Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: We begin this hour with markets are looking ahead to
Speaker 2: high stakes trade talks between the US and China and
Speaker 2: Switzerland this weekend. Joining us now. Very pleased to say
Speaker 2: Pin Navarro, the Director of the Office of Trade and
Speaker 2: Manufacturing Policy at the White House, dot Donavaro, it's been
Speaker 2: too long, sir. It's good to see you. Thanks for
Speaker 2: being here.
Speaker 3: Been a long time.
Speaker 4: Joan, it is good to see you too, sir. Thank you, sir,
Speaker 4: first class digs here, my friend.
Speaker 2: Well, I'm pleased we're looking after you. Let's kick it
Speaker 2: off with these talks this weekend. We just heard from
Speaker 2: the President just moments ago and he mentioned an eighty
Speaker 2: percent tariff might be about right. It's up to the
Speaker 2: Treasury Secretary. We understand you won't want to get ahead
Speaker 2: of those negotiations, but I just wonder could you offer
Speaker 2: some clarity on what about right means when the President
Speaker 2: says eighty percent tariff on China seems right, seems right
Speaker 2: for the talks this weekend, or seems right for the
Speaker 2: foreseeable future. Yeah.
Speaker 4: I was one of three people that was with the
Speaker 4: White House the first term for all years. One of
Speaker 4: the big reasons is I never got ahead of the president.
Speaker 4: Let me tell you about Geneva, which is kind of
Speaker 4: I've got a very warm memories. It was my finest
Speaker 4: hour as a negotiator. I went there to lead the
Speaker 4: negotiations for the United Postal Union reforms that essentially got
Speaker 4: China rates fair to we say billions on that. But
Speaker 4: I mentioned this because Geneva has symbolic value in this negotiation.
Speaker 4: It is the headquarters.
Speaker 3: Of the World Trade Organization.
Speaker 4: And the scariest thing I ever saw in Geneva was
Speaker 4: the size of the China delegation at the World Trade Organization.
Speaker 4: And they've played the WTO like a fiddle.
Speaker 3: So let's see what happens tomorrow.
Speaker 4: I'd be happy to come back on Monday do the debrief,
Speaker 4: but I don't want to get ahead of the Boss
Speaker 4: or Scott Besting. And don't forget Scott's going with Jamison Greer,
Speaker 4: the United States Trade Representative. He's the guy who learned
Speaker 4: that the knee of Bob liteheis for the first time around,
Speaker 4: was there for all the China stuff, and he's the
Speaker 4: guy who was the architect, along with Howard Lutnik, of
Speaker 4: the UK deal.
Speaker 3: So let's see what happens. It'so of the very best.
Speaker 2: We'll certainly pensil in the weekend for the markets. Well,
Speaker 2: pensil in and appearance with you for Monday. No worries
Speaker 2: about that. I'm looking forward to that conversation. Just got
Speaker 2: into the weekend and reflected on your experience dealing with
Speaker 2: the Chinese. Then not the UK. This is not the
Speaker 2: same relationship. The trade relationship is tremendously unbalanced and has
Speaker 2: been for a long long time. Can you frame for
Speaker 2: us how difficult it has been previously for you to
Speaker 2: negotiate with the Chinese and how much longer it could
Speaker 2: take with the Chinese relative to set the UK and
Speaker 2: other trade partners.
Speaker 3: Well, I could tell you.
Speaker 4: I think I sat face to face with the China
Speaker 4: team maybe seven times during the first term, and twice
Speaker 4: Shi Jinping was there with G seven, just community the
Speaker 4: G twenty both. I think it was Tokyo and our
Speaker 4: Buenos Aires. What's interesting, So what's so interesting to me,
Speaker 4: Jonathan about China is that they have continuity. The same
Speaker 4: people are going to be in Geneva or the same
Speaker 4: people back then, and you know, our our regimes change,
Speaker 4: we have different governments and things like that. But they
Speaker 4: have the advantage of that kind of continuity.
Speaker 3: But look, it'll be interesting again.
Speaker 4: I don't I don't want to get ahead of Scott
Speaker 4: and Jamison or the President.
Speaker 3: I think, let's see what happens.
Speaker 4: You know, my role, and we've got we've got fifteen
Speaker 4: countries we run enormous trade deficits with that, We've got
Speaker 4: to renegotiate.
Speaker 3: The whole structure of those deals.
Speaker 4: And there's another one hundred countries that that cheat us
Speaker 4: in some ways.
Speaker 3: But smaller ways. My role in the administration.
Speaker 4: On all of this is to do the background analytics
Speaker 4: to see how we country is cheating us, which basically
Speaker 4: sets up the terms of the negotiation. And every country,
Speaker 4: like fingerprinsts, like India is the Maharaja tariffs. They have
Speaker 4: the highest tariffs of any of our major trading partners.
