WEBVTT - Bloomberg Surveillance TV: June 27, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and am Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:37.040 Bloomberg Terminal and the Bloomberg Business App. Joining us now 0:00:37.080 --> 0:00:39.879 to discuss the state of energy, not just domestically but worldwide, 0:00:39.920 --> 0:00:44.040 the seventeenth United States Secretary of Energy, Chris Right, Mister Secretary, 0:00:44.040 --> 0:00:46.280 welcome back to the program sir, looking forward to an 0:00:46.320 --> 0:00:48.480 in dev conversation with you about what you cover every 0:00:48.479 --> 0:00:50.160 single day. So, first of all, just on a run 0:00:50.200 --> 0:00:52.080 so we can deal with that. What is the current 0:00:52.120 --> 0:00:55.240 stance of the US officially on the use and import 0:00:55.560 --> 0:00:56.520 of the running crude? 0:00:58.560 --> 0:01:01.560 Oh, the sanctions are still in pl no change there. 0:01:01.800 --> 0:01:04.520 I think the Trump what President Trump was referring to 0:01:04.640 --> 0:01:07.679 there is Hey, if we make a large piece and 0:01:07.760 --> 0:01:11.440 sanctions come off, aron can flourish. 0:01:11.120 --> 0:01:13.319 If you could a decent understanding the miss the Secretary 0:01:13.319 --> 0:01:15.120 of just how much of running crud is being consumed 0:01:15.120 --> 0:01:19.280 and impulsive already as things stand, despite the sanctions. 0:01:21.080 --> 0:01:23.280 We do so, a RAM produces about three and a 0:01:23.319 --> 0:01:26.440 half million barrels a day, and they've been import they've 0:01:26.480 --> 0:01:29.280 been exporting about one and a half million barrels of 0:01:29.280 --> 0:01:32.639 oil a day, and the maximum pressure campaign that President 0:01:32.680 --> 0:01:35.480 Trump did in his last term tamp that down to 0:01:35.560 --> 0:01:37.720 only one hundred or two hundred thousand barrels a day. 0:01:37.760 --> 0:01:39.880 They cut off ninety percent of it. That was a 0:01:40.080 --> 0:01:43.520 possible strategy here as well, but hadn't been implemented yet. 0:01:43.640 --> 0:01:47.000 We tried to give negotiations a chance see if we 0:01:47.000 --> 0:01:48.480 can do it without maximum pressure. 0:01:48.800 --> 0:01:51.560 So is maximum pressure still on the table or is 0:01:51.600 --> 0:01:53.200 the ad ministration walking away from that? 0:01:55.480 --> 0:01:57.880 Well, the goal right now, of course, is to get 0:01:57.880 --> 0:02:00.160 a peace deal, is to get peace into the middle 0:02:00.400 --> 0:02:03.880 and spread the focus on commerce not conflict. So no, 0:02:04.120 --> 0:02:06.720 it's not actively being discussed right now, but the situation 0:02:06.840 --> 0:02:09.760 is still dynamic there. We want to see peace, prosperity 0:02:09.800 --> 0:02:12.120 and security as the future of the Middle East. 0:02:12.480 --> 0:02:14.320 When it comes to what's going on in Iran as well. 0:02:14.360 --> 0:02:17.600 In terms of the IAEA, the Foreign Minister said yesterday 0:02:17.639 --> 0:02:20.280 that basically they have no plans to having the Director 0:02:20.320 --> 0:02:23.480 General Raphael Grossy in Iran and doesn't sound like they're 0:02:23.520 --> 0:02:27.160 willing to give the inspectors the space, time and access 0:02:27.200 --> 0:02:29.440 they need to look at these nuclear facilities. 0:02:29.639 --> 0:02:31.440 What is the United States response to that? 0:02:33.720 --> 0:02:35.720 Yeah, look, this is early on. 0:02:35.880 --> 0:02:36.720 This is early on. 0:02:37.000 --> 0:02:40.000 Iran has just had most of its nuclear program entirely 0:02:40.040 --> 0:02:43.519 devastated by Israel and the United States. They're a little 0:02:43.560 --> 0:02:45.720 bit humbled, they're a little bit shell shocked right now. 0:02:46.040 --> 0:02:48.520 So yeah, I wouldn't put too much weight on those words, 0:02:48.720 --> 0:02:52.120 but a final peace steal certainly has to have confidence 0:02:52.360 --> 0:02:55.400 in a dismantlement of the Iranian nuclear program and that 0:02:55.440 --> 0:02:58.240 people can have security it won't be resurrected in the future. 