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

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Speaker 2: This is the.

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Speaker 3: Bloombag Daybak podcast, available every morning on Apples, Spotify or

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Speaker 3: wherever you listen. It's Wednesday, the fifth of March in London.

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Speaker 3: I'm Caroline Hepka coming up today. President Trump concedes that

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Speaker 3: there may be downsides as he defends his use of

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Speaker 3: tariffs in a prime time speech to Congress. Germany up

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Speaker 3: ends its iron cloud controls on borrowing to boost defense

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Speaker 3: spending and sticking to five percent. China holds firm on

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Speaker 3: a bullish growth goal for the year ahead, but says

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Speaker 3: that it will be difficult. Let's start with a roundup

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Speaker 3: of our top stories. President Trump has delivered a full

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Speaker 3: throated defense of his economic and diplomatic agenda in a

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Speaker 3: joint session of Congress.

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Speaker 2: In a one hour and forty.

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Speaker 3: Minute speech, the US leader sought to justify any economic

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Speaker 3: pain that he conceded maybe coming as a result of taris.

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Speaker 4: Tariffs are not just about protecting American jobs. They're about

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Speaker 4: protecting the soul of our country. Tariffs are about making

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Speaker 4: America rich again and making America great again. And it's happening,

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Speaker 4: and it will happen.

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Speaker 2: Rather quickly.

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Speaker 4: There'll be a little disturbance, but we're okay with that.

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Speaker 4: It won't be much.

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Speaker 3: Despite admitting to the possible downside of his policy, Champ

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Speaker 3: also reiterated his plan to impose twenty five percent tariffs

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Speaker 3: on aluminium and steel and to put in place reciprocal

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Speaker 3: tariffs on all countries with barriers to American imports.

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Speaker 4: April twond reciprocal tariffs kick in, and whatever they tariff

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Speaker 4: us other countries, we will tariff them. That's reciprocal back

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Speaker 4: and forth. Whatever they tax us, we will tax them.

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Speaker 5: If they do not monitory tariffs to keep us out

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Speaker 5: of their market, then we will do non monitoring barriers

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Speaker 5: to keep them out of our market.

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Speaker 3: The president spoke just hours after hitting top trading partners

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Speaker 3: Canada and Mexico with twenty five percent tariffs and doubling

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Speaker 3: levies on the world's second largest economy, China to twenty percent,

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Speaker 3: moves which risk exacerbating economic pressures. The decision by the

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Speaker 3: US president to double down on wide ranging universal tariffs

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Speaker 3: appeared to be somewhat at odds with the comments of

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Speaker 3: his Commerce secretary only hours earlier, speaking to Fox Business,

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Speaker 3: Howard Lutnik, had said that the administration is looking at

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Speaker 3: a pathway for tariff relief on Mexican and Canadian goods

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Speaker 3: covered by North America's free trade agreements.

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Speaker 6: Both the Mexicans and the Canadians were on the phone

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Speaker 6: with me all day today trying to show that they'll

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Speaker 6: do better, and the president's listening, because you know, he's very,

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Speaker 6: very fair and verasonable. So I think he's going to

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Speaker 6: work something out with them. It's not going to be

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Speaker 6: a pause and that pause stuff, but I think he's

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Speaker 6: going to figure out, you do more, and I'll meet

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Speaker 6: you in the middle some way, and we're going to

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Speaker 6: probably be announced in that tomorrow.

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Speaker 3: Lutnik did not explicitly say what actions President shop was

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Speaker 3: considering after imposing across the board tariffs on America's closest neighbors.

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Speaker 3: Lutnik's comments saw equities gain in late trading after a

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Speaker 3: volatile day on markets that saw US stocks plunging, then recovering,

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Speaker 3: and falling anew. At the end of the session, Trump

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Speaker 3: outed his tariff moves as more effective at bringing jobs

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Speaker 3: to the US than President Biden's efforts, which included the

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Speaker 3: Chips and Science Act and its billions of dollars in

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Speaker 3: subsidies to spur domestic semiconductor manufacturing.

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Speaker 4: We're not giving them any money. Your Chips Act is

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Speaker 4: a horrible, horrible thing. We give hundreds of billions of

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Speaker 4: dollars and it doesn't mean a thing. They take our

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Speaker 4: money and they don't spend all that meant to them.

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Speaker 4: We're giving them no money. All that was important to

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Speaker 4: them was they didn't want to pay the tariffs. So

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Speaker 4: they came in their building, and many other companies are coming.

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Speaker 2: We'll have to give them money.

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Speaker 4: We just want to protect our businesses and our people,

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Speaker 4: and they will come because they won't have to pay

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Speaker 4: tariffs if they build in America. So it's very amazing.

