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This is Bloomberg day Break Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight Ahead on the program, we'll look ahead to the March Jobs Report and Q one auto sales and what President Trump's tariffs on auto imports could mean to future sales. I'm Tom Busby in New York.
I'm Caroline Hetcke here in London, where we're assessing the position of NATO amidst growing global tensions.
I'm Doug Krisner previewing next week's rate decision from the Reserve Bank of Australia.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three Yeero, New York, Bloomberg ninety nine to one, Washington, DC, Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, Sirius XM one twenty one, and around the world on Bloomberg Radio, dot Com and the Bloomberg Business App.
Good day to you. I'm Tom Busby. We begin today's program with a look at the March Jobs Report out this coming Friday. The same day We're gonna hear from Federal Reserve Chair Jerome Powell. What could all this mean for the US labor market and for FED policy moving forward? Well, good news for more. We're joined by Michael McKee of Bloomberg International Economics and Policy correspondent. Michael, thank you for being here. Well, let's start with that job's report. What do you expect to see?
We expect to see a slowdown in job creation. We're still a week out, so there will be a lot of data that comes in on employment from other indicators that will go into the general forecast. Right now, we have one hundred and thirty five thousand as the forecast, and it was one hundred and fifty one thousand in February, but that could bounce around a little bit. The key for the Fed is unemployment and unemployments not expected to
change state four point one percent. The question is is anybody going to care about the jobs report by next Friday?
Well, well, I guess they'll care because, I mean, with the Trump policies, the tens of thousands of federal workers being laid off, the you know, and things are changing every day. There were tiiffs. I mean, all this adds up to the you know what we're going to see.
In terms of the jobs report. Yes, the real question is whether we see a lot in this month because of the timing of it. All, the jobs report taken in the first weeks of the month, and we don't really have a good handle on how many people have been fired. Last week the government reported we had only eight hundred and twenty one federal workers filing new claims for unemployment. Part of it is that people get laid off,
they get unlaid off, they get laid off again. I imagine many federal workers don't know what their jobs situation is, so expect to see a lot of cuts in federal employment, but maybe not this month.
Wow.
And there's other data that we saw come out PCE for March indicative of where jobs are maybe coming or going. I mean with consumers pulling back.
Consumers have pulled back just a little bit. It isn't a huge drop because we had seen a huge shop in spending in January and this was a four tenths rise, not too bad. But it did come mostly in durable goods, so it suggests maybe people were afraid of tariffs and running out and buying stuff. I don't know, refrigerators, stoves
or something cars before prices went up. And then the University of Michigan Sentiment Indicator came out and normally doesn't move much between the preliminary and the final, but in this case it did. We saw a big drop in overall sentiment and in expectations, and then we saw inflation expectations rise significantly to five percent over the next year. So Americans are anticipating bad news from Liberation Day next week.
Yeah, that's a lot of inflation fears right there. Well, let's talk about Liberation Day and President Trump's tariffs. We know they change week to week, day to day, sometimes hour to hour, but what is the impact right now on the economy on jobs. I mean, clearly people are worried, consumers are concerned.
Right now. It has people concerned, it has businesses concerned. We've seen that in business leaders surveys and obviously the Michigan and Conference Board numbers show US consumers are feeling the same way. They haven't in the hard data acted yet, but that's what we're expected to see over the next couple of weeks. Especially if people go to the store and see prices higher, that really drives consumer behavior, particularly for things like gasoline food, which may take a little
longer to work their way into this. And of course you don't buy a car every day, but if you notice, prices are going up, so it's something that the FED has to worry about. There are all kinds of estimates on what this could do to inflation, could push it up by one and a half two percent for the year. One forecast that came out this last week from a Wall Street firm was we would see inflation over four
percent for the next three four five months. That would not go over well with the American public.
No well, And Susan Collins from the FED Boston Bank said, it's coming.
