July 22, 2025 • 38 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump said the US reached an agreement with the Philippines setting a 19% tariff on the country’s exports, the latest pact ahead of an Aug. 1 deadline.
Trump initially imposed a 17% rate for the US ally in April, which was paused to allow time for negotiations. He then threatened earlier this month to raise the charge to 20%.
Trump announced the deal on social media Tuesday after meeting with Philippines President Ferdinand Marcos Jr. The minor reduction underscored the difficulty foreign leaders are facing as they attempt to convince the US president to grant relief from his country-based tariffs.
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 speaks with:
- Bloomberg Washington Correspondent Tyler Kendall.
- Former Deputy National Security Adviser for Cyber and Emerging Technology in the Biden Administration Anne Neuberger.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
- International Capital Strategies Founder and Managing Partner Doug Rediker.
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 (00:02):
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Speaker 2 (00:25):
The President today with trade on the agenda, sitting down
with the President of the Philippines, Ferdinand Marcos Junior inside
the White House right now, knowing of course that Donald
Trump has threatened a twenty percent tariff against our ally
in the South Pacific. The President speaking a short time
ago with reporters alongside President Marcos in the Oval Office.
Speaker 3 (00:45):
Listen, well, it's tough.
Speaker 4 (00:46):
He's a very tough togretiated so far, we're not there
because he's he's negotiating too tough. In fact, I used
to like him better than I do now he's too tough.
But we'll probably agree to something. But he is a
strong he loves your country.
Speaker 2 (01:03):
We'll see if a trade deal emerges. Here there meeting
right now, in fact, over lunch following the bilateral meeting,
in the presence of the White House Press Corps, Bloomberg's
Tyler Kendall is with me right now in Washington, having
watched what turned out to be Tyler a roughly half
hour news conference of briefing, if you will, a bit
of a weave with President Trump here through a series
of issues from trade.
Speaker 5 (01:24):
We didn't spend too.
Speaker 2 (01:25):
Much time on that to j Powell, to in fact,
the Russia investigation dating back to the twenty sixteen election.
Speaker 5 (01:31):
The real news today though, has to do with tariffs.
What could come of this right exactly, Joe.
Speaker 6 (01:36):
I mean, we have to put into context here that
we did see the Philippines receive one of those long
awaited trade letters and they actually saw their tear freight
go up. You said it there. They're facing a twenty
percent levee on so called Liberation Day, they were facing
a seventeen percent levey, so it didn't appear that negotiations
were really going in their favor. And of course this
(01:57):
is actually one of the first visits, the first visit
of ahead of state from the Association of Southeast Asian
Nations OSSION, and that's important because these were really countries
that were prioritized in these trade talks, but that we
really haven't seen much movement when it comes to any
sort of framework deal being announced. Now, the Philippines does
run about a five billion dollar trade surplus.
Speaker 4 (02:19):
With the US.
Speaker 6 (02:20):
The US is on the deficit end, So this is
something that the administration is definitely looking to try to
advance and move forward. But why these nations were really
prioritized has to do with China, which of course also
came in to the conversation. Today. We heard President Trump
saying that perhaps he will visit China in the not
so distant future, and he also confirmed that they have
started to see or rather he suggested that those export
(02:44):
licenses related to rare earth minerals and magnets have started
to speed up. And we know that that's something that
we watch really closely because that's really been at the
crux of the negotiations with Beijing.
Speaker 2 (02:55):
Interesting language, very trumpy, and we're going to have a
very good relationship. You said the country the friend of
the Philippines was maybe tilting towards China. He said, we
are untilting it. And you wonder what kind of details
we might get following this meeting today. But he talked
about a lot more than trade. He got into the
matter involving Jay Powell, and I should be clear he
(03:15):
was asked about this by a reporter. This was the
first thing that came up when this went to Q
and A following their opening remarks. Having heard the President
of course threatened to fire Jay Powell, listened to what
he said today.
Speaker 7 (03:26):
I think he's done a bad job. But he's going
to be out pretty soon anyway, and eight months he'll
be out. But I call him too late. He's too
late all the time. He should have loaded interest rates
many times. Europe loaded their rate ten times, we load
ours none, and it's causing a problem for people that
want to buy a home. Look, our economy is so
(03:46):
strong now, we're blowing through everything.
Speaker 4 (03:48):
We're setting records, you know that. You see that, and
whether it's the Philippines or anyone else, we're setting records
at levels that nobody's ever seen before. But you know what,
people aren't able to buy a house because this guy
is a numb skull. He keeps the rich too high
and probably doing it for political races.
Speaker 2 (04:08):
Interesting though, it sounds like he's going to let Jay
Powell run out the clock. And it follows the comments
we heard from the Treasury Secretary earlier kind of tamping
down this idea that Jay Powell should resign.
Speaker 6 (04:18):
Right, the question seems to be here in Washington is
are they trying to build up the momentum to fire
j Powell or to force perhaps a resignation. And you're
exactly right. You did say that he's going to let
him perhaps run out the term, alluding to May of
twenty twenty six, when Jay Powell would be up as
FED chair. But he also touched on the recent renovations
of the Federal Reserve, saying that he wants this to
(04:40):
be looked into. We had Bill Poulty on the program
last week. You said he's confident that there's going to
be a congressional investigation into this. We had Lisa McClain
yesterday telling you me on Balance of Power that she
doesn't want to get ahead of anything, but she didn't
rule it out to that lawmakers would ultimately look into
what has been cost overruns at the Federal Reserve. Though
the Fed, of course says that everything is an order.
(05:01):
They've only been truthful in their testimony about these renovations.
But it is interesting because they seem to be walking
the line here at the administration. You have Scott Bessen,
of course, as you alluded to, saying that at the moment,
he doesn't see there is a need for power to
be gone, though he would like to see these lower
interest rates. But they're starting to talk about this idea
(05:21):
of mission creep, and that really seems to be where
the administration is focusing their rhetoric at the moment.
Speaker 2 (05:27):
Interesting, Tyler, just quickly before you leave us, we're going
to have AI on the menu for tomorrow. This is
the big plan that we've been waiting for, the blueprint,
if you will, from the administration that has little to
do with restrictions and a lot to do with energy.
Speaker 6 (05:41):
What are we going to learn right exactly? And this
is something that we've been expecting from the administration. I
was at the AI Innovation Summit last week in Pittsburgh
where President Trump really tried to tout that the US
is trying to keep this edge when it comes to China.
Now we are expecting him to announce perhaps these policy
guidelines around artificial intelligence that would really have to do
with easing regulation but also expanding the energy resources. And
(06:03):
that was a big theme that we heard last week
as we had the CEOs from Exxon and Chevron sort
of descend on this policy summit to make the case
that there does need to be more energy production in
the United States. I can tell you from the experts
that I have spoken to, including the US Energy Secretary,
that they're really going to need a holistic approach because
there is just so much demand. And that does open
(06:24):
up the door for other sources of energy, whether that
be alternative energies or nuclear for example. That's one that
we keep hearing about when it comes to productions.
Speaker 2 (06:32):
A lot of that's following your conversation last week with
the CEO at Corewave. It makes you realize how many
of these deals are emerging. Tyler, thank you so much.
Reporting for Bloomberg at the White House. Tyler Kendall with
us in person today in Washington, DC. This is the
story that we wanted to get to with and new
Burger because it's going to be something that we talk
about a lot tomorrow. It's actually getting a lot of
talk today. Sam Altman open Ai is in town speaking
(06:55):
at a Federal Reserve event. In fact, you can see
that live on Bloomberg TV and on YouTube. In the
process of speaking right now about what could be and
I think we can all agree the most important technological
trend before US and Newburger was tasked with gauging the
risks and potential benefits of artificial intelligence when she worked
(07:15):
in the Biden administration as the Deputy National Security Advisor
for Cyber and Emerging Technology and is now pain Distinguished
Lecturer at Stanford University and with US Live on Bloomberg
TV and Radio and Newburger welcome back. You've heard the
way this is being framed. I know we'll get the
official document tomorrow, but the idea of not bringing guardrails,
(07:36):
adding guardrails to AI, but tearing them off seems to
be the approach the White House has taken, going so
far reportedly to actually penalize states when it comes to
funding if they add their own restrictions.
Speaker 5 (07:49):
Is this the direction we should be taking or one
that scares.
Speaker 2 (07:52):
You, frankly about the future of artificial intelligence?
Speaker 8 (07:56):
Thanks Joe, it's good to be here with you. The
discussion has always been about respond innovation, and I think
what we'll expect tomorrow is some efforts to reduce regulation.
