Latest / Trumponomics / This Country Is Winning the Trade War

Transcript

This Country Is Winning the Trade War · Trumponomics

0:03
Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
0:07
Speaker 1: global economy to you. Trade wars are good and easy
0:15
Speaker 1: to win. That was President Trump's famous tweet just over
0:18
Speaker 1: a year ago when he announced tariff's on steel and
0:20
Speaker 1: aluminum from China and other countries. There have been plenty
0:24
Speaker 1: of twists and turns in the trade wars since then,
0:26
Speaker 1: But who's winning well, Trade lawyers definitely, and yes, trade
0:31
Speaker 1: reporters are. World Trade team here at Bloomberg has doubled
0:34
Speaker 1: in the past year. But when it comes to countries,
0:37
Speaker 1: economic theory says no one really wins a trade war.
0:41
Speaker 1: And if you look at the way the trade battles
0:42
Speaker 1: have hurt exports in China and raised costs and uncertainty
0:46
Speaker 1: for US businesses, you'd be inclined to agree, but we
0:50
Speaker 1: might be looking in the wrong place. In a minute,
0:53
Speaker 1: I'm going to talk to Bloomberg's Asian Economy columnist Dan
0:56
Speaker 1: Moss about the impact of trade wars and tougher global
1:00
Speaker 1: competition on Asia. But first, our Southeast Asian Economies reporter
1:04
Speaker 1: Michelle jam Riscoe has been to one country that does
1:08
Speaker 1: seem to be winning Donald Trump's trade war. This is Vietnam,
1:29
Speaker 1: where motorbikes raced through the streets of the capital Hanoi.
1:32
Speaker 1: Forty years after the war with America, the Vietnamese have
1:36
Speaker 1: the most favorable opinion of the US out of any
1:38
Speaker 1: foreign populace, according to the Pew Research Center, and Donald
1:42
Speaker 1: Trump may just have given them another reason to like
1:44
Speaker 1: America in the form of his trade war with China.
1:47
Speaker 1: That's because the tariff battle is giving a boost to
1:49
Speaker 1: Vietnam's economy, which was already one of the world's fastest
1:52
Speaker 1: growing thanks in part to foreign business is looking for
1:55
Speaker 1: cheaper factories my college when you in and I visited Shenwa,
2:02
Speaker 1: a furniture maker in Hanoi, to get a firsthand look
2:04
Speaker 1: at how Vietnamese business is reaping the benefits. Shenwa started
2:08
Speaker 1: as a bicycle company in and in the decades since
2:11
Speaker 1: has evolved into a big brand within Vietnam for home
2:14
Speaker 1: office and even the seats in parliament. But it also
2:17
Speaker 1: has a solid portfolio of long time international partners like
2:20
Speaker 1: Aikia and Toyota. A family that's growing in part thanks
2:24
Speaker 1: to those tariffs. Here's CEO Laid Wei Ang. We expect
2:33
Speaker 1: new orders to increase a lot due to the trade war,
2:36
Speaker 1: but it's hard to quantify it. Right now, there are
2:38
Speaker 1: more companies getting in touch with us to switch from
2:41
Speaker 1: China to our products, but in order to turn them
2:44
Speaker 1: into real contracts, we still have a lot to do
2:47
Speaker 1: and many things to change. It's quite difficult to compete
2:50
Speaker 1: with China in terms of quantity and cost. Here on
3:02
Speaker 1: Ang's factory floor is where that struggle to compete with
3:04
Speaker 1: China is playing out, and already with some success. You
3:08
Speaker 1: can tell Ang really wants to prioritize not just quantity
3:11
Speaker 1: but quality. He aims to compete with Japanese craftsmanship very much.
3:18
Speaker 1: In each of these buildings, you can smell the burnt
3:21
Speaker 1: metal and creative sparks flying work. Here's still gently at
3:26
Speaker 1: each of their stations in different zones, organized as Mr
3:30
Speaker 1: Ain said in a system that they took from Ng.
3:39
Speaker 1: An average size, boyish looking man with a big smile
3:42
Speaker 1: proudly escorts us around his village of factory buildings about
3:45
Speaker 1: an hour outside downtown Hannoi. We're just the latest onlookers.
