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Welcome to the Bloomberg Daybreak Asia podcast. I'm Charlie Pellet. Doug Prisoner's off. This week, US futures climbed and Asian equity futures were mixed after President Trump warned he may impose a one hundred percent tariffon chip imports.
We're going to be putting a very large tariff on chips and semiconductors. But the good news for companies like Apple is if you're building in the United States or have committed to build without question, committed to build in the United States, there will be no charge.
The comments came as Apple CEO Tim Cook unveiled a one hundred billion dollar US investment plan alongside Trump at the Oval Office. Coming up, we'll get reaction from Emily Benson, head of strategy at Minerva Technology. Fewtures. After months of trade talks and threats, US reciprocal tariffs are set to take effect at twelve oh one am Eastern Time. For more, we heard from William Rinch, senior advisor at the Center
for Strategic and International Studies. He spoke with Bloomberg's Heidi Stroud Watts and Hustlinda Amen.
He previously served as US Under Secretary of Comments for Export Administration during the Clinton administration. Good have you with us, William? I mean, what's your take? We're seeing headlines still, you know, dropping when it comes to those tariffs. It aimed over till the fat lady sinks. I mean, where are we with these tariffs?
Well, you know, another day, another tariff that seems to be what's happening here? And it's just one thing after another. There's so many unanswered questions that it's very hard to figure out what's going to happen. You know, on the secondary tariffs on India, why not China? You know, how is it going to be enforced? Is it going to be on everything? Or are there going to be exceptions? There tends to be sometimes a list of exceptions that
gets ruled out later on. On the semiconductor tariffs that you were just talking about a few minutes ago, same thing. You know, are they going to how they're not going to be applied to companies that are producing here or have promised to produce here?
What does that mean? How long do they have to keep their word? You know?
Are the teriffs going to be on the chips or the products that contain the chips. And if it's the product contains the chips, is it on the full value of the product or just the value of the chip. None of these questions are answered right now. In a week, we may have some answers, but it's really the same as the deals.
That are on screen right now.
There's a lot of unanswered questions about those too, and a lot of cases where the leaders of the other countries have interpreted what they agree to somewhat differently than what our president has said. So there's just a host of things that have to be resolved. This is going to go on for a very long time.
What are the implications, William, I mean you can only imagine MODI must be thinking how did a friend become a foe? And you have to also question if India's non aligned policy might change at this point in time.
Well, yes, I think that's a very important question.
Whether these tariffs are coming at the expense of the broader US India relationship. Relations with India have improved a lot over the last twenty years, starting in the George W. Bush administration, mostly for geostrategic reasons. Mostly I think as a counterweight to China, and these actions now may be sacrificing the good will and credibility that have been built up over a long period of time. Trump seems to be frustrated by ability to close the negotiation with the
Indian government. You know, there were many predictions that there'd be a deal. There were many optimistic predictions about a good deal, meaning for both sides, and none of that has happened. And for those of us to watch trade negotiations that we weren't really surprised.
India is a very difficult country to negotiate with.
So I think the President is frustrated and is taking out his ire on the secondary sangards issue first with India. He implied today that China might follow so because they actually buy more oil, Russian oil than India does. So stay tuned for, you know, tomorrow or the next day, more tariffs.
The counterweight element of channing is a really interesting one to me because we've seen some of these traditional security allies in the region, Japan, South Korea, the Philippines really having to scramble to get favorable trade terms. India obviously now on the ouse as well, whereas Beijing seems to be kind of coasting along with but can being kicked down the road on an extended truce. What do you make of that dynamic?
Well, it's puzzling.
I mean, the irony of a lot of this is that we're is how badly we're treating our friends. You know, we have friends and allies in the region in Korea, Japan, we have friends there in Southeast Asia that are not out well. The Philippines is an ally as well, and we're treating them really harshly in these things, in these agreements.
And you think that if the overall policy is to maintain the US presence, particularly it's economic presence in the Asia Pacific region, you want to have friends and you want to have people that are going to side with you if conflicts come up.
And right now it.
Seems that we're really tossing those people aside.
