WEBVTT - Trump Tariffs Take Effect, China Retaliates & US Pauses Ukraine Aid

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

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<v Speaker 2>This is the.

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<v Speaker 3>Bloomberg Day BAC podcast, available every morning on Apple, Spotify

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

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

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<v Speaker 3>US on leashes a barrage of tariffs on goods from Canada, Mexico,

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<v Speaker 3>and China. As Beijing and Toronto respond, President Trump halts

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<v Speaker 3>US military aid to Ukraine in a bid to squeeze

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<v Speaker 3>Zelinski Plus seeking safe harbor, stocks sell off and bonds rise.

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<v Speaker 3>As Trader's Way, growing geopolitical risks, and the threat of

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<v Speaker 3>tit for tat levees. Let's start with a roundup of

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<v Speaker 3>our top stories. America has implemented the most sweeping tariffs

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<v Speaker 3>yet of Donald Trump's presidency. Most goods entering the country

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<v Speaker 3>from Canada and Mexico will now face a twenty five

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<v Speaker 3>percent charge, while the tariff on Chinese goods has been

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<v Speaker 3>doubled to twenty percent. Speaking at the White House, President

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<v Speaker 3>Trump pitched the move as a way to bring more

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<v Speaker 3>manufacturing back to the US.

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<v Speaker 4>I would just say this to people in Canada or

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<v Speaker 4>Mexico if they're going to build car plans to people

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<v Speaker 4>that are doing them are much better off building here

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<v Speaker 4>because we have the market with the market where they

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<v Speaker 4>sell the most, and so I think it's going to

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<v Speaker 4>be very exciting, very exciting for the automobile companies.

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<v Speaker 3>President Trump's tariffs prompted swift retaliation from Canada and China,

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<v Speaker 3>and may spur similar reprisals from Mexico. Beijing immediately announced

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<v Speaker 3>that it would impose tariffs of up to fifteen percent

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<v Speaker 3>on US exports, with a focus on farm, produce and

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<v Speaker 3>defense firms. Speaking just ahead of the US tariffs coming

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<v Speaker 3>into force, the Canadian Foreign Minister Melanie Jolie said the

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<v Speaker 3>government was ready to go ahead with its retaliatory duties

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<v Speaker 3>on one hundred and seven billion dollars of US products

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<v Speaker 3>announced last month.

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<v Speaker 5>We know that this is an existential threat to US

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<v Speaker 5>and there.

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

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<v Speaker 1>The work we already should the US decide to launch their.

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<v Speaker 3>Trade war, Canadian Foreign Minister Melanie Jolie, speaking there. The

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<v Speaker 3>Bank of Canada has warned that a prolonged tariff war

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<v Speaker 3>has the potential to decrease GDP by nearly three percent.

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<v Speaker 3>Over two years and quote wipeout growth during that period. Separately,

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<v Speaker 3>President job also announced that the US will impose tariffs

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<v Speaker 3>on external agricultural products from the second of April. In

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<v Speaker 3>a social media post, he wrote, to the great farmers

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<v Speaker 3>of the United States, get ready to start making a

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<v Speaker 3>lot of agricultural product to be sold inside of the

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<v Speaker 3>United States. The President did not provide more detail on

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<v Speaker 3>which products would be affected or if there would be

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<v Speaker 3>any exceptions. The move comes just as US food ued

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<v Speaker 3>imports of ballooned, with the country's agriculture trade deficit projected

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<v Speaker 3>to hit a record forty nine billion dollars this year. Well,

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<v Speaker 3>the decision to move forward with the tariffs has sparked

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<v Speaker 3>a bearish mood of cross markets. Asian shares sank to

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<v Speaker 3>their lowes sleven in a month, while the S and

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<v Speaker 3>P five hundred suffered its worst sell of this year.

