Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
Speaker 2: from our global headquarters in New York City. We are
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Speaker 2: Terminal and the Bloomberg Business app Begin this hour. We're
Speaker 2: still struggling to build on yesterday's gains as growth worries
Speaker 2: Linker on Wall Street John Stolfus of Oppenheimer, staining Bullet's writing,
Speaker 2: we remain positive on equities. The broad rotation, which began
Speaker 2: in the rally from the S and P five hundred
Speaker 2: low on October twenty seven, twenty twenty three, has repeatedly
Speaker 2: deflected volatility. John joins us now for more. John and Mornick,
Speaker 2: good morning, Good to see. You've said, is the policy changes?
Speaker 2: Do the policy changes? Does the policy and sentency change
Speaker 2: your view?
Speaker 3: It so? No, it doesn't.
Speaker 4: In fact, we would say, if anything, the policy uncertainty
Speaker 4: takes us to say, well, this is just about what
Speaker 4: you would expect. This is something you know, it's it's
Speaker 4: Monty Python used to say. And now for something completely different.
Speaker 4: If you consider the difference between the prior administration and
Speaker 4: this administration, we can't help but think, you know, it's
Speaker 4: very natural tariff The prospect of tariff wars that could
Speaker 4: last is very concerning. Okay, to business, to the consumer,
Speaker 4: and to governments alike on all borders. But we can't
Speaker 4: help but think that this is a process. This is
Speaker 4: the first president. And by the way, I'm not an
Speaker 4: apologist for the for the Trump administration, nor was I
Speaker 4: for the Biden administration. This is politically agnostic. It's a
Speaker 4: business person talking when we look at it. There, for
Speaker 4: eighty years now, the US has in effact had a
Speaker 4: very lacks policy towards dealing with tariffs against our products
Speaker 4: for decades. We have now exported our production and the
Speaker 4: result of that is the rest of the world are
Speaker 4: the producers and we're the consumers. And without us, those
Speaker 4: other countries would suffer significantly.
Speaker 3: They have over capacity.
Speaker 4: In Asia, in Europe, they have over capacity in Latin America.
Speaker 4: This is for years we have been building up the
Speaker 4: world has been building up capacity to export to the US.
Speaker 2: We can pounk the politics. I think you just have
Speaker 2: to focus on the policy and the objectives. And the
Speaker 2: objective is pretty click even everything you've said, rebalance the
Speaker 2: US economy, rebalance the global economy for that matter, and
Speaker 2: accept in their own words, some disruption a detox. What
Speaker 2: does that mean for markets?
Speaker 4: Well, I think what it means is we have right
Speaker 4: now we're going to be affected very much by an
Speaker 4: increase in volatility.
Speaker 3: That's quite natural.
Speaker 4: We think the way that work to weather it is
Speaker 4: with prudent diversification that meets the needs objectives and the
Speaker 4: tolerance to volatility for an investor or an institututions mandate.
Speaker 4: But it's it's not something that is indigestible. If anything,
Speaker 4: it's something that has to be digested at this point
Speaker 4: because we it's the first time we've ever seen an
Speaker 4: administration not kick the can down the road in terms
Speaker 4: of the cost of government versus services, actually rendered the
Speaker 4: tariff regimes in the in the around the world and
Speaker 4: could actually once people can meet at the table and
Speaker 4: cooler heads prevail. I think work out pretty well. The
Speaker 4: initial part, there's a lot of political jostling and everybody
Speaker 4: is working to get their constituency to say stand up
Speaker 4: for us and whichever side it is. But once you
Speaker 4: get over that that that human uh uh a lack
Speaker 4: of ability to get to the down to brass tacks quickly.
Speaker 4: Once you get to it, I think we get to
Speaker 4: a much better situation and a reglobalization which would should
Speaker 4: be good for both developed and emerging markets.
Speaker 1: To be clear, I think a lot of people would
Speaker 1: agree with you, and a lot of people in the
Speaker 1: business community would agree with you as well, particularly in
Speaker 1: the United States, who have alluded to exactly what you're
Speaker 1: talking about. The issue is the near term volatility of
Speaker 1: headlines and the path to get there some of the
Speaker 1: negotiation tactics that are making people concerned about how long
Speaker 1: it might take to actually get to that place. You
Speaker 1: say that you need to write size expectations for how
Speaker 1: certain assets will respond to volatility. Does that basically mean
Speaker 1: that you think that they should lower their expectations for
Speaker 1: a whole host of different assets.
Speaker 4: We would say it being realistic, it's like near term
Speaker 4: lower expectations and understand, for example, the sell off that
Speaker 4: we'd seen in the financial stocks for example, let alone
Speaker 4: what we saw in technology, Well, they had a phenomenal
Speaker 4: run last year. So a good place for a haircut
Speaker 4: or a trim, or even a correction would be amongst
Speaker 4: those two sectors and others. So just live with it
Speaker 4: rather than dump and run, you stay with it.
Speaker 3: You're diversified. You know what you own, know why you own.
Speaker 4: It, and have right sized expectations, and like us, you
Speaker 4: might be pleasantly surprised over the course of a forty
Speaker 4: year career.
