Trump’s Exact Tack On Tariffs Still Cloudy: Bloomberg’s Webber

by the US on steel and aluminum imports. The results inconclusive and here to help us understand what's at stake, what we need to look for going forward, and how widely this could turn into a trade war. As Caitlin Webber, government analyst focusing on US trade policy for Bloomberg Intelligence, Caitlin, help us, where are we at this point with these teriff What has the response been like and how severe

are they? Well? The response U after our President Trump announced that he UM intends to impose these tariffs on imported steel and tim percent tariffs and imported aluminium was really severe and dramatic. UM both from UM, you know US downstream UM consumers, industries, everything from automakers to UM even beverage makers were really UM negative in saying that these would um, you know, increase their costs and and

and eventually increased costs for consumers. There's also a really negative reaction from trading partners who would likely be targeted by UM these these measures, saying that they were UM immediately preparing some sort of retaliation and response. UM. But at this point, you know, we really need to look for the details and what the tariffs will actually look like. Trump yesterday yesterday was very very dramatic, but also vague. We need to see if they're going to be any

countries excluded. You know, is you going to give any indication of how long these are going to apply? And these are going to be some sort of process where companies or countries can apply for exemptions from the tariffs. Caitlin, Our trade wars as easily one, as President Trump tweeted today. Uh uh no, I I would not say so. I mean, there's certainly winners and losers, but trade in the twenty

one century is not a zero sum game. Uh So, yeah, you know, you could certainly see the U. S. Steel and aluminum producers being winners from this sort of action, but losers would you know, be all of those US industries that are importing those products and then ultimately consumers. And then that doesn't even you know, speak to the U S exporters that aren't even sort of part of this fight, you know, U S exporters and agriculture um, you know, motorcycles, bourbon that could be targeted in other

countries because of this. So, you know, trade is is. You know, it's really not a zero sum game. It's it's really not clear that it can be easily one, as Trump um seemed to portroy this morning. You know, Caitlin, one thing I was struck by was how President Trump's proclamation goes against UH decades of GOOP policies. And indeed a number of Republican Congress members have come out and been vocal in their opposition to these tariffs. What recourse

do they have? Yeah, it was really jarring yesterday to see a Trump's traditional allies and Congress come out very strongly against these tariffs, saying they're they're seally a giant talks on consumers. But you know, unlike the solar tariffs and the washing machine tariffs that came out in January, Congress really doesn't have much resource or excuse recourse on

this issue. I mean, they could hypothetically pass a law that would UM undo any tariffs, or even they could pass a law that would remove the president's authority UM to impose these what are called sexual and two thirty

two tariffs. But then you know those are going to be obviously vetoed by Trump and they don't have the votes to override those videos because many Democrats support these tariffs kind of ironically, So at this point, what they can really do is continue to complain and continue to to lobby the president UM not unlike sort of what they're doing at the same time on gun potential gun restrictions. But you know, they're they're their hands are kind of

tied in terms of legislative solutions here, Caitlin. You know, you talk about gun policies, and we hear one thing out of President Trump, and then we hear another thing after he speaks with the n r A or I'm just trying to understand who given that, who's in charge

here with the trade discussion, who's writing this policy? You know, I think that changes from day to day, and it seems like, you know, whoever maybe is in the lead UM you know, on one particular day, is is the person who has the most influence, And it seems like maybe in the past couple week that weeks, that person is Peter Navarro, UM, who has getting promoted to be Special Assistant to the President on trade, who's who's very

critical of China, UM, very much critical of free trade agreements. UM. But we you know, we've seen so much flux and Trump's trade agenda over the past year. UM, So I don't think that we're done seeing that those that that change. Even in terms of these tariffs which he said he's going to finalize as of next week. I think it's very likely that UM, other parties in the White House, like Gary Cohen are going to appeal to him successfully to have some some limits here that would really narrow

the impact of those once they're they're ultimately applied. Caitlin, just about the twenty seconds, any aty bitty movement on a to renegotiations. You know, these steel and aluminium tariffs, if they do not exempt Canada and Mexico would not be very helpful at all. There hasn't been much movement. There's actually uh talks abom on right now. This this week and they've been completely overstandoed are this tariff talk?

