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

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Speaker 2: This is the.

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Speaker 3: Bloomberg Day BAC podcast, available every morning on Apple, Spotify

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Speaker 3: or wherever you listen. It's Tuesday, the fourth of March.

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Speaker 3: Here in London. I'm Caroline Hepka. Coming up today, the

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Speaker 3: US on leashes a barrage of tariffs on goods from Canada, Mexico,

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Speaker 3: and China. As Beijing and Toronto respond, President Trump halts

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Speaker 3: US military aid to Ukraine in a bid to squeeze

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Speaker 3: Zelinski Plus seeking safe harbor, stocks sell off and bonds rise.

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Speaker 3: As Trader's Way, growing geopolitical risks, and the threat of

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Speaker 3: tit for tat levees. Let's start with a roundup of

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Speaker 3: our top stories. America has implemented the most sweeping tariffs

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Speaker 3: yet of Donald Trump's presidency. Most goods entering the country

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Speaker 3: from Canada and Mexico will now face a twenty five

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Speaker 3: percent charge, while the tariff on Chinese goods has been

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Speaker 3: doubled to twenty percent. Speaking at the White House, President

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Speaker 3: Trump pitched the move as a way to bring more

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Speaker 3: manufacturing back to the US.

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Speaker 4: I would just say this to people in Canada or

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Speaker 4: Mexico if they're going to build car plans to people

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Speaker 4: that are doing them are much better off building here

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Speaker 4: because we have the market with the market where they

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Speaker 4: sell the most, and so I think it's going to

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Speaker 4: be very exciting, very exciting for the automobile companies.

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Speaker 3: President Trump's tariffs prompted swift retaliation from Canada and China,

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Speaker 3: and may spur similar reprisals from Mexico. Beijing immediately announced

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Speaker 3: that it would impose tariffs of up to fifteen percent

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Speaker 3: on US exports, with a focus on farm, produce and

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Speaker 3: defense firms. Speaking just ahead of the US tariffs coming

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Speaker 3: into force, the Canadian Foreign Minister Melanie Jolie said the

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Speaker 3: government was ready to go ahead with its retaliatory duties

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Speaker 3: on one hundred and seven billion dollars of US products

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Speaker 3: announced last month.

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Speaker 5: We know that this is an existential threat to US

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Speaker 5: and there.

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Speaker 2: Are thousands of jobs in Canada at stake. Now we've done.

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Speaker 1: The work we already should the US decide to launch their.

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Speaker 3: Trade war, Canadian Foreign Minister Melanie Jolie, speaking there. The

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Speaker 3: Bank of Canada has warned that a prolonged tariff war

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Speaker 3: has the potential to decrease GDP by nearly three percent.

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Speaker 3: Over two years and quote wipeout growth during that period. Separately,

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Speaker 3: President job also announced that the US will impose tariffs

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Speaker 3: on external agricultural products from the second of April. In

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Speaker 3: a social media post, he wrote, to the great farmers

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Speaker 3: of the United States, get ready to start making a

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Speaker 3: lot of agricultural product to be sold inside of the

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Speaker 3: United States. The President did not provide more detail on

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Speaker 3: which products would be affected or if there would be

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Speaker 3: any exceptions. The move comes just as US food ued

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Speaker 3: imports of ballooned, with the country's agriculture trade deficit projected

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Speaker 3: to hit a record forty nine billion dollars this year. Well,

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Speaker 3: the decision to move forward with the tariffs has sparked

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Speaker 3: a bearish mood of cross markets. Asian shares sank to

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Speaker 3: their lowes sleven in a month, while the S and

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Speaker 3: P five hundred suffered its worst sell of this year.

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Speaker 3: The US index of leading shares fell one point eight

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Speaker 3: percent on Monday, while a gauge of the magnificent seven

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Speaker 3: megacap stocks sank by more than three percent. Joseph Lavornia

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Speaker 3: was the chief economist of the White House National Economic

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Speaker 3: Council during President Trump's first administration.

