April 8, 2025 • 41 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
US President Donald Trump spent the final hours before his tariffs were set for full implementation lining up negotiations with key US allies, but his insistence on pushing forward with sweeping 104% tariffs on many Chinese goods dimmed optimism that a brutal trade war would be avoided.
Trump and top administration officials on Tuesday signaled the US was open to dealmaking that could reduce or eliminate higher tariffs on dozens of nations as Asian and European leaders announced plans for talks with the White House.
Still, Trump is pushing ahead with higher duties on roughly 60 trading partners that he dubbed the “worst offenders” are set to take effect after midnight New York time. And the White House said Trump is proceeding with tariffs that would amount to 104% on many Chinese goods. That package includes previous levies applied because of the fentanyl crisis, his reciprocal tariffs, as well as an additional retaliation Trump announced after Beijing said it would tax US exports to China.
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 Economics Chief Economist Tom Orlik.
- Republican Congressman Pat Fallon of Texas.
- Bloomberg Politics Contributor Rick Davis and ROKK Solutions Partner Kristen Hawn.
- Wiley Rein Partner Greta Peisch.
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):
In a story that has dragged on days, and it's
really just beginning, let's be honest, not the market reaction,
but the tariffs. The reciprocal tariffs go into effect at
midnight tonight, and there are questions about, of course, their impact.
There are questions about what deals in fact could be made.
As we look squarely at China today, President not making
(00:47):
anyone happy in Beijing now criticizing President Trump's threats to
oppose this additional Remember yesterday around this time, fifty percent tariff,
he said, reciprocating the reciprocal or some to that effect.
China calls it blackmail. The US threat to escalate tariffs
on China a mistake on top of a mistake, The
country's Commerce Ministry said in a statement, China will never
(01:10):
accept it. If the US insists on its own way,
China ready will fight to the end unquote. That does
not sound like a country that's about to make a deal, though,
on truth social President Trump says quite the opposite. China
also wants to make a deal badly, he writes, referring
to a deal in the works now with South Korea,
but they don't know how to get it started. He says,
(01:32):
We're waiting for their call. It will happen exclamation point.
Earlier today we heard from the Chair of the Council
of Economic Advisors at the White House, Stephen Myron, on
Bloomberg's surveillance, had this to say.
Speaker 3 (01:48):
I think that depends on the Chinese, and you know,
my advice to them would be that they have a
lot more to lose than America does. That America holds
a leverage and everybody knows that, and therefore they should
seek a detant and offer concessions which would persuade the
President to relent.
Speaker 2 (02:05):
Seek a detante, as we do right now with the
great Tom Orlick. There was one voice we wanted to
get to today as this really seems to focus around
China at the moment, and that is the chief economist
at Bloomberg Economics, Tom Orlck, who spent a good chunk
of his career reporting in China and has a good
sense of the psychology right now in Beijing. It's great
(02:27):
to have you back, Tom. I have very simple questions
for you on this, because we're actually talking about fairly
simple ideas here. It's just been a very complicated reaction.
What is the psychology when you hear terms like blackmail,
fight to the end? How is Beijing interpreting this line
from the White House when it comes to tariffs and
more layers of tariffs?
Speaker 4 (02:49):
So, of course I don't have a window into China's
leadership compound in Beijing, Joe, but I suspect if we
could listen in on some of those conversations, China's leaders
will probably be thinking. Well, First, in Trump's first term,
we engaged in an extensive negotiation over tariffs. We struck
(03:12):
a deal. Yes, we didn't fully live up to the
terms of those deal, but there was a COVID pandemic.
It's forced maseure. Now Trump's hitting us again and with
much higher tariffs. Is this a reasonable negotiating partner if
we negotiate in good faith once and do a deal.
(03:33):
But that deal doesn't seem to have any traction is
there any point in US engaging in another negotiation. So
I think that's probably part of the reason why we're
seeing China hitting back rather than attempting to negotiate.
Speaker 2 (03:49):
Interesting fight to the end, it's pretty stark. That sounds
like we're not going to be reaching a deal anytime soon.
Washington has a certain angle on China. It's a bipartisan affair.
Although the White House has a particular obsession with China
when it comes to trade, does it deserve that reputation.
Speaker 4 (04:06):
So I think the idea that China has more to
lose from this than the United States does is true.
China has the trade surplus, the United States has the
trade deficit. China is benefiting from catch up on technology
as US firms move their factories and their expertise and
their ip into the Chinese market. So China does have
(04:30):
more to lose here. But China is not the only
country that has something to lose in a trade war.
Speaker 2 (04:38):
Sure.
Speaker 4 (04:38):
Think about the US firms which have supply chains across
China's East Coast, apple being a prominent example. Think about
the US consumers who've grown used to being able to
pick up their clothes and their sneakers and their electronics
bargain basement prices, and think of the investors. We've been
(05:00):
making big bets on this relationship staying in place. There
are some pretty important US constituencies who are going to
be losing out here.
Speaker 2 (05:08):
Well, that's right. I mean you could argue we wouldn't
have Walmart without China, right, we wouldn't have cheap appliances
without China. We'd be paying three thousand dollars for an
iPhone without China, or some of the countries that have
seen spillovers with Apple and so forth trying to relocate
some manufacturing. But this is why people are talking about
upending the world's economic order without China. Do we not
(05:32):
pay more for everything?
Speaker 4 (05:34):
Well, I think the President, if you were here in
the studio j would say, we'd also have more of
a manufacturing industry if it weren't for China. Right, So
there's two sides.
Speaker 2 (05:43):
To it for every but it is much more expensive.
Speaker 4 (05:45):
The labor's much more expensive. But maybe it's worth paying
more for our consumer goods. The White House believes if
that guarantees a future for the US manufacturing industry, a
path to a stable middle class life for US workers
and locks in our national security.
Speaker 5 (06:06):
Right.
Speaker 4 (06:06):
Part of the argument here is not about economic efficiency
and profits and market gains. It's about recognizing that China's
a geopolitical rival, and do we want to be so
dependent on a geopolitical rival for crucial interests?
Speaker 2 (06:21):
Well, will you talk about you know, high end manufacturing,
advanced manufacturing. I understand the drive there when you're talking
about making socks or sneakers. Is that really what we
want to bring back to this country? What would our
economy look like?
Speaker 4 (06:36):
I think that's a great question. Joe So, I used
to live in China. Yeah, and I visited some of
the manufacturing centers. I've seen what it's like working in
a factory that snaps together iPhones or shows up sports gear.
Those are great jobs if you were working on a
Chinese farm, because by going into the factory your double
(07:00):
tripling your income. Are they a great job if you're
a US worker? Do you want to work in those conditions?
I think there are some questions there.
Speaker 2 (07:10):
Well, I'm sure that's true. As a go forward. You
look at this truth post from Donald Trump that I
was reading. He seems to think that a deal with
South Korea would unlock a deal with China. In fact,
says their top team South Korea is on a plane
heading to the US and things are looking good. Were
likewise dealing with many other countries, all of whom who
(07:30):
want to make a deal with the United States, and
he points to China could some motion in the region,
South Korea, Japan in fact unlock a deal with Beijing.
Speaker 4 (07:39):
So I think there are some really important differences between
South Korea and China when it comes to their relations
with the United States. So the first one is South
Korea is a US ally, and South Korea relies on
US troops as part of the deterrent against North Korea.
Exports are also important as a driver of South Korea's growth.
(08:03):
They really can't do without export markets.
Speaker 6 (08:05):
So for security.
Speaker 4 (08:07):
Reasons, for economic reasons, for treaty reasons, you can understand
why South Koreans might be wanting to get on a
plane to Washington, DC. None of those things apply to China.
China is not a US ally. China is in many
respects a US adversary. Exports are important for China's economy,
but not nearly as important as domestic demand. So they
(08:30):
take a hit here, but it's nothing like the size
of the hit which South Korea would take. So it
doesn't surprise me that some small, some mid sized economies
like South Korea should be picking up the phone. Does
that mean China is going to be picking up the phone?
I'm not holding my breath.
Speaker 2 (08:49):
Wow, this has been a clinic with Tom Orlick in
our remaining moment here, Vietnam accused of wandering Chinese goods
through its country in the end, pre evading tariffs. Essentially,
do tariffs stop that kind of behavior? Is Vietnam caught
in the middle?
Speaker 4 (09:07):
So think about the difference between Trump one and Trump two.
Trump one, China got hit with tariffs, Vietnam didn't get
hit with tariffs. Mexico didn't get hit with tariffs. Right,
that's a world where if you're a bit crafty, you
can game the system.
Speaker 2 (09:22):
This has changed that.
Speaker 4 (09:23):
Let's send the ship to Vietnam, right, and then onto
the US, and then we can dodge the tariffs. If
everyone get hits with tariff. If everyone gets hit with tariffs,
that game doesn't work anymore.
Speaker 2 (09:32):
Boy, fascinating. I hope we can stay close with you
on this because the next couple of days it sounds
like we'll be critical here in the region. Tom Orlick,
he's the chief economist at Bloomberg Economics for a reason
and great to have some time. Tom. Thank you so much.
