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Trade War Footing · Trumponomics

• 0:00
  Speaker 1: Hello. Just a quick note about this episode of Stephanomics.
• 0:04
  Speaker 1: The segment about Israel was recorded before the news this
• 0:07
  Speaker 1: week that Prime Minister Benjamin Netanyahu failed to form a
• 0:11
  Speaker 1: new government. Thanks for listening and enjoy the show. Welcome
• 0:19
  Speaker 1: to Stephanomics, the podcast that brings the global economy to you.
• 0:23
  Speaker 1: My name is Tom Oulick. I'm the chief economist for
• 0:26
  Speaker 1: Bloomberg and I'm filling in for this one week for
• 0:30
  Speaker 1: your regular and eponymous host, Stephanie Flanders. Back when I
• 0:39
  Speaker 1: lived in China, the big concern amongst Chinese economists was
• 0:43
  Speaker 1: something they call a horby jen jug, or a currency war.
• 0:47
  Speaker 1: The fear in Beijing was that the United States was
• 0:50
  Speaker 1: going to weaponize its financial system and the big Wall
• 0:53
  Speaker 1: Street banks would come to China promising grace and reform,
• 0:58
  Speaker 1: but they would deliver chaos and crisis, the kind of
• 1:01
  Speaker 1: meltdown which China's Asian neighbors experienced in and well, it
• 1:09
  Speaker 1: turns out those fears were misplaced. There is a conflict
• 1:13
  Speaker 1: between the U. S and China, but it's not about currencies.
• 1:16
  Speaker 1: It's about trade, and that's going to be the focus
• 1:19
  Speaker 1: of today's episode. I'll be speaking with Wendy Cutler, who
• 1:23
  Speaker 1: spent her career as one of the most senior trade
• 1:26
  Speaker 1: negotiators in the United States, to get her insiders take
• 1:31
  Speaker 1: on how trade negotiations between China and the US could evolve.
• 1:35
  Speaker 1: And I'll be catching up with Jenny Leonard, one of
• 1:38
  Speaker 1: Bloomberg's star trade reporters, to hear what it's like reporting
• 1:42
  Speaker 1: from the front line of the trade war. Before we
• 1:46
  Speaker 1: get there, though, we're going to go to a part
• 1:48
  Speaker 1: of the world which is more familiar through the lens
• 1:51
  Speaker 1: of security or human rights than economics. Let's go to Israel,
• 1:57
  Speaker 1: and here from Ivan Levingstone about some interesting develops in
• 2:00
  Speaker 1: the labor market. A few weeks ago, I visited a
• 2:16
  Speaker 1: coworking space in Jerusalem called biz Max. I toward the
• 2:20
  Speaker 1: standard mix of open work areas and smaller glass in rooms,
• 2:24
  Speaker 1: complete with minimalists, a core and an espresso machine. On
• 2:28
  Speaker 1: first take, it could have been any we work style office,
• 2:32
  Speaker 1: but there was a key difference. Bis Max is run
• 2:36
  Speaker 1: for ultra Orthodox Jewish Men or in Hebrew are dem
• 2:41
  Speaker 1: with a kosher kitchen and religious book lying in the shelves.
• 2:44
  Speaker 1: It seeks to provide a place for them to get
• 2:47
  Speaker 1: businesses off the ground. I went there in late April
• 2:51
  Speaker 1: to meet with Yetrak Meyer A Jelovski, a thirty one
• 2:55
  Speaker 1: year old father of five who runs his own event
• 2:57
  Speaker 1: planning business called a smata. Every day I am going home.
• 3:04
  Speaker 1: He's a podcast told me as him unruly like each
• 3:10
  Speaker 1: as he goes by met me wearing the traditional garb
• 3:13
  Speaker 1: of hardy Jews, black suit, white shirt, long curls falling
• 3:18
  Speaker 1: from the corners of his hair. He also brought a
• 3:21
  Speaker 1: kosher iPad with some restrictive settings that he manages his
• 3:25
  Speaker 1: company on. He's just as busy as any small business
• 3:29
  Speaker 1: owner making a go of it, but he also has
• 3:32
  Speaker 1: to make time for prayer and religious obligations. I have
• 3:36
  Speaker 1: every day about every day one and a half events,
• 3:41
  Speaker 1: a big small ones between one twice a week. I
• 3:46
  Speaker 1: have a wedding, a big wedding game three under portions.
• 3:50
  Speaker 1: Portions was in the big hole, was catering. For good reason,
• 4:02
  Speaker 1: Israel has earned the nickname startup Nation. The country has
• 4:06
  Speaker 1: a burgeoning tech sector driving the economy, but below the
• 4:09
  Speaker 1: surface there's trouble. Growth is stabilizing and productivity is sluggish.
