Business Rundown: High State Trade Talks Between U.S., China Began
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I'm Lydia Hu, and this is the Fox Business Rundown. Monday, June 9th, 2025. Talks are underway between the U.S. and China. Will they bring a better trade deal and the certainty the markets are craving? For investors, you really just have to wait until the final deal is done. I think the important point is the trajectory is moving in the right direction.

Kicking off what will no doubt be a big week, the White House's top trade officials are meeting with their Chinese counterparts in London. Their goal, end the ongoing trade war and make a deal that will give America's manufacturers a much needed boost.

Stocks rallied after a better than expected May jobs report last week, but the stakes remain high for Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jameson Greer. Wall Street and Main Street are anxious about President Trump's tariff strategy. Funny because both sides do have a different set of leverage. To help us kick off

the week and break it all down, we bring in Lou Bassanese, the executive vice president of market strategy at Prairie Operating. The United States, which I think China figured out pretty quickly, buys a lot of goods for China. And yes, some of those go into intermediary products, but a lot of them are finished goods. And, you know, China blinked first when they announced some, you know, economic stimulus measures before the first round of talks.

with Scott Besson. And part of that is because the U.S. has leveraged that if the U.S. doesn't do trade with China, China looks to lose about 2.2% at full percentage points on GDP growth. I mean, it's that significant. So you talk about an economy that's struggling to tread water above their 5% mark and you take a 2.2% decline in that and there's no chance they can do it.

By the same token, the U.S. needs China to a lesser extent, but definitely to a meaningful extent for areas like pharmaceuticals. I mean, a lot of our pharmaceuticals are imported from China. They're finished products that are brought in. 38% of our imports from China are intermediary goods. So they're used to produce U.S. goods. So that's meaningful enough that we have to come to some truce. But here's what I would say. I mean, I've been in investment banking. I've been in business.

for almost three decades and a deal is never done until it's done. I mean, we've seen this. These trade talks have fallen apart before they come back together. Here we go. You know, we usually go into a weekend and there's some saber rattling about how it's not going well and that by the end of the weekend, you know, everyone's back at the table. So I think...

For investors, you really just have to wait until the final deal is done. I think the important point is the trajectory is moving in the right direction to a resolution. We've seen that happening. Credit to the president and his administration for setting hard deadlines for tariff negotiations, because without that, I don't think anyone's motivated to act.

I mean, you just keep kicking the can down the road, which is, you know, it's the greatest pastime of politicians to just push it down, push it down. So I got to give credit where credit's due there. What does it ultimately look like, though, is that that's the question. I think the good news is everyone is off the panel.

and a button. And, you know, originally everyone was fearing 100% plus tariffs on potential goods. And now it probably will settle in somewhere in the 10 to 20% range, which is manageable. Not ideal in certain industries, but it's manageable. And boy, do they certainly have a lot that they could be talking about. You know, adding to, you know, the export economy that you just so beautifully explained, you know, China's also a big source for rare earth minerals. And I know that, you

Yeah. You know, the U.S. delegation is not happy about the way China has been or really has not been supplying the rare earth minerals to our manufacturers. And we really need them. So no doubt that's going to come up. Absolutely. And, you know, just for the legal eagles out there, I always like to remind folks, since I'm a lawyer, too, I follow the tariff cases. There are a variety of cases right now that have been filed that have been challenging the president's tariffs.

And what the tariffs are doing, Lou, is, you know, they're creating leverage so that they can go in and negotiate the deals that they're talking about right at this moment. But I've got my eyes squarely on one particular case today. This one is an appellate court. It's the Court of Appeals for the Federal Circuit. We're expecting a filing today from the Trump administration relating to a stay that's important. Tariffs right now are still in place.

But there was a decision that was not in the Trump administration's favor. But while there's an appeal in place for now, there's a stay of that order. So the tariffs can remain while an appeal is playing out. We'll see how much longer that stay will remain in place. In other words, how much longer tariffs will be, you know, enforced while the appeals are playing out. And that's really important because you got to know if we're following that, you and I, and that's Trump's leverage here.

