WEBVTT - The President Has Hurt His Credibility, Bell Says 0:00:00.080 --> 0:00:13.040 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leye. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:32.879 Bloomberg dot Com, and of course, on the Bloomberg. So 0:00:33.000 --> 0:00:35.000 let's just start with the White House, Mary go round. 0:00:35.800 --> 0:00:39.519 McMaster is out and John Bolton is in as the 0:00:39.560 --> 0:00:43.120 President's National Security Advisor. What does it mean for foreign 0:00:43.200 --> 0:00:45.879 policy going forward from here? I'm pleased to say here 0:00:45.920 --> 0:00:49.680 in New York is Dantana Boum, p WC Global Sanctions Leader, 0:00:49.680 --> 0:00:52.639 and he joins us around the table right here, right now, Dan, 0:00:52.840 --> 0:00:55.240 talk to me about the latest moves in the White 0:00:55.320 --> 0:00:58.720 House and the significance of them for you. I give up. 0:00:59.040 --> 0:01:01.080 I mean this is this used to be really easy 0:01:01.120 --> 0:01:03.080 to try and predict what was going to happen. Next. 0:01:04.080 --> 0:01:08.280 You've got a new incoming National Security advisor who, you know, 0:01:08.360 --> 0:01:11.600 we're reminded, does not need confirmation by the Senate, who 0:01:11.640 --> 0:01:16.319 has some rather extreme views on dealings with hostile nations 0:01:16.360 --> 0:01:18.880 around the world historically. Well, let's let's be a little 0:01:18.920 --> 0:01:21.960 bit more blunt here. Uh, this is somebody who has 0:01:22.120 --> 0:01:24.760 been for war on many occasions as one of the 0:01:24.840 --> 0:01:27.840 architects behind the Iraq war. Um, is this sort of 0:01:27.880 --> 0:01:32.399 a sign that President Trump is planning to threaten military 0:01:32.400 --> 0:01:38.120 action somewhere? Yeah, I mean, that's that's obviously what this 0:01:38.319 --> 0:01:40.959 looks like we could be headed towards. I think there's 0:01:41.000 --> 0:01:44.480 still enough moderates that exist within the government that hopefully 0:01:44.600 --> 0:01:46.160 that's not the case. I mean, you look at the 0:01:46.200 --> 0:01:49.800 Iran deal. With Pompeo replacing Tillerson, that already put the 0:01:49.840 --> 0:01:53.400 Iran deal at risk. Um Bolton has been extremely anti 0:01:53.480 --> 0:01:56.240 the Iran deal. In fact, wanted to preemptively attack Iran 0:01:56.720 --> 0:02:00.240 North Korea as well. It wasn't really up for negotiating sations. 0:02:00.280 --> 0:02:03.080 Who was up for a more preemptive strike. All of 0:02:03.120 --> 0:02:05.760 these are really complicating what was already a fairly tense 0:02:05.800 --> 0:02:08.040 situation to begin with. Down Do you believe there's an 0:02:08.040 --> 0:02:11.440 intellectual framework for for shaping the people around the president 0:02:11.520 --> 0:02:13.760 right now? Because if there is, most people say all 0:02:13.840 --> 0:02:16.640 roads lead to Iran. Rex Tillison had a difference over 0:02:16.639 --> 0:02:19.519 a run with the President the United States. Hr McMaster 0:02:19.600 --> 0:02:22.399 also having that difference with the president. Another one that's 0:02:22.400 --> 0:02:25.320 really in focus now will be Mattest, the Defense Secretary, 0:02:25.320 --> 0:02:28.040 because he also has a different opinion on Iran, So 0:02:28.080 --> 0:02:30.320 to all roads lead to Iran or is this something else? 0:02:31.240 --> 0:02:33.720 It's unclear what the strategy is. The only thing I 0:02:33.800 --> 0:02:36.400 take comfort in is the civil servants that are a 0:02:36.440 --> 0:02:39.160 Treasury and State for the most part, still remained from 0:02:39.240 --> 0:02:42.480 prior administration. So the people that are actually executing the 0:02:42.560 --> 0:02:45.239 underlying work, a lot of them are still there. Obviously, 0:02:45.760 --> 0:02:49.120 the revolving door of people making direction for the plans 0:02:49.160 --> 0:02:52.000 have been changing pretty rapidly over the last year. But 0:02:52.240 --> 0:02:54.760 I want to believe there's some sort of a strategy here. 0:02:55.760 --> 0:02:58.520 I mean, we're there's so many fronts that this administration 0:02:58.600 --> 0:03:01.240 is trying to cover off on now, between Iran, Russia, 0:03:01.240 --> 0:03:04.440 and North Korea, now who knows potentially Cuba. I mean, 0:03:04.480 --> 0:03:07.360 it is absolute whiplash trying to manage all of this 0:03:07.400 --> 0:03:09.600 and try and look for some sort of cogent theme here. 0:03:09.680 --> 0:03:12.080 There are so many different ways we could go this morning. Um, 0:03:12.160 --> 0:03:13.840 we could talk about some of the market action and 0:03:13.840 --> 0:03:15.840 the risk aversion. Now, we could talk about the tariffs 0:03:15.880 --> 0:03:17.760 with China, and we're gonna get to all of those things. 0:03:18.040 --> 0:03:19.520 I do just want to get your thoughts on the 0:03:19.600 --> 0:03:22.200 j c p o A with Iran, the Joint Comprehensive 0:03:22.200 --> 0:03:24.960 Plan of Action. Talk to me about the next scheduled 0:03:24.960 --> 0:03:27.880 event where the President could really make a difference here, 0:03:27.919 --> 0:03:30.960 because it feels like we're gravitate, gravitating towards a moment 0:03:31.000 --> 0:03:33.480 where he might move to rip that up. So may 0:03:33.680 --> 0:03:37.720 is the next scheduled waivers to further extend the sanctions 0:03:37.760 --> 0:03:40.200 relief with the j c p o A. And already 0:03:40.240 --> 0:03:42.800 it's been I mean, every time the waivers have come up, 0:03:42.840 --> 0:03:45.200 it's been spoken about in terms of, you know, this 0:03:45.240 --> 0:03:47.600 is the worst deal ever and it will never go ahead. 0:03:47.680 --> 0:03:49.920 And every time the waivers have been extended, I have 0:03:50.040 --> 0:03:52.040 some doubts this time that that may be the case. 0:03:52.640 --> 0:03:54.920 I mean, the other complicating factor is due to other 0:03:55.000 --> 0:03:57.880 things that the Iranian regime has been doing, the EU 0:03:57.960 --> 0:04:01.000 has been looking at applying additional sound actions unrelated to 0:04:01.000 --> 0:04:03.600 the j c p o A, but additional sanctions on Iran, 0:04:04.160 --> 0:04:06.400 and Iran is just kind of sitting back looking at this, 0:04:06.440 --> 0:04:08.840 wondering what did we actually sign up for to begin with. 0:04:09.160 --> 0:04:12.640 So you advise companies and wondering what are they asking 0:04:12.640 --> 0:04:14.760 you what are they calling you up right now about? 0:04:15.080 --> 0:04:18.480 So we get a lot of calls about looking at 0:04:18.480 --> 0:04:22.440 the risks to enter Iran globally, and obviously, as an 0:04:22.440 --> 0:04:25.440 American I'm restricted in the support that I can provide, 0:04:25.480 --> 0:04:27.920 but as a global organization, we try to look at, 0:04:27.920 --> 0:04:29.880 you know, how do you ring fence U s, nationals, 0:04:29.880 --> 0:04:33.400 how do you apply a framework to understand the risk 0:04:33.480 --> 0:04:37.360 that you're entering. Especially with Iran and the snap backed 0:04:37.360 --> 0:04:39.640 provisions of the j c P o A, there's a 0:04:39.640 --> 0:04:42.799 possibility that within sixty days of the sanctions being lift 0:04:43.000 --> 0:04:46.160 being reimposed that a company might have to exit. So 0:04:46.360 --> 0:04:48.800 everyone that goes in needs to have an exit strategy, 0:04:48.839 --> 0:04:51.880 and that's the basic advice that we're advising. How problematic 0:04:52.000 --> 0:04:54.719 is it with the turnover to come up with some 0:04:54.800 --> 0:04:58.720 kind of predictable path for these companies. It's it's impossible 0:04:58.760 --> 0:05:01.080 at this point, and it really has slowed the growth 0:05:01.320 --> 0:05:04.640 of entry into Iran. There were obviously billions of dollars 0:05:04.640 --> 0:05:06.440 of deals announced in the wake of the j c 0:05:06.600 --> 0:05:09.760 P away in the aviation and automotive industry. Now we 0:05:09.839 --> 0:05:12.719 are seeing a lot more hesitancy by our clients around 0:05:12.760 --> 0:05:15.960 the world as they're looking at Iran entry. They're asking 0:05:15.960 --> 0:05:18.200 the question of what exactly do we do next, and 0:05:18.279 --> 0:05:21.239 they're honest answers. It's really unclear what the next step 0:05:21.320 --> 0:05:23.359 