Tough Medicine to Swallow 4/7/25
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I'm CNBC producer Katie Kramer, and this is Squawk Pod.

Sometimes you have to take medicine to fix something. President Trump says, take your medicine. The White House's tariff policy sparking a global market meltdown. We're looking at much greater odds of a recession, not just here, but globally. Sending major indices here in the U.S. into bear market territory. This is a true man-made disaster. And dividing Wall Street and Washington on what to do next. I don't know how you could kill an economy in four days. How long have we been liberated?

The president's senior trade advisor, Peter Navarro, joins us on the market whipsaw. We will hit 50,000 on the Dow, and we're going to have a broad-based recovery in the S&P 500. The market's trying to find its bottom now. The thing I would say to retail investors is don't get panicked out by all of this. And what's the point of the policy?

It brings home our domestic manufacturing. I mean, that should be patently obvious to you. That's the whole point. That takes years. We bring here. Are we asking people to be patient for years? That's another one of the debates. How long will this take? It's Monday, April 7th, 2025. Squawk Pod begins right now.

Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. It's a Monday morning and there is lots of red. Rainy Monday. Rainy Monday, but that's the best part of the news that you're seeing this morning. If you take a look at the U.S. economic futures. In combination with that, yeah.

As of Friday, we had closed down 17.5% for the S&P 500. The Dow down by 15% as of Friday's close. But you did see the Nasdaq, the Nasdaq 100, the Russell 2000, and the Dow Transports all closing in bear market territory already on Friday. You really saw some pain inflicted both on Asian and European markets overnight. The volatility index up another 17% to 53. We were at 20%.

a few days ago, a week ago, we were trading at 20. You saw big gains in that at this point, up 231% for the one-year period. We haven't seen 53 in a very long time in terms of what the volatility, the fear factor is showing us. As I mentioned, markets in Asia plummeting overnight. The Hang Seng down more than 13%. Japan dropping about 8% to an 18-month low.

Earlier in the session, Japanese futures were suspended after they hit circuit breakers. And then energy prices, adding to last week's steep losses as well. You're now looking at WTI below $60 a barrel. So $59.81 for the year. It's down 31%. I guess the upside to that is you're going to get cheaper prices at the pump. But all of this signaling the market's idea that...

we're looking at much greater odds of a recession, not just here, but globally. Bitcoin actually dropping below 80,000 right now. It's at 76,470. 74 for a while. Yeah, it's a market phenomenon at this point, not economic, but it's getting awful close. And you look at junk bond spreads as well that...

The Journal has a good piece on when you'll start to see the markets indicating that this is spreading to the economy. Well, that's the question. I think there's a real issue about contagion. And it's possibly, by the way, a day away at the rate we're going. Well, normally the dollar goes up.

when there's scariness like this. And it's not. It bounced on Friday. I don't know if that's a reflection of the dollar or a reflection of the flight to quality has gone to treasuries. It has not gone to the dollar like it typically would. At some point, there are going to be investment firms that are going to blow up that are on margin. There are going to be private credit operations that are going to run into trouble that won't be able to provide credit to small businesses and large businesses. And that's when it starts to go to the economy itself. Well, by the way,

By default, this is already forecasting

it's what they think it what we all think is going to happen in the economy. But yes, is this already going to impact the economy? Do you think that retirees who are watching the broadcast right now are running out to buy a new anything right now? No, I've got a daughter graduating next month. Like what's the job market look like? What are companies going to write? Everybody's freaking out of their minds. And so this is this is like a good man made disaster. It is. It's it's self-inflicted in and they they've

They got too cute by a factor of about 10 with those, the way they calculated the tariffs. Because the tariffs are not nearly as high as what that weird equation brought. And it allowed them to make an offer that seemed reasonable, like a half, which really wasn't a half. It's much higher than that. And that allows them, I think, to pretend that they're

they're giving a little when they're really just getting it shouldn't be it shouldn't be over but here's the next problem if you're the administration the longer this goes on the harder it actually is to make a good deal to actually walk away with a win because if you are a foreign country today if you're president Xi today who by the way has a lot more patience than I think we do who sits around and actually says

These guys not only are going to be under pressure from us, he's under pressure from his own people. He is, but we're still in a much stronger position than anyone we're trying to extract concessions from. And they're going to get, they can try to wait us out and say, well, Trump's under, I don't know how much pressure. We just don't want to be the king of the losers. You don't know how much pressure Trump's under? I

I think that we are about to come to a point where, you know, he hasn't been under pressure in part because he's scared everybody from talking out loud and saying bad things about him. He's going to get Republicans in Congress. But I think right now you're about to start to see the damn break when it comes to Republicans in Congress. I think business folks... There are already seven senators, Republican senators. This is where you start that they would sign on to. Business folks who have been too scared to say anything, I think you're starting to hear from them. This is where you trot out the...

