>> it is the incentive of the u.s. to maintain ambiguity. >> everything in the u.s., we have the strongest hand. >> the united states is a big, important country and that gives us leverage, but we are not infinitely big and not infinitely important. >> this kicks off a negotiation. this is not the end. >> this is "bloomberg surveillance" with the jonathan ferro, lisa abramowicz, and annmarie hordern.

jonathan: good morning, good morning. bloomberg "surveillance" starts now. coming into thursday with promises made, promises kept. pres. trump: this is liberation day. i will sign a historic executive order instituting reciprocal tariffs. china, 67%. we will be charging a discounted reciprocal tariff of 54%. the european union, 20% are taiwan, 32%. japan, 24%. 25% tariff on all foreign-made automobiles. a minimum baseline tariff of 10%. promises made, promises kept. jonathan: the president unleashing a major tariff push, 20% on the eu, 24% on japan, 54% on china. >> president trump's announcement of universal tariffs on the whole world, including the european union, is

a major blow to the world economy. we are not preparing for further countermeasures -- we are preparing for further countermeasures to protect our interests and businesses if negotiations fail. jonathan: equity futures cratering overnight. the uncertainty persists and on negotiations begin. lisa: today is a question of, how much is it a game changer for the united states' position in the global world trade order. there has been a slew of different responses from wall street. one person after another. i was looking for one positive note and i couldn't find it. neal kicked it off with "happy obliteration day." jonathan: the higher tariffs start april 9. the new baseline tariff of 10% starts april fifth.

there is space and time they negotiate, but it is unclear what the metrics are to get the tariffs removed. hopefully later we will explore that with howard lutnick. sec. lutnick joins us any: 30 eastern and that has to be one of the number one questions for him. what are the metrics. have you communicated them with trade partners? lisa: i worst case scenario and other superlatives not just because of the numbers, but the lack of detail and lack of complexity. the overall blanket look at all trade partners, regardless of the trade relationship that the united states has with them. where are the areas of negotiation? how do we get to an offramp at a time when scott bessent said to annmarie last night, don't retaliate. if you don't retaliate, this will be the high mark and we could possibly go down from there. when asked, are you open to negotiations come he said, not my beg, check president trump.

jonathan: in the bond market, two-year, 10 year, 30 year down by eight or nine basis points. it is in foreign exchange where i think that we really have to look. can we get to 2025 before high tariffs meant a stronger dollar? higher tariffs, a much weaker dollar. euro-dollar 1.10. sterling, strength for sterling and weakness for dollar. 1.3170. lisa: to me this is the most important move in markets. we've been warning about the importance correlation between the u.s. risk assets and the dollar for a while and we are now looking at underperformance for the u.s. assets by european investors that rival anything that we've seen in the past number of years. a real question about whether this is truly a test of u.s. exceptionalism. jonathan: we have a lot to get through. global stocks sink. the steepest american tariffs in

a century. and the probability of recession. we begin with our top story, president trump slapping a minimum 10% tariff on all u.s. trading partners and even higher duties on 60 nations. annmarie joins us in washington, d.c. the negotiations begin. annmarie: the negotiations begin. you brought up a good point talking about the fact that when it comes to the 10% baseline universal, around the world tariff that is levied on all of these countries, that will kick in on april fifth. and then, if you are a country that is on this list, this chart that the president brought out yesterday, those tariffs come the european union 20%, vietnam 46%, china 34% and cumulative when it comes to china with the tariff of more than 50%. that will kick in on april 9. the key question i have today is, is that timing, the gap between the fifth and the ninth, is that to just get customs and

the border prepared to change the computers to make sure that they are bringing in these tariff dollars? or, is that the start of negotiations? scott bessent the treasury secretary told me yesterday that a number of countries have already called and it is now up to the president how he wants to negotiate. lisa: you have a sense of who around him has the biggest have 20 comes to influencing these decisions -- has the biggest heft when it comes to influencing this decisions? annmarie: something i took away after i spoke to the treasury secretary after the rose garden event is that this is not exactly something that he is going to be intricately involved in when it comes to negotiations. this will be run out of the commerce department with howard lutnick, who we will be speaking to you later today, the trade ambassador jamieson greer, and of course, the most hawkish individual around the president that i felt really felt like had

a leading role and what we are seeing today is peter navarro. jonathan: more from annmarie through the next three hours of programming or so. equities down more than three percentage points on the s&p 500 . catching up with secretary besson yesterday asking about the equity market selloff. he pointed to the nasdaq and when it peaked and said that this looks like a mag 7 problem not a maga problem. lisa: it felt rehearsed. they will address the drop we are seeing in stocks that is more broader based than big tech. this is the big question, is there a trump put or isn't there? jonathan: let's get a take from dan green, who writes the following. this isn't great and it is more onerous than thought. assuming countries don't retaliate, this is as bad as it gets. dan, good morning. is this the clearing event that people were looking for?

dan: i don't think so. i haven't thought so and i don't think that now. i want to echo annmarie's point that we moved from one uncertainty to another. we have dispensed with the uncertainty and now we are into, is this a negotiating window? i think it is but perhaps it is simply a mechanical window to allow the border and customs agents to get their ducks in a row. now, we have an idea for what will be implemented, but who will come to the table? israel has said we are taking off all of our tariffs on the united states. that is not a particularly large trading partner for the united states but it is indicative of the response that you would like to get from other countries if you are donald trump and the administration. jonathan: u.s. equity underperformance dominated is 2025 continues. we thought that the dollar would strengthen off the back of announcements like this and it

is weakening. dan: i am looking at the dollar right now. depending on if you use the dxy or trade-weighted index, it is still higher than the post-covid rally and much higher than pre the taper tantrum, google it if you don't know. the answer to this question is the same answer to a number of questions. i don't know. there -- to lisa's point about looking for positive takes around the street, everyone is going to assume the worst case outcome right now because that's all we really have. if in two days, to scott bessent's point about countries willing to make an agreement, if you start to get headlines that germany, china, mexico, whoever has decided to meet some of the president's demands, then some of these worst-case outcomes will come off of the table quickly. lisa: you think that the

worst-case case scenario has been priced in? dan: no/ the worst case scenario is a recession. i tend to look at this purely through the prism of the stock market and the stock market is off 8% from a high. you will be down 10% or 11%. a recession is a 20% drop at least if not one third. you're probably calling it half of a recession in a simplest it framework. there is more downside of things get worse. to a point that a number of people and made, this isn't really going to start hurting until the middle of the year. there is plenty of time to deal with the worst-case outcomes. but at the same time there's plenty of time for them to come to fruition. lisa: person after person on the show has said that the uncertainty has been such a drag on growth and uncertainty and corporations. the longer that this goes on the more the damage will become entrenched before you get the inflationary one time pop, or longer, from tariffs.

how much longer can we say that uncertainty is policy? dan: you have seen ceo confidence has come down and investor confidence is not good at all. the bear survey is basically at its highest level. when you listen to a number of earnings from retailers, i think that they have been to my ear pretty good. that's not to say there aren't companies with specific issues. lulu is dealing with certain issues but then you have walmart with pretty good comps. there has not yet been a meaningful impact a large consumer behavior, that i have seen. you had the weather issue in january, but when i listen to the companies who reported recently on balance it seems pretty positive to me. plus, you had egg prices come down. crisis over, for eggs at least. lisa: is that the most optimistic point that you can come up with? egg prices are coming down?

jonathan: ism services later this morning, payrolls tomorrow, jobless claims and between. how useful is that economic data? dan: very useful, but the idea that tariffs will influence jobless claims this week is obviously not a thing. jonathan: are we going to ignore strength, but if it is weak it has to be really weak? dan: you want to ignore strength, but the issue in the market is over what happens the next 3, 6, 9 months. in the middle of the year if prices start going up, if you get additional job losses, real personal income growth might be slowing down in which case consumer spending will slow down, and then you will hear people talk about more recessionary conditions, legitimately were s -- legitimately recessionary in the middle of the year.

i try to take an optimistic take if only because everyone else will do the opposite. no, i don't think you should ignore strength because i think that the economy is doing ok. there were some one that effective the first quarter. the idea that you should bet against the u.s. consumer has been wrong time and time again. i'm not saying that i should ignore what is happening, but i think that we underestimate the u.s. economy strength. jonathan: we have done that over the last five years repeatedly in your right to point it out. i am hearing from economists that if the tariff stick regardless if people retaliate it could lead to 1% core inflation. how does chairman powell step in with core pce pushing 4%? dan: this is the big debate in the economics community if a lot of this comes to pass how does the fed respond? i am in the camp that thinks

that they probably respond more to the weakness. he used a transitory to describe tariffs in the press conference the other day. gun to the head, i think they're likely to say that these price increases will be temporary and i care more about the economic and labor market weakness that will commensurately be unfolding. in that scenario, you will be talking about three to four rate cuts as opposed to one to two. jonathan: not everyone has a time horizon of five minutes. a lot more people are working programs like this trend to work out what is going on with financial markets and their retirement accounts. is this an opportunity for them to buy? 12 months, 34 months, will you look back at this moment and say that that is a good entry point? dan: almost always the answer is yes. there is a book called just keep dying. on your retirement account -- just keep buying. on your retirement account, listen, on balance the market goes up. to the extent that one believes, as i do, but some of these

worst-case outcomes will not come to pass because there is a negotiation that will take place over the next couple of hours, days, weeks, in which case down 10%, 15% for the s&p 500 come on balance you want to buy that. i know that the conversation today will be all tariffs but there is a headline about microsoft pulling back on ai data centers. heretofore there had been few headlines that had contradicted the ai narrative. you're starting to see cracks in that window and those are the things you want to pay attention to because there have been two driving factors for u.s. equity markets over the past couple of years, u.s. growth exceptionalism relative to the rest of the world and the ai story. most of which boosted risk assets. both of those issues are being challenged, the u.s. growth exceptionalism and increasingly the ai data story. it's down 10% to 15% when you're supposed to buy, almost

invariably yes unless you are going into a recession. both of those stories are challenged right now and it may not be that simple. lisa: it has been a huge component and one reason why it is not just the tariffs. if you're talking about a sea in trade and suddenly recession calls screaming across the street, that is why you have a lot of negativity. jonathan: it is safe to say that this is an everything problem. it is good to see you. dan greenhaus. with an update on stories elsewhere if there are any. yahaira: president trump is raising tariffs on countries around the world. he announced at least a 10% tariff on all exporters to the u.s. with about 60 nations are seeing even higher duties. bloomberg economics estimates that the effective tax rate on more than $3 trillion of imported goods could rise to

23%, the highest in more than a century. in washington, senate republicans unveiled a budget blueprint that would fast-track a renewal of president donald trump's tax cuts with an additional 1.5 trillion dollars in tax reductions and would increase the debt ceiling by up to five trillion dollars of the budget in the coming days. dan mentioned microsoft pulling back on data center projects around the world as uncertainty pours into investments around ai and cloud computing. according to those familiar the company halted talks for sites in indonesia, the u.k., north dakota, and wisconsin as analysts ramped up scrutiny of heavy data center spending by microsoft and other hyperscalers. jonathan: more later on this hour. later, promises made, promises kept. pres. trump: i campaigned on this policy throughout last

year, and today that promise was made, and it was also a promise that was kept. promises made, promises kept. this is not full reciprocal. this is kind reciprocal. jonathan: we will catch up with the former trump white house trade official and the commerce secretary howard lutnick. live from new york city this morning, good morning. ♪

