July 27, 2025 • 18 mins
For months, the impact of President Trump’s aggressive trade policy has largely felt theoretical. But with an Aug. 1 tariff extension on the horizon and a consequential week ahead for the president’s broader economic agenda, the cracks are beginning to show.
On today’s Big Take podcast, Bloomberg senior economic writer Shawn Donnan joins David Gura to break down the tariff fallout hiding in plain sight, and which sectors and countries are being hit the hardest.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news Preston.
Speaker 2 (00:10):
Trump's trade war is now in its fourth month, and
we're approaching a pivotal moment. Friday is the end of
the extended pause the President put in place on his
reciprocal tariffs for promissing a wealth of trade deals an investment
in US production. On the other side, the.
Speaker 1 (00:26):
Big money we'll start coming in on August first, and.
Speaker 2 (00:30):
This week we'll also get a raft of data that
will tell us how the US economy is doing GDP data,
new data on consumer confidence, and a job support for
the month of July. It's also a very busy week
for corporate earnings, and in the middle of all of that,
there's a Federal Reserve meeting, after which reporters will have
a chance to ask FED Chair Jerome Powell for his
(00:51):
perspective on how the president's trade war is affecting the
US economy.
Speaker 1 (00:55):
I guess the entirety of this year, the big word
has been uncertainty, right.
Speaker 2 (01:00):
Sean Donnan is a senior economics writer at Bloomberg.
Speaker 1 (01:03):
That Donald Trump's tariffs were causing this uncertainty in the
US and global economy, and that that was going to
have two effects. One is a drag on investment by
businesses who don't know where to allocate capital, and the
second is it drag on hiring. And we are starting
to see that dragon investment show up.
Speaker 2 (01:24):
Sewn says companies all over the world are cutting costs,
adjusting supply chains, and rethinking their approach to investments and expansion.
Speaker 1 (01:33):
We've seen import's first swell into the US and then
kind of tail off. We've seen Chinese exports to the
United States contract. We've seen a twenty five percent drop
in exports out of Japan, particularly of cars to the
US that have been hit by tariffs. We are seeing
(01:54):
Japan and Canada on the verge of possible recessions.
Speaker 2 (01:59):
All in, Bloomberg Economics estimates the world's GDP will take
a two trillion dollar hit by the time Trump leaves
office in twenty twenty eight. So just who is starting
to feel that crunch the most. I'm David Gera and
this is the big take from Bloomberg News today. On
(02:19):
the show, From American consumers to winemakers in Europe, we
run down the impact so far of President Trump's trade war.
Shandnin has been working with other Bloomberg reporters all over
the world to understand how President Trump's tariff policy is
changing the global economy.
Speaker 1 (02:40):
Our colleagues in France rang up the biggest organic wine
production cooperative in France. It's down in the south of France,
in the Long Duck kind of region. They literally are
sitting on two point seven million bottles of wine or
the equivalent of two point seven million bottles of wine
(03:00):
that they haven't sold. And a big reason for that
is that a quarter of all European wine exports head
for the United States, and those exports have kind of frozen.
Then you go look at Japanese auto parts producers and
what we're already starting to see in regions of Japan
(03:21):
people being laid off at auto parts producers because exports
from Japan to the United States are following. We're seeing
a similar impact in Canada and Vietnam. We've had all
sorts of suppliers who have you know, we're told by
the American companies that they serve as Okay, hang on
a second, we've got these tariffs here. Don't send the stuff, Please,
(03:43):
dear God, do not send the stuff, because we're going
to face a huge tariff bill if you do. And
now they've kind of back on and say okay, now
really send the stuff, Send it as fast as possible
because the tariffs might go up.
Speaker 2 (03:54):
Sean, When you look at the economic data and you're
hunting for signs of tariff's damage, how does it show up?
What's telling you the scale and scope of the damage
from these tariffs so far.
Speaker 1 (04:04):
Look, the biggest thing I'm looking at is in this
second quarter and in the third and fourth quarter to come,
is going to be the business investment figures what's called
fixed investment or non residential fixed capital investment, right, And
you see that is the kind of bet on the
future of the US economy. That's domestic and foreign manufacturers
(04:27):
and other companies and what they are investing, whether it's
warehouses or factories and so on. That is the big
promise from the Trump administration is that these tariffs will
force producers to come make their stuff here in the
United States. Well, to do that, they have to invest
in factories. And that's where we're going to see that.
