WEBVTT - Trump Seeks Reciprocal Tariffs, HSBC Job Cuts & European Security Concerns

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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<v Speaker 1>Daybreak Youro podcast, available every morning on Apple, Spotify or

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<v Speaker 1>wherever you listen. It's Friday, the fourteenth of February in London.

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<v Speaker 1>I'm Stephen Carroll coming up today. US President Trump moves

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<v Speaker 1>to impose reciprocal tariffs on its trading partners. You can't

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<v Speaker 1>trust him, Ukraine Zelensky sounds of warning on Vladimir Putin.

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<v Speaker 1>Plus cuts are coming, Bloomberg learns HSBC is preparing for

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<v Speaker 1>a fresh round of layoffs. Let's start with a round

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<v Speaker 1>up of our top stories. US President Donald Trump has

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<v Speaker 1>ordered his administration to consider imposing reciprocal tariffs on its

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<v Speaker 1>trading partners. The levees would be customized for each country

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<v Speaker 1>and aim to offset their tariffs on US goods as

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<v Speaker 1>well as non tariff barriers to trade.

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<v Speaker 2>Again, whatever they charge us with judging the EMI, so

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<v Speaker 2>it works out very on. It's very It's a beautiful,

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<v Speaker 2>simple system, and we don't have to worry judging too

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<v Speaker 2>much or too little.

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<v Speaker 1>Reciprocal tariffs would amount Trump's broadest action to address US

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<v Speaker 1>trade deficits. Bloomberg Senior Economic Supporter Sean Donnan says, the

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<v Speaker 1>key focus is on how other countries tax consumers.

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<v Speaker 3>Value added taxes or VAT, and that's big in the EU.

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<v Speaker 3>There's more than one hundred and sixty countries in the

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<v Speaker 3>world that use a VAT. The US, of course, does not.

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<v Speaker 3>This kind of rekindles a battle that the US has

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<v Speaker 3>had on and off with Europe since the nineteen sixties

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<v Speaker 3>over how to treat taxes and trade. But we're going

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<v Speaker 3>to end up with some big numbers aim that some

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<v Speaker 3>big trading partners. We just don't yet know what those

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<v Speaker 3>numbers are going to be.

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<v Speaker 1>Bloomberg Shawn donnand speaking there as, Trump also told reporters

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<v Speaker 1>that he would enact import taxes at a later date

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<v Speaker 1>on cars, semiconductors, and pharmaceuticals, over and above the reciprocal tariffs.

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<v Speaker 1>The US president has already imposed ten percent tariffs on

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<v Speaker 1>Chinese goods and plans to put twenty five percent duties

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<v Speaker 1>in all US steel and aluminium imports next month. The

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<v Speaker 1>latest salvo on tariffs came as Trump and India's Prime

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<v Speaker 1>Minister Narandro Modi met in Washington. The two leaders agreed

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<v Speaker 1>to begin negotiations to address what Trump described as long

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<v Speaker 1>running disparities in their trade relationship.

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<v Speaker 2>It has been to US just about the highest tariffed

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<v Speaker 2>nation anywhere in the world. They've been very strong on tariffs.

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<v Speaker 2>I don't blame them necessarily, but it's a different way

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<v Speaker 2>of doing business. It's very hard to sell into India

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<v Speaker 2>because they have their trade bearers very strong tariffs.

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<v Speaker 1>Donald Trump was speaking there in that joint press conference

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<v Speaker 1>this as Narandro Mody said the two men had agreed

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<v Speaker 1>to more than double bilateral trade to five hundred billion

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<v Speaker 1>dollars by twenty thirty. Trump also said the US would

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<v Speaker 1>take steps to sell the F thirty five warplane to

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<v Speaker 1>India as part of a bigger commitment to deepening defense ties.

