WEBVTT - US Commerce Secretary Howard Lutnick Talks Tariffs, Trade Deals

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Commerce Secretary Howard Lutnik, Mister secretary, we appreciate your time

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<v Speaker 2>as we consider the deals that have yet to be

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<v Speaker 2>made with other trading partners. Is the message this one

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<v Speaker 2>sends to them that sectoral tariffs are up for negotiation,

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<v Speaker 2>but that ten percent base rate is not right.

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<v Speaker 1>So reciprocal tariffs, if you think about it, is how

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<v Speaker 1>open is your economy to our exports, how fair is

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<v Speaker 1>it to our exports? What kind of trade deficit you do?

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<v Speaker 1>And that sets that line. So ten percent is the

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<v Speaker 1>bottom line for that. But as the President said, many

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<v Speaker 1>of those will be higher. Of course, you can bring

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<v Speaker 1>them down by opening your government, opening your economy to

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

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

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<v Speaker 1>and that's what the UK did.

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<v Speaker 3>The UK said I'm going.

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<v Speaker 1>To let you export into the UK five billion dollars

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

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<v Speaker 1>you six billion dollars in tariffs, but help us out

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<v Speaker 1>on cars and steal in aluminum.

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<v Speaker 4>They were never our problem.

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<v Speaker 1>They nationalized their steel industry. They don't really have much

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<v Speaker 1>of a steel industry. They agreed to come on and

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<v Speaker 1>do it with us. So they're going to put the

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<v Speaker 1>same kind of tariffs, the same kind of quotas, keep

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<v Speaker 1>out the bad guys, and let's build our steel and

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<v Speaker 1>aluminum industries inside our walled countries together. And that was

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<v Speaker 1>These are sort of the key parts of being super smart,

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<v Speaker 1>being super rigorous, and trying to figure out the right

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<v Speaker 1>answer how to do trade deals that no one's ever

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<v Speaker 1>done before.

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<v Speaker 5>We're talking about the rigor here, But Secretary Lutnik tell

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<v Speaker 5>us a little bit about what the China angle is

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<v Speaker 5>with the US UK agreement. We've heard that China should

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<v Speaker 5>be pressured by some of these countries that the US

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<v Speaker 5>strikes up agreements with.

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

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<v Speaker 1>be clear, that is not our strategy. Our strategy is

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<v Speaker 1>to do fair and reciprocal trade, to open these markets

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

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<v Speaker 1>There are some countries that have huge trade deficits with

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<v Speaker 1>China and huge trade surpluses with US, like take Vietnam, right,

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<v Speaker 1>they buy eighty five billion dollars worth of goods on

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<v Speaker 1>a trade deficit with China, and then they run one

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<v Speaker 1>hundred and ten or one hundred and five one hundred

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<v Speaker 1>and ten billion dollar trade surplus with US as they

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<v Speaker 1>assemble those things and ship it to US. So Vietnam's

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<v Speaker 1>got issues, to Thailand's got issues. All those countries that

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<v Speaker 1>are really China's proxies to US are going to have

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<v Speaker 1>issues because our view is going to be whatever the

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<v Speaker 1>tariff results on China should be their tariff on their

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<v Speaker 1>business with them. Now, probably the most interesting country I

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<v Speaker 1>can tell you that has a huge trade deficit with

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<v Speaker 1>China and a huge trade surplus with US is the

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<v Speaker 1>European Union.

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<v Speaker 3>And no one thinks.

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<v Speaker 1>About that, but a huge amount of the European Union

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<v Speaker 1>is really a tariff arbitrage from China through the European

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<v Speaker 1>Union into the American economy. And that is one of

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<v Speaker 1>those sort of really really interesting sticking points when we

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<v Speaker 1>sit down and we talk to the European Union.

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<v Speaker 5>And what's the goal with the UK when it comes

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<v Speaker 5>to China. Is there an expectation that then the UK

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<v Speaker 5>should actually also be pressing China.

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<v Speaker 3>No, not so much.