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check out foreign-exchange. the euro is looking at the biggest one-day move going back to december 2015. the euro-dollar, 1.1118. promises made, promises kept. pres. trump: we will establish a minimum baseline tariff of 10%. it will be on other countries to help rebuild our economy and prevent cheating. i campaigned on this policy throughout last year, and today that promise was made and it was also a promise, as you know, that was kept. promises made, promises kept. this is not full reciprocal, this is kind reciprocal. if you complain and you want your tariff to be zero, you build your product in america. jonathan: the president slapping a 10% tariff on all exporters to the united states and higher duties on dozens of nations including the eu, china, and japan. massive moves. annmarie: massive moves when it

comes to what's going on in the fallout. the equity market following the massive walls that the president put up last night, he calls it liberation day, promises made, promises kept. the question is, will there be negotiations? i am pleased to be joined by terry haynes. you said liberation day tariffs, now watch for many path dependent negotiations. do you think that all of these rates that the president outlined yesterday can come down? terry: a lot of them, sure. one reason is secretary lutnick has been preloading everything over the past weeks with a lot of different countries, saying here is what we would like on tariffs and on tariff barriers. here is the realm of things that we want to talk about. those other countries have already been discussing that internally and will have internal and external politics, things they can do and things they can't.

annmarie: howard lutnick has been in touch with his counterparts and on our program he has sometimes said that he would talk to his european counterpart that day when trump came out with a 200% tariff on wine and cheese. why not just do the deal? why have this destructive market moment to get to that point? terry: i think that the administration wagers that trade negotiations of those kind never end. they get fogged d -- bogged down and they are not able to finish them. i think there -- i think they think there is more value in a shock and awe approach. annmarie: april 5 is the deadline and april 9 if you are one with a higher number like the european union at 20%. terry: i think that the big

places won't. there is too much complexity internally in a large country to be able to check off with stakeholders and figure out how you want to change things and go through the legislative and regulatory process. that's unlikely. annmarie: trumps economic agenda is a three legged stool. if one of these stools collapses, the entire agenda may collapse. how quickly do they need to get the tax cuts to make sure that they keep this economy afloat? terry: 80% by the end of this calendar year, because that is the way that the congressional process will work. the third quarter is largely screwed up because of the need to deal with spending bills, but at the same time, can they do it faster? sure. that is what scott bessent told you yesterday. annmarie: that is why they are including the debt ceiling. terry: exactly. he told you that he will now turn his attention to dealing

with the tax cuts. i joked on the radio side this morning that scott bessent will be the gary cohn of 2025 and that's largely how the markets should look at it, but lutnick will deal with the tariff issue. annmarie: tax cuts and how quickly they need to get it done, we are talking about an extension of current policy. no tax on tips or social security, does that get done? the treasury secretary seems to think so and i'm not sure when i speak to sources on congress. terry: do i think he gets it done? sure. annmarie: the extras? all of it, this economy, the budget and deficit hawks, they are willing to sign up for that? terry: they will. there is trump urgency because he understands his biggest leverage points politically, particularly deficit hawks, come up in the midterms. i think that is where you will see a lot of that. annmarie: jonathan, terry haynes

of pangea policy a friend of the show. he thinks that it is a shock and awe moment to get negotiators to the table but it doesn't sound like we will get deals by april 9. jonathan: the number one strategic anchor for the equity market bulls is the belief that when you take a step back and take a big picture view of the policy platform from this administration it is pro-risk and pro-growth. are they rethinking that after yesterday's announcement? next, bob michele on the probability of a recession. from new york, this is bloomberg. ♪

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jonathan: one line from eric robinson, stagflation looms large. citi suggesting that if these tariffs take we are talking about an additional one percentage point on top of core pce by year end. that takes us to about 4%. 4% year end and this economy weekends, can the fed respond? on the nasdaq, we are lower by 3.9. in the bond market, yields are down hard nine basis points at the front end of the curve. new lows for 2025 north of 4% on a 10-year maturity. foreign exchange, some of the

biggest moves in the fx market in the best part of a decade. euro-dollar, two percentage point move. 1.1086. let's get you some morning movers. yahaira: we start with big tech taking a major hit. having to do with the microsoft data center story, but it is the tariffs really stinging. apple has at the worst because of trump's tariffs on china and elsewhere that are higher than expected. even though the iphone maker has begun diversifying away from china, the tariffs are poised to hit it in the places it shifted like vietnam and india. we had the chip stocks being pummeled because the tariff on taiwan is much higher than anticipated at 32%. a big problem since all of these three companies, nvidia, amd, broadcom, rely on tsmc to

produce some of the most sophisticated chips. lastly we have the issue makers and apparel stocks -- the shoe makers and apparel stocks because of the massive 46% tariff on the non-were a lot of them diverted production to avoid u.s.-china trade tensions. now, there is nowhere to hide. jonathan: lisa, trump volume one goes after china. you move all of your supply chains to try to insulate yourself thinking, i'm going to vietnam. then, yesterday, 46% tariff on vietnam. lisa: this is exactly the point. president trump is going after the connector countries that have picked up the slack and hidden some chinese exports heading to the united states. a question for me is, this is choosing taiwan, vietnam, malaysia, the philippines to choose between china and the united states as trading partners and it puts them in a precarious situation given both

the u.s.'s track record and geographic proximity to china. jonathan: that has major foreign policy implications, which you alluded to. president trump slapping a minimum 10% tariff on u.s. trading partners and high duties on 60 nations including 34% on china, 24% on japan and targeted tariffs that will kick in on april 9. how will people respond? china and europe bound to retaliate. the china minister of commerce urging the u.s. to immediately cancel the tariffs. the eu is preparing countermeasures if, this is important, if negotiations fail. lisa: how much room is there for negotiation before april 9? do we get some sense that this gets walked back in a massively? one aspect of the response that's important is fiscal stimulus. it is not just coming from europe, but from china.

if there are major fiscal injections and those regions -- in those regions it amplifies the idea of exceptionalism leaving the u.s. with entrenchment. jonathan: the question i had when this was in veiled is, is this inclusive of or exclusive to the tariffs announced in the last few weeks. it is in addition to.put that on top of the fentanyl push and you end up with 54% in total, brutal. lisa: or 67%. bloomberg economics is looking at the ideas of what else has been implemented on aluminum and everything else. that is how much they estimate the tariff rate on chinese goods will go up. how plausible is this? then you throw in some of the potential areas, fentanyl, tiktok, etc., where are the off ramps? jonathan: fiscal policy is the next push in washington, d.c. with the senate unveiling plans to fast-track tax cuts and

additional reductions of 1.5 trillion out of a planned vote on the resolution later on this week. annmarie catching up with secretary besson yesterday. he was trying to push that story forward at a time of the equity market is cratering for different reasons. lisa: this is the sweetener that people have been looking for. i want to go back to what neal said from renaissance macro. there is no offset from the tax law. that is at best an extension of what we have in place.the tariff stuff is new. people are not looking at this as an incredible fiscal expansion, they are looking at this as simply expanding the tax cuts that have been put in place. jonathan: on retaliation, the eu vowing to retaliate after trump's 20% tariffs on imports. ursula von der leyen saying we are preparing for their countermeasures to protect our interests. oli, we will get to why you are

there in a second. outline for us, for people waking up in the united states, how is europe responding to the push? oliver: jonathan, a couple of points. the 20% rate that the united states imposed on the european union is on the higher end a flood european officials were expecting. they were expecting between 10% and 25%. 20% is a huge number. for the europeans, it is a question of appraising how they are going to respond. we heard from ursula von der leyen that they will have countermeasures. they will draw them up if, that is the key, if negotiations fail to get the barrier lower in terms of negotiating the tariff down. for most european policymakers, how do you go about negotiating this? if you think about the difference in tariff rates between the eu and united states, it is one half of

a percentage point. you're trying to bring that down by offering potential nontariff trade barriers. he made reference to eu poultry and chicken saying that you can't get into the market from the u.s. because of these nontariff barriers. how do you negotiate and present those things? what does a 1% tariff equal to in other domains like vat? that will be the question for european officials who don't want to respond or engage in a trade war but need to come up with something. lisa: how much clout do they have politically to negotiate given the anger in europe towards the united states in the sense of, are you really going to cave? oliver: i think that it will be difficult, but at the end of the day for the europeans the reality of the situation, the rf the situation, this is how the united states arrived at their tariff level. it's a trillion dollar

relationship that is for both parties immensely valuable, but there is a trade deficit of 200 $50 billion in the favor of the europeans. at the end of the day, this is always going to hurt the europeans more going forward. we are seeing today already the impact on the private sector. those auto tariffs are live, they are having to raise price and add fees. it's already happening. jonathan: you are in nato, mr. rubio is over there right now. what are you seeing? oliver: earlier we heard from marco rubio. this is exactly what the europeans wanted to hear, and frankly, i don't think they were necessarily expecting to hear. they are committed to a nato that takes their own defense more seriously, that's more robust. trump is not letting that go.

he would like to see 5% gdp spend on defense. the thing that's really important that we heard from rubio yesterday is that rubio himself seems to be hitting 5% of its own gdp spend, 3.8%, and that is the first time we've heard that so explicitly from the administration. jonathan: bloomberg's oliver crook. the impact on the tariffs, on the economy, we watch closely to corporate america. bob michelle joins us for more. that interaction between the tariffs, margins, and consumer price tolerance will be really important over the next few months. what do you think? bob: well, i've been spending the next few hours reading, and they all wind up in the same place, which is, as things stand

now, we are headed to a recession, and it is very clear that this is a tax on businesses and households, yes, we can talk about offsetting it with an extension of the tax cut and jobs act, but right now, a heavy tax has been applied to businesses and to households. the one thing they can plan on is that top line will come down. they are going to see a reduction of sales, their input costs will go up, and they're going to look at narrowing margins. if it goes out, they will have to lay people off. that will affect consumer confidence, so this is not good at all. lisa: at the same time, citigroup came out and said if sustained, the tariffs could add an additional 1% of core inflation this year. there seems to be this feeling with hard data not rolling over as quickly as the soft data that the fed is destined to be late and not cut rates in response to

that expected recession. do you agree? bob: i keep that line of thinking, and i tell you why feet i feel like we are supposed to go back and dust off our econ 101 books. very clearly in there, it talks about the difference between demand pull, which we saw during covert inflation, and cost push. cost push inflation cripples businesses and households and ultimately pushes you into recessions if it is bad enough. the fed already told us a couple weeks ago that yes, it is not pleasant to have this cost push inflation, but they will work through that. there are more concerns about the downside, about the impact. so i think, you know, where's binky when you need him? [laughter] april 9 is so far away. jonathan: we heard that

yesterday. bob: i love that. a lot can happen. but if these policies stick for the next quarter or so, then we have to start pricing in the fed, brings downgrades to 2.5%, two point 2.5% -- 2.25%. lisa: morgan stanley took away their calls were in no rate cut and looked at potential rate cuts for the rest of the year. mohamed el-erian saying the same thing yesterday, that this is a different kind of moment, given what we are seeing post-pandemic. at what point does the fed not offset growth concerns but juice inflation concerns on the other side? bob: as i said, this is a tax applied to the system. sure, if you are the fed, you are not going to ignore that inflation is now cruising up above 3% to 4%. what you are going to look at is

