April 3, 2025 • 21 mins
Trump announced the steepest American tariffs in more than a century, with a 10% tariff on all exporters to the US and even higher duties on some 60 nations. China now faces a tariff well above 50% on many goods.
On today’s Big Take, Bloomberg reporter Josh Wingrove joins host David Gura to discuss Trump’s “huge” announcement, and how it will reshape global trade.
Read more: Trump Tariffs Everyone, With Rate on China Set to Soar Above 50%
Further listening: The World Is Paying for Trump’s China Tariffs
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
World leaders, and Global Wall Street are parsing the tariff's
announcement President Trump made on Wednesday, shortly after markets closed
in the US. The President made good on a big
campaign promise to overhaul nearly a century of trade policy.
Speaker 3 (00:23):
By fellow Americans. This is liberation day waiting for a
long time.
Speaker 2 (00:29):
With a new executive order, Trump declared a national Economic
emergency and announced a baseline tariff of ten percent, along
with additional duties on a long list of countries.
Speaker 3 (00:41):
Indonesia, Malaysia, Cambodio. Who look at Cambodia ninety seven percent.
We're going to bring it down to forty nine. They
made a fortune.
Speaker 2 (00:49):
That's Trump reading from a chart printed on a piece
of poster board Commerce Secretary Howard Lutnik handed him in
the middle of the speech.
Speaker 3 (00:57):
We didn't want to bring this very windy out here.
We didn't want to bring out the big charts because
it had no chance of standing. Fortunately, we came armed
with a little smaller chuck.
Speaker 2 (01:07):
This announcement was a major event for the global economy
and for markets, and stock futures took a dive as
the President spoke the president's tariff's announcement is a major
assault on a system he is criticized for decades. Josh
Wingrove is a White House reporter for Bloomberg.
Speaker 1 (01:24):
Trump has been talking about this for a long time, clearly,
and he wanted a level of pageantry for it, and
he lined up his cabinet, he lined up workers, he
spoke it kind of an unusual location in the Rose
Garden that allowed him to get as many American flags
behind him as possible. He chose the longest edge, and
he's casting this as make America wealthy again. You know,
(01:47):
this is liberation Day for you know, what he believes
will be sort of a renaissance of American manufacturing.
Speaker 2 (01:53):
Josh says, the focus now is on the effects these
tariffs will have and what the trading partners Trump targeted
going to.
Speaker 1 (02:00):
Do countries will respond. The question is whether Trump then
upsit or whether that's sort of tit for Tat is
the end of it for now, and I think markets
will react obviously much more favorably if it's like a
one shot retaliation rather than an escalating fight.
Speaker 2 (02:19):
I'm David Gura, and this is the big take from
Bloomberg News. Today on the show Preston Trump's tariff's announcement,
what it means for markets, for the economy, for all
of us, and what happens next. Preston Trump spoke to
a crowd of supporters, advisors, including cabinet secretaries and members
(02:40):
of Congress at an event in the Rose Garden at
the White House. Bloomberg' Josh Wingrove says there was a
lot of fanfare, but the President didn't give a lot
of detail.
Speaker 1 (02:49):
Today's announcement For those who did not watch, it was
extremely Trumpian in that the actual rate was revealed by
him holding up a giant placard. Be it like four
feet by what five feet? I don't know it was.
It was a huge sign that he held up that
had the sort of presumed rate that the US believes
(03:12):
would be fair. And so that's how the world learned
about a thirty four percent tariff on China was by
Trump sort of revealing it like you know, a game show,
on a giant printed placard.
Speaker 2 (03:23):
Josh spelled out for us, what are the tariffs that
the president is putting in place?
Speaker 1 (03:27):
These numbers are bigger than anyone would have done other
than Donald Trump. But are also smaller than Donald Trump considered.
So a ten percent global tariff is just a major,
major departure from where the US has been going for
decades and decades and decades. This will be hundreds of
billions annually when combined with all the other stuff he
(03:47):
wants to do. That are import taxes, of course, and
some of that will be passed on to consumers. As
we know, Trump believes that a lot of it will
not a lot of it will be eaten by price
reductions by exporting countries. But you know, time will tell.
But the temper is on the lower end of what
we had heard. There was talk about twenty percent, but
the fine print is rolling in and that is narrowing
(04:08):
the scope and focusing the scope. For instance, they've said
that the tariffs will not stack on top of other
terrafs in some cases. So for instance, Australia is getting
a ten percent tariff, but Australian steel, an industry that
already has a twenty five percent tariff in effect already,
will not be on top of that, so you know,
it won't be thirty five for it, and there was
some fear that that would be the case in some
countries would get double or even triple whammies. But as
(04:30):
Trump's tariff sort of kick in, so that's been a
major narrowing here as well. They've also exempted certain countries
Canada and Mexico. Namely, this is a big one that
will be a sign of relief to some of those
closely integrated continental sectors, chiefly, I think the auto sector.
