WEBVTT - US Commerce Secretary Howard Lutnick Talks Tariffs, Mexico and Canada

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Markets, bouncin as the Trump administration signals a deal could

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<v Speaker 2>be reached to relieve tariffs on Mexico and Canada joining

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<v Speaker 2>US now is the man behind the negotiations, the forty

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<v Speaker 2>first United States Secretary of Commas, Howard Lantnik missed the

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<v Speaker 2>Secretary before we get go in a warm congratulations from

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<v Speaker 2>the team here at Bloomberg Surveillance on your confirmation.

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<v Speaker 1>Oh thanks so much.

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<v Speaker 3>It wasn't last night's speech amazing. I really I could

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<v Speaker 3>have been more proud of President Trump.

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<v Speaker 2>We'll get into the niceties on that in just a moment.

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<v Speaker 2>Let's kick it off, sir with a question about your

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<v Speaker 2>comments yesterday when you suggested that maybe there could be

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<v Speaker 2>a compromise on trade between the United States, Mexico and

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<v Speaker 2>Canada and maybe we'd hear more about that today. Has

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<v Speaker 2>the President confirmed that is that still the plan?

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<v Speaker 1>Well?

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<v Speaker 3>I think what happened is you have the trade ministers

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<v Speaker 3>and all the people from Canada really working hard with

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<v Speaker 3>our homeland security people.

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<v Speaker 1>Remember, this is not a trade war. This is a

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<v Speaker 1>drug war.

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<v Speaker 3>We've got fentanyls still pouring into the country, and it's

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<v Speaker 3>got to stop.

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<v Speaker 1>So what's happened is they're showing us even more.

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<v Speaker 3>Ways to try to stop the floor of fentanyl and

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<v Speaker 3>if they can stop the floor of fenyl. The President

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<v Speaker 3>is open minded. There are going to be tariffs, let's

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<v Speaker 3>be clear. But what he is thinking about is which

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<v Speaker 3>sections of the market that can maybe maybe he'll consider

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<v Speaker 3>giving them relief until we get to, of course, April second,

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<v Speaker 3>But I don't want anybody to forget. April second is

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<v Speaker 3>the day that we announced our reciprocal tariffs around the world,

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<v Speaker 3>and so April second is coming.

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<v Speaker 1>But this is about fentanyl this month.

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<v Speaker 2>Got that. Just want additional clarity, Just to be very

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<v Speaker 2>clear on this. Yesterday when you said I think the

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<v Speaker 2>President's going to figure out you do more and on

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<v Speaker 2>meet you in the middle, we're probably going to announce

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<v Speaker 2>that tomorrow as in today, can we no longer respect

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<v Speaker 2>that announcement?

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<v Speaker 1>No, no, no, no, I didn't say that.

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<v Speaker 3>I said, is it in is listening to the offers

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<v Speaker 3>from Mexico and Canada. He's thinking about trying to do

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<v Speaker 3>something in the middle. He's thinking about it, We're talking

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<v Speaker 3>about it. We're going to what I leave here, I'm

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<v Speaker 3>going to go talk about it with him, and I

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<v Speaker 3>think early this afternoon or this afternoon, we expect to

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<v Speaker 3>make an announcement. And my my thinking is it's going

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<v Speaker 3>to be somewhere in the middle, So not one hundred

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<v Speaker 3>percent of all products and not none, somewhere in the middle,

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<v Speaker 3>because I think Mexico and Canada are trying the best

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<v Speaker 3>and let's see where we end up. So I do

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<v Speaker 3>think somewhere in the middle is a likely outcome.

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<v Speaker 2>When you say somewhere in the middle, do you mean

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<v Speaker 2>somewhere in the middle on tariffs, as in somewhere between

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<v Speaker 2>zero and twenty five or do you mean that certain groups,

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<v Speaker 2>certain industries will just get a carve out. And would

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<v Speaker 2>that carve out be say the autos, because the President

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<v Speaker 2>mentioned last night he'd spoken to the auto's CEOs. It

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<v Speaker 2>carve outs we should be thinking about here.

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<v Speaker 3>Yeah, I think I think it's by product and by regent.

