Latest / Trumponomics / Is Trump Bringing an End to US Free Market Capitalism?

Transcript

Is Trump Bringing an End to US Free Market Capitalism? · Trumponomics

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. In the case of
0:08
Speaker 1: Intel is interesting, but I hope I'm going to have
0:11
Speaker 1: many more cases like it.
0:12
Speaker 2: You know, you do have stupid people say, oh, that's
0:14
Speaker 2: a shame.
0:15
Speaker 1: It's not a shame.
0:15
Speaker 2: It's called business.
0:29
Speaker 3: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
0:33
Speaker 3: and this is trump Andomics, the podcast that looks at
0:35
Speaker 3: the economic world of Donald Trump, how he's already shaped
0:39
Speaker 3: the global economy, and what on earth is going to
0:41
Speaker 3: happen next. This week, we're sparing a thought for the
0:45
Speaker 3: boardrooms of corporate America and how trump Andomics is working
0:49
Speaker 3: out for them. Donald Trump has involved himself more directly
0:53
Speaker 3: in American businesses on a wider range of issues than
0:56
Speaker 3: any president in living memory. He weighs in on social media,
1:00
Speaker 3: in the courts, and especially in the Oval office. So
1:04
Speaker 3: is it just Trump being Trump? Or will history also
1:08
Speaker 3: say this was the point where the US embraced the
1:11
Speaker 3: kind of state run capitalism previously associated with Moscow or Beijing.
1:16
Speaker 3: Just a few examples to introduce the thought. In late August,
1:19
Speaker 3: you'll remember, the President sealed the deal that gave the
1:22
Speaker 3: US government a nearly ten percent stake in Intel.
1:26
Speaker 2: Corps, celebrating that he got it the zero what this
1:29
Speaker 2: means future?
1:30
Speaker 3: Shortly after calling on social media for the CEO of
1:33
Speaker 3: that semiconductor company to resign, the President's banned American chipmakers
1:38
Speaker 3: from exporting chips to China, only to change his mind
1:41
Speaker 3: a few months later after the CEO of the chip
1:43
Speaker 3: giant in Vidia, paid the President to visit and agreed
1:47
Speaker 3: to pay the government a fifteen percent tax on those
1:50
Speaker 3: chip sales.
1:51
Speaker 2: Of the revenues that they make from those sales into
1:53
Speaker 2: the China market of the age twenty when it comes
1:55
Speaker 2: to Nvidia or AMD's equivalent once they start shipping those.
2:00
Speaker 3: Something we don't yet know is even constitutional. America's commander
2:04
Speaker 3: in chief has also weighed in on everything from changed
2:07
Speaker 3: restaurant logos and clothing commercials causing stocks to jump or
2:13
Speaker 3: sink on the basis of late night truth social posts.
2:15
Speaker 1: American Eagle shows are up twenty four percent right now,
2:19
Speaker 1: and this is after President Donald Trump came out in
2:21
Speaker 1: support of the controversial ad with Sidney Sweeney in it.
2:26
Speaker 3: And just this week, for example, he weighed in on
2:28
Speaker 3: a long standing feature of US corporate life, saying apropos
2:32
Speaker 3: of nothing in particular that companies should have to report
2:35
Speaker 3: on a six month basis their earnings, not quarterly. So
2:39
Speaker 3: ow are CEO's handling all of this? What is the
2:42
Speaker 3: Trump playbook for them? And where are all of those
2:45
Speaker 3: interventions taking corporate America American capitalism. Well we're going to
2:50
Speaker 3: get into that right now with Shelley Banjo, Bloomberg's Managing
2:54
Speaker 3: editor for Global Business in America's who spends at least
2:57
Speaker 3: part of her time talking to chief executives who come
2:59
Speaker 3: through our doors in New York. Shelley, great to have.
3:02
Speaker 1: You, Thanks for having me, And from.
3:04
Speaker 3: San Francisco, Ian King, a reporter who covers semiconductors, hardware,
3:09
Speaker 3: and telecoms for US at Bloomberg. Thanks Ian, follow that, Shelley.
3:19
Speaker 3: I noticed one of our esteemed colleagues, West Kasova wrote
3:22
Speaker 3: this week a brilliant CEO guide to getting what you
3:25
Speaker 3: want out of Trump. I mean, if someone was trying
3:28
Speaker 3: to devise MBA courses now on handling this second term
3:34
Speaker 3: of President Donald Trump, you know, seven months in, what
3:37
Speaker 3: do you think will be in that kind of class?