So it is bigger than almost anyone would ever have
done before him, and it's smaller than he was considering
(04:52):
hours before.
Speaker 2 (04:53):
Toward the end of the President's speech, he started to
go through a list of what he called reciprocal tariffs
country by country percentages. The President says he'll put a
forty six percent tariff on Vietnam, a twenty five percent
tariff on South Korea, and a twenty four percent tariff
on Japan.
Speaker 1 (05:09):
I should know, without being too glib about it, like
there's deep frustration in the Republican Party and the Democratic
Party about the way that the global trading regime has
shaken out in the US and the impact it's had
on sectors like autos, like steel, and that they want
to change that. And the trick on this, of course is,
you know, how do you not change it too much
that you throw away all the progress you still have made, like,
(05:31):
for instance, American manufacturers that rely on foreign imported inputs
to make their goods in the US. Right, you know,
like the widgets that come into your factory don't often
come necessarily from down the road. If for an American manufacturer,
they come from lower cost markets abroad. And Trump wants
to change that as much as possible. But if you
try to change it overnight, many of these companies will
simply not make it. And that is not something any president,
(05:53):
even Donald Trump, would want to be in office presiding over.
But he does want major change here. Right, They've taken
and no pain, no gain approach, and they've sort of
warned that, look, this is not going to be smooth.
This is going to be bumpy. But how far they
want to go, we'll see. There are things still coming
down the pipe, and I think that that is important
to note here.
Speaker 2 (06:14):
Josh notes we've already had tariffs on cars and steel tariffs,
and President Trump has said there will be new duties,
even higher tariffs on semiconductors, critical minerals, lumber, and pharmaceuticals. Josh,
you covered Donald Trump on the campaign trail. I'm curious
how much of what we heard in that announcement on
Wednesday Jives is what he promised he would do on
(06:34):
the campaign trail.
Speaker 1 (06:36):
He's been saying this a lot on the campaign trail,
but the specifics were never really there, and the Republican
Party was always sort of picking which part it wanted
to listen to. As we're investors, right, people kind of
saw in the first term where he used tariffs as
a tool. The Republican Party is very comfortable with that,
no issue, even the anti tariff Republicans in Capitol Hill,
(06:58):
they do not mind Trump threaten tariffs left right and
center to get concessions out of countries. In fact, they
kind of like it. They think it's sort of flexing
as muscles. But as these tariffs started to come in,
I think people have thought, oh, whoa, he's like more
serious this time than in the first term. And that's
an important point. We've been talking about Donald Trump and tariffs,
not even just since this campaign, but since the two
(07:18):
previous ones. And in the first term it was much
more narrow, it was much more targeted. They did sectors
like steel and aluminum, but they exempted entire countries they
did lower numbers. For instance, it was ten percent on aluminum.
Now it's twenty five. And now we're doing not only
not exempting and not only doing higher numbers, but then
(07:38):
also filling in the blanks with across the board tariffs
on every other good under the sun. So it's much bigger,
it's much broader. Donald Trump himself believes in tariffs, and
I think the signal came on the campaign trail he
would talk about tariffs being his favorite word.
Speaker 4 (07:54):
I always say, tariffs is the most beautiful word to
me in the dictionary. And I always reprimand by the
fake news. They said, what about love, religion and God?
I said, I agree, Let's put God number one. Let's
put religion number two. I love, I don't know, I
got to put that number.
Speaker 2 (08:14):
Three, I guess right.
Speaker 4 (08:17):
And then it's tariff because tariff's are going to make
us rich.
Speaker 1 (08:21):
As he has been signaling for a long time that
this is where it was going to be. And the
question was just sort of like how, you know, focused
it would land and there'll be a lot of reporting,
I think in the coming days about what happened here
and who won you know, how these backroom chats shook out.
I will note not a lot of this leaked until
the announcement, and so the discussions that they were having
were clearly pretty animated, and clearly people were on different
(08:44):
ends of the spectrum on this, but they managed to
keep it mostly in house. One big question going forward
is where does he go from here? Does he strike
deals and bring those numbers down? You know, if someone
offers Tarrak concessions, does he meet them halfway? Or does
he get mad at retaliation? And we do expect retaliation
and ratchet things up even more.
Speaker 2 (09:06):
We'll get to that next. How are other countries going
to respond to what the President's announced? And how much
of an appetite does he have to negotiate. You reported
that in the hours leading up to this announcement that
the president's plans were still in limbo. What do we
(09:27):
know about what the sticking points were, what was being
debated among the president and his economic advisors? And I'm
curious what insight you have to who actually had his
ear as this was coming together.
Speaker 1 (09:36):
The fundamental discussion had to have been around scope, because
that was the difference, right that no one seemed to
be arguing a completely different approach, but how big a
brush they wanted to paint with. There seemed to be
real division on that, and going off of what people
are saying publicly, you know, you had the more hawkish
(09:57):
end certainly appears to have included Peter Navarro that goes
on TV and talks pretty strongly about how much he
believes in tariffs. And then other signs of concession or
you know, let's say adjustment maybe would be a better word,
have come from like Secretary Lutnik to Commerce Secretary Secretary Bessent.
