Trump-Xi Truce Appears Elusive

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President Donald Trump has floated talks with his Chinese counterpart more than half a dozen times since the trade war started. But prospects look remote, even as their tariff fight appears to have peaked.

Inflicting trade pain is unlikely to bring President Xi Jinping to the negotiating table. Instead, Chinese authorities seem intent on proving that they can withstand more economic and political suffering than their archrival.

On Friday, Beijing hiked tariffs on all US goods to 125%, mirroring a move by the White House that pushed duties on Chinese imports to the same level, on top of an existing 20% tax. China said it won’t match any further hikes, calling the repeated use of steep tariffs economically meaningless, but reiterated its vow to “fight to the end” with other, unspecified countermeasures.

“The fact that the Chinese authorities have once again matched US tariff hikes suggests that they are in no rush to negotiate with the Trump administration,” said Julian Evans-Pritchard, head of China economics at Capital Economics.

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, Bloomberg's David Gura is in for Joe. Kailey and David speak with:

• Bloomberg's Jordan Fabian.
• Arbroath Group Managing Partner Christopher Smart.
• Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
• Chief Economist for SMBC Nikko Securities America Joe Lavorgna.
• Nonresident Senior Fellow with the Atlantic Council Global Energy Center Ellen Wald.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:02):
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Speaker 2 (00:25):
You've heard from Jamie Dimond and talked about stormy seas
in the markets in part because of the confusion the
uncertainty about these tariffs policies. We heard from Michael Falkunder
this morning. He's the Deputy Treasury Secretary and was on
Bloomberg Surveillance talking about what the White House is waiting for.

Speaker 3 (00:40):
We are looking for China to pull back on its
tariff retaliation and to come to the table. We are
looking for them to work with us in order to
create an environment whereby we can address these vulnerabilities, where
they can come to the table and equitably address these
long standing issues that have given them an unfair advantage.

Speaker 4 (01:04):
Not sure China raising its retaliatory terror freight on US
imports to one hundred and twenty five percent could be
easily classified as the pulling back that the White House
was looking for, but that is indeed what we got today,
and we want to get more now with Jordan Fabian,
who covers the White House for us here at Bloomberg
and U is here with us in our Washington, d C.

Speaker 5 (01:21):
Studio.

Speaker 4 (01:22):
So Jordan, the President, President Trump that is, has made
it very clear that he is willing to talk to
President She. But the signals we're getting from China is
not that they're ready to talk. They're still in fight mode.

Speaker 6 (01:32):
It seems that's right. You saw that with the retaliation.

Speaker 7 (01:35):
They put some restrictions on Hollywood films even and suggested
they could retaliate against other sectors. So you basically have
an unstoppable force meeting in a movable object, and there
doesn't seem to be an end in sight. The President
in fact indicating publicly that he wants she to call
him first, and g is saying no thanks.

Speaker 2 (01:54):
Peter Navarro, one of the President's counselors, is branding this
is ninety Deals in ninety Days, the name that would
make Murph Griffin happy, I think in terms of its tone.
Where are we in this process? We've heard over the
last few days there's been a lot of phone calls
coming in their plans for trips people coming to Washington.
Obviously the Treasury sectory running to leave on a trip. Where
does that stand in how are they prioritizing those conversations.

Speaker 7 (02:14):
I think we're one or two days past this and
we're at zero deals. So that's quite the pace that
mister Davarro has laid out.

Speaker 6 (02:21):
I want to.

Speaker 7 (02:21):
Remind viewers that these trade deals are extremely complex vehicles.
I mean, these often take years. I'm thinking I covered
the South Korea US negotiations of a President Obama. That's
something that took years and years to hammer out. And
so they have this sort of damnically is hanging over
them where these tariffs are going to go back into
place for all the other training partners on July ninth,

(02:42):
which puts a tremendous amount of pressure to read some
kind of deal. So I would assume there may be
some kind of deal in principle before maybe another specific
deal is reached, but it's really unclear at the moment.

Speaker 4 (02:55):
Well, and is it clear that other countries are taking
the administration seriously in terms of the threat to enact
tariffs on ninth if there is no deal reach. I
just wonder about the leverage the opposing sides will have
against the White House, knowing how easily President Trump has
proven to alter course on things like import taxes.

Speaker 7 (03:14):
This is the big problem right with President Trump's reversal,
is that him and his allies are claiming, you know,
this is the art of the deal. He now has
this extreme leverage over trading partners. But to your point, Kaylee,
if he's proven to change his mind on a whim,
In fact, he said to reporters he's judging this all
on instinct. If his instinct that July ninth is I

(03:34):
shouldn't go ahead with this, why should they believe he's
serious about imposing those tariffs.

Speaker 2 (03:38):
I don't want to make you look into a crystal ball,
but on the campaign trail, we heard a lot from
the President about a universal tariff, and it strikes me
as I hear you talk about the difficulty in detail
that goes into each of these negotiations, At least historically,
it would be a lot easier for the President to
do that. Is there any conversations there any way that
this ends up with just a ten percent across the
board tariff or are they really wedded to this idea

(04:00):
doing this as they say more narrowly tailored set of deals.

Speaker 6 (04:03):
It could very well end up being that way.

Speaker 7 (04:05):
And I'll remind people that those ten percent tariffs are
still in place. I know the market reacted with euphoria
with the climb down from these higher rates, but they're
still in across the board tariff on all trading partners
and one hundred and forty tariff on China. That's tremendous change.
And so even if those were to could stay in
place going forward, you know, these are terif rates that

(04:26):
are ten times the average US terraforate that existed last year.
So yeah, I'm not sure how markets would take that
even if that were to take place.

Speaker 4 (04:34):
Well, and that's before we even get to the sectoral tariffs.
You still have twenty five percent tariffs on auto imports,
on steel and aluminum imports, and the President has made
clear he's still looking at things like pharmaceuticals, chips, possibly lumber,
and copper. Do we have any sense, Jordan, of when
that shoe might drop?

Speaker 7 (04:50):
The President indicated this week that he you might announce
those pharmaceutical tariffs quite soon. As for the others, you know,
copper could come in May. I think that's when that
investigation is going to conclude. But all this adds up
to uncertainty. It's more uncertainty about his tariff plans. And again,
even if the higher rates don't go into place, Let's see,

(05:11):
you have that ten percent baseline, you have this high
rate on rate on China, They're going to go up
even more if he goes forward with these plans.

Speaker 2 (05:20):
We learned this week what we've learned before that is
it all comes down to the man who's holding the
iPhone and issues the edict at the end. President Trump's
the one who put that pause and place in a
post on untruth social We kind of are looking to
see who's leading these negotiations, who's doing what is that
the Commerce Secretary of the Treasury Sectary is at the USTR.
Why would a country want to be what is a
country who's negotiating with the White House thinking if they're

(05:42):
talking to a Scott Besson or a Howard Lutnik, if
it really is going to come down to President Trump,
and what is your sense of his engagement with this process?
Kind of writ large.

Speaker 7 (05:48):
It's a great point is that you have these people
like Bessett and Latnik who at least have some experience
in the financial field at the very least, and you
could have people like the Vietnamese deputy Prime minister who
came in this week to talk to the Treasury Secretary.
But at the end of the day, it's going to
be Trump again. He said he's deciding this on instinct.
He said this week that when he decided to issue

(06:10):
that tweet pulling back on the terraces, he did it
from the heart, and there were no lawyers present.

