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Speaker 1: Bloomberg Audio Studios, podcasts, radio News.

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Speaker 2: I just signed the largest trade deal in history, I

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Speaker 2: think maybe the largest deal in history with Japan.

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Speaker 3: With about a week until President Trump's August first deadline

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Speaker 3: for trading partners, Japan and the United States have announced

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Speaker 3: a new agreement.

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Speaker 4: There's a photo circulating on Twitter from Dan Scavino and

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Speaker 4: you actually see a sharpie x out of some what

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Speaker 4: looks like preliminary deals for even more concessions with Japan.

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Speaker 3: My colleague Amrie Hordern interviewed Treasury Secretary Scott Bessont on

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Speaker 3: Bloomberg Television this morning.

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Speaker 4: I want to ask you about this fifteen percent tariff free.

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Speaker 4: Is that the new floor now for trading partners when

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Speaker 4: you're going into these negotiations.

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Speaker 5: Well, I think it's very important to note that fifteen

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Speaker 5: percent for Japan for reciprocal tariffs for autos, that is

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Speaker 5: a different kind of deal. But because the Japanese proposed

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Speaker 5: a very innovative solution.

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Speaker 3: Notes in marker last minute maneuvering different kinds of deals.

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Speaker 3: These are the hallmarks of trade negotiations in the Trump era,

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Speaker 3: along with policy pronouncements on social media and in letters.

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Speaker 3: Suffice to say, this is not the way trade talks

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Speaker 3: traditionally unfold. That's something I heard directly from two former officials,

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Speaker 3: both of whom oversaw US trade policy.

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Speaker 2: Bob Zelik I was the US Trade Representative from two

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Speaker 2: thousand and one to early two thousand and five. I

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Speaker 2: also worked on trade issues in the Bush forty one administration,

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Speaker 2: particularly NAFTA in Your Way round, which has created the

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Speaker 2: W two.

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Speaker 6: And Mike Frohman, I was US Trade Representative between twenty

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Speaker 6: thirteen and twenty seventeen, and I too worked on trade

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Speaker 6: issues before that as Deputy National Security Advisor for International

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Speaker 6: Economic Policy in Obama's first term.

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Speaker 3: Frohman and Zelik spent years criss crossing the globe in

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Speaker 3: pursuit of trade deals. As US Trade representative, they argued

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Speaker 3: with trading partners over semantics, words and phrases, and agreements,

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Speaker 3: some of which were thousands of pages long. I wanted

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Speaker 3: to bring these former ustrs together to ask them what

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Speaker 3: they make of President Trump's trade war and what they

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Speaker 3: think will happen next. Zelik says, it continues to be

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Speaker 3: tough to identify the president's motivations.

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Speaker 2: What's your goal if you're going to evaluate this in

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Speaker 2: six months or twelve months. Trump sometimes says, well, it's

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Speaker 2: the rai's revenue. Well, then you're not going to have

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Speaker 2: to block all trade. Sometimes he says it's to protect

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Speaker 2: specific industries. Sometimes he says it's the lower barriers. Sometimes

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Speaker 2: he says it has nothing to do with trade. It's

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Speaker 2: because he doesn't like the Brazilian leader's politics. He's worried

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Speaker 2: about sort of pentanol instead of other issues. So it's

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Speaker 2: a moving target.

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Speaker 3: Frohman represented the US in negotiations over the TPP, the

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Speaker 3: Trans Pacific Partnership that was a trade agreement with a

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Speaker 3: dozen Pacific rim countries that make up forty percent of

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Speaker 3: the world's economy. The US never ratified it, in part

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Speaker 3: because of political pushback from President Obama's own party, something

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Speaker 3: President Trump and his trade team haven't had to deal with.

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Speaker 6: I think we're involved in a grand experiment, and sometimes

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Speaker 6: I think to myself, Gee, as a US trade representative,

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Speaker 6: I would have loved to have been able to threaten

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Speaker 6: and impose tariffs as a way of increasing my leverage

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Speaker 6: at the negotiating table. And we'll see. It does create

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Speaker 6: potential tensions with allies and partners. What's unclear is how

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Speaker 6: far he can push it.