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<v Speaker 1>US has been reluctant to sell the planes to countries

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<v Speaker 1>where its technology might be stolen by adversaries. In Europe,

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<v Speaker 1>leaders are still coming to terms with the u US

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<v Speaker 1>shift and its policy towards Russia. After Trump and Putin's

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<v Speaker 1>surprise call to discross Ukraine, Ukrainian leader of Ladimir Zelenski

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<v Speaker 1>says he's warned the US president that Putin cannot be trusted,

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<v Speaker 1>adding that Ukraine must be part of any peace talks.

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<v Speaker 4>Today, we cannot predict how it all will go on.

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<v Speaker 4>But we must be strong. We will be very careful.

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<v Speaker 4>We need allies and fair partners. We cannot accept as

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<v Speaker 4>an independent country any agreements made without us.

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<v Speaker 5>Shap.

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<v Speaker 1>That was doder Mezelenski. They're speaking through a translator. The

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<v Speaker 1>Trump administration also told European allies they should buy American

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<v Speaker 1>weapons and military equipment to maintain the NATO alliance. This

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<v Speaker 1>as Bloomberg Economics calculates that protecting Ukraine and expanding Europe's

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<v Speaker 1>own militaries could cost the continent's major powers an additional

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<v Speaker 1>three point one trillion dollars over the next ten years.

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<v Speaker 1>In to some breaking news this hour, and nat West

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<v Speaker 1>has reported pre tax operating profit the beat estimates, coming

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<v Speaker 1>in at one point four to nine billion pounds. That's

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<v Speaker 1>above an estimate of one point four billion pounds. Net

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<v Speaker 1>income in the fourth quarter was at one point two

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<v Speaker 1>five billion pounds, also beating estimates. Net interest income slightly

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<v Speaker 1>above estimates at two point ninety seven billion pounds as well,

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<v Speaker 1>and also news that the UK Treasury has reduced its

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<v Speaker 1>stake in that West to seven point nine to eight percent.

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<v Speaker 1>That's down from eight point nine percent and staying with earnings.

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<v Speaker 1>Sales Aurmez climbed as a luxury group, benefit of from

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<v Speaker 1>a strong appetite over the holiday shopping season. Sales jumped

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<v Speaker 1>almost eighteen percent in the fourth quarter at constant exchange rates,

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<v Speaker 1>according to the latest results out from the firm this morning.

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<v Speaker 1>That's above what analysts had been expecting, which was growth

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<v Speaker 1>of eleven percent. Armes chairs have climbed more than twenty

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<v Speaker 1>percent since the start of this year. HSBC is planning

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<v Speaker 1>any round of job cuts next week. Bloomberg understands the

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<v Speaker 1>changes to its investment bank workforce will affect employees globally,

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<v Speaker 1>starting in Asia. That's the CEO Jean jel Hadri continues

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<v Speaker 1>his overhaul of Europe's biggest lender. Layoffs could begin as

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<v Speaker 1>early as Monday and will be based on performance, job

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<v Speaker 1>duplication and simplification, with some already underway in the firm's

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<v Speaker 1>markets division. JP Morgan, CEO, says the bank will scale

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<v Speaker 1>back spending on what he called stupid diversity initiatives that

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<v Speaker 1>he sees as wasteful. Responding to an employee question, Jamie

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<v Speaker 1>Diamond said plans to cancel some schemes was about costs

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<v Speaker 1>rather than backlash from the Trump administration. JP Morgan's longtime leader,

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<v Speaker 1>also reiterated the bank's commitment to working with black, Hispanic

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<v Speaker 1>and LGBTQ communities, but told staff that he was never

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<v Speaker 1>a firm believer in bias. Training and the UK's Prime Minister,

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<v Speaker 1>Kris Starmer, met China's top diplomat as the two countries

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<v Speaker 1>look to improve ties. The British leader joined a meeting

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<v Speaker 1>between farm mister Wange and National Security Advisor Jonathan Powell

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<v Speaker 1>Bloomberg James Wilcock reports.