• 4:15
  Speaker 1: Because unemployment is near record lows the country needs to
• 4:18
  Speaker 1: find more workers ideally ones who are highly skilled. There
• 4:23
  Speaker 1: are two groups economists have zeroed in on because they
• 4:26
  Speaker 1: participate at a lower rate in the workforce, Ultra Orthodox
• 4:30
  Speaker 1: men like Eacha and Arab Israeli women. The Hardim present
• 4:35
  Speaker 1: a particular challenge with their rapid population growth and lower productivity,
• 4:40
  Speaker 1: helping them climb in the workforce as a priority that
• 4:43
  Speaker 1: may only intensifying urgency, and in Israel, surrounded by enemies,
• 4:48
  Speaker 1: economic challenges become geopolitical ones Without a first rate economy,
• 4:53
  Speaker 1: it's hard to maintain a first rate military. Each of
• 4:57
  Speaker 1: success building a business came to spite some challenges. He
• 5:01
  Speaker 1: got married at age nineteen and soon decided to work
• 5:04
  Speaker 1: to help provide for his family, but he was locked
• 5:07
  Speaker 1: out of some fields because of his religious education. On
• 5:10
  Speaker 1: a visit to his home in Jerusalem, he told me
• 5:13
  Speaker 1: what it was like getting started In the beginning. It
• 5:16
  Speaker 1: was very hard because of the it's a low income.
• 5:20
  Speaker 1: You have to learn everything by yourself. I didn't learn
• 5:24
  Speaker 1: ever about the work or any work. Just studied the
• 5:29
  Speaker 1: town there, and then I went to start the business
• 5:32
  Speaker 1: by seeing every even he went to do events and
• 5:36
  Speaker 1: I was I was standing him by the entrance of
• 5:39
  Speaker 1: the kitchen took to check out our works. Israel's Harri
• 5:43
  Speaker 1: Deem are growing part of the population and also a
• 5:46
  Speaker 1: rising political force. As such, they're an increasingly important block
• 5:51
  Speaker 1: for Prime Minister Benjamin Netan yahoo in support of his
• 5:54
  Speaker 1: right wing governing coalitions. As their political influence rises. Where
• 5:59
  Speaker 1: their demographics strength, that bodes well for the subsidies that
• 6:02
  Speaker 1: benefit them, like child allowances and scholarships. In a way,
• 6:07
  Speaker 1: the government is at odds with itself. Political leaders help
• 6:10
  Speaker 1: protect funding that may discourage work, while others are trying
• 6:14
  Speaker 1: to bring Haredim into the labor force, seeing it as
• 6:16
  Speaker 1: a long term economic issue. At the start of this decade,
• 6:21
  Speaker 1: government targets were set with the aim of increasing the
• 6:24
  Speaker 1: employment rate of Haredi men and Arab Israeli women. Arab
• 6:28
  Speaker 1: women are already close to hitting their goal, but for
• 6:31
  Speaker 1: Haredi men the story is different. While they have increasingly
• 6:35
  Speaker 1: joined the workforce in recent years, progress is stagnating well
• 6:39
  Speaker 1: below the hope for level. One key reason is a
• 6:42
  Speaker 1: cultural emphasis on religious study. I met with Av Weiss,
• 6:48
  Speaker 1: an economist and president of the TAB Center for Social
• 6:51
  Speaker 1: Policy Studies in Israel, to dig into the reasons for
• 6:54
  Speaker 1: the divergence. See the difference between the the the Haredi
• 6:57
  Speaker 1: men and the Arab women um is it's got to stem,
• 7:02
  Speaker 1: bottom line, from desire. That the desire of the Arab
• 7:06
  Speaker 1: pubin um really is to improve their lot, to be
• 7:10
  Speaker 1: able to do better than than than the past, to
• 7:13
  Speaker 1: increase your education, to increase your employment. For the Harediman,
• 7:16
  Speaker 1: that's just not necessarily the case. While the Haredim are
• 7:20
  Speaker 1: interested in moving upwards spiritually, Arab Israeli women are focused
• 7:24
  Speaker 1: on a different kind of upward mobility. Facing challenges including
• 7:29
  Speaker 1: discrimination and higher rates of poverty, They're making strides and
• 7:33
  Speaker 1: education and at least in high school, increasingly studying fields
• 7:36
  Speaker 1: like engineering that leads to more lucrative employment. Such progress
