August 11, 2025 • 22 mins
Watch Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Lisa Mateo
Ed Ludlow, Bloomberg Technology Co-Host, discusses Nvidia and Advanced Micro Devices agreeing to pay 15% of their revenues from Chinese AI chip sales to the US government to secure export licenses.
Brendan Murray, Bloomberg Global Trade Editor, discusses tariffs. Small US companies are struggling to comply with President Donald Trump's new tariffs and cope with growing financial strains from higher import costs, according to Erin Williamson, vice president of US customs brokerage at Geodis.
Geetha Ranganathan, Bloomberg Intelligence Analyst on US Media, discusses Paramount acquiring the exclusive rights to show all events from the Ultimate Fighting Championship in the US over the next seven years, in a $7.7 billion deal.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Applecarclay, and Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (00:23):
One of the names that Tatiana was talking about was Nvidia, AMD.
These companies, chip companies cutting a deal potentially with President
Trump to pay fifteen percent on China AI chip sales
and to deal with the US government. And I can't
recall seeing similar type deals before. But let's get the
(00:44):
latest on this. Ed loved though he covers all the
technology stuff for Bloomberg. He's out there in London, but
he's back home in London right now. Ed, thanks so
much for joining us here. Can you break down kind
of this deal for Nvidian AMD.
Speaker 3 (01:01):
How did this whole thing come about?
Speaker 4 (01:04):
Yeah, I mean, it's an unprecedented arrangement if you consider
it simply an export tax. You know, what we understand
from sourcing is like this is a quid pro quo
that export licenses for Nvidia and AMD to be permitted
to sell a specific chip that each of the companies
had designed for the Chinese market. They will give up
fifteen percent of future revenues. And you know that the
(01:27):
math's important. You know, historically those numbers you were going
over in the past segment prior segment twenty four percent
for AMD, thirteen percent from video. Those are from the
last fiscal year. And the state of player has been
that in Vidia and AMD have not been allowed to
sell product directly into China. They haven't done. You know,
in Vidia has the only company that's commented on this
(01:50):
reporting and story, and they did so very purposefully, saying
we have not yet shipped any of our so called
H twenty chip. But you know that the market in
one hand sees this is really positive. You know, they
have been campaigning to be able to sell into China.
And on the other hand, you know there's a caution
retail because they'll pay a levy on it, you know,
(02:12):
in the billions of dollars on a fiscal year basis,
and China may have something to say about it. But
this is all according to people familiar of course.
Speaker 5 (02:20):
Hey, and what could this mean for in video and
AMD pushing i mean even deeper into the Chinese market.
Speaker 4 (02:27):
So video in particular, Jens Among the CEO, has been
very consistent that it's important to have access to the
Chinese market because fifty percent of all of the research
in the world that goes into AI is either being
done in China or it's being done by a Chinese national.
You know, there is a deep research R and D
(02:47):
development footprint. Call it what you will, and if you
look at the cell side reaction this morning, they the
analysts all back Jensen on this line of argument that
if you're not allowed to sell American technology into China,
you're handing that market over to a domestic champion. In
this case it's Huawei, and that's not a new warning.
(03:09):
Jensen Wang has come on Bloomberg Television and made a
very explicit warning on that behind closed doors. As we've reported,
he's met with President Trump in the White House and
discussed that. But before all of these restrictions came into place,
the important bit was that China was a really big
end market and the policy of the current administration kind
of took that away with immediate effect. From in Nvidia's case,
(03:32):
America's most important technology company. They would love to be
getting back to booking billions of dollars of revenues on
a fiscal quarter basis. But the really key they're not
yet currently able to this reporting around a deal that
would allow them to is very interesting, but again unprecedented.
Speaker 2 (03:50):
It seems like there's a thread here if you think
about President Trump and his ability or willingness or need
to generate revenue from some of our exports from the
technology companies, whether it's a direct investment by Apple into
US manufacturing or these export type taxes. Here is this
kind of a theme that's developing in Silicon Valley.
Speaker 4 (04:13):
The administration loves big round numbers, especially when it comes
to investments by technology companies into domestic operations. The thing
about this specific piece of reporting fifteen percent of China
specific revenues is you can model for it. You know
this pool, you know better than anyone. The cell side
must be having a field day this morning because they
(04:33):
can start doing the math and they'll say, okay. In
the most bullish scenario, Nvidia might book seven billion dollars
of revenue in fiscal two Q twenty twenty six. Oh
my goodness, America is going to book one billion dollars
of tax or one billion dollars of costs on that,
and so you know, the President is getting it done
his way. But you know, the question that we don't
(04:56):
know and we don't have the reporting on it, is
whose idea? Is this the companies themselves or was it
some deal making by the president. You'd expect that giving
up fifteen percent is better than having zero, and they'd
rather have that China market access.
Speaker 5 (05:09):
So how is China expected to react to all this?
Speaker 4 (05:13):
So in two different ways, there is the concern that
is emerging out of China that having a American technology
come into the country in the form of a high
performance GPU or an AI chip gives some security risk
to China's national security because of the accusation that Nvidia
(05:34):
and AMD have engineered some sort of backdoor access into
that technology, something that both companies dispute and refute unwaveringly.