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<v Speaker 6>Kiss Starmer expressed his intention to build a consistent and

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<v Speaker 6>respectful relationship between the UK and China, and according to

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<v Speaker 6>China's Global Times, Foreign Minister Wang Yi So, the UK

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<v Speaker 6>government had started the process of improving relations and looked

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<v Speaker 6>forward to deepening cooperation on AI and climate change. Both

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<v Speaker 6>China's top diplomat and the US Ambassador to Britain were

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<v Speaker 6>in Downing Street yesterday. It showcases the balancing act Britain

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<v Speaker 6>is trying to pull off, trying to build ties to

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<v Speaker 6>the world's second largest economy while avoiding the ayre of

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<v Speaker 6>the US President Donald Trump in London, James Orcock Bloomberg Radio.

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<v Speaker 1>Those are your top stories. Eurostocks on the market's Eurostox

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<v Speaker 1>fifty futures of down two tenths of one percent, so

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<v Speaker 1>we're seeing a narrowing of the negative sentiment on European

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<v Speaker 1>stock markets. The Eurostox fifty index actually hit a record

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<v Speaker 1>high in trading yesterday. We've had some optimism boosted around

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<v Speaker 1>the prospect of those reciprocal tariffs not coming until April,

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<v Speaker 1>leaving some space for negotiation. The Mascis Specific Index six

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<v Speaker 1>tenths higher as well. On the currency markets, the Bloomberg

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<v Speaker 1>Dollars Spot Index now in the red a tenth of

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<v Speaker 1>one percent as well. That's after the drop that we

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<v Speaker 1>saw yesterday. So the euros trailing at one of four

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<v Speaker 1>to sixty seven against the dollar of the pound at

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<v Speaker 1>one twenty five sixty seven. And in a moment, we'll

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<v Speaker 1>bring you more on those announcements out of the US

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<v Speaker 1>on tariffs. But just a word or another story that

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<v Speaker 1>caught our eye this morning to do with how one

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<v Speaker 1>hedge fund is using AI. It's replaced junior analysts at

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<v Speaker 1>the Australian hedge fund, Minotaur Capital. That's according to reporting

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<v Speaker 1>by our colleagues Harry Brompton and Georgina McKay so their

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<v Speaker 1>bets using their large language model have returned almost fourteen

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<v Speaker 1>percent in the six months to the end of January,

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<v Speaker 1>versus almost seven percent for the MSCI All Country World Index. Now,

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<v Speaker 1>it's not unusual that hedge funds be using AI for

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<v Speaker 1>this sort of work, but Minotaur believes that they have

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<v Speaker 1>developed a large language model that can digest larger amounts

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<v Speaker 1>of information and produces two thousand word reports on any

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<v Speaker 1>global stock. It deems has the potential to double in

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<v Speaker 1>three years or improve tenfold in the so in decades.

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<v Speaker 1>They combine this at making their own inquiries as a

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<v Speaker 1>recipe for success. But the co founder Arman Rosenberg telling

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<v Speaker 1>Bloomberg the cost of developing that AI large language model

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<v Speaker 1>is about half that of a junior analyst's salary. You

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<v Speaker 1>can read more in that story on Bloomberg dot com

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<v Speaker 1>and on the terminal. So let's turn back to tariff's then,

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<v Speaker 1>the US President now talking about reciprocal tariffs on trading

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<v Speaker 1>partners in response to levies, regulation or other non tariff barriers.

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<v Speaker 1>But the timeline is key here. Let's bring in our

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<v Speaker 1>senior editor Bill Ferries for more. But what can you

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<v Speaker 1>tell US about what Donald Trump has announced here.

