WEBVTT - Markets Slump on Tariff Anxiety 0:00:02.720 --> 0:00:10.560 Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:18.479 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.600 --> 0:00:21.799 Listen on demand wherever you get your podcasts, or watch 0:00:21.920 --> 0:00:23.040 us live on YouTube. 0:00:23.640 --> 0:00:27.160 It's got an update here on what's happening down in Washington, 0:00:27.240 --> 0:00:31.320 DC with all these tariffs. Every single day there seems 0:00:31.360 --> 0:00:33.440 to be more and more news. Tyler Kendall joined us 0:00:33.400 --> 0:00:37.400 Bloomberg News reporter Tyler, what's the latest on the tariffs 0:00:37.440 --> 0:00:40.360 here where we heard some tough talk from mister Carney, 0:00:41.320 --> 0:00:44.960 the incoming Prime minister at Canada. What's the latest right. 0:00:44.840 --> 0:00:46.879 Well, we are expecting the next round of tariffs to 0:00:46.880 --> 0:00:48.800 go into effect this Wednesday. That's going to be on 0:00:48.880 --> 0:00:51.640 steel and aluminum tariffs at twenty five percent. We've been 0:00:51.640 --> 0:00:55.240 told not to expect any exemptions or carve outs at 0:00:55.280 --> 0:00:58.200 this moment, but of course, like many things, that remains 0:00:58.200 --> 0:01:00.320 to be seen and could be a moving target here 0:01:00.360 --> 0:01:02.280 at the White House, and I would just expect to 0:01:02.320 --> 0:01:05.560 hear this week rhetorics start to shift from senior administration officials. 0:01:05.560 --> 0:01:06.960 We've often talked about. 0:01:06.720 --> 0:01:08.520 Tariff's up to this point as being a way to 0:01:08.560 --> 0:01:11.280 advance President Trump's border policies. But now we're going to 0:01:11.280 --> 0:01:14.040 start to hear a lot more about these tariffs being 0:01:14.080 --> 0:01:17.640 about national security concerns. Recall, steel was a flashpoint on 0:01:17.680 --> 0:01:20.400 the twenty twenty four campaign trail with that proposed MEF 0:01:20.480 --> 0:01:24.399 on steel acquisition and where we heard national security come up. Notably, 0:01:24.480 --> 0:01:27.440 a Commerce Secretary, Howard Lutnick, over the weekend did say 0:01:27.520 --> 0:01:31.480 that Americans should start to prepare for foreign good prices 0:01:31.520 --> 0:01:33.920 to go up, although he contends that US good prices 0:01:33.959 --> 0:01:36.480 will ultimately go down over the long term, but that 0:01:36.520 --> 0:01:39.320 there might be that adjustment period as we've heard President 0:01:39.360 --> 0:01:41.280 Trump talk about. I just bring that up about the 0:01:41.319 --> 0:01:43.080 steel tariffs because we have to keep in mind that 0:01:43.120 --> 0:01:46.039 includes those downstream items and economists say that could hit 0:01:46.240 --> 0:01:47.240 consumers the most. 0:01:47.640 --> 0:01:49.960 Tyler Trump said of the U with economy faces a 0:01:50.040 --> 0:01:53.600 period of transition, how much pain are they willing to take? 0:01:54.760 --> 0:01:56.720 Right Well, the threshold for pain appears to be a 0:01:56.760 --> 0:01:59.600 little bit higher than most people believe. But the rhetoric 0:01:59.680 --> 0:02:01.440 right now of the White House is that there needs 0:02:01.480 --> 0:02:03.920 to be this short term adjustment period in order to 0:02:03.960 --> 0:02:06.680 have this longer term growth. And President Trump actually gave 0:02:06.760 --> 0:02:09.280 us a little bit of insight into his thinking during 0:02:09.320 --> 0:02:12.400 that interview that aired over the weekend, actually comparing the 0:02:12.480 --> 0:02:15.880 US to China, saying, in his words that China thinks 0:02:15.919 --> 0:02:18.960 in a one hundred year perspective, whereas the US likes 0:02:19.000 --> 0:02:20.959 to think in quarters. He then used that as a 0:02:21.000 --> 0:02:24.400 way to segue into doubling down on the claim that 0:02:24.440 --> 0:02:26.560 he says he is not watching the stock market, though 0:02:26.600 --> 0:02:29.919 he did noted that he has his eye towards interest rates. 