Trump Seeks Elusive China Trade Deal; US Terminates Canada Trade Talks

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.

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1:02Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Lisa Mateo. Here are the top stories we're following today. Lisa, we begin with new developments on two trade fronts. First, talks between Treasury Secretary Scott Besant and China's Vice Premier Huli Fang are scheduled to take place in Malaysia this weekend. It's a prelude to the closely watched meeting between Presidents Trump and Xi Jinping next week. President Trump wants Xi to resume American soybean purchases, crack down on fentanyl, and back off on restrictions on rare earth exports. He says if no deal is reached, big tariffs will resume.

1:43Actually, on November 1st, the tariff on China goes to 157 percent, which is record-setting territory. And we don't want that because it's not sustainable for them. They can't sustain that. We don't want them to have to go through that. So I'm meeting with President Xi. And I would say the first we have some big issues, like with the farmers and various other things. But the first question I'm going to be asking him about is fentanyl. President Trump is scheduled to arrive in Malaysia, his first stop on his Asian trip early Sunday morning. Well, meantime, Nathan, President Trump is injecting new uncertainty into America's closest trading partnership.

2:22The president posted on Truth Social that he's terminating trade negotiations with Canada. He's citing this TV advertisement from the province of Ontario. When someone says let's impose tariffs on foreign imports, it looks like they're doing the patriotic thing by protecting American products and jobs. And sometimes for a short while it works, but only for a short time. But over the long run, such trade barriers hurt every American worker and consumer. Now that commercial features excerpts of then President Ronald Reagan defending free trade. We get more from Bloomberg's Balazs Pins. This is just a reminder of just how rocky the relationship with Canada has been ever since Trump returned to the White House.

3:08And even though there has been a sense of stabilization recently and talks have been happening, Mark Carney was in the White House a couple of weeks ago and that meeting seems to have gone well. that really important trade relationship, which is worth almost a trillion dollars a year. Bloomberg's Balazs-Penns reports President Trump is accusing Canada of timing the ad to interfere with the Supreme Court case against his country-by-country tariffs. Arguments in that case set for November 5th. Well now, Lisa, let's turn to the latest on the government shutdown. It is now day 24 of the second longest shutdown in American history.

3:41On day 23, Senate Democrats blocked a Republican bill that would have paid members of the military and federal workers who have had to stay on the job since the funds ran out October 1st. Democrats say that bill would have given President Trump too much leeway to decide which government employees have to keep working while the standoff continues. House Minority Leader Hakeem Jeffries says all federal workers will receive pay once the government reopens. When Donald Trump says anything, and he's the president of the United States, and there's been a willingness to engage in unlawful and illegal behavior, sometimes rubber-stamped by the conservative majority on the U.S.

4:16Supreme Court, that's problematic. But the law is very crystal clear in this particular instance. And we are going to make sure that every single federal employee receives the entirety of their pay. House Minority Leader Hakeem Jeffries spoke with Bloomberg's David Gurra. You can hear their full conversation on the latest edition of the Bloomberg Big Take podcast. And the government shutdown, Nathan, it's also delayed important economic data. Later this morning, we finally get the consumer price report for September. Bloomberg's Michael McKee has a preview. One rose among the thorns. We actually get some inflation data from the government.

4:50The Labor Department has called furloughed employees back to work to put together the September Consumer Price Index. Social Security uses a third quarter CPI average to determine next year's cost of living increase for beneficiaries, which by law must be published this month. The data had all been collected by the time the government shut down on October 1st, so it's simply a matter of collating it and making the usual seasonal adjustments. Analysts expect we'll see no appreciable slowdown from August, with headline CPI rising 0.4 % during the month and core 0.3%. That would put the annual rate of inflation at 3.1 % for both.

5:25Another move in the wrong direction for the Fed. Michael McKee, Bloomberg Radio. All right, Mike, thanks. One question remains, who will be the next Fed chairman? Bloomberg's Tom Keene put that question to Neil Detta, head of economic research at Renaissance Macro. Well, I frankly don't think it's any of the people that are being discussed right now. And the reason is, is because if it was going to be one of those people, they would have already named them by now. So, you know, I mean, I think the longer it goes on, the more likely it is, frankly, that Secretary Besant. I mean, what do we know about Treasury Secretary Besant?

6:01We know that number one, which is the most important, he has the confidence of the president of the United States. And number two, he has the confidence of the financial markets. And those are two pretty good. And number three, he probably is interviewing all these people and is thinking to himself, like, I'm better than all these guys. As for what the Fed does on policy, Renaissance Macro's Neil Dutta expects the central bank to cut rates next week and in December. Well, we now turn to some stocks on the move. Shares of Intel, they're up more than 8 percent. Well, the chipmaker returned to profitability and gave an upbeat revenue forecast.

