David Woo: What Trump Started is Worse Than a Trade War

For the most part, Americans haven't felt much pain yet from the tariffs that Donald Trump introduced (and then partially walked back) on April 2. The damage is highly visible in financial markets, but for the moment, shelves remain stocked, inflation measures have remained muted, and there hasn't been a significant wave of layoffs in official data. But according to our guest, real pain is coming. And what's going down is worse than a trade war. On this episode, we speak with the one and only David Woo, now the founder of David Woo Unbound. He also previously served as the Head of Global Rates, Foreign Exchange, and EM Fixed Income and Economics Research at Bank of America. He says that the administration has absolutely nothing to show for its initial months in office on any front. And he says this isn't a game of chicken, where one side can blink and avoid disaster. Instead, we're seeing a "war of attrition" where damage is being done to both the US and Chinese economies as we speak. As he sees it, the China hawks in the administration have been in control, and have the impulse to obliterate the Chinese economy, which makes the situation more than just a so-called trade war. He discusses the political, market, and real economy implications of this dramatic escalation. Read more:Trump U-Turns on Powell, China Follow Dire Economic WarningsA Bad Peace in Ukraine Carries Global Risks Only Bloomberg - Business News, Stock Markets, Finance, Breaking & World News subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 0:58Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:41Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 1:57Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:03Tracy Alloway?

  And I'm Tracy Alloway.

• 2:04Joe Weisenthal?

  Tracy, it is April 22nd. It is 12:09 and 52 seconds as of the time that I am talking right now.

• 2:12Tracy Alloway?

  Soon we'll have to do fractions of a second.

• 2:14Joe Weisenthal?

  Yeah, I know. The market is actually up today. We're recording this on Tuesday. We just got a headline. Apparently Treasury Secretary Scott Besant at a JP Morgan event in Washington said Besant sees de-escalation with China situation unsustainable. That sent markets surging. You know, everyone's looking for a little shred of hope, right? Or a little shred of optimism that like things could settle down. We get clarity, you know?

• 2:39Tracy Alloway?

  That the two biggest economies in the world aren't going to go completely head to head.

• 2:44Joe Weisenthal?

  Right. Like, because if, I mean, this is really the story, right? Even with the walk back on April 9th, the week after Liberation Day, even if, and we're not getting any deals yet, at least so far, we haven't gotten a deal with India. We haven't gotten a deal with Japan, let alone the EU. But the, you know, even if we got all those deals sometime in the next three months, and typically trade deals take like years to work out, there's still the fact of an economic rupture between the world's two biggest economies.

• 3:09Tracy Alloway?

  Right. I think that's certainly a possibility. The one other thing I would say is, so you're right. Stocks are up this morning because Besant has been saying, you know, some mildly potentially positive things on this issue, but there is still this huge question of who would make the first move in this particular standoff. And I think it is a standoff. And I think, you know, both respective policymaking groups here, the Trump administration and the CCP under Xi Jinping, I think they both care about who is seen to be making the biggest concession here. So I think everyone can reasonably say that we would want some sort of I was about to say peace deal between China and the US.

• 3:54Tracy Alloway?

  Peace deal isn't right. Some sort of reconciliation, but the path to getting there seems like very confused and uncertain to me.

• 4:02Joe Weisenthal?

  Yeah, there's a lot. I mean, look, people call it a trade war, so I don't see why we can't have a peace,

• 4:06Tracy Alloway?

  Trade peace deal.

• 4:07Joe Weisenthal?

  A detente of some sort. And look, we both know the stakes, right? Because the US relies substantially on China for finished goods of all kinds of things that US consumers enjoy, but also intermediate goods that are used for actual manufacturing. And we also know that at least in the short term, there is not some quick substitute for the sheer amount of demand that comes from the US consumer. And so we've seen all the TikToks of factories in China, you know, trying to figure out ways to go direct to the US consumer. At least in the short term, both economies have a lot to lose, it would seem. And so there's all this question of like, you know, who blinks first? Anyway, there's a, you know, and you just see it in the market pricing, there's a lot

• 4:49Joe Weisenthal?

  of pain being priced in immediately today, maybe accepted from the persistence of this trade war.

• 4:57Tracy Alloway?

  Right.

• 4:58Joe Weisenthal?

  Well, I'm very excited. One of my favorite guests, I've talked to him, we've talked to him on the podcast before. I've talked to him on the TV, always energetic and always has just sort of interesting thoughts, a fun guy to talk to, also very serious. We're going to be speaking with David Wu. He is the CEO of David Wu Unbound. And prior to that, he was the head of global rates, currency, emerging markets, fixed income and economics research at Bank of America. I always want to get David's takes on things. So David, thank you so much for coming back on Outlots.

• 5:31Speaker 04

  Thanks for having me. It's a pleasure.

• 5:33Joe Weisenthal?

  Is this a type of war that we're seeing right now? That, you know, whether you trade war, you know, it seems like the obvious thing, but like, how aggressive, how provocative, how combative are Trump's actions against China?

• 5:47Speaker 04

  I think it's very combative. I think this is much more than just a trade war. I think this is war actually. And then I think, you know, from that point of view, it's not that surprising the way it's gone because in a way, the whole thing has been heating up under Biden. I mean, I'll tell you.

• 6:03Joe Weisenthal?

  Yeah.

• 6:03Speaker 04

  And I think in a way, you know, it's actually very interesting. In a way, Trump is picking up where Biden left off.

