WEBVTT - Tariff Turmoil Hits China, India Again

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

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<v Speaker 2>Across Asia, policymakers and business leaders are once again trying

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<v Speaker 2>to make sense of a tariff whiplash, this time after

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<v Speaker 2>the Supreme Court ruled President Donald Trump's signature tariff strategy illegal.

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<v Speaker 3>A top official in Japan's ruling Liberal Democratic Party call

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<v Speaker 3>the tariff situation a real mess, while sources say Indian

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<v Speaker 3>officials are postponing talks to finalize New Dali's pact with

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<v Speaker 3>the US.

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<v Speaker 2>Much of the confusion comes from Trump's workaround response to

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<v Speaker 2>the Supreme Court ruling and his threats to impose fresh

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<v Speaker 2>tariffs on trading partners. He announced a temporary ten percent

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<v Speaker 2>global tariff that went into effect Tuesday, and said he

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<v Speaker 2>plans to raise it to fifteen percent. Trump's also getting

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<v Speaker 2>ready to launch a series of investigations that could pile

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<v Speaker 2>on even more import duties. Some are tied to national security,

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<v Speaker 2>others are connected to Section three oh one of a

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<v Speaker 2>trade act. They could allow the US to impose retaliatory

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<v Speaker 2>levies on countries carrying out unreasonable or discriminatory actions against

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<v Speaker 2>American trade.

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<v Speaker 4>The President is sending out a series of warnings today

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<v Speaker 4>via truth Social about any country that doubts his ability

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<v Speaker 4>to impose tariffs in this fashion, He said, any country

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<v Speaker 4>that wants to play games with the ridiculous Supreme Court

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<v Speaker 4>decision buyer beware.

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<v Speaker 2>After Trump announced his Liberation Day tariffs almost a year ago,

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<v Speaker 2>countries in Asia race to negotiate trade deals with the US.

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<v Speaker 2>Now they're wondering if they're going to have to renegotiate,

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<v Speaker 2>and this time around, many are finding they're in a

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<v Speaker 2>much better position.

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<v Speaker 5>President Trump, by most accounts, has lost a lot of

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<v Speaker 5>leverage here.

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<v Speaker 2>Brendan Murray oversees Bloomberg's trade coverage from London, and.

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<v Speaker 5>If you're sitting in Brussels or Beijing right now, you're saying,

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<v Speaker 5>perhaps maybe we have more leverage than we did last week,

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<v Speaker 5>so maybe we could think about retaliating. Maybe this is

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<v Speaker 5>where the countries look at what President Trump has lost

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<v Speaker 5>and they say, you know, we're not going to put

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<v Speaker 5>up with that, and we do have ways to fight back.

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<v Speaker 2>One of the countries that stands to win big out

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<v Speaker 2>of all of this China.

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<v Speaker 1>If you're Beijing, you're sort of now on a level

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<v Speaker 1>playing field with US allies.

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<v Speaker 2>Jenny marsh oversees Bloomberg's coverage of North Asia's economy and politics.

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<v Speaker 1>You've gone from the biggest target when Trump first came

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<v Speaker 1>into now sort of you know, you have a fairly

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<v Speaker 1>level playing ground.

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<v Speaker 3>She says.

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<v Speaker 2>The Supreme Court's decision shifts the power dynamics ahead of

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<v Speaker 2>an important summit between President Trump and President hijin Ping

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<v Speaker 2>next month. So what was achieved by the trade war?

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<v Speaker 3>Yeah?

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<v Speaker 1>What was achieved? I think China realized is not half

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<v Speaker 1>as dependent on America as everyone thought.

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<v Speaker 2>This is the big Take Asia from Bloomberg News. I'm Wanha.

