WEBVTT - Treasury Sec. Scott Bessent Talks Fed criticisms, trade talks

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

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<v Speaker 2>I'm joined by the US Treasury Secretary Scott Bessett this

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<v Speaker 2>morning on the heels of this agreement. The President announced

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<v Speaker 2>last night last week, you joined me, John and Lisa,

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<v Speaker 2>and you said you were going to Japan for the

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<v Speaker 2>World Expo, wasn't really going to be focused on trade.

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<v Speaker 2>You came back. The President had a seventy five minute

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<v Speaker 2>meeting as well last night with the trade negotiator. You

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<v Speaker 2>were in the room, and he got this deal with

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<v Speaker 2>you alongside him over the finish line.

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<v Speaker 1>Even though the.

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<v Speaker 2>Reporting at of Washington that actually the discussions with Japan

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<v Speaker 2>were quite difficult. What changed in the last twenty four hours.

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<v Speaker 1>Look, Anne, Marie.

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<v Speaker 3>We had some discussions about the overall US Japan relationship,

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<v Speaker 3>which was one of the strongest in the world when

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<v Speaker 3>I was in Tokyo and Osaka, and then we got back.

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<v Speaker 3>There were elections on Sunday. LDP did slightly better than

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<v Speaker 3>expected that they don't have a majority. Japanese government was

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<v Speaker 3>ready to deal, and as president, only President Trump could do.

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<v Speaker 3>He brought the Japanese trade delegation into the Oval and

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<v Speaker 3>had a very fulsome negotiation with them and I tell

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<v Speaker 3>you they're tough negotiators for President Trump's tougher.

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<v Speaker 2>Well, there is a photo circulating on Twitter from Dan

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<v Speaker 2>Scavino and you actually see a sharpie x out of

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<v Speaker 2>some what looks like preliminary deals for even more concessions

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<v Speaker 2>with Japan. I want to ask you about this fifteen

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<v Speaker 2>percent tariff free? Is that the new floor now for

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<v Speaker 2>trading partners when you're going into these negotiations.

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<v Speaker 3>Well, I think it's very important to note that fifteen

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<v Speaker 3>percent for Japan for reciprocal tariffs for autos, that is

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<v Speaker 3>a different kind of deal. But because the Japanese proposed

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<v Speaker 3>a very innovative solution, We've been working with them for months,

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<v Speaker 3>the trade team, myself, Ambassador Greer, Secretary Lutnik, and they

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<v Speaker 3>came to us with the idea of a Japan US

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<v Speaker 3>partnership where they are going to provide equity, credit guarantees

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<v Speaker 3>and funding for major projects.

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<v Speaker 1>In the US.

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<v Speaker 3>So they got the fifteen percent rate because they were

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<v Speaker 3>willing to provide this innovative financing.

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<v Speaker 1>Mechanism.

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<v Speaker 2>There's a lot of Japanese FDI into the United States already.

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<v Speaker 2>Is this new capital?

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<v Speaker 1>Oh no, this is all new capital.

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<v Speaker 3>This is all new capital, and it is going to

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<v Speaker 3>be targeted at the strategic industries. The President Trump and

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<v Speaker 3>this administration belief that we have to de risk on

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<v Speaker 3>During COVID, we saw our vulnerabilities, whether it was in

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<v Speaker 3>medicine semiconductors. So we are going all in over the

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<v Speaker 3>next few years to de risk our supply chains and

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<v Speaker 3>this deal, thanks to President Trump, is going to be

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<v Speaker 3>part of that.

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<v Speaker 2>When it comes to the fifteen percent rate on autos,

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<v Speaker 2>this means that Toyota is basically paying a cheaper rate

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<v Speaker 2>than say GM if they have inputs from other countries.

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<v Speaker 2>Still they're still at the twenty five percent auto rate.

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<v Speaker 2>Do you see the auto rate leveling out to something

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<v Speaker 2>lower than twenty five percent.

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<v Speaker 1>We'll have to see.

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<v Speaker 3>And again those are just GM components.

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<v Speaker 1>There's also the.

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<v Speaker 3>USNCA, the portion of any autos assembled in the US,

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<v Speaker 3>and then of course GM and especially Ford. I think

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<v Speaker 3>Ford has the largest US production. You're building in the US,

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<v Speaker 3>there are no tariffs, so when.

