Japan, South Korea Trade Deals Will Be Hard,Says Commerce Secretary (Full Interview)

Japan, South Korea Trade Deals Will Be Hard,Says Commerce Secretary (Full Interview)

Mr.
Secretary, we appreciate your time as we consider the deals that have yet to be
made with other trading partners, is the message this one sends to them that
sectoral tariffs are up for negotiation, but that 10% base rate is not
right. So reciprocal tariffs, if you think
about it, is how open is your economy to our exports?
How fair is it to our exports? What kind of trade deficit you do?
And that sets that line. So 10% is the bottom line for that.
But as the president said, many of those will be higher.
Of course, you can bring them down by opening your government, opening your
economy to US exports, and then the sectoral tariffs.
That’s where you can be super smart if you’re opening your market to us.
And that’s what the UK did. The UK said, I’m going to let you export
into the UK $5 billion more of services. That’s great for American exports.
We’ll pay you $6 billion in tariffs, but help us out on cars and steel and
aluminum. They were never our problem.
They nationalized their steel industry. They don’t really have much of a steel
industry. They agreed to come on and do it with
us. So they’re going to put the same kind of
tariffs, the same kind of quotas, keep out the bad guys and let’s build our
steel and aluminum industries inside our walled countries together.
And that was these are sort of the key parts of being super smart, being super
rigorous, and trying to figure out the right answer how to do trade deals that
no one’s ever done before. You’re talking about the rigor here.
But Secretary, let Nick tell us a little bit about what the China angle is with
the US UK agreement. We’ve heard that China should be
pressured by some of these countries that the US strikes up agreements with.
Yeah, that’s not our strategy at all. I want to be clear that is not our
strategy. Our strategy is to do fair and
reciprocal trade to open these markets to trade.
And that’s what we’re going to do. Now, there are some countries that have
huge trade deficits with China and huge trade surpluses with us, like take
Vietnam, right? They buy $85 billion worth of goods on a
trade deficit with China. And then they run a 110 or didn’t $510
billion trade surplus with us as they assemble those things and ship it to us.
So Vietnam’s got issues, Thailand’s got issues.
All those countries that are really China’s proxies to us are going to have
issues because our view is going to be whatever the tariff results on China
should be their tariff on their business with them.
Now, probably the most interesting country, I can tell you that has a huge
trade deficit with China and a huge trade surplus with us is the European
Union and no one thinks about that. But a huge amount of the European Union
is really a tariff arbitrage from China through the European Union into the
American economy. And that is one of those sort of really,
really interesting sticking points when we sit down and we talk to the European
Union. And what’s the goal with the UK when it
comes to China? Is there an expectation that then the UK
should actually also be pressing China? No, not so much.
We’re not with the UK again, we had a balanced budget.
It was really about our exports. We are not focused in sort of this, you
know, singling out China or any of that stuff.
That’s just not the president’s goal. The president’s goal is to drive the
American economy. Hopefully the meetings this weekend will
de-escalate things and put things back on the right track with China and the US
on trade. But our objective with all these
countries is whatever rate we set for China should be for the countries that
trade with China and send it in to us, that should be about the same for those
too. That makes some sense.
And otherwise, let’s grow our exports and let’s grow our tariff revenues.
Let’s grow our exports and let’s take this trade deficit down.
Remember, if you have a $1.2 trillion trade deficit and you cut it to 900
billion, you only get a 25%. You grow our GDP 1%.
Imagine the guy sitting in the building behind me grows our economy 1%.
And then you bring in all these building, right, that trillions and
trillions of investment that’s probably going to bring two points of GDP.
No one ever thinks about the fact that the US doesn’t.
Our economy grows similar to everybody else.
And you know why? Because we export four points a year of
GDP growth to the rest of the world. When Donald Trump brings that home,
you’re going to see our economy grow like fire.
And that’s what he’s talking about and that’s what he talked about today.
Well, Mr. Secretary, in your last answer, you
referred to a few other trading partners, the European Union, Vietnam.
You also called out. Is that where we should look to see the
next deal, a merger? Are we likely to see a.
There are partners like Japan and India first.
Well, I think we would like to do one in Asia so we can show that kind of
arrangement. We want to do one in Latin America.
We’re trying to show people a framework of how to do business so that we can
role much more quickly. Right?
