WEBVTT - UPDATE: Major US-China Tariff Cuts Propel Stocks And Dollar Higher 0:00:02.560 --> 0:00:10.959 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:11.039 --> 0:00:14.560 Daybreak Europe podcast, available every morning on Apple, Spotify or 0:00:14.600 --> 0:00:17.239 wherever you listen. It's Monday, the twelfth, the May in London. 0:00:17.280 --> 0:00:19.919 I'm Lizzie Burden and I'm Stephen Carroll coming up today. 0:00:20.079 --> 0:00:23.479 Substantial progress may have been an understatement. The US and 0:00:23.600 --> 0:00:27.320 China agree to significantly lower tariffs in a ninety day 0:00:27.400 --> 0:00:28.360 cool augh period. 0:00:28.640 --> 0:00:31.480 The US cuts its levees on Chinese goods from one 0:00:31.560 --> 0:00:34.720 hundred and forty five percent to thirty percent, while China 0:00:34.760 --> 0:00:37.480 reduces its duties from one hundred and twenty. 0:00:37.159 --> 0:00:38.760 Five percent to ten percent. 0:00:39.200 --> 0:00:42.640 Markets rejoice, SMP mini futures jump as much as three percent, 0:00:42.720 --> 0:00:46.320 as equities power ahead and bonds and gold tumble. 0:00:46.640 --> 0:00:48.760 Let's start with a roundup of our top stories. 0:00:49.120 --> 0:00:52.400 The United States and China have agreed to significantly cut 0:00:52.479 --> 0:00:55.400 tariffs on each other's goods in a ninety day pause 0:00:55.440 --> 0:00:58.480 of the trade war between the world's two largest economies. 0:00:58.840 --> 0:01:01.360 The US will reduce its tariffs from one hundred and 0:01:01.360 --> 0:01:04.880 forty five percent to thirty percent on Chinese imports, while 0:01:04.959 --> 0:01:07.520 China will bring its levees down to ten percent from 0:01:07.560 --> 0:01:10.839 one hundred and twenty five percent. US Treasury Secretary Scott 0:01:10.840 --> 0:01:14.240 Bessent says neither country wants to see trade between them stop. 0:01:15.000 --> 0:01:20.240 The consensus from both delegations this weekend is neither side 0:01:20.600 --> 0:01:27.000 wants a pecuplin and what had occurred with these very 0:01:27.080 --> 0:01:32.520 high tariffs, as Investador Reverse said, was the equivalent of 0:01:32.560 --> 0:01:38.479 an embargo, and neither side want set. We do want trade. 0:01:38.840 --> 0:01:42.200 Bessent added that the US still wants supply chain independence 0:01:42.560 --> 0:01:45.600 in six key industries and will continue with what he 0:01:45.720 --> 0:01:48.400 called strategic rebalancing in those sectors. 0:01:48.760 --> 0:01:49.880 The pause was announced in a. 0:01:49.920 --> 0:01:52.920 Joint statement with China, with a Foreign Ministry spokesperson in 0:01:52.960 --> 0:01:55.280 Beijing declining to give further details. 0:01:56.120 --> 0:01:58.480 US Talk features if Sara's bonds are selling off and 0:01:58.520 --> 0:02:01.520 the dollar is strengthening After the announcement from the US 0:02:01.560 --> 0:02:05.120 and China, SMP five hundred SMP mini futures are up 0:02:05.160 --> 0:02:07.880 two point six percent on Wall Street, the NASDAK features 0:02:07.880 --> 0:02:10.120 are up by three point four percent, as the Bloomberg 0:02:10.120 --> 0:02:12.920 Dollar Spot Index is up by nine tenths of one percent. 0:02:13.240 --> 0:02:16.200 Benedict Low Equity and Derivative Strategist for Europe at BNP 0:02:16.360 --> 0:02:19.000 Parri about markets three point sixty, says the move was 0:02:19.040 --> 0:02:21.400 a pleasant surprise for investors. 0:02:21.800 --> 0:02:25.320 We were actually surprised by the number that came out. 0:02:25.639 --> 0:02:27.760 The kind of hearing all word on the street was 0:02:27.800 --> 0:02:30.120 fifty to sixty percent on China. So I think that 0:02:30.320 --> 0:02:33.240 was a net positive, and you're seeing huge reaction, especially 0:02:33.240 --> 0:02:35.520 in the US equity market, which makes sense because that 0:02:35.639 --> 0:02:37.560 was the market that was and the economy as a 0:02:37.560 --> 0:02:38.320 whole that will be more. 0:02:38.280 --> 0:02:38.960 Affected by it. 0:02:39.000 --> 0:02:41.320 So I would say it's a bris coonstint at least 0:02:41.320 --> 0:02:42.400 for the next few days. 0:02:42.680 --> 0:02:46.799 That's BNP Parabos Benedict Low speaking there. As we are 0:02:46.880 --> 0:02:51.040 seeing European stocks rising as well as the dollar has rallied. 