Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: World leaders, and Global Wall Street are parsing the tariff's
Speaker 2: announcement President Trump made on Wednesday, shortly after markets closed
Speaker 2: in the US. The President made good on a big
Speaker 2: campaign promise to overhaul nearly a century of trade policy.
Speaker 3: By fellow Americans. This is liberation day waiting for a
Speaker 3: long time.
Speaker 2: With a new executive order, Trump declared a national Economic
Speaker 2: emergency and announced a baseline tariff of ten percent, along
Speaker 2: with additional duties on a long list of countries.
Speaker 3: Indonesia, Malaysia, Cambodio. Who look at Cambodia ninety seven percent.
Speaker 3: We're going to bring it down to forty nine. They
Speaker 3: made a fortune.
Speaker 2: That's Trump reading from a chart printed on a piece
Speaker 2: of poster board Commerce Secretary Howard Lutnik handed him in
Speaker 2: the middle of the speech.
Speaker 3: We didn't want to bring this very windy out here.
Speaker 3: We didn't want to bring out the big charts because
Speaker 3: it had no chance of standing. Fortunately, we came armed
Speaker 3: with a little smaller chuck.
Speaker 2: This announcement was a major event for the global economy
Speaker 2: and for markets, and stock futures took a dive as
Speaker 2: the President spoke the president's tariff's announcement is a major
Speaker 2: assault on a system he is criticized for decades. Josh
Speaker 2: Wingrove is a White House reporter for Bloomberg.
Speaker 1: Trump has been talking about this for a long time, clearly,
Speaker 1: and he wanted a level of pageantry for it, and
Speaker 1: he lined up his cabinet, he lined up workers, he
Speaker 1: spoke it kind of an unusual location in the Rose
Speaker 1: Garden that allowed him to get as many American flags
Speaker 1: behind him as possible. He chose the longest edge, and
Speaker 1: he's casting this as make America wealthy again. You know,
Speaker 1: this is liberation Day for you know, what he believes
Speaker 1: will be sort of a renaissance of American manufacturing.
Speaker 2: Josh says, the focus now is on the effects these
Speaker 2: tariffs will have and what the trading partners Trump targeted
Speaker 2: going to.
Speaker 1: Do countries will respond. The question is whether Trump then
Speaker 1: upsit or whether that's sort of tit for Tat is
Speaker 1: the end of it for now, and I think markets
Speaker 1: will react obviously much more favorably if it's like a
Speaker 1: one shot retaliation rather than an escalating fight.
Speaker 2: I'm David Gura, and this is the big take from
Speaker 2: Bloomberg News. Today on the show Preston Trump's tariff's announcement,
Speaker 2: what it means for markets, for the economy, for all
Speaker 2: of us, and what happens next. Preston Trump spoke to
Speaker 2: a crowd of supporters, advisors, including cabinet secretaries and members
Speaker 2: of Congress at an event in the Rose Garden at
Speaker 2: the White House. Bloomberg' Josh Wingrove says there was a
Speaker 2: lot of fanfare, but the President didn't give a lot
Speaker 2: of detail.
Speaker 1: Today's announcement For those who did not watch, it was
Speaker 1: extremely Trumpian in that the actual rate was revealed by
Speaker 1: him holding up a giant placard. Be it like four
Speaker 1: feet by what five feet? I don't know it was.
Speaker 1: It was a huge sign that he held up that
Speaker 1: had the sort of presumed rate that the US believes
Speaker 1: would be fair. And so that's how the world learned
Speaker 1: about a thirty four percent tariff on China was by
Speaker 1: Trump sort of revealing it like you know, a game show,
Speaker 1: on a giant printed placard.
Speaker 2: Josh spelled out for us, what are the tariffs that
Speaker 2: the president is putting in place?
Speaker 1: These numbers are bigger than anyone would have done other
Speaker 1: than Donald Trump. But are also smaller than Donald Trump considered.