The Atlanta Fed has a what they call GDP now measure,
(04:49):
which takes in all of the data that comes on
construction spending and equipment spending and so on. And in
the second quarter it is showing a increase in investment
of just zero point one percent. That's going to be
the contribution to overall growth, and that is pretty subdued.
(05:11):
That's as slow as it gets without getting into kind
of recession territory. So if that comes true in the
GDP numbers that we get this week, then that's going
to be a big warning sign for the US economy.
Speaker 2 (05:25):
You're getting at a contrast I want you to draw,
and that's between the rhetoric that we hear from President
Trump and his economic team about the efficacy of these tariffs,
the revenue that they're bringing in, the promise that they're
going to reform the economy here in the US in
a good way, and what we're seeing in the economic data.
How stark is that contrast.
Speaker 1 (05:43):
With Donald Trump that there's always been hyperbole, right, A
big issue for anyone digesting his economic plans has been
kind of listening to the sales pitch and then kind
of matching it with reality and what we actually see.
And consistently, you know, what we see is kind of
over promising and kind of under delivering on the economy,
(06:06):
and part of that is a kind of ideological battle
right between Donald Trump, who is a great American protectionist,
who believes that if we put this tariff wall up
around the United States, that that will fix all sorts
of problems, from the fentanyl crisis to immigration to factory
(06:26):
employment in places that were hit hard by the China
shock early this century. That is his answer, and a
lot of his advisors, like Peter Navarro and Jameson Greer,
the US Trade Representative, believe that globalization, free trade has
gone too far. The tariff wall has come down too low.
We need to raise it again and encourage investment in
the United States. The reality is economists say, well, there's
(06:49):
a cost to that, and the cost to that is
higher prices, not just for consumer goods, but also for
all of the things we need to make stuff. Right.
If you put a fifty percent tariff on steel, it's
not just a tariff on imported steel. It also leads
to higher prices for domestic steel because the domestic producers
(07:12):
adjust their prices upwards. That means higher prices for everything
from washing machines to cars. And that's an input that
we don't know. You don't see immediately. So it's higher prices,
but it's also slower growth as companies adapt to those
higher prices, the higher cost of doing business and start
changing the bets that they make.
Speaker 2 (07:36):
As you say, the president is counting on a surge
in investment in the country, companies deciding to build more
factories here, do more manufacturing here. Is there evidence that
that's happening.
Speaker 1 (07:47):
You know, we've seen the president through around some big numbers.
He's talked about up to fifteen trillion dollars and promised
investment just in the initial months of his administration. That
would be fifty percent of US GDP. That seems unlikely
to happen in a single year. A lot of these
things are promises. Right in the deal that was announced
(08:08):
with Japan, one of the things they've talked about is
a five hundred billion dollar plus investment fund, But we
don't know where that investment is going to be, what
projects is it going to go to. These things take
years to play out. Now. It could be that the
tariff wall is so high this time that maybe more
(08:28):
of this investment will come. The argument from the Trump administration,
there's you know, it does make sense to a certain extent,
and that this is the world's largest economy. US consumers are,
you know, the biggest consumers in the global economy. If
you want to access that consumption, then come build here
in the United States. But it's going to take years
(08:48):
to figure out if that promise has actually come true.
The flip side of it, what economists would tell you
is that, well, if you're making producing in the United
States more expensive, you're actually reducing incentives for investment there,
because all of a sudden, the US becomes an island
on its own.
Speaker 2 (09:08):
As the US lives in this new isolation as an island,
As you said, what's happening with other nations, other trading partners,
what's happening in the world beyond the US.
Speaker 1 (09:19):
What we're starting to see, and some of this was
actually happening last year during the election, is other countries
just talking to each other and starting to hatch their
own trade deals. So the EU has won that it's
been negotiating for years, feels like decades with Latin American
Economic Block, they're finally getting close to the closing that deal.
(09:39):
That is an enormous trade agreement. We've seen the Transpecific Partnership,
which the US pulled out of in the first Trump administration.
We've seen that expand the United Kingdom, which is not
a Pacific country, but it has joined the Transpacific Partnership,
which now has a new name, and that is growing.