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Speaker 4: You should get rid of the Chip Act.

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Speaker 3: President Trump's desire to end the Chips Act will bring

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Speaker 3: into question whether this will have an impact on future

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Speaker 3: investments in the semiconductor manufacturing space. This week, TSMSC pledged

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Speaker 3: to invest in additional one hundred billion dollars in advanced

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Speaker 3: plants on US soil. Other companies that have said they'll

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Speaker 3: invest more in the US because of the Chips Act

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Speaker 3: include Micron, Intel and South Koreas Samsung. Trump's speech comes

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Speaker 3: as the latest data shows US economic activity slowing amid

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Speaker 3: the uncertainties of a global trade war. Bloomberg opinion columnist

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Speaker 3: Mohammad al Arian says he expects some tough economic news

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Speaker 3: in the coming weeks.

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Speaker 7: I suspect we're going to see a whole series of

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Speaker 7: downward revisions in the next few weeks. I suspect those

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Speaker 7: revisions will be from about half a percentage points as

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Speaker 7: much as one percentage point. And if that happens, we're

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Speaker 7: going to be discussing the risk of what's called stall speed,

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Speaker 7: which means the economy isn't going fast enous to gain

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Speaker 7: the source of subtraction that keeps us out of something worse.

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Speaker 3: Mohammed el Arian's prediction comes as New York Fed President

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Speaker 3: John Williams says that he anticipates tariffs will contribute to inflation.

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Speaker 8: Based on what we know today, given all the uncertainties

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Speaker 8: around that I do factory and some effects of cares

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Speaker 8: now on inflation on prices, because I think we will

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Speaker 8: see some of those effects later this year.

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Speaker 3: Speaking during the Bloomberg invest Conference, he also emphasized there

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Speaker 3: is a lot of uncertainty of how the economy will

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Speaker 3: respond to President Trump's levees. US officials are rush to

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Speaker 3: revive a mineral resources deal with Ukraine after President Zinski

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Speaker 3: said that he was ready for peace. Speaking to Congress,

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Speaker 3: President Trump said that Ukraine is poised to sign the agreement,

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Speaker 3: which calls for fifty percent of the country's future resource

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Speaker 3: revenues to go into a US managed investment fund, and

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Speaker 3: that Russia is also seeking an end to the conflict.

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Speaker 4: Regarding the agreement on minerals and security, Ukraine is ready

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Speaker 4: to sign it at any time that is convenient for you. Simultaneously,

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Speaker 4: We've had serious discussions with Russia and have received strong

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Speaker 4: signals that they are ready for peace. Wouldn't that be beautiful?

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Speaker 3: Trump's comments after the Ukrainian leader took to social media

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Speaker 3: to express regret over an unsuccessful previous meeting in the

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Speaker 3: Oval Office, which led President Trump to walk away from negotiations. Meanwhile,

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Speaker 3: officials say a pause in US arms supplies to Ukraine

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Speaker 3: after that Oval Office clash could have a consequential impact

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Speaker 3: on the conflict. That's as it was announced yesterday that

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Speaker 3: Russia will work with the Trump administration to broker nuclear

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Speaker 3: talks with Iran. To other news, Germany is set to

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Speaker 3: amend its Constitution to exclude defense and security costs from

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Speaker 3: limits on fiscal spending. The move will unlock hundreds of

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Speaker 3: billions of euros in a dramatic shift that appends its

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Speaker 3: tight controls on government boring. Discussing the decision, the incoming

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Speaker 3: chance that, Fredrick Mertz says, the current geopolitical landscape demands action.

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Speaker 7: Is our volunteer and coldipsias.

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Speaker 8: I want to be very clear here, whatever it takes

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Speaker 8: must also go for our defense now in view of

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Speaker 8: the threats to our freedom and to peace on our continent.

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Speaker 3: Fredrick Mertz, speaking their via translator. He also shared that

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Speaker 3: Germany's major parties have agreed to launch a five hundred

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Speaker 3: billion euro investment fund for priorities like energy and housing.

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Speaker 3: China says that its economy will grow five percent this year,

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Speaker 3: setting a bullish target that has analysts predicting more stimulus

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Speaker 3: is on the cards. The superpower's annual economic forecast comes

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Speaker 3: a day after the US double tariffs on the country.

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Speaker 3: Speaking at the party's national Congress, Premier Lee Kiang says

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Speaker 3: the goal will only be met by supporting the economy Jesus.

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Speaker 2: The target of GDP grows of five percent fully takes

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Speaker 2: into account the need to stabilize employment and improve people's

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Speaker 2: well being as more as conditions.