0:02:58.520 --> 0:03:00.480 You deal with a lot of nuclear at the Energy 0:03:00.560 --> 0:03:04.280 Department before the US strikes, but after the Israeli strikes. 0:03:04.320 --> 0:03:08.880 Raphael Grossi told us that the IAEA cannot verify with 0:03:09.000 --> 0:03:12.800 the four hundred kilograms of sixty percent enriched uranium in 0:03:12.919 --> 0:03:16.480 Isfahan was currently where it was? 0:03:16.480 --> 0:03:18.480 Was it still there? Do the Irradians take it out? 0:03:18.720 --> 0:03:22.639 Doesn't the IAEA need to go in and verify where 0:03:22.639 --> 0:03:23.960 this enriched uranium is. 0:03:26.240 --> 0:03:29.040 I think that's quite likely part of a future negotiation 0:03:29.200 --> 0:03:30.200 or a future deal. 0:03:30.200 --> 0:03:32.040 Miss the Secretary. Of course, this is just one part 0:03:32.080 --> 0:03:33.960 of the conversaction and energy right now. I can tell 0:03:33.960 --> 0:03:36.000 you earlier on this morning, there's a report that you 0:03:36.040 --> 0:03:37.960 might have seen that came from reuts As. Actually the 0:03:38.040 --> 0:03:41.240 Administraction is readying a package of executive actions aimed a 0:03:41.280 --> 0:03:45.360 boosting energy supply to power the US expansion of artificial energy. 0:03:45.400 --> 0:03:47.440 Mister Secretary, what can you share with this this morning? 0:03:49.600 --> 0:03:54.320 Yeah, Look, artificial intelligence is an incredibly exciting development that's coming. 0:03:54.560 --> 0:03:57.240 It is going to revolutionize not just our economy but 0:03:57.360 --> 0:04:00.560 our health drug discovery, but it also plays huge role 0:04:00.600 --> 0:04:03.240 in national defense, which is why I've compared it to 0:04:03.280 --> 0:04:07.000 the Manhattan Project. It's critical, it'll be transformative, and we 0:04:07.080 --> 0:04:10.160 must lead. We cannot be second place in AI. And 0:04:10.240 --> 0:04:12.920 to do that, we have the scientist, we have the capital. 0:04:13.360 --> 0:04:17.039 You have to have a huge growth in US electricity production. 0:04:17.480 --> 0:04:19.719 So we need to get the morass in the way 0:04:19.760 --> 0:04:22.440 that's really hobbled the American energy system for the last 0:04:22.480 --> 0:04:25.560 four years, and we got to unleash American investment in 0:04:25.600 --> 0:04:28.800 American capitalism. That's going to take building a lot of 0:04:28.839 --> 0:04:29.719 new power generation. 0:04:29.920 --> 0:04:33.480 Mister Secretary, to build on that idea, what type of 0:04:33.720 --> 0:04:35.840 energy production are you looking at? I know that New 0:04:35.920 --> 0:04:38.960 York State was just looking at potentially creating a new 0:04:39.200 --> 0:04:40.640 nuclear energy plan. 0:04:40.880 --> 0:04:43.080 Is that one of the paths of travel. 0:04:42.720 --> 0:04:44.680 That you think is going to be pivotal for the 0:04:44.760 --> 0:04:45.479 United States? 0:04:47.600 --> 0:04:50.920 Absolutely, look to have a secure power glided into power AI. 0:04:51.160 --> 0:04:55.479 You need ninety nine point percent of the time on 0:04:55.760 --> 0:04:59.240 power and so that today our biggest source of reliable 0:04:59.240 --> 0:05:02.480 power today by far as natural gas. Our second biggest 0:05:02.520 --> 0:05:05.320 source is nuclear, and our third biggest source right behind 0:05:05.320 --> 0:05:08.200 that is coal. So those are the three keys to 0:05:08.279 --> 0:05:11.320 the future of our electricity grid. Nuclear we haven't built 0:05:11.360 --> 0:05:13.080 much for a while, so I was thrilled to see 0:05:13.120 --> 0:05:17.000 the governor's announcement embracing nuclear in New York. We have 0:05:17.040 --> 0:05:21.080 the governors of Tennessee and Georgia and Virginia passionate about 0:05:21.080 --> 0:05:23.880 getting new nuclear built in their states. So yes, one 0:05:23.920 --> 0:05:26.880 of our goals in this administration is is to launch 0:05:27.160 --> 0:05:28.800 the American nuclear renaissance. 