Trump Hits Powell Again, Tariff Toll Grows, Swiss Defense Stifled
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This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Wednesday the 30th of April here in London. I'm Caroline Hipker. And I'm Stephen Carroll. Coming up today, Donald Trump turns up the heat on Jerome Powell as the US president defends his economic agenda after 100 days in office. AstraZeneca's CFO tells us she's seen no evidence that UK growth policies are matching the rhetoric.

Plus, Switzerland risks missing out on lucrative European arms contracts as the country's neutrality threatens to stifle its defence industry. Let's start with a roundup of our top stories. US President Donald Trump has renewed his criticism of the Federal Reserve Chair Jerome Powell while defending his economic policies and tariff strategy during an event to mark his 100th day in office.

Speaking to supporters in Michigan, Trump again pressured the central bank to cut interest rates despite the independence of Fed policymaking. And inflation is basically down and interest rates came down despite the fact that I have a Fed person who's not really doing a good job. But I won't say that. I want to be very nice. I want to be very nice and respectful to the Fed.

You're not supposed to criticize the Fed. You're supposed to let him do his own thing. But I know much more than he does about interest rates, believe me. Although Trump said earlier this month that he doesn't plan to fire Powell, his latest remarks are likely to heighten investor concerns over the central bank's independence as the White House pursues an aggressive restructuring of U.S. trade relationships. Adding to economic anxiety, U.S. consumer confidence dropped in April to its lowest level in nearly five years.

China's factory activity has fallen into its sharpest contraction in 16 months in an early sign of the fallout from 145% U.S. tariffs. The official manufacturing purchasing managers index dropped more than expected to 49 in April. That was down from 50.5 in March. Meanwhile, the non-manufacturing index, which covers construction and services, also grew more slowly than anticipated.

But speaking to ABC News, the U.S. president said China deserves the steep tariffs he has imposed on their exports, adding that Beijing could find a way to reduce their impact on American consumers. China probably will eat those tariffs, but at 145, they basically can't do much business with the United States. And

They were making from us a trillion dollars a year. They were ripping us off like nobody's ever ripped us off. And by the way, we have other countries that were just as bad. If you look at the European Union, it was terrible what they've done to us. Every country, almost every country in the world was ripping us off. They're not doing that anymore.

President Trump's defiant remarks come just days after his administration signalled that it was seeking to ease tensions and to re-engage with Beijing in trade talks. Earlier on Tuesday, Treasury Secretary Scott Besant declined to offer details on any active negotiations between the two countries, but warned that China could lose as many as 10 million jobs due to the tariffs.

As Donald Trump repeated his criticism of the European Union, the bloc says it has put concessions on the table during its talks with the US, while the White House says negotiations are stuck at the starting line. The EU Commissioner for International Partnership, Joseph Sikella, has told Bloomberg he is confident a deal can be reached.

Instability is not a good message for business because business is always looking for safe havens, for predictability, for stability. And this is something we want to offer to remain the reliable, stable and predictable partner. And I have a good feeling that we will solve the issues to a mutual interest.

Sikella's upbeat tone clashed with comments from US Treasury Secretary Scott Besant. He told a press briefing that trade talks wouldn't begin until the EU resolves what he called internal issues, singling out the digital services tax levied by some countries, calling it unfair.

President Donald Trump has signed an executive order to prevent steel and car tariffs doing double damage to automakers. But despite that, earnings season is beginning to show how the chaotic period for global trade is starting to hurt companies. Bloomberg's James Walcock has more.

You can break down what we've heard so far into three groups. Firstly, companies that say they're in for a rough ride, the likes of General Motors, Merck, JetBlue. Heavy on automakers, retailers and air travel, this group is withdrawing earnings guidance, slashing costs and often delaying share buybacks.

Then you have a few like Coca-Cola, who see the trade war as manageable, with its sodas being bottled locally around the world. And then you have Pandora's box, the firms who say they still have no idea how to quantify what's coming and haven't updated their forecasters' quarter. In London, James Woolcock, Bloomberg Radio.

