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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: And with another negotiator that was at that table, the

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Speaker 2: President last night, Commerce Secretary Howard Lutnik. I want to

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Speaker 2: pick up on this idea and good morning, thanks for

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Speaker 2: joining us. I want to pick up this idea of

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Speaker 2: innovative financing mechanisms and this five hundred and fifty billion

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Speaker 2: dollar fun the Japanese are going to be investing into.

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Speaker 2: What exactly is that fund going to look like?

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Speaker 3: So the Japanese are going to give America the ability

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Speaker 3: to choose the projects, to side the projects, and execute

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Speaker 3: the projects.

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Speaker 1: So let's say we.

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Speaker 3: Want to build generic pharmaceuticals, right, we don't make antibiotics

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Speaker 3: in America. So the President says, let's go make antibiotics

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Speaker 3: in America. The Japanese will finance the project. They will

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Speaker 3: finance the project, and then we'll give it to an

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Speaker 3: operator who'll run it, and the profits will.

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Speaker 1: Be split ninety percent to.

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Speaker 3: The taxpayers of the United States of America and ten

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Speaker 3: percent to the Japanese. So they basically bought down their

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Speaker 3: twer freight by this commitment of we will back what you,

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Speaker 3: the President want, and you America want to build in America.

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Speaker 3: That are key to national security concerns will back that,

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Speaker 3: and therefore we'll be on your side.

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Speaker 2: The Prime Minister Shiba says, these are loan guarantees.

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Speaker 1: Is it more than that?

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Speaker 3: Of course, it's more than that. It's equity loans and

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Speaker 3: loan guarantees. They have to deliver the project. So we say,

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Speaker 3: let's build semiconductors. We want to build one hundred billion

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Speaker 3: dollars worth of semiconductor fabs is what you call them,

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Speaker 3: because we want to make those chips in America. The

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Speaker 3: Japanese will finance that whole project. They've got to put

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Speaker 3: down equity, loans, loan, whatever they want to do. They

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Speaker 3: have to deliver the hundred billion.

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Speaker 2: Or Japanese companies.

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Speaker 3: Oh no, no, anybody does it. It's the Japanese or

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Speaker 3: the financier. They're the banker, they're not the operator. It's

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Speaker 3: not Japanese companies. So when people get confused, this is

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Speaker 3: like a Japanese company, like you know, like Toyota coming

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Speaker 3: in and building a factory.

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Speaker 1: No, that's Toyota. This is literally.

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Speaker 3: America saying we want to build generic pharmaceuticals, semiconductors, critical

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Speaker 3: minerals here.

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Speaker 2: This exists now like what can we think of in

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Speaker 2: the model after this.

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Speaker 3: That's why you have someone like me who joins the government.

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Speaker 3: I mean, this was my idea in January. So I

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Speaker 3: started because the Japanese are never going to really open

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Speaker 3: their market the way Donald Trump wants them to open it.

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Speaker 1: I mean open it, open it, you know.

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Speaker 3: So what's happened is they had to come up with

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Speaker 3: another way to really make it work and the.

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Speaker 1: Tariff model work.

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Speaker 3: So I suggested to them a four hundred billion dollar

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Speaker 3: fund where they would give to the President and they

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Speaker 3: would give to America the financing to go build out

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Speaker 3: your whatever you think for national security, go build it,

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Speaker 3: will back you.

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Speaker 1: And that's the model. It reports the Prime Minister.

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Speaker 2: Though maybe resigning, could this deal transcend domestic politics in Japan?

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Speaker 3: Of course, I mean it's vital. You saw what happened

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Speaker 3: to their car companies. They were all up more than

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Speaker 3: ten percent today. So a twenty five percent tariff delivers

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Speaker 3: what Donald Trump said, build it in America.

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Speaker 1: A fifteen percent is right on the edge to right

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Speaker 1: on the edge.

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Speaker 3: So the Japanese car manufacturers can still produce in Japan,

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Speaker 3: and that's what the Japanese wanted to buy.

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Speaker 1: They wanted to buy that line where.