So that's the first part, and then you go back
to the domestic champion bit. You know, the H twenty
and in Vidia's case, and the mi I THREEH eight
in AMD's case, were specifically engineered for the Chinese market
(05:55):
to make compromises to both sides. They're very low performance
chips relative to what is at the cutting edge for
both of those companies, and Huawei is the leader in
China domestically speaking, it has chips that are better than
those chips that our American companies have for export, so
they also don't want to give up some of that momentum.
(06:17):
And it will be interesting to see because you guys
probably will have seen what's going on with lithium and
c ATL in the markets this morning as well. This
has become a point of bargaining and negotiation between two countries.
Technology going into China in exchange for raw materials going
the other way. But there are pros and cons that
each side's weighing up, and it's not a perfect swap
(06:37):
right now.
Speaker 3 (06:39):
So we have any sense of timing here?
Speaker 2 (06:41):
Ed this kind of came out of nowhere when is
implement Yeah.
Speaker 4 (06:46):
Really great question. It did kind of come out of nowhere.
And again AMD have not commented publicly on this. Nvidia
put out a very purposeful and pointed statement. They don't
address the fifteen percent at all. They're they're neither acknowledging
it or denying it, but they do say we follow
us rules, which they say every single week at the moment,
but there's a part in the statement that says, we
(07:08):
haven't shipped AGE twenty to China for months, but we
hope export control rules will let America compete in that market.
So that makes it sound like they're saying, just to
Wall Street, don't don't don't model this into your top
line assumptions just yet. But we think that we're getting
closer for sure.
Speaker 5 (07:28):
Now you mentioned timing, so I mean the US China
trained two truth that's expected to expire tomorrow.
Speaker 4 (07:33):
Correct, yes, but again you know, Okay, guys, give me
a break. I'm in London usually San Francisco technology focused.
I ain't covering this White House necessarily. But the point
is that semiconductors have had an ad hoc arrangement, haven't they,
Not just in the context of China, but in other
markets as well. India and electronics has been one. And
(07:56):
what's so interesting about Nnvidia and AMD and semi conductors
is that we have so much reporting about the rest
of the technology sector, where American officials have been flying
around the world saying to our trade partners, don't do
business with China except in the case of chips. So
you know, the deadlines I think the President's about being
extended in various cases anyway, but it is to pardon
(08:19):
the pun, that that's where we stand. AI chips are
Trump's bargaining chip right in what he wants to achieve
with China.
Speaker 2 (08:27):
So, ed, when you talk to people in the valley,
are they just saying, this is the new world order?
Speaker 3 (08:31):
We need to.
Speaker 2 (08:33):
Be open to cutting deals with this administration. Again, whether
it's a commitment to invest in the US or you know,
paying attacks, is this kind of the new world order?
Speaker 6 (08:45):
Do you think?
Speaker 4 (08:47):
Yeah, it's a difference between the companies that are zigging
with the president and those that are zagging against the president.
You know, Intel is a good example of that. You know,
the reporting is that Intel's CEO will be headed to
the White House to get a good old fashioned dressing
day today. You know, their strategy has not been in
line with what's happening with Nvideo and Apple, which is
we're committing, mister President, here's hundreds of billions of dollars.
(09:09):
Actually those numbers are worth looking at with the microscope.
They're a little bit sort of made up, but you
know that's kind of what corporate America's got on board with.
But with the Huawei example, really quick because I look
over my shoulders, see where the president's at. It's not
just that if you don't sell American tech into China,
they won't use it. They'll use Chinese tech. China wants
(09:30):
to sell US tech into international markets as well. And
so you know the position of the valley is flood
the world with American technology and just drown out the
competition wherever it comes from.
Speaker 3 (09:41):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (09:46):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Otto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (10:00):
All right, so we've been hearing a lot about the
impact of tariffs on big businesses, right, but small US
companies they are really getting squeezed with President Trump's new levies.
Here to break it down for us is Brendan Murray.
He's Global Bloomberg Global Trade Editor. He's joining us from London,
So thanks for joining us.
Speaker 3 (10:17):
Brendan.
Speaker 5 (10:17):
First off, I got to ask you how much of
a financial hit are we talking about?
Speaker 6 (10:22):
Well, the US Chamber of Commerce recently put a number
on this and they're saying that there are about two
hundred and thirty six thousand small business importers in the US.
Now those are companies that have less than five hundred employees,
and they say that if you apply the amount that
they import and you combine that with the tariff right
(10:44):
that they would be paying, they're looking at about two
hundred billion dollars a year the tariff bill for these
small importers that have to pay these new tariffs that
present Trump rolled out. So that works out too, about
nine hundred thousand dollars per company per year. So you know, imagine,
(11:06):
you know, if that were if that bill suddenly arrived
on your on your desk at your at your retail
shop or other small business, you know, and yet that's
you know, oftentimes would wipe out any sort of profit
margin you might have. So, uh, the small businesses have
are speaking to two politicians in Washington through the National
(11:28):
Retail Federation and the US Chamber of Commerce and trying
to have their voices heard because all anybody can hear
these days is the stock market is is is ignoring
the trade war, but it certainly isn't you know? The
trade war is certainly having an impact on these small
companies that don't have the wherewithal to absorb the higher
(11:49):
costs and the higher administrative duties that that that they
have to that they're facing now.
