April 10, 2025 • 18 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) President Donald Trump announced a 90-day pause on higher tariffs that hit dozens of trade partners after midnight, while raising duties on China to 125%.
(2) Five gut-wrenching days after Donald Trump’s America-versus-the-world trade war threw stock and bond markets around the globe into disarray, he backpedaled and, in the process, pulled the financial system back from the brink.
(3) China’s top leaders are poised to meet Thursday to discuss additional economic stimulus after US President Donald Trump ratcheted up tariffs, according to people familiar with the matter.
(4) President Donald Trump called the bond market a thing of beauty on Wednesday. For traders of government debt, the day meant pure mayhem.
(5) The murmurs spread quietly at first, then exploded into a roar as the news hit — President Donald Trump was pausing the bulk of his tariffs and putting his global trade war on hold. Mostly.
(6) The UK housing market is in danger of being “blown off course” by US President Donald Trump’s trade war, estate agents warned after activity weakened sharply last month.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This say is the
Bloomberg Daybreak youurate podcast, available every morning on Apple, Spotify
or wherever you listen. It's Thursday, the tenth of April
in London. I'm Stephen Carroll coming up today. Just hours
after coming into Forrest, Trump announces a ninety day pause
(00:23):
on hired tariffs for dozens of countries. The US President
offers no reprove for China, imposing even higher levies that
now total one hundred and twenty five percent, plus liberation
day for markets. The S and P five hundred gains
almost ten percent as the tariff pause drives the best
dock rally since two thousand and eight. Let's start with
(00:45):
a roundup of our top stories. Donald Trump has an
aunceday surprise ninety day pause on higher tariffs that hit
dozens of trading partners while raising duties on China to
one hundred and twenty five percent. The President also says
he's going to take a look at tariff exemptions for
some US companies and will decide quote on instinct. It
(01:05):
all comes thirteen hours after the extra duties on fifty
six countries and the European union took effect. Trump was
asked why he decided to back off.
Speaker 2 (01:14):
I thought that people were jumping a little bit out
of line. They were getting yippie, you know, they were
getting a little bit yippy, a little bit afraid.
Speaker 1 (01:24):
President Trump, speaking there as the White House confirmed that,
with the exception of China, countries hit with higher duties
will now face a ten percent baseline levy Instead. US
tariffs on steel, aluminium, and automobiles remain at their current rates,
alongside separate tariffs on Canadian and Mexican goods. Bloomberg has
learned that China's top leaders are meeting today to discuss
(01:46):
additional economic stimulus in response to the latest tariff salvo.
On Wednesday, Trump further escalated the tariff battle between the
world's two largest economies. A one hundred and twenty five
percent tariff on Chinese goods took effect at five am
London time. The move follows Beijing's announcement that it will
raise its tariff's on US products to eighty four percent.
(02:07):
Despite the rising tensions, the US president expects the two
countries to begin negotiations over trade.
Speaker 3 (02:13):
China wants to make a deal, They just don't know
how quite to go about it.
Speaker 2 (02:17):
You know, it's one of those things they don't know
quite the proud people and.
Speaker 1 (02:22):
President she's a proud man. I know him very well,
and they don't.
Speaker 4 (02:25):
Know quite how to go about it.
Speaker 1 (02:27):
But they'll figure it out.
Speaker 3 (02:29):
In the process of figuring out.
Speaker 1 (02:30):
But they want to make a deal. Trump says he
doesn't believe he'll need to raise rates any further to
bring China to the negotiating table. Despite the latest escalation
between Washington and Beijing, markets are viewing Trump's tariff for
pre for other countries as a major positive. The S
and P five hundred sword on the news, regaining more
than seventy percent of the losses since the so called
(02:51):
Liberation Day announcement last week. In all, more than thirty
billion shares worth one point five trillion dollars changed hands
across US venues, a level of activity not seen since
two thousand and eight, but some, including TPW Investment Management
CEO J Pulaski, believe the damage has already been done.
Speaker 3 (03:10):
This has been an immense own goal by the US administration.
We have basically proven ourselves to be not good partners,
not good business partners. And I think that was reflected
in the treasury market and reflected in the dollar. And
so for us, you know, we have been and continue
to be of the view that we are early in
(03:33):
a secular change of leadership away from US equities, which
have been the leader since the bottom of O nine,
to the rest of the world. J.
