Latest / Bloomberg Intelligence / Trump’s Exact Tack On Tariffs Still Cloudy: Bloomberg’s Webber

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Trump’s Exact Tack On Tariffs Still Cloudy: Bloomberg’s Webber · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Bramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Traders
• 0:33
  Speaker 1: have had some time to digest the possibility of tariffs
• 0:37
  Speaker 1: by the US on steel and aluminum imports. The results
• 0:41
  Speaker 1: inconclusive and here to help us understand what's at stake,
• 0:44
  Speaker 1: what we need to look for going forward, and how
• 0:47
  Speaker 1: widely this could turn into a trade war. As Caitlin Webber,
• 0:51
  Speaker 1: government analyst focusing on US trade policy for Bloomberg Intelligence, Caitlin,
• 0:56
  Speaker 1: help us, where are we at this point with these
• 0:59
  Speaker 1: teriff What has the response been like and how severe
• 1:02
  Speaker 1: are they? Well? The response U after our President Trump
• 1:06
  Speaker 1: announced that he UM intends to impose these tariffs on
• 1:10
  Speaker 1: imported steel and tim percent tariffs and imported aluminium was
• 1:14
  Speaker 1: really severe and dramatic. UM both from UM, you know
• 1:19
  Speaker 1: US downstream UM consumers, industries, everything from automakers to UM
• 1:27
  Speaker 1: even beverage makers were really UM negative in saying that
• 1:31
  Speaker 1: these would um, you know, increase their costs and and
• 1:35
  Speaker 1: and eventually increased costs for consumers. There's also a really
• 1:38
  Speaker 1: negative reaction from trading partners who would likely be targeted
• 1:42
  Speaker 1: by UM these these measures, saying that they were UM
• 1:46
  Speaker 1: immediately preparing some sort of retaliation and response. UM. But
• 1:50
  Speaker 1: at this point, you know, we really need to look
• 1:52
  Speaker 1: for the details and what the tariffs will actually look like.
• 1:57
  Speaker 1: Trump yesterday yesterday was very very dramatic, but also vague.
• 2:01
  Speaker 1: We need to see if they're going to be any
• 2:02
  Speaker 1: countries excluded. You know, is you going to give any
• 2:05
  Speaker 1: indication of how long these are going to apply? And
• 2:07
  Speaker 1: these are going to be some sort of process where
• 2:09
  Speaker 1: companies or countries can apply for exemptions from the tariffs. Caitlin,
• 2:14
  Speaker 1: Our trade wars as easily one, as President Trump tweeted today.
• 2:20
  Speaker 1: Uh uh no, I I would not say so. I mean,
• 2:23
  Speaker 1: there's certainly winners and losers, but trade in the twenty
• 2:27
  Speaker 1: one century is not a zero sum game. Uh So, yeah,
• 2:30
  Speaker 1: you know, you could certainly see the U. S. Steel
• 2:32
  Speaker 1: and aluminum producers being winners from this sort of action,
• 2:35
  Speaker 1: but losers would you know, be all of those US
• 2:38
  Speaker 1: industries that are importing those products and then ultimately consumers.
• 2:43
  Speaker 1: And then that doesn't even you know, speak to the
• 2:45
  Speaker 1: U S exporters that aren't even sort of part of
• 2:48
  Speaker 1: this fight, you know, U S exporters and agriculture um,
• 2:51
  Speaker 1: you know, motorcycles, bourbon that could be targeted in other
• 2:54
  Speaker 1: countries because of this. So, you know, trade is is.
• 2:58
  Speaker 1: You know, it's really not a zero sum game. It's
• 3:00
  Speaker 1: it's really not clear that it can be easily one,
• 3:04
  Speaker 1: as Trump um seemed to portroy this morning. You know, Caitlin,
• 3:07
  Speaker 1: one thing I was struck by was how President Trump's
• 3:11
  Speaker 1: proclamation goes against UH decades of GOOP policies. And indeed
• 3:17
  Speaker 1: a number of Republican Congress members have come out and
• 3:21
  Speaker 1: been vocal in their opposition to these tariffs. What recourse
• 3:25
  Speaker 1: do they have? Yeah, it was really jarring yesterday to
• 3:28
  Speaker 1: see a Trump's traditional allies and Congress come out very
• 3:32
  Speaker 1: strongly against these tariffs, saying they're they're seally a giant
• 3:35
  Speaker 1: talks on consumers. But you know, unlike the solar tariffs
• 3:40
  Speaker 1: and the washing machine tariffs that came out in January,
• 3:42
  Speaker 1: Congress really doesn't have much resource or excuse recourse on
• 3:46
  Speaker 1: this issue. I mean, they could hypothetically pass a law
• 3:50
  Speaker 1: that would UM undo any tariffs, or even they could
• 3:54
  Speaker 1: pass a law that would remove the president's authority UM
• 3:57
  Speaker 1: to impose these what are called sexual and two thirty
• 4:00
  Speaker 1: two tariffs. But then you know those are going to
• 4:02
  Speaker 1: be obviously vetoed by Trump and they don't have the
• 4:05
  Speaker 1: votes to override those videos because many Democrats support these
• 4:09
  Speaker 1: tariffs kind of ironically, So at this point, what they
• 4:12
  Speaker 1: can really do is continue to complain and continue to
• 4:15
  Speaker 1: to lobby the president UM not unlike sort of what
• 4:17
  Speaker 1: they're doing at the same time on gun potential gun restrictions.
