Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:07):
We begin this hour with markets are looking ahead to
high stakes trade talks between the US and China and
Switzerland this weekend. Joining us now. Very pleased to say
Pin Navarro, the Director of the Office of Trade and
Manufacturing Policy at the White House, dot Donavaro, it's been
too long, sir. It's good to see you. Thanks for
being here.
Speaker 3 (00:24):
Been a long time.
Speaker 4 (00:24):
Joan, it is good to see you too, sir. Thank you, sir,
first class digs here, my friend.
Speaker 2 (00:29):
Well, I'm pleased we're looking after you. Let's kick it
off with these talks this weekend. We just heard from
the President just moments ago and he mentioned an eighty
percent tariff might be about right. It's up to the
Treasury Secretary. We understand you won't want to get ahead
of those negotiations, but I just wonder could you offer
some clarity on what about right means when the President
says eighty percent tariff on China seems right, seems right
for the talks this weekend, or seems right for the
(00:51):
foreseeable future. Yeah.
Speaker 4 (00:54):
I was one of three people that was with the
White House the first term for all years. One of
the big reasons is I never got ahead of the president.
Let me tell you about Geneva, which is kind of
I've got a very warm memories. It was my finest
hour as a negotiator. I went there to lead the
(01:15):
negotiations for the United Postal Union reforms that essentially got
China rates fair to we say billions on that. But
I mentioned this because Geneva has symbolic value in this negotiation.
It is the headquarters.
Speaker 3 (01:33):
Of the World Trade Organization.
Speaker 4 (01:34):
And the scariest thing I ever saw in Geneva was
the size of the China delegation at the World Trade Organization.
And they've played the WTO like a fiddle.
Speaker 3 (01:45):
So let's see what happens tomorrow.
Speaker 4 (01:48):
I'd be happy to come back on Monday do the debrief,
but I don't want to get ahead of the Boss
or Scott Besting. And don't forget Scott's going with Jamison Greer,
the United States Trade Representative. He's the guy who learned
that the knee of Bob liteheis for the first time around,
was there for all the China stuff, and he's the
guy who was the architect, along with Howard Lutnik, of
(02:10):
the UK deal.
Speaker 3 (02:11):
So let's see what happens. It'so of the very best.
Speaker 2 (02:14):
We'll certainly pensil in the weekend for the markets. Well,
pensil in and appearance with you for Monday. No worries
about that. I'm looking forward to that conversation. Just got
into the weekend and reflected on your experience dealing with
the Chinese. Then not the UK. This is not the
same relationship. The trade relationship is tremendously unbalanced and has
been for a long long time. Can you frame for
us how difficult it has been previously for you to
(02:35):
negotiate with the Chinese and how much longer it could
take with the Chinese relative to set the UK and
other trade partners.
Speaker 3 (02:43):
Well, I could tell you.
Speaker 4 (02:44):
I think I sat face to face with the China
team maybe seven times during the first term, and twice
Shi Jinping was there with G seven, just community the
G twenty both. I think it was Tokyo and our
Buenos Aires. What's interesting, So what's so interesting to me,
(03:07):
Jonathan about China is that they have continuity. The same
people are going to be in Geneva or the same
people back then, and you know, our our regimes change,
we have different governments and things like that. But they
have the advantage of that kind of continuity.
Speaker 3 (03:25):
But look, it'll be interesting again.
Speaker 4 (03:29):
I don't I don't want to get ahead of Scott
and Jamison or the President.
Speaker 3 (03:34):
I think, let's see what happens.
Speaker 4 (03:35):
You know, my role, and we've got we've got fifteen
countries we run enormous trade deficits with that, We've got
to renegotiate.
Speaker 3 (03:45):
The whole structure of those deals.
Speaker 4 (03:47):
And there's another one hundred countries that that cheat us
in some ways.
Speaker 3 (03:51):
But smaller ways. My role in the administration.
Speaker 4 (03:54):
On all of this is to do the background analytics
to see how we country is cheating us, which basically
sets up the terms of the negotiation. And every country,
like fingerprinsts, like India is the Maharaja tariffs. They have
the highest tariffs of any of our major trading partners.