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<v Speaker 3>The US index of leading shares fell one point eight

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<v Speaker 3>percent on Monday, while a gauge of the magnificent seven

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<v Speaker 3>megacap stocks sank by more than three percent. Joseph Lavornia

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<v Speaker 3>was the chief economist of the White House National Economic

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<v Speaker 3>Council during President Trump's first administration.

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

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<v Speaker 5>and in some ways they need to be. The President

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<v Speaker 5>is serious about reindustrializing the US manufacturing base, and tariffs

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<v Speaker 5>are a very important.

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<v Speaker 6>Tool that will be used to do that.

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<v Speaker 5>The markets also, I think we're not believing the President

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<v Speaker 5>was serious with these tariffs. So today might just reflect

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<v Speaker 5>the fact that for much I think of this year,

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<v Speaker 5>there was thoughts that they would actually never be ablemented

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<v Speaker 5>or be watered down. So I think today was really

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<v Speaker 5>a reality check for many investors.

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

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<v Speaker 3>the Vics hit the highest since December. Markets are bracing

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<v Speaker 3>for further volatility, with key events this week, including the

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<v Speaker 3>National People's Congress meeting in China and a speech by

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<v Speaker 3>President Trump to a joint session of Congress later today.

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<v Speaker 3>President Trump has ordered a pause to all US military

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<v Speaker 3>aid to Ukraine. A senior defense official told Bloomberg that

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

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<v Speaker 3>Vladomi Zelinski, is committed to peace. At a press conference,

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<v Speaker 3>Trump was asked about his disastrous meeting with Ukraine's leader

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<v Speaker 3>last week.

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<v Speaker 4>He said he thinks there was going to go on

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<v Speaker 4>for a long time, and he'd better not be right

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<v Speaker 4>about that. That's all I'm saying.

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<v Speaker 3>Trump's order applies to all American military equipment not currently

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<v Speaker 3>in Ukraine, including weapons in transit across Europe. Allied officials

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<v Speaker 3>have said that supplies of weapons are likely to last

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<v Speaker 3>only until the summer. Meanwhile, Bloomberg has learned that European

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<v Speaker 3>leaders believe Trump is trying to mount pressure on Zelinsky

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<v Speaker 3>to apologize and to sign the minerals Agreement. The UK

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<v Speaker 3>and France are privately urging Zelensky to repair relations with Trump,

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<v Speaker 3>with one source saying Ukraine's leader may need to grovel

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<v Speaker 3>because a simple apology to the US may not suffice.

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<v Speaker 3>Speaking to his parliament, UK Prime Minister Kirstamer said the

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<v Speaker 3>UK and US will lead from the front.

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<v Speaker 2>Our two nations will work together on security arrangements for

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<v Speaker 2>a lasting piece in Ukraine. I also welcome the President's

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<v Speaker 2>continued commitment to that piece, which nobody in this House

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<v Speaker 2>should doubt for a second is sincere.

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<v Speaker 3>K leader also reassured parliamentarians that the US wouldn't be

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<v Speaker 3>withdrawing military support for Ukraine. With America then doing so

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<v Speaker 3>hours after he spoke. Defense related stocks rallied across the

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<v Speaker 3>Asia Pacific region, with analysts saying that regional companies may

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<v Speaker 3>benefit from increased demand from Europe. Those are a few

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<v Speaker 3>of our top stories for you this morning. Let's look

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<v Speaker 3>at the markets now, so it does look to be

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<v Speaker 3>some pause, some suspension really, even though it does seem

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<v Speaker 3>that maybe the global trade war has begun. US ecuity

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<v Speaker 3>futures are actually up right now. We did have a

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<v Speaker 3>sell off for the S and P five hundred yesterday,

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<v Speaker 3>The SMP emais are up by two tenths of one percent.

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<v Speaker 3>Yesterday the S and P five hundred posted its worst

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<v Speaker 3>drop of twenty twenty five, falling by one point eight percent.

