Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg dayba Qut podcast. Good morning, It's Thursday,
Speaker 2: the seventh of August. I'm Caroline Hepcat in London.
Speaker 1: And I'm Stephen Carroll. Coming up today. US President Donald
Speaker 1: Trump's new tariffs come into effect, pushing US import duties
Speaker 1: to their highest since World War II.
Speaker 2: The White House warns of a one hundred percent tariff
Speaker 2: on semiconducted chips, with carve outs for companies who manufacture
Speaker 2: in the US.
Speaker 1: Plus Dreaming of your Own off the Grid Island, a
Speaker 1: tech entrepreneur's converted for it off the Welsh Coast goes
Speaker 1: on the market for three million pounds.
Speaker 3: Let's start with the roundup of our top stories.
Speaker 1: The next phase of US President's global trade tariffs have
Speaker 1: come into effect, pushing American taxes on imports to their
Speaker 1: highest level since World War II. The European Union, Japan,
Speaker 1: and South Korea negotiated a rate of fifteen percent on
Speaker 1: their exports to the United States. Other countries simply assigned
Speaker 1: rates which range from the UK's ten percent to much higher.
Speaker 1: More levies are yet to come, with President Trump saying
Speaker 1: he would double tariffs on Indian goods to fifty percent
Speaker 1: as a penalty for buying Russian oil. Boombergs Jail Lisa
Speaker 1: says these so called secondary tariffs are less about trade
Speaker 1: and more about geopolitics.
Speaker 4: It does seem like India has become kind of collateral
Speaker 4: damage in this ongoing pressure campaign that Trump's trying to
Speaker 4: launch against Russian President Vladimir Putin. Part of that big,
Speaker 4: you know idea of applying these secondary sinctions or tariffs
Speaker 4: on you know, nations that purchase Russian oil to try
Speaker 4: to get Putin to end the Russia's warn.
Speaker 1: Ukraine Jesus out of the president. Trump said he might
Speaker 1: also punish China with additional tariffs over its purchases of
Speaker 1: Russian oil. Trade negotiations with China are still ongoing, along
Speaker 1: with the US's other two largest trading partners, Mexico and Canada.
Speaker 2: Now, the US president declared plans for a new one
Speaker 2: hundred percent tariff on semikin doctor imports. Standing next to
Speaker 2: Apple CEO Tim Cook in the Oval Office, Donald Trump
Speaker 2: says that he is bringing manufacturing back to the US.
Speaker 5: We'll be putting a terraform of approximately one hundred percent
Speaker 5: on chips and semiconductors. But if you're building in the
Speaker 5: United States of America, there's no charge, even though you're
Speaker 5: building and you're not producing yet in terms of the
Speaker 5: big numbers of jobs and all of the things that
Speaker 5: you're building. If you're building, there will be no charge.
Speaker 3: Now.
Speaker 2: Trump's surprise declaration further upends the global electronics supply chain.
Speaker 2: Tech companies including Apple, TSMC, and Nvidia have pledged to
Speaker 2: spend more than a trillion dollars collectively in the US
Speaker 2: since Trump returned to power, but the levees may still
Speaker 2: have major implications for the price of consumer electronics in
Speaker 2: the US.
Speaker 1: I Meanwhile, America's allies are still grappling with the shock
Speaker 1: caused by the levees. Switzerland's President Karen Keller Sotter left
Speaker 1: Washington after a two day emergency trip, having failed to
Speaker 1: secure better terms. The European leader did not meet President Trump,
Speaker 1: instead only talking to Secretary of State Marco Rubio. Swiss
Speaker 1: goods face the highest American tariff of any developed nation
Speaker 1: at thirty nine percent. Bloomberg Economics estimates that if the
Speaker 1: rate comes into effect, including on pharmaceuticals, at risks, cutting
Speaker 1: up to one percent of Swiss economic output in the
Speaker 1: medium term. The Swiss government is holding an emergency meeting
Speaker 1: later today. Meanwhile, despite agreeing a trade deal with President Trump,
Speaker 1: Japan is also trying to get clarity on car tariffs.
Speaker 1: Tokyo says Japanese cars were exempted from the levy, but
Speaker 1: that detail was not on the executive order.
Speaker 2: Now, three FED officials have voiced fresh concerns over the
Speaker 2: US labor market, pointing to a rate cut in September.
