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President Donald Trump is doubling down on global tariffs, even after his signature tariff strategy was ruled illegal by the Supreme Court. I will sign in order to impose a
ten percent global tariff under Section one twenty two. Immediately after the Court decided that the President couldn't use broad emergency powers to impose tariffs, Trump announced a new ten percent global levy using a different justification, and just a day later, Trump said he would ratchet up the tariff rate to fifteen percent for one hundred and fifty dates, the legal maximum that can be in place without congressional approval.
Now he's focused on a new statute never been tested before, that would allow him to raise tariffs to fifteen percent, but only in certain situations.
The Trump administration has also the US Trade Representative to launch new accelerated Section three oh one investigations, which would allow the US to impose retaliatory tariffs on countries whose actions it deems unreasonable or discriminatory against US trade. For US trading partners around the world, it's causing tariff whiplash all over again. On Monday, the European Union postponed a vote on the trade deal and negotiated with the US late last year, saying it needs clarity on the Trump
administration's trade policies first. India's trade delegation has also postponed a trip to the US to finalize a trade deal, which had been set for later this week.
I don't think we're going to see completely fully renegotiated deals, but the countries that are in this process are going to want to know the details of what they're going to roll out before they sign on the dotted line of anything with the Trump administration.
Brendan Murray oversees Bloomberg's trade coverage from London.
If you're sitting in Brussels or Beijing right now, you're saying, perhaps maybe we have more leverage than we did last week.
If you're Beijing, you're sort of now on a level playing field with US allies.
And Jenny marsh oversees Bloomberg's coverage of Greater China's economy and politics.
You've gone from the biggest target when Trump first came into now sort of you know, you have a fairly level playing ground.
She says, Like the EU, China sees the Supreme Court's decision as a loss of leverage for the US and a major win for China's trade ambitions, head of a high stakes meeting between President Trump and President shi Jinping late next month.
So what was achieved by the trade war?
Yea, what was achieved? I think China realized is not half as dependent on America as everyone thought.
This is the Big Take from Bloomberg News. I'm Sarah Holder today and on the show, my colleague Wan Ha who hosts The Big Take Asia podcast sits down with Brendan Murray in London and Jenny Marsh in Hong Kong to discuss what the end of the US's reciprocal tariffs and the potential for a new global tariff rate needs for America's trading partners across Asia and around the world.
Thank you so much, both of you for making time to join us. Between the three of us, we've got big parts of the world covered. Rendon, you're based in London, Jenny, you're here with me in Hong Kong. Before we get into what this ruling means for countries and manufacturers, I have to ask what's been the reaction to the Supreme Court ruling on the ground where you are.
I think a lot of people have more questions right now than they do answers. President Trump came out pretty assertively after the Supreme Court ruled against him and said, in effect, nothing's changed. I still have tariff authorities, and I may even use them to a greater degree than
I did before. The story is the same. The US is going to use tariffs to try to reshore manufacturing, create factory jobs, and essentially, as President Trump would say, rebalance the global trading system back in the US's favor.
That's interesting. So he's trying to say nothing's changed here.
Yeah, nothing's changed, but you know, in a sense, a lot of things have changed. The President Trump, by most accounts, has lost a lot of leverage here.
Jenny, what about here in Hong Kong and broadly in China. What's been the reaction.
It's been pretty mute in measured, I would say. But also when you sort of look at this, China sort of came out from the ruling as one of the winners. So you know, in a way, it's half of them to sort of come out sort of threatening anything because they've probably benefited from the Supreme Court ruling. I think you know, particularly ahead of the she Trump summit as well, they have to be thinking this sort of weekends Trump's hand, just a couple of weeks before he flies into Beijing.
I think that being said, China realizes this still is a Section and three zero one investigation pending against them, so in that sense they're actually weaker than other countries, and that this sort of investigation has already sort of been in trained for months that could be expedited now so they could quickly see more tariffs, and those tariffs under that investigation have no upper limit and they're pretty sticky.
The ones imposed under Section three zero one from Trump's first term is still in place, so I think that probably also is why they're sort of waiting and seeing before coming out with a sort of a strong reaction. And then I think for exporters in this region, particularly sort of ones that had the China plus one strategies for them, I think there's a big question mark now over was it a good idea to invest in new factories in Cambodia and Vietnam? Is it as useful as I thought it was going to be?
Jenny, who are the winners in this? And what does this victory mean for them.
