Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the.
Speaker 3: Bloomberg Day BAC podcast, available every morning on Apple, Spotify
Speaker 3: or wherever you listen. It's Tuesday, the fourth of March.
Speaker 3: Here in London. I'm Caroline Hepka. Coming up today, the
Speaker 3: US on leashes a barrage of tariffs on goods from Canada, Mexico,
Speaker 3: and China. As Beijing and Toronto respond, President Trump halts
Speaker 3: US military aid to Ukraine in a bid to squeeze
Speaker 3: Zelinski Plus seeking safe harbor, stocks sell off and bonds rise.
Speaker 3: As Trader's Way, growing geopolitical risks, and the threat of
Speaker 3: tit for tat levees. Let's start with a roundup of
Speaker 3: our top stories. America has implemented the most sweeping tariffs
Speaker 3: yet of Donald Trump's presidency. Most goods entering the country
Speaker 3: from Canada and Mexico will now face a twenty five
Speaker 3: percent charge, while the tariff on Chinese goods has been
Speaker 3: doubled to twenty percent. Speaking at the White House, President
Speaker 3: Trump pitched the move as a way to bring more
Speaker 3: manufacturing back to the US.
Speaker 4: I would just say this to people in Canada or
Speaker 4: Mexico if they're going to build car plans to people
Speaker 4: that are doing them are much better off building here
Speaker 4: because we have the market with the market where they
Speaker 4: sell the most, and so I think it's going to
Speaker 4: be very exciting, very exciting for the automobile companies.
Speaker 3: President Trump's tariffs prompted swift retaliation from Canada and China,
Speaker 3: and may spur similar reprisals from Mexico. Beijing immediately announced
Speaker 3: that it would impose tariffs of up to fifteen percent
Speaker 3: on US exports, with a focus on farm, produce and
Speaker 3: defense firms. Speaking just ahead of the US tariffs coming
Speaker 3: into force, the Canadian Foreign Minister Melanie Jolie said the
Speaker 3: government was ready to go ahead with its retaliatory duties
Speaker 3: on one hundred and seven billion dollars of US products
Speaker 3: announced last month.
Speaker 5: We know that this is an existential threat to US
Speaker 5: and there.
Speaker 2: Are thousands of jobs in Canada at stake. Now we've done.
Speaker 1: The work we already should the US decide to launch their.
Speaker 3: Trade war, Canadian Foreign Minister Melanie Jolie, speaking there. The
Speaker 3: Bank of Canada has warned that a prolonged tariff war
Speaker 3: has the potential to decrease GDP by nearly three percent.
Speaker 3: Over two years and quote wipeout growth during that period. Separately,
Speaker 3: President job also announced that the US will impose tariffs
Speaker 3: on external agricultural products from the second of April. In
Speaker 3: a social media post, he wrote, to the great farmers
Speaker 3: of the United States, get ready to start making a
Speaker 3: lot of agricultural product to be sold inside of the
Speaker 3: United States. The President did not provide more detail on
Speaker 3: which products would be affected or if there would be
Speaker 3: any exceptions. The move comes just as US food ued
Speaker 3: imports of ballooned, with the country's agriculture trade deficit projected
Speaker 3: to hit a record forty nine billion dollars this year. Well,
Speaker 3: the decision to move forward with the tariffs has sparked
Speaker 3: a bearish mood of cross markets. Asian shares sank to
Speaker 3: their lowes sleven in a month, while the S and
Speaker 3: P five hundred suffered its worst sell of this year.
Speaker 3: The US index of leading shares fell one point eight
Speaker 3: percent on Monday, while a gauge of the magnificent seven
Speaker 3: megacap stocks sank by more than three percent. Joseph Lavornia
Speaker 3: was the chief economist of the White House National Economic
Speaker 3: Council during President Trump's first administration.
Speaker 5: The markets worried. It's understandable because the tariffs are significant,
Speaker 5: and in some ways they need to be. The President
Speaker 5: is serious about reindustrializing the US manufacturing base, and tariffs
Speaker 5: are a very important.
Speaker 6: Tool that will be used to do that.
Speaker 5: The markets also, I think we're not believing the President
Speaker 5: was serious with these tariffs. So today might just reflect
Speaker 5: the fact that for much I think of this year,
Speaker 5: there was thoughts that they would actually never be ablemented
Speaker 5: or be watered down. So I think today was really
Speaker 5: a reality check for many investors.
Speaker 3: Joseph Lavornia speaking there, as Wall Street's so called fear gauge,
Speaker 3: the Vics hit the highest since December. Markets are bracing
Speaker 3: for further volatility, with key events this week, including the
Speaker 3: National People's Congress meeting in China and a speech by
Speaker 3: President Trump to a joint session of Congress later today.