We need to remember that the United States is the
(10:02):
world's largest economy. It's a thirty trillion dollar economy, but
that's a thirty trillion dollar economy in one hundred trillion
dollar plus global economy. It's not the only game in town.
And we've already seen with Chinese exports, for example, some
signs that they are finding other markets to replace the
United States. So you know, the rest of the world
(10:23):
is kind of getting on with its business and trying
to find alternatives to the US market. And for a
lot of people, that's the scariest prospect.
Speaker 2 (10:33):
What happens to the global economy if the US continues
its protectionist trade policies. Plus what this week's economic data
will tell us about the health of the labor market,
that's after the break. Tracking the impact of President Trump's
(10:57):
trade war in real time isn't easy. This week, we're
getting a lot of new economic data and updates from
some of the largest companies in the world. That'll give
us a clearer picture of just how consumers and businesses
are responding to the trade war. For a guy like you, Shawn,
who is on the front lines of this trade war
covering what's been going on, how important is this week we're.
Speaker 1 (11:18):
Going to get a real snapshot of the impact of
the tariffs on the US economy, and that is going
to be you know, the first evidence that we see
in the second quarter numbers for GDP. We'll also see
that in the jobs side. Remember that the last jobs
numbers we had were stronger than expected at the headline level,
but when you kind of went below the surface, you
(11:40):
realize that the private sector hiring looked pretty soft. So
we'll see how the labor market is holding up at
the end of the week. But we're also you know,
there's this August first deadline that President Trump has wielded,
and what we're also going to be seeing is just
how far he's willing to go, whether he extends that deadline.
For India is still out there. We thought that they
(12:02):
were going to be one of the first big economies
to get a deal with the United States. We're still
waiting to that, and you know, we're going to see,
if everything goes to the plans that Trump and his
aides have laid out, We're going to see an increase
in US tariffs by another step up at the end
of the week, and that will then have a further
impact into the third quarter going forward. I think one
(12:25):
of the things that maybe and maybe this explains why
markets have to a lot of economists look complacent about
the damage that tariffs are doing. I think one of
the reasons is you need to think of the impact
of tariffs as a kind of a really bad cold
right or it's something that that just kind of hangs
around that isn't going away. You're operating at like eighty
(12:48):
ninety percent of your best. It's not a sudden, dramatic
shock to the system. It's this kind of chronic impact
that just kind of drags on, which means that the
US and global economies are just going to grow slightly slower,
are just going to be less dynamic than they were beforehand.
Can the world to adapt to that? Of course, the
(13:09):
world will find a way to survive. The US economy
will find a way to survive. Companies will find a
way to survive. You know, general Motors paid one point
one billion dollars in tariffs just in the second quarter alone,
and it said that for the full year it expects
to pay four to five billion dollars in tariffs. Can
(13:30):
it keep doing that forever? No, it will find a
way to adapt it. We'll do different things. But in
the meantime, it's going to have reduced profitability, it's going
to have less capital to invest in new projects, it's
probably going to hire few people.
Speaker 2 (13:43):
Sean, I'm glad you bring up the auto sector, because
there's GM, there's Stillantis, there's Volkswagon. All of them issued
kind of similar warnings and said they've paid a ton
because of these tariffs. I wonder are there any other
sectors you want to flag where, either in earnings reports
or in commentary, you've seen broad trends emerging about how
much tariffs are impacting business.
Speaker 1 (14:04):
You know, there's more tariffs to come, and we also
need to remember that. And you know President Trump has
promised big tariffs on pharmaceuticals, so the pharmaceutical industry is
waiting to see what those tariffs are going to be.
The other big one that I try to get my
head around every day, just because it's something that is
part of all of our lives every day, is semiconductors.
President Trump ordered up a investigation into the national security
(14:28):
impact of importing semiconductors, and we are going to see
we've got steel, we've got aluminum. We're waiting for the
results of a national security investigation on critical minerals. It's
hard to single out sectors, although I have single out
pharmacicols a big back, because it's kind of everything in
our lives. Right The shirt I'm wearing I looked up
(14:49):
this morning. It was made in China. I didn't realize that.
But you know that's going to be more expensive next
time around, or it's going to come from somewhere else.
