>> welcome to bloomberg markets. it's noon on wall street, for hours until the white house event in which president trump is expected to announce a wide array of tariffs directed at most if not all u.s. trading partners. markets, a few hours before the tariff announcements, the s&p 500 with the majority of companies hire within the index up .2%. it's been bouncing around. we started with the vix elevated

around 24 and it's now under 22. we have the russell 2000 up .8%, but the nasdaq is not sharing that amount of gain, .3%.the two year yield is below 390. gold is making records, 3120 six. bitcoin headed for $87,000 per coin. amazon putting in a last-minute bid to acquire all of tiktok according to the new york times. bloomberg technology's caroline hyde joins us now. if amazon is making this bid, how many does that make it? caroline: president trump would say five. he said that there were four groups. this would be a fifth. it came in the form of a letter to vice president vance who is leading the charge in negotiations and commerce secretary lutnick. it's interesting in the new york

times piece that amazon's bid, there are various parties involved that don't appear to be taking it seriously. we don't know why they wouldn't be taking it seriously, maybe it is the price point. there are serious bids, we just had one come on the show. he doesn't want the chinese algorithm come he just wants the tiktok user base and develop a decentralized model. jesse tinsley is another person, entrepreneur, who said that he would be interested. the ceo of roblox told us that he is interested in the bid as well. then there is what is being negotiated on capitol hill right now. we understand today president trump will take a meeting around a potential deal with blackstone, oracle leading the charge in terms of an investment into u.s.-based tiktok, and it would provide the security that it still does. there is even andreessen horowitz as being involved in the bid.

it is a fluid situation but it seems as though president trump and vice president vance are looking at it from a more diplomatic situation. what is it mean for the future relationship with china and how can they get china to agree to give over the asset. many say that that is without the algorithm so that is what the oracle offer would be. vonnie: what would a winning bid put forward to gain the asset? caroline: it is the right price point. there have been price points all the way up to $150 billion for the asset if it included the algorithm. this is ultimately about getting the bytedance founder on board, the chinese government onboard board, and also congress. this is from a bipartisan nature. it has been agreed on by the house, senate, and the congress broadly that they don't want tiktok to operate in the u.s. as it stands with a chinese algorithm. can a deal formulated with oracle take a small chunk of the

overall ownership? other investors already in the deal, like general atlantic backing bytedance. if they stay involved, would that satiate the law? if you still have the chinese algorithm is there the risk of u.s. data? that's the key question. vonnie: it seems of we wait long enough there will be more bidders. is there a hard, fast deadline? caroline: in theory, april 5. that's why it is such a last-minute offer from amazon. it would be extreme to see that a deal would come up to the wire like this and president trump himself has said that he may kick the can a little further. he did it wants, january 19 pushed to april 5. it could move again but it is certainly coming under fire and we seem to be getting closer. vonnie: it was an extraordinarily busy week. is there any consideration of

chinese and -- chinese input and opinions? caroline: very much. this is why you have for president trump that this could be some kind of trade negotiating tactic. maybe if we do a deal on tiktok we can reduce tariffs on china. this has become a geopolitical football and always was. we also had president trump himself say how much he likes the social media offering. in many ways he felt it helped him with his own campaign energizing the voter base. you had the ceo of tiktok at his own inauguration. this has become political in terms of what is happening in terms of the actual asset. vonnie: shareholders do not seem to be displeased. caroline hyde, thank you so much, the anchor of bloomberg technology. as we have been saying, we are hours for president trump's announcements. details are still unclear. here's what the president had to

say recently about his plans. . pres. trump: liberation day. liberation day. this is the beginning of liberation day. april 2 is a liberating day for our country. we are going to be getting back some of the wealth very very foolish presidents gave away. we are the process of imposing reciprocal tariffs. the prices will be lower than what they've been charging us, and in some cases may be substantially lower. we have a world obligation, perhaps. friend often has been worse than foe. the money will be coming back to us in the form of tariffs. relatively speaking we will be very kind. vonnie: u.s. neighbors to the north and south, some of the u.s.'s biggest trading partners are prepared to respond come in some cases with their own tariffs. kailey leinz is in washington. alex vasquez is in mexico city.