• 7:41
  Speaker 1: has come even amid withering criticism of Israel and the
• 7:44
  Speaker 1: West for how it treats its Arab citizens, as well
• 7:47
  Speaker 1: as for the poor economic state of Palestinians in Gaza
• 7:51
  Speaker 1: and the West Bank. But there are some more positive
• 7:55
  Speaker 1: stories out there. Kuluta Uti is a twenty nine year
• 7:59
  Speaker 1: old Arab israel woman from Jaffa with two daughters. While
• 8:03
  Speaker 1: her parents didn't go to university and she married at
• 8:06
  Speaker 1: the age of twenty one, she is now finishing a
• 8:08
  Speaker 1: degree in political science. In between managing family and studies,
• 8:13
  Speaker 1: she's the co sea of an organization called Present Tense,
• 8:17
  Speaker 1: which tries to reduce social gaps in marginalized communities in
• 8:20
  Speaker 1: Israel through entrepreneurship. I met her for a morning chat
• 8:25
  Speaker 1: at a municipal building in Jaffa where her organization host programming,
• 8:29
  Speaker 1: and she told me about why Arab Israeli women have
• 8:31
  Speaker 1: been challenged joining the labor force. Have all these expectations,
• 8:35
  Speaker 1: and you need to to meet all the expectations, and
• 8:38
  Speaker 1: then you have to choose what exectation you can to meet,
• 8:41
  Speaker 1: because it's so hard because you need to have a home,
• 8:44
  Speaker 1: you need to have a get married, and you have children.
• 8:47
  Speaker 1: You need to do all of these things and evens.
• 8:49
  Speaker 1: And also if you can do a degree and and work,
• 8:52
  Speaker 1: it's great, but it's hard. It's tougher for for Arab
• 8:57
  Speaker 1: women with a tight labor market and shortages of engineers.
• 9:01
  Speaker 1: Israel's future growth. Henderson part on this group. If they succeed,
• 9:05
  Speaker 1: it will be a real bright spot, but they're not
• 9:08
  Speaker 1: there yet. A lot of women really do break the
• 9:11
  Speaker 1: glass city, but a lot of them also stay at home,
• 9:14
  Speaker 1: and you can see the stats and it's getting better,
• 9:18
  Speaker 1: but still it's not in the in the correct fields
• 9:20
  Speaker 1: that can high tech officials admit that the government's programs
• 9:24
  Speaker 1: in this area still have a ways to go. Here's
• 9:27
  Speaker 1: Julia Eton, head of the Employment and Diversity Administration for
• 9:31
  Speaker 1: Israel's Ministry of Labor, Social Affairs and Social Services. It's
• 9:36
  Speaker 1: very clear if you're not bridging the gap these two
• 9:39
  Speaker 1: populations and believe it to the the productivity of a general population,
• 9:44
  Speaker 1: rates of growth of israel economy are not going to
• 9:47
  Speaker 1: be sufficient to have a normal level of growth and living.
• 9:54
  Speaker 1: That's why it's crucial for us to succeed. But they're
• 9:57
  Speaker 1: not alone here. You have communities, you have their ambition,
• 10:00
  Speaker 1: you have their beliefs, you have their way of analyzing
• 10:04
  Speaker 1: the reality. What early mean Israel is a tiny country
• 10:10
  Speaker 1: that doesn't trade with its neighbors and is in a
• 10:13
  Speaker 1: state of war with some of them. It's economic edge,
• 10:16
  Speaker 1: particularly in the world of tech, is a crucial strategic asset.
• 10:21
  Speaker 1: It provides incentives for countries, including the United States and
• 10:25
  Speaker 1: those across Africa and Asia, to forge stronger ties with
• 10:28
  Speaker 1: the Jewish state, and for Prime Minister Netan Yahoo winning
• 10:32
  Speaker 1: on the economy increases the chances that he can keep
• 10:35
  Speaker 1: winning period. For Bloomberg News, I'm Ivan Levingstone. I'm delighted
• 10:51
  Speaker 1: to be joined for this section by Wendy Cutler. Wendy
• 10:55
  Speaker 1: is the vice president of the Asia Society Policy Institute
• 10:59
  Speaker 1: at a former deputy at the US Trade Representative. That's
• 11:04
  Speaker 1: a lot of words. Basically, what it means is there
• 11:07
  Speaker 1: are a few people in the world who know more
• 11:09
  Speaker 1: about trade negotiations than Wendy does. Wendy, thanks for joining us.
