Trump Threatens 100% Tariffs on Russia, Pledges Arms for Ukraine

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1:53The Bloomberg Businessweek Daily podcast with Carol Masser and Tim Stenevek on Bloomberg Radio. President Trump threatened to impose stiff financial penalties on Russia if it does not end hostilities with Ukraine. That's within 50 days while pledging fresh weapons supplies for Kiev. Trump said the levies would come in the form of secondary tariffs without providing details. The president has used the term in the past to describe duties imposed on countries for trading with American adversaries. adversaries. Angela Stend is senior fellow at the Brookings Institution. She's also the author of Putin's World, Russia Against the West and With the Rest.

2:30She's a former national intelligence officer for Russia and Eurasia at the National Intelligence Council, also served in the Office of Policy Planning at the U.S. Department of State. Angela, good to have you with us this afternoon. Secretary Lutnik followed up afterward. He said it would be a secondary sanction or secondary sanctions, I should say. What exactly does that mean for a country that has had sanctions on it for years? So the actual tariffs or sanctions on Russia wouldn't mean very much tariffs because we barely trade with Russia. I think$5 billion last year. But what that would mean is sanctions on China, sanctions on India.

3:09They're the two largest purchasers of Russian oil, probably a country like Turkey as well, which purchases a lot of Russian oil. So they are threatening those countries. I believe that President Trump said 100 percent tariffs. There's a Senate bill which would impose 500 percent tariffs, secondary tariffs on these countries that purchase Russian hydrocarbons. So that's the real threat, not so much to Russia. Angela, how meaningful would it be for these countries? so uh i mean it would be meaningful because they are the largest purchases um of russian oil uh but then we don't know how they might retaliate um india of course is a country that's been drawing closer to the united states so to have that kind of tariff on india would also i think affect other aspects of the U.S.-Indian relationship.

4:05So I think they're kind of all waiting. I should say that, you know, saying that Russia has 50 days to end the war, you have to realize that Russia is now in the middle of a very brutal summer offensive. And if you give them 50 days, the summer will be over by then. So Russia can still do an enormous amount of damage to Ukraine in those 50 days. Well, in terms of moving the needle on actually ending this conflict, Dr. Sten, is this enough in your view to actually push Russia to stop its bombardment of Ukraine? Well, the most important thing at the moment are the weapons supplies. I mean, the Ukrainians desperately need air defenses.

4:45They need those Patriot batteries. And today, President Trump said that there's 17 of them available. So what's going to happen is European allies are going to purchase American Patriot missiles and other weapons. they are then going to give them to Ukraine. So that enables President Trump to say to his base, well, we're not spending any more money on Ukraine. Whether that's enough to help Ukraine really give the message to Putin that he cannot win this war, I think that's doubtful. I mean, Putin's not going to stop until he really believes that he's not going to win this. And for that, the Ukrainians need an enormous amount of weapons, including, in the end, weapons that could strike Moscow.

5:27But we haven't said that we're going to provide those yet. Well, let's listen to exactly what the president said earlier. Here he is in the Oval Office with NATO Secretary General Mark Ruda. We're going to be sending them weapons and they're going to be paying for them. The United States will not be having any payment made. We're not buying it, but we will manufacture it and they're going to be paying for it. This is a very big deal we've made. This is billions of dollars worth of military equipment is going to be purchased. from the United States going to NATO, et cetera. And that's going to be quickly distributed to the battlefield.

6:06Ukraine will take it up. And, you know, say what you want about Ukraine. When the war started, they had no chance. And they still would have had no chance if the equipment, they had the best equipment, because we do make the best planes and missiles and we make the best military equipment in the world by far. That was President Trump earlier today. He was in the Oval Office with NATO Secretary General Mark Ruda. Dr. Sten, I want to talk about the weapons portion of this and the significance that you see in an environment where many in the Republican Party were happy not to provide Ukraine with any aid.

6:43How do you view this politically for President Trump and also whether or not you think this is enough of a move by the United States? And again, the president saying the United States is going to provide them NATO's NATO member states are going to pay for them if that's enough to give Ukraine the edge against Russia. Well, so first of all, this certainly has split the MAGA base because there's still significant numbers of people beginning with Vice President Vance who think that we shouldn't be supplying Ukraine. And then you had the undersecretary in the Defense Department, Elbridge Colby, apparently order the end of supplying Ukraine with weapons because he thinks only the Europeans should do this.

7:23President Trump reversed that order that apparently he hadn't heard about before. So, yes, I think this is still a contentious issue within his base. Is that enough to help Ukraine? I mean, Ukraine just needs an enormous amount of these Patriot batteries if it gets 17 extra ones. That's terrific. Ukrainians themselves are manufacturing their own drones now. They're also making deals with European countries to co-produce them. But we really don't know whether that is enough because the Russians are also stepping up their production of weapons. And they're also using their drones in very creative ways to try and get around some of the barriers that the Ukrainians have put in their way.

8:06So at the moment, things are very difficult for Ukraine. And I think only very significant numbers of weapons can help them push this back. And they also do have a mobilization problem. They, you know, Russia has many more people that can mobilize. It's got North Koreans fighting for the Russians and Ukrainians do face the shortage. And, you know, they are so far refusing to draft 18 to 25 year olds, but they are under pressure from some of the Western countries to do so. Angela, we saw a report last week that North Korea is supplying as much as 40 percent of Russia's ammunition. Just how much of an asset is this for Russia?

8:51Oh, North Korea is an enormous asset for Russia now. We now hear they may send as many as 30 ,000 more Korean troops to Russia to help. And with the ammunition, so without North Korea, it would be very difficult for Russia to do what it's doing. Iran is less important now, by the way, because the Russians are producing their own drones. But I would say the single most important country in terms of weapon supplies right now is North Korea. Dr. Angela Sten, we always appreciate you taking the time and joining us on Bloomberg Businessweek Daily. Dr. Angela Sten is senior fellow at the Brookings Institution, also the author of Putin's World, Russia Against the West and with the rest.

9:33Bloomberg Businessweek Daily is brought to you by HPE, bringing you the self-driving network, a network that's self-optimizing, self-healing, and self-protecting, and only continues to get smarter. Learn more at hpe.com slash networking. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Social media posts on sleep outnumber those on exercise by three to one and those on diet by 5 to 1, according to consumer researcher Ryla Global Consulting. And so it may come as no surprise that there are seemingly no limits to what we will do to get a good night's sleep.

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11:30When it comes to your finances, your business, your future, at LPL, we ask, what if you could? Paid advertisement. Investing involves risk, including potential loss of principal. LPL Financial LLC. Member FINRA SIPC. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Let's talk about the world of Elon, Inc. The money behind Elon Musk's trillion-dollar empire is increasingly flowing in one direction, and that's toward AI. Musk said on Sunday that he plans to hold a vote by Tesla shareholders on whether the company should invest in XAI, the cash-burning AI startup that he founded two years ago.

12:15It comes shortly after SpaceX, his mammoth rocket launch company, agreed to invest about$2 billion into the AI firm. This, according to people familiar with the matter. Dana Hull and Ed Ludlow write about Elon turning to Tesla and SpaceX to fuel his AI ambitions. Dana Hull is Bloomberg News senior technology reporter. She's also a contributor to the Elon, Inc. podcast. You can catch new episodes of that every single week, wherever you get your podcasts. She joins us from our San Francisco bureau. Dana, a Tesla is, I know it's not a car company because we're told it's not a car company. I heard you chuckle there.

12:50We're told it's not a car company. They do Optimus, they do the self-driving stuff. But listen, what moves the company's stock? How many cars they delivered? Do they have any business, according to the folks you talked to, making an investment in this money-losing AI company? Yeah, so the money needs of XAI are enormous. I mean, billions of dollars are pouring into artificial intelligence. There's huge need for compute and data centers. And, you know, XAI is building out this big data center in Memphis called Colossus. And as we've seen so often with Elon Musk, you know, he doesn't I mean, he he runs five companies, but they're not really separate.

13:29They have overlapping investors, engineers, management, sometimes boards. And Musk often, I don't want to say robs Peter to pay Paul, but he will co-mingle his companies in a way that is very unlike any other corporate CEO that we've seen. And I think in his mind, AI is the future. Tesla is also an AI company. If they can invest in XAI, they maybe get preferential access to Grok. We're already seeing that Tesla is now integrating Grok, the chatbot, into its cars. We know that Tesla has sold Megapacks to XAI for that Memphis data center. So they already are working together quite a bit. And I think, you know, a lot of investors, particularly the retail investors, see this as a way to get in on XAI.

14:14I mean, so there probably is a fair amount of shareholder support for this idea, at least from the retail side. Yeah. And speaking of support, so, of course, Musk is planning to hold a vote by Tesla shareholders on whether or not the EV maker should invest in XAI. Does Elon usually let other people, including his shareholders and supporters, weigh in on his decision making? Yeah, I mean, so Tesla is a publicly traded company. And so this would be a management proposal that would likely be spelled out in the proxy. We know that Tesla is having its shareholder meeting on November 6th. We have not seen a proxy yet.

14:50But this idea is something that Musk has floated for over a year now. I mean, I think he first polled people on X, like, should Tesla invest$5 billion in XAI like a year ago? And so it sounds like now it's likely to be in the proxy. So, I mean, because it is a publicly traded company, shareholders have to weigh in. It would be a sizable investment for Tesla. I want to read a post that you link to in the piece that you and Ed wrote. It's from Grok on X. First off, we deeply apologize for the horrific behavior that many experienced. We have removed that deprecated code and refactor the entire system to prevent further abuse.

15:31This was on Friday, Dana, and it was about the horrific behavior. It was referred to itself as Mecca Hitler, and it had posts that praised Adolf Hitler and appeared to call the Holocaust, quote, effective. This is this is the chat bot for XAI. Is this thing ready? Like, like if you're a Tesla investor, do you have pause about sending money from Tesla to a company that has made a mistake such as this in the in the AI race? I know, right? That that is a very good question. Well, I think like when you say Tesla investor, you know, there's sort of two camps of investors. There are institutional investors, a lot of index funds.

16:15You know, Tesla obviously joined the S &P 500 back in December 2020. And then there's this very rapid retail shareholder base that is wildly enthusiastic, very on board with Elon. And they're really betting on Elon in the future. And if the future is not car sales, it's got to be something. And so I see that this is all part of Elon's big plan to really position himself as a leader in AI. Remember that XAI was founded after OpenAI by his rival, Sam Altman, came out with ChatGPT. And so you're seeing Grok try to be a big player in this field. Yes, they have absolutely made mistakes. The whole Hitler thing from last week was horrible.

16:57I think it's notable that Grok apologized or XAI apologized and they seem to be sorting it out. But yeah, I mean, the other question I have is like, do Tesla owners want Grok in their cars? I mean, I'm assuming there's a way to opt out or not enable that if you want. But I don't think that when people buy a Tesla, they necessarily signed up for Grok. So Musk has, of course, really stepped away from that whole political sphere that he was in for a little while. Except when he tweets. I was going to say, is it fair to say that that's the case? He's trying to step away, I will say. I don't really buy that, to be honest.

17:37I mean, he had to step away from Doge because his time as a special government employee had like a limit. Like you can only serve X number of days per year as an SGE. And so like that came to an end, but he just can't help himself. Like if he feels strongly about something, like he cannot keep his mouth shut. So we saw him tweeting over the weekend about the Epstein files. I mean, and he is still talking about creating a third party. He has, you know, for all intents and purposes, quote unquote, stepped away from Doge. But I think he still has ambitions to be a player in the midterms to potentially really start this third party.

18:16And, you know, he has poured so much money into American politics already. I don't see him going quietly into the night on that. As we think about XAI, I mean, is there still a conversation about his head being in too many places right now with too many business ventures? I mean, that's an ongoing perennial criticism of Elon that he spread too thin, that he's distracted, that he's got too many things on his plate. But like, that's the way he's operated for years. I mean, you know, he simultaneously ran Tesla and SpaceX for decades. And SpaceX is the most valuable company in the world right now.

18:52And Tesla still has a one trillion dollar market cap. So I feel like a lot of long term investors see past that. And they think that, you know, Elon is a genius who can hyper focus where he needs to and when he needs to. And, you know, that that criticism doesn't hasn't really held up like he is able to execute when he's hyper focused and he hyper focuses a lot like every day. How can we look to Tesla's acquisition of SolarCity close to a decade ago as sort of a blueprint for a private investment or an investment in a private company such as XAI? Well, it was the same kind of deal, right? Where SolarCity was struggling and really needed a bailout.

19:32And so Tesla bought SolarCity, which was rife with all of these conflicts of interests because Elon was the chair of the board, was the largest investor. So it was like, you know, some people forget like Tesla acquired SolarCity. I mean, SolarCity was a company that Elon founded with his cousins. So this was, and you know, and now, I mean, Tesla still has a solar roof division somewhat. But it's the same thing. Tesla has money. XAI needs money. Elon's going to go to his board and say, we should invest. They're going to bring it to the shareholders. I'm sure there'll be a campaign around it. I would imagine that it could pass unless there's really strong institutional opposition.

20:12And the SolarCity deal was rife with all these conflicts and it went to court, but ultimately Tesla prevailed and it ended up being okay for shareholders. I mean, And they took a bath initially, but the company has still achieved great heights. Chief Investment Officer Nancy Tangler said that an investment into XAI will further dilute the declining EV business. Is this something that you're hearing from sources as well? I mean, absolutely. Tesla used to be all about selling cars. The company used to say that it was going to make 20 million cars a year by 2030. They've completely abandoned that.

20:53You know, Elon now tweets things about how, like, owning a car will be like owning a horse. Like, the future is all about shared mobility and ride sharing and AI and optimists. And, you know, we haven't heard anything about the Mexico plant in months. I mean, I think that that plant is basically dead for all intents and purposes. So, yeah, I mean, you know, Tesla has got to find a way to make money. And if they can catch the AI wave and get a return on their investment in XAI, ultimately, that's seen as a good thing. In about 30 seconds or less, how is SpaceX doing in regards to everyone trying to do the space race right now?

21:32SpaceX is the dominant launch provider in the United States, full stop. I mean, there's no other way to get to the International Space Station except for on SpaceX in the United States. So I think that they and they have Starlink. So, I mean, even though they've had some setbacks with Starship, they are the dominant provider in the U.S. So next time the president threatens to cut off contracts with SpaceX, just remember what Dana said, full stop. They're the dominant provider of this technology. The Pentagon just gave XAI a contract today with some other AI companies as well, up to 200 million per each to do AI for the government.

22:12So those contracts keep flowing. Dana Hull, Bloomberg News, senior technology reporter, also contributor to the Elon, Inc. podcast. Catch new episodes of the podcast each week. This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. President Trump and his allies have seized upon a new way to criticize Fed Chair Jay Powell, his handling of an expensive renovation of the Federal Reserve's headquarters.

22:53I think if Jerome Powell stepped down, it would be a great thing. I don't know that he's going to, but he should. Jerome Powell's been very bad for our country. We should have the lowest interest rate on earth, and we don't. He just refuses to do it, and yet he's spending two and a half billion dollars rebuilding the Fed. That was President Trump just yesterday in Maryland. This construction project offers the clearest example yet of how Trump and those in his orbit are looking for every opportunity to scrutinize Jerome Powell's leadership at the central bank, even beyond his economic stewardship.

23:28Bloomberg News Federal Reserve reporter Amaro Amokwe joins us now from our Washington, D.C. Bureau. A$2.5 billion renovation, the topic of the renovation coming up when Jay Powell defended the renovations as necessary during his testimony to the Senate Banking Committee late last month. Some of those are just flatly misleading. The idea of elevators, you know, it's the same elevator. It's been there since the building was built. So that's a mischaracterization. And some of those are no longer in the plans. You know, that's earlier. The plans have continued to evolve. I do want to bring in Amara Omokwe.

24:04She's been writing about this. She's Bloomberg News Federal Reserve reporter. She joins us from Washington, D.C. $2.5 billion is what is at issue here. What exactly is the Federal Reserve renovation happening right now? And who started planning this? Like, give us the details here. Yeah. So the Fed is currently renovating two historic buildings here in Washington, D.C., and they've said those renovations are basically meant to consolidate all their operations in one place and really restore these two historic buildings that are very old and that the Fed says haven't been like comprehensively restored in quite some time.

24:43And so that's kind of the Fed's rationale for these renovations. They were approved by the Fed's board several years ago. So this project is not a new project. The Fed, the Trump administration scrutiny is new, but this project has been going on for quite a while. And so what we're seeing here is President Trump and those in his administration now taking issue with the overall price tag of the project, which has increased in recent years, and then also taking issue with what Fed Chair Jerome Powell said about some of the design features in the renovation when he was on the Hill last month talking about these renovations.

25:19And some of the administration officials are basically alleging that Powell was not truthful in that testimony. And that seems to be what they're using to kind of lay the groundwork to say that perhaps President Trump has cause to remove Chair Powell from his position on the Fed's Board of Governors. Because, of course, to remove someone from the Fed's Board of Governors, you have to meet a very high legal standard, which is cause something like malfeasance or neglect of duty. And so some administration officials seem to be trying to use this renovation issue to try and establish that cause. Amara, as you mentioned, this is not new.

25:54This renovation has been going on for quite some time now, but is this the first time that the magnitude of the renovation is really being questioned? Yeah, I would say so. And what kind of set this off was media reports about some of the features in the renovation. Basically, there was a media report that sort of characterized some of the features in the renovation as very lavish, very extravagant. And so that led to Republican senators when Chair Powell was on the Hill last month, that led them to sort of question him over why there are some of these features, why the costs for the project have increased over the years.