Lutnick Says Japan Deal ‘Could Be’ Model for EU Agreement

Lutnick Says Japan Deal ‘Could Be’ Model for EU Agreement

Now I’m with another negotiator that was
at that table, the president last night, Commerce Secretary Howard Lutnick.
I want to pick up on this idea. And good morning.
Thanks for joining us. I want to pick up this idea of
innovative financing mechanisms and this $550 billion fund the Japanese are going
to be investing into. What exactly is that fund going to look
like? So the Japanese are going to give
America the ability to choose the projects, decide the projects and
execute the projects. So let’s say we want to build
generic pharmaceuticals, right? We don’t make antibiotics in America.
So the president says, let’s go make antibiotics in America.
The Japanese will finance the project. They will finance the project.
And then we’ll give it to an operator who’ll run it.
And the profits will be split 90% to the taxpayers of the United States of
America and 10% to the Japanese. So they basically brought down their
tariff rate by this commitment of we will back what you, the president, want
and you, America, want to build an America that are key to national
security concerns, will back that and therefore will be on your side.
The Prime Minister Sheba, says these are loan guarantees.
Is it more than that? Of course it’s more than that.
It’s it’s equity loans and loan guarantees.
They have to deliver the projects. So we say let’s build semiconductors.
We want to build a $100 billion worth of semiconductor fabs, is what you call
them, because we want to make those chips in America.
The Japanese will finance that whole project.
They’ve got to put that equity loans, whatever they want to do, they have to
deliver the 100 billion or Japanese companies.
JET Oh, no, no. Anybody does it.
It’s the Japanese are the financer. They’re the banker, They’re not the
operator. It’s not Japanese company.
So what? People get confused.
This isn’t like a Japanese company like, like, you know, like Toyota coming in
and building a factory. No, that’s Toyota.
This is literally America saying we want to build generic pharmaceuticals,
semiconductors, critical minerals here. This exists now.
Like what could we think this model after?
That’s why you have someone like me who joins the government.
I mean, this was my idea in January. So I started because the Japanese are
never going to really open their market the way Donald Trump wants them to open
it. I mean, open it.
Open it. You know, so what’s happened is they had
to come up with another way to really make it work.
And the tariff model worked. So I suggested to them $400 billion fund
where they would give it to the president and they would give to America
the financing to go build out your whatever you think for national
security, go build. It will back you.
And that’s the model. The reports the prime minister, though,
may be resigning. Could this deal transcend domestic
politics in Japan? Of course.
I mean, it’s vital. You saw what happened to their car
companies. They were all up more than 10% today.
So a 25% tariff delivers what Donald Trump said, build it in America.
A 15% is right on the edge. It’s right on the edge.
So the Japanese car manufacturers can still produce in Japan.
And that’s what the Japanese wanted to buy.
They wanted to buy that line where they could stay in Japan for some cars build,
of course, huge amounts here. But also what they did is they’ll invest
and give Donald Trump the tools to invest in America.
That 15% tariff on autos is huge for Japan.
Do you see the entire auto tariff that sectoral tariffs coming down from 25% to
15%? Because for some inputs this would mean
Toyota has a 15% rate, but GM still has a 25% rate.
Well, GM doesn’t have a 25% rate unless they build in the important South Korea
or a problem building. If you build in South Korea, that’s a
South Korea thing. And if you’re importing from South
Korea, that’s a South Korea thing. So Europe is now paying 25%.
South Korea is paying 25%. The Japanese have bought, if you will,
by giving a huge investment to Donald Trump in America.
They bought the ability to be down to 15%.
And Donald Trump can then really invest in America on the projects that he
thinks are the most important for America.
And we’ll see what happens with Europe. We’ll see what happens with South Korea.
But right now, Donald Trump has put the pressure on them.
Let’s be clear. Well, this is a lot of pressure on them.
Is this a model for Brussels? It could be.
I mean, that’s up to them to negotiate, right?
Are they willing to open their market? I don’t think I don’t think anybody.
Europe’s not going to go and give us $1,000,000,000,000 to get below 15% or
15%. Now, the floor for autos, I would I
would go for a reciprocal tariff. The European Union, I don’t think point
they’re willing to accept. I don’t think countries can get low like
that. I think I think small countries have a
positive. Guilty of being low, and that’s up to
the president to decide. But larger countries will have a hard
time with that. They will have a hard time.
So to be clear, with the European Union right now, the trade negotiations are in
Washington. I know you’re talking to them every
single day. The rate the floor that they would have
to accept is 15%. What Japan accepted.
I think what everybody in the world has seen is Donald Trump.
So I’m the table setter, if you will, right?
I set the table right. I organize things.
I structure things. You know, there was a picture that the
president posted over his shoulder with the big board that, of course, I created
the big board and put it there. But the answer is the negotiator in
chief for the United States of America is sitting behind the desk.
Donald Trump is sitting there saying the deal also created the board on
Liberation Day and we saw the sky high tariffs you created last night’s board.
I’m trying to understand from you what the European Board is going to look
like. So if say, say, there’s a 15% across the
board rate. What can the Europeans be buying that
can assuage the concerns of the president?
Are you talking about LNG purchases? Is there agricultural purchases?
The Europeans have a $20 trillion economy.
Right. We have just under 30 trillion.
And the Chinese and the Europeans are similar in size at about $20 trillion.
So if they say to the president, we will open our market to you like and I mean
really open it, meaning we will take us cars.
I think of what the Japanese did. They said we will take U.S.
cars based on U.S. standards so you don’t have to make a
different car. You can take the car you make in
Detroit, put it on a boat and send it. If the Europeans will accept that and
they will accept really, really accepting U.S.
