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Joe Weisenthal
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Joe Weisenthal
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Joe Weisenthal
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Joe Weisenthal
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Bloomberg Balance of Power Intro/Outro
Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [00:57]
Joe Weisenthal
Clearly a lot for the markets to track today from the economic data and of course, the driver of some of the higher inflationary pressures we're seeing in the economic data, which is geopolitics in the Middle east, specifically, with the ongoing closure of the Strait of Hormuz and no clear sign yet as to how exactly that particular issue is going to be resolved. Of course, there's other players in that game. It's not just about the US And Iran, but other countries, and President Trump has said this repeatedly, who need the energy that flows through that strait, like China, for example, the biggest buyer of Iranian oil. But it's unclear, and Joe mentioned this a moment ago, to what extent the Strait of Hormuz or the conflict with Iran is going to be the dominant topic of conversation, which when China Xi Jinping sits down with President Trump in Beijing later this week. It's a trip he's set to depart on within the next hour or so after previewing it for weeks, remembering, of course, that this is a reschedule of a meeting that was supposed to take place much earlier this year.
- [01:54]
Donald Trump
We're leading China in AI, and I'm going to go see President Xi in two weeks. I look forward to that, but I'll say I'm leading. We have friendly. We have very friendly competition, but it'll be actually, it'll be a very important trip. We're doing a lot of business with China and making a lot of money. We're making a lot of money. It's different than it used to be, but I'll be talking about that'll be one subject. But he's been very nice about this. You know, in all fairness, he gets like 60% of his oil from hormones. And he's been, I think he's been very respectful. We haven't been challenged by China. They don't challenge us. We're going to have a meeting with President Xi. It's going to be, I think, quite amazing. He's been a friend of mine. I've gotten along with him very well over the years.
- [02:42]
Kaylee McGhee
We'll see if they continue to get along well when the president arrives this week. That's where we start our conversation with Michelle Giamrisko, who covers the White House national security for us and an editor here in Washington with the headline Trump Faces Emboldened Xi in China as Iran War Clips US Leverage. Is that how you're seeing it, this conventional wisdom that the president is carrying more baggage with him now? And I'm curious what President Xi makes of Donald Trump, sees him as an equal.
- [03:11]
Michelle Giamrisko
I think the White House would certainly take issue, of course, the idea that Xi Jinping is emboldened in any way or has more leverage than they do. I think both sides have reason to believe that they have the leverage and certainly around, you know, something like Iran, but also trade issues and other issues that will come up. But, you know, I think what you saw with that montage there was, you know, President Trump, as usual, being at pains to underscore the great relationship that he has with the world's second largest economy, trying to promote some sort of stability and also, you know, seemingly, you know, insistent upon the fact that the US Is coming in with a stronger footing. He, in fact, you know, yesterday, if you remember, he kind of tried to put China on the back foot in these issues and really, you know, mentioned that he was going to pressure them on Iran. Why haven't they done more? They have the lever with Iran that other countries do not, in fact, that the US Perhaps does not. So he's really kind of pushed on these issues harder than I think, you know, some headlines would suggest around what Xi thinks he's coming into this summit with.
- [04:15]
Joe Weisenthal
Well, and on the subject of Xi, does he need as much from Donald Trump at this summit as Trump seems to need or want from China?
- [04:23]
Michelle Giamrisko
Well, you know, there's, that's a complicated question. It's a great question. But there are so many issues at hand that I think both have a bottom line interest in creating this message of stability. And also, you know, of course, there's this always an interest that Trump has in kind of promoting the pomp and circumstance of the occasion, showing that he's the big VIP coming in and being hosted and feted by the world's second largest economy leader. So I think both have an interest in this going off without a hitch and kind of downplaying the concerns while also clearly having those conversations with behind the scenes around tech, around Iran, around Taiwan, which is one that you've brought up before, and other geopolitical conflicts that only the two world's most powerful leaders can kind of come together on.
- [05:11]
Kaylee McGhee
Got you. Does President Xi view President Trump as an equal? I know we can't get. He plays it very close to the vest. You can't get inside his head. But the bombast, the mixed messaging, some of the concerns that he sees domestically here inform this meeting in what way?
