Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: So here's the nightstest. This morning, the President of the
Speaker 2: United States, Donald Trump canceling European tariffs that were sent
Speaker 2: to begin February first. After reaching a framework deal over Greenland.
Speaker 2: The US COMMAS Secretary Howard Latnik joined us. Now making
Speaker 2: some waves of the World Economic Forum over the last
Speaker 2: couple of days. Mister secretary is going to see you.
Speaker 3: Great to see you.
Speaker 2: Let's cut through the drama. Let's get to the big
Speaker 2: point in the elephant in the room. What happened at
Speaker 2: dinner time the other night. I've heard all kinds of
Speaker 2: stories booming, Legarde storming at the room. What happens?
Speaker 3: Oh, this is so silly.
Speaker 4: So at the end of the evening they called on me.
Speaker 4: I just published an op ed in the Financial Times,
Speaker 4: and so they called on me. I gave two three
Speaker 4: minutes of my ft, which basically said that globalization right
Speaker 4: and the outsourcing of your industry to the lowest cost
Speaker 4: in the world right, had really left, had really harmed
Speaker 4: American and had harmed Europe, and it had failed, and
Speaker 4: it failed us, and that we need to reshure, need
Speaker 4: to take care of our own citizens.
Speaker 3: So that's basically the model.
Speaker 4: And when I was done with that two or three minutes,
Speaker 4: one person of the two hundred odd people in the
Speaker 4: room booed, and I felt honored because it was Al
Speaker 4: Gore on alcore Bood, and I was like, really, so.
Speaker 2: I wasn't throwing bread rolls a year from the bank.
Speaker 2: That wasn't happening nout it.
Speaker 4: I put it in the ft. I mean, I wasn't
Speaker 4: like trying to be quiet about it. I mean I
Speaker 4: think that globalization, right, and the idea of global supply
Speaker 4: chains and finding the lowest cost, I mean, that is
Speaker 4: just not the way to take care of your auto workers, right,
Speaker 4: who are in Ohio and Michigan. And so we're bringing
Speaker 4: that back. So think about this. When we were done
Speaker 4: with we started auto tariffs. We started working on it
Speaker 4: in March and we finished in November, and we were
Speaker 4: done the last day. When we finished, General motives in
Speaker 4: Ford stocks each went up ten percent. General Motives end
Speaker 4: of the year of sixty percent. If I told you
Speaker 4: on January first that General Motives was going to be
Speaker 4: on sixty percent, you would all say, oh, stop it,
Speaker 4: and how about this. On that same day, Sean Fame,
Speaker 4: who runs the United Auto Workers called me and said,
Speaker 4: I can't believe I'm calling a Republican Secretary of Commerce
Speaker 4: to say thank God for you and your administration. The
Speaker 4: first administration is actually taking care of the auto.
Speaker 3: Workers of America. So think about that.
Speaker 4: You can, if you really think it through, you can
Speaker 4: take care of the company and the worker. You don't
Speaker 4: have to pick sides because we want union labor growth
Speaker 4: in America.
Speaker 3: These are great jobs. Why wouldn't we want them in America.
Speaker 4: So that's why Donald Trump wins the union vote, because
Speaker 4: he's actually pro these workers. He literally is pro these workers.
Speaker 4: It's not a political thing. It's these are great jobs
Speaker 4: for Americans. Let's go get more of them.
Speaker 2: There's a lot of money set to come into the
Speaker 2: United States and big bets, a ton of FDM. We
Speaker 2: could get into that in just a moment. I just
Speaker 2: want to stay on G seven, allies, this week's been
Speaker 2: quite a week. Emmanuel Macron, the French president, has said
Speaker 2: basically accused of the US of trying to subordinate the Europeans.
Speaker 2: The Prime Minister of Canada, I'm sure you heard his speech,
Speaker 2: Mark Conney the other day, said this is not a
Speaker 2: transition it's a rupture. How would you describe relations with
Speaker 2: those countries at the moment.
Speaker 3: I think our relations are perfectly fine. Right.
Speaker 4: I described the relationship with respect to the whole when
Speaker 4: Greenland was going back and forth before we sort of
Speaker 4: settled it with a framework agreement.
Speaker 3: Right, I called it a kerf fluffle. Right.
Speaker 4: It's basically like if you have an argument with your
Speaker 4: spouse that's not real.
Speaker 3: You know, it's not a real one. It's like a
Speaker 3: small thing.
Speaker 2: My spouse doesn't go out there and deliver a speech
Speaker 2: after that argument. It's the end of the relationship.
Speaker 4: Fair enough, But you're right, and I think they overreacted.
Speaker 4: And it's proof that they overreacted because a day or
Speaker 4: two later, there's a framework that makes sense.
Speaker 3: Right.