It's very worrisome.
What do you make of the state of play when it comes to China? I mean, is it just sort of a good news story for now because it is such a strategically and competitively difficult relationship that it's kind of being put on the back burner. And you know the fact that these extensions are probably likely to happen. Suggest that this is this is a way to kind of make it a good news story.
Well, it's it's a fascinating it's fascining to watch that one play out.
The President seems to be of two minds about China.
A lot of the people he appointed to the administration are real China hawks that perceived China as an extential threat and favor you decoupling to the maximum extent possible.
The President does not seem to be in that group. Although he appointed all these people.
He does seem to have the view that if he and she did and Ping could just sit down together one on one, they could work a lot of these differences out. He tried that in his first term. It didn't work. He appears now to want to try again. I don't think it will work any better in the second term than it did in the first. But you've seen him over the last two months pulling his punches
with China. The nasty rhetoric about the leadership which he's displayed with respect to other countries has gone away.
He's imposed and then removed some export controls. It's kind of a yo yo policy. They're on they're off, and he's.
Not done anything on the Russian oil issue with respect to them, at least so far. I think he wants to get the meeting and doesn't want to disrupt the relationship. He's also very aware, as I'm sure you reported on that China is the one country that has used his leverage on US, namely with critical minerals and rare earths, and they haven't hesitated to block their export.
That was a wake up call.
I think to the administration that this is one of the one of the rare cases where Trump does not hold all the cards, and I think that forces him to proceed more cautiously.
William, we know that Trump's tariffs face a legal battle at home, doesn't even matter. I mean, we know that Trump has a way of pushing through everything. Anyways.
Yeah, I think that's interesting to watch.
My guess is that whether he wins or loses, it'll be very difficult to get rid of the tariffs, at least in the short term if he loses, and I think this will play out over the next four or five months. It's not on a really fast track, but it's going to fat be faster than the normal course of litigation in the United States. I think by the end of the year you'll get a decision out of
the Supreme Court. If he loses, he'll probably say that the agreements that he's already struck are the product of the negotiations and not the product of the law that he used, so that the court's judgment about the law.
Doesn't affect the agreements that he's negotiated.
Now he'll be sued about that, so more lawsuits, more litigation. The courts so far have tended to say, let's keep the terroriffts in place while we're sorting out all these legal issues. So I think even if he loses, they're going to stay in place. And if countries are looking to the litigation as a fail say for them that ultimately it'll get them off the hook.
I think they're going to be disappointed.
William Ranch, Senior advisor at CSI is really great to have your views.
Welcome back to the Daybreak Asia podcast. I'm Charlie Peloton this week for Doug Chrisner. President Trump says he will impose a one hundred percent tariff on semiconductor imports, adding he will exempt companies moving production back to the US the comments came is Apple CEO Tim Cook unveiled a one hundred billion dollar US investment plan alongside Trump at the Oval Office. For more, we heard from Emily Benson,
head of strategy at Minerva Technology Futures. She spoke with Bloomberg's Heidi Stroud Watts and has slender Amen.
Willly really great to have you with us. And so when we see an announcement like this, which obviously looks big and impressive from the headlines, we know that it takes it to a sort of a cumulative six hundred billion dollar intended spend by Apple in the US market. Are you Are you impressed by it in terms of what practically significantly it means and what it means for some of these contracts with existing partnerships.
Thank you for having me. It sounds exactly like the type of arrangement that the Trump administration has sought even since before it came in. While the one hundred percent announcement today on semiconductor imports me seem high, the administration actually first telegraphed that idea at that rate as far back as January of this year in the Taiwan context. And I think this has been a very forward leaning posture of the White House to try to induce companies
to make exactly the sort of announcement. I would also add that this comes on the heels of a separate five hundred million dollar announcement by Apple in the MP materials context, where it is also agreeing to off taake critical minerals and earths at a superficial price floor. And so Apple is really doubling down on the US market in a way that very closely aligns with this new posture on economic security in the United States.
Does has put the pressure then, because you know, President Trump obviously says this is a great example of how his trade policy, his supply chain policy is working.