Now to some breaking earnings news for you this morning. Profits at the Swiss banking giant UBS beat estimates in the first three months of the year after its markets division posted record performance during the recent volatility. Net income for the three months to March came in at $1.7 billion.

Similar story at France's Societe Generale, where record revenue from trading stocks and related securities helped to lift revenue and profits past expectations. Net income at Socten more than doubled from a year earlier to €1.6 billion. A beat too for Spain's Santander, with first-quarter profits of $3.4 billion, and the lender said it was on track to meet its full-year targets.

Less good news, though, from the auto sector this morning. Mercedes-Benz withdrawing its outlook for this year due to the uncertainty from Donald Trump's trade news. The volatility sparked by tariffs, the company says, is too high to reliably assess the business development for the remainder of this year. Drug maker AstraZeneca has told us it is seeing no particular benefits

Thank you very much.

We asked AstraZeneca's chief financial officer, Aradhana Sarin, whether she is seeing any benefit from the government's pledge to boost economic growth. Not yet. So we haven't really seen any of that yet. Industrial policy is obviously one thing, but obviously access to medicines is also important because...

You know, if you think about where we do our studies and where we invest R&D investment, you know, eventually at the end of all of that, we do want patients in that country to have access to medicine. So, you know, if we spend all the money in research and then patients don't benefit in that country, that's very disappointing.

AstraZeneca CFO Aradna Sarin speaking to us about the NHS not buying enough of its drugs. Now, it comes after the company's CEO, Pascal Sorio, issued a warning against the use of tariffs yesterday and that the drug makers in the US are lobbying the Trump administration to exclude medicines from future levies.

Vladimir Putin is demanding that Russia take control of four Ukrainian regions as part of a peace deal to end the war. Bloomberg understands the Kremlin wants jurisdiction over the land, which it currently doesn't fully occupy as part of the agreement. The news is a blow to US President Donald Trump's efforts to reach a ceasefire amid mounting frustration about a lack of progress. State Department spokeswoman Tammy Bruce says negotiations have reached a crucial stage. We are now at a time...

where concrete proposals need to be delivered by the two parties on how to end this conflict. How we proceed from here is a decision that belongs now to the president. If there is not progress, we will step back as mediators in this process.

That's the State Department's Tammy Bruce there. Meanwhile, President Trump remains confident a deal on critical minerals will be signed with Ukraine, according to the White House. Sources say the agreement, which will govern post-war plans to exploit the country's mineral deposits and rebuild its infrastructure, could be signed as soon as this week.

Those are our top stories for you this morning. Let's have a look at the markets then this hour. MSCI Asia Pacific Index is up by half of 1%. You've got the KOSPI significantly weaker. CSI 300 is also down. Of course, we've seen the S&P 500 up for six days in a row, a total of near 8% in terms of gains.

but the issues around the trade war are really weighing on Asian equities. And you've also got a set of big earnings out tonight, tech earnings from Meta, from Microsoft. So the NASDAQ 100 will be in focus. It has recovered nearly all of its losses since the 2nd of April. Just thinking about...

That disappointment then in Asia, the China manufacturing PMI slumping. That's the kind of big issue there. Looking at the Bloomberg Dollar Spot Index, it's weaker this morning. So, a softer dollar, softer pound. The euro down a tenth of 1%. Oil prices in retreat down 1.2%. Gold also down two-tenths this morning. U.S. stock futures are in the red and 10-year U.S. yields trade at 4.17 in terms of those yields this morning.

Well, in a moment, we'll bring you more on Trump's latest broadside against the Federal Reserve Chair and discuss why Swiss neutrality threatens to stifle its defence industry. But another story that caught our eye this morning about a particularly unusual property deal in the Arctic archipelago of Svalbard.

