Transcription
We have major breaking news into CNN on the global trade war. President Trump just truth out saying, quote, “I have authorized a 90-day pause.”
The president here announcing a 90-day pause on tariffs, though it’s not clear specifically which countries this pause is going to apply to. The Dow right now, shooting up over 2000 points. Look at that. As this announcement comes through, a giant spike in the Dow Jones Industrial Average.
This is important as part of the messaging around this pause. The president saying that this is based on the fact that more than 75 countries have called the U.S. and tried to work out deals with the administration and not try to retaliate for his tariffs.
Notably, though, the president is raising the tariff applied to China from the United States to 125%, effective immediately. So this pause applies to other countries, not China. That’s right, a 90-day pause on new tariffs, except for China, which again goes to 125% in the markets. Obviously a bully. And they are as they are hearing this news.
Let’s go to Jeff Zeleny. He is live for us at the White House. This is what they had been hoping for. The markets. They actually kind of imagined it the other day and had a little bit of a jump into positive territory. But this is the announcement from the president, Jeff.
Well, Brianna, that was certainly a test run, but certainly not an intended one to see the markets go up when there was a false report of a pause. But now we are hearing from the president for the first time during this escalating trade war, saying that he is putting a 90-day pause, and you can just see to the right of our screen there what the markets are doing with this.
From a policy standpoint, it is a bit more murky. The White House has not filled in any details of this, but we are getting this, from the president on social media, as you were reading there, and he is explaining it as adding more to the China, tariff, pot, which is really growing, day by day here, adding another tariff to China, even as he is praising the countries who he said have not retaliated. And those, of course, are the countries who are lining up to have discussions with the Treasury Secretary, with the White House, with the administration, on trying to renegotiate.
So the president is saying—and let me just read it to you here—“The countries who have not, at my strong suggestion, retaliated in any way, shape, or form against the United States. I have authorized a 90-day pause and substantially lowered reciprocal tariffs during this period of 10%, also effective immediately.”
So what this would seem to be—and again, we will have to fill in the blanks here—what this would seem to be is to be taking all the countries back to that baseline, 10%, if you will, which went into effect last Saturday for most countries. And then, of course, the reciprocal tariffs went into effect at midnight. So the president is putting a pause on those. Of course, this is adding to the policy uncertainty. But you can see what the market is doing. It’s adding a bit of certainty to the market.
So, we’re expected to see the president in the next hour, here at the White House. We will see if he adds any meat on these bones here, but certainly a significant reaction from the White House. They have been reeling here watching the financial markets really have a deep negative effect on this. The president has long said, at least during this period, he’s not watched the markets. We know, of course, watching him for a long time, he does. And clearly, this is something that he’s been hearing from Republicans on Capitol Hill. Republican donors, really people who are supportive of this policy saying it’s time for an exit ramp.
So that’s what it looks like. This will be, at least for now, a 90-day pause on those reciprocal tariffs. Or should Brianna, Jeff, please stand by. We’ve just learned that the Treasury Secretary, Scott Bastian, will be speaking publicly soon. This also as we await to hear from President Trump. Markets, as you can see on your screen right now, are reacting very positively to this news.
Let’s bring in CNN’s Matt Egan and Richard Quest. Richard, first to you, I wonder what you make of this announcement from the president, given the insistence from some folks in his administration that these tariffs were here to stay.
I think that there’s a sort of duopoly of issues taking place. The first is the tariffs, and the second is the execution. The tariffs themselves. The president still loves tariffs. So he’s going to want to, in some shape or form, bring them back. This is his rise on that in terms of economic policy. But he’s seen how damaging. And now he says he’s got so many countries coming towards him wanting to negotiate. He wants to give time for that to take place. It all begs the question why? When they announced the reciprocal tariffs, didn’t the president say they take effect in 90 days? You all have 90 days to negotiate. Why did it have to be done this way to get to a result that, well, doesn’t? There is. Let’s be clear, there is no more certainty about U.S. trade policy now than there was half an hour ago, than before this announcement. The only difference is that the sword of Damocles has—it’s actually been dropped, has now been lifted back up again. And so you’re seeing the market. This is a relief rally. This is not back to the races. This is them saying the worst has not happened just yet. But it does not—and this I can’t emphasize enough—it does not take us back to anything like the level of certainty that business seeks about what the U.S. trade policy actually is.
Yeah. No, it’s a stay of execution.
Richard Quest, hang with us, if you will. I want to bring former Treasury Secretary Larry Summers back into the conversation. Larry, react to this news.