6:34The outlook signals that Intel is on the right track following a turbulent year. Jay Goldberg is a senior semiconductor analyst with Seaport Research Partners. It's an encouraging step forward for the company. They've been through some rough times. And I think the driver of this quarter's results are their new products coming on stream. I think that's helping a lot. And I'm most encouraged by sort of the gross margin outlook for next quarter. Well, Seaport Research Partners also notes a slew of deals that has Intel shares up 90 percent so far this year. In the stretch of a few months, Intel secured an unconventional investment from the U.S.

7:12government and won investments from NVIDIA and SoftBank Group. Lisa's shares of Ford are driving higher as well this morning. They're up about two and a half percent. The automaker reported third quarter profits and sales above Wall Street estimates. CEO Jim Farley tells Bloomberg that Ford will largely bounce back next year from a devastating fire that hobbled a key supplier to its top-selling F-150 pickup. We're still working through it. It'll be, I'd say, around 100 ,000 units, but we still have the opportunity to improve that. This is really a retiming of wholesale. What we lose this year, we'll gain most of it back next year.

7:46Maybe a billion and a half to two and a half billion of EBIT this year. A little bit heavier on the cash because of how auto works. But we'll be gaining at least a billion, if not more, of that back next year. And Ford CEO Jim Farley now expects a billion-dollar financial hit from President Trump's tariffs. That's down from an earlier estimate of$2 billion. And a quick programming note, Nathan, we would like to invite you this weekend for another episode of the Michelle Hussein Show. Now, this week, Michelle sits down with Reform UK leader Nigel Farage. Among their topics, President Trump. In terms of keeping promises that he made to the electorate, yes.

8:25There are many other areas in which we might disagree or might do things differently. Which are the areas that you disagree? There are other areas we might disagree, social policy, etc. We might see things differently. But the fundamentalism of Trump is you tell the electorate, I'm going to do X, and you actually do it. And that's what he's doing. Well, you can listen and watch the entire interview with Michelle Hussain on Apple, YouTube, Spotify, or anywhere else you listen.

8:55All right, it's time now for Check On The News Around The World. For that, we go to Michael Barr. Hello, Lisa. The head coach of the Portland Trail Blazers and a player for the Miami Heat were arrested along with more than 30 other people in a takedown of two gambling operations. Authorities said those involved leaked inside information about NBA athletes and rigged poker games backed by mafia families. Portland coach Chauncey Billups was charged with participating in a conspiracy to rig high-stakes card games tied to organized crime families. U.S. Attorney Joseph Nacella says the defendants would lure victims into rigged poker games for a chance to play with sports celebrities.

9:36The scheme targeted victims known as, quote, fish, who were often lured to participate in these rigged games by the chance to play alongside former professional athletes who were known as, quote, face guards. Heat guard Terry Rozier is accused in a separate scheme of exploiting private information about players to win bets on games. Outgoing New York City Mayor Eric Adams officially threw his support behind former New York Governor Andrew Cuomo in the mayoral election. Self-described Democratic Socialist Zoran Mamdani leads in the polls over Cuomo and Republican Curtis Sliwa. If elected, Mamdani would be New York's first Muslim mayor.

10:19Cuomo running as an independent and Adams seized on Mamdani's views on the Israel-Hamas war to paint him as an extremist. New York can't be Europe, folks. I don't know what is wrong with people. You see what's playing out in other countries because of Islamic extremism. Mamdani called Cuomo and Adams puppets of President Trump. We have a president of this country who has spoken publicly of his desire for Eric Adams to drop out of the race. Eric Adams dropped out. Spoken of his desire for candidates to consolidate behind Andrew Cuomo. Today, Eric Adams is endorsing Andrew Cuomo. Election day is November 4th.

10:56New York Attorney General Letitia James is set to make her initial appearance in federal court today. James was indicted in a mortgage fraud case. In 2022, James sued Donald Trump and his company for fraud. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Lisa. Thank you, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in Dan Schwartzman. Thanks, Lisa. Game one of the World Series tonight in Toronto as the Blue Jays are hosting the Los Angeles Dodgers. LA's looking to repeat as champions, which would make them the first team to win back-to-back since 2000 when the Yankees won their third straight.