Speaker 2: According to the San Francisco FED president Mary Daily, the
Speaker 2: data shows policymakers will need to alter borrowing costs soon.
Speaker 6: Labor market has softened, and you can see this everywhere
Speaker 6: in the US economy and here as well. And I
Speaker 6: would see additional slowing in the labor market as an
Speaker 6: unwelcome sign. So all this means, as you put it together,
Speaker 6: that I think will likely need to adjust the policy
Speaker 6: rate sometime in the coming.
Speaker 2: Months, the Fed's Mary Daily speaking there speaking to CNBC. Meanwhile,
Speaker 2: the Minneapolis FED president Near Kashkari also express worry over
Speaker 2: the slowdown showing up in multiple data points, adding that
Speaker 2: he expects two FED rate cuts before the end of
Speaker 2: the year. The news also comes off to fellow Governor
Speaker 2: Lisa Cook said that downward revisions to the jobs data
Speaker 2: for the last three months were typical of turning points
Speaker 2: in the economy.
Speaker 1: In her words, markets are expecting an interest rate cut
Speaker 1: from the Bank of England later today. The news comes
Speaker 1: as members of the Monetary Policy Committee contend with a
Speaker 1: slowing economy and a jobs market rattled by higher taxes.
Speaker 1: Bloombergoks tea Adebayo has more.
Speaker 7: Markets and economists are expecting the UK Central Bank to
Speaker 7: cut interest rates to four percent this afternoon, a two
Speaker 7: year low. The twenty five bases point drop would be
Speaker 7: in line with the boees current once a quarter pace
Speaker 7: of easing, but policymakers have remained cautious amid a fresh
Speaker 7: inflation spike. Concerns over the economy are also rising after
Speaker 7: it faced back to back contractions and a hiring slowdown
Speaker 7: over spring. The decision will likely expose divisions amongst the
Speaker 7: nine member committee panel, with experts predicting a three way
Speaker 7: split in London. Twa Adebayo, Bloomberg.
Speaker 2: Radio president Donald Chom says there is a very good
Speaker 2: chance that he will meet Russia's Vlasimir Putin and Ukraine's
Speaker 2: Vladimir Zelinski soon in another bid to broke a piece
Speaker 2: between the two countries. Chomps spoke to reporters in the
Speaker 2: Oval Office hours after talks between Putin and US Special
Speaker 2: Envoice Steve Whitkoff in Moscow.
Speaker 5: Very good talks with President Putin today, and there's a
Speaker 5: very good chance that we could be ending the ending
Speaker 5: the round, ending the end of that road. Road was
Speaker 5: long and continues to be long, but there's a good
Speaker 5: chance that there will be a meaning very soon.
Speaker 2: Excuse me, do you think you are some kind.
Speaker 5: Of pot Well, look, I don't want to say.
Speaker 2: Been disappointed before President Trump speaking thereafter, he informed allies
Speaker 2: in a phone call on Wednesday that he is positive
Speaker 2: about the possibility of a ce SPA in Ukraine in.
Speaker 3: Terms of sources.
Speaker 2: Speaking to Bloomberg, he also suggested that Putin would be
Speaker 2: open to peace talks in exchange for discussing land swaps.
Speaker 1: With Those are your top stories on the markets this morning.
Speaker 1: The Mscirish Pacific Index nine tenths higher this morning after
Speaker 1: those latest tariff announcement, particularly to do with chick makers,
Speaker 1: have been giving the markets some optimism. TSMC shares in
Speaker 1: Taiwan are up by four point nine nine percent. Looking
Speaker 1: ahead to the European trading session, eurostocks fifty futures are
Speaker 1: up by a quarter of one percent. Wall Street futures
Speaker 1: are two tents higher for SMP emonies as well. The
Speaker 1: ten your Treasury eel this morning just up a basis
Speaker 1: point at four point twenty four percent. The Blueberg Dollar
Speaker 1: Spot index is a tenth of one percent weaker.
Speaker 2: Now in a moment, we'll bring you more on the
Speaker 2: latest US tariffs coming into effect. Plus we'll dig into
Speaker 2: the market reaction, particularly to the announcement around chips. But first,
Speaker 2: something we've been laughing about and thinking about all morning,
Speaker 2: really a bit of an escape from all the tariff news.
Speaker 2: Sarah Rappaport School always gets the best assignments, doesn't she.
