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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordernt. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business app. So here's the laces
this morning. How's lawmakers set to vote on the fate of President Donald Trump's tariffs on Canada. A trio of Republicans joining Democrats calling for the vote, joining us now to extend the conversation. Scott Lindscombe at the Cana Institute, Scott, Welcome to the program. Interest in Exchange with the President.
In an interview broadcast in the United States in the last forty eight hours or so, Scott, the President was asked about tariff and he brought up the example of Switzerland, said that he didn't like the way he was spoken to. So we ratchet up the tariff just a little bit more does not undermine the official justification for these tariffs.
Well, it certainly does.
This is supposed to be about a national emergency that requires it's an event that's so abrupt and so urgent that the president needs to invoke powers that are typically reserved to Congress and that the president typically isn't allowed to access. So if the whole basis for these tariffs is not the trade deficit or fentanyl coming across the border, and instead is the Swiss representative's voice, then the president shouldn't really have the ability to invoke these tariff powers at all.
Scott, this is definitely going to be something that I'm sure the Supreme Court is paying attention to, at least the lawyers who are arguing for it. I am curious about what Tyler was just talking about, which is that you are getting some pushback now from Republicans around some of this tariff policy, in particular tied to affordability concerns and how this is playing through to their voters. How much more of that do you expect?
I mean, I expect a lot of it this year. In poll after poll after poll, the President's tariffs just aren't popular, and voters have tied them to continued concerns about affordability. You know, economists don't want deflation, but voters do. And the fact is that while inflation is slowed, prices definitely haven't gone down, and particularly for key staples at
the grocery store, like beef. And so you're going to, I think, see continued connection of the tariffs to the affordability issues, and you're going to see Democrats, I think, use that as a lever including through symbolic votes like the one we're going to get I think today, if not tomorrow.
This is the reason why people haven't been paying attention to symbolic votes is because they are symbolic, and that's the reason why the Democrats have kind of been a little impotent on this. The interesting aspect is that there are a number of Republicans that are starting to join forces. And I do wonder how much heading into and after the midterms you start to get a real check coming from some Republican constituents based on what they're hearing from voters.
Do you see that as crumping some of the tariff plans that have currently been laid out.
Yeah, you know, quite Frankly, I don't think that the Congress is going to have the ability to do too much to stop these emergency tariffs under the International Emergency Economic Powers Act, simply because they're going to need veto proof majorities to get past Trump. So even after the midterms, I think it'd be really difficult for Congress to really pass any sort of tariff reform, whether it's to the emergency tariffs or to the national security tariffs under section
two the two. I mean, I'd love to see it, but the reality is, these institutional checks are pretty weak because of the veto proof majority.
And that's why I think one of the.
Reasons why the Supreme Court's decision, whenever we get it, is so important here because that would be a legitimate check on those emergency tariffs if the court really does say the president's not allowed to use them.
Scott, We've seen lots of justifications for the terifts that were introduced a year ago, raising revenue, national security, bringing manufacturing home, getting your own back when someone upsets you on the phone, all of those things. The number one issue for me, Scott, is getting China to rebalance, and the Treasury Secretary had come out repeatedly and articulated quite perfectly as to why we need to do that, and
not just ask the Europeans as well. Now, Scott, I think it begs the question now, after the evidence of the last twelve months, what we can actually do about that, because that trade surplus from China has never been wired to despite the tariffs introduced last year.
Yeah, it really shows the limitations of unilateral tariffs to do a lot to change foreign government behavior, particularly when it comes to a massive economy like China that's dealing with really systemic issues that simply can't be fixed by subsidizing a factory or removing a subsidy or something like that. So the fact is that you need a lot more than simply applying attacks on some imported goods to fundamentally change a China's economic model, and quite frankly, you might
not be able to do it at all. Unilateral policies coming from a single government tend to produce backlash in the target country. You've seen some of that in China as well, where they're actually doubling down on nationalization and self sufficiency efforts. And then the last thing, of course, is that Trump's tariffs haven't just targeted China. When you're also targeting China competitors like India, Vietnam, Malaysia, even Mexico and Canada, it makes it even harder to induce those
types of changes. And I think again that's why we've seen record exports out of China simply getting moved to third countries that don't have Trump tariffs attached.
Stay with US mult Bloomberg Savannah's coming up off to this.