I think that they're going to wait and see what happens next week when these when you steal aluneum tariffs come out, and if those are very punitive and don't exclude NAFTA partners, we could see NAFTA talks really grind to a hold. I think much appreciate it as always. Caitlin Webber is our government analysts for US Trade Policy for Bloomberg Intelligence, joining us from our Bloomberg ninety nine one studios in Washington, d C. And you can follow

Caitlin Webber on Twitter at Caitlin Webber. Using social media in order to spread disinformation, it is a topic of the day and here to help us understand a little bit more about it is David Garretty. He is the chief executive of g v A Research and he can be followed on Twitter at g v A Research. David, let's first have you set out what do you believe to be the current problem and what are some of

the solutions. I mean, the problem is is that if we look at the United States of America, the social media companies which we know that Twitter, Facebook, YouTube, which is part of Google now known as Alphabet pretty much have all scaled up and have not gotten to a point where, according to some surveys, UH respondents are using

Facebook or other social media feeds as their primary news source. Okay, Now, as we understand that law binding organizations such as this network, UH, you know, there are regulatory requirements that have to be met, and from the standpoint if there's political advertising, there has to be attribution. This has to be made known beforehand, and you know, there's also a responsibility in some respects to make sure that there are verifiable facts that are

being communicated. Uh. We certainly understand that if we look at organizations perhaps such as Twitter, that at least fifteen percent if not more, of the accounts on Twitter, by some estimates, are are not backed by real individuals, that these are in effect what are called bots, and to the extent that we have bots that are being manipulated or being programmed in such a way as to take UH news which is not factually supported, which is politically biased,

without attribution, and communicating those across um millions of people who are using Facebook and other social media we lead to very very successful disinformation and disinformation and an election contest either leads people to have a skewed point of view, a divisive point of view, or just to check out and not vote and participate. Whatsoever serves to undermine we might argue, the liberal democratic process and of our society which has nurtured these companies. So the question is do

we need social media or form I think the answers yes. Okay, So, if say Twitter and Facebook were treated as news organizations, how much would that cut into their bottom line and how would that transform their business model? Well, I mean, they're making the argument that they're protected by the First Amendment. They're making the argument that they're protected by free speech

of the Commons. But as we note and you point out, they are supported by advertising sufficiently, so this might arguably be seen as being more of a form of commercial free speech. If they needed to adopt the standards of other news organizations, certainly their costs of doing business would be going up. But clearly, given the scale that they have attained, they have the resources to be able to sustain those overhead costs in order to be better participants

in our liberal democratic system. But what are those costs? The costs arguably would be from a staffing standpoint, We've already had indications from Facebook as well as also Google that they would be putting people on their payroll uh twenty thousand. I think, in the case of Facebook, in order to do a better job of policing the content that was coming across of their platform. Uh. We haven't

yet seen evidence that those individuals have been hired. So we may be looking at something which is really lip service, and that the dollars that are being provided by these companies are going more towards lobbying Congress to try to

delay or postpone that day of inevitability. David, the Federal Communications Commission is able to designate specific entities as public utilities, and I believe the telephone companies used to be designated maybe still aren't designated in that way because of the reach at the time of a T and T when there was no competition, uh, And there's a format for that to take place. Is it possible that the f c C would be able to do that with these kinds of companies and that they would then have to

be treated in a similar way. It's entirely possible based upon historical president precedent. But if we were to look at there and staffing of the Federal Communications Commission under a jet Pie who certainly has seen fit to repeal net neutrality and certainly has been implicated in terms of taking UH money not only from Sinclair Broadcasting with respect to the expansion of their efforts in terms of local radio, but also taking gifts out right from the National Rifle

Association or n r A. UH. One might argue that we're not really with a good staffing to make that happen.