3:49
Speaker 1: In the past three months, he's been visited by about
3:52
Speaker 1: ten potential new clients who are considering moving orders from
3:55
Speaker 1: China to Shenhwa. They've come from all over both the
3:58
Speaker 1: U s and China, as well as South Korea and Japan,
4:01
Speaker 1: and also from much further away like Romania. He's almost
4:04
Speaker 1: sure the fresh business will help him smash a growth target.
4:07
Speaker 1: For his point is driven home during our tour as
4:11
Speaker 1: a South Korean businessman walks by in a hard hat
4:14
Speaker 1: browsing products he'd like to sell to the U. S
4:17
Speaker 1: Ang pauses his tutorial about how NA has boosted productivity
4:20
Speaker 1: by shaving seconds off the process of bending the initial medal.
4:23
Speaker 1: He points out the latest visitor strolling the floors excitedly
4:27
Speaker 1: interjecting in English, a prongfolio, and I thought to me
4:39
Speaker 1: right now, Ang seems most focused on a new Canadian client,
4:42
Speaker 1: manufacturer distributor Conglam, whose executives are scrapping their Chinese sourcing
4:46
Speaker 1: and looking instead to order from NA, including cabinets they
4:50
Speaker 1: ship to US customers. Ang says this is exactly the
4:53
Speaker 1: type of order that his business has been working toward,
4:55
Speaker 1: as they buy new machinery and become more efficient on
4:57
Speaker 1: the factory floor. The most difficult things now is increasing
5:02
Speaker 1: quality and ensuring good quality of our products while trying
5:06
Speaker 1: to reduce costs to meet clients requirements and to be
5:09
Speaker 1: more competitive. The gains in productivity have allowed aim to
5:14
Speaker 1: raise salaries about eight percent each year for the past
5:17
Speaker 1: three years, he says, more than double the rate of inflation.
5:21
Speaker 1: One of his workers, forty six year old Havantan, has
5:25
Speaker 1: been at China for twenty two years, and both that
5:27
Speaker 1: the recent bumping business allowed him to buy a new
5:29
Speaker 1: motorbike for his family last year. My wife is much
5:39
Speaker 1: happier since I got higher income from the company, so
5:42
Speaker 1: we have a better life now. I also have better
5:45
Speaker 1: health as the working environment here has become better than
5:48
Speaker 1: it was previously. Ain showed off the cabinets and test
5:56
Speaker 1: phase that China was perfecting to close the deal with
5:59
Speaker 1: Conglong later, he offers up a more concrete example of
6:02
Speaker 1: where his company has already gained from the trade war.
6:05
Speaker 1: Akia has done business with Shenois for more than seventeen years.
6:09
Speaker 1: Last year, the Swedish furniture giant gave Shenwis some more
6:12
Speaker 1: business by switching from a Chinese vendor that could hike
6:15
Speaker 1: prices due to tariffs. Achia began buying these twenty cent
6:18
Speaker 1: metal parts from Shenois, which Ain pulled off a newer machine.
6:22
Speaker 1: On our tour, I met Sebastian Eckert, the World Bank's
6:32
Speaker 1: lead Vietnam economist, in an eighth floor meeting room that
6:35
Speaker 1: overlooks an especially buzzy intersection with tourists and teens snapping
6:40
Speaker 1: photos in front of Hannoi's historic opera house across the way.
6:43
Speaker 1: Eckert put things into perspective. Vietnam, of course, um, you know,
6:49
Speaker 1: even before the recent tensions, in many ways, has picked
6:57
Speaker 1: up activities where China basically move. We've moved on ind right,
7:05
Speaker 1: So a lot of the the FDI that VS actually
7:09
Speaker 1: is is relocation from China, and I think this the
7:14
Speaker 1: recent chansions they probably accelerate that for some instant, that's
7:19
Speaker 1: a keyword. I've been hearing a lot accelerate. The penalties
7:22
Speaker 1: targeted at China and the broader demand slow down there
7:26
Speaker 1: have given an extra nudge in Vietnam's favor. Not only
7:29
Speaker 1: that the government is loosing its grip on commerce. At
7:32
Speaker 1: the start of Sunwa, then a state owned company was
7:36
Speaker 1: fully privatized, and now an owns a stake in the firm.
7:41
Speaker 1: Eckert sees Vietnamese agencies cleaning up regulations brainstorming on tough
7:45
Speaker 1: reforms like intellectual property rights and adding more free trade
7:48
Speaker 1: agreements to their impressive lineup. It's all earned them better
7:51
Speaker 1: spots and international rankings like the World Banks Ease of
7:54
Speaker 1: Doing Business Index and the World Economic Forums Competitiveness Index.