Speaker 6 (06:14):
And so.

Speaker 7 (06:16):
You're right, they could, you know, theoretically reach a deal
with Bessen. Besen gives it to Trump and he says
no thanks. And so that's something very difficult for other nations.

Speaker 4 (06:26):
To grapple with just because you mentioned lawyers. And I
don't even think we talked about this yesterday in the
aftermath of the cabinet meeting the President held, but he
alluded to this notion that the agreements he's making with
all of these law firms who are trying to head off,
you know, potential retaliation from the administration to do hundreds
of millions of dollars in pro boner work, that somehow
those lawyers are going to be helping kind of craft

(06:46):
these trade deals. Is that actually how it gets done.
You recruit all the DC big law community to do this.

Speaker 5 (06:52):
Work for you.

Speaker 2 (06:52):
An expansive definition of pro bono I think by the president.

Speaker 6 (06:55):
Indeed, yeah, the fact of government employees. No, it's not mean.

Speaker 7 (07:00):
Usually these agreements are hammered out by the US trade representatives.
The Commerce Department will get involved, and they have all.

Speaker 6 (07:07):
Kinds of subject matter experts on this.

Speaker 7 (07:09):
It's very unusual to turn to the private sector big
law to do this. But listen, if he's hollowing out
the federal government, maybe some of those people aren't there.

Speaker 2 (07:18):
I mean, he needs their help. A busy week when
we had this pause, obviously we had the executorder on
shower heads, all these marketing announcements from the White House.
There's also this budget agreement on the hill. What is
the president? What does the White House do now having
that enhanced, or how does this process look going forward?
The way that the White House is going to be
working with lawmakers on advancing his broader economic agenda as
this kind of roiling tariffs issue continues.

Speaker 7 (07:40):
Well, you've heard him keep haranguing House Republican or Center
Republican lawmakers too. To get this quote one big, beautiful bill.
The problem with that is that's a very complex endeavor,
and he really needs that even more now that he's
done this tariff move to provide relief for Americans who
are about to get hit with higher prices as a result
of these teriffs. To mention the fact that the debt

(08:01):
ceiling is coming up some time later this year July August.
So that sounds like a lot of time in Congress,
that's not a lot of time, and so he needs
them to come together quickly.

Speaker 6 (08:12):
You know, the Republicans have proven their fractious within.

Speaker 7 (08:15):
Their own ranks, so they really need to come to
agreement on some of those key issues on tax But is.

Speaker 4 (08:20):
It possible that for all of his rhetoric around promises made,
promises kept, what he said on the cam campaign trail
comes true in real life. It's really up to Congress
now to decide whether or not a lot of that happens.
When it comes to no tax on tips and social security,
there is a risk, right that the president doesn't get
everything he's asked for.

Speaker 6 (08:35):
Absolutely.

Speaker 7 (08:36):
I mean, those are a lot of pine the sky
s and some of them aren't popular with Republicans.

Speaker 6 (08:43):
There was this idea that he floated about raising.

Speaker 7 (08:47):
Taxes for wealthy Americans, which has been anathema to Republicans
for decades. And so yeah, he doesn't get as much
as he wants. You know, revenue comes down, you have
Americans paying higher prices, you end up running into a
lot of problems. Not to mention, these tariffs are really
straining Republican loyalty right now. So for him to then
come to come to them with these ass is a
lot for them to take joy.

Speaker 2 (09:07):
Great to speak with you, Thank you very much. Jordan Fabian,
White House editor here at Bloomberg News and Kayla, we
have the president now making his way to get his
annual physical. I guess that's on his agenda here before
the plan takes off for South Florida later today.

Speaker 5 (09:18):
Gotta check in.

Speaker 4 (09:19):
Walter read the first annual physical, of course of his
second term. That the president has long argued that he
is in perfect health.

Speaker 5 (09:26):
I think he's called the healthiest president.

Speaker 2 (09:28):
Called medical resignation.

Speaker 5 (09:30):
Yeah, we'll leave that to the doctor.

Speaker 2 (09:32):
Headline crossing here, I am a Republican governor, Kim Reynolds
announcing she will not seek reelection in twenty twenty six.
Continue to monitor that much more here as Balance of
Power continues. On Bloomberg Radio and on YouTube.

Speaker 1 (09:44):
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us live weekdays at noon and five pm. He's durn
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eleven thirty the Markets.

Speaker 4 (10:04):
Watch each and every true social post and listen to
every word uttered by President Trump. As this has been
a wild week when it comes to tariffs, A lot
has changed, but the thing that remains the same is
that the focal point of this trade war seems to
be between the world's two largest economies. This has come
down in large part to the US and China. After
China today made the decision after the White House is

(10:24):
clarity yesterday that one hundred and forty five percent at
least tariff rate is now in effect for all Chinese imports.
China raised its own retaliatory rate to one hundred and
twenty five percent, suggesting they won't even bother raising tariffs
any higher than that. Is any further escalation in their
mind from the Trump administration would be considered a joke.
The Chinese government, though, is still vowing to fight to

(10:47):
the end, saying they'll use other countermeasures if necessary, even
as President Trump suggests he wants to make a deal.

Speaker 8 (10:54):
Well, see what happens with China. We would love to
be able to work a deal. They've really taken advantage
of our country for a long period of time. We're
resetting the table and I'm sure that we'll be able
to get along very well. I have great respect for
President She's been in a true sense, he's been a

(11:16):
friend of mine for a long period of time, and
I think that we'll end up working out something that's
very good for both countries.

Speaker 2 (11:25):
Well, with friends like that, who needs enemies that President
Trump there at the cabinet meeting yesterday, Christopher Smart joins
us now. He's managing partner at our growth and we're
drawing on his experience both the National Security Council and
the National Economic Council during the Obama administration, where he
worked an awful lot on trade issues. Thank you very
much for being here, And I'm wonder sort of how
you see all of this playing out there is the
kind of long waiting period we're in now where we

(11:46):
have the White House waiting for a call from Raijing,
presumably looking at sort of how this has ratcheted up
where things stand. What do you see as the next
steps in the States?

Speaker 9 (11:57):
Well, could be with you, I mean, as you say,
with friends like that, who needs adversaries. The thing I
think that is spooking markets right now is that, on
top of all of the other uncertainty, we finally have
this US China confrontation that frankly we had been expecting
since the first day of the Trump administration, and with
all of the distractions around Canada and Mexico, is always

(12:19):
on the back burner until all of a sudden Wednesday,
these tariffs were ratcheted up to sky high levels. And
as our Chinese counterparts point out, there's not much of
a difference between one hundred and twenty five and one
hundred and forty five. It's hard right now to see
what the off ramps are going to be on this
particular bilateral relationship. President says he wants to do a deal,

(12:39):
but you know, again, when it gets to you know,
the other guy's got got to call me first. It's
not quite clear the other guy's ready to do that.

Speaker 4 (12:48):
Well, to your exact point, Christopher, this notion that China
has suggested any further ratcheting up of tariffs would be
economically meaningless, does that mean that there was a ceiling
to hit there in terms of what would already be
the complete instruction of the US China trading relationship, And
we've already hit that ceiling.