3:40
Speaker 1: I think the first thing is do not come empty handed.
3:43
Speaker 1: You know Wes's wonderful story, as you point out, talks
3:46
Speaker 1: about this trophy that Tim Cook has prepared for him.
3:50
Speaker 1: We had the Coca Cola CEO come in with a
3:53
Speaker 1: personalized bottle for Trump and we can sort of mark
3:56
Speaker 1: this or laugh, but the indication is I am here
3:59
Speaker 1: to kiss the ring and I want to start that
4:02
Speaker 1: from the outset, the way you would go and visit royalty.
4:05
Speaker 3: We've been talking about this over the last few days.
4:07
Speaker 3: It's not just these sort of you know, public times
4:11
Speaker 3: where you go to the White House and you lobby.
4:13
Speaker 3: It's also just the sort of never quite knowing what's
4:16
Speaker 3: going to happen next.
4:18
Speaker 1: Right exactly, because you can understand what Trump might be
4:21
Speaker 1: after on you know, sort of the policies that he's into,
4:25
Speaker 1: but as a CEO, you're sort of living in fear
4:28
Speaker 1: that you're going to be the subject of a truth
4:30
Speaker 1: social post. And that is something that businesses and CEOs
4:35
Speaker 1: are are terrified of because it's very hard to plan for.
4:40
Speaker 1: You can't really come up with a business case of
4:44
Speaker 1: what to do when this happens. The one CEO we
4:46
Speaker 1: had in last week told us that they actually did
4:49
Speaker 1: do a simulation with a board of what happens when
4:52
Speaker 1: you are the subject of a true social post. So
4:55
Speaker 1: it's a conversation they're having at the board level.
4:58
Speaker 3: And it's funny because I know people who do do
5:00
Speaker 3: some of these trainings. And obviously our social media is
5:03
Speaker 3: not a new thing, and I've heard sort of government
5:07
Speaker 3: relations and others talk about how does one handle it
5:10
Speaker 3: if there's a Twitter storm over something. You know, airlines
5:14
Speaker 3: deal with it all the time when you've got you know,
5:16
Speaker 3: some prominent person stuck in a long line all their
5:18
Speaker 3: plane gets delayed. But I suspect, you know, there's a
5:20
Speaker 3: whole different set of rules if you're dealing with the
5:22
Speaker 3: commander in chief.
5:24
Speaker 1: Absolutely, and it moves market. We saw with the Cracker
5:27
Speaker 1: Barrel example that they you know, spent a lot of
5:30
Speaker 1: time putting out a new logo didn't look all that
5:33
Speaker 1: you know, controversial at the time. Cracker Barrel, the famous
5:37
Speaker 1: US restaurant chain, faces and tense.
5:39
Speaker 2: Backlash after it tried to swap its own logo for
5:43
Speaker 2: a sleek new design and.
5:44
Speaker 1: All of a sudden, it's sort of you know, stirred
5:47
Speaker 1: up a storm saying, you know, why are you erasing
5:50
Speaker 1: our history? And so there was a huge backlash, and
5:53
Speaker 1: all of a sudden, you know, Trump is weighing and
5:56
Speaker 1: those stock prices going down, and this CEO has to
5:59
Speaker 1: make decision. Am I going to stand up for this?
6:02
Speaker 1: Am I going to you know, fall back? And in
6:04
Speaker 1: the end they cave. They said, you know, we're going
6:06
Speaker 1: to go We're going to go back to how it was.
6:09
Speaker 1: We're sorry. And if you think about that exercise, you're
6:13
Speaker 1: sitting there just developing a brand logo, you don't necessarily think, okay, well,
6:17
Speaker 1: what is the president going to think about this rand logo?
6:20
Speaker 3: We talk about audience of one, yeah.
6:22
Speaker 1: And now and now you do. And so we had
6:24
Speaker 1: the Alaska Airline CEO in a couple of days ago,
6:28
Speaker 1: and I asked him about this because they also changed
6:30
Speaker 1: their logo recently, and he said, it's not an excuse
6:33
Speaker 1: to say like we didn't think about it anymore. Like
6:35
Speaker 1: we live in this world where you have to think
6:38
Speaker 1: about that. You have to think what's going to happen
6:40
Speaker 1: if you know, the social media folks, if the president,
6:44
Speaker 1: if whoever, is going to come out against you, what
6:46
Speaker 1: is your plan? And the anxiety that he said he
6:48
Speaker 1: was feeling as he was changing his logo.
