Deep Dive
Shownotes Transcript
You're listening to an iHeart Podcast. Hiscox Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online quote at Hiscox.com. That's H-I-S-C-O-X dot com.
There's no business like small business. Hiscox Small Business Insurance. Switch to Verizon Business and get more from your internet without paying more for your internet. Get LTE Business Internet starting at $39 a month when paired with select business mobile plans. That's unlimited data.
and with it, unlimited possibilities. Start saving today with Verizon Business. Ranked number one in small business internet customer satisfaction by J.D. Power. Starting price for 25 megabits per second LTE internet plan with smartphone plan savings, plus taxes, fees, and economic adjustment charge. Terms apply. For J.D. Power 2024 award information, visit jdpower.com slash awards.
Thank you.
Whatever challenge comes next, let Microsoft help you keep pushing forward. For more details, visit Microsoft.com slash challengers. Bloomberg Audio Studios. Podcasts. Radio. News.
World leaders and global Wall Street are parsing the tariffs announcement President Trump made on Wednesday, shortly after markets closed in the U.S. The president made good on a big campaign promise to overhaul nearly a century of trade policy. My fellow Americans, this is Liberation Day. Waiting for a long time.
With a new executive order, Trump declared a national economic emergency and announced a baseline tariff of 10%, along with additional duties on a long list of countries. Indonesia, Malaysia, Cambodia. Oh, look at Cambodia, 97%.
We're going to bring it down to 49. They made a fortune. That's Trump reading from a chart printed on a piece of poster board Commerce Secretary Howard Lutnick handed him in the middle of the speech. We didn't want to bring — it's very windy out here. We didn't want to bring out the big charts because it had no chance of standing. Fortunately, we came armed with a little smaller chart. This announcement was a major event for the global economy and for markets. And stock futures took a dive as the president spoke.
The president's tariffs announcement is a major assault on a system he has criticized for decades. Josh Wingrove is a White House reporter for Bloomberg. Trump has been talking about this for a long time, clearly, and he wanted a level of pageantry for it. And he lined up his cabinet. He lined up workers. He spoke at kind of an unusual location in the Rose Garden that allowed him to get as many American flags behind him as possible. He chose the longest edge of
And he's casting this as make America wealthy again. You know, this is Liberation Day for, you know, what he believes will be sort of a renaissance of American manufacturing. Josh says the focus now is on the effects these tariffs will have and what the trading partners Trump targeted are going to do. Countries will respond differently.
The question is whether Trump then ups it or whether that sort of tit for tat is the end of it for now. And I think markets will react obviously much more favorably if it's like a one-shot retaliation rather than an escalating fight. I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, President Trump's tariffs announcement, what it means for markets, for the economy, for all of us, and what happens next.
President Trump spoke to a crowd of supporters, advisors, including cabinet secretaries and members of Congress at an event in the Rose Garden at the White House. Bloomberg's Josh Wingrove says there was a lot of fanfare, but the president didn't give a lot of detail. Today's announcement, for those who did not watch it, was extremely Trumpian in that the actual rate was revealed by him holding up a giant placard saying,
be it like four feet by what, five feet? I don't know. It was a huge sign that he held up that had...
the sort of presumed rate that the US believes would be fair. And so that's how the world learned about a 34% tariff on China was by Trump sort of revealing it like, you know, a game show on a giant printed placard. Josh, spell it out for us. What are the tariffs that the president is putting in place? These numbers are bigger than anyone would have done other than Donald Trump, but are also smaller than Donald Trump considered. So a 10% global tariff
is just a major, major departure from where the U.S. has been going for decades and decades and decades. This will be hundreds of billions annually when combined with all the other stuff he wants to do that are import taxes, of course. And some of that will be passed on to consumers. As we know, Trump believes that a lot of it will not. A lot of it will be eaten by price reductions by exporting countries. But, you know, time will tell. But the 10% is on the lower end is what we had heard. There was talk about 20%.