You're on the fastest show in politics.
Speaker 1 (09:49):
You're listening to the Bloomberg Balance of Power podcast. Catch
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You can also live on Amazon Alexa from our flagship
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Speaker 2 (10:08):
Congressman Pat Fallon, the Republican from Texas's fourth Districts, is
watching all of this happen and joins us now live
on Bloomberg TV and Radio. Congressman, it's great to have you.
We've been hearing a lot of concern from both sides
of the aisle, certainly in this hearing this morning with
the US Trade Representative about the impact of these tariffs
and exactly what's going to happen after midnight tonight. Are
(10:30):
you hearing a coherent message from the White House that
you can support? Is the President going to make the
country stronger at midnight tonight?
Speaker 6 (10:37):
Absolutely?
Speaker 7 (10:38):
And I am hearing a coherent message, and that is
that there are So I just was with Leadership and
they had just got off the phone with President Trump,
and he said to them there was about seventy countries
that have reached out to the administration and wanted to
negotiate trade deals.
Speaker 6 (10:53):
So what it looks like at chipping up?
Speaker 7 (10:55):
And I'm not going to panic at all, and I
don't think anybody should, because things like this, you know,
days in a weeks, they should be measured in days
and weeks, they should be measured in months and years.
Speaker 6 (11:03):
And I do think that we're going to see.
Speaker 7 (11:05):
Trade deals really a cascade of them that will strengthen
this country, will put us in a better position.
Speaker 6 (11:11):
And I think the economy will show more strength.
Speaker 8 (11:15):
Well, Congressman, as we consider that kind of time horizon,
what are you telling your constituents about what they should
be bracing for in the days and weeks ahead, in
the more short term compared to what you just described
as the months and years ahead. Because this is consistently
how we see it framed by this administration, short term
pain for longer term gain.
Speaker 7 (11:34):
I think really what you're asking, Kayley, is how short
term is.
Speaker 6 (11:38):
Short term is it going to be yes, exactly. Don't
have the crystal ball.
Speaker 7 (11:43):
But what I suspect will happen is that once we
see these major countries making deals like Vietnam, that would
be that's a sizable deal.
Speaker 6 (11:52):
Obviously the EU would be.
Speaker 7 (11:55):
Seismic, and then the markets will see, Okay, we're seeing
some steady stability, we're seeing some achievement, and you're going
to see a slow isolation of China, and then it's
up to them to make a deal. I know that
they're going to have to say face and whatnot, but
this trade war will hurt them way more than it
will hurt us. We will experience some pain, no doubt,
(12:16):
but they will experience it tenfold. So it's made behooves
them to come to the table as well. And I
think you'll see that. You just won't see it immediately
for really, I think egotistical reasons when you deal with
an authoritarian regime, that's just.
Speaker 6 (12:29):
In the equation.
Speaker 2 (12:32):
Well, they do like to buy some of our stuff
as well, but we buy a lot more of theirs. Congressman,
the US China Business Council finds that the fourth Congressional District,
your district alone exported five hundred and ten million dollars
worth of goods to China in the most recent year
we have here, twenty twenty two. What could that mean
for your local economy if those exports begin to slow.
Speaker 7 (12:55):
The fourth Congressional District in Texas as a whole has
a very dynamic economy, Joe, and if we were our
own country would be the eighth largest economy in the world.
Speaker 6 (13:04):
So five hundred and ten million.
Speaker 7 (13:05):
While that's a big number, you know what, our constituents
are rooting for America and america success, unlike some other
networks like CNN that was seemingly rooting for China.
Speaker 6 (13:15):
Was sent an article I read yesterday.
Speaker 8 (13:18):
Well, I wonder, sir, if more help will be required
for their success if these tariffs indeed go into effect
and last for some period of time. We obviously saw
in the first Trump administration that farmers were offered subsidies.
I wonder if you expect to see that again. Bloomberg
has reported that Republican colleagues of yours are considering looking
at potentially a tax credit for exporters. Would you be
(13:40):
supportive of those kinds of measures? Is it worth it
to spend more in order to raise revenue.
Speaker 7 (13:48):
Yeah, I think that it's too early to talk about
that or really seriously consider it, but we need to
strategically decouple from China. Obviously we're going to trade with
them even when this is over. But the reliant over
reliance that we've had on our number one geo political
competitor is alarming, and really COVID should have woken us
up to that reality. And we're far too reliant on
(14:10):
the Chinese right now. And this, I think is going
to act as a wonderful instrument to start that decoupling,
and that's going to make us stronger, and we need
to be We need to have more diverse trading partners.
Speaker 2 (14:24):
We're watching Wall Street turn negative here. We just want
to mention after starting with a powerful rally this morning,
a relief rally that seemed to be defying gravity considering
the news that hasn't changed too much around tariffs. As
the congressman mentioned, there was some hope for deals to
emerge from these reciprocal tariffs, but hope appears to be
fading on Wall Street, the S and P five hundred
(14:45):
turning negative. It's now up actually just by four points.
The Nasdaq one hundred is down by twenty four points
here as we make our way through the midday in trading, Congressmen,
are you hearing from constituents? Are they Are they hitting
the constituent line to ask about their retirement accounts?
Speaker 7 (15:03):
There's a few folks, but it hasn't been really all
that sizeable yet, because again, if you're an investor in
the markets, you know that what happens over days shouldn't
really concern you.
Speaker 6 (15:12):
That's more of.
Speaker 7 (15:13):
A weeks and months, So you know, let's see what
happens two months from now.
Speaker 6 (15:18):
Well, the markets, I personally think that the markets.
Speaker 7 (15:21):
Will be much higher in a few months, and I'm
maybe an eternal optimist, but I do think that this
isn't going to last.
Speaker 6 (15:27):
This is just very very short term.
Speaker 8 (15:30):
Well, speaking of short term, as you look ahead two months, Congressman,
I wonder what's going to happen in your chamber in
just the next two days, because the Speaker would like
to see a vote on the Senate pass budget blueprint,
which I know a number of your colleagues in the
House have taken issue with. Is it your expectation that
the votes are actually there for that to pass this week?
And for reconciliation to advance.
Speaker 6 (15:51):
That's a great question.
Speaker 7 (15:52):
We had a conference this morning, and it's going to
be a challenge. To be very honest, I don't know
if we're going to have the votes. I hope we do,
because all this is doing is this is like you said,
it's a blueprint to move the process forward.
Speaker 6 (16:05):
There will be then a final product.
Speaker 7 (16:07):
I personally would not vote for a final product that
doesn't have significant cuts in spending because we need to
work toward balancing a budget moving forward. Considering we have
a thirty six trillion dollar debt in climbing. We need
to take a fiscal responsibility seriously, not just on the
campaign trail, but actually here in Washington, d C.
Speaker 6 (16:24):
So I don't know exactly what's going to happen.
Speaker 7 (16:27):
We'll see, but if we don't, then we're going to
have to work together and we have to extend the
Trump tax cuts. We have to have a plan in
place to go and be a bit more disciplined fiscally,
and so I hope that we can get there.
Speaker 2 (16:43):
President, writing on Truth Social last night, the House must
pass this budget resolution and quickly with the caps lock on. Congressman,
will this actually get out of the Rules Committee to
get to the floor. That might be the most important
hurdle here considering some of the Republicans who are concerned
earned about the level of cuts in this blueprint.
Speaker 7 (17:03):
Well, Joe, what we don't want to do is take
it to the floor and fail. So we really have
to count the votes. We have to do the whip
counts before that happens. And again I hope that it will.
We're going to hate be having dinner with President Trump
tonight and we'll be talking about that, and if we
have it, we'll go forward. But if not, there's always
going to be a third way. It's not binary with
it's either pass or fail. There are going to be
third ways to get to that success. But we have
(17:27):
to do it together. We have to have currently two
hundred and seventeen votes to move it forward.
Speaker 6 (17:32):
So again I'm praying that we can do it.
Speaker 8 (17:36):
And finally, Congressman, we just have two minutes left here.
But given your seats on the Intelligence and Armed Services committees,
I wonder what you make of the other news we
got from the President yesterday about direct talks with Aron
to take place on Saturday. What is your expectation or
your hope that that conversations will be able to yield.
Speaker 7 (17:54):
You know, I very rarely I'm going to oppose having
a conversation with another nation state because you know.
Speaker 6 (18:00):
President Trump tried that in his first term with North Korea.
Speaker 7 (18:03):
Really nothing came of it, but I really applauded the
effort because why not talk with President Reagan said, trust
but verified. So even if you came to some accord,
you have to make sure that their actions match their
rhetoric in the pages that they signed in any kind
of an agreement or treaty. So I do applaud talking,
(18:23):
but you know, Iran's on the run. They are not
strong right now. Israel has decimated, has blowed and decimated Hamas,
and even President Trump with his latest strike on the
Houties and Iran losing Syria, they're on their heels. So
we'll see. It could just be all rhetoric, it could
be for show, but we'll find out.
Speaker 6 (18:44):
Indeed we will.
Speaker 8 (18:44):
Congressman, thank you so much for your time this afternoon.
