WEBVTT - EVs, Big Pharma, Tech and the Tariff Threat 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business 0:00:10.560 --> 0:00:14.440 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.400 stay ahead with insight on the people, companies, and trends 0:00:18.400 --> 0:00:23.400 shaping today's complex economy. Plus global business finance and tech 0:00:23.480 --> 0:00:27.360 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.680 --> 0:00:31.760 with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.680 --> 0:00:35.839 Tesla facing some challenges in Europe. I think it's fair 0:00:35.880 --> 0:00:37.800 to say globally, but just check out what our team 0:00:37.840 --> 0:00:40.879 reported last week. Sales fell for the tenth time in 0:00:40.880 --> 0:00:43.320 the last twelve months in Europe. That was where Elon 0:00:43.400 --> 0:00:46.280 Musk's politicking and a changer of the carmaker's most important 0:00:46.280 --> 0:00:50.800 product had been major hindrances. The company registered six and 0:00:50.800 --> 0:00:52.839 eighty eight new cars in the month of February. We 0:00:52.880 --> 0:00:55.200 don't have the March numbers yet, that's some of the February. 0:00:55.440 --> 0:00:57.280 It's down forty percent from a year ago. This is 0:00:57.280 --> 0:01:01.840 according to the European Automobile Manufacturers Associate. Tesla's sales plunged 0:01:01.880 --> 0:01:03.880 forty three percent of the first two months of the year, 0:01:04.120 --> 0:01:06.280 while the Regent saw a thirty one percent rise in 0:01:06.319 --> 0:01:09.959 ev registration. So more people are buying evs, but fewer 0:01:10.040 --> 0:01:11.640 people are buying Tesla's. 0:01:11.720 --> 0:01:14.280 That's amazing. That's a huge, huge drop. 0:01:14.400 --> 0:01:17.080 So maybe it's a surprise to people listening who don't 0:01:17.319 --> 0:01:19.720 look at this market every single day, or maybe not 0:01:19.760 --> 0:01:22.920 surprising given what's happening with Tesla's stock price. Sean Tucker 0:01:22.959 --> 0:01:25.119 is probably not surprised about this. He's editor of Kelly 0:01:25.120 --> 0:01:28.319 blue Book. It's the vehicle valuation and automotive research company. 0:01:28.319 --> 0:01:31.680 He argues that Tesla's quote high water mark as an automaker, 0:01:31.680 --> 0:01:35.160 maybe in the past, that's a hot take. Sean Sean 0:01:35.200 --> 0:01:38.400 joins us from Washington, DC. So Sean back up the 0:01:38.520 --> 0:01:41.039 claim there. Why in your view, could Tesla's best days 0:01:41.080 --> 0:01:41.759 be behind it? 0:01:43.240 --> 0:01:45.679 Because its peak in terms of auto sales was in 0:01:45.760 --> 0:01:49.240 February of twenty twenty three. We weren't able to call 0:01:49.280 --> 0:01:51.000 the peak at the time because we weren't sure that 0:01:51.520 --> 0:01:52.640 the decline would last. 0:01:52.680 --> 0:01:54.639 But what we see now is if you look. 0:01:54.520 --> 0:01:57.279 At Tesla's as a percentage of the new cars sold 0:01:57.920 --> 0:02:00.680 in twenty twenty three, they hit four point two nine percent, 0:02:00.720 --> 0:02:02.560 and that's their peak, and in twenty twenty four they 0:02:02.600 --> 0:02:03.640 were back down to three. 0:02:03.440 --> 0:02:06.440 Point ninety five, so it was already falling before this 0:02:06.520 --> 0:02:07.920 political controversy began. 0:02:08.520 --> 0:02:09.239 What is the issue? 0:02:09.280 --> 0:02:11.840 Is it political controversy or is it the fact that 0:02:11.960 --> 0:02:13.920 this is a space that a lot of competitors have 0:02:13.919 --> 0:02:16.520 gotten involved in and I think Americans this is not 0:02:16.560 --> 0:02:21.040 on Americans radar, but byd and show me those vehicles 0:02:21.760 --> 0:02:24.000 blow away anybody who gets behind the wheel. 