Japan is the most clever at protecting its own markets
(04:17):
with a combination of domestic protectionism non tariff barriers. You know,
Germany they have auto tariffs at ten percent. We have
them at two and a half percent, but they also
have the vat tax which acts as another twenty nine
what is it, nineteen percent tariff and an exports subsidies.
Speaker 3 (04:37):
So what I do is.
Speaker 4 (04:40):
Do the background and look at kind of how these
countries are doing what to us, and we get great
deals from there.
Speaker 3 (04:48):
People. I think the UK deal is very interesting.
Speaker 4 (04:51):
I think the significance is not just that it's a deal,
but that's a template for the future deals. What we
do done is like four or five verticals we look at.
It's the tariffs, the non tariff barriers, the digital taxes,
and then the various kinds of cheating, the dumping, the
currency manipulation and things like that. And then from there
(05:12):
we assess what the asks are, what we need and
go forward from there.
Speaker 3 (05:18):
See, you get to see a steady wave of deals.
Speaker 4 (05:21):
The USTR building is right across the street from the
White House. It's got the most staff negotiating these deals.
And it's like you go to the Delhi and you
have to take.
Speaker 3 (05:35):
A number and get in line.
Speaker 4 (05:36):
Every day there's delegations from around the world lining up
to meet with Jamison Greer and Howard Lutnick, and I've seen.
Speaker 3 (05:46):
I looked yesterday at the schedule.
Speaker 4 (05:47):
It was kind of fun out the July and it's
just you know, one after the others.
Speaker 1 (05:51):
Well, Peter looking at the countries lining up.
Speaker 5 (05:53):
One key aspect of the UK deal was of course
bringing down the auto tariff to ten percent. So right
now tariff rate that's lower for Bentley's, which is a
car that most American families can't afford made in the UK,
where Chevys have a higher rate if they're made in
Canada or Mexico. Is there an expectation that the next
trade deals auto terrors will be coming down those rates.
Speaker 3 (06:19):
It's going to be country by country. I mean, the
beauty about the UK is.
Speaker 4 (06:23):
That very small amount of exports they send us and
we have a hard cap I think it's one hundred
thousand units where it goes right back up to twenty
five percent. And again we're trying to do something that's
mutually beneficial to both countries to get to a better place.
Speaker 3 (06:44):
Well at the same time.
Speaker 4 (06:46):
Changing the level of the playing field so that it
is more level. I think for me, the beauty of
the UK deal besides that was all of the good
stuff we had for AG. I mean, one of the
problems we have is this non tariff barriers like FIDO
sanitary standards, what's that that's like? These things they do
(07:08):
to keep our pork out, our chicken out, our beef.
Speaker 3 (07:13):
Right now we're going to be able to.
Speaker 4 (07:15):
Sell a lot more beef, poultry, dairy, and ethanol.
Speaker 3 (07:19):
I mean they had a really.
Speaker 4 (07:20):
High tariff, like almost a lockout tariff on ethanol and
that's made from corn.
Speaker 3 (07:25):
So the folks in Iowa are very happy about that.
So this is the way we're going to go forward
on net. The United States is going to be far
better off. And all we're doing is trying to level
the playing field.
Speaker 4 (07:39):
I saw the e EU kind of rattling sabers I
think was yesterday about some kind of retaliation, and I
would just say to anybody's who's in the European Union,
I mean, how can you look at us in the
face and threaten us when your tariffs are higher?
Speaker 3 (07:57):
You have lost.
Speaker 4 (07:58):
Cases repeatedly at the WTO on us selling you things
like beef and poultry, and you won't even honor that.
Speaker 1 (08:08):
So yesterday the President called Ursula Vonderline fantastic and he
said he hopes to meet her. But are you saying
that the European Union is not as high on the
priority list? And say other trading partners like the Oriental
pan not at all.
Speaker 3 (08:23):
I mean the EU to be clear here, we.
Speaker 4 (08:25):
Have the second highest trade deficit with the EU, behind China,
so they're very high on the list. All I'm saying
here is that I thought I found it unfortunate that
the EU kind of fired I think some term was
fired shots across our bow. It's like retaliation will not
(08:46):
work against the United States.