You got to ask yourself, was China also wondering, are these tariffs going to remain in play? Absolutely. I mean, look, I think you bring up the other two critical points. It's China has leverage with us over rare earths. There's really no other option for us. I know we can sign a deal, you know, sign a deal with Ukraine and other countries. There's not enough supply there. But then this legal precedent, right? I mean, it's the U.S. court system is potentially taking the legs out from underneath this administration to negotiate. So China is absolutely waiting. And, you know, the difficult thing is the Chinese administration

but just culturally are much more patient than we are in the U S right. They think in five and 10 year and a hundred year increments where we think in, you know, election cycles. So, uh, I'm, I'm with you. I think they're watching these courses that court cases very closely.

to see if they have newfound leverage, if there's appeal that's overturned. But look at what happened here, right? The court ruled against the Trump administration, and I think you probably know best, it was within hours an appeal was filed. So I'm sure the president's team is ready

with their next contingency plans on what happens if the decision goes against them. So no shortage of drama. That's all I would say right now, and volatility as a result. Since 2017, Disney has grown its U.S. workforce by nearly 20,000, employing 160,000 people across all 50 states. And with more than $30 billion in investments in U.S. parks...

Disney is creating nearly 10,000 jobs. Learn more at the waltdisneycompany.com slash economic dash impact. No doubt. And that's why you got to stick with Lou Bassanese and Fox Business all day, every day, because we keep you informed on the latest developments. But let's broaden out the conversation a little bit and talk about some of other pieces of the data that we're getting lately that are kind of clued

cluing us in on the relative strength of the economy, you know, kind of bigger picture. You know, last week we had a stronger than expected jobs report. So that was great. Uh, this week we're expecting to get another read on inflation. You know, the last report on inflation showed us that inflation has been cooling. Um, you tell me why this upcoming inflation report is important, why investors are going to be looking at it. I expect it's because we're going to be looking to see is inflation continuing to cool? Um,

questions about how tariffs are impacting that. How do you see it? Yeah, so the trend is our friend. And in this case, inflation has been coming down and that trend has been very favorable at setting the stage for Powell,

And the Fed to eventually cut rates. But the fear now and the focus on this week's reading is that the tariffs, the on again, off again implementation will show up in higher prices. So there's some debate on both sides of the aisle whether or not tariffs are inflationary or not. But here's the at the end of the day, here's what matters. Does the number do the numbers show that there's more inflation?

If that happens right now, economists are predicting just about 0.2%, 0.3% increase in inflation for core CPI. That would be an acceleration and a deviation from that trend. The problem with that, if that happens –

And that puts the Fed in a pickle because Powell can't be looking to cut rates as inflation is reigniting potentially. But I would caution investors, right? One data point does not make a trend. We'd have to see a continuation probably into another month or two.

All that to say, I don't think there's any chance the Fed is cutting rates, no matter how much the president admonishes Jerome Powell to cut them now and cut them severely. The data is just not there. You know, you mentioned that Friday's jobs report much better than expected. So unless the labor market rolls over, the Fed is really still on that. Let's hold and wait for more data, which they shared after coming off their last Fed meeting. I know we've got another one next week and one in July, but I think the odds are best case scenario. We get a cut in September.

But the president, like you just hinted at it, he's been making these kind of public calls for Jerome Powell to cut rates. I think he's nicknamed him too slow, Jerome Powell. Kind of a criticism of how Powell was slow. Powell and the Federal Reserve were slow to act a couple years ago, and we saw sky-high inflation. They were slow to increase rates then to respond. Now Trump is criticizing Powell again, saying, look...

As of right now, we're standing at around 2.3%, I believe, was the last read. It's pretty close. Well, close, maybe not close enough to 2%, which is the target, but much better than where we were. So I guess the president's point here, Lou, is that we are on the right course. We're on the right trajectory. We've seen month after month inflation cooling. So Trump is basically saying, come on, pal, read what's happening. Go ahead with the trend and you can go ahead and cut rates now. But what you're saying is...

We still need to wait and see. There's maybe no harm in just holding off for now. And I will say, you're in good company, Lou, because most investors are expecting no change. Yeah, well, that scares me because I like to be a contrarian, but I don't do it just for contrarian's sake. And I think in this instance, we have to think of the bigger picture. And the president's case and argument is simply, hey, look at the EU. They're cutting rates and all these other countries are cutting rates. But the problem with that logic is

is that they're doing so because their economies are struggling. They're sucking wind. I mean, if you look at EU growth, it's sub 1% estimates for the next quarter, whereas the US, after this tariffs were kind of factored in and factored out, I mean, the US economy is in a much better shape. We're looking at, you know, if we get this big, beautiful bill passed,

back half of the year should be really strong economic growth so that's the reason for the fed to sit tight um i always say that jerome powell is the rodney dangerfield of finance he gets absolutely no respect because of that mistake he made you mentioned in the beginning saying inflation was transitory and it wasn't but he's been very right and and uh accurate to hold his course through and be data dependent in the last year or so so i give you know

There was that one jobs report that scared them. They cut rates 50 basis points. And I think they've done the right thing since then until the data changes, barring some deterioration in jobs, which we just haven't seen it yet. You know, I don't think we can get a Fed cut. So I think the battle will rage on between Powell and Trump and Trump will try and convince him otherwise. But I don't think Powell is going to budge because then it looks like he can be motivated by politics. And that's what he's adamantly against. So speaking of battles, can we talk about...