, is it temperate? we can't use transitory. is it temporary, or is this the kind of thing that's going to lead to a wage price spiral? for now, it does not feel like it will. it feels like you will see a dramatic decline in consumption, and they will respond. and by the way, you go back to when the regional banking system was crashing, the fed had every opportunity there to reference this and wash out. did they? no, they stepped in. yeah. it looks like we are cruising to recession now, unless things change, but both covid and the regional banking crisis tell us we've got to watch the policy response, and the fed and other central banks have a lot of drivetime. jonathan: they also hiked interest ranks. -- rates. bob: yes, they did, but they created an enormous safety net around the entire system.

you can model things for recession. we don't know what will happen next week, and the fed can bring rates down a lot. if jonathan: let's say they go down to 2.5% and what kind of numbers have you got in mind across the curve? bob: if they are headed to 2.5%, the market is going to front run that. you will cut down to 2%. on the whole thing. they only got to 4.75%. i think we will see some of these backed off. i don't think they want to crash the economy. all of saying is let's forget there are many policy responses.

an extension of the tax cuts and jobs act and hanging more off a it is one, but central bank policy is another. jonathan: bob michele of j.p. morgan asset management stays with us to let's do an update on stories elsewhere this morning, with your bloomberg brief, here's yahaira jacquez. yahaira: an antitrust trial later this month according to the "wall street journal," trial set for april 14 could force meta to unwind its whatsapp and instagram acquisitions. meanwhile, an 11th hour for tiktok. president trump was expected to meet with top aides yesterday to consider proposals ahead of saturday's deadline for the

company to find a buyer or face a u.s. ban. and president trump said the other day he would consider running for a third term in office, but the hill is reporting that jd vance and kamala harris are seen as top presidential contenders by their respective parties in the 2028 election. almost 70% of republican respondents would consider vance, while 60% would consider harris. jon? jonathan: thank you. up next, auto tariffs take effect mr. trump:. toyota sales, one million sales into the united states. we will impose tariffs on all foreign-made autos. jonathan: up next, craig trudell. live from new york, you are watching bloomberg tv. ♪

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jonathan: a 10% tariff across the board, 20% on the eu, 24% on japan, 34% plus on china, and equities sinking. on the nasdaq, we are down by close to 4%, on the russell down by 4.7%. on "surveillance" this morning, toyota takes effect. -- auto tariffs take effect. mr. trump: toyota sales bring in almost $1 million. under former presidents, they let it happen, that's why effective at midnight, we will impose a 25% tariff on all foreign-made automobiles. jonathan: president donald

trump's 25% tariff on u.s. auto imports taking effect shortly after midnight as promised. bloomberg's craig trudell joins us for more. welcome to the program. what changed after midnight last night? craig: i think this will be hugely disruptive with this industry, and to correct with the president just said, you know, if you are defining imports of vehicles from foreign nations, as he put it, as including mexico and canada, gm is importing a lot more than, you know, almost none from the u.s. neighbors. this will affect gm, ford. and also, you know, jeep and ram and chrysler maker stellantis. so this will have an impact even on tesla, which, i think everybody views as a potential winner at least in terms of getting hit the least, but even elon musk has talked about the idea that, you know, tariffs on

imported parts will also hit his company, even if he is somewhat insulated by the fact that he makes his electric vehicles in the u.s. for the u.s. jonathan: is that at stake here at all? craig: i think it will be difficult for other countries to move trump off of his view, because we know this is something that he's had in his craw for decades. he talks about the mercedes that he sees on fifth avenue and the lack of cadillacs that you see, you know, in germany or elsewhere. this is something that clearly is a firmly held view of his, and it is sort of front and center when he talks about trade and how the rest of the world, in his mind, to quote him roughly, is ripping off the u.s. jonathan: out of london this morning, bob michele of jbs amendment -- jp asset management

is still with us. bob: we had our investment quarterly two weeks ago, and we were surprised at the complacency across markets but more especially in corporate america. when our analysts were talking to companies, they were mostly talking about, well, we have to wait and see what the shape of tariffs looks like. we could probably pass them through. what we did not hear is, "we are planning for this. if it's 10%, we are doing this, not that. if it is 20%, then we have to go to plan ," and so on. bso we reduced our treasury exposure. lisa: is this a global phenomenon at times when places like europe and china are planning fiscal responses? bob: it has to be across the board. you have to pull back and see where things settle out. we are talking about room for negotiation, the more positive side that could happen over the next week.

i think we also have to be aware, you could see several tariffs. we could see tariffs put on things like semiconductors, like pharmaceuticals. we have not had clarity on that yet. i think this is the time to pull back and wait it out. lisa: you go into treasuries. he sat on the show a number of weeks back that this is the week that u.s. exceptionalism had peaked. you talked about the dollar in the weaker dollar as part of that, and what we are seeing this morning is weaker dollar pretty much across the board, the euro surging the most since 20 and 15. going to make things safe haven properties of the dollar are being eroded. do you think that is fair to say as a theme going out to the remainder of the year? bob: well, i think currencies are an excellent question. thank you for bringing that up. because i don't believe that if you are china, if you are japan, if you are europe, you are going to let this happen. you are not going to have tariffs put in place and see

your currency appreciate. so i would not be surprised to see a coordination of a time to push the dollar back up. and how do you do it? do you just pick up the phone and call the administration and say, i know you are upset about our tariffs, but we are going to help you out. we are going to buy a lot of treasuries. do something like that, and that pushes the dollar back up. if you can push the dollar up 10%, that offsets about half of your 20% or so tariffs. jonathan: that is not what is happening right now. bob: it is not, but as i said, we haven't seen any responses yet. jonathan: bob michele at jp morgan asset management, good to see. what kind of retaliation will we see? headlines crossing the bloomberg terminal months ago, germany and france pushing for a more aggressive tariff response. the latest responding from the team here at bloomberg. lisa: yeah. talking about how they should be ready with options, targeting u.s. tech and services.

the french government wants to make sure the eu response uses all of its instruments to defend eu interests. they have come out, and really this was the quote of the morning, last night's decision is comparable to a war of aggression against ukraine, the magnitude and determination of the response must become this wreck. jonathan: that is a shocking comparison for absolutely shocking. lisa: which gives you a sense of why this is why people are saying, please let cooler heads prevail. this is a hit on some of the national champions of europe. you have to imagine there are a lot of emotions. jonathan: that will not help, for sure. up next, jim of apollo, bloomberg's oliver crook, nela richardson, and katie k, the second hour of "bloomberg surveillance" on the other side. ♪

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>> it is the incentive of the u.s. to maintain ambiguity to play a multi-round game. >> everything in the u.s. we have the strongest hand. >> u.s. is a big, important country. but we are not infinitely big and infinitely important. >> we have been in the process of destroying the american brand and this idea that every country is going to come is changing rapidly. >> this is not the end.

>> this is "bloomberg surveillance." jonathan: the second hour of bloomberg surveillance begins right now, with a the futures plummeting. we are down by 3.4% on the s&p. the nasdaq lower, the russell down. the picture looks something like this. the nasdaq down by 4%. the russell down by 4.65%. in the bond market a it in treasuries. down on twos, tens, and 30's. new lows for the year in last 24 hours. in foreign exchange early this morning we some moves we have not seen going back to 2015 on euro-dollar. this is the takeaway. coming into 2025 with a big consensus trade come along the u.s. dollar and if you get additional tariffs at that dollar gets stronger. we got additional tariffs and that dollars getting weaker. lisa: in tandem with the weakening of risk assets. which raises the question, is this a new risk paradigm?

now the u.s. wants to pull away and there is a question about whether the dollar is a safe haven or is this the opening salvo to get everybody in a tizzy, and then you go back to something more akin to what we have known before? jonathan: so many different -- different variables here. let's say it sticks. how will the costs be shared? we know the importer pays the tariff. is it passed on to consumers? can you put pressure on the exporters to drop their prices? the federal reserve has to watch this play out for a number of weeks. and wait and hope it shows up in the data anytime soon. lisa: if it doesn't show up in the hard data and you get something akin to what citigroup is looking for, a 4% rate on core inflation, how can they wait? how can they cut rates in response to weakness that has not yet occurred? this is the conundrum. if you get a short term pop in

inflation at the same time the data is lagging behind these indicators it puts the fed in a bind and is the reason morgan stanley said they are moving their call for a june fed rate because of the stagflationary backdrop. jonathan: chairman powell speaks on friday going into the weekend. he knows where the tariffs are for now. they have not been implemented yet. he's going to have a decent idea of what the payrolls look like. it is the message going to be going into the weekend? lisa: the dovish message that would send the market into a place of more comfort would be to repeat the word transitory. the idea that they are willing to look through a short term pop in inflation. if he says, we have a dual mandate and we have to be concerned that the inflationary pressures can continue given some of the tariff pressures, that will set the markets into a different type of tizzy. one people are talking about but is not getting christ. jonathan: equity futures right

now on the s&p negative by 3.4%. coming up, we will be catching up with jim zelter of apollo. we will speak to nela richardson of adp. and we will catch up with the former trump trade official katie kalutkiewicz. we begin this hour with our top story. steepest american tariffs in a century. annemarie joins us now with the latest from the nation's capital. much of this can be negotiated? annmarie: that is the big question this morning, obviously, a hangover from the president. he is outlining promises made, promises cap. he wants to see a global realignment. to do that he is putting a 10% raise tariff, universal, basically a ring around the united states. key question. can that be negotiated lower for a country like the united kingdom? that is the only tariff rate they have received. on top of that, april 9 you were going to have a more customized

approach for a number of countries, including china. 34%. and you take into account the fentanyl tariffs that is more than a 50% rate for chinese imports coming to the united states. the european union, 20%. you have japan, 24 percent. can these rates be lowered? that comes into effect april 9. already the treasury secretary told me yesterday after the event that these negotiations almost already started. we have seen a flurry of diplomacy, whether it is the european union, japan, reaching out to the administration. will we did a deal before april 9 or is this going to take more time? pangaea policies as it may take more time. lisa: a lot of people this morning are going to have painted worst-case scenarios. they come on and tell us that this prolongs uncertainty, increases the chance of recession. in washington, d.c. how different is the tone? is there a sense of, this is

what we want? annmarie: i think yesterday just hours after the president unveiled these tariffs saw a number of republicans, i handful, joined with democrats and push back on what the president did with canada. using emergency authority to put tariffs on canada. the u.s. neighbor on the northern border. the likes of senator mcconnell and susan collins. you already see some pushback and concern. i would say something is very key and something i picked up from my interview with treasury secretary scott bessent yesterday, trump's agenda is a three legged stool. you have deregulation, tax cuts, and tariffs. right now the tariff leg is crippling this agenda and it is why you want -- you see the secretary want to push ahead and get this tax deal done by the middle of summer. jonathan: joining us now for the next 30 minutes or so, the perfect guests, jim zelter, the

president of apollo global management. good morning. congratulations on the new title. i have not spoken to you for a number of months. jim: thank you. i appreciate the note. jonathan: you have called it macro paralysis. what is it now? jim: it is. i sit here this morning and this really cannot be a surprise. the reality of the surprise is a little more painful for everybody to digest, but this administration was very clear during the campaign what their objective was. they really wanted to revitalize american industry. they wanted to bring back manufacturing, focus on energy, focus on industrial renaissance. tariffs, as annmarie said, taxes, deregulation where the three legged stool. i know you are having secretary lutnick on this morning, but they have been signaling this was the dialogue. this was obviously an -- a long negotiation, but this was part of the agenda.