• 4:21
  Speaker 1: But you know, they're they're their hands are kind of
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  Speaker 1: tied in terms of legislative solutions here, Caitlin. You know,
• 4:28
  Speaker 1: you talk about gun policies, and we hear one thing
• 4:31
  Speaker 1: out of President Trump, and then we hear another thing
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  Speaker 1: after he speaks with the n r A or I'm
• 4:36
  Speaker 1: just trying to understand who given that, who's in charge
• 4:39
  Speaker 1: here with the trade discussion, who's writing this policy? You know,
• 4:43
  Speaker 1: I think that changes from day to day, and it
• 4:46
  Speaker 1: seems like, you know, whoever maybe is in the lead
• 4:50
  Speaker 1: UM you know, on one particular day, is is the
• 4:53
  Speaker 1: person who has the most influence, And it seems like
• 4:55
  Speaker 1: maybe in the past couple week that weeks, that person
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  Speaker 1: is Peter Navarro, UM, who has getting promoted to be
• 5:01
  Speaker 1: Special Assistant to the President on trade, who's who's very
• 5:05
  Speaker 1: critical of China, UM, very much critical of free trade agreements. UM.
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  Speaker 1: But we you know, we've seen so much flux and
• 5:14
  Speaker 1: Trump's trade agenda over the past year. UM, So I
• 5:17
  Speaker 1: don't think that we're done seeing that those that that change.
• 5:22
  Speaker 1: Even in terms of these tariffs which he said he's
• 5:24
  Speaker 1: going to finalize as of next week. I think it's
• 5:27
  Speaker 1: very likely that UM, other parties in the White House,
• 5:31
  Speaker 1: like Gary Cohen are going to appeal to him successfully
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  Speaker 1: to have some some limits here that would really narrow
• 5:37
  Speaker 1: the impact of those once they're they're ultimately applied. Caitlin,
• 5:41
  Speaker 1: just about the twenty seconds, any aty bitty movement on
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  Speaker 1: a to renegotiations. You know, these steel and aluminium tariffs,
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  Speaker 1: if they do not exempt Canada and Mexico would not
• 5:52
  Speaker 1: be very helpful at all. There hasn't been much movement.
• 5:55
  Speaker 1: There's actually uh talks abom on right now. This this
• 5:57
  Speaker 1: week and they've been completely overstandoed are this tariff talk?
• 6:01
  Speaker 1: I think that they're going to wait and see what
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  Speaker 1: happens next week when these when you steal aluneum tariffs
• 6:05
  Speaker 1: come out, and if those are very punitive and don't
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  Speaker 1: exclude NAFTA partners, we could see NAFTA talks really grind
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  Speaker 1: to a hold. I think much appreciate it as always.