Speaker 1: So a ten percent global tariff is just a major,
Speaker 1: major departure from where the US has been going for
Speaker 1: decades and decades and decades. This will be hundreds of
Speaker 1: billions annually when combined with all the other stuff he
Speaker 1: wants to do. That are import taxes, of course, and
Speaker 1: some of that will be passed on to consumers. As
Speaker 1: we know, Trump believes that a lot of it will
Speaker 1: not a lot of it will be eaten by price
Speaker 1: reductions by exporting countries. But you know, time will tell.
Speaker 1: But the temper is on the lower end of what
Speaker 1: we had heard. There was talk about twenty percent, but
Speaker 1: the fine print is rolling in and that is narrowing
Speaker 1: the scope and focusing the scope. For instance, they've said
Speaker 1: that the tariffs will not stack on top of other
Speaker 1: terrafs in some cases. So for instance, Australia is getting
Speaker 1: a ten percent tariff, but Australian steel, an industry that
Speaker 1: already has a twenty five percent tariff in effect already,
Speaker 1: will not be on top of that, so you know,
Speaker 1: it won't be thirty five for it, and there was
Speaker 1: some fear that that would be the case in some
Speaker 1: countries would get double or even triple whammies. But as
Speaker 1: Trump's tariff sort of kick in, so that's been a
Speaker 1: major narrowing here as well. They've also exempted certain countries
Speaker 1: Canada and Mexico. Namely, this is a big one that
Speaker 1: will be a sign of relief to some of those
Speaker 1: closely integrated continental sectors, chiefly, I think the auto sector.
Speaker 1: So it is bigger than almost anyone would ever have
Speaker 1: done before him, and it's smaller than he was considering
Speaker 1: hours before.
Speaker 2: Toward the end of the President's speech, he started to
Speaker 2: go through a list of what he called reciprocal tariffs
Speaker 2: country by country percentages. The President says he'll put a
Speaker 2: forty six percent tariff on Vietnam, a twenty five percent
Speaker 2: tariff on South Korea, and a twenty four percent tariff
Speaker 2: on Japan.
Speaker 1: I should know, without being too glib about it, like
Speaker 1: there's deep frustration in the Republican Party and the Democratic
Speaker 1: Party about the way that the global trading regime has
Speaker 1: shaken out in the US and the impact it's had
Speaker 1: on sectors like autos, like steel, and that they want
Speaker 1: to change that. And the trick on this, of course is,
Speaker 1: you know, how do you not change it too much
Speaker 1: that you throw away all the progress you still have made, like,
Speaker 1: for instance, American manufacturers that rely on foreign imported inputs
Speaker 1: to make their goods in the US. Right, you know,
Speaker 1: like the widgets that come into your factory don't often
Speaker 1: come necessarily from down the road. If for an American manufacturer,
Speaker 1: they come from lower cost markets abroad. And Trump wants
Speaker 1: to change that as much as possible. But if you
Speaker 1: try to change it overnight, many of these companies will
Speaker 1: simply not make it. And that is not something any president,
Speaker 1: even Donald Trump, would want to be in office presiding over.
Speaker 1: But he does want major change here. Right, They've taken
Speaker 1: and no pain, no gain approach, and they've sort of
Speaker 1: warned that, look, this is not going to be smooth.
Speaker 1: This is going to be bumpy. But how far they
Speaker 1: want to go, we'll see. There are things still coming
Speaker 1: down the pipe, and I think that that is important
Speaker 1: to note here.
Speaker 2: Josh notes we've already had tariffs on cars and steel tariffs,
Speaker 2: and President Trump has said there will be new duties,
Speaker 2: even higher tariffs on semiconductors, critical minerals, lumber, and pharmaceuticals. Josh,
Speaker 2: you covered Donald Trump on the campaign trail. I'm curious
Speaker 2: how much of what we heard in that announcement on
Speaker 2: Wednesday Jives is what he promised he would do on
Speaker 2: the campaign trail.
