April 17, 2025 • 18 mins
As the trade war between Donald Trump and Xi Jinping continues to escalate, economists around the world are asking who will blink first.
On today’s Big Take podcast, Bloomberg’s John Liu and Jennifer Welch join host David Gura to discuss what it will take for both presidents to come to the negotiating table, how the current state of China’s economy impacts its positioning in the trade war and why hardball tactics are unlikely to work this time around.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
The standoff between the US and China continues to escalate,
which is leading to economic uncertainty worldwide. Bloomberg News now
reporting China is expanding the ongoing trade war.
Speaker 1 (00:19):
It does not seem like we're getting any kind of
state visit or to tant anytime soon, or even high
level talks.
Speaker 2 (00:25):
In the last two weeks, the US has placed tariffs
of one hundred and forty five percent on Chinese exports,
and China has retaliated with tariffs of one hundred and
twenty five percent and export restrictions on critical rare earth minerals.
Speaker 3 (00:39):
China wants to make a deal, they just don't know
how quite to go about it.
Speaker 1 (00:43):
You know.
Speaker 2 (00:43):
It's one of those things that.
Speaker 3 (00:44):
Are not quite proud people, and President She's a proud man.
Speaker 1 (00:50):
At the moment, it doesn't seem to be working out,
I think in the way in which President Trump may
have anticipated or hoped that it would.
Speaker 2 (00:57):
Jennifer Welch helped lead China policy at the National Security
Council during the first Trump administration and also under President Biden. Today,
she's chief geoeconomics analyst for Bloomberg economics.
Speaker 1 (01:09):
They think President Trump's mo is to build pressure. There's
a real contrast of approaches here. President Trump prides himself
on his unpredictability as well as his hardball tactics right
whereas Beijing, in particular Chinese President She Jumping, is a
very methodical player when it comes to negotiations. They like structure,
having a clear idea of what the agenda's going to
(01:31):
be so they can prepare for it. And I think
President Trump's unpredictability really puts them on the back heel
in a lot of ways.
Speaker 2 (01:38):
For its part, China has signaled its open to talks.
On Wednesday, Beijing appointed a point person for negotiations, but
sources close to China's government have told Bloomberg that President
She wants to see the White House approach talks with
more respect, and it wants the Trump administration to adopt
a more consistent position on tariffs. It begs the question,
(02:00):
with the world's two largest economies in a standoff, which
leader President Trump or President She will blink first.
Speaker 3 (02:08):
China is not going to engage in negotiations until it
feels the United States has shown some sincerity.
Speaker 2 (02:17):
John lou Is Bloomberg's executive editor for Greater China. He's
based in Beijing.
Speaker 3 (02:21):
I think the main concern for the Chinese side is
that they go into some sort of back and forth
with Washington and that whatever agreements they reach are either
scuttled or the US goes back on them. The US,
the Trump administration does something to embarrass not only the
Chinese government but also she and so that I think
(02:42):
is the number one concern for the Chinese side, and
they want to make sure that does not happen.
Speaker 2 (02:50):
I'm David Gera, and this is the big take from
Bloomberg News today on the show. What it will take
for President's Trump and She to come to the negotiating table,
How the current state of China, this economy, impacts its
positioning in the trade war, and why hardball tactics are
unlikely to work this time around. When preston Trump anoun's
(03:15):
sweeping tariffs on about sixty trading partners earlier this month,
he made good on a big campaign promise on day one.
Speaker 3 (03:21):
We will throw out Bidenomics and we will reinstate Maganomics. Maganomics.
We will go right after China. We will not rely
on them one bit.
Speaker 2 (03:35):
And while China has long been a target of Trump's ire,
the size and scope of these tariffs caught Beijing by surprise,
but Bloomberg' John lou says it shouldn't have come as
a shock.
Speaker 3 (03:46):
I was surprised that there was surprise because I think
what Donald Trump did was exactly what he said he
was going to do. Right he said on the campaign trail,
He's going to take tariffs on China to sixty some percent.