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<v Speaker 4>We're not with the UK again. We had a balanced

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<v Speaker 4>budget was really about our exports.

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<v Speaker 1>We are not focused in sort of this, you know,

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<v Speaker 1>singling out China, you know, any of that stuff.

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<v Speaker 3>That's just not the president's goal.

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<v Speaker 1>The president's goal is to drive the American economy. Hopefully

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<v Speaker 1>the meetings this weekend will de escalate things and put

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<v Speaker 1>things back on the right track with China and the

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<v Speaker 1>US on trade. But our objective with all these countries

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<v Speaker 1>is whatever rate we set for China should be for

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<v Speaker 1>the countries that trade with China and send it into US, that.

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<v Speaker 4>Should be about the same for those two. That makes

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<v Speaker 4>some sense.

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<v Speaker 1>And otherwise, let's grow our exports, and let's grow our

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

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<v Speaker 1>trade deficit down. Remember, if you have a one point

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<v Speaker 1>two trillion dollar trade deficit and you cut it to

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<v Speaker 1>nine hundred billion, you only cut of twenty five percent.

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<v Speaker 4>You grow our GDP one percent.

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<v Speaker 1>Imagine the guy sitting in the building behind me grows

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<v Speaker 1>our economy one percent. And then you bring in all

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<v Speaker 1>these building, right, the trillions and trillions of investment, that's

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<v Speaker 1>probably gonna bring.

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<v Speaker 4>Two points of GDP.

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<v Speaker 1>No one ever thinks about the fact that the US doesn't.

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<v Speaker 1>Our economy grows similar to everybody else. And you know why,

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<v Speaker 1>because we export four points a year of GDP growth

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<v Speaker 1>to the rest of the world. When Donald Trump brings

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

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<v Speaker 1>And that's what he's talking about, and that's what he

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<v Speaker 1>talked about today, Secretary.

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<v Speaker 2>And your last answer, you referred to a few other

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<v Speaker 2>trading partners, the European Union, Vietnam you also called out.

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<v Speaker 2>Is that where we should look to see the next

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<v Speaker 2>deal a merger We likely to see other partners like

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<v Speaker 2>Japan and India.

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<v Speaker 1>First, Well, I think we would like to do one

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<v Speaker 1>in Asia so we can show that kind of arrangement.

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<v Speaker 1>We want to do one in Latin America. We're trying

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<v Speaker 1>to show people a framework of how to do business

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<v Speaker 1>so that we can roll much more quickly. Right, So,

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<v Speaker 1>once you do one trade in Latin America, you do

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<v Speaker 1>one in the Caribbean, you can then say, look, here's

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<v Speaker 1>a template. Why don't you all think about it and

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<v Speaker 1>see does that work for you? And if you want

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<v Speaker 1>to modify and modify it. But then what will happen

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<v Speaker 1>is we'll do one, and then we'll do ten, and

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<v Speaker 1>then we'll do one and then we'll do fifteen, right,

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<v Speaker 1>and we want to do big But obviously, when you

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<v Speaker 1>talk about Japan, I mean, come on, you've got to

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<v Speaker 1>spend an enormous amount of time with Japan Korea.

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<v Speaker 3>These are not going to be fast deals. Now.

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<v Speaker 1>India has been leaning in really hard, right, you know,

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<v Speaker 1>I love doing a deal with India.

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<v Speaker 4>That's certainly a possibility. But this is a lot of work.

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<v Speaker 1>These are a lot of lines where remember this was

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<v Speaker 1>not sort of a just a gloss over handshake trade deal.

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<v Speaker 1>This was two thousand, six hundred lines of tariffs changing,

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<v Speaker 1>modifying and coming down.

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<v Speaker 4>And you know when you talk about India, it's probably

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<v Speaker 4>seven thousand lines. It just takes time and it just

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<v Speaker 4>takes work.

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<v Speaker 3>So give us a chance.