they have been very clear in the communications. the pain of the announcement is being felt this morning in the market, but i'm not saying preaching patience and perspective, but certainly this should not be a surprise. i think now as we think about the big trends of the last 20, 30 years, globalization is not going to be like we have seen it in the past. it is a new global world order. how the u.s. manufacturing and financial base fits into that is tbd, that it is going to be one that plays out over the next several months. jonathan: i can't think of more people dialed into the c-suite and corporate america. how are they planning for the changes in the global economy that you and the team are anticipating? are plans going ahead? are they totally derailed? jim: i use the term macro paralysis because we came into the year, the busiest folks on wall street were supposed to be the m&a and ecm folks. that has not taken place.

the pace of productivity in the public markets is muted. i think it plays into, and i have been on the show before talking about the role of public markets and private markets. not just private credit, but overall private markets. you were going to see this be a turning point where private markets play a larger role for a lot of these corporate staters still -- they have long-term plans, whether it is what is going on in technology, energy, mining. who is going to finance this reassuring that is part of the master plan? so, no doubt i think in c-suite send board rooms there is vision, there is a desire, but the reality is things have come to a stop. i know you are going to have torsten on later today. the data, when you see what is going on with consumers, corporate concern, it is certainly amazing what the president has been able to do in 75 days.

what 400 basis points did not do over two or three years. we talked about the tightening of financial conditions. it didn't happen. the u.s. consumer led a massive rally and a strength in the u.s. economy. in 75 days talk of today has slowed down the economy. the soft data and anecdotes would tell you that we have a recession went from a one in five, to a one in three, and now who you talk to it is north of 50%. it is probably 50%, going higher. lisa: i want to go back to something you said, that this should not have been a surprise to anyone. a be the objective should not have been a surprise, but the execution is raising some questions for people about, how is it going to be passed through? is there anything about what you have seen over the past week that makes you materially change some of your strategy about how you go forward? how you advise the c-suite?

jim: let's go through two or three things. a lot of it depends on the portfolio or liabilities you manage. if you run a domestic longshore fund this is much more fundamental. we are a long-term, long-duration investor with a lot of investment-great assets. when you look around the globe, is anything cheap? not really. our rates going to be, notwithstanding the rate in the last 24 hours, our rates going to be material higher because of deglobalization? probably. and then you have to weigh the geopolitics. certainly your risk parameters and how you want to calibrate risk has certainly gone up the last several months. and the idea of an equity return has certainly gone up the last several months. with base rates high and getting a coupon it is all about your calibration of risk. certainly this has taken a situation where in terms of what

you can get in base rates and terms of bonds, in terms of fixed income, fixed income replacement, it has made the equity risk premium higher, and certainly for us we are in the private equity business. for us it is a really high hurdle for equities these days. lisa: which raises the question, especially if apollo has seen the debt portion of your business grow, is that only set to expand? especially if rates are going to remain structurally higher? jim: there is a reason we have positioned our business the way we have over the last five to seven years. not suspecting a day like this would occur, but the reality is you have millions of folks that are ill-prepared for their retirement and pension. i was in asia and australia last week. even as well as the superannuation funds have done for australia they do not have a system on post-accumulation and post-retirement. around the globe and in this

country 11,000 people a day are turning 65. we rl-prepared for a system tomorrow in terms of the needs. what is being written recently about private markets, certainly in larry fink's letter, it is a tune we have been talking about the last several years, about changing market structure, the role of private markets in retirement systems, financing what this administration is putting forth. we think we are primed to be first in what is going on right now, but it is a wake-up call for retirees around the jonathan: globe. jonathan:i'm pleased to say that jim zelter will be sticking with us. let's take a moment to check out the market. equity futures down 3.4%. with an update, here is yahaira jacquez. >> we start with robert hopp ache reacting to -- reacting to president donald trump's terrace. >> this is an extraordinary day

for the economy, comparable to the day after the russian aggression on ukraine. it is necessary now for the european union and its partners. yahaira: trade ministers will meet monday and are preparing for further countermeasures if negotiations with the u.s. fail. china also bowing to retaliate against a trump's new tariffs, which raised levies on chinese imports to at least 65%. the tariffs are expected to shrink chinese exports to the u.s. by 80% and result in a 1% to 2% loss to china's growth. economists are predicting beijing will ramp up stimulus to offset the impact. let's get a check on apple shares. those are falling 7% in the premarket. president trump's tariffs will hit the company's supply chain and manufacturing centers. ceo tim cook had previously persuaded president trump to exclude some apple products from tariffs, but the new levies will

still have significant impact on the company. that is your bloomberg brief. jonathan: up next, the negotiate -- the negotiating begins. >> we are prepared to respond. we are preparing for further countermeasures to protect our interests and our businesses if negotiations fail. jonathan: we will get you an update in just a moment. we will catch up with all of her crook and have more from jim zelter of apollo. from new york city this morning, good morning. ♪

jonathan: equities down across the board here. -3% on the s&p. on the nasdaq down even more.

on the russell we are down by 4.5%. this morning the negotiating begins. >> we have always been ready to negotiate. at the same time, we are prepared to respond. we are already finalizing the first package of countermeasures in response to tariffs on steel, and we are now preparing for further countermeasures to protect our interests and our businesses if negotiations fail. jonathan: here is the latest. the european union bowing to retaliate if negotiations fail after president trump announced a 20% tariff on imports. all equipped joins us with more. what is the latest? oliver: this is the higher end of what we are anticipate -- what we were anticipating. they were expecting something between 10% and 20%. now the question for

policymakers is, how do you respond? we understand the administration is not just looking for the diminishing of trade areas in terrace. they want to do the non-monetary that trump talked about a number of times last night. how do you even begin to calculate that? that is going to be the question for policymakers. already you are getting disagreement in terms of how to approach this. have been hearing from the economy minister from germany, who likened these tariff increases to having the same economic impact to the invasion of ukraine by russia. it is the rhetoric coming out of germany. we understand the friends of -- french are wanting to put up a much stronger fight and are starting to target u.s. tech companies, services, the sorts of things. that is emphatically not with the administration wants. it is what scott bessent has warned against. and again, we say all of this standing here in the nato headquarters, where all of these european countries are dependent on the european -- on the u.s.

being on board. jonathan: stay close. more later on today on bloomberg tv and bloomberg radio. still with us, jim zelter, the president of apollo. let's talk about europe. there has been a major sentiment shift toward the european side of financial markets and a pullback from the united states. for a long time we talked about u.s. exceptionalism. one feature of that, i think jeff bezos himself said it, is risk-seeking capital, abundant markets, tons of liquidity. is any of that under threat? jim: i think what you are seeing is maybe not the u.s. going down, but also parts of the globe coming up. the letter last september that everyone had on file, they have quickly pulled it out the last three or four weeks because certainly this administration has woken europe up. as they wake up they are saying, how do we create an economic environment where capital can grow, capital can be created for

growth companies? you have a $23 trillion economy with a nascent securitization market. i think this administration has woken up europe in terms of thinking about how they actually fund, finance, and grow in this industrial renaissance around the globe right now. it has certainly been a massive wake-up call and i think you are going to see private market solutions for many of these countries. companies and industries not only in the u.s., but western europe, as they rise to the challenge. lisa: one discussion point has been u.s. exceptionalism was predicated on the ai trade, as well as fiscal stimulus. that is going into reverse a bit, maybe. at the same time the fiscal expansion is going on in places like europe. how much do you see that continuing in terms of market performance and something you are willing to follow? jim: what you are addressing is mostly on the equity performance and public equity performance. certainly there has been a

massive amount of global investment in the u.s. equity markets, in the s&p. that is going to be muted as investors think about other parts of the globe right now. the bigger question you are getting at is, if a recession -- if i was here six months ago we would have said a recession in 2025 or 2026 was one in five. now that is certainly one in two, if not higher. the other scenario is the stagflation scenario. that went from one in seven, to probably one in 5, 1 in four. that has to be the concern of policymakers in the u.s. lisa: it sounded like you didn't pink the fed could cut rates. why? do you think they are destined to allow that kind of scenario? jim: i think they have a -- when you look at the balance of the dual mandate right now it is certainly much more challenging.

certainly the white house is going to want to see them cut rates, and certainly some of the economic data in terms of slower growth would portray that to be the next move. i think the fed is going to have to practice much more patients. jonathan: this is the number one question right now. is that fed put constrained because of higher inflation down the road? lisa: right now the market is betting it is not. because you are seeing almost four rate cuts and priced in by year-end. morgan stanley taking away their call. a key question at a time we are coming off of a real inflationary bump. jonathan: we caught up with the treasury secretary yesterday and he was asked by annemarie about the equity market selloff since february. he pointed to the nasdaq and said it seems like a mag seven problem and not a maga problem. you could push back, but he has got a point. there is something going on here

outside of just trade. jim: that goes back to my point earlier. when you look around what is an investor right now, are things people? no, they have gone down in price, but don't confuse a price move with something being cheap. mag seven took the market up, and now the mag seven has taken the market down. this is a complex economy. the theme we have been talking about for years -- and i know we are talking about the equity market -- these public markets only reflect a very small portion of the u.s. economy. these are great growth companies, but so much of the u.s. economy, so much of the european economy is private companies. how do they navigate this? that is what gives us a great deal of enthusiasm, because what is going on for investors in private markets, but also companies needing capital, there is a lot more tools than there was a decade ago. jonathan: can we finish on data centers, which has been a major

thing? there have been some warnings about overcapacity. how are you and the team navigating that? jim: we have taken on much more as a debt provider to date. certainly those who have been around a few decades, you feel like you are seeing a bit of the conversation about dark fiber from 1998 to 1999. build it and they will come. certainly there are economics that still need to be developed in terms of the economic model of the data center business. a lot of capital has been created upfront to purchase the land, secure the power, create the facility. but who is the long-term offtake of that? who is the long-term capital? this goes back to the conversation about the pension deficit issue. there is a tremendous amount of long-term capital that wants to be matched up with that opportunity set. to date we have been much more of a debt provider. but i think the questions that were raised last week by joe's side, and the short term

supply-demand mismatch about how these things come along. jonathan: we could talk to you all morning. we appreciate your time. jim zelter, the president of apollo global management. lisa: at a time when suddenly the chances of recession, he said, one in two, from one in five, and the chance of stagflation, one in three. jonathan: equity markets colliding with that discussion. we are down by 3.4% on the s&p. up next, nela richardson. payrolls just a day away. from new york, this is bloomberg. ♪ you gonna go back and see how the pyramids were built or something? nope. ellen and i want to go on vacation, so i'm going to go back to last week and buy a winning lottery ticket. -can i come? -only room for one. how am i getting home? sittin' on my lap like last time, ronald. fine, but i'm bringing this. [ whirring ] alright.

