Balance of PowerWatch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump said he wasn’t considering a pause on his plan to implement sweeping additional tariffs on dozens of countries despite outreach from trading partners to eager to avoid the levies, while still signaling he could be open to some negotiations.
“We’re not looking at that,” Trump said on Monday while meeting with Israeli Prime Minister Benjamin Netanyahu in the Oval Office.
Trump said tariffs were “very important” to his economic agenda — and would generally remain — while opening the door to “fair deal and good deals with every country.” “There can be permanent tariffs and there can also be negotiations because there are things that we need beyond tariffs,” he added.
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe and Kailey speak with:
- Bloomberg News Correspondent Tyler Kendall.
- Bloomberg Equities Reporter Ryan Vlastelica.
- Republican Congressman Frank Lucas of Oklahoma.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
- Professor of Public Policy and Economics at the University of Michigan and Former Member of the White House Council of Economic Advisers Betsey Stevenson.
Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Apple, Cockley and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
We got our eyes trained on markets as they are keying off what's happening here in Washington. With a lot of news today on tariffs. We walk through the fake news portion already, according to the White House reports, rumors of a ninety day review or just that fake news. The President though, taking to truth social a bit earlier to threaten an additional fifty percent tariff on China, and it takes place as Israeli Prime Minister Benjamin Nett Yahoo pays a visit to the White House today to talk about Israel's higher.
Than expected seventeen percent tariff.
They're going to be holding forth in the Oval Office a short time from now, and we'll hold a joint news conference later on. That's where we start this hour with Bloomberg's Tyler Kendall on the North Lawn at the White House.
Tyler, Yeah, hey, Joe, Well right now, we are waiting for Israeli Prime Minister Benjamin and Yahoo to arrive here at the White House. You might be able to see it over my shoulder for our radio listeners. There's currently an honor guard lined up here in the driveway of the White House North Lawn to welcome him as they begin those negotiations. Now, one theme that we're seeing emerge when it comes to the potential tariff negotiations is that it appears President Trump wants to do them in person. He confirmed earlier today that he had spoken to the japan Prime Minister and that a team of negotiators would be coming to Washington to further their discussions. Now, of course, as you've been discussing, the biggest story today appears to be President Trump threatening this additional fifty percent tariff when it comes to China. Critical here. Our understanding, according to his truth Social post, is that this levee would be enacted on top of existing levees, the twenty percent tariff that's already in place against Beijing, and then of course that thirty four percent and tariff that we are expecting to go into place on April ninth.
Well, in addition with reciprocal tariffs on all other partners, tylered. The President also talked about other ongoing conversations with different countries that he is having. Is there any indication from the White House that deals are forthcoming before the Wednesday deadline?
At this point, the White House is holding pretty firm right. Senior administration officials had confirmed yesterday that more than fifty countries reached out to the US to negotiate. The question being what will it take for President Trump to get to the negotiating table. He's previously said that he needs to see something phenomenal, right, and what phenomenal means remains to be seen. Although yesterday he did give some indication to reporters that they're really focusing in on trade deficits that could be very difficult for some countries, particularly ones that we rely on for low cost goods, to end up meeting in order to get some sort of deal done. But Joe and Kelly, this White House really dismissing investors' fears. I want you to take a listen here to what President Trump told reporters yesterday on Air Force One, saying, to hold type, this is all about long term gain.
What's gonna happen with the market.
I can't tell you what I can tell you our country has gotten a lot stronger, and eventually it'll be a country like Noahther it'll be the most dominant country economically.
In the world.
Treasury Secretary Scott Bessent yesterday dismissed recession fear, said he's not pricing in one, even as big banks revised thor for a casts when it comes to it, and we're starting to hear those Wall Street executives push back, including JP Morgan chases Jamie Diamond and his annual shareholder note, blasting the policy and saying he hopes to see a quick resolution. Remains to be seen. Exactly what that will be, but for now, this White House is holding firm.