Speaker 3: President Trump has ordered a pause to all US military
Speaker 3: aid to Ukraine. A senior defense official told Bloomberg that
Speaker 3: America is now holding back equipment until Trump decides Ukraine's president,
Speaker 3: Vladomi Zelinski, is committed to peace. At a press conference,
Speaker 3: Trump was asked about his disastrous meeting with Ukraine's leader
Speaker 3: last week.
Speaker 4: He said he thinks there was going to go on
Speaker 4: for a long time, and he'd better not be right
Speaker 4: about that. That's all I'm saying.
Speaker 3: Trump's order applies to all American military equipment not currently
Speaker 3: in Ukraine, including weapons in transit across Europe. Allied officials
Speaker 3: have said that supplies of weapons are likely to last
Speaker 3: only until the summer. Meanwhile, Bloomberg has learned that European
Speaker 3: leaders believe Trump is trying to mount pressure on Zelinsky
Speaker 3: to apologize and to sign the minerals Agreement. The UK
Speaker 3: and France are privately urging Zelensky to repair relations with Trump,
Speaker 3: with one source saying Ukraine's leader may need to grovel
Speaker 3: because a simple apology to the US may not suffice.
Speaker 3: Speaking to his parliament, UK Prime Minister Kirstamer said the
Speaker 3: UK and US will lead from the front.
Speaker 2: Our two nations will work together on security arrangements for
Speaker 2: a lasting piece in Ukraine. I also welcome the President's
Speaker 2: continued commitment to that piece, which nobody in this House
Speaker 2: should doubt for a second is sincere.
Speaker 3: K leader also reassured parliamentarians that the US wouldn't be
Speaker 3: withdrawing military support for Ukraine. With America then doing so
Speaker 3: hours after he spoke. Defense related stocks rallied across the
Speaker 3: Asia Pacific region, with analysts saying that regional companies may
Speaker 3: benefit from increased demand from Europe. Those are a few
Speaker 3: of our top stories for you this morning. Let's look
Speaker 3: at the markets now, so it does look to be
Speaker 3: some pause, some suspension really, even though it does seem
Speaker 3: that maybe the global trade war has begun. US ecuity
Speaker 3: futures are actually up right now. We did have a
Speaker 3: sell off for the S and P five hundred yesterday,
Speaker 3: The SMP emais are up by two tenths of one percent.
Speaker 3: Yesterday the S and P five hundred posted its worst
Speaker 3: drop of twenty twenty five, falling by one point eight percent.
Speaker 3: This as we have seen Asian equity markets also down,
Speaker 3: but not significantly moving lower despite the retaliation that we
Speaker 3: have heard from China. The Shanghai and Shenzens are both
Speaker 3: in the green. The SX two hundred and Australia's down
Speaker 3: six tenths, the NICK dropping one point three percent, the
Speaker 3: MASCI Asia Pacific Index down three tenths of one percent.
Speaker 3: And then looking at the bond markets again as once
Speaker 3: the tariffs were actually implemented, there wasn't another big move
Speaker 3: in markets. Tenue US yields trading at four point fifteen,
Speaker 3: so actually barely moving right now. The Euro and sterling
Speaker 3: both end of the day up yesterday. This morning, the
Speaker 3: Bloomberg Dollar Spot index is actually flat. So those are
Speaker 3: the markets now. In a moment, we're going to bring
Speaker 3: you the latest around China imposing tariffs on the US
Speaker 3: after that barrage of tariffs that came into force only
Speaker 3: a few minutes ago, really from a President Donald Trump.
Speaker 3: But before we get to that conversation, something else caught
Speaker 3: my eye this morning. Input eras a near miss is
Speaker 3: at City Group are becoming a little bit more common.
Speaker 3: City Group almost transferred six billion dollars to a customer's
Speaker 3: account by accident. This was to a staff member's era.
Speaker 3: They copied and pasted the account number into the field
Speaker 3: for the dollar figure. Todd Gillespie at Bloomberger has been
Speaker 3: writing about this this morning, a City Group saying that
Speaker 3: it did promptly identify and corrected this inputting error, which
Speaker 3: had no impact to the bank or our client. According
Speaker 3: to Citygroup, this happened in April, the same month that
Speaker 3: another part of the bank accidentally credited eighty one trillion
Speaker 3: dollars to a different client. So the firm now having
Speaker 3: says it has set up a company wide tool to
Speaker 3: help vet these large, anomalous payments and transfers, according to
Speaker 3: people familiar with the matter, but even Matt Levine, our
Speaker 3: opinion colomist, was writing about this yesterday. Bank eraror in
Speaker 3: your favor does look like a city group, you know,
Speaker 3: still trying to battle fat fingers input errors. Anyway, it's
Speaker 3: a story that I read this morning and would recommend.