Speaker 2 (11:54):
So, Brendan, we've seen we just finished up the second quarter,
are about to finish up the second quarter uh earnings period,
and it seems like most of the companies, when they
talk about tariffs are saying, hey, we're eating it in
our margin for the most part.
Speaker 7 (12:09):
Uh.
Speaker 3 (12:09):
Can small businesses do that?
Speaker 4 (12:13):
Not?
Speaker 6 (12:13):
Really, not in the long term. They are also trying to, uh,
you know, get creative with putting putting good. You know,
a lot of them stockpiled up before the tariffs took effect.
A lot of them are doing things like these bonded
warehouses where you don't owe the tariff bill until later on. Uh.
So there are there are ways to kind of uh
(12:34):
put off the tariff payment that you're going to owe
the government, uh, but not forever, and eventually it's going
to have to be passed on to the consumer. Maybe
the exporter that you buy it from will cut you
a little break, but between the exporters, the importers and
the consumers, you know, this this this extra cost is
just going to get distributed throughout the supply chain.
Speaker 5 (12:57):
Hey, Bernnie, can you get a little bit into why
why this is so important, because small businesses are really
the source of more than half the country's job creation
right in recent years.
Speaker 6 (13:06):
Yeah, exactly. I mean, you know, as small as the
small businesses, you know, they they're not the ones we
read about in headlines all the time, but they are.
They are the ones that are where, you know, lots
of new jobs are being created. And you know, we
we read a lot about the you know, the big
publicly traded companies that lay off tens of thousands of workers,
(13:27):
but you know, we've got millions of small businesses that
are hiring just a couple every day, and and so
it is a it is a big constituency for economic
activity that's often overlooked because we think of the American
economy as being driven by uh, you know, s and
p five hundred companies, when in fact, it's the uh
(13:47):
you know, it's these companies with you know, less than
fifty employees often that that are that are driving a
lot of the employment and uh and investment in the
you know, in various you know, regions, across the country.
Speaker 2 (14:01):
So I think what I'm what I'm also hearing from
and seeing in your reporting and is just I guess
the uncertainty.
Speaker 3 (14:07):
If you're I guess, if.
Speaker 2 (14:08):
You're a big wal Mart or just a big corporation
Parcter and Gamble, you probably got teams of people who
can deal with all these changing UH tariffs. Small businesses,
I'm guessing don't have those resources, So I guess they're
just left to fend for themselves.
Speaker 6 (14:26):
Yeah, pretty much. I mean, or they're or they're you know,
they're calling up you know, a customs broker or someone
some expert who it's you know, imagine if you're you know,
if your tax you know, you're filling out your taxes
went from one one page you know, uh a one
pager to the I R S too, you know, fifty pages.
You know you're gonna you're gonna probably need some help
figuring that out if you want to do it right,
(14:48):
you know, want to be audited later. So this is
essentially what these companies, these small businesses are facing, is
all this extra administrative uh paperwork, electronic paperwork, but it's
still you know, you still have to fill out the
forms correctly. Otherwise the Customs Bureau is going to come
is going to come at you and penalize you if
(15:08):
you if you, if you misclassify a good under one
HS code, you know when that that a teriff applies
to that when it doesn't. So it can get really complicated,
especially when you know eighty different countries have different different
tariff levels now, and then you know on top of
that you have the sectoral specific care of steel aluminum cars,
(15:33):
it's coming on pharmaceuticals and chips. So it's just creating
this this real complex web of bureaucracy that that small
businesses just don't have the capacity to handle.
Speaker 5 (15:46):
Yeah, and what are some especially being here with those
higher import costs. I mean you gave some big figures
earlier in the last thirty seconds or so, can you
explain kind of breakdown into detail about where those costs
are coming from?
Speaker 6 (15:58):
Yeah, I mean basically, if you if if you're an importer,
you have to put up a customs what's called a
customs bond, and that is basically a guarantee. It's a
type of insurance that the customs bureau is going to
get paid down the road. And so it's a bit
of it's sort of like cash and reserve, and now
you suddenly have to put up about twenty percent maybe
fifty percent more, and so that really kind of drains
(16:20):
your It comes right out of your your cash flow,
your working capital, and it you know, can essentially, you know,
paralyze your your your operation if you don't have that
to draw on. So yeah, so if you add all
of these, you know, hundreds of thousands of incidents together,
you know, what you wind up with is about half
(16:43):
of new job creation created by these small businesses, you know,
feeling the real pain from this, from these new tariffs.