His role, I think is a little unclear here. We
(10:18):
think we'll learn more about that in the coming days.
But the market signal had to have been going through
those two who have come from a finance background, And
of course markets have been nervous for weeks because when
Trump started actually putting pen to paper on these tariffs,
people realized that he wasn't entirely just using them as
(10:38):
a bargaining tool, and so that reaction had to have
been a factor. There has got to be an awareness
right now of the risk of going too big, too soon,
too quickly, and triggering some sort of downturn.
Speaker 2 (10:53):
Picking up on that over and over again, I Ford
investors talk about the consequences of uncertainty. Hear they said
they didn't on what the prison would do or what
he wouldn't do when it comes to trade policy with
this announcement, Josh, how much of that uncertainty went away?
Speaker 1 (11:07):
I think a lot of it went away, but there's
still some and there's still now new uncertainty. The existing
uncertainty is where the rest of these shoes are going
to drop on the other sectoral tariffs and how big
they're going to go. Although the breadcrumbs are leading in
one direction, he seems to always land at the number
twenty five for these, so you know, I would assume
(11:28):
that that would be a likely candidate for the tariffs
on things like lumber on pharmaceutical drugs since I make
Inductor chips. The question and uncertainly going forward is how
firm is he on this? How many exemptions are we
talking about here? And Trump has said he doesn't like exemptions.
Kevin Hasset, one of his economic advisors, came out and
(11:49):
talked to reporters a couple of weeks ago and said,
if I start talking about exemptions, he kicks me out
of the room. So Trump does not want to start
nipping and tucking here and there. And that's going to
get tricky because some of these tear tariffs are going
to start hitting things like I don't know, critical pharmaceutical
drugs or essential parts that get complicated for cars if
(12:10):
they're tariffed at a particularly onerous rate. Autoparts tariffs, by
the way, are coming as well in the coming weeks
and months. They haven't specified when, and so I think
that is going to be a key pressure point once
you start seeing choke points emerge from this tariff policy
in certain industries, in certain sectors where it threatens either
American jobs or you know, to become a political problem. Otherwise,
(12:34):
will Trump be adaptable to that. A lot of presidents
would like nip and tuck and you know, change things
on the fly. Trump is signally he is not interested
in that.
Speaker 2 (12:42):
So we'll see, Josh, what happens next. Do these policies
that the President announced go and effect immediately? And if not,
what's going to happen between now and when they do
go into effect?
Speaker 1 (12:53):
They go into effect over the next week or so.
The first trunch, the ten percent baseline goes into effect
this weekend. The bigger numbers for what they've think or
the worst defenders going to effect a few days later.
The auto tariffs that were already tied up still go
into effect on Thursday, and then other stuff is sort
of coming after that. What happens next is that we
will continue to see him march towards the sector specific tariffs,
(13:17):
and we will see how he triages these requests either
from industries in America to change things, tweak things, examt things.
He has bowed to that before with autos, but has
later grumbled about it. So whether he's keen to do
it again, I think remains unclear. Even if he did,
at the end of the day, he would get to
that ten percent baseline number. So it's still going to
(13:38):
be a fairly significant tariff. And remember they're talking about
replacing income tax revenue with tariff revenue. That's tricky for
a couple of reasons. Number one, how because Republicans don't
really have a clear plan yet on their reconciliation package,
and in particular tax cuts that would be broad based.
And number two, tariff revenue might decline or plateau over time,
(14:04):
and it's less predictable than income tax revenue, so that
gets tricky in terms of forecasting and this of that,
because of course people might buy less of a product
over time once they realize it's tariff and address to
other alternatives.
Speaker 2 (14:16):
Josh, what did President Trump say about his appetite to
negotiate with the countries he's targeted with these tariffs, either
in the Rose Garden or what's he said leading up
to it.
Speaker 1 (14:24):
He has sent mixed messages on that, and on the
one hand saying he wants to make deals and this
is all about reciprocity. You charge us what we charge you,
or will charge you you charge us, And so by definition,
if someone wants to come to him and drop their tariffs,
he's willing to listen. He wants this to be the
new order, and he wants people to adjust to the
(14:47):
new order, and he wants companies to make pledges to
invest in America. And so my expectations are sort of
modest at best that there'll be substantial changes to this.
But yeah, I mean, I think he will love to
announce deals and reductions, and so I think we'll see
a bit of that. But they're talking about hundreds of
billions in revenue each year, trillions over a decade, which
(15:09):
is the customary budget forecast window here in Washington, and
so I don't think that that number is going to
change a lot. It'll change on the margin for particular countries.
Speaker 2 (15:18):
Josh, what did the audience for this announcement tell you
about the way the White House is going to approach
selling this policy to Americans? So, as you said, there
were cabinet secretaries there, members of Congress. At one point,
he pulled up an auto worker who supported his candidacy
to speak to the crowd.