• 6:09Joe Weisenthal?

  Who picked up where Trump left off, right?

• 6:11Speaker 04

  Okay, let me, let me just take it back for a minute. What I mean, let me explain better what I meant by that sentence, right? Under Biden, if you remember, when Biden became president, okay, Harvard University Balfour Center published a big report in which they did a massive ranking of the technology leaderships across the major tech races, okay? It was a report sponsored by Eric Schmidt, the former CEO of Google, who was a big patriot. And in this report, they conclude conclusion that US and China were in basically dead heat in first or second place in all the leading technologies in the world. And soon after that, Eric Schmidt went on a PR or political campaign across, you know,

• 6:56Speaker 04

  the Beltway, essentially lobbying every congressman, every senator who will listen to him, that this is time to basically stop the access of China from, you know, advanced technology so that the US has a chance to essentially regain the leadership. Okay, so therefore, under Biden, the most important thing, you know, in terms of vis a vis China, it was not so much the trade war, but rather they put in punishing sanctions in terms of the ability of China to be able to access, you know, semiconductor, advanced semiconductors and in manufacturing equipment for advanced semiconductors. All that was meant to basically give the US two to three year, basically like head start, okay, in AI, semiconductors, in automation, in robotics and so on and so forth.

• 7:41Speaker 04

  Guess what? Less than a month after Trump became president, we had the deep sea news. The deep sea news basically was a massive piece of news. I mean, it was a game changer. Let me tell you this. I mean, the deep sea news for me is no proof of China's technological prowess, but it is proof that AI can be easily copied. All of a sudden overnight, all the sanctions that happened under Biden.

• 8:10Speaker 04

  It was for nothing, okay? To the extent that if these sanctions were designed to protect the monopoly of the big US tech companies, okay? All of a sudden, that meant nothing. Because anything that could be copied is worth nothing commercially. And this is the reason why, by the way, I, the day the Deep Sea News came out, I shorted basically Nasdaq and it's, you know, it was a great trade, by the way. But I think that's what it gets out. So all the China hawks, I mean, Trump has brought a lot of China hawks into his administration. I have to tell you that. For the China hawks, if they thought that they had been more time with China, I think after Deep Sea News came out, literally, there was this new sense of urgency.

• 8:54Speaker 04

  We need to basically stop China now. The only way they can do that is to bankrupt China economically. Because honestly, at this point, I mean, let's be honest. When you're talking about the 145% tariff,

• 9:06Joe Weisenthal?

  Yeah.

• 9:07Speaker 04

  you're not engaging in the trade war. You're engaging in basically economic murder. I mean, that's it. I mean, I don't see how China is going to be able to export anything to the US with a tariff 145%. So I think from that point of view, this to me was, I think that the so-called trade war that we call as such really was always intended as an economic blow that will be so great to China that China will no longer be in a position to threaten US hegemony. So again, this is why I said this is more than a trade war. This is much more than a trade war. This is meant to protect US hegemony.

• 9:46Tracy Alloway?

  Right, sort of existential in that sense. Let me press you on one thing you said. So, you know, you mentioned the importance of Deep Seek and you kind of suggested that some of the severity of the action taken on China was because of the Deep Seek threat. But, I mean, we know that Trump, from his campaign, was going to take a really hardline stance against China. So how can you connect Deep Seek with some of the policies that we've seen coming out of the administration? Can you make that direct link?

• 10:17Speaker 04

  Crazy, I think that's an excellent question. But let's think about this for a moment, okay? I've always said, you know, listen, I'm probably the only person you know, like has been on your show, who's read the back-to-back 100-page, you know, essentially, face one agreement that was signed between Trump and the Chinese back in 2020.

• 10:34Joe Weisenthal?

  I bet Dan Wong is right, too. But anyway, you're the other one, keep going, keep going.

• 10:38Speaker 04

  Yeah, and let me tell you this, it was probably, I mean, I have a PhD in international trade from Columbia University. And let me tell you this, that trade agreement, my humble opinion was one of the best trade agreements signed between two countries in the last fifty years. And the reason was because it was a win-win, basically, deal. And the people tend to think, oh, whoa, whatever, I mean, people didn't read the whole thing. I mean, it's pretty amazing what that whole thing actually meant. Now, in my humble opinion, the difference between Trump and Biden is that whereas Biden saw the US-China rivalry as largely a zero-sum game, that is, if China wins, we lose. If we win, then China will lose.

• 11:17Speaker 04

  I think Trump, in his whole entire career, sees things through the lenses of deals. And Trump always understands that, basically, to do a deal, there has to be enough for everybody around the table. So from that point of view, in my humble opinion, if you look back on the first day of Trump's inauguration, what do you do? On this, I still remember, I don't know if you guys covered the story, I still remember, he did a press conference in the Oval Office late at night, you know, on the inauguration day. And this is when he announced the twenty percent tariff on Canada and Mexico over the fentanyl. Okay? And he was asked, during that press conference, why not China? You promised to hit China hard.

• 12:00Speaker 04

  So why did you decide to hit Canada and Mexico but not China? He asked, his response was, oh, because we hit China pretty hard my first time, we're gonna give them a pass this time. It was not until the next day, he announced the twenty percent for China. And then three weeks later, of course, we all, you know, know now, like, you know, basically, the tariff was extended for Mexico and Canada, and China was hit by twenty percent, okay? And then the list goes on and on. In my humble opinion, you know, again, we, we sitting here and thinking that Trump is in the driver's seat. I don't, I think at this point, Trump is no longer in the driver's seat, to the extent that I think the China Hawks are actually in the driver's seat.

