September 10, 2025 • 39 mins
For all the doomsaying about US President Donald Trump's trade and economic policies, the world's biggest economy has held up relatively well, at least on the surface. Markets are up, trade demand remains firm and the Federal Reserve is moving toward interest rate cuts, which could spur more activity.
But Steven Okun, founder and CEO of APAC Advisors, warns that the worst is yet to come. Global exports that surged in the run-up to August’s reciprocal levies are cooling, the US labor market is slowing, and markets will react once the data confirms economists’ warnings, he says. Though the slew of global levies provides some clarity, questions remain over Trump's motivations on trade policy and his tendency to upend matters with one social media post. Okun speaks with John and Katia from Singapore.
Join us for Bloomberg's Investment Management Summit in Singapore on Oct. 7, featuring leading investors, asset managers and experts, to unlock insights and strategies for geopolitical volatility, technology innovation and sustainable growth. Also catch John and Katia for a live episode recording with Matthew Michelini, head of Asia-Pacific at Apollo Global Management. See you there!
Register here for this exclusive event: https://events.bloombergevents.com/0BAkqm
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
President Donald Trump has been in office for about nine months.
In that time, he's been a massively disruptive force, climping
down on immigration, cutting government funding, and withdrawing from important
multilateral institutions. He's also in the midst of reshaping trade,
with long term implications for companies and their supply chains,
(00:23):
but the.
Speaker 2 (00:24):
US economy has remained surprisingly resilient. Major equity markets globally
are up this year. Countries by and large have not
retaliated with their own big tariffs, and trade continues to
flow tariffs or not as companies adjust.
Speaker 1 (00:41):
You are listening to Asia Centric from Bloomberg Intelligence and
Kaetudmitriva on Hong Kong.
Speaker 2 (00:45):
I'm John Lee also in Hong Kong, and we've.
Speaker 1 (00:48):
Got a special episode this week. We're speaking with Stephen
oakan founder and CEO of APAC Advisors, a corporate advisory firm,
and he's a frequent commentator on Trump and Asian affairs.
Speaker 2 (01:00):
Steven will also be on a panel at the Bloomberg
Investment Management Summit on October seventh in Singapore. Now more
details on that are in the episode description, and we'll
also discuss this later during the episode. Asia Centric will
also be doing a special live recording at the event
with another fantastic guest, So would love to see you then.
Speaker 1 (01:20):
And Stephen, you're going to be there and we've got
you now and it's always a pleasure to talk to you.
Speaker 3 (01:25):
Welcome to the show.
Speaker 4 (01:26):
Thanks great to see you again, and look forward to
being back with Bloomberg and Singapore now.
Speaker 1 (01:31):
At the beginning of this year, many economists were warning
about the dislocations that Trump could cause with higher government
spending and deficits, tear off, slowing trade, and sort of
the uncertainty itself in a way of creating this weight
on investment and on hiring. How surprised are you that
the US economy and markets have both held up relatively
(01:54):
well so far.
Speaker 4 (01:55):
Well, I think you kind of remind me of where
the Biden people were of four years ago when they
were putting all of the stimulus into the US economy
to come out of COVID, and people like Larry Summers
were saying, oh, look, inflation is coming and it's going
to be bad, and the Biden White aster were saying,
oh no, don't you know, you're being a chicken little
(02:15):
and we can handle it, and it may be a
little bit, don't worry about it. And of course the
US got hit with massive inflation and it caused the
Democrats eventually the White House. We're in the same place now,
I think, except now it's that what Trump is doing,
especially with tariffs, is that he's saying, oh, well, look
at what's happened. It's not so bad yet. And you know, inflation,
(02:36):
if it's up, it's only up a little bit. Well,
you know what, people were prepared for this. They front
ran inflation by stocking up inventories. In the United States,
the president has used and I'll use the word bully
pulpit like no president probably since Steady Roosevelt, who came
up with that, to force companies to not say, tariff,
We're going to raise prices to eat some of those tariffs.
(02:58):
Well that's done. And you starting to see it now
that the front loading is over, the companies can no
longer eat those tariffs. There's only so much that manufacturers
can put on their suppliers. And now we're going to
start to see I believe that inflation is going to
hit the United States. Markets are going to take a hit,
and then we're going to see what the Trump administration
(03:19):
does if it sticks to its guns on tariffs for
the reasons that they're doing for reindustrialization or whatever process,
or if they're going to back off because the economic
hits come in.
Speaker 2 (03:30):
Join us for Bloomberg's Investment Management Summit in Singapore on
October seven, where we'll bring together leading asset owners and
managers to discuss geopolitical volatility, technological innovation, shifting investment priorities,
and discover practical strategies for sustainable growth. Speaking at the event,
we'll have leaders from Ontario Teacher's Pension Plan, Apollo Global Management,
(03:54):
Income Insurance, Global Line Investors, and many more. If you
like to join us at this excluar, The event registered
via the link featured in this episode's description. Steven, I
want to play the devil's advocate here, But is there
a world where possibly President Trump could look like a genius,
Like he's cutting the deficit, he's boosting revenue with tariffs
(04:16):
we mentioned inflationsl hasn't come up yet, and he could
potentially find a way to end the war in Ukraine.
Speaker 4 (04:22):
Well, let's just stick with the tariffs first and we
can go off on everything.
Speaker 3 (04:26):
I really are poking the bear, right now.
Speaker 4 (04:29):
We don't know why they're doing teriffs. They don't know
why they're doing terrifs for a couple of reasons. And
so you know, you hear the Ambassador Greer, the US
Trade representative, and his speeches and in his writings, he
says that tariffs are there because the US needs to reindustrialize.
If you want to be a great power, you need
to have a manufacturing base, and the tariffs are going
(04:49):
to help us accomplish this, and we're not moving off
of these terriffs. Then you hear the Treasury Secretary literally
at the same time say that the tariffs are going
to melt away like ice cube because we need to
address the trade imbalance between the United States and its counterparts.
And when that trade imbalance goes away, the tariffs go away.
You can't do both. So we don't know from what
(05:11):
you hear from the two top economic people, certainly on
the trade side and the Trump administration, what the purpose
of these tariffs are for. So it's very hard to
forecast what the United States is going to do when
you're hearing two different reasons for it. And that is
why you have got this word is so overused right
now Everyone talks about how much uncertainty there is in
(05:32):
the market, But there is uncertainty in the market because
we don't know why the US is doing, what is doing,
and what its strategy is. When we figure this out,
and it's going to take some time still, then we
will know what it is ultimately going to mean for
the United States. We still don't have arguably a single
(05:52):
trade agreement that this administration has done. It is said
it has done agreements with Japan, and with Vietnam, and
with Malaysia and Indonesia. In this part of the world,
nothing is assigned. There is nothing that businesses and governments
can then work off of. So I will just just
john and say we're still way too soon to answer
your question of whether or not Trump is going to
(06:13):
look like a genius on his America First trade policy,
because we still don't know what he's trying to accomplish
with his America first trade policy.
Speaker 1 (06:21):
Why does it matter so much the purpose of the tariffs?
Is it the point that if these are used just
to generate revenue, then that would imply, you know that
things are pretty much set in stone. We have these tariffs,
They're going to be around for the next couple of
years at least, versus using tariffs as sort of national security, geopolitical,
(06:42):
geostrategic policy.
Speaker 3 (06:43):
Is that sort of the difference you see there.
Speaker 4 (06:46):
Well, if you know why the tariffs are there, then
as a government, as a business, as an investor, you
can better determine what the United States is going to do,
what countries and reaction are going to do, and then
you have a way to know should I make this investment,
should I pull out of this country, should I go
to that country? Should I leave the sector? Should I
go to that sector? We still don't know that. Again,
(07:08):
is the purpose of these tariffs to reindustrialize? If it is,
then you're going to make a certain judgment. If the
purpose of these tariffs is to raise revenue and it
is to pay for the tax cuts that are in
the one big beautiful bill now the law, well if
it's there, then they're never going away, because then if
you get rid of the tariffs, you have to eliminate
(07:29):
the tax cuts. And you know that does not happen
in the United States. So are these there for revenue
generation reasons? Are these there for reindustrialization reasons? Are these
there for national security reasons? And right now, and you
have different legislative authority for the US government and the
White House to enact these tariffs. So is this about
national security? Because right now the Trump administration is basically
(07:52):
saying everything is national security, certainly much more than it
had ever been done before. National security used to be Okay,
autos were in there, and steel and aluminum we're in there. Certainly,
of course military equipment was national security. Now you're putting
in lumber. Now you're putting aviation parts, and now you're
putting in pharmaceuticals, you're putting in I think they have
(08:12):
like eight or nine different national security investigations going under
what we would call Section two thirty two tariffs in
the United States. So if it's national security, then that's
a different way you're going to move around your investment
in your supply chains. Is this aimed at China, because
if it's aimed at China, then you can set up
factories in partners. If it's not aimed at China, and
(08:33):
if it's aimed at real industrialization, then it doesn't matter
where your factory is, India, Vietnam, China, they're all the same.