Speaker 1 (15:33):
We support Donald Trump's policies on tariffs one hundred percent.
Speaker 3 (15:39):
So, mister President, we can't thank you enough.
Speaker 2 (15:42):
And in six months or a year, we're going to
begin to see the benefits. I can't wait to see
what's happening three or four years down the road.
Speaker 3 (15:48):
Thank you, mister President.
Speaker 2 (15:50):
How's he going to make the case that this is
something that the US needs to do.
Speaker 1 (15:53):
They have been amplifying the relatively small number of stakeholders
who think this is a good idea. The steel industry,
for instance, loves steel tariffs. It tends to boost their
prices and help things along. The people that don't love
steel tarffs are everyone who has to buy steel, including
the car industry, for instance, so they're much less jazzed
about it. And so Trump is pointing to the first group.
(16:14):
He's pointing to steel workers. He's pointing to union leaders,
including the United Auto Workers, who've talked about the positives
of at least some of this. But it's a fairly
narrow margin. So I think we're going to continue to
hear this coming from him, from his aids, from his
loyal members on Capitol Hill, from his cabinet, and less
so from others. But I will note a lot of
(16:36):
the stakeholders in industry I think have learned a lot
from the first term. They are not standing on the
street corner outside of the White House with a sign
protesting these tariffs. Nor are they really putting out fiery
statements or taking ads on Fox that run in Palm
Beach on the weekend so the Trump will see it.
They are really kind of keeping their advocacy largely behind
(16:57):
closed doors and thinking that that is the best way
to drive this to a different outcome. But the President
believes in tariffs. I don't know how to explain that
sometimes other than that he just is a vowed that
other countries have ripped off the US for a long time.
A lot of this seems to be rooted with what
(17:18):
he thinks that Japanese did in the eighties. The guy
loves tariffs. He's been waiting for this day a long time,
and I think we should expect tariffs to substantially be
part of the picture as long as he's president.
Speaker 2 (17:29):
I should say you and I are talking just a
couple hours after this announcement. You mentioned that economists have
been trying to game out who's going to pay for this,
what the effect is going to be on the global economy. Yes,
external economists, but our own colleagues at Bloomberg Economists have
been doing that as well. Where are we in kind
of getting an understanding or a forecast for what this
might mean?
Speaker 1 (17:48):
Our friends at Bloomberg Economics have been crunching these numbers
to the extent that there are numbers to crunch, right,
and Trump has been sending mixed signals, and so the
output really ranges. You know, there's like the sort of
max list approach, which would be a much more significant
headwind to growth and a much more significant thorn to
the FED, and a much more significant threat of a
(18:09):
downturn So this kind of lays in the middle a
little bit, and I will be reading closely as everyone will,
how they hash this out, for instance, as we sort
out what other tariffs might still be stacked on top
of these, whether these replace existing things. These are important questions.
But what all their work shows is that prices will
(18:31):
rise for consumers and that that will complicate things in
a range of ways. It kind of makes things tricky
for the FED, who will be facing questions of rising
prices but also stagnating growth. And it makes things tricky
just broadly, as Trump also tries to sketch out a
budget plan that is banking on fairly robust growth that
(18:54):
he just put a weighted blanket on the shoulder of
to try to sort of also reset the manufacturing base.
There will be a price for this. It's the short
answer of all the analyses, but it's been unclear because
the details haven't been laid out until now.
Speaker 2 (19:08):
Let me ask you, lastly, Josh, sort of how this
fits in with Wall Street's expectations. So if Wall Street
had its worst case scenario and its best case scenario,
where does this fall.
Speaker 1 (19:20):
I think that again you have to grade Trump on
a curve as Trump goes, this is a sort of
moderate outcome. This is not the full fire and fury
approach that they kicked around, and he likes to do that, right.
He likes to threaten everything and then come out with
a slightly less onerous version of that. And then people
(19:42):
are like, ah, he's moderating, but grading Trump against other presidents,
this is still a maximalist approach. If Joe Biden wanted
to put a ten percent tariff on everything, I would
be curious about what Republicans would have thought about that.
I think they would not have been super keen. Areas
of overlap a lot between the parties, like on China,
(20:02):
for instance, so tariffs are a tool that both are
willing to wield. But the scale of this is huge,
So I think as Trump goes, this is not as
widespread as the worst fears of markets in Wall Street.
But it's big, and it's bigger than a lot of
presidents would have done, and we're just beginning to chew
through what impact it's going to have.
Speaker 2 (20:25):
Josh, thank you very much, thanks for having me. This
is the Big Take from Bloomberg News. I'm David Gura.
This episode is produced by Alex Tye, Rachel Lewis Chrisky,
and our deputy executive producer Julia Weaver. It was edited
by Patty Hirsch and Derek Wallbank. This episode was mixed
and sound designed by Alex Segura and fact checked by
Nami Ing. Our senior producer is Naomi Shaven. Our senior
(20:48):
editor is Beth Ponzo. Our executive producer is Nicole Beemster Bor.
