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tv   Bloomberg Markets Balance of Power  Bloomberg  June 20, 2018 12:00pm-1:00pm EDT

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children, republicans rush to try to fix the growing prices of small children separated from their parents at the southern border as the president urges congress to step in and says it is not his fault. ceos urge caution on u.s.-china trade disputes, saying it may be part of negotiations. the white house trade official trade -- says moving forward effectively is essential for u.s. economic security. mexicoth europe and targeting bourbon for retaliation against u.s. tariffs on steel and aluminum, we talk with the governor of kentucky. shery: let's start with breaking news, we have learned that traders of deutsche bank unit
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suffered a one-day loss that was massive, 12 times what internal risk officers estimated for regulatory purposes. the bank may lose on a typical day. andreak it all down there how unusual -- we break it all down. how was usual was this loss? >> to times or three times that two or three times would be value risk a measure. it was outside, so much so that regulators asked questions, including the federal reserve. it was offset in different parts of the bank. david: this would be alarming with any bank by deutsche bank has a history, already on a watch list from the fed. the fdic has put them on a list and this has to raise questions with regulators. >> what they are controlling eternally -- internally but
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harder for u.s. regulators because they only have one part of the picture. if you are a u.s. regulator, you can only see what is in the u.s. operations. david: we are about to get results of the stress test, quantitative results, this afternoon and the u.s. subsidiary for deutsche bank as a part of that and will that be included in the stress test? >> we are looking at this tomorrow. we have a lot of questions about what it will look like. operational risk is part of all of the equation. operational risk is what the fed is looking at. whether this was operational risk or -- there are questions about what this was. we say it raises questions but all we know is there was this outside day that was two times, three times, four times bigger than anything. shery: what is the significance of this when we tried to get a glimpse on to their trading exposure? >> it kind of goes back to what we talked about before. u.s. regulators can only see one
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part of the book. the fact they have been outside trading day, that was potentially offset elsewhere in the bank, what risk is happening in the u.s. and what is being taken abroad? as they restructure operations, what does that mean for u.s. operations? shery: deutsche bank has a lot of problems, how is the u.s. business doing? >> they are retrenching their u.s. investment bank. however, we wrote that they laid off five emerging markets traders. we are seeing different parts of the bank being let go and reshaped. some of it is intentional and some is not. some top stars have been leaving did -- leaving. david: print reporting, thank you -- great reporting, thank you. at mixed looking action for the major averages with the dow down slightly after opening up 4/10 of 1%.
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the dow now on facebook seven down day in a row, the longest losing streak since march of 2017 on the trade war concerns which have appeased to some degree. a fractional loss. s&p 500 and nasdaq are higher and the s&p 500 up for its first time in four days. investors looked past the trade war concerns. technology shares rallying which is why the nasdaq is outperforming, up .9%. let's look at media movers. 7%res of fox are soaring, up after fox accepted a new bid from disney that is about $38 per share versus the previous bid of $20 per share -- $28 for sure. -- per share. fox say other aspects of the bid make it superior. shares of fox up more than 90% since disney's original bid last
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december. other movers, some laggards. oracle down 7%. they reported earnings, what investors do not like -- they have decided to change the way they are reporting cloud revenue. perhaps cloudiness. worst daydown 8%, the since -- after they say they will close stores in the u.s. gave ae a global -- global cop that fell short of estimates and shave their profit view. fedex down 1.2%. they beat fiscal fourth-quarter estimates but their midpoint of their profit view was not cutting it and investors punishing shares to a small degree, down about 1%. oil is trading higher. highs.up 2% at session ahead of the opec meeting tomorrow were largely it was
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thought that opec may discuss boosting supply, but there has been some wondering about whether or not the brand will go with that. they areinister said optimistic a deal will be met. it will be interesting to see what happens. david: thank you very much been -- thank you very much. president trump says he will be signing something shortly on immigration that was called a preemptive act. ap reported that dhs may be coming up to the border to keep families together but we do not know. president trump says he will sign something shortly on immigration. up, we talk about the threat of a trade war between china and the u.s.. this is bloomberg. ♪
