China Denies U.S. Trade Talks; Apple's New iPhone Plan
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we once again begin with new developments in the global trade war. This morning, a Chinese foreign ministry spokesman says Beijing is not having trade talks with the U.S. and the White House should not mislead the public about talks. Yesterday, President Trump said his administration was talking with China on trade.

We get more from Bloomberg's Rosalind Matheson. It's interesting to see the denials between them about whether they're having conversations because it seems as if at least some kind of dialogue is going on, even at a much lower level. And those back channels might be operating. But getting from where we are now to something tangible,

is another question entirely. So even if the rhetoric is dialing down, getting to a point where we've got a proper framework on tariffs from here between China and the US or other concessions that either side makes, that's very much yet to be seen.

That's Bloomberg's Rosalind Matheson reporting. And in another development, Bloomberg News has learned China is considering suspending its 125% tariff on some U.S. imports, including medical equipment and industrial chemicals like ethane.

Well, Nathan, Japan is trying to strike a trade deal with the U.S. to avoid tariffs, but doesn't want to be part of a U.S.-led economic bloc against China, its largest trading partner. According to current and former Japanese government officials, Japan is prioritizing its own interests and has conveyed to China that it doesn't fully align with the U.S. on chip-related exports.

and semiconductor restrictions. In the meantime, Karen, Treasury Secretary Scott Besson says the U.S. and South Korea could reach an agreement of understanding on trade as soon as next week. Besson talked to reporters at an Oval Office meeting between President Trump and the Prime Minister of Norway.

We had a very successful bilateral meeting with the Republic of South Korea today. We may be moving faster than I thought, and we will be talking technical terms as early as next week as we reach an agreement on understanding as soon as next week. So South Koreans came early. They came with their A game, and we will see if they follow through on that.

As Treasury Secretary Scott Besant and South Korea's finance minister says the two sides are aiming for a deal by early July. That would be before the 90-day reprieve from higher tariffs ends.

Well, Nathan, as the trade war goes on, there's a new analysis of the impact tariffs could have on Americans across the board. And we get the details with Bloomberg's Kimberly Adams. They'd hit lower income consumers the hardest. That's according to a report from the left-leaning Institute on Taxation and Economic Policy. It finds if the tariffs now in effect stay in place next year, it would amount to a 6.2% tax increase on those making $28,600 or less.

That compares to 1.7% for the wealthiest earners, making close to $915,000. Economists have warned tariffs will raise prices for everyone, but low-income families are likely to lose more because they tend to spend more on food and other necessities. Kimberly Adams, Bloomberg Radio. All right, Kim, thank you. And Fed Governor Christopher Waller is warning that firms could begin laying off more workers if the Trump administration reinstates aggressive tariffs.

It wouldn't surprise me that you might start seeing more layoffs tick up in the unemployment rate going forward.

if the big tariffs in particular come back on. The smaller tariff world of 10 to 12 percent, most of the firms, they can deal with it. But if I see a significant drop in the labor market, then the employment side of the mandate, I think, is important that we step in. Federal Reserve Governor Christopher Waller made those comments in an interview with Bloomberg's Michael McKee. You can hear the full conversation on the Bloomberg Talks podcast. It is available wherever you get your podcasts.

Well, Nathan, we go to the latest on the war in Ukraine now. The Trump administration may be looking for concessions from Russia to reach a peace deal. Sources tell Bloomberg the U.S. will demand that Russia accept Ukraine's right to an army and defense ministry when White House envoy Steve Witkoff meets with Russian President Vladimir Putin. Russia's Interfax News Service reports Witkoff has arrived in Moscow today. And we get more with Bloomberg Russia reporter Greg Sullivan.

Kyiv and its European allies are likely to welcome this development because they've been focused on Ukraine's security after the war, whether that's security guarantees from other countries or Ukraine having the ability to defend itself. However, from the Russian side, this has been a key demand of Vladimir Putin. It's one that he's actually used to justify his invasion, saying that he needed to demilitarize Ukraine.

knowing that that has been a key concession makes it unclear whether Russia will be willing to accept that going forward. Bloomberg's Greg Sullivan reports the U.S. also wants Moscow to return to Ukraine's Zaporizhia nuclear power plant, along with land occupied by Russia in the Kharkiv region. Turning back to markets now, Karen, stocks are higher around the world as we close out the trading week. The S&P 500 rose 2% yesterday, closing at its highest level since the day President Trump announced his tariff offensive.