0:02:29.919 --> 0:02:31.600 But it really does track with what we've been hearing 0:02:31.600 --> 0:02:33.760 from White House officials, which is that they are trying 0:02:33.960 --> 0:02:36.919 to have everybody look at the broader macroeconomic picture when 0:02:36.919 --> 0:02:40.320 concerns come up about inflation, or the labor market and 0:02:40.400 --> 0:02:43.400 workforce cuts, or even consumer sentiment. And I actually caught 0:02:43.480 --> 0:02:45.639 up with any C Director Kevin Hassett here on the 0:02:45.680 --> 0:02:48.359 White House North Lawn earlier this morning, and he told 0:02:48.400 --> 0:02:50.080 me that there's really not much they can do until 0:02:50.120 --> 0:02:53.160 the full Trump Agenda is implemented, which really means that 0:02:53.200 --> 0:02:55.960 they are banking on some things that haven't yet quite 0:02:55.960 --> 0:02:58.960 gone into effects, such as a terrorists as a revenue raiser, 0:02:59.000 --> 0:03:02.400 which goes hand in hand with importantly here President Trump's 0:03:02.440 --> 0:03:05.520 tax cut agenda, which Isabelle, we know is not going 0:03:05.560 --> 0:03:08.160 to necessarily be an easy task for this Congress. 0:03:08.520 --> 0:03:12.400 And Tyler, I guess the initial discussion surrounding these tariffs 0:03:12.560 --> 0:03:15.600 from President Trump's administration, where they were really not so 0:03:15.639 --> 0:03:18.520 much a trade war issue but a war against drugs 0:03:18.560 --> 0:03:22.520 and immigration. Is that still the argument that the administration 0:03:22.639 --> 0:03:23.040 is making. 0:03:24.080 --> 0:03:26.520 Well when it comes to those tariffs against Mexico and 0:03:26.520 --> 0:03:29.440 Canada that currently have this USMCA as well as auto 0:03:29.520 --> 0:03:32.480 exemption on them, This administration even over the weekend, said 0:03:32.480 --> 0:03:34.760 that any amount of fentanyl combing over the border is 0:03:34.880 --> 0:03:37.040 too much, and it doesn't really seem like they're moving 0:03:37.080 --> 0:03:38.600 off of that. We're going to them move into this 0:03:38.680 --> 0:03:41.960 national security argument with the steel and aluminum tariffs this week, 0:03:42.000 --> 0:03:44.080 but then we are really pushing ahead to that April 0:03:44.120 --> 0:03:47.040 second date that the administration keeps pushing us towards when 0:03:47.080 --> 0:03:49.480 it comes to the reciprocal tariff plans. We did learn 0:03:49.520 --> 0:03:52.880 that after President Trump had threatened reciprocal tariffs against Canadian 0:03:53.480 --> 0:03:56.400 lumber and dairy, for example, that that likely will not 0:03:56.480 --> 0:03:59.480 take effect until April second, even though he had threatened 0:03:59.480 --> 0:04:02.680 that those could have come sooner. So we're really going 0:04:02.720 --> 0:04:04.880 to start to see this argument of reciprocity as we 0:04:04.960 --> 0:04:07.920 start to expect some more leaders to come here over 0:04:08.000 --> 0:04:10.000 the next couple of weeks, as we beat the drum 0:04:10.120 --> 0:04:11.680 up to that April second date. 0:04:12.160 --> 0:04:15.040 How aligned is President Trump? And Secretary's caught Best that 0:04:15.120 --> 0:04:17.440 we have Trump saying that this is a transition period, 0:04:17.560 --> 0:04:19.839 and we have Best and saying this is a detox period. 0:04:21.000 --> 0:04:21.160 Right. 0:04:21.200 --> 0:04:24.120 Well, they're really trying to put forward this picture that 0:04:24.200 --> 0:04:27.400 the government does need to reduce government spending and that 0:04:27.440 --> 0:04:29.800 does go along with this tax cut agenda. We're going 0:04:29.800 --> 0:04:32.839 to need spending cuts in order to offset the tax cuts, 0:04:32.839 --> 0:04:35.560 and that's something that this Congress in particular is going 0:04:35.600 --> 0:04:38.840 to have to grapple with. Republicans in the House are 0:04:38.880 --> 0:04:41.560 really divided among this issue, particularly when it does come 0:04:41.600 --> 0:04:44.240 to government spending cuts and