Trump Escalates Global Trade War, Pauses Military Aid to Ukraine
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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 begin with tariffs. President Trump has made good on a promise of sweeping levies on China and North American allies. As of midnight, most goods from Canada and Mexico now face a 25% charge, while the tariff on Chinese goods has been doubled to 20%.

In comments heard live on Bloomberg Radio, President Trump said the tariffs will help bring manufacturing back to the U.S. I would just say this to people in Canada or Mexico, if they're going to build car plants, the people that are doing them are much better off doing it.

building here because we have the market with the market where they sell the most. President Trump says there was no room left to reach a deal with Canada and Mexico as he hopes to force them to address fentanyl flows into the U.S. Vast amounts of fentanyl have poured into our country from Mexico and as you know also from China where it goes to Mexico and goes to Canada.

And China also had an additional 10, so it's 10 plus 10. And it comes in from Canada and it comes in from Mexico. And President Trump added the tariffs will be exciting for U.S. automakers. The administration has delayed the removal of a so-called de minimis exemption for now. That means Canada and Mexico can continue shipping low-cost goods over the border without a tariff.

Well, Nathan, Trump's move has prompted a swift retaliation from Canada and China. Canada has imposed phased levels on $107 billion worth of U.S. goods, while China imposed tariffs as high as 15 percent, mainly on agricultural shipments. Meanwhile, Mexican President Claudia Sheinbaum said her government would await for the tariffs to go into effect before reacting, but they are ready to respond. Canadian Foreign Minister Melanie Jolie spoke before the tariffs were put into place.

We know that this is an existential threat to us and there are thousands of jobs in Canada at stake now.

We've done the work. We are ready should the U.S. decide to launch their trade war. Canadian Foreign Minister Melanie Jolie said her government was ready to go ahead with retaliatory duties. And Karen, President Trump also announced he's imposing tariffs on external agricultural products on April 2nd. He didn't provide detail on which products would be affected or if there'd be any exemptions.

The U.S. agriculture trade deficit is projected to hit a record $49 billion this year. Well, Nathan, all this has sparked a bearish mood across markets. Asian shares sold off and the S&P 500 suffered its worst drop of the year. Joe Livornia was chief economist at the White House National Economic Council during President Trump's first term. He told Bloomberg's balance of power the markets might have not priced in Trump's move.

The markets also, I think, were not believing the president was serious with these tariffs. So today might just reflect the fact that for much I think of this year, there was thoughts that they would actually never be implemented or be watered down. So I think today was really a reality check for many investors.

Former Trump official Joe Livornia notes that Wall Street's so-called fear gauge, the VIX, hit its highest level since December. And tonight, Karen, many are going to be watching as President Trump addresses Congress for the first time in his second term. Bloomberg's Amy Morris is in Washington with a preview.

Since his reelection, President Trump has blazed across the federal government, dismantling norms and traditions and parts of the government itself, firing thousands of federal workers, closing agencies, and positioning the U.S. closer to Russia, all issues that may overshadow his address to Congress. The White House says President Trump will also discuss his economic agenda.

In Washington, Amy Morris, Bloomberg Radio. Amy, thank you. And for full coverage of the president's address to a joint session of Congress, stay with Bloomberg for a special edition of Balance of Power with Joe Matthew and Kayleigh Lyons. It starts at 8 p.m. Wall Street time on Bloomberg Radio, Bloomberg Television, and the Bloomberg Podcasts page on YouTube.

Well, Nathan, China's biggest political event of the year is underway. Policymakers are expected to push China's official budget deficit target to its highest level in over three decades at the National People's Congress. It would pump trillions of yuan into a system battling deflation, a property crash, and the new U.S. trade clash.

Investors will look for hints as to whether the gathering can help sustain a recent equity rally. Elsewhere in geopolitics, Karen, President Trump is pausing all U.S. military aid to Ukraine. A senior defense official tells Bloomberg the freeze will remain in effect until the president decides Ukraine's leader, Volodymyr Zelensky, is committed to peace. The president was asked about his recent meeting with Zelensky. He said he thinks the war's going to go on for a long time.

And he better not be right about that. This morning, the Kremlin said the suspension of aid is the best contribution to peace. President Trump had kept the door open to signing the minerals deal with Ukraine that was scrapped last week. He calls it a great deal for the U.S.