After he took I think there was a bit of
optimism here in China that that would not happen, but
that's exactly what he did. The Chinese, for their part,
(04:09):
made very clear that if tariffs came into effect that
they would hit back. And from what I can gleanm
the US was itself relatively surprised that the Chinese retaliated
as proactively and aggressively as they did.
Speaker 2 (04:24):
Here in the US. This is all over the place,
in newspapers and on television. They're in China. How much
is this a subject of conversation? Is it everywhere as well?
Speaker 3 (04:33):
It's everywhere. It is the thing everybody is talking about.
There's an overwhelming country wide consensus or sort of broad
support for China to fight this, and so these tariffs
have made you know, Shiji being very popular for retaliating.
(04:56):
It's seen, I think, a broad swelling of patriotic sentiment,
support for the government, and there is this feeling on
the ground here amongst ordinary people, business owners that China
is being wrong by these turriffs. I think the additional
(05:16):
thing here, though, is there is a sense of foreboding.
I think there is a sense of what does it
mean for China economically and could this get even worse?
Speaker 2 (05:26):
John? On Wednesday, China's National Bureau of Statistics reported that
the country's gross domestic product grew five point four percent
in the first quarter from a year ago. That's more
than was expected. How does China's economic position play into
how it's approaching this trade war.
Speaker 3 (05:41):
I think the longer China can keep the economy ticking along,
the longer China can hold out. And I think ultimately
this is sort of a game of chicken, if you will,
but also I think a game of endurance, and so
whether or not economically China can keep growth up, I
think that'll be a determining factor in how this trade
(06:03):
war unfolds. And you mentioned the GDP data was better
than expected for the first quarter. I don't know that
that is super telling of the actual economic conditions here
on the ground. There was actually a lot of exports
in the first quarter that will pull ahead that companies
in the US. Buyers in the US actually moved their
orders ahead and sort of built up their inventories in
(06:24):
anticipation that there would be higher tariffs on Chinese goods,
and so that might be actually hiding some of the
underlying weakness in the Chinese economy. We've had a terrible
property crisis that has yet to be resolved. We've had
weak consumer sentiment, weak consumer spending. The government has promised
and has already started to roll out lots of stimulus
(06:45):
measures to try and get households spending again, get companies
investing again. And I would expect that the government will
do more of that and at a greater magnitude as
we go forward, as the impact of these tariffs are
felt more broadly.
Speaker 2 (07:00):
That's going to determine how negotiations between the US and
China play out. But another factor will be personality. Bloomberg's
Jennifer Welch, who worked in the first Trump administration, thinks
Trump's long standing emphasis on the art of the deal
will play a huge role.
Speaker 1 (07:17):
From his perspective. He is the deal maker, right, He
plays hardball. He is very much empowered at home, and
I think he's trying to leverage that to bring a
lot of confidence into these negotiations as sort of coming
in with a mandate from the American people and really
trying to utilize the fullest extent of America's comprehensive national
(07:41):
power here and sort of going further than most presidents
have in the past to challenge the limits of that.
That's how I think he is approaching not just China,
but negotiations with all these partners.
Speaker 2 (07:53):
What role does pride play in these conversations? You have
two leaders here who are extremely proud individuals. I think
it's fair to say, how does that affect or shape
talks of this magnitude.
Speaker 1 (08:05):
I think that's one of the main hurdles to talks
really taking off in a serious way at this point
in time. Obviously, there's a lot of pain on both sides.
There's the potential for even deeper pain as these terrorsts
start to bite, and yet we're not really seeing a
lot of progress in terms of negotiations, and in fact,
each side still seems to be saying that the ball
is in the other side's court, and I think a
main reason for that is because neither of them wants
(08:26):
to look weak, right. President Trump, especially after pausing on
reciprocal terarifts and then even on the electronics exemptions, has
been kind of pushing back in other ways to demonstrate
he's still very strong on trade. And I think that's
especially important for him when it comes to China because
of the legacy of his campaign promises there and the
legacy of his first term of wanting to appear tough
on Beijing. I think likewise, for President She Jim Paying
(08:48):
he feels as the leader of the second largest economy
in the world, they need to demonstrate that they can't
be pushed around by the United States anymore. They took
those prior tariff hikes on the Chin and have to
demonstrating their willingness to stand up for China.
