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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News want to bring you

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Speaker 1: straight to the White House on this two hundredth day

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Speaker 1: of the second Trump term for a conversation that dovetails

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Speaker 1: off everything we just discussed with Laura. Stephen Myron has

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Speaker 1: the President's ear when it comes to the economy. He

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Speaker 1: is chair of the White House Council of Economic Advisors.

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Speaker 1: And with us now from the North Lawn on what

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Speaker 1: is by the way, it's got to be Stephen, the

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Speaker 1: most beautiful day of the year so far in Washington,

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Speaker 1: mister chairman, welcome back to Bloomberg TV and Radio. It's

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Speaker 1: good to see you. Day two hundred and the tariffs

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Speaker 1: take effect. I guess we'll start there. Is this it

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Speaker 1: are we here? This is the tariff regime. Realizing you've

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Speaker 1: got an extension with Mexico, you're working on a deal

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Speaker 1: with China. These are the numbers that we've been waiting for. Yes,

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Speaker 1: will they stay in place the way they are?

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Speaker 2: First of all, thank you for having me. It's great

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Speaker 2: to be back. Look, you know, I think that the

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Speaker 2: restructuring of the global trading system that the President has

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Speaker 2: undertaken and successfully executed has been nothing short of historic.

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Speaker 2: We've got trade deals encompassing material tariff rates bringing in

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Speaker 2: large amounts of revenue with almost no retaliation from countries

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Speaker 2: that now entail about fifty five to sixty percent of

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Speaker 2: global GDP, And that brings in that that's going to

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Speaker 2: bring in trillions of dollars of revenue over a decade.

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Speaker 2: It creates very strong incentives for making stuff in the

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Speaker 2: United States, and the investment commitments that the President has

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Speaker 2: secured are going to do wonders for getting firms to

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Speaker 2: invest in America.

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Speaker 1: So if it's going to bring in trillions, then it

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Speaker 1: I guess these are the numbers that will assume we'll

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Speaker 1: be in place until further notice. But I'm curious I

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Speaker 1: saw the President's truth social last night is as it's midnight,

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Speaker 1: we're here, do we have a sense of how much

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Speaker 1: money the Treasury has inherited in the last thirteen hours

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Speaker 1: or so.

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Speaker 2: So I don't have a sense about what's happened in

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Speaker 2: the last thirteen hours or so. But as you know,

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Speaker 2: in the last month, we saw a record print of

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Speaker 2: about thirty billion dollars in the month in the month

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Speaker 2: alone from tariffs, and that was before the higher rates

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Speaker 2: really set in. You know, the CBO did a study

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Speaker 2: when the One Big Beautiful Bill was was under consideration

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Speaker 2: in Congress, finding that the total effect of the tariffs

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Speaker 2: would about three trillion dollars over the course of a decade.

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Speaker 2: You know, I think that tariff rates have moved a

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Speaker 2: little bit higher since then, and so my team is

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Speaker 2: actually currently crunching through the numbers right now as we speak,

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Speaker 2: with the higher with the new tariff rates. But I

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Speaker 2: wouldn't be surprised if the final number is closer to

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Speaker 2: four trillion dollars over a decade instead of three.

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Speaker 1: Fantastic. Is that something that you'll be able to make

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Speaker 1: public soon? When will we see that research?

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Speaker 2: Oh? Yes, I mean I hope so it's it's it's

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Speaker 2: in process right now. I've got several of several of

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Speaker 2: my of my staff working on it at the moment.

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Speaker 1: I love that getting a little peak behind the curtain

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Speaker 1: here to the extent that we're curious about the economic

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Speaker 1: impact of tariffs, mister Chairman, you know, there has been

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Speaker 1: a grand debate, and your administration is on one side

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Speaker 1: of it about whether tariffs are inflationary. Now that we

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Speaker 1: actually have the numbers, there's also been reference from yourself

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Speaker 1: and from the likes of Treasury Secretary Scott Bessant, about

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Speaker 1: a one time time change in prices as opposed to

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Speaker 1: an inflationary trend. When will we know the impact of

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Speaker 1: that one time change?

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Speaker 2: Thanks, So, Look, you're right, there's been a lot of

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Speaker 2: conversation about this subject, and I think that a few

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Speaker 2: things are worth mentioning. One, we ran this experiment in

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Speaker 2: twenty eighteen. Twenty nineteen, we saw zero macroeconomically significant evidence

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Speaker 2: of tariff driven inflation. Then two, we've been running higher

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Speaker 2: tariffs in this administration since the very first day, since

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Speaker 2: January twentieth. We've now got several months of data, and

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Speaker 2: again there's just zero macroeconomically significant evidence of price pressures

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Speaker 2: from tariffs. Three, the overall policy mix is extremely disinflationary.

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Speaker 2: When you think about deregulation, when you think about incentives

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Speaker 2: for increased capital stock, increased labor supply from no taxes

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Speaker 2: on overtime, things like that, that's very disinflationary. The border policies

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Speaker 2: are very disinflationary as well, And I think that people

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Speaker 2: are underestimating the amount of service driven disinflation that's in

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Speaker 2: the pipeline. And I think when you look at it,

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Speaker 2: when you look at the housing market holeistically, you get

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Speaker 2: a sense of that as well. So overall, we don't

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Speaker 2: expect significant inflation from the tariffs, and Secretary Beston is right.

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Speaker 2: If there were to materialize some inflation from tariffs, it

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Speaker 2: would be a one time price shift, price level shift,

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Speaker 2: not an enduring trend in the same way that that

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Speaker 2: tax would cause that. And there have been many countries

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Speaker 2: throughout the world that have that taxes that change those

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Speaker 2: bat taxes, and when they move them up or they

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Speaker 2: move them down, you get a price level shift. You

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Speaker 2: don't get a new inflation regime that last years.

