White House economic advisor Peter Navarro debates Chinese and Mexican tariffs with CNN's Jim Scuitto and explains what the nations need to do. Navarro said Mexico must do more to prevent illegal immigration from Guatemala and from letting those who get through to bribe their way to the U.S. border.
"Here's the way this works. China bears most of the burden of the tariffs. What happens when we put the tariffs on is China is forced to lower their prices, they have fewer exports, lower profits," Navarro said.
"The Chinese government itself experiences lower tax revenues, a slower rate of growth, a higher unemployment rate and foreign direct investment flows out of China," he said. "Now, we have seen virtually zero impact on price inflation after putting $250 billion worth of tariffs on China. So this whole idea that somehow the American consumer is bearing that is nonsense."
Transcript, via CNN:
JIM SCIUTTO, CNN HOST: I'd like to discuss now with Peter Navarro; he's a senior Trump policy adviser, focusing on trade. Peter, thanks for taking the time this morning.
PETER NAVARRO, SENIOR TRUMP POLICY ADVISER: Good to see you, Jim.
SCIUTTO: So, let's begin there on Capitol Hill, you heard our colleague talking about Republican senators furious at the tariff plan to be implemented on Monday by the president. I wonder, should Americans expect the president to relent on this or will he go forward?
NAVARRO: Jim, I think the starting point for the conversation has to be the conveyor belt that we now have in Mexico running from the southern border with Guatemala up to El Paso and San Diego. We've got over a 100,000 illegal immigrants at any given day now moving up on that conveyor belt.
In April, we apprehended 109,000 illegal entries coming across the border. Now, this illegal immigration imposes billions of dollars of costs on the American economy and society. These immigrants come up across the border and those costs are -- and our schools and our hospitals --
SCIUTTO: OK --
NAVARRO: They take away jobs. So this is -- every -- I think every American understands that this is an emergency and a surge. And the question is, what do we do about it? Congress has not acted --
SCIUTTO: Well --
NAVARRO: And Mexico has not acted. So the president is now acting. The question is will the --
SCIUTTO: That will --
NAVARRO: American people support him and --
SCIUTTO: That --
NAVARRO: Let's talk about what we want.
SCIUTTO: To be fair, not every American because of course a majority of the Senate even with many Republicans rejected the national emergency declaration. But I want to get to the costs here because I get that there is -- there is an issue, a major issue at the border, but let's talk about the cost.
Ted Cruz who supported the president on the wall according to "New York Times", he called the proposal -- proposed tariffs a $30 billion tax increase on Texans. The Koch Brothers, conservative group of course, they are calling the tariffs the largest tax hike in modern history.
As you know, the president often claims that Mexico will be paying these tariffs when you and I know and Republicans know that, in fact, American consumers and businesses --
NAVARRO: So hang on, let me stop you right there --
SCIUTTO: Pay those. Does the president -- but let me ask the question --
NAVARRO: When you say -- hang on, hang on --
SCIUTTO: Does the president know who pays the tariffs?
NAVARRO: Hang on, when you --
SCIUTTO: Does he know?
NAVARRO: When you say you and I know, I don't know that at all. Here is what I know. When we had the same discussion -- hang on, hang on --
SCIUTTO: Ted Cruz and the Koch Brothers say it's a tax on Americans businesses.
NAVARRO: The Koch Brothers? Come on now. Let's talk about this discussion and who bears the burden of these tariffs. We had the same discussion with the China tariffs. Everybody is trying to claim that somehow American consumers bear that burden, that's exactly wrong. China --
SCIUTTO: How is -- how is that wrong?
NAVARRO: Hang on --
SCIUTTO: American companies --
SCIUTTO: Have to pay --
SCIUTTO: The tariffs --
SCIUTTO: On the goods they import --
NAVARRO: Let me explain --
SCIUTTO: And they pass those costs on the consumers --
NAVARRO: Let me explain, you want a --
SCIUTTO: It's not a discussion.
NAVARRO: You want to let me explain this?
SCIUTTO: Absolutely, but the facts are facts --
NAVARRO: All right, give me a minute here without interrupting me, Jim, OK? Here's the way this works. China bears most of the burden of the tariffs. What happens when we put the tariffs on is China is forced to lower their prices, they have fewer exports, lower profits.
The Chinese government itself experiences lower tax revenues, a slower rate of growth, a higher unemployment rate and foreign direct investment flows out of China. Now, we have seen virtually zero impact on price inflation after putting $250 billion worth of tariffs on China. So this whole idea that somehow the American consumer is bearing that is nonsense. What the American public --
SCIUTTO: Well, but Peter --
NAVARRO: Hang on, Jim --
SCIUTTO: I get the --
NAVARRO: What the American public is bearing -- but the cost --
SCIUTTO: I've let you make your point. I do, I let you make your point, but I have to challenge -- I have to challenge you calling it nonsense --
NAVARRO: Sure --
SCIUTTO: Because, yes, and I will brief you that it has --
NAVARRO: It is nonsense --
SCIUTTO: It has costs on China because of course China doesn't like having tariffs, mix their product -- makes their products more expensive, they have to adjust if they want to keep sales at the same level.
