'Nonsensical' Trade War, Possible China Relief, Billionaire’s Tariff Pain
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Bloomberg Audio Studios. Podcasts. Radio. News. This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Thursday the 24th of April in London. I'm Caroline Hepker. And I'm Stephen Carroll. Coming up today, hedge fund titan Ken Griffin says Donald Trump's trade war has devolved into a nonsensical place as the president raises the prospect of lower China tariffs in the coming weeks.

The UK's Chancellor, Rachel Reeve, says there's no rush to strike a deal with the US to lower levies on Britain. Plus, a major bump in the road. Billionaire Jim Ratcliffe's foray into the car business faces its latest challenge to profitability in the form of US auto tariffs. Let's start with a roundup of our top stories.

Bloomberg understands that President Trump's decision to ease off criticism of Federal Reserve Chair Jerome Powell and China came after a meeting with executives from Walmart, Home Depot and Target who warned that store shelves could be empty within weeks.

Meanwhile, Citadel founder Ken Griffin said the trade war had disrupted business leaders' ability to focus on long-term growth. Speaking at the Semaphore World Economy Summit, the Republican mega-donor warned that things are moving too haphazardly. All of us were really looking forward to four years of having a chance to really grow our businesses. And unfortunately, the trade war, which has devolved into a nonsensical place...

It means that we're spending time now thinking about supply chains, thinking about strategically how we're going to source goods around the world. And I'll tell you what's not going to happen is people are not going to race to build manufacturing in America.

Griffin's comments came as market participants tell Bloomberg that it's becoming increasingly difficult to predict the direction of stocks, bonds or the dollar. As Jay Woods, chief global strategist at Freedom Capital Markets, put it, every day is just uncertainty, uncertainty, uncertainty. We expect one thing to happen and then something entirely different does.

President Trump has raised the prospect of a new tariff rate for China coming in the next two to three weeks, but that it depends on Beijing. The Wall Street Journal reported on Wednesday that administration officials are weighing plans to cut tariffs on Chinese imports.

Now, under the proposal, they say tariffs could be reduced to a range of 50 to 65 percent or through a tiered system, 35 percent on items deemed non-critical to national security, but then up to 100 percent on sensitive goods that would be gradually phased in over five years. The White House has yet to formally begin tariff talks, though, with Beijing. President Trump told reporters that everything's active.

We're going to have great deals. And by the way, if we don't have a deal with a company or a country, we're going to set the tariff. We just set the tariff. It's something that we think that will happen, I'd say, over the next couple of weeks, wouldn't you say? I think so. Over the next two, three weeks, we'll be setting the number.

And we're going to pick, could be for China too. President Trump is known for shifting positions and a White House official noted that the reported proposal may have been floated as a trial balloon to draw China back to the negotiating table, but any changes would require progress in negotiations.

Treasury Secretary Scott Besant echoed that caution on Wednesday, saying that the U.S. is not likely to unilaterally lower tariffs and that a comprehensive trade deal could take two to three years.

Next to Britain's Chancellor Rachel Reeves, who says the UK isn't in a rush to do a trade deal with America. Bloomberg was told the uncertainty over how Trump's tariffs might play out means London feels less time pressure to strike a deal. Speaking to reporters, Reeves says safety standards won't be compromised.

We're confident that we can secure an agreement with the United States. We're not going to rush a deal. We want to get the right deal in our country's national interest. The UK's Chancellor's tight fiscal plans are again in question as the trade war hits economic growth around the world. She's due to meet Treasury Secretary Scott Besant tomorrow to discuss tariff negotiations.

To breaking earnings news this hour, BNP Paribas has reported record income from equities trading as the French lender rode the global market volatility that's been seen in the first quarter of this year. The French lender reported a 42% surge in equities trading revenue to 1.19 billion euros, beating even the most optimistic analyst's estimate.

It was also the highest in data compiled by Bloomberg and going back to 2007. However, BNP Paribas costs rose 4% on the previous year's period, which contributed to a decline in net income, according to BNP's statement this morning.

Donald Trump is ramping up pressure on Ukraine's President Volodymyr Zelensky to accept a peace deal with Russia. Last week, U.S. officials presented a new proposal to end the war that would effectively freeze the conflict largely along existing battle lines. The U.S. is also willing to acknowledge Russia's occupation of Crimea and ease sanctions on Moscow. Speaking from the Oval Office yesterday, Trump said an agreement now hinges on Ukraine's acceptance. I will say that I think Russia is...

And a lot of people said Russia wanted to go for the whole thing. And they've, I think we have a deal with Russia. We have to get a deal with Zelensky. And I hope that Zelensky, I thought it might be easier to deal with Zelensky. So far, it's been harder. Right.