Bloomberg's head of podcasts is Sage Bowman. If you like
this episode, make sure to subscribe and review The Big
Take wherever you get your podcast. It helps people find
the show. Thanks for listening. We'll be back tomorrow
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
World leaders, and Global Wall Street are parsing the tariff's
announcement President Trump made on Wednesday, shortly after markets closed
in the US. The President made good on a big
campaign promise to overhaul nearly a century of trade policy.
Speaker 3 (00:23):
By fellow Americans. This is liberation day waiting for a
long time.
Speaker 2 (00:29):
With a new executive order, Trump declared a national Economic
emergency and announced a baseline tariff of ten percent, along
with additional duties on a long list of countries.
Speaker 3 (00:41):
Indonesia, Malaysia, Cambodio. Who look at Cambodia ninety seven percent.
We're going to bring it down to forty nine. They
made a fortune.
Speaker 2 (00:49):
That's Trump reading from a chart printed on a piece
of poster board Commerce Secretary Howard Lutnik handed him in
the middle of the speech.
Speaker 3 (00:57):
We didn't want to bring this very windy out here.
We didn't want to bring out the big charts because
it had no chance of standing. Fortunately, we came armed
with a little smaller chuck.
Speaker 2 (01:07):
This announcement was a major event for the global economy
and for markets, and stock futures took a dive as
the President spoke the president's tariff's announcement is a major
assault on a system he is criticized for decades. Josh
Wingrove is a White House reporter for Bloomberg.
Speaker 1 (01:24):
Trump has been talking about this for a long time, clearly,
and he wanted a level of pageantry for it, and
he lined up his cabinet, he lined up workers, he
spoke it kind of an unusual location in the Rose
Garden that allowed him to get as many American flags
behind him as possible. He chose the longest edge, and
he's casting this as make America wealthy again. You know,
(01:47):
this is liberation Day for you know, what he believes
will be sort of a renaissance of American manufacturing.
Speaker 2 (01:53):
Josh says, the focus now is on the effects these
tariffs will have and what the trading partners Trump targeted
going to.
Speaker 1 (02:00):
Do countries will respond. The question is whether Trump then
upsit or whether that's sort of tit for Tat is
the end of it for now, and I think markets
will react obviously much more favorably if it's like a
one shot retaliation rather than an escalating fight.
Speaker 2 (02:19):
I'm David Gura, and this is the big take from
Bloomberg News. Today on the show Preston Trump's tariff's announcement,
what it means for markets, for the economy, for all
of us, and what happens next. Preston Trump spoke to
a crowd of supporters, advisors, including cabinet secretaries and members
(02:40):
of Congress at an event in the Rose Garden at
the White House. Bloomberg' Josh Wingrove says there was a
lot of fanfare, but the President didn't give a lot
of detail.
Speaker 1 (02:49):
Today's announcement For those who did not watch, it was
extremely Trumpian in that the actual rate was revealed by
him holding up a giant placard. Be it like four
feet by what five feet? I don't know it was.
It was a huge sign that he held up that
had the sort of presumed rate that the US believes
(03:12):
would be fair. And so that's how the world learned
about a thirty four percent tariff on China was by
Trump sort of revealing it like you know, a game show,
on a giant printed placard.
Speaker 2 (03:23):
Josh spelled out for us, what are the tariffs that
the president is putting in place?
Speaker 1 (03:27):
These numbers are bigger than anyone would have done other
than Donald Trump. But are also smaller than Donald Trump considered.
So a ten percent global tariff is just a major,
major departure from where the US has been going for
decades and decades and decades. This will be hundreds of
billions annually when combined with all the other stuff he
(03:47):
wants to do. That are import taxes, of course, and
some of that will be passed on to consumers. As
we know, Trump believes that a lot of it will
not a lot of it will be eaten by price
reductions by exporting countries. But you know, time will tell.
But the temper is on the lower end of what
we had heard. There was talk about twenty percent, but
the fine print is rolling in and that is narrowing
(04:08):
the scope and focusing the scope. For instance, they've said
that the tariffs will not stack on top of other
terrafs in some cases. So for instance, Australia is getting
a ten percent tariff, but Australian steel, an industry that
already has a twenty five percent tariff in effect already,
will not be on top of that, so you know,
it won't be thirty five for it, and there was
some fear that that would be the case in some
countries would get double or even triple whammies. But as
(04:30):
Trump's tariff sort of kick in, so that's been a
major narrowing here as well. They've also exempted certain countries
Canada and Mexico. Namely, this is a big one that
will be a sign of relief to some of those
closely integrated continental sectors, chiefly, I think the auto sector.
So it is bigger than almost anyone would ever have
done before him, and it's smaller than he was considering
(04:52):
hours before.
Speaker 2 (04:53):
Toward the end of the President's speech, he started to
go through a list of what he called reciprocal tariffs
country by country percentages. The President says he'll put a
forty six percent tariff on Vietnam, a twenty five percent
tariff on South Korea, and a twenty four percent tariff
on Japan.