concerns about what it could 0:04:44.240 --> 0:04:47.680 mean for social programs such as medicaid. That is going 0:04:47.720 --> 0:04:50.080 to be a very complicated factor here as they try 0:04:50.120 --> 0:04:52.160 to get that over the finish line. And we got 0:04:52.160 --> 0:04:54.599 one indication this weekend that they are expecting this to 0:04:54.640 --> 0:04:58.960 be a month's long fight. The House Republicans introducing a 0:04:59.040 --> 0:05:02.880 stopgap measured keep the government funded until September thirtieth, with 0:05:02.960 --> 0:05:05.320 President Trump posting on truth Social that he had asked 0:05:05.360 --> 0:05:07.640 for that date in order to give enough time for 0:05:07.720 --> 0:05:10.320 Republicans to work out the rest of his agenda items. 0:05:10.600 --> 0:05:12.680 All right, Tyler, thank you so much for joining us. 0:05:12.720 --> 0:05:14.800 Really appreciate it. Tyler at Kendall. She's a reporter for 0:05:14.839 --> 0:05:16.520 Bloomberg News down to Washington, DC. 0:05:18.600 --> 0:05:22.280 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:05:22.360 --> 0:05:25.720 weekdays at ten am Eastern on Applecarplay and Android Auto 0:05:25.839 --> 0:05:28.919 with the Bloomberg Business App. Listen on demand wherever you 0:05:28.960 --> 0:05:32.120 get your podcasts, or watch us live on YouTube. 0:05:32.440 --> 0:05:33.960 So I've got a lot of volatility as the name 0:05:34.000 --> 0:05:36.640 of the game here in marketplaces, and we know that 0:05:36.680 --> 0:05:39.240 markets do not like volatility, so you see that in 0:05:39.240 --> 0:05:40.640 the price action here. Let's see what the. 0:05:40.560 --> 0:05:41.360 Pros are doing here. 0:05:41.520 --> 0:05:45.120 Tim o'bona, what's chief investment strategist at Innovator Capital Management. 0:05:45.120 --> 0:05:49.760 He's somewhere out there in Chicago, one of my favorite towns. Absolutely, Hey, Tim, 0:05:49.880 --> 0:05:52.240 talk to us about these markets here. You talk to 0:05:52.279 --> 0:05:55.600 your clients. How do you is it handholding? Is it 0:05:55.839 --> 0:05:57.800 what are the conversations these days. 0:05:58.680 --> 0:06:01.160 Oh, Paul, there's a lot of jitters out there, and 0:06:01.240 --> 0:06:04.359 every conversation that we are having right now all comes 0:06:04.360 --> 0:06:06.000 back to the question of what's going to be the 0:06:06.040 --> 0:06:09.440 net impact of all these different policies from the Trump administration. 0:06:10.160 --> 0:06:13.240 And you know, right now, I think there's this mindset 0:06:13.360 --> 0:06:15.839 shift that you know, everybody was really excited about the 0:06:15.839 --> 0:06:19.200 pro business policies of the Trump administration. Now I think 0:06:19.200 --> 0:06:22.200 it's becoming pretty clear that Trump realizes he needs to 0:06:22.200 --> 0:06:24.919 slow this economy down if he wants to get interest 0:06:24.960 --> 0:06:27.640 rates and inflation under control. And there's really two ways 0:06:28.320 --> 0:06:30.360 that he's going to be able to do that. One 0:06:31.080 --> 0:06:33.480 is pulling back in government spending and I think you're 0:06:33.480 --> 0:06:37.040 seeing that through through DOGE. And then also with the tariffs, 0:06:37.720 --> 0:06:39.920 and the tariffs we view that as really a tax 0:06:40.000 --> 0:06:43.239 on the consumer that is going to put additional pressure 0:06:43.760 --> 0:06:47.240 on consumers that are already under stress. And I think 0:06:47.240 --> 0:06:49.400 what he's going for here is long you know, long 0:06:49.480 --> 0:06:52.000 term gain with the fact that we know there's going 0:06:52.040 --> 0:06:54.920 to be continued short term pain, and he's okay with that. 0:06:55.760 --> 0:06:57.800 You know, you're not going to get the approval of 0:06:57.839 --> 0:07:00.520 the everyday American if the stock markets going up. You know, 0:07:00.720 --> 0:07:04.240 he counted that the first time constantly, that's not the case. 0:07:04.240 --> 0:07:04.560 This time. 0:07:04.600 --> 0:07:06.680 