Fran You're just back from Davos, and the number one a gender item at least unofficially, seems from all your broadcasting and reporting to have been the Donald. Is that right?
Yeah, he was thousands of miles away from the Swiss town of Davos. But I have to say it was the talk of the possible return of Donald Trump to the White House that everyone was talking about, and how you trump proof the economy, if you can trump proof the economy, the impact he could have on of course inflation and on globalization overall.
And then there was a shift as well, so there was a sort of the dominant strain from Afar to us in London seemed to be that there was a kind of oh, right, we have to accept that he might be coming back to the White House. But then there seemed to be a rear guard. Yes, don't worry, it's all containable. There won't be much change.
And some people are like adult with it with a little bit of humor. So we asked Christine Laguard about what a Trump presidency, you know, Trump to point oh means. She kind of made everyone laugh. I think the Gravil cupof.
Coffee, it's for the American people to decide what they want. But obviously we are all concerned about it because the United States is the largest economy, the largest defense country in the world.
But it's tricky from because Boris Johnson wrote a piece this week about actually all the evidence we have from last time Donald Trump was in powers that you know, this was a man we could do business with, and in it he singles out regard as you know, the sort of grand dam of Europe's left in his words or some metaphor similar, you know, her clutching her pearls was kind of what Donald Trump is there to do. He's there to kind of shake things up.
And there's still so much we don't know about Donald Trump, who his running made is, but also what kind of composition of Congress he'll have. Adam Posen was talking about.
That, Yeah, everything changes of Trump wins in mostly for bad ways. Speaking as an economists, I think the reality is the American electorate is going to be more strategic. If Trump wins, the Democrats will likely hold the House. If Biden wins, the Republicans will likely hold the Senate, and so it's going to be about the sort of stealth fiscal policy but if.
You're a chief executive or if you're an investor, you're a policy maker, I think you probably have to game theory what it means in terms of some of the policies that sometimes do come out of the blue, to try and make sure that you have your house in order. I know there's also talks and rumors about European Union looking at leadership after the elections to make sure that they have someone strong enough to possible counter the US
if Donald Trump is in the White House. And then we spoke to the Finance Minister of Germany and he just took issue with the fact that we're talking about Donald Trump too much.
We are talking too much about Donald Trump in Europe, and we.
Should be prepare ourselves for a possible second term for Donald Trump by fostering our European competitiveness. But whether you think we're talking about Donald Trump too much, we have to try and figure out what possible Trump presidency. The second time Round meets for the Economy. Welcome to in the City, Bloomberg's podcast, connecting you to the conversations and the stories shaping the world of finance and Francin.
Laqua and I'm alegri Stratton.
So this week a look at really what impact four more years of Trump and the White House will have on economies around the world with us Bloomberg Head of Economics and Government, Stephanie Fonder. Stephanie, thank you so much for joining us. We were together in Davos. We're definitely the decision makers were sizing up the global risks of another Trump presidency.
Yeah, I think people are looking and realizing that this is, you know, a very serious possibility. And I think you saw a couple of strands. You saw a general kind of unease about the uncertainty that that was going to bring at a time when you know, heaven knows, we already have quite a lot of quite a lot of
uncertainty in the global economy. But there was another interesting strand which I thought was, you know a lot of big business leaders, particularly who are based in the US, really wanting to get away from the kind of extreme rhetoric that you often hear on the campaign and certainly has been part of the Biden administration's pitch against Trump. You know that he's a risk to democracy and all of these things. I think that you know, the head
of JP Morgan JB. Diamond specifically pushed back on that and was in a sense just I mean, you could say he was trying to normalize Trump. You're certainly trying to normalize the campaign between these two and say, look, we shouldn't think this is about preventing a dictatorship. We should consider these to be too serious politicians.
Because I mean, the thing we've seen in the UK was obviously the Boris Johnson piece, which was a different version of the same Jamie Diamond weldview stuff, which was hold on a second, it might not be as bad as all that, and I think there's a number of reasons for it. The sort of really unkind observation is Trump was quite good for the wealthy, and Jamie Diamond's clearly wealthy, and indeed Boris Johnson's got quite wealthy recently. Two.
But there's sort of less unkind and more sort of high minded version or interpretation of it is that you know, fundamentally Trump has a huge number of supporters and represents a view in America and indeed a view in other countries, and a constituency that feels quite aggrieved and quite voiceless, and so trying to connect with those people as well might be on the mind certainly, certainly of someone like Boris Johnson.