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Speaker 1: Fun It underscores our resolve to meet difficulties head on

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Speaker 1: and strive hard to deliver.

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Speaker 3: Kiang, speaking through a translator there, His economic goals drew

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Speaker 3: a mixed response from the market. Some were positive about

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Speaker 3: the high growth number, others thought the announcement lacked any

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Speaker 3: positive surprises. The Hangs saying China Enterprises Index climbed as

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Speaker 3: much as two point six percent in early trading, but

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Speaker 3: pared back that gain to one point eight percent by

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Speaker 3: the midday break. Those are our top stories for you

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Speaker 3: this morning. Well, speaking of the markets, US equities on

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Speaker 3: the S and P five hundred yesterday at one point

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Speaker 3: fell by two percent, then actually ended up down one

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Speaker 3: point two percent on Tuesday. Futures though appointing higher up

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Speaker 3: seven tenths of one percent. There's been a lot of

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Speaker 3: volatility in US equity markets, a risk though in Asia

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Speaker 3: is trading strongly. European equities yesterday slipped two point one percent.

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Speaker 3: Futures though, are positive and bouncing higher one point eight

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Speaker 3: percent for the US SOX fifty futures, So it wasn't

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Speaker 3: just the trump announcements to Congress. This speech of Congress,

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Speaker 3: it was also this defense spending plan from Germany five

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Speaker 3: hundred billion euros that seemed to have an impact on

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Speaker 3: the euro dollars, sustaining a break of one oh five

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Speaker 3: trading at the highest levels as of twenty twenty five.

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Speaker 3: For the euro this morning we traded at one oh

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Speaker 3: six thirty six, another tenth of one percent. And the

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Speaker 3: Canadian and Mexican peso, those currencies they managed to reverse

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Speaker 3: declines yesterday after those comments from the Commerce Secretary Howard

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Speaker 3: Lutnik on a possible trade deal. So those are the

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Speaker 3: most important market movers. Let's discuss though President Trump's addressed

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Speaker 3: shall we to a joint session of Congress? President Trump

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Speaker 3: acknowledging that tariffs could cause a little disturbance, He lambasted

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Speaker 3: policies on race, gender, and diversity. He offered numerous tax cuts,

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Speaker 3: new projects like a natural gas pipeline, ramping up production

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Speaker 3: of critical minerals. Joining me to go through what was

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Speaker 3: said just in the early hours of this morning London Time,

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Speaker 3: Bloomberg's EMEA news director Roslyn matheson good morning, it was noisy.

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Speaker 3: There were protests from Democrats. There were chants of USA.

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Speaker 3: Trump went through a lot of his policies. What did

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Speaker 3: you make of the speech overall?

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Speaker 9: It was interesting because Trump's always a campaigner, even when

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Speaker 9: he's president, he doesn't really stop campaigning. But this didn't

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Speaker 9: feel quite as exuberant a presentation as he's done previously.

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Speaker 9: It was striking in a way that he talked about

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Speaker 9: the economy, but he didn't really dwell on the economy,

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Speaker 9: almost like he was saying to the American people, he

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Speaker 9: realizes there's going to be periods of adjustment here for them,

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Speaker 9: particularly when it comes to prices and the flow on

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Speaker 9: potentially from things like tariffs, and so he didn't really

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Speaker 9: dwell on the economy.

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Speaker 2: That's probably his weakest point right now.

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Speaker 9: Instead, as you say, he focused on some of his

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Speaker 9: traditional talking points. He really spent a lot of time

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Speaker 9: talking about migrants and the border area.

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Speaker 2: And what he's doing there.

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Speaker 9: He talked about, as you say, issues around DEI as well.

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Speaker 9: He didn't spend a lot of time on foreign policy either,

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Speaker 9: perhaps realizing that's not necessarily something that the American public

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Speaker 9: want to hear a lot about as well. I mean,

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Speaker 9: he really was sending this speech was to the American people.

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Speaker 9: So that was kind of like the key takeaways I think.

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Speaker 3: Yeah, and there was lots for sort of ordinary voters

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Speaker 3: to catch hold of. No tax on tips, no tax

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Speaker 3: on overtime, no tax on Social Security benefits for seniors,

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Speaker 3: is what the President said. But then it raises this

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Speaker 3: issue of how does the Republican administration pay for it all?

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Speaker 9: Well, that's right, and there again that he didn't have

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Speaker 9: a lot of answers. I mean, obviously they're leaning heavily

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Speaker 9: on this government cost cutting program DOGE, which is being

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Speaker 9: enacted by Elon Musk, and they're talking about very large

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Speaker 9: sums of money that they say that they are already saving,

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Speaker 9: although it's been very difficult to back that up even

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Speaker 9: with the figures that DOGE is putting out to show

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Speaker 9: that they are indeed saving enormous sums of money.