He's not talking about it at all. And I think 0:07:06.680 --> 0:07:09.359 it really comes back to that realization that if we 0:07:09.360 --> 0:07:11.320 are going to get interest rates down, if we are 0:07:11.360 --> 0:07:14.320 going to get inflation under control, there has to be 0:07:14.400 --> 0:07:17.200 some pain that comes along with that. And I think 0:07:17.240 --> 0:07:18.440 that's what you're seeing right now. 0:07:19.200 --> 0:07:21.480 And note you mentioned that the majority of investors were 0:07:21.520 --> 0:07:24.760 not taking Trump seriously when it comes to tariffs, So 0:07:24.800 --> 0:07:26.840 now it seems like he is serious and the velocity 0:07:26.840 --> 0:07:30.679 of the shift from excitement to fear has been swift. 0:07:30.960 --> 0:07:33.040 How are you trading this market? Where do you hedge? 0:07:34.200 --> 0:07:36.400 Well, you know, really in the bulk of what we 0:07:36.480 --> 0:07:39.600 do is risk management, you know, at all times. And 0:07:39.680 --> 0:07:42.000 if you look at the flows that we've seen here 0:07:42.040 --> 0:07:46.800 recently in the ETF market, we've seen a tremendous amount 0:07:46.800 --> 0:07:48.680 of inflows here to the tune of about a billion 0:07:48.720 --> 0:07:51.440 dollars over the last week and a half into buffered 0:07:51.480 --> 0:07:54.640 ETF strategies. And really what these do is they give 0:07:54.680 --> 0:07:58.000 you a known level of downside protection on an index 0:07:58.080 --> 0:08:00.240 like the S and P five hundred ETF or the 0:08:00.320 --> 0:08:04.480 Nasdaq with known upside exposure. And I think right now, 0:08:04.640 --> 0:08:07.160 we look at all the uncertainty that is out there, 0:08:07.440 --> 0:08:09.840 you know the fact that you know, on the flip 0:08:09.840 --> 0:08:11.600 of a switch, Trump could come out there pull back 0:08:11.640 --> 0:08:14.760 tariffs and this market could rip higher, or you could 0:08:14.800 --> 0:08:18.520 continue to see this tit for tat. There's so much uncertainty. 0:08:18.560 --> 0:08:21.400 And really, what these strategies do and why I think 0:08:21.480 --> 0:08:25.200 so many investors are gravitating towards these, is that they 0:08:25.200 --> 0:08:27.760 do help remove a lot of that uncertainty. They keep 0:08:27.800 --> 0:08:31.240 you invested, which is incredibly important, especially right now, but 0:08:31.360 --> 0:08:33.480 they also are going to help you really hedge out 0:08:33.520 --> 0:08:36.520 and mute a lot of this volatility that we're seeing, 0:08:37.040 --> 0:08:38.600 you know, coming from the Trump administration. 0:08:39.679 --> 0:08:42.200 Talk to us about the fixed income market. 0:08:42.200 --> 0:08:42.360 Here. 0:08:42.360 --> 0:08:45.080 We've got big moves today here in the in the 0:08:45.120 --> 0:08:47.920 bond market, treasuries of ten your ersury up twenty basis points, 0:08:47.960 --> 0:08:50.840 kicking the yield down the like four point two two percent. Here, 0:08:51.400 --> 0:08:54.480 where's opportunity if anywhere in the fixed income market. 0:08:55.480 --> 0:08:57.560 Well, Paul, I think we're starting to get a little 0:08:57.600 --> 0:08:59.360 more more bullish here, and this has been an area 0:08:59.360 --> 0:09:02.040 we've been very bearish on for the last couple of years, 0:09:02.120 --> 0:09:04.200 you know, simply for the fact that you know, most 0:09:04.240 --> 0:09:06.480 advisors that we're working with are using these as a 0:09:06.559 --> 0:09:10.640 risk management tool, right, and we continue to see BONN 0:09:10.720 --> 0:09:13.920 yields in equity prices moving in the same direction that 0:09:13.960 --> 0:09:17.480 you don't have that diversification that most advisors are going for. 0:09:18.360 --> 0:09:20.480 With that, I think with some of the changes that 0:09:20.520 --> 0:09:24.480 we've seen here recently, they're starting to become more opportunities. 