All right. Bloomberg Tyler Kendel live on the North Line at the White House where we are seeing on Bloomberg TV the honor guard passing as we await the arrival of the Israeli Prime Minister Benjamin Netanyahoo. Thank you so much now, as Tyler was alluding to the administration's response to financial markets, essentially saying that it's not a big deal. We certainly have seen a great deal of volatility, a seven percent intra day swing on the S and P five hundred today, and we want to get more context as to what exactly is going on inequities. Ryan Vlass Stellica Bloomberg Equities Reporters joining us live from Chicago with more so. Ryan. Obviously, right now we're not looking at losses as steep as what we experienced at the end of last week, but we have still seen some pretty incredible moves.
Absolutely, volatility is kind of off the charts today. We've seen just some enormous wings and companies. There was a rumor today about a potential pause that caused stocks the spike, and then when that was sort of downplayed, we saw them retreat back lower again. Everyone is very antsy. Everyone is, you know, shooting first and asking questions later. Everything is being buried, driven by headlines by a rumor. It's an extremely volatile market right now.
Conventional wisdom seems to be beware the dead cat bounce here.
Ryan, I'm not sure your thoughts on this.
It was encouraging, even though it turned out to be a rumor this morning that there was some did under stocks here. We heard from Larry Fink last hour. He said, it's more of a long term buying opportunity of the selling opportunity. But that doesn't mean the market can't drop another twenty percent.
What would that mean.
Well, people are really trying to suss out what all these tariff implications really mean for the economy going forward. There's a lot more talk about a recession than maybe we even heard, you know, a week ago. I mean, everything has changed very dramatically in just a couple of days as far as like the market is concerned. I mean, we have a company like Apple that at one point today was on track for its biggest three day drop since before the iPod was released back in two thousand. So the sheer scale of the selling right now is something to behold. And you know, it certainly would be possible that we would get some kind of a bounce. Maybe that's a short term bounce. Maybe this does end up being a longer term opportunity, but right now there's still so much uncertainty that it's hard to you know, make any calls one way or the other.
Well, and when we look at kind of regional exposure, exposure, if you will, I'm looking at the Nasdaq Golden drag China Index right now down seven percentage points as the President is threatening tariff is high as one hundred and four percent effectively on all Chinese goods. Are there other pockets of the market Ryan like that that you're watching, well?
I mentioned Apple, and Apple is really in the crosshairs of tariffs right now. That's what we are sort of focusing on here. They do so much of their manufacturing in China, in Vietnam, in these countries that are releasing the brunt of the sort of tariff impact here. And this is a company that we've already been having a lot of concerns about in terms of their growth expectations, their inability to grow as fast as some of the other mega cap peers. It was already trading at evaluation that was seen as elevated by historical standards. So there's really a lot of reasons to be selling a stock like Apple right now, and there's sort of fewer reasons to buy unless you are taking a longer term kind of point of view. But I would say a lot of these companies, especially within big tech, people remain pretty positive on them in terms of their you know, their cash flow, their balance sheets, their you know, dominance in the markets they operate, and so you will certainly find people who remain optimistic about Big Peck. But I think right now the short term is so uncertain that everyone is, like I said, just extremely cautious and very prone to be selling.
Ryan Vstellika, Bloomberg Equities Reporter in the teeth of the cell off.
Ryan, We thank you so much. Kealley.
It's pretty remarkable to see the VIS back above fifty here this morning. The number that we're looking at, by the way, on the the S and P five hundred forty nine point fifteen. A closing level would in fact mean a bear market, joining the Nasdaq.
Which did such last week.
Yeah, a decline of course of twenty percent or more is what would codify that bear market. And it's incredible because we have seen over the last two days at the end of last week of selling in the equity market, investor seeking haven in the treasury market, and yet that's not what is happening today. We're actually up fourteen basis points on the ten year yield right now at four thirteen. So you're seeing selling in stocks, you're also seeing selling in bonds, and I wonder what that signal's investors are anticipating about whether or not we will likely get a response from the Federal Reserve to this volatility and economic uncertating.