is for our listeners, just churning in. At the momentum, 0:05:23.400 --> 0:05:25.520 the market actions follows were down just seventy eight on 0:05:25.600 --> 0:05:27.560 the down, negative five or six points on the SMP 0:05:27.720 --> 0:05:30.920 five hundreds, So following yesterday's route, we are bouncing off 0:05:30.920 --> 0:05:32.680 the lows in terms of futures, a bit of risk 0:05:32.680 --> 0:05:35.800 aversion in the FX market with a stronger Japanese Yeah, 0:05:35.839 --> 0:05:38.640 dollyan at one of five and treasury stable here after 0:05:38.720 --> 0:05:41.680 yesterday's big bit. The tenuere treasury yield as follows at 0:05:41.720 --> 0:05:44.120 two point eight two percent, so a little bit of 0:05:44.120 --> 0:05:46.200 calm coming through to this market in the last I 0:05:46.240 --> 0:05:49.240 would say, the last one hour, Lisa, Yeah, although there 0:05:49.320 --> 0:05:51.560 still are some pretty big losers. You can see that 0:05:51.560 --> 0:05:54.320 Facebook share is still down ahead of open. You can 0:05:54.360 --> 0:05:57.359 see that ten Cent has been really absolutely penalized, so 0:05:57.400 --> 0:05:59.839 a lot of red to down. It's at Lesa's question 0:05:59.839 --> 0:06:02.560 and important question about what you're advising companies at the moment. 0:06:02.839 --> 0:06:05.080 You talked about companies around the world. I imagine if 0:06:05.080 --> 0:06:07.840 you're a European company looking to do business in a 0:06:07.880 --> 0:06:10.880 place like Iran. Now, even you were thinking, I don't 0:06:10.920 --> 0:06:12.600 know what to do, because even if I was an 0:06:12.600 --> 0:06:14.680 American company, I would be very very hesitant. But as 0:06:14.720 --> 0:06:17.320 a European company, the US has up the agreement. Is 0:06:17.320 --> 0:06:19.080 that a place you want to make an investment right now, 0:06:19.320 --> 0:06:21.880 and as a US company, with the exception of foreign 0:06:21.960 --> 0:06:24.800 organized subsidiaries, you're essentially iced out of the market. For 0:06:24.880 --> 0:06:28.400 the European companies, the challenges and continues to be the 0:06:28.440 --> 0:06:31.520 ability to finance any transactions with Iran, because there's no 0:06:31.600 --> 0:06:34.240 major bank in the world that will really touch the business. 0:06:34.600 --> 0:06:36.640 And that's been the case even after the deal was 0:06:36.680 --> 0:06:38.760 put in place, even after pressure from the UK and 0:06:38.920 --> 0:06:43.040 US governments to establish banking relationships. Because of so many 0:06:43.040 --> 0:06:45.120 banks being penalized over the years, many of your gun 0:06:45.200 --> 0:06:47.560 shy about re entering a market and potentially putting a 0:06:47.600 --> 0:06:49.520 bull's eye on their back. A lot of people will 0:06:49.520 --> 0:06:52.960 wake up this morning they'll see the Chinese retaliating with 0:06:53.160 --> 0:06:56.640 arrists from the arrists that the United States introduced just yesterday. 0:06:56.680 --> 0:07:00.440 They proposed in the last twenty four hours, What has 0:07:00.520 --> 0:07:03.200 changed for US foreign policy? If and I think it's sold. 0:07:03.560 --> 0:07:07.919 I mean, we're moving very rapidly to an isolation isolationist 0:07:07.920 --> 0:07:10.200 approach to how we're dealing with the world. I mean, 0:07:10.240 --> 0:07:13.640 we have a trade war with China now that's looming. 0:07:13.680 --> 0:07:16.520 We have actual wars with Iran and North Korea that 0:07:16.560 --> 0:07:18.360 are on the table. I mean, there's a lot of 0:07:18.440 --> 0:07:21.360 legitimate threats. But the way in which we are handling 0:07:21.400 --> 0:07:24.760 some of these actions in a somewhat unilateral matter is 0:07:24.880 --> 0:07:28.360 com complicating our perception in the world. Just push back 0:07:28.360 --> 0:07:31.480 a little bit. China's measure in response to the US 0:07:31.840 --> 0:07:35.640 was pretty minor. What do you make that? I think 0:07:35.920 --> 0:07:39.080 similar to how a lot of countries deal with response 0:07:39.120 --> 0:07:41.480 in a more responsible manner. I mean, this is obviously 0:07:41.520 --> 0:07:44.160 