May 13, 2025 • 10 mins
Peter Atwater, President of Financial Insyghts and Adjunct Lecturer of Economics at the College of William and Mary, discusses the broader financial and economic implications of President Donald Trump's trade war against Xi Jinping's China.
After two days of high-stakes talks in Switzerland, trade negotiators from the world’s biggest economies announced Monday a massive de-escalation in tariffs. In a carefully coordinated joint statement, the US slashed duties on Chinese products to 30% from 145% for a 90-day period, while Beijing dropped its levy on most goods to 10%.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:07):
This is Bloomberg Business Week with Carol Masser and Tim
Stenoveek on Bloomberg Radio.
Speaker 3 (00:14):
Let's get into it on the trade, on the macro
and more. Always good to have with us.
Speaker 1 (00:18):
Check the pulse as he sees it is Peter Atwater,
president of Financial Insights, an adjunct lecturer of economics, server
at william and Mary, author of the book The Confidence Map,
Charting a.
Speaker 3 (00:28):
Path from Chaos to Clarity.
Speaker 1 (00:29):
He joins us once again from Williamsburg, actually from Philadelphia, Pennsylvania,
on this Monday.
Speaker 3 (00:34):
Peter, good to have you here. How are you.
Speaker 4 (00:36):
I'm doing great, Carol, how are you?
Speaker 3 (00:37):
I'm doing well. I'm doing well.
Speaker 1 (00:39):
And it seems like, you know, investors feeling a little
bit more upbeat, although we keep questioning what macro or
what fundamentally has changed at this point. What's the constructive
takeaway in view that you believe that we should have
on all of this as citizens and also as investors.
Speaker 4 (00:55):
Sure so, I don't know about you, but growing up,
we've played a lot of red light, green light, yes, neighborhood,
and I feel like that is exactly what investors have
been playing since the inauguration, that they're either all in
or all out, and we're seeing them try to navigate
it day to day. I can't imagine what it must
(01:16):
feel like in the c suite of a major multinational
corporation in all of this.
Speaker 2 (01:22):
They probably feel like they have to kiss up or
lose out, which is what most of them seem to do.
Speaker 1 (01:27):
They don't pull the trigger on things because they're just
nervous about what comes next.
Speaker 2 (01:30):
Yeah. I wonder if you think one thing that's changed, Peter,
is that investors have realized there are other places besides
the USA. Right, we were winning for so long that
there was no reason to say invest in Europe, and
now that kind of diversification all of a sudden seems
pretty important.
Speaker 3 (01:51):
Yeah.
Speaker 4 (01:51):
And I was on your show a couple of weeks
ago and said the US runs the risk of being uninvestable.
This was before the Liberation Day and there was a
lot of concern that we've seen, and yes, there are alternatives.
But I think it's useful to remember too that the
kind of nationalistic, dominant, independent leader that we're seeing in
(02:15):
the United States exists all over the world today. And
so for investors, the challenge is Now, if you want
to diversify, remember that you're investing in what I call
an era of a good few men. That these are
times where you have to be very sensitive to your
(02:35):
investing in different locations because you run the risk of
either being an incredible beneficiary or an incredible victim of
a certain independent leader.
Speaker 1 (02:47):
You know, it's interesting, Peter. We've been talking with a
lot of guests, and they are making the assumption that
we are now moving into the tax part of the
Trump white House and the easing regular Tory part of
the Trump white House. And I'm just wondering, we kind
of got the tariff part wrong initially, right. We thought
(03:11):
it was going to be easy and it was just
going to be a lot of talk, and it wasn't
the case. And we're not done yet, even though there's
some ease in the market, And I'm just wondering on
the regulatory side, I think businesses are thinking it's going
to be full, you know, speed ahead. Could they possibly
be getting it wrong in terms of the regulatory environment
and easing kind of business conditions.
Speaker 4 (03:31):
Well, if you look at the regulatory changes that have
been made amid all of this tariff discussion, they've been extensive,
and so I think a lot of things have already
moved to the benefit of businesses. The question I think
that now remains to be seen is how does that
(03:51):
translate into the data at day activity, particularly on the
consumer front. You know, what does business as a fair
mean in terms of the impact day to day on
main street?
Speaker 3 (04:04):
Well, what are you worried about?
Speaker 1 (04:05):
Because in your notes you talk about business leaders are
increasingly fearful of essentrally planned US economy, So kind of
play that out for us.
