1 00:00:00,080 --> 00:00:09,960 Speaker 1: Boo Bloomberg Audio Studios, podcasts, radio news. You're listening to 2 00:00:10,000 --> 00:00:13,720 Speaker 1: the Bloomberg Balance of Power podcast. Catch us live weekdays 3 00:00:13,720 --> 00:00:16,720 Speaker 1: at noon and five pm Eastern on Apple Coarclay, and 4 00:00:16,720 --> 00:00:20,119 Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand 5 00:00:20,160 --> 00:00:25,080 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 6 00:00:25,640 --> 00:00:28,480 Speaker 2: After the call with Canada, you'll need to stay with 7 00:00:28,600 --> 00:00:29,360 Speaker 2: us all day here. 8 00:00:30,000 --> 00:00:32,720 Speaker 3: Charlie will certainly be watching. What was that dow? 9 00:00:32,800 --> 00:00:34,760 Speaker 2: Down six hundred points at one point, we're looking at 10 00:00:34,760 --> 00:00:36,600 Speaker 2: a seventy five point loss. Of course, this has a 11 00:00:36,640 --> 00:00:39,279 Speaker 2: lot to do with the progress in Mexico. And then 12 00:00:39,280 --> 00:00:41,440 Speaker 2: we're counting down to a three o'clock call, three pm. 13 00:00:41,520 --> 00:00:44,800 Speaker 2: Will it be a perfect call? Donald Trump and Justin 14 00:00:44,840 --> 00:00:49,560 Speaker 2: Trudeau talking about the implementation tomorrow of twenty five percent 15 00:00:49,640 --> 00:00:53,920 Speaker 2: tariffs across the board. The US national anthem was booed 16 00:00:54,040 --> 00:00:57,720 Speaker 2: by hockey fans on Saturday in Ottawa, booed last night 17 00:00:57,800 --> 00:01:02,920 Speaker 2: by NBA fans in Toronto. I don't know what they're 18 00:01:02,960 --> 00:01:05,399 Speaker 2: singing today in Mexico, but the market's certainly like the 19 00:01:05,440 --> 00:01:07,520 Speaker 2: idea that Donald Trump had some time to talk with 20 00:01:07,600 --> 00:01:15,720 Speaker 2: Mexico's president, and sure enough, the tariffs are delayed, as 21 00:01:15,720 --> 00:01:20,440 Speaker 2: we heard earlier from the President of Mexico, who takes 22 00:01:20,520 --> 00:01:23,720 Speaker 2: us inside the phone call with Donald Trump speaking through 23 00:01:23,720 --> 00:01:24,360 Speaker 2: a translator. 24 00:01:24,360 --> 00:01:25,080 Speaker 3: Here, let's listen. 25 00:01:26,440 --> 00:01:28,800 Speaker 4: Then he agreed and at the end asked me how 26 00:01:28,880 --> 00:01:32,119 Speaker 4: much time I wanted to put on pause. I said, well, 27 00:01:32,440 --> 00:01:35,720 Speaker 4: let's put it on pause forever. And he asked how long. 28 00:01:36,200 --> 00:01:38,320 Speaker 4: I said, let's put it on pause for a month, 29 00:01:38,959 --> 00:01:40,800 Speaker 4: and I am sure that in that month we will 30 00:01:40,840 --> 00:01:43,919 Speaker 4: be able to have results, good results for his people 31 00:01:44,280 --> 00:01:45,600 Speaker 4: and good results for Mexico. 32 00:01:47,840 --> 00:01:52,360 Speaker 2: Claudius shinbah, Let's put it on pause forever, and he asked, 33 00:01:52,400 --> 00:01:53,200 Speaker 2: now how long? 34 00:01:54,160 --> 00:01:54,520 Speaker 3: It does? 35 00:01:54,600 --> 00:01:57,320 Speaker 2: Make you wonder the substance of these calls and maybe 36 00:01:57,320 --> 00:02:01,760 Speaker 2: something similar? Could something similar happen with Canada later on today? 37 00:02:02,280 --> 00:02:05,360 Speaker 2: Knowing that Mexico pledged ten thousand troops to stand along 38 00:02:05,360 --> 00:02:09,120 Speaker 2: the border to keep drug trafficking and illegal immigrants out, 39 00:02:09,200 --> 00:02:11,400 Speaker 2: keep the fentanyl owed, is there a similar agreement that 40 00:02:11,440 --> 00:02:16,520 Speaker 2: could be struck today with Canada. Doesn't appear clear to 41 00:02:16,600 --> 00:02:18,200 Speaker 2: us at this moment, which is why we need to 42 00:02:18,200 --> 00:02:19,520 Speaker 2: wait for the readout on this call. 43 00:02:20,280 --> 00:02:20,400 Speaker 5: Now. 44 00:02:20,440 --> 00:02:22,840 Speaker 2: Vin Gary Shankar is wondering what happens as well. That's 45 00:02:22,880 --> 00:02:25,040 Speaker 2: why we have the president of the Economic Security and 46 00:02:25,120 --> 00:02:29,000 Speaker 2: Technology Department at CSIS with us right now. Former Senior 47 00:02:29,000 --> 00:02:32,839 Speaker 2: Official Department of Congress, Navin I'm sure you never heard 48 00:02:32,880 --> 00:02:35,280 Speaker 2: of a moment quite like this where we have things 49 00:02:35,360 --> 00:02:37,399 Speaker 2: knocking around. It's going to be different from one hour 50 00:02:37,440 --> 00:02:40,280 Speaker 2: to the next. It appears over the course of the day. 51 00:02:40,320 --> 00:02:42,960 Speaker 2: I'm supposed to ask you about the impact of tariffs, 52 00:02:42,960 --> 00:02:46,240 Speaker 2: But is that the point of this conversation, or are 53 00:02:46,280 --> 00:02:50,040 Speaker 2: we simply using these bargaining chips to exact concessions from 54 00:02:50,080 --> 00:02:53,880 Speaker 2: our neighbors with no real intention of ever implementing them. 55 00:02:54,560 --> 00:02:56,200 Speaker 6: Well, thank you and joy, it's great to be here. 56 00:02:56,240 --> 00:02:59,839 Speaker 6: It certainly seems like the use of AIPA the Emergency 57 00:03:00,000 --> 00:03:04,840 Speaker 6: Economic powers to institute these tarrs are designed to achieve 58 00:03:04,960 --> 00:03:09,400 Speaker 6: some ends with respect to fentanyl interdiction. Fentanyl is a 59 00:03:09,440 --> 00:03:12,600 Speaker 6: serious public health issue and deserves the attention of the 60 00:03:12,600 --> 00:03:17,359 Speaker 6: President's given it. However, the real question is whether the 61 00:03:17,400 --> 00:03:20,440 Speaker 6: potential trade war that we're facing down right now is 62 00:03:20,480 --> 00:03:24,360 Speaker 6: really worth the risk in terms of addressing what is 63 00:03:24,440 --> 00:03:31,639 Speaker 6: essentially a joint law enforcement and integers interdiction type of 64 00:03:31,720 --> 00:03:32,760 Speaker 6: effort that's required. 65 00:03:34,120 --> 00:03:36,640 Speaker 2: Well, So is this a trade war or a drug war? 66 00:03:36,680 --> 00:03:38,920 Speaker 2: The White House was using the latter term this morning. 67 00:03:40,400 --> 00:03:43,000 Speaker 6: Well, I would say that we looks like we're on 68 00:03:43,040 --> 00:03:47,040 Speaker 6: the precipice of a trade war, unless you know, we're 69 00:03:47,040 --> 00:03:51,880 Speaker 6: at T minus one or less because these tariffs going 70 00:03:51,920 --> 00:03:56,160 Speaker 6: to effect at twelve one am on February fourth. The 71 00:03:56,280 --> 00:03:59,640 Speaker 6: dance between Mexico and the US right now perhaps is 72 00:03:59,640 --> 00:04:03,600 Speaker 6: a way to forestall that. The real question is shouldn't 73 00:04:03,600 --> 00:04:06,600 Speaker 6: we be fighting a tech war, because that's really what 74 00:04:06,680 --> 00:04:09,480 Speaker 6: the issue is as far as economic security of the 75 00:04:09,560 --> 00:04:12,800 Speaker 6: United States is concerned. And I think that this may 76 00:04:12,840 --> 00:04:15,920 Speaker 6: actually be ultimately somewhat of a distraction from what we 77 00:04:15,960 --> 00:04:21,560 Speaker 6: should be focused on, and certainly I think the administration 78 00:04:21,640 --> 00:04:24,960 Speaker 6: is aware of this. But again, the question is about focus. 79 00:04:26,160 --> 00:04:29,000 Speaker 2: Okay, So Navin introduces an interesting idea here and a 80 00:04:29,040 --> 00:04:33,240 Speaker 2: smart question. By the way, Navin, no one's talking about 81 00:04:33,320 --> 00:04:36,400 Speaker 2: the ten percent tariffs against China, which are more likely 82 00:04:36,480 --> 00:04:39,640 Speaker 2: to be implemented or kept in place, I would argue, 83 00:04:40,040 --> 00:04:43,680 Speaker 2: than the Canadian or Mexican tariffs. We've talked recently about 84 00:04:44,080 --> 00:04:48,320 Speaker 2: turning the screws on export controls for high tech GPUs, 85 00:04:48,440 --> 00:04:50,919 Speaker 2: the advanced stuff that Nvidia is selling for instance. 86 00:04:51,440 --> 00:04:52,919 Speaker 3: Is that the direction you're looking at? 87 00:04:52,960 --> 00:04:56,000 Speaker 2: And why are we talking about Mexico and Canada if 88 00:04:56,000 --> 00:04:56,880 Speaker 2: that's the case. 89 00:04:58,200 --> 00:05:00,320 Speaker 6: Well, the reason we're talking about Mexico and ca Canada 90 00:05:00,440 --> 00:05:05,159 Speaker 6: is because the North American economic ecosystem is highly integrated. 