Yeah, and it's just a desire to sort of try and feel like Donald Trump is still on the reservation and you know, actors as though he is still you know, a viable leader for America, given that he's you know, quite quite has a very good chance of being the next president. Any one of these leaders, any one of these business people will have to interact with him or
his officials. So there's also just a basic kind of self preservation aspect that you know, any the world is such that you know, they will have to deal with whoever's the president. And if it looks like it might be Donald Trump, there's no point trying to suggest that you know it'll be you know that he is some impossible to deal with character, because you're going to have to deal with him.
But Stephaniely, if you break down, you know, the impact on the economy, So is it almost automatically inflationary because it will be you know, less globalist, We could potentially see more supply chain disruption between the US and China. And so actually, if you're a European you're kind of stuck in the middle and you're not sure what to do.
Yeah, it's interesting because the one thing he has said in the way of policies on the economic front is the ten percent tariff on all imported goods. And we actually did the numbers on that with Blimberg Economics the other day, and it's obviously, you know, as economists would say, it's not very good for real incomes and for consumers
in the US. I think we found forty five out of fifty states where it was going to be a modest hit to real income because remember, you're even if you may have helped the old mining company or auto plant, your increase, seeing the price of all these imports that people buy and other businesses buy. Ironically, China does quite well, we notice, because of course there's lots of very high tariffs on China anyway, so it wouldn't necessarily be a
big hit for them. But the countries like Mexico that Chinese exporters are competing with would suddenly face this tariff at least if he goes through on that promise of ten percent across the board. So you know, that kind of thing at the margin could sort of further disrupt global trade. Add to inflation a little bit in the US. But you know, as ever with these things, one it's still thinking more about the uncertainty and more about what kind of policies you'd be looking at across the board
from the US. You know, we don't know really how what his stance against China will be. It could be that he'll be a bit more conciliatory with Shijinping than President Biden has been, given that he has a seem to have a bit of a portion for dictators.
How difficult is it just to have a template on, you know, the economics under Donald Trump, because some of the policies were made on a whim, It was on social media, So because they're not pre announced, it's actually quite difficult to know right now what you know, he'll do on the Inflation Reduction Act and some of the lynchpins that are benefiting the US economy, although he may not agree with the underlying premise of it.
Yeah, it's interesting. It's been so much part of and we saw that in New Hampshire in Iowa, A big part of the pitch to voters for Trump has been the comparison between you know, what their economic situation was under Trump versus what it's been under Biden. And of course we could argue there were lots of you know, the Putin's invasion of Ukraine had quite a lot to do with that, The timing of COVID had quite a
lot to do with that contrast. But having made that big economic pitch, actually we're not hearing that much from Donald Trump in the way of new economic policies apart
from the one I just talked about. In fact, he's focused more on, as far as we can see, increasing executive power, so try to reduce the influence of the individual departments and regulators in the US, so that would potentially suggest, you know, much less environmental regulation, and they're definitely a kind of wind down in the Inflation Reduction Act. We've heard a lot about immigration and potentially, you know, some thought about maybe using the using the American army
on US soil to confront illegal immigration. So you know, there is a bit of a disconnect. But although a lot of his he's been sort of talking about Biden's economic failures, he hasn't been proposing a lot of concrete new economic policies that we could focus on.
I think the other thing that's been to sort of bring it back to the UK. The other thing that I don't perhaps this week will be the first time people will start to process it is if we have an autumn election and I don't think and you know, none of us know, but if we have an automate election, which is time roughly around the same time as what we now think is quite likely to be Biden versus Trump, and you have more and more of this bellicose language
that he is so fond of. I think firstly, you know, we are not used to having an election in this country which has got another election that's very relevant and important happening at the same time, it's suffusing and intermingling with the language and the debates that are being had in the UK and that are not completely irrelevant. So I think, firstly, that's the kind of the backdrop if you've got Trump saying repeatedly, are you better off now
than you were four years ago? And that is a you know, a date but debating point as well that we'll play in our election. I think it is it is going to be unusual to have that sort of double narrative playing through our own potentially our own election.
