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00:00Obviously we're hearing much more from the U.S. side at this point but who benefits among the automakers from this truce on the car side. Well for an America first president you might be sort of surprised to hear that it's actually the German automakers who would be real beneficiaries of this so BMW and Mercedes both have big SUV plants down in the southeastern part of the country and they've really been hurt by the fact that there's been such a significant amount of tariffs sort of thrown at both Chinese made vehicles coming into the US and on U.S. made vehicles going in going to China because they ship a lot of SUV out of those plants to China. So you actually have some big beneficiaries as well. I hear that that would be considered U.S. automakers Tesla of course is an import only brand in China . So this was this is a big development for them. Ford also they have some plans to build Lincoln models in China eventually and told our Keith Naughton last week that they want to accelerate those plans. But we're talking about sometime next year. So they also would like to see some relief on this front . I do have a chart here my GTC library showing the car surplus between the U.S. and China. The white here is the number of cars that the U.S. sends to China. The red the imports from China to the United States. There it is. Craig what does this mean from an electric vehicle perspective. I mean there is some irony in that you've got President Trump threatening to end tax credits here in the United States while in China you have them dis incentivizing traditional automakers from making you know typical gas guzzlers and highly incentivizing eevee makers . Right. And adding to the irony too. Just last week we heard President Trump or at least read to President Trump in tweets talk about GM making a big bet on China years ago and his prediction that that won't pan out. Ironically enough there will be a lot of investment to make electric vehicles in China to serve that market because they are implementing tougher standards there. And we aren't seeing a significant amount of imports into the US of China build electric vehicles. But GM does for instance make the Cadillac sex plug in hybrid in China and has been importing those into the US. We're surely going to see more automakers wanting to import some of the either plug in hybrids or fully Betty fully battery electric vehicles that they make in China to serve that market. They're surely going to want to send those to the U.S. at some point we don't have a whole lot of specifics on what those models will be just yet . But certainly there they're flooding that market because the government is requiring them to do so in order to keep serving what is a huge market on the global scale. On the global market now Larry in the context of your new report on Chinese influence what do you make of this deal in general de talks for now. How significant is it . Well I think it's an interim agreement that reduces tensions . But you know as we note in our report there are very fundamental challenges that the United States is facing just in the economic realm in terms of technology theft forced technology transfer misappropriation of intellectual property and all of the non-transparent for poor non-transparent forms of penetration of our university labs and those need to be addressed vigorously and the negotiations to come. So let's hone in on this intellectual property issue because Larry Kudlow the White House economic adviser has indicated that the two presidents also talked about this intellectual property theft issue and are close to reaching some sort of agreement. You know what is the state of play there in terms of how in your view China is not respecting US intellectual property and the implications of that . Well American companies are pretty much forced to hand over their intellectual property according to a pretty rapid timetable as a condition for gaining access to the vast Chinese market. That's one problem that needs to be addressed that kind of coercion needs to stop. And then there's all the elements of simple theft of technology. And as I said people coming into American universities sometimes who are P.L. a People's Liberation Army research scientists. But they don't say that on their application form. They mask the real location of where they work by giving some generic Technology University name and then you know if they're really scientists for the People's Liberation Army. What's their agenda when they come here and work on advanced robotics or gene splicing or driverless vehicles or whatever the cutting edge technology may be. All of this needs to be addressed. We need really radical transparency in this relationship. Well we're looking for an update from the White House on that issue in particular. But in general as you mentioned this is an interim agreement. The deadline is March 1st. What do you imagine happens on March 1st . Well you know I think the Trump administration Emily has bet so heavily on this that they can't just accept a fig leaf here . And while I'm very wary and I think a lot of people who've been working on this report are very wary of a generalized trade war we do think there needs to be more reasonable reciprocity in the U.S. China relationship not only on trade but in all the different matters of exchange between think tanks universities and journalists and so on. And if that isn't forthcoming then I don't think President Trump is going to be able to just put a Band-Aid on this and say we have an agreement. I think the Chinese need to understand that we've really reached a kind of existential questioning of the entire relationship and they need to be much more forthcoming and to change the way they operate in and with the United States .

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Why German Automakers Benefit From China-U.S. Trade Truce

U.S. Treasury Secretary Steven Mnuchin said that China has agreed to eliminate tariffs on imported automobiles and White House economic adviser Larry Kudlow said the U.S. and China are “pretty close” to an agreement on stopping intellectual property theft. Bloomberg's Craig Trudell and Hoover Institution Senior Fellow Larry Diamond discuss on "Bloomberg Technology." (Source: Bloomberg)

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