Speaker 3: Well, when you.
Speaker 1: Talk about diversification, it's taken on a different meaning over time.
Speaker 1: There was a question around bonds diversified. There was a
Speaker 1: question around whether gold was the ultimate diversifier. There was
Speaker 1: a question with geographies versus sectors. How is your understanding
Speaker 1: of what it means to be diversified changed in an
Speaker 1: era where there are some pretty seismic changes going on.
Speaker 2: From the policy perspective.
Speaker 4: I would say diversification today the approach should be very
Speaker 4: much like one that is parallel to the one in
Speaker 4: fixed income, which is considered duration. Here it would be
Speaker 4: the duration of the need. In other words, are you longed,
Speaker 4: are your objectives long?
Speaker 3: Term for retirement.
Speaker 4: Are you a retiree who is a relatively young.
Speaker 3: Retiree, how long.
Speaker 4: Are you going to need to be exposed to equities
Speaker 4: to have, based on history, have a greater ability to
Speaker 4: keep your standard of living. And so we are really
Speaker 4: at a point now where you know, the old days
Speaker 4: when the private investor would would appear, they were usually
Speaker 4: the retail investor. It was cocktail party stocks that they
Speaker 4: would talk. Now Diday people invest for need because they
Speaker 4: recognize the fact that things like Social Security will likely
Speaker 4: not be anywhere near the benefit percentage wise.
Speaker 3: What it once was for their parents or their grandparents.
Speaker 3: When we have this.
Speaker 5: Policy uncertainty though, when we see that bleed into the markets,
Speaker 5: we see pullbacks. Are you advocating people buy more?
Speaker 4: Yeah, we actually are advocating dollar cost averaging. We don't
Speaker 4: say buy the dips, but we say buy the babies
Speaker 4: that get tossed out with the bathwater. The type of
Speaker 4: volatility that we are seeing now, we have seen parallels
Speaker 4: to it in the Great Financial Crisis in COVID. Remember
Speaker 4: when COVID struck. I'll never forget an April of what
Speaker 4: was it, April of twenty twenty, wasn't it. April twenty twenty,
Speaker 4: you had some of the smartest people in the world
Speaker 4: on shows saying it could be decades before they find
Speaker 4: a cure for this deadly virus. To me, you know,
Speaker 4: and that we had At that time, Trump was in
Speaker 4: the White House and he said something to the effect of, well,
Speaker 4: we could have you know, in.
Speaker 3: His own inlimit all voice. I'm not going to get.
Speaker 4: To him a date the present, but he said we
Speaker 4: could get it. We could get drugs in a warp
Speaker 4: tie in warp speed, and we did a short period,
Speaker 4: relatively speaking, we had it.
Speaker 3: We don't wear a mask today.
Speaker 2: We had a lot of fair though cross sass there
Speaker 2: and you saw that in credit to yes, you could
Speaker 2: make the argument this morning. You don't see that in
Speaker 2: credit at the moment. I think it was Jonathan Crinsky yesterday.
Speaker 2: I have btig who said that market bottoms need doubt.
Speaker 2: Do you think there is sufficient doubt that you can
Speaker 2: buy this morning?
Speaker 4: You know, I wouldn't back up the truck, but I
Speaker 4: don't have any problem with layering in at this point.
Speaker 2: And where would you layer in because there are a
Speaker 2: lot of babies to use your words that have been
Speaker 2: tossed out Tesla Panetin in the video. The list goes
Speaker 2: on and on. Even Apple was struggling yesterday. Where are
Speaker 2: those babies?
Speaker 4: Well, okay, as you know, because I managed ruddy it
Speaker 4: up and hurry, they don't.
Speaker 3: I mean, just describe it.
Speaker 4: I give you please me technol information technology, Communications services,
Speaker 4: which has which has the search engines, the streamers, and
Speaker 4: the social media. I would also be looking at a
Speaker 4: consumer discretionary. The American shopper persists at shopping, even though
Speaker 4: now a discount private label perhaps, but still shopping. Businesses
Speaker 4: are still doing what they're doing. And so we would
Speaker 4: look at financials and the industrials. You know, the industrials
Speaker 4: are so well positioned to take us into the next
Speaker 4: chapter of AI. Industrial equipment that needs to be advanced
Speaker 4: to create all kinds of developments in terms of whether
Speaker 4: it's the electric grid, whether it's medicine, whether it's just
Speaker 4: in finance, what it can do to help us get
Speaker 4: through all the data that gets What.
Speaker 2: About the travel names, John, given the downgrades we've seen
Speaker 2: from the airlines early this suite, what about the travel names?
Speaker 4: You know, I would have to say that's not surprising.
Speaker 4: Airlines have been remarkably strong for a fairly long.
Speaker 3: Period of time.
Speaker 4: Uh. You know, we've never been big fans of airlines,
Speaker 4: whether we're at the airport or whether we're considering what
Speaker 4: to buy, only because of the nature of that business
Speaker 4: and the ability of the traveler to suddenly stop traveling
Speaker 4: abruptly or keep traveling much longer, the ability to charge
Speaker 4: ridiculously high fares. Uh, you know, it's still I haven't
Speaker 4: been to Europe in years. But my point is is
Speaker 4: what happens is it's we need to see more competition
Speaker 4: come in, and that's going to hurt earning.
