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World leaders, and Global Wall Street are parsing the tariff's announcement President Trump made on Wednesday, shortly after markets closed in the US. The President made good on a big campaign promise to overhaul nearly a century of trade policy.
By fellow Americans. This is liberation day waiting for a long time.
With a new executive order, Trump declared a national Economic emergency and announced a baseline tariff of ten percent, along with additional duties on a long list of countries.
Indonesia, Malaysia, Cambodio. Who look at Cambodia ninety seven percent. We're going to bring it down to forty nine. They made a fortune.
That's Trump reading from a chart printed on a piece of poster board Commerce Secretary Howard Lutnik handed him in the middle of the speech.
We didn't want to bring this very windy out here. We didn't want to bring out the big charts because it had no chance of standing. Fortunately, we came armed with a little smaller chuck.
This announcement was a major event for the global economy and for markets, and stock futures took a dive as the President spoke the president's tariff's announcement is a major assault on a system he is criticized for decades. Josh Wingrove is a White House reporter for Bloomberg.
Trump has been talking about this for a long time, clearly, and he wanted a level of pageantry for it, and he lined up his cabinet, he lined up workers, he spoke it kind of an unusual location in the Rose Garden that allowed him to get as many American flags behind him as possible. He chose the longest edge, and he's casting this as make America wealthy again. You know, this is liberation Day for you know, what he believes will be sort of a renaissance of American manufacturing.
Josh says, the focus now is on the effects these tariffs will have and what the trading partners Trump targeted going to.
Do countries will respond. The question is whether Trump then upsit or whether that's sort of tit for Tat is the end of it for now, and I think markets will react obviously much more favorably if it's like a one shot retaliation rather than an escalating fight.
I'm David Gura, and this is the big take from Bloomberg News. Today on the show Preston Trump's tariff's announcement, what it means for markets, for the economy, for all of us, and what happens next. Preston Trump spoke to a crowd of supporters, advisors, including cabinet secretaries and members of Congress at an event in the Rose Garden at the White House. Bloomberg' Josh Wingrove says there was a lot of fanfare, but the President didn't give a lot of detail.
Today's announcement For those who did not watch, it was extremely Trumpian in that the actual rate was revealed by him holding up a giant placard. Be it like four feet by what five feet? I don't know it was. It was a huge sign that he held up that had the sort of presumed rate that the US believes would be fair. And so that's how the world learned about a thirty four percent tariff on China was by Trump sort of revealing it like you know, a game show, on a giant printed placard.
Josh spelled out for us, what are the tariffs that the president is putting in place?
These numbers are bigger than anyone would have done other than Donald Trump. But are also smaller than Donald Trump considered. So a ten percent global tariff is just a major, major departure from where the US has been going for decades and decades and decades. This will be hundreds of billions annually when combined with all the other stuff he wants to do. That are import taxes, of course, and
some of that will be passed on to consumers. As we know, Trump believes that a lot of it will not a lot of it will be eaten by price reductions by exporting countries. But you know, time will tell. But the temper is on the lower end of what we had heard. There was talk about twenty percent, but the fine print is rolling in and that is narrowing the scope and focusing the scope. For instance, they've said that the tariffs will not stack on top of other
terrafs in some cases. So for instance, Australia is getting a ten percent tariff, but Australian steel, an industry that already has a twenty five percent tariff in effect already, will not be on top of that, so you know, it won't be thirty five for it, and there was some fear that that would be the case in some countries would get double or even triple whammies. But as Trump's tariff sort of kick in, so that's been a major narrowing here as well. They've also exempted certain countries
Canada and Mexico. Namely, this is a big one that will be a sign of relief to some of those closely integrated continental sectors, chiefly, I think the auto sector. So it is bigger than almost anyone would ever have done before him, and it's smaller than he was considering hours before.
Toward the end of the President's speech, he started to go through a list of what he called reciprocal tariffs country by country percentages. The President says he'll put a forty six percent tariff on Vietnam, a twenty five percent tariff on South Korea, and a twenty four percent tariff on Japan.
