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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: One word dominated the economic debate during the US presidential campaign.

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Speaker 3: It's tariff. Because tariffs are going to make us rich

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Speaker 3: as hell. It's going to bring our countries.

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Speaker 1: Business is back that left us.

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Speaker 2: While President Trump says those tariffs would be applied to

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Speaker 2: countries all over the world, he singled out one of

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Speaker 2: them over and over again.

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Speaker 3: I put tariffs on China. With China, we took in

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Speaker 3: hundreds of billions of dollars.

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Speaker 1: Nobody else took in ten cents from China.

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Speaker 3: They never did massive tariffs on China. During my four years,

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Speaker 3: we had the best economy in the history.

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Speaker 2: During his first term in twenty eighteen, Trump embarked on

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Speaker 2: a trade war with China in a bid to bring

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Speaker 2: manufacturing back to the US.

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Speaker 3: Now he's escalating it.

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Speaker 2: That may seem like a good opportunity for other nations

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Speaker 2: that sell products to the US, but China has not

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Speaker 2: let up on manufacturing in the face of Trump's tariff.

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Speaker 2: Products that would have gone to the US are now

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Speaker 2: flooding into nations all over the world, leading to factory

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Speaker 2: closures and mass layoffs. With a new set of sweeping

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Speaker 2: global tariffs, set to take effect on April second. That

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Speaker 2: pain is likely to increase.

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Speaker 1: Every country, even if you don't have tariffs placed directly

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Speaker 1: on you, will be impacted in some way.

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Speaker 2: Katya Dmitrieva is an economics correspondent for Bloomberg based in

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Speaker 2: Hong Kong, and she says, when it comes to China.

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Speaker 1: While shipments to places like the US where there are

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Speaker 1: higher tariffs have dropped over the past five years, what

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Speaker 1: you're seeing is that a bigger part of their trade PIE,

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Speaker 1: or a bigger part of their exports PIE, is just

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Speaker 1: going to a number of countries all around the world.

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Speaker 2: In other words, US tariffs did lead to China selling

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Speaker 2: fewer goods to the US, but China's exports didn't suffer overall.

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Speaker 2: The things they no longer sold to the US they

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Speaker 2: sold to other countries instead. And while some of those

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Speaker 2: goods were used in products that were later sold to

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Speaker 2: US consumers, many others worked things like clothes and electronics

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Speaker 2: that put local manufacturers out of business as consumers opted

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Speaker 2: for cheaper items.

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Speaker 1: I was speaking with an economist at HSBC, Frederick Newman,

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Speaker 1: and he put it this way. It was also in

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Speaker 1: one of his research notes. It's an African proverb and

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Speaker 1: it goes, when elephants fight, it is the grass that suffers.

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Speaker 1: And I think that's a great way of encapsulating exactly

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Speaker 1: what we're seeing now and what we're going to be

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Speaker 1: seeing for the next few years with tariffs.

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Speaker 2: I'm David Gera and this is the big take from

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Speaker 2: Bloomberg News Today on the show, how US tariffs on

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Speaker 2: China are being shouldered by the rest of the world,

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Speaker 2: causing industries in other countries to suffer, and how Trump's

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Speaker 2: reciprocal tariffs on April second could make life even harder

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Speaker 2: for nations caught in the crossfire. Near the city of

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Speaker 2: Surakarta in Indonesia, on the island of Java, a transformation

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Speaker 2: has been taking place. The region is Indonesia's textile center,

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Speaker 2: known for making elaborate fabrics, but Bloomberg'skati Dimitrieva says in

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Speaker 2: recent years that industry has been struggling.

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Speaker 1: It's interesting because it feels and it looks a lot

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Speaker 1: like the towns that I've seen in the US rust

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Speaker 1: belb the Midwest. One of the things you'll notice right

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Speaker 1: away is how many factories are closed. They don't have

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Speaker 1: a market anymore. Domestically for their goods because people can

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Speaker 1: just buy it cheaper in markets and online from China.

