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

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Speaker 2: Welcome to the Bloomberg Daybreak Asia podcast. I'm Charlie Pellet.

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Speaker 2: Doug Prisoner's off. This week, US futures climbed and Asian

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Speaker 2: equity futures were mixed after President Trump warned he may

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Speaker 2: impose a one hundred percent tariffon chip imports.

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Speaker 3: We're going to be putting a very large tariff on

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Speaker 3: chips and semiconductors. But the good news for companies like

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Speaker 3: Apple is if you're building in the United States or

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Speaker 3: have committed to build without question, committed to build in

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Speaker 3: the United States, there will be no charge.

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Speaker 2: The comments came as Apple CEO Tim Cook unveiled a

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Speaker 2: one hundred billion dollar US investment plan alongside Trump at

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Speaker 2: the Oval Office. Coming up, we'll get reaction from Emily Benson,

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Speaker 2: head of strategy at Minerva Technology. Fewtures. After months of

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Speaker 2: trade talks and threats, US reciprocal tariffs are set to

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Speaker 2: take effect at twelve oh one am Eastern Time. For more,

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Speaker 2: we heard from William Rinch, senior advisor at the Center

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Speaker 2: for Strategic and International Studies. He spoke with Bloomberg's Heidi

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Speaker 2: Stroud Watts and Hustlinda Amen.

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Speaker 4: He previously served as US Under Secretary of Comments for

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Speaker 4: Export Administration during the Clinton administration. Good have you with us, William?

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Speaker 4: I mean, what's your take? We're seeing headlines still, you know,

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Speaker 4: dropping when it comes to those tariffs. It aimed over

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Speaker 4: till the fat lady sinks. I mean, where are we

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Speaker 4: with these tariffs?

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Speaker 5: Well, you know, another day, another tariff that seems to

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Speaker 5: be what's happening here? And it's just one thing after another.

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Speaker 5: There's so many unanswered questions that it's very hard to

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Speaker 5: figure out what's going to happen. You know, on the

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Speaker 5: secondary tariffs on India, why not China? You know, how

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Speaker 5: is it going to be enforced? Is it going to

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Speaker 5: be on everything? Or are there going to be exceptions?

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Speaker 5: There tends to be sometimes a list of exceptions that

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Speaker 5: gets ruled out later on. On the semiconductor tariffs that you

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Speaker 5: were just talking about a few minutes ago, same thing.

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Speaker 5: You know, are they going to how they're not going

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Speaker 5: to be applied to companies that are producing here or

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Speaker 5: have promised to produce here?

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Speaker 6: What does that mean? How long do they have to

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Speaker 6: keep their word? You know?

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Speaker 5: Are the teriffs going to be on the chips or

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Speaker 5: the products that contain the chips. And if it's the

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Speaker 5: product contains the chips, is it on the full value

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Speaker 5: of the product or just the value of the chip.

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Speaker 5: None of these questions are answered right now. In a week,

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Speaker 5: we may have some answers, but it's really the same

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Speaker 5: as the deals.

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Speaker 6: That are on screen right now.

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Speaker 5: There's a lot of unanswered questions about those too, and

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Speaker 5: a lot of cases where the leaders of the other

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Speaker 5: countries have interpreted what they agree to somewhat differently than

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Speaker 5: what our president has said. So there's just a host

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Speaker 5: of things that have to be resolved. This is going

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Speaker 5: to go on for a very long time.

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Speaker 4: What are the implications, William, I mean you can only

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Speaker 4: imagine MODI must be thinking how did a friend become

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Speaker 4: a foe? And you have to also question if India's

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Speaker 4: non aligned policy might change at this point in time.

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Speaker 6: Well, yes, I think that's a very important question.

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Speaker 5: Whether these tariffs are coming at the expense of the

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Speaker 5: broader US India relationship. Relations with India have improved a

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Speaker 5: lot over the last twenty years, starting in the George W.

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Speaker 5: Bush administration, mostly for geostrategic reasons. Mostly I think as

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Speaker 5: a counterweight to China, and these actions now may be

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Speaker 5: sacrificing the good will and credibility that have been built

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Speaker 5: up over a long period of time. Trump seems to

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Speaker 5: be frustrated by ability to close the negotiation with the

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Speaker 5: Indian government. You know, there were many predictions that there'd

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Speaker 5: be a deal. There were many optimistic predictions about a

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Speaker 5: good deal, meaning for both sides, and none of that

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Speaker 5: has happened. And for those of us to watch trade

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Speaker 5: negotiations that we weren't really surprised.

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Speaker 6: India is a very difficult country to negotiate with.

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Speaker 5: So I think the President is frustrated and is taking

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Speaker 5: out his ire on the secondary sangards issue first with India.