Speaker 1 (05:09):
I should know, without being too glib about it, like
there's deep frustration in the Republican Party and the Democratic
Party about the way that the global trading regime has
shaken out in the US and the impact it's had
on sectors like autos, like steel, and that they want
to change that. And the trick on this, of course is,
you know, how do you not change it too much
that you throw away all the progress you still have made, like,
(05:31):
for instance, American manufacturers that rely on foreign imported inputs
to make their goods in the US. Right, you know,
like the widgets that come into your factory don't often
come necessarily from down the road. If for an American manufacturer,
they come from lower cost markets abroad. And Trump wants
to change that as much as possible. But if you
try to change it overnight, many of these companies will
simply not make it. And that is not something any president,
(05:53):
even Donald Trump, would want to be in office presiding over.
But he does want major change here. Right, They've taken
and no pain, no gain approach, and they've sort of
warned that, look, this is not going to be smooth.
This is going to be bumpy. But how far they
want to go, we'll see. There are things still coming
down the pipe, and I think that that is important
to note here.
Speaker 2 (06:14):
Josh notes we've already had tariffs on cars and steel tariffs,
and President Trump has said there will be new duties,
even higher tariffs on semiconductors, critical minerals, lumber, and pharmaceuticals. Josh,
you covered Donald Trump on the campaign trail. I'm curious
how much of what we heard in that announcement on
Wednesday Jives is what he promised he would do on
(06:34):
the campaign trail.
Speaker 1 (06:36):
He's been saying this a lot on the campaign trail,
but the specifics were never really there, and the Republican
Party was always sort of picking which part it wanted
to listen to. As we're investors, right, people kind of
saw in the first term where he used tariffs as
a tool. The Republican Party is very comfortable with that,
no issue, even the anti tariff Republicans in Capitol Hill,
(06:58):
they do not mind Trump threaten tariffs left right and
center to get concessions out of countries. In fact, they
kind of like it. They think it's sort of flexing
as muscles. But as these tariffs started to come in,
I think people have thought, oh, whoa, he's like more
serious this time than in the first term. And that's
an important point. We've been talking about Donald Trump and tariffs,
not even just since this campaign, but since the two
(07:18):
previous ones. And in the first term it was much
more narrow, it was much more targeted. They did sectors
like steel and aluminum, but they exempted entire countries they
did lower numbers. For instance, it was ten percent on aluminum.
Now it's twenty five. And now we're doing not only
not exempting and not only doing higher numbers, but then
(07:38):
also filling in the blanks with across the board tariffs
on every other good under the sun. So it's much bigger,
it's much broader. Donald Trump himself believes in tariffs, and
I think the signal came on the campaign trail he
would talk about tariffs being his favorite word.
Speaker 4 (07:54):
I always say, tariffs is the most beautiful word to
me in the dictionary. And I always reprimand by the
fake news. They said, what about love, religion and God?
I said, I agree, Let's put God number one. Let's
put religion number two. I love, I don't know, I
got to put that number.
Speaker 2 (08:14):
Three, I guess right.
Speaker 4 (08:17):
And then it's tariff because tariff's are going to make
us rich.
Speaker 1 (08:21):
As he has been signaling for a long time that
this is where it was going to be. And the
question was just sort of like how, you know, focused
it would land and there'll be a lot of reporting,
I think in the coming days about what happened here
and who won you know, how these backroom chats shook out.
I will note not a lot of this leaked until
the announcement, and so the discussions that they were having
were clearly pretty animated, and clearly people were on different
(08:44):
ends of the spectrum on this, but they managed to
keep it mostly in house. One big question going forward
is where does he go from here? Does he strike
deals and bring those numbers down? You know, if someone
offers Tarrak concessions, does he meet them halfway? Or does
he get mad at retaliation? And we do expect retaliation
and ratchet things up even more.
Speaker 2 (09:06):
We'll get to that next. How are other countries going
to respond to what the President's announced? And how much
of an appetite does he have to negotiate. You reported
that in the hours leading up to this announcement that
the president's plans were still in limbo. What do we
(09:27):
know about what the sticking points were, what was being
debated among the president and his economic advisors? And I'm
curious what insight you have to who actually had his
ear as this was coming together.
Speaker 1 (09:36):
The fundamental discussion had to have been around scope, because
that was the difference, right that no one seemed to
be arguing a completely different approach, but how big a
brush they wanted to paint with. There seemed to be
real division on that, and going off of what people
are saying publicly, you know, you had the more hawkish
(09:57):
end certainly appears to have included Peter Navarro that goes
on TV and talks pretty strongly about how much he
believes in tariffs. And then other signs of concession or
you know, let's say adjustment maybe would be a better word,
have come from like Secretary Lutnik to Commerce Secretary Secretary Bessent.
His role, I think is a little unclear here. We
(10:18):
think we'll learn more about that in the coming days.