Speaker 9 (13:05):
Well, it's hard to imagine a product that is still
profitable to ship at one hundred and twenty five percent
tariff that is no longer profitable at one hundred and
forty five. So I think effectively, you know, when you
more than double the price of anything, it's very hard
to continue that relationship. And I think you've already seen
early reports of shipping companies shutting down, traffic diverted in midstream,

(13:30):
and all of that is beginning to unravel right now.
The real concern is if this goes on for more
than a few days. You know, President seems to be
quite nimble in terms of changing his posture, but if
this goes on more than a few days or weeks,
you know, we're more likely to get locked into something
that's going to continue for some time.

Speaker 2 (13:50):
I have a definitional question, and that is, are we
seeing de coupling happen? Now? Has it happened? This is
a thing that by policy, the last administration did not
want to have happen. Are we there? And if not,
when are we going to know that we are?

Speaker 10 (14:03):
Well?

Speaker 9 (14:04):
We're getting there? You know, again, nothing, It seems very
hard to imagine what you can still ship back and
forth when tariffs on both sides effectively double or more
what you're sending in both directions. Now, that takes some
time to unravel. Maybe there'll be some negotiations that stop that.
But I think your broader question is really to the point,
which is when will these threats These threats will continue

(14:28):
to lurk to loom over trade going forward with China.
And so the decoupling or the unraveling of the relationship
that started in the first Trump administration trade is down
substantially since then continued through the Biden administration. That's going
to be a problem that's going to continue for a
long time.

Speaker 6 (14:45):
And I'll just.

Speaker 9 (14:45):
Add, you know, anybody doing business with the United States
isn't just wondering what's going to happen with this administration.
But you know, two and a half three years from
now we get a new president of either party, what
is that going to look like. It's going to be
very very uncertain compared what they've been used to do
dealing with the United States over the last many decades.

Speaker 4 (15:05):
Well, and to that point on the uncertainty of the
credibility of the United States and the credit worthiness of
the United States, Christopher, I wonder what you make of
the increasing concern it seems we are seeing looking at
the activity and bond and currency markets about the suggestion
that whether it's US treasuries or the US dollars, the
world's reserve currency, that that status is safe haven assets

(15:27):
may no longer be applicable right now.

Speaker 9 (15:31):
Well, I think those are the kinds of things that
come unraveled over a long period of time. But I
think anybody, including the President, who looked at markets on
Wednesday and saw stocks, bonds, and the dollar all selling
off together, I think that was sort of a moment
of cold sweat if you're an investor, or maybe as
the President describes it, the yips. But that's something that's

(15:53):
a sense that, as you say, global investors aren't looking
to the US as a safe haven anymore. And you're
seeing bits and piece of that, as for example, US
interest rate rise, but the dollar is selling off. There
is a sense that maybe you want to put your
money elsewhere as global tensions are rising.

Speaker 2 (16:12):
As I mentioned, you worked on the NEEC and the NSC,
and I'm curious sort of what form this conversation, should
it happen, is likely to take. We're kind of dispensing
with the usual back and forth it would be done
drafting a trade deal with a country like China, all
of that shuttle diplomacy, all of the work that would
go into crafting something down to each and every nuance.

Speaker 1 (16:31):
What has to.

Speaker 2 (16:32):
Happen on that phone call? Is it the phone call
itself that's most important here to markets and to policy makers?
Or does it need to be substantial? Does there need
to be something substantial that comes out of it?

Speaker 9 (16:43):
Well, I can tell you from your earlier conversation in
this half hour, it's not going to be lining up
a whole bunch of pro bone or corporate lawyers who
are angry with you to begin with. These are agreements
that are very difficult, very technical to iron out over
a long period of time. I think just a phone
call will do a whole whole lot to calm people's nerves,
and maybe a framework and a team going back and

(17:05):
forth and something that will show goodwill towards Boat on
both sides, that a deal is possible or a limitation
of the tension is possible. Just putting in in a
box would be a big step forward at this stage.

Speaker 4 (17:19):
Well to your point on pro bono work, I would
just note that President Trump has announced another six hundred
million dollars worth of pro bono deals with a number
of law firms, including Kirkland and Ellis.

Speaker 5 (17:30):
That's just crossing his true social feed.

Speaker 4 (17:31):
So I guess we'll see what role, if any, they
play in these many, many negotiations that have to happen.
But to the notion that there are other countries that
are in this game as well, obviously or actively talking
to the White House with a ten percent levey still
in place, Christopher, which I think we all largely are
overlooking due to the dramatic figures we're seeing when it
comes to US and China tariffs. What will that ten

(17:52):
percent flat rate alone, as long as it applies, which
we assume will be the duration of this ninety days,
What is that going to do economically speaking, well, I think.

Speaker 9 (18:01):
You're absolutely right. There is so much going on right now,
and so much news piled on top of news. You
guys are doing a great job trying to make sense
of it all for us, but we've all been distracted
for what is a wrenching readjustment of the terms of
trade with the United States. The average tariff of the
US has applied to imports has been two two and
a half percent four decades, and now it is jumping

(18:24):
to ten percent. And that's the expectation that that will
remain in place. Now, that's not necessarily going to mean
ten percent increase in all prices, but as you saw
from the consumer the consumer surveys just now, people are
expecting that those prices to jump. That will lead to

(18:44):
a reaction in the FED at some point, and we're
going to have to absorb all of that over a
longer period of time.

Speaker 2 (18:51):
There's something that we hear from the President and also's
economic advisors that this could be kind of cured instantly,
that you know, we could go back to the way
things were. There could be even this to all of this.
And I want to ask you about kind of the
horse out of the barningness of all of this, and
this conversation about American exceptionalism. You talked about the kind
of reconfiguration that we've seen of geopolitics and economic relationships

(19:12):
around the globe. As you sit and look at all
of this and assess the damage that's been done here
in terms of confidence and reputation, how difficult will it
be to snap one's fingers and return to the way
things were or have a you know, have the comedy
that was that was there just a couple of days ago.

Speaker 9 (19:30):
Well, I may actually steal the horse out of the
barningness effect that just referenced, because I think the horse
is out of the barn. It's one of those things
that takes years and years and years to build up
confidence and a sense of transparency that you can rely
on another trading partner. And the as I mentioned before,
you know, the shifts and mixed messages that we've been

(19:54):
getting from this administration have been very disruptive to our
trading partners. But I think again, as you look over
the last ten years, and again it was the Trump
administration in the first time around. The Biden administration kept
some tariffs in place and added some tariffs, which is
very different from the way the United States has done
business in the past. Anybody who wants to just look

(20:15):
past this administration has to keep in mind that we're
dealing with a new United States that is turning more inward,
that is more likely to provout to apply tariffs than
take them away, and that I think creates some longer
term uncertainty about what adds to the costs of doing
business with what has been an exceptional economy.

Speaker 4 (20:38):
Christopher, Finally, before we let you go, we just have
a minute left here. I'm sorry this may be an
unfair question, but would you say the odds of a
recession occurring within the next year are now greater that
it happens than that it doesn't, even with this ninety
day pause in place on the higher rates.