Speaker 2 (09:04):
I think we're familiar with President Trump's personality, but President
she is much more of an enigma for American audiences
and John, I wonder if you could paint a picture
for us of him as a leader, how he's responded,
and what that tells us just about the way he
approaches leading his country.
Speaker 3 (09:18):
I think he is a leader that projects stability, that
projects forthrightness and standing his place, not making sudden turns
in policy. But at the same time, I think when
push comes to shove, he will make dramatic changes. During
COVID China had this COVID zero policy. It put a
(09:40):
tremendous burden on the economy, on the average citizen. And
then at the end of twenty twenty two, we started
seeing protests, people going on the street wanting the government
to end the COVID zero policy. And because of that,
he did almost overnight, just did away with that policy.
And he is a man who is willing to make changes.
But before that, I think he's shown that he's going
(10:03):
to project strength and he's going to project stability, and
that he knows where he's going and it's the right
direction forward.
Speaker 2 (10:11):
Jennifer Welch says what President Trump may have been betting
on is that China's economic situation, in particular the size
of its debt, along with the housing and youth unemployment
crises John mentioned, would make she bend.
Speaker 1 (10:23):
This is me reading the tea leaves a little bit.
He may have not fully anticipated the extent to which
Beijing was going to push back on this, so I
think he engaged in kind of this tip for tat
with Beijing to try and back them down by escalating
to de escalate again. But the de escalation never happened,
and now we have these extremely high terrorf rates on
both sides.
Speaker 2 (10:45):
After the break where the US China trade war goes
from here and the weapons Beijing has at its disposal
to counter additional tariffs. Tensions between the US and China
are fraught right now, and from the rhetoric coming out
(11:06):
of the White House, you'd think the two have never
been further apart on trade, but Bloomberg Economics, as Jennifer
Welch says, Presidents Trump and She half broke her to
deal before.
Speaker 1 (11:17):
It was inked in January twenty twenty. It's called the
Phase one trade deal, and that was meant to be
the starting point for what we're called Phase two negotiations
that were supposed to deal with much more contentious issues
around structural or forums in China that never really took off,
in part because of the pandemic and in part because
of deepening US China tensions. The question now is are
(11:39):
the negotiations that may emerge out of this current round
of tensions geared towards a Phase one redux where it's
just going to be addressing the kind of current trade
imbalance and through purchase agreements, or is it going to
be trying to attack what those Phase two talks that
never started were geared towards these larger structural issues. And
(12:01):
I think different members of the administration probably have different
perspectives on that. And the key question is going to
be what's President Trump's view, right, And some of this
may depend a little bit on the timeline to be
frank right. I think one of the major incentives for
him on the Phase one deal was it was inked
in an election year and he probably wanted to put
the US China trade war to the side and get
(12:22):
that resolved before heading into a presidential election.
Speaker 2 (12:25):
Jennifer says it's important to remember that while President Trump
isn't up for reelection and doesn't seem too worried about
the fallout from a trade war, many of his allies
in Congress are, and the midterms are right around the corner.
Speaker 1 (12:38):
That could be an incentive for him where maybe the ambition,
so to speak, is lowered to something more like a
Phase one Redux deal. But I think that's a million
dollar question at this point, and it's also another reason
why talks probably have nim progressed all that far as.
Speaker 2 (12:55):
The stalemate continues, both the US and China are eyeing
other trade partners. The Trump administration has been lining up
potential deals with some of China's biggest economic rivals. Some
of the President's economic advisors met with leaders from Japan yesterday,
and the administration has talks scheduled with South Korea and
India in the coming weeks. For his part, President She
(13:16):
has made trips to Vietnam, Cambodia, and Malaysia, and John
lu says she is looking to improve China's trade relationship
with the EU.