Largely is noted around electricity accelerating permitting since the United
States does need a great deal more of new plants
in order to power large models that are core to
(08:16):
artificial intelligence, as well as efforts to accelerate private sector
innovation and potentially use tools like government financing tools to
help the US compete with China in deploying AI, particularly
in developing countries.
Speaker 2 (08:31):
Well, it doesn't sound like you're worried at all, then
is this the approach we need to hasten America's place
in this development because AI is either going to go,
they say, to America or China. And there's been a
very careful approach, certainly was in the prior administration for
fear of the impact that AI could have on competing technologies,
(08:51):
on the job market, on the overall economy.
Speaker 8 (08:55):
So my own view is that the risk and the
opportunity in AI is actually in deployment, where we take
the power of large language models and apply them in manufacturing,
in robotics, in education. That brings a great deal of opportunity.
Accelerating innovation to also bring some level of risk, for example,
in cyber the opportunity to use models to find vulnerabilities,
(09:17):
either to exploit them or on the positive side, to
find them in order to fix them. So I think
the key will be as the Trump administration takes steps
to promote innovation, that we also ensure that the organizations
that are deploying AI are thinking carefully about what are
the related risks, whether that's to actual operations, whether that's
(09:38):
to decisions that are given to AI models, and ensure
that they understand how models are used, they're explainable, they
keep humans in the loop on key decisions, and they're
really continuously reassessing the risks of those deployments. But there's
a lot of promise in AI, and I think it's
exciting to see these steps that will do things like
enable the United States to compete in building power plans
(10:01):
and accelerating permitting or potentially helping companies around the world
with government financing to ensure that as deployments of AI
happen in countries around the world, it's happening on US
artificial and telerodence rails, using our models and our infrastructure
to promote this next stage of innovation.
Speaker 2 (10:19):
Well, you sound a lot like Jensen Wong and a
little bit like the White House in this case, and
the idea to promote open source. This is what we're
going to hear tomorrow. And open weight AI development and
quote export American AI technologies through full stack deployment packages
almost like what you just said, What are the national
(10:40):
security implications of this? Knowing that the White House just
recently loosened export controls on in Nvidia's Age twenty and
a different chip competing chip from AMD in China, if
we're talking about full stack deployment packages around the world,
what does that mean for countries like China.
Speaker 8 (10:58):
The national security risks really are that AI powers military
and intelligence applications, and in the competition between the US
and China on the global stage, we want to ensure
that US technologies are not being used by China to
promote its intelligence and military advancements. And that's the key
that was the thinking behind export controls, to ensure that
(11:20):
the highest end chips that are produced by the United
States are not made available to China. And that is
the core concern that we have in the area of
national security. There are secondary concerns in the area of
how does AI models in the hands not only of China,
but of adversaries around the world. Transnational terrorist criminals accelerate
(11:40):
cyber attacks, potentially accelerate advancements in bioweapons. Those are a
broader set of concerns, and that's why it's so important
that the companies generating AI models ensure that there are controls.
And that's the reason why government is maintaining a careful
eye on advancements and models, on the controls that are models,
and also considering how we would defend against potential advancements
(12:03):
in those areas.
Speaker 2 (12:05):
Do you trust this administration to guide the way on
this technology? A day after President Trump posted an AI
video of Barack Obama being arrested in the Oval Office.
Speaker 8 (12:17):
There are many parties that have a key role in
ensuring that AI is used responsibly. The government has that
role governments around the world most importantly, and not most important,
I would say very importantly private sector that is generating
these models or deploying these models their partners and assessing
them carefully, and in ensuring guardrails are built in as
(12:38):
models are used. When we come to US leadership and chips,
that's clearly a national security goal for the United States,
but I would note that chips is one part of
global leadership. It's also who's using our models, because values
are baked into models, and we want to ensure that
those American values are built in as countries around the world,
as companies around the world begin deploying AI.
Speaker 2 (13:01):
As we spend time with and Newberger, I have to
bring up what's going on at Microsoft, and this is
something the company is actively now naming two groups supported
by the Chinese government it is accusing of hacking its technology,
state sponsored hackers using flaws and its SharePoint document management software,
and a hacking campaign that has gone on for some
(13:22):
time now. And I wonder your thoughts on this blog
post that not only identifies China, but the specific groups within.
Speaker 8 (13:31):
This is a deeply, deeply concerning vulnerability in hack. SharePoint
is a widely used application. I'll note there's two versions,
one enterprises manage themselves, one managed by Microsoft, and the
cloud is vulnerability only applies to those managed by companies themselves.
But because SharePoint is so widely used, we can expect
(13:51):
likely a fair number of victims and the vulnerability is
a major one. So attackers cannot only steal data, they're
stealing keys. They steal keys. Think about physical keys in
our own homes. That means they can get back in
unless keys are changed, and they can maintain access unless
organizations do a fair amount of work to not only patch,
(14:12):
but to ensure new keys are being used. So a
very concerning hack at this moment in time, and a
very concerning vulnerability as well.
Speaker 9 (14:20):
Well.
Speaker 2 (14:20):
You wonder what the government role here should be, and
by that I mean our government. In a statement that
Chinese embassy said, China firmly opposes all forms of cyber
attacks quote. At the same time, we also firmly oppose
smearing others without solid evidence unquote. Will remind everyone that
the budget put forth by the Trump administration in fact,
(14:43):
would cut almost five hundred million dollars nearly thirty percent
of positions at the cybersecurity and an infrastructure security agency.
Is this an administration that's equipped to deal with China.
Speaker 5 (14:54):
In this way?
Speaker 8 (14:56):
No, exactly as you said, Joe, there's a role for
government and its it's very concerning to seek cuts in
the government's cybersecurity mission because this is a time when
our infrastructure, our power, our pipelines, are water, all run
on digital infrastructure, and in many cases that digital infrastructure
is not secure enough to deal with threats by countries
(15:17):
and criminals. But as a partner to government, there's also
a role for the private sector, and I think there's
real questions to be asked about how Microsoft is using
AI to find and fix vulnerabilities in its products. You know,
you may have seen just recently Google announced Big Sleep,
a partnership between their cybersecurity and their AI arm within
Google that found and fixed a very significant exploit. And
(15:41):
I think we should really be expecting tech companies to
start using AI not only to generate more secure software,
but to look back at their enterprise of products find
and fix those vulnerabilities, because our digital infrastructure needs to
be a lot more secure than it is for the
reasons you just noted countries like China and criminals as well.
Speaker 5 (16:01):
That's a pretty compelling use case.
Speaker 10 (16:02):
Ann.
Speaker 2 (16:02):
I'm really glad you could join us today and Newburger Payne,
Distinguished Lecturer, Stanford University, former Biden Administration cyber is great
to hear your insights today. We should note that Microsoft
shares are a bit lower today, but still trading just
below their all.
Speaker 5 (16:15):
Time high above five hundred dollars. This is Bloomberg.
Speaker 1 (16:20):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern 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 (16:39):
What is there to talk about President Trump? In the
West Wing today with the President of the Philippines, we
are standing by for news if we get it on
trade with a thret and twenty percent tariff against the Philippines.
They are talking about that now on Capitol Hill. It's
a whole different ballgame. And by the way, we brought
you a news conference a bit earlier with President Trump
in the Oval, he was asked about Jeffrey Epstein. He
(17:01):
talked about a lot of different things, from j Powell
to Barack Obama, who he claims was a trader for
the Russia hoax, in his words, trying to change the
topic here on the daily question about Jeffrey Epstein. I
don't come here to talk about the Epstein files every day,
but it's been impossible to hide from it. Case in point,
what's happening in the House of Representatives. All work has
(17:24):
basically stopped on legislation.
Speaker 5 (17:26):
This week.
Speaker 2 (17:27):
There were going to be some votes on immigration and
environmental related bills. They are not going to happen. After
Democrats tried to force a vote on the release of
the Epstein files and the Rules Committee last night, the
whole thing broke down. We're in a world now where
we could see lawmakers going home as early as tomorrow
in the House following what took place in Rules. But
(17:48):
let's be honest, long before we started talking Jeffrey Epstein,
in the last couple of days here in Washington, d C.
The last couple of weeks, there was a crisis of
trust on Capitol Hill following what Republicans put together in
the President's Big Beautiful Bill, then a recisions package that
clawed back congressionally approved funding, something that we talked about
(18:11):
with Congresswoman Becka Balen, the Democrat from Vermont, joined us
on the late edition of Balance of Power last evening.
When we talk about the idea of a potential government
shut down, remember what the congresswoman said, Let's listen.
Speaker 11 (18:27):
Why should we negotiate in good faith? Why should we
come together and do that hard work of coming to
an agreement if in the end the agreement will not
be honored. And that's what I've seen for my entire
term in Congress. Now this is my third year in Congress.