Speaker 3 (16:51):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (16:56):
You're listening to the Bloomberg Intelligence podcast Catch us a
low weekdays at ten am. He's done on Apple, Cocklay
and Android Auto with the Bloomberg Business App. Listen on
demand wherever you get your podcasts, or watch us live
on YouTube.
Speaker 3 (17:10):
Well, in the media front today we had Paramount.
Speaker 2 (17:14):
It's actually called Paramount or sky Dance, because Skydance acquired Paramount,
which what used to be Viacom, which used to be
free about it anyway, so it's Paramount sky Dance. They're
buying the UFC rights for seven points seven billion dollars
Ultimate Fighting Championship. I'm not a fan, but I know
there's ga jillions of people out there that love that
(17:34):
stuff and they're paying a big penny for Let's see
what it means for the company. Keitha Ranganath and joins
this year. She covers all the big media companies. Gith,
does this make sense? Is this a good deal for Paramount?
Speaker 7 (17:50):
You know, Paul, it's really no one saw this coming.
I mean, the Paramount Skydance Dance transaction just closed last
week August seventh, and we were still kind of waiting
for some inkling of what the go to strategy or
the go forward strategy would be from you know, David
Ellison's team, and here you go with a bang, you know,
paying almost eight billion dollars for UFC rights. Now they
(18:12):
are premier sports rights, so they're definitely making a big
statement here. Yes, you're absolutely right. UFC has over one
hundred million fans in the United States. Their current deal
is with ESPN. They were getting paid about five hundred
million a year, so this is you know, more than
one hundred and twenty percent search. So it is definitely
a pretty Penny. And what Paramount is hoping is that
(18:33):
this really gets them onto the sports arena, so makes
them a must have platform. And we're talking here about
Paramount Plus, which is their streaming platform, which is known
for really some great scripted content and some sports, but
this is really a big way for them to kind
of make a statement, make a really bold splash on
the sports streaming stage.
Speaker 5 (18:54):
All right, KEITHA, I'm trying to check this in stride
because my husband is a big UFC fan, so he
watches it on ESPN. So does this mean that I
have to get Paramount Plus on time?
Speaker 3 (19:04):
Don't don't tell me that, get.
Speaker 7 (19:05):
The sorry, Lisa, Yes you do. Because everything all of
the UFC contents. So, you know, what we'd initially thought
was that UFC was kind of going to split these packages.
You know, they have the Fight Night, which is the
weekly bi weekly kind of uh you know, matchups that
you see, and then they have their big marquee events,
which are the numbered events with you know, the likes
(19:27):
of o Connor McGregor all these other big superstar players
and you got to pay out of your pocket for
that pay per view. They're actually now making all of
that content both the market events as well as the
fight nights all available to Paramount Plus subscribers. So there's
no pay per view anymore. But yeah, unfortunately your husband's
going to have to subscribe to Paramount Plus.
Speaker 3 (19:49):
This is what I think you do.
Speaker 2 (19:50):
You every streamer you put on, you have to take
one off, go to the family.
Speaker 3 (19:54):
Okay, we're putting on Paramount Plus. What are you giving back?
Speaker 5 (19:57):
What are we giving back?
Speaker 3 (19:58):
Yeah, exactly, that's how you do it.
Speaker 7 (19:59):
Thank you.
Speaker 3 (20:00):
The stock market doesn't care.
Speaker 2 (20:02):
The stocks off one point two percent today, it's at
a fifty two week low. What is realistically the bold
case for Paramount Skydance Corporation?
Speaker 7 (20:12):
Yes, I think you know, we really need of course,
you know, this kind of tells us that they're definitely
going to keep the streaming platforms. See some of the
some of the concerns Paul, before, you know, before the
deal actually closed, was what is sky Dance really interested in?
So they don't really have any expertise in running TV assets.
All that they really cared about was the Paramount studio
because you know, sky Dance is a big studio and
(20:34):
they were really really interested in the studio assets. So
we really didn't have any direction in terms of what
they were going to do with the cable networks. Viacom
has a bunch of those. You have the CBS broadcast network,
you have the Paramount plus streaming platform. What this deal
signals is they're definitely interested in the streaming platform and
the CBS broadcast network. Because you know, they did say
(20:55):
that they're going to simulcast some of those UFC games
on the CBS broadcast networks. I think that is going
to be a core part of their portfolio. What we're
still not clear about is what they're going to do
with some of the cable networks. So you know, whether
it's a BET or an MTV or a Comedy Central,
we really don't know what the strategy is there. Chances
are they might look to monetize those assets, you know,
sell them, but really I think the big play for
(21:17):
a Paramount is going to come down to make these
bigger and bigger investments. If they really want to be
a credible, you know, streamer, they have to obviously go
after these big deals, which is exactly what they did
today with the UFC. We'll have to wait and watch
and see exactly what their aspirations are, but It depends
if they're if they're willing to kind of make these
(21:38):
big investments, they could become, you know, arguably one of
the top three or one of the top four platforms.
Speaker 5 (21:44):
And is this just another sign of the impact of
sports live events on streaming? I mean, Apple, Netflix, YouTube, Amazon,
I mean you name it. Talk more about the impact
of sports and live events on streaming.