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Speaker 2: So that seems to be one effect.

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Speaker 9: He obviously really wants to get rid of the Chips

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Speaker 9: Act as well, although that's going to be that would

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Speaker 9: be incredibly difficult. But he's saying, essentially, why are we

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Speaker 9: paying all this money to try and get companies to

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Speaker 9: come and build their factories in the US, rather than

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Speaker 9: using other means to draw them over. So he's looking

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Speaker 9: at pulling several things out of the cupboard, it seems, yeah.

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Speaker 3: And President Trum repeated his grievances also against countries for

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Speaker 3: ripping off the world's wealthiest economy. Tariffs are not just

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Speaker 3: about protecting American jobs, They're about protecting the soul of America.

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Speaker 3: We played you that sound a little earlier in the

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Speaker 3: bulletin because it was quite striking. And yet he admitted

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Speaker 3: that there would be an impact in the US.

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Speaker 2: He did, he said it, but he said it would

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Speaker 2: be small.

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Speaker 9: And what a lot of economists are saying is that

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Speaker 9: the impact of tariffs on the US economy could be significant,

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Speaker 9: but not in ways that Donald Trump is really saying,

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Speaker 9: because he's What economists are warning about is the pass

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Speaker 9: on effect of tariffs to US companies and to US consumers,

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Speaker 9: right at a time when obviously inflation is still issuing

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Speaker 9: in the US, and economists are also increasingly warning that

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Speaker 9: tariffs wouldn't just be an issue for inflation but also for.

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Speaker 2: Growth in the US.

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Speaker 9: And you can see perhaps already a little bit of

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Speaker 9: signaling from the US that they might walk back some

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Speaker 9: of these size of the tariffs on Canada and Mexico.

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Speaker 9: Howard Litnick, the Common Secretary, indicating something might come today

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Speaker 9: on that, But certainly Trump was indicating more that he

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Speaker 9: feels that tariffs are going to bring in trillions of

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Speaker 9: dollars to the US economy.

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Speaker 3: Yeah, it was perhaps a more traditional, as you say,

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Speaker 3: maybe a more sedate affair. Yes, there was lots of chanceing,

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Speaker 3: but there were also guests that President Trump referred to,

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Speaker 3: and some of them were people I think that he

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Speaker 3: felt could illustrate the points on the sort of social

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Speaker 3: concerns that he has, the cultural issues that he's raised

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Speaker 3: against DEI, also notably talking about English as the official

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Speaker 3: language of the United States. How much of the conservative

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Speaker 3: agenda of the Trump administration is going to have influence

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Speaker 3: around the world because he did mention that on diversity,

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Speaker 3: equity and inclusion.

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Speaker 9: Well, again, he was really talking to his US base

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Speaker 9: with that and throwing I guess a bit of red

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Speaker 9: meat their way when it comes to DEI. But it'll

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Speaker 9: be interesting to see how much that provides companies with

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Speaker 9: the incentive to ditch DEI, not just in the US, but.

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Speaker 2: In the rest of the world.

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Speaker 9: Do they adhere to that in the US, but do

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Speaker 9: they quietly keep their DEI goals overseas and their programs,

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Speaker 9: or do they say, well, this gives us the rationale

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Speaker 9: to do that everywhere. That would be one interesting thing

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Speaker 9: because we're seeing a lot of big companies at least

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Speaker 9: shed it when it comes to the US.

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Speaker 2: But also how much does that further in a way

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Speaker 2: inflame or allow.

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Speaker 9: The agenda of very right wing parties across Europe alone.

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Speaker 9: We've seen elon mus for example, very much drawing closer

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Speaker 9: to the AfD in Germany, that's the far right group there,

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Speaker 9: and does that kind of give weight to their agendas

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Speaker 9: in their own countries in obviously the AfD is now

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Speaker 9: going to be one of the bigger political forces.

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Speaker 2: In Germany, but not in government. And does that embolden

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Speaker 2: those movements around the world?

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Speaker 3: Yeah, okay, Ross, thank you so much for being with

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Speaker 3: me this morning. Blueberg's EA News director Roslin Matheson. So

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Speaker 3: going over some of the points that President Trump made

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Speaker 3: in his address, so that joint session of Congress talking

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Speaker 3: about taxes, about migration, DEI and tariffs, which takes us

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Speaker 3: to our next point. China is targeting growth of five

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Speaker 3: percent this year despite US tariffs and is also ramping

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Speaker 3: up its own defense spending, reflecting President Shijingping's ambition to

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Speaker 3: build a military that can challenge the United States. Joining

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Speaker 3: me now is Bloomberg's China Government and Economics editor Jenny

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Speaker 3: Marsh to discuss what is cut of the National People's Congress,

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Speaker 3: which is the Chinese government's biggest political meeting of the year.

