Transcription
Mr. Secretary, thank you for making time for us on a busy morning for you and the team. Appreciate it as always. Let's talk about those deadlines, those dates. Baseline tariffs start on April 5th. Higher tariffs start on April 9th.
What happens between now and then? Well, it really—we are talking to all the trade ministers, but nothing really happens between now and then. What CEOs are thinking about is, finally, let's think about building in America. You've got almost $5 trillion of commitments coming to America to build their factories. That number is only going to grow as people realize it's time to bring manufacturing home to America, where the greatest economy in the greatest market is in the world is. It's time for America to stop taking care of every other economy in the world and building them up. Let's build the American economy up. Let's build American GDP. And you're going to see great growth from America.
Mr. Secretary, as you know, capitals around the world are watching this program right now. They want to understand what they can do between now and then to avoid those tariffs. What do they need to do? Have you communicated any metrics to them whatsoever?
Well, we've been talking to the trade ministers of the major trading partners for more than a month, and we've been talking to them. And so you have to understand, and this is what's difficult for your audience to understand, that tariffs are easy to understand, right? We have a two and a half percent tariff on autos. And Europe has a 10% tariff, and other people have 20% or 15% tariffs. And that's sort of easy. So they can all come down. But it's the non-tariff trade barriers that are the difference. Some countries have that, and they take that—that tax of 20%—and they use it to subsidize the production of their domestic industries. That's why we can't sell cars there because they give a rebate. Either they give it directly. One country told me yesterday that they give it directly to their car manufacturer to make their cars cheaper. That's why they sell it successfully, and we don't. Others take the money and use it and give cheap energy costs to this production. And that's why the steel industry—why is everybody else so good at steel? And we're not. It's because their governments subsidize it. So we really need to change the way trade works around the world. It's tariffs, but don't get confused—these non-tariff trade barriers, they are the monster that needs to be slayed.
You've been consistent about this argument. Subsidized production, manipulated currencies, foreign trade barriers—something the president addressed just last night. Can we just sit on the numbers just for a moment? The EU 20%, 24% on Japan, 34% on China. Just what exactly was the methodology to go through all those different barriers to entry that you want to knock down? How did you come up with these numbers?
Well, the Council of Economic Advisers—you know, the the the economists of of the administration—coupled with USTR, the United States trade representative, they publish a book called *Trade Barriers* about this thing. Right. And they've been analyzing for decades all of these different tools that these other economies use to hurt America. Right. They won't take our corn in India. They won't take our beef almost anywhere. It's unbelievable. They won't take our agricultural products. They they they just treat us badly because we've allowed them to treat us badly. And when you finally go back at them and say, this has got to end, it's going to be tough for them because they built their whole social network, their whole economies on basically exploiting America. And Donald Trump has said it's time for America to change that. It's going to be difficult for them to change that. But eventually America is going to be treated fairly, and the production of American factories is going to be incredibly strong growth. And you're going to see that growth reverberate through GDP. Remember, people forget the gross domestic production. If you buy a foreign-made Toyota, that is not domestic production; making a car in America, that's domestic.
Mr. Secretary, we could just sit on the methodology just for a bit longer and address it directly. This is what we understand, what most people understand. You did that—essentially you divided the country's trade surplus with the United States by the total exports and then divided the number by two and produced this discounted rate. If you're a trade partner right now and you've just watched how America has put together that policy, how were you meant to negotiate with that? What are those countries meant to say? What are they meant to do?
The countries understand that their trade policies were exploitation—exploitation of America. Everybody understands. One country actually said to me, I was amazed that we were able to get away with it for this long. I mean, imagine that—you share that country's—because they say this. They never say this on the record. You've got the potential, the option, the ability right now to just say it—who's saying that to you?