Speaker 7 (21:57):
Yeah, I'm really glad you bring that up, Lisa, because
this seer actually is. I would say it's a watershed
moment for media because this is the very first time
in the history of media that you have all sports
becoming available on a streaming service. So previously you needed
your PATV subscription in order to get access to sports.
You won't need that anymore. Starting August twenty first.
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Speaker 2 (00:23):
One of the names that Tatiana was talking about was Nvidia, AMD.
These companies, chip companies cutting a deal potentially with President
Trump to pay fifteen percent on China AI chip sales
and to deal with the US government. And I can't
recall seeing similar type deals before. But let's get the
(00:44):
latest on this. Ed loved though he covers all the
technology stuff for Bloomberg. He's out there in London, but
he's back home in London right now. Ed, thanks so
much for joining us here. Can you break down kind
of this deal for Nvidian AMD.
Speaker 3 (01:01):
How did this whole thing come about?
Speaker 4 (01:04):
Yeah, I mean, it's an unprecedented arrangement if you consider
it simply an export tax. You know, what we understand
from sourcing is like this is a quid pro quo
that export licenses for Nvidia and AMD to be permitted
to sell a specific chip that each of the companies
had designed for the Chinese market. They will give up
fifteen percent of future revenues. And you know that the
(01:27):
math's important. You know, historically those numbers you were going
over in the past segment prior segment twenty four percent
for AMD, thirteen percent from video. Those are from the
last fiscal year. And the state of player has been
that in Vidia and AMD have not been allowed to
sell product directly into China. They haven't done. You know,
in Vidia has the only company that's commented on this
(01:50):
reporting and story, and they did so very purposefully, saying
we have not yet shipped any of our so called
H twenty chip. But you know that the market in
one hand sees this is really positive. You know, they
have been campaigning to be able to sell into China.
And on the other hand, you know there's a caution
retail because they'll pay a levy on it, you know,
(02:12):
in the billions of dollars on a fiscal year basis,
and China may have something to say about it. But
this is all according to people familiar of course.
Speaker 5 (02:20):
Hey, and what could this mean for in video and
AMD pushing i mean even deeper into the Chinese market.
Speaker 4 (02:27):
So video in particular, Jens Among the CEO, has been
very consistent that it's important to have access to the
Chinese market because fifty percent of all of the research
in the world that goes into AI is either being
done in China or it's being done by a Chinese national.
You know, there is a deep research R and D
(02:47):
development footprint. Call it what you will, and if you
look at the cell side reaction this morning, they the
analysts all back Jensen on this line of argument that
if you're not allowed to sell American technology into China,
you're handing that market over to a domestic champion. In
this case it's Huawei, and that's not a new warning.
(03:09):
Jensen Wang has come on Bloomberg Television and made a
very explicit warning on that behind closed doors. As we've reported,
he's met with President Trump in the White House and
discussed that. But before all of these restrictions came into place,
the important bit was that China was a really big
end market and the policy of the current administration kind
of took that away with immediate effect. From in Nvidia's case,
(03:32):
America's most important technology company. They would love to be
getting back to booking billions of dollars of revenues on
a fiscal quarter basis. But the really key they're not
yet currently able to this reporting around a deal that
would allow them to is very interesting, but again unprecedented.
Speaker 2 (03:50):
It seems like there's a thread here if you think
about President Trump and his ability or willingness or need
to generate revenue from some of our exports from the
technology companies, whether it's a direct investment by Apple into
US manufacturing or these export type taxes. Here is this
kind of a theme that's developing in Silicon Valley.
Speaker 4 (04:13):
The administration loves big round numbers, especially when it comes
to investments by technology companies into domestic operations. The thing
about this specific piece of reporting fifteen percent of China
specific revenues is you can model for it. You know
this pool, you know better than anyone. The cell side
must be having a field day this morning because they
(04:33):
can start doing the math and they'll say, okay. In
the most bullish scenario, Nvidia might book seven billion dollars
of revenue in fiscal two Q twenty twenty six. Oh
my goodness, America is going to book one billion dollars
of tax or one billion dollars of costs on that,
and so you know, the President is getting it done
his way. But you know, the question that we don't
(04:56):
know and we don't have the reporting on it, is
whose idea? Is this the companies themselves or was it
some deal making by the president. You'd expect that giving
up fifteen percent is better than having zero, and they'd
rather have that China market access.
Speaker 5 (05:09):
So how is China expected to react to all this?
Speaker 4 (05:13):
So in two different ways, there is the concern that
is emerging out of China that having a American technology
come into the country in the form of a high
performance GPU or an AI chip gives some security risk
to China's national security because of the accusation that Nvidia
(05:34):
and AMD have engineered some sort of backdoor access into
that technology, something that both companies dispute and refute unwaveringly.
So that's the first part, and then you go back
to the domestic champion bit. You know, the H twenty
and in Vidia's case, and the mi I THREEH eight
in AMD's case, were specifically engineered for the Chinese market
(05:55):
to make compromises to both sides. They're very low performance
chips relative to what is at the cutting edge for
both of those companies, and Huawei is the leader in
China domestically speaking, it has chips that are better than
those chips that our American companies have for export, so
they also don't want to give up some of that momentum.