91 00:05:05,680 --> 00:05:10,760 Speaker 6: Those players have much to lose given their export exposure 92 00:05:10,800 --> 00:05:14,080 Speaker 6: to the United States. But with respect to China, the 93 00:05:14,160 --> 00:05:16,600 Speaker 6: ten percent tariff, remember what they had priced in with 94 00:05:16,680 --> 00:05:19,640 Speaker 6: something like sixty percent tariffs based on what the President 95 00:05:19,680 --> 00:05:22,520 Speaker 6: had said during the campaign, So this is much lower 96 00:05:22,560 --> 00:05:24,599 Speaker 6: than that. We will feel the hit here in the 97 00:05:24,720 --> 00:05:30,120 Speaker 6: US on things like electronics and other types of goods 98 00:05:30,120 --> 00:05:33,359 Speaker 6: and services like that from China. But I think the 99 00:05:33,400 --> 00:05:36,200 Speaker 6: bigger question, which you pose is an important one, is 100 00:05:36,240 --> 00:05:39,839 Speaker 6: we should be thinking the economic relationship with China covering 101 00:05:39,880 --> 00:05:45,480 Speaker 6: a number of economic security tools, trade, export controls, investment screening, 102 00:05:46,640 --> 00:05:50,200 Speaker 6: and other types of measures that are intended to actually 103 00:05:50,680 --> 00:05:54,400 Speaker 6: strengthen the US's hand with respect to the technology competition 104 00:05:54,480 --> 00:05:58,200 Speaker 6: that is now accelerating across a number of technologies. 105 00:05:59,320 --> 00:06:02,080 Speaker 2: If the FED is coming from China and going through 106 00:06:02,120 --> 00:06:05,320 Speaker 2: Mexico and Canada to get here, most of it through Mexico, 107 00:06:06,760 --> 00:06:09,480 Speaker 2: that also can change the way you're looking at this 108 00:06:09,680 --> 00:06:12,359 Speaker 2: drug war. Why don't we go to the source instead 109 00:06:12,360 --> 00:06:13,640 Speaker 2: of unplaced partners? 110 00:06:14,680 --> 00:06:17,080 Speaker 6: One hundred percent? And as you'll recall, during the Biden 111 00:06:17,160 --> 00:06:21,560 Speaker 6: administration there was an agreement with presidency to work on 112 00:06:21,640 --> 00:06:24,720 Speaker 6: that issue. I think you have certainly put your finger 113 00:06:24,800 --> 00:06:28,360 Speaker 6: onto a really important issue, which is the source. And 114 00:06:28,400 --> 00:06:33,480 Speaker 6: I think that is a curious decision to prioritize what 115 00:06:33,600 --> 00:06:37,080 Speaker 6: is in effect harder measures with Mexico and Canada right 116 00:06:37,120 --> 00:06:40,560 Speaker 6: now relative to the Chinese. Who knows what's coming down 117 00:06:40,600 --> 00:06:43,520 Speaker 6: the pike in terms of the game plan of the administration, 118 00:06:43,640 --> 00:06:47,279 Speaker 6: but sequencing matters, and so now we're going to focus 119 00:06:47,320 --> 00:06:53,880 Speaker 6: on our closest allies relative to what is our principal competitor. 120 00:06:55,279 --> 00:06:58,080 Speaker 2: Nac A headline just crossing the terminal. Secretary of State 121 00:06:58,120 --> 00:07:02,280 Speaker 2: Rubio Mexico sending Nation Guard to the border is quote 122 00:07:02,320 --> 00:07:06,280 Speaker 2: a very good sign unquote. Is there an equivalent side 123 00:07:06,520 --> 00:07:09,160 Speaker 2: here for Canada? What is it that Justin Trudeau can 124 00:07:09,240 --> 00:07:12,120 Speaker 2: promise Donald Trump on the phone at three o'clock you're 125 00:07:12,120 --> 00:07:13,960 Speaker 2: going to line up the Mounties and that's going to 126 00:07:14,000 --> 00:07:15,760 Speaker 2: be it along the northern border here or is it 127 00:07:15,840 --> 00:07:16,520 Speaker 2: something more than that? 128 00:07:18,240 --> 00:07:21,600 Speaker 6: Well, It's interesting because the AEPA order was focused on fentanyl, 129 00:07:21,640 --> 00:07:28,080 Speaker 6: and the cross border fentanyl from Canada is relatively small, 130 00:07:28,480 --> 00:07:33,320 Speaker 6: very very small, negligible relative to Mexico. And so really 131 00:07:33,360 --> 00:07:36,000 Speaker 6: the question is what's the goal of this and what 132 00:07:36,040 --> 00:07:38,960 Speaker 6: do you really want from Canada Canada. Are there unstated 133 00:07:39,000 --> 00:07:41,960 Speaker 6: goals that are not in the AEPA order or is 134 00:07:42,000 --> 00:07:46,280 Speaker 6: there something more? And so I think that explains the 135 00:07:46,400 --> 00:07:50,760 Speaker 6: difference in the way that relatively relatively Canada and Mexico 136 00:07:50,800 --> 00:07:54,240 Speaker 6: have responded. So Mexico has, you know, really made a 137 00:07:54,320 --> 00:07:57,560 Speaker 6: number of measures and you just read that out to 138 00:07:57,760 --> 00:08:02,280 Speaker 6: demonstrate focus on fentinel. Well, Canada's response is a little 139 00:08:02,280 --> 00:08:06,160 Speaker 6: bit different. They've said, well, we'll retaliate. I think the 140 00:08:06,280 --> 00:08:10,280 Speaker 6: Ontario premiere has said that he's banning US companies from 141 00:08:10,920 --> 00:08:14,240 Speaker 6: government contracts in Ontario. So too much harder stance. And 142 00:08:14,280 --> 00:08:18,600 Speaker 6: it's really because these measures affect those countries differently, and 143 00:08:18,680 --> 00:08:24,120 Speaker 6: their potential kind of alternatives are also different. Remember, our 144 00:08:24,160 --> 00:08:28,400 Speaker 6: relationship with Canada is also important with respect to the 145 00:08:28,440 --> 00:08:32,520 Speaker 6: competition with China, both in terms of critical minerals that 146 00:08:32,559 --> 00:08:38,440 Speaker 6: we need for advanced technologies. Canada's role on implementation of 147 00:08:38,760 --> 00:08:42,360 Speaker 6: export controls, and also the fact that Canada is going 148 00:08:42,360 --> 00:08:44,480 Speaker 6: to take over the G seven presidency and we need 149 00:08:44,559 --> 00:08:47,720 Speaker 6: partnership with them to again and win the bigger the 150 00:08:47,760 --> 00:08:50,720 Speaker 6: bigger war, if you will, the tech war. 151 00:08:52,120 --> 00:08:54,080 Speaker 3: That's a good one, Avina. I haven't heard anybody mention 152 00:08:54,160 --> 00:08:57,440 Speaker 3: that the G seven. We like data here at Bloomberg. 153 00:08:57,480 --> 00:08:58,520 Speaker 3: Let's put some numbers on this. 154 00:08:58,600 --> 00:09:04,000 Speaker 2: To your point, Canada negligible as a source of fentanyl trafficking. 155 00:09:04,760 --> 00:09:08,560 Speaker 2: Forty three pounds came across the northern border last year 156 00:09:09,520 --> 00:09:15,040 Speaker 2: versus twenty one thousand pounds across the southern border. Gives 157 00:09:15,120 --> 00:09:17,520 Speaker 2: a little bit of perspective to what we're talking about, Navine. 158 00:09:17,520 --> 00:09:20,600 Speaker 2: What is this poor ten for the EU? Donald Trump 159 00:09:20,600 --> 00:09:21,600 Speaker 2: says Europe is next. 160 00:09:23,640 --> 00:09:26,480 Speaker 6: Well, you know there are two things he says there next. Again, 161 00:09:26,520 --> 00:09:29,160 Speaker 6: the question is going to become, what are the goals 162 00:09:29,200 --> 00:09:33,000 Speaker 6: of whatever tariffs he puts on the EU? Are we 163 00:09:33,080 --> 00:09:39,480 Speaker 6: dealing with trying to address bilateral trade deficits? So, for example, 164 00:09:39,480 --> 00:09:42,600 Speaker 6: in the case of Mexico and Canada, you may put 165 00:09:42,600 --> 00:09:47,400 Speaker 6: these tariffs on both countries, but you will likely experience 166 00:09:47,400 --> 00:09:50,520 Speaker 6: an increase in imports from other countries like Germany, like 167 00:09:50,600 --> 00:09:54,680 Speaker 6: those in Europe. So the overall aggregate b trade deficit 168 00:09:54,760 --> 00:09:57,840 Speaker 6: will not reduce, but you might shift which countries you 169 00:09:57,920 --> 00:10:01,559 Speaker 6: have a deficit in relative to others. And so the 170 00:10:01,679 --> 00:10:04,120 Speaker 6: question is what's the goal with respect to Europe. Is 171 00:10:04,120 --> 00:10:07,120 Speaker 6: it to address the bilateral trade deficit? Well, let's see 172 00:10:07,120 --> 00:10:10,920 Speaker 6: what the president does there. Is it to achieve some 173 00:10:11,080 --> 00:10:15,520 Speaker 6: other non economic ends such as the fentoonyl case here 174 00:10:15,559 --> 00:10:18,040 Speaker 6: in North America? Are there other goals he's trying to 175 00:10:18,040 --> 00:10:21,040 Speaker 6: achieve with Europe? Potentially there are, And then you'd have 176 00:10:21,120 --> 00:10:26,120 Speaker 6: to ask the question are these commensurate? You have economic measures, 177 00:10:26,640 --> 00:10:29,320 Speaker 6: the costs of which we don't fully understand because they 178 00:10:29,360 --> 00:10:31,960 Speaker 6: have to play out, and then you're trying to achieve 179 00:10:32,080 --> 00:10:39,880 Speaker 6: relatively short term actions on non economic policy issues. And 180 00:10:39,960 --> 00:10:43,439 Speaker 6: so the question is is it a good motivator for that? 181 00:10:42,960 --> 00:10:45,880 Speaker 6: That is the jury is still out on that. 182 00:10:47,840 --> 00:10:50,160 Speaker 3: Smart talk. Lavin, thank you for joining. It's great to 183 00:10:50,160 --> 00:10:50,400 Speaker 3: have you. 184 00:10:50,440 --> 00:10:54,080 Speaker 2: The vin Gary Shankar csis the Center for Strategic and 185 00:10:54,120 --> 00:10:57,959 Speaker 2: International Studies formally with the Department of Commerce. A voice 186 00:10:57,960 --> 00:11:00,000 Speaker 2: of experience, as we always try to bring you here 187 00:11:00,320 --> 00:11:02,280 Speaker 2: on the fastest show in politics. 