On Sunday, White House National Economic Council Director, Kevin Hassett spoke to CNN's Jake Tapper about President Trump's tariff policies.
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00:00White House National Economic Council director Kevin Hassett. Kevin, good to see you again.
00:04So the 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. The strength of the dollar right now is plunging.
00:17Consumer sentiment is worse than at any time during the Great Recession. Is all of this part of the plan?
00:24Right. In fact, let's talk about what the trade plan is, because I think that it's very,
00:28very important for people to understand why we're doing what we're doing and how we got to the point
00:33where this is the right strategy. The bottom line is that in the United States, there are these things
00:39called 232s. You've heard people talk about it. It's a trade action where the government decides
00:45that there's something that's a serious threat to national security if we don't do something about
00:49it. And so an example, just hypothetical, would be supposed that in order to protect ourselves from
00:55an adversary, we had cannons, but we had to buy the cannonballs from them. Well, then you could put
01:00a 232 tariff on the cannonball and then we'd have to make it here. And then that would make it so that
01:06if we ever did have a situation where we're in conflict, that we'd had everything we need to
01:11protect ourselves. And so the 232 things were always excluded. They weren't covered by the new actions
01:17that you discussed at the opening. And so it's not like, so for example, semiconductors are the key
01:22important part of a lot of defense equipment. And there's going to be a semiconductor 232
01:28that studies those things carefully and decides what it has to, what has to be onshore in order
01:33to protect America. And so it was always the case in annex two in the reciprocal act that
01:38semiconductors were going to not be covered by that action because there's a 232 action that was
01:43announced in the executive order that is going to address it. And so I don't think that anything
01:50really should be a surprise if people stopped and studied, but it seems like a lot of the coverage,
01:55people are in a rush to get the coverage out and didn't really think through the logic of it,
01:58which is why we have a longer form show with you here, right, Jake, where we can talk about what
02:02exactly is going on. And then finally, why is it that people think that there is an emergency about
02:07this? Well, it's because especially over the last four years, the influence of China into every
02:14little corner of our country has just gotten bigger and bigger and bigger. And so it actually is the
02:19case that it's a very uncomfortable amount of Chinese input in our actual weapons systems,
02:25Jake, in our actual weapons systems. And so President Trump thinks it's urgent that we
02:29address these matters. Okay, let's talk about the overall investment environment. Nine days ago,
02:35President Trump announced to the whole world that those were the rules for doing business in America
02:40going forward. The tariffs were here to stay. His policies were not going to change. I'm just quoting
02:44him from his truth social messages. And then, of course, on Wednesday, he issued this 90-day
02:50pause on most of the tariffs. And in his own words, it was because the bond markets were getting queasy
02:54and yippy. So here's what one small business owner told CNN about the impact that this whiplash
03:01is having on her. A pause is better than no pause, but the uncertainty is still really chaotic for a
03:09small business like me. And now, even if I move out of China, how am I going to be certain that if I
03:14place an order today, I won't find a new tariff tomorrow? This up and down is just something as a
03:18small business I can't pivot to. So that's Sarah Wells from Sarah Wells Bags. Well, what do you say to
03:23small business owners or even big business owners who say they're having difficulty making long-term
03:28business decisions because the country seems right now to be run by capricious whim?
03:33Oh, 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
03:57American people, deregulation, and of course, trade policy. Now, on the trade policy, the whole point
04:03of the trade policy is to address the national emergency that we're too dependent on foreign
04:10products in the U.S., especially if we were at a time of conflict. And we're doing something about
04:15that. And the reciprocal act was basically, guys, if you come to the table and negotiate us with us
04:20and treat us the same way we treat you, then you'll get your rate really low. And so right now,
04:26130 countries, 130 countries have responded, and we're negotiating with them, and they've got
04:32their rate down to 10%. And so really, it's kind of almost a two-world system. There's a process
04:38about China, and that's very, very nascent, if at all, and then the process for everybody else. So
04:44the process for everybody else is orderly. It's clear. People are coming to town with great,
04:49great offers. We've got Japan, Korea, India. I was just talking to the foreign minister of India,
04:57and everything is moving forward very quickly. And so I guess that the bottom line is that the
05:03small business owner has experienced over the last few weeks the start of a process that's settling
05:08down really quite quickly. Again, 130 countries are at 10% now. So let's talk about these 130 countries,
05:13because as you know better than I do, it typically takes months, if not years, to negotiate trade
05:19deals. Trump's signature trade deal from his first term, a great achievement, according to both
05:25Democrats and Republicans, NAFTA II, or the USMCA, that took 15 months to put together. How exactly are
05:32you and your team and the USTR team, how are you going to negotiate deals that actually deliver for
05:38the American 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
06:03Lettnick, 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 Lettnick and Jameson Greer, because last
06:57Sunday, the secretary of commerce, Howard Lettnick, 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, you talked about at the top, smartphones,
07:28computers, chips. It's it's a contradictory message. I mean, I understand that you're saying
07:34that this was the plan. But Lettnick, it seems like nobody told Lettnick and Greer.