0:05:28.960 --> 0:05:32.400 Mister Secretary, how do you encourage this type of investment 0:05:32.440 --> 0:05:34.400 at a time where the goal of the President has 0:05:34.440 --> 0:05:37.920 also been to lower prices. And we've seen this particularly 0:05:38.000 --> 0:05:40.560 in the energy space, where the President has been very 0:05:40.640 --> 0:05:43.640 vocal about the desire to see energy prices lower. And 0:05:43.680 --> 0:05:45.599 this has led to a number of oil rigs in 0:05:45.640 --> 0:05:48.119 the shell patch to be taken offline because it isn't 0:05:48.320 --> 0:05:51.240 profitable for a lot of these companies to be producing 0:05:51.360 --> 0:05:52.320 as much as they used to. 0:05:52.560 --> 0:05:54.000 How do you sort of square that circle? 0:05:56.160 --> 0:05:59.120 Yes, yeah, prices are supply and demand. Prices are supply 0:05:59.200 --> 0:06:02.479 and demand. But what we're doing in the administration is 0:06:02.600 --> 0:06:06.120 everything possible to lower the cost to produce energy in 0:06:06.120 --> 0:06:08.200 the United States. Cheaper to produce a barrel of oil 0:06:08.279 --> 0:06:10.800 or an mcf and natural gas, you know, or a 0:06:10.800 --> 0:06:13.720 ton of coal or a kilo one hour of electricity 0:06:13.720 --> 0:06:17.960 from nuclear plants. So that's deregulatory, that's common sense regulation 0:06:18.120 --> 0:06:21.359 focused on health and safety and the environment, but not 0:06:21.480 --> 0:06:26.520 the nonsense that just burdens burdens energy producers. Nuclear will 0:06:26.560 --> 0:06:28.760 be a little bit more expensive at the start, but 0:06:28.800 --> 0:06:32.320 I think that cost will be borne by hyperscalers. They 0:06:32.400 --> 0:06:36.159 want to see nuclear rearrives and they'll sign higher power 0:06:36.200 --> 0:06:39.640 purchase agreements to help kickstart nuclear we need to grow 0:06:39.680 --> 0:06:42.920 the energy supply and keep cost down. You're right, that's 0:06:42.920 --> 0:06:45.320 a challenge. You're right to bring that issue up, and 0:06:45.360 --> 0:06:47.200 that's what I work on seven days a week. 0:06:47.320 --> 0:06:49.880 Let's get at the regulatory burden. We're lucky to have 0:06:49.920 --> 0:06:52.880 someone in your seat that's actually ran an energy company 0:06:52.880 --> 0:06:55.320 in this country. As you know, permitting it is really 0:06:55.360 --> 0:06:58.320 difficult across many dimensions. You have to go state by 0:06:58.400 --> 0:07:00.960 state and the things you can do at the executive 0:07:01.080 --> 0:07:03.359 level to make this a lot easier. Could you describe 0:07:03.360 --> 0:07:04.440 those kind of things. 0:07:06.160 --> 0:07:08.560 That there are a number of things, and it is 0:07:08.600 --> 0:07:12.280 why we created the National Energy Dominance Council. That's really 0:07:12.320 --> 0:07:15.840 to bring people leaders from all different agencies that impact 0:07:15.840 --> 0:07:18.600 the ability to build things in our country together and 0:07:18.680 --> 0:07:21.520 say what We talked to producers and say, you know, 0:07:21.520 --> 0:07:23.680 why aren't you building that? And they'll give us a 0:07:23.720 --> 0:07:26.680 list of seven things. It'll take us seven years, and 0:07:26.720 --> 0:07:29.120 we're really worried about this one and that one. So 0:07:29.160 --> 0:07:31.440 we dive into those issues and say how can we 0:07:31.480 --> 0:07:35.120 simplify that. But I'll highlight a Supreme Court decision from 0:07:35.160 --> 0:07:38.040 just a few weeks ago on to get more oil 0:07:38.120 --> 0:07:40.960 out of Utah via train that've been held up for 0:07:41.160 --> 0:07:44.679 years through suits over NEPA, and the Supreme Court ruled 0:07:44.800 --> 0:07:48.240 eight to zero. Every Supreme Court justice involved in the 0:07:48.280 --> 0:07:51.160 case said, yes, we need to put NEPA back in 0:07:51.200 --> 0:07:54.440 its box. It's to check to make sure the environment's 0:07:54.480 --> 0:07:58.360 being considered. It's not to have years long, endless delays 0:07:58.520 --> 0:08:01.040 because if you delay something, you make it more uncertain, 0:08:01.160 --> 0:08:03.360 more expensive, and simply less things get built. 