On Sunday, White House National Economic Council Director, Kevin Hassett spoke to CNN's Jake Tapper about President Trump's tariff policies.
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
Stay Connected
Forbes on Facebook: http://fb.com/forbes
Forbes Video on Twitter: http://www.twitter.com/forbes
Forbes Video on Instagram: http://instagram.com/forbes
More From Forbes: http://forbes.com
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
Stay Connected
Forbes on Facebook: http://fb.com/forbes
Forbes Video on Twitter: http://www.twitter.com/forbes
Forbes Video on Instagram: http://instagram.com/forbes
More From Forbes: http://forbes.com
Category
🗞
NewsTranscript
00:00White House National Economic Council Director, Kevin Hassett. Kevin, good to see you again.
00:04Hey, Jake. Good to see you.
00:05The White House says everything that happened over the last week and a half went according to plan.
00:10Over the course of just a few days, the global market lost trillions in stock value,
00:13regained some of it, but not all of it.
00:15The strength of the dollar right now is plunging.
00:17Consumer sentiment is worse than at any time during the Great Recession.
00:22Is all of this part of the plan?
00:24Right. In fact, let's talk about what the trade plan is,
00:27because I think that it's very, very important for people to understand
00:30why we're doing what we're doing and how we got to the point where this is the right strategy.
00:35The bottom line is that in the United States, there are these things called 232s.
00:41You've heard people talk about it.
00:42It's a trade action where the government decides that there's something that's a serious threat
00:47to national security if we don't do something about it.
00:50And so an example, just hypothetical, would be suppose that in order to protect ourselves
00:55from an adversary, we had cannons, but we had to buy the cannonballs from them.
01:00Well, then you could put a 232 tariff on the cannonball, and then we'd have to make it here,
01:05and then that would make it so that if we ever did have a situation where we were in conflict,
01:09that we'd have everything we need to protect ourselves.
01:12And so the 232 things were always excluded.
01:15They weren't covered by the new actions that you discussed at the opening.
01:18And so it's not like, so for example, semiconductors are the key important part of a lot of defense
01:25equipment, and there's going to be a semiconductor 232 that studies those things carefully
01:30and decides what has to be onshore in order to protect America.
01:34And so it was always the case in Annex 2 in the Reciprocal Act that semiconductors were going
01:39to not be covered by that action because there's a 232 action that was announced in the executive
01:45order that is going to address it. And so I don't think that anything really should be a surprise
01:51if people stopped and studied, but it seems like a lot of the coverage, people are in a rush to get
01:55the coverage out and didn't really think through the logic of it, which is why we have a longer
01:59form show with you here, right, Jake, where we can talk about what exactly is going on.
02:04And then finally, why is it that people think that there is an emergency about this?
02:07Well, it's because, especially over the last four years, the influence of China
02:13into every little corner of our country has just gotten bigger and bigger and bigger.
02:18And so it actually is the case that it's a very uncomfortable amount of Chinese input
02:23in our actual weapons systems, Jake, in our actual weapons systems.
02:26And so President Trump thinks it's urgent that we address these matters.
02:30Okay, let's talk about the overall investment environment. Nine days ago, President Trump
02:35announced to the whole world that those were the rules for doing business in America going forward.
02:41The tariffs were here to stay. His policies were not going to change. I'm just quoting him from his
02:45truth social messages. And then, of course, on Wednesday, he issued this 90-day pause on most
02:50of the tariffs. And in his own words, it was because the bond markets were getting queasy and yippy.
02:55So here's what one small business owner told CNN about the impact that this whiplash is having on her.
03:04A pause is better than no pause, but the uncertainty is still really chaotic for a small business like me.
03:10And now, even if I move out of China, how am I going to be certain that if I place an order today,
03:15I won't find a new tariff tomorrow? This up and down is just something as a small business I can't pivot to.
03:20So that's Sarah Wells from Sarah Wells Bags. Well, what do you say to small business owners or even
03:25big business owners who say they're having difficulty making long-term business decisions
03:29because the country seems right now to be run by capricious whim?
