>> good morning. these are the stories that set your agenda. u.s. and european futures plummet.

donald trump imposes tariffs on canada, mexico and china, threatening to up in global trade. in beijing is preparing a u.s. trade proposal to avoid further tariffs and the euro slides as donald trump says the eu is next . so the clock is going down to those tariffs kicking in tuesday. this is the market reaction. futures set for a battering, pointing lower. we look at the automakers and minors and the impact on europe

and the pledge that european terrorists are coming next. keep an eye on the metals and on copper. that's falling. s&p futures stateside looking to drop. let's flip the board and ebola cross asset. yields down at the back end of the treasury curve, reacting to the re-imposition. euro-dollar at 1.02. the two year of the front end. it's a different picture and crude diverging and that is significant. you are looking at an increase. bitcoin and ether also taking a hammering.

it's a safe haven. that argument has been trashed today. let's check in on the canadian dollar falling to the lowest level since 2003. the mexican peso the chinese yuan. the canadian dollar down 1.3%. canada and mexico say they will retaliate. china working on a proposal to try to appease donald trump. let's cross over to avril hong for the asian market reaction. >> we are seeing heavy selling, risk off in the region. investor concern rippling that this will be a trade war now that we have the opening salvo. still waiting to hear what china does but i thought it worth highlighting that we are seeing some of the ai movers and ts emc

dragging on the markets as they are back from a long holiday. alibaba higher today, helping declines amid optimism of its ai models but also worth highlighting when it comes to hong kong markets that they are not performing as badly as other parts of the region, maybe this idea that with the announcement of tariffs that this opens the way for them to bring out the bazooka on stimulus. a bit more building on what you just talked about when it comes to the trade war as in the first iteration. that is where we saw it getting hit hard after the announcement. we saw offshore renimbi moving towards record lows but it's interesting how it's not the worst performer among the currencies, maybe a bit of

stealth intervention underway already. we will have to wait until wednesday when markets get back. we have the wall street journal reporting china is looking at talks with trump on trade and it will reduce so that's helping the offshore. >> avril hong on that. canada and mexico vowing to hit back at the u.s. after trump followed through on threats to impose tariffs on imports of their goods. beijing has promised corresponding countermeasures to trump's 10% levy without announcing any new tariffs. justin trudeau says the move left his government with no choice but to respond with counter tariffs. >> first, i want to speak directly to americans, our

closest friends and neighbors. this is a choice that will harm canadians but beyond that it will have real consequences for you, the american people. >> let's bring in kriti gupta. what does this impact? >> you heard it from trudeau. it shows up like in some of this goods behind me. fruits and vegetables. most of mexico's avocados find a home in the u.s.. 47 percent of fruits and vegetables come from mexico and canada. beer and tequila is a big one. you will see companies impacted at the open. and car parts is a big piece of it. carmakers like to assemble their cars in mexico and canada. they have that proximity to

detroit and the rust belt. lumber and steel. these are things that will hit american pocketbooks. >> what about the impact on the u.s. economy? what is the assessment in terms of the economic impact? >> one of the immediate questions was that this could increase, some calling for a recession, for the u.s. it will show up in the form of inflation. you're talking about a $930 drop in household incomes as soon year, within the next 12 months with inflation potentially up to 3% so when we are talking about pricing in an uptick in inflation these are the things we are watching. energy prices and food prices will be part of that core bucket. even u.s. gdp by 2029 a hit of

$55 billion. and remember on the campaign trail he made a promise that these tariffs will help offset some of the tax cuts for american citizens. they cost as much as $5 trillion. those are the estimates so you can see how maybe the 1.5 trillion dollars estimated by the committee for a responsible federal budget could offset those things and this is just the opening salvo. >> just the opening salvo. kriti gupta breaking down the impact. trump also reiterating that he does plan to impose tariffs on the european union, citing a large trade deficit with the block. >> it will definitely happen with the european union because they have really taken advantage

