Target CEO Brian Cornell & Commerce Secretary Howard Lutnick 3/4/25
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This is SquawkPod and I'm CNBC producer Cameron Costa. On today's podcast, tariffs on Canada and Mexico take effect with some extra on China. The question is, what's the end game, right? Like, is this a fentanyl thing for real? Is this what you're trying to shut down? Is this we want to build American factories here? Because that's a much longer term process. That's going to take years.

We asked the Commerce Secretary himself. Howard Lutnick tells us today, yes, it's all about fentanyl. Today's opioids, April 2nd, I'll be here talking to you about how trade policy is going to change and we're going to make it fair to Americans. U.S. stocks dropped and the VIX Wall Street's fear gauge ticked up.

on Monday as investors digested the reality, which includes potentially higher costs for automakers. "Yes, as the president said on the campaign trail, there may well be short-term price movements, but in the long term, it's going to be completely different. This is going to be the greatest America. We'll have a balanced budget."

Price movements, indeed. Retailers like Target are preparing themselves and their consumers for some changes. Becky Quick sits down with Target CEO Brian Cornell. We know for certain categories, like fruits and vegetables, where during this winter season, we depend on Mexico for a significant amount of supply. Those are categories where we'll try to protect pricing, but the consumer will likely see price increases over the next couple of days.

It's Tuesday, March 4th, 2025. A jam-packed, tariff-heavy SquawkPod begins right now. Stand back your body in three, two, one, cue, please.

Good morning, everybody, and welcome to Squawk Box right here on CNBC. I'm Becky Quick, along with Joe Kernan. Andrew is off today. The S&P 500's worst day of the year yesterday. It was a decline of about one and three quarters percent. It came after President Trump announced that these tariffs would be, in fact, taking place, that it looked like there was no room for change or for negotiation. And immediately, you did see a bit of a sell-off that happened. Joe, I don't know how you'd kind of take this and put it in context with some of these issues today.

I think the market for for some people, it was a bit of a wake up call thinking, OK, this is really going to happen when nobody had been thinking about that to this point. I'm not sure if everyone still believes that Chuck Robbins was there was a soundbite from Chuck Robbins just in the last hour or so talking a little bit about how maybe they think it's going to come off at this point. And that may be still be what investors are thinking right now, too. So we'll continue to see what the real impact on the market.

Journal says... What's that? Journal? Journal's got to go. He says, if you want to...

If your end game is renegotiating the USMCA, if that's what you want to do, then do it. You just, you know, this is going to add quite a bit of cost to SUVs, even that are assembled in North America. The whole fentanyl thing, I mentioned this yesterday, the U.S. Customs seized 43 pounds of fentanyl at the Canadian border, and that could kill millions of people. But

But that compares to 21,148 pounds at the Mexican border. They say it's assembled up there. They've got a lot of, when you ask them about it, they've got a lot of, I don't know, it almost sounds like an excuse. I'm not saying it is completely because we don't, one pound of fentanyl is too much to get in. But it's 500 times at the southern border. Yeah, 500. So that...

They're friendly partners for the most part. I don't know how long it lasts. And I don't know what his... I don't know how long he's going to, you know, hear the mainstream media just hyperventilating about a one-and-three-quarter point move in the S&P. We're up 600. It was one-and-three-quarter points. I think the question...

It's not a huge drop, but I think the question is, what's the end game? Is this a fentanyl thing for real? Is this what you're trying to shut down? Is this we want to build American factories here? Because that's a much longer-term process. That's going to take years that these tariffs would have to be in place before you actually see companies put that much money to work, get the factories up and running, along those types of things. So I think it's just confusion. You did see the VIX spike a little bit yesterday, and there were questions about that, too. And the other thing I was thinking about on the way in this morning is just that

Remember, back in January 20th, when all this took place, all we heard for most of the next month was just this talk about animal spirits. And I think the questions, the uncertainty surrounding this, the question would be is does it kill animal spirits that were kind of unleashed by the thought that this was going to be such a pro-business administration? Well, it's also you want to do these things to try and get