- [05:28]
Michelle Giamrisko
Yeah, it's a very dangerous question.
- [05:29]
Kaylee McGhee
Yeah, I'm sure.
- [05:30]
Michelle Giamrisko
I think one thing, I mean, you mentioned like the bombasts and the rhetoric coming from both sides, and that's something, of course, that we've had to explore throughout this relationship, is what is actually going on behind the scenes. And also in the lead up to this summit, what are Chinese officials saying versus what is actually going to be communicated between the two leaders themselves, which isn't always the same thing. It's something that we ran into, of course, on the prospects for the summit actually going forward when that was a question as well. So, you know, it'll be interesting to see how the two leaders come out of it. But again, we should remember, out of any of these US China summits over the past many, many years, the US And China will have divergent messages. There's unlikely to be any broad communique that they agree on. So they will have different messages to their own domestic audiences.
- [06:14]
Joe Weisenthal
Well, and maybe there won't be a communique, but will there be tangible outcomes from this? Michelle, you talk about how the end goal here might just be a projection of stability. Does that mean no new, like real agreements on anything?
- [06:26]
Michelle Giamrisko
Well, I mean, you know, the US Would love to come out of this with a basket of new deals. And I think they've signaled as much of, you know, traction on different investments and agreements we know, you know, with any certainty. We just know the Boeing deal is obviously going to be a story about
- [06:42]
Joe Weisenthal
CEO will be along for the ride.
- [06:43]
Michelle Giamrisko
Exactly. And some other CEOs along for the ride as well. But, you know, I think both sides have kind of been at pains also to set low expectations for the so called deliverables. So this really is more fascination around the conversation on the big geopolitical topics of the day, I think.
- [06:59]
Joe Weisenthal
All right, Bloomberg's Michelle Jamir is looking forward to you and the team's coverage of this summit over the next several days. Again, President Trump is expected to depart the White House and begin his journey to Beijing later on this hour. If he makes any remarks, we will bring them to you as we consider not just, of course, what he is aiming to achieve in China, but what China may be aiming to achieve by extension and to what extent China is willing to get involved in the Middle east conflict in a more material way. This is something we got into with Heather Connelly of the American Enterprise Institute on this show yesterday. This is what she told told us. China's stayed sort of on the sidelines here.
- [07:33]
Michelle Giamrisko
They're waiting to see.
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Joe Weisenthal
They want the United States in a weakened position again.
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Michelle Giamrisko
China believes its rise is unstoppable and
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Joe Weisenthal
America's decline is unstoppable. And they believe this is just another
- [07:45]
Michelle Giamrisko
data point that supports their theory.
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Joe Weisenthal
And unfortunately, because the conflict is not resolved in any meaningful way, it really
- [07:53]
Michelle Giamrisko
in some ways strengthens the Beijing's point of view here.
- [08:00]
Joe Weisenthal
And to continue this conversation with the perspective from Capitol Hill, I'm pleased to say joining us here in our Washington, D.C. studio is Democratic Congressman Greg Stanton of Arizona. He represents the 4th districts and also used to be the mayor of Phoenix. Welcome back to Bloomberg TV and Radio. Appreciate it. As we think about the intersection of the president's trip to China this week and the ongoing war and or cease fire, whatever you want to call it, with Iran right now, from your purview on the China Select Committee on the Foreign Affairs Committee, is China potentially a lever that could unlock the Strait of Hormuz? Is it going to take another external party getting involved? If it, if it's clear at this point that the US Is unable to make this happen in the near term,
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Congressman Greg Stanton
it would be very helpful if China got involved, just like it'd be very helpful for other countries around the world got involved. The challenges, of course, and I'm a critic of the, of the president, but of course, the challenge is, is that this president has stuck proverbially the finger in the eye of so many of our traditional allies with these tariff regimes that he's put into place. So we're in a very weakened position to ask for assistance from China. I think China views itself as watching the United States decrease in esteem around the world, in popularity around the world as a trusted partner, and they feel that they are elevating. So I would be surprised if Xi agreed to roll up his sleeves and get more involved in a solution to the Iranian war.