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shery: this is bloomberg markets: balance of power. david: we get to mark crumpton for the first word news. >> a report the donald trump administration may be backing down from its continental border policy -- controversial border policy. -- they say an order is being drafted to end the policy but not clear of president trump it will sign it. the president though said he will sign something to keep families together. lawmakers from both parties have been criticizing the white house for separating families who illegally cross the southern border. who says there is cautious optimism the obama outbreak -- ebola outbreak in the congo may be winding down. containedn largely
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they say as there have been 38 confirmed cases including 14 deaths. more than 3000 people have been vaccinated with an instrumental drug in the first ever attempt to stop an emerging ebola epidemic. back to business at the united nations human rights council, despite the withdrawal of the united states. they began discussion on summary executions and freedom of expression with u.s. seats empty. nikki haley announced the pullout yesterday, criticizing the council for "his chronic bias against israel." includesg it it -- it human rights abusers such as cuba and the congo. theresa may has fended off a rebellion by her own conservative party to win a crucial brexit vote. she won on the issue of the so-called meaningful vote, it was over whether theresa may should have the power to take the u.k. out of the eu without a
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deal. others want a parliament to have a meaningful vote on the way forward if negotiations broke down. global news 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. shery: thank you. public outcry over children being separated from their parents at the u.s. mexico border is building. the president has blamed democrats and called on congress to fix the us going crisis. now the president may be taking control, telling reporters at the white house he will sign something preemptively on immigration later today. we welcome a democrat from washington, a member of the house judiciary committee. that thearing president will sign an executive insight onou have what this could be an your
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reaction after the president blamed democrats for the separation? >> i have to laugh at that. the president does not need to sign an executive order, he just needs to pick up the phone and tell his secretary of homeland security to stop enforcing the policy that he put in place. this president put the zero tolerance policy in place and he said it was too the term people from coming -- deter people from coming to the united states. he has created this crisis. i have no idea what he will sign and i will not believe it is stopping family separation until i see what he signs. the bills but before us on the floor this week reportedly to fix the problem, it is not a problem congress needs to fix but a problem the president needs to take care of and neither bill on the floor solves the issue of family separation. one of them, the so-called moderate compromise bill makes
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things worse and allows for families to be detained indefinitely and does not in family separation. it eliminates all the court ordered conditions by which children can be held. i do not believe anything until i see it. i think republicans and democrats and independents theihearts broken.y have had as a mother, my heart is broken who wereg to 174 women asylum-seekers being held in a federal prison, who had their children taken away from them. they literally do not know whether children are. president trump is trying to walk this back. if he is, because he finally sees it is not just about the xers. -- not just about the pictures. he said the pictures of crying babies do not look good. this is about right and wrong. david: none of us who are parents can watch that happen and not be deeply touched. let's talk, we will find out in
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a few moments what the president has done. let's assume that he does issue an order that says you have to keep the family together. they will be detained but they will remain together. is that enough? are you arguing with detaining them at all? against detaining children. the president has done everything he can to try to deter people from coming, but to convince the market people that the people coming across the border are a problem. a story aboutu one woman i spoke with up-ice three children, her oldest child with three children, her oldest child was shot and killed by gangs and another shot and paralyzed, she came with another child. splitting these families apart and this is about imprisonment of legal asylum-seekers. david: imprisonment is a strong
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word. that is a tragic story. something has gone wrong in these lies but they are applying for asylum and you do not automatically get asylum, would you just allow everybody into the country to go anywhere they wanted on the process was going on? >> i want to say that imprisonment is a strong word and i used it because i visited the asylum-seekers being held in prison, can a federal prison -- in a federal prison. i'm not making this up. but if theyenough prison, change the policy and do not proceed criminally against these people but civil proceedings, they will not be putting children in prison. >> they are putting children into cages. that is not acceptable. we have seen that from our conventions on the rights of the child, the american association of