Every single time we have an agreement, a top line agreement,
(18:47):
it is only as good as you know the words
on the paper, because they do not honor it. So
of course we have to look at playing hardball, because
they break the rules and then they expect us as
Democrats to continue to lay by those rules.
Speaker 2 (19:02):
Of course we have to look at playing hardball, she said,
I had just asked the congresswoman if she was prepared
to vote to shut down the government when the funding
deadline hits on September thirtieth. Let's assemble there our panel
for their take on this. Bloomberg Politics contributors Jeanie Schanzano
and Rick Davis are with US Genius, Senior Democracy Fellow
with the Center for the Study of the Presidency in Congress.
(19:24):
Rick our Republican strategist and partner at Stone Court Capital. Jeanie,
is she channeling you when you listen to congress Woman
balance in that case? And will Democrats vote to shut
down the government?
Speaker 12 (19:36):
We are hearing, and by the way, it was a
great conversation with her and you head back to back
representatives last night, so we heard both sides, which was
so wonderful, and I think she is what we are
hearing from Democrats. More broadly, we heard the same thing
from Brendan Boyle, the top Democrat on the Budget Committee,
who said, how can we be expected to go, oh
(20:00):
when we negotiate and then two weeks later they claw
back the funding. And I think that is a story
everybody can understand. If Republicans don't want to work in
a bipartisan fashion, and we heard from Russ's vote they
do not, then they will have to pass the budget
as best they can by themselves. And that's something I
(20:21):
think we're going to hear from a unified Democratic caucus
as we go forward, unless, of course, Republicans decide to
deal fairly with their counterparts.
Speaker 5 (20:31):
Well, it does feel like things are frozen at the
moment here.
Speaker 6 (20:33):
Rick.
Speaker 2 (20:34):
I don't know your thoughts on what took place in
the House of Representatives last evening. We've talked about the
recisions package before, but this feels like we're in a more,
if even possible, a more dysfunctional place than we were before.
If Democrats continue to threaten a vote on Jeffrey Epstein files,
can they get anything done?
Speaker 10 (20:53):
Yeah?
Speaker 5 (20:53):
Look, they're going to be gone.
Speaker 3 (20:55):
Nothing's going to happen in the House of Representatives for
the balance of the summer, and that's probably a good thing.
We need a reset to the politics that exists on
Capitol Hill today. You know, right now the future is
pretty glooming. As you've pointed out, Why should Democrats cooperate
with Republicans when reposed, they are only going to break
their commitments and come back after the funds that they
(21:16):
both jointly Byparson Way agreed to pass. It is amazing
that the Recisions Package nine billion dollars has created this
biggest stink. When Congress just passed four trillion dollars a
debt as a part of the reconciliation bill, that should
be what people are fuming about, not nine billion dollar
recision package. And I think Democrats would be on much
(21:38):
better ground to say that we have just run up
a deficit the likes of which no other president has
ever done. I mean, I just I guess I missed
the point that the Recision package of nine billion dollars,
which is a rounding error on that deficit, is somehow
going to make a big difference politically to the Democrats.
But so be it. I don't give advice to Democrats
(21:59):
and they're on their but it does look pretty gloomy
when it comes to whether or not there can be
a bipartisan budget that gets approved by the end of September.
Speaker 2 (22:09):
So it sounds like we're cruising for a shutdown. It's
not even August yet. It's about the principle here, right, Genie.
It could be one dollar, the fact that it was
approved signing to law. This is why Democrats are angry.
Speaker 5 (22:18):
Am I wrong?
Speaker 9 (22:20):
Well?
Speaker 12 (22:20):
Absolutely? I mean, anybody who has negotiated anything knows that
what is the point if the other side is going
to negotiate and then a couple hours later pull back
on what you've agreed to fairly and I would just
say that we are going to hear an awful lot,
by the way, about the debt and deficit from the Democrats.
There was a really important op ed in The Times
(22:42):
by James Carvill and he is speaking for many Democrats
when he says the twenty twenty sixth election should be
run on one thing, and that is repeal the Big
Beautiful Bill, or what they describe as the Big Ugly Bill.
And one of the main reasons is Medicare Medicare. One
reason is the food snap and other pullbacks on that,
(23:05):
but a big reason is the debt and deficit. And
so I think Democrats are going to do both. They
are going to continue to ask to be treated fairly
and provide partisan negotiations with Republicans, and they are going
to push for a repeal for this bill because the
bill is regressive and it hits the working and the
(23:25):
lower class harder in the interest of tax breaks for
the wealthy.
Speaker 2 (23:31):
Rick Davis, where's this Epstein going in the House of Representatives?
Because it appears the House Oversight Committee is going to
get involved here, and this is an interesting headline today.
Tim Burchett, who's joined us on the program before, is
responsible for this. The Oversight Committee will subpoena imprisoned Epstein
associate Glaine Maxwell to testify before Congress. Burchett says he
(23:55):
did not consult President Trump beforehand. He's got the support
of the committee chair James Comer, who also says he
did not compare notes or speak with Trump or the
Speaker of the House about this. This story's not going
away anytime soon. What would testimony like this bring to
this whole scan well, I.
Speaker 3 (24:15):
Mean you really have to wonder. I mean, why in
the world would the Attorney General say that all, you know,
efforts have been made to discover the truth about Jeffrey
Epstein's but Jelaane Maxwell wasn't ever talked to. I mean, really,
she's sitting just a few miles away from you.
Speaker 6 (24:35):
Now.
Speaker 3 (24:36):
Evidently, according to the reporting I've seen, even the Attorney
General wants to have a little tat to.
Speaker 5 (24:40):
Day with Maxwell.
Speaker 3 (24:42):
So my guess is we may be right into this
after Labor Day where the theatrics of the House of Representatives,
you know, thank goodness, they're there for entertainment value alone,
you know, are going to plunge deeply into this issue
of Jeffrey Epps and just keep it alive a little
bit longer. But there are a lot of Republicans scritching
(25:04):
a head wondering, you know, is that every man for
himself today? What's the Attorney General going to do? Cut
a deal with Maxwell not to testify to the House.
I mean, this is going to be an interesting August.
Speaker 2 (25:15):
Well you got that right, boy, Just when you thought
the dog days of summer were arriving, we just got
to read out guys on the President's meeting with President
Marcos of the Philippines, President Trump writing, it was a
beautiful visit. We concluded our trade deal. Concluded our trade deal,
whereby the Philippines, he writes, is going open market with
the United States and zero tariffs. The Philippines will pay
(25:39):
a nineteen percent tariff. In addition, we will work together militarily.
Remembering that the President had threatened a twenty percent tariff
in the trade letter that went out, So, Jeanie, President
Marcos just saved himself one percent. We call this a
trade deal.
Speaker 12 (25:57):
I don't know if that's what he came for. It
seems to be that's what he's leaving with. It will
be really curious, and I have not seen this readout.
It will be really curious to see what the President
Marco's side has to say about this. But my gosh,
you go in with twenty and come out with nineteen.
I think the President has won this round. But unfortunately,
(26:19):
it is the American public that will pay that nineteen percent,
not the Philippines. And that's something that needs to be
underscored repeatedly. This is a tax on the American consumer
should they buy anything from the Philippines.
Speaker 5 (26:35):
The Philippines will pay a nineteen percent.
Speaker 2 (26:37):
Here if he writes the United States zero, maybe Rick,
you're more concerned with the next line here, we will
work together militarily. How important is that when it comes
to China?
Speaker 5 (26:49):
You know, look, I think it's critical.
Speaker 3 (26:52):
Philippines has always been a strategic partner of ours for
many years. We've had ups and downs with the island
we got kicked out of and Clark Basse in the
early eighties, and we've now been able to resurrect that
military relationship. But you know, look, I mean, you do wonder.
You know, the Philippines are in the position to give
(27:13):
blood and treasure to our effort to contain China aggression
in the South China Sea. They've been harassed and shot
at by the Chinese, and yet we're going to slap
them with a nineteen percent tariff. I really wonder what
the symmetry of all this policy is, because sometimes it
doesn't make any sense.
Speaker 2 (27:33):
Rick Davis and Jeanie Schanzeno with breaking news in the
Clutch here from the White House following the President's meeting
with the Philippine President. Many thanks to both of you,
of course, Bloomberg Politics contributors Rick Davis and Jeanie Schanzeno.
We're going to have more on this, the emerging details
on this deal here in a conversation ahead with Doug Reticker,
who's going to join us in studio just a couple
of moments from now. We'll also check the markets with
(27:55):
Charlie Pellett to see if there's a Wall Street reaction here.
