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the north korean leader that he was canceling a planned june 12 summit. new jersey democrat robert menendez told secretary pompeo, the art of diplomacy is a lot harder than the art of the deal. robuste we applaud the dramatic efforts to try to denuclearize the korean peninsula, many of us are deeply deeprned that the lack of reparation that is necessary before such a summit is even agreed to was not taking place. said it's menendez pretty amazing that the administration might be shocked that north korea's acting might very well normally act. -- issued a statement of her own free will. she was poisoned along with her father in a nerve agent attack, gave a taped interview. a spokesman for vladimir putin -- rights haven
been respected by british authorities. its $717 has passed billion defense policy bill that would give the military a 2.5% pay hike. major budgetgot a increase under the terms of the deal. the measure goes to the senate. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. shery: i'm shery ahn. amanda: i'm amanda lang.
here the top stories we're following from around the world. it on kindred president trump cancels the historic summit over the north korean leader's recent statement and says the u.s. military is if necessary. trump alsoident launching a probe into auto imports. applyingt attempt at pressure on canada and mexico to strike a nafta deal. and shares tumble after the canadian government blocks a proposed $930 million sale of that construction firm to a chinese buyer. let's get started with a quick check of major averages. u.s. stocks paring back some of its earlier losses still in the red for the dow which is down .3%. it's down to session lows following the release of president trump's letter to north korea calling off his summit with kim jong-un. the s&p 500 is down .2% while
the nasdaq is essentially flat. as earnings season winds down investors turning their attention to geopolitical uncertainty. energy is also leading the declines it -- leading the declines. amanda: one of those geopolitical concerns is the specter of new tariffs this time on automobiles. the u.s. chamber of commerce already responding today warning president trump against those tariffs. a look at the share of foreign automobiles in the u.s. market. after peaking at close to 30% is hovering around 25%. fully one quarter of the vehicles purchased by americans would be hit with these tariffs if they went through. a big bite and one that many are warning would cause severe damage to the producers. shery: we will be talking about that later in the program. now to our top story.
president trump calling the canceled summit with north korea a setback for the world. president trump also declaring that the u.s. military is ready for any potential conflict. >> i have spoken to general mattis and the joint chiefs of staff in our military which is by far the most powerful anywhere in the world. it has been greatly enhanced recently as you all know. is ready if necessary. byrne,let's bring in tom president of the korea society. great to have you with us. we finally got president of south korea's response to this cancellation thing that he wants leaders to have direct closer conversation, that piece on the korean peninsula cannot be abandoned or delayed and that is regrettable. tim, thedent trump and summit won't be taking place. he was essentially caught by
surprise because he was just in the u.s. meeting with president trump this week. >> i wouldn't say it was a total surprise because probably in their conversations trump .xpressed his reservation there has been a lot of criticism or questioning by experts on president trump's decision to meet north korea's kim jong-un. meaning that it would be very unorthodox way of negotiating from the top down. but evidently the u.s. government has been trying to negotiate with north korea to make the preparations at the working level and apparently therding to mike pay up north koreans weren't responsive enough. so that i think was a contributing factor to president trump writing that letter. we heard president trump continue to emphasize the u.s. military capabilities at a time when north korea just destroyed their nuclear test site whether or not that was a functional test site who knows. they still went ahead and did that. they released u.s. detainees.
what is the option for north korea to still try to save face and not continue to escalate tensions in the peninsula? >> let's go back a little bit. north korea's foreign affairs spokesman or specialist made a statement that the u.s. doesn't want to negotiate at the peace table, we will go shoulder to some sort of nuclear confrontation. that could have then what prompted trump to remind the north koreans that the u.s. has a formidable military. i think in president trump's letter he still left the door open. should you change your mind we will come back and negotiate. certainly president moon would be disappointed because he trying toat stake make north korea make a strategic decision. in other words choose economic
development for regime survival rather than military prowess. amanda: president trump characterize this as something he was left with no option over today. where does it leave south korea and its ability to negotiate more directly with north korea? >> i think what this means is there has to be more of the orthodox diplomatic preparation for a meeting that would have consequential importance on the korean peninsula and the future of north korean government. people will have different opinions on this. even despite the cancellation of the summit are we worse or better off given there was at least an attempt to have a conversation? >> i think that's the way senior american officials in the white house, that this was an opening for a breakthrough.