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  Speaker 1: Caitlin Webber is our government analysts for US Trade Policy
• 6:16
  Speaker 1: for Bloomberg Intelligence, joining us from our Bloomberg ninety nine
• 6:20
  Speaker 1: one studios in Washington, d C. And you can follow
• 6:23
  Speaker 1: Caitlin Webber on Twitter at Caitlin Webber. Using social media
• 6:41
  Speaker 1: in order to spread disinformation, it is a topic of
• 6:45
  Speaker 1: the day and here to help us understand a little
• 6:48
  Speaker 1: bit more about it is David Garretty. He is the
• 6:49
  Speaker 1: chief executive of g v A Research and he can
• 6:53
  Speaker 1: be followed on Twitter at g v A Research. David,
• 6:58
  Speaker 1: let's first have you set out what do you believe
• 7:02
  Speaker 1: to be the current problem and what are some of
• 7:04
  Speaker 1: the solutions. I mean, the problem is is that if
• 7:07
  Speaker 1: we look at the United States of America, the social
• 7:09
  Speaker 1: media companies which we know that Twitter, Facebook, YouTube, which
• 7:14
  Speaker 1: is part of Google now known as Alphabet pretty much
• 7:17
  Speaker 1: have all scaled up and have not gotten to a
• 7:19
  Speaker 1: point where, according to some surveys, UH respondents are using
• 7:24
  Speaker 1: Facebook or other social media feeds as their primary news source. Okay, Now,
• 7:28
  Speaker 1: as we understand that law binding organizations such as this network, UH,
• 7:32
  Speaker 1: you know, there are regulatory requirements that have to be met,
• 7:36
  Speaker 1: and from the standpoint if there's political advertising, there has
• 7:39
  Speaker 1: to be attribution. This has to be made known beforehand,
• 7:43
  Speaker 1: and you know, there's also a responsibility in some respects
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  Speaker 1: to make sure that there are verifiable facts that are
• 7:48
  Speaker 1: being communicated. Uh. We certainly understand that if we look
• 7:52
  Speaker 1: at organizations perhaps such as Twitter, that at least fifteen
• 7:55
  Speaker 1: percent if not more, of the accounts on Twitter, by
• 7:58
  Speaker 1: some estimates, are are not backed by real individuals, that
• 8:02
  Speaker 1: these are in effect what are called bots, and to
• 8:05
  Speaker 1: the extent that we have bots that are being manipulated
• 8:09
  Speaker 1: or being programmed in such a way as to take
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  Speaker 1: UH news which is not factually supported, which is politically biased,
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  Speaker 1: without attribution, and communicating those across um millions of people
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  Speaker 1: who are using Facebook and other social media we lead
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  Speaker 1: to very very successful disinformation and disinformation and an election
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  Speaker 1: contest either leads people to have a skewed point of view,
• 8:32
  Speaker 1: a divisive point of view, or just to check out
• 8:34
  Speaker 1: and not vote and participate. Whatsoever serves to undermine we
• 8:38
  Speaker 1: might argue, the liberal democratic process and of our society
• 8:42
  Speaker 1: which has nurtured these companies. So the question is do
• 8:46
  Speaker 1: we need social media or form I think the answers yes. Okay, So,
• 8:49
  Speaker 1: if say Twitter and Facebook were treated as news organizations,
• 8:55
  Speaker 1: how much would that cut into their bottom line and
• 9:00
  Speaker 1: how would that transform their business model? Well, I mean,
• 9:03
  Speaker 1: they're making the argument that they're protected by the First Amendment.
• 9:06
  Speaker 1: They're making the argument that they're protected by free speech
• 9:09
  Speaker 1: of the Commons. But as we note and you point out,
• 9:13
  Speaker 1: they are supported by advertising sufficiently, so this might arguably
• 9:16
  Speaker 1: be seen as being more of a form of commercial
• 9:18
  Speaker 1: free speech. If they needed to adopt the standards of
• 9:22
  Speaker 1: other news organizations, certainly their costs of doing business would
• 9:27
  Speaker 1: be going up. But clearly, given the scale that they
• 9:29
  Speaker 1: have attained, they have the resources to be able to
• 9:32
  Speaker 1: sustain those overhead costs in order to be better participants
• 9:36
  Speaker 1: in our liberal democratic system. But what are those costs?
• 9:39
  Speaker 1: The costs arguably would be from a staffing standpoint, We've
• 9:42
  Speaker 1: already had indications from Facebook as well as also Google
• 9:46
  Speaker 1: that they would be putting people on their payroll uh
• 9:49
  Speaker 1: twenty thousand. I think, in the case of Facebook, in
• 9:52
  Speaker 1: order to do a better job of policing the content
• 9:56
  Speaker 1: that was coming across of their platform. Uh. We haven't
• 9:59
  Speaker 1: yet seen evidence that those individuals have been hired. So
• 10:04
  Speaker 1: we may be looking at something which is really lip service,
• 10:07
  Speaker 1: and that the dollars that are being provided by these
• 10:09
  Speaker 1: companies are going more towards lobbying Congress to try to
• 10:13
  Speaker 1: delay or postpone that day of inevitability. David, the Federal
• 10:18
  Speaker 1: Communications Commission is able to designate specific entities as public utilities,
• 10:27
  Speaker 1: and I believe the telephone companies used to be designated
• 10:31
  Speaker 1: maybe still aren't designated in that way because of the
• 10:34
  Speaker 1: reach at the time of a T and T when
• 10:37
  Speaker 1: there was no competition, uh, And there's a format for
• 10:41
  Speaker 1: that to take place. Is it possible that the f
• 10:44
  Speaker 1: c C would be able to do that with these
• 10:47
  Speaker 1: kinds of companies and that they would then have to
• 10:52
  Speaker 1: be treated in a similar way. It's entirely possible based
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  Speaker 1: upon historical president precedent. But if we were to look
• 10:59
  Speaker 1: at there and staffing of the Federal Communications Commission under
• 11:03
  Speaker 1: a jet Pie who certainly has seen fit to repeal
• 11:06
  Speaker 1: net neutrality and certainly has been implicated in terms of
• 11:09
  Speaker 1: taking UH money not only from Sinclair Broadcasting with respect
• 11:14
  Speaker 1: to the expansion of their efforts in terms of local radio,
• 11:16
  Speaker 1: but also taking gifts out right from the National Rifle
• 11:19
  Speaker 1: Association or n r A. UH. One might argue that
• 11:23
  Speaker 1: we're not really with a good staffing to make that happen.