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<v Speaker 3>This as we have seen Asian equity markets also down,

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<v Speaker 3>but not significantly moving lower despite the retaliation that we

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<v Speaker 3>have heard from China. The Shanghai and Shenzens are both

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<v Speaker 3>in the green. The SX two hundred and Australia's down

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<v Speaker 3>six tenths, the NICK dropping one point three percent, the

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<v Speaker 3>MASCI Asia Pacific Index down three tenths of one percent.

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<v Speaker 3>And then looking at the bond markets again as once

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<v Speaker 3>the tariffs were actually implemented, there wasn't another big move

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<v Speaker 3>in markets. Tenue US yields trading at four point fifteen,

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<v Speaker 3>so actually barely moving right now. The Euro and sterling

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<v Speaker 3>both end of the day up yesterday. This morning, the

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<v Speaker 3>Bloomberg Dollar Spot index is actually flat. So those are

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

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<v Speaker 3>you the latest around China imposing tariffs on the US

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<v Speaker 3>after that barrage of tariffs that came into force only

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<v Speaker 3>a few minutes ago, really from a President Donald Trump.

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<v Speaker 3>But before we get to that conversation, something else caught

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<v Speaker 3>my eye this morning. Input eras a near miss is

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<v Speaker 3>at City Group are becoming a little bit more common.

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<v Speaker 3>City Group almost transferred six billion dollars to a customer's

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<v Speaker 3>account by accident. This was to a staff member's era.

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<v Speaker 3>They copied and pasted the account number into the field

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<v Speaker 3>for the dollar figure. Todd Gillespie at Bloomberger has been

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<v Speaker 3>writing about this this morning, a City Group saying that

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<v Speaker 3>it did promptly identify and corrected this inputting error, which

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<v Speaker 3>had no impact to the bank or our client. According

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<v Speaker 3>to Citygroup, this happened in April, the same month that

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<v Speaker 3>another part of the bank accidentally credited eighty one trillion

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<v Speaker 3>dollars to a different client. So the firm now having

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<v Speaker 3>says it has set up a company wide tool to

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<v Speaker 3>help vet these large, anomalous payments and transfers, according to

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<v Speaker 3>people familiar with the matter, but even Matt Levine, our

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<v Speaker 3>opinion colomist, was writing about this yesterday. Bank eraror in

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<v Speaker 3>your favor does look like a city group, you know,

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

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<v Speaker 3>a story that I read this morning and would recommend.

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<v Speaker 3>Has imposed tarifs of up to fifteen percent on US goods,

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<v Speaker 3>including soybeans and chicken, after the US double tariffs on

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<v Speaker 3>Chinese imports in a barrage of measures from President Trump.

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<v Speaker 3>The US rolled out tariffs are twenty five percent on

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<v Speaker 3>nearly all imports from Canada and Mexico, with Canada responding.

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<v Speaker 3>Bloomberg's Markets Life stashist Mark Cranfield joins me now to

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<v Speaker 3>discuss Mark good morning instant reaction from Beijing, then to

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<v Speaker 3>Trump tariffs. What do you make of the barrage of

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<v Speaker 3>US tariffs and countermeasures?

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<v Speaker 7>So, whether it's the tariffs that Donald Trump has imposed

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<v Speaker 7>upon China, Canada, and Mexico and the reciprocation from Canada

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<v Speaker 7>and China in return. Nothing really is out of line

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

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<v Speaker 7>which is partly explains why we have a fairly reach

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<v Speaker 7>subdued response in markets. Possibly, trade ers are waiting for

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<v Speaker 7>Donald Trump to address both Houses of Congress on Tuesday

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<v Speaker 7>morning in America. That's when they may get to hear

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<v Speaker 7>whether he wants to double down on this, whether he

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<v Speaker 7>wants to really push the trade war further. So far,

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<v Speaker 7>it's a bit of a tit for tat, but not

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<v Speaker 7>really any much different to what investors had been expecting.