0:09:25.160 --> 0:09:27.640 You know, if you look at BONN yelds and inflation 0:09:27.720 --> 0:09:30.840 really over the last several years, they followed this this 0:09:30.960 --> 0:09:34.240 government deficit as a percentage of GDP almost in lockstep 0:09:34.320 --> 0:09:36.800 with one another. So as we see more and more 0:09:37.200 --> 0:09:40.079 you know, hopefully more success from from the Department of 0:09:40.120 --> 0:09:43.200 Government efficiency from the Trump administration being able to pull 0:09:43.280 --> 0:09:46.880 back that spending, I think that gives us more hope 0:09:46.960 --> 0:09:49.720 that we can see, uh, you know, interest rates start 0:09:49.760 --> 0:09:52.679 to work, or that inverse correlation start to work a 0:09:52.720 --> 0:09:56.360 little bit better, that interest rates can come down. Uh 0:09:56.559 --> 0:10:00.360 and again a slowing economy too, that that should help 0:10:00.440 --> 0:10:02.600 us out on the longer end of the yield curve. 0:10:02.679 --> 0:10:04.840 So I still do think it's it's a risk with 0:10:04.880 --> 0:10:07.319 the environment that we're in right now with core inflation 0:10:07.440 --> 0:10:10.160 still elevated, but I think for the first time in 0:10:10.200 --> 0:10:12.920 a couple of years, we're starting to see signs, you know, 0:10:12.960 --> 0:10:16.080 that the long to intermediate duration bond trade could be 0:10:16.080 --> 0:10:17.360 showing some signs of life here. 0:10:17.960 --> 0:10:20.160 When it comes to inflation, we have Mohammed El Ariyan 0:10:20.240 --> 0:10:22.760 and an opinion piece today saying that the FEDS insistence 0:10:22.800 --> 0:10:27.000 and keeping inflation to two percent maybe limiting its flexibility. 0:10:27.040 --> 0:10:29.640 Where do you stand on that on your inflation views. 0:10:30.520 --> 0:10:32.520 Well, I don't think the Fed is going to move 0:10:32.559 --> 0:10:34.400 on it, so I think it's a fun thing to debate. 0:10:34.480 --> 0:10:37.320 I don't necessarily know if it helps investors in the 0:10:37.400 --> 0:10:41.440 short term. And look, you look back in the history 0:10:41.640 --> 0:10:45.920 of the US any time that we have seen core 0:10:45.960 --> 0:10:50.640 inflation starting off north of five percent or above, never 0:10:50.760 --> 0:10:53.520 before have we had a situation where we've gotten back 0:10:53.559 --> 0:10:57.599 down to two percent without a recessionary hit to the 0:10:57.679 --> 0:11:00.560 labor market coming. And you know what we've heard for 0:11:00.600 --> 0:11:02.280 the last several years, even from a lot of our 0:11:02.480 --> 0:11:05.440 you know, advisor clients, is that this time is different. 0:11:06.280 --> 0:11:08.320 And look, I hope it is. I hope this time 0:11:08.400 --> 0:11:10.520 is different where we can get back down to that 0:11:10.520 --> 0:11:13.400 two percent target without a huge hit to the labor 0:11:13.440 --> 0:11:15.840 market taking place. But we don't want to just go 0:11:15.880 --> 0:11:18.120 out there and position our portfolios like that's going to 0:11:18.120 --> 0:11:21.400 be the case, because it would, in fact be a 0:11:21.559 --> 0:11:24.320 unicorn event. And I think, you know, a lot of 0:11:24.360 --> 0:11:26.240 the you know, this comes back down to how strong 0:11:26.240 --> 0:11:29.320 the labor market has been over the last couple of years. 0:11:29.360 --> 0:11:32.080 Wage growth still running north of you know, well north 0:11:32.080 --> 0:11:35.440 of four percent. That's not conducive with a two percent 0:11:35.520 --> 0:11:38.320 inflation target at all. And you know, I think what 0:11:38.520 --> 0:11:40.320 gives me a little bit of hope that we are 0:11:40.360 --> 0:11:42.760 going to get back down there, you know, within the 0:11:42.800 --> 0:11:44.760 next year or so now is if you look at 0:11:44.800 --> 0:11:47.959 all the layoffs that are taking place within the government 0:11:48.240 --> 0:11:50.320 over the last couple of years, you've had about a 0:11:50.400 --> 0:11:53.440 quarter of all new jobs that have been created by 0:11:53.480 --> 0:11:56.240 the government. We're starting to pull that back. You're starting 0:11:56.280 --> 0:11:58.280 to see