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Speaker 5: He implied today that China might follow so because they

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Speaker 5: actually buy more oil, Russian oil than India does. So

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Speaker 5: stay tuned for, you know, tomorrow or the next day,

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Speaker 5: more tariffs.

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Speaker 1: The counterweight element of channing is a really interesting one

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Speaker 1: to me because we've seen some of these traditional security

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Speaker 1: allies in the region, Japan, South Korea, the Philippines really

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Speaker 1: having to scramble to get favorable trade terms. India obviously

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Speaker 1: now on the ouse as well, whereas Beijing seems to

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Speaker 1: be kind of coasting along with but can being kicked

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Speaker 1: down the road on an extended truce. What do you

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Speaker 1: make of that dynamic?

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Speaker 6: Well, it's puzzling.

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Speaker 5: I mean, the irony of a lot of this is

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Speaker 5: that we're is how badly we're treating our friends. You know,

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Speaker 5: we have friends and allies in the region in Korea, Japan,

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Speaker 5: we have friends there in Southeast Asia that are not

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Speaker 5: out well. The Philippines is an ally as well, and

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Speaker 5: we're treating them really harshly in these things, in these agreements.

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Speaker 5: And you think that if the overall policy is to

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Speaker 5: maintain the US presence, particularly it's economic presence in the

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Speaker 5: Asia Pacific region, you want to have friends and you

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Speaker 5: want to have people that are going to side with

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Speaker 5: you if conflicts come up.

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Speaker 6: And right now it.

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Speaker 5: Seems that we're really tossing those people aside.

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Speaker 6: It's very worrisome.

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Speaker 1: What do you make of the state of play when

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Speaker 1: it comes to China? I mean, is it just sort

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Speaker 1: of a good news story for now because it is

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Speaker 1: such a strategically and competitively difficult relationship that it's kind

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Speaker 1: of being put on the back burner. And you know

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Speaker 1: the fact that these extensions are probably likely to happen.

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Speaker 1: Suggest that this is this is a way to kind

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Speaker 1: of make it a good news story.

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Speaker 5: Well, it's it's a fascinating it's fascining to watch that

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Speaker 5: one play out.

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Speaker 6: The President seems to be of two minds about China.

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Speaker 5: A lot of the people he appointed to the administration

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Speaker 5: are real China hawks that perceived China as an extential

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Speaker 5: threat and favor you decoupling to the maximum extent possible.

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Speaker 6: The President does not seem to be in that group.

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Speaker 6: Although he appointed all these people.

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Speaker 5: He does seem to have the view that if he

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Speaker 5: and she did and Ping could just sit down together

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Speaker 5: one on one, they could work a lot of these

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Speaker 5: differences out. He tried that in his first term. It

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Speaker 5: didn't work. He appears now to want to try again.

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Speaker 5: I don't think it will work any better in the

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Speaker 5: second term than it did in the first. But you've

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Speaker 5: seen him over the last two months pulling his punches

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Speaker 5: with China. The nasty rhetoric about the leadership which he's

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Speaker 5: displayed with respect to other countries has gone away.

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Speaker 6: He's imposed and then removed some export controls. It's kind

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Speaker 6: of a yo yo policy. They're on they're off, and he's.

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Speaker 5: Not done anything on the Russian oil issue with respect

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Speaker 5: to them, at least so far. I think he wants

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Speaker 5: to get the meeting and doesn't want to disrupt the relationship.

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Speaker 5: He's also very aware, as I'm sure you reported on

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Speaker 5: that China is the one country that has used his

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Speaker 5: leverage on US, namely with critical minerals and rare earths,

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Speaker 5: and they haven't hesitated to block their export.

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Speaker 6: That was a wake up call.

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Speaker 5: I think to the administration that this is one of

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Speaker 5: the one of the rare cases where Trump does not

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Speaker 5: hold all the cards, and I think that forces him

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Speaker 5: to proceed more cautiously.

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Speaker 4: William, we know that Trump's tariffs face a legal battle

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Speaker 4: at home, doesn't even matter. I mean, we know that

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Speaker 4: Trump has a way of pushing through everything. Anyways.

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Speaker 6: Yeah, I think that's interesting to watch.

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Speaker 5: My guess is that whether he wins or loses, it'll

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Speaker 5: be very difficult to get rid of the tariffs, at

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Speaker 5: least in the short term if he loses, and I

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Speaker 5: think this will play out over the next four or

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Speaker 5: five months. It's not on a really fast track, but

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Speaker 5: it's going to fat be faster than the normal course

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Speaker 5: of litigation in the United States. I think by the

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Speaker 5: end of the year you'll get a decision out of

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Speaker 5: the Supreme Court. If he loses, he'll probably say that

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Speaker 5: the agreements that he's already struck are the product of

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Speaker 5: the negotiations and not the product of the law that

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Speaker 5: he used, so that the court's judgment about the law.

