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Hi, I'm CNBC producer Katie Kramer. Today on SquawkPod. All politics are local, so are economies. Virginia's Governor Glenn Youngkin joins us on the Trump administration's policies remaking business. This has to happen. We need to rein in spending and reestablish fiscal reality back into the federal government. And with that, yes, there will be job losses. And Virginia has a lot of federal employees and a lot of contractors. And I expect we'll see job losses.
A new federal investigation that could result in tariffs on pharmaceuticals. What will it mean to the drug industry? Former FDA head Scott Gottlieb. I fear that if the president places tariffs on those drugs, we're not just going to see prices increase. We're going to see companies stop manufacturing them because the margins of those drugs are very slim.
And the rest of today's headlines, like the White House versus the Ivy League. This isn't just about Harvard. This is about other universities. This isn't even about anti-Semitism. This is about genuine free speech. A funding fight between the Trump administration and Harvard over concerns about speech. A lot of their donors from the right are allowed to donate, but they couldn't give a speech on most of those campuses. So why are they giving the money?
It is Tuesday, April 15th, 2025, Tax Day. Squawk Pod begins right now. Stand, Andrew, by in three, two, one. Cue, Andrew. Good morning. Welcome to Squawk Box. Live here on CNBC at the NASDAQ Market Site in Times Square, I'm Andrew Ross Sorkin. Along with Joe Kernan and Kelly Evans, Becky is off today. And yes, it is April 15th, a very special day in the hearts of many.
I think it's a patriotic duty. I do. I would like to pay as low a number as possible, but I feel good about...
The patriotism. Are you an on-the-ball kind of person? Because for someone like me, deadlines strike fear into the heart. No, no, no. The act of paying I dislike. The idea of what the number is I dislike. There's a lot of things I dislike about taxes. I'm not arguing for higher taxes. I'm just suggesting that... You're kind of arguing for higher taxes on other people. For those of us who've been blessed to do well, I feel good about it. But 50% is good by me.
80, I got a problem with. You got a problem with that. I don't want to work till, we work until June 29th. Well, you know, we just had a wealth tax two weeks ago. What do you mean? Oh, the tariffs. I mean the tariffs. Everybody lost 10% of their wealth. So that's sort of how it works. And nobody got to collect it either. You were channeling...
Judge learned at hand, Justice learned at hand, too. He said the most patriotic thing is to keep your taxes as low as you possibly can legally. That is your patriotic duty. You know what? You know what the, you know, there's at the convenience store, there's that place where there's non-alcoholic beer. The door's never been opened. It's actually just a, it's like a fake front. There's also a thing on the bottom of the IRS form where you can,
Give more money. Never been used. Never been used. What percentage of people do that, you think? Zero. Is there a number less than zero? That was a movie. No, maybe somebody does that. Really rich people certainly don't. Let me ask you, when you are at a store and they ask you to round up
Okay. I do that. Do you do it? Do you not do it? I do that. You do it. You know where I do it? I thought that was a scam. Taco Bell. I just did it on Saturday. I just did it on Saturday. It was $13.25, which is not a lot of money. I'm not gorgy. They said, do you want to make it $14? I always say yes, make it $14. Now I feel like a bad person. I never do it because I thought it was something where the companies are doing it for the write-off. You don't like the tips at Starbucks or places like that.
I don't like, well, no, what I really dislike is the tips when it's at the self-checkout. Have you been to that? I have not experienced that, no. The self-checkout, where you're at the self-checkout at the airport and then they say, would you like to tip 20%? He tips himself. Tip to who? You tip yourself. Yeah, if I can keep it.
Well, now the big news of the morning. China ordering its airlines to stop taking deliveries of Boeing aircraft. This is a Bloomberg report, which also says the Chinese airlines have been asked to stop buying aircraft equipment and parts from U.S. companies. Boeing shares are falling pre-market on the report. I don't want to say only. It's only by 3%. It's a lot to unpack here. The move by China could represent a new front in the U.S.-China trade war.
On Friday, China retaliated against the Trump administration tariffs by hiking its own tariffs on U.S. goods to 125%. We have reached out to Boeing for further comment on this story. We'll tell you what we know. Boeing actually had finally been having an okay run here. I mean, they're down 12% year to date, but they had certainly gotten over the worst of the selling pressure last year. And now, of course, comes another potentially major blow. Off the lows, 128, but you remember the highs. I mean, they're so...