Speaker 1: He's been saying this a lot on the campaign trail,
Speaker 1: but the specifics were never really there, and the Republican
Speaker 1: Party was always sort of picking which part it wanted
Speaker 1: to listen to. As we're investors, right, people kind of
Speaker 1: saw in the first term where he used tariffs as
Speaker 1: a tool. The Republican Party is very comfortable with that,
Speaker 1: no issue, even the anti tariff Republicans in Capitol Hill,
Speaker 1: they do not mind Trump threaten tariffs left right and
Speaker 1: center to get concessions out of countries. In fact, they
Speaker 1: kind of like it. They think it's sort of flexing
Speaker 1: as muscles. But as these tariffs started to come in,
Speaker 1: I think people have thought, oh, whoa, he's like more
Speaker 1: serious this time than in the first term. And that's
Speaker 1: an important point. We've been talking about Donald Trump and tariffs,
Speaker 1: not even just since this campaign, but since the two
Speaker 1: previous ones. And in the first term it was much
Speaker 1: more narrow, it was much more targeted. They did sectors
Speaker 1: like steel and aluminum, but they exempted entire countries they
Speaker 1: did lower numbers. For instance, it was ten percent on aluminum.
Speaker 1: Now it's twenty five. And now we're doing not only
Speaker 1: not exempting and not only doing higher numbers, but then
Speaker 1: also filling in the blanks with across the board tariffs
Speaker 1: on every other good under the sun. So it's much bigger,
Speaker 1: it's much broader. Donald Trump himself believes in tariffs, and
Speaker 1: I think the signal came on the campaign trail he
Speaker 1: would talk about tariffs being his favorite word.
Speaker 4: I always say, tariffs is the most beautiful word to
Speaker 4: me in the dictionary. And I always reprimand by the
Speaker 4: fake news. They said, what about love, religion and God?
Speaker 4: I said, I agree, Let's put God number one. Let's
Speaker 4: put religion number two. I love, I don't know, I
Speaker 4: got to put that number.
Speaker 2: Three, I guess right.
Speaker 4: And then it's tariff because tariff's are going to make
Speaker 4: us rich.
Speaker 1: As he has been signaling for a long time that
Speaker 1: this is where it was going to be. And the
Speaker 1: question was just sort of like how, you know, focused
Speaker 1: it would land and there'll be a lot of reporting,
Speaker 1: I think in the coming days about what happened here
Speaker 1: and who won you know, how these backroom chats shook out.
Speaker 1: I will note not a lot of this leaked until
Speaker 1: the announcement, and so the discussions that they were having
Speaker 1: were clearly pretty animated, and clearly people were on different
Speaker 1: ends of the spectrum on this, but they managed to
Speaker 1: keep it mostly in house. One big question going forward
Speaker 1: is where does he go from here? Does he strike
Speaker 1: deals and bring those numbers down? You know, if someone
Speaker 1: offers Tarrak concessions, does he meet them halfway? Or does
Speaker 1: he get mad at retaliation? And we do expect retaliation
Speaker 1: and ratchet things up even more.
Speaker 2: We'll get to that next. How are other countries going
Speaker 2: to respond to what the President's announced? And how much
Speaker 2: of an appetite does he have to negotiate. You reported
Speaker 2: that in the hours leading up to this announcement that
Speaker 2: the president's plans were still in limbo. What do we
Speaker 2: know about what the sticking points were, what was being
Speaker 2: debated among the president and his economic advisors? And I'm
Speaker 2: curious what insight you have to who actually had his
Speaker 2: ear as this was coming together.
Speaker 1: The fundamental discussion had to have been around scope, because
Speaker 1: that was the difference, right that no one seemed to
Speaker 1: be arguing a completely different approach, but how big a
Speaker 1: brush they wanted to paint with. There seemed to be
Speaker 1: real division on that, and going off of what people
Speaker 1: are saying publicly, you know, you had the more hawkish
Speaker 1: end certainly appears to have included Peter Navarro that goes
Speaker 1: on TV and talks pretty strongly about how much he
Speaker 1: believes in tariffs. And then other signs of concession or
Speaker 1: you know, let's say adjustment maybe would be a better word,
Speaker 1: have come from like Secretary Lutnik to Commerce Secretary Secretary Bessent.
Speaker 1: His role, I think is a little unclear here. We
Speaker 1: think we'll learn more about that in the coming days.
