Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. Here's the latest this morning,
the US and China agreeing to a ninety day cooling
golf period, the US reducing its levies on Chinese imports
from one hundred and forty five percent to thirty while
China cuts duties on US goods from one hundred and
twenty five percent to ten Joining US now to discuss
(00:23):
the Treasury Secretary Scott Benson a driving force behind trade
talks in Geneva over the weekend. Mister Secretary, welcome back
to Bloomberg. Survelland sir, it's good to see you.
Speaker 2 (00:32):
Good afternoon from Geneva, Jonathan.
Speaker 1 (00:34):
Greater catch up as always, sir. Let's get into these
talks over the weekend. One standout line for me and
for many others was the line that the differences between
the two sides weren't as large as we thought they
would be. What were those differences, sir, and why were
they smaller than you expected?
Speaker 3 (00:51):
Well, I think, Jonathan, what's important to know is for
the tariff program, we had a plan, we had a process.
We did not have a mechanism for engaging with the Chinese.
So China was the only country who escalated their terriffs
in response to our reciprocal tariff level. So that resulted
(01:13):
in an unfortunate escalation. So we now have a mechanism
to deal with that. Neither side wants a generalized decoupling.
The US is going to do a strategic decoupling in
terms of the items that we discovered during COVID were
(01:37):
of national security interest, whether it's semiconductor's, medicine, steel, So
we still have generalized terraffs on some of those, but
both sides agreed we do not want a generalized decoupling.
Speaker 1 (01:54):
These things tay time. As you know, sir, we've got
ninety days now to work with. Last time around, it
took eighteen months to reach an agreement on purchase agreements.
I think you yourself has said in the past that
it can take two to three years to have a
full comprehensive trade agreement with the country, between the US
and China. What do you think is achievable, sir, over
the next ninety days.
Speaker 3 (02:13):
Well, Jonathan, we're going to see. But what has to
happen is it has to be fair for the American people.
But in January twenty twenty, President Trump produced a template
we had an excellent trade agreement with China and the
Biden administration chose not to enforce it. The Chinese delegation
(02:37):
basically told us that once President Biden came into office,
they just ignored their obligations. So we all already have
a large framework. The other thing to remember here, Jonathan,
is that this is a pause down to ten percent.
The April second level for China is thirty four percent,
(03:00):
so we will be working to see where their final
reciprocal number ends up. And the negotiations are a combination
of tariffs, non tariff, trade barriers, currency manipulation, and subsidies
of labor and capital.
Speaker 1 (03:19):
Just to build on that, as I listened to you,
do you consider the new levels as a ceiling or
a flaw?
Speaker 2 (03:25):
Well, it's obvious.
Speaker 3 (03:26):
It's obviously a floor that they are now with everyone
else who did not retaliate. So the levels have come
down to the Palls level, and what I would say
is thirty four which is their assigned April second level,
(03:47):
would be a ceiling, which is what I went out
and told people on April second, which.
Speaker 2 (03:52):
Is why I was surprised.
Speaker 3 (03:53):
Market participants panicked because we had kept We had kept
the upside for every country and if they didn't retaliate.
So this unfortunate turn of events happened because.
Speaker 2 (04:07):
Of retaliation, but now we have the.
Speaker 3 (04:13):
A process in place to avoid escalation like that.
Speaker 4 (04:17):
Again, Secretary Beston, just to build on that, are you
saying that tariff rates will only go up from here?
If this really is a floor of ten percent on
the Chinese side and thirty percent on the US side.
Speaker 3 (04:30):
I'm not saying that they're going to go up, but
it would be implausible that they would go below ten.
Speaker 4 (04:40):
One thing that you've been talking about is generalized to
coupling is something that's not necessarily in the interest of
either side, and either side wants that.
Speaker 2 (04:48):
What about a strategic to coupling.
Speaker 4 (04:50):
What is the appropriate rate of tariffs that could potentially
cause some sort of strategic to coupling in the sectors
that you are talking about.
Speaker 2 (04:59):
Well, look, bringing back our strategic are important. Strategic industries
can be.
Speaker 3 (05:09):
A result of terrorists, but it's also a result of
national will. So this administration is running full speed to
make sure that what we saw during COVID never happens again.