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<v Speaker 1>Don't be pushing rushing, But let me tell you, each

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<v Speaker 1>one of these trade deals is going to feel the same.

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<v Speaker 3>You're going to feel huge.

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<v Speaker 1>Export opportunity coming from America, huge tariff revenue coming in right,

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<v Speaker 1>and a dramatic improvement of the United States economy as

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<v Speaker 1>we reshore the industrial base of America.

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<v Speaker 5>Mister Secretary, should we see the deal between the US

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<v Speaker 5>and UK as basically a roadmap or a blueprint of

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<v Speaker 5>how future trade deals in the next two months will

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<v Speaker 5>look exactly right.

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<v Speaker 1>So people understand, Okay, there's the baseline.

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<v Speaker 3>If you want your tarer or your.

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<v Speaker 4>Reciprocal tariff rate low, you've got to attack.

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<v Speaker 3>The trade deficit.

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<v Speaker 1>You've got to open your market, you've got to let

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<v Speaker 1>us export, you gotta have those things be together. And

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<v Speaker 1>then if you want to talk and really be smart

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

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<v Speaker 1>open your market big, and then if you want to

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<v Speaker 1>talk to us, we'll try to come up with the

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<v Speaker 1>smartest answer like we did with the UK. Right, they

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<v Speaker 1>want to sell Rolls Royce engines to Boeing. Right, so

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<v Speaker 1>we made a deal and said, you know what, you

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<v Speaker 1>can sell your parts to Boeing. Tarafree Airbus makes planes

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<v Speaker 1>in America. Can sell those parts to Tarafree. And then

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<v Speaker 1>what happens with it. They buy ten billion dollars with

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<v Speaker 1>the Boeing planes today as part of the deal. So

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<v Speaker 1>this is the kind when you have the right partner,

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<v Speaker 1>you can come up with really really smart, thoughtful and

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<v Speaker 1>rigorous trade deal like we've.

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<v Speaker 3>Done with the UK.

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<v Speaker 2>Well, and as you've alluded to, mister Secretary, you believe

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<v Speaker 2>this will result in higher revenue for the United States.

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<v Speaker 2>If we're going to get all this revenue from tariffs,

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<v Speaker 2>why would the president be pushing for higher taxes on anybody?

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<v Speaker 2>Because our understanding is for the wealthy. He's looking at

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<v Speaker 2>a new rate of thirty nine six percent, and I

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

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<v Speaker 1>Well, you realize that the tariff revenues doesn't count toward

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<v Speaker 1>the reconciliation numbers.

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<v Speaker 3>Don't ask why.

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<v Speaker 1>I can't understand why we're running it like twenty twenty

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<v Speaker 1>five billion a month and they're not counting it. But

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<v Speaker 1>we'll leave that aside for another day. This is this

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<v Speaker 1>is Washington. They have their own accounting practices. So the

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

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<v Speaker 1>no tax on overtime overtime, and no tax on Social Security.

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<v Speaker 1>And if he says, look the richest Americans, remember he

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<v Speaker 1>cut it from thirty nine point six to thirty seven.

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<v Speaker 1>So if he just goes back to what he did

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<v Speaker 1>last time, you know, I'm in favor of that. I

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<v Speaker 1>think it's smart as long as it's a redistribution to

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<v Speaker 1>his priorities of no tax on tips, no tax on

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<v Speaker 1>overtime and no tax on Social Security.

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<v Speaker 3>I think it's smart.

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<v Speaker 1>But what you'll see next year is you'll see the

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<v Speaker 1>revenues from tariffs are so great and our deficit is lower.

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<v Speaker 3>Then you've got the gold you know.

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<v Speaker 1>The Trump Card coming out, and that's going to raise

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<v Speaker 1>you know, raise revenues and drive that lower, and you're

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<v Speaker 1>going to see interest rates lower. You're going to see

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<v Speaker 1>the deficit lower, and next year is going to be

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<v Speaker 1>one happy year.

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<v Speaker 5>Commerce Secretary Howard Lutnick, thank you so much for joining