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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day

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Speaker 2: Terminal and the Bloomberg Business app. So here's the laces

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Speaker 2: this morning. How's lawmakers set to vote on the fate

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Speaker 2: of President Donald Trump's tariffs on Canada. A trio of

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Speaker 2: Republicans joining Democrats calling for the vote, joining us now

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Speaker 2: to extend the conversation. Scott Lindscombe at the Cana Institute, Scott,

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Speaker 2: Welcome to the program. Interest in Exchange with the President.

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Speaker 2: In an interview broadcast in the United States in the

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Speaker 2: last forty eight hours or so, Scott, the President was

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Speaker 2: asked about tariff and he brought up the example of Switzerland,

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Speaker 2: said that he didn't like the way he was spoken to.

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Speaker 2: So we ratchet up the tariff just a little bit

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Speaker 2: more does not undermine the official justification for these tariffs.

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Speaker 3: Well, it certainly does.

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Speaker 4: This is supposed to be about a national emergency that

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Speaker 4: requires it's an event that's so abrupt and so urgent

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Speaker 4: that the president needs to invoke powers that are typically

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Speaker 4: reserved to Congress and that the president typically isn't allowed

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Speaker 4: to access. So if the whole basis for these tariffs

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Speaker 4: is not the trade deficit or fentanyl coming across the border,

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Speaker 4: and instead is the Swiss representative's voice, then the president

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Speaker 4: shouldn't really have the ability to invoke these tariff powers

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Speaker 4: at all.

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Speaker 1: Scott, this is definitely going to be something that I'm

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Speaker 1: sure the Supreme Court is paying attention to, at least

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Speaker 1: the lawyers who are arguing for it. I am curious

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Speaker 1: about what Tyler was just talking about, which is that

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Speaker 1: you are getting some pushback now from Republicans around some

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Speaker 1: of this tariff policy, in particular tied to affordability concerns

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Speaker 1: and how this is playing through to their voters. How

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Speaker 1: much more of that do you expect?

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Speaker 4: I mean, I expect a lot of it this year.

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Speaker 4: In poll after poll after poll, the President's tariffs just

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Speaker 4: aren't popular, and voters have tied them to continued concerns

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Speaker 4: about affordability. You know, economists don't want deflation, but voters do.

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Speaker 4: And the fact is that while inflation is slowed, prices

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Speaker 4: definitely haven't gone down, and particularly for key staples at

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Speaker 4: the grocery store, like beef. And so you're going to,

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Speaker 4: I think, see continued connection of the tariffs to the

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Speaker 4: affordability issues, and you're going to see Democrats, I think,

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Speaker 4: use that as a lever including through symbolic votes like

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Speaker 4: the one we're going to get I think today, if

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Speaker 4: not tomorrow.

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Speaker 1: This is the reason why people haven't been paying attention

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Speaker 1: to symbolic votes is because they are symbolic, and that's

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Speaker 1: the reason why the Democrats have kind of been a

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Speaker 1: little impotent on this. The interesting aspect is that there

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Speaker 1: are a number of Republicans that are starting to join forces.

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Speaker 1: And I do wonder how much heading into and after

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Speaker 1: the midterms you start to get a real check coming

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Speaker 1: from some Republican constituents based on what they're hearing from voters.

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Speaker 1: Do you see that as crumping some of the tariff

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Speaker 1: plans that have currently been laid out.

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Speaker 4: Yeah, you know, quite Frankly, I don't think that the

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Speaker 4: Congress is going to have the ability to do too

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Speaker 4: much to stop these emergency tariffs under the International Emergency

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Speaker 4: Economic Powers Act, simply because they're going to need veto

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Speaker 4: proof majorities to get past Trump. So even after the midterms,

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Speaker 4: I think it'd be really difficult for Congress to really

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Speaker 4: pass any sort of tariff reform, whether it's to the

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Speaker 4: emergency tariffs or to the national security tariffs under section

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Speaker 4: two the two. I mean, I'd love to see it,

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Speaker 4: but the reality is, these institutional checks are pretty weak

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Speaker 4: because of the veto proof majority.

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Speaker 3: And that's why I think one of the.

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Speaker 4: Reasons why the Supreme Court's decision, whenever we get it,

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Speaker 4: is so important here because that would be a legitimate

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Speaker 4: check on those emergency tariffs if the court really does

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Speaker 4: say the president's not allowed to use them.