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<v Speaker 3>Remember the USMCA, right, the United States, Mexico and Canada

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<v Speaker 3>agreement set up some policies that said you've got to

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<v Speaker 3>have a certain amount of US content in your products

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<v Speaker 3>to be USMCA compliant. So I think he's thinking about

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<v Speaker 3>those categories. The USMCA compliant and does not make sense

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<v Speaker 3>to you. Right, if you complied with the agreement, then

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<v Speaker 3>maybe you avoid tariffs. And if you didn't comply with

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<v Speaker 3>the agreement, well you did so at your own risk.

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<v Speaker 2>You knew you.

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<v Speaker 3>Weren't complying, and therefore it seems likely that's a place

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<v Speaker 3>where the President will go. Again, the President gets to

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<v Speaker 3>make the decision. I'm there talking with him about.

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<v Speaker 1>It, and so is the team.

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<v Speaker 3>But our expectation is that it'll be categories. It will

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<v Speaker 3>be twenty five percent, but it'll be there will be

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<v Speaker 3>some categories left out. It could well be autos, could

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<v Speaker 3>be others as well. USMCA go look at that. That

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<v Speaker 3>was the agreement we made with US, Mexico and Canada

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<v Speaker 3>saying those products are exempt.

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<v Speaker 1>Everyone who didn't.

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<v Speaker 3>Live under those terms and did so at their own

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<v Speaker 3>risk knew they were doing it at their own risk.

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<v Speaker 1>Always.

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<v Speaker 4>Secretary Latna, good morning. Would you say right now that

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<v Speaker 4>you think that US autos like GM and Ford are

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<v Speaker 4>compliant under USMCA.

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<v Speaker 3>That is my understanding is the Big Three say they

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<v Speaker 3>produce cars that are compliant under US MCA, which means

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<v Speaker 3>they have sufficient US content in them to be part

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<v Speaker 3>of the US MCA agreement. So I think that's part

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<v Speaker 3>of our discussion and the president's really thinking about that.

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<v Speaker 4>So it's fair to assume then, especially given the constituencies

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<v Speaker 4>of auto workers that the President was able to pick

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<v Speaker 4>up in this past election, that it is the auto

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<v Speaker 4>industry that can potentially get that exemption later this afternoon.

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<v Speaker 3>It's not really the deceemption, remember, it's it's we're trying

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<v Speaker 3>to end fetanyl.

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<v Speaker 1>Coming into the country.

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<v Speaker 3>So we're trying to set a message that fetanyl has

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<v Speaker 3>got to end coming in from Mexico and and it

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<v Speaker 3>just has to end. And they've done a reasonable job

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<v Speaker 3>on the border, and they're going to do a better

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<v Speaker 3>job on the border.

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<v Speaker 1>But this is memory.

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<v Speaker 3>It's a key about fentanyl for this month April. Second,

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<v Speaker 3>we could talk about the rest, but this month it's

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<v Speaker 3>about fentanyl, and the President's trying to give.

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<v Speaker 1>Mexico and Canada some statement, some move.

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<v Speaker 3>Forward because they are doing they are trying their hardest,

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<v Speaker 3>and we believe they're trying their hardest. But the fact

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<v Speaker 3>is that we're got to put something on because deaths

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<v Speaker 3>in America have not decreased in a way that is sufficient.

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<v Speaker 4>Deaths of in America many families will sympathize with this,

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<v Speaker 4>remarks me myself, I know families who have been at

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<v Speaker 4>the end of the suffering when it comes to fentanyl.

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<v Speaker 4>But yesterday though, the President questioned the fairness of Canadian banks,

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<v Speaker 4>So what is it about. Is it about Canada's banking

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<v Speaker 4>system or is it really about fentanyl?

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<v Speaker 3>So this month, right now, is about fentanyl. When we

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<v Speaker 3>talk about April second, we will talk about the bigger

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<v Speaker 3>trade picture between our trading partners Canada and our trading

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<v Speaker 3>parts of Mexico. So April second, I'll be happy to

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<v Speaker 3>come on and talk to you about our thinking and

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<v Speaker 3>our thoughts about a broad trading model. But right now

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<v Speaker 3>it's about fentanyl. This is a drug related issue. Drugs

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<v Speaker 3>coming into the United States of America have got to

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<v Speaker 3>stop the border. It's got to remain closed. That's the

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<v Speaker 3>key of how you treat your great trading partner. You

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<v Speaker 3>treat your great trading partner with respect, and you stop

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<v Speaker 3>letting fentanyl into the country. So my view is the

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<v Speaker 3>President is thinking about it. He's thinking about autos, he's

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<v Speaker 3>thinking about USMCA. He's going to come up with a plan.