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Speaker 5: The markets worried. It's understandable because the tariffs are significant,

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Speaker 5: and in some ways they need to be. The President

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Speaker 5: is serious about reindustrializing the US manufacturing base, and tariffs

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Speaker 5: are a very important.

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Speaker 6: Tool that will be used to do that.

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Speaker 5: The markets also, I think we're not believing the President

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Speaker 5: was serious with these tariffs. So today might just reflect

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Speaker 5: the fact that for much I think of this year,

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Speaker 5: there was thoughts that they would actually never be ablemented

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Speaker 5: or be watered down. So I think today was really

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Speaker 5: a reality check for many investors.

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Speaker 3: Joseph Lavornia speaking there, as Wall Street's so called fear gauge,

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Speaker 3: the Vics hit the highest since December. Markets are bracing

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Speaker 3: for further volatility, with key events this week, including the

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Speaker 3: National People's Congress meeting in China and a speech by

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Speaker 3: President Trump to a joint session of Congress later today.

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Speaker 3: President Trump has ordered a pause to all US military

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Speaker 3: aid to Ukraine. A senior defense official told Bloomberg that

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Speaker 3: America is now holding back equipment until Trump decides Ukraine's president,

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Speaker 3: Vladomi Zelinski, is committed to peace. At a press conference,

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Speaker 3: Trump was asked about his disastrous meeting with Ukraine's leader

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Speaker 3: last week.

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Speaker 4: He said he thinks there was going to go on

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Speaker 4: for a long time, and he'd better not be right

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Speaker 4: about that. That's all I'm saying.

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Speaker 3: Trump's order applies to all American military equipment not currently

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Speaker 3: in Ukraine, including weapons in transit across Europe. Allied officials

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Speaker 3: have said that supplies of weapons are likely to last

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Speaker 3: only until the summer. Meanwhile, Bloomberg has learned that European

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Speaker 3: leaders believe Trump is trying to mount pressure on Zelinsky

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Speaker 3: to apologize and to sign the minerals Agreement. The UK

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Speaker 3: and France are privately urging Zelensky to repair relations with Trump,

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Speaker 3: with one source saying Ukraine's leader may need to grovel

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Speaker 3: because a simple apology to the US may not suffice.

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Speaker 3: Speaking to his parliament, UK Prime Minister Kirstamer said the

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Speaker 3: UK and US will lead from the front.

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Speaker 2: Our two nations will work together on security arrangements for

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Speaker 2: a lasting piece in Ukraine. I also welcome the President's

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Speaker 2: continued commitment to that piece, which nobody in this House

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Speaker 2: should doubt for a second is sincere.

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Speaker 3: K leader also reassured parliamentarians that the US wouldn't be

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Speaker 3: withdrawing military support for Ukraine. With America then doing so

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Speaker 3: hours after he spoke. Defense related stocks rallied across the

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Speaker 3: Asia Pacific region, with analysts saying that regional companies may

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Speaker 3: benefit from increased demand from Europe. Those are a few

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Speaker 3: of our top stories for you this morning. Let's look

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Speaker 3: at the markets now, so it does look to be

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Speaker 3: some pause, some suspension really, even though it does seem

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Speaker 3: that maybe the global trade war has begun. US ecuity

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Speaker 3: futures are actually up right now. We did have a

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Speaker 3: sell off for the S and P five hundred yesterday,

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Speaker 3: The SMP emais are up by two tenths of one percent.

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Speaker 3: Yesterday the S and P five hundred posted its worst

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Speaker 3: drop of twenty twenty five, falling by one point eight percent.

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Speaker 3: This as we have seen Asian equity markets also down,

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Speaker 3: but not significantly moving lower despite the retaliation that we

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Speaker 3: have heard from China. The Shanghai and Shenzens are both

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Speaker 3: in the green. The SX two hundred and Australia's down

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Speaker 3: six tenths, the NICK dropping one point three percent, the

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Speaker 3: MASCI Asia Pacific Index down three tenths of one percent.