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Speaker 2: Scott, We've seen lots of justifications for the terifts that

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Speaker 2: were introduced a year ago, raising revenue, national security, bringing

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Speaker 2: manufacturing home, getting your own back when someone upsets you

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Speaker 2: on the phone, all of those things. The number one

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Speaker 2: issue for me, Scott, is getting China to rebalance, and

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Speaker 2: the Treasury Secretary had come out repeatedly and articulated quite

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Speaker 2: perfectly as to why we need to do that, and

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Speaker 2: not just ask the Europeans as well. Now, Scott, I

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Speaker 2: think it begs the question now, after the evidence of

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Speaker 2: the last twelve months, what we can actually do about that,

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Speaker 2: because that trade surplus from China has never been wired

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Speaker 2: to despite the tariffs introduced last year.

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Speaker 4: Yeah, it really shows the limitations of unilateral tariffs to

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Speaker 4: do a lot to change foreign government behavior, particularly when

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Speaker 4: it comes to a massive economy like China that's dealing

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Speaker 4: with really systemic issues that simply can't be fixed by

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Speaker 4: subsidizing a factory or removing a subsidy or something like that.

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Speaker 4: So the fact is that you need a lot more

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Speaker 4: than simply applying attacks on some imported goods to fundamentally

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Speaker 4: change a China's economic model, and quite frankly, you might

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Speaker 4: not be able to do it at all. Unilateral policies

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Speaker 4: coming from a single government tend to produce backlash in

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Speaker 4: the target country. You've seen some of that in China

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Speaker 4: as well, where they're actually doubling down on nationalization and

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Speaker 4: self sufficiency efforts. And then the last thing, of course,

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Speaker 4: is that Trump's tariffs haven't just targeted China. When you're

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Speaker 4: also targeting China competitors like India, Vietnam, Malaysia, even Mexico

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Speaker 4: and Canada, it makes it even harder to induce those

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Speaker 4: types of changes. And I think again that's why we've

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Speaker 4: seen record exports out of China simply getting moved to

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Speaker 4: third countries that don't have Trump tariffs attached.

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Speaker 2: Stay with US mult Bloomberg Savannah's coming up off to this.

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Speaker 1: This is actually a comment from a Bloomberg user which

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Speaker 1: I think is a really interesting one, which is annual

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Speaker 1: benchmark revisions, updated birth death model, and new seasonal factors.

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Speaker 1: It's apples to oranges comparisons. What data are we actually

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Speaker 1: looking at? I mean, look, ultimately, the market is taking

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Speaker 1: this at face value, and I am too, because ultimately

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Speaker 1: it's a good sign to see that there is job creation,

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Speaker 1: particularly in the private sector. On the flip side, how

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Speaker 1: do you get some sort of longer trajectory look based

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Speaker 1: in all of the revisions that seasonal everything that's been

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Speaker 1: going on.

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Speaker 2: Good luck, Mike Keay Beddy joins US now, Michael cape

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Speaker 2: at MULK and Stanley Mike, good to see you. Welcome

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Speaker 2: to the program.

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Speaker 5: It's all clear now, is it?

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Speaker 2: If I was calling you as a client, my first

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Speaker 2: question would be how much confidence can I have in this?

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Speaker 2: Is this the real deal?

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Speaker 5: I think it's largely the real deal.

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Speaker 6: Everything that you mentioned is completely fair, benchmark revisions, new

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Speaker 6: birth death adjustments, there's favorable seasonal factors in this report.

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Speaker 6: But does it wipe away one hundred and seventy thousand

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Speaker 6: private payrolls?

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Speaker 5: Probably not.

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Speaker 6: I mean we were at ninety thousand n private payrolls

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Speaker 6: and I felt optimistic, right, So if truth is ninety,

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Speaker 6: I'm super happy with that number.

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Speaker 5: Right.

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Speaker 6: So at one seventy, I think it's hard to bring

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Speaker 6: all of that.

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Speaker 5: Back and look through it.

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Speaker 6: So, and to your point, it does fit a lot

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Speaker 6: of other data points in the economy. Durable goods have

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Speaker 6: been strong, Ism has picked up, Manufacturing output.

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Speaker 5: Has been on an upward trend.

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Speaker 6: So seeing some complementary hiring alongside that is a welcome

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Speaker 6: sign for the economy.

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Speaker 2: Do you think focusing on December retail sales like we

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Speaker 2: will guess today is a waste of time? Are you

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Speaker 2: explained to bounce back? Should we just see that as

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Speaker 2: a headfake?