Congressman Pat Fallen, Republican representing Texas's fourth District, live from
Capitol Hill with us here on Balance of Power on
Bloomberg TV and Radio, as we track what's happening in
politics and how it coincides with what's happening in the markets.
A brief dip lower on the S and P five
hundred after a rally of as much as four percent.
Right now we're up just shy are just around twenty
(19:06):
points up four tens of one percent on the S
and P.
Speaker 2 (19:08):
Vicks barely budging, and Bitcoin is lower today. It's hard
to make sense of all of this, but we'll continue
with our political panel coming up next here on Balance
of Power. Looks like we're getting another bit under this market.
Speaker 8 (19:21):
Kley, Yeah, we'll see if it lasts. This is Bloomberg
TV and Radio.
Speaker 1 (19:28):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Alma 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 (19:44):
Thank you for being with us on the Tuesday edition
here on Bloomberg TV and Radio. The anxiety that's being
felt over tariffs on Wall Street is being felt here
in Washington as well, and not only by Democrats, most
Republicans on Capitol Hill have been behind the Trump administry
on this. Most who you here join us on balance
of power speak to the short term pain, long term
(20:07):
gain aspects of this. But there are some Republicans now
who are beginning to vocalize their worries. Senator Ted Cruz
is one of them, referring to Elon Musk as the
angel on President Trump's shoulder. Tom Tillis, the Republican from
North Carolina, made his views clear today unless he was
just Kaylee trying to get tape on himself in case
the tariffs don't work out, right, we can play this
(20:29):
back during a campaign. This was part of testimony of
the US Trade Representative jameson Greer before the Senate Finance Committee.
Listen to Senator Tillis in.
Speaker 5 (20:39):
This scenario, the decision maker who decided the ala prima approach,
who has obviously had to have spent time anticipating what
we saw in the markets and some of the pushback.
I'm assuming this all got gamed out because it's a
novel approach.
Speaker 6 (20:54):
It need to be thought out.
Speaker 5 (20:55):
Whose throat do I get to choke if this proves
to be wrong?
Speaker 8 (21:00):
Yes, that was the quote, whose throat? And you might
get to chill Well. Jamison Grier kind of reluctantly said,
you can always look at me or talk to me
about that service the USTR, but we want to talk
to our political panel about this. Rick Davis is with
US Bloomberg Politics contributor and Republican strategists partner at Stone
Court Capital, alongside Kristen han Today partner at Rock Solutions
(21:21):
and democratic strategist. Rick, Are we about to see some
serious Republican on Republican violence, either metaphorically or physically speaking
over this tariff issue?
Speaker 9 (21:31):
Yeah, I definitely think we're entering the era where there's
very little anxiety between Democrats and Republicans because Republicans basically
see this as a win or lose proposition amongst themselves.
So now the question is between Congress and the administration,
who's going to pay right? I mean, Donald Trump's a
decision maker. There's no question that there's not a policy
(21:53):
making apparatus that includes the Trade rep that's going to
decide these tariffs. So he can do all the damage
he wants. But that's like, you know, hitting the fodder,
not the target. And so the reality is, I think
you're already starting to see cracks in the congressional armor
around Donald Trump. And there's legislation in the Senate that
(22:17):
is bipartisan that would take away some of the leverage
that Donald Trump has to do these tariffs. And it'll
be interesting to see how far that goes, because that
echoes the Senator tell Us' comments, which is, if I
trust you and don't vote for that measure and take
it back into my own control, who's going to pay
(22:38):
the price when I go down in my Senate seat?
Speaker 2 (22:42):
How does this play often? Kristin, I'm guessing you're kind
of enjoying watching this conversation. Senator Ted Cruz says there
are angels and demons vying for influence in the White
House picture. Peter Navarro on one shoulder, Elon Musk on
the other. Apparently Musk did direc directly appeal to President
Trump over the weekend to keep the reciprocal tariffs from
(23:04):
taking effect. It will impact his business at Tesla. Peter
Navarro says he's not really a car manufacturer, He's an
auto assembler. How does all of this end. Where's the
rupture in the administration or in the party that you
see coming.
Speaker 10 (23:21):
I mean, that's a very good question. Actually we're only
four months into this administration, if that, and you're kind
of seeing I mean, you look at what's happening. The
markets are just one of the things that's happening. But
you know, I think that the president has been teflon
for so long, and Republicans in the House, in the
Senate for the most part, have stood behind him. And
(23:42):
like you mentioned earlier, the talking point that everybody's using
right now is that, you know, this is a major
disruptive policy. We knew that going in. We knew that
there was going to be pain. You know.
Speaker 6 (23:53):
I think he was.
Speaker 10 (23:54):
Saying, you've got to operate or give medicine or something.
You know, if you break it, you bought it. But
you you know, there's you're sitting you're starting to see
these certain cracks, and I think a lot of people
are seeing there holding their breath, hoping that the market's
rally and that you know, the tariffs had their well
Donald Trump's intended effect. But I think that there's gonna
(24:16):
be a lot of pain. And you're looking at, you know,
a country like China, and what is the impact of
these tariffs going to be on you know, people across
this country and they're they're buying ability to buy goods
and services when like it or not, we rely on
a lot on a lot of cheaper goods that come
(24:38):
in from China. So you know, people hired Donald Trump
because they you know, they were they were being squeezed
by inflation. They couldn't buy things at the grocery store.
The cost of goods was far too high. But if
he does stuff to make it worse, I think that
you will see repercussions at the ballot box.
Speaker 8 (25:00):
I want to go back, Rick to this idea of
the angel of Elon Musk and the demon of Peter Navarro,
because they both clearly see each other as villains in
this story if you judge their public comments about each other,
including Elon Musk Overnight saying Navarro is truly a moron.
That is a direct quote, also calling him quote dumber
than a sack of bricks. The White House Press Secretary
(25:21):
Caroline Lovett, who was briefing reporters right now, was asked
about this, and she says, boys will be boys, and
we will let their public sparring continue. Obviously, Rick, these
are grown men we are talking about in their fifties
and seventies respectively, but their public sparring to allow it
to continue. Does that not undermine the messaging of this administration?
Speaker 2 (25:40):
Yeah, for sure.
Speaker 9 (25:41):
I mean, this is just a cloud that kind of
sits over the administration's effort to define what they're trying
to accomplish on tariffs. And if it weren't such a
dramatic impact, we've seen what's happened to the market since
the President has marked upon as tariff policy. You don't
need a lot of noise in the system that's going
to rankle those markets. And so the fact that one
(26:05):
of the top advisors to the President, Elon Musk, who
is also the world's wealthiest man and has two hundred
and nineteen million followers on his platform x is somehow
picking a fight with the top trade policy person in
the White House is.
Speaker 2 (26:23):
Crazy.
Speaker 9 (26:23):
I mean, no other administration would tolerate that. Either they'd
be told to shut up and go to their neutral corners,
or somebody would win that fight and the other person
would be out of the administration. And so the fact
that this is sort of gumming up what is already
a challenging message narrative for the administration doesn't help the
(26:44):
markets either. And so what we see today after you know,
some optimism that they're going to be deals cut with
places like Japan and maybe you know, Israel. The Prime
Minister was in the Oval Office yesterday talking about some
of these things has been overshadowed by the Boys Will
(27:04):
be Boys frat party fight in China, basically saying as
our largest trading partner, stick it. So, I mean, you know,
I don't know which narrative you like, but neither one
of those are going to fit a productive political scenario.
Speaker 2 (27:22):
Kristin Kayley mentioned some of the nicer things that Elon
Musk has said about Peter Navarro on Twitter. A couple
of his posts were deleted, in fact, because they were
so offensive. There's one that I could not read on
the air here if I wanted to keep my job.
Is this how it ends with Elon Musk? Peter Navarro
went to jail. I think we could say for Donald Trump,
(27:43):
I mean, that's pretty loyal when it comes down to
who's gonna survive this fight?
Speaker 10 (27:50):
Yeah, I mean I think when you talk about Donald Trump,
I mean we've always talked about how he kind of runs,
whether it's his business or the White House like a
mom boss you know, dedication and loyalty seemed to be
the number one thing he cares about. So we'll see
who comes out of this fight on top that. I
totally agree with, Rick Scott. I mean, I mean, I
(28:11):
didn't think there was anything that could surprise me about
this administration. But when you see two of the top
advisors to the president of the United States publicly fighting,
it's not good for anybody, particularly not their messaging going forward.
So I guess we'll have to see this What did
they call it a locker room Maybe that was a
(28:31):
previous thing they called locker room talk or boys will
be boys. That's just not a good answer, and frankly
they should come up with a better solution to this
little spat.
Speaker 8 (28:42):
Well, Caroline Levitt has had to answer more questions than
just about this little spat. She was talking about, specifically
tariffs and US manufacturing being brought back by them. She
suggested that the president thinks the US has the workforce
to make iPhones. Rick. This is of course, as we
consider the supply chains of companies like Apple who left
China or started to diversify away from China to other
(29:05):
countries that are also now facing incredibly high interest rates.
