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This is the Bloomberg dayba Qut podcast. Good morning, It's Thursday, the seventh of August. I'm Caroline Hepcat in London.
And I'm Stephen Carroll. Coming up today. US President Donald Trump's new tariffs come into effect, pushing US import duties to their highest since World War II.
The White House warns of a one hundred percent tariff on semiconducted chips, with carve outs for companies who manufacture in the US.
Plus Dreaming of your Own off the Grid Island, a tech entrepreneur's converted for it off the Welsh Coast goes on the market for three million pounds.
Let's start with the roundup of our top stories.
The next phase of US President's global trade tariffs have come into effect, pushing American taxes on imports to their highest level since World War II. The European Union, Japan, and South Korea negotiated a rate of fifteen percent on their exports to the United States. Other countries simply assigned rates which range from the UK's ten percent to much higher. More levies are yet to come, with President Trump saying he would double tariffs on Indian goods to fifty percent
as a penalty for buying Russian oil. Boombergs Jail Lisa says these so called secondary tariffs are less about trade and more about geopolitics.
It does seem like India has become kind of collateral damage in this ongoing pressure campaign that Trump's trying to launch against Russian President Vladimir Putin. Part of that big, you know idea of applying these secondary sinctions or tariffs on you know, nations that purchase Russian oil to try to get Putin to end the Russia's warn.
Ukraine Jesus out of the president. Trump said he might also punish China with additional tariffs over its purchases of Russian oil. Trade negotiations with China are still ongoing, along with the US's other two largest trading partners, Mexico and Canada.
Now, the US president declared plans for a new one hundred percent tariff on semikin doctor imports. Standing next to Apple CEO Tim Cook in the Oval Office, Donald Trump says that he is bringing manufacturing back to the US.
We'll be putting a terraform of approximately one hundred percent on chips and semiconductors. But if you're building in the United States of America, there's no charge, even though you're building and you're not producing yet in terms of the big numbers of jobs and all of the things that you're building. If you're building, there will be no charge.
Now.
Trump's surprise declaration further upends the global electronics supply chain. Tech companies including Apple, TSMC, and Nvidia have pledged to spend more than a trillion dollars collectively in the US since Trump returned to power, but the levees may still have major implications for the price of consumer electronics in the US.
I Meanwhile, America's allies are still grappling with the shock caused by the levees. Switzerland's President Karen Keller Sotter left Washington after a two day emergency trip, having failed to secure better terms. The European leader did not meet President Trump, instead only talking to Secretary of State Marco Rubio. Swiss goods face the highest American tariff of any developed nation
at thirty nine percent. Bloomberg Economics estimates that if the rate comes into effect, including on pharmaceuticals, at risks, cutting up to one percent of Swiss economic output in the medium term. The Swiss government is holding an emergency meeting later today. Meanwhile, despite agreeing a trade deal with President Trump, Japan is also trying to get clarity on car tariffs. Tokyo says Japanese cars were exempted from the levy, but that detail was not on the executive order.
Now, three FED officials have voiced fresh concerns over the US labor market, pointing to a rate cut in September. According to the San Francisco FED president Mary Daily, the data shows policymakers will need to alter borrowing costs soon.
Labor market has softened, and you can see this everywhere in the US economy and here as well. And I would see additional slowing in the labor market as an unwelcome sign. So all this means, as you put it together, that I think will likely need to adjust the policy rate sometime in the coming.
Months, the Fed's Mary Daily speaking there speaking to CNBC. Meanwhile, the Minneapolis FED president Near Kashkari also express worry over the slowdown showing up in multiple data points, adding that he expects two FED rate cuts before the end of the year. The news also comes off to fellow Governor Lisa Cook said that downward revisions to the jobs data for the last three months were typical of turning points in the economy.
In her words, markets are expecting an interest rate cut from the Bank of England later today. The news comes as members of the Monetary Policy Committee contend with a slowing economy and a jobs market rattled by higher taxes. Bloombergoks tea Adebayo has more.
Markets and economists are expecting the UK Central Bank to cut interest rates to four percent this afternoon, a two year low. The twenty five bases point drop would be in line with the boees current once a quarter pace of easing, but policymakers have remained cautious amid a fresh inflation spike. Concerns over the economy are also rising after it faced back to back contractions and a hiring slowdown
over spring. The decision will likely expose divisions amongst the nine member committee panel, with experts predicting a three way split in London. Twa Adebayo, Bloomberg.
Radio president Donald Chom says there is a very good chance that he will meet Russia's Vlasimir Putin and Ukraine's Vladimir Zelinski soon in another bid to broke a piece between the two countries. Chomps spoke to reporters in the Oval Office hours after talks between Putin and US Special Envoice Steve Whitkoff in Moscow.
Very good talks with President Putin today, and there's a very good chance that we could be ending the ending the round, ending the end of that road. Road was long and continues to be long, but there's a good chance that there will be a meaning very soon.
Excuse me, do you think you are some kind.
Of pot Well, look, I don't want to say.
