China hits back. EU makes plans.
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How are China’s new 34% retaliatory tariffs expected to impact global trade?
Well, in a world that's gone a little bit crazy, the only question is how much crazier can it get? And there are lots of known unknowns, like how far will the retaliations go? Will there be retaliations to the retaliations? And how much of the uh economy will be impacted and how long is it all gonna last? And could it become so catastrophic that Donald Trump actually backs down and says that was his intention all along? Who knows? But it's not without precedent. Last time someone tried to push the tariffs this high. Recession followed and there was a change of president and the tariffs were dropped, but not for a few years later. It's Monday, it's the 7th of April 2025. It's the morning call from NAB. Good morning.
Well a massive fall in the Australian dollar on Friday was down four point six percent to sixty point four US cents, actually got down below sixty at one stage. The US dollar climbed up a bit on Friday to one hundred and thirty on the DXY from one hundred and one point five at the start of the session, so it's bouncing back after the uh being the lowest dollar since last October, the day before. Uh the pound was down one point six percent, the euro down naught point nine percent, and obviously Stock markets went crazy. So on Friday, the Nasdaq came down five point eight percent, the S P lost six percent, the Dow down five and a half percent, European shares uh largely down just under the five percent mark, including the FTSE one hundred, the VIX in the US is up over forty five, bond yields are lower, uh, but not such drastic moves.
So ten year treasury is down three basis points on Friday, but closing down below four percent, down Uh eight for Germ for ten year guilt in the UK. Aussie ten years were down four basis points to four point two one percent. Now on futures uh take another few basis points off that. And oil prices also well down. Uh so WTI fell seven point four percent on Friday, Brent down six point five percent to below sixty five and a half US cents. I think that's the lowest since twenty twenty one. So look at all that going on. But Donald Trump is saying, give it time, I'm off for a game of golf.
What are the immediate effects of the latest US‑China tariff round on currency markets?
And Treasury Secretary Stock Scott Bessant uh says that um he doesn't think any of this is going to cause a recession. No reason to price it in, he says. Really? Well here's an abstratigo catrill. I guess it's what the markets do today that is the question, because of course China now imposing a thirty four percent reciprocal tariff from April the tenth. I guess the question is is uh who can h hold out the longest? Is it uh China, is it Europe, or is it the United States? That I mean China can trade with others, I guess Europe can to a point. Uh the US is actually making it very difficult to trade with them. So how does this all end, I wonder?
Um morning Phil. Uh yes. So um and and again to to your point it's probably worth emphasizing that the dates are pretty tight. So um uh you know the imposition of the big tariffs coming from the US will start on the ninth. Uh and by the way, the ten percent across the board tariff or the is already started on Saturday. Um and then of course China is saying that they will retaliate on the tenth. So we only got three days for for this not to happen. Um and then reading the the Wall Street Journal, um, there is actually no communication whatsoever between China and the US at the moment. So we have to assume that the base case will be that this will happen this week. Um and Of course then the big question is, um, you know, the the uh the US has won
that any country that looks to retaliate will face even more severe tariffs. So um again the the assumption here is that uh if we, you know, really follow and and assume that Trump is gonna say what he's gonna do, which is actually what is has been the case since the election, um, then we have to kind of be open minded to the prospect that things are likely to get worse before they get better. Um and then of course there's the issue around what Europe does and and we know that there's a big trade meeting t uh between sorry the ministers of trade uh meeting today to decide um w how to respond.
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Chapters
8 chapters
1
How are China’s new 34% retaliatory tariffs expected to impact global trade?
0:01–2:02
2
What are the immediate effects of the latest US‑China tariff round on currency markets?
2:02–4:12
3
How are European trade ministers planning to respond to the US‑China tariff escalation?
4:12–5:53
4
What does the latest data on US inflation and labour markets mean for Fed policy?
5:53–8:31
5
Will the heightened tariff environment trigger a recession in the United States?
8:31–10:56
6
How are commodity prices, especially oil, influencing inflation expectations?
10:56–13:40
7
What are the short‑term outlooks for the Australian and US dollars amid rising risk aversion?
13:40–15:55
8
What key economic events this week could shift the trajectory of the trade war?
15:55–17:43