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Speaker 1: Yeah, well, then it becomes a question of you know,

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Speaker 1: who's actually paying for this beyond the specific importer who's

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Speaker 1: standing on the dock here. We're going to talk later

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Speaker 1: with Stu Lenard Junior, the force behind Stu Lenards, the

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Speaker 1: chain of grocery stores up in New York and Connecticut

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Speaker 1: in the Northeast. It's a really interesting conversation because he

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Speaker 1: said that prices for him are in fact costs are rising,

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Speaker 1: and the more important thing he said was he can't

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Speaker 1: afford to absorb, but he's got to pass it along

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Speaker 1: to his customers. What do you say to the CEO,

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Speaker 1: specifically of a small business who's experiencing this phenomenon.

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Speaker 2: What I would say is that adjustments are difficult, and

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Speaker 2: adjustments don't happen overnight and in the fullness of time.

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Speaker 2: I have no doubt that the countries that are that

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Speaker 2: we are placing tariffs on will ultimately dare the burden

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Speaker 2: of those tariffs, either through lower prices or through another

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Speaker 2: channel like currencies has happened in twenty eighteen, twenty nineteen

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Speaker 2: with China. Now that's an argument in the fullness of time.

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Speaker 2: In this short run, there can be price volatility, right,

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Speaker 2: we have volatility and financial markets. We have now seen

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Speaker 2: a little bit of volatility in the real economy as well,

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Speaker 2: and it wouldn't be surprising to me or to anybody

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Speaker 2: else if we saw volatility in prices, as in consumer

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Speaker 2: prices as well. However, I think that's merely a short

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Speaker 2: run adjustment phenomenon. The incentives to make a profit, the

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Speaker 2: incentive the bedrock principles of a capitalistic economy, will mean

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Speaker 2: that folks Likest Leonard and others will find ways to

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Speaker 2: provide products to consumers for cheaper because that's what consumers want,

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Speaker 2: and they'll find ways to adjust their supply chains, to

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Speaker 2: adjust whom they're buying from, to take advantage of different

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Speaker 2: terif rates in different countries, and find ways to get

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Speaker 2: to get others to absorb those costs because they have

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Speaker 2: it incentive to do.

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Speaker 1: So, they're going to have a lot of work to do.

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Speaker 1: I want to ask you about the tariffs on chips

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Speaker 1: and semiconductors red headline on the terminal last evening, mister chairman,

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Speaker 1: when the President said one hundred percent as he was

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Speaker 1: talking to reporters in the Oval Office, But I realized

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Speaker 1: there are some very important exceptions here for chip designers

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Speaker 1: and ship makers who are actively investing in building in

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Speaker 1: the United States, and to my red that covers most

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Speaker 1: of the majors here, including TSMC, which is building in

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Speaker 1: Arizona and some other places. Who would this tariff actually

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Speaker 1: impact or will it not touch anyone other than a

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Speaker 1: foreign maker like say Huawei that isn't already selling here.

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Speaker 2: Yeah, soon, not to get ahead of Secretary Latnik and

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Speaker 2: the other folks who are going to be designing this program,

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Speaker 2: but I would be surprised if they're warrant some guardrails

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Speaker 2: along around those criteria to make sure that companies were

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Speaker 2: doing the types of investments that warranted that type of

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Speaker 2: exemption that you just mentioned, right, And so our country's

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Speaker 2: investing enough to build it to build their supply in

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Speaker 2: the United States, are they making good faith progress and

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Speaker 2: good faith outlays that are leading to actual, genuine increases

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Speaker 2: in the productive capacity of the United States. It's not

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Speaker 2: enough to say, oh, I'll build a factory and you know,

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Speaker 2: stick a stick a pick axe in the ground and

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Speaker 2: then just leave it there for ten years, collecting a terrification.

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Speaker 2: There's going to be there's gonna be checks to make

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Speaker 2: sure that good faith efforts are made to actually expand

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Speaker 2: production the United States. And if that's happening, then that's

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Speaker 2: exactly the outcome we want, right, Like, what we want

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Speaker 2: is to increase domestic production of critical components like semiconductors.

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Speaker 1: Just a minute left here, Chairman, I have to just

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Speaker 1: quickly ask you about the search for a new Federal Reserve.

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Speaker 1: Chair Bloomberg is reporting today that Governor Waller, Christopher Waller,

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Speaker 1: is emerging as a top candidate. The President's advisors have

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Speaker 1: been very, very impressed with his approach to monetary policy.

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Speaker 1: Are you one of those advisors making that recommendation?

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Speaker 2: I think I think that Governor Waller has really built

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Speaker 2: up a really impressive crack record in the last few

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Speaker 2: years at the FED with his predictions about inflation, about

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Speaker 2: with his predictions about where where a FED policy needed

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Speaker 2: to move to respond to that inflation. And I think

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Speaker 2: he's done himself, you know, a big credit recently as well,

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Speaker 2: you know, not succumbing to the tariff arrangement syndrome that

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Speaker 2: many others throughout the throughout the country, but particularly at

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Speaker 2: the FED seem to have succumbed to, you know, And

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Speaker 2: he's he's done a really good job having an independent

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Speaker 2: voice which I think ultimately is proven correct that there

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Speaker 2: isn't really much of inflationary threat from pariffs that would

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Speaker 2: that anyone should really be concerned about, at least of

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Speaker 2: all the FED.

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Speaker 1: Yeah, it sounds like you're in his corner. That sounds like, yes,

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Speaker 1: mister chairman. It's great to have you with us, Stephen

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Speaker 1: Myron from the North Lawn of the White House. We

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Speaker 1: thank you for the insights. As always, tariff derangement syndrome.

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Speaker 1: Did he just come up with that