So long ago that I 2017, 2018, 300. Yeah, I think more. Wow. The Trump administration will investigate imports of pharmaceuticals and computer chips as part of an effort to impose tariffs on both sectors, in this case on national security grounds.
Federal register filings indicate the White House began the probes on April 1st. They follow this past weekend's confusion when it appeared President Trump might exempt certain products from those punishing tariffs. White House officials later tried to clarify that those products would still fall under national security tariffs. Here's a president in the Oval Office yesterday talking about pharmaceuticals. All I have to do is oppose...
a tariff, the more, the faster they move in. The higher the tariff, it's inversely proportional. The higher the tariff, the faster they come. Comments from President Trump also impacting auto stocks. From the Oval Office, the president said he's looking to help some of the car companies, which he said need a little bit of time to move production to the U.S. Ford gained 4 percent yesterday. GM up about 3.5 percent. And Stellantis gaining 4%.
5.5%. Trump initiated 25% tariffs on imported cars earlier this month. The senior auto industry executive telling CBC the president's latest comments provide some recognition that the industry is going through a tough stretch. And I've talked to a number of automakers, including some very senior folks yesterday on the back of this news. They were happy to see their stock up. The question is, May 3rd is D-Day for the automakers. And the question is, what happens timing-wise in terms of what's allowed?
and what's not. And the thing that we will see, by the way, get picked up in earnings is there still has been a move afoot to try to bring supplies into the U.S., house them here. So there's already, putting aside the tariff issue, there's just additional cost that's already being embedded into the system. So what's May 3rd again?
May 3rd, I believe, is the day that the tariffs would go into effect on autos. On autos for Canada and Mexico. Correct. I think if you could make the case that the companies he's trying to help...
If you make a real case, I think you'll get some type of dispensation from above. I don't know. We'll see how it works out. Look, the way I imagine the auto thing plays out, I don't know if you agree with this, is there will be a bunch of press releases about bringing some manufacturing back to the U.S. because they already have, by the way, some of them have more manufacturing capacity than they're actually using. And even auto parts. Right. So you could bring a little bit back. Yeah.
Claim a win and call it a day. Right. And I think, I don't know if that's a win. I mean, it'll look like a win for a moment, but in terms of what was articulated in the stated proposition. The Post found a person that his business is going to go under. So I think that he will hear some of these things.
these cries i mean i i don't uh i don't know what it all looks like six months from now i don't but i think it's well-intentioned i don't think he's trying but the bull case here is that ultimately you have less tariffs the tariffs are not what you think they are and
that he gets some win in terms of marginal improvement in terms of bringing some manufacturing back. What do you think of NVIDIA yesterday? Would you need all of this area to get there? You think NVIDIA would have built all this stuff here if it wasn't for sort of this sort of change in sentiment? I mean, it is a macro move that Trump is trying to make.
Sure. I mean, it's going to be more expensive for them to build those things here, right? Yeah. I mean, I think the question, first of all, let's not forget there is something called the CHIPS Act in America that was put in place by the last administration. But that was taxpayer funded. It was. But I'm saying if you look at some of the stuff that's happening in the U.S. as it relates to bringing CHIPS back. Do you think NVIDIA is still part of that?
I don't know, but I think that there are benefits. I believe that Foxconn- You just would knee jerk, give credit to the Biden administration for this? No, no, no, no, no, I'm just saying that if you look at all the chip, to the extent that there are tech companies bringing chip stuff back, that was something that began- Well, we don't, we need, before we say NVIDIA is that, we should look to make sure that that- And we should also, well, the other thing we need to look at
and call me in three or five years from now, is what actually they did here. Because I remember when we had the governor of Wisconsin on and the whole Foxconn thing. And if you looked at the Foxconn project, there was no project. So look, similarly, and I don't begrudge Apple. Apple put out a big statement that they're doing $500 billion or whatever it was investing in the U.S.,
They put out a similar statement under Biden in 2021 for $430 billion. So, you know,
You know, politics by press release is sort of an interesting situation. You've got to see what actually happens. All these things, we've heard that it's all these things, it's on the margin. That's where it makes a difference. We're not going to just turn around an ocean liner immediately. So even if it's on the margin, even if it's on the margin, it's good. We're headed in the right direction after, you know, 60,000 factories closed down. Right, but all I'm suggesting to you is...
