MarketWatch's Rob Schroeder helps us break down what is happening with tariffs implemented by the Trump admin., plus what Canada and Mexico have promised.
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00:00Perhaps the art of the deal needs a follow-up to include the art of minor
00:04concessions. 25 percent tariffs on our neighbors to the north and south delayed
00:09before they ever took effect. What did President Trump gain and what happens in
00:1430 days? Market Watch Washington Bureau Chief Rob Schroeder with us now. Good to
00:19see you my friend. So let's just go in order here through our neighbors and
00:23we'll start with Mexico. What exactly happened there and what do you expect to
00:28play out in 30 days? Yeah good morning Dave. It's been quite a wild ride over
00:34these past few days. Volatility is something I think that we're getting
00:38used to all over again. You know as as soon as these this tariff threat went
00:43through they did strike a deal. Mexico said they would put more troops on the
00:49southern border. This is something that President Trump had sought to curb the
00:54flow of migrants and and fentanyl into the U.S. and they paused for one month
01:00the the tariffs that were going to affect into effect on Mexican goods. The
01:06same with Canada as we saw just a few hours later. That's a 2,000 mile border
01:13between the U.S. and Mexico. How exactly we're going to know if 10,000 additional
01:18troops have been sent there? Anyone's guess. All right so what happened with
01:22Canada? It seems like much more minor concessions on their behalf when it
01:27seemed like they were further apart on a deal. Yes similarly a 30-day pause
01:33measures related to the border. This is something that President Trump has
01:38reiterated again and again that doesn't necessarily have to do with purely
01:45economic themes. He's asking both the U.S. rather the the U.S.'s southern and
01:52northern neighbors here Mexico and Canada to do things to stop these these
01:57flows of drugs migrants and so on. So we're seeing a new a kind of a new
02:02chapter here in his use of tariffs as a weapon to sort of extract non-economic
02:10consequences or non-economic policies. It's a little different with China. They
02:15did go into effect there which we can talk about more as well. Please yeah what
02:20is the status with the 10% tariff on goods imported to China? That's right so
02:2610% on Chinese goods across the board. This is this is something that took in
02:32that went into effect this morning after midnight. China did retaliate on on
02:37targeted U.S. goods. The latest we hear from the White House is that a call
02:43between President Trump and President Xi is in the works. It's being arranged.
02:48President Trump did say yesterday that the U.S. and China would be talking but
02:53it was unclear at what level. But it seems that that's in the works for the
02:57two leaders to speak. Of course they knew each other the last time around. They
03:01they will be talking I would assume many times this time around. So this is more
03:07of an economic situation involving trade deficits and and the like. So I
03:13expect a pretty aggressive stance towards China here in the coming weeks
03:18months and maybe even years. China's finance ministry says 15%
03:25tariffs on coal and liquefied natural gas imports but yeah relatively minor at
03:30this point. Be interesting to see what they do regarding Tesla which would
03:33certainly get the president's attention. So with Canada and Mexico what's the
03:38lesson here? The Wall Street Journal who called this the dumbest trade war with
03:42Rupert Murdoch in the Oval Office mind you today says Trump blinked. Did he bluff?
03:50It's an interesting strategy to go right up until the 11th hour and ask for these
03:58things. I don't know who was bluffing who was blinking and so on but I do think
04:03that he President Trump did get results of some kind in the form of and the
04:10Canadians and the Mexicans mind you would probably say the same thing.
04:14They're talking about talking once again and the threat of tariffs is off for now.
04:20Certainly these tariffs would have hurt Canada and Mexico not to mention the US.
04:26So I don't know that it's early or too early to declare winners and losers. We
04:32do have another month to go here. I would expect though that these kinds of
04:37deadlines keep occurring, keep getting put on the calendar, keep getting
04:43renegotiated. I don't doubt that the tariffs would be used as we see in the
04:49case of China but remember with Canada and Mexico you're talking about what
04:54used to be NAFTA what's now the USMCA. It's an enormous free trade zone that
04:59was negotiated in during the 90s and so this is something that has enormous
05:04effects here for American consumers, Mexican consumers, Canadian consumers so
05:09there's a lot at stake and I would expect some pretty intense negotiations.