03:32Oh, I don't think at all it's run by capricious whim. The way that I would think about it is that
03:38in the previous administration, you can sort of say, if you're thinking about it in the football
03:42analogy, is that they were running out the clock. And that what's going on now in the Trump
03:47administration is across a wide array of policy areas, we're in a two-minute offense. And the two-minute
03:52offense is pushing, as you've seen, the reconciliation bill through so that we get tax relief for American
03:58people, deregulation, and of course, trade policy. Now, on the trade policy, the whole point of the
04:03trade policy is to address the national emergency that we're too dependent on foreign products in the
04:11U.S., especially if we were at a time of conflict. And we're doing something about that. And the
04:16reciprocal act was basically, guys, if you come to the table and negotiate us with us and treat us the
04:21same way we treat you, then you'll get your rate really low. And so right now, 130 countries,
04:27130 countries have responded, and we're negotiating with them, and they've got their rate down to 10%.
04:34And so really, it's kind of almost a two-world system. There's a process about China,
04:39and that's very, very nascent, if at all. And then the process for everybody else. So the process
04:44for everybody else is orderly. It's clear. People are coming to town with great, great offers.
04:50We've got Japan, Korea, India. I was just talking to the foreign minister of India. And everything is
04:58moving forward very quickly. And so I guess that the bottom line is that the small business owner
05:03has experienced over the last few weeks the start of a process that's settling down really quite
05:09quickly. Again, 130 countries are at 10% now. So let's talk about these 130 countries, because as
05:13you know better than I do, it typically takes months, if not years, to negotiate trade deals.
05:20Trump's signature trade deal from his first term, a great achievement, according to both Democrats
05:25and Republicans, NAFTA II, or the USMCA, that took 15 months to put together. How exactly are you and
05:32your team and the USTR team, how are you going to negotiate deals that actually deliver for the
05:38American people with more than 100 countries in less than three months? Oh, yeah. You know,
05:44first of all, just a little bit of more clarification. One of the things I like to ask
05:49people is, who's the chairman of the National Economic Council? And then everybody thinks, oh,
05:52it's you, Kevin. Well, no, I'm the director. The chairman of the National Economic Council is
05:57President Trump. And so what President Trump does is he sets out a path for everybody, for Howard
06:03Lutnick, Scott Bessett, and for Jameson, on how they would move forward on a particular policy
06:08matter. And then it's my job as director to make sure that the president's wishes are being fulfilled.
06:12I'm kind of there to help everybody succeed. And I can tell you, I've been watching the people who
06:17are assigned to different assignments working really, really hard on getting trade deals forward
06:21over the last many weeks. And so one of the things that we were thinking about this week was that we
06:28had a few of these deals that are so close to baked that we could announce that we have a deal in
06:32principle. You're right that getting the fine print out would maybe take a little longer. But we were
06:37thinking about announcing a deal in principle even this week. But then we were making so much
06:41progress so rapidly that the president decided to instead, instead of having one or two things right
06:46now, just go for the 10 percent pause. And I think it was the right answer, given the massive amount of
06:51momentum that we've been seeing. Yeah. So let's talk about Lutnick and Jameson Greer, because last
06:57Sunday, the secretary of commerce, Howard Lutnick, was on a different show. He was talking about tariffs.
07:01And he was saying that these that what these are going to do is it's going to it's going to bring
07:06iPhone manufacturing to the United States. Five days ago, U.S. Trade Representative Jameson Greer
07:12told senators, quote, the president has been clear with me and with others that he does not intend to
07:17have exclusions and exemptions, unquote, to these tariffs. But now we know about these carve outs for
07:24electronics imported to the U.S. that we talked about it. You talked about at the top smartphones,
07:29computers, chips. It's it's a contradictory message. I mean, I understand that you're saying
07:34that this was the plan. But Lutnick, it seems like nobody told Lutnick and Greer.