Speaker 9 (20:52):
OK, they have to be greater, because nobody is feeling
more comfortable right now than any decisions that were on
hold a few weeks ago or even last week can
go ahead with them. They're going to want to see
if you know, what kind of deals come together, how
they come together, how many countries sign up, and then
they are they likely to stick? And then after that
there are the sectoral tariffs that may or may not

(21:12):
come and go, and then after that there's this whole
US China relationship that is going to evolve over months
and years. So I think that uncertainty has to create
higher risks of recession towards the end of this year.

Speaker 4 (21:26):
All right, Christopher Smart, it's always great to have you,
former Special Assistant to the President for International Economics during
the Obama administration, now managing partner at our Growth Group.
Here with us on Balance of Power on Bloomberg Radio
and on YouTube as well. Right now we are looking
at some rising equity markets though the Nasdaq one hundred
just crossing one percent gained territory. We'll have more on
the latest for you on the other side of the spreak.

(21:48):
This is Bloomberg.

Speaker 1 (21:52):
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Speaker 2 (22:09):
Continuing to watch markets this afternoon as we see some relief,
some enthusiasm and the equities market, but again keep an
eye on treasure markets in specific as earning season gets underway.
In Earnest as well, we heard from Jamie Diamond for
i think the third time this week on that conference
call with investors. Of course, he did an interview earlier
in the week with Fox Business one that was of
keen interest to the President of the United States and

(22:29):
preceded his pause on some of those tariffs, and reached
out in a lengthy memo to JP Morgan investors as well,
because the conversation here still revolves around this uncertainty even
as we've seen the tit for tat between the US
and China, wondering how all of this winds.

Speaker 4 (22:44):
Up well, and that was exactly what Jamie Diamond was
speaking to after JP Morgan's earnings, this notion that yes,
he could see how there are good things coming in
terms of deregulation in tax cuts, but there's also the
uncertainty that comes with these tariff policies and more widely
the economic outlook as we looked at what Charlie was
just describing Emish consumer sentiment data for example today, so

(23:04):
it kind of speaks to the volatility we have all
experienced over the last week. Is the market maybe has
some things it wants to look ahead to, but can't
seem to get past a lot of the immediate headwinds when.

Speaker 5 (23:15):
It comes to the tariffs that are still in place
right now.

Speaker 2 (23:17):
And that data that we got from Michigan so crucial
because we see kind of the premissy of that soft data,
that sentiment related data. Guess we got a lot of
hard data this week on inflation. And while the President
did take credit for the fact that it hadn't moved
that much, he said, no inflation, just a little inflation.
Of course, backward looking data. And this sentiment gives us
some insight into how, yes, consumers are feeling about the future,
their savings, their prospects, but small business owners as well.

Speaker 11 (23:40):
Yeah.

Speaker 4 (23:40):
Well, and that souring sentiment maybe giving Democrats something to
seize on here is they try to use a message
that arguably helped Trump win the White House, which is
about the economy now against him. And that is the
note we begin today's political panel on Bloomberg Politics and tributors.
Rick Davis and Genie Shanzano are with us. Rick of
course as a partner at Stonequirk Capital, and Republican strategist
Genie and Zeno our Democratic analyst and senior Democracy fellow

(24:02):
at the Center for the Study of the Presidency and Congress,
Genie as the Democrat I will start with you on
this as we're hearing messaging now from Democrats on Capitol
Hill about this being chaotic even if President Trump pulled
back on Tariff's reciprocal tariffs. So that is for the
time being that the chaos is really what the name
of the game here is.

Speaker 5 (24:22):
Is that a message that works for them?

Speaker 12 (24:25):
It should be you know, I feel, Kaylee, like, if
Democrats can't use what has happened over the last week
against this administration and against Republicans, they ought to hang
up their hat and go home. Because Donald Trump won
last November on the back really of a really heterogeneous

(24:45):
group of voters who came together to support him because
they were disgusted by the economy that Joe Biden had created,
whether that was deserved or not, and particularly the rising prices,
particularly inflation, and Donald Trump in less than eighty days
has made all of that much worse. So if Democrats

(25:06):
cannot use that to their advantage as we go into
twenty six and again into twenty eight, they really don't
have any hopes but I'm hopeful, Kaylee. I'm going to
be optimistic on a Friday that they can use it
to their advantage politically, because this has been quite a shock,
and not just to Democrats but Republicans and Trump supporters.
And we've heard the discontent from all areas.

Speaker 2 (25:29):
Capitol hillill bit quiet on this rainy Friday in Washington
as lawmakers make their way home for recess. But before
they did, the Minority Leader Hakim Jeffries spoke about the
pause that we saw put in place all of the
undulations related to these tariff's policies. Let's take a listen
to what he had to say.

Speaker 11 (25:43):
What, if any advanced knowledge did members of the House
Republican Conference have of Trump's decision to pause the reckless
tariffs that he put into place. There are several members
of Congress who will be aggressively demanding answers and transparency,

(26:09):
particularly as it relates to stock purchased decisions that may
have occurred over the last few days.

Speaker 2 (26:18):
Well, one of those members was Mike Levin, congressman from California,
who joined this last night in balance of power. He
was a signatory to a letter to Republican leadership in
the House wanting an investigation into what trades may or
may not have happened on the day that that pause
was announced. Gity, how resonant is this call that we're
hearing from Democrats as we talk about what their messaging
should be is going forward here? Yes, there is the

(26:39):
kind of calamitous roll out of this tariff's policy as
we saw it play out in the markets. Is this
something that's going to resonate? Do you think with voters
this focus here on what may or may not have
happened in terms of market manipulation.

Speaker 12 (26:51):
I think it's absolutely going to Even before this happened,
we had Bernie Sanders, Alexander or Casio Cortes out there
saying that Trump and the Republicans are all about the
super wealthy. And you know, one of the astonishing things
for me, David, was to have the President sit in
the White House and brag about how his friend made

(27:12):
two point five million dollars today nine hundred million dollars
he said about Charles Schwab and Penske. You know, to
have a president sitting in the White House saying that
is an underscoring of the fact that this is a
president and a party about the uber wealthy. He's celebrating
publicly that fact. By the way, on the same day

(27:32):
that Bloomberg called the best day ever for billionaires, there
was our billionaire president celebrating that. Absolutely, Again, something Democrats
should be able to underscore. Whether they do or not
is another question, but Sanders and others are out there
doing it.

Speaker 13 (27:47):
Now.

Speaker 12 (27:47):
The moderates have to take up the reins, and I
think that's what Jeffreys is calling for.

Speaker 4 (27:52):
Yeah, I believe it was a thirty six billion dollar
swing in the net worth of Elon Musk on Wednesday
during the rally.

Speaker 5 (27:59):
Obviously didn't stick. Yes, even if we're seeing stocks in.

Speaker 4 (28:02):
The green today, Rick, But it comes back to what
the political liability is for President Trump around the volatility
in the markets. Is he tried, at least to a
certain extent, to look through it. Obviously maybe couldn't get
past some of the activity we saw in the bond
market a few days ago. But how how much does
it matter when people are panicking looking at their four
O one case.