0:02:24.000 --> 0:02:25.079 How big of an issue is that? 0:02:26.560 --> 0:02:29.640 It's absolutely huge for Tesla. But for a moment, if 0:02:29.680 --> 0:02:32.040 you could imagine if we could take elon Musk out 0:02:32.040 --> 0:02:35.320 of consideration for this, what you would have is a 0:02:35.320 --> 0:02:37.960 company with an aging lineup, you know, the Modelesque, the 0:02:37.960 --> 0:02:41.240 Model X. The platform underneath those was introduced in twenty twelve. 0:02:41.280 --> 0:02:45.359 That is ancient by auto industry standards. There's nothing new 0:02:45.400 --> 0:02:48.520 in the pipeline, at least nothing particularly high volume new 0:02:48.520 --> 0:02:52.839 in the pipeline, and sales peaked back in twenty twenty three. 0:02:53.120 --> 0:02:54.639 Then you add in the fact that they've got all 0:02:54.639 --> 0:02:58.280 of this new competition and they're not innovating any I 0:02:58.320 --> 0:03:00.519 don't know that they would be doing well without. 0:03:00.280 --> 0:03:01.440 The political controversy. 0:03:01.560 --> 0:03:04.400 Stack the political controversy on top of that, and you 0:03:04.480 --> 0:03:05.919 just you have what you see today. 0:03:06.480 --> 0:03:08.840 So and I have to counter just because earlier in 0:03:08.840 --> 0:03:11.280 our last hour, we talked with a member of our 0:03:11.320 --> 0:03:16.080 Bloomberg Intelligence team are Tim Craighead, and we've got a 0:03:16.160 --> 0:03:19.240 story out in Bloomberg BusinessWeek about the ten companies to 0:03:19.280 --> 0:03:21.720 watch for good or bad reasons for better for worse, 0:03:22.080 --> 0:03:25.919 and Tesla was a company that was singled out for better. 0:03:26.360 --> 0:03:30.520 And basically what they talked about is that several positives 0:03:30.560 --> 0:03:33.640 to look forward to. Orders for Tesla's newly revamped Model 0:03:33.680 --> 0:03:37.800 Wire accelerating notably even in China. Production rates are poised 0:03:37.760 --> 0:03:41.480 to increase quickly. Meantime, the company's battery sales to utilities, 0:03:41.480 --> 0:03:45.040 which generate higher margins than autos, appear underappreciated as a 0:03:45.040 --> 0:03:45.600 profit driver. 0:03:45.840 --> 0:03:47.800 So that's more of a corporate overview. 0:03:48.200 --> 0:03:51.040 But I am curious about the Model Why, and I 0:03:51.040 --> 0:03:54.920 think there's also a subcompact right that could start in 0:03:55.040 --> 0:03:58.560 June widening, you know, kind of Tesla's reach and appeal. 0:03:58.840 --> 0:03:59.920 So what would you say to that. 0:04:01.360 --> 0:04:04.600 The Model Why refresh is essentially a visual refresh. It's 0:04:04.840 --> 0:04:07.400 basically the same car underneath that it's been since about 0:04:07.400 --> 0:04:10.800 twenty seventeen, So we kind of question whether that's really 0:04:10.840 --> 0:04:12.680 going to generate much of a sales spike. 0:04:12.880 --> 0:04:14.960 Absolutely, it's their best selling model. I believe it was 0:04:14.960 --> 0:04:16.560 one of the top five best selling models in the 0:04:16.680 --> 0:04:18.840 United States last year. But I don't think there's a 0:04:18.839 --> 0:04:20.599 lot of opportunity for growth with that. 0:04:20.960 --> 0:04:22.320 And then you pile. 0:04:22.160 --> 0:04:24.160 Musk's troubles on top of it, and I'd be very 0:04:24.160 --> 0:04:28.040 surprised if you see sales actually increase anywhere outside of China, 0:04:28.080 --> 0:04:30.599 And then in China you've got BYD to contend with. 0:04:31.760 --> 0:04:35.000 As for battery sales, that's a little bit outside of 0:04:35.040 --> 0:04:36.239 our scope, is Kelly Bluebook. 0:04:36.279 --> 0:04:37.760 But I wouldn't know that the musk. 0:04:38.400 --> 0:04:40.360 Musk is fond of saying these days that Tesla's not 0:04:40.400 --> 0:04:42.320 a car company, And if he's right, and he's got 0:04:42.360 --> 0:04:45.679 significant plans outside of cars, then that changes the equation. 