07:40No, no, I disagree with that. I think that absolutely the characterization that I gave you at the top of
07:45the hour is the thing that everybody understood all along. But I can see that when you're getting
07:50interviewed here, interviewed there, that somehow like not having the time like you and I have now
07:55just show the big picture can make it so that people don't have a complete picture of what's
07:59going on. Greer is in Senate testimony. Think about it this way. No, but but but think about
08:03this way again, that there are these 232s, which are coming, that are announced in the Reciprocal Trade
08:08Act. And the things that are going to be in the 232s, like the cannonballs that we need so that we
08:13could have something to put in the cannon, those things are in progress. And while those are in
08:19progress, these say 10% on most of the world tariffs will not apply to those things. And so
08:25then there's a question and interpretation. What you say, OK, if you're not applying a semiconductor to
08:30those things, then what does that exactly mean? Because the U.S. doesn't really import a whole lot of
08:35just semiconductors. The semiconductors are in things. And it's very, very natural for the
08:39Commerce Department. And I think that the Secretary of Commerce Howard Lutnick is one of the the best
08:43commerce secretaries I've ever worked with that he had his team go through and say, well, what does it
08:49mean to comply with this order? And that's what came out. I don't think that it was rushed or
08:53disorganized at all. So these exemptions are only for items that will help our Defense Department needs?
09:00It's not iPhones in general. It's not semiconductors in general for commercial use?
09:06There's a long list, which you could put a graphic up, of the things that are that we're planning 232
09:13actions on because they're necessary for national security. And those things that are on that long
09:18list are things that will be exempt until those 232s happen.
09:22But you understand how some people might look at this and say, this doesn't really make sense in
09:27terms of the president's larger goal. If the President Trump and you and your team are all
09:32trying to reshore manufacturing so that American manufacturing for phones and computers is happening
09:40here in the United States, and along with all these great middle class jobs that would go with it,
09:45that you're exempting those items, while at the same time, the reshoring and manufacturing of the
09:52production of sneakers and t-shirts would happen here. And that seems to be completely the opposite
09:59of the goal, right?
10:02That's just a perspective. If you think that we're going to fail to deliver on the 232s,
10:07then your question would be one to wonder about. But the 232s will be successful. We've already got 232
10:13steel and aluminum, for example. And so that wouldn't be covered by the reciprocal part.
10:19And we've got 232 on autos. That's not covered by the reciprocal part. So those other things are
10:24going to happen. And it makes a great deal of sense. So the one final thing I want to say is going back
10:29to like, why are we doing this in the first place? There's the national security matter, but there's also
10:33what it means for the American worker. And so when we look at, say, the small business person who's
10:38concerned that the price of their goods is going to be higher when they sell it to their customers,
10:43the thing that they also have to remember is that these policies, which the president successfully
10:48enacted in the first term, are going to increase the demand for labor, increase wages, up by almost
10:53$6,500 in the first three years of the Trump administration. And so what it means is that even
10:58if you accept the naysayer's perspective on what might happen to the price of a cup of coffee,
11:03that the person walking into the coffee shop is going to have a lot more money. In the 15 years after
11:07China entered the WTO, real wages went down. So wages went down by more than prices, as we thought
11:12these cheap goods were going to revolutionize America. In fact, it was the opposite. Welfare
11:16went down. We had Angus Deaton write a whole book about the deaths of despair that were related to
11:20this. And so I think we're very optimistic about the fact that people are going to have more money in
11:25their pockets and that they're going to have a higher standard of living. Well, right now, I mean,
11:28wealth has disappeared from the market. And as you know, the fears of a global recession or a United States
11:34recession have increased, even among business supporters, business leaders who support President
11:39Trump. Well, what you're seeing is that the survey data is what we call the soft data. The survey data
11:46has been showing that people are anxious about the changes a little bit. But the hard data have been
11:52really, really strong, as you know. In fact, if you look at the latest jobs report, it was way,
11:56way above even what I expected. And so what's happening is that people are racing to create jobs and to make
12:02stuff here in the U.S. If they make it in the U.S., they're not going to pay any tariff. And there's
12:07an explosion in the labor market that's really surprised me. And so you can't have a lot of new
12:12employment and then have like a recession. It's just the opposite. But you know the jobs data was
12:17from before the Liberation Day. I mean, there's before all these global tariffs. Well, not all those,
12:24but also it was clear, I think, that the jobs data were anticipation of something happening,
12:29something big. That would be only rational for firms to think that way. All right, Kevin Hassett,
12:33thank you so much for your time this morning. Really appreciate it. Great to see you, Jake.