7:59
Speaker 1: That's really come back. And I think that's very healthy,
8:02
Speaker 1: and it's something that is structural, that reflects a rising
8:05
Speaker 1: middle class, increasingly urbanized country, healthy wage girls, more disposable income,
8:12
Speaker 1: not only in a small fraction of households, but very
8:15
Speaker 1: broad based, very inclusive girls, of course, and and I
8:18
Speaker 1: think that's fueling a healthy domestic economy. And I think
8:21
Speaker 1: that's that's important. Ing himself as an example of the
8:24
Speaker 1: Vietnamese affection for America, in a country where lingering hustle
8:28
Speaker 1: sentiment from the war is largely confined to museums, a
8:31
Speaker 1: son is studying marketing in Indiana, part of a growing
8:34
Speaker 1: pattern as Vietnam ranks number seven in the world and
8:37
Speaker 1: sending students to the States. The Vietnamese hold a much
8:40
Speaker 1: different perspective on China. They talk about a lack of
8:44
Speaker 1: trust etched in a thousand years of history with their
8:46
Speaker 1: communist neighbor, and almost nine and ten have an unfavorable
8:49
Speaker 1: view of China, according to the same Pew survey. But
8:53
Speaker 1: for all the positive signs, businesses aren't getting too excited
8:56
Speaker 1: about the opportunities that might flow from the trade war.
8:59
Speaker 1: For one thing, companies know they can't cut out the
9:02
Speaker 1: second biggest market in the world. In fact, Ang says
9:05
Speaker 1: Shea still needs to source some materials, including steel, from
9:08
Speaker 1: China in order to continue producing according to customer preferences.
9:13
Speaker 1: Corruption also remains an issue. Infrastructure still lags in some ways,
9:17
Speaker 1: and paperwork can bog down newcomers. Moreover, Vietnam is vulnerable
9:22
Speaker 1: to international criticism for imprisoning dissidents and bloggers who challenge
9:25
Speaker 1: the government's one party socialist rule. And of course, if
9:29
Speaker 1: the US China trade war worsens or goes global, that's
9:32
Speaker 1: going to be bad for everyone, especially trade heavy economies
9:35
Speaker 1: like Vietnam. But A thinks Shena in his country will
9:39
Speaker 1: rise to the challenge. We see many opportunities in both
9:46
Speaker 1: domestic and international market. The trade war is bringing more business,
9:51
Speaker 1: for sure, while there are some potential areas in the
9:54
Speaker 1: domestic market that we haven't tapped yet. In talks about
9:58
Speaker 1: creating a so called smart fact Jory with more robots
10:01
Speaker 1: and advanced machines. He aims to double sales in the
10:04
Speaker 1: next five years. For now, the trade war is helping
10:07
Speaker 1: and keep things plans on truck for Bloomberg News. This
10:11
Speaker 1: is Michelle jam Risco. So that was Michelle jam Risco.
10:18
Speaker 1: I'm very pleased to talk now to Daniel Moss, who
10:22
Speaker 1: will be familiar to some of you long time listeners
10:25
Speaker 1: to the Benchmark podcast. He used to run the economics
10:29
Speaker 1: coverage here at Bloomberg. He has done a lot of
10:31
Speaker 1: other things for Bloomberg, but most importantly for our purposes.
10:35
Speaker 1: For the last few months, he's been based in Asia
10:38
Speaker 1: as the Asian Economy columnist for Bloomberg Opinion. Dan, thanks
10:41
Speaker 1: very much for coming back on the podcast. Step great
10:45
Speaker 1: to be here. So we were just hearing about this
10:48
Speaker 1: quite positive story about Vietnam potentially at least in the
10:53
Speaker 1: short term, being a winner from the trade wars. Is
10:58
Speaker 1: this something that you see generally when you think about
11:02
Speaker 1: the impact on Southeast Asia of the immediate sort of
11:06
Speaker 1: US China wrangling over trade, that there are some countries
11:11
Speaker 1: that are actually benefiting as well as the losses we see,
11:14
Speaker 1: or is it primarily a negative story. When you think
11:16
Speaker 1: about the impact of the trade wars on the region,
11:20
Speaker 1: it is overall a broadly negative story, with a couple
11:25
Speaker 1: of exceptions, and Vietnam is one of them, certainly in
11:29
Speaker 1: the short term. I was in Vietnam late last year
11:33
Speaker 1: and the place was getting quite a lot of positive
11:37
Speaker 1: buzz from foreign businesses who had set up there. Late
11:42
Speaker 1: last year, the government lifted restrictions on how much foreigners
11:46
Speaker 1: can own of huge swaths of industry. However, and this
11:51
Speaker 1: is the key caveat when you're talking about Vietnam, it
11:54
Speaker 1: remains a one party communist state, and so called sent
12:00
Speaker 1: citive areas they are still off limits to foreign control.