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Speaker 3: They could stay in Japan for some cars build of

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Speaker 3: course huge amounts here. But also what they did is

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Speaker 3: they'll invest and give Donald Trump the tools to invest

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Speaker 3: in America.

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Speaker 2: That fifteen percent tariff on autos is huge for Japan.

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Speaker 2: Do you see the entire auto tariff, that sectoral tariff

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Speaker 2: coming down from twenty five percent to fifteen percent, because

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Speaker 2: for some inputs this would mean Toyota has a fifteen

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Speaker 2: percent rate, but GM still has a twenty five percent rate.

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Speaker 3: Well, GM doesn't have a twenty five percent rate unless

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Speaker 3: they build.

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Speaker 1: Certainly important in South Korea or Okay.

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Speaker 3: If you're building, if you're building South Korea, that's a

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Speaker 3: South Korea thing, and if you're importing from South Korea,

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Speaker 3: that's a South Korea thing. So Europe is now paying

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Speaker 3: twenty five percent, South Korea is paying twenty five percent.

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Speaker 3: The Japanese have bought, if you will, by giving a huge.

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Speaker 1: Investment to Donald Trump in America.

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Speaker 3: They've bought the ability to be down to fifteen percent.

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Speaker 3: And Donald Trump can then really invest in America on

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Speaker 3: the projects that he thinks are the most important for America.

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Speaker 1: And we'll see what happens with Europe. We'll see what

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Speaker 1: happens with South Korea.

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Speaker 3: But right now, Donald Trump has put the pressure on them.

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Speaker 1: Let's be clear, Well, this is a model pressure on them.

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Speaker 1: Is this a model for Brussels? It could be.

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Speaker 3: I mean that's up to them to negotiate. Right Are

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Speaker 3: they willing to open their market? I don't think. I

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Speaker 3: don't think anybody. Europe's not going to go and give

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Speaker 3: us a trillion dollars too.

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Speaker 2: Well, can they get below fifteen percent? Or is fifteen

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Speaker 2: percent now the floor for autos?

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Speaker 1: Would I would know for a.

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Speaker 2: Recipal tariff for the European Union, I don't think they're

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Speaker 2: willing to accept.

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Speaker 3: I don't think big countries can get low like that.

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Speaker 3: I think I think small countries have a possibility of

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Speaker 3: being low, and that's up to the president to decide.

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Speaker 1: But larger countries will have a hard time with that.

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Speaker 1: They will have a hard time.

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Speaker 2: So to be clear, with the European Union right now,

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Speaker 2: and the trade negotiators are in Washington, I know you're

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Speaker 2: talking to them every single day. The rate, the floor

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Speaker 2: that they would have to accept is fifteen percent what

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Speaker 2: Japan accepted.

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Speaker 3: I think what everybody in the world has seen is

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Speaker 3: Donald Trump. So I'm the table center, if you will, right,

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Speaker 3: I set the table, right, I organize things.

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Speaker 1: I structure things.

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Speaker 3: You know, there was a picture that the President posted

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Speaker 3: over his shoulder with the big board. That of course

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Speaker 3: I created the big board and put it there. But

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Speaker 3: the answer is the negotiator in chief of the United

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Speaker 3: States of America is sitting behind the desk.

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Speaker 1: You know, Donald Trump is sitting there negotiating.

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Speaker 2: Also created the board on Liberation Day and we saw

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Speaker 2: the sky high terras. You created last night's board. I'm

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Speaker 2: trying to understand from you what the European board.

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Speaker 1: Is going to look like.

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Speaker 2: So I say this a fifteen percent across the board rate.

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Speaker 2: What can the Europeans be buying that can assuage the

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Speaker 2: concerns of the president. Are you talking about LNG purchases?

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Speaker 2: Is there agricultural purchases?

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Speaker 3: The Europeans have a twenty trillion dollar economy, right, we

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Speaker 3: have just under thirty trillion, and the Chinese and the

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Speaker 3: Europeans are similar in size at about twenty trillion dollars.

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Speaker 1: So if they say to the President, we will.