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Speaker 3: And then looking at the bond markets again as once

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Speaker 3: the tariffs were actually implemented, there wasn't another big move

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Speaker 3: in markets. Tenue US yields trading at four point fifteen,

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Speaker 3: so actually barely moving right now. The Euro and sterling

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Speaker 3: both end of the day up yesterday. This morning, the

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Speaker 3: Bloomberg Dollar Spot index is actually flat. So those are

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Speaker 3: the markets now. In a moment, we're going to bring

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Speaker 3: you the latest around China imposing tariffs on the US

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Speaker 3: after that barrage of tariffs that came into force only

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Speaker 3: a few minutes ago, really from a President Donald Trump.

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Speaker 3: But before we get to that conversation, something else caught

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Speaker 3: my eye this morning. Input eras a near miss is

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Speaker 3: at City Group are becoming a little bit more common.

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Speaker 3: City Group almost transferred six billion dollars to a customer's

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Speaker 3: account by accident. This was to a staff member's era.

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Speaker 3: They copied and pasted the account number into the field

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Speaker 3: for the dollar figure. Todd Gillespie at Bloomberger has been

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Speaker 3: writing about this this morning, a City Group saying that

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Speaker 3: it did promptly identify and corrected this inputting error, which

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Speaker 3: had no impact to the bank or our client. According

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Speaker 3: to Citygroup, this happened in April, the same month that

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Speaker 3: another part of the bank accidentally credited eighty one trillion

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Speaker 3: dollars to a different client. So the firm now having

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Speaker 3: says it has set up a company wide tool to

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Speaker 3: help vet these large, anomalous payments and transfers, according to

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Speaker 3: people familiar with the matter, but even Matt Levine, our

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Speaker 3: opinion colomist, was writing about this yesterday. Bank eraror in

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Speaker 3: your favor does look like a city group, you know,

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Speaker 3: still trying to battle fat fingers input errors. Anyway, it's

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Speaker 3: a story that I read this morning and would recommend.

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Speaker 3: Has imposed tarifs of up to fifteen percent on US goods,

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Speaker 3: including soybeans and chicken, after the US double tariffs on

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Speaker 3: Chinese imports in a barrage of measures from President Trump.

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Speaker 3: The US rolled out tariffs are twenty five percent on

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Speaker 3: nearly all imports from Canada and Mexico, with Canada responding.

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Speaker 3: Bloomberg's Markets Life stashist Mark Cranfield joins me now to

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Speaker 3: discuss Mark good morning instant reaction from Beijing, then to

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Speaker 3: Trump tariffs. What do you make of the barrage of

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Speaker 3: US tariffs and countermeasures?

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Speaker 7: So, whether it's the tariffs that Donald Trump has imposed

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Speaker 7: upon China, Canada, and Mexico and the reciprocation from Canada

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Speaker 7: and China in return. Nothing really is out of line

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Speaker 7: with what we've been hearing for the past few days anyway,

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Speaker 7: which is partly explains why we have a fairly reach

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Speaker 7: subdued response in markets. Possibly, trade ers are waiting for

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Speaker 7: Donald Trump to address both Houses of Congress on Tuesday

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Speaker 7: morning in America. That's when they may get to hear

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Speaker 7: whether he wants to double down on this, whether he

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Speaker 7: wants to really push the trade war further. So far,

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Speaker 7: it's a bit of a tit for tat, but not

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Speaker 7: really any much different to what investors had been expecting.

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Speaker 7: So really they probably want to hear a bit more detail,

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Speaker 7: particularly how Donald Trump is responding to the Chinese side.

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Speaker 7: He did say he expected some form of agricultural tariffs

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Speaker 7: from China. Let's see how he responds now that China

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Speaker 7: have actually done that.