The biggest one is so far is China, India, and Brazil. They were facing the highest tariffs and they're the ones that have seen the biggest sort of percentage point decreases. But I think everyone's aware that this is just the
holding pattern, right. This is what Trump has done is sort of to bridge the gap until he can sort of then use his other tools to get tariffs really where he wants them, And it's going to be much more complicated and harder for business to navigate because rather than the sort of broad tariffs, it's going to be this sort of like jumble of different sort of sectorial tariffs.
So Japan, South Korea, and Taiwan the big thing they are looking at still now is a section two three two investigation into chips, And for Taiwan, actually that was always the case because the trade deal they struck had a carve out for chips, which is sort of the biggest thing in the export to the US. So in some respects it was always going to be around these specific investigations into sort of really contentious sectors, and I think that hasn't really changed. So even though it's sort
of a headline win in some of these ways. For some of these countries there are sort of more potent measures down the pipeline and Brendan.
If we talk about winners someone's losing, which countries would you place on that list and why?
The United Kingdom for months has said we negotiated the best deal of a ten percent rate with President Trump last year. Now this across the board fifteen percent. Does that mean they're one of the losers in this? Are they going to get a special carve out in however the implementation from the White House goes ahead. We haven't talked yet about Canada and Mexico. They've been carved out of the fifteen percent because they're USMCA partners with the US,
so in that case they're not really delta setback. But they are in the process of renegotiating that North American Free Trade Agreement, and Trump, with all of his displeasure with the Supreme Court, may find Canada and Mexico as outlets to vent his frustration at because he has really
gone after Canada recently Mexico to a lesser degree. But if those negotiations were expected to go smoothly before, now the President without his favorite tariff tool has got to take another approach, and those two economies could be in for a rough ride over the coming months.
And it seems like countries like Japan and South Korea that had negotiated a fifteen percent terror freight, it looks like they've now just also lost their competitive advantage as well, right if everyone else gets fifteen percent?
Yeah, absolutely. And I think if you're these trade negotiators and you've spent like the last year painsaking me, having these meetings and sort of working out these deals, convincing your companies to get behind you, it must be so frustrating to wake up and to sort of realize that hard work has sort of been for nothing. At the same time, it makes it harder for Japan South Korea to sort of say that their trade deals are invalid because the tariffs are actually where they negotiated them to
be at. So in a way, it's kind of stays quo for them.
After the break, how the last year of tariff drama has shifted the global trade balance and what consequences the latest twist could have for the Shi Trump meeting next month, We're back with more from Big Take Asia host juanha in conversation with Brendan Murray, who runs Bloomberg's trade coverage, and Jenny Marsh, who covers the economy of Northern Asia from Hong Kong.
Certainly, the US as it stands is still at this point the biggest destination for global manufacturers. To what degree do you think the trade war changed that.
We just got the US's year end trade balance figures, and if you look at the top ten US trading partners, they really didn't shift around all that much. China's share of trade fell quite a bit. It's been falling for a couple of years now as the tariffs you know, take effect, But it's still Canada and Mexico at the top. You know, a couple of European countries, South Korea, Japan are in the top ten. Nothing has really changed to a significant degree in a sort of like structural way.
This is much more of a slow burn change in the global trading system than a sudden shock to the system. But we're heading into a new chapter now, and I guess in.
Some ways I mean that the trade war has also caused this fundamental shift as well, right, I mean in terms of certainly companies feeling that they can't rely just on the US as the main dominant market. They've got to find other customers in other parts of the world. Jenny, how has a country like China taken advantage of this asymmetry in global trade.
I think China is one of the best and most stock examples of just trade rerouting. You know, by the end of last year, China's exports to the US the kind of just attempt center its total exports, and that's half the first trade war, you know, and you saw the surge and exports instead to Europe, Latin America, Africa.
Export has just found other markets. And then you know, China finish the year with that one point two trillion dollar trade surplus, which no one was expecting it would be able to record in a year where it's facing the highest US tariffs, you know, in nearly a century. So they prove that you can diversify and find other markets.
And it's also then you know, it's taken an advantage of not only the trade war, but I think just the general volatility of Trump right just sort of warm its relationships and warm its trade ties with other countries.
You know, you saw Mark Carney come at the beginning of this year and talk about a new world order in China striking a bunch of trade deals with Beijing, and then Beijing kind of you know, handing out an olive branch by rolling back tariffs that it had imposed on Canada, and then Canada is saying, okay, right, you know, we're going to let in a certain quotua of Chinese electric vehicles into Canada, which something they had resisted to align with the US. That seemed like a landmark moment.
And then you had kist Arma coming just very shortly
afterwards and trying to achieve something similar. So I think China sees that other countries now need to diversify, and it's repositioning itself as sort of a land of opportunity at a time when people really are desperate from new growth drivers and are now worlling to sort of overlook some of the different issues or the difficult issues that has sort of stopped them being so favorable to trade with Beijing, such as the war in Ukraine, human rights issues.
People are now kind of they're being more pragmatic because it's a more kind of dangerous world in terms of trade, going into the trade war economists for saying tariffs at sixty percent are going to like decimate the Chinese economy. No way, They're going to sort of come out of this unscathed. Quite stark economic predictions. None of that came to pass. You know, exports surged and they hit their growth target of about five percent, so it didn't really have a negative impact on China at all.
In some ways. I mean, that's a feather in China's cap r.
Absolutely.
Yeah.
I think the trade will went better for shug Pain than he probably ever realized it would do, and it probably has rewired trade. Like if those tyrists went away, now what company start selling back into American markets? Maybe they would and they'd have even more trade. You know, it's hard to predict.
And Brendan, what's your take on how global trade is doing? You know, now that we're nearly a year since Celebration Day.
Yeah, I mean, if you look at it on a sort of annual basis, global trade has held up pretty well. But if you go back and look at how it transpired over twenty twenty five, it was the front loading. It was. It was strong in the first half of the year, and then it kind of softened toward the end of the year. I think we could be in for something similar that a lot of companies will be looking at this fifteen percent rate and say this might be as good as it gets for the next one
hundred and fifty days. So let's place our orders now so we could see after Chinese New Year, you know, a rush to get items in from markets in Asia into the US. But that's just going to complicate the ability of governments and central banks and economists and markets to figure out what is the clear read on the global economy. Is it being sort of propped up right now by you know, some some panic purchasing and ordering and inventory stocking, or is there some genuine demand there.
Jenny. Trade obviously goes hand in hand with geopolitical ties. How might the trade shifts affect political ties between the US and its biggest trading partners.
I think it's already having an impact, right because it's this volatility. So US allies are realizing that the US is not as a reliable partner, not just in terms of sort of military spending, but in terms of trade as well. You know, you embrace Trump's trade war, you say, okay, we'll make the deals we'll do the investment, we'll put in the and then turns out they aren't legal after all, and then you have to sort of renegotiate and go back all over again. So I think it just dnse
US credibility. No one's going to turn their back on the US. It's too powerful, and it still is a huge military guarantee, particularly countryside Japan in this region. But at the same time, there is a clear need to make sure you have a range of partners in all of your eggs and not just in one basket.
Now President Trump is expected to meet President she at a summit Embinging at the end of March. How does the Supreme Court ruling change the balance of power at the negotiating table when they meet.
This could be the sort of the first test, if you like, real test of how the Supreme Court sort of changes some of these deals. It will be interesting to see sort of how strongly the Chinese play their hand. On the other hand, I don't think they want to rock the boat too much. You know, the US channel relationship has kind of calibrated nicely, and even this year you've seen Trump, you know, take on so many parts with his claims around Greenland, you know, so much term
at European partners admid all of that. It has stayed quite calm with the Chinese, and I think both sides are very committed to sort of keeping that stability going. So maybe they just decide the status quoba is a good thing. You know, it's a beat to have a bed in the hand and two in the tree, and they keep sort of targeting that. But certainly she has more options now than he did a few weeks ago.
What would be the dream scenario for a president Shoe.
Hu Jinping has two things he really cares about getting from the US. It has access to the highest end in video chips, and it is some kind of concession on Taiwan. And I think if you're sat in beaging thinking what's the biggest thing I can get here? If it's my best moment, then you're going to push. And Trump has already signaled that he actually is. He's much more open to giving them those top chips than any
other US leader or politician is. And then on Taiwan, they want to stronger language around opposing Taiwan independence, which would be a big blow for Taiwan if that language changes and They want Trump to stop selling Taiwan so many weapons.
So he could actually get what he wants.
It should Yeah good.
This is the Big Take from Bloomberg News. I'm Sarah Holder. The show is hosted by me, David Gera, and Juan ha. There's much more on Bloomberg dot com. Get unlimited access to all of our coverage at a special rate for listeners at Bloomberg dot com slash podcast offer. Thanks for listening. We'll be back tomorrow.