6:51
Speaker 3: So Ian We do know that the president likes doing
6:55
Speaker 3: big deals and talking to big companies who then make
7:00
Speaker 3: promises with lots of zeros attached. When it comes to
7:02
Speaker 3: investment in other things. Obviously the big tech giants, the
7:06
Speaker 3: likes of Google and Apple, you know, there's been a
7:08
Speaker 3: lot of that in that area. But also in the
7:10
Speaker 3: area that you cover, we're obviously thinking more and more
7:13
Speaker 3: these days about AI and the semiconductor chips that go
7:18
Speaker 3: into AI. You know, how has the world changed just
7:21
Speaker 3: for the companies and that that you cover in the
7:23
Speaker 3: last seven months.
7:24
Speaker 2: I mean it had already changed. We inherited an environment
7:27
Speaker 2: from the Biden administration where there was a unique level
7:30
Speaker 2: of government interest, whether that government was in Washington or Beijing.
7:35
Speaker 2: The industry had become a tool of geopolitics. What's changed
7:39
Speaker 2: under the current president is the predictability. And on the
7:44
Speaker 2: one hand, the CEOs of the companies that I believe
7:48
Speaker 2: they've cracked the code. You know, they believe that sort
7:50
Speaker 2: of flattery gets you everywhere. They have a certain pattern
7:54
Speaker 2: in terms of behavior that they exhibit. Now they will
7:56
Speaker 2: go to the White House, they will come out of
7:58
Speaker 2: the security gains, they'll look into a TV camera and
8:02
Speaker 2: they'll say the following words, which is, are we are
8:04
Speaker 2: so lucky to have this president who is uniquely interested
8:07
Speaker 2: in our industry, And then they will quote some large
8:10
Speaker 2: dollar number which frankly, quite often isn't really related to
8:14
Speaker 2: anything concrete. And that pattern appears to help them in
8:18
Speaker 2: their relationships and allow them to open doors to other things.
8:22
Speaker 2: But on the flip side of that, as Shelley said,
8:25
Speaker 2: there's an element of unpredictability that has been introduced in
8:28
Speaker 2: terms of we are one social media posting away from
8:32
Speaker 2: a massive intervention in the fate of our company, in
8:35
Speaker 2: our company's earnings and our company's profits, and I think
8:38
Speaker 2: that is definitely taking its toll.
8:41
Speaker 3: I mean, we obviously saw the kind of embarrassing example
8:43
Speaker 3: of that. The off mic moment was when Mark Zuckerberg
8:47
Speaker 3: had a Meta was kind of caught after one of
8:50
Speaker 3: these sessions in the White House where he'd announced a
8:52
Speaker 3: big number for what Meta was going to invest, and
8:56
Speaker 3: then he was heard to be saying, oh, to the President,
8:58
Speaker 3: I wasn't sure what number to use. I hope that
9:00
Speaker 3: was all right right now, which sort of goes to
9:09
Speaker 3: this choreography that people are engaging with and not necessarily
9:13
Speaker 3: a great attention to what the actual number is, at
9:16
Speaker 3: least from from a business standpoint. But I guess the
9:18
Speaker 3: most extreme example ian for those who didn't haven't followed
9:22
Speaker 3: every turn, was where we ended up, where we started
9:25
Speaker 3: and where we ended up with the chief exec of Intel, Bhutan.
9:30
Speaker 3: So just talk us through what happened to him, because
9:32
Speaker 3: there was a sudden true social post about him saying
9:35
Speaker 3: he must be conflicted and must resign, and then the
9:38
Speaker 3: President said there is no other solution to this problem,
9:41
Speaker 3: but then it turned out that there was.
9:43
Speaker 2: Yeah, this was an alarming moment I think in corporate history.
9:48
Speaker 2: This gentleman was brought in to rescue Intel. He is
9:51
Speaker 2: of you know, he's originally Malaysia, he's an American citizen.
9:55
Speaker 2: Now he's of Chinese background, and there was a political
9:59
Speaker 2: so of campaign to try to undermine him because of
10:02
Speaker 2: his investment links to China, links that we don't even
10:06
Speaker 2: know exist anymore. But it was certainly historically was a case.
10:09
Speaker 2: And what happens as the President saw that seized upon
10:13
Speaker 2: it and immediately jumped to the conclusion that Bhutan, the
10:16
Speaker 2: CEO of Intel, a publicly traded company, was in fact
10:19
Speaker 2: conflicted and should step down. That was a call he
10:22
Speaker 2: made a week later. Lit Bhutan is in the White House.
