Daybreak Weekend: Eco Lookahead, BOE Report, Tariff Impact
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Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our daybreak anchors all around the world. Straight ahead on the program, what will tariff wars, Wall Street in turmoil, fears of a recession, and some key inflation data out this week all mean for the Fed?

Plus, a look at the potential impact of President Trump's tariffs on the U.S. retail sector. I'm Tom Busby in New York. I'm Carolyn Hepka here in London, where we're diving into the Bank of England's assessment of the key risks facing the U.K.'s financial landscape. I'm Doug Krisner looking at how the impending reciprocal Trump tariffs are resonating through the Asia-Pacific.

That's all straight ahead on Bloomberg Daybreak Weekend. On Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.

Good day to you. I'm Tom Busby. We begin today's program with a look at the early fallout from President Trump's trade war, how it may impact next month's Federal Reserve decisions on interest rates and economic policy. We're coming off a better than forecast March jobs report, and we get U.S. CPI data for March on Thursday, PPI data on Friday. It is a lot, and tariff policies could change at any time. We're joined by Michael McKee, Bloomberg International Economics and Policy Correspondent.

How do you and the Federal Reserve policymakers try to make sense of everything we've seen this past week? From an economic theory standpoint, you can't make any sense out of it because it makes no sense. But you have to deal with the world that you have. And so the Fed is going to be modeling out what potential effects this could have on the actual economy. They'll sit back and say, yeah, this is really stupid economic policy, but they're not going to.

They have to do something at some point about where we are. So they need to try to figure that out. And it's still really hard to do because the imposition of the tariffs isn't clear exactly what gets tariffed and by how much, how soon. So it's going to take a while. And some haven't even started. So what they'll be looking at is the impact on inflation and on unemployment and on consumers.

Next week, we get the CPI report for the month of March, which isn't going to tell us much because it's for the month of March. And that's before almost all the tariffs. And the tariffs that were put out in March are basically on the producer side. We may see inflation go up a little bit on a year-over-year basis or it may go down a little bit on a year-over-year basis. But it's not going to tell the Fed anything about where they're going.

So it's going to be another month or so before they start to have some data. The big fear, of course, is inflation. And we've already heard from some companies, carmakers, saying it's going to cost you more. And there are reports, JPMorgan Chase, Goldman Sachs, for high-end cars could be $15,000 more.

Mercedes-Benz says, "We're not even going to send our lowest-priced car there because people can't afford it." I couldn't afford it even if it were the lowest-priced car. But the interesting thing is, when the new car situation, if that plays out that way, used cars are going to get very expensive. Because people who can't afford to pay the higher prices for new cars are going to go buy used cars, and then supply and demand will see used car prices go up.

Probably inflation is the first danger out of the tariffs that the Fed is going to be looking at because prices can go up immediately. It will take a while for companies to figure out what they need to do with staffing. If there is a recession and do we want to cut people, remember how hard it was to hire people before. It's always sticky.

So that'll take some time to play out. The good thing for the Fed about the jobs report on Friday was that it was generally solid. Again, it was March before most of this stuff started happening. But it fits the narrative, as Jay Powell has been saying, that the labor market is solid.

And the Fed's two responsibilities are the labor market and inflation. So they can lean on inflation. They can leave rates unchanged because the inflation rate is either staying where it is or we hope not, but it could be going up. So I don't think at this point the Fed is thinking about cutting rates, even if Wall Street is.

And more on that March jobs report, because Challenger Gray and Christmas came out this past week, said 280,000 federal workers were laid off. That was in two months.

But a lot of them still getting severance, so they're not counted in these numbers. Actually, they are counted as still employed, according to the BLS. They put out a note in Friday's jobs report that said people who are receiving severance or who are on administrative leave are counted as employed.

So we haven't seen the impact yet. And we may not for several months. The Challenger survey is based on job cut announcements. And they basically said, we took the press releases that Elon Musk put out about how many people were going to be fired. And that's what we're counting. And people don't usually put a lot of weight on Challenger because a lot of the

job cuts that are announced don't happen. Either companies do it through attrition or through just not hiring additional people as opposed to actually firing people. It was a number that got people's attention, and we're certainly going to probably see some

big federal job losses. But I don't know that we get to 280,000 very quickly. No, it's going to be a while. And could this March report be the last really upbeat jobs report for a while because of these? Well, it could. On Friday, John Farrow spoke with the new Labor Secretary who said, no, this is not going to be the last good report. But I can't see how it would be

good report going forward. And the reason why is the uncertainty. If you don't know whether you're going to have to be letting people go in a month or so, you don't want to be hiring people.