0:02:51.040 --> 0:02:54.280 The euros heading for its worst day this year against 0:02:54.360 --> 0:02:57.800 the dollar, down currently one point two percent at one eleven, 0:02:58.120 --> 0:03:01.120 the en also dropping by one point seven percent, goal 0:03:01.200 --> 0:03:04.480 prices sliding two down two point nine percent, as crude 0:03:04.480 --> 0:03:05.360 oil has rallied. 0:03:05.520 --> 0:03:08.200 The Treasury Secretary also used the press conference to make 0:03:08.200 --> 0:03:10.280 the case for the way in which the US likes 0:03:10.320 --> 0:03:13.360 other nations to approach relations. Scott Bessent told the press 0:03:13.400 --> 0:03:16.200 the positive mood music set by the UK and Swiss 0:03:16.200 --> 0:03:19.160 teams was in stock contrast to that of the EU. 0:03:19.720 --> 0:03:23.080 The UK and Switzerland have moved to the front of 0:03:23.120 --> 0:03:27.919 the queue for the trade deals, whereas the EU has 0:03:27.960 --> 0:03:30.480 been much slower, so we value. 0:03:30.160 --> 0:03:32.920 That also, Treasury Secretary Scott Best sent speaking there in 0:03:33.000 --> 0:03:35.880 Geneva after the US and UK last week secured an 0:03:35.880 --> 0:03:38.800 agreement to roll back some of the Trump administration's recent 0:03:38.840 --> 0:03:40.520 tariffs on the British economy. 0:03:40.680 --> 0:03:44.120 Pharmaceutical stocks have dropped after President Trump announced plans to 0:03:44.160 --> 0:03:48.080 sign an executive order later aimed at significantly reducing US 0:03:48.200 --> 0:03:51.960 prescription drug prices in Europe. Obesity drug maker Novo Nordisk 0:03:52.000 --> 0:03:54.160 fell by as much as eight point six percent at 0:03:54.240 --> 0:03:57.160 the open, one of the steepest decliners in the stocks 0:03:57.240 --> 0:04:00.920 six hundred Healthcare Index, which slid by three point three percent. 0:04:01.080 --> 0:04:02.960 With more details here at Boombergs ta are. 0:04:02.880 --> 0:04:03.360 At a bio. 0:04:03.640 --> 0:04:06.800 While the details remain unclear, the President claims the order 0:04:06.840 --> 0:04:10.000 will require that Americans pay no more than the lowest 0:04:10.040 --> 0:04:13.160 price charged for the same medication in any other country. 0:04:13.640 --> 0:04:16.440 In a post on truth Social Trump said the move 0:04:16.520 --> 0:04:19.720 could lower US drug prices buy as much as eighty percent. 0:04:20.360 --> 0:04:23.479 Americans currently pay the highest prices in the world for 0:04:23.560 --> 0:04:28.680 prescription medications. However, drug makers argue that such reforms would 0:04:28.680 --> 0:04:32.560 cut into their revenues and undermine the development of breakthrough 0:04:32.560 --> 0:04:36.120 therapies that could extend and improve lives. In London, Tea 0:04:36.160 --> 0:04:38.640 were at a bio Bloomberg Radio to earnings. 0:04:38.720 --> 0:04:42.800 UniCredit has posted first quarter profit that topped analyst expectations, 0:04:43.040 --> 0:04:44.719 as net income in the first three months of the 0:04:44.760 --> 0:04:47.680 year rose to two point seven to seven billion euros. 0:04:48.000 --> 0:04:51.280 The results strengthen the hand of CEO Andrea Orceell as 0:04:51.320 --> 0:04:55.000 he pursues potential acquisitions, including Germany's comments Bank and an 0:04:55.080 --> 0:05:00.000 unsolicited bid for ital Italy's Banco BPM. UniCredit, Italy's second 0:05:00.040 --> 0:05:03.479 largest bank, is now forecasting annual profit exceeding nine point 0:05:03.520 --> 0:05:04.880 three billion euros. 0:05:05.200 --> 0:05:06.960 The shares are up more than three percent. 