This morning, shares of Alphabet are up 5.5% in early trading. The Google parent reported first quarter revenue and profit that beat analyst expectations, fueled by continued strength in its search advertising business. Mandeep Singh is a senior tech analyst at Bloomberg Intelligence.

Google services revenue was a slight beat, but what was really impressive was the margin beat on the Google services. And a lot of it is because everyone thought because they are adding AI overviews, that's going to hurt the margins of search. Oh, it didn't happen. Bloomberg Intelligence's Mandeep Singh also notes Alphabet's first quarter profit was boosted by $8 billion in unrealized gains from an investment in Elon Musk's SpaceX.

Well, on the flip side, Nathan, shares of Intel are down 5.5%. The struggling chipmaker gave a revenue forecast for the current quarter that was well below what analysts projected. And Intel's chief financial officer is also warning that a tariff-fueled recession could torpedo chip demand. And another big tech company is making a strategy change, Karen. That would be Apple.

Bloomberg News has learned the tech giant's aiming to shift major parts of its supply chain out of China. Sources say the company plans to make most of its U.S.-sold iPhones in India by the end of next year. That means Apple would need to roughly double its iPhone output in the South Asian country. Apple sells more than 60 million iPhones a year in the U.S.

Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Heads of state and royalty are traveling to Rome for Pope Francis' funeral tomorrow at the Vatican. President Donald Trump and Argentine President Javier Millay are among the leaders arriving today.

Meanwhile, today is the last day Francis will lie in state at St. Peter's Basilica before his coffin is sealed in preparation for his funeral. After the services and burial, attention will turn to the conclave to elect a new pope. A date hasn't been set yet. Retired Los Angeles Archbishop Roger Mahoney, who was in the last two conclaves, says those votes went fast, but he doesn't expect the same this time.

The challenge this time is there's so many new cardinals from far away places who don't have the opportunity to travel and are not as involved with the other cardinals. Retired Archbishop Mahoney has been selected to play a key role in the closing of Pope Francis' casket.

A U.S. judge has temporarily blocked parts of President Trump's executive order that calls for major changes to U.S. election rules. That includes a first-of-its-kind demand for proof of citizenship to vote.

A 19-year-old from New Jersey is facing arson charges for the wildfire burning in the southern part of the state. The blaze has grown to over 15,000 acres with 50% containment. Ocean County Prosecutor Bradley Bilheimer says investigators believe the wildfire was started as a bonfire using wooden pallets that weren't fully extinguished.

I'm not prepared to discuss the motive at this time, nor does the state have to prove what the motive is. We can just confidently say that we think the fire was set intentionally. Joseph Kling has been charged. Disgraced former New York Congressman George Santos is potentially facing 87 months in prison for an array of fraud charges. He will be sentenced in federal court today.

NASA is canceling the lease of its New York City Climate Science Unit that has occupied the same Columbia University-owned building since the 1960s. A NASA spokesman says the move is part of President Trump's review of federal leases. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Karen. All right, Michael Barr, thank you.

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Time now for the Bloomberg Sports Update with John Stashower. John, good morning. Good morning, Karen. A little more like it for the Knicks. They corrected a lot of the problems from the Game 2 loss to the Pistons at the Garden in Detroit. They scored 24 more points than in Game 2. They made 10 more free throws.

Carl Anthony Towns and O.G. Ananobi went from a combined 20 points to team up for 53. The Knicks won 118-116. They lead the series 2-1 with game four in Detroit on Sunday. The Clippers wallop Denver by 34. L.A.'s up 2-1. Oklahoma City has a 3-0 lead on Memphis. The Thunder trailed by 26 at halftime.

won the second half 63-31. Stanley Cup playoff wins for Florida, Minnesota, St. Louis, and Toronto won in overtime. The NFL draft in Green Bay began as expected. Quarterback Cam Ward in Tennessee. Travis Hunter was, as everyone thought he'd be, the second player taken, but not by Cleveland. He's going to Jacksonville, who traded up. And then it was the Giants' turn, and to no one's surprise, they took Penn State pass rusher Abdul Carter. The Giants' general manager is Joe Shane. Great kid. We spent a lot of time with him.

