Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Across Asia, policymakers and business leaders are once again trying
Speaker 2: to make sense of a tariff whiplash, this time after
Speaker 2: the Supreme Court ruled President Donald Trump's signature tariff strategy illegal.
Speaker 3: A top official in Japan's ruling Liberal Democratic Party call
Speaker 3: the tariff situation a real mess, while sources say Indian
Speaker 3: officials are postponing talks to finalize New Dali's pact with
Speaker 3: the US.
Speaker 2: Much of the confusion comes from Trump's workaround response to
Speaker 2: the Supreme Court ruling and his threats to impose fresh
Speaker 2: tariffs on trading partners. He announced a temporary ten percent
Speaker 2: global tariff that went into effect Tuesday, and said he
Speaker 2: plans to raise it to fifteen percent. Trump's also getting
Speaker 2: ready to launch a series of investigations that could pile
Speaker 2: on even more import duties. Some are tied to national security,
Speaker 2: others are connected to Section three oh one of a
Speaker 2: trade act. They could allow the US to impose retaliatory
Speaker 2: levies on countries carrying out unreasonable or discriminatory actions against
Speaker 2: American trade.
Speaker 4: The President is sending out a series of warnings today
Speaker 4: via truth Social about any country that doubts his ability
Speaker 4: to impose tariffs in this fashion, He said, any country
Speaker 4: that wants to play games with the ridiculous Supreme Court
Speaker 4: decision buyer beware.
Speaker 2: After Trump announced his Liberation Day tariffs almost a year ago,
Speaker 2: countries in Asia race to negotiate trade deals with the US.
Speaker 2: Now they're wondering if they're going to have to renegotiate,
Speaker 2: and this time around, many are finding they're in a
Speaker 2: much better position.
Speaker 5: President Trump, by most accounts, has lost a lot of
Speaker 5: leverage here.
Speaker 2: Brendan Murray oversees Bloomberg's trade coverage from London, and.
Speaker 5: If you're sitting in Brussels or Beijing right now, you're saying,
Speaker 5: perhaps maybe we have more leverage than we did last week,
Speaker 5: so maybe we could think about retaliating. Maybe this is
Speaker 5: where the countries look at what President Trump has lost
Speaker 5: and they say, you know, we're not going to put
Speaker 5: up with that, and we do have ways to fight back.
Speaker 2: One of the countries that stands to win big out
Speaker 2: of all of this China.
Speaker 1: If you're Beijing, you're sort of now on a level
Speaker 1: playing field with US allies.
Speaker 2: Jenny marsh oversees Bloomberg's coverage of North Asia's economy and politics.
Speaker 1: You've gone from the biggest target when Trump first came
Speaker 1: into now sort of you know, you have a fairly
Speaker 1: level playing ground.
Speaker 3: She says.
Speaker 2: The Supreme Court's decision shifts the power dynamics ahead of
Speaker 2: an important summit between President Trump and President hijin Ping
Speaker 2: next month. So what was achieved by the trade war?
Speaker 3: Yeah?
Speaker 1: What was achieved? I think China realized is not half
Speaker 1: as dependent on America as everyone thought.
Speaker 2: This is the big Take Asia from Bloomberg News. I'm Wanha.
Speaker 2: Every week we take you inside some of the world's
Speaker 2: biggest and most powerful economies and the markets, tycoons and
Speaker 2: businesses that drive this ever shifting region. Today on the show,
Speaker 2: a legal blow in Washington, d C. Just added more
Speaker 2: trade uncertainty, how the Supreme Court tariff ruling is playing
Speaker 2: out in Asia, and the surprise advantage it could give
Speaker 2: to Beijing. Thank you so much, both of you for
Speaker 2: making time to join us. Between the three of us,
Speaker 2: we've got big parts of the world covered. Brendon, you're
Speaker 2: based in London. Jenny, you're here with me in Hong Kong.
Speaker 2: Before we get into what this ruling means, for countries
Speaker 2: and manufacturers. I have to ask, what's been the reaction
Speaker 2: to the Supreme Court ruling on the ground where you
Speaker 2: are a lot.
Speaker 5: Of people have more questions right now than they do answers.
Speaker 5: President Trump came out pretty assertively after the Supreme Court
Speaker 5: ruled against him and said, in effect, nothing's changed. I
Speaker 5: still have teriff authorities, and I may even use them
Speaker 5: to a greater degree than I did before. The story
Speaker 5: is the same. The US is going to use tariffs
Speaker 5: to try to reshore manufacturing, create factory jobs, and essentially,
Speaker 5: as President Trump would say, rebalance the global trading system
Speaker 5: back in the US's favor.