Look, this is a welcome development. What everyone has been saying is that the policies that are being pursued are very dangerous, that the truculence is catastrophic for economic interests because of the uncertainty that it generates. And we’ve seen a major retreat by the president from the truculent. It doesn’t put the genie all the way back in the bottle. It doesn’t eliminate all the uncertainty. But it’s obviously a welcome step that we are backing away from major blunders, and the market is appropriately welcoming that step. But credibility is a thing where it takes a long time to build up and only a short time to lose. And we’ve lost a lot of it in the last few days. So this action, as welcome as it is, certainly doesn’t leave our credibility completely restored. But I’m glad that we’ve had a demonstration that the president is able to listen, and I wonder whether the Secretary of the Treasury wants to reconsider his remarks about the being cutting his own throat in light of the president’s prudent decision to back off. And hopefully we will now start listening to sense in the formulation of our policy. But this is a very welcome development. But no one should be confused if anyone thought there was a carefully crafted, well-designed strategy behind what went on on Liberation Day or since this reversal. After all, the statements that were made even earlier this morning should remind people that we are engaged in dangerous rhetorical improvization, not serious policy making.
Larry, please stand by. You’re seeing at the bottom of your screen a position in the White House grounds known as the sticks. And it’s essentially a live position where we are listening to Caroline Levin, the press secretary, alongside Treasury Secretary Scott Bass. Let’s listen.
Trade plan. As you all know, the president just put out a statement announcing an additional tariff on China. The tariff on China will now go up to 125%, because China imprudently decided to retaliate against the United States. And as I said at the podium yesterday, when you punch at the United States of America, President Trump is going to punch back harder. In that same vein, we have had more than 75 countries from around the world reach out to President Trump and his team here at the White House to negotiate better trade deals for the American worker. We have been overwhelmed with the amount of requests from countries around the world. I’ll let the Secretary speak to that. We will continue with the tailor-made negotiations I spoke about yesterday. In the meantime, there will be a 90-day pause on the reciprocal tariffs as these negotiations are ongoing, and the tariff level will be brought down to a universal 10% tariff. The Secretary here has been a huge part of the president’s trade team, of course, and will continue to lead these negotiations moving forward to look out for the American worker, which is always President Trump’s goal. So I’ll kick it over to our great Treasury Secretary, Scott Bassett.
Good. Thank you. And we saw the successful negotiating strategy that President Trump implemented a week ago today. It has brought more than 75 countries forward to negotiate. It took great courage, great courage for him to stay the course until this moment. And what we have ended up with here. As I told everyone a week ago in this very spot, “Do not retaliate and you will be rewarded.” So every country in the world who wants to come and negotiate, we are willing to hear you. We’re going to go down to a 10% baseline tariff we have for them. And China will be raised to 125 due to their insistence on escalation.
We’ll have you back, Secretary. Thank you for doing this. We can ask you three quick things. I think clear, because the markets are opening. First of all, Mexico and China, are they part of this 10% universal?
Well, China, no. Chocolate in Canada, Mexico, and Canada 10%. Yes.
Okay. Second, given then that you have the rest of the world essentially calling in, it’s not China. Is this not just all about China?
Well, it’s about bad actors. And you know, what we will see is some of the very early countries are China’s neighbors that we’re going to see. I’m seeing Vietnam today. Japan’s at the front of the queue. South Korea, India. So we will see. And as I’ve repeatedly said, and President Trump has been saying it for years, China is the most imbalanced economy in the history of the modern world, and they are the biggest source of U.S. trade problems. And indeed, they are a problem for the rest of the world, because what we’ve seen is that as the U.S. announced a tariff wall last week, many of those goods have already started flooding into your treasuries. Now, this trade war is China versus the rest of the world.
Well, I’m not calling it a trade war, but I am saying that China has escalated, and President Trump responded very courageously to that. And we are going to work on a solution with our trading partners.
Excuse me, excuse me, excuse me. Your call.
If I could just add to what the secretary said, many of you in the media clearly missed the art of the deal. You clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we’ve seen the opposite effect. The entire world is calling the United States of America, not China, because they need our markets, they need our consumers, and they need this president in the Oval Office to talk to them. And that’s exactly why more than 75 countries have called, because the United States of America is the best place in the world to do business. And as the president has shown great courage, as a secretary has said, in choosing to retaliate against China even higher.
I think you, Treasury Secretary Mnuchin, can you explain what the decision-making by what feels like a reversal here? I mean, these just went into effect less than 15 hours ago. These tariffs. Why the pause now?
No. Again, President Trump created maximum negotiating leverage for himself. And they which turns went into effect 15 hours ago. The ones that we have lowered went into effect a week ago. They are or they were announced a week ago. And we have just been overwhelmed, overwhelmed by the response from mostly our allies who want to come and negotiate in good faith. So we are expecting them to come with their best deal yet. As I said a week ago today, “Don’t retaliate. Hold your ground. Let’s see what happens.” And China, the escalating and escalating. And now they have 125% tariffs. So we have said to them—I mean, Mr. Secretary, you go ahead with the country next month. We’re doing this unlike the 90s, when there were some new tariffs. Is that because everyone laughed? I mean, be seeing across the financial markets how much was, you know, what we saw on the stock markets. You know, this decision.