10:25
Speaker 2: Everything is great, and this chipsacked money that had been
10:29
Speaker 2: assigned to Intel under the Biden administration is suddenly switched
10:34
Speaker 2: into shareholding stake for the US government in Intel. So
10:38
Speaker 2: I mean, how do you follow that, how do you
10:40
Speaker 2: plan for that? How do you run a company with
10:43
Speaker 2: that kind of set of possibilities in the air. And
10:46
Speaker 2: the answer is you don't. You just react, And that's
10:49
Speaker 2: not a way to run a company.
10:51
Speaker 3: There's been some Republicans and certainly some sort of pro
10:57
Speaker 3: market conservative commentator who've raised both eyebrows at that deal.
11:04
Speaker 3: But I think it's very striking how little opposition there's
11:08
Speaker 3: been to it or sort of concerns about it. And
11:10
Speaker 3: I guess one has to just for completeness. I mean
11:13
Speaker 3: in video is the other area, the other big deal
11:16
Speaker 3: that the President has made, which financially is probably even
11:20
Speaker 3: more significant for the company We're talking about much bigger numbers,
11:24
Speaker 3: but also could be quite significant strategically for the US.
11:28
Speaker 2: Again, it's geopolitics influencing the US policy. The underlying desire
11:33
Speaker 2: is to prevent China from getting access to advanced semiconductors,
11:37
Speaker 2: because we believe in the US that is against national
11:41
Speaker 2: security interests. But somehow that's become negotiable. Somehow that has
11:45
Speaker 2: become the subject of a real estate deal. And if
11:49
Speaker 2: in Video and AMD, which is a smaller company doing
11:52
Speaker 2: roughly the same thing, are allowed to send a certain
11:56
Speaker 2: type of chip to the China, now a reduced capability chip,
12:00
Speaker 2: then they can do that, but with the provider that
12:02
Speaker 2: they give the US government effectively a kickback fifteen percent
12:06
Speaker 2: of that and as a whole, as you alluded to
12:08
Speaker 2: us or concern about whether this is even legal. We
12:11
Speaker 2: spoke with the CFO of Nvidia, so this is the
12:14
Speaker 2: world's largest publicly traded corporation. We asked her about how
12:18
Speaker 2: are you going to pay this fifteen percent and she said,
12:20
Speaker 2: I'm not there's no rules, there's nothing that. Effectively, what
12:24
Speaker 2: she said was, this is illegal. If I do this,
12:26
Speaker 2: I'm breaching my fiduciary duty. Can't do it until they
12:29
Speaker 2: give me a set of rules to do it. Those
12:30
Speaker 2: rules have not emerged, so right now it's not going
12:33
Speaker 2: to happen.
12:43
Speaker 3: Shelly, I do want to get back to you because
12:44
Speaker 3: something that strikes me when you think about the kind
12:47
Speaker 3: of training that anyone who gets to the top of
12:50
Speaker 3: a company will have had, either implicitly or explicitly. I
12:53
Speaker 3: was sort of thinking about it as before we started this,
12:56
Speaker 3: the implicit messaging has always been you want to do
13:01
Speaker 3: everything you can to ingratiate yourself with the government whatever
13:04
Speaker 3: country you are, but without it being evident and without
13:09
Speaker 3: necessarily calling attention or raising any question marks. Whereas it
13:13
Speaker 3: seems that this is the opposite in this administration. Whatever
13:15
Speaker 3: you do to ingratiate yourself has to be completely open
13:19
Speaker 3: and ideally you know, in the Oval Office with cameras rolling.
13:23
Speaker 3: That is quite a shift, And I just wonder, you know,
13:26
Speaker 3: are there even sort of legal worries in these boardrooms
13:30
Speaker 3: about needing to really very publicly engage in sort of
13:36
Speaker 3: quid pro quos with the federal government.
13:39
Speaker 1: Yeah. I mean the most striking example of that has
13:42
Speaker 1: obviously been Elon Musk and Tesla and sort of how
13:46
Speaker 1: close you get to the president where you're literally in
13:50
Speaker 1: the White House making and helping informing these decisions. And
13:53
Speaker 1: we saw the impact on Tesla people stopped buying Tesla cars.