of us and we have a deficit. i would not say there's a timeline but it will be soon. >> let's bring in oliver crook in hamburg. how seriously is the european union taking the threat of u.s. tariffs and what options could they reach for? >> i think they are taking it seriously. our member speaking to the prime minister of denmark a few months before the election and she kind of shrugged greenland off. it's clear this will be a major feature of the trump administration and european leaders have been resident that have been reticent but they have a list of retaliatory measures they are ready told fire off if they get these measures from donald trump coming in the next days or weeks. the question is what it -- what

are his demands and he has made some indication of that before saying you need to up your defense spending and he wants to see nato spending hit 5%. no country is close to that except for poland. lng and fossil fuels. if you are adding all these tariffs, is there is much fossil fuel to go around? and to put this into scale, the trade between the u.s. and european union is about 1.5 trillion euros every year, bigger than every single european economy except for the u.k., france, germany and italy and they enjoy 3% tariffs. and goldman sachs has suggested that could wipe out 1% of european growth also adjust the trade deficit but let's not

forget the u.s. runs a surplus on services so that could be another place they get hit back. they will have a major impact on europe. >> which parts of the european economy are most likely to be impacted? where will the pain be faced and felt most acutely? >> basically germany. more than half of that surplus europe runs with the u.s. is what germany. they run a surplus of about 85 billion euros with the u.s. and now the u.s. is the biggest trading partner of germany. they have pivoted away from china and moved to the u.s.. and they are going to get crushed by this. this is the biggest port in germany.

this is where all the major trade happens in this port has been operational since 1189a.d so it's been a hub for european trade for a long time and let's not forget this idea of global trade and exporting to the rest of the world has been the catalyst that's created this huge amount of growth. that is currently drastically at risk. we have heard these tariffs could reduce exports from germany into the u.s. by 15%. it could hit the automotive sector and farm up. this economy has built its entire economic legacy on open trade and if you start to crush that, particularly after the data we got last week, another contraction, what you will basically guarantee for germany is another year of contraction. that will mean three years of consecutive contraction.

that has not happened once since 1989 so this is a huge development for the german economy, particularly in the throes of what we can call a chaotic collection period without a cohesive narrative. >> oliver crook in hamburg on the fact that germany is at the tipping point edge of this potential impact of tariffs that donald trump he's promised on the eu. the context and details in terms of the potential impact from oliver crook and with the german elections a couple weeks away we will have a focus on how a new chancellor may navigate this. oliver crook will be live, speaking with guests, including the ceo. that is tomorrow on bloomberg tv. even more important in light of these tariffs threats. a line crossing around samsung

winning an appeal case relating to a merger dating back to 2015. the high court has upheld an acquittal of samsung's executive chairman so they are currently down 2.7%. that may be more of an effect in reaction to the tariff risk. emerging market currencies have slumped with the peso iran the biggest losers. let's check in with mark cranfield. i know you have been monitoring the impact across the treasury curve. it's difficult to know which asset classes to zoom in on. what stands out to you in terms of how the markets are adjusting to this news? >> it's the macro traders in control so far today and that's not too surprising because we

have the cash markets that have not opened so we have to take into account what we have seen. the dollar is strong across the board. suspension of stealth intervention already to try and keep them stable and that certainly the genesis of an article suggesting they are preparing talks with the u.s. but what's interesting is that the short end is looking at the inflation impact from tariffs and higher yields, especially the two year. that's where the dollar bid is coming from but if you look at the long end we are seeing much more demand, particularly around the 30 year sector and that suggests people think the growth factor will be a factor. we predict more than 1% will be

shaved off this year if the tariffs stay in place. even though the u.s. is trying to isolate itself and put america first it will have an impact and that's why there's a lot of demand for the longest u.s. bonds. we have not seen that for some time. the long end is outperforming dramatically compared to the short. they may develop further and of course people one the inside story. it is just a cell across the board but we may start to see more divergence within sectors as people in the u.s. start to react to what's happening in canada and mexico. it will be an interesting day in the u.s.. it could look different by the time asian traders come back tomorrow. >> that divergence as well is pronounced. mark cranfield in terms of what

to monitor in terms of the market reaction to this news. let's get you the details and this is a focus on with net inflows coming in above estimates. the dividend per share is slightly below estimates. we know there has been scrutiny a new ceo recently appointed in the last couple weeks but that's the redhead and we will watch that. and donald trump threatens to cut off aid to south africa, sparking a selloff in the rand.

this is bloomberg.