Been disappointed before President Trump speaking thereafter, he informed allies in a phone call on Wednesday that he is positive about the possibility of a ce SPA in Ukraine in.
Terms of sources.
Speaking to Bloomberg, he also suggested that Putin would be open to peace talks in exchange for discussing land swaps.
With Those are your top stories on the markets this morning. The Mscirish Pacific Index nine tenths higher this morning after those latest tariff announcement, particularly to do with chick makers, have been giving the markets some optimism. TSMC shares in Taiwan are up by four point nine nine percent. Looking ahead to the European trading session, eurostocks fifty futures are up by a quarter of one percent. Wall Street futures
are two tents higher for SMP emonies as well. The ten your Treasury eel this morning just up a basis point at four point twenty four percent. The Blueberg Dollar Spot index is a tenth of one percent weaker.
Now in a moment, we'll bring you more on the latest US tariffs coming into effect. Plus we'll dig into the market reaction, particularly to the announcement around chips. But first, something we've been laughing about and thinking about all morning, really a bit of an escape from all the tariff news. Sarah Rappaport School always gets the best assignments, doesn't she.
Well, she's been writing about a private island for sale off the Welsh coast. It's home to a Victorian era ford that's been renovated into a five bedroom home. It's got things like a roof top bar. It's also fully self sufficient with generators, solar panels and heat pumps. Now the island is currently owned by the tech On Brenner and Mike Connor, who bought it in twenty seventeen brought it back from dereliction. He's had some great parties on
the island over the years. He describes it as a really expensive train set.
Yes, I think that's got a helipad on it as well.
You'll have to add that in there.
I think there's been quite a lot of a work that's essentially had to be done to try and get this island back to I suppose the state that it's in now, but it is on sale. Four an island, and it's at the current price is three million pounds.
I thought that was quite a snip. Actually, I must say that I've been doing research asland.
Well.
No, I just had seen the island when it was for sale.
I think everybody in the country.
Saw it because it was the most popular or the most viewed for sale property in the UK, and the year that it was up for sale I think it was twenty seventeen or twenty eighty, So I actually thought three million pounds after all the investment that must have been needed just.
Made me think of the famous five To be honest, the idea of there being an island, you know, with a four workshist.
It's so beautiful a view of that coast must be amazing.
Yeah, we'll put a link to there rapp And for its story in our podcast show notes. But let's bring you more down our top stories. The late US round of Donald Trump's trade tariffs have come into effect, raising the rates faced by dozens of countries around the world. Switzerland's president left Washington without any change to the thirty nine percent rate that their imports will now face in the US. Donald Trump's already threatening further moves on chips
and higher tariffs on India as well. Let's speak to Bloomberg's Ramsey Arabaki for more on all of this. Ramsey, good to talk to you. First of all, just to put us where we are with these new tariff rates coming into force today. How big a moment is this in Donald Trump's trade offensive.
Well, you know, he's been in one sense, it's at least some certainty for the world. He's been talking about these things since he got into office. He had this big announcement in April, delayed till July, delayed again. Finally at midnight in the US New York they have gone into effect, So we kind of know where everything lies. But as you guys have been talking about he's still full of surprises. There's the issue with India and oil.
There's this random announcement in the White House about one hundred percent or sorry, one hundred percent tariffs on chips unless they're produced in the United States or at least a company promises to produce the United States. There's the shaker on Switzerland. They still haven't settled China and Mexico and Canada, which are the biggest trade partners. So in one sense things feel quietly settled. But there's still some very big questions out there. And as I said, he's
full of surprises. So everyone's still on their toes.
Yeah, okay, so let's focus in on one of those. Then one hundred percent havef on chips with some very key exemptions. Is it good or badness for chip makers?
Well, you know, you even look at the story that Bloomberg and others writer. Right now, we even have people trying, they say, they're scrambling to make sense of what this threat is. It seems good news for a lot of the names you would know off the top of your head, a company like Apple, Taiwan's TSMC, Samsung in Korea, all of those governments. Those companies said, look, we were making investments in the United States or we're going to So by the reading of what he said, it's like, well,
they should be exempted. So it's not entirely clear just yet how big of a hit it could have to some of the biggest suppliers. What he's demanded was sort of already in train even before he came into office. If you remember, under the Biden administration, there was a chips AC that was encouraging chip makers to build in the United States, and a lot of them had already
made commitments to that point. But again, it probably has just as much to do with Trump's interest in being splashy and having a big number out there and really hammering home his point that he wants he wants companies to build in America for American consumers and American jobs.
So this could potentially, as you say, have some good news for those chip makers that are carved out from the that Twerff threat. But the other threat that we had from Donald Trump is to increase the tariff right on India from twenty five to fifty percent later this month. This is linked to its purchases of Russian oil. Is there any hope for negotiation? Do we think we've another twenty one days before that higher rate would come into force.