• 11:14
  Speaker 1: Thanks Tom So. Implicit in the Trump administration's approach to
• 11:18
  Speaker 1: trade negotiations is the idea that the careful, consensus based
• 11:24
  Speaker 1: multilateral approach followed by past administrations basically got it wrong
• 11:30
  Speaker 1: and gave China a free ride. Do you agree with
• 11:33
  Speaker 1: that assessment? Well, I think over time, various administrations tried
• 11:38
  Speaker 1: different approaches towards China. I think supporting China's entry into
• 11:43
  Speaker 1: the w t O was an important move, and as
• 11:47
  Speaker 1: a result of China joining the w t O, we
• 11:50
  Speaker 1: saw them significantly lower their terrorists for US and other imports,
• 11:55
  Speaker 1: as well as revived thousands of regulations and laws, and
• 11:59
  Speaker 1: we saw an overall opening. But what didn't occur was
• 12:04
  Speaker 1: that the reform and market opening that was so vibrant
• 12:08
  Speaker 1: in two thousand one when China joined the w t O,
• 12:11
  Speaker 1: it just didn't continue, particularly in recent years. And furthermore,
• 12:16
  Speaker 1: the w t O was unable to negotiate new rules
• 12:20
  Speaker 1: and new terror flowering, which also led to a situation
• 12:24
  Speaker 1: where the current WTO rules are really old rules and
• 12:28
  Speaker 1: they don't address the challenging practices that China has brought
• 12:32
  Speaker 1: to the international training system. So do you think that
• 12:36
  Speaker 1: calls for this more direct bilateral approach which the Trump
• 12:41
  Speaker 1: administration is now taking, or if you were calling the shots,
• 12:46
  Speaker 1: would your first call have been to Brussels and Tokyo
• 12:51
  Speaker 1: and Seoul and to the w t O and an
• 12:53
  Speaker 1: attempt to kind of martial a multilateral coalition to tackle
• 12:58
  Speaker 1: this challenge. Well. Following China's w t O accession, the
• 13:03
  Speaker 1: administration tried different administrations trying different approaches to deal with China,
• 13:09
  Speaker 1: including dialogues, particularly the ones led by the Treasury Department,
• 13:14
  Speaker 1: the Special These Strategic and Economic Dialogue, as well as
• 13:19
  Speaker 1: trade dialogues as well, and while some progress was made,
• 13:22
  Speaker 1: the progress was incremental and the dialogues let left many
• 13:26
  Speaker 1: frustrated the Obamba administration put a real premium on challenging
• 13:34
  Speaker 1: Chinese practices that were inconsistent with the w t O
• 13:38
  Speaker 1: two dispute settlement in the w t O and scored
• 13:41
  Speaker 1: some important victories, but still a lot of the problem
• 13:45
  Speaker 1: problematic practices that China followed continued, so a new approach
• 13:50
  Speaker 1: was needed, and I think in some respects, President Trump
• 13:53
  Speaker 1: has gone it right by imposing tariffs, whether I support
• 13:57
  Speaker 1: them or not, they have brought to China to the
• 13:59
  Speaker 1: newociating table. However, I think what has been really flawed
• 14:04
  Speaker 1: in the President's approach to dealing with China is the
• 14:08
  Speaker 1: fact that we're going it alone. We're relying on unilateral
• 14:12
  Speaker 1: measures on bilateral negotiations without trying to bring other countries
• 14:18
  Speaker 1: on board with our approach, who also share similar concerns
• 14:23
  Speaker 1: that the United States has with China. So I think
• 14:27
  Speaker 1: we could be doing a much better job working with
• 14:29
  Speaker 1: our allies and friends both in Asia and around the world,
• 14:33
  Speaker 1: and together telling China that it needs to change its
• 14:37
  Speaker 1: practices and pursue more, more market opening um measures. And unfortunately,
• 14:44
  Speaker 1: the Trump administration has decided not only to take on China,
• 14:49
  Speaker 1: but also to take on our friends and allies, and
• 14:51
  Speaker 1: as a result, trying to establish a multilateral coalition to
• 14:57
  Speaker 1: approach China has been very hard to construct. And it's
• 15:02
  Speaker 1: not just the muscular bilateralism or the muscular unilateralism of
• 15:07
  Speaker 1: the Trump administration which sets it apart from past administrations.
• 15:13
  Speaker 1: It's also the personal role which Donald Trump is taking
• 15:16
  Speaker 1: that that positioning of I'm the only one who makes
• 15:19
  Speaker 1: the decisions, that public approach with the tweets to declare
• 15:24
  Speaker 1: policy changes and the lack of predictability. Now you're someone
• 15:29
  Speaker 1: who's really been at the center of some of the
• 15:32
  Speaker 1: most high profile, most delicate trade negotiations which the US
• 15:36
  Speaker 1: has has conducted in in recent years. And what's your
• 15:40
  Speaker 1: take on that very personal approach which the president is taking.