• 11:27
  Speaker 1: So we had earlier on the show. Today we had
• 11:29
  Speaker 1: Randall Rothenberg, the chief executive officer of the Interactive Advertising Bureau,
• 11:34
  Speaker 1: on the show, and he was saying that UH, that
• 11:37
  Speaker 1: it would actually be beneficial to have some government regulation
• 11:42
  Speaker 1: if they were looking for perhaps a way to certify
• 11:48
  Speaker 1: the voices on the web or basically have basically something
• 11:51
  Speaker 1: like a fingerprint or identifier UH to where the source
• 11:54
  Speaker 1: of the information is coming. Do you agree and what
• 11:57
  Speaker 1: would that look like? Now? I agree entirely, and I think,
• 12:00
  Speaker 1: you know, having attribution in terms of political comments, I mean,
• 12:03
  Speaker 1: whether this is necessarily political advertising or whether it's political
• 12:06
  Speaker 1: messaging would be important. I think the first thing that
• 12:09
  Speaker 1: needs to be done is to try to establish reliable
• 12:13
  Speaker 1: identities behind the various accounts that are out on social media.
• 12:16
  Speaker 1: And from that standpoint, you know, looking towards other liberal democracies,
• 12:19
  Speaker 1: in this case, looking over towards Asia South Korea, they
• 12:23
  Speaker 1: have very stringent requirements in terms of people using their identification,
• 12:27
  Speaker 1: their registered resident number as a means before you can
• 12:30
  Speaker 1: open up an account. The same thing is true with
• 12:32
  Speaker 1: respect of looking at other liberal democracies such as Japan.
• 12:36
  Speaker 1: The question is whether we here in the United States
• 12:39
  Speaker 1: are so you know, wedded to unbridled First Amendment rights
• 12:43
  Speaker 1: even for companies that have scaled to massive commercial success,
• 12:47
  Speaker 1: you know, to basically put in place elements of responsibility
• 12:51
  Speaker 1: and to encourage good corporate citizenship. Well, in that context,
• 12:56
  Speaker 1: what has been the response, if anything, from Apple, Microsoft, Google.
• 13:02
  Speaker 1: You could make the case that all of these companies
• 13:05
  Speaker 1: depend on their financial well being by having people sit
• 13:11
  Speaker 1: down or stare at a screen and do things using
• 13:14
  Speaker 1: the Internet. No, certainly, one might argue, I mean Google
• 13:18
  Speaker 1: clearly with YouTube, has a direct interest by maintaining a
• 13:21
  Speaker 1: social media channel which has been implicated in terms of disinformation.
• 13:25
  Speaker 1: We look at Microsoft, we look at Apple. Yes, these
• 13:27
  Speaker 1: are the technology platforms that serve to enable the delivery
• 13:30
  Speaker 1: these types of services. You know, does that perhaps put
• 13:33
  Speaker 1: them too much of a remove um clearly, you know
• 13:36
  Speaker 1: we have instances here where you know, Microsoft has been
• 13:39
  Speaker 1: subject to sanction because of any competitive practices both domestically
• 13:43
  Speaker 1: as well as overseas in the past, but it hasn't
• 13:45
  Speaker 1: extended necessarily to putting out disinformation. One might argue that
• 13:48
  Speaker 1: there really is a need first and foremost for the
• 13:51
  Speaker 1: social media community UH to perhaps do a better job
• 13:54
  Speaker 1: of policing themselves or have others do it for them.
