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Bloomberg Day BAC podcast, available every morning on Apple, Spotify or wherever you listen. It's Tuesday, the fourth of March. Here in London. I'm Caroline Hepka. Coming up today, the US on leashes a barrage of tariffs on goods from Canada, Mexico, and China. As Beijing and Toronto respond, President Trump halts US military aid to Ukraine in a bid to squeeze Zelinski Plus seeking safe harbor, stocks sell off and bonds rise. As Trader's Way, growing geopolitical risks, and the threat of
tit for tat levees. Let's start with a roundup of our top stories. America has implemented the most sweeping tariffs yet of Donald Trump's presidency. Most goods entering the country from Canada and Mexico will now face a twenty five percent charge, while the tariff on Chinese goods has been doubled to twenty percent. Speaking at the White House, President Trump pitched the move as a way to bring more manufacturing back to the US.
I would just say this to people in Canada or Mexico if they're going to build car plans to people that are doing them are much better off building here because we have the market with the market where they sell the most, and so I think it's going to be very exciting, very exciting for the automobile companies.
President Trump's tariffs prompted swift retaliation from Canada and China, and may spur similar reprisals from Mexico. Beijing immediately announced that it would impose tariffs of up to fifteen percent on US exports, with a focus on farm, produce and
defense firms. Speaking just ahead of the US tariffs coming into force, the Canadian Foreign Minister Melanie Jolie said the government was ready to go ahead with its retaliatory duties on one hundred and seven billion dollars of US products announced last month.
We know that this is an existential threat to US and there.
Are thousands of jobs in Canada at stake. Now we've done.
The work we already should the US decide to launch their.
Trade war, Canadian Foreign Minister Melanie Jolie, speaking there. The Bank of Canada has warned that a prolonged tariff war has the potential to decrease GDP by nearly three percent. Over two years and quote wipeout growth during that period. Separately, President job also announced that the US will impose tariffs
on external agricultural products from the second of April. In a social media post, he wrote, to the great farmers of the United States, get ready to start making a lot of agricultural product to be sold inside of the United States. The President did not provide more detail on which products would be affected or if there would be any exceptions. The move comes just as US food ued imports of ballooned, with the country's agriculture trade deficit projected
to hit a record forty nine billion dollars this year. Well, the decision to move forward with the tariffs has sparked a bearish mood of cross markets. Asian shares sank to their lowes sleven in a month, while the S and P five hundred suffered its worst sell of this year. The US index of leading shares fell one point eight percent on Monday, while a gauge of the magnificent seven
megacap stocks sank by more than three percent. Joseph Lavornia was the chief economist of the White House National Economic Council during President Trump's first administration.
The markets worried. It's understandable because the tariffs are significant, and in some ways they need to be. The President is serious about reindustrializing the US manufacturing base, and tariffs are a very important.
Tool that will be used to do that.
The markets also, I think we're not believing the President was serious with these tariffs. So today might just reflect the fact that for much I think of this year, there was thoughts that they would actually never be ablemented or be watered down. So I think today was really a reality check for many investors.
Joseph Lavornia speaking there, as Wall Street's so called fear gauge, the Vics hit the highest since December. Markets are bracing for further volatility, with key events this week, including the National People's Congress meeting in China and a speech by President Trump to a joint session of Congress later today. President Trump has ordered a pause to all US military
aid to Ukraine. A senior defense official told Bloomberg that America is now holding back equipment until Trump decides Ukraine's president, Vladomi Zelinski, is committed to peace. At a press conference, Trump was asked about his disastrous meeting with Ukraine's leader last week.
He said he thinks there was going to go on for a long time, and he'd better not be right about that. That's all I'm saying.
Trump's order applies to all American military equipment not currently in Ukraine, including weapons in transit across Europe. Allied officials have said that supplies of weapons are likely to last only until the summer. Meanwhile, Bloomberg has learned that European leaders believe Trump is trying to mount pressure on Zelinsky
to apologize and to sign the minerals Agreement. The UK and France are privately urging Zelensky to repair relations with Trump, with one source saying Ukraine's leader may need to grovel because a simple apology to the US may not suffice. Speaking to his parliament, UK Prime Minister Kirstamer said the UK and US will lead from the front.