It's coming. And the thing is the FED doesn't know what to do yet because they don't have handle on exactly what the president's tariffs are going to do. And the best line came from the Richmond Fed president who said, this is not a fog of under certainty like you normally see. This is a pull over to the side of the road and put on your high beams kind of fog of uncertainty because we have no idea. Tom Barkin saying that we have no idea, what's going to happen.
Well, let's hope Jerome Powell gives us a little clarity. He is speaking this Friday. We're gonna hear from HM. Why don't you tell us what you expect.
That's why the church lady line comes in. How convenient that the FED chair is speaking the same week as Independence Day. He is speaking on Friday, and we will get probably. I don't see how he can avoid giving us some view on what impact the tariffs are going to have on the economy, both on inflation and growth. And if that's the case, then there's going to be a lot for investors to try to parse in terms of what it means for FED action. So it's going to be a very very busy week. Powell and jobs
on the same day. So all of you who thought you were going to get away to the Hamptons or upstate early not on Friday this week.
Well, the March non farm payrolls numbers out this Friday, eight thirty am Wall Street Time our thanks to Michael McKee, Bloomberg International Economics and Policy correspondent. We turned now to the US auto sector ahead of first quarter vehicle sales out this Tuesday, just before President Trump's punishing twenty five percent tariffs are slated to go into effect on all
imported autos. For more on how those tariffs, if they go into effect, could impact consumers, investors, US and foreign automakers, and more, were joined by Steve Mann Bloomberg Intelligence, Global Autos and Industrial Research analysts. Steve, thank you for being here, and boy, is there a lot to unpack here. Well, let's start with look back. It looks like the industry was off to a pretty solid start, not spectacular to the new year, despite high sticker prices and elevated borrowing rates.
But boy, if these tariffs, if implemented, things could really change. How would that change everything?
Well, we actually just published a report and we lowered our sales forecast for the US passenger vehicle sales. We were at down half a percent. Now we're looking at down at least three percent for the year. Well, prices are going to go up. We're hearing dealerships out there telling their customers that prices are going to go up. There's different numbers out there, depending on the price of the vehicle, could be thirty five hundred or as much as ten thousand dollars. So it's gonna really put a
dent on sales. On the flip side, it's going to help use car sales. So if you look at you know, Avis and Hurts, they're actually responding positively to the news because you know, if they sell their used fleet, they're going to get more money for it. And the balance sheet Imprus and the other thing that's reacting positively are you know, the retail sales part sales companies like O'Reilly
Advanced autoparts. You know, they're actually bucking the trend. So if consumers are not going to buy new cars, they're going to have to probably have to fix up the old one and keep you a little bit longer.
So it sounds like a lot of cars are going to stay on the road a lot longer. And the average now is like eleven and a half twelve years, isn't it.
Yeah, that's right. So you know you kind of mentioned it earlier. The consumer is already hesitating by a new car because prices have gone up quite a bit, especially on those big pickup trucks and SUVs, you know, leasing upwards of one thousand to two thousand dollars, So it's becoming out of reach for a lot of consumers.
Now, yeah, the consumer consumer definitely appears to be the loser here. Let's talk about the automakers, especially Detroit's Big three, and how they'll be impacted, and will they each be impacted in the same way. I know, for IT makes a lot more of its cars in the US than the other two.
Yeah, look, I think all three, No, silentis, FOURD and GM will be impacted by a lot, you know, not just just on the initial cost of the tariff. You know, also if they have to reshore some of their plants. We have an analysis out there that that tells us it could cost as much as four billion dollars if they have to build a new plant in the US, you know, shift that plant back into Mexico and build a new one. And in the US, that's a lot
of spending. That's only for one plan. You know, they have multiple plants in Mexico and Canada that they can reshore. So it's it's it's it's huge. The other thing for Ford specifically too, is one of the things we're looking at is their EV sales have been generating huge losses for the company in the last two three years, and especially for example, the Machi one of the most popular ones.