I should know, without being too glib about it, like there's deep frustration in the Republican Party and the Democratic Party about the way that the global trading regime has shaken out in the US and the impact it's had on sectors like autos, like steel, and that they want
to change that. And the trick on this, of course is, you know, how do you not change it too much that you throw away all the progress you still have made, like, for instance, American manufacturers that rely on foreign imported inputs to make their goods in the US. Right, you know, like the widgets that come into your factory don't often come necessarily from down the road. If for an American manufacturer, they come from lower cost markets abroad. And Trump wants
to change that as much as possible. But if you try to change it overnight, many of these companies will simply not make it. And that is not something any president, even Donald Trump, would want to be in office presiding over. But he does want major change here. Right, They've taken and no pain, no gain approach, and they've sort of warned that, look, this is not going to be smooth. This is going to be bumpy. But how far they
want to go, we'll see. There are things still coming down the pipe, and I think that that is important to note here.
Josh notes we've already had tariffs on cars and steel tariffs, and President Trump has said there will be new duties, even higher tariffs on semiconductors, critical minerals, lumber, and pharmaceuticals. Josh, you covered Donald Trump on the campaign trail. I'm curious how much of what we heard in that announcement on Wednesday Jives is what he promised he would do on the campaign trail.
He's been saying this a lot on the campaign trail, but the specifics were never really there, and the Republican Party was always sort of picking which part it wanted to listen to. As we're investors, right, people kind of saw in the first term where he used tariffs as a tool. The Republican Party is very comfortable with that, no issue, even the anti tariff Republicans in Capitol Hill, they do not mind Trump threaten tariffs left right and
center to get concessions out of countries. In fact, they kind of like it. They think it's sort of flexing as muscles. But as these tariffs started to come in, I think people have thought, oh, whoa, he's like more serious this time than in the first term. And that's an important point. We've been talking about Donald Trump and tariffs, not even just since this campaign, but since the two previous ones. And in the first term it was much
more narrow, it was much more targeted. They did sectors like steel and aluminum, but they exempted entire countries they did lower numbers. For instance, it was ten percent on aluminum. Now it's twenty five. And now we're doing not only not exempting and not only doing higher numbers, but then also filling in the blanks with across the board tariffs on every other good under the sun. So it's much bigger,
it's much broader. Donald Trump himself believes in tariffs, and I think the signal came on the campaign trail he would talk about tariffs being his favorite word.
I always say, tariffs is the most beautiful word to me in the dictionary. And I always reprimand by the fake news. They said, what about love, religion and God? I said, I agree, Let's put God number one. Let's put religion number two. I love, I don't know, I got to put that number.
Three, I guess right.
And then it's tariff because tariff's are going to make us rich.
As he has been signaling for a long time that this is where it was going to be. And the question was just sort of like how, you know, focused it would land and there'll be a lot of reporting, I think in the coming days about what happened here and who won you know, how these backroom chats shook out.
I will note not a lot of this leaked until the announcement, and so the discussions that they were having were clearly pretty animated, and clearly people were on different ends of the spectrum on this, but they managed to keep it mostly in house. One big question going forward is where does he go from here? Does he strike deals and bring those numbers down? You know, if someone offers Tarrak concessions, does he meet them halfway? Or does
he get mad at retaliation? And we do expect retaliation and ratchet things up even more.
We'll get to that next. How are other countries going to respond to what the President's announced? And how much of an appetite does he have to negotiate. You reported that in the hours leading up to this announcement that the president's plans were still in limbo. What do we know about what the sticking points were, what was being debated among the president and his economic advisors? And I'm curious what insight you have to who actually had his ear as this was coming together.
The fundamental discussion had to have been around scope, because that was the difference, right that no one seemed to be arguing a completely different approach, but how big a brush they wanted to paint with. There seemed to be real division on that, and going off of what people are saying publicly, you know, you had the more hawkish end certainly appears to have included Peter Navarro that goes on TV and talks pretty strongly about how much he
believes in tariffs. And then other signs of concession or you know, let's say adjustment maybe would be a better word, have come from like Secretary Lutnik to Commerce Secretary Secretary Bessent. His role, I think is a little unclear here. We think we'll learn more about that in the coming days.
But the market signal had to have been going through those two who have come from a finance background, And of course markets have been nervous for weeks because when Trump started actually putting pen to paper on these tariffs, people realized that he wasn't entirely just using them as a bargaining tool, and so that reaction had to have been a factor. There has got to be an awareness right now of the risk of going too big, too soon, too quickly, and triggering some sort of downturn.