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<v Speaker 2>Every week we take you inside some of the world's

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<v Speaker 2>biggest and most powerful economies and the markets, tycoons and

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<v Speaker 2>businesses that drive this ever shifting region. Today on the show,

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<v Speaker 2>a legal blow in Washington, d C. Just added more

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<v Speaker 2>trade uncertainty, how the Supreme Court tariff ruling is playing

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<v Speaker 2>out in Asia, and the surprise advantage it could give

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<v Speaker 2>to Beijing. Thank you so much, both of you for

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<v Speaker 2>making time to join us. Between the three of us,

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<v Speaker 2>we've got big parts of the world covered. Brendon, you're

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<v Speaker 2>based in London. Jenny, you're here with me in Hong Kong.

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<v Speaker 2>Before we get into what this ruling means, for countries

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<v Speaker 2>and manufacturers. I have to ask, what's been the reaction

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<v Speaker 2>to the Supreme Court ruling on the ground where you

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<v Speaker 2>are a lot.

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<v Speaker 5>Of people have more questions right now than they do answers.

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<v Speaker 5>President Trump came out pretty assertively after the Supreme Court

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<v Speaker 5>ruled against him and said, in effect, nothing's changed. I

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<v Speaker 5>still have teriff authorities, and I may even use them

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<v Speaker 5>to a greater degree than I did before. The story

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<v Speaker 5>is the same. The US is going to use tariffs

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<v Speaker 5>to try to reshore manufacturing, create factory jobs, and essentially,

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<v Speaker 5>as President Trump would say, rebalance the global trading system

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<v Speaker 5>back in the US's favor.

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<v Speaker 2>That's interesting. So he's trying to say nothing's changed here.

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<v Speaker 5>Yeah, nothing's changed, but you know, in a sense, a

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<v Speaker 5>lot of things have changed. President Trump, by most accounts,

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<v Speaker 5>has lost a lot of leverage here.

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<v Speaker 2>Jenny, what about here in Hong Kong and broadly in China.

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<v Speaker 2>What's been the reaction.

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<v Speaker 1>It's been pretty mute in measured, I would say, But

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<v Speaker 1>also when you sort of look at this, China sort

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<v Speaker 1>of came out from the ruling as one of the winners,

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<v Speaker 1>so you know, in a way, it's half of them

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<v Speaker 1>to sort of come out sort of threatening anything because

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<v Speaker 1>they've probably benefited from the Supreme Court ruling. I think,

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<v Speaker 1>you know, particularly ahead of the she Trump's summit as well,

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<v Speaker 1>they have to be thinking this sort of weakens Trump's

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<v Speaker 1>hand just a couple of weeks before he fires into Beijing.

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<v Speaker 1>I think that being said, China realizes this still is

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<v Speaker 1>a Section three zero one investigation pending against them, so

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<v Speaker 1>in that sense, they're actually weaker than other countries, and

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<v Speaker 1>that this sort of investigation has already sort of been

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<v Speaker 1>in trained for months that could be expedited now so

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<v Speaker 1>they could quickly see more tariffs, and those tariffs under

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<v Speaker 1>that investigation have no upper limit and they're pretty sticky.

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<v Speaker 1>The ones imposed under Section three zero one from Trump's

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<v Speaker 1>first term is still in place, so I think that

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<v Speaker 1>probably also is why they're sort of waiting and seeing

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<v Speaker 1>before coming out with a sort of a strong reaction.

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<v Speaker 1>And then I think for exporters in this region, particularly

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<v Speaker 1>sort of ones that had the China plus one strategies

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<v Speaker 1>for them, I think there's a big question right now

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<v Speaker 1>over was it a good idea to invest in new

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<v Speaker 1>factories in Cambodia and Vietnam. Is it as useful as

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<v Speaker 1>I thought it was going to.

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<v Speaker 2>Be Jenny, Who are the winners in this and what

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<v Speaker 2>does this victory mean for them?

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<v Speaker 1>The biggest winners so far, it's China, India, and Brazil.

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<v Speaker 1>They were facing the highest tariffs and they're the ones

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<v Speaker 1>that have seen the biggest sort of percentage point decreases.