Speaker 3: Has imposed tarifs of up to fifteen percent on US goods,
Speaker 3: including soybeans and chicken, after the US double tariffs on
Speaker 3: Chinese imports in a barrage of measures from President Trump.
Speaker 3: The US rolled out tariffs are twenty five percent on
Speaker 3: nearly all imports from Canada and Mexico, with Canada responding.
Speaker 3: Bloomberg's Markets Life stashist Mark Cranfield joins me now to
Speaker 3: discuss Mark good morning instant reaction from Beijing, then to
Speaker 3: Trump tariffs. What do you make of the barrage of
Speaker 3: US tariffs and countermeasures?
Speaker 7: So, whether it's the tariffs that Donald Trump has imposed
Speaker 7: upon China, Canada, and Mexico and the reciprocation from Canada
Speaker 7: and China in return. Nothing really is out of line
Speaker 7: with what we've been hearing for the past few days anyway,
Speaker 7: which is partly explains why we have a fairly reach
Speaker 7: subdued response in markets. Possibly, trade ers are waiting for
Speaker 7: Donald Trump to address both Houses of Congress on Tuesday
Speaker 7: morning in America. That's when they may get to hear
Speaker 7: whether he wants to double down on this, whether he
Speaker 7: wants to really push the trade war further. So far,
Speaker 7: it's a bit of a tit for tat, but not
Speaker 7: really any much different to what investors had been expecting.
Speaker 7: So really they probably want to hear a bit more detail,
Speaker 7: particularly how Donald Trump is responding to the Chinese side.
Speaker 7: He did say he expected some form of agricultural tariffs
Speaker 7: from China. Let's see how he responds now that China
Speaker 7: have actually done that.
Speaker 3: Okay, So I suppose do you think that markets underestimated
Speaker 3: the possibility then of just this amount of trade protectionism,
Speaker 3: because we also don't expect it to end. There are
Speaker 3: you know, at least sort of three or four other
Speaker 3: possible measures coming out of the US in the coming weeks.
Speaker 3: On country by country tariffs and sector based tariffs too.
Speaker 7: I think to an extent investors that have been a
Speaker 7: little bit complacent on what was coming down the line.
Speaker 7: But more significantly where they've really been caught out is
Speaker 7: what's happening to the US economy. Already we're beginning to
Speaker 7: see signs of cracks. But if you saw consumer confidence
Speaker 7: numbers of crashing, other data is already suggesting that what
Speaker 7: the US government is doing under this administration is already
Speaker 7: starting to hurt confidence in the US economy regardless of
Speaker 7: what happens with the tariffs. And what we see now
Speaker 7: is that traders are pricing in for three interest rate
Speaker 7: cuts on the Federal Reserve this year. It was only
Speaker 7: pretty recently they were pricing for just one cut. So
Speaker 7: a significant change in investors outlook towards the US economy,
Speaker 7: which is being reflected in US markets. That's on top
Speaker 7: of anything related to terrorists, and that's a more immediate
Speaker 7: problem for investors. So that's really what's driving things in
Speaker 7: the very short term. Of course, if this becomes into
Speaker 7: a real tip for tat where America introduces more terrorists,
Speaker 7: other countries respond with more of their own, things can
Speaker 7: certainly spireal, but for now it's the weak US economic
Speaker 7: data and the effect it's having on the federal reserve.
Speaker 7: That's what's really worrying investors.
Speaker 3: Okay, Mark, thank you so much for being with me
Speaker 3: this morning. Put in Beggs Markets Live stash Is Mark Cranfield,
Speaker 3: thank you so much for your time on those tariffs. Well,
Speaker 3: now to Ukraine, because President Donald Trump ordered also a
Speaker 3: pause on all military aid to Ukraine, putting pressure on Vlodomisolinsky.
Speaker 3: A senior Defense Department official says that military assistants will
Speaker 3: be paused until Trump determines Ukraine's leader has demonstrated a
Speaker 3: good faith commitment to peace joining US. Now. Bloomberg's TV
Speaker 3: correspondent Oliver Quick, good morning. How big a setback is
Speaker 3: this for Zelensky and for Ukraine?