first of all we have been hearing that the white house has been talking about elon musk leaving soon. political reporting that president trump told his inner circle that that will be happening. what we know about the announcement? kailey: this is political reporting on elon musk but i would say that there is already an expiration date on elon musk's time in the administration in his current capacity at a special government employee. there was a 130 day window. from january 20 come that would be the expiration towards the end of may and politico is reporting that the timing could coincide with that time horizon. it comes as elon musk has been openly speaking about the toll that his role as the leader of the department of government efficiency has had on him personally as he tries to manage his businesses and the tolls on those businesses, specifically tesla which has faced protests. we saw that in the lowest quarterly sales since 2022

revealed today. he has been kind of a fall guy for the trump administration, taking a lot of political flack for his actions. we saw that in the wisconsin state supreme court race where he was involved financially, putting in $20 million, but went there in person to rally with the conservative candidate who ultimately lost to the liberal judge last night. it goes to show how he has expended a lot of political capital in addition to some of his wealth in the political realm in recent weeks. all of this coming together indicates per politico's reporting that his time serving in this very forward capacity may be coming to an end, although they advised that he will be sticking around in president trump's orbit as an advisor. vonnie: 50 two minutes before the tariff announcements, is anything in stone? kailey: not to our knowledge. as of this morning our report indicated the white house hadn't reached a conclusion as to what the tariffs announced a four: 30

eastern will ultimately look like with a number of options on the table including a single level tariff that will be blank et applied to u.s. trading partners. a lot is still unknown. we will find out more in the rose garden this afternoon, with much of the president's cabinet members in congress assembled, as they are waiting and watching like we are. no one in d.c. has full clarity as to what we are going to get. vonnie: we will be following along with "balance of power" for the details. to the ottawa bureau chief, changes in trade policy cooling relationships between the u.s., canada, and its new prime minister mark carney. he threatened retaliatory tariffs if there are fresh tariffs placed on canada today, which we believe there will be. what kind of tariffs could we be seeing out of canada? >> prime minister mark carney is

meeting with his cabinet in ottawa trying to figure out how hard they hit the u.s. with retaliatory tariffs. canada has proposed $60 billion worth of tariffs on u.s. goods and we have threatened a further $95 billion. in that list are items that could cause canadians and americans much more pain than the retaliation that we have deployed so far. that includes autos, more agricultural products like beef and pork. items that are bigger ticket that count for more trade and would cause some pain to canadian consumers, but the goal would be to pressure the u.s. to take the tariffs off. autos is a significant point of debate today. we have yet to see if the government follows through with that piece of the retaliation, but it is something they are considering and have threatened for some time. their are non-tariff measures that canadian provinces have

imposed like pulling alcohol from red states off the shelves. there are even export taxes to oil or pot ash. it remains to be seen what donald trump announces in the rose garden. vonnie: the province of ontario, the premier minister ford, will be on later today. stay tuned for that interview. bloomberg's ottawa bureau chief. let's turn to mexico, alex vasquez joins us in mexico city. we know that mark carney and president sheinbaum have had a conversation. mexico's position may not be the same as canada's. alex: president claudia sheinbaum has been using a pretty different strategy then canada or china. she has not announced any retaliatory measure yet.

she is trying to give more importance to talks, especially with commerce secretary lutnick and the mexican foreign economy minister. she understands that mexico has some disadvantages in the trade relationship with the u.s. mexico needs of the u.s. she has been trying to get some special treatment for mexico. we know that mexico has replaced canada as the main u.s. trading partner, so she is confident she will get the special treatment from the u.s. she is trying to give more importance to talks, and she has not announced any retaliatory measure yet. she did say that she will if mexico gets hit by broad tariffs today. she will announce a response tomorrow, which could include tariffs and non-tariff measures. again, i think that the mexican

government is confident they can reach a special deal for the country. vonnie: bloomberg economics estimates that any tariffs on the u.s. could chafe 5.4% off of the mexican gdp, but if mexico responds it could reach 7.4% off the mexican gdp. the central bank already lowered rates by 50 basis points, at 9%. what more could the central bank do? alex: we need to understand that mexico, about 80% of exports goes to the u.s. whatever decision regarding broad tariffs could be devastating for the economy. the economy is already slowing down. we saw a contraction in the last quarter of 2024. we are expecting another contraction in this quarter. the central bank has been trying to push the economy to give a boost to the economy and slashing the interest rate and they will continue doing it because the inflation rate is