• 15:45
  Speaker 1: Does that strengthen the hand of his negotiators or do
• 15:49
  Speaker 1: the costs of unpredictability outweigh the benefits. What's kind of
• 15:54
  Speaker 1: a mixed picture. I think in every negotiation a dose
• 15:57
  Speaker 1: of unpredictability is useful. If your counterparts think they know
• 16:02
  Speaker 1: your every move, they'll just game it all out, So
• 16:04
  Speaker 1: some unpredictability could be useful. Um, but I think the
• 16:08
  Speaker 1: President has gone way too far on that score. And
• 16:12
  Speaker 1: as a result, our trading partners are left scratching their heads,
• 16:16
  Speaker 1: not really knowing what they're being asked to do. Also,
• 16:19
  Speaker 1: I think being really public UM, particularly in the final
• 16:23
  Speaker 1: stages of trade negotiations, is not a great approach. What
• 16:30
  Speaker 1: I often would find at the end of trade negotiations
• 16:33
  Speaker 1: that having private conversations would be much more useful once
• 16:37
  Speaker 1: you're public. And we're seeing this now in the volley
• 16:40
  Speaker 1: of words between Beijing and Washington. Both sides are are
• 16:46
  Speaker 1: setting up high expectations for their domestic publics and what
• 16:51
  Speaker 1: they might be able to achieve, and also they're reducing
• 16:54
  Speaker 1: their flexibilities to find common ground. Now, maybe this is intentional,
• 16:59
  Speaker 1: Maybe both sides have decided that they don't want a
• 17:02
  Speaker 1: deal because they're certainly acting like that. But again, UM,
• 17:07
  Speaker 1: I think being too public and too hard hitting UM
• 17:12
  Speaker 1: in the public with with strong words is not a
• 17:15
  Speaker 1: great way to bring talks to to closure. That hardening
• 17:21
  Speaker 1: of rhetoric could bring some real costs to the negotiations. UM, Wendy,
• 17:26
  Speaker 1: I want to I want to focus the conversation on
• 17:29
  Speaker 1: one of the specific moments in the last few weeks,
• 17:32
  Speaker 1: which was that moment where Leo her was on his
• 17:35
  Speaker 1: way to Washington, d C. And it seemed like a
• 17:38
  Speaker 1: deal was going to be signed, and then suddenly we
• 17:41
  Speaker 1: heard from the US side, No, China's tried to pull
• 17:45
  Speaker 1: back from there from their previous commitments. They're trying to
• 17:49
  Speaker 1: pull their chips off the table, and that's not acceptable
• 17:53
  Speaker 1: to us. So we're not going to sign a deal.
• 17:55
  Speaker 1: Um now. As someone who's been inside these kind of
• 17:59
  Speaker 1: trade negotiating sans, what's your take on that. Is it
• 18:03
  Speaker 1: common to see substantial changes in negotiating position behind the
• 18:08
  Speaker 1: scenes from one or both sides in the final days
• 18:11
  Speaker 1: before a deal is signed. Well, unfortunately it is. And
• 18:16
  Speaker 1: this is not the first time a country has come
• 18:19
  Speaker 1: to the negotiating table in the final stage and taken
• 18:22
  Speaker 1: things off the table, or has moved goalposts and asked
• 18:27
  Speaker 1: the other and the other country to do more. What
• 18:30
  Speaker 1: happens at the end of a trade negotiation is both
• 18:33
  Speaker 1: sides and their capital as I think, look at the
• 18:35
  Speaker 1: entire deal and try and figure out is this a
• 18:38
  Speaker 1: deal that will garner public support? Is this deal viable, incredible?
• 18:43
  Speaker 1: And will I be able to withstand the criticism? And
• 18:47
  Speaker 1: I think that leads both sides at the end of
• 18:49
  Speaker 1: a negotiation to do things like taking things off the
• 18:53
  Speaker 1: table or asking the other country to do more. However,
• 18:57
  Speaker 1: given the high stakes of this negotiation, and I think
• 19:00
  Speaker 1: these last minute moves were extremely consequential and really led
• 19:06
  Speaker 1: the US to question whether China was acting in good faith.
• 19:10
  Speaker 1: In the US view, China had agreed to many of
• 19:13
  Speaker 1: the provisions already that it it, you know, took off
• 19:18
  Speaker 1: the table in the final stages. Um. And again, I
• 19:22
  Speaker 1: think I think these issues can I don't think they're insurmountable.