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<v Speaker 3>This afternoon, We're going to announce that plan. I think

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<v Speaker 3>it's going to be in the middle somewhere. There's going

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<v Speaker 3>to be twenty five percent tariffs. It's not the middle

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<v Speaker 3>as in a number. I think it's a middle in

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<v Speaker 3>terms of USMCA, not USMCA. But the President will decide

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<v Speaker 3>that this afternoon and then we'll go on from there.

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<v Speaker 1>But think about that.

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<v Speaker 3>If you were compliant with USMCA, you did with President

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<v Speaker 3>Trump asked in his last term, and if you weren't compliant,

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<v Speaker 3>you did that at your own risk.

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<v Speaker 5>Secretary Lutnik, I just want to make sure that I

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<v Speaker 5>understand this correctly. You're talking about the idea that this

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<v Speaker 5>all has to do with the drug wars, and at

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<v Speaker 5>the same time, some people have speculated this could lead

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<v Speaker 5>to a renegotiation of USMCA that would lead all around

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<v Speaker 5>to even lower tariffs than before. Are you saying that's

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<v Speaker 5>off the table. The tariffs are still part of this

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<v Speaker 5>at the twenty five percent level.

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<v Speaker 3>Well, remember April second, we begin our reciprocity model, which

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<v Speaker 3>is how you treat us as how we treat you,

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<v Speaker 3>and that is going to be part of this exception

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<v Speaker 3>part of his tarr policy. And then he's got industries, autos, semiconductors, pharmaceuticals,

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<v Speaker 3>steal and aluminum and copper lumber. These issues need to

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<v Speaker 3>come home. We need to help our domestic industries grow

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<v Speaker 3>and flourish, and so we called out those product sets

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<v Speaker 3>for extra focus.

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<v Speaker 1>But that's April second.

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<v Speaker 3>So on April second, our reciprocal trade policy will come out.

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<v Speaker 3>In twenty twenty six, we renegotiate USMCA with Canada and Mexico,

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<v Speaker 3>and we're going to have really clear analysis and clear

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<v Speaker 3>focus on how that changes. But right today, let's be clear,

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<v Speaker 3>today is about fentanyl.

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<v Speaker 5>We heard from last night the President. He said that

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<v Speaker 5>he was fine with a little disturbance, but going forward

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<v Speaker 5>there will be all of these gains realized. Secretary Lutnik,

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<v Speaker 5>are you concerned about the level of uncertainty express not

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<v Speaker 5>just in markets, but just even from people who you

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<v Speaker 5>used to work with, where they're saying, we don't have

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<v Speaker 5>a clear sense of what the goal is. And I

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<v Speaker 5>understand you're saying it'll come on April second, but in

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<v Speaker 5>the meantime people are just putting all plans on hold.

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<v Speaker 3>Well, I'm not seeing all plants at all. In fact,

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<v Speaker 3>I'm seeing the opposite. Right, we saw Apple commit to

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<v Speaker 3>five hundred billion dollars. We saw open Ai an oracle

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<v Speaker 3>commit to five hundred billion dollars of investments. TSMC just

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<v Speaker 3>the other day saying one hundred billion dollar investment in America.

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<v Speaker 3>Sawt Bank two hundred billion dollar investment in America.

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<v Speaker 1>So a trillion, three hundred billion dollars.

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<v Speaker 3>And you think people are waiting on the sidelines, We

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<v Speaker 3>feel it every day. All these companies are coming, they're

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<v Speaker 3>building in America, they're committing to America.

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<v Speaker 1>We agree April second is coming.

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<v Speaker 3>We have to do our work before we announce our

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<v Speaker 3>plans on April second. Of course, we have to do

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<v Speaker 3>our work and do it properly and do it thoughtfully.

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<v Speaker 1>But in this period of time, America needs.

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<v Speaker 3>A president to protect people from fentanyl that shouldn't be

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<v Speaker 3>killing people in our country. China still has fentanyl as

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<v Speaker 3>a highest list of subsidies.

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<v Speaker 1>Subsidies.