I don't think it's going to be suddenly made in
North Carolina. So it's this kind of CROs price increase
that we're going to get used to. And for a
long time, the value of free trade and free markets
(15:10):
was held up with two examples of economies in history,
and that was in the nineteen twenties. Argentina and the
United States were roughly equivalent in size as economies. One
chose a path of protection and import substitution. That's Argentina
and in the one hundred years since, I think it's
fair to say that Argentina has been the less successful
(15:32):
economy than the United States, and the other chose a
path of opening up and of encouraging other economies to
open up, and the US economy became the world's largest
economy on the back of that. Now the question is,
over the next one hundred years, are we going to
continue the dynamism of the last century in the United
(15:54):
States or is it going to become a lesser version
of itself.
Speaker 2 (15:58):
I want to end with market complacency what you brought
up a few minutes ago. We're seeing the stock market
at all time highs. Underneath that, how much anxiety is
there among investors about the United States's economic prospects. Are
we seeing indications that there is less of an appetite
for investment in the US in light of this trade war,
(16:19):
and as you've laid out what could be coming here
in the next few months, I.
Speaker 1 (16:22):
Think it's really hard to figure out from equity markets
what they are for telling, partly because of the influence
of the big tech company is but you can see
the anxiety in the reaction, for example, to General Motors' earnings.
The shares were down after the company came out and said,
as a result of tariffs are profits in the second quarter,
we're thirty five percent less than they would have been otherwise.
(16:44):
So we're going to see that build and we'll see
it in individual stocks there. The other kind of corner
of financial markets has been so fascinating has been currency markets, right,
and what's happened with the dollar in the first half
of this year. The dollar had its worst performance since
nineteen seventy three. Now, what happened in nineteen seventy three,
(17:06):
That's when you saw the kind of final pull out
of the Bretton Woods currency system, which pegged the dollar.
It's a goal by Richard Nixon, and there was a
whole repricing of the dollar, and that was the goal
at the time. The fact that we've seen that impact
in the first half of this year tells me that
some parts of the financial market are more worried about
tariffs than perhaps equity markets are.
Speaker 2 (17:29):
John, Thank you very much, Thank you so much for
having me. This is the Big Take from Bloomberg News.
I'm David Gurra. To get more from the Big Take
and unlimited access to all of bloomberg dot com. Subscribe
today at bloomberg dot com Slash podcast offer. If you'd
liked this episode, make sure to follow and review The
(17:51):
Big Take wherever you listen to podcasts. It helps people
find the show. Thanks for listening.
Speaker 1 (17:55):
We'll be back tomorrow
Bloomberg Audio Studios, podcasts, radio news Preston.
Speaker 2 (00:10):
Trump's trade war is now in its fourth month, and
we're approaching a pivotal moment. Friday is the end of
the extended pause the President put in place on his
reciprocal tariffs for promissing a wealth of trade deals an investment
in US production. On the other side, the.
Speaker 1 (00:26):
Big money we'll start coming in on August first, and.
Speaker 2 (00:30):
This week we'll also get a raft of data that
will tell us how the US economy is doing GDP data,
new data on consumer confidence, and a job support for
the month of July. It's also a very busy week
for corporate earnings, and in the middle of all of that,
there's a Federal Reserve meeting, after which reporters will have
a chance to ask FED Chair Jerome Powell for his
(00:51):
perspective on how the president's trade war is affecting the
US economy.
Speaker 1 (00:55):
I guess the entirety of this year, the big word
has been uncertainty, right.
Speaker 2 (01:00):
Sean Donnan is a senior economics writer at Bloomberg.
Speaker 1 (01:03):
That Donald Trump's tariffs were causing this uncertainty in the
US and global economy, and that that was going to
have two effects. One is a drag on investment by
businesses who don't know where to allocate capital, and the
second is it drag on hiring. And we are starting
to see that dragon investment show up.
Speaker 2 (01:24):
Sewn says companies all over the world are cutting costs,
adjusting supply chains, and rethinking their approach to investments and expansion.
Speaker 1 (01:33):
We've seen import's first swell into the US and then
kind of tail off. We've seen Chinese exports to the
United States contract. We've seen a twenty five percent drop
in exports out of Japan, particularly of cars to the
US that have been hit by tariffs. We are seeing
(01:54):
Japan and Canada on the verge of possible recessions.
Speaker 2 (01:59):
All in, Bloomberg Economics estimates the world's GDP will take
a two trillion dollar hit by the time Trump leaves
office in twenty twenty eight. So just who is starting
to feel that crunch the most. I'm David Gera and
this is the big take from Bloomberg News today. On
(02:19):
the show, From American consumers to winemakers in Europe, we
run down the impact so far of President Trump's trade war.