But the fine print is rolling in and that is narrowing the scope and focusing the scope. For instance, they've said that the tariffs will not stack on top of other tariffs in some cases. So for instance, Australia is getting a 10% tariff, but Australian Steel, an industry that already has a 25% tariff in effect already,
will not be on top of that. So, you know, it won't be 35 for it. And there was some fear that that would be the case. And in some countries, we get double or even triple whammies as Trump's tariffs sort of kick in. So that's been a major narrowing here as well. They've also exempted certain countries, Canada and Mexico, namely. This is a big one. That will be a sign of relief
to some of those closely integrated continental sectors, chiefly, I think, the auto sector. So it is bigger than almost anyone would ever have done before him, and it's smaller than he was considering hours before. Toward the end of the president's speech, he started to go through a list of what he called reciprocal tariffs, country by country, different percentages.
The president says he'll put a 46% tariff on Vietnam, a 25% tariff on South Korea, and a 24% tariff on Japan. I should note, without being too glib about it, there's deep frustration in the Republican Party and the Democratic Party about the way that the global trading regime has shaken out in the U.S. and the impact it's had on sectors like autos, like steel.
and that they want to change that. And the trick on this, of course, is, you know, how do you not change it too much that you throw away all the progress you still have made? Like, for instance, American manufacturers that rely on foreign imported inputs to make their goods in the US, right? You know, like widgets that come into your factory don't often come necessarily from down the road for an American manufacturer. They come from
lower cost markets abroad. Now, Trump wants to change that as much as possible. But if you try to change it overnight, many of these companies will simply not make it. And that is not something any president, even Donald Trump, would want to be in office presiding over. But he does want major change here, right? They've taken a no pain, no gain approach. And they've sort of warned that, look, this is not going to be smooth. This is going to be bumpy. But how far they want to go, we'll see. There are things still coming down
And I think that that is important to note here. Josh notes we've already had tariffs on cars and steel tariffs. And President Trump has said there will be new duties, even higher tariffs, on semiconductors, critical minerals, lumber, and pharmaceuticals. Josh, you covered Donald Trump on the campaign trail. I'm curious how much of what we heard in that announcement on Wednesday jives with what he promised he would do on the campaign trail.
He's been saying this a lot on the campaign trail, but the specifics were never really there. And the Republican Party was always sort of picking which part it wanted to listen to, as were investors, right? People kind of saw in the first term where he used tariffs as a tool. The Republican Party is very comfortable with that. No issue. Even the anti-tariff Republicans in Capitol Hill, they do not mind Trump threatening tariffs left, right, and center to get concessions out of countries. In fact, they kind of like it. They think it's sort of flexing his muscles.
But as these tariffs have started to come in, I think people have thought, oh, whoa, he's like more serious this time than in the first term. And that's an important point. We've been talking about Donald Trump and tariffs not even just since this campaign but since the two previous ones. And in the first term, it was much more narrow. It was much more targeted. They did sectors like steel and aluminum but they exempted entire countries. They did lower numbers. For instance, it was 10% on aluminum. Now it's 25%. And now we're doing –
not only not exempting and not only doing higher numbers, but then also filling in the blanks with across the board tariffs on every other good under the sun. So it's much bigger. It's much broader. Donald Trump himself said,
believes in tariffs. And I think the signal came on the campaign trail. He would talk about tariffs being his favorite word. I always say tariffs is the most beautiful word to me in the dictionary. Then I was reprimanded by the fake news. They said, what about love, religion and God? I said, I agree. Let's put God number one. Let's put religion number two. Love, I don't know. We got to put that number three, I guess, right?
And then it's Tariff.
Because tariffs are going to make us rich as hell. He has been signaling for a long time that this is where it was going to be. And the question was just sort of like how, you know, focused it would land. And there'll be a lot of reporting, I think, in the coming days about what happened here and who won, you know, how these backroom chats shook out. I will note not a lot of this leaked until the announcement. And so the discussions that they were having were clearly pretty animated. And clearly people were on different ends of the spectrum on this, but they managed to keep it momentary.
mostly in-house. One big question going forward is, where does he go from here? Does he strike deals and bring those numbers down? You know, if someone offers tariff concessions, does he meet them halfway? Or does he get mad at retaliation? And we do expect retaliation and ratchet things up even more. We'll get to that next. How are other countries going to respond to what the president's announced? And how much of an appetite does he have to negotiate?