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<v Speaker 2>It comes to what's next, we know the EU negotiators

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<v Speaker 2>are in town. This fifteen percent rate feels like potentially

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<v Speaker 2>a floor. Could anyone get below fifteen percent? Is the

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<v Speaker 2>European Union still trying for ten percent minimum baseline tariff.

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<v Speaker 3>Well, again, the fifteen percent is a result of this

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<v Speaker 3>very innovative package that the Japanese came with and your

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<v Speaker 3>present Trump being able to push them to do even

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<v Speaker 3>more so.

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<v Speaker 2>Has Russels come up with anything innovative?

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<v Speaker 3>Not yet, But again, talks are going better than they

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<v Speaker 3>had been. I think that we are making good progress

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<v Speaker 3>with the EU, but as I've said before, Emory and

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<v Speaker 3>the EU has a collective action problem twenty seven countries.

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<v Speaker 3>Great thing about dealing with the Japanese. I've been going

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<v Speaker 3>to Japan since nineteen ninety I think this weekend was

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<v Speaker 3>my fifty second trip. And the Japanese government moves of

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<v Speaker 3>one entity. They're highly organized across all level of government.

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<v Speaker 2>So you say that talks are going better, We just

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<v Speaker 2>have a story hitting the terminal this morning from our

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<v Speaker 2>colleagues in Europe that the European Union is readying one

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<v Speaker 2>hundred billion dollars euros. If there is no deal in place,

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<v Speaker 2>they will impose thirty percent tariffs on those one hundred

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<v Speaker 2>billion euros worth of goods. Do you think we're going

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<v Speaker 2>to get to that place?

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<v Speaker 3>I think it's a negotiating tactic, and it's what I

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<v Speaker 3>would do if I were in their place. But Amery,

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<v Speaker 3>Remember we are the deficit nation. They're the surplus nations,

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<v Speaker 3>so any kind of a escalation in trade problems will

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<v Speaker 3>always hit them worse.

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<v Speaker 2>I want to also talk about what's going on with China.

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<v Speaker 2>You're going to Stockholm Monday Tuesday to meet with your

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<v Speaker 2>Chinese counterparts. Are we going to continuously see the discussions

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<v Speaker 2>revolve around where Earth's and export controls or they're going

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<v Speaker 2>to be other items on the table.

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<v Speaker 3>I think we're in a very good place with China

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<v Speaker 3>now and we can start moving on to bigger discussions.

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<v Speaker 3>As I've said many times, there is the potential for

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<v Speaker 3>a big, beautiful rebalancing between the US and China. President

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<v Speaker 3>Trump is committed to bringing back precision manufacturing to the US,

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<v Speaker 3>and as we become more of a manufacturing economy, China

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<v Speaker 3>is highly imbalanced. They account for thirty percent of all

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<v Speaker 3>the manufacturing output in the world. That's not sustainable. We

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<v Speaker 3>believe they should become more of a consumption economy. If

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<v Speaker 3>they are willing to go down that route, then we

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<v Speaker 3>could actually do it together. And then there are lots

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<v Speaker 3>of other things we can talk about whether it's them

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<v Speaker 3>buying sanctioned Russian or Iranian oil, you know a number

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<v Speaker 3>of security things.

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<v Speaker 2>And so the purchasing agreement from Trump's first administration, he

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<v Speaker 2>had a deal with China on the Phase one purchasing

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<v Speaker 2>agreement on agriculture.

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<v Speaker 3>Well, again, that's another way that we could bring this

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<v Speaker 3>imbalance relationship into balance. So we will be talking about

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<v Speaker 3>purchasing agreements, especially ag and to refresh everyone's memory, we

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<v Speaker 3>had the purchase agreements. Chinese lived up to the purchase

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<v Speaker 3>agreements during President Trump's final year in office, and then

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<v Speaker 3>the Biden administration didn't enforce those purchase agreements.

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<v Speaker 1>So we're going to let bygones be bygones. We're going

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<v Speaker 1>to look forward.

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<v Speaker 3>And I think we can come up with some very

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<v Speaker 3>interesting purchasing agreements. As you know, President Trump is committed

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<v Speaker 3>to the American farmers.