Speaker 1: But the market signal had to have been going through
Speaker 1: those two who have come from a finance background, And
Speaker 1: of course markets have been nervous for weeks because when
Speaker 1: Trump started actually putting pen to paper on these tariffs,
Speaker 1: people realized that he wasn't entirely just using them as
Speaker 1: a bargaining tool, and so that reaction had to have
Speaker 1: been a factor. There has got to be an awareness
Speaker 1: right now of the risk of going too big, too soon,
Speaker 1: too quickly, and triggering some sort of downturn.
Speaker 2: Picking up on that over and over again, I Ford
Speaker 2: investors talk about the consequences of uncertainty. Hear they said
Speaker 2: they didn't on what the prison would do or what
Speaker 2: he wouldn't do when it comes to trade policy with
Speaker 2: this announcement, Josh, how much of that uncertainty went away?
Speaker 1: I think a lot of it went away, but there's
Speaker 1: still some and there's still now new uncertainty. The existing
Speaker 1: uncertainty is where the rest of these shoes are going
Speaker 1: to drop on the other sectoral tariffs and how big
Speaker 1: they're going to go. Although the breadcrumbs are leading in
Speaker 1: one direction, he seems to always land at the number
Speaker 1: twenty five for these, so you know, I would assume
Speaker 1: that that would be a likely candidate for the tariffs
Speaker 1: on things like lumber on pharmaceutical drugs since I make
Speaker 1: Inductor chips. The question and uncertainly going forward is how
Speaker 1: firm is he on this? How many exemptions are we
Speaker 1: talking about here? And Trump has said he doesn't like exemptions.
Speaker 1: Kevin Hasset, one of his economic advisors, came out and
Speaker 1: talked to reporters a couple of weeks ago and said,
Speaker 1: if I start talking about exemptions, he kicks me out
Speaker 1: of the room. So Trump does not want to start
Speaker 1: nipping and tucking here and there. And that's going to
Speaker 1: get tricky because some of these tear tariffs are going
Speaker 1: to start hitting things like I don't know, critical pharmaceutical
Speaker 1: drugs or essential parts that get complicated for cars if
Speaker 1: they're tariffed at a particularly onerous rate. Autoparts tariffs, by
Speaker 1: the way, are coming as well in the coming weeks
Speaker 1: and months. They haven't specified when, and so I think
Speaker 1: that is going to be a key pressure point once
Speaker 1: you start seeing choke points emerge from this tariff policy
Speaker 1: in certain industries, in certain sectors where it threatens either
Speaker 1: American jobs or you know, to become a political problem. Otherwise,
Speaker 1: will Trump be adaptable to that. A lot of presidents
Speaker 1: would like nip and tuck and you know, change things
Speaker 1: on the fly. Trump is signally he is not interested
Speaker 1: in that.
Speaker 2: So we'll see, Josh, what happens next. Do these policies
Speaker 2: that the President announced go and effect immediately? And if not,
Speaker 2: what's going to happen between now and when they do
Speaker 2: go into effect?
Speaker 1: They go into effect over the next week or so.
Speaker 1: The first trunch, the ten percent baseline goes into effect
Speaker 1: this weekend. The bigger numbers for what they've think or
Speaker 1: the worst defenders going to effect a few days later.
Speaker 1: The auto tariffs that were already tied up still go
Speaker 1: into effect on Thursday, and then other stuff is sort
Speaker 1: of coming after that. What happens next is that we
Speaker 1: will continue to see him march towards the sector specific tariffs,
Speaker 1: and we will see how he triages these requests either
Speaker 1: from industries in America to change things, tweak things, examt things.
Speaker 1: He has bowed to that before with autos, but has
Speaker 1: later grumbled about it. So whether he's keen to do
Speaker 1: it again, I think remains unclear. Even if he did,
Speaker 1: at the end of the day, he would get to
Speaker 1: that ten percent baseline number. So it's still going to
Speaker 1: be a fairly significant tariff. And remember they're talking about
Speaker 1: replacing income tax revenue with tariff revenue. That's tricky for
Speaker 1: a couple of reasons. Number one, how because Republicans don't
Speaker 1: really have a clear plan yet on their reconciliation package,
Speaker 1: and in particular tax cuts that would be broad based.
