Chips & Drug Probes, Tariffs Double Prices, Harvard Funding Freeze
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Bloomberg Audio Studios. Podcasts. Radio. News. This is the Bloomberg Daybreak. Your podcast available every morning on Apple, Spotify or wherever you listen. It's Tuesday the 15th of April here in London. I'm Caroline Hipker. And I'm Stephen Carroll. Coming up today, Donald Trump targets the chips and pharmaceutical industries with new investigations as a likely precursor to more tariffs. A billionaire tax

Toymaker says Trump is probably going to steal Christmas as China tariffs have paralysed his business. Plus, frozen out, Harvard vows to resist Trump in a $9 billion funding fight over academic freedoms. Let's start with a roundup of our top stories.

Donald Trump's administration is signalling that more tariffs on semiconductor and pharmaceutical imports are likely to be coming soon. The White House has initiated trade probes into chip and drug imports in a move that sets the stage for sector-specific charges. Mandeep Singh of Bloomberg Intelligence says it's an approach that could be widened.

It looks like with semis and consumer electronics, there will be more to come in terms of tariffs. But the goal is pretty clear. They want more reshoring. And I feel the sectoral tariffs are probably more effective in that because with reciprocal tariffs, you could move from country to country depending on wherever the reciprocal tariffs were low. So from that perspective, sectoral tariffs could end up being more effective.

Mandeep Singh speaking there as President Trump says he is exploring possible temporary exemptions to his tariffs on imported vehicles and parts to give car companies more time to set up manufacturing in the United States. Well, a near daily flow of tariff announcements is adding to the confusion for companies and countries trying to navigate President Trump's evolving trade policy. The highest so-called reciprocal

tariffs are currently on pause for 90 days, with levies on popular electronics also temporarily halted as nations race to negotiate bilateral deals. Speaking to Bloomberg's Anne-Marie Hordern, the US Trade Secretary Scott Besant was asked how many of those deals he expects to have signed by the end of the pause.

I think there will be advantage to our allies especially and a first mover advantage. Usually the first person who makes the deal gets the best deal. So who do you think will be first? It's their choice. Is there a handful of countries that you expect to have a deal before the 90 days is up? Oh, I think there could be numerous countries.

countries. And it may not be the actual trade document, but we will have agreement in principle and be able to move forward from there.

US Treasury Secretary Scott Besant there, his view that this is all part of an orderly negotiation process is not shared by his predecessor in the Biden administration. Former US Treasury Secretary Janet Yellen says the entire process is muddled.

The objective's unclear. The rationale for the tariffs that have been announced, really unclear and not at all sensible. Steps toward removing the tariffs, lowering them are positive, but we're in a world of tremendous uncertainty.

Janet Yellen speaking there comes after the CEO of DHL told Bloomberg on Monday that both businesses and consumers may now, quote, adopt a wait-and-see approach before making spending decisions.

While the White House adds carve-outs for certain sectors, others dependent on China have been warning of the effect on consumer prices. Bloomberg's Ewan Potts has more. Christmas is nearly here, at least that is if you're a toy manufacturer. As the sector plans for its busy season, there's a warning over what President Trump's 145% tariffs on Chinese imports will mean for customers. Toy billionaire Nick Mowbray has told Bloomberg that the tariffs have paralysed his company.

He says as 80% of all toys are made in China, the firm will need to almost double retail prices. As to manufacturing in the US, he says the industry cannot simply replicate the deep ecosystem and tight supply chains that exist in China. As he puts it, Donald Trump is probably going to steal Christmas from families and kids in the United States this year. In London, I'm Ewan Potts, Bloomberg Radio.

Well, returning to our exclusive interview with the U.S. Treasury Secretary, Scott Besant played down the bond market sell-off but added that he has a big toolkit to combat any crisis. Treasuries saw their biggest weekly slide since 2001 last week alongside a decline in the U.S. dollar. Besant was asked if he thought central banks and countries were dumping their U.S. assets.

