TrumponomicsIn a live taping before an audience in New York, host Stephanie Flanders was joined by Bloomberg political correspondent Nancy Cook and Bloomberg Opinion Senior Executive Editor Tim O’Brien to unpack the way in which US President Donald Trump is making tariff decisions during his chaotic first few weeks in office, whether he has a plan and who his most influential advisers might be.
For the second part of the conversation, Bloomberg TV anchor Katie Greifeld and senior editor Ed Harrison discuss how Trump’s economic policy is causing uncertainty among business leaders and why a key metric to look at is the 10-year Treasury rate.
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Welcome to Trump Andomics, the Bloomberg podcast that looks at the economic world of Donald Trump, how he is shaping the global economy, and what on Earth will happen next. We're hosting this episode in front of a live audience. I can't help emphasizing the word live because the last show, the last show we did was at the World Economic Forum in Davos. But I think you're very alive and much more excitingly, you're at the New York Bloomberg headquarters. We have put together top class panel of Bloomberg experts to help us unpack the topic of the week. Kind of hard to pick these days what the one topic is. But I think what is trump Andomics two point oh? What have we actually learnt in the first few weeks of this administration? Is not a bad place to start. You know, Donald Trump has always made his own weather. People tend to talk a lot about him flooding the zone, because last weekend we had not so much flooding the zone as threatening to blow it up. In the case of the closest economic relationships that the US has with its neighbors, Canada and Mexico. We talked a bit about that in the last episode of Trump Andnomics, but we're going to broaden it out with this excellent panel we have here to consider. What have we learned about the way the president's making his decisions, Who's up, who's down? And especially important, I hope to Bloomberg subscribers, what's the impact on this for markets and for investors. So let's get to it. We have a couple of Trump Andomics regulars. This is only what the third or fourth episode, but we can still we can call you regulars. Nancy Cook, who I thank very much for taking the train from DC to be with us tonight, our senior national political correspondent. Thanks Nancy, thanks for having me.
It's so nice to be in New York.
Did you get a moment of piece, touch a tiny moment of piece as you sat on the train or was it just hopeless to me?
I went out to dinner last night and Trump said that he was going to take over Gaza, So I thought, we welcome to Trump to point out you can't go out to dinner, okay.
And we have Tim o'briane, Senior Executiveloper of Bloomberg opinion, and crucially for the purpose of the podcast, author of Trump Nation, The Art of Being the Donald, Tim very good to see you, and later we're going to have Bloomberg and Ka Katie Gryfield and senior editor Ed Harrison. That'll be the more sort of money part of things. But part of the challenge with this administration, I was alluding to it before, is not so much distinguishing a signal from the noise as just kind of drawing breath. So I think it's particularly important for us, in sort of podcasts like this and events like this, to sort of step back and think what we've learned. So, Nancy, I know you've been tearing around reporting out how some of these decisions are being made, how the tariff news came together, So give us a bit of an insight into that.
You Know, one thing I've learned i've covered Trump since twenty fifteen is often decisions are made on the fly, and I would say with the tariff decision, that was the case there as well. We wrote a story last week saying as of Thursday, they really hadn't made a decision, and that was true. There were some advisors calling for gradual tariffs, some people trying to say, well, let's just teariff certain industries or certain countries. There was a tiny group of people in the White House, including Stephen Miller, who many people know, who's one of the deputy chiefs of staff, who was advocating for things. The Treasury Secretary Scott Besson had just gotten in there. Trump was hearing from all these different people, also including Peter Navarro. We can't forget about him. He's quite hawkish on China and tariffs in general. But they were basically building the tariff policy, you know, as he was making the threats and sort of having all these meetings, and at the end of the day, Trump's decided that he was going to do it, and it was really like a sort of twelve hour decision. Okay, we're going to teariff these two major US allies.
And do you think, just to remind ourselves, the people that he'd said were officially in charge of trade policy are not confirmed, and when you didn't mention them in your.
Description, just then yeah, they're not even there yet. So officially the Commerce Secretary, who if he's confirmed, will be Howard Luttnik, who was in charge of Canter Fitzgerald. He will be in charge of it, along with the US Trade Representative Jamerson Greer, who worked in the first Trump administration as the chief of staff to Bob Leittheiser. And they're supposed to be in charge, but they're not even confirmed yet. And there was really not a political appointees at these agencies. And so right now these huge trade decisions are basically being made by Donald Trump and then three aids in the White House.
Do you get the impression on the Sunday and Monday as we trying to manage the blowback from this announcement, was there sort of an disagreement about how to respond, how quickly to give in?