Larry think was pouring a little bit of cold water on that, just thinking that the market's got a bit over at skis expecting four cuts this year. Congressman Frank Lucas is looking at all of this just like the rest of us are. He is the Republican representing the third District of Oklahoma and joins us now Live. Congressman, it's great to have you back on Bloomberg TV and radio. This story has evolved a bit since we last talked about it, and I wonder from your standpoint, and if you put your rancher hat on in Oklahoma, if you're hearing a consistent message from this White House, and if you support this course of action.
Clearly the President believes he's going to stay the course. He's determined to change the way we do trade and business around the world. He's using a sledgehammer approach of tariffs. My folks in Oklahoma are still overwhelmingly supportive of the President. We'll see over the course of the coming hours or days what kind of response we get from our trading partners or competitors around the world. But what choice do we have other than to pursue this for the time being and hold the faith when it comes to the market. Well.
Being supportive of the president is one thing, Congressman, being supportive of this specific policy from the president is another. Are your constituents telling you they're on board with tariffs of this scope and scale?
Mise, constituents are holding their breath. Eighty percent of the cotton we raise in this country plus is exported. Forty percent of the winter week we raise in this country's exported. All the hugs we raise in Northwest Oklahoma get on ships to go to Asia. So these issues are very important to my constituents. But they also understand the status quo for the last three or four decades has worked against us. And here comes President Trump, prepared not to accept the status quo, but to plow through.
Now.
We will see over the coming days and weeks and months. I have faith that the President and his inner circle advisors will make the necessary strategic adjustments if there are strategic adjustments to be made. But let's just take a breath and try to work our way through the next few days, because, after all, if you put them the money in the market two years ago, from a stock market perspective, you're still several thousand points a hit as of this moment.
Well to the point that you're making about your district, Congressman, a report by the US China Business Council found indeed that Oklahoma's third district was the third largest recipient China, rather, was the third largest recipient of your global exports, which you just described here one hundred and fifty four million dollars in gross sales. How do you quantify what's about to happen here to local business.
Well, if you look at four years ago, when we had the first taste of the trade wars, President Trump responded by urging Congress to provide additional assistance to farmers to weather the storm, and he also negotiated a deal four years ago with the Chinese to buy an additional fifty billion dollars in US agricultural products. I'm not sure exactly what top of my head, how well the Biden administration followed through on that, But he remembered who his supporters were, and he stood with us. We'll see this time. But you have to have faith. We'll see in the next hours, days, weeks what happens. But movement, it would seem from our trading partners around the world might. The President says he's had inquiries from fifty different countries wanting to address the tariff issues. Again, this is a sledgehammer approach, but the system has generally worked against us from a manufacturing point of view for decades. Let's give it a try.
Congressman, one of your Republican colleagues in the House, Congressman Don Bacon, has introduced legislation that looks a lot like the legislation bipartisan legislation that was introduced in the Senate, essentially requiring congressional approval of the president's tariffs. The White House today has issued a veto threat on that Senate bill that was co sponsored by Senator Chuck Grassley and Maria can't. Well, why veto's something that is at actually technically according to the Constitution. Just you guys reclaiming Article one authority that you're entitled to.
Well, I'm very jealous of congressional power under the Constitution. I'm not sure how we got to this point delegating this much to the President. It is a discussion that has to be had. I'm not sure that right now in the depths of the trenches economically is the battle, is the place and time to do it.
I just want to mention a breaking headline here on the terminal. Congressman, it appears that President Trump's news conference that had been scheduled for a couple of hours from now with Benjamin Nett Yahoo has been canceled. They are going to take some questions. I want to be clear when they meet in the Oval Office, but we're not going to have the formal bilateral news conference that we had expected. Congressman, That's just part of the story today that we're following with regard to these tariffs. And as Kayleie mentioned, now, you've got essentially a veto threat coming from the White House here. Do you worry is your worst case scenario a war between the White House and the Congress on top of a trade war.