There hasn't been too much Wall Street concern over the
matter of tariffs now for weeks as we head for
an August first deadline on reciprocal tariffs. Right now, the
Dow's ahead by one hundred and thirty eight s and
P five hundred is up five and ASDAK remains lower,
it's not about sixty five points right now, much more
ahead here on Balance of Power only on Bloomberg.
Speaker 1 (28:21):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on Apple,
Cockley and Android Auto with the Bloomberg Business App. Listen
on demand wherever you get your podcasts, or watch us
live on YouTube.
Speaker 2 (28:37):
You wouldn't think there was a trade deadline a week
and a half away, remembering of course, how the markets
behaved following President Trump's Liberation Day. But we do have
news on the trade front. President Trump meeting today with
the President of the Philippines, President Marcos, was in the
Oval Office.
Speaker 5 (28:53):
There was a half.
Speaker 2 (28:54):
Hour back and forth with the White House Press Corps
and when they went back behind closed doors, if they
did strike a trade deal, according to President Trump, who
says the Philippines will go open market with the United
States and zero tariffs, I'm reading his language here. Quote
the Philippines will pay a nineteen percent tariff, the United
(29:18):
States will pay zero, he says. In addition, we will
work together militarily. It was a great honor to be
with the President. This was a pretty short meeting. They
spoke with reporters for about a half hour, met for
roughly an hour, and the President just posted this a
short time ago. We're joined in studio now by Doug
Reticker ahead of this August first deadline. It's a conversation
(29:39):
that we've been looking forward to. Founder managing partner International
Capital Strategies, a former member of the executive board on
the International Monetary Fund. Doug, it's great to see you.
Welcome back to Bloomberg TV. And radio, So I guess
we'll call this a deal. We don't have much more
than what we're seeing in this brief post from the
president here. There have been a number of framework agreements,
which might be the way that you describe this, But
(30:01):
with all the noise in Washington today, this is the
closest thing we have to a bit of news. This
is a market that has been very forgiving to this president.
Do you expect further deals to emerge?
Speaker 9 (30:12):
First of all, we have to put deals in quotes, okay,
because as you said, a deal is a framework, and
a framework is still an undefined set of agreements that
is not entirely even the UK deal is not entirely
bedded down. So let's be careful how we expect to
see things until they're in writing. Until you have a
tariff schedule that is sent to a customs officer who
(30:34):
reads across and says, this product gets this tariff, we
actually don't know what's in these things. Do I expect
more deals deals in that amorphous sense? Maybe kind of
sort of yes, But I'm very worried that the markets
broadly have just become overly complacent, overly sanguine, either because
they don't really fully appreciate the impact that is forthcoming,
(30:57):
or because they go back to the taco trade. Yeah think, Well,
Trump's going to back down in a matter of days anyway. Therefore,
let's just go on our August break. I'm just not
sure that's going to be a great strategy, at least
in the short run.
Speaker 2 (31:10):
That's a pretty risky proposition if it's one or the other. Here,
we've got markets that are knocking on all time highs
on a daily basis. Here you seem to suggest we
could be in for a reckoning.
Speaker 9 (31:19):
Well, I think the economy. I mean, I'm not going
to say the economy is not strong. The economy is
doing fine. However, that's in part because of these artificial
postponements of the impacts of tariffs that have basically made
sure that the impacts of those tariffs are not being felt.
If everybody assumes that you're going to kick the can
down the road on tariffs forever, then fine, then the
(31:42):
floodgates of growth and modest impacts are for as far
as the eye can see. But I'm a little more
skeptical that this is all sustainable when you've got big,
big countries Japan, the EU that are Canada and Mexico,
where these are the US's largest trading partners, and it
is not clear there's going to be a deal, and
(32:03):
if there is a deal, that that deal is sustainable. Yes,
So I'm very anxious that people haven't fully digested what
could could be coming.
Speaker 2 (32:11):
Well, it's coming out in the wash here a little
bit in earnings reporting seasons. Some of these conference calls
this week, DOUG have been really interesting. Lockheed Martin today
pointing to the cost of steel when it comes to
making missiles. General Motors similar situation. In fact, we heard
from Paul Jacobson earlier today's the CFO at General Motors
about the supply chain pinch that this has been creating.
(32:34):
This is from earlier today on Bloomberg TV and Radio.
Speaker 5 (32:36):
Let's listen.
Speaker 10 (32:37):
Since COVID, we've been looking at creating more resiliency in
the supply chain and we've onshoored a lot of things.
As we mentioned in our last call, only about three
percent of our direct purchases come from China through the
supply chain, so that's helped us a little bit in
terms of being proactive on that. Obviously, we'll do some
resetting in partnership with our supply chain partner. But you know,
(33:01):
it really starts with our manufacturing.
Speaker 5 (33:02):
Footprint resetting in partnership with our supply chain partners.
Speaker 2 (33:08):
That's real. That's different than waving tariff letters around here.
When you hear a company like General Motors talking like that,
what does that tell you about the evolution or economy
could be about to go through?
Speaker 9 (33:19):
Well, it says take notice and pay attention. And while
the auto sector is particularly exposed, they're getting it on
autos themselves, on auto parts, on steel, on aluminum. The
auto guys are really in the crosshres. But I think
we can I'm not saying it's a canary in the
coal mine, but certainly we should be taking it very
seriously that. As I said earlier, the impact of these
(33:41):
tariffs across supply chains, across economies, across trading patterns is
just not being fully appreciated, in part because companies have
gone to great extremes to try and mask it, tamp
it down not only under political pressure, but under the
risk slash opportunity that these towers will be reversed by
the Supreme Court ultimately, if not the interim courts along
(34:03):
the way, So they're saying, well, let's try and keep
things as stable as we can until we're forced, but
there will be a point at which they might be forced.
Speaker 5 (34:12):
Huh.
Speaker 2 (34:12):
Well, and that's pretty interesting here when you consider the
possibilities that what you just described has given the administration
cover to say tariffs are not inflationary.
Speaker 5 (34:23):
Look at the data.
Speaker 2 (34:24):
You guys have been talking about it for months and
we don't see it yet, but we of course know
that it's been spread around, it has been shared by
companies and in some cases has yet to hit the
hard data.
Speaker 5 (34:35):
When do you see that happening. Well, there have been
some cracks.
Speaker 9 (34:39):
Already, a lot of companies front loaded, and we don't
know exactly when that's going to run out, but it's
inevitable that it's going to run out, So I can't
say what the date certain will be where actually you
start to see a spike in inflation because these new
orders have to replace the stockpiles that are being drawn down.
But I do want to go back to one point,
(35:00):
which is the snatching defeat from the jaws of victory,
which is I think President Trump did a spectacular job
in basically getting everyone to accept the baseline ten percent tariff,
which six months ago we all said nobody's going to
accept the baseline ten percent tariff. Suddenly, whether it was
the EU or others, said we will accept the ten
(35:22):
percent tariff. And if you just look at it from
a budget deficit reduction standpoint, that's two hundred and eighty
three hundred billion dollars of additional revenue. There's a lot
of upside to Trump's own agenda. What did he do?
He extrapolated a linear If nothing bad is happening at ten,
then nothing bad will happen at twenty. And so now
(35:42):
he's just overplaying his hands. Whether it's the EU or others,
they're all saying, you know, we swallowed hard. We were
willing to accept something we didn't want to accept. Now
you're at risk of overplaying your hand. That's what worries me,
because then you've got the risk of no deal or
teriffs that are so inflationary and disruptive that it does
(36:03):
have a serious impact on the economy.
Speaker 2 (36:05):
I want to ask you about Jay Powell while you're
still with us, because if the market's whistling passed the
graveyard on tariffs, you could argue the same when it
comes to Powell. Then again, we heard from the President
earlier today and it doesn't sound like he has any
intention of firing him or even forcing him to step down.
He says, we'll give it the next eight months. It's
not that long anyway.
Speaker 9 (36:22):
Is this even a story, Well, it's a story because
the markets focus on Yeah. But I don't think the
markets are wrong to somewhat take the president's words today
at least that he's not planning to fire Chair Powell
before the end of his term. I think taking that
at face value is probably a good bet. I think
that obviously Trump is trying to jawbone Chair Powell and
(36:43):
the FMC into bending to his wishes. I don't think
that they are susceptible to that. But I think the markets,
while they clearly get excited whenever there's a talk about
changing the FED chair for good reason, I think they're
probably correct in tamping down the expectations that Trump is
going to pull the trigger. I'd throw in one political observation,
which is, if something else happens, something unrelated to the FED,
(37:08):
and President Trump needs to change the narrative, he is
prone to doing something which will absorb all of our
eyes on new headlines, and one of those possibilities could
be the so called wag the dollar scenario, which is
you threaten, if not pull the trigger on firing chair
powel in order to distract attention from something else that
(37:30):
you really want people not to focus on.