• 13:57
  Speaker 1: Perhaps in this regard, we might have other in the
• 14:00
  Speaker 1: broader technology community here in the US also encourage this
• 14:05
  Speaker 1: type of appropriate and collaborative behavior. Well, we will look
• 14:10
  Speaker 1: out for that, and I'm sure this is a conversation
• 14:11
  Speaker 1: that will be continuing for the months to come. David Garretty,
• 14:14
  Speaker 1: thank you so much for your perspective on this and
• 14:16
  Speaker 1: for filling us in on where we are here today
• 14:19
  Speaker 1: on this Chief executive Officer of g v A Research,
• 14:39
  Speaker 1: are you ready for the sixth second? Ad Well, Randall Rothenberg,
• 14:42
  Speaker 1: the chief executive of the Interactive Advertising Bureau, is here
• 14:46
  Speaker 1: to tell us more about this. Randall it's a pleasure
• 14:49
  Speaker 1: to have you here in our eleven three oh studios. UM,
• 14:52
  Speaker 1: so tell us about the sixth second ad, the lack
• 14:55
  Speaker 1: of attention that consumers seem to be able to to
• 15:00
  Speaker 1: be able to pay attention for more than six seconds,
• 15:02
  Speaker 1: and what this means for advertising, most from the market perspective,
• 15:06
  Speaker 1: but also for the platforms like Google and Facebook. Well,
• 15:10
  Speaker 1: at the root of the six second ad is the
• 15:13
  Speaker 1: fact that digital video is becoming the experience platform for
• 15:19
  Speaker 1: UM for brands uh more than any other form of platform.
• 15:24
  Speaker 1: And it's been an ongoing adjustment to try to figure
• 15:26
  Speaker 1: out what is the natural standard for digital video advertising.
• 15:31
  Speaker 1: The six second ad has been with us for about
• 15:33
  Speaker 1: ten years. UM. You know, Vine was the pioneer of
• 15:37
  Speaker 1: the six second spot, and it's kind of been evolving
• 15:41
  Speaker 1: into what you might even think of as a natural standard. UM.
• 15:46
  Speaker 1: There's been a reasonable amount of research done on it.
• 15:48
  Speaker 1: We've done research at i EB on it and it
• 15:51
  Speaker 1: seems to indicate that it's pretty sticky with consumers. You know,
• 15:54
  Speaker 1: whether it goes forward as a real standard or not,
• 15:57
  Speaker 1: we just have to see what's the best distribution platform
• 16:01
  Speaker 1: for these videos digital videos. Oh, there's lots of them.
• 16:04
  Speaker 1: I mean, obviously YouTube is a very dominant uh platform.
• 16:08
  Speaker 1: It's effective for many marketers and it's not effective for others.
• 16:11
  Speaker 1: It depends upon the category, depends upon the brand, depends
• 16:14
  Speaker 1: upon the message, depends upon the creativity. UH So I
• 16:18
  Speaker 1: would say is less about the platform than it is
• 16:21
  Speaker 1: about the amalgamation of all the factors. The reason why
• 16:24
  Speaker 1: I ask us because whenever I see you can skip
• 16:26
  Speaker 1: this at in five seconds, I'm counting down the seconds
• 16:28
  Speaker 1: before I could skip it. How do you how do
• 16:30
  Speaker 1: you measure the efficacy? Well, you do it using both
• 16:33
  Speaker 1: traditional means and non traditional means. Traditional means is all
• 16:36
  Speaker 1: the research that goes into awareness preference. But the non
• 16:41
  Speaker 1: traditional means, which is where digital's power actually is, is
• 16:45
  Speaker 1: the ability to attribute a post hoc action to it.
• 16:50
  Speaker 1: I mean, did people look at the the A, did
• 16:53
  Speaker 1: people click? Did they buy? And that's really where the
• 16:57
  Speaker 1: movement is moving to what we call dire act brands.