Even if we had the labor supply, do we have
the desire on the part of the American workforce to
work in that kind of manufacturing. Is there not a
reason why it was outsourced to other countries aside from
just the cheapness of that labor.
Speaker 9 (29:21):
Yeah. Look, I mean, you're almost at full employment in
the United States, So where you're finding thousands of workers
who are going to go into a factory and assemble
iPhones and things like that, it would be a challenge.
And the fact is that none of those things can
happen overnight. I think conservatively they're talking years to be
(29:44):
able to recreate the manufacturing and forget about the supply chain,
because the supply chain that all the parts and materials
and technology that goes into an iPhone is also built
in China. And so where's that supply chain going to
come from? Because we're ill equipped to start manufacturing the
(30:05):
kind of components that go into these kinds of units.
Why because they're done much cheaper in other markets. So
I think a lot of this talk about how we're
going to bring back manufacturing in the United States needs
to be accompanied with what kind of manufacturing are we
really going to become the low cost producer in the world.
(30:25):
Of course not, and we don't want to be because
we aspire to better things for workers in America than
you know, a sweatshop. So I mean, the reality is,
when you really open up the Pandora's box on this
kind of rhetoric, you really wonder what it is we're
trying to accomplish. Good jobs, high paying jobs, you know,
(30:47):
technical jobs that would encourage people to get better educations. Yes,
those are the things we're looking for here in the US.
Speaker 2 (30:56):
Rick Davis, Stone, Core Capital, Kristen Hahn, Rock Solutions are
great panel. As Howard Lutnik said on CBS Sunday Morning,
the army of millions of human beings screwing in little
screws to make iPhones, Kayley, the kind of thing that's
going to come to America. We'll see about that much
more ahead here on Bloomberg. Stay with us on Balance
of Power Live from Washington.
Speaker 1 (31:17):
You're listening to the Bloomberg Balance of Power podcasts. 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 play Bloomberg eleven thirty.
Speaker 8 (31:36):
The current Treasury Secretary has just hit us with a
fresh post on X about these tariffs, Joe Scott Bessen
saying President Trump's end goal is bringing back jobs and
manufacturing to the United States, raising wages, increasing revenue, and
reviving the American dream. He goes on to say that
what they're trying to do is quote right, the wrongs
of long standing global trade imbalances.
Speaker 2 (31:57):
That's right, different than raising redue, for instance, to pay
for tax cuts. As we seem to get together every
day here Kayley, to figure out which one it is,
what is the drive and maybe it's a combination. There
they're in de baseline tariffs stay in place, generating that
ten percent to help fill coffers in the US, and
we use reciprocal for negotiations. All of these questions are unanswered.
Speaker 8 (32:22):
Well, and there are questions that we have as well.
For Greta Pisch, partner at Wiley Ryan, former General counsel
at the Office of the US Trade Representative, who is
joining us now here on Bloomberg TV and Radio. Greta,
when we consider the prospects of this being a revenue raiser,
if at least in part that is what the objective
is here, to what extent will any revenue gains be
(32:42):
offset by just lower trade between the US and its
trading partners, Because we've heard from many economic minds that
it is expected that the actual volume of that trade
will go down and that impacts the overall number you
could bring in.
Speaker 11 (32:55):
Right, Yes, that's exactly right. As you raise the tariff,
you would expect demand for imports to go down, and
in fact, that's what the administration says that in part,
that's what they want to do by creating incentives to
move manufacturing here. So if your primary objective is revenue raising,
(33:18):
what you may want to do is have a relatively
lower tariff on a broader base of imports, which sort
of sounds like that ten percent base that they've already
put in place that came into effect on Saturday. Higher tariffs,
of course, are going to drive import volumes down and
ultimately lead to less revenue collection.
Speaker 2 (33:39):
We heard from the US Trade Representative Jameison Greer in
testimony earlier today. Has got two days worth today in
the Senate where he spoke with Senator Bennett Michael Bennett
of Colorado about the impact of these tariffs.
Speaker 12 (33:52):
Let's listen, what is that the American people should expect
to be able to suffer as a result in terms
of rising prices.
Speaker 13 (34:00):
I think there's not really a one to one on
tariffs and price effects, and so many things go go
into price I know you think I'm probably like dodging
and weaving on this. Well, but I'm looking at data.
Speaker 12 (34:11):
I know you're smart enough to know that the likelihood
is that prices are going to go up for the
American people as a result of the tariffs.
Speaker 2 (34:19):
Was he dodging and weaving there? I'm trying to understand
where the administration is on this because we hear a
lot about a one time impact. Wall Street's factoring in
it looks like a lot worse.
Speaker 11 (34:32):
Well, you know, it isn't so much a dodge and
weave in the fact that you know, inflation has a
lot of components that go into it. It's a macroeconomic
indicator that isn't just driven by tariffs, and in fact,
often it's it's something else going on the labor market,
supply demand. In the past, you know, we haven't seen
(34:54):
tariffs drive inflation, even in the first Trump administration when
tariffs went up quite a bit on Hi and that
felt like a lot at the time. Of course, now
what we're talking about is much bigger. That action did
not cause inflation or other tariffs that have been put
in place in the Trump administration and other administrations. We
(35:15):
just don't usually think of tariffs as being an inflation driver.
This is a big experiment of a much larger trade
action than we've ever seen. So in part, we'll have
to wait and see and how it interacts with other
parts of the economy. But I think his comment is
valid in the sense of looking back at how we
(35:35):
usually think about tariffs and their magnitude and their impact
on the economy. It is a bit complicated as to
how they get bigged into prices and what their effect is.
Speaker 8 (35:46):
Well, I'd like to talk about one specific magnitude of
tariffs on one of our trading partners, GRETA, and that
is China, because in addition to the twenty percent tariffs
that have already been put into place to combat what
the White House argues as the trade of fentanyl, and
thirty four percent in terms of the reciprocal tariff rate
it was already intending to impose at midnight tonight. The
White House has confirmed today it is going ahead with
(36:08):
that additional fifty percent tariff on Chinese goods, bringing the
effective rate to one hundred and four percent. With a
level that high GRETA, what is realistically going to happen
with the trade relationship between the US and China and
the flow of goods?
Speaker 6 (36:24):
Well, like all of.
Speaker 11 (36:25):
These tariffs, you know, I think the big question is
what is the endgame?
Speaker 3 (36:30):
What is the.
Speaker 11 (36:31):
Administration attempting to achieve with these tariffs? And it may
be different and likely is a bit different with respect
to China than with respect to other trading partners, But
I think a question here is is this about decoupling
from China? Is it to increase leverage to have a negotiation,
(36:52):
which it seems like at times the President may have
alluded to. Those are very different outcomes, and China is
going to have its own as every trading partner has
its own prerogatives and its own domestic economic and political
imperatives that it has to answer to. And so I
(37:13):
think at this point we don't fully understand what the
administration's strategy with the President is hoping to achieve with
this further increase in tariff, But you know, I think
it's certainly going to be a consequential action and potential
discussions with China going forward.
Speaker 2 (37:33):
Does the US Trade Representative's Office model this maybe in
conjunction now with the Secretary of Commerce to kind of
play this out to see what it is we're actually
asking for. When you hear Howard Lutnik talk about iPhones
being assembled in the US, once again, we heard from
Dan ives On that the analyst said that would mean
basically a three thousand dollars iPhone where it becomes the
(37:55):
line of diminishing returns when decisions like this are being made.
Speaker 11 (38:01):
I mean, it's a great question, and again we don't
know what's in the mind of the administration and the
President and what they're hoping to achieve with these tariffs
and negotiations. Just a few minutes ago, the Press Secretary
Caroline Lovett said that the President was directing members of
the trade team to come up with Taylor made deals
(38:23):
for trading partners that are unique with respect to the
trade relationship imports, exports, the barriers in each of those markets.
So that indicates that you know, it may be a
different scenario for each and every one of this over
one hundred trading partners. But again we don't have a
(38:46):
clear sense of what the ask is and what the
end state is. You know, where do they want to
be in nine months, in eighteen months, what do they
want the tariffs to look like, and what do they
want the results of any negotiations to be.
Speaker 8 (39:01):
And finally, Greta, in our final moments with you, given
that you were general counsel at the USTRD, do you
have any hesitations around the actual legal mechanisms with which
President Trump is acting to enact these tariffs, because there
are now movements in Congress toward kind of resting back
congressional authority through resolution to exert that Article one privilege
(39:21):
to actually be the ones in charge of tariff policy.
But how would all of this stand up in court?
Speaker 11 (39:28):
Well, Congress certainly has the ability to take action to
counteract or address the trade policies that have been enacted
by the President so far. And yes, there are also
rumors or in even one case that's been filed to
challenge some of the tariffs that have been put in
(39:49):
place since President Trump came into office. But I think
there's a lot of question marks there. He is stretching
these authorities in new ways and them in a magnitude
that hasn't been attempted before. But and so we just
(40:09):
don't know what the courts are going to do with that,
and whether any of these challenges will be successful. But
I would just say that even if the courts are successful,
or even if litigants are successful and challenging some of
the actions that have been taken place so far, the
president has other tools and authorities that can be used
to put tariffs in place. So you know he is
(40:32):
committed to this policy. It would seem he thinks that
tariffs are effective in addressing these issues, and he'll find
a way to do it.