Speaker 3 (13:25):
Not only has Trump put these tariffs on China, but
he's also put them on lots of American allies, Europe,
many Southeast Asian countries, and so that gives China an
opportunity to step in and to have itself be seen
as a stabilizing force in the global economy as opposed
(13:45):
to Washington d C, which Beijing will project as being
unpredictable and as being not so caring about the rest
of the world and concerned mostly about itself. Xijiping is
in Southeast Asia this week. He's visiting Vietnam, He's visiting Malaysia.
In Vietnam, he called on the Vietnamese to partner with
(14:05):
China to resist the unilateral bullying that's happening in the world,
which is of course availed reference to the United States.
There's been reports that we're going to get many European
leaders visiting Beijing later this year for a summit. That
would suggest another opportunity for China to enhance its relationship
with Europe. Whether or not other countries wholeheartedly embrace China,
(14:29):
I think, is a different question. In Asia, for example,
you have places like Japan, India, the Philippines, other Southeast
Asian countries that have territorial disputes with China, and so
they are not going to be embracing China that quickly.
There's going to be suspicion in those relationships. Same with Europe.
China has supported Russia and its war invasion of Ukraine diplomatically, rhetorically, economically,
(14:55):
and so that is put many European countries off, and
so there's going to be suspicion as China tries to
strengthen these relationships.
Speaker 2 (15:05):
You characterize this as a game of chicken, and I'm
wondering sort of how long China has here, how long
the runway is for President She to hold out on
negotiating before the situation becomes difficult for China economically, any
sense of that At this point.
Speaker 3 (15:19):
I would say the runway for She in terms of
that game of chicken is very long. Without a doubt,
there is broad public support for China to fight back,
and I think that means people are willing to take
a little bit more pain if it means that that's
what they need to do to contribute to the fight
against the United States. And the other thing I would
(15:41):
say is the Chinese government has a history of enduring
difficult periods where they've placed additional burdens on local companies'
local households. COVID is a great example of that. You know,
I don't know of many countries where the government could
have imposed lockdowns like they did here in China, and
(16:03):
so I do think those points suggest that they can
play this game for quite a while.
Speaker 2 (16:08):
Meaning President Trump might not get that phone call anytime soon.
Speaker 3 (16:13):
And the reason for that is there's a very different
cultural dynamic at work, where the Chinese believe very strongly
that at a working level that she will appoint somebody,
that Trump will appoint somebody, and those two individuals will
go back and forth and back and forth and back
and forth and work out all the details of a deal.
(16:35):
And only after that deal has been finalized and everybody's
happy with it, only then will Hijinping appear to shake
hands and sign something. President Trump really just wants to
get she on the phone and try and work something
out person to person, one on one, and it's just
(16:55):
not the way the Chinese system works. It's not the
way that Chijinping works.
Speaker 2 (16:59):
So that big question who's going to blink first? I
put it to both Jennifer Welch in Washington and John
Lou in Beijing.
Speaker 3 (17:07):
The first person to blink is going to immediately get
a quick response from the other side. So if President
Trump blinks first, you're going to get something affirmative from
the Chinese side because they want out of this just
as badly. If the Chinese blink, I think you probably
will hear this great sigh of relief from Washington, DC.
Speaker 1 (17:29):
My bet would be that it is going to be
neither side overtly obviously blinking. I think conversations are going
to start in a quieter way at more working levels,
to set this stage eventually for a leader level conversation
because of sort of their mutual interest in guarding their
(17:49):
respective pride. So that's my prediction. We'll see when it's
upe actually occurring.
Speaker 2 (17:58):
This is the Big Take from bloom News. I'm David Gura.
This episode was produced by David Fox, Rachel Lewis Chrisky,
and our deputy executive producer, Julia Weaver. It was edited
by Patty Hirsch, John Low, Jennifer Welch, and Chris Antsy.
It was fact checked by Andreana Tapia and mixed and
sound designed by Alex Sagura. Our senior producer is Naomi Shaven,
(18:19):
Our senior editor is Elizabeth Ponso. Our executive producer is
Nicole Beemster Boor. Sage Bauman is Bloomberg's head of Podcasts.