• 17:01
  Speaker 1: I mean, there are enormous numbers thousands of companies that
• 17:05
  Speaker 1: are now establishing themselves across every consumer facing category using
• 17:10
  Speaker 1: this form of online advertising. All right, I want to
• 17:12
  Speaker 1: mention a couple of companies to you and get your Thoughts,
• 17:14
  Speaker 1: Warby Parker, Casper, Dollar Shave Club, bark Box, Glossier. These
• 17:19
  Speaker 1: are companies that you just described as being direct to
• 17:22
  Speaker 1: the consumer brands. Right. We just released a massive year
• 17:26
  Speaker 1: long study on what we call direct brands, and um,
• 17:30
  Speaker 1: those are all representative of this this direct brands phenomenon,
• 17:35
  Speaker 1: And fundamentally, this is not about digital advertising. This is
• 17:38
  Speaker 1: about a uh kind of an apocal shift in the
• 17:42
  Speaker 1: way UH industrial supply chains themselves are put together and
• 17:46
  Speaker 1: managed for value. And our thesis, which we believe the
• 17:51
  Speaker 1: research proves, is that the owned and operated, high barrier
• 17:56
  Speaker 1: to entry capital intensive supply chains that have dominated really
• 18:00
  Speaker 1: since the late nineteenth century have been replaced are being
• 18:03
  Speaker 1: replaced by low barrier to entry capital, flexible least and
• 18:08
  Speaker 1: rented supply chains. So the whole form of value creation
• 18:12
  Speaker 1: in consumer facing, in the consumer facing economy is shifting
• 18:16
  Speaker 1: massively in this direction, which is what allows the Warby
• 18:20
  Speaker 1: Parkers and the Caspers and thousands of other companies whose
• 18:23
  Speaker 1: names you don't even know to come into existence. One
• 18:26
  Speaker 1: barrier to entry that certainly isn't There are many restrictions
• 18:30
  Speaker 1: by the social media companies that end up being the
• 18:34
  Speaker 1: distribution platforms for a lot of these advertisements, and right
• 18:37
  Speaker 1: now Congress is calling for a lot more UH. Some
• 18:40
  Speaker 1: commerce members are calling for more regulation. What what do
• 18:43
  Speaker 1: you think is the appropriate measure, especially as we hear
• 18:46
  Speaker 1: more about Russian advertising on Facebook. Well, Russian bots are
• 18:50
  Speaker 1: a serious issue. Bots themselves are a serious issue. But
• 18:54
  Speaker 1: you also have to remember that bots are just a technology.
• 18:57
  Speaker 1: There are bad bots meeting UH things that can be
• 19:00
  Speaker 1: used for nefarious purposes because the digital marketing and media
• 19:05
  Speaker 1: supply chain isn't well policed by some companies, and the
• 19:09
  Speaker 1: bots that can be used for good purposes as well
• 19:11
  Speaker 1: to amplify a message. Basically, it's another form of automation.
• 19:15
  Speaker 1: So UM. The congressional UM legislation that's being bandied about,
• 19:21
  Speaker 1: for example, the war Uh Warner Klobisher bill in the
• 19:25
  Speaker 1: Senate gets at some things, but it doesn't actually help,
• 19:29
  Speaker 1: uh fix the supply chain problems that are there. The
• 19:34
  Speaker 1: Warner Klobascher bill and most of the other legislation that
• 19:38
  Speaker 1: you're seeing basically aims specifically at paid electioneering advertising. The
• 19:45
  Speaker 1: election ads vote for Trump, vote for Hillary that appear
• 19:48
  Speaker 1: in formatted spaces and time slots doesn't really address UH.
• 19:54
  Speaker 1: The social media infiltration and supply chain infiltration beyond that
• 19:59
  Speaker 1: supply chain infiltration, meaning so you've got you've got. Uh.
• 20:07
  Speaker 1: You have in the Internet a very open ended supply
• 20:11
  Speaker 1: chain in which anyone, almost anyone can plug and play.
• 20:16
  Speaker 1: And uh, you don't have enough companies qualifying their suppliers
• 20:22
  Speaker 1: downstream and their customers upstream. And you need in any
• 20:26
  Speaker 1: other industry, any other industry, the food industry, the textile industry,
• 20:31
  Speaker 1: you have that supplier qualification taking place. Randa Rothenburg, thank
• 20:34
  Speaker 1: you so much. We'll have to have you back on
• 20:36
  Speaker 1: fascinating discussion. Randal Rothenberg, chief executive officer of Interactive Advertising Bureau,
• 20:41
  Speaker 1: which is based in New York. Shares of US automakers
• 20:58
  Speaker 1: are falling yet again. General Motors, for example, is experiencing
• 21:02
  Speaker 1: the biggest four day drop in its shares since at
• 21:06
  Speaker 1: one point it's recouped a little bit of of those losses.
• 21:10
  Speaker 1: But here to help us understand what the impact of
• 21:12
  Speaker 1: trade tensions could be on the auto industry, as Jamie Butters,
• 21:16
  Speaker 1: us autos reporter for Bloomberg, Jamie, thank you so much
• 21:19
  Speaker 1: for joining us. So the reaction in equity markets seems
• 21:23
  Speaker 1: to be highly negative toward auto companies with the looming
• 21:28
  Speaker 1: potential aluminum and steel tariffs, Can you walk us through
• 21:32
  Speaker 1: just why people are so negative? Well, sure, hey, good morning.