Look, you want to try and get the border secure? That's going to be some near-term pain. You're going to see on nightly news every night. You're going to hear that schools or people are coming to schools to take parents away from them. You're going to hear that. You try and get the trade imbalances in order. Near-term, that's going to cause pain. You try and shrink the size of the federal government. Look what goes on there. I mean, the hyperventilating that goes on with HEPA. You do any of that stuff,

near term and you're going to... I mean, look at Drudge on any given day. I mean, the world is literally ending. How long does... And I don't look at Drudge, actually. But if you happen to, by accident, hit it up, it's just... I mean, you get to bruise on his hand and he's going to be... They're just so ridiculous at this point. I don't know what happened to that whole outfit. But we'll see how long this goes. He's not...

you know there's a there's a midterm coming in two years nobody i don't think any republican wants to get shellacked in the midterm but he's not running again and um this may be the time where he you know he all he cares about is the stock market going up and you know inflation being low and interest rates coming down i think eventually it it will affect some of the sinking but maybe not right away

President Trump hitting Canada and Mexico with 25% tariffs on imports to the U.S., doubling tariffs on Chinese goods to 20%. President saying that the three countries had failed to do enough to stop the flow of fentanyl into the U.S. and retaliation came immediately.

From China, mostly on agricultural products, the country announcing U.S. imports of soybeans and corn would be subject to additional tariffs of 10 and 15 percent respectively, starting in about a week. China also announced export and investment restrictions for more than two dozen U.S. firms.

Canadian Prime Minister Governor Justin Trudeau said his country would respond immediately with 25% tariffs on about $20 billion worth of all U.S. imports and more than $80 billion additional dollars worth of imported goods in about three weeks if the new U.S. tariffs are still in place. Canadian energy will be subjected to a 10% tax.

U.S. tariff under new American rules. And Mexico's economy minister, economic minister, said President Claudia Scheinbaum was expected to announce Mexico's response during a news conference this morning. We do have some more details on China's new retaliatory tariffs as well. The country is saying it will hit American chicken, wheat, corn and cotton with a 15 percent tariff.

Soybeans, pork, beef, fruit and vegetables and dairy and fish products will also be subject to a 10% tariff. One U.S. firm specifically targeted by China is medical equipment maker Illumina, the country announcing a ban on the company's genetic sequencers. China accounts for about 7% of Illumina's sales, and you can see that that stock is off by about 3%.

The Trump administration, meantime, is pausing military aid to Ukraine. A White House official telling NBC News that the U.S. is reviewing its assistance to make sure it's contributing to a solution in Ukraine's war with Russia. That move comes just days after a public disagreement in the Oval Office over the war. On Friday, as you have to know by this point, Ukrainian President Volodymyr Zelensky was believed to be coming to the White House to sign a deal providing the United States access to critical Ukrainian minerals.

But in a public argument, President Trump and Vice President Vance criticized Zelensky, saying that he hadn't shown enough gratitude for the billions of dollars in aid that the U.S. has supplied since the World War broke out. President Zelensky did not look like he was ready to sign any deals and looked like he was negotiating in front of the media that was there as well. Trump again criticized Zelensky yesterday after an Associated Press report quoted the Ukrainian president as saying that the end of the war with Russia is very far away.

In a post on Truth Social, Trump said Zelensky's comment was the worst thing that he could have said and said America will not put up with this for much longer. I saw something from two years ago that said something like thousands of deaths on both sides of the territory hasn't changed one inch. That was two years ago, and I don't know what's changed since then.

in terms of the territory, but war always is awful. There's no doubt, and there's no one denying who started it and who's at fault or anything else, but it's gotta end, gotta stop one way or another. It's like, you know, spending money on defense

And on, you know, I mean, I think Putin's got a thousand nukes or something. I don't know how many we have. There are things that you hope are never used and you wish you didn't have to build them. And now we're, you know, every time we send another couple of billion, it's weapons being used up and we're depleted over here. Be nice to stop spending it on the weapons and stop using the weapons. Both of those would be good. I think that's the answer.

Well, the other huge announcement today is what Europe is going to do in terms of stepping up its own defense spending. And that's something we're watching play out, too. Yeah. What a concept. They've been, you know, they've been benefiting sort of one way from from, you know, we are the leading Western nation and we do like to lead. But at some point you don't want to be taken advantage of. You know, I need to talk to you off camera about why are chicken wings so?

Not surging in price, but eggs are. I have the answer to that. Do you know the answer? No. Does it have to do with...

