WEBVTT - Trump Got an ‘Amazing’ Meeting. China Got Much-Needed Time

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>High stakes negotiations in Busan, South Korea between Presidents Trump

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<v Speaker 2>and She. This was a chance for both sides to

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<v Speaker 2>stabilize relations after some rocking months thanks to Trump's agree.

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<v Speaker 3>On Thursday, Presidents Donald Trump and Shihin Ping of China

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<v Speaker 3>reached an agreement a one year truce in their trade war.

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<v Speaker 2>I thought it was an amazing meeting. He's a great leader,

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<v Speaker 2>great leader of a very powerful, very strong country, China.

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<v Speaker 3>She, through an interpreter, said he and Trump didn't always

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<v Speaker 3>see eye to eye, but they had found a way forward.

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<v Speaker 4>You and I at the helm of China US relations

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<v Speaker 4>should stay the right course and ensured a steady sailing

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<v Speaker 4>forward of the giant ship of China US relations.

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<v Speaker 3>The agreement capped six contentious months, starting when Trump announced

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<v Speaker 3>his global tariffs and threatened retaliatory arabs as high as

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<v Speaker 3>one hundred and forty five percent. The highly anticipated meeting

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<v Speaker 3>between Trump and She in South Korea started with a

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<v Speaker 3>long and awkward handshake.

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<v Speaker 2>We're kind good to see you again. There seemed to

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<v Speaker 2>be some chemistry between the two men. They were shaking

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<v Speaker 2>hands at the doorway. Trump even went in and whispered

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<v Speaker 2>something to Shiji Ping, who knows what he said.

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<v Speaker 3>John lou is Bloomberg's executive editor for Greater China. He's

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<v Speaker 3>based in Beijing. He says the agreement, which brought China's

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<v Speaker 3>tariffs back to where they were roughly when Trump rolled

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<v Speaker 3>them out earlier this year, buys China some breathing room.

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<v Speaker 2>While I think China is happy that there can be

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<v Speaker 2>a trade truths for maybe the next twelve months, I

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<v Speaker 2>think the concern that ultimately the United States is trying

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<v Speaker 2>to put the strategy in place that would restrain China's

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<v Speaker 2>rise is going to continue to be at the forefront

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<v Speaker 2>of Shiji Ping and these leadership's minds.

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<v Speaker 3>Brendan Murray is Bloomberg's Global Trade editor, and he says,

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<v Speaker 3>now that the meeting is over, it will be fascinating

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<v Speaker 3>to see how news of the agreement is received in

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<v Speaker 3>Beijing and DC.

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<v Speaker 1>I do think that there will be some people in

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<v Speaker 1>Washington who will look at this as China getting the

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<v Speaker 1>better of Trump, given the breakdown of the concessions that

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<v Speaker 1>each side gave up. So now we'll hear the debate

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<v Speaker 1>about the actual substance. If what we're seeing is a

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<v Speaker 1>truce for the next twelve months.

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<v Speaker 3>I'm David Gura, and this is the big take from

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<v Speaker 3>Bloomberg News Today. On the show, parsing the details of

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<v Speaker 3>the new US China trade agreement and why both countries

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<v Speaker 3>are moving forward without a permanent deal. Thursday's agreement marks

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<v Speaker 3>a temporary truce in a US China trade war that

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<v Speaker 3>President Trump set off in April. I asked Bloomberg's Brendan

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<v Speaker 3>Murray and John lou to dig into what each country

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<v Speaker 3>won and law in the agreement.

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<v Speaker 1>Here's Brendan, So here's the scorecard that I've been keeping.

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<v Speaker 1>The US concessions. The US is lowering fentanyl tariffs from

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<v Speaker 1>twenty percent to ten percent. The US is suspending this

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<v Speaker 1>fifty percent expansion of its US entity list, the ownership

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<v Speaker 1>list that so irritated the Chinese a few weeks ago.

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<v Speaker 1>The US is backing away from the one hundred percent tariff

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<v Speaker 1>threat that President Trump put out there a few weeks ago.

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<v Speaker 1>China's reciprocal tariff rate stays at ten percent for another year,

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<v Speaker 1>and they're suspending ship fees. Both countries are, but that

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<v Speaker 1>was much more damaging to China than it was to

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<v Speaker 1>the US. So those are the US concessions. What China

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<v Speaker 1>gave up its rare earth controls, the most extreme of

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<v Speaker 1>which it announced a few weeks ago. It's suspending those

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<v Speaker 1>for a year. It says it's going to resume buying

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<v Speaker 1>American soybeans and potentially there's some energy deals to be

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<v Speaker 1>done there. It's going to crack down on the export

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<v Speaker 1>of the chemicals used to make fentanyl. And Trump said

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<v Speaker 1>that China agreed to some vague promises of investments and

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<v Speaker 1>then agreed to work on a solution for TikTok So.