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Speaker 3: I'm David Gera, and this is the big take from

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Speaker 3: Bloomberg News Today. On the show, we bring together two

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Speaker 3: former US trade representatives, one who worked for a Republican

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Speaker 3: president and one who worked for a Democrat, to discuss

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Speaker 3: President Trump's efforts to reshape the global economy. The first

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Speaker 3: thing I wanted to know was if anything President Trump

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Speaker 3: has done when it comes to trade policy was expected.

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Speaker 3: If this trade war has played out the way Mike

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Speaker 3: Frohman and Bob Zelik thought it would. Well, here's what

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Speaker 3: Zelik told me.

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Speaker 2: Well, it's not a total surprise because Trump has had

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Speaker 2: a strong protectionist streak since the nineteen eighties, first focus

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Speaker 2: on Japan.

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Speaker 3: In his first term.

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Speaker 2: Bob Leithheiser, his trade representative, had a protectionist streak. But

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Speaker 2: Bob also knew how to conclude deals, and so he

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Speaker 2: redid the NAFTA as the USMCA, he worked out some

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Speaker 2: deals with Korea. Jamison Greer, who is the new USDR,

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Speaker 2: had been Bob's chief of staff. He's a very competent

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Speaker 2: sort of trade official, but he works in an environment

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Speaker 2: now where I think President Trump has a greater sense

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Speaker 2: of self confidence that people around him are loyalists, and

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Speaker 2: so it's much more haphazard. So I call it chaotic protectionism.

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Speaker 2: It's not just protectionism, it's the chaos. And that's important

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Speaker 2: because it's not only the economic effects of rising costs

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Speaker 2: and inflation, but it's the uncertainty that it's created, and

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Speaker 2: it's the danger with the types of relationship you have

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Speaker 2: with your allies. So at the same time you want

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Speaker 2: to get Japan to be spending more on defense, why

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Speaker 2: would you be sort of getting in a big fight

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Speaker 2: with them or the South Koreans. He likes the uncertainty.

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Speaker 2: Businesses don't like the uncertain neebird, but for him, it's

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Speaker 2: part of his negotiating model.

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Speaker 3: Like Zeleeg, Mike Frowman has been studying the president's negotiating model,

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Speaker 3: and Froeman sees a through line.

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Speaker 6: I think the President's actually been quite clear he has

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Speaker 6: at least three objectives when it comes to tariffs. One

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Speaker 6: is just leverage. Leverage for its own sake, whether it's migration, fentanyl,

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Speaker 6: or the judicial system in Brazil, or most recently, the

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Speaker 6: idea that we're going to impose tariffs as secondary sanctions

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Speaker 6: on countries that do business with Russia if we don't

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Speaker 6: have a peace agreement with it. And by the way,

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Speaker 6: on leverage, I think so far it's been quite successful.

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Speaker 6: All these countries have come to the table. The Europeans

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Speaker 6: who used to say will never negotiate with the US

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Speaker 6: under the threat of tariffs, got on a plane, came

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Speaker 6: to Washington and are begging to have meetings with members

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Speaker 6: of the administration. Two Revenue revenue so far also successful.

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Speaker 6: One hundred million dollars one hundred billion dollars in the

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Speaker 6: first six months, slated.

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Speaker 1: To go to three hundred billion.

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Speaker 6: You know, if you end up cutting off all trade

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Speaker 6: by raising tariffs to fifty percent or higher, you're not

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Speaker 6: going to collect tariff revenue. But in the meantime it

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Speaker 6: is raising significant revenue and beyond what anybody expected.

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Speaker 1: And Third in this I think I.

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Speaker 6: Had thought was his most important priority is the reindustrialization

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Speaker 6: of the United States economy and increasing manufacturing in the US.

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Speaker 6: I think that's a much harder one. We are seeing

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Speaker 6: individual anecdotal announcements of companies willing to expand their existing

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Speaker 6: production or maybe a new factory or two, but whether

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Speaker 6: or not putting up a tariff wall, a tariff wall alone,

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Speaker 6: as opposed to a broader industrial policy changes the nature

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Speaker 6: of the US economy very much is an open question,

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Speaker 6: and I think politically the interesting thing is that under globalization,

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Speaker 6: when Bob was USTR, when I was USTR, the challenge

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Speaker 6: was the benefits of globalization were why spread, but largely invisible.

