Trump’s Tariff Whiplash, Dollar Selloff & British Steel Emergency
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This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Monday the 14th of April in London. I'm Caroline Hepke. And I'm Stephen Carroll. Coming up today, the dollar drops as Donald Trump downplays his tariff pause on electronics and vows new levies on the sector. Exports to the US from China surge in March as firms scramble to source goods before duties push up costs.

Plus, forging ahead, UK officials race to secure the crucial materials needed to keep British Steel's blast furnaces running. Let's start with a roundup of our top stories. President Donald Trump says a pause on tariffs for certain electronics is only temporary, insisting in his words that nobody is getting off the hook.

On Friday, the US announced that popular consumer electronics, including phones and laptops, would be exempt from the planned 125% tariff on Chinese goods and 10% global levies. But over the weekend, it became clear that those products would soon face separate charges. Posting on Truth Social on Sunday, Trump said the exempted items were just moving to a different tariff package.

bucket and that the administration would now be focusing on semiconductors and the whole electronics supply chain. Speaking to reporters on Air Force One, Trump gave further details of his plan. The tariffs will be in place.

in the not distant future because as you know, like we did with steel, like we did with automobiles, like we did with aluminum, which are now fully on, we'll be doing that with semiconductors, with chips and numerous other things. And that'll take place in the very near future. I'm going to be announcing it over the next week.

It's not yet clear what tariff rate Trump plans to apply to semiconductors and related products, but other sectors such as steel and autos have faced levies of 25%. This latest twist comes as countries and global markets continue to be whipsawed by a flurry of walk

The Bloomberg Dollar Spot Index slipped on Monday after tumbling 2.4% last week.

amid escalating trade tensions with China and concerns about U.S. growth slowing down. The move lower comes as traders pay close attention to the U.S. Treasury market following last week's rout. Bob Michael, global head of fixed income at J.P. Morgan Asset Management, says the worst of the sell-off has likely now happened.

I think there's still a bit more of a washout to go. I think there are still the investors that are coming in overseas that have seen the downward price moves and maybe unwinding some positions. But I feel pretty good that we're putting in a low in price and a high in yield here.

Bob Michael speaking there. As markets continue to digest the latest tariff news out of Washington, equity index futures for both the US and Europe are pointing higher this morning. However, a rise in the price of gold, which hit a new record high, suggests investors remain cautious about what lies ahead.

The latest tariff moves from the US come as new data shows China's exports surged last month. Exports in dollar terms far exceeded all forecasts to rise by 12.4%, with a near 9% rise in goods being sent to the US. The figures suggest that many companies were front-loading orders in March to get ahead of looming tariffs.

The data also reveals that Chinese exports to Southeast Asia reached their second highest level on record, suggesting firms are diverting shipments to countries across the region. Here in the UK, corporate finance chiefs have been adopting defensive positions even before the prospect of a global trade war. This according to a new study showing British businesses are playing it safe. Bloomberg's Tiwa Adebayo has more.

Just 12% of the UK's chief financial officers think now is a good time to take more risks. That's half the long-term average. The data gathered by consulting firm Deloitte was collected in March this year, just before Donald Trump's global tariff programme was unleashed.

The last time risk appetite levels were this low, the country was dealing with the onset of the COVID pandemic in early 2020. It will make sobering reading for Prime Minister Keir Starmer, whose Labour government has pledged to speed up economic growth. CFOs are also prioritising cutting costs.

and predicting a sharp hiring decline over the next year. In London, Tiwa Adebayo, Bloomberg Radio. British officials are racing to find the materials to keep the last steelmaker in the country going after seizing control of the company from its Chinese owners. An emergency session of Parliament gave the government power to run British Steel after talks with its parent company Jingye broke down. Business Secretary Jonathan Reynolds says the Chinese firm left them with no choice.

In this situation, with the clock being run down, doing nothing was not an option. We could not, will not, and never will stand idly by while heat seeps from the UK's remaining blast furnaces without any planning, any due process, or any respect for the consequences.

Reynolds now faces the challenge of keeping the steel plant open. The business loses £700,000 a day and needs raw materials urgently. The saga also raises questions about the viability of Chinese infrastructure investment in the UK, with the government saying there is now a high trust bar going forward.