13:57
Speaker 1: You can sort of negotiate how much of that had
14:02
Speaker 1: to do with his association with Trump, how much it
14:04
Speaker 1: had to do with other things. But you know, even
14:07
Speaker 1: we had the board chair of Tesla into Bloomberg this
14:12
Speaker 1: or this last week, and you know, even she said,
14:15
Speaker 1: as part of the negotiations with Musk for his pay package,
14:18
Speaker 1: like we would like to see him focus on Tesla,
14:21
Speaker 1: And so, you know, it does sort of raise the
14:23
Speaker 1: question of, you know, how much is it you're just
14:27
Speaker 1: doing your job as CEO includes now managing the emotions
14:30
Speaker 1: and the whims of the US President, and how close
14:33
Speaker 1: is too close and how far is too far? I mean,
14:36
Speaker 1: you haven't really seen a consumer backlash quite like at
14:40
Speaker 1: Tesla at other companies, and so I think some Americans,
14:46
Speaker 1: consumers and probably consumers around the world are sort of
14:49
Speaker 1: inerrod to it a little bit. They understand that this
14:51
Speaker 1: is part of the job. I think it's also a
14:54
Speaker 1: question of are people really going to do what they
14:57
Speaker 1: say that they're going to do, because I think a
14:58
Speaker 1: hallmark of the Trump press tency is We're throwing a
15:01
Speaker 1: lot of big numbers at you, a lot of big stuff,
15:03
Speaker 1: a lot of big threats. You don't know which ones
15:05
Speaker 1: are gonna come true. This week, you had the TikTok
15:09
Speaker 1: deal come back into focus. I remember when I was
15:13
Speaker 1: living in Hong Kong in twenty eighteen, twenty nineteen, twenty twenty,
15:17
Speaker 1: you know, the first Trump presidency, we were talking about this,
15:20
Speaker 1: and so, you know, fast forward to twenty twenty five,
15:22
Speaker 1: we're still talking about the same thing that Tramp was
15:25
Speaker 1: talking about. We're still talking about tariffs. Like there's some
15:29
Speaker 1: things that just haven't happened yet. So how do you know,
15:31
Speaker 1: as the CEO, which ones to take seriously and which
15:33
Speaker 1: ones you don't? And I think the answer has become
15:35
Speaker 1: as Ian sort of alluded to, like you have to
15:37
Speaker 1: take them all seriously. But I don't know, you know,
15:40
Speaker 1: how much do consumers really get impacted by that?
15:43
Speaker 3: You know, A part of the story of American capitalism
15:47
Speaker 3: was always sort of slightly economical with the truth. You know,
15:51
Speaker 3: there has always been an enormous amount of subsidies and lobbying.
15:56
Speaker 3: When I worked in the US Treasury, you know, having
15:58
Speaker 3: been brought up in the UK, the half from American,
16:00
Speaker 3: I was sometimes surprised by the sort of assumption that businesses,
16:06
Speaker 3: the sort of the closeness of the lobbying and the
16:08
Speaker 3: closeness of the business relationships was certainly something that was
16:11
Speaker 3: different from the UK and seemed to be part of
16:14
Speaker 3: the American tradition that you'd have businesses weighing in very
16:17
Speaker 3: directly on you know, deals that were being done and
16:19
Speaker 3: other things, and there was no question of any wrongdoing.
16:22
Speaker 3: It was just like the way things happened. So, I mean,
16:25
Speaker 3: given that, is it surprising that you haven't had more
16:28
Speaker 3: businesses sort of say, hang on a minute, what kind
16:31
Speaker 3: of capitalism is this?
16:33
Speaker 1: For sure? And we're seeing that right now build up
16:35
Speaker 1: all these companies, build up their presences in Washington. They're
16:38
Speaker 1: hiring the firms that are aligned with Trump and people
16:41
Speaker 1: who had come out of the Trump one point zero
16:44
Speaker 1: administration who have now started out their own lobbying firms,
16:47
Speaker 1: and they're coming out and saying that outright that we're
16:49
Speaker 1: not hiding. This is what it means to be a
16:51
Speaker 1: good CEO in this moment in twenty twenty five. And
16:54
Speaker 1: so is our companies getting closer with the US government
16:58
Speaker 1: or are the administration's goals Probably I'm not sure if
17:02
Speaker 1: any of the consumers or investors seemed to care at
17:06
Speaker 1: this moment. So far, we haven't seen in some sort
17:08
Speaker 1: of big outcry or anything like that.