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Speaker 6: I think we will see some bounce back, but not entirely.

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Speaker 6: There is softness in that report. But just remember, even

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Speaker 6: in what i'll call normal times, retail sales is very volatile.

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Speaker 6: It gets revised frequently, So the signal out of retail

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Speaker 6: sales I think is always kind of maybe second order.

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Speaker 6: I think the market puts more weight on it than

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Speaker 6: it otherwise should. But look, even with that number, consumption

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Speaker 6: is likely to come in at around two point three

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Speaker 6: percent in the fourth quarter, still a solid number with

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Speaker 6: a week December retail sales.

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Speaker 1: Are these good jobs that are being created? Do we

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Speaker 1: have a sense of the quality of them?

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Speaker 6: Well, I haven't seen the mix, but I think you know,

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Speaker 6: the average hourly earnings number at point four suggests that

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Speaker 6: you know they are quality jobs on that front. That's

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Speaker 6: an average number across all the sectors. So I think

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Speaker 6: any job is better than no job, So I certainly

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Speaker 6: think there's quality in it.

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Speaker 1: Yes, I guess I'm looking at for example, one hundred

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Speaker 1: and twenty four thousand created in health and social assistance,

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Speaker 1: private education one hundred thirty seven. I mean some of

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Speaker 1: the main winners have really come from a couple of

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Speaker 1: secers that are sort of independent of the cycle. Is

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Speaker 1: that we're getting older, and that we're paying a lot

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Speaker 1: of money for our kids to go to college. I mean,

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Speaker 1: how much can we glean strength from these numbers and

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Speaker 1: a sense of sustainability.

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Speaker 6: Well, the narrowness of job gains has always been the question.

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Speaker 6: The narrowness of growth in the economy has always been

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Speaker 6: an issue. It's spending by upper income consumers, it's ai

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Speaker 6: related business spending. Our thesis is that you will see

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Speaker 6: some broadening out in twenty twenty six. So, as you

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Speaker 6: mentioned the rebounded small caps, we do think that if

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Speaker 6: you get a stabilization in the labor market, inflation does

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Speaker 6: come down, it can support purchasing power of other parts

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Speaker 6: of the economy, and the economy can broaden out. So

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Speaker 6: the narrowness of the recovery and the ongoing expansion is

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Speaker 6: an issue.

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Speaker 5: We think it will broaden out. We'll see if it happens.

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Speaker 1: Right now, you're seeing the market price out or push

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Speaker 1: back some of the expected rate cuts to July from

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Speaker 1: June previously, in the sense that maybe this is not

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Speaker 1: an economy that needs rate cuts. There are a number

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Speaker 1: of people at the Federal Reserve who believe you should

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Speaker 1: keep running this economy hot because otherwise people could lose

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Speaker 1: their jobs. And the whole we're structuring takes place with

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Speaker 1: artificial intelligence, and if you don't do that, you'll get

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Speaker 1: scarring that lasts a long time.

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Speaker 3: Where do you fall on that?

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Speaker 1: Do you think that that's a legitimate argument that you

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Speaker 1: should proactively cut rates at a time of structural change.

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Speaker 5: I think they've done some of that.

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Speaker 6: I think it's easy to see that they've done that

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Speaker 6: over the last two years. The question is kind of

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Speaker 6: where does that process end. I think the June July

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Speaker 6: period for the next rate cut is about right, and

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Speaker 6: this data today says rate cuts, if and when they come,

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Speaker 6: will be based on inflation. So when does the committee

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Speaker 6: get evidence that inflation is decelerating, that tariffs are a

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Speaker 6: transitory upward push on inflation. Sometime around the middle of

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Speaker 6: the year is probably where that evidence comes through. But

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Speaker 6: to your question, I think they have done some cutting

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Speaker 6: preemptively to support the labor market and prevent some downside risk.

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Speaker 6: We'll see ultimately if that was enough.

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Speaker 2: I noticed that was your focus coming into the new year,

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Speaker 2: looking at the dual mandate, that you thought the inflation

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Speaker 2: sign of things, price stability was going to be more

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Speaker 2: instructive for the future of FED policy.

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Speaker 3: Is that right?

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Speaker 6: That's right, and this number I think confirms that right.

