WEBVTT - Surveillance: Tariffs Have Many Uses, Peter Navarro Says 0:00:00.080 --> 0:00:13.040 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 0:00:13.480 --> 0:00:17.560 Jai Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.920 Bloomberg dot Com, and of course on the Bloomberg Now. 0:00:27.960 --> 0:00:30.920 We center on Iran as well, and we do that 0:00:30.960 --> 0:00:35.720 with Daniel tan Obauma p WC, who is outstanding on 0:00:35.840 --> 0:00:38.760 what nobody wants to talk about, including on might point 0:00:38.760 --> 0:00:43.400 out the President, which is actually, how do you do sanctions? 0:00:43.479 --> 0:00:46.760 Let's start with first principles, what do you actually do 0:00:46.960 --> 0:00:50.120 on sanctions? Like Mr manut Sin comes up with a 0:00:50.200 --> 0:00:53.080 twenty page document, how's it work? I think you've got 0:00:53.080 --> 0:00:56.040 to separate what the rhetoric out of the administration is 0:00:56.200 --> 0:00:59.200 versus the reality. What's the reality of the reality. In 0:00:59.240 --> 0:01:01.560 some instances of the sanctions that have come out, they 0:01:01.560 --> 0:01:05.120 have been focused and targeted on certain industries and sectors 0:01:05.319 --> 0:01:07.600 and really sought to achieve an objective, which is to 0:01:07.640 --> 0:01:11.279 force a change in behavior, to seize assets of bad people. 0:01:11.920 --> 0:01:15.880 At times we get that conflated with creating very lengthy 0:01:15.959 --> 0:01:18.520 lists of people who don't really have assets in the 0:01:18.560 --> 0:01:22.000 US who don't travel to the US and thus it 0:01:22.080 --> 0:01:24.840 gives the appearance of doing something without doing something. But 0:01:25.000 --> 0:01:27.560 is it a document out of Treasury? Is it a 0:01:27.640 --> 0:01:30.440 document out of a congressman that runs a committee. So 0:01:30.800 --> 0:01:34.759 it's typically the policy element of sanctions is driven out 0:01:34.800 --> 0:01:37.919 of the administration through State and the White House, State 0:01:38.200 --> 0:01:41.880 through the State Department, but the real nuts and bolts, 0:01:41.920 --> 0:01:46.560 the execution, the operationalization of sanctions comes through Treasury. You're 0:01:46.600 --> 0:01:49.160 actually seeing a bit of a power struggle play out 0:01:49.160 --> 0:01:52.160 in public because a number of things are talked about 0:01:52.160 --> 0:01:55.440 now by the State Department around enforcement and criminal prosecution. 0:01:55.960 --> 0:01:58.600 None of these things that agency has any remit over. 0:01:58.680 --> 0:02:03.640 Actually who does the Treasury Department the Justice Department over enforcement? 0:02:04.400 --> 0:02:07.720 So the question I have just more confusive. We started 0:02:07.760 --> 0:02:10.240 speaking to Mr. Well, I'm gonna go real simple here. 0:02:10.280 --> 0:02:13.280 Let's start just with a ran. My understanding was we 0:02:13.720 --> 0:02:15.960 had already the US government had already put sanctions on 0:02:16.000 --> 0:02:20.160 pretty much everything that mattered. What's what's left? I guess 0:02:20.240 --> 0:02:23.400 there's there's not a lot left. Um, Now, what could 0:02:23.480 --> 0:02:25.639 be left and what could be significant if we get 0:02:25.680 --> 0:02:29.560 to the major announcement is there's a concept called secondary 0:02:29.600 --> 0:02:33.239 sanctions and secondary sanctions forced a choice to foreign companies 0:02:33.240 --> 0:02:35.560 to choose between doing business with the US and doing 0:02:35.600 --> 0:02:40.040 business with Iran, but not both. Those powers were put 0:02:40.040 --> 0:02:43.760 in place in the Obama administration, used twice, but essentially, 0:02:43.760 --> 0:02:46.680 you can pick a country in any country, a company 0:02:46.680 --> 0:02:49.040 in any country in the world, and banned them from 0:02:49.040 --> 0:02:51.080 doing business in the US if you believe, if the 0:02:51.160 --> 0:02:55.080 US believes that they've been training with Iran the Obama 0:02:55.160 --> 0:03:02.200 administration after they were too smaller entities in Asia, banking 0:03:02.400 --> 0:03:05.600 entities that were found to be