Mexico to a lesser degree. But
Speaker 4: if those negotiations were expected to go smoothly before, now
Speaker 4: the President without his favorite tariff tool has got to
Speaker 4: take another approach, and those two economies could be in
Speaker 4: for a rough ride over the coming months.
Speaker 5: And it seems like countries like Japan and South Korea
Speaker 5: that had negotiated a fifteen percent terror freight, it looks
Speaker 5: like they've now just also lost their competitive advantage as well,
Speaker 5: right if everyone else gets fifteen percent?
Speaker 1: Yeah, absolutely. And I think if you're these trade negotiators
Speaker 1: and you've spent like the last year painsaking me, having
Speaker 1: these meetings and sort of working out these deals, convincing
Speaker 1: your companies to get behind you, it must be so
Speaker 1: frustrating to wake up and to sort of realize that
Speaker 1: hard work has sort of been for nothing. At the
Speaker 1: same time, it makes it harder for Japan South Korea
Speaker 1: to sort of say that their trade deals are invalid
Speaker 1: because the tariffs are actually where they negotiated them to
Speaker 1: be at. So in a way, it's kind of stays
Speaker 1: quo for them.
Speaker 2: After the break, how the last year of tariff drama
Speaker 2: has shifted the global trade balance and what consequences the
Speaker 2: latest twist could have for the Shi Trump meeting next month,
Speaker 2: We're back with more from Big Take Asia host juanha
Speaker 2: in conversation with Brendan Murray, who runs Bloomberg's trade coverage,
Speaker 2: and Jenny Marsh, who covers the economy of Northern Asia
Speaker 2: from Hong Kong.
Speaker 5: Certainly, the US as it stands is still at this
Speaker 5: point the biggest destination for global manufacturers. To what degree
Speaker 5: do you think the trade war changed that.
Speaker 4: We just got the US's year end trade balance figures,
Speaker 4: and if you look at the top ten US trading partners,
Speaker 4: they really didn't shift around all that much. China's share
Speaker 4: of trade fell quite a bit. It's been falling for
Speaker 4: a couple of years now as the tariffs you know,
Speaker 4: take effect, But it's still Canada and Mexico at the top.
Speaker 4: You know, a couple of European countries, South Korea, Japan
Speaker 4: are in the top ten. Nothing has really changed to
Speaker 4: a significant degree in a sort of like structural way.
Speaker 4: This is much more of a slow burn change in
Speaker 4: the global trading system than a sudden shock to the system.
Speaker 4: But we're heading into a new chapter now, and I
Speaker 4: guess in.
Speaker 5: Some ways I mean that the trade war has also
Speaker 5: caused this fundamental shift as well, right, I mean in
Speaker 5: terms of certainly companies feeling that they can't rely just
Speaker 5: on the US as the main dominant market. They've got
Speaker 5: to find other customers in other parts of the world. Jenny,
Speaker 5: how has a country like China taken advantage of this
Speaker 5: asymmetry in global trade.
Speaker 1: I think China is one of the best and most
Speaker 1: stock examples of just trade rerouting. You know, by the
Speaker 1: end of last year, China's exports to the US the
Speaker 1: kind of just attempt center its total exports, and that's
Speaker 1: half the first trade war, you know, and you saw
Speaker 1: the surge and exports instead to Europe, Latin America, Africa.
Speaker 1: Export has just found other markets. And then you know,
Speaker 1: China finish the year with that one point two trillion
Speaker 1: dollar trade surplus, which no one was expecting it would
Speaker 1: be able to record in a year where it's facing
Speaker 1: the highest US tariffs, you know, in nearly a century.
Speaker 1: So they prove that you can diversify and find other markets.
Speaker 1: And it's also then you know, it's taken an advantage
Speaker 1: of not only the trade war, but I think just
Speaker 1: the general volatility of Trump right just sort of warm
Speaker 1: its relationships and warm its trade ties with other countries.
Speaker 1: You know, you saw Mark Carney come at the beginning
Speaker 1: of this year and talk about a new world order
Speaker 1: in China striking a bunch of trade deals with Beijing,
Speaker 1: and then Beijing kind of you know, handing out an
Speaker 1: olive branch by rolling back tariffs that it had imposed
Speaker 1: on Canada, and then Canada is saying, okay, right, you know,
Speaker 1: we're going to let in a certain quotua of Chinese
Speaker 1: electric vehicles into Canada, which something they had resisted to
Speaker 1: align with the US. That seemed like a landmark moment.
Speaker 1: And then you had kist Arma coming just very shortly
Speaker 1: afterwards and trying to achieve something similar. So I think
Speaker 1: China sees that other countries now need to diversify, and
Speaker 1: it's repositioning itself as sort of a land of opportunity
Speaker 1: at a time when people really are desperate from new
Speaker 1: growth drivers and are now worlling to sort of overlook
Speaker 1: some of the different issues or the difficult issues that
Speaker 1: has sort of stopped them being so favorable to trade
Speaker 1: with Beijing, such as the war in Ukraine, human rights issues.
Speaker 1: People are now kind of they're being more pragmatic because
Speaker 1: it's a more kind of dangerous world in terms of trade,
Speaker 1: going into the trade war economists for saying tariffs at
Speaker 1: sixty percent are going to like decimate the Chinese economy.