Speaker 4: Japan is the most clever at protecting its own markets
Speaker 4: with a combination of domestic protectionism non tariff barriers. You know,
Speaker 4: Germany they have auto tariffs at ten percent. We have
Speaker 4: them at two and a half percent, but they also
Speaker 4: have the vat tax which acts as another twenty nine
Speaker 4: what is it, nineteen percent tariff and an exports subsidies.
Speaker 3: So what I do is.
Speaker 4: Do the background and look at kind of how these
Speaker 4: countries are doing what to us, and we get great
Speaker 4: deals from there.
Speaker 3: People. I think the UK deal is very interesting.
Speaker 4: I think the significance is not just that it's a deal,
Speaker 4: but that's a template for the future deals. What we
Speaker 4: do done is like four or five verticals we look at.
Speaker 4: It's the tariffs, the non tariff barriers, the digital taxes,
Speaker 4: and then the various kinds of cheating, the dumping, the
Speaker 4: currency manipulation and things like that. And then from there
Speaker 4: we assess what the asks are, what we need and
Speaker 4: go forward from there.
Speaker 3: See, you get to see a steady wave of deals.
Speaker 4: The USTR building is right across the street from the
Speaker 4: White House. It's got the most staff negotiating these deals.
Speaker 4: And it's like you go to the Delhi and you
Speaker 4: have to take.
Speaker 3: A number and get in line.
Speaker 4: Every day there's delegations from around the world lining up
Speaker 4: to meet with Jamison Greer and Howard Lutnick, and I've seen.
Speaker 3: I looked yesterday at the schedule.
Speaker 4: It was kind of fun out the July and it's
Speaker 4: just you know, one after the others.
Speaker 1: Well, Peter looking at the countries lining up.
Speaker 5: One key aspect of the UK deal was of course
Speaker 5: bringing down the auto tariff to ten percent. So right
Speaker 5: now tariff rate that's lower for Bentley's, which is a
Speaker 5: car that most American families can't afford made in the UK,
Speaker 5: where Chevys have a higher rate if they're made in
Speaker 5: Canada or Mexico. Is there an expectation that the next
Speaker 5: trade deals auto terrors will be coming down those rates.
Speaker 3: It's going to be country by country. I mean, the
Speaker 3: beauty about the UK is.
Speaker 4: That very small amount of exports they send us and
Speaker 4: we have a hard cap I think it's one hundred
Speaker 4: thousand units where it goes right back up to twenty
Speaker 4: five percent. And again we're trying to do something that's
Speaker 4: mutually beneficial to both countries to get to a better place.
Speaker 3: Well at the same time.
Speaker 4: Changing the level of the playing field so that it
Speaker 4: is more level. I think for me, the beauty of
Speaker 4: the UK deal besides that was all of the good
Speaker 4: stuff we had for AG. I mean, one of the
Speaker 4: problems we have is this non tariff barriers like FIDO
Speaker 4: sanitary standards, what's that that's like? These things they do
Speaker 4: to keep our pork out, our chicken out, our beef.
Speaker 3: Right now we're going to be able to.
Speaker 4: Sell a lot more beef, poultry, dairy, and ethanol.
Speaker 3: I mean they had a really.
Speaker 4: High tariff, like almost a lockout tariff on ethanol and
Speaker 4: that's made from corn.
Speaker 3: So the folks in Iowa are very happy about that.
Speaker 3: So this is the way we're going to go forward
Speaker 3: on net. The United States is going to be far
Speaker 3: better off. And all we're doing is trying to level
Speaker 3: the playing field.
Speaker 4: I saw the e EU kind of rattling sabers I
Speaker 4: think was yesterday about some kind of retaliation, and I
Speaker 4: would just say to anybody's who's in the European Union,
Speaker 4: I mean, how can you look at us in the
Speaker 4: face and threaten us when your tariffs are higher?
Speaker 3: You have lost.
Speaker 4: Cases repeatedly at the WTO on us selling you things
Speaker 4: like beef and poultry, and you won't even honor that.
Speaker 1: So yesterday the President called Ursula Vonderline fantastic and he
Speaker 1: said he hopes to meet her. But are you saying
Speaker 1: that the European Union is not as high on the
Speaker 1: priority list? And say other trading partners like the Oriental
Speaker 1: pan not at all.
Speaker 3: I mean the EU to be clear here, we.
Speaker 4: Have the second highest trade deficit with the EU, behind China,
Speaker 4: so they're very high on the list. All I'm saying
Speaker 4: here is that I thought I found it unfortunate that
Speaker 4: the EU kind of fired I think some term was
Speaker 4: fired shots across our bow. It's like retaliation will not
Speaker 4: work against the United States.
