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

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Speaker 2: Commerce Secretary Howard Lutnik, Mister secretary, we appreciate your time

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Speaker 2: as we consider the deals that have yet to be

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Speaker 2: made with other trading partners. Is the message this one

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Speaker 2: sends to them that sectoral tariffs are up for negotiation,

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Speaker 2: but that ten percent base rate is not right.

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Speaker 1: So reciprocal tariffs, if you think about it, is how

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Speaker 1: open is your economy to our exports, how fair is

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Speaker 1: it to our exports? What kind of trade deficit you do?

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Speaker 1: And that sets that line. So ten percent is the

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Speaker 1: bottom line for that. But as the President said, many

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Speaker 1: of those will be higher. Of course, you can bring

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Speaker 1: them down by opening your government, opening your economy to

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Speaker 1: US exports, and then the sectoral tariffs. That's where you

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Speaker 1: can be super smart if you're opening your market to us,

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Speaker 1: and that's what the UK did.

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Speaker 3: The UK said I'm going.

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Speaker 1: To let you export into the UK five billion dollars

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Speaker 1: more of services. That's great for American exports. We'll pay

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Speaker 1: you six billion dollars in tariffs, but help us out

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Speaker 1: on cars and steal in aluminum.

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Speaker 4: They were never our problem.

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Speaker 1: They nationalized their steel industry. They don't really have much

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Speaker 1: of a steel industry. They agreed to come on and

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Speaker 1: do it with us. So they're going to put the

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Speaker 1: same kind of tariffs, the same kind of quotas, keep

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Speaker 1: out the bad guys, and let's build our steel and

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Speaker 1: aluminum industries inside our walled countries together. And that was

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Speaker 1: These are sort of the key parts of being super smart,

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Speaker 1: being super rigorous, and trying to figure out the right

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Speaker 1: answer how to do trade deals that no one's ever

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Speaker 1: done before.

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Speaker 5: We're talking about the rigor here, But Secretary Lutnik tell

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Speaker 5: us a little bit about what the China angle is

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Speaker 5: with the US UK agreement. We've heard that China should

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Speaker 5: be pressured by some of these countries that the US

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Speaker 5: strikes up agreements with.

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Speaker 1: Yeah, that's not our strategy at all. I want to

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Speaker 1: be clear, that is not our strategy. Our strategy is

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Speaker 1: to do fair and reciprocal trade, to open these markets

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Speaker 1: to trade, and that's what we're going to do now.

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Speaker 1: There are some countries that have huge trade deficits with

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Speaker 1: China and huge trade surpluses with US, like take Vietnam, right,

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Speaker 1: they buy eighty five billion dollars worth of goods on

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Speaker 1: a trade deficit with China, and then they run one

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Speaker 1: hundred and ten or one hundred and five one hundred

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Speaker 1: and ten billion dollar trade surplus with US as they

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Speaker 1: assemble those things and ship it to US. So Vietnam's

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Speaker 1: got issues, to Thailand's got issues. All those countries that

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Speaker 1: are really China's proxies to US are going to have

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Speaker 1: issues because our view is going to be whatever the

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Speaker 1: tariff results on China should be their tariff on their

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Speaker 1: business with them. Now, probably the most interesting country I

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Speaker 1: can tell you that has a huge trade deficit with

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Speaker 1: China and a huge trade surplus with US is the

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Speaker 1: European Union.

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Speaker 3: And no one thinks.

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Speaker 1: About that, but a huge amount of the European Union

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Speaker 1: is really a tariff arbitrage from China through the European

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Speaker 1: Union into the American economy. And that is one of

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Speaker 1: those sort of really really interesting sticking points when we

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Speaker 1: sit down and we talk to the European Union.

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Speaker 5: And what's the goal with the UK when it comes

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Speaker 5: to China. Is there an expectation that then the UK

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Speaker 5: should actually also be pressing China.

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Speaker 3: No, not so much.

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Speaker 4: We're not with the UK again. We had a balanced

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Speaker 4: budget was really about our exports.

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Speaker 1: We are not focused in sort of this, you know,

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Speaker 1: singling out China, you know, any of that stuff.

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Speaker 3: That's just not the president's goal.

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Speaker 1: The president's goal is to drive the American economy. Hopefully

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Speaker 1: the meetings this weekend will de escalate things and put

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Speaker 1: things back on the right track with China and the

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Speaker 1: US on trade. But our objective with all these countries

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Speaker 1: is whatever rate we set for China should be for

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Speaker 1: the countries that trade with China and send it into US, that.

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Speaker 4: Should be about the same for those two. That makes

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Speaker 4: some sense.

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Speaker 1: And otherwise, let's grow our exports, and let's grow our

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Speaker 1: tariff revenues. Let's grow our exports, and let's take this

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Speaker 1: trade deficit down. Remember, if you have a one point

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Speaker 1: two trillion dollar trade deficit and you cut it to

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Speaker 1: nine hundred billion, you only cut of twenty five percent.

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Speaker 4: You grow our GDP one percent.

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Speaker 1: Imagine the guy sitting in the building behind me grows

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Speaker 1: our economy one percent. And then you bring in all

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Speaker 1: these building, right, the trillions and trillions of investment, that's

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Speaker 1: probably gonna bring.

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Speaker 4: Two points of GDP.

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Speaker 1: No one ever thinks about the fact that the US doesn't.

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Speaker 1: Our economy grows similar to everybody else. And you know why,

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Speaker 1: because we export four points a year of GDP growth

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Speaker 1: to the rest of the world. When Donald Trump brings

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Speaker 1: that home, you're going to see our economy grow like fire.

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Speaker 1: And that's what he's talking about, and that's what he

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Speaker 1: talked about today, Secretary.