I have no evidence that it's sovereign. We are still a global reserve currency. We have a strong dollar policy. The dollar can go up and down. The US Treasury Secretary was speaking at several Wall Street banks, a warning of weak foreign demand for US bonds due to President Trump's policies.

The European Union's top trade negotiator met his US counterparts in Washington DC as the bloc tries to secure a deal on tariffs. The EU has paused retaliatory measures in the hope it can secure further carve-outs from the White House, which has reduced its key blanket levy to 10% for 90 days. Meanwhile, Bloomberg has learned that Britain has privately signalled to the EU that it would be open to following some of its rules on food products.

The discussions come ahead of a key summit where the UK hopes to be included in EU defence spending. UK households have increased their spending in a sign of resilience despite rising bills. The British retail consortium's March retail sales figures were 1.1% higher than the previous year. Separate data from Barclays suggests that two-thirds of consumers now want to buy goods made in Britain in a sign of how the trade war is changing habits.

And Harvard University has been hit with a $2.2 billion funding freeze after defying President Trump's demands. The move came just hours after the institution put out a statement saying it wouldn't surrender its independence and capitulate to requests ending all diversity, equity and inclusion programmes. Ginny Sheehan-Zaino, political science professor at Iona State, says the prestigious university is well placed to contest the policy's demands.

If anybody can push back on this, it's going to be Harvard, of course, the wealthiest, probably the best, one of the best institutions in America and the world. And the reality is, is that Harvard is saying we will comply with all valid laws. Their problem is this push to curtail how Harvard admits students, what faculty teaches is a violation of the law.

Iona State's Jeannie Sheehan-Sano speaking there. The Trump administration last month said it was scrutinising as much as $9 billion in federal grants and contracts to Harvard as part of its efforts to combat anti-Semitism on US campuses. Harvard has previously signalled that it would work with the administration to combat anti-Semitism on campus, such as tightening disciplinary procedures, but its president, Alan Garber, says the latest demands are unacceptable.

And those are our top stories this morning. Let's get to the markets. So Wall Street managed to clinch two days of gains. The S&P 500 rose yesterday by eight tenths of one percent, although stock futures are pointing lower and in the red this morning. European stocks outperformed yesterday. Your stock 600 rising 2.7 percent. Again, we're in the red this morning. But the other big story was the

The Treasury's rallied for the first time in five days. Yields fell over 10 basis points across the curve and they're adding to those gains overnight. Meanwhile, gilts rose alongside gains in European bonds. The dollar again is weakening, though, a sixth straight session and we're down again this morning. The pound has been one of the beneficiaries against the dollar, strengthening to the highest since October. Japanese equities this morning are also outperforming this possibility of growth.

More tariff relief may be on the auto manufacturers. That has helped the Nikkei 225 up 1% and the Topix currently up 1.2% this morning. So that's a look at where we are in the markets.

In a moment, we'll bring you up to date with the latest tariff headlines, plus dig into Harvard's dispute with the Trump administration. But another story that caught our eye this morning, this is the latest analysis of Europe's changing climate. So last year was the hottest on record for Europe, according to the Copernicus Climate Change Service in the world, Meteorological...

organisation as well. Their report finding the extra heat in the atmosphere and ocean likely supercharged the storms last year. Remember Storm Boris causing huge flooding, the flooding in Valencia in Spain as well. The worst in more than a decade for many parts too. But I find it interesting that there's also in this data a divide between the

in Eastern and Western Europe too. Take, for example, sunshine. The Balkans had hundreds more hours of sunshine than is typical last year, but it was much cloudier in Western Europe. So France had 350 fewer hours of sunshine than it normally has as well. Now, the effects of a lot of this is...