Some of that stuff. People want to curry favor. No, I'm saying some of that stuff had already, was happening. Right. The Trump administration says it's freezing more than $2 billion in grants to Harvard University over concerns about anti-Semitism on campus, other issues. The freeze was announced hours after
After Harvard rejected Weishaus' demands that it eliminate its DEI programs and screen international students for ideological concerns, in a note to the university community, Harvard President Alan Garber said, although some of the demands outlined by the government are aimed at combating anti-Semitism, the majority represent direct governmental regulation of the intellectual conditions of
at Harvard. Harvard is likely better positioned to fight financial pressure from the government. It has a $53 billion endowment, is more than $10 billion largest, and then the next richest university. Are we going to talk about this?
I mean, we've all been talking about it during the break. Because Harvard is now so it comes down to what exactly are they asking Harvard to do? They're asking Harvard to eliminate their DEI programs. Right. They're asking them to do what else? I mean, because there's this is where the whole anti-Semitism issue becomes the main focus. And if they're giving them government funds and saying to me, the issue has always been about and it's a nuanced view.
Violence and genuine disruption of classes to me is a problem, and that should be prevented. Right. I'm a Jew. I hate the anti-Semitism piece of this more than anything, more than anybody. Do I think that people can scream from the rooftops if they want? I hate to say that, but I think that they can.
And in the same way that we think that it was not right for the Biden administration to go after the tech companies, but all around, whether you think it was laptops or covid or this or that. No, no. The left misses those days of controlling Facebook and controlling Twitter. And at the time they didn't.
say, don't do it. What I'm saying is, to the extent that we want to be, if we're trying to have a consistent view about free speech. But it wasn't consistent back then. So why are we then saying it shouldn't be consistent now? My only point is, if we genuinely believe in free speech, if we're going to advocate for Yvonne Musk's ex and everything else. Instead of calling it for what it is, which is hypocrisy. No, you are doing it for what it is. This is the ultimate whataboutism. Why didn't the left care about
that we couldn't read about the lab origin of Wuhan or the Biden laptop. I'm agreeing with you. I'm saying if we believe that the government... But you can't go back in time and decide to do it now. You let it go back then. You let it go back then. If we believe that the government should not be involved in speech, which is what you would argue this entire election was about, right? That's what the election was about. I just don't like to pick and choose when I decide that. Well, no, now you're picking and choosing. That's exactly the point. I just want...
Jewish kids to be able to go to class without failure. I agree, but that's about disruption of classes and about violence. The idea that the government genuinely should be influencing speech to me is a problem.
Well, it's nice that now- And I would think it should be a problem for you too. I can't be Superman and go back in time and say- But then that is a whataboutism. No, it's not a whataboutism. That is a straight whataboutism story. It's, okay. You're just lucky that you're deciding to apply these standards now instead of when they should have been applied back then. I should be applying them now. I'm a Jew. I'm an American Jew. This is not about being Jewish. It's about everybody in anti-Semitism. And I've said many times I'm not Jewish, but I'm a Zionist. But my point is this is about speech broadly.
So this isn't just about Harvard. This is about other universes. This isn't even about antisemitism. Think about law firms in the country that have been attacked because of this. This is about genuine free speech and whether you can actually stand up and say what you want. In socialism land over in Europe right now, you can go to jail. Terrible.
The left isn't, they don't care about that. They're not up in arms about sending people to jail for a tweet over in the UK. You don't hear anything about it. They don't live in the UK.
They pick and choose when free speech, sometimes they want free speech. When it doesn't suit them, they don't want free speech. He's the administration's approach. But that's exactly what's happening here. If you misgender someone, you get thrown off the faculty. But if you say from the river to the sea and lead a demonstration at that campus. Terrible, terrible. And say genocide of the Jews. I agree with you, terrible. You're almost celebrated at Harvard. That's where this comes from. I'm not saying it's not terrible. That's where this comes from. Should it fall under hate speech?
Well, some of this should fall under hate speech, and that absolutely should be a problem, 100%, that some of it should be a hate speech situation. But all I'm suggesting is... It's just so fluid with the left. The Harvard scenario, from what I understand, is not just...
Deal with the violence, deal with the disruption, deal with the hate speech. It's genuinely about changing the quote-unquote governance, what goes on in the classroom, some of what's being taught. They're saying eliminate DEI, screen international students for ideological concerns. So if the administration had a more targeted focus where it said we're withholding federal funds, if any of these hate speech laws happen,
appear to be allowed violence. So I think you could have a behavioral, talk about behavioral remedy? I think you could have a behavioral remedy, which is you could say, okay, here are the things to lay out. But you agree, we need some remedy because the cesspool that is the higher education system that we've seen for the last 40 years, the last 40 years,
The tenure system hiring only far left half the time at Ivy Leagues, it's just, it's like infested with that ideology. So we've got to do something for our kids. So tell the donor class, look at who are the biggest donors to Harvard. Think about who the biggest donors are. Ken Griffin, by the way, biggest donor to Harvard.