Yeah, and I have I often find I mean, there is an interesting way agro It's a bit like you know, we all watch, you know, the American TV kind of permeates our consciousness. And there's also been a sort of equivalent to that in economics that the big economic debates in the US we tend to sort of transposed onto the UK, like rising inequality or and and and other things that you know, and the flat real wages, which has been true in the US and actually less true
in the UK. I think that would be the risk if you have kind of simultaneous parallel campaigns. I guess if that if the betting is potentially a couple, that the UK election would be two weeks after the presidential election, maybe in November, you could you could find that there were sort of people were importing debates from the from the US campaign that actually are less relevant for the UK. We haven't had a very good recovery from COVID like the US has had. We have a different kind of
inflation problem. We certainly have a very different kind of energy situation. And yet you know, there's a there's a risk that will sort of find ourselves having the same arguments as they are having in the US.
I think I think that all of that's true. I also think there would be being said and both politically big political leaders and Starma will come under different pressure to respond to them. So, you know, from from Sunk's perspective, you know this has been said in America, do you agree? And he'll have kind of one set of political calculations to go through. But the same will be true as Starma.
If you know, he's looking like he's becoming the next prime minister, you know, he'll come under pressure from the left of his party to just you know, say this is outrageous how they et cetera structure, and he'll probably you know, need to keep quiet for the reasons we sort of started this podcast, which is people will have to work with each other in you know, twelve months time.
Yeah, there's also an interesting thing if all the debate is about Bidenomics, or at least if there's quite a lot of debate about Bidenomics and whether it works, it sort of makes it a complicated argument for Keir Starmer, right, because you know, there's certainly been elements of the biden approach to the economy that the Rachel Reeves and others in the London on the labor side are trying to emulate.
But if they're also trying to kind of distance themselves from a president who looks like he might be about to lose, I think that too could be a bit a bit complicated. But then I mean, that's that's a problem. You know, there's equally a problem for Donald Trump that you know, in effect, lots of the Biden aconomics policies are actually a sort of you know, putting into practice things that he had talked about, you know, wanting the
US to be more competitive. Well, actually, arguably the Biden administration has done more to invest in infrastructure and American businesses than Donald Trump did, So I think, you know, they'll be there'll be an interesting development debate on that happening on the other side of the Atlantic as well, Stephanie.
If Donald Trump actually does better in the polls in the next couple of months, does it shift the conversation in the UK more to the right, or do investors look at the UK and say, look, you know, given the two parties and the fact that they're not that far apart in terms of policies, the UK could look a bit like a safe haven.
I think this, I mean, I think the UK looking like it's sort of bucking the trend with two quite normal, relatively boring contenders for number ten, I think could be helpful.
I mean, as as you know, Frans seen in recent years, it's been quite hard to persuade people of the merits of the UK stock market, but I think there could certainly be an element of that that if you feel like you know, US politics has gone down this rather sort of unedifying path yet again, and the UK has actually kind of rescued itself from Liz Trust and other other craziness, and it's actually now got two very sort of traditional, relatively middle of the road politicians, at least
in the way that they present themselves.
If you're an Eastern European country right now, you are probably quivering because of the the dynaut the O, the things he's on the record about saying around NAT spending and defending Ukraine. I mean, I think we're having this debate now in London focused on economics, but the defense aspect and possibly more isolationist stanced from Donald Trump, whether whether or not it comes to be true, because he has totally capable of saying one thing and then doing
completely the other. But people talked about it being a nightmare scenario for them, haven't they from Yeah.
They have.
If I could have, we should do Stephani your show just on the eye rolls of policymakers in Davos when you ask them about, you know, whether it was possible to Trump prove the economy. I think the Finance Minister of Germany said, look, we're just talking too much about Donald Trump. Is there a way of Europe and others to Trump prove the economy?
I mean, if I were them, I'd be much more concerned about Trump proofing, you know, the security of Eastern in Europe. I mean just to you know, to go back to a Legras point, I think that is where sort of under the surface, where the concerns would have
to be. If you have a leader coming in who has got an ambiguous at best relationship towards President Putin, and whose election just in itself will send a signal to a lot of powers around the world that the sort of US policeman is not going to be around, or at least could be easily bought off in one way or another. You know that both President Biden and President Trump have been sort of in some ways America
first politicians. But the difference of course with Biden is it's not been America only, whereas President Trump is very much sort of focused on just the US alone, not
the broader security of the world. If you're sitting in Poland or Moldova, which could easily be next in President putin sites let alone lap fear, I think, you know, there isn't a lot of Trump proofing, even though President Macrol, for example, in France's you know, is definitely talking about the need for Europe to have a response.