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Speaker 2: Chinese manufacturers are undercutting Indonesian textile makers and driving them

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Speaker 2: out of business. Even Indonesia's trademark Batique textiles aren't safe

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Speaker 2: from Chinese competition. When Indonesian producers would try to sell elsewhere,

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Speaker 2: they would also compete with these cheaper Chinese goods. How

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Speaker 2: much of an outlier is Indonesia? How many other countries

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Speaker 2: are kind of wrestling with these same issues.

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Speaker 1: Indonesia is not alone. You have Vietnam, Thailand, you have

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Speaker 1: even South Korea and Japan, which are developed economies, but

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Speaker 1: we've seen them making moves because of the surge in

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Speaker 1: Chinese imports. We're seeing it in Mexico and places like

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Speaker 1: Turkey as well. So it really does span the globe.

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Speaker 2: I was astonished career that China has managed to maintain

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Speaker 2: a share of global exports despite a big drop in

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Speaker 2: its sheriff total US imports since Trump's first term. How

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Speaker 2: is that the case? How given that focus on consumption,

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Speaker 2: has that played out in that way?

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Speaker 1: So when the tariffs came in twenty eighteen twenty nineteen,

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Speaker 1: China immediately pivoted to other markets. So primarily what that's

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Speaker 1: meant is emerging markets getting a lot of the same

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Speaker 1: goods that normally would have gone to the States, but

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Speaker 1: because of high tariffs, demands for those items just dropped.

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Speaker 1: And so China's share of exports to places like Vietnam, Indonesia, Thailand,

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Speaker 1: Mexico have skyrocketed, while shipments to places like the US

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Speaker 1: where there are higher tariffs have dropped over the past

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Speaker 1: five years. And so what you're seeing is that a

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Speaker 1: bigger part of their trade PIE, or a bigger part

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Speaker 1: of their exports PIE is just going to a number

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Speaker 1: of countries all around the world.

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Speaker 2: What does that look like on the ground in these

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Speaker 2: other countries, if China has shifted its attention to them,

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Speaker 2: what does it look like when they're exporting so much

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Speaker 2: two other countries.

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Speaker 1: Well, what it looks like is job loss. It looks

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Speaker 1: like anger, and once that factory closes, I mean that

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Speaker 1: city is at risk. And that's exactly what we saw

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Speaker 1: in the States. It's exactly what we're seeing now across

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Speaker 1: emerging markets. And it's not just workers, of course, it's

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Speaker 1: also retailers. It's also local indu street executives and companies

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Speaker 1: that are feeling the pain of this.

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Speaker 2: When we talk about Chinese exports, are we talking about electronics, principolice?

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Speaker 4: What?

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Speaker 3: What? In some is China exporting to the world.

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Speaker 1: So it started with steel. So they began exporting a

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Speaker 1: few years ago, record amounts of steel to economies like Mexico,

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Speaker 1: like Brazil, as well as Southeast Asia. But something we've

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Speaker 1: noticed is that it's actually become much bigger than that.

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Speaker 1: It's not just steel anymore. It's not just evs, you know,

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Speaker 1: it's not just renewable goods. It's not just batteries. It's everything.

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Speaker 1: It's everything from steel to shoes to calculators.

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Speaker 2: Economists are calling this a new China Shock, a term

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Speaker 2: first used to describe the dramatic impact Chinese exports had

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Speaker 2: on the US labor market starting in the late nineteen nineties.

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Speaker 2: This time the shock is more global. But China's big

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Speaker 2: export push is not without say domestic cost. While exports

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Speaker 2: have buoyed the economy as the government seeks to deflate

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Speaker 2: a property bubble, Trump's tariffs are forcing authorities to now

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Speaker 2: ramp up consumer spending to diversify the economy.

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Speaker 1: Yeah, this is This is kind of the big question

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Speaker 1: for China right now. You can see that the government

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Speaker 1: policy makers in China and twenty twenty five have really

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Speaker 1: made consumption and pivoting to local consumption a big priority

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Speaker 1: exactly because of this. It's a reaction to tariffs, to

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Speaker 1: Trump's tariffs, and it's also an acknowledgement that China cannot

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Speaker 1: simply rely on exports forever to fuel growth. They really

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Speaker 1: need to pivot at some point, something economists and countries

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Speaker 1: around the world have been saying for years now. The

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Speaker 1: first set of tariffs that came in in twenty eighteen

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Speaker 1: twenty nineteen was one of the things that prompted this

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Speaker 1: China shock that we're now seeing globally. One thing that

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Speaker 1: Chinese policymakers need to think about now is not just

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Speaker 1: you West tariffs, but also tariffs from their neighbors and

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Speaker 1: their allies and markets where they thought that it was

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Speaker 1: pretty safe to start selling goods.