What political spectrum, what political side do you think he's on? Come on. - Well, you found one who's on the right? - No, look, you can actually go through the, John Paulson. - But that's upsetting the students 'cause then they all think they're under pressure from people who are right wing donors. - I'm saying, look, that's more of a free market view of the universe than letting the government do it. I think having the government do it is when you get into a bigger problem. - And a lot of their donors from the right are allowed to donate, but they couldn't give a speech on most of those campuses. - So why are they giving the money?
Don't. That's not me. You don't think that most people who are donating to these universities are doing that? They are buying influence that they are in the business. They get in. And by the way, the schools are selling influence. Their kids getting in and about giving us. Put up a building to get their D students. I'm not even going to put it on. Put it on the donor.
These universities have been trying to sell influence. They are in the business of peddling influence for the last 50 years. That is the business that they are in. Why do they have the president's circle, the this, the that? You give X amount of money, you get to go to this dinner with the president five times a year, you get to go to this one once a year. That's what they're selling you. They're selling you influence. That's the business. To influence them how? Either because you think the kids are getting in. What's Ken Griffin going to get out of influencing Harvard?
- Well, that might just be influenced societally. - Either societally or influenced over-- - Oh, you mean just so he can-- - No, no, or over, you would think, the curriculum. - Well, it hasn't worked, has it? - I'm just suggesting this is what, but to let the government do it, talk about a democracy, that's where I think it becomes more troubling.
Up next on Squawk Pod, the Doge slim down has hit Virginia's workforce, but the Commonwealth's Governor Glenn Youngkin is still optimistic about the long-term goals of the Trump administration. Virginia is for lovers or for workers? Are you changing that? Well, we are for job lovers is what we're for.
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U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
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Welcome back to Squawk Pop. Stand by Joe. Here's Mike. Cue.
You're watching Squawk Box on CNBC. I'm Joe Kernan, along with Andrew Ross Sorkin and Kelly Evans. Becky is off today. Doge cuts having a direct impact on Virginia's economy and jobs market. Now the state is stepping up to help former federal workers get new employment. Joining us now, Virginia Governor Glenn Youngkin, who is in studio. Morning. This happens occasionally, but it's nice when it does. It's good to see you in person.
Virginia's right next to D.C. You got a lot of you got one hundred and forty four thousand federal employees and it rises to over three hundred thousand if you do commuters going going into D.C. You some of your comments here remind me of W of what number was he? But George W. Compassionate conservative. You're in favor of Doge, but you point out it wasn't federal workers fault that this happened. And you'd like to ease the transition or even solve their problems if possible.
Yeah, a lot of it has to do with the first reality that running $37.5 trillion of debt and adding $2 trillion to it every year is not just unsustainable, but I think it's to the detriment of the future of the country. And so this has to happen. We need to rein in spending and reestablish fiscal reality back into the federal government.
And with that, yes, there will be job losses. And Virginia has a lot of federal employees and a lot of contractors. And I expect we'll see job losses. We haven't seen them yet, really. Our first-time claims have been really steady over the course of the last few months.
But I do expect we will see job losses. We are insulated a bit because the disproportionate amount of jobs in Virginia are defense and national security and intelligence jobs. But with that said, I expect we'll see job losses. Now, my dad lost his job twice when I was growing up, Joe. And this is wildly disruptive and terrible for families.
And so what I'm trying to do is help find a path for folks when they lose their job. And Virginia's been roaring economically. I mean, we were blessed last summer to be named CNBC's top state for business. We've had record investment, $100 billion in the last three years. We have 250,000 open jobs posted that are unfilled.
And so there's a great opportunity for folks to find a new opportunity, new job, new career. And so we're working hard to use those open jobs and, of course, support from the private sector and from the government to help people transition from a job loss in the federal government to a job opportunity in the private sector. There's a way to do this without paying people to dig holes or some type of planned...
economy like China, these jobs are open already in the private sector. Open jobs, ready to go. So how do you help people? How do you transition people into those? So the first thing we've done is make it very clear that Virginia has jobs, lots of them. And we set up a website that has them listed on it. So if you live in Northern Virginia and you're experiencing job disruption, you can go to virginiahasjobs.com
and you can find over 100,000 open jobs in Northern Virginia. And these are good jobs. Listen, they're not perfect matches. And so they're high paying, good jobs that will require someone to possibly get some retraining or reskilling, or go into a new field. But they're really good jobs. We also provide a pathway for folks to make sure that they can apply for unemployment. Our unemployment trust fund is at record levels at a billion and a half dollars.