Speaker 1: Well, she's been writing about a private island for sale
Speaker 1: off the Welsh coast. It's home to a Victorian era
Speaker 1: ford that's been renovated into a five bedroom home. It's
Speaker 1: got things like a roof top bar. It's also fully
Speaker 1: self sufficient with generators, solar panels and heat pumps. Now
Speaker 1: the island is currently owned by the tech On Brenner
Speaker 1: and Mike Connor, who bought it in twenty seventeen brought
Speaker 1: it back from dereliction. He's had some great parties on
Speaker 1: the island over the years. He describes it as a
Speaker 1: really expensive train set.
Speaker 2: Yes, I think that's got a helipad on it as well.
Speaker 3: You'll have to add that in there.
Speaker 1: I think there's been quite a lot of a work
Speaker 1: that's essentially had to be done to try and get
Speaker 1: this island back to I suppose the state that it's
Speaker 1: in now, but it is on sale. Four an island,
Speaker 1: and it's at the current price is three million pounds.
Speaker 2: I thought that was quite a snip. Actually, I must
Speaker 2: say that I've been doing research asland.
Speaker 7: Well.
Speaker 2: No, I just had seen the island when it was
Speaker 2: for sale.
Speaker 3: I think everybody in the country.
Speaker 2: Saw it because it was the most popular or the
Speaker 2: most viewed for sale property in the UK, and the
Speaker 2: year that it was up for sale I think it
Speaker 2: was twenty seventeen or twenty eighty, So I actually thought
Speaker 2: three million pounds after all the investment that must have
Speaker 2: been needed just.
Speaker 1: Made me think of the famous five To be honest,
Speaker 1: the idea of there being an island, you know, with
Speaker 1: a four workshist.
Speaker 2: It's so beautiful a view of that coast must be amazing.
Speaker 1: Yeah, we'll put a link to there rapp And for
Speaker 1: its story in our podcast show notes. But let's bring
Speaker 1: you more down our top stories. The late US round
Speaker 1: of Donald Trump's trade tariffs have come into effect, raising
Speaker 1: the rates faced by dozens of countries around the world.
Speaker 1: Switzerland's president left Washington without any change to the thirty
Speaker 1: nine percent rate that their imports will now face in
Speaker 1: the US. Donald Trump's already threatening further moves on chips
Speaker 1: and higher tariffs on India as well. Let's speak to
Speaker 1: Bloomberg's Ramsey Arabaki for more on all of this. Ramsey,
Speaker 1: good to talk to you. First of all, just to
Speaker 1: put us where we are with these new tariff rates
Speaker 1: coming into force today. How big a moment is this
Speaker 1: in Donald Trump's trade offensive.
Speaker 8: Well, you know, he's been in one sense, it's at
Speaker 8: least some certainty for the world. He's been talking about
Speaker 8: these things since he got into office. He had this
Speaker 8: big announcement in April, delayed till July, delayed again. Finally
Speaker 8: at midnight in the US New York they have gone
Speaker 8: into effect, So we kind of know where everything lies.
Speaker 8: But as you guys have been talking about he's still
Speaker 8: full of surprises. There's the issue with India and oil.
Speaker 8: There's this random announcement in the White House about one
Speaker 8: hundred percent or sorry, one hundred percent tariffs on chips
Speaker 8: unless they're produced in the United States or at least
Speaker 8: a company promises to produce the United States. There's the
Speaker 8: shaker on Switzerland. They still haven't settled China and Mexico
Speaker 8: and Canada, which are the biggest trade partners. So in
Speaker 8: one sense things feel quietly settled. But there's still some
Speaker 8: very big questions out there. And as I said, he's
Speaker 8: full of surprises. So everyone's still on their toes.
Speaker 2: Yeah, okay, so let's focus in on one of those.
Speaker 2: Then one hundred percent havef on chips with some very
Speaker 2: key exemptions. Is it good or badness for chip makers?
Speaker 8: Well, you know, you even look at the story that
Speaker 8: Bloomberg and others writer. Right now, we even have people trying,
Speaker 8: they say, they're scrambling to make sense of what this
Speaker 8: threat is. It seems good news for a lot of
Speaker 8: the names you would know off the top of your head,
Speaker 8: a company like Apple, Taiwan's TSMC, Samsung in Korea, all
Speaker 8: of those governments. Those companies said, look, we were making
Speaker 8: investments in the United States or we're going to So
Speaker 8: by the reading of what he said, it's like, well,
Speaker 8: they should be exempted. So it's not entirely clear just
Speaker 8: yet how big of a hit it could have to
Speaker 8: some of the biggest suppliers. What he's demanded was sort
Speaker 8: of already in train even before he came into office.