188 00:11:01,840 --> 00:11:03,960 Speaker 3: We'll keep working our way through this. It has been 189 00:11:04,280 --> 00:11:05,800 Speaker 3: quite a doozy of a couple of days. 190 00:11:05,840 --> 00:11:08,600 Speaker 2: Our Political panel is up next today Genie Shanzano, our 191 00:11:08,640 --> 00:11:12,400 Speaker 2: Democratic analyst with Republican strategist Mark Short On Bloomberg. 192 00:11:14,640 --> 00:11:18,120 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 193 00:11:18,200 --> 00:11:21,280 Speaker 1: us live weekdays at noon and five pm Eastern on 194 00:11:21,400 --> 00:11:24,640 Speaker 1: Apple Cocklay and Android Auto with the Bloomberg Business App. 195 00:11:24,679 --> 00:11:27,679 Speaker 1: You can also listen live on Amazon Alexa from our 196 00:11:27,720 --> 00:11:31,800 Speaker 1: flagship New York station, Just Say Alexa, Play Bloomberg eleven 197 00:11:31,920 --> 00:11:34,120 Speaker 1: thirty O China. 198 00:11:34,120 --> 00:11:36,880 Speaker 2: We're going to put in a different bucket today, but 199 00:11:37,000 --> 00:11:40,760 Speaker 2: with regard to Canada and Mexico, our two immediate neighbors here, 200 00:11:40,800 --> 00:11:44,240 Speaker 2: this is something that has changed a lot already. We 201 00:11:44,280 --> 00:11:47,240 Speaker 2: are sitting here on the eve of the tariffs being implemented. 202 00:11:47,640 --> 00:11:50,199 Speaker 2: The market thinks it knows something. The question is what 203 00:11:50,240 --> 00:11:54,160 Speaker 2: can Justin Trudeau offer that might delay the tariffs? 204 00:11:54,160 --> 00:11:54,360 Speaker 4: Here? 205 00:11:54,480 --> 00:11:58,440 Speaker 2: Is it ten thousand mounties along the border as Mexico 206 00:11:58,559 --> 00:12:00,840 Speaker 2: is giving us in the form of their own troops. 207 00:12:01,120 --> 00:12:03,400 Speaker 2: Our political panel is with us today to talk about 208 00:12:03,400 --> 00:12:06,160 Speaker 2: this and a lot more. Jeanie Shanzeno or Bloomberg Politics 209 00:12:06,160 --> 00:12:08,880 Speaker 2: contributor and Democratic analyst with us in New York. Senior 210 00:12:08,920 --> 00:12:10,839 Speaker 2: Democracy Fellow with the Center for the Study of the 211 00:12:10,880 --> 00:12:14,520 Speaker 2: Presidency in Congress with me here in Washington. Republican strategist 212 00:12:14,679 --> 00:12:18,000 Speaker 2: Mark Short, former chief of staff to former Vice President 213 00:12:18,120 --> 00:12:19,880 Speaker 2: Mike Pence. Great to see you both here and Mark, 214 00:12:19,880 --> 00:12:21,520 Speaker 2: thanks for being with us in studio. It's great to 215 00:12:21,559 --> 00:12:24,800 Speaker 2: have you as part of our conversation. As always, do 216 00:12:24,920 --> 00:12:28,160 Speaker 2: we step back big picture here and say, well, I 217 00:12:28,160 --> 00:12:31,480 Speaker 2: guess tariffs do work, you just don't have to implement them. 218 00:12:32,960 --> 00:12:36,040 Speaker 7: I think that President Trump, even his first administration, was 219 00:12:36,160 --> 00:12:39,000 Speaker 7: very effective in the negotiation with tariffs and to use 220 00:12:39,040 --> 00:12:42,920 Speaker 7: them to bring people to the negotiating table. However, I 221 00:12:42,960 --> 00:12:45,400 Speaker 7: do think there's a big difference between the first administration 222 00:12:45,440 --> 00:12:48,920 Speaker 7: and the second administration. In the first administration, the president 223 00:12:49,080 --> 00:12:52,760 Speaker 7: had a lot of economic advisors but also national security 224 00:12:52,760 --> 00:12:55,520 Speaker 7: advisors who believed in the benefits of trade, not just 225 00:12:55,600 --> 00:12:58,720 Speaker 7: for the economy but for national security. The team that 226 00:12:58,760 --> 00:13:00,760 Speaker 7: he has around today is a very different team that 227 00:13:00,840 --> 00:13:04,200 Speaker 7: does not has a much more protectionist perspective. And so 228 00:13:04,840 --> 00:13:07,280 Speaker 7: even though there may be some thirty day relief here 229 00:13:07,320 --> 00:13:11,240 Speaker 7: in the Mexico terraces, I think that the advisors he 230 00:13:11,320 --> 00:13:13,400 Speaker 7: has around him right now, believe very strongly in a 231 00:13:13,400 --> 00:13:16,880 Speaker 7: protectionist policy because they really believe that the manufacturing base 232 00:13:16,920 --> 00:13:19,520 Speaker 7: of America has been hurt by trade. And so I 233 00:13:19,559 --> 00:13:22,520 Speaker 7: think that this may be a temporary reprieve. I don't 234 00:13:22,520 --> 00:13:24,320 Speaker 7: think it'll be a permanent reprieve. I think this is 235 00:13:24,360 --> 00:13:27,280 Speaker 7: this administration to be moving forward with a whole slew 236 00:13:27,320 --> 00:13:28,960 Speaker 7: of tariffs in the coming months. 237 00:13:28,640 --> 00:13:31,160 Speaker 2: And maybe come back with something more targeted toward Mexico, 238 00:13:31,200 --> 00:13:33,520 Speaker 2: for instance, auto sector or otherwise. 239 00:13:33,440 --> 00:13:35,640 Speaker 7: Perhaps, But I mean even at the same time that 240 00:13:35,679 --> 00:13:39,719 Speaker 7: these threats are being settled, he's threatening new terriffs for 241 00:13:39,760 --> 00:13:42,760 Speaker 7: the EU. That's right, And so I think that you know, 242 00:13:42,840 --> 00:13:46,520 Speaker 7: typically with the US Trade Representives Office, it requires about 243 00:13:46,559 --> 00:13:49,800 Speaker 7: a ninety day investigation to prove unfair trade practices, and 244 00:13:49,880 --> 00:13:52,640 Speaker 7: you've heard the administration hint that April was when a 245 00:13:52,640 --> 00:13:54,920 Speaker 7: lot of those investigations will come. Do what he had 246 00:13:54,960 --> 00:14:00,040 Speaker 7: threatened with Canada and Mexico was unique. Under IEPA, the 247 00:14:00,160 --> 00:14:06,079 Speaker 7: Economic Empowers Act. Did no administration ever use that for tariffs, 248 00:14:06,080 --> 00:14:09,240 Speaker 7: and so there's I think there was other challenges potentially 249 00:14:09,280 --> 00:14:11,160 Speaker 7: in the courts on that. And so if there's a 250 00:14:11,200 --> 00:14:13,160 Speaker 7: backing off of some of the Mexico. I still think 251 00:14:13,200 --> 00:14:15,640 Speaker 7: it's becoming when these investigations are complete. 252 00:14:15,679 --> 00:14:15,880 Speaker 3: Wow. 253 00:14:15,960 --> 00:14:18,360 Speaker 2: So, Genie, are we looking at a master at work 254 00:14:18,400 --> 00:14:20,520 Speaker 2: here or an economic arsonist? 255 00:14:22,400 --> 00:14:25,400 Speaker 5: Well, I think it could be somewhere in between. You know, 256 00:14:25,480 --> 00:14:28,320 Speaker 5: we did here for a while that even you know, 257 00:14:28,440 --> 00:14:31,680 Speaker 5: especially people in the market, were not that concerned because 258 00:14:31,720 --> 00:14:34,160 Speaker 5: they said, this is going to be transactional in nature, 259 00:14:34,440 --> 00:14:37,680 Speaker 5: We're going to get these negotiations as we've seen with Mexico, 260 00:14:38,200 --> 00:14:41,400 Speaker 5: and that this would in the long term not have 261 00:14:41,480 --> 00:14:45,320 Speaker 5: a real economic impact. But as a political scientist, let 262 00:14:45,360 --> 00:14:48,080 Speaker 5: me say that there is a price to pay for this. 263 00:14:48,800 --> 00:14:52,000 Speaker 5: We teach our children not to bully in the playground 264 00:14:52,080 --> 00:14:55,680 Speaker 5: for a reason, and we don't bully in the international 265 00:14:55,720 --> 00:14:59,560 Speaker 5: realm either for a reason, because there are long term 266 00:14:59,680 --> 00:15:04,280 Speaker 5: impact on our national security and our alliances. If you 267 00:15:04,400 --> 00:15:07,760 Speaker 5: are another country and you are looking at this bullying, 268 00:15:08,160 --> 00:15:12,200 Speaker 5: are you inclined to trust your alliance with the United 269 00:15:12,240 --> 00:15:15,080 Speaker 5: States or are you more inclined to go say the 270 00:15:15,120 --> 00:15:18,120 Speaker 5: way of China and Jijinping. There is a school of 271 00:15:18,200 --> 00:15:22,000 Speaker 5: thought which says all the inroads that jijon Ping has 272 00:15:22,160 --> 00:15:25,800 Speaker 5: made in the global South, he is the beneficiary of 273 00:15:25,840 --> 00:15:29,240 Speaker 5: this kind of bullying. Donald Trump does this because he 274 00:15:29,440 --> 00:15:31,440 Speaker 5: is long held that we are on the losing end 275 00:15:31,440 --> 00:15:34,360 Speaker 5: of a trade deficit. But the reality is he is 276 00:15:34,480 --> 00:15:38,480 Speaker 5: president of the United States and our alliances matter. And 277 00:15:38,520 --> 00:15:40,080 Speaker 5: this is true not only if you look at this 278 00:15:40,120 --> 00:15:42,480 Speaker 5: story about tariffs, but also if you look at the 279 00:15:42,560 --> 00:15:46,880 Speaker 5: USAID story. So long term the impact on US, I 280 00:15:46,920 --> 00:15:51,000 Speaker 5: am extremely concerned about short term, we may all survive 281 00:15:51,080 --> 00:15:52,000 Speaker 5: this economically. 