And there's all kinds of support systems for resumes and interviews and everything else. And so the moral of the story is that just like my dad did when I was growing up twice, is you find new opportunities and you go. And I want to make sure people know those opportunities are available and ready to go. I mean, this would be a model, if you can pull this off, of how to do things. How many private sector employees, they make money, they get taxed,
those taxes go to pay for a federal employee. It's like you need 10 private sector employees. I don't know how many you need to pay for one federal employee. So if you could convert federal employees into private sector employees, their tax dollars can pay for the remaining federal employees that we have without running a deficit. It's a great transition for folks to get in the private sector. And I can tell you from the last three years in Virginia where we were bottom third in job growth and now we've gone to...
top three, five, 10 every year in job growth. We're seeing record surpluses in our budgets. We're able to use those surpluses to reduce taxes and invest in education and law enforcement and other investments in business development. And it is a wonderful cycle, but it has to start with job growth.
Virginia's got jobs and listen, America's got jobs. And the bottom line is what I think President Trump has been saying over and over again is let's reshore manufacturing. Let's reinvigorate the middle class. Let's create job opportunities. We're seeing it in Virginia. I will say our economic development pipeline has never been more full where I'm getting calls almost every day from multinational corporations who are saying, hey, we want to invest in the United States. Can we come to Virginia? And
We're competing like crazy. We're in the SEC of economic development. Listen, I compete against Tennessee and North Carolina and South Carolina, Georgia, Florida, and Texas all the time. We're winning our fair share and, in fact, more than we ever have won before. But this is about creating jobs and opportunity, and particularly in the middle class, where we're seeing the most job growth in Virginia. It's exciting. It's an exciting opportunity. And from a position of strength,
with record surpluses, record reserves, and record job growth, we can take on the dislocation and provide this pathway for folks. What kind of impact are you hearing from businesses about the tariffs, either on their businesses in the U.S., where they have to import certain things either into your state, or you were saying people want to come to your state and manufacture, but how much of this, I mean,
At least what we keep hearing is a sort of state of paralysis from a lot of the big multinationals about what to do next. There's a sort of game chicken. Do I come back to the U.S.? Do I invest somewhere else? Do I wait to figure out what the tariffs are really going to look like? What is the message that you're hearing on the other end of the phone? So I'm not seeing paralysis. What we're seeing in our economic development activities is big moves. And
That's from Fortune 50 and Fortune 100 companies. That's for businesses not in the United States that want to be in the United States. And so our economic development pipeline is as full as it's ever been. And you're a former Carlyle man. You talk to the banks, they would tell you the IPO pipeline dried up. The M&A pipeline slowed down. I mean, they will tell you, and this is why Jamie Dimon and others have suggested there could be a recession in the offing. Why do you think that those numbers, at least on a national or global level,
are different than what's going on in Virginia. - All right, so big difference between pricing an IPO in a week where the stock market's going like this and making 20 year investments to build someplace. And so what we're seeing is the long-term investment and the confidence in the long-term investment.
which I think is reflective of the words we keep hearing out of President Trump, which is, listen, there's a dislocation in the near term. There's long-term opportunity. And that's why we're seeing big footprints being put down. I mean, you just saw it yesterday. NVIDIA says they're going to invest $500 billion in the United States. You see life science companies like Eli Lilly and Johnson & Johnson investing tens of billions.
And that is reflective of a perspective of long-term versus short-term. Just to put some context on it, because we just had an analyst on, a semiconductor analyst, and it's interesting. You know, you look at what NVIDIA announced, but the truth is Taiwan Semiconductor, which
announced they were building a plant in arizona hopefully was going to be building chips in that plant already you always wanted to get orders and now they have more orders from nvidia but it's not like uh... somehow this is a it's or not so i'm not going to be your plans they're right they've already announced their bill is by the by the way they were building those plants and i think this is what i could have a little bit glee
because of the chips hacks that came in the last administration. I always say that because sometimes we're reading these press releases and it's- It's a way of sort of, you know, poo-pooing any success currently. But I would ask it in a different way. Don't, as a Carlisle guy, don't you think the rollout, I mean, I know he's an impulsive individual, President Trump. You wouldn't run Carlisle
probably making decisions the same way we've seen the tariff roll out. Could you at least acknowledge it's been hard to know what's coming next? And it might have been a little seat of the pants or herky-jerky or something? If I can, I'm going to get that two seconds. I just want to comment here really quickly, which is first, we are seeing new increase of scale post-January 20th.