• 19:27
  Speaker 1: I think with creativity they can be worked through. However, Um,
• 19:33
  Speaker 1: if both sides continued to be very public in their
• 19:36
  Speaker 1: rhetoric and very hard line. Um, with each passing day,
• 19:40
  Speaker 1: this deal is going to be more difficult to conclude. Wendy,
• 19:44
  Speaker 1: let's let's let's throw it forwards. Um, how do you
• 19:48
  Speaker 1: see this playing? The markets think maybe there's a deal
• 19:52
  Speaker 1: at Osaka with President Trump and President She sitting down
• 19:56
  Speaker 1: at that G twenty meetsing. There's also, as you mentioned,
• 20:00
  Speaker 1: and hardening rhetoric on both sides, the threat of more tariffs,
• 20:04
  Speaker 1: the threat of sanctions on Chinese firms. It feels like
• 20:09
  Speaker 1: if we don't get a deal in Osaka, this could
• 20:12
  Speaker 1: be messy, extended, and expensive for both sides. Um, could
• 20:17
  Speaker 1: you handicap those probabilities for US? Yes? So, in my view,
• 20:22
  Speaker 1: I think both sides right now think that they can
• 20:28
  Speaker 1: outlive the other with respect to having no trade deal.
• 20:31
  Speaker 1: The US feels their economy is strong and that China's
• 20:35
  Speaker 1: economy is weak, and therefore that the US has the
• 20:38
  Speaker 1: negotiating leverage. I think China feels that it has the
• 20:41
  Speaker 1: political and economic tools that it needs to ensure that
• 20:45
  Speaker 1: its citizens can survive this trade war, and in their view,
• 20:50
  Speaker 1: history proves that. But the other development that's going to
• 20:54
  Speaker 1: happen soon is that on June one, China is going
• 20:58
  Speaker 1: to impose the next round of it's tariff hikes on
• 21:01
  Speaker 1: sixty billion dollars worth of US imports, and the full
• 21:05
  Speaker 1: impact of the US tariff escalation on two billion dollar
• 21:10
  Speaker 1: worth of Chinese imports will be felt by June one.
• 21:15
  Speaker 1: And if you recall the last time the two leaders
• 21:17
  Speaker 1: met on December one, in the lead up to that meeting,
• 21:20
  Speaker 1: those tariffs started to have a very destructive effect on
• 21:24
  Speaker 1: the both both sides economies. So at last December one,
• 21:29
  Speaker 1: both leaders when they met, agreed to launch talks for
• 21:32
  Speaker 1: ninety days, so if you ask me now, I would
• 21:36
  Speaker 1: My sense is that come the meeting between Presidents Trump
• 21:41
  Speaker 1: and She on the margins of the G twenty meeting
• 21:44
  Speaker 1: in Osaka, um perhaps they will agree that both sides
• 21:48
  Speaker 1: need to resume the negotiations and pick up from where
• 21:52
  Speaker 1: they where they left the talks um in early May.
• 21:56
  Speaker 1: But I don't see the deal coming together by the
• 21:59
  Speaker 1: time of the G twenty meeting. I think President Trump
• 22:03
  Speaker 1: was very clear when he said in Japan just yesterday
• 22:06
  Speaker 1: that he's in no rush to conclude these talks. But
• 22:10
  Speaker 1: perhaps a month from now he will feel like he's
• 22:12
  Speaker 1: in a different position when these tariff the new tariff
• 22:17
  Speaker 1: actions start having a real bite for US consumers, workers,
• 22:21
  Speaker 1: farmers and businesses. Okay, no deal in Osaka, but potentially
• 22:27
  Speaker 1: an agreement to agree. Wendy Cutler from the Asia Society,
• 22:32
  Speaker 1: thank you very much for your time and your insights.
• 22:35
  Speaker 1: Thank you, Tom. The trade team at Bloomberg News is
• 22:45
  Speaker 1: one of the scoop eest teams in the newsroom, and
• 22:49
  Speaker 1: on that team, few are scoopia than Jenny Leonard. Jenny's
• 22:54
  Speaker 1: joining me in the studio now to talk about her
• 22:57
  Speaker 1: experience of reporting the trade war UM and her take
• 23:01
  Speaker 1: on how things are going to evolve. Jenny, Thanks for
• 23:03
  Speaker 1: joining us, Thanks for having me so. Jenny, you've been
• 23:06
  Speaker 1: reporting this trade war from the start. Can you give
• 23:09
  Speaker 1: us a sense of how the mood on the U
• 23:12
  Speaker 1: S side, the people around the president who are trying
• 23:15
  Speaker 1: to shape policy, How is the mood in that group
• 23:18
  Speaker 1: shifted from that first declaration from from the president that
• 23:22
  Speaker 1: trade wars are good and easy to win to the
• 23:24
  Speaker 1: situation we find ourselves in today. So actually, I think
• 23:28
  Speaker 1: it hasn't evolved that much. The people who are closest
• 23:32
  Speaker 1: to the president, I think, would still stand by that
• 23:36
  Speaker 1: declaration that trade wars are good and easy to win.