Well, Nathan, as the European Union looks for ways to support Ukraine, it's unveiled an nearly $840 billion plan to fund rearmament. The proposal includes $158 billion in loans to boost defense spending. European Commission President Ursula von der Leyen announced it this morning. We are in an era of rearmament. And Europe is ready to massively boost its defense spending.

both to respond to the short-term urgency to act and to support Ukraine, but also to address the long-term need to take on more responsibility for our own European security. And EC President Ursula von der Leyen sent a letter to EU member states listing possible options to

bolster national defense in the near term. Back on Wall Street, Karen, traders have a key earnings report to look ahead to this morning. Bloomberg's Charlie Pellett has a preview of the latest results from Target. Target's outlook on consumer demand and macroeconomic uncertainties will be among key areas of focus. Joe Feldman is an analyst with Telsey Advisory Group. He's got an outperform rating on the stock with a $150 price target. We're hoping to see a

better trend on the inventory side. Their in-stocks have been very good, which is a good thing because you can sell the product. The estimate on sales is $30.67 billion with gross margin at 25.5%. In New York, Charlie Pellett.

Bloomberg Radio. All right, Charlie, thank you. And finally, Bloomberg News has learned about another big mistake at Citigroup. The bank almost transferred about $6 billion to a customer's account in a fat-finger error. The near miss happened in Citi's wealth management business. We're told the staff member copied and pasted the recipient's account number where the dollar amount should have gone. This happened the same month another Citi division accidentally credited $81 trillion to a client.

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. The Senate voted Monday to confirm former wrestling executive Linda McMahon as Secretary of Education. She'll now head a department President Trump has vowed to dismantle. Randy Weingarten is president of the American Federation of Teachers. The partners that she has are the people who are in classrooms all across America.

What we're asking her to do is work with us, not against us. Don't take a wrecking ball to the Department of Education. Make cuts with a scalpel, not with a hatchet, and ultimately help us help children. Weingarten adds one out of every $9 that go to kids in school in America comes from the federal government.

The top agent at the FBI's New York field office said that he had been forced out of his job following clashes with Justice Department officials over Trump administration directives. In an email, James Dennehy had told agents to dig in in the face of the Trump administration's firing of officials who investigated the January 6th attack. Dennehy says he was told Friday to retire from his role.

Officials are rushing to reschedule Mardi Gras celebrations and warning revelers against bringing umbrellas and tents as powerful storms with a threat of tornadoes are expected to strike Louisiana and other parts of the South.

Today, the Supreme Court is scheduled to hear a case Mexico filed against U.S. gun manufacturers. Mexico alleges that Smith & Wesson and other manufacturers aided and abetted illegal gun trafficking in violation of U.S. law, which in turn harms Mexico. Former federal prosecutor and Loyola Law School professor Lori Levinson.

This might be an uphill battle, frankly, for the Mexican government, because there are so many legal issues that the Supreme Court will look at.

And frankly, the Supreme Court has been very open to gun rights in the last decade or so. Professor Levinson, the hearing marks the first time that the Supreme Court will consider a federal law known as the Protection of Lawful Commerce in Arms Act. The 2005 law provides a legal shield for gun companies from civil suits. 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.

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.

Success. It's discipline. It's teamwork. It's the drive and passion inside of us that comes before all recognition. It's the best in each of us made better by the best in all of us. Whatever success looks like to you, Stiefel is invested in yours. That's why Stiefel is one of the fastest growing global wealth management firms in the country. So when you're ready to chase success, our financial advisors are ready for you.

At Stiefel, we invest everything into our advisors so they can invest everything into their clients. That means direct access to one of the industry's largest equity research franchises and a leading middle market investment bank.

And it's why Stiefel has won the J.D. Power Award for Employee Advisor Satisfaction two years in a row. If you're an advisor or an investor, choose Stiefel, where success meets success. Stiefel Nicholas & Company, Inc., member SIPC and NYSE. For J.D. Power 2024 award information, visit jdpower.com slash awards. Compensation provided for using, not obtaining the award.

Time now for the Bloomberg Sports Update, brought to you by Tri-State Audi. Here's John Stashower. John, good morning. Good morning, Karen. It's going to be quite a fight to see who gets the last couple of playoff spots in the NHL's Eastern Conference. Right now, there are six teams separated by only four points. Rangers among those in the hunt. Night after a shutout win at the Garden, they were right back at MSG, this time against the Islanders. Will Cooley scored off his helmet, and five minutes later, first period, it was time for another will. Back the other way, Karen.

Carrick dropped it off for Borgen. He scores! Will Borgen with a short-handed goal gives the Rangers a 2-0 lead. The Rangers 11th short-handed

hit and goal this season. Second best in the league. Call on MSG. JT Miller scored third period. Artemi Panarin an empty netter his 25th. 24 hours after shutting out Nashville 4-0, the Rangers blanked the Islanders 4-0. This time with a different goalie, Igor Shosturkin.