Speaker 4 (04:13):
Yeah, So if I look at what's been going on,
we are adapting the American economy to a particular style
of leadership in Washington, And so for business leaders, they're
having to filter every decision now in terms of political risk. First,
(04:35):
what does this mean if I comply? What does it
mean if I choose not to comply? What are the
consequences in both fronts? And as we've seen, the rewards
for compliance are immense and the punishment for non compliance
is brutal. So for business leaders, they're going to have
to demonstrate that they are complying. And the more aspects
(04:59):
that we see in the economy, the more this feels
like it's a centrally planned economy, where Washington is dictating
how businesses should perform day to day.
Speaker 2 (05:11):
It's so fascinating that we go from I think most Americans,
at least my age, grew up thinking free market capitalism
is the way this economy should run, that leis a
fair wasn't just a French term but also the American way.
And now I mean to say that we're moving towards
a centrally planned economy. It was just something I've heard
(05:32):
from a number of other people. Peter to me is
a little bit scary. But is this the way the
Republican Party has changed? Is this, you know, the way
it's going to be going forward for them?
Speaker 4 (05:46):
Yeah? I mean, if we look at the three elements
of business today in terms of labor, capital, and trade,
you're seeing incredibly intense intervention the policies that drive the
inputs to business. And so, whether you give it a
(06:07):
different name than centrally planned economy, there is no question
that if I'm a business leader, I'm increasingly in the
passenger seat. I may still be in the front seat,
but somebody else has the gas pedal and somebody else
has the break in the wheel.
Speaker 3 (06:22):
Who wins an essentially planned economy.
Speaker 4 (06:24):
The planner those that comply.
Speaker 1 (06:28):
Yeah, because I just think about you know, certainly on
the campaign trail, it was about bringing more people who
maybe felt left out of the economy.
Speaker 3 (06:36):
Is that the case?
Speaker 1 (06:37):
I mean, I don't know if you bring more manufacturing
Peter back. You know, we've had conversations earlier today that yes, indeed,
that will bring jobs to those who have felt left out,
and good paying jobs.
Speaker 3 (06:48):
But I'm just curious, you know, do you agree with that?
Speaker 4 (06:52):
Yeah, I mean, we can steer the economy to deliver
a particular type of job. The question is whether whether
that is most efficient, whether that's most productive, and centrally
planned economies tend to disappoint on both of those fronts.
Is this a uh?
Speaker 2 (07:13):
Is this a hallmark of populism, because this is what
we're seeing right nationalists. Uh, populism here at work. Is
central planning always, always, uh the default position for for
populist governments.
Speaker 4 (07:30):
Yeah, I think that, you know, whether it's on the
right or the left, there is a tendency for when
when powerlessness and uncertainty rain for those to follow. And
what you have, as I said, across the globe today,
are dominant leaders seeking to form a national economy, a
(07:53):
national political environment that is oriented around them.
Speaker 2 (07:57):
It's funny because I look at some of the bullet
points in your note, and I think it makes me
think of the Soviet economy, right, delays to capital investments
from private from the private sector, fewer imports and more shortages,
you know, breadlines, pricing and slower hiring and slower job cuts.
(08:18):
Just stagnation there, and are we drifting towards that.
Speaker 4 (08:25):
I think that what you're seeing is as business leaders
strive to control the controllable, they're going to pull back
on hiring, They're going to pull back on inventory. They're
trying to do what they can in an environment that
feels incredibly uncertain. The risk that they now run is
(08:46):
that those decisions run contrary to the objectives of Washington.
Speaker 1 (08:51):
Where's the power of the investor in all of this, Peter,
Because I think we've certainly seen it with the bond
market right sending very clear messages to the White House
and the administration and ultimately folks like we assume the
Treasury Secretary responding to it with the President. But I'm
just curious, where's the investor in kind of fighting back
or pushing back on this.
Speaker 4 (09:10):
Well, in the same way that we've talked about, you know,
let's a fair as being part of this capitalist system
that we've been operating under, we've also had shareholder primacy.
And so where is that investor? I think that investor
is getting pushed further and further back in the line.
At the same time, you know, we've seen bond investors
(09:33):
make noise, and I think that that's going to be
a global concern. You know, the United States is not
the only one who has budget constraints that need to
ultimately be addressed. So I think there's going to be
a lot of tension between investors and national leaders moving forward.
Speaker 2 (09:52):
But you think that shareholders are less powerful? I mean,
I guess these votes are usually controlled by large blocks,
and and that the bond vigilantes could still become active.
Speaker 4 (10:06):
Yeah, I think shareholders just just watching what we've seen
in the in the first several months of this new administration,
are clearly the tale to a dog. And so you know,
and and that again they're going to have to understand
that you will be a beneficiary or a victim. There's
there's no moderate midpoint.
Speaker 3 (10:26):
In that, all right, we're going to leave it there.
Always thoughtful.