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Speaker 3: Open our market to you like Aaronline, mean really open

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Speaker 3: it meaning we will take US cars. Like think of

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Speaker 3: what the Japanese did. They said, we will take US

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Speaker 3: cars based on US standards. So you don't have to

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Speaker 3: make a different car. You can take the car you

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Speaker 3: make in Detroit, put it on a boat, and send it.

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Speaker 3: If the Europeans will accept that, and they will accept,

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Speaker 3: really really accepting US products in Europe.

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Speaker 1: That's a giant.

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Speaker 3: That's hundreds of billions of dollars of export opportunity for America.

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Speaker 3: That's going to move the President because he's going to

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Speaker 3: say that opportunity.

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Speaker 1: For Americans is so great.

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Speaker 3: That's what we've been We've been talking about it four months.

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Speaker 3: I mean, holy moly, I can't I.

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Speaker 2: Can't tell they're saying they're going to retaliate if they

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Speaker 2: don't get a deal.

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Speaker 1: I understand. Then the President wrote them a.

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Speaker 3: Letter saying, if you don't get a deal, side were charging.

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Speaker 2: You a thirty persociating tactics out in public.

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Speaker 1: Well, of course it is.

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Speaker 3: I mean, Donald Trump writes a letter and says, if

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Speaker 3: you don't make a deal, it's thirty percent. And the

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Speaker 3: thing about Donald Trump is he's dead serious. If you

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Speaker 3: don't make a deal, it's thirty percent. Now, that puts

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Speaker 3: the pressure on them right to say, Okay, that's my alternative.

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Speaker 3: They want to get a deal done, for sure, they

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Speaker 3: want to get a deal done. But does Donald Trump

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Speaker 3: want to get a deal done? How much does he

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Speaker 3: value the fact that they open their market? Do they

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Speaker 3: completely open their market, because that's what he's looking for.

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Speaker 3: I think they will. I think they will really really

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Speaker 3: open their market, and I mean open it, which is

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Speaker 3: something the United States of America has never had, the

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Speaker 3: idea that Donald Trump is opening the world's markets for Americans,

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Speaker 3: the ranchers, the fishermen, right are farmers. I mean, these

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Speaker 3: are amazing opportunities that no one in the world has

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Speaker 3: ever seen. We have Stockholm syndrome, right. The world has

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Speaker 3: so held us off for so long. We can't even

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Speaker 3: imagine a world where we can export freely the way

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Speaker 3: everybody else exports to us. And that world is coming.

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Speaker 3: That's what Donald Trump calls the Golden Age.

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Speaker 1: That's what it calls.

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Speaker 3: Our ability to export to the world the way they

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Speaker 3: treat us. We can now finally treat them.

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Speaker 2: You're gonna have to step away from the Europeans, though

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Speaker 2: potentially for a moment next week, because I believe you're

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Speaker 2: going to be headed to the Stockholm talks with China. Yes,

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Speaker 2: So what we saw with China and this administration, Jensen

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Speaker 2: Wang had a conversation with the president. I imagine you

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Speaker 2: were there when it comes to the Nvidia H twenty chips.

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Speaker 2: What did Jensen Wang say to you and the president

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Speaker 2: that gave him the green light to start selling those

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Speaker 2: H twenties back into China.

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Speaker 3: Well, the H twenties were open during Biden, so Biden said.

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Speaker 2: Really, well, they were developed during Biden because they were

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Speaker 2: so Chara.

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Speaker 3: We were actually sold to China, and then we came

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Speaker 3: in and we said, whoa, whoa.

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Speaker 1: Whoa, that's a pretty powerful chip.

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Speaker 3: In April, and we held that back, and that was

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Speaker 3: then held back, and now we had the whole magnet thing,

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Speaker 3: which is very exciting.

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Speaker 1: We're trying to.

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Speaker 3: Make sure that magnets are being delivered to our producers,

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Speaker 3: which was the deal, and these have export controls on them,

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Speaker 3: and they'll come off. As the Chinese deliver their magnets,

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Speaker 3: then the H twenties will come off. But it is

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Speaker 3: logical since they were free to sell last time, it

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Speaker 3: seems reasonable that we'll get to me.