President Trump and Elon Musk. Like what happened last week? I don't know. Part of it. Yeah. Part of me is, is this like a soap opera, mid-time, daytime TV where they staged this to really kind of drum it up? I think it's probably a mixture of both. Right. I think, I think,

Understandably, Elon, he had I said this. He's got the best perspective on on government spending after his work at Doge. Right. So for him to speak out, we have to listen. I know former House Speaker Newt Gingrich was like, look, Elon just doesn't understand how Washington works. So all the politicians are going to ignore him.

that's true. He doesn't understand the inner workings of how to get bills passed. I think he's misrepresenting the action to take to just blow up the bill and kill the bill. I think what he should be doing more ardently is just, look, we need more spending. The deficit's going to continue to grow. We know CBO estimates are always overly conservative and beneficial to any bill. So

I think he's spot on that, hey, we've got to cut this. But to the other side of the argument, President Trump is like, listen, we don't pass this by July 4th. We're dead on arrival, right? I mean, we're going to deal with the bond market over –

reacting, interest rates climbing, and we can't refinance debt that we need to. So this is a I don't know, it's like maybe an episode of Survivor playing out in real time between Musk and President Trump. I think President Trump absolutely wins. But, you know, Musk goes home as the richest man in the world. So I think he does OK, too. Right. You know, it's interesting. Musk's criticisms that are

Musk is basically saying, look, this big, beautiful bill makes some cuts, but they're nowhere near enough. That's that's that's the heart of his criticism. And when I hear that, I just think back to his work with Doge, which, yes, I think that is, you know, his gift to America, that he created Doge and really changed the conversation. And he was maybe, I've argued, one of the most important people in the world.

the only person that was in a position that could really, you know, change the way Washington is function or at least starting this conversation, highlighting it in a way that he is, you know, the same reason why folks had a problem with him, that he's not elected is also the reason why he was able to do it because he's not elected. He could just go in there and change everything. But at the same time, Lou, when we look at what he saved with Doge,

Nowhere near the two trillion dollars of what he was predicting, promising. I mean, I think we're coming in at close to one hundred and eighty billion dollars in savings. So when he says, look, this bill doesn't save enough, my mind goes back to, well, you know, thank you. But also, where's the rest of the savings you promised to?

Yeah, no, that's exactly right. I think the key for everyday Americans is, are we moving in the right direction? And if we're cutting spending with Doge and on the government budget, then yes, right? A step in the right direction towards fiscal fitness or better fiscal fitness is the right one. It's up for argument. How much is enough cutting? I would say it's not really about one single bill. It's what happens next time around.

we're going to continue the cutting as has elon kicked off a culture of efficiency with doge that yeah it's only 180 billion now but that over time results in more savings i think that's you know there's definitely case examples of things that we were doing in the government that were so wasteful and so inefficient

But my worry is that this is just a passing moment, right? Like Doge was formed, E-line was adamant, we get a bunch of cuts and then it just kind of gets left and forgotten and government keeps moving on with the inertia that it's had to just keep spending more. And I think that's where the rub is with politicians. Some of the holdouts that say we need more cuts is like, listen, we know we're gonna keep adding to the deficit.

If you eliminate the debt ceiling, forget it. I mean, you know, Washington shows what it does, whether you're Republican or Democrat, you keep spending and you spend more if you have the limit. So it's interesting. But I do think it'll get resolved in time because there's no other choice. I mean, president like tariffs has set a deadline. It has to happen. July 4th. It's going to be up to.

Yeah, it's got to be up to all our wonderful elected representatives in the Senate to come to a compromise or else face President Trump. No, thanks. Well, that or else and face President Trump. But the or else for the American public is a tax hike. And no one wants to go back home and explain that to their constituents and how that happened.

on their watch. So we're going to watch it. Lou Bassany is always so grateful for your time. Expert insight. So fun to have this conversation with you on this Monday. Thank you. We'll talk to you again really soon. Thank you, Libby. I appreciate it. Hey, I'm Trey Gowdy, host of the Trey Gowdy Podcast. I hope you will join me every Tuesday and Thursday as we navigate life together and hopefully find ourselves a little bit better on the other side. Listen and follow now at foxnewspodcast.com.