Well, I think that there is. There was disagreement, a ton of disagreement in the first Trump administration about trade policy, and I think there continues to be disagreement. You know, Peter Navarro, who I mentioned, is much more sort of hawkish and wanting to teariff everything.
You know.
I would put Howard Lutnik, the incoming Commerce Secretary, in that camp, but Scott Besnt wanted to make it more gradual. But just one more example of how Trump makes these decisions on the fly. When he threatened the tariffs on Columbia. For instance, he was in Miami and golfing at his club in Durrell and you know, one source told me he was on the golf cart and pulled out his phone and on true social announced that he was going to terror.
He explains what he misspelled. Columbia.
Yes, announced like while he was, you know, in his golf outfit, said he's going to put tariffs on Columbia, you know, and if they don't take action in one week, they will rise to fifty And then got back on the golf cart. And so that is really I think the perfect metaphor for how he is making these decisions. You know, you could sort of make fun of it, or you could say, oh, he's doing this on the fly. But I will say, having covered him for a long time and spent a lot of time with him on the campaign trail, he is like a much more self assured leader this time. And I do think knows what he wants even more so, I.
Mean tim there is this sort of line developing of oh, this was again, you know, policy being done without the grown ups in charge some of these, or with the grown ups not in the room. He's on his golf court, car whatever. But I know you're always saying, we shouldn't be surprised by any of this. This is his modus oparendum.
Yeah, I mean he's you know, he's been this way since he was seven. This shouldn't surprise anybody. He's not a linear thinker. He doesn't think strategically. He thinks emotionally, and everyone around him, you know it's calling it trade policy is almost a misnomer because I think what is real intention is to use it as a cudgel, at least in the near term, to have various groups that he wants to flex around. I think he's also, particularly on Mexico, there's this confluence of campaign promises he's trying to keep around trade, immigration, drugs, and they were all critiques he had of the Bided administration. So when one fell swot he's trying to say, I will solve immigration, trade and other things that ail US as quickly as possible and with as much blunt force as possible. But the advisors he has around has around him, none of them think massive tariffs are really good. They know it's bad for trade, they know it's bad for economies, they know it dense global diplomacy, but there's succoming because you don't become a member of Trump's White House unless you get the agenda.
And so.
Kevin Hassett was on CNBC yesterday saying, I guess I shouldn't say the any of our competitor another network saying that this isn't a trade war, it's a drug war. And some of that is threading an eel around the legalities that Trump would need to deploy in order to act unilaterally around this. And then Scott Bessens, who also knows better the Treasury secretary, is advocating a rigorous escalation of tariffs, even though for all of his adult life he understands the virtues and importance as of free trade, and Trump himself really does not have a sophisticated grasp of economics or trade. He is interested, I think, in creating chaos because it keeps people back on their heels and it gives him room to maneuver. He did it in his business life before Trump one point zero. He did it in his first term. He will do it for the next four years. And it generally is coming from a desire to occupy the spotlight and to keep everyone else guessing about what he wants to do next. And that's an effective campaign strategy, he's proven that. But as a governing strategy, or as a way of messaging to the business community that needs to think ahead about investing long term, hiring long term, having long term trading relationships, it's an utter disaster.
It's interesting. I would push back on a few this. I do think we learned. In fact, I'm allowed. I'm allowed to disagree with people. I disagree with you. No, I think we did learn actually from the president's interview with our own editor in chief John Wicklithwaite. Then he does have a theory of tariffs. I think he actually had, and he actually has an idea of using them for different things. Because we were pushing him back. John mclwaite was pushing him on isn't it inconsistent to say you're going to raise lots of money but also move production, because if you move production and reduce the amount of imports, you're not going to be able to raise the money. And he was quite clear he's like, some things we want to raise money on, we put it at a low rate. Other things we actually want to bring it back home. And that's what I think the danger that's not a theory, no, well, the Dane, well, it is that this is a selective tariff theory. I just made it up, but I think the and actually on the this week's episode of Trumponomics and A Wong, the Chief US Economists was introducing us the idea of optimal tariff theory, which I'm not sure he's read that book. It sounded way too complicated. But the difference this time is that he's also seeming to want to use it for any as a bludgeon, as you say, for lots of different things, and as a way he's using it in the same way that he used the kind of dramatic statements about Mexico paying for the wall in the first administration, or some of the sort of ground standing with NATO, and the economic costs of that could be quite significant.
That much uncertainty, and I think in a world that is naturally populated with uncertainties and threats, you, I think you want leaders in various and stakeholders across society to engage in certainty and rationality. And I don't think either one of those things are going to be his strong suits. So I think people trying to sort through how you make your own decisions, either as a business leader or an investor, as a citizen, it's just going to be constantly left on their heels, and that's exactly how we want it. I would also, I would say, though I don't think there's a theory. I think there is just a need to occupy the conversation. I think that's different.