and the payoff may be as remote as it would lead the probability, which is so great that we had to try it. opening't say that the has been completely closed because there was a lot of talk or criticism that trump was moving too fast. and maybe kim jong-un was criticized but then pyongyang is moving too fast as well, that the bureaucracy and the army weren't really ready for this. if north korea went ahead with this by really prioritizing economic development, north korea doesn't have any resources really. taking stuff meant from the military and putting it into civilian economy. amanda: as the world watches is the nuclear threat higher today than it was yesterday or it might have been? >> we are considering all of that. so i guess if markets reacted it
would be higher. i think the u.s. wouldn't follow and path very lightly diplomacy would still be a priority. youy: what does it tell that president trump keeps saying that kim jong-un's attitude changed after the second meeting with president xi jinping in china? do you buy into that? >> this is the way i look at things. the first encounter between kim jong-un and the senior south korean delegation when they had that dinner in pyongyang, the reaction in top levels of the korean government was it's almost too good to be true. it was so unbelievable, this about-face that kim jong-un had taken in january and then further in february and march. so this unconditional love that kim jong-un showered upon south korea and the u.s. and the rest of the world has changed and conditions started to be made and demand by north korea. so we could be back into a more
real situation but i think progress has been made and perhaps we can still build upon it in establishing some sort of long-term peace for a more stable north korean peninsula. shery: you are much more optimistic than i am. up, stretching a section 230 two. your bmw could be a problem. president trump threatens u.s. allies with another round of tariffs, citing national security. this time on imported cars. this is bloomberg. ♪
lang. president trump threatens u.s. allies with a new round of tariffs overnight, ordering the commerce department to investigate auto imports over possible threats to national security. secretary wilbur ross commented on twitter yesterday saying the department will conduct a thorough, fair and transparent investigation. the threat is seen as the latest move to put pressure on the president's nafta partners to strike a new deal. it's hard to see how auto parts our national security concern. we do know that autos are front and center in this nafta negotiation. >> it's hard to imagine by any car imports could pose a national security threat. right now some of the reaction that we have received from allies who export to the u.s. even from car manufacturers, their biggest question right now is how is this possible. what could be the threat here.
what we have heard from secretary ross over the past day if thee's this idea that u.s.'s manufacturing base is in decline that puts the country in a pretty vulnerable position and also that means the country is in a bad spot economically. if we are in the down and out's economically been of course the u.s. will be more vulnerable. i think this was a bit of a shock. it's just the beginning of an investigation. there has been no findings yet. if we look at trump's tweet yesterday before this we definitely get a hint that he thinks this will create jobs in america. amanda: we were already seeing the chamber of commerce responding saying auto producers in america are doing great. i was curious about how you define a foreign vehicle being imported because very few cars are shipped fully made to another country. they tend to be assembled in the country where they will be sold. are we talking about the parts coming from foreign countries? parts are included in this
probe. more widely if you think about the global supply chain and an example of how integrated it is cars always come to mind even in north america. a car and its components crossover the border several times before it is assembled and sent to the dealership and eventually someone buys it. i think it's a really big concern right now that this is going to offend supply change -- up and supply change. the administration is demanding that a certain percentage of a car be made with higher wage sort of i guess you are trying to get more production back in the united states so this just adds on top of that uncertainty about supply chains and how accessible is parts are going to be. shery: sarah mcgregor, thank you for joining us from ottawa. in new york is founding partner
at rhodium group. sarah and amanda mentioned pressure to get a deal on nafta that this is also pressure against china, isn't it? will it work when it comes to negotiating with china and what risks does this new strategy carry? trackis so hard to keep of all the various threats and negotiating tactics that are being employed almost on an hour to hour basis. that wereriffs suggested presently really don't seem to have that much to do with china per se. it does seem to be part of the white house's conception that by showing we can be tough on anybody whenever we want however we want, that somehow will translate into leverage with everyone at the same time including with the chinese. on china, theance sort of guiding principle down inside the beltway is to be strategically predictable and operationally unpredictable, to
negotiating partners on their toes. we don't really have strategic clarity either right now. getting some clarity from president trump's tweet. really not that much. end weay he said in the will probably have to use a different street -- trade structure with china. -- much does this printed in threatened to dismantle the production chains that have been built over the last few decades? >> they definitely assume the china of the future was going to be a lot more like us economically. regulation, how they managed competition policy issues. they were going to be a lot more like us, a lot -- not less like us. where the president is right is indications about where beijing is trying to go with how the chinese economy is run in the iture is not as clear-cut as was to even the most hardheaded
analyst five or 10 years ago. translating that into a new american strategy for how we are going to adjust, taking account of all the things we need to, i don't see that with anywhere near adequate clarity yet. amanda: one of the damaging things about this rhetoric is it reverses decades of thinking around tariffs that they are bad and should be lower. change? that >> i don't think it reverses that logic. it puts it to the test. unfortunately when we don't remember history every now and then we have to relearn it. maybe higher tariffs can somehow compel concessionary behavior by american trade partners. doesn't usually work that way and especially doesn't work when it's completely out of alignment with your business community. i know you cited u.s. chamber's reactions to these auto tariffs.