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what this does to children when they are put into these detention facilities. not allowed to be held. the long-term trauma and abuse. the association of pediatrics call this child abuse. i want to make it clear that we have a cost effective and humane program that was in operation called the family support case management program that was in operation and was doing incredibly well with asylum-seekers. asylum-seekers have a credible to sharing -- not being prosecuted criminally but having the initial credible fair hearing. cases,some cases, in all with this program, they were allowed legal resources and a new whether they had a valid claim. in some places, they were sent back home if they did not have a valid claim but done humanely. where they did have a valid claim, they were released and in someorganizations work with e to bring them back whether
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hearing. almost in 98% success rate. cost effective and humane. much better way to deal with this. the administration and did that program. dust into that program. -- ended thatm program. there are cost-effective ways to do this. children screaming for their mothers and fathers come i can tell you, whoever you are, this is not who we are as a country. . david: we really appreciate that. the democrat from washington, a member of the house judiciary committee. let's listen to president trump moments ago on the subject. president trump: they are working on various pieces of legislation to get it done. i will be doing something that is somewhat preemptive but we
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will be matched by legislation, i am sure. we are having problems with democrats, they do not want to vote for anything, they do not care about lack of security and what "is for anybody can flow in, including from the middle tremendous-- problems from that and tremendous crime caused by that. we will not do it. the cause we are also busy, i just mentioned to the congressman and senators that we will cancel and postpone tomorrow's congressional picnic. we have a congressional picnic tomorrow. i walked to the oval office and said, it does not feel right to have a picnic for congress when we are working on doing something very important. we have many things important, trade. it did not feel right.
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we will be officially postponing andcongressional picnic make it another time when things are going extremely well. for the country, they are going well. we have record-setting numbers in every way economically but want to solve the immigration problem. this has been going on 40 years and more. it has been going on forever and we want to solve it. we are postponing the congressional picnic tomorrow. does anybody have questions or a statement while the president is here? >> i will say something. on the issue of immigration, trade, investment, all areas where congress has a lot of authority under the constitution and you have authority and the executive branch has authority under the constitution. that is why meetings like this are very important. bring in the leadership on both sides together. i appreciate the opportunity to let you see our views.
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on these issues where we share authority. thank you. to keept trump: we want families together but have to be strong with the border, otherwise you have millions of people, not thousands, millions of people flowing up and overtaking the country. we are not letting that happen. we have to be strong on the border. but we want to be compassionate. yes? >> thank you for having us. dan saidsaid was -- was good, on trade, immigration, we have a partnership under the constitution, we need to work together. i was thinking, when we look at resin mix in -- president and -- nixon s portrait, he went to china, president reagan went to the berlin wall in moscow.
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a year ago when we were here, i suggested that immigration, has been with us for 40 years, hopefully you are the president who can help us solve immigration with your leadership. you may be able to do what nixon did and -- president reagan did and we like to work with you. president trump: we need the support of the democrat because we need their votes. people say we have a majority but we have a one majority in the senate. we need 60. we do not go with a majority, we go with 60. that is the way it is. we need 60 votes. we have 51 at the most and we need democrat votes. tom? >> i think it is very important we protect the border and not allow a child to get into the u.s. free ticket.
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as you said, we would like to put families together. them. processing of can admitawful, we them but if not, they need to go back to their country. we are working on legislation to allow the border patrol agents to keep families together at the border while we process their claims in a timely fashion. president trump: our borde patrol agents and ice agents have been doing one great job. -13, they come into the country and we are liberating towns in long island and throwing them out by the thousands but we do -- need laws that do not allow them to come back. >> mr. president, there are a number of issues that we will be able to discuss today to touch on the national security of the country.