282 00:15:53,240 --> 00:15:56,280 Speaker 2: Mark you were there for the renegotiating of NAFTA. I 283 00:15:56,480 --> 00:16:01,160 Speaker 2: guess we can call it that. Creating the USM is 284 00:16:01,800 --> 00:16:05,080 Speaker 2: genie correct about bullying and does a weakened Mexico and 285 00:16:05,200 --> 00:16:09,440 Speaker 2: China embolden or Canada rather embolden China. 286 00:16:09,480 --> 00:16:12,440 Speaker 7: Well, I will say that even in the USMCA trade agreement, 287 00:16:12,480 --> 00:16:15,920 Speaker 7: there was a clause that allowed under national security emergencies 288 00:16:15,960 --> 00:16:19,520 Speaker 7: and ability to obviate the treaty and to move forward 289 00:16:19,520 --> 00:16:21,800 Speaker 7: to tariffs. And I think that that's why you've seen 290 00:16:21,840 --> 00:16:24,880 Speaker 7: the president youth sventanyl and the border crisis, which I 291 00:16:24,880 --> 00:16:27,000 Speaker 7: think certainly applies to Mexico. It's a little bit harder 292 00:16:27,000 --> 00:16:30,600 Speaker 7: to see the emergency with the border in Canada. But 293 00:16:30,760 --> 00:16:34,280 Speaker 7: I think that I'm less worried about the bullying factor. 294 00:16:34,320 --> 00:16:36,400 Speaker 7: I think that for a lot of Americans, they do 295 00:16:36,480 --> 00:16:40,800 Speaker 7: feel that there's been a weakness of American foreign policy 296 00:16:40,840 --> 00:16:43,840 Speaker 7: for years, and I think they welcome a stronger personality. 297 00:16:43,840 --> 00:16:45,720 Speaker 7: But I think Genie makes a really good point about 298 00:16:45,760 --> 00:16:48,720 Speaker 7: China being the beneficiary, because I remember in the first 299 00:16:48,720 --> 00:16:52,520 Speaker 7: administration that, for instance, it took a lot of negotiation, 300 00:16:52,760 --> 00:16:56,240 Speaker 7: if you recall the Huawei controversy first to get Canada 301 00:16:56,400 --> 00:17:00,400 Speaker 7: onto our side on Huawei against China. Are they going 302 00:17:00,480 --> 00:17:03,280 Speaker 7: to be as excited to partner with us the next 303 00:17:03,280 --> 00:17:06,159 Speaker 7: time around when we have a concern about China. And 304 00:17:06,720 --> 00:17:08,200 Speaker 7: so I think she makes a really good point. And 305 00:17:08,280 --> 00:17:11,119 Speaker 7: in some cases, when you're tearing down these alliances, you 306 00:17:11,480 --> 00:17:15,080 Speaker 7: force some of our former allies into relationships with some 307 00:17:15,119 --> 00:17:18,119 Speaker 7: of our adversaries. And I think again that's where our 308 00:17:18,200 --> 00:17:21,359 Speaker 7: national security advisors in the first administration believed in the 309 00:17:21,359 --> 00:17:23,480 Speaker 7: benefit of that trade. That currently those are not the 310 00:17:23,480 --> 00:17:24,879 Speaker 7: same advisors that's going around. 311 00:17:25,040 --> 00:17:27,119 Speaker 2: We're spending time with Mark Short and Genie Shanzino are 312 00:17:27,160 --> 00:17:29,159 Speaker 2: a great panel on the Monday edition here a Balance 313 00:17:29,160 --> 00:17:32,879 Speaker 2: of Power. It was a very busy weekend for the 314 00:17:32,920 --> 00:17:35,560 Speaker 2: Trump administration. While you were going about your business, it 315 00:17:35,600 --> 00:17:37,919 Speaker 2: wasn't only terriffs they were talking about here. What we 316 00:17:38,000 --> 00:17:42,919 Speaker 2: saw take place with us AID. Us AID was quite remarkable. 317 00:17:42,960 --> 00:17:47,199 Speaker 2: Here Elon Musk declaring on X us AID is a 318 00:17:47,320 --> 00:17:48,520 Speaker 2: criminal organization. 319 00:17:49,600 --> 00:17:50,840 Speaker 3: Time for it to die. 320 00:17:51,840 --> 00:17:53,520 Speaker 2: We know that a lot of things happen there over 321 00:17:53,560 --> 00:17:55,920 Speaker 2: the course of the weekend. Workers were told to stay home. 322 00:17:55,960 --> 00:17:58,200 Speaker 2: And since we've arrived here this morning, we're told the 323 00:17:58,200 --> 00:17:59,960 Speaker 2: Secretary of State Marco Rubio. 324 00:17:59,680 --> 00:18:02,040 Speaker 3: Has taken can control of us AID. 325 00:18:02,359 --> 00:18:04,520 Speaker 2: Genie, your thoughts on this, and I'll ask you about 326 00:18:04,560 --> 00:18:06,800 Speaker 2: this payment system at the Treasury because it strikes me 327 00:18:06,920 --> 00:18:09,480 Speaker 2: that in the end, these could be more significant stories 328 00:18:09,840 --> 00:18:11,440 Speaker 2: than what we're hearing about tariffs today. 329 00:18:12,560 --> 00:18:14,840 Speaker 5: Yeah, Joe, you forgot to mention the other big news 330 00:18:14,840 --> 00:18:17,199 Speaker 5: of the weekend, which was Pucksatani Phil. So we're in 331 00:18:17,240 --> 00:18:19,360 Speaker 5: for more winters beside. 332 00:18:19,200 --> 00:18:20,520 Speaker 3: I'm depressed already. I know. 333 00:18:21,119 --> 00:18:24,719 Speaker 5: I'm sorry. I'm USAID. And of course the Treasury story. 334 00:18:25,000 --> 00:18:27,639 Speaker 5: You know, I mentioned this prior because it seems to 335 00:18:27,680 --> 00:18:30,639 Speaker 5: me it's pert and person of Donald Trump's approach to 336 00:18:30,680 --> 00:18:34,320 Speaker 5: the world, and certainly you have people in the US 337 00:18:34,320 --> 00:18:37,920 Speaker 5: and around the world who support it. I do get concerned. 338 00:18:38,000 --> 00:18:42,720 Speaker 5: A good deal that we are seeming to lose understanding 339 00:18:42,800 --> 00:18:46,480 Speaker 5: of something that China, which Mark just mentioned before, knows 340 00:18:46,520 --> 00:18:52,520 Speaker 5: intuitively soft power matters. Now usaid, certainly there is waste 341 00:18:52,600 --> 00:18:57,040 Speaker 5: in all government programs. Certainly no question can be cleaned out. 342 00:18:57,480 --> 00:19:01,439 Speaker 5: But I am worried when we to think that something 343 00:19:01,520 --> 00:19:04,479 Speaker 5: you know, talking about people within there as you know, 344 00:19:04,600 --> 00:19:08,400 Speaker 5: somehow criminals without evidence, when we talk about it as 345 00:19:08,480 --> 00:19:12,520 Speaker 5: needing to be dead or destroyed. Certainly again cleaned up. 346 00:19:12,840 --> 00:19:16,760 Speaker 5: But soft power matters. And if the United States doesn't 347 00:19:16,840 --> 00:19:21,520 Speaker 5: exercise soft power, that power shift will go elsewhere like 348 00:19:21,680 --> 00:19:25,600 Speaker 5: China and Russia. And nobody does this better than Jijinping. 349 00:19:26,040 --> 00:19:28,960 Speaker 5: Look at the Silk Road, look at again the inroads 350 00:19:29,000 --> 00:19:33,159 Speaker 5: into the global South. We are losing our ability to 351 00:19:33,240 --> 00:19:38,040 Speaker 5: be seen around the world as anybody but demanding harvesting people, 352 00:19:38,280 --> 00:19:42,960 Speaker 5: mining people's goods. We also have to help the poorest 353 00:19:43,240 --> 00:19:45,719 Speaker 5: people in the world if we want to have an 354 00:19:45,760 --> 00:19:49,480 Speaker 5: ability to have impact. You know, somebody just reminded me 355 00:19:49,600 --> 00:19:52,000 Speaker 5: that there was a point just before World War two 356 00:19:52,400 --> 00:19:57,800 Speaker 5: when somebody told Truman that hunger means communism. And we 357 00:19:57,920 --> 00:20:01,919 Speaker 5: fight that by showing people that democracy can deliver for 358 00:20:02,000 --> 00:20:04,480 Speaker 5: them and us and soft power matters in that. 359 00:20:05,960 --> 00:20:06,560 Speaker 3: Mark, I don't know. 360 00:20:06,560 --> 00:20:08,840 Speaker 2: Your thoughts on this and the idea of kind of 361 00:20:08,840 --> 00:20:10,919 Speaker 2: giving the keys to Elon Musk, but I think of 362 00:20:11,000 --> 00:20:15,399 Speaker 2: you as an older style Republican, an institutionalist, maybe a 363 00:20:15,400 --> 00:20:18,520 Speaker 2: more traditional Republican. Maybe you've gotten your head around Terris. 364 00:20:18,560 --> 00:20:19,720 Speaker 2: Are you getting your head around this? 365 00:20:20,640 --> 00:20:23,920 Speaker 3: I think that on USC I d that that. 366 00:20:24,119 --> 00:20:26,440 Speaker 7: I think for a lot of Americans, they do wanted 367 00:20:26,520 --> 00:20:28,760 Speaker 7: more of America First policy. Do feel like there's been 368 00:20:28,800 --> 00:20:31,400 Speaker 7: a lot of taxpayer dollars abuse, But it's important that 369 00:20:31,400 --> 00:20:33,800 Speaker 7: I think the President Trump has a has an effective 370 00:20:33,840 --> 00:20:36,399 Speaker 7: way of throwing an idea out, seeing what the market 371 00:20:36,400 --> 00:20:39,199 Speaker 7: reaction is and adjusting. And so over the weekend it 372 00:20:39,359 --> 00:20:41,840 Speaker 7: was is you just read from Elon Musk it's criminal, 373 00:20:41,920 --> 00:20:44,560 Speaker 7: it'll be abolished, and now it's like, well, actually it's 374 00:20:44,600 --> 00:20:47,200 Speaker 7: just going to be shrunk and put under Mark Rubia's 375 00:20:47,600 --> 00:20:49,960 Speaker 7: So there's a there's already an adjustment within a very 376 00:20:50,040 --> 00:20:50,840 Speaker 7: quick amount of time. 377 00:20:50,880 --> 00:20:52,200 Speaker 3: It's what actions be happening. 