Speaker 14 (28:22):
Yeah, Look, I mean, you know, some of these issues
have real residents with voters, and some don't have much
of a partisan edge. This idea that somehow members of Congress.
You know that there's a difference between Republicans and Democrats
insider trading. It's pretty clear in the pulling we saw
before the election day last year that basically voter sink

(28:43):
everyone is insider trading in Capitol Hill. And you know,
they can't pass a bill that outlaws it, and so
they must all be in on it. And so I
don't think it's really a partisan issue, but you do
see a collapse of the consumer sentiment around the swings
in the markets and the uncertainty that's created around this

(29:06):
tearf regime. And and you know you're seeing record drops,
you know, ten percent in March, more in February, you know,
thirty percent since December in consumer confidence. That's a real poll, right,
Those are the polls of consumers telling you whether or
not they're optimistic about the future. And it's only grown
worse in selection day, which, by the way, was that

(29:29):
one of its highest points in the last you know,
five or six years. So we've fallen a long way
in making sure that our consumers have confidence in our economy.
And that's on the president himself, you know, his vacillations
and and and you know, incredible sort of rolling the

(29:49):
dice with this massive tearf regime has consequences, and we're
now seeing those with consumers.

Speaker 2 (29:57):
Rick, put yourself in the position of a Republican lawmaker
going home to his district for the next two weeks.
Maybe you'll have a town home. Maybe he won't likely
encounter a constituent who's going to ask him why is
this happening? Why is the president doing this? Is there
a clear message from the White House down to those
backbench lawmakers about the rationale for doing this that they
can kind of easily succinctly explain to constituents on the

(30:21):
right or the left who just wonder what's going on
here and why we've seen the kind of undulations.

Speaker 6 (30:24):
We have Now.

Speaker 14 (30:25):
That's part of the problem is that we don't have
a set of talking points that members of Congress on
either side can adequately address the current situation. I mean,
what guidance has the White House given, you know, Republican
officials going home, as you point out, for easter recess
and indoubtedly they're going to be communicating with their voters

(30:48):
and constituents, and what are they going to tell them, Like, well,
we got a ninety day pause. That's probably the best
news that they can talk about the tariffs is that
nothing you know, really extreme is gonna happen. The fact
that we're at i'd say a trade war with China

(31:09):
right now, uh, sort of cuts both ways with with
with their constituents. But the lack of certainty, the lack
of you know, sort of the kind of communications guidance
that you would want from the White House. Tell us
how to go sell this right, give us the endgame,
tell us what what's the upside for our for our constituents.

Speaker 2 (31:29):
They're just not getting.

Speaker 14 (31:31):
And I think that that we've always seen white houses
have trouble, uh, communicating their own plans. Certainly, the Biden
administration had a horrific time communicating how they were going
to try and solve inflation. You know, they went through
denial and then you know, sort of Biden nomics.

Speaker 2 (31:49):
None of that stuff work.

Speaker 14 (31:51):
That the Trump administrations have a totally different approach, which
is like, we're just not going to talk about it.
We're just gonna kind of, you know, tweet our way
through this thing and in a spasmodic fashion. And the
reality is it doesn't leave these members of Congress with
any real good guidance that they can survive a town hall,
which is no wonder why they tell people don't do

(32:13):
town halls. You know, I'm into tell them and they're
all going to.

Speaker 2 (32:16):
Be mad at you.

Speaker 6 (32:19):
Yep.

Speaker 4 (32:19):
We've seen some pretty cringe worthy videos merge over the
last few months of these town halls, to be sure.
But of course one of the other things. In addition
to the messaging around the economy, we've seen a lot
of focus on Geni from both Republicans and this White
House's progress when it comes to issues of migration and
efforts of deporting criminals. Of course, a lot has been
focused on of those who were deported to this notorious

(32:41):
prison in Al Salvador. And Genie, I know you are
a watcher of the court, So in our final few
minutes here, I wonder your reaction to the Supreme Court
decision that the administration does have to return the Maryland
man Abrego Garcia, Kilmar Abrego Garcia, who was admittedly wrongfully
deported by the administration. He has to come back, And
I wonder what you make of the ruling.

Speaker 12 (33:02):
Yeah, it's such an important ruling. His twenty seventh day
today Kayley in a super max prison and the government
admitting he is there by accident, but saying sorry, essentially,
we can't get him back. And so now this judge
gave them a two hour delay. They're still supposed to
meet today. A very strange petition by the DOJ, I
think today to ask the government or ask the court

(33:24):
rather to postpone a hearing. And the judge came back,
essentially and said, how could it take you so long
to read a four page ruling by the court, the
Supreme Court. So you know, the government has to go
before this judge and has to say what are their
plans to get him back? And of course I think
this is very much in sync with what we're seeing

(33:46):
on the tariff issue. Even if you support the president's
policies on immigration and on targeted tariffs, it is the
execution in every case which has been a disaster. And
I always go back and say, reread Federal in seventy
you know, I like the Federalist papers. Gaily, what does
Hamilton say? A bad government is one that executes the

(34:07):
law and the legislation of the country badly, and a
bad president is one who does the same. And this
is a trap, and Joe Biden fall into the same
trap with afghanistand withdrawal. We're seeing it again. They have
to execute well. Otherwise on immigration, you lose a supporter
like Joe Rogan. You know it's over.

Speaker 2 (34:30):
Jis Zeno recommending the Federalist seventy there on this Friday afternoon,
Really appreciate that senior Democracy fellow at the Center for
the Study of the Presidency and Congress Course of Bloomer
Politics contributor, along with Rick Davis, partner at Stone Court
Capital of Bloomberg Politics contributor, as well as some insight
there about the path forward here for the White House
and for lawmakers as they look ahead to the weekend
and recess to follow. No shortage of things for them

(34:52):
to talk about while they're back home their districts, Kayley,
including the bill that they managed to pass the House
managed to pass earlier this week.

Speaker 4 (34:58):
Yeah, which seems to be just a footnote in the
week that has been. Given all of the volatility we're
seeing in financial markets, the equities are swinging to the
upside today. We're right around the highs of the session,
up about one and a half percent on the Nasdaq.
One hundred one point four percent or so on the
S and P. The ten year yield right now at
four basis points at four forty six. We'll have more
ahead in our second hour of Balance of Power. Here
on Bloomberg.

Speaker 1 (35:20):
You're listening to the Bloomberg Balance of Power podcasts. Catch
us live weekdays at noon and five pm. He'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 2 (35:39):
I want turn out of Joe Lorna, who's a managing
director in Chief Economists at SMBC and Necosecurities. He was
former Special Assistant to the President Chief Economists of the
National Economic Council during President Trump's first term. Joe, great
to have you with us, and I'd love to start
this by asking him sort of how you see these
next few months proceeding here. You've been in the room
with the presidents. He's thought about trade, no doubt, thought
aloud about trade, and sort of how he's policy. What

(36:01):
do you expect is going to happen here? Aside from
hopefully I imagine the president thinking of the phone call,
the phone ringing, How does he approach these deals? What's
he looking for in terms of just the mechanics of
putting these deals together.