Gosh, that's another wildcard that we're trying to get our head around, you know, if you just we go back a little bit after the invasion of Ukraine, that's when the US and the EU really tried to crack down on Russian energy, and they had this policy of trying to cap the price on Russian oil but still trying to keep it onto the market, which means there's a lot of oil, so gasoline prices don't go up, but Moscow and Vladimir Putin get less money. A big buyer
during all this was India. The US knew it. They sort of just let it slide. India saying we need the cheap oil, we have a growing economy, the US thinking, well, we need a counterweight to China, so we'll all get along here.
Now.
Trump thought he could end this war in Russia very quickly. It's going much more difficult than he thought. Vladimir Putin is a lot more stubborn than he was expecting. So he's been ramping up his pressure on Putin, and I think that's where he probably saw an opportunity to make it seem like he was serious, and he's kind of using India as as the outlet for that. What sort
of upside he's going to get is unclear. Vladimir Putin and Russia have been very, very resistant and sort of they've adapted well to the economic isolation the West has tried to put them in. And this is obviously very much angered India, so much so that even you know, the Modi's opponents are piling in and backing him in a sense saying this is just straight up bullying. But you're right, there's time to sort this out. And as we've seen, Trump can change his mind very quickly, very dramatically.
And it could be as simple as one phone call. We saw the Swiss apparently didn't get it, got a really terrible deal because of a bad phone call. It could be that a nice phone call with Modi sorts it out, or a nice phone call with Putin. But it puts the oil market a tricky situation. It puts
Indian a very tricky situation. And as I'm sure as you might have heard as well in the questioning yesterday in the White House, Trump even said he might do the same thing for China, which again it just is throwing another huge wrench in the works in that trade relationship. And as I'm sure you know, China is another massive buyer of oil globally and from Russia.
Yeah, person Trump's saying that that may happen, but of course it also sounded fairly tensitive about China. Let's see what happens on that point. Ramsey, thank you so much for being with us, that is Blomberg's Ramsey Alviccarby that are joining us taking us through the latest round of trade tariffs.
Well, let's think about how markets are reacting to that trade and use now the exemptions that Donald Trump announce him his plans. Chip tarris has boosted shares in Asia and our market support of Valerie Title is with us.
Now for more.
It just talk us through what we are seeing in terms of reaction to this latest set of announcements.
Well, huge relief when it comes to the semiconductor Yes, it was a big, flashy number one hundred percent, but it exempts anybody who is pledging investment in the US, is pledging to move their supply chain more to the US. So we're seeing the likes of TSMC. Those shares are up five percent in Taiwan trade. Even the likes of Navidia traded higher in postmarket, and the likes of Apple as well. Tim Cook obviously being in the Oval Office with Trump when he made this announcement, Apple is going
to get that carve out that exemption too. So Apple shares traded nearly three percent higher in post market trades. This is just another tariff now, Stephen, that we don't have to worry about. The tariff thread on semiconductors seems in the rear view mirror the exemptions. The list of both foundries and chip designers who have pledged investment in the US is really quite extensive. TSMC, applied materials, Apple has talked about moving some of their supply chains to
the US. Navidia as well. There's this big Phoenix plant that TSMC is building in Arizona, and many chip designers voice support of using that production line as well. So the carve ounts are quite enormous on this one, and I think that surprised the market in quite a positive way. With TSMC up some five percent and trade in Taiwan in.
Terms of the USS of taffs O buying Russian oil.
Targeting India and China. How's that affecting oil prices?
This is a really hard one to put your finger on because secondary sanctions are very much known to be very hard to enforce, and honestly, the oil price yesterday was way more affected by reports that Trump wants to meet with Putin and Zelenski. So we actually saw oil fall at the end of the session yesterday. So it does seem like to be there's two things pulling the
oil market. It has rallied this week on worries of these secondary sanctions, but then yesterday was really much on a back foot on hopes of a ceasefire when it comes to the Russia Ukraine. Or we did have WTI falling over percent by the end of the close in yesterday session.
And just in terms of markets are thinking about the tireffs more broadly in the effect on the US economy. Interesting of comments from Federal Reserve policymakers Mary Daily and Yakashkari among them about interest.
Rights exactly a dove its shift from some of these FED members voicing some fresh concerns on the labor market. Mary Daily Basically, this is now her second time around that she's mentioned that the labor market is cooling, because Kari mentioned that as well, saying cutting sooner rather than later might be better than waiting because of this cooling in the labor market. We also heard from Lisa Cook, who is a Fed governor a current voter as well,
saying that it is concerning the latest jobs market. Jobs data is concerning and those big revisions can be somewhat typical of turning points in the US economy. So this dubvish language from the Federal Reserve members, it has kept the dollar soft. It's been weakening for five straight days. It's now down a percent and a half since Friday's payroll report. But when it comes to what's priced in
the front end, I think it's fairly justified. We're pricing still around a ninety percent ninety ninety to ninety five percent chance of a September cut, So at least no one for now is talking about a big jumbo cut when it comes to September. That would be something that
would really shift the market. But Stephen, remember we still have another CPI print and another payroll print before we get to that September meeting, so that might keep FED members from sounding any alarm on a jumbo cut until we get more data.
This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond.
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