• 12:42Speaker 04

  I think the China Hawks are maneuvering him in a position that he's increasingly struggling to back away from.

• 12:50Speaker 04

  So I guess more extreme. And that is a different story. This is why to me, this is not just about Pete Navarro versus basically Scott Besen. This is about the China Hawks represented by Vans, by basically Rubio, by Walt and all of them. Actually. So from that point of view, again, this is, this is what we're talking about. I think Trump really wanted, I think Trump was so eager to do a TikTok deal on the first day that he spoke with basically Xi Jinping. Things were going to go very differently. But I think it was a series of mistakes that have now allowed the China Hawks to take over. And I think Trump now in a way is a little bit powerless. And I think, you know, it's, we could talk about the process and the sequencing.

• 13:31Speaker 04

  But I think this is where I'm at right now, which is, is not entirely up to Trump anymore.

• 13:51Speaker 00

  What's next for virtual assets? I'm Jacob Rees, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 14:07Speaker 05

  We're seeing a lot of insocial players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service insocial clients.

• 14:16Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merrick of Ripple says.

• 14:24Speaker 06

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 14:43Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 14:53Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Masser. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 15:35Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 16:16Joe Weisenthal?

  So, first of all, I just want to say I appreciate the out-of-consensus perspective, because I would describe the consensus perspective as the only active force that happens or what's happening in Trump's brain. And so, first of all, you're disagreeing with that, and I respect that. Second of all, you know, from my perspective, Trump strikes, I know he likes to do deals and he loves talking about doing deals, etc. When he pulled that chart out on Liberation Day, April 2nd, and basically slammed every country in the world, this did not come across to me as someone who likes positive sum deals. This strikes me as someone who finds any trade gap is per se bad.

• 17:00Joe Weisenthal?

  That if you're running a trade surplus with the United States, you must be cheating. You must be doing some sort of- Yeah, it's all relative. And so like, give me the counter argument here. Also, you know, this idea, you know, people have been using the good czar, bad boyers characterization. Oh, it's the, it's the Navarros of the world. It's the Vanses. Trump is being blah, blah, blah. And I tend to not find those things. But just convince me that Trump is not a zero sum thinker when it comes to-

• 17:24Speaker 04

  I'll convince you. And by the way, I want to say this. There's a big difference between China versus everybody else.

• 17:29Joe Weisenthal?

  Okay.

• 17:30Speaker 04

  I think Trump understands that everybody else, he thought that the US is so big, he could just push them around. I think China is a very different story. Just think about this for a moment. The day that he unleashed whatever on, I mean, whatever the tariff schedule on Liberation Day.

• 17:48Joe Weisenthal?

  April 2nd, yeah.

• 17:49Speaker 04

  China was only hit with a 25% tariff.

• 17:52Joe Weisenthal?

  Yeah, that's true.

• 17:52Speaker 04

  Which is actually right in the middle of the range, by the way. It's not like he did China with 30%. I mean, listen, I mean, Thailand was 29%, Switzerland 35%. You can basically look across, you know, I mean, China was actually to the low end, by the way. If you think about that for a moment. I think that was a sign that Trump did not, you know, I mean, because me again, you know, I think Trump understands, depending who you're dealing with here. If you're dealing with a little guy, you're gonna basically like literally knock the other guy dead. And I think Trump feels like, you know, this is the reason why, I mean, I'm, you know, I, I think Mexico is a great example. Because Mexico, unlike any other country, has literally been bending forward, backward to meet Trump.

• 18:37Speaker 04

  Like, forget about half the way, like 99% of the way. I thought Trump should have granted a deal to basically Chime Bomb, literally like three weeks into his presidency.

• 18:46Joe Weisenthal?

  He loves Chime Bomb.

• 18:47Speaker 04

  And he didn't. And the reason is because apparently he saw Mexico as being a push around. Okay? Well, China, I think is a different story. So I, I think, you know, we cannot basically apply the same logic to what Trump is saying. But you know what's interesting though? What is interesting is the fact that as of today, right now as we speak, if I look at, you know, like, you know, yesterday. I was, I mean, I didn't, you know, as you know, I've got a YouTube channel now, you know, and, and, um, and I was trying to basically, I'm trying to upgrade my lighting. So I wanted to buy this very expensive light. This is sort of very high-end lights. They're half manufactured in China.

• 19:24Tracy Alloway?

  You need one of those, uh, one of those circle lights, like a, like a ring light, like a proper, uh, proper influencer.

• 19:30Speaker 04

  More than a ring light. I'm talking about this is a professional, basically a spotlight, right? So this is a very high-end, in case you don't know, like literally ninety percent of the high-end spotlights now are manufactured in China. Okay, I mean, that, that's just, that's just a fact, right? So they don't just make the low-end stuff. This is really high-end stuff. And, you know, as you know, I live in Israel now. And I mean, there's no inventory of this light in all of Israel. I literally like got in touch with every store, the importer, nothing. So I decided to call up B and H in New York. Of course, they have it in stock, even though it's from China. And guess what? It costs literally half the price of what I would have paid if I bought the light in Israel. Unfortunately, they don't have it in Israel anyway. So I was asking the B and H guys, what, you know, listen, what about the tariff?