Speaker 5 (37:32):
Not that there's anything like that around here. I've been
looking forward to seeing it.
Speaker 2 (37:36):
I appreciate your coming in Doug Redicker International Capital Strategies
with us live in Washington here on Bloomberg TV and radio.
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 noontime Eastern
(37:58):
at Bloomberg dot com
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Auto with the Bloomberg Business App. Listen on demand wherever
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Speaker 2 (00:25):
The President today with trade on the agenda, sitting down
with the President of the Philippines, Ferdinand Marcos Junior inside
the White House right now, knowing of course that Donald
Trump has threatened a twenty percent tariff against our ally
in the South Pacific. The President speaking a short time
ago with reporters alongside President Marcos in the Oval Office.
Speaker 3 (00:45):
Listen, well, it's tough.
Speaker 4 (00:46):
He's a very tough togretiated so far, we're not there
because he's he's negotiating too tough. In fact, I used
to like him better than I do now he's too tough.
But we'll probably agree to something. But he is a
strong he loves your country.
Speaker 2 (01:03):
We'll see if a trade deal emerges. Here there meeting
right now, in fact, over lunch following the bilateral meeting,
in the presence of the White House Press Corps, Bloomberg's
Tyler Kendall is with me right now in Washington, having
watched what turned out to be Tyler a roughly half
hour news conference of briefing, if you will, a bit
of a weave with President Trump here through a series
of issues from trade.
Speaker 5 (01:24):
We didn't spend too.
Speaker 2 (01:25):
Much time on that to j Powell, to in fact,
the Russia investigation dating back to the twenty sixteen election.
Speaker 5 (01:31):
The real news today though, has to do with tariffs.
What could come of this right exactly, Joe.
Speaker 6 (01:36):
I mean, we have to put into context here that
we did see the Philippines receive one of those long
awaited trade letters and they actually saw their tear freight
go up. You said it there. They're facing a twenty
percent levee on so called Liberation Day, they were facing
a seventeen percent levey, so it didn't appear that negotiations
were really going in their favor. And of course this
(01:57):
is actually one of the first visits, the first visit
of ahead of state from the Association of Southeast Asian
Nations OSSION, and that's important because these were really countries
that were prioritized in these trade talks, but that we
really haven't seen much movement when it comes to any
sort of framework deal being announced. Now, the Philippines does
run about a five billion dollar trade surplus.
Speaker 4 (02:19):
With the US.
Speaker 6 (02:20):
The US is on the deficit end, So this is
something that the administration is definitely looking to try to
advance and move forward. But why these nations were really
prioritized has to do with China, which of course also
came in to the conversation. Today. We heard President Trump
saying that perhaps he will visit China in the not
so distant future, and he also confirmed that they have
started to see or rather he suggested that those export
(02:44):
licenses related to rare earth minerals and magnets have started
to speed up. And we know that that's something that
we watch really closely because that's really been at the
crux of the negotiations with Beijing.
Speaker 2 (02:55):
Interesting language, very trumpy, and we're going to have a
very good relationship. You said the country the friend of
the Philippines was maybe tilting towards China. He said, we
are untilting it. And you wonder what kind of details
we might get following this meeting today. But he talked
about a lot more than trade. He got into the
matter involving Jay Powell, and I should be clear he
(03:15):
was asked about this by a reporter. This was the
first thing that came up when this went to Q
and A following their opening remarks. Having heard the President
of course threatened to fire Jay Powell, listened to what
he said today.
Speaker 7 (03:26):
I think he's done a bad job. But he's going
to be out pretty soon anyway, and eight months he'll
be out. But I call him too late. He's too
late all the time. He should have loaded interest rates
many times. Europe loaded their rate ten times, we load
ours none, and it's causing a problem for people that
want to buy a home. Look, our economy is so
(03:46):
strong now, we're blowing through everything.
Speaker 4 (03:48):
We're setting records, you know that. You see that, and
whether it's the Philippines or anyone else, we're setting records
at levels that nobody's ever seen before. But you know what,
people aren't able to buy a house because this guy
is a numb skull. He keeps the rich too high
and probably doing it for political races.
Speaker 2 (04:08):
Interesting though, it sounds like he's going to let Jay
Powell run out the clock. And it follows the comments
we heard from the Treasury Secretary earlier kind of tamping
down this idea that Jay Powell should resign.
Speaker 6 (04:18):
Right, the question seems to be here in Washington is
are they trying to build up the momentum to fire
j Powell or to force perhaps a resignation. And you're
exactly right. You did say that he's going to let
him perhaps run out the term, alluding to May of
twenty twenty six, when Jay Powell would be up as
FED chair. But he also touched on the recent renovations
of the Federal Reserve, saying that he wants this to
(04:40):
be looked into. We had Bill Poulty on the program
last week. You said he's confident that there's going to
be a congressional investigation into this. We had Lisa McClain
yesterday telling you me on Balance of Power that she
doesn't want to get ahead of anything, but she didn't
rule it out to that lawmakers would ultimately look into
what has been cost overruns at the Federal Reserve. Though
the Fed, of course says that everything is an order.
(05:01):
They've only been truthful in their testimony about these renovations.
But it is interesting because they seem to be walking
the line here at the administration. You have Scott Bessen,
of course, as you alluded to, saying that at the moment,
he doesn't see there is a need for power to
be gone, though he would like to see these lower
interest rates. But they're starting to talk about this idea
(05:21):
of mission creep, and that really seems to be where
the administration is focusing their rhetoric at the moment.
Speaker 2 (05:27):
Interesting, Tyler, just quickly before you leave us, we're going
to have AI on the menu for tomorrow. This is
the big plan that we've been waiting for, the blueprint,
if you will, from the administration that has little to
do with restrictions and a lot to do with energy.
Speaker 6 (05:41):
What are we going to learn right exactly? And this
is something that we've been expecting from the administration. I
was at the AI Innovation Summit last week in Pittsburgh
where President Trump really tried to tout that the US
is trying to keep this edge when it comes to China.
Now we are expecting him to announce perhaps these policy
guidelines around artificial intelligence that would really have to do
with easing regulation but also expanding the energy resources. And
(06:03):
that was a big theme that we heard last week
as we had the CEOs from Exxon and Chevron sort
of descend on this policy summit to make the case
that there does need to be more energy production in
the United States. I can tell you from the experts
that I have spoken to, including the US Energy Secretary,
that they're really going to need a holistic approach because
there is just so much demand. And that does open
(06:24):
up the door for other sources of energy, whether that
be alternative energies or nuclear for example. That's one that
we keep hearing about when it comes to productions.
Speaker 2 (06:32):
A lot of that's following your conversation last week with
the CEO at Corewave. It makes you realize how many
of these deals are emerging. Tyler, thank you so much.
Reporting for Bloomberg at the White House. Tyler Kendall with
us in person today in Washington, DC. This is the
story that we wanted to get to with and new
Burger because it's going to be something that we talk
about a lot tomorrow. It's actually getting a lot of
talk today. Sam Altman open Ai is in town speaking
(06:55):
at a Federal Reserve event. In fact, you can see
that live on Bloomberg TV and on YouTube. In the
process of speaking right now about what could be and
I think we can all agree the most important technological
trend before US and Newburger was tasked with gauging the
risks and potential benefits of artificial intelligence when she worked
(07:15):
in the Biden administration as the Deputy National Security Advisor
for Cyber and Emerging Technology and is now pain Distinguished
Lecturer at Stanford University and with US Live on Bloomberg
TV and Radio and Newburger welcome back. You've heard the
way this is being framed. I know we'll get the
official document tomorrow, but the idea of not bringing guardrails,
(07:36):
adding guardrails to AI, but tearing them off seems to
be the approach the White House has taken, going so
far reportedly to actually penalize states when it comes to
funding if they add their own restrictions.
Speaker 5 (07:49):
Is this the direction we should be taking or one
that scares.
Speaker 2 (07:52):
You, frankly about the future of artificial intelligence?
Speaker 8 (07:56):
Thanks Joe, it's good to be here with you. The
discussion has always been about respond innovation, and I think
what we'll expect tomorrow is some efforts to reduce regulation.
Largely is noted around electricity accelerating permitting since the United
States does need a great deal more of new plants
in order to power large models that are core to
(08:16):
artificial intelligence, as well as efforts to accelerate private sector
innovation and potentially use tools like government financing tools to
help the US compete with China in deploying AI, particularly
in developing countries.
Speaker 2 (08:31):
Well, it doesn't sound like you're worried at all, then
is this the approach we need to hasten America's place
in this development because AI is either going to go,
they say, to America or China. And there's been a
very careful approach, certainly was in the prior administration for
fear of the impact that AI could have on competing technologies,
(08:51):
on the job market, on the overall economy.