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jonathan: where to begin with markets this morning. equity futures down across the board, down 3.4% on the s&p. the nasdaq down by more than 2%. that is the move in the equity market worldwide right now. the bond market looks like this, treasury yields lower. down by about five basis points. think about where the highs work at the start of the year around 4.80 on 10 year. yields are down by five basis in the session. that unlocks more dollar weakness. coming into the year we thought

additional tariffs make an additional dollar strength, that was one of the consensus trades. it is being absolutely shredded. 1.10 on the euro-dollar. that currency pair has seen a two percentage point moves. crude, i'm sure it's on your mind. crude is down more than 5%, brent to 71, wti two 67. opec will hike up more than expected. lisa: expected to make a larger supply hike in may that will lead to this decline. adding supply, 411,000 barrels per day. the key question is how much will they lean into this and take the mantle away from the united states given the fact that opec-plus and the u.s. has made up the difference the past number of years.

jonathan: two hours away from the opening bell, let's get to some morning movers. >> walmart and target getting hit. this is because so many of these retailers source their goods from china. with a tariff rate of at least 65%, something has to give, either margins will take a hit or consumers will have to pay more at a time when they are already feeling the pinch. next up we have the automakers also falling. that 25% levy on all vehicles imported from overseas is on and starts today. i will note that interestingly, ford announced it is extending its employee discount to all customers as it tries to keep business coming. next up we have travel stocks also sinking.

tariffs will raise the price on consumers for goods and they won't have extra money or confidence to travel. apparently no one wants to visit us here in the u.s. jonathan: i'm sure many people do. lisa: i was talking to someone in the travel industry and they were saying canadians are not. that is the big difference. canadians are saying absolutely not. jonathan: what else have you got? lisa: united states. jonathan: nothing better. president donald trump announcing the steepest tariffs in a century. 10% levies on all exporters to the u.s. just for vacations. we will talk more about this, the price -- surprising thing was of the europe, japan story, it was the places like vietnam. to see numbers north of 40% for vietnam when you see companies

try to insulate themselves from the tariffs on china a number of years ago this has become incredibly disruptive. lisa: why start with mexico and canada before getting to this level? it is tied to the story of vietnam, malaysia, philippines, what are the backdoors china has been using to get product into the united states? i ask this earlier, how much is this united states forcing the likes of vietnam, malaysia, philippines, taiwan, to choose between the united states and china in terms of their major trade department at times when they have benefited from being the connector country between the u.s. and china. jonathan: scott bessent was doing interviews after this announcement. why isn't mexico and canada there? don't know, they are not a part of the negotiations. didn't seem to be willing to discuss about trade at all.

taxes is where the folks in this market will be if we could negotiate those tariffs. senate republicans planning to fast-track the renewal. the treasury secretary wants us to talk about this, this morning. jonathan: the three-pronged stool. if you just have the tariff, you end up with the recession calls that people are talking about. the new conversation, overnight, is are these really tax cuts or are they simply an extension? are they sweetener or expected status quo? is there something congress could do given its cutbacks on the importance of fiscal restraint paring back some of the government debt overhang? is there something they could do to expand fiscal spending given that focus. the focus everywhere else of

doing the opposite of the united states. jonathan: we will catch up with the commerce secretary. we need to talk to him about this story as well. the white house nearing the sale of tiktok and it might not be to amazon. other large private capital firms would own about half of the company. lisa: who is the front, what does this process look like? the other question is how willing is china right now to use this as part of a negotiating tool with lowering some of those tariffs there at a rate of about 54% or at least as of april 9. in a real question about what the parameters are on both sides and will this deal be allowed to go through. jonathan: who do they negotiate with? who are they talking to? are they negotiating with tiktok, china, the president? who do they speak to? lisa: i would guess it is a several tiered discussion. look at u.s. steel as an

example, this is that on steroids. you have a chinese government trying to figure out how to retaliate. jonathan: what is the biggest criticism we have seen? they don't protect data. tiktok faces a fine of over 500 million euros for data sent to china. lisa: this is something a lot of congress members and globally people agreed was a national security concern. why are we also talking about the algorithm still controlled by china which could allow the sale to go through. a lot of did not understand frankly what the different levers are. jonathan: this is one of those busy mornings. equity futures down 3.4%. economic data this morning. we had challenger job cuts just moments ago. michael mckee has more. michael: doge cuts are finally

hitting the economy, we have an increase of 204.8% in job cuts announced for the month of march. last month it was 103%. this is the biggest increase since may of 2020. remember what was happening then. all the job cuts don't usually work out. it does suggest that we do have some trouble ahead. this is mostly doge cuts in the private sector. it is also the contractors and people like that who are being laid off. some sobering news about the labor market this morning you could call it. jonathan: 20% on the you, 30% on china. we have seen sentiment crater.

will we see this with the hard data later this week? michael: this week will largely reflect things that happened last month. the thing about the whole tariff regime announced yesterday, we didn't get a lot of details about how this would be applied. there is a range of views on wall street. capital economics thinks 33%. a lot of people in the 20's. the smooth hauling tariff rate was 20%. according to a fed model in 2018 if you plug these numbers into it, gdp will fall by about 2.3% and prices will go up by 1.5%. it is according to the wall street economist overnight penciling, fairly substantial. import taxes will arrive between $400 billion and $600 billion.

that would be the largest tax increase in decades. ing says tariffs will cost americans an average of $1400. the impact is going to be much worse on the bottom 60% by income. you hire a -- yahaira was looking at the details. people talking now about the possibility of recession increasing a lot. jonathan: appreciate that. michael mckee with the latest economic data. where is this labor market right now? >> solid. someone hopefully left all of the economic releases here on the bloomberg terminal. i will use this as well as the adp data reported on wednesday. we saw 155,000 jobs created in march. very good news for the baseline of the labor economy before this

tariff announcement. if you look at where the senses for economists, you see initial jobless claims were low. we are still at historical lows when it comes to the expectation of layoffs over the next few months. all of the standards of the labor market have coalesced into a pretty solid number. next week will be the reference week for the adp number and the new government data. next week will be important to watch. for the month of march we saw solid hiring across all firm sizes. lisa: this is the challenge for the fed reserve, they are looking at the existing data at the same time the soft data is showing a rapid shift. they said one feature of the labor market has been the

companies have been reluctant to fire people post-pandemic. have you seen any signs that is starting to change? nela: main street could adjust to tariffs as quickly as the markets are adjusting right now. production patterns and consumption patterns are going to be very sticky. that's what we are seeing broadly in the data. the headline number is solid. you are not seeing the effects of policy changes or even downbeat consumers. what you are seeing is in the industry specific channels. construction, hiring was much lower. that could be because input prices in terms of housing construction has gone up. it could also be because of labor shortages, a big driver of hiring construction. a boost of hiring manufacturing. the second straight month, that was a surprise. is this trying to feed

production before the tariffs really take hold of the u.s. and global economy? maybe. we are seeing a slower facing consumer industry. this is all to say we are seeing an uneven effect in the labor market. the topline number is still very good. lisa: you go around, you mine the data qualitative and quantitative. i'm wondering about who you expect to absorb the costs. our company is prepared to absorb it with margins, is it going to come in the way of job cuts? nela: the answer to this question is really important to think short-term and long-term. going to the macro policy to the locals. they will be very different than the response of a farm in california. every company is going to absorb these impacts very differently.

you will not see it immediately in job loss. a cup back in hours or a change in the compensation structure. jobs will be the last to respond. i think companies are holding the line in terms of their headcount. it is so hard and costly to make changes to the labor force. in the medium-term, maybe a year or two when this new policy is cemented broadly, that is when you will see changes that are more permanent in terms of headcount. i think in the next couple of months the labor market stays ok. you might see a pickup in initial jobless claims. they can't make big changes in a short period of time. jonathan: wait and see mode. now based on those policies that

we saw yesterday went up. lisa: if it doesn't break for six months or 12 months, how do they justify cutting rates at the same time inflation is picking up on the heels of robust consumer spending. jonathan:nela richardson of adp. payroll tomorrow morning. here is uehara hack -- yahaira: volkswagen is planning to add import fees to sticker prices of its vehicles shifting to the u.s.. europe's largest automaker told dealers it would give more details by mid april on pricing strategies. shares are lower to percent. the white house is ending tariff exemptions which allow packages worth less than $800 to enter the u.s. free. the loophole is expected to have

major impact on discount marketplaces like temu and sh ein, the change is part of an effort to prevent illegal or dangerous goods including opioid from being shipped into the u.s. new york city mayor eric adams is leaving the democratic party and running for reelection as an independent. adams plans to announce a campaign with an emphasis on ethnic minorities who helped elect him in 2022. the announcement comes after a federal judge dismissed corruption charges against him. jonathan: thank you very much. the latest accounts from the last ecb meeting, this is where policymakers are. the rate cut and the pause on the table for april. do they have to consider something else further down the line. lisa: do they have to respond in

the same way that people have in the past? has it really done a good job? it is a very hard call for the central banks. jonathan: inflation uncertainty could unfold. tell me about it. up next, the risk of retaliation. >> i wouldn't try to retaliate because as long as you don't retaliate, this is the high-end of the number. we could see if there is a different floor. jonathan: the former trump official joins us next from new york city, this is bloomberg. ♪

jonathan: live from new york city, heading to the opening

bell with equities lower by more than 3% on the s&p. the russell 2000, -4.6%. the risk of retaliation. >> i would advise none of the countries to panic. i wouldn't try to retaliate because as long as you don't retaliate, this is the high-end of the number. the market could add certainty that this is the number barring retaliation. we could see if there is a different mindset to let things settle for a while. jonathan: treasury secretary scott bessent telling anne-marie the tariff rates announced as long as countries don't retaliate. that's where things could get complicated. annmarie: these tariffs come into effect april 5 and then

april 9 for the reciprocal, more nuanced. the european union for 20%. potentially this is the opening of a door for negotiations. i'm very pleased to say we are joined by a former trump white house trade official and she was a negotiator at one point. is this really truly the start of a negotiation? >> it depends. in some cases it is black-and-white, a tariff reduction. we talk about the nontariff barriers, it is much more challenging to imagine what this could look like. annmarie: how did they get to these rates? where is the data behind this? kate: this is the question. what is the modality?

there's quite a lot of speculation. the president of course cited tariffs, that rates currency manipulation. we have to dig into that a little bit more. annmarie: if this is a true negotiation, i'm not sure it could get done by april 9, maybe it could. will there be carveouts and exemptions? kate: there were a number of exemptions allowed under these tariffs. the white house issued pages and pages of exemptions. notably from products that are likely to face tariffs. we have new tariffs on cars. the president has indicated new investigations into pharmaceuticals, semi conductors, ships, copper, lumber. they are exempt at the moment. annmarie: china number one on the list. the past few weeks we saw 20% levy, on top of that, trump 1.0

had around about 25% when he came to phase one trade deals and other imbalances. what is the tariff rate at this moment if you are importing from china? kate: as of today it is 45%. we will add in the 10 on saturday. cumulatively we are looking at around 79%-80% on all imports from china. annmarie: do you think that is negotiable? kate: i think it is. his legacy goal is a deal with china. this is very typically trump leveraging. he wants to come in with the most significant leverage. the question is how china will respond. annmarie: based on your past experience, how do you think china will respond to this?

kate: they will continue to be calculated, we have seen them take a measured approach. they are showing the trump administration they are prepared to defend themselves. they have started to reach out to allies of the united states urging them to join together. of course, if china starts to make friends with our allies around a shared dislike, this is a bigger concern. annmarie: is that a redline you think this administration understands? if you are too aggressive you will force allies say we will not put up the barriers when it comes to beijing. kate: i think some do. the president articulated some of our friendly nation, sometimes they are the worst. japan and korea received fairly

high tariffs. we could negotiate with them away from this. i don't think he's focused at the moment about the end roads china might make. annmarie: that was a former u.s. trade negotiator. explained how the next few weeks might be playing out. what caught my eye conversation, the rate she is anticipating, 79%. jonathan: amazing. a lot of confusion around that yesterday afternoon. just how big these tariffs actually are. lisa: suddenly you're talking about rates that would decouple the biggest economies in the world. jonathan: the u.s. commerce secretary from new york. the third hour of "bloomberg surveillance" up next.