Speaker 2: That's interesting. So he's trying to say nothing's changed here.
Speaker 5: Yeah, nothing's changed, but you know, in a sense, a
Speaker 5: lot of things have changed. President Trump, by most accounts,
Speaker 5: has lost a lot of leverage here.
Speaker 2: Jenny, what about here in Hong Kong and broadly in China.
Speaker 2: What's been the reaction.
Speaker 1: It's been pretty mute in measured, I would say, But
Speaker 1: also when you sort of look at this, China sort
Speaker 1: of came out from the ruling as one of the winners,
Speaker 1: so you know, in a way, it's half of them
Speaker 1: to sort of come out sort of threatening anything because
Speaker 1: they've probably benefited from the Supreme Court ruling. I think,
Speaker 1: you know, particularly ahead of the she Trump's summit as well,
Speaker 1: they have to be thinking this sort of weakens Trump's
Speaker 1: hand just a couple of weeks before he fires into Beijing.
Speaker 1: I think that being said, China realizes this still is
Speaker 1: a Section three zero one investigation pending against them, so
Speaker 1: in that sense, they're actually weaker than other countries, and
Speaker 1: that this sort of investigation has already sort of been
Speaker 1: in trained for months that could be expedited now so
Speaker 1: they could quickly see more tariffs, and those tariffs under
Speaker 1: that investigation have no upper limit and they're pretty sticky.
Speaker 1: The ones imposed under Section three zero one from Trump's
Speaker 1: first term is still in place, so I think that
Speaker 1: probably also is why they're sort of waiting and seeing
Speaker 1: before coming out with a sort of a strong reaction.
Speaker 1: And then I think for exporters in this region, particularly
Speaker 1: sort of ones that had the China plus one strategies
Speaker 1: for them, I think there's a big question right now
Speaker 1: over was it a good idea to invest in new
Speaker 1: factories in Cambodia and Vietnam. Is it as useful as
Speaker 1: I thought it was going to.
Speaker 2: Be Jenny, Who are the winners in this and what
Speaker 2: does this victory mean for them?
Speaker 1: The biggest winners so far, it's China, India, and Brazil.
Speaker 1: They were facing the highest tariffs and they're the ones
Speaker 1: that have seen the biggest sort of percentage point decreases.
Speaker 1: But I think everyone's aware that this is just the
Speaker 1: holding pattern, right. This is what Trump has done is
Speaker 1: sort of to bridge the gap until he can sort
Speaker 1: of then use his other tools to get tariffs really
Speaker 1: where he wants them. And it's going to be much
Speaker 1: more complicated and harder for business to navigate because rather
Speaker 1: than thinking a sort of broad tariffs, it's going to
Speaker 1: be this sort of like jumble of different sort of
Speaker 1: sectorial tariffs. So Japan, South Korea, and Taiwan, the big
Speaker 1: thing they are looking at still now is a section
Speaker 1: two three two investigation into chips, And for Taiwan, actually
Speaker 1: that was always the case because the trade deal they
Speaker 1: struck had a carve out for chips, which is sort
Speaker 1: of the biggest thing in the export to the US.
Speaker 1: So in some respects it was always going to be
Speaker 1: around these specific investigations into sort of really contentious sect
Speaker 1: and I think that hasn't really changed. So even though
Speaker 1: it's sort of a headline win in some of these ways,
Speaker 1: for some of these countries, there are sort of more
Speaker 1: potent measures down the pipeline.
Speaker 2: And it seems like countries like Japan and South Korea
Speaker 2: that had negotiated a fifteen percent terror freight, it looks
Speaker 2: like they've now just also lost their competitive advantage as well,
Speaker 2: right if everyone else gets fifteen percent?
Speaker 1: Yeah, absolutely. And I think if you're these trade negotiators
Speaker 1: and you've spent like the last year painstaking me having
Speaker 1: these meetings and sort of working out these deals, convincing
Speaker 1: your companies to get behind you, it must be so
Speaker 1: frustrating to wake up and to sort of realize that
Speaker 1: hard work has sort of been for nothing. At the
Speaker 1: same time, it makes it harder for Japan South Korea
Speaker 1: to sort of say that their trade deals are invalid
Speaker 1: because the tariffs are actually where they negotiated them to
Speaker 1: be at, So in a way, it's kind of status
Speaker 1: quo for them.