And if indeed, as we have seen some evidence already, the economy is slowing down, then you can probably meet the demand that you have with the employees that you have. So I don't know that we're going to see another blowout surprise to the upside for a while.

Going to be a long four weeks before that next meeting. Our thanks to Michael McKee, Bloomberg International Economics and Policy Correspondent. Well, more now on President Trump's sweeping tariffs, which are hitting certain countries a lot harder than others, impacting some of America's biggest electronics, apparel, footwear makers and retailers. And for more on the potential impact of those tariffs on the retail sector, we're joined by Jennifer Bartashas, Bloomberg Intelligence Senior Analyst, Retail Staples and Packaged Food.

Wow. Well, Jennifer, let's start with a look at the countries that supply most of the imported clothing, sneakers, gadgets, furniture and other goods aside from autos. I mean, China, Vietnam, Taiwan, these are huge numbers, aren't they? They are indeed. And so it was a bit of a surprise how big some of these numbers were, given how much some of our companies rely on those companies.

countries for manufacturing. So when you're talking about Vietnam, India, Thailand, Cambodia, you know, I think one of the big takeaways here is that our retailers in the United States have been making an effort to diversify away from China for the past several years. And yet, and with the idea that it would help insulate them from higher tariffs,

And yet with this new wave, that is just not the case anymore. And so that's that's an area for concern. No, but the most impacted country will be China. And still, you pick up an article of clothing, a toy. Chances are an Apple iPhone that it is made in China. So much is manufactured there.

So still, they haven't separated themselves totally. I know Apple is making iPhones in India now. They've tried, but it's a global world. No matter what we hear from the White House, how is this going to impact U.S. companies?

So as you said, very accurately, China is still the main trading partner for a lot of U.S. companies. And so even those attempts to diversify just don't add up to really offset the huge impact that these Chinese tariffs are going to have.

When you talk about real big retailers like Target in particular, you know, China is still the biggest the biggest source for their their their goods that are imported. When you're talking about apparel and electronics and toys and home furniture, even some beauty products, it really puts a lot of pressure on people.

retailers like Target that skew to more discretionary spending and how they're going to manage all this additional cost.

You know Walmart also, you know out of the general merchandise that they sell, you know, the bulk of it comes from China And then you can't forget to me one of the areas of retail that's going to get hit the hardest and that's the dollar stores Because they're very low price point stores most of what they sell comes from China and so Figuring out how they're going to be able to manage

Their business, when it's so reliant on China and have such low price points, is really going to be a challenge. And let's face it, importers pay those tariffs. The price increases are passed along to consumers. There was no doubt about that. So these are the hardest hit people are going to be the folks that shop at those Dollar Tree, Dollar General stores. I mean, this could be devastating. Exactly.

Exactly. So you've got consumers who are already under pressure. You've got prices going up that's going to, from tariffs that are going to create even more pressure on these consumers. And dollar stores are where people go to seek value, right? Because they don't have a lot of money in their pocket and they can get things. And so these retailers in particular are going to have a very difficult time navigating this new tariff landscape. When we heard about earnings from the fourth quarter from these companies,

They all said that they had mitigation plans in place. So they were talking to their suppliers to try to share costs. They were thinking about what products they could, you know, if they had to not carry anymore. But the tariffs announced are so sweeping, it doesn't leave them a lot of room for negotiation. So, you know, whether it's Dollar General, Dollar Tree, think about five below. Again, these companies are really up against the wall with these tariffs.

And not just those companies. I want to break down Vietnam. I think it's a good example. 46% tariffs on imports from Vietnam. Nike footwear, 50, one half, 50% of its footwear is sourced from Vietnam. That's according to company filings compiled by Bloomberg. Also, Lululemon, Adidas, Abercrombie. I mean, the list goes on and on. I don't know if a lot of people know how much is made there and how it's going to affect consumers here.