0:08:03.520 --> 0:08:05.920 Miss the Secretary, appreciate your time, sir, as always to 0:08:05.960 --> 0:08:07.880 break down the situation. Hopefully we can engage on this 0:08:07.920 --> 0:08:11.000 conversation again, Chris. Right there, the Energy Secretary of the 0:08:11.080 --> 0:08:23.320 United States, Tobin Marcus of All for Research, joins us 0:08:23.320 --> 0:08:25.520 now for more. Tobin, welcome to the program. I just 0:08:25.560 --> 0:08:27.120 want to pick up on the language, the words used 0:08:27.120 --> 0:08:29.640 by the COMMA secretary. How would lot mak we inked 0:08:29.680 --> 0:08:33.520 the deal? What's the deal? Do you have any details whatsoever? 0:08:34.679 --> 0:08:36.640 This seems to be the third time for the giving 0:08:36.880 --> 0:08:40.000 this particular deal because it seems to be a solidification 0:08:40.160 --> 0:08:42.360 of the framework to get back to the Geneva and 0:08:42.480 --> 0:08:46.079 census that was reached about two months ago. So it's 0:08:46.120 --> 0:08:48.040 good to have that lockdown. But it does not really 0:08:48.080 --> 0:08:50.199 look to me like that's delivering any kind of incremental 0:08:50.240 --> 0:08:54.920 relief or incremental steps forward. It's just solidifying the set 0:08:54.960 --> 0:08:57.439 of understandings that was required to keep the trading relationship 0:08:57.440 --> 0:09:00.240 from going further off track in terms of access to 0:09:00.320 --> 0:09:02.600 RARR earths on their side and the rollback of some 0:09:02.600 --> 0:09:04.640 of the incremental export controls on our side. 0:09:04.800 --> 0:09:06.760 I was at those talks in London. I still can't 0:09:06.760 --> 0:09:09.880 get from this administration and idea of what the language 0:09:09.920 --> 0:09:13.320 looks like. Who signed it. The Chinese say earlier this 0:09:13.360 --> 0:09:15.960 morning the US side will correspondingly cancel a series of 0:09:15.960 --> 0:09:19.439 restrictive measures taken against China, which measures. 0:09:20.480 --> 0:09:23.640 So it seems from my perspective that the Chinese have 0:09:23.720 --> 0:09:27.400 been primarily focused on the further expansion of export controls 0:09:27.440 --> 0:09:30.480 and took place after the Geneva meeting. So certainly the 0:09:30.920 --> 0:09:36.080 restrictions on natural gas liquids, on aerospace, on EA software, 0:09:36.440 --> 0:09:38.040 those are I think are clearly in the set of 0:09:38.080 --> 0:09:39.920 things that are going to be rolled off. The initial 0:09:40.000 --> 0:09:43.280 vote of contention from the Chinese side was this declaration 0:09:43.480 --> 0:09:46.400 that anyone using baway send chips is in violation of 0:09:46.480 --> 0:09:49.760 US export controls, that the uside characterized as a restatement 0:09:49.760 --> 0:09:53.400 of existing policy, and the Chinese side characterized as incremental 0:09:53.440 --> 0:09:55.920 expansion of export control. So that, in my mind is 0:09:55.920 --> 0:09:59.040 the question. I don't think that the US has committed 0:09:59.040 --> 0:10:01.040 to rolling that back, but that I think is sort 0:10:01.040 --> 0:10:04.880 of the final piece of wiggle room in how we 0:10:04.960 --> 0:10:05.720 understand this. 0:10:05.720 --> 0:10:06.840 This isn't a trade deal. 0:10:06.880 --> 0:10:08.959 This is just an understanding of some of the de 0:10:09.240 --> 0:10:12.480 escalation we've seen in these talks in Geneva and London. 