Shandnin has been working with other Bloomberg reporters all over
the world to understand how President Trump's tariff policy is
changing the global economy.
Speaker 1 (02:40):
Our colleagues in France rang up the biggest organic wine
production cooperative in France. It's down in the south of France,
in the Long Duck kind of region. They literally are
sitting on two point seven million bottles of wine or
the equivalent of two point seven million bottles of wine
(03:00):
that they haven't sold. And a big reason for that
is that a quarter of all European wine exports head
for the United States, and those exports have kind of frozen.
Then you go look at Japanese auto parts producers and
what we're already starting to see in regions of Japan
(03:21):
people being laid off at auto parts producers because exports
from Japan to the United States are following. We're seeing
a similar impact in Canada and Vietnam. We've had all
sorts of suppliers who have you know, we're told by
the American companies that they serve as Okay, hang on
a second, we've got these tariffs here. Don't send the stuff, Please,
(03:43):
dear God, do not send the stuff, because we're going
to face a huge tariff bill if you do. And
now they've kind of back on and say okay, now
really send the stuff, Send it as fast as possible
because the tariffs might go up.
Speaker 2 (03:54):
Sean, When you look at the economic data and you're
hunting for signs of tariff's damage, how does it show up?
What's telling you the scale and scope of the damage
from these tariffs so far.
Speaker 1 (04:04):
Look, the biggest thing I'm looking at is in this
second quarter and in the third and fourth quarter to come,
is going to be the business investment figures what's called
fixed investment or non residential fixed capital investment, right, And
you see that is the kind of bet on the
future of the US economy. That's domestic and foreign manufacturers
(04:27):
and other companies and what they are investing, whether it's
warehouses or factories and so on. That is the big
promise from the Trump administration is that these tariffs will
force producers to come make their stuff here in the
United States. Well, to do that, they have to invest
in factories. And that's where we're going to see that.
The Atlanta Fed has a what they call GDP now measure,
(04:49):
which takes in all of the data that comes on
construction spending and equipment spending and so on. And in
the second quarter it is showing a increase in investment
of just zero point one percent. That's going to be
the contribution to overall growth, and that is pretty subdued.
(05:11):
That's as slow as it gets without getting into kind
of recession territory. So if that comes true in the
GDP numbers that we get this week, then that's going
to be a big warning sign for the US economy.
Speaker 2 (05:25):
You're getting at a contrast I want you to draw,
and that's between the rhetoric that we hear from President
Trump and his economic team about the efficacy of these tariffs,
the revenue that they're bringing in, the promise that they're
going to reform the economy here in the US in
a good way, and what we're seeing in the economic data.
How stark is that contrast.
Speaker 1 (05:43):
With Donald Trump that there's always been hyperbole, right, A
big issue for anyone digesting his economic plans has been
kind of listening to the sales pitch and then kind
of matching it with reality and what we actually see.
And consistently, you know, what we see is kind of
over promising and kind of under delivering on the economy,
(06:06):
and part of that is a kind of ideological battle
right between Donald Trump, who is a great American protectionist,
who believes that if we put this tariff wall up
around the United States, that that will fix all sorts
of problems, from the fentanyl crisis to immigration to factory
(06:26):
employment in places that were hit hard by the China
shock early this century. That is his answer, and a
lot of his advisors, like Peter Navarro and Jameson Greer,
the US Trade Representative, believe that globalization, free trade has
gone too far. The tariff wall has come down too low.
We need to raise it again and encourage investment in
the United States. The reality is economists say, well, there's
(06:49):
a cost to that, and the cost to that is
higher prices, not just for consumer goods, but also for
all of the things we need to make stuff. Right.
If you put a fifty percent tariff on steel, it's
not just a tariff on imported steel. It also leads
to higher prices for domestic steel because the domestic producers
(07:12):
adjust their prices upwards. That means higher prices for everything
from washing machines to cars. And that's an input that
we don't know. You don't see immediately. So it's higher prices,
but it's also slower growth as companies adapt to those
higher prices, the higher cost of doing business and start
changing the bets that they make.
