July 9, 2025 • 19 mins
Bitcoin surged past $112,000 for the first time, setting a fresh record alongside a broad rally in risk assets that has swept up technology stocks big and small. The original cryptocurrency rose as much as 3.1% to $112,009, pushing its gain this year close to 20%. The move underscores the speculative momentum gripping markets even as President Donald Trump unleashes a fresh barrage of tariff announcements. The crypto rally is far from isolated: Nvidia Corp.’s brush with a $4 trillion valuation in Wednesday trading helped push the S&P 500 within a whisker of its record, with fast-money investors joining the stock-market fray. We speak to Matthew Tuttle, CEO & CIO at Tuttle Capital Management.
Also - President Trump’s threat to impose 50% tariffs on Brazilian goods sent the country’s currency plunging as the US leader sharply escalated a dispute with Latin America’s largest nation and leftist leader Luiz Inacio Lula da Silva. In a letter posted to his social media account, Trump cited Jair Bolsonaro — the right-wing former president and Lula rival who is facing a trial on charges that he attempted a coup following his 2022 election defeat. For more insight, we heard from Deborah Elms, Head of trade policy at Hinrich Foundation.
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:11):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Prisner.
President Trump is threatening to impose fifty percent tariffs on
goods from Brazil, and he cited Brazil's insidious attacks on
free elections. Earlier in the day, Trump unveiled a new
round of tariff demand letters sent to seven US trading partners.
And we'll take a look at the tariff story momentarily
(00:32):
with Deborah Elms. She is head of Trade policy at
the Heinrich Foundation. First, a look at cryptocurrencies, because today
bitcoin broke above one hundred twelve thousand for the first time.
For a closer look, I'm joined by Matthew Tuttle. He
is the CEO also the CIO at Tuttle Capital Management. Matthew,
thank you so much for making time to chat with me.
(00:55):
A lot of dynamics obviously playing out today. We can
talk about the tariffs, we can talk about the FED
minute and increased risk appetite reflected not just in this
new record high for the Nasdaq Composit, but obviously in
the rally in bitcoin today. Is the mood in markets?
Do you believe overly optimistic.
Speaker 3 (01:14):
So I don't. And you know, I'm paying a ton
of attention to what Trump tweets, not about tariffs, but
what he tweets about markets. He warned everybody before Liberation
Day markets sold off. He told you to get in
at the bottom, told you to get in again. And
(01:36):
the other day he tweeted markets at all time highs.
We're going to keep them there. Certainly, we're extended, and
you know, in the short term we're due for some
sort of profit taking. But you know, until Trump says otherwise,
you know we're going to be optimistic here.
Speaker 2 (01:55):
The other thing the President has indicated very clearly is
his desire for much more dubbish fedshairman, and that outcome
seems certain when fed Share J. Powell's term expires. So
the question is whether or not it's too much to
say that the next fed share is going to deliver
on lower rates immediately, or do you think that's a
bridge too far.
Speaker 3 (02:17):
I don't. I think that is a prerequisite. I think
that's part of the split you're seeing in the FED
people jockeying for that position. I think whoever he brings
in will lower interest rates immediately, barring you know, something
obviously out of left field, or else they will get
(02:39):
the same storm that Powell is getting. You know, what
we don't know yet is how the bond vigilantes will
look at things. So you know, the Fed controls the
short term rates. Fed doesn't control the long term rates.
You know, we had five days in a row of
the ten year picking up until today, so you know
(03:01):
that that's a wild card. But I would certainly expect
whoever the next FED chairman is to be lowering rates
right away.
Speaker 2 (03:08):
So I'm going to push back a bit here, ever
so slightly. Yes, the Fed does control the policy rate,
the Fed funds rate. It also has the ability to
expand the balance sheet, perhaps in a way of controlling
the yield curve. So do you think that there is
a bit of risk here under a new FED chairman,
a Duvish FED chairman, that we could see a little
more quantitative easing if yields don't cooperate in the way
(03:33):
in which the administration would like.