Oh, come on. Oh, stop. I mean, the country. One country told us they were—that they give the subsidy to the car companies. Another country made—that they give this subsidy to these steel companies. I mean, they're not going to repeat it on here. What's on here is that this is going to change, that it's time for these things to change, and they're going to be more fair. And America is going to do well. And in the middle of that time, all the factories are going to come back to America, and you're going to see an enormous number of factories come back to America, or you're going to see incredible change globally. It's going to take time, but the factories are going to be built in America. That's the most important thing. Donald Trump wants to see steel and aluminum made in America so we can defend ourselves. He's going to want to see pharmaceuticals made in America. Who on your audience doesn't want us to make the ingredients for pharmaceuticals? Did anybody ever ask themselves why the ingredients for our drugs should be made in China? Why is that? That's not cheap labor. That's fact. And that's high-tech factories in China. Why? Because their government helped create it. They created cheap goods there. They oversupply them. They drive the capitalist American—who don't think like this—out of business. And then they make it in China. And Donald Trump has said—I've had—and I think this—I think, Mr. Secretary, most people totally agree with you. They would totally agree with you because China is an adversary. It is not a partner to the United States.
Europe would make a very different argument. And Europe might be wondering this morning what's been thrown into the same bucket as the Chinese. What explanation can you give them?
Europe does not treat our products fairly. They do not treat our companies fairly. They treat themselves incredibly well to the detriment of the United States of America. Right. It is time for them to treat us fairly. And that is the point. This is not—it's not free and fair trade. Their tariffs are higher. The non-tariff trade barriers are incredible. Like I asked you, why don't they take our beef? Why don't they take our agricultural products? Why? Because they don't want them. Because they want to make the money themselves. Why is it okay for every other country to feel this way, and it's not okay for America? I tell you why. Because we were the world's piggy bank, and Donald Trump has said our $36 trillion deficit, our $1.2 trillion trade deficit—$1.2 trillion—we buy other people's things more than we sell them. Ours has got to be rebalanced. It's a national emergency. Let's fix America, and we can.
Mr. Secretary, for you, it's—be for the president. I know it's Ford and Berlin's, but there are products that Europe takes, things like LNG, things like Microsoft services. Do you want to see balanced trade, product by product?
No, no, no, it's not. It's not product by product. It's—it's a big macro issue. Okay. Fairness comes when one decides that they can stop. They can't get away with it any longer. So let's make a great deal with the United States of America. Okay? These got—they've got core issues. They have a VAT tax of 20% or 20. Europe has 21%. I mean, so when our goods are sold there, we pay 21%. They say everybody pays that, and then they use that money to beat us down in other ways. I mean, come on, we need to have fair trade macro, not product by product. But I think that the way Donald Trump looks at it is country by country. And what's going to happen is you're going to see domestic production grow. You're going to see interest rates come down in America. You're going to see growth in America, great jobs in America. Robotics is going to come to America. It's going to replace cheap labor overseas. Robots can make things. They know what the job is going to be. Mechanics who fix robots, kind of like a high-end BMW. Robots are going to need to be fixed, and those jobs are going to be high-paying jobs, and they're going to be here. We're tired of them being overseas.
For some countries, there's—at 10% base. That's the only levee that they were hit with yesterday. I think of the United Kingdom, I think of Australia. But those countries have a trade surplus with the United States. So why put the tariff on?
Well, I think the president understands that all of these countries, even if they have a trade surplus, if you dig into it, like, for instance, the U.K., their trade surplus counts—that they have this London Metals Exchange. And so gold and silver—bullet—and going in counts. I mean, come on. That doesn't really count. So—and Australia, which is a wonderful partner of ours, they buy a lot of our planes. Right. And if you buy our commodity gas, I mean that's really what you need—not really what we need to sell you. It's not the same. So that the president decided, why don't we have a baseline of 10% to really understand that everybody needs our economy. Our economy is the magnet of the world. Everybody needs our economy; let's them pay coming in. And let's change that deficit of $1.2 trillion and let's make America's economy grow and let's balance that out. Let's fix that first, and then we'll go readdress the rest of the world. But we need to fix our trade deficit—$1.2 trillion. It's unbelievable why we don't have those jobs and the rest of the world does. Treasury Secretary Scott Bessen told me last night this is a ceiling. Potentially we can see a different floor. Are you prepared to negotiate all of these rates? Is that—is this truly the start of a negotiation?