Speaker 1: And number two, tariff revenue might decline or plateau over time,
Speaker 1: and it's less predictable than income tax revenue, so that
Speaker 1: gets tricky in terms of forecasting and this of that,
Speaker 1: because of course people might buy less of a product
Speaker 1: over time once they realize it's tariff and address to
Speaker 1: other alternatives.
Speaker 2: Josh, what did President Trump say about his appetite to
Speaker 2: negotiate with the countries he's targeted with these tariffs, either
Speaker 2: in the Rose Garden or what's he said leading up
Speaker 2: to it.
Speaker 1: He has sent mixed messages on that, and on the
Speaker 1: one hand saying he wants to make deals and this
Speaker 1: is all about reciprocity. You charge us what we charge you,
Speaker 1: or will charge you you charge us, And so by definition,
Speaker 1: if someone wants to come to him and drop their tariffs,
Speaker 1: he's willing to listen. He wants this to be the
Speaker 1: new order, and he wants people to adjust to the
Speaker 1: new order, and he wants companies to make pledges to
Speaker 1: invest in America. And so my expectations are sort of
Speaker 1: modest at best that there'll be substantial changes to this.
Speaker 1: But yeah, I mean, I think he will love to
Speaker 1: announce deals and reductions, and so I think we'll see
Speaker 1: a bit of that. But they're talking about hundreds of
Speaker 1: billions in revenue each year, trillions over a decade, which
Speaker 1: is the customary budget forecast window here in Washington, and
Speaker 1: so I don't think that that number is going to
Speaker 1: change a lot. It'll change on the margin for particular countries.
Speaker 2: Josh, what did the audience for this announcement tell you
Speaker 2: about the way the White House is going to approach
Speaker 2: selling this policy to Americans? So, as you said, there
Speaker 2: were cabinet secretaries there, members of Congress. At one point,
Speaker 2: he pulled up an auto worker who supported his candidacy
Speaker 2: to speak to the crowd.
Speaker 1: We support Donald Trump's policies on tariffs one hundred percent.
Speaker 3: So, mister President, we can't thank you enough.
Speaker 2: And in six months or a year, we're going to
Speaker 2: begin to see the benefits. I can't wait to see
Speaker 2: what's happening three or four years down the road.
Speaker 3: Thank you, mister President.
Speaker 2: How's he going to make the case that this is
Speaker 2: something that the US needs to do.
Speaker 1: They have been amplifying the relatively small number of stakeholders
Speaker 1: who think this is a good idea. The steel industry,
Speaker 1: for instance, loves steel tariffs. It tends to boost their
Speaker 1: prices and help things along. The people that don't love
Speaker 1: steel tarffs are everyone who has to buy steel, including
Speaker 1: the car industry, for instance, so they're much less jazzed
Speaker 1: about it. And so Trump is pointing to the first group.
Speaker 1: He's pointing to steel workers. He's pointing to union leaders,
Speaker 1: including the United Auto Workers, who've talked about the positives
Speaker 1: of at least some of this. But it's a fairly
Speaker 1: narrow margin. So I think we're going to continue to
Speaker 1: hear this coming from him, from his aids, from his
Speaker 1: loyal members on Capitol Hill, from his cabinet, and less
Speaker 1: so from others. But I will note a lot of
Speaker 1: the stakeholders in industry I think have learned a lot
Speaker 1: from the first term. They are not standing on the
Speaker 1: street corner outside of the White House with a sign
Speaker 1: protesting these tariffs. Nor are they really putting out fiery
Speaker 1: statements or taking ads on Fox that run in Palm
Speaker 1: Beach on the weekend so the Trump will see it.
Speaker 1: They are really kind of keeping their advocacy largely behind
Speaker 1: closed doors and thinking that that is the best way
Speaker 1: to drive this to a different outcome. But the President
Speaker 1: believes in tariffs. I don't know how to explain that
Speaker 1: sometimes other than that he just is a vowed that
Speaker 1: other countries have ripped off the US for a long time.