- [09:23]
Kaylee McGhee
What's the conversation that you're having with your fellow members on the Foreign Affairs Committee, I'm assuming Democrats in this case about the idea of President Trump making deals that might not actually favor the United States or maybe might not favor Taiwan to get some sort of leverage to get some action on Iran. Do you actually believe the President would do something like that or is this a false narrative as this trip?
- [09:47]
Congressman Greg Stanton
I don't think it's false narrative at all. Look, the President has brought many top CEOs are looking to do deals for sure he wants investment from China into the United States. As long as it passes a security background check, which any China investment has to do. We certainly support that. But what would he do in exchange? What is he willing to do? And obviously concern about the security of Taiwan said he's willing at the top of the list.
- [10:09]
Kaylee McGhee
What does he mean by that?
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Congressman Greg Stanton
Well, that's, that's a real huge problem. As you know, the United States Congress wants to do a $14 billion sale of arms to Taiwan so they can better defend themselves in case of any kind of incursion or attack by Beijing or mainland China. The president in the past indicated he supports that. The Taiwanese legislature has voted for $25 billion to buy US weapons to defend themselves. And now as we're approaching this meeting between Xi and Trump, it appears that that weapons sale is on the by the wayside. That sends the exact wrong message. We need to make it clear that we are going to help Taiwan in their own self defense.
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Joe Weisenthal
Well, and on the subject of weapons sales, there's obviously a massive question about the own munitions of ours that we have expended in the Middle east to how quickly those can be replenished and what it means for other theaters like the Pacific. Are we, does the United States even have the ability to assist Taiwan at the same level we level we otherwise would have before the Middle east conflict began? If something were to happen in the near term?
- [11:14]
Congressman Greg Stanton
Yes, and I would argue we have to do so. The point you're making is a good one. With our support of the Ukraine in the Russia war against Ukraine, we got to continue to support Ukraine. Now, the President has made what I believe is the wrong decision to engage in this war of choice against Iran. We would have been much better off dealing with this at a diplomatic level, particularly if our goal was to stop a nuclear armament of Iran. The only way to do that is to get at that enriched uranium. And we can't do that without putting boots on the ground. The American people are not going to support Any boots on the ground in, in Iran. So the only way to do that realistically was through a negotiated settlement. And so if someone were to think about doing harm to the United States with our attention diverted, this unfortunately would be a good time. That's why we have to help Taiwan in their own self defense.
- [12:08]
Kaylee McGhee
At this critical moment, looking at gas prices in Arizona averaging $4.80. My gosh, Californians must be driving across the board to tank up in your state. I'm just curious your thoughts on this idea of suspending the gas tax on a federal level. President says he wants to do it. Sounds like D's and ours are lining up. Although John Thune poured some cold water on this last night. There's a question of whether there'll be a legislative answer.
- [12:31]
Congressman Greg Stanton
Well, look, we want to provide some relief to the American people who are suffering. Gas is out of, out of hand. And so we want it, we want to do that. Obviously the, that gas tax normally goes for important infrastructure projects in the United States. So suspending that should be a last choice. But it is an option. If it came before the United States Congress, my guess is that it would be successful. But it begs the question, how do we even get into this mess? This is a war of choice. And the vast increase in gas prices was an inevitable result of the poor decision making by this president. Look, it's very frustrating for the American people to see Iran has done exactly what the intelligence community said they were going to do in light of an attack from the United States. Yet the President acts like this is a big surprise to all of them. It wasn't a surprise. It was inevitable. So for increasing gas prices, the American people know exactly who to blame for it, and that's Donald Trump.
- [13:29]
Joe Weisenthal
Well, when we consider this notion of a federal gas tax holiday, there's a question of how long it would last, at what point, if ever it was to be put back on. And this funds essentially the fund that maintains our highway systems. You sit on the transportation committee. Do you have concern about that and what it would mean for the solvency of the fund?