Speaker 6: Yeah, I mean, listen, given what we saw on Friday,
Speaker 6: in the kind of fallout that we saw after that
Speaker 6: disastrous press conference interaction on Friday between Zelenski, Vans and Trump,
Speaker 6: you know, it's not totally unexpected. But again, this is
Speaker 6: going to be one of the major step This is
Speaker 6: we all know, and Zelenski has said it many times
Speaker 6: in the past that basically he is completely dependent on
Speaker 6: the United States in order to continue his battle against
Speaker 6: Russia in order to have any sort of lasting ceasefire
Speaker 6: with the Russia. So in the absence of this military aid,
Speaker 6: and now it has we understand again according to people
Speaker 6: familiar that it has been pause. That means that all
Speaker 6: military gear that is on its way to Ukraine on planes,
Speaker 6: that is waiting for a deposit within Poland, all of
Speaker 6: that is going to be paused. And there's also a
Speaker 6: large sort of quantity of funding that was already sort
Speaker 6: of inherited by Trump from Biden about four billion dollars,
Speaker 6: that too is going to be paused. And again we're
Speaker 6: expecting to get more actual details from this from Donald
Speaker 6: Trump today in a speech that'll be I think at
Speaker 6: around one am UK time. But again this is you know,
Speaker 6: the Europeans could still buy some of this kit from
Speaker 6: the United States to send over to Ukraine. But if
Speaker 6: the United States decides to really turn the screws, they
Speaker 6: can put a halt on selling this equipment. They could
Speaker 6: put a halt on some of the operational requirements in
Speaker 6: order to actually be able to enlist us in the field.
Speaker 6: And again this is all sort of part of the
Speaker 6: sort of broader dynamic that we've been seeing where it's
Speaker 6: going to be very hard to make any progress if Ukraine, Europe,
Speaker 6: and the United States cannot inhabit a common reality about
Speaker 6: what is going on in Ukraine, Russia as aggressor Ukraine's victim.
Speaker 3: What does this mean then for Europe, the UK and
Speaker 3: France trying to take the lead here.
Speaker 6: Yeah, so listen, they're trying their diplomatic efforts. I think
Speaker 6: they sort of would try as much as they could,
Speaker 6: and they sort of had some success, it seemed, in
Speaker 6: charming Donald Trump. But at the end of the day,
Speaker 6: you know, it's what's signed on the dotted line. It's
Speaker 6: all the dollars and cents for Donald Trump. And the
Speaker 6: question is, you know, what leverage do they have right
Speaker 6: now at all? So they're sort of drawing up different proposals.
Speaker 6: It was a story out in the FT overnight saying
Speaker 6: that basically they'd be looking at basically taking the Russian
Speaker 6: frozen assets potentially is using that as a guarantee in
Speaker 6: case a ceasefire is broken. And again, what they're trying
Speaker 6: to do now is get in place an architecture to
Speaker 6: potentially get a ceasefire proposal, to put that to Trump
Speaker 6: and Zelensky in order to just sort of pause things
Speaker 6: which would give Trump a win in order to negotiate
Speaker 6: that longer standing kind of ceasefire and end to the war,
Speaker 6: the just piece that Zelenski is looking for. But again
Speaker 6: this comes back to this fundamental issue. If you do
Speaker 6: not have this sort of common reality where you know,
Speaker 6: Trump and Europe can get on the same page about
Speaker 6: who is sort of at fault here, it's going to
Speaker 6: be very difficult to make a sort of final agreement
Speaker 6: where everybody is happy. And of course this says nothing
Speaker 6: of the fact of the sort of bigger question for Europe,
Speaker 6: which is how strong are NATO security guarantees for Europe
Speaker 6: More broadly.
Speaker 3: Yeah, it's also prompting and rethink in other parts of
Speaker 3: the world, namely Taiwan.
Speaker 6: Yeah, and it was sort of very interesting we heard
Speaker 6: from the Taiwanese Defence Minister and this is a direct
Speaker 6: quote saying we have deeply recognized that one cannot discuss
Speaker 6: values without also addressing national interest, right. And we say
Speaker 6: this with Trump giving a press conference yesterday with the
Speaker 6: TSMC CEO. TSMC has just said that they'll build a
Speaker 6: plant or commit one hundred billion dollars worth of investment
Speaker 6: into the United States. So from Taiwan's perspective, maybe that
Speaker 6: buys you something. But the question with Trump now always
Speaker 6: is what does it buy you and for how long?
Speaker 6: And this is the new foreign policy of the United States.
Speaker 6: We see this with tariffs. Whenever you put the sort
Speaker 6: of tariffs up, if Canada or Mexico complies, their main
Speaker 6: question is going to be, Okay, what happens in two
Speaker 6: months and three months? What if they want to extract
Speaker 6: something more from it? And that is the new reality
Speaker 6: for many of these American allies who are increasingly being
Speaker 6: treated not necessarily as enemies, but just as anybody else.
Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the
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