0:05:07.440 --> 0:05:10.560 Vladimir Zelenski says he will be waiting for Vladimir Putin 0:05:10.600 --> 0:05:13.600 in Turkey on Thursday. The leaders of Russia and Ukraine 0:05:13.600 --> 0:05:16.040 are being pushed to begin peace talks by the United 0:05:16.040 --> 0:05:19.359 States and Europe. Ukraine's president says, Kiev is ready to 0:05:19.600 --> 0:05:20.360 end this war. 0:05:21.040 --> 0:05:23.080 Your nas Vukrainian maa. 0:05:23.000 --> 0:05:27.479 Ukraine which absolutely no problem engaging in negotiations. We're ready 0:05:27.560 --> 0:05:30.400 for any format. I will be in Turkey this Thursday, 0:05:30.480 --> 0:05:33.599 the fifteenth May. I expect Britain to come to Turkey 0:05:33.600 --> 0:05:33.960 as well. 0:05:35.200 --> 0:05:38.839 Zelenski's planned trip comes after US President Donald Trump insisted 0:05:38.880 --> 0:05:42.039 the two leaders meet despite Moscow's reluctance to agree to 0:05:42.080 --> 0:05:45.479 a thirty day ceasefire. The UK and other European countries 0:05:45.520 --> 0:05:49.200 say they're a ready a dramatic increase in sanctions on 0:05:49.320 --> 0:05:52.919 Russia should Putin not engage with negotiations. 0:05:53.440 --> 0:05:55.440 Those are you top stories this morning? On the markets. 0:05:55.440 --> 0:05:58.120 The stock six hundred is higher half of eight percent 0:05:58.400 --> 0:06:00.680 on Wall Street, smp E many futures up two point 0:06:00.720 --> 0:06:02.560 five percent. Now is that future is up three point 0:06:02.640 --> 0:06:05.680 three percent, and the tenure US treasure reeled is up 0:06:05.720 --> 0:06:08.280 seven basis points at four point four to four percent. 0:06:08.640 --> 0:06:10.719 In a moment, we'll bring you analysis of the US 0:06:10.839 --> 0:06:12.880 China trade war pause and take you through the big 0:06:12.920 --> 0:06:17.040 reaction on markets. But Lizzie listening to the US Treasury 0:06:17.040 --> 0:06:19.880 Secretary Scott Besant and Jemson Greer, the US Trade Representative, 0:06:19.920 --> 0:06:22.800 speaking in Geneva announcing those measures that did strike me 0:06:22.800 --> 0:06:26.120 that both yesterday and today they've mentioned the setting, they've 0:06:26.120 --> 0:06:28.000 talked about. How you know, the fact that they were 0:06:28.000 --> 0:06:31.160 in such a beautiful place with lots of tranquility really 0:06:31.200 --> 0:06:34.880 helped to steer those discussions along. And even Jemeson Grier 0:06:34.880 --> 0:06:36.440 going as far as sort of making a dig at 0:06:36.440 --> 0:06:40.080 hotel diplomacy, saying that because they were in the Swiss 0:06:40.120 --> 0:06:45.159 ambassador's residence, the Swiss delegation to the United Nations engineer, 0:06:45.240 --> 0:06:47.320 that's where some of those talks took place, and he 0:06:47.400 --> 0:06:49.159 was saying that really helped them get the deal across 0:06:49.160 --> 0:06:51.920 the line. This is a new era for Mountain diplomacy. 0:06:51.960 --> 0:06:53.080 Maybe late diplomacy a. 0:06:53.080 --> 0:06:55.000 Bit harsh on the hotel, but look, we've got the 0:06:55.040 --> 0:06:56.679 Peak District, the Lake District. 0:06:56.760 --> 0:06:57.920 If anyone wants to come. 0:06:57.800 --> 0:07:01.240 Here and negotiate build on that UK US trade packed, 0:07:01.279 --> 0:07:02.599 I'm sure that they could do it. 0:07:02.880 --> 0:07:03.040 Well. 0:07:03.040 --> 0:07:05.520 That's bringing more details of what we heard from those 0:07:05.640 --> 0:07:09.679 US representatives on this tariff poles between the US and China, 0:07:09.720 --> 0:07:11.920 our trades are. Brandon Murray is with us for more 0:07:11.960 --> 0:07:15.800 in studio. Brandon, good morning. How significant is the relief 0:07:15.840 --> 0:07:18.160 for both economies from what we heard. 0:07:18.320 --> 0:07:21.280 Well, it's very significant for the Chinese economy. What we 0:07:21.360 --> 0:07:24.640 saw today was a major pullback in the trade war 0:07:24.680 --> 0:07:29.040 that the US waged against China. Remember yesterday there were 0:07:29.040 --> 0:07:31.400 one hundred and forty five percent tariffs on almost every 0:07:31.680 --> 0:07:34.840 Chinese import into the US. That gets reduced down to 0:07:34.920 --> 0:07:38.560 thirty percent, which, if you recalled, President Trump said just 0:07:38.600 --> 0:07:41.800 a few days ago that eighty percent sounded reasonable. So 0:07:41.840 --> 0:07:44.440 what the US walked out of there today with is 0:07:44.520 --> 0:07:47.440 less than half of what Donald Trump said was reasonable. 