President Trump speaking there hours after criticising Zelensky on social media for saying this week that his country wouldn't recognise Russian sovereignty over Crimea, accusing him of prolonging fighting. Meanwhile, critics of the proposed deal fear the terms will favour Moscow and sacrifice European security.

Earlier this morning, the Ukrainian cities of Kyiv and Kharkiv faced drone and missile attacks, injuring at least five people, according to a telegram post by the city military administration in Kyiv. Now to the City of London. Firms are seeking bigger office spaces for the first time since the pandemic. It's a move that signals changing attitudes towards physical footprints for many businesses. Bloomberg's Tiwa Adebayo has more.

In the wake of the coronavirus outbreak, business leaders envisioned a future of shrinking office real estate and home working dominance. Whilst that prophecy did initially come true, recent figures show the tide is turning back towards in-office presence for a number of London firms.

Across the capital, 70% of the established businesses that moved office in 2024 took additional space, totaling about 4.1 million square feet of expansion. That's according to data from broker Cushman & Wakefield.

Now, industry heavy hitters including JP Morgan and Jane Street are in talks to boost their physical presence in the city with a focus on central, well-connected locations. In London, Tiwa Adebayo, Bloomberg Radio.

Those are your top stories on the markets. The equity market rally was losing steam late yesterday, but the S&P 500 still finished by 1.7% higher. We saw the dollar rebound from year to date lows rising near 1% in the past three sessions, trading just slightly weaker overnight. In equity, Asian trading today in India.

Asia, we're looking at the MSCI Pacific Index three tenths lower. The Hang Seng in Hong Kong is down by 1.1%. Treasury yields continuing to decline. The 10-year yield down another two basis points this morning to 4.36%. European stock features flat for Eurostox 50 at the moment. But when the currency markets, we're also watching the yen strengthen four tenths of one percent against the dollar trading just shy of 143. The euro is up

two times at 113.36. Now, in a moment, we will have all the latest tariff news for you this morning, plus why Trump's levies are spelling trouble for British billionaire Jim Ratcliffe's car business.

But before we get to those conversations, another story has caught our eye. Jogging's out and apparently moving and lifting heavy objects is in. As if being on social media slash existing in the world wasn't hard enough. Apparently the things that I like are now no longer popular and I have to take up new things now. I don't want to do any new things, Caroline. I'm fed up with this. But anyway, look, Bloomberg's read Brown as I'm writing about how gym businesses are

adopting the uptick in interest or increased interest in weightlifting. So they're actually getting rid of quite a lot of their cardio machines. Crunch Fitness, one of the big chains in the US, said that they're actually in most places reducing around 40% of the machines they have available for cardio because people aren't using them and they're replacing them with weights.

And that is both a kind of TikTok social media trend. It's also one that you've kind of seen with celebrities. And it's partly also the health advice that's being given sort of to older people, especially to women as people age is to kind of bulk up, you know, keep hold of your muscles. Anyway, it's a really great piece from a red brand who goes into lots of details about why, you know, weightlifting is now the thing in the gym.

Well, let's get you the latest on the tariff story now. Donald Trump now says China might get a lower rate within weeks, while US officials are said to be considering reducing the levies on the car industry as well. Our AMEA News Director Rosalind Matheson is with us for more this morning. Rosalind, let's start with China. Both Trump and the Treasury Secretary Scott Bassett

have indicated there's room for negotiation. Can we say this really is a de-escalation? Well, at least the language is a de-escalation. The question is, what does it actually lead to? Because there's a lot of, on the one hand, on the other, commentary coming from US officials. Donald Trump saying that he thinks he can get a good deal with China. They're talking with officials, unnamed officials in China, every single day, and that he's confident that

of that. But also, you know, we're getting these reports that he may reduce tariffs on China preemptively, even before there's a negotiation. And then other officials saying, hang about, no, he's not going to do anything like that. I mean, the messaging overall seems to be they're open to a conversation. They're indicating that they realise that perhaps it's escalating to a point that the US doesn't want it to get to.