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<v Speaker 7>So really they probably want to hear a bit more detail,

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<v Speaker 7>particularly how Donald Trump is responding to the Chinese side.

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<v Speaker 7>He did say he expected some form of agricultural tariffs

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<v Speaker 7>from China. Let's see how he responds now that China

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<v Speaker 7>have actually done that.

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<v Speaker 3>Okay, So I suppose do you think that markets underestimated

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<v Speaker 3>the possibility then of just this amount of trade protectionism,

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<v Speaker 3>because we also don't expect it to end. There are

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<v Speaker 3>you know, at least sort of three or four other

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<v Speaker 3>possible measures coming out of the US in the coming weeks.

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<v Speaker 3>On country by country tariffs and sector based tariffs too.

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<v Speaker 7>I think to an extent investors that have been a

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<v Speaker 7>little bit complacent on what was coming down the line.

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<v Speaker 7>But more significantly where they've really been caught out is

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<v Speaker 7>what's happening to the US economy. Already we're beginning to

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<v Speaker 7>see signs of cracks. But if you saw consumer confidence

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<v Speaker 7>numbers of crashing, other data is already suggesting that what

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<v Speaker 7>the US government is doing under this administration is already

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<v Speaker 7>starting to hurt confidence in the US economy regardless of

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<v Speaker 7>what happens with the tariffs. And what we see now

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<v Speaker 7>is that traders are pricing in for three interest rate

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<v Speaker 7>cuts on the Federal Reserve this year. It was only

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<v Speaker 7>pretty recently they were pricing for just one cut. So

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<v Speaker 7>a significant change in investors outlook towards the US economy,

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<v Speaker 7>which is being reflected in US markets. That's on top

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<v Speaker 7>of anything related to terrorists, and that's a more immediate

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<v Speaker 7>problem for investors. So that's really what's driving things in

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<v Speaker 7>the very short term. Of course, if this becomes into

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<v Speaker 7>a real tip for tat where America introduces more terrorists,

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<v Speaker 7>other countries respond with more of their own, things can

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<v Speaker 7>certainly spireal, but for now it's the weak US economic

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<v Speaker 7>data and the effect it's having on the federal reserve.

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<v Speaker 7>That's what's really worrying investors.

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<v Speaker 3>Okay, Mark, thank you so much for being with me

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<v Speaker 3>this morning. Put in Beggs Markets Live stash Is Mark Cranfield,

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<v Speaker 3>thank you so much for your time on those tariffs. Well,

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<v Speaker 3>now to Ukraine, because President Donald Trump ordered also a

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<v Speaker 3>pause on all military aid to Ukraine, putting pressure on Vlodomisolinsky.

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<v Speaker 3>A senior Defense Department official says that military assistants will

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<v Speaker 3>be paused until Trump determines Ukraine's leader has demonstrated a

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<v Speaker 3>good faith commitment to peace joining US. Now. Bloomberg's TV

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<v Speaker 3>correspondent Oliver Quick, good morning. How big a setback is

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<v Speaker 3>this for Zelensky and for Ukraine?

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<v Speaker 6>Yeah, I mean, listen, given what we saw on Friday,

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<v Speaker 6>in the kind of fallout that we saw after that

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<v Speaker 6>disastrous press conference interaction on Friday between Zelenski, Vans and Trump,

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

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<v Speaker 6>going to be one of the major step This is

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<v Speaker 6>we all know, and Zelenski has said it many times

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<v Speaker 6>in the past that basically he is completely dependent on

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<v Speaker 6>the United States in order to continue his battle against

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<v Speaker 6>Russia in order to have any sort of lasting ceasefire

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<v Speaker 6>with the Russia. So in the absence of this military aid,

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<v Speaker 6>and now it has we understand again according to people

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<v Speaker 6>familiar that it has been pause. That means that all

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<v Speaker 6>military gear that is on its way to Ukraine on planes,

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<v Speaker 6>that is waiting for a deposit within Poland, all of