05:13Yeah I mean these are our allies and these are trade agreements that have
05:16benefited the United States for decades in particular the consumers who are
05:21paying lower prices on just about everything. I just can't help but wonder
05:27what does say the EU learn because he has threatened the EU. Is there someone
05:31you think inside the administration whether it's Scott Besant or whether
05:34it's the stock market that began to waver with these tariffs that kind of
05:38pulled the president back from the edge? Yeah on on Sunday night we saw futures
05:45down quite a bit as the tariffs were expected to go into place or let's say
05:50scheduled to go into place. The Dow for example opened up much lower on on
05:55Monday morning but by the end of the day when it seemed that both Canada and
06:01Mexico the tariffs would be coming off it did pull back it closed down I think
06:07about a hundred or so points but not nearly the you know 600 plus point drop
06:12that that they were looking at. Now President Trump I don't think is going
06:16to say that he's he's doing these kinds of things solely for the the market or
06:22solely for investors. He wants to as all presidents do he'll say that he wants to
06:27be presidents for all American a president for all Americans but it that
06:32can't help but be in the the consciousness of the White House when
06:36they see a lot of red on Wall Street. He does have Scott Besant there at his side
06:42someone who by the way has been let's say skeptical about tariffs and has
06:49advocated for a sort of you know start small and then go bigger approach. So I
06:54think he's got lots of people whispering in his ears about the the varying
06:59effects of this and and he knows the consequences of this kind of economic
07:04punishment. Okay so on other fronts about 60 days until tick-tock is banned yet
07:09again the president still searching for a deal there and as he searches for that
07:14creating a sovereign wealth fund at least he says they're going to but where
07:19is that money going to come from? How could that be used with tick-tock? Yeah
07:25that's right and this one has proved to be a bit of a head-scratcher because
07:29sovereign wealth funds are typically managed by countries with budget
07:34surpluses which is certainly not something that the US has in in many
07:38given years. You can look back but deficits are more the norm than
07:42surpluses in recent US history. So there's a lot of questions around this
07:47they did talk about setting it up within the next 12 months but there's also
07:52conflicts of conflict of interest questions as well. You know it's unclear
07:57where where the money would come from what it would be used for if a kind of
08:01you know tick-tock would be a sort of project in there that could be included
08:06and and how that would work. At this point really if I think there's more
08:10questions than answers about this and I don't know that Congress would
08:15necessarily go along with this. He did sign the order yesterday but some of
08:19these orders I think as we've discussed can be exploratory or aspirational and
08:24and right now as I said more questions than answers. If anyone has a few minutes
08:30I highly recommend listen to the president's incoherent babbling about
08:33what a sovereign wealth fund would be and would do for the United States. It
08:37made absolutely zero sense and I've listened to it about 17 times. In
08:43particular sovereign wealth funds of our companies with surpluses. We run a
08:46massive deficit so we have nothing to fund it but we don't have time for all
08:52this. The final question is the current status of USAID and the role of Elon
08:58Musk probably the biggest story in Washington this morning. Where are we?
09:02That's right. There have been protests in front of USAID down the street from
09:09where I'm sitting. Members of Congress from you know being quite up in arms
09:14about that what he wants to do. It's being folded into another department.
09:20This I think it bears repeating and reminding viewers who who may not read
09:28about this every day. U.S. foreign aid is a very small part of the overall
09:34federal budget which is really taken up by Medicare, Medicaid, military spending
09:39and so on. But I think that Elon Musk is is taking a fine-toothed comb to you
09:45know pretty much any department that he can. Foreign aid is not always popular. So
09:51as of yesterday I believe on Monday the headquarter building here in Washington
09:57was closed and employees were told to work from home and they are going
10:02through that and looking for I think in their words what what suits American
10:06interests. So that is that is certainly in great flux right now and I believe
10:12it's going to be under the purview of the State Department and may cease to
10:15exist as an independent agency unless there is a legal challenge which I
10:20fully expect that there will be. There will be dozens. Is there any check on
10:25Musk's power? Does he have the legal right? Does he have congressional
10:29authority to make the changes that he is? He now has basically the keys to the
10:34castle to see inside the sensitive Treasury Department payments plan. Yeah
10:41that's a question Dave that's going to be tested multiple times here as as we
10:46as we go forward with the Trump administration. Certainly he's not the
10:50only let's call him a bureaucrat for for the sake of terminology. He's not
10:55the only unelected bureaucrat to do something that but perhaps on the scale
11:01that he's doing, it's unprecedented. You know, Democrats in Congress are
11:05calling this a constitutional crisis. Some of the things that he's trying to
11:09do and and I think challenges will be fast and furious to it and and we'll
11:14find out one way or another if he can in fact do what he's doing. Some of it
11:21may be reversed retroactively. Some may stand. But yes, as you said, it's
11:25probably one of the biggest stories right now in Washington. It has been a
11:29wild couple of weeks as always. Washington Bureau Chief for Market
11:34Watch Rob Schroeder. Appreciate your time, sir. You'll stay busy. Thank you.