Speaker 2: After the break, how the tariff drama of the past
Speaker 2: year has remapped global trade and how the Supreme Court
Speaker 2: ruling could play Deshijan thing's advantage at a high stakes
Speaker 2: summit next month. I'm back with Brendan Murray, who runs
Speaker 2: Bloomberg's trade coverage, and Jenny marsh who oversees North Asia's
Speaker 2: economy and politics. Regardless of how President Trump responds to
Speaker 2: the upending of his tariff regime by the Supreme Court,
Speaker 2: the global trading system has already been transformed in ways
Speaker 2: that don't necessarily favor the US, even if America's trade
Speaker 2: numbers and key partners remain relatively the same. Certainly, the
Speaker 2: US as it stands is still at this point the
Speaker 2: biggest destination for global manufacturers. To what degree do you
Speaker 2: think the trade war changed that.
Speaker 5: We just got the US's year end trade balance figures,
Speaker 5: and if you look at the top ten US trading partners,
Speaker 5: they really didn't shift around all that much. China's share
Speaker 5: of trade fell quite a bit, It's been falling for
Speaker 5: a couple of years now as the tariffs do take effect.
Speaker 5: But it's still Canada and Mexico at the top. You know,
Speaker 5: a couple of European countries, South Korea, Japan are in
Speaker 5: the top ten. Nothing has really changed to a significant
Speaker 5: degree in a sort of like structural way. This is
Speaker 5: much more of a slow burn change in the global
Speaker 5: trading system than a sudden shock to the system. But
Speaker 5: we're heading into a new chapter now, and I guess in.
Speaker 2: Some ways, I mean that the trade war has also
Speaker 2: caused this fundamental shift as well, right, I mean in
Speaker 2: terms of certainly companies feeling that they can't rely just
Speaker 2: on the US as the main dominant market. They've got
Speaker 2: to find other customers in other parts of the world. Jenny,
Speaker 2: how has a country like China taken advantage of this
Speaker 2: asymmetry in global trade.
Speaker 1: I think China's one of the best and most stark
Speaker 1: examples of just trade re routing. You know, by the
Speaker 1: end of last year, China's exports to the US just
Speaker 1: for ten percent of its total exports, and that's half
Speaker 1: from the first trade war, you know, and you saw
Speaker 1: the surge and exports instead to Europe, Latin America, Africa.
Speaker 1: Export has just found other markets. And then you know,
Speaker 1: China finished the year with that one point two trillion
Speaker 1: dollar trade surplus, which no one was expecting it would
Speaker 1: be able to record in a year where it's facing
Speaker 1: the highest US tariffs, you know, in nearly a century,
Speaker 1: so they prove that you can diversify and find other markets.
Speaker 1: And it's also then, you know, it's taken an advantage
Speaker 1: of not only the trade war, but I think just
Speaker 1: the general volatility of Trump right just sort of warm
Speaker 1: its relationships and warm its trade ties with other countries.
Speaker 1: You know, you saw Mark Carney come at the beginning
Speaker 1: of this year and talk about a new world order
Speaker 1: in China, striking a bunch of trade deals with Beijing,
Speaker 1: and then Beijing kind of you know, handing out an
Speaker 1: olive branch or rolling back to tariffs that it had
Speaker 1: imposed on Canada, and then Canada are saying, okay, right,
Speaker 1: you know, we're going to let in a certain quoture
Speaker 1: of Chinese electric vehicles into Canada, which was something they
Speaker 1: had resisted to align with the US. That seemed like
Speaker 1: a landmark moment. And then you had kiss Arma coming
Speaker 1: just very shortly afterwards and trying to achieve something similar.
Speaker 1: So I think China sees that other countries now need
Speaker 1: to diversify, and it's repositioning itself as sort of a
Speaker 1: land of opportunity at a time when people really are
Speaker 1: desperate from new growth drivers and there now worring to
Speaker 1: sort of overlook some of the different issues or the
Speaker 1: difficult issues that had sort of stopped them being so
Speaker 1: favorable to trade with Beijing, such as the war in Ukraine,
Speaker 1: human rights issues. People are now kind of they're being
Speaker 1: more pragmatic because it's a more kind of dangerous world
Speaker 1: in terms of trade. Going into the trade war, economists
Speaker 1: was saying tariffs at sixty percent are going to like
Speaker 1: decimate the Chinese economy. No way, They're going to sort
Speaker 1: of come out of this unscathed, quite stark economic predictions.
Speaker 1: None of that came to pass. You know, exports surged
Speaker 1: and they hit their growth target of about five percent,
Speaker 1: so it didn't really have a negative impact on China
Speaker 1: at all.
Speaker 2: In some ways. I mean, that's a feather in China's cap.