>> we are just focused on tariffs, but there is a whole range of policies that are not growth-friendly. >> the rest of the world is

watching mistake after mistake being made. >> it could be a net loss for the whole global order. >> the majority of countries, their main trading partner is china. >> where is this leading to? i: the thatcher-reagan. that is option a. option b is jimmy carter on steroids. >> this is "bloomberg surveillance." jonathan: smith hawley on steroids last night, that is for sure. good morning. the third hour of bloomberg surveillance begins right now with equity futures cratering on the s&p 500. we are down across the board. down by 3.4 percent on the s&p 500. on the nasdaq we are down by 4%. in the bond market we do receive a bit of a bid. new lows for 2025 in the last 24 hours, but in foreign-exchange the standout headline is this dollar we is. the euro on course potentially for the biggest single day

performance going back to december 2015. lisa: this is a continuation of what we have seen, which is risk assets lower at the same time the dollar, usually a safe haven, is weaker. this is the reason why deutsche bank came out and said the safe haven properties of the dollar are being eroded. there is a big gut check about how much the world order has shifted overnight the overlay of tariffs that come as you mentioned, revert us back to pre-smoot-hawley times. jonathan: if you missed the fireworks as they were unfolding yesterday evening it was messy. wall street journal came out with the headline. the market took that as, 10% is not 20%, good news. all of a sudden the president holds up a board and there are all of these numbers. 24% on japan. 34% on china. the equity market never looked back, cratered. lisa: this is a worst-case

scenario. that is what many analysts said in both the scope of the terrace but also the vagueness. it was not clear what the off ramps were for those company -- those countries to come back and say, we will meet you where you are at and negotiate. that is why the people have -- people are having a hard time looking for. he questions here. what kind of policy responses are there from the white house and federal reserve? and at what point when people came up to this table and set uncertainty itself is cratering expectations and confidence, at what point is that the new policy that people can factor in that will suppress risk appetite? even if there are some deals created? jonathan: let's unpack some of that. sentiment, hammer. let's see if it spills into the hard data. two, the only real light this morning, the tiny light at the end of a dark tunnel, ursula von der leyen saying, we will retaliate if negotiations fail. that is someone ready to negotiate.

lisa: and does she have enough of a quorum given the fact that we heard some pretty harsh words from germany? if that is a silver lining that gives you a sense of the tone on our show this morning. there are people in the consumer sector or who do raise the point about how globalism left a lot of people behind. at the same time, from a his and his perspective to unwind all of this in a couple of days is leaving people wondering how you do this and how you begin to negotiate? i think that is the reason why people are having a hard time understanding the off ramps from this tariff policy. jonathan: april 5, baseline tariffs start. higher tariffs begin on april 9. that is the clock. equity futures down by 3.3% on the s&p. we will catch up with tom narayan, following 25% tariffs on autos. in later this hour the u.s. commerce secretary, howard lutnick. that is a most-watch

conversation taking place right here on bloomberg surveillance. begin this hour with global stocks sinking following president trump's sweeping tariff announcement. alexander altmann writing, is the worst case outcome. we are at peak uncertainty. i am not convinced. alix joins us for more. what would convince you? alex: we need to see a lot of evidence that it really is a negotiating ploy, and i don't really think that is the case. i mean, case in point is from tariffs we had china, which is 3% of goods, and in that environment everyone said at the time, this is a negotiating tactic, yet all of those tariffs are still here today. jonathan: we got through the china story ok, but we are in a different position now. a lot of people are running around with this idea that if these tariffs stick you are talking about an extra 1% on pc by the end of the year. is that the kind of number

you're coming up with? could it be worse than that? alex: i would look at it from the economic growth perspective. we are now forecasting negative growth in the fourth quarter of this year. it is a 160 basis point-swing in the gdp trajectory. but i think the bigger thing which people are not factoring in is the wealth effect. you have got half of u.s. households now own securities. almost 70% of these, of households, have their financial assets tied into equity markets. financial is asian of the economy is far greater today, so the uncertainty you mentioned, in terms of the impact that has on the equity market, i think that immediately feeds through the wealth channel and accelerates any kind of downturn we may feel long before we are factoring in anything tariff-related. lisa: is that the key point from yesterday? even if some of these rates are negotiated lower the uncertainty that is going to be prolonged and lack of predictability has

caused you to grow less optimistic about equity returns, particularly in the united states? alex: absolutely. put it simply. uncertainty is the killer of everything. if you are a board room uncertainty stops you from making those investment decisions. it stops you from making those hiring decisions. of course from a tariff perspective we can say i'm being incentivized to bring manufacturing onshore, that doesn't happen overnight. we can see from the first experience under trump with certain corporations they promised a lot and ended up delivering a lot less. case in point, ford. this uncertainty, to me, is going to weigh on consumer sentiment. we have already seen it this year and i think what happened yesterday will make it worse. lisa: the assumption coming into this year is the united states would get hurt less than the rest of the world. what we have seen is the opposite trade with europe are performing the united states by

more than 17 points. -- 17 percentage points. is that a trend that is going to stick? i said that at a time when the dollar is weakening at the fastest pace versus the euro going back to 2015. alex: it is pretty unclear. we came into the air with a pretty strong view of u.s. exceptionalism. that was our view, and it was a controversial one. i think the issue is we need to go back to the old phrase of if the u.s. sneezes the rest of the world is going to catch cold. if the u.s. is going to be in a waning economic environment then it is most likely going to drag the rest of the world with it. i think that the interconnectedness, we can say we want to go back to a smith holy environment of higher tariffs over the 1930's, but the world is much more interconnected today. but my concern is, people talk about repatriation flows, but the interconnectedness of the u.s. and how important it is from the capital markets perspective means it will probably drag along everyone.

jonathan: i'm pleased you brought this up, because we have started to see this weakness develop elsewhere. as we speak the dax is down by 2%. are you seeing those european longs that have accumulated over the last few months should get more comfortable in the weeks to come? alex: yes. and i think there is a couple of reasons for that. number one is the opportunity set of that evaluation cap is contingent upon that opportunity set, i.e., the evaluation cap being attractive based on an roa differential. that cap is largely closed and closed in record speed. which leads onto the second point. why? if you are trying to move money outside the united states we have a $60 trillion market. look at any other market globally. it is orders of magnitude smaller. trying to move money also is going to have a profound impact on those respective markets, which makes it less interesting if you are a large financial institution.

you will be like, i don't want to be in u.s. equities anymore. where do you go? lisa: tactically, where do you go? alex: in the u.s. you have to go responsibly in two parts. you have to go with quality. there is not anything particularly new. strong balance sheet versus weak balance sheet, just thinking about the path of if interest rates cannot come down as quickly as we hoped what does that mean for the leveraged loan market? so, strong versus weak balance sheet. the other one is, we need to start thinking about value again. are there parts of the market that are factoring in a higher degree of recession or providing that margin of safety that are the parts of the market -- other parts of the market are not? the market is trading on, what, 22 times eps? there parts of the market that are still trading cheap and international equities trading cheap. mexico, for example, 8.5 times.

turkey, also a relatively cheap market. there are esoteric parts of the world where we might have to dig deeper to find something interesting. jonathan: didn't mind the turkiye point? lisa: i'm thinking of all of the places to go. turkiye. redefining undervalued. jonathan: we are searching for the silver lining here. who do you think blinks first? the white house or the federal reserve? alex: i think that is a great question and i personally think that is going to have to be the white house. and i think the white house is operating -- so, the way we are thinking about it is twofold. the fed operating under a put driven by the credit market. the white house is being driven by a perch that is time-driven, not strike-driven. they are operating on the assumption they need to think about midterms, recovery in the economy and people feeling good for 2026. they are operating under more capacity in terms of, how do i get that inflection point. i think it is going to be the white house that comes to the

negotiating table first and the fed will be operating on the function of, if the credit market balks, then i suspect that will be when they step in. jonathan: smart framing. alex altmann of barclays. underperformance within the equity market in the united states. apple down something like 7% or 8%. likes of amazon down something like six percentage points. likewise for meta, down 5% too. across-the-board mag seven stocks getting hammered this morning. lisa: they're the ones that have that international footprint. either way, if you want retaliation do they become targets? poster child of america that china can go after? there is a key question, which is, where does the trump administration respond if there trying to cater to the nationalistic feeling and corporate america is viewed as a globalist entity does not necessarily the champion they want to support? i'm serious.

doesn't work with the narrative they are trying to put out that we have your back, you workers. at a certain point you wonder how much that is going to stymie the trump put. jonathan: equity futures down by 3%. the opening bell, one hour 17 minutes away. with an update, here is a yahaira jacquez. yahaira: tiktok owner bytedance is facing a fine of over 500 million euros for illegally shipping european users data to china. the fine comes after a lengthy investigation found tiktok violated the eu's general data protection regulation. the regulator will order tiktok to suspend the data processing in china within a set timeframe. meanwhile, russia is counting on president trump to deliver an acceptable peace deal in ukraine, but according to people familiar is prepared to continue the war if talks fail. those sources said the kremlin is unconcerned by trump's threat to slap secondary sanctions on

russian oil over the lack of progress toward a cease-fire. and u.s. crude futures are falling nearly 6% now, trading at $67 a barrel following president trump's tariff announcement. opec-plus deepened its slump, saying it would lift output by 411,000 barrels in may, more than previously announced. jonathan: more later. up next, the morning calls, plus tom narayan on the impact of the 25% tariffs on autos. that conversation, up next. live from new york, you are watching bloomberg tv. ♪

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on the stand out because we have had, bob michele, if these tariffs stick is fed will cut. that is his view. this fed will cut down to it to handle. that is what this market is wondering. whether they can, whether they will. lisa: bob said this is a very different fed that is clearly attenuated to the risks of a downturn. this is why jay powell is going to be so important to listen to on tomorrow after the jobs report. he repeats the word transitory. that fed put just got reinstated. jonathan: i imagine that is what the market wants to hear. equity futures down by more than 3%. the russell, -4.5%. this get you some morning calls. city upgrading tjx, saying retailers will benefit from tariff disruption. that stock is down by .8%. bank of america lowering its price target on apple, pointing to steeper tariffs on china. that stock is down by 7.5%.

your third call from j.p. morgan, cutting its price target on wells fargo, expecting banks to be impacted in numerous ways by tariffs. that stock is lower by more than 4%. its head down to washington, d.c. and catch up with annemarie . you know the dates. baseline tariffs start on april 5. auto tariffs have already started. annmarie: auto tariffs, those take effect today. one thing to note, given the fact we are talking about baseline 10%, the reciprocal tariffs, the white house announced yesterday those auto tariffs will not be on top of that. they will not hit also the reciprocal tariffs. we are talking about 25% when it comes to auto imports. a few things to note. one, the european, already looking to passing it immediately onto the consumer. others like mercedes-benz is looking at, can they do more in the united states?