Speaker 8 (08:55):
So my own view is that the risk and the
opportunity in AI is actually in deployment, where we take
the power of large language models and apply them in manufacturing,
in robotics, in education. That brings a great deal of opportunity.
Accelerating innovation to also bring some level of risk, for example,
in cyber the opportunity to use models to find vulnerabilities,
(09:17):
either to exploit them or on the positive side, to
find them in order to fix them. So I think
the key will be as the Trump administration takes steps
to promote innovation, that we also ensure that the organizations
that are deploying AI are thinking carefully about what are
the related risks, whether that's to actual operations, whether that's
(09:38):
to decisions that are given to AI models, and ensure
that they understand how models are used, they're explainable, they
keep humans in the loop on key decisions, and they're
really continuously reassessing the risks of those deployments. But there's
a lot of promise in AI, and I think it's
exciting to see these steps that will do things like
enable the United States to compete in building power plans
(10:01):
and accelerating permitting or potentially helping companies around the world
with government financing to ensure that as deployments of AI
happen in countries around the world, it's happening on US
artificial and telerodence rails, using our models and our infrastructure
to promote this next stage of innovation.
Speaker 2 (10:19):
Well, you sound a lot like Jensen Wong and a
little bit like the White House in this case, and
the idea to promote open source. This is what we're
going to hear tomorrow. And open weight AI development and
quote export American AI technologies through full stack deployment packages
almost like what you just said, What are the national
(10:40):
security implications of this? Knowing that the White House just
recently loosened export controls on in Nvidia's Age twenty and
a different chip competing chip from AMD in China, if
we're talking about full stack deployment packages around the world,
what does that mean for countries like China.
Speaker 8 (10:58):
The national security risks really are that AI powers military
and intelligence applications, and in the competition between the US
and China on the global stage, we want to ensure
that US technologies are not being used by China to
promote its intelligence and military advancements. And that's the key
that was the thinking behind export controls, to ensure that
(11:20):
the highest end chips that are produced by the United
States are not made available to China. And that is
the core concern that we have in the area of
national security. There are secondary concerns in the area of
how does AI models in the hands not only of China,
but of adversaries around the world. Transnational terrorist criminals accelerate
(11:40):
cyber attacks, potentially accelerate advancements in bioweapons. Those are a
broader set of concerns, and that's why it's so important
that the companies generating AI models ensure that there are controls.
And that's the reason why government is maintaining a careful
eye on advancements and models, on the controls that are models,
and also considering how we would defend against potential advancements
(12:03):
in those areas.
Speaker 2 (12:05):
Do you trust this administration to guide the way on
this technology? A day after President Trump posted an AI
video of Barack Obama being arrested in the Oval Office.
Speaker 8 (12:17):
There are many parties that have a key role in
ensuring that AI is used responsibly. The government has that
role governments around the world most importantly, and not most important,
I would say very importantly private sector that is generating
these models or deploying these models their partners and assessing
them carefully, and in ensuring guardrails are built in as
(12:38):
models are used. When we come to US leadership and chips,
that's clearly a national security goal for the United States,
but I would note that chips is one part of
global leadership. It's also who's using our models, because values
are baked into models, and we want to ensure that
those American values are built in as countries around the world,
as companies around the world begin deploying AI.
Speaker 2 (13:01):
As we spend time with and Newberger, I have to
bring up what's going on at Microsoft, and this is
something the company is actively now naming two groups supported
by the Chinese government it is accusing of hacking its technology,
state sponsored hackers using flaws and its SharePoint document management software,
and a hacking campaign that has gone on for some
(13:22):
time now. And I wonder your thoughts on this blog
post that not only identifies China, but the specific groups within.
Speaker 8 (13:31):
This is a deeply, deeply concerning vulnerability in hack. SharePoint
is a widely used application. I'll note there's two versions,
one enterprises manage themselves, one managed by Microsoft, and the
cloud is vulnerability only applies to those managed by companies themselves.
But because SharePoint is so widely used, we can expect
(13:51):
likely a fair number of victims and the vulnerability is
a major one. So attackers cannot only steal data, they're
stealing keys. They steal keys. Think about physical keys in
our own homes. That means they can get back in
unless keys are changed, and they can maintain access unless
organizations do a fair amount of work to not only patch,
(14:12):
but to ensure new keys are being used. So a
very concerning hack at this moment in time, and a
very concerning vulnerability as well.
Speaker 9 (14:20):
Well.
Speaker 2 (14:20):
You wonder what the government role here should be, and
by that I mean our government. In a statement that
Chinese embassy said, China firmly opposes all forms of cyber
attacks quote. At the same time, we also firmly oppose
smearing others without solid evidence unquote. Will remind everyone that
the budget put forth by the Trump administration in fact,
(14:43):
would cut almost five hundred million dollars nearly thirty percent
of positions at the cybersecurity and an infrastructure security agency.
Is this an administration that's equipped to deal with China.
Speaker 5 (14:54):
In this way?
Speaker 8 (14:56):
No, exactly as you said, Joe, there's a role for
government and its it's very concerning to seek cuts in
the government's cybersecurity mission because this is a time when
our infrastructure, our power, our pipelines, are water, all run
on digital infrastructure, and in many cases that digital infrastructure
is not secure enough to deal with threats by countries
(15:17):
and criminals. But as a partner to government, there's also
a role for the private sector, and I think there's
real questions to be asked about how Microsoft is using
AI to find and fix vulnerabilities in its products. You know,
you may have seen just recently Google announced Big Sleep,
a partnership between their cybersecurity and their AI arm within
Google that found and fixed a very significant exploit. And
(15:41):
I think we should really be expecting tech companies to
start using AI not only to generate more secure software,
but to look back at their enterprise of products find
and fix those vulnerabilities, because our digital infrastructure needs to
be a lot more secure than it is for the
reasons you just noted countries like China and criminals as well.
Speaker 5 (16:01):
That's a pretty compelling use case.
Speaker 10 (16:02):
Ann.
Speaker 2 (16:02):
I'm really glad you could join us today and Newburger Payne,
Distinguished Lecturer, Stanford University, former Biden Administration cyber is great
to hear your insights today. We should note that Microsoft
shares are a bit lower today, but still trading just
below their all.
Speaker 5 (16:15):
Time high above five hundred dollars. This is Bloomberg.
Speaker 1 (16:20):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern 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 (16:39):
What is there to talk about President Trump? In the
West Wing today with the President of the Philippines, we
are standing by for news if we get it on
trade with a thret and twenty percent tariff against the Philippines.
They are talking about that now on Capitol Hill. It's
a whole different ballgame. And by the way, we brought
you a news conference a bit earlier with President Trump
in the Oval, he was asked about Jeffrey Epstein. He
(17:01):
talked about a lot of different things, from j Powell
to Barack Obama, who he claims was a trader for
the Russia hoax, in his words, trying to change the
topic here on the daily question about Jeffrey Epstein. I
don't come here to talk about the Epstein files every day,
but it's been impossible to hide from it. Case in point,
what's happening in the House of Representatives. All work has
(17:24):
basically stopped on legislation.
Speaker 5 (17:26):
This week.
Speaker 2 (17:27):
There were going to be some votes on immigration and
environmental related bills. They are not going to happen. After
Democrats tried to force a vote on the release of
the Epstein files and the Rules Committee last night, the
whole thing broke down. We're in a world now where
we could see lawmakers going home as early as tomorrow
in the House following what took place in Rules. But
(17:48):
let's be honest, long before we started talking Jeffrey Epstein,
in the last couple of days here in Washington, d C.
The last couple of weeks, there was a crisis of
trust on Capitol Hill following what Republicans put together in
the President's Big Beautiful Bill, then a recisions package that
clawed back congressionally approved funding, something that we talked about
(18:11):
with Congresswoman Becka Balen, the Democrat from Vermont, joined us
on the late edition of Balance of Power last evening.
When we talk about the idea of a potential government
shut down, remember what the congresswoman said, Let's listen.
Speaker 11 (18:27):
Why should we negotiate in good faith? Why should we
come together and do that hard work of coming to
an agreement if in the end the agreement will not
be honored. And that's what I've seen for my entire
term in Congress. Now this is my third year in Congress.
Every single time we have an agreement, a top line agreement,
(18:47):
it is only as good as you know the words
on the paper, because they do not honor it. So
of course we have to look at playing hardball, because
they break the rules and then they expect us as
Democrats to continue to lay by those rules.