Speaker 2 (07:36):
As you say, the president is counting on a surge
in investment in the country, companies deciding to build more
factories here, do more manufacturing here. Is there evidence that
that's happening.
Speaker 1 (07:47):
You know, we've seen the president through around some big numbers.
He's talked about up to fifteen trillion dollars and promised
investment just in the initial months of his administration. That
would be fifty percent of US GDP. That seems unlikely
to happen in a single year. A lot of these
things are promises. Right in the deal that was announced
(08:08):
with Japan, one of the things they've talked about is
a five hundred billion dollar plus investment fund, But we
don't know where that investment is going to be, what
projects is it going to go to. These things take
years to play out. Now. It could be that the
tariff wall is so high this time that maybe more
(08:28):
of this investment will come. The argument from the Trump administration,
there's you know, it does make sense to a certain extent,
and that this is the world's largest economy. US consumers are,
you know, the biggest consumers in the global economy. If
you want to access that consumption, then come build here
in the United States. But it's going to take years
(08:48):
to figure out if that promise has actually come true.
The flip side of it, what economists would tell you
is that, well, if you're making producing in the United
States more expensive, you're actually reducing incentives for investment there,
because all of a sudden, the US becomes an island
on its own.
Speaker 2 (09:08):
As the US lives in this new isolation as an island,
As you said, what's happening with other nations, other trading partners,
what's happening in the world beyond the US.
Speaker 1 (09:19):
What we're starting to see, and some of this was
actually happening last year during the election, is other countries
just talking to each other and starting to hatch their
own trade deals. So the EU has won that it's
been negotiating for years, feels like decades with Latin American
Economic Block, they're finally getting close to the closing that deal.
(09:39):
That is an enormous trade agreement. We've seen the Transpecific Partnership,
which the US pulled out of in the first Trump administration.
We've seen that expand the United Kingdom, which is not
a Pacific country, but it has joined the Transpacific Partnership,
which now has a new name, and that is growing.
We need to remember that the United States is the
(10:02):
world's largest economy. It's a thirty trillion dollar economy, but
that's a thirty trillion dollar economy in one hundred trillion
dollar plus global economy. It's not the only game in town.
And we've already seen with Chinese exports, for example, some
signs that they are finding other markets to replace the
United States. So you know, the rest of the world
(10:23):
is kind of getting on with its business and trying
to find alternatives to the US market. And for a
lot of people, that's the scariest prospect.
Speaker 2 (10:33):
What happens to the global economy if the US continues
its protectionist trade policies. Plus what this week's economic data
will tell us about the health of the labor market,
that's after the break. Tracking the impact of President Trump's
(10:57):
trade war in real time isn't easy. This week, we're
getting a lot of new economic data and updates from
some of the largest companies in the world. That'll give
us a clearer picture of just how consumers and businesses
are responding to the trade war. For a guy like you, Shawn,
who is on the front lines of this trade war
covering what's been going on, how important is this week we're.
Speaker 1 (11:18):
Going to get a real snapshot of the impact of
the tariffs on the US economy, and that is going
to be you know, the first evidence that we see
in the second quarter numbers for GDP. We'll also see
that in the jobs side. Remember that the last jobs
numbers we had were stronger than expected at the headline level,
but when you kind of went below the surface, you
(11:40):
realize that the private sector hiring looked pretty soft. So
we'll see how the labor market is holding up at
the end of the week. But we're also you know,
there's this August first deadline that President Trump has wielded,
and what we're also going to be seeing is just
how far he's willing to go, whether he extends that deadline.
For India is still out there. We thought that they
(12:02):
were going to be one of the first big economies
to get a deal with the United States. We're still
waiting to that, and you know, we're going to see,
if everything goes to the plans that Trump and his
aides have laid out, We're going to see an increase
in US tariffs by another step up at the end
of the week, and that will then have a further
impact into the third quarter going forward. I think one
(12:25):
of the things that maybe and maybe this explains why
markets have to a lot of economists look complacent about
the damage that tariffs are doing. I think one of
the reasons is you need to think of the impact
of tariffs as a kind of a really bad cold
right or it's something that that just kind of hangs
around that isn't going away. You're operating at like eighty
(12:48):
ninety percent of your best. It's not a sudden, dramatic
shock to the system. It's this kind of chronic impact
that just kind of drags on, which means that the
US and global economies are just going to grow slightly slower,
are just going to be less dynamic than they were beforehand.