0:04:46.320 --> 0:04:48.520 But he needs to be right because as a car company, 0:04:48.600 --> 0:04:51.200 it really sales really peaked a little over two years ago. 0:04:51.360 --> 0:04:53.560 Yeah, maybe he's betting it all on the humanoid robot 0:04:53.640 --> 0:04:57.160 and the robo taxi. Where does the robotaxi come into 0:04:57.200 --> 0:04:57.960 your analysis? 0:05:00.120 --> 0:05:02.599 Many of the Tesla's rivals have attempted to make a 0:05:02.600 --> 0:05:05.880 sort of robotaxi project work. Several of them have gotten 0:05:05.880 --> 0:05:07.640 out of the business when in the last few years, 0:05:07.720 --> 0:05:10.400 it's possible that Tesla has secret sauce that nobody else 0:05:10.440 --> 0:05:12.719 has and will make this profitable, but it's proven to 0:05:12.760 --> 0:05:14.839 be a very difficult business to profit in. 0:05:15.200 --> 0:05:17.599 You're in Washington, d C. I believe you're going to 0:05:17.600 --> 0:05:21.400 start getting weaymos soon in Washington DC. Have you been 0:05:21.440 --> 0:05:23.480 able to ride in one outside of DC? 0:05:25.040 --> 0:05:26.880 I have written in a Zooks, but not a Weymo. 0:05:27.720 --> 0:05:30.600 How what was your experience, just as somebody who is 0:05:30.680 --> 0:05:33.560 in this world day in and day out with a 0:05:33.680 --> 0:05:37.480 driver on the radar, what was your experience without a driver? 0:05:39.000 --> 0:05:41.960 You know? I drive fifty two different cars a year. 0:05:42.000 --> 0:05:44.800 As Kelly get a new car wants a week to 0:05:44.839 --> 0:05:47.760 test drive, and I have really come around on the 0:05:47.800 --> 0:05:50.120 concept of self driving cars over time. They may be 0:05:50.160 --> 0:05:52.520 nervous to begin with, but the truth is now I 0:05:52.520 --> 0:05:54.320 look around me in traffic and I see so many 0:05:54.320 --> 0:05:56.720 people tapping on their phones that I would rather driving 0:05:56.760 --> 0:05:58.360 world where at least the car was paying attention. 0:05:58.960 --> 0:06:00.440 I love, I completely agree with you. 0:06:00.480 --> 0:06:02.680 I Carol knows my trip to San Francisco a few 0:06:02.680 --> 0:06:05.200 months ago, my life was like turned upside down with 0:06:05.240 --> 0:06:07.440 this just my first experience in a WEEIMO, I think 0:06:07.440 --> 0:06:10.640 it's fantastic. I wish this stuff was all over because 0:06:10.680 --> 0:06:13.440 these things follow the rules and they're not texting and driving. 0:06:13.839 --> 0:06:17.760 But realistically, in your view, do you see that world existing? 0:06:19.400 --> 0:06:21.040 It's going to take a lot longer to get there 0:06:21.080 --> 0:06:23.560 than some of these technology companies what have you believe 0:06:24.000 --> 0:06:26.960 there are significant regulatory challenges. 0:06:26.480 --> 0:06:29.080 Because right now this is regulated by the states. So 0:06:29.160 --> 0:06:29.960 even if you can make. 0:06:29.880 --> 0:06:32.440 The technology work, you'd have to work through fifty sets 0:06:32.440 --> 0:06:34.880 of liability laws and fifty different legislatures. 0:06:34.880 --> 0:06:37.400 Maybe start maybe, but not if Elon Musk has his 0:06:37.480 --> 0:06:41.200 way in terms of regulations with Sean Duffy at the 0:06:41.240 --> 0:06:43.600 helm of the Department of Transportation. 0:06:43.960 --> 0:06:46.159 Which is one of the more interesting proposals he put 0:06:46.160 --> 0:06:48.520 He's put out there. The other thing I'll put out 0:06:48.560 --> 0:06:51.640 is that when we start to masterself driving cars and 0:06:51.640 --> 0:06:54.080 actually get them functional, you open a whole new questions 0:06:54.120 --> 0:06:57.880 we've never run into before. Mercedes has the most advanced 0:06:57.880 --> 0:06:59.720 system for sale in the United States. It's a legal 0:06:59.800 --> 0:07:04.320 law right now only in Nevada, California, and they have proposed, 0:07:04.480 --> 0:07:06.920 just to give you one example, that the industry adopts 0:07:07.040 --> 0:07:10.480 teal exterior lights as a signal that the self driving 0:07:10.480 --> 0:07:13.200 system is on, because how are police supposed to know 0:07:13.240 --> 0:07:15.560 whether the driver's distracted if it's okay for the driver 0:07:15.600 --> 0:07:16.160 to be distracted. 