Speaker 8: If you remember, under the Biden administration, there was a
Speaker 8: chips AC that was encouraging chip makers to build in
Speaker 8: the United States, and a lot of them had already
Speaker 8: made commitments to that point. But again, it probably has
Speaker 8: just as much to do with Trump's interest in being
Speaker 8: splashy and having a big number out there and really
Speaker 8: hammering home his point that he wants he wants companies
Speaker 8: to build in America for American consumers and American jobs.
Speaker 1: So this could potentially, as you say, have some good
Speaker 1: news for those chip makers that are carved out from
Speaker 1: the that Twerff threat. But the other threat that we
Speaker 1: had from Donald Trump is to increase the tariff right
Speaker 1: on India from twenty five to fifty percent later this month.
Speaker 1: This is linked to its purchases of Russian oil. Is
Speaker 1: there any hope for negotiation? Do we think we've another
Speaker 1: twenty one days before that higher rate would come into force.
Speaker 8: Gosh, that's another wildcard that we're trying to get our
Speaker 8: head around, you know, if you just we go back
Speaker 8: a little bit after the invasion of Ukraine, that's when
Speaker 8: the US and the EU really tried to crack down
Speaker 8: on Russian energy, and they had this policy of trying
Speaker 8: to cap the price on Russian oil but still trying
Speaker 8: to keep it onto the market, which means there's a
Speaker 8: lot of oil, so gasoline prices don't go up, but
Speaker 8: Moscow and Vladimir Putin get less money. A big buyer
Speaker 8: during all this was India. The US knew it. They
Speaker 8: sort of just let it slide. India saying we need
Speaker 8: the cheap oil, we have a growing economy, the US thinking, well,
Speaker 8: we need a counterweight to China, so we'll all get
Speaker 8: along here.
Speaker 5: Now.
Speaker 8: Trump thought he could end this war in Russia very quickly.
Speaker 8: It's going much more difficult than he thought. Vladimir Putin
Speaker 8: is a lot more stubborn than he was expecting. So
Speaker 8: he's been ramping up his pressure on Putin, and I
Speaker 8: think that's where he probably saw an opportunity to make
Speaker 8: it seem like he was serious, and he's kind of
Speaker 8: using India as as the outlet for that. What sort
Speaker 8: of upside he's going to get is unclear. Vladimir Putin
Speaker 8: and Russia have been very, very resistant and sort of
Speaker 8: they've adapted well to the economic isolation the West has
Speaker 8: tried to put them in. And this is obviously very
Speaker 8: much angered India, so much so that even you know,
Speaker 8: the Modi's opponents are piling in and backing him in
Speaker 8: a sense saying this is just straight up bullying. But
Speaker 8: you're right, there's time to sort this out. And as
Speaker 8: we've seen, Trump can change his mind very quickly, very dramatically.
Speaker 8: And it could be as simple as one phone call.
Speaker 8: We saw the Swiss apparently didn't get it, got a
Speaker 8: really terrible deal because of a bad phone call. It
Speaker 8: could be that a nice phone call with Modi sorts
Speaker 8: it out, or a nice phone call with Putin. But
Speaker 8: it puts the oil market a tricky situation. It puts
Speaker 8: Indian a very tricky situation. And as I'm sure as
Speaker 8: you might have heard as well in the questioning yesterday
Speaker 8: in the White House, Trump even said he might do
Speaker 8: the same thing for China, which again it just is
Speaker 8: throwing another huge wrench in the works in that trade relationship.
Speaker 8: And as I'm sure you know, China is another massive
Speaker 8: buyer of oil globally and from Russia.
Speaker 2: Yeah, person Trump's saying that that may happen, but of
Speaker 2: course it also sounded fairly tensitive about China. Let's see
Speaker 2: what happens on that point. Ramsey, thank you so much
Speaker 2: for being with us, that is Blomberg's Ramsey Alviccarby that
Speaker 2: are joining us taking us through the latest round of
Speaker 2: trade tariffs.
Speaker 1: Well, let's think about how markets are reacting to that
Speaker 1: trade and use now the exemptions that Donald Trump announce
Speaker 1: him his plans. Chip tarris has boosted shares in Asia
Speaker 1: and our market support of Valerie Title is with us.