Speaker 1 (03:42):
Pilowski speaking there is Asian stocks are on course for
their biggest jump in two years, while European stock futures
appointing to significant gains at the open. Meanwhile, the yield
on to your treasury is jumped by as much as
thirty basis points on the tariff pause, some calling us
a no win market. There have been fears about this
to be of the world's biggest death market and its
status as a safe haven. Tonald Trump acknowledged he had
(04:05):
been watching the moves.
Speaker 2 (04:06):
I was watching the bond market.
Speaker 3 (04:08):
That bond market is very tricky.
Speaker 1 (04:10):
I was watching it.
Speaker 5 (04:10):
But if you look at it now, it's it's beautiful.
Speaker 1 (04:15):
President's action caused a major reversal of the curve steepening
trade as traders unwound bets on swift interest rate cuts.
The S and P five hundred ended yesterday nine point
five percent of its biggest one day gain since two
thousand and eight. It took just minutes to reverse much
of the past week's lasses.
Speaker 4 (04:33):
Bloomberg Exchange.
Speaker 1 (04:33):
Wilcock has the story.
Speaker 2 (04:35):
Is it real? That was how traders on the New
York Stock Exchange reacted as words spread of Trump's U turn.
Then you sparked a stunning relief rally as trillions of
dollars moved into equities in minutes. Goldman Sachs reversed their
forecast for a US recession, which they'd published only two
hours before. But even as the rush hit where he remains.
(04:56):
Some investors who spoke to Bloomberg say it's still hard
form a fundamental view of what the Trump administration actually wants.
In their view, the volatility is by no means over
in London, James Wilcock, Bloomberg Radio.
Speaker 1 (05:11):
And there's a new warning of the UK housing market
risks being blown off course by the US trade war.
The Royal Institution of Chartered Surveyors measure of buyer demand
hit its lowest since September twenty twenty three last month,
with activity expected to dip further in the next three months.
They are index of house prices dropped by nine percentage
points to well below the median expectation of economists. While
(05:34):
the outlook for next year is more positive, Rix warrants
that this could change if the turmoil unleashed by Trump's
tariff salvo escalates. Those are your top stories on the markets.
The Mscish Pacific Index up five point two percent, on
track for its biggest jump in more than two years.
The nickey in Tokyo is eight point five percent higher.
European stock Future is pointing to a strong open in Europe.
(05:56):
Eurostrucks fifty up eight point one percent for one hundred
futures five and a half percent stronger. Dak's features up
by almost eight percent as well. On treasury markets, the
ten year yeld down another five basis points this morning
to four point two nine percent. The thirty year yeld
down five basis points as well to four point six
nine percent. On currency markets, the Bloomberg Dollar Spot Index
(06:17):
is four tenths weeker. The Euros trading at one oh
nine eighty three against the dollar. The pound is at
one twenty eight fifty nine.
Speaker 6 (06:25):
Well.
Speaker 1 (06:25):
In a moment, we'll bring up to date on all
of the latest tariff headlines, plus dig into the major
rally that we're seeing on markets as a result. But
we have a great read on Bloomberg this morning detailing
the inside story of Trump's tariff reversal, Justin Sank and
his team, writing that within fourteen hours, Trump executed one
of the biggest economic policy reversals in modern presidential history.
(06:46):
The piece has some fascinating insights how Trump was watching
the bond markets, how he placed particular weight on commentary
from JP Morgan's Jamie Diamond who so who had said
it was perfectly reasonable to conclude that global trade was unfair,
but also warned that a recession was the likely outcome
of Trump's movement, that businesses were cutting back amid the uncertainty.
That's a message that seems to have gotten through to
(07:06):
the US President. Donald Trump also tempted by the overtures
that he'd had from trading partners looking for deals after
the tariffs were mooted, apparently offering concessions on issues like
non trade barriers that hadn't been in play before. The
social media post itself, with the announcement drafted by Trump,
Howard Lutnick, and Scott Bessen without any of Trump's legal
team present. In fact, some people in the White House
(07:28):
only found out about it at the same time as
everyone else. Meanwhile, Trump's trade chief Jemison Greer was testifying
before Congress as all of this was happening. Here he
is being questioned by the Democratic Representative Stephen Harsford, how
many days?
Speaker 3 (07:41):
How many weeks?