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Speaker 6: Nobody walked out of a Walmart and said this is wtses.

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Speaker 6: But the costs of globalization were very visible. A factory

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Speaker 6: closing in your town acutely felt by the workers of

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Speaker 6: that town, and that town didn't always get the follow

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Speaker 6: on investment, and so you saw a downward spiral. More generally,

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Speaker 6: here we see the opposite. The costs of the Trump approach,

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Speaker 6: I think are going to be seen and felt by

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Speaker 6: everybody and be largely visible. And if he's successful in

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Speaker 6: increasing manufacturing in the US, we're not going to know

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Speaker 6: that for four, six or eight years, and it's going

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Speaker 6: to affect a relatively small number of workers and a

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Speaker 6: relatively small number of industries. That's a hard thing to

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Speaker 6: manage politically.

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Speaker 2: Mike's trying to be even handed. He's the president of

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Speaker 2: Council on Foreign Relations.

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Speaker 1: Well, guilty is charged.

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Speaker 2: The revenue is the teriff revenue is a percentage of

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Speaker 2: US revenue was about eighty billion dollars. It was two percent, Okay,

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Speaker 2: the numbers we're talking about, maybe it'll get us up

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Speaker 2: to four or five percent. Okay, these are not significant numbers.

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Speaker 2: And by the way, if the economy slows, what will

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Speaker 2: you do to the revenues you would otherwise get from income?

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Speaker 2: So I think this is a faulty, overstated argument about

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Speaker 2: what can be accomplished in this session in terms of

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Speaker 2: your second point was leverage. So again you have to

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Speaker 2: ask leverage for what. Okay, so what market have we

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Speaker 2: really opened yet?

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Speaker 6: What have we that's not a skull? What about fence

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Speaker 6: and all? What about migration?

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Speaker 2: Well, frankly, I think the way you do with migration

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Speaker 2: is to take a different policy towards the border, which

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Speaker 2: you will do, and I don't think it's driven by

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Speaker 2: a strait policy. Going back then to the sort of

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Speaker 2: industrialization point, Look, the United States economy has transformed itself.

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Speaker 2: This started really kind of in the seventies, and so

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Speaker 2: the rest belt story is not sort of a recent story,

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Speaker 2: and it's the story of changing for manufacturing and services.

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Speaker 2: It's a story of how people adjust in the process.

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Speaker 2: It's the story of facing competition. So I don't drive

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Speaker 2: a GM car from the nineteen seventies. The Japanese competition

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Speaker 2: was a good thing. And by the way, all these

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Speaker 2: competitions from other countries, these are components in supply and logistics.

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Speaker 2: So there's been lots of work done. If you put

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Speaker 2: the tariffs cities talking about on steel, you're likely to

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Speaker 2: maybe help save thirty or forty thousand steel jobs, You're

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Speaker 2: going to cost hundreds of thousands of other jobs or

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Speaker 2: people who use steel. So it's an interconnected economic system.

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Speaker 2: Trump and Biden, frankly, have tried to restore the wonderful,

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Speaker 2: nostalgic economy of the nineteen fifties. I like the nineteen fifties.

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Speaker 2: I was born in the nineteen fifties. It's not the

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Speaker 2: economy I want to have in the future. What he's

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Speaker 2: missing is all the service sector where we have surpluses.

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Speaker 2: If you notice when he focuses on trade deficits. By

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Speaker 2: the way, that's another one of his objectives. So you

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Speaker 2: have to ask how he's going to achieve that is

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Speaker 2: that he ignores the service sector. So look, this is

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Speaker 2: partly his own political sense of using America's economic power,

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Speaker 2: the test will be and he has a similar view

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Speaker 2: about military power. He won't over use military power. But

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Speaker 2: as you saw or the run at the right moment,

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Speaker 2: he wants to show we're a powerful country. But I

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Speaker 2: want to keep pressing on this question to achieve what.

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Speaker 6: Well, let me let me first of all, I don't disagree.

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Speaker 6: I never disagree with Bobs. I agree with virtually everything

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Speaker 6: he said. But let me let me add a corollary,

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Speaker 6: because I think one thing has very much changed in

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Speaker 6: the last ten years, which is that we have become

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Speaker 6: painfully aware of the dependencies that we have on China.