That's why there's just so much uncertainty and why it's
impossible to say right now, yes this will work or no,
it won't work because we don't know what they're trying
to accomplish with it.
Speaker 1 (08:50):
Does that imply then sort of an illuming market correction
because markets have been a bit complacent on that front.
Speaker 4 (09:00):
I think the markets have front run some of the tariffs,
some of the customers. The businesses have eaten the costs
in part because they're getting afraid of getting called out
by the White House. But when all of a sudden,
Sony starts to raise prices, and then Walmart starts to
raise prices, and the toy company start to raise prices,
now everybody's going to start to raise prices. You can't
(09:20):
suppress prices through truth social only for so long. And
so I do think the same type of reckoning that
is going to hit the US economy as it did
under the Biden administration when it came to the over stimulus.
You're going to have the same thing come here. Now, Look,
I get the theory of the case. The theory of
the Trump case is, yes, tariffs are inflationary. The President
(09:42):
won't say this, but of course the economists around him
know this. Tariffs are inflationary. Certainly, what the Trump administration
is doing on immigration and taking all of that labor
out of the workforces inflationary. But they will say, we
are doing deflationary things. We're getting rid of all of
this waste and abuse, we're getting rid of all of
this regulation. We are going to drill, baby drill, and
that is deflationary, and so this will all balance out,
(10:05):
and then yeah, he will look like a genius, John
if this turns out, if their economic theory holds.
Speaker 2 (10:12):
Stephen, you're obviously based in Singapore. Who do you think
in Asia has been I guess the relative winners and
losers of these tariff.
Speaker 4 (10:22):
Rights, Like, everything is relative in a way, so you're
there's losers and there's less losers in a way. You
can say, look, if who is Vietnam's competitor. So if
if Vietnam's competitor is India and Vietnam's tariff is at
twenty percent and India's tariff is at fifty percent, you
could argue Vietnam is better. Right, Yeah, they're hitting with
(10:43):
twenty percent, but their competitors, not Singapore is at ten percent,
their competitors at India's fifty percent. So really you have
to get into the tariffs are relative. You have to
look at where's your competitor, what manufacturing sector, and are
you in and are you coming out better off than
your competitors. So there are no I would argue when
we have eliminated to a degree, to a large degree,
(11:06):
the global rules based trading system and we are now
in something different that is just being built up. Long run,
we don't know who's going to be better at the
Costs are going up for everybody. But if the costs
are going up less for you than your competitor, maybe
you're going to be better off. If China's tariffs are
going to be at one hundred and forty five percent
(11:26):
and Vietnam's tariffs are going to be at twenty percent,
in Malaysia at twenty and nineteen and whatever those numbers are,
then they're going to be better off. But boy, if
Vietnam's getting hit with a forty percent tariff on tranship
goods and we can talk about whatever that means under
this administration, and China is less than forty percent, well
(11:46):
then Vietnam's way worse off than China. So all of
this is still it's all relative. I wouldn't call out
any winners or losers yet. I would say everybody's a
loser if you're exposed to global trade. But there's going
to be people who are certainly going to lose less well.
Speaker 1 (12:01):
Picking up on that transshipment piece, there has been an
interesting development in this administration where they're really sort of
a pay for play model in some ways. So there's
this transshipment component in trade, which they haven't really described,
The White House hasn't described, and people are still kind
of unsure what it means. But there was also this
(12:21):
idea that for some chips companies that they would have
to give back to the US some of the profit
from selling certain chips to China, for example. How do
you see that monetization? How big is that or how
new is that development?
Speaker 3 (12:37):
Is that worrying for companies?
Speaker 4 (12:39):
Yeah, in some ways it's very easy to explain, you know,
President Trump, because he'll say something and believe him when
he says it. It's all you have to do. Listen
to what he says, and when he says, the United
States is the biggest store in the world. Everybody wants
to shop here. I own the store. I set the prices.
(13:00):
And it's literally what President Trump has said. So you
have to recognize he's going to set the prices. You
want to shop in the United States, here's what you're
going to pay. You want to take from the United
States and send it to China, here's what you're going
to pay. And this is extremely worrying because you don't
know what that price is going to be at any
given time, and you don't know what he's going to
focus on at any given time. And the issue. For years,
(13:25):
basically trade was allowed except for areas that we would
call national security. So you could ship anything, you'd send
anything you wanted to China unless it would harm the
national security. Obviously, military equipment was always in that category.
You wouldn't send that to China or other countries of concern,
you know, Russia, Iran, name your country in that category.
Now what's happening is that national security and trade are
(13:49):
becoming much more intertwined. And now when you start looking
at AI, or you look at facial recognition, you look
at drones, you would say, well, drones can be used
for very good purposes, for search and rescue, for better
irrigation of crops, any number of things drones are very valuable,
and of course drones are also very deadly. So now
(14:09):
you get more things that could be national security, could
be just economics and trade. And that's where you're getting
this blurring of the lines. And what you need to
know is the business. What's national security? What can't I ship?
I don't go anywhere near that? And I stay. It's
getting harder and harder to do that now when President
Trump is saying something like to Navidia and others, well,
(14:32):
you can't ship this to China because it's national security
unless you pay us some fee to do that. Well,
now that's not national security anymore. How can that be?
Either it is or it isn't. And so it is
this unknowingness, I say, this uncertainty, which everybody talks about
all the time. But it's even getting more uncertain as
we go forward to say, I'm going to pick winners
(14:53):
and losers, and I'm going to say, you can't ship
this if it's national security unless you pay me. How
do you bargain around it? Now we can either stay
or go to transhipments, which is a whole another different
issue that is going to cause a lot of complications
in trade as well.
Speaker 2 (15:06):
Steven, I wanted to before we get to transhipments, I
wanted to discuss the US and the trade negotiations with China.
Speaker 3 (15:14):
Do you think the.
Speaker 2 (15:14):
Administration, the US administration underestimated the resolve of China, and
in particular China's retaliatory threat of potentially withdrawing the export
of rare earths.
Speaker 4 (15:26):
Yeah, and that's the is Donald Trump would say in
America first, would say, we are the biggest, most powerful
country in the world under any metric that you want, economic, military, diplomatically, culturally,
and therefore, when we negotiate one on one, to use
a Trumpian tern, we have all the cards and we
(15:46):
are going to use all of that leverage against you
to get the best deal for the United States because
nobody has cards against us. That's true, except when it
comes to China. China has cards. And that's the rare
ears is one of those cards that China can play,
and it is why we haven't seen you know, we've
seen a standstill for the most part. Now that said,
(16:06):
tariffs are extraordinarily high. Tariffs are basically at fifty percent
for China. That is astronomical, more than we've ever would
have considered to be normal in our lifetime, and now
we say, oh, it's only fifty percent. So let's keep
in mind this is really out of the ordinary. But
let's see when the US really negotiates with somebody who
has leverage against the United States, how it plays out.
(16:27):
We're certainly going to watch that. But in every other negotiation,
the US has used basically all of its power to
leverage what it could get and has received. Certain countries
have certain lines that you can't cross, but boy, they're
not nearly the line that China has.
Speaker 1 (16:44):
Yeah, there's an interesting difference between how Trump is treating
China in this administration versus the last. It seemed a
lot more targeted.
Speaker 3 (16:53):
At China and the first administration.
Speaker 1 (16:55):
And now we've got this period of you know, ninety
days where they're going to continue to negotiate. It seems
like things are warming up, or at least it's sort
of a stasis. You know. Are you surprised by how
Trump seemingly has been less hawkish maybe than some in
the administration.
Speaker 4 (17:14):
Well, I mean, we've got to go back to why
is the US doing what it's doing, you know, visa
via China, And that is because look, China started this
trade war against the US fifteen years ago, twenty years ago,
whatever date you want to put on it. And the
United States had a bipartisan policy, you know, you go
to Clinton, you go go to Bush, you could go
to the beginning of the Obama term, that we would
(17:35):
engage with China, we would accommodate their rise because as
they came into the global rules based trading system, they
would become one of the they would follow all those rules,
and China didn't. And China used the power of its state.
You can look at Made in China twenty twenty five,
which came out in twenty fifteen, and China said, we
are going to use the power of the state to
(17:56):
dominate the key sectors of the twenty first century AI, renewables,
electric vehicles, biopharma, and China was extraordinarily successful using the
power of the state to do that. In China had
a policy called dual circulation, where China said, we are
going to keep the Chinese market for China. That's one circulation,
(18:18):
and then the second circulation, the duel is that we're
going to use Made in China twenty twenty five to
dominate globally. The key sectors of the twenty first century,
and they do dominate a lot of those sectors now,
certainly in the electric vehicle space. And if you look
at what's happened in China over the last two three decades,
the US has become more reliant on China will China
(18:39):
has become less reliant on the United States. That had
to change, the unfair practices, the state subsidies, the force,
technology transfers, all of that. The US is reacting to.