0:10:12.520 --> 0:10:14.880 So where does this leave the relationship more long term, 0:10:14.920 --> 0:10:16.600 for more of a comprehensive agreement. 0:10:17.800 --> 0:10:20.040 It still looks very challenging to me. I think that 0:10:20.080 --> 0:10:23.760 the bullish narrative in markets immediately after the Geneva meeting 0:10:23.960 --> 0:10:26.559 was we've come down to thirty but of that thirty, 0:10:26.760 --> 0:10:29.080 twenty percent is FEDYL related, and that should be an 0:10:29.120 --> 0:10:31.960 easy thing for the Chinese side to alleviate Trump's concern 0:10:32.040 --> 0:10:35.080 on you know, this is an authoritarian society, Well like 0:10:35.120 --> 0:10:37.760 we should just think that they can flip a switch 0:10:38.000 --> 0:10:40.280 and do whatever they need to do on export controls 0:10:40.320 --> 0:10:43.920 on tentinal precursors to satisfy the US side. I think 0:10:43.960 --> 0:10:46.600 that's easier said than done, even to the extent that 0:10:46.600 --> 0:10:48.680 they can fully lay our substantive concerns, you know. I 0:10:48.679 --> 0:10:52.440 mean there have been multiple rounds of headlines from Boomberg 0:10:52.600 --> 0:10:56.240 among others about Vietnam aiming towards a twenty to twenty 0:10:56.320 --> 0:10:58.319 five percent teriff rate in their talks. 0:10:58.360 --> 0:10:59.040 Even if we've. 0:10:58.920 --> 0:11:00.719 Reached a deal, that's what the to look consist of, 0:11:01.000 --> 0:11:02.880 and we're taking Vietnam to twenty five, it does not 0:11:02.960 --> 0:11:05.160 really make sense to take off that twenty percent Fennel 0:11:05.200 --> 0:11:07.920 tariff and China at ten. It would be very upside 0:11:07.920 --> 0:11:10.720 down to go after Vietnam, where the main concerns have 0:11:10.800 --> 0:11:13.720 been around them as sort of an outlet for Chinese 0:11:13.760 --> 0:11:16.800 industrial over capacity and transshipping and so forth, and hit 0:11:16.840 --> 0:11:19.040 them harder than China itself. So I think we have 0:11:19.040 --> 0:11:20.600 a long way to go. I mean, the Chinese love 0:11:21.240 --> 0:11:23.280 slow delivered to mechanisms, and that's what we have in 0:11:23.280 --> 0:11:25.160 place now. And I think these talks will drag out 0:11:25.160 --> 0:11:27.439 for quite a while longer before we get further inco 0:11:27.480 --> 0:11:28.240 mentally easy. 0:11:28.200 --> 0:11:28.920 Isn't that Tobin? 0:11:29.200 --> 0:11:31.440 Kind of what we expect across the board, that this 0:11:31.559 --> 0:11:33.040 is going to be a process and they're going to 0:11:33.080 --> 0:11:35.680 be frameworks that are going to be announced on July ninth. 0:11:35.720 --> 0:11:37.360 That will then kick the can down the road. 0:11:37.640 --> 0:11:39.960 And right now the market is banking on escalate to 0:11:39.960 --> 0:11:42.520 de escalate, as John was talking about when it came 0:11:42.559 --> 0:11:44.280 to a run, but also when it comes to trade 0:11:44.320 --> 0:11:46.439 deals and what the path forward is likely to be 0:11:46.520 --> 0:11:47.160 for the president. 0:11:48.400 --> 0:11:51.520 Yeah, so I think I am less optimistic about exactly 0:11:51.559 --> 0:11:53.680 what these deals are going to deliver in terms of 0:11:53.720 --> 0:11:57.200 market relevant relief than I think sort of hull blue 0:11:57.280 --> 0:11:59.959 about deals in general and deal making as an enter 0:12:00.760 --> 0:12:03.839 would suggest, you know, latnux indication that there's going to 0:12:03.840 --> 0:12:06.080 be ten of these deals, and now we'll see they've 0:12:06.120 --> 0:12:07.839 been teasing a bunch of deals right around the corner 0:12:07.880 --> 0:12:10.080 for about two months now. But even if deals get 0:12:10.160 --> 0:12:12.400 rolled out, I mean, again in Vietnam being in my 0:12:12.520 --> 0:12:16.040 mind sort of the easiest