pretty much inside the central bank target. the main concern right now is the big tariff will have a serious impact and send the economy straight into a recession. vonnie: we shall await. that is bloomberg's alex vasquez covering the economy and government in mexico city. investors are on edge about all of the tariff back and forth. the u.s. 2, 5, and 1--year 10 year yield hit their lowest point since october. the senior investment strategist at edward jones, joined by the chief u.s. interest rates strategist for bloomberg onset. let me ask about the sanguine nature of the stock market today. we saw massive selloff yesterday and it feels like the closer that we get to the time stocks are shrugging this off and saying that there's nothing we can do about this. >> it is a fair point.

we've had a couple of days covering the markets. i would say broadly this comes after a 10% correction of the s&p down over 14% in the tech-heavy nasdaq. keep in mind that the period of peak uncertainty may perhaps be behind us. will we get full certainty after the 4:00 p.m. rose garden meeting? probably not. we will still wonder about with retaliation measures will look like, what ongoing negotiations will look like on tariffs, but investors were largely left in the dark ahead of today as to what a policy may be. we think to some extent markets as we know them don't like uncertainty, and perhaps peak uncertainty is behind us. as we move forward beyond tariffs, the administration should start looking at more progrowth policies.tax reform is on the agenda come the summer months, and of ongoing deregulation message as well. perhaps a mix of more certainty and better policies that are

more market friendly in the months ahead. vonnie: let me turn to the bond market. the 10 year and beyond completely go lower. does it matter what the tariffs are exactly or is this just a broad response we potential hit to growth? ira: almost all a growth scare and a little bit of an inflation scare. when you look at how the bond markets reacted to all of the tariff talk, you see real yields really catch a bid, and those have gone significantly lower. that has increased inflation expectations, particularly in the front end of the yield curve. we are pricing in over the next year to 18 months. then the market expects that to somewhat moderata -- moderate. this is about growth and the risk of a little stagflation. that is how the market has been reacting. vonnie: is the market saying that this could be solved if the fed cuts another time this year?

ira: the answer is no. the market is thinking that the that is going to cut a couple of times this year reflecting the idea that we won't have insanely high inflation that will cause the federal reserve to hike interest rates. this is not 2022 or 1979. this is much closer to a situation where growth is ultimately what the market is the most worried about. that is why you see things like five-year tips yields all the way down to 1.25%. that's a big rally over the last two months, almost 75 basis points since the beginning of the year in five-year tips yields. i think that's a very reflective to the risk-off tone that we've had since donald trump took office. vonnie: i have to ask. there is a difference if the u.s. imposes tariffs and the caps come down slightly over the next few months and if we see retaliatory tariffs from other countries, china, mexico, to canada. we have no idea what that scenario looks like. ira: the market of boars uncertainty and that's one of

the big issues going on with the fact that you have yields lower than in january. in january, there was some optimism that the economy would continue to be strong and that president trump's policies would be progrowth. but now there's a bigger fear that we will have bumps in the road and there is a lot of uncertainty about it. markets don't like uncertainty. the markets will price for that with higher volatility and lower bond yields and probably lower risk asset prices. vonnie: is this the end of the risk off environment? if we have certainty later on, will investors suddenly get confidence again? mona: we think that volatility is here to stay this year. we came into this year after two back-to-back 20% plus s&p 500 return years. we were expecting year three and the bull market to have lower returns and higher bouts of volatility and we have gotten our first 10% correction already. we expect tariffs to remain in overhang. some of it will depend on the

ongoing negotiations. if the tariffs on the reciprocal front ra cap, perhaps investors and consumers and corporations can start to think more clearly about the worst-case scenario in terms of pricing and negotiations. if we can start to see some of the tariffs ratchet down, that will be good news for investor. more broadly, we are focused on what the earnings growth picture looks like for 2025 end with the labor market looks like. earnings growth continues to hold in there. we have seen downward revisions for q1 and q2 but 2025 still looks like a 10% plus year. the labor market thus far, 4.1% unemployment rate, relatively healthy. the number could go up as federal layoffs have been happening, etc., but we see a relatively contained unemployment rate environment which will be healthy and good for the consumer. a strong consumer, strong earnings, that's a good backdrop for markets to move higher with