(06:17):
And it will be interesting to see because you guys
probably will have seen what's going on with lithium and
c ATL in the markets this morning as well. This
has become a point of bargaining and negotiation between two countries.
Technology going into China in exchange for raw materials going
the other way. But there are pros and cons that
each side's weighing up, and it's not a perfect swap
(06:37):
right now.
Speaker 3 (06:39):
So we have any sense of timing here?
Speaker 2 (06:41):
Ed this kind of came out of nowhere when is
implement Yeah.
Speaker 4 (06:46):
Really great question. It did kind of come out of nowhere.
And again AMD have not commented publicly on this. Nvidia
put out a very purposeful and pointed statement. They don't
address the fifteen percent at all. They're they're neither acknowledging
it or denying it, but they do say we follow
us rules, which they say every single week at the moment,
but there's a part in the statement that says, we
(07:08):
haven't shipped AGE twenty to China for months, but we
hope export control rules will let America compete in that market.
So that makes it sound like they're saying, just to
Wall Street, don't don't don't model this into your top
line assumptions just yet. But we think that we're getting
closer for sure.
Speaker 5 (07:28):
Now you mentioned timing, so I mean the US China
trained two truth that's expected to expire tomorrow.
Speaker 4 (07:33):
Correct, yes, but again you know, Okay, guys, give me
a break. I'm in London usually San Francisco technology focused.
I ain't covering this White House necessarily. But the point
is that semiconductors have had an ad hoc arrangement, haven't they,
Not just in the context of China, but in other
markets as well. India and electronics has been one. And
(07:56):
what's so interesting about Nnvidia and AMD and semi conductors
is that we have so much reporting about the rest
of the technology sector, where American officials have been flying
around the world saying to our trade partners, don't do
business with China except in the case of chips. So
you know, the deadlines I think the President's about being
extended in various cases anyway, but it is to pardon
(08:19):
the pun, that that's where we stand. AI chips are
Trump's bargaining chip right in what he wants to achieve
with China.
Speaker 2 (08:27):
So, ed, when you talk to people in the valley,
are they just saying, this is the new world order?
Speaker 3 (08:31):
We need to.
Speaker 2 (08:33):
Be open to cutting deals with this administration. Again, whether
it's a commitment to invest in the US or you know,
paying attacks, is this kind of the new world order?
Speaker 6 (08:45):
Do you think?
Speaker 4 (08:47):
Yeah, it's a difference between the companies that are zigging
with the president and those that are zagging against the president.
You know, Intel is a good example of that. You know,
the reporting is that Intel's CEO will be headed to
the White House to get a good old fashioned dressing
day today. You know, their strategy has not been in
line with what's happening with Nvideo and Apple, which is
we're committing, mister President, here's hundreds of billions of dollars.
(09:09):
Actually those numbers are worth looking at with the microscope.
They're a little bit sort of made up, but you
know that's kind of what corporate America's got on board with.
But with the Huawei example, really quick because I look
over my shoulders, see where the president's at. It's not
just that if you don't sell American tech into China,
they won't use it. They'll use Chinese tech. China wants
(09:30):
to sell US tech into international markets as well. And
so you know the position of the valley is flood
the world with American technology and just drown out the
competition wherever it comes from.
Speaker 3 (09:41):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (09:46):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Otto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (10:00):
All right, so we've been hearing a lot about the
impact of tariffs on big businesses, right, but small US
companies they are really getting squeezed with President Trump's new levies.
Here to break it down for us is Brendan Murray.
He's Global Bloomberg Global Trade Editor. He's joining us from London,
So thanks for joining us.
Speaker 3 (10:17):
Brendan.
Speaker 5 (10:17):
First off, I got to ask you how much of
a financial hit are we talking about?
Speaker 6 (10:22):
Well, the US Chamber of Commerce recently put a number
on this and they're saying that there are about two
hundred and thirty six thousand small business importers in the US.
Now those are companies that have less than five hundred employees,
and they say that if you apply the amount that
they import and you combine that with the tariff right
(10:44):
that they would be paying, they're looking at about two
hundred billion dollars a year the tariff bill for these
small importers that have to pay these new tariffs that
present Trump rolled out. So that works out too, about
nine hundred thousand dollars per company per year. So you know, imagine,
(11:06):
you know, if that were if that bill suddenly arrived
on your on your desk at your at your retail
shop or other small business, you know, and yet that's
you know, oftentimes would wipe out any sort of profit
margin you might have. So, uh, the small businesses have
are speaking to two politicians in Washington through the National
(11:28):
Retail Federation and the US Chamber of Commerce and trying
to have their voices heard because all anybody can hear
these days is the stock market is is is ignoring
the trade war, but it certainly isn't you know? The
trade war is certainly having an impact on these small
companies that don't have the wherewithal to absorb the higher
(11:49):
costs and the higher administrative duties that that that they
have to that they're facing now.