378 00:20:52,240 --> 00:20:54,160 Speaker 2: So we back to that, take them seriously, take them 379 00:20:54,160 --> 00:20:55,199 Speaker 2: literally debates? 380 00:20:55,240 --> 00:20:56,520 Speaker 3: Well, No, I think I think it's important too. 381 00:20:56,560 --> 00:20:59,600 Speaker 7: He often throws ideas out and since reaction and I 382 00:20:59,640 --> 00:21:02,119 Speaker 7: and I think that seeing how the market reacted of 383 00:21:02,160 --> 00:21:05,560 Speaker 7: the weekend to the to the terraffs, I think helped 384 00:21:05,680 --> 00:21:10,520 Speaker 7: modulate on Mexico by this morning. So so yes, Mexico 385 00:21:10,600 --> 00:21:12,240 Speaker 7: came back to the table saying that put troops to 386 00:21:12,240 --> 00:21:14,040 Speaker 7: the border. But I think the President was also looking 387 00:21:14,040 --> 00:21:15,879 Speaker 7: for a deal because he didn't like that market reaction. 388 00:21:16,080 --> 00:21:18,320 Speaker 7: So he is always going to be sensitive to what 389 00:21:18,359 --> 00:21:20,320 Speaker 7: the either the financial markets or. 390 00:21:20,280 --> 00:21:21,880 Speaker 3: The popularity markets did. 391 00:21:21,960 --> 00:21:23,880 Speaker 7: But to another point the Genie was making, I think 392 00:21:23,880 --> 00:21:26,679 Speaker 7: another story was lost here is that you know, I 393 00:21:26,720 --> 00:21:30,680 Speaker 7: thought Mark or Ruby had a significant achievement in Panama 394 00:21:30,760 --> 00:21:33,280 Speaker 7: with Belton Road initiative. But I felt in many ways 395 00:21:33,280 --> 00:21:35,439 Speaker 7: the President Trump undercut that by coming out, you know, 396 00:21:35,520 --> 00:21:37,560 Speaker 7: yesterday and saying, well, that's not really objective and take 397 00:21:37,600 --> 00:21:41,480 Speaker 7: back the canal. I mean, getting Panama the distance itself 398 00:21:41,520 --> 00:21:44,720 Speaker 7: from the Chinese investments was a huge win from markoint Yes, 399 00:21:45,080 --> 00:21:47,120 Speaker 7: so I felt like that was undercutting what I thought 400 00:21:47,200 --> 00:21:49,440 Speaker 7: was a very significant foreign policy achievement by. 401 00:21:49,520 --> 00:21:51,720 Speaker 3: Ruby O in the State Department. That's fascinating, Genie. I 402 00:21:51,720 --> 00:21:53,640 Speaker 3: don't know your thoughts on this is the job done 403 00:21:53,840 --> 00:21:54,600 Speaker 3: in Panama. 404 00:21:55,920 --> 00:21:58,359 Speaker 5: No, I don't think it's done and I agree with Mark. 405 00:21:58,480 --> 00:22:01,320 Speaker 5: It was a win on the for Marco Rubio and 406 00:22:01,359 --> 00:22:04,520 Speaker 5: the State Department. And yet with all of the noise, 407 00:22:04,760 --> 00:22:08,479 Speaker 5: it's very hard, especially when the President steps on it, 408 00:22:08,840 --> 00:22:11,199 Speaker 5: for them to get that message out. And so, you know, 409 00:22:11,280 --> 00:22:14,320 Speaker 5: you wonder how frustrated Marco Rubio might be at this point. 410 00:22:14,760 --> 00:22:17,160 Speaker 5: But I do think that you know, as we look 411 00:22:17,200 --> 00:22:20,320 Speaker 5: at what has happened in just the last few days, 412 00:22:21,240 --> 00:22:24,840 Speaker 5: you see the President testing, you know, as Mark said, 413 00:22:24,880 --> 00:22:29,640 Speaker 5: testing things. The problem is, there are real people impacted 414 00:22:29,960 --> 00:22:33,600 Speaker 5: by these tests. You mentioned the Treasury issue. You had 415 00:22:33,840 --> 00:22:38,200 Speaker 5: an employee of thirty five years who suddenly left, and 416 00:22:38,240 --> 00:22:42,080 Speaker 5: so Musk's people were able to get access to that system. 417 00:22:42,480 --> 00:22:45,240 Speaker 5: You know, I'm at a university. All of our funding 418 00:22:45,280 --> 00:22:48,000 Speaker 5: has been frozen. Now, these are not the worst impacts 419 00:22:48,000 --> 00:22:52,480 Speaker 5: in the world, but testing reaction makes you seem at 420 00:22:52,520 --> 00:22:56,639 Speaker 5: some in some ways a bit incompetent. And so you know, 421 00:22:56,720 --> 00:23:01,000 Speaker 5: it's gonna matter how they implement these policies, and so 422 00:23:01,160 --> 00:23:05,400 Speaker 5: far the implementation has left many people around the country 423 00:23:05,600 --> 00:23:08,560 Speaker 5: scratching their head. If you want to cut, cut, but 424 00:23:08,600 --> 00:23:11,000 Speaker 5: there's a process by which we do that in the 425 00:23:11,119 --> 00:23:14,560 Speaker 5: United States. You are not king, You're the second branch 426 00:23:14,600 --> 00:23:15,120 Speaker 5: of government. 427 00:23:16,119 --> 00:23:16,760 Speaker 3: We only have a. 428 00:23:16,720 --> 00:23:19,560 Speaker 2: Minute left, so you're saved by the bill almost already. 429 00:23:19,560 --> 00:23:21,640 Speaker 2: If Elon Musk is going to have access to all 430 00:23:21,680 --> 00:23:25,360 Speaker 2: of our personal information, should he go up to Congress 431 00:23:25,359 --> 00:23:27,320 Speaker 2: and be confirmed as a Government. 432 00:23:27,000 --> 00:23:29,439 Speaker 7: Of Special Member of the cabint, absolutely no private citizen 433 00:23:29,480 --> 00:23:33,080 Speaker 7: should have access to that. So if that's truly what's 434 00:23:33,080 --> 00:23:35,080 Speaker 7: going to happen, absolutely he would need to get confirmed, 435 00:23:35,119 --> 00:23:37,280 Speaker 7: I think to have that sort of authority and power. 436 00:23:37,040 --> 00:23:39,800 Speaker 2: To create a new Doge Commission or a Guess Department 437 00:23:39,840 --> 00:23:41,640 Speaker 2: that's actually real and part of the government. 438 00:23:42,119 --> 00:23:43,639 Speaker 7: Yes, but I still think the end of the day 439 00:23:43,640 --> 00:23:45,400 Speaker 7: they're going to retract that power from there. 440 00:23:45,440 --> 00:23:48,479 Speaker 2: You go, Mark Short, can't believe you're here with us 441 00:23:48,480 --> 00:23:50,040 Speaker 2: here along with Janie Shanzen. 442 00:23:49,640 --> 00:23:49,720 Speaker 8: Or. 443 00:23:52,960 --> 00:23:56,440 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 444 00:23:56,480 --> 00:24:00,400 Speaker 1: us live weekdays at noon and five pm Eastern Barklay 445 00:24:00,440 --> 00:24:03,480 Speaker 1: and Android Otto with the Bloomberg Business app, Listen on 446 00:24:03,560 --> 00:24:06,800 Speaker 1: demand wherever you get your podcasts, or watch us live 447 00:24:06,880 --> 00:24:08,840 Speaker 1: on YouTube. 448 00:24:09,280 --> 00:24:11,480 Speaker 9: We hope you're all listening to our next conversation because 449 00:24:11,480 --> 00:24:13,720 Speaker 9: it's an important one. Joining us now on Bloomberg TV 450 00:24:13,800 --> 00:24:16,200 Speaker 9: and Radio is Jared Bernstein, of course, used to lead 451 00:24:16,200 --> 00:24:20,240 Speaker 9: the Council of Economic Advisors under the Biden administration. Jared, 452 00:24:20,240 --> 00:24:23,200 Speaker 9: welcome back to balance of power. Now outside the White House, 453 00:24:23,200 --> 00:24:26,000 Speaker 9: able to speak a bit more freely, perhaps when you 454 00:24:26,040 --> 00:24:28,280 Speaker 9: look at what has been threatened here, let's just focus 455 00:24:28,320 --> 00:24:32,439 Speaker 9: on Canada twenty five percent levies, ten percent on Chinese goods. 456 00:24:32,480 --> 00:24:35,840 Speaker 9: What economic impact are you bracing for if this becomes reality. 457 00:24:37,960 --> 00:24:39,720 Speaker 10: Well, first of all, great to be with you, and yes, 458 00:24:39,760 --> 00:24:41,880 Speaker 10: it's nice to have a little more degrees of freedom. 459 00:24:43,440 --> 00:24:47,000 Speaker 10: I think that economists have been really quite uniform. Analysts 460 00:24:47,040 --> 00:24:51,359 Speaker 10: across the board have recognized that tariffs get largely passed 461 00:24:51,400 --> 00:24:56,480 Speaker 10: forward to consumers. So I think there's little question that 462 00:24:56,560 --> 00:24:59,760 Speaker 10: if these tariffs were to take effect, a consumer prices 463 00:24:59,800 --> 00:25:03,720 Speaker 10: will go up. China, Mexico. I understand Mexico is now 464 00:25:03,760 --> 00:25:06,240 Speaker 10: on hold, but China, Mexico and Canada are by far 465 00:25:06,359 --> 00:25:10,320 Speaker 10: our three largest trading partners, something like one point four 466 00:25:10,359 --> 00:25:16,080 Speaker 10: to one point five trillion in imports last year. That's 467 00:25:16,119 --> 00:25:19,560 Speaker 10: about maybe five percent of GDP, so that's real money. 