volatility along the way. vonnie: obviously, we are seeing what seems to be a little bit of indiscriminate buying. we have the majority of the s&p 500 companies up-to-date, but companies like moderna took a big hit yesterday. various sectors like discretionary. does that make sense to you? mona: we are seeing within the s&p an interesting rotation and ongoing rotation. the higher valuation parts of the market are clearly being hurt more so. the three sectors that are lagging are tech, consumer discretionary including the likes of apple, amazon, and tesla, and of course, services which held up relatively better but still the top three in terms of lagging performers. seven of the 11 sectors of the s&p are positive. the positive drivers of the market this year have included areas like health care and financials. of course, defensive and cyclical parts of the market.

those are better valuations. we have seen that theme in the u.s., the rotation out of large-cap tech into areas like europe and chinese tech. the theme of trying to get better valuation, better value, and delivered to cyclical and value parts of the market we think has legs to go. vonnie: thank you so much. president trump's policies are raising fears for a recession, as we have been hearing. in her latest column she writes in part, recessions happen. 13 since world war ii. this would likely be the only recession directly caused by white house policy. tariffs by the administration put on the u.s. in retaliation are paralyzing business activity and rattling consumers. wall street firms are reducing their estimates for how much gross domestic product will expand.

this would seem to make sense if in the end all works out in the best of all possible worlds. is that your starting position? >> i'm following a logical conclusion from the simultaneous pursuit of three contractionary policies in the economy: shrinking the federal workforce, mass deportation of workers, and tariffs all reduce the size of the economy. a recession is not something i'm hoping for. you can only shrink the economy for so long before a recession occurs. vonnie: what about the argument that tariffs will bring in revenue and that will offset some of the negative impacts? mona: i have not -- >> i have not seen any evidence to support that projection. white house staff says that it will bring in six trillion dollars, a virtual impossibility. i don't think that we can trust their economic prognostications. you have to look at the cold hard numbers. consumer confidence dipped, firms are paring back. the important thing about recessions is that they tell us

they are coming and give us a chance to change policy to avert them. the real question is, are we going to do that? vonnie: would it be on the part of the administration to do that given that it laid out what it's policies are in doesn't seem willing to change them? or would it be the federal reserve at that point? >> the real question is, will congress intervene to reverse executive policy that is on its turf should the u.s. economy start to look like it's heading into a downturn? tariffs are clearly the constitutional purview of congress. they can reclaim that land whenever they feel like it. it is a question of if they will do so for the american people. vonnie: they can but it is twisty. there would need to be court action and courts traditionally haven't been one to get involved with what the president decides when it comes to tariffs? >> some of the accelerating uncertainty around recessions are exactly because of conversations like this.

there is a policy actively shrinking the u.s. economy and we don't know who has the ability to stop it and if they will. that is the kind of uncertainty that consumers are feeling. not what tariffs will do, because we are feeling that and worse. it is the uncertainty that of policymakers intervene on the behalf of the economy or stay loyal to a promise to tariffs. vonnie: if we entered a recession, and odds are up all over wall street for a recession happening, would it be the worst thing in the sense that we will hit one at some point soon anyway? >> i do worry about setting a precedent of a recession almost entirely self-inflicted. i worry about -- recessions tend to build momentum as opposed to lose them into a downturn. i would never speak lightly or act with necessity on the economic pain that this will bring to households who might have little say in what's going on in the economic policy. the bottom half will be hit the hardest and recession. they will see their bottom line suffer the most.

i worry that it is a little too cavalier to say that the economy will recover when so many families will not. vonnie: we know that president trump wants a good economy. he boasts of good data when we get good data, he says that it is thanks to his administration. if we headed into a recession, would the white house administration start to change policy? what it do something like give out $500 checks to people? a stimulus in order to stimulate the economy? >> those interventions have to come from congress, passed in joint bills by the house and senate to prop up the economy and aggregate demand. can you prop up aggregate demand enough in a recession and will you change the supply pain bringing down economic projections? it is not clear how effective a demand boost, like a check to every household with an income tax filing below $100,000,, how effective that will be if we are pursuing a supply war.