It started under Obama where he started to shift and
you saw that with CPTPP or then called TPP that
he focused on to try and constrain China. Did work.
(19:01):
Trump one started it with the targeted tariffs. Biden continued
every tariff that Trump had and upped some of them,
and now Trump two point zero is taking it even further.
There is no walk back yet. This is very consistent
with American foreign policy, not Trump foreign policy, American foreign policy.
And until China changes, we don't see that coming anytime soon.
(19:24):
Don't expect the United States to change. Where the debate
you have right now in the Trump administration is the
way I used a SoundBite on this is Will Bessent.
Trump Rubio. Rubio is in that hawk ish camp. Rubio
is that China is our adversary, not strategic competitor. China
(19:45):
is our adversary, and if we stay on the path
we're on now, China is going to control everything we
need access to within ten years from now, and we
cannot allow this to happen. The cent is more of
the I recognize where China is, but we have to exist.
There's a lot of money to be made. Let's do
a deal with China. And so you see, even within
(20:06):
the Trump administration, you have the business end camp and
the Rubio camp, and we don't know how that's going
to turn out yet and what we're all watching, of course.
Speaker 3 (20:13):
That's interesting.
Speaker 1 (20:14):
So you don't see President Trump as starting quote unquote
the trade war.
Speaker 3 (20:20):
You say, it's.
Speaker 1 (20:20):
Actually going back to what China has done basically since
joining the World Trade Organization in China twenty twenty five.
Speaker 4 (20:28):
Yeah, I get what started. I mean, the hope was
with China joining the WTO, it would become follow all
of those rules and it could it would go over time.
And that didn't happen. And now you could say that
this was the American This is the American view, the
American view, of the Western view, the Japanese view was
that China was on the path to do that and stopped,
or we got it wrong and China was never going
(20:49):
to do that. We should never have done what we did,
going back to the wto ascension. Time doesn't matter why
either China change or the West got China wrong. They're
not doing it now. So it is not a Trump thing,
and it is not a US thing. Who is putting
tariffs on electric vehicles Canada, Mexico, Japan, India, Brazil. This
(21:12):
unfair competition is not something that is only impacting the US.
The dumping of excess capacity into markets is not just
into the United States. The Southeast Asian countries are very
concerned that China is going to take all of these
state subsidized goods and jump them into Southeast Asia. And
(21:32):
that's why you have tariffs on China from Indonesia and
Malaysia and Thailand. You know you can sense this. I
think it really drives me crazy because Trump, who is
supposed to be this master pr person in people, you know,
say it's a Trump trade war. It's not the Trump
trade war. This is the China's trade war. That the
(21:53):
US and others are now engaged on. The EU has
the same exact issues that the Americans have, and so
as all of this plays out, it is a global issue.
And what's interesting is is Trump taking this too far?
And is he not recognizing this? And this fifty percent
tariff that the US is threatening India with, is that
(22:13):
pushing India towards China? Right? India has banned goods from
China coming in because they don't want that China shock
to happen to them as they start to rise in
a manufacturing base. But is Trump pushing India towards China
where it doesn't want to be?
Speaker 1 (22:27):
I was just about to ask on that exact point,
are global tariff's way to do that? Because the risk is,
of course, with these high tariffs on all countries into
the US, it will kind of what S and P
has called it in a recent report, established this sort
of south south trading system with China at the center
of it. So are on tariff's kind of countered to
(22:49):
what Trump wants to do?
Speaker 4 (22:51):
Well, we'll put aside whether China is at the center
of anything on trade, because the issues everybody has with China,
these are not US issues, the dumping of the access capacity,
the state subsidies, the protecting of the domestic market. This
is done globally, So I don't think you're going to
see China take the United States's place as the center
(23:12):
of the trading work, and you're going to see different
You're going to see much different trade flows. Eventually, you're
going to see different trade agreements eventually that don't center
on the US or China. So that's I think what
we have to keep in mind. Well, if the US
has three types of tariffs, if you want to think
of it broadly, the US has three types of tariffs.
It's looking at right now, it's got the tariffs on China,
(23:34):
and that is to address everything that we've been talking
about in terms of unfair competition, state subsidization, force technology transfers,
intellectual property.
Speaker 2 (23:43):
Theft, and the like.
Speaker 4 (23:44):
So you have one bucket of tariffs at China tariffs.
The second bucket of tariffs are the reciprocal tariffs. These
are the tariffs that the US is putting on the world,
and you get your rate based on some formula that
they made up, and that is because of the trade
imbalance the US has. Then you have the third bucket
these national security tariffs, and these are the tariffs that
the United States is putting on to either it could
(24:07):
be reindustrialized, you know, it could be resure. Maybe you
could use them for friendshoring. So there's possibilities there in
the two thirty twos. The mistake, I think without question,
that the United States is doing under this administration is
these global reciprocal tariffs. A trade and balance, per se
is not a bad thing. People say, I have a
trade and balance with my barber. Every time I go
(24:28):
get a haircut, I give him money. He doesn't give
me money. So I have a trade and balance with
my barber. I want a trade and balance with my barber,
or my hair would look ridiculous. So the reciprocal tariffs,
that is the problem. National security tariffs, if they're done
the right way, you need to have national security tariffs.
Now we'll argue, and I would certainly argue that he's
blown up the definition no pun intended of national security
(24:51):
tariffs by having nine different types of sectors that you're
looking at. But no, you do need a domestic auto
manufacturing sector because you need auto sector for your military.
Makes perfect sense to have auto tariffs on certain countries,
but you don't necessarily want to put auto tariffs on
your partners and allies because you don't worry about them.
(25:12):
So though there is a place for tariffs, there's a
place for certain tariffs. I'd argue there's a place for
China tariffs. There's a place narrow for national security turffs.
These global tariffs are really going to damage I think
the United States long term, Stevin.
Speaker 2 (25:25):
Do you think the US is however, you know we
mentioned this before, but is losing friends like we mentioned India,
there's also the case of Brazil as well. Like Brazil
which is quite interesting because the US actually enjoys a
trade surplus with Brazil and they've been slept with the
fifty percent tariff. Switzerland has been slept with a thirty
nine percent tariff.
Speaker 3 (25:44):
In Canada, Yeah, what did Canada do?
Speaker 2 (25:47):
And even a place like Australia they have a trade
deficit with the US and they still have to pay
ten percent.
Speaker 4 (25:53):
There's a Singapore Because Donald Trump looks at the world
through one lens on trade, and that is does the
US have a trade surplus or a trade deficit? The
US has a obviously trade deficit, so therefore everybody has
to help us offset that. And he will say, I
can look at you and I will say I'm going
(26:13):
to hammer you with tariffs, but you're going to be
in the five Eyes. You know, you're going to be
part of the national security team that we're going to
share the most sensitive information with. But New Zealand would be,
you know, one of the five eyes. Yet I'm going
to hit New Zealand with fifteen percent teriffs. You can't
look at the world as he is looking at it
in such a silo and not expect to lose friends
(26:34):
if you're an ally or an ally and everything, and
you need to treat people like allies as a friend
of mine phrases it. You know, this administration has no
strategic empathy whatsoever. They look at everything from a US perspective.
What is in the single best interest of the United States.
I define that is getting investment into the United States.
I define that is getting tariff revenue in the United States,
(26:56):
and nothing else matters. And I don't care what you
think about it New Zealand, Canada, Greenland, Japan, career whoever.
And I do think this is costing the US partners
and allies now part of this of the Americas is Okay,
where are you going to go? What else are you
going to do? And you're not going to China? And
so where does that leave you? And so this is
(27:19):
where right now the situation that you have globally is
that people are being very quiet about all of this
disruption that's happening. On the surface, countries are being quiet
about it, businesses are being quiet about it. Investors are
being quiet about it, in large part because you don't
want to say anything negative about the president because that
(27:40):
may bring action against you. But under the surface, there's
a lot that is going on right now in what
is the foundation of the global trading system going to
be since we don't have one anymore and the US
is not part of that discussion.
Speaker 1 (27:57):
On that point, you wrote in NY recently about the
collapse of Brand America, as you called it. So the
idea that consumers from Canada to China are boycotting US
goods and it's kind of paired with this concurrent rise
in nationalism spending in China, for example. So how different
is that pushback right now than prior years And do
(28:21):
you think that it's salvageable at some point, is it
just associated with Trump or is sort of a longer
term damage.