We're not eating them after they cull them, I take it, are we? No, broilers versus, they're totally different chickens. Oh, totally different types of flocks, I guess? Well, the other thing is, one chicken can only contribute two wings, but one chicken can probably contribute lots of eggs. I've said that before. I would like to genetically alter that. I don't see what's wrong with it. Why have a two-winged chicken when you can have a four or an eight-winged? It'd look a little weird.

but it'd be better for chickens. I might pass on that. This might be something where I don't want the genetically modified version of it. Supposedly, I know, I said that yesterday, Chernobyl farms, which, by the way, is in Ukraine. How weird is that? Yeah. But, yeah, the broilers, you can repopulate those flocks really easily. The egg layers, I don't know. They've got to be trained. Well, they have to, I don't know.

Harder. More information than I know. Squeeze. Harder. I can't imagine trying to do that day in and day out. Teas will be next.

Coming up on SquawkPod, how Target will weather President Trump's tariffs with CEO Brian Cornell. Over the last few years, we've gone from over 60% of our imports coming from China to 30, and we're on a path to get it down to 25. So we've diversified our supply chain to give us more optionality, and I think that'll serve us well as we go forward. An extended interview with the retailer's CEO right after this. Back pain and stiffness in Morning's Rough.

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Target just reporting those earnings are coming in at $2.41 a share. That was a pretty steep beat over the street's expectations of $2.26 a share. Revenue came in at $30.9 billion, and that also beat estimates they were around $30.8 billion. Same-store sales were up by 1.5%. That about matches the guidance that the company issued back in mid-January. If you're looking at the fourth quarter operating margins, they came in at 4.7%. That was slightly higher than the street expected.

And as for the guidance for the full year, the company is saying that it sees earnings somewhere between $8.80 and $9.80 a share. That's about in line with what the street's expecting. The company also expects comp sales to be flat in 2025. The street was looking for a gain of 1.6%, but we're going to talk a lot more about that in just a moment. In the release, Target says...

In light of ongoing consumer uncertainty and a small decline in February net sales, combined with tariff uncertainty and the expected timing of certain costs within the fiscal year, the company expects to see meaningful year-over-year profit pressure in the first quarter relative to the remainder of the year. So unsure what's going to happen in the first quarter, but still giving guidance that's in line with the street for the full year.

Joining us right now to dig into this all in depth is Target CEO Brian Cornell. And Brian, it's great to see you this morning. Good to see you. Thanks for joining us. So very strong numbers for the fourth quarter. What happened? Well, I think the team delivered a really solid holiday season. And you talked about the results, but it was great to see the comp sales grow. It was driven by traffic, which was really important. And it was led by categories like apparel and beauty, really strong performance in toys and books.

and our digital performance just gets stronger and stronger. Over 7% led by same-day services that grew over 25%. Our Target Plus Marketplace continues to perform really well. So the team did a really nice job of connecting with the consumer during the holiday season, and we're just building on the momentum we've seen in recent months.

That traffic growth, it's the ninth straight month that we've seen traffic grow. And to see traffic up 2% during an important holiday season was a real bright spot. So traffic is here. You guys are pretty optimistic about the full year. But you do have some concerns for the first quarter. And I think that might be what the street's reacting to right now. The stock is up by about eight-tenths of a percent. So you always see some fluctuation right when the numbers come out. Excellent fourth quarter.

really good guidance for the full year, but questions about what's happening right now in the first quarter. First of all, what happened in February in terms of sales? What did you see? Becky, I'll go back to something you and I have been talking about actually for several years now. It's just the state of the consumer. And I think we've seen a cautious consumer for quite some time now. You know, they're

shopping carefully. They're making sure they're stretching their budgets as carefully as they can. We know that that's a consumer who's been looking for value, but is also celebrating the key holiday moments like they did during November and December. We saw that in February. We actually had record performance around Valentine's Day. A consumer wants to make sure they're there, they're in Target stores, they're shopping online. They celebrated that moment. But we also saw extreme cold across the country. And actually, as we've seen temperatures warm up,

For categories like apparel, we've seen a pretty good spike. But it is a consumer right now that I think is under pressure. That's not new news. You reported consumer confidence has taken a downturn in recent weeks. And I think there is some concern about tariffs. And I think there's a number of Americans right now that understand what a tariff is and what it might mean for them. So I think that cautious shopping behavior that we've seen for quite some time now continued in February.