Vietnam or we had 50 calls over the weekend, but there's also some people saying that they weren't that nice about the 50 calls that they got. And they're saying, no, that's not enough, that they're still standing tough. Maybe that changes a little. If you were to see or, you know, what Ackman suggested, take 30 days, take 90 days before you put that would be a that might negotiate before you put these things before you put on the other. By the way, that strategy to me separately. Yeah.

is probably going to create just as much uncertainty because all of a sudden we're going to be the same way that we sit with this tick tock deadline, you know, every 75 days. And you know that there's another 75 days to go. If you if you announce there's a 90 day moratorium, the markets may like it marginally, but they're not really going to like it that much because they're going to say, OK, now we have another 90 days of this. Things to keep to keep in mind, just in perspective on an absolute level.

these numbers aren't really that scary. It's giving back about two years of really big gains, admittedly, but... This would be one of the fastest... - To get down. - ...entries into bear market in history. - Yeah, and with no exogenous... - And by the way, if we open it... - No exogenous event. - Right, with no other thing that's causing it.

If you're looking at today's losses, if they continue at the levels we're looking right now, but you're also looking at the S&P having the biggest losses they've seen since 1987. It's quickly over three days. Just to put it in perspective again, we were sweating.

getting up above 4,000 and we're really about to retest the Mike Wilson 3,000 retest of the lows and the worst case scenario. We're breaking under 5,000. We're going to get back in the fours today. We're going to get back in the high four, 4,900 or so. One of Jeremy Grantham's acolytes, and Jeremy Grantham, he's always, you know, the world's always ending, but this guy says we're still 30 to 40% overvalued in the S&P 500.

regardless of tariffs. - Is this a defense of tariffs? - I'm sorry? - Is this like a- - Do you want someone to defend the tariffs? - No, I just didn't understand why this idea that we're like suggesting, well, everything's over. - No, I'm not suggesting everything's okay. I'm saying to keep it in perspective, the pandemic low was 2,300. No one wants to go back there. When we had two Octobers in 2022 and 2023, where we were worried about going back to the lows, that was down at, we were trying to get through 4,000.

This is two years of outsized gains and giving it all back in three days. And no one's saying that it's pleasant or anything. I'm just saying as far as perspective goes, just have some historical perspective before you, you know,

truckin miller it had said before that he was in favor of up to ten percent terror did not do anything but not above that he posted that on x uh... yesterday saying that he's not in favor of tear up at these levels not about tempers historical those that the only historical context i think you actually need is what we talked about on friday which is that global trade in nineteen thirty dropped by sixty percent in twelve months

That's the only historical context that actually matters. The Port of Los Angeles, I think there are estimates that it will lose 15% of trade this week if these tariffs hold. By the way, that was very interesting because the longshoremen out there are saying this is going to be worse than COVID. It's very interesting because you have that union on one end saying this is going to be worse than COVID.

And then you obviously have the UAW and others who are standing there in the Rose Garden clapping. I don't think I don't know how you could kill an economy in four days. How long have we been liberated? We've been liberated since. Was that Wednesday or Wednesday last week? That's what I said. It's still a market for. And, you know, markets.

are 90 of the time it's not based on anything other than how investors are feeling in terms of sentiment and it can go it can overshoot by 50 percent it can understand in the long term it's a weighing machine in the short term it's a voting machine and the market is voting that they they don't like this at all they think it's safe i don't and it could end six months from now we could be in a recession

But the jobs number was great on Friday. Which is why you're not going to get rate cuts. The market is now anticipating five rate cuts this year. I don't think we're going to have inflation either. Inflation is a bigger problem right now than the jobs market is. Is what? Inflation is a bigger problem than the jobs market at this point. I don't think we're going to get inflation. If you look at oil at 59 or whatever, mortgage rates, interest rates. I'm just saying the latest reads on inflation are a bigger problem for the Fed than the latest jobs. And there will be one-time price increases from tariffs. If they stay, I think...

