Growth. Policean ominous term, drawing guns and firing a shot as a ministrations turned violent again in hong kong. Shery looking at where markets are trading, we see u. S. Futures kicking off down 1. 2 . Is a big plunge after the regular session it is a big plunge after the regular session friday, and respond to retaliatory tariffs. In the regular session we saw the dow fall 623 point and tech and energy, some of the big losers on the s p 500 while the nasdaq fell 3 . We have of the recession indicators like a 210 yield curve goes to inverting while the threemonth tenure was the deepest inversion since march 2007. At the moment we continue to see the downward trend with u. S. Futures down 1. 4 which is a big plunge given futures at the open dont move much. Lets see how we are shaping up for the markets in asia with selena in beijing. We are seeing red across the board, new zealand opening and nikkei futures down. Kospi pointing down. Sox stocks are absorbing the escalation ahead of the weekend, trump escalating as well as telling companies to pull out of china. We see the all out economic war after the tumultuous august for the financial markets. Can see the yen following. Towardsontinued moves haven assets. Earlier we saw the yen strength in past the january flash crash of 104. 87. Looking at Economic Data we are expecting later this hour, we tradingect mainland data and singapore production after a week gdp. A weak gdp. And the philippine markets are closed. Thank you. Lets take a look at the first word news. Hong kong police are defending an officers decision to fire his gun as the best option area clashes with protesters escalated overnight. At a press briefing, police said the action was necessary as protesters were charging them. Police have arrested 36 people following sundays protest, including several violent crashes. Clashes. A new businessman leader after a political process that featured no other candidates. He will be the third leader since macau was handed back to china in 1999 after centuries of rule by portugal. There is little public controversy, highlighting the proposition movement. The tax on global tech and potential duties on french wine were on the menu as the g7 wound up in biarritz. The proposal for Tax Companies to Tax Companies that make more than a certain amount infuriated the trump administration. He promised 100 tariffs on wine imports. Macronpresident emmanuel raised eyebrows at the g7 by inviting the Iranian Foreign minister for a lastminute sideline meeting. France said the arrangement was to diskette deescalate tensions with iran. They met for 30 minutes before he left. The french teams of the other g7 leaders were told in advance he was coming. French team said the other g7 leaders were told in advance he was coming. Shery we saw President Trump after the regular close on friday confirmingshery he will boost tariffs on chinese imports as china impose retaliatory tariffs. You are seeing brent falling after two weeks of gains. Now we are seeing concerns over Global Demand rising as we see the u. S. China trade tensions escalate, offsetting some of the speculations of the Federal Reserve cutting rates after fed chair powells commentary. It is about pessimism over the global economy. Thanks. President trump has sharply escalated the trade war and has one regret. He said he is having second thoughts, but the white house clarified saying he meant his only regret is not imposing higher tariffs from the start. China is not backing down. State media saying beijing is seriously making preparations for a breakdown in relations. Andkrasny is in washington, correspondent Tom Mackenzie is in beijing. What is the latest . Ros it is as you described it. On friday President Trump foreshadowed a big move against china, sending the stock market tumbling and it came after the close, not into the market just yet very futures are down. There is concern among businesses and President Trumps aides including his economic director and suggested the u. S. Should be preparing for a long trade war against china with no real kind of sign of life at the end of the tunnel. We are seeing strong words from beijing. They are not backing down. Was they are not, and it the action from china that triggered the latest trump tweet storm friday when he or when china outlined its retaliatory measures, which it had planned three weeks ago. It should not have come as a big surprise to the white house. We saw the chinese saying they will put tariffs on 75 billion worth of u. S. Goods including , oil and beef, pork autos. They are dividing those tariffs between the first of september and september 15. Matching and mirroring the plans tariffs from the u. S. Trump had outlined on 10 on 300 billion worth of goods. It is raised to 15 . That was the response in terms of the chinese side. After tweets from trump, you had the state media saying we are as you said now very seriously preparing for a further escalation in the trade tensions between the two sides. Thehave the editor of influential global Times Newspaper saying, pointing to issues beyond the tariffs, talking about taiwan and hong kong, saying the u. S. Was at risk of losing china. On saturday we had a statement from the Commerce Ministry accusing the u. S. Of protectionism, trade protection and the state media saying china would fight the trade war until the end. Shery we