Bloomberg Audio Studios, podcasts, radio news.
Let's turn to Tariff's the big story, the President doubling down on his trade agenda.
An unfortunate ruling from the United States Supreme Court. Almost all countries and corporations want to keep the deal that they already made. The legal power that I, as President have to make a new deal could be far worse for them.
The President pledging to use alternative legal authorities to impose new duties following the Supreme courts ruling against the tariff agenda. I'm very pleased to say they'll make it some time for us. This morning, it's the US Trade Representative Jamieson Greer. Ambassador Greer, Welcome to the program, sir. We need to spend some time with you talking about the next year, particularly the next one hundred and fifty days. But there is some intrigue over the last week. Let's talk about
the last week and particularly on Friday. There is now a new baseline tariff of ten percent. Why did we start with ten percent when the President appears to one fifteen.
So the authority that we're using right now, which is a temporary one hundred and fifty day authority, that's five months, one hundred and fifty days. And we have a lot of countries out there that for a long time have had ten percent. We have some that have hire at fifteen percent. And so our goal with all of this is to have continuity. So we want to have the
ten percent. It'll and we're looking about how to implement the fifteen percent that the present indicated, because we want to have continuity, We want the countries, we want the companies, we want people to understand that what we were doing before, we're going to reconstruct with alternative tools because we want to keep going maintain the policy.
We'll just have a change in the legal implementing authority.
And bestially giving me the impression that this is still under conversation negotiation, perhaps internally, when the President was pretty explicit over the weekend in its own words, I, as a president of the United States of America, will be effective immediately raising the ten percent worldwide tarifim countries, many of which have been ripping the usof for decades without retribution to the fully allowed and legally tested fifteen percent level.
How can we sort of explain that which is rather explicit with the more nuanced time you're offering this morning, So.
We'll put out a supplemental proclamation that the President will sign going to fifteen percent where appropriate. Remember, before the Supreme Court struck down the tariffs, a lot of these countries had agreed to have US tariffs on them of eighteen percent, nineteen percent, twenty percent. So going up to fifteen percent for them, at least temporarily, it's better than
the deal that they had. And so the President wants to make sure again that we have continuity in this process, that folks who acknowledged they had giant trade surpluses with us, they had unfair trading practices affecting their trade, and who agreed agreed to pay the tariff, that they actually are in a position to do it until we can get the more durable and long lasting measures in place.
And master agreed. When you say one appropriate, is that this week? Or are you looking to do this after the one hundred and fifty days runs out of the ten percent level we currently have.
Oh, it'll be, it'll be in coming days. It's soon, right, I mean, the President put out of this direction to your point, and so that all of that is in development, so that will be soon again The idea is to establish a through line from the policy that the President has implemented successfully over the past year and continue it over the one hundred and fifty days, and as we build up appropriate terror prates using other investigations and means.
So when you do raise the one twenty two terror to fifteen percent, what's your argument going to be to the Europeans? Because this is stacking on top of most favored nation rates. That means that for the Europeans that agreed on to fifteen percent the highest level they would agree to accept, this new rate for some products will be above fifteen percent. What's going to be the argument to Brussels.
So I've been in constant contact with my counterparts and Brussels, the UK and elsewhere. And the way to think about this is every country has domestic procedures that they need to go through to come into compliance with a deal. With Brussels, we gave them a good rate on cars that stays the same.
With the UK, we gave.
Them a quote on cars. We gave them a quota of beef to import duty free that stays the same. So a lot of these parts stay the same. But just like Brussels, hasn't fully implemented its deal, or the UK hasn't fully implemented its deal. We also need a couple months now to have some domestic procedures because the Supreme Court struck down all of this. It's pretty normal when you have a trade deal to implement over time.
Most trade deals take years to implement. We're on the fast track and so we're just going to have to have, you know, a couple three months to make sure that we rejigger the tariffs in a way that comply with our end of the deal. And we expect the EU and the UK to hold up their end of the bargain too.