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Speaker 3: Good morning, Jenny, So the aim of five percent for

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Speaker 3: a third year in a row, how does Beijing plan

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Speaker 3: to reach that? What of any extra stimulus measures? That's right,

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Speaker 3: this is the third year in a row.

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Speaker 10: It sort of looks a bit like China's now found

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Speaker 10: a flaw of what's an acceptable level of growth to get.

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Speaker 10: They're the main sort of thing they're doing is they've

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Speaker 10: laid out the highest fiscal deficit target and over three decades,

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Speaker 10: a plan to raise local government bond issuance to record

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Speaker 10: levels too, So in short, more government spending.

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Speaker 2: You know, I think these.

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Speaker 10: Targets were sort of well telegraphed ahead of the meeting,

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Speaker 10: so they're very much in line with what was expected

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Speaker 10: going in. Of course, you know what wasn't necessarily expected

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Speaker 10: going into this meeting was that China would already be

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Speaker 10: facing a twenty percent caraff hike from Trump. You know,

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Speaker 10: so I think the big question here is the government

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Speaker 10: is clearly sort of very bullisious year about maintaining its growth,

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Speaker 10: and they can roll out stimulus you know, throughout the

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Speaker 10: year as is needed. If they see things slowing down,

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Speaker 10: you know, they'll look at the economic data and they'll

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Speaker 10: make tweaks. But if Trump does continue to ramp up tariffs,

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Speaker 10: you know, they have a very very big challenge ahead

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Speaker 10: this year that was not there in previous years when

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Speaker 10: they had this goal.

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Speaker 3: Yeah. Absolutely, and Beijing's response so far has been to

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Speaker 3: call for talks, retaliation, but not escalation, and that is

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Speaker 3: so we kind of wonder how she is going to

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Speaker 3: handle the trade war.

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Speaker 10: He's approaching it with extreme caution, you know. I think

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Speaker 10: Blue Bay Economics called it a surgical approach to retaliation yesterday,

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Speaker 10: which I think is very accurate. They are hitting back

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Speaker 10: with a far lower tariff level. You know, Trump has

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Speaker 10: gone for twenty percent hike. Now I think the hike

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Speaker 10: on the Chinese side is still under three percent, and

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Speaker 10: they're only sort of targeting these products that they can

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Speaker 10: easily source some other places. So in yesterday's retaliation, the

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Speaker 10: big aim was American beans, which around fifty percent of

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Speaker 10: American exports go to China. But China since the last

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Speaker 10: trade war, of course, has diversified its options there. It

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Speaker 10: can buy soy beans from Brazil now instead. So it's

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Speaker 10: being very careful in how it sort of responds to

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Speaker 10: the US.

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Speaker 2: It's trying not to escalate things.

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Speaker 3: And I mentioned defense spending. There was a social media

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Speaker 3: post on the Chinese embassy in the United States saying,

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Speaker 3: if is what the US wants, been a tariff war,

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Speaker 3: a trade war, or any other type of war, We're

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Speaker 3: ready to fight till the end. I mean, that's the

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Speaker 3: kind of stark, short message. Defense spending in China is

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Speaker 3: going up too.

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Speaker 10: Yeah, that was some of the toughest language we've seen

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Speaker 10: in this trade war so far. Actually they've been state

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Speaker 10: media has been pretty muted. But the defense budget today,

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Speaker 10: you know that they've hightd it again by seven point

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Speaker 10: two percent, which matches last year's growth level. And I

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Speaker 10: think that just reflects of the ambitions that she has

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Speaker 10: to build a military that can challenge the US. You know,

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Speaker 10: just since Trump came in, we've seen we've seen the

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Speaker 10: PLA do live fire drills off Australia, which sort of

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Speaker 10: caused quite a bit of reaction their drills off Taiwan,

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Speaker 10: off Vietnam being a lot more sort of assertive in

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Speaker 10: its sort of projecting military power. And you know, with

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Speaker 10: Trump being so occupied with these trade spats with other

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Speaker 10: countries and you know, all the things he has right now,

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Speaker 10: maybe this is a good chance for China to sort

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Speaker 10: of keep projecting that military power. Maybe Chi Chiping is

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Speaker 10: seeing an opening there.

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Speaker 2: Mm hmm.