Speaker 4 (07:42):
I understand it's ninety days.
Speaker 5 (07:44):
I haven't spoken to the present since I so the
trade representative hasn't spoken to the President of the United States.
Speaker 4 (07:51):
About a global reordering of trade. Yes, I have, and
yet hearing with you. So yet he announced it on
a tweet. W t H. Who's in charge? The President
of United States is in charge.
Speaker 1 (08:04):
That's right, Representative Jemeerson Greer there giving you an insight
of perhaps how quickly this story was changing. You can
read justin Singk's full account of how the decision came
about on Bloomberg dot Com and on the terminal Well.
The tariffs, the higher tariff have been paused for many countries,
including members of the European Union, but China still facing
this massive levee now of one hundred and twenty five percent.
(08:26):
Let's bring in our senior US Government editor Derek Wellbank
for more on this story, Derek, The focus of course
now on very much what's happening between the US and China.
How much more escalation could we be in line?
Speaker 4 (08:38):
For Well, we've gotten signals that this is as high
as the US wants to go. But never say never, right,
because the original rate for this was going to be
thirty four percent on top of the twenty four or
on top of the twenty that had already been levied, right,
So somewhere in that fifty four range, But then there
was an additional fifty and now that that's been plussed
(08:59):
up in we're at one hundred and twenty five. So
we really have to say a bit of never saying ever,
even though the initial read is this is as high
as we're going with China, the latest moves sort of
put us into a place where from here forward you
are looking at a very sort of bifurcated trade posture
from the United States. Right, you have a massive one
(09:22):
hundred and twenty five percent tariff on all Chinese goods,
and let's be clear, the US is defining China as
not just the mainland but also Hong Kong and Macau,
and then for the rest of the world, a. Generally speaking,
there are a couple of here and theres generally speaking
a global ten percent minimum. So that is a very
(09:42):
very different world that you're talking about here, we're something
like that to hold. You can see a clear case
where the move toward trying to get a supply chains
to move from China to other countries, your vietnams, et cetera,
is very much still in play.
Speaker 1 (10:02):
And of course this opens the door then for negotiations
that these countries, many countries we've been told have made
overtures to the White Eyes to try and get concessions
in that process. Are they going to be encouraged even though,
as you point out, many of these countries are facing
the ten percent basedline levy? Still, are they going to
be encouraged by this move to perhaps make more attractive
(10:23):
offers to the US President.
Speaker 4 (10:28):
Well, the last time that you and I talked, we
talked about how no country had figured out how to
move the president off of his signature economic policy. And
now we've gotten an indication because what we said at
that time was when you first get that move, that's
going to sort of give clarity about how to do
it in future. Now I'm not sure that the exact
(10:50):
way that that's happened is exactly clarity. But one of
the things that the White House did make clear that
I think everyone's going to be paying attention to, is
that there's a difference between China, which very stridently responded,
and a lot of the other countries which didn't. Right,
we had been mentioning a lot of these countries were
in weight and sea posture didn't necessarily immediately retaliate. Some
(11:14):
of that was because they wanted to do talks instead,
and we're racing to Washington to try and do that.
Some of it candidly. The European Union is a great
example of this. They were still talking about what they
wanted to do even as they were being pushed by
some friends in Germany to respond harder. The events sort
of completed a cycle before they got to it. In
any case, that kind of weight out wound up being
(11:38):
a strategy that resulted in lower terraff for people. And
as they say, we're very early days in a four
year administration, but everyone is taking notes about how to
move this president.
Speaker 1 (11:51):
The other story, the next step in the story we're
watching as well is our reporting that China's top leaders
are preparing their own economic response to this as well,
and the potential for more stimulus to counter the effects
of the trade war. What do we know about the
options they're considering.
Speaker 4 (12:10):
Well, that's exactly right. We're we're understanding understanding that top
leaders are meant to meet today to discuss additional stimulus items.
You're talking about support measures for consumer spending, uh, technology, housing,
things of that nature. So it's a lot of kind
of domestic support is kind of where we're hearing uh
(12:31):
for for China. That would that would track with a
lot of what China has been trying to do sort
of broader in their in their economic strategy over the
last several years. You know, one of the things that
we've seen is that some flagship companies really do have
an x US strategy. B y D, Huawei are great
(12:51):
examples of this. They don't really have any US presence
to speak of, but they've still managed to find an
awful lot of success. And so this would be an
example of China sort of doubling down on itself. An
analogy I have heard is that a river may be
quite turbulent, but the ocean is a great leveler, right
(13:12):
and all water flows into the ocean. China's economy is
an ocean to itself.