0:07:16.160 --> 0:07:17.679 Wait, what was the signal? You said? 0:07:18.760 --> 0:07:20.640 And exterior lights and colored and. 0:07:20.600 --> 0:07:22.960 Teal does that work? Does that exist now? 0:07:24.480 --> 0:07:27.320 Only in testing? And again that would be a legal issue. 0:07:27.360 --> 0:07:29.000 You'd have to get fifty states to agree to that. 0:07:29.240 --> 0:07:31.200 The point is just to say that even once the 0:07:31.240 --> 0:07:34.560 technology works, we've got a whole public policy system that 0:07:34.560 --> 0:07:36.840 we'd have to work through it a lot of new questions. 0:07:36.480 --> 0:07:38.520 But that's none of that has to do with the 0:07:38.600 --> 0:07:40.520 Actually a lot of what you're talking about has to 0:07:40.560 --> 0:07:43.280 do with policy and with sort of the way that 0:07:43.560 --> 0:07:46.320 law enforcement looks at this stuff. In your view is 0:07:46.360 --> 0:07:48.000 the tech is the tech there. 0:07:49.760 --> 0:07:50.520 It's getting there. 0:07:50.640 --> 0:07:53.160 But Tesla has more significant challenges than most of its 0:07:53.280 --> 0:07:56.720 rivals in that way. Elon Musk is very insistent on 0:07:57.080 --> 0:08:00.480 doing self driving with nothing but cameras, and the systems 0:08:00.480 --> 0:08:03.760 that have surpassed Tesla, like that Mercedes system that's the 0:08:03.800 --> 0:08:07.640 only Level three approved anywhere in America, uses radar cameras 0:08:07.640 --> 0:08:12.360 and leadar If Tesla can't adopt additional technologies like that, 0:08:12.400 --> 0:08:14.960 it's going to take them longer to get an effective 0:08:15.000 --> 0:08:15.920 self triding car, all. 0:08:15.920 --> 0:08:18.280 Right, Sean, I just was like, wait a minute, I 0:08:18.280 --> 0:08:19.160 gotta ask you something. 0:08:19.400 --> 0:08:20.320 Are you saying. 0:08:20.080 --> 0:08:24.360 Mercedes is better than Tesla when it comes to self driving. 0:08:26.560 --> 0:08:29.240 The automotive industry uses a system of five levels to 0:08:29.320 --> 0:08:33.000 describe self driving cars, from level one just your basic 0:08:33.679 --> 0:08:35.800 smart cruise control, up to level five being a car 0:08:35.840 --> 0:08:39.040 with no steering wheel. Almost every automaker has a level 0:08:39.040 --> 0:08:41.600 two system right now, including Tesla, and Mercedes has the 0:08:41.600 --> 0:08:44.560 only Level three system that's approved anywhere in the United States. 0:08:44.960 --> 0:08:47.480 What that means is that legally you can look away 0:08:47.480 --> 0:08:50.560 from the roadway while it's working. Some Mercedes has that. 0:08:50.679 --> 0:08:52.959 It's only in Nevada and parts of California right now, 0:08:53.000 --> 0:08:55.480 but there is currently a Mercedes system you can buy 0:08:55.840 --> 0:08:57.640 that will let you settle back and read a book 0:08:57.640 --> 0:08:59.840 in a car, and Tesla doesn't have anything like that. 0:09:00.880 --> 0:09:03.120 I have to say, I am a little bit familiar 0:09:03.280 --> 0:09:09.120 with Mercedes, and just their safety systems are like blown 0:09:09.160 --> 0:09:12.240 away where you can take your hands off the wheel, 0:09:12.480 --> 0:09:14.160 and especially like on a highway. 0:09:13.800 --> 0:09:15.760 Not even a brand new car that you're talking about, Yeah, 0:09:15.800 --> 0:09:16.520 experience with right. 