Did today's session with the South
Korean president bring us closer to or
move us further away from a deal with
China?
>> Well, I mean, one of the issues for
South Korea and other Asian nations is
how much they're going to remain
integrated with China in terms of their
exports to the United States. So, there
are very important issues that need to
be discussed with the US uh if the US
demands uh that so-called rules of
origin are changed. limiting the amount
of Chinese content in uh East Asian
exports to the US that will really have
implications for their businesses. Uh
they may have to create supply chains
exclusively for the United States. So
there are serious issues. I'm afraid
today's discussion
uh really touched on things that um even
the president seemed to be admitting uh
were misunderstandings or
misinformation. So I don't think we
moved the ball ahead at all today.
>> Well, I want to ask you as well about
this investment in US ship building that
we heard about from uh President E last
week on Bloomberg. We talked about this
as a matter of fact with uh Gene Soka,
but it's something that I asked
Christopher Smart about today. He's with
Arrowth and used to be an economic
adviser to President Obama uh about the
current trade deal here between the US
and South Korea and what it might mean
uh for investment in our ship building.
Listen to what he said.
>> Korea has committed to invest I think
it's $350 billion in the US including in
ship building. Um in return for that
they were able to match auto tariffs
that the Japanese uh government was able
to secure at 15%. So on on on on paper
at least it looks like a very good deal
for Korea in the context of what other
countries have been getting.
>> How does Beijing feel about Korea
investing in US ship building? Mary,
>> well you know I think on the just on the
surface there's nothing wrong with South
Korea investing in US ship building. Uh
South Korea has an advantage in ship
building. they would be a welcomed
investor in US to to increase US ship
building. I think the Chinese understand
that. What is looming in the background
though are you know coming charges on
chi on on uh Chinese ships that dock in
the United States um particularly those
that are owned by Chinese companies. So,
China has to see this as an offensive
move. Even though on its face, the
simple foreign investment by South Korea
and the United States is not really a
threat to them.
>> Interesting. Well, there's a lot more
that we can talk about here with regard
to China, including a potential meeting.
Mary, you heard me discussing this with
Wendy, and the president was asked today
about it. Uh, setting up a meeting, a
bilateral, trilateral, I guess, meeting,
US, South Korea, China. Then he even
suggested Kim Jong-un from North Korea.
Is this just happy talk in sort of an
off-hand remark in the Oval Office or
something that could actually happen?
>> Well, the you know, President Xiinping
is not going to engage in any meeting,
including bilaterally, with President
Trump, unless there's a deal that's
already just waiting to be inked. It is
completely unclear what we want from
North Korea uh in the Trump
administration. Um, and if the North
Koreans are anywhere close to being able
to deliver on security uh, guarantees or
changes, they're very much involved
deeply in the arms trade. Um, and
they're advancing in their technology.
It's very hard to see what they think
they could gain from some kind of
moratorum or whatever it is the
president believes that his special
relationship
um with Kim Jong-un could provide for
the United States. So right now I'd have
to say it sounds like happy talk.
There's not going to be any such meeting
unless there's a lot of uh diplomatic
groundwork that gets done and real
outcomes that the Chinese could sign on
to.
>> Yeah. Well, President Trump is still
threatening more tariffs on China. I
believe a 200% tariff was the threat
today if no uh magnets. The latest
strategy, I guess, of of preempting
whatever the next conversation is going
to be with Beijing, but we're already
seeing China pull back, and I'm sure
that you've seen evidence of this as
well. I mentioned Gene Soka. He joined
us last week on Bloomberg, runs the port
of Los Angeles, and talked about the
shift in cargo ships that he's seeing
since President Trump's tariff policies
took effect. Listen to how he put it.
>> What we have seen is cargo emanating
from China really dropping. Back in
2018, it was 60% of our portfolio. Today
it's 45% and continuing to decline. An
uptick from Vietnam, Indonesia,
Malaysia, Thailand, not so much from
India. And with the 50% tariffs that
were slapped on that country, I don't
see much change there yet. But
definitely a shift to Southeast Asia.
Are those numbers a motivating factor
for President Xi Mary? How low can those
numbers get before China needs to worry?
>> Well, I love Gene. He's always so clear
on what's happening at the port of LA
and I think that's just reflective of
what we have seen and the shift away
from dependence on the American market
uh in China has been happening for a
very long time. China got the message to
diversify its trade, its import sources,
its export destinations quite a while
ago. Uh the US um hasn't been strategic
about doing that except in the case of
China where we raised tariffs early on
in the first Trump administration. Uh
these kinds of threats are nothing new
to President Xiinping. This is not going
to move him. Uh yes, it is causing pain
for uh particularly coastal provinces
that are heavily dependent on export
manufacturing, but this is not the
future of China as Xiinping sees it. The
Chinese have now uh you know had a shot
across the vow, a big one. We're going
to withhold magnets if you continue to
try to bully us. Uh and what they've
gotten in response is more bullying. So
they do have uh you know tools that c
they can use to hurt the United States
and they're trying to get the US to the
bargaining table just as much as the US
is trying to get China. So this is the
relationship that both sides need for
now. Uh but right today we're not seeing
any real change uh or breakthrough that
will give us a hint as to where this is
going to end up.
>> Yeah. So what happens first? the magnets
start showing up or we actually see a
200% tariff on China.
>> If we see a 200% tariff, we are
definitely not going to see any magnets
and we're going to see more things
disappear. There are many categories of
exports where China is the dominant
supplier. So they have they have more
bullets in a sense to fire behind this
one. I think that the negotiators in
particular Secretary Bessant and trade
representative Greer are doing all they
can to make sure that they can get a
negotiated settlement uh to the dispute
that is to the liking of President Trump
and the Chinese side to the liking of
President uh Xiinping. So whether they
can make that progress uh in time to
meet President Trump's which seems to be
an increasingly short fuse um we really
don't know. That is a continuing source
of great uncertainty not only for the
port of LA but for all all businesses
but there's others out there. the 50% on
Brazil um you know the increasing uh
tensions that have been thrown at other
countries like India those still remain
out there even as some uncertainty has
uh dissipated now that we have deals
with many of the advanced economies of
the world such as Japan South Korea etc.
When the president holds a meeting like
he did today talking about new trade
administration, two trade deals with
South Korea, I think that makes
companies worry even more about where's
the best place to invest and source.