Speaker 2 (40:41):
Greta pises Swiley Ryan, former General Counsel the Office of
the ust Are Greta many thanks for the conversation. Thanks
for listening to the Balance of Power podcast. Make sure
to subscribe if you haven't already an Apple, Spotify, or
Worthy get your podcasts and you can find us live
(41:02):
every weekday from Washington, DC at noontime Eastern 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):
In a story that has dragged on days, and it's
really just beginning, let's be honest, not the market reaction,
but the tariffs. The reciprocal tariffs go into effect at
midnight tonight, and there are questions about, of course, their impact.
There are questions about what deals in fact could be made.
As we look squarely at China today, President not making
(00:47):
anyone happy in Beijing now criticizing President Trump's threats to
oppose this additional Remember yesterday around this time, fifty percent tariff,
he said, reciprocating the reciprocal or some to that effect.
China calls it blackmail. The US threat to escalate tariffs
on China a mistake on top of a mistake, The
country's Commerce Ministry said in a statement, China will never
(01:10):
accept it. If the US insists on its own way,
China ready will fight to the end unquote. That does
not sound like a country that's about to make a deal, though,
on truth social President Trump says quite the opposite. China
also wants to make a deal badly, he writes, referring
to a deal in the works now with South Korea,
but they don't know how to get it started. He says,
(01:32):
We're waiting for their call. It will happen exclamation point.
Earlier today we heard from the Chair of the Council
of Economic Advisors at the White House, Stephen Myron, on
Bloomberg's surveillance, had this to say.
Speaker 3 (01:48):
I think that depends on the Chinese, and you know,
my advice to them would be that they have a
lot more to lose than America does. That America holds
a leverage and everybody knows that, and therefore they should
seek a detant and offer concessions which would persuade the
President to relent.
Speaker 2 (02:05):
Seek a detante, as we do right now with the
great Tom Orlick. There was one voice we wanted to
get to today as this really seems to focus around
China at the moment, and that is the chief economist
at Bloomberg Economics, Tom Orlck, who spent a good chunk
of his career reporting in China and has a good
sense of the psychology right now in Beijing. It's great
(02:27):
to have you back, Tom. I have very simple questions
for you on this, because we're actually talking about fairly
simple ideas here. It's just been a very complicated reaction.
What is the psychology when you hear terms like blackmail,
fight to the end? How is Beijing interpreting this line
from the White House when it comes to tariffs and
more layers of tariffs?
Speaker 4 (02:49):
So, of course I don't have a window into China's
leadership compound in Beijing, Joe, but I suspect if we
could listen in on some of those conversations, China's leaders
will probably be thinking. Well, First, in Trump's first term,
we engaged in an extensive negotiation over tariffs. We struck
(03:12):
a deal. Yes, we didn't fully live up to the
terms of those deal, but there was a COVID pandemic.
It's forced maseure. Now Trump's hitting us again and with
much higher tariffs. Is this a reasonable negotiating partner if
we negotiate in good faith once and do a deal.
(03:33):
But that deal doesn't seem to have any traction is
there any point in US engaging in another negotiation. So
I think that's probably part of the reason why we're
seeing China hitting back rather than attempting to negotiate.
Speaker 2 (03:49):
Interesting fight to the end, it's pretty stark. That sounds
like we're not going to be reaching a deal anytime soon.
Washington has a certain angle on China. It's a bipartisan affair.
Although the White House has a particular obsession with China
when it comes to trade, does it deserve that reputation.
Speaker 4 (04:06):
So I think the idea that China has more to
lose from this than the United States does is true.
China has the trade surplus, the United States has the
trade deficit. China is benefiting from catch up on technology
as US firms move their factories and their expertise and
their ip into the Chinese market. So China does have
(04:30):
more to lose here. But China is not the only
country that has something to lose in a trade war.
Speaker 2 (04:38):
Sure.
Speaker 4 (04:38):
Think about the US firms which have supply chains across
China's East Coast, apple being a prominent example. Think about
the US consumers who've grown used to being able to
pick up their clothes and their sneakers and their electronics
bargain basement prices, and think of the investors. We've been
(05:00):
making big bets on this relationship staying in place. There
are some pretty important US constituencies who are going to
be losing out here.
Speaker 2 (05:08):
Well, that's right. I mean you could argue we wouldn't
have Walmart without China, right, we wouldn't have cheap appliances
without China. We'd be paying three thousand dollars for an
iPhone without China, or some of the countries that have
seen spillovers with Apple and so forth trying to relocate
some manufacturing. But this is why people are talking about
upending the world's economic order without China. Do we not
(05:32):
pay more for everything?
Speaker 4 (05:34):
Well, I think the President, if you were here in
the studio j would say, we'd also have more of
a manufacturing industry if it weren't for China. Right, So
there's two sides.
Speaker 2 (05:43):
To it for every but it is much more expensive.
Speaker 4 (05:45):
The labor's much more expensive. But maybe it's worth paying
more for our consumer goods. The White House believes if
that guarantees a future for the US manufacturing industry, a
path to a stable middle class life for US workers
and locks in our national security.
Speaker 5 (06:06):
Right.
Speaker 4 (06:06):
Part of the argument here is not about economic efficiency
and profits and market gains. It's about recognizing that China's
a geopolitical rival, and do we want to be so
dependent on a geopolitical rival for crucial interests?
Speaker 2 (06:21):
Well, will you talk about you know, high end manufacturing,
advanced manufacturing. I understand the drive there when you're talking
about making socks or sneakers. Is that really what we
want to bring back to this country? What would our
economy look like?
Speaker 4 (06:36):
I think that's a great question. Joe So, I used
to live in China. Yeah, and I visited some of
the manufacturing centers. I've seen what it's like working in
a factory that snaps together iPhones or shows up sports gear.
Those are great jobs if you were working on a
Chinese farm, because by going into the factory your double
(07:00):
tripling your income. Are they a great job if you're
a US worker? Do you want to work in those conditions?
I think there are some questions there.
Speaker 2 (07:10):
Well, I'm sure that's true. As a go forward. You
look at this truth post from Donald Trump that I
was reading. He seems to think that a deal with
South Korea would unlock a deal with China. In fact,
says their top team South Korea is on a plane
heading to the US and things are looking good. Were
likewise dealing with many other countries, all of whom who
(07:30):
want to make a deal with the United States, and
he points to China could some motion in the region,
South Korea, Japan in fact unlock a deal with Beijing.
Speaker 4 (07:39):
So I think there are some really important differences between
South Korea and China when it comes to their relations
with the United States. So the first one is South
Korea is a US ally, and South Korea relies on
US troops as part of the deterrent against North Korea.
Exports are also important as a driver of South Korea's growth.
(08:03):
They really can't do without export markets.
Speaker 6 (08:05):
So for security.
Speaker 4 (08:07):
Reasons, for economic reasons, for treaty reasons, you can understand
why South Koreans might be wanting to get on a
plane to Washington, DC. None of those things apply to China.
China is not a US ally. China is in many
respects a US adversary. Exports are important for China's economy,
but not nearly as important as domestic demand. So they
(08:30):
take a hit here, but it's nothing like the size
of the hit which South Korea would take. So it
doesn't surprise me that some small, some mid sized economies
like South Korea should be picking up the phone. Does
that mean China is going to be picking up the phone?
I'm not holding my breath.
Speaker 2 (08:49):
Wow, this has been a clinic with Tom Orlick in
our remaining moment here, Vietnam accused of wandering Chinese goods
through its country in the end, pre evading tariffs. Essentially,
do tariffs stop that kind of behavior? Is Vietnam caught
in the middle?
Speaker 4 (09:07):
So think about the difference between Trump one and Trump two.
Trump one, China got hit with tariffs, Vietnam didn't get
hit with tariffs. Mexico didn't get hit with tariffs. Right,
that's a world where if you're a bit crafty, you
can game the system.
Speaker 2 (09:22):
This has changed that.
Speaker 4 (09:23):
Let's send the ship to Vietnam, right, and then onto
the US, and then we can dodge the tariffs. If
everyone get hits with tariff. If everyone gets hit with tariffs,
that game doesn't work anymore.
Speaker 2 (09:32):
Boy, fascinating. I hope we can stay close with you
on this because the next couple of days it sounds
like we'll be critical here in the region. Tom Orlick,
he's the chief economist at Bloomberg Economics for a reason
and great to have some time. Tom. Thank you so much.
You're on the fastest show in politics.
Speaker 1 (09:49):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm. He's tern
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You can also live on Amazon Alexa from our flagship
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Speaker 2 (10:08):
Congressman Pat Fallon, the Republican from Texas's fourth Districts, is
watching all of this happen and joins us now live
on Bloomberg TV and Radio. Congressman, it's great to have you.
We've been hearing a lot of concern from both sides
of the aisle, certainly in this hearing this morning with
the US Trade Representative about the impact of these tariffs
and exactly what's going to happen after midnight tonight. Are
(10:30):
you hearing a coherent message from the White House that
you can support? Is the President going to make the
country stronger at midnight tonight?
