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After the call with Canada, you'll need to stay with us all day here.
Charlie will certainly be watching. What was that dow?
Down six hundred points at one point, we're looking at a seventy five point loss. Of course, this has a lot to do with the progress in Mexico. And then we're counting down to a three o'clock call, three pm. Will it be a perfect call? Donald Trump and Justin Trudeau talking about the implementation tomorrow of twenty five percent tariffs across the board. The US national anthem was booed by hockey fans on Saturday in Ottawa, booed last night
by NBA fans in Toronto. I don't know what they're singing today in Mexico, but the market's certainly like the idea that Donald Trump had some time to talk with Mexico's president, and sure enough, the tariffs are delayed, as we heard earlier from the President of Mexico, who takes us inside the phone call with Donald Trump speaking through a translator.
Here, let's listen.
Then he agreed and at the end asked me how much time I wanted to put on pause. I said, well, let's put it on pause forever. And he asked how long. I said, let's put it on pause for a month, and I am sure that in that month we will be able to have results, good results for his people and good results for Mexico.
Claudius shinbah, Let's put it on pause forever, and he asked, now how long?
It does?
Make you wonder the substance of these calls and maybe something similar? Could something similar happen with Canada later on today? Knowing that Mexico pledged ten thousand troops to stand along the border to keep drug trafficking and illegal immigrants out, keep the fentanyl owed, is there a similar agreement that could be struck today with Canada. Doesn't appear clear to us at this moment, which is why we need to wait for the readout on this call.
Now.
Vin Gary Shankar is wondering what happens as well. That's why we have the president of the Economic Security and Technology Department at CSIS with us right now. Former Senior Official Department of Congress, Navin I'm sure you never heard of a moment quite like this where we have things knocking around. It's going to be different from one hour to the next. It appears over the course of the day.
I'm supposed to ask you about the impact of tariffs, But is that the point of this conversation, or are we simply using these bargaining chips to exact concessions from our neighbors with no real intention of ever implementing them.
Well, thank you and joy, it's great to be here. It certainly seems like the use of AIPA the Emergency Economic powers to institute these tarrs are designed to achieve some ends with respect to fentanyl interdiction. Fentanyl is a serious public health issue and deserves the attention of the
President's given it. However, the real question is whether the potential trade war that we're facing down right now is really worth the risk in terms of addressing what is essentially a joint law enforcement and integers interdiction type of effort that's required.
Well, So is this a trade war or a drug war? The White House was using the latter term this morning.
Well, I would say that we looks like we're on the precipice of a trade war, unless you know, we're at T minus one or less because these tariffs going to effect at twelve one am on February fourth. The dance between Mexico and the US right now perhaps is a way to forestall that. The real question is shouldn't we be fighting a tech war, because that's really what the issue is as far as economic security of the
United States is concerned. And I think that this may actually be ultimately somewhat of a distraction from what we should be focused on, and certainly I think the administration is aware of this. But again, the question is about focus.
Okay, So Navin introduces an interesting idea here and a smart question. By the way, Navin, no one's talking about the ten percent tariffs against China, which are more likely to be implemented or kept in place, I would argue, than the Canadian or Mexican tariffs. We've talked recently about turning the screws on export controls for high tech GPUs, the advanced stuff that Nvidia is selling for instance.
Is that the direction you're looking at?
And why are we talking about Mexico and Canada if that's the case.
Well, the reason we're talking about Mexico and ca Canada is because the North American economic ecosystem is highly integrated. Those players have much to lose given their export exposure to the United States. But with respect to China, the ten percent tariff, remember what they had priced in with something like sixty percent tariffs based on what the President had said during the campaign, So this is much lower
than that. We will feel the hit here in the US on things like electronics and other types of goods
and services like that from China. But I think the bigger question, which you pose is an important one, is we should be thinking the economic relationship with China covering a number of economic security tools, trade, export controls, investment screening, and other types of measures that are intended to actually strengthen the US's hand with respect to the technology competition that is now accelerating across a number of technologies.
If the FED is coming from China and going through Mexico and Canada to get here, most of it through Mexico, that also can change the way you're looking at this drug war. Why don't we go to the source instead of unplaced partners?
One hundred percent? And as you'll recall, during the Biden administration there was an agreement with presidency to work on that issue. I think you have certainly put your finger onto a really important issue, which is the source. And I think that is a curious decision to prioritize what is in effect harder measures with Mexico and Canada right
now relative to the Chinese. Who knows what's coming down the pike in terms of the game plan of the administration, but sequencing matters, and so now we're going to focus on our closest allies relative to what is our principal competitor.
Nac A headline just crossing the terminal. Secretary of State Rubio Mexico sending Nation Guard to the border is quote a very good sign unquote. Is there an equivalent side here for Canada? What is it that Justin Trudeau can promise Donald Trump on the phone at three o'clock you're going to line up the Mounties and that's going to be it along the northern border here or is it something more than that?
Well, It's interesting because the AEPA order was focused on fentanyl, and the cross border fentanyl from Canada is relatively small, very very small, negligible relative to Mexico. And so really the question is what's the goal of this and what do you really want from Canada Canada. Are there unstated goals that are not in the AEPA order or is there something more? And so I think that explains the difference in the way that relatively relatively Canada and Mexico
have responded. So Mexico has, you know, really made a number of measures and you just read that out to demonstrate focus on fentinel. Well, Canada's response is a little bit different. They've said, well, we'll retaliate. I think the Ontario premiere has said that he's banning US companies from government contracts in Ontario. So too much harder stance. And it's really because these measures affect those countries differently, and
their potential kind of alternatives are also different. Remember, our relationship with Canada is also important with respect to the competition with China, both in terms of critical minerals that we need for advanced technologies. Canada's role on implementation of export controls, and also the fact that Canada is going to take over the G seven presidency and we need partnership with them to again and win the bigger the bigger war, if you will, the tech war.
That's a good one, Avina. I haven't heard anybody mention that the G seven. We like data here at Bloomberg. Let's put some numbers on this.
To your point, Canada negligible as a source of fentanyl trafficking. Forty three pounds came across the northern border last year versus twenty one thousand pounds across the southern border. Gives a little bit of perspective to what we're talking about, Navine. What is this poor ten for the EU? Donald Trump says Europe is next.
Well, you know there are two things he says there next. Again, the question is going to become, what are the goals of whatever tariffs he puts on the EU? Are we dealing with trying to address bilateral trade deficits? So, for example, in the case of Mexico and Canada, you may put these tariffs on both countries, but you will likely experience an increase in imports from other countries like Germany, like
those in Europe. So the overall aggregate b trade deficit will not reduce, but you might shift which countries you have a deficit in relative to others. And so the question is what's the goal with respect to Europe. Is it to address the bilateral trade deficit? Well, let's see what the president does there. Is it to achieve some other non economic ends such as the fentoonyl case here in North America? Are there other goals he's trying to
achieve with Europe? Potentially there are, And then you'd have to ask the question are these commensurate? You have economic measures, the costs of which we don't fully understand because they have to play out, and then you're trying to achieve relatively short term actions on non economic policy issues. And so the question is is it a good motivator for that? That is the jury is still out on that.
Smart talk. Lavin, thank you for joining. It's great to have you.
The vin Gary Shankar csis the Center for Strategic and International Studies formally with the Department of Commerce. A voice of experience, as we always try to bring you here on the fastest show in politics.
We'll keep working our way through this. It has been quite a doozy of a couple of days.
Our Political panel is up next today Genie Shanzano, our Democratic analyst with Republican strategist Mark Short On Bloomberg.
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We're going to put in a different bucket today, but with regard to Canada and Mexico, our two immediate neighbors here, this is something that has changed a lot already. We are sitting here on the eve of the tariffs being implemented. The market thinks it knows something. The question is what can Justin Trudeau offer that might delay the tariffs?
Here?
Is it ten thousand mounties along the border as Mexico is giving us in the form of their own troops. Our political panel is with us today to talk about this and a lot more. Jeanie Shanzeno or Bloomberg Politics contributor and Democratic analyst with us in New York. Senior Democracy Fellow with the Center for the Study of the Presidency in Congress with me here in Washington. Republican strategist Mark Short, former chief of staff to former Vice President
Mike Pence. Great to see you both here and Mark, thanks for being with us in studio. It's great to have you as part of our conversation. As always, do we step back big picture here and say, well, I guess tariffs do work, you just don't have to implement them.
I think that President Trump, even his first administration, was very effective in the negotiation with tariffs and to use them to bring people to the negotiating table. However, I do think there's a big difference between the first administration and the second administration. In the first administration, the president had a lot of economic advisors but also national security advisors who believed in the benefits of trade, not just
for the economy but for national security. The team that he has around today is a very different team that does not has a much more protectionist perspective. And so even though there may be some thirty day relief here in the Mexico terraces, I think that the advisors he has around him right now, believe very strongly in a protectionist policy because they really believe that the manufacturing base of America has been hurt by trade. And so I think that this may be a temporary reprieve. I don't
think it'll be a permanent reprieve. I think this is this administration to be moving forward with a whole slew of tariffs in the coming months.
And maybe come back with something more targeted toward Mexico, for instance, auto sector or otherwise.
Perhaps, But I mean even at the same time that these threats are being settled, he's threatening new terriffs for the EU. That's right, And so I think that you know, typically with the US Trade Representives Office, it requires about a ninety day investigation to prove unfair trade practices, and you've heard the administration hint that April was when a lot of those investigations will come. Do what he had threatened with Canada and Mexico was unique. Under IEPA, the
Economic Empowers Act. Did no administration ever use that for tariffs, and so there's I think there was other challenges potentially in the courts on that. And so if there's a backing off of some of the Mexico. I still think it's becoming when these investigations are complete.
Wow.
So, Genie, are we looking at a master at work here or an economic arsonist?
Well, I think it could be somewhere in between. You know, we did here for a while that even you know, especially people in the market, were not that concerned because they said, this is going to be transactional in nature, We're going to get these negotiations as we've seen with Mexico, and that this would in the long term not have a real economic impact. But as a political scientist, let me say that there is a price to pay for this.
We teach our children not to bully in the playground for a reason, and we don't bully in the international realm either for a reason, because there are long term impact on our national security and our alliances. If you are another country and you are looking at this bullying, are you inclined to trust your alliance with the United States or are you more inclined to go say the
way of China and Jijinping. There is a school of thought which says all the inroads that jijon Ping has made in the global South, he is the beneficiary of this kind of bullying. Donald Trump does this because he is long held that we are on the losing end of a trade deficit. But the reality is he is president of the United States and our alliances matter. And this is true not only if you look at this story about tariffs, but also if you look at the
USAID story. So long term the impact on US, I am extremely concerned about short term, we may all survive this economically.
Mark you were there for the renegotiating of NAFTA. I guess we can call it that. Creating the USM is genie correct about bullying and does a weakened Mexico and China embolden or Canada rather embolden China.
Well, I will say that even in the USMCA trade agreement, there was a clause that allowed under national security emergencies and ability to obviate the treaty and to move forward to tariffs. And I think that that's why you've seen the president youth sventanyl and the border crisis, which I think certainly applies to Mexico. It's a little bit harder to see the emergency with the border in Canada. But I think that I'm less worried about the bullying factor.
I think that for a lot of Americans, they do feel that there's been a weakness of American foreign policy for years, and I think they welcome a stronger personality. But I think Genie makes a really good point about China being the beneficiary, because I remember in the first administration that, for instance, it took a lot of negotiation, if you recall the Huawei controversy first to get Canada onto our side on Huawei against China. Are they going to be as excited to partner with us the next
time around when we have a concern about China. And so I think she makes a really good point. And in some cases, when you're tearing down these alliances, you force some of our former allies into relationships with some of our adversaries. And I think again that's where our national security advisors in the first administration believed in the benefit of that trade. That currently those are not the same advisors that's going around.
We're spending time with Mark Short and Genie Shanzino are a great panel on the Monday edition here a Balance of Power. It was a very busy weekend for the Trump administration. While you were going about your business, it wasn't only terriffs they were talking about here. What we saw take place with us AID. Us AID was quite remarkable. Here Elon Musk declaring on X us AID is a criminal organization.
Time for it to die.
We know that a lot of things happen there over the course of the weekend. Workers were told to stay home. And since we've arrived here this morning, we're told the Secretary of State Marco Rubio.
Has taken can control of us AID.
Genie, your thoughts on this, and I'll ask you about this payment system at the Treasury because it strikes me that in the end, these could be more significant stories than what we're hearing about tariffs today.
Yeah, Joe, you forgot to mention the other big news of the weekend, which was Pucksatani Phil. So we're in for more winters beside.
I'm depressed already. I know.
I'm sorry. I'm USAID. And of course the Treasury story. You know, I mentioned this prior because it seems to me it's pert and person of Donald Trump's approach to the world, and certainly you have people in the US and around the world who support it. I do get concerned. A good deal that we are seeming to lose understanding of something that China, which Mark just mentioned before, knows intuitively soft power matters. Now usaid, certainly there is waste
in all government programs. Certainly no question can be cleaned out. But I am worried when we to think that something you know, talking about people within there as you know, somehow criminals without evidence, when we talk about it as needing to be dead or destroyed. Certainly again cleaned up. But soft power matters. And if the United States doesn't exercise soft power, that power shift will go elsewhere like China and Russia. And nobody does this better than Jijinping.
Look at the Silk Road, look at again the inroads into the global South. We are losing our ability to be seen around the world as anybody but demanding harvesting people, mining people's goods. We also have to help the poorest people in the world if we want to have an ability to have impact. You know, somebody just reminded me that there was a point just before World War two
when somebody told Truman that hunger means communism. And we fight that by showing people that democracy can deliver for them and us and soft power matters in that.
Mark, I don't know.
Your thoughts on this and the idea of kind of giving the keys to Elon Musk, but I think of you as an older style Republican, an institutionalist, maybe a more traditional Republican. Maybe you've gotten your head around Terris. Are you getting your head around this?
I think that on USC I d that that.
I think for a lot of Americans, they do wanted more of America First policy. Do feel like there's been a lot of taxpayer dollars abuse, But it's important that I think the President Trump has a has an effective way of throwing an idea out, seeing what the market
reaction is and adjusting. And so over the weekend it was is you just read from Elon Musk it's criminal, it'll be abolished, and now it's like, well, actually it's just going to be shrunk and put under Mark Rubia's So there's a there's already an adjustment within a very quick amount of time.
It's what actions be happening.
So we back to that, take them seriously, take them literally debates?
Well, No, I think I think it's important too.
He often throws ideas out and since reaction and I and I think that seeing how the market reacted of the weekend to the to the terraffs, I think helped modulate on Mexico by this morning. So so yes, Mexico came back to the table saying that put troops to the border. But I think the President was also looking for a deal because he didn't like that market reaction. So he is always going to be sensitive to what the either the financial markets or.
The popularity markets did.
But to another point the Genie was making, I think another story was lost here is that you know, I thought Mark or Ruby had a significant achievement in Panama with Belton Road initiative. But I felt in many ways the President Trump undercut that by coming out, you know, yesterday and saying, well, that's not really objective and take
back the canal. I mean, getting Panama the distance itself from the Chinese investments was a huge win from markoint Yes, so I felt like that was undercutting what I thought was a very significant foreign policy achievement by.
Ruby O in the State Department. That's fascinating, Genie. I don't know your thoughts on this is the job done in Panama.
No, I don't think it's done and I agree with Mark. It was a win on the for Marco Rubio and the State Department. And yet with all of the noise, it's very hard, especially when the President steps on it, for them to get that message out. And so, you know, you wonder how frustrated Marco Rubio might be at this point. But I do think that you know, as we look at what has happened in just the last few days, you see the President testing, you know, as Mark said,
testing things. The problem is, there are real people impacted by these tests. You mentioned the Treasury issue. You had an employee of thirty five years who suddenly left, and so Musk's people were able to get access to that system. You know, I'm at a university. All of our funding has been frozen. Now, these are not the worst impacts in the world, but testing reaction makes you seem at
some in some ways a bit incompetent. And so you know, it's gonna matter how they implement these policies, and so far the implementation has left many people around the country scratching their head. If you want to cut, cut, but there's a process by which we do that in the United States. You are not king, You're the second branch of government.
We only have a.
Minute left, so you're saved by the bill almost already. If Elon Musk is going to have access to all of our personal information, should he go up to Congress and be confirmed as a Government.
Of Special Member of the cabint, absolutely no private citizen should have access to that. So if that's truly what's going to happen, absolutely he would need to get confirmed, I think to have that sort of authority and power.
To create a new Doge Commission or a Guess Department that's actually real and part of the government.
Yes, but I still think the end of the day they're going to retract that power from there.
You go, Mark Short, can't believe you're here with us here along with Janie Shanzen.
Or.
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We hope you're all listening to our next conversation because it's an important one. Joining us now on Bloomberg TV and Radio is Jared Bernstein, of course, used to lead the Council of Economic Advisors under the Biden administration. Jared, welcome back to balance of power. Now outside the White House, able to speak a bit more freely, perhaps when you look at what has been threatened here, let's just focus on Canada twenty five percent levies, ten percent on Chinese goods.
What economic impact are you bracing for if this becomes reality.
Well, first of all, great to be with you, and yes, it's nice to have a little more degrees of freedom. I think that economists have been really quite uniform. Analysts across the board have recognized that tariffs get largely passed forward to consumers. So I think there's little question that if these tariffs were to take effect, a consumer prices
will go up. China, Mexico. I understand Mexico is now on hold, but China, Mexico and Canada are by far our three largest trading partners, something like one point four to one point five trillion in imports last year. That's about maybe five percent of GDP, so that's real money. The supply chains couldn't be more integrated, so this is very much a monkey wrench in terms of inflation. And
interest rates. We already saw a market reaction. You've talked a lot about policy uncertainty, and you know, you guys nailed the exactly right question. Is this all threats for leverage or is there you know, some real action coming here.
Well, you've been in meetings like these, Jared, I don't know what your thought is on that, But when you consider the countries we're talking about here, like Sean just said, it's not just about raising revenue or exacting some sort of retribution. It's about rebalancing trade. What would Donald Trump need to do to zero our relationship with Canada? That appears to be the goal here.
No. Yeah, well, first of all, let me say that I really probably haven't been in meetings like this because one of the things that we put a pretty high priority on was avoiding the kind of policy lurching that we've seen in the past couple of weeks. Now, look, if you do everything yourself from the oval, and we did executive orders as well, though not nothing like what we're seeing in terms of the flurry from Trump, if you do everything yourself, you're going to have a lot
more policy lurching. They call it flooding the zone and I just think it's particularly bad for the uncertainty that we've talked about, and that creates a negative climate for business investment. So I think this is not the kind you know. If I were at those meetings, I'd be saying, wait a second, let's try to give the world a little more idea about what we're up to here. By the way, if you don't enact the tariffs, you don't
get the revenues. So I think it's they can't talk both about we're using this for leverage and we're going to collect a lot of revenues. In terms of zeroing out trade balances, I think you're probably right. We know these folks think of the trade deficit as a scorecard, and I just think that's a really big mistake. I mean, we've had full employment economies with large trade deficits and
with small trade deficits. That doesn't mean they're one hundred percent wrong, by the way, and in fact, one of the things that they got right before a lot of other people did was to recognize communities and people who've gotten hurt by persistently imbalanced trade. But that doesn't mean you try to zero out trade balances, because that has significant negative effects on prices, interest rates, and supply chains.
It means that you make sure that you're running the kind of economy that provides opportunities for everybody, including those in import competing sectors.
Well, and when we consider those that the President thinks have been hurt by our current trade balances, a lot of it, Jared, he continues to speak to, is the manufacturing sector. He thinks that tariffs are a way to protect a Maria Can manufactures and to incentivize more production in the US. If tariffs are not the right way to go about that, what is.
Well, First of all, let me just underscore the points that were made by the excellent guy you had on before me, who pointed out that these tariffs that we saw in Trump one were associated with job losses in manufacturing. You know, I remember vividly the day that Alcoa came right after Trump put on aluminum tariff's. Alca the biggest US aluminum producer, came in and said, can we get an exemption?
Why?
Because so many of these imports by US companies are inputs, intermediate inputs, and so you're raising the price of production for them. That hurts our sectors. The Trump administration did not lower the trade balance in Trump one and they won't do it in Trump two. So you know, your question is the right one. How do you increase activity in the manufacturing sector if that's your goal, and certainly it was part of our goal in the Biden administration,
you incent of oys investment. You know, this is a lot more carrots than sticks. Our investment that John which is ongoing, was pulling in hundreds of billions of private capital to invest in standing up new domestic industries, many of which, by the way, most of which are are being built in red or even Trumpian parts of the country. So that's you know, that's the way. That's the way
that we found to be a lot more successful. We I think the record is starting to show that that works much better than this approach.
Yeah, it does appear they're going to be drinking the clears up in Canada because they're going after whiskey from Kentucky here, Jared, I just wonder what a company's supposed to do. If you're Mary Borrow, what do you do right now? And by the way, GM has been one of the hardest hits today, even with some of the
relief that we've seen since this morning. If you've got a vehicle that's crossing the border multiple times at various stages of assembly, do you have to rewrite your entire business plan?
Well, it was interesting you should raise Mary Borrow because she was quoted in the Journal the other day. I took this to heart. She said, we're putting some of our investment plans on hold until we get a bit more policy certainty. That's not an exact quote, but that's certainly the spirit of what she said. That's a precise
point that I think is so important here. Even if you're happy as I am to see these Mexican tariffs postponed for a month, the damage is already done in terms of creating an uncertain environment that we know for a fact empirically has been shown trade uncertainty of this magnitude is associated with diminished investments. I don't think that these supply chains that you just asked about, where vehicles cross borders, both north and southern borders many times, are
going to be reconstructed anytime soon. And look, if this call goes the way it might go at three o'clock, they don't need to be so one thing we need to find out is just how serious the president is about all this.
As we've been talking, we've been getting some headlines from Raphael Bostik, the president of the Atlanta Fed, and obviously for the last several years we haven't been able to have the frenk conversations around monetary policy we wish we could have with you. So I ask you this question now, as Bostic says they're just going to have to watch on tariffs, do you expect the Federal Reserve is going to look through this.
I think they're going to probably look through any one time price hits. I think again, the conversation you just had suggested that when you do put a tariff on it definitely is a price hit to inflation, but it can be a one time hit for the level, not an ongoing hit to the growth rate. Where I think they are probably worrying more about than they might be talking about, is any kind of damage done to inflationary expectations.
I consider anchored inflationary expectations a national economic treasure in the sense that this was so important in getting inflation back down when the pandemic induced spike occurred. And so this is something we know that the FED values dearly and if price setters, they're the folks who really matter when it comes to inflation. Expectations are so thrown by this policy lurching that their expectations where prices are headed become d anchor to become unsettled. That's a real risk.
So it's one thing to look through relative to the inflation rate. As Raphael was saying, I think that makes sense. It's another to be worried about any type of impact on expectations.
One of these days, we're just going to have Jared come back to talk out of school all about the FED.
That's all we're going to Jared. Great to have you.
That is a great liberation for me these days.
Well, I love that, So take us up on the invite. It's good to see you, Jared.
Welcome as always, former Director, White House Council Economic Advisors, the former chair. Interesting take on things here, Kayley will be waiting to hear on this next phone call at three o'clock. The markets seem to be ahead of the curve though. Love deciphering all of this.
Yeah, Mexico's tariffs have been deferred and does seam traders are hoping the same for Canada and China. We have yet to get official word on that from the President.
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President Donald Trump speaking with reporters from the Oval Office at the White House for more than half an hour on a number of subjects, including citing a number of executive orders, one that would create a sovereign Wealth Fund in the United States, but importantly fielding a number of questions on tariffs, specifically after earlier in the day having reached an agreement with the President of Mexico to defer a twenty five percent ARAF being placed on all Mexican
imports for a month in exchange for ten thousand troops being sent to the border with the US question, as we heard the President talking about, there is whether or not his conversations with China and Canada that he says will take place this afternoon in the case of Justin Trudeau, or with China over the next twenty four hours can also yield an agreement to have those tariffs to first.
That's right, a La Columbia.
We'll see what happens with a three pm call with Prime Minister Justin Trudeau will be following that closely here. Really interesting though, just to get a peek behind the curtain in the Oval Office once again, someone who has only been there for two weeks, Scott Bessnt speaking, Howard Lutnik speaking, Steve Whitcoff from off camera. Strangely, Rupert Murdoch in the room to witness all of that today as well.
Kyley.
Yeah.
And while we've witnessed it all and listened to it here on Balance of Power on Bloomberg TV and Radio, we want to get a bit more reaction now from someone who does have thoughts on trade. The chair of the Trade Subcommittee of the House Ways and Means Committee is joining us now, Republican Congressman Adrian Smith of Nebraska here with us on Bloomberg. Congressman, thank you so much
for your time. You've obviously had praise today for the agreement that Donald Trump was able to strike with Mexico, specifically on Fenton All But when you look at a country like Canada, which only according to Customs and Border Protection, had forty three pounds of fentanyl crossing the northern border last year compared to twenty one thousand pounds in the case of what was coming from Mexico, do you really
see these things as equal? What will it take for Canada to differ tariffs in the same way Mexico was able to.
I think there are, you know, some different dynamics, certainly, but I think the President's a posture right now is one that he explained even before he was elected. He wanted to put people on notice. He's followed through with that. We are seeing some positive results, and I think that, you know, there's some leveling of the playing field in terms of trade that creates many opportunities, hopefully on the horizon.
Well, Congressman, we appreciate your being generous with your time and waiting through the Oval Office conversation here. The difference as well between Canada and Mexico, though, is that there are rattals eliatory tariffs in store twenty five percent. Canada is looking at, in fact, goods from a number of red states. I'm sure you've looked through these whiskey from Kentucky, oranges from Florida, appliances from South Carolina, and Harley Davidson
motorcycles from Pennsylvania. I don't know if we go red there. I guess for the sake of this conversation, we'll go with it. What would be the impact of these levees on our economy?
Well, you know, the tariffs and the responses. I mean, those speak for themselves. I think that there is a better understanding now the seriousness that this administration is taking trade and the security of our border. The previous administration wide open border, totally unengaged on trade, and that sets up this scenario that we are seeing. And I think it's important that President Trump is empowered to make a good negotiation. And I certainly you know see you know,
the the dynamics of tariffs. I understand that. I think the American people understand that as well. And the American people also know that we need to see more action and they are seeing that.
Well, if this is all about negotiation, for President Trump, what was wrong with the deal he negotiated during his first term? What's wrong with the USMCA, Well.
We saw a Mexico flagrantly violate USMCA on biotech white corn for example. Now it so happens that, yeah, that's my district is a big producer of that corn. But the world is watching, the world watched, watched Mexico give us a heads up on this well in advance, and Joe Biden never said a word about it in four years.
That's obviously not Donald Trump's style. And I'm glad because I think our country is stronger with a president who speaks up and speaks out, especially when our trading partners, Mexico had just agreed to USMCA and then had such a flagrant violation. It took us a long time, but we did win that dispute resolution, but it was lost time and time is money.
The White House this morning was framing this as a drug war, not a trade war. Congressman, I don't know if you see it that way. But with that said, and based on what Kaylee was mentioning forty three pounds versus twenty one thousand pounds of fentanyl crossing the northern border versus the southern border, this could be cleaned up real quick. Right they get on the phone at three o'clock, is this all over before the close of business.
I think there are opportunities to correct this. We know that if the if we get cooperation on the southern border, it's likely to go to the northern border if we don't get the cooperation that we need. We need quite honestly, we need more cooperation as it relates to immigration from state and local governments, to say, the state of California and that sanctuary city dynamics that exist across the country. We need full cooperation there, and certainly we need cooperation from Canada and Mexico.
Mister Chairman, we just have a minute left. But if this is about extracting cooperation and concessions from allies, is it not then about raising revenue? Because you and the rest of your colleagues on the Ways and Means Committee in the House are about to try to push through a tax package with a lot of cuts and Donald Trump says tariffs are supposed to play a role in offsetting that.
Well, there, we're going to have discussions about revenue and various opportunities to save taxpayer dollars across the budget. We need to have these conversations. We've needed to have those for some time. We saw records spending under President Biden that triggered inflation. I think it's very important that we move forward with policies that bring down the cost of products for consumers. I think the administration understands this and sees this as a priority as well.
Congressman, it's great to have you back, certainly at a moment like this. He chairs the Trade Subcommittee in the House. Congressman Adrian Smith, Republican from Nebraska, we thank you for the insight. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, at Apple, Spotify, or wherever you get your podcasts, and you can find us live every weekday from Washington, DC at noontime Eastern at Bloomberg dot com.