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Speaker 6: Doesn't affect the agreements that he's negotiated.

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Speaker 5: Now he'll be sued about that, so more lawsuits, more litigation.

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Speaker 5: The courts so far have tended to say, let's keep

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Speaker 5: the terroriffts in place while we're sorting out all these

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Speaker 5: legal issues. So I think even if he loses, they're

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Speaker 5: going to stay in place. And if countries are looking

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Speaker 5: to the litigation as a fail say for them that

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Speaker 5: ultimately it'll get them off the hook.

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Speaker 6: I think they're going to be disappointed.

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Speaker 1: William Ranch, Senior advisor at CSI is really great to

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Speaker 1: have your views.

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Speaker 2: Welcome back to the Daybreak Asia podcast. I'm Charlie Peloton

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Speaker 2: this week for Doug Chrisner. President Trump says he will

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Speaker 2: impose a one hundred percent tariff on semiconductor imports, adding

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Speaker 2: he will exempt companies moving production back to the US

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Speaker 2: the comments came is Apple CEO Tim Cook unveiled a

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Speaker 2: one hundred billion dollar US investment plan alongside Trump at

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Speaker 2: the Oval Office. For more, we heard from Emily Benson,

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Speaker 2: head of strategy at Minerva Technology Futures. She spoke with

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Speaker 2: Bloomberg's Heidi Stroud Watts and has slender Amen.

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Speaker 1: Willly really great to have you with us. And so

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Speaker 1: when we see an announcement like this, which obviously looks

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Speaker 1: big and impressive from the headlines, we know that it

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Speaker 1: takes it to a sort of a cumulative six hundred

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Speaker 1: billion dollar intended spend by Apple in the US market.

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Speaker 1: Are you Are you impressed by it in terms of

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Speaker 1: what practically significantly it means and what it means for

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Speaker 1: some of these contracts with existing partnerships.

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Speaker 7: Thank you for having me. It sounds exactly like the

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Speaker 7: type of arrangement that the Trump administration has sought even

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Speaker 7: since before it came in. While the one hundred percent

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Speaker 7: announcement today on semiconductor imports me seem high, the administration

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Speaker 7: actually first telegraphed that idea at that rate as far

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Speaker 7: back as January of this year in the Taiwan context.

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Speaker 7: And I think this has been a very forward leaning

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Speaker 7: posture of the White House to try to induce companies

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Speaker 7: to make exactly the sort of announcement. I would also

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Speaker 7: add that this comes on the heels of a separate

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Speaker 7: five hundred million dollar announcement by Apple in the MP

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Speaker 7: materials context, where it is also agreeing to off taake

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Speaker 7: critical minerals and earths at a superficial price floor. And

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Speaker 7: so Apple is really doubling down on the US market

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Speaker 7: in a way that very closely aligns with this new

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Speaker 7: posture on economic security in the United States.

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Speaker 1: Does has put the pressure then, because you know, President

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Speaker 1: Trump obviously says this is a great example of how

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Speaker 1: his trade policy, his supply chain policy is working.

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Speaker 4: Right.

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Speaker 1: How much pressure is there on other tech names. We

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Speaker 1: know that there were talks with Jensen Huang today as

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Speaker 1: well to also be able to show up in the

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Speaker 1: way that the President the White House wants to see.

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Speaker 7: So rewinding a couple of weeks, we heard from the

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Speaker 7: President and also Commerce Secretary Lutnik in Scotland on the

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Speaker 7: sidelines of the EU US negotiations and ultimately deal announcement

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Speaker 7: that semiconductor tariffs were inbound. They were going to be

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Speaker 7: announced on a short timeframe, and so the administration has

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Speaker 7: been teasing out the idea that if you would like

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Speaker 7: to make a deal, now is a good time. I'm

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Speaker 7: very curious to see what transpires at the end of

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Speaker 7: this week and over the weekend heading into next week,

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Speaker 7: because it's easy to foresee a scenario in which a

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Speaker 7: lot of the big players come to the White House

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Speaker 7: with ideas for carve outs, and here I think the

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Speaker 7: primary push by a lot of the companies involved would

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Speaker 7: be to not have this take place immediately. And that's

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Speaker 7: actually something that we see that's transpiring very differently, for

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Speaker 7: example in the India context, where tariffs will enter into

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Speaker 7: a into force tomorrow and so there will certainly be

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Speaker 7: an all hands on doc effort to figure out where

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Speaker 7: there's a little bit of give and take, because this

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Speaker 7: will ultimately have very significant price pressure, especially for hyperscalers

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Speaker 7: and data center build out.

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Speaker 4: Emily's all about bringing chip production back home. The thing

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Speaker 4: is the US is offshort that production to Asia since

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Speaker 4: the nineteen sixties. It doesn't have the ability the capacity

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Speaker 4: to do it, and it takes years to build new

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Speaker 4: chip fat.