This is actually a comment from a Bloomberg user which I think is a really interesting one, which is annual benchmark revisions, updated birth death model, and new seasonal factors. It's apples to oranges comparisons. What data are we actually looking at? I mean, look, ultimately, the market is taking this at face value, and I am too, because ultimately it's a good sign to see that there is job creation,
particularly in the private sector. On the flip side, how do you get some sort of longer trajectory look based in all of the revisions that seasonal everything that's been going on.
Good luck, Mike Keay Beddy joins US now, Michael cape at MULK and Stanley Mike, good to see you. Welcome to the program.
It's all clear now, is it?
If I was calling you as a client, my first question would be how much confidence can I have in this? Is this the real deal?
I think it's largely the real deal.
Everything that you mentioned is completely fair, benchmark revisions, new birth death adjustments, there's favorable seasonal factors in this report. But does it wipe away one hundred and seventy thousand private payrolls?
Probably not.
I mean we were at ninety thousand n private payrolls and I felt optimistic, right, So if truth is ninety, I'm super happy with that number.
Right.
So at one seventy, I think it's hard to bring all of that.
Back and look through it.
So, and to your point, it does fit a lot of other data points in the economy. Durable goods have been strong, Ism has picked up, Manufacturing output.
Has been on an upward trend.
So seeing some complementary hiring alongside that is a welcome sign for the economy.
Do you think focusing on December retail sales like we will guess today is a waste of time? Are you explained to bounce back? Should we just see that as a headfake?
I think we will see some bounce back, but not entirely. There is softness in that report. But just remember, even in what i'll call normal times, retail sales is very volatile. It gets revised frequently, So the signal out of retail sales I think is always kind of maybe second order. I think the market puts more weight on it than
it otherwise should. But look, even with that number, consumption is likely to come in at around two point three percent in the fourth quarter, still a solid number with a week December retail sales.
Are these good jobs that are being created? Do we have a sense of the quality of them?
Well, I haven't seen the mix, but I think you know, the average hourly earnings number at point four suggests that you know they are quality jobs on that front. That's an average number across all the sectors. So I think any job is better than no job, So I certainly think there's quality in it.
Yes, I guess I'm looking at for example, one hundred and twenty four thousand created in health and social assistance, private education one hundred thirty seven. I mean some of the main winners have really come from a couple of secers that are sort of independent of the cycle. Is that we're getting older, and that we're paying a lot of money for our kids to go to college. I mean, how much can we glean strength from these numbers and a sense of sustainability.
Well, the narrowness of job gains has always been the question. The narrowness of growth in the economy has always been an issue. It's spending by upper income consumers, it's ai related business spending. Our thesis is that you will see some broadening out in twenty twenty six. So, as you mentioned the rebounded small caps, we do think that if you get a stabilization in the labor market, inflation does come down, it can support purchasing power of other parts
of the economy, and the economy can broaden out. So the narrowness of the recovery and the ongoing expansion is an issue.
We think it will broaden out. We'll see if it happens.
Right now, you're seeing the market price out or push back some of the expected rate cuts to July from June previously, in the sense that maybe this is not an economy that needs rate cuts. There are a number of people at the Federal Reserve who believe you should keep running this economy hot because otherwise people could lose their jobs. And the whole we're structuring takes place with artificial intelligence, and if you don't do that, you'll get scarring that lasts a long time.
Where do you fall on that?
Do you think that that's a legitimate argument that you should proactively cut rates at a time of structural change.
I think they've done some of that.
I think it's easy to see that they've done that over the last two years. The question is kind of where does that process end. I think the June July period for the next rate cut is about right, and this data today says rate cuts, if and when they come, will be based on inflation. So when does the committee get evidence that inflation is decelerating, that tariffs are a transitory upward push on inflation. Sometime around the middle of
the year is probably where that evidence comes through. But to your question, I think they have done some cutting preemptively to support the labor market and prevent some downside risk. We'll see ultimately if that was enough.
I noticed that was your focus coming into the new year, looking at the dual mandate, that you thought the inflation sign of things, price stability was going to be more instructive for the future of FED policy.
Is that right?