If you liked this episode, make sure to subscribe and
review The Big Take wherever you listen to podcasts. It
helps people find the show, thanks for listening. We'll be
back tomorrow.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
The standoff between the US and China continues to escalate,
which is leading to economic uncertainty worldwide. Bloomberg News now
reporting China is expanding the ongoing trade war.
Speaker 1 (00:19):
It does not seem like we're getting any kind of
state visit or to tant anytime soon, or even high
level talks.
Speaker 2 (00:25):
In the last two weeks, the US has placed tariffs
of one hundred and forty five percent on Chinese exports,
and China has retaliated with tariffs of one hundred and
twenty five percent and export restrictions on critical rare earth minerals.
Speaker 3 (00:39):
China wants to make a deal, they just don't know
how quite to go about it.
Speaker 1 (00:43):
You know.
Speaker 2 (00:43):
It's one of those things that.
Speaker 3 (00:44):
Are not quite proud people, and President She's a proud man.
Speaker 1 (00:50):
At the moment, it doesn't seem to be working out,
I think in the way in which President Trump may
have anticipated or hoped that it would.
Speaker 2 (00:57):
Jennifer Welch helped lead China policy at the National Security
Council during the first Trump administration and also under President Biden. Today,
she's chief geoeconomics analyst for Bloomberg economics.
Speaker 1 (01:09):
They think President Trump's mo is to build pressure. There's
a real contrast of approaches here. President Trump prides himself
on his unpredictability as well as his hardball tactics right
whereas Beijing, in particular Chinese President She Jumping, is a
very methodical player when it comes to negotiations. They like structure,
having a clear idea of what the agenda's going to
(01:31):
be so they can prepare for it. And I think
President Trump's unpredictability really puts them on the back heel
in a lot of ways.
Speaker 2 (01:38):
For its part, China has signaled its open to talks.
On Wednesday, Beijing appointed a point person for negotiations, but
sources close to China's government have told Bloomberg that President
She wants to see the White House approach talks with
more respect, and it wants the Trump administration to adopt
a more consistent position on tariffs. It begs the question,
(02:00):
with the world's two largest economies in a standoff, which
leader President Trump or President She will blink first.
Speaker 3 (02:08):
China is not going to engage in negotiations until it
feels the United States has shown some sincerity.
Speaker 2 (02:17):
John lou Is Bloomberg's executive editor for Greater China. He's
based in Beijing.
Speaker 3 (02:21):
I think the main concern for the Chinese side is
that they go into some sort of back and forth
with Washington and that whatever agreements they reach are either
scuttled or the US goes back on them. The US,
the Trump administration does something to embarrass not only the
Chinese government but also she and so that I think
(02:42):
is the number one concern for the Chinese side, and
they want to make sure that does not happen.
Speaker 2 (02:50):
I'm David Gera, and this is the big take from
Bloomberg News today on the show. What it will take
for President's Trump and She to come to the negotiating table,
How the current state of China, this economy, impacts its
positioning in the trade war, and why hardball tactics are
unlikely to work this time around. When preston Trump anoun's
(03:15):
sweeping tariffs on about sixty trading partners earlier this month,
he made good on a big campaign promise on day one.
Speaker 3 (03:21):
We will throw out Bidenomics and we will reinstate Maganomics. Maganomics.
We will go right after China. We will not rely
on them one bit.
Speaker 2 (03:35):
And while China has long been a target of Trump's ire,
the size and scope of these tariffs caught Beijing by surprise,
but Bloomberg' John lou says it shouldn't have come as
a shock.
Speaker 3 (03:46):
I was surprised that there was surprise because I think
what Donald Trump did was exactly what he said he
was going to do. Right he said on the campaign trail,
He's going to take tariffs on China to sixty some percent.
After he took I think there was a bit of
optimism here in China that that would not happen, but
that's exactly what he did. The Chinese, for their part,
(04:09):
made very clear that if tariffs came into effect that
they would hit back. And from what I can gleanm
the US was itself relatively surprised that the Chinese retaliated
as proactively and aggressively as they did.