or most important example, we 0:12:16.320 --> 0:12:19.920 seem to be aiming towards a significant increase in reciprocal 0:12:20.000 --> 0:12:22.640 terriff rates in that set of talks. So if we 0:12:22.720 --> 0:12:24.520 roll out that deal, that's not like good news for 0:12:24.559 --> 0:12:26.800 the market, it's not good news for I need to 0:12:26.800 --> 0:12:29.439 take one name that was mentioned just a moment ago, 0:12:30.280 --> 0:12:33.880 and similarly elsewhere, you know, like the sectoral tariffs have 0:12:33.920 --> 0:12:36.920 been the sticking point primarily with Japan, with India to 0:12:36.960 --> 0:12:39.520 some extent, they will be a huge sticking point with 0:12:39.600 --> 0:12:41.800 the EU, although those talks are not quite as far along. 0:12:42.080 --> 0:12:43.960 It doesn't really look to me like the US side 0:12:44.040 --> 0:12:45.360 is going to give on those. And so if we 0:12:45.400 --> 0:12:48.480 get a bunch of deals that don't drop the sectoral tariffs, 0:12:48.600 --> 0:12:50.880 I don't really think that this represents a big kind 0:12:50.920 --> 0:12:53.679 of dubbish impulse for markets. 0:12:54.040 --> 0:12:56.439 Type and appreciate your time and your opinion, Thank you, sir, 0:12:56.480 --> 0:13:08.400 type of Marcus there before Free said it's not just 0:13:08.480 --> 0:13:11.120 this morning the White House announcing imminem plans assigned trade 0:13:11.160 --> 0:13:13.720 agreements with ten countries, with the focus now shifting to 0:13:13.760 --> 0:13:17.920 the European Union. Marissa Adams of HSBC stand constructive, writing, 0:13:17.920 --> 0:13:20.320 we have entered a new era for trade. We don't 0:13:20.360 --> 0:13:22.960 expect things to go back to the way they were, Marissa, 0:13:23.040 --> 0:13:24.920 joints is now for more. Marissa, good morning, it's going. 0:13:24.800 --> 0:13:25.520 To see you. Good morning. 0:13:25.520 --> 0:13:26.000 Thanks for having me. 0:13:26.080 --> 0:13:28.880 You've said this before. Trade doesn't stand still, but it 0:13:28.920 --> 0:13:31.400 has changed. Can you just walk us all through how 0:13:31.480 --> 0:13:32.080 it's changed. 0:13:32.400 --> 0:13:35.960 Yeah, And it's really interesting because we did see disruption 0:13:36.040 --> 0:13:36.800 through the pandemic. 0:13:37.160 --> 0:13:38.760 You know, we've seen a different. 0:13:38.679 --> 0:13:42.960 Period of negotiations, but really posts April second, it's changed 0:13:43.000 --> 0:13:45.079 that I am at both on the supply side and 0:13:45.160 --> 0:13:48.199 the demand side. Now we've see these ten percent baseline 0:13:48.200 --> 0:13:50.080 tariffs that are now in place, and I think it 0:13:50.120 --> 0:13:52.080 is really clear. I always want to keep reminding people 0:13:52.160 --> 0:13:54.520 they're there, so whilst we have a lot of negotiations, 0:13:54.559 --> 0:13:57.920 ten percent is actually in place. But what's really changed 0:13:58.000 --> 0:14:00.480 is the speed of negotiations. And you know, we've heard 0:14:00.480 --> 0:14:04.040 this morning around the China deal. The Indian trade negotiators 0:14:04.040 --> 0:14:07.240 are in DC this week. There's optimism around you deal, 0:14:07.240 --> 0:14:09.199 and I think that this is actually quite a positive 0:14:09.200 --> 0:14:12.120 sign that quite quickly we're looking to come to agreements. Now, 0:14:12.120 --> 0:14:14.680 I would say there are deals in principle, they're not 0:14:14.720 --> 0:14:16.680 free trade agreements, and free trade agreements, as we know, 0:14:16.800 --> 0:14:19.240 take five to ten multiple years to really get down 0:14:19.240 --> 0:14:21.160 to the nitty gritty detail. But at least this is 0:14:21.200 --> 0:14:23.920 a positive sign that we're getting to some certainty For corporates. 