17:10
Speaker 3: I guess so far we've mainly seen stock prices go
17:13
Speaker 3: up rather than down, which makes a difference exactly Ian
17:16
Speaker 3: if we just think about the potential long term implications
17:20
Speaker 3: of this. And I've seen that there's been a debate
17:22
Speaker 3: around this, some saying that America is embracing for better
17:27
Speaker 3: or worse and more of a kind of Chinese style
17:29
Speaker 3: state run capitalism. Other people I saw Michael Strain, the
17:33
Speaker 3: director of Economic policy Studies at the American Enterprise Institute, said,
17:36
Speaker 3: you know, this is Trump being Trump. This is opportunism
17:39
Speaker 3: and a sort of thrill about having deals being done
17:43
Speaker 3: from Donald Trump. It's not a big ideological shift. I mean,
17:46
Speaker 3: even those two examples that you and I just talked about,
17:50
Speaker 3: taking a strategic share in an industry, a US company
17:56
Speaker 3: that makes something chips that we know is going to
17:58
Speaker 3: be sort of central to the future of the global economy,
18:02
Speaker 3: it doesn't seem of all the things that Donald Trump's doing,
18:06
Speaker 3: that didn't seem to me like the craziest thing. And
18:08
Speaker 3: it certainly is no different from some countries you know
18:10
Speaker 3: that aren't China, like France, for example.
18:13
Speaker 2: Yeah, I mean when you unpack that there are a
18:15
Speaker 2: number of elements which I think talk to your point here.
18:17
Speaker 2: The first point is that he inherited and an apparatus
18:22
Speaker 2: called the Chips Act from the Biden administration, and that
18:25
Speaker 2: was the kind of Sauz Korea and Taiwanese development, state
18:28
Speaker 2: directed capital development. Hey, we will give you money as
18:32
Speaker 2: a company if you do this certain type of thing.
18:35
Speaker 2: And that was the situation that Intel and a lot
18:37
Speaker 2: of its peers were in. What Trump said all along
18:40
Speaker 2: was I don't like this. This isn't market capitalism, this
18:43
Speaker 2: isn't the kind of thing that the US government should
18:45
Speaker 2: be doing. What we should do here is and then
18:49
Speaker 2: turn this into a loan. So what there was a
18:51
Speaker 2: lot of to and fro about this, But what he
18:53
Speaker 2: did was turn it into basically taking a stake and
18:56
Speaker 2: tried to sell that to his constituents, the US tax
19:00
Speaker 2: players as hey, this is a win for us. We've
19:02
Speaker 2: got something. This is a transaction. This is back to
19:05
Speaker 2: that real estate deal mentality. So it was a complicated
19:09
Speaker 2: situation there. The other side of it is the geopolitical thing.
19:12
Speaker 2: There's one through line through the first Trump administration, the
19:15
Speaker 2: Baden administration, and the current Trump administration, which is the
19:19
Speaker 2: concern the geopolitical rivalry with China, and that is a constant,
19:25
Speaker 2: that is something which has only increased. The only wrinkle
19:28
Speaker 2: has been hold on them and it maybe we'll let
19:31
Speaker 2: in video them, We'll let AMD give the Chinese some
19:34
Speaker 2: of these old type chips, and that's the only wrinkle.
19:37
Speaker 3: Well, and you say it's the only wrinkle. I mean,
19:39
Speaker 3: we've discussed it in the past on this show with
19:42
Speaker 3: from of our geoeconomists, at least one of whom was
19:45
Speaker 3: very heavily involved in the Chips Act in the Biden
19:48
Speaker 3: National Security Council. And I think that was the one
19:51
Speaker 3: that everyone has found very hard to square. If you
19:54
Speaker 3: think about the objectives of the first Trump administration highlighting
19:58
Speaker 3: the risk of China, the way that Biden's administration kind
20:02
Speaker 3: of institutionalized that and to some extent developed it in
20:05
Speaker 3: the form of the Chips Act and some of the
20:07
Speaker 3: export controls that they put on, and the way that
20:10
Speaker 3: continued in the first few months of the Trump administration
20:13
Speaker 3: with the initial ban on those chip sales. The reversal
20:17
Speaker 3: of that, you might say, just for the sake of
20:19
Speaker 3: a few bucks for the federal government, That's the one
20:23
Speaker 3: that people find hard to square in the kind of
20:25
Speaker 3: policy community. Is that also true in Silicon Valley or
20:28
Speaker 3: they just think, oh great.