It's in Norwegian territory, although governed by a 100-year-old treaty signed by some 45 countries, among them Russia, China and the US. And there's a plot of land for sale that's about the size of Manhattan. And a group of buyers is willing to pay 300 million euros for it. They include Norwegian and international investors. And their aim is to protect the area from environmental changes. Yes, except, of course, this...

bit of land along with a lot of the arctic is now at the center of all of this geopolitics and the tensions with u.s president donald trump he's talked about wanting to take over greenland from denmark so the norwegian government has said this sales got to be cleared by us first so it's a pretty fascinating story um of course the the area is just full of mountains fjords

Arctic wildlife and it's a massive stretch of land. It does, although it's in the complete darkness for about four months of the year and then you kind of get to almost total silence. But then complete light for the other four months. So, you know, business is bad, business is good. You can read more on Bloomberg.com and you'll find a link to the article in our show notes if you're listening to the Bloomberg Daybreak Europe podcast.

Now to President Trump's rally celebrating his 100th day in office, which saw him tout his harsh immigration enforcement, blast China for, quote, ripping us off and criticising the Federal Reserve chair. But the president's approval ratings have slumped.

amidst his administration's aggressive pursuit of an America first agenda. Joining us now is our News Desk editor, Jill Desus, to discuss what did you make of President Trump's rally in Michigan and also, of course, his first 100 days back in office?

Yes, good morning. Well, I think what you just rattled off there is really kind of emblematic of what we saw out of this rally. It's really kind of a greatest hits of all things Trump. You saw a bit of him contradicting himself slightly, kind of, you know, running into, you know,

you know, defending the tariffs, but then also talking about some of these easing measures that he's put forth recently, including really just hours before this rally, he signed some directives easing tariffs on auto part levies, for example. So, I mean, he's kind of, you know, equivocating there a little bit. You also had some criticism of Jerome Powell, one of his favorite targets, the Fed chair there thrown in as well. But really, I think the big takeaway from this rally is we're $100

days into the Trump presidency. As you mentioned, approval rating with the public is down significantly. There is a recent poll showing really only around 39% approval rating or something. I mean, we're looking at some of the worst approval ratings of either this presidency or his first term in office here that Trump is contending with.

And then you're also setting that against the background of this tariff plan, which has created a lot of market turmoil. You've got a lot of uncertainty that Trump is trying to balance here. And so Trump is really kind of using this as a way to kind of come out and really just be classic Trump here, which is to say, you know, the plan is right. Everything's fine. We're doing great. And I think really just trying to reassure people there, obviously, you know, whether that's actually effective, I think, is a separate question.

But on the question of the criticism of Jerome Powell, though, of course, as you say, this is something that Donald Trump has returned to on repeated occasions, but he did pull back from previous threats to get rid of the Federal Reserve chairman that had spooked markets as well. Does it look like we're swinging back in that direction? How serious is this criticism?

Yeah, I mean, look, you know, Trump really can't help himself, can he? I mean, we're really only about a week or so ago, you know, we heard, you know, him calling, you know, Jay Powell a loser. Obviously, he's, you know, really, he's really hit interest rates really, really hard here. I mean, you know, it kind of compares, I guess, to kind of get the

full picture here, you back up about a week or so ago. We know that a lot of Donald Trump's advisors were kind of advising him on the prospect of what would it actually look like if you tried to fire Jay Powell. He then came out a few days later and said, that's not something that I'm considering. He didn't really return to that level of language at this rally, but he is kind of ticking back up

and, you know, criticizing Jerome Powell, you know, saying that he's not doing a really good job. You know, Trump saying that he knows interest rates better than Powell does. So we are seeing that return to criticism, but I wouldn't characterize this as something that felt like he was really ratcheting up the kind of campaign that we saw just a couple of weeks ago. Hmm.

Meanwhile, those U.S. tariffs that President Xi says China deserves do seem to be having a swift and quite deep impact on China's factory activity. This set of data is being really closely watched. What do you think of it?