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<v Speaker 1>But I think everyone's aware that this is just the

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<v Speaker 1>holding pattern, right. This is what Trump has done is

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<v Speaker 1>sort of to bridge the gap until he can sort

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<v Speaker 1>of then use his other tools to get tariffs really

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<v Speaker 1>where he wants them. And it's going to be much

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<v Speaker 1>more complicated and harder for business to navigate because rather

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<v Speaker 1>than thinking a sort of broad tariffs, it's going to

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<v Speaker 1>be this sort of like jumble of different sort of

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<v Speaker 1>sectorial tariffs. So Japan, South Korea, and Taiwan, the big

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<v Speaker 1>thing they are looking at still now is a section

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<v Speaker 1>two three two investigation into chips, And for Taiwan, actually

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<v Speaker 1>that was always the case because the trade deal they

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<v Speaker 1>struck had a carve out for chips, which is sort

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<v Speaker 1>of the biggest thing in the export to the US.

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<v Speaker 1>So in some respects it was always going to be

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<v Speaker 1>around these specific investigations into sort of really contentious sect

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<v Speaker 1>and I think that hasn't really changed. So even though

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<v Speaker 1>it's sort of a headline win in some of these ways,

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<v Speaker 1>for some of these countries, there are sort of more

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<v Speaker 1>potent measures down the pipeline.

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<v Speaker 2>And it seems like countries like Japan and South Korea

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<v Speaker 2>that had negotiated a fifteen percent terror freight, it looks

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<v Speaker 2>like they've now just also lost their competitive advantage as well,

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<v Speaker 2>right if everyone else gets fifteen percent?

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<v Speaker 1>Yeah, absolutely. And I think if you're these trade negotiators

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<v Speaker 1>and you've spent like the last year painstaking me having

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<v Speaker 1>these meetings and sort of working out these deals, convincing

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<v Speaker 1>your companies to get behind you, it must be so

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<v Speaker 1>frustrating to wake up and to sort of realize that

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<v Speaker 1>hard work has sort of been for nothing. At the

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<v Speaker 1>same time, it makes it harder for Japan South Korea

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<v Speaker 1>to sort of say that their trade deals are invalid

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<v Speaker 1>because the tariffs are actually where they negotiated them to

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<v Speaker 1>be at, So in a way, it's kind of status

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<v Speaker 1>quo for them.

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<v Speaker 2>After the break, how the tariff drama of the past

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<v Speaker 2>year has remapped global trade and how the Supreme Court

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<v Speaker 2>ruling could play Deshijan thing's advantage at a high stakes

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<v Speaker 2>summit next month. I'm back with Brendan Murray, who runs

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<v Speaker 2>Bloomberg's trade coverage, and Jenny marsh who oversees North Asia's

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<v Speaker 2>economy and politics. Regardless of how President Trump responds to

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<v Speaker 2>the upending of his tariff regime by the Supreme Court,

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<v Speaker 2>the global trading system has already been transformed in ways

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<v Speaker 2>that don't necessarily favor the US, even if America's trade

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<v Speaker 2>numbers and key partners remain relatively the same. Certainly, the

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<v Speaker 2>US as it stands is still at this point the

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<v Speaker 2>biggest destination for global manufacturers. To what degree do you

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<v Speaker 2>think the trade war changed that.

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<v Speaker 5>We just got the US's year end trade balance figures,

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<v Speaker 5>and if you look at the top ten US trading partners,

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<v Speaker 5>they really didn't shift around all that much. China's share

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<v Speaker 5>of trade fell quite a bit, It's been falling for

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<v Speaker 5>a couple of years now as the tariffs do take effect.

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<v Speaker 5>But it's still Canada and Mexico at the top. You know,

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<v Speaker 5>a couple of European countries, South Korea, Japan are in

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<v Speaker 5>the top ten. Nothing has really changed to a significant

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<v Speaker 5>degree in a sort of like structural way. This is

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<v Speaker 5>much more of a slow burn change in the global

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<v Speaker 5>trading system than a sudden shock to the system. But

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<v Speaker 5>we're heading into a new chapter now, and I guess in.