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<v Speaker 1>I think any way you add those up, China comes

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<v Speaker 1>up a little bit, you know, giving up less than

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<v Speaker 1>what the US gave up. And I believe that the

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<v Speaker 1>Hawks in Washington would support that view.

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<v Speaker 3>John, as you here, Brendan described that scorecard. As he

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<v Speaker 3>put it, there are some things that these two leaders

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<v Speaker 3>didn't talk about. They didn't get into great detail about

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<v Speaker 3>these Nvidia Blackwell chips. Sounds like they didn't talk about Taiwan.

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<v Speaker 3>If you believe the President of the United States, how

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<v Speaker 3>surprising is that what wasn't talked about in Busan.

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<v Speaker 2>On the question of Taiwan. From what I've heard from

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<v Speaker 2>President Trump, he seems to be very aware of how

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<v Speaker 2>sensitive a topic that is and how potentially explosive on chips,

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<v Speaker 2>you know, I think China wants the Nvidia Blackwell chips.

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<v Speaker 2>If they could get their hands on the most advanced

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<v Speaker 2>technology that's out there, they definitely would do that. Again,

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<v Speaker 2>I think it's some consideration of how likely it would

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<v Speaker 2>have been for them to get that, and if putting

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<v Speaker 2>too much, it's putting too much emphasis on that would

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<v Speaker 2>have meant giving up on something else. Ultimately, Beijing is

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<v Speaker 2>going to walk away feeling like it got a pretty

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<v Speaker 2>good deal, and going forward it's going to try to

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<v Speaker 2>hold the United States to what has been agreed to.

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<v Speaker 3>On that point, I mean, this is not a deal

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<v Speaker 3>that's going to continue in perpetuity. And Brendan, I think

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<v Speaker 3>I've seen this described as subscription diplomacy. You can kind

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<v Speaker 3>of analogize this to your Netflix subscription. You had this

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<v Speaker 3>three month pause on tariffs, and now you have a

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<v Speaker 3>year long pause on tariffs. It just keeps getting extended

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<v Speaker 3>and there's no kind of permanent resolution to all of this.

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<v Speaker 3>What does that mean for US China relations long term?

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<v Speaker 1>So, the Phase one trade deal that President Trump signed

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<v Speaker 1>in his first term. What they had achieved was a

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<v Speaker 1>ninety page, multi chapter agreement that President Trump said would

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<v Speaker 1>transform the relationship between the US and China. So fast

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<v Speaker 1>forward to what we've seen come out of the latest

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<v Speaker 1>Shi Trump deal. We have a couple hundred word social

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<v Speaker 1>media posts from President Trump and basically a relationship that

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<v Speaker 1>is no longer based on something that's in writing, that

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<v Speaker 1>will be based on a series of talks going forward.

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<v Speaker 1>And John, I'd be curious to hear your reaction to this,

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<v Speaker 1>but that really plays into China's strategy of let's just

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<v Speaker 1>kind of string them along and things can escalate and

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<v Speaker 1>de escalate, but we'll have this series of discussions rather

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<v Speaker 1>than something in writing that will abide by and the

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<v Speaker 1>two sides will kind of try to maintain some sort

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<v Speaker 1>of stability going forward. And given the volatility of the

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<v Speaker 1>temperament of President Trump, I'm not really sure that plays

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<v Speaker 1>into his strengths.

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<v Speaker 2>I think the fundamental relationship is one of rivalry and

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<v Speaker 2>I don't think any deal that is struck today or

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<v Speaker 2>in a year is going to change that. And what

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<v Speaker 2>it means is, yes, there's a truce, but at the

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<v Speaker 2>same time both countries are using that time to try

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<v Speaker 2>and build up an arsenal that they can bring to

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<v Speaker 2>bear in the future. So I think we are inherently

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<v Speaker 2>going to have lots of volatility. We're going to have

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<v Speaker 2>deals that come together only to fall apart, because fundamentally

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<v Speaker 2>the two countries are at odds, are competing, and it's

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<v Speaker 2>not a relationship that lends itself to stability.

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<v Speaker 3>After the break, with many negotiations still in progress, what

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<v Speaker 3>does this US China deal mean for other countries still

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<v Speaker 3>stuck in the trade war With several issues unsettled between

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<v Speaker 3>the United States and China. I spoke with Bloomberg's Brendan

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<v Speaker 3>Murray and John lou about what's next. So it seems

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<v Speaker 3>like after this meeting, lower level officials advisors are going

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<v Speaker 3>to hammer out some of the details here. But there

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<v Speaker 3>was such a build up to these two leaders meeting

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<v Speaker 3>face to face, and I wonder if this is what

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<v Speaker 3>we're going to see going forward here the big decisions

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<v Speaker 3>are going to be made when these two men get together.