0:09:16.600 --> 0:09:18.280 Yeah, I have one and it's old, it's over ten 0:09:18.360 --> 0:09:21.880 years old. But the safety systems are unbelievable in terms 0:09:21.920 --> 0:09:24.920 of what you can do and how it just tracks 0:09:25.000 --> 0:09:26.800 and just keeps you safe. And what I also do 0:09:26.880 --> 0:09:29.560 wonder Sean that if we're not kind of quite ready 0:09:29.640 --> 0:09:32.440 to just look away and let the car drive, do 0:09:32.480 --> 0:09:35.200 we just continue to see the safety systems get better 0:09:35.240 --> 0:09:37.480 and better on these cars, because I almost feel like 0:09:37.520 --> 0:09:40.440 Cinems amount of highway you know, you put on basically 0:09:40.480 --> 0:09:43.240 cruise control, and these cars are tracking. It almost feels 0:09:43.320 --> 0:09:45.840 like with one another. And in that regard, I feel 0:09:45.880 --> 0:09:48.880 so much safer where my car. If I get distracted, 0:09:49.240 --> 0:09:51.640 it's going to stop the car if I miss the 0:09:51.640 --> 0:09:53.840 car stopping in front of me, And that's pretty amazing. 0:09:55.360 --> 0:09:58.400 And those are essentially the same technologies. Yeah, the technologies 0:09:58.440 --> 0:10:01.240 that will ultimately result in so driving cars. The first 0:10:01.240 --> 0:10:03.600 thing they do is give us those safety systems, and 0:10:03.679 --> 0:10:06.040 when all of those safety systems can work together and 0:10:06.080 --> 0:10:07.640 talk to each other, you end up with a self 0:10:07.679 --> 0:10:11.160 driving car. That's also how the industry is going to 0:10:11.240 --> 0:10:13.560 have to get people comfortable with it. Triple A did 0:10:13.559 --> 0:10:15.640 a study, I believe, just a month ago in which 0:10:15.960 --> 0:10:18.680 sixteen percent of Americans said they would get into a 0:10:18.679 --> 0:10:22.640 self driving car. That's the public challenge that they face 0:10:22.679 --> 0:10:24.720 in terms of approval, sixteen percent. 0:10:24.840 --> 0:10:29.000 I don't, so I don't buy that number. And here's why. 0:10:29.920 --> 0:10:32.240 The only reason I got into it in San Francisco 0:10:32.320 --> 0:10:34.040 wasn't even on my radar. And then I met up 0:10:34.040 --> 0:10:35.800 with a friend who was like, Hey, did you go 0:10:35.920 --> 0:10:37.880 in the Waimo yet? And I was like no, and 0:10:37.920 --> 0:10:40.319 She's like, Oh, it's so awesome. Just download the app 0:10:40.760 --> 0:10:42.560 and do it. And I did it. And I'm a 0:10:42.640 --> 0:10:45.800 true believer. I'm converted. And I think it's just like 0:10:45.880 --> 0:10:48.920 word of mouth, and just because people haven't been around 0:10:49.080 --> 0:10:52.080 this technology means they're going to answer that question a 0:10:52.080 --> 0:10:52.600 certain way. 0:10:53.640 --> 0:10:56.240 Well maybe right, but I think that as people get 0:10:56.280 --> 0:10:58.840 more accustomed to the safety systems, they get more comfortable 0:10:59.000 --> 0:11:01.840 and more comfortable with the car making certain decisions like that. 0:11:01.840 --> 0:11:04.000 That's how we eventually get to a world where most 0:11:04.040 --> 0:11:05.040 of us are willing to get in. 0:11:05.400 --> 0:11:07.520 I was even talking to your point, John, I was 0:11:07.559 --> 0:11:09.440 even talking to the Uber and Lyft drivers about this 0:11:09.520 --> 0:11:11.480 in the San Francisco Bay area because as you know, 0:11:11.520 --> 0:11:13.160 in San Francisco, you can only do it in San 0:11:13.200 --> 0:11:15.640 Francisco City proper. It's like a very strict border where 0:11:15.640 --> 0:11:19.840 you can do this. And they prefer driving with these 0:11:19.840 --> 0:11:22.679 on the roads because they follow the rules and they 0:11:22.720 --> 0:11:25.880 make good choices. I mean, it's pretty remarkable to see. 0:11:26.679 --> 0:11:30.360 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:30.440 --> 0:11:33.440 live weekday afternoons from two to five e's during Listen 0:11:33.480 --> 0:11:37.040 on Applecarplay and Android Otto with the Bloomberg Business app, 0:11:37.200 --> 0:11:39.960 or watch US live on YouTube. 