I would tell you, Joe, my biggest concern just this moment, in addition to tariffs, in addition to trade wars, the House needs to pass the budget resolution that the Senate has passed with our separate instructions, so that we can get on with reconciliation, addressing the national debt, addressing spending, making sure that we don't have the most dramatic increase in taxes at the end of this year, and the fact that that would have on the entire economy. There are a lot of pieces in play right just this moment we need to focus.
Well.
Of course, one of your focuses, sir, is you share the new task Force on Monetary policy, treasury, market resilience, and economic prosperity. And given how keyed in the market seems to be to the words of Federal Reserve officials around this, I wonder if you are anticipating we may see intervention from the Senate Bank, because right now, at least in terms of market functioning, everything looks like it is acting appropriately. The systems are working. In short of that, is there really a need for FED intervention here that you see?
Well, I have faith in Chairman Powell and the entire Board of Governors of the Federal Reserve System. I think they, using that independent the spirit of the nineteen thirteen Act, will make the appropriate decisions on interest rates in effect, monetary policy. We'll just have to see over the course of the days. This is a world where we seem to live moment by moment, not day by day traditionally. But we'll see where they go. And by the way, on the task force, our next hearing this week will address US treasury debt in the monetary system? How do you have how do you market? How do you sell all of the treasury notes, bonds and bills into the market when you have seven eight times more paper than we had twenty or thirty years ago and you have half the market makers. This will be an introduction to an introductory needing so that the members of the task force can come up with speed with experts in the field. But yeah, you talk about timing critical nature a task force focusing on the FED and Treasury debt. I can't imagine two more important issues for the long term and intermedia and short term picture of the country than that.
Well, when we think about the short term, Larry Fink was talking to Bloomberg last hour. You might have heard the conversation. Congressman. He's casting doubt on what the market sees as the likelihood of several maybe four interest rate cuts this year, even though he says we're probably in a recession right now. If that's the case, how about an emergency rate cut today.
That's not really a position for me to take a side on that. I will simply say this, a lot of the challenges we face right now have to do with the Biden administrations over stimulating the economy with spending four years ago, and we're dealing with a hangover from that, balancing where we are are interest rates, a capital investment, the trade issues. It's a challenging time. I would not want to be the chairman of the FED, or for that matter, on the Board of Directors, and we can all offer advice and independence, but it's still a body, based on its own insights that makes the decision.
Well, if you don't want to be the FED chairman, Congressman, I wonder if you envy the Speaker this week as well, because he's going to have to push through the Senate resolution, which you are speaking to just a moment ago, that looks different than what you and your colleagues initially passed in the House. And already there are a number of Republicans who have suggested they can't support this given how drastic the difference is in terms of the spending cuts that are outlined. Are you confident that you actually can get this thing passed before the Easter recess?
Well, let me put it this way. With the challenge is going on right now, whether it's the trade wars, the stock markets, all of the bond markets, all of these issues, we in the House Republican Conference have to show forward momentum. We have to demonstrate that we can and get our work done. We can get the reconciliation no matter what the instructions say, it will be that final document put together by the various committees, and none of that create the savings that move the process forward. If we can't take that step, then that is the kind of thing that we could potentially have a dramatic psychological effect on the market. I've told several of my colleagues we need to do our work and do it on time this week. We cannot go home for Easter until we've addressed the budget resolution. And if we don't do our work, the market may explain to my colleagues why we have to do our budget and reconciliation work.
All right, We'll leave it on that note. Congressman Frank Lucas, Republican representing Oklahoma's third District. Joining us here on Bloomberg TV and Radio.
You're listening to the Bloomberg Balance of Power podcasts. Catch us live weekdays at noon and five pm. E's durn on Apple Cocklay and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York's station, Just say Alexa Play Bloomberg eleven thirty.
Here in Washington, we're keeping an eye on the White House as we anticipate the arrival of Israeli Prime Minister Benjamin Netanyahu, who's set to meet this afternoon with President Trump. The one item that was previously on the schedule has now been removed. There will be no joint news conference in the East Room as was previously planned, So for more on that, we'd go back to the White House where Bloomberg. Tyler Kendall is joining us once again. So Tyler, it's still going to be an opportunity for them to take questions, I guess, just in a different venue.