>> donald trump says the u.s. is to stop spending -- sending aid to south africa. the u.s. president's comments, less than two weeks after zero's government signed a new law making it easier for the state to expropriate land subject to equitable compensation. jenna visit -- jennifer joins us. explain what is driving this decision. what is behind his animus when it comes to these recent policies. >> it's fascinating and the timing of this as well because

this was something signed by the president just two weeks ago and it caused division depending on who you spoke to and in particular we have this government of national unity some of which saying this was just an update to a law back in 1975 but other people are saying this is going against what this country stands for so this is expropriation without compensation by the deep details are important here and a lot of these lands if they are to be seized by the government will largely be abandoned buildings so we are now hearing president trump taking aim at this. we should note one of his closest advisers was born in south africa and potentially that is something he's thought about but this could be significant for the country. we have seen the rand weekend against the dollar and notches

that but we are looking at aid over the past two decades so this could be significant for the country, not something that ram opposed the ones to hear. we are hearing from south africa's foreign minister specifically about this and saying the expropriation act is not exceptional as many other countries have similar legislation and is saying hopefully the u.s. uses this time to look into what the law is doing before acting but a bit of trumping is the potential for this rescinded aid and tariffs. >> and a big chunk of that reportedly going to south africa's continuing and ongoing fight so the potential human impact is there. and you are on the ground at the conference. what is the reaction when we way up that to these tariffs?

>> prior to this announcement there was already concerned about what a global trade ward would mean for commodity prices at a time when a lot of african countries and companies are trying to get more value add when it comes to mining so this is not something they necessarily want to hear because this will affect what it is they are able to benefit from, the actual extraction and downstream process so you can expect it will be a lot of the discussion and will potentially heighten what we do and try to rewrite some of the code around these deals. we will see how that could affect long-term agreements. >> jennifer zabasajja on the

ground for us and covering that event. elon musk meanwhile has been talking about what's been happening with dog and his links to the treasury department. that's a really important story. a number of senior treasury officials have resigned. and as president trump vows to drill, what does that mean? /

♪♪ ♪ three little birds ♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪

>> oil jumping as president trump placing tariffs on a range of imports including crude from

canada and mexico and it had fallen since trump's inauguration with policies threatening to disrupt global trade so what does this mean for oil refiners as wti is currently up. here to tell us more is an associate. >> these tariffs will likely be an impact for u.s. refiners. canada especially accounted for 60% of u.s. crude imports into the u.s. and 2024 is a soul importer into the midwest and rocky mountain districts. they are not only attuned to taking in the cheaper crude but at the same time face the lack of alternatives given in these

regions are landlocked so as a result fuel makers in the area may need to lower their run rates potentially or face higher costs to for -- to source feedstocks. >> that's why they cannot just sweep up -- coming out, president trump reiterates his threat to impose tariffs on the european union. we walked through

>> good morning. i am tom mackenzie in london. u.s. and european futures plummet and the dollar surges after donald trump imposes tariffs on canada, mexico and china. who vowed to hit back with countermeasures. beijing is preparing a u.s. trade proposal to avoid further tariffs and the euro slides as donald trump says the eu is next so the clock is counting down to those u.s. tariffs kicking in. the signature is on the order. implementation will take place on tuesday. he will have a call with the leaders of canada and mexico. european stock futures taking a huge hit. it is risk off across these

markets and the ftse 100 futures with a focus on miners and the impact with copper prices pointing lower by 1.3% although oil is higher. s&p futures down and nasdaq 100 futures set for a fall of almost 2.5% and let's take a look at the fx impact. and we will get to the mexican peso canadian dollar shortly. down 1.1%. there's a bid towards the back and. and the front end is being sold off on expectations they will have to keep rates on hold for longer. and wti currently jumping to percent and there's a 10% tariff

coming through on canadian oil. bitcoin taking a knock. let's check in on the mexican peso. falling to around 2000 and three and the mexican peso's down 2% versus the dollar, falling 1.2% in the offshore yuan also a little softer but may be some intervention coming through from officials in china. we monitor these currencies throughout the day. and i'm joined by melanie and before i get to the theoretical proposition of tariffs i want to ask about the second derivative effects on europe of tariffs we

know are coming by tuesday on canada, mexico and china. what is the impact?