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certainly, national -- controlling who and what comes across our border is element of national security. as we do the compassionate thing with families. i look forward to working with you to further strengthen our military and together we have turned around a declining situation. that is also part of what we need to do together. responsibilities to do more together. president trump: with all of the numbers you see, if we were not strong on the border, we would have hundreds of thousands of people coming to the border. and the country would not be the country anymore. lindsay? >> we have a massive mess owing on for decades. we will fix it one day but we have a specific problems. here is your dilemma, our dilemma, if a family shows up to the border, and we let the
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country andto the say, please come back for your hearing, 80% of the time the adults never show up. most americans feel like that is bad. that will create a third wave of illegal immigrants. i want to be fair to people who came under the old system but not create a third way. the other choice is, if you detain the parents who broke the law under a decision, you have to break the family up. the 90 97 supreme court decision -- i would urge my democratic friends to find a way to keep families together, have a legislative fix, and argue about other things later. we are in a bind. if you detain the adults, the law requires the children be separated. if you let the adults into the country, they never show up. seems to me we want to keep the
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--ily together and happy happy adults show up. certainly wehumer, can fix the court decision because the country is in a bad spot, not just you. president trump: the dilemma is, if you are weak, some people would like you to be, if you are really pathetically weak, the country will be overrun with millions of people. if you are strong, you do not have any heart. that is a tough dilemma. perhaps i would rather be strong. yes? >> homeland security has held 30 hearings on border security. senator graham mentioned, incentives, nothing compassionate about enticing people to take a dangerous journey through the desert. we have seen pictures of dead bodies, nothing compassionate
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about that. daca, unaccompanied children, prior to that, we had children from central america coming into this country. and the in 2012, problems skyrocketed. company children from central -- unaccompanied children from central america. half a million family members. we have 750,000 individuals, very sympathetic, we have to do stop those incentives. the goal should be to reduce the people.people in -- that is what strong enforcement does. president trump: this deal was just about done. andident obama signed daca said i am not allowed to sign it but i will anyway. he said, i am not allowed to
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sign this so we will hold up. judge who held it up and another one who held it up. a couple turned it down. it will be a supreme court issue. before it was held up, everyone assumed daca would not be held up and we had a deal with the democrats that everybody agreed to. $25 million, we would build a wall and take care of different things, including loopholes. it was all done, but when this judge ruled in favor of daca, meaning it would continue until we get this report, all of a sudden they were not there anymore. that is what happened and why we are in this mess. we had a couple of court decisions which will force an issue to the supreme court that should not be there. john? >> thank you for inviting us on these important issues and for having this important discussion . on immigration, but also one trade.
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the context i want to make sure we talk about is -- we have made incredible progress on tax relief, progress on regulatory relief, and that is reflected in our economy. if we can do the same thing on trade, think of what that means for our country in terms of economic growth, jobs, getting wages moving higher, and the impact it has to all americans. we have to look at it in that context. trade is on top of tax relief, regulatory relief, and now, if we can get the right policies in place on trade, think without -- what that would mean in our country. president trump: doing well on trade, we have been hurt or many years on trade. despite bad trade deals, we have been doing well and now we are making good trade deals. they will be announced rapidly. we already have a couple made. honestly, we need people coming into our country.
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we have a lot of companies coming into our country, chrysler was just announced. a great company going to wisconsin to make the iphones. and laptops. an unbelievable company. we need people to work for these companies. they are coming in at a number of nobody thought possible. we want people to come into the country. i can speak for everybody at the table, we want them to come in based on merit. we want great people who will be great for our country. we want them to come based on merit. we need them because we have so many companies coming to the country. >> >> america's most generous company in the world, and i think we need to draw a line between legal immigration that benefits our country and illegal immigration which is a threat to public safety. i wanted to make the point, i agree with what tom cotton and
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others have said. what you have said about being able to enforce the law and keep families together. it is not a mutually exclusive choice. we can do both. i am confident we will achieve that goal. i want to point out that coming borderborder state, the -- the in the gallery along the border is a complex problem. it is commodity agnostic. drugs,y it is people, weapons, and you talk about an opioid crisis in the united states. it is not just prescription drugs and heroine that comes from heroine. this is a very complex situation. order along the border. everyone agrees with that we need to be compassionate the way we handle these families. it is important to remember the larger context because the cartels and criminal organizations that benefit from this, they are making a lot of money.
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in keeping this situation dangerous for everyone involved. people use the children and always as a ticket. to getting into the country. we have to remember that. there's a number of the 12,000 children, 2000 are with parents, with some came up really horrible people in some cases. you have the coyotes, you have the traffickers, the human traffickers, not only drug traffickers, but human track of it -- traffickers. they use these children as passports to get into the country. it is a complex issue. for many,n going on many years. many, many decades. but we are going to solve that along with a lot of other problems we have already solved. at solvingg well problems. when i became president, we had north korea, we had the iran deal which was no good, we had lots of problems with trade and bad trade deals.