Yeah, Hey, Kelly, well it is breaking news. Per White House official, no more press conference at two thirty pm Eastern, But as you say, we are still expecting this is Raeli Prime minister to arrive here at the White House shortly, and they will still hold that bilateral meeting in at the Oval Office. Typically how this works is that they are open at the beginning to press to ask some questions, and we get that footage back live. So we'll have to see as of now that does still appear to be on the table. We are still waiting for an exact reason as to why that press conference ultimately was canceled.
Now we know, of.
Course that tariffs were expected are still expected to be a top topic today. I was here yesterday when Israeli Prime Minister Benjamin Enyaw who did arrive here in Washington. There were reports that he had already started the negotiations with some top senior administration officials when it did come to the tariffs. As you well know, Israel had lifted most of its tariffs in the run up to April second in a bid to try to get ahead of it, try to strike a deal early, and they still were slapped with that seventeen percent Levy. Now our Bloomberg News reporting, according to sources familiar, say that net and Yahu had called President Trump on the phone to try to negotiate a deal. President Trump told him that he should come here in Washington to negotiate in person, and that is how this visit was spurred today. So we're still going to have to wait see further details. Other things that we know, other agenda items, of course, the ongoing war with Hamas and shared concerns when it comes to Iran.
Bloomberg's Tyler Kendall live at the White House shoulder to shoulder with the Color Guard as we anticipate the arrival of Benjamin Netanyahu. As Kaylee mentioned, the joint news conference has been canceled. We will hear from these two leaders in the Oval Office, and that's where we begin with our signature panel today. Bloomberg Politics contributors Rick Davis and Genie Schanzeno are with us. Rick is our Republican strategist partner at Stone Court Capital. Genie democratic analyst and senior democracy Fellow with the Center for the Study of the Presidency in Congress. It's great to have you both here, an important day for the markets, an important day at the White House.
Genie.
To know that this news conference has been canceled gives the White House more control over the conversation with reporters. I'm wondering your thought on the strategy here, because reporters will be allowed in the Oval office. But that's a very different affair than having a formal news conference in the East room.
It absolutely is. And for somebody who for the last three months has been speaking to reporters openly day after day after day, sometimes multiple times a day, as you both know, this is quite a switch for them to cancel this press conference. But I always wondered about this press conference. How could you have Benjamin who was standing up there talking about negotiating these tariffs out while Donald Trump yesterday and the day before is saying this is a revolution in the country to revive the manufacturing base. It cannot be both. You can't both revive the manufacturing base and negotiate with a foreign country. And so that is the sort of conundrum that Donald Trump has himself in on what are the goals of this tariff policy. So I always thought it was going to be a very strange press conference to have them both up there, and I think that they are still not sure how they're going to move forward, and that's why we're seeing the cancelation.
Well, but to Genie's point on whether or not this is a negotiation.
Rick.
You also have the President at the end of last week talking about talking to the leader of Vietnam who said he would drop all tariffs on US products. You have Japan apparently in conva with the President today, so clearly talks are ongoing. And as we have an eye here on Bloomberg TV and on YouTube on the White House, we see President Trump awaiting another conversation as the vehicle has just pulled up with the Israeli Prime Minister Benjamin Nenniahu inside it. We're now seeing Joe those two leaders shaking hands.
Yeah, quick can shake under the portalco. This is not a formal arrival on the South portico, but they're in fact right at the entrance to the West Wing, both wearing matching suits. Today it looks like benjaminett Yah who got the cue on the red tie. Indeed, they are now heading back into the West Wing for an Oval office meeting around the top of the hour.
We expect to have an ear on that. Yeah.
One of the questions reporters just attempted to shout at them, will you discuss tariffs on israel I? Think we know the answer to that question, as we understood that it's one of the primary objectives of net Nyaho's visit today is to have that conversation. But if that conversation is happening, Rick, do we not define that as negotiation?