12:07
Speaker 1: Vietnam is a big country, but it's not so big.
12:11
Speaker 1: It has relatively warm relations with the US and with
12:16
Speaker 1: Western Europe that, of course, can all go wrong, though
12:20
Speaker 1: its system of government is not dramatically different from China's
12:24
Speaker 1: and steph. As you know from your own working experiences.
12:29
Speaker 1: When emerging markets let foreign investors have more and more
12:35
Speaker 1: of a say in the economic life of their country,
12:38
Speaker 1: governments also surrender a certain amount of control. Some systems
12:43
Speaker 1: of government and individual states are more comfortable with that
12:46
Speaker 1: than others. For now, it's probably a bargain that works
12:50
Speaker 1: for Vietnam. How long it works remains to be seen.
12:55
Speaker 1: I suspect there's a little bit of crush to this.
12:59
Speaker 1: Whether it's a long term player remains to be seeing.
13:03
Speaker 1: I mean, it's one thing that certainly we think about
13:05
Speaker 1: when we look at what you might call the Asian
13:07
Speaker 1: economic model, which was so focused on trade and exporting
13:14
Speaker 1: to the rest of the world, we know that that
13:16
Speaker 1: sort of the path that China took and that other
13:19
Speaker 1: countries before it took, is going to be much harder
13:22
Speaker 1: now looking ahead. I mean, the rest of the world's
13:24
Speaker 1: a bit more wise to that approach, but it's just
13:27
Speaker 1: a much more competitive environment. I mean, not just Vietnam,
13:30
Speaker 1: but if you're sort of stepping back and thinking about
13:33
Speaker 1: Southeast Asia as a whole and that Asian export economies,
13:36
Speaker 1: you know, how well do you think countries are grappling
13:39
Speaker 1: with moving away from it or needing to find a
13:43
Speaker 1: different kind of economic model. They do need to find
13:46
Speaker 1: a different type of economic models. Some of them are
13:49
Speaker 1: pinning hopes on their own middle class. But just to
13:53
Speaker 1: be clear about this, a move away from exports is
13:57
Speaker 1: essentially a move away from the model that got them
14:00
Speaker 1: where they are. You know, we're all familiar with the
14:03
Speaker 1: success stories of some of these Asian economies. You know,
14:06
Speaker 1: tigers was a term very much on vogue in the
14:09
Speaker 1: eighties and nineties. Who don't hear that so much anymore.
14:12
Speaker 1: They did really, really well out of exports, and part
14:16
Speaker 1: of that was an exports supply chain that sneaked through
14:20
Speaker 1: China and has recently served China as well as serving
14:25
Speaker 1: the US. Now, to attract all the multinationals that were
14:29
Speaker 1: part of those supply chains, they needed to make their
14:33
Speaker 1: economies more open. They needed to invest more money in education,
14:37
Speaker 1: They needed to keep up the momentum move up the
14:41
Speaker 1: value chain. Now, if you take away exports and if
14:44
Speaker 1: you at least subtract from China's role in that global
14:49
Speaker 1: supply chain, the model that got many of these East
14:52
Speaker 1: Asian countries where they are, well, you know, got another model.