468 00:25:19,720 --> 00:25:23,000 Speaker 10: The supply chains couldn't be more integrated, so this is 469 00:25:23,359 --> 00:25:25,720 Speaker 10: very much a monkey wrench in terms of inflation. And 470 00:25:25,800 --> 00:25:28,880 Speaker 10: interest rates. We already saw a market reaction. You've talked 471 00:25:28,880 --> 00:25:31,680 Speaker 10: a lot about policy uncertainty, and you know, you guys 472 00:25:31,840 --> 00:25:35,080 Speaker 10: nailed the exactly right question. Is this all threats for 473 00:25:35,160 --> 00:25:39,640 Speaker 10: leverage or is there you know, some real action coming here. 474 00:25:41,000 --> 00:25:43,200 Speaker 2: Well, you've been in meetings like these, Jared, I don't 475 00:25:43,240 --> 00:25:46,359 Speaker 2: know what your thought is on that, But when you 476 00:25:46,480 --> 00:25:50,280 Speaker 2: consider the countries we're talking about here, like Sean just said, 477 00:25:50,320 --> 00:25:53,640 Speaker 2: it's not just about raising revenue or exacting some sort 478 00:25:53,640 --> 00:25:58,280 Speaker 2: of retribution. It's about rebalancing trade. What would Donald Trump 479 00:25:58,320 --> 00:26:02,000 Speaker 2: need to do to zero our relationship with Canada? That 480 00:26:02,040 --> 00:26:03,320 Speaker 2: appears to be the goal here. 481 00:26:03,400 --> 00:26:07,280 Speaker 10: No. Yeah, well, first of all, let me say that 482 00:26:07,359 --> 00:26:10,360 Speaker 10: I really probably haven't been in meetings like this because 483 00:26:11,040 --> 00:26:13,640 Speaker 10: one of the things that we put a pretty high 484 00:26:13,680 --> 00:26:17,240 Speaker 10: priority on was avoiding the kind of policy lurching that 485 00:26:17,280 --> 00:26:19,720 Speaker 10: we've seen in the past couple of weeks. Now, look, 486 00:26:19,760 --> 00:26:21,679 Speaker 10: if you do everything yourself from the oval, and we 487 00:26:21,720 --> 00:26:24,320 Speaker 10: did executive orders as well, though not nothing like what 488 00:26:24,359 --> 00:26:28,280 Speaker 10: we're seeing in terms of the flurry from Trump, if 489 00:26:28,320 --> 00:26:30,760 Speaker 10: you do everything yourself, you're going to have a lot 490 00:26:30,800 --> 00:26:34,159 Speaker 10: more policy lurching. They call it flooding the zone and 491 00:26:34,440 --> 00:26:38,960 Speaker 10: I just think it's particularly bad for the uncertainty that 492 00:26:39,000 --> 00:26:41,639 Speaker 10: we've talked about, and that creates a negative climate for 493 00:26:41,720 --> 00:26:44,720 Speaker 10: business investment. So I think this is not the kind 494 00:26:44,800 --> 00:26:46,520 Speaker 10: you know. If I were at those meetings, I'd be saying, 495 00:26:46,520 --> 00:26:48,639 Speaker 10: wait a second, let's try to give the world a 496 00:26:48,640 --> 00:26:51,600 Speaker 10: little more idea about what we're up to here. By 497 00:26:51,640 --> 00:26:54,320 Speaker 10: the way, if you don't enact the tariffs, you don't 498 00:26:54,359 --> 00:26:57,160 Speaker 10: get the revenues. So I think it's they can't talk 499 00:26:57,200 --> 00:27:00,199 Speaker 10: both about we're using this for leverage and we're going 500 00:27:00,280 --> 00:27:03,960 Speaker 10: to collect a lot of revenues. In terms of zeroing 501 00:27:04,040 --> 00:27:06,560 Speaker 10: out trade balances, I think you're probably right. We know 502 00:27:06,640 --> 00:27:09,840 Speaker 10: these folks think of the trade deficit as a scorecard, 503 00:27:10,040 --> 00:27:12,320 Speaker 10: and I just think that's a really big mistake. I mean, 504 00:27:12,359 --> 00:27:16,280 Speaker 10: we've had full employment economies with large trade deficits and 505 00:27:16,320 --> 00:27:19,240 Speaker 10: with small trade deficits. That doesn't mean they're one hundred 506 00:27:19,240 --> 00:27:20,879 Speaker 10: percent wrong, by the way, and in fact, one of 507 00:27:20,880 --> 00:27:22,440 Speaker 10: the things that they got right before a lot of 508 00:27:22,480 --> 00:27:25,480 Speaker 10: other people did was to recognize communities and people who've 509 00:27:25,480 --> 00:27:28,880 Speaker 10: gotten hurt by persistently imbalanced trade. But that doesn't mean 510 00:27:28,880 --> 00:27:34,040 Speaker 10: you try to zero out trade balances, because that has 511 00:27:34,680 --> 00:27:38,199 Speaker 10: significant negative effects on prices, interest rates, and supply chains. 512 00:27:38,359 --> 00:27:40,800 Speaker 10: It means that you make sure that you're running the 513 00:27:40,880 --> 00:27:44,560 Speaker 10: kind of economy that provides opportunities for everybody, including those 514 00:27:44,600 --> 00:27:46,080 Speaker 10: in import competing sectors. 515 00:27:47,880 --> 00:27:50,760 Speaker 9: Well, and when we consider those that the President thinks 516 00:27:50,800 --> 00:27:54,000 Speaker 9: have been hurt by our current trade balances, a lot 517 00:27:54,000 --> 00:27:56,399 Speaker 9: of it, Jared, he continues to speak to, is the 518 00:27:56,440 --> 00:27:59,320 Speaker 9: manufacturing sector. He thinks that tariffs are a way to 519 00:27:59,359 --> 00:28:03,520 Speaker 9: protect a Maria Can manufactures and to incentivize more production 520 00:28:03,680 --> 00:28:05,680 Speaker 9: in the US. If tariffs are not the right way 521 00:28:05,760 --> 00:28:07,080 Speaker 9: to go about that, what is. 522 00:28:08,600 --> 00:28:10,639 Speaker 10: Well, First of all, let me just underscore the points 523 00:28:10,640 --> 00:28:13,919 Speaker 10: that were made by the excellent guy you had on 524 00:28:14,000 --> 00:28:17,479 Speaker 10: before me, who pointed out that these tariffs that we 525 00:28:17,520 --> 00:28:21,640 Speaker 10: saw in Trump one were associated with job losses in manufacturing. 526 00:28:21,680 --> 00:28:24,600 Speaker 10: You know, I remember vividly the day that Alcoa came 527 00:28:24,920 --> 00:28:27,919 Speaker 10: right after Trump put on aluminum tariff's. Alca the biggest 528 00:28:28,040 --> 00:28:30,720 Speaker 10: US aluminum producer, came in and said, can we get 529 00:28:30,760 --> 00:28:31,400 Speaker 10: an exemption? 530 00:28:31,800 --> 00:28:32,080 Speaker 4: Why? 531 00:28:32,160 --> 00:28:36,879 Speaker 10: Because so many of these imports by US companies are inputs, 532 00:28:36,880 --> 00:28:40,240 Speaker 10: intermediate inputs, and so you're raising the price of production 533 00:28:40,320 --> 00:28:44,120 Speaker 10: for them. That hurts our sectors. The Trump administration did 534 00:28:44,200 --> 00:28:47,280 Speaker 10: not lower the trade balance in Trump one and they 535 00:28:47,320 --> 00:28:50,240 Speaker 10: won't do it in Trump two. So you know, your 536 00:28:50,320 --> 00:28:54,160 Speaker 10: question is the right one. How do you increase activity 537 00:28:54,160 --> 00:28:57,080 Speaker 10: in the manufacturing sector if that's your goal, and certainly 538 00:28:57,080 --> 00:28:59,000 Speaker 10: it was part of our goal in the Biden administration, 539 00:28:59,400 --> 00:29:01,920 Speaker 10: you incent of oys investment. You know, this is a 540 00:29:02,000 --> 00:29:05,640 Speaker 10: lot more carrots than sticks. Our investment that John which 541 00:29:05,760 --> 00:29:10,120 Speaker 10: is ongoing, was pulling in hundreds of billions of private 542 00:29:10,200 --> 00:29:13,880 Speaker 10: capital to invest in standing up new domestic industries, many 543 00:29:13,880 --> 00:29:16,080 Speaker 10: of which, by the way, most of which are are 544 00:29:16,160 --> 00:29:20,120 Speaker 10: being built in red or even Trumpian parts of the country. 545 00:29:20,640 --> 00:29:23,520 Speaker 10: So that's you know, that's the way. That's the way 546 00:29:23,520 --> 00:29:26,120 Speaker 10: that we found to be a lot more successful. We 547 00:29:26,880 --> 00:29:29,200 Speaker 10: I think the record is starting to show that that 548 00:29:29,360 --> 00:29:31,360 Speaker 10: works much better than this approach. 549 00:29:32,400 --> 00:29:34,240 Speaker 2: Yeah, it does appear they're going to be drinking the 550 00:29:34,280 --> 00:29:36,840 Speaker 2: clears up in Canada because they're going after whiskey from 551 00:29:36,880 --> 00:29:40,400 Speaker 2: Kentucky here, Jared, I just wonder what a company's supposed 552 00:29:40,400 --> 00:29:42,520 Speaker 2: to do. If you're Mary Borrow, what do you do 553 00:29:42,640 --> 00:29:44,640 Speaker 2: right now? And by the way, GM has been one 554 00:29:44,640 --> 00:29:47,040 Speaker 2: of the hardest hits today, even with some of the 555 00:29:47,080 --> 00:29:49,080 Speaker 2: relief that we've seen since this morning. If you've got 556 00:29:49,080 --> 00:29:51,760 Speaker 2: a vehicle that's crossing the border multiple times at various 557 00:29:51,760 --> 00:29:54,720 Speaker 2: stages of assembly, do you have to rewrite your entire 558 00:29:54,760 --> 00:29:55,360 Speaker 2: business plan? 559 00:29:57,720 --> 00:30:01,520 Speaker 10: Well, it was interesting you should raise Mary Borrow because 560 00:30:01,560 --> 00:30:03,640 Speaker 10: she was quoted in the Journal the other day. I 561 00:30:03,640 --> 00:30:06,320 Speaker 10: took this to heart. She said, we're putting some of 562 00:30:06,320 --> 00:30:08,840 Speaker 10: our investment plans on hold until we get a bit 563 00:30:08,880 --> 00:30:11,880 Speaker 10: more policy certainty. That's not an exact quote, but that's 564 00:30:11,880 --> 00:30:14,640 Speaker 10: certainly the spirit of what she said. That's a precise 565 00:30:15,760 --> 00:30:19,000 Speaker 10: point that I think is so important here. Even if 566 00:30:19,040 --> 00:30:22,040 Speaker 10: you're happy as I am to see these Mexican tariffs 567 00:30:22,520 --> 00:30:26,560 Speaker 10: postponed for a month, the damage is already done in 568 