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Speaker 6: So they had to do some They decided to FED

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Speaker 6: to do some risk management rate cuts to support downside

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Speaker 6: or prevent downside risk to the labor market. They put

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Speaker 6: in seventy five basis points of cuts. The data suggests

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Speaker 6: that things are stabilizing, So if and when the FED

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Speaker 6: cuts further, it will be you know where inflation is

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Speaker 6: coming out of the first quarter, we think it'll be

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Speaker 6: about three percent year on year. We think it'll settle

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Speaker 6: down to about two and a half by the end

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Speaker 6: of the year. Somewhere in there is room for a

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Speaker 6: few more rate cuts.

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Speaker 2: The two and a half we cut around two and

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Speaker 2: a half.

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Speaker 6: Now, well we're thinking three.

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Speaker 2: Stay with us. More Bloomberg surveillance coming up after this.

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Speaker 2: Let's turn to energy and critical minerals. The Trump administration

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Speaker 2: so to announce some major shift in climate rules, rolling

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Speaker 2: back and Obama era policy regulating fossil fuels. On that

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Speaker 2: and more, the US and Serier Sancretary Dunkbergham joins us.

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Speaker 2: Now for more, missus Secretary, you have been a busy

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Speaker 2: man over the last week. I just want to start

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Speaker 2: with Project Vote and then we'll get to the EPI

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Speaker 2: and what's going to happen with regulations around fossil fuels

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Speaker 2: and such. MISSUS Secretary, What is Project Vote and how

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Speaker 2: should I be thinking about this in comparison to say

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Speaker 2: the SPI.

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Speaker 7: Well, it's absolutely a comparison. The Strategic Patrolling Reserve has

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Speaker 7: created a great buffer on price shocks for American consumers

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Speaker 7: for decades and decades we had no equivalent on critical minerals.

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Speaker 7: There are sixty minerals on the Critical Minerals list.

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Speaker 3: Some of those are rare earth elements. China, as you

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Speaker 3: know Jonathan.

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Speaker 7: Controls about eighty five to one hundred percent of the

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Speaker 7: processing and refining on about twenty of those, enough to

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Speaker 7: put a stranglehold on global industry, whether it's tech high tech,

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Speaker 7: whether it's defense, whether it's consumer and so with the

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Speaker 7: threats last year put out by China on export controls,

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Speaker 7: the US leapt into action. We're broadly bringing mining back

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Speaker 7: in America. But this idea of creating a strategic Critical

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Speaker 7: Minerals Reserve across sixty different elements, driven by the private sector,

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Speaker 7: great leadership by across the board of multiple Cabinet secretaries

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Speaker 7: in the Trump administration, working with the up XM Bank,

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Speaker 7: working with the private sector about ten billion and alone

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Speaker 7: about two billion in equity capital going in.

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Speaker 3: This is going to be private sector.

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Speaker 7: Funded, market driven, and those critical minerals will be stored

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Speaker 7: at locations that are economically smart and economically efficient.

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Speaker 3: Around the country. But the idea is that we will.

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Speaker 7: In addition to that, last week, there was also at

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Speaker 7: the State Department a historic meeting. Over fifty countries came

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Speaker 7: to the US, all of them some of them already

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Speaker 7: signed on others many others interested joining a club of

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Speaker 7: nations with free trade on critical minerals with price floors.

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Speaker 7: The key on price floors is that would block China

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Speaker 7: from illegal dumping to kill the vice across anyone particularly

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Speaker 7: critical mineral, and that's going to allow the assurance for

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Speaker 7: capital to start flowing back into mining and refining of

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Speaker 7: these minerals in the US and in our allies. So tremendous,

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Speaker 7: tremendous interest from the leaders of ministers from around the

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Speaker 7: country that were there at the event hosted the State

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Speaker 7: Department last week. So anyway, great progress going to make

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Speaker 7: sure that US is secure relative to our position on

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Speaker 7: critical minerals.

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Speaker 2: And MISSUS Secretary, you certainly alluded to it. China's got

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Speaker 2: a stranglehold over critical minerals, and America needs to do

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Speaker 2: something about it, and overwhelmingly this agreement on this program

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Speaker 2: often almost weekly to do something about it. What is

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Speaker 2: less understood is why they have that stranglehold. You talked

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Speaker 2: about pricing and dumping. What about regulations this is typically

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Speaker 2: quite a dirty process. Is that held back production domestically

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Speaker 2: as well?

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Speaker 3: Well?