0:11:41.240 --> 0:11:43.520 We've been talking about tariffs and we're already seeing companies 0:11:43.520 --> 0:11:46.680 react ahead of this announcement tomorrow. Mercedes Benz considering withdrawing 0:11:46.679 --> 0:11:50.040 its least expensive car from the US. Cocoa and coffee 0:11:50.040 --> 0:11:53.480 futures climbed on heightened supply fears as attention shifts potential 0:11:53.559 --> 0:11:56.440 impacts of a trade war on ag markets. Just a 0:11:56.440 --> 0:11:58.480 couple of headlines. I deleted some because we want time 0:11:58.520 --> 0:12:00.760 to get to them all. But there's a lot around. 0:12:00.440 --> 0:12:02.000 This, Yeah, and we have a great guest to talk 0:12:02.040 --> 0:12:04.880 all about it, Brad Carson. He does think about tariffs 0:12:04.880 --> 0:12:07.920 on high tech, specifically data centers and other infrastructure use 0:12:08.520 --> 0:12:11.320 that are used in AI tools. He is the co 0:12:11.400 --> 0:12:15.400 founder and president of Americans for Responsible Innovation and their 0:12:15.400 --> 0:12:18.120 mission is to quote help you as policymakers develop a 0:12:18.120 --> 0:12:22.439 thoughtful governance framework for rapidly advancing technologies that protects the 0:12:22.480 --> 0:12:25.160 public from harm while continuing to foster innovation. 0:12:25.240 --> 0:12:26.200 He's also a former. 0:12:25.960 --> 0:12:28.800 Congressman, serve two terms in the House as a Democrat 0:12:28.800 --> 0:12:31.800 in Oklahoma second District. He's a veteran worked in the 0:12:31.800 --> 0:12:34.800 Obama administration, General Counsel of the Army and Undersecretary of 0:12:34.800 --> 0:12:36.280 the Army, among other roles. 0:12:36.280 --> 0:12:39.360 In other words, we're out of time, Brad. Sorry, you 0:12:39.400 --> 0:12:39.920 come at. 0:12:39.760 --> 0:12:42.160 Things from different perspectives, which is what we always like 0:12:42.240 --> 0:12:42.720 to talk to. 0:12:43.120 --> 0:12:43.480 Brad. 0:12:43.880 --> 0:12:45.600 Talk to us about tariffs and how you're thinking about 0:12:45.600 --> 0:12:47.600 them as we get ready for what's to come in 0:12:47.679 --> 0:12:48.760 less than twenty four hours. 0:12:49.880 --> 0:12:50.839 Well, great to be with you. 0:12:50.880 --> 0:12:52.920 And as you said in our mission statement at ARI, 0:12:53.360 --> 0:12:55.920 we want to be thoughtful and tariffs have trade offs, 0:12:56.120 --> 0:12:58.200 and when it comes to AI, there are some real 0:12:58.240 --> 0:13:01.800 negative effects possibly of our race to build giant data 0:13:01.800 --> 0:13:05.960 centers necessary for the next generations of AI, because Chinese 0:13:06.000 --> 0:13:08.719 parts as well as parts from Mexico and Canada are 0:13:08.760 --> 0:13:12.160 really essential to that. It's really exponential growth in building 0:13:12.200 --> 0:13:14.640 these kind of massive data centers, so it's going to 0:13:14.679 --> 0:13:17.360 increase the cost probably slow down the progress, and that 0:13:17.480 --> 0:13:19.640 is one of the trade offs that policy makers should 0:13:19.640 --> 0:13:20.160 be thinking about. 0:13:20.320 --> 0:13:22.680 Mexico and Canada not usually on our radar when we 0:13:22.720 --> 0:13:26.559 think about the high tech it's usually China, it's usually overseas. 0:13:26.760 --> 0:13:27.240 What is it? 0:13:28.559 --> 0:13:31.600 Well we get Actually we import more IT equipment from 0:13:31.640 --> 0:13:34.280 Mexico at forty three billion dollars a year than we 0:13:34.360 --> 0:13:37.280 do from China or Canada each which are about thirty 0:13:37.320 --> 0:13:39.599 billion dollars a year, and so there's a lot of 0:13:39.679 --> 0:13:42.160 kind of IT equipment coming through all of those nations. 