Picking up on that over and over again, I Ford investors talk about the consequences of uncertainty. Hear they said they didn't on what the prison would do or what he wouldn't do when it comes to trade policy with this announcement, Josh, how much of that uncertainty went away?
I think a lot of it went away, but there's still some and there's still now new uncertainty. The existing uncertainty is where the rest of these shoes are going to drop on the other sectoral tariffs and how big they're going to go. Although the breadcrumbs are leading in one direction, he seems to always land at the number twenty five for these, so you know, I would assume that that would be a likely candidate for the tariffs on things like lumber on pharmaceutical drugs since I make
Inductor chips. The question and uncertainly going forward is how firm is he on this? How many exemptions are we talking about here? And Trump has said he doesn't like exemptions. Kevin Hasset, one of his economic advisors, came out and talked to reporters a couple of weeks ago and said, if I start talking about exemptions, he kicks me out of the room. So Trump does not want to start
nipping and tucking here and there. And that's going to get tricky because some of these tear tariffs are going to start hitting things like I don't know, critical pharmaceutical drugs or essential parts that get complicated for cars if they're tariffed at a particularly onerous rate. Autoparts tariffs, by the way, are coming as well in the coming weeks
and months. They haven't specified when, and so I think that is going to be a key pressure point once you start seeing choke points emerge from this tariff policy in certain industries, in certain sectors where it threatens either American jobs or you know, to become a political problem. Otherwise, will Trump be adaptable to that. A lot of presidents would like nip and tuck and you know, change things on the fly. Trump is signally he is not interested in that.
So we'll see, Josh, what happens next. Do these policies that the President announced go and effect immediately? And if not, what's going to happen between now and when they do go into effect?
They go into effect over the next week or so. The first trunch, the ten percent baseline goes into effect this weekend. The bigger numbers for what they've think or the worst defenders going to effect a few days later. The auto tariffs that were already tied up still go into effect on Thursday, and then other stuff is sort
of coming after that. What happens next is that we will continue to see him march towards the sector specific tariffs, and we will see how he triages these requests either from industries in America to change things, tweak things, examt things. He has bowed to that before with autos, but has later grumbled about it. So whether he's keen to do it again, I think remains unclear. Even if he did, at the end of the day, he would get to that ten percent baseline number. So it's still going to
be a fairly significant tariff. And remember they're talking about replacing income tax revenue with tariff revenue. That's tricky for a couple of reasons. Number one, how because Republicans don't really have a clear plan yet on their reconciliation package, and in particular tax cuts that would be broad based.
And number two, tariff revenue might decline or plateau over time, and it's less predictable than income tax revenue, so that gets tricky in terms of forecasting and this of that, because of course people might buy less of a product over time once they realize it's tariff and address to other alternatives.
Josh, what did President Trump say about his appetite to negotiate with the countries he's targeted with these tariffs, either in the Rose Garden or what's he said leading up to it.
He has sent mixed messages on that, and on the one hand saying he wants to make deals and this is all about reciprocity. You charge us what we charge you, or will charge you you charge us, And so by definition, if someone wants to come to him and drop their tariffs, he's willing to listen. He wants this to be the new order, and he wants people to adjust to the new order, and he wants companies to make pledges to
invest in America. And so my expectations are sort of modest at best that there'll be substantial changes to this. But yeah, I mean, I think he will love to announce deals and reductions, and so I think we'll see a bit of that. But they're talking about hundreds of billions in revenue each year, trillions over a decade, which is the customary budget forecast window here in Washington, and so I don't think that that number is going to
change a lot. It'll change on the margin for particular countries.
Josh, what did the audience for this announcement tell you about the way the White House is going to approach selling this policy to Americans? So, as you said, there were cabinet secretaries there, members of Congress. At one point, he pulled up an auto worker who supported his candidacy to speak to the crowd.
We support Donald Trump's policies on tariffs one hundred percent.
So, mister President, we can't thank you enough.
And in six months or a year, we're going to begin to see the benefits. I can't wait to see what's happening three or four years down the road.
Thank you, mister President.
How's he going to make the case that this is something that the US needs to do.