when i try to introspect in this column is to not say this is what will happen, but here are all of the things that we don't know this time because this is a unique economic circumstance in which policy isn't being telegraphed honestly or clearly at all. vonnie: you mentioned that recessions are often self-fulfilling ended enough people believe it will happen -- phil fulfilling, and if enough people believe it will happen it will happen. we will continue to watch the story as it progresses. a fantastic column about recessions being self-inflicted in this case. let's get to markets, about to hit a session high for the s&p 500, the best performers include caesars entertainment up more than 5%. tesla on up 5% despite deliveries missing. we got the political report that we make it an announcement at some point that trump told his inner circle that musk might be departing that role in the next

few weeks. consumer discretionary outperforming. the russell 2000 is outperforming the other indices of about .8%. stay with us. plan b for companies, next. this is bloomberg. ♪ -honey... -but the gains are pumping! dad, is mommy a "finance bro?" she switched careers to make money for your weddings. oooh the asian market is blowing up! hey who wants shots, huh?! -shots?? -of milk. the right money moves aren't as aggressive as you think.

vonnie: welcome back to "bloomberg markets." 3 1/2 hours before the rose garden announcements on tariffs. we are seeing sentiment improve. a couple of stories involved. tesla being one of them. that's happening indices reach their session highs. the s&p 500 up more than .5%. the nasdaq 100 is up .8%. that is a whopping gain just in the last few minutes. politico reporting that elon musk may be stepping away from his oval office related duties

at least for part of the time and that announcement may be coming in the next few weeks, according to sources. we are seeing the 10-year yield, two-year yield, the whole area the curve lower today. but a little bounce there, you see the two-year yield at 391.39. only about 17 off the record. bitcoin is also rising. many stocks in the s&p 500 have turned around and are in the green. let's highlight a couple of individual equity movers. bloomberg's isabelle lee joins us. >> look at this chart. we started off the day in the red. we are zooming up to the green. in the morning, the mood was kind of pessimistic because tesla sales slumped to its lowest since 2022. sales falling 13% in the first quarter. the company retooled factories to make the redesign model.

that's common, but the uncommon one is the factor of elon musk, which some analysts have cited. as you can tell now, stocks are edging higher. we have president donald trump saying that elon musk will be stepping back from his role in the coming weeks. that's what sources told politico. the president remains pleased with musk and his doge initiative. that's politico reporting. up next we have newsmax. this stock is edging lower by 15% but that's after it soared almost 2,000% in the past days this week. so the conservative media outlet really rallying since its i.p.o. on monday. it's cemented itself as a stock and the market value today is greater than fox, than warner brothers. we have retail traders piling into the stock with some calling it the new game stock. they call it new game stock because of its easy returns. lastly a software company that gave weaker than expected outlooks. the stock touched an all-time

low. shares are edging lower by 20%. so really massive drop there. we have revenue adjusted e.p.s. and subscription revenue all lower than forecasts. back to you. vonnie: thank you so much. today's tariffs announcement will be no -- will not be the final act, according to williams who used to head up the international affairs office at the u.s. chamber of commerce. he says today will be the beginning of a lot of negotiations. >> today what we are going to see in the rose garden in a few hours doesn't suggest the final act. the president has decided on a course of action that is more than just short-term deal making. the bottom line is he sees revenue growth from the tariff and position. he sees an opportunity to deal with retribution of unfair trade practices, 15 countries he has identified in particular, and so that makes it very difficult for u.s. corporate leaders to decide

where to place their investments and their bets. vonnie: tariff uncertainty sending businesses scrambling. leas get to -- let's get to randy carr, c.e.o. of world emblem one of the largest patch producers in the world with clients including levis. 60% of the company's production is done in mexico. randy joins us to talk about how he is trying to mitigate the impact of the trade war. he is wearing one of his emblems, world emblem itself. that's what they look like. they're on baseball caps, everything you can possibly think of. randy, you output a million emblems a day. that can't stop. how have you been thinking about these tariffs and what you might need to change given that you export many of these, you make them on the same day and ship them on the same day? randy: thank you for having me. so it's been a bit of a roller coaster. we have -- when the new administration came into office, we were aware that some of this