not the just the opening salvo. I think what China 0:07:44.240 --> 0:07:48.200 is responsive with three billion dollars and tariffs against US 0:07:48.280 --> 0:07:51.720 imports um is really just the beginning. It's going to 0:07:51.880 --> 0:07:55.080 slowly but surely kind of ratchet up the pressure on 0:07:55.240 --> 0:07:58.280 US companies, and obviously China is a massive trading partner 0:07:58.360 --> 0:08:01.680 to the US. You can't start with the big bang necessarily, 0:08:01.720 --> 0:08:05.920 although some administrations might believe otherwise. But I think this 0:08:06.000 --> 0:08:08.560 is just the beginning. Dantana Bum. It's been great to 0:08:08.600 --> 0:08:10.520 have you with us in a studio here in New York, 0:08:10.520 --> 0:08:12.520 and it's great to catch up view the p WC 0:08:12.840 --> 0:08:30.680 Global Sanctions Leader. Fantastic guests we can bring in right now. 0:08:30.840 --> 0:08:34.480 Really caught my attention on Twitter yesterday evening. Ian Bremer, 0:08:34.559 --> 0:08:39.000 Eurisia Group founder and an authority on global geopolitical risk, 0:08:39.200 --> 0:08:43.240 tweeting the following yesterday evening probably the worst biggest single 0:08:43.320 --> 0:08:46.520 day for geopolitical risks since I started Eurisia Group in 0:08:46.679 --> 0:08:52.160 nineteen and that's a stunning statement. Give us the y Well, 0:08:52.559 --> 0:08:56.480 first of all, you have the decision to take fifty 0:08:56.480 --> 0:08:59.920 billion dollars of terroiffs against China, which they will react 0:09:00.000 --> 0:09:03.720 to in the context of a big transition towards a 0:09:03.800 --> 0:09:08.200 more confrontational relationship with the Chinese. Elevation of Peter Navarro Um, 0:09:08.320 --> 0:09:12.800 the decision to signs law a bill, a travel bill 0:09:12.960 --> 0:09:15.559 on Taiwan that will lead to a direct exchanges of 0:09:15.640 --> 0:09:17.800 high level officials. That's a red line for the Chinese. 0:09:17.800 --> 0:09:20.680 So the most important bilateral relationship in the world taking 0:09:20.679 --> 0:09:24.160 a marks turn to the negative real tipping point there Um, 0:09:24.240 --> 0:09:29.319 and the appointment of John Bolton uh to National Security Advisor, 0:09:29.920 --> 0:09:34.520 one of the most outspoken Hawks arguing for preemption against 0:09:34.600 --> 0:09:38.080 North Korea, ripping up the Iran deal, much stronger himself 0:09:38.160 --> 0:09:40.319 on China as well. But the issue is that this 0:09:40.400 --> 0:09:43.599 is happening in the context of a global environment that 0:09:43.720 --> 0:09:47.560 is already unwinding a geopolitical recession, where the US doesn't 0:09:47.600 --> 0:09:51.320 have the kind of influence internationally that it has historically 0:09:51.440 --> 0:09:55.079 and is much more prone towards miscalculation. Where nine eleven 0:09:55.120 --> 0:09:58.920 obviously a much more dramatic shock, but it happened in 0:09:58.920 --> 0:10:01.120 the context of a u US that was clearly a 0:10:01.120 --> 0:10:03.640 global leader, with an awful lot of allies behind this, 0:10:04.000 --> 0:10:07.360 and so it's a consequence there wasn't nearly listened impact 0:10:07.360 --> 0:10:09.680 on geopolitical environment. Yeah, I was going to say, and 0:10:09.720 --> 0:10:11.000 I think a lot of people would have read that 0:10:11.120 --> 0:10:13.080 and said, what about two thousand and one? What about 0:10:13.120 --> 0:10:15.840 the invasion of a rug? But your point quite clearly 0:10:15.960 --> 0:10:18.240 in a G zero world, in the context of that, 0:10:18.240 --> 0:10:20.600 that makes it a lot more fragile at the moment. 