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<v Speaker 2>Well, looking forward, you told me John and Lisa last week,

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<v Speaker 2>the market doesn't need to worry about August twelfth, that's

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<v Speaker 2>the deadline for this current dayton between Washington and Beijing.

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<v Speaker 2>What's the new deadline going to be?

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<v Speaker 3>Well, again, I think that we could roll it forward,

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<v Speaker 3>maybe in a ninety day increment and I think the

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<v Speaker 3>good news here is that we are back on track

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<v Speaker 3>with the Chinese negotiations. On April second, President Trump told countries,

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<v Speaker 3>here's your reciprocal rate. But that was the ceiling if

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<v Speaker 3>you do not escalate. If you don't escalate, this is

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<v Speaker 3>the max. The Chinese chose to escalate. But now we

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<v Speaker 3>both sides have de escalated, and I think we can

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<v Speaker 3>get into a very good cadence of regular meetings with them.

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<v Speaker 3>And look, we're the two largest economies.

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<v Speaker 1>In the world.

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<v Speaker 3>We do not want to decouple with the Chinese. We

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<v Speaker 3>just need to de risk part of our supply chain.

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<v Speaker 2>Does regular incremental meetings include a meeting between President Trump

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<v Speaker 2>and Shijipang this fall.

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<v Speaker 3>I do know that a party chair she has invited

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<v Speaker 3>President Trump to visit China. I don't know. I don't

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<v Speaker 3>have dates on that. I don't know if the President's accepted.

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<v Speaker 3>I know they have a fantastic relationship on a personal level,

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<v Speaker 3>which I think forms the basis of everything between the

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<v Speaker 3>US and China.

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<v Speaker 2>Local reports in China, we're talking about the two meeting

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<v Speaker 2>on the sidelines of the APEX summit in South Korea

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<v Speaker 2>this fall. At the end of October early November, or

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<v Speaker 2>maybe President Trump going to China first. Could we see

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<v Speaker 2>a meeting that soon? You think a meeting within this

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<v Speaker 2>year can happen.

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<v Speaker 3>Again, I'm not privy to the President's travel schedule beyond September,

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<v Speaker 3>so we'll see.

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<v Speaker 2>Nothing before a meeting with Chighing paid before September, nothing

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<v Speaker 2>before Labor Day. So in the last week I do

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<v Speaker 2>want to go through something that's going on with China.

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<v Speaker 2>They've imposed exit bands on a Wells Fargo banker, a

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<v Speaker 2>commerce department employee, and according to Microsoft, they hacked into

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<v Speaker 2>their software. Will you address these actions at the talks

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<v Speaker 2>in Stockholm.

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<v Speaker 3>We're going to address a whole host of things, and

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<v Speaker 3>you know, obviously things like that will be on the

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<v Speaker 3>agenda with my Chinese counterpart.

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<v Speaker 2>You had said to me last week that the Nvidia

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<v Speaker 2>H twenty chip was potentially a chip in negotiations, a

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<v Speaker 2>mosaic part of the deal. Do you think China's doing

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<v Speaker 2>this for leverage at the trade table?

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<v Speaker 3>Absolutely not, absolutely not, because again, the H twenty, while

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<v Speaker 3>it is an advanced chip, is not one of the

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<v Speaker 3>most advanced chip. I think if we were think about

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<v Speaker 3>the Nvidia stack, the HP would be something fourth fifth

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<v Speaker 3>down the stack, and my understanding is that Huawei can

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<v Speaker 3>produce something with similar applicacy.

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<v Speaker 2>So China's malicious behavior, even just in the past week,

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<v Speaker 2>even targeting a commerce department employee. Do you think they're

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<v Speaker 2>doing this to have leverage with the United States?

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<v Speaker 3>Well, I can tell you in Stockholm it's not going

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<v Speaker 3>to give them any leverage with me. And it's a big,

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<v Speaker 3>sprawling bureaucracy. And sometimes I think we may see the

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<v Speaker 3>arrests may have been in a province, the central government

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<v Speaker 3>may not be aware of it. So I would highly

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<v Speaker 3>doubt that something at that level that they have wanted

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<v Speaker 3>to engage with the US. We are engaging with them,

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<v Speaker 3>and I think both sides want to move forward in

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<v Speaker 3>a productive way.