Speaker 4: What did we say? We said we cared about it
Speaker 4: for national security. Right, we said we care about a
Speaker 4: national security. I mean, it's obvious we care about it
Speaker 4: for national security. Because if you're going to build a
Speaker 4: golden dome over the United States of America, right, wouldn't
Speaker 4: you prefer the golden dome cover Greenland? So when you're
Speaker 4: knocking out the missiles, you're not knocking them out right
Speaker 4: over your head like we've all seen Israel like knocking
Speaker 4: out the missiles right over their head with their iron dome.
Speaker 4: Wouldn't you prefer to knock out the missiles if you
Speaker 4: live on the East coast of the United States of
Speaker 4: America over Greenland, a couple of thousand miles away where
Speaker 4: there's no people, right, does not sound better. So this
Speaker 4: is sort of where we're thinking about it and how
Speaker 4: our national security team is thinking about it. Let's actually
Speaker 4: the framework, Well, the framework is a national security based
Speaker 4: framework that that's what the United States cares about. We
Speaker 4: care about our national security, and we care about the
Speaker 4: shipping lanes. So let's talk about the national security and
Speaker 4: shipping lanes and let's see if we can't figure out
Speaker 4: a framework to do that together. And I think that's
Speaker 4: what the President truthed about. He said, we're going to
Speaker 4: try to figure that out together because those were the
Speaker 4: key points that the States of America cared about. And
Speaker 4: I think the President's been clear about and he just
Speaker 4: wants people at the table dealing with it swiftly. I
Speaker 4: mean to think about this, he sends out a truth
Speaker 4: and like within four days, right, we have a framework
Speaker 4: agreement Like that's by the way, it's a pretty effecise.
Speaker 3: We had TIFFs, we had tariffs on tariff's off.
Speaker 1: They were never as to do, they were never on
Speaker 1: the threat of them, were coming on for February first.
Speaker 1: What does this do now for the agreement you were
Speaker 1: and your team struck with Brussels because the legal implementation
Speaker 1: has now been put on hold.
Speaker 4: Oh, I think it'll be put on unhold probably tomorrow.
Speaker 4: I mean, come on, That's why I said it's an overreaction.
Speaker 4: I mean, they know when the President says, this is
Speaker 4: what's going to happen. I mean what provoked the president.
Speaker 4: What provoked the President was that they sent military people
Speaker 4: to Greenland. I mean, they didn't send military people to Ukraine. Like,
Speaker 4: why aren't they sending military people to Greenland?
Speaker 3: You know, it was so it seemed like a provocation.
Speaker 2: We spoke to the Finish leader and he suggested that
Speaker 2: was a miscommunication, and he cleared that up pretty quickly.
Speaker 2: There's something I want to get into with you that
Speaker 2: I think is quite important. This, of course, is the
Speaker 2: art of the deal. We talk about it on the
Speaker 2: program all the time. The President anchors the story to
Speaker 2: the extreme and then gets a favorable deal for the
Speaker 2: United States. I think that's whe I understood. Something happened
Speaker 2: though in the last twelve months that I think is
Speaker 2: really interesting. He tried the same thing with Canada and
Speaker 2: totally upended the election in Canada. North of the border.
Speaker 2: POLYEF was going to sail away with that. The reason
Speaker 2: Mark Carney's here as Prime Minister is because the President
Speaker 2: took such an assertive stance on Canada. Now at the time,
Speaker 2: I was finding the humor in the conversation. Then the
Speaker 2: Canadian started lighting up the Bloomberg terminal sending messages. They
Speaker 2: were deeply offended and we've seen that damage the economic
Speaker 2: relationship with Canada and the United States. And the risk
Speaker 2: came mists the Secretary, and I'd love your thoughts on
Speaker 2: it and your reaction, because I think this is really
Speaker 2: important regard to the Europeans. The points you're making about
Speaker 2: Europe and have made over the last week are valid
Speaker 2: points and they're actually well received by a lot of Europeans,
Speaker 2: but the style in which is being delivered at the
Speaker 2: moment some of them are finally get offensive. D you
Speaker 2: think it's a risk here that we damage the economic
Speaker 2: relationship with the Europeans in the same way we do
Speaker 2: with the Canadians, and for that matter, derail the conservative
Speaker 2: movement in Europe as well.
Speaker 3: Underway, I don't.
Speaker 4: I think the fact is that you need to rethink.
Speaker 4: I think Europe is amazing and it's got extraordinary opportunity
Speaker 4: and a twenty trillion dollar economy. But think about this,
Speaker 4: if they had the right digital rules, meaning similar digital
Speaker 4: rules to the United States. We have six trillion dollars
Speaker 4: with the committed investment to build data centers in America,
Speaker 4: and we have a.
Speaker 3: Thirty trillion dollar economy.
Speaker 4: So if they had a twenty trillion dollar economy, you'd say, okay,
Speaker 4: if they had the same rules, they could.