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<v Speaker 2>Some ways, I mean that the trade war has also

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<v Speaker 2>caused this fundamental shift as well, right, I mean in

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<v Speaker 2>terms of certainly companies feeling that they can't rely just

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<v Speaker 2>on the US as the main dominant market. They've got

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<v Speaker 2>to find other customers in other parts of the world. Jenny,

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<v Speaker 2>how has a country like China taken advantage of this

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<v Speaker 2>asymmetry in global trade.

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<v Speaker 1>I think China's one of the best and most stark

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<v Speaker 1>examples of just trade re routing. You know, by the

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<v Speaker 1>end of last year, China's exports to the US just

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<v Speaker 1>for ten percent of its total exports, and that's half

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<v Speaker 1>from the first trade war, you know, and you saw

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<v Speaker 1>the surge and exports instead to Europe, Latin America, Africa.

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<v Speaker 1>Export has just found other markets. And then you know,

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<v Speaker 1>China finished the year with that one point two trillion

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<v Speaker 1>dollar trade surplus, which no one was expecting it would

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<v Speaker 1>be able to record in a year where it's facing

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<v Speaker 1>the highest US tariffs, you know, in nearly a century,

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<v Speaker 1>so they prove that you can diversify and find other markets.

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<v Speaker 1>And it's also then, you know, it's taken an advantage

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<v Speaker 1>of not only the trade war, but I think just

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<v Speaker 1>the general volatility of Trump right just sort of warm

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<v Speaker 1>its relationships and warm its trade ties with other countries.

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<v Speaker 1>You know, you saw Mark Carney come at the beginning

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<v Speaker 1>of this year and talk about a new world order

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<v Speaker 1>in China, striking a bunch of trade deals with Beijing,

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<v Speaker 1>and then Beijing kind of you know, handing out an

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<v Speaker 1>olive branch or rolling back to tariffs that it had

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<v Speaker 1>imposed on Canada, and then Canada are saying, okay, right,

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<v Speaker 1>you know, we're going to let in a certain quoture

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<v Speaker 1>of Chinese electric vehicles into Canada, which was something they

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<v Speaker 1>had resisted to align with the US. That seemed like

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<v Speaker 1>a landmark moment. And then you had kiss Arma coming

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<v Speaker 1>just very shortly afterwards and trying to achieve something similar.

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<v Speaker 1>So I think China sees that other countries now need

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<v Speaker 1>to diversify, and it's repositioning itself as sort of a

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<v Speaker 1>land of opportunity at a time when people really are

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<v Speaker 1>desperate from new growth drivers and there now worring to

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<v Speaker 1>sort of overlook some of the different issues or the

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<v Speaker 1>difficult issues that had sort of stopped them being so

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<v Speaker 1>favorable to trade with Beijing, such as the war in Ukraine,

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<v Speaker 1>human rights issues. People are now kind of they're being

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<v Speaker 1>more pragmatic because it's a more kind of dangerous world

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<v Speaker 1>in terms of trade. Going into the trade war, economists

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<v Speaker 1>was saying tariffs at sixty percent are going to like

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<v Speaker 1>decimate the Chinese economy. No way, They're going to sort

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<v Speaker 1>of come out of this unscathed, quite stark economic predictions.

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<v Speaker 1>None of that came to pass. You know, exports surged

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<v Speaker 1>and they hit their growth target of about five percent,

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<v Speaker 1>so it didn't really have a negative impact on China

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<v Speaker 1>at all.

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<v Speaker 2>In some ways. I mean, that's a feather in China's cap.

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<v Speaker 1>Br Absolutely, yeah. I think the trade war went better

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<v Speaker 1>for shuji Ping than he probably ever realized it would do,

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<v Speaker 1>and it probably has rewired trade. Like if those tarrists

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<v Speaker 1>went away now wood companies start selling back into American markets,

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<v Speaker 1>maybe they would, and they'd have even more trade. You know,

0:12:33.240 --> 0:12:36.160
<v Speaker 1>it's hard to predict, Jenny.

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<v Speaker 2>Trade obviously goes hand in hand with geopolitical ties. How

0:12:40.040 --> 0:12:43.400
<v Speaker 2>might the trade shifts affect political ties between the US

0:12:43.440 --> 0:12:45.160
<v Speaker 2>and its biggest trading partners.

