Minnesota Backlash Spurs Policy Shift; Trump Vows to Raise Tariffs to 25% on South Korean Goods

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts

1:02Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin in Minneapolis, where President Trump may be signaling a strategy shift after the deaths of two U.S. citizens in immigration raids this month. The president says he's sending his border czar, Tom Homan, to the city, the man who who had been overseeing ICE operations there, Border Patrol Commander-at-Large Greg Bovino, is expected to leave as soon as today. Holman is seen as more measured in his approach than Homeland Security Secretary Kristi Noem, but White House Press Secretary Caroline Levitt says this is not a sign that the president has lost confidence in Noem.

1:47Mr. Holman is doing an exceptional job, and he has been working with Secretary Noem and President Trump over the course of the last year. Secretary Noem still has the utmost confidence and trust of the president of the United States, and she's continuing to oversee the entire Department of Homeland Security and all of the immigration enforcement that's taking place across the whole entire country. Press Secretary Caroline Levitt spoke at the White House news conference and the New York Times reports President Trump met with Secretary Noem for nearly two hours in the Oval Office yesterday but did not suggest her job was at risk.

2:18President Trump says he also spoke with Minnesota Governor Tim Walz and will consider independent investigations into the shootings and reducing the number of federal agents in the state. Nathan, outrage over the shooting death of Minneapolis ICU nurse Alex Preddy now has Washington hurtling toward a government shutdown at the end of the week. Senate Democrats are threatening to vote against funds for the Department of Homeland Security unless it comes with new safeguards like warrant requirements and body cameras for ICE and Border Patrol agents. Republicans are signaling they'll resist those demands, but several GOP senators are calling for an impartial investigation into Preddy's killing.

2:57A shutdown would likely have little impact on ICE or Border Patrol. They received massive funding in President Trump's tax bill last year. The government might not be the only thing shutting down, Karen. Several airlines are cutting flights again due to the weather. So far, about 1 ,000 flights have been canceled today. That's according to FlightAware. The National Weather Service is warning of another potential significant winter storm later this week. U.S. natural gas is falling today as traders take profits. Prices shot up nearly 30 percent yesterday amid freezing temperatures. Nathan, we have several developments on the geopolitical front this morning.

3:34U.K. Prime Minister Keir Starmer is heading to Beijing this week to meet with Chinese leaders. In an interview with Bloomberg, Starmer said the U.K. will not have to choose between the U.S. and China as he tries not to draw the ire of President Trump. We get more from Bloomberg's Rosalind Matheson. It's not an easy visit. It will be a very delicate one for Starmer to balance, as he says, you know, like a lot of leads he's talking about, we're not trying to take a side here. He'll keep talking about the importance of the U.S. relationship. But equally, he'll want to come away from this China visit with some proper deals in the bag and to show it's not just rhetoric.

4:11Bloomberg's Rosalind Matheson says this will be the first visit by a British prime minister to China in eight years. Meanwhile, Karen, Canada's Prime Minister Mark Carney spoke yesterday with President Trump and Treasury Secretary Scott Besson talked about the conversation with Fox's Sean Hannity. I was in the Oval with the president today. He spoke to Prime Minister Carney, who was very aggressively walking back some of the unfortunate remarks he made at Davos. And, Sean, I'm not sure what the prime minister was thinking. That was Treasury Secretary Scott Besson speaking with Fox. In Davos last week, Carney spoke about the need for middle powers to band together to counter aggressive coercion by the world's superpowers.

4:55Many observers saw his comments as being aimed at the U.S. Nathan, President Trump is threatening to raise tariffs on South Korean goods to 25 percent. In a social media post, the president said the country's lawmakers had not lived up to the deal they agreed to with the new rate applying to autos, lumber, pharmaceutical and other products. Bloomberg's White House correspondent Josh Wingrove reports. He's essentially ripping up, or at least for now, the deal and saying that's because the Koreans are slow walking it. I should note that there were a lot of question marks, including from what the American position was about this deal.

5:28And so this is another case for countries that are looking at this, including the EU and the UK that had their deals and then saw the Greenland tariff threat come in. The Trump's deals aren't necessarily locked in. If implemented, Bloomberg's Josh Wingrove says the move could have wide-ranging effects on major South Korean companies that export to the U.S., such as Hyundai Motor. Turning to markets now, Karen, shares of major health insurers are tumbling in early trading. That's after the U.S. proposed plans to keep Medicare payment rates flat next year. Analysts had expected an increase as high as 6%.

6:02President Trump has been facing criticism for Americans' affordability challenges. He started targeting insurers, blaming them for rising premiums in private Affordable Care Act plans. And checking the stocks this morning, shares of Humana are now down more than 13 percent. CVS Health is down 10 percent. United Health down 9 percent. Let's turn to the economy now, Nathan, where the Federal Reserve kicks off its two-day policy meeting in Washington later today. And the Fed is widely expected to leave rates unchanged as a steadier jobs market restores a degree of consensus at the central bank. Jan Hatsius is chief economist at Goldman Sachs.

6:39Wage growth has continued to come down. Rent inflation has continued to come down. I think that should get the majority on the FOMC comfortable with some additional cuts in the second half. I don't expect anything this week. I don't expect anything in the next few meetings. But the second half of the year is a different story. Goldman Sachs chief economist Jan Hatsius made the comments in an interview with Bloomberg at the Goldman Sachs Global Macro Conference in Hong Kong. A rocky start for TikTok's newly established U.S. entity. It's working to resolve a major infrastructure failure triggered by a data center power disruption.

7:16The issues, which started on Sunday, prevented millions of Americans from posting videos, accessing their feeds, or seeing up-to-date engagement metrics.

7:28Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Crews have been working to restore power knocked out by a massive weekend winter storm. At least 30 deaths have been reported in states afflicted with severe cold. The storm dropped over a foot of snow from Arkansas to New England. More widespread record cold temperatures are forecast for today, with eastern Texas through western Pennsylvania under extreme cold warnings. Pennsylvania Governor Josh Shapiro.

8:01What was so unique about this storm was nearly every or every one of our 67 counties got hit. New Jersey Governor Mikey Sherrill says cleanup is underway. Sherrill says the state of emergencies she implemented on Saturday is now over. I think we've gone through the acute crisis. Now it's post-crisis cleanup and making sure we continue to keep everyone safe through this cold weather. We are enduring. enduring. New York City Mayor Zoran Mamdani. While the worst is behind us, there is still more to be done as we clear the snow and restore our city. And how are New Yorkers grading the new mayor on handling the storm?

8:42If you wanted to get out and around, you could and I did, so there's something to be said for that too, you know? So what do you give him? I give him an A. He's alright. He's trying to do something good. He get a B. A B. He get a B. Strong B. What's your grade? B minus. Officials say almost all MTA train and bus service in New York City will operate on a regular weekday schedule today. North Korea fired what appeared to be ballistic missiles off its east coast days after the U.S. released a new defense strategy. The launch comes after the U.S. National Defense Strategy urged South Korea to take the primary role in deterring North Korea with critical but more limited U.S.

9:22support. Global news, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr, and this is Bloomberg. Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Karen, Americans have been doing well at the Australian Open. Six into the quarterfinals, four on the women's side. But Coco Gauff, seated third, lost to the Ukrainian Alina Svitolina, and it was not closed. 6-1, 6-2. Two young Californians also went down. Ivijovic, who just turned 18, won only three games against top seed Irina Sabalenka. And Lerner Tien, who just turned 20, lost in four sets to Alex Zverev.

9:58Arizona, a unanimous number one in the most recent college basketball poll, and the Wildcats stayed undefeated, winning at BYU. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Hello, I'm Michelle Hussain, and for more than 20 years, I was at the BBC. military withdrawal from Afghanistan. But all the time I was delivering the headlines, I wanted to go further than the news of the day, to spend more time with the people shaping our world. And that's what I'm doing here on this podcast. Speaking to people from Nigel Farage, Russia needs to be taught a lesson, to tech journalist Kara Swisher.

10:41And the tech industry is running wild. You know, they've gotten what they wanted and they've seen a huge run-up in their stock prices. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to The Michelle Hussain Show from Bloomberg Weekend, wherever you get your podcasts. You certainly ask interesting questions.

11:14Radio nationwide on Sirius XM and around the world on Bloomberg.com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. President Donald Trump may be shifting tactics after two killings of U.S. citizens in Minneapolis immigration enforcement. The president is sending his border czar Tom Hulman to oversee the operation, but the White House is not shifting blame for tensions in the state. Here's Press Secretary Caroline Levitt. This tragedy occurred as a result of a deliberate and hostile resistance by Democrat leaders in Minnesota. White House Press Secretary Caroline Levitt.

11:50This morning, we're joined by Bloomberg D.C. breaking news editor Alexander Pearson. So, Alex, how big a shift is this? What kind of a change of approach could we see from Tom Homan in Minneapolis? Good morning. Good morning, Nathan. It certainly seems to be a significant shift, certainly in terms of tone, but potentially also in strategy. The Trump administration, Trump himself and his officials were very defensive of immigration enforcement officials in the wake of the killing last weekend of Alex Pretti. And ever since outcries grown over video footage of that particular incident, they've come under huge pressure, also from some Republicans within Trump's own party.

12:35And yesterday we did see the president come out with a far more measured tone. He said he'd had a call with the governor of Minnesota and also with the mayor of Minneapolis, that those were good calls. They seem to be cooperative. And also this announcement that he was sending his border side to Minneapolis, which in and of itself is notable, given that Tom Homan is known within the administration as not really being in favor of the current operations that are happening in many U.S. cities. He's not really in favor of these large-scale deployments. He's in favor of far more focused immigration enforcement.

13:09So that's certainly being read as an attempt by the president to try to diffuse some of the tensions, bring down, you know, some of the shrill tone around this issue, and to potentially bring in someone like Tom Homan who can shift the strategy away from what is turning out to be quite, you know, a controversial operation in that city. Well, with Holman coming in, Alex, what does this mean for the figures who had been overseeing ICE enforcement in Minneapolis? Border Patrol Commander-at-Large Greg Bovino and Homeland Security Secretary Kristi Noem, who's come under a lot of criticism as well. That's right.

13:46So the current reporting is that Bovino will be removed from the city. That's been reported overnight. It's not been officially confirmed yet, but that's certainly the direction that seems to be going. He'll be relieved of his duties and Holman will come in and actually manage ICE operations in the city. And Department of Homeland Security Secretary Christine Ohm has come under a lot of criticism. And there has been some concern that maybe her job could be at risk. And certainly there was a report overnight from the New York Times that she requested a meeting with the president in the Oval Office.

14:21That meeting took place. It lasted around two hours. There was no indication that her job was at risk based on that conversation, but we don't really know that much more about what was discussed. But certainly that the meeting took place, you know, raises some questions about, you know, how secure her position is, given that she was one of the officials who came out strongest in support of border control in the wake of the killing over the weekend. Got about a minute left here, but the outrage over these killings has Senate Democrats threatening to block a major government funding bill unless it strips out DHS funds.

14:55What's the risk of a government shutdown by the end of the week? Yeah, the risk is significant. So Senate Minority Leader Chuck Schumer has threatened not to support that funding package unless that DHS funding is removed. Republicans so far have not actually said that they're willing to do that. They want other measures to be taken, but the Democrats have not budged on their position. They say that the measures so far proposed are insufficient. So at the moment, we are heading towards potentially a partial government shutdown, whereby, you know, the bills, these bills will not pass. And as a result, there won't be enough funding for some parts of the government.

15:33It is noted below that ICE and other border immigration enforcement agencies will still have funding due to last year's tax bill. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston and nationwide on Sirius XM Channel 121. Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces.

16:17And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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