So once you do one trade in Latin America, you do one in the Caribbean,
you can then say, look, here’s a template.
Why don’t you all think about it and see does that work for you?
And if you want to modify it, modify it. But then what’ll happen is we’ll do one,
and then we’ll do ten, and then we’ll do one and then we’ll do 15.
Right? And we want to do big.
But obviously, when you talk about Japan, I mean, come on, you’ve got to
spend an enormous amount of time with Japan, Korea.
These are not going to be fast deals. Now, India has been leaning in really
hard, Right. You know, I love doing a deal with
India. That’s certainly a possibility.
But this is a lot of work. These are a lot of lines.
Remember, this was not sort of a just a gloss over a handshake trade deal.
This was 2600 lines of tariffs changing, modifying and coming down.
And, you know, when you talk about India, it’s probably 7000 lines.
It just takes time and it just takes work.
So give us a chance. Don’t be pushing, rushing.
But let me tell you, each one of these trade deals is going to feel the same.
You’re going to feel huge export opportunity coming from America, huge
tariff revenue coming in. Right.
And a dramatic improvement in the United States economy as we reassure the
industrial base of American. Mr.
Secretary, should we see the deal between the US and UK as basically a
roadmap or a blueprint of how future trade deals of the next two months will
look? Exactly right.
So people understand, okay, there’s the baseline if you want you, Tara, your
reciprocal tariff rate low, you’ve got to attack the trade deficit.
You’ve got to open your market, you’ve got to let us export.
You’ve got to have those things be together.
And then if you want to talk and really be smart and really be thoughtful, then
let’s talk sectorial tariffs. So open your market big and then if you
want to talk to us, we’ll try to come up with the smartest answer like we did for
it with the UK, right? They want to sell Rolls-Royce engines to
Boeing, right? So we made a deal and said, you know
what? You can sell your parts to Boeing tariff
free. Airbus makes planes in America.
You can sell those parts tariff free. And then what happens with it?
They buy $10 billion with the Boeing planes today as part of the deal.
So this is the time when you have the right partner you can come up with
really, really smart, thoughtful and rigorous trade deal like we’ve done with
the UK. Well, and as you’ve alluded to, Mr.
Secretary, you believe this will result in higher revenue for the United States
if we’re going to get all this revenue from tariffs, why would the President be
pushing for higher taxes on anybody? Because our understanding is for the
wealthy, he’s looking at a new rate of 39.6%.
And I thought the Republican Party didn’t stand for that kind of thing.
Well, you realize that the tariff revenues doesn’t count toward the
reconciliation numbers. Don’t ask why.
I can’t understand why we’re running it like 20, 25 billion a month and they’re
not counting it. But we’ll leave that aside for another
day. This is this is Washington.
They have their own accounting practices.
So the president’s trying to make sure he gets no tax on tips, no tax on
overtime, overtime and no tax on Social Security.
And if he says, look, the richest Americans, remember he cut it from 39.6
to 37. So if he just goes back to what he did
last time, you know, I’m in favor of that.
I think it’s smart as long as it’s a redistribution to his priorities of no
tax on tips, no tax on overtime in attacks on Social Security.
I think it’s smart. But what you’ll see next year is you’ll
see the revenues from tariffs are so great and our deficit is lower.
Then you’ve got the gold, you know, the trump card coming out, and that’s going
to raise, you know, raise revenues and drive that lower.
And you’re going to see interest rates lower.
You’re going to see the deficit lower. And next year is going to be one happy
year.

Commerce Secretary Howard Lutnick said that trade deals with South Korea and Japan could take significantly more time to complete than the framework agreement President Donald Trump announced Thursday with the UK, in a signal that some Asian partners may have to wait for tariff relief.

“You’ve got to spend an enormous amount of time with Japan, South Korea. These are not going to be fast deals,” Lutnick said in an interview on Bloomberg Television.

Lutnick added that India has been “leaning in really hard” and the country was “certainly” a possibility to be among the next countries to reach an agreement. But, he cautioned, “this is a lot of work.”

“When you talk about India, it’s probably 7,000 lines” of tariffs to be changed or modified under a hypothetical agreement, Lutnick said. “It just takes time, and it just takes work — so give us a chance, don’t be pushing and rushing.”

At the same time, Lutnick said he was hopeful that initial deals could serve as templates for their respective regions, helping illustrate what kind of concessions Trump was looking for in exchange for tariff relief.

“We’re trying to show people a frame for how to do business so that we can roll much more quickly, right?” Lutnick said.
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