Markets tumbled this week after the White House announced a new round of tariffs on imported consumer goods from China. White House trade adviser Peter Navarro joined Chris Wallace on 'Fox News Sunday' to make the case for why they tariffs are needed.
Full transcript via FOX News:
PETER NAVARRO, WHITE HOUSE TRADE ADVISER: Good morning, Chris. How are you, sir?
WALLACE: Let's start with the basics. Who pays the tariffs? Here's what the president said this week.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Until such time as there is a deal, we will be taxing the hell out of China. That's all there is, OK?
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WALLACE: But, Peter, that's just not true. American importers pay the tariffs when Chinese imports into this country, go through customs. They pay the tariffs and sometimes they pass them on to American consumers. True?
NAVARRO: False, Chris. What we've seen clearly is that China has strategically gamed the tariffs by slashing their prices and by devaluing their currency. Since the tariffs were put in place back in 2018, the Chinese yuan fell by almost 10 percent. So they have offset virtually all of these tariffs and the consumers are not seeing any price hikes in any significant way and it's not showing up in the data. We have care inflation at 1.5 percent, well below the Fed target. So the answer to that is false. We could have a bigger question about whether tariffs in general might cause a rise in consumer prices, but not in this case. And you notice that people cheered when the president said get tough on China. I'm looking at Capitol Hill right there. It's one of the few things we have a bipartisan consensus on, sir.
WALLACE: But, Peter, the -- the industries that make these goods say that because of the president's tariffs, that the price of consumer goods goes up to customers. I want to put up a couple of statistics.
The Consumer Technology Association says with this new round of tariffs, which are going to be overwhelmingly on consumer goods, not things that -- like steel or whatever that -- that would be parts of products created by American manufacturers, the price of laptops and tablets will rise $50 to $120. Smartphones will cost $70 more.
The Tax Foundations as a typical family of four is paying $850 a year more already for the current Trump tariffs and will pay another $350 more for these new -- this new round of tariffs.
You can argue that the pain is worth it to straighten out our very bad trade relationship with China, but you listen to those statistics, it doesn't seem like you can say that there's no pain, sir.
NAVARRO: Chris, if you and I were sