July 28, 2025 • 50 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
The US and European Union agreed on a hard-fought deal that will see the bloc face 15% tariffs on most of its exports, including automobiles, staving off a trade war that could have delivered a hammer blow to the global economy.
The pact was concluded less than a week before a Friday deadline for President Donald Trump’s higher tariffs to take effect and was quickly praised by several European leaders, including German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni, who called it “sustainable.”
Trump and European Commission President Ursula von der Leyen announced the deal Sunday at his golf club in Turnberry, Scotland, although they didn’t disclose the full details of the pact or release any written materials. The 15% rates will take effect Aug. 1, according to a US official.
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe and Kailey speak with:
- Bloomberg Washington Correspondent Tyler Kendall.
- Schulz Trade Law Founder and Managing Partner Michelle Schulz.
- Texas State Representative James Talarico.
- Arbroath Group Founder and Managing Partner Christopher Smart.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
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):
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(00:20):
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Speaker 2 (00:25):
President Trumger means in Scotland, where he's had a series
of big meetings, meeting yesterday with the EU Commissioned President
Ursula Vonderlon, inking a trade deal and averting thirty percent
tariffs being implemented on Friday, which of course is August first.
The EU now facing a fifteen percent terror free on
basically all of its exports to the United States, and
it's something that President Trump talked about today as he
(00:47):
had another round of meetings with the UK Prime Minister
Keir Starmer, who he's still with in fact as we speak,
noting of course that the UK and the US had
already reached a framework trade agreement much earlier on Europe
now next. Many other countries though, are hoping they will
be able to follow, knowing that Friday deadline is looming.
Here's how the President talked about it earlier today.
Speaker 3 (01:07):
We're making inter great deals. We're making deals that are
good for us, but we want them to be good
for everybody. It's important. We're going to be setting a
tariff for essentially the rest of the world, and that's
what they're going to pay if they want to do
business in the United States.
Speaker 4 (01:24):
We go live to the White House right now for more.
Speaker 5 (01:26):
Bloomberg's Tyler Kendall, Bloomberg Washington correspondent, standing by with the
latest from the North lawn of the White House. Tyler,
we're all looking ahead to Friday, of course, the first
of August, but as Kaylee mentions, there's another deadline that's
twelfth of August when it comes to China. With tandem
talks underway here with this White House, what comes next?
Speaker 3 (01:46):
Right exactly?
Speaker 6 (01:47):
Joe and President Trump was asked about those talks with
China earlier today and he said, we're going to see
what happens now. The USTR Jamis and Greer, in an
interview earlier, gave us a little bit more color about
what the White House is expecting when it comes to
these discussion. He really amounted this to basically a check
in to make sure that both sides are upholding the
agreement that was reached in London, which he'll recall, was
(02:08):
really to uphold the agreement reached in Geneva when it
comes to some of those export controls around critical and
rare earth minerals as well as semiconductors and perhaps less
advanced chips. Our reporting does indicate that China has started
to ramp up its export licenses when it comes to
rare earths, and we've also seen the US start starting
(02:30):
to sort of loosen those restrictions, including in videos being
able to sell H twenty chips into Beijing. The next
phase here is really to make sure that the de
escalation continues. We are broadly expecting that they will extend
this August twelfth deadline. The Treasury Secretary Scott besen't said
as much on Bloomberg Television last week August twelfth and
then ninety days after that, because they seem to be
(02:52):
doing this in ninety day increments, but there are a
few threads where we could see potential progress here. The
Treasury Secretary said that they would expect and beyond export
controls and perhaps they would talk about curbing China's imports
when it comes to sanctioned Russian oil and then also
importantly fentanyl, because Joe and Keley, we have to keep
in mind about twenty percent of that tariff that's currently
(03:14):
in place against China is linked directly to the White
House's concerns around fentanyl. While China has denied its role
in its alleged role and fentanyl flows into the US,
we did see them take some steps last week to
curb two chemicals that are used in the opioid perhaps
seen as maybe a concession here to help keep talks
going forward.
Speaker 2 (03:36):
All right, So that's the talks with China, Tyler, and
we'll see what the outcome of them ultimately is. Meanwhile,
we know what the outcome of the meeting between Ursula
Vonderlin of the European Commission and President Trump's meeting was,
which is that we have reached at least a framework
of a trade deal. Some details we have now gotten
from the White House walk us through.
Speaker 6 (03:53):
It right exactly, and we have to keep in mind
this is a really consequential deal for this White House
just by sheer volume, Kayley, right, the EU makes up
about twenty percent of US annual imports into this country.
So this was really something that ultimately was prioritized in
these talks, despite at the beginning we were really told
that the EU would be last in line for a deal.
Now our understanding is there's going to be that fifteen
(04:15):
percent baseline tariff, and it actually does include some really
key sector specific tariffs, including autos about a thirty five
billion dollar import industry from the EU to the US.
That was a really critical area that the EU wanted
to see some relief on, but it also extends to
pharmaceuticals as well as chips, really importantly to distinguish though,
we did get a fact sheet kicked out by the
(04:36):
USTR Jamison Greer's office just moments ago which really does
clarify that steel and aluminum tariffs will remain at fifty
percent for now, but they do say that they are
going to work on their supply chains and cooperation going forward,
because our understanding from the EU side was that these
metals would be tariff under a lower level, under a
(04:57):
certain quota, under a certain amount before it snapped back
up to fifty percent. So we're still waiting for some
key details there. But in order for the EU to
clinch these lower rates, they did have to put in
some sweeteners that include six hundred billion dollars worth of investment,
as well as seven hundred and fifty billion dollar pledge
for US energy. It's probably worth pointing out that the
EU had been ramping up its imports of US LG
(05:18):
already to account for US steering away from Russian energy imports,
for example. And then the last one I'll leave you
too with is that President Trump says that the EVE
is going to start importing vast amounts of us A
defense equipment. This is something that we were widely expecting,
since we know that the US has been calling on
our European allies to boost their defense expenditures in the
(05:38):
wake of the war with Ukraine.
Speaker 5 (05:40):
Really interesting, Tyler just quickly left wanting our European wine
and spirits makers. They apparently decided to move this to
another day to figure out what would happen to this
very important industry for Europe. They're calling for a sector
specific carve out here an exemption. Do we have any
sense of when and that will be managed, when that'll
(06:01):
be dealt with At this point.
Speaker 6 (06:03):
We're still awaiting a details. But Joe, I know that
you've spoken to quite a few European ambassadors about this
exact issue, because this really is a huge industry for
Europe and you'll recall actually one of the first tear
threats against the European Union was against alcohol, wines and spirits,
back before we even had the escalation to that fifty
percent rate. So this is something that's really been a
(06:24):
thread throughout and that we're going to have to watch
very closely. But President Trump, as you mentioned, was asked
about it earlier today.
Speaker 2 (06:31):
You can always trust Joe Matthew to be on top
of the wine story and Tyler Kendall to be on
top of everything out of the White House where she
reports for us here on Blimberg TV and Radio. Thank
you so much, And we want to get more into
the actual detail of this trade agreement that has been
reached with Europe, the trade agreements we have yet to see,
and what it all means for companies that are actually
trying to navigate this environment and figure out what it
(06:51):
means for imports and exports. As we turned to Michelle Schultz,
she's founder and managing partner of Schultz Trade Law and
specializes essentially in helping corporations comply with things like this.
Michelle great to have you here on balance of power.
When we consider even the deal that we've got with
the European Union and the readout we now have, it
really is broad strokes of a deal. We're missing a
(07:12):
lot of granular detail here, and I wonder how corporations
are dealing with that. Is this actually enough information to
work with to make investment and purchasing decisions off of.
Speaker 7 (07:24):
I do not believe it's exactly enough information to make
decisions based off of. And we have already lost a
lot of trust with our partners in the EU. Our
clients are in different sectors like aerospace, oil and gas,
food and wine, gourmet food, and they have been pivoting
each time the tariffs get adjusted. We didn't expect this
(07:47):
adjustment so soon. But we have to keep in mind
that even though it's fifteen percent on about seventy percent
of the products, the tariffs on steel, aluminum, copper still
apparently will be at fifty percent, and that includes derivatives.
So when we're talking about details, I've got this book
(08:07):
behind me. That's the Harmonized Tariff Schedule. That is the
perfect example of how detailed these rules get. Each item
is listed in there, and so we need to check
each item and see if it's subject to tariffs and
how high.
Speaker 5 (08:22):
Well, so, what kind of conversations are you having with
these clients that you mentioned, because there seems to be
a feel in Europe today. I don't know if this
is the case in China that while there are elements
of this deal that are clearly favoring the United States,
at last we have certainty when it comes to tariff levels.
The fact that we might not like fifteen percent, but
(08:44):
at least we know it's fifteen percent. Does that resonate
with your clients.
Speaker 7 (08:50):
It does in the sense that it is one set number,
but it's a little bit misleading because we have layers
of different types of tariffs that are all going on,
like the steel and aluminium tariffs. Also, all twenty seven
countries within the EU have to sign off on this agreement,
and I haven't seen them do that yet. In fact,
(09:11):
I've seen a little bit of negative feedback from the
Prime Minister of France and Hungary as well, I believe.
So we're gonna have to wait and see if all
the EU members agree to this. It seems to me
that Ursula vonderlyin was correct when she said this is
essentially the best we're going to get it. It's good,
(09:32):
but it's not great. Fifteen percent across the board is
still higher than we're used to and I'm really hoping
that this reduction will include zero percent tariffs both ways
on aircraft and aircraft parts, which has been mentioned, but
we don't have anything in writing. We don't have a
(09:52):
written agreement with that level of detail.
Speaker 2 (09:56):
Yeah, there's a lot that we have yet to see
pen actually put to paper on Michelle. When we consider
what the whole point of these tariffs are, yes, and
part it to balancing the trade deficit with the US.
Hence y Europe is agreeing to make more purchases of
US goods like military equipment and the life. But the
President also contends that a lot of this is about
(10:17):
on shoring supply as well. Are companies that you're speaking
with finding the ability to do that very quickly, to
replace supply that may come from somewhere else that they're
currently importing and try to just get it domestically in
the United States? How long does that process actually take
to find those alternative roots if they're available at all.
Speaker 7 (10:35):
If they're available at all, it takes a very long time.
We have clients in every industry that are importing from
virtually every major country in Europe, and it is not
a fast process to find another supplier. Same with China.
A lot of suppliers had already moved from China, so
(10:55):
they moved to Vietnam, or the importer might have moved
its manufacturer somewhere like Mexico when the very first China
tariffs came out under Section three oh one under President Biden.
But then they had to pivot because now the Mexico
tariffs are up. So what our clients are doing is
pivoting as best they can and saving as best they can.
(11:17):
But some of them will go out of business if
tariffs continued to rise. And I think we have to
remember that this is still an increase. It's a decrease
from what was threatened, but it is still an overall
increase in tariffs for everyone.
Speaker 5 (11:33):
You mentioned the French Prime Minister Michelle Francois Biru on
x writing it's a dark day when an alliance of
free peoples united who affirm their values and defend their
interests resolves to submission.
Speaker 4 (11:48):
What's he talking about?
Speaker 7 (11:50):
Oh wow, Yes, So the Europeans were hoping for a
lower tariff frey overall, they were hoping for a friendlier
deal than we gave them, especially given our history with Europe.
They had thrown out the number of ten percent at
one point, and I thought that maybe that would have
been more reasonable in the eyes of the European countries,
(12:14):
But they see fifteen percent as still quite high and
a slap in the face. It will impact trade, and
it will be a cost to the US importers. So
it still presents a challenge, and it still presents an increase,
and I think that some of the European leaders are disappointed.
Speaker 2 (12:33):
Well beyond the deal with just Europe, where I don't
think I saw any mention of transshipping Michelle. We have
seen that mentioned in others, including the agreement that was
reached with Vietnam. The idea that there would be even
a higher tariff rate on transship goods that are coming
indirectly from China. I just wonder how hard that actually
is to track and follow. How do we actually know
where products are originating from if they're coming into the
(12:56):
US under cargo vessels with a different flag. How difficult
is that, especially for importers to try to navigate.
Speaker 7 (13:04):
It's actually quite difficult, and we have been in the
weeds of doing due diligence on suppliers and their suppliers
and their suppliers and their suppliers, and it's more and
more difficult, to the point where companies are using software tools.
We have three at least that we're using right now
(13:24):
in order to ferret out who owns what and who
is sending what from where. But to determine that something
is not made with slave labor, for example in the
Shinjang region, we have to go way back into the
supply chain. And you can't always rely on manufacturer Zaffa
davits because they may or may not be true and correct,
(13:46):
so you really have to go behind and do due
diligence behind the paperwork. It's becoming more and more difficult.
And I'll add that on the export side, the Commerce
Department has been throwing around a fifty percent rule similar
to ohfact, the Office of ourgn Assets controls fifty percent rule,
which would mean on the export side, we're also going
(14:08):
to have to look at ownership, who owns what, and
what's percentage. It's very difficult from a practical perspective.
Speaker 5 (14:15):
We've got about a minute left, Michelle, How worried are
you that this White House is too eager to reach deals,
to announce deals to the markets and to others who
were promised all of these amazing trade deals, too eager
to follow up on the details that you're talking about,
never mind make good on national security promises.
Speaker 4 (14:33):
When it comes to high tech chips.
Speaker 7 (14:37):
I believe they can do it. I'm somewhat optimistic that
they can do it. But it takes months, if not years,
normally to negotiate a trade agreement, and so this is
way out of line with your typical free trade agreement internationally.
This is a deal, and it's really a deal in
the sense of a deal. We've got some purchases that
(15:00):
the European Union's going to make, and the details as
far as which tariff numbers, what tariff codes, those aren't
all clear. Yet we still have steal an aluminum. I
do think the White House has been a bit eager
to show its success, and that's great. It's a step
in the right direction. But I don't think that our
(15:21):
allies and other countries are pleased with it quite yet.
Speaker 4 (15:26):
Michelle.
Speaker 5 (15:27):
It's great to have you with us. Let's stay close
on this. We have a lot more to talk about.
Thanks for joining our conversation today. Michelle Schultz, Founder managing
partner Schultz Trade Law. Really interesting to get inside an
operation that's dealing directly with the stakeholders.
Speaker 1 (15:41):
You're listening to the Bloomberg Balance of Power podcasts. Catch
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Speaker 5 (16:00):
Thanks for being with us on the Monday edition of
Balance of Power on Bloomberg TV and Radio. I'm Joe
Matthew alongside Kaylee Lines. Who's back with us today. I'm
glad to say as we talk politics here in the
nation's capital, and it's not very often that a politician
breaks through into the main stream without spending a lot
of money or doing something wrong. Case in point, James Tallerico,
(16:23):
a member of the Texas House of Representatives, a Democrat,
a pastor, and a former teacher, is now being considered
a potential threat to flip a Republican Senate seat blue
if he, of course, decides to run for it. Kayley,
this is an individual I'll get personal here for a moment,
(16:44):
who both of our spouses asked us about without prompt unsolicited,
which is something that never happens, by the way, in
either of our homes. We don't really talk politics right
when we go home at the kitchen table. But James
Tallerico was viral before he did the Rogan interview when
he talked about the Ten Commandments in schools.
Speaker 4 (17:04):
He's a TikTok sensation.
Speaker 5 (17:06):
He is now apparently a Joe Rogan sensation, and a
lot of smart people in Washington are asking if, in
fact he could be the future of the Democratic Party.
Speaker 8 (17:15):
Yeah.
Speaker 2 (17:16):
In fact, Joe Rogan is hoping he might one day run.
Speaker 5 (17:18):
For president, Isn't that right?
Speaker 2 (17:20):
Which is obviously an endorsement that would be highly coveted
by many as we know the influence Joe Rogan particularly
has in politics, but especially as we consider what is
a changing landscape in Texas with a redistricting fight underway,
with as you mentioned, of course, a Senate seat potentially
up for grabs John Cornyn getting primaried by Ken Paxton.
Many democrats considering throwing their hats in the ring if
(17:42):
they haven't done so already, makes a unique moment in
time to.
Speaker 9 (17:45):
Speak with mister Tellerica.
Speaker 5 (17:47):
Yeah, well, that's for sure, this which is why we
reached out to James. Look at James Tallerico in the
act I mentioned he's a pastor talking about the confluence
of his religious beliefs and policy.
Speaker 4 (18:00):
Listen on Bloomberg.
Speaker 9 (18:02):
What would Jesus do about a tax system that benefits
the rich over the poor?
Speaker 4 (18:09):
What would Jesus do.
Speaker 9 (18:09):
About a healthcare system that forces the sick to start
go fund me pages to afford life saving surgeries? What
would Jesus do about an education system that ties a
child school funding to their community's property wealth. Would he
stay in his room and pray? Or would he walk
(18:30):
into the seat of power and flip over the tables
of injustice?
Speaker 2 (18:36):
A taste of James Tallerico's messaging, and he's joining us
now on Bloomberg TV and Radio for more. Appreciate the time, James,
Thank you so much for being with us. What do
you think it is about the way in which you
are trying to convey what aren't in some instances political
messages leaning on your Christian faith and kind of biblical
readings of policy issues that seems to be resonating in
(18:58):
a way that other Democrats from Texas have struggled to
see themselves resonate in recent years.
Speaker 9 (19:05):
Well, thank y'all for having me on, and please thank
your spouses too for recommending to you. You know, I
think people are hungry for authentic moral leadership in this country,
and I think folks just want elected officials who are
themselves and who are honest and speak directly and clearly.
(19:27):
That's I think what this exposes. Folks are tired of
the kind of consultant driven, poll tested political sound bites,
and they want people who are just going to speak
like a human being. And that's what I try to
do every day, whether it's you know, at a podium
or a pulpit, whether it's as an elected official or
as a as a member of the clergy.
Speaker 5 (19:49):
Authentic moral leadership, pastor tall a Rico makes you a
contrarian in this political world, if not a UNI considering
your background.
Speaker 4 (20:02):
We're in a.
Speaker 5 (20:02):
World where sharp elbows work here in Washington, where the
pressure play works, we're bullying works, We're name calling is
now considered commonplace. Par For the course, a lot of
people would ask how someone who considers themselves a man
of God, someone who acts as a gentleman, has any
place in this political world.
Speaker 9 (20:26):
Well, one of my favorite verses in Scripture is Matthew
five five the meek shall inherit the earth, meaning you know, violence, bullying, aggression.
Those things may work in the short run, and I
think that's what you're seeing in our political discourse. It
gets you a temporary bump in your followers or in
(20:46):
your cable TV viewership, or maybe even gets you elected
in the next election, but it doesn't work in the
long run. In the long run, I think people want honesty,
they want compassion, they want understanding, and so I'm placing
my long term bet on those values. I honestly think
(21:09):
over the last ten years of our politics, people are
just sick of the blood sport, and they're sick of
the way that politics feels like professional wrestling a lot
of the times. And I'm hoping that earnestness and sincerity
are going to make a comeback in our politics, at
least I hope so.
Speaker 7 (21:28):
Well.
Speaker 2 (21:28):
And it's one thing to consider our politics along party
lines and partisan divides, but there are also deep divides
within the parties themselves. You need look no further than
Texas As. I'm sure you well know the primary and
the Republican on the Republican side for the Senate seat
between Ken Paxton and the incumbent Senator Cornyn. Are you
worried that, as you consider a potential Senate run yourself,
(21:51):
that a Democratic primary could potentially be just as damaging.
Speaker 9 (21:57):
I don't think it has to be. You know, primary
election can be a good thing, especially if both candidates
go about it in a respectful way. You know, it
should be a contest of ideas, you know, I think
we saw in the last election the consequences of not
having a competitive primary. Those primaries make us better as
candidates and.
Speaker 4 (22:17):
As a party.
Speaker 9 (22:18):
I think that's true on both sides of the aisle.
I think elections are always a good thing. Competition in
politics is always a good thing, and I'm hoping that's
true in this upcoming primary here in Texas well.
Speaker 5 (22:31):
Are you thinking about running for Senate? Is that a
real story and what's going into your consideration If that's
the case.
Speaker 9 (22:38):
I am thinking about it. But if I'm being very honest,
with you. You know, my entire focus is really on the
special legislative session that's just been called here in Texas.
I'm sure you've covered this, but the President has asked
our governor Greg Abbott to find him five more congressional seats.
He wants to redraw the political maps in the middle
(22:59):
of the day decade to try to protect his majority
in the next election, regardless of how we all vote.
And I just I think this is politics that's worst.
You know, politicians picking their voters instead of voters picking
their politicians. And so I'm doing everything I possibly can
to stop this, this jerry mander from going through, to
stop this power grap from going through. I was elected
(23:22):
by my constituents here in Central Texas to fight for
them to the state capitol. That's what I'm going to
do before I start thinking about other elected positions.
Speaker 2 (23:30):
Well, if you view that as politics as it's at
its worst, would it be a mistake for blue states
like California or New York to try to follow Texas's
lead and reclaim some more state seats for Democrats.
Speaker 9 (23:43):
I think the idea of every state being jerrymandered is
a terrible vision for this country. That said, I do
know that you have to stand up to bullies. You
can't just lie down and let them win. And so
I do think that we need folks who are willing
to match energy, But we cannot lose sight of the
ultimate goal, and that is fair elections in every state,
(24:07):
fair maps in every state. I mean, every single state
in this country should have an independent, citizen led redistrict
and commission that takes the power to draw these maps
out of the hands of politicians and puts it into
the hands of the people that we seek to represent.
So while we need to stand up to folks who
are trying to grab on to power like the President
(24:27):
is currently trying to do, we can't lose sight of
the ultimate vision, which is making sure that every state
has fair maps and fair representation for all Americans.
Speaker 5 (24:38):
Will you join other Democrats in leaving the state from
keeping the majority from doing this?
Speaker 4 (24:43):
In Texas?
Speaker 9 (24:44):
Well, you know we're in the minority as Democrats here
in the Texas Legislature. We've been in the minority for
a long time, and so we've had to figure out
how to use every tool in our toolbox. You know,
whether that's the rules, whether it's our platforms or whether
it is denying quorum. That's obviously a dramatic step, and
it's one that shouldn't be taken lightly. You know, we
(25:06):
haven't even seen the maps here in Texas yet, and
so I don't want to rush to any conclusions, but
I will just tell you that I think it's fair
to say that my Democratic colleagues and I are willing
to do whatever it takes to stop this power grab
and to protect the democratic process here in Texas and
around the country, because if President Trump succeeds with this
(25:27):
power grab in Texas, I worry that he will do
the same thing in every red state across the country,
which would essentially rig the twenty twenty six midterms. And so,
regardless of your party, whether you're a Democrat or Republican
or an independent, none of us want politicians in Washington
silencing our voices and rigging the next election.
Speaker 5 (25:48):
We'd love to have you back, James Tallerrico, When are
you planning to make up your mind for this Senate race?
Speaker 9 (25:55):
Well, I'd love to come back. You know, the special
legislative session is going to last until the end of August.
That's assuming another one won't be called right after that.
So as long as I'm being called to do my
job as a state representative here in the state Capitol,
That's what I'm going to be doing. But once that's over,
I'll be looking at how I can best continue my service,
(26:15):
and that may include running for another office in twenty
twenty six.
Speaker 4 (26:19):
Yeah, let us know when you make up your mind.
We want to continue our conversation with you.
Speaker 5 (26:22):
James Telerico, Texas House of Representatives Democrat, who you've been
hearing so much about.
Speaker 4 (26:26):
We thought we'd bring him to you here on Balance
of Power.
Speaker 1 (26:32):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
almal Coarckley and Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 5 (26:48):
Under the heat Dome here in the Amtrak corridor from
Washington to New York. It's going to be another sweltering week.
Pretty good strategy, most people will admit for Donald Trump
to get out of the bubble, get overseas, get out
of the way of the whole Epstein's story. Let your
lieutenants leave town. They're in Stockholm, Scott Besson's talking to China,
(27:10):
Howard Lutnik and so forth. House lawmakers are gone set
to defend their record here from a summer of legislating,
when they hold town hall meetings, catch up with the family,
do a little bit of fundraising, and then when they
all come back, it'll be a big sprint to the
government funding deadline on September thirtieth. And you know they're
(27:31):
already talking about a possible shut down. We hear about
it every day around here. So we take a break
this week and it allows us to have some bigger
picture ideas. Although let's not be mistaken, this is going
to be a very busy week in Washington. While there
are a lot of people around, the news is going
to be flying. We don't only have trade deals coming
from overseas here. We have a trade deadline to cap
(27:52):
the week on Friday, that's August one, right.
Speaker 4 (27:54):
This was the end of the road here.
Speaker 5 (27:57):
When it comes to reciprocal tariffs, and that's why a
lot of countries have been coming to the table. Of course,
we had the EU over the weekend. The presidents in
Scotland sat down with the President of the European Commission
Ursula vonder lyon and had something to show for it.
Speaker 4 (28:13):
Here's Donald Trump from yesterday.
Speaker 3 (28:15):
We've reached a deal. I think you were saying, this
is probably the biggest deal ever reached in any capacity.
Speaker 10 (28:21):
We have a deal, and it's a big deal.
Speaker 11 (28:24):
It's a huge deal. It's fifteen percent tariffs across the board,
all in inclusive.
Speaker 4 (28:30):
I think it's the biggest deal ever made. Thank you
very much, the biggest deal ever made. A big deal,
A huge deal. She said.
Speaker 5 (28:39):
She clearly knows how to talk to Donald Trump. But
this was supposed to be the elusive deal right the EU.
They weren't getting along. Now we've got both. Look, they
both used the word deal, at least a framework agreement.
Here's the thing, though, they did not figure out the wine.
And we're going to have some time to explore this
(28:59):
on that program this week. The wine tariffs. Remember Donald
Trump promised two hundred percent on wine, champagne and spirits
coming from Europe. Some of us may have even bought
cases of wine in advance of those tariffs taking hold,
but they're still not there, and they did not agree
on what the number would be today, So we have
(29:20):
to come back around on the grape juice and we will. Yeah,
ed biggest deal ever made, ever made, said Donald Trump.
Now we talk about context a lot here on Bloomberg.
That's what we offer you. That's why you tune into
the broadcast other than to hang out with your friends
here in Washington.
Speaker 4 (29:40):
And we're going to seek some context with the help of.
Speaker 5 (29:42):
Christopher Smart because it's not only the trade deals happening.
We just hit that We've got a lot of economic
data this week. Yeah, We've got a jobs report coming
a new month on Friday, and a FED meeting. Remembering
last time we met, Donald Trump and j Powell had
hard hats on and that incredible display over at the
Ecchos building here in Washington. His news conference following the
(30:05):
FED meeting and following that event and the pressure from
Donald Trump is going to be fascinating. Christopher Smartest, founder
and managing partner of our Growth Group, former Special Assistant
to the President at the National Economic Council during the
Obama administration. And indeed, when we seek context, we find
it with the help of Christopher. It's great to see, sir,
Welcome back to Bloomberg. It's good to connect on a
(30:27):
day like this, because there's a lot we need to
talk about, and I'm wondering what has your attention and
what will be kind of the most important of the
tent polls.
Speaker 4 (30:35):
This week?
Speaker 5 (30:35):
We open with trade deals, we have a FED meeting
right in the middle, and we have the jobs report
on Friday. Will these three combine to bring good news
to this White House?
Speaker 11 (30:45):
Well, I've got bigger questions on my mind. First of all,
why is it that you and I are the only
two people trapped in the Amtrak corridor on a week
like this from everybody.
Speaker 8 (30:51):
Else is gone?
Speaker 4 (30:52):
Great question?
Speaker 11 (30:54):
My second question is which one looks more uncomfortable in
those pictures?
Speaker 10 (30:58):
Is at J.
Speaker 11 (30:58):
Powell and his heart hat or is it Ursula Vanderlyne
trying to talk about the hugest deal she's ever seen.
Speaker 5 (31:06):
But these are good questions, Christopher Smart. I don't know
if you have answers to either of them. But she
clearly knew who was coming to town, right set them
for this.
Speaker 8 (31:15):
That's right.
Speaker 11 (31:16):
No, she was briefed, but it's clear that she's cut
from a different cloth politically from the President in terms
of personality and persona. But to your question, brought are
questions about the economy and the markets. I think you
know clearly the EU deal is helpful to have a
framework at least around which to work, but huge gaps
(31:39):
in terms of understanding what will be included, what will
be excluded. Steele apparently is included currently in this. I'm
sorry steel is not included in this, but there are
ongoing talks around steel that may lead to an even
lower rate for European steel. Pharmaceuticals are a big question
(32:00):
I know in the UK the President being in Scotland
right now. Scotch whiskey is a big question mark in
terms of what tariffs that will be facing coming into
the US, in addition to the wine that you covered.
But broadly, I think it's important to know that we
do know more about what the trade framework is going
to look like than we did a couple of months ago,
and tariffs that were roughly around two percent of as
(32:24):
a weighted average tariffs for United States imports are now
going to be just below twenty percent if the current
trajectory continues. So I think that's the big headline that
we all need to kind of absorb, and that's probably
what the FED is still going to look at as
it gathers later this week to decide not to change rates,
And I guess the bigger question is will there be
(32:45):
descents to that decision.
Speaker 5 (32:48):
Well, it's fascinating here, what do you make of this
idea that, when we consider the uncertainty that the FED
is going to be clearly addressing on Wednesday, that investors
are kind of ignoring at the moment, this idea that, well,
we don't have all the details, and you know, it
may not be as favorable to the EU as well.
Speaker 4 (33:06):
Ursula vonder Land was hoping.
Speaker 5 (33:07):
But you know what, at least we know what the
tariff level is and having that certainty may be the
most valuable part of these negotiations.
Speaker 4 (33:16):
Christopher, Well, it is.
Speaker 11 (33:18):
But again the certainty is only relative. So it's it's
certainly much better than we have had in the last
few months. But again, lots of you know, companies that
make decisions about where to build the factory, about what
supply lines to build, really need to know the details.
You need to know what the exclusions are, what not
only how is it applying to them, but how is
(33:39):
it going to apply to their suppliers, to their customers,
How is it going to apply to their competitors. Just
as a small example, right now, we had the Japan
deal over the weekend.
Speaker 8 (33:50):
We now have an EU deal.
Speaker 11 (33:52):
The big the we're now importing cars from Mexico and
Canada outside of the u SMCA at much higher rates
than the UK and I'm sorry, than the UK, the
EU and Japan. So all of these are interconnecting parts
that will have to be addressed going forward. That means that,
for certainty, we're still going to have to wait a
(34:16):
long time. I guess the good news to your earlier
question about the economic data we're getting is that the
economic data still seems to be pretty good and the
economy seems to be resilient to some of these headwinds.
Speaker 5 (34:28):
Well, what do you make of the message from the administration, Christopher, Like, Hey,
you guys have been telling us every month since we
showed up here that teriffs are going to cause inflation.
It hasn't happened yet. And if it hasn't happened yet,
then why would it happen? The idea being that we're
somehow out of the woods here. But what happens if
it kicks in in the second half, maybe in the
(34:48):
third or fourth quarter, Christopher, we are having a very
different conversation about the impact of tariff's on our economy
and prices.
Speaker 8 (34:56):
Well, I think that's exactly right.
Speaker 11 (34:57):
And I think if you were on the fom SEE
looking at just the economic data, not looking at anything
to do with trade policy, you would probably be thinking
about a couple of cuts right.
Speaker 8 (35:07):
Now because of the way the.
Speaker 11 (35:11):
Interest I'm sorry, because of the way prices have been falling,
not you know, not as fast as you'd like them to,
but they're certainly certainly heading downward for the most part.
But then you add on to that uncertainty around what
the President's deals will be. Now that's becoming clearer right now,
and as I said, we're moving from a world of
two percent to roughly twenty percent. The President and others
(35:32):
would say that's just a one off, that's only affecting
ten percent of our imports ten percent of GDP, which
are what our imports represent. But the third element to
all of this is, yes, but how do others respond
to these tariffs? Right You certainly have domestic producers that
are going to raise their rates, their prices to meet
(35:52):
the prices of the importers. You have other countries that
are going to respond in one way or another with
some terriffs, and then you've got the uncertainty around the
broader terror structure going on into the next few months
and years. And it's not necessarily the tariffs themselves drive inflation.
It's trade wars and trade uncertainty that drives inflation.
Speaker 5 (36:15):
Well, Donald Trump's feeling pretty good about things at the moment. Christopher,
I suspect that anybody would with a trip like this.
He's playing golf. I guess he's playing pretty good golf
out there. Did you see, by the way, golf Force one.
I don't know if you have one of these, Christopher,
but they've made like this bulletproof golf cart for him.
It appears to be, according to reporting, a modified Polaris
(36:37):
Ranger XP. This imagine a golf cart with you know,
the armor and the tint the windows around. He's got
this massive entourage on the golf course.
Speaker 4 (36:47):
I don't know.
Speaker 5 (36:47):
It looks like the gator that I ride around and
when I visit my buddy Adam in Orange.
Speaker 4 (36:51):
But I feel either way.
Speaker 8 (36:53):
It's probably a gift from the King of Scotland.
Speaker 5 (36:56):
You think it came from It's a donation to the
air Force. But look, if you're Donald Trump, Christopher Smart,
you're sitting there saying, I'm surrounded by naysayers, and I
keep announcing deals, and I just wonder your message to
the casual observer, what would you tell our viewers or
listeners who are saying, boy, seems like terriffs work pretty well.