0:13:42.440 --> 0:13:44.840 Certainly on the high tech end, you do think of 0:13:44.920 --> 0:13:48.800 China or South Korea, Japan. One of the equipment instruction equipment, 0:13:48.880 --> 0:13:51.440 the racks, servers like that could come from China, but 0:13:51.520 --> 0:13:54.600 also from Mexico and Canada. So all of those countries 0:13:54.640 --> 0:13:57.120 will be affected by the tariffs and will certainly affect 0:13:57.400 --> 0:13:59.720 what will be you know, we're talking data center construction 0:13:59.800 --> 0:14:03.600 call us that are fifty sixty billion dollars aspirationally from 0:14:03.760 --> 0:14:06.600 the big companies like Google and Amazon. So these are 0:14:06.720 --> 0:14:09.720 very expensive projects, and the costs could go up three 0:14:09.760 --> 0:14:11.760 to five maybe even more than that. 0:14:12.000 --> 0:14:14.559 Is I'm curious how you look at the US and 0:14:14.640 --> 0:14:17.080 versus China when it comes to this technology. How would 0:14:17.080 --> 0:14:20.840 you characterize the race, the AI race between these two countries. 0:14:20.840 --> 0:14:21.840 Who's winning right now? 0:14:22.800 --> 0:14:24.920 I think the US is winning and we're likely to win. 0:14:25.280 --> 0:14:27.280 And I think the gap between the US and China, 0:14:27.360 --> 0:14:30.200 which today might be six to twelve months, is likely 0:14:30.240 --> 0:14:33.560 to grow over time as the various export restrictions which 0:14:33.560 --> 0:14:37.080 we'll keep China from accessing at scale the chips necessary 0:14:37.120 --> 0:14:40.520 to produce the so called frontier models, they begin to 0:14:40.560 --> 0:14:42.800 have more teeth, and so the US is in the lead. 0:14:42.920 --> 0:14:44.760 The big labs in the US are where all these 0:14:44.760 --> 0:14:46.800 products are being developed, and we need to make sure 0:14:46.800 --> 0:14:49.920 we keep that lead, and if it's not stolen to espionage, 0:14:50.040 --> 0:14:53.360 cybersecurity protections are critical to US labs so we can 0:14:53.400 --> 0:14:56.280 maintain the technological lead that we will develop in the 0:14:56.360 --> 0:14:56.840 United States. 0:14:56.920 --> 0:14:59.320 Wait, what makes you so confident that the US is 0:14:59.360 --> 0:15:00.880 going to hold that's lead here? 0:15:02.080 --> 0:15:04.560 Well, the big input into it are, of course chips, 0:15:05.000 --> 0:15:08.160 and the chips are where the export controls will restrict 0:15:08.280 --> 0:15:11.320 China's access to them. And so over time, again there's 0:15:11.360 --> 0:15:14.280 a lot of cheating and kind of subterfuge on those 0:15:14.360 --> 0:15:16.560 but the US is going to dominate that chip market, 0:15:16.640 --> 0:15:19.240 so that's part of it. We have the best engineers 0:15:19.240 --> 0:15:23.000 in the world here, the big labs open AI, Anthropic, Google, 0:15:23.200 --> 0:15:27.440 Meta by our US companies, and they're likely to continue 0:15:27.440 --> 0:15:29.360 to be at the very frontier of that. So we 0:15:29.480 --> 0:15:31.880 have the best chips, we have the best engineers, we 0:15:31.960 --> 0:15:34.120 have the best culture in which to develop these kinds 0:15:34.120 --> 0:15:37.040 of things, and so I think unless we really mess 0:15:37.080 --> 0:15:39.680 it up, you should maintain a lead, a lead to 0:15:40.160 --> 0:15:43.560 steal perhaps to match we're unlikely to kind of natively 0:15:43.600 --> 0:15:44.640 develop on their own. 0:15:44.760 --> 0:15:49.840 Brad, you've spent four years in the House serving your constituents. 