Speaker 4 (28:28):
Well, there's no question there's going to be a longer
term hit to brand America, and that is going to
extend out. You're already seeing it with people who aren't
traveling to the United States, so that's hitting hospitality, it's
hitting the airlines. So you're seeing that. I mean, you
could see it in discrete areas, which you've seen before.
I mean you've seen, you know, boycotts in Malaysia right
(28:50):
now in particular against the Starbucks or McDonald's or KFC
or whoever because of what the US policy was in
terms of Israel. And but now it's not just a
policy boycott that you're seeing. It's now broadening out into
the US. So some of it you're seeing in a
movement away from travel to the US. It could be
(29:11):
a movement away from US goods. But the question then
is going to become what happens when Americans, who are
very used to getting access to government officials really at
the highest level in most countries, that access is going
to start to go away too. Governments aren't going to
say I can't meet with the Americans because that is
going to bring blowbacks. So this is all just starting now,
(29:32):
and you know, certainly the US businesses who I'm talking
to are really trying to think through what is it
that we have to do differently. A lot of what
that American brand stood for was we treat our people well,
we pay them well, we give back to the community.
You know, we don't engage in corruption, we follow the rules.
(29:55):
I mean in all of these benefits that you had
from being an American company would mean people were more
willing to work for you. Foreigners were much more willing
wanted to work for American companies in their country as
opposed to their national champions. All of that is certainly
starting to shift now, and the question is what should
(30:16):
US companies be doing about that? And the discussions we're
having is you need to stick to your values. You
need to really talk about your values now more. And
you can't take it for granted that people say, oh,
you're a US company, you must do a B and C.
You now need to be proving it. You now need
to be going out into the community. You now need
(30:37):
to be meeting with the foreign governments showing them how
much benefit you're bringing. Because most American companies who work overseas.
You know, they may have a couple of as pets,
but they're predominantly employing local hires. Show what you're doing,
and then bring those local hires, train them to move
from entry level to management, you know, into mid management,
(30:59):
into upper manager. You're going to have to do a
lot more of that to offset the damage that is
being done right now to brand America. By the way,
the Trump administration is engaging with foreign governments.
Speaker 2 (31:13):
And Steven, what's next, Like, do you see a wood
where these taiffs could actually be dulled back?
Speaker 4 (31:18):
Yeah? I thought you were going to say, could I
see a world where they're going to go away? And
the answer is an easy one to that. No, they're
not going away. And what's going to happen is, you know,
certainly the US is going to get addicted to tariffs.
They do count towards revenue. And yes, the teriffs are
a tax on Americans, and Americans haven't been paying as
much of that tax because some of it's been eaten
(31:40):
by the customers, some of it of the manufacturer and
the you know, the importer. Some of it has been
pushed back into the supplier. But that's going to be
less and less. So there's a component that's a tax
on Americans, but there is also others who are paying
part of that tariff, and the US is going to
get addicted to that revenue because it's being used to
pay for other things. Part of it is that three
(32:02):
years from now, you're going to have we don't have
any trade agreements yet. At some point we are actually
going to have some signed deals between the United States
and Japan, Korean, Indonesian, Malaysian, Vietnam and presumably Singapore and others,
and it is going to take a long time to
unnegotiate or renegotiate those trade agreements. So you're going whatever
(32:24):
you sign, you are going to have to that's not
going to get unsigned. Whoever the next president is, I
don't care if it's a Democrat, if it's a MAGA,
if it's more of an establishment Republican. You're going to
be living with that trade agreement for a while. Will
some of the tariffs be dialed back at some point? Yes,
When and by how much we don't know. And so
that is why governments are asking themselves today, should I
(32:48):
sign an agreement with the United States? Because what happens
if three years from now I have no agreement, then
by existing agreement states And so I'll take this little
hit on tariffs because some of them will get back,
but the other things won't. And I'll just say to
give credit to the Trump administration on this front, there
are a lot of significant non tariff barriers that businesses face.
(33:10):
It's not just all about tariffs. It's about slow walking
of approvals. It's about not clearing your packages in a
timely manner. It's about not granting applications for immigration visas
or whatever it might be. It is certainly forced labor
that is a major issue in this part of the
world that should be addressed. An Ambassador Greer has said,
(33:34):
we are going to address non tariff barriers. Non tariff
barriers are a key part of the America First trade policy.
I just wrote an op ed on this that you'd
better make sure you do not have forced labor in
your operations or in your supply chain here in Southeast
Asia and in Indonesia in particular, because you may think,
and you might be correct, that Donald Trump is anti
(33:56):
ESG and he's anti woke, and certainly his administration and
certain Marias is dialing back human rights, but in other
areas they're doubling down on human rights, and you better
be paying attention to that. And that isn't going to
go away either. So yeah, some of this will get
dialed back over time, but we're not going back to
pre I think it was January twentieth this year, whatever
(34:18):
it was before Inauguration day was this year. We're not
snapping back to the day before that, no matter who
the next president is, no matter what party he or
she is from.
Speaker 1 (34:28):
Now maybe as a final question, I mean, this is
going to be really pulling back here, and it could
threatens to be too big of a question. But I'm
just curious from your view, you know, in three years time,
where is America geo strategically, economy wise in the global system.
Speaker 3 (34:47):
Is it generally, in your view, going to be.
Speaker 1 (34:50):
Better off or worse off or is it maybe a wash?
Speaker 4 (34:56):
I mean, I think it is going to be overall
worse off. As the US benefited from the rules based
global trading system because it afforded certainty, It opened markets
for the United States. It gave great advantage to the
US when it comes to services, something that this administration
(35:18):
and this president doesn't seem to care about but the US. Yeah,
we might be in a manufacturing deficit, but we are
a service's powerhouse, and all of those the upsides of
the global system we're not focusing on anymore now. There
are downsides that need to be addressed that China needed
to be addressed, and it was being addressed started with Obama.
(35:40):
Trump no question accelerated a Biden kept it. Trump's taking
it even further. But we should be working with our
partners and allies who have the same issues with China
that we do, and we're losing that. The US is
going to be worse off in confronting China where it
needs to be confronted because we're better not doing that alone.
So I think we're going to be worse off in
that regard. I think you certainly could have addressed all
(36:04):
of the issues that were in the WTO and the
multilateral Trading System is instead of just blowing it up
and seeing what comes next. I think we're going to
be worse off from that point. But I think to
really answer your question three years from now, how is
the US going to be, Well, first you got to
tell me what is China do in reaction to what
the US has been doing, because as we said earlier,
that shoe hasn't dropped yet. So what is China going
(36:27):
to do? And then what is it going to US
going to do? What if the US starts to say
to Vietnam you can no longer have goods that have
content from China other than from a the minimal perspective
coming in to the US, Well, what is China going
to do to Vietnam? And then what is going to
happen here in Southeast Asia? So we're really early days
(36:48):
in watching how this is going to play out, and
as we believe, maybe possibly Donald Trump's going to be
in Asia for the AUSION meeting or the APEC meeting.
We're all watching to see what happens with the next
step in the US China relationship. Is it going to
be the center Rubio driving it? What's Trump going to decide?
What'siegent being going to do? And then I can try
(37:09):
and start to answer your question about where the US
is going to be three years from now, But I
don't even know where we're going to be three months
from that.
Speaker 2 (37:15):
Steven, I'm really glad that you mentioned the services component
because a lot of this discussion has really focused on goods.
But as you mentioned, the US does enjoy a huge
surplus when it comes to services, Like everyone watches American films,
American investment banks dominate, everyone uses American auditing firms, advertising firms.
(37:36):
Can you see a world where, like possibly you know,
the Europe or other countries start putting some measures against
US services.
Speaker 4 (37:46):
I think China already did or certainly threatened it right
when China said, oh, We're not going to let any
Hollywood movies in anymore. And that's a huge generator of
brand America, of moving American board. In addition, of course,
do making a lot of money for the United States.
You have a huge surplus of course in the entertainment
industry and that part of the services industry. So you
(38:08):
did see retaliation being threatened on services in response to
the US threats on goods in that US China teariff war.
Now will others do that, or we'll China do that,
We'll China start to say okay, financial services, investment, banking,
life insurance, retail insurance, whatever you have in the financial
(38:32):
services side. Obviously all of the data centers in those
types of services all of that is of concern, and
I would certainly imagine, I think I can do more
than imagine that the services sector in the United States
is watching to see are they going to get dragged
into this or are they going to stay out of it?
(38:52):
And then if they're retaliated against, what does the US do. So, yes,
we've ignored in this whole discussion on trade for the
most part from this administration, how much of a benefit
services brings to the United States. There were a services economy,
and that is it is certainly something to keep under raiders. Great.
Speaker 3 (39:13):
Thanks so much for joining us today, Stephen Oh.