He's been in constant communication with him. I know you guys asked last time about the foot. We feel good about the foot where he is. He's been running, been working out. So we're not really concerned with that at this point. But again, we're just excited to add a really good football player to the organization and it's really going to help our defense moving forward. Tackles went fourth and seventh. LSU's Will Campbell to the Patriots. Missouri's Armand Membu to the Jets. The Commanders also took a tackle.

Oregon's Josh Connolly. The big news tonight came with a 25th pick. The Giants made a trade with Houston and took Ole Miss quarterback Jackson Dart. So while the Giants have added veteran QBs, Russell Wilson and Jameis Winston, Dart becomes the QB of the future. They took him and not Colorado's Shador Sanders, who sometimes might be taken as high as second overall. Sanders was not drafted last night. Now available for tonight's start of round two. John Staschauer, Bloomberg Sports, Karen Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. As we continue to follow the mood swings and the rhetoric swings when it comes to trade and tariffs, President Trump says when it comes to China...

Both sides are talking. They had a meeting this morning, so I can't tell you. It doesn't matter who they is. We may reveal it later, but they had meetings this morning and we've been meeting with China.

That was the president speaking at the White House yesterday. But this morning, China's foreign ministry is reiterating that no talks are underway. And a spokesman says the U.S. should stop misleading the public. For the very latest, we are joined by Bloomberg Markets reporter Valerie Teitel. So, Valerie.

Are the U.S. and China talking or not? Good morning. Hey, that's a great question. I don't think anybody knows the answer. Lots of contradictions all around. But I think the thing that was most interesting this morning, Nathan, was some news. Matt, sources were telling Bloomberg that China is looking at tariff exemptions for certain industries, one of those being the medical industry, maybe some chip components, some exemptions there. But

They also came out and contradicted that as well. We had a China spokesman saying they're not familiar with these reports on China tariff exemptions. So a lot of back and forth, a lot of uncertainty when it comes to the picture on the U.S.-China trade situation, though. I have to say, Nathan, the equity market is looking through a lot of this. The S&P 500 is in

the green when it comes to the futures. And if you look at how the move on the week, what that's been like, it's up nearly four and a half percent for the S&P futures. And look, Nathan, that's going to be its second best week of the year if this move holds. So it seems like there is a lot of positivity when it comes to the equity market and risk sentiment. Maybe the

big takeaway from this week is, yes, there's still a lot of moving parts, but it seems like the trend for tariffs is downward and we're headed towards de-escalation on the trade war front. Yeah, there are so many moving parts, whether or not the U.S. and China are talking, whether their definitions of talking are a little bit different. There's also some word that China might not be just looking at exemptions for some U.S. imports, but

also looking to stimulate, looking for some stimulus for its economy as well. Yeah, that's right. We heard from the Politburo this morning. They said they're preparing emergency plans amid external shots, wanting to boost internal demand and looking up at setting up new financing and policy tools. They also said they want to support enterprises that are affected by tariffs. So it does seem like...

the Politburo is ready to stand there with some support to its industries that are hurt by tariffs. You know, that did kind of boost the dollar. Hearing this overnight, the Bloomberg dollar index is up three tenths of one percent. It seems like the the

move from overnight is really just kind of unwinding the sell America trade, Nathan, that kind of grafts our attention on Monday. We're seeing those currencies like the Japanese yen, the euro and the Swiss franc, those that have acted like safe havens in the last few weeks, losing some ground in the front of dollar strength this morning. And of course, we also heard from Treasury Secretary Scott Besson talking about how talks with South Korea may be going along a lot more

quickly than even he expected. And also some word this morning on potentially what the framework of a U.S. trade deal with India could look like. Yeah, it seems like the Trump administration is eager to announce one framework deal, you know, before Trump's 100 days next week. We had Bloomberg reporting just a few hours ago that the U.S. is seeking

An India trade deal on e-commerce, crops and data storage. So maybe these are our first glimpse on what these framework deals are going to look like when it comes to the nations that the U.S. is negotiating with. But yeah, you're right. We've had positive news on the India framework deal. Also, those comments from Treasury Secretary Scott Besant yesterday talking about an imminent framework deal with South Korea. So things are looking more positive.

in terms of the trade war and in terms of de-escalation, but I think the market is really eager to see one of these deal frameworks on paper. So maybe we can draw a bit more conclusions about what the Trump administration is really trying to negotiate for with these trading partners.

This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak. There are presentations.

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