have seen Business Leaders in the u. S. Not stay silent as this trade war rages on, but we see President Trump taking a harder stance against corporate america. His directive or tweet on friday that u. S. Companies should get out of china, make alternative arrangements, has rattled the Business Community more than anything else so far. They have seen tariffs as a negotiating tip, and they will be put on and taken off. The idea President Trump could invoke a kind of obscure law to National Security emergency to Order Companies out of china has rattled corporate america. We have seen the Consumer TechnologyAssociation Call the tariffs the worst mistake since a measure in the 1930s which triggered the great depression. Businesses which really crave predictability are rattled by all of this from technology to aviation, retail. They are feeling the pinch. It is kind of unclear what happens next. Certainly doesnt seem like good news. Interesting polling about it regular americans by cbs. 25 feel like President Trump is taking the right moves in china and that was before the latest tariffs escalation. The support for him on china trade policy could be lower now. How about reaction from china . How seriously is china taking the threats of u. S. Corporate investment . Tom they are looking at Companies Like ford and starbucks that are investing billions of dollars and continue to in the chinese market. Tesla, building out a factory that helps and it hopes to be up and running by the end of the year. But it is also taking seriously the suggestion that there are very serious concerns in the u. S. About decoupling with china. President trump is vocalizing some of it. It strengthens the hardliners who suggested we need to take this decoupling very seriously and continue to invest in homegrown champions and indigenous innovation. You will expect more pressure from the hawks to make sure there are subsidies. And you can get additional measures to open up the markets here to companies outside of the u. S. Whether from the european union, japan and other places. What we are waiting for beyond the retaliation is if they will be nontariff barriers china will impose on u. S. Corporations here , something they take seriously here including unreliable entities list, banning companies from operating here. These are things we are looking out for as tensions continue. Shery angie Tom Mackenzie shery Tom Mackenzie and ros krasny, thank you. President trump, paired with the escalation on friday, another series of tweets attacking Federal Reserve chairman jay powell, and he did it after jackson hole, which puts comments by powell which pushed stocks higher. It was interesting because investors took positive cues from mr. Powells comments at jackson hole but trump reversed that. Kathleen this is the speech everyone was waiting for, fed chair, traditionally as the fed chair, kicking off the symposium with a speech people will say, will he signal a rate hike . You can see him walking with mark carney, still president of the bank of england. He did open the door to a rate cut. He cited global slowing Global Growth and looked ahead, even if the economy looks solid now. There is a focus on trade that apparently got donald trump. Trade policy uncertainty is playing a role in the global slowdown. That is no surprise. Everyone agrees. And then the thing he said before, which is that we will act as appropriate to sustain the economic expansion. People take this as a sign he is on the side of the fed getting ready for a rate cut. What happens next . Trump blasted powell in a way we have hardly ever seen. This was as stocks had been rallying. Lets look at what trump tweeted out. What he said, as usual the fed did nothing. E wasbody at jackson hol going, donald trump have thought this was a fed meeting. He confused jackson hole in the speech. He went on to say we have we a strong dollar. The u. S. Will do great. This is what got peoples attention. Who is our bigger enemy, jay ell for chairman she . Chairman xi . People,thing, uniformly their mouths were hanging open. It was a really interesting morning at jackson hole and something the markets are paying attention to. Were paying attention to. Paul so the reaction was one of shock. Where do we go from here . Kathleen shock, concern because people talk about the fact it will not change the fed policy course, but it does undermine the credibility of the institution. Lets listen to what president Patrick Harker told us friday morning. The concerns fed independence is being threatened, everybody i talked to said the fed even though we are not perfect, we dont always make perfect decisions, independence of the Federal Reserve is critical for the american economy. Kathleen what will really matter is Interest Rates. All that point Patrick Harker thinks they can hold. Jim bullard of see st. Louis, a voter, had this to say. He thinks the yield curve is one of the big issues. You have a yield curve that is massively inverted. You have the funds rate as the highest point on a whole new curve. That doesnt make sense. We have to react to the fact there has been a downdraft in global yields area selina in the interview in global yields. Kathleen in the interview, he thinks there could be a lively debate on the Interest Rate cut. It will be interesting to see what the other heads of the fed say when you step back. Powell gave