0:07:47.800 --> 0:07:50.720 If you're on the Chinese side, you got a great 0:07:50.760 --> 0:07:55.760 deal in given what you gave up. Remember China's China 0:07:55.760 --> 0:08:01.000 had duties on American imports into China, but much less 0:08:01.040 --> 0:08:04.480 than the U that than China ships to the U S. So, uh, 0:08:04.560 --> 0:08:07.160 if you're if you're in Beijing today, you might be 0:08:07.200 --> 0:08:10.920 calling this uh uh just six weeks from Donald Trump's 0:08:10.920 --> 0:08:14.520 liberation Day. Uh, the US retreat day in in a 0:08:14.600 --> 0:08:18.520 large way because uh, the definitely the heat of the 0:08:18.560 --> 0:08:21.440 trade war is much lower now, and it gives time 0:08:21.600 --> 0:08:25.760 three months is what the this period of negotiation will 0:08:25.800 --> 0:08:28.880 we'll move into next. And it gives, uh, it gives 0:08:28.880 --> 0:08:32.000 to give them, gives the two sides a chance to 0:08:32.200 --> 0:08:37.040 work through the pretty major agreement disagreements that they still have. 0:08:37.520 --> 0:08:40.800 But I think the analysis at the end of the 0:08:40.880 --> 0:08:43.320 day is going to be that the US gave up 0:08:43.320 --> 0:08:44.400 a lot of its leverage. 0:08:44.720 --> 0:08:46.760 Do you read anything, Brendan into the fact that the 0:08:46.880 --> 0:08:50.760 China Foreign Ministry offered no further comment on the trade deal. 0:08:51.240 --> 0:08:55.040 I'm no analyst of Chinese politics, but they you know, 0:08:55.080 --> 0:08:57.320 they wouldn't want to be seen as grand standing. But 0:08:57.559 --> 0:08:59.120 we'll have We'll have to wait and see what the 0:08:59.120 --> 0:09:01.320 trade hawks and walk Shington say when they get up, 0:09:01.400 --> 0:09:03.960 when they wake up this morning. But my guess is 0:09:03.960 --> 0:09:07.920 that there it will be seen as a major, almost 0:09:08.240 --> 0:09:11.559 too much of a retreat from Washington's perspective. 0:09:11.800 --> 0:09:15.120 I mean, what does that mean for trade flows? We've 0:09:15.120 --> 0:09:18.600 been reporting about how so many of Chinese goods had 0:09:18.640 --> 0:09:21.640 been moving away from the US to other countries in 0:09:21.679 --> 0:09:24.640 anticipation of these or as these tires have taken effect 0:09:25.080 --> 0:09:29.120 as well. What about the prospect that a ninety day 0:09:29.160 --> 0:09:31.720 pause could be enough for some of that damage to 0:09:31.720 --> 0:09:32.360 be undone? 0:09:32.800 --> 0:09:36.440 It could? You know, a thirty percent tariff on Chinese 0:09:36.840 --> 0:09:41.760 imports into the US can be managed, one hundred and 0:09:41.840 --> 0:09:46.160 forty five percent can't be. So you can divert, you 0:09:46.200 --> 0:09:49.680 can divert products to other countries where you can ship 0:09:49.720 --> 0:09:53.040 from to avoid tariffs. But this is going to be 0:09:53.920 --> 0:09:58.400 Remember this thirty percent is divided into two segments, the 0:09:58.440 --> 0:10:01.600 ten percent baseline that every other country gets and the 0:10:01.640 --> 0:10:04.840 twenty percent fentanyl tariff that the US put on China. 0:10:05.360 --> 0:10:08.360 China can get out of that fentanyl tariff if it 0:10:08.480 --> 0:10:12.319 does what the US wants it to crack down on 0:10:13.000 --> 0:10:16.400 the export of the materials used to make vents and all. 0:10:16.880 --> 0:10:18.920 So at the end of the day, China is in 0:10:18.960 --> 0:10:22.440 the same place as everybody else is it could be, 0:10:23.400 --> 0:10:27.280 and most China Hawks in Washington would say they're the 0:10:27.320 --> 0:10:31.320 biggest violator of trade rules. So it'll be interesting to 0:10:31.320 --> 0:10:35.600 see how the Trump administration defends what it got here. 0:10:36.160 --> 0:10:40.640 Certainly markets like it, that will be seen as a positive. 