Navarro Says Japan Trade Deal Should Spur Other Agreements Soon

Navarro Says Japan Trade Deal Should Spur Other Agreements Soon

Let’s see where we started.
We come in, President comes in the administration, we got a two and a half
percent tariff. That’s basically what we were charging
Japan. We went to 25% tariffs on autos through
what’s called the 232. Right.
And then we instituted a global tariff on Japan.
And what we’ve got here is a beautiful thing.
We go from 25% to 15% on autos. For Japan, that was part of of what what
President Trump was trading. And the sneaky great thing about this is
the $550 billion that we’re going to get from Japan in essentially is a blank
check to invest in America. And the thing that that really needs to
be understood here is it’s going to be used to basically cure our supply chain
vulnerabilities. Okay.
This is really important. We’ve seen in the pandemic that we were
exposed on pharmaceuticals. We know we’ve got a chip problem where
too many of the chips are made offshore. We’ve seen recently with China their
export restrictions on things like gallium on rare earth magnets, critical
minerals. And so this this money and Howard
Lutnick, the commerce secretary, I think is going to be the the symphony
orchestra guy on this. We are going to figure out every
vulnerability we have in our economy and make sure that we close that gap with
now the help of the Japanese. So for me, that’s the big thing.
Now, the other thing to keep in mind here is because I know you’re going to
ask me about what’s happening with the EU and things like that.
What this deal does as what the Indonesian deal did, is it spurs other
deals along. Right.
In this case, right now, we’re in a situation where, for example, German
cars are going to be at a disadvantage now to Japanese cars because it’s a 25%
tariff on Germany. Same thing with Hyundais from South
Korea. So as as just watching the boss, I mean,
I’m almost getting tired of winning, but I don’t think you ever will.
Okay. But as I watch him,
he’s like a maestro. He sees he wasn’t doing a Japanese deal.
He was doing a synergistic whole deal with the rest of the world.
This is just one part of that chess game.
Well, let’s follow on this and talk about the European Union, because the
Treasury secretary, Scott Benson, was asked on Bloomberg Television earlier
today if the E.U. has put forth anything innovative, such
as what we’re seeing with this fund. Should we use this idea of the fund?
Would that be something innovative that the administration is looking for?
What are you looking for from the E.U. in order to clinch?
Tyler, it’s a great question, but what I want everybody to know is that we have
these large trade deficits with. We call them, you know, the 15 big ones.
Right. And including the E.U.
writ large. But everyone, they’re like fingerprints.
Every country or in this case, E.U. entity that we deal with has a different
set of problems that we got to deal with.
So every deal is going to be unique to deal with that fingerprint problem.
The problem we have with the E.U. is that they basically violate the WTO
rules in terms of our ag products, so we can’t export to them.
They’ve got a tariff which was four times higher than ours was when we got
in. But they also had this thing, the value
added tax. I’d love to see some relief related to
the value added tax, which is is unique. What I can guarantee you is once the
deal is made, we’re going to have a situation where we’ll be able to sell
more ag products, more autos, and we’ll see a dramatic reduction in that trade
deficit. But as to what it’s going to look like,
I will. We’ll see.
Is the design to see GM’s and Fords driving around Japan, driving around
Europe, or have we realized that that’s not going to happen?
And therefore, the investment fund with Japan or something similar with the EU?
Well, certainly we’d love to see a lot more American cars driving around
Europe. Japan’s a tough market, if you ever been
there. And they export a lot more cars than
they ever use in the country. It’s just they just they’re it’s land
constrained and things like that. Driving left side to fear.
They’ve got the steering wheel on the wrong side,
but they’re going there. But what we can do in Japan is get them
to buy more ag products. And the other part of that deal, which
we didn’t talk about, is, is it Alaska LNG?
I mean, if you think about Japan’s vulnerability, they have a long standing
problem with China. There’s there’s over the Senkaku Islands
and a whole bunch. Other things.
Right. And they have to figure out a way to
maintain their energy security in a world of volatility in Asia.
And they’re a lot closer to Alaska than they are to the Persian Gulf.
Right. And so doing an LNG deal and using their
money to help do it is a really big, big part of this.
So, look, they’re they’re an important ally to us, a long, long term ally.
And this thing works on both economic security and national security.
And I got to applaud Jamieson Greer, Howard Lutnick and Scotty Bassett.
What we’ve done is every country has a template, right?
There’s like four or five verticals that we look at terms, tariffs, non-tariff
barriers, digital taxes, things like that.
And we they they’re just going in and the countries are lining up like they’re
at a deli, pull in numbers and they want a deal.
And the president then comes in and closes it.
And by the way, when he closed that deal last night, it started at 400 billion.
Mm hmm. I saw the Sharpie.
Yeah. Yeah, I think so.
550. How about you do?
Yeah. Yeah.
Well, when we. When we are talking about making the
deals, I do have to ask you about our Bloomberg News reporting, which is that