donald trump what donald trump has been saying the economy needs, opens the door to a rate cut, ands stock rally turns into a big stock decline. Maybe the president is misunderstanding, goes ahead on the fed side. That is something the fed has to with. The more trump does that, the more they have to cut. Who knows. Paul kathleen hays, thank you for joining us. Still to come, greg sorry and joins us. He said trade is the most important factor in the markets for the next 12 months. We will look at how this could play out. This is bloomberg. Paul we have asian futures unsurprisingly pointing down quite a bit since the trade war between china and the u. S. Ramps up. Seeing how investors should be playing volatility. We have the sorry a Strategic Partners founder with us. That was quite an interesting weekend, wasnt it would work the fed committing to easing and President Trump taking that as a signal to double down in the trade war. Where does this leave us . Investors need to brace for more volatility. We are flat on the markets over january 18 months since 2018. Investors need to be prepared for more of this, take advantage of market rallies, rate cash, gift securities, and look at the wealth accumulating to look at the by. This is going to be with us for some time. Paul you say you prefer u. S. Markets but is the trade war pushing u. S. Equities into dangerous territory now . Way to look athe it, there is more challenges in the overseas markets. Germany just issued 30 year bonds at a zero yields. Acceleration is affecting europe and asia more than the u. S. There are private pockets of opportunity. M a. Is organic we think this will drive prices in certain sectors of the market. Shery because of the challenges europe faces, they are talking about stimulus potentially that , china and other parts of the economy have more ammunition. Doesnt that feel attractive . Are lear if valuations the valuations are attractive. Until we see volatile talent until we see more with the trade war, that is the key. Until we get a plan, there is an entry point in markets that are more fairly valued than our own. It would be prudent we until we get that visibility rather than catch a falling knife. Shery you say you like missable bonds. We have seen this 4 trillion market, stability with low risk returns actually play up more risk. The highyield segment gaining traction. Is this sector at risk here . For investors in a high income tax bracket, and then the 10 year with 1. 25 on a taxable basis, it is worth taking risk. If you stay with states with relatively low without room to increase, and there is still good collection of revenues from turnpikes and buildings, i think there is better value in Municipal Bonds for higher wage earners. Paul you mentioned a minute ago in terms of stocks you like , biotech, Things Health care. How serious are you taking this threat from the president that u. S. Companies engaged in china should no longer engage in china. Does that mean you have got to be selective . Is pervasivereat across all industries and why we , sector andility where you are placing assets. With the threat over the weekend, the hesitation. We have already been seeing upex of leading indicators last year. Last year it was. 6 . We had the roundtable leaders it is not good, because when they spend and money gets invested, it is reflected in better earnings which reflect higher stock prices. That threat has a bigger concern than any one industry. Are you say the bonds overbought but the last 72 hours show global risk is intensifying. If we look at some havens, we have a chart indicating the japanese yen continuing to strengthen against the u. S. Dollar. If you are looking around and thinking of getting defensive, are there haven trades in the u. S. . People have started to look at gold and as you look at financial markets, Precious Metals represent a safe haven place. I have not outperformed the stock market. We would stick with plain vanilla ons because they are the safe haven and that is where risk assets move in times of stock market volatility. Shery shery with us. Great to have you with us. You can get a roundup of stories you need to know in todays edition of daybreak. Go to dayb on your terminals. You can customize settings so you only get news on industries and assets you care about. This is bloomberg. Shery lets get a quick check of business flash headlines. Sinopec reported a fall in firsthalf earnings in a fuel glut and rising competition. Net income dropped to 4. 5 billion in six months through june down from 6 billion a year earlier. Operating profits slumped 51 . Sinopec is the most exposed among chinas top three oil companies. Worldsme of the biggest banks and Advisory Firms are making their case for a role in the biggest ipo. Saudi aramco has revived a much aftered share shelving plans to buy a 70 stake in one company. Will compete for a role in the offering that could come as early as next year. Still to come on daybreak australia, tensions between protesters and police intensify in hong kong. China signals it may intervene. The latest coming up. This is bloomberg. A. M. Here in sydney, gloomy monday morning. The market open 90 minutes away and futures looking weaker by 1. 