Speaker 3 (08:47):
We shouldn't have that.
Speaker 4 (08:48):
Let's talk, let's figure this out, and it would.
Speaker 3 (08:51):
Be nice here. Let's give piece a chance here.
Speaker 4 (08:54):
All we're asking for here in the United States of
America is fairness.
Speaker 3 (08:58):
I mean, hold on, did you agree?
Speaker 4 (09:00):
Is there any disagreement on this set and on your
set that the tariffs of the EU are higher, and
that the non tariff bearriers are higher, and that the
w t O in Geneva is basically sanctioning that through
tuesdays one is the.
Speaker 3 (09:17):
But would you agree with that?
Speaker 6 (09:19):
I think there's a bigger question fac there. There's a
bigger question here. There's a bigger question here, and this
is something that the German Finance Minister has come out
and talked about, which is they'd be willing to drop
all tariffs to zero if the US were willing to
drop all tariffs to zero. There is a willingness to
negotiate aground the board to a lower teriff regime. Would
that be acceptable to you? Or is ten percent?
Speaker 3 (09:41):
So stay with that. See, that's such a misdirection.
Speaker 4 (09:45):
Okay, it's it's the non tariff barriers stupid to kind
of paraphrase Bill Clinton, It's like, it's the non tariff barriers.
So when countries like Vietnam or entities like the EU
say to oh, let's all go to zero tariffs and
everything will be okay, that's.
Speaker 3 (10:04):
Not the problem. It's part of the problem.
Speaker 4 (10:07):
But the bigger problem is the non tariff barriers in Europe.
Speaker 3 (10:12):
It's the VAT tax.
Speaker 4 (10:13):
I mean, I don't know if you know this, but
the United States has tried, going back to the nineteen
seventies to get equity treatment for the that tax, which
most countries of the world use versus the income tax
which we use. We haven't been able to get it
because the WTO has a majority of people who benefit
(10:33):
from sticking it to the United States.
Speaker 3 (10:35):
So they do.
Speaker 4 (10:36):
So the zero tariff thing, that's misdirection, and on your set,
you should call it on that. Let's lower the bad
tariff barriers, and let's give you relief on the VAT tax.
Speaker 3 (10:49):
Now we're talking.
Speaker 6 (10:50):
The VAT tax is a slightly different mechanism. This is
all going to take a long time, and there are
a lot of competing factors here in terms of who
can possibly pull these levers. I just wander, We've got
two months left in this ninety day negotiating period that
is paused for the retaliatory tariffs. Does that just get
extended out in another ninety days as you have to
deal with different legislative bodies to possibly remedy what you.
Speaker 4 (11:13):
See, Well, we don't have to deal with legislative body.
Well okay in the EU perhaps, but you know, like
coin a term in Trump time, which is to say,
do it as fast as possible without screwing it up.
Speaker 3 (11:27):
And that's all we're trying to do.
Speaker 4 (11:28):
I go back to the observation that the United States
Trade Representative and that building, which is historic building, by
the way, beautiful to see if you ever get there.
The lines, you know, they're they're coming in and out.
We're talking, and we're talking, and you.
Speaker 3 (11:43):
Know, let's, as the boss says, let's see what happens.
Speaker 4 (11:46):
I mean, it's in everybody's interests around the world to
level the playing field with the United States in a
way which allows us to restructure this international trade environment
which is fundamentally skewed against the United States. I mean,
we're losing because of this system. The United States is
losing our manufacturing base, We're losing our defense industrial base.
Speaker 3 (12:08):
And when push comes to.
Speaker 4 (12:09):
Shove and folks around the world are looking for the
United States to help defend them, I mean, we get
to a point where we can't do that, what good
is that?
Speaker 3 (12:17):
So trade?
Speaker 4 (12:19):
Trade, economic security is national security is one of the
guiding principles and President Trump in this administration. So we're
just trying to get fairness here. Give give fairness a
chance here and work with us.
Speaker 2 (12:31):
Looking forward to an update on Monday, sir, it's going
to see it once again, sir. Thank you. Dotar, Director
of the Office of Trade and Manufacturing Policy at the
White House.