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<v Speaker 7>Well, what he's announced is a really sweeping demand of

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<v Speaker 7>his US Trade representative and his Commerce secretary to propose

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<v Speaker 7>new levies on a country by country basis in a

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<v Speaker 7>bid to kind of rebalance trade relations between the US

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<v Speaker 7>and every one of its trading partners. So that requires

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<v Speaker 7>looking at not just what kind of tariffs those countries

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<v Speaker 7>impose on US goods, but of non tariff barriers those

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<v Speaker 7>countries have too, And a non tariff barrier could be

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<v Speaker 7>things like regulations that could include things like value added tax,

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<v Speaker 7>include a whole host of things that make selling American

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<v Speaker 7>goods into that country difficult. And the end result of

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<v Speaker 7>this is expected to be a list of recommendations for

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<v Speaker 7>again every single country on how much the US should

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<v Speaker 7>raise tariffs against those countries to try to even things out.

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<v Speaker 7>President Trump presented it as a very easy way of

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<v Speaker 7>trying to rebalance trade, but the reality is it's going

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<v Speaker 7>to be quite difficult, and it's going to take quite

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<v Speaker 7>a bit of time, I think, to go through all

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<v Speaker 7>of that.

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<v Speaker 1>Yeah, indeed, I mean, those are the key factors that

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<v Speaker 1>markets appear to be focused on, both the timeline and

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<v Speaker 1>the fact that this looks like a very complex and

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<v Speaker 1>potentially unworkable task.

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<v Speaker 7>It is going to be complex. The Howard Lutnik, who

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<v Speaker 7>is still Trump's nominee to lead the Commerce Department, he

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<v Speaker 7>told reporters that he think all he thinks all the

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<v Speaker 7>studies about this could be done by April first, and

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<v Speaker 7>that President Trump could act on it on his recommendations

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<v Speaker 7>after that. The reality, of course, is that that also

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<v Speaker 7>opens up a big space of time for negotiations to

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<v Speaker 7>start with all the countries involved. So I would imagine

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<v Speaker 7>any world leader who's talking or meeting with Donald Trump

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<v Speaker 7>over the next six or seven weeks between now and

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<v Speaker 7>April will be putting in a good word and also

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<v Speaker 7>trying to say like what sort of measures they're willing

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<v Speaker 7>to take, whether it's buying more American goods or reducing

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<v Speaker 7>some of those tariffs to try to make it less

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<v Speaker 7>likely that they will face the full impact of potential tariffs.

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<v Speaker 1>The interesting also to see the comments from Peter Navarro

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<v Speaker 1>talking dismissing concerns that this might push up prices for

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<v Speaker 1>US consumers as well, which is, you know, one of

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<v Speaker 1>the factors of the economists have been thinking about.

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<v Speaker 7>Yeah, and it comes you know, all of this comes

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<v Speaker 7>of course, just yesterday there was a higher than expected

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<v Speaker 7>inflation reading in the US, so the trend is not

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<v Speaker 7>looking good. The bets on when the Federal Reserve will

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<v Speaker 7>cut rates have been pushed back even further. The Trump

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<v Speaker 7>administration and Peter Navarro basically arguing that hey, we did

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<v Speaker 7>some tariffs in Trump's first term, and the reality was

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<v Speaker 7>it was a pretty limited impact, they said. Studies have

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<v Speaker 7>shown that exporters to the US absorbed some of that

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<v Speaker 7>some of that cost with lower margins, but there were

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<v Speaker 7>costs passed on. And certainly, as you talk about an

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<v Speaker 7>inflationary environment in the US, when people were worried about

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<v Speaker 7>the price of eggs, the price of homes, the price

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<v Speaker 7>of cars, particularly with things like the steel and aluminum tariffs,

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<v Speaker 7>it's going to be a real difficult question politically about

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<v Speaker 7>whether the president goes forward with US.

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<v Speaker 1>Okay, Bill Ferries, our senior editor, thank you very much

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<v Speaker 1>for joining us this morning. Well, the threat of tariffs

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<v Speaker 1>on Europeanes is also hanging over the security issues being

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<v Speaker 1>discussed at the Munich Security Conference, which gets underway today.

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<v Speaker 1>Our correspond to Oliver Crook is there for US and

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<v Speaker 1>he joins US now Live Oliver Good Morning. Trade issues

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<v Speaker 1>intertwined with security issues at this event. How worried will

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<v Speaker 1>leaders there be about the issis they've heard from Donald Trump.