Exactly. When you're talking about the footwear industry, Vietnam is the biggest place for manufacturing for footwear. And so whether it's Allbirds or it's, as you said, Nike or Puma or Adidas, you know, all of these companies are now faced with how they're going to how they're going to manage those costs.

And you can only pass through so much to consumers You know, I think it's inevitable that consumer costs are going to be coming up But there's a breaking point where you can't do that and you have to absorb some so one of the things that everyone's watching is you know What's going to happen with the margins of these companies as costs go up and their ability to raise prices gets capped? and so, you know

We think that there may still be room for negotiation the way President Trump announced these tariffs before they fully go into effect. But you have to plan for the worst. And right now it's looking a bit dire for apparel companies and for footwear companies. Oh, it sure is. Well, our thanks to Jennifer Bartashas, Bloomberg Intelligence Senior Analyst,

retail staples, and packaged food. And coming up on Bloomberg Daybreak Weekend, we'll dive into the Bank of England's assessment of the key risks facing the UK's financial landscape. I'm Tom Busby, and this is Bloomberg.

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.

Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? A combination of financial services and generosity programs. Thrivent offers advice, investments, insurance, banking, and generosity, as well as resources to fund service projects or direct dollars to causes you care about. With more than 120 years serving clients, you can plan your finances with confidence. Visit Thrivent.com to learn more. Thrivent.

This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program, a look at how President Trump's tariffs on Chinese goods will impact relations with Beijing moving forward. But first, the U.K. Central Bank releases its quarterly report on the stability of the U.K.'s financial system this week, along with what it's doing to remove or reduce risks.

But as geopolitical and global economic tensions rise, can policymakers really fortify the Bank of England against market turmoil? For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker. Tom, the Bank of England stability report is meant to support the resilience of Britain's financial system and therefore support economic growth by scanning the risks

on the horizon. In the last report released in November 2024, the Bank of England cited a riskier outlook driven by geopolitical tensions and global fragmentation. Specifically, they called out material pressures on government debt levels and increasing borrowing costs, even if they talked about consumers and businesses remaining resilient.

In the six months or so since that publication, those risks do appear to loom large, still complicating the job of policymakers looking to steer the UK's financial markets through the storm. In the UK, fiscal pressure has increased. Just look at how the Chancellor, Rachel Reeves, lost half of her £10 billion fiscal buffer in the days after her spring financial statement.

This is something that the central bank did warn about back in November. The bank argued then that a deterioration in market perceptions about the sustainability of the long-term path of government's debt globally may lead to higher rates and sharp movements in market prices.

In particular, Bank of England experts believe that increased debt levels and servicing costs for governments could also reduce their capacity to respond to future shocks that may be to come and

and also increase the cost of borrowing and refinancing of debt for households and for businesses. So has the Bank of England's financial outlook become riskier? And how do they plan to keep the country on track?

I've been asking Bloomberg's finance reporter, Laura Noonan, and I began by asking her simply, and to begin with, what the point is of this financial stability report. So the point of a financial stability report is that if there is a financial crisis coming, you see the warning signs really early and you step in and do what you can to prevent it.

prevent it. So we notably in the UK didn't have any before the financial crisis and they introduced this concept in the aftermath of the financial crisis because you had all these people saying why were there no alarm bells ringing? And part of the reason that there were no alarm bells ringing about the build-up of risk was that while every regulator and every central bank has a

general oversight of risk there was no one specifically in charge of ringing the bell so I would think of this financial stability report this is the bell. Okay so we're waiting for this bell recap what happened in November's report because they come up with a list of risks and they explain them in some detail think about the time frame between that November report and now. Okay so November was a

particularly fun report. It was a big bell. And that's because they do these things quarterly, but they also, as well as having the general laundry list of these are the risks to the financial system, they also do special publications during some. And we had a special publication in November, which I was very excited about, which was the outcome of this

broad market stress test, the first one in the world to see how the market system would respond to a crisis. And that found that basically non-banks were not particularly ready for a crisis.

The other things that they warned about were the general things they've been warning about for some time. And often the language is very important here. It's a bit like if you watch the interest rate decisions and the commentary around that, the exact words used. So you can say, you know, the outlook, the risk is deteriorating, the risk is worsening, risks are escalating. So the exact language matters in terms of whether they see big risks, whether they see moderate risks in different areas.