you know, a lot of those layoffs, which 0:11:58.280 --> 0:12:00.439 I've seen recent estimates in the three hunds to five 0:12:00.520 --> 0:12:04.360 hundred thousand range, those are going to be jobs that 0:12:04.400 --> 0:12:06.760 are going to be replaced in the private sectors. So 0:12:06.800 --> 0:12:09.800 there's going to be a lot more supply coming to market, 0:12:09.960 --> 0:12:12.680 which I'm hopeful that that will really soften things up 0:12:12.720 --> 0:12:13.520 to where we need to be. 0:12:13.880 --> 0:12:15.560 Tim, thank you so much for joining us. Timber Bouden, 0:12:15.600 --> 0:12:19.240 what's chief investment strategies from Innovator Capital Management. 0:12:20.880 --> 0:12:24.600 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:12:24.679 --> 0:12:28.040 weekdays at ten am Eastern on Applecarclay and Android Auto 0:12:28.160 --> 0:12:31.240 with the Bloomberg Business app. Listen on demand wherever you 0:12:31.280 --> 0:12:34.640 get your podcasts, or watch us live on YouTube. 0:12:34.960 --> 0:12:37.000 Is Bill Lee Paul Sweeney live here in on our 0:12:37.000 --> 0:12:38.160 Bloomberg Interrective Broker. 0:12:38.440 --> 0:12:39.280 We're studio. 0:12:39.280 --> 0:12:41.440 We're streaming live on YouTube at over to YouTube dot 0:12:41.480 --> 0:12:45.000 com and search Bloomberg Podcast Live, and that's where you're fine. 0:12:45.200 --> 0:12:47.199 We talk every week to our good friends at Bloomberg 0:12:47.440 --> 0:12:50.719 New Energy Finance b n EF. Now we've got to 0:12:50.720 --> 0:12:53.120 talk about tariffs and what that means for green sectors 0:12:53.120 --> 0:12:56.119 from energy to biofuels. Today we do that with Antoine 0:12:56.200 --> 0:13:01.160 Wagner Jones, head of Trade and Supply Chains for bn Yeah, Antoine, 0:13:01.200 --> 0:13:05.240 thanks for being in our studio here. Tariffs cannot be 0:13:05.400 --> 0:13:10.040 good for the evolution into green energy. How do you 0:13:10.040 --> 0:13:14.079 guys think about the wrists that are being introduced into. 0:13:13.920 --> 0:13:18.600 That, Yeah, there's at a time where everything is whipsawing 0:13:18.720 --> 0:13:21.240 and we're seeing a lot of differences in terms of 0:13:21.240 --> 0:13:25.240 policy approaches. What's really interesting is to see areas of continuity. 0:13:25.440 --> 0:13:28.360 Trump is very much on board with manufacturing in the US. 0:13:28.720 --> 0:13:30.360 That was something that was very much a part of 0:13:30.400 --> 0:13:33.280 the Biden administration. The way in which that's happening is 0:13:33.440 --> 0:13:37.760 very different, however, as central planks of Biden's approach was 0:13:37.760 --> 0:13:40.800 to be Okay, we're going to onshore semiconductors, We're going 0:13:40.880 --> 0:13:44.839 to onshore clean energy manufacturing. And what we've seen now 0:13:44.960 --> 0:13:49.760 is attack on the Inflation Reduction Act rhetorically and a 0:13:49.880 --> 0:13:52.160 version that's starting to build on the Chips Act. These 0:13:52.200 --> 0:13:56.000 big sources of finance for a lot of these projects 0:13:56.040 --> 0:13:57.920 that are happening in the US at a time when 0:13:58.000 --> 0:14:00.000 tariffs are starting to be stepped up as a respon 0:14:00.040 --> 0:14:01.560 once and this is building on a lot of tariffs 0:14:01.559 --> 0:14:04.360 that we saw on the Biden administration front. That has 0:14:04.400 --> 0:14:07.000 to be twinned with support for some of these different sectors. 0:14:07.320 --> 0:14:09.600 When that's being pulled out, then it starts to become 0:14:09.800 --> 0:14:12.880 very uncertain, and when you're seeing the levels of volatility 0:14:12.920 --> 0:14:16.200 around tariff's being announced, being pulled back, being re announced 0:14:16.200 --> 0:14:18.200 when things are really unclear in terms of what's going 0:14:18.240 --> 0:14:20.840 to happen. That's not great for businesses that need to 0:14:20.880 --> 0:14:26.120 make decisions on investment that has quite a long payback period. 