And we're seeing those inquiries come from companies that are making specific decisions to invest in the United States. OK, that puts that to rest now. Because they just know that long term there will be no tariffs in the United States. And of course, the market, I mean, listen, we're a 30 trillion dollar economy. We're the biggest market in the world. And the president has been clear that there will be some level of tariffs. Yeah.
And so folks are coming. And that's good for Virginia. We have tailwinds in that whole investment cycle. And again, once when you have a lot of clarity on the end result of what the tariffs are going to look like, though, Governor. Yeah, well, I firmly believe what the president has done is create negotiating room. I think there will be some level of tariffs. He's been very clear about that. You hear it from him all the time. You know, his favorite word is tariff. Andrew's point, it's tough for people to plan when you don't know what's... And he's going to have some level of tariffs. And then I do think that it is...
the consistent predictability of President Trump, that in fact he creates room for negotiations and he's created room. And now 75 countries, at least according to everybody in the administration, are negotiating
I expect they will cut deals. I don't know who they're going to cut it with first, but you can see it. You can see a deal with India over ag and India's trade barriers. You can see a deal with Japan. You can see a deal with South Korea. You can see a deal with Europe. And these kinds of trade deals are what Americans are expecting. That's what they voted for. And they're going to reset this trade relationship, which has had decades of imbalance. Yeah, I have people. We've got to reset it.
telling me that that's not what they voted for. They voted for a border and they voted for deregulation. They didn't vote for tariffs. I think they knew all along. He's been saying this for 40 years. He's been talking about tariffs. I mean, listen, his economic plan was clearly expressed. One, reset trade balances. And that's what he's doing.
Two, to make sure that we're reshoring manufacturing and reestablishing the hollowed out middle class. Three, to reestablish fiscal responsibility in Washington. Four, to make sure that deregulation is in place. America is the best place to do business in the world. And five, to establish energy dominance again. Let's hit the fiscal responsibility question because we're going to have a budget that Mike Johnson is going to try to press through.
There was a sort of ordering effect. I think some people thought, OK, try to figure out the tariffs to the extent that you can therefore then map out reoccurring revenue from tariffs, which then you'd be able to map onto this budget. So if you want to take remove taxes on tips or things like that, you'd be able to offset some of these costs because you know about other revenue.
Now that the tariff question is pushed out 90 days, there seems to be a new version of this, which is let's just do the budget before we know the tariff story. And maybe we'll either make up the numbers from the tariff piece or we'll just pretend that there is no money. I don't even know. And I feel like one of the things you're seeing in the bond market is an anxiety about just how fiscally responsible we ultimately are going to be. How do you see that?
Well, let me just begin. The bond market seemed to be very comfortable with $2 trillion a year deficits. And so I think the bond market last week and the last 10 days was reacting to the wild swings in the stock market. And that's just the reality. I think the bond market's going to
calm down materially and will continue to be the backbone of american investments and that the 10-year has re-stabilized and i do expect that the 10-year will come down a bit over time i think secretary besant has been very clear about his focus on bringing down the 10-year uh and that will underpin housing investment and housing purchases but you want to bring it you want to bring it down for the right reasons not the wrong reasons well i think that's i think that's what will happen right now with regards to what's happening in congress listen i'm a governor
Right. And what we do in Virginia is balance our budget every year. And we've been able to run surplus after surplus after surplus. And the key ingredients to that have been job growth. Core to it has been job growth and has been constrained spending that we can afford. And I think this is where they're going to land.
There will be some level of tariff. I think the president's been incredibly clear, but you hear it from him all the time. His favorite words are tariff. And I think there will be some level of tariff. The difference between what the House and the Senate are going to project for tariffs and what they're going to project for growth and what they're going to have to reduce in spending, that's what's going to happen in reconciliation. I do expect we'll get a budget deal out of them. And I think it'll be a budget deal that calms the markets once again. When do you think that happens?
if you were to put that on a calendar? I think it's going to have everything to do with when the debt ceiling has to be raised, and that deadline will drive their progress. They're really committed to getting this done, and we've watched both the president and leadership in the House and the Senate come together and drive outcomes. And here we are sitting here with
A bill that started in the House and then came back from the Senate and got passed again in the House. They're going to go to reconciliation. They're going to figure this out. And I think that along with deals cut with nations around tariffs, some clarity on what's going to happen with the budget. I think Chairman Powell is going to have some work to do in May and June to be very clear about what's going to happen from the Federal Reserve.