They're actually built in Mexico. So if they have to lose another ten thousand dollars on that vehicle, it begs the question is should they even continue you're building that vehicle, and what that means is it's you know, the Big three four as well as GM could actually lose EV market share to the pure place, not just Tesla, but to also Rivian Lucid.
Well, let's talk about Tesla and the EV's. Tesla makes every car it sells in the US in the US at plants in Texas and California, and how does it stand to win? And as you said, Rivian Lucid, Faraday Future, all these other ones, smaller ones, niche ones, are they going to be the winners here too?
Yeah?
I think so, because you know, they have a very different manufacturing footprint or different business model than the legacy automakers. They're more vertically integrated. So a lot of the most expensive components in an EV, the batteries, right, the charging systems, the battery management system, they're actually built in house. The motors are actually built in house, so they have much better control of the cost. And obviously because they are
bill in the House. In in the US, they're not subject to the tariff as high as the legacy automakers.
Interesting to watch if it all goes into effect. First corder auto sales out this Tuesday. Those twenty five percent tariffs on all imported autos kicking in Thursday morning, twelve oh one am Wall Street Time. Our thanks to Steve Mann, Bloomberg Intelligence, Global autos and industrials research analysts. Coming up on Bloomberg day Break weekend. Calls for unity at a NATO summit this week. I'm Tom Busby and this is Bloomberg.
This is Bloomberg day Break Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program, A big decision this week from Australia Bank. But first at a fraud time for Geopolitical security. Defense is front of mind for world leaders and bolstering protection will be certainly high on the agenda at the NATO headquarters in Brussels this week, where Allied Foreign Affairs ministers meet for
talks chaired by Secretary General Mark Ruda. Now for more, let's go to London and bring in Bloomberg day Break. Europbanker Caroline hepgar Tom speaking.
To Bloomberg earlier this month, the NATO chief Mark Russia expressed his desire for relations with Russia to return to normal once fighting subsides in Ukraine, but the body's Secretary General was quick to acknowledge that there's a long way to go before proceedings reached that stage. He is preparing to share discussions between allied foreign ministers in Brussels, the latest event on a recent packed schedule for Rutsa, who has flown around the world to discuss the ongoing war
in Ukraine with numerous world leaders. Included in his travels was a stop in Washington, d C. Where he met with the US President Donald Trump. Russia has been engaging in intense diplomacy in recent weeks to keep the Transatlantic alliance together, as Trump has pared back support for Ukraine and has indicated that the US will step back from its traditional security role in Europe. The surprise move has sent European countries scrambling to boost defense spending and to
rethink their military positioning. The NATO chief has said that he is confident Trump is committed to NATO and that there is no room for doubt there. In his words, whilst also praising Trump for breaking the deadlock between Russia and Ukraine, the delicate situation between President Trump and his counterparts in Europe and its impact on markets is something that we've been discussing with Carl Tannenbaum, who is chief economist at Northern Trust.
For many reasons, a truce between Ukraine and Russia would be very much welcome, but there are some hard yards to be walked before we achieve that outcome. And absolutely the forecasts for Europe are actually going up when they for major centers elsewhere in the world they're going down. I'm sure that the Europeans would have preferred to stimulate
other than at the end of a figurative bayonet. But the fact is that the prompting that this did to have the Germans and the Europeans open their budgets will be favorable for their growth picture and their markets.
Reflect that.
You've said that it's difficult and that you underestimated, along with many others, the reality of the tariff I'll call it a tariff war from President Trump. In terms of the tensions, How do you think about the tensions between the US and the EU. The EU says that there really wasn't any negotiation, particularly that they had no success with negotiating with the Trump White House. What does that mean economically that those ties are now so much more difficult?
The risk of the current strategy is that the alienation that comes from the first steps will make it very difficult to come back together in any meaningful way. There's an injury felt by counterparts the United States and the way that this is being done, and voices that might have normally been heard have yet to be accounted for. I certainly hope that the damage done is not lasting, and that there is a phase to come yet this year where there will be more consultation and less provocation.
But I hope that comes right soon. It's taken longer than I would have thought.