But does this new one fifteen percent now basically break the EU Trade Agreement given where most favored nation products are and those rates.
So right now, as we talked about ten percents in place, there will be a proclamation raising it to fifteen percent appropriate and so once that comes out, I'm happy to come back on and explain how that might accommodate other countries where there's a deal.
Well, any of the rates on any country stay at ten percent.
Well we will.
We want to make through that we go through the legal process and we get out of proclamation. Again, this is anytime we put on a tariff, we're going to have foreign interest who want to bring it down, so people are going to sue us. So I'm not going to get ahead of the President. I'm not going to get ahead of the White House Counsel and all these folks who are implementing this. So when that comes out, it will be very clear what and how and why investador.
In some of your comments, it seems like you're suggesting that the rate could go above fifteen percent, and I just am curious what exactly you're planning to use. It's been discussed that section three oh one in particular will be used to go after places like China, which it has been used for before. Is that still in the cards.
Yes.
So Section three oh one is a country specific tool, and it allows the President to investigate unfair trading practices by countries. And again, this is what we've been getting at over the past year, as we've concluded deals with
over a dozen countries. They have agreed to eliminate unfair barriers to our trade, take down their tariffs, you know, eliminate fake regulatory barriers, etc. And so we can actually conduct these investigations under Section three oh one on a country by country basis, figure out exactly what they're doing that's been so problematic, and negotiate with those countries, but also impose a tariff as enforcement to make sure that they eliminate those practices in China certainly, but also other
countries Vietnam, Southeast Asia, the Europeans potentially. But the point is to recreate the policy that we've developed over the past year, to give continuity and be able to be in a position where we can honor the deals but also have enforcement available. That's the only reason why these countries have made all these concessions, because they know the presence willing to enforce, willing to raise tariffs if he needs to.
Have you started the three on one investigations.
So there are couple that are that have already started.
We opened a Section three oh one investigation on Brazil a few months ago, we opened up one on China a few months ago about compliance with the Phase one deal, and we have many others that we are preparing right now we expect to launch in the coming days and weeks, such as related to forced labor and supply chains, industrial access capacity or unfair trading practices with respect to fishing or seafood or rice, or subsidies for certain products and that kind of thing.
So, Invessiger, you were potentially planning to use three on one because when I spoke to you and your colleagues in the past, there was this concern Supreme Court could strike down AEPA. So why didn't you do these investigations from the very beginning.
AIPA was the most appropriate tool to use because we are facing an emergency in this country. In the five years prior to President Trump's second term, are US trade deficit exploded by forty percent to reach one point two
trillion dollars, the largest trade deficit in human history. And the trade deficit was a manifestation of many things, but one of them is a lot of offshoring of production to other countries, jobs and manufacturing that went to China, Vietnam, Mexico, etc. To the point where our defense industrial base was challenged,
our manufacturing base and jobs were hollowed out. And this was an emergency and is an emergency, and so the President used an emergency power to move very very quickly Section three oh one and Section two thirty two.
Some of our alternative tools.
They take more time, they take more process, They're very effective, but they didn't have the flexibility and the speed we needed to really out the gate, make these points, get the deals with the countries, and now we can go back and make them firm.
Ambassada, Canada, and Mexico of course will be down separately. But does the President feel constrained by USMCI.
So, I wouldn't say feel constrained. We're in the middle of a review that we have to conduct in the United States. I'm in contact with my counterparts from both Mexico and Canada. There are things in you SMC that makes sense that you don't get a lot of news because they function fine, but there are a lot of things where we don't have the type of market access
we want, whether it's in goods or services. We have Mexico that historically, over the past few years, has been discriminating against US energy.
Producers and service providers.
We have Canada that limits our access for dairy, has taken American wine and spirits off its shelves.
So we have a lot of issues like that. We also have.
Concerns about transhipment through Canada and Mexico of goods from third countries coming through and benefiting from duty free treatment from USMCA, And so we want to make sure that if there's an agreement with either of these countries, that it really benefits these countries and not third countries that might use Canada or Mexico as an export hub into the United States.