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a lot of things we solved and we that in theory, i should not have had to solve. these are things that should have been solved for a long time. even on trade here we should --er have allowed our past our past leader should never have allowed china to get to a point where there is a five hundred billion dollars trade deficit with the united states. when they went up, we should have gone up. we should have gone up together. that includes the european union and it includes many others. it should not have happened. we came at a time where there were plenty of problems to solve. one of the big problems is immigration. --ope with him not too long, i mean beyond one problem of immigration. you can mention the word comprehensive, or you don't have to use it. a lot of politicians don't like the word comprehensive immigration reform. i think we have the whole immigration picture, and that is what i'm looking to do ultimately. right now we want to fix this
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problem. does anybody else -- david, you want to say something? half, west year and a have had a turnaround in the economy to we were faced with eight years of 1.9% of economic growth. on regulation. this year, we put a dodd-frank bell, a bipartisan bill and freed up a couple trillion bill -- dollars. the ministers and his fruit 6 million -- $3 trillion. this economy is moving. the rest of the world is paying attention. nato has doubled their investment in terms of military spending. we are headed in the right direction. i hope that we can focus on the priorities right now within this trade him a ticket equal access. it is not right when alibaba can do cloud computing in the u.s. and google can't do cloud computing and china. this is what this is about. we produce -- reduced local poverty, while poverty in the
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united states remains flat. that is not right. this is moving to change that. i appreciate the fact that you call attention to what is happening with the economy. there are two things. the tax bills and the regulations. not been set around this table, and i am surprised, the biggest a compass group from your administration is what you have done what the military. succeeded a president who had a policy who said you can't do anything with the military unless you do it with nondefense we changed that. we had to vote for a lousy budget bill to do it, but nonetheless. brokenchanged to we have 30. pres. trump: the military is really incredible to we are ordering new planes, new ships, all jobs too. jobs i would say in this case is a far second.
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we will have a military like we have never had before. that's great. 700 million have moved and 716. in that budget, $6 billion for opioids. that is important. a lot of progress is being made. mike, you have something to say? thank you, mr. president. i know i speak with the president when i expressed gratitude of this administration for the support of the members of the senate and house that are gathered around here. you have delivered to the american people on national security, rebuilding our military. tax cuts and regulatory reform are restoring our economy. what the president reiterated again yesterday and he has said every day from when he sought this office is where -- as we have a crisis of illegal immigration. families to be separated. we don't want children taken away from parents. law,right now under the and we sit with these lawmakers, we only of two choices. number one, don't prosecute people come into our country
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illegally. and then underem court cases and the law, they have to be separated from their children. what i want to be clear about is we are calling on his lawmakers, mr. president, not just to solve this problem in a way that affirms our commitment to law and order, and compassion, which we can do, and there are proposals in the senate and house to do that, but the president's vision articulated in his state of the union address is what -- is let's solve the whole problem. wall," command solve the problem for 1.8 million people that were brought into this country. and let's deal with law and order and compassion with this issue of sit -- of family separation at the borders. i would say with great respect to members of congress, as the house was -- considers legislation tomorrow, the president has postponed the congressional work, we are calling on congress to act. let's roll our sleeves up, work the problem, and this crisis.
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-- and this crisis. pres. trump: thank you. does anyone else have anything to say? >> thank you. from the house perspective, i want to say my commander to an chief is still a current server. -- they understand we are invested. even though we are asking you to do a lot. secondly, security plays a big role. that puts border security in the bill that we will bring up and hopefully pass in the house this week. deferral -- fully funds the border. i hope the house can pass it. i wish democrats would join us. there are a lot of stuff that they like there. unfortunately, i think they like the politics better. we wish youto say, didn't take secretary pompeo from the house. he did a great job. he's doing a great job. thank you. i appreciate it. anybody else? >> thank you, mr. president.