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Speaker 6: China as the world's manufacturing floor was so compelling that

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Speaker 6: every company around the world that they could moved a

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Speaker 6: good part of their supply chain to China. And it

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Speaker 6: wasn't just cheap labor, it was the infrastructure, it was

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Speaker 6: the management practices. It became a very powerful driver of manufacturing.

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Speaker 6: Then we found, whether it was because of natural disasters

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Speaker 6: or COVID or an increasing competitive military relationship with China,

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Speaker 6: that we became overly dependent on them. And we see

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Speaker 6: that now China has various leverage over us. So I

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Speaker 6: agree with Bob, we don't want to go back to

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Speaker 6: the nineteen fifties. However, do we want to be dependent

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Speaker 6: on China for the magnet that goes in the nose

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Speaker 6: cone of our missiles. That seems to me something that

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Speaker 6: we should probably build here in the United States and

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Speaker 6: figure out a way of doing it. And there will

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Speaker 6: be some number of products that will say, for national

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Speaker 6: security reasons or for broadly critical national competitiveness reasons, we

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Speaker 6: need to have US capacity. And there may be other

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Speaker 6: products where we can say we may not be able

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Speaker 6: to do this ourselves, or may not make economic sense

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Speaker 6: to do it ourselves, but as long as we can

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Speaker 6: rely on a close ally or partner other than China,

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Speaker 6: that that would be sufficient for our national security and

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Speaker 6: national competitives reasons.

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Speaker 1: I think that is what Trump. He may not.

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Speaker 6: Articulate it that way, but the best reading of what

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Speaker 6: he's trying to do is to say, we can't be

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Speaker 6: dependent on China for certain critical minerals, for certain magnets,

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Speaker 6: for certain manufacturing capacity that we need to either have here.

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Speaker 1: And where he I think has a big.

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Speaker 6: Gap in his articulation is what role he sees for

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Speaker 6: our allies. And if you really want to rely on

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Speaker 6: on Canada and Mexico and Europe and our NATO allies,

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Speaker 6: among others, to help be part of our broader national

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Speaker 6: security posture. It probably best not to stick a finger

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Speaker 6: in their eye with tariffs.

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Speaker 3: My conversation with former US trade representatives Mike Frohman and

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Speaker 3: Bob Zellick continues.

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Speaker 1: After the break.

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Speaker 3: As we approach August first, when President Trump says the

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Speaker 3: extension of that pause he put in place on reciprocal

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Speaker 3: tariffs will end. The White House has announced framework agreements

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Speaker 3: with a handful of US trading partners, including Japan, Indonesia,

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Speaker 3: and Vietnam. But it's a far cry from ninety deals

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Speaker 3: in ninety days. That's what one of Trump's trade advisors

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Speaker 3: said was the goal back in April. That initial ninety

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Speaker 3: day period ended in early July. President Trump sounded frustrated

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Speaker 3: with the process.

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Speaker 1: It's just too time consuming.

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Speaker 6: It just makes it more complicated, and we can do

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Speaker 6: things over the years.

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Speaker 3: I asked former US trade representatives Bob Zellick and Mike

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Speaker 3: Froehman about what Trump said at that cabinet meeting that

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Speaker 3: doing these deals is, as he put it to, time consuming.

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Speaker 3: I'm going to read a quote from a colleague of mind,

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Speaker 3: Jenny Leonard, who covers the White House.

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Speaker 1: She wrote, the.

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Speaker 3: Trump administration is effectively conceding that its self imposed deadline

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Speaker 3: was too optimistic for a full tear down and rebuilding

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Speaker 3: of the architecture of the US led global trading system.

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Speaker 3: You both spent a tremendous amount of time outside of

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Speaker 3: Washington negotiating these deals. Traditionally, they have taken a very

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Speaker 3: long time to hammer out. What has the president learned

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Speaker 3: about the difficulty of negotiating trade deals over these last

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Speaker 3: six months.

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Speaker 2: Deal is an elastic term, but for Trump, it's the

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Speaker 2: heart of the matter. It's the art of the deal.