Speaker 2 (04:24):
Here in the US. This is all over the place,
in newspapers and on television. They're in China. How much
is this a subject of conversation? Is it everywhere as well?
Speaker 3 (04:33):
It's everywhere. It is the thing everybody is talking about.
There's an overwhelming country wide consensus or sort of broad
support for China to fight this, and so these tariffs
have made you know, Shiji being very popular for retaliating.
(04:56):
It's seen, I think, a broad swelling of patriotic sentiment,
support for the government, and there is this feeling on
the ground here amongst ordinary people, business owners that China
is being wrong by these turriffs. I think the additional
(05:16):
thing here, though, is there is a sense of foreboding.
I think there is a sense of what does it
mean for China economically and could this get even worse?
Speaker 2 (05:26):
John? On Wednesday, China's National Bureau of Statistics reported that
the country's gross domestic product grew five point four percent
in the first quarter from a year ago. That's more
than was expected. How does China's economic position play into
how it's approaching this trade war.
Speaker 3 (05:41):
I think the longer China can keep the economy ticking along,
the longer China can hold out. And I think ultimately
this is sort of a game of chicken, if you will,
but also I think a game of endurance, and so
whether or not economically China can keep growth up, I
think that'll be a determining factor in how this trade
(06:03):
war unfolds. And you mentioned the GDP data was better
than expected for the first quarter. I don't know that
that is super telling of the actual economic conditions here
on the ground. There was actually a lot of exports
in the first quarter that will pull ahead that companies
in the US. Buyers in the US actually moved their
orders ahead and sort of built up their inventories in
(06:24):
anticipation that there would be higher tariffs on Chinese goods,
and so that might be actually hiding some of the
underlying weakness in the Chinese economy. We've had a terrible
property crisis that has yet to be resolved. We've had
weak consumer sentiment, weak consumer spending. The government has promised
and has already started to roll out lots of stimulus
(06:45):
measures to try and get households spending again, get companies
investing again. And I would expect that the government will
do more of that and at a greater magnitude as
we go forward, as the impact of these tariffs are
felt more broadly.
Speaker 2 (07:00):
That's going to determine how negotiations between the US and
China play out. But another factor will be personality. Bloomberg's
Jennifer Welch, who worked in the first Trump administration, thinks
Trump's long standing emphasis on the art of the deal
will play a huge role.
Speaker 1 (07:17):
From his perspective. He is the deal maker, right, He
plays hardball. He is very much empowered at home, and
I think he's trying to leverage that to bring a
lot of confidence into these negotiations as sort of coming
in with a mandate from the American people and really
trying to utilize the fullest extent of America's comprehensive national
(07:41):
power here and sort of going further than most presidents
have in the past to challenge the limits of that.
That's how I think he is approaching not just China,
but negotiations with all these partners.
Speaker 2 (07:53):
What role does pride play in these conversations? You have
two leaders here who are extremely proud individuals. I think
it's fair to say, how does that affect or shape
talks of this magnitude.
Speaker 1 (08:05):
I think that's one of the main hurdles to talks
really taking off in a serious way at this point
in time. Obviously, there's a lot of pain on both sides.
There's the potential for even deeper pain as these terrorsts
start to bite, and yet we're not really seeing a
lot of progress in terms of negotiations, and in fact,
each side still seems to be saying that the ball
is in the other side's court, and I think a
main reason for that is because neither of them wants
(08:26):
to look weak, right. President Trump, especially after pausing on
reciprocal terarifts and then even on the electronics exemptions, has
been kind of pushing back in other ways to demonstrate
he's still very strong on trade. And I think that's
especially important for him when it comes to China because
of the legacy of his campaign promises there and the
legacy of his first term of wanting to appear tough
on Beijing. I think likewise, for President She Jim Paying
(08:48):
he feels as the leader of the second largest economy
in the world, they need to demonstrate that they can't
be pushed around by the United States anymore. They took
those prior tariff hikes on the Chin and have to
demonstrating their willingness to stand up for China.