Speaker 1 (10:29):
Peter Atwater, thank you as always, President Financial Insights and
Adjunct Lecturer of Economy of Economics at William and Mary
An author of the book The Confidence Map, Charting a
path from Chaos to Clarity,
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:07):
This is Bloomberg Business Week with Carol Masser and Tim
Stenoveek on Bloomberg Radio.
Speaker 3 (00:14):
Let's get into it on the trade, on the macro
and more. Always good to have with us.
Speaker 1 (00:18):
Check the pulse as he sees it is Peter Atwater,
president of Financial Insights, an adjunct lecturer of economics, server
at william and Mary, author of the book The Confidence Map,
Charting a.
Speaker 3 (00:28):
Path from Chaos to Clarity.
Speaker 1 (00:29):
He joins us once again from Williamsburg, actually from Philadelphia, Pennsylvania,
on this Monday.
Speaker 3 (00:34):
Peter, good to have you here. How are you.
Speaker 4 (00:36):
I'm doing great, Carol, how are you?
Speaker 3 (00:37):
I'm doing well. I'm doing well.
Speaker 1 (00:39):
And it seems like, you know, investors feeling a little
bit more upbeat, although we keep questioning what macro or
what fundamentally has changed at this point. What's the constructive
takeaway in view that you believe that we should have
on all of this as citizens and also as investors.
Speaker 4 (00:55):
Sure so, I don't know about you, but growing up,
we've played a lot of red light, green light, yes, neighborhood,
and I feel like that is exactly what investors have
been playing since the inauguration, that they're either all in
or all out, and we're seeing them try to navigate
it day to day. I can't imagine what it must
(01:16):
feel like in the c suite of a major multinational
corporation in all of this.
Speaker 2 (01:22):
They probably feel like they have to kiss up or
lose out, which is what most of them seem to do.
Speaker 1 (01:27):
They don't pull the trigger on things because they're just
nervous about what comes next.
Speaker 2 (01:30):
Yeah. I wonder if you think one thing that's changed, Peter,
is that investors have realized there are other places besides
the USA. Right, we were winning for so long that
there was no reason to say invest in Europe, and
now that kind of diversification all of a sudden seems
pretty important.
Speaker 3 (01:51):
Yeah.
Speaker 4 (01:51):
And I was on your show a couple of weeks
ago and said the US runs the risk of being uninvestable.
This was before the Liberation Day and there was a
lot of concern that we've seen, and yes, there are alternatives.
But I think it's useful to remember too that the
kind of nationalistic, dominant, independent leader that we're seeing in
(02:15):
the United States exists all over the world today. And
so for investors, the challenge is Now, if you want
to diversify, remember that you're investing in what I call
an era of a good few men. That these are
times where you have to be very sensitive to your
(02:35):
investing in different locations because you run the risk of
either being an incredible beneficiary or an incredible victim of
a certain independent leader.
Speaker 1 (02:47):
You know, it's interesting, Peter. We've been talking with a
lot of guests, and they are making the assumption that
we are now moving into the tax part of the
Trump white House and the easing regular Tory part of
the Trump white House. And I'm just wondering, we kind
of got the tariff part wrong initially, right. We thought
(03:11):
it was going to be easy and it was just
going to be a lot of talk, and it wasn't
the case. And we're not done yet, even though there's
some ease in the market, And I'm just wondering on
the regulatory side, I think businesses are thinking it's going
to be full, you know, speed ahead. Could they possibly
be getting it wrong in terms of the regulatory environment
and easing kind of business conditions.
Speaker 4 (03:31):
Well, if you look at the regulatory changes that have
been made amid all of this tariff discussion, they've been extensive,
and so I think a lot of things have already
moved to the benefit of businesses. The question I think
that now remains to be seen is how does that
(03:51):
translate into the data at day activity, particularly on the
consumer front. You know, what does business as a fair
mean in terms of the impact day to day on
main street?
Speaker 3 (04:04):
Well, what are you worried about?
Speaker 1 (04:05):
Because in your notes you talk about business leaders are
increasingly fearful of essentrally planned US economy, So kind of
play that out for us.
Speaker 4 (04:13):
Yeah, So if I look at what's been going on,
we are adapting the American economy to a particular style
of leadership in Washington, And so for business leaders, they're
having to filter every decision now in terms of political risk. First,
(04:35):
what does this mean if I comply? What does it
mean if I choose not to comply? What are the
consequences in both fronts? And as we've seen, the rewards
for compliance are immense and the punishment for non compliance
is brutal. So for business leaders, they're going to have
to demonstrate that they are complying. And the more aspects
(04:59):
that we see in the economy, the more this feels
like it's a centrally planned economy, where Washington is dictating
how businesses should perform day to day.