products in Europe, that’s a giant that’s hundreds of billions of dollars
of export opportunity for Americans. That’s going to move the president
because he’s going to say that opportunity for Americans is so great.
That’s why next week, what we’ve been we’ve been talking about it for months.
I mean, holy moly, I can’t I can’t tell there.
They’re they’re they’re saying they’re going to retaliate if they don’t get a
deal by on. But I understand then the president
wrote them a letter saying if you don’t get a deal signed, we’re charging you
30% shooting tactics out in public. Well, of course it is.
I mean, Donald Trump writes a letter and says if you don’t make a deal, it’s 30%.
And the thing about Donald Trump is he’s dead serious.
If you don’t make a deal, it’s 30%. Now, that puts the pressure on them,
right, to say, okay, that’s my alternative.
They want to get a deal that for sure they want to get a deal done.
But does Donald Trump want to get the deal done?
How much does he value the fact that they open their market?
Do they completely open their market because that’s what he’s looking for?
I think they will. I think they will really, really open
their market. And I mean, open it, which is something
the United States of America has never had.
The idea that Donald Trump is opening the world’s markets for Americans, the
ranchers, the fishermen. Right.
Our our farmers. I mean, these are amazing opportunities
that no one in the world has ever seen. We have Stockholm Syndrome, right?
The world has so held us all for so long, we can’t even imagine a world
where we can export freely the way everybody else exports to us.
And that world is coming. That’s what Donald Trump calls the
Golden Age. That’s what he calls our ability to
export to the world the way they treat us.
We can now finally treat them. You’re going to have to step away from
the Europeans, though, potentially for a moment next week, because I believe
you’re going to be headed to the Stockholm talks with China.
Yes. So what we saw with China and this
administration, Jensen Wang, had a conversation with the president.
I imagine you were there when it comes to India, H20 chips.
What did Jensen Huang say to you in the president that gave him the green light
to start selling those H20 back into China?
Well, the 1820s were open during Biden, so Biden said really Well, They were
developed during Biden. They were sold.
And China, we actually sold to China. And then we came in and we said, Whoa,
whoa, whoa. That’s a pretty powerful chip in April.
And we held that back and that was then held back.
Now. We had the whole magnet thing, which is
very exciting. We’re trying to make sure that magnets
are being delivered to our producers, which was the deal.
And these have export controls on them and they’ll come off as the Chinese
deliver their magnets, then the H20 will come off.
But it is logical, since they were free to sell last time, it seems reasonable
that we’ll get to what you said. They were a powerful chip.
Are you concerned about national security issues when it comes to
allowing the Chinese now to get their hands on the h-20?
Well, the age 20 was the third best chip in the world, and now it’s the fourth
best because the Blackwell is the best. There’s an H 208 100.
So an age 20 is the fourth best chip. And I think the president has decided
that if things. Are going well with China that they can
buy them. So I think that decision has been made.
We are putting on the licensing mechanism and we are getting that going.
But the president has decided that the Chinese can buy them, but that’s in a
balanced way with the Chinese delivering on the deal that we made with them.
And they’re delivering rare earths to American.
So when you sit across from the Chinese counterparts next week, what do you plan
to discuss with them? Is loosening export controls more more
export controls on the table? I think what we talk about is there’s a
line right below the line. We are giant economies.
We should trade with each other, right? They want to buy our produce.
They want to buy our vegetables. Right.
They need they don’t grow everything. They don’t have the breadbasket of
America that we have. So they want to buy those products.
And you know what? There’s lots of things that they make
that we want to buy, that we want inexpensive things on our shelves.
So let’s talk below the line. Let’s open the market better in China
and let us sell more things in China. And then at the line where we’re
competitive, you know, where is that line?
Where above that line where they’re not going to sell us their hypersonic
missiles and we’re not selling them our best chips?
Those two things are not happening because they’re a competitor.
They are a competitor. And what we’re really going to discuss
is where’s that line? Are the H twenties above the line or
below the line? That’s really nuance and that’s
discussion. But of course, would we like to buy baby
clothes that are inexpensive? Of course we would.
So that makes perfect sense. So let’s open the market down here.
Right. We’re never opening the market up here.
And what do we discuss? We discuss that line of what’s over it
and what’s under it. But do we want more of this, them
selling it to us and not selling it to them?
The president and President Xi from China agreed that they would like to do
more business there. So we’re going to talk about opening the
market more for things that make sense to open it.
And we’re really going to discuss the areas that maybe we should really be
addressing. Is that yes, or is that No.
One area? I just want to finish on this.
I’m curious if you’re going to address directly, because it’s the Commerce
Department, an employee of yours is facing an exit ban right now from China.
Do you have any update on this? It’s unbelievable.
Right? So he has there was an employee of ours
is a Chinese national who was working in the patent office and he went home and
he was arrested and they’re holding his passport.
I mean, it’s so I give that to the State Department and the State Department
deals with that. But it is it is outrageous behavior.
It’s just outrageous behavior. Secretary Lutnick, thank you so much for
your time this morning.

The US-Japan deal “could be” a model for the EU, Commerce Secretary Howard Lutnick tells Bloomberg Surveillance.
Large countries would have hard time getting a tariff lower than the 15% that Japan got, Lutnick also says

Japan will finance projects and give them to an operator who will run it in the US, Commerce Secretary Howard Lutnick says on Bloomberg TV.  
“They’re the banker, they’re not the operator,” he says
“Profits will be split 90% to the taxpayers of the United States of America, and 10% to the Japanese,” Lutnick add
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