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Speaker 7: There's been an attack on American energy in this country,

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Speaker 7: but even longer than that, there's been an attack on

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Speaker 7: mining in our country. And just like President Trump's drill,

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Speaker 7: baby drill, we've got.

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Speaker 3: To get back to mind, baby mine.

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Speaker 7: The US graduated thirty six thousand lawyers last year and

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Speaker 7: about three hundred people with mining and metallurgical degrees. China,

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Speaker 7: of course, is not doing it cleaner than any I mean,

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Speaker 7: whether they're tearing up the Congo or Indonesia, child labor,

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Speaker 7: illegal cartels, criminal organizations.

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Speaker 3: All of these things that are going on.

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Speaker 7: It's a dirty industry potentially for the environment, but there's

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Speaker 7: a lot of corruption around that. In part because countries

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Speaker 7: like America are like those in Europe that have rules

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Speaker 7: that have epas that can do things cleaner, better, safer, smarter,

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Speaker 7: both in terms of the environment, in terms of the

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Speaker 7: labor force. Basically got out of this business, and we've

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Speaker 7: got to get the free world's got to get back

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Speaker 7: into the mining business and show that with innovation that

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Speaker 7: we can do it, and we can do it in

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Speaker 7: a way that protects the environment, protects the workers, and

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Speaker 7: also then protects the economies of these countries. And so

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Speaker 7: this is a strategic important for the United States to

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Speaker 7: get back in and be part of that is the

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Speaker 7: permitting process. We've put a stranglehold on permitting. But for

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Speaker 7: President Trump, we're breaking the logjam on permitting. Big announcements

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Speaker 7: coming around the engagement finding and this is going to

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Speaker 7: be a huge, huge step forward in terms of getting

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Speaker 7: projects done and keeping plants open in America.

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Speaker 1: Mister Secretary, there's a question around refinding things like lithia

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Speaker 1: that are crucial for a lot of the high tech

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Speaker 1: aspects that go into our economy. There's a question about

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Speaker 1: copper really necessary for the build out of some of

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Speaker 1: the hyperscalers in particular. On the other side, there are

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Speaker 1: things like coal and there's a real question of some

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Speaker 1: of the rollbacks the EPA rules, like lowering emission standards

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Speaker 1: as well as potentially increasing the use of coal. Why

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Speaker 1: are those necessary to get some of the national security

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Speaker 1: goals that you're talking about.

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Speaker 7: Well, we'll be making some more announcements on beautiful clean

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Speaker 7: coal today, as President Trump likes to call it, and

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Speaker 7: should call it, because there's a coal plant running in

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Speaker 7: America today. It has survived an onslaught for twenty years.

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Speaker 7: But they've taken everything, virtually everything out of the Knox,

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Speaker 7: the socks, that anything that would be considered an issue

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Speaker 7: relative the environment, and what's left. The attack on coal

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Speaker 7: as a baseload power has been largely around CO two emissions,

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Speaker 7: and with the reversal of the endangement finding that says

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Speaker 7: that this was massive overreach by the Obama EPA, that

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Speaker 7: we are going to go back to a thing where

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Speaker 7: we can have consumer choice that's lower prices. And of course,

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Speaker 7: with the big storms we had in the Northeast last week,

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Speaker 7: I mean check back on Secretary Rights press conference last Friday,

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Speaker 7: but we would have had millions and millions of people

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Speaker 7: in this country without power if coal hadn't stepped up.

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Speaker 7: Coal was the hero of keeping the lights and the

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Speaker 7: heat on in America, and all of the money that

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Speaker 7: has been spent in the northeastern part of this country

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Speaker 7: on renewables. There is times those storms where we had

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Speaker 7: less than two percent of the power coming from wind

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Speaker 7: and solar. There was more coming from burning wooden trash

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Speaker 7: than there was coming from wind and solar, and coal

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Speaker 7: in some parts of the country was providing twenty five

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Speaker 7: percent of the electricity, So we need The Biden plan

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Speaker 7: of energy transition was actually energy subtraction. It wasn't addition,

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Speaker 7: It wasn't transition, it was subtraction. They were shutting down

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Speaker 7: baseload and then replacing it with intermittent, unreliable, foreign sourced

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Speaker 7: forms of energy that required us to build out all

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Speaker 7: kinds of additional infrastructure on top of the infrastructure we

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Speaker 7: already had. That's what drove up prices. And now we're

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Speaker 7: facing this AI arms race with China. We need more power,

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Speaker 7: We need energy audition. The way to have energy addition

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Speaker 7: is to stop stop getting rid of the stuff that

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Speaker 7: already works, and of course that includes our fossil fuel

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Speaker 7: baseload and the PGM market. Seventy percent of the power

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Speaker 7: was coming from hydrocarbons.