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Speaker 3: Okay, So I suppose do you think that markets underestimated

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Speaker 3: the possibility then of just this amount of trade protectionism,

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Speaker 3: because we also don't expect it to end. There are

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Speaker 3: you know, at least sort of three or four other

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Speaker 3: possible measures coming out of the US in the coming weeks.

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Speaker 3: On country by country tariffs and sector based tariffs too.

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Speaker 7: I think to an extent investors that have been a

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Speaker 7: little bit complacent on what was coming down the line.

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Speaker 7: But more significantly where they've really been caught out is

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Speaker 7: what's happening to the US economy. Already we're beginning to

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Speaker 7: see signs of cracks. But if you saw consumer confidence

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Speaker 7: numbers of crashing, other data is already suggesting that what

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Speaker 7: the US government is doing under this administration is already

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Speaker 7: starting to hurt confidence in the US economy regardless of

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Speaker 7: what happens with the tariffs. And what we see now

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Speaker 7: is that traders are pricing in for three interest rate

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Speaker 7: cuts on the Federal Reserve this year. It was only

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Speaker 7: pretty recently they were pricing for just one cut. So

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Speaker 7: a significant change in investors outlook towards the US economy,

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Speaker 7: which is being reflected in US markets. That's on top

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Speaker 7: of anything related to terrorists, and that's a more immediate

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Speaker 7: problem for investors. So that's really what's driving things in

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Speaker 7: the very short term. Of course, if this becomes into

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Speaker 7: a real tip for tat where America introduces more terrorists,

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Speaker 7: other countries respond with more of their own, things can

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Speaker 7: certainly spireal, but for now it's the weak US economic

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Speaker 7: data and the effect it's having on the federal reserve.

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Speaker 7: That's what's really worrying investors.

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Speaker 3: Okay, Mark, thank you so much for being with me

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Speaker 3: this morning. Put in Beggs Markets Live stash Is Mark Cranfield,

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Speaker 3: thank you so much for your time on those tariffs. Well,

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Speaker 3: now to Ukraine, because President Donald Trump ordered also a

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Speaker 3: pause on all military aid to Ukraine, putting pressure on Vlodomisolinsky.

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Speaker 3: A senior Defense Department official says that military assistants will

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Speaker 3: be paused until Trump determines Ukraine's leader has demonstrated a

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Speaker 3: good faith commitment to peace joining US. Now. Bloomberg's TV

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Speaker 3: correspondent Oliver Quick, good morning. How big a setback is

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Speaker 3: this for Zelensky and for Ukraine?

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Speaker 6: Yeah, I mean, listen, given what we saw on Friday,

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Speaker 6: in the kind of fallout that we saw after that

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Speaker 6: disastrous press conference interaction on Friday between Zelenski, Vans and Trump,

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Speaker 6: you know, it's not totally unexpected. But again, this is

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Speaker 6: going to be one of the major step This is

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Speaker 6: we all know, and Zelenski has said it many times

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Speaker 6: in the past that basically he is completely dependent on

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Speaker 6: the United States in order to continue his battle against

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Speaker 6: Russia in order to have any sort of lasting ceasefire

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Speaker 6: with the Russia. So in the absence of this military aid,

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Speaker 6: and now it has we understand again according to people

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Speaker 6: familiar that it has been pause. That means that all

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Speaker 6: military gear that is on its way to Ukraine on planes,

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Speaker 6: that is waiting for a deposit within Poland, all of

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Speaker 6: that is going to be paused. And there's also a

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Speaker 6: large sort of quantity of funding that was already sort

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Speaker 6: of inherited by Trump from Biden about four billion dollars,

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Speaker 6: that too is going to be paused. And again we're

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Speaker 6: expecting to get more actual details from this from Donald

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Speaker 6: Trump today in a speech that'll be I think at

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Speaker 6: around one am UK time. But again this is you know,

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Speaker 6: the Europeans could still buy some of this kit from

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Speaker 6: the United States to send over to Ukraine. But if

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Speaker 6: the United States decides to really turn the screws, they

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Speaker 6: can put a halt on selling this equipment. They could

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Speaker 6: put a halt on some of the operational requirements in

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Speaker 6: order to actually be able to enlist us in the field.