Right.
How much pressure is there on other tech names. We know that there were talks with Jensen Huang today as well to also be able to show up in the way that the President the White House wants to see.
So rewinding a couple of weeks, we heard from the President and also Commerce Secretary Lutnik in Scotland on the sidelines of the EU US negotiations and ultimately deal announcement that semiconductor tariffs were inbound. They were going to be announced on a short timeframe, and so the administration has been teasing out the idea that if you would like
to make a deal, now is a good time. I'm very curious to see what transpires at the end of this week and over the weekend heading into next week, because it's easy to foresee a scenario in which a lot of the big players come to the White House with ideas for carve outs, and here I think the primary push by a lot of the companies involved would
be to not have this take place immediately. And that's actually something that we see that's transpiring very differently, for example in the India context, where tariffs will enter into a into force tomorrow and so there will certainly be an all hands on doc effort to figure out where there's a little bit of give and take, because this will ultimately have very significant price pressure, especially for hyperscalers and data center build out.
Emily's all about bringing chip production back home. The thing is the US is offshort that production to Asia since the nineteen sixties. It doesn't have the ability the capacity to do it, and it takes years to build new chip fat.
That's absolutely right, with one exception, which is sort of uncomfortable for people who don't really like the direction of travel right now with US policy is that TSMC's production facilities in Arizona are actually beating expectations, and so I do think the Administration has been relatively clear eyed about the timeline. That being said, they're willing to apply maximum pressure to the likes of TSMC in order to expedite
what's already a very fast timeframe. Again, I do think there will be carbau to extend the timeline of implementation. If you talk to a lot of industry analysts, I think the four to five to six year timeframe is
more medable for the industry. We also have to remember that this will directly confront one of the administration's other hallmark policies, and this was announced two weeks ago in the AI Action Plan, And here the White House is saying very publicly that it wants to prioritize AI build out, it wants to double down on US infrastructure, and very interestingly, it also wants to package a lot of that AI tech stac into separate bundles that it can then export abroad.
It of course, will need affordable inputs at the baseline in order to be able to export these packages and very interested to see what the ultimate price impact is on that particular corner of the administration's policy.
And emily some say it is about quantity, it's also about quality. And when it comes to both of them, Taiwan and self on subpause, what do you make off perhaps equality and quantity that can be expected from the US.
Well, I'm glad you bring up our allies and partners like time in Korea, but also the because a couple of weeks ago and the lead up to the expiration of the reciprocal tariff pause, the administration has entered into these arrangements where foreign partners seem to be under the assumption that they would only be subject to a fifteen percent teriff freight, and that includes a lot of these
sectoral products like semi conductors. So one question will actually be whether or not today's announcement induces further development on shore by those countries, or whether or not we'll have to explore further negotiations. I also will note that the United States actually does not import a lot of semi
conductors directly. Most semi conductors actually enter the United States in finished goods, so these are items like iPhones or laptops, and so it'll be interesting to see how the administration starts to calculate the actual value and whether or not each finished item will be subject to that one hundred percent tare free.
Emily all of this as we hurdle towards midterms, right, and as someone who's worked within the comments deplopmentum within sort of broader industrial and supply chain policy, how likely or easy would it be for some of these policies to be rolled back, particularly if you say that they're negotiated carveouts that push the timeline out by half a decade or more.
Well, trade is not top of mind for a lot of voters. It typically comes in somewhere in the eight to ninth police for priority voting issues. That being said, in today's Apple announcement, for example, they've entered into a bigger partnership with Corning Glass. Corning will increase its workforce related to this one deal by fifty percent in the state of Kentucky. So it's also possible that we do see sizable job gains and very targeted that's, of course,
aside from possible job losses and others. But if we start to see some economic movement. I definitely could foresee it having some political consequences in the midterms.
Emily Benson, head of strategy of Minerver Technology Futures, speaking with Bloomberg's Heidi Stroud Watts and Hustlinda Amen here on the Bloomberg Daybreak Asia podcast.
Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the Asia Pacific. You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen. Join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia. I'm Doug Prisoner and this is Bloomberg