May 30, 2025 • 16 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) A federal appeals court offered President Donald Trump a temporary reprieve from a ruling threatening to throw out the bulk of his sweeping tariff agenda, giving at least some hope to a White House now facing substantial new restrictions on its effort to rewrite the global trading order.
(2) US Treasury Secretary Scott Bessent said trade talks with China are “a bit stalled,” and that a call between President Donald Trump and his counterpart Xi Jinping may be needed for the world’s two largest economies to reach a deal.
(3) President Donald Trump pushed Federal Reserve Chair Jerome Powell to lower interest rates at their first in-person meeting since the president’s inauguration, the White House said.
(4) Buried deep in the more than 1,000-page tax-and-spending bill that President Donald Trump is muscling through Congress is an obscure tax measure - section 899 - that's setting off alarms on Wall Street and beyond.
(5) The US economic outlook remains stronger than Europe despite sweeping policy uncertainty causing ripples across the economy, according to Citigroup Inc. Chief Executive Officer Jane Fraser.
(6) Bank of England Governor Andrew Bailey has urged the government to strike a deeper trade deal with the European Union to improve growth and “minimize negative effects” of Brexit.
Podcast Conversation: Why Wall Street Interns Are Safe From AI: Marc Rubinstein
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Blueberg daybreakur podcast, available every morning on Apple,
Spotify or wherever you listen. It's Friday, the thirtieth of May.
Here in London. I'm Caroline Hepka. Coming up today. Markets
drop as Trump wins a temporary tariff reprieve in an
appeals court ruling, and the Treasury Secretary, Scott Bessen concedes
that trade talks with China have stalled the Bank of
(00:33):
England's Andrew Bailey wades into UK politics and calls for
closer EU ties to reverse the damage of Brexit. Plus,
Hidden in Plane Sight, we discuss the obscure tax item
buried deep in the President's massive tax and spending bill
that is giving wall Streets sleepless nights. Let's start with
(00:54):
a roundup of our top stories. President Trump's global tariffs
will remain in place for now. That's after an appeals
court temporarily paused a ruling on Wednesday that had blocked them.
JOm has hailed the ruling in a social media post
on Thursday night, while calling the original decision quote so
(01:15):
wrong and so political. Derek Wallbang is our senior editor
for US economics and government.
Speaker 3 (01:21):
This is going to work through the US legal process.
In the meantime, though, it has kind of complicated the
idea that the Trump administration in this ninety day pause
window was going and trying to do deals with individual countries.
We really haven't seen a ton of deals come through
with that. We've had the UK, a lot of others
(01:42):
are said to be maybe close or nearer, but haven't
gotten over the line.
Speaker 2 (01:48):
Darry Wallbank says that despite the temporary reprieve, the possibility
remains that the appeals court could ultimately back the original
ruling and block President Trump's tariff policy that would reduce
the effective US tariff rate to below six percent from
a high of almost twenty seven percent last month. However,
(02:09):
White House official stress that Trump has options to pursue
similar tariffs through other authorities if appeals ultimately fall short. Now,
US Treasury Secretary Scott Bestent says that trade talks with
China are currently at a bit of a standstill. Bestent
told Fox News a call may be required between President
(02:30):
Trump and Chinese President Shijinping in order to reach a deal.
Speaker 4 (02:34):
I would say that they are a bit stalled. I
believe that We will be having more talks with them
in the next few weeks, and I believe we may
at some point have a call between the President and
party chair.
Speaker 5 (02:52):
She.
Speaker 2 (02:52):
That was Treasuy Sectary Scott Bessent speaking on Fox News.
The last time Trump and She spoke was in January,
days ahead of President Trump's inauguration. The US President said
that he would speak to the Chinese leader in the
days after trade talks in mid May, though the call
never materialized, and in their first in person meeting since
(03:13):
the inauguration, President Trump pushed the FED Chair, Jerome Powell
to lower interest rates. The US President has publicly and
repeatedly lashed out at the policymaker, calling him a quote loser.
White House Press Secretory Caroline Levitt says that Trump urged
Powell to cut rates.
Speaker 6 (03:31):
The President did say that he believes the FED chair
is making a mistake by not lowering interest rates, which
is putting US at an economic disadvantage to China in
other countries, and the President's been very vocal about that
both publicly and now I can reveal privately as well.
Speaker 2 (03:47):
The White House Press Secretary there the FED officials have
held interest rates steady this year, arguing that a patient
approach to policy is appropriate amid economic uncertainty caused by tariffs.
The Central Bank says that Chair Pow quote stress the
path of policy will depend entirely on incoming economic information
and what that means for the outlook. While moving on
(04:09):
to some corporate news, the CEO of City Group says
that the economic outlook for the US does remain stronger
than Europe despite sweeping policy uncertainty from trade and tariffs.
Speaker 7 (04:21):
Bloomberg's un Potts has more.
Speaker 8 (04:23):
There's nothing like being in Europe to make you feel
a bit better about the US. City Groups Shane Fraser
not mincing her words. She was speaking in a wide
ranging interview at a financial conference, where she also expressed
skepticism that the EU will pursue its long delayed plan
for capital markets union and drive economic growth. On the
prospects for the US economy, Fraser said her eye is
(04:44):
on the unemployment figures, but Addie, the consumer spending so
far appears to be showing signs of resilience in London.
Speaker 7 (04:50):
I'm you in pots Blimberg Radio.
Speaker 2 (04:52):
Bank of England Governor Andrew Bailey has urged the British
government to strike a deeper EU trade deal. The Central
bank head warned that quote something has gone wrong with
the global trading system.
Speaker 9 (05:05):
If you believe that tariff action is needed to create
the shock and or to get these issues onto the
table and dealt with, I'm afraid that means something's gone
wrong with the multilateral system. Yeah, these things ought to
be dealt with without having to get to this point.
And we need to deal with that something. And it
matters to central bankers and economic policymakers because our jobs
(05:25):
are much harder, much harder if we face more inflexible
and uncertain supply conditions in our economies, as we appear
to do today.
Speaker 2 (05:34):
The Bank of England Governor Andrew Bailey he sees rebuilding
ties with the EU as the best way to drive
sorely needed UK growth. Since the recent trade deal with Europe,
UK business confidence has jumped to a nine month high
in a sharp rebound. And lastly, a fifty three year
old man is due in court later today accused of
(05:56):
driving a car into crowds of people at Liverpool's trophy parade.
Paul Doyle, who is from the West Derby area of
the city, is charged with seven offenses including dangerous driving,
malicious wounding and intent to cause grievous bodily harm. Jenny
Simms is the Assistant Chief Constable of Merseyside Police.
Speaker 7 (06:16):
This continues to be.
Speaker 10 (06:17):
A large and complex investigation and detectives are reviewing a
huge volume of CCTV and mobile phone footage submitted by
the public and businesses.
Speaker 2 (06:29):
Jenny Simms speaking there. Seventy nine people were injured in
Monday's incident in Liverpool, with seven people still in hospital.
Those are our top stories this morning. Let me take
you through the markets now. So the legal battle over
President Trump's tariffs and the uncertainty injected by a fresh
court decision has weighed on markets. The masci Asia Pacific
(06:51):
indegs down half of one percent, the Hank Saying dropping
one and a half percent this morning. We also had
data out yesterday showing the US economy shrank at the
start of this year, weaker consumer spending and even bigger
impact from trade than had been initially thought. Stock futures
for the US and for Europe are in the red
this morning. We're down two tenths for the S and
(07:11):
P five hundred e Many futures you've also got in
terms of the BlueBag dollar Spot index. A stronger dollar,
a weeker euro, weeker pound a Japanese yen, though, is
gaining two tenths of one percent. I've read an interesting
report that global investors have become net buyers of cash
Japanese equities for the last eight weeks in a row.
So this goes to that theme of investors looking elsewhere
(07:35):
and away from just the kind of US exceptional trade
in stocks. Looking at the bond markets this morning, little
movement actually in tenny US treasure yields forty two is
where we stand. So those are the markets in a moment.
I'm going to bring you more in the latest when
it comes to the Trump administration winning a temporary tariff
reprieve in the appeals Cord. Plus also why Wall Street
(07:56):
is alarmed by a tax measure that's buried in the
big beautiful bill that's currently working its way through Congress.
So we'll get to those stories. But somebody else caught
my eye this morning. Summer is rolling around, and so
soon the corridors of your firm, I imagine, and mine
and maybe many others will be filled with interns, which
got me to thinking, why I'm in the world of Ahi,
(08:18):
do we still have interns? I was staggered to learn though,
how intense the competition for internships is now. Three hundred
and fifteen thousand people applied for an internship at Goldman
Sachs for two seven hundred places that they offer. JP
Morgan was even more staggering, almost half a million applications
(08:39):
for four thousand positions at JP Morgan for like a
ten week internship. Much harder to get an internship than
it is to get into Harvard. Mark Rubinstein, who writes
Bloomberg's Net Interest newsletter, dug out this story for us
and has written all about it. He explains that there's
been a huge surge in applications because of online platforms
(09:02):
making it easier to find out about internships and apply
for those opportunities.
Speaker 7 (09:07):
The salary doesn't hurt.
Speaker 2 (09:08):
One hundred and twenty five thousand dollars is the annual
salary the equivalent of that, But mainly it's that internships
are the prime route to get a graduate job, and
the prime route now into the top ranks of banking
and finance. So there you go. Some thoughts for you.
It's a real kind of audition for leadership potential from people.
(09:30):
So now you can have to on that as you
think about interns arriving perhaps in your office this summer. Now,
a reprieve for President Trump on taris from a federal
appeals court, but a legal fight that threatens to inject
even more uncertainty into the global economy. Joining me now
is Bloomberg reporter cat Demitrieva Katty.
Speaker 7 (09:48):
Good morning.
Speaker 2 (09:49):
Just tell me what did the court actually decide. It
seems to extend the timeline now for this legal fight
over Trump's tariffs.
Speaker 7 (09:58):
Yeah, it certainly does.
Speaker 5 (10:00):
And we're still, frankly trying to unpack exactly what this
all means, because there are still a lot of questions
about where we go from here. But essentially with the
US Court of International Trade, they're in Manhattan. What they ruled,
these three judges is that the Trump administration was wrong.
(10:20):
They wrongfully invoked this emergency law to justify their reciprocal levee.
So for that, we'd have to go back to April.
Speaker 7 (10:28):
Second.
Speaker 5 (10:29):
That was when they announced, you know, on Liberation Day,
these reciprocal tariffs against or what they called reciprocal tariffs
against a number of countries, and there was about a
sixty countries that they had targeted, and so the court
found that that was not actually legal, that was not allowed,
so they blocked effectively the tariffs. Now, the administration very
(10:53):
quickly and as expected, filed an appeal. That appeal was
granted very recently, and so that effectively stays that initial order.
But basically, what this means is a protracted legal fight
between the US administration and the courts. It will likely
go all the way up to the Supreme Court, and
(11:14):
as we know, this takes a lot of time.
Speaker 7 (11:17):
Yeah, what workarounds? Then? Does the Trump administration have?
Speaker 2 (11:21):
What is it looking at in order to deliver on
its tariff's aims, because that's what the administration has said
it would do given this legal battle.
Speaker 5 (11:30):
Now, Yeah, and I think that markets are assuming, I
mean everyone is assuming at this point that there's no
way around tariffs. You know, initially when the ruling came down,
there was some optimism, but very quickly soured because of
the stay, but also because the Trump administration has a
very clear trade strategy. They want to impose, they want
(11:51):
to add tariffs, and there are other ways to do that, right,
So the emergency law was kind of the biggest broadest
way to do it and the quickest way to do it.
There are other methods that take time. So there's for example,
the two three two tariffs, and that would apply sort
(12:12):
of pharmaceutical there's semiconductors. It also doesn't impact tariffs that
were imposed under Section three oh one, which is to
do with unfair trade practices. And the administration can also
do a lot of They could just do investigations. You know,
this is the power of the US government to launch
(12:32):
investigations against specific products, against specific countries. And so we
do know that there are a lot of these other
tools that would use national security powers to be able
to add levy so that they're not necessarily going away.
Speaker 2 (12:50):
Okay, Katy, thank you so much for being with us
this morning. Right, so we are awaiting then quite a
protracted battle when it comes to imposing twists, Bloomberg reported,
Katya Demitrievia, thank you. Now. Another aspect of what's happening
with the Trump administration, very deep in more than a
thousand pages of tax and spending information in the bill
(13:12):
that President Trump is pushing through Congress is an obscure
tax measure that is setting off alarm bells on Wall
Street and beyond our opening trade Ancha Critti Gupti is
here to explain why this matters. Pretty good morning. Just
tell me about this measure. It's known as Section eight
ninety nine.
Speaker 7 (13:30):
It is, it is.
Speaker 11 (13:31):
It's called the Enforcement of Remedies against Unfair Foreign Taxes,
aptly named for exactly what it does, which is simply
this idea that when you're looking or comparing this to
other countries that have as would be deemed by the
Trump administration as tax policies that are discriminatory, which again
is a fairly vague term, so we don't actually know
which countries that applies to, but we know it's something
(13:52):
that Donald Trump has talked about in his previous iterations
in terms of tax barriers when it comes to the
likes of the European Union, for example. This is a
measure that would include raising tax rates on passive income
as you suggest, but interests and dividends as well. And
the reason this is so important is because when you
are talking about international investors and how they are positioned
and exposed to the United States, a lot of them
(14:14):
aren't necessarily trading stocks day in day out, trading the
headline risk you've seen a little bit of a jump
in that at the moment, but a lot of them
are talking about saying having the majority of their exposure
to the US and sitting in those assets, so to
be taxed on that passive income or those dividends actually
threatens trillions of dollars that would incentivize a foreigner to
(14:35):
enter the States in the first place.
Speaker 2 (14:36):
Yeah, I mean that could be absolutely huge if signed
into law. The sense is that it would therefore drive
away foreign investors.
Speaker 11 (14:44):
It's interesting because there's a couple of ways that this
would show up, because it also measure talks about not
only the interest, but dividends as well. We know that
right now in this current market environment, something that a
lot of stocks are saying companies are issuing is not
only share buybacks, which is a big one, but in
times of recession, they will pull back on those share
buybacks and issue dividends instead to their shareholders.
Speaker 7 (15:05):
So to be now taxed on that basically.
Speaker 11 (15:07):
Return for shareholders returns of capital is a concerning way
for a lot of companies actually want to keep their
investors interested and not see a sharper decline in their
share price.
Speaker 7 (15:19):
So why has it been put into the bill then.
Speaker 11 (15:22):
Two as a negotiating tactic, it seems. And again this
really falls in line with some of the rhetoric you've
heard from Donald Trump. I think the most easiest one,
although it's not specifically MEAs mentioned in this bill, is
the vat tax. He calls that an unfair, discriminatory tax,
something that he thinks the European Union can pull down
very easily.
Speaker 7 (15:40):
Us sitting on the side.
Speaker 11 (15:40):
Of the Atlantic note that is a very tricky thing
to do just from an internal European perspective, but from
the outside that is how he's viewing it.
Speaker 7 (15:48):
But it's not just him. You've had these other.
Speaker 11 (15:49):
Tax barriers in other places as well, not just in
the European Union, but India, Switzerland, some others. Globally speaking,
the US has one of the lowest tax rates in
the world, and that has been a beneficiary for both
corporates and for passive investors.
Speaker 1 (16:06):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (16:12):
Look for us on your podcast feed every morning, on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 1 (16:18):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (16:24):
Our flagship New York station, is also available on your
Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.
Speaker 1 (16:32):
I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg Daybreak Europe
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Blueberg daybreakur podcast, available every morning on Apple,
Spotify or wherever you listen. It's Friday, the thirtieth of May.
Here in London. I'm Caroline Hepka. Coming up today. Markets
drop as Trump wins a temporary tariff reprieve in an
appeals court ruling, and the Treasury Secretary, Scott Bessen concedes
that trade talks with China have stalled the Bank of
(00:33):
England's Andrew Bailey wades into UK politics and calls for
closer EU ties to reverse the damage of Brexit. Plus,
Hidden in Plane Sight, we discuss the obscure tax item
buried deep in the President's massive tax and spending bill
that is giving wall Streets sleepless nights. Let's start with
(00:54):
a roundup of our top stories. President Trump's global tariffs
will remain in place for now. That's after an appeals
court temporarily paused a ruling on Wednesday that had blocked them.
JOm has hailed the ruling in a social media post
on Thursday night, while calling the original decision quote so
(01:15):
wrong and so political. Derek Wallbang is our senior editor
for US economics and government.
Speaker 3 (01:21):
This is going to work through the US legal process.
In the meantime, though, it has kind of complicated the
idea that the Trump administration in this ninety day pause
window was going and trying to do deals with individual countries.
We really haven't seen a ton of deals come through
with that. We've had the UK, a lot of others
(01:42):
are said to be maybe close or nearer, but haven't
gotten over the line.
Speaker 2 (01:48):
Darry Wallbank says that despite the temporary reprieve, the possibility
remains that the appeals court could ultimately back the original
ruling and block President Trump's tariff policy that would reduce
the effective US tariff rate to below six percent from
a high of almost twenty seven percent last month. However,
(02:09):
White House official stress that Trump has options to pursue
similar tariffs through other authorities if appeals ultimately fall short. Now,
US Treasury Secretary Scott Bestent says that trade talks with
China are currently at a bit of a standstill. Bestent
told Fox News a call may be required between President
(02:30):
Trump and Chinese President Shijinping in order to reach a deal.
Speaker 4 (02:34):
I would say that they are a bit stalled. I
believe that We will be having more talks with them
in the next few weeks, and I believe we may
at some point have a call between the President and
party chair.
Speaker 5 (02:52):
She.
Speaker 2 (02:52):
That was Treasuy Sectary Scott Bessent speaking on Fox News.
The last time Trump and She spoke was in January,
days ahead of President Trump's inauguration. The US President said
that he would speak to the Chinese leader in the
days after trade talks in mid May, though the call
never materialized, and in their first in person meeting since
(03:13):
the inauguration, President Trump pushed the FED Chair, Jerome Powell
to lower interest rates. The US President has publicly and
repeatedly lashed out at the policymaker, calling him a quote loser.
White House Press Secretory Caroline Levitt says that Trump urged
Powell to cut rates.
Speaker 6 (03:31):
The President did say that he believes the FED chair
is making a mistake by not lowering interest rates, which
is putting US at an economic disadvantage to China in
other countries, and the President's been very vocal about that
both publicly and now I can reveal privately as well.
Speaker 2 (03:47):
The White House Press Secretary there the FED officials have
held interest rates steady this year, arguing that a patient
approach to policy is appropriate amid economic uncertainty caused by tariffs.
The Central Bank says that Chair Pow quote stress the
path of policy will depend entirely on incoming economic information
and what that means for the outlook. While moving on
(04:09):
to some corporate news, the CEO of City Group says
that the economic outlook for the US does remain stronger
than Europe despite sweeping policy uncertainty from trade and tariffs.
Speaker 7 (04:21):
Bloomberg's un Potts has more.
Speaker 8 (04:23):
There's nothing like being in Europe to make you feel
a bit better about the US. City Groups Shane Fraser
not mincing her words. She was speaking in a wide
ranging interview at a financial conference, where she also expressed
skepticism that the EU will pursue its long delayed plan
for capital markets union and drive economic growth. On the
prospects for the US economy, Fraser said her eye is
(04:44):
on the unemployment figures, but Addie, the consumer spending so
far appears to be showing signs of resilience in London.
Speaker 7 (04:50):
I'm you in pots Blimberg Radio.
Speaker 2 (04:52):
Bank of England Governor Andrew Bailey has urged the British
government to strike a deeper EU trade deal. The Central
bank head warned that quote something has gone wrong with
the global trading system.
Speaker 9 (05:05):
If you believe that tariff action is needed to create
the shock and or to get these issues onto the
table and dealt with, I'm afraid that means something's gone
wrong with the multilateral system. Yeah, these things ought to
be dealt with without having to get to this point.
And we need to deal with that something. And it
matters to central bankers and economic policymakers because our jobs
(05:25):
are much harder, much harder if we face more inflexible
and uncertain supply conditions in our economies, as we appear
to do today.
Speaker 2 (05:34):
The Bank of England Governor Andrew Bailey he sees rebuilding
ties with the EU as the best way to drive
sorely needed UK growth. Since the recent trade deal with Europe,
UK business confidence has jumped to a nine month high
in a sharp rebound. And lastly, a fifty three year
old man is due in court later today accused of
(05:56):
driving a car into crowds of people at Liverpool's trophy parade.
Paul Doyle, who is from the West Derby area of
the city, is charged with seven offenses including dangerous driving,
malicious wounding and intent to cause grievous bodily harm. Jenny
Simms is the Assistant Chief Constable of Merseyside Police.
Speaker 7 (06:16):
This continues to be.
Speaker 10 (06:17):
A large and complex investigation and detectives are reviewing a
huge volume of CCTV and mobile phone footage submitted by
the public and businesses.
Speaker 2 (06:29):
Jenny Simms speaking there. Seventy nine people were injured in
Monday's incident in Liverpool, with seven people still in hospital.
Those are our top stories this morning. Let me take
you through the markets now. So the legal battle over
President Trump's tariffs and the uncertainty injected by a fresh
court decision has weighed on markets. The masci Asia Pacific
(06:51):
indegs down half of one percent, the Hank Saying dropping
one and a half percent this morning. We also had
data out yesterday showing the US economy shrank at the
start of this year, weaker consumer spending and even bigger
impact from trade than had been initially thought. Stock futures
for the US and for Europe are in the red
this morning. We're down two tenths for the S and
(07:11):
P five hundred e Many futures you've also got in
terms of the BlueBag dollar Spot index. A stronger dollar,
a weeker euro, weeker pound a Japanese yen, though, is
gaining two tenths of one percent. I've read an interesting
report that global investors have become net buyers of cash
Japanese equities for the last eight weeks in a row.
So this goes to that theme of investors looking elsewhere
(07:35):
and away from just the kind of US exceptional trade
in stocks. Looking at the bond markets this morning, little
movement actually in tenny US treasure yields forty two is
where we stand. So those are the markets in a moment.
I'm going to bring you more in the latest when
it comes to the Trump administration winning a temporary tariff
reprieve in the appeals Cord. Plus also why Wall Street
(07:56):
is alarmed by a tax measure that's buried in the
big beautiful bill that's currently working its way through Congress.
So we'll get to those stories. But somebody else caught
my eye this morning. Summer is rolling around, and so
soon the corridors of your firm, I imagine, and mine
and maybe many others will be filled with interns, which
got me to thinking, why I'm in the world of Ahi,
(08:18):
do we still have interns? I was staggered to learn though,
how intense the competition for internships is now. Three hundred
and fifteen thousand people applied for an internship at Goldman
Sachs for two seven hundred places that they offer. JP
Morgan was even more staggering, almost half a million applications
(08:39):
for four thousand positions at JP Morgan for like a
ten week internship. Much harder to get an internship than
it is to get into Harvard. Mark Rubinstein, who writes
Bloomberg's Net Interest newsletter, dug out this story for us
and has written all about it. He explains that there's
been a huge surge in applications because of online platforms
(09:02):
making it easier to find out about internships and apply
for those opportunities.
Speaker 7 (09:07):
The salary doesn't hurt.
Speaker 2 (09:08):
One hundred and twenty five thousand dollars is the annual
salary the equivalent of that, But mainly it's that internships
are the prime route to get a graduate job, and
the prime route now into the top ranks of banking
and finance. So there you go. Some thoughts for you.
It's a real kind of audition for leadership potential from people.
(09:30):
So now you can have to on that as you
think about interns arriving perhaps in your office this summer. Now,
a reprieve for President Trump on taris from a federal
appeals court, but a legal fight that threatens to inject
even more uncertainty into the global economy. Joining me now
is Bloomberg reporter cat Demitrieva Katty.
Speaker 7 (09:48):
Good morning.
Speaker 2 (09:49):
Just tell me what did the court actually decide. It
seems to extend the timeline now for this legal fight
over Trump's tariffs.
Speaker 7 (09:58):
Yeah, it certainly does.
Speaker 5 (10:00):
And we're still, frankly trying to unpack exactly what this
all means, because there are still a lot of questions
about where we go from here. But essentially with the
US Court of International Trade, they're in Manhattan. What they ruled,
these three judges is that the Trump administration was wrong.
(10:20):
They wrongfully invoked this emergency law to justify their reciprocal levee.
So for that, we'd have to go back to April.
Speaker 7 (10:28):
Second.
Speaker 5 (10:29):
That was when they announced, you know, on Liberation Day,
these reciprocal tariffs against or what they called reciprocal tariffs
against a number of countries, and there was about a
sixty countries that they had targeted, and so the court
found that that was not actually legal, that was not allowed,
so they blocked effectively the tariffs. Now, the administration very
(10:53):
quickly and as expected, filed an appeal. That appeal was
granted very recently, and so that effectively stays that initial order.
But basically, what this means is a protracted legal fight
between the US administration and the courts. It will likely
go all the way up to the Supreme Court, and
(11:14):
as we know, this takes a lot of time.
Speaker 7 (11:17):
Yeah, what workarounds? Then? Does the Trump administration have?
Speaker 2 (11:21):
What is it looking at in order to deliver on
its tariff's aims, because that's what the administration has said
it would do given this legal battle.
Speaker 5 (11:30):
Now, Yeah, and I think that markets are assuming, I
mean everyone is assuming at this point that there's no
way around tariffs. You know, initially when the ruling came down,
there was some optimism, but very quickly soured because of
the stay, but also because the Trump administration has a
very clear trade strategy. They want to impose, they want
(11:51):
to add tariffs, and there are other ways to do that, right,
So the emergency law was kind of the biggest broadest
way to do it and the quickest way to do it.
There are other methods that take time. So there's for example,
the two three two tariffs, and that would apply sort
(12:12):
of pharmaceutical there's semiconductors. It also doesn't impact tariffs that
were imposed under Section three oh one, which is to
do with unfair trade practices. And the administration can also
do a lot of They could just do investigations. You know,
this is the power of the US government to launch
(12:32):
investigations against specific products, against specific countries. And so we
do know that there are a lot of these other
tools that would use national security powers to be able
to add levy so that they're not necessarily going away.
Speaker 2 (12:50):
Okay, Katy, thank you so much for being with us
this morning. Right, so we are awaiting then quite a
protracted battle when it comes to imposing twists, Bloomberg reported,
Katya Demitrievia, thank you. Now. Another aspect of what's happening
with the Trump administration, very deep in more than a
thousand pages of tax and spending information in the bill
(13:12):
that President Trump is pushing through Congress is an obscure
tax measure that is setting off alarm bells on Wall
Street and beyond our opening trade Ancha Critti Gupti is
here to explain why this matters. Pretty good morning. Just
tell me about this measure. It's known as Section eight
ninety nine.
Speaker 7 (13:30):
It is, it is.
Speaker 11 (13:31):
It's called the Enforcement of Remedies against Unfair Foreign Taxes,
aptly named for exactly what it does, which is simply
this idea that when you're looking or comparing this to
other countries that have as would be deemed by the
Trump administration as tax policies that are discriminatory, which again
is a fairly vague term, so we don't actually know
which countries that applies to, but we know it's something
(13:52):
that Donald Trump has talked about in his previous iterations
in terms of tax barriers when it comes to the
likes of the European Union, for example. This is a
measure that would include raising tax rates on passive income
as you suggest, but interests and dividends as well. And
the reason this is so important is because when you
are talking about international investors and how they are positioned
and exposed to the United States, a lot of them
(14:14):
aren't necessarily trading stocks day in day out, trading the
headline risk you've seen a little bit of a jump
in that at the moment, but a lot of them
are talking about saying having the majority of their exposure
to the US and sitting in those assets, so to
be taxed on that passive income or those dividends actually
threatens trillions of dollars that would incentivize a foreigner to
(14:35):
enter the States in the first place.
Speaker 2 (14:36):
Yeah, I mean that could be absolutely huge if signed
into law. The sense is that it would therefore drive
away foreign investors.
Speaker 11 (14:44):
It's interesting because there's a couple of ways that this
would show up, because it also measure talks about not
only the interest, but dividends as well. We know that
right now in this current market environment, something that a
lot of stocks are saying companies are issuing is not
only share buybacks, which is a big one, but in
times of recession, they will pull back on those share
buybacks and issue dividends instead to their shareholders.
Speaker 7 (15:05):
So to be now taxed on that basically.
Speaker 11 (15:07):
Return for shareholders returns of capital is a concerning way
for a lot of companies actually want to keep their
investors interested and not see a sharper decline in their
share price.
Speaker 7 (15:19):
So why has it been put into the bill then.
Speaker 11 (15:22):
Two as a negotiating tactic, it seems. And again this
really falls in line with some of the rhetoric you've
heard from Donald Trump. I think the most easiest one,
although it's not specifically MEAs mentioned in this bill, is
the vat tax. He calls that an unfair, discriminatory tax,
something that he thinks the European Union can pull down
very easily.
Speaker 7 (15:40):
Us sitting on the side.
Speaker 11 (15:40):
Of the Atlantic note that is a very tricky thing
to do just from an internal European perspective, but from
the outside that is how he's viewing it.
Speaker 7 (15:48):
But it's not just him. You've had these other.
Speaker 11 (15:49):
Tax barriers in other places as well, not just in
the European Union, but India, Switzerland, some others. Globally speaking,
the US has one of the lowest tax rates in
the world, and that has been a beneficiary for both
corporates and for passive investors.
Speaker 1 (16:06):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (16:12):
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Speaker 2 (16:24):
Our flagship New York station, is also available on your
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I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg Daybreak Europe
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