Just going back to Scott Beston, because you've both mentioned him, and it struck me. I mean, he had been he was one of the early members of the administration that was nominated and was felt to be gave that dose of normality along with Marco Rubio and particularly on the economics, on the trumpnomics, he's supposed to be this critical figure of sort of stability as Wall Street background and investing background. I feel like changed our view of him a bit over the last couple of weeks. It seems like he's signing the permission slips for Elon Musk's people, letting them resting him run wild in the Department of Treasury. I mean, Nasi, is that Do you think we should think of him as a different kind of figure in this administration or is it two early days.
I think that it's a little bit early, but I will say my owner reporting from he's been Treasury Secretary for a week, and I think.
It's been a really quiet week for the Treasury.
But I do think that he has been in a tough spot. I would say he's been in charge of one of the key agencies for just a short period of time, and Elon Musk has rolled up in there and now has access to the Treasury payment system, and that is a huge thing to control or like even have access to. Scott Besson did not get his pick, for instance, for the IRS Commissioner. You know, have reporting that he did not want the former Congressman Billy Long to get that job, so he sort of overruled on that. You know, there was a lot of fighting during the transition between Scott Besson and Howard Lutnik over who would actually get the Treasury secretary job. So I'm looking ahead to that and what the tension is between the two of them both leading trade stuff, and also just you know how that level of infighting develops. So I think it's been a tricky week and Scott is someone who I would say Wall Street respects and bond market respects, and I think people did think he was going to be the grown up in the room, and he did a pretty good job of courting sort of fringe Trump allies and building his own coalition to get the Treasury secretary job. But now that he is in there, being in Trump world does require real survival skills and real sort of political infighting skills, and I will be curious to see how he fares in that political environment.
How he fared Slash losts well.
You know. The other thing is that the Treasury secretary is a weak cabinet position and FED chairman, you know, that was where the action is in terms of having I think real power to affect the economy. And I think Treasury secretaries are spokespeople for an administration's economic worldview. And the ones who've been I think very effective at it, Jim Baker during the Bush administration, Bob Rubin during the Clinton administration. They're in sync with their presidents. There's a unified philosophy, and they're the ones out in the world saying these are our economic goals. And it's very hard for Trump advisors to be in sync with Trump because he's unpredictable, and then secondly, I think whatever Bessen's is saying now about Trump and his approaches to these things, it runs up against how I think Bessant has rolled through most of his career, and so he's going to be, I think, constantly caught between Irock and a hard place philosophically.
Yeah, I think Besson has also recently told allies. I think he's trying to set expectations in Washington, and he has told people my number one priority for twenty twenty five is really getting through a sweeping tax bill. And so I think he's trying to steer clear of some of the landmines like trade policy and focus on this one thing. And I just think that's an interesting thing. Because I disagree with you. I think Treasury is is a great job. You're in charge of like sanctions, tax policy, international diplomacy, Like there's such a range of things that you're in charge of. You at your own plane, This.
Is a cool job.
I disagree with you. I don't want to be I'm happy as a reporter, but I think it's a big job. But I do think he is trying to set expectations like I will get through the tax bill, and that will be I'll be successful if I get that through.
Well, I'm glad you said that. That's it. I agree with you, and I definitely have to agree with Tim because having worked for Bob Rumer, that's Treasury I saw, I think Treasury at a particularly powerful time. And we might just add that it was the last time we had a budget surplus. I'm just saying, all right, so we're going to get that gets us very nicely onto the sort of more economic y market bit of the discussion. But Nancy and Tim, thank you very much, and we're going to get you back for questions a bit later on. But thanks very much. Thanks, So we're going to bring on the other speakers. The last time we did do one of these events was at the World Economic Forum, though not with subscribers because the describers didn't make it up the hill. But the feeling there was that the investors were so incredibly positive about everything to do with the US. The markets were kind of pricing. I felt it was like pricing for the best of all possible trumps, you know, all the good things for markets, the deregulation, the extension of tax cuts, none of the bad things. And I don't know. I mean, one of the things we will get onto is whether the events of the last couple of weeks have sort of changed that feeling of a sort of fair weather for markets on Donald Trump, and I was very struck. One of my former colleagues at JP, Morgan Bruce Kasman, put out a note in the last couple of days saying this weekend's announcements point towards a materially different US policy mix than built into our outlook, and challenge the underlying view that the Trump administration will strive to limit disruptive policies. In fact, the risk is that the policy mix is tilting into a business unfriendly stance. So that's I think as sort of framing for this second part of the conversation. I'm very excited to welcome Katie Greifeld, Bloomberg TV hosts many of you will know, and co host of the Money Stuff podcast. Katie, thank you very much for joining us, Thanks for having me and Ed Harrison, senior editor and author of the Everything Risk newsletter, who's also come from Washington to be here. Katy on that, do you get the sense with all the guests that you talk to on Bloomberg TV and elsewhere, that the mood is shifting, that there is a fear that this is going to be a business unfriendly administration, at least with this kind of uncertainty.