Speaker 2 (09:04):
I think we're familiar with President Trump's personality, but President
she is much more of an enigma for American audiences
and John, I wonder if you could paint a picture
for us of him as a leader, how he's responded,
and what that tells us just about the way he
approaches leading his country.
Speaker 3 (09:18):
I think he is a leader that projects stability, that
projects forthrightness and standing his place, not making sudden turns
in policy. But at the same time, I think when
push comes to shove, he will make dramatic changes. During
COVID China had this COVID zero policy. It put a
(09:40):
tremendous burden on the economy, on the average citizen. And
then at the end of twenty twenty two, we started
seeing protests, people going on the street wanting the government
to end the COVID zero policy. And because of that,
he did almost overnight, just did away with that policy.
And he is a man who is willing to make changes.
But before that, I think he's shown that he's going
(10:03):
to project strength and he's going to project stability, and
that he knows where he's going and it's the right
direction forward.
Speaker 2 (10:11):
Jennifer Welch says what President Trump may have been betting
on is that China's economic situation, in particular the size
of its debt, along with the housing and youth unemployment
crises John mentioned, would make she bend.
Speaker 1 (10:23):
This is me reading the tea leaves a little bit.
He may have not fully anticipated the extent to which
Beijing was going to push back on this, so I
think he engaged in kind of this tip for tat
with Beijing to try and back them down by escalating
to de escalate again. But the de escalation never happened,
and now we have these extremely high terrorf rates on
both sides.
Speaker 2 (10:45):
After the break where the US China trade war goes
from here and the weapons Beijing has at its disposal
to counter additional tariffs. Tensions between the US and China
are fraught right now, and from the rhetoric coming out
(11:06):
of the White House, you'd think the two have never
been further apart on trade, but Bloomberg Economics, as Jennifer
Welch says, Presidents Trump and She half broke her to
deal before.
Speaker 1 (11:17):
It was inked in January twenty twenty. It's called the
Phase one trade deal, and that was meant to be
the starting point for what we're called Phase two negotiations
that were supposed to deal with much more contentious issues
around structural or forums in China that never really took off,
in part because of the pandemic and in part because
of deepening US China tensions. The question now is are
(11:39):
the negotiations that may emerge out of this current round
of tensions geared towards a Phase one redux where it's
just going to be addressing the kind of current trade
imbalance and through purchase agreements, or is it going to
be trying to attack what those Phase two talks that
never started were geared towards these larger structural issues. And
(12:01):
I think different members of the administration probably have different
perspectives on that. And the key question is going to
be what's President Trump's view, right, And some of this
may depend a little bit on the timeline to be
frank right. I think one of the major incentives for
him on the Phase one deal was it was inked
in an election year and he probably wanted to put
the US China trade war to the side and get
(12:22):
that resolved before heading into a presidential election.
Speaker 2 (12:25):
Jennifer says it's important to remember that while President Trump
isn't up for reelection and doesn't seem too worried about
the fallout from a trade war, many of his allies
in Congress are, and the midterms are right around the corner.
Speaker 1 (12:38):
That could be an incentive for him where maybe the ambition,
so to speak, is lowered to something more like a
Phase one Redux deal. But I think that's a million
dollar question at this point, and it's also another reason
why talks probably have nim progressed all that far as.
Speaker 2 (12:55):
The stalemate continues, both the US and China are eyeing
other trade partners. The Trump administration has been lining up
potential deals with some of China's biggest economic rivals. Some
of the President's economic advisors met with leaders from Japan yesterday,
and the administration has talks scheduled with South Korea and
India in the coming weeks. For his part, President She
(13:16):
has made trips to Vietnam, Cambodia, and Malaysia, and John
lu says she is looking to improve China's trade relationship
with the EU.
Speaker 3 (13:25):
Not only has Trump put these tariffs on China, but
he's also put them on lots of American allies, Europe,
many Southeast Asian countries, and so that gives China an
opportunity to step in and to have itself be seen
as a stabilizing force in the global economy as opposed
(13:45):
to Washington d C, which Beijing will project as being
unpredictable and as being not so caring about the rest
of the world and concerned mostly about itself. Xijiping is
in Southeast Asia this week. He's visiting Vietnam, He's visiting Malaysia.