3 after a heavy slowdown in the u. S. Friday. I am paul allen. Ahn. i am shery lets get to first word news with Tom Mackenzie. Tom President Trump has further slowed trade tensions when his saying he regrets not putting higher tariffs on china. Said the mediaam misinterpreted the president s initial merit remarks about having second thoughts. She says he does not regret starting a trade war but thinks he should have hit china party from the start. The u. S. And japan agreed in principle to a trade deal that will include higher purchases of american arm products. President trump and shinzo abe announced a this in biarritz, saying they have agreed on every point of contention. Abe said there is work to be done by the two sides aim to slight just signed a deal during the you and meeting in new york next month. North korea has followed up a string of person recent missile tests with a new super large missile test. Kim jongun saying it is a great weapon. President trump says he is not happy with continued weapons tests but short range launches are not a violation. He said he expected to meet kim again soon. Rocket carrying a humanoid robot failed to dock with the International Space station. They say the failure is because of problems in the docking system and a second attempt will be made tuesday. This took off thursday with the robot in the pilot seat area cosmos said the robot had been taught how to manually conduct a docking. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Shery big market moves in reaction to the escalating trade war. What are you seeing . Seeing the rush to haven assets. The jpy fell below the flash crash low. Low. Er it was at the 2016 the key area is 104. 56. The strongest level since 2016. Keep that key level in mind. We are seeing it at 100 4. 65, slightly weaker. We are checking out some earnings we will be watching for any moment. Morgan stanley expecting a irong result amid rallying ore prices. The focus will be on the outlook for the markets. Any progress on new project plans for that company. Later today expecting fiscal your results from boro and viva energy group. Switching boards again, a quick review on china earnings to expect. China railway, great wall motor. Over acrossing news all of the assets is the escalation of the trade war. We are watching for sentiment on that. Paul thank you. Lets get to more of what we should be watching as treating gets underway in asia. Adam haigh is with us. Just how bad is the markets assessment of this latest flareup in relations . The yen at the strongest since 2016. Adam we got a bunch of reaction in friday trading so what we are seeing in asia, it was hesitant to say it would be a real risk up move and then treasury futures open, putting serious pressure on the yen. The s p 500 futures that have opened 1. 5 lower doesnt out well for the risk scenario for the start of the week. A lot of traders when they left in asia friday expected to be coming in monday digesting what was happening at jackson hole tonehe town of how the of powells speech. Morgan stanley is saying what this really does is causes them to dial back growth expectations for Global Growth, cuts the global recession scenario in the picture in the next six to nine months. It is clearly a risk off environment, and both sense that things have gotten worse over the last 48 to 72 hours. Shery we see the offshore chinese yuan at the lowest on record, perp not surpassing the level in august 6. What is the options traders positioning at the moment telling us . Even before we had this latest escalation there was fairly significant pricing in the market that showed people betting against the chinese currency over the for seeable future. The trajectory was really what we were expecting. We had that spike in volatility a few weeks ago and have had an increase of late but really looking at monday to see if that pricing changes now. The question is whether you get some kind of defense of the currency around these levels, whether the authorities feel they need to stem declines. The move we are seeing monday is fairly sizable and would before entering a little bit of caution from the authorities. We will be doing our reporting seeing what the banks are getting the tone from the authorities in terms of whether they feel there is defense of the yuan at this point. We are getting closer to 7. 2 from 7. 1 . Of the decline question comes when we get significant moves. Volatility. Ied shery we are seeing it across the markets area think you so haigh,r that, adam Global Markets editor. You can find his charts on the gtv library. Takents in hong kong have an ominous term turn. Police drawing guns and beijing gives the strongest signal it may have to intervene. Stephen engle is following that development. Last week we were talking about how protesters had turned peaceful, that the violence stopped but it seems to have returned. The respite did not last long. Friday we had a fairly peaceful human train human chain. That went off without a hitch. It was quite something. Then saturday and sunday last night, quite violent again. Six Police Officers had to draw sidearms. The superintendent defending one officers decision to actually higher a round into the air because the officers life was in great danger. The government is saying these violent acts pushed hong kong to a dangerous edge. Another 36 arrests on sunday on top of two dozen saturday, 15 officers according to the hong the,police were injured in if you want to call it a mealy malay call it a melee. A full an had