But the reality is that getting these tariffs lowered enough is easier said than done. And equally, he will need China to make some kind of step towards the US. He can't just lift tariffs on China or reduce them without something in return. So at least the language is softening, but we're a bit of a way potentially before we get to tangibles on it. And yet there are quite a number of sectors within the US, executives, individual states,

various companies who are putting pressure on Donald Trump over tariffs. Does relief on the auto sector look perhaps the most likely to happen now? Well, there's been a lot of lobbying from the auto sector, a parade of CEOs, executives, lobbyists through Washington saying this is going to be very damaging for our own auto industry. In fact, it could lead

to layoffs and so on. It's really interesting because, of course, Donald Trump's going to Michigan next week. That's where he's going to mark his 100 days in office. That's the bedrock of the US auto industry. So certainly he doesn't want to be heckled there by people saying that he's risking jobs in the US. But what we do know, of course, from our own reporting is they are looking at perhaps

some easing there, avoiding the stacking of tariffs for the auto sector. So, you're not putting tariffs on top of each other. Perhaps, again, some exemptions for the US, Mexico, Canada trade deal because, of course, a lot of the auto parts come through the America's

as a whole into the US. So there might be some selective relief that can come there. No promises from the White House as yet, but we do know from our own reporting that's being at least discussed. This is we've got the parade of financial officials moving through Washington for the IMF and World Bank spring meetings at the moment. Rachel Reeves saying that she's in no rush to do a trade deal. Well, it's interesting because you have a lot of countries saying they're rushing to talk, but at the same time, the narrative is that they would prefer to do a good deal rather than a quick deal.

and then a bad deal of course becomes very very difficult to unwind so if you race to get something done getting it unpicked later on is very very difficult and so even with countries like Japan, India, others who are really at the front line of having these negotiations with US officials you get a message there also that they would prefer a better deal over a quick deal and

And some suggestion from the White House even that getting a proper trade deal with a country like China could take years. So certainly we're getting that kind of like hurry up but also wait messaging coming from a bunch of countries including the UK. Ros, thank you so much for being with us this morning taking us through all the latest tariff twists. Our EMEA News Director Roslyn Matheson.

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Well, the British billionaire Jim Ratcliffe is among those feeling the pinch from Donald Trump's levies on the auto sector. His INEOS automotive business, which had already been facing difficulties from recalls and bankrupt suppliers, now looks even further from turning a profit. Our UK business editor Jamie Nemo joins us now for more on this. Jamie, good morning. INEOS Automotive's main product is the Grenadier SUV. Talk us through what the state of the business was before the tariffs.

Yeah, well, they were really in startup mode and they still are. I mean, it's like a nine-year-old business. So, in startup world, that's quite developed. But in the car business, that's a long way from really producing large sums, large volumes of cars. So, yes, they just started selling cars in 2023, really trying to ramp up now. So, this is a real blow to their plans to sort of

boost sales in the US, which is its largest market. Ah, okay. So, what's changed since the auto tariffs were imposed? So, they've raised the prices on a couple of their models. They've got a pickup that they've had to raise by 10%, and the standard Grenadier is 5% higher. They hope that customers will keep coming to buy the car. The problem for the pickup version is that it already attracts the 25% chicken tax, which has been in place for decades. So, you've now got this double tariff hit. So,

So, they're really going to have to take that blow. And there's really not that much they can do about it. What's the kind of comparison with INEOS versus other car makers? Because, of course, they're all affected by the tariffs, but INEOS is particularly feeling the pain. Yeah, well, if you think about VW, for instance, it's a giant company. We talk about the strain it's under. But in reality, it's still churning out huge profits.

And then take INEOS, you're a startup, you're losing tons of money at the moment, and it's just going to get worse. I mean, they were hoping to turn a profit in the next few years, not exactly sure when, they haven't stated that. But we know now, the CEO told us that this will delay that.

and it'll take a lot longer. And then you've got the dilemma, does he keep putting money in? He's having to fund this. It's not his main business. Chemicals is the main thing. And he's got a lot of sport now as well. Man United is the big high-profile investment. So, you know, he'll really have to commit or pull the plug. Yeah, I was sort of going to say, Jim Ratcliffe, he's such a well-known figure. He's quite controversial. He does speak from time to time. So, he's...

He's perhaps quite well-known in the UK, obviously, for his wealth and the chemicals business success. What does it mean for him then? Because he's trying to repeat that success in other sorts of businesses. Yeah, he's really trying to prove himself in other industries and it's not quite paid off yet. Sport in particular, he's come in at different times of sports, cycling, football, Formula One, and it's not quite worked out. So, this is another area where he's really trying to prove himself. So,

He probably doesn't want to pull the plug. He really wants to show that he can make this work, make a success of it. So, yeah, that's his real thing. He wants to just show that he can work his magic in other sectors. Is there any cause for optimism from the company in this as well? How are they thinking about, I suppose, the path away from their current difficulties? Yeah, I think so. They hope that as they get more mature, they can strengthen their supply chain.

You know, they had a situation last year where a seat supplier went bust and they had no alternative than to shut down the factory. I think they hope that as it gets older, they'll have fallbacks in different scenarios. And also, as the brand gets, you know, better known in the U.S. in particular, they won't have to completely sort of throw huge sums at marketing to sell the vehicles. And it'll be a bit more, you know, self-sufficient.

This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com.

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