Speaker 11 (37:17):
Yeah. No, And I think that's a fair question to ask.
And I think you know, you've seen concessions right on
the part of some of these countries. I think some
of them are being exaggerated. For example, the commitments to
invest in the US, to buy things from the US,
those were going to happen probably in any case. Europe
needs to diversify its energy supply, it needs to buy
more defense, more for its own defense, so those are
(37:41):
going to happen anyway. On the other hand, you see
commitments to open up the markets to US companies, and
those are things that are very difficult. They're very easy
to promise, very difficult to do. It involves layers and
layers of regional regulation, legal reforms, lots of things that
will only see the result of whether they work or
not in over many years.
Speaker 8 (38:03):
But again, I just go back to the uncertainty.
Speaker 11 (38:05):
Trade deals aren't necessarily deals themselves that you strike and
sign a piece of paper.
Speaker 8 (38:10):
They're setting the framework for an ongoing relationship as things change,
and if that relationship isn't clear and predictable, it becomes
very difficult to do business.
Speaker 5 (38:19):
Fascinating as always, Christopher Smart or Growth Group, we always
look forward to the conversation, Christopher, I feel like I
could picture you on a golf Force one on the
Boston Common. We got to follow up on this much
more ahead on Bloomberg.
Speaker 1 (38:34):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm. E's durn
on Apple Cocklay and Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 2 (38:53):
President Trump earlier this month had given a fifty day
deadline which would bring us at that point into early
September for Vladimir Putin to reach a ceasefire deal with
Ukraine or else face the threat of secondary sanctions or tariffs.
And today, while he was sitting down with the UK
Prime Minister Kiir Starmer. President Trump announced he's set to
(39:13):
bring that deadline forward.
Speaker 3 (39:15):
I'm going to make a new deadline of about ten,
ten or twelve days from today. There's no reason in waiting.
There's no reason they're waiting. It's fifty days. I want
to be generous, but we just don't see any progress
being Matt. It would be sanctions and maybe tariffs, secondary tariffs.
Speaker 5 (39:40):
This is the undercurrent of the conversations on trade that
the President is having overseas. You can add Gaza to
that list, as well as we assemble our political panel.
They're both with us today. Bloomberg Politics contributors Genie Shanzano
and Rick Davis. Rick is our Republican strategist and partner
at Stone Court Capital. Genie is senior Democracy Fellow with
the Center for the Study of the Presidency in Congress.
Speaker 4 (40:03):
Rick, this is an.
Speaker 5 (40:04):
Interesting turn here and fascinating to listen to the language
coming from President Trump just a day after he met
with Ursula Vonderlin and now today with the UK's here Starmer,
is this trip to Scotland the worst thing that could
have happened to Vladimir Putin?
Speaker 12 (40:20):
Well, I think the worst thing that could have happened
to Vladimir Putin is Vladimir Putin. Remember he's gone through
other presidents, you know, sort of rinse and repeat.
Speaker 3 (40:27):
Right.
Speaker 12 (40:27):
He thinks you're gonna be your best friend, You're gonna
have a strategic relationship finally with the former Soviet Union,
only to be disappointed by the fact that he actually
has no intention of being anything other than a former
KGB agent who's out to recreate the you know, Russian empire.
Remember George W. Bush once said, oh, I look at
his eyes and I saw it, you know, somebody I
(40:49):
could deal with. And that's the same experience Donald Trump's had.
He looked into his eyes and he thought he was
somebody he could do business with. And now he's realizing
the same thing George W. Lives in, Barack Obama and
other former presidents. You can't do business with this man.
He has an agenda that is counter to the global
agenda of freedom and democracy and trade. And where do
(41:14):
you find common ground? There is none, And that's what
Donald Trump is now realizing. So the fact that he's
in the embrace of the Europeans, that's helpful. Right here,
Starmer will make a good effort on the airplane fly
into the Aberdeen golf course today to say that guy
is a bad guy and we ought to shut him down.
Speaker 8 (41:31):
So that's good.
Speaker 12 (41:33):
The question is does it stick when he's home and
he's surrounded by other sort of maga Kremlinites who are
going to give him a different tune?
Speaker 8 (41:43):
With Donald Trump so many times it's.
Speaker 12 (41:44):
The last man in the office, and I you know,
maybe maybe Cures Starmer should spend more time in Washington.
Speaker 8 (41:53):
Well.
Speaker 2 (41:53):
Building on Rick's point, Genie, and thinking back to the
language we just heard from President Trump, the suggestion that
there is no reason for waiting for a longer deadline,
suggesting that the outcome might not be different whether the
waight period is fifty days or ten days. Is this
a President Trump that has now resigned to the idea
that he can't deal with Vladimir Putin?
Speaker 13 (42:13):
Yeah, And I think the question is why has it
taken him so long? You know, Donald Trump is the
one who gave Vladimir Putin this long runway, and he
continually goes on television and talks about, even today in
his press conference, the nice, pleasant calls they'll have, and
then three hours later, Vladimir Putin is bombing key. The
(42:34):
reality is the person who hasn't changed their note or
tune at all is Vladimir Putin. He's been clear from
the beginning on what he will and will not accept,
and that has not changed. And so I'm not sure
why Donald Trump has been fooling himself quite frankly, that
something would change if he gave him fifty days or
ten days. I think what's troubling policy wise is the
(42:57):
President is talking about these secondaries sanctions, and a big
question about those is those aren't going to be sanctions
on Russia. There'll be sanctions on people who do business
with Russia, including India and China, the very people we're
trying to have a trade deal with. So I'm not
sure that gets him where he wants to go either.
(43:19):
And I think what it says is he doesn't want
to take the next step of firmly standing behind Ukraine
and giving them what they need to execute this war.
And if he's not prepared to do that, and I
understand why, then all of this is.
Speaker 5 (43:35):
For not what's your thought on that, Rick, We've been
talking about secondary sanctions the four of us now for years.
Will the Trump administration be the one to put them
in effect.
Speaker 12 (43:48):
Very well could, and it's about time. As you point out,
this hasn't been a hard one to figure out. It's
not doing trade with China and India that matters. It's
the revenue that Russia gets that sustains their war effort
from doing those trade deals. And so if you have
an ability to shut that down, you have ability to
help shut down the war effort in.
Speaker 4 (44:09):
Russia.
Speaker 12 (44:10):
And by the way, either Donald Trump's going to do
it at what his level he said is one hundred
percent tariff costs, or the Congress is going to pass
overwhelmingly a tariff regime, a sanctions regime where those tariffs
are five hundred percent. And so I think it's a
(44:31):
lot to say something's going to happen where economic sanctions
on Russia get a lot stiffer pretty soon. And either
Donald Trump's going to do it, or Congress is going
to do it and put it on his desk and
dare him not to sign it.
Speaker 2 (44:48):
Well, of course, as President Trump is pushing for an
end to this war, he also is pushing for a
ceasefire between Israel and Thomas. As the world is growing
increasingly focused on the hunger that the people of Gaza
are currently experiencing in questions over whether or not that
classifies as starvation. To ask the Israeli Prime Minister Benjamin
(45:08):
Netanyahoo if it does. His answer is no. This is
what he said yesterday.
Speaker 10 (45:13):
Israel as presented as though we are applying a campaign
of starvation in Gaza.
Speaker 8 (45:22):
What a bold face lie.
Speaker 10 (45:26):
There is no policy of starvation in Gaza, and there
is no starvation in Gaza. We enable humanitarian throughout the
duration of the war to enter Gaza, otherwise there would
be no Gazins.
Speaker 2 (45:42):
And while he says there is no campaign of starvation,
others obviously beg to differ, including it seems President Trump,
who was actually asked about the situation in Gaza alongside
the UK Prime Minister Keir Starmer, who described the people
of Britain specifically as being revolted by the images they
are seeing out of Gaza, Trump suggested he's seen the
pictures too, and he does not agree with Anton Y'ahu.
Speaker 4 (46:02):
This is what he said.
Speaker 3 (46:04):
The United States will be helping with the food. You know,
we have a lot of access to food. We've got
a lot of food ourselves, and we're going to bring
it over there. We're also going to make sure that
they don't have barriers stopping people. We're going to be
getting some good, strong food. We can save a lot
of people. I mean, some of those kids are that's
real starvation stuff. I see it, and you can't fake that.
(46:26):
So we're going to be even more involved.
Speaker 2 (46:31):
Real starvation stuff, Genie, that you can't fake. What do
we make of this break between President Trump and the
Israeli Prime Minister.
Speaker 13 (46:40):
I think it was very welcome that the President broke
with the Prime minister. As you mentioned, We've all seen
the pictures. Despite in many cases the press not being
welcome into Gaza, we've been able to see pictures, and
I think one of the most terrific stories we heard
this weekend was a five month old baby who died
(47:01):
weighing less than when she was born. This came out
of the AP and Donald Trump said it absolutely right,
President Trump, excuse me that the pictures don't lie, and
so I think it's very important that the President said that.
I don't know where that leaves us. We've seen Israel
put in a corner where it's opening some food corridors,
(47:24):
it's allowing a pause in the fighting for there to
be some movement forward in terms of the aid, but
we are quite frankly, no closer to a real end
to this war from either side. And as these people
starve to death, sixty thousand dead over there, that is
a very troubling sign. But I was glad the President
(47:47):
today said that, and he said it loud, and he
said it so the entire world could hear what we
all know to be the truth.
Speaker 5 (47:54):
Rick, what do you make of the rhetoric from Netanyahu's government,
from Benjaminetnia who himself Ron Dermer and others that what
we're seeing, I mean, you heard Netanya who they're saying
there is no starvation in Gaza. They're actually going a
step further to say that Hamas is exploiting young children
with terminal diseases and having them photographed to make it
(48:17):
look as if they are starving. How are Americans supposed
to interpret this messaging?
Speaker 12 (48:24):
Well, I mean, unfortunately, all of those things could be true,
and yet the truth is also on the side of
the people.
Speaker 4 (48:31):
Gaza who are hungry.
Speaker 12 (48:32):
I mean, I take my lead from Sinny McCain, the
World Food Program head. Wouldn't surprise anybody that I'd say that,
But The reality is, of course, there are independent agencies
that do this all across the world, and they know
a famine, they know starvation when they see it. They've
been very outspoken about this. You would think that Prime
Minister Ninya who would use them as a safe place
(48:54):
as long as they're happy, he will have some insulation
to the criticism what he's doing in Gaza. But the
reality is there are a lot of voices in the
Israeli government right now, we have to assume that the
voice that matters the most is Bib Nin Yahoo's, and
it seems out of step with.
Speaker 8 (49:13):
What the rest of the world.
Speaker 12 (49:14):
The World Food Program and others who are charged with
avoiding this kind of situation are saying about the access points,
the amount of food that's getting in there, and the
distribution process that's being used. It's a failure by anybody
stretch of the imagination. And the fact that now Donald
Trump has an inclination to do something about it, his
(49:35):
close relationship with BB hopefully can be put to use
so that so that the efforts to combat hamas aren't
cast in a negative light. Because of the dire situation
that the rest of the people of Gaza have actually
been exposed.
Speaker 10 (49:53):
To all right.