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Speaker 2: One might look at some of his experience with reality

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Speaker 2: TV and even say, it's the appearance of the celebrity winner,

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Speaker 2: and the story has to keep moving on right, and

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Speaker 2: there's a certain entertainment value with it. And so therefore

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Speaker 2: his team is confronted with the question of how much

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Speaker 2: should we cover in these deals? Should our priority be

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Speaker 2: to open a market or should our priority to close

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Speaker 2: our market? Are we focusing on the bilateral.

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Speaker 1: Trade deficit as a goal?

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Speaker 2: Maybe just want them to purchase stuff they don't have

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Speaker 2: guidance on that. Okay, he's ripping up the USMCA, the

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Speaker 2: North American Free Trade Agreement rewrite, which he negotiated. And remember,

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Speaker 2: trade is a sensitive political topic for other countries too,

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Speaker 2: So if you're going to take a political hit in

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Speaker 2: your country to either accept the US closing its market

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Speaker 2: or open your market on some edition, you need to

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Speaker 2: know that it's going to last longer than a day.

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Speaker 2: So your question, while it seems basic in some ways,

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Speaker 2: is extraordinarily fundamental because it's how does Trump govern? How

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Speaker 2: does he see himself as an international deal maker? And

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Speaker 2: by the way, you know, coming back to the China issue.

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Speaker 2: You know, Trump has been quite forthright. He doesn't care

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Speaker 2: about human rights issues. He doesn't really care about Taiwan.

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Speaker 2: You know, if he gets a big deal, what's in

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Speaker 2: the terms of the deal?

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Speaker 1: Okay?

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Speaker 2: And so what you're going to see is an ongoing,

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Speaker 2: messy process, but at times they will be punctured by

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Speaker 2: the greatest deal ever. And so I think this adds

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Speaker 2: to the economic problem of uncertainty. So coming back to

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Speaker 2: the economics of this, do tariffs raise prices yes, will

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Speaker 2: they increase costs yes? Will the retaliation hurt US export industries.

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Speaker 2: If they retaliate, yes, if they retaliate, yeah, But there's

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Speaker 2: lots of ways, as Mike, you know, people can stick

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Speaker 2: it to you, okay. Will they develop relations with others?

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Speaker 2: Will the Chinese say, we're not going to buy soybeans

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Speaker 2: from the United States, We'll get him from Brazil.

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Speaker 1: Okay?

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Speaker 2: So the farm community traditionally realized heavily on exports.

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Speaker 1: Okay.

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Speaker 2: I was in North Dakota not long ago. I was

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Speaker 2: talking to various farmers and I said, you know, are

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Speaker 2: you worried about the retaliation? They said, well, you know,

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Speaker 2: turns out we lost about twenty six twenty seven billion

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Speaker 2: dollars or deals last time. But he subsidizes to twenty

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Speaker 2: billion dollars. So if you're happy to have be a

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Speaker 2: subsidized worker under the US government, you know, that's fine.

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Speaker 2: But traditionally the farm community didn't want those types of things.

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Speaker 2: So what I think you're going to see is this

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Speaker 2: process where the uncertainty will eventually weigh on the system.

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Speaker 3: There's also the prospect of more formal retaliation against US tariffs.

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Speaker 3: President Trump has threatened a thirty percent tariff on European

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Speaker 3: exports on Wednesday, Bloomberg reported the European Union is ready

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Speaker 3: to retaliate if the President follows through on that. The

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Speaker 3: EE would impose its own thirty percent tariffs on some

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Speaker 3: one hundred billion euros worth of US goods. I asked

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Speaker 3: Mike Frohman about what EU retaliation would mean for Trump's

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Speaker 3: trade war.

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Speaker 6: You know, look, I think the Europeans have long been

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Speaker 6: preparing to retaliate if the US actually moves forward with

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Speaker 6: serious tariffs. And what the President has said is he'll

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Speaker 6: simply just add the retaliation.

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Speaker 1: On top of the other levels.