You know, this is so fluid. We've seen how they walk. We've got Navarro on today. I'm sure he'll be as strident as ever. Let's talk about that, because President Trump, reacting to the stock market declines, he spoke with reporters on Air Force One last night, returning to Washington from Florida. I don't want anything to go down. But sometimes you have to take medicine to fix something.

We have such a horrible, we have been treated so badly by other countries because we had stupid leadership that allowed this to happen.

Yeah. President keeping his focus on U.S. trade, the trade deficit with other countries. That's what he's talking about, saying if nations want to talk, he's open to it. But otherwise, he says, why would I want to talk now over the weekend? China's foreign ministry saying, quote, the market was has spoken when it comes to tariffs. President Trump reacted to that message. We have to solve our trade deficit with China. We have a trillion dollar trade deficit with China.

Hundreds of billions of dollars a year we lose with China. And unless we solve that problem, I'm not going to make a deal. Now, I'm willing to deal with China, but they have to solve their surplus. Separately in a post on his social media site last evening, Trump saying, we have massive financial deficits with China, the European Union and many others. The only way this problem can be cured is with tariffs, which are now bringing tens of billions of dollars into the USA. They are already in effect.

And he says they're a beautiful thing. I would suggest they do not offset what's happened in the marketplace thus far in any way, shape or form. And by the way, worth noting that, you know, President Vietnam apparently told the president that he was prepared to go to zero. And he said, you know, I'll call you back. So it's unclear, you know, what the goal is, what's going on here. It's what's the goal? What's something? I mean, it's it's really I don't know what else to say.

I think we all know what's going on. It is creating cracks even within the Trump administration. You saw Elon Musk's comments over the weekend on X. He went after Navarro for pushing these policies. He told Italian politicians that he would be in favor of zero tariffs, total free trade. There are very few people who think that this is a good idea. Very few. I told you, the calculation that they used to somehow get countries that don't even have

tariffs against us to somehow put it up at like 40 and 50 percent because it's this minus this divided by this with the trade deficit. That got to numbers that are, I don't know if anyone really thinks that that's how you gauge the protectionist policies of another place, but that's what they're using. I think to use non-serious analysis on something as important as this

It's almost frivolous, and I don't think this is a time for non-serious. I think they're learning that this is, you know, you can't be non-serious on defense issues.

signal gate you can't be non-serious about that and they better get serious quick what i don't know is whether you can put the toothpaste back in the tube not that he can't tweet out in 10 seconds from now if he so chooses the tariffs are off which i can't imagine something he's going to be doing but that the that whatever has just happened here i think has actually had a fissure around the world longer term and i think people haven't even figured that part of this out the the the

the breaking of trust with allies. I still think they're going to, no way that they can ignore the biggest economy and biggest trading partner in the world if they have to hold their nose. I mean, I think it's interesting. Not over the short term, but longer term, the alliances that it builds and the places that people want to do business. I don't think it's permanent damage. I don't. I think the arrogance of that, to be honest, not about you, I'm saying the arrogance of this, of anybody who thinks that somehow just because, you know,

I like to believe we're exceptional, but the arrogance to think that just because of our size and scale that everyone's going to have to always hold their nose to play with us, I think is a very bad strategy. And add in that they have some culpability. They've got some culpability in why this is happening in the first place. There are better deals that could be struck. There's a better way to go about doing it. If you could get to zero with everyone, it'd be a better play. Eat your vegetables.

Look, did you hear that? If you have a sickness, you need medicine. So if you have a gangrenous leg, you need to cut the damn leg off and start hopping around the rest of your life. I guess that's what we're saying here. I would rather not do that.

We've got so much news to cover this morning, including this. Now, J.P. Morgan CEO Jamie Dimon out with his annual shareholder letter. Want to get straight over to Leslie Picker, who's been going through that letter. Of course, something that the investment community looks at virtually every year. So very, very carefully this year, perhaps even more important.

Yeah, and good timing this year, of course, as everyone wants to hear his perspective. He's writing in his 58-page annual letter that the economy is facing, quote, considerable turbulence. He's saying that the short-term effects from tariffs is likely to have inflationary outcomes and, quote, whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.