- [13:47]
Congressman Greg Stanton
Heck yeah. I mean, it's a real issue balancing out the interests of, you know, these ungodly high gas prices that the American people are dealing with. Suspending the gas tax, even for a temporary period, would only bring the price down a fraction of what they, the increase has been just over the last few weeks as a result of this war of choice. At the same time, we are negotiating with the Republicans right now a five year extension of the bipartisan Infrastructure law, one of the most successful bipartisan piece of legislation that has improved transportation around the United States of America. We've got to keep that momentum going. Nothing is better for our economy than investing in the infrastructure of the United States of America. So this is a great balancing of of interests. The sooner we can resolve this Iranian conflict or reach an agreement with them, which means the President, United States has to understand that in order to reach an agreement, you're going to have to win on some things and you're going to have to give on something. That's what a compromise is. And it needs to reach a compromise in Iran so we can get the gas prices down to a regular level and continue to invest in America's infrastructure.
- [14:57]
Kaylee McGhee
I just want to mention quickly, we've got some breaking news on what is the second round of voting now? The the procedural vote to bring Kevin Warsh's nomination to be Fed chair has passed. He has been confirmed as a member of the Fed Board of Governors. This would be the vote that brings him to chair. We haven't gotten to that floor vote yet, Kaylee, but this is an important one. Just 30 seconds. Congressman, do you worry Kevin Warsh cuts interest rates in the face of these high energy prices?
- [15:22]
Congressman Greg Stanton
Well, look, this is a difficult question. Here's why it's so important that the Fed be independent. And this has been horrific for United States reputation around the globe. We're the leading economy. The world relies on us and they rely on us because of, in part, the independence of the Fed. When they make decisions about the interest rates, it's done without political interference. Donald Trump has tragically broken through that wall. Kevin Warsh, when in this position, needs to be as independent as possible and not make decisions based on politics. But what's in the best economic interest of our country?
- [15:55]
Kaylee McGhee
Congressman Greg Stanton, the Democrat from Arizona, thank you for the insights. It's great to have you with us. FDA Commissioner McCarry expected to resign now, according to Bloomberg. Stay with us on balance of power. We'll have much more coming up after this.
- [16:11]
Congressman Greg Stanton
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- [16:40]
Bloomberg Balance of Power Intro/Outro
IBM, you're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa. Play Bloomberg 11:30 here.
- [17:00]
Joe Weisenthal
On balance of Power, we're trying to keep on top of the headlines for you. And as Joe mentioned right before we went to break, we did get some news. Bloomberg now reporting that the FDA commissioner, Marty Makary, is expected to resign. And Kyle Diamantis, a lawyer who previously served as the top food official at the fda, is expected to take over the commissioner role in an acting capacity. Of course, it was the end of last week when reports first started surfacing that President Trump had approved of the firing of McCary. Joe but apparently McCarry's going to say, you can't fire me. I quit with a resignation before that?
- [17:34]
Kaylee McGhee
Something like that, yes. The administration official talking with Bloomberg said while the White House had to sign off on the decision, it was in fact, Secretary Robert F. Kennedy, Jr. Who made the call. Interesting moment. There's been a lot of ink spilled on this the last, what, four days or so since this really entered the the news cycle. So everyone saw this coming. And it's something we'd like to hear from our political panel about before we get on to other matters. Bloomberg Politics contributor Jeannie Shannon Zaino is with us, a Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ash Center. Republican strategist Lester Munson is here as well, principal of the international practice at BGR Group. Lester, once the door starts swinging, it keeps turning. And I guess that remains the case here. Is this a condemnation of the MAHA movement or just questionable management by Mr. McCary?
- [18:28]
Lester Munson
Well, I'm not sure on the management question, Joe. I do think there's a, there's a lot of political crosscurrents here on drug approvals. Some, there's some abortion issues. There's, there's some other aspects of health policy that, you know, kind of didn't necessarily all fit together. And so he, Dr. McCary here seems to have suffered from maybe a overall policy approach that didn't quite fit into what the administration wanted to see. I think it's interesting that his boss, the head of HHS RFK Jr. Who arguably may, arguably may be more controversial, appears to be in pretty good shape with the administration right now.
- [19:13]
Joe Weisenthal
Well, so weigh in on, on that, Jeannie, because this is not the first time we've seen turnover within the wider Health and Human Services Department. You could point to the CDC and other places as well. So what does this say about Bobby's stewardship, as the president always calls him?