0:10:41.080 --> 0:10:46.480 But if you're in a long term trade disagreement with 0:10:46.640 --> 0:10:50.880 China to rebalance one point two trillion dollar trade and balance, 0:10:51.600 --> 0:10:55.320 this is going to make it more difficult to apply 0:10:55.400 --> 0:10:56.400 leverage to China. 0:10:56.480 --> 0:10:58.360 So how much hope is this going to give to 0:10:58.559 --> 0:11:01.920 other countries that they can negotiate good terms too. 0:11:02.400 --> 0:11:05.000 Yeah, you would think that that that this would this 0:11:05.080 --> 0:11:08.600 would give them, uh, you know, some sense of relief 0:11:08.679 --> 0:11:11.360 between this deal and the and the deal that the 0:11:11.440 --> 0:11:14.240 UK signed last week. Uh, you know, a lot of 0:11:14.280 --> 0:11:17.360 these details are still kind of vague, and and you 0:11:17.400 --> 0:11:20.320 know that there's no there's nothing, uh, there's not a 0:11:20.320 --> 0:11:22.839 whole lot of fine print on on either of these two. 0:11:23.320 --> 0:11:25.280 But you've got to think that the that the US 0:11:25.360 --> 0:11:29.920 administration has felt, the has heard the concerns from US 0:11:30.000 --> 0:11:34.000 businesses about how they came out of the gates fast 0:11:34.160 --> 0:11:38.559 and high with their tariffs and that is applying economic 0:11:38.600 --> 0:11:41.560 pain to the US and that they are now uh, 0:11:41.840 --> 0:11:45.920 you know, in a in a situation where they you know, 0:11:45.960 --> 0:11:47.720 they have to bring those down in a big way. 0:11:47.760 --> 0:11:51.360 This is this is not uncharacteristic of Donald Trump's style. 0:11:51.720 --> 0:11:54.360 He comes in big, with his hardest punch, and then 0:11:54.360 --> 0:11:56.800 he says, you know, let's you know, then you know, 0:11:56.840 --> 0:12:00.520 then then will then we'll uh you know, will negotiate things, 0:12:01.000 --> 0:12:04.080 you know, in a calmer fashion. But and this seems 0:12:04.120 --> 0:12:07.000 to be what we're hearing. We heard Scott Besson say 0:12:07.040 --> 0:12:12.200 today that he and the US Trade Representative Jameson Greer say, 0:12:12.520 --> 0:12:15.560 we don't want to decouple from China, we don't want 0:12:15.559 --> 0:12:20.400 to trade embargo and what's what that's doing to the 0:12:20.480 --> 0:12:23.000 US economy? Right now is causing a lot of disruption 0:12:23.480 --> 0:12:26.520 and a lot of small companies can't do can't do 0:12:26.600 --> 0:12:29.360 business if with tariffs of one hundred and forty five 0:12:29.360 --> 0:12:34.040 percent on their Chinese parts and products. So I think 0:12:34.080 --> 0:12:36.599 what we're seeing is a pretty sharp pullback from the 0:12:36.720 --> 0:12:39.439 US administration. Now that could all that could all change 0:12:39.440 --> 0:12:42.319 too this. You know, they can tariffs can come back 0:12:42.360 --> 0:12:46.280 as soon as they go away. But it looks today 0:12:46.360 --> 0:12:49.760 like the US gave more concessions than China did. 0:12:50.120 --> 0:12:52.480 Okay, Brendon Murray, our trades are thank you very much. 0:12:52.920 --> 0:12:55.240 Well, let's get to the market reaction now. Cridy Gupster, 0:12:55.240 --> 0:12:58.079 who anchors the opening trade on Bloomberg Television, has been 0:12:58.120 --> 0:13:01.040 watching the markets move in real time, and she joins 0:13:01.120 --> 0:13:03.920 us now in the studio. Christy, what stood out for 0:13:04.000 --> 0:13:07.760 you in the market reaction, particularly the equity maybe seem 0:13:07.800 --> 0:13:08.520 pretty stoning. 