Speaker 3: We shouldn't have that.
Speaker 4: Let's talk, let's figure this out, and it would.
Speaker 3: Be nice here. Let's give piece a chance here.
Speaker 4: All we're asking for here in the United States of
Speaker 4: America is fairness.
Speaker 3: I mean, hold on, did you agree?
Speaker 4: Is there any disagreement on this set and on your
Speaker 4: set that the tariffs of the EU are higher, and
Speaker 4: that the non tariff bearriers are higher, and that the
Speaker 4: w t O in Geneva is basically sanctioning that through
Speaker 4: tuesdays one is the.
Speaker 3: But would you agree with that?
Speaker 6: I think there's a bigger question fac there. There's a
Speaker 6: bigger question here. There's a bigger question here, and this
Speaker 6: is something that the German Finance Minister has come out
Speaker 6: and talked about, which is they'd be willing to drop
Speaker 6: all tariffs to zero if the US were willing to
Speaker 6: drop all tariffs to zero. There is a willingness to
Speaker 6: negotiate aground the board to a lower teriff regime. Would
Speaker 6: that be acceptable to you? Or is ten percent?
Speaker 3: So stay with that. See, that's such a misdirection.
Speaker 4: Okay, it's it's the non tariff barriers stupid to kind
Speaker 4: of paraphrase Bill Clinton, It's like, it's the non tariff barriers.
Speaker 4: So when countries like Vietnam or entities like the EU
Speaker 4: say to oh, let's all go to zero tariffs and
Speaker 4: everything will be okay, that's.
Speaker 3: Not the problem. It's part of the problem.
Speaker 4: But the bigger problem is the non tariff barriers in Europe.
Speaker 3: It's the VAT tax.
Speaker 4: I mean, I don't know if you know this, but
Speaker 4: the United States has tried, going back to the nineteen
Speaker 4: seventies to get equity treatment for the that tax, which
Speaker 4: most countries of the world use versus the income tax
Speaker 4: which we use. We haven't been able to get it
Speaker 4: because the WTO has a majority of people who benefit
Speaker 4: from sticking it to the United States.
Speaker 3: So they do.
Speaker 4: So the zero tariff thing, that's misdirection, and on your set,
Speaker 4: you should call it on that. Let's lower the bad
Speaker 4: tariff barriers, and let's give you relief on the VAT tax.
Speaker 3: Now we're talking.
Speaker 6: The VAT tax is a slightly different mechanism. This is
Speaker 6: all going to take a long time, and there are
Speaker 6: a lot of competing factors here in terms of who
Speaker 6: can possibly pull these levers. I just wander, We've got
Speaker 6: two months left in this ninety day negotiating period that
Speaker 6: is paused for the retaliatory tariffs. Does that just get
Speaker 6: extended out in another ninety days as you have to
Speaker 6: deal with different legislative bodies to possibly remedy what you.
Speaker 4: See, Well, we don't have to deal with legislative body.
Speaker 4: Well okay in the EU perhaps, but you know, like
Speaker 4: coin a term in Trump time, which is to say,
Speaker 4: do it as fast as possible without screwing it up.
Speaker 3: And that's all we're trying to do.
Speaker 4: I go back to the observation that the United States
Speaker 4: Trade Representative and that building, which is historic building, by
Speaker 4: the way, beautiful to see if you ever get there.
Speaker 4: The lines, you know, they're they're coming in and out.
Speaker 4: We're talking, and we're talking, and you.
Speaker 3: Know, let's, as the boss says, let's see what happens.
Speaker 4: I mean, it's in everybody's interests around the world to
Speaker 4: level the playing field with the United States in a
Speaker 4: way which allows us to restructure this international trade environment
Speaker 4: which is fundamentally skewed against the United States. I mean,
Speaker 4: we're losing because of this system. The United States is
Speaker 4: losing our manufacturing base, We're losing our defense industrial base.
Speaker 3: And when push comes to.
Speaker 4: Shove and folks around the world are looking for the
Speaker 4: United States to help defend them, I mean, we get
Speaker 4: to a point where we can't do that, what good
Speaker 4: is that?
Speaker 3: So trade?
Speaker 4: Trade, economic security is national security is one of the
Speaker 4: guiding principles and President Trump in this administration. So we're
Speaker 4: just trying to get fairness here. Give give fairness a
Speaker 4: chance here and work with us.
Speaker 2: Looking forward to an update on Monday, sir, it's going
Speaker 2: to see it once again, sir. Thank you. Dotar, Director
Speaker 2: of the Office of Trade and Manufacturing Policy at the
Speaker 2: White House.