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Speaker 6: So you know, that's not something that has happened in

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Speaker 6: the past, because previous presidents when they've imposed tariffs, has

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Speaker 6: been gone through the various processes the Bob laid out

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Speaker 6: and have said here's the nature of the damage, and

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Speaker 6: therefore here's what the tariff should be. And he has

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Speaker 6: shown a willingness just to ignore that and try and

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Speaker 6: meet or exceed whatever he faces. As a result, countries

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Speaker 6: thus far have not really retaliated. China very interestingly discovered

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Speaker 6: where they had leverage one of the many areas I

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Speaker 6: think where they have leverage, and used it judiciously to

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Speaker 6: send a signal that if the US is intent on

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Speaker 6: raising tariffs, they too can take action that can make

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Speaker 6: it very painful.

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Speaker 1: For the US.

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Speaker 6: This is rare earths that was on rare earths and

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Speaker 6: magnets and things of that sort, using export controls just

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Speaker 6: like we use with them. I want to say one

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Speaker 6: thing just about how Trump manages and how it compares

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Speaker 6: to other presidents. Bob and I both work for presidents

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Speaker 6: where probably one of the watchwords was under promise and overdeliver.

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Speaker 6: I'd never say something that you want to have read

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Speaker 6: back to you that you failed to achieve. President Trump

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Speaker 6: clearly has a very different approach. I'm going to negotiate

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Speaker 6: a peace agreement with Ukraine and Russia in twenty four hours.

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Speaker 6: We're going to have ninety trade agreements in ninety days.

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Speaker 6: Whether he ever gets a peace agreement with Russia or Ukraine,

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Speaker 6: and whether it comes in twenty four months rather than

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Speaker 6: twenty four hours, it doesn't seem to have any negative

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Speaker 6: implications other than those of us who sit around and

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Speaker 6: sort of comment on on government policy. But in the

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Speaker 6: broad public, he will have achieved an agreement. I think

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Speaker 6: what he's decided is I'll just send you a letter

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Speaker 6: and I'll tell you.

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Speaker 1: What the result is. That's a novel approach. I don't

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Speaker 1: think Bob and I.

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Speaker 6: As USDR, has ever thought we could just send a

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Speaker 6: country a letter and paystell them. Here's where the here's

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Speaker 6: the deal that you are to agree to unless you

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Speaker 6: come up with a better and final offer.

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Speaker 3: Bob Zelick says the politics of trade will be interesting

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Speaker 3: to watch. It, says the Smoot Holly terrifact, which Congress

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Speaker 3: passed in nineteen thirty, cast a long shadow.

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Speaker 2: That affected a couple generations views the trade protectionism was bad.

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Speaker 2: But you now have a public that saw the rust

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Speaker 2: belt in the seventies, they saw the alleged China shock

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Speaker 2: and adjustment, and from the progressive left, they didn't like globalization,

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Speaker 2: even though it helped a lot of poor people around

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Speaker 2: the world. And so it's a different mindset. What will

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Speaker 2: be interesting will be to see if some of Trump's

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Speaker 2: policies really backfire. So it'll happen in pieces, and it'll

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Speaker 2: happen in different areas, and people will struggle for inputs

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Speaker 2: of different types. The question will be whether there will

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Speaker 2: be some other political leadership that at some point says, look,

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Speaker 2: we need to transform this. Okay, and there are people

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Speaker 2: who know better, but they're afraid of Trump's their party.

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Speaker 2: And on the Democratic side, you see people saying, oh,

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Speaker 2: Trump's triffs are bad, but our.

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Speaker 1: Tariffs are good.

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Speaker 2: It's not believable, So you know, someone will need to

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Speaker 2: frame this in slightly different ways.

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Speaker 6: Where I think Republican and Democratic administrations have failed over

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Speaker 6: decades is not so much in how they approach trade agreements,

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Speaker 6: but that they didn't accompany trade agreements with a set

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Speaker 6: of domestic policies necessary to help workers and communities survive

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Speaker 6: and thrive in a rapidly changing economy where that change

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Speaker 6: was coming from technology, where most of it came from

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Speaker 6: from immigration or from globalization. And that what's remarkable to

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Speaker 6: me is how little time we're spending and how much

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Speaker 6: how little political energy.

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Speaker 1: There is to say we need a.

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Speaker 6: Strategy for worker retraining, we need plays based economic development,

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Speaker 6: we need ways of bringing venture capital to more places

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Speaker 6: than just Silicon Valley and Boston.

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Speaker 1: And to me, that's particularly urgent right now.