21 saves his fourth shutout of the season. The Capitals topped Ottawa 5-4 in a shootout. The Knicks at the Garden tonight to play Golden State. College basketball teams ranked second and third in the country, both won at home. Duke by 33 over Wake Forest as the star freshman Cooper Flagg scored 28. Duke is 18-1 in the ACC. And Houston is 18-1 in the Big 12. The Cougars beat Kansas, who began the season ranked number one. This was its 11th loss. St. John's doesn't play until Saturday.

Red Storm keep moving up the rankings now sixth highest since 1991. The Yankees will begin the season without Luis Gil who last season pitched to a three and a half ERA and was the American League Rookie of the Year. He's got a lat strain.

When the Yanks' Clark Schmidt had a similar injury last year, he missed three months. Max Fried started last night in Tampa. Yanks all over the Pirates, 12-3. Dom Smith drove in four runs. The Mets had only two hits, won one time with the Marlins. Kodai Senga and David Peterson teamed for five scoreless innings. John Stasheller, Bloomberg Sports, Gary 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. The trade war is on. President Donald Trump has made good on threats to impose 25% tariffs on most imports from Canada and Mexico and to double the levy on all Chinese goods.

to 20%. The president says it's about stopping illegal immigration and drug flows and boosting U.S. manufacturing. They can't come in and steal our money and steal our jobs and take our factories and take our businesses and expect...

Not to be punished. And they're being punished by tariffs. President Trump spoke there at a White House news conference heard live on Bloomberg Radio. This morning, we are joined by Bloomberg News global trade editor Brendan Murray. And Brendan, could we see trade flows upended dramatically following this first major salvo in what looks like a new trade war? Good morning.

Morning. Yeah, it could happen fairly quickly. Now, we haven't heard the retaliation yet from Mexico. That will be something to watch today and tomorrow. Mexico is, of course, a big supplier of food products and

consumer electronics and automobiles and uh and so we'll see how uh you know a lot of a lot of the food products are perishable too so you know you can't really stick those in a warehouse for very long so we'll see how uh the trade flows

play out here. But it seems that all three sides are kind of talking a big talk right now about how tough they're going to be on their retaliation. There's even a Canadian politician who's saying, we're going to cut off your electricity supply from our province into the U.S.,

So we'll see how you like that. So it's getting it's getting it's I wouldn't call it, you know, that the tone isn't, you know, very, very sharp just yet. But both sides are kind of sharpening up their sharpening up the rhetoric. And, you know, we'll see how if this is a short run situation or something that turns into a more prolonged trade war that starts to hit the economy.

Well, as we start to see these rhetorical knives get sharpened here, Brendan, we've heard Canada announce phased-in tariffs on $107 billion in U.S. goods, China with 15% tariffs mainly on U.S. agriculture. What kind of impact could that have on the U.S. economy?

So China's retaliation that they announced just a few hours ago was fairly reserved. It was on a tiny fraction of the goods that China imports from the US, but more symbolic than anything, they targeted agricultural products.

U.S. farmers and U.S. farmers for years have tried to develop markets in China and to and to and to increase all the soybeans and all the wheat and crops that they that they that they ship overseas. China has been the big market for those at the at the moment.

guess who's having a bumper harvest? Brazil. So if China says, look, we're going to slap tariffs on American agricultural products, the message is we've got somewhere else to buy from. So American farmers would be getting nervous about this. And I think that's one of the reasons why you saw Trump post on social media yesterday something about

farmers are going to do great because we're going to put tariffs on all food imports. And so American farmers are going to do great. So a bit of preemptive reassurance there, I think, maybe the President Trump anticipating that China would come back and retaliate against, you know, the heartland of America. Only about 30 seconds left, Brandon. What does this mean for the existing U.S. trade deal with Canada and Mexico? And is the door still open to a trade deal with China?

Well, there's an interesting role that that trade deal, the USMCA, previously NAFTA, plays into this. That's supposed to be renegotiated in 2026. This was the deal that Trump renegotiated.

renegotiated in his first term. It's up for renegotiation in 2026. And so perhaps what the strategy here is to put Mexico and Canada on the back feet, hit them with these tariffs, drive them to an early renegotiation in more favorable terms to the U.S.,

That's one way some folks are speculating this could play out, that this is really just, you know, kind of a flurry of things that the U.S. could do to sort of enter those negotiations in the strongest position possible. 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.

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