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<v Speaker 6>that is going to be paused. And there's also a

0:13:09.520 --> 0:13:12.480
<v Speaker 6>large sort of quantity of funding that was already sort

0:13:12.480 --> 0:13:15.600
<v Speaker 6>of inherited by Trump from Biden about four billion dollars,

0:13:15.600 --> 0:13:17.400
<v Speaker 6>that too is going to be paused. And again we're

0:13:17.400 --> 0:13:19.839
<v Speaker 6>expecting to get more actual details from this from Donald

0:13:19.880 --> 0:13:21.640
<v Speaker 6>Trump today in a speech that'll be I think at

0:13:21.640 --> 0:13:24.640
<v Speaker 6>around one am UK time. But again this is you know,

0:13:24.679 --> 0:13:26.679
<v Speaker 6>the Europeans could still buy some of this kit from

0:13:26.720 --> 0:13:29.199
<v Speaker 6>the United States to send over to Ukraine. But if

0:13:29.240 --> 0:13:31.960
<v Speaker 6>the United States decides to really turn the screws, they

0:13:32.000 --> 0:13:34.280
<v Speaker 6>can put a halt on selling this equipment. They could

0:13:34.280 --> 0:13:37.200
<v Speaker 6>put a halt on some of the operational requirements in

0:13:37.280 --> 0:13:39.360
<v Speaker 6>order to actually be able to enlist us in the field.

0:13:39.600 --> 0:13:41.080
<v Speaker 6>And again this is all sort of part of the

0:13:41.120 --> 0:13:43.600
<v Speaker 6>sort of broader dynamic that we've been seeing where it's

0:13:43.600 --> 0:13:46.760
<v Speaker 6>going to be very hard to make any progress if Ukraine, Europe,

0:13:46.800 --> 0:13:49.760
<v Speaker 6>and the United States cannot inhabit a common reality about

0:13:49.800 --> 0:13:52.880
<v Speaker 6>what is going on in Ukraine, Russia as aggressor Ukraine's victim.

0:13:53.360 --> 0:13:55.160
<v Speaker 3>What does this mean then for Europe, the UK and

0:13:55.240 --> 0:13:56.719
<v Speaker 3>France trying to take the lead here.

0:13:56.800 --> 0:13:59.000
<v Speaker 6>Yeah, so listen, they're trying their diplomatic efforts. I think

0:13:59.000 --> 0:14:00.800
<v Speaker 6>they sort of would try as much as they could,

0:14:00.800 --> 0:14:03.040
<v Speaker 6>and they sort of had some success, it seemed, in

0:14:03.120 --> 0:14:04.880
<v Speaker 6>charming Donald Trump. But at the end of the day,

0:14:04.920 --> 0:14:06.840
<v Speaker 6>you know, it's what's signed on the dotted line. It's

0:14:06.880 --> 0:14:09.160
<v Speaker 6>all the dollars and cents for Donald Trump. And the

0:14:09.240 --> 0:14:11.800
<v Speaker 6>question is, you know, what leverage do they have right

0:14:11.840 --> 0:14:14.720
<v Speaker 6>now at all? So they're sort of drawing up different proposals.

0:14:14.720 --> 0:14:17.480
<v Speaker 6>It was a story out in the FT overnight saying

0:14:17.480 --> 0:14:19.960
<v Speaker 6>that basically they'd be looking at basically taking the Russian

0:14:19.960 --> 0:14:23.040
<v Speaker 6>frozen assets potentially is using that as a guarantee in

0:14:23.080 --> 0:14:25.520
<v Speaker 6>case a ceasefire is broken. And again, what they're trying

0:14:25.520 --> 0:14:27.440
<v Speaker 6>to do now is get in place an architecture to

0:14:27.480 --> 0:14:30.960
<v Speaker 6>potentially get a ceasefire proposal, to put that to Trump