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Speaker 2: And your last answer, you referred to a few other

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Speaker 2: trading partners, the European Union, Vietnam you also called out.

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Speaker 2: Is that where we should look to see the next

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Speaker 2: deal a merger We likely to see other partners like

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Speaker 2: Japan and India.

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Speaker 1: First, Well, I think we would like to do one

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Speaker 1: in Asia so we can show that kind of arrangement.

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Speaker 1: We want to do one in Latin America. We're trying

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Speaker 1: to show people a framework of how to do business

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Speaker 1: so that we can roll much more quickly. Right, So,

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Speaker 1: once you do one trade in Latin America, you do

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Speaker 1: one in the Caribbean, you can then say, look, here's

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Speaker 1: a template. Why don't you all think about it and

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Speaker 1: see does that work for you? And if you want

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Speaker 1: to modify and modify it. But then what will happen

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Speaker 1: is we'll do one, and then we'll do ten, and

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Speaker 1: then we'll do one and then we'll do fifteen, right,

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Speaker 1: and we want to do big But obviously, when you

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Speaker 1: talk about Japan, I mean, come on, you've got to

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Speaker 1: spend an enormous amount of time with Japan Korea.

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Speaker 3: These are not going to be fast deals. Now.

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Speaker 1: India has been leaning in really hard, right, you know,

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Speaker 1: I love doing a deal with India.

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Speaker 4: That's certainly a possibility. But this is a lot of work.

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Speaker 1: These are a lot of lines where remember this was

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Speaker 1: not sort of a just a gloss over handshake trade deal.

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Speaker 1: This was two thousand, six hundred lines of tariffs changing,

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Speaker 1: modifying and coming down.

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Speaker 4: And you know when you talk about India, it's probably

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Speaker 4: seven thousand lines. It just takes time and it just

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Speaker 4: takes work.

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Speaker 3: So give us a chance.

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Speaker 1: Don't be pushing rushing, But let me tell you, each

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Speaker 1: one of these trade deals is going to feel the same.

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Speaker 3: You're going to feel huge.

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Speaker 1: Export opportunity coming from America, huge tariff revenue coming in right,

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Speaker 1: and a dramatic improvement of the United States economy as

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Speaker 1: we reshore the industrial base of America.

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Speaker 5: Mister Secretary, should we see the deal between the US

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Speaker 5: and UK as basically a roadmap or a blueprint of

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Speaker 5: how future trade deals in the next two months will

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Speaker 5: look exactly right.

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Speaker 1: So people understand, Okay, there's the baseline.

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Speaker 3: If you want your tarer or your.

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Speaker 4: Reciprocal tariff rate low, you've got to attack.

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Speaker 3: The trade deficit.

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Speaker 1: You've got to open your market, you've got to let

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Speaker 1: us export, you gotta have those things be together. And

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Speaker 1: then if you want to talk and really be smart

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Speaker 1: and really be thoughtful, then let's talk sectoral tariff. So

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Speaker 1: open your market big, and then if you want to

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Speaker 1: talk to us, we'll try to come up with the

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Speaker 1: smartest answer like we did with the UK. Right, they

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Speaker 1: want to sell Rolls Royce engines to Boeing. Right, so

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Speaker 1: we made a deal and said, you know what, you

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Speaker 1: can sell your parts to Boeing. Tarafree Airbus makes planes

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Speaker 1: in America. Can sell those parts to Tarafree. And then

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Speaker 1: what happens with it. They buy ten billion dollars with

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Speaker 1: the Boeing planes today as part of the deal. So

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Speaker 1: this is the kind when you have the right partner,

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Speaker 1: you can come up with really really smart, thoughtful and

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Speaker 1: rigorous trade deal like we've.

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Speaker 3: Done with the UK.

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Speaker 2: Well, and as you've alluded to, mister Secretary, you believe

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Speaker 2: this will result in higher revenue for the United States.

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Speaker 2: If we're going to get all this revenue from tariffs,

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Speaker 2: why would the president be pushing for higher taxes on anybody?

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Speaker 2: Because our understanding is for the wealthy. He's looking at

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Speaker 2: a new rate of thirty nine six percent, and I

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Speaker 2: thought the Republican Party didn't stand for that kind of thing.

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Speaker 1: Well, you realize that the tariff revenues doesn't count toward

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Speaker 1: the reconciliation numbers.

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Speaker 3: Don't ask why.

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Speaker 1: I can't understand why we're running it like twenty twenty

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Speaker 1: five billion a month and they're not counting it. But

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Speaker 1: we'll leave that aside for another day. This is this

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Speaker 1: is Washington. They have their own accounting practices. So the

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Speaker 1: president's trying to make sure he gets no tax on tips,

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Speaker 1: no tax on overtime overtime, and no tax on Social Security.

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Speaker 1: And if he says, look the richest Americans, remember he

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Speaker 1: cut it from thirty nine point six to thirty seven.

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Speaker 1: So if he just goes back to what he did

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Speaker 1: last time, you know, I'm in favor of that. I

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Speaker 1: think it's smart as long as it's a redistribution to

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Speaker 1: his priorities of no tax on tips, no tax on

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Speaker 1: overtime and no tax on Social Security.

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Speaker 3: I think it's smart.

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Speaker 1: But what you'll see next year is you'll see the

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Speaker 1: revenues from tariffs are so great and our deficit is lower.

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Speaker 3: Then you've got the gold you know.

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Speaker 1: The Trump Card coming out, and that's going to raise

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Speaker 1: you know, raise revenues and drive that lower, and you're

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Speaker 1: going to see interest rates lower. You're going to see

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Speaker 1: the deficit lower, and next year is going to be

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Speaker 1: one happy year.

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Speaker 5: Commerce Secretary Howard Lutnick, thank you so much for joining