0:10:20.679 --> 0:10:25.240 Something else you've also warned about Ian before the departure 0:10:25.240 --> 0:10:27.439 of the last twenty four hours was how significant the 0:10:27.480 --> 0:10:31.920 departure of HR McMaster would be for this administration. Just 0:10:32.120 --> 0:10:35.080 talk me through why and walk me through the domino 0:10:35.120 --> 0:10:38.480 effect from here. How you think this evolves. Well, you 0:10:38.600 --> 0:10:43.240 have people now around Trump that are more enabling of 0:10:43.240 --> 0:10:49.160 of Trump. Before with Chillerson, with McMaster, with Gary Cohne, 0:10:49.640 --> 0:10:52.880 you had people who may not have had enormous influence 0:10:53.080 --> 0:10:55.880 over Trump, but they were willing to strongly say when 0:10:55.920 --> 0:10:59.640 they believed that Trump was wrong. They were largely moderating influences, 0:11:00.000 --> 0:11:04.080 and they were analytically fairly sharp. Um, so they actually 0:11:04.160 --> 0:11:06.240 knew a fair amount about the world. They had a 0:11:06.240 --> 0:11:09.640 fair amount of expertise. Um. You're losing a lot of 0:11:09.679 --> 0:11:13.480 that with their replacements now. But you're also enabling. You're 0:11:13.600 --> 0:11:16.000 enabling with people that are not willing to tell Trump 0:11:16.000 --> 0:11:18.320 when he's wrong. They're willing to support his instincts, and 0:11:18.320 --> 0:11:23.880 they're also intrinsically more hawkish, more prone towards escalation. Trump 0:11:24.000 --> 0:11:28.000 himself has made his presidency more about ripping up the 0:11:28.040 --> 0:11:31.600 deal with Iran and more importantly, more about North Korea. 0:11:31.840 --> 0:11:34.120 We had a lot of presidents Democrat and Republican ended 0:11:34.160 --> 0:11:35.920 have known that North Korea was getting worse, but they 0:11:35.920 --> 0:11:38.480 didn't want to engage very much themselves, because they knew 0:11:38.679 --> 0:11:40.320 that it was going to be very hard to fix 0:11:40.320 --> 0:11:42.840 and the downside was going to be great. Trump's ability 0:11:42.880 --> 0:11:45.600 to fix North Korea, his expertise is certainly no greater 0:11:45.640 --> 0:11:49.040 than previous presidents. He's much more risk acceptance. So there 0:11:49.120 --> 0:11:52.440 is a possibility of a diplomatic breakthrough, but there's also 0:11:52.480 --> 0:11:54.199 a much greater chance that we end up with in 0:11:54.280 --> 0:11:56.559 a war. And I do think that the recent appointment, 0:11:56.920 --> 0:12:01.000 capped off most importantly by Bolton's accession to get Security Advisor, 0:12:01.360 --> 0:12:05.120 makes the likelihood of direct military conflicts, specifically with the 0:12:05.200 --> 0:12:08.280 Koreans and also potentially between the US and Iran or 0:12:08.400 --> 0:12:11.680 Israel and Iran, much more likely than it was twenty 0:12:11.679 --> 0:12:15.120 four hours ago. Some pretty frightening words so far, though, 0:12:15.160 --> 0:12:18.679 as John pointed out earlier, it's really sentiments sentiment shift, 0:12:18.880 --> 0:12:21.240 and one that that's negative because the actions taken so 0:12:21.320 --> 0:12:24.920 far haven't been in themselves that extreme. What to you 0:12:24.960 --> 0:12:28.560 will signal a market escalation that moves us much closer 0:12:28.960 --> 0:12:33.040 to some kind of military altercation. Well, first of all, 0:12:33.120 --> 0:12:35.400 yesterday did right, I mean, you know the fact that 0:12:35.480 --> 0:12:38.280 you have a seven plus point hit to the markets. 0:12:38.600 --> 0:12:41.440 When's the last time that that happened directly as a 0:12:41.520 --> 0:12:46.240 result of presidential action. That was a market move of choice, uh, 0:12:46.360 --> 0:12:49.200 not the reaction to a global recession or you know, 0:12:49.240 --> 0:12:52.080 sort of a bubble bursting um. And so I do 0:12:52.200 --> 0:12:55.040 think that combined, as I said, with Taiwan, combined with 0:12:55.040 --> 0:12:58.200 the escalation of Peter Navarro, one of the most anti 0:12:58.320 --> 0:13:00.960 China hawks that again has been in a high level 0:13:01.000 --> 0:13:05.720 position in any administration in decades, has set the Chinese 0:13:05.720 --> 0:13:08.040 off on the market spot for the first time. Reacting 0:13:08.080 --> 0:13:09.720 to that is you know, the markets have been very 0:13:09.720 --> 0:13:13.680 complacent with geopolitical risks over the past year, in part 0:13:13.720 --> 0:13:17.160 because the baseline economics are doing well. This is the 0:13:17.240 --> 0:13:19.839 first time that Trump has taken action that really moves 0:13:19.880 --> 0:13:22.760 in a very different direction. I don't