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<v Speaker 3>They subsidize the production of precursors, the ingredients to fetanol.

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<v Speaker 3>They send it to Mexico and Canada and into the

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<v Speaker 3>country it comes. So our president has said enough already,

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<v Speaker 3>enough already, and that's why he's come up with this

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<v Speaker 3>tariff plan today. April second will be a fairness plan,

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<v Speaker 3>and fairness plan is not that hard to figure out if.

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<v Speaker 1>You have a look it.

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<v Speaker 4>Can I jump in there on the on the fairness plan,

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<v Speaker 4>is that an initial, partial assessment and response or will

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<v Speaker 4>tariffs actually hit on April second?

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<v Speaker 3>Well, there are a whole variety of laws in the

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<v Speaker 3>United States of America that we will follow with precision.

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<v Speaker 1>Some tariffs will come on right away, and then some.

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<v Speaker 3>Tariffs will go be registered and they will take three

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<v Speaker 3>weeks or four weeks, and they will come on in

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<v Speaker 3>due course.

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<v Speaker 1>So there's a process for tariffs in America.

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<v Speaker 3>But we will announce them and we will be negotiating

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<v Speaker 3>with all these countries thereafter, and then they go into

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<v Speaker 3>effect over a period of months, so basically April second. No,

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<v Speaker 3>we'll announce them and then they come in.

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<v Speaker 4>Because there's months of studies, massive report, public opinion. This

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<v Speaker 4>can take a very long time. So legally there's no

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<v Speaker 4>law that's short enough really to put tariffs in place

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<v Speaker 4>on the second. So how long between April second till

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<v Speaker 4>the tariffs actually hit do you think we'll see?

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<v Speaker 3>As I said there, we launched our studies on January twentieth,

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<v Speaker 3>so April second, those studies are done. Some tariffs can

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<v Speaker 3>come straight away, some can come weeks later, some can

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<v Speaker 3>some can take over a month or two to come online.

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<v Speaker 1>But it will be very, very.

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<v Speaker 3>Thoughtful, very organized, and we begin on April second. We've

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<v Speaker 3>announced it from January twentieth that April second was the day.

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<v Speaker 3>We're sticking with our day. We're sticking with reciprocity. It

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<v Speaker 3>is time for America to be treated fairly. And that's

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<v Speaker 3>what the President Trump is going to do. He's going

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<v Speaker 3>to make sure we are treated fairly. He's talked about

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<v Speaker 3>it last night. He's made this clear. So Mexico and

0:12:13.559 --> 0:12:16.360
<v Speaker 3>Canada is about fentanyl today for the month of March,

0:12:16.600 --> 0:12:19.960
<v Speaker 3>but on April second, it's about fairness. And yes, that

0:12:20.120 --> 0:12:23.319
<v Speaker 3>is a process that comes in that is strictly specific

0:12:23.320 --> 0:12:24.959
<v Speaker 3>to the laws, but it'll.

0:12:24.679 --> 0:12:26.720
<v Speaker 1>Take over a month or two months to come in.

0:12:26.760 --> 0:12:30.120
<v Speaker 3>But once it's in, they will stick, which is treat

0:12:30.200 --> 0:12:34.160
<v Speaker 3>us fairly, treat us properly, or don't trade with us.

0:12:34.640 --> 0:12:36.600
<v Speaker 2>Miss the Secretary, I was a man of my word.

0:12:36.600 --> 0:12:37.840
<v Speaker 2>I am a man of my word, and I promise

0:12:37.880 --> 0:12:39.520
<v Speaker 2>we'd come back to the address last night. So let's

0:12:39.520 --> 0:12:42.000
<v Speaker 2>finish there. The President of the United States talked about

0:12:42.000 --> 0:12:44.640
<v Speaker 2>a big, beautiful drop in interest rates. A lot of

0:12:44.640 --> 0:12:47.280
<v Speaker 2>people in this market are curious whether the president is

0:12:47.320 --> 0:12:50.520
<v Speaker 2>no longer sensitive to the deadI girations of the equity market.

0:12:50.640 --> 0:12:53.400
<v Speaker 2>The focus, the emphsis now is on the bondom market.

0:12:53.640 --> 0:12:55.839
<v Speaker 2>Is that the shift is that the way to understand things.