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Speaker 6: And again this is all sort of part of the

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Speaker 6: sort of broader dynamic that we've been seeing where it's

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Speaker 6: going to be very hard to make any progress if Ukraine, Europe,

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Speaker 6: and the United States cannot inhabit a common reality about

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Speaker 6: what is going on in Ukraine, Russia as aggressor Ukraine's victim.

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Speaker 3: What does this mean then for Europe, the UK and

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Speaker 3: France trying to take the lead here.

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Speaker 6: Yeah, so listen, they're trying their diplomatic efforts. I think

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Speaker 6: they sort of would try as much as they could,

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Speaker 6: and they sort of had some success, it seemed, in

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Speaker 6: charming Donald Trump. But at the end of the day,

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Speaker 6: you know, it's what's signed on the dotted line. It's

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Speaker 6: all the dollars and cents for Donald Trump. And the

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Speaker 6: question is, you know, what leverage do they have right

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Speaker 6: now at all? So they're sort of drawing up different proposals.

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Speaker 6: It was a story out in the FT overnight saying

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Speaker 6: that basically they'd be looking at basically taking the Russian

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Speaker 6: frozen assets potentially is using that as a guarantee in

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Speaker 6: case a ceasefire is broken. And again, what they're trying

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Speaker 6: to do now is get in place an architecture to

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Speaker 6: potentially get a ceasefire proposal, to put that to Trump

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Speaker 6: and Zelensky in order to just sort of pause things

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Speaker 6: which would give Trump a win in order to negotiate

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Speaker 6: that longer standing kind of ceasefire and end to the war,

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Speaker 6: the just piece that Zelenski is looking for. But again

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Speaker 6: this comes back to this fundamental issue. If you do

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Speaker 6: not have this sort of common reality where you know,

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Speaker 6: Trump and Europe can get on the same page about

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Speaker 6: who is sort of at fault here, it's going to

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Speaker 6: be very difficult to make a sort of final agreement

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Speaker 6: where everybody is happy. And of course this says nothing

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Speaker 6: of the fact of the sort of bigger question for Europe,

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Speaker 6: which is how strong are NATO security guarantees for Europe

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Speaker 6: More broadly.

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Speaker 3: Yeah, it's also prompting and rethink in other parts of

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Speaker 3: the world, namely Taiwan.

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Speaker 6: Yeah, and it was sort of very interesting we heard

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Speaker 6: from the Taiwanese Defence Minister and this is a direct

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Speaker 6: quote saying we have deeply recognized that one cannot discuss

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Speaker 6: values without also addressing national interest, right. And we say

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Speaker 6: this with Trump giving a press conference yesterday with the

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Speaker 6: TSMC CEO. TSMC has just said that they'll build a

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Speaker 6: plant or commit one hundred billion dollars worth of investment

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Speaker 6: into the United States. So from Taiwan's perspective, maybe that

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Speaker 6: buys you something. But the question with Trump now always

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Speaker 6: is what does it buy you and for how long?

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Speaker 6: And this is the new foreign policy of the United States.

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Speaker 6: We see this with tariffs. Whenever you put the sort

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Speaker 6: of tariffs up, if Canada or Mexico complies, their main

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Speaker 6: question is going to be, Okay, what happens in two

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Speaker 6: months and three months? What if they want to extract

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Speaker 6: something more from it? And that is the new reality

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Speaker 6: for many of these American allies who are increasingly being

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Speaker 6: treated not necessarily as enemies, but just as anybody else.

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