Last time they called out the geopolitical risks were increasing. Very obviously, yes, they are. And we can expect that geopolitical risks have not subsided between November 2020

And now, so if I were a betting person, which apparently we're not allowed to be anymore, but if I were a betting person, I would be betting on geopolitical risks to feature heavily in the report. And with that, we can expect to see the warning about the different risks that different parts of the financial landscape face. And geopolitical risks can manifest in lots of different things. So you can have difficulty trading with certain parts of the world. You can have sharp

corrections or sharp changes to asset prices because of geopolitical policies. So there's a number of things there and I would expect

a lot of warning about geopolitical risk. They also tend to warn about other things, like there'll always be something about cyber. When the geopolitical situation worsens, there's often a heightened fear about cyber because you have state-sponsored cyber attacks and that's something we saw a lot last year where there was a lot of concern about how would the financial system withstand an attack from a negative state actor and that's something that they have been warning heavily about.

There has been ongoing concern about valuation in various asset classes.

Now, obviously, valuations have fallen recently, in recent days anyway, so they are still at fairly elevated levels. The other repeated one is the links between the private equity/private credit/private market space and the financial system and the way that those links could unravel in a problematic way. Okay, so quite a list of risks that you're watching out for in terms of what they may cite.

How are these reports then so normally received? How we actually get them is actually great fun. So how we literally receive them is they take a gang of journalists three floors underground in the Bank of England and they lock us in with them. It's actually very, very fun. And then we have an hour and a half with them before we can then broadcast. In terms of how they're received by the wider world...

So, the FPC is part of the Bank of England rather than the PRA, which is the regulatory arm. So, basically, the Bank of England warns and then the PRA and the FCA, to an extent, decides, okay, what do we want to take greater action in? So, if they warn about vulnerabilities in a certain part of the market, the PRA may then go and do an exercise to review that.

So there are two things the FPC can do. They can advise or recommend. They can actually make orders for some things, but they very rarely do that. The one thing they directly control is something called the counter-surgical capital buffer, which some of your listeners may be familiar with. And that basically sets

the capital buffer banks have to maintain to deal with a potential crisis. In the UK, it's been at neutral level for quite some time and that's because banks are well capitalised. I don't think they're going to change that buffer this week, but they might. The other things I should have said earlier that they talk about a lot is

the resilience of households, the resilience of businesses to these things. So they'll talk about, you know, for a long time during the last interest rate cycle, we heard about their percentage of households whose mortgages would jump by a certain amount and how that would play out.

I mean, for us, from a journalistic point of view, disappointingly, the last few times it's been households are resilient, banks are resilient, business are resilient. That is no crack whatsoever to report on. But I guess what I would impart you is that the level of resilience has been high and as interest rates fall, the level of resilience should increase.

Okay, so then that probably goes to my next thought, which is what is your assessment, Bloomberg's assessment currently of the UK's sort of risk landscape and how we're thinking about it? So the UK's risk landscape is not as, from a macroeconomic perspective, it's not as bad as

as some of the markets where there are bigger policy changes taking place. So I don't think it's the riskiest market. The one thing that I would, that I'm like watching out for is what if anything they say about the deregulation risk. So...

The Bank of England's regulatory arm, the PRA and the FCA, which regulates conduct and other parts of the financial industry, they've been pulling back a lot of rules in the spirit of promoting the UK's competitiveness, which is great and all. And they say that they are threading the needle in terms of, OK, we're going to make the burdens on financial services firm less and that's not going to increase risk by too much. It is a fine balancing act.

And the FPC, this report, is independent enough that it could say we see heightened risk to financial stability arising from the deregulation which is taking place both in the UK and elsewhere. I think that's going to be an interesting trend. Like we've had the FCA's chief executive, Nick Hirathi, has been talking about the government needing to

set an acceptable risk level and an acceptable failure level, if they want to go down this route of taking off all the red tape and everything that Rachel Reeves has been talking about, there will be more failures. There will be more risks. And in theory, the FPC is, I think of them as being the guardian of that. They're the ones who I'm hoping are going to watch this at very high level and say,

is what we're doing increasing risk in the financial system? And is it increasing risk in a dangerous way or in a moderate way? It's interesting, isn't it, that this idea of risk, that Britain needs more risk-taking, positive risk-taking in order to galvanise economic growth or allow investors to put more money to work in a better way that's going to deliver more growth for Britain.