07:40No, no, I disagree with that. I think that absolutely the characterization that I gave you
07:45at the top of the hour is the thing that everybody understood all along. But I can see that when you're
07:50getting interviewed here, interviewed there, that somehow like not having the time like you and I have
07:55now, just show the big picture, can make it so that people don't have a complete picture of what's
07:59going on. But Greer is in Senate testimony.
08:00Think about it this way. No, but but but think about this way again, that there are these 232s,
08:05which are coming, that are announced in the Reciprocal Trade Act. And the things that are going to be in
08:11the 232s, like the cannonballs that we need so that we can have something to put in the cannon,
08:15those things are in progress. And while those are in progress, these say 10 percent on most of the
08:22world tariffs will not apply to those things. And so then there's a question, an interpretation,
08:27what you say, OK, if you're not applying a semiconductor to those things, then what does
08:31that exactly mean? Because the U.S. doesn't really import a whole lot of just semiconductors.
08:36The semiconductors are in things. And it's very, very natural for the Commerce Department.
08:40And I think that the Secretary of Commerce, Howard Lettnick is one of the best Commerce Secretaries
08:44I've ever worked with, that he had his team go through and say, well, what does it mean to comply
08:50with this order? And that's what came out. I don't think that it was rushed or disorganized at all.
08:54So these exemptions are only for items that will help our Defense Department needs? It's not iPhones
09:01in 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 we're planning 232 actions on
09:13because they're necessary for national security. And those things that are on that long list are
09:18things that will be exempt until those 232s happen. But you understand how some people might look at
09:24this and say, this doesn't really make sense in terms of the president's larger goal. If President
09:30Trump and you and your team are all trying to reshore manufacturing so that American manufacturing
09:36for phones and computers is happening here in the United States, and along with all these great
09:43middle class jobs that would go with it, that you're exempting those items, while at the same time,
09:50the reshoring and manufacturing of the production of sneakers and t-shirts would happen here.
09:57And that seems to be completely the opposite of the goal, right?
10:01That'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
10:12232 steel 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
10:28back to, like, why are we doing this in the first place? There's the national security matter,
10:33but there's also what it means for the American worker. And so when we look at, say, the small
10:37business person who's concerned that the price of their goods is going to be higher when they sell
10:42it to their customers, the thing that they also have to remember is that these policies, which the
10:47president successfully enacted in the first term, are going to increase the demand for labor, increase
10:52wages, up by almost $6,500 in the first three years of the Trump administration. And so what it means is
10:57that even if you accept the naysayer's perspective on what might happen to the price of a cup of
11:02coffee, that the person walking into the coffee shop is going to have a lot more money. In the
11:0715 years after China entered the WTO, real wages went down. So wages went down by more than prices,
11:12as we thought these cheap goods were going to revolutionize America. In fact, it was the
11:15opposite. Welfare went down. We had Angus Deaton write a whole book about the deaths of despair that
11:20were related to this. And so I think we're very optimistic about the fact that people are going to have
11:24more money in their pockets and that they're going to have a higher standard of living.
11:28Well, right now, I mean, wealth has disappeared from the market. And as you know, the fears of a
11:32global recession or a United States recession have increased even among business supporters,
11:38business leaders who support President Trump.
11:41Well, what you're seeing is that the survey data is what we call the soft data. The survey data has
11:47been 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
12:02and to make stuff here in the U.S. If they make it in the U.S., they're not going to pay any tariff.
12:06And there's an explosion in the labor market. It's really surprised me. And so you can't have a lot
12:11of new employment and then have like a recession. It's just, you know, the jobs, the jobs data was
12:17from before the liberation day. I mean, there's before all these global. Well, not, not all those,
12:24but, but, but also it was clear. I think that the jobs data were anticipation of something
12:29happening, something big. That would be only rational for firms to think that way. All right,
12:32Kevin Hassett, thank you so much for your time this morning. Really appreciate it.
12:35Jake.