expect the markets 0:13:22.800 --> 0:13:26.160 to react on issues like North Korea or Iran until 0:13:26.280 --> 0:13:30.320 you see a direct shock. The corporations will. They're starting 0:13:30.320 --> 0:13:32.840 to put plans in place in terms of what they 0:13:32.880 --> 0:13:35.240 would do if there was a massive supply chain shock 0:13:35.400 --> 0:13:38.120 or oil prices would a spike over a hundred briefly, 0:13:38.480 --> 0:13:39.960 or even if they had to get their ex paths 0:13:39.960 --> 0:13:43.160 out of situations. Every corporation, major corporation we advise as 0:13:43.240 --> 0:13:45.760 talking about that now, but the markets are much more 0:13:45.760 --> 0:13:49.440 short term and they don't necessarily plan for escalated tail risk, 0:13:49.640 --> 0:13:51.679 which are the kinds of things we're seeing all over 0:13:51.720 --> 0:13:53.920 the world right now geopolitically so and it's a really 0:13:53.920 --> 0:13:56.600 good point. Typically we just consider those things at how risk. 0:13:56.640 --> 0:13:58.240 I want to talk to you about what you consider 0:13:58.320 --> 0:14:00.200 to be the base case right now? In the eighth 0:14:00.240 --> 0:14:03.520 of John Bolton. We now have a national security advisor 0:14:03.559 --> 0:14:06.400 in the White House that couldn't even get confirmed by 0:14:06.480 --> 0:14:09.880 a Republican controlled Senate as the US Ambassador to the 0:14:09.960 --> 0:14:12.840 u N under George W. Bush. We have John Bolton 0:14:12.840 --> 0:14:15.360 as the National Security advisor individual that has written our 0:14:15.400 --> 0:14:19.120 pets about striking Iran and striking North Korea. Do you 0:14:19.160 --> 0:14:22.160 just consider it inevitable? Now? Is your base case that 0:14:22.160 --> 0:14:24.720 that j c p o A, the Joint Comprehensive Plan 0:14:24.800 --> 0:14:28.480 of Action, the agreement with Iran just gets torn up. 0:14:28.520 --> 0:14:31.560 It's it's probably a base case. It wasn't Again, twenty 0:14:31.560 --> 0:14:33.840 four hours ago, I think Trump had said he wanted 0:14:33.840 --> 0:14:35.240 to do it, but there was a lot of pushback 0:14:35.280 --> 0:14:37.680 from people around him, as well as from Europeans and 0:14:37.680 --> 0:14:40.160 even American allies. Like the Staudis and the Iranians who 0:14:40.200 --> 0:14:42.680 are no fan of the Iran deal, recognized that if 0:14:42.680 --> 0:14:44.520 Trump ripped it up, that the U s would be 0:14:44.560 --> 0:14:46.640 isolated to be that by themselves, you know, it caused 0:14:46.640 --> 0:14:48.720 more problems than it was worth. They didn't want tougher 0:14:48.800 --> 0:14:51.880 sanctions by the Americans against Iran, but on different issues 0:14:51.880 --> 0:14:54.560 on IRUN solistic missile program, on the support for terrorist 0:14:54.680 --> 0:14:58.880 organizations has below others around the region. Now, I think 0:14:58.960 --> 0:15:01.480 that the baseline, the spite effect is going to continue 0:15:01.520 --> 0:15:03.560 to be an enormous amount of pressure against Trump to 0:15:03.560 --> 0:15:05.880 do this. I do think the baseline is that the 0:15:06.000 --> 0:15:08.640 j c p o A, the irandeal goes away or 0:15:08.680 --> 0:15:11.560 the Americans rip it up. And I think part of 0:15:11.600 --> 0:15:13.760 the reason for that is because the pressure on Trump 0:15:13.840 --> 0:15:18.600 himself the Mueller investigation um the which is clearly going 0:15:18.720 --> 0:15:22.600 much longer than the inspected expected. You saw the departure 0:15:23.240 --> 0:15:25.640 of his top attorney just in the past forty hours 0:15:25.680 --> 0:15:29.040 because he wasn't listening to him. Trump's expectations around that 0:15:29.120 --> 0:15:33.800 investigation clearly were much more rose tinted um as he 0:15:33.920 --> 0:15:36.800 comes to realize that the starks sharks are circling his 0:15:36.920 --> 0:15:39.680 behavior has become more erratic, he has lashed out more. 0:15:40.000 --> 0:15:42.320 I do think that the Bolton appointment is part of that. 0:15:42.800 --> 0:15:45.400 Do you think that amid the White House turmoil, the 0:15:45.560 --> 0:15:51.080 China tariffs and the US tariffs are just noise. No, 0:15:51.160 --> 0:15:56.400 they're not noise because unlike Caribs against American allies, where 0:15:56.400 --> 0:16:00.120 there's very strong pushback from those advising Trump and his 0:16:00.240 --> 0:16:04.160 major funders, all of the Republicans you know, sort of 0:16:04.200 --> 0:16:07.400 governors and senators and the rest, on China, there actually 0:16:07.440 --> 0:16:11.640 is a strong desire among many advising and supporting Trump. 