• 21:36
  Speaker 1: So you know, steel and aluminum, Steel traditionally, right is
• 21:41
  Speaker 1: what cars were made of. We we rely less on
• 21:45
  Speaker 1: steel now over time, and partly by replacing it with
• 21:49
  Speaker 1: other materials such as aluminum, which can be more expensive
• 21:52
  Speaker 1: but are lighter and therefore you know, better for fuel
• 21:55
  Speaker 1: economy and another efficient use of the vehicle. But these
• 21:59
  Speaker 1: are these are huge components, and the you know, and
• 22:03
  Speaker 1: most of what the automakers buy for building vehicles in
• 22:07
  Speaker 1: the U S is U S steel. But the nature
• 22:10
  Speaker 1: of markets, if you're going to raise the used terrorists
• 22:12
  Speaker 1: to raise the price of imported steel, the price of
• 22:14
  Speaker 1: domestic steal is going to go up. So all the
• 22:16
  Speaker 1: steel and all the aluminum that goes in the whatever
• 22:20
  Speaker 1: fifteen million vehicles a year that we make around here
• 22:23
  Speaker 1: is gonna get more expensive. Okay, Jamie, I mean I
• 22:27
  Speaker 1: understand the argument that you know, the global nature of
• 22:29
  Speaker 1: steel and so on, But you know, if GM purchases
• 22:33
  Speaker 1: of the steel for US production from US suppliers, couldn't
• 22:37
  Speaker 1: they then make the public argument that g you know,
• 22:40
  Speaker 1: we didn't impose tariffs in order to raise prices for
• 22:44
  Speaker 1: our customers. We agreed or the president put forth these
• 22:48
  Speaker 1: tariffs in order to save the eighty thousand jobs that
• 22:51
  Speaker 1: are in the steel industry. Well, but but where is
• 22:54
  Speaker 1: that going to get paid for? Is it going to
• 22:56
  Speaker 1: be paid for out of GM's bottom line or is
• 22:58
  Speaker 1: it going to come out of the customer? But I'm saying,
• 23:00
  Speaker 1: but you're saying that this is like a global global
• 23:03
  Speaker 1: purchasing agreement, Well it's no. Well what the point is
• 23:06
  Speaker 1: that they're buying it locally and the price they pay
• 23:09
  Speaker 1: locally is going to go up, right, because the only
• 23:12
  Speaker 1: thing keeping it down is is this uh, you know,
• 23:16
  Speaker 1: arguably underpriced foreign steel. Yeah, well, I just want you
• 23:21
  Speaker 1: to walk us through if there have been any estimates
• 23:24
  Speaker 1: of just how much uh the steel and aluminum tariffs
• 23:29
  Speaker 1: could potentially increase either the cost of a car to
• 23:32
  Speaker 1: make or the cost of a car to buy for
• 23:35
  Speaker 1: the consumer. Right. Uh, you know, there's a lot that
• 23:38
  Speaker 1: we don't know because there will be exemptions and there
• 23:41
  Speaker 1: will be you know, how how it actually gets implemented.
• 23:44
  Speaker 1: But if you look at it just kind of broadly,
• 23:46
  Speaker 1: it might not be that bad. So if you figure
• 23:50
  Speaker 1: there's eight hundred dollars worth of steel in the average vehicle,
• 23:54
  Speaker 1: of course, look I mean arrange of the average, right,
• 23:56
  Speaker 1: you can have a Toyota Yaris that's a tiny lawyer,
• 23:58
  Speaker 1: you know, Chevy Cruise that's a little thing, or a
• 24:01
  Speaker 1: great big you know, Silverado on fifty. But on average,
• 24:03
  Speaker 1: let's say there's eight hundred to a thousand dollars worth
• 24:06
  Speaker 1: of steel and aluminum in a vehicle. You know, if
• 24:09
  Speaker 1: it's a what are we talking about tariff, that might
• 24:13
  Speaker 1: only be two hundred two fifty dollars worth of extra
• 24:17
  Speaker 1: taxes per vehicle, which on a thirty six months lease,
• 24:21
  Speaker 1: you know, works out to about six dollars a month.
• 24:23
  Speaker 1: You know, so maybe that's not so much. It's sort
• 24:26
  Speaker 1: of but I guess it raises the question the bigger
• 24:28
  Speaker 1: picture of you know, what's the role of government and
• 24:31
  Speaker 1: the role of taxation. We just went through this process,
• 24:34
  Speaker 1: you know, the President has been very proud to eliminate
• 24:37
  Speaker 1: a lot of regulations that were there to maybe protect
• 24:40
  Speaker 1: the air or protect consumers, and we want to get
• 24:42
  Speaker 1: rid of those so the economy runs a little more smoothly.