Yes, well, I think, you know, as you were just saying a few minutes ago, I mean, just the fact that you're seeing that factory activity slip into contraction is pretty concerning. I think that, you know, what we've been hearing from analysts is that this is sort of worse than expected when you're weighing just some of that initial impact of those 145 percent tariffs.

on Chinese products. I mean, you know, when you're digging into that data a little bit more, some of the worst numbers that I saw on there, I mean, new export orders falling to the lowest since December, 2022. I mean, we're looking at what pandemic era, you know, sort of shifts in some of this manufacturing activity. I mean that, and, and where you looked at the,

Those orders in particular recording the biggest drop since April of that year, 2022. And remember, that's when Shanghai, the entire city of Shanghai was in lockdown. So, I mean, that's a pretty serious and pretty dramatic shift here. You know, I think at this point, what we've heard from Beijing so far is that there are have already.

laid out some measures to kind of help exporters. They announced that they were going to help them get access to loans, make things a little bit easier there, but they haven't really pulled any kind of big bazooka stimulus. I mean, you know, talk about this forever, but you know, that doesn't really seem like something that China is interested in pursuing, at least over the past couple of years. So China certainly exercised some caution there, but I do think it does kind of suggest

A bit of a warning sign there. I would be really on the lookout for other economic data, not just out of China, but sort of around the world over the next few weeks, just to see if we can get a better indication of how exactly these tariffs are actually starting to take effect. And just remember, the reciprocal tariffs are still on pause at the moment. I mean, it could be more economic pain to come for some of these countries going forward.

Jill, thank you so much for being with us this morning. Bloomberg's Newsdesk editor, Jill Desis. Thank you.

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Now, to a special report looking at European defence. Switzerland's neutrality is threatening to stifle its small but symbolically important defence industry as a major shift towards European rearmament and national security is underway. Joining us now for more is our reporter, Levan Stam, who has been writing about this. Levan, great to have you with us.

First of all, how big is the defence industry in Switzerland and what is it making now? Good morning and thank you for having me. Well, at least in economic terms, the Swiss defence industry is rather tiny within the European context. It contributes just over 0.2% to Swiss economic output and employs around 14,000 people.

There are two major groups of firms that I should mention. Big manufacturers that produce entire weapon systems. These include subsidiaries of German Rheinmetall and American General Dynamics. But then there is also a plethora of really small companies that each employ maybe a few dozen employees. And those mostly focus on the production of arms components, mostly for larger European defense producers. And I think it's also important to mention that the economic significance has recently further decreased.

Swiss war material exports have dropped by 30% since an all-time high in 2022, exactly because of laws rooted in neutrality that restrict Swiss defence exports. So just explain a bit about the laws and how they restrict things. There has been criticism around blocking some exports to Ukraine. So...

I mean, basically countries that buy weapons with at least 50% of the value made in Switzerland are not allowed to re-export them to other countries.

And Swiss firms also aren't allowed to export to war zones. And for a long time, other countries didn't care too much about these restrictions. And the Swiss government also had the powers to grant exceptions if it deemed fitting. But then the Swiss parliament scrapped those powers in a lower revision in late 2021. So really just months before Russia's full-scale invasion of Ukraine.

And ever since, the government had to deny multiple requests by European governments to send Swiss-made weapons to Ukraine, including Germany and Denmark. And that has led to European countries now systematically avoiding to rely on Swiss arms or components because they really don't see Switzerland as a trustworthy supplier anymore.

Swiss neutrality has a long history. What are the views of it now? How are the Parliament and the Swiss government thinking about the defence industry in the current context? Well, so the Swiss are increasingly split about Switzerland's neutrality stance and how far also support for Ukraine should go. With arms exports, it's actually even more complicated because it was exactly the left-leaning parties which generally are in favour of extending support for Ukraine.

And they were exactly the ones that pushed through a law that law reform that now blocks the arms exports. And at the same time, there is the business friendly Swiss People's Party. But that one has exactly pushed for a vote that seeks to enshrine everlasting Swiss neutrality in the country's constitution. At the same time, on the government side, there I spoke with multiple agencies and

And they were all really worried about the vanishing Swiss defense industry, rather from a security concern standpoint. And they fear that if Swiss firms are cut out of supply chains, that also reduces Switzerland's leverage to get supplies for its own army from European partners in times of crisis.

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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