Speaker 3 (03:36):
I mean, I certainly think that's what you're going to
see if that happens. You know, if the bond vigilantes revolt,
you know, say hey, look at the debt, if foreigners
aren't buying our debt, then yeah, I think there will
be a lot of pressure on the FED from the
President to you know, maneuver things around a little bit
(03:59):
so that he gets the interest rate regime he's looking for.
Speaker 2 (04:03):
One of the other things that was very interesting today
is the rally that we had in cryptocurrencies, and we
intraday had Bitcoin breaking above one hundred and twelve thousand
dollars for the very first time. A lot's going on here,
a combination of geopolitical uncertainty, maybe a little bit more
institutional interest, but I think the outlook for regulatory clarity
(04:24):
maybe changing a bit. I mean, next Wednesday we have
a House Oversight Subcommittee hearing on making America the Crypto
Capital of the World. How do you feel about crypto
broadly speaking?
Speaker 3 (04:37):
I think at this point crypto is a must own
in investor portfolios. I think we're entering a golden age
of crypto. You know, we've never before had an administration
that's rapidly pro crypto, and I mean some of that
obviously is their own self interest. We'd never had a
(04:58):
crypto ZAR, and we have an SEC that is entirely
different than we've ever seen before. In crypto. And you
know this is coming from a guy who you know,
we've got a bunch of crypto ETFs, we filed for
a bunch more. We're dealing with an entirely different sec
(05:19):
than we've ever dealt with. You're seeing crypto treasury companies
come out now with mixed results. But you know, I
think that you know, I'm not surprised we hit new
eyes on bitcoin today. I would expect it to continue
to rise, and you know, and I would also expect
(05:39):
the same for a lot of the other real cryptocurrencies.
Speaker 2 (05:44):
It seemed to move in lockstep with this rally that
we had in big cap tech today. So if you
had to come up with a strategy on how to
use a crypto ETF in a portfolio, would it be
as kind of a growth component? Are you looking to
hedge volatility with crypto? What's what's the use case here
in terms of a crypto ETF as a part of
(06:06):
a portfolio.
Speaker 3 (06:08):
Yeah, not really a hedge. I mean a lot of
times crypto enthusiasts will say, oh, crypto's a hedge, and
then the market will sell off three percent and bitcoin
will sell off five You know, our definition of a
hedge is something that works every single time. Crypto will
work some of the time, it won't work all the time.
I think it's exposure to a diversified asset class, and
(06:33):
you know, obviously today not a diversified asset class, but
there are times when it is. And I think it's
also even more exposure to a theme that I think
is a dominant theme today and is likely to be
a dominant theme for quite some time. And so that's
why I think it really should be in your portfolio.
Speaker 2 (06:56):
So let me understand how the market is functioning right now.
Is it primarily being driven still by the retail crowd
or our institutional players having greater influence these days.
Speaker 3 (07:07):
So, you know, the retail crowd has been right on
this from the very beginning, buying the depth. The institutions
are being dragged in. They've got no choice. They can't
watch this market rally like this without them being involved.
So the higher we go, the more they're going to
(07:29):
need to get involved. So it's really at this point,
I mean, when you see a move like we saw
today and you know, and I haven't seen the breath
numbers or anything like that, but you know, we were
extended the market kind of took a breather for two
days in a row, and then you had a nice,
big up move. They tried to sell it off midday
and they couldn't. I got a figure. That's all hands
(07:52):
on deck at this point.
Speaker 2 (07:54):
So what if you observed in the relationship between let's
use bitcoin as an example of a major crypto current
and see and the US dollar. What has that correlation
been like? And talk to me a little bit about
how you understand it and what it's telling you.
Speaker 3 (08:09):
Yeah, I mean, what it's telling me is that bitcoin
is uncorrelated with the US dollar. So you know, it
also gives you as an investor, some protection from a
falling dollar. And you know, and because we've had a
falling dollar, that's a lot of you know, the the
(08:33):
interest I mean certainly not all. I mean, a lot
of the things we talked about are are maybe more important.
But it's a lot of the interest you've had in
money moving into crypto, but also money moving into gold.
You know, gold is another one.
Speaker 2 (08:49):
Uh.