00:30:26,680 --> 00:30:29,480 Speaker 10: terms of creating an uncertain environment that we know for 569 00:30:29,520 --> 00:30:32,880 Speaker 10: a fact empirically has been shown trade uncertainty of this 570 00:30:32,960 --> 00:30:37,440 Speaker 10: magnitude is associated with diminished investments. I don't think that 571 00:30:37,560 --> 00:30:41,400 Speaker 10: these supply chains that you just asked about, where vehicles 572 00:30:41,440 --> 00:30:45,080 Speaker 10: cross borders, both north and southern borders many times, are 573 00:30:45,120 --> 00:30:49,680 Speaker 10: going to be reconstructed anytime soon. And look, if this 574 00:30:49,760 --> 00:30:51,680 Speaker 10: call goes the way it might go at three o'clock, 575 00:30:51,720 --> 00:30:54,720 Speaker 10: they don't need to be so one thing we need 576 00:30:54,760 --> 00:30:57,360 Speaker 10: to find out is just how serious the president is 577 00:30:57,400 --> 00:30:58,000 Speaker 10: about all this. 578 00:31:00,240 --> 00:31:02,560 Speaker 9: As we've been talking, we've been getting some headlines from 579 00:31:02,680 --> 00:31:07,280 Speaker 9: Raphael Bostik, the president of the Atlanta Fed, and obviously 580 00:31:07,320 --> 00:31:09,040 Speaker 9: for the last several years we haven't been able to 581 00:31:09,040 --> 00:31:11,800 Speaker 9: have the frenk conversations around monetary policy we wish we 582 00:31:11,840 --> 00:31:14,120 Speaker 9: could have with you. So I ask you this question now, 583 00:31:14,120 --> 00:31:17,200 Speaker 9: as Bostic says they're just going to have to watch 584 00:31:17,880 --> 00:31:20,760 Speaker 9: on tariffs, do you expect the Federal Reserve is going 585 00:31:20,760 --> 00:31:21,480 Speaker 9: to look through this. 586 00:31:25,120 --> 00:31:28,360 Speaker 10: I think they're going to probably look through any one 587 00:31:28,480 --> 00:31:31,480 Speaker 10: time price hits. I think again, the conversation you just 588 00:31:31,520 --> 00:31:34,120 Speaker 10: had suggested that when you do put a tariff on 589 00:31:34,160 --> 00:31:36,840 Speaker 10: it definitely is a price hit to inflation, but it 590 00:31:36,880 --> 00:31:38,959 Speaker 10: can be a one time hit for the level, not 591 00:31:39,000 --> 00:31:42,040 Speaker 10: an ongoing hit to the growth rate. Where I think 592 00:31:42,160 --> 00:31:45,560 Speaker 10: they are probably worrying more about than they might be 593 00:31:45,640 --> 00:31:49,840 Speaker 10: talking about, is any kind of damage done to inflationary expectations. 594 00:31:50,160 --> 00:31:55,440 Speaker 10: I consider anchored inflationary expectations a national economic treasure in 595 00:31:55,480 --> 00:31:58,800 Speaker 10: the sense that this was so important in getting inflation 596 00:31:59,000 --> 00:32:02,400 Speaker 10: back down when the pandemic induced spike occurred. And so 597 00:32:02,720 --> 00:32:05,560 Speaker 10: this is something we know that the FED values dearly 598 00:32:05,960 --> 00:32:09,400 Speaker 10: and if price setters, they're the folks who really matter 599 00:32:09,440 --> 00:32:13,720 Speaker 10: when it comes to inflation. Expectations are so thrown by 600 00:32:13,720 --> 00:32:18,560 Speaker 10: this policy lurching that their expectations where prices are headed 601 00:32:19,360 --> 00:32:22,600 Speaker 10: become d anchor to become unsettled. That's a real risk. 602 00:32:22,720 --> 00:32:25,600 Speaker 10: So it's one thing to look through relative to the 603 00:32:25,640 --> 00:32:28,400 Speaker 10: inflation rate. As Raphael was saying, I think that makes sense. 604 00:32:28,440 --> 00:32:31,320 Speaker 10: It's another to be worried about any type of impact 605 00:32:31,640 --> 00:32:33,600 Speaker 10: on expectations. 606 00:32:34,720 --> 00:32:36,200 Speaker 2: One of these days, we're just going to have Jared 607 00:32:36,240 --> 00:32:38,320 Speaker 2: come back to talk out of school all about the FED. 608 00:32:38,360 --> 00:32:41,280 Speaker 3: That's all we're going to Jared. Great to have you. 609 00:32:41,400 --> 00:32:45,040 Speaker 10: That is a great liberation for me these days. 610 00:32:45,480 --> 00:32:47,440 Speaker 3: Well, I love that, So take us up on the invite. 611 00:32:47,440 --> 00:32:48,320 Speaker 3: It's good to see you, Jared. 612 00:32:48,320 --> 00:32:51,960 Speaker 2: Welcome as always, former Director, White House Council Economic Advisors, 613 00:32:52,000 --> 00:32:56,200 Speaker 2: the former chair. Interesting take on things here, Kayley will 614 00:32:56,280 --> 00:32:58,120 Speaker 2: be waiting to hear on this next phone call at 615 00:32:58,200 --> 00:33:01,000 Speaker 2: three o'clock. The markets seem to be ahead of the 616 00:33:01,040 --> 00:33:03,160 Speaker 2: curve though. Love deciphering all of this. 617 00:33:03,520 --> 00:33:06,479 Speaker 9: Yeah, Mexico's tariffs have been deferred and does seam traders 618 00:33:06,480 --> 00:33:08,360 Speaker 9: are hoping the same for Canada and China. We have 619 00:33:08,480 --> 00:33:11,160 Speaker 9: yet to get official word on that from the President. 620 00:33:13,320 --> 00:33:16,800 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 621 00:33:16,880 --> 00:33:20,320 Speaker 1: us live weekdays at noon and five pm Eastern on Apple, 622 00:33:20,360 --> 00:33:23,400 Speaker 1: Cocklay and Android Atto with the Bloomberg Business App. You 623 00:33:23,440 --> 00:33:26,880 Speaker 1: can also listen live on Amazon Alexa from our flagship 624 00:33:26,960 --> 00:33:31,560 Speaker 1: New York station, Just Say Alexa played Bloomberg eleven thirty. 625 00:33:32,640 --> 00:33:35,840 Speaker 9: President Donald Trump speaking with reporters from the Oval Office 626 00:33:35,840 --> 00:33:37,680 Speaker 9: at the White House for more than half an hour 627 00:33:37,760 --> 00:33:40,320 Speaker 9: on a number of subjects, including citing a number of 628 00:33:40,360 --> 00:33:42,920 Speaker 9: executive orders, one that would create a sovereign Wealth Fund 629 00:33:42,960 --> 00:33:45,800 Speaker 9: in the United States, but importantly fielding a number of 630 00:33:45,880 --> 00:33:49,120 Speaker 9: questions on tariffs, specifically after earlier in the day having 631 00:33:49,200 --> 00:33:51,719 Speaker 9: reached an agreement with the President of Mexico to defer 632 00:33:52,120 --> 00:33:54,520 Speaker 9: a twenty five percent ARAF being placed on all Mexican 633 00:33:54,520 --> 00:33:57,880 Speaker 9: imports for a month in exchange for ten thousand troops 634 00:33:57,920 --> 00:34:00,600 Speaker 9: being sent to the border with the US question, as 635 00:34:00,640 --> 00:34:02,560 Speaker 9: we heard the President talking about, there is whether or 636 00:34:02,560 --> 00:34:05,520 Speaker 9: not his conversations with China and Canada that he says 637 00:34:05,520 --> 00:34:07,960 Speaker 9: will take place this afternoon in the case of Justin Trudeau, 638 00:34:08,160 --> 00:34:10,080 Speaker 9: or with China over the next twenty four hours can 639 00:34:10,120 --> 00:34:13,279 Speaker 9: also yield an agreement to have those tariffs to first. 640 00:34:13,360 --> 00:34:14,680 Speaker 3: That's right, a La Columbia. 641 00:34:14,719 --> 00:34:16,680 Speaker 2: We'll see what happens with a three pm call with 642 00:34:16,760 --> 00:34:19,879 Speaker 2: Prime Minister Justin Trudeau will be following that closely here. 643 00:34:20,080 --> 00:34:22,160 Speaker 2: Really interesting though, just to get a peek behind the 644 00:34:22,160 --> 00:34:24,239 Speaker 2: curtain in the Oval Office once again, someone who has 645 00:34:24,280 --> 00:34:26,680 Speaker 2: only been there for two weeks, Scott Bessnt speaking, Howard 646 00:34:26,719 --> 00:34:31,040 Speaker 2: Lutnik speaking, Steve Whitcoff from off camera. Strangely, Rupert Murdoch 647 00:34:31,080 --> 00:34:32,719 Speaker 2: in the room to witness all of that today as well. 648 00:34:32,800 --> 00:34:33,040 Speaker 3: Kyley. 