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Speaker 3: Coming up after the break.

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Speaker 2: The tactics countries are using to fight back against the

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Speaker 2: global China shock, and how Trump's reciprocal tariffs could put

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Speaker 2: those countries in.

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Speaker 3: An even more difficult situation.

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Speaker 2: The tariff's President Trump put in place on China during

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Speaker 2: his first term, redirected a flood of cheap Chinese exports

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Speaker 2: from the US to other countries around the world. In

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Speaker 2: his second term, his administration has already raised tariffs by

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Speaker 2: twenty percent and has threatened further increases. Those tariffs risk

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Speaker 2: sending more cheap Chinese goods and materials around the world,

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Speaker 2: making it hard for other countries to compete. Bloomberg' Katie

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Speaker 2: Dimitrieva says, those other countries are trying to figure out

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Speaker 2: how that can defend themselves. Broadly speaking, what can these

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Speaker 2: countries do to prevent this influx of goods from coming in?

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Speaker 2: Stand up to China? Is it tariffs? This is a

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Speaker 2: reciprocal tariffs, Is it a value added tax? Is it

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Speaker 2: kind of investigations into dumping of materials? Of how are

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Speaker 2: they approaching this kind of change in the economic landscape.

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Speaker 1: Yeah, it's all the above. Several months ago across Southeast Asia,

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Speaker 1: countries were starting to push back on China and these

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Speaker 1: cheap exports. And it was interesting because we had already

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Speaker 1: seen developed economies like the US and Europe atting tariffs,

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Speaker 1: but it was very different that Southeast Asia, which is

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Speaker 1: arguably politically geographically much closer to China, began pushing back

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Speaker 1: as well.

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Speaker 2: Thailand has a seven percent value added tax on imported

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Speaker 2: goods below fifty dollars and launched a probe into Temu,

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Speaker 2: China's e commerce giant. Malaysia has its own ten percent

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Speaker 2: sales tax on low value goods, and Vietnam last year

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Speaker 2: ordered Temu and Shen, a similar e commerce site, to

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Speaker 2: suspend operations in the country. Indian authorities have launched investigations

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Speaker 2: into Chinese dumping, and a little further abroad, Mexico is

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Speaker 2: reviewing its own tariffs on Chinese shipments. Indonesia considered a

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Speaker 2: two hundred percent tariff on a range of Chinese goods

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Speaker 2: last year, but fighting back against China carries risks.

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Speaker 1: It's interesting because these countries are kind of squeezed right,

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Speaker 1: like they want to maintain good relations with China. And

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Speaker 1: this is why the situation is a bit unprecedented in

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Speaker 1: that places like Indonesia, the leadership wants to maintain good

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Speaker 1: geopolitical relations because they rely a lot on Chinese FDI

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Speaker 1: as part of the Belton Roade initiative and also just

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Speaker 1: general investment.

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Speaker 3: FDI stands for foreign direct investment.

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Speaker 1: So it's not in their best interest, in fact, to

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Speaker 1: take the kinds of steps that President Trump taken in

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Speaker 1: the US. So what they've been left to do is

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Speaker 1: float these very specific tariffs for industries that are the

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Speaker 1: most vocal.

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Speaker 2: What is China say in reply to criticism that these

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Speaker 2: other economies are being flooded, that they're facing economic difficulty

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Speaker 2: because of this. What's China's response been.

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Speaker 1: China has been very quiet about this particular subject. In fact,

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Speaker 1: a reporter at a Chinese Foreign Ministry briefing earlier this month,

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Speaker 1: a reporter from Pakistan and from Pakistani news outlet asked

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Speaker 1: about this exact question, this flood of Chinese goods in

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Speaker 1: neighboring countries, and the response was interesting.