Speaker 2: What's the old joke, the fastest White's become a millionass
Speaker 2: start with a billion by a length something like that.
Speaker 4: There you go, And I think Buffett learned that years
Speaker 4: ago at one point, think it was it was it
Speaker 4: US Air. There was some airline that that Buffett took
Speaker 4: a position and he limped away from it, which he
Speaker 4: rarely limps away from that.
Speaker 2: A lot of people have been burnt over the decades,
Speaker 2: that's for sure. Johny's going to see you as always appreciated,
Speaker 2: John steffis there of Oppenheimen. Let's turn back to the
Speaker 2: tride story. Tariffs. They former New York Fed President Bill
Speaker 2: Dutley saying Trump's tariffs will be worse than market's thing right,
Speaker 2: saying markets seem to think that if the President once
Speaker 2: stopped the damage, the FED will. I think they're too complacent.
Speaker 2: They'll joined us now for more. Bill, welcome to the program, sir,
Speaker 2: great pace, let's talk about it. Why do you think
Speaker 2: that's too complacent.
Speaker 6: I think the problem is that layers are bad for
Speaker 6: growth and bad for inflation, which puts a FED in
Speaker 6: a buying Basically, they're missing by more on both sides
Speaker 6: of their mandate. So I think in the near term
Speaker 6: the Fed's could basically be on hold waiting for more information.
Speaker 6: Trump administration making the matter worse because not only are
Speaker 6: they putting tariffs in place that are much larger than
Speaker 6: they do during the first term, they're doing it in
Speaker 6: a very haphazard, irregular way, which is creating a lot
Speaker 6: of uncertainty. You know, the decline in merger activity in
Speaker 6: the from months of this year is pretty striking. People
Speaker 6: expect activity pick up with the Trump administration. It's actually
Speaker 6: gone down because nobody knows what the rules of the
Speaker 6: game are going to be in terms of relative prices.
Speaker 6: For inputs relative prices for exports. So people are very
Speaker 6: confused and people are just sitting on their hands.
Speaker 1: Bill, as John was just saying, you wrote this line.
Speaker 1: Market seem to think that if the President won't stop
Speaker 1: the damage, the Federal Reserve will with rate cuts. Where
Speaker 1: do you think they have the political leverage to not
Speaker 1: cut rates at a time when they are seeing quite
Speaker 1: a bit of potential destruction to the US economic outlook.
Speaker 6: Well, it all depends on what happens to inflation, how
Speaker 6: high does it go, and too does it get into
Speaker 6: inflation expectations. The inflation expectations are the key issue for
Speaker 6: the Fed. The second thing they're going to be focusing
Speaker 6: on how much does the unemployment rate rise. It's not
Speaker 6: about job creation, it's about the unemployent rate. One thing
Speaker 6: that people don't really understand, I think well is the
Speaker 6: fact that we don't need a lot of job creation
Speaker 6: to keep the unemployment rate here, because the growth rate
Speaker 6: of the labor force has collapsed with the Trump administration
Speaker 6: deep tape or deporting workers. The number of people coming
Speaker 6: over the borders has collapsed. The growth rate of the
Speaker 6: native border population is really slow. So top speed for
Speaker 6: the US of commune in terms of keeping unemployer rate
Speaker 6: where it is probably a fifty thousand in the payroll
Speaker 6: employment a month, and I think people think that one
Speaker 6: hundred and fifty two hundred thousand, if it slows to
Speaker 6: fifty thousand, the Fed's going to cut I think that's wrong.
Speaker 1: Well, I understand the argument that the FED put isn't
Speaker 1: exactly there, that the FED is going to come in
Speaker 1: and cut rates in response to market turmoil. At the
Speaker 1: same time, there is an argument that some of the
Speaker 1: terriff related inflationary forces are one time price adjustments that
Speaker 1: will eventually come down, especially with a weakening economic outlook,
Speaker 1: and that they can look through that a bit more
Speaker 1: in place of bigger emphasis on the unemployment rate and
Speaker 1: other economic indicators. Do you push back against that.
Speaker 6: Well, again, it depends on whether it gets into inflation expectations.
Speaker 6: The first term Trump, the tariff increases were relatively modest.
Speaker 6: It wasn't an inflation issue because inflation was running below
Speaker 6: the FEDS two percent.
Speaker 3: Of this time.
Speaker 6: The teriff increases our orders of magnitude larger, and it's
Speaker 6: happening at the time that inflation has been running well
Speaker 6: above the FES two percent. Objective for four years, So
Speaker 6: inflation expectations are the key, and one troubling indicator in
Speaker 6: that regard is what the University of Michigan Household Expectations
Speaker 6: Survey showed last month. For five to ten year forward
Speaker 6: inflation expectations, it rose to three and a half percent,
Speaker 6: the highest level since the nineteen nineties. So if that
Speaker 6: is co corroborated by other inflation expectations indicators, that's going
Speaker 6: to make it much more difficult.