0:14:26.600 --> 0:14:30.000 And we're not quite seeing the upsurge in manufacturing investment 0:14:30.040 --> 0:14:33.560 that we're expecting to see over the first few months 0:14:33.600 --> 0:14:36.040 as a result. So it's an interesting time. There's a 0:14:36.080 --> 0:14:38.520 lot in flux. It's bad news for leek green energy, 0:14:38.560 --> 0:14:41.320 as you can expect, but it's also not necessarily great 0:14:41.320 --> 0:14:42.960 news for some of the objectives that are a central 0:14:42.960 --> 0:14:46.480 part of Trump's agenda, whether that's building out data centers. 0:14:46.520 --> 0:14:48.040 You need a lot of grid equipment, a lot of 0:14:48.080 --> 0:14:50.560 that comes from Mexico that suddenly becomes a lot more 0:14:50.560 --> 0:14:52.760 expensive if you need all the transformers that you need, 0:14:53.600 --> 0:14:56.360 and the examples along that line of thinking just on 0:14:56.400 --> 0:14:58.800 ever ending. So it's a lot of uncertainty and not 0:14:58.840 --> 0:15:01.560 a great outlook when it comes to to you know, 0:15:01.680 --> 0:15:04.800 this idea that tariff's equals manufacturing, but actually the path 0:15:04.800 --> 0:15:07.560 to getting there is a lot more is a lot 0:15:07.600 --> 0:15:09.320 more fraught than I think is appreciated. 0:15:09.920 --> 0:15:11.440 I was just going to ask what we see a 0:15:11.480 --> 0:15:14.280 shift into em Are they starting to ramp up imports 0:15:14.280 --> 0:15:16.560 of clean tech products? I mean maybe they could stand 0:15:16.560 --> 0:15:17.080 to benefit. 0:15:18.640 --> 0:15:24.640 Yeah, it's we generally speaking, yes, we could start to 0:15:24.680 --> 0:15:28.080 see arise from that perspective. But again, I think a 0:15:28.080 --> 0:15:31.720 lot of the constraining factors they're on grid investment rather 0:15:31.800 --> 0:15:34.400 than the cost of clean energy, and that's where we're 0:15:34.440 --> 0:15:36.680 starting to see some real pain points when already there's 0:15:36.680 --> 0:15:40.480 some big shortages of large power transformers, for example, and 0:15:40.520 --> 0:15:43.040 that's something that is repeatedly a huge concern and something 0:15:43.080 --> 0:15:46.400 that has made materially more difficult to integrate that sort 0:15:46.400 --> 0:15:49.240 of clean energy if you're making building out the grid 0:15:49.280 --> 0:15:51.560 a lot harder. So there's a lot of recurring themes 0:15:51.600 --> 0:15:52.479 that keep popping. 0:15:52.240 --> 0:15:52.960 Up, and that's one of them. 0:15:53.600 --> 0:15:57.120 How about near shoring. We thought about North America as 0:15:57.200 --> 0:16:00.840 near shoring Canada and Mexico, but that may not be 0:16:01.120 --> 0:16:04.520 enough because now we're talking putting tariffs on those folks 0:16:04.600 --> 0:16:07.160 as well. So it sounds like if you want to 0:16:07.200 --> 0:16:12.240 manufacture anything, it's going to be almost entirely United States based. 0:16:12.040 --> 0:16:14.160 And that's what's fascinating. So over the last few years, 0:16:14.200 --> 0:16:18.600 we've seen all these different buzzwords on shoring, reshoring, near shuring, 0:16:18.720 --> 0:16:21.240 near shuring. This idea which was promoted by the Biden 0:16:21.240 --> 0:16:24.960 administration that will have certain incentives for manufacturing, will extend 0:16:25.040 --> 0:16:28.760 those incentives for manufacturing parts of evs, for example, to 0:16:28.800 --> 0:16:33.280 our North American neighbors in Canada and Mexico. Now, when 0:16:33.280 --> 0:16:38.720 you're starting to impose tariffs on those same neighbors, then 0:16:38.760 --> 0:16:41.400 you're flying in the face of that trend, and it 0:16:41.440 --> 0:16:43.320 really seems like that sort of dead in the water. 