In terms of February, how much of it, the cautiousness you saw from consumers was from the weather? How much of it was from the fires and floods that we saw in different places across the country? How much of this is the consumer kind of having spent everything in December and maybe reining in some spending a little bit afterwards? I think it's all of the above. I think you've really summarized it. But I also recognize it's one month.

We're excited about spring and the Easter season. We expect Easter to perform just like it did in Valentine's Day. So there's a lot of, obviously, time in front of us. But you described all the factors we're looking at in February, from fires and floods and extreme cold to just consumers that are looking at their credit card bills and saying, I might pull back just a little bit. But we've had a really optimistic outlook for the full year. And

In a few hours, we'll talk about our confidence in the next five years. And sitting here today, I'm very excited about where Target sits as we think about the next five years and how we build on the momentum that we've built in our business.

I've just been watching the stock as you've been talking. It's over your shoulder. And it's gone from up over 5 percent to down a couple percent to now just around the midline. It's up by two tenths of a percent. And again, this is a lot of bouncing around. But I think the investor is doing the same thing with every stock on a daily basis at this point. Try to figure out what is the impact right now. And the uncertainty that comes around tariffs have raised a lot of questions.

How do you see the tariff in terms of, A, how your business handles it, and B, what you think it is, the impact to the consumer? We always start with the consumer, Becky, as we think about the implications of tariffs. And we've been working on this for quite some time. We had a very experienced team. This is not the first time we've faced tariffs. But it's really understanding where we go from here.

and the impact it'll have on consumers. So we'll watch it very carefully. We'll see how things unfold. I think for anyone in our space today, we're looking for certainty. And hopefully over the next few weeks, we have a better understanding of how things are going to move forward.

And we've got to react accordingly. So if the certainty is, OK, all goods coming from either China or Mexico are going to face 25 percent tariffs. And if you're coming from China, it's going to be 20 or 25 percent from these two countries, 20 percent from China. What does that mean in terms of what you're bringing into this country, what you sell? Well, I'll start with.

Half of the goods we sell come from the United States. And over the last few years, we've gone from over 60 percent of our imports coming from China to 30. And we're on a path to get it down to 25. So we've diversified our supply chain to give us more optionality. And I think that'll serve us well as we go forward. But we always want to make sure we're delivering great value to the consumer. And over the last couple of years, you and I have talked about the importance of making sure we're delivering value. It's a consumer that's

On a budget, we want to make sure we delight them with great new items, but also the value they're looking for, that affordability, every time they shop. So we'll continue to make sure we lean in and do everything we can to control prices, provide that value, and continue to delight them with newness along the way. So what did your team do to prepare for this potential eventuality? I mean, there were a lot of people who still didn't think this was going to happen. Midnight has come, and they are in place as far as we know at the moment. We've done a lot of scenario planning.

And we've tried to understand what are the different options that we might have to face. We'll go back and understand the implication of Canada and Mexico. We've been looking at that. We know for certain categories, like fruits and vegetables, where during this winter season, we depend on Mexico for a significant amount of supply. Those are categories where we'll try to protect pricing, but the consumer will likely see price increases over the next couple of days.

Over the next couple of days? So those are really short supply chains. You think about all the fresh produce. You know, we depend on Mexico during the winter. We're going to try to make sure we can do everything we can to protect pricing. But if there's a 25 percent tariff, those prices will go up for things like what strawberries, avocados, bananas. What are we talking about? You've got that list, right? Is that so? Those are some of the key items. And those prices could change within days in the stores, certainly over the next week.

Brian, this is something you think about for Target all the time, but you are also the head of the business council right now, the chairman of the business council for what's stepping in for this. So you must have been talking to lots of your peers, other business leaders, and I wonder what conversations you've had with the administration about this.

Well, I won't speak for the other CEOs, but as I said earlier, I think we're all looking for clarity and certainty. And we operate much better when we understand, all right, what are the issues we're facing? What are the steps we have to take? And I think coming out of today, we've got a better understanding of kind of what might be in front of us. So I think for most business leaders, they're looking for certainty and clarity, and you'll modify your business strategy and your tactics along the way. But

Again, we're going to understand what's going to happen. We're going to look closely at the consumer. We want to make sure we protect our brand in this environment and deliver that value.