Speaker 3: For the Fed.
Speaker 5: Bill You're talking about the upcoming economic projections we're going
Speaker 5: to get from the Fed, and you say inflation will
Speaker 5: be increased, but the path for the unemployment rate won't
Speaker 5: change much as labor force growth slows along with hiring.
Speaker 5: Are you basically saying the Fed and their projections are
Speaker 5: going to almost pinpoint stagflation.
Speaker 6: Well, I think they have to lower their growth estimates
Speaker 6: given the uncertainty that the terists are causing and the
Speaker 6: fact that it makes the real income for lowering households
Speaker 6: very much squeeze, so they're not going to be able
Speaker 6: to spend very much. They have to raise inflation because
Speaker 6: the price level of a lot of these important goods
Speaker 6: is going to go up pretty significantly, so I think
Speaker 6: that's sort of in the cards. I think what's going
Speaker 6: to surprise people is that they're not going to raise
Speaker 6: their unemployment rate projectory very much. And I think that
Speaker 6: people maybe be surprised that they're not going to increase
Speaker 6: the number of rate cuts they have in their forecasts.
Speaker 6: Last time, they had two rate cuts for twenty twenty five,
Speaker 6: and I think they'll keep it right there.
Speaker 2: Bill, let's just talk about those forecasts. What is the
Speaker 2: approach to putting forecasts together in a moment like this.
Speaker 2: How much of a conversation happens between individual policymakers actually with.
Speaker 6: Regard to the summary of economic projections, everyone sort of
Speaker 6: does their own, so this is not coordinated. You are allowed,
Speaker 6: towards the end of the Federal over Market Committed meeting
Speaker 6: to change your forecast based on what you've heard from others,
Speaker 6: but people rarely do that, So these things are really
Speaker 6: put into place before the meeting starts and hardly ever changed.
Speaker 1: A lot of people expect the statement of economic projection
Speaker 1: not to really move that significantly, and if they do,
Speaker 1: for it to essentially be irrelevant because they don't know anything.
Speaker 1: Do you disagree, do you think that it will be
Speaker 1: indicative of what kinds of scenario analysis individual members are
Speaker 1: doing and how much they're incorporating policy for their outlook.
Speaker 6: I think the reason that matters is the fact that
Speaker 6: I think people are looking for the FED to sort
Speaker 6: of come to the rescue of the economy by cutting rays.
Speaker 6: And you've seen it in the decline and your treasure
Speaker 6: note heels over the last few months. And I think
Speaker 6: the Fed's doing a signal through the Summary of Economic
Speaker 6: Projections and in chairman press conference, is that no, we're
Speaker 6: sitting on our hands for the time being.
Speaker 2: Bill Tompley with the license great pay sample in black opinion.
Speaker 2: The Common Secretary had Laton joined us now from Washington,
Speaker 2: d C. It's the Secretary, welcome back to the program.
Speaker 2: So always appreciate your time. If we could just take
Speaker 2: a step back and set the table. What are the
Speaker 2: stakes for today's mate thing between you and Canadian officials.
Speaker 7: Well, I think the stakes today, if you take a
Speaker 7: look at it from the big picture, is the United
Speaker 7: States said we need to have steel and aluminum domestically
Speaker 7: in America.
Speaker 3: In national security.
Speaker 7: You need medals to make bullets, you need metals to
Speaker 7: make munitions.
Speaker 3: You need medals to make everything.
Speaker 7: And Donald Trump is very focused on let's make sure
Speaker 7: the key ingredients that are necessary to defend America are
Speaker 7: made here in America. And these other countries they just
Speaker 7: don't pay attention. I mean, how many times do I
Speaker 7: have to say national security is important? And if you
Speaker 7: do like the EU, and you respond by putting a
Speaker 7: terrifying Kentucky bourbon which used to piss off Mitch McConnell,
Speaker 7: which doesn't really matter anymore, you gotta wonder, really, really
Speaker 7: do I have to deal with this stuff?
Speaker 2: But alas we do, miss the Secretary, Let's get to
Speaker 2: Europe in a moment. Let's just stand Canada and that
Speaker 2: will work our way to the EU if we can.
Speaker 2: For the Canadians, as you know, they've put tariffs on
Speaker 2: around twenty one billion dollars of US goods. Well, that
Speaker 2: changed your approach to today's mating.
Speaker 3: Well, I mean take a look at that again. Let's
Speaker 3: take a step back national security.
Speaker 7: We put a tariff on stealing aluminum to make sure
Speaker 7: the dumping countries of the world stop and we can
Speaker 7: build up our stealing aluminum in America.
Speaker 3: And what does Canada do? They put a.
Speaker 7: Tariff on sports equipment. I mean, really, this is just
Speaker 7: its tone death. Listen to the President national security matters,
Speaker 7: when he calls out things like semiconductors, he calls out pharmaceuticals,
Speaker 7: he calls out autos. These are things that matter to
Speaker 7: us as a country. And if you're going to respond
Speaker 7: to us with sports equipment, you're just not listening to
Speaker 7: President Trump.
Speaker 5: Satary Lonak, how much are the conversations today actually about
Speaker 5: bringing up the negotiations when it comes to USNCA.