And finally in sports news, Rory McIlroy has completed a career grand slam in golf with his win at the US Masters tournament. He becomes only the sixth man to win all four major golf tournaments. It came down to a sudden death playoff between the Northern Irishman and Justin Rose after McIlroy dragged his par putt wide. Afterwards he reflected on what the victory meant to him and to his family. I want to say hello to my mum and dad. They're back home in Northern Ireland and

I can't wait to see them next week. I just can't wait to celebrate this with them. Woi maka woi there speaking after winning the first Masters play-off since 2017. His win follows 14 years of attempting to capture the title at Augusta. And

And those are your top stories on the markets today. The MSCI Pacific Index 1.7% higher than it can in Tokyo by almost 2%. And the Hang Seng is 2.4% higher. The Bloomberg Dollar Spot Index is a tenth of 1% weaker. So we've got the Japanese yen three tenths stronger at 143.11 against the dollar. And the euro and the pound are both slightly stronger against the greenback. This morning, the 10-year Treasury yield down at two basis points to 4.47%.

Gold hitting a record high again today, slightly off the highs, but still over $3,220 a troy ounce as we're looking at Wall Street futures and Eurostox 50 futures, both higher. Eurostox 50 futures up by 2.5%. Well, in a moment, we'll bring you up to speed on the market reaction to President Trump's latest tariff moves over the weekend. Plus, we'll dig into the UK government's take over of British Steel that also happened very busy weekend. But something else caught our eye this morning.

This is a bit lighter, maybe the craze for caviar. Apparently, caviar as a luxury item, i.e. worth shelling out for, has remained pretty resilient over about a century. Russian caviar is under Western sanctions, but today most caviar imported into the U.S. is actually farmed in China.

It's always been kind of a little bit outrageous, but actually the price of caviar has been coming down. Yeah, dramatically so because of the increased production out of China as well. Our colleague Madison Derbyshire has been writing about how it's become sort of a staple now almost of menus in Manhattan, certainly. And questions now being asked about what the Chinese tariffs after production essentially moved to China mean for this product.

on the menu that gives a sense of luxury but has been now almost used everywhere. I mean, it's quite funny to get some of the commentary from chefs in this piece as well. One of them describes it as, at the end of the day, it's salt. Do you ever want to see an idea of the downgrading of caviar in people's minds? Just salt now. Yeah, absolutely. Well, I suppose the big question is whether or not maybe some of that caviar will end up in the EU, will be diverted. Anyway, we shall see. It's one of those kind of big tariff questions, isn't it? Well, let's get into that and the impact on markets next.

The dollar declining at the start of this week as investors look past the weekend reprieve on tariffs on popular consumer electronics and prepare for what could be another wild week in markets. Our MarketsLive executive editor is strapped in and ready for us, Mark Cudmore. Good morning. Good to talk to you. Let's talk about the tariff tech pause first, though. Trump promising more levies on this sector. How significant is this for markets?

I mean, obviously tariffs are the biggest story and they're going to remain the biggest story. They're not going away. Uh, I think you gotta, every kind of question in markets, then we need to look at two different time spans. So on the longer term time span, um, tariff, tariffs are going to be imposed by the U S to a level not seen probably in about a hundred years, whether some get removed, some get negotiated away. Uh,

they will be imposed because he and most of the circles of administration deeply believe in them. Trump in particular has long deeply believed in tariffs and always been very clear about this, that he thinks this is what's needed to kind of restructure the US economy. So they're going to remain in place. What hasn't worked out is which ones exactly and that kind of ebb and flow of trading. In the short term, look...

I know that Trump has kind of gone, hey, we're going to impose semiconductor tariffs again, and that's kind of bad news. And some people are wondering, hey, why are stocks higher? Well, the fact is, the exemption in the short term, even though it's only temporary, of the electronics goods from China, that's such a massive amount of the China trade that you've suddenly kind of taken...

like a quarter or more of the risk off of that kind of China-US trade war, the most important part. So I think that is a bigger relief in the short term, even though people know more tariffs are coming. And they also are aware that there's going to probably be more positive headlines in the short term. We have the Besset meeting in Tokyo later this week. People expect there'll be some kind of deal with Japan trade there. We'll announce some kind of headline short-term win. And that might provide some relief. So I...

I think longer term, this story is going to stay with us. It's going to stay extremely negative. It's extremely negative for U.S. assets. On the short term, I think we're going to bounce around. I wouldn't want to trade that very negative, aggressively negative narrative in the very short term. Okay. Well, talking about negative, the dollar dropping to a new 2025 low. Where next? As really the currency universe has also seen this just massive reset. Yeah.

Yeah, unfortunately it's going to be a similar type answer. And that's because we're all trading the same story, the tariffs. But you look at the

The world is overexposed to the U.S. dollar still. We've talked a lot about this in this program over the last three or four months. And ultimately, the U.S. policies are very damaging to holding U.S. assets. For the last 15 or so years, we traded TINA. There is no alternative to U.S. mega cap tech stocks. And so, you know, of the marginal dollar generated around the world, 95% was just pouring into kind of U.S. equities.