Speaker 3: Now for more.
Speaker 1: It just talk us through what we are seeing in
Speaker 1: terms of reaction to this latest set of announcements.
Speaker 9: Well, huge relief when it comes to the semiconductor Yes,
Speaker 9: it was a big, flashy number one hundred percent, but
Speaker 9: it exempts anybody who is pledging investment in the US,
Speaker 9: is pledging to move their supply chain more to the US.
Speaker 9: So we're seeing the likes of TSMC. Those shares are
Speaker 9: up five percent in Taiwan trade. Even the likes of
Speaker 9: Navidia traded higher in postmarket, and the likes of Apple
Speaker 9: as well. Tim Cook obviously being in the Oval Office
Speaker 9: with Trump when he made this announcement, Apple is going
Speaker 9: to get that carve out that exemption too. So Apple
Speaker 9: shares traded nearly three percent higher in post market trades.
Speaker 9: This is just another tariff now, Stephen, that we don't
Speaker 9: have to worry about. The tariff thread on semiconductors seems
Speaker 9: in the rear view mirror the exemptions. The list of
Speaker 9: both foundries and chip designers who have pledged investment in
Speaker 9: the US is really quite extensive. TSMC, applied materials, Apple
Speaker 9: has talked about moving some of their supply chains to
Speaker 9: the US. Navidia as well. There's this big Phoenix plant
Speaker 9: that TSMC is building in Arizona, and many chip designers
Speaker 9: voice support of using that production line as well. So
Speaker 9: the carve ounts are quite enormous on this one, and
Speaker 9: I think that surprised the market in quite a positive way.
Speaker 9: With TSMC up some five percent and trade in Taiwan in.
Speaker 2: Terms of the USS of taffs O buying Russian oil.
Speaker 3: Targeting India and China. How's that affecting oil prices?
Speaker 9: This is a really hard one to put your finger
Speaker 9: on because secondary sanctions are very much known to be
Speaker 9: very hard to enforce, and honestly, the oil price yesterday
Speaker 9: was way more affected by reports that Trump wants to
Speaker 9: meet with Putin and Zelenski. So we actually saw oil
Speaker 9: fall at the end of the session yesterday. So it
Speaker 9: does seem like to be there's two things pulling the
Speaker 9: oil market. It has rallied this week on worries of
Speaker 9: these secondary sanctions, but then yesterday was really much on
Speaker 9: a back foot on hopes of a ceasefire when it
Speaker 9: comes to the Russia Ukraine. Or we did have WTI
Speaker 9: falling over percent by the end of the close in
Speaker 9: yesterday session.
Speaker 1: And just in terms of markets are thinking about the
Speaker 1: tireffs more broadly in the effect on the US economy.
Speaker 1: Interesting of comments from Federal Reserve policymakers Mary Daily and
Speaker 1: Yakashkari among them about interest.
Speaker 9: Rights exactly a dove its shift from some of these
Speaker 9: FED members voicing some fresh concerns on the labor market.
Speaker 9: Mary Daily Basically, this is now her second time around
Speaker 9: that she's mentioned that the labor market is cooling, because
Speaker 9: Kari mentioned that as well, saying cutting sooner rather than
Speaker 9: later might be better than waiting because of this cooling
Speaker 9: in the labor market. We also heard from Lisa Cook,
Speaker 9: who is a Fed governor a current voter as well,
Speaker 9: saying that it is concerning the latest jobs market. Jobs
Speaker 9: data is concerning and those big revisions can be somewhat
Speaker 9: typical of turning points in the US economy. So this
Speaker 9: dubvish language from the Federal Reserve members, it has kept
Speaker 9: the dollar soft. It's been weakening for five straight days.
Speaker 9: It's now down a percent and a half since Friday's
Speaker 9: payroll report. But when it comes to what's priced in
Speaker 9: the front end, I think it's fairly justified. We're pricing
Speaker 9: still around a ninety percent ninety ninety to ninety five
Speaker 9: percent chance of a September cut, So at least no
Speaker 9: one for now is talking about a big jumbo cut
Speaker 9: when it comes to September. That would be something that
Speaker 9: would really shift the market. But Stephen, remember we still
Speaker 9: have another CPI print and another payroll print before we
Speaker 9: get to that September meeting, so that might keep FED
Speaker 9: members from sounding any alarm on a jumbo cut until
Speaker 9: we get more data.
Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the
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