Speaker 7: Well, USMCA, we set aside USMCA. So the United States
Speaker 7: made a deal with both Mexico and Canada that said
Speaker 7: if you have enough US content in certain products or
Speaker 7: it's actually made domestically, they can trade between our countries
Speaker 7: tax free.
Speaker 3: That remains intact.
Speaker 7: What is outside of that is both things that don't
Speaker 7: have that American content that are imported from other countries.
Speaker 3: So that has a tarrify on it.
Speaker 7: And now the President has said, look, there are certain
Speaker 7: topics I need to have US make in America, and
Speaker 7: stealing aluminum is key.
Speaker 3: I mean we all understand that.
Speaker 7: So why not allow the greatest country in the world
Speaker 7: who completely feeds Canada Canada exists.
Speaker 3: Completely feeds off of.
Speaker 7: The amazing economy of the United States of America. Let
Speaker 7: us build up our steel and aluminum so that we
Speaker 7: can protect ourselves. And by the way, we protect Canada.
Speaker 7: I think Canada's got sixty planes. Oh yeah, they're really
Speaker 7: going to protect themselves. They're really They're the lowest investor
Speaker 7: in NATO. They totally rely on us, and yet they
Speaker 7: think they need to respond to steal in aluminum tariffs.
Speaker 7: I mean, everybody is so used to picking off America,
Speaker 7: so used to it that they can't even stop. Donald
Speaker 7: Trump is here to say, we need to be treated fairly,
Speaker 7: and we need to be treated fairly.
Speaker 2: Now do you think this approach, if you articulate this
Speaker 2: to the Canadians today, will help bring down the temperature?
Speaker 3: I do.
Speaker 7: I think once you actually breathe and think steal and aluminum,
Speaker 7: American needs steal in aluminum.
Speaker 3: I mean, if you.
Speaker 7: Respond like the British didn't respond, the Mexicans didn't respond,
Speaker 7: you have some countries that actually thoughtfully examine how they
Speaker 7: do business with us, and then you have people like
Speaker 7: the Canadians who are in a so you have no idea.
Speaker 7: You think it's about a trade war. This is their
Speaker 7: way of getting election votes. And the EU, you know,
Speaker 7: the EU is just so many years treated us so harshly.
Speaker 3: They just can't stop.
Speaker 7: Look, their tariffs are way up here and our tariffs
Speaker 7: are down here.
Speaker 3: How about relax. Let us balance it.
Speaker 7: We are your largest most important trading partner. Treat us
Speaker 7: with respect and let's get a little balance. And Donald
Speaker 7: Trump is out there saying balance, balance, Balance, April second,
Speaker 7: he's going to describe his balance. We're going to do
Speaker 7: it together. We're going to describe our trading policy. We're
Speaker 7: going to describe our balance. But remember semiconductors we need
Speaker 7: to have them in America. Pharmaceuticals we need to have
Speaker 7: in America. Cars we need to have in America. And
Speaker 7: steal in aluminum come on America. Oh and lumber as well.
Speaker 3: I want to champagne things for our national security.
Speaker 2: And the one of champagne. So don't forget the why
Speaker 2: champagne this?
Speaker 3: Come on?
Speaker 7: That's that, you know, if you make him unhappy, he
Speaker 7: responds unhappy. But come on, let's get back to the
Speaker 7: core basics here, which is a trading policy that says
Speaker 7: America has allowed the world to lean on us to
Speaker 7: take from us, to grow off of us. And now
Speaker 7: it's time for a little balance. We've got a two
Speaker 7: trillion dollar budget deficit. We want to bring certain jobs home.
Speaker 7: Let the President do the right thing for America. He
Speaker 7: will respond after we're done organizing things to make sure
Speaker 7: the world grows. But today, just remember he's the president
Speaker 7: of the United States of America.
Speaker 3: He's not the president of the world.
Speaker 7: He's going to take care of American workers, and it is.
Speaker 2: Time missed the Secretary. I just want to make sure
Speaker 2: that the audience is in on a little jokes there,
Speaker 2: because they might have missed the post for the President
Speaker 2: a couple of minutes ago. So I'm going to share
Speaker 2: it with them and then come back to you in
Speaker 2: just a second. So the President of the United States
Speaker 2: for this out on true social moments ago said. The
Speaker 2: European Union, one of the most hostile and abusive taxing
Speaker 2: entire thing authorities in the world form for the sole
Speaker 2: purpose of taking advantage of the United States, has just
Speaker 2: put a nasty fifty percent tariff on whiskey. If this
Speaker 2: tariff is not removed immediately, the United States will shortly
Speaker 2: place a two hundred percent tariff on all wines, champagnes
Speaker 2: and alcoholic products coming out of France and other EU
Speaker 2: represented countries. So, missus Secretary, just to bring you in,
Speaker 2: I imagine you are aware of what the President said
Speaker 2: based on our conversation just now. Have you given the
Speaker 2: Europeans a warning on this? Have you're given them a
Speaker 2: time limit to back away? You're taking the same approach
Speaker 2: you did with the Canadians just a few days ago.