That was called tannem Bound, chief economist at Northern Trust, speaking to me and to Bloomberg's Stephen Carroll. So how will these dynamics play out during the upcoming meeting of foreign ministers? I've been speaking to BLOOMBERG'SMEA News director Roslyn Matheson. Well, it's good to speak to you. What normally happens at these NATO meetings, well.
It depends whose meeting, because some of them are minister or level and some are obviously leader level, which are the big shebang, And it depends which ministers are meeting.
In this case, as you say, it's foreign ministers meeting, and their task tends to be well a little bit thankless, to be honest, they are often the ones who are meeting to pave the way into the leader's summit, which we know is coming up some months later, and so their job is to iron out any of the kinks ahead of that, to work out what's going to be on the agenda, to do some behind the scenes agreements and understandings, and then take all of that back in
a way to their headquarters at home. And that's all about laying the table for that meeting. I mean, obviously they discuss a broad array of topics, and for foreign ministers it can be a very broad church indeed, and for this meeting it will be about a bunch of stuff that's very topical at the moment, but will also be about all those kind of sideline conversations, hallway conversations to get a bit of an understanding about what they're going to be looking like going into a leader's summer.
So will all member states be in attendance.
At this stage It appears so, including the US Secretary of State Mark Rubio. I mean, it's an interesting question because we've seen at some gatherings, including G twenty meetings and so on, that the US has opted not to attend or to send a lower level official questioning it seems that you know whether these forums do anything that matters or whether they need to be there. But it looks like Mark Rubio will turn up. And obviously he's been quite engaged with NATO and with Europe as a whole.
He recently met with a bunch of ministers from the Baltics, for example. He recently met with the Turkish foreign minister who was visiting him in the US. So he's certainly engaging with his counterparts across Europe. So we are expecting a full bench for this meeting.
Is it possible was that there might be something of a tense atmosphere between the US and EU members given that the meeting comes hot on the heels of these leaked messages on the Signal app which featured senior members of the Trump administration describing EU States as quote freeloaders.
What's going to be an interesting meeting in the backdrop of those revelations around the signal chat, and for European ministers who are there, no doubt questioning Marco Rubio quite a bit about how secure intelligence is that they're sharing. I mean, there's a lot of communications that have to go on in a circle of trust and understanding that whatever you talk about or whatever is shared is within a certain cone of silence because you can talk more
candidly as a result. And so if you have European ministers even more worry than they probably already were about how to communicate with the US, how to talk openly and honestly with officials, including Marco Ribio, what about how secure intelligences that get shared? And so all of that will be aired in that meeting. No doubt you're unlikely to see Europeans stop sharing intelligence with the US. They
just need each other too much to do so. But you will get certainly expressions of concern about that at the meeting.
Now, we did see the NATO chief Mark Rutter in the White House in the Oval Office with President Trump when they had that discussion. He was talking about being confident of the President's continued support talk US through the complications though of the relationship. Are things still on the right path.
What was interesting to see that meeting actually because it seems as though Rita and Trump kind of hit it off, like they at least had a bit of a rapport and Ritter was treading carefully in his comments and seemingly knowing how not to press Donald Trump's buttons, and so that is obviously a plus to have that relationship seemingly on a positive footing. But the overall relationship between the
US and NATO is pretty poor right now. I mean, Donald Trump has been repeatedly critical of NATO, be it over how much other nations spend on their defense, you know, the collective nature of NATO, whether it's worth what he sings as the US investment in NATO, What does the US get out of it? I mean, it's worth pointing out the only time that Article five, the collective responsibility area of NATO, has been invoked was by the US
in its many decades. But you know, Donald Trump is repeatedly called into question NATO, what it's for, what it serves, where it's going, and so you know, personal relationship with Route, which is quite positive, is not going to really negate all of that. So there are fundamental questions here for the US about their future role in NATO.