No, it’s because it’s going to—because of the large number of imbalances. We’ve had more than 75 countries contact us. And I imagine after today there will be more. So it is just a processing problem. Each one of each one of these solutions is going to be bespoke. It is going to take some time. And President Trump wants to be personally involved. So that’s why we’re getting the 90-day pause.
Clarification. Secretary, there was a point that you and I were in the Oval Office in the president talking about this. I don’t know what that number is. I feel like, yeah, I’m like, “What the—?” But look, it’s all the president’s decision. And that we were—the president had the level in mind to raise the China tariffs. And then he had the three-month—certainly the three-month pause in mind. And we were discussing the exact wording.
Yes. Sorry. Of course, the president’s decision, it was the president’s decision, had to wait until today. And again, as I said in the past, no one creates leverage for himself like President Trump.
Mr. Secretary, shall we go to the Secretary? What does the president want to see by this? I think it’s July 9th deadline to keep things positive and then just dreamers coming down or in the morning.
Well, that—that these are trade negotiations. But if countries want to come and offer other events so I talked about yesterday that we are thinking about a big—no. One GM project in Alaska that Korea, South Korea, Japan, Taiwan are interested in financing and taking a substantial portion of the all stake. But again, in essence, that is great because it will increase the trade deficit than we have with those countries. So everything’s on the table.
Clarification of the $10 million, what happened to those countries? Just had a 10% things like Brazil and or are they still going to have these because we’re saying that no. Ten cent for all of this. What happens because we just had a 10% that’s going to remain. Different environment for China.
Pardon you ponies might go to China 25. Well, they—I’m not sure what you mean by the word embargo 100 121% tariffs like that including those 84% within these.
Well, look, it’s China’s decision that we have the deficit with them. They sold us almost five times what we sold them. So again, I think it’s an own goal by China.
Mr. Secretary. Secretary signal that you’re confident that you’re going to be able to strike with all these mean five nations. I mean, you write it signals that President Trump cares about trade and that we want to negotiate in good faith. And as I said, that each one of these is going to be a separate bespoke negotiation. So we are confident that having seen the other side of where this could go and like I said last week, the market didn’t understand those were maximum levels. The countries can think about those levels as they come to us to bring down their tariffs, their non-tariff trade barriers. We’re going to discuss currency manipulation, subsidy of labor and industry. If you will.
The clause also applied to the sexual tariffs that the president announced, ma’am love or anything else?
No, it’s on the reciprocal. So becoming Mr. Secretary. Andrea go ahead.
Mr. Secretary, I want to in the. What you’re doing here from the market. You can keep me acting crazy, right. I didn’t see that this is going to come down the market some. What—what the market. The market to take.
Thank you. It’s been a lot of volatility in the market, not just in terms of stock markets going up from time to time. So put this in your mind. You anticipate the market.
Well, I think what we’ve seen, I think the willingness by more than 75 countries to come into shape, I think now the market understands that everything they saw last Wednesday was a ceiling. And now we have a 10% the temporary floor, and I think the market—my 35 years in the market, I always wanted certainty. So I think we’ve got more certainty.
Secretary Maggie. Go.
Mr. Secretary, why do people assume this is the last word? The president began this morning saying, because five hours later, you know, new problems. Why will investors in the market assume that this is—because, again, as I said, we’ve given 90 days, and the only certainty we can provide is that the U.S. is going to negotiate in good faith, and we assume that our allies will, too. And in terms of certainty, we will see what China does. But what I am certain of, what I’m certain of is that what China is doing will affect their economy much more than ours, because they have an export-driven, led the world with cheap export models, and the rest of the world understands because when we put up our tariff wall, those exports were already flowing to the rest of the G7 and to the global South.
And you can see your secretary, how much of this decision was driven by the bond market cratering overnight? What is happening with China selling their bonds that I am nothing that says that. And we actually had quite a good tenure auction today. And all this was—again, this was driven by the president’s strategy. He and I had a long talk on Sunday, and this was his strategy all along, and that you might even say that he go to China to a bad position. They responded, and they have shown themselves to the world to be the bad actors. And—and we are willing to cooperate with our allies and with our trading partners who did not retaliate. It wasn’t a hard message. “Don’t retaliate. Things will turn out well.”
Mr. Secretary, countries were going to go nations with these 75 countries. How long will that take? A matter of weeks. Will it be a matter of months? You expect the financial markets to be stable during that time period?
Well, we—we started with a 90-day pause, and we will see if more countries turn up what will happen. But the—we have a meeting with Vietnam today, and we have one of the largest trade deficits with them. So I’m hoping it will move in a good direction. I was at the Japanese ambassador’s house last night for the Cherry Blossom Festival, which was quite festive, and he and I had a good chat. They are going to send a deal team over so we’ll save as a complicating negotiations. These are imbalances that have taken decades to create, and but I think having seen the maximum level that Donald Trump is willing to go to, President Trump has created this negotiating leverage.