What I keep coming back to, both with guests and you know, with my Bloomberg team, is that it's only week two, so it's really hard to say, but I will say the experience with tariffs I think rattled a lot of investors that I've been speaking to this week, also a lot of business executives, because I mean, you just think about the automakers. We had forward report earnings this afternoon. And maybe tariff's a negotiating tactic. It certainly seems like the last week has proven that. But if you're running a company, if you're putting money to work, the will he won't he? When it comes to tariffs, you still have to respond. You have to game plan, you have to try to, you know, make decisions here. You think about Ford, for example, and you think about, okay, maybe we pushed out tariffs for a month. When it comes to Canada and Mexico, the auto industry would be so affected by those levies if they wanted to affect, But also how long they lasted whether or not we saw retaliation, and Jim Farley, I mean saying he said on BTV actually just about an hour or two ago, that they can see he's the CEE of Ford. They can handle a couple weeks of tariffs, but if it goes beyond that, it'll be billions and billions of dollars in incremental profit headwinds. So those are real considerations, and I think that optimism is still there. I mean, Farley went on to say that he thinks Trump will be overall positive for the auto industry, but there's question marks around that. Just all out enthusiasm and felt like we saw after the election.
I would agree with that. What I would say is is that when he came on board, people were thinking low tax is low regulation, that's good for business. But with the tariffs, that's changed. And I think the thing that's changed that's most obvious is inflation expectations. That is, the expectations both from consumers and from the market that inflation will stay low. As soon as Trump became more likely to win, we saw from September forward the expectations over the next two years of inflation that's market based go from something in the one percentage area to now three percent, which is quite a move, and interestingly, very recently we've also seen an increased risk of recession, and so that's a sign that perhaps he's not going to be as friendly as we thought he was going to be.
How are people thinking about the FED in that context? Because actually, well, Casey, you reminded me that we'd had this very interesting comment from the President in the last week about the FED, who's he'd always been keen on having lower and lower interest rates.
Yeah, Trump loves the voliage erom pale. But this week, I mean lost sort of in all the news that we got over the weekend.
He did say that he thought that the.
FED made the right move last week at their meeting to hold interest rates steady, which honestly was the most surprising thing I saw over the weekend.
And it is interesting to think. I love the fact. Can I just say I love the fact that you thought that was more exciting than the twenty five.
Yeah, if I couldn't, I wish I could be a fly on the wall to seedge roam palcy that headline.
But I don't know.
There's this idea of the FED put that has always percolated. There's the idea of the Trump put that's been out there, the idea again that both of them, if things really got out of hand in the markets, that you would either see the Fed step in or Trump step in to juice the s and P. Five hundred to put it bluntly there. But when it comes to the Fed this time around, it seems the consensus in markets is that they're going they're in wait and see mode. We were talking about executives. How do you make monetary policy in this sort of environment, And it's maybe Treasury secretary sounds like a cool job. It would be really hard to be fedchair right now.
Let me I say that it's interesting because Scott Veston, the Treasury Secretary, just recently said that they don't really care about the FED funds rate, which is what the FED controls. They care about the ten year treasury rate. And I think that's very interesting for two reasons. One the fact that he's mentioning the ten year treasury rate instead of the stock market. Because if you remember, in the last term, the President went up and kept on talking about, look, stocks are up, obviously I'm doing a great job. Suddenly it's the bond market that actually matters. That's number one. The number two is is that they're now focused on this long term interest rate. And the reason is, I believe, because that's the rate that matters. We saw when the Fed lowered interest rates last year that actually long term interest rates went up. Thirty year mortgages went up in concert with those long term interest rates. If you get a corporate loan, that's also because of those interest rates. And so that's what they're focused on now. So now it's the bond market that matters much less than the stock market.
He is having to But if you'll, Scott Best, one of your jobs is going to be shoveling an enormous amount of treasuries in trying to sell an enormous number of bombs that even does the the amount of debt that even rolls over now in the US, let alone the deficit each year. Surely that's why he's particularly focused on the cost of borrowing.