Speaker 2 (49:55):
Rick Davis and Jeanie Shanzino are political panel on this Monday.
Thank you so much, covering all things geopolitics.
Speaker 5 (50:04):
Thanks for listening to the Balance of Power podcast. Make
sure to subscribe if you haven't already, at Apple, Spotify,
or wherever you get your podcasts, and you can find
us live every weekday from Washington, DC at Noontimeeastern at
Bloomberg dot com.
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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(00:20):
you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
President Trumger means in Scotland, where he's had a series
of big meetings, meeting yesterday with the EU Commissioned President
Ursula Vonderlon, inking a trade deal and averting thirty percent
tariffs being implemented on Friday, which of course is August first.
The EU now facing a fifteen percent terror free on
basically all of its exports to the United States, and
it's something that President Trump talked about today as he
(00:47):
had another round of meetings with the UK Prime Minister
Keir Starmer, who he's still with in fact as we speak,
noting of course that the UK and the US had
already reached a framework trade agreement much earlier on Europe
now next. Many other countries though, are hoping they will
be able to follow, knowing that Friday deadline is looming.
Here's how the President talked about it earlier today.
Speaker 3 (01:07):
We're making inter great deals. We're making deals that are
good for us, but we want them to be good
for everybody. It's important. We're going to be setting a
tariff for essentially the rest of the world, and that's
what they're going to pay if they want to do
business in the United States.
Speaker 4 (01:24):
We go live to the White House right now for more.
Speaker 5 (01:26):
Bloomberg's Tyler Kendall, Bloomberg Washington correspondent, standing by with the
latest from the North lawn of the White House. Tyler,
we're all looking ahead to Friday, of course, the first
of August, but as Kaylee mentions, there's another deadline that's
twelfth of August when it comes to China. With tandem
talks underway here with this White House, what comes next?
Speaker 3 (01:46):
Right exactly?
Speaker 6 (01:47):
Joe and President Trump was asked about those talks with
China earlier today and he said, we're going to see
what happens now. The USTR Jamis and Greer, in an
interview earlier, gave us a little bit more color about
what the White House is expecting when it comes to
these discussion. He really amounted this to basically a check
in to make sure that both sides are upholding the
agreement that was reached in London, which he'll recall, was
(02:08):
really to uphold the agreement reached in Geneva when it
comes to some of those export controls around critical and
rare earth minerals as well as semiconductors and perhaps less
advanced chips. Our reporting does indicate that China has started
to ramp up its export licenses when it comes to
rare earths, and we've also seen the US start starting
(02:30):
to sort of loosen those restrictions, including in videos being
able to sell H twenty chips into Beijing. The next
phase here is really to make sure that the de
escalation continues. We are broadly expecting that they will extend
this August twelfth deadline. The Treasury Secretary Scott besen't said
as much on Bloomberg Television last week August twelfth and
then ninety days after that, because they seem to be
(02:52):
doing this in ninety day increments, but there are a
few threads where we could see potential progress here. The
Treasury Secretary said that they would expect and beyond export
controls and perhaps they would talk about curbing China's imports
when it comes to sanctioned Russian oil and then also
importantly fentanyl, because Joe and Keley, we have to keep
in mind about twenty percent of that tariff that's currently
(03:14):
in place against China is linked directly to the White
House's concerns around fentanyl. While China has denied its role
in its alleged role and fentanyl flows into the US,
we did see them take some steps last week to
curb two chemicals that are used in the opioid perhaps
seen as maybe a concession here to help keep talks
going forward.
Speaker 2 (03:36):
All right, So that's the talks with China, Tyler, and
we'll see what the outcome of them ultimately is. Meanwhile,
we know what the outcome of the meeting between Ursula
Vonderlin of the European Commission and President Trump's meeting was,
which is that we have reached at least a framework
of a trade deal. Some details we have now gotten
from the White House walk us through.
Speaker 6 (03:53):
It right exactly, and we have to keep in mind
this is a really consequential deal for this White House
just by sheer volume, Kayley, right, the EU makes up
about twenty percent of US annual imports into this country.
So this was really something that ultimately was prioritized in
these talks, despite at the beginning we were really told
that the EU would be last in line for a deal.
Now our understanding is there's going to be that fifteen
(04:15):
percent baseline tariff, and it actually does include some really
key sector specific tariffs, including autos about a thirty five
billion dollar import industry from the EU to the US.
That was a really critical area that the EU wanted
to see some relief on, but it also extends to
pharmaceuticals as well as chips, really importantly to distinguish though,
we did get a fact sheet kicked out by the
(04:36):
USTR Jamison Greer's office just moments ago which really does
clarify that steel and aluminum tariffs will remain at fifty
percent for now, but they do say that they are
going to work on their supply chains and cooperation going forward,
because our understanding from the EU side was that these
metals would be tariff under a lower level, under a
(04:57):
certain quota, under a certain amount before it snapped back
up to fifty percent. So we're still waiting for some
key details there. But in order for the EU to
clinch these lower rates, they did have to put in
some sweeteners that include six hundred billion dollars worth of investment,
as well as seven hundred and fifty billion dollar pledge
for US energy. It's probably worth pointing out that the
EU had been ramping up its imports of US LG
(05:18):
already to account for US steering away from Russian energy imports,
for example. And then the last one I'll leave you
too with is that President Trump says that the EVE
is going to start importing vast amounts of us A
defense equipment. This is something that we were widely expecting,
since we know that the US has been calling on
our European allies to boost their defense expenditures in the
(05:38):
wake of the war with Ukraine.
Speaker 5 (05:40):
Really interesting, Tyler just quickly left wanting our European wine
and spirits makers. They apparently decided to move this to
another day to figure out what would happen to this
very important industry for Europe. They're calling for a sector
specific carve out here an exemption. Do we have any
sense of when and that will be managed, when that'll
(06:01):
be dealt with At this point.
Speaker 6 (06:03):
We're still awaiting a details. But Joe, I know that
you've spoken to quite a few European ambassadors about this
exact issue, because this really is a huge industry for
Europe and you'll recall actually one of the first tear
threats against the European Union was against alcohol, wines and spirits,
back before we even had the escalation to that fifty
percent rate. So this is something that's really been a
(06:24):
thread throughout and that we're going to have to watch
very closely. But President Trump, as you mentioned, was asked
about it earlier today.
Speaker 2 (06:31):
You can always trust Joe Matthew to be on top
of the wine story and Tyler Kendall to be on
top of everything out of the White House where she
reports for us here on Blimberg TV and Radio. Thank
you so much, And we want to get more into
the actual detail of this trade agreement that has been
reached with Europe, the trade agreements we have yet to see,
and what it all means for companies that are actually
trying to navigate this environment and figure out what it
(06:51):
means for imports and exports. As we turned to Michelle Schultz,
she's founder and managing partner of Schultz Trade Law and
specializes essentially in helping corporations comply with things like this.
Michelle great to have you here on balance of power.
When we consider even the deal that we've got with
the European Union and the readout we now have, it
really is broad strokes of a deal. We're missing a
(07:12):
lot of granular detail here, and I wonder how corporations
are dealing with that. Is this actually enough information to
work with to make investment and purchasing decisions off of.
Speaker 7 (07:24):
I do not believe it's exactly enough information to make
decisions based off of. And we have already lost a
lot of trust with our partners in the EU. Our
clients are in different sectors like aerospace, oil and gas,
food and wine, gourmet food, and they have been pivoting
each time the tariffs get adjusted. We didn't expect this
(07:47):
adjustment so soon. But we have to keep in mind
that even though it's fifteen percent on about seventy percent
of the products, the tariffs on steel, aluminum, copper still
apparently will be at fifty percent, and that includes derivatives.
So when we're talking about details, I've got this book
(08:07):
behind me. That's the Harmonized Tariff Schedule. That is the
perfect example of how detailed these rules get. Each item
is listed in there, and so we need to check
each item and see if it's subject to tariffs and
how high.
Speaker 5 (08:22):
Well, so, what kind of conversations are you having with
these clients that you mentioned, because there seems to be
a feel in Europe today. I don't know if this
is the case in China that while there are elements
of this deal that are clearly favoring the United States,
at last we have certainty when it comes to tariff levels.
The fact that we might not like fifteen percent, but
(08:44):
at least we know it's fifteen percent. Does that resonate
with your clients.
Speaker 7 (08:50):
It does in the sense that it is one set number,
but it's a little bit misleading because we have layers
of different types of tariffs that are all going on,
like the steel and aluminium tariffs. Also, all twenty seven
countries within the EU have to sign off on this agreement,
and I haven't seen them do that yet. In fact,
(09:11):
I've seen a little bit of negative feedback from the
Prime Minister of France and Hungary as well, I believe.
So we're gonna have to wait and see if all
the EU members agree to this. It seems to me
that Ursula vonderlyin was correct when she said this is
essentially the best we're going to get it. It's good,
(09:32):
but it's not great. Fifteen percent across the board is
still higher than we're used to and I'm really hoping
that this reduction will include zero percent tariffs both ways
on aircraft and aircraft parts, which has been mentioned, but
we don't have anything in writing. We don't have a
(09:52):
written agreement with that level of detail.
Speaker 2 (09:56):
Yeah, there's a lot that we have yet to see
pen actually put to paper on Michelle. When we consider
what the whole point of these tariffs are, yes, and
part it to balancing the trade deficit with the US.
Hence y Europe is agreeing to make more purchases of
US goods like military equipment and the life. But the
President also contends that a lot of this is about
(10:17):
on shoring supply as well. Are companies that you're speaking
with finding the ability to do that very quickly, to
replace supply that may come from somewhere else that they're
currently importing and try to just get it domestically in
the United States? How long does that process actually take
to find those alternative roots if they're available at all.
Speaker 7 (10:35):
If they're available at all, it takes a very long time.
We have clients in every industry that are importing from
virtually every major country in Europe, and it is not
a fast process to find another supplier. Same with China.
A lot of suppliers had already moved from China, so
(10:55):
they moved to Vietnam, or the importer might have moved
its manufacturer somewhere like Mexico when the very first China
tariffs came out under Section three oh one under President Biden.
But then they had to pivot because now the Mexico
tariffs are up. So what our clients are doing is
pivoting as best they can and saving as best they can.
(11:17):
But some of them will go out of business if
tariffs continued to rise. And I think we have to
remember that this is still an increase. It's a decrease
from what was threatened, but it is still an overall
increase in tariffs for everyone.
Speaker 5 (11:33):
You mentioned the French Prime Minister Michelle Francois Biru on
x writing it's a dark day when an alliance of
free peoples united who affirm their values and defend their
interests resolves to submission.
Speaker 4 (11:48):
What's he talking about?
Speaker 7 (11:50):
Oh wow, Yes, So the Europeans were hoping for a
lower tariff frey overall, they were hoping for a friendlier
deal than we gave them, especially given our history with Europe.
They had thrown out the number of ten percent at
one point, and I thought that maybe that would have
been more reasonable in the eyes of the European countries,
(12:14):
But they see fifteen percent as still quite high and
a slap in the face. It will impact trade, and
it will be a cost to the US importers. So
it still presents a challenge, and it still presents an increase,
and I think that some of the European leaders are disappointed.