was going -- some things were going to change but we weren't aware that usmca would be up-ended. that hit us really hard, at the end of january and supposedly february 2, there was going to be 25% tariffs on mexico and canada. that was going to start immediately. that went on and came off. once again it started in march, came on for a couple of days and came off. today we are expecting it to happen again. so unfortunately we are having to prepare a few different ways. vonnie: when you say a few different ways, how many scenarios do you have gamed out? are you suggesting you are looking at building factories or walking way from factories? you have all these scenarios gamed out depending on what the president says today? randy: yes. we have 1,500 employees between mexico, the states, and canada. in mexico, the main -- 60% where

we manufacture our products, and as you pointed out we move between half a million and a million emblems a day there. we are looking at a few different things. the first thing is moving out of mexico into another country. the second thing -- which is the dominican republic. so the second week of february, we were already on planes to the dominican looking at facilities there or nicaragua or guatemala. the second thing we looking at doing is reshorting. when there is an opportunity to reshore we want to take advantage of that. however, it takes time to reshore. it takes 21 years to establish factories. you have 800 people that are well trained, a great work force, and to bring all of those jobs back to the united states, to up-end half a million square feet of factory space put it back in the united states is expensive. and it takes a lot of time to train and to build out the knowledge and infrastructure to do that. the third thing is to shut those

facilities down in other countries, there is the respect to the employees that we have there and there's the searcheses that are involved and the shut down costs. there are all theengs things -- these things that are at play. the big thing for us is one, are we shore it's possible, add technology when we can, and three look for other low cost alternatives so we can continue to provide the same level of service and close to price when possible from other countries. vonnie: it must be in the back of your mind that if you just move say to guatemala or dominican republic that the president will then impose tariffs on those countries, right? the spirit of the thing is that there is an equal playing field. randy: i think that's the biggest issue with this whole thing is that the first thing is nafta is 29 years old, the 85% of the goods that come between the states, mexico and canada are done under usmca, so it took

29 years to build this whole sort of trade infrastructure between these three countries. to expect it to get resolved in two months is an issue. yes, you are correct that they very easily could move the tariffs from mexico to another low-cost country, but if you go back to 2018, the original tariffs on china pushed all the near shoring plus covid, it pushed all the near shoring into mexico. so it's not only the tariffs that we are battling in mexico. we are also battling inflation. going back to 23018 and you have that inflation, you have costs between 40% and 50% in mexico so it's not -- it wasn't just the tariffs that cause us to have that knee-jerk move to get on planes and fly to these other countries. it was already in the playbook. the tariffs drove it i would say faster. vonnie: randy, there is a disincentive to be operating in mexico as far as we know. we don't know what will be announced or what kind of

retaliatory tariffs if any will be announced by mexico, but at the moment it seems like it's a di incentive. if you were to continue reshoring to the united states and bear in mind you are opening a new facility in georgia, so you are doing a little bit of that, would you need actual incentives to do? how much leverage do you have or does the administration have all the leverage right now? randy: the administration has all the leverage, for sure. we governed the business under nafta and usmca, 21 year -- it's been fantastic. so the answer is how to get things back to the country. look, again, number one it takes time. it takes confidence to know that in four years from now, whether it's the same administration or another one, they're not just going to up-end, put another free trade agreement in and push everything off shore. to your earlier interview with the gentleman, i think he said the same thing. we are very careful about where

pe -- we put the cap x because we don't know what the next four years looks like. vonnie: what do you do? you still want to attract customers. how do you plan for the next quarter, two quarters, capital allocation, whether you hire more people? where they should be hired? randy: it's a great question. i will go back to something i said earlier. the underlying answer is accommodation of a few different things. the first one is we have to continue servicing customers within a framework of a price that's acceptable. that's the underpinnings of everything. the second thing is when we can add technology such as generative a.i., we are doing it. when we can reshore we are doing it when it makes economic sense. the move to the dominican is also -- it gives us the leverage or hedge against inflation in mexico, plus it is another trade agreement with the u.s. there is not a trade deficit such as the one we have in