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<v Speaker 2>But you'll raise these issues. Yes, So now that the

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<v Speaker 2>administration is getting trade deals across the finish line Japan, Indonesia, Philippines,

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<v Speaker 2>yesterday you said the European Union potentially in sight. Do

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<v Speaker 2>you think the Federal Reserve is gonna have enough clarity

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<v Speaker 2>by September to cut interest rates?

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<v Speaker 1>Uh?

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<v Speaker 3>Again, I I'm not really sure what the Federal Reserve

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<v Speaker 3>is looking at because, Uh, thus far we have not

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<v Speaker 3>seen or we've seen very little, if any uh price

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<v Speaker 3>pressures from the tariffs, and if we were to see those, uh,

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<v Speaker 3>they wouldn't be inflationary, be a one time price adjustment.

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<v Speaker 3>So I again, I I think that their analysis of

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<v Speaker 3>tariffs is a bit off. Well.

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<v Speaker 2>Governor Waller made this exact case to us on surveillance

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<v Speaker 2>on Friday, and it sounds like he might dissent at

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<v Speaker 2>this meeting. He also said the President hasn't called him yet.

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<v Speaker 2>He's one of these names that are circulating around. Could

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<v Speaker 2>he replace FED chair J?

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<v Speaker 1>Powell?

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<v Speaker 2>Is he a name you're looking at? Have you reached

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<v Speaker 2>out to him?

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<v Speaker 3>I think there are a lot of strong candidates, including

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<v Speaker 3>several who are on the main board and perhaps regional

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<v Speaker 3>bank presidents.

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<v Speaker 2>So are there other names outside of Kevin Hassett, Kevin Walsh,

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<v Speaker 2>Christopher Waller and you yourself has been circulating There's.

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<v Speaker 3>A long list, and like I said, there's some great candidates.

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<v Speaker 2>And have you reached out to everyone on both those lists.

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<v Speaker 3>I'm not going to talk about the process, but we

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<v Speaker 3>are getting the process underway. Obviously it's going to be

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<v Speaker 3>President Trump's decision and we're not in a rush.

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<v Speaker 2>So, oh, you're not in a rush. But the President

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<v Speaker 2>continuously says he wants to get rid of the FED

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<v Speaker 2>chair J.

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<v Speaker 1>Powell.

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<v Speaker 2>Mahmade Larian yesterday said he should resign.

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<v Speaker 1>Do you think J.

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<v Speaker 2>Powell should step down to protect the institution?

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<v Speaker 1>The couple of things.

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<v Speaker 3>One, the President said he is not going to Firechair Palell.

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<v Speaker 3>I was somewhat surprised that Muhammad al Area came out

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<v Speaker 3>and said that.

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<v Speaker 1>And what I've come.

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<v Speaker 3>Out and said is that I believe that it would

0:13:06.640 --> 0:13:09.679
<v Speaker 3>do Chair Pale a favor, and he would be doing

0:13:09.720 --> 0:13:16.240
<v Speaker 3>the institution of favor if he did an internal review

0:13:16.400 --> 0:13:20.839
<v Speaker 3>separate monetary policy from everything else. And this is something

0:13:20.880 --> 0:13:24.000
<v Speaker 3>that Larry Summers and I agree on, is this mission

0:13:24.080 --> 0:13:29.720
<v Speaker 3>creep from the FED is endangering their independence of monetary policy.

0:13:29.840 --> 0:13:33.960
<v Speaker 3>So all these other things that they're engaging in could

0:13:34.000 --> 0:13:38.480
<v Speaker 3>threaten monetary policy. So it is a big, sprawling institution.

0:13:39.440 --> 0:13:45.600
<v Speaker 3>The central budget for the Board is up four x

0:13:45.760 --> 0:13:51.640
<v Speaker 3>since two thousand and four, and every institution needs to

0:13:51.760 --> 0:13:52.480
<v Speaker 3>examine themselves.

0:13:52.480 --> 0:13:53.280
<v Speaker 1>But you want the.

0:13:53.160 --> 0:13:55.360
<v Speaker 2>Man that you guys don't think is doing a good

0:13:55.480 --> 0:13:57.360
<v Speaker 2>job to run that review.