that will be music to the ears of donald trump, who has been talking about wanting to bring more manufacturing into the united states. i will say we also have the likes of ford, gm, the lobbying effort continues in washington, d.c. they are calling the administration and trying to get carveouts for some of the components that go into these cars. jonathan: more from annemarie coming later. on cue. we will be catching up with howard lutnick in about 12 minutes time, so look out for that. 25% tariffs on autos taking effect last night. tom narayan writing, we have more clarity. the market is not pricing in permanent tariffs. the scenario makes us like ferrari more. tom joins us now for more. is that outperformance in a down market or are those stocks going to finish the year higher? tom: it's probably more relative call. targets will be a net negative

across-the-board. it is undoubtable. if you look at how these stocks are trading it would appear they are not pricing in permanent tariffs. lisa: how much do you think there is a message in the fact that mexico and canada were not included yesterday in the retaliatory tariffs, opening up may be room for negotiation with what is going on in autos today? tom: exactly. we think that is very true and obviously i'm not a political analyst. i could tell you what investors are saying, and they certainly think this is potentially opens up room for renegotiating usmca. the d3 is already largely usmca compliant, which means north american content. the question is obviously u.s. content, but they are already at about 50% u.s. content. it is just the other 50% that could be tariff. if they could negotiate that down, that would be a big boost to them. lisa: yesterday president trump

was saying there will be 0% tariffs if people move their production to the united states. this morning mercedes said they were contemplating moving some production to the united states. how feasible is that type of shift and what is the timeframe you could foresee? tom: it really depends on the oem. mercedes has their plant in the u.s.. so does bmw. a lot of those get imported to europe, but certainly you could add shifts to expand that production footprint. that is not as difficult, let's say, as gm, building a brand-new plant in the u.s. would take not months, but several years. we are talking three to four years. by the time you could have a new administration that takes off. so, less likely for brand-new plant to be built in the u.s. war likely for extra shifts or lines to be built for a mercedes or bmw. jonathan: how many manufacturers

will just exit this market? we had this conversation earlier this week. jon came on the program and talked about whether some companies would just exit the low end of the market. i wonder if you share that opinion and how some of these policies will reshape the auto market in america in adverse ways? tom: the u.s. market is a big market. it is kind of hard to get out of it completely. it is dominated by the d3 anyway. the japanese and korean players, it does beg the question of how big they are in the market. longer term. they tend to compete with each other, not the d3. also there imports are predominately on the premium side. let's say a lexus for a toyota. maybe you get less of those. again, all of this presumes a structural tariff that continues.

we are not sure that is going to happen, but for the most part if you are in the u.s. you are going to want to stay there. it is a very important market. especially what is happening in china and europe. you will see some stuff on the fringes, but unlikely to see huge changes. jonathan: why doesn't anyone believe it? very few people have come on this program and said it is their base case that these whole. what is that come from? tom: it comes from the fact that yesterday's news excluded tariffs, and actually the tariff announcement last week on autos was in some people's minds there is a silver lining there. talked about examining u.s. content. in the past we didn't know what happened to a chevy equinox. it is assembled in mexico but shipped to the u.s. now we know the administration says they are going to calculate how much u.s. content there is. we think and investors seem to

think this is potentially a negotiating tool for the future, as opposed to an outright 75% tariff. the other thing we know is automakers are talking about the fact that they will increase pricing. they will not just absorb the tariff altogether. it is not as painful as it would be if the oem's absorb the tariff entirely. lisa: we have been discussing what the endgame is. some people have speculated that it is a decoupling of the u.s. from china, and that we are removing some of those connecting companies like vietnam, thailand, etc., that have been doing the production of manufactured bits. even how integrated the supply chain has been, given how much supply factors have moved into malaysia, how feasible do you think that kind of decoupling is? tom: it is very difficult. the supply chain is.

you are talking even the supply chain within the supply chain right? suppliers, there is components in there that come from different countries. there are a ton of parts that are sourced from overseas. so, that decoupling is -- that will take even longer potentially than setting up plants in the u.s. you may see some suppliers change -- let's say mexico, honduras, what have you -- in the hopes that will sweeten the deal. but there simply is not the labor force in the u.s. to do some of these jobs. you know, creating that takes years. so, unlikely that will decouple. that is the world we live in. it will be difficult to go back from that. jonathan: appreciate your input. busy week for you. tom narayan of rbc.

i wonder what it would take to convince people this was actually going to happen? the tariffs have gone up overnight and still analysts in the auto sector don't believe they stay after a week, after a month, after two, after three. at what point do they believe this is going to hold? lisa: at what point do people give up the hope of a trump port, where there is going to be some response from the administration trying to jawbone markets higher? jonathan: equities are lower by more than 3%. next, a major player in trump's tariff announcement, the commerce secretary, howard lutnick, live on bloomberg tv. ♪ i can't believe you corporate types are still calling each other rock stars. you're a rock star.

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jonathan: equities right now negative by 3.4% on the s&p 500. on the nasdaq we are down by 4%. in just a moment, jobless claims data add of payrolls data tomorrow morning, going into that your bond market looks like this. yields are lower by eight basis points on tans. 4.05%. and euro is cratering. for the dollar side of the trade. euro-dollar right now, 1.1085. let's get to michael mckee with some economic data. good morning, mike. mike: we are getting the latest jobs claims numbers.

strong labor market. 219,000 for the last week. and only 564 federal employees filing for unemployment benefits there in a different category, so we are not seeing the doge effect yet there. we also waiting for the u.s. trade balance, which comes in at a negative $122 billion. that is down from 131 billion last time. we will have to get the breakdown of the imports and exports of the trade balance for various countries, but i will send that along as soon as that gets parsed out. jonathan: 219 -- 219,000 is not terrible. the labor market still looks ok. tomorrow morning what do you expect to see? mike: we are not expecting to see a lot of change. maybe a slight decline in hiring, but the government numbers are not expected to fall the same reason we are not seeing a big change in government jobless claims. it is confusing as to who has a

job and who doesn't. challenger just taking announcements from the federal government about how many jobs they are going to cut as opposed to the actual number of jobs. so, it may happen, but it's going to happen perhaps next month rather than this month. jonathan: thank you. latest with claims. no bad news there on jobless claims going into tomorrow morning. lisa: the only negativity you could find there is continuing claims rose to the highest level since 2021 but failing comparison to what we saw in the aftermath of the pandemic. as richardson said, you are not going to see those layoffs in the near term. knees are doing pretty well and passing along that with a strong, robust labor market, raising a question of when the hard data looked like what we are seeing in the soft data. jonathan: the opening bell, 58 minutes away. the equity market down. on the s&p negative by more than 3%. our top story worldwide, president donald trump unleashing a major tariff push, imposing levies on all of america's major trade partners.

howard lutnick playing a key role in president trump's tariff announcement just last night. the commerce secretary joins us for more. thank you for making time for us on a busy morning. appreciate it, as always. let's talk about those dates. they slammed tariffs start april 5. higher tariffs start april night. what happens between now and then? sec. lutnick: we are talking to all of the trade ministers, but nothing happens between now and then. what ceos are thinking about is finally, let's think about tilting in america. have almost 5 trillion dollars of commitments coming to america to build their factories. that number is only going to grow as people realize it is time to bring manufacturing home to america, we are the greatest economy and the greatest market in the world. it is time for america to stop taking care of every other economy in the world and building them up. let's build the american cap

economy up. let's build american gdp. you're going to see great growth from america. jonathan: capitals around the world watching this program want to understand what they can do between now and then to avoid those tariffs. what do they need to do? have you communicated any metrics to them whatsoever? sec. lutnick: we have been talking to the trade ministers of the major trading partners for more than a month, and we've been talking to them, and so, you have to understand, and this is what is difficult for your audience to understand tariffs are easy to understand, right? we have a 2.5% tariff on autos and europe has a 2.5% tariff and other people have a 20% or 15% tariff. that is easy, so they could all come down. it is the non-tariff trade barriers that are the difference. some countries have a vat, and they take that tax of 20% and they use it to subsidize the production of their domestic

industries. that is why we can't sell cars there. because they give a rebate. either they give it directly, one country told me yesterday they give it directly to their car manufacturer to make their cars cheaper. that is why they sell successfully and we don't. others take the money and use it and give cheap energy costs to this production. that is why the steel industry -- why is everybody else so good at steel and we are not? it is because their governments subsidize it. we really need to change the way trade works around the world. it is tariffs, but don't get confused that these non-tariff trade barriers, they are the monster that needs to be slayed. jonathan: you have been consistent about this argument. manipulated currencies, foreign trade barriers. can we sit on the numbers for a moment? the eu, 20%, 24% on japan, 34% on china. what was the methodology to go through all of those different barriers to entry that you want

to knock down? how did you come up with these numbers? sec. lutnick: the council of economic advisers, you know, the phd economists of the administration, coupled with ustr, the united states trade representative, they publish a book called trade barriers about this thick. they have been analyzing for decades all of these different tools that these other economies use to hurt america. they will not take our corn in india. he will not take our be foremost anywhere. it is unbelievable they will not take our agricultural products. they just treat us badly because we have allowed them to treat us badly. and when you finally go back to them and say, this has got to end, going to be tough for them because they have dealt their whole social network, their whole economies on basically exploiting america. donald trump has said it is time for america to change that.

it's going to be difficult for them to change that, but eventually america is going to be treated fairly and the production of american fact trees is going to be incredibly strong growth and you're going to see that growth reverberate through gdp. remember, people forget the d. gross domestic production. if you buy a foreign-made toyota that is not domestic production. making a car in america, that is domestic production. jonathan: if we could sit on the methodology and address it directly, this is what most people understand you did. he divided this -- the trade from exports and invited by two. if you are a trade partner right now and you have watched how america has put together that policy, how are you meant to negotiate with that? what are those countries meant to do? sec. lutnick: the countries

understand that there trade policies were an exploitation of america. everybody understands. one country actually said to me, i was amazed we were able to get away with it for this long. i mean, imagine that. jonathan: can you share that country with us? they never say this on the record. you have the potential, the option, the ability to share that. sec. lutnick: of course they are not going to sit on the record. jonathan: who is saying that to you? sec. lutnick: stop. one country told us they give the subsidy to the car companies. another country admitted they give their subsidy to the steel companies. i mean, they are not going to repeat it on here. it is on here is that this is going to change. that it is time for these things to change. and they are going to be more fair. and america is going to do well and in the middle of that time all of the factories are going to come back to america. you are going to see an enormous number of factories come back to america, or you are going to see

incredible change locally. it is going to take time, but the factories are going to be built in america. that is the most important thing. donald trump wants to see steel made in america so we can defend ourselves. going to want to see pharmaceuticals made in america. who on your audience does not want us to make the ingredients for pharmaceuticals? did anyone ever ask themselves why the ingredients for our drugs should be made in china? why is that? that is not cheap labor. that is high-tech factories in china. why? because their government helped create it. they created cheap goods there. they oversupply them, they drive the capitalist american who do not think like this out of business and then they make it in china. donald trump has said, i have had enough of this. jonathan: i think most people would totally agree with you because china is not a partner for the united states.

europe would make a very different argument. and europe might be wondering why they are being thrown into the same bucket as the chinese. what explanation can you give them. -- give them? sec. lutnick: europe does not treat our products fairly. they do not treat our companies fairly. they treat themselves incredibly well to the detriment of the united states of america. right? it is time for them to treat us fairly. and that is the point. it is not free and fair trade. there tariffs are higher. the nontariff trade barriers are incredible. i've asked you, why don't they take our beef? why don't they take our agricultural products? why? because they don't want them. because they want to make the money themselves. why is it ok for every other country to feel this way and it is not ok for america? i tell you why, because we are the world speaking bank and the