Speaker 1 (13:18):
Derek Wellbanker, Senior US Government editor, thank you very much
for joining us as we are watching for further developments
on this story. Well Trump's announcement sparked a dramatic reversal
on market. Stocks on Wall Street swords and NASDAK having
its best day in twenty four years, Treasuries rallying to
Asian shares, our higher futures pointing to a jump at
(13:39):
the open in Europe as well. Let's bring in our
markets live stretch. Just Mary Nicola for more. Mary, how
should we be thinking about this turnaround on markets? Is
this a full reversal of the recent selloffs or is
it investors jumping on any good news.
Speaker 5 (13:54):
I think it's probably more of the latter, that we're
just jumping on any good news because the fact is
that teriff's are they're less punitive. Yes, but there is
still some concern over a recession of some kind. And
sure inflation has abated, but it still doesn't completely erase
a lot of the global growth woes that have really
(14:16):
gripped the markets to begin with. We still have tariffs
that are in place, and they're at historically high levels.
And then of course you have tensions between the world's
largest economies coming still elevated, so a substantial balance may
be harder to come by, and we're likely to see
that over the coming days.
Speaker 1 (14:39):
We also have the story that Derek Ballbank was just
telling us about the potential for China's stimulus as a
response to perhaps the damage from this. Of course, China
very much being punished by the increase in levees that
have now come into force on its imports as well.
How are markets parsing this bad news and potentially good
news from stimulus.
Speaker 5 (15:00):
Yeah, what we've seen this morning is that China assets
are just essentially ignoring these punitive levees on from the US,
and what the focus has been on is just on stimulus.
So obviously as tensions rise, there's expectations higher expectations of
more stimulus. You noted the news of that policymakers are meeting,
(15:22):
and so of course that is all putting just putting
hopes that more is coming sooner rather than later. And
then of course we had the disappointment from the price
data this morning, which essentially highlights that there is a
need for more stimulus, even when you're ignoring what is
happening on the external side, because the domestic challenges are
(15:46):
still quite strong. So you still have deflation, you have
a property malaise, and you have weak consumption, and what's
happening externally just compounds it.
Speaker 1 (15:56):
How is this all playing out on the Chinese yuan,
because it's something been watching very closely how the People's
Bank of China has been managing its daily fix for
the currency.
Speaker 5 (16:06):
Yeah, the yuan. Essentially, we saw that the fix has
was weakened today and we're going to see a gradual
weakening in the currency. There had been recent calls that
you we would get a sharper depreciation in the currency,
but that's unlikely, especially with the market volatility, especially with
how high the dollar CEE and why volatility remains, and
(16:28):
of course the prospects of triggering outflows is still a
threat when you if you decide to make such a
one off depreciation, and of course you don't want to
when when you're under the spotlight like China is right now,
you don't want to draw the attention and be a
bad actor in this environment. So I think China is
(16:48):
going to continue to see UH to play by the
rules and sense of not doing anything aggressive on currency policy,
to ensure that it just has its credibility.
Speaker 1 (17:01):
Mary this time yesterday, a lot of the focus was
on the moves that we were seeing in treasury markets.
This massive job, particularly at the long end, and curving
yields a reversal of that, as we've seen rallies across
treasuries as well as equities on the back of this.
Can we say that treasury markets have returned to normal?
Speaker 6 (17:17):
Now?
Speaker 1 (17:18):
Are they vulnerable to further shifts in policy?
Speaker 5 (17:22):
I wouldn't know about normal, but I think you do
get reprieved. Absolutely, So normalcy might be a little bit
far fetch, especially when you look at where volatility stands.
So if you look at the move index, the move
index still remains very elevated. So obviously there's still a
lot of jitters in the bond market. But one thing
is interesting, and it does seem that it's the bond
(17:42):
market that caused Trump to blink rather than the stock market.
But of course the erratic moves that we saw just
prompted him to shift gears and so, but what we're
seeing overall is that if with the delay in these tariffs.
