Bloomberg Interview Transcript: Trade Tariffs Discussion
Interview with Brendan Murray, Head of Global Trade Coverage
**Host (8:26):** Tariffs are scheduled to take place on Tuesday and they would easily be among the most sweeping of the Trump era.
**Host (8:32):** Joining us now is Brendan Murray, Head of Global Trade Coverage. The Commerce Secretary called the conversation fluid. Scott Bessent actually talks about a coalition perhaps between Mexico, Canada, and the United States of America. Perhaps that is the offramp to full-scale tariffs. Good morning.
**Brendan Murray (8:54):** Exactly. I think what we can expect is a long day of phone calls between governments, between industry and their leaders, and to try to head off what would be an escalation in the trade war with the U.S.' three biggest trading partners. Scott Bessent called it the creation of what he called a "Fortress North America." That's where Canada, Mexico and the U.S. roll up more import barriers to Chinese imports and what they see as a flood of Chinese products coming into all three countries. So we will see how it all shakes out throughout the day.
Howard Lutnick also left the window open to some sort of flexibility or some sort of deal between Canada and Mexico and the U.S. at least, so it sounds like we are going to head to the midnight deadline with a potential for something to happen, but the window is open for the leadership to negotiate their way out of something like a full-scale trade war.
**Dani (10:05):** Let Nick saying that there will indeed be tariffs implemented, the level of which is being thrown into question. We are also going to get China's NPC this weekend and China has been one of those tariffs that have indeed been put on for all of the threats. This is an additional 10%, but what kind of response are we receiving? From China specifically, a nation that has gotten the threat realized that the bark and bite has come to realization.
**Brendan Murray (10:35):** China's response to the first 10% tariff that we saw imposed a month ago was a fairly measured one. They seemed like they are keeping their powder dry. Going into this big national political meeting this week, you could expect that they would retaliate against the next 10% tariff that Trump has threatened immediately. By Tuesday morning they will have announced some large, multibillion-dollar figure of U.S. exports to China that they will hit.
We will have to wait and see what the package of that retaliation is, but you can imagine them going after U.S. agriculture exports, kind of the heart of the Trump core of support in farm country, just as farmers are trying to figure out what they are trying to plant this year going into spring. They might have the prospect of tariffs on their exports put in place.
So it is a chess game that we are going to see play out through the day and the weeks ahead, but it seems like markets are playing it reserved and casting judgment on which direction it is going to go in so far.
Trending on the Terminal
**Dani (11:50):** Needing to see the white of the tariffs' eyes before casting judgment. Let's get you some other trending stories. Investors are watching for announcements on more stimulus from China's economy. The annual meeting takes off on Tuesday. The challenge, ramping up government investment and encouraging businesses and consumers to spend to offset the impact of U.S. tariffs.
**Manus (12:15):** Prada is moving closer to a deal to buy Versace after agreeing to a price of nearly $1.6 billion. They didn't immediately respond to request for comment on Sunday. Prada also declined to comment.
**Dani (12:33):** And cryptocurrencies open martial a rally, recouping some of their losses from what was the worst month 2022 in January. President Trump posted about plans for a Strategic Crypto Reserve. Still, many of his plans are unknown including how much crypto the government will actually buy.
**Manus (12:56):** We catch up with Peter Kinsella on the reversal in the Trump trade. That is next on "Bloomberg."
Interview with Peter Kinsella, UBP Global Head of Forex Strategy
**Manus (15:27):** This is "Bloomberg Brief." I'm Manus Cranny alongside Dani Burger in New York.
A 25% tariff on all of the imports from Canada and Mexico, hitting China twice with an additional 10%. The worst-case scenarios are now less likely than before. Investors can be forgiven for feeling exhausted with these developments, however it is important to focus on outcomes rather than the process and in a sense, Trump can be described as having high implied but low realized volatility. Peter, we will talk about Europe in just a moment but the risk is lower realized volatility and to compromise it, is that the base case that you are extrapolating at the moment over this week?
**Peter Kinsella (16:14):** It is, yeah. What we've seen since Trump came into office in mid-January, tariffs are on, tariffs are off. We see a lot more heat than light. Simply look at implied volatility. It really comes off any time we get any sort of event from Trump, and in a sense really, it's become difficult if not impossible to trade the tariff story. We have Trump saying one thing, the Treasury saying another. The end result really is that we've actually seen very well behaved currencies that have not been doing an awful lot. The dollar is pretty much today where it was in early June.
It does appear that Trump is high on implied but low realized volume.
**Dani (17:09):** And then also, the Euro seems not to be budging on German news on just how much they might spend on defense. It might be as much as they invested in East Germany since reunification. Why isn't that moving the needle at all?