Either way, What do you think might emerge from these talks? Will it be focused on Ukraine? Will it be again back to the amount of defense spending. I mean we've had Germany, for example, bring out a really big defense Berzuka in terms of how much spending they're going to try to enact. What do you think might emerge from these discussions? Will there be any resolutions?
Well, I'd likely to be anything you'd call a breakthrough because Marco Ribio has not been so centrally involved in the conversations that the US is having with Russia and the US is having with Ukraine. Other officials in the US seem to be taking the lead on that, So he's not been directly involved in many of the conversations around that necessarily or even potentially seen as a decision
maker on it. And so you can expect a lot of conversation, as you say, around security issues, particularly the future of the war in Ukraine. Is there a cease far? Is it going to be tangible? How to get it to be broader than just the Black Sea or energy infrastructure, and either of those don't seem to be particularly secure at the moment anyway. And those issues, as you say, around European defense, defense spending, NATO, but because it's foreign ministers,
it's also a pretty broad church. So you can imagine topics around trade coming up, tariffs so obviously, and the impact economically of the tariffs that Donald Trump is enacting around the world, including on Europe. So the economic relationship, because the economic relationship is a key part of the geostrategic relationship alongside the pure defense one. So you can imagine that at this meeting there'll be a broad conversation about a bunch of topics involving Europe, NATO, and the US,
so not just defense. Trade will probably come into it somehow, but again you're unlikely to see major tangible announcements coming.
That was Bloomberg's EMEA news director Roslyn matheson my thanks to her, we will have full coverage of that NATO meeting at the headquarters in Brussels from the third to fourth of April right here on Bloomberg. I'm Caroline hepget In London. You can catch us every weekday morning for Bloomberg Daybreak you at beginning at six am in London. That's one am on Wall Street.
Tom, thank you, Caroline. And coming up on Bloomberg day Break weekend, the Reserve Bank of Australia meets this week to make a decision on interest rates. Bloomberg's James McIntyre breaks it all down from Australia.
It was a week of an expected CPI reading. We had the headline come in at at two point four. Consensus was two point five. We were at the two point four, but we'd said all along that that probably wasn't enough. It would need to be something exceptional to pull the RBA over the line. They're going to be delivering gradual rate cuts, and following up from their February with an April cut was just too much, we think, given what the rest of the economic picture is telling them,
it needed to be exceptional. It's welcome, but in our view, it's not enough to push them over the line on April first.
That's next year. On Bloomberg day Break Weekend, I'm Tom Busby and this is Bloomberg. This is Bloomberg day Break Weekend. Our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. The Reserve Bank of Australia cut its benchmark lending rate in February for the first time in four years. Will the RBA cut rates again when it meets this week? For more, we turned to Doug Christner, host of the Daybreak Asia podcast Tom.
Last week, Australia's center left government unveiled a pre election budget. Now it included tax cuts and some other sweeteners aimed at soothing concerns about the high cost of living. Australia Finance Minister Katie Gallagher discussed the potential impact of inflation and interest rates in an interview with Bloomberg.
Well, the budget's always a series of balancing decisions and balancing requests for investment and other ways of dealing with all the pressures on it. But we see these as a good way to provide a bit of relief to households their top up to the tax cuts that were passed and.
Started flowing in July last year.
And really when they're put together in together with those tax cuts and once fully implemented, it'd be about for the average worker about fifty dollars a week. So we're not pretending that they aren't modest, that's for sure, but they're topping up the work that we'd already started a year ago.
Well that's true.
I mean the treasurer of Jim Chalmers also these the word modest when he was describing them. And when you consider the size and the timing of them, was there some consideration given to the inflation risk as well?
Well, that goes to the timing decision to have them start next year, really to make sure that inflation is back into ban and that you know, we are mindful obviously we've done a lot of Australia as a country has done a lot of heavy lifting to get inflation back down to more normal range and we don't want to jeopardize that. And so the timing of when they come in was factored into our thinking and into the Treasury forecasts.