charged officer with metal pipes and other weapons including bricks and molotov cocktails. Wereally friday protests peaceful. Saturday and sunday, far from it. What is the latest reaction from beijing . Intervention might be on the cards. Stephen this is the most worrying height worrying thing because beijing has hong kongy warned that it needs to take care of this. In perhaps the strongest worded statement, commentary from a news agency last night which is a government, and i dont want to parse words or interpret them. The commentary says it is not only chinas Central Government authority but also its responsibility to intervene when riots take place in hong kong. The commentary alluded to comments made by a deceased former leader who said beijing has to act under such circumstances and in that commentary they used the terminology Color Revolution amed at overturning constitutional institution. That many people say is a signal beijing is getting ready for further action against hong kong. We know there has been a buildup for exercises across the border in shenzhen of chinese pla troops. Thank you for watching that story for us. Later on daybreak asia we will speak to the former chief secretary of hong kong. That is 10 40 a. M. In sydney, 8 40 in hong kong. The rba governor has a warning for the world central bankers, you can see the day on your own. We will have more on the Key Takeaways from jackson hole. This is bloomberg. Triggeringde war is other aspirants around the world other actions around the world, other countries reevaluating trade relationships. This could get out of control. Trade uncertainty with us in what i saw was a system that has become more cautious. Business leaders express a fair amount of concern about knowing where export markets are going and what their opportunities are going to be. We have to keep monitoring the way forms will firms will react and if it will spill over into hiring plans and Spending Plans and into the consumer sector. Said he figures some fed he figures we spoke to at jackson hole. The rba governor philip lowe drew rave reviews with one simple message, Monetary Policy makers can only do so much to isre up the economy would under pressure from Political Uncertainty. Kathleen hays has just returned from where he spoke. Kathleen some striking. There was a twoday symposium friday and saturday and then there is a wrapup panel. They look at what the themes have been and the president of the reserve bank of australia or the governor got up and gave this speech with a simple and powerful message, central bankers alone cant save the world when is politicians who are taking steps that are weighing on the global economy. He have brexit, italy, and went on to say political shocks are turning into economic shocks. Policy accommodations sometime he says if you are putting stimulus in when it is geopolitical politics hitting the economy, it will boost asset prices and not have much impact on the thing slowing the economy down because Interest Rate cuts cant change what a trade were is doing or brexit. He called on politicians to act, saying ending Political Uncertainty would help. That resonatedr with the audience. Thoughn it is not as the consensus is we are going for global recession. Many central bankers see an economy that has a decent under footing that the more regulatory work continues, the more uncertainty not just on the trade war but italy, brexit and hong kong, all of these things have nothing to do with consumer demand but they upset them. That is why it is like a clarion call. The governments job to do something because we could cushion it or try to, but we can only do so much. It was stunning to see that with one of the best banks out of the conference. The best things out of this conference. Shery joining me now is stephen blitz. Great to have you with us. Was that sort of the narrative we heard from fed chair powell speech friday as well . It is interesting when you read through the fed, he comes to the point of saying the fed is a steward of Economic Growth rather than a progenitor. Thereal emphasis for moving trend of the economy up or down or sideways has to do with congress and the private sector. Lots of smart economists have written about this in terms of growth. As far as the fed is concerned, he put them in a taker. Take the economic environment what it is and then said policy within what is given to them to maximize the dual mandate of high employment and keeping inflation under control. Shery how successful would you say he was in resetting the fed policy or communications because we have seen him in the past not be that successful . It was a good speech but didnt have a chance to resume or really, people really think about what he said and implications because the minute he got finished, trump talked this was an fomc meeting. I dont know what he was thinking about but it basically took the thunder from this speech at the point in the markets ran with trump, not only his tweet about old but what he was talking about in terms of and bring up the trade war with china. Want to get to breaking news on the terminal, trade numbers out of new zealand, big miss, deficit at 685 million. The market was expecting something different. Imports are the culprit, blowing out to 5. 1 million. The kiwi dollar has been weakening. Today, 63. 