Yeah?
I think by definition him being here and the tariffs are going to come up, that's a negotiation, because clearly that's what Donald Trump wants it to be. You know, all weekend we had Cabinet members hitting Sunday shows saying, Hey, we're going to work out deals on all these things. Be patient, let us do our work. Don't overreact to the teriff regime, all these numbers. Treasury Secretary best And said, this is the high water mark. You know everything is going to come down from here, and so why not have your closest ally, one of your best friends in as a head of state, come to Washington, sit down in the Oval Office, and work out a deal. I would be stunned that this visit does not result in some kind of good news about a reduced tariff between Israel and the United States, because that is what the White House desperately needs. Frankly, they need it worse than Beabing nit Yahoo needs and so I can't imagine this isn't the beginning of a series of announcements that said, see, we told you just give us time, we're going to work out deals that are going to benefit the US manufacturing, you know, and supply capability.
Is that going to be the role out here, Genie. We heard from any number of administration officials yesterday giving us a bit of a confused idea on this. Peter Navarro as recently as this morning, was talking about raising revenue from tariffs.
He referred to them as tax cuts.
But if you show up with a bunch of deals this week, we understand the phone was ringing all weekend. The President talked to Japan this morning. Now it's Israel today. Obviously this isn't going to be a revenue generator. What's the market going to make of that?
Yeah?
I mean it is the uncertainty about what this is all about that continues. And while Donald Trump was winning, if you guys didn't hear he won, as he said five times, the golf tournament this weekend. He sent all these folks out on the Sunday show that Rick was talking about with mixed messages, some of them talking about these fifty countries who are trying to negotiate. Then you also had Lutnick saying, no, there's no room for negotiation. So to me, there are two things here. Number one is there is a big break in the administration. You have some folks who have a more traditional view. This is negotiation. It's temporary, it's going to be over. Just wait and see Bill Lackman, you know, don't worry. Everything will be okay. And then you have other people like Howard Lutnik and like Peter Navarro who are saying, no, this is a remaking. And Donald Trump himself talks about a revolution this weekend. And that's the problem with Rick's hope that they come out with a deal. If you are a revolutionary and your base is waiting for you to bring manufacturing back and re sure, you know, help all these forgotten men and women from this globalized economy, how can you then be negotiating out deals with your allies or your enemies. The two don't go hand in hand. And that's the problem, and that's what's creating all this uncertainty.
Well, and we know the markets don't love the uncertainty. Rick. It was interesting there was some is reporting Earlier today, a suggestion that the White House would be opened to a ninety day delay on tariffs saw the markets rally dramatically off the back after what opened after opening a pretty steep lost territory is seven percent swing, and yet the positive reaction in the markets immediately slapped down when the White House itself pushed back and said that was fake news. What does it tell you that an opportunity to maybe alleviate some of the pain we've seen in the equity market was not one that the White House decided to take. Does that suggest that they do want to be seen as credible on this Yeah.
Look, I think in order to be able to get the kind of deals they want to get from a negotiated posture, they've got to show their resolve. And the idea that we're going to kick the can for ninety days maybe had been talked about and someone leaked it who didn't know the final conclusion. But the bottom line is it actually shows how quickly the market is prepared to respond to any good news from tariffs. And so that's why I think they're going to roll out a series of quote progress reports on these terphrasemes because they know that they've got an issue with getting into these sort of recessionary levels in the market, and they're going to try and put their finger in the dike on this one. It does not do this administration any good to have the markets collapsing while they're trying to implement this weaker dollar, more tariffs reset of the global economic program. And by the way, let's be clear, that's what this is. It's not just a terif regime. They are restacking the global priorities based on what the strengths are of the US economy and not anything else.
It's interesting that we're having this conversation after hearing from Bill Ackman, from Jamie Diamond, from Larry Finke today on Bloomberg. Genie, I wonder you heard the veto threat from the White House earlier, This idea of passing a bill that would require congressional approval after sixty days on Tariff's veto threat to the Speaker of.