14:57
Speaker 1: I don't know that they necessarily have a convinced seeing
15:00
Speaker 1: new one, and I guess one of them, I mean,
15:01
Speaker 1: one part of one big part of the model. The
15:04
Speaker 1: last few years has just been dependents on China, I mean, selling,
15:08
Speaker 1: selling into that China growth story. We think a lot
15:12
Speaker 1: about the impact of trade wars and as understandable because
15:15
Speaker 1: it's such a it's a change to have this kind
15:18
Speaker 1: of protectionist mood affecting relations between the two of the
15:22
Speaker 1: biggest economies in the world. But if you're sitting in
15:25
Speaker 1: major you're looking at Asian economies all around you, what
15:28
Speaker 1: are you worried about most? Are you worried most about
15:31
Speaker 1: the trade war? Or are you worried most about the
15:33
Speaker 1: slowing of growth in China because that's such a big
15:35
Speaker 1: part of this year's story as well. Yeah, when I
15:38
Speaker 1: wake up tomorrow morning, I'll be worrying about the trade
15:42
Speaker 1: war and the impact of that. But you know, as
15:45
Speaker 1: I wake up in the months and perhaps the year
15:49
Speaker 1: to come, I'll be worried that economies aren't thinking enough
15:53
Speaker 1: about the structural slowed down and the structural change in
15:58
Speaker 1: the Chinese economy. This is an economy that Donald Trump, notwithstanding,
16:04
Speaker 1: is becoming more and more driven by its own domestic
16:08
Speaker 1: consumer market, by technology. China is not going to grow
16:15
Speaker 1: at six percent forever. It didn't grow at ten percent forever.
16:18
Speaker 1: You know, we need to get used to growth of
16:21
Speaker 1: five points something, four points something, three points something. You know,
16:26
Speaker 1: the O E c D has done some modeling. Capital Economics,
16:29
Speaker 1: among other firms, have done some modeling. As China's economy
16:34
Speaker 1: continues to mature, you know it's going to look actually
16:39
Speaker 1: a lot like the US and to a degree Western
16:41
Speaker 1: Europe in terms of its rates of growth. Now, for
16:45
Speaker 1: all the people's staff that we've heard say, well, the
16:48
Speaker 1: biggest thing in my lifetime has been the super fabulous
16:53
Speaker 1: rise of China. That's great, that's true. But how much
16:57
Speaker 1: consideration is given to a China, know which looks normal?
17:03
Speaker 1: That is the really long term fundamental challenge. Being close
17:08
Speaker 1: to China was once an an unalloyed good. How much
17:13
Speaker 1: longer will that be true? Again? Got a new model.
17:18
Speaker 1: It makes me think. And it's interesting because you and
17:20
Speaker 1: I both have a sort of longer term perspect on this,
17:22
Speaker 1: although you had a much deeper understanding of the region.
17:25
Speaker 1: I mean, I think, you know, you've just moved back
17:27
Speaker 1: to Asia after many years away, and I think the
17:31
Speaker 1: last time you were there. You should remind us the
17:33
Speaker 1: last time you were there was in the late nineties.
17:36
Speaker 1: That was when I was making flying visits to Asia
17:39
Speaker 1: during the Asia Financial crisis, when I was working at
17:42
Speaker 1: the U. S. Treasury, working for Larry Summers. So, of
17:44
Speaker 1: course I got a rather crazed picture of these countries
17:47
Speaker 1: when they were going through this absolute worst moment of crisis.
17:51
Speaker 1: You were sitting there able to look at it a
17:53
Speaker 1: bit more calmly. But what struck you most you've been
17:55
Speaker 1: back for a few months now, how is that long
17:58
Speaker 1: term story of China influen punts and the development of
18:01
Speaker 1: the region played out relative to what you might have
18:04
Speaker 1: thought when you left? So I moved to Singapore three
18:09
Speaker 1: months ago. The last time I lived in Southeast Asia,
18:11
Speaker 1: I was the bureau chief of Bloomberg in Malaysia from
18:17
Speaker 1: so definitely that was a period of economic and political
18:20
Speaker 1: upheaval in the region. Having been away for two decades,
18:26
Speaker 1: I expected Steph that when I returned, China's footprint would
18:30
Speaker 1: be everywhere. You know, writ large, writ small, rip medium,
18:35
Speaker 1: you name it. The thing that surprised me most as
18:39
Speaker 1: I talk to people at central banks here and read
18:42
Speaker 1: more and more about monetary policy in Asia, the more
18:48
Speaker 1: it's apparent to me this is still largely about the