in things like renewable energy, for example, even if you're looking for an upside about what is a very depressing story about the changing climate, is renewable energy was able, generation hit a record because there was more sunshine in parts of the world that has more solar panels, but also because wind speeds were less strong, which meant that wind power was able to generate more because, of course, when the wind speed goes too high, you can't use wind turbines because it becomes unsafe. So the fact that they had more moderate or below or

average wind speeds is how they describe it in this report as well meant that generation from wood turbines was able to help too but a warning in here as well about early warning systems in particular and that was I saw that I thought that was really interesting the fact that in Europe because the weather is becoming more extreme that kind of early warning system especially for things like fires and floods needs to be better anyway you can read

the story on the Bloomberg terminal and on our website. Joe Wertz has been keeping track of the weather, extreme weather across Europe and what it means for all the different regions in Europe.

Well, let's turn back to the trade story. And President Trump has moved forward on tariffs on imported medicines and semiconductors, even as the pullback on tech tariffs over the weekend and the abrupt reduction of country-specific tariffs for 90 days has sown confusion and paralysis for many companies. Our senior editor, Bill Ferris, joins us now for more on this story. Let's start with these new investigations then, Bill. What exactly is the Trump administration looking at for semiconductors and pharmaceuticals?

Yeah, thanks for having me. So President Trump has ordered the Commerce Department to undertake one of these what they call Section 232 investigations. It kind of has a national security implication, looking specifically at semiconductor chips, the chip manufacturing machines and hardware, as well as pharmaceuticals. And that basically gives the Commerce Department 270 days

to come up with a report for the president's desk. Of course, we're only 80 plus days into his administration. I don't think it's going to take 270 days to get this. But the end result is likely to be some sort of recommendation on new sector specific tariffs in those areas. Meanwhile, President Trump also suggesting that there may be another U-turn, this time on imported vehicles and car parts. So what do we know about that?

Right. So President Trump floating the idea that this 25 percent tariff on imported vehicles could be eased or suspended. We don't have he didn't really go into detail on that, but it is another sign that the administration is perhaps stepping back.

from its initial vow, I guess, or commitment to these 25% tariffs. We know he wants to see more manufacturing back in the U.S., but of course it takes a lot of time to build up that infrastructure and those factories and even a lot of the parts for the production themselves.

that would be required have to come from overseas. So we don't have any details. We don't know what the timeline is, but he is floating the idea and it's benefited, I think, auto stocks in some parts of the world today. We've also, on the negotiation fronts, particularly thinking about the tariffs for China, the trade representative, Jameson Greer, floating the idea of discussions that could happen at the highest level.

Yeah, Jameson Greer, the USTR, saying that he thinks that there is interest in talks. The big question here is it's almost a who blinks first here. I think the Trump administration has signaled repeatedly that they would like Xi Jinping and his aides to place a call to them. I think on the other side, the Chinese have said that they're willing to to put up with this trade war and even escalated at times if they need to. So that

it's unlikely that they're going to make that call. They did praise some of the pullback in tariffs over the weekend. But I think at this point, they're willing to wait and perhaps even absorb some pain before agreeing to talks. Well, all of these tariffs do seem now quite tangled and they seem to be leading to confusion. How much of this, though, do you think might be about consumer prices? How much is the Trump White House paying attention to U.S. consumers?

Well, you know, I think the auto tariffs is an interesting example. You had a lot of estimates out saying that auto prices could go from even for just very modest vehicles, $2,500 to $4,000 in additional costs. That's a huge burden on households in the U.S. So I think they're looking at that. We know when you had some of that bond fallout.

And Tuesday last week, I think we know the president said that that factored into his thinking about pulling back on the reciprocal tariff. So I think the market impacts and the potential inflation impacts, those things show that the president perhaps has a pain point. OK, Bill Ferrys, our senior editor, thank you very much for joining us with the latest on the many and varied aspects of this tariff story.

When you have bars in the sky, onboard showers and award-winning in-flight entertainment, it's no surprise that Emirates was recently named the best airline in the world. We fly you to over 140 destinations and with partners across the globe, we connect you to another 1,700 cities across six continents. So when we say we're also the largest international airline, what we really mean is...

