Reporter 1 (00:01):
With these new tariffs on semiconductors, the president yesterday said there would be some flexibility for different industries or different specific products. Do you think iPhones would be included in that as an exception?
Kevin Hassett (00:14):
The specifics of the 232 law are very well-known and you should maybe bring in some legal experts to explain them. But 232 is an action that allows us to put tariff on things for national security. And so the example I like to use is if you have a cannon but you're getting the cannonballs from an adversary, then if there were to be some kind of action, then you might run out of cannonballs, might not be a good thing, and so you can put a tariff on the cannonballs.
(00:38)
And so in the 232 action, the courts upheld over and over the US's right to protect America by putting tariff on things that affect national security. And so there isn't any change in anything, it's just this question of when you say is this affecting national security or not, that there are experts, legal officials, technical experts that decide what is and what isn't, and that's a progress that happens a little bit over time when these actions are announced. But in the end, it's not a question of exemption or not, but covered or not. The covered or not is a technical and legal matter.
Reporter 1 (01:11):
Do you think, though-
Reporter 2 (01:11):
Kevin do you have [inaudible 00:01:12].
Reporter 1 (01:12):
But just to clarify on that.
Kevin Hassett (01:12):
[inaudible 00:01:13].
Reporter 1 (01:13):
Would iPhones, for example, be something that would be covered, and that as a national security…
Kevin Hassett (01:17):
I'm the Ph.D. economist, so the specific matters go to the tech experts, to the legal experts of the president.
Reporter 2 (01:23):
A question on China, they're limiting exports of rare earth minerals. Are you concerned about that? What kind of impact do you think it could have on America?
Kevin Hassett (01:31):
The rare earth limits are being studied very carefully and they're concerning and we're thinking about all the options right now.
Reporter 2 (01:37):
They're concerning how? And what options are you considering?
Kevin Hassett (01:39):
The rare earths are a part of lots of the economy. It's a little bit of the value add to the US economy, but a crucial part of the value add.
(01:46)
Yes?
Reporter 3 (01:46):
Kevin, there are thousands of small and medium-sized American businesses that rely on Chinese exports. How is the White House recommending that they stay afloat if they suddenly have to pay 145% more to get their goods out of port?
Kevin Hassett (02:02):
The secretary of commerce in particular has a massive team of people and also the small business administrator that are taking calls of small businesses, understanding their concerns and thinking about how best to address them, including by finding other suppliers that are not on the current list that China is on.
Reporter 3 (02:20):
They say that they have tried to move their production out of China, but that's a process that takes six months, maybe a year.
Kevin Hassett (02:25):
It could.
Reporter 3 (02:25):
What do they do until then?
Kevin Hassett (02:26):
It depends on which product and that's why they're different experts helping the people.
Reporter 4 (02:29):
Kevin, do you feel like there's been mixed messages coming from the administration from announcing the exemptions, to now saying there will be tariffs announced on semiconductors sometime this week? Do you feel like there is mixed messages from the White House right now?
Kevin Hassett (02:42):
I don't think so. I think that the team members and the president haven't been surprised by news, but I think that because of the normal development of things, like when you say we're covering this and then the technical staff has to come out and say, "Well, what exactly is this?" If you have a semiconductor that is a toaster with a semiconductor, a national security matter or not, there are people that have processes to decide those things and those are ongoing. And that's been the case for trade practice, for trade law for as long as I've been in Washington, which is 40 years or so.
Reporter 4 (03:07):
And the president has said he isn't worried about allies getting closer to China, but right now China's president is meeting in with leaders in Vietnam, Spain has said that they would like to potentially grow closer to China. Should the White House be concerned that this is pushing our allies closer to China?
Kevin Hassett (03:25):
The White House is concerned about China, period. Yeah.
Reporter 5 (03:28):
Kevin, can I ask Citi Group downgraded [inaudible 00:03:30] US equities this morning and flashed the S&P 500 Index target. Do you have a reaction to that?
Kevin Hassett (03:37):
Just before I came in, equities were up a lot. I think the equilibrium policies of the president are going to be very, very good for the country and for equities. If you think about it, we've got a massive tax bill that includes both individual side things for workers and lots of corporate things that would be a positive price shock for markets when realized if there's uncertainty about the tax bills. The de-reg is really good for companies, it cuts all this regulatory red tape that they have to spend money on is so odd. And so I don't see how in the long run, a year from now, that the policies that we're looking at are viewed as anything other than a big positive for equity markets.
(04:12)
Yeah, over here.
Reporter 6 (04:12):
Kevin, just for clarity, for people that are seeing this back and forth between these on and off again tariffs, will there be any exemptions on any electronics?
Kevin Hassett (04:20):
What we're talking about is coverage and so what's going to be covered. And pretty much everything's going to be covered, the question is which law applies. And so if there's something that has a national security effect on things, so if we buy it from some other country, then we might be unprepared in time of war if they were to turn off that thing, then that's going to be in a 232 bucket. But then we've got the reciprocal bucket, which is kind of most everything else. And so I think that it all has been very carefully designed and makes a good deal of sense.
(04:51)
I've got a last question, guys, but I'll let you go.
Reporter 7 (04:54):
Can you give us an example of what could be…
Kevin Hassett (04:57):
Two questions.
Reporter 7 (04:57):
… reshored quickly? Sorry about that.
Kevin Hassett (04:59):
Mm-hmm.
Reporter 7 (05:00):
Can you give us an example of what should be, could be reshored quickly under these tariffs and this whole policy?
Kevin Hassett (05:07):
Sure. One of the things that is being reshored amazingly quickly right now is auto production. Auto production capacity utilization was at about 60% a couple of months ago and they're adding extra shifts now to make the autos in the US just as the president suggested.
(05:23)
Last question.
Reporter 8 (05:24):
Thank you so much. Spanish Prime Minister visited China last week with the Spanish media, and he got a lot of criticism from the administration, facing consequences after the visit, and the economy minister is coming here tomorrow to visit Secretary Bessent.
Kevin Hassett (05:42):
That'll be a foreign policy question for the president, but I'm just a economic policy guy. So I don't get engaged in things like foreign policy discussions with prime ministers.
(05:51)
So thank you very much guys. Thank you. Have a good one.
Reporter 6 (05:54):
Thank you.