649 00:34:33,320 --> 00:34:33,680 Speaker 4: Yeah. 650 00:34:33,680 --> 00:34:35,680 Speaker 9: And while we've witnessed it all and listened to it 651 00:34:35,680 --> 00:34:37,840 Speaker 9: here on Balance of Power on Bloomberg TV and Radio, 652 00:34:37,880 --> 00:34:40,000 Speaker 9: we want to get a bit more reaction now from 653 00:34:40,040 --> 00:34:43,400 Speaker 9: someone who does have thoughts on trade. The chair of 654 00:34:43,440 --> 00:34:45,880 Speaker 9: the Trade Subcommittee of the House Ways and Means Committee 655 00:34:45,880 --> 00:34:49,560 Speaker 9: is joining us now, Republican Congressman Adrian Smith of Nebraska 656 00:34:49,600 --> 00:34:52,080 Speaker 9: here with us on Bloomberg. Congressman, thank you so much 657 00:34:52,120 --> 00:34:54,480 Speaker 9: for your time. You've obviously had praise today for the 658 00:34:54,520 --> 00:34:57,280 Speaker 9: agreement that Donald Trump was able to strike with Mexico, 659 00:34:57,360 --> 00:34:59,719 Speaker 9: specifically on Fenton All But when you look at a 660 00:34:59,719 --> 00:35:04,720 Speaker 9: country like Canada, which only according to Customs and Border Protection, 661 00:35:04,840 --> 00:35:08,280 Speaker 9: had forty three pounds of fentanyl crossing the northern border 662 00:35:08,320 --> 00:35:10,560 Speaker 9: last year compared to twenty one thousand pounds in the 663 00:35:10,560 --> 00:35:13,080 Speaker 9: case of what was coming from Mexico, do you really 664 00:35:13,080 --> 00:35:15,719 Speaker 9: see these things as equal? What will it take for 665 00:35:15,800 --> 00:35:18,800 Speaker 9: Canada to differ tariffs in the same way Mexico was 666 00:35:18,840 --> 00:35:19,200 Speaker 9: able to. 667 00:35:20,360 --> 00:35:23,120 Speaker 8: I think there are, you know, some different dynamics, certainly, 668 00:35:23,760 --> 00:35:28,400 Speaker 8: but I think the President's a posture right now is 669 00:35:28,480 --> 00:35:32,160 Speaker 8: one that he explained even before he was elected. He 670 00:35:33,040 --> 00:35:36,359 Speaker 8: wanted to put people on notice. He's followed through with that. 671 00:35:36,560 --> 00:35:40,399 Speaker 8: We are seeing some positive results, and I think that, 672 00:35:40,840 --> 00:35:43,160 Speaker 8: you know, there's some leveling of the playing field in 673 00:35:43,239 --> 00:35:48,600 Speaker 8: terms of trade that creates many opportunities, hopefully on the horizon. 674 00:35:49,960 --> 00:35:52,480 Speaker 2: Well, Congressman, we appreciate your being generous with your time 675 00:35:52,560 --> 00:35:56,720 Speaker 2: and waiting through the Oval Office conversation here. The difference 676 00:35:56,719 --> 00:35:58,920 Speaker 2: as well between Canada and Mexico, though, is that there 677 00:35:59,520 --> 00:36:03,200 Speaker 2: are rattals eliatory tariffs in store twenty five percent. Canada 678 00:36:03,320 --> 00:36:05,680 Speaker 2: is looking at, in fact, goods from a number of 679 00:36:05,760 --> 00:36:08,880 Speaker 2: red states. I'm sure you've looked through these whiskey from Kentucky, 680 00:36:08,920 --> 00:36:12,920 Speaker 2: oranges from Florida, appliances from South Carolina, and Harley Davidson 681 00:36:12,960 --> 00:36:15,680 Speaker 2: motorcycles from Pennsylvania. I don't know if we go red there. 682 00:36:15,719 --> 00:36:17,680 Speaker 2: I guess for the sake of this conversation, we'll go 683 00:36:17,760 --> 00:36:20,920 Speaker 2: with it. What would be the impact of these levees 684 00:36:20,960 --> 00:36:21,719 Speaker 2: on our economy? 685 00:36:22,840 --> 00:36:26,560 Speaker 8: Well, you know, the tariffs and the responses. I mean, 686 00:36:26,920 --> 00:36:31,080 Speaker 8: those speak for themselves. I think that there is a 687 00:36:31,120 --> 00:36:36,720 Speaker 8: better understanding now the seriousness that this administration is taking 688 00:36:36,719 --> 00:36:42,359 Speaker 8: trade and the security of our border. The previous administration 689 00:36:42,800 --> 00:36:49,720 Speaker 8: wide open border, totally unengaged on trade, and that sets 690 00:36:49,800 --> 00:36:53,040 Speaker 8: up this scenario that we are seeing. And I think 691 00:36:53,080 --> 00:36:56,840 Speaker 8: it's important that President Trump is empowered to make a 692 00:36:56,880 --> 00:37:01,799 Speaker 8: good negotiation. And I certainly you know see you know, 693 00:37:01,920 --> 00:37:06,520 Speaker 8: the the dynamics of tariffs. I understand that. I think 694 00:37:06,520 --> 00:37:09,840 Speaker 8: the American people understand that as well. And the American 695 00:37:09,880 --> 00:37:12,839 Speaker 8: people also know that we need to see more action 696 00:37:13,040 --> 00:37:13,799 Speaker 8: and they are seeing that. 697 00:37:15,200 --> 00:37:18,560 Speaker 9: Well, if this is all about negotiation, for President Trump, 698 00:37:18,600 --> 00:37:21,839 Speaker 9: what was wrong with the deal he negotiated during his 699 00:37:21,920 --> 00:37:25,800 Speaker 9: first term? What's wrong with the USMCA, Well. 700 00:37:25,680 --> 00:37:31,880 Speaker 8: We saw a Mexico flagrantly violate USMCA on biotech white 701 00:37:31,880 --> 00:37:35,200 Speaker 8: corn for example. Now it so happens that, yeah, that's 702 00:37:35,480 --> 00:37:38,719 Speaker 8: my district is a big producer of that corn. But 703 00:37:38,800 --> 00:37:43,520 Speaker 8: the world is watching, the world watched, watched Mexico give 704 00:37:43,600 --> 00:37:46,960 Speaker 8: us a heads up on this well in advance, and 705 00:37:47,080 --> 00:37:51,440 Speaker 8: Joe Biden never said a word about it in four years. 706 00:37:52,280 --> 00:37:55,440 Speaker 8: That's obviously not Donald Trump's style. And I'm glad because 707 00:37:55,480 --> 00:37:59,319 Speaker 8: I think our country is stronger with a president who 708 00:37:59,360 --> 00:38:03,400 Speaker 8: speaks up and speaks out, especially when our trading partners, 709 00:38:04,000 --> 00:38:08,439 Speaker 8: Mexico had just agreed to USMCA and then had such 710 00:38:08,440 --> 00:38:11,040 Speaker 8: a flagrant violation. It took us a long time, but 711 00:38:11,080 --> 00:38:15,400 Speaker 8: we did win that dispute resolution, but it was lost 712 00:38:15,480 --> 00:38:19,359 Speaker 8: time and time is money. 713 00:38:19,520 --> 00:38:21,880 Speaker 2: The White House this morning was framing this as a 714 00:38:22,000 --> 00:38:24,960 Speaker 2: drug war, not a trade war. Congressman, I don't know 715 00:38:25,000 --> 00:38:26,959 Speaker 2: if you see it that way. But with that said, 716 00:38:27,000 --> 00:38:29,920 Speaker 2: and based on what Kaylee was mentioning forty three pounds 717 00:38:30,000 --> 00:38:33,480 Speaker 2: versus twenty one thousand pounds of fentanyl crossing the northern 718 00:38:33,520 --> 00:38:36,319 Speaker 2: border versus the southern border, this could be cleaned up 719 00:38:36,320 --> 00:38:38,360 Speaker 2: real quick. Right they get on the phone at three o'clock, 720 00:38:38,520 --> 00:38:41,040 Speaker 2: is this all over before the close of business. 721 00:38:41,600 --> 00:38:45,279 Speaker 8: I think there are opportunities to correct this. We know 722 00:38:45,480 --> 00:38:49,479 Speaker 8: that if the if we get cooperation on the southern border, 723 00:38:49,520 --> 00:38:51,200 Speaker 8: it's likely to go to the northern border if we 724 00:38:51,239 --> 00:38:54,480 Speaker 8: don't get the cooperation that we need. We need quite honestly, 725 00:38:54,520 --> 00:38:58,200 Speaker 8: we need more cooperation as it relates to immigration from 726 00:38:58,280 --> 00:39:01,799 Speaker 8: state and local governments, to say, the state of California 727 00:39:01,840 --> 00:39:05,400 Speaker 8: and that sanctuary city dynamics that exist across the country. 728 00:39:05,880 --> 00:39:09,960 Speaker 8: We need full cooperation there, and certainly we need cooperation 729 00:39:10,120 --> 00:39:11,960 Speaker 8: from Canada and Mexico. 730 00:39:13,120 --> 00:39:15,239 Speaker 9: Mister Chairman, we just have a minute left. But if 731 00:39:15,280 --> 00:39:18,719 Speaker 9: this is about extracting cooperation and concessions from allies, is 732 00:39:18,719 --> 00:39:21,520 Speaker 9: it not then about raising revenue? Because you and the 733 00:39:21,560 --> 00:39:24,000 Speaker 9: rest of your colleagues on the Ways and Means Committee 734 00:39:24,000 --> 00:39:25,759 Speaker 9: in the House are about to try to push through 735 00:39:25,760 --> 00:39:27,600 Speaker 9: a tax package with a lot of cuts and Donald 736 00:39:27,600 --> 00:39:29,480 Speaker 9: Trump says tariffs are supposed to play a role in 737 00:39:29,520 --> 00:39:30,120 Speaker 9: offsetting that. 738 00:39:31,400 --> 00:39:34,120 Speaker 8: Well, there, we're going to have discussions about revenue and 739 00:39:35,239 --> 00:39:39,719 Speaker 8: various opportunities to save taxpayer dollars across the budget. We 740 00:39:39,760 --> 00:39:42,239 Speaker 8: need to have these conversations. We've needed to have those 741 00:39:42,320 --> 00:39:45,840 Speaker 8: for some time. We saw records spending under President Biden 742 00:39:45,920 --> 00:39:49,000 Speaker 8: that triggered inflation. I think it's very important that we 743 00:39:49,040 --> 00:39:52,960 Speaker 8: move forward with policies that bring down the cost of 744 00:39:53,120 --> 00:39:57,040 Speaker 8: products for consumers. I think the administration understands this and 745 00:39:57,320 --> 00:39:58,919 Speaker 8: sees this as a priority as well. 746 00:40:00,200 --> 00:40:02,719 Speaker 2: Congressman, it's great to have you back, certainly at a 747 00:40:02,719 --> 00:40:06,200 Speaker 2: moment like this. He chairs the Trade Subcommittee in the House. 748 00:40:06,239 --> 00:40:09,960 Speaker 2: Congressman Adrian Smith, Republican from Nebraska, we thank you for 749 00:40:10,000 --> 00:40:19,120 Speaker 2: the insight. Thanks for listening to the Balance of Power podcast. 750 00:40:19,719 --> 00:40:22,839 Speaker 2: Make sure to subscribe if you haven't already, at Apple, Spotify, 751 00:40:22,920 --> 00:40:25,520 Speaker 2: or wherever you get your podcasts, and you can find 752 00:40:25,600 --> 00:40:28,840 Speaker 2: us live every weekday from Washington, DC at noontime Eastern 753 00:40:29,120 --> 00:40:30,520 Speaker 2: at Bloomberg dot com.