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what they said in terms of the change we have seen in terms of the military. -- we are working hard in the house. we are hopeful we will pass a bill. we need to make sure that gets taken up in the senate and we don't give you another omnibus type bill. pres. trump: please. please. that would be very nice. >> that would be and could -- that will be important to continue working on the bill. pres. trump: thank you, liz. say hello to your father. handsome guy. thank you all very much. we appreciated. -- appreciate it. we are looking to keep families together. we will be signing executive order. we will also count on commerce.
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-- congress we are signing an executive order in a while. we will keep families together. but we have to maintain toughness or our country will be overrun by people, crime, by all of the things we don't stand for that we don't want. i will be signing an executive order and a little while before i go to minnesota. at the same time, i think you have to understand, we are keeping families together but we have to keep our borders strong. we will be overrun with crime and with people that should not be in our country. reporter: will you accept a stand-alone bill? pres. trump: we will see what happens. his -- it affects everybody. i have to say you have double standards. you have people that want absolute security and safety. then you have people that do look at the children and then you have people like me, and i think most of
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these people that want both to walk the heart but we also want strong borders. we want no crime. we don't want crime in the country. coming inant people from the middle east through our border using children to get through the line. we don't have that. we are doing too good a job to allow that to happen. we will not allow that to happen. thank you very much. this has been going on for 50 years. longer. this has been going on under president obama, president bush, this is been going on for many years to we will see if we can solve it. this is not something that happened just now. you look at the images from 2014, i was watching this morning, and they were showing images from 2014. they blow away what we are looking at today. was during the obama administration. i saw images that were horrible. you know the ones i am talking about.
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i'm sure you saw them too. we will see if we can solve immigration problem likely solved so many other problems. i think we will get it done. thank you very much. david: we have been listening to president trump speaking at the white house with a group of republican legislators. both senate and congress. mainly about the question of immigration and separating the families of the border. you heard the lawmakers trying to work out what they see is a difficult problem. they want to keep families together, on the other, they feel they can't allow people to come in and claim asylum and have pre--- free reign in the country. he is trying to say, congress we need help, but he will be signing an executive order which
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will help keep families together as a try to sort through this. chiefring in bloomberg washington correspondent kevin cirilli. kevin, tell us what this order is going to do. kevin: a dizzying day as lawmakers press president trump to reverse his ownicy. the president hearing those concerns. now saying he is going to issue an executive order which would keep families together while illegal immigrants waive court proceedings. this comes as good news to republicans who are up for tough reelection battle to november. quite frankly, they are eager to vote on legislation that would solve this policy problem. issuing harshalso rhetoric on the issue of immigration. in some cases, doubling down. criticizing illegal immigrants who use what he says "children as passports." all of this comes as the president is set to issue a cake pan -- a campaign style rally in minnesota. it comes as cries from democrats have grown as loud as i could
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possibly be with a series of democrats protesting president trump himself. when he visited capitol hill last evening. whether ongoing issues that have emerged in washington with the secretary of commerce wilbur ross testifying today, taking heat from democrats and republicans from the president's trade policy. shery: congress has had a busy day. tomorrow, the houses voting on two immigration bills. one that could actually help and these family separations. what do we know? kevin: there is a series of competing proposals and house speaker paul ryan saying this is going to be voted upon tomorrow. have the tension and ongoing tension between the centrist led by the outgoing speaker and the freedom caucus. this comes as their are questions about whether or not the president would come -- would sign a stand-alone bill that would solve the issue of separating the children from their families. jennifer jacobs of bloomberg news asking president trump within the last half hour. he declined to say what he would
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sign. specifically whether it line by line, the president's executive order will match the legislation that will be voted upon here on capitol hill tomorrow. or whether this will be something entirely different. either way, sources i talked without the white house told me this is something they were not expecting. the furor coming from republicans and democrats, something that caught them off -- flat-footed. now they are trying mercifully to solve this. shery: kevin cirilli, thank you so much for that. trump did notnt only talk about immigration. he talks about trade. at the very end, you'd heard him say that the zte deal was "not at all key to the north korean deal." neither side is blinking in the trade war of words per we theome from washington, director of policy research. thank you for your patience as we listen to the president.