18:50
Speaker 1: Federal Reserve. This is still a dollar zone. Is China's
18:56
Speaker 1: footprint in the region expanding in other economic ways? For
19:00
Speaker 1: Shure is China funding a lot of infrastructure in this
19:03
Speaker 1: region for Shure, is the Belton Road Initiative having an
19:08
Speaker 1: impact for Shure. But when it comes to the monetary realm,
19:13
Speaker 1: this is still a dollar game. And whenever there's a
19:17
Speaker 1: Federal Open Market Committee meeting for two days, there's just
19:21
Speaker 1: this constant blitz. It's like I was back in d
19:24
Speaker 1: C at a fed lock up. People's Bank of China
19:28
Speaker 1: is barely mentioned. For me. That was a surprise. Now
19:33
Speaker 1: culturally and politically things have advanced significantly. I'm talking to
19:38
Speaker 1: you right now from Jakarta, the capital of Indonesia, which,
19:41
Speaker 1: as you know, was the epicenter in Southeast Asia of
19:45
Speaker 1: the financial crisis two decades ago. It ultimately became a
19:49
Speaker 1: political crisis and in some ways a sectarian crisis. Indonesia
19:54
Speaker 1: is in full bloom as a democracy as it prepares
19:57
Speaker 1: to vote this month. Country only been voting directly for
20:01
Speaker 1: presidents since two thousand and four. And democracy is a
20:05
Speaker 1: great thing. We all support that, but it does make
20:08
Speaker 1: it harder sometimes to get a handle on the debate,
20:11
Speaker 1: and it can also uncork some sentiments that authoritarian rules
20:16
Speaker 1: had papered over. No I think that's I mean It's
20:19
Speaker 1: fascinating and not necessarily what we hear all the time
20:23
Speaker 1: when we think about the rise of China and and
20:26
Speaker 1: how how dominant it's become. Some things have moved very quickly,
20:30
Speaker 1: but some of these long term aspects, certainly about the
20:32
Speaker 1: role of the dollar, we know it could take a
20:35
Speaker 1: lot longer. I seem to remember. I think the the
20:38
Speaker 1: UK was surpassed by the US in terms of the
20:40
Speaker 1: size of its economy in the late in the eighties nineties.
20:44
Speaker 1: It took another sixty years before the pound was really
20:47
Speaker 1: displaced by the dollar as the global currency. So maybe
20:51
Speaker 1: we shouldn't be surprised, but it's it's interesting to hear
20:54
Speaker 1: that you've come all that way, Dan, moving from the US,
20:57
Speaker 1: only to discover that it really is still all about
21:00
Speaker 1: at the FED. I appreciate that we got that insight.
21:02
Speaker 1: Thanks very much for joining us. I know we're going
21:04
Speaker 1: to have you back on the show very soon. Thanks Steph.
21:07
Speaker 1: Looking forward to it. So I'm joined now by someone
21:16
Speaker 1: who's also about to move from the US, Brendan Murray,
21:19
Speaker 1: who until recently was managing editor for the US economic
21:23
Speaker 1: coverage here at Bloomberg, but is now Our world trades
21:26
Speaker 1: are we've decided trade it become so important to Bloomberg
21:29
Speaker 1: we didn't just have to report it, but we needed
21:31
Speaker 1: to install an autocrat to keep the show on the road. So, Brendan, welcome.
21:36
Speaker 1: I wanted to chat to you partly to tell everyone
21:38
Speaker 1: that we have a global trades are now, but also
21:41
Speaker 1: because a news story out of Geneva caught my eye,
21:43
Speaker 1: which I don't say very often. It's the news that
21:46
Speaker 1: the World Trade Organization, based in Geneva has just published
21:50
Speaker 1: its first ruling on national security. Now, Brendan, this was
21:55
Speaker 1: about a trade dispute between Russia and Ukraine, which might
21:59
Speaker 1: be quite important for those two countries, but it's not
22:01
Speaker 1: necessarily going to be something the world has to pay
22:03
Speaker 1: attention to. Why did we make a bit of a
22:05
Speaker 1: fuss out of it here in Bloomberg. Well, this ruling
22:08
Speaker 1: is going to have bigger implications for the Trump administration's
22:12
Speaker 1: trade agenda around the world. Essentially, Trump is saying that
22:18
Speaker 1: the steel and aluminum tariffs that it is applying on
22:22
Speaker 1: a number of countries around the world are justified for
22:25
Speaker 1: national security reasons, so that this ruling out of the
22:28
Speaker 1: w t O will invite some disputes from from around
22:32
Speaker 1: the world, from countries like Canada, China, and EU. So
22:36
Speaker 1: he's always said so. The administration has always said w