Speaker 2 (12:33):
Well beyond the deal with just Europe, where I don't
think I saw any mention of transshipping Michelle. We have
seen that mentioned in others, including the agreement that was
reached with Vietnam. The idea that there would be even
a higher tariff rate on transship goods that are coming
indirectly from China. I just wonder how hard that actually
is to track and follow. How do we actually know
where products are originating from if they're coming into the
(12:56):
US under cargo vessels with a different flag. How difficult
is that, especially for importers to try to navigate.
Speaker 7 (13:04):
It's actually quite difficult, and we have been in the
weeds of doing due diligence on suppliers and their suppliers
and their suppliers and their suppliers, and it's more and
more difficult, to the point where companies are using software tools.
We have three at least that we're using right now
(13:24):
in order to ferret out who owns what and who
is sending what from where. But to determine that something
is not made with slave labor, for example in the
Shinjang region, we have to go way back into the
supply chain. And you can't always rely on manufacturer Zaffa
davits because they may or may not be true and correct,
(13:46):
so you really have to go behind and do due
diligence behind the paperwork. It's becoming more and more difficult.
And I'll add that on the export side, the Commerce
Department has been throwing around a fifty percent rule similar
to ohfact, the Office of ourgn Assets controls fifty percent rule,
which would mean on the export side, we're also going
(14:08):
to have to look at ownership, who owns what, and
what's percentage. It's very difficult from a practical perspective.
Speaker 5 (14:15):
We've got about a minute left, Michelle, How worried are
you that this White House is too eager to reach deals,
to announce deals to the markets and to others who
were promised all of these amazing trade deals, too eager
to follow up on the details that you're talking about,
never mind make good on national security promises.
Speaker 4 (14:33):
When it comes to high tech chips.
Speaker 7 (14:37):
I believe they can do it. I'm somewhat optimistic that
they can do it. But it takes months, if not years,
normally to negotiate a trade agreement, and so this is
way out of line with your typical free trade agreement internationally.
This is a deal, and it's really a deal in
the sense of a deal. We've got some purchases that
(15:00):
the European Union's going to make, and the details as
far as which tariff numbers, what tariff codes, those aren't
all clear. Yet we still have steal an aluminum. I
do think the White House has been a bit eager
to show its success, and that's great. It's a step
in the right direction. But I don't think that our
(15:21):
allies and other countries are pleased with it quite yet.
Speaker 4 (15:26):
Michelle.
Speaker 5 (15:27):
It's great to have you with us. Let's stay close
on this. We have a lot more to talk about.
Thanks for joining our conversation today. Michelle Schultz, Founder managing
partner Schultz Trade Law. Really interesting to get inside an
operation that's dealing directly with the stakeholders.
Speaker 1 (15:41):
You're listening to the Bloomberg Balance of Power podcasts. Catch
us live weekdays at noon and five pm. E's durn
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You can also listen live on Amazon Alexa from our
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Speaker 5 (16:00):
Thanks for being with us on the Monday edition of
Balance of Power on Bloomberg TV and Radio. I'm Joe
Matthew alongside Kaylee Lines. Who's back with us today. I'm
glad to say as we talk politics here in the
nation's capital, and it's not very often that a politician
breaks through into the main stream without spending a lot
of money or doing something wrong. Case in point, James Tallerico,
(16:23):
a member of the Texas House of Representatives, a Democrat,
a pastor, and a former teacher, is now being considered
a potential threat to flip a Republican Senate seat blue
if he, of course, decides to run for it. Kayley,
this is an individual I'll get personal here for a moment,
(16:44):
who both of our spouses asked us about without prompt unsolicited,
which is something that never happens, by the way, in
either of our homes. We don't really talk politics right
when we go home at the kitchen table. But James
Tallerico was viral before he did the Rogan interview when
he talked about the Ten Commandments in schools.
Speaker 4 (17:04):
He's a TikTok sensation.
Speaker 5 (17:06):
He is now apparently a Joe Rogan sensation, and a
lot of smart people in Washington are asking if, in
fact he could be the future of the Democratic Party.
Speaker 8 (17:15):
Yeah.
Speaker 2 (17:16):
In fact, Joe Rogan is hoping he might one day run.
Speaker 5 (17:18):
For president, Isn't that right?
Speaker 2 (17:20):
Which is obviously an endorsement that would be highly coveted
by many as we know the influence Joe Rogan particularly
has in politics, but especially as we consider what is
a changing landscape in Texas with a redistricting fight underway,
with as you mentioned, of course, a Senate seat potentially
up for grabs John Cornyn getting primaried by Ken Paxton.
Many democrats considering throwing their hats in the ring if
(17:42):
they haven't done so already, makes a unique moment in
time to.
Speaker 9 (17:45):
Speak with mister Tellerica.
Speaker 5 (17:47):
Yeah, well, that's for sure, this which is why we
reached out to James. Look at James Tallerico in the
act I mentioned he's a pastor talking about the confluence
of his religious beliefs and policy.
Speaker 4 (18:00):
Listen on Bloomberg.
Speaker 9 (18:02):
What would Jesus do about a tax system that benefits
the rich over the poor?
Speaker 4 (18:09):
What would Jesus do.
Speaker 9 (18:09):
About a healthcare system that forces the sick to start
go fund me pages to afford life saving surgeries? What
would Jesus do about an education system that ties a
child school funding to their community's property wealth. Would he
stay in his room and pray? Or would he walk
(18:30):
into the seat of power and flip over the tables
of injustice?
Speaker 2 (18:36):
A taste of James Tallerico's messaging, and he's joining us
now on Bloomberg TV and Radio for more. Appreciate the time, James,
Thank you so much for being with us. What do
you think it is about the way in which you
are trying to convey what aren't in some instances political
messages leaning on your Christian faith and kind of biblical
readings of policy issues that seems to be resonating in
(18:58):
a way that other Democrats from Texas have struggled to
see themselves resonate in recent years.
Speaker 9 (19:05):
Well, thank y'all for having me on, and please thank
your spouses too for recommending to you. You know, I
think people are hungry for authentic moral leadership in this country,
and I think folks just want elected officials who are
themselves and who are honest and speak directly and clearly.
(19:27):
That's I think what this exposes. Folks are tired of
the kind of consultant driven, poll tested political sound bites,
and they want people who are just going to speak
like a human being. And that's what I try to
do every day, whether it's you know, at a podium
or a pulpit, whether it's as an elected official or
as a as a member of the clergy.
Speaker 5 (19:49):
Authentic moral leadership, pastor tall a Rico makes you a
contrarian in this political world, if not a UNI considering
your background.
Speaker 4 (20:02):
We're in a.
Speaker 5 (20:02):
World where sharp elbows work here in Washington, where the
pressure play works, we're bullying works, We're name calling is
now considered commonplace. Par For the course, a lot of
people would ask how someone who considers themselves a man
of God, someone who acts as a gentleman, has any
place in this political world.
Speaker 9 (20:26):
Well, one of my favorite verses in Scripture is Matthew
five five the meek shall inherit the earth, meaning you know, violence, bullying, aggression.
Those things may work in the short run, and I
think that's what you're seeing in our political discourse. It
gets you a temporary bump in your followers or in
(20:46):
your cable TV viewership, or maybe even gets you elected
in the next election, but it doesn't work in the
long run. In the long run, I think people want honesty,
they want compassion, they want understanding, and so I'm placing
my long term bet on those values. I honestly think
(21:09):
over the last ten years of our politics, people are
just sick of the blood sport, and they're sick of
the way that politics feels like professional wrestling a lot
of the times. And I'm hoping that earnestness and sincerity
are going to make a comeback in our politics, at
least I hope so.
Speaker 7 (21:28):
Well.
Speaker 2 (21:28):
And it's one thing to consider our politics along party
lines and partisan divides, but there are also deep divides
within the parties themselves. You need look no further than
Texas As. I'm sure you well know the primary and
the Republican on the Republican side for the Senate seat
between Ken Paxton and the incumbent Senator Cornyn. Are you
worried that, as you consider a potential Senate run yourself,
(21:51):
that a Democratic primary could potentially be just as damaging.
Speaker 9 (21:57):
I don't think it has to be. You know, primary
election can be a good thing, especially if both candidates
go about it in a respectful way. You know, it
should be a contest of ideas, you know, I think
we saw in the last election the consequences of not
having a competitive primary. Those primaries make us better as
candidates and.
Speaker 4 (22:17):
As a party.
Speaker 9 (22:18):
I think that's true on both sides of the aisle.
I think elections are always a good thing. Competition in
politics is always a good thing, and I'm hoping that's
true in this upcoming primary here in Texas well.
Speaker 5 (22:31):
Are you thinking about running for Senate? Is that a
real story and what's going into your consideration If that's
the case.
Speaker 9 (22:38):
I am thinking about it. But if I'm being very honest,
with you. You know, my entire focus is really on the
special legislative session that's just been called here in Texas.
I'm sure you've covered this, but the President has asked
our governor Greg Abbott to find him five more congressional seats.
He wants to redraw the political maps in the middle
(22:59):
of the day decade to try to protect his majority
in the next election, regardless of how we all vote.
And I just I think this is politics that's worst.
You know, politicians picking their voters instead of voters picking
their politicians. And so I'm doing everything I possibly can
to stop this, this jerry mander from going through, to
stop this power grap from going through. I was elected
(23:22):
by my constituents here in Central Texas to fight for
them to the state capitol. That's what I'm going to
do before I start thinking about other elected positions.
Speaker 2 (23:30):
Well, if you view that as politics as it's at
its worst, would it be a mistake for blue states
like California or New York to try to follow Texas's
lead and reclaim some more state seats for Democrats.
Speaker 9 (23:43):
I think the idea of every state being jerrymandered is
a terrible vision for this country. That said, I do
know that you have to stand up to bullies. You
can't just lie down and let them win. And so
I do think that we need folks who are willing
to match energy, But we cannot lose sight of the
ultimate goal, and that is fair elections in every state,
(24:07):
fair maps in every state. I mean, every single state
in this country should have an independent, citizen led redistrict
and commission that takes the power to draw these maps
out of the hands of politicians and puts it into
the hands of the people that we seek to represent.
So while we need to stand up to folks who
are trying to grab on to power like the President
(24:27):
is currently trying to do, we can't lose sight of
the ultimate vision, which is making sure that every state
has fair maps and fair representation for all Americans.
Speaker 5 (24:38):
Will you join other Democrats in leaving the state from
keeping the majority from doing this?
Speaker 4 (24:43):
In Texas?
Speaker 9 (24:44):
Well, you know we're in the minority as Democrats here
in the Texas Legislature. We've been in the minority for
a long time, and so we've had to figure out
how to use every tool in our toolbox. You know,
whether that's the rules, whether it's our platforms or whether
it is denying quorum. That's obviously a dramatic step, and
it's one that shouldn't be taken lightly. You know, we
(25:06):
haven't even seen the maps here in Texas yet, and
so I don't want to rush to any conclusions, but
I will just tell you that I think it's fair
to say that my Democratic colleagues and I are willing
to do whatever it takes to stop this power grab
and to protect the democratic process here in Texas and
around the country, because if President Trump succeeds with this
(25:27):
power grab in Texas, I worry that he will do
the same thing in every red state across the country,
which would essentially rig the twenty twenty six midterms. And so,
regardless of your party, whether you're a Democrat or Republican
or an independent, none of us want politicians in Washington
silencing our voices and rigging the next election.