Speaker 2 (05:11):
It's so fascinating that we go from I think most Americans,
at least my age, grew up thinking free market capitalism
is the way this economy should run, that leis a
fair wasn't just a French term but also the American way.
And now I mean to say that we're moving towards
a centrally planned economy. It was just something I've heard
(05:32):
from a number of other people. Peter to me is
a little bit scary. But is this the way the
Republican Party has changed? Is this, you know, the way
it's going to be going forward for them?
Speaker 4 (05:46):
Yeah? I mean, if we look at the three elements
of business today in terms of labor, capital, and trade,
you're seeing incredibly intense intervention the policies that drive the
inputs to business. And so, whether you give it a
(06:07):
different name than centrally planned economy, there is no question
that if I'm a business leader, I'm increasingly in the
passenger seat. I may still be in the front seat,
but somebody else has the gas pedal and somebody else
has the break in the wheel.
Speaker 3 (06:22):
Who wins an essentially planned economy.
Speaker 4 (06:24):
The planner those that comply.
Speaker 1 (06:28):
Yeah, because I just think about you know, certainly on
the campaign trail, it was about bringing more people who
maybe felt left out of the economy.
Speaker 3 (06:36):
Is that the case?
Speaker 1 (06:37):
I mean, I don't know if you bring more manufacturing
Peter back. You know, we've had conversations earlier today that yes, indeed,
that will bring jobs to those who have felt left out,
and good paying jobs.
Speaker 3 (06:48):
But I'm just curious, you know, do you agree with that?
Speaker 4 (06:52):
Yeah, I mean, we can steer the economy to deliver
a particular type of job. The question is whether whether
that is most efficient, whether that's most productive, and centrally
planned economies tend to disappoint on both of those fronts.
Is this a uh?
Speaker 2 (07:13):
Is this a hallmark of populism, because this is what
we're seeing right nationalists. Uh, populism here at work. Is
central planning always, always, uh the default position for for
populist governments.
Speaker 4 (07:30):
Yeah, I think that, you know, whether it's on the
right or the left, there is a tendency for when
when powerlessness and uncertainty rain for those to follow. And
what you have, as I said, across the globe today,
are dominant leaders seeking to form a national economy, a
(07:53):
national political environment that is oriented around them.
Speaker 2 (07:57):
It's funny because I look at some of the bullet
points in your note, and I think it makes me
think of the Soviet economy, right, delays to capital investments
from private from the private sector, fewer imports and more shortages,
you know, breadlines, pricing and slower hiring and slower job cuts.
(08:18):
Just stagnation there, and are we drifting towards that.
Speaker 4 (08:25):
I think that what you're seeing is as business leaders
strive to control the controllable, they're going to pull back
on hiring, They're going to pull back on inventory. They're
trying to do what they can in an environment that
feels incredibly uncertain. The risk that they now run is
(08:46):
that those decisions run contrary to the objectives of Washington.
Speaker 1 (08:51):
Where's the power of the investor in all of this, Peter,
Because I think we've certainly seen it with the bond
market right sending very clear messages to the White House
and the administration and ultimately folks like we assume the
Treasury Secretary responding to it with the President. But I'm
just curious, where's the investor in kind of fighting back
or pushing back on this.
Speaker 4 (09:10):
Well, in the same way that we've talked about, you know,
let's a fair as being part of this capitalist system
that we've been operating under, we've also had shareholder primacy.
And so where is that investor? I think that investor
is getting pushed further and further back in the line.
At the same time, you know, we've seen bond investors
(09:33):
make noise, and I think that that's going to be
a global concern. You know, the United States is not
the only one who has budget constraints that need to
ultimately be addressed. So I think there's going to be
a lot of tension between investors and national leaders moving forward.
Speaker 2 (09:52):
But you think that shareholders are less powerful? I mean,
I guess these votes are usually controlled by large blocks,
and and that the bond vigilantes could still become active.
Speaker 4 (10:06):
Yeah, I think shareholders just just watching what we've seen
in the in the first several months of this new administration,
are clearly the tale to a dog. And so you know,
and and that again they're going to have to understand
that you will be a beneficiary or a victim. There's
there's no moderate midpoint.
Speaker 3 (10:26):
In that, all right, we're going to leave it there.
Always thoughtful.
Speaker 1 (10:29):
Peter Atwater, thank you as always, President Financial Insights and
Adjunct Lecturer of Economy of Economics at William and Mary
An author of the book The Confidence Map, Charting a
path from Chaos to Clarity,
Hosts And Creators
Tim Stenovec
Carol Massar
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