Speaker 3 (08:49):
You know, gold recovered a little bit today. It had
a bad couple of days, but gold has been on
a rampage as well. And I think in a lot
of ways the gold trade and the crypto trade have
been the same.
Speaker 2 (09:03):
So is there an inverse correlation between let's say bitcoin
and the dollar that, in your view has shown consistency
for a while.
Speaker 3 (09:13):
Some consistency, you know, more consistency there with gold, some
consistency with bitcoin. The problem with bitcoin is there are
so many other factors, and you know, and that comes
into gold to to an extent, but there's so many
different factors, you know, I wouldn't look at it as hey,
(09:35):
every time the dollar goes down, bitcoin.
Speaker 2 (09:37):
Is going to go up.
Speaker 3 (09:38):
But there is a strong inverse correlation there, and it
makes sense. People are looking for alternative currencies to store
their money, and you know, and they've not been really
interested in going into intermediate term or longer term treasuries.
(09:59):
They've been putting money in bitcoin. They've been putting money
in goal.
Speaker 2 (10:02):
Matthew will leave it there, Thank you so very much.
Matthew Tuttle there. He is the CEO also the CIO
at Tuttle Capital Management. On the line from Greenwich, Connecticut
here on the Daybreak Asia podcast. Welcome back to the
Daybreak Asia Podcast. I'm Doug Chrisner. President Trump unveiled a
(10:25):
new round of tariff demand letters today sent to seven
US trading partners, and of those seven, only one. The
Philippines ranks among America's top fifty trading partners. A rate
there of twenty percent set for goods from the Philippines.
And then later in the day, Trump threatened to impose
fifty percent tariffs on goods from Brazil. He cited the
(10:47):
treatment of former Brazilian president Jaiir Balsonaro, and Trump called
on Brazilian authorities to drop charges against Balsonaro over an
alleged coup attempt. Well, then we heard from Brazil's current president,
Luisi Ignacio Lula da Silva. He said any measure to
raise tariff's unilaterally will be answered in light of the
(11:07):
Brazilian law of economic reciprocity. So for a closer look
at the tariff story, we caught up with Deborah Elms.
She is head of trade policy at the Heinrich Foundation.
She spoke with Bloomberg TV host Heidi Stroud Watson Cherry
on Now. Heidi asked the first question about US tariff
policy broadly and for Brazil in particular, since Brazil runs
(11:29):
a trade deficit with the US.
Speaker 4 (11:31):
Yeah, I mean, I think the big answer at the
moment is that while the April second tariffs were problematic
because they used a really misguided formula, at least there
was a formula. This latest batch of letters that Trump
is sending out really make no sense at all. Some
countries have gone down, some countries have gone up. There's
absolutely no justification for either up or down, or even frankly,
(11:55):
staying the same. And so the result of that is
complete confusion over what are us goals and what are
us objectives? With the exception of the Brazil letter, every
other letter has been identical. And so again for trade partners,
what are you supposed to do with that? You've suddenly
been given a new number, and it's not based on
anything you either have or haven't done. It's not whether
(12:16):
you've been there, you haven't been there, you tried hard.
Speaker 5 (12:19):
You did it.
Speaker 4 (12:20):
It's completely random at this point.
Speaker 6 (12:24):
And maybe it is the strategy of throwing everything at
the wall and seeing what sticks. Right, everything's on the
table under this new approach. But I do wonder does
that mean if you're a trading partner you might also
be thinking, well, what's the point in negotiating? Because he
says one thing, he might mean another. Something could change
in the next hour or day, all weeks anyway.
Speaker 4 (12:44):
Yeah, I think that's been the question from the beginning
with this second version of the Trump administration. What is
it that they're looking for? And even if you gave
that to Trump, would he be satisfied with that? And
would he be satisfied with whatever you gave him for
more than five minutes? And I think the longer this
goes on, the more likely it is that trade partners
will say, well, we tried, we did take this seriously.