That's right, and this number I think confirms that right. So they had to do some They decided to FED to do some risk management rate cuts to support downside or prevent downside risk to the labor market. They put in seventy five basis points of cuts. The data suggests that things are stabilizing, So if and when the FED cuts further, it will be you know where inflation is coming out of the first quarter, we think it'll be
about three percent year on year. We think it'll settle down to about two and a half by the end of the year. Somewhere in there is room for a few more rate cuts.
The two and a half we cut around two and a half.
Now, well we're thinking three.
Stay with us. More Bloomberg surveillance coming up after this. Let's turn to energy and critical minerals. The Trump administration so to announce some major shift in climate rules, rolling back and Obama era policy regulating fossil fuels. On that and more, the US and Serier Sancretary Dunkbergham joins us. Now for more, missus Secretary, you have been a busy
man over the last week. I just want to start with Project Vote and then we'll get to the EPI and what's going to happen with regulations around fossil fuels and such. MISSUS Secretary, What is Project Vote and how should I be thinking about this in comparison to say the SPI.
Well, it's absolutely a comparison. The Strategic Patrolling Reserve has created a great buffer on price shocks for American consumers for decades and decades we had no equivalent on critical minerals. There are sixty minerals on the Critical Minerals list.
Some of those are rare earth elements. China, as you know Jonathan.
Controls about eighty five to one hundred percent of the processing and refining on about twenty of those, enough to put a stranglehold on global industry, whether it's tech high tech, whether it's defense, whether it's consumer and so with the threats last year put out by China on export controls, the US leapt into action. We're broadly bringing mining back
in America. But this idea of creating a strategic Critical Minerals Reserve across sixty different elements, driven by the private sector, great leadership by across the board of multiple Cabinet secretaries in the Trump administration, working with the up XM Bank, working with the private sector about ten billion and alone about two billion in equity capital going in.
This is going to be private sector.
Funded, market driven, and those critical minerals will be stored at locations that are economically smart and economically efficient.
Around the country. But the idea is that we will.
In addition to that, last week, there was also at the State Department a historic meeting. Over fifty countries came to the US, all of them some of them already signed on others many others interested joining a club of nations with free trade on critical minerals with price floors.
The key on price floors is that would block China from illegal dumping to kill the vice across anyone particularly critical mineral, and that's going to allow the assurance for capital to start flowing back into mining and refining of these minerals in the US and in our allies. So tremendous, tremendous interest from the leaders of ministers from around the country that were there at the event hosted the State
Department last week. So anyway, great progress going to make sure that US is secure relative to our position on critical minerals.
And MISSUS Secretary, you certainly alluded to it. China's got a stranglehold over critical minerals, and America needs to do something about it, and overwhelmingly this agreement on this program often almost weekly to do something about it. What is less understood is why they have that stranglehold. You talked about pricing and dumping. What about regulations this is typically quite a dirty process. Is that held back production domestically as well?
Well?
There's been an attack on American energy in this country, but even longer than that, there's been an attack on mining in our country. And just like President Trump's drill, baby drill, we've got.
To get back to mind, baby mine.
The US graduated thirty six thousand lawyers last year and about three hundred people with mining and metallurgical degrees. China, of course, is not doing it cleaner than any I mean, whether they're tearing up the Congo or Indonesia, child labor, illegal cartels, criminal organizations.
All of these things that are going on.
It's a dirty industry potentially for the environment, but there's a lot of corruption around that. In part because countries like America are like those in Europe that have rules that have epas that can do things cleaner, better, safer, smarter, both in terms of the environment, in terms of the
labor force. Basically got out of this business, and we've got to get the free world's got to get back into the mining business and show that with innovation that we can do it, and we can do it in a way that protects the environment, protects the workers, and also then protects the economies of these countries. And so this is a strategic important for the United States to get back in and be part of that is the permitting process. We've put a stranglehold on permitting. But for
President Trump, we're breaking the logjam on permitting. Big announcements coming around the engagement finding and this is going to be a huge, huge step forward in terms of getting projects done and keeping plants open in America.
Mister Secretary, there's a question around refinding things like lithia that are crucial for a lot of the high tech aspects that go into our economy. There's a question about copper really necessary for the build out of some of the hyperscalers in particular. On the other side, there are things like coal and there's a real question of some of the rollbacks the EPA rules, like lowering emission standards
as well as potentially increasing the use of coal. Why are those necessary to get some of the national security goals that you're talking about.