• 20:15Speaker 04

  He said, well, you know, listen, we're not raising prices until we've actually depleted our stock. But the point I'm trying to basically tell you is like Americans have not even begun to feel the even iota of the tariff. I mean, the stock market obviously has gone down a bit, that kind of thing, but it's like nothing. I mean, I think people don't realize what this really means because right now what's happening is that the inventory in the system, and then there's no doubt inventory got built up in Q1 because a lot of companies anticipated the tariff increase. That's providing a bit of a buffer. Wait until we get into June, when prices either will go up or that there will be no stock to the extent that just, you know, the whatever you want to basically buy is simply not available. I don't even know how Hollywood

• 21:00Speaker 04

  can basically to do with their lighting without Chinese lights right now at this point because there's very low degree of substitutability. But the point here is that I, I think, you know, in a way, I think, you know, the pain is like absolutely, and I think this is where Trump is very misinformed, by the way. I truly believe Trump is surrounded. By some really terrible advisors who at least didn't tell him the full story. Because when it comes to the trade war, I mean, I can just tell you, I mean, I, I think that every step of the way, I think, you know, they miss fire. For one thing, I think the presumption that tariff was not going to be inflationary was, I don't know where they got that from, and I'll tell you where they got that from, by the way.

• 21:42Speaker 04

  And that was perhaps the biggest, biggest, basically, you know, since the, uh, assumption they were making when they basically unleashed this trade war because Trump figured that while first time trade war didn't have any impact on prices, so he expected this time the same to happen as well. And that unfortunately, I don't care where Priti Navarro got his PhD is worth nothing. His degree is not worth a piece of papers written on, but let me tell you one. The reason why the inflationary effect associated with Trump's trade war, one, was so limited, was because Chinese companies were able to set up shop very quickly somewhere else.

• 22:23Speaker 04

  In the Philippines, Indonesia, and wherever they went, they were able to circumvent the US tariff by continuing to export to the US at whatever price they were selling previously to the US. So in a way, if there was very little price impact was because Chinese companies were able to circumvent the tariff. This time, the entire tariff is designed to leave Chinese companies with no place to hide, as you know. Like, the only reason why, like, Trump hasn't take out the whatever, even the, the fist in basically, I mean, you know, hasn't basically, did not apply additional reciprocal tariff on Mexico is because Mexico had already agreed to adopt the same US tariff on Chinese imports.

• 23:06Speaker 04

  So this time, it is no, this is why Southeast Asia got hit really hard this time, you know, in the reciprocal tariff. It's because precisely Navarro and others, they understand they need to, they want to close the back doors to China. So this time, there is no cushion in the system. You're gonna see one hundred percent pastoral in terms of prices. In fact, the Chinese government apparently has decided that the more Pass through, the better. The reason being that, you know, we all know, only a couple of weeks ago, I think the Chinese uh in Beijing, Chinese officials met with Costco, with Walmart and warned them against applying pressure on Chinese suppliers to basically to take the hit on tariff. The reason is because I think from the Chinese perspective,

• 23:49Speaker 04

  they think that once the price effect associated with the tariff is unleashed onto the US economy, onto the US consumers, it's going to get so bad that Trump will have no choice but to basically stand down.

• 24:02Joe Weisenthal?

  Hmm.

• 24:03Speaker 04

  And then, and I think this is the reason why, in a way, I said that we're right now in round two of this trade war. I think the round one basically ended last week. We're now around two. Round two, you know, you could argue that China enjoys the advantage insofar that time is on their side. And I think, you know, I think things are going to get very ugly.

• 24:22Tracy Alloway?

  I have many questions, but just to start with, okay, why should I care whether it's Trump or his policy advisers being, you know, uber hawkish on China? Why does that matter when the policy result seems to be, you know, pretty much the same? And then secondly, you talked about the pain potentially coming this summer. We've seen a lot of people in markets start to talk about the idea that maybe there isn't a Trump put, right? Like, maybe he doesn't care about stock prices this time around. So what exactly is going to be the catalyst for some sort of détente?

• 24:59Speaker 04

  Yeah, crazy. I think it's a very good point, but you see, again, this is, whether it's Trump or somebody else around him, I think it makes a very big difference. And so far in this respect, let me basically take it back for a second if you would allow me, because I think

• 25:13Tracy Alloway?

  Please, yeah.

• 25:13Speaker 04

  This is connected to a lot of other things that are on the table right now. For example, I thought was a huge mistake that Trump started his presidency by making stopping the war in Ukraine a top priority.

• 25:27Speaker 04

  Okay, he thought that he was gonna be able to stop in twenty four hours. Forget about twenty four, let's just say he was indeed being sarcastic. But, you know, I can tell you this, at the beginning of this presidency, Polly Market was giving a seventy percent chance that he was gonna stop the war basically by one hundred days into his presidency, and now it's right now currently less than three percent chance. Now, this is why Trump went on this, you know, trauma offensive with Putin, that he appeased Putin. And literally, with, you know, my man, I'm not gonna use any more exaggerated adjective at this point, but let's put it this way. Trump didn't understand that there was no way in hell that Putin was going to agree to a ceasefire

• 26:09Speaker 04

  without having taken control of the rest of Donetsk, where they've been stuck in basically very, very drawn-out battles for the last six months. But it doesn't really matter. The point here is that I think three months into his presidency, Trump has got nothing to show for visa v. Ukraine. Even though he has rupture, transatlantic relations, he has sold Ukraine down the river, and he's got nothing to show for, and Putin is not buying it. Guess what? At this point, in my humble opinion, Trump has one of two choices. He could either pivot by getting much tougher with Putin, okay? So you see an increase in geopolitical risk and bullish gold.