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Speaker 1: You said they were a powerful chip.

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Speaker 2: Are you concerned about national security issues when it comes

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Speaker 2: to allowing the Chinese now to get their hands on

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Speaker 2: the H twenty.

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Speaker 3: Well, the H twenty was the third best chip in

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Speaker 3: the world, and now it's the fourth best, right because

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Speaker 3: the Blackwell is the best. There's an H two hundred

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Speaker 3: and H one hundred, so in H twenty is the

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Speaker 3: fourth best chip. And I think the President has decided

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Speaker 3: that if things are going well with China, that they

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Speaker 3: can buy them. So I think that decision has been made.

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Speaker 3: We are putting on the licensing mechanism and we are

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Speaker 3: getting that going. But the President has decided that the

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Speaker 3: Chinese can buy them. But that's in a balanced way

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Speaker 3: with the Chinese delivering on the deal that we made

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Speaker 3: with them, and they're delivering rare earths to American manufacturers.

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Speaker 2: So when you sit across from Chinese counterparts next week,

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Speaker 2: what do you plan to discuss with them? Is loosening

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Speaker 2: export controls, more expert controls on the table.

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Speaker 3: I think what we talk about is there's a line

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Speaker 3: right below the line. We are giant economies. We should

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Speaker 3: trade with each other. They want to buy our produce,

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Speaker 3: they want to buy our vegetables, right, they need They.

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Speaker 1: Don't grow everything.

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Speaker 3: They don't have the bread basket of America that we have,

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Speaker 3: so they want to buy those products.

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Speaker 1: And you know what, there's lots of.

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Speaker 3: Things that they make that we want to buy that

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Speaker 3: we want inexpensive things on our shelves.

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Speaker 1: So let's talk below the line.

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Speaker 3: Let's open the market better in China, and let us

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Speaker 3: sell more things in China. And then at the line

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Speaker 3: where we're competitive, you know, where is that line? Where

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Speaker 3: above that line they're not going to sell us their

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Speaker 3: hypersonic missiles and we're not selling them our best chips.

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Speaker 3: Those two things are not happening because they're a competitor.

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Speaker 3: They are a competitor. And what we're really going to

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Speaker 3: discuss is where's that line? Are the h twenties above

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Speaker 3: the line or below the line? That's really nuanced, and

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Speaker 3: that's discussion. But of course, would we like to buy

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Speaker 3: baby clothes that are inexpensive?

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Speaker 1: Of course we would. That makes perfect sense.

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Speaker 3: So let's open the market down here, right, We're never

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Speaker 3: opening the market up here. And what do we discuss.

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Speaker 3: We discussed that line of what's over it and what's

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Speaker 3: under it? But do we want more of this them

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Speaker 3: selling it to us and not selling it to them.

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Speaker 3: The President and President chief from China agreed that they

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Speaker 3: would like to do more business there, So we're going

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Speaker 3: to talk about opening their market more for things that

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Speaker 3: makes sense to open it. And we're really going to

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Speaker 3: discuss the areas that maybe we should really be addressing.

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Speaker 3: Is that yes or is that no?

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Speaker 1: One area?

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Speaker 2: I just want to finish on this. I'm curious if

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Speaker 2: you're going to dress directly because it's the Commerce Department.

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Speaker 1: An employee of yours is.

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Speaker 2: Facing an exit ban right now from China. Do you

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Speaker 2: have any update on this.

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Speaker 3: It's unbelievable, right so he has. There was employee bars

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Speaker 3: he's a Chinese national who is working in the patent

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Speaker 3: office and he went home and he was arrested and

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Speaker 3: they're holding his passport. I mean, it's so I give

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Speaker 3: that to the State Department, and the State Department deals

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Speaker 3: with that, but it is it is outrageous, Bathe, It's

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Speaker 3: just outrageous

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Speaker 2: Babe, Secretary of Arylatin, thank you so much for your

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Speaker 2: time this morning.