Speaker 3: Get four trillion, or how about two trillion.
Speaker 4: You realized two trillion for their economy, right, would be
Speaker 4: ten points a GDP S right over three or four years.
Speaker 4: I mean, that would produce amazing growth. And let me
Speaker 4: sort of explain how that works. So we did a
Speaker 4: deal with Micron. Right, they're going to build two hundred
Speaker 4: billion dollars in America. So on Friday last Friday, we
Speaker 4: did a ground breaking of their megafab, one hundred billion
Speaker 4: dollar fag fab. And where did they do it? They
Speaker 4: did it in Upstate New York conserractives. Now, there hasn't
Speaker 4: been industrial building in Upstate New York in probably forty years.
Speaker 4: But if you think about it, it had a huge
Speaker 4: industrial base once upon a time.
Speaker 3: So what does it have. It has power because it
Speaker 3: has the power infrastructure for that.
Speaker 4: So what that does is it creates like this enormous uplift.
Speaker 4: And I think Europe can do the same thing. I
Speaker 4: think the UK can do the same thing. And Canada
Speaker 4: is just thinking in this arrogant kind of thought.
Speaker 5: Well, but just to build on what John is talking about,
Speaker 5: it's a style question. Can you get the same results
Speaker 5: without using words like calling leaders week or their economy
Speaker 5: is decaying?
Speaker 3: Right?
Speaker 5: Is it necessary to provoke the visceral feeling that we
Speaker 5: feel among a lot of leaders here and in conversations
Speaker 5: with international investors? I mean, is there any other way?
Speaker 5: Is that style more harmful than it is helpful?
Speaker 3: Well?
Speaker 4: I think it creates listening, Like people pay attention to
Speaker 4: it and listen to it. If you just sort of
Speaker 4: blend in, no one hears anything in Davos, right, everybody
Speaker 4: says the same blah blah blah blah blah. And if
Speaker 4: you need to break out and you need to say it.
Speaker 4: So my view is right that Canada has never expressed
Speaker 4: to the world that they have the best deal, the
Speaker 4: second best deal in the world. The best deal in
Speaker 4: the world is Mexico because remember they have USMCA, which
Speaker 4: means eighty five percent of the Canadian economy comes into
Speaker 4: the United States for zero. And there he is complaining
Speaker 4: that he's going to go to China and improve it.
Speaker 3: What's he going to do? China's delighted to sell to him.
Speaker 4: But do you think China's going to open their economy
Speaker 4: to accept exports from Canada. This is the silliest thing
Speaker 4: I've ever seen. They have the second best deal because
Speaker 4: Mexico's got a little better deal. They have twenty five
Speaker 4: percent on the extra fifteen percent, whereas Canada's got thirty
Speaker 4: five percent on the extra fifteen percent. But give me
Speaker 4: a break. They have the second best deal in the world.
Speaker 4: And all I got to do is listen to this
Speaker 4: guy wind and complain.
Speaker 5: Mister Secretary. In fairness, you've seen from the airplanes. You've
Speaker 5: seen in about a thirty percent decline in Canadian visitors
Speaker 5: to the United States, if not significantly more. You've seen
Speaker 5: a similar type of decline from China. European travelers inbound
Speaker 5: have come down. There is a sense that people do
Speaker 5: not want to come to the culture of the US,
Speaker 5: and there is this anchor about it. I just wonder
Speaker 5: if you think that that's just temporary, or you just
Speaker 5: sort of dismiss that, or you think it's irrelevant to
Speaker 5: the actual issues.
Speaker 4: I think what that is is political marketing. Right, the
Speaker 4: Canadians have the second best deal in the whole wide world.
Speaker 4: If they continue this path, right, which is a political
Speaker 4: path of a certain thing. I'm going to go fly
Speaker 4: to China. I'm going to open up my markets to China.
Speaker 4: I'm going to take Chinese electric cars and do all
Speaker 4: sorts of this stuff. Then when USMCA gets renegotiated this year,
Speaker 4: this year, sort of like towards the end of the summer,
Speaker 4: in the middle of the summer, do you think the
Speaker 4: President of the United States is going to say you
Speaker 4: should keep having the second best deal in the world.
Speaker 4: I mean, you guys are such great friends. I mean
Speaker 4: they are playing with a except of rules that they
Speaker 4: haven't really thought.
Speaker 2: I can hear it in your voice. You're excited about
Speaker 2: negotiating this aren't you lay this year?
Speaker 4: Well, they've sort of given a sort of a roadmap
Speaker 4: of saying, so I guess we should change the whole deal.
Speaker 3: Right, you want to be like the rest of the world.
Speaker 4: You don't want to be this favored neighbor because you've
Speaker 4: taken it so for granted that you're willing to come
Speaker 4: to Davos and say, there's two higemic powers in the world,
Speaker 4: and we're going to decide which one we're going to
Speaker 4: work with. Really, you're going to either work with the
Speaker 4: United States of America, where seventy five percent of your
Speaker 4: economy is totally tied to it, or China.