- [19:31]
Adobe Acrobat Narrator
I like that Bobby. You know, I think he is still on solid footing with the president, with the White House. He still has a lot of support. But to your point, his management may come up for question as they've been apparently unable to keep good people in these positions. But I think more than that, this really reflects concern, concern about what's going to happen in November. You know, I was struck by hearing the head of the Susan B. Anthony pro life group talk about the fact that McCary should be fired immediately. And you know, I think as Donald Trump's numbers and Republican numbers overall are going down, approval numbers are going down, it creates more of an environment where somebody like McCary, who has some detractors both in and out of the base, this becomes a sort of key point that we should really have to remove him. He's too much of a distraction to allow this to keep going.
- [20:27]
Kaylee McGhee
I just want to mention that when President Trump leaves the White House, he's going to be on his way to China. What could be Momentarily, we will bring you to the driveway. If he's taking questions at the South Portico. We know that they're gathering reporters right now. Lester, Jeannie mentions November and we've got a lot of noise around these midterms right now. Look no further than South Carolina, where we've got a couple of bills now to redraw the congressional map after the SCOTUS ruling. President Trump on truth Social last evening saying that he's watching closely, urging Republicans in the state to get it done in all caps. Alabama, of course, officials moving forward now with their redrawn map after the Supreme Court lifted a injunction blocking that on racial grounds. I could tell you about Virginia. You remember that. I know there's a last minute effort to try to overturn the state Supreme Court ruling that ditched the Democratic map. But I'm just wondering, Lester, what the, what the score is in the redistricting battle right now because it's getting pretty hard to tell by how much Republicans are winning.
- [21:31]
Lester Munson
Well, I mean, that Virginia decision, if it holds, is, is a big deal. That's probably four seats that have swung, that swung to the Democrats and now have gone back to the Republican side. I think I'd give the Republicans a slight edge here on, you know, Machiavellian manipulation of redistricting if that's a Olympic, a new Olympic sport that's coming down the pike. Democrats put up a pretty good fight. They're talking about some extreme measures in Virginia to swing that back the other way again, perhaps firing or laying off the entire Supreme Court and replacing it with a new one. That would that would be quite something if they were to attempt to do that. And there may be some pressure on the governor, Abigail Spamberger, to do exactly that. That'll be fun to watch. But I would say at the end of the day, we're looking at a House race in November that is going to be very close either way. It's going to come down to just a handful of seats, maybe a dozen that are that are worth watching and that are going to determine the future of half of one branch of our government. And I think right now I'd give it a coin flip as to who's going to be in the majority next year, Republicans or Democrats.
- [22:46]
Joe Weisenthal
Well, it's incredible to consider that it even could be a coin flip in a year that so many had been up until even just a week ago. Jeannie describing as what could have the makings of a blue wave midterm year, that it was more likely than not well, more likely than not, the Democrats were going to take the House. And it does seem that it is a bit of a different tune that everyone is singing now. How much of this do you think ultimately is also going to hinge on whether these newly redrawn Republican districts, Jeannie, are actually as read as hoped if we're seeing a watering down of some of them so that they aren't quite so in favor of Republicans, even if it eliminates one safely? Democrats, we have this question about South Carolina, for example, as they consider their own potential redistricting that would write out Jim Clyburn seat. In theory, though, Clyburn suggests he could still hold a seat in Congress even with a new map.
- [23:46]
Adobe Acrobat Narrator
Yeah. And Kaylee, I'm so glad you mentioned that because Jim Clyburn has been very clear and I think this is the danger of these redistricting wars, is that you can try to draw maps to choose your voters, but in fact, we go to the polls in November and we do get a choice. And that's what you're hearing people like Jim Clyburn say that we are going to the polls and in an environment in which the president is approval rating is in the low 30s, gas is nearing in on $5 per gallon. We're in a quagmire in the Middle east in an endless war. The president is underwater even on border, an issue that arguably he's done well on. If Democrats cannot still pull this out in November with that environment. If it goes unchanged, then that is probably on the Democrats. So all of this redistricting has moved in the advantage of Republicans, try as they might to sort of rescale things. But I'm of the opinion you cannot Gerry your man, gerrymander your way out of reality. And the reality is people are unhappy and facing high prices. So I still think democrats get about 4% of the national vote, which will translate into about five votes. They may even get as much as 11 or 12 in the end. Huh.