So we had earlier on the show. Today we had Randall Rothenberg, the chief executive officer of the Interactive Advertising Bureau, on the show, and he was saying that UH, that it would actually be beneficial to have some government regulation if they were looking for perhaps a way to certify the voices on the web or basically have basically something like a fingerprint or identifier UH to where the source of the information is coming. Do you agree and what

would that look like? Now? I agree entirely, and I think, you know, having attribution in terms of political comments, I mean, whether this is necessarily political advertising or whether it's political messaging would be important. I think the first thing that needs to be done is to try to establish reliable identities behind the various accounts that are out on social media.

And from that standpoint, you know, looking towards other liberal democracies, in this case, looking over towards Asia South Korea, they have very stringent requirements in terms of people using their identification, their registered resident number as a means before you can open up an account. The same thing is true with respect of looking at other liberal democracies such as Japan.

The question is whether we here in the United States are so you know, wedded to unbridled First Amendment rights even for companies that have scaled to massive commercial success, you know, to basically put in place elements of responsibility and to encourage good corporate citizenship. Well, in that context, what has been the response, if anything, from Apple, Microsoft, Google.

You could make the case that all of these companies depend on their financial well being by having people sit down or stare at a screen and do things using the Internet. No, certainly, one might argue, I mean Google clearly with YouTube, has a direct interest by maintaining a social media channel which has been implicated in terms of disinformation. We look at Microsoft, we look at Apple. Yes, these are the technology platforms that serve to enable the delivery

these types of services. You know, does that perhaps put them too much of a remove um clearly, you know we have instances here where you know, Microsoft has been subject to sanction because of any competitive practices both domestically as well as overseas in the past, but it hasn't

extended necessarily to putting out disinformation. One might argue that there really is a need first and foremost for the social media community UH to perhaps do a better job of policing themselves or have others do it for them. Perhaps in this regard, we might have other in the broader technology community here in the US also encourage this type of appropriate and collaborative behavior. Well, we will look out for that, and I'm sure this is a conversation

that will be continuing for the months to come. David Garretty, thank you so much for your perspective on this and for filling us in on where we are here today on this Chief executive Officer of g v A Research, are you ready for the sixth second? Ad Well, Randall Rothenberg, the chief executive of the Interactive Advertising Bureau, is here to tell us more about this. Randall it's a pleasure

to have you here in our eleven three oh studios. UM, so tell us about the sixth second ad, the lack of attention that consumers seem to be able to to be able to pay attention for more than six seconds, and what this means for advertising, most from the market perspective, but also for the platforms like Google and Facebook. Well, at the root of the six second ad is the fact that digital video is becoming the experience platform for UM for brands uh more than any other form of platform.

And it's been an ongoing adjustment to try to figure out what is the natural standard for digital video advertising. The six second ad has been with us for about ten years. UM. You know, Vine was the pioneer of the six second spot, and it's kind of been evolving into what you might even think of as a natural standard. UM. There's been a reasonable amount of research done on it. We've done research at i EB on it and it

seems to indicate that it's pretty sticky with consumers. You know, whether it goes forward as a real standard or not, we just have to see what's the best distribution platform for these videos digital videos. Oh, there's lots of them. I mean, obviously YouTube is a very dominant uh platform. It's effective for many marketers and it's not effective for others. It depends upon the category, depends upon the brand, depends

upon the message, depends upon the creativity. UH So I would say is less about the platform than it is about the amalgamation of all the factors. The reason why I ask us because whenever I see you can skip this at in five seconds, I'm counting down the seconds before I could skip it. How do you how do you measure the efficacy? Well, you do it using both traditional means and non traditional means. Traditional means is all

the research that goes into awareness preference. But the non traditional means, which is where digital's power actually is, is the ability to attribute a post hoc action to it. I mean, did people look at the the A, did people click? Did they buy? And that's really where the movement is moving to what we call dire act brands. I mean, there are enormous numbers thousands of companies that are now establishing themselves across every consumer facing category using

this form of online advertising. All right, I want to mention a couple of companies to you and get your Thoughts, Warby Parker, Casper, Dollar Shave Club, bark Box, Glossier. These are companies that you just described as being direct to the consumer brands. Right. We just released a massive year long study on what we call direct brands, and um, those are all representative of this this direct brands phenomenon,