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<v Speaker 5>I mean, listen, they need to figure out what to

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<v Speaker 5>prioritize of what they've heard recently from Donald Trump. I mean,

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<v Speaker 5>the last forty eight hours alone has been a complete

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<v Speaker 5>barrage of information. It's very hard to know really what

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<v Speaker 5>to take away from it, what to take seriously, what

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<v Speaker 5>to take literally. I mean, the week began with this

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<v Speaker 5>conversation between Donald Trump and Vladimir Putin, really kind of

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<v Speaker 5>out of the blue.

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<v Speaker 8>Again, a lot of people were.

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<v Speaker 5>Surprised by it, but again people shouldn't be that surprised

0:12:40.400 --> 0:12:43.600
<v Speaker 5>by the policies that Donald Trump is advancing, and not

0:12:43.640 --> 0:12:46.040
<v Speaker 5>just the substance of them, but their style. Basically, this

0:12:46.120 --> 0:12:49.120
<v Speaker 5>is not a multilateral system anymore. This is a unilateral system.

0:12:49.160 --> 0:12:51.000
<v Speaker 5>This is one that is going to be governed by

0:12:51.040 --> 0:12:53.880
<v Speaker 5>Donald Trump and how he wants, how he wants to

0:12:53.880 --> 0:12:56.480
<v Speaker 5>sort of pursue foreign policy. And for the Europeans are

0:12:56.559 --> 0:12:59.000
<v Speaker 5>sort of left scrambling here. They're trying desperately to get

0:12:59.000 --> 0:13:01.040
<v Speaker 5>a seat of disable. But the concern is that this

0:13:01.160 --> 0:13:04.000
<v Speaker 5>US delegation is not here to listen, it's here to talk.

0:13:05.880 --> 0:13:09.000
<v Speaker 1>This as we've heard from the Trump administration that they've

0:13:09.040 --> 0:13:11.640
<v Speaker 1>told allies in Europe they want them to buy more

0:13:11.679 --> 0:13:16.280
<v Speaker 1>American weapons. This is part of the continued support for NATO.

0:13:16.440 --> 0:13:17.600
<v Speaker 1>Does that seem likely?

0:13:18.720 --> 0:13:19.560
<v Speaker 8>That seems very likely.

0:13:19.559 --> 0:13:21.160
<v Speaker 5>And again that is sort of one of the issues,

0:13:21.320 --> 0:13:24.120
<v Speaker 5>like buying more fossil fuels, that's really for the Europeans

0:13:24.120 --> 0:13:26.199
<v Speaker 5>than the Americans pushing on an open door right. The

0:13:26.240 --> 0:13:29.840
<v Speaker 5>Europeans need more military hardware and they need more fossil fuels.

0:13:29.880 --> 0:13:31.640
<v Speaker 5>The US is very happy to sell that to them.

0:13:31.720 --> 0:13:34.520
<v Speaker 5>So that is one way in which that certainly will

0:13:34.679 --> 0:13:37.160
<v Speaker 5>likely happen. But again to your earlier point, Steve, and

0:13:37.200 --> 0:13:39.400
<v Speaker 5>this whole idea that all these issues are intertwined, this

0:13:39.440 --> 0:13:42.160
<v Speaker 5>is a sort of staple of the sort of Trump policy.

0:13:42.240 --> 0:13:46.000
<v Speaker 5>There are not discrete trade issues, discrete antitrust regulation issues,

0:13:46.160 --> 0:13:49.920
<v Speaker 5>discrete defense issues. Everything is sort of banded up together.