- [25:03]
Kaylee McGhee
I don't know if we're talking blue wave in that world, Jeannie, if you want to go there, but there is some logic to this, Lester, that, that history and the issues here could be more powerful than any map that one could redraw. What do you think?
- [25:19]
Lester Munson
Yeah, Joe, I think it's to be determined. We're still a long ways off. It's months away. We haven't even really gotten into the summer yet. Iran may be a distant memory by the time folks are going to the ballot box or doing their early voting. I think there's, there's, there's plenty of drama to come, plenty of subplots to resolve personality disputes. Other fun topics. The reflecting pool today. Who knows what it could be tomorrow?
- [25:50]
Joe Weisenthal
Your guess as as good as mine, Lester. It'll be also be interesting come tomorrow to see what the results look like in one state in particular that's holding a primary today. Just bear with me everyone because this one is confusing. Nebraska, already a weird state electorally in the terms of the presidential vote, the so called blue dot because of the way Nebraska system works. Now we have a Senate race where you have an incumbent Republican, Pete Ricketts who is running against, we don't really know at this point, potentially an independent in Dan Osborne or potentially there could be a Democrat in the race also although the front runner Democrat says she's only in the race to drop out so that you just have an Osborne Ricketts matchup. But there's also a conservative anti abortion pastor who is running as a Democratic even though he voted for Trump three times. Joe, do I have that summarize?
- [26:36]
Kaylee McGhee
Yeah, this is great.
- [26:37]
Joe Weisenthal
Correctly Jeannie, what is going on in Nebraska? What does this tell us about the current state of American politics that we're playing these games?
- [26:45]
Adobe Acrobat Narrator
Yeah, Kaylee, you deserve an A plus for that. That was very well done in a very brief period of time. It's hard to do. It's sort of again an example of the gamesmanship we See, in American politics, particularly electoral politics, and it's what frustrates so many Americans. You know, Democrats know, as you just went through, they can't win in Nebraska, so they don't want somebody on that Democratic ticket. They want to clear the path for Osborne to move right through. And of course, you've got Cindy Burbank. She's saying, I win. I'm stepping down and handing this thing over to Osborne so he can take it. But then you've got this pastor, and the Democrats are claiming he's a plant by the Republicans. And so between that and the blue dot race that's going on to fill on vacancy, Nebraska gets the weirdest, oddest, strangest elections of the 2026 cycle.
- [27:39]
Kaylee McGhee
From the blue wave to the blue dot. Lester, I don't know. So you got planted candidates on both sides here. I think Politico reached for the term gamesmanship. Lester, is this just how you win the game?
- [27:52]
Lester Munson
Listen, it's, it rewards the system, rewards entrepreneurship and creativity and brazenness. Lean in. Go, go for the brass ring here. Don't, don't let anyone slow you down. I find it to be very inspiring, Joe,
- [28:10]
Joe Weisenthal
but just in our, in our last minute here, Jeannie, even if this works out the way the plants want it to, if we're calling them that and it is an Osborne Ricketts mashup, Osborne tried this in 2024. He lost to Deb Fisher then by seven points. What would be different this time around?
- [28:25]
Adobe Acrobat Narrator
Well, we don't know. I think what we're going to see, Kelly, is a lot of money flow into that race. And that's one of the lessons of these primaries. The amount of money flowing into these primaries is just another reminder as to how close all of this is going to be to Lester's point, because control of the House now rests in like 18 seats across the country. And of course, the Senate, you add to that and the money is going to be flowing to try to see if Democrats can help this independent and sort of making him a Bernie Sanders, I guess, an independent that caucuses with them.
- [28:58]
Joe Weisenthal
Well, if it is all a game, certainly you have to pay to play. Jeannie Shan Zaino and Lester Munson, our political panel today.
- [29:04]
Kaylee McGhee
I told producer James I was afraid to do this story because I confused everyone. But you did it.
- [29:08]
Joe Weisenthal
Well, everyone still probably is confused. I'm a little bit confused. It's a lot to keep track of. We have more to keep track of as we turn back to the president's trip to China. That'll be ahead here.