Speaker 7: Well, I think the President has made it crystal clear
Speaker 7: that he finds this tit for tat really abusive and aggravating. Right,
Speaker 7: His objective is steel and aluminum tariffs. Let him build
Speaker 7: his steel and aluminum business in America, because that's important.
Speaker 7: And then you know, they say, okay, we're going to
Speaker 7: tax whiskey. And I find all this back and forth
Speaker 7: really off the topic. The key topic is rebalancing American trade.
Speaker 7: We're going to spend lots of time together, you know.
Speaker 7: But the President was totally annoyed that the Europeans did this.
Speaker 7: And so you go in a year back from someone
Speaker 7: who emotionally cares about America. He cares about America and
Speaker 7: he wants to take care of Americans. And why are
Speaker 7: Europeans picking on Kentucky Bourbon's Roley Gavidson motorcycle. You're saying
Speaker 7: this is an emotional respects it's disrespectful.
Speaker 5: Are you saying responsive we see, well, we see two
Speaker 5: hundred tariffs and wine, champagne and alcoholic products before April second,
Speaker 5: when the President says it's the big one and we're
Speaker 5: going to get the reciprocal rollout.
Speaker 7: Well, the joy of my job is that Donald Trump
Speaker 7: makes the decisions right and the people around him.
Speaker 3: We talk to him and we advise him.
Speaker 7: April second is when we do reciprocal tariffs and he
Speaker 7: just he's called.
Speaker 3: Out these products. He wants these countries to respect him.
Speaker 7: And all of this showed you is that Europe and
Speaker 7: Canada do not respect Donald Trump and do not respect
Speaker 7: America's ability to build it steel an aluminum industry, which.
Speaker 3: Is vital for national security. Whereas you watched Mexico and
Speaker 3: you watch the UK be pragmatic and thoughtful and the way.
Speaker 7: We're going to deal with them is going to be better.
Speaker 7: So these are just black and white things. Why would
Speaker 7: you put against steel and aluminum When you say Harley
Speaker 7: Davidson motorcycles and Kentucky Bourbon.
Speaker 3: It's just illogical.
Speaker 7: I think the President is saying, look, I am going
Speaker 7: to respond, always bigger and always stronger. We will talk together,
Speaker 7: you know, he wrote that tweet this morning. We will
Speaker 7: talk together. If that's what he wants to do, we
Speaker 7: will do that. But the answer is April second, a
Speaker 7: thoughtful approach to reciprocity and nash security of those products
Speaker 7: he's called out. We're going to increase our domestic production
Speaker 7: of those and have a reciprocal model, and hopefully when
Speaker 7: I talk to the Europeans, they'll realize that they should.
Speaker 3: Take these things down.
Speaker 7: Cool these things out, let's properly negotiate.
Speaker 5: Do you have plans to speak to your European counterparts today?
Speaker 5: Of course, like who are you speaking to, say, Ursula
Speaker 5: Underlion or potentially some heads of companies like Bernard or
Speaker 5: no who was also at the President's inauguration.
Speaker 7: Generally as the Commerce secretary, I speak to the trade ministers.
Speaker 3: That's totally how it got.
Speaker 5: A lot of companies also, and I know executives have
Speaker 5: been calling you, Sarah, Is that not correct? They're looking
Speaker 5: for exemptions. Exemptions carve outs fall squarely in the Commerce Department.
Speaker 3: So let's talk about exemptions for a moment.
Speaker 7: Steel and aluminum tariffs went in in twenty eighteen, and
Speaker 7: when we came back into power, the Biden administration had
Speaker 7: granted four hundred and ninety thousand exemptions imagine four undred
Speaker 7: and ninety thousand exemptions to steal.
Speaker 3: An illuminum tariffs.
Speaker 7: I mean, I don't know that our department could actually
Speaker 7: collate Ford to ninety thousand Christmas cards, let alone four
Speaker 7: undred and ninety thousand stealing illuminum tariffs.
Speaker 3: I mean, come on, it's ridiculous.
Speaker 7: So yesterday what we did is we just got rid
Speaker 7: of all the exemptions.
Speaker 3: That's all we did.
Speaker 7: The stealing illuminum tariffs were already on. We just said, look,
Speaker 7: let's just build back our steal an aluminum industry in
Speaker 7: America to protect America.
Speaker 3: It's so logical, it's so important.
Speaker 7: And then all we get you get some countries who understand,
Speaker 7: in some countries who just go right back to old school,
Speaker 7: and you know, the President's going to deal with them
Speaker 7: with strength and with power, and he's remembered that they
Speaker 7: like to respond with a just go after their wine,
Speaker 7: and maybe they'll pay attention and listen.
Speaker 3: The fact is April second.
Speaker 7: We're going to go April second, we're going to go
Speaker 7: with the reciprocity, thoughtful global.
Speaker 1: Process, Secretary Lot, It's going to take a while to
Speaker 1: actually get those tariffs in place after all of the
Speaker 1: appeals process, etc. After April second, and in the meantime,
Speaker 1: as all of these discussions around tariffs continue, a lot
Speaker 1: of businesses are just halting investments. You're seeing consumer sentiment decline,
Speaker 1: You're seeing their spending activity decrease. Can you give them
Speaker 1: a sense of when they'll have certainty.