How do we think about financial stability in the UK versus other markets? Is it more precarious, less precarious? I mean, there's a big world out there, but how do we benchmark it? I would say more precarious than the EU, partly because of all these policy changes. The one thing about the EU is...

The EU have been talking a lot about simplification, about competitiveness, but it is a really slow moving train. And one of the things since Brexit, Brexit made it much easier for the UK to directly and quickly enact reforms. In the EU, they will be discussing it till the end of time. They are doing a review on the competitiveness of banking, which they report on by the end of 2026. So they are not changing rules as quickly despite talking about what the UK is.

Obviously, the risks in the US are much, much higher because there is a lot of policy change going on there at every level and no one quite knows how this is going to play out. So if I were to rank the hierarchy of financial stability risks in our major markets, US top, UK second, EU third.

How important a feature are borrowing costs likely to be in this report? You did touch on it, you know, when it comes to perhaps interest rates maybe coming down, but borrowing costs, talk about those. So I think borrowing costs are not going to be a major feature just because they are coming down. So when we saw, so most people will now have had, even people on fixed mortgages, they will have had their rate increases reduced.

and they will have adjusted. And the trajectory is very much downward. Now, there's obviously an open question about how quickly the UK moves down. But borrowing costs are likely to fall. And that is, generally speaking, positive from a household resilience perspective. The other thing we sometimes will get commentary on is the level of availability of credit from banks to firms and individuals. And that is a kind of a leading indicator because if banks themselves are worried about

changes, then they will start restraining credit. So I tend to think that if there were any kind of problems coming, what we first see is banks restraining credit, and then we'd see issues in terms of borrowing affordability coming later. My thanks to Bloomberg's Laura Noonan. And we will have full coverage of the Bank of England's financial stability report and its implications in the coming days right across Bloomberg Channel's

and on the terminal. I'm Caroline Hepke here in London. You can catch us every weekday morning for Bloomberg Daybreak Europe, beginning at 6 a.m. in London. That's 1 a.m. on Wall Street. Tom. Thank you, Caroline. And coming up on Bloomberg Daybreak Weekend, a look at how President Trump's increased tariffs on Chinese goods could impact relations with China. I'm Tom Busby, and this is Bloomberg. ♪

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.

Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? A combination of financial services and generosity programs. Thrivent offers advice, investments, insurance, banking, and generosity, as well as resources to fund service projects or direct dollars to causes you care about. With more than 120 years serving clients, you can plan your finances with confidence. Visit Thrivent.com to learn more. Thrivent.

where money means more. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. President Trump announcing last week an additional 34% tariff on Chinese goods, bringing total levies to at least 5%.

54%. Now, for more on how the new tariffs are reverberating through the Asia-Pacific region, let's get to the host of the Daybreak Asia podcast, Doug Krisner. Tom, Bloomberg Economics did the math and discovered the average charge on Chinese goods will rise to 66.8%. Earlier estimates from Bloomberg's trade team show a 60% tariff

could cut China's direct exports to the US by up to 80% over the medium term. And under that scenario, some 2.3% of China's GDP would be at risk.

For more, we turn to Jenny Marsh. She is China EcoGov team leader for Bloomberg News. Jenny joins us from our studios in Hong Kong. I thought it was very interesting that the U.S. has addressed a loophole. It allows packages worth up to $800 from either China or Hong Kong to enter the U.S. duty-free. But now we were told that's going to end May 2nd. So it shouldn't come as a surprise when you look at markets and see

a sell-off in shares like Alibaba and JD.com. Was that a surprise at all? Not a surprise because he talked about it in the executive order on the first day. And of course, they tried sort of putting this break on the de minimis loophole earlier that they had to sort of lift it because logistically, it's very hard to sort of, there's a lot of logistics of how you actually impose that. So I think that was pretty expected.

And so now it's just a matter of, okay, how do small companies deal with that? But when you add that in as well, actually the tariff rate looks even higher than 67%.