0:16:11.720 --> 0:16:14.960 The Chinese are engaged in unfair practices. They're not providing 0:16:14.960 --> 0:16:18.000 reciprocal market access to the Americans. This is getting worse 0:16:18.080 --> 0:16:20.560 and the Americans need to do something about it. The 0:16:20.760 --> 0:16:24.600 problem is that Trump's policies are not very strategic, They're 0:16:24.600 --> 0:16:28.640 not very directed. As I mentioned, they also include Taiwan 0:16:28.720 --> 0:16:31.640 issues which are not linked, but which the Chinese will 0:16:31.680 --> 0:16:33.800 see is pushing them in the corner. And also, the 0:16:34.160 --> 0:16:37.320 Americans don't have allies on their side because of the 0:16:37.360 --> 0:16:42.320 symbolic efforts against NAFTA and willingness to put allies on 0:16:42.440 --> 0:16:45.200 notice on aluminium steel if they don't get the Americans 0:16:45.200 --> 0:16:47.760 a better deal pulling out of the trans specific partnership 0:16:47.840 --> 0:16:51.680 earlier in Trump presidency. All of this makes American policy 0:16:51.680 --> 0:16:54.280 against China more unilateral, when if you want to take 0:16:54.280 --> 0:16:56.040 a tough line against China, you want it to be 0:16:56.080 --> 0:16:59.200 more multilateral, more strategic. And it's been great to catch 0:16:59.280 --> 0:17:00.680 out with you, a friend of the program, and we 0:17:00.680 --> 0:17:03.480 always appreciate your insight on all of these issues that 0:17:03.520 --> 0:17:06.399 dominate the agenda currently, the geopolitical issues very much at 0:17:06.400 --> 0:17:09.120 the front and center as we close out the trading week. 0:17:09.160 --> 0:17:11.280 Ian Bremer, really appreciate your time. Thank you, sir, that 0:17:11.320 --> 0:17:14.439 you raise a group founder joining us on the latest 0:17:14.440 --> 0:17:17.399 movements in the White House and that trade battle between 0:17:17.480 --> 0:17:30.639 China and the United States. I want to bring in 0:17:30.680 --> 0:17:33.240 a kind of hack that is d F E. D 0:17:33.480 --> 0:17:36.560 and F Man head of research and kinda thank you 0:17:36.600 --> 0:17:40.520 so much for being with us. Let's start with those teriffs, 0:17:40.840 --> 0:17:45.440 the US imposing terroriffs on China, China retaliating. How much 0:17:45.640 --> 0:17:48.880 is this just noise at this point? Not really the 0:17:48.880 --> 0:17:51.879 biggest measures that could have been taken? Uh? And and 0:17:51.920 --> 0:17:53.560 sort of how are you how are you suggesting that 0:17:53.640 --> 0:17:57.200 clients play this? Yeah, this is this is very much 0:17:57.240 --> 0:18:00.200 a measured approach, and actually it is in a spot 0:18:00.200 --> 0:18:04.480 to the previous um steel and a million times. There's 0:18:04.520 --> 0:18:07.199 not at all in retaliation of the one we heard yesterday, 0:18:07.240 --> 0:18:12.239 which was about five the big one. So this is 0:18:12.320 --> 0:18:16.359 China basically picking in tiny little um areas which such 0:18:16.400 --> 0:18:23.480 as wine and dry fruits, pork bellies, some steel. These 0:18:23.520 --> 0:18:27.160 are not going to really impact China's economy very much 0:18:27.280 --> 0:18:30.040 or the industry. Indeed, um we're talking for the on 0:18:30.080 --> 0:18:33.400 the agriculture, on the fruit space, probably one billion. They 0:18:33.440 --> 0:18:35.439 have a lot more to give if they needed to 0:18:35.480 --> 0:18:37.840 really negotiate their way through. I think they're putting that 0:18:37.880 --> 0:18:40.199 in their backside of their pocket right now. Kind of 0:18:40.200 --> 0:18:42.919 at the moment, there is an annual export from the 0:18:42.960 --> 0:18:45.920 United