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<v Speaker 3>That's just going to be kind of the contour of

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<v Speaker 3>these conversations, the way that these countries deal with each

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<v Speaker 3>other going forward.

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<v Speaker 2>Leaderal leader, I think that's the way it will be.

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<v Speaker 2>We had this announcement by President Trump saying that he

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<v Speaker 2>was going to visit China in April, and the President

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<v Speaker 2>she would then do a reciprocal visit to the US

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<v Speaker 2>after that. We also know that China is hosting APEC

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<v Speaker 2>next year and the United States is hosting the G

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<v Speaker 2>twenty in Miami at the end of the year, and

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<v Speaker 2>so there's going to be a lot of opportunity for

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<v Speaker 2>these two men to get together. And I think that

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<v Speaker 2>just means that a lot of the problems that pop

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<v Speaker 2>up between these two countries will ultimately have to be

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<v Speaker 2>decided and resolved or sort of tempered by these two men.

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<v Speaker 3>In looking at the state of trade negotiations with the

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<v Speaker 3>US globally, Brendan has described them as fitting into different buckets.

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<v Speaker 3>There's the first bucket, appeasement.

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<v Speaker 1>You've got basically countries that are just having to accept

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<v Speaker 1>the tariffs.

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<v Speaker 3>Then there's the second bucket, the kicking and screaming bucket.

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<v Speaker 1>Per se Canada is the perfect example. They've been back

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<v Speaker 1>and forth with the threats between the US and Canada

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<v Speaker 1>for months now.

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<v Speaker 3>Then the third bugget the country's putting up a fight.

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<v Speaker 1>And China, I think really has shown compared to at

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<v Speaker 1>least Trump's first term dealings with shijiping, that it can

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<v Speaker 1>play hardball the way Trump likes to play hardball. The

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<v Speaker 1>ability to use the threat of rare earths and China's

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<v Speaker 1>dominance with them really changed the game this year. The

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<v Speaker 1>US has a technology advantage and they will use that

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<v Speaker 1>as leverage over China. But China has this rare earth's

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<v Speaker 1>advantage that really hasn't come to the fore the way

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<v Speaker 1>it has until now. So I think that that's really

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<v Speaker 1>where the game has changed. China has said you want

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<v Speaker 1>to play rough, we can play rough too, and everyone

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<v Speaker 1>else realized that, yeah, they can do some damage if

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<v Speaker 1>they want, or threaten it at least to get what

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<v Speaker 1>they want.

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<v Speaker 3>China's advantage on rare earth's is not going away soon.

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<v Speaker 3>Even with the US building up its capabilities and partnerships,

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<v Speaker 3>It'll be many years before it could conceivably replace China

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<v Speaker 3>as a supplier. Brendan give us a bit of context

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<v Speaker 3>here is you look at the long sweep of this

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<v Speaker 3>trade war. Is global trade now in a better place

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<v Speaker 3>than it was yesterday or a week ago, last year

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<v Speaker 3>or so. How has this meeting kind of changed the

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<v Speaker 3>way that this war is unfolding.

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<v Speaker 1>Yeah, I mean, global trade has been pretty resilient through

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<v Speaker 1>all of this. I mean you could go back to

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<v Speaker 1>the first US China tariff conflicts in Trump's first term

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<v Speaker 1>through COVID and then the return of Trump with the

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<v Speaker 1>reciprocal tariffs kind of shocking every country, and trade has

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<v Speaker 1>held up pretty well. The World Trade Organization will tell

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<v Speaker 1>you that seventy five percent or so of trade globally

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<v Speaker 1>still runs by rules by low tariffs. But that number

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<v Speaker 1>is going down the more the US puts tariffs up,

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<v Speaker 1>and we'll have to see how long that that can

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<v Speaker 1>hold out. And remember President Trump went around he calls

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<v Speaker 1>them deals, but he's putting higher tariffs these countries in

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<v Speaker 1>Asia and they won't be liking it. So how long

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<v Speaker 1>will these countries be able to withstand the headwinds of

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<v Speaker 1>these higher tariffs. Once their industries start to suffer, they

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<v Speaker 1>then here comes the political pressure. So I think the

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<v Speaker 1>big question is, you know, we've seen over the past

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<v Speaker 1>half century or so free trade being used to ensure peace,

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<v Speaker 1>the peace dividend. If we've traded with one another, we

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<v Speaker 1>won't go to war with one another. Now President Trump

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<v Speaker 1>is using the threat of tariffs to tell countries to

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<v Speaker 1>not be in disputes, and so tariffs are being really

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<v Speaker 1>turned into something completely different than they have been for

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<v Speaker 1>the past fifty years. And I think we don't really

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<v Speaker 1>know how it's going to end up. But the economic

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<v Speaker 1>consequences are going to be slow, and perhaps they'll deliver

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<v Speaker 1>jobs in the US and investments, and you know, maybe

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<v Speaker 1>that's what will end up. But I think there's going

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<v Speaker 1>to be a lot of disruption and uncertainty in the meantime.

