Bloomberg Audio Studios, podcasts, radio news optimism of a FED rate cut. We are seeing across the board a sense of calm after a pretty volatile two weeks. We do see a sense that even in bond markets there is a bid, with don yields down just about two basis points four point five percent. Meanwhile, crude prices lower yet again after declining almost four percent last week. Traded on the IMAX down now just three tenths of a percent. And this comes as trade talks between the US and
the European Union are underway in Europe. The EU sharing it doesn't expect a deal to lower tariffs on steel and other products. Joining US now from Brussels is US Commerce Secretary Howard Lucknick. Secretary Lutnik, thank you so much for being with us. I want to start on your discussions with the European Union. We were hearing some noise that it doesn't necessarily include reducing steel and aluminum tariffs from fifty percent to fifty percent. Is that off the table for now?
No, what we're talking about. Everything is on the table. When you have such a great partner as the European Union. They have four hundred and fifty million people and a twenty trillion dollar economy, so the opportunity is great. They would like to have steel and aluminum as part of this package, and we think it is very very important that they understand our digital companies and they reconsider their digital regulations to be more inviting to our big companies.
They tend to tax our big companies and attack our big companies, and they're not getting the investment that we're getting. Right, You're seeing trillions of dollars of our tech companies investing in building data centers in America and they're not getting them here. So we're talking to them about take your foot off the regulatory statement, build those data centers in America, and in exchange for that, we'll come up with a cool steal and aluminum deal that we'll all be together.
So it's all all trading. These are trade deals.
You're talking about opportunities together. Let's bring it all on the table. Let's see what we can accomplish.
Secretary Lutnik, what's the threshold in terms of reducing certain regulations in Europe on US tech companies that's required in order to create some sort of framework for this deal?
Well, what the European Union does is they say, well, our digital rules they only touch companies above a certain threshold. Of course, the only companies above those threshold are all American companies.
So come on, that can't be the rule. Let's take it off.
Let's settle the outstanding cases against Google and against Microsoft and against Amazon.
Let's put them behind us.
Let's come up with a reasonable framework where these companies can grow and build, and then those companies will agree to invest hundreds of billions of dollars of data centers here. So the idea is, if they take their foot off this regulatory framework and make it more inviting for our companies, they can get the benefit of hundreds of billions, possibly
a trillion dollars of investment a year. So the idea is, I'm trying to convince them that winning the way Donald Trump is winning in America is the way to go. Look at America, look at these growth rates. Come on to realize our investment in ai Cape's last quarter exceeded consumer spending in America. We had three point eight percent GDP growth. We're going to grow over four percent, and next year we could grow over five percent. You got to embrace what's coming. The AI world is coming. Come on,
embrace it. That's what we're here doing. Try to bring and make our deal with Europe, which has a great deal done by Donald Trump.
Let's make that deal better.
Secretary Letnik, just on that point and point take in on what you see as the benefit to embracing that tech with the EU over and over again has insisted that it's digital laws are not up for discussion. Are you seeing any sort of relenting from them as you've been pushing it. Does it seem like they would agree to you on this point.
Well, you know, I see a lot of ministers. Remember there's twenty seven countries, so some are.
More open minded than others.
But you know, it's a process which is talking to them and telling them that if they want to get that kind of investment here, they've got to change the model.
So there's the carrot and the stick. You know, if you keep taxing these companies, they're not going to give you the investment. So that's my job.
To sort of talk about it and help those American companies find their way clear to invest here and to grow here. And another example for them, I show them that you know they're ruling out clean diesel for batteries, and I try to remind them you don't make.
Batteries in Europe.
Come on, guys, don't make rules that harm yourself cause you don't make batteries. That's not a good idea. Stick with clean diesel, stick with combustion engines. Come on, be clever about yourselves and just common sense. This is the common sense Trump administration here in Europe, trying to remind them that they have an amazing economy that can grow and build.
Will help them grow and build with great trade with America.
But you can't be silly and sort of embrace just batteries which you don't make in Europe. So these are the kind of conversations I have. They're pretty fun if you ask me, because I get to point to the growth in America and say, come on, follow our lead and we will have a bigger, better, stronger trade deal. We'll add to it, will add excitement to it.
But you've got to come along with.
Us, Secretary intern that's the model the growth we've been seeing because the AI has been contributing a lot to this American economy. And as a lot of us been said about the two speed nature of it that on one hand AI is doing and on the other hand, you have consumers that are still feeling high prices. You saw that play out through the most recent elections. There's been a renewed concentration from this Trump administration to try to reduce teriffs, especially on things like food, give food,
food goods. Are you and the rest of this administration as you negotiate terror specifically looking at that, trying to find terrists to bring down to lower the cost of everyday household items for American consumers.
Exactly.
The Trump administration is exactly about affordability. We are going through every line item to try to make sure we can drive affordability across the American consumer landscape.
Two things though.
American earnings are growing, right, the average earnings of America, their income is growing. So as that grows and we drive prices down, you're going to feel that golden age coming.
So it's the.
Combination of earnings growing and we raizor focus on bringing down prices. That's one of the things we're doing here today, working together to try to bring down prices on average daily products. We are working on it. The Trump Administration is on it. We have a clear direction from the President. We are going to lower prices and like things more affordable. We're also going to raise income, raising income as well.