Speaker 1: A lot of this seems to be rooted with what
Speaker 1: he thinks that Japanese did in the eighties. The guy
Speaker 1: loves tariffs. He's been waiting for this day a long time,
Speaker 1: and I think we should expect tariffs to substantially be
Speaker 1: part of the picture as long as he's president.
Speaker 2: I should say you and I are talking just a
Speaker 2: couple hours after this announcement. You mentioned that economists have
Speaker 2: been trying to game out who's going to pay for this,
Speaker 2: what the effect is going to be on the global economy. Yes,
Speaker 2: external economists, but our own colleagues at Bloomberg Economists have
Speaker 2: been doing that as well. Where are we in kind
Speaker 2: of getting an understanding or a forecast for what this
Speaker 2: might mean?
Speaker 1: Our friends at Bloomberg Economics have been crunching these numbers
Speaker 1: to the extent that there are numbers to crunch, right,
Speaker 1: and Trump has been sending mixed signals, and so the
Speaker 1: output really ranges. You know, there's like the sort of
Speaker 1: max list approach, which would be a much more significant
Speaker 1: headwind to growth and a much more significant thorn to
Speaker 1: the FED, and a much more significant threat of a
Speaker 1: downturn So this kind of lays in the middle a
Speaker 1: little bit, and I will be reading closely as everyone will,
Speaker 1: how they hash this out, for instance, as we sort
Speaker 1: out what other tariffs might still be stacked on top
Speaker 1: of these, whether these replace existing things. These are important questions.
Speaker 1: But what all their work shows is that prices will
Speaker 1: rise for consumers and that that will complicate things in
Speaker 1: a range of ways. It kind of makes things tricky
Speaker 1: for the FED, who will be facing questions of rising
Speaker 1: prices but also stagnating growth. And it makes things tricky
Speaker 1: just broadly, as Trump also tries to sketch out a
Speaker 1: budget plan that is banking on fairly robust growth that
Speaker 1: he just put a weighted blanket on the shoulder of
Speaker 1: to try to sort of also reset the manufacturing base.
Speaker 1: There will be a price for this. It's the short
Speaker 1: answer of all the analyses, but it's been unclear because
Speaker 1: the details haven't been laid out until now.
Speaker 2: Let me ask you, lastly, Josh, sort of how this
Speaker 2: fits in with Wall Street's expectations. So if Wall Street
Speaker 2: had its worst case scenario and its best case scenario,
Speaker 2: where does this fall.
Speaker 1: I think that again you have to grade Trump on
Speaker 1: a curve as Trump goes, this is a sort of
Speaker 1: moderate outcome. This is not the full fire and fury
Speaker 1: approach that they kicked around, and he likes to do that, right.
Speaker 1: He likes to threaten everything and then come out with
Speaker 1: a slightly less onerous version of that. And then people
Speaker 1: are like, ah, he's moderating, but grading Trump against other presidents,
Speaker 1: this is still a maximalist approach. If Joe Biden wanted
Speaker 1: to put a ten percent tariff on everything, I would
Speaker 1: be curious about what Republicans would have thought about that.
Speaker 1: I think they would not have been super keen. Areas
Speaker 1: of overlap a lot between the parties, like on China,
Speaker 1: for instance, so tariffs are a tool that both are
Speaker 1: willing to wield. But the scale of this is huge,
Speaker 1: So I think as Trump goes, this is not as
Speaker 1: widespread as the worst fears of markets in Wall Street.
Speaker 1: But it's big, and it's bigger than a lot of
Speaker 1: presidents would have done, and we're just beginning to chew
Speaker 1: through what impact it's going to have.
Speaker 2: Josh, thank you very much, thanks for having me. This
Speaker 2: is the Big Take from Bloomberg News. I'm David Gura.
Speaker 2: This episode is produced by Alex Tye, Rachel Lewis Chrisky,
Speaker 2: and our deputy executive producer Julia Weaver. It was edited
Speaker 2: by Patty Hirsch and Derek Wallbank. This episode was mixed
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