43. Honorable mention to australias 10 year bonds, dropping 12 basis points to. 855. If i can get to the domestic u. S. Economy for a moment, if we can imagine there was no trade war, with the fed be considering easing . Not, but you know, assuming a can opener, the old joke about economists, the shape of the curve, the shift in global Economic Growth, there are some core issues globally which trump is trying to talk about attacking in a very politics way. The big problem is the fact that europe is allowed to sustain this incredible large trade surplus and a weaker currency, so germany is trading with an italian currency. We have the promise back to 1973 is freenge rates flowing exchange rates. But the reality is we have not had that. Because of that, these are issues. The European Central bank is saying to its domestic capital, leave. There is no Investment Opportunity here, so find it someplace else because that is what negative rates do. Point, thesome negative rates and imbalance of policies around the world will eventually slow things down and cause the fed to ease, whether it would have been in july, probably not. To your point on the euro, there has been thoughts or suggestions currency intervention could be coming down the track. How likely is that . It is there. I would not say 50 probability but what we know of trump, it would not suggest a risk of 1 or 2 . That would say 25 chance he gets fed up with the fed. The fed also has a limit to how low it can drop Interest Rates. Because one of the main concerns on powells part in the whole fomc, if rates get too low, you bring up financial fragility. People start taking too much risk. How low can you drop Interest Rates as long as the u. S. Economy is extending expanding . There is a limit. Lets say they did that limit magically tomorrow and trump was insistent on some sort of change in the dollar, etc. , i can imagine nothing it is a strong thing were anything but it would be successful because usually you need coordinated to be successful. Wouldnt shock me if late this year, next year where brexit is out and done if he considers it more successfully. This comingn see from the fomc. Divergenceeems to be in this Economic Data. ,ou see strongerthanexpected but it is the manufacturing side that doesnt seem to be picking up. Gtv terms showing investments fell for the First Time Since 2016 when we saw the latest secondquarter gdp. When will this part of the economy started affecting the healthy part of the economy and the risks that that happens sooner than later . The risk is that it does happen. Not an entity by itself. And income on growth to keep spending. It is the industrial and other industries who is spending and as workers. Adds workers. Forerms of the real value the u. S. Economy it is still the largest single industry in the u. S. Services in total are larger than manufacturing but this is the largest industry. Something like 12 of the private sector will value add. When that starts to go down, it means manufacturers are throwing off spending to the rest of the economy and there is a Multiplier Effect and it will begin to slow the overall economy. The idea, we should have learned in 2006, 2008, one sector it was housing could somehow contract and Everything Else keep rolling along as if nothing has happened is a fantasy. Paul all right. Ts lombard, chief u. S. Economist stephen lets, thank you joining us. , thank you for joining us. Lets look at the markets, seeing a lot of action. We have equities here, the nikkei futures pointing lower by 1. 2 , the kospi looking the weakest of the bench, the bunch, lower 1. 5 . New zealand trading off 1. 4 and all of this happening after the more tumultuous events friday in the u. S. And the trade war appears to escalate, seeing u. S. Markets selling off. Of thise are seeing all action and currency markets, so violent. The japanese yen now at the strongest level since this year. We continue to see the safe 105n demand and below that level. We are seeing the kiwi dollar as well dropping to the lowest since september 2015 as we see the risk off mood affecting the rock the markets. Chinese offshore yuan also the lowest on record as we see this risk off flows across markets as the trade war escalate between the u. S. And china. This is bloomberg. Shery lets get a quick checkshery of business flash headlines. Royal dutch shell is being sued in australia over tax avoidance. They say the office has in finding for six years for the treatment of gas projects also of the off of the northwest coast. It is evaluated at 500 million u. S. And resolves something and 1. 5 billion in tax evasion. Paul tesla is scouting western germany for a new factory. They described in germany as leading choice, thing own ideal saying a ideal place would be near the netherlands and france border. It is trailing only china. Economist will join us next. This is bloomberg. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy a new samsung note. Click, call or visit a store today. Paul good morning. I am paul allen in sydney. We are under an hour away from the market open in australia, japan, and south korea. Shery from bloombergs headquarters in new york, i am shery ahn. Welcome to daybreak asia this our top stories monday, u. S. Stock futures tumble, and the yen top climbs on trade war escalation. The white house says President Trump says he wishes he would hit china with higher tariffs from the start