mexico. it's a better alternative to give us a hedge but continuing the low cost model that we have already used in our business. to answer your question, it's a few different things. one, look for a second low cost alternative. the second one is automation when it's possible. robotics, generative a.i., software, and the third thing is we are unfortunately going to have to raise prices and take some of the hit to the bottom line. vonnie: all right, randy, very tough job at the moment. then again, when isn't it? randy carr. we will check in with you soon. c.e.o. of world emblem. coming up, former u.s. treasury secretary larry summers joins with his insights as the world awaits trump's tariff unveiling. last night we heard from the colorado governor who gave a warning about the tariffs. >> you get tax coming, tax going. the power to tax is the power to destroy and i think if this

policy moves forward, it will do an excellent job of really hurting the americaneconomy.

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vonnie: this is "bloomberg markets." i am vonnie quinn. we want to bring you an interview with host david westin who is standing by. david: i am david westin. i am joindz by former treasury secretary larry summers of harvard, special trbtor -- contributor on bloom brgberg. it's a big day. this afternoon we are due to hear about the tariffs. first set the stage. what is at stake? lawrence: these are very consequential economic policies. they're consequential for prices. they're consequential for

employment. they're consequential for america's foreign relations. they're consequential for national security and frankly i think the question is mostly how much damage is going to be done. if you think about it, david, it's a remarkable thing that this is the centerpiece of their economic program and they're so nervous about its market impact that they have to announce it after the markets have closed. so it seems a kind of bizarre strategy which i have been watching government policies a lot. i have never seen an announcement that was delayed until after the market closed. where the government was the one that was making the announcement, and frankly it's a bit naive as a strategy since

the indices and the futures continue to trade. insofar as there is a market impact that's playing out, we will still see it almost immediately. david: you are a distinguished economist with a lot of extensive experience in washington dealing with the economy. what would you normally expect if as predicted we have substantial tariffs, we have a supply shock, is that relatessed to demand shock? lawrence: so as far as markets are concerned, it's all going to be about what happens relative to what people expected and markets have traded down a lot over the last couple of weeks because people think that this is going to be bad. as far as the economic impact is concerned, the proximate impact is higher prices. when you have higher prices and people's incomes don't adjust immediately, they have less money to spend on other things

and that means less demand and that means fewer people employed and that means less need for capacity expansion and less investment, and so this is a classic supply shock. the basic economics of this situation are just like the economics of an increase in the price of oil. which is always seen as the classic example of a hard stagflation kind of problem, and of course it puts the federal reserve in a very difficult position because usually all the signs go one way, but when inflation is going up, that would be a reason to raise interest rates. when unemployment is going up, that would be a reason to reduce interest rates. so it puts the federal reserve in a very difficult position. so we will have to see how these

tariffs are administered, just what form they take before we can make an estimate of what the cumulative impact is going to be, but the direction of the impact is i think something that almost all economists would agree on. what is also surprising about this is that yeah, economists always think protectionism is bad but not all protectionism is equally bad, and a bunch of what the trump administration is doing seems to me bad within the category of protectionism. think for example of the tariffs on steel and aluminum. 60 times as many people work in industries that use those inputs as work in industries that produce steel and aluminum. so when you tariff inputs to american producers, it's not

even good mer can tillism. you are reducing the competitiveness of the producers and so even if you just focus on things in terms of competitiveness and you don't think about the consumer interest at all, you are doing something that's counterproductive and the other thing is this is like a football team that's trying to run a play in practice without a defense. this is going to hurt our economy before we get to any possible retaliation, and it's clear from what's been said, whether it's canada or whether it's europe or whether it's china, that there's going to be retaliation, perhaps retaliation in tariff forms, perhaps retaliation in terms of discrimination against other customers, and on top of that, you have the psychological effect. there's data in the last few