He reminds readers that stagflation in the 1970s didn't stop the trend of rising rates, noting that even though interest rates have come down recently, this trend could still reverse. Diamond says even with the recent declines, equity valuations are still well above their historical averages. Still on trade, Diamond says, quote, where the United States is treated unfairly, we should demand those agreements be fixed. He

He says America first is fine as long as it doesn't end up being America alone. Much of the letter really entails policy recommendations on everything from tax and fiscal policies to education and healthcare reforms to building more housing and infrastructure. And he also lists issues that he thinks

is causing, quote, legitimate frustration and anger in the country today, including, quote, uncontrolled immigration, income and education inequality, culture wars, bureaucracy and polarization that's amplified by media and social media. And he said that by enacting policy reforms to resolve these issues, GDP would grow by over 3% a year. Guys.

Wow. You know, I get the sense that Jamie traditionally works on that letter a pretty long time in advance. But Leslie, it sounds like he was updating it up to the to the last minute. Some of it sounded like before the mess that we're in. Yeah. Some of the some of the other issues. I'm sure that's the long term stuff he was working on. My guess is he spends months on this. But he must have been working on it right up to Saturday. Right. Thoughtful. I mean, to say that there are. Yeah, they need to be dealt with. I don't know if.

if you need to go shock and awe. I don't know why an incremental sort of a stepwise fashion might, he just doesn't, he doesn't know that. - Patience? - Homie don't play that, yeah. - You're right, he works on this letter for a very long time. He writes it himself is my understanding, but the current environment is so dynamic, it's pretty certain that yes, he was making edits and adjustments to reflect the current environment with tariffs, absolutely.

Some new insights from CEOs on President Trump's tariffs on the economy. This is courtesy of the CNBC CEO Council. In a new poll, a flash poll that was just taken, two-thirds say they expect a recession this year or next year because of those new U.S. tariffs. Just 14% say that they do not see a recession coming.

More than 50% say they think that recession will be moderate or severe. And about a third of them say that they expect they will have to cut jobs this year because of the new White House policies. And I think that's the big issue and big question facing the general economy at this point. Yeah, I don't.

They maybe have some data to back it up, but in general, they're in the same boat we are. Yeah, but when CEO confidence drops, that's when hiring... They can be self-fulfilling. Right, exactly. Tease will be next.

Coming up next on Squawk Pod, we hear directly from the Trump administration's senior trade advisor, Peter Navarro. The biggest tax cut in American history, the broadest base tax cut in American history, is coming within a matter of months. So any discussion of recession seems silly. But it's ugly out there. JPMorgan, Goldman Sachs and S&P Global have upped their recession probability. We'll get into all of it right after this.

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.

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President Trump posting on True Social this morning. Oil prices are down. Interest rates are down. The slow-moving Fed should cut rates. Food prices are down. There's no inflation in the long-time abused. USA is bringing in billions of dollars a week from the abusing countries on tariffs that are already in place. This is despite the fact that the biggest abuser of them all, China, whose markets are crashing, just raised its tariffs by 34%.

on top of its long-term, ridiculously high tariffs, plus not acknowledging my warning for abusing countries not to retaliate. They've made enough for decades, taking advantage of the good old USA. Our past leaders are to blame for allowing this and so much else to happen to our country. Make America great again.

And a number of countries reportedly reaching out to negotiate tariffs with President Trump over the weekend. Joining us now with the latest, President Trump's senior trade and manufacturing advisor, Peter Navarro. And given the backdrop, Peter, of what we've seen, the tumult in the markets and the S&P could

theoretically, be in bear market territory. And I know you make the distinction between Main Street and Wall Street, but obviously they're interconnected. So to get the real story on how many countries are calling and on whether the president is actually agreeable

is important because we've heard all these countries are, you know, making the phone call. But then we hear that maybe the president isn't interested at this point. Can you clear that up? Sure, Joe. But but let me first take you back in a time capsule, because this feels a lot like the day after the election in 2016. And I don't know if you remember that day, but I was on the set with you. The futures were dead red down.

And I made the prediction that the Dow would hit twenty five thousand. And Andrew's head exploded like, well, but you correctly point out that wasn't that heavy a lift. And we did hit that not in four years, but in less than two years. And what I'm seeing, Joe, is is a beautiful situation where we will hit fifty thousand on the Dow.

and we're going to have a broad-based recovery in the s p 500 the market's trying to find its bottom now the thing i would say to retail investors

is don't get panicked out by all of this. And what the president could have added to that fine truth was the fact that the biggest tax cut in American history, the broadest base tax cut in American history, is coming within a matter of months. So any discussion of recession seems silly when you factor that in. Plus, the Fed, the Fed...

is not going to do its job, but the long bond is doing it. We're lowering our oil prices, which is just amazing. And here's the one other thing I want to say macro wise, Joe, because look, this is all about people worried about global recession. That's what they're worried about.