• 26:53Speaker 04

  Or that he has to go even tougher on China. Because at this point, you know what? You cannot be seen as being weak on both Russia and China. Forget about Iran. I mean, it's pretty amazing what basically Steve Wicoff is now proposing. By the way, capping Iranian Richmond at three point six seven percent was the key component of the Obama nuclear agreement with Iran that Trump walked away from. So Trump is like going super dovish, Russia are basically in Iran.

• 27:26Speaker 04

  Guess what? If he wants to continue that dovish approach, then he will have to throw some red meat to the China hawks within this administration, which means getting tougher on China. In my view, there is very little, I mean, I, you know, I think, I feel sorry for Scott Bassin. I guess Scott's a very nice guy. No, Scott, Scott is not a China hawk. I wouldn't say Scott is a China hawk. He's suddenly, you know, he, he doesn't hate China in that sense. But there are a lot of people within administrations who think that this is the time to destroy the Chinese economy once for all, right? Because the point here is, it's not just about the fact that, oh, well, Chinese export to the US is roughly around 5% of Chinese GDP. If you look at both direct and indirect, you know, 40% of Chinese industrial production. But more important is the fact

• 28:11Speaker 04

  that the Chinese economy is already on its knees. You know, 40% of GDP's investment. If we can somehow decimate China's export, then we can basically bankrupt their business model. And then, you know, the whole economy goes into recession. Who knows what happens? And then they won't be able to play catch up with us. So what I'm telling you is that, in fact, actually it's interesting because the only way Trump can actually keep going with this trade war by getting the support from the general public, from Congress and saying, you know what? This is about China.

• 28:42Tracy Alloway?

  Hmm.

• 28:43Speaker 04

  Nobody right now will say, oh, wow, let's, you know, let's be nicer to the Chinese. Because right now, anybody who stands up to the Chinese, they're seen as traitors right away. And that, to me, is the most interesting part of the story, which is that I think the China hawks, in many ways, have prevailed. And Trump, right now, is having to essentially see the ground to that because, in a way, he's got nothing to show for right now. And then he wants to keep the trade war going. The only way he can do that is by saying this is about China.

• 29:13Tracy Alloway?

  Right. So just on the second part of the question then, what is the catalyst for a détente? And is it, you know, some sort of policy win for the Trump administration that maybe allows him to back down a little bit on behalf of the China hawks, I guess?

• 29:28Speaker 04

  I, I think, you know, listen, I mean, Politico actually wrote a very interesting story, actually, on Friday, Saturday, okay? Which I think makes sense. I mean, I don't believe- Everything they say, but in this particular case, I think it sort of makes some sense, which is that forget about like Trump and and Xi are not talking, like even the back channel is not working. Hmm. The one reason is interesting because Trump wants to basically manage the entire process on his own. He wants to talk to Xi Jinping directly. He, this is why he doesn't want to send people to China, talk to the Chinese. He wants to get on the phone with Xi Jinping and Xi Jinping right now is not returning the call or rather doesn't want to talk. Okay, and I can partially understand why, by the way, but interesting things, I think Trump, listen, Trump is very suspicious

• 30:11Speaker 04

  of everybody around him, including Rubio, by the way. But just think about this, you ask yourself, Steve Witkoff, why is Steve Witkoff like the hardest working man in the Trump administration? This is a man who has already met with Putin three times. He's the guy who basically met with the Iranians twice. He is the guy who basically negotiated the the ceasefire in Gaza. This guy seems to be the unofficial Secretary of State. In my humble opinion, the reason why Steve Witkoff is everywhere is not because it's not a reflection of his diplomatic savvy, but because Trump trusts him. Because guess what? I think he's no more than Trump's messenger.

• 30:54Speaker 04

  And so from that point of view, because Trump doesn't trust anybody, Trump, the fact that Steve Witkoff is so prominent means that Trump is running US foreign policy all by himself. And I think this is going to be especially so in terms of discussion, negotiation with the Chinese.

• 31:24Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to. This culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs. And hands on experience matters more to recruiters than advanced degrees. With the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 32:08Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there. It's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 32:47Joe Weisenthal?

  Yeah, Steve Woodcough, he's a real estate guy from New York. So he does seem to like, he doesn't have a real diplomatic background. He's a real estate guy in New York who's now the special envoy to the Middle East. And so I'm not surprised that maybe Trump sees him as the best one.

• 33:04Speaker 04

  He's now the special envoy, period. He's the presidential, he's not just a special envoy for the Middle East. His title now is a special envoy.

• 33:11Joe Weisenthal?

  But it does seem like Trump himself, as you say, like, he wants to shake Xi's hand. He, I mean, he did, he went to Singapore, right? In the first administration, Kim Jong-un, right? And like, this was like, what he lives for, right? This is what really gets him excited. The opportunity to like, be on stage and shake hands with these guys and be part of it and come up with a negotiation. That strikes me as actually a sort of very useful read into how Trump thinks about international relations.

• 33:43Speaker 04

  Yeah, I mean, TikTok is a great example, right? I mean, the fact is, one day before inauguration, everybody thought TikTok was finished.

• 33:52Joe Weisenthal?