Our two nations will work together on security arrangements for a lasting piece in Ukraine. I also welcome the President's continued commitment to that piece, which nobody in this House should doubt for a second is sincere.
K leader also reassured parliamentarians that the US wouldn't be withdrawing military support for Ukraine. With America then doing so hours after he spoke. Defense related stocks rallied across the Asia Pacific region, with analysts saying that regional companies may benefit from increased demand from Europe. Those are a few of our top stories for you this morning. Let's look at the markets now, so it does look to be some pause, some suspension really, even though it does seem
that maybe the global trade war has begun. US ecuity futures are actually up right now. We did have a sell off for the S and P five hundred yesterday, The SMP emais are up by two tenths of one percent. Yesterday the S and P five hundred posted its worst drop of twenty twenty five, falling by one point eight percent. This as we have seen Asian equity markets also down, but not significantly moving lower despite the retaliation that we have heard from China. The Shanghai and Shenzens are both
in the green. The SX two hundred and Australia's down six tenths, the NICK dropping one point three percent, the MASCI Asia Pacific Index down three tenths of one percent. And then looking at the bond markets again as once the tariffs were actually implemented, there wasn't another big move in markets. Tenue US yields trading at four point fifteen, so actually barely moving right now. The Euro and sterling both end of the day up yesterday. This morning, the
Bloomberg Dollar Spot index is actually flat. So those are the markets now. In a moment, we're going to bring you the latest around China imposing tariffs on the US after that barrage of tariffs that came into force only a few minutes ago, really from a President Donald Trump. But before we get to that conversation, something else caught my eye this morning. Input eras a near miss is at City Group are becoming a little bit more common.
City Group almost transferred six billion dollars to a customer's account by accident. This was to a staff member's era. They copied and pasted the account number into the field for the dollar figure. Todd Gillespie at Bloomberger has been writing about this this morning, a City Group saying that it did promptly identify and corrected this inputting error, which
had no impact to the bank or our client. According to Citygroup, this happened in April, the same month that another part of the bank accidentally credited eighty one trillion dollars to a different client. So the firm now having says it has set up a company wide tool to help vet these large, anomalous payments and transfers, according to people familiar with the matter, but even Matt Levine, our
opinion colomist, was writing about this yesterday. Bank eraror in your favor does look like a city group, you know, still trying to battle fat fingers input errors. Anyway, it's a story that I read this morning and would recommend. Has imposed tarifs of up to fifteen percent on US goods, including soybeans and chicken, after the US double tariffs on Chinese imports in a barrage of measures from President Trump.
The US rolled out tariffs are twenty five percent on nearly all imports from Canada and Mexico, with Canada responding. Bloomberg's Markets Life stashist Mark Cranfield joins me now to discuss Mark good morning instant reaction from Beijing, then to Trump tariffs. What do you make of the barrage of US tariffs and countermeasures?
So, whether it's the tariffs that Donald Trump has imposed upon China, Canada, and Mexico and the reciprocation from Canada and China in return. Nothing really is out of line with what we've been hearing for the past few days anyway, which is partly explains why we have a fairly reach subdued response in markets. Possibly, trade ers are waiting for Donald Trump to address both Houses of Congress on Tuesday
morning in America. That's when they may get to hear whether he wants to double down on this, whether he wants to really push the trade war further. So far, it's a bit of a tit for tat, but not really any much different to what investors had been expecting. So really they probably want to hear a bit more detail, particularly how Donald Trump is responding to the Chinese side. He did say he expected some form of agricultural tariffs
from China. Let's see how he responds now that China have actually done that.
Okay, So I suppose do you think that markets underestimated the possibility then of just this amount of trade protectionism, because we also don't expect it to end. There are you know, at least sort of three or four other possible measures coming out of the US in the coming weeks. On country by country tariffs and sector based tariffs too.
I think to an extent investors that have been a little bit complacent on what was coming down the line. But more significantly where they've really been caught out is what's happening to the US economy. Already we're beginning to see signs of cracks. But if you saw consumer confidence numbers of crashing, other data is already suggesting that what the US government is doing under this administration is already starting to hurt confidence in the US economy regardless of
what happens with the tariffs. And what we see now is that traders are pricing in for three interest rate cuts on the Federal Reserve this year. It was only pretty recently they were pricing for just one cut. So a significant change in investors outlook towards the US economy, which is being reflected in US markets. That's on top of anything related to terrorists, and that's a more immediate problem for investors. So that's really what's driving things in
the very short term. Of course, if this becomes into a real tip for tat where America introduces more terrorists, other countries respond with more of their own, things can certainly spireal, but for now it's the weak US economic data and the effect it's having on the federal reserve. That's what's really worrying investors.