Can the world to adapt to that? Of course, the
(13:09):
world will find a way to survive. The US economy
will find a way to survive. Companies will find a
way to survive. You know, general Motors paid one point
one billion dollars in tariffs just in the second quarter alone,
and it said that for the full year it expects
to pay four to five billion dollars in tariffs. Can
(13:30):
it keep doing that forever? No, it will find a
way to adapt it. We'll do different things. But in
the meantime, it's going to have reduced profitability, it's going
to have less capital to invest in new projects, it's
probably going to hire few people.
Speaker 2 (13:43):
Sean, I'm glad you bring up the auto sector, because
there's GM, there's Stillantis, there's Volkswagon. All of them issued
kind of similar warnings and said they've paid a ton
because of these tariffs. I wonder are there any other
sectors you want to flag where, either in earnings reports
or in commentary, you've seen broad trends emerging about how
much tariffs are impacting business.
Speaker 1 (14:04):
You know, there's more tariffs to come, and we also
need to remember that. And you know President Trump has
promised big tariffs on pharmaceuticals, so the pharmaceutical industry is
waiting to see what those tariffs are going to be.
The other big one that I try to get my
head around every day, just because it's something that is
part of all of our lives every day, is semiconductors.
President Trump ordered up a investigation into the national security
(14:28):
impact of importing semiconductors, and we are going to see
we've got steel, we've got aluminum. We're waiting for the
results of a national security investigation on critical minerals. It's
hard to single out sectors, although I have single out
pharmacicols a big back, because it's kind of everything in
our lives. Right The shirt I'm wearing I looked up
(14:49):
this morning. It was made in China. I didn't realize that.
But you know that's going to be more expensive next
time around, or it's going to come from somewhere else.
I don't think it's going to be suddenly made in
North Carolina. So it's this kind of CROs price increase
that we're going to get used to. And for a
long time, the value of free trade and free markets
(15:10):
was held up with two examples of economies in history,
and that was in the nineteen twenties. Argentina and the
United States were roughly equivalent in size as economies. One
chose a path of protection and import substitution. That's Argentina
and in the one hundred years since, I think it's
fair to say that Argentina has been the less successful
(15:32):
economy than the United States, and the other chose a
path of opening up and of encouraging other economies to
open up, and the US economy became the world's largest
economy on the back of that. Now the question is,
over the next one hundred years, are we going to
continue the dynamism of the last century in the United
(15:54):
States or is it going to become a lesser version
of itself.
Speaker 2 (15:58):
I want to end with market complacency what you brought
up a few minutes ago. We're seeing the stock market
at all time highs. Underneath that, how much anxiety is
there among investors about the United States's economic prospects. Are
we seeing indications that there is less of an appetite
for investment in the US in light of this trade war,
(16:19):
and as you've laid out what could be coming here
in the next few months, I.
Speaker 1 (16:22):
Think it's really hard to figure out from equity markets
what they are for telling, partly because of the influence
of the big tech company is but you can see
the anxiety in the reaction, for example, to General Motors' earnings.
The shares were down after the company came out and said,
as a result of tariffs are profits in the second quarter,
we're thirty five percent less than they would have been otherwise.
(16:44):
So we're going to see that build and we'll see
it in individual stocks there. The other kind of corner
of financial markets has been so fascinating has been currency markets, right,
and what's happened with the dollar in the first half
of this year. The dollar had its worst performance since
nineteen seventy three. Now, what happened in nineteen seventy three,
(17:06):
That's when you saw the kind of final pull out
of the Bretton Woods currency system, which pegged the dollar.
It's a goal by Richard Nixon, and there was a
whole repricing of the dollar, and that was the goal
at the time. The fact that we've seen that impact
in the first half of this year tells me that
some parts of the financial market are more worried about
tariffs than perhaps equity markets are.
Speaker 2 (17:29):
John, Thank you very much, Thank you so much for
having me. This is the Big Take from Bloomberg News.
I'm David Gurra. To get more from the Big Take
and unlimited access to all of bloomberg dot com. Subscribe
today at bloomberg dot com Slash podcast offer. If you'd
liked this episode, make sure to follow and review The
(17:51):
Big Take wherever you listen to podcasts. It helps people
find the show. Thanks for listening.
Speaker 1 (17:55):
We'll be back tomorrow
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