States to China totaling about a hundred and thirty 0:18:45.960 --> 0:18:49.720 billion dollars, the retaliation from the Chinese totaling about three 0:18:49.760 --> 0:18:52.800 billion dollars worth of goods. Kind Of, you can hardly 0:18:52.800 --> 0:18:55.840 call it a trade war year, can we? No? Definitely not, 0:18:55.920 --> 0:18:58.560 And I think China doesn't want to. They've all they've 0:18:58.600 --> 0:19:01.440 you know, shooting the undershooting pain. They've been showing they 0:19:01.480 --> 0:19:04.679 want They've been taking every opportunity when the US rhetoric 0:19:04.720 --> 0:19:07.800 has been a little bit surprising or maybe provocative. They've 0:19:07.800 --> 0:19:11.880 tried to show that, look, we're responsible world leader. That's 0:19:12.080 --> 0:19:14.359 a position they're very much trying to covet and um 0:19:14.480 --> 0:19:18.560 and and enhance upon um. So. No, they don't want 0:19:18.600 --> 0:19:21.520 a global trade war. Actually, China doesn't really need their 0:19:21.680 --> 0:19:25.439 Their economy is so strong and their intra Asia trade 0:19:25.560 --> 0:19:28.760 is so big. They doesn't. They don't. They actually won't 0:19:28.760 --> 0:19:30.639 lose so much if there was a big trade war 0:19:30.720 --> 0:19:34.240 between ton in the US. So this is um so 0:19:34.680 --> 0:19:36.800 they won't lose if you think in a big way. 0:19:37.560 --> 0:19:40.880 You know, I just wanna read you a comment by 0:19:40.960 --> 0:19:43.880 an analyst regarding some of these tariffs. This can turn 0:19:44.000 --> 0:19:47.240 ugly on a global scale very quickly, in synchronous global 0:19:47.280 --> 0:19:50.239 growth or not. Markets are right to be pricing in 0:19:50.440 --> 0:19:53.960 a more subdued outlook. I'm just wondering, first of all, 0:19:54.080 --> 0:19:55.800 whether you agree with this this from I M G. 0:19:56.000 --> 0:19:59.920 Asia Pacific chief Economist Robert Carnell. And second of all, 0:20:00.240 --> 0:20:02.520 are you watching us? I mean, at what point will 0:20:02.560 --> 0:20:06.960 you change your expectations for commodity prices based on some 0:20:07.040 --> 0:20:11.000 of this, uh, this trade scuffle action? Say so, First 0:20:11.000 --> 0:20:13.879 of all, the US has given thirty days to consult 0:20:14.359 --> 0:20:16.760 on on what on what they're going to actually do 0:20:16.800 --> 0:20:18.359 whether and so they're actually going to go ahead and 0:20:18.359 --> 0:20:20.920 do all these tariffs. So thirty days a long time. 0:20:21.359 --> 0:20:24.080 The China's come up with a small retaliation. It's again 0:20:24.119 --> 0:20:26.040 it's not a retaliate, it's more of a going do 0:20:26.160 --> 0:20:29.120 this because we could do this. UM. They haven't really 0:20:29.160 --> 0:20:31.280 taken on the big guns out we've already seen with 0:20:31.320 --> 0:20:35.320 the EU. Trumpet said we're going to put tires on 0:20:35.520 --> 0:20:38.439 EU steal. Those are those are not not going to happen. 0:20:39.160 --> 0:20:42.280 Japan still exampt so in study days a lot could happen, 0:20:42.440 --> 0:20:44.800 and I personally think it will be toned down by 0:20:44.840 --> 0:20:47.439 the by when it when it comes to it. UM. 0:20:47.640 --> 0:20:50.440 In terms of impact on commodity prices, right now, it's 0:20:50.600 --> 0:20:54.080 risk off because the mere thought of a global trade 0:20:54.080 --> 0:20:57.320 war UM is not good for global economic growth, which 0:20:57.359 --> 0:21:01.080 in turn is not good for commodities such as iron, ore, steel, 0:21:01.440 --> 0:21:07.040 energy UM. Less so on agriculture, But agriculture is potentially, 0:21:07.080 --> 0:21:10.119 for me the biggest one which China could use against 0:21:10.240 --> 0:21:13.640 UM the US on soybeans if they needed to. Yeah, 0:21:13.720 --> 0:21:16.320 so D please elaborate on that in terms of what 0:21:16.520 --> 0:21:19.359 exactly do you expect the price action on soybeans and 0:21:19.440 --> 0:21:24.960 grains to be should dis escalate, So the trade between 0:21:26.359 --> 0:21:29.920 US soybeans to China is equivalent of about fourteen billion dollars, 0:21:29.960 --> 0:21:34.639