Speaker 1: Bloomberg Audio Studios, podcasts, radio news. President Trump's twenty five
Speaker 1: percent tariffs on steel and aluminum imports from every country
Speaker 1: in the world went into effect on Wednesday morning, with
Speaker 1: no exceptions. The United States of America is going to
Speaker 1: take back a lot of what was stolen from it
Speaker 1: by other countries and by frankly incompetent US leadership. The
Speaker 1: tariffs mark a key piece of Trump's agenda to reshape
Speaker 1: US trade from Washington, and a return to a similar
Speaker 1: policy from his first term. But just hours after the
Speaker 1: tariffs went into effect, Canada retaliated with twenty five percent
Speaker 1: tariffs on about twenty one billion dollars of US made products.
Speaker 1: The EU hit back two with countermeasures against over twenty
Speaker 1: eight billion dollars worth of American goods. Now, investors, automakers,
Speaker 1: and American consumers are wondering will these tariffs hold up
Speaker 1: and what could their impact to be long term? From
Speaker 1: Bloomberg's Washington Bureau, This is the Big Take DC podcast,
Speaker 1: I'm Saleamosen. Today. On the show, I'm joined by Bloomberg's
Speaker 1: Josh Wingrove to explore what Trump's latest tariffs on steel
Speaker 1: and aluminum mean for the US economy and America's relationships
Speaker 1: with some of its closest allies. Put this into context
Speaker 1: for me, how much does the US rely on the
Speaker 1: imports of these metals.
Speaker 2: This is going to be a lot bigger for aluminum
Speaker 2: than steel. You know, Steel is a case where there
Speaker 2: is existing or a lot more existing capacity that the
Speaker 2: industry really wants to lean on. And so the steel
Speaker 2: companies and industry groups have generally been for these tariffs
Speaker 2: and SLA that's a lot different than a lot of
Speaker 2: other industries. Right In autos, for instance, they have been
Speaker 2: warning against the tariffs and in fact got the exemption
Speaker 2: last week from President Trump on those canes in Mexico tariffs.
Speaker 2: It's not only is Canada my homeland, I should say,
Speaker 2: the number one source of US aluminum imports. I mean,
Speaker 2: it's just huge amounts so to tear if these things.
Speaker 2: Trump is obviously, on the one hand, trying to create
Speaker 2: an incentive to develop new smelters, which by the way,
Speaker 2: are not done quickly and which by the way, use
Speaker 2: a lot of electricity. So it's a bit of a
Speaker 2: tricky landing to stick. But in the meantime, it's just
Speaker 2: simply going to be an extra cost for American companies
Speaker 2: that use aluminum, which of course is a wide range
Speaker 2: of industries. So these are pretty big ones, and I
Speaker 2: should note they're bigger than the first term. I think
Speaker 2: people are missing this a little bit right. Trump did
Speaker 2: a lot of stuff in his first term, and stealing
Speaker 2: aluminum were a big part of it, but there were
Speaker 2: exemptions for countries and there were also different rates. What
Speaker 2: he's doing here also is raising the rate in illuminum
Speaker 2: to twenty five from ten last time it was ten,
Speaker 2: so the scope is broader in terms of application. There's
Speaker 2: no exclusions. Trump even mused about an Australia exclusion, didn't
Speaker 2: give it. And the rate is higher for aluminum. It's
Speaker 2: the same steal.
Speaker 1: Where does most of the US's metal supply come from?
Speaker 1: What countries?
Speaker 2: That depends what you're talking about. Aluminum is certainly Canada.
Speaker 2: Steal is more of a mix, and there's been appetite
Speaker 2: to hit some of those countries. And the big concern
Speaker 2: on this, of course is China. And the concern is
Speaker 2: is Chinese deal kind of sneaking in through Mexico and
Speaker 2: Canada or other places. And that's the justification you'll hear
Speaker 2: from the White House for these tariffs. Now, those third
Speaker 2: party countries, of course their position is, well, if that's
Speaker 2: a genuine concern, let's talk about that rather than paint
Speaker 2: with a wide brush. Russian metal production obviously also looms
Speaker 2: large in this and it's the whole other kettle of
Speaker 2: fish there, given the sanctions and the potential for relief
Speaker 2: of those sanctions if indeed there is a ceasefire deal
Speaker 2: in Ukraine. But fundamentally he thinks tariffs will support the
Speaker 2: existing domestic industry and incentivize new ones. It's just murkier,
Speaker 2: all right.