Speaker 6 (10:37):
Absolutely?
Speaker 7 (10:38):
And I am hearing a coherent message, and that is
that there are So I just was with Leadership and
they had just got off the phone with President Trump,
and he said to them there was about seventy countries
that have reached out to the administration and wanted to
negotiate trade deals.
Speaker 6 (10:53):
So what it looks like at chipping up?
Speaker 7 (10:55):
And I'm not going to panic at all, and I
don't think anybody should, because things like this, you know,
days in a weeks, they should be measured in days
and weeks, they should be measured in months and years.
Speaker 6 (11:03):
And I do think that we're going to see.
Speaker 7 (11:05):
Trade deals really a cascade of them that will strengthen
this country, will put us in a better position.
Speaker 6 (11:11):
And I think the economy will show more strength.
Speaker 8 (11:15):
Well, Congressman, as we consider that kind of time horizon,
what are you telling your constituents about what they should
be bracing for in the days and weeks ahead, in
the more short term compared to what you just described
as the months and years ahead. Because this is consistently
how we see it framed by this administration, short term
pain for longer term gain.
Speaker 7 (11:34):
I think really what you're asking, Kayley, is how short
term is.
Speaker 6 (11:38):
Short term is it going to be yes, exactly. Don't
have the crystal ball.
Speaker 7 (11:43):
But what I suspect will happen is that once we
see these major countries making deals like Vietnam, that would
be that's a sizable deal.
Speaker 6 (11:52):
Obviously the EU would be.
Speaker 7 (11:55):
Seismic, and then the markets will see, Okay, we're seeing
some steady stability, we're seeing some achievement, and you're going
to see a slow isolation of China, and then it's
up to them to make a deal. I know that
they're going to have to say face and whatnot, but
this trade war will hurt them way more than it
will hurt us. We will experience some pain, no doubt,
(12:16):
but they will experience it tenfold. So it's made behooves
them to come to the table as well. And I
think you'll see that. You just won't see it immediately
for really, I think egotistical reasons when you deal with
an authoritarian regime, that's just.
Speaker 6 (12:29):
In the equation.
Speaker 2 (12:32):
Well, they do like to buy some of our stuff
as well, but we buy a lot more of theirs. Congressman,
the US China Business Council finds that the fourth Congressional District,
your district alone exported five hundred and ten million dollars
worth of goods to China in the most recent year
we have here, twenty twenty two. What could that mean
for your local economy if those exports begin to slow.
Speaker 7 (12:55):
The fourth Congressional District in Texas as a whole has
a very dynamic economy, Joe, and if we were our
own country would be the eighth largest economy in the world.
Speaker 6 (13:04):
So five hundred and ten million.
Speaker 7 (13:05):
While that's a big number, you know what, our constituents
are rooting for America and america success, unlike some other
networks like CNN that was seemingly rooting for China.
Speaker 6 (13:15):
Was sent an article I read yesterday.
Speaker 8 (13:18):
Well, I wonder, sir, if more help will be required
for their success if these tariffs indeed go into effect
and last for some period of time. We obviously saw
in the first Trump administration that farmers were offered subsidies.
I wonder if you expect to see that again. Bloomberg
has reported that Republican colleagues of yours are considering looking
at potentially a tax credit for exporters. Would you be
(13:40):
supportive of those kinds of measures? Is it worth it
to spend more in order to raise revenue.
Speaker 7 (13:48):
Yeah, I think that it's too early to talk about
that or really seriously consider it, but we need to
strategically decouple from China. Obviously we're going to trade with
them even when this is over. But the reliant over
reliance that we've had on our number one geo political
competitor is alarming, and really COVID should have woken us
up to that reality. And we're far too reliant on
(14:10):
the Chinese right now. And this, I think is going
to act as a wonderful instrument to start that decoupling,
and that's going to make us stronger, and we need
to be We need to have more diverse trading partners.
Speaker 2 (14:24):
We're watching Wall Street turn negative here. We just want
to mention after starting with a powerful rally this morning,
a relief rally that seemed to be defying gravity considering
the news that hasn't changed too much around tariffs. As
the congressman mentioned, there was some hope for deals to
emerge from these reciprocal tariffs, but hope appears to be
fading on Wall Street, the S and P five hundred
(14:45):
turning negative. It's now up actually just by four points.
The Nasdaq one hundred is down by twenty four points
here as we make our way through the midday in trading, Congressmen,
are you hearing from constituents? Are they Are they hitting
the constituent line to ask about their retirement accounts?
Speaker 7 (15:03):
There's a few folks, but it hasn't been really all
that sizeable yet, because again, if you're an investor in
the markets, you know that what happens over days shouldn't
really concern you.
Speaker 6 (15:12):
That's more of.
Speaker 7 (15:13):
A weeks and months, So you know, let's see what
happens two months from now.
Speaker 6 (15:18):
Well, the markets, I personally think that the markets.
Speaker 7 (15:21):
Will be much higher in a few months, and I'm
maybe an eternal optimist, but I do think that this
isn't going to last.
Speaker 6 (15:27):
This is just very very short term.
Speaker 8 (15:30):
Well, speaking of short term, as you look ahead two months, Congressman,
I wonder what's going to happen in your chamber in
just the next two days, because the Speaker would like
to see a vote on the Senate pass budget blueprint,
which I know a number of your colleagues in the
House have taken issue with. Is it your expectation that
the votes are actually there for that to pass this week?
And for reconciliation to advance.
Speaker 6 (15:51):
That's a great question.
Speaker 7 (15:52):
We had a conference this morning, and it's going to
be a challenge. To be very honest, I don't know
if we're going to have the votes. I hope we do,
because all this is doing is this is like you said,
it's a blueprint to move the process forward.
Speaker 6 (16:05):
There will be then a final product.
Speaker 7 (16:07):
I personally would not vote for a final product that
doesn't have significant cuts in spending because we need to
work toward balancing a budget moving forward. Considering we have
a thirty six trillion dollar debt in climbing. We need
to take a fiscal responsibility seriously, not just on the
campaign trail, but actually here in Washington, d C.
Speaker 6 (16:24):
So I don't know exactly what's going to happen.
Speaker 7 (16:27):
We'll see, but if we don't, then we're going to
have to work together and we have to extend the
Trump tax cuts. We have to have a plan in
place to go and be a bit more disciplined fiscally,
and so I hope that we can get there.
Speaker 2 (16:43):
President, writing on Truth Social last night, the House must
pass this budget resolution and quickly with the caps lock on. Congressman,
will this actually get out of the Rules Committee to
get to the floor. That might be the most important
hurdle here considering some of the Republicans who are concerned
earned about the level of cuts in this blueprint.
Speaker 7 (17:03):
Well, Joe, what we don't want to do is take
it to the floor and fail. So we really have
to count the votes. We have to do the whip
counts before that happens. And again I hope that it will.
We're going to hate be having dinner with President Trump
tonight and we'll be talking about that, and if we
have it, we'll go forward. But if not, there's always
going to be a third way. It's not binary with
it's either pass or fail. There are going to be
third ways to get to that success. But we have
(17:27):
to do it together. We have to have currently two
hundred and seventeen votes to move it forward.
Speaker 6 (17:32):
So again I'm praying that we can do it.
Speaker 8 (17:36):
And finally, Congressman, we just have two minutes left here.
But given your seats on the Intelligence and Armed Services committees,
I wonder what you make of the other news we
got from the President yesterday about direct talks with Aron
to take place on Saturday. What is your expectation or
your hope that that conversations will be able to yield.
Speaker 7 (17:54):
You know, I very rarely I'm going to oppose having
a conversation with another nation state because you know.
Speaker 6 (18:00):
President Trump tried that in his first term with North Korea.
Speaker 7 (18:03):
Really nothing came of it, but I really applauded the
effort because why not talk with President Reagan said, trust
but verified. So even if you came to some accord,
you have to make sure that their actions match their
rhetoric in the pages that they signed in any kind
of an agreement or treaty. So I do applaud talking,
(18:23):
but you know, Iran's on the run. They are not
strong right now. Israel has decimated, has blowed and decimated Hamas,
and even President Trump with his latest strike on the
Houties and Iran losing Syria, they're on their heels. So
we'll see. It could just be all rhetoric, it could
be for show, but we'll find out.
Speaker 6 (18:44):
Indeed we will.
Speaker 8 (18:44):
Congressman, thank you so much for your time this afternoon.
Congressman Pat Fallen, Republican representing Texas's fourth District, live from
Capitol Hill with us here on Balance of Power on
Bloomberg TV and Radio, as we track what's happening in
politics and how it coincides with what's happening in the markets.
A brief dip lower on the S and P five
hundred after a rally of as much as four percent.
Right now we're up just shy are just around twenty
(19:06):
points up four tens of one percent on the S
and P.
Speaker 2 (19:08):
Vicks barely budging, and Bitcoin is lower today. It's hard
to make sense of all of this, but we'll continue
with our political panel coming up next here on Balance
of Power. Looks like we're getting another bit under this market.