So it's a combination of it can be terrorists, but again,
it is the administration moving as quickly as possible to
(05:31):
make sure that we are self sufficient in the strategic industries.
Speaker 1 (05:35):
I think that's completely understandable from the United States side,
and I want to miss the secretary whether the Chinese
understood that. Did you get the sense they do understand
that that will be the road forward for the United States.
Speaker 3 (05:49):
Well, I think they understand that, and I think they
understand that we are focused on fair trade, that this
gigantic depth that we have with them, that it didn't
happen last year, it didn't happen there before, It's happened
over decades, and that this happened half excuse me, has
(06:10):
to be remedied. The China shock gutted our manufacturing sector,
and we want to bring that back.
Speaker 2 (06:17):
On the other side.
Speaker 3 (06:19):
Party chair she has said that he would like to
increase consumption, but to date the Chinese have just increased manufacturing.
So we would like to see them increase consumption. We
would like to see them open their market to American products.
So there are two ways to rebalance. One is fewer
(06:41):
Chinese goods in.
Speaker 2 (06:42):
The US market.
Speaker 3 (06:44):
The other is more American goods in the Chinese market.
And my guess is that the answer is somewhere in between.
Speaker 1 (06:52):
Some of this, of course, takes us back to the
purchase agreements of the first term of the president. Is
it different this time around? Is it as simple as
just revisit seeing those purchase agreements or do you say
additional sectors being targeted?
Speaker 3 (07:05):
Jonathan, I think everything's on the table. But the Phase
one purchase agreements is a very good roadmap because I
will point out that during twenty twenty China met their
obligations under that agreement. It was only under President Biden
where they neglected them. So we are getting we are
(07:28):
starting there, and look, the world has changed. Products have changed,
product mix has changed. So I think everything's on the table.
But the main thing here is we have to have
a fair deal for the American people. And keep in
mind too that we also have twenty percent finanyl terras
(07:48):
on so we were at th for twenty twenty five.
We have put on thirty percent terras. They have put
on ten. And my economic observation is that businesses just
need time to calibrate. That we saw approximately twenty percent
teriffs from President Trump's first term. Businesses calibrated, supply chains,
(08:13):
moved We have seen twenty percent tariffs President Trump put
on in February due to the fentanyl crisis calibration very
little disruption, and now a ten percent additional tariff should
mean very little disruption.
Speaker 4 (08:32):
Mister Secretary, A lot of people are wondering what caused
the softening and tone, the reason for both sides to
come together and be able to have this kind of
negotiation and try to pass forward where there will be
further negotiations in the near term. What's your interpretation of
what caused both sides to come to the table.
Speaker 3 (08:51):
Well, I think that the two levels on the reciprocal tariffs,
when they both ratcheted up to one twenty five, caused
the equivalent of an embargo, and that wasn't good for
either side. Where the depth is the country, so less
bad for us. But I think there was the unintended
(09:14):
consequence of this very fast ratchet, and so now both sides.
Speaker 2 (09:19):
Are at ten.
Speaker 3 (09:20):
We will be moving forward with a ninety day pause,
and the important thing to remember is that we can
always go back to the April second level. But my
sense is we had very good discussions. My counterpart was
the very firm but very engaged and I think we
(09:43):
have set the stage for meaningful discussions.
Speaker 4 (09:47):
Mister secretary, is there already a scheduled date for Jijian
Ping and President Trump to meet in person at any
point in the near term? Do you think that that
is something in the cards as part of these negotiations.
Speaker 3 (10:00):
I think that there would be a phone call before
a meeting, and there's nothing on the calendar, but I
could imagine that that could happen in the coming weeks
or months.
Speaker 1 (10:12):
Coming into the meeting. As you know, the President put
out a social media post he referred to as Scotty b.
I won't go there, We'll keep using, mister secretary, and
he said, you could go as low as eighty. Can
you share with us how we went from, say, eighty
down to thirty. Where did that number come from?
Speaker 2 (10:28):
Sir?
Speaker 3 (10:29):
I think that in the President's mind, eighty was a
number that did not cause an embargo, so we could
still be at eighty and have trade flowing. But we
were able to both the moved down by one hundred
and fifteen percent. And Jonathan, I think the other important
(10:53):
thing here is I think this is the first time
that the Chinese have addressed one of the President's real priority,
which is ending this fentanyl crisis in the United States.