And when it comes to forecasts around inflation that's forecasted to be back inside the RBA's target range, making a pretty hard hit amount an argument against further easing.
Right, Well, we obviously lead the bank to make their decisions. You know, our responsibilities are contained in the budget, But we are really pleased the Treasury forecasts have inflation turning sustainably or coming back sustainably into the band six months earlier than had been expected at.
My EFO, and so that's really welcome news.
Obviously, we'll leave the Bank to make decisions based on the information they have.
Turning to some questions around spending as well, we were expecting to see perhaps a substantial boost of defense spending, considering well the geopolitical environment at the moment, potential pressure from the US as well. Was there a temptation to go a little bit bigger therea what we're rising to two point three percent of GDP by the early twenty thirties.
Look, we put a lot of work into working out the priorities in defense, and the Defense Minister has led that in conjunction with his department. We've found an extra fifty billion dollars over the medium term for defense. That's not an insignificant amount of money when you think about it. We've bought forward some money in this budget based on a defense advice about their capability needs, so that is met.
But I also think you should look at.
Defense and national security, bringing in all of the intelligence agency, the work that defat's doing to stabilize our relationships in the region. It is very uncertain global times, as everybody is witnessing, and so investments in defense are essential, but so are investments in a whole range of other areas to make sure we keep Australian safe.
We also have a forecast for deficits for a decade. Is there any sense of urgency to do something about that sooner?
Well, when you look at the you'll see under this government we've had the biggest nominal turnaround, the most significant no turnaround in the budget forecasts of any first term government. So we've improved the budget bottom line by over two.
Hundred billion dollars.
Again massive numbers, I know, but we've improved the deficits. We've delivered two surpluses, we've paid down debt and we're paying you know, because we have lower debt, we're paying lower interest bills on that debt. That all matters. So we have absolutely since day one. It's probably the key part of my job is to work out how we make sensible savings and bring those deficits and head the budget back into balance in a reasonable timeframe. But we also have to be realistic that we have to pay
for services for Medicare, for defense spending. There's no shortage of pressures on the budget and the budget balances all of those up.
That is Australia Finance Minister Katie Gallagher speaking earlier with Bloomberg's Paul Allen. Joining me now to explore what we may hear from the RBA next week is James McIntyre. James covers Australia and New Zealand for Bloomberg Economics, joining us from our studios in Sydney. Can we begin by kind of unpacking this weaker than expected inflation data. I'd like to know whether or not these readings are enough to prompt a rate cut from the RBA. What do you think?
Well, our view is that no, it's not. It was a week of an expected CPI reading. We had the headline come in at at two point four. Consensus was two point five. We were at the two point four. But we'd said all along that that probably wasn't enough. It would need to be something exceptional to pull the
RBA over the line. They're going to be delivering gradual rate cuts and following up from there February with an April cut was just too much, we think, given what the rest of the economic picture is telling them, it needed to be exceptional. It's welcome, but in our view, it's not enough to push them over the line on April first.
So where is this inflationary pressure coming from. Is it goods inflation and if so, what are the commodities or items involved? Or maybe it's a little bit more service related.
The mix within the Australian inflation story is very much a services story, and goods inflation has really fallen away, especially goods inflation around energy goods automotive fuel that's down quite a bit. But on the services side we've seen housing rents, insurance, new construction costs, but also medical and education services costs. There've been some of the key ones. There's some welcome developments on the services side, which is allowing the RBA to move rents of ease, the continuing
to ease. New construction costs are coming down and insurance costs are starting to kind of ease back as well. So it's good, it's welcome, it's enough we think to get them over the line. When the full quarterly CPI is released ahead of the main meeting but just not enough yet to push them over the line next for April.
So are you thinking that the next rate cut would be in May? Is that your thinking?
That's our base case. So our base case for some time has been that the RBA would be delivering twenty five basis point rate cuts per quarter May August November. They're key meetings where they do the quarterly forecast update following the quarterly CPI readings. We still think that there's nothing to kind of change our view on that, including nothing really in the government's budget, which was released on Tuesday evening by the Treasurer outlining some election policy goodies.