Speaker 4 (39:16):
Thanks for having me. I hope this was a good
back and forth and I look forward to continuing this
when we're all in Singapore.
Speaker 1 (39:23):
You've been listening to Asia Centric from Bloomberg Intelligence. I'm
Kaietdmitriva in Hong Kong.
Speaker 2 (39:28):
I'm John Lee, also in Hong Kong. You can listen
to all our episodes on Apple Podcasts, Spotify or review
Listen and this podcast was produced and edited by Clara Channa.
Thanks for listening.
President Donald Trump has been in office for about nine months.
In that time, he's been a massively disruptive force, climping
down on immigration, cutting government funding, and withdrawing from important
multilateral institutions. He's also in the midst of reshaping trade,
with long term implications for companies and their supply chains,
(00:23):
but the.
Speaker 2 (00:24):
US economy has remained surprisingly resilient. Major equity markets globally
are up this year. Countries by and large have not
retaliated with their own big tariffs, and trade continues to
flow tariffs or not as companies adjust.
Speaker 1 (00:41):
You are listening to Asia Centric from Bloomberg Intelligence and
Kaetudmitriva on Hong Kong.
Speaker 2 (00:45):
I'm John Lee also in Hong Kong, and we've.
Speaker 1 (00:48):
Got a special episode this week. We're speaking with Stephen
oakan founder and CEO of APAC Advisors, a corporate advisory firm,
and he's a frequent commentator on Trump and Asian affairs.
Speaker 2 (01:00):
Steven will also be on a panel at the Bloomberg
Investment Management Summit on October seventh in Singapore. Now more
details on that are in the episode description, and we'll
also discuss this later during the episode. Asia Centric will
also be doing a special live recording at the event
with another fantastic guest, So would love to see you then.
Speaker 1 (01:20):
And Stephen, you're going to be there and we've got
you now and it's always a pleasure to talk to you.
Speaker 3 (01:25):
Welcome to the show.
Speaker 4 (01:26):
Thanks great to see you again, and look forward to
being back with Bloomberg and Singapore now.
Speaker 1 (01:31):
At the beginning of this year, many economists were warning
about the dislocations that Trump could cause with higher government
spending and deficits, tear off, slowing trade, and sort of
the uncertainty itself in a way of creating this weight
on investment and on hiring. How surprised are you that
the US economy and markets have both held up relatively
(01:54):
well so far.
Speaker 4 (01:55):
Well, I think you kind of remind me of where
the Biden people were of four years ago when they
were putting all of the stimulus into the US economy
to come out of COVID, and people like Larry Summers
were saying, oh, look, inflation is coming and it's going
to be bad, and the Biden White aster were saying,
oh no, don't you know, you're being a chicken little
(02:15):
and we can handle it, and it may be a
little bit, don't worry about it. And of course the
US got hit with massive inflation and it caused the
Democrats eventually the White House. We're in the same place now,
I think, except now it's that what Trump is doing,
especially with tariffs, is that he's saying, oh, well, look
at what's happened. It's not so bad yet. And you know, inflation,
(02:36):
if it's up, it's only up a little bit. Well,
you know what, people were prepared for this. They front
ran inflation by stocking up inventories. In the United States,
the president has used and I'll use the word bully
pulpit like no president probably since Steady Roosevelt, who came
up with that, to force companies to not say, tariff,
We're going to raise prices to eat some of those tariffs.
(02:58):
Well that's done. And you starting to see it now
that the front loading is over, the companies can no
longer eat those tariffs. There's only so much that manufacturers
can put on their suppliers. And now we're going to
start to see I believe that inflation is going to
hit the United States. Markets are going to take a hit,
and then we're going to see what the Trump administration
(03:19):
does if it sticks to its guns on tariffs for
the reasons that they're doing for reindustrialization or whatever process,
or if they're going to back off because the economic
hits come in.
Speaker 2 (03:30):
Join us for Bloomberg's Investment Management Summit in Singapore on
October seven, where we'll bring together leading asset owners and
managers to discuss geopolitical volatility, technological innovation, shifting investment priorities,
and discover practical strategies for sustainable growth. Speaking at the event,
we'll have leaders from Ontario Teacher's Pension Plan, Apollo Global Management,
(03:54):
Income Insurance, Global Line Investors, and many more. If you
like to join us at this excluar, The event registered
via the link featured in this episode's description. Steven, I
want to play the devil's advocate here, But is there
a world where possibly President Trump could look like a genius,
Like he's cutting the deficit, he's boosting revenue with tariffs
(04:16):
we mentioned inflationsl hasn't come up yet, and he could
potentially find a way to end the war in Ukraine.
Speaker 4 (04:22):
Well, let's just stick with the tariffs first and we
can go off on everything.
Speaker 3 (04:26):
I really are poking the bear, right now.
Speaker 4 (04:29):
We don't know why they're doing teriffs. They don't know
why they're doing terrifs for a couple of reasons. And
so you know, you hear the Ambassador Greer, the US
Trade representative, and his speeches and in his writings, he
says that tariffs are there because the US needs to reindustrialize.
If you want to be a great power, you need
to have a manufacturing base, and the tariffs are going
(04:49):
to help us accomplish this, and we're not moving off
of these terriffs. Then you hear the Treasury Secretary literally
at the same time say that the tariffs are going
to melt away like ice cube because we need to
address the trade imbalance between the United States and its counterparts.
And when that trade imbalance goes away, the tariffs go away.
You can't do both. So we don't know from what
(05:11):
you hear from the two top economic people, certainly on
the trade side and the Trump administration, what the purpose
of these tariffs are for. So it's very hard to
forecast what the United States is going to do when
you're hearing two different reasons for it. And that is
why you have got this word is so overused right
now Everyone talks about how much uncertainty there is in
(05:32):
the market, But there is uncertainty in the market because
we don't know why the US is doing, what is doing,
and what its strategy is. When we figure this out,
and it's going to take some time still, then we
will know what it is ultimately going to mean for
the United States. We still don't have arguably a single
(05:52):
trade agreement that this administration has done. It is said
it has done agreements with Japan, and with Vietnam, and
with Malaysia and Indonesia. In this part of the world,
nothing is assigned. There is nothing that businesses and governments
can then work off of. So I will just just
john and say we're still way too soon to answer
your question of whether or not Trump is going to
(06:13):
look like a genius on his America First trade policy,
because we still don't know what he's trying to accomplish
with his America first trade policy.
Speaker 1 (06:21):
Why does it matter so much the purpose of the tariffs?
Is it the point that if these are used just
to generate revenue, then that would imply, you know that
things are pretty much set in stone. We have these tariffs,
They're going to be around for the next couple of
years at least, versus using tariffs as sort of national security, geopolitical,
(06:42):
geostrategic policy.
Speaker 3 (06:43):
Is that sort of the difference you see there.
Speaker 4 (06:46):
Well, if you know why the tariffs are there, then
as a government, as a business, as an investor, you
can better determine what the United States is going to do,
what countries and reaction are going to do, and then
you have a way to know should I make this investment,
should I pull out of this country, should I go
to that country? Should I leave the sector? Should I
go to that sector? We still don't know that. Again,
(07:08):
is the purpose of these tariffs to reindustrialize? If it is,
then you're going to make a certain judgment. If the
purpose of these tariffs is to raise revenue and it
is to pay for the tax cuts that are in
the one big beautiful bill now the law, well if
it's there, then they're never going away, because then if
you get rid of the tariffs, you have to eliminate
(07:29):
the tax cuts. And you know that does not happen
in the United States. So are these there for revenue
generation reasons? Are these there for reindustrialization reasons? Are these
there for national security reasons? And right now, and you
have different legislative authority for the US government and the
White House to enact these tariffs. So is this about
national security? Because right now the Trump administration is basically
(07:52):
saying everything is national security, certainly much more than it
had ever been done before. National security used to be Okay,
autos were in there, and steel and aluminum we're in there. Certainly,
of course military equipment was national security. Now you're putting
in lumber. Now you're putting aviation parts, and now you're
putting in pharmaceuticals, you're putting in I think they have
(08:12):
like eight or nine different national security investigations going under
what we would call Section two thirty two tariffs in
the United States. So if it's national security, then that's
a different way you're going to move around your investment
in your supply chains. Is this aimed at China, because
if it's aimed at China, then you can set up
factories in partners. If it's not aimed at China, and
(08:33):
if it's aimed at real industrialization, then it doesn't matter
where your factory is, India, Vietnam, China, they're all the same.
That's why there's just so much uncertainty and why it's
impossible to say right now, yes this will work or no,
it won't work because we don't know what they're trying
to accomplish with it.
Speaker 1 (08:50):
Does that imply then sort of an illuming market correction
because markets have been a bit complacent on that front.