0:12:57.679 --> 0:13:00.640
<v Speaker 1>Well, I think that is too specific.

0:13:00.679 --> 0:13:03.360
<v Speaker 3>I mean, let's face it, if we balance the budget

0:13:03.360 --> 0:13:06.640
<v Speaker 3>of the United States of America, interest rates are going

0:13:06.640 --> 0:13:09.960
<v Speaker 3>to come smashing down. And I don't mean ten basis points,

0:13:10.200 --> 0:13:12.840
<v Speaker 3>I mean one hundred and fifty basis points. You're going

0:13:12.880 --> 0:13:15.480
<v Speaker 3>to have an explosion in the housing market. You're going

0:13:15.520 --> 0:13:17.880
<v Speaker 3>to have an explosion in the equity markets. Because this

0:13:18.040 --> 0:13:21.680
<v Speaker 3>is not a manufactured cut in the interest rates like

0:13:21.720 --> 0:13:24.920
<v Speaker 3>you saw last time with this huge money supply which

0:13:24.960 --> 0:13:26.320
<v Speaker 3>created the vast inflation.

0:13:26.720 --> 0:13:28.520
<v Speaker 1>This is the right way to do it.

0:13:28.760 --> 0:13:33.880
<v Speaker 3>You stop printing money, you stop running deficits, You balance

0:13:33.960 --> 0:13:36.720
<v Speaker 3>the budget of the United States of America. You smash

0:13:36.880 --> 0:13:41.160
<v Speaker 3>interest rates down, you produce enormous amounts of energy, drive

0:13:41.240 --> 0:13:44.680
<v Speaker 3>those prices down, and you will see the greatest equity

0:13:44.760 --> 0:13:48.040
<v Speaker 3>market and the greatest economy in the United States of America. Now,

0:13:48.080 --> 0:13:51.360
<v Speaker 3>remember this president is worried about the United States of America.

0:13:51.480 --> 0:13:54.320
<v Speaker 3>Sometimes I can asked questions about am I worried about

0:13:54.360 --> 0:13:56.640
<v Speaker 3>Canadam I worried about Mexican And am I worried about

0:13:56.679 --> 0:14:00.000
<v Speaker 3>the EU? My president is worried about the United States

0:14:00.000 --> 0:14:02.280
<v Speaker 3>heats of America. And you are going to see the

0:14:02.360 --> 0:14:06.440
<v Speaker 3>greatest equity market and buyd markets under President Trump.

0:14:06.480 --> 0:14:07.000
<v Speaker 1>Well, let's you.

0:14:06.920 --> 0:14:09.679
<v Speaker 2>Worry about the American data right now because equities have

0:14:09.760 --> 0:14:12.240
<v Speaker 2>rolled over just a little bit, you know, the market. Well,

0:14:12.280 --> 0:14:13.640
<v Speaker 2>I won't make a big deal of it. We're just

0:14:13.679 --> 0:14:16.120
<v Speaker 2>a bit softer at the back of this data from ADP,

0:14:16.280 --> 0:14:19.000
<v Speaker 2>which is a downside surprise at seventy seven K. The

0:14:19.120 --> 0:14:21.920
<v Speaker 2>estimate was one forty. So with sub one hundred, we'll

0:14:21.920 --> 0:14:23.600
<v Speaker 2>see what we get on the m later on this

0:14:23.680 --> 0:14:26.240
<v Speaker 2>morning and on payrolls on Friday. But as you know,

0:14:26.520 --> 0:14:29.080
<v Speaker 2>mister Secretary, the data over the last few weeks hasn't

0:14:29.120 --> 0:14:32.600
<v Speaker 2>been great. The survey data has been softer, and a

0:14:32.640 --> 0:14:35.120
<v Speaker 2>lot of these companies in these surveys have pointed to

0:14:35.400 --> 0:14:39.040
<v Speaker 2>tariff uncertainty. Do you accept that the business community needs

0:14:39.040 --> 0:14:42.240
<v Speaker 2>some clarity or whether it's twenty five, fifteen, ten, whatever,

0:14:42.280 --> 0:14:44.920
<v Speaker 2>the number is going to be that the volatility around

0:14:44.920 --> 0:14:49.120
<v Speaker 2>the trade story, the cumulative effect of persistent uncertainty is

0:14:49.160 --> 0:14:50.880
<v Speaker 2>starting to wink into this economy a little bit.