AI is redefining what's possible for your business. Are you up for the challenge? Microsoft is helping leaders like you get AI-ready faster with unified data and simplified platform management, unlocking up to 150% improved output. Just look at the NDA. They're using AI-powered insights to deliver more personalized fan experiences. Then there's BMW.
Driving change confidently with safe, secure AI tools and guidance. And the Lego house? They're creating new interactive experiences for people to explore. No matter where you are in your business journey, Microsoft is here to help you achieve real breakthroughs that drive impact. Their industry-leading trustworthy AI fuels innovation in ways that are safe and secure.
Business leaders Microsoft surveyed saw an average of 3.7 times ROI per $1 invested in generative AI. Growing and innovating your business is your job. Microsoft helps you achieve that with innovative AI tools and experiences to guide you confidently into the future. Whatever change comes next, let Microsoft help you keep pushing forward. For more details, visit Microsoft.com slash challengers.
Switch to Verizon Business and get more from your internet without paying more for your internet. Get LTE Business Internet starting at $39 a month when paired with select business mobile plans. That's unlimited data and with it, unlimited possibilities. Start saving today with Verizon Business, ranked number one in small business internet customer satisfaction by J.D. Power.
Starting price for 25 megabits per second LTE internet plan with smartphone plan savings, plus taxes, fees, and economic adjustment charge. Terms apply. For J.D. Power 2024 award information, visit jdpower.com slash awards.
In today's changing job market, finding and retaining top talent is more challenging than ever. But with Express Employment Professionals, you can streamline your hiring process and save both time and money. Did you know that 92% of U.S. hiring decision makers expect to face challenges finding qualified candidates this year?
The costs of recruiting, advertising, interviewing, and onboarding can add up quickly. But Express has the solution. Go to ExpressPros.com today. Ready to hire differently? Whether you need contract workers or your next core team member, contact Express Employment Professionals. Express leverages advanced technology and a streamlined hiring process to reduce your recruitment costs.
From efficient job postings to customized candidate screening, Express makes hiring easier and more cost-effective. With more than 870 offices, you have a local team ready to help manage your workforce. Go to ExpressPros.com to find a location near you.
You reported that in the hours leading up to this announcement, the president's plans were still in limbo. What do we know about what the sticking points were, what was being debated among the president and his economic advisors? And I'm curious what insight you have into who actually had his ear as this was coming together. The fundamental discussion had to have been around scope because that was the difference, right? That no one seemed to be arguing a completely different agenda.
But how big a brush they wanted to paint with, there seemed to be real division on that. And going off of what people are saying publicly, you know, you had the more hawkish end certainly appears to have included Peter Navarro, a guy that goes on TV and talks pretty strongly about how much he believes in tariffs. And then other signs of concession or, you know, let's say adjustment maybe would be a better word, have come from like Secretary Lutnick, the Commerce Secretary,
Secretary Besson, his role I think is a little unclear here. I think we'll learn more about that in the coming days. But the market signal had to have been going through those two who have come from a finance background. And of course, markets have been nervous for weeks because when Trump started actually putting pen to paper on these tariffs…
People realized that he wasn't entirely just using them as a bargaining tool. And so that reaction had to have been a factor. There has got to be an awareness right now of the risk of going too big, too soon, too quickly and triggering some sort of
of downturn. Picking up on that, over and over again, I've heard investors talk about the consequences of uncertainty here. They said they didn't know what the president would do or what he wouldn't do when it comes to trade policy. With this announcement, Josh, how much of that uncertainty went away? I think a lot of it went away, but there's still some and there's still now new uncertainty. The existing uncertainty is where the rest of these shoes are going to drop on the other sectoral tariffs and how big they're going to go.
