Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Commerce Secretary Howard Lutnik, Mister secretary, we appreciate your time
Speaker 2: as we consider the deals that have yet to be
Speaker 2: made with other trading partners. Is the message this one
Speaker 2: sends to them that sectoral tariffs are up for negotiation,
Speaker 2: but that ten percent base rate is not right.
Speaker 1: So reciprocal tariffs, if you think about it, is how
Speaker 1: open is your economy to our exports, how fair is
Speaker 1: it to our exports? What kind of trade deficit you do?
Speaker 1: And that sets that line. So ten percent is the
Speaker 1: bottom line for that. But as the President said, many
Speaker 1: of those will be higher. Of course, you can bring
Speaker 1: them down by opening your government, opening your economy to
Speaker 1: US exports, and then the sectoral tariffs. That's where you
Speaker 1: can be super smart if you're opening your market to us,
Speaker 1: and that's what the UK did.
Speaker 3: The UK said I'm going.
Speaker 1: To let you export into the UK five billion dollars
Speaker 1: more of services. That's great for American exports. We'll pay
Speaker 1: you six billion dollars in tariffs, but help us out
Speaker 1: on cars and steal in aluminum.
Speaker 4: They were never our problem.
Speaker 1: They nationalized their steel industry. They don't really have much
Speaker 1: of a steel industry. They agreed to come on and
Speaker 1: do it with us. So they're going to put the
Speaker 1: same kind of tariffs, the same kind of quotas, keep
Speaker 1: out the bad guys, and let's build our steel and
Speaker 1: aluminum industries inside our walled countries together. And that was
Speaker 1: These are sort of the key parts of being super smart,
Speaker 1: being super rigorous, and trying to figure out the right
Speaker 1: answer how to do trade deals that no one's ever
Speaker 1: done before.
Speaker 5: We're talking about the rigor here, But Secretary Lutnik tell
Speaker 5: us a little bit about what the China angle is
Speaker 5: with the US UK agreement. We've heard that China should
Speaker 5: be pressured by some of these countries that the US
Speaker 5: strikes up agreements with.
Speaker 1: Yeah, that's not our strategy at all. I want to
Speaker 1: be clear, that is not our strategy. Our strategy is
Speaker 1: to do fair and reciprocal trade, to open these markets
Speaker 1: to trade, and that's what we're going to do now.
Speaker 1: There are some countries that have huge trade deficits with
Speaker 1: China and huge trade surpluses with US, like take Vietnam, right,
Speaker 1: they buy eighty five billion dollars worth of goods on
Speaker 1: a trade deficit with China, and then they run one
Speaker 1: hundred and ten or one hundred and five one hundred
Speaker 1: and ten billion dollar trade surplus with US as they
Speaker 1: assemble those things and ship it to US. So Vietnam's
Speaker 1: got issues, to Thailand's got issues. All those countries that
Speaker 1: are really China's proxies to US are going to have
Speaker 1: issues because our view is going to be whatever the
Speaker 1: tariff results on China should be their tariff on their
Speaker 1: business with them. Now, probably the most interesting country I
Speaker 1: can tell you that has a huge trade deficit with
Speaker 1: China and a huge trade surplus with US is the
Speaker 1: European Union.
Speaker 3: And no one thinks.
Speaker 1: About that, but a huge amount of the European Union
Speaker 1: is really a tariff arbitrage from China through the European
Speaker 1: Union into the American economy. And that is one of
Speaker 1: those sort of really really interesting sticking points when we
Speaker 1: sit down and we talk to the European Union.
Speaker 5: And what's the goal with the UK when it comes
Speaker 5: to China. Is there an expectation that then the UK
Speaker 5: should actually also be pressing China.
Speaker 3: No, not so much.
Speaker 4: We're not with the UK again. We had a balanced
Speaker 4: budget was really about our exports.
Speaker 1: We are not focused in sort of this, you know,
Speaker 1: singling out China, you know, any of that stuff.
Speaker 3: That's just not the president's goal.
Speaker 1: The president's goal is to drive the American economy. Hopefully
Speaker 1: the meetings this weekend will de escalate things and put
Speaker 1: things back on the right track with China and the
Speaker 1: US on trade. But our objective with all these countries
Speaker 1: is whatever rate we set for China should be for
Speaker 1: the countries that trade with China and send it into US, that.
Speaker 4: Should be about the same for those two. That makes
Speaker 4: some sense.
Speaker 1: And otherwise, let's grow our exports, and let's grow our
Speaker 1: tariff revenues. Let's grow our exports, and let's take this
Speaker 1: trade deficit down. Remember, if you have a one point
Speaker 1: two trillion dollar trade deficit and you cut it to
Speaker 1: nine hundred billion, you only cut of twenty five percent.
Speaker 4: You grow our GDP one percent.
Speaker 1: Imagine the guy sitting in the building behind me grows
Speaker 1: our economy one percent. And then you bring in all
Speaker 1: these building, right, the trillions and trillions of investment, that's
Speaker 1: probably gonna bring.
Speaker 4: Two points of GDP.
Speaker 1: No one ever thinks about the fact that the US doesn't.
Speaker 1: Our economy grows similar to everybody else. And you know why,
Speaker 1: because we export four points a year of GDP growth
Speaker 1: to the rest of the world. When Donald Trump brings
Speaker 1: that home, you're going to see our economy grow like fire.
Speaker 1: And that's what he's talking about, and that's what he
Speaker 1: talked about today, Secretary.