• 23:39
  Speaker 1: At least they still believe that the US has the
• 23:41
  Speaker 1: resolve to actually come out as the winner of this. UM.
• 23:44
  Speaker 1: I would say that the advisors around the President and
• 23:48
  Speaker 1: the Vice President and the President himself are hearing more
• 23:51
  Speaker 1: and more from Republicans on the hill, from farmers from
• 23:55
  Speaker 1: constituencies that this is starting to bite and they might
• 24:00
  Speaker 1: not want to see this go on much longer. So
• 24:03
  Speaker 1: we might see a shift. We might start seeing a
• 24:06
  Speaker 1: shift sometime in the near future. But at this point,
• 24:09
  Speaker 1: I think his advisors. The mood is still very much
• 24:13
  Speaker 1: um like it was a couple a couple of months ago,
• 24:17
  Speaker 1: and can you help us put a bit of a
• 24:19
  Speaker 1: structure around are thinking on who those advisors are, um
• 24:25
  Speaker 1: who are the hawks, Who are the doves? Who are
• 24:28
  Speaker 1: the people who see China as a kind of existential threat?
• 24:31
  Speaker 1: Who are the people who just want to get a
• 24:33
  Speaker 1: deal done? So I think we've reported extensively on the
• 24:37
  Speaker 1: sort of the two camps, the hawks and the doves,
• 24:39
  Speaker 1: and um my sources are very adamant in pointing out
• 24:43
  Speaker 1: that Peter Navarro, who's the trade advisor that's very far
• 24:48
  Speaker 1: on the hawker side, is not in the same place
• 24:51
  Speaker 1: as Ustr Lighthouser, who's also seen as a hawk. But
• 24:54
  Speaker 1: Peter Navarre really sees China as an existential threat. He
• 24:57
  Speaker 1: wrote books about China. Robert Lighthegh or the U s
• 25:00
  Speaker 1: TR is more of a trade hog. He's, for you know, decades,
• 25:04
  Speaker 1: has fought countries unfair subsidies and training practices, and China
• 25:09
  Speaker 1: obviously is on the forefront of that. But he's not
• 25:11
  Speaker 1: obsessed with China as maybe Peter Navarro is. And then
• 25:14
  Speaker 1: we have the the doves may be led by Treasury
• 25:17
  Speaker 1: Secretary Minuchin, who obviously gets a lot of calls from
• 25:20
  Speaker 1: Wall Street who, um, would really like to see a
• 25:24
  Speaker 1: deal done? Student. And then we have the National security
• 25:28
  Speaker 1: advisors like John Bolton, who actually their voices has been
• 25:33
  Speaker 1: elevated a lot in this administration and they have a
• 25:37
  Speaker 1: say in trade decisions now, which wasn't the case in
• 25:40
  Speaker 1: previous administrations. And when something like the sanctions on Huawei happened, Jenny, Um,
• 25:47
  Speaker 1: is that coming, in your sense, from an integrated policy
• 25:52
  Speaker 1: the trade negotiators aware that those Huawei sanctions are going
• 25:56
  Speaker 1: to drop, or is that coming out of left field
• 25:59
  Speaker 1: from a different of the administration? Yeah, good question. I
• 26:03
  Speaker 1: think it's Um, It's a little bit of both. In
• 26:07
  Speaker 1: that the Huawei sanction sanctions have been discussed for a
• 26:11
  Speaker 1: long time, so it shouldn't come as a surprise to
• 26:13
  Speaker 1: anyone on the trade team that someone like John Bolton
• 26:17
  Speaker 1: has been pushing for that. But then when it actually happened, uh,
• 26:22
  Speaker 1: last week or two weeks ago, you know, our reporting
• 26:25
  Speaker 1: showed that everyone was overwhelmed with actually rolling out and
• 26:30
  Speaker 1: implementing that those sanctions because it did come out of nowhere.