  Yeah.

• 33:53Speaker 04

  I mean, was, you know, Congress already voted, Supreme Court had already gone along. And then it was it. And then guess what? Trump managed to revive it because of our phone call with Xi Jinping. That was it. So from that point of view, again, I, I think Trump has made a lot of mistakes, I think. But it doesn't take away from the fact that he is a dealmaker. He wants to do deals. Okay. And I think from that point of view, he still thinks that he can pull off a deal with the Chinese. Yeah. The biggest challenge I think he has right now is the how to basically repair the total loss of trust. Okay, on the Chinese side, vis a vis Trump, right? Because I have no doubt, like, you know, I mean, I think Xi Jinping was like, well, you know,

• 34:34Speaker 04

  he got the invitation to go to the inauguration, he didn't go, but he thought that was a real nice gesture. And then he spoke with Trump over the phone. And then, you know, and then even after basically, you know, China was hit by the twenty five, twenty percent tariff on fentanyl, he was probably still thinking that this is gonna be okay. But it's like, it's giving, getting worse every single day. You know what's very interesting? So I'm conducting a daily survey, believe it or not, okay? I mean, for the last three years, I mean, I have a joint venture, you know, with, uh, Ruiwi, which is a Toronto-based online survey technology company. They're actually a listed company in Canada and one of the leading, you know, online survey technology companies in the world. So it's part of my, you know, research process.

• 35:15Speaker 04

  So we have joined forces to conduct proprietary surveys, okay, for my clients. And one of the surveys is what I call Co-World Two Survey. So I'm conducting surveys of Chinese people and Americans every single day to gauge how they feel about each other, you know, in terms of US-China relations. It is fascinating. Okay. I can tell you, even until a week ago, the Chinese people, when you asked them, like, is the US an enemy or an ally? Most Chinese people said ally as opposed to enemy, believe it or not. More people said ally than enemy. Okay. And that tells me that even though things were like, you know, getting worse and worse and worse,

• 35:56Speaker 04

  the Chinese media was very careful not to basically stoke, you know, nationalistic fervor in China. They were still trying to basically, you know, find a way out of this. But the last week, I mean, there was a huge spike in terms of percentage of my respondents in China who said the US is an enemy and adversary. Now, basically, forty-six percent of Chinese said America is an adversary or an enemy versus only forty percent of Americans who consider China as such. And so that is very, very interesting. So from that point of view, I think this is the biggest problem, which is that I didn't China sort of feels like, you know, they gave Trump three months and then things got worse and worse and worse. Maybe they have no idea if it's Trump

• 36:41Speaker 04

  or Trump's advisor, the China Hawks and so on and so forth. All I know is that they can no longer engage. Okay. Basically, so therefore they are preparing the population in China for a long standoff. This is why people are wrong to call this thing, oh, game of chicken. Because in a game, I'm a professor of economics here in Israel and I teach game theory. In game theory, yeah, I mean, everybody who's taking a course in game theory, they think about game of chicken. Game of chicken, by the way, is completely irrelevant at this point. Because in a game of chicken, as you know, one side will capitulate before the collision. So that nothing happens. Okay, nothing happens. So somebody stops before something bad happens. I would argue,

• 37:23Speaker 04

  we've already gone beyond a game of chicken. We're now in a war of attrition. A war of attrition is another game in game theory, except war of attrition. Basically, the game continues, even though it continues to inflict pain on both sides. But both sides sort of hang on until one side finally capitulate because the pain becomes unbearable. A little bit like World War One, if you like. And I think the Chinese are now preparing for this war of attrition. And this is why I think Trump is still thinking he's gonna get the Chinese, gonna get basically Xi Jinping on the phone, he's gonna do this and that. I am doubtful. I mean, even Scott Besson, as I said before, because Scott is not really, he's not a political type. He doesn't

• 38:04Speaker 04

  understand the hatred there is for China in Washington. And I think from that point of view, Trump is gonna be, it's gonna be difficult for Trump. But if anybody can do it, it's still Trump. But I'm just saying it's gonna be very difficult.

• 38:16Joe Weisenthal?

  Tracy, in our episode with Martin Wolf, I brought up the fact that, you know, for the first time, I actually think it's really important to read those surveys of international perspectives on China or on the US. And David giving a great example of like, why for any leader globally, not just China, the domestic attitudes probably really matter if any leader wants to maintain domestic legitimacy.

• 38:39Tracy Alloway?

  Sure. Although, one thing I would say in China is there is a rather authoritarian government.

• 38:44Speaker 04

  Sure.

• 38:45Tracy Alloway?

  That probably makes a difference in that dynamic. But David, I want to ask you a question. So you're a smart guy, reasonably smart guy. That's one of the biggest compliments I've ever given on Odd Lots, by the way.

• 38:56Speaker 04

  Thank you.

• 38:57Joe Weisenthal?

  He's so thrilled.

• 38:59Tracy Alloway?

  But do you worry at all that when it comes to, I should say, you're obviously a very keen watcher of the White House and everything that's going on there and trying to disaggregate, you know, what's driving certain policymakers. But do you worry that there's a degree of overthinking at play here, or, you know, sane-washing, perhaps, of Trump and the administration, that you're trying to like, put a framework on what's happening, that maybe isn't the case? Like, maybe it is just quite chaotic, and people are unsure of what they're doing, unsure of what the ultimate goals are?

• 39:34Speaker 04

  I do agree with that. I do think that, like, in a way, I was hoping for more. I mean, to the extent that, you know, like, for example, Doge is a good example, right? So Elon Musk was like, you know, he had three months after the elections to prepare for Doge, right? I mean, he supposedly had like hundreds of legal advisors, all sorts of people, they figured out everything. And guess what? It's gone from $2 trillion to $1 trillion, and then whatever, 10 days ago, he declared Trump's cabinet, he's going to find $150 billion of cuts for the 2026 budget. I mean, I track the daily US Treasury

• 40:15Speaker 04

  statement, okay, which tracks every single, like, whatever, in aggregate, but in very detailed form, every dollar that goes out of the Treasury account that the US federal government keeps with the Federal Reserve, where all this money goes in and out. And let me tell you this, I cannot see any evidence of any spending cuts so far. Hmm. Okay, so what I'm telling you is this, I mean, and that's Elon Musk. You know, and which scares me because I've always thought Elon Musk is supposed to be a very smart guy, you know, this guy. I mean, you don't become the richest man in the world just by talking big. Well, maybe it does. Maybe American capitalism is all about talking big, whatever it is. But this is a good example of basically, literally like, you know, talking out of, I don't know, I don't want to use any,

• 41:00Speaker 04

  you know, things I'm going to basically regret. But that's why this trade war thing is very important, as I said before. Because Trump thought, Trump is, and his political advisors, decided that because trade war in his first term was not inflationary. Therefore, it's not going to be inflationary this time. Therefore, there's no reason for the Fed not to cut interest rates. Okay? And that is completely like, so you see what I'm saying, how that is important? Because now it's like, oh, well, you know, like, what, Trump, you're, you're now, you want, you want to fire basically Powell? Why didn't you think about that three weeks ago, or a month ago, or even two months ago, when you're planning this whole tariff business?

• 41:41Speaker 04

  Okay, because I saw, you know, if you could get Elon Musk to cut spending, and that will be deflationary, which could potentially offset any inflationary effect associated with a tariff. And then you could get the Fed on your side if there's fiscal tightening. But right now, we haven't got any fiscal tightening because Elon Musk hasn't been able to deliver, other than talking big about spending cuts, and the tariff is going to be definitely inflationary this time. There is no way, it doesn't matter whether it's Powell, anybody else, who was the chairman of the Federal Reserve. No chairman of Federal Reserve will be cutting interest rates right now, under the circumstances. So from now on, you put Trump to be basically throwing a tantrum right now, pounding tables, saying, wow, Powell's not doing his job.

• 42:22Speaker 04

  That to me, again, just shows that this administration is off to a terrible start. To the extent that the assumptions that they're making for where they get to now were completely wrong. And unfortunately, I, I'm sorry to say this, I think Scott is a great guy, but Scott did not have the same kind of relationship that Steve Mnuchin had with. Trump in his first term.

• 42:45Joe Weisenthal?

  Yeah.

• 42:46Speaker 04

  If you remember, Steve Mnuchin was Trump's actually, uh, you know, campaign, campaign chairperson. Okay, so from that point of view, there was much more trust and I think therefore Mnuchin was a much more careful person. And then whereas I think Scott Bess is more of an academic philosopher, hedge fund guy, who thinks big in terms of like the theory, but like I think in terms of the day to day stuff, I don't know how much influence he has over Trump. As a result, I kind of feel like, I, I think there are a lot of mistakes have been made and what worries me more than anything else is that maybe these mistakes cannot be undone.

• 43:20Joe Weisenthal?

  Okay, what happens when the crunch arrives? As you said, Americans outside of investors haven't actually felt any of this impact at all. And as you say, like, how does Hollywood even continue with something as simple as losing access to affordable, advanced lightings? And that's just a fairly small sliver of the US economy. What does this summer look like to you in the United States, given this war of attrition dynamic that's going on?

• 43:46Speaker 04

  I think it's gonna look like a shit show. I, I really believe it's gonna be a shit show. I think we're gonna be going to recession. I think Trump's approval rating is gonna collapse. Okay, and I think, you know, the point here is this, I mean, again, you know, like, obviously, you know, there's only one question of any interest to anybody right now, which is, okay, fine. So when will Trump and Xi Jinping get on the phone? That, that's the only question, right? I mean, I think we, we can only, we can say right now that things will probably bottom once the two men have gotten on the phone, where that for that matter, Trump announces he's gonna be on his way to Beijing. To me, things are not bad enough for him to get to that point.

• 44:26Speaker 04

  So from that point of view, this is why I think, you know, at least in the near term, I think stocks are still going lower. I, I think, you know, from that point of view, because precisely the Chinese believe that time is on their side. And, and Trump, the problem is, is when you have a 145% tariff on China, how do you even back down from that? Let's just say you say, okay, fine, let's go from the 145 to 125% or even to 100%. You know what? It makes no difference. At 145% to 100%, that doesn't mean that China is gonna be able to export anymore to the US. So from that point of view, let's think about that, Smer Joe, for a second. In a negotiation, I thought from the very beginning, that's why I thought TikTok was a very good beginning.

• 45:09Speaker 04

  I thought the only way Trump can do deals with China is by doing a bunch of small deals. They eventually add up to a big one. But right now, with tariff at 145%, the only kind of deal you can do will be a very big deal. I think we can, we can all agree right now to do a big deal is going to be very difficult. For one thing, it takes a lot, a lot of time. And moreover, it takes a lot of political capital that Trump doesn't have. And again, you have to remember, you know, with Elon Musk trying to cut spending, the only thing that the House and the Senate can agree on is to increase defense spending. Like for this, the only difference is, oh, well, the House wants to increase defense spending only by $100 billion next year.

• 45:53Speaker 04

  The Senate wants to increase about $150 billion next year. Everything else is going to be going down. That's it. So when the politicians believe that, you know, China is as an existential threat, that these people are evil, we need to basically stop them before they stop us. Then you know what? It will be very, very difficult for Trump to make that big deal that I think is necessary right now to stop this whole thing. And this is why I, I cannot see me just, if I put my hat as a game theories on right now, I'm struggling to see a way out right now. But maybe, you know, you, I'm sure you'll find better, you know, more, more smarter guests. And if you do, let me know. Like, you know, what, what is the way out here?

• 46:36Joe Weisenthal?

  David Wu, that was a blast. Really appreciate your perspective and uh, maybe in uh, six months or a year or when uh, Trump and Xi Jinping get on the phone, we'll have you back. Thank you so much for uh, coming back on Odd Lots.

• 46:48Speaker 04

  Thanks for having me.

• 47:03Joe Weisenthal?

  I always feel like I have to catch my breath a little bit after talking with David. I knew that, but it's always like, it's always that energy.

• 47:09Tracy Alloway?

  You did say that in the intro, didn't you? Energetic.

• 47:12Joe Weisenthal?

  He's an energetic fellow, that's for sure.

• 47:14Tracy Alloway?

  Yes, for sure. And one thing I will say, I, I really do appreciate some of his insights into the Trump administration. Because in Trump one, you know, a lot of people got that. Call wrong.

• 47:25Joe Weisenthal?

  Yeah.

• 47:25Tracy Alloway?

  And a lot of people thought that we would see inflation from trade war number one, and we didn't really get that. And so it is very interesting to me to hear someone who was pretty supportive of that administration, the first Trump administration, sound quite negative on the second administration. And I guess our headline for this is going to be, you know, David Wu on the coming S H I T show in America.

• 47:51Joe Weisenthal?

  Look, whether it's the czar, whether it's the boyers, the conclusion is this is a very bad situation.

• 47:59Tracy Alloway?

  Yeah.

• 47:59Joe Weisenthal?

  Right. And as he said, they've literally gotten zero accomplishments so far. The war in Ukraine is still going. There's not even a TikTok deal. And then I really do think, you know, again, like, you know, it's useful, this idea, it's not a game of chicken. And the game, the damage is being done today as we speak with hardening of opinions on both sides. And the domestic polity and, you know, every leader, even an authoritarian one, has to maintain domestic legitimacy to varying degrees or another. So this idea that like, we're, you know, this is not a situation where someone could blink. There's already been this sort of like damage and it drags on further every single day.

• 48:42Joe Weisenthal?

  And I think part of what we're seeing in the market is no one can see what that obvious off ramp is.

• 48:47Tracy Alloway?

  Off ramp, yeah.

• 48:48Joe Weisenthal?

  Given those dynamics.

• 48:49Tracy Alloway?

  Yeah, it's funny you said that. I was literally about to say the same exact sentence, that the off ramp is hard to see. You know, one thing I realized, we mentioned Whitkoff.

• 48:57Joe Weisenthal?

  Yeah.

• 48:58Tracy Alloway?

  Going from like being a real estate guy to special envoy. One thing I appreciate about the Trump administration is the ability for a personal progress in terms of careers. Like you can kind of become, you know, they're very into personal development and experimenting with new roles, which is interesting to see.

• 49:17Joe Weisenthal?

  That's nice.

• 49:18Tracy Alloway?

  Yeah, I wanted to end on a nice note.

• 49:20Joe Weisenthal?

  Yes.

• 49:20Tracy Alloway?

  Okay, shall we leave it there?

• 49:22Joe Weisenthal?

  Let's leave it there.

• 49:22Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 49:28Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the Stalwart. Check out David Wu, his stuff at David Wu. Unbound? He's certainly unbound. Follow our producers, Carmen Rodriguez at Carmen Arman, Dashill Bennett at Dashbot, and Kale Brooks at KaleBrooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have all of our episodes and a daily newsletter that you should subscribe to. And you can chat about all of these topics. We even have a China room in our Discord, discord.gg/oddlots.

• 49:57Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about the off-ramp from the trade war, or lack thereof, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 50:50Speaker 07

  If you're a business owner, you need a card that can keep up. With the Delta SkyMiles Reserve Business American Express Card, everyday purchases transform into miles you can use towards future travel. So business as usual can lead to a well-deserved getaway. And for a limited time, card members can earn 200,000 bonus miles, the highest miles offered this year. Whether you're traveling for business or planning your next adventure, now's a great time to make every purchase go further. Apply today at www.delta.com/podcast. Offer ends November 4. Minimum spending requirements and terms apply.

• 51:26Speaker 05

  A business gift should do more than check a box. It should reflect your brand and show someone they're appreciated, recognized, and truly seen. 4imprint offers thousands of high-quality customizable products, like premium apparel, drinkware, tech, and more, making it easy to create a gift that feels meaningful and on-brand. And with 4imprint's expert support and their 360-degree guarantee, you can be 4imprint certain your order will arrive exactly as intended. Explore gifting with confidence at 4imprint.com. 4imprint, for certain.