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<v Speaker 3>And I guess I should note here too, Brandon, that

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<v Speaker 3>even though this deal did knock the US tariffs down

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<v Speaker 3>by ten percent, the overall China tariff is much higher

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<v Speaker 3>than it was a year ago, about thirty percent on average,

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<v Speaker 3>according to Bloomberg Industries, with many products facing tariffs as

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<v Speaker 3>high as forty seven percent.

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<v Speaker 1>Yeah, China is still something in the thirty percent range,

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<v Speaker 1>thirty to forty percent, and it will be more competitive

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<v Speaker 1>than it otherwise would have been with its manufacturing rivals

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<v Speaker 1>across Southeast Asia, which came in somewhere around the twenty

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<v Speaker 1>percent mark. But China has found markets for goods that

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<v Speaker 1>are no longer being bought by Americans and has maintained

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<v Speaker 1>that the question is is China going to export problems

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<v Speaker 1>to other countries that will have a backlash the way

0:12:43.120 --> 0:12:44.800
<v Speaker 1>the US has reacted.

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<v Speaker 3>And that getsuon my last question to you, John, we

0:12:48.200 --> 0:12:51.480
<v Speaker 3>see a country that is looking many years down the road.

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<v Speaker 3>I think on the eve of this meeting, China announced

0:12:53.320 --> 0:12:56.439
<v Speaker 3>its next five year plan will significantly boost the shriff

0:12:56.400 --> 0:13:01.240
<v Speaker 3>of Chinese consumerism, domestic consumption. Seems intentional to me. What

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<v Speaker 3>is the strategy there on the Chinese part.

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<v Speaker 2>I think China sees it's dependence on trade as a weakness.

0:13:07.920 --> 0:13:10.520
<v Speaker 2>I think China has come away from the last you know,

0:13:10.600 --> 0:13:14.960
<v Speaker 2>eight to ten years believing that any dependency that can

0:13:15.600 --> 0:13:19.440
<v Speaker 2>be weaponized will be weaponized. And so, you know, Chinese

0:13:19.480 --> 0:13:21.400
<v Speaker 2>trade has been booming, as Brenda was saying, you know,

0:13:21.480 --> 0:13:24.840
<v Speaker 2>China's selling stuff to Europe, to Latin America, to Africa,

0:13:24.840 --> 0:13:27.719
<v Speaker 2>around the world, and it's trade surplus, I think is

0:13:27.760 --> 0:13:30.440
<v Speaker 2>on pace for like one point five trillion US dollars

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<v Speaker 2>this year. I think there's a general recognition in China

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<v Speaker 2>that that is not a sustainable path forward, that that

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<v Speaker 2>is just going to peeve off all of their trading partners,

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<v Speaker 2>and so they are putting a lot of effort in

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<v Speaker 2>trying to develop a domestic consumer economy. The problem is

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<v Speaker 2>how do you do that? If they can do that,

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<v Speaker 2>and I think there are a lot of reasons to

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<v Speaker 2>think it's going to be a real challenge.

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<v Speaker 1>The other issue there is that Trump's political clock is

0:13:57.320 --> 0:14:01.600
<v Speaker 1>ticking a lot faster than China's on this, and China

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<v Speaker 1>has the advantage of time and they can drag this along.

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<v Speaker 1>President Trump needs to deliver something economically before the midterm

0:14:08.760 --> 0:14:11.520
<v Speaker 1>elections start heating up in nine months or so. So

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<v Speaker 1>I think the time is not on President Trump's side here,

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<v Speaker 1>and China plays a much longer game than the US does.

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<v Speaker 3>This is the Big Take from Bloomberg News. I'm David Gura.

0:14:25.520 --> 0:14:27.840
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0:14:27.880 --> 0:14:31.080
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0:14:31.120 --> 0:14:34.800
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0:14:35.000 --> 0:14:37.000
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0:14:40.080 --> 0:14:42.000
<v Speaker 3>Thanks for listening. We'll be back tomorrow.