And now, suddenly, people don't want to have exposure to U.S. assets because they don't know how the rules are going to change. And U.S. businesses have an increased cost of business. Again, they don't know exactly which cost of business is going to increase and how much, but they know it's going to get much more expensive to do business. So, we're eroding the advantage, structurally eroding the advantage that U.S. companies have held. And it's

It's a structural advantage that was so deeply embedded that people thought it would never be removed. That's the narrative we traded the last 15 years, that there was no point playing EM, there's no point playing a China recovery. Europe was never going to grow again. All those things have all been shifted. Now it's suddenly, no, wait a sec, we got way too carried away in the US story, so we have to get out of the US story. And suddenly people are getting more excited by the other options again on a structural basis. And that means that over the next couple of years, the dollar will continue to decline.

But very short term, I'm pretty wary about how much it's falling in the short term. You know, whether it's higher or lower in a week, I have no idea. But over the next couple of years, it's definitely weakening. OK, this isn't a week as well. We're looking ahead to some central bank decisions. But I do wonder, Mark, before we let you go, perhaps are you more excited by what we saw from Rory McIlroy over the weekend?

Absolutely. The Masters is the big news today. Markets are rather quiet compared to the last week or so. Actually, funnily enough, I woke up this morning and my trader WhatsApp chats had all blown up. And I woke up about 5 a.m. Hong Kong time and I thought that, oh my God, something nuclear has happened in FX markets. It must have gone crazy. And I clicked through every chat and every single one was just talking about the Gulf.

Oh, it was an amazing moment, wasn't it? That walk, you know, back to getting the cup was amazing. Good stuff, Mark. Thank you so much for being with us this morning. I'm sure we'll be speaking to you much more over the course of this week on Markets Live. Executive Editor, Mark Cudmore.

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Well, the UK government ran an emergency session of Parliament to take control of British steel this weekend. The company's been effectively nationalised after talks with its Chinese owner, Jingye, broke down. Our UK politics supporter, James Wilcock, is with us now for more. James, just remind us of the background to what got us here. Yeah, it's a very good question, Stephen, because here is quite special. We've been talking about this government and how it might need to step in on a range of industries like Thames Water. It's since gone nationalised rail, but

to happen over an emergency sitting, Parliament hasn't been recalled on a Saturday since 1982, the Falklands War, and then to now be in possession of the last British steel company in the country. It's

And so, you know, how we got here, though, is Chinese firm Jingye acquired British Steel back in March 9th, 2020. I'm being that specific because obviously that is pre-COVID by a matter of days. It pledged to invest 1.2 billion into the company to make it new and green. And a lot has changed since then. The pandemic, inflation, tariffs. And so last month, it announced a consultation on shutting the steelworks and it being cheaper to just import the steel from China. And it was a lot of work.

That is obviously anathema to a UK government that has made its industrial strategy all about keeping steel alive. The UK government offered to pay for the raw materials. We gather they were crisis talks. We gather there was an offer to finish off the 1.2 billion investment with a further half a billion from the government. However, talks broke down and...

the most striking thing to me coming in on this Monday is the government over the weekend effectively saying that Jingye weren't serious and that were the words they're saying Jingye apparently wanted one billion pounds to keep the steelworks going and with a guarantee no guarantee that the billion pounds would stay for investment in the UK which made the government concerned the assets would potentially be leaving the country and so the government took the step to say they were going to nationalise it

What is Jing Ye's argument here? Well, if you look at British Steel's accounts, the argument is pretty clear, Caroline. In 2022, British Steel made a turnover of £1.7 billion, but it made a loss of £400 million. It made a loss in 2023 of £231 million pre-tax.

This is a company, British Steel, that loses £700,000 a day. It is just not viable to keep it going. And the business secretary, Jonathan Reynolds, acknowledged that over the weekend, where he said the market value of this firm is zero. So if you're Jing Ye, what are you getting out of owning British Steel? What does this say, James, about the Labour government's approach to its business and industrial strategy?

All around the world, Stephen, people are asking the question of, is globalization working? What does my country need to be done here? And the UK government has been extremely clear about its path to growth.

it needs private investment. So what this story is so interesting is it's the first time we're seeing it all tied together. This is national security. This is the green debate. Both things need steel. This is also a world which the UK needs to be able to function with some of its sectors being far less productive and competitive, especially the industrial manufacturing ones, than some of its global rivals. If it had lost British steel, the UK would have been the only G7 country without a capacity to produce virgin steel.

So the stakes are quite clear. What we can now say is this is a UK government willing to put the state funding on the line to back these industries. And that's the route it sees for some of these kind of crises. The question we don't yet know, though, is what the fiscal tradeoff will be. We know this is a company that loses £231 million in a year. Where is that money going to come from?

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.

Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130. I'm Caroline Hepke. 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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