In Vietnam, he called on the Vietnamese to partner with
(14:05):
China to resist the unilateral bullying that's happening in the world,
which is of course availed reference to the United States.
There's been reports that we're going to get many European
leaders visiting Beijing later this year for a summit. That
would suggest another opportunity for China to enhance its relationship
with Europe. Whether or not other countries wholeheartedly embrace China,
(14:29):
I think, is a different question. In Asia, for example,
you have places like Japan, India, the Philippines, other Southeast
Asian countries that have territorial disputes with China, and so
they are not going to be embracing China that quickly.
There's going to be suspicion in those relationships. Same with Europe.
China has supported Russia and its war invasion of Ukraine diplomatically, rhetorically, economically,
(14:55):
and so that is put many European countries off, and
so there's going to be suspicion as China tries to
strengthen these relationships.
Speaker 2 (15:05):
You characterize this as a game of chicken, and I'm
wondering sort of how long China has here, how long
the runway is for President She to hold out on
negotiating before the situation becomes difficult for China economically, any
sense of that At this point.
Speaker 3 (15:19):
I would say the runway for She in terms of
that game of chicken is very long. Without a doubt,
there is broad public support for China to fight back,
and I think that means people are willing to take
a little bit more pain if it means that that's
what they need to do to contribute to the fight
against the United States. And the other thing I would
(15:41):
say is the Chinese government has a history of enduring
difficult periods where they've placed additional burdens on local companies'
local households. COVID is a great example of that. You know,
I don't know of many countries where the government could
have imposed lockdowns like they did here in China, and
(16:03):
so I do think those points suggest that they can
play this game for quite a while.
Speaker 2 (16:08):
Meaning President Trump might not get that phone call anytime soon.
Speaker 3 (16:13):
And the reason for that is there's a very different
cultural dynamic at work, where the Chinese believe very strongly
that at a working level that she will appoint somebody,
that Trump will appoint somebody, and those two individuals will
go back and forth and back and forth and back
and forth and work out all the details of a deal.
(16:35):
And only after that deal has been finalized and everybody's
happy with it, only then will Hijinping appear to shake
hands and sign something. President Trump really just wants to
get she on the phone and try and work something
out person to person, one on one, and it's just
(16:55):
not the way the Chinese system works. It's not the
way that Chijinping works.
Speaker 2 (16:59):
So that big question who's going to blink first? I
put it to both Jennifer Welch in Washington and John
Lou in Beijing.
Speaker 3 (17:07):
The first person to blink is going to immediately get
a quick response from the other side. So if President
Trump blinks first, you're going to get something affirmative from
the Chinese side because they want out of this just
as badly. If the Chinese blink, I think you probably
will hear this great sigh of relief from Washington, DC.
Speaker 1 (17:29):
My bet would be that it is going to be
neither side overtly obviously blinking. I think conversations are going
to start in a quieter way at more working levels,
to set this stage eventually for a leader level conversation
because of sort of their mutual interest in guarding their
(17:49):
respective pride. So that's my prediction. We'll see when it's
upe actually occurring.
Speaker 2 (17:58):
This is the Big Take from bloom News. I'm David Gura.
This episode was produced by David Fox, Rachel Lewis Chrisky,
and our deputy executive producer, Julia Weaver. It was edited
by Patty Hirsch, John Low, Jennifer Welch, and Chris Antsy.
It was fact checked by Andreana Tapia and mixed and
sound designed by Alex Sagura. Our senior producer is Naomi Shaven,
(18:19):
Our senior editor is Elizabeth Ponso. Our executive producer is
Nicole Beemster Boor. Sage Bauman is Bloomberg's head of Podcasts.
If you liked this episode, make sure to subscribe and
review The Big Take wherever you listen to podcasts. It
helps people find the show, thanks for listening. We'll be
back tomorrow.
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