0:16:43.960 --> 0:16:45.440 I don't think we're going to see the death of 0:16:45.480 --> 0:16:49.080 integrated value chains for the automotive sector over the next 0:16:49.120 --> 0:16:52.040 few weeks. That's going to remain in North America, across 0:16:52.080 --> 0:16:54.720 North America because of the inertia in the system, the 0:16:54.720 --> 0:16:56.400 efforts that are being made by lots of these the 0:16:56.400 --> 0:17:00.000 big three automakers for example. But at the same time, 0:17:00.040 --> 0:17:01.520 I don't think we're going to see the step up 0:17:01.520 --> 0:17:05.000 in investment in Mexican manufacturing that was due to surf 0:17:05.080 --> 0:17:09.520 the US market through this trend of nailshuring, which now 0:17:09.520 --> 0:17:11.040 I really don't see as a poltical priority. 0:17:11.080 --> 0:17:13.399 All interesting, All right, and Swan, thank you so much 0:17:13.440 --> 0:17:17.000 for joining US. Antoine Vagno Jones, head of Trade and 0:17:17.080 --> 0:17:20.360 Supply Chains for BNF. Joining us here on our Bloomberg 0:17:20.400 --> 0:17:21.840 Interactive Brokers Studio. 0:17:23.520 --> 0:17:27.240 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:27.320 --> 0:17:30.680 weekdays at ten am Eastern on Applecarclay and Android Auto 0:17:30.800 --> 0:17:33.879 with the Bloomberg Business App. Listen on demand wherever you 0:17:33.880 --> 0:17:37.280 get your podcasts, or watch us live on YouTube. 0:17:37.400 --> 0:17:41.520 Earlier today, Joe Dominguez see You, of Constellation Energy, spoke 0:17:41.560 --> 0:17:45.000 with Bloomberg Intelligence co host Alex Steele about the impact 0:17:45.040 --> 0:17:48.760 of tariffs on energy investments at Sarah Week in Houston. 0:17:48.880 --> 0:17:52.040 Joe was first asked about the recession. It's slowing growth, 0:17:52.080 --> 0:17:54.639 and he was asked if he's noticing any of that 0:17:54.800 --> 0:17:56.200 at Constellations take a listen. 0:17:56.640 --> 0:17:58.560 We don't see an end in sight right now. We're 0:17:58.560 --> 0:18:01.159 starting to see it get rational, and by that I 0:18:01.240 --> 0:18:04.240 mean we're not seeing the same request for data centers 0:18:04.280 --> 0:18:06.880 popping up in five or six utilities. So I think 0:18:06.920 --> 0:18:10.560 the hyperscalers are beginning to figure out where they want 0:18:10.560 --> 0:18:13.560 to go. And it's not the frenzy of activity, but 0:18:13.600 --> 0:18:16.280 in terms of the deal pace, it continues the same 0:18:16.280 --> 0:18:17.520 way we saw it last year. 0:18:17.800 --> 0:18:19.879 And how are the deals like, how is it to 0:18:19.920 --> 0:18:20.600 get them done? 0:18:21.040 --> 0:18:23.600 Is it hard? Is it coming up with a structure 0:18:23.760 --> 0:18:25.600 the money? Like? What is it? 0:18:25.600 --> 0:18:28.520 It's not hard, but they're complicated because they're multi billion 0:18:28.560 --> 0:18:31.919 dollar deals, right, So we're talking about twenty year deals 0:18:31.960 --> 0:18:35.199 for power that sometimes could cost five or ten billion dollars. 0:18:35.240 --> 0:18:38.159 So, like any commercial deal of that scale, it's. 0:18:38.040 --> 0:18:40.520 Going to take a long time to negotiate, and each 0:18:40.600 --> 0:18:42.560 time you need to do that with a new party, 0:18:42.840 --> 0:18:45.160 you have to go through all the terms and conditions again. 0:18:45.320 --> 0:18:47.960 But I think we're going to get some some deals 0:18:47.960 --> 0:18:48.600 done this year. 0:18:48.880 --> 0:18:51.560 Can you give me some hints, like in maybe areas, 0:18:51.640 --> 0:18:54.760 what kind of deals, like what kind of power? 0:18:55.160 --> 0:18:58.560 Well, I think nuclear continues to be very attractive for 0:18:58.600 --> 0:19:01.320 the hyper scalers because it operates twenty four to seven, 0:19:01.680 --> 0:19:04.240 it's cleaned, so it meets their environmental goals, and it 0:19:04.280 --> 0:19:06.960 matches up really well from a reliability standpoint. 0:19:07.119 --> 0:19:08.679 So let's go Tom money then for a second. 0:19:08.880 --> 0:19:11.800 So coming up with the deals is very interesting, particularly 0:19:11.800 --> 0:19:14.199 the one you do with Microsoft to restart three Mile Island. 0:19:14.880 --> 0:19:16.399 Are your costs going up right now? 0:19:18.200 --> 0:19:18.880 A little bit? 0:19:19.000 --> 0:19:22.520