Speaker 10 (36:13):
We had those reciprocal tariff announcements, as you know, April second,
and I was pretty confident that, you know, we were
going to at least have that in place until you know,
it wasn't going to change until we got to the ninth.
And then when the ninth, of course struck and they
were in place shortly thereafter, the President announced there'd be delays.
And I see that because the negotiation process had been done,

(36:33):
so you need to come with these tariffs that were
very high, very aggressive, and then in the process that
was bringing people to the table. And now that the
negotiation has begun, to me, the maximal amount of uncertainty
in some sense with tariffs was earlier this week before
that announcement occurred. And now we could just go forward.
And my guess is the President is going to make
deals with the various countries and that will be to

(36:56):
the US advantage, and we're going to kind of clean
up this uncertainty and then we'll move on to the
next thing, which should be the budget and what's spending
cuts of any and how they have to impact or
help the economy. But I do think this tariff uncertainty
will pass. I think the market has I understand why
the market's reacted the way it has. I don't expect
it to continue. I do expect the volatility to subside

(37:17):
as progress and trade negotiation moves forward.

Speaker 5 (37:21):
But it's not just about the market activity, right Joe.

Speaker 4 (37:23):
It's also about consumer and business activity, who while they're
waiting for clarity to see what the outcome is ninety
days from now, they still have to make decisions with
their own purchasing power now, decide what they're doing in
terms of inventories, where they're sourcing the supply, what purchases
they're making, how much damage realistically can be done. Even
if you think ultimately we end up in a better
place at the end of the day, at the end

(37:45):
of this period, I should say we still have the
whole period to get through.

Speaker 10 (37:49):
No, absolutely, And it's uncertainty even as it relates to
tax policy and the budget is also a factor right now.
It's just been a very relatively short period of time.
If we're looking at at the labor markets, the jobles
to claim numbers are low. For looking at the consumer
spending side, the chain source numbers look pretty good if
in the next week or two there is progress on

(38:10):
the trade. I don't expect this uncertainty to really meaningfully
have any long lasting or appreciable effect on the economy.
The economy is very resilient, it's very robust. It will
come back. If we go ninety days, we're day eighty
nine and there's been no progress made, yes, absolutely that'll
be a problem, but I don't expect that to be
the case. I do think we're going to my punching guests,

(38:31):
Gut tells me we're going to get some good news
somewhat soon.

Speaker 2 (38:36):
Joe, about the kind of inherent inflationaryness of all of this,
I'm curious sort of how you're looking at this. John
Williams is speaking at the Puerto Rico Chamber of Commerce
right now. He says that his expectation is that these
tariffs are going to boost inflation this year to three
and a half four percent. We've heard from the present's
economic advisors during this term a more greatly reduced sense
of the inflationary impact this is going to have what's yours?

(38:58):
How do you marry your kind of forecast of what
I mentioned that what we heard from President Williams and
the New York Fed and the White House team today.

Speaker 10 (39:05):
We've been up to view that energy prices will come down.
That'll be a very very powerful offset, especially to any
what I think is still likely to be a modest
impact from terraf. So for example, if you had a
ten percent across the board tariff sixty percent on China,
as the President had proposed on the campaign trail, that
doesn't even lift in price level terms your CPI more
than a point. And of course there'll be offsets from

(39:25):
the currency and offset from the margins. But on the
inflation side, the fact that oil is down at sixty
is very very encouraging. That might have been due to
the administration pushing the saudis a particular increased oil production
that will provide an offset. So I mean the inflation
outlook right now is still I'm still uncertain, it's still sticky.

(39:47):
The Fed is I think, wait looking too much into
review mirror on this stuff, because if you look at
the markets right now, they're telling you looking at break evens,
there's no inflation problem, and that's also I think one
of the reasons why the market is behaving that risk
ass since I've not behaved as well today as they've
listened to FED commentary from President to Williams and think
that the FED might be making a mistake by parping
too much on the inflation side, unless on the potential growth.

(40:10):
So I mean the time it could be slowing. That's
what more investors are worried about right now than inflation.

Speaker 4 (40:16):
Well, have you changed your own expectation, Joe, for the
kinds or the scale of FED rate cuts we could
see this year, the number of them.

Speaker 10 (40:24):
No, We've actually been pretty stable, and we marked our
growth down based on what will be the week Q one.
We've got GDP around one and a half percent, and
with most of that weakness concentrated in the first quarter.
We did raise our inflation forecast a bit, but not massively,
and we kept the FED basically not cutting until the
second half of the year, which is where we've been
for a while. I don't think the FED needs to

(40:45):
cut in the short term. I don't think the FED
should cut in the short term, and therefore we see
no change. You've got two cuts one twenty five in September,
another twenty five in December.

Speaker 2 (40:57):
I want to ask you about dollar weakness, and Kaylee,
just a moment to go kind of running through a
number of the pairs indicating we're seeing softness in the
dollar today, and again drawing on your experience during the
first term, I wonder sort of what insight you can
give us into the way in which the president looks
at the strength of the dollar relative to other currencies.
Of course, there's this conversation maybe swirling in the background
still about this perspective mar Lago Accord getting folks to

(41:20):
the table there. It seems like in this current environment,
with the lack of communication between the US and China,
that would be a difficult thing to pull off, to
say the least. But what's your sense of the outlook
here from Washington on global currencies, the way that this
president is looking at the dollar today.

Speaker 10 (41:34):
So in general, the trade weight, if you look at
the Fed's real broad trade weighted dollar, it's close to
a forty year high. So this notion that the dollar
is expensive, you see it in the FED data. Investors
tend to focus on the d X y as you
could pull up on your Bloomberg terminal, which is very
narrow nominal basket of currencies, and that's been a bit

(41:54):
weaker over time. I could see the dollar perhaps softening
a bit, but for good reasons on things like the
mar Alago courd. I don't know where that's if that's
going to happen. I'm just not privy to those discussions.
I think given the President's love of branding and marketing,
it'd be hard for me to think that there isn't
a mar A Lago accord at some point, But what
it entails I don't know. But just for a minute,

(42:17):
on the markets right now, we're clearly in a very
sharp de leveraging period, and I wouldn't be surprised if
some of this selling just naturally burns itself out, especially
as we get more chatter that hey, look, the administration
with its trading partners, is making some progress. And ultimately
my base case for the economy, because I'm still an optimist,
is that there will be a deal reached with China,

(42:39):
as it's in both countries' best interest and I think
the Chinese will want to negotiate, and the President having
had some successes with other countries that will precede those
actions will basically push China.

Speaker 6 (42:49):
To do so.

Speaker 4 (42:52):
I want to ask you about the bond market as well, though, Joe,
because obviously that is we understand what caught the president's
attention enough that he was actually inspired to do a
little bit of a policy shift with this ninety day
pause on reciprocal tariff rates. When you see the kind
of activity we've seen in the bond market, the upward
pressure we're seeing on the ten year yields, is that
something you attribute mostly to this back and forth over

(43:14):
tariffs or does that signal something else to you about
whether or not US treasuries are seen as the kind
of safety asset that they once were considering the other
kind of fiscal trajectory oriented issues that the United States
is still grappling with. Knowing we have a debt ceiling
fight potentially ahead of us, that we're going to be
looking at a tax package that could increase the deficit
if there's not enough spending cuts to offset it. How

(43:36):
much is that factoring into what we've been seeing.

Speaker 10 (43:39):
So there's a lot darilan pack. But on the ninety day,
if I can remember everything, but on the ninety days.

Speaker 5 (43:48):
Just explain the bombing market to us show.