0:13:58.280 --> 0:13:59.400
<v Speaker 1>What's that you want?

0:13:59.400 --> 0:14:01.640
<v Speaker 2>The man Powell, which you and a president don't think

0:14:01.760 --> 0:14:04.120
<v Speaker 2>is doing a very good job to run the review

0:14:04.160 --> 0:14:04.959
<v Speaker 2>of the institution.

0:14:05.240 --> 0:14:09.240
<v Speaker 3>Well, I think that it could be a committee, it

0:14:09.280 --> 0:14:13.719
<v Speaker 3>could be a group. They could invite outside experts. In

0:14:14.600 --> 0:14:19.920
<v Speaker 3>the Bank of England after the twenty twenty two a

0:14:20.280 --> 0:14:25.360
<v Speaker 3>great hike shock went back and did a very good

0:14:25.480 --> 0:14:28.760
<v Speaker 3>examination of what went wrong with monetary policy. That brought

0:14:28.760 --> 0:14:32.960
<v Speaker 3>in outside experts. So, you know, I think an internal

0:14:32.960 --> 0:14:35.760
<v Speaker 3>review would be a good start, and if the internal

0:14:35.800 --> 0:14:39.000
<v Speaker 3>review didn't look like it was serious, then maybe they

0:14:39.040 --> 0:14:40.520
<v Speaker 3>could be an external review.

0:14:40.800 --> 0:14:44.000
<v Speaker 2>Have you communicated this directly with J Powell? Do you

0:14:44.040 --> 0:14:49.240
<v Speaker 2>guys continuously have your once a week breakfast lunches either

0:14:49.240 --> 0:14:50.320
<v Speaker 2>at the FED or the Treasury.

0:14:50.880 --> 0:14:54.840
<v Speaker 3>I gave a speech on Monday night on bank deregulation,

0:14:55.000 --> 0:14:58.400
<v Speaker 3>bank regulation, the future of regulation, which is, you know,

0:14:58.560 --> 0:15:02.080
<v Speaker 3>aside from monetary pol see, I think the most important

0:15:02.120 --> 0:15:03.720
<v Speaker 3>thing for the economy.

0:15:04.160 --> 0:15:06.320
<v Speaker 1>The FED is one of three regulators.

0:15:06.360 --> 0:15:08.720
<v Speaker 3>There's the FED, the Office and Control of the Currency

0:15:08.760 --> 0:15:10.600
<v Speaker 3>which sits under Treasury.

0:15:10.520 --> 0:15:11.800
<v Speaker 1>And the FDIC.

0:15:12.600 --> 0:15:17.920
<v Speaker 3>And I believe that all three of those should have

0:15:18.000 --> 0:15:22.000
<v Speaker 3>important voices. And I believe that the regulation has been

0:15:22.120 --> 0:15:25.200
<v Speaker 3>much too stringent since the Great Financial Crisis.

0:15:25.480 --> 0:15:26.960
<v Speaker 1>We are seeing this big.

0:15:26.720 --> 0:15:30.840
<v Speaker 3>Build up outside the regulated financial system. I think I

0:15:30.880 --> 0:15:33.560
<v Speaker 3>saw something two days ago. The private credit is up

0:15:33.600 --> 0:15:38.800
<v Speaker 3>ten x. Not saying it's a financial stability problem, but

0:15:39.000 --> 0:15:42.800
<v Speaker 3>I am saying that there's a regulatory arbitrage going on.

0:15:43.160 --> 0:15:45.440
<v Speaker 3>But that was a long way of saying I saw

0:15:45.520 --> 0:15:47.200
<v Speaker 3>a chair Palel at that speech.

0:15:47.720 --> 0:15:50.880
<v Speaker 2>And your launches in breakfast continue always, so you have

0:15:50.960 --> 0:15:52.000
<v Speaker 2>a good relationship.

0:15:51.600 --> 0:15:54.480
<v Speaker 3>With him at the moment, we have continuing communication.

0:15:54.840 --> 0:15:57.000
<v Speaker 2>Last time you were on, you also talked about the

0:15:57.040 --> 0:16:00.600
<v Speaker 2>potential next FED chair. You said his or her nomination

0:16:01.280 --> 0:16:03.320
<v Speaker 2>is Governor Bowman also in the running.