-- and donald trump has said, our deficit, our $1.2 trillion trade deficit, 1.2 trillion dollars, we by other people's things more than we sell them hours, has got to be rebalanced. it is a national emergency. let's fix america and we can. annmarie: mr. secretary, for you it is beef, for the president i know it is ford. but there are things like lng, things like microsoft services. do you want to see balanced trade product byproduct? sec. lutnick: no, no, no. it is not product byproduct. it is a big macro issue, ok? fairness comes when one decides that they can't get away with it any longer, so let's make a deal with the united states of america. they've got core issues. they have a vat tax of 20%. europe has 21%.

when our goods are sold there we pay 21%. they say, everybody pays that. and then they use that money to beat us down in other ways. i mean, come on. we need to have fair trade macro. not product byproduct, but i think the way donald trump looks at it, it is country by country. what is going to happen is, you are going to see domestic production grow. you are going to see interest rates come down in america. you are going to see growth in america, great jobs in america. robotics is going to come to america. it's going to replace cheap labor overseas. robots can make things. you know what the job is going to be? mechanics who fix robots. kind of like a high end bmw, robots are going to need to be fixed, and those are going to be high-paying jobs, and they are going to be here. we are tired of them being overseas. annmarie: for some countries there is a 10% base and that was

the only living they were hit with yesterday. i think of the united kingdom. those countries have a trade surplus with the united states. why put the tariff on? sec. lutnick: i think the president understands that all of these countries, even if they have a trade surplus, if you dig into it, the u.k., there trade surplus, if they have this london metals exchange, gold and silver boolean, come on, that doesn't really count. and australia, which is a wonderful partner of ours, they buy a lot of our planes, right? if you buy our commodity, gas. that is what you need, not really what we need to sell you. it is not the same. so, the president decided, why don't we have a baseline of 10%? to really understand that everybody needs our economy. our economy is the magnet of the world. everybody needs our economy. let's change that deficit of $1.2 trillion and let's make

america's economy grow and let's balance that out. let's fix that first, and then we will readdress the rest of the world. but we need to fix our trade deficit. $1.2 trillion. it is unbelievable why we don't have those jobs and the rest of the world does. annmarie: scott bessent told me last night this is a ceiling. potentially we could see a different floor. you prepared to negotiate all of these rates? is this truly the start of a negotiation? sec. lutnick: well, it is a start of a rebalancing of the way the world works. i agree with the sec. that our view is that the only way these rates are going up is if countries decide to retaliate. but why would you retaliate against your biggest client? your biggest client says, i want to reorder things. the united states of america is the largest client in the world. of course the countries are going to talk to us.

but they talk too casually. they always talk about their tariff rates. it is like they say, i'm going to cut my tariff rate. you think the reason we don't sell a car is because europe charges a 10% tariff and we were charging 2.5%? that was outrageous, but the key is, they have all of these rules, rules, rules, and rules. one of my favorites is the koreans. we took their cars, right? kia and hyundai. you were going to sell agricultural products to them. when mcdonald's went to send in french fries they would not let them go in because we could not prove the origin of the potato. i mean, you don't understand the scale and depth of how they keep our products out. and donald trump has said, i have had enough. we are going to be treated better. america is going to be treated better, and that starts today. jonathan: why what -- why wasn't russia on that list yesterday? sec. lutnick: because we have

sanctions against russia, north korea, belarus, and cuba, and so we are not supposed to be trading with them. jonathan: thanks for clearing that up. the additional question about mexico and canada, they were also noticeably absent. i would they absent? -- why were they absent? sec. lutnick: they were operating under rule that was set for fentanyl, right? that they needed to close the border and stop fentanyl. what that rule is, usmca, the major trading is exempt, right? and the other products they do have a 25% tariff. when that is resolved -- so we are not going to double count it. that is not the way it works. when that is resolved they will fall into a model like this, but i think usmca continues to be exempted. so, car parts, for instance, don't come with the tariff. if they end up being finished in american cars.

if you are building your car in america and getting parts from canada and mexico, that is fine. american cars still come with no tariff. jonathan: the additional question we had on numbers, what is the tariff on china now? the complete tariff, including everything? what is that now? sec. lutnick: it was a 20% tariff because they continue to make the ingredients for fentanyl and send them out. those ingredients have the highest subsidy rate in china, meaning the chinese government is paying these factories to make these goods, the ingredients for fentanyl, which is killing americans. right? donald trump put a 20% tariff on that, and now the regular trade deficit number right? the analysis by the council of economic advisers and the u.s. trade representative, we have a 34% tariff.

it is 54%. when they stop making ingredients for fentanyl. in 2019 president xi told president trump he would put the death penalty on anyone who made fentanyl. and now he is actually subsidizing them. that is just -- that is just so, so, so wrong that donald trump is just -- he's not going to stand for it and he has to hit them. annmarie: on china as well, what about the 301 tariffs that were put in place under trump 1.0 and carried on through the biden administration? that is about 25%. do they get added to this cumulative number? sec. lutnick: they do, indeed, but those are on specific product segments and those still are as well. annmarie: so we are talking about 79% for some imports, cumulative? a 79% tariff from china, is that

accurate? sec. lutnick: on certain products that could be true, sure. all they have to have is a phone call. all they have to have is a phone call from president xi to president trump saying, going to end fentanyl production that is killing americans, and it drops 20%. that is a pretty inexpensive phone call, but you have to make the decision you are going to stop killing americans. so far they have not made that decision. shocking, but they haven't. you have to think about that for a minute. a phone call would save them 20% on all of their products, but they would have to stop making the ingredients of fentanyl, and they refuse. outrageous. annmarie: has your counterpart reached out to set up that phone call between is internal -- president trump and xi jinping? sec. lutnick: president trump and g, they are not going to be -- when that phone call gets made i don't think they are

asking me to set it up. i think that is above me. jonathan: does that tell you something about the leverage you think you have perhaps you don't have over the chinese? the fact that they are not doing those things, despite the fact you have put tariffs up as much as you have? sec. lutnick: well, we will see. remember, these tariffs are just going into place, and i think they will have that phone call. and they will have lots of conversation together. i think for me the greatest thing for me is that donald trump is sitting behind the resolute desk in the oval office and he is the greatest you make her, and he will decide how he wants to play his hand, but the way he has played his hand now is, he has been talking about this for 35 years. wants to reorder trade to have the world stop exploiting us, to bring the factories back, to bring employment back. no one thought about when nafta, he called yesterday the worst trade deal ever. what nafta did, it gave canada and mexico sort of the economic

right to be estate of the united states without paying federal tax, and without respecting the constitution. if you could build in mexico a drive to texas and building canada, just drive across the border, it was all fine. and no economically equal to being alabama and georgia. so, what happened is, how manufacturing left america and put those americans out of jobs, and donald trump wants to bring back factories, bring back those jobs, and they can come back. $5 trillion worth of commitments to bring back those jobs is pretty unbelievably impressive, and that is what donald trump is capable of. jonathan: also impressive is the selloff this morning. how much pain are you willing to tolerate? the s&p is down by 3.7%. the dollar is being sold quite aggressively against the euro in one of the biggest moves we have seen in the last decade. how much pain are you willing to tolerate? how much market pain are you willing to tolerate?

sec. lutnick: donald trump is focused on economic pain that the united states of america has suffered over decades. since nafta, 90,000 factories, not jobs, factories. 5 million high-paying jobs gone overseas. he is focused on the u.s. worker and the u.s. economy. and what is going to happen is people are going to realize it is the great american economy that is the winner here. and anyone who doubts that, and anyone who shorts donald trump or anybody who doubts the strength and power of the american economy is making a foolish bet. sure, importers are going to have a tough time figuring out what to do, because they went and found the cheapest production in the world. it is time to bring that production home, to have the smart, amazing people that run american companies figured out, bring robotics back to america. i would say that united states domestic growth is going to have

the greatest resurgence ever under donald trump, and that is what he has set in motion yesterday. jonathan: you will except it takes time to engineer a supplied side response? do you accept that? sec. lutnick: of course it takes time to build factories, but companies understand how to do it. they will do it. the united states of america is the greatest economy in the world. people have to do business with it. the rest of the world will bring down their trade barriers, and you will see a great resurgence in our ability to sell agriculture overseas. you will see factories being built here, and that production will be faster. there will be a rebalancing of those who make things in cheap labor markets, figuring out how to make them here, but ultimately speaking, and i think in much less time than you think, the world will reorder itself, figured out, and the

united states growth rate will turbocharge compared to the rest of the world. we have been too close to them because our presidents have been presidents of the world. and donald trump ran on the policy that he was going to be the president of the united states. of the workers of the united states, and he was going to place american workers first. and that is what he did yesterday, and that is what everybody is feeling. those workers have been disrespected, and now they are going to be respected. jonathan: a final question, if we may. any conversations with the europeans? those negotiations start immediately? can you give us a sense of things? sec. lutnick: absolutely. our teams are talking to all of the great train partners today. and we are available for our great train partners every day. it is time for them to do deep soul-searching of how they treat us poorly. and how to make it right. it's time for them to do that.

it's going to be difficult for them, because they have taken advantage of us for so long, they should just be disappointed that the free ride is over. it is time for them to be realistic and change the way they look at the united states of america. i think that is going to happen starting today. jonathan: i think it is changing in real time, sir, in many ways. the u.s. commerce secretary on the trade tariffs announced overnight from the united states of america. and ray, a strong push from president donald trump. a strong defense from the commerce secretary and a big round of negotiations coming right up. annmarie: i think we ended it right there. the negotiations start today. he said he's getting on calls with his trading partners. he says the trading partners need to do some soul-searching. it sounds like this is a kickoff to negotiations but i did not get a sense that there is any urgency right now to have those deals and negotiation trap up before april 5 and -- when the 10% tariff takes place, and then

april 9 for those reciprocal tariffs that are much higher rate on certain countries. jonathan: lisa, the clock is ticking. there is only a week to go. lisa: howard lutnick's response to what happens between now and april 9, not a whole lot, it tells you to emphasize marie -- annmarie's point, it is hard to see the offramp of what could get struck if this is about rejiggering the entire trade system. there is a key question that seemed to be answered with a bit less urgency than the market feels, which is they are willing to look through quite a bit of wall street pain with the -- with the idea that ultimately mainstreet could benefit. jonathan: which is why this market is down and near session lows. we are down 3.6% on the s&p. coming up tomorrow, payrolls. here is your guest lineup. we will catch up with john stoltzfus, j.p. mers rep -- priya ms. ruck, mohamed el-erian of queens college cambridge, and the new u.s. labor secretary. from new york city this morning, thank you for choosing bloomberg

tv. this was "bloomberg surveillance." ♪

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pres. trump: this is liberation day. i will sign a historic executive order instituting reciprocal tariffs. china, 67%. we are going to be charging a discounted reciprocal tariff of 34%. european union, they are very tough. taiwan, we are going to charge them 32%. japan, we are charging them 24%. we will impose a 25% tariff on all foreign-made automobiles. we will establish a baseline tariff of 10%. promises made, promises kept. katie: that was donald trump detailing his plan to impose the steepest american tariffs in a century. stocks set toi