SCIUTTO: But it's not nonsense to say that importers pay tariffs. We've been interviewing them every day, they say they're paying them. We had -- we had an importer from Texas yesterday talking about 50 percent, 60 percent increases on his prices because the products move back and forth across the border multiple times, and you have to pay tariffs multiple times.
So it may be true that producers have not yet passed those costs on to consumers, but it is American producers who are paying the tariffs and at some point --
NAVARRO: So Jim --
SCIUTTO: They've got to do it. So how is that nonsense?
NAVARRO: You're filibustering here. The fact is, you said American consumers are bearing the burden, that's just -- it's just wrong. China has borne the vast majority of this burden. If -- look, if they could just pass the tariffs on to America, they wouldn't protest. And if Mexico could just pass the tariffs on, they wouldn't protest them. Here is the reality, America is really bearing the costs of both the
China economic aggression that is -- that is stealing our intellectual property to the tune of several hundred billion dollars a year. And in the Mexican case, look, Jim, we have a crisis here, a national emergency of unprecedented proportions. You cannot have 100,000 people on any given day moving on a conveyor belt driven by narco traffickers and human traffickers, making billions of dollars off the American public.
They come across the border, they crowd our schools, they crowd our hospitals, the crime rate goes up, they drive the wages down of people in our cities and yet, they tend to be African-American and Hispanics at the lower end of the income stream. It's simply not fair.
So what this president --
SCIUTTO: OK --
NAVARRO: Is doing is taking a stand on this, he wants the Mexican --
SCIUTTO: Well --
NAVARRO: Government to respond. We should talk to them --
SCIUTTO: I get it --
NAVARRO: About what we want from the Mexicans. Do you want to know that?
SCIUTTO: The president agreed -- the president clearly taking a stand here. I'm just going to -- I've got to ask you because it's not nonsense. We've had -- we've had the producers --
NAVARRO: It is nonsense --
SCIUTTO: Come on the air --
NAVARRO: It's a simple problem --
SCIUTTO: Are they lying when they say --
NAVARRO: It's a simple problem --
SCIUTTO: Are American producers lying when they say they're paying for the tariffs. Are they lying?
NAVARRO: It's a simple problem in what's called tax instance analysis in economics. The question of who bears --
SCIUTTO: Yes --
NAVARRO: The burden of a tariff or a tax? And what I'm telling you, Jim, is that --
SCIUTTO: Are these American producers in Texas lying when they say they're paying the tariffs? NAVARRO: American consumers are not bearing the burden of the China
tariffs for example. We're seeing -- look, we had this same conversation a year ago when everybody's hair was on fire, saying that consumer prices were going to go up because we were putting a tariff on China. Didn't happen. China bore the burden of that. Devalued their currency, they lowered their prices and --
SCIUTTO: What are you doing when you're relying on American companies not to pass those costs on?
NAVARRO: Pardon me?
SCIUTTO: You're relying on American companies not to pass the costs on to consumers. American companies --
NAVARRO: Oh --
SCIUTTO: They're paying the tariffs or their profit margins are smaller --
NAVARRO: This is determined -- it's determined by market conditions. If you want to get technical, the elasticity of supply and demand --
SCIUTTO: Last thing, technical.
NAVARRO: But here's the point, Jim --
SCIUTTO: It's pretty straightforward.
NAVARRO: Look, this is not an argument that we should be having. The real argument should be about the costs that illegal immigration imposes upon the United States of America, and the fact that neither Congress or the Mexican government had lifted a finger to do anything about it.
And that the president has a very few options because Congress refuses to act. This -- in my judgment, this is a brilliant strategic move to get the Mexicans to internalize some of the costs. Right now --
NAVARRO: The Mexican government makes money off illegal immigration. After the tariffs are put in place, the Mexican government will bear a cost of that. We believe that these tariffs may not have to go into effect precisely because we have the Mexicans' attention, Vice President Pence will be meeting with them today --
SCIUTTO: Fair enough --
NAVARRO: Secretary of State Pompeo and Ambassador Robert Lighthizer. So, I think --
SCIUTTO: Let's set aside the facts for a moment --
NAVARRO: Let's stay calm and look at the chess board here. We have to solve this crisis, do we agree on that, Jim? Do we agree on that? SCIUTTO: Listen, I --
NAVARRO: Is this a crisis?
