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I think Barco did a great job at Munich. I'm Sephanie Flanders, head of Government and Economics at Bloomberg. And this is Trump Economics, the podcast that looks at the economic world of Donald Trump, how he's already shaped the global economy and what on earth is going to happen next and this week? As we heard at the top of the show, President Donald Trump thinks Secretary of State Marco Rubio did a great job at the Munich Security Conference.
But how did European leaders and the world more broadly interpret his message? And where did the Munich Summit leave us in relation to Europe and its future relations with China. Well, I know it happened a few days ago, but I thought for once we could linger a little on that conference, because it is a good opportunity to take of where we are and also to show off the fact that our editor in chief had the only sit down interview with Marco Rubio, and we also had our head of geoeconomics,
Jenny Welsh, in attendance, launching lots of exciting research. So I am joined by John Mickleswaite, editor in chief of Bloomberg News and Jenny Welsh, chief geoeconomics analyst for Bloomberg Economics. John as I mentioned, you had the only sit down interview with him. What were your kind of personal impressions. Had you met him before, what did you think of him?
I had met him a long time ago when he was more in the kind of I suppose neo conservative mold than the I love JD Vance mold. I thought it was interesting. I think you said style and substance. I think if you look at the substance of what he said, he was quite careful not to digress too much from the kind of Trump agenda, but in terms of style, it was said way more nicely and also
with a lot of kind of common cultural heritage. You know, he really believed these things about the rolling Stones and beer and Christopher Columbus. That's very much part of the kind of Rubio worldview is that we, you know, there's this great common civilization and we're much stronger together in that way. And that's that's I think the main thing that came across, and I think the other bit is
a degree of self confidence. I mean, remember when he went into the Trumpet administration, there was a lot of talk about, you know, little Marco's gone to join. Actually, as the years have gone by, it he has become a much stronger, more significant figure, and you see his fingerprints all over things to do with Venezuela most obviously and the Americas, but just quite cleverly, you know, deciding which bits he's going to have an input into and which one. You know, some of the Middle East stuff
he's he's handed over to wit Coough and things. But he's more popular with the State Department people than you might have expected a few years ago. He's he's on and up, and but people are relentlessly thinking about in the presidential side, where you could and out of the Trump cabinet. Him and jd. Vance are the two obvious people who could head in a presidential direction.
Jenny. We've had Chris Kennedy on the show a few times in the past, and recently he was talking about Venezuela. He works for you now as a geoeconomics analyst, but before, up until last summer, he was working for Rubio in the State Department's policy planning unit. Very much to John's point. He wrote an essay for Bloomberg highlighting that he was one of the few figures in the administration who'd found a line somehow between the America Firsts and the more
neo conservative wings of the president's coalition. Do you think that's going to come under more strain? Did you see any of the strains in evidence in Munich?
Yeah, I would agree with Chris's take there. And by the way, he also has a really great profile of Rubio available on the terminal for terminal clients as well, and this is something he siloated too. Rubio has played his cards exceptionally well over the last year or so. He's been given far more responsibilities. He's not just Secretary
of State, he's also a national security advisor. He's leveraged that to his advantage and is especially played a really strong hand in US policy towards Venezuela, which Trump regards as incredibly successful, especially after the Operation alis Maduro. That being said, and this is often a law in Washington, the more successful you are, the more powerful you are, the more risky your position can be, and especially as
you start to gain prominence. Right, one of Rubio's I think tactics over the last year has been to make sure that he doesn't steal the spotlight that he has been very careful to follow and implement policy and pay respect to the President as kind of the strategists in chief.
And one of the risks that I think he faces is the more his star has risen, the more attention there will be to him personally, and that can be a very tricky thing to navigate in Washington, but especially in the Trump administration.
So, Jenny, did you find a sort of focused on the tone of a speech and much less on a pretty uncompromising and still quite conditional approach to the transatlantic relationship that was actually in the small print of what he said.
What was interesting to me is that there was widespread recognition. You heard this from every European speaker who took the main stage. You heard it in the sidimens, You heard it in the lounges and in the hallways too, of the idea that the world is changing, Europe needs to step up, not just because of American pressure to do so, but also because of the friction with the United States
and concerns about reliability there. What still seemed to be very much a nascent conversation is how does that actually happen? There didn't seem to be very many clear pass forward.