The House his ally.
But it is in fact the CEOs and the executives who appear to have his ear Is it the Acmans and Diamonds of the world who pull Donald Trump off the course on more tariffs?
I really hope, so somebody has to. I mean, you know, I think there is a lot of wishful thinking here. But let's take a step back and remember there is only one thing Donald Trump has been committed to publicly, and that is this tariff regime. It is going to be very hard for him to walk away from that. That is going to require the Larry things, that Jamie Diamonds, the Bill Ackmans, quite frankly, the Ben Shapiro's of the world, all of these folks Elon Musk out there saying this is a problem. And then of course Congress has a role. And I think we can't forget the constitutional role of the courts here, because the way in which the President did this, to declare a national emergency based on a trade deficit that we have had since the nineteen seventies is highly constitutionally questionable. So those are the three groups who have got to get to the President and walk him off this ledge. But I think it's going to be tougher because the President has long been publicly committed to this. He's not particularly intellectually curious, and so all the people who are saying this makes no sense. He's out playing golf and million dollar a plate golf tournaments this weekend.
To Genie's point on the role of Congress Rick in our final minute here the White House, of course issuing a veto threat of the bipartisan legislation that has been put forward in the Senate to claw back some congressional authority on tariff approval. Does that effectively kill that effort or might they pass it anyway?
Yeah, it would be hard to get it on the agenda in the House of Representatives with a veto threat from the President. I think the Speaker is still very much in league with the President on his priorities, even though I think they all are looking over their shoulder at the twenty twenty six elections and what impact a declining market at the hands of Republican is going to look like when they try to run for reelection. So there's a real there's a real tension right now in the House of Representatives about trying to maintain a majority through the midterms and still be able to do the bidding of Donald Trump. He's making them walk this plank, and I don't see any distance between the Speaker and the President at this point. That's going to cause a revolt by Republicans in the House.
Yeah, and the speakers are going to be preoccupied trying to advance budget matters this week. Anyway, Rick Davis and Jeanie Shanzino, our signature political panel here with us on Balance of Power. Thank you so much as always, and just to reiterate we did moments ago see the Israeli Prime Minister Benjamin Netnatt who entering the White House for a conversation with President Trump. They will be answering questions later on from the Oval Office. No Eastern news conference, though we'll have more next. On Bloomberg TV and radio.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm. E'stern on Apple, Cockley and Android with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube right now.
If this holds with a twenty basis point move upward on the ten year treasury yield, that would be the single largest single day move up in yields since September of twenty twenty two. Pretty incredible to see that, and we want to get more on what's happening, not just in these markets, but what markets are signaling about the forward look on the economy. Betty Stevenson is joining US now. She's professor of public policy at the University of Michigan, also former member of the Council of Economic Advisors during the Obama administration. Betsy, Welcome back to Bloomberg TV and Radio. As we consider here the idea that President Trump today has floated even higher tariffs on China than previously thought, potentially reaching one hundred and four percent with this current regime, assuming there is no backing down, is this a greater inflation risk or a growth risk to you?
Oh boy, that's a really hard question. I think that's why no one knows what the Fed's going to do. You know that there is clearly an inflation risk, and we know that these terrifts are going to bring inflation. Of course, that what they bring is a one time jump up in prices, and so the FED has to ask, can we look through this period of inflation, can we say transitory again, ignore it and then focus on the growth because there's clearly going to be a big hit to growth.
You know.
The the challenge I think that the FED has is that it's you know, it's just not one hundred percent sure what it should be doing. Does it want to try to stimulate demand in this environment? Does it want to slow demand down? You know, if I was there, I'd be more worried about the risk to growth, because you know, unemployment has long and permanent effects, so I would really be focused on that. But equally, I think I think what they're going to have to be looking at is not what do people expect for inflation this year? We all know inflation is going to be higher this year, but what do we expect is going to happen to inflation in three, four or five years. And we have very fragilely anchored inflation expectations right now. If they see that fragility getting even worse, I think they're going to have to turn to making sure that they keep those anchors in.