Well, it's the start of a rebalancing of the way the world works. I agree with the secretary that our view is that the only way these rates are going up is if countries decide to retaliate. But why would you retaliate against your biggest client, your biggest clients? I want to reorder things. I mean, the United States of America is the largest client in the world. And yes, of course, the countries are going to talk to us, but they talk too casually. They always talk about their tariff rates. I mean, it's like—it's like they say, oh, I'm going to cut my tariff rate. You think the reason we don't sell a car is because Europe charges a 10% tariff and we were only charging two and a half. That was outrageous. But the key is they have all these rules. Rules and rules and rules—like one of my favorites is the Koreans. When we made a deal with them in 2012, we took their cars, right, Kia and Hyundai, and we were going to sell agricultural products to them. Right. And when McDonald's went to send in French fries, they wouldn't let them go in because we couldn't prove the origin of the potato. I mean, you don't understand the scale and depth of how they keep our products out. And Donald Trump has said, I've had enough. We are going to be treated better. America is going to be treated better. And that starts today.
Mr. Secretary, why exactly wasn't Russia on that list yesterday?
Because we have sanctions against Russia, North Korea, Belarus, and Cuba. And so we're not supposed to be trading with them.
Thanks for clearing that up. The additional question that other people had to whip out: Mexico and Canada, they were also noticeably absent. Why were they absent?
Well, they are operating under a rule that was set on for fentanyl, right, that they needed to close the border and stop fentanyl. And what that rule is—that USMCA, right, the major trading—is exempt. Right. And the other products that they do have a 25% tariff when that is resolved. So we're not going to double-counted. That's just the way it works. When that's resolved, they will fall into a model like this. But I think USMCA—in—in the order USMCA continues to be exempted. So car parts, for instance, are—don't come with a tariff if they end up being finished in American cars. So if you are building your car in America and you're getting parts from Canada and Mexico, that's fine. The American cars still come with no tariffs.
Okay, that's helpful. The additional question we had on just a few numbers because we're all trying to make sense of this in real time and you've got the numbers. What's the tariff on China now? The complete tariff, including everything. What is that number now?
Well, there was a 20% tariff because they continue to make the ingredients for fentanyl and send them out. Right. And those ingredients have the highest subsidy rate in China, meaning the Chinese government is paying these factories to make these goods—that the ingredients for fentanyl, which is killing Americans. Right. So Donald Trump put a 20% tariff on that. And now the regular trade deficit number. Right. The analysis by the Council of Economic Advisers and the United States Trade Representative, we have a 34% tariff, so it's 54%. But when they stop making the ingredients for fentanyl—and I want to point out, in 2019, President Xi told President Trump that he would put the death penalty on anyone who made fentanyl, and now he's actually subsidizing them. And that's just—it's just so, so, so wrong—that Donald Trump is just—he's not going to stand for it. And he's got to hit them with the only thing he can—neck—which is economic—China as well. On China as well.
What about the 301 tariffs that were put in place under Trump 1.0 and then carried on for the Biden administration? That's about 25%. Are those still in place? Do they get added to this cumulative number?
They do indeed. But those are on specific product segments, and those still are as well. Autos are not. So we're talking about 79—79% for some—for some imports. Cumulative, we're talking about a 79% tariff from China. Is that accurate?
On certain products. That could be true, sure. But they've got the UAE. All they have to have is a phone call—or they have to have is a phone call from President Xi to President Trump saying, I'm going to end fentanyl production that's killing Americans, and it drops 20%. I mean, that's a pretty inexpensive phone call. But you have to make the decision. You got to stop killing Americans. And so far, they haven't made that decision—shocking, but they haven't made that decision. And you really got to think about that for a minute. Think about that for a minute. A phone call would save them 20% on all their products, but they'd have to stop making the ingredients of fentanyl, and they refuse. Outrageous.
Has your—has your counterpart reached out to set up that phone call between President Trump and Xi Jinping?