0:13:08.800 --> 0:13:11.800 So the bar was high going into this presser. There 0:13:11.840 --> 0:13:14.480 was a lot of optimism baked in really starting on 0:13:14.600 --> 0:13:16.920 Friday actually, and you saw it on both sides of 0:13:16.920 --> 0:13:19.720 the Atlantic, and then over the weekend the substantial progress 0:13:19.800 --> 0:13:23.560 line even Donald Trump's buy stocks on Friday was or 0:13:23.559 --> 0:13:26.760 on Thursday night, I should say was quite telling. We 0:13:26.800 --> 0:13:29.360 didn't expect this kind of optimism though, because, as Brendan 0:13:29.400 --> 0:13:31.640 was saying, the expectation the line in the sand was 0:13:31.679 --> 0:13:35.559 eighty percent. To come down to thirty is massive. A 0:13:35.640 --> 0:13:38.880 one hundred and fifteen percent reprieve on that tariff freight 0:13:39.040 --> 0:13:41.920 is enormous. The problem here, and the hiccup here that 0:13:41.960 --> 0:13:44.760 you're going to see perhaps maybe filter through the markets 0:13:44.760 --> 0:13:46.679 in the next couple of days, is that this is 0:13:46.720 --> 0:13:49.600 only for ninety days, and those tariffs initially were meant 0:13:49.600 --> 0:13:51.680 to be put on four ninety days. That one hundred 0:13:51.640 --> 0:13:53.920 and forty five percent was meant to be for ninety days, 0:13:53.920 --> 0:13:56.320 and we're not even I don't even think we're thirty 0:13:56.400 --> 0:13:58.840 days through, maybe a little over thirty days, and already 0:13:58.840 --> 0:14:01.080 we're seeing a reversal. So when you start to see 0:14:01.080 --> 0:14:04.000 some of the commentary come from Donald Trump or Scott Bessend, 0:14:04.160 --> 0:14:05.839 that's where the red herrings kind of. 0:14:05.800 --> 0:14:07.280 Lie in some of the data. 0:14:07.320 --> 0:14:10.360 But right now, again the bar was high, and Scott 0:14:10.400 --> 0:14:13.280 Bessant already beat. So the optimism is showing up in 0:14:13.320 --> 0:14:16.200 the equities picture, in the bonds picture, in the currency's picture, 0:14:16.440 --> 0:14:18.640 and even in oil, which was really weighed down by 0:14:18.640 --> 0:14:19.520 those growth concerns. 0:14:19.600 --> 0:14:23.040 But how sustainable can this sentiment be? To your point 0:14:23.120 --> 0:14:25.880 that this is only ninety days, so there are a 0:14:25.920 --> 0:14:26.520 couple of things. 0:14:26.560 --> 0:14:28.680 So now this has kind of shown, so you're right, 0:14:28.800 --> 0:14:31.280 can't it's not sustainable because this can always you turn 0:14:31.320 --> 0:14:34.000 and that is the kind of word on the street here. 0:14:34.240 --> 0:14:36.680 But what it is showing is a mechanism with which 0:14:36.720 --> 0:14:39.160 to de escalate. And that is a crucial piece because 0:14:39.720 --> 0:14:41.960 thirty days ago we didn't have this mechanism. 0:14:42.360 --> 0:14:43.720 We didn't have high level talks. 0:14:43.760 --> 0:14:46.840 We didn't even have lower level talks for then ultimately 0:14:46.840 --> 0:14:49.520 Scott bessen to go over to Geneva and sign the deal. 0:14:49.760 --> 0:14:52.440 Both sides were not talking and I think that has 0:14:52.480 --> 0:14:55.120 been the real game changer here, that if there was 0:14:55.160 --> 0:14:57.960 some sort of hiccup in policy. For example, and you 0:14:58.000 --> 0:15:00.440 heard that in the press conference from Scott Bessant that 0:15:00.520 --> 0:15:02.760 he brought up the cartels in terms of the fentanyl 0:15:02.840 --> 0:15:06.120 trade in Mexico, he brought up currency manipulation, He brought 0:15:06.200 --> 0:15:08.280 up the fact that both sides, the US and China, 0:15:08.520 --> 0:15:12.040 were acting in their national interests. So it wasn't exactly 0:15:12.200 --> 0:15:16.000 the all friendly, all sunshine and rainbows. There were clear 0:15:16.200 --> 0:15:18.960 pieces of concerns that were still meant to be the 0:15:19.000 --> 0:15:22.040 Currncy manipulation is the piece of it. Notably absent was 0:15:22.080 --> 0:15:24.520 the fact that the Treasury Secretary didn't talk about the 0:15:24.560 --> 0:15:28.320 massive holdings of treasuries that China has. So you can 0:15:28.360 --> 0:15:30.280 see that there are still sticking points. But now we 0:15:30.360 --> 0:15:32.800 know that if things were to ratchet up, there is 0:15:32.840 --> 0:15:35.080 a way back to de ratcheting. 