We heard from Kevin Hassett over the weekend. He did Sunday morning television Betsy and suggested that the phone is ringing off the hook at the White House, and if you listen to what he said, you might envision.
A world where there are no tariffs in the near term. Let's listen.
So the fact is, the countries are angry and retaliating and by the way, coming to the table. I got our report from the USTR last night that more than fifty countries have reached out to the President to begin a negotiation. But they're doing that because they understand that they bear a lot of the tariff. And so I don't think that you're going to see a big effect on the consumer in the US, because I do think that the reason why we have a persistent, long run trade deficit is these people have very in elastic supplies.
What's your thought on that.
We know that the President spoke with Japan earlier, today's meeting with Benjamin nett Ya, who Now we get to the end of the week. Let's say these fifty leaders cut deals with the president. Do you look like a genius. Market's up one thousand points.
No.
So I want to start with this simple thing. Look, I don't even think Kevin Hassett believes what he was saying. Why are our countries coming to the table, not because they think they're going to absorb the price increase, but because when prices go up all around the globe, we all sell less. The stock market is not falling because they're worried about having to pass through prices onto consumers. And so when you pass on high prices, if the price in Nikes goes up thirty percent, you know what people are gonna do, buy fewer Nikes. And so even if they're passing all those prices onto consumers, it's not good for Nike profits because people don't buy the product. And that's what countries all around the globe are worried about. It's about the shrinking of trade, not about who's paying the prices. The American consumer pays the prices, and the administration even believes that they pay the price because they're talking about the great you know, gain and revenue they're gonna get from these from these tariffs. So they know that the tariffs get paid here, that it's not going to show up in terms of, you know, hurting some other comfort some other country. So then you said, well, wait, could Trump be the genius who eliminates tariffs. Tariffs were incredibly low before Trump started all of this. I think the reason he has shocked market so much is because everybody thought, oh, yeah, you know, maybe we're gonna get three, four, five, six percent tariffs. They're gonna that's gonna be a huge increase compared to the past, but not these numbers that are like you know, early twentieth century tariffs. No nobody expected them because they are enormous. No other country has them. Calling them reciprocal tariffs is completely misleading.
It's not.
Vietnam is not charging US forty six percent tariff, which is what we put on them. They're charging us like a one and a half percent tariff. So is he a genius if that one and a half percent tariff goes away at the cost of all the turmoil he's caused around the globe. I don't think so well.
One of the things he argues is that this brings back more manufacturing to the US. My question, Betsy, is when you consider that there's tariffs on actual raw materials like steel and aluminum, potentially lumber coming down, what impact that would have on actually the ability to build out that infrastructure, let alone defined the labor force to build those factories or populate them ultimately when construction is done. Given some of the other efforts around migration, specifically in this country, how easily can it realistically be achieved if some of those barriers are put into plates, you.
Know, everything you said is exactly right. And then let's add on top of that that it takes several years to build a factory and get it up and running. We're not talking about building uh, you know, factories in the United States where we assemble nikes. We're talking about paying more for nikes. You know, even if he's talking about protecting American manufacturing, that he's he is hammering the American auto industry with this. They are suffering more because of all of the tariffs on the components of cars. Look, we cannot have a car or even a bicycle without imports because we don't have rubber in.
The United States.
So what are we supposed to do to actually move that car down the road if we don't have wheels. It's just not you know, it's it's doesn't make any sense. If you want to support American manufacturing, you don't do it by making all the ingredients in American manufacturing more expensive.
Betsy Stevenson was ready for this conversation. Professor of Public Policy Economics, University of Michigan.
It's great to have you back on Bloomberg.
Betsy will be deeply curious to see Kayley with the University of Michigan Consumer Sentiment Survey says at the end of this week, as we really start to bump into the corrosive impacts here the emotional impact of these tariffs on the markets and consumers.
Thanks for listening to the Balance of Power podcast.
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