0:14:31.040 --> 0:14:33.440
<v Speaker 6>and Zelensky in order to just sort of pause things

0:14:33.480 --> 0:14:36.240
<v Speaker 6>which would give Trump a win in order to negotiate

0:14:36.280 --> 0:14:39.080
<v Speaker 6>that longer standing kind of ceasefire and end to the war,

0:14:39.120 --> 0:14:41.440
<v Speaker 6>the just piece that Zelenski is looking for. But again

0:14:41.520 --> 0:14:43.800
<v Speaker 6>this comes back to this fundamental issue. If you do

0:14:43.880 --> 0:14:46.360
<v Speaker 6>not have this sort of common reality where you know,

0:14:46.440 --> 0:14:48.640
<v Speaker 6>Trump and Europe can get on the same page about

0:14:48.640 --> 0:14:50.560
<v Speaker 6>who is sort of at fault here, it's going to

0:14:50.560 --> 0:14:53.200
<v Speaker 6>be very difficult to make a sort of final agreement

0:14:53.240 --> 0:14:55.440
<v Speaker 6>where everybody is happy. And of course this says nothing

0:14:55.440 --> 0:14:57.240
<v Speaker 6>of the fact of the sort of bigger question for Europe,

0:14:57.240 --> 0:15:00.480
<v Speaker 6>which is how strong are NATO security guarantees for Europe

0:15:00.480 --> 0:15:01.360
<v Speaker 6>More broadly.

0:15:01.200 --> 0:15:03.520
<v Speaker 3>Yeah, it's also prompting and rethink in other parts of

0:15:03.560 --> 0:15:04.840
<v Speaker 3>the world, namely Taiwan.

0:15:05.080 --> 0:15:06.720
<v Speaker 6>Yeah, and it was sort of very interesting we heard

0:15:06.720 --> 0:15:09.040
<v Speaker 6>from the Taiwanese Defence Minister and this is a direct

0:15:09.120 --> 0:15:12.000
<v Speaker 6>quote saying we have deeply recognized that one cannot discuss

0:15:12.120 --> 0:15:15.760
<v Speaker 6>values without also addressing national interest, right. And we say

0:15:15.800 --> 0:15:18.360
<v Speaker 6>this with Trump giving a press conference yesterday with the

0:15:18.400 --> 0:15:21.880
<v Speaker 6>TSMC CEO. TSMC has just said that they'll build a

0:15:22.040 --> 0:15:25.240
<v Speaker 6>plant or commit one hundred billion dollars worth of investment

0:15:25.440 --> 0:15:27.880
<v Speaker 6>into the United States. So from Taiwan's perspective, maybe that

0:15:27.920 --> 0:15:30.400
<v Speaker 6>buys you something. But the question with Trump now always

0:15:30.440 --> 0:15:32.640
<v Speaker 6>is what does it buy you and for how long?

0:15:32.920 --> 0:15:35.400
<v Speaker 6>And this is the new foreign policy of the United States.

0:15:35.480 --> 0:15:37.320
<v Speaker 6>We see this with tariffs. Whenever you put the sort

0:15:37.320 --> 0:15:40.680
<v Speaker 6>of tariffs up, if Canada or Mexico complies, their main

0:15:40.760 --> 0:15:42.680
<v Speaker 6>question is going to be, Okay, what happens in two

0:15:42.680 --> 0:15:44.680
<v Speaker 6>months and three months? What if they want to extract

0:15:44.720 --> 0:15:46.920
<v Speaker 6>something more from it? And that is the new reality

0:15:46.920 --> 0:15:49.320
<v Speaker 6>for many of these American allies who are increasingly being

0:15:49.720 --> 0:15:52.520
<v Speaker 6>treated not necessarily as enemies, but just as anybody else.

0:15:53.280 --> 0:15:56.040
<v Speaker 1>This is Bloomberg Daybreak Europe, your morning brief on the

0:15:56.080 --> 0:15:59.160
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