Speaker 10 (43:50):
Okay, so I think, so on why did the administration
make a very quick pivot? And to me, this is
my two cents, I'm just trying to figure this out
piece to puzzle together. But Kevin Hassett was rumorative set
a ninety day extension on Friday that was well before
the bond market. It's sold off sharply and coming in
Monday morning, the bond market to ten note was at

(44:11):
three eighty five and then since had a big move after.
I think once there was you know, chatter among the
various parties that there would be negotiations starting. My guess
is the administration said there's no point at this point
and not suspending for those countries that want to negotiate
with us. Now, what are we gaining by waiting now?

(44:32):
I don't think it was the bond market. I don't
think it was necessarily the equity market. I think it
was just the whole ray of factors. What are we getting,
what are we benefiting from? If we're having a conversation,
let's try to provide some clarity by having that negotiation. Now,
in terms of the budget, what I mentioned in seeing
is does the Senate parliamentarian, How does she attribute to scoring?

(44:54):
Are we going to go a current policy or are
we going to go to current law? Because that's definitely
numbers the CBO has. They do. We could debate what
the number will be, but the numbers they have on
paper simply do not make any sense. Because a policy
has been in place for over seven years that has
given us revenue share a GDP in line with his
long term average is not going to create by itself

(45:15):
a shortage of revenue and larger deficits. What will be
is if we have a recession, which I don't expect,
and then what happens, of course, on the spending side,
that's up for debate. I have no idea what happens
on the spending side. I'm hoping we could find some
common ground and make some cuts, but that we don't know,
and we won't know anything until Congress comes back in
two weeks following the Easter holiday.

Speaker 4 (45:38):
All right, Joe Livornia, answering my multi part question. We
appreciate it.

Speaker 5 (45:43):
As always. We're we're Special.

Speaker 4 (45:44):
Assistant to the President, chief Economists for the NEEC in
the first Trump White House, now chief Economists for SMBC.
Eco Securities America. Always great to have you here.

Speaker 1 (45:54):
You're listening to the Bloomberg Balance of Power podcasts. Catch
us live weekdays at noon and five pm on Apple
Cockley 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 4 (46:13):
Happening tomorrow are talks between the US and Iran. Those
set to take.

Speaker 5 (46:18):
Place in Oman.

Speaker 2 (46:19):
Yes, Seef Woo Coff, the President's envoy, continues to have
a very busy travel schedule since Saint Petersburg Rush today.
That plane that he flies on is going to mascot
Oman this weekend for those meetings that the US is
going to have with the Foreign Minister of Iran. Unclear
sort of how they'll unfold, who will be there mediating
those conversations or if they'll be direct, but they certainly
stand to be pivotal. Perhaps Chris Wright, the US Energy

(46:39):
Secretary of the seventeenth US Energy Secretary, is on Bloomberg
surveillance this morning talking about the importance of that meeting
for US energy policy. More broadly, Let's take a listen
to what he had to.

Speaker 13 (46:48):
Say his genda can be summarized as prosperity at home
and piece abroad. Lower oil prices help both of those,
and the piece abroad that's the most concerned right now.
In the region where I am in the Middle East
is Iran.

Speaker 2 (47:04):
Iran.

Speaker 13 (47:05):
During the Biden administration, oil prices were higher. There was
sort of an appeasement attitude and no strong enforcement of sanctions,
enormous funding de Hamas to Hezbollah, to the Huthis, and
a rapid advancement of their nuclear program. President Trump's agenda
is exactly the opposite that it's peace through strength, but
we simply cannot and will not accept a nuclear armed Iran.

Speaker 15 (47:29):
Well, when it comes to Ron, we saw even more
sanctions on the regime yesterday. When it comes to these
oil sanctions, the President has said he wants to go
back to maximum pressure. Is that part of the conversation
you're having with golf allies on this tour that they'd
be willing to step in if some of those Iranian
barrels come off the market.

Speaker 13 (47:50):
Well, fortunately, just from the United States production itself and
the size of the global oil market today, absolutely we
can tolerate squeezing out Iranian exports that And of course,
do all the Gulf neighbors want the same thing we want.

Speaker 3 (48:04):
Yes.

Speaker 13 (48:04):
Do they fear a nuclear armed Iran? Absolutely? Do they
think now is the time to turn the screws and
end Iran's nuclear weapons program? Absolutely? But yeah, can the
world tolerate that? Absolutely? Ten years ago, twenty years ago,
could this have happened?

Speaker 12 (48:20):
No?

Speaker 13 (48:21):
But today we both have large American oil production, better
relations with our neighbors, and a strong resolute leader. In
forty years of trouble, forty five years of trouble from Iran,
we've never had a better chance to reduce Iranian power,
reduce Iranian tyranny in the Middle East, and we don't
want to miss that opportunity.

Speaker 15 (48:41):
Mister Secretary. The President has said a lot, even recently
to me on Air Force One. He likes that. Guess
oil prices are coming down? Do you and the President
have a price in mind?

Speaker 6 (48:54):
Now?

Speaker 13 (48:55):
My whole life, I've avoided predicting prices or dictating prices.
You know, we have a wonderful free market economy. That's
what makes the world wealthier, That's what allows consumers to
continually re express choices in every direction. So now there's
no formula for a good oil price.

Speaker 4 (49:14):
Insightful conversation with the Energy Secretary Chris Right earlier today
on Surveillance with our colleague and Marie hor Dern, as
we consider the prospects of the talks happening tomorrow between
the US and Iran and what implications they may have
for global energy markets, we turned to Ellen Wall, nonresident,
Senior Fellow with the Atlantic Council Global Energy Center and
President of Transversal Consulting. Welcome back to Bloomberg TV and Radio. Ellen,

(49:37):
when we considered the moment at which we're having the conversation,
or the US in Iran is entering these conversations in
global oil markets, knowing OPEC plus is suddenly putting more
supply onto the market despite weakness in prices. What difference
does the supply of Iranian crude, whether it is more
constrained or potentially more available on the market, how does

(49:57):
that impact the overall picture.

Speaker 16 (50:00):
That's a really good, good question, and I think there
are a couple key points here. And it's interesting that
the US Energy Secretary of things that you know, getting
rid of all Iranian barrels from market is something that
the market could tolerate. I think he's probably right, but
it's not going to be quite as easy as he thinks.
There's definitely spare capacity on you know, available that could

(50:23):
definitely make up for Iranian barrels if they choose to
really squeeze on the sanctions. But I think you will
find that China will get very very upset by this
because they really like their discounted Iranian oil. But given
that President Trump seems to want to negotiate all things
with China, I'm sure that you know this is also

(50:44):
up for up for negotiation. Maybe if China agrees to
buy less Iranian oil and really help squeeze itrun. President
Trump's willing to make changes in the teriff regime there,
so I wouldn't be surprised if it's all it's all together,
it's all lumped together, it's all up for negotiation. I
do think that, you know, when you look at maybe

(51:05):
a potential for more Mani and barrels to come on
the market down the line, say after some kind of
an agreement, that's something that the oil market and the
global market's going to have to work out. It would
be great if that happened in conjunction with you know,
an economic boom where demand is trending higher than opposed
to right now, where we're not really so sure.