And you can really see a pathway here. Listen, this is a this is a period, as the president has said over and over, of disruption and resetting what has been decades of unfair trade practices, running massive deficits at the federal government level and needing to reset those. And once again, reshoring manufacturing and rebuilding a hollowed out middle class. Virginia is for.
For lovers or for workers? Are you changing that? Well, we are for job lovers is what we're for. Virginia is for job lovers. Is that still the slogan? Virginia is for lovers? Virginia is for lovers. It gives us great flexibility. We can be wine lovers. We can be job lovers. Good to be flexible. We can love lots of things. Right now, we're loving jobs. Virginia is for workers. Workers. Love work. How's that? Love work. They do. Governor.
Good to have you on. They're screaming that you got to go, you got to go. And I go, well, Keith won't talk. I mean, you had a lot to say, right? I love being with you all. I've been with you in lots of different chapters in my life. And I just really appreciate being with you. And I think one of the things that I've recognized in this new chapter, which is just the most rewarding I've ever had in my career, I feel more purposeful than I've ever felt, is that
the experience that i had in the business world translates directly into government yeah and how do we think about building an economy how do we think about balancing budgets how do we think about critical investments in economic development but also in education and law enforcement
making sure that we're creating not just a state, but hopefully a country that will, in fact, thrive. We've seen it in Virginia. It works. And once again, Virginians are really appreciating what we're doing. Even people that didn't vote for me like what we're doing. And I think that's the job of a governor. And I'm glad that we've had the opportunity to serve this past three years. Governor, thanks. I've mailed, you know, Youngkin in 2018. A lot of people have said it. I didn't realize this. The biggest company in Virginia is Freddie Mac.
Apparently by revenue. I got a note about this, so I'm very curious. Well, at some point, come on back, because I'm curious what you think should happen to Freddie Mac. Yeah, I would argue, just remember that revenues for companies like that are a bit deceiving. It's like Exxon. They have gross oil prices and net oil prices. And so one of the things we are seeing is massive investments, particularly in the data center and AI world in Virginia, where the largest data center market by a factor of four. Oh, you drive down 80. It's just...
And we're seeing tons of data center movement in Virginia, which is really exciting. Thank you. Awesome. Thank you very much.
Coming up next on SquawkPod, how tariffs on pharmaceuticals could affect our health system. Dr. Scott Gottlieb, former FDA commissioner and board member at Pfizer and Illumina, says his fear is that companies simply stop making drugs when costs go up. 70% of all key starting materials that you mentioned are made in China. A lot of those are sent to India where they're finished into active pharmaceutical ingredient and then pressed into pills. And those pills are imported into the U.S. That whole supply chain is going to be hard to move to the U.S.,
Heparin, amoxicillin, hydrocortisone. How much of our medicine cabinets rely on imports from overseas? We'll be right back.
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the trump administration meanwhile is investigating uh pharmaceutical imports citing national security concerns joining us now dr scott gottlieb former fda commissioner and a cnbc contributor he's also a pfizer and illumina a board member and a lot of the things that that you talk about here scott i don't know if everyone knows this but just about 70 percent you note
of the key ingredients, the key chemical substances that are used, they all originate in China. That's troubling. Yeah, that's right. I think when we look at the pharmaceuticals coming into the United States, first of all, we have to start the discussion with fully 50 percent of all the drugs consumed in the United States are manufactured here. There's about 300 registered facilities that manufacture drugs. Fully 10 percent of all the drugs that we consume are manufactured here.
are manufactured in Puerto Rico. For the other 50 percent, the vast majority of the economic value comes from drugs imported from Europe. So of the $235 billion trade deficit we have with Europe, about 40 percent of that is drugs. Fifty billion alone comes from Ireland. So a lot of drugs for branded drugs have been moved into Ireland because of the tax advantages of manufacturing there. Those are the branded drugs. When the president talks about the national security concerns,
By and large, I think what he's talking about isn't the fact that Lilly's manufacturing some of its weight loss drug in Ireland. He's talking about the fact that we rely on China for things like antibiotics and basic generic medicines that are important, that in many cases, life-saving medicines. Heparin, hydrocortisone, 40% of the heparin used in the United States is made in China. Largely all the moxicillin that's used in the United States is made in China as well.