The restructuring that's going to happen, Joe, globally is going to start with China and Vietnam and Germany, heavily export dependent countries. They are going to have to engage significant fiscal stimulus to reorient their economy. So that thing is going to go on. And in the meantime, we're going to boom here. I think they're much bigger than most people thought. And I think from policy standpoint,

Institutes on both sides of the aisle, the methodology that was used has been universally derided as being non-serious. I don't know whether you know exactly who came up with the formula, but it allowed you to at least characterize most of these countries as being, their tariffs well above the reality of the situation so that when you say that we're going to do half on them,

It was much higher than anyone anticipated. And I think you'd have to concede that this was not the market reaction you were looking for. There's a way of maybe incrementally trying to accomplish some of the things that the president wants to do in a reasonable, serious way. And this just...

Almost across the board has caused what you're seeing in the stock market and a lot of head scratching and head shaking on whether anyone really knows what they're doing in this case. Peter, can you at least acknowledge that? Sure. No, I can't. Because here's what I'm seeing. You're throwing a lot of stuff at me. First of all, the methodology was perfectly sound. It was done by the Council of Economic Advisers.

based on long-term studies that are in the academic literature. And the people taking pot shots at us are the same people that always take pot shots at us. The American Enterprise Institute, Peter. Of course. Larry Lindsay. Of course. Joe, come on. The American Enterprise Institute has been against it. Yeah, Larry Lindsay. Let's not get...

Let's not get buried down in those weeds now. You asked me a serious question. Will the president willing to negotiate? What we have here is a national emergency based on massive chronic trade deficits caused by systematically higher tariffs and non-tariff barriers. So when you ask if

If we're willing to negotiate, the president will always listen. But let's understand what the problem is. When you have a country like Vietnam, let's take Vietnam. When they come to us and say, we'll go to zero tariffs, that means nothing to us because it's the non-tariff cheating that matters. Let's do Vietnam, Joe.

They sell us $15 for every $1 we sell them. About $5 of that $15 is China transshipping to Vietnam to evade their tariffs. What does Vietnam do? They dump into our markets, killing our shrimpers, our people who make metal brackets, kitchen cabinets, agricultural products.

They engage in intellectual property theft. They have the biggest number of cases, aside from China, at the Department of Commerce on the dumping. So the point is, the point is, anybody who wants to come to talk to us,

Talk to us about lowering your non-tariff barriers. Vietnam has a 10% VAT. Europe has a 19% VAT. We can't compete against that. We have tried at the World Trade Organization to get... Andrew, let me just make this point. We have tried at the World Trade Organization since the 1970s to get VAT tax relief, and they've told us no every single time. We've won case after case at the World Trade Organization.

organization on things like our agricultural products, pork, beef, and other, and corn. And they just blow us off. - I think the thing we're all trying to understand is then if there are gonna be negotiations and you're saying zero is not enough,

What is enough? Zero is a small first start. OK, what is enough? What is enough? And let me ask you, but related to that. Let me answer that question. Let me answer. Let's take them one at a time. We have plenty of time. So what is enough? OK, you take any given country. They're like fingerprints. They all cheat us in a different way. So here are the things they cheat us on. Some of them engage in currency manipulation. Some of them have a hefty VAT tax.

All of them dump into our markets. All of them engage in heavy export subsidies and government subsidies. All of them put up these phony technical and phytosanitary barriers to our ag products and our autos and everything in between. Many of them steal our intellectual property. A lot of them run

sweatshop labor, including forced child labor. They have pollution havens. So when you say to me, what do we want from them? We want fairness. We don't want them to kill American workers by inundatus with this non-tariff cheating. And it would be really refreshing to have the media talk more about that. This zero tariff thing, it's a misdirection. No, it's a misdirection.

it's not a non-tariff what that suggests is that there's a lot there's gonna be up a lot bigger challenge in terms of actually then getting to to yes if you will or finding the off-ramp where idealism a given that we're not just talking about getting to zero we're talking about getting uh... all sorts of other policies inside each of these countries change my smile related question on the other unrelated related is you have uh... have talked a lot about how terrorists