There was still a lot of discussion about internal divisions, and then, obviously, especially for you members, there's addition bureaucratic hurdles to overcome that get in the way of everything from figuring out how do we develop a more independent, self reliant defense industrial base to how do we address critical mineral reliance on China issues when we have to work more together as a union in the United States is kind of a unitary actor that can move much faster,
So that to me was kind of this interesting contradiction of a real strong shared awareness of the issue but still not a clear sense of the way to address it.
That does tend to be the rule with yourop. They're really really good at understanding the problem, but analyzing the problem slightly less good at solving it.
Job.
We're going to play a bit of your interview, but I guess we should ask you all the headlines you wanted.
I think, actually the honest truth is, I went in there thinking he'd made quite an impressive speech, did I think, pull on lots of issues that matter a lot to Rebio and which have always mattered to him, And yet he managed to do it in a way that wouldn't annoy Donaldrump but also please thee Europeans. I tried to push him more into you know what does this mean in practice? You know, what do you actually expect the Europeans to do?
Let's hear a bit of it.
Mary Ruper, Sexuary of State, thank you for talking to Bloomberg. You've just made this rather remarkable speech where you talked about the destiny of Europe and America always being intertwined. You talked about an alliance which has stretched all the way culturally from Michelangelo to the Rolling Stones, the first I suspect for a sexual estate, but a culture that
has bled and died together. But the very common theme of your speech was the need to share the burden, the need for Europe and America to do to do things together, which was slightly different from the Vice President last year. Were you kind of offering a carrot where perhaps he was offering a state.
I think it's the same message.
I think what the Vice President said last year very clearly was that Europe and made a series of decisions internally that were threatening to the alliance and ultimately to them themselves. Not because we hate Europe or we don't like Europeans, But because what is it that we fight for?
What is it that binds us together?
And ultimately it's the fact that we are both heirs to the same civilization, and it's a great civilization and it's one we should be proud of. It's one that's contributed extraordinarily to the world, and it's one frankly upon which America is built. From our language, to our system of government, to our laws, to the food we eat, to the name of our cities and towns, all of it deeply linked to this Western civilization and culture that we should be proud of, and it's worth defending. And
ultimately that's the point. It is because we understand that ultimately our own fate will be intertwined with what happens with Europe. We want Europe to survive, We want Europe to prosper because we're interconnected in so many different ways, and because our alliance is so critical. But it has to be an alliance of allies that are capable and willing to fight for who they are and what's important.
You see a parallel. You seem to see a parallel between the Cold War, which I think I would argue that the America beat the Soviet Union because it had a common idea and it had allies on its side. You're now in a struggle with China. People say you've often been a hawk on that subject. You're want a struggle with China. Do you think you absolutely need Europe to be able to Yeah.
I would say two things.
The first the mentions of the Cold War to remind people of everything we've achieved together in the.
Past and times when there was doubt.
But it's also a reminder that at the end of that era, when we won the Cold War, there was this euphoria that led us to make some terrible decisions that have now left as vulnerable and de industrialized the West. It allowed it left us increasingly dependent on others, including China, for our critical supplies, and that needs to be reversed in order to safeguard us. And so I do think, yes, it would be ideal to have a Western supply chain that is free from extortion from anyone. So I think
we do have a vested interest in that regard. Today is different than yesterday, but it has parallels, not in that China is the new Soviet Union, but that in our future collectively will be stronger if we work on these things together.
There is sort of allies Mark Colony has just been to Beijing. Stahmars just beat to Beijing. Mertz is about to go there. Do you worry that they're beginning to drift off too much in that direction?
No, I think nation states need to interact with one another. Remember, I serve under a president that's willing to meet with anybody. I mean, to be frank, I'm pretty confident in saying that if the Ayatola said tomorrow he wanted to meet with President Trump, the President would meet him, not because he agrees with the Ayatola, but because he thinks that's the way you solve problems in the world, and he
doesn't view meeting someone as a concession. Likewise, the President intends to travel to Beijing and has already met once with President g and in this very forum yesterday I met with my counterpart, the Foreign Minister of China. So we expect nation states to interact with one another. In the end, we expect nation states to act in their national interest. I don't think that is excluded that you know that in no way runs counter to our desire to work together on things that we share in common
or threats with face in common. But I don't think visiting Beijing or meeting with the Chinese is on the country. I think it would be irresponsible for great powers not to have relations ships and talk tough things and to the extent possible and avoid unnecessary conflict. But there will be areas we'll never agree on, and those are the areas that I hope we can work together on.
So you think the rupture that many people have spoken about is illusory that hasn't happened yet, Well, there's.