Those are generic drugs. And I fear that if the president places tariffs on those drugs, we're not just going to see prices increase. We're going to see companies stop manufacturing them because the margins of those drugs are very slim. And whereas the branded companies can shift manufacturing into the United States, they can absorb some of the increase on a temporary basis. They
They can advance, manufacture some of their API and freeze it to buy themselves some time. There's things that they can do. They're not going to get out of the market of making a $100,000 a year drug. When it comes to the generic medicines, they don't have a lot of cushion. And I think a lot of these generic manufacturers are going to get out of these markets if tariffs are imposed on them. And then we're going to have drug shortages here. So the very problem they're trying to solve, which is the national security issue related to this 232 issue,
provision that they're trying to use is the one that's going to be the least amenable to using this tool. And that's what I fear is going to happen. This was a discussion we had in the last Trump administration when the issue of tariffs on drugs first came up. So you can, there are things we could do. I don't know, do you
Do you hold off on the tariffs and start expediting all the things that you said to turn us into a domestic manufacturer of all this stuff? You do that first? You think it would be counterproductive to sort of force the issue by using tariffs?
Yeah, look, I think the president has an opportunity to strike a sort of grand bargain with the industry, particularly the branded industry. When you look at the branded companies that are manufacturing those high margin products over in Ireland, they would be willing to bring a lot of that manufacturing back to the U.S. And in fact, you've seen Lilly and Novartis make announcements in
in recent weeks that they're bringing a substantial portion of that manufacturing back because, quite frankly, the tax advantage of manufacturing in Ireland isn't that substantial relative to bringing your manufacturing back to the U.S. and having more control over it. It's easier to hire labor here. The two biggest inputs in manufacturing are the labor costs and the energy costs. Energy is cheaper here.
So the increased benefit they get from moving it to Ireland because of the tax treatment, it isn't fully offset by those other advantages, but it's an offset enough that they'd be willing to do it. But they need expedited approvals, not just from FDA, but environmental approvals as well. It takes three to five years to build a facility. They can retrofit some of their existing facilities in the meantime. But I think the president can get a deal with the branded drug industry to move a lot of that European based manufacturing back to the U.S.,
With respect to the China-based manufacturing and the India-based manufacturing, so the key starting materials, 70% of all key starting materials that you mentioned are made in China. A lot of those are sent to India where they're finished into active pharmaceutical ingredient and then pressed into pills. Then those pills are imported into the U.S.,
That whole supply chain is going to be hard to move to the U.S. without some kind of effort on the administration to reduce regulatory barriers, maybe provide some targeted subsidies to move that back, because those are very low margin products. In many cases, the generic companies lose money on those drugs. They're just supplying them because they're
their contracts, the hospitals that they contract with and others need them. And so they sell them at a loss in order to capture other business. That's not going to come back so easily. And it's certainly not going to come back from tariffs. So the very thing they're trying to do with this Section 232 provision, which is a national security provision, which is to try to address this supply chain that's moved to China. Most of that supply chain are these generic drugs products.
And they're just going to get out of the market, I fear, if the tariffs are imposed on them. So they need to bifurcate this and treat the European issue separate from the China issue. Both require a different solution. The European issue is largely a trade deficit issue. The China issue is a national security issue, but it's not going to be amenable to the same remedies that they're trying to impose on the European issue. The one that you can use the national security, the one you can use it on, tariffs would be counterproductive.
Exactly. And also the one, well, the one that they would want to use it on, which is the China supply chain, the tariffs are very counterproductive. The one that they can use it on where the market can absorb it, and I think the companies would be amenable to try to work with the administration to bring manufacturing back, it probably doesn't apply. I mean, they're going to get litigated. It's a stretch to say that in Ireland that... Making drugs...
Making drugs in Ireland, exactly, is, you know, especially when we're talking about Greenland being a closer partner. Ireland's a pretty close partner. And I'm not too concerned about drugs being made there as a national security issue. All right. Well, this is like a catch-22. And tariffs are, you know, each time it's different and it can either maybe be good, but it could be counterproductive. Dr. Gottlieb, thanks.
Good day, Rihanna. He just, when he goes, just starts talking with us. It's amazing. It's pretty smart. I know. And thank you, Kelly Evans. Thank you for having me. For hanging out all this time. Tomorrow and Friday we're off. That's right. Good week to do it.
And that is the pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Follow Squawk Pod wherever you get your podcasts. We'll meet you right back here tomorrow. All right, clear. Thanks, guys.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world. U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.