And the president's talked a lot about how tariffs can be helpful as a tax, effectively, as a way to raise revenue here in the United States. Tariffs are tariffs, and they do raise revenues. They will. I see them as a tax cut, Andrew, because they're going to help pay for the biggest tax cut in American history. Every dollar that we extract from foreigners who are cheating us is going to go to the American public in the form of debt reduction and

and tax cuts, including, for example, in our auto industry. Anybody who buys an American-made car is going to get a healthy tax cut. We were given $7,500 away for EVs made partly in China. That's crazy. If Donald Trump gives away money for American-made cars made in Akron and Flint and Detroit, that gets our manufacturing base back. Peter, just stick with me, though, for a second. Sure. Either we can...

Collect those revenues. And by the way, there's other people who think it'll be a tax on the American people. But let's just put that aside and assume that you can collect revenues. Either you're collecting revenues and that's the goal or you're negotiating with these countries to get to not just zero. It sounds like anymore, but but something very different than that. But those two goals seem to be at odds with each other.

Not if you look at it as a movie rather than a snapshot, Andrew. The goal here ultimately is to have people make things here. Remember, the president has said early in Austin. But again, if that's the goal. Hang on, let me finish the thought. Andrew, why are you interrupting? Let me just finish the thought.

The president has said early and often that the best way to avoid tariffs is to just come here and produce. I mean, if you look at our auto industry, right, we're an assembly line for German engines and transmissions right now. That just doesn't make any sense. In World War II, we won that war with our so-called arsenal of democracy. We can't do that anymore. We've got parts of

all spread all around the globe. And if COVID taught us anything, those supply chains are not resilient. They're not reliable. So I take your point, but I'll tell you, we're going to get to a place where America makes stuff again.

Real wages are going to be up. Profits are going to be up. And look, it bewilders me right now in the sense that if you're just looking at this chessboard, it's the market's going to find a bottom time to layer in. And if you look at all the good things that President Trump is going to bring you in terms of tax cuts, deregulation, lower energy prices, lower interest rates.

And the world restructuring in a way which is going to be healthy. I mean, how long? How many conversations have we had about China moving from an export-dependent

parasite on the world to an economy that actually serves its own people rather than keep you talking about tax cuts do you know anything about letting the the top marginal rate go but are you a proponent of letting that go from 37 back above 39.6 to try to pay for some of this other stuff because you know how many small to medium-sized corporations pay taxes at those rates if they're

Joe, that one's not my lane. I let Scotty and Kevin do that. You add all this together and it's not looking... No tax on overtime. No tax on Social Security. Tax breaks for if you buy a domestic auto. But if you raise the top rate, that's not a Republican or a conservative...

You're asking the wrong guy. Whose idea was that? So you own the tariffs then? Joe, you're going after me for something that I'm not involved in. I can talk tariffs to

until the cows go home. Hey, Becky, how are you? Let's talk a little more about the tariffs because this idea of who's getting hurt immediately. Oil prices, oil's fungible. They can go elsewhere to buy oil. Things like soybeans, corn, wheat, that can be picked up from other markets too. Brazil is very happy to step in and supply some of those things. Farmers here are already getting hurt, already asking for relief like they got under the first Trump administration.

If we are raising these tariffs, taking that money and simply turning around and paying the people who are getting hurt with it, how does that benefit the economy, particularly if it leads to a downturn in the economy that costs people jobs? Because, Becky, it brings home our domestic manufacturing. I mean, that should be patently obvious to you. That's the whole point. That takes years. We bring here. Are we asking people to be patient for years? That's another one of the debates. How long will this take? Right.

Brian of the UAW stands up on Liberation Day, almost steals the show from the boss, and he says he's lived through this whole thing. He watched the factories go away. And now he knows that the factories are underutilized. There's brownfield investment that can be made in auto parts factories that are still there. And it won't take long—

And in the meantime, even Brownfield will take 18 months to two to three years. I think that's the question. That's a long time to get things back. I remember what what I did working in the pandemic. And we were we were looking at the PPE and 95 masks. And we're going to take six months to get factories done. You know, we done it, did it in two months.

GM got us ventilators in 14 days. So don't tell me that America doesn't have the wherewithal to move things. We can do stuff. But look, the big picture here, let's not lose sight of the big picture. We got a $1.2 trillion trade deficit this year.