20:29
Speaker 2: No, I think it's back to what we were talking
20:31
Speaker 2: about earlier, which is the ability of CEOs to say
20:35
Speaker 2: the right thing to appear at the right time. And
20:38
Speaker 2: what has effectively happened here is that the Trump administration
20:41
Speaker 2: has adopted the language and the thinking of In Video Corporation.
20:46
Speaker 2: Here in Video has said, Look, these tips are so
20:48
Speaker 2: old now they don't matter. We're not even sure that
20:50
Speaker 2: the Chinese want them. Why can't we just send them
20:53
Speaker 2: there anyway and get that bit of money that we'll
20:55
Speaker 2: get for them, and we'll use that money to make
20:57
Speaker 2: America great again by paying for our Otherwise, if we
21:01
Speaker 2: don't do this, we't have any presence in China. They
21:03
Speaker 2: do their own thing, and we've lost completely. And they've
21:06
Speaker 2: constructed this logical framework that kind of has the cogs
21:10
Speaker 2: have mashed with some of the geopolitical concerns, some of
21:14
Speaker 2: the free market concerns that exist around this intervention and
21:17
Speaker 2: made it work. And whether it's Howard Lutnik or others
21:21
Speaker 2: have just decided to adopt this and allow this to happen,
21:24
Speaker 2: and then you have the man at the top who said, well,
21:26
Speaker 2: give me fifteen percent and you're okay. That I think,
21:29
Speaker 2: and the way it was done has caused concern, But
21:33
Speaker 2: the fundamental logic, I think a lot of the even
21:36
Speaker 2: the hawks, are like, well, okay, I can see.
21:38
Speaker 3: That, Shelley. I wonder whether anyone has observed that to you.
21:42
Speaker 3: I mean, there's a lot of deals that aren't really deals.
21:44
Speaker 3: They're not deals in the kind of corporate sense of oh,
21:47
Speaker 3: there's a bit of paper or many many pieces of
21:49
Speaker 3: paper and lawyers in the room and kind of clear terms.
21:54
Speaker 3: Sometimes they're unwritten. Sometimes we find in some of the
21:56
Speaker 3: trade quote unquote deals that in the case of Vietnam,
22:00
Speaker 3: for example, there was a profound disagreement about what the
22:02
Speaker 3: actual deal was after it was supposed to have been done.
22:05
Speaker 3: That is part of the issue, isn't it that this
22:06
Speaker 3: is these deals are sort of semi deals until the
22:10
Speaker 3: next deal.
22:10
Speaker 1: Yeah, they're squishy. And I think going back to your
22:12
Speaker 1: original question of what is chapter one, two, three, four
22:15
Speaker 1: of the Trump playbook, coming up with a big number
22:19
Speaker 1: that can't necessarily be tracked and promising it to the
22:22
Speaker 1: Trump administration probably deserves a chapter in that playbook, because
22:27
Speaker 1: you know, you look at a company like Hyundai, you
22:29
Speaker 1: look at these drug makers Johnson and Johnson. They're all
22:32
Speaker 1: coming up with these numbers and they're putting it forth
22:34
Speaker 1: and I'm sure that they can justify it. But some
22:37
Speaker 1: of these numbers account for factories they built five years ago,
22:41
Speaker 1: inspired by Trump, maybe in Trump one point I zero.
22:44
Speaker 1: So they're squishy numbers, they're squishy deals. The examples that
22:48
Speaker 1: Ian site are a little bit more specific, but a
22:51
Speaker 1: lot of these manufacturing commitments that these companies have done,
22:54
Speaker 1: and these ribbon cutting type scenarios are not some things
22:58
Speaker 1: that you can necessarily try and really hold my accountable.
23:02
Speaker 2: Shit.
23:03
Speaker 3: I don't want to put you on the spot, but
23:04
Speaker 3: just before we end, it occurs to me that before
23:06
Speaker 3: you came back to New York and when you and
23:08
Speaker 3: I first met in Hong Kong, and we tend to
23:10
Speaker 3: think that this is more of a quote unquote Asian
23:12
Speaker 3: way of doing things, you know, to have more of
23:14
Speaker 3: these kind of backroom deals and state government sort of
23:18
Speaker 3: strategic involvement. Does it feel similar or does it feel
23:22
Speaker 3: like something completely unique to Donald Trump.