Speaker 1: We're talking about a lot of terrors being proposed. But Josh,
Speaker 1: in the next twenty four hours, maybe none of the
Speaker 1: tariffs that we're talking about happen, right, because we both
Speaker 1: covered the first term and that pendulum swing.
Speaker 2: I mean it absolutely swings, like you you know very well.
Speaker 2: So yeah, as we sit here today, maybe by the
Speaker 2: time people listen to this things will have changed. But
Speaker 2: I will say Trump has been sturdier on some tariffs
Speaker 2: than others. And the steel and aluminum tariffs, those are
Speaker 2: on the sturdier end of the spectrum, for sure. He
Speaker 2: has been talking about them from the beginning. The other
Speaker 2: ones have kind of shifted a bit as the winds blow,
Speaker 2: but he really feels strongly about steel and aluminum. I
Speaker 2: should note again that the industry groups, in particular on steel,
Speaker 2: really support this, and so I would not bet on
Speaker 2: much until we start seeing real supply chain snarls or
Speaker 2: potentially market impacts.
Speaker 1: So what's the approach here? Can we call what Trump
Speaker 1: is doing a strategy of having these announcements and then saying, Okay,
Speaker 1: we're going to back down. We hear about a new
Speaker 1: threat every week, and then there's reactions from markets and
Speaker 1: business leaders and world leaders, and then there's mixed messages.
Speaker 1: Is it a strategy?
Speaker 2: What is this? This is a strategy. I think it's
Speaker 2: just the rollout has been chaotic. I don't know that
Speaker 2: there's any way to say it. Trump and his supporters
Speaker 2: see benefit in that, They see benefit in unpredictability, but
Speaker 2: markets obviously see much less benefit in that unpredictability. And
Speaker 2: so right now, this sort of will he or won't
Speaker 2: he is hanging over a lot of things. And if
Speaker 2: you're the Americans and you actually do want to steer
Speaker 2: investment away from, say Canada and Mexico, having a big
Speaker 2: cloud of uncertainty, over Canada and Mexico isn't the worst
Speaker 2: thing in the world. So that sort of part helps him.
Speaker 2: The whip saw nature of it that we're seeing in markets,
Speaker 2: I think is less helpful. And we've seen that from
Speaker 2: Republicans saying it publicly. I was talking this week with
Speaker 2: Mark Short, who is an aid to President Trump in
Speaker 2: his first term and then a very senior aid to
Speaker 2: Vice President Pence, who of course is no longer vice president,
Speaker 2: and he was saying, you know, in the first term,
Speaker 2: Trump got a lot of feedback from people talking about
Speaker 2: the benefits of trade, both the economists talking about the
Speaker 2: benefits of trade and national security folks talking about the
Speaker 2: benefits of trade and keeping your friends your friends. This
Speaker 2: time around, Short doesn't see that around him. You've got
Speaker 2: a lot of tariff evangelists around the President, who himself
Speaker 2: loves tariffs right He talks about it as being his
Speaker 2: third or fourth favorite word. So Trump is really jazzed
Speaker 2: on tariffs right now. The people around him are jazzed
Speaker 2: on tariffs right now. It's not super clear how many
Speaker 2: people in the room are saying, I don't know, And
Speaker 2: so that's why I think we're seeing this sort of
Speaker 2: steady march.
Speaker 1: And what is the message do you think that Trump
Speaker 1: is sending to the world by pushing forward with these
Speaker 1: medals tariffs now while other broader tariffs remain in limbo.
Speaker 2: The message he wants to send is that America is
Speaker 2: back and open for business, and that if you come
Speaker 2: here and make stuff here, you will get preferential treatment,
Speaker 2: you won't pay tariffs. And remember, of course Republicans are
Speaker 2: talking about a tax bill that may lower the corporate
Speaker 2: tax rate, in particular even lower for domestically produced goods.