So they brought their trade team and they brought a
Vice Minister for State Security who met with our national
security team. It was a separate meeting, and they had
(11:15):
a very robust and detailed discussion on ways to stop
the transport of precursor drugs from China to North America
that ends up in the hands of the cartels that
is then killing several hundred thousand Americans a year. So
I'm very optimistic that President Trump we have solved part
(11:41):
of the fentanyl crisis by securing the border, and I
think this is the next step on that. So if
over the coming months we were to see excellent engagement
from the Chinese and solutions towards solving the fentanyl crisis,
I think we could see some amount of the ventanyl
tariffs perhaps come off, but that is going to take
(12:04):
actions from them.
Speaker 1 (12:06):
What kind of action specifically, say, well, we can.
Speaker 3 (12:10):
See where these precursor drugs are coming from from.
Speaker 2 (12:15):
At Treasury.
Speaker 3 (12:18):
Financial Criminal Enforcement Network has very good visibility into international finance.
We can see these Chinese companies that are selling the
equipment for making the pills, that transferring the precursor drugs
to the cartels.
Speaker 2 (12:34):
US Treasury has declared.
Speaker 3 (12:36):
The Mexican cartels foreign terrorist organizations, so working with Chinese
leadership to stop this would be a very tangible symbol.
In China, the narcotics distribution is punishable by death, and
we're not pushing for that necessarily, but we are pushing
(12:58):
for very very strict enforcement, similar to what they do
at home.
Speaker 4 (13:04):
Mister Secretary, I imagine you're incredibly tired, and a lot
of people were very excited to see you taking the
lead in these discussions, certainly in the market. Are you
going to be taking the lead going forward with other
difficult negotiations around the world with different trading partners.
Speaker 3 (13:21):
I've been involved in most of the Asia negotiations. We
had a very good negotiation with Or, We've had two
rounds of negotiations with Japan.
Speaker 2 (13:33):
I've been involved with Korea.
Speaker 3 (13:35):
I've met with the Vietnam and excuse me, also Indonesia.
So my focus has been on the Asia region thus far.
And then the trade team had a great victory with
the UK putting together the contours of the first trade deal.
(13:56):
The other thing I want to say too, is my
partner here in Geneva and Best.
Speaker 2 (14:00):
Her career was an incredible asset.
Speaker 3 (14:02):
He has years of experience, a broad and deep knowledge
of trade, negotiation, of.
Speaker 2 (14:10):
The numbers and the nuance.
Speaker 3 (14:12):
And we would not be here today without ambassador career.
Speaker 1 (14:16):
Missus Secretary, just before you go, you've promised us a
lot of time. We've used up most of it already.
Just the final question, what does victory look like for
you in six months time when we get to year end?
And I know it's frustrated to you that we've only
been talking about trade, that we haven't focused on the
full policy platform. Where do you want to be by
year end?
Speaker 3 (14:36):
Well, well, Johnathan, this administration is doing peace deal, trade deal,
tax deal. I try to state mostly as you know
in my econ lane. So from that lane, victory to
me looks like the three legged stool that really are
(14:56):
the three parts of our program.
Speaker 2 (14:59):
Really kicking in.
Speaker 3 (15:00):
So we will have most of the trade and tariffs settled.
Speaker 2 (15:05):
The tax bill is.
Speaker 3 (15:07):
Moving along very well, better than I could have imagined.
Speaker Johnson, leader Thun are doing an incredible job with
President Trump's leadership. So we will have tax done and
then the final piece that is longer lagged, but perhaps
the most important is deregulation and deregulation. We are deregulating
(15:30):
across all industries every day. President Trump is committed to
for every new regulation, ten comes off the books. And
deregulations should start kicking in in the third.
Speaker 2 (15:42):
And the fourth quarters.
Speaker 3 (15:44):
So tax, trade and deregulation all coming together at the
end of the year. I think it's going to be very,
very powerful for President Trump's economic agenda.
Speaker 1 (15:57):
Mister Treasury Secretary Scope person, at your time, sir from Geneva.
Very generous with your time.