We are going to see a delay in a more
wait and see approach from the Fed that still keeps
(18:02):
yields elevated. But overall, I think also you still have
discussions on the tax cuts coming through and a tax
bill that's still in the pipeline, so I wouldn't say
that we're out of the woods completely on the bond market.
Speaker 1 (18:17):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 6 (18:23):
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Speaker 1 (18:30):
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Speaker 1 (18:43):
I'm Caroline Hitka and I'm Stephen Carroll. Join us again
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your day right here on Bloomberg day Break Europe.
Bloomberg Audio Studios, podcasts, radio news. This say is the
Bloomberg Daybreak youurate podcast, available every morning on Apple, Spotify
or wherever you listen. It's Thursday, the tenth of April
in London. I'm Stephen Carroll coming up today. Just hours
after coming into Forrest, Trump announces a ninety day pause
(00:23):
on hired tariffs for dozens of countries. The US President
offers no reprove for China, imposing even higher levies that
now total one hundred and twenty five percent, plus liberation
day for markets. The S and P five hundred gains
almost ten percent as the tariff pause drives the best
dock rally since two thousand and eight. Let's start with
(00:45):
a roundup of our top stories. Donald Trump has an
aunceday surprise ninety day pause on higher tariffs that hit
dozens of trading partners while raising duties on China to
one hundred and twenty five percent. The President also says
he's going to take a look at tariff exemptions for
some US companies and will decide quote on instinct. It
(01:05):
all comes thirteen hours after the extra duties on fifty
six countries and the European union took effect. Trump was
asked why he decided to back off.
Speaker 2 (01:14):
I thought that people were jumping a little bit out
of line. They were getting yippie, you know, they were
getting a little bit yippy, a little bit afraid.
Speaker 1 (01:24):
President Trump, speaking there as the White House confirmed that,
with the exception of China, countries hit with higher duties
will now face a ten percent baseline levy Instead. US
tariffs on steel, aluminium, and automobiles remain at their current rates,
alongside separate tariffs on Canadian and Mexican goods. Bloomberg has
learned that China's top leaders are meeting today to discuss
(01:46):
additional economic stimulus in response to the latest tariff salvo.
On Wednesday, Trump further escalated the tariff battle between the
world's two largest economies. A one hundred and twenty five
percent tariff on Chinese goods took effect at five am
London time. The move follows Beijing's announcement that it will
raise its tariff's on US products to eighty four percent.
(02:07):
Despite the rising tensions, the US president expects the two
countries to begin negotiations over trade.
Speaker 3 (02:13):
China wants to make a deal, They just don't know
how quite to go about it.
Speaker 2 (02:17):
You know, it's one of those things they don't know
quite the proud people and.
Speaker 1 (02:22):
President she's a proud man. I know him very well,
and they don't.
Speaker 4 (02:25):
Know quite how to go about it.
Speaker 1 (02:27):
But they'll figure it out.
Speaker 3 (02:29):
In the process of figuring out.
Speaker 1 (02:30):
But they want to make a deal. Trump says he
doesn't believe he'll need to raise rates any further to
bring China to the negotiating table. Despite the latest escalation
between Washington and Beijing, markets are viewing Trump's tariff for
pre for other countries as a major positive. The S
and P five hundred sword on the news, regaining more
than seventy percent of the losses since the so called
(02:51):
Liberation Day announcement last week. In all, more than thirty
billion shares worth one point five trillion dollars changed hands
across US venues, a level of activity not seen since
two thousand and eight, but some, including TPW Investment Management
CEO J Pulaski, believe the damage has already been done.
Speaker 3 (03:10):
This has been an immense own goal by the US administration.
We have basically proven ourselves to be not good partners,
not good business partners. And I think that was reflected
in the treasury market and reflected in the dollar. And
so for us, you know, we have been and continue
to be of the view that we are early in
(03:33):
a secular change of leadership away from US equities, which
have been the leader since the bottom of O nine,
to the rest of the world. J.
Speaker 1 (03:42):
Pilowski speaking there is Asian stocks are on course for
their biggest jump in two years, while European stock futures
appointing to significant gains at the open. Meanwhile, the yield
on to your treasury is jumped by as much as
thirty basis points on the tariff pause, some calling us
a no win market. There have been fears about this
to be of the world's biggest death market and its
status as a safe haven. Tonald Trump acknowledged he had
(04:05):
been watching the moves.