No I mean, even as I speak to you now, there are US troops deployed here on this continent, on behalf of NATO. There are still all kinds of cooperation that go on at every level, from intelligence to commercial and economic.
The links remain.
I think there is a readjustment that's happening because I think we have to understand that we want to reinvigorate this This alliance has to be about different things than it's been in the past, because the challenges of the twenty first century are different than the challenges of the twentieth thanks.
But that's being most obviously tested at the moment as Ukraine, you see all these numbers from the front where the Ukrainians do seem to be doing better in terms of what's happening in the Russians. Do you think Ukraine or do you think Russia is still winning that war or where do you place it militarily?
I think that's a difficult order to say anyone is winning. The Russians are losing seven to eight thousand soldiers.
A week, a week, not not wounded dead.
Ukraine has suffered extraordinary damage, including you know, overnight and again to its energy infrastructure, and it will take billions of dollars in years and years to rebuild that country.
So I don't think anyone can claim to be winning it.
I think that both sides are suffering tremendous damage, and we'd like to see the war come to an end. It's a senseless war, and our view, the president believes that very deeply. He believes the war would have never happened that he'd been president at the time.
So we're doing two things.
So obviously we continued, Look, we don't provide arms to Russia, we provide arms to Ukraine.
We don't sanction Ukraine. We sanctioned Russia.
But at the same time, we find ourselves in a unique position of serving as probably the only nation on Earth that can bring the two sides to discuss the potential for ending this war on negotiated terms.
And it's an obligation we haven't.
We won't walk away from because we think it's a very unique one to have. It may not come to fruition, unfortunately. I hope it does, and I think there are days when I feel more optimistic about it than others. But we're going to keep trying because that is in the end, this war will not be solved militarily. It will be in the end, it will come to a negotiated settlement. We'd like to see that happen as soon as possible.
Marco Rubio, thank you very much for talking to Bloomberg.
Thank you, and.
So John. We've obviously we talked quite a lot about Marco Ruby, but I wanted to also use this a chance to kind of take stock of how Europe was responding to this new world that Trump has been helping to shape. And one of the issues that was discussed a lot is defense and even talk of the sharing of the nuclear umbrella between Germany and France. That seemed
like a new stage. It wasn't just they're going to spend more on defense, but they're going to actually be seriously thinking about alternatives to the US or some kind of diversification away from the US if they're thinking about defending themselves from Russia.
There's one European leader who rather nicely told me, and I'm going to get it slightly wrong, that you know, the way in which Europe proceeded was you have lethar G the event, have crisis chaos, and then you end up with a suboptimal solution of sorts. And I think they're somewhere in the kind of chaos towards the suboptimal
solution stage of it. At the moment, I think that Greenland, no matter how often the Trump administration out all people around the Trump administration tried to say, oh, it really didn't matter that much, I think it really did matter. I think it struck through right into some of the main leaders in Europe that they realized that they they
can't rely on America. Many of them might hope that a different administration would be more supportive, and many of them might even have looked at Ruby and thought, well, if he was running it, this would be we could deal with this. But the idea that they can necessarily one hundred percent rely on that, I think is now out. You've even got Germany looking at you know, what the nuclear options are for it, You've got Britain talking to
France about its nucleus. Suddenly a lot of things are on the table that weren't there before in terms of where they've got to on that sort of voyage. Yes, you've got you know, Germany is going to build Europe's biggest army. You've got more money going back into defense in several different areas. But it's the sort of next stage where you get the suboptimal solutions.
You know.
One really obvious point is Europe has countless defense manufacturers and different priorities in each part of different armies and different versions of tanks and different simplifying all that would not only save a fortune, it would also end up with a much kind of better fighting force at the end. And they don't seem to be getting there.
And it was very striking to me some of that conversation about the nuclear deterrent and potential options involving the French and potentially the British or indeed a sort of pan European Jenny, I was wondering, how seriously do you take that?
I think it's important to take it seriously. The other thing that comes to mind that I think is really striking here is the timing of this. This is coming after the expiration of the last major arms limitation treaty between the US and Russia. A new start expired earlier this month, and I think the world has yet to fully appreciate or reckon with the idea that we're going
to see a new wave of nuclear proliferation. I think the europe context is obviously unique and driven in part by these frictions with Washington, but it is taking place against the backdrop of this broader nuclear movement where I think we're going to see not just the US and Russia because the expiration of this treaty, China has already been embarking on a major nuclear weapons expansion, but also other countries. And the consequences of that for geopolitical stability
and the consequences of conflict are immense. And you can't get more dangerous and more impactful than nuclear conflict, right, And that's the world in which we are going to increasingly live in.