Speaker 3: The opposite actually is coming true.
Speaker 7: You saw Apple five hundred billion dollars, You saw a
Speaker 7: SoftBank two hundred billion dollars, Eli Lilly forty billion dollars.
Speaker 3: A meeting a.
Speaker 7: Company today who sent me notes saying they want to
Speaker 7: invest sixty five billion in America, the scale by which
Speaker 7: American companies are committed to invest in America and global.
Speaker 1: Company Secretary, when I'm talking about she let me explain
Speaker 1: to you what I'm.
Speaker 7: Taching investments and those are coming well, let me finish,
Speaker 7: these are huge investments coming to America.
Speaker 3: Over one point seven.
Speaker 7: Trillion committed in Donald Trump's first fifty days. Anyone who
Speaker 7: thinks people are uncertain doesn't understand what Donald Trump is saying.
Speaker 7: He's saying, bring your production to America and you will
Speaker 7: avoid all the tariffs. Come build in the greatest economy
Speaker 7: in the world, and you will avoid tariffs.
Speaker 1: That's maybe long term, but what we're seeing in the
Speaker 1: short term is that small business confidence has fall into a.
Speaker 3: Four month low.
Speaker 1: They say, a high degree of uncertainty about what the
Speaker 1: regime is going to look like. They talk about likelihood increasing,
Speaker 1: likelihood of having to increase prices in response to the tariffs.
Speaker 1: You're seeing this with respect to airplane tickets that are
Speaker 1: falling off a cliff as of February. I'm just wondering,
Speaker 1: when you take a look at these types of indicators,
Speaker 1: at what point does it become concerning to you.
Speaker 7: The greatest dealmaker who's ever lived is sitting behind the desk.
Speaker 3: In the Oval Office.
Speaker 7: He understands that the best way to get our farmers,
Speaker 7: our ranchers, and our fishermen's produce and products in the
Speaker 7: rest of the world, which they block it. I mean
Speaker 7: India blocks our farmers. All these countries block our farmers.
Speaker 7: The way to grow it is to make deals with
Speaker 7: them where they have to understand the power of the
Speaker 7: US economy is that you need to take our products.
Speaker 7: We want to unleash American ingenuity and the capacity to
Speaker 7: export and when other countries put giant, giant.
Speaker 3: Tariffs on our products.
Speaker 7: Let's be clear. You can't go to Europe and see
Speaker 7: an American car. You can't go to Korea and see
Speaker 7: an American car. You can't go to Japan and see
Speaker 7: an American car. But you sure see their cars here.
Speaker 7: So the concept of Donald Trump saying, hang on a minute,
Speaker 7: you have got to be kidding. We need to unleash
Speaker 7: the American economy.
Speaker 3: And if we've got.
Speaker 7: To teach the rest of the world to treat us
Speaker 7: with respect, that they have beaten on us, and they.
Speaker 3: Have abused us, and their.
Speaker 7: Tariffs are so so high that they've got to actually
Speaker 7: treat us with respect. Bring down their tariffs so that
Speaker 7: it's reciprocal.
Speaker 3: Remember, they will never.
Speaker 7: Live with us having the tariffs as high as they
Speaker 7: have them. So what they're going to do is they're
Speaker 7: going to bring them down. Let Donald Trump run this economy.
Speaker 7: He knows what he's doing better than any president who's
Speaker 7: ever sat at that desk.
Speaker 3: Let him do his job.
Speaker 7: There's going to be a lot of talking, but in
Speaker 7: the end, there's going to be the greatest growth economy
Speaker 7: America's ever seen. We are going to export and people
Speaker 7: are going to build in America. Those two things are
Speaker 7: going to happen, and they're going to happen because Donald
Speaker 7: Trump's going.
Speaker 3: To create fair trade.
Speaker 7: Start saying the word fair trade, because right now trade
Speaker 7: in America.
Speaker 3: Go look at the numbers.
Speaker 7: Un fair, Europe huge, India huge, right, China the highest.
Speaker 3: There's no inflation in these countries.
Speaker 7: What there is is blocking Americans from doing business there.
Speaker 3: And Donald Trump is going to break down those walls.
Speaker 2: Let's talk about China. So we heard from a Foreign
Speaker 2: Ministry official in China who said this that Beijing has
Speaker 2: done the United States a favor and Washington should have
Speaker 2: said a big thank you for all they've done to
Speaker 2: control drugs. And I imagine they're alluding to Fensanel directly,
Speaker 2: mister Secretary. I just wonder if the President has seen
Speaker 2: those comments in the last twenty four hours and what
Speaker 2: its response is to them.
Speaker 7: The President, as we have said on April twod, is
Speaker 7: going to take a holistic approach to everything. March has
Speaker 7: been the month to reduce the right the board and
Speaker 7: fentanyl deaths in America, and I hope to god China's
Speaker 7: reducing the production of the fentanyl ingredients that kill seventy
Speaker 7: five thousand or top seed Americans, and as the President
Speaker 7: rightly knows, that number is way way more. We need them.