0:15:49.840 --> 0:15:51.880 You also spent quite a bit of time in Washington 0:15:52.480 --> 0:15:56.760 during the Obama administration. Are you in touch at all 0:15:56.840 --> 0:16:00.320 with your former colleagues in the House, And if you are, 0:16:00.600 --> 0:16:01.320 do they get this. 0:16:03.440 --> 0:16:05.360 I am in touch with my former colleagues a lot. 0:16:05.400 --> 0:16:07.520 I go up there, you know, a couple times a 0:16:07.560 --> 0:16:10.040 month off and to talk to them about AI issues, 0:16:10.720 --> 0:16:13.760 and they're not really I think aware of the effect 0:16:13.840 --> 0:16:16.800 of the tariffs on AI and AI itself is just 0:16:16.800 --> 0:16:19.840 becoming an issue on the Hill. Most congressmen are not 0:16:20.360 --> 0:16:24.520 technically literate. They're not engineers. They're more likely businessmen or lawyers, 0:16:24.640 --> 0:16:28.440 teachers perhaps, and so these are very complicated issues. And 0:16:28.600 --> 0:16:30.680 while tariffs I think probably have a lot of people 0:16:30.720 --> 0:16:33.960 agitated on Capitol Hill, the effect of tariffs on AI 0:16:34.080 --> 0:16:36.720 data centers is probably not something that most people are 0:16:36.800 --> 0:16:38.600 yet paying attention to, but they should. 0:16:39.800 --> 0:16:42.400 You know, it's really kind of interesting because we've talked 0:16:42.480 --> 0:16:45.360 so much about like this tech war between the United 0:16:45.360 --> 0:16:48.840 States and China, and like, listening to your conversation, it 0:16:48.960 --> 0:16:52.200 just feels like you sound like we really don't have 0:16:52.240 --> 0:16:53.400 anything to be worried about. 0:16:54.240 --> 0:16:56.840 Is that fair? Am I misreading you? 0:16:56.880 --> 0:16:57.000 Now? 0:16:57.040 --> 0:16:59.120 I think we have something to be worried about because 0:16:59.160 --> 0:17:01.400 we know that they's we'll try to steal our best 0:17:01.480 --> 0:17:02.480 tech techniques. 0:17:02.560 --> 0:17:03.800 Right, so unless our. 0:17:03.760 --> 0:17:08.040 Labs have exquisite cybersecurity, the idea that other nations wouldn't 0:17:08.040 --> 0:17:11.200 steal our best models. We know, for example, that Chinese 0:17:11.320 --> 0:17:14.560 espionage in the defense sector is pervasive. 0:17:14.600 --> 0:17:16.840 Righttimes, espionage that goes both ways. Right. 0:17:16.920 --> 0:17:20.240 To be fair, absolutely, we have more to lose when 0:17:20.240 --> 0:17:22.800 you when you have the exquisite technology you have a 0:17:22.800 --> 0:17:24.720 lot more to lose by people stealing it, right, they're 0:17:24.720 --> 0:17:25.639 trying to get it from you. 0:17:25.760 --> 0:17:29.040 So then do you think something like deep seek in 0:17:29.119 --> 0:17:33.720 your view, I mean from all assessments so far, it 0:17:33.840 --> 0:17:36.320 just sounds like Shohn is figuring this out and maybe 0:17:36.320 --> 0:17:40.119 they can do you know, AI models in a much 0:17:40.160 --> 0:17:45.679 more productive energy efficient, you know, less expensive way. So 0:17:45.720 --> 0:17:49.040 it does sound like there's expertise there as well. 0:17:49.160 --> 0:17:50.679 Oh, there's incredible expertise. 0:17:51.280 --> 0:17:54.080 You know, universities like ching Wa or Peaking or among 0:17:54.119 --> 0:17:57.920 the best world. Chinese engineering culture is extraordinary. They're turning 0:17:57.960 --> 0:18:00.800 out many more STEM graduates per year than we are. 0:18:01.080 --> 0:18:03.960 So I don't underestimate what the Chinese can do. But 0:18:04.000 --> 0:18:05.640 I think most people believe that there would have been 0:18:05.640 --> 0:18:09.080 no Deep Seek without say a chat GPT. They used 0:18:09.119 --> 0:18:13.360 American models to so called distill. You know, they're probably 0:18:13.400 --> 0:18:16.440 hearing things in San Francisco dinner parties that get back 0:18:16.480 --> 0:18:19.119 to China about how to do things techniques. So I 0:18:19.160 --> 0:18:22.000 think America is still the leader, but again we have 0:18:22.080 --> 0:18:25.640 to safeguard it by building data centers, by turning out engineers, 0:18:25.840 --> 0:18:28.720 by securing our models that we do develop here, and 0:18:28.760 --> 0:18:31.840 making sure that these export controls, you really do take 0:18:31.840 --> 0:18:35.520 effect so that the Chinese can't import the top Nvidia chips. 0:18:35.560 --> 0:18:38.280 They're so essential to making frontier models, so we have 0:18:38.359 --> 0:18:40.960