Although the breadcrumbs are leading in one direction. He seems to always land at the number 25 for these. So, you know, I would assume that that would be a likely candidate for the tariffs on things like lumber, on pharmaceutical drugs, on semiconductor chips. The question and uncertainty going forward is how firm is he on this? How many exemptions are we talking about here? And Trump has said he doesn't like exemptions. Kevin Hassett, one of his economic advisers,
came out and talked to reporters a couple of weeks ago and said, if I start talking about exemptions, he kicks me out of the room. So Trump does not want to start nipping and tucking here and there. And that's going to get tricky because some of these tariffs are going to start hitting things like, I don't know, critical pharmaceutical drugs or essential parts products.
that get complicated for cars if they're tariffed at a particularly onerous rate. Auto parts tariffs, by the way, are coming as well in the coming weeks and months. They haven't specified when.
And so I think that is going to be a key pressure point. Once you start seeing choke points emerge from this tariff policy in certain industries and certain sectors where it threatens either American jobs or, you know, to become a political problem otherwise, will Trump be adaptable to that? A lot of presidents would like nip and tuck and, you know, change things on the fly. Trump has signaled he's not interested in that.
So we'll see. Josh, what happens next? Do these policies that the president announced go into effect immediately? And if not, what's going to happen between now and when they do go into effect?
They go into effect over the next week or so. The first tranche, the 10% baseline goes into effect this weekend. The bigger numbers for what they think are the worst offenders go into effect a few days later. The auto tariffs that were already teed up still go into effect on Thursday and then other stuff is sort of coming after that. What happens next is that we will continue to see him march towards the sector-specific tariffs.
And we will see how he triages these requests either from industries in America to change things, tweak things, exempt things. He has bowed to that before with autos.
but has later grumbled about it. So whether he's keen to do it again, I think remains unclear. Even if he did, at the end of the day, he would get to that 10% baseline number. So it's still going to be a fairly significant tariff. And remember, they're talking about replacing income tax revenue with tariff revenue. That's tricky for a couple of reasons. Number one,
because Republicans don't really have a clear plan yet on their reconciliation package and in particular tax cuts that would be broad based. And number two is,
Tariff revenue might decline or plateau over time and it's less predictable than income tax revenue. So that gets tricky in terms of forecasting and this and that, because of course people might buy less of a product over time once they realize it's tariffed and address to other alternatives. Josh, what did President Trump say about his appetite to negotiate with the countries he's targeted with these tariffs, either in the Rose Garden or what's he said leading up to it? He has sent mixed messages on that. And
on the one hand saying he wants to make deals and this is all about reciprocity you charge us what we charge you or we'll charge you what you charge us and so by definition if someone wants to come to him and drop their tariffs he's willing to listen he wants this to be the new order
He wants people to adjust to the new order and he wants companies to make pledges to invest in America. My expectations are modest at best that there'll be substantial changes to this. But yeah, I think he will love to announce deals and reductions. I think we'll see a bit of that. But they're talking about hundreds of billions in revenue each year, trillions over a decade, which is the customary budget forecast window here in Washington.
And so I don't think that that number is going to change a lot. It'll change on the margin for particular countries. Josh, what did the audience for this announcement tell you about the way the White House is going to approach selling this policy to Americans?
As you said, there were cabinet secretaries there, members of Congress. At one point, he pulled up an auto worker who supported his candidacy to speak to the crowd. We support Donald Trump's policies on tariffs 100 percent. So, Mr. President, we can't thank you enough. And in six months or a year, we're going to begin to see the benefits. I can't wait to see what's happening three or four years down the road. Thank you, Mr. President.
How is he going to make the case that this is something that the U.S. needs to do? They have been amplifying the relatively small number of stakeholders who think this is a good idea. The steel industry, for instance, loves steel tariffs. It tends to boost their prices and help things along. The people that don't love steel tariffs are everyone who has to buy steel, including the car industry, for instance. So they're much less jazzed about it. And so Trump is pointing to the first group. He's pointing to steel workers first.
He's pointing to union leaders, including the United Auto Workers, who've talked about the positives of at least some of this, but it's a fairly narrow margin. So I think we're going to continue to hear this coming from him, from his aides, from his loyal members on Capitol Hill, from his cabinet, and less so from others. But I will note a lot of the stakeholders in industry I think have learned a lot from the first term. They are not standing.
on the street corner outside the White House with a sign protesting these tariffs, nor are they really putting out fiery statements or taking ads on Fox that run in Palm Beach on the weekends of the Trump-CM. They are really kind of keeping their advocacy largely behind closed doors and thinking that that is the best way to drive this to a different outcome. But the president believes in tariffs. I don't know how to explain it. Sometimes other than that, he just is...