While short-term, there may be some pressures, as you'll hear from me today, I'm really excited about the next five years. I want to stick with this issue for a little bit. We could talk about the next five years, too. But just the idea that business leaders would prefer certainty. Is that the case, even if the certainty is that you're going to be facing 25 or 20 percent tariffs? Or would you rather face maybe a little uncertainty? Maybe we use this as a negotiation and then we see what comes. Well, we'll see how that unfolds. But

One way or another, we need to understand what are the operating conditions? How do we react? How do we take care of the consumers we serve, our teams, our brand? So I'll always err on the side of certainty. And you mentioned that this is a very experienced team. You've dealt with tariffs from the last Trump administration. What happened then? How much got passed on to consumers? How much did it impact your profit margins? Well, it's when we started to make some changes in the country of production. And

and de-risking our supply chain, looking at different options, bringing things back to the Western hemisphere. So we're actively been pursuing some different changes in our supply chain to give us more durability and flexibility to meet the changing environment we're in today. So that's an interesting point too.

We've been trying to figure out ourselves, is this a negotiation tactic? Is this something that really is going to be driving or hopefully drive factories to be producing things here in the United States? You have made changes to your supply chain. You didn't stop and change or go back on any of those things. You're continuing to make progress. It doesn't happen overnight. But is this a push that really is going to lead to more production in the United States long term, you think? Well, that's the goal of the administration.

And if that happens, we'll have more opportunities to buy products made right here in the USA. Certainly that's going to be interesting for us, and we certainly encourage that. But we'll continue to modify our supply chain and give us as much flexibility as possible. What do consumers think about tariffs? What have you learned? What do you know about that? Well, I'll give you a couple of facts. You know I like numbers. I mean, only a couple of months ago,

only about 20% of America actually understood what a tariff was. Now that number's close to 50, and I think they understand what that means, the fact that it could have an implication on them, on the prices they pay. So I think going back to the state of the consumer, yes, they've been cautious for a while. They've been shopping really carefully. Weather's been extreme.

Overall confidence has dipped down. But I think that lingering tariff conversation that they hear about almost every night on the news or every morning when they're watching you, that's certainly in the back of their minds. And in the back of their minds, that does what to their behavior? Are they spending less money as a result or are they thinking, OK, this is OK, we'll deal with the pain for a little while if it leads to more jobs in the United States? How...

How far down do they dig on the tariffs? I think we see a very cautious consumer right now, but one that still celebrates those key holidays. They're still looking for newness, but they're shopping on a budget and they're looking for affordability right now. So what does the next five years look like for Target? What's the game plan? Well, I'll start with one of the things that we're going to talk about today.

We operate in a $4.2 trillion retail market. And we're a $100 billion plus player, but the top 10 players in retail, and we're one of them, still only represent 38% of the business. So when we sit here today, we see significant opportunity.

And a lot of that opportunity is in what I'll call target categories. It's an apparel, it's in a home, it's in those hardline categories where we really excel. So we see a lot of opportunity to grow market share, accelerate our top line by billions of dollars. And sitting here today, I feel great about our strategy, the scale we've built, the kind of capabilities we have in place and the team that we have.

And we'll talk about that today. But it's really when Target's at its best, when we bring all of those things together, use the magic mix of our

national brand partnerships, our $31 billion owned brand business, and all the emerging brands that we sell. When we bring those together with our digital capabilities and the investments we've made so that when you order, I can have a ship shopper, one of the 300,000 across America, bring that item to your home in two hours. It's really about how we unpack our strategy, our scale, and all the capabilities we've been investing in for years to drive future growth for our company.

Let me ask you just about the uncertainty in this quarter, but why you feel so confident about the rest of the year. And I guess people would say, look, you've had times where you felt good about the rest of the year or thought you'd be getting through things maybe more quickly than you have. Why are you so confident about it this year? Well, I think I've been sitting in this chair for 11 years now.

And I've seen lots of different cycles, and these cycles will come and go. But when I look at the underlying capabilities in our business today, the investments we've been making for years, you know, in capabilities and services, in our stores. Last year, we talked about a pipeline of adding another 300 stores to the 2,000 we have across all 50 states today.