0:12:45.800 --> 0:12:49.000
<v Speaker 1>I think it's already handing an impact right because it's

0:12:49.000 --> 0:12:52.640
<v Speaker 1>this volatility. So US allies are realizing that the US

0:12:52.720 --> 0:12:55.200
<v Speaker 1>is not as a reliable partner, not just in terms

0:12:55.200 --> 0:12:57.360
<v Speaker 1>of sort of military spending, but in terms of trade

0:12:57.360 --> 0:13:00.800
<v Speaker 1>as well. You know, you embraced Trump's trade war. You say, Okay,

0:13:01.240 --> 0:13:03.400
<v Speaker 1>we'll make the deals, we'll do the investment, we'll put

0:13:03.400 --> 0:13:07.199
<v Speaker 1>in the hours, and then turns out they aren't legal

0:13:07.240 --> 0:13:10.120
<v Speaker 1>after all, and then you have to sort of renegotiate

0:13:10.120 --> 0:13:12.600
<v Speaker 1>and go back all over again. So I think it

0:13:12.720 --> 0:13:15.760
<v Speaker 1>just dnse US credibility. No one's going to turn their

0:13:15.800 --> 0:13:18.280
<v Speaker 1>back on the US. It's too powerful, and it still

0:13:18.360 --> 0:13:22.360
<v Speaker 1>is a huge military guaranteeur particularly countriesie Japan in this region.

0:13:22.840 --> 0:13:25.199
<v Speaker 1>But at the same time, there is a clear need

0:13:25.240 --> 0:13:27.640
<v Speaker 1>to make sure you have a range of partners in

0:13:27.679 --> 0:13:29.480
<v Speaker 1>all of your eggs and not just in one basket.

0:13:29.880 --> 0:13:32.719
<v Speaker 2>Now President Trump is expected to meet President she at

0:13:32.720 --> 0:13:35.360
<v Speaker 2>a summit embing at the end of March. How does

0:13:35.400 --> 0:13:38.920
<v Speaker 2>the Supreme Court ruling change the balance of power at

0:13:38.960 --> 0:13:41.040
<v Speaker 2>the negotiating table when they meet.

0:13:41.480 --> 0:13:43.880
<v Speaker 1>This could be the sort of the first test, if

0:13:43.920 --> 0:13:46.960
<v Speaker 1>you like, real test of how the Supreme Court sort

0:13:47.000 --> 0:13:50.040
<v Speaker 1>of changes some of these deals. It's hard to imagine

0:13:50.080 --> 0:13:53.000
<v Speaker 1>Trump arriving with any less sort of swagger than he

0:13:53.040 --> 0:13:55.280
<v Speaker 1>would do normally. And he knows that he has these

0:13:55.320 --> 0:13:58.120
<v Speaker 1>sort of Section three zero one investigations that he could

0:13:58.120 --> 0:14:01.200
<v Speaker 1>still threaten more tariffs, and with China, he's already got

0:14:01.240 --> 0:14:04.199
<v Speaker 1>an investigation going where he could impose them at the

0:14:04.240 --> 0:14:06.720
<v Speaker 1>same time. One of the big deliverables they were meant

0:14:06.720 --> 0:14:10.160
<v Speaker 1>to extend the trade truths they have and that's predicated.

0:14:10.240 --> 0:14:13.680
<v Speaker 1>And you know, China keeps supplying where earth if America

0:14:13.760 --> 0:14:17.400
<v Speaker 1>doesn't raise tariffs, if it keeps the tariffs down, or

0:14:17.400 --> 0:14:20.880
<v Speaker 1>the tariffs are gone. So if you're China, you know,

0:14:21.680 --> 0:14:24.080
<v Speaker 1>maybe you ask something extra now to keep up your

0:14:24.080 --> 0:14:26.480
<v Speaker 1>half of the deal. The only reason they were buying

0:14:26.520 --> 0:14:29.640
<v Speaker 1>the soybeans from the US was again to get the