0:16:03.760 --> 0:16:06.360
<v Speaker 1>Again I'm not going to name names, but.

0:16:07.840 --> 0:16:11.880
<v Speaker 3>There are good candidates. As I said on the board

0:16:12.200 --> 0:16:17.080
<v Speaker 3>that there's several female regional bank presidents, and then there

0:16:17.240 --> 0:16:20.800
<v Speaker 3>are some fantastic women outside the FED.

0:16:21.040 --> 0:16:26.600
<v Speaker 2>There's also Governor Kugler's chair that is open in January.

0:16:26.680 --> 0:16:29.560
<v Speaker 2>Have you started that process.

0:16:29.600 --> 0:16:32.560
<v Speaker 1>It's a simultaneous process.

0:16:33.080 --> 0:16:38.239
<v Speaker 3>The Coogler chair is a fourteen year seat, so we'll

0:16:38.280 --> 0:16:41.920
<v Speaker 3>be looking at that also. And again I think we

0:16:42.040 --> 0:16:43.479
<v Speaker 3>have some very good candidates.

0:16:43.560 --> 0:16:46.240
<v Speaker 2>Given you just saw J Powell. Has he yet to

0:16:46.320 --> 0:16:49.560
<v Speaker 2>tell you whether or not he is going to leave

0:16:49.640 --> 0:16:53.400
<v Speaker 2>the board his governor seat by twenty before twenty twenty eight.

0:16:54.000 --> 0:16:55.320
<v Speaker 1>He hasn't yet.

0:16:56.400 --> 0:16:59.440
<v Speaker 3>My belief is that he will, and I think that

0:16:59.480 --> 0:17:02.360
<v Speaker 3>it would be very good for the institution for him

0:17:02.360 --> 0:17:03.880
<v Speaker 3>to do it, and I think it'd be very good

0:17:03.920 --> 0:17:05.120
<v Speaker 3>for him personally.

0:17:04.680 --> 0:17:05.080
<v Speaker 1>To do it.

0:17:05.280 --> 0:17:07.840
<v Speaker 2>The President once said that he goes out and ryle's

0:17:07.920 --> 0:17:11.439
<v Speaker 2>financial markets, and then he sends you, his Treasury secretary

0:17:11.480 --> 0:17:14.720
<v Speaker 2>out to calm things. Things are pretty calm today, but

0:17:14.760 --> 0:17:16.800
<v Speaker 2>when it comes to the FED chair, I know you

0:17:16.840 --> 0:17:19.240
<v Speaker 2>love college basketball, and you talk about the President being

0:17:19.280 --> 0:17:23.280
<v Speaker 2>Bobby Knight, and I know you love Dean Smith. Are

0:17:23.280 --> 0:17:25.679
<v Speaker 2>you guys playing this good cop bad cop when it

0:17:25.680 --> 0:17:28.960
<v Speaker 2>comes to talking about the FED talking about Jay Powell?

0:17:30.040 --> 0:17:30.560
<v Speaker 1>Not at all?

0:17:31.240 --> 0:17:34.760
<v Speaker 3>And Marie, the reason I think that I'm to the

0:17:34.800 --> 0:17:38.159
<v Speaker 3>extent I'm able to calm the markets, and that doesn't

0:17:38.200 --> 0:17:41.600
<v Speaker 3>always happen. I was in the investment business for thirty

0:17:41.760 --> 0:17:45.160
<v Speaker 3>five forty years, But I think more importantly than that,

0:17:45.640 --> 0:17:50.120
<v Speaker 3>I understand what President Trump is doing, and a lot

0:17:50.160 --> 0:17:54.400
<v Speaker 3>of times he's won two three steps ahead of the market.

0:17:54.760 --> 0:17:58.679
<v Speaker 3>And as you know better than anyone, the market wants

0:17:58.840 --> 0:18:03.440
<v Speaker 3>instant explanation, they want clarity, they want.

0:18:05.080 --> 0:18:06.480
<v Speaker 1>Immediate gratification.