And fundamentally, this is not about digital advertising. This is about a uh kind of an apocal shift in the way UH industrial supply chains themselves are put together and managed for value. And our thesis, which we believe the research proves, is that the owned and operated, high barrier to entry capital intensive supply chains that have dominated really since the late nineteenth century have been replaced are being replaced by low barrier to entry capital, flexible least and

rented supply chains. So the whole form of value creation in consumer facing, in the consumer facing economy is shifting massively in this direction, which is what allows the Warby Parkers and the Caspers and thousands of other companies whose names you don't even know to come into existence. One barrier to entry that certainly isn't There are many restrictions by the social media companies that end up being the distribution platforms for a lot of these advertisements, and right

now Congress is calling for a lot more UH. Some commerce members are calling for more regulation. What what do you think is the appropriate measure, especially as we hear more about Russian advertising on Facebook. Well, Russian bots are a serious issue. Bots themselves are a serious issue. But you also have to remember that bots are just a technology.

There are bad bots meeting UH things that can be used for nefarious purposes because the digital marketing and media supply chain isn't well policed by some companies, and the bots that can be used for good purposes as well to amplify a message. Basically, it's another form of automation. So UM. The congressional UM legislation that's being bandied about, for example, the war Uh Warner Klobisher bill in the Senate gets at some things, but it doesn't actually help,

uh fix the supply chain problems that are there. The Warner Klobascher bill and most of the other legislation that you're seeing basically aims specifically at paid electioneering advertising. The election ads vote for Trump, vote for Hillary that appear in formatted spaces and time slots doesn't really address UH. The social media infiltration and supply chain infiltration beyond that

supply chain infiltration, meaning so you've got you've got. Uh. You have in the Internet a very open ended supply chain in which anyone, almost anyone can plug and play. And uh, you don't have enough companies qualifying their suppliers downstream and their customers upstream. And you need in any other industry, any other industry, the food industry, the textile industry, you have that supplier qualification taking place. Randa Rothenburg, thank you so much. We'll have to have you back on

fascinating discussion. Randal Rothenberg, chief executive officer of Interactive Advertising Bureau, which is based in New York. Shares of US automakers are falling yet again. General Motors, for example, is experiencing the biggest four day drop in its shares since at one point it's recouped a little bit of of those losses. But here to help us understand what the impact of trade tensions could be on the auto industry, as Jamie Butters, us autos reporter for Bloomberg, Jamie, thank you so much

for joining us. So the reaction in equity markets seems to be highly negative toward auto companies with the looming potential aluminum and steel tariffs, Can you walk us through just why people are so negative? Well, sure, hey, good morning. So you know, steel and aluminum, Steel traditionally, right is

what cars were made of. We we rely less on steel now over time, and partly by replacing it with other materials such as aluminum, which can be more expensive but are lighter and therefore you know, better for fuel economy and another efficient use of the vehicle. But these are these are huge components, and the you know, and most of what the automakers buy for building vehicles in

the U S is U S steel. But the nature of markets, if you're going to raise the used terrorists to raise the price of imported steel, the price of domestic steal is going to go up. So all the steel and all the aluminum that goes in the whatever fifteen million vehicles a year that we make around here