They have been amplifying the relatively small number of stakeholders who think this is a good idea. The steel industry, for instance, loves steel tariffs. It tends to boost their prices and help things along. The people that don't love steel tarffs are everyone who has to buy steel, including the car industry, for instance, so they're much less jazzed about it. And so Trump is pointing to the first group.
He's pointing to steel workers. He's pointing to union leaders, including the United Auto Workers, who've talked about the positives of at least some of this. But it's a fairly narrow margin. So I think we're going to continue to hear this coming from him, from his aids, from his loyal members on Capitol Hill, from his cabinet, and less so from others. But I will note a lot of the stakeholders in industry I think have learned a lot
from the first term. They are not standing on the street corner outside of the White House with a sign protesting these tariffs. Nor are they really putting out fiery statements or taking ads on Fox that run in Palm Beach on the weekend so the Trump will see it. They are really kind of keeping their advocacy largely behind closed doors and thinking that that is the best way to drive this to a different outcome. But the President
believes in tariffs. I don't know how to explain that sometimes other than that he just is a vowed that other countries have ripped off the US for a long time. A lot of this seems to be rooted with what he thinks that Japanese did in the eighties. The guy loves tariffs. He's been waiting for this day a long time, and I think we should expect tariffs to substantially be part of the picture as long as he's president.
I should say you and I are talking just a couple hours after this announcement. You mentioned that economists have been trying to game out who's going to pay for this, what the effect is going to be on the global economy. Yes, external economists, but our own colleagues at Bloomberg Economists have been doing that as well. Where are we in kind of getting an understanding or a forecast for what this might mean?
Our friends at Bloomberg Economics have been crunching these numbers to the extent that there are numbers to crunch, right, and Trump has been sending mixed signals, and so the
output really ranges. You know, there's like the sort of max list approach, which would be a much more significant headwind to growth and a much more significant thorn to the FED, and a much more significant threat of a downturn So this kind of lays in the middle a little bit, and I will be reading closely as everyone will, how they hash this out, for instance, as we sort out what other tariffs might still be stacked on top
of these, whether these replace existing things. These are important questions. But what all their work shows is that prices will rise for consumers and that that will complicate things in a range of ways. It kind of makes things tricky for the FED, who will be facing questions of rising
prices but also stagnating growth. And it makes things tricky just broadly, as Trump also tries to sketch out a budget plan that is banking on fairly robust growth that he just put a weighted blanket on the shoulder of to try to sort of also reset the manufacturing base. There will be a price for this. It's the short answer of all the analyses, but it's been unclear because the details haven't been laid out until now.
Let me ask you, lastly, Josh, sort of how this fits in with Wall Street's expectations. So if Wall Street had its worst case scenario and its best case scenario, where does this fall.
I think that again you have to grade Trump on a curve as Trump goes, this is a sort of moderate outcome. This is not the full fire and fury approach that they kicked around, and he likes to do that, right. He likes to threaten everything and then come out with a slightly less onerous version of that. And then people are like, ah, he's moderating, but grading Trump against other presidents,
this is still a maximalist approach. If Joe Biden wanted to put a ten percent tariff on everything, I would be curious about what Republicans would have thought about that. I think they would not have been super keen. Areas of overlap a lot between the parties, like on China, for instance, so tariffs are a tool that both are willing to wield. But the scale of this is huge, So I think as Trump goes, this is not as widespread as the worst fears of markets in Wall Street.
But it's big, and it's bigger than a lot of presidents would have done, and we're just beginning to chew through what impact it's going to have.
Josh, thank you very much, thanks for having me. This is the Big Take from Bloomberg News. I'm David Gura. This episode is produced by Alex Tye, Rachel Lewis Chrisky, and our deputy executive producer Julia Weaver. It was edited by Patty Hirsch and Derek Wallbank. This episode was mixed and sound designed by Alex Segura and fact checked by Nami Ing. Our senior producer is Naomi Shaven. Our senior editor is Beth Ponzo. Our executive producer is Nicole Beemster Bor.
Bloomberg's head of podcasts is Sage Bowman. If you like this episode, make sure to subscribe and review The Big Take wherever you get your podcast. It helps people find the show. Thanks for listening. We'll be back tomorrow