0:14:24.000 --> 0:14:26.200 What are you seeing from individual corporations at the moment, 0:14:26.280 --> 0:14:28.040 what are they doing. We've been having this debate with 0:14:28.040 --> 0:14:29.960 economists and maybe it's better to have this debate with you. 0:14:30.360 --> 0:14:32.440 Are you seeing them take the hit on margins, pass 0:14:32.440 --> 0:14:34.640 it on to consumers, something in between? What are they doing? 0:14:34.800 --> 0:14:36.760 So it really depends sector bisector, and I think the 0:14:36.840 --> 0:14:38.440 one industry where we've seen at the most is in 0:14:38.480 --> 0:14:43.120 consumer retail. They have shorter order cycles, the lower margins, 0:14:43.200 --> 0:14:44.760 So what we're seeing there is that some of them 0:14:44.800 --> 0:14:46.400 are actually taking a hit to their bottom line. We've 0:14:46.400 --> 0:14:48.280 seen a few companies come out this week around that. 0:14:48.800 --> 0:14:51.000 The numbers, though still are fairly small, and I think 0:14:51.080 --> 0:14:54.400 ten percent is something that co corporates can absorb. When 0:14:54.400 --> 0:14:56.960 it starts to get to twenty five, thirty, forty fifty, 0:14:57.320 --> 0:14:58.920 that's at a stage where even if you want to 0:14:58.920 --> 0:15:01.280 compress your margins are going to have past pass costs 0:15:01.280 --> 0:15:02.000 on to consumers. 0:15:02.080 --> 0:15:04.520 How much confidence do they have in terms of where 0:15:04.560 --> 0:15:06.880 tariffs are going to be the highest i e. China, 0:15:07.000 --> 0:15:09.680 that they're actually moving production. How quickly is that happening? 0:15:09.840 --> 0:15:12.240 And it's a really good question in the sense that 0:15:12.320 --> 0:15:14.640 it depends if you are a shorter industry or a 0:15:14.640 --> 0:15:16.920 longer order industry. So we've seen in the tech industry, 0:15:16.920 --> 0:15:19.520 as an example, a lot of investment in semiconductors here 0:15:19.520 --> 0:15:22.120 in the United States. But a factory isn't built overnight. 0:15:22.160 --> 0:15:25.040 So we've got those commitments there, but five to six 0:15:25.120 --> 0:15:25.880 seven years. 0:15:25.640 --> 0:15:26.480 To build a factory. 0:15:26.720 --> 0:15:28.480 You're only going to do that once you know there 0:15:28.560 --> 0:15:30.360 is a certain path around how much more it will 0:15:30.360 --> 0:15:32.720 cost to come on shore. And again, margins is key. 0:15:32.760 --> 0:15:36.000 So some of those high margin tech industry tech businesses 0:15:36.000 --> 0:15:38.160 in the OEMs, they can afford to come back to 0:15:38.160 --> 0:15:39.800 the US. If you're in the ones that are a 0:15:39.800 --> 0:15:41.920 little bit narrow, you're still having to compete with OEMs 0:15:41.960 --> 0:15:44.600 in Asia for the ultimate end game. So that's where 0:15:44.600 --> 0:15:46.960 it becomes a bit of a challenge. So we've seen movement, 0:15:47.440 --> 0:15:49.200 and even over the past three four years there was 0:15:49.240 --> 0:15:52.680 a lot of movement into Latin America into Canada's trading partners, 0:15:52.880 --> 0:15:55.480 but even that is still five six seven years away 0:15:55.480 --> 0:15:57.520 from really being fully up and in production. 0:15:58.000 --> 0:16:00.400 John alluded to this earlier, and it's a really good point, 0:16:00.440 --> 0:16:03.360 the idea that ahead of any kind of tariff, there 0:16:03.400 --> 0:16:07.080 was a stockpiling of goods at prices pre tariff, and 0:16:07.160 --> 0:16:09.840 so we haven't really seen the ramifications either when it 0:16:09.880 --> 0:16:12.480 comes to margins or when it comes to consumer pricing, 0:16:12.920 --> 0:16:14.280 when does that run out? 0:16:14.400 --> 0:16:15.760 I mean, how long is that runway? 