john murphy putting out a couple of clever tweets in the past hour or so. so i think there is a long way to go before the logic of lowering trade berries is really under debate. it's not. we areotiating purposes threatening to unilaterally raise our barriers but no one can really argue that you going to make everything more expensive for the american consumer. the debate is whether it will be more painful for us and for them and that's not really a modern making their policy. shery: all of this coming at a time when trade ministers start their meeting tomorrow. china is participating. after the u.s. withdrew from the tpp how much leverage does china have now? and who is winning in these trade negotiations? according to some people, china is. >> you have to show up to be in the game. happily i do think we've got a deputy u.s. trade representative recently confirmed who is also
for the time being ahead of our xm bank. that's a good sign that we are putting the right kind of guy at the table. while there are some really disappointing signals in the u.s. reluctance to be part of tpp, the fading of the prospect of the president rethinking that. you can't take from that that china is ready to be an engine of progress and liberalization in the region either. china has at last year's apec summit, the president made some big statements about china's foriness to be a leader regional openness. it's rhetoric isn't backed up either. amanda: daniel rosen, thank you. , prime minister justin trudeau deals a blow to construction firm a con. nearly $1 billion deal that fell apart. this is bloomberg. ♪
shery: this is bloomberg markets. i'm shery ahn in new york. amanda: i'm amanda lang in toronto. shares of american construction firm a con are having their worst day since 2008 after the canadian government blocked the deal with china communications construction. josh win growth is with us now from ottawa. this was a long review and the government picks explaining that it's for national security reasons. how surprising is it you this is a state-owned company. >> i think the question was whether they could pass this with conditions and hide off some of the more concerning parts of the company from a security standpoint or whether they were going to just block it. remember trudeau wants to build ties with china. ofhas a long family history barking up that particular tree and he seemed to be open to this so i think for them to come down and say that should have showed
that trudeau doesn't have an adult cost. people were surprised to see the company jump back. the shares are down 17% today essentially back to where they were in august when news of them exploring a sale first came out in the first place. we have been on this roller coaster ride for the last nine months and we are back to where we are. who knows what the reaction will be because candida at this point is trying to say this is an isolated case. we will see how easy that is. a knee-jerk decision. they took their time with it. they were trying to find a way to let this happen. our the national security concerns legitimate when you consider the kind of projects that this company does? does this chill other chinese investment or can we say this is quite specific to this one industry? >> i think there are people who would say that they wanted this to go through.
some of the industries that were ,lagged for telecom, nuclear some work that was done regarding military housing and facilities. i think it just got to the point where you would be splicing off so many different parts it would be too complex. take theirnly did time. we asked the minister this morning in a feature in ottawa what was it that killed the steel -- this deal? he wouldn't name a particular sector. he did say he took the advice of the security agency. in other words national security agencies in canada said, block this thing. shery: we have just 30 seconds. quickly, this coming a critical time when canada is considering trade talks with china. >> and dealing with talks with the u.s. now they can say to donald trump, look, we are tough on china, too. we had our own timelines on this.
scarlet: live in bloomberg world headquarters. the top stories we are covering on the bloomberg around the world. summit canceled. president trump scrubs a meeting with kim jong-un sending markets reeling. accelerates the push to revamp germany's biggest lender. crypto underscore new. the justice department opened a criminal probe into whether traders are manipulating the price of bitcoin and other currencies. u.s. markets closing in two hours. stocks were tumbling. >> the dow was down 1%. ashave seen volatility traders have been watching