Just to build on what Dan's talking about. Though, there is a feeling that there is a limit to how much tariffs can go up or how much the Trump administration may have to reduce tariffs going forward in order to address some concerns about cost of living. Has that affected your negotiations at all.
No, I think it's pretty easy.
The world understands that there's given take in these trade deals, and the benefits are clear that the Trump administration has created the greatest set of trade deals. You know, the President has talked about a two thousand dollars tariff dividend coming back to the American people who got the one big beautiful bill which is going on cut and there's going to be significant income growth from people next year as that bill comes into play, and we are going
to focus on the affordability. You saw coffee and cocoa and bananas and all those kind of things. Those prices came down. You're going to see prices continuously come down, energy prices down. You're going to see affordability across the board here, Trump administration is going to win in affordability and income, two sides of the coin.
We're going to win.
Secretary Latnik, there's been a huge focus, and you've been talking about how US tech has definitely been the passion of the economic growth over the past couple of years. As the Trump administration decided whether or not to allow Nvidia to sell the H two hundred chips into China, that's been a discussion and something that increasingly people are speculating about.
Well, I've seen that speculation.
That kind of decision sits right on the desk of Donald Trump.
Right.
He's got Jensen from Nvidio who really wants to sell those chips, and he's got a good reasons for it. There's an enormous number of other people who think that that's something that should be deeply considered. And the benefit that we have is we have Donald Trump in the Oval office. He is going to weigh those decisions. He understands President she the best. He will decide whether we go forward with that or not. That's on his desk
with lots of different advisors. The President loves to hear lots of different voices to make those kind of decisions, and he'll decide whether we sell those chips or not, and then we will go execute it.
However he decides to go forward.
There's a bigger question here, Secretary Lutnik, about what national security is. Is it more of a national security risk to give China some of these high powered chips or is it more of a national security risk to.
Not have US tech in China?
Has your view on that changed?
Well, that's the question exactly as well put and in front of the president, which is, do you want to sell China some chips and keep them using our tech and our tech stack, or do you say to them, look, we're not going to sell you our best chips. We're just going to hold off on that and we're going to compete in the AI race ourselves. So that is the question. It's in front of the president. He's going
to decide. It's a really really interesting question. He's got all the information, he's got lots and lots of experts talking to him, and he's going to decide which way he wants to go forward.
Secretary Lutnick. Meanwhile, use of IEPA for terroriffts in front of the Supreme Court, the feedback has been skepticism so far from many of the justices, conservative ones included. As this plays out, can you walk us through how you prioritize the different alternatives should the administration's use of terrorists via IEPA get struck down.
So I was in the Supreme Court. I sat through the whole argument. The justices were tough on the beginning on the Department of Justices, you know, our person, but then they were much tougher on the other side, much much tougher. So I left that day feeling very confident that we and the President was going to prevail on these IEPA tariffs. So I think you're hearing it from me. I think I was there in the courtroom. I heard it all the way through. I didn't sort of write
my story halfway through. I sat all the way through to the end. The President's going to win that case because that makes sense for him to win. But I want to remind you the president has lots of other authorities. He has two thirty twos, he has three oh one's, he has three thirty eights, he has a whole variety.
One twelve, one, twenty two. He's got all sorts of other powers.
And tariffs are going to be part of this administration going forward, but I don't think they're going to be necessary because the President's going to win the IEPA case in front of the Supreme Court.
Secretary Lutnik. Theoretically, if the US did lose that court in front of the Supreme Court, in terms of AIPA as justification, how quickly could you roll out that package of additional measures, whether it's Section three h one or Section two thirty two.
I think many of them come very very quickly.
I really I don't think most of the big deals I don't think are in jeopardy. I think the people who did those deals, they don't want their tariffs to go up. They want their auto tariffs that's durable. That was in a nine to zero at the Supreme Court. You have auto tariffs, you have semiconductors, you have pharmaceuticals, you have steel and aluminum, you have lumber.
All of those are durable tarffs. They're not going anywhere.
I think our big trade deals are here to stay the way they are now, right and the others. I think we're going to win the case, but I think it would be relatively straightforward for the President to replace it with other means, but it's not going to be necessary because the President has used IEPA correctly and he's going to win that case.
Secretary letnik, We know you've got a really busy morning. But before we let you go, has the Supreme Court case influenced any of your discussions at all with trade partners in terms of what the potential limits are to your ability to negotiate? Are potentially key some of the ongoing negotiations that have been already struck.
So that's exactly the point I'm here in Europe. It hasn't come up at all. The fact is we've made a great deal with Europe. They think it's important to them, it's important to us. It includes semiconductors, it includes pharmaceuticals, it includes autos. These are things that are important to the European Union, and they're important. The whole trade deal
is important to America. I think this deal stands. I think the question that we are negotiating is how to make the deal bigger, how to make it stronger, how to make it more inclusive, how to bring in these Digital Markets Act and try to improve that for digital America, How to maybe do steal and aluminum, and how to include that, how to do things bigger and better together
between our two great economies. I think they're going to do it standards, make sure they take us autos here, and make sure we are working together to extend both the European Union standards and American standard throughout the world. I don't feel that the AIPA case is here at all. I think the opportunities for us to grow and do business together. People want to have their trade deals with America, and I think these deals are durable.
US Commerce Secretary Howard Lutnik, thank you so much for your time and good luck over there in Europe