You know, President Trump and and President Xi, they may have to—away. They're not going to be—when that phone call gets made. I don't think they're asking me to set it up. I think that's above me.
And, Mr. Secretary, does that tell you something about maybe the benefits you think you have—perhaps you don't have—over the Chinese? The fact that they aren't reaching out, they aren't doing those things, despite the fact you've put tariffs up as much as you have.
Well, we'll see. Remember, these tariffs are just going into place. And, you know, I think they will have that phone call, and they will have lots of conversation together, I think. For me, the greatest thing for me is that Donald Trump is sitting behind the Resolute desk in the Oval Office, and he is the greatest dealmaker, and he will decide how he wants to play his hand. But the way he's played his hand now is he's been talking about this for 35 years. He wants to reorder trade, to have the world stop exploiting us, to bring the factories back, to bring employment back. You know, no one thought about—with NAFTA, which he called yesterday, the worst trade deal ever—would. NAFTA's did. It gave Canada and Mexico sort of the economic right to be a state of the United States without paying federal tax and without respecting the Constitution. But you could build in Mexico and drive to Texas and build in Canada and just drive across the border—was all fine. And no, you know, economically equal to being Alabama and Georgia. Yeah. And so what happened is our manufacturing left America and put those Americans out of jobs. And Donald Trump wants to bring back factories, bring back those jobs, and they can come back. $5 trillion worth of commitments to bring back those jobs. It's pretty unbelievably impressive. And that's what Donald Trump is capable of.
Also impressive is the sell-off this morning. And a big question in the markets is asking how much pain you're willing to tolerate. The S&P is down by 3.7%. The dollar is being sold quite aggressively against the euro. We're seeing one of the biggest moves we've seen in the last decade. Mr. Secretary, how much pain are you willing to tolerate? How much market pain are you willing to tolerate?
Donald Trump is focused on the economic pain that the United States of America has suffered over decades since NAFTA—90,000 factories, not jobs, factories, 5 million high-paying jobs gone overseas. He's focused on the U.S. worker and the U.S. economy. And what's going to happen is people are going to realize it is the great American economy that is the winner here. And anyone who doubts it and anybody who shorts Donald Trump or anybody who doubts the strength and the power of the American economy is making a foolish bet. Sure, importers are going to have a tough time figuring out what to do because they went and found the cheapest production in the world. It's time to bring that production home, to have the smart, amazing people who run American companies figure it out, bring robotics back to America. And I would say that United States domestic growth is going to have the greatest resurgence ever under Donald Trump. And that's what he has set in motion yesterday.
You'll accept it takes time to engineer a supply-side response, though, sir. And in the meantime, you can see bad things happen. Do you accept that?
Well, what I can accept, of course, takes time to build factories. But companies understand how to do it. They will do it. The United States of America is the greatest economy in the world. People have to do business with it. The rest of the world will bring down their trade barriers, and you'll see a great resurgence in our ability to sell agriculture overseas. You'll see factories being built here, and that factory production will be faster. So, sure, there will be a rebalancing of those who make things in cheap labor markets, figuring out how to make them here. But ultimately speaking—and I think in much less time than you think—the world will reorder itself, we'll figure it out. And the United States growth rate will turbocharge compared to the rest of the world. We've been too close to them because we've been—you know, our presidents have been presidents of the world. And Donald Trump ran on the policy that he was going to be the president of the United States, of the Workers of the United States. And he was going to place American workers first. And that's what he did yesterday. And that's what everybody's feeling. Those workers have been disrespected, and now they're going to be respected.
Mr. Secretary, just one final question. If we make any calls scheduled for today with the Europeans, do those negotiations start this morning immediately? Can you give us a sense of things?
Absolutely. We are—our teams are talking to all the great trading partners today, and we are available for our great trading partners every day. It is time for them to do deep soul-searching of how they treat us poorly and how to make it right. It is time for them to do that. That is going to be difficult for them because they've taken advantage of us for so long. They should just be disappointed that the free ride is over. It's time for them to be realistic and to change the way they look at the United States of America. And I think that's going to happen starting today.