trading with Iran, supporting 0:03:05.600 --> 0:03:10.880 Iran's refinance of Germany, or that is the thing. They're 0:03:10.919 --> 0:03:13.919 not going after any significant entities. And even earlier in 0:03:13.960 --> 0:03:16.440 the Trump administration, there was a small Chinese bank on 0:03:16.440 --> 0:03:19.480 the border with North Korea that was designated under a 0:03:19.560 --> 0:03:23.240 different type of authority. Very small bank, but the administration 0:03:23.280 --> 0:03:25.880 took a victory lap for being tough on Chinese banks, 0:03:26.160 --> 0:03:27.840 even though no one had really heard of the bank 0:03:27.880 --> 0:03:30.400 that they designated in the first place. So, Daniel, as 0:03:30.440 --> 0:03:32.959 you go about your business talking to boards and C 0:03:33.240 --> 0:03:36.920 suite executives, what are what are executives doing in a 0:03:37.080 --> 0:03:40.200 context of our sanctions on are they are they not 0:03:40.200 --> 0:03:42.720 not on is it Iran or is it China. It's 0:03:42.720 --> 0:03:45.200 more agnostic than that. It's looking at all of the 0:03:45.280 --> 0:03:49.920 different areas where sanctions have been imposed. Where are we exposed. 0:03:50.040 --> 0:03:53.400 If your customers customers do business with some of these 0:03:53.440 --> 0:03:56.960 countries or companies in Iran or or in targeted areas, 0:03:57.320 --> 0:03:59.960 you can be held liable. So it's really trying to 0:04:00.040 --> 0:04:03.440 assess are we exposed anywhere in our company, because we 0:04:03.520 --> 0:04:06.880 could be a massive global company not directly do business 0:04:06.880 --> 0:04:09.960 with Iran, but indirectly through some of our customers, we 0:04:09.960 --> 0:04:13.200 can end up being caught to facilitate trade with Iran, 0:04:13.240 --> 0:04:14.960 which could put us in the penalty box with the 0:04:15.040 --> 0:04:17.360 U S. And then how do the other countries react 0:04:17.400 --> 0:04:20.359 to the United Kingdom with all their distractions, Germany with 0:04:20.440 --> 0:04:24.520 their distractions, and particularly France with a heritage to Persia. 0:04:24.839 --> 0:04:27.880 We're very unpopular on this right now. I mean the 0:04:27.920 --> 0:04:30.440 Iran Do they just say no, We're not gonna do it, 0:04:30.560 --> 0:04:33.440 or that's a bit of the problem. The Iran deal 0:04:33.520 --> 0:04:36.120 that was put in place in the Obama administration was 0:04:36.160 --> 0:04:38.599 the permanent five members of the UN Security Council that 0:04:38.680 --> 0:04:42.440 came together to form that deal with Iran. You now 0:04:42.480 --> 0:04:45.280 are seeing a unilateral approach to Iran and the way 0:04:45.279 --> 0:04:48.520 the US is acting, And actually there is an EU 0:04:48.600 --> 0:04:52.640 lead mechanism called INSTINCTS that was designed to provide financing 0:04:53.160 --> 0:04:57.840 for Iran related trade, permissible Iran related trade stuff, it's 0:04:57.839 --> 0:05:01.400 all humanitarian. The State Apartment over the last few weeks 0:05:01.440 --> 0:05:05.640 has began threatening that SPV with sanctions because it could 0:05:05.640 --> 0:05:09.320 be used to circumvent um u S sanctions, which really 0:05:09.400 --> 0:05:12.680 isn't the point. So there is a bit of a 0:05:12.760 --> 0:05:16.440 struggle right now to try and suss out any activity 0:05:16.480 --> 0:05:20.840 with Iran. The Europeans have been light in challenging the 0:05:20.960 --> 0:05:23.800 US on this. I think the one wild card to 0:05:23.839 --> 0:05:26.880 me with this being g twenty week is China. China 0:05:27.040 --> 0:05:30.120 still is trading significantly with Iran, and reports came out 0:05:30.200 --> 0:05:33.200 yesterday that their trading volumes have only gone down about 0:05:33.200 --> 0:05:36.040 a hundred million dollars in the month of May to 0:05:36.160 --> 0:05:39.359 about nine hundred million dollars in trade with Iran. To 0:05:39.480 --> 0:05:44.520 be clear, if we do new sanctions or enforce the 0:05:44.640 --> 0:05:48.400 present sanctions, are they the kind of materials and goods 0:05:48.400 --> 0:05:51.120 where China or another country just makeup they doll one 0:05:51.160 --> 0:05:54.800 eight hundred Tehran and say let's fix us now. Well, 0:05:54.839 --> 0:05:58.560 so China and Iran are still trading, that's still happening. 