- [29:17]
Kaylee McGhee
Stay with us on Balance of Power. We'll have much more coming up after this.
- [29:24]
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Joe Weisenthal
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Public and IBM Advertiser
See complete disclosures@public.com disclosures.
- [30:24]
Bloomberg Balance of Power Intro/Outro
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
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Kaylee McGhee
Standing by to hear from President Trump. At least we're going to see him. It appears he's in the Oval Office right now, is about to make his way out onto the South Lawn to get on Marine One and make his way to Andrews, where, of course, Air Force One is waiting for him. This is the big trip to China. President will be taking off shortly if he does take some questions from reporters. We've got our eyes on the Colonnade right now. We'll of course bring it to you. Kelly. We've got some information on not only the corporate executives who are going to be traveling with the president, but members of the administration. This is coming from the pool and we're just getting a sense of who's going to be on Air Force One. A couple of Trumps. Eric Trump. Yes. Lara Trump. Yes. The first lady, on the other hand, will not be on board. Secretaries of State and Defense, Rubio and Hegseth and the ustr Jamison Greer among those who are going to be attending these meetings. So we're not hiding from any stories. And the defense secretary and the head of trade is the room.
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Joe Weisenthal
No, certainly not. And of course, the treasury secretary, I think, is going to reconvene with the team in China, having traveled to Japan.
- [31:42]
Kaylee McGhee
Yes.
- [31:43]
Joe Weisenthal
First on a more extended trip to Asia. But yes, the presence of the Secretary of State and the USTR specifically underscores how this is in part a diplomatic conversation. Perhaps you will have some geopolitics on the agenda, including the Middle east and the Strait of Hormuz with the ongoing commercial conflict with Iran, but also what this summit may have been about prior to a hot war starting in the Middle east, which is predominantly issues around trade.
- [32:11]
Congressman Greg Stanton
Yes.
- [32:12]
Joe Weisenthal
And things like critical minerals, for example. So that's what we wanted to get into. Now as we turn to someone who used to be inside the ustr. She served as Senior Trade Representative for China at the Office of the United States Trade Representative and now is Managing Director at Beacon Global Strategies, Sarah Schumann, who is here with us in our Washington D.C. studio. Sarah, great to have you here on Bloomberg TV and radio. Can you just set a baseline expectation as to what we can reasonably assume is going to come out tangible from this summit between Trump and Xi?
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Sarah Schumann
Thanks. Yeah, it's great to be here. And I'll say I think the symbolism of this trip is really important. Remember the last time that President Trump went to China, it was 2017. A lot has happened in the relationships since then, whether it's trade and technology confrontation. Covid. Right. The war in Ukraine and now in the Strait of Hormuz. So much has happened in the relationship and the relationship is now really framed around a strategic competition, whereas before the relationship was thought of much more in the sense of, you know, mutual benefit and win, win. So I think the symbolism, symbolism of him going right now is itself a major signal that despite tension in the relationship, the open lines of communication remain between the leaders. On the substance, the White House has been managing expectations quite a bit. Everything out of the White House signals that they want to keep expectations rather low for any particular deliverables. They are talking about deliverables around agriculture, aircraft, maybe in some other discrete sectors. But they really want to focus the attention on the more symbolic deliverable around a potential Board of Trade that might be announced.
- [33:55]
Kaylee McGhee
Speaking of symbolism, it was noteworthy to see this list of corporate executives joining the President on a trip to China, not including Jensen Huang. You mentioned some of the water under the bridge. Since this last visit, there's been an enormous debate about export controls when it comes to high end chips, those that are made by in video. And we've heard a lot of on again, off again talks about what China should and should not be allowed to buy. Is the idea that we're saving the best for last or we have to have one meeting before we get to the real issue at hand. Why wouldn't Wang be in this massive group of executives?
- [34:31]
Sarah Schumann
Yeah, it's a really good question. I mean, I think the administration has signaled that with this concept of a board of trade, they really want to be able to display, discuss non strategic sectors, areas where their national securities are not front and center, but where the two countries can continue to trade and even expand trade. And they're looking at things like pharmaceuticals, but also aircraft, agriculture. And in those areas, I think they're also looking at chips, but not in the advanced space. Right. So you're, you're seeing other CEOs go from other chip companies, but that are not at that sort of in that, that particular area. And I think that's an intentional signal that those issues are not on the table for this discussion.