Speaker 2 (51:28):
Ellen, I was struck, I don't know if you were,
by what we heard there from the Energy Secretary. At
the end of those comments, he says he doesn't have
a price in mind, and there's no formula for a
good oil price. I'm surprised only because he was the
CEO of Liberty Energy in his spenshial career in the
energy business, I would assume that he would have some
sense of that. What do you make of that? As
you look at WTI here at sixty one forty four barrel,
and we see these prices drifting lower over the course

(51:49):
of the week, this is bound or likely to pose
some problems for producers here here in this country. How
do you define how do you identify a good price
here for oil in this environment?

Speaker 8 (51:59):
You know?

Speaker 16 (52:00):
I think the Energy Secretary was giving the Ali Naimi
answer where everyone would ask him he used to be
the energy you know for Saudi Arabia and the CEO
of a rampone. He would say, you know, if I
knew with oil prices would be I'd be in Vegas
or you know, there is no perfect oil price. So see,
it was really challenge channeling that he definitely has an
optimal oil price in mind. The question is is it

(52:22):
the optimal oil price for consumers or the optimal price
for producers? And those are two very different things. And
so right now, US producers are not really liking oil
prices right now. They'd rather see things higher, particularly because
their costs are increasing. The cost to complete a well
has just gone sky high with all of these tariffs
on steel and in particular the tubular goods that they

(52:44):
need to complete wells, and so you know, with prices
trending lower, they're going to have to ask themselves is
it really worth it to complete this well here at
current prices? And so those are some hard decisions that
producers are going to have to make, and every producer
has a different price point at which it makes sense.
Smaller producers they're going to be the first to shut in.

(53:05):
Larger producers like Exxon Chevron, they're going to be able
to keep to keep going for longer.

Speaker 12 (53:13):
Well.

Speaker 4 (53:13):
So it's what I'm hearing from you Ellen, this notion
of unleashing American energy drill, baby drill, that that's going
to offset whatever cost pressures may arise, or at least
a good deal of cost pressures that arise from higher
tariffs on imports, that that's not necessarily how this is
realistically going to go down in terms of domestic production.

Speaker 16 (53:30):
I would say that I see drill, baby, drill, and
you know, unleashing American energy is kind of more of
a long term strategy. Right now, we're a very high
levels of production. We really don't actually need any more
American oil coming into production right now, but you know, ten, fifteen,
twenty years down the line, we're going to need that.
And the things that we can put in place now

(53:52):
and do now are going to make it able.

Speaker 5 (53:54):
We're going to make it possible for.

Speaker 16 (53:56):
Us to unleash American energy dominance in you know year.
So I think that they're not exactly they're not necessarily
meant to coexist. The low oil prices, the trade ward
right now, it's really causing some pain. What what producers
would really like now is some reassurance from the Trump
administration that this is a temporary turbulence. It's going to

(54:17):
you know, be behind us soon, and they're going to
be able to make decisions about how to deploy capital,
you know, for the future, as soon as this this
shakes out.

Speaker 2 (54:27):
As soon as this shakes out, and you've taken us
right where I want to go, which is, how are producers?
How are oil companies looking at the unsearchy we've been
talking about so kind of detailing this conversation about Tariff's
policy and this ninety day pause with your world with oil,
I imagine it's having a chilling effect as it is
in many other sectors. What is the oil industry waiting for?
What would what would amount to the kind of certainty

(54:48):
they need here to proceed with with with capex expenditure,
capital expenditure in the way that they were before.

Speaker 16 (54:55):
That is a really good question, and I think what
they need is some kind of road for what the
Trump administration is planning for the next four years when
it comes to energy policy. What are the regulatory changes
going to look like? What's the regulatory regime.

Speaker 5 (55:09):
Going to be?

Speaker 16 (55:10):
All we know is that some of the regulations from
the Biden administration have been done away with, But we
don't know what's coming in their place. They don't know,
and they would like to know. And so the best
thing that the Trump administration could do for the energy
industry right now is to give them a roadmap. You know,
here are the kind of permitting, you know, things we're
trying to do, we want to put in a place. Here,

(55:31):
Here are the steps we're going to take to ensure
that these changes that we're making can't be undone by
a future administration. Yes, these trade issues are a big
deal now, but we expect in a year or a
year and a half there's going to be a lot
of American made steel available for purchase. And here's what
we're going to do to make that possible. And those

(55:52):
kinds of things would really help the executives that these
oil companies feel more secure about making decisions to deploy
capital to say yes to that big project to drill
exploratory wells, because they will have the surety that they
need that yes, when they apply for that permit, they
can expect to get it in thirty days, not a year,

(56:14):
and not have it challenged by ten different people.

Speaker 4 (56:18):
Ellen, I'd like to ask you about something else that
the President has floated and we haven't heard as much about,
at least within the last week or so, which is
this notion of using secondary tariffs, which isn't something that
has previously existed in geoeconomics on countries that buy oil
and energy from Venezuela or Russia. He has threatened to
do this depending on whether or not he extracts the

(56:40):
behavioral changes he would like to see from Venezuela when
it comes to cooperation with migrant issues that he thinks
they are not currently cooperating with the administration on in
Russia when it comes to ongoing conversations around ending the
war in Ukraine?

Speaker 5 (56:53):
Is that threat real to you?

Speaker 4 (56:54):
What would secondary tariffs on that crude actually mean for
the global market.

Speaker 16 (57:00):
Yeah, that's that's a very complicated question because we know
what secondary sanctions means. I think that the difference that
we're looking at between a secondary tariff in whatever that
that looks like, in a secondary sanction might be that
sanctions are actually really hard to enforce. So really the
way that it works is that people get scared about

(57:21):
sanctions being enforced and so they adhere to them. To
actually enforce the sanction requires a lot of effort and time,
and you've got to make a really big case. You've
got to assemble a lot of evidence and only then
can you find them and get the money, And it
takes a long time. With tariffs, I think the idea
is that it's much quicker. You're not going to have
to go through an entire process and assemble this evidence

(57:42):
that you know, he can kind of say, all right, well,
I'm putting this tariff on Spain because they're buying you know,
this thing from Venezuela, and Venezuela is not you know,
concurring with what we want in terms of their drug policy.
And because he has a lot more leeway with how
to deploy a terror, it can be deployed much faster
than say, enforcing a sanction. But you know, I'm kind

(58:05):
of in the same boat as you guys. We're not
exactly sure what this looks like because we'd never really
seen it employed before.

Speaker 2 (58:11):
Ellen, great to get those insights from you. Thank you
very much. That's Ellen Waald, non Resident Senior Fellow in
the Global Energy Center at the Atlantic Council, also the
president of Transversal Consulting. As we talk about the oil
market again, we've seen wt IRN sixty one dollars a
barrel today over these last few days, that drift downward
in oil prices, and just to keep an eye on
all of the markets here as we kind of push
to the weekend. Enthusiasm evidently for the weekend as well,
after this very rough week and the equities markets we

(58:33):
see the S and P five hundred up two point
two percent, the down the S and P five hundred,
and the NASTAC all up on this afternoon. In the
bond market, it has been a different story here today
and over the course of the week. Thanks for listening
to the Balance of Power podcast. Make sure to subscribe

(58:54):
if you haven't already, at Apple, Spotify, or wherever you
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