So I just see this horizon in front of us where we can continue to grow. We can continue to take market share, delight consumers along the way, and just extend that Tarjay magic across the country. You feel like you have more control over your own destiny at this point? I certainly do. And we're going to focus right now in the near term. We'll control the things we can control, but we're going to continue to invest. We'll talk about investing $4 to $5 billion in capital in our business again this year.

continue to make sure we're investing in stores and digital capabilities. We're really excited about our retail media business, Rondell. We expect to see that double in the next five years. Our marketplace, Target Plus, is a billion-dollar business today. I expect that to be a $5 billion business in five years. And our Target Circle 360 business that delivers those items to your home, I think we'll see that continue to grow in a significant way in years to come. So in some ways, I think we're just getting started.

You know, you have managed through a lot, a lot, everything from the COVID pandemic to differences you've seen along the way, issues you've had with the supply chain, issues you've had with logistics and getting things through. What is the thing you worry about the most right now? What are you spending the most time with your team working on? I guess I always focus on two things, the consumer and

and taking care of our team, taking care of the 400,000 team members across the country that execute that strategy. So how do we make sure we're supporting them, staying close to the consumer, but controlling the things we can control and in an environment where there is a lot of uncertainty, staying calm, staying focused, leveraging the experience we have to make sure we're playing the long game. Okay. Brian Cornell, I want to thank you very much for spending the time with us this morning. Always good to be with you. Thank you for joining us.

Up next on SquawkPod, a conversation with the official central in these tariffs, Commerce Secretary Howard Letnick. Tariffs do not, do not, do not create inflation. Printing money creates inflation. You have a balanced budget. There can't be inflation. It doesn't mean one product could be more expensive and one product could be less expensive. The Trump administration's long-term goals and the short-term prices they're willing to pay right after this break.

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You're watching Squawk Box on CNBC. I'm Joe Kernan along with Becky Quick. Beamed in, it was weird. I heard the music in there. You were just, yeah, just like Star Trek. Andrew is off today. New U.S. tariffs are in effect today against Canada, Mexico and China. Mexico's president speaking right now. She says they are responding with tariff and non-tariff measures that will be announced Sunday.

She said it's not their plan to start a trade confrontation, but joining us now, Commerce Secretary Howard Luttnick.

About time you're back on here, Mr. Secretary. We hoped you'd get that. No, we didn't. But you were on quite a bit before it all became official. But hopefully this is the beginning of a lot of appearances and you can come in studio as well. It's good to see you. Great to see you. I think of Cantor as more bond than stocks. If we were going to measure what's happening so far in the bond market, things are going swimmingly with the 10-year. I'm

I'm not so sure about the stock market at this point. How much how much do you expect as far as a reaction to some of this stuff? And what is the president's and your tolerance for a dislocation, if you will, in the stock market? Well, remember, the current tax

Tariff policy is a drug related policy. There's opioids pouring into this country. They're killing about 75,000 autopsy Americans a year. So imagine if you lost or I lost one of my children with the first thing I do is worry about an autopsy. So the president thinks there's multiples of that.

people who've died, and there is no price for American death. So his view is we've got to protect American lives, and that's what these tariffs are about. So let's differentiate between today's tariffs, which are about saving Americans' lives. China makes the opioid products.

and then Mexico and Canada feed them into America, and that's got to end. They've done a nice job on the border, but they haven't stopped the flow of fentanyl. And then if you want to talk about trade policy, that starts April 2nd, and that's a very, very clear reset that these countries have used us and abused us, and that is going to change. But that starts April 2nd, so let's keep the two separate, and I'm happy to talk about either way.

An ounce of fentanyl is bad, but it just sounds, when you talk about Canada, it sounds like an excuse, or at least people think it's an excuse. 43 pounds came across the Canadian border last year versus 21,148 pounds from Mexico. So is it really fentanyl? I mean, I can give you, and you can confirm whether this is true,

Is milk still 270%? Cheese, 249%? Yes. Yes. Poultry, 238%? Egg? I mean, it's across the board. These are peanut butter. All this from Canada, 295%. Why use fentanyl? That would mean that you could take the tariffs off if they did something with fentanyl and make no progress on all the tariffs that are coming from Canada down here.