• 26:34
  Speaker 1: Too many people who weren't involved in these discussions that
• 26:38
  Speaker 1: John Bolton had with the President about this and which
• 26:41
  Speaker 1: group do you put the president in? Is he an
• 26:43
  Speaker 1: instinctive member of one group or is he moving between
• 26:46
  Speaker 1: them depending on circumstances. Yeah, it really depends on the
• 26:49
  Speaker 1: day for the president. Um. You know, a good example
• 26:53
  Speaker 1: was last week when he was in Japan, um Or
• 26:56
  Speaker 1: when he left for Japan, he was talking about Huawei
• 26:58
  Speaker 1: and how there's really a big national security risk and
• 27:03
  Speaker 1: how that's really a problem, and in the next sentence
• 27:06
  Speaker 1: he totally undermined what he had just said and what
• 27:09
  Speaker 1: his national security advisors want him to say by saying, well,
• 27:12
  Speaker 1: we might wrap this into some kind of trade deal
• 27:14
  Speaker 1: sometime soon. And so you know, he's really swinging. And
• 27:19
  Speaker 1: we've known this about the President for a while now,
• 27:22
  Speaker 1: that he he likes these policy debates and having them
• 27:25
  Speaker 1: play out in front of him. Um, and he sides
• 27:28
  Speaker 1: with whoever you know, he wants to side in that moment,
• 27:31
  Speaker 1: and he changes his mind often, which keeps all of
• 27:33
  Speaker 1: his advisors on their toes. For sure, that unpredictability from
• 27:37
  Speaker 1: the president, as we heard from Wendy Cutler, um potentially
• 27:41
  Speaker 1: an advantage at some points in the negotiation, but also
• 27:44
  Speaker 1: evidently coming at some costs, including to his own side. Um, Jenny,
• 27:49
  Speaker 1: let's throw this forwards. Tell us about your expectation or
• 27:54
  Speaker 1: how we should think about that She Trump meeting at
• 27:58
  Speaker 1: the G twenty the mark it's right that we could
• 28:00
  Speaker 1: get a deal there, or do you see that as
• 28:03
  Speaker 1: excessively optimistic. I think the markets are always a little
• 28:08
  Speaker 1: more optimistic than reality. Uh. I think a deal might
• 28:12
  Speaker 1: not be possible in the next month, because that would
• 28:17
  Speaker 1: really take you know, Lightheiser and Leo Hood to sit
• 28:20
  Speaker 1: down again, to go over you know, basically go to
• 28:24
  Speaker 1: the status quo before China renect on on its commitments,
• 28:28
  Speaker 1: and I don't really see that happening. At the same time,
• 28:31
  Speaker 1: I would say anything can happen when President Trump gets
• 28:35
  Speaker 1: in the room with President She. We've seen this multiple times.
• 28:37
  Speaker 1: Trump reversed his ban on on z T, the telecom
• 28:41
  Speaker 1: equipment's maker, last year at the request of Shooting Ping.
• 28:45
  Speaker 1: So I wouldn't rule anything out. But a deal seems
• 28:48
  Speaker 1: a little bit too ambitious, Okay. Personalities of the two
• 28:52
  Speaker 1: leaders crucial as we prepare for that G twenty meeting.
• 28:56
  Speaker 1: Jenny Lennon, thank you so much. Thank you well. We
• 29:05
  Speaker 1: toyed with renaming it Tom and Omics, but producers Scott
• 29:08
  Speaker 1: Lamman advised me that that was a bad idea for
• 29:11
  Speaker 1: a single episode and potentially a career ending mistake for
• 29:16
  Speaker 1: me personally. So thanks for listening to Stephanomics. Stephanie Flanders
• 29:20
  Speaker 1: will return next week with more on the ground insights
• 29:23
  Speaker 1: into the global economy. In the meantime, you can find
• 29:26
  Speaker 1: us on the Bloomberg Terminal website, APT or wherever you
• 29:30
  Speaker 1: get your podcasts. We would love if you took the
• 29:33
  Speaker 1: time to rate and review our show so it can
• 29:35
  Speaker 1: reach more listeners. For more news and analysis from Bloomberg Economics,
• 29:40
  Speaker 1: follow at Economics on Twitter, and you can also find
• 29:43
  Speaker 1: me at Tom Marlick. The story in this episode was
• 29:47
  Speaker 1: reported and written by Ivan Levingstone. It was produced by
• 29:50
  Speaker 1: Magnus Henrickson and edited by Scott Lanman, who is also
• 29:54
  Speaker 1: the executive producer of Stephanomics Special thanks to Wendy Cutler,
• 29:58
  Speaker 1: Jenny Leonard, and Michael Arnold. Francesco Levi is the head
• 30:02
  Speaker 1: of Bloomberg Podcasts. H