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question of china and u.s. trade, that has been roiling the markets. what are the options open to the u.s. and china at this point? clients andnk contacts in d.c. are generally of the view that everything the president has said and done is more about posturing as part of the negotiating -- negotiation then establishing a policy. i think the viewpoint, and it is one that i share, but what has happened thus far and some of the headline volatility that we will he in the days and weeks ahead is still intended to ultimately craft some sort of a deal that will allow both beijing and washington to step back from the precipice. shery: at this point, we know when it comes to china trying to retaliate on the u.s., the u.s. is not sending enough goods that they can retaliate on equal footing. the gtv go library showing you this chart which actually shows that the u.s. only exported $130 billion last year. impose 200 trying to
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-- 50 billion dollars of tariffs on chinese goods. what can beijing do then? isaac: i think your point is right. i think the trump administration feels as though it is in a position of strength in this negotiation because of that disparity. read it is important to note that beijing has a whole suite of other options. they can have a higher levy rate on the tariffs that they put on our goods. we only are going to propose a 10 percent rate. there's could be higher. we could have a regulatory slowdown on some of the approvals and some of the day to day processes that we see in chinese ports. and, this is something we have seen in relation to other nations, we could see some sort of a boycott in china of u.s. goods which could have a broader impact on the market. david: there are a number -- there are a number of different options we could see. like there isn't much of american business that is favoring that. is it relevant to the white
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house? it appears president trump is appealing to his base. he campaigned on the issue of addressing chinese trade. if he ends up in a world where basically we have ruptured our trade relation, we have imports, doesn't matter to the white house that it may even hurt growth overall? moment, no.e i think it is important to note that the first round of tariffs, the $50 billion, only 1% of that hit consumers from a good's perspective. this next round could have more of an impact. easy forense, it is the trump base to conceptually in the trade tariffs president's actions and thus far. that is what we have seen. if we see a further escalation and we see this rhetoric turn into policy, there will be an impact on the cost of goods. and it is harder to support a policy that is hurting your than it is to conceptually support the stances we have seen from the trump administration thus far.
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david: particularly as we go into midterm elections. thank you for being with us. isaac boltansky, compass point director of policy research. shery: after months of threats, the european union has triggered the first phase of retaliation against president trump's tariffs on steel and aluminum. and have tried to hit the u.s. where it ertz. targeting a list of american brands from politically important districts. one of the casualties, bourbon whiskey. earlier, i spoke with kentucky governor matt bevin and asked whether he was concerned about the impact on one of his states more iconic industries. always the's potential for some type of impact. i don't take it will be a tremendous impact. the bourbon industry is eight point $5 billion industry. europe is a small portion of that. but growing. the fact is people love bourbon. and you think about this, why do people put tariffs on it? they do it to protect an industry. sensitive to defense
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perhaps or they do it to raise money. the eu is straight up doing this to raise money. they are taking bourbon, which is popular, that is only produced in kentucky, so the reality is 95% of the world's bourbon and all of the bourbon worth drinking is made in kentucky. they are not protecting the european bourbon market. they are doing this as a pure money grab. it is to take effect may be as early as this week. maybe in july. we will see. the reality is this is all a bunch of play between nations. we have significant deficits with the eu. about $150 billion. you go back to 2009, we only had a $61 billion deficit with the european union. withly, as their deficit the u.s. has grown and grown, if they want to play this game with the united states, ultimately they will lose. i don't see this will have long-term implications on trade between the eu and the u.s.. i really don't.