Speaker 3: Why would you say that? It just I think it's political,
Speaker 3: you know.
Speaker 4: I think if we take it correctly, we should look
Speaker 4: at it as just political noise coming out of a
Speaker 4: prime minister and maybe this is working for his election, right,
Speaker 4: because I don't think it can be real, Because if
Speaker 4: you took out the math of Canada's economy and doing
Speaker 4: business with the United States of America's thirty trillion dollars economy,
Speaker 4: there's no such thing as changing what they have today.
Speaker 3: No one would vote for changing.
Speaker 4: What they head today now, not think they're marketing as well,
Speaker 4: but they're just for their politics, but they're surely not
Speaker 4: marketing it well for their fundamental economics for long term.
Speaker 1: The United States, the US are doing deals with China,
Speaker 1: and i'd love you to walk us through what's going
Speaker 1: on with the Age twenties. Is it accurate now that
Speaker 1: basically for China to get the Age twenty chips, Taiwan
Speaker 1: needs to send them to America for US to put
Speaker 1: a tariff on them to make money off it, and
Speaker 1: then send to China.
Speaker 3: And is it your understanding that China might.
Speaker 1: Be suspectable now to these chips suspect because they're entering
Speaker 1: through the United States.
Speaker 4: So it's the Age two hundred, right, So that's the
Speaker 4: chip we're talking about. And Jensu Wang came to the
Speaker 4: Oval office and he argued that this is a better
Speaker 4: chip than they can actually make in any scale. Right,
Speaker 4: So if we sell them to China, right, and Chinese businesses,
Speaker 4: then they'll start using them and they'll develop on the
Speaker 4: American tech stack and that will take some money away
Speaker 4: from the Chinese tech stack. And that's it's an interesting argument.
Speaker 4: There are two sides. There are strong two sides. We
Speaker 4: shouldn't sell them any or we should sell them the
Speaker 4: which and I stayed right in the middle. It was
Speaker 4: a really really good discussion, okay. And the President decided
Speaker 4: that fine, we'll sell the h two hundreds to them, okay.
Speaker 3: And he made that decision, and after.
Speaker 4: He was done, he said, and you know what, I
Speaker 4: think if we do that, we should get twenty five
Speaker 4: percent for the American taxpayers, right, because we're creating something.
Speaker 1: I think China wants to buy them, knowing that they're
Speaker 1: going from Taiwan now back to the US.
Speaker 3: Coming to the United States.
Speaker 4: Because in order to collect twenty five percent, right, the
Speaker 4: process matter to do it, right is he imported, put
Speaker 4: a tariff on it, and then export it again. Okay.
Speaker 4: And so that's the model. It's the process model to
Speaker 4: execute a plan that the President United States of America made, right.
Speaker 4: So that's just the execution model of how to do
Speaker 4: it. It's not it's just process, right. And it's the same
Speaker 4: age two hundred chip. And the question will find out
Speaker 4: is that businesses in China want to buy that's for sure.
Speaker 4: The question is does China central government right want you
Speaker 4: know when they have that same argument too, I want
Speaker 4: to give my companies this chip that they're all clamoring for,
Speaker 4: or do I want to force them to take the
Speaker 4: pain of using lesser chips that are domestically made, but
Speaker 4: helping our domestic companies grow.
Speaker 3: And that's a question. We're going to see how it goes.
Speaker 4: But I think the President put that question out there,
Speaker 4: and I think it's a really interesting one. I didn't
Speaker 4: say there's not two sides of that coin, right, but
Speaker 4: the President thought having Chinese developers on the US tech stack, right,
Speaker 4: given sort of the middle, he falls that way. And
Speaker 4: it was really robust discussion. Both sides of the discussion
Speaker 4: were in the room. It was a deep and thoughtful discussion,
Speaker 4: and that's where he came out and that's why.
Speaker 3: He's the president.
Speaker 2: So you know, I'm just a final thought just listening
Speaker 2: to this engaging conversation of the last fifteen minutes or so.
Speaker 2: Do you fancy the FED seat over the Federal Reserve?
Speaker 2: I can see comma section, you can see him in
Speaker 2: the the ecles. Can you imagine the magic of that
Speaker 2: news conference? These news conferences?
Speaker 1: With the news conference, I'd be going.
Speaker 4: I know what I call that. I call that an
Speaker 4: Amy winehouse. No, No, no.
Speaker 2: I call that box office. It's going to see you,
Speaker 2: the Secretary, thank you. I'm just making sure Missus Farrow
Speaker 2: hasn't scheduled a speech. I don't want that, do we,
Speaker 2: Missus Secretary, thank you, appreciate your time.