Speaker 5 (25:48):
We'd love to have you back, James Tallerrico, When are
you planning to make up your mind for this Senate race?
Speaker 9 (25:55):
Well, I'd love to come back. You know, the special
legislative session is going to last until the end of August.
That's assuming another one won't be called right after that.
So as long as I'm being called to do my
job as a state representative here in the state Capitol,
That's what I'm going to be doing. But once that's over,
I'll be looking at how I can best continue my service,
(26:15):
and that may include running for another office in twenty
twenty six.
Speaker 4 (26:19):
Yeah, let us know when you make up your mind.
We want to continue our conversation with you.
Speaker 5 (26:22):
James Telerico, Texas House of Representatives Democrat, who you've been
hearing so much about.
Speaker 4 (26:26):
We thought we'd bring him to you here on Balance
of Power.
Speaker 1 (26:32):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
almal Coarckley and Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 5 (26:48):
Under the heat Dome here in the Amtrak corridor from
Washington to New York. It's going to be another sweltering week.
Pretty good strategy, most people will admit for Donald Trump
to get out of the bubble, get overseas, get out
of the way of the whole Epstein's story. Let your
lieutenants leave town. They're in Stockholm, Scott Besson's talking to China,
(27:10):
Howard Lutnik and so forth. House lawmakers are gone set
to defend their record here from a summer of legislating,
when they hold town hall meetings, catch up with the family,
do a little bit of fundraising, and then when they
all come back, it'll be a big sprint to the
government funding deadline on September thirtieth. And you know they're
(27:31):
already talking about a possible shut down. We hear about
it every day around here. So we take a break
this week and it allows us to have some bigger
picture ideas. Although let's not be mistaken, this is going
to be a very busy week in Washington. While there
are a lot of people around, the news is going
to be flying. We don't only have trade deals coming
from overseas here. We have a trade deadline to cap
(27:52):
the week on Friday, that's August one, right.
Speaker 4 (27:54):
This was the end of the road here.
Speaker 5 (27:57):
When it comes to reciprocal tariffs, and that's why a
lot of countries have been coming to the table. Of course,
we had the EU over the weekend. The presidents in
Scotland sat down with the President of the European Commission
Ursula vonder lyon and had something to show for it.
Speaker 4 (28:13):
Here's Donald Trump from yesterday.
Speaker 3 (28:15):
We've reached a deal. I think you were saying, this
is probably the biggest deal ever reached in any capacity.
Speaker 10 (28:21):
We have a deal, and it's a big deal.
Speaker 11 (28:24):
It's a huge deal. It's fifteen percent tariffs across the board,
all in inclusive.
Speaker 4 (28:30):
I think it's the biggest deal ever made. Thank you
very much, the biggest deal ever made. A big deal,
A huge deal. She said.
Speaker 5 (28:39):
She clearly knows how to talk to Donald Trump. But
this was supposed to be the elusive deal right the EU.
They weren't getting along. Now we've got both. Look, they
both used the word deal, at least a framework agreement.
Here's the thing, though, they did not figure out the wine.
And we're going to have some time to explore this
(28:59):
on that program this week. The wine tariffs. Remember Donald
Trump promised two hundred percent on wine, champagne and spirits
coming from Europe. Some of us may have even bought
cases of wine in advance of those tariffs taking hold,
but they're still not there, and they did not agree
on what the number would be today, So we have
(29:20):
to come back around on the grape juice and we will. Yeah,
ed biggest deal ever made, ever made, said Donald Trump.
Now we talk about context a lot here on Bloomberg.
That's what we offer you. That's why you tune into
the broadcast other than to hang out with your friends
here in Washington.
Speaker 4 (29:40):
And we're going to seek some context with the help of.
Speaker 5 (29:42):
Christopher Smart because it's not only the trade deals happening.
We just hit that We've got a lot of economic
data this week. Yeah, We've got a jobs report coming
a new month on Friday, and a FED meeting. Remembering
last time we met, Donald Trump and j Powell had
hard hats on and that incredible display over at the
Ecchos building here in Washington. His news conference following the
(30:05):
FED meeting and following that event and the pressure from
Donald Trump is going to be fascinating. Christopher Smartest, founder
and managing partner of our Growth Group, former Special Assistant
to the President at the National Economic Council during the
Obama administration. And indeed, when we seek context, we find
it with the help of Christopher. It's great to see, sir,
Welcome back to Bloomberg. It's good to connect on a
(30:27):
day like this, because there's a lot we need to
talk about, and I'm wondering what has your attention and
what will be kind of the most important of the
tent polls.
Speaker 4 (30:35):
This week?
Speaker 5 (30:35):
We open with trade deals, we have a FED meeting
right in the middle, and we have the jobs report
on Friday. Will these three combine to bring good news
to this White House?
Speaker 11 (30:45):
Well, I've got bigger questions on my mind. First of all,
why is it that you and I are the only
two people trapped in the Amtrak corridor on a week
like this from everybody.
Speaker 8 (30:51):
Else is gone?
Speaker 4 (30:52):
Great question?
Speaker 11 (30:54):
My second question is which one looks more uncomfortable in
those pictures?
Speaker 10 (30:58):
Is at J.
Speaker 11 (30:58):
Powell and his heart hat or is it Ursula Vanderlyne
trying to talk about the hugest deal she's ever seen.
Speaker 5 (31:06):
But these are good questions, Christopher Smart. I don't know
if you have answers to either of them. But she
clearly knew who was coming to town, right set them
for this.
Speaker 8 (31:15):
That's right.
Speaker 11 (31:16):
No, she was briefed, but it's clear that she's cut
from a different cloth politically from the President in terms
of personality and persona. But to your question, brought are
questions about the economy and the markets. I think you
know clearly the EU deal is helpful to have a
framework at least around which to work, but huge gaps
(31:39):
in terms of understanding what will be included, what will
be excluded. Steele apparently is included currently in this. I'm
sorry steel is not included in this, but there are
ongoing talks around steel that may lead to an even
lower rate for European steel. Pharmaceuticals are a big question
(32:00):
I know in the UK the President being in Scotland
right now. Scotch whiskey is a big question mark in
terms of what tariffs that will be facing coming into
the US, in addition to the wine that you covered.
But broadly, I think it's important to know that we
do know more about what the trade framework is going
to look like than we did a couple of months ago,
and tariffs that were roughly around two percent of as
(32:24):
a weighted average tariffs for United States imports are now
going to be just below twenty percent if the current
trajectory continues. So I think that's the big headline that
we all need to kind of absorb, and that's probably
what the FED is still going to look at as
it gathers later this week to decide not to change rates,
And I guess the bigger question is will there be
(32:45):
descents to that decision.
Speaker 5 (32:48):
Well, it's fascinating here, what do you make of this
idea that, when we consider the uncertainty that the FED
is going to be clearly addressing on Wednesday, that investors
are kind of ignoring at the moment, this idea that, well,
we don't have all the details, and you know, it
may not be as favorable to the EU as well.
Speaker 4 (33:06):
Ursula vonder Land was hoping.
Speaker 5 (33:07):
But you know what, at least we know what the
tariff level is and having that certainty may be the
most valuable part of these negotiations.
Speaker 4 (33:16):
Christopher, Well, it is.
Speaker 11 (33:18):
But again the certainty is only relative. So it's it's
certainly much better than we have had in the last
few months. But again, lots of you know, companies that
make decisions about where to build the factory, about what
supply lines to build, really need to know the details.
You need to know what the exclusions are, what not
only how is it applying to them, but how is
(33:39):
it going to apply to their suppliers, to their customers,
How is it going to apply to their competitors. Just
as a small example, right now, we had the Japan
deal over the weekend.
Speaker 8 (33:50):
We now have an EU deal.
Speaker 11 (33:52):
The big the we're now importing cars from Mexico and
Canada outside of the u SMCA at much higher rates
than the UK and I'm sorry, than the UK, the
EU and Japan. So all of these are interconnecting parts
that will have to be addressed going forward. That means that,
for certainty, we're still going to have to wait a
(34:16):
long time. I guess the good news to your earlier
question about the economic data we're getting is that the
economic data still seems to be pretty good and the
economy seems to be resilient to some of these headwinds.
Speaker 5 (34:28):
Well, what do you make of the message from the administration, Christopher, Like, Hey,
you guys have been telling us every month since we
showed up here that teriffs are going to cause inflation.
It hasn't happened yet. And if it hasn't happened yet,
then why would it happen? The idea being that we're
somehow out of the woods here. But what happens if
it kicks in in the second half, maybe in the
(34:48):
third or fourth quarter, Christopher, we are having a very
different conversation about the impact of tariff's on our economy
and prices.
Speaker 8 (34:56):
Well, I think that's exactly right.
Speaker 11 (34:57):
And I think if you were on the fom SEE
looking at just the economic data, not looking at anything
to do with trade policy, you would probably be thinking
about a couple of cuts right.
Speaker 8 (35:07):
Now because of the way the.
Speaker 11 (35:11):
Interest I'm sorry, because of the way prices have been falling,
not you know, not as fast as you'd like them to,
but they're certainly certainly heading downward for the most part.
But then you add on to that uncertainty around what
the President's deals will be. Now that's becoming clearer right now,
and as I said, we're moving from a world of
two percent to roughly twenty percent. The President and others
(35:32):
would say that's just a one off, that's only affecting
ten percent of our imports ten percent of GDP, which
are what our imports represent. But the third element to
all of this is, yes, but how do others respond
to these tariffs? Right You certainly have domestic producers that
are going to raise their rates, their prices to meet
(35:52):
the prices of the importers. You have other countries that
are going to respond in one way or another with
some terriffs, and then you've got the uncertainty around the
broader terror structure going on into the next few months
and years. And it's not necessarily the tariffs themselves drive inflation.
It's trade wars and trade uncertainty that drives inflation.
Speaker 5 (36:15):
Well, Donald Trump's feeling pretty good about things at the moment. Christopher,
I suspect that anybody would with a trip like this.
He's playing golf. I guess he's playing pretty good golf
out there. Did you see, by the way, golf Force one.
I don't know if you have one of these, Christopher,
but they've made like this bulletproof golf cart for him.
It appears to be, according to reporting, a modified Polaris
(36:37):
Ranger XP. This imagine a golf cart with you know,
the armor and the tint the windows around. He's got
this massive entourage on the golf course.
Speaker 4 (36:47):
I don't know.
Speaker 5 (36:47):
It looks like the gator that I ride around and
when I visit my buddy Adam in Orange.
Speaker 4 (36:51):
But I feel either way.
Speaker 8 (36:53):
It's probably a gift from the King of Scotland.
Speaker 5 (36:56):
You think it came from It's a donation to the
air Force. But look, if you're Donald Trump, Christopher Smart,
you're sitting there saying, I'm surrounded by naysayers, and I
keep announcing deals, and I just wonder your message to
the casual observer, what would you tell our viewers or
listeners who are saying, boy, seems like terriffs work pretty well.
Speaker 11 (37:17):
Yeah. No, And I think that's a fair question to ask.