0:13:50.040 --> 0:13:51.760
<v Speaker 5>I mean, I spoke to the highest ranking general in

0:13:51.800 --> 0:13:54.200
<v Speaker 5>the German military yesterday. This is the man who commands

0:13:54.200 --> 0:13:56.480
<v Speaker 5>the armed forces which they needs to bring these things

0:13:56.480 --> 0:13:58.840
<v Speaker 5>into being, and I asked him, listen, if the United

0:13:58.840 --> 0:14:01.840
<v Speaker 5>States is willing to use as leverage points basically anything,

0:14:01.880 --> 0:14:02.640
<v Speaker 5>even on allies.

0:14:02.760 --> 0:14:05.760
<v Speaker 8>Do you feel secure buying arms and being reliant on

0:14:05.760 --> 0:14:07.960
<v Speaker 8>the United States for buying arms, and he said, basically

0:14:08.040 --> 0:14:09.160
<v Speaker 8>there is no other alternative.

0:14:09.240 --> 0:14:11.320
<v Speaker 5>So in short, yes, Stephen, there we'll be buying probably

0:14:11.320 --> 0:14:13.520
<v Speaker 5>more US arms because they also don't have a choice.

0:14:14.040 --> 0:14:14.280
<v Speaker 3>Yeah.

0:14:14.280 --> 0:14:16.240
<v Speaker 1>Indeed, we're going to bring our listeners that interview that

0:14:16.280 --> 0:14:19.160
<v Speaker 1>you did with Krstan Brewer in a moment on the program.

0:14:19.600 --> 0:14:22.480
<v Speaker 1>I'm wondering, though more broadly, about the discussions that are

0:14:22.480 --> 0:14:25.440
<v Speaker 1>going to be happening around Ukraine's future at the Munich

0:14:25.520 --> 0:14:28.920
<v Speaker 1>Security Conference. We've had that phone call between Donald Trump

0:14:28.960 --> 0:14:32.280
<v Speaker 1>and Vladimir Potin, which is really upset the US policy

0:14:32.320 --> 0:14:36.000
<v Speaker 1>position until now, How is this discussion going to play

0:14:36.040 --> 0:14:36.720
<v Speaker 1>out in Munich?

0:14:37.800 --> 0:14:39.480
<v Speaker 8>Again, this is a big question here, and I think

0:14:39.480 --> 0:14:40.560
<v Speaker 8>for the Europeans it's a.

0:14:40.600 --> 0:14:42.560
<v Speaker 5>Very very big question right again, they want to try

0:14:42.560 --> 0:14:44.800
<v Speaker 5>to get their voice heard in this conversation there. It's

0:14:44.840 --> 0:14:46.640
<v Speaker 5>not clear that they're going to and we've heard a

0:14:46.680 --> 0:14:48.320
<v Speaker 5>lot of different things from Donald Trump I and we've

0:14:48.320 --> 0:14:50.680
<v Speaker 5>even heard from some people that this meeting with Putin

0:14:51.000 --> 0:14:52.600
<v Speaker 5>could happen in a matter of weeks.

0:14:52.600 --> 0:14:53.400
<v Speaker 8>Again, we don't know.

0:14:53.480 --> 0:14:56.960
<v Speaker 5>He also said yesterday that basically there would be meetings

0:14:57.000 --> 0:15:00.880
<v Speaker 5>between high level members of the Ukraine delegation, American delegation

0:15:01.240 --> 0:15:04.040
<v Speaker 5>and the Russian delegation here in Munich. That came out

0:15:04.080 --> 0:15:06.560
<v Speaker 5>of the absolute blue sky. So again it's very hard

0:15:06.560 --> 0:15:08.440
<v Speaker 5>to know where this is proceeding. But the sense that

0:15:08.480 --> 0:15:11.800
<v Speaker 5>you're getting here from the certainly from the Europeans, is

0:15:11.800 --> 0:15:14.440
<v Speaker 5>that this negotiation train has already left the station.

0:15:14.720 --> 0:15:16.600
<v Speaker 8>And guess what the Europeans are not on it.

0:15:17.520 --> 0:15:20.240
<v Speaker 1>This is Bloomberg Daybreak Europe, your morning brief on the

0:15:20.320 --> 0:15:23.360
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