0:05:59.040 --> 0:06:01.800 The US knows this. But is the US willing to 0:06:01.920 --> 0:06:06.000 risk another dispute with China because of their support of Iran? 0:06:06.920 --> 0:06:09.560 I don't think that's really the case. They may pick 0:06:09.600 --> 0:06:12.400 a softer target within China to take credit for being 0:06:12.440 --> 0:06:15.320 hard on China. But I think right now that the 0:06:15.400 --> 0:06:18.680 question of these major sanctions that were talked about on Friday, 0:06:18.760 --> 0:06:21.600 or that said they were released on Friday, that yesterday, 0:06:21.600 --> 0:06:24.800 Now they're coming on Monday. It really is hard to 0:06:24.800 --> 0:06:26.760 tell what's major. But they're going to make a much 0:06:26.760 --> 0:06:29.000 bigger deal, most likely out of whatever it is than 0:06:29.240 --> 0:06:32.839 in reality. How effective had the sanctions been on Iran? 0:06:32.960 --> 0:06:35.039 How tough has it been in so look, Iran is 0:06:35.200 --> 0:06:38.280 used to being isolated, They're very good at being isolated. 0:06:38.320 --> 0:06:42.000 For the last forty or so years, they've been isolated 0:06:42.040 --> 0:06:45.840 from most of the Western economies. How much of an 0:06:45.839 --> 0:06:48.680 impact hasn't made. There's clearly been an attempt by the 0:06:48.680 --> 0:06:51.880 Trump administration to force the hardliners back in power from 0:06:51.880 --> 0:06:55.760 the moderates to justify the creation of a more legitimate 0:06:55.880 --> 0:06:58.880 enemy worthy of some of the rhetoric we've seen over 0:06:58.880 --> 0:07:02.120 the last few days visa v cocked and loaded. So 0:07:03.720 --> 0:07:06.240 the sanctions really, if you're trying to bring some of 0:07:06.279 --> 0:07:08.919 the negotiating table and you're pulling out of a deal 0:07:09.040 --> 0:07:11.760 that a number of parties negotiated and that no one 0:07:11.800 --> 0:07:15.040 has violated, how do you trust any Have you ever 0:07:15.120 --> 0:07:18.400 used in all your work is as a public employee 0:07:18.400 --> 0:07:21.760 of the United States of America, your different efforts travel 0:07:21.840 --> 0:07:25.880 lux now with p WC. Price Waterhouse Coopers, did you 0:07:25.920 --> 0:07:29.440 ever use the fraight locked and loaded, cocked and loaded, 0:07:29.560 --> 0:07:35.040 or cockton loaded. No, I have not used used. I've 0:07:35.120 --> 0:07:37.720 used other colorful rhetoric in the government, but not quite 0:07:37.760 --> 0:07:41.440 that Flower, Jim. I'm thank you so much always locked 0:07:41.440 --> 0:07:59.000 and loaded for a great discussion. Tom. We often talk 0:07:59.040 --> 0:08:01.800 about geopod politics and how and the impact on the market, 0:08:01.840 --> 0:08:03.680 and that's certainly a big issue. This is going to 0:08:03.800 --> 0:08:06.280 be a big issue this week as the G twenty 0:08:06.400 --> 0:08:09.480 meets later this week. It's always a big issue for 0:08:09.800 --> 0:08:12.880 economics and the markets, but now with the trade tensions 0:08:12.920 --> 0:08:15.880 between China and the US, even more so. Uh, We're 0:08:16.000 --> 0:08:18.240 very fortunate to have our next guest to help us 0:08:18.280 --> 0:08:20.640 kind of pass through this very lovely is that Peterson 0:08:20.720 --> 0:08:24.640 Institute Senior fellow, UH Syracuse University professor as well. She 0:08:24.720 --> 0:08:27.080 joins us on the phone from Syracuse. Mary, thanks so 0:08:27.120 --> 0:08:29.559 much for joining us. We do have the G twenty 0:08:29.800 --> 0:08:33.319 later this week. It appears at Presidents Trump and g 0:08:33.640 --> 0:08:36.640 will meet on the sidelines. Should we is the best 0:08:36.640 --> 0:08:41.200 if we just keep our expectations low here? Yea good morning. 