Speaker 8 (19:21):
Kley, Yeah, we'll see if it lasts. This is Bloomberg
TV and Radio.
Speaker 1 (19:28):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Alma 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 (19:44):
Thank you for being with us on the Tuesday edition
here on Bloomberg TV and Radio. The anxiety that's being
felt over tariffs on Wall Street is being felt here
in Washington as well, and not only by Democrats, most
Republicans on Capitol Hill have been behind the Trump administry
on this. Most who you here join us on balance
of power speak to the short term pain, long term
(20:07):
gain aspects of this. But there are some Republicans now
who are beginning to vocalize their worries. Senator Ted Cruz
is one of them, referring to Elon Musk as the
angel on President Trump's shoulder. Tom Tillis, the Republican from
North Carolina, made his views clear today unless he was
just Kaylee trying to get tape on himself in case
the tariffs don't work out, right, we can play this
(20:29):
back during a campaign. This was part of testimony of
the US Trade Representative jameson Greer before the Senate Finance Committee.
Listen to Senator Tillis in.
Speaker 5 (20:39):
This scenario, the decision maker who decided the ala prima approach,
who has obviously had to have spent time anticipating what
we saw in the markets and some of the pushback.
I'm assuming this all got gamed out because it's a
novel approach.
Speaker 6 (20:54):
It need to be thought out.
Speaker 5 (20:55):
Whose throat do I get to choke if this proves
to be wrong?
Speaker 8 (21:00):
Yes, that was the quote, whose throat? And you might
get to chill Well. Jamison Grier kind of reluctantly said,
you can always look at me or talk to me
about that service the USTR, but we want to talk
to our political panel about this. Rick Davis is with
US Bloomberg Politics contributor and Republican strategists partner at Stone
Court Capital, alongside Kristen han Today partner at Rock Solutions
(21:21):
and democratic strategist. Rick, Are we about to see some
serious Republican on Republican violence, either metaphorically or physically speaking
over this tariff issue?
Speaker 9 (21:31):
Yeah, I definitely think we're entering the era where there's
very little anxiety between Democrats and Republicans because Republicans basically
see this as a win or lose proposition amongst themselves.
So now the question is between Congress and the administration,
who's going to pay right? I mean, Donald Trump's a
decision maker. There's no question that there's not a policy
(21:53):
making apparatus that includes the Trade rep that's going to
decide these tariffs. So he can do all the damage
he wants. But that's like, you know, hitting the fodder,
not the target. And so the reality is, I think
you're already starting to see cracks in the congressional armor
around Donald Trump. And there's legislation in the Senate that
(22:17):
is bipartisan that would take away some of the leverage
that Donald Trump has to do these tariffs. And it'll
be interesting to see how far that goes, because that
echoes the Senator tell Us' comments, which is, if I
trust you and don't vote for that measure and take
it back into my own control, who's going to pay
(22:38):
the price when I go down in my Senate seat?
Speaker 2 (22:42):
How does this play often? Kristin, I'm guessing you're kind
of enjoying watching this conversation. Senator Ted Cruz says there
are angels and demons vying for influence in the White
House picture. Peter Navarro on one shoulder, Elon Musk on
the other. Apparently Musk did direc directly appeal to President
Trump over the weekend to keep the reciprocal tariffs from
(23:04):
taking effect. It will impact his business at Tesla. Peter
Navarro says he's not really a car manufacturer, He's an
auto assembler. How does all of this end. Where's the
rupture in the administration or in the party that you
see coming.
Speaker 10 (23:21):
I mean, that's a very good question. Actually we're only
four months into this administration, if that, and you're kind
of seeing I mean, you look at what's happening. The
markets are just one of the things that's happening. But
you know, I think that the president has been teflon
for so long, and Republicans in the House, in the
Senate for the most part, have stood behind him. And
(23:42):
like you mentioned earlier, the talking point that everybody's using
right now is that, you know, this is a major
disruptive policy. We knew that going in. We knew that
there was going to be pain. You know.
Speaker 6 (23:53):
I think he was.
Speaker 10 (23:54):
Saying, you've got to operate or give medicine or something.
You know, if you break it, you bought it. But
you you know, there's you're sitting you're starting to see
these certain cracks, and I think a lot of people
are seeing there holding their breath, hoping that the market's
rally and that you know, the tariffs had their well
Donald Trump's intended effect. But I think that there's gonna
(24:16):
be a lot of pain. And you're looking at, you know,
a country like China, and what is the impact of
these tariffs going to be on you know, people across
this country and they're they're buying ability to buy goods
and services when like it or not, we rely on
a lot on a lot of cheaper goods that come
(24:38):
in from China. So you know, people hired Donald Trump
because they you know, they were they were being squeezed
by inflation. They couldn't buy things at the grocery store.
The cost of goods was far too high. But if
he does stuff to make it worse, I think that
you will see repercussions at the ballot box.
Speaker 8 (25:00):
I want to go back, Rick to this idea of
the angel of Elon Musk and the demon of Peter Navarro,
because they both clearly see each other as villains in
this story if you judge their public comments about each other,
including Elon Musk Overnight saying Navarro is truly a moron.
That is a direct quote, also calling him quote dumber
than a sack of bricks. The White House Press Secretary
(25:21):
Caroline Lovett, who was briefing reporters right now, was asked
about this, and she says, boys will be boys, and
we will let their public sparring continue. Obviously, Rick, these
are grown men we are talking about in their fifties
and seventies respectively, but their public sparring to allow it
to continue. Does that not undermine the messaging of this administration?
Speaker 2 (25:40):
Yeah, for sure.
Speaker 9 (25:41):
I mean, this is just a cloud that kind of
sits over the administration's effort to define what they're trying
to accomplish on tariffs. And if it weren't such a
dramatic impact, we've seen what's happened to the market since
the President has marked upon as tariff policy. You don't
need a lot of noise in the system that's going
to rankle those markets. And so the fact that one
(26:05):
of the top advisors to the President, Elon Musk, who
is also the world's wealthiest man and has two hundred
and nineteen million followers on his platform x is somehow
picking a fight with the top trade policy person in
the White House is.
Speaker 2 (26:23):
Crazy.
Speaker 9 (26:23):
I mean, no other administration would tolerate that. Either they'd
be told to shut up and go to their neutral corners,
or somebody would win that fight and the other person
would be out of the administration. And so the fact
that this is sort of gumming up what is already
a challenging message narrative for the administration doesn't help the
(26:44):
markets either. And so what we see today after you know,
some optimism that they're going to be deals cut with
places like Japan and maybe you know, Israel. The Prime
Minister was in the Oval Office yesterday talking about some
of these things has been overshadowed by the Boys Will
(27:04):
be Boys frat party fight in China, basically saying as
our largest trading partner, stick it. So, I mean, you know,
I don't know which narrative you like, but neither one
of those are going to fit a productive political scenario.
Speaker 2 (27:22):
Kristin Kayley mentioned some of the nicer things that Elon
Musk has said about Peter Navarro on Twitter. A couple
of his posts were deleted, in fact, because they were
so offensive. There's one that I could not read on
the air here if I wanted to keep my job.
Is this how it ends with Elon Musk? Peter Navarro
went to jail. I think we could say for Donald Trump,
(27:43):
I mean, that's pretty loyal when it comes down to
who's gonna survive this fight?
Speaker 10 (27:50):
Yeah, I mean I think when you talk about Donald Trump,
I mean we've always talked about how he kind of runs,
whether it's his business or the White House like a
mom boss you know, dedication and loyalty seemed to be
the number one thing he cares about. So we'll see
who comes out of this fight on top that. I
totally agree with, Rick Scott. I mean, I mean, I
(28:11):
didn't think there was anything that could surprise me about
this administration. But when you see two of the top
advisors to the president of the United States publicly fighting,
it's not good for anybody, particularly not their messaging going forward.
So I guess we'll have to see this What did
they call it a locker room Maybe that was a
(28:31):
previous thing they called locker room talk or boys will
be boys. That's just not a good answer, and frankly
they should come up with a better solution to this
little spat.
Speaker 8 (28:42):
Well, Caroline Levitt has had to answer more questions than
just about this little spat. She was talking about, specifically
tariffs and US manufacturing being brought back by them. She
suggested that the president thinks the US has the workforce
to make iPhones. Rick. This is of course, as we
consider the supply chains of companies like Apple who left
China or started to diversify away from China to other
(29:05):
countries that are also now facing incredibly high interest rates.
Even if we had the labor supply, do we have
the desire on the part of the American workforce to
work in that kind of manufacturing. Is there not a
reason why it was outsourced to other countries aside from
just the cheapness of that labor.
Speaker 9 (29:21):
Yeah. Look, I mean, you're almost at full employment in
the United States, So where you're finding thousands of workers
who are going to go into a factory and assemble
iPhones and things like that, it would be a challenge.
And the fact is that none of those things can
happen overnight. I think conservatively they're talking years to be
(29:44):
able to recreate the manufacturing and forget about the supply chain,
because the supply chain that all the parts and materials
and technology that goes into an iPhone is also built
in China. And so where's that supply chain going to
come from? Because we're ill equipped to start manufacturing the
(30:05):
kind of components that go into these kinds of units.