Speaker 2 (19:02):
Of course we have to look at playing hardball, she said,
I had just asked the congresswoman if she was prepared
to vote to shut down the government when the funding
deadline hits on September thirtieth. Let's assemble there our panel
for their take on this. Bloomberg Politics contributors Jeanie Schanzano
and Rick Davis are with US Genius, Senior Democracy Fellow
with the Center for the Study of the Presidency in Congress.
(19:24):
Rick our Republican strategist and partner at Stone Court Capital. Jeanie,
is she channeling you when you listen to congress Woman
balance in that case? And will Democrats vote to shut
down the government?
Speaker 12 (19:36):
We are hearing, and by the way, it was a
great conversation with her and you head back to back
representatives last night, so we heard both sides, which was
so wonderful, and I think she is what we are
hearing from Democrats. More broadly, we heard the same thing
from Brendan Boyle, the top Democrat on the Budget Committee,
who said, how can we be expected to go, oh
(20:00):
when we negotiate and then two weeks later they claw
back the funding. And I think that is a story
everybody can understand. If Republicans don't want to work in
a bipartisan fashion, and we heard from Russ's vote they
do not, then they will have to pass the budget
as best they can by themselves. And that's something I
(20:21):
think we're going to hear from a unified Democratic caucus
as we go forward, unless, of course, Republicans decide to
deal fairly with their counterparts.
Speaker 5 (20:31):
Well, it does feel like things are frozen at the
moment here.
Speaker 6 (20:33):
Rick.
Speaker 2 (20:34):
I don't know your thoughts on what took place in
the House of Representatives last evening. We've talked about the
recisions package before, but this feels like we're in a more,
if even possible, a more dysfunctional place than we were before.
If Democrats continue to threaten a vote on Jeffrey Epstein files,
can they get anything done?
Speaker 10 (20:53):
Yeah?
Speaker 5 (20:53):
Look, they're going to be gone.
Speaker 3 (20:55):
Nothing's going to happen in the House of Representatives for
the balance of the summer, and that's probably a good thing.
We need a reset to the politics that exists on
Capitol Hill today. You know, right now the future is
pretty glooming. As you've pointed out, Why should Democrats cooperate
with Republicans when reposed, they are only going to break
their commitments and come back after the funds that they
(21:16):
both jointly Byparson Way agreed to pass. It is amazing
that the Recisions Package nine billion dollars has created this
biggest stink. When Congress just passed four trillion dollars a
debt as a part of the reconciliation bill, that should
be what people are fuming about, not nine billion dollar
recision package. And I think Democrats would be on much
(21:38):
better ground to say that we have just run up
a deficit the likes of which no other president has
ever done. I mean, I just I guess I missed
the point that the Recision package of nine billion dollars,
which is a rounding error on that deficit, is somehow
going to make a big difference politically to the Democrats.
But so be it. I don't give advice to Democrats
(21:59):
and they're on their but it does look pretty gloomy
when it comes to whether or not there can be
a bipartisan budget that gets approved by the end of September.
Speaker 2 (22:09):
So it sounds like we're cruising for a shutdown. It's
not even August yet. It's about the principle here, right, Genie.
It could be one dollar, the fact that it was
approved signing to law. This is why Democrats are angry.
Speaker 5 (22:18):
Am I wrong?
Speaker 9 (22:20):
Well?
Speaker 12 (22:20):
Absolutely? I mean, anybody who has negotiated anything knows that
what is the point if the other side is going
to negotiate and then a couple hours later pull back
on what you've agreed to fairly and I would just
say that we are going to hear an awful lot,
by the way, about the debt and deficit from the Democrats.
There was a really important op ed in The Times
(22:42):
by James Carvill and he is speaking for many Democrats
when he says the twenty twenty sixth election should be
run on one thing, and that is repeal the Big
Beautiful Bill, or what they describe as the Big Ugly Bill.
And one of the main reasons is Medicare Medicare. One
reason is the food snap and other pullbacks on that,
(23:05):
but a big reason is the debt and deficit. And
so I think Democrats are going to do both. They
are going to continue to ask to be treated fairly
and provide partisan negotiations with Republicans, and they are going
to push for a repeal for this bill because the
bill is regressive and it hits the working and the
(23:25):
lower class harder in the interest of tax breaks for
the wealthy.
Speaker 2 (23:31):
Rick Davis, where's this Epstein going in the House of Representatives?
Because it appears the House Oversight Committee is going to
get involved here, and this is an interesting headline today.
Tim Burchett, who's joined us on the program before, is
responsible for this. The Oversight Committee will subpoena imprisoned Epstein
associate Glaine Maxwell to testify before Congress. Burchett says he
(23:55):
did not consult President Trump beforehand. He's got the support
of the committee chair James Comer, who also says he
did not compare notes or speak with Trump or the
Speaker of the House about this. This story's not going
away anytime soon. What would testimony like this bring to
this whole scan well, I.
Speaker 3 (24:15):
Mean you really have to wonder. I mean, why in
the world would the Attorney General say that all, you know,
efforts have been made to discover the truth about Jeffrey
Epstein's but Jelaane Maxwell wasn't ever talked to. I mean, really,
she's sitting just a few miles away from you.
Speaker 6 (24:35):
Now.
Speaker 3 (24:36):
Evidently, according to the reporting I've seen, even the Attorney
General wants to have a little tat to.
Speaker 5 (24:40):
Day with Maxwell.
Speaker 3 (24:42):
So my guess is we may be right into this
after Labor Day where the theatrics of the House of Representatives,
you know, thank goodness, they're there for entertainment value alone,
you know, are going to plunge deeply into this issue
of Jeffrey Epps and just keep it alive a little
bit longer. But there are a lot of Republicans scritching
(25:04):
a head wondering, you know, is that every man for
himself today? What's the Attorney General going to do? Cut
a deal with Maxwell not to testify to the House.
I mean, this is going to be an interesting August.
Speaker 2 (25:15):
Well you got that right, boy, Just when you thought
the dog days of summer were arriving, we just got
to read out guys on the President's meeting with President
Marcos of the Philippines, President Trump writing, it was a
beautiful visit. We concluded our trade deal. Concluded our trade deal,
whereby the Philippines, he writes, is going open market with
the United States and zero tariffs. The Philippines will pay
(25:39):
a nineteen percent tariff. In addition, we will work together militarily.
Remembering that the President had threatened a twenty percent tariff
in the trade letter that went out, So, Jeanie, President
Marcos just saved himself one percent. We call this a
trade deal.
Speaker 12 (25:57):
I don't know if that's what he came for. It
seems to be that's what he's leaving with. It will
be really curious, and I have not seen this readout.
It will be really curious to see what the President
Marco's side has to say about this. But my gosh,
you go in with twenty and come out with nineteen.
I think the President has won this round. But unfortunately,
(26:19):
it is the American public that will pay that nineteen percent,
not the Philippines. And that's something that needs to be
underscored repeatedly. This is a tax on the American consumer
should they buy anything from the Philippines.
Speaker 5 (26:35):
The Philippines will pay a nineteen percent.
Speaker 2 (26:37):
Here if he writes the United States zero, maybe Rick,
you're more concerned with the next line here, we will
work together militarily. How important is that when it comes
to China?
Speaker 5 (26:49):
You know, look, I think it's critical.
Speaker 3 (26:52):
Philippines has always been a strategic partner of ours for
many years. We've had ups and downs with the island
we got kicked out of and Clark Basse in the
early eighties, and we've now been able to resurrect that
military relationship. But you know, look, I mean, you do wonder.
You know, the Philippines are in the position to give
(27:13):
blood and treasure to our effort to contain China aggression
in the South China Sea. They've been harassed and shot
at by the Chinese, and yet we're going to slap
them with a nineteen percent tariff. I really wonder what
the symmetry of all this policy is, because sometimes it
doesn't make any sense.
Speaker 2 (27:33):
Rick Davis and Jeanie Schanzeno with breaking news in the
Clutch here from the White House following the President's meeting
with the Philippine President. Many thanks to both of you,
of course, Bloomberg Politics contributors Rick Davis and Jeanie Schanzeno.
We're going to have more on this, the emerging details
on this deal here in a conversation ahead with Doug Reticker,
who's going to join us in studio just a couple
of moments from now. We'll also check the markets with
(27:55):
Charlie Pellett to see if there's a Wall Street reaction here.
There hasn't been too much Wall Street concern over the
matter of tariffs now for weeks as we head for
an August first deadline on reciprocal tariffs. Right now, the
Dow's ahead by one hundred and thirty eight s and
P five hundred is up five and ASDAK remains lower,
it's not about sixty five points right now, much more
ahead here on Balance of Power only on Bloomberg.
Speaker 1 (28:21):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on Apple,
Cockley and Android Auto with the Bloomberg Business App. Listen
on demand wherever you get your podcasts, or watch us
live on YouTube.