(13:06):
We spent a huge amount of time, effort, money, resources,
and we ended up with almost exactly what we got
at the outset. And so we are going to dial
back our participation in these discussions and we'll just sort
of see what happens. But I think it is problematic
because these numbers that the Trump administration is throwing out
are huge. I mean, we would have said at the
(13:28):
beginning of this that ten percent was outrageous. Remember that
US tariffs in December were just over two percent, so
ten percent would have been a massive increase in tariffs.
And now we're looking at numbers easily between twenty and
forty and Brazil just got handed fifty So these are
numbers that in any other world we would be completely
(13:49):
flabbergasted to be discussing at all, and now we seem
to be sort of discounting them as just the price
of doing business.
Speaker 5 (13:58):
So let's talk a little bit about because, as Heidi mentioned,
this is a country that runs a trade deficit with
the United States, have had a traditionally very strong partnership
with the United States. And at the same time, now
President Trump singling out Brazil for fifty percent tariffs could
almost look politically motivated, given that he's also talking about
former President Jaior Bolsonaro. I mean, isn't this interference using
(14:22):
economic tools to politically interfere in other countries' domestic politics
and doing it so overtly. What's the message that he
sends to other countries?
Speaker 4 (14:35):
Well, I think it's deeply problematic. Remember that the official
justification for these tariffs is an Emergency Economic Powers Act,
which says that there is an economic emergency that needs
to be resolved, and Trump is arguing that tariffs are
the solution to this, to this set of economic emergencies,
And it is hard to figure out what kind of
economic emergency is plaguing the US Brazil relationship. Shots that
(14:58):
you need a fifty percent terror. I think we already
have this particular justification under dispute in the court system
in the US. Two courts have found against it. It's
now in an appeals process. We'll see what happens. But
I think, most alarmingly, if I was Brazil, the letter
also indicated that they are going to start a different
kind of trade process with Brazil, called a Section three
(15:20):
oh one of Unfair Trade Practices, And if that happens
and goes forward, then no matter what takes place in
these court cases under AEPA, there is still justification for
treating Brazilian trade very differently in the future, and that
can be extraordinarily long lasting and damaging.
Speaker 5 (15:40):
Then, as a country leader that's negotiating with the United States,
do you see this as a four year blip. Can
you just get over the weather, through the crises right
now and try to get to the other side, or
is this going to be a more long term issue?
If President Trump is representative of what the Republican Party
has now become.
Speaker 4 (16:03):
I think that is of course a giant question that
every leader is asking themselves how long is this going
to be? And clearly a lot of the commentary is
suggesting that the goal is to just play for time
to do whatever it takes. Play for time. You know,
a week's extension, a month's extension, six weeks extension. As
long as you keep kicking this can down the road,
it'll be fine. But I think that's also problematic because remember,
(16:26):
these tariffs are enormous. Twenty to forty percent across the
board for many trade partners, is really extremely problematic. And
so you can say we're just going to pretend, or
we're going to play, or we're going to extend. But
if that doesn't happen, then all of a sudden, you're
facing very high tariffs that have real economic consequences for
your domestic economy. Those are people's jobs, those are livelihoods.
(16:49):
That's businesses that may have to close as a result
of these incredibly high tariffs implemented extraordinarily quickly. And so
I think that the challenge, as always for leaders, is well,
what if anything could I do And if I could
do that, would I do so? And if I did
it and I got an agreement, how long would it last?
(17:10):
And so I think these are all questions that are
still in the minds of every trade partner and will
be for some time.
Speaker 5 (17:16):
To come, especially perhaps India. Could they be next in
the firing line? We thought that India was safe and
then the agreement would come after the UK Vietnam and
the Geneva Framework with China. But now if you lump
India together with the rest of bricks, and then you
threaten on the additional ten percent anything that has been
negotiating until now, does it even make sense? What's a point?
Speaker 4 (17:39):
Well, I think it's a great question. And if you
want a poster child for this, I would say look
at South Korea, which has a free trade agreement with
the United States that was painfully renegotiated under Trump's first administration,
and in spite of that, and in spite of a
lot of effort on the part of their government since
April second, they actually got hit again with a twenty
five percent tariff yesterday in one of these letters. So
(18:00):
I think it does make you question the value of
any agreement or commitment. However, the alternative is, well, what
if we actually succeed, What if we get the outcome
we're looking for and we're then somehow safe for at
least a longer period of time and maybe for the
duration of Trump's term. That's a gamble that every government
has to decide whether they're prepared to accept or not.
Speaker 5 (18:24):
The ELM's always good to have you with us, head
of Trade policy at the Heinrich Foundation, of course, talking
about all of these tariff implications with the threats coming
from President Trump.
Speaker 2 (18:35):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(18:57):
and Australia. I'm Doug Chrisner and this is Bloomberg. M
hmm
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:11):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Prisner.
President Trump is threatening to impose fifty percent tariffs on
goods from Brazil, and he cited Brazil's insidious attacks on
free elections. Earlier in the day, Trump unveiled a new
round of tariff demand letters sent to seven US trading partners.
And we'll take a look at the tariff story momentarily
(00:32):
with Deborah Elms. She is head of Trade policy at
the Heinrich Foundation. First, a look at cryptocurrencies, because today
bitcoin broke above one hundred twelve thousand for the first time.
For a closer look, I'm joined by Matthew Tuttle. He
is the CEO also the CIO at Tuttle Capital Management. Matthew,
thank you so much for making time to chat with me.
(00:55):
A lot of dynamics obviously playing out today. We can
talk about the tariffs, we can talk about the FED
minute and increased risk appetite reflected not just in this
new record high for the Nasdaq Composit, but obviously in
the rally in bitcoin today. Is the mood in markets?
Do you believe overly optimistic.
Speaker 3 (01:14):
So I don't. And you know, I'm paying a ton
of attention to what Trump tweets, not about tariffs, but
what he tweets about markets. He warned everybody before Liberation
Day markets sold off. He told you to get in
at the bottom, told you to get in again. And
(01:36):
the other day he tweeted markets at all time highs.
We're going to keep them there. Certainly, we're extended, and
you know, in the short term we're due for some
sort of profit taking. But you know, until Trump says otherwise,
you know we're going to be optimistic here.
Speaker 2 (01:55):
The other thing the President has indicated very clearly is
his desire for much more dubbish fedshairman, and that outcome
seems certain when fed Share J. Powell's term expires. So
the question is whether or not it's too much to
say that the next fed share is going to deliver
on lower rates immediately, or do you think that's a
bridge too far.
Speaker 3 (02:17):
I don't. I think that is a prerequisite. I think
that's part of the split you're seeing in the FED
people jockeying for that position. I think whoever he brings
in will lower interest rates immediately, barring you know, something
obviously out of left field, or else they will get
(02:39):
the same storm that Powell is getting. You know, what
we don't know yet is how the bond vigilantes will
look at things. So you know, the Fed controls the
short term rates. Fed doesn't control the long term rates.
You know, we had five days in a row of
the ten year picking up until today, so you know
(03:01):
that that's a wild card. But I would certainly expect
whoever the next FED chairman is to be lowering rates
right away.
Speaker 2 (03:08):
So I'm going to push back a bit here, ever
so slightly. Yes, the Fed does control the policy rate,
the Fed funds rate. It also has the ability to
expand the balance sheet, perhaps in a way of controlling
the yield curve. So do you think that there is
a bit of risk here under a new FED chairman,
a Duvish FED chairman, that we could see a little
more quantitative easing if yields don't cooperate in the way
(03:33):
in which the administration would like.
Speaker 3 (03:36):
I mean, I certainly think that's what you're going to
see if that happens. You know, if the bond vigilantes revolt,
you know, say hey, look at the debt, if foreigners
aren't buying our debt, then yeah, I think there will
be a lot of pressure on the FED from the
President to you know, maneuver things around a little bit
(03:59):
so that he gets the interest rate regime he's looking for.
Speaker 2 (04:03):
One of the other things that was very interesting today
is the rally that we had in cryptocurrencies, and we
intraday had Bitcoin breaking above one hundred and twelve thousand
dollars for the very first time. A lot's going on here,
a combination of geopolitical uncertainty, maybe a little bit more
institutional interest, but I think the outlook for regulatory clarity
(04:24):
maybe changing a bit. I mean, next Wednesday we have
a House Oversight Subcommittee hearing on making America the Crypto
Capital of the World. How do you feel about crypto
broadly speaking?