0:15:35.440 --> 0:15:39.200 Okay, Kritty group to opening trade anchor from Bloomberg Television, 0:15:39.280 --> 0:15:41.920 we thank you. Let's bring in our Hong Kong News 0:15:41.920 --> 0:15:44.840 Desk editor Jill de Sis Jill, good morning. 0:15:45.000 --> 0:15:47.000 Does this count as a win for Beijing? 0:15:47.720 --> 0:15:49.440 Here is just trying to parse through all of the 0:15:49.520 --> 0:15:52.160 numbers along with everybody else, and I do think this 0:15:52.200 --> 0:15:55.240 is a pretty significant improvement for China. I mean, obviously 0:15:55.280 --> 0:15:58.320 there's just the headline number, right if you're reducing those 0:15:58.360 --> 0:16:02.240 tariffs that significant for the next ninety days. I mean, 0:16:02.240 --> 0:16:05.480 it does indicate that maybe relations are improving. Obviously it's 0:16:05.480 --> 0:16:08.680 only temporary, but I think that you know, that does 0:16:08.720 --> 0:16:10.560 indicate that there's you know, that's a step in the 0:16:10.600 --> 0:16:13.680 right direction. It certainly isn't you know, I mean, removing 0:16:13.920 --> 0:16:15.680 the you know, one hundred and twenty five and forty five 0:16:15.720 --> 0:16:18.840 percent terriffs that we saw in China. That's that's that's 0:16:18.840 --> 0:16:20.800 a that's a pretty good victory for China. So yeah, 0:16:20.800 --> 0:16:22.680 I think we have to see where things go from here. 0:16:22.720 --> 0:16:25.400 But the fact that the progresses even gotten to this point, 0:16:25.680 --> 0:16:27.520 I think that's pretty promising. 0:16:27.960 --> 0:16:31.320 How much could this bring relief for the Chinese economy, Joe, 0:16:31.360 --> 0:16:34.160 because we've been seeing early signs of the effects the 0:16:34.200 --> 0:16:36.920 tariffs had already been having, or at least the uncertainty 0:16:36.960 --> 0:16:39.480 over the tariffs had been having on things like trade flows. 0:16:39.880 --> 0:16:41.920 Yeah, I mean I think that you know, when you're 0:16:41.960 --> 0:16:45.720 looking at you know exactly what this means for the 0:16:45.760 --> 0:16:48.000 Chinese economy, and you know, taking a look at some 0:16:48.120 --> 0:16:51.640 of the Bloomberg Economics data that we've been really putting out, 0:16:52.440 --> 0:16:55.920 I mean, just that the fact that the shock on 0:16:56.800 --> 0:16:58.520 you know, how much this meaning for US imports is 0:16:58.560 --> 0:17:00.920 going down significantly. I think the that's you know, a 0:17:01.000 --> 0:17:04.600 really really big improvement. I'm talking actually right now with 0:17:04.640 --> 0:17:07.320 the some of our reporters who have been reaching out 0:17:07.320 --> 0:17:12.119 to Chinese exporters who are absolutely elated at this news 0:17:12.560 --> 0:17:14.960 so far. I mean we were, you know, just talking 0:17:15.080 --> 0:17:18.919 to somebody who has a t moostore selling you know, 0:17:18.960 --> 0:17:21.639 sort of face and body painting tools, saying that, you know, 0:17:21.720 --> 0:17:25.719 their entire office was shouting horay. That particular Chinese exporter. 0:17:25.880 --> 0:17:29.040 I mean, that's somebody that had a stockpile of about 0:17:29.040 --> 0:17:31.280 five months supply and a US warehouse, just kind of 0:17:31.280 --> 0:17:34.120 waiting to see what was ultimately going to happen in 0:17:34.160 --> 0:17:37.560 this trade war. You know what that person was telling us, 0:17:37.840 --> 0:17:40.439 you know, just a few minutes ago, is essentially that 0:17:40.880 --> 0:17:44.040 they're elated because they were actually expecting this to drag 0:17:44.080 --> 0:17:45.639 on for quite a bit longer. And the fact that 0:17:45.680 --> 0:17:48.440 you already have this reprieve not too long, you know, 0:17:48.480 --> 0:17:51.040 about a month and some change after these tarrots really 0:17:51.040 --> 0:17:54.000 went into effect, that's actually been really promising for them. 0:17:54.040 --> 0:17:56.080 So at least from