Speaker 2: How they measure that, what the content threshold would be
Speaker 2: very unclear, so essentially remake the American economy. He talks
Speaker 2: in particular pretty nostalgically about industries like steel, in particular
Speaker 2: US steel, which of course used to be this mammoth
Speaker 2: in America and on the market, but now of course
Speaker 2: has fallen on more muted times, to say the least,
Speaker 2: And so I think he harkens back to the era
Speaker 2: of like an American manufacturing renaissance. The flip side is
Speaker 2: that a lot of the manufacturing companies in America right now,
Speaker 2: who have factories running as I speak, get a lot
Speaker 2: of inputs from abroad. Cheaper inputs that help them remain
Speaker 2: competitive with their competitors and other developed economies. And if
Speaker 2: we are tarifing those inputs, it risks the businesses that
Speaker 2: are already here, It risks the factories and supply chains
Speaker 2: that are already here. And of course it could make
Speaker 2: goods more expensive. If you make cars in America, solely
Speaker 2: in America with American made parts, those cars are going
Speaker 2: to be more expensive than is the case now, which
Speaker 2: of course will reduce demand for American cars. Trump is
Speaker 2: keen about those trade offs, but we should be clear
Speaker 2: eyed about those trade offs.
Speaker 1: Coming up. How world leaders are responding to the latest
Speaker 1: tariffs and the ripple effects they could have on American consumers.
Speaker 1: Trump's promised a lot of reciprocal terrorifts on countries that
Speaker 1: impose teriffs themselves on the US. Are we seeing any
Speaker 1: major metal exporting countries retaliate for these new tariffs immediately?
Speaker 2: Canadians are retaliating. The Europeans announced theirs within hours.
Speaker 1: On Wednesday, Canadian Finance Minister Dominic LeBlanc described a dollar
Speaker 1: for dollar approach. Canada imposed reciprocal tariffs on the US.
Speaker 1: We will use every tool at our disposal to defend
Speaker 1: Canadian jobs and Canadian businesses and support workers through these
Speaker 1: challenging times. In Ursula Vonderleyan the European commit president describe
Speaker 1: their countermeasures as strong but proportionate.
Speaker 3: As the United States are applying tariff's worth twenty eight
Speaker 3: billion dollars, we are responding with countermeasures worth twenty six
Speaker 3: billion euros.
Speaker 2: And this is the risk here because Trump is three
Speaker 2: weeks away from announcing what he believes will be reciprocal tariffs.
Speaker 2: But when he makes these measures, and in particular with
Speaker 2: the way he's making them, he's creating a political dynamic
Speaker 2: in these other countries where they are compelled to respond,
Speaker 2: their voters would be outraged if they didn't. And then
Speaker 2: Trump treats that as an escalation, They respond, he responds,
Speaker 2: they respond again, and you can see how this is
Speaker 2: going to spiral. And of course his tariff spiral, the
Speaker 2: impacts of them spiral, the costs for consumers spiral, the
Speaker 2: market fallout spirals.
Speaker 1: Tell me more about that, how is that going to
Speaker 1: ripple through the economy.
Speaker 2: Well, right now the US is tiffing. You know some
Speaker 2: goods on Canada and Mexico. That's a lot of stuff
Speaker 2: that's you know gas if you live in the Midwest,
Speaker 2: because the Canada is the number one source of crude
Speaker 2: oil imports by the US. That's fruit. I have a toddler.
Speaker 2: All I do is buy fruit. Honest to God, that's
Speaker 2: like half my life. A lot of agricultural products, of course,
Speaker 2: come from Mexico. You know, there's lots of goods that
Speaker 2: Americans will pay more for. The Trump team argues that
Speaker 2: tariffs are a tax cut for Americans. You will not
Speaker 2: find a single economists outside of the Trump administration who
Speaker 2: agrees with that tariffs are paid by the importer. This
Speaker 2: is a statement of facts. Sometimes the price is reduced
Speaker 2: by the seller because they know the importers paying tariffs,
Speaker 2: and so, you know, China, Canada makesic It might eat
Speaker 2: some of the costs, but fundamentally the dollars are paid
Speaker 2: by the importer. Every time Trump imposes a tariff, that
Speaker 2: is an import tax paid by American firms. And the
Speaker 2: question is how much that will be passed on to consumers,
Speaker 2: not if it'll be passed on to consumers. Trump thinks
Speaker 2: it'll be worth it because he's envisioning his Golden age,
Speaker 2: where you know, manufacturing jobs rebound and you know, salaries
Speaker 2: rise and everyone has more money in their pocket. But
Speaker 2: the reality of tariffs is that costs rise and everyone
Speaker 2: pays that price.