Speaker 3 (04:37):
I think at this point crypto is a must own
in investor portfolios. I think we're entering a golden age
of crypto. You know, we've never before had an administration
that's rapidly pro crypto, and I mean some of that
obviously is their own self interest. We'd never had a
(04:58):
crypto ZAR, and we have an SEC that is entirely
different than we've ever seen before. In crypto. And you
know this is coming from a guy who you know,
we've got a bunch of crypto ETFs, we filed for
a bunch more. We're dealing with an entirely different sec
(05:19):
than we've ever dealt with. You're seeing crypto treasury companies
come out now with mixed results. But you know, I
think that you know, I'm not surprised we hit new
eyes on bitcoin today. I would expect it to continue
to rise, and you know, and I would also expect
(05:39):
the same for a lot of the other real cryptocurrencies.
Speaker 2 (05:44):
It seemed to move in lockstep with this rally that
we had in big cap tech today. So if you
had to come up with a strategy on how to
use a crypto ETF in a portfolio, would it be
as kind of a growth component? Are you looking to
hedge volatility with crypto? What's what's the use case here
in terms of a crypto ETF as a part of
(06:06):
a portfolio.
Speaker 3 (06:08):
Yeah, not really a hedge. I mean a lot of
times crypto enthusiasts will say, oh, crypto's a hedge, and
then the market will sell off three percent and bitcoin
will sell off five You know, our definition of a
hedge is something that works every single time. Crypto will
work some of the time, it won't work all the time.
I think it's exposure to a diversified asset class, and
(06:33):
you know, obviously today not a diversified asset class, but
there are times when it is. And I think it's
also even more exposure to a theme that I think
is a dominant theme today and is likely to be
a dominant theme for quite some time. And so that's
why I think it really should be in your portfolio.
Speaker 2 (06:56):
So let me understand how the market is functioning right now.
Is it primarily being driven still by the retail crowd
or our institutional players having greater influence these days.
Speaker 3 (07:07):
So, you know, the retail crowd has been right on
this from the very beginning, buying the depth. The institutions
are being dragged in. They've got no choice. They can't
watch this market rally like this without them being involved.
So the higher we go, the more they're going to
(07:29):
need to get involved. So it's really at this point,
I mean, when you see a move like we saw
today and you know, and I haven't seen the breath
numbers or anything like that, but you know, we were
extended the market kind of took a breather for two
days in a row, and then you had a nice,
big up move. They tried to sell it off midday
and they couldn't. I got a figure. That's all hands
(07:52):
on deck at this point.
Speaker 2 (07:54):
So what if you observed in the relationship between let's
use bitcoin as an example of a major crypto current
and see and the US dollar. What has that correlation
been like? And talk to me a little bit about
how you understand it and what it's telling you.
Speaker 3 (08:09):
Yeah, I mean, what it's telling me is that bitcoin
is uncorrelated with the US dollar. So you know, it
also gives you as an investor, some protection from a
falling dollar. And you know, and because we've had a
falling dollar, that's a lot of you know, the the
(08:33):
interest I mean certainly not all. I mean, a lot
of the things we talked about are are maybe more important.
But it's a lot of the interest you've had in
money moving into crypto, but also money moving into gold.
You know, gold is another one.
Speaker 2 (08:49):
Uh.
Speaker 3 (08:49):
You know, gold recovered a little bit today. It had
a bad couple of days, but gold has been on
a rampage as well. And I think in a lot
of ways the gold trade and the crypto trade have
been the same.
Speaker 2 (09:03):
So is there an inverse correlation between let's say bitcoin
and the dollar that, in your view has shown consistency
for a while.
Speaker 3 (09:13):
Some consistency, you know, more consistency there with gold, some
consistency with bitcoin. The problem with bitcoin is there are
so many other factors, and you know, and that comes
into gold to to an extent, but there's so many
different factors, you know, I wouldn't look at it as hey,
(09:35):
every time the dollar goes down, bitcoin.