Remember, the process in America for tariffs is that the president launched a study, and those are the rules of tariffs in America. And that study is finished on April 2nd. So on April 2nd, the president will have all the tools in his arsenal that he wants to do to reset tariffs. So he will be addressing all of those products in Canada. The fact that, you know, Canada has a national sales tax. Another way to say it is a national tariff.

on our products. And we sell, you know, they import from us very little and we export and they export to us huge amounts. So the idea is that's going to be reset. But that starts April 2nd. Now we just, you know, people say, oh, it's only a small amount of opioids. You know, they're only killing 75,000 Americans. You shouldn't worry about that. I mean, the president is not going to take that laying down. OK, he's not.

These things just have to end. And we need to see material reduction in autopsy deaths from opioid. And that's what the president is talking about. This is not a trade war. We are going to reset.

trade policy on April 2nd. You've got China's got huge tariffs on us, huge tariffs on everything with us. And Canada, you just talked about why do we produce cars in Canada? They've had an invitation. Canada and Mexico had an invitation to trade with the amazing economy of the United States of America. And they have abused that

And the president's going to reset that. But that's April 2nd. That's not today. Today's opioids, April 2nd. I'll be here talking to you about how trade policy is going to change and we are going to make it fair to Americans. I know people worry about short term, but we are going to bring jobs. You are never going to see the amount of production come back to America. Then Donald Trump is going to bring back to America trillions and trillions of dollars of production is going to come back to America.

creating great jobs in America, and that's why the Americans elected Donald Trump, and he's going to deliver for them.

Secretary Letnick, let's let's just focus on the ones for today that you're talking about, the ones that you say are related just to fentanyl, just because I guess we have a little more time to consider the others. Today, Brian Cornell told us earlier this morning on the show that shoppers at Target could very well see increases in the prices that they're paying for things like produce and vegetables, vegetables.

Because of the time of year, right now they rely, we rely on a lot of those imports coming in from Mexico. So if that goes up by 25% today, by the end of this week or early next week, shoppers at Target and other stores could see the increase immediately. On Best Buy, the conference call today, the CEO also said that those prices could go in fairly quickly, price increases could go in fairly quickly if these 25% tariffs kick in today.

What does Canada need to do? What does Mexico need to do? They were able to push off these tariffs the last time around in the 11th hour. Is that possible to happen today? Is there anything they could do for the administration to say, OK, we won't put these tariffs on today. At least we'll push it off and see what else happens.

Well, of course, if they can stop the flow of fentanyl and they can prove to the president they can stop the flow of fentanyl, then of course the president can remove these tariffs. But you've seen it. It has not been a statistically relevant reduction of deaths in America. It's just black and white. And we told them it was outcome based that

I understand that Canada says, oh, it's only a small amount of fentanyl. You know, it can only kill nine million Americans. It's not that much. Whereas, you know, the flow of fentanyl from Mexico could kill everybody in America. I mean, you got to be kidding me. It's got to stop and it's got to stop now.

Really right away, right away. And China's got to stop producing it. So I understand that there are threats. Hopefully Mexico will understand that this is not a trade war, right? This is a drug war. Hopefully they understand that. We keep saying it again and again and again. On April 2nd, we're going to have lots and lots of discussion on how to reset trade correctly. But that's April 2nd. I'm happy to talk about it now.

But, you know, we expect, for example, on April 2nd, we want car manufacturing to come back to Michigan, to come back to Ohio. NAFTA gutted Michigan and gutted Ohio. And on April 2nd, in that time, we're going to try to start bringing cars back

We're going to bring back those great jobs. We're going to bring back production of enormous amounts of things and make America a manufacturing center again. So yes, there's going to be, as the president said on the campaign trail, there may well be short-term price movements.

But in the long term, it's going to be completely different. This is going to be the greatest America. We'll have a balanced budget. A balanced budget. Interest rates will come smashing down. And I mean 100 basis points, 150 basis points lower. You're going to have income taxes, no tax on tips, no tax on Social Security, no tax on overtime. This president is going to deliver all of those things and drive manufacturing here. And these things are important.