0:14:29.680 --> 0:14:33.320
<v Speaker 1>tariffs down. Well, if the tariff's not there anymore, it

0:14:33.360 --> 0:14:35.520
<v Speaker 1>just gives she an opening to say, if I'm going

0:14:35.560 --> 0:14:37.640
<v Speaker 1>to keep doing this for you, what are you going

0:14:37.720 --> 0:14:40.440
<v Speaker 1>to do for me? And maybe Trump's answer to that

0:14:41.000 --> 0:14:42.760
<v Speaker 1>is will go easy on you when it comes to

0:14:42.760 --> 0:14:45.880
<v Speaker 1>some of these other sort of sectorial tariffs. But even

0:14:45.920 --> 0:14:48.160
<v Speaker 1>if that is the answer, that's a win for she

0:14:48.320 --> 0:14:50.360
<v Speaker 1>because before he didn't have that leverage, he would have

0:14:50.360 --> 0:14:53.800
<v Speaker 1>had to find something different. So it will be interesting

0:14:53.840 --> 0:14:56.960
<v Speaker 1>to see sort of how strongly the Chinese play their hand.

0:14:57.600 --> 0:14:59.240
<v Speaker 1>On the other hand, I don't think they want to

0:14:59.280 --> 0:15:02.480
<v Speaker 1>rock the boat too much, so maybe they just decide

0:15:02.560 --> 0:15:05.240
<v Speaker 1>the status quoba is a good thing. You know, it's

0:15:05.280 --> 0:15:06.640
<v Speaker 1>better to have a bed in the hand and two

0:15:06.680 --> 0:15:10.400
<v Speaker 1>in the tree, and they keep sort of targeting that.

0:15:10.840 --> 0:15:12.800
<v Speaker 1>But certainly she has more options now than he did

0:15:12.840 --> 0:15:13.520
<v Speaker 1>a few weeks ago.

0:15:14.720 --> 0:15:16.960
<v Speaker 2>What would be the dream scenario for a president?

0:15:17.040 --> 0:15:20.120
<v Speaker 1>Shoe h Jinping has two things he really cares about

0:15:20.120 --> 0:15:23.760
<v Speaker 1>getting from the US. It is access to the highest

0:15:23.840 --> 0:15:27.360
<v Speaker 1>end in video chips, and it is some kind of

0:15:27.400 --> 0:15:30.200
<v Speaker 1>concession on Taiwan. And I think if you're sat in

0:15:30.200 --> 0:15:32.520
<v Speaker 1>beaging thinking what's the biggest thing I can get here?

0:15:32.560 --> 0:15:35.240
<v Speaker 1>If it's my best moment, then you're going to push.

0:15:35.320 --> 0:15:38.080
<v Speaker 1>And Trump has already signaled that he actually is. He's

0:15:38.200 --> 0:15:41.120
<v Speaker 1>much more open to giving them those top chips than

0:15:41.160 --> 0:15:44.640
<v Speaker 1>any other US leader or politician is. And then on Taiwan,

0:15:44.720 --> 0:15:49.040
<v Speaker 1>they want stronger language around opposing Taiwan independence, which would

0:15:49.080 --> 0:15:51.520
<v Speaker 1>be a big blow for Taiwan if that language changes.

0:15:52.000 --> 0:15:55.040
<v Speaker 1>And they want Trump to stop selling Taiwan so many

0:15:55.080 --> 0:15:56.840
<v Speaker 1>weapons so.

0:15:56.800 --> 0:15:58.080
<v Speaker 2>He could actually get what he wants.

0:15:58.200 --> 0:15:59.840
<v Speaker 1>It should Yeah good.

0:16:07.240 --> 0:16:10.720
<v Speaker 2>This is The Big Take Asia from Bloomberg News. I'm wanha.

0:16:11.240 --> 0:16:13.840
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0:16:13.840 --> 0:16:16.680
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0:16:16.720 --> 0:16:20.040
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0:16:20.120 --> 0:16:22.320
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0:16:22.400 --> 0:16:25.240
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