Well, we'll be making some more announcements on beautiful clean coal today, as President Trump likes to call it, and should call it, because there's a coal plant running in America today. It has survived an onslaught for twenty years. But they've taken everything, virtually everything out of the Knox, the socks, that anything that would be considered an issue
relative the environment, and what's left. The attack on coal as a baseload power has been largely around CO two emissions, and with the reversal of the endangement finding that says that this was massive overreach by the Obama EPA, that we are going to go back to a thing where
we can have consumer choice that's lower prices. And of course, with the big storms we had in the Northeast last week, I mean check back on Secretary Rights press conference last Friday, but we would have had millions and millions of people in this country without power if coal hadn't stepped up. Coal was the hero of keeping the lights and the heat on in America, and all of the money that has been spent in the northeastern part of this country
on renewables. There is times those storms where we had less than two percent of the power coming from wind and solar. There was more coming from burning wooden trash than there was coming from wind and solar, and coal in some parts of the country was providing twenty five percent of the electricity, So we need The Biden plan of energy transition was actually energy subtraction. It wasn't addition,
It wasn't transition, it was subtraction. They were shutting down baseload and then replacing it with intermittent, unreliable, foreign sourced forms of energy that required us to build out all kinds of additional infrastructure on top of the infrastructure we already had. That's what drove up prices. And now we're facing this AI arms race with China. We need more power,
We need energy audition. The way to have energy addition is to stop stop getting rid of the stuff that already works, and of course that includes our fossil fuel baseload and the PGM market. Seventy percent of the power was coming from hydrocarbons.
During those storms.
I mean, America and the world is dependent on it is going to be for in long future.
Innovation is what we need to help solve any.
Concerns that people might have about future climate change.
Mister Secretary, A lot of people could get on board with that. The problem is that a lot of people have pointed out that it feels like there are certain energy sources that have gotten subtracted in this administration, as well, wind being among them. It's not necessarily that we want all energy sources, but picking winners and losers. How do you counter that?
Well, it's easy because we're not picking winners and losers. We're picking reliable, affordable, nationally secure sources that can provide what Americans need, what we need for low prices for consumers, what we need for industry, and what we need for AI. What we're not subsidizing any longer is intermittent, weather dependent foreign source, which, in the case of offshore wind, hits all three of those, but it's also the highest cost, it's not affordable, and it's also opposed.
By our marine fisheries.
I was meeting with a group of third and fourth generation fishermen in New England last Friday.
It's blowing up their business.
These are the farmers of the sea that put food on our table. You meet with the marine mammal groups that save the whale groups. They're opposed to offshore national security. Now there's a classified reports out that the radar interference and above the water in the sonar interference below the water of these massive offshore products represent real national security risks.
These are not made up things.
These are things that have to be considered, particularly related to offshore. But with the Working Families tax cut bill that got passed last July, are people are not contemplating new projects. We have companies that are coming to us from around the world that are saying, hey, we're not going to be building offshore because we get it. It was only viable because of the massive tax subsidies. So
Americans had to pay twice. They had to pay in terms of higher electric costs, and then they also had to pay through their these tax subsidies.
So it's all of the it's all of the above.
That a reliable, affordable, and dispatchable and don't require massive subsidies, I mean, and that's the level playing field.
That we're at right.
Now, MISSUS Secretary, just quickly, because people will hate us if we're talking about wind farms when payrolls comes out in about sixty seconds time. But I want to squeeze this in course. As you know, have ruled against your administration stunt work orders on these offshore wind farms. Are you going to appeal that?
Absolutely we are, and as I'm sure as we get into court and have sessions and share share classified information, there will be further discussions on this. You know, people are saying that, oh, this is some ideological attack on offshore win. No, this is like a real, genuine concern, and as Americans, we should be concerned. No one's reading a story about pilots getting shot down in the Iran or in the Russian Ukraine War. Because everything is autonomous.
It's autonomous on autonomous. And if you've got massive radar interference just off our huge population centers, if you wanted to attack America, you would launch autonomous drones through those through those things, or you do not launch autonomous submarines because of the sonar interference. And so we just have to wake up. Warfare has changed in the last four years. The world's different, and we have to be ready to respond to it.
This is the Bloomberg Survendons podcast, bringing you the best in markets, economics, anchient politics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always, on the Bloomberg Terminal and the Bloomberg Business app