11:33Toronto hasn't been in this series since 1993. The Blue Jays send rookie Trey Yassavich to the mound versus the Dodgers' Blake Snell. Thursday night football, the LA Chargers dominated the Minnesota Vikings 37-10 behind three touchdown passes from Justin Herbert. There were just two games in the NBA last night, the Thunder beating the Pacers in double overtime 141-135 in a rematch of last year's final as Shea Gilgus-Alexander scored 55 points. In Game 2, the Warriors knocked off the Nuggets 137-131 in overtime. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

12:12This is Scarlett Fu. And I'm Paul Sweeney, inviting you to join us for the Bloomberg Intelligence Podcast. Every day, we harness the power of Bloomberg Intelligence to bring you deep dives into the companies that are moving markets from publicly traded companies like Apple to those that are privately owned but known by everyone on earth like OpenAI. Now, I helped to build Bloomberg Intelligence to what it is today, Scarlett. And now our analysts are the best in the world, covering more than 2 ,000 global companies. That is your legacy, Paul. And we speak to those in-house experts every day. They are Bloomberg's go-to authorities on sectors, companies, and legal processes.

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13:10Coast to coast on Bloomberg Radio. 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 looking for a quick win when he meets next week in South Korea with Chinese President Xi Jinping. Earlier this week, the president said he's got a lot of leverage heading into this first face-to-face encounter for both leaders in years. I think that China will come to the table and make a very fair deal because if they don't, they're going to be paying us 157 percent in tariffs.

13:46That was President Trump at the White House earlier this week. This morning, we're joined from Beijing by Bloomberg News senior reporter James Major. And James, the president puts this in very simple terms, but the dynamics going into these talks are really complicated, aren't they? So what are the chances that we get something like a big deal out of this one encounter next week? I would say that the chances of a big deal resolving a lot of the issues between the U.S. and China are practically zero. I mean, if you look at what happened in 2018, 2019, it took 18 months, almost two years of regular meetings and negotiations to get anything close to what could be called a big deal.

14:25And we've had a couple of meetings for a few days in Europe, and we've got some meetings coming up this week in Malaysia, where Scott Besant and Vice Premier Holi Fang will be meeting. but they're really not negotiating on the fundamental differences between the two countries. And so I think we'll get some agreements. If the two leaders do actually meet, which I wouldn't put 100 % probability on that, but if they do actually meet, I think we'll get some announcements out of that. But I don't think it's going to be some sort of overarching solving of all the different bilateral issues that the two countries are facing.

15:03Interesting. You say that there might not be a 100 % chance that the leaders meet on Thursday. What's got you thinking that there could be some vulnerability there? I mean, after the Madrid, sorry, after the Stockholm meeting, you know, Scott Besson came out and said that there wasn't a deal until Donald Trump said there was a deal. And the Chinese came out and said, we have a deal. And then eventually Donald Trump did come out and say, no, no, we did actually reach a deal. But there was a lot of uncertainty about, you know, what normally would have been, you know, the two sides come out and they announced something.

15:32The negotiators on the ground announced something. But here it really is until the last minute, until the president, Donald Trump says, I'm about to have a meeting or I've just had a meeting. I don't have that confidence that what we think is going to happen is actually going to happen. There's been too many cases where at the last minute, like you saw with the U.S. and Canada today, Mark Carney was hoping to do a deal with the U.S. this weekend before APEC. Suddenly, Donald Trump has come out and said, all the negotiations are off. So, it's that kind of uncertainty and volatility. I think that just means that I don't want to put my, I don't want to make a bet that the meeting between him and President Xi is definitely going to happen.

16:09Well, going into this, we've got the president talking about the threat of 157 % tariffs and, you know, China has come out with these rare earth export restrictions announcement. Given all this, who has the bigger leverage potentially? I think, I mean, if you look at what's happening so far with trade, you have had, I guess, since April or March, there's been increasingly higher tariffs, U.S. tariffs on Chinese goods. And yet, despite all that, I guess the current sort of average tariff rate is between 40 % and 50%. Despite that, China is still selling about a billion dollars a day worth of goods to America.

16:49And so, what that means is that even with those higher tariffs, there are no suppliers other than China for these goods that Chinese companies are selling. There are no other supplies at that price where some American companies are still willing to buy those products. So, yes, raising tariffs from 50 % to 150 % or whatever the latest threat is, is going to beat into that quicker. But I think this kind of Chinese dominance of products like rare earths, products like lithium-ion batteries, where they are really the only supplier at scale for the whole world, sort of gives them a lot of leverage in these kind of negotiations where they can clearly wear higher tariffs for a period of time.

17:33And they also have many markets outside the U.S. where other people are more than happy to buy those products, and it doesn't matter to them what the U.S. tariff is on those products. So I would say going to this, you're seeing with the rare earth export controls, with that strength in exports, the Chinese seem to have the uphand. 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.

18:10Wall 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. And 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 Nathan Hager. And I'm Lisa Mateo. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

19:02Hello, 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. 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.

19:46So please join me, listen and subscribe to The Michelle Hussain Show from Bloomberg Weekend, wherever you get your podcasts. You certainly ask interesting questions.