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Speaker 2: Here's that exchange, shared on YouTube by China's CCTV Video

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Speaker 2: news agency.

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Speaker 4: Today's China is an anchor of stability, engine of economic development,

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Speaker 4: and a pillar of regional security. Indust's that it is

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Speaker 4: common for neighbors to not agree on everything.

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Speaker 1: China's top diplomat basically said, you know, it's common for

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Speaker 1: neighbors not to agree on everything. What we noticed afterwards, though,

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Speaker 1: is that they scrubbed the question from the official record,

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Speaker 1: so it's a subject that is kind of sensitive enough

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Speaker 1: that it gets policymakers to react in that way and

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Speaker 1: kind of make them nervous.

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Speaker 2: There are potentially more US tariffs in the works, meaning

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Speaker 2: nations already dealing with the China shock are now scrambling

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Speaker 2: to prepare for these extra trade barriers with the US.

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Speaker 2: President Trump has said on April second, he's going to

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Speaker 2: implement what the administration is calling reciprocal tariffs. Each one

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Speaker 2: of the US's trade partners would be hit with a

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Speaker 2: tariff rate calculated by taking into account the barriers the

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Speaker 2: US faces to trading with that country, and that means

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Speaker 2: these nations industries will face pressure not just from cheap

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Speaker 2: Chinese imports, but also potentially less demand from the US

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Speaker 2: Among their largest trade partners.

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Speaker 1: They are trying as much as possible to get Trump

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Speaker 1: an official on the phone with a varied success rate.

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Speaker 1: They're trying to buy as many US goods or make

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Speaker 1: promises to buy as many US goods as possible, particularly.

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Speaker 3: LNG that's liquefied natural gas.

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Speaker 1: So you're seeing global leaders coming to the White House

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Speaker 1: or releasing statements saying we're open to buy more LNG

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Speaker 1: and more goods from the US to sort of shrink

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Speaker 1: the trade surplus that some countries have with the US.

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Speaker 1: That many countries have with the US because the US

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Speaker 1: is the world's biggest economies with the most hungry consumers,

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Speaker 1: and so there's communication, trying to negotiate, trying to make

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Speaker 1: promises to buy more things. That's been the big step

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Speaker 1: so far. And industries are preparing for a flood, a

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Speaker 1: renewed flood of goods hitting their shores.

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Speaker 2: Is the playbook fundamentally the same. Are we likely to

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Speaker 2: see sort of what happened during the first Trump term

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Speaker 2: happen again in countries like Indonesia, Thailand, Vietnam.

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Speaker 1: Yeah, it really depends on what the reciprocal tariffs look

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Speaker 1: like right now. We don't know what the administration is

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Speaker 1: looking at in terms of the number, you know, will

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Speaker 1: it be a tiered system, Will every country get its

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Speaker 1: own rate, Will there even be a rate that's announced,

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Speaker 1: Will there be carveouts, will there be caveats, will there

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Speaker 1: be space for other industries? This is what all of

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Speaker 1: these industries across the world right now, especially the biggest

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Speaker 1: trading for US's biggest trading partners, they're trying to negotiate

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Speaker 1: that right now not looking very hopeful. So you know,

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Speaker 1: what we could see is in some ways a repeat

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Speaker 1: of the first Trump trade war, where you have just

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Speaker 1: rapid fire developments, especially in the first year, you have

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Speaker 1: the tariffs come in. Similar to what happened in the

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Speaker 1: first term, tariffs on China did come in, but over

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Speaker 1: period of a year of negotiations, additional tariffs were not

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Speaker 1: put in place, and so you know the timeframe of

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Speaker 1: this happening. In some ways, it just gets kind of elongated,

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Speaker 1: so we could be in for a bit of a

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Speaker 1: wait before you know everything the dust is settled. In

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Speaker 1: some ways, it will be very different, though, I mean

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Speaker 1: the main difference is that Trump's trade war has gone global,

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Speaker 1: and so every country, even if you don't have tariffs

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Speaker 1: placed directly on you, will be impacted in some way.

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Speaker 2: This is the big take from Bloomberg News. I'm David Gera.

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Speaker 2: This episode was produced by Alex Tie. It was edited

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