One of the other things that you know, people now talk about after New Hampshire is how did anyone ever think that they could beat Donald Trump as a Republican candidate? You know, what's his pull for? If you're sitting in Europe, you kind of think, well, why is he so late?
I mean, he's he has managed to turn around, you know, he's managed to play the you know, liberal establishment against itself brilliantly. And you know we've all seen this again and again. But you know that the series of legal cases I think probably have sort of sealed it for him, because it can they can sort of send a signal.
You know, he can say, look, this is what they're doing to me, Imagine what they could do to you, you know, And I'm standing there defending you against this against a sort of liberal state that wants to that wants to take all your money and wants to you know,
send the US to the dogs. So you know, he has been just he has pulled off that coup and I guess he was allowed to do that because he was never really punished for January sixth, which people thought, you know, was going to be the end of him, but his party sort of collectively gave him a pass and then that enabled him to sort of rebuild his support. But it, you know, it will go down as a pretty extraordinary political career to have pulled off.
But isn't there isn't there isn't he doing? Isn't he treading a fine line which is difficult for him with this instinct to kind of be a showman. But isn't there a kind of worry amongst some voters of him wanting revenge? And he you know, whis Whilst you're right, it's a motivating factor for them, the idea of this
underdog being beaten up legally by the Democrats. So in some senses it is motivating and galvanizing for him, but he has to be careful not to be too hell bent on revenge and and getting his own back, and so you see that in the narratives or sorry, his rhetoric after Iowa he was quite sort of you know, magisterial and the statesmen like. And then last night he was what this morning is pretty vile about about his opponent.
Yeah, I think he's I mean, this is of course what the Biden administration will tell you. They'll say, you know, ignore the polls. This is all in a vacuum when you actually have when you're facing the choice between the two, and when Donald Trump is much more omnipresent on not just his own social media platforms, but you know, broadcast news.
And other areas.
When he's now out on the road campaigning again, people will be reminded, you know, how exhausting it is dealing with his sort of sallies every day and his constant moving back and forth on different views, and they will kind of want the quieter life that comes with you know, old man Biden. You know that there is there could be a lot of truth to that, but we just don't know yet.
I guess one of the most extraordinary things is also when Donald Trump starts speaking about China, and you know, some of the antagonizing things he said about China, people were horrified, and now it's really mainstream. Are there other points whereas actually he's really set the agenda on economics and the way that the US will be.
I mean, I do think that in many ways, the Biden administration has operationalized a lot of the sort of Trump rhetoric on China and what had gone wrong with the US and the unfair global trading system. You know, they kind of took it seriously. They kept quite a lot of his tariffs in place against China, but they also put all of these domestic policies in place that were about specifically competing with China and also trying to
slow down China's own development. You know, it was the Biden administration that actually put limits on you know, exports to China are a very high level superconducted technologies and other things. So that's why I think it's interesting that there will be quite a lot of policies that part of Bidenomics that Donald Trump should find completely consistent with
his view. I think again, just going back on the national security, you know, ultimately the relationship with China comes down not just so well I can the US's economic reliance on China, but also how far the US will continue to invest in sort of being a counterbalance to
China and sort of in geopolitical terms in Asia. And that is the great unknown, you know, when it goes back to this point about America first versus America only, is Donald Trump really going to want to defend Taiwan and continue to send those kind of supporting messages to Taiwan? And you know, if not, where does that leave actually all of the economic producers who are so utterly dependent
on Taiwan semiconductors. That's why I was a little bit surprised in Davos that business people weren't a little bit more focused on those kind of question marks, because we just don't know which side he's going to be on.
Stephanie, thank you so much. Thanks for listening to this week's in the City. We'll be back next week, but in the meantime, if you like our show, please head on over to wherever you listen to podcasts, rate review, and subscribe. It helps people find the show. This episode was hosted by me Francis LaQuan and Alegraspratton. It was produced by Summersati, additional edit by Blake Maples and special thanks to Stephanie Flanders. And we also want to flag
the relaunch of the London Rush newsletter. We'll sign up to get briefed ahead of your morning calls with the latest UK business headlines, key data, but also market reaction. Bloomberg UK's new morning newsletter link is in the show notes