days suggesting that just because people are angry and upset demand for teslas is down significantly because people are unhappy with elon musk. well, that kind of effect is going to attach to american producers around the world because everybody is thinking that their traditional friend has turned against them. so this is a kind of thing you discuss in the way we would usually discuss an oil price spike or an earthquake or a drought, as a supply shock, but it's a thing we are doing to ourselves. david: this is not the only action from the trump administration that's causing turmoil. one of them is close to you and you've talked about, and that is the move by the administration against certain elite universities including your harvard with the possible $9 billion up for review. what are your thoughts about

that? lawrence: look, there is a lot that should be fixed at harvard and should be fixed at other universities. in some ways, it is shameful that there hasn't been more done to address anti-semitism, that there have been real excesses on d.e.i. and the university should have done more much more quickly to address that. but make no mistake. david, this is an authoritarian attempt to chill and punish potential adversaries. president trump and his administration have made common cause with the neo-nazi a.f.d. there is a track record of who they have been in contact with and who supports them. this is not a genuine concern about anti-semitism.

and this is not a genuine concern about universities. they're going after judges. they're going after law firms. they're going after companies. this is an attempt at being authoritarian towards your adversaries. and what we know from history is that there is a lot of contagion. when people capitulate, people decide it's hopeless and more people capitulate, when people have rectitude and stand up against it, it gives others strength. if harvard university with the $52 billion endowment with its enormous prestige, with an alumni network in every aspect of american leadership second to none, if it cannot resist this authoritarian tendency, who can?

so there is an enormous amount that is at stake here. david: larry, thank you so very much for being with us on this important day. larry summers, former treasury secretary, now of harvard. back to you. vonnie: our thanks to wall street host david westin and former treasury secretary larry summers. we are hitting session highs once again. this market just taking off in the last hour and a little bit. the s&p up .75%. almost all sectors are in green. the russell 2000 is up 1.5%. the nasdaq is up helped in part by tesla, which really took a turnaround after politico reported that donald trump has told his inner circle that elon musk may be departing that particular role in the next few weeks. so tesla which had been negative for the first hour or two of trading turned positive and is now up almost 4% partially on the back of that news. but also the sentiment just

generally has improved a little, perhaps the knowledge we are actually going to get some idea of what these tariffs will be in a few hours impacting this market sentiment. the vix below 21. we are keeping an eye on shares on amazon as well. that also affecting markets today big time, up 3.6% having spent some of the morning in negative territory. the stock higher after a "new york times" report that the giant made a last minute offer to buy tiktok in the united states. the social media platform faces a saturday deadline to change its ownership structure. that deadline though could be fluid. let's just jump back into the news that musk will depart from doge when his work is complete. that's according to the white house press secretary just now. so that could be taken a number of ways. musk will depart from doge when his work is complete. this presumably is a response to the politico report that trump

has told his inner circle that trump will be departing "soon" or in the next few weeks. karoline leavitt saying he will depart from doge when his work is complete. let's get to that tesla news with detroit bureau chief david welsh. we are seeing the stock jump around. the market weighing the idea we had this disappointment with the idea that musk might be returning partially to his job. what do you make of it all? david: the disappointing sales that sent shares down more than 5% early in the session, that's a continuation of what we have seen. between the model wide changeover between some of the politics around musk and his car buyers and also increased competition from others, sales are getting hit. that's the obvious one. when the shares started going back up, it was shortly after the politico report and i think look, even if tesla shareholders agree with what musk is doing with doge, he is still to them

better off if he is at tesla fixing the sales declines they've had and making them money. vonnie: it looks like that might be happening in the future. david, thank you so much. vonnie quinn, that does it for "bloomberg markets." "balance of power" coming up next. this is bloomberg. ♪

>> from the world of politics to the world of business, this is "balance of power."

live from washington, d.c. >> today we finally get answers. welcome to the fastest show in politics as president trump plans to deliver news on tariffs and what he has been calling liberation day. we still have a lot of questions but there is an announcement set to coincide with the closing bell today. i am joe mathieu with kailey leinz in washington. thanks for being with us on "balance of power" on bloomberg tv and radio. this could include across the board tariffs, sectsorral tariffs, retaliatory tariffs, maybe all three. kailey: it's literally anyone's guess. we should have more clarity in three hours though it's unclear if we will have all the clarity we in financial markets desire because even if we do get an announcement today about tariffs, there is nos necessarily any telling how long exactly they will remain in place.