Speaker 4 (09:00):
I think the markets have front run some of the tariffs,
some of the customers. The businesses have eaten the costs
in part because they're getting afraid of getting called out
by the White House. But when all of a sudden,
Sony starts to raise prices, and then Walmart starts to
raise prices, and the toy company start to raise prices,
now everybody's going to start to raise prices. You can't
(09:20):
suppress prices through truth social only for so long. And
so I do think the same type of reckoning that
is going to hit the US economy as it did
under the Biden administration when it came to the over stimulus.
You're going to have the same thing come here. Now, Look,
I get the theory of the case. The theory of
the Trump case is, yes, tariffs are inflationary. The President
(09:42):
won't say this, but of course the economists around him
know this. Tariffs are inflationary. Certainly, what the Trump administration
is doing on immigration and taking all of that labor
out of the workforces inflationary. But they will say, we
are doing deflationary things. We're getting rid of all of
this waste and abuse, we're getting rid of all of
this regulation. We are going to drill, baby drill, and
that is deflationary, and so this will all balance out,
(10:05):
and then yeah, he will look like a genius, John
if this turns out, if their economic theory holds.
Speaker 2 (10:12):
Stephen, you're obviously based in Singapore. Who do you think
in Asia has been I guess the relative winners and
losers of these tariff.
Speaker 4 (10:22):
Rights, Like, everything is relative in a way, so you're
there's losers and there's less losers in a way. You
can say, look, if who is Vietnam's competitor. So if
if Vietnam's competitor is India and Vietnam's tariff is at
twenty percent and India's tariff is at fifty percent, you
could argue Vietnam is better. Right, Yeah, they're hitting with
(10:43):
twenty percent, but their competitors, not Singapore is at ten percent,
their competitors at India's fifty percent. So really you have
to get into the tariffs are relative. You have to
look at where's your competitor, what manufacturing sector, and are
you in and are you coming out better off than
your competitors. So there are no I would argue when
we have eliminated to a degree, to a large degree,
(11:06):
the global rules based trading system and we are now
in something different that is just being built up. Long run,
we don't know who's going to be better at the
Costs are going up for everybody. But if the costs
are going up less for you than your competitor, maybe
you're going to be better off. If China's tariffs are
going to be at one hundred and forty five percent
(11:26):
and Vietnam's tariffs are going to be at twenty percent,
in Malaysia at twenty and nineteen and whatever those numbers are,
then they're going to be better off. But boy, if
Vietnam's getting hit with a forty percent tariff on tranship
goods and we can talk about whatever that means under
this administration, and China is less than forty percent, well
(11:46):
then Vietnam's way worse off than China. So all of
this is still it's all relative. I wouldn't call out
any winners or losers yet. I would say everybody's a
loser if you're exposed to global trade. But there's going
to be people who are certainly going to lose less well.
Speaker 1 (12:01):
Picking up on that transshipment piece, there has been an
interesting development in this administration where they're really sort of
a pay for play model in some ways. So there's
this transshipment component in trade, which they haven't really described,
The White House hasn't described, and people are still kind
of unsure what it means. But there was also this
(12:21):
idea that for some chips companies that they would have
to give back to the US some of the profit
from selling certain chips to China, for example. How do
you see that monetization? How big is that or how
new is that development?
Speaker 3 (12:37):
Is that worrying for companies?
Speaker 4 (12:39):
Yeah, in some ways it's very easy to explain, you know,
President Trump, because he'll say something and believe him when
he says it. It's all you have to do. Listen
to what he says, and when he says, the United
States is the biggest store in the world. Everybody wants
to shop here. I own the store. I set the prices.
(13:00):
And it's literally what President Trump has said. So you
have to recognize he's going to set the prices. You
want to shop in the United States, here's what you're
going to pay. You want to take from the United
States and send it to China, here's what you're going
to pay. And this is extremely worrying because you don't
know what that price is going to be at any
given time, and you don't know what he's going to
focus on at any given time. And the issue. For years,
(13:25):
basically trade was allowed except for areas that we would
call national security. So you could ship anything, you'd send
anything you wanted to China unless it would harm the
national security. Obviously, military equipment was always in that category.
You wouldn't send that to China or other countries of concern,
you know, Russia, Iran, name your country in that category.
Now what's happening is that national security and trade are
(13:49):
becoming much more intertwined. And now when you start looking
at AI, or you look at facial recognition, you look
at drones, you would say, well, drones can be used
for very good purposes, for search and rescue, for better
irrigation of crops, any number of things drones are very valuable,
and of course drones are also very deadly. So now
(14:09):
you get more things that could be national security, could
be just economics and trade. And that's where you're getting
this blurring of the lines. And what you need to
know is the business. What's national security? What can't I ship?
I don't go anywhere near that? And I stay. It's
getting harder and harder to do that now when President
Trump is saying something like to Navidia and others, well,
(14:32):
you can't ship this to China because it's national security
unless you pay us some fee to do that. Well,
now that's not national security anymore. How can that be?
Either it is or it isn't. And so it is
this unknowingness, I say, this uncertainty, which everybody talks about
all the time. But it's even getting more uncertain as
we go forward to say, I'm going to pick winners
(14:53):
and losers, and I'm going to say, you can't ship
this if it's national security unless you pay me. How
do you bargain around it? Now we can either stay
or go to transhipments, which is a whole another different
issue that is going to cause a lot of complications
in trade as well.
Speaker 2 (15:06):
Steven, I wanted to before we get to transhipments, I
wanted to discuss the US and the trade negotiations with China.
Speaker 3 (15:14):
Do you think the.
Speaker 2 (15:14):
Administration, the US administration underestimated the resolve of China, and
in particular China's retaliatory threat of potentially withdrawing the export
of rare earths.
Speaker 4 (15:26):
Yeah, and that's the is Donald Trump would say in
America first, would say, we are the biggest, most powerful
country in the world under any metric that you want, economic, military, diplomatically, culturally,
and therefore, when we negotiate one on one, to use
a Trumpian tern, we have all the cards and we
(15:46):
are going to use all of that leverage against you
to get the best deal for the United States because
nobody has cards against us. That's true, except when it
comes to China. China has cards. And that's the rare
ears is one of those cards that China can play,
and it is why we haven't seen you know, we've
seen a standstill for the most part. Now that said,
(16:06):
tariffs are extraordinarily high. Tariffs are basically at fifty percent
for China. That is astronomical, more than we've ever would
have considered to be normal in our lifetime, and now
we say, oh, it's only fifty percent. So let's keep
in mind this is really out of the ordinary. But
let's see when the US really negotiates with somebody who
has leverage against the United States, how it plays out.
(16:27):
We're certainly going to watch that. But in every other negotiation,
the US has used basically all of its power to
leverage what it could get and has received. Certain countries
have certain lines that you can't cross, but boy, they're
not nearly the line that China has.
Speaker 1 (16:44):
Yeah, there's an interesting difference between how Trump is treating
China in this administration versus the last. It seemed a
lot more targeted.
Speaker 3 (16:53):
At China and the first administration.
Speaker 1 (16:55):
And now we've got this period of you know, ninety
days where they're going to continue to negotiate. It seems
like things are warming up, or at least it's sort
of a stasis. You know. Are you surprised by how
Trump seemingly has been less hawkish maybe than some in
the administration.
Speaker 4 (17:14):
Well, I mean, we've got to go back to why
is the US doing what it's doing, you know, visa
via China, And that is because look, China started this
trade war against the US fifteen years ago, twenty years ago,
whatever date you want to put on it. And the
United States had a bipartisan policy, you know, you go
to Clinton, you go go to Bush, you could go
to the beginning of the Obama term, that we would
(17:35):
engage with China, we would accommodate their rise because as
they came into the global rules based trading system, they
would become one of the they would follow all those rules,
and China didn't. And China used the power of its state.
You can look at Made in China twenty twenty five,
which came out in twenty fifteen, and China said, we
are going to use the power of the state to
(17:56):
dominate the key sectors of the twenty first century AI, renewables,
electric vehicles, biopharma, and China was extraordinarily successful using the
power of the state to do that. In China had
a policy called dual circulation, where China said, we are
going to keep the Chinese market for China. That's one circulation,
(18:18):
and then the second circulation, the duel is that we're
going to use Made in China twenty twenty five to
dominate globally. The key sectors of the twenty first century,
and they do dominate a lot of those sectors now,
certainly in the electric vehicle space. And if you look
at what's happened in China over the last two three decades,
the US has become more reliant on China will China
(18:39):
has become less reliant on the United States. That had
to change, the unfair practices, the state subsidies, the force,
technology transfers, all of that. The US is reacting to.
It started under Obama where he started to shift and
you saw that with CPTPP or then called TPP that
he focused on to try and constrain China. Did work.