Speaker 2 (11:54):
So, Brendan, we've seen we just finished up the second quarter,
are about to finish up the second quarter uh earnings period,
and it seems like most of the companies, when they
talk about tariffs are saying, hey, we're eating it in
our margin for the most part.
Speaker 7 (12:09):
Uh.
Speaker 3 (12:09):
Can small businesses do that?
Speaker 4 (12:13):
Not?
Speaker 6 (12:13):
Really, not in the long term. They are also trying to, uh,
you know, get creative with putting putting good. You know,
a lot of them stockpiled up before the tariffs took effect.
A lot of them are doing things like these bonded
warehouses where you don't owe the tariff bill until later on. Uh.
So there are there are ways to kind of uh
(12:34):
put off the tariff payment that you're going to owe
the government, uh, but not forever, and eventually it's going
to have to be passed on to the consumer. Maybe
the exporter that you buy it from will cut you
a little break, but between the exporters, the importers and
the consumers, you know, this this this extra cost is
just going to get distributed throughout the supply chain.
Speaker 5 (12:57):
Hey, Bernnie, can you get a little bit into why
why this is so important, because small businesses are really
the source of more than half the country's job creation
right in recent years.
Speaker 6 (13:06):
Yeah, exactly. I mean, you know, as small as the
small businesses, you know, they they're not the ones we
read about in headlines all the time, but they are.
They are the ones that are where, you know, lots
of new jobs are being created. And you know, we
we read a lot about the you know, the big
publicly traded companies that lay off tens of thousands of workers,
(13:27):
but you know, we've got millions of small businesses that
are hiring just a couple every day, and and so
it is a it is a big constituency for economic
activity that's often overlooked because we think of the American
economy as being driven by uh, you know, s and
p five hundred companies, when in fact, it's the uh
(13:47):
you know, it's these companies with you know, less than
fifty employees often that that are that are driving a
lot of the employment and uh and investment in the
you know, in various you know, regions, across the country.
Speaker 2 (14:01):
So I think what I'm what I'm also hearing from
and seeing in your reporting and is just I guess
the uncertainty.
Speaker 3 (14:07):
If you're I guess, if.
Speaker 2 (14:08):
You're a big wal Mart or just a big corporation
Parcter and Gamble, you probably got teams of people who
can deal with all these changing UH tariffs. Small businesses,
I'm guessing don't have those resources, So I guess they're
just left to fend for themselves.
Speaker 6 (14:26):
Yeah, pretty much. I mean, or they're or they're you know,
they're calling up you know, a customs broker or someone
some expert who it's you know, imagine if you're you know,
if your tax you know, you're filling out your taxes
went from one one page you know, uh a one
pager to the I R S too, you know, fifty pages.
You know you're gonna you're gonna probably need some help
figuring that out if you want to do it right,
(14:48):
you know, want to be audited later. So this is
essentially what these companies, these small businesses are facing, is
all this extra administrative uh paperwork, electronic paperwork, but it's
still you know, you still have to fill out the
forms correctly. Otherwise the Customs Bureau is going to come
is going to come at you and penalize you if
(15:08):
you if you, if you misclassify a good under one
HS code, you know when that that a teriff applies
to that when it doesn't. So it can get really complicated,
especially when you know eighty different countries have different different
tariff levels now, and then you know on top of
that you have the sectoral specific care of steel aluminum cars,
(15:33):
it's coming on pharmaceuticals and chips. So it's just creating
this this real complex web of bureaucracy that that small
businesses just don't have the capacity to handle.
Speaker 5 (15:46):
Yeah, and what are some especially being here with those
higher import costs. I mean you gave some big figures
earlier in the last thirty seconds or so, can you
explain kind of breakdown into detail about where those costs
are coming from?
Speaker 6 (15:58):
Yeah, I mean basically, if you if if you're an importer,
you have to put up a customs what's called a
customs bond, and that is basically a guarantee. It's a
type of insurance that the customs bureau is going to
get paid down the road. And so it's a bit
of it's sort of like cash and reserve, and now
you suddenly have to put up about twenty percent maybe
fifty percent more, and so that really kind of drains
(16:20):
your It comes right out of your your cash flow,
your working capital, and it you know, can essentially, you know,
paralyze your your your operation if you don't have that
to draw on. So yeah, so if you add all
of these, you know, hundreds of thousands of incidents together,
you know, what you wind up with is about half
(16:43):
of new job creation created by these small businesses, you know,
feeling the real pain from this, from these new tariffs.
Speaker 3 (16:51):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (16:56):
You're listening to the Bloomberg Intelligence podcast Catch us a
low weekdays at ten am. He's done on Apple, Cocklay
and Android Auto with the Bloomberg Business App. Listen on
demand wherever you get your podcasts, or watch us live
on YouTube.
Speaker 3 (17:10):
Well, in the media front today we had Paramount.