Why because they're done much cheaper in other markets. So
I think a lot of this talk about how we're
going to bring back manufacturing in the United States needs
to be accompanied with what kind of manufacturing are we
really going to become the low cost producer in the world.
(30:25):
Of course not, and we don't want to be because
we aspire to better things for workers in America than
you know, a sweatshop. So I mean, the reality is,
when you really open up the Pandora's box on this
kind of rhetoric, you really wonder what it is we're
trying to accomplish. Good jobs, high paying jobs, you know,
(30:47):
technical jobs that would encourage people to get better educations. Yes,
those are the things we're looking for here in the US.
Speaker 2 (30:56):
Rick Davis, Stone, Core Capital, Kristen Hahn, Rock Solutions are
great panel. As Howard Lutnik said on CBS Sunday Morning,
the army of millions of human beings screwing in little
screws to make iPhones, Kayley, the kind of thing that's
going to come to America. We'll see about that much
more ahead here on Bloomberg. Stay with us on Balance
of Power Live from Washington.
Speaker 1 (31:17):
You're listening to the Bloomberg Balance of Power podcasts. 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 play Bloomberg eleven thirty.
Speaker 8 (31:36):
The current Treasury Secretary has just hit us with a
fresh post on X about these tariffs, Joe Scott Bessen
saying President Trump's end goal is bringing back jobs and
manufacturing to the United States, raising wages, increasing revenue, and
reviving the American dream. He goes on to say that
what they're trying to do is quote right, the wrongs
of long standing global trade imbalances.
Speaker 2 (31:57):
That's right, different than raising redue, for instance, to pay
for tax cuts. As we seem to get together every
day here Kayley, to figure out which one it is,
what is the drive and maybe it's a combination. There
they're in de baseline tariffs stay in place, generating that
ten percent to help fill coffers in the US, and
we use reciprocal for negotiations. All of these questions are unanswered.
Speaker 8 (32:22):
Well, and there are questions that we have as well.
For Greta Pisch, partner at Wiley Ryan, former General counsel
at the Office of the US Trade Representative, who is
joining us now here on Bloomberg TV and Radio. Greta,
when we consider the prospects of this being a revenue raiser,
if at least in part that is what the objective
is here, to what extent will any revenue gains be
(32:42):
offset by just lower trade between the US and its
trading partners, Because we've heard from many economic minds that
it is expected that the actual volume of that trade
will go down and that impacts the overall number you
could bring in.
Speaker 11 (32:55):
Right, Yes, that's exactly right. As you raise the tariff,
you would expect demand for imports to go down, and
in fact, that's what the administration says that in part,
that's what they want to do by creating incentives to
move manufacturing here. So if your primary objective is revenue raising,
(33:18):
what you may want to do is have a relatively
lower tariff on a broader base of imports, which sort
of sounds like that ten percent base that they've already
put in place that came into effect on Saturday. Higher tariffs,
of course, are going to drive import volumes down and
ultimately lead to less revenue collection.
Speaker 2 (33:39):
We heard from the US Trade Representative Jameison Greer in
testimony earlier today. Has got two days worth today in
the Senate where he spoke with Senator Bennett Michael Bennett
of Colorado about the impact of these tariffs.
Speaker 12 (33:52):
Let's listen, what is that the American people should expect
to be able to suffer as a result in terms
of rising prices.
Speaker 13 (34:00):
I think there's not really a one to one on
tariffs and price effects, and so many things go go
into price I know you think I'm probably like dodging
and weaving on this. Well, but I'm looking at data.
Speaker 12 (34:11):
I know you're smart enough to know that the likelihood
is that prices are going to go up for the
American people as a result of the tariffs.
Speaker 2 (34:19):
Was he dodging and weaving there? I'm trying to understand
where the administration is on this because we hear a
lot about a one time impact. Wall Street's factoring in
it looks like a lot worse.
Speaker 11 (34:32):
Well, you know, it isn't so much a dodge and
weave in the fact that you know, inflation has a
lot of components that go into it. It's a macroeconomic
indicator that isn't just driven by tariffs, and in fact,
often it's it's something else going on the labor market,
supply demand. In the past, you know, we haven't seen
(34:54):
tariffs drive inflation, even in the first Trump administration when
tariffs went up quite a bit on Hi and that
felt like a lot at the time. Of course, now
what we're talking about is much bigger. That action did
not cause inflation or other tariffs that have been put
in place in the Trump administration and other administrations. We
(35:15):
just don't usually think of tariffs as being an inflation driver.
This is a big experiment of a much larger trade
action than we've ever seen. So in part, we'll have
to wait and see and how it interacts with other
parts of the economy. But I think his comment is
valid in the sense of looking back at how we
(35:35):
usually think about tariffs and their magnitude and their impact
on the economy. It is a bit complicated as to
how they get bigged into prices and what their effect is.
Speaker 8 (35:46):
Well, I'd like to talk about one specific magnitude of
tariffs on one of our trading partners, GRETA, and that
is China, because in addition to the twenty percent tariffs
that have already been put into place to combat what
the White House argues as the trade of fentanyl, and
thirty four percent in terms of the reciprocal tariff rate
it was already intending to impose at midnight tonight. The
White House has confirmed today it is going ahead with
(36:08):
that additional fifty percent tariff on Chinese goods, bringing the
effective rate to one hundred and four percent. With a
level that high GRETA, what is realistically going to happen
with the trade relationship between the US and China and
the flow of goods?
Speaker 6 (36:24):
Well, like all of.
Speaker 11 (36:25):
These tariffs, you know, I think the big question is
what is the endgame?
Speaker 3 (36:30):
What is the.
Speaker 11 (36:31):
Administration attempting to achieve with these tariffs? And it may
be different and likely is a bit different with respect
to China than with respect to other trading partners, But
I think a question here is is this about decoupling
from China? Is it to increase leverage to have a negotiation,
(36:52):
which it seems like at times the President may have
alluded to. Those are very different outcomes, and China is
going to have its own as every trading partner has
its own prerogatives and its own domestic economic and political
imperatives that it has to answer to. And so I
(37:13):
think at this point we don't fully understand what the
administration's strategy with the President is hoping to achieve with
this further increase in tariff, But you know, I think
it's certainly going to be a consequential action and potential
discussions with China going forward.
Speaker 2 (37:33):
Does the US Trade Representative's Office model this maybe in
conjunction now with the Secretary of Commerce to kind of
play this out to see what it is we're actually
asking for. When you hear Howard Lutnik talk about iPhones
being assembled in the US, once again, we heard from
Dan ives On that the analyst said that would mean
basically a three thousand dollars iPhone where it becomes the
(37:55):
line of diminishing returns when decisions like this are being made.
Speaker 11 (38:01):
I mean, it's a great question, and again we don't
know what's in the mind of the administration and the
President and what they're hoping to achieve with these tariffs
and negotiations. Just a few minutes ago, the Press Secretary
Caroline Lovett said that the President was directing members of
the trade team to come up with Taylor made deals
(38:23):
for trading partners that are unique with respect to the
trade relationship imports, exports, the barriers in each of those markets.
So that indicates that you know, it may be a
different scenario for each and every one of this over
one hundred trading partners. But again we don't have a
(38:46):
clear sense of what the ask is and what the
end state is. You know, where do they want to
be in nine months, in eighteen months, what do they
want the tariffs to look like, and what do they
want the results of any negotiations to be.
Speaker 8 (39:01):
And finally, Greta, in our final moments with you, given
that you were general counsel at the USTRD, do you
have any hesitations around the actual legal mechanisms with which
President Trump is acting to enact these tariffs, because there
are now movements in Congress toward kind of resting back
congressional authority through resolution to exert that Article one privilege
(39:21):
to actually be the ones in charge of tariff policy.
But how would all of this stand up in court?
Speaker 11 (39:28):
Well, Congress certainly has the ability to take action to
counteract or address the trade policies that have been enacted
by the President so far. And yes, there are also
rumors or in even one case that's been filed to
challenge some of the tariffs that have been put in
(39:49):
place since President Trump came into office. But I think
there's a lot of question marks there. He is stretching
these authorities in new ways and them in a magnitude
that hasn't been attempted before. But and so we just
(40:09):
don't know what the courts are going to do with that,
and whether any of these challenges will be successful. But
I would just say that even if the courts are successful,
or even if litigants are successful and challenging some of
the actions that have been taken place so far, the
president has other tools and authorities that can be used
to put tariffs in place. So you know he is
(40:32):
committed to this policy. It would seem he thinks that
tariffs are effective in addressing these issues, and he'll find
a way to do it.
Speaker 2 (40:41):
Greta pises Swiley Ryan, former General Counsel the Office of
the ust Are Greta many thanks for the conversation. Thanks
for listening to the Balance of Power podcast. Make sure
to subscribe if you haven't already an Apple, Spotify, or
Worthy get your podcasts and you can find us live
(41:02):
every weekday from Washington, DC at noontime Eastern at Bloomberg
dot com.
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