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Speaker 6: One because I think the Trump trade policies may end

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Speaker 6: up actually hurting a lot of the constituencies he is

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Speaker 6: allegedly attempting to help. But two, we haven't talked about AI.

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Speaker 6: You know, whatever impact trade had on displacing workers, AI

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Speaker 6: has the potential to displace a multiple of that.

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Speaker 1: And if we are going.

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Speaker 6: To get our act together and prepare for that, we

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Speaker 6: need to finally.

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Speaker 1: Address this issue. And it could be a great legacy.

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Speaker 6: For the Trump administration if they took seriously the kinds

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Speaker 6: of policies you needed to make sure that workers and

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Speaker 6: farmers and ranchers would survive and thrive.

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Speaker 3: I'm curious as you look ahead, there are countries we've

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Speaker 3: done the right thing, as the White House has laid

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Speaker 3: it out, made the phone call, traveled to Washington often

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Speaker 3: many times, and yet they've gotten these letters. It hasn't

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Speaker 3: been reciprocated. How should they think about how to proceed

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Speaker 3: given all of that.

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Speaker 2: So your question is really important because in the United

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Speaker 2: States we start to debate this just among ourselves. We

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Speaker 2: have to remember we're about four percent of the world's population,

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Speaker 2: depending on exchange rates, you know, twenty percent of the

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Speaker 2: world's economy. Others will have a vote and others will

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Speaker 2: have a voice. Now, the United States is a very

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Speaker 2: powerful economy, it's a very innovative economy. Others will not

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Speaker 2: want to cut it off, but they have to prepare

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Speaker 2: for the uncertainty. They have to develop alternatives. And so,

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Speaker 2: as Mike and I have both mentioned, even if you

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Speaker 2: cut a deal, can you rely on it? So trade

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Speaker 2: is like water, it will continue to flow, okay, and

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Speaker 2: so if we create a barrier, it'll go somewhere else.

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Speaker 2: What does that mean in part, Well, if you're so

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Speaker 2: concerned about Chinese influence in the world, why would you

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Speaker 2: let the China define the.

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Speaker 1: Rules of the future.

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Speaker 2: There are new trade channels being formed, okay, whether it's logistics, infrastructure,

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Speaker 2: a lot of it's East Asia, South Asia, Africa, sort

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Speaker 2: of Middle East. And the big difference is we're not

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Speaker 2: making the rules for those agreements, whether it's digital AI

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Speaker 2: other issues. We are not in a sense trying to

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Speaker 2: frame kind of where us Cap and his interests are

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Speaker 2: because it's a somewhat hazard process and others won't necessarily

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Speaker 2: throw it in our face, but they would do what

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Speaker 2: an average human being will do. They'll just sort of

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Speaker 2: try to work around you.

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Speaker 6: It's a real issue because I think short term we

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Speaker 6: go back to the issue of leverage. You can use

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Speaker 6: sticks to a certain degree, but that does come with

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Speaker 6: its costs, and I think one of the costs is

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Speaker 6: if you're not actually able to balance sticks and carrots

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Speaker 6: and tell people what is the deal ultimately, because I think,

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Speaker 6: as Bob has said, the president enjoys the uncertainty, enjoys

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Speaker 6: the instability, and that way he can always be asking

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Speaker 6: for more. And the way the trade negotiated process allegedly

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Speaker 6: works is that the team brings back a trade agreement

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Speaker 6: and it's all subject to the president's approval, and if

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Speaker 6: he doesn't think it's sufficient, he sends it back. And

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Speaker 6: so now that's always been a role for a president,

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Speaker 6: but there does seem to be a bit of arbitrariness

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Speaker 6: of like in a real estate transaction, can I get a.

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Speaker 1: Little bit more?

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Speaker 6: And it's hard to manage allied relations, partner relations, which

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Speaker 6: by definition is a game. You need to work with

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Speaker 6: alloys and partners over and over again, across different domains,

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Speaker 6: across different issues, and if you destroy the trust and

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Speaker 6: the nature of the working together, it makes it very

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Speaker 6: difficult to do that going forward.

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Speaker 1: Thanks to both of you, appreciate it, thanks for having us.

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Speaker 3: This is the big take from Bloomberg News. I'm David

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