He's avowed that other countries have ripped off the U.S. for a long time. A lot of this seems to be rooted with what he thinks the Japanese did in the 80s. The guy loves tariffs. He's been waiting for this day a long time.
And I think we should expect tariffs to substantially be part of the picture as long as he's president. I should say you and I are talking just a couple hours after this announcement. You mentioned that economists have been trying to game out who's going to pay for this, what the effect is going to be on the global economy. Yes, external economists, but our own colleagues at Bloomberg Economist have been doing that as well. Where are we in kind of getting an understanding or a forecast for what this might mean?
Our friends at Bloomberg Economics have been crunching these numbers to the extent that there are numbers to crunch, right? And Trump has been sending mixed signals. And so the output really ranges. You know, there's like the sort of maximalist approach, which would be a much more significant headwind to growth and a much more significant fallout.
to the Fed and a much more significant threat of a downturn. So this kind of lays in the middle a little bit and I will be reading closely as everyone will how they hash this out. For instance, as we sort out what other tariffs might still be stacked on top of these, whether these replace existing things or
These are important questions. But what all their work shows is that prices will rise for consumers and that that will complicate things in a range of ways. It kind of makes things tricky for the Fed, who will be facing questions of rising prices but also stagnating growth. And it makes things tricky
just broadly, as Trump also tries to sketch out a budget plan that is banking on fairly robust growth that he just put a weighted blanket on the shoulder of to try to sort of also reset the manufacturing base. There will be a price for this. It's the short answer of all the analyses, but it's been unclear because the details haven't been laid out until now. Let me ask you lastly, Josh, sort of how this fits in with Wall Street's expectations. So if Wall Street had its
worst case scenario and its best case scenario, where does this fall? I think that, again, you have to grade Trump on a curve. As Trump goes, this is
a sort of moderate outcome. This is not the full fire and fury approach that they kicked around. And he likes to do that, right? He likes to threaten everything and then, you know, come out with a slightly less onerous version of that. And then people are like, ah, he's, you know, moderating. But grading Trump against other presidents, this is still a maximalist approach. If Joe Biden wanted to put a 10% tariff on
on everything, I would be curious about what Republicans would have thought about that. I think they would not have been super keen. There are areas of overlap a lot between the parties, like on China, for instance. So tariffs are a tool that both are willing to wield. But the scale of this is huge. So I think as Trump goes, this is not as widespread as the worst fears of markets and Wall Street. But it's big and it's bigger than a lot of presidents would have done
And we're just beginning to chew through what impact it's going to have. Josh, thank you very much. Thanks for having me. This is The Big Take from Bloomberg News. I'm David Gurra. This episode is produced by Alex Tai, Rachel Lewis-Kriske, and our Deputy Executive Producer, Julia Weaver. It was edited by Patty Hirsch and Derek Walbank.
This episode was mixed and sound designed by Alex Segura and fact-checked by Naomi Ng. Our senior producer is Naomi Chavon. Our senior editor is Beth Ponzo. Our executive producer is Nicole Beamster-Boer. Bloomberg's head of podcasts is Sage Bauman. If you liked this episode, make sure to subscribe and review The Big Take wherever you get your podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.
Switch to Verizon Business and get more from your internet without paying more for your internet. Get LTE Business Internet starting at $39 a month when paired with select business mobile plans. That's unlimited data and with it, unlimited possibilities. Start saving today with Verizon Business, ranked number one in small business internet customer satisfaction by J.D. Power.
There are presentations. Aww.
And then there are Canva presentations. With Canva, you can use AI to take your presentation to the next level. You can generate dynamic slides and text with a simple prompt. You can drag and drop graphics and charts from Canva's media library and add interactive elements to plus up your deck. And with collaboration tools built in, the whole team can work together better.
You'll love the presentations you can easily design with Canva. Your clients and coworkers will too. Love your work with Canva presentations at Canva.com. Hiscox Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for help.
You're listening to an iHeart Podcast.