Speaker 7: We need China to stop making the ingredients, and we
Speaker 7: need Mexico and Canada to stop shipping them into our country.
Speaker 7: That is March. March is very very focused on that.
Speaker 7: Hopefully they'll get down and we'll have a good, a
Speaker 7: good reduced border. Obviously that's so far, so good, but
Speaker 7: we need to reduce those fentanyl deaths. And then come April,
Speaker 7: you're going to see us start to focus on.
Speaker 3: Lowering tariff away and increasing.
Speaker 7: Tariffs at home, so at least we get a little
Speaker 7: ballance if they want to lower them. Reciprocal tariffs mean
Speaker 7: take them down and we'll take we'll keep ours.
Speaker 2: Den any implication that we do so it ramping up
Speaker 2: tariffs over the line months on China, Have they given
Speaker 2: any indication they're prepared to do that? Just to stress
Speaker 2: test this theory, because taras's been ramping up China over
Speaker 2: the last ten years now, any indication they're willing to
Speaker 2: actually step back and do what you're asking them to do.
Speaker 7: You know, China is always a separate thinking. You know,
Speaker 7: the Chinese Communist Party thinks about things in a much,
Speaker 7: much different way than everybody else. And I don't know
Speaker 7: how they're going to deal with bringing these things down.
Speaker 3: I would like them to bring it down.
Speaker 7: They have a huge market, but remember we consume more
Speaker 7: than two times what they consume. They have a big economy,
Speaker 7: but they're a production economy.
Speaker 3: They sell to us. They need to sell to us.
Speaker 7: We are the greatest consuming economy in the world. We
Speaker 7: are the customer that everybody in the world needs. Now,
Speaker 7: they put huge tariffs in China because they're trying to
Speaker 7: build up their consumer production domestically, and that's where they stand.
Speaker 7: So you don't hear all of you talking about how
Speaker 7: horrible China is and all the inflation in China and
Speaker 7: all this sort of stuff.
Speaker 3: It's just not true. The fact is America is going.
Speaker 7: To build up its industries here, drive down tariffs there.
Speaker 7: I don't know what China will do, but my expectation
Speaker 7: is the whole world who trades with us will bring
Speaker 7: down their tariffs and allow our farmers, ranchers and seamen,
Speaker 7: allow our production, allow our car manufacturers to export more
Speaker 7: and grow. We are looking for fair trade. Secretary Trade,
Speaker 7: Let's say it over and over again.
Speaker 3: We got it.
Speaker 5: I think it could maybe be a bumper sticker for you.
Speaker 5: There are reports this week that potentially underway our plans
Speaker 5: for Shijing ping to meet with Donald Trump.
Speaker 3: Are we expecting a.
Speaker 5: Meeting between these two leaders either in the spring or
Speaker 5: early summer.
Speaker 7: I mean, look, the President runs his agenda, but from
Speaker 7: my perspective, when strong leaders meet each other, that is
Speaker 7: useful and effective for the world. But Donald Trump will
Speaker 7: make those decisions himself. I am focused on reciprocal tariffs.
Speaker 7: On April second, I am not in the agenda of
Speaker 7: who President Trump decides he wants.
Speaker 1: To meet Secretary Lutnak or just two minutes away from
Speaker 1: the latest indicator from the United States, which is PPI
Speaker 1: data and inflation read and initial jobless claims. You've talked
Speaker 1: about how the data that we are getting right now
Speaker 1: is Biden data. At what point does it become Trump data.
Speaker 7: I'd say we fully wear the fourth quarter, and we
Speaker 7: may well wear much of.
Speaker 3: The third quarter. But for fourth quarter, for sure.
Speaker 7: You know, the American economy, right, a twenty nine trillion
Speaker 7: dollar economy. You can't take office on Monday and have
Speaker 7: the news media say, oh, look what you did on Tuesday.
Speaker 3: I mean, come on, that's so silly.
Speaker 7: So the real way the world works is for sure,
Speaker 7: the fourth quarter is Donald Trump's quarter, and the third
Speaker 7: quarter it starts his policies start to really embed in America.
Speaker 7: So that's the right way to look at it. First
Speaker 7: and second quarter are Biden's sort of left behind difficulty,
Speaker 7: and then you see Donald Trump dig us out, build
Speaker 7: us up, and buy.
Speaker 3: The fourth quarter, you're going to.
Speaker 7: See growth rates because we got all these companies committing
Speaker 7: to build in America, get their shovels in the ground,
Speaker 7: because we get regulations out of the way, start to
Speaker 7: produce those jobs, start to bring back trade craft. You know,
Speaker 7: electricians who build giant factories, HVAC specialists who cool those,
Speaker 7: and then mechanics who fix robots.
Speaker 3: You've got trade craft coming back to America. It's going
Speaker 3: to be amazing.
Speaker 7: We're going to have the greatest training program ever because
Speaker 7: we need to train our great workers for the AI
Speaker 7: revolution and the tech revolution that is coming that Donald
Speaker 7: Trump is bringing to construction and development in America, and
Speaker 7: we need to train our people and they're going to
Speaker 7: have great.
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