I'm sure you followed the story Josh Wing Grove and the team Dan in Bloomberg News in Washington, d C. Reporting more recently that the President is privately musing about exiting the North American Trade Pact. What can you share with this this morning about the prospect of that, Hamnck.
Well, it's not just privately. He talks about a public it's not a secret. I don't think that's super neosy, to be honest. The President has been really clear this year that he's concerned with the performance of USMCA. He doesn't feel that we should just rubber stamp this agreement. I'm having separate negotiations with Canada and Mexico because our relationships with those countries are so different, and so I
think we'll have over the coming year the conversations. Maybe we'll have separate protocols with Canada and Mexico that we tack on to USMCA. We just have to fix some of the gaps in that the President has already taken action on autos, which is a big problem. We've seen a huge influx of imports of autos from Mexico over the past few years, when really we want to be making those things here. And we're already seeing Stilantis, GM and others announce new lines and using up open capacity
in the United States to make more cars here. So we're already seeing a good effect from the present's trade policies with respect to Canada and Mexico.
So sounds like a review and improve is the path you're on, Ambassador Gear. When it comes to the one twenty twos, are you prepared potentially for or suits as well using that legal authority.
Well, any legal authority the President uses to impose tariffs, foreign interests are going to sue, right, people who are importing from foreign companies and foreign workers they're going to sue, So of course we expect that that comes along. However, I would say that the lower courts and even the Supreme Court expressed that one twenty two is an authority
that the president can use. We put out the proclamation last week that lines out exactly how the president can use this and why he's using it in the declarations he's making. Are people going to sue? I expect they will. We feel confident in the case.
In July of last year, though, the president's own lawyers said that one twenty two wasn't applical. They said that this is the appeal of the Court of International Trade decision. They said, basically, nor does it have any obvious application here one twenty two, where the concerns the president identified and declaring an emergency arise from trade deficits, which are conceptually distinct from balance of payment deficits. So why do you think it works now when it didn't work over the summer.
So I will say first of all that I think that there's more context of that statement. And further, a balance of payments is not identical to a trade deficit. People have kind of set up this straw man that's just wrong. If people go back and actually read the proclamation that went out, it talks about the actual balance of payments deficit.
It refers to the current account.
Now, the trade deficit is a big portion of the current account, so it certainly is a driver of it. But we also talk about things like our net investment income position where we're twenty six trillion dollars in the hole. So there are a variety of things that contribute to a balance of payments deficit. And so folks who are out there with this kind of over simple straw man argument that we're just equating a trade deficit to a balance payments deficit, they're just wrong.
They don't even understand. I don't think they've read the proclamation.
And bestI can we finish on the dright deficit quite and recently, and just to wrap up the conversation, help explain to us what the metric for success is actually going to be for the administration to demonstrate to the American public that this effort is actually working.
Sure, so when the President put his trade program into place starting in April, every month from April through December twenty twenty five, the trade deficit goods went down year on year.
That's exactly what happened.
So from April to December, the trade deficit and goods went down by seventeen percent. When we look at you know, is the trade policy working. We're looking at the direction and the trend and the trade deficit, so that's going the right way. We're looking at real wages. Are they going up? Are people being paid more to produce here? And they are. We have average weekly earnings or four
point four percent over the year. And we're looking at what's happening with manufacturing and we're seeing a lot more purchases of capital goods. We're seeing starts on factories and so that's going the right direction. We're seeing productivity and manufacturing surging, so all of that's going in the right direction. And we're seeing things like you know, ge has announced you know, another three billion dollars worth of investment, a
thousand jobs across five states, Georgia, Tennessee, et cetera. So we're seeing it in the data and we're seeing it in the actual expansion of manufacturing in America.
Ambassador, and you've got a run. Thanks for making some time for us. Look forward to catching up again soon. Thank you, sir, Thank you very much. The US Trade Representative Jamison Greer on metrics for success after that trade deficit was much wider than expected at the previous read