• 24:46
  Speaker 1: You say, well, hey, what's another six dollars for the
• 24:49
  Speaker 1: you know, fairly affluent people who can buy a new
• 24:52
  Speaker 1: car or truck. Um. You know, it's not that that
• 24:54
  Speaker 1: cost by itself is overwhelming, but you add a little
• 24:59
  Speaker 1: six dollar here's six dollar there, those things can add
• 25:02
  Speaker 1: up and create a much less efficient economy. Jimmy, what
• 25:05
  Speaker 1: about the effect on automobiles that are made outside the
• 25:10
  Speaker 1: United States and are imported. That is a really interesting question. Um.
• 25:16
  Speaker 1: And you know, again it's not all clear and sorted yet,
• 25:20
  Speaker 1: but as it as it's been described, and what we're
• 25:23
  Speaker 1: if you if you figure we're gonna a tax steel
• 25:26
  Speaker 1: when it comes into the country, that is kind of
• 25:29
  Speaker 1: a disincentive to build vehicles. Here you look at say,
• 25:32
  Speaker 1: Fiat Chrysler is in the process of moving the assembly
• 25:36
  Speaker 1: of their heavy trucks from Mexico to Ohio. I'm sorry
• 25:41
  Speaker 1: to Michigan. And um so if bringing it to Michigan
• 25:45
  Speaker 1: is going to impose that is going to make all
• 25:48
  Speaker 1: that steel subject to the terrorists, it puts them at
• 25:50
  Speaker 1: a disadvantage to the GM trucks that are still going
• 25:53
  Speaker 1: to be made in Mexico. So he might this move
• 25:56
  Speaker 1: could actually give a little advantage to Mexican made and
• 26:00
  Speaker 1: Korean made vehicles. Maybe it's a disincentive for Hyundai to
• 26:03
  Speaker 1: build cars in the southern US instead of just importing
• 26:07
  Speaker 1: them with you know, fully subsidized deal from Korea. So
• 26:12
  Speaker 1: there's a lot of there are a lot of question
• 26:14
  Speaker 1: marks here, Jamie. I mean, if they start to uh,
• 26:17
  Speaker 1: if US companies start to build more cars overseas, that
• 26:20
  Speaker 1: certainly would be a change in the dynamic right now.
• 26:25
  Speaker 1: But just where we are, can you just put this
• 26:27
  Speaker 1: in a perspective, do the auto industry executives who you're
• 26:30
  Speaker 1: speaking with an analysts think that the move has been
• 26:33
  Speaker 1: overdone given what we know so far, the move by
• 26:38
  Speaker 1: the shares, no with the shares a response to the
• 26:42
  Speaker 1: deep negative response. I know, I'm not hearing them it's overdone.
• 26:49
  Speaker 1: There may be, I mean, the their rhetoric is very high.
• 26:52
  Speaker 1: The rhetoric is very hot within the industry. Some of
• 26:55
  Speaker 1: some of the analysts are saying, this is actually pretty manageable.
• 26:59
  Speaker 1: You know, it's not a deal, it's not what we want,
• 27:01
  Speaker 1: but it's but it's manageable. And so maybe some of
• 27:04
  Speaker 1: you know, chairs were down three four percent yesterday for
• 27:07
  Speaker 1: most of the automakers. Maybe some of that will recover,
• 27:11
  Speaker 1: especially if we start to see some exemptions made for
• 27:15
  Speaker 1: you know, critical, you know, significant supplies of steel or aluminum.
• 27:20
  Speaker 1: They may be able to mitigate it, but they're very
• 27:23
  Speaker 1: worried about the president that has said the risk of
• 27:25
  Speaker 1: a trade ward breaking out. You've got to leave it there,
• 27:28
  Speaker 1: But thanks very much. As always, Jamie Butter is excellent
• 27:31
  Speaker 1: on the US automobile industry. Joining us from our bureau
• 27:35
  Speaker 1: in Detroit. Thanks for listening to the Bloomberg P and
• 27:40
  Speaker 1: L podcast. You can subscribe and listen to interviews at
• 27:43
  Speaker 1: Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm
• 27:47
  Speaker 1: pim Fox. I'm on Twitter at pim Fox. I'm on
• 27:51
  Speaker 1: Twitter at Lisa Abramo. It's one before the podcast. You
• 27:54
  Speaker 1: can always catch us worldwide on Bloomberg Radio