22:39
Speaker 1: T shouldn't be getting itself involved in this, and in fact,
22:42
Speaker 1: even the w D has sort of said in the
22:44
Speaker 1: past they didn't particularly want to get involved in national
22:46
Speaker 1: security things. But if you look at the ruling itself,
22:49
Speaker 1: the w two seems to have said, yeah, Russia's claim
22:52
Speaker 1: of national security concerns was right in this case. I
22:55
Speaker 1: think they were. They were They've been putting restrictions on
23:00
Speaker 1: the goods going from Ukraine to other countries but through Russia,
23:04
Speaker 1: and because of the sort of conditions relations between Russia
23:08
Speaker 1: and Ukraine. Russia had said there's national security concerns, why
23:11
Speaker 1: I was doing this, And the w t O has
23:13
Speaker 1: agreed with that. So so why should the administration really
23:16
Speaker 1: worry about it? If it's going to be on on
23:18
Speaker 1: the Donald Trump's side, well, they should worry about it
23:20
Speaker 1: because they're probably on shakier ground calling the steel and
23:24
Speaker 1: aluminum tariffs justified for national security reasons. In the Russia
23:28
Speaker 1: and Ukraine case, there was an armed conflict going on
23:31
Speaker 1: when Russia installed these these restricted trade measures. The US
23:36
Speaker 1: UH doesn't have the same argument that there's an actual
23:40
Speaker 1: military conflict going on, that we need these tariffs for
23:43
Speaker 1: national security reasons. So the definition of of of trying
23:47
Speaker 1: to prove that these are needed for national security that
23:49
Speaker 1: the administration is probably hoping if there's a looser a
23:53
Speaker 1: looser definition of basically this could open up the floodgates
23:57
Speaker 1: to for other countries to say, oh, well, we have
23:59
Speaker 1: we have national security interests in in in maintaining our
24:02
Speaker 1: steel industries. And so you can you can see the
24:05
Speaker 1: sort of domino effect that that this could have. What
24:08
Speaker 1: about what's the timing on that? Do we think if
24:11
Speaker 1: I know that sometimes things take an awful long time
24:13
Speaker 1: to go through the w t O, but are we
24:15
Speaker 1: expecting a ruling on any of these things? Nothing? Nothing
24:18
Speaker 1: in the near term. That's that That's one of the
24:21
Speaker 1: potential outcomes of this particular case is that this could
24:24
Speaker 1: be appealed and and it could be tied up for years. Um,
24:28
Speaker 1: you know, that's probably what Donald Trump would be would
24:31
Speaker 1: be hoping happens if it does actually come to the
24:35
Speaker 1: ruling for national security against the US. Now, I feel
24:38
Speaker 1: kind of sorry for the World Weld Trade Organization. They're
24:40
Speaker 1: sort of damned if they do, and damned if they don't.
24:42
Speaker 1: If they don't get involved in these kind of issues,
24:45
Speaker 1: then you can imagine, as you say, more and more
24:47
Speaker 1: countries going around them and saying everything is a national
24:50
Speaker 1: security concern, and then the w t A becomes relevant.
24:52
Speaker 1: But if it's relevant and then hated enough for President
24:56
Speaker 1: Trump to take the US out, that's a pretty bad
24:59
Speaker 1: outcome as well. Who knew that world trade negotiations could
25:02
Speaker 1: be so exciting. You must be very excited to take
25:05
Speaker 1: on your new role. Congratulations Brendan, and thank you. Thanks
25:17
Speaker 1: thanks for listening to Stephanomics. Please join us next week
25:19
Speaker 1: for another episode about the forces shaping the global economy.
25:22
Speaker 1: In the meantime, you can find us on the Bloomberg
25:24
Speaker 1: Terminal website or app or wherever you get your podcasts.
25:28
Speaker 1: We'd love it if you took the time to rate
25:30
Speaker 1: and review the show so it could reach more listeners.
25:33
Speaker 1: For more news and analysis from Bloomberg Economics, follow as
25:36
Speaker 1: Economics on Twitter. You can also follow me on at
25:39
Speaker 1: my Stephanomics. The story in this episode was reported and
25:43
Speaker 1: written by Michelle jam Risco, and Win You Win was
25:46
Speaker 1: produced by Magnus Hendrickson. And edited by Nurserene Syria and
25:50
Speaker 1: Scott Lamman, who is also the executive producer of Stephanomics
25:54
Speaker 1: Special Thanks to Dan Moss, Brendan Murray and Hung Trom.
25:58
Speaker 1: Francesca Levy is the head of bloom By podcast