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Speaker 3: During those storms.

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Speaker 7: I mean, America and the world is dependent on it

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Speaker 7: is going to be for in long future.

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Speaker 3: Innovation is what we need to help solve any.

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Speaker 7: Concerns that people might have about future climate change.

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Speaker 1: Mister Secretary, A lot of people could get on board

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Speaker 1: with that. The problem is that a lot of people

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Speaker 1: have pointed out that it feels like there are certain

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Speaker 1: energy sources that have gotten subtracted in this administration, as well,

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Speaker 1: wind being among them. It's not necessarily that we want

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Speaker 1: all energy sources, but picking winners and losers. How do

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Speaker 1: you counter that?

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Speaker 7: Well, it's easy because we're not picking winners and losers.

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Speaker 7: We're picking reliable, affordable, nationally secure sources that can provide

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Speaker 7: what Americans need, what we need for low prices for consumers,

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Speaker 7: what we need for industry, and what we need for AI.

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Speaker 7: What we're not subsidizing any longer is intermittent, weather dependent

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Speaker 7: foreign source, which, in the case of offshore wind, hits

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Speaker 7: all three of those, but it's also the highest cost,

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Speaker 7: it's not affordable, and it's also opposed.

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Speaker 3: By our marine fisheries.

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Speaker 7: I was meeting with a group of third and fourth

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Speaker 7: generation fishermen in New England last Friday.

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Speaker 3: It's blowing up their business.

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Speaker 7: These are the farmers of the sea that put food

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Speaker 7: on our table. You meet with the marine mammal groups

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Speaker 7: that save the whale groups. They're opposed to offshore national security.

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Speaker 7: Now there's a classified reports out that the radar interference

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Speaker 7: and above the water in the sonar interference below the

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Speaker 7: water of these massive offshore products represent real national security risks.

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Speaker 3: These are not made up things.

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Speaker 7: These are things that have to be considered, particularly related

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Speaker 7: to offshore. But with the Working Families tax cut bill

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Speaker 7: that got passed last July, are people are not contemplating

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Speaker 7: new projects. We have companies that are coming to us

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Speaker 7: from around the world that are saying, hey, we're not

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Speaker 7: going to be building offshore because we get it. It

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Speaker 7: was only viable because of the massive tax subsidies. So

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Speaker 7: Americans had to pay twice. They had to pay in

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Speaker 7: terms of higher electric costs, and then they also had

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Speaker 7: to pay through their these tax subsidies.

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Speaker 3: So it's all of the it's all of the above.

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Speaker 7: That a reliable, affordable, and dispatchable and don't require massive subsidies,

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Speaker 7: I mean, and that's the level playing field.

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Speaker 3: That we're at right.

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Speaker 2: Now, MISSUS Secretary, just quickly, because people will hate us

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Speaker 2: if we're talking about wind farms when payrolls comes out

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Speaker 2: in about sixty seconds time. But I want to squeeze

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Speaker 2: this in course. As you know, have ruled against your

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Speaker 2: administration stunt work orders on these offshore wind farms. Are

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Speaker 2: you going to appeal that?

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Speaker 7: Absolutely we are, and as I'm sure as we get

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Speaker 7: into court and have sessions and share share classified information,

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Speaker 7: there will be further discussions on this. You know, people

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Speaker 7: are saying that, oh, this is some ideological attack on

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Speaker 7: offshore win. No, this is like a real, genuine concern,

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Speaker 7: and as Americans, we should be concerned. No one's reading

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Speaker 7: a story about pilots getting shot down in the Iran

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Speaker 7: or in the Russian Ukraine War. Because everything is autonomous.

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Speaker 7: It's autonomous on autonomous. And if you've got massive radar

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Speaker 7: interference just off our huge population centers, if you wanted

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Speaker 7: to attack America, you would launch autonomous drones through those

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Speaker 7: through those things, or you do not launch autonomous submarines

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Speaker 7: because of the sonar interference. And so we just have

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Speaker 7: to wake up. Warfare has changed in the last four years.

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Speaker 7: The world's different, and we have to be ready to

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Speaker 7: respond to it.

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