The Journal, you know, they don't like tariffs. And they've been, sometimes they're nice or positive about some of the moves of President Trump, but sometimes negative. They've never liked the tariffs. They got a piece today, cross-border, some corporate...

parts and cars go back and forth eight times across the border. They're going to be taxed every time or taxed every time. There's an estimate, Anderson Economic Group, that 25% tariff will raise the cost of a full-size SUV assembled in North America by $9,000, a pickup truck by $8,000. You wouldn't want to have that on very long, would you? Can I ask you a question? Why do cars that are sold in America get made in

in Canada and Mexico as opposed to being made here. Seriously. Part of it is the USMCA that's the last Trump administration. Why? Why, why, why? Why shouldn't American jobs be here? You can't just wave a magic wand and move everything immediately. This is going to take time. A big part of this was because of what was negotiated under the last Trump administration with the new NAFTA USMCA.

And USMCA, the president has been crystal clear that he thinks that Michigan and Ohio, the communities of Michigan and Ohio, they've been ravaged by these ideas. And the concept says, let's bring that production back. I've spoken to the car manufacturers. They have ample excess capacity in America and they can move that production back.

I agree with you. They can't do it in three months, but they can do it in six months. And you're going to see jobs created in America, cars in America. You build it here, you don't pay any tariff. And that starts on April 2nd. But today, we've got to save lives. But on April 2nd, I think you're going to see a reordering and a re...

you know, negotiating with our trading partners and trying to make the world fair and reciprocal. You guys have no idea how bad the deals are that America suffers with. Everybody charges. Like you just said, imagine dairy is 250% in Canada. You guys don't think about that stuff, but it's unbelievable the way we get ripped off around the world. And Donald Trump's going to level set it, make it reciprocal and make it fair. But you can't kill Americans and get away with it. You just can't.

We do want to reward friends, and I don't know whether you could say punish our enemies, but what is China? Are they friends? Are they enemies? Are they a security risk? Are they your second biggest economy on the planet? It's symbiotic, Howard. How far do we want to push that, and how bad, I mean, how much pain are we going to be willing to take in inflation if all of a sudden they hit us right back?

Remember, so you made one comment. So inflation comes from a government printing more money. Some prices can rise, you know, this bottle of water. You don't think it can come from tariffs? It can't happen at all from tariffs? No, tariffs do not, tariffs do not, do not, do not create inflation.

Printing money creates inflation. You have a balanced budget, there can't be inflation. It doesn't mean one product could be more expensive and one product could be less expensive. But China, I'll give you an example. China has the highest tariffs in the world. In the world.

Everything gets tariffed in China and they don't have inflation. In fact, they have deflation. India, the second highest tariffs in the world, they don't have inflation. So this concept is just people whining and complaining and not being truthful. The fact is we need to protect America. Why does China tariff everything and we give them a free ride back here and they subsidize the opioid production? They subsidize opioid production.

Can I just ask you very quickly, the American Automotive Policy Council president just put out a statement on the tariffs. He said, we continue to believe that vehicles and parts that meet the USMCA's stringent domestic and regional content requirements should be exempt from the tariff increase. Our American automakers who invested billions in the US to meet these requirements should not have their competitors undermined by tariffs that will raise the cost of building vehicles. Is there a chance?

that they would get an exemption? Well, look, that is a discussion. The president's always thought about that, right? About USMCA. But this is, remember, the problem is this is an opioid-related tactic today. We need to have

opioids stopped flowing into the country. On April 2nd, we're going to re-examine trade policy, but that comes April 2nd, and we understand that there are production in Mexico and Canada. But let me ask you a question. Why don't you go ask those auto manufacturers what percentage of their parts are made in America? And it would shock you in a negative way to say that many of the cars that they think

produced under USMCA have less than 10% American parts. Less than 10%. We've got to bring this stuff to America. It's got to be produced in America. Mr. Secretary, to be continued, hopefully. We've got four seconds left. Thanks for coming on today. We appreciate it. Hope to see you again soon. That does it for us today. We'll see you tomorrow.

We hope we do catch you tomorrow on SquawkPod. And you can always catch our anchors, Joe Kernan, Becky Quick, and Andrew Ross Sorkin, live on SquawkPod every weekday morning from 6 to 9 a.m. Eastern. Don't forget to follow SquawkPod wherever you get your podcasts and have a great day. All right, clear. Thanks, guys.

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