the inflationary impact will also be dependent on any issues relating to supply chain so the tariffs on china. it could be that there are some supply increases and it will also have an impact there. it's also a big question for the ecb to answer. >> you have talked about the different scenarios under which tariffs could impact europe but the size and scope of those, what is that? >> 10 to 15%.

so we have it falling to 2% and rising to 2.5 or 6%. anything higher than that, the impact could be bigger, but it depends. >> they're pricing in about 84 basis in terms of cuts. let's stick with your scenario. is 84 basis points is it too much? what are you factoring in in terms of the ecb reaction function? >> our forecast has two more rate cuts and that would be a cut in march and in june. >> that's assuming 2% to 15% tariffs. anything more and it is for the ecb to decide in which case it

will have to be more but given the neutral rate and where we think it will stop, we think we are probably on the good side of it. >> that is interesting, that call on 50 basis points, and that factors in tariffs. are we underestimating the read across from the fed that may be held on pause for longer and what that impact is on the ecb and boe in the u.k.? >> our forecast has higher for longer. we do not think the ecb will be rattled if the fed stops or goes quicker. they have said they will be meeting dependent and meeting by

meeting. of course, it cannot completely ignore it, but we don't think it will be watching exactly very closely. >> do you have a risk radar in terms of the sectors or segments that are most vulnerable to tariffs? what stands out to you as the weak links when it comes to the u.s. economy on the impact of tariffs? >> we think if the administration were to target different sectors it would go down the root of aluminum, steel but perhaps there will be negotiations. we have heard from donald trump that if the eu imports more gas they won't get tariffs so it's all up in the air. and we know they are planning to import more to fill the inventory gap.

melanie with the potential economic impacts on the eurozone , factoring in their base case of 10 to 15% tariffs. now we have some lines crossing in terms of 29 to 30 million shares for 101 euros per share and that is the line crossing so that is another stock for you to watch. and now some other stories making the news. elon musk says his department of government efficiency is in the process of trying to shut down u.s. aid. the agency's website when off-line and sources say some officials were placed on lead after denying staff from the department of government

efficiency access to systems. he also said his team is shutting down some payments to federal contractors, suggesting he may have access to sensitive systems used at treasury. president trump has put the ceo in charge of modernizing i.t. but he appears to be expanding that to include control over financial foes and other parts of the government. unicredit has made a new move with a minority stake in general. they say therefore .1% stake is a pure financial investment with no strategic interest. they began accumulating in september. and we will have an exclusive interview with the ceo on the pulse with francine lacqua.

we continue our coverage of donald trump's move to impose tariffs on canada, mexico and china as businesses and investors brace for the fallout. stay with us. this is bloomberg.

>> after weeks of threats, a

north american trade war has a ruptured, president trump warning the world that tariffs were coming and now their impact is reverberating. it is the most extensive active protectionism taken by a president and almost a century and swings a wrecking ball between the alliance. let's discuss the implications with brenda. thank you for taking the time. what is the impact on the global economy and supply chains from these actions? >> it will be another shock to the system after a number of them over the past several years from covid to the attacks in the red sea to the war in ukraine. one by one, these shocks to keeping stability in global trade are going to create problems anywhere from raising costs of imports or exports to

shipping delays and all sorts of other things. because when the system has stress on it it has little flexibility to absorb that so we will see this ripple effect not just from the canada, u.s., mexico dispute but it could extend to china and the european union as well. global trade is durable and held well but this one will really test the principal of the free flow of goods around the world. >> do we know where the heaviest costs will live, the importers, the producers, consumers? what is the spread of impact from these higher taxes on goods produced in canada and mexico? >> there's a whole industry of logistics and customs brokers