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especially as it relates to bourbon. people in europe still love bourbon. they will still buy it. the european union will make money off it. shery: that seems to be the calculation by the president and his administration, that this is part of broader negotiations. if it starts to claim real victims in some key u.s. industries, would it be time to rethink the strategy? especially if the actions are not just targeted against china, but also against allies? gov. bevin: again, i think it is important to understand whether the victim is the right word or not. there will be right -- repercussions. people will feel it. the cost of goods, certain goods, will go up. in every country that is involved in this type of a trade dispute. there is no question about that. it is historically always is way. therl be implications of this. not states should immediately rushed to weigh in, we will take that step by step. certain states that are more agricultural based are more susceptible to these types of
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things and then is kentucky. but there are certain industries, our automotive experts, certainly, our era space exports, our pharmaceutical experts, our agricultural experts, our bourbon, we have a number of things that we have to worry about. i'm not concerned about it. i do believe you are right. there is a certain amount of posturing going on. it is part of the negotiation process. shery: you have talked about aerospace, car industry in kentucky. they are also getting hit by u.s. tariffs. being imposed on steel and aluminum that makes metals more expensive. there are industries that will get hurt. does that mean the stable way in and support some of those that will get hurt during this trade standoff? gov. bevin: my god- my job as a government -- is a -- as a governor is a delicate balance. then again, we have people that are peripheral producers. people that produce products
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that of steel and aluminum. these are folks are going to arguably be hurt with respect to the fact that their cost of raw material has at least initially risen and is likely to rise in the near term as well. the cost of their goods go up. if they don't have the ability to pass on to the consumer, who dues -- who loses? i have to balance all these things. i have people who benefit and are hurt by this. my job is to represent them to the best of my ability and make sure that as a state and miami advocating for us to thread this needle as thoughtfully as possible. shery: how much room is therefore cooperation on the state level when the administration is taking such a hard-line against trade with allies and with china? gov. bevin: there is a tremendous amount. i applaud this president or does it and trump and that the ministration have been more open to dialogue with states than any in our lifetimes. the amount of interaction but
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the federal government has with state governments, the number of conversations between the president and governors of both parties is unprecedented. i encourage more of the same. the president does speak with us. does listen to us. does allow himself to be informed by is. still does what he does with his administration. but with a lot of dialogue and feedback from us at the state level. i find it interesting that in his recent g-7 summit, he made tariffsosal to take all off everywhere. notice nobody liked that idea why not? for all the people who love free trade across the board, i am a free proponent. it has to be fair trade. if we took every tariff off everywhere, i would be a strong proponent of that. shery: how important is a nafta 2.0 and do you expect it to happen within the year? gov. bevin: it is hard. you look at what is happening. the election cycle and mexico that we are heading into right now at the national level, we have just come off provincial
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elections in canada, when we have our elections coming up in november. this is taking people's eye off the ball politically. is it still possible? it is. it is a shame we have missed the boat to have done some things. what i have encouraged folks in the u.s. and canada specifically is to not feel like we have to eat the entire apple in one bite. let's take it a bite at a time. let's focus on dairy and agriculture and soft lumber. let's start with things that are smaller scale. then take it up to other things as well. we get into metal and things of the stored. -- sort. everyone agrees it needs to be modernized. it is antiquated and its approach. the premise behind it was arguably good. let's modernize it and make sure it works. the china chamber of commerce and 60% of respondents to their survey, more than 700 companies here in the u.s. say they plan to invest and increase
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their workforce in the next two years. could those plans be derailed once the administration comes out with plans to curb investments by chinese corporations? gov. bevin: i don't think so. capital goes where capital is welcome. capital is welcome in the united states. it is very welcomed in kentucky. i have made very clear in my chinesetions with country -- companies, japanese companiescoming -- that we are open for their business. and we have more than almost 9000 employees in kentucky work for chinese owned companies even now. one of the larger per capita of any state in america. this is something we are already doing. i welcome more of it. there is a tremendous amount of capital that has been built up in china. it is looking for a place to get a good return on its investment. where in the world is that return right now?
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seemingly more obvious than any worlds. north america. the united states. that capital is still interested and will still come, i'm confident enough. shery: governor matt bevin of kentucky. coming up, mick mulvaney, white house budget director and acting -- and acting director speaks at the cd conference with bloomberg's eric -- eric shatner. if you missed out on any of our charts, gtv go is the function on the bloomberg library. you can save them and use them in future reference. this is bloomberg. ♪ loomberg. ♪
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♪ -- lisa: i'm laser. this is "bloomberg etf iq." --focus on the access assets, risks, and rewards offered by funds. ♪ lisa: speaking refuge from trade wars. how investors can find protection in etf. a strengthening dollar. occurrences that investors back to hedge etf's. oaktree capital

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