I noticed that the South China Morning Post was reporting that President Xi is set to visit Vietnam, Malaysia, Cambodia in mid-April. Now, we know that all of those nations are being hit by this round of U.S. tariffs. Is this a part of some type of strategy that Xi has maybe to reconfigure trade relationships? Yeah, I think the itinerary is really interesting. I mean, the first trip that Xi takes abroad every year

always carries huge symbolism. Last year, he chose to go to France, just as the European Union was sort of weighing these big EV tariffs. This year, he's picked Vietnam, Cambodia and Malaysia. And, you know, Vietnam and Malaysia, sort of these two big countries have sort of been a key part of the China plus one strategy of sort of rerouting trade.

to the US to sort of skirt tariffs and also now facing their own huge levies. I think Vietnam's tariffs are higher than China's. 46% was the reciprocal figure announced. So this is a big opportunity for Xi, I think, to go to these countries, make trade deals, but also just sort of protect

present China as the grown-up in the room. Vietnam had been very carefully balancing its ties. It had hosted Biden

in I think it was 2023 and then very quickly hosted Xi Jinping for a visit and sort of playing this sort of playing both sides equally and I think now this gives China an opportunity to say well actually we are the better partner here and so this trip I think the timing of it is very interesting. I'm noticing weakness in the currency but I would imagine that the BBOC does not

want the Chinese yuan to weaken greatly in the face of this trade war. Fair statement to say that the PBOC is going to try to keep the yuan as strong as it can under the circumstances? Yeah, I think that's the strategy that we have seen so far. And they don't want to invite any more criticism as well from the Trump administration. In terms of the negative impact that this is going to have on Chinese economic growth, particularly as it relates to the exporters, what are you hearing about that?

I think it's an interesting reaction from economists who are saying they're sort of seeing a hit on average of sort of a one percentage point to GDP growth this year, but they're not downgrading their GDP forecasts. Because I think everyone thinks China will still hit 5%.

What's going to have to happen now is a massive sort of spending stimulus to fill the hole that is going to be left by the hit exports to the US. And I think that's sort of what people are going to be looking to. There's the external strategy of does Xi get on the phone with Trump? I think it's extremely unlikely he's going to try and call him before that April 9 deadline. It's just not how China does things. They're not going to respond to strength with weakness. Much more likely they focus on shoring up their alliances,

trade partnerships around the world. And they've been very careful to save stimulus for exactly this moment. And now they have the chance to sort of roll out a big support package. Jenny, I want you to help me look ahead to the inflation data that we're going to get for China in the coming week. PPI, CPI, we know the deflationary pressures that the economy is facing. Is that going to be underscored by these data points or is something beginning to shift right now?

The CPI at the beginning of the year was pretty bad. Even when we took out the seasonal factors, it went right down to negative 0.7. The survey is for it to come back up to zero, but still hovering right on that zero point. China is still facing a lot of deflationary pressures, and this is only going to make it worse.

So I think we're not seeing those go away. I mean, that being said, before Liberation Day, we have seen economists upgrading their expectations for China this year because the economy has been looking pretty strong on other sort of aspects. The consumer is stirring. There's talks of the property market finally bottoming out. Animal spirits are up. So...

If China can spend enough to compensate for Trump's actions and then actually gets a bit of a Trump bump from other countries now, sort of turn to China and away from the U.S., you know, this might not actually be so bad for Beijing. Do you think, can you imagine, let me put it that way, that sometime between now and the 9th of April when the retaliatory tariffs are set to kick in, that there will be some movement here between Washington and Beijing in a positive direction? Yeah.

I don't think there will be, is my hunch, because I think you had Wang Yi saying just this week, you know, in order to have talks, those the sort of the unfair fentanyl tariffs have got to come off. And when Senator Daines left Beijing, he said in order to have talks, China has to stop the fentanyl smuggling. Neither of those things are going to happen in the next sort of seven days. So I

I don't think there'll be sort of scrambles for last-minute negotiations. That is Jenny Marsh, China EcoGov team leader for Bloomberg News. We go from Hong Kong to Sydney. Now, in contrast to China, Australia found itself on the low end of Trump's tariff spectrum. The country will be subject to a minimum 10% levy imposed on all exports to the U.S. Joining me now for a closer look is Bloomberg Australia correspondent Paul Allen. He joins from our studio in Sydney.