Speaker 1: No way, They're going to sort of come out of
Speaker 1: this unscathed. Quite stark economic predictions. None of that came
Speaker 1: to pass. You know, exports surged and they hit their
Speaker 1: growth target of about five percent, so it didn't really
Speaker 1: have a negative impact on China at all.
Speaker 5: In some ways. I mean, that's a feather in China's
Speaker 5: cap r.
Speaker 1: Absolutely.
Speaker 5: Yeah.
Speaker 1: I think the trade will went better for shug Pain
Speaker 1: than he probably ever realized it would do, and it
Speaker 1: probably has rewired trade. Like if those tyrists went away,
Speaker 1: now what company start selling back into American markets? Maybe
Speaker 1: they would and they'd have even more trade. You know,
Speaker 1: it's hard to predict.
Speaker 5: And Brendan, what's your take on how global trade is doing?
Speaker 5: You know, now that we're nearly a year since Celebration Day.
Speaker 4: Yeah, I mean, if you look at it on a
Speaker 4: sort of annual basis, global trade has held up pretty well.
Speaker 4: But if you go back and look at how it
Speaker 4: transpired over twenty twenty five, it was the front loading.
Speaker 4: It was. It was strong in the first half of
Speaker 4: the year, and then it kind of softened toward the
Speaker 4: end of the year. I think we could be in
Speaker 4: for something similar that a lot of companies will be
Speaker 4: looking at this fifteen percent rate and say this might
Speaker 4: be as good as it gets for the next one
Speaker 4: hundred and fifty days. So let's place our orders now
Speaker 4: so we could see after Chinese New Year, you know,
Speaker 4: a rush to get items in from markets in Asia
Speaker 4: into the US. But that's just going to complicate the
Speaker 4: ability of governments and central banks and economists and markets
Speaker 4: to figure out what is the clear read on the
Speaker 4: global economy. Is it being sort of propped up right
Speaker 4: now by you know, some some panic purchasing and ordering
Speaker 4: and inventory stocking, or is there some genuine demand there.
Speaker 5: Jenny. Trade obviously goes hand in hand with geopolitical ties.
Speaker 5: How might the trade shifts affect political ties between the
Speaker 5: US and its biggest trading partners.
Speaker 1: I think it's already having an impact, right because it's
Speaker 1: this volatility. So US allies are realizing that the US
Speaker 1: is not as a reliable partner, not just in terms
Speaker 1: of sort of military spending, but in terms of trade
Speaker 1: as well. You know, you embrace Trump's trade war, you say, okay,
Speaker 1: we'll make the deals we'll do the investment, we'll put
Speaker 1: in the and then turns out they aren't legal after all,
Speaker 1: and then you have to sort of renegotiate and go
Speaker 1: back all over again. So I think it just dnse
Speaker 1: US credibility. No one's going to turn their back on
Speaker 1: the US. It's too powerful, and it still is a
Speaker 1: huge military guarantee, particularly countryside Japan in this region. But
Speaker 1: at the same time, there is a clear need to
Speaker 1: make sure you have a range of partners in all
Speaker 1: of your eggs and not just in one basket.
Speaker 5: Now President Trump is expected to meet President she at
Speaker 5: a summit Embinging at the end of March. How does
Speaker 5: the Supreme Court ruling change the balance of power at
Speaker 5: the negotiating table when they meet.
Speaker 1: This could be the sort of the first test, if
Speaker 1: you like, real test of how the Supreme Court sort
Speaker 1: of changes some of these deals. It will be interesting
Speaker 1: to see sort of how strongly the Chinese play their hand.
Speaker 1: On the other hand, I don't think they want to
Speaker 1: rock the boat too much. You know, the US channel
Speaker 1: relationship has kind of calibrated nicely, and even this year
Speaker 1: you've seen Trump, you know, take on so many parts
Speaker 1: with his claims around Greenland, you know, so much term
Speaker 1: at European partners admid all of that. It has stayed
Speaker 1: quite calm with the Chinese, and I think both sides
Speaker 1: are very committed to sort of keeping that stability going.
Speaker 1: So maybe they just decide the status quoba is a
Speaker 1: good thing. You know, it's a beat to have a
Speaker 1: bed in the hand and two in the tree, and
Speaker 1: they keep sort of targeting that. But certainly she has
Speaker 1: more options now than he did a few weeks ago.
Speaker 5: What would be the dream scenario for a president Shoe.
Speaker 1: Hu Jinping has two things he really cares about getting
Speaker 1: from the US. It has access to the highest end
Speaker 1: in video chips, and it is some kind of concession
Speaker 1: on Taiwan. And I think if you're sat in beaging
Speaker 1: thinking what's the biggest thing I can get here? If
Speaker 1: it's my best moment, then you're going to push. And
Speaker 1: Trump has already signaled that he actually is. He's much
Speaker 1: more open to giving them those top chips than any
Speaker 1: other US leader or politician is. And then on Taiwan,
Speaker 1: they want to stronger language around opposing Taiwan independence, which
Speaker 1: would be a big blow for Taiwan if that language
Speaker 1: changes and They want Trump to stop selling Taiwan so
Speaker 1: many weapons.
Speaker 5: So he could actually get what he wants.
Speaker 1: It should Yeah good.
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 2: The show is hosted by me, David Gera, and Juan ha.
Speaker 2: There's much more on Bloomberg dot com. Get unlimited access
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Speaker 2: We'll be back tomorrow.