Speaker 2 (04:06):
I was watching the bond market.
Speaker 3 (04:08):
That bond market is very tricky.
Speaker 1 (04:10):
I was watching it.
Speaker 5 (04:10):
But if you look at it now, it's it's beautiful.
Speaker 1 (04:15):
President's action caused a major reversal of the curve steepening
trade as traders unwound bets on swift interest rate cuts.
The S and P five hundred ended yesterday nine point
five percent of its biggest one day gain since two
thousand and eight. It took just minutes to reverse much
of the past week's lasses.
Speaker 4 (04:33):
Bloomberg Exchange.
Speaker 1 (04:33):
Wilcock has the story.
Speaker 2 (04:35):
Is it real? That was how traders on the New
York Stock Exchange reacted as words spread of Trump's U turn.
Then you sparked a stunning relief rally as trillions of
dollars moved into equities in minutes. Goldman Sachs reversed their
forecast for a US recession, which they'd published only two
hours before. But even as the rush hit where he remains.
(04:56):
Some investors who spoke to Bloomberg say it's still hard
form a fundamental view of what the Trump administration actually wants.
In their view, the volatility is by no means over
in London, James Wilcock, Bloomberg Radio.
Speaker 1 (05:11):
And there's a new warning of the UK housing market
risks being blown off course by the US trade war.
The Royal Institution of Chartered Surveyors measure of buyer demand
hit its lowest since September twenty twenty three last month,
with activity expected to dip further in the next three months.
They are index of house prices dropped by nine percentage
points to well below the median expectation of economists. While
(05:34):
the outlook for next year is more positive, Rix warrants
that this could change if the turmoil unleashed by Trump's
tariff salvo escalates. Those are your top stories on the markets.
The Mscish Pacific Index up five point two percent, on
track for its biggest jump in more than two years.
The nickey in Tokyo is eight point five percent higher.
European stock Future is pointing to a strong open in Europe.
(05:56):
Eurostrucks fifty up eight point one percent for one hundred
futures five and a half percent stronger. Dak's features up
by almost eight percent as well. On treasury markets, the
ten year yeld down another five basis points this morning
to four point two nine percent. The thirty year yeld
down five basis points as well to four point six
nine percent. On currency markets, the Bloomberg Dollar Spot Index
(06:17):
is four tenths weeker. The Euros trading at one oh
nine eighty three against the dollar. The pound is at
one twenty eight fifty nine.
Speaker 6 (06:25):
Well.
Speaker 1 (06:25):
In a moment, we'll bring up to date on all
of the latest tariff headlines, plus dig into the major
rally that we're seeing on markets as a result. But
we have a great read on Bloomberg this morning detailing
the inside story of Trump's tariff reversal, Justin Sank and
his team, writing that within fourteen hours, Trump executed one
of the biggest economic policy reversals in modern presidential history.
(06:46):
The piece has some fascinating insights how Trump was watching
the bond markets, how he placed particular weight on commentary
from JP Morgan's Jamie Diamond who so who had said
it was perfectly reasonable to conclude that global trade was unfair,
but also warned that a recession was the likely outcome
of Trump's movement, that businesses were cutting back amid the uncertainty.
That's a message that seems to have gotten through to
(07:06):
the US President. Donald Trump also tempted by the overtures
that he'd had from trading partners looking for deals after
the tariffs were mooted, apparently offering concessions on issues like
non trade barriers that hadn't been in play before. The
social media post itself, with the announcement drafted by Trump,
Howard Lutnick, and Scott Bessen without any of Trump's legal
team present. In fact, some people in the White House
(07:28):
only found out about it at the same time as
everyone else. Meanwhile, Trump's trade chief Jemison Greer was testifying
before Congress as all of this was happening. Here he
is being questioned by the Democratic Representative Stephen Harsford, how
many days?
Speaker 3 (07:41):
How many weeks?
Speaker 4 (07:42):
I understand it's ninety days.
Speaker 5 (07:44):
I haven't spoken to the present since I so the
trade representative hasn't spoken to the President of the United States.
Speaker 4 (07:51):
About a global reordering of trade. Yes, I have, and
yet hearing with you. So yet he announced it on
a tweet. W t H. Who's in charge? The President
of United States is in charge.