And I think you know, you've seen concessions right on
the part of some of these countries. I think some
of them are being exaggerated. For example, the commitments to
invest in the US, to buy things from the US,
those were going to happen probably in any case. Europe
needs to diversify its energy supply, it needs to buy
more defense, more for its own defense, so those are
(37:41):
going to happen anyway. On the other hand, you see
commitments to open up the markets to US companies, and
those are things that are very difficult. They're very easy
to promise, very difficult to do. It involves layers and
layers of regional regulation, legal reforms, lots of things that
will only see the result of whether they work or
not in over many years.
Speaker 8 (38:03):
But again, I just go back to the uncertainty.
Speaker 11 (38:05):
Trade deals aren't necessarily deals themselves that you strike and
sign a piece of paper.
Speaker 8 (38:10):
They're setting the framework for an ongoing relationship as things change,
and if that relationship isn't clear and predictable, it becomes
very difficult to do business.
Speaker 5 (38:19):
Fascinating as always, Christopher Smart or Growth Group, we always
look forward to the conversation, Christopher, I feel like I
could picture you on a golf Force one on the
Boston Common. We got to follow up on this much
more ahead on Bloomberg.
Speaker 1 (38:34):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm. E's durn
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You can also listen live on Amazon Alexa from our
flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 2 (38:53):
President Trump earlier this month had given a fifty day
deadline which would bring us at that point into early
September for Vladimir Putin to reach a ceasefire deal with
Ukraine or else face the threat of secondary sanctions or tariffs.
And today, while he was sitting down with the UK
Prime Minister Kiir Starmer. President Trump announced he's set to
(39:13):
bring that deadline forward.
Speaker 3 (39:15):
I'm going to make a new deadline of about ten,
ten or twelve days from today. There's no reason in waiting.
There's no reason they're waiting. It's fifty days. I want
to be generous, but we just don't see any progress
being Matt. It would be sanctions and maybe tariffs, secondary tariffs.
Speaker 5 (39:40):
This is the undercurrent of the conversations on trade that
the President is having overseas. You can add Gaza to
that list, as well as we assemble our political panel.
They're both with us today. Bloomberg Politics contributors Genie Shanzano
and Rick Davis. Rick is our Republican strategist and partner
at Stone Court Capital. Genie is senior Democracy Fellow with
the Center for the Study of the Presidency in Congress.
Speaker 4 (40:03):
Rick, this is an.
Speaker 5 (40:04):
Interesting turn here and fascinating to listen to the language
coming from President Trump just a day after he met
with Ursula Vonderlin and now today with the UK's here Starmer,
is this trip to Scotland the worst thing that could
have happened to Vladimir Putin?
Speaker 12 (40:20):
Well, I think the worst thing that could have happened
to Vladimir Putin is Vladimir Putin. Remember he's gone through
other presidents, you know, sort of rinse and repeat.
Speaker 3 (40:27):
Right.
Speaker 12 (40:27):
He thinks you're gonna be your best friend, You're gonna
have a strategic relationship finally with the former Soviet Union,
only to be disappointed by the fact that he actually
has no intention of being anything other than a former
KGB agent who's out to recreate the you know, Russian empire.
Remember George W. Bush once said, oh, I look at
his eyes and I saw it, you know, somebody I
(40:49):
could deal with. And that's the same experience Donald Trump's had.
He looked into his eyes and he thought he was
somebody he could do business with. And now he's realizing
the same thing George W. Lives in, Barack Obama and
other former presidents. You can't do business with this man.
He has an agenda that is counter to the global
agenda of freedom and democracy and trade. And where do
(41:14):
you find common ground? There is none, And that's what
Donald Trump is now realizing. So the fact that he's
in the embrace of the Europeans, that's helpful. Right here,
Starmer will make a good effort on the airplane fly
into the Aberdeen golf course today to say that guy
is a bad guy and we ought to shut him down.
Speaker 8 (41:31):
So that's good.
Speaker 12 (41:33):
The question is does it stick when he's home and
he's surrounded by other sort of maga Kremlinites who are
going to give him a different tune?
Speaker 8 (41:43):
With Donald Trump so many times it's.
Speaker 12 (41:44):
The last man in the office, and I you know,
maybe maybe Cures Starmer should spend more time in Washington.
Speaker 8 (41:53):
Well.
Speaker 2 (41:53):
Building on Rick's point, Genie, and thinking back to the
language we just heard from President Trump, the suggestion that
there is no reason for waiting for a longer deadline,
suggesting that the outcome might not be different whether the
waight period is fifty days or ten days. Is this
a President Trump that has now resigned to the idea
that he can't deal with Vladimir Putin?
Speaker 13 (42:13):
Yeah, And I think the question is why has it
taken him so long? You know, Donald Trump is the
one who gave Vladimir Putin this long runway, and he
continually goes on television and talks about, even today in
his press conference, the nice, pleasant calls they'll have, and
then three hours later, Vladimir Putin is bombing key. The
(42:34):
reality is the person who hasn't changed their note or
tune at all is Vladimir Putin. He's been clear from
the beginning on what he will and will not accept,
and that has not changed. And so I'm not sure
why Donald Trump has been fooling himself quite frankly, that
something would change if he gave him fifty days or
ten days. I think what's troubling policy wise is the
(42:57):
President is talking about these secondaries sanctions, and a big
question about those is those aren't going to be sanctions
on Russia. There'll be sanctions on people who do business
with Russia, including India and China, the very people we're
trying to have a trade deal with. So I'm not
sure that gets him where he wants to go either.
(43:19):
And I think what it says is he doesn't want
to take the next step of firmly standing behind Ukraine
and giving them what they need to execute this war.
And if he's not prepared to do that, and I
understand why, then all of this is.
Speaker 5 (43:35):
For not what's your thought on that, Rick, We've been
talking about secondary sanctions the four of us now for years.
Will the Trump administration be the one to put them
in effect.
Speaker 12 (43:48):
Very well could, and it's about time. As you point out,
this hasn't been a hard one to figure out. It's
not doing trade with China and India that matters. It's
the revenue that Russia gets that sustains their war effort
from doing those trade deals. And so if you have
an ability to shut that down, you have ability to
help shut down the war effort in.
Speaker 4 (44:09):
Russia.
Speaker 12 (44:10):
And by the way, either Donald Trump's going to do
it at what his level he said is one hundred
percent tariff costs, or the Congress is going to pass
overwhelmingly a tariff regime, a sanctions regime where those tariffs
are five hundred percent. And so I think it's a
(44:31):
lot to say something's going to happen where economic sanctions
on Russia get a lot stiffer pretty soon. And either
Donald Trump's going to do it, or Congress is going
to do it and put it on his desk and
dare him not to sign it.
Speaker 2 (44:48):
Well, of course, as President Trump is pushing for an
end to this war, he also is pushing for a
ceasefire between Israel and Thomas. As the world is growing
increasingly focused on the hunger that the people of Gaza
are currently experiencing in questions over whether or not that
classifies as starvation. To ask the Israeli Prime Minister Benjamin
(45:08):
Netanyahoo if it does. His answer is no. This is
what he said yesterday.
Speaker 10 (45:13):
Israel as presented as though we are applying a campaign
of starvation in Gaza.
Speaker 8 (45:22):
What a bold face lie.
Speaker 10 (45:26):
There is no policy of starvation in Gaza, and there
is no starvation in Gaza. We enable humanitarian throughout the
duration of the war to enter Gaza, otherwise there would
be no Gazins.
Speaker 2 (45:42):
And while he says there is no campaign of starvation,
others obviously beg to differ, including it seems President Trump,
who was actually asked about the situation in Gaza alongside
the UK Prime Minister Keir Starmer, who described the people
of Britain specifically as being revolted by the images they
are seeing out of Gaza, Trump suggested he's seen the
pictures too, and he does not agree with Anton Y'ahu.
Speaker 4 (46:02):
This is what he said.
Speaker 3 (46:04):
The United States will be helping with the food. You know,
we have a lot of access to food. We've got
a lot of food ourselves, and we're going to bring
it over there. We're also going to make sure that
they don't have barriers stopping people. We're going to be
getting some good, strong food. We can save a lot
of people. I mean, some of those kids are that's
real starvation stuff. I see it, and you can't fake that.
(46:26):
So we're going to be even more involved.
Speaker 2 (46:31):
Real starvation stuff, Genie, that you can't fake. What do
we make of this break between President Trump and the
Israeli Prime Minister.
Speaker 13 (46:40):
I think it was very welcome that the President broke
with the Prime minister. As you mentioned, We've all seen
the pictures. Despite in many cases the press not being
welcome into Gaza, we've been able to see pictures, and
I think one of the most terrific stories we heard
this weekend was a five month old baby who died
(47:01):
weighing less than when she was born. This came out
of the AP and Donald Trump said it absolutely right,
President Trump, excuse me that the pictures don't lie, and
so I think it's very important that the President said that.
I don't know where that leaves us. We've seen Israel
put in a corner where it's opening some food corridors,
(47:24):
it's allowing a pause in the fighting for there to
be some movement forward in terms of the aid, but
we are quite frankly, no closer to a real end
to this war from either side. And as these people
starve to death, sixty thousand dead over there, that is
a very troubling sign. But I was glad the President
(47:47):
today said that, and he said it loud, and he
said it so the entire world could hear what we
all know to be the truth.
Speaker 5 (47:54):
Rick, what do you make of the rhetoric from Netanyahu's government,
from Benjaminetnia who himself Ron Dermer and others that what
we're seeing, I mean, you heard Netanya who they're saying
there is no starvation in Gaza. They're actually going a
step further to say that Hamas is exploiting young children
with terminal diseases and having them photographed to make it
(48:17):
look as if they are starving. How are Americans supposed
to interpret this messaging?
Speaker 12 (48:24):
Well, I mean, unfortunately, all of those things could be true,
and yet the truth is also on the side of
the people.
Speaker 4 (48:31):
Gaza who are hungry.
Speaker 12 (48:32):
I mean, I take my lead from Sinny McCain, the
World Food Program head. Wouldn't surprise anybody that I'd say that,
But The reality is, of course, there are independent agencies
that do this all across the world, and they know
a famine, they know starvation when they see it. They've
been very outspoken about this. You would think that Prime
Minister Ninya who would use them as a safe place
(48:54):
as long as they're happy, he will have some insulation
to the criticism what he's doing in Gaza. But the
reality is there are a lot of voices in the
Israeli government right now, we have to assume that the
voice that matters the most is Bib Nin Yahoo's, and
it seems out of step with.
Speaker 8 (49:13):
What the rest of the world.
Speaker 12 (49:14):
The World Food Program and others who are charged with
avoiding this kind of situation are saying about the access points,
the amount of food that's getting in there, and the
distribution process that's being used. It's a failure by anybody
stretch of the imagination. And the fact that now Donald
Trump has an inclination to do something about it, his
(49:35):
close relationship with BB hopefully can be put to use
so that so that the efforts to combat hamas aren't
cast in a negative light. Because of the dire situation
that the rest of the people of Gaza have actually
been exposed.
Speaker 10 (49:53):
To all right.
Speaker 2 (49:55):
Rick Davis and Jeanie Shanzino are political panel on this Monday.
Thank you so much, covering all things geopolitics.
Speaker 5 (50:04):
Thanks for listening to the Balance of Power podcast. Make
sure to subscribe if you haven't already, at Apple, Spotify,
or wherever you get your podcasts, and you can find
us live every weekday from Washington, DC at Noontimeeastern at
Bloomberg dot com.
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