0:08:41.440 --> 0:08:43.600 We're gonna have a lot of spectacutor sports this week, 0:08:43.600 --> 0:08:48.400 aren't we. Um, Well, it's pretty hard to do. I 0:08:48.440 --> 0:08:50.760 think all of us are ready for an end to this, 0:08:50.960 --> 0:08:54.079 just to move on to more productive types of engagement 0:08:54.080 --> 0:08:56.480 between the two countries. So I think it's pretty hard 0:08:56.520 --> 0:08:59.199 to have our keep our expectations in check this week. 0:08:59.880 --> 0:09:03.440 So what do you think China wants here? I mean, 0:09:03.440 --> 0:09:06.080 they're gonna have an opportunity here to maybe move this 0:09:06.200 --> 0:09:09.360 discussion for what do you think China really wants at 0:09:09.360 --> 0:09:13.559 this stage? Well, China has all along wanted to seek 0:09:13.640 --> 0:09:17.440 some kind of negotiated in to this, UH and they 0:09:17.480 --> 0:09:24.280 also need to uh keep their head high. That is, 0:09:24.320 --> 0:09:27.520 they can't be seen as cow tewing to President Trump. 0:09:28.080 --> 0:09:31.040 So that's become more and more difficult as the threats 0:09:31.040 --> 0:09:35.240 of ratched ratcheted up. Now with this meeting here between 0:09:35.280 --> 0:09:38.120 the two leaders, there is a possibility that something can 0:09:38.160 --> 0:09:41.800 be done. We saw a hope of progress each time 0:09:41.840 --> 0:09:46.079 they've met, of course, uh, unfortunately that hasn't led to 0:09:46.120 --> 0:09:50.560 anything except escalating tariffs. So, UM, we're gonna hope for 0:09:50.559 --> 0:09:54.040 the best this week and UM hope that the magic 0:09:54.160 --> 0:09:57.240 of the two men meeting can bring us a little 0:09:57.280 --> 0:10:00.880 further along on this. Otherwise we're looking at some pretty 0:10:01.600 --> 0:10:06.000 that's pretty tough ride moving forward. How do you extrapolate forward? 0:10:06.320 --> 0:10:10.320 And this is my lead question for Dr Navarro, Professor 0:10:10.440 --> 0:10:16.439 Lovely here in forty minutes, Iran, we blinked, Ice, we blinked. 0:10:17.240 --> 0:10:20.080 If I say to you, the president will blink with 0:10:20.240 --> 0:10:23.840 G twenty, what does that actually mean? Do we know 0:10:23.920 --> 0:10:28.360 what blink means? Okay, I would add Mexico, we blink. 0:10:28.400 --> 0:10:34.079 Excuse me, I'm sorry, she's like efforting me forward to Navarro. Mexico. 0:10:34.640 --> 0:10:38.400 We blinked. So what what does blink mean that the 0:10:38.440 --> 0:10:42.720 G twenty? Mary, Well, you know, he could easily go 0:10:42.920 --> 0:10:46.000 back to things that were on the table months ago 0:10:46.400 --> 0:10:49.800 before there was so much uncertainty and angst driven to 0:10:50.120 --> 0:10:53.720 you know, American businessmen and women's hearts. Through this, he 0:10:53.760 --> 0:10:57.400 could go back to a package where we have significant 0:10:57.440 --> 0:11:00.679 purchases by the Chinese, you know me, not even more 0:11:00.720 --> 0:11:02.400 than we would have end up with us, certainly more 0:11:02.440 --> 0:11:05.839 than we have now. Um, he can look at some 0:11:05.880 --> 0:11:10.120 sort of shallow reforms, which I think is probably what's 0:11:10.240 --> 0:11:14.400 due given the length of these negotiations, which you know, 0:11:14.559 --> 0:11:17.560 by the standard of international trade agreements, have not been 0:11:17.679 --> 0:11:21.480 very long. Uh, And he could perhaps look back at 0:11:21.559 --> 0:11:24.400 some other types of reforms that she was willing to make. 0:11:24.440 --> 0:11:26.199 But I think most of these things would have been 0:11:26.200 --> 0:11:28.360 on the table in the past, so I think that 0:11:28.400 --> 0:11:31.480 would be uh, in some sense viewed as a blink 0:11:31.520 --> 0:11:34.680 by many folks. In fact, I think part of President 0:11:34.679 --> 0:11:37.040 Trump's problem is that it's hard for him to get 0:11:37.080 --> 0:11:40.120 a win here. Now. If he does reach an agreement, 0:11:40.240 --> 0:11:42.959 people will claim as a blink, and if he doesn't, 0:11:43.520 --> 0:11:46.040 we're going to see the impact on American businesses and 0:11:46.080 --> 0:11:49.520 American consumers. So it's it's a little it's a very 0:11:49.600 --> 0:11:53.880 fraught week firm I think, does the Hong Kong protests 0:11:54.040 --> 0:11:57.280 and all the dynamics of the past fourteen days does 0:11:57.320 --> 0:12:05.720 that affect Mr She's