Speaker 1 (08:04):
That's right, Representative Jemeerson Greer there giving you an insight
of perhaps how quickly this story was changing. You can
read justin Singk's full account of how the decision came
about on Bloomberg dot Com and on the terminal Well.
The tariffs, the higher tariff have been paused for many countries,
including members of the European Union, but China still facing
this massive levee now of one hundred and twenty five percent.
(08:26):
Let's bring in our senior US Government editor Derek Wellbank
for more on this story, Derek, The focus of course
now on very much what's happening between the US and China.
How much more escalation could we be in line?
Speaker 4 (08:38):
For Well, we've gotten signals that this is as high
as the US wants to go. But never say never, right,
because the original rate for this was going to be
thirty four percent on top of the twenty four or
on top of the twenty that had already been levied, right,
So somewhere in that fifty four range, But then there
was an additional fifty and now that that's been plussed
(08:59):
up in we're at one hundred and twenty five. So
we really have to say a bit of never saying ever,
even though the initial read is this is as high
as we're going with China, the latest moves sort of
put us into a place where from here forward you
are looking at a very sort of bifurcated trade posture
from the United States. Right, you have a massive one
(09:22):
hundred and twenty five percent tariff on all Chinese goods,
and let's be clear, the US is defining China as
not just the mainland but also Hong Kong and Macau,
and then for the rest of the world, a. Generally speaking,
there are a couple of here and theres generally speaking
a global ten percent minimum. So that is a very
(09:42):
very different world that you're talking about here, we're something
like that to hold. You can see a clear case
where the move toward trying to get a supply chains
to move from China to other countries, your vietnams, et cetera,
is very much still in play.
Speaker 1 (10:02):
And of course this opens the door then for negotiations
that these countries, many countries we've been told have made
overtures to the White Eyes to try and get concessions
in that process. Are they going to be encouraged even though,
as you point out, many of these countries are facing
the ten percent basedline levy? Still, are they going to
be encouraged by this move to perhaps make more attractive
(10:23):
offers to the US President.
Speaker 4 (10:28):
Well, the last time that you and I talked, we
talked about how no country had figured out how to
move the president off of his signature economic policy. And
now we've gotten an indication because what we said at
that time was when you first get that move, that's
going to sort of give clarity about how to do
it in future. Now I'm not sure that the exact
(10:50):
way that that's happened is exactly clarity. But one of
the things that the White House did make clear that
I think everyone's going to be paying attention to, is
that there's a difference between China, which very stridently responded,
and a lot of the other countries which didn't. Right,
we had been mentioning a lot of these countries were
in weight and sea posture didn't necessarily immediately retaliate. Some
(11:14):
of that was because they wanted to do talks instead,
and we're racing to Washington to try and do that.
Some of it candidly. The European Union is a great
example of this. They were still talking about what they
wanted to do even as they were being pushed by
some friends in Germany to respond harder. The events sort
of completed a cycle before they got to it. In
any case, that kind of weight out wound up being
(11:38):
a strategy that resulted in lower terraff for people. And
as they say, we're very early days in a four
year administration, but everyone is taking notes about how to
move this president.
Speaker 1 (11:51):
The other story, the next step in the story we're
watching as well is our reporting that China's top leaders
are preparing their own economic response to this as well,
and the potential for more stimulus to counter the effects
of the trade war. What do we know about the
options they're considering.
Speaker 4 (12:10):
Well, that's exactly right. We're we're understanding understanding that top
leaders are meant to meet today to discuss additional stimulus items.
You're talking about support measures for consumer spending, uh, technology, housing,
things of that nature. So it's a lot of kind
of domestic support is kind of where we're hearing uh
(12:31):
for for China. That would that would track with a
lot of what China has been trying to do sort
of broader in their in their economic strategy over the
last several years. You know, one of the things that
we've seen is that some flagship companies really do have
an x US strategy. B y D, Huawei are great
(12:51):
examples of this. They don't really have any US presence
to speak of, but they've still managed to find an
awful lot of success. And so this would be an
example of China sort of doubling down on itself. An
analogy I have heard is that a river may be
quite turbulent, but the ocean is a great leveler, right
(13:12):
and all water flows into the ocean. China's economy is
an ocean to itself.