Speaker 2: And your last answer, you referred to a few other
Speaker 2: trading partners, the European Union, Vietnam you also called out.
Speaker 2: Is that where we should look to see the next
Speaker 2: deal a merger We likely to see other partners like
Speaker 2: Japan and India.
Speaker 1: First, Well, I think we would like to do one
Speaker 1: in Asia so we can show that kind of arrangement.
Speaker 1: We want to do one in Latin America. We're trying
Speaker 1: to show people a framework of how to do business
Speaker 1: so that we can roll much more quickly. Right, So,
Speaker 1: once you do one trade in Latin America, you do
Speaker 1: one in the Caribbean, you can then say, look, here's
Speaker 1: a template. Why don't you all think about it and
Speaker 1: see does that work for you? And if you want
Speaker 1: to modify and modify it. But then what will happen
Speaker 1: is we'll do one, and then we'll do ten, and
Speaker 1: then we'll do one and then we'll do fifteen, right,
Speaker 1: and we want to do big But obviously, when you
Speaker 1: talk about Japan, I mean, come on, you've got to
Speaker 1: spend an enormous amount of time with Japan Korea.
Speaker 3: These are not going to be fast deals. Now.
Speaker 1: India has been leaning in really hard, right, you know,
Speaker 1: I love doing a deal with India.
Speaker 4: That's certainly a possibility. But this is a lot of work.
Speaker 1: These are a lot of lines where remember this was
Speaker 1: not sort of a just a gloss over handshake trade deal.
Speaker 1: This was two thousand, six hundred lines of tariffs changing,
Speaker 1: modifying and coming down.
Speaker 4: And you know when you talk about India, it's probably
Speaker 4: seven thousand lines. It just takes time and it just
Speaker 4: takes work.
Speaker 3: So give us a chance.
Speaker 1: Don't be pushing rushing, But let me tell you, each
Speaker 1: one of these trade deals is going to feel the same.
Speaker 3: You're going to feel huge.
Speaker 1: Export opportunity coming from America, huge tariff revenue coming in right,
Speaker 1: and a dramatic improvement of the United States economy as
Speaker 1: we reshore the industrial base of America.
Speaker 5: Mister Secretary, should we see the deal between the US
Speaker 5: and UK as basically a roadmap or a blueprint of
Speaker 5: how future trade deals in the next two months will
Speaker 5: look exactly right.
Speaker 1: So people understand, Okay, there's the baseline.
Speaker 3: If you want your tarer or your.
Speaker 4: Reciprocal tariff rate low, you've got to attack.
Speaker 3: The trade deficit.
Speaker 1: You've got to open your market, you've got to let
Speaker 1: us export, you gotta have those things be together. And
Speaker 1: then if you want to talk and really be smart
Speaker 1: and really be thoughtful, then let's talk sectoral tariff. So
Speaker 1: open your market big, and then if you want to
Speaker 1: talk to us, we'll try to come up with the
Speaker 1: smartest answer like we did with the UK. Right, they
Speaker 1: want to sell Rolls Royce engines to Boeing. Right, so
Speaker 1: we made a deal and said, you know what, you
Speaker 1: can sell your parts to Boeing. Tarafree Airbus makes planes
Speaker 1: in America. Can sell those parts to Tarafree. And then
Speaker 1: what happens with it. They buy ten billion dollars with
Speaker 1: the Boeing planes today as part of the deal. So
Speaker 1: this is the kind when you have the right partner,
Speaker 1: you can come up with really really smart, thoughtful and
Speaker 1: rigorous trade deal like we've.
Speaker 3: Done with the UK.
Speaker 2: Well, and as you've alluded to, mister Secretary, you believe
Speaker 2: this will result in higher revenue for the United States.
Speaker 2: If we're going to get all this revenue from tariffs,
Speaker 2: why would the president be pushing for higher taxes on anybody?
Speaker 2: Because our understanding is for the wealthy. He's looking at
Speaker 2: a new rate of thirty nine six percent, and I
Speaker 2: thought the Republican Party didn't stand for that kind of thing.
Speaker 1: Well, you realize that the tariff revenues doesn't count toward
Speaker 1: the reconciliation numbers.
Speaker 3: Don't ask why.
Speaker 1: I can't understand why we're running it like twenty twenty
Speaker 1: five billion a month and they're not counting it. But
Speaker 1: we'll leave that aside for another day. This is this
Speaker 1: is Washington. They have their own accounting practices. So the
Speaker 1: president's trying to make sure he gets no tax on tips,
Speaker 1: no tax on overtime overtime, and no tax on Social Security.
Speaker 1: And if he says, look the richest Americans, remember he
Speaker 1: cut it from thirty nine point six to thirty seven.
Speaker 1: So if he just goes back to what he did
Speaker 1: last time, you know, I'm in favor of that. I
Speaker 1: think it's smart as long as it's a redistribution to
Speaker 1: his priorities of no tax on tips, no tax on
Speaker 1: overtime and no tax on Social Security.
Speaker 3: I think it's smart.
Speaker 1: But what you'll see next year is you'll see the
Speaker 1: revenues from tariffs are so great and our deficit is lower.
Speaker 3: Then you've got the gold you know.
Speaker 1: The Trump Card coming out, and that's going to raise
Speaker 1: you know, raise revenues and drive that lower, and you're
Speaker 1: going to see interest rates lower. You're going to see
Speaker 1: the deficit lower, and next year is going to be
Speaker 1: one happy year.
Speaker 5: Commerce Secretary Howard Lutnick, thank you so much for joining