the Chinese exporter side, I mean, 0:17:56.119 --> 0:17:59.040 people that are doing direct business with American consumers that 0:17:59.040 --> 0:18:01.360 are really really dependent on these types of trade flows, 0:18:01.720 --> 0:18:04.080 We're already seeing a lot of encouragement there. Again, I 0:18:04.119 --> 0:18:08.040 do have to stress obviously these tariffs, you know, this reprieve, 0:18:08.400 --> 0:18:09.040 these cuts are. 0:18:09.000 --> 0:18:10.480 Only in place for ninety days. 0:18:10.480 --> 0:18:13.320 But again, the trajectory is certainly very positive, or at 0:18:13.400 --> 0:18:16.040 least the sentiment here is that this has been very positive. 0:18:16.320 --> 0:18:18.800 Well, Jill, some of those exporters out of China had 0:18:18.840 --> 0:18:23.040 already moved trade to other countries in Asia worried about 0:18:23.080 --> 0:18:25.960 the tariff war. We saw that in the data on Friday. 0:18:26.040 --> 0:18:28.119 Do you think we now just hit undo on that. 0:18:28.680 --> 0:18:31.360 Pleissie, I think, you know, obviously too early to say there, 0:18:31.400 --> 0:18:33.720 because ultimately, you know, I mean, if you're some of 0:18:33.720 --> 0:18:36.000 these exupporters, sure you do have those ones that are 0:18:36.000 --> 0:18:38.719 you know, very elated by this, and we're really banking 0:18:38.720 --> 0:18:41.000 on that business. But you also, you know, have a 0:18:41.040 --> 0:18:42.320 lot of people that you know, at the end of 0:18:42.359 --> 0:18:44.360 the day, there's still a lot of uncertainty here here, right, 0:18:44.400 --> 0:18:46.800 I mean, you know, let's just park it and rewind, 0:18:47.119 --> 0:18:48.840 you know to where we were about a month or 0:18:48.880 --> 0:18:50.639 you know, two months ago. I mean, you know, you 0:18:50.760 --> 0:18:53.960 had you know, these not just these tariffs on China, 0:18:54.040 --> 0:18:56.520 but also these reciprocal tariffs that countries all over the 0:18:56.560 --> 0:18:58.600 world were facing, and there was you know a lot 0:18:58.800 --> 0:19:01.879 of confusion over what exactly that would ultimately mean for 0:19:01.920 --> 0:19:04.119 how the United States is doing trade in business with 0:19:04.520 --> 0:19:06.679 you know, countries worldwide. I mean, we saw during the 0:19:06.680 --> 0:19:09.119 first Trump administration, you know, a lot of you know, 0:19:09.119 --> 0:19:13.119 different companies that were already starting to diversify away from China, 0:19:13.200 --> 0:19:15.600 trying to put the rigs in different baskets in Southeast Asia. 0:19:15.680 --> 0:19:18.399 Some of those guys got burned, you know, just a 0:19:18.400 --> 0:19:21.119 month or so ago when we saw really high tariffs 0:19:21.160 --> 0:19:24.159 on Vietnam and others. Obviously, some of those have currently 0:19:24.200 --> 0:19:25.920 been paused. But I think, you know, that's a long 0:19:25.960 --> 0:19:28.520 way of saying that there's still a lot of uncertainty 0:19:28.560 --> 0:19:31.480 in this environment. Obviously, the cuts that we've seen so far, 0:19:31.600 --> 0:19:34.280 while dramatic, I'm still only in place for ninety days, 0:19:34.520 --> 0:19:37.160 so I can imagine that if you're you know, an exporter, 0:19:37.560 --> 0:19:39.919 if you're considering where exactly you're sort of setting up 0:19:39.920 --> 0:19:41.240 shop and how you want to do business with the 0:19:41.320 --> 0:19:44.320 United States, it's still a bit of an uncertain environment 0:19:44.359 --> 0:19:46.040 until you have something that actually does feel like a 0:19:46.080 --> 0:19:46.840 definitive deal. 0:19:47.040 --> 0:19:47.280 Jill. 0:19:47.320 --> 0:19:50.080 Another note of caution, perhaps too, from these comments from 0:19:50.080 --> 0:19:53.760 Scott best and about the five or six strategic industries 0:19:53.880 --> 0:19:57.240 where the US is going to seek supply chain independence 0:19:57.280 --> 0:20:01.479 and this quote strategic rebalancing that he's promising, is that 0:20:01.560 --> 0:20:04.960