is gonna get more expensive. Okay, Jamie, I mean I understand the argument that you know, the global nature of steel and so on, But you know, if GM purchases of the steel for US production from US suppliers, couldn't they then make the public argument that g you know, we didn't impose tariffs in order to raise prices for our customers. We agreed or the president put forth these tariffs in order to save the eighty thousand jobs that are in the steel industry. Well, but but where is

that going to get paid for? Is it going to be paid for out of GM's bottom line or is it going to come out of the customer? But I'm saying, but you're saying that this is like a global global purchasing agreement, Well it's no. Well what the point is that they're buying it locally and the price they pay locally is going to go up, right, because the only thing keeping it down is is this uh, you know,

arguably underpriced foreign steel. Yeah, well, I just want you to walk us through if there have been any estimates of just how much uh the steel and aluminum tariffs could potentially increase either the cost of a car to make or the cost of a car to buy for the consumer. Right. Uh, you know, there's a lot that we don't know because there will be exemptions and there will be you know, how how it actually gets implemented. But if you look at it just kind of broadly,

it might not be that bad. So if you figure there's eight hundred dollars worth of steel in the average vehicle, of course, look I mean arrange of the average, right, you can have a Toyota Yaris that's a tiny lawyer, you know, Chevy Cruise that's a little thing, or a great big you know, Silverado on fifty. But on average, let's say there's eight hundred to a thousand dollars worth

of steel and aluminum in a vehicle. You know, if it's a what are we talking about tariff, that might only be two hundred two fifty dollars worth of extra taxes per vehicle, which on a thirty six months lease, you know, works out to about six dollars a month. You know, so maybe that's not so much. It's sort of but I guess it raises the question the bigger picture of you know, what's the role of government and

the role of taxation. We just went through this process, you know, the President has been very proud to eliminate a lot of regulations that were there to maybe protect the air or protect consumers, and we want to get rid of those so the economy runs a little more smoothly. You say, well, hey, what's another six dollars for the you know, fairly affluent people who can buy a new

car or truck. Um. You know, it's not that that cost by itself is overwhelming, but you add a little six dollar here's six dollar there, those things can add up and create a much less efficient economy. Jimmy, what about the effect on automobiles that are made outside the

United States and are imported. That is a really interesting question. Um. And you know, again it's not all clear and sorted yet, but as it as it's been described, and what we're if you if you figure we're gonna a tax steel when it comes into the country, that is kind of a disincentive to build vehicles. Here you look at say, Fiat Chrysler is in the process of moving the assembly of their heavy trucks from Mexico to Ohio. I'm sorry

to Michigan. And um so if bringing it to Michigan is going to impose that is going to make all that steel subject to the terrorists, it puts them at a disadvantage to the GM trucks that are still going to be made in Mexico. So he might this move could actually give a little advantage to Mexican made and Korean made vehicles. Maybe it's a disincentive for Hyundai to build cars in the southern US instead of just importing

them with you know, fully subsidized deal from Korea. So there's a lot of there are a lot of question marks here, Jamie. I mean, if they start to uh, if US companies start to build more cars overseas, that certainly would be a change in the dynamic right now.

But just where we are, can you just put this in a perspective, do the auto industry executives who you're speaking with an analysts think that the move has been overdone given what we know so far, the move by the shares, no with the shares a response to the deep negative response. I know, I'm not hearing them it's overdone. There may be, I mean, the their rhetoric is very high.

The rhetoric is very hot within the industry. Some of some of the analysts are saying, this is actually pretty manageable. You know, it's not a deal, it's not what we want, but it's but it's manageable. And so maybe some of you know, chairs were down three four percent yesterday for most of the automakers. Maybe some of that will recover, especially if we start to see some exemptions made for you know, critical, you know, significant supplies of steel or aluminum.

They may be able to mitigate it, but they're very worried about the president that has said the risk of a trade ward breaking out. You've got to leave it there, But thanks very much. As always, Jamie Butter is excellent on the US automobile industry. Joining us from our bureau in Detroit. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm

pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio