Commerce Secretary Howard Lutnick Talks Non-Tariff Barriers

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As you know our top story worldwide, President Donald Trump and leashing a major tariff push, imposing levies on all of America's major trade partners. The COMMA Secretary Howard Latnik playing a key role in President Trump's tariff announcement just last night. The COMMA Secretary joins us now for more. Mister Secretary, thank you for making time for us on a busy morning for you and the team appreciate it.

Well it really We are talking to all the trade ministers, but nothing really happens between now and then. What CEOs are thinking about is, finally, let's think about building in America. You've got almost five trillion dollars of commitments coming to America.

To build their factories.

That number is only going to grow as people realize it's time to bring manufactured bring home to America, where the greatest economy and the greatest market in the world is. It's time for America to stop taking care of every other economy in the world and building them up. Let's build the American economy up. Let's build American GDP, and you're going to see great growth from America.

Mister Secretary, as you know, capitals around the world watching this program right now wants to understand what they can do between now and then to avoid those tariffs. What do they need to do. Have you communicated any metrics to them, whatsoever.

Well, we've been talking to the trade ministers of the major trading partners for more than a month and we've been talking to them, and so you have to understand, and this is what's difficult for your audience to understand.

That tariffs are easy to understand.

Right, we have a two and airf percent tariff on autos, and Europe has a ten percent tariff, and other people have twenty percent or fifteen percent tariff, and that's sort of easy, so they.

Can all come down.

But it's the non tariff trade barriers that are the difference. Some countries have that and they take that that tax of twenty percent and they use it to subsidize the production of their domestic industries. That's why we can't sell cars there because they give a rebate either they give it directly. One country told me yesterday that they give it directly to their car manufacturer to make their cars cheaper.

That's why they sell successfully and we don't.

Others take the money and use it and give cheap energy costs to this production. And that's why the steel industry. Why is everybody else so good at steel and we're not. It's because their governments subsidize it. So we really need to change the way trade works around the world. It's tariffs, but don't get confused that these non tariff trade barriers, they are the monster that needs to be slaved.

You've been consistent about this argument. Subsidized production, manipulated currencies, and trade barrier is something the President addressed just last night. Can we just sit on the numbers just for a moment, the EU twenty percent, twenty four percent on Japan, thirty four percent on China. Just what exactly was the methodology to go through all those different barriers to entry that you want to knock down.

How did you come up with these numbers?

Well, the Council of Economic Advisors, you know, the PhD economists of the administration, coupled with USTR, the United States Trade Representative. They publish a book called Trade Barriers about this thick right, and they've been analyzing for decades all of these different tools that these other economies use to hurt America.

Right.

They won't take our corn in India, they won't take our beef almost anywhere, it's unbelievable. They won't take our agricultural products. They just treat us badly because we've allowed them to treat us badly.

And when you finally go back at them and say this is it's got.

To end, it's going to be tough for them because they've built their whole social network, their whole economies on basically exploiting America. And Donald Trump has said it's time for America to change that. It's going to be difficult for them to change that. But eventually America is going to be treated fairly and the production of American factories is going to be incredibly strong growth, and you're going to see that growth reverberate through GDP. Remember, people forget

It's a secritificate.

Just sit on the methodology just for a bait longer and address it directly. This is what we understand, what most people understand.

You did that.

Essentially, you divided the country's trade surplus with the United States by the total exports and then divided the number by two and produce this discounted rate. If you're a trade partner right now and you've just watched how America's put together that policy, how are you meant to negotiate with that?

What are those countries meant to say? What are they meant to do?

The countries understand that their trade policies were exploited, an exploitation of America.

Everybody understands.

One country actually said to me, I was amazed that we were able.

To get away with it for this long. I mean, imagine that's.

Because I never say this on the record. You've got the potential, the option, the ability right.

Now to share. They're not going to say it on the who's saying that to you?

Come on? Oh? Stop?

I mean the country One country told us that they give the subsidy to the car companies. Another country admitted that they give their subsidy to their steel companies. I mean, they're not going to repeat it on here. What's on here is that this is going to change. That it's time for these things to change and going to be more fair, and America is going to do well. And in the middle of that time, all the factories are

See incredible change globally.

It's going to take time, but the factories are going to be built in America.

That's the most important thing.

Donald Trump wants to see steel, an aluminum made.

In America so we could defend ourselves.

He's going to want to see pharmaceuticals made in America. Who on your audience doesn't want us to make the ingredients for pharmaceuticals Todaybody ever ask themselves why the ingredients for our drugs should be made in China? Why is that that's not cheap labor, that's factor, that's high tech factories in China. Why because their government helped create it.

Had nothing, Secretary, most people are totally agree with you. They would totally agree with you because China is an adversary. It is not a partner for the United States. Europe would make a very different argument. And Europe might be wondering this morning why they're being thrown into the same buncket as the Chinese. What explanation can you give them?

Europe does not treat our products fairly. They do not treat our companies fairly. They treat themselves incredibly well, to the detriment of the United States of America. Right, it is time for them to treat us fairly. And that is the point. This is not it's not free and fair trade. Their tariffs are higher, the non tariff trade barriers are incredible. Like I'd asked you, why don't they take our beef? Why don't they take our agricultural products?

And it's not okay for America. I tell you why. Because we were the world's piggybank.

And Donald Trump has said our thirty six trillion dollar deficit, our one point two trillion dollar trade deficit one point two trillion dollars.

We buy other.

People's things more than we sell them ours. Is got to be rebalanced. It's a national emergency. Let's fix America and we can.

Mister Secretary, for you, it's beef for the president. I know it's Ford and Berlin's, but there are products that Europe takes, things like LNG, things like Microsoft services. Do you want to see balance trade product by product?

No, no, no, it's it's not product by product. It's it's a big macro issue. Okay.

Fairness comes when one decides that they can stop. They can't get away with it any longer. So let's make a great deal with the United States of America. Okay, they've got core issues. They have a that tax of twenty percent or twenty Europe has twenty one percent. I mean, so when our goods are sold there, we paid twenty one percent.

They say everybody pays that, and then they.

Use that money to beat us down in other ways.

I mean, come on, we need to have.

Fair trade macro, not product by product. But I think the way Donald Trump looks at it is country by country, and what's going to happen is you're going to see domestic production grow.

You're going to see interest rates come down.

In America. You're going to see growth in America. Great jobs in America. Robotics he's going to come to America. It's going to replace cheap labor overseas. Robots can make things, you know what. The job there's going to be mechanics who fix robots, kind of like a high end BMW robot, so are going to need to be fixed and those jobs are going to be high paying jobs and they're going to be here.

We're tired of them being overseas.

For some countries, there's the ten percent base. That's the only levee that they were hit with yesterday. I'm think, give you United Kingdom and think of Australia. But those countries have a trade surplus with the United States.

So why put the terrified.

Well, I think the President understands that all of these countries, even if they have a trade surplus, if you dig into it, like for instance, the UK, they are trade surplus counts that they have this London Medals exchange.

And so gold and silver bullion going in counts. I mean, come on, that doesn't really count.

So and Australia, which is a wonderful partner of ours, they buy a lot of our planes, right, and if you buy our commodity gas, I mean, that's really what you need, not really what we need to sell you.

It's not the same.

So the President decided, why don't we have a baseline of ten percent to really understand that everybody needs our economy. Our economy is the magnet of the world.

Everybody needs our economy.

Let's them pay coming in and let's change that deficit of one point two trillion dollars and let's make America's economy grow.

And let's balance that out. Let's fix that first, and.

Then we'll go and readdress the rest of the world. But we need to fix our trade deficit one point two trillion dollars.

It's unbelievable.

Why we don't have those jobs and the rest of the world does.

Treasury Secretary Scott Besson told me last night, this is a ceiling. Potentially we can see a different floor. Are you prepared to negotiate all of these rates? Is this truly the start of a negotiation?

Well, it's the start of a rebalancing of the way the world works. I agree with the Secretary that our view is that the only way these rates are going up is if countries decide to retaliate. But why would you retaliate against your biggest client, your biggest clients is I want to reorder things. I mean, the United States of America is the largest client in the world. And yes, of course the countries are going to talk to us, but they talk too casually. They always talk about their

Right. You think the reason we don't sell.

A car is because Europe charges a ten percent tariff and we were only charging two and a half.

That was outrageous. But the key is they have.

All these rules, rules and rules and rules. Like one of my favorites is the Koreans. When we made a deal with them in twenty twelve, we took their cars, right, Kia and Hundai, and we were going to sell.

Agricultural products to them, right.

And when McDonald's went to send in French fries, they wouldn't.

Let them go in because we couldn't.

Prove the origin of the potato I mean, you don't understand the scale and depth of how they keep our products out. And Donald Trump is I've had enough. We are going to be treated better. America is going to be treated better, and that starts.

Today, missus Sancrigary, Why exactly wasn't Russia on that list yesterday?

Because we have sanctions against Russia, North Korea, Belarus, and Cuba, and so we're not supposed to be trading with them.

Thanks for clearing that up.

The additional question that other people had too about Mexico and Canada, they were also noticeably absent.

Why would they absent, Well, they are operating under a rule that was set on for fentanyl right that they needed to close the border and stop fentanyl. And what that rule is that USMCA, right, the major trading is exempt, right, and the other products that they do have a twenty five percent tariff when that is resolved, So we're not going to double counted.

That's just not the way it works.

When that's resolved, they will fall into a model like this. But I think USMCA in the order, USMCA continues to be exempted, so car parts, for instance, are don't come with a tariff. If they end up being finished in American car. So if you're building your car in America and you're getting parts from Canada and Mexico, that's fine.

The American cars still come with no.

Tarr Okay, that's how full.

The additional question we had on just a few numbers because we're all trying to make sense of this in real time, and you've got the numbers. What's the tariff on China? Now, the complete tariff including everything? What is that number?

Now?

Well, there was a twenty percent tariff because they continue to make the ingredients for fentanel and send them out right, and those ingredients have the highest subsidy rate in China, meaning the Chinese government is pay these factories to make

And that's just it's just so so so.

Wrong that Donald Trump is just he's not going to stand for it, and he's got to hit them with the only thing.

You get, Secretary Lutnik, which is economy from China as well.

On China as well.

What about the three oh one terrors that were put in place under Trump one point zero and then carried on to the Biden administration, it's about twenty five percent. Are those still in place? Do they get added to this cumulative number?

They do, indeed, but those are on specific product segments and those still are as well.

Autos are not. So we're talking about seventy nine.

So we're talking about seventy nine percent for some imports cumulative, we're talking about a seventy nine percent tariff from China.

Is that accurate.

On certain products? That could be true? Sure, But they've got to stop the U eight. All they have to have is a phone call. All they have to have is a phone call from President She to President Trump saying I'm going to end fentanyl production that's killing Americans, and it drops twenty percent. I mean, that's a pretty inexpensive phone call.

But you have to make the decision.

You got to stop killing Americans, and so far they haven't made that decision.

Shocking, but they haven't made that decision. And you really got to think about that for a minute. Think about that for a minute.

A phone call would save them twenty percent on all their products, but they'd have to stop making the ingredients of fentanyl, and they refuse outrageous.

Has your counterpart reached out to set up that phone call between President Trump and Shujipeing?

You know President Trump and President.

She they have they're not going to be when their phone call gets made.

I don't think they're asking me to set it up. I think that's above me.

Missus Secretary.

Does that tell you something about maybe the lenfor is you think you have perhaps you don't have over the Chinese, the fact that they aren't reaching down, they aren't doing those things, despite the fact you've put taras up as much as you have.

Well we'll see.

Remember these tariffs are just going into place, and you know, I think they will have that phone call and they will have lots of conversation together. I think for me, The greatest thing for me is that Donald Trump is sitting behind the resolute desk in the Oval Office, and he is the greatest deal maker, and he will decide how he wants.

To play his hand.

But the way he's played his hand now is he's been talking about this for thirty five years. He wants to reorder trade, to have the world stop exploding us, to bring the factories back, to.

Bring employment back.

You know, no one thought about when NAFTA, which he called yesterday the worst trade deal ever. When NAFTA did it gave Canada and Mexico sort of the economic right to be a state of the United States without paying federal tax and without respecting the Constitution. But you could build in Mexico and drive to Texas and build.

In Canada, just drive across the border.

Was all fine and no, you know, economically equal to being Alabama and Georgia.

And so what happened is.

Our manufacturing left America and put those Americans out of jobs. And Donald Trump wants to bring back factories, bring back those jobs, and they can come back. Five trillion dollars worth of commitments to bring back those jobs is pretty unbelievably impressive.

And that's what Donald Trump's capable of.

Also impressive is the sell of this morning and a big question the market's asking how much pain you're willing to tolerate. The SMP's down by three p seven percent. The dollar is being sold quite aggressively against the euro. Was saying one of the biggest moves we've seen in the last decade, mister secretary, how much pain are you willing to tolerate? How much market pain are you willing to tolerate?

Donald Trump has focused on the economic pain that the United States of America has suffered over decades since NAFTA, ninety thousand factories, not jobs, factories, five million high paying jobs gone overseas. He's focused on the US worker and

Sure, importers are going.

To have a tough time figuring out what to do, because they went and found the cheapest production in the world. It's time to bring that production home, to have the smart, amazing people who run American companies figure it out, bring robotics back to America. And I would say that United States domestic growth is going to have the greatest resurgence ever under Donald Trump.

And that's what he has set in motion yesterday.

You'll accept it takes time to engineer a supply side response, though, sir, and in the mad time you can see bad things happen.

Do you accept that?

Well, what I can accept.

Of course, takes time to build factories, but companies understand how to do it, they will do it. The United States of America is the greatest economy in the world.

People have to do business with it.

The rest of the world will bring down their trade barriers, and you'll see a great resurgence in our ability to sell agriculture overseas. You'll see factories being built here and that factory production will be faster. So sure, there will be a reb balancing of those who make things in cheap labor markets figuring out how to make them here.

We've been too close to them because we've been you know, our presidents have been presidents of the world. And Donald Trump ran on the policy that he.

Was going to be the president of the United States of the workers of the United States, and he was going to place American workers first. And that's what he did yesterday. And that's what everybody's feeling. Those workers have been disrespected and now they're going.

To be respected.

Missus.

Secondar you just the final question, if we might any call schedule for today with the Europeans to those negotiations start this morning immediately.

Can you give us a sense of things.

Absolutely, we are our teams are talking to all the great trading partners today and we are available for our great trading partners every day.

It is time for them to do deep soul.

Searching of how they treat us poorly and how to make it right.

It is time for them to do that.

That is going to be difficult for them because they've taken advantage of us for so long.

They should just be disappointed that the free ride is over.

It's time for them to be realistic and to change the way they look at the United States of America. And I think that's going to happen starting today.

I think it's changing in real time, set in many ways. Miss the Secretary, I appreciate your time. The US Commas Secretary Hamut Latank on the trade tariffs announced overnight from the United States of America.