the EU sees progress towards a U.S. trade deal with a 15% baseline tariff.
Is that where these numbers let’s let’s view the spin of the game, right?
The Canadians do this probably the best or the worst, depending on what you
think of that. But they’re there’s they they we don’t
negotiate in public. Okay.
These other countries aspirationally negotiate in public to try to get us to
where they want us to go. So I would say that even though it was
reported on Bloomberg, I would take it with a grain of salt.
Let’s see what happens. Never.
Never assume that anything’s fixed until the boss says it’s fixed.
But should we expect that the baseline rate is tending closer to 15?
I wouldn’t be. I wouldn’t go there.
And actually aspirational the you attention what they give the boss.
I mean, look here’s the problem with the EU is that besides the high tariffs that
they charge us high tariffs, they’re non-tariff barriers when we’ve
challenged them on meat and pork. And one case is they refuse to abide by
the cases. So that’s a problem.
This I’m telling you, the value added tax.
Okay? It’s like on autos, you start with a 10%
tariff and you add a 19% value added tax.
That’s not just a tariff, it’s also an export subsidy.
The way it works under the rules of the World Trade Organization.
And then you got all these digital taxes that the Europeans invented and trying
to slap on our big tech companies. So let’s see what happens.
I never get ahead of the boss. I have to talk about the EU deal.
Come right back here to talk about it. I look forward to it.
But I caution you that if the EU is putting something out there in the
biosphere out here, it’s aspirational rather than maybe what’s going to
happen. We hear you when it comes to August 1st.
Markets, of course, want to know what we can bank on here.
Are you in a world where if you get enough of these, you add a couple of
more countries, maybe it’s the EU, South Korea.
Something else that I’m not thinking of here.
Do you say, You know what, it’s August 1st, everybody.
You’re on your own, or would you extend that to countries that are in talks with
the White House? Again, I never get ahead of that.
I just my job is to help the trade team figure out what we have to negotiate for
and give you an example. For example, on the whole critical
minerals rare earths thing, when when we were hit with that by China, that was a
major thing, I think, in world geopolitics, Right?
It’s not nothing for China to withhold something as critical to technology as
they did. It was a wake up call
to the world. But what that has has focused all our
attention on is how do we solve that problem?
So now we think in terms of what’s Japan, what’s the Congo, what’s Guyana,
what can they contribute? That’s one of the verticals.
Okay. So again, let’s it’s going to be case by
case. Case by case.
Yes. Since you did bring up China, the
administration moved last week to ease those restrictions when it did come to
India selling its H20 ships. I’m wondering if you have any national
security concerns around this move which had been put in place
regionally. That was that was not my lane.
And we basically were given to the h-20. And
we believe that that’s in the interests of the United States.
I think the reporting on that was a little bit over the top in terms of what
China was actually getting. But that’s not something I want.
Whack salary yet. Howard Here you are.
David We want you to have Howard Lutnick, Scott Bessen, and now Peter
Navarro, all on the same day in the studio, which is pretty remarkable.
And we’ve learned a lot from these conversations.
So any of this, I’m like, they were like my opening acts.
I think they saved the best. Sorry.
Howard Scott, I think we saved the best for last.
What do you or am I the epilogue? Well, I don’t know.
Let’s ask the boss when we’re done. When it comes to the defense
contractors, we can talk about GM. But when Tyler mentioned national
security, when you hear Raytheon or Lockheed say, hey, the steel is is
eating into our margins when we’re making missiles and military hardware,
is that the cost of doing business? So let’s go back to the Japan deal where
we just got 100 more orders for Boeing and we got the Japanese to significantly
increase the impact on the margin is we’re going to do our arms sales to
them. And the during the first term, I was I
was basically the tip of the spear on arms sales.
And we were having some big problems with the hill and all and even within
the State Department. And then we just turned that around and
they started selling F-16s to Bosnia and stuff like that.
And that’s good for America because it means we don’t have to fight the
battles. We create jobs at home.
So Raytheon is going to be quite happy. And if any Raytheon lobbyist dares
criticize any particular part of the Trump thing, they’re not seeing the big
picture because the scale of the increase in business will offset the
impact on margin that that’s. What’s your point?
That’s what I think that’s what the markets have figured out.
I remember I remember when when the boss first put on the tariffs in the market,
you know, the Dow went below 40,000, he said on sell, I guess.
I said, what are you doing? We’re going to 50,000.
We’re on a new all time high here already?
Yeah, 50,000 state owned enterprises. We do that in our sleep.

Peter Navarro, director of the Office of Trade and Manufacturing Policy at the White House joined Bloomberg to discuss the recent trade deal with Japan and how it is the framework for other deals going forward. When asked about the EU’s possible deal he said “take it with a grain of salt.” he spoke with Joe Mathieu and Tyler Kendall.
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