But the market signal had to have been going through
those two who have come from a finance background, And
of course markets have been nervous for weeks because when
Trump started actually putting pen to paper on these tariffs,
people realized that he wasn't entirely just using them as
(10:38):
a bargaining tool, and so that reaction had to have
been a factor. There has got to be an awareness
right now of the risk of going too big, too soon,
too quickly, and triggering some sort of downturn.
Speaker 2 (10:53):
Picking up on that over and over again, I Ford
investors talk about the consequences of uncertainty. Hear they said
they didn't on what the prison would do or what
he wouldn't do when it comes to trade policy with
this announcement, Josh, how much of that uncertainty went away?
Speaker 1 (11:07):
I think a lot of it went away, but there's
still some and there's still now new uncertainty. The existing
uncertainty is where the rest of these shoes are going
to drop on the other sectoral tariffs and how big
they're going to go. Although the breadcrumbs are leading in
one direction, he seems to always land at the number
twenty five for these, so you know, I would assume
(11:28):
that that would be a likely candidate for the tariffs
on things like lumber on pharmaceutical drugs since I make
Inductor chips. The question and uncertainly going forward is how
firm is he on this? How many exemptions are we
talking about here? And Trump has said he doesn't like exemptions.
Kevin Hasset, one of his economic advisors, came out and
(11:49):
talked to reporters a couple of weeks ago and said,
if I start talking about exemptions, he kicks me out
of the room. So Trump does not want to start
nipping and tucking here and there. And that's going to
get tricky because some of these tear tariffs are going
to start hitting things like I don't know, critical pharmaceutical
drugs or essential parts that get complicated for cars if
(12:10):
they're tariffed at a particularly onerous rate. Autoparts tariffs, by
the way, are coming as well in the coming weeks
and months. They haven't specified when, and so I think
that is going to be a key pressure point once
you start seeing choke points emerge from this tariff policy
in certain industries, in certain sectors where it threatens either
American jobs or you know, to become a political problem. Otherwise,
(12:34):
will Trump be adaptable to that. A lot of presidents
would like nip and tuck and you know, change things
on the fly. Trump is signally he is not interested
in that.
Speaker 2 (12:42):
So we'll see, Josh, what happens next. Do these policies
that the President announced go and effect immediately? And if not,
what's going to happen between now and when they do
go into effect?
Speaker 1 (12:53):
They go into effect over the next week or so.
The first trunch, the ten percent baseline goes into effect
this weekend. The bigger numbers for what they've think or
the worst defenders going to effect a few days later.
The auto tariffs that were already tied up still go
into effect on Thursday, and then other stuff is sort
of coming after that. What happens next is that we
will continue to see him march towards the sector specific tariffs,
(13:17):
and we will see how he triages these requests either
from industries in America to change things, tweak things, examt things.
He has bowed to that before with autos, but has
later grumbled about it. So whether he's keen to do
it again, I think remains unclear. Even if he did,
at the end of the day, he would get to
that ten percent baseline number. So it's still going to
(13:38):
be a fairly significant tariff. And remember they're talking about
replacing income tax revenue with tariff revenue. That's tricky for
a couple of reasons. Number one, how because Republicans don't
really have a clear plan yet on their reconciliation package,
and in particular tax cuts that would be broad based.
And number two, tariff revenue might decline or plateau over time,
(14:04):
and it's less predictable than income tax revenue, so that
gets tricky in terms of forecasting and this of that,
because of course people might buy less of a product
over time once they realize it's tariff and address to
other alternatives.
Speaker 2 (14:16):
Josh, what did President Trump say about his appetite to
negotiate with the countries he's targeted with these tariffs, either
in the Rose Garden or what's he said leading up
to it.
Speaker 1 (14:24):
He has sent mixed messages on that, and on the
one hand saying he wants to make deals and this
is all about reciprocity. You charge us what we charge you,
or will charge you you charge us, And so by definition,
if someone wants to come to him and drop their tariffs,
he's willing to listen. He wants this to be the
new order, and he wants people to adjust to the
(14:47):
new order, and he wants companies to make pledges to
invest in America. And so my expectations are sort of
modest at best that there'll be substantial changes to this.
But yeah, I mean, I think he will love to
announce deals and reductions, and so I think we'll see
a bit of that. But they're talking about hundreds of
billions in revenue each year, trillions over a decade, which
(15:09):
is the customary budget forecast window here in Washington, and
so I don't think that that number is going to
change a lot. It'll change on the margin for particular countries.
Speaker 2 (15:18):
Josh, what did the audience for this announcement tell you
about the way the White House is going to approach
selling this policy to Americans? So, as you said, there
were cabinet secretaries there, members of Congress. At one point,
he pulled up an auto worker who supported his candidacy
to speak to the crowd.
Speaker 1 (15:33):
We support Donald Trump's policies on tariffs one hundred percent.
Speaker 3 (15:39):
So, mister President, we can't thank you enough.
Speaker 2 (15:42):
And in six months or a year, we're going to
begin to see the benefits. I can't wait to see
what's happening three or four years down the road.