Just just to follow what Jenny said, if you look at if you remember in the Ukraine War, fairly early on, there was this issue about whether Putin would use tactical nuclear weapons, and the Chinese immediately jumped or supposedly jumped on his back and said, absolutely, no way, that's sort of a road we're going to pass over. I think by the same token, you know, the idea that Germany would ever think of sort of turning to people or other than America to protect it, the idea that Germany
might in the end even consider doing it itself. You know, this is a this is a very different world. And it's that thing where Donald Trump has thrown a stone in the pool and the ripples still heading out. And again a lot of these things may not happen, but the mere fact people are thinking about it is a really, really big deal.
Jenny, you mentioned China. That's another thing that's changed out the Munich Security Conference. You were telling us earlier you used to be very much focused on transatlantic ties, but you now see much more. There's more people there from Asia, and you know, clearly there's now more focus in Europe from a kind of strategic standpoint as well as an
economic standpoint on China. So, you know, do you feel that you've got a clearer sense of how Europeans were thinking about China, Because a few years ago it would have been all about de risking and reducing their vulnerability to China in terms of supply chains, as we discussed on the program a couple of weeks ago. Now almost it's the opposite. Now people are talking about building ties with China.
Absolutely, and as you're noting there, it's very complex. Europe is really facing difficult choices on both sides. On one hand, the frictions with Washington do lead them to naturally consider the other major power in the world. On the other hand, they're extremely frustrated with China for what they see as China's ongoing support for Russia during its war in Ukraine.
And this was a question that got pitched to the Chinese Foreign Minister Wangi after his remarks, which by the way, they purposely put right after Rubio so couldn't underscore more clearly the idea that there's a contrast being painted here
between the United States and China. Is the two major powers in the world, and his response I think left many Europeans deeply unsatisfied, which is essentially China remains very committed to the peace process, but no comments on questions about supporting Russia's war machine and ongoing strong economic and
strategic ties. The other challenge that Europe faces with China is Preussia from Chinese exports and Chinese silver capacity, and that's something that continues to be a strain that we heard from European leaders and itamans from other Europeans as well, And again I think it's it's one of those examples of recognition of the problem, a frustration with the problem, but no clear sense of the way for in part because they're navigating these difficult trade offs with Washington, and
that's something I think we're going to continue to see to play out.
And John, there's been a lot of focus on the quality of speeches in recent weeks. People were very impressed by Mark Carney's speech in Devils. You were saying that you thought Rubio's speech was very good, A sort of blockbuster speech is not what you ever expect from a Chinese foreign minister. But did you get the sense that there were more substantive meetings happening behind closed doors.
There's definitely a kind of flirtation going on in that direction. And that there's two bits. I mean, very clearly, one of privately, one of Europe's leaders, when asked what happens in Ukraine, they said very clearly that, you know, the only three people who can stop the war in Ukraine are Vladimir Putin, Donald Trump and Jiujinping, because Jujing Pin could just simply turn off the support and then Russia
would have to give in. And so I think there is a kind of realization, certainly at the top of Europe that this is a relationship you go into carefully. It's quite interesting that Rubio and I asked him about that, said no, that's fine. It's completely logical that the Europeans should also have a foreign policy towards China, which slight tension between that and what Trump has said a few times,
but that was what he said. Now you can make an argument about how long the particularly Trumpish version of foreign policy in America continues. At some point, what gets impression the likelihood is it is going to move away from that. And I think when it stops being so quite so keen to go and beat up the Europeans and starts thinking we are in a competition with China
and we're going to need allies. I think that is where there is quite a difficulty, because I think people will forgive American leaders, will forgive Europe doing stuff if it's purely just a kind of reflect to what Trump has been up to. But if you come out of it with Europe seemed to have deeper ties with China, that's going to really complicated the Transatlantic relationship. So I think the europe has to be a bit careful on that. I think, Jenny, we're going.
To run out of time, but I do want to just touch on because you were presenting this research at Munich, and of course it's a subject close to your heart because you were very focused on China and Taiwan policy when you're at the National Security Council. It's not as if the US policy towards China is completely straightforward at this point, and in fact, we are seeing a lot of mixed messages in terms of, you know, the doing
of economic deals, the sort of hard talk. But also there's somehow the suggestion that there's kind of less support, for example, for Taiwan and you had I mean just for a sort of couple of headlines. I mean, you've highlighted in that report, you and the team what the economic consequences would be of the US. Just stepping back from Asia.
We were very fortunate that the Munich security conferences here chose a theme of under destruction. Played quite well for our new report that looks at the potential economic consequences were conflict to break out in these major hotspots around the world, including the Taiwan Street, where we estimate a conflict there could cost the global economy about ten trillion dollars.
That's almost ten percent of global GDP, more than the covid pandemic, more than the global financial crisis, and candidly that's probably a conservative estimate when you look at the really critical role that Taiwan plays in producing advanced semit conductors that are just going into more and more things from our smartphones, to our smart home appliances, to our cars and increasingly feeding the beast of ai right, which is also very important and increasingly important at least in
the US stock market. I think the risk that we're highlighting in that report and that we're seeing in just the headlines today, right, is not necessarily that the US will overtly give up Taiwan, although that's something President she to be a certain going to be pressing for in his meeting in April with President Trump. But even just the risk of an inadvertent sort of strategic distraction from Asia, that the US is being pulled into the Middle East.
It's very focused on the Western hemisphere, and when you're dealing with China that is fully focused on the Indo Pacific and that has tremendous resources to bear, strategic distraction can become strategic defeat. So that was essentially the premise of our report. Again played in very well to the themes that Munich that identified as well.
So, John, I wanted to ask you what I might be a kind of final takeaway from Munich. You mentioned that there was this was a real rupture to coin a phrase, to have Germany thinking about alternatives to the US. That certainly was the feel sort of throughout most of the last year that the feeling among Europeans was this
is a lasting thing. There was the loss of trust in the US as an Now, you know, it may have been unpredictable, but the fact that you now can't rely on the US as an ally is something that will outlast Donald Trump, just as the sort of suspicion of China from the US is potentially going to outlast Donald Trump. There were an awful lot of sort of democratic democratic hopefuls in Munich and others and senators who all seemed to be in who were at the summit
and seemed to be wanting to say the opposite. You know that this too will pass. Do you think that the Europeans were buying that or do you think that it is going to be very difficult for any future president to be trusted in the same way.
It's a very good question. I think that the Europeans were all looking sort of hopefully towards towards the kind of democrats and you know, this is the answer will get us out of this mess. And I think also towards people like Glenn Younkin, who was also there, sort of Republican moderates. Although you probably wouldn't thank me for saying that that all those sort of people, Yes, the
Europeans were looking at them. But I think there is this sort of big debate amongst the Europeans which in one good way is sort of coming to an end. It's been this endlessly waiting for the world after Trump. I think the good news is because it's good for Europe full stop to be doing this stuff. Is that Europe now has been bullied by Trump and by the possibility that Trump some elements of Trumpery could survive Trump into thinking we absolutely need to focus on defense, We
need to actually start building things. We need to work out how to do some of the stuff with competition that they haven't done before. In a weird way, one of the main consequences of Trump andnomics straightforwardly could be the economics of Europe, because you're now finding people inside Germany, inside some of the other big countries saying, look, we just need to get on with this stuff to do
with competition Europe our economy. The reason why we are so powerless when we negotiate with the Americans is that our economy is not growing anywhere near as quickly as theirs, and we need to get on with it. And some people now talking about coalitions of the willing and all those sort of things. So not taking the full twenty seven along with them definitely leaving Victor Orbam behind, but
also potentially leaving the French behind as well. You know that that is a very different way of thinking about it, and it is you know, as I said, it's funny that Trump and Onmic, one of the main long term consequences of trump Andomics could be what actually what happens in Europe rather than anywhere else. And I think that that is quite a sort of fundamental thing. Wait to see what happens.
I think you've given us a very elegant ending to the program, John, not least but giving a justification for why a supposedly economic podcast would have spent half an hour talking about politics. Finally, finally, because it does that Trumpnomics indeed is bleeding into all these areas. But John, Miickalthwaite, and Jennifer wh thank you so much, Thank you so much, thank you, thanks for listening to Trump Noomics from Bloomberg.
It was hosted by me Stephanie Flanders. I was joined by Bloomberg News as editor in chief John Nichol, Fwaite and Bloomberg Economics Chief geoeconomics analyst Jennifer Welch. Trumpnomics was produced by summersadi In, Moses and Dan with help from Amy Keene and special thanks this week to Rachel Lewis Chriski to help let us find the show. Please rate and review it highly wherever you listen to podcasts