Speaker 2 (28:37):
You wouldn't think there was a trade deadline a week
and a half away, remembering of course, how the markets
behaved following President Trump's Liberation Day. But we do have
news on the trade front. President Trump meeting today with
the President of the Philippines, President Marcos, was in the
Oval Office.
Speaker 5 (28:53):
There was a half.
Speaker 2 (28:54):
Hour back and forth with the White House Press Corps
and when they went back behind closed doors, if they
did strike a trade deal, according to President Trump, who
says the Philippines will go open market with the United
States and zero tariffs, I'm reading his language here. Quote
the Philippines will pay a nineteen percent tariff, the United
(29:18):
States will pay zero, he says. In addition, we will
work together militarily. It was a great honor to be
with the President. This was a pretty short meeting. They
spoke with reporters for about a half hour, met for
roughly an hour, and the President just posted this a
short time ago. We're joined in studio now by Doug
Reticker ahead of this August first deadline. It's a conversation
(29:39):
that we've been looking forward to. Founder managing partner International
Capital Strategies, a former member of the executive board on
the International Monetary Fund. Doug, it's great to see you.
Welcome back to Bloomberg TV. And radio, So I guess
we'll call this a deal. We don't have much more
than what we're seeing in this brief post from the
president here. There have been a number of framework agreements,
which might be the way that you describe this, But
(30:01):
with all the noise in Washington today, this is the
closest thing we have to a bit of news. This
is a market that has been very forgiving to this president.
Do you expect further deals to emerge?
Speaker 9 (30:12):
First of all, we have to put deals in quotes, okay,
because as you said, a deal is a framework, and
a framework is still an undefined set of agreements that
is not entirely even the UK deal is not entirely
bedded down. So let's be careful how we expect to
see things until they're in writing. Until you have a
tariff schedule that is sent to a customs officer who
(30:34):
reads across and says, this product gets this tariff, we
actually don't know what's in these things. Do I expect
more deals deals in that amorphous sense? Maybe kind of
sort of yes, But I'm very worried that the markets
broadly have just become overly complacent, overly sanguine, either because
they don't really fully appreciate the impact that is forthcoming,
(30:57):
or because they go back to the taco trade. Yeah think, Well,
Trump's going to back down in a matter of days anyway. Therefore,
let's just go on our August break. I'm just not
sure that's going to be a great strategy, at least
in the short run.
Speaker 2 (31:10):
That's a pretty risky proposition if it's one or the other. Here,
we've got markets that are knocking on all time highs
on a daily basis. Here you seem to suggest we
could be in for a reckoning.
Speaker 9 (31:19):
Well, I think the economy. I mean, I'm not going
to say the economy is not strong. The economy is
doing fine. However, that's in part because of these artificial
postponements of the impacts of tariffs that have basically made
sure that the impacts of those tariffs are not being felt.
If everybody assumes that you're going to kick the can
down the road on tariffs forever, then fine, then the
(31:42):
floodgates of growth and modest impacts are for as far
as the eye can see. But I'm a little more
skeptical that this is all sustainable when you've got big,
big countries Japan, the EU that are Canada and Mexico,
where these are the US's largest trading partners, and it
is not clear there's going to be a deal, and
(32:03):
if there is a deal, that that deal is sustainable. Yes,
So I'm very anxious that people haven't fully digested what
could could be coming.
Speaker 2 (32:11):
Well, it's coming out in the wash here a little
bit in earnings reporting seasons. Some of these conference calls
this week, DOUG have been really interesting. Lockheed Martin today
pointing to the cost of steel when it comes to
making missiles. General Motors similar situation. In fact, we heard
from Paul Jacobson earlier today's the CFO at General Motors
about the supply chain pinch that this has been creating.
(32:34):
This is from earlier today on Bloomberg TV and Radio.
Speaker 5 (32:36):
Let's listen.
Speaker 10 (32:37):
Since COVID, we've been looking at creating more resiliency in
the supply chain and we've onshoored a lot of things.
As we mentioned in our last call, only about three
percent of our direct purchases come from China through the
supply chain, so that's helped us a little bit in
terms of being proactive on that. Obviously, we'll do some
resetting in partnership with our supply chain partner. But you know,
(33:01):
it really starts with our manufacturing.
Speaker 5 (33:02):
Footprint resetting in partnership with our supply chain partners.
Speaker 2 (33:08):
That's real. That's different than waving tariff letters around here.
When you hear a company like General Motors talking like that,
what does that tell you about the evolution or economy
could be about to go through?
Speaker 9 (33:19):
Well, it says take notice and pay attention. And while
the auto sector is particularly exposed, they're getting it on
autos themselves, on auto parts, on steel, on aluminum. The
auto guys are really in the crosshres. But I think
we can I'm not saying it's a canary in the
coal mine, but certainly we should be taking it very
seriously that. As I said earlier, the impact of these
(33:41):
tariffs across supply chains, across economies, across trading patterns is
just not being fully appreciated, in part because companies have
gone to great extremes to try and mask it, tamp
it down not only under political pressure, but under the
risk slash opportunity that these towers will be reversed by
the Supreme Court ultimately, if not the interim courts along
(34:03):
the way, So they're saying, well, let's try and keep
things as stable as we can until we're forced, but
there will be a point at which they might be forced.
Speaker 5 (34:12):
Huh.
Speaker 2 (34:12):
Well, and that's pretty interesting here when you consider the
possibilities that what you just described has given the administration
cover to say tariffs are not inflationary.
Speaker 5 (34:23):
Look at the data.
Speaker 2 (34:24):
You guys have been talking about it for months and
we don't see it yet, but we of course know
that it's been spread around, it has been shared by
companies and in some cases has yet to hit the
hard data.
Speaker 5 (34:35):
When do you see that happening. Well, there have been
some cracks.
Speaker 9 (34:39):
Already, a lot of companies front loaded, and we don't
know exactly when that's going to run out, but it's
inevitable that it's going to run out, So I can't
say what the date certain will be where actually you
start to see a spike in inflation because these new
orders have to replace the stockpiles that are being drawn down.
But I do want to go back to one point,
(35:00):
which is the snatching defeat from the jaws of victory,
which is I think President Trump did a spectacular job
in basically getting everyone to accept the baseline ten percent tariff,
which six months ago we all said nobody's going to
accept the baseline ten percent tariff. Suddenly, whether it was
the EU or others, said we will accept the ten
(35:22):
percent tariff. And if you just look at it from
a budget deficit reduction standpoint, that's two hundred and eighty
three hundred billion dollars of additional revenue. There's a lot
of upside to Trump's own agenda. What did he do?
He extrapolated a linear If nothing bad is happening at ten,
then nothing bad will happen at twenty. And so now
(35:42):
he's just overplaying his hands. Whether it's the EU or others,
they're all saying, you know, we swallowed hard. We were
willing to accept something we didn't want to accept. Now
you're at risk of overplaying your hand. That's what worries me,
because then you've got the risk of no deal or
teriffs that are so inflationary and disruptive that it does
(36:03):
have a serious impact on the economy.
Speaker 2 (36:05):
I want to ask you about Jay Powell while you're
still with us, because if the market's whistling passed the
graveyard on tariffs, you could argue the same when it
comes to Powell. Then again, we heard from the President
earlier today and it doesn't sound like he has any
intention of firing him or even forcing him to step down.
He says, we'll give it the next eight months. It's
not that long anyway.
Speaker 9 (36:22):
Is this even a story, Well, it's a story because
the markets focus on Yeah. But I don't think the
markets are wrong to somewhat take the president's words today
at least that he's not planning to fire Chair Powell
before the end of his term. I think taking that
at face value is probably a good bet. I think
that obviously Trump is trying to jawbone Chair Powell and
(36:43):
the FMC into bending to his wishes. I don't think
that they are susceptible to that. But I think the markets,
while they clearly get excited whenever there's a talk about
changing the FED chair for good reason, I think they're
probably correct in tamping down the expectations that Trump is
going to pull the trigger. I'd throw in one political observation,
which is, if something else happens, something unrelated to the FED,
(37:08):
and President Trump needs to change the narrative, he is
prone to doing something which will absorb all of our
eyes on new headlines, and one of those possibilities could
be the so called wag the dollar scenario, which is
you threaten, if not pull the trigger on firing chair
powel in order to distract attention from something else that
(37:30):
you really want people not to focus on.
Speaker 5 (37:32):
Not that there's anything like that around here. I've been
looking forward to seeing it.
Speaker 2 (37:36):
I appreciate your coming in Doug Redicker International Capital Strategies
with us live in Washington here on Bloomberg TV and radio.
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 noontime Eastern
(37:58):
at Bloomberg dot com
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