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Speaker 7: That's absolutely right, with one exception, which is sort of

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Speaker 7: uncomfortable for people who don't really like the direction of

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Speaker 7: travel right now with US policy is that TSMC's production

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Speaker 7: facilities in Arizona are actually beating expectations, and so I

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Speaker 7: do think the Administration has been relatively clear eyed about

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Speaker 7: the timeline. That being said, they're willing to apply maximum

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Speaker 7: pressure to the likes of TSMC in order to expedite

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Speaker 7: what's already a very fast timeframe. Again, I do think

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Speaker 7: there will be carbau to extend the timeline of implementation.

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Speaker 7: If you talk to a lot of industry analysts, I

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Speaker 7: think the four to five to six year timeframe is

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Speaker 7: more medable for the industry. We also have to remember

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Speaker 7: that this will directly confront one of the administration's other

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Speaker 7: hallmark policies, and this was announced two weeks ago in

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Speaker 7: the AI Action Plan, And here the White House is

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Speaker 7: saying very publicly that it wants to prioritize AI build out,

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Speaker 7: it wants to double down on US infrastructure, and very interestingly,

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Speaker 7: it also wants to package a lot of that AI

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Speaker 7: tech stac into separate bundles that it can then export abroad.

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Speaker 7: It of course, will need affordable inputs at the baseline

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Speaker 7: in order to be able to export these packages and

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Speaker 7: very interested to see what the ultimate price impact is

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Speaker 7: on that particular corner of the administration's policy.

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Speaker 4: And emily some say it is about quantity, it's also

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Speaker 4: about quality. And when it comes to both of them,

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Speaker 4: Taiwan and self on subpause, what do you make off

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Speaker 4: perhaps equality and quantity that can be expected from the US.

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Speaker 7: Well, I'm glad you bring up our allies and partners

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Speaker 7: like time in Korea, but also the because a couple

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Speaker 7: of weeks ago and the lead up to the expiration

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Speaker 7: of the reciprocal tariff pause, the administration has entered into

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Speaker 7: these arrangements where foreign partners seem to be under the

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Speaker 7: assumption that they would only be subject to a fifteen

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Speaker 7: percent teriff freight, and that includes a lot of these

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Speaker 7: sectoral products like semi conductors. So one question will actually

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Speaker 7: be whether or not today's announcement induces further development on

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Speaker 7: shore by those countries, or whether or not we'll have

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Speaker 7: to explore further negotiations. I also will note that the

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Speaker 7: United States actually does not import a lot of semi

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Speaker 7: conductors directly. Most semi conductors actually enter the United States

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Speaker 7: in finished goods, so these are items like iPhones or laptops,

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Speaker 7: and so it'll be interesting to see how the administration

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Speaker 7: starts to calculate the actual value and whether or not

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Speaker 7: each finished item will be subject to that one hundred

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Speaker 7: percent tare free.

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Speaker 1: Emily all of this as we hurdle towards midterms, right,

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Speaker 1: and as someone who's worked within the comments deplopmentum within

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Speaker 1: sort of broader industrial and supply chain policy, how likely

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Speaker 1: or easy would it be for some of these policies

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Speaker 1: to be rolled back, particularly if you say that they're

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Speaker 1: negotiated carveouts that push the timeline out by half a

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Speaker 1: decade or more.

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Speaker 7: Well, trade is not top of mind for a lot

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Speaker 7: of voters. It typically comes in somewhere in the eight

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Speaker 7: to ninth police for priority voting issues. That being said,

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Speaker 7: in today's Apple announcement, for example, they've entered into a

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Speaker 7: bigger partnership with Corning Glass. Corning will increase its workforce

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Speaker 7: related to this one deal by fifty percent in the

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Speaker 7: state of Kentucky. So it's also possible that we do

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Speaker 7: see sizable job gains and very targeted that's, of course,

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Speaker 7: aside from possible job losses and others. But if we

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Speaker 7: start to see some economic movement. I definitely could foresee

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Speaker 7: it having some political consequences in the midterms.

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Speaker 2: Emily Benson, head of strategy of Minerver Technology Futures, speaking

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Speaker 2: with Bloomberg's Heidi Stroud Watts and Hustlinda Amen here on

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Speaker 2: the Bloomberg Daybreak Asia podcast.

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Speaker 8: Thanks for listening to today's episode of the Bloomberg Daybreak

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Speaker 8: Asia Edition podcast. Each weekday, we look at the story

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Speaker 8: shaping markets, finance, and geopolitics in the Asia Pacific. You

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Speaker 8: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

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Speaker 8: or anywhere else you listen. Join us again tomorrow for

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Speaker 8: insight on the market moves from Hong Kong to Singapore

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Speaker 8: and Australia. I'm Doug Prisoner and this is Bloomberg