Speaker 2 (09:37):
Is going to go up.
Speaker 3 (09:38):
But there is a strong inverse correlation there, and it
makes sense. People are looking for alternative currencies to store
their money, and you know, and they've not been really
interested in going into intermediate term or longer term treasuries.
(09:59):
They've been putting money in bitcoin. They've been putting money
in goal.
Speaker 2 (10:02):
Matthew will leave it there, Thank you so very much.
Matthew Tuttle there. He is the CEO also the CIO
at Tuttle Capital Management. On the line from Greenwich, Connecticut
here on the Daybreak Asia podcast. Welcome back to the
Daybreak Asia Podcast. I'm Doug Chrisner. President Trump unveiled a
(10:25):
new round of tariff demand letters today sent to seven
US trading partners, and of those seven, only one. The
Philippines ranks among America's top fifty trading partners. A rate
there of twenty percent set for goods from the Philippines.
And then later in the day, Trump threatened to impose
fifty percent tariffs on goods from Brazil. He cited the
(10:47):
treatment of former Brazilian president Jaiir Balsonaro, and Trump called
on Brazilian authorities to drop charges against Balsonaro over an
alleged coup attempt. Well, then we heard from Brazil's current president,
Luisi Ignacio Lula da Silva. He said any measure to
raise tariff's unilaterally will be answered in light of the
(11:07):
Brazilian law of economic reciprocity. So for a closer look
at the tariff story, we caught up with Deborah Elms.
She is head of trade policy at the Heinrich Foundation.
She spoke with Bloomberg TV host Heidi Stroud Watson Cherry
on Now. Heidi asked the first question about US tariff
policy broadly and for Brazil in particular, since Brazil runs
(11:29):
a trade deficit with the US.
Speaker 4 (11:31):
Yeah, I mean, I think the big answer at the
moment is that while the April second tariffs were problematic
because they used a really misguided formula, at least there
was a formula. This latest batch of letters that Trump
is sending out really make no sense at all. Some
countries have gone down, some countries have gone up. There's
absolutely no justification for either up or down, or even frankly,
(11:55):
staying the same. And so the result of that is
complete confusion over what are us goals and what are
us objectives? With the exception of the Brazil letter, every
other letter has been identical. And so again for trade partners,
what are you supposed to do with that? You've suddenly
been given a new number, and it's not based on
anything you either have or haven't done. It's not whether
(12:16):
you've been there, you haven't been there, you tried hard.
Speaker 5 (12:19):
You did it.
Speaker 4 (12:20):
It's completely random at this point.
Speaker 6 (12:24):
And maybe it is the strategy of throwing everything at
the wall and seeing what sticks. Right, everything's on the
table under this new approach. But I do wonder does
that mean if you're a trading partner you might also
be thinking, well, what's the point in negotiating? Because he
says one thing, he might mean another. Something could change
in the next hour or day, all weeks anyway.
Speaker 4 (12:44):
Yeah, I think that's been the question from the beginning
with this second version of the Trump administration. What is
it that they're looking for? And even if you gave
that to Trump, would he be satisfied with that? And
would he be satisfied with whatever you gave him for
more than five minutes? And I think the longer this
goes on, the more likely it is that trade partners
will say, well, we tried, we did take this seriously.
(13:06):
We spent a huge amount of time, effort, money, resources,
and we ended up with almost exactly what we got
at the outset. And so we are going to dial
back our participation in these discussions and we'll just sort
of see what happens. But I think it is problematic
because these numbers that the Trump administration is throwing out
are huge. I mean, we would have said at the
(13:28):
beginning of this that ten percent was outrageous. Remember that
US tariffs in December were just over two percent, so
ten percent would have been a massive increase in tariffs.
And now we're looking at numbers easily between twenty and
forty and Brazil just got handed fifty So these are
numbers that in any other world we would be completely
(13:49):
flabbergasted to be discussing at all, and now we seem
to be sort of discounting them as just the price
of doing business.