and freight forwarders and the middleman between the company that buys a good in the company that makes a good and it's in the middle of that system that someone will have to pay that higher tariff in china's case and i saw some notes yesterday from companies saying we will have to increase the customs bond that we have. and all those goods that we ordered a week ago that will come across the border this week and there's 25% more expensive so there will be strains in the system where the money changes hands and some confusion about who will pay that initially and by a lot of the reporting we have done already those costs will get passed along. the customs broker will not take the full burden of that so it works its way through and ultimately consumers face the

higher costs that are coming. >> is the auto sector the sector that stands out to you? there's a quote from our team that these tariffs are a tariff on the u.s. auto industry itself because of the connectivity between the u.s., canada and mexico when it comes to the auto sector. >> and we think of the auto industry, we think of the big auto companies, the household names, but the auto industry is this complex system of suppliers , multiple tears of suppliers that employ hundreds of thousands of people. they depend on each other to deliver the parts when they are needed and coming up that system can slow everything down. and i saw a quote saying the

canadian auto industry will shut down if this is the case. it will cause a lot of disruption and add costs and if there are is not some negotiation soon the economic pain compounds on itself and it's harder to dig out of your >> what do we make of the decision to put 10% tariffs on mexico and china. what does that signal about the way they are thinking about their trade relationship with the world's second-largest economy? >> it signals he probably wants to take these confrontations in stages and the north korean -- north american one is the one he will stress now. he wants to deal with that on the northern and southern borders. it was curious that he only put

10% on china, a strategic adversary, and it told me he has not forgotten about china but the real showdown with them is some time off in the future. >> brendan murray, appreciate it. our global trades are on the global impact of these tariffs. it will be implemented tuesday. and hannah mott has promised free passage for u.s. warships through the panama canal and

marco rubio blasted the government after the weekend, calling beijing's influence in the region unacceptable. this is bloomberg. ♪ (giggling) you go to sandals to get really, really close, (giggling) to the caribbean. we should do this every morning. sandals valentine's sale is now on. save up to $1,000 and get a sandal-lit dinner for two.

>> if we have tit-for-tat retaliation, all we know is that it will have a global negative impact. >> these things can be inflationary. >> it is not the tool for economic security consideration.

collects it's obvious whether it's inflationary or deflationary. >> there could be a moment where even the high level of government debt, saying we want we want a much higher coupon. >> we will see double-digit global gdp losses. >> that is catastrophic. >> policymakers reacting to the threat of u.s. tariffs and these warnings coming before trump's announcements that tariffs on canada, mexico and china will begin tomorrow. with a carveout for oil of 10% when it comes to canada. but wti is popping because you have 4 million barrels per day being transported from the canadian market into the u.s. market.

there the pop on the back of these tariffs. the divergence between wti and brent. for how long one has to question. but right now oil prices are surging on the back of this news. around 4 million barrels per day , 500 thousand from mexico, among the top two trading partners overall and this in terms of what's coming through on the oil front. the refiners in the midwest cannot switch up and they have built those refiners to take the dirtier oil from canada. they do not have other sources and that will be the pain point and potentially inflationary for consumers at the pump. let's have a look at the most exposed european stocks because that impact is certainly there in front and center is the auto

sector. one of the biggest plants is in the u.s. and they depend on the flow of auto parts from canada and mexico. watch the automakers. in terms of mexico, the spanish lenders all in focus. the alcohol makers could be impacted. copper down, oil up. in terms of the miners, particularly on the ftse 100, that could be the pain point. we will watch oil companies. in terms of breaking lines coming through, we knew there was a focus on cost cuts and the board. they have shrunk the board. they are looking to cut around 400 jobs in switzerland. the line crossing. the stock is up around 40%. coming up, an exclusive interview with the ceo of

generale on the pulse with francine lacqua. interesting in light of unicredit building out a stake in generale. before that, it's the opening trade coming up next. this is bloomberg. ♪

>> good morning from london. i am anna edwards alongside guy johnson and kriti gupta. u.s. and european futures