Speaker 1: Br Absolutely, yeah. I think the trade war went better
Speaker 1: for shuji Ping than he probably ever realized it would do,
Speaker 1: and it probably has rewired trade. Like if those tarrists
Speaker 1: went away now wood companies start selling back into American markets,
Speaker 1: maybe they would, and they'd have even more trade. You know,
Speaker 1: it's hard to predict, Jenny.
Speaker 2: Trade obviously goes hand in hand with geopolitical ties. How
Speaker 2: might the trade shifts affect political ties between the US
Speaker 2: and its biggest trading partners.
Speaker 1: I think it's already handing an impact right because it's
Speaker 1: this volatility. So US allies are realizing that the US
Speaker 1: is not as a reliable partner, not just in terms
Speaker 1: of sort of military spending, but in terms of trade
Speaker 1: as well. You know, you embraced Trump's trade war. You say, Okay,
Speaker 1: we'll make the deals, we'll do the investment, we'll put
Speaker 1: in the hours, and then turns out they aren't legal
Speaker 1: after all, and then you have to sort of renegotiate
Speaker 1: and go back all over again. So I think it
Speaker 1: just dnse US credibility. No one's going to turn their
Speaker 1: back on the US. It's too powerful, and it still
Speaker 1: is a huge military guaranteeur particularly countriesie Japan in this region.
Speaker 1: But at the same time, there is a clear need
Speaker 1: to make sure you have a range of partners in
Speaker 1: all of your eggs and not just in one basket.
Speaker 2: Now President Trump is expected to meet President she at
Speaker 2: a summit embing at the end of March. How does
Speaker 2: the Supreme Court ruling change the balance of power at
Speaker 2: the negotiating table when they meet.
Speaker 1: This could be the sort of the first test, if
Speaker 1: you like, real test of how the Supreme Court sort
Speaker 1: of changes some of these deals. It's hard to imagine
Speaker 1: Trump arriving with any less sort of swagger than he
Speaker 1: would do normally. And he knows that he has these
Speaker 1: sort of Section three zero one investigations that he could
Speaker 1: still threaten more tariffs, and with China, he's already got
Speaker 1: an investigation going where he could impose them at the
Speaker 1: same time. One of the big deliverables they were meant
Speaker 1: to extend the trade truths they have and that's predicated.
Speaker 1: And you know, China keeps supplying where earth if America
Speaker 1: doesn't raise tariffs, if it keeps the tariffs down, or
Speaker 1: the tariffs are gone. So if you're China, you know,
Speaker 1: maybe you ask something extra now to keep up your
Speaker 1: half of the deal. The only reason they were buying
Speaker 1: the soybeans from the US was again to get the
Speaker 1: tariffs down. Well, if the tariff's not there anymore, it
Speaker 1: just gives she an opening to say, if I'm going
Speaker 1: to keep doing this for you, what are you going
Speaker 1: to do for me? And maybe Trump's answer to that
Speaker 1: is will go easy on you when it comes to
Speaker 1: some of these other sort of sectorial tariffs. But even
Speaker 1: if that is the answer, that's a win for she
Speaker 1: because before he didn't have that leverage, he would have
Speaker 1: had to find something different. So it will be interesting
Speaker 1: to see sort of how strongly the Chinese play their hand.
Speaker 1: On the other hand, I don't think they want to
Speaker 1: rock the boat too much, so maybe they just decide
Speaker 1: the status quoba is a good thing. You know, it's
Speaker 1: better to have a bed in the hand and two
Speaker 1: in the tree, and they keep sort of targeting that.
Speaker 1: But certainly she has more options now than he did
Speaker 1: a few weeks ago.
Speaker 2: What would be the dream scenario for a president?
Speaker 1: Shoe h Jinping has two things he really cares about
Speaker 1: getting from the US. It is access to the highest
Speaker 1: end in video chips, and it is some kind of
Speaker 1: concession on Taiwan. And I think if you're sat in
Speaker 1: beaging thinking what's the biggest thing I can get here?
Speaker 1: If it's my best moment, then you're going to push.
Speaker 1: And Trump has already signaled that he actually is. He's
Speaker 1: much more open to giving them those top chips than
Speaker 1: any other US leader or politician is. And then on Taiwan,
Speaker 1: they want stronger language around opposing Taiwan independence, which would
Speaker 1: be a big blow for Taiwan if that language changes.
Speaker 1: And they want Trump to stop selling Taiwan so many
Speaker 1: weapons so.
Speaker 2: He could actually get what he wants.
Speaker 1: It should Yeah good.
Speaker 2: This is The Big Take Asia from Bloomberg News. I'm wanha.
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