Speaker 5 (13:58):
So let's talk a little bit about because, as Heidi mentioned,
this is a country that runs a trade deficit with
the United States, have had a traditionally very strong partnership
with the United States. And at the same time, now
President Trump singling out Brazil for fifty percent tariffs could
almost look politically motivated, given that he's also talking about
former President Jaior Bolsonaro. I mean, isn't this interference using
(14:22):
economic tools to politically interfere in other countries' domestic politics
and doing it so overtly. What's the message that he
sends to other countries?
Speaker 4 (14:35):
Well, I think it's deeply problematic. Remember that the official
justification for these tariffs is an Emergency Economic Powers Act,
which says that there is an economic emergency that needs
to be resolved, and Trump is arguing that tariffs are
the solution to this, to this set of economic emergencies,
And it is hard to figure out what kind of
economic emergency is plaguing the US Brazil relationship. Shots that
(14:58):
you need a fifty percent terror. I think we already
have this particular justification under dispute in the court system
in the US. Two courts have found against it. It's
now in an appeals process. We'll see what happens. But
I think, most alarmingly, if I was Brazil, the letter
also indicated that they are going to start a different
kind of trade process with Brazil, called a Section three
(15:20):
oh one of Unfair Trade Practices, And if that happens
and goes forward, then no matter what takes place in
these court cases under AEPA, there is still justification for
treating Brazilian trade very differently in the future, and that
can be extraordinarily long lasting and damaging.
Speaker 5 (15:40):
Then, as a country leader that's negotiating with the United States,
do you see this as a four year blip. Can
you just get over the weather, through the crises right
now and try to get to the other side, or
is this going to be a more long term issue?
If President Trump is representative of what the Republican Party
has now become.
Speaker 4 (16:03):
I think that is of course a giant question that
every leader is asking themselves how long is this going
to be? And clearly a lot of the commentary is
suggesting that the goal is to just play for time
to do whatever it takes. Play for time. You know,
a week's extension, a month's extension, six weeks extension. As
long as you keep kicking this can down the road,
it'll be fine. But I think that's also problematic because remember,
(16:26):
these tariffs are enormous. Twenty to forty percent across the
board for many trade partners, is really extremely problematic. And
so you can say we're just going to pretend, or
we're going to play, or we're going to extend. But
if that doesn't happen, then all of a sudden, you're
facing very high tariffs that have real economic consequences for
your domestic economy. Those are people's jobs, those are livelihoods.
(16:49):
That's businesses that may have to close as a result
of these incredibly high tariffs implemented extraordinarily quickly. And so
I think that the challenge, as always for leaders, is well,
what if anything could I do And if I could
do that, would I do so? And if I did
it and I got an agreement, how long would it last?
(17:10):
And so I think these are all questions that are
still in the minds of every trade partner and will
be for some time.
Speaker 5 (17:16):
To come, especially perhaps India. Could they be next in
the firing line? We thought that India was safe and
then the agreement would come after the UK Vietnam and
the Geneva Framework with China. But now if you lump
India together with the rest of bricks, and then you
threaten on the additional ten percent anything that has been
negotiating until now, does it even make sense? What's a point?
Speaker 4 (17:39):
Well, I think it's a great question. And if you
want a poster child for this, I would say look
at South Korea, which has a free trade agreement with
the United States that was painfully renegotiated under Trump's first administration,
and in spite of that, and in spite of a
lot of effort on the part of their government since
April second, they actually got hit again with a twenty
five percent tariff yesterday in one of these letters. So
(18:00):
I think it does make you question the value of
any agreement or commitment. However, the alternative is, well, what
if we actually succeed, What if we get the outcome
we're looking for and we're then somehow safe for at
least a longer period of time and maybe for the
duration of Trump's term. That's a gamble that every government
has to decide whether they're prepared to accept or not.
Speaker 5 (18:24):
The ELM's always good to have you with us, head
of Trade policy at the Heinrich Foundation, of course, talking
about all of these tariff implications with the threats coming
from President Trump.
Speaker 2 (18:35):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(18:57):
and Australia. I'm Doug Chrisner and this is Bloomberg. M
hmm
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