Give me kind of the base level here. What is Australia facing right now? Well, Australia is facing that 10% tariff and the narrative in Australia as well. We got off lightly there. But at the same time, there's just confusion, bafflement. There's a lot of – we've got an election coming up and both sides of politics are kind of puzzled really because the US and Australia have a free trade agreement and

So the U.S., Australia doesn't put tariffs on any U.S. products. Australia also runs a trade deficit with the United States. So we buy more off the U.S. than the U.S. buys off Australia. So a lot of confusion there. And President Trump signaled out beef as well as something he's got beef with, quite frankly. But there is no tariff on U.S. beef into Australia. But imports of beef is bad.

banned due to a 20-year-old concern about mad cow disease. So there's a biosecurity issue there. And it sounds crazy, but if you've ever visited Australia, you know how uptight this country is about biosecurity. It's a great big island with lots of weird fauna and flora. And the

Neither government of any stripe wants to put that at risk. So that's why that barrier is there, but didn't save Australia from President Trump's tariff round. Should we dismiss the notion of any type of retaliation? Is that even a likelihood? It's very unlikely. The Prime Minister was pretty quick out of the gate to say that, look, while it's unwarranted, there's not going to be any reaction whatsoever.

Um, we are in an election cycle here. So we've had the opposition leader talking tough, but saying that he could reach a deal with the U S to get tariffs removed. But you know that this is the type of thing you'd expect to hear in an election. Uh, the election is at the start of may, uh,

would be some time before a new government was installed, regardless of what government that is. So yeah, retaliation at this point is pretty much off the table for Australia. Can you give me a sense of the likely impact? What are people talking about as they look to these new levies that will take effect? We don't know whether there's going to be any wiggle room here. It's not until April 9th that the reciprocal tariffs go into effect at 12.01am. So put aside...

the flexibility that may exist in some type of new trade negotiation. What would be the impact if these tariffs kind of go into effect? Well, it's sort of still sinking in here, but there's a sense that it's not as bad as it could have been. And look, let's just take the wine industry, for example. So the US imports a lot of Australian wine.

That will now be 10 percent more expensive. But the wine industry has just come off the back of a bruising tariff battle with China, where tariffs were put on Australian wine of 220 percent. So it's like an attitude of, OK, we can live with this.

But again, the prevailing sense of this is just one of enormous confusion because there are a few relationships in the world that are closer than the U.S.-Australia relationship. Australia has shown up to every war that the United States has fought. It's been a very close partner. As I mentioned, it runs a trade deficit.

There's just a tremendous amount of confusion all around. And even with the tariffs that are in place, like the steel and aluminum tariffs – we say aluminum here – Blue Scope Steel, it's Australia's only listed steelmaker, it makes steel in the U.S. It's got a big plant in Ohio. It's the fifth largest steel producer.

But it imports – well, it exports steel to the west coast of the United States. The reason being is it's cheaper to do that than to truck it over the Rocky Mountains from Ohio. So U.S. steel consumers are getting a better deal from Blue Scope doing that. So now that's been chucked out the window. The more expensive steel is going to come to the west coast from Ohio. So, again, it's just –

Head-scratching. It just seems absolutely bizarre. So to take us back to Australia and the impact of tariffs, is there some type of geographic differentiation that we can describe how certain areas of the country will be affected maybe to a greater or lesser degree than others?

Yeah, well, that's true. And this is where it gets even weirder. Australia appeared on that big list that the president held up with 10% next to its name. So compared to the rest of the world, the country did get off lightly. But then if you continue reading down that list, you get to some rather strange outliers, first of which is at Norfolk Island.

which is an Australian territory. It's about 1,600 miles out to sea. It has a population of just over 2,000 people. That's been hit with a tariff of 29%.

And the prime minister raised this as well. He said he cannot understand what goes on in Norfolk Island, population 2,000 in the middle of the ocean. That is such a threat to U.S. trade. But it gets weirder still. Further down the list is the herd in McDonald Island, another Australian territory, tariff of 10 percent signaled out. It's got no people at all, but a whole lot of penguins. Yeah.

I don't think you've got penguins in the US. Maybe that's the problem. That's Paul Allen, Australia correspondent for Bloomberg News, joining from Sydney. And I'm Doug Krisner. You can catch us weekdays for the Bloomberg Daybreak Asia podcast. It's available wherever you get your podcast.

Tom? Thanks, Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at 5 a.m. Wall Street time for the latest on markets overseas and the news you need to start your day. I'm Tom Busby. Stay with us. Top stories and global business headlines are coming up right now.

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