SCIUTTO: Well, maybe, you have --
NAVARRO: If we can't agree on that --
SCIUTTO: Lawmakers who don't agree it's a national emergency --
NAVARRO: Then it's difficult --
SCIUTTO: Issue now, the question -- we've interviewed -- I've interviewed the chief of the Customs and Border Patrol many times who describes it as crisis.
NAVARRO: But Jim --
SCIUTTO: But I believe it -- I believe it when she says that --
NAVARRO: Do you believe that this is a crisis? Do you believe that there are a 100,000 illegal immigrants trying to get into the United States moving through Mexico right now, is that a fact or a factor?
SCIUTTO: Listen, the numbers speak for themselves. And if we can agree on --
NAVARRO: OK --
SCIUTTO: First principles --
NAVARRO: That's unacceptable. I don't care whether you're on the left --
SCIUTTO: Will you grant --
NAVARRO: On the right or in the middle, that's not acceptable --
SCIUTTO: Will you grant the fact --
NAVARRO: To the American people and this president is going to do something about it, full stop.
SCIUTTO: I actually grant the numbers, we report the increasing numbers of illegal --
NAVARRO: How to control --
SCIUTTO: Undocumented asylum seekers --
NAVARRO: Last week on a Wednesday --
SCIUTTO: Coming across the border. Will you grant the fact --
NAVARRO: A thousand people walked over from Juarez, Mexico --
SCIUTTO: That tariffs are not paid by foreigners --
NAVARRO: To El Paso --
SCIUTTO: But they're paid by -- will you grant that fact? I mean, listen to the Koch Brothers, listen to Ted Cruz, will you grant that it's a fact that that's where --
NAVARRO: Yes --
SCIUTTO: The tariffs are paid.
NAVARRO: Jim, I'm just astonished that CNN would quote the Koch Brothers as a reliable source for any --
SCIUTTO: Not just the Koch Brothers --
NAVARRO: Koch Brothers have fought --
SCIUTTO: Ted Cruz --
NAVARRO: Everything that the left stands for --
SCIUTTO: A dozen manufacturers we're had on our air --
NAVARRO: And they've fought this president on trade ever since --
SCIUTTO: Economists --
NAVARRO: He declared for president --
SCIUTTO: Importers, business people in border states --
NAVARRO: Now, the Koch Brothers? Is this CNN source? Come on, Jim. Come on --
SCIUTTO: You watched CNN, Peter, we've had dozens --
NAVARRO: No, I'm just saying --
SCIUTTO: Of producers come on the air and say we pay the tariffs.
NAVARRO: Let's not bring the Koch Brothers into this. Let's not bring the Koch Brothers into this.
SCIUTTO: Listen, you're meeting -- the White House is meeting with Mexican officials today. Is there something that Mexico could do between now and Monday that will prevent the president from imposing 5 percent tariffs.
NAVARRO: Absolutely. They can commit to taking all the asylum seekers and then applying Mexican laws which are much stronger than ours. Look, here is the thing. If the people who are moving up with scripts to claim asylum from their narco traffickers, human trafficker, handlers simply understood that, that script ain't going to work anymore getting into America, they're going to be in Mexico instead.
That 100,000 will go to a trickle in the 21 days it takes --
SCIUTTO: So there's a concession --
NAVARRO: For that message to get back.
SCIUTTO: Mexico can make today --
NAVARRO: If you think --
SCIUTTO: To prevent tariffs on Monday?
NAVARRO: Absolutely, that's the number one on my list. The other two things are, we have a 2,000-mile-plus border with Mexico, very hard to police. The southern border, however, Mexico has with Guatemala is only a 150 miles and better yet, it has --
SCIUTTO: Yes --
NAVARRO: Both natural and artificial choke points where it is really easy to police. So a strong commitment from the Mexican government to put resources down there and I'm sure this government will help them in any way possible, that's number two.
And number three, look, there's a bunch of check points that go from the southern to the northern border. Those check points are designed to stop the flood, but instead it's the (INAUDIBLE), the bite, the corruption, the government officials who make money off this --
SCIUTTO: OK --
NAVARRO: Human trafficking, that has to stop. So the point here is prior to President Trump announcing the possible imposition of these tariffs, Mexico profited from illegal immigration --
SCIUTTO: OK --
NAVARRO: Both in the private sector --
SCIUTTO: So those three things --
NAVARRO: And in the public, yes sir --
SCIUTTO: If you see progress on that today, will we watch for it, Peter?
NAVARRO: That's it, that's what we're looking for, Jim, that's what we're looking for --
SCIUTTO: Let's keep up the conversation --
NAVARRO: The acting Department of Homeland Security Secretary made that very clear the first day these were announced, and this is not unreasonable --
SCIUTTO: Right --
NAVARRO: Jim, we're asking Mexico to put in --