Speaker 1: Well, let's talk about that. Okay, tariffs go into effect.
Speaker 1: We have less metal. Do American metals makers have the
Speaker 1: capacity to scale up enough to meet the demand.
Speaker 2: Some of them do. Steel for sure has more, but
Speaker 2: some steel makers in America rely on scrap from abroad.
Speaker 2: Guess what that's tariff now, you know, so their input
Speaker 2: stream now has an extra cost associated to it. And
Speaker 2: then on aluminum, there is just nowhere near American capacity.
Speaker 2: So in the meantime, American companies will just try to
Speaker 2: use less aluminum, or they'll simply pay the tariff, which
Speaker 2: means they'll pay a tax to the American government to
Speaker 2: buy the aluminum that they're using right now. And of
Speaker 2: course a lot of things use aluminum, so I think yes,
Speaker 2: there is of course going to be an incentive for
Speaker 2: companies to establish manufacturing facilities and hire manufacturing workers in
Speaker 2: the US. But these things do not turn on a dime.
Speaker 1: Have we heard anything any kind of reaction from American
Speaker 1: based manufacturers and reaction.
Speaker 2: To the tariffs Right now? The producers are happy The
Speaker 2: people that are unhappy are the other industry groups, everyone
Speaker 2: else who needs steel, everyone else who needs illuminum, because
Speaker 2: they know that their costs are going up because now
Speaker 2: they either are going to a small number of American producers,
Speaker 2: who of course have more pricing power right now, or
Speaker 2: they pay a tariff and buy abroad, which means paying more.
Speaker 1: US steel, a major American steel producer, is currently in
Speaker 1: the middle of a struggle over a potential acquisition by
Speaker 1: Japan's Nipon Steel. Court Joe Biden blocked that deal and
Speaker 1: Trump opposes it. How does all of this fit into
Speaker 1: the picture of these new tariffs.
Speaker 2: The fate of that deal is unclear, and Trump announced
Speaker 2: that he would not let Nippon Steel own a controlling
Speaker 2: stake in US Steel, but left opening up possibility that
Speaker 2: they could have less than that, and he called it
Speaker 2: an investment, maybe a minority stake. Our reporting specifically is
Speaker 2: that the companies really didn't know what he meant by that,
Speaker 2: and there are no talks really around that, and right
Speaker 2: now there's a legal fight on going with respect to
Speaker 2: President Biden's decision to block it. The Trump team has
Speaker 2: not moved to adjust that in any way, and Therefore,
Speaker 2: the question for a NIP on steel is do you
Speaker 2: want to buy part of US steel? And no one
Speaker 2: really knows how that will look, but that is a
Speaker 2: good indication of how the mood on steel has shifted.
Speaker 2: It is now being treated explicitly as a national security
Speaker 2: type of industry. When Trump did that in his first term,
Speaker 2: that was more controversial, and now there is more bipartisan agreement.
Speaker 2: On steel is like a tactical sector. Trump basically is saying,
Speaker 2: you don't need the Japanese to buy you because I'm
Speaker 2: going to give tariffs and it's going to prop up
Speaker 2: your company in the meantime.
Speaker 1: Josh, as this develops over the next couple of days,
Speaker 1: couple of hours, I don't know what are you lying?
Speaker 2: I think the big question is twofold number one, how
Speaker 2: many countries he will enact reciprocal tariffs on and how
Speaker 2: hogwilde they're going to go in calculating that number? And
Speaker 2: number two and watching is the sectoral tariffs. We have
Speaker 2: the steel and aluminum ones, but they're not the only ones.
Speaker 2: He's teed up some on copper, He's talked about lumber,
Speaker 2: He's talked about pharmaceutical drugs, semiconductor chips and hugely autos.
Speaker 2: When do those come with what scope, with what exemptions,
Speaker 2: at what rate? That is a huge factor I think
Speaker 2: in all this. So both of these are allegedly coming,
Speaker 2: you know, in a few weeks in April, and so
Speaker 2: I think that's why people are watching. All this follows
Speaker 2: so closely.
Speaker 1: Thank you for joining, Thank you for having me. This
Speaker 1: is the Big Take DC podcast from Bloomberg News. I'm Salaamosen.
Speaker 1: This episode was produced by Julia Press. It was edited
Speaker 1: by Aaron Edwards, Brendan Murray, and Doug Alexander. Was fact
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