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Joe Weisenthal
I'd like to quickly bring our audience's attention to some headlines that just crossed the terminal. An appeals court has halted the order from last week that came from the Court of International Trade declaring the President's new Section 122 tariffs unlawful. Of course, this was the 10% balance of payments tariffs he implemented after the Supreme Court court struck down his IPA tariffs. The Court of International Trade last week has said those were unlawful, but appeals court again has halted that order for now. They're weighing a bid for a longer pause on that. But what position does this put President Trump in going to talks with China that are going to be, at least in some part, about trade? Why would China credibly believe that this is a lever that the President can still pull without massive legal challenges?
- [35:55]
Sarah Schumann
Yeah, no, it's a great question. I think a lot of people are pointing to this as showing that the President is going in with a weakened hand, but I would say actually quite the opposite. Section 301 is actually the main tool that has been used to impose tariffs on China in the past. In fact, during the President's first term, there were several rounds of tariffs imposed on China using Section 301. I lived through that when I was, you know, our representative to China. I had many sleepless nights waking up to, you know, another announcement of tariffs on China, which the President was able to accomplish through section 301. And so I mention this because whatever happens on section 122, it's basically irrelevant because the President can still use section 301 to impose tariffs. And they have shown that there are a number of different investigations in place that they can use Section 301 to accomplish that in pretty short order.
- [36:44]
Kaylee McGhee
So give our audience a sense of how to judge the success of this trip and what you're going to be looking for, particularly when it comes to dealing with China. There's this battle of the communiques. Who can get to the reporters first. Is there going to be a readout? We haven't seen an official White House readout that was not a truth social post. I think maybe in this entire second term, Kaylee, a lot of traditions like that kind of go out the window, but this is sometimes, you know, the battle of the PR machines at work here. What should the White House be prepared for?
- [37:19]
Sarah Schumann
Yeah, I think that for the President going in and just having this meeting itself and showing that there are some benefits that come from the stability that has been reached is sort of, is the goal. Whether or not there are big numbers to be announced. I think he would like to see some major, major deliverables with big numbers attached. But I think that we all need to manage our expectations. And I think we also need to realize that in the past, including when he went In 2017, the United States was really pushing China to make fundamental changes to its economy, really take on a more market based approach and address long standing trade concerns. We're not trying to do that anymore. Basically the United States, through successive administrations, including the last one, has realized we're not to going, going to be able to push China to take on those sort of bigger structural issues. And so instead what we're really looking to do is just manage, manage those disruptions. We can't fix it, but we're going to manage it. And so that's why I think a successful trip looks like frankly, that they're just managing this relationship well without the United States really giving over too much under Chinese pressure.
- [38:29]
Joe Weisenthal
Well, and it's one thing for the US to manage its own relationship with China, but how much is that complicated by the relationships China has with other, with other countries who may be pushed even more toward China due to some U.S. policies under this administration?
- [38:46]
Sarah Schumann
Yeah, I think that the administration and the way that it's approached tariffs and other issues has in many ways alienated a lot of the allies that really the United States needs needs on board to pressure China because the US can't do it alone. Right. It's going to require the help of partners and allies. I thought it was very important symbolically that Secretary Besson is going to Japan before he arrives in Beijing. I don't think that's an accident. I think it's a very strong signal that our allies in Asia are very key to our our relationship with China.
- [39:18]
Kaylee McGhee
We've got a live view for those of you on Bloomberg TV and watching us on YouTube, of President Trump making his way from the Oval Office. And it appears he's going to be coming over here to talk to reporters who have been lined up just on the south side of the White House before he gets to Marine One, of course, then on his way to Andrews and to Air Force One, which will carry him to China. President's got a dark suit, yellow tie today. It looks like he's in the mood to talk. Let's watch and listen. Sarah, thank you for your interest insights. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington, D.C. at noontime eastern@bloomberg.com
- [40:07]
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