0:18:06.840 --> 0:18:09.639
<v Speaker 3>So I think that I am able to As a

0:18:09.720 --> 0:18:13.840
<v Speaker 3>former practitioner, I think about when President Trump tells me

0:18:14.040 --> 0:18:16.840
<v Speaker 3>what his goals are, I think about, what is the

0:18:16.840 --> 0:18:20.840
<v Speaker 3>best way for me to give good framing to market

0:18:20.920 --> 0:18:25.919
<v Speaker 3>participants for them to understand what he's doing. Because he

0:18:26.000 --> 0:18:30.320
<v Speaker 3>always has a plan, it's not always obvious, So you.

0:18:30.400 --> 0:18:35.320
<v Speaker 2>Are communicating almost a strategic ambiguity that he likes to

0:18:35.359 --> 0:18:36.200
<v Speaker 2>operate from.

0:18:36.320 --> 0:18:42.119
<v Speaker 3>Well, and I'm also trying to explain that there is

0:18:42.200 --> 0:18:48.040
<v Speaker 3>a plan because look, these letters went out, everyone was,

0:18:48.520 --> 0:18:52.560
<v Speaker 3>oh my gosh, these are high rates. And I think

0:18:52.600 --> 0:18:58.800
<v Speaker 3>the president created maximum negotiating leverage and the market actually

0:18:58.800 --> 0:19:01.800
<v Speaker 3>took it pretty well, took it pretty well.

0:19:02.160 --> 0:19:03.720
<v Speaker 2>Just to finish on that final point, then, do you

0:19:03.720 --> 0:19:06.760
<v Speaker 2>think he's more in boldened to go for higher rates

0:19:06.760 --> 0:19:10.480
<v Speaker 2>with trading partners now given the market is not pushing back.

0:19:10.560 --> 0:19:15.680
<v Speaker 3>Well, I think he's created a lot of leverage because

0:19:16.000 --> 0:19:20.239
<v Speaker 3>he's created an ab situation. He is able to go

0:19:20.280 --> 0:19:23.520
<v Speaker 3>to the trading partners and say, look, I am happy

0:19:23.560 --> 0:19:26.000
<v Speaker 3>to take in this tariff income if you don't want

0:19:26.040 --> 0:19:26.760
<v Speaker 3>to negotiate.

0:19:27.119 --> 0:19:28.160
<v Speaker 1>This is a high rate.

0:19:28.359 --> 0:19:32.200
<v Speaker 3>But the US is taking a massive amounts of tariff income.

0:19:32.560 --> 0:19:39.439
<v Speaker 3>We had the first June budget surplus since twenty fifteen

0:19:40.920 --> 0:19:44.879
<v Speaker 3>last month. We reported it this month, and so we

0:19:44.960 --> 0:19:48.360
<v Speaker 3>are taking in substantial income. So President Trump is creating

0:19:48.400 --> 0:19:51.440
<v Speaker 3>this leverage by saying, if you don't want to negotiate

0:19:51.520 --> 0:19:54.720
<v Speaker 3>with me, I've sent you a letter with a high rate.

0:19:55.119 --> 0:19:58.960
<v Speaker 3>You have at the high rate, or come and negotiate

0:19:59.080 --> 0:19:59.800
<v Speaker 3>in better.

0:19:59.640 --> 0:20:01.640
<v Speaker 1>Fashion, because I'll tell you.

0:20:01.400 --> 0:20:04.639
<v Speaker 3>What was fascinating for me, and this was President Trump

0:20:04.720 --> 0:20:08.880
<v Speaker 3>at his best, at his best was the Indonesians came

0:20:09.280 --> 0:20:13.640
<v Speaker 3>with what I thought was a very good offer out

0:20:13.680 --> 0:20:17.840
<v Speaker 3>of the Blox. President Trump kept pushing them. He raised

0:20:17.880 --> 0:20:21.280
<v Speaker 3>the reciprocal rate when he sent them the letter, and

0:20:21.560 --> 0:20:26.920
<v Speaker 3>five iterations later, the Indonesian trade deal was greatly improved,

0:20:27.080 --> 0:20:29.240
<v Speaker 3>turned into a great deal for both sides.

0:20:29.680 --> 0:20:31.920
<v Speaker 2>Secretary Scott Besson, thank you so much for your time

0:20:31.960 --> 0:20:32.480
<v Speaker 2>this morning.