0:14:52.520 --> 0:14:53.040
<v Speaker 1>No way.

0:14:53.280 --> 0:14:55.400
<v Speaker 3>I mean, the President spoke about him last night. He

0:14:55.480 --> 0:15:00.680
<v Speaker 3>said Biden left them a pile a poop. He left

0:15:00.760 --> 0:15:04.000
<v Speaker 3>him allows the economy that he's trying to fix. You're

0:15:04.040 --> 0:15:08.600
<v Speaker 3>looking at data that's Biden data. Do not try to

0:15:09.160 --> 0:15:12.840
<v Speaker 3>besmirch my President Trump with Biden's nonsense.

0:15:12.880 --> 0:15:15.680
<v Speaker 2>Do you hear the manufacturing number is Biden data? I

0:15:15.720 --> 0:15:17.400
<v Speaker 2>just want to be very clear, that's your opinion. You're

0:15:17.520 --> 0:15:19.800
<v Speaker 2>entitled to it. You think that's his dates, not your

0:15:20.040 --> 0:15:20.480
<v Speaker 2>my opinion.

0:15:20.640 --> 0:15:25.680
<v Speaker 1>Okay, what possible could change? Seriously, we are in early March.

0:15:26.360 --> 0:15:28.600
<v Speaker 1>My president took over January twentieth.

0:15:29.000 --> 0:15:33.280
<v Speaker 3>You think economic data coming out in early March is

0:15:33.360 --> 0:15:35.000
<v Speaker 3>Donald Trump related data?

0:15:35.320 --> 0:15:35.720
<v Speaker 1>Monthly?

0:15:37.280 --> 0:15:41.360
<v Speaker 2>MISSUS Secretary? Are you okay? Are you suggesting we don't

0:15:41.360 --> 0:15:43.440
<v Speaker 2>have to get into an argument about it? You suggesting

0:15:43.840 --> 0:15:46.840
<v Speaker 2>so when bone yields drop in a market that's worth

0:15:46.920 --> 0:15:49.960
<v Speaker 2>trillions of dollars and investor's place bets off the back

0:15:49.960 --> 0:15:52.760
<v Speaker 2>of that economic data, that that data doesn't count front

0:15:52.760 --> 0:15:55.520
<v Speaker 2>of think that that data somehow misleading.

0:15:56.840 --> 0:15:57.400
<v Speaker 1>I think that.

0:15:57.400 --> 0:16:01.240
<v Speaker 3>Data is leading you to understand. If Joe Biden was

0:16:01.280 --> 0:16:03.960
<v Speaker 3>still in charge, you'd be in trouble. But you have

0:16:04.040 --> 0:16:06.720
<v Speaker 3>a new president. There's a new sheriff in town, and

0:16:06.880 --> 0:16:09.960
<v Speaker 3>I would bet, I would bet on the economic growth

0:16:09.960 --> 0:16:11.640
<v Speaker 3>that is coming from Donald Trump.

0:16:11.960 --> 0:16:14.880
<v Speaker 1>You see the investments. You see it already.

0:16:15.040 --> 0:16:19.840
<v Speaker 3>There's trillions of dollars of manufacturing moving to America. It's

0:16:20.000 --> 0:16:23.760
<v Speaker 3>moving to America. That means the cavalry is coming. For

0:16:23.840 --> 0:16:27.520
<v Speaker 3>every trillion dollars that invests in the United States of America,

0:16:27.760 --> 0:16:31.320
<v Speaker 3>that produces one percent of GDP growth, imagine that you

0:16:31.400 --> 0:16:37.080
<v Speaker 3>have a president bringing GDP growth directly to his economy.

0:16:37.240 --> 0:16:38.160
<v Speaker 1>That's amazing.

0:16:38.600 --> 0:16:42.000
<v Speaker 2>Mister Secretary. We appreciate your time and your opinion. As always, Sir,

0:16:42.120 --> 0:16:44.480
<v Speaker 2>the US Commerce Secretary, how would love maca on the

0:16:44.480 --> 0:16:47.640
<v Speaker 2>economic data, financial markets, and what's going to happen with

0:16:47.680 --> 0:16:47.920
<v Speaker 2>trade