Speaker 2 (17:14):
It's actually called Paramount or sky Dance, because Skydance acquired Paramount,
which what used to be Viacom, which used to be
free about it anyway, so it's Paramount sky Dance. They're
buying the UFC rights for seven points seven billion dollars
Ultimate Fighting Championship. I'm not a fan, but I know
there's ga jillions of people out there that love that
(17:34):
stuff and they're paying a big penny for Let's see
what it means for the company. Keitha Ranganath and joins
this year. She covers all the big media companies. Gith,
does this make sense? Is this a good deal for Paramount?
Speaker 7 (17:50):
You know, Paul, it's really no one saw this coming.
I mean, the Paramount Skydance Dance transaction just closed last
week August seventh, and we were still kind of waiting
for some inkling of what the go to strategy or
the go forward strategy would be from you know, David
Ellison's team, and here you go with a bang, you know,
paying almost eight billion dollars for UFC rights. Now they
(18:12):
are premier sports rights, so they're definitely making a big
statement here. Yes, you're absolutely right. UFC has over one
hundred million fans in the United States. Their current deal
is with ESPN. They were getting paid about five hundred
million a year, so this is you know, more than
one hundred and twenty percent search. So it is definitely
a pretty Penny. And what Paramount is hoping is that
(18:33):
this really gets them onto the sports arena, so makes
them a must have platform. And we're talking here about
Paramount Plus, which is their streaming platform, which is known
for really some great scripted content and some sports, but
this is really a big way for them to kind
of make a statement, make a really bold splash on
the sports streaming stage.
Speaker 5 (18:54):
All right, KEITHA, I'm trying to check this in stride
because my husband is a big UFC fan, so he
watches it on ESPN. So does this mean that I
have to get Paramount Plus on time?
Speaker 3 (19:04):
Don't don't tell me that, get.
Speaker 7 (19:05):
The sorry, Lisa, Yes you do. Because everything all of
the UFC contents. So, you know, what we'd initially thought
was that UFC was kind of going to split these packages.
You know, they have the Fight Night, which is the
weekly bi weekly kind of uh you know, matchups that
you see, and then they have their big marquee events,
which are the numbered events with you know, the likes
(19:27):
of o Connor McGregor all these other big superstar players
and you got to pay out of your pocket for
that pay per view. They're actually now making all of
that content both the market events as well as the
fight nights all available to Paramount Plus subscribers. So there's
no pay per view anymore. But yeah, unfortunately your husband's
going to have to subscribe to Paramount Plus.
Speaker 3 (19:49):
This is what I think you do.
Speaker 2 (19:50):
You every streamer you put on, you have to take
one off, go to the family.
Speaker 3 (19:54):
Okay, we're putting on Paramount Plus. What are you giving back?
Speaker 5 (19:57):
What are we giving back?
Speaker 3 (19:58):
Yeah, exactly, that's how you do it.
Speaker 7 (19:59):
Thank you.
Speaker 3 (20:00):
The stock market doesn't care.
Speaker 2 (20:02):
The stocks off one point two percent today, it's at
a fifty two week low. What is realistically the bold
case for Paramount Skydance Corporation?
Speaker 7 (20:12):
Yes, I think you know, we really need of course,
you know, this kind of tells us that they're definitely
going to keep the streaming platforms. See some of the
some of the concerns Paul, before, you know, before the
deal actually closed, was what is sky Dance really interested in?
So they don't really have any expertise in running TV assets.
All that they really cared about was the Paramount studio
because you know, sky Dance is a big studio and
(20:34):
they were really really interested in the studio assets. So
we really didn't have any direction in terms of what
they were going to do with the cable networks. Viacom
has a bunch of those. You have the CBS broadcast network,
you have the Paramount plus streaming platform. What this deal
signals is they're definitely interested in the streaming platform and
the CBS broadcast network. Because you know, they did say
(20:55):
that they're going to simulcast some of those UFC games
on the CBS broadcast networks. I think that is going
to be a core part of their portfolio. What we're
still not clear about is what they're going to do
with some of the cable networks. So you know, whether
it's a BET or an MTV or a Comedy Central,
we really don't know what the strategy is there. Chances
are they might look to monetize those assets, you know,
sell them, but really I think the big play for
(21:17):
a Paramount is going to come down to make these
bigger and bigger investments. If they really want to be
a credible, you know, streamer, they have to obviously go
after these big deals, which is exactly what they did
today with the UFC. We'll have to wait and watch
and see exactly what their aspirations are, but It depends
if they're if they're willing to kind of make these
(21:38):
big investments, they could become, you know, arguably one of
the top three or one of the top four platforms.
Speaker 5 (21:44):
And is this just another sign of the impact of
sports live events on streaming? I mean, Apple, Netflix, YouTube, Amazon,
I mean you name it. Talk more about the impact
of sports and live events on streaming.
Speaker 7 (21:57):
Yeah, I'm really glad you bring that up, Lisa, because
this seer actually is. I would say it's a watershed
moment for media because this is the very first time
in the history of media that you have all sports
becoming available on a streaming service. So previously you needed
your PATV subscription in order to get access to sports.
You won't need that anymore. Starting August twenty first.
Speaker 1 (22:19):
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