23:26
Speaker 1: It's such astute question because when I was sort of
23:30
Speaker 1: reflecting on this idea of is this just the now,
23:33
Speaker 1: Is this the CEO saying I need to get through this,
23:35
Speaker 1: I need to move on to the next thing, or
23:37
Speaker 1: is there lasting impact? I think I came to the
23:40
Speaker 1: conclusion that the lasting impact is that the window can shift,
23:44
Speaker 1: and that you know, if Trump pushes the envelope. Now,
23:47
Speaker 1: mixing my metaphors a little bit, but if Trump push
23:50
Speaker 1: the pushes on the pushes the one you know right exactly,
23:54
Speaker 1: then then it sort of like opens it up for
23:57
Speaker 1: anything to happen. And that's sort of what had happened
24:00
Speaker 1: with China in so many different ways over the last
24:03
Speaker 1: you know, number of decades, right, You start to normalize
24:07
Speaker 1: things little by little by little by little, and then
24:09
Speaker 1: you look back and you see, wow, this actually this
24:11
Speaker 1: whole thing has created monumental shift.
24:15
Speaker 3: I wonder ian we think of the tech world now
24:18
Speaker 3: and semiconductors in particular, as being something that is moving
24:21
Speaker 3: incredibly fast and potentially decisions made now could be affecting,
24:28
Speaker 3: you know, the whole path of AI as it sort
24:31
Speaker 3: of takes hold of our economies and our societies. Do
24:35
Speaker 3: you think there are some lasting shifts here or is
24:38
Speaker 3: it going to be a sort of a kind of
24:40
Speaker 3: Trumpian fever dream.
24:42
Speaker 2: No. I think lasting shifts are in the all thing,
24:44
Speaker 2: that there is an absolute policy in place, whether it's
24:47
Speaker 2: in Beijing, whether it's in Washington, whether it's in this
24:50
Speaker 2: whole or Taipei, and that structuring things in a way
24:54
Speaker 2: that those economies and those sets of capabilities will succeed.
24:57
Speaker 2: I lived in career for eleven years. Korean companies, they
25:02
Speaker 2: succeeded because the government decided that semiconductors were important. Taiwan
25:09
Speaker 2: t SMC, they succeeded partially because taipaid made that a
25:13
Speaker 2: national priority. That's happening in the US, and that's unprecedented
25:17
Speaker 2: obviously in many respects for the US. How it's done,
25:20
Speaker 2: whether it's done in an organized fashion, whether it's done
25:22
Speaker 2: in a logical fashion and a consistent fashion, to your point,
25:26
Speaker 2: is really important because guess what, the chips that are
25:29
Speaker 2: being designed today, the TIC chip technology that is being
25:32
Speaker 2: designed today, won't really be relevant for at least two, three, four,
25:36
Speaker 2: five years. And even though the industry is moving very quickly,
25:40
Speaker 2: you are basically plotting your path towards success or disaster
25:44
Speaker 2: right now. So again, this mixture of countervailing forces on
25:50
Speaker 2: the one hand, yes, interest is good, Yes, capital is good. Yes,
25:54
Speaker 2: using restrictions is good. On the flip side of it,
25:57
Speaker 2: inconsistency is also kind of an anathem so the chip industry,
26:01
Speaker 2: because it's such a difficult thing to do and it
26:03
Speaker 2: plays out over such a long period.
26:06
Speaker 3: Well, I think that is the point we've often reached
26:08
Speaker 3: in these conversations. You know, in principle, quite a lot
26:11
Speaker 3: happening here that could well make sense for America, for
26:15
Speaker 3: the world, but the way it's being done and the
26:17
Speaker 3: exact decisions raising some question marks and certainly changing the
26:21
Speaker 3: way corporate America thinks about its relationship with the government.
26:26
Speaker 3: Shelly Banjo, Ian King, thank you so much, thank you,
26:30
Speaker 3: thank you, thanks for listening to trump Andomics from Bloomberg.
26:34
Speaker 3: It was hosted by me Stephanie Flanders and I was
26:37
Speaker 3: joined this week by Bloomberg's Shelley Banjo and Ian King.
26:41
Speaker 3: Trump Andomics was produced by Summer Sadi and Moses and
26:44
Speaker 3: Dam with help from Amy Keen and special thanks this
26:47
Speaker 3: week to Magnus Henrickson. Sound design is by Blake Maples
26:51
Speaker 3: and Kelly Garry and Sage Bowman is Bloomberg's head of Podcasts.
26:56
Speaker 3: To help others find Trump and nomics. Please rate and
26:58
Speaker 3: review it highly Where for you listen