options? Well, it certainly makes um 0:12:05.760 --> 0:12:10.360 it's harder for him in some ways. Also because you know, 0:12:10.400 --> 0:12:13.320 we see that there is at least within Hong Kong 0:12:13.600 --> 0:12:20.480 very deep well uh of resentment almost of the increasing 0:12:20.880 --> 0:12:27.120 authoritarianism in the mainland, and if the economy slows even more, 0:12:27.440 --> 0:12:29.959 it's going to make it much more difficult for She 0:12:30.320 --> 0:12:34.640 moving forward, not justin on the political sphere, but also 0:12:34.679 --> 0:12:38.160 on the economic sphere, because people's you know, sense of 0:12:38.200 --> 0:12:41.920 well being, their morale as an important measure of how 0:12:41.960 --> 0:12:45.880 the economy will do. So, Mary, as President Trump sits 0:12:45.880 --> 0:12:49.000 down with President She, what do you think President Trump 0:12:49.040 --> 0:12:53.120 will view as a win or as a successful Friday 0:12:53.160 --> 0:12:58.560 Saturday coming up? Wow? Well, I've learned never never wise 0:12:58.640 --> 0:13:04.560 to predict what what President Trump thinks. However, clearly, well, 0:13:04.640 --> 0:13:07.800 you know, I would say from an ordinary sense, we 0:13:07.840 --> 0:13:11.920 would expect a win to be something that results in uh, 0:13:11.960 --> 0:13:16.720 you know, greater purchases for US agricultural exporters, uh, greater 0:13:16.800 --> 0:13:20.840 freedom for our American service providers, particularly business service providers 0:13:20.880 --> 0:13:27.520 in China UM and perhaps liberalization on some tariffs, certainly 0:13:27.720 --> 0:13:31.800 some liberalization in terms of FDI caps or ownership caps, 0:13:31.800 --> 0:13:34.760 but you know that's sort of normal. We're looking at 0:13:34.800 --> 0:13:38.280 politics here, so he may be looking for some gigantic 0:13:38.640 --> 0:13:41.320 uh sign that he has one, that he has somehow 0:13:42.040 --> 0:13:44.160 brought the Chinese to the table in a way that 0:13:44.200 --> 0:13:46.719 no one else could. And I think that's where the 0:13:46.800 --> 0:13:49.160 danger lies, because that's what the Chinese are not going 0:13:49.200 --> 0:13:52.360 to want to give him. Very lovely, thank you so much, 0:13:52.400 --> 0:13:57.480 greatly appreciate it. With the person of course, with Syracuse University, 0:14:09.520 --> 0:14:11.640 the Interview of the Day, Paul Swone and Tom Keane, 0:14:11.640 --> 0:14:16.520 with his Peter Kent Navarro, Amertus Professor, University of California 0:14:16.920 --> 0:14:21.040 at Irvine, and certainly within the White House, the President's 0:14:21.320 --> 0:14:26.200 chief guider on our discussion with China, our discussion on 0:14:26.280 --> 0:14:30.160 trade and manufacturing policy. Professor Navarro, you have been a 0:14:30.160 --> 0:14:32.960 good friend of the show. We've always gone from many 0:14:33.000 --> 0:14:36.040 different opinions. I want to begin with a moment we're 0:14:36.080 --> 0:14:42.200 in right now. After Iran and delay, after Mexico, and 0:14:42.200 --> 0:14:46.600 delay after Ice and delay over the weekend, why should 0:14:46.600 --> 0:14:50.520 my listeners worldwide think of anything except out of G 0:14:50.720 --> 0:14:57.200 twenty further delay with China. Well that's a great set 0:14:57.280 --> 0:15:01.360 up there. Um, Look, we're in the glide path. Now 0:15:01.400 --> 0:15:06.680 to Osaka, Well, who talks will resume UH, going into that, 0:15:06.840 --> 0:15:10.280 Let's see what happens. What the President has said was 0:15:10.440 --> 0:15:13.120 will either get a great and fair deal or we won't. 0:15:13.760 --> 0:15:16.680 I think what's important for your listeners to understand is 0:15:16.800 --> 0:15:20.720 what we're fighting for and what we're fighting about. There's 0:15:20.760 --> 0:15:25.760 basically seven problems structurally that we face with China. It's 0:15:25.760 --> 0:15:30.640 the cyber intrusions into our business networks, forced technology transfers 0:15:30.640 --> 0:15:34.880 a condition of market access, totally illegal under the w 0:15:35.040 --> 0:15:37.480 t O. We lose a couple of hundred billion dollars 0:15:37.480 --> 0:15:41.160 a year alone in intellectual property seft. There's an ongoing 0:15:41.240 --> 0:15:46.040 problem with dumping a product, huge over capacity and stealing 0:15:46.120 --> 0:15:52.440 aluminum in UH China growing over capacity, and auto's robotics UH. 0:15:52.520 --> 0:15:57.120 Number five, we've got the history of currency manipulation. Number six, 0:15:57.640 --> 0:16:01.760 it's the state owned enterprises, which are basically the tip 0:16:01.840 --> 0:16:06.720 of the Chinese mercantilis spirit. And then of course the issues. 0:16:06.760 --> 0:16:10.120 So these are discussions we're having Tom And as you know, 0:16:11.080 --> 0:16:15.360 we had a hundred and fifty page plus agreement UM 0:16:15.440 --> 0:16:20.520 that we worked literally for over a year on and Okay, 0:16:20.560 --> 0:16:23.040 I want to go to the immediately, Professor Naval, you 0:16:23.080 --> 0:16:26.680 talk about a mercantilist China. Are we going after a 0:16:26.800 --> 0:16:33.680 mercantilist China by becoming a mercantilist America? No, I think, Uh. 0:16:33.800 --> 0:16:37.720 I think what's important for your listeners to get the 0:16:37.760 --> 0:16:42.040 big picture on is this. We are in an international 0:16:42.080 --> 0:16:48.560 trading system where the United States faces significantly higher caariffs 0:16:48.640 --> 0:16:51.920 around the world under the World Trade Organization if you 0:16:51.960 --> 0:16:55.080 know this, Tom, but under the most Favored Nation rules 0:16:55.160 --> 0:16:59.880 of the World Trade Organization, is perfectly legitimate for country 0:17:00.440 --> 0:17:04.119 uh to charge the United States significantly higher tariffs and 0:17:04.280 --> 0:17:09.280 on the products that we charged them, and it's it's endemic, uh. 0:17:09.320 --> 0:17:13.440 And what that does, really, this unreciprocal trade, it creates 0:17:13.440 --> 0:17:18.640 a large trade deficit over half a billion what I think, 0:17:18.640 --> 0:17:22.080 it's like almost a year we're approaching. But my point 0:17:22.119 --> 0:17:25.200 is this is like you you're asking me about mercantile 0:17:25.320 --> 0:17:29.040 is and whatever. We we have the lowest terrorists, lowest 0:17:29.040 --> 0:17:32.760 trade berries in the world, and as the President has said, 0:17:32.800 --> 0:17:35.240 we're being treated like a pe manage. Okay, I want 0:17:35.240 --> 0:17:38.360 to Peter, I want to get to where we are 0:17:38.520 --> 0:17:41.040 right now. I don't need a rehash what we've done 0:17:41.080 --> 0:17:43.480 for the last two years on TRIGG. You wrote about 0:17:43.600 --> 0:17:46.520 most Favored nation status in the Wall Street Journal a 0:17:46.640 --> 0:17:50.000 number of months ago, summer of last year, your colleague 0:17:50.000 --> 0:17:54.800 Emritus Professor sarez Villa at Irvine wrote a scathing note 0:17:54.880 --> 0:17:56.959 and he really got to the heart of the matter, 0:17:57.440 --> 0:18:00.959 which is the game theory of the moment. Professor suarez 0:18:01.040 --> 0:18:06.320 Vila talked about a global trading system that can impose countermeasures. 0:18:06.720 --> 0:18:11.240 Is China imposing countermeasures on what they perceive as the 0:18:11.280 --> 0:18:16.399 trade war you and President Trump are beginning. Tom, I 0:18:16.640 --> 0:18:19.040 don't want to really speculate on what China does or 0:18:19.080 --> 0:18:23.920 doesn't do. What we see as a chessboard here where 0:18:23.960 --> 0:18:26.200 a big thing that we need to do this summer 0:18:26.400 --> 0:18:29.920 is past the United States, Mexico, Canada agreement that that 0:18:30.040 --> 0:18:34.640 for US is high on the priority list because if 0:18:34.640 --> 0:18:37.280 we do that, we'll create half a million jobs, will 0:18:37.280 --> 0:18:40.000 get another point of g d P, will create seventy 0:18:40.000 --> 0:18:43.560 five thousand jobs in the auto sector. And that's that's 0:18:43.600 --> 0:18:47.199 something that Congress can do within a matter. Can you 0:18:47.320 --> 0:18:50.480 do that? By Lincoln? Okay? What we focus on, I mean, 0:18:50.520 --> 0:18:53.320 I understand you want to talk Peter, is no okay, 0:18:53.320 --> 0:18:56.399 but Peter, to be fair to you, you are not 0:18:56.560 --> 0:19:01.200 conflating trade policy with immigration. Polo. See, can we get 0:19:01.200 --> 0:19:06.240 a successful new NAFTA even as a president conflates that 0:19:06.400 --> 0:19:12.960 policy with the immigration. Absolutely. I think that the recent 0:19:14.000 --> 0:19:19.040 use of tariffs UH to get Mexico to significantly tightened 0:19:19.080 --> 0:19:22.600 their border security has brought these these nations closer to 0:19:22.680 --> 0:19:27.080 each other. We're working very well now with Mexico UH. 0:19:27.119 --> 0:19:30.520 And I think that that was an important thing. I 0:19:30.560 --> 0:19:34.720 remember that the tariffs have many different uses. In that case, UH, 0:19:34.760 --> 0:19:38.200 they were used to address the national security crisis. And 0:19:38.240 --> 0:19:41.320 when the President announced that, people went crazy, and then 0:19:41.320 --> 0:19:44.320 two days later they hailed it as a great victory, 0:19:44.400 --> 0:19:47.840 and that's what it is. So UM I think. I 0:19:47.880 --> 0:19:51.480 think that from an investors point of view, the important 0:19:51.480 --> 0:19:55.680 thing to see is that the US economy is rock solid. 0:19:56.680 --> 0:20:01.680 All of financial indicators are pointing bullish, and the terror 0:20:01.760 --> 0:20:05.560 of policies that we're using doctor working in different ways 0:20:06.000 --> 0:20:12.120 to help our economy and help restructure the international trade 0:20:12.200 --> 0:20:15.080 environment in a way which is more fair and therefore 0:20:15.280 --> 0:20:19.080 more expansive. And but as it relates dr virus relates 0:20:19.119 --> 0:20:22.120 to terrorists, what do you believe has been the impact 0:20:22.280 --> 0:20:28.520 on US consumers and US businesses zero. And that's that's 0:20:28.520 --> 0:20:31.800 shown in the data. And that's that's counterintuitive. I mean, 0:20:32.280 --> 0:20:34.760 there were a lot of people who were saying that 0:20:34.800 --> 0:20:38.080 we were going to have tremendous price inflation from from 0:20:38.080 --> 0:20:39.840 all of the terrorists we put in, whether it was 0:20:39.840 --> 0:20:42.879 aluminum steel or whether it was China, we've seen zero. 0:20:42.960 --> 0:20:46.159 Now in the case of China, it's very clear what's happened. Uh. 0:20:46.280 --> 0:20:48.879 They devalued their currency to take the bite out of 0:20:48.920 --> 0:20:52.479 the terrors. They've lowered their prices. We've seen them bearing 0:20:52.480 --> 0:20:55.919 the burden of the tariffs to lower exports, lower profits. 0:20:56.200 --> 0:21:01.080 The Chinese government itself, um is is burying that. But 0:21:01.160 --> 0:21:05.200 are those are those tariffs? Are those are paying nothing? 0:21:05.200 --> 0:21:09.080 There's no. You can't point to any inflation in this economy, 0:21:09.119 --> 0:21:11.880 which is why the others. The other piece out there, 0:21:11.960 --> 0:21:15.200 tom as you know, UH, is the federal reserve. I mean, 0:21:15.520 --> 0:21:17.879 a rate cut and passage of U S M c 0:21:18.080 --> 0:21:21.119 A would get us easily over Well, the President just 0:21:21.160 --> 0:21:23.359 tweeted out that we would see four or five percent. 0:21:23.440 --> 0:21:26.240 I believe he assumes real g d P. And I 0:21:26.280 --> 0:21:29.480 can't find many people that would agree with that ductor 0:21:29.560 --> 0:21:35.399 navi of so critical moment here with is the bluster 0:21:36.520 --> 0:21:40.240 and policy that we've been doing. And as someone mentioned 0:21:40.240 --> 0:21:43.000 brilliantly over the weekend, maybe it's talked loud and carry 0:21:43.359 --> 0:21:47.040 a small stick. What kind of stick does the president 0:21:47.160 --> 0:21:52.760 take to the G twenty meeting, tom As I said 0:21:52.760 --> 0:21:54.720 at the outset, we're on the glide path going in. 0:21:54.840 --> 0:21:57.840 Let's just see what happens. I think that uh the 0:21:57.880 --> 0:22:00.560 important thing here if you're an investor, just to see 0:22:00.600 --> 0:22:04.480 the chessboard. You got a strong economy, uh, and that 0:22:04.560 --> 0:22:07.360 will continue, and that's bullish for the markets. That's all 0:22:07.440 --> 0:22:10.440 that matters. We've had the tariffs in for over a year, 0:22:10.600 --> 0:22:14.359 tom and we've seen no negative impacts whatsoever on the 0:22:14.480 --> 0:22:19.760 US economy. In fact, the Q one we actually we 0:22:20.119 --> 0:22:22.399 came in a little over three percent growth rate, and 0:22:22.440 --> 0:22:25.280 the full point of that was due to our reduction 0:22:25.320 --> 0:22:28.480 in the trade deficit, primarily because of the China tariffs. 0:22:28.520 --> 0:22:32.120 So let's not let's not. I think if people want 0:22:32.160 --> 0:22:35.360 to get excited about things right now, they should get 0:22:35.359 --> 0:22:37.920 excited about passing the U S m c A agreement, 0:22:37.920 --> 0:22:40.159 because that's going to be the next leg up on 0:22:40.200 --> 0:22:43.240 our growth. That should get excited about the idea that 0:22:43.359 --> 0:22:46.960 the FED might lower interest rates as they should. Uh. 0:22:47.000 --> 0:22:50.000 And and let's let's just see what happens with China. 0:22:50.040 --> 0:22:54.000 We we won't what what would the administration consider a 0:22:54.000 --> 0:22:59.639 successful G twenty meeting as it relates to China? Uh? 0:23:00.000 --> 0:23:03.080 And speculate on that. Let's just see what happens. Well, 0:23:03.240 --> 0:23:05.800 this is the quiet period. Let's just go into Osaka. 0:23:06.080 --> 0:23:08.560 Let's see what happens. I'm happy to talk about other things, 0:23:08.640 --> 0:23:13.800 but let's just let's just see what happens. Is multilateral dead, sir? 0:23:14.080 --> 0:23:16.000 I mean, with all the books you've written, the anger 0:23:16.080 --> 0:23:20.480 over China over the years, is a multilateral America dead? 0:23:22.040 --> 0:23:27.359 The US Mexico Canada Agreement is my multilateral. It's three countries, 0:23:28.080 --> 0:23:32.080 um in I think the smartest, biggest trade deal in 0:23:32.720 --> 0:23:37.360 world history. And it's good for all three countries as 0:23:37.359 --> 0:23:42.159 well as American farmers, ranchers, manufacturers, and workers. So in 0:23:42.200 --> 0:23:46.560 that sense, multilateralism um isn't dead at all. And and 0:23:46.920 --> 0:23:52.160 so no, um, if you have multilateral Transpacific partnership, which 0:23:52.240 --> 0:23:56.040 is which would have torn apart of auto industry, that's dead. 0:23:56.840 --> 0:24:00.000 But the U S m c A is hopefully it'll 0:24:00.040 --> 0:24:03.200 be alive and well and and last for a long time. 0:24:03.440 --> 0:24:05.840 Peter Navarro, thank you so much. She has Assistant to 0:24:05.840 --> 0:24:09.359 the President, Director of Trade and Manufacturing Policy at the 0:24:09.359 --> 0:24:25.280 White House. That we greatly appreciate his time. Last week 0:24:25.320 --> 0:24:29.200 we were honored to speak with General McCrystal Admiral Strevidis, 0:24:29.200 --> 0:24:32.800 and we continue that forward now with another admiral. He 0:24:32.840 --> 0:24:37.360 has Admiral Sestak of Pennsylvania. But he's different than at Crystal. 0:24:37.520 --> 0:24:41.920 He's different than Stravidas. He's decided to run for president. 0:24:42.040 --> 0:24:46.040 He is, I believe, by count candidate uh for a 0:24:46.200 --> 0:24:50.159 very crowded Democratic Party field. Admiral, we are thrilled to 0:24:50.200 --> 0:24:53.199 have you with us. As a former congressman, you know 0:24:53.320 --> 0:24:58.520 the landscape. Well, why do the Democrats need a candidate 0:24:59.200 --> 0:25:04.560 to come up the process of defeating President Trump? Hey, 0:25:04.560 --> 0:25:08.719 thanks for having me aboard. I honestly do believe what 0:25:08.760 --> 0:25:14.200 America's most want is someone who is actually accountable to them, 0:25:14.240 --> 0:25:18.679 to them, above self, above party, above any special interest. 0:25:19.680 --> 0:25:23.040 That's what they most want. Look, they're looking for a 0:25:23.080 --> 0:25:26.000 president and also believe or they need a president who 0:25:26.040 --> 0:25:30.120 has a depth of global experience to restore America's leadership 0:25:30.160 --> 0:25:33.160 in the world, and that's what protects our American dream 0:25:33.200 --> 0:25:36.040