Speaker 3 (15:48):
Thank you, mister President.
Speaker 2 (15:50):
How's he going to make the case that this is
something that the US needs to do.
Speaker 1 (15:53):
They have been amplifying the relatively small number of stakeholders
who think this is a good idea. The steel industry,
for instance, loves steel tariffs. It tends to boost their
prices and help things along. The people that don't love
steel tarffs are everyone who has to buy steel, including
the car industry, for instance, so they're much less jazzed
about it. And so Trump is pointing to the first group.
(16:14):
He's pointing to steel workers. He's pointing to union leaders,
including the United Auto Workers, who've talked about the positives
of at least some of this. But it's a fairly
narrow margin. So I think we're going to continue to
hear this coming from him, from his aids, from his
loyal members on Capitol Hill, from his cabinet, and less
so from others. But I will note a lot of
(16:36):
the stakeholders in industry I think have learned a lot
from the first term. They are not standing on the
street corner outside of the White House with a sign
protesting these tariffs. Nor are they really putting out fiery
statements or taking ads on Fox that run in Palm
Beach on the weekend so the Trump will see it.
They are really kind of keeping their advocacy largely behind
(16:57):
closed doors and thinking that that is the best way
to drive this to a different outcome. But the President
believes in tariffs. I don't know how to explain that
sometimes other than that he just is a vowed that
other countries have ripped off the US for a long time.
A lot of this seems to be rooted with what
(17:18):
he thinks that Japanese did in the eighties. The guy
loves tariffs. He's been waiting for this day a long time,
and I think we should expect tariffs to substantially be
part of the picture as long as he's president.
Speaker 2 (17:29):
I should say you and I are talking just a
couple hours after this announcement. You mentioned that economists have
been trying to game out who's going to pay for this,
what the effect is going to be on the global economy. Yes,
external economists, but our own colleagues at Bloomberg Economists have
been doing that as well. Where are we in kind
of getting an understanding or a forecast for what this
might mean?
Speaker 1 (17:48):
Our friends at Bloomberg Economics have been crunching these numbers
to the extent that there are numbers to crunch, right,
and Trump has been sending mixed signals, and so the
output really ranges. You know, there's like the sort of
max list approach, which would be a much more significant
headwind to growth and a much more significant thorn to
the FED, and a much more significant threat of a
(18:09):
downturn So this kind of lays in the middle a
little bit, and I will be reading closely as everyone will,
how they hash this out, for instance, as we sort
out what other tariffs might still be stacked on top
of these, whether these replace existing things. These are important questions.
But what all their work shows is that prices will
(18:31):
rise for consumers and that that will complicate things in
a range of ways. It kind of makes things tricky
for the FED, who will be facing questions of rising
prices but also stagnating growth. And it makes things tricky
just broadly, as Trump also tries to sketch out a
budget plan that is banking on fairly robust growth that
(18:54):
he just put a weighted blanket on the shoulder of
to try to sort of also reset the manufacturing base.
There will be a price for this. It's the short
answer of all the analyses, but it's been unclear because
the details haven't been laid out until now.
Speaker 2 (19:08):
Let me ask you, lastly, Josh, sort of how this
fits in with Wall Street's expectations. So if Wall Street
had its worst case scenario and its best case scenario,
where does this fall.
Speaker 1 (19:20):
I think that again you have to grade Trump on
a curve as Trump goes, this is a sort of
moderate outcome. This is not the full fire and fury
approach that they kicked around, and he likes to do that, right.
He likes to threaten everything and then come out with
a slightly less onerous version of that. And then people
(19:42):
are like, ah, he's moderating, but grading Trump against other presidents,
this is still a maximalist approach. If Joe Biden wanted
to put a ten percent tariff on everything, I would
be curious about what Republicans would have thought about that.
I think they would not have been super keen. Areas
of overlap a lot between the parties, like on China,
(20:02):
for instance, so tariffs are a tool that both are
willing to wield. But the scale of this is huge,
So I think as Trump goes, this is not as
widespread as the worst fears of markets in Wall Street.
But it's big, and it's bigger than a lot of
presidents would have done, and we're just beginning to chew
through what impact it's going to have.
Speaker 2 (20:25):
Josh, thank you very much, thanks for having me. This
is the Big Take from Bloomberg News. I'm David Gura.
This episode is produced by Alex Tye, Rachel Lewis Chrisky,
and our deputy executive producer Julia Weaver. It was edited
by Patty Hirsch and Derek Wallbank. This episode was mixed
and sound designed by Alex Segura and fact checked by
Nami Ing. Our senior producer is Naomi Shaven. Our senior
(20:48):
editor is Beth Ponzo. Our executive producer is Nicole Beemster Bor.
Bloomberg's head of podcasts is Sage Bowman. If you like
this episode, make sure to subscribe and review The Big
Take wherever you get your podcast. It helps people find
the show. Thanks for listening. We'll be back tomorrow
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