0:16:16.080 --> 0:16:18.840 Yeah, and Q one data actually, you know, you look 0:16:18.840 --> 0:16:21.600 at Q one data, really strong results. The wto trade 0:16:21.640 --> 0:16:25.080 index at quite a significant high that's seen, and that 0:16:25.200 --> 0:16:27.120 is really due to that front loading. I think we'll 0:16:27.160 --> 0:16:28.800 start to see some of the effects in Q four, 0:16:29.200 --> 0:16:31.160 But industry by industry, So if you look at the 0:16:31.160 --> 0:16:33.560 healthcare industry, I've been in New York this week speaking 0:16:33.560 --> 0:16:35.800 to a lot of pharmaceutical companies and they have long 0:16:35.880 --> 0:16:38.080 term contracts, so they are locked in for a year 0:16:38.120 --> 0:16:39.800 and a half two years for some of that production, 0:16:39.960 --> 0:16:42.920 so they may not actually see it for quite a time. 0:16:43.400 --> 0:16:45.040 Same thing with the energy sector, where you have long 0:16:45.120 --> 0:16:48.160 term energy sector contracts, but anything that is shorter order 0:16:48.200 --> 0:16:50.520 and where they're able to adjust, they will. Now one 0:16:50.560 --> 0:16:52.560 of your guests earlier was talking about the fact that 0:16:52.600 --> 0:16:54.760 exporters don't really seem to be taking the hit at 0:16:54.760 --> 0:16:57.240 this stage. That also might start to change because as 0:16:57.280 --> 0:16:59.440 you're starting to negotiate with those suppliers, is there a 0:16:59.440 --> 0:17:02.080 stage fore you you know, you've got to get them 0:17:02.120 --> 0:17:04.159 to lower their prices a little bit to offset the tariffs. 0:17:04.240 --> 0:17:06.160 So I think in Q four we'll start to see 0:17:06.160 --> 0:17:07.000 some of those effects. 0:17:07.160 --> 0:17:10.400 The political cell though for tariffs is to bring manufacturing 0:17:10.440 --> 0:17:12.600 not to Canada or Mexico but to the United States 0:17:12.720 --> 0:17:14.160 is ten percent getting it done. 0:17:14.800 --> 0:17:17.320 It's starting to create those conversations. And I think in 0:17:17.359 --> 0:17:19.679 addition to it's not just terriffs that's an impact. If 0:17:19.680 --> 0:17:22.720 there's tax incentives, if there's other regulatory incentives. Now, the 0:17:22.760 --> 0:17:25.840 other thing that is hasn't necessarily been expressed here is 0:17:25.840 --> 0:17:29.560 also about resiliency, and we saw after the pandemic, corporates 0:17:29.560 --> 0:17:31.520 were really focused on resiliency. How do you get those 0:17:31.560 --> 0:17:34.040 items actually into the country. So there is a huge 0:17:34.040 --> 0:17:36.720 benefit in the healthcare industry, for example, they have already 0:17:36.760 --> 0:17:39.399 done region for regions, so where they are supplying medications 0:17:39.440 --> 0:17:41.439 here in the United States, they've actually brought that production 0:17:41.520 --> 0:17:44.040 on shore. So it is really starting to happen. It's 0:17:44.080 --> 0:17:45.440 just that it's a little bit longer of an order 0:17:45.440 --> 0:17:47.360 cycle and they need some more incentives to actually make 0:17:47.359 --> 0:17:47.920 that investment. 0:17:48.040 --> 0:17:50.960 What about the sectoral tariffs that were potentially going to 0:17:50.960 --> 0:17:53.400 get when it comes to things like pharmaceuticals that are 0:17:53.440 --> 0:17:55.200 also going to be on what many would say more 0:17:55.440 --> 0:17:56.840 sound legal footing. 0:17:57.080 --> 0:17:59.159 And that I'd say is more of a concern for 0:17:59.200 --> 0:18:02.400 corporates than the percent. So where those land and how 0:18:02.440 --> 0:18:04.480 that means they have to rejig some of their supply 0:18:04.600 --> 0:18:06.520 chains is going to be a challenge, so. 0:18:06.880 --> 0:18:07.680 They're looking at that. 0:18:07.760 --> 0:18:10.159 What I would say is that the biggest challenge of 0:18:10.160 --> 0:18:12.480 the moment is still this uncertainty. So you don't want 0:18:12.480 --> 0:18:14.600 to make an investment. You're waiting to pause to move 0:18:14.640 --> 0:18:17.439 through that, and as a result of that, companies are 0:18:17.520 --> 0:18:18.679 delaying decisions. 0:18:18.880 --> 0:18:20.159