(19:01):
Trump one started it with the targeted tariffs. Biden continued
every tariff that Trump had and upped some of them,
and now Trump two point zero is taking it even further.
There is no walk back yet. This is very consistent
with American foreign policy, not Trump foreign policy, American foreign policy.
And until China changes, we don't see that coming anytime soon.
(19:24):
Don't expect the United States to change. Where the debate
you have right now in the Trump administration is the
way I used a SoundBite on this is Will Bessent.
Trump Rubio. Rubio is in that hawk ish camp. Rubio
is that China is our adversary, not strategic competitor. China
(19:45):
is our adversary, and if we stay on the path
we're on now, China is going to control everything we
need access to within ten years from now, and we
cannot allow this to happen. The cent is more of
the I recognize where China is, but we have to exist.
There's a lot of money to be made. Let's do
a deal with China. And so you see, even within
(20:06):
the Trump administration, you have the business end camp and
the Rubio camp, and we don't know how that's going
to turn out yet and what we're all watching, of course.
Speaker 3 (20:13):
That's interesting.
Speaker 1 (20:14):
So you don't see President Trump as starting quote unquote
the trade war.
Speaker 3 (20:20):
You say, it's.
Speaker 1 (20:20):
Actually going back to what China has done basically since
joining the World Trade Organization in China twenty twenty five.
Speaker 4 (20:28):
Yeah, I get what started. I mean, the hope was
with China joining the WTO, it would become follow all
of those rules and it could it would go over time.
And that didn't happen. And now you could say that
this was the American This is the American view, the
American view, of the Western view, the Japanese view was
that China was on the path to do that and stopped,
or we got it wrong and China was never going
(20:49):
to do that. We should never have done what we did,
going back to the wto ascension. Time doesn't matter why
either China change or the West got China wrong. They're
not doing it now. So it is not a Trump thing,
and it is not a US thing. Who is putting
tariffs on electric vehicles Canada, Mexico, Japan, India, Brazil. This
(21:12):
unfair competition is not something that is only impacting the US.
The dumping of excess capacity into markets is not just
into the United States. The Southeast Asian countries are very
concerned that China is going to take all of these
state subsidized goods and jump them into Southeast Asia. And
(21:32):
that's why you have tariffs on China from Indonesia and
Malaysia and Thailand. You know you can sense this. I
think it really drives me crazy because Trump, who is
supposed to be this master pr person in people, you know,
say it's a Trump trade war. It's not the Trump
trade war. This is the China's trade war. That the
(21:53):
US and others are now engaged on. The EU has
the same exact issues that the Americans have, and so
as all of this plays out, it is a global issue.
And what's interesting is is Trump taking this too far?
And is he not recognizing this? And this fifty percent
tariff that the US is threatening India with, is that
(22:13):
pushing India towards China? Right? India has banned goods from
China coming in because they don't want that China shock
to happen to them as they start to rise in
a manufacturing base. But is Trump pushing India towards China
where it doesn't want to be?
Speaker 1 (22:27):
I was just about to ask on that exact point,
are global tariff's way to do that? Because the risk is,
of course, with these high tariffs on all countries into
the US, it will kind of what S and P
has called it in a recent report, established this sort
of south south trading system with China at the center
of it. So are on tariff's kind of countered to
(22:49):
what Trump wants to do?
Speaker 4 (22:51):
Well, we'll put aside whether China is at the center
of anything on trade, because the issues everybody has with China,
these are not US issues, the dumping of the access capacity,
the state subsidies, the protecting of the domestic market. This
is done globally, So I don't think you're going to
see China take the United States's place as the center
(23:12):
of the trading work, and you're going to see different
You're going to see much different trade flows. Eventually, you're
going to see different trade agreements eventually that don't center
on the US or China. So that's I think what
we have to keep in mind. Well, if the US
has three types of tariffs, if you want to think
of it broadly, the US has three types of tariffs.
It's looking at right now, it's got the tariffs on China,
(23:34):
and that is to address everything that we've been talking
about in terms of unfair competition, state subsidization, force technology transfers,
intellectual property.
Speaker 2 (23:43):
Theft, and the like.
Speaker 4 (23:44):
So you have one bucket of tariffs at China tariffs.
The second bucket of tariffs are the reciprocal tariffs. These
are the tariffs that the US is putting on the world,
and you get your rate based on some formula that
they made up, and that is because of the trade
imbalance the US has. Then you have the third bucket
these national security tariffs, and these are the tariffs that
the United States is putting on to either it could
(24:07):
be reindustrialized, you know, it could be resure. Maybe you
could use them for friendshoring. So there's possibilities there in
the two thirty twos. The mistake, I think without question,
that the United States is doing under this administration is
these global reciprocal tariffs. A trade and balance, per se
is not a bad thing. People say, I have a
trade and balance with my barber. Every time I go
(24:28):
get a haircut, I give him money. He doesn't give
me money. So I have a trade and balance with
my barber. I want a trade and balance with my barber,
or my hair would look ridiculous. So the reciprocal tariffs,
that is the problem. National security tariffs, if they're done
the right way, you need to have national security tariffs.
Now we'll argue, and I would certainly argue that he's
blown up the definition no pun intended of national security
(24:51):
tariffs by having nine different types of sectors that you're
looking at. But no, you do need a domestic auto
manufacturing sector because you need auto sector for your military.
Makes perfect sense to have auto tariffs on certain countries,
but you don't necessarily want to put auto tariffs on
your partners and allies because you don't worry about them.
(25:12):
So though there is a place for tariffs, there's a
place for certain tariffs. I'd argue there's a place for
China tariffs. There's a place narrow for national security turffs.
These global tariffs are really going to damage I think
the United States long term, Stevin.
Speaker 2 (25:25):
Do you think the US is however, you know we
mentioned this before, but is losing friends like we mentioned India,
there's also the case of Brazil as well. Like Brazil
which is quite interesting because the US actually enjoys a
trade surplus with Brazil and they've been slept with the
fifty percent tariff. Switzerland has been slept with a thirty
nine percent tariff.
Speaker 3 (25:44):
In Canada, Yeah, what did Canada do?
Speaker 2 (25:47):
And even a place like Australia they have a trade
deficit with the US and they still have to pay
ten percent.
Speaker 4 (25:53):
There's a Singapore Because Donald Trump looks at the world
through one lens on trade, and that is does the
US have a trade surplus or a trade deficit? The
US has a obviously trade deficit, so therefore everybody has
to help us offset that. And he will say, I
can look at you and I will say I'm going
(26:13):
to hammer you with tariffs, but you're going to be
in the five Eyes. You know, you're going to be
part of the national security team that we're going to
share the most sensitive information with. But New Zealand would be,
you know, one of the five eyes. Yet I'm going
to hit New Zealand with fifteen percent teriffs. You can't
look at the world as he is looking at it
in such a silo and not expect to lose friends
(26:34):
if you're an ally or an ally and everything, and
you need to treat people like allies as a friend
of mine phrases it. You know, this administration has no
strategic empathy whatsoever. They look at everything from a US perspective.
What is in the single best interest of the United States.
I define that is getting investment into the United States.
I define that is getting tariff revenue in the United States,
(26:56):
and nothing else matters. And I don't care what you
think about it New Zealand, Canada, Greenland, Japan, career whoever.
And I do think this is costing the US partners
and allies now part of this of the Americas is Okay,
where are you going to go? What else are you
going to do? And you're not going to China? And
so where does that leave you? And so this is
(27:19):
where right now the situation that you have globally is
that people are being very quiet about all of this
disruption that's happening. On the surface, countries are being quiet
about it, businesses are being quiet about it. Investors are
being quiet about it, in large part because you don't
want to say anything negative about the president because that
(27:40):
may bring action against you. But under the surface, there's
a lot that is going on right now in what
is the foundation of the global trading system going to
be since we don't have one anymore and the US
is not part of that discussion.
Speaker 1 (27:57):
On that point, you wrote in NY recently about the
collapse of Brand America, as you called it. So the
idea that consumers from Canada to China are boycotting US
goods and it's kind of paired with this concurrent rise
in nationalism spending in China, for example. So how different
is that pushback right now than prior years And do
(28:21):
you think that it's salvageable at some point, is it
just associated with Trump or is sort of a longer
term damage.
Speaker 4 (28:28):
Well, there's no question there's going to be a longer
term hit to brand America, and that is going to
extend out. You're already seeing it with people who aren't
traveling to the United States, so that's hitting hospitality, it's
hitting the airlines. So you're seeing that. I mean, you
could see it in discrete areas, which you've seen before.