We have over, since the trade war began when the world declared war on us back in 1979, we've accumulated $18 trillion of money we've had to transfer into foreign hands. That's about two-thirds of an annual GDP. That is totally unsustainable.

and what we need to be able to do is stop that for our national security our economic security and the way to do that is to get our manufacturing back and that's what we're all about and let's understand the problem higher we charge systematically higher tariffs but the bigger problem is the non-tariff cheating it's it's just that's the world let me ask you this they suck our blood on that

Peter, let me ask you this. Elon Musk, who the president has described as a genius repeatedly, basically came out over the weekend and said that he at least implied two things. One, that he's not in favor of these tariff program the way it's structured currently, suggesting he wants it, you know, he wants zero zero across the board. But he also took a shot at you and took a shot at you personally. Have you spoken to him?

No, but we'll speak. I'll probably see him today in the Oval. It's no big deal. Here's the thing. It's like Elon Musk. What do you tell Elon? Why is he, if Elon's against this, then he's so smart. Andrew, again, let me finish. Let me finish here. I'm just about to tell you. Look, Elon Musk and his Doge team is making a contribution to America in terms of waste, fraud, and abuse. And that's a very good thing for this country and the American people.

When it comes to tariffs and trade, we all understand in the White House and the American people understand that Elon's a car manufacturer. But he's not a car manufacturer. He's a car assembler in many cases. If you go to his Texas plant,

A good part of the engines that he gets, which in the EV case is the batteries come from Japan and come from China. The electronics come from Taiwan. The tires come. What we want, and the difference is in our thinking and Elon's on this,

is that we want the tires made in Akron. We want the transmissions made in Indianapolis. We want the engines made in Flint and Saginaw. And we want the cars manufactured here. It's like this business model where BMW and Mercedes come in to Spartansburg, South Carolina, and have us assemble German engines and Austrian transmissions here.

That doesn't work for America. It's bad for our economics. It's bad for our national security. We want them to come here. And with Elon, it's fine. He's a car man. He's a car person. That's what he does. And he wants to cheat foreign parts, and we understand that. But we want him home. We want him home for our national security and economic security. And everything's good with Elon. No problem. Do you expect deals near term? Or is this like a...

If the market really gets in its mind that this is a six month or a one year exercise, I don't know how much stabilization. I don't know if your 50,000 prediction is going to come. I mean, do you expect deals to be announced this week with the president?

I expect the market to quickly find a bottom. I expect the smart people. Without any deals from the president or without any? Is it possible, he says, let's do a 30-day hiatus on some of this. I've told you, Joe. And let's talk it over with all of our trading partners to see if we can get somewhere before we do it. Is that possible? Absolutely.

Hang on. Again, let me finish these thoughts here. I mean, first of all, it's the president's decision. Second of all, I've told you that the most important thing is for countries to come to us not offering zero tariffs, which is disingenuous because it won't get us anything, particularly with countries like Vietnam,

What they have to do is tell us they're going to drop all their non-tariff cheating. And as you said, that takes a little time here. OK, we got a one point two trillion dollar deficit. But in the meantime, Joe, hang on. Let's not lose sight of all the good things that are happening in the show. We're about to end the show. And I just want to ask you about some breaking news. The EU's von der Leyen is saying that we are now ready to negotiate with the U.S. on tariffs. We are ready for a good deal, but ready to take countermeasures. We

We will set up import surveillance task force. Is this a negotiation that you think will bear fruit that we could see lower tariffs as a result of?

Let me say the Financial Times is going to run an op-ed of mine today, online, in print tomorrow, which addresses some of that. And what I would say to the EU, when you make those announcements, would you be very careful to tell us you're going to lower your non-tariff barriers? EU, drop your 19 percent VAT. EU, respect the WTO's decisions to let us sell us our pork, our corn, our beef. You don't do that.

EU. You dump stuff in here. You're using export subsidies. You steal from the American people every which way is possible. So don't just say we're going to lower our tariffs. That's a good small start because you know your tariffs are higher than ours. But the bigger problem, this is the thought I want to leave with everybody, the bigger, by orders of magnitude,

by orders of magnitude is a non-tariff cheating. And that's got to stop. So that's what we want to hear. You start talking that language, we'll see what happens, as the boss says. Peter, thank you very much for joining us today. We'll be right back.

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