Okay, Mark, thank you so much for being with me this morning. Put in Beggs Markets Live stash Is Mark Cranfield, thank you so much for your time on those tariffs. Well, now to Ukraine, because President Donald Trump ordered also a pause on all military aid to Ukraine, putting pressure on Vlodomisolinsky. A senior Defense Department official says that military assistants will be paused until Trump determines Ukraine's leader has demonstrated a
good faith commitment to peace joining US. Now. Bloomberg's TV correspondent Oliver Quick, good morning. How big a setback is this for Zelensky and for Ukraine?
Yeah, I mean, listen, given what we saw on Friday, in the kind of fallout that we saw after that disastrous press conference interaction on Friday between Zelenski, Vans and Trump, you know, it's not totally unexpected. But again, this is going to be one of the major step This is we all know, and Zelenski has said it many times in the past that basically he is completely dependent on the United States in order to continue his battle against Russia in order to have any sort of lasting ceasefire
with the Russia. So in the absence of this military aid, and now it has we understand again according to people familiar that it has been pause. That means that all military gear that is on its way to Ukraine on planes, that is waiting for a deposit within Poland, all of that is going to be paused. And there's also a large sort of quantity of funding that was already sort of inherited by Trump from Biden about four billion dollars,
that too is going to be paused. And again we're expecting to get more actual details from this from Donald Trump today in a speech that'll be I think at around one am UK time. But again this is you know, the Europeans could still buy some of this kit from the United States to send over to Ukraine. But if the United States decides to really turn the screws, they
can put a halt on selling this equipment. They could put a halt on some of the operational requirements in order to actually be able to enlist us in the field. And again this is all sort of part of the sort of broader dynamic that we've been seeing where it's going to be very hard to make any progress if Ukraine, Europe, and the United States cannot inhabit a common reality about what is going on in Ukraine, Russia as aggressor Ukraine's victim.
What does this mean then for Europe, the UK and France trying to take the lead here.
Yeah, so listen, they're trying their diplomatic efforts. I think they sort of would try as much as they could, and they sort of had some success, it seemed, in charming Donald Trump. But at the end of the day, you know, it's what's signed on the dotted line. It's all the dollars and cents for Donald Trump. And the question is, you know, what leverage do they have right now at all? So they're sort of drawing up different proposals.
It was a story out in the FT overnight saying that basically they'd be looking at basically taking the Russian frozen assets potentially is using that as a guarantee in case a ceasefire is broken. And again, what they're trying to do now is get in place an architecture to potentially get a ceasefire proposal, to put that to Trump and Zelensky in order to just sort of pause things which would give Trump a win in order to negotiate that longer standing kind of ceasefire and end to the war,
the just piece that Zelenski is looking for. But again this comes back to this fundamental issue. If you do not have this sort of common reality where you know, Trump and Europe can get on the same page about who is sort of at fault here, it's going to be very difficult to make a sort of final agreement where everybody is happy. And of course this says nothing of the fact of the sort of bigger question for Europe, which is how strong are NATO security guarantees for Europe More broadly.
Yeah, it's also prompting and rethink in other parts of the world, namely Taiwan.
Yeah, and it was sort of very interesting we heard from the Taiwanese Defence Minister and this is a direct quote saying we have deeply recognized that one cannot discuss values without also addressing national interest, right. And we say this with Trump giving a press conference yesterday with the TSMC CEO. TSMC has just said that they'll build a plant or commit one hundred billion dollars worth of investment into the United States. So from Taiwan's perspective, maybe that
buys you something. But the question with Trump now always is what does it buy you and for how long? And this is the new foreign policy of the United States. We see this with tariffs. Whenever you put the sort of tariffs up, if Canada or Mexico complies, their main question is going to be, Okay, what happens in two months and three months? What if they want to extract
something more from it? And that is the new reality for many of these American allies who are increasingly being treated not necessarily as enemies, but just as anybody else.
This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Streets and beyond.
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