If you're going there, so are we. Book now on Emirates.com. Fly Emirates. Fly better.

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Now, the Trump administration has frozen $2.2 billion in multi-year grants to Harvard University, the oldest and richest U.S. university, after it refused to agree to a list of government demands. It comes also as federal funds and grants have been frozen or cancelled for several high-profile U.S. universities as part of the Trump administration's campaign to force changes at elite universities. Let's get more on this and discuss with Bloomberg's Tiwa Adebayo. Good morning, Tiwa.

There was a question about whether U.S. universities would push back on Trump administration demands. What has the White House demanded of Harvard?

Well, Caroline, it's interesting that we talk about pushback because what's interesting here is that Harvard was previously willing to work with the Trump administration that was on combating anti-Semitism, which is actually where this all started. The Trump team said that it initially began scrutinizing as much as $9 billion in its federal grants and contracts to Harvard in an effort to root out anti-Semitism on campus.

College campuses have experienced incidents of anti-Semitism, including at Harvard and Columbia. And in February, the Trump team created a multi-agency task force to stop that. But now, according to Harvard's President Alan Garber, the university is being subjected to numerous demands, including cancelling DI programs, changes to admissions and hiring, curbing the power of certain students and faculty students.

because of their ideological views. So what Alan Garver is saying is that this has been an expanded ask and it proves that the goal of the Trump administration, according to him, isn't simply about fighting anti-Semitism. He thinks it's more about a power struggle for control, as you mentioned, of one of the world's most powerful institutions in Harvard. So how have...

Harvard and other institutions chosen to respond to this from the Trump administration? Well, in Harvard's case, they've hit back pretty hard. The school's president, Alan Garber, posted a statement on the website, and he said the university won't surrender its independence or constitutional rights. So they're taking this pretty seriously. It looks like they are planning to take the financial hit at the moment.

Harvard is definitely better placed than some of its other peers to do that. Their endowment sits at around $53 billion. But what's interesting, too, is that their statement doesn't just talk about Harvard. It's definitely not the only U.S. college that has faced demands from this administration. Actually, Columbia University, another prominent example, they handled it a bit differently. The Trump administration threatened to freeze $400 million of their federal funding to

And in response, the school actually agreed to do things like ban masks, expand campus police powers and appoint a senior member of staff to oversee the Middle East, South Asian and African Studies Department. Harvard has done the opposite here. They've used this opportunity to make clear that they don't think itself or any other private university for that matter, as its lawyers say in a letter, should allow itself to be taken over or expanded.

by the federal government. So they're taking a defiant stance in response to this. It does seem to be quite a deep ideological battle in the US and many people see that sort of...

having influence or understanding what is going on on university campuses is quite crucial to the fabric of the US or really any country. Well, definitely. And actually looking back at some of the demands, it's easy to see why some may think this is about more than just university students. For their part, the Trump administration actually say that Harvard's response to their request convey a troubling entitlement mindset.

and that federal funding essentially should come at the price of upholding what they're referring to as civil rights laws. So in the eyes of the government, perhaps, it is also about more than just the university.

But speaking about the implications of this discussion for wider society, of course, places like Harvard and Columbia, some of the most important educational institutions in the world, and they are emblematic of intellectual freedom. Larry Kramer, who is the vice chancellor of the London School of Economics, but formerly the dean of Stanford Law School in the US, spoke to us a couple of weeks ago about the situation. Here's what he thinks will happen and the wide-reaching effect that could take place.

The U.S. has long had the largest dominant university system in the world, and the effective dismantling of that and the effective effort to really crush some of the best universities in the world will have just, you know, collateral effects of all sorts that are hard to specify, but will be unfolding over the next couple of years. So, Larry Kramer there from the London School of Economics saying this is

about more than just the control of elite US universities, but certainly a story that's likely to develop in the coming weeks.

Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130. I'm Caroline Hepker. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak Europe.

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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.