We don't think there's anything there that really threatens that gradual but sustained RBA cutting cycle through the course of this year.
So you mentioned the federal budget. What is the aim here on the part of the government. What are they trying to achieve?
Well, I guess the key aim is reelection, So we think the government will swiftly follow this budget by announcing an election, possibly with an election campaign over the coming weeks and appolling date sometime in May. But what have they done in this budget, Well, they have kept the
fiscal position relatively unchanged. That is that they've banked some revenue upgrades from commodity prices and a stronger labor market, and they've plowed those extra tax receipts into some more spending and some tax cuts, small tax cuts for individuals, some further support on power price relief for households, and then additional spending on making doctors visits cheaper, some more childcare.
All very popular election goody type spending. Not a lot of it though, and not enough spending to move the dial from a macro perspective and worry the RBA. But I guess the government's hoping that that spending is enough to sound good and entice voters at the ballot box.
So you teased out some of the winners as a result of this federal budget. Who would the losers be?
Yeah, losers in the budget, I guess Within the housing construction sector. There had been some hopes that there would be some further measures to help boost construction. We didn't really see anything there. Over all, though, what the budget didn't deliver is any concrete, sustained microeconomic reforms. There was some good work done on competition policy, but none on sort of the real deep seated issues around reigning in
the structural deficit for the policy. With an election looming, the government has tried to minimize the obvious losers and that's sort of what stands out to us from the latest budget offering.
James, I'm curious to get your take on what you're hearing as it relates to US tariffs that that seems to be the looming threat right now. Australia's Treasurer Jim Chalmers was making some comments in the last week. Is there a position that the government has or are there areas open to some type of negotiation should it come to that.
The government is looking to stay friends with the administration and do all the right things. Australia does do the right things when it to what the US administer, the Trump administration might want. We run a trade deficit with the US. We have been lifting out defense spending, but we also provide major contributions to defense bases and expenditure
for US troops that are stationed here. As the US military has been undertaking a Pacific pivot for some time now to count to muscle up to China, Australia is part of that effort. When it comes to tariffs. We're not retaliating, and what the government is doing is trying to offer support to affected industries. There aren't many in Australia but steel, aluminium, and possibly, depending on how the April to Liberation Day tariffs play out, possibly the beef
sector as well. Whilst in the background doing the legwork with the US administration to try to win some exemptions and some favor in Australia's way. We don't know how it's going to go yet, but that's the path that the government is trying to very gently tread.
Before I let you go, we know that the Chinese economy seems to be exhibiting some sign of renewal. I don't know if it's durable or not. Yes, there is still the problem with the property market, but certainly high tech stocks are telling kind of an enlightening story perhaps, and I'm curious as to whether or not this is having any ripple effect on Australia's economy right now. The fact that China seems to be doing a little bit better.
Nothing major in terms of signs within the economic the hard economic data yet, but within the soft economic data we can see that the confidence remaining relatively positive in Australia. Domestic rate cuts are helping on the consumer side of things, but there would be a great deal of concern within business and consumer sentiment, a great hit to business and consumer sentiment were was China to be showing signs of not looking very very strong or the economy perhaps faltering
a bit. Policy moves from the Chinese authorities to deliver more stimulus of very very welcome news to Australia. So we're seeing that sort of in the confident side of things. Whether that translates into the hard economic data, it still remains a bit of a wait and see, I think.
James, thank you so much for taking the time to chat with us as we look ahead to the RBA decision. Bloomberg's James McIntyre. There he covers Australia and New Zealand for Bloomberg Economics. I'm Doug Prisner. You can catch us weekdays for the Daybreak Asia podcast. It's available wherever you get your podcast. Tom.
Thank you Doug, and that does it for this edition of Bloomberg day Break Weekend. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas and the news you need to start your day. I'm Tom Busby. Stay with US. Top stories and global business headlines are coming up right now