I mean you've seen, you know, boycotts in Malaysia right
(28:50):
now in particular against the Starbucks or McDonald's or KFC
or whoever because of what the US policy was in
terms of Israel. And but now it's not just a
policy boycott that you're seeing. It's now broadening out into
the US. So some of it you're seeing in a
movement away from travel to the US. It could be
(29:11):
a movement away from US goods. But the question then
is going to become what happens when Americans, who are
very used to getting access to government officials really at
the highest level in most countries, that access is going
to start to go away too. Governments aren't going to
say I can't meet with the Americans because that is
going to bring blowbacks. So this is all just starting now,
(29:32):
and you know, certainly the US businesses who I'm talking
to are really trying to think through what is it
that we have to do differently. A lot of what
that American brand stood for was we treat our people well,
we pay them well, we give back to the community.
You know, we don't engage in corruption, we follow the rules.
(29:55):
I mean in all of these benefits that you had
from being an American company would mean people were more
willing to work for you. Foreigners were much more willing
wanted to work for American companies in their country as
opposed to their national champions. All of that is certainly
starting to shift now, and the question is what should
(30:16):
US companies be doing about that? And the discussions we're
having is you need to stick to your values. You
need to really talk about your values now more. And
you can't take it for granted that people say, oh,
you're a US company, you must do a B and C.
You now need to be proving it. You now need
to be going out into the community. You now need
(30:37):
to be meeting with the foreign governments showing them how
much benefit you're bringing. Because most American companies who work overseas.
You know, they may have a couple of as pets,
but they're predominantly employing local hires. Show what you're doing,
and then bring those local hires, train them to move
from entry level to management, you know, into mid management,
(30:59):
into upper manager. You're going to have to do a
lot more of that to offset the damage that is
being done right now to brand America. By the way,
the Trump administration is engaging with foreign governments.
Speaker 2 (31:13):
And Steven, what's next, Like, do you see a wood
where these taiffs could actually be dulled back?
Speaker 4 (31:18):
Yeah? I thought you were going to say, could I
see a world where they're going to go away? And
the answer is an easy one to that. No, they're
not going away. And what's going to happen is, you know,
certainly the US is going to get addicted to tariffs.
They do count towards revenue. And yes, the teriffs are
a tax on Americans, and Americans haven't been paying as
much of that tax because some of it's been eaten
(31:40):
by the customers, some of it of the manufacturer and
the you know, the importer. Some of it has been
pushed back into the supplier. But that's going to be
less and less. So there's a component that's a tax
on Americans, but there is also others who are paying
part of that tariff, and the US is going to
get addicted to that revenue because it's being used to
pay for other things. Part of it is that three
(32:02):
years from now, you're going to have we don't have
any trade agreements yet. At some point we are actually
going to have some signed deals between the United States
and Japan, Korean, Indonesian, Malaysian, Vietnam and presumably Singapore and others,
and it is going to take a long time to
unnegotiate or renegotiate those trade agreements. So you're going whatever
(32:24):
you sign, you are going to have to that's not
going to get unsigned. Whoever the next president is, I
don't care if it's a Democrat, if it's a MAGA,
if it's more of an establishment Republican. You're going to
be living with that trade agreement for a while. Will
some of the tariffs be dialed back at some point? Yes,
When and by how much we don't know. And so
that is why governments are asking themselves today, should I
(32:48):
sign an agreement with the United States? Because what happens
if three years from now I have no agreement, then
by existing agreement states And so I'll take this little
hit on tariffs because some of them will get back,
but the other things won't. And I'll just say to
give credit to the Trump administration on this front, there
are a lot of significant non tariff barriers that businesses face.
(33:10):
It's not just all about tariffs. It's about slow walking
of approvals. It's about not clearing your packages in a
timely manner. It's about not granting applications for immigration visas
or whatever it might be. It is certainly forced labor
that is a major issue in this part of the
world that should be addressed. An Ambassador Greer has said,
(33:34):
we are going to address non tariff barriers. Non tariff
barriers are a key part of the America First trade policy.
I just wrote an op ed on this that you'd
better make sure you do not have forced labor in
your operations or in your supply chain here in Southeast
Asia and in Indonesia in particular, because you may think,
and you might be correct, that Donald Trump is anti
(33:56):
ESG and he's anti woke, and certainly his administration and
certain Marias is dialing back human rights, but in other
areas they're doubling down on human rights, and you better
be paying attention to that. And that isn't going to
go away either. So yeah, some of this will get
dialed back over time, but we're not going back to
pre I think it was January twentieth this year, whatever
(34:18):
it was before Inauguration day was this year. We're not
snapping back to the day before that, no matter who
the next president is, no matter what party he or
she is from.
Speaker 1 (34:28):
Now maybe as a final question, I mean, this is
going to be really pulling back here, and it could
threatens to be too big of a question. But I'm
just curious from your view, you know, in three years time,
where is America geo strategically, economy wise in the global system.
Speaker 3 (34:47):
Is it generally, in your view, going to be.
Speaker 1 (34:50):
Better off or worse off or is it maybe a wash?
Speaker 4 (34:56):
I mean, I think it is going to be overall
worse off. As the US benefited from the rules based
global trading system because it afforded certainty, It opened markets
for the United States. It gave great advantage to the
US when it comes to services, something that this administration
(35:18):
and this president doesn't seem to care about but the US. Yeah,
we might be in a manufacturing deficit, but we are
a service's powerhouse, and all of those the upsides of
the global system we're not focusing on anymore now. There
are downsides that need to be addressed that China needed
to be addressed, and it was being addressed started with Obama.
(35:40):
Trump no question accelerated a Biden kept it. Trump's taking
it even further. But we should be working with our
partners and allies who have the same issues with China
that we do, and we're losing that. The US is
going to be worse off in confronting China where it
needs to be confronted because we're better not doing that alone.
So I think we're going to be worse off in
that regard. I think you certainly could have addressed all
(36:04):
of the issues that were in the WTO and the
multilateral Trading System is instead of just blowing it up
and seeing what comes next. I think we're going to
be worse off from that point. But I think to
really answer your question three years from now, how is
the US going to be, Well, first you got to
tell me what is China do in reaction to what
the US has been doing, because as we said earlier,
that shoe hasn't dropped yet. So what is China going
(36:27):
to do? And then what is it going to US
going to do? What if the US starts to say
to Vietnam you can no longer have goods that have
content from China other than from a the minimal perspective
coming in to the US, Well, what is China going
to do to Vietnam? And then what is going to
happen here in Southeast Asia? So we're really early days
(36:48):
in watching how this is going to play out, and
as we believe, maybe possibly Donald Trump's going to be
in Asia for the AUSION meeting or the APEC meeting.
We're all watching to see what happens with the next
step in the US China relationship. Is it going to
be the center Rubio driving it? What's Trump going to decide?
What'siegent being going to do? And then I can try
(37:09):
and start to answer your question about where the US
is going to be three years from now, But I
don't even know where we're going to be three months
from that.
Speaker 2 (37:15):
Steven, I'm really glad that you mentioned the services component
because a lot of this discussion has really focused on goods.
But as you mentioned, the US does enjoy a huge
surplus when it comes to services, Like everyone watches American films,
American investment banks dominate, everyone uses American auditing firms, advertising firms.
(37:36):
Can you see a world where, like possibly you know,
the Europe or other countries start putting some measures against
US services.
Speaker 4 (37:46):
I think China already did or certainly threatened it right
when China said, oh, We're not going to let any
Hollywood movies in anymore. And that's a huge generator of
brand America, of moving American board. In addition, of course,
do making a lot of money for the United States.
You have a huge surplus of course in the entertainment
industry and that part of the services industry. So you
(38:08):
did see retaliation being threatened on services in response to
the US threats on goods in that US China teariff war.
Now will others do that, or we'll China do that,
We'll China start to say okay, financial services, investment, banking,
life insurance, retail insurance, whatever you have in the financial
(38:32):
services side. Obviously all of the data centers in those
types of services all of that is of concern, and
I would certainly imagine, I think I can do more
than imagine that the services sector in the United States
is watching to see are they going to get dragged
into this or are they going to stay out of it?
(38:52):
And then if they're retaliated against, what does the US do. So, yes,
we've ignored in this whole discussion on trade for the
most part from this administration, how much of a benefit
services brings to the United States. There were a services economy,
and that is it is certainly something to keep under raiders. Great.
Speaker 3 (39:13):
Thanks so much for joining us today, Stephen Oh.
Speaker 4 (39:16):
Thanks for having me. I hope this was a good
back and forth and I look forward to continuing this
when we're all in Singapore.
Speaker 1 (39:23):
You've been listening to Asia Centric from Bloomberg Intelligence. I'm
Kaietdmitriva in Hong Kong.
Speaker 2 (39:28):
I'm John Lee, also in Hong Kong. You can listen
to all our episodes on Apple Podcasts, Spotify or review
Listen and this podcast was produced and edited by Clara Channa.
Thanks for listening.
Hosts And Creators
John Lee
Tom Corbett
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