Speaker 1 (13:18):
Derek Wellbanker, Senior US Government editor, thank you very much
for joining us as we are watching for further developments
on this story. Well Trump's announcement sparked a dramatic reversal
on market. Stocks on Wall Street swords and NASDAK having
its best day in twenty four years, Treasuries rallying to
Asian shares, our higher futures pointing to a jump at
(13:39):
the open in Europe as well. Let's bring in our
markets live stretch. Just Mary Nicola for more. Mary, how
should we be thinking about this turnaround on markets? Is
this a full reversal of the recent selloffs or is
it investors jumping on any good news.
Speaker 5 (13:54):
I think it's probably more of the latter, that we're
just jumping on any good news because the fact is
that teriff's are they're less punitive. Yes, but there is
still some concern over a recession of some kind. And
sure inflation has abated, but it still doesn't completely erase
a lot of the global growth woes that have really
(14:16):
gripped the markets to begin with. We still have tariffs
that are in place, and they're at historically high levels.
And then of course you have tensions between the world's
largest economies coming still elevated, so a substantial balance may
be harder to come by, and we're likely to see
that over the coming days.
Speaker 1 (14:39):
We also have the story that Derek Ballbank was just
telling us about the potential for China's stimulus as a
response to perhaps the damage from this. Of course, China
very much being punished by the increase in levees that
have now come into force on its imports as well.
How are markets parsing this bad news and potentially good
news from stimulus.
Speaker 5 (15:00):
Yeah, what we've seen this morning is that China assets
are just essentially ignoring these punitive levees on from the US,
and what the focus has been on is just on stimulus.
So obviously as tensions rise, there's expectations higher expectations of
more stimulus. You noted the news of that policymakers are meeting,
(15:22):
and so of course that is all putting just putting
hopes that more is coming sooner rather than later. And
then of course we had the disappointment from the price
data this morning, which essentially highlights that there is a
need for more stimulus, even when you're ignoring what is
happening on the external side, because the domestic challenges are
(15:46):
still quite strong. So you still have deflation, you have
a property malaise, and you have weak consumption, and what's
happening externally just compounds it.
Speaker 1 (15:56):
How is this all playing out on the Chinese yuan,
because it's something been watching very closely how the People's
Bank of China has been managing its daily fix for
the currency.
Speaker 5 (16:06):
Yeah, the yuan. Essentially, we saw that the fix has
was weakened today and we're going to see a gradual
weakening in the currency. There had been recent calls that
you we would get a sharper depreciation in the currency,
but that's unlikely, especially with the market volatility, especially with
how high the dollar CEE and why volatility remains, and
(16:28):
of course the prospects of triggering outflows is still a
threat when you if you decide to make such a
one off depreciation, and of course you don't want to
when when you're under the spotlight like China is right now,
you don't want to draw the attention and be a
bad actor in this environment. So I think China is
(16:48):
going to continue to see UH to play by the
rules and sense of not doing anything aggressive on currency policy,
to ensure that it just has its credibility.
Speaker 1 (17:01):
Mary this time yesterday, a lot of the focus was
on the moves that we were seeing in treasury markets.
This massive job, particularly at the long end, and curving
yields a reversal of that, as we've seen rallies across
treasuries as well as equities on the back of this.
Can we say that treasury markets have returned to normal?
Speaker 6 (17:17):
Now?
Speaker 1 (17:18):
Are they vulnerable to further shifts in policy?
Speaker 5 (17:22):
I wouldn't know about normal, but I think you do
get reprieved. Absolutely, So normalcy might be a little bit
far fetch, especially when you look at where volatility stands.
So if you look at the move index, the move
index still remains very elevated. So obviously there's still a
lot of jitters in the bond market. But one thing
is interesting, and it does seem that it's the bond
(17:42):
market that caused Trump to blink rather than the stock market.
But of course the erratic moves that we saw just
prompted him to shift gears and so, but what we're
seeing overall is that if with the delay in these tariffs.
We are going to see a delay in a more
wait and see approach from the Fed that still keeps
(18:02):
yields elevated. But overall, I think also you still have
discussions on the tax cuts coming through and a tax
bill that's still in the pipeline, so I wouldn't say
that we're out of the woods completely on the bond market.
Speaker 1 (18:17):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 6 (18:23):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 1 (18:30):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 6 (18:35):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
Speaker 1 (18:43):
I'm Caroline Hitka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg day Break Europe.
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