And so you know, if John mickel Fate were asking him proting questions over and over again, he'd probably have to come clean about what he really means, because what does it really mean that we care about the ten year treasury Obviously, it's not that we want it to go up. We don't want the treasure you able to go up. We wanted to, let's say, stay in a range. If it goes up too far, then that range will be too it'll be too high. Wanted to go beyond that range, and we don't want it to go too low because then that's a recession. That's signaling recession. But in the back of his mind he has to be thinking, we're going to be shoving this dead out and we needed to be lower than an otherwise would be. And I think that there's that inconsistency that Tim was talking about. There's that policy incoherence. How are you going to get three percent in growth, have a four point five percent fed funds RAID and still get a lower interest rate. It's just it's not feasible. And it'll be very interesting to see how they play that.
Yeah, I thought those comments were so interesting. Scott Besson said that, not to name another network, but on I think it was Fox Business just this afternoon, and.
You know these are subscribed. As to Bloomberg, did you not get the memoy?
But isn't it better to hear us talk about I thought that was fascinating, and I do think there is something to the idea that this time around, and for only two weeks in that it seems like the bond market is the focal poorum rather than the stock market. But when it comes to the long end, it's you have to wonder what the administration could even do other than just watch the tenure treasury yield, because it's not like the Federal Reserve itself even has control over that side of the bond market.
In a way, this takes us to the dollar and whether you can possibly have just the right bond yield, just the right Fed funds, and just the right dollar. For Donald Trump, he sounded on different signals on that over the years. He kind of wants a strong dollar when you think of it as more of a sort of virility symbol. On the other hand, he thinks that's a sign of the unfairness of the global economy. How do you think about the dollar?
The dollar is really interesting because even you think back to Scott Beston, I think it was in his confirmation hearings he didn't endorse a strong dollar, but he did talk about the importance of having the global reserve currency, which I don't know how much to read into that, but it did stick out to me at the time. But bringing it back to corporate America in this earning season, the strong dollar is a headache for a lot of these internationally exposed businesses. You're seeing it pop up in earnings calls, a lot of finger pointing out the strong dollar. Something I always wonder about is how much corporates are using it as an excuse, maybe exaggerating some of the effects to make their numbers look better. But it's definitely a headwind.
I mean, this is slightly putting you on the spot years. But do you get the sense, you know, there was an era in which sort of push for government efficiency, you know, went with the deregulation agenda and was considered in a very kind of positive way. You know, obviously a lot of the press around events and the Treasury and the way that Elon Musk's team has been approaching the scaling back of government. Do you get the sense, either of you that there were also business leaders or market folks who are actually kind of like, hm, well maybe this is actually going to do something. Maybe he really is going to shrink the government by ten percent.
What do you think, well, I'm very interested in what Katie.
We haven't discussed this.
I'm just because I can tell you that in DC itself, there's a palpable fear everywhere that you go about everything that's going on. I know people who are in certain agencies who thought that they were untouchable and then suddenly they got the notices.
That would be music to Elon Muss presumably touch the.
Fact that we're going to see the voluntary cuts and if you don't obviously voluntarily decide to leave, then we're going to actually make the cuts ourselves at some point in time. So there's a palpable fear that I think pervades Washington that makes it more difficult to understand. Is this helpful from a business leader perspective? But that's the fear that we're seeing.
In like guess Casey, some of the people, the business people that you speak to, if they've ever done any cuts or rounds of redundances, they know that if you do the bias, you lose all the best people, potentially all the people who have the most options.
Yeah, absolutely, there's potentially some painful medicine there. But when we speak to as about especially when we first learned about Doge and Elon Musk's role here in this administration. The question that we always asked investors and still are is how seriously do you take some of these pledges, some of these goals that they've set out to accomplish when it comes to spending cuts, and it just feels like so many other things right now, it's really wait and see mode. And you also there's also the question there is many how much of this is an investible scene. Maybe we do shrink the government by ten percent. I'm not sure what that math looks like, but what does that trade even look like?
So there's a.
Lot of questions and I haven't quite gotten one satisfying answer there.
We everyone has to just tune into more and more podcasts. I think that's what most people are doing. But you wouldn't want to be trading on every single headline, that's for sure. Well, this has been brilliant, Casey and Ed, thank you very much, Thank you, thank you all for joining us for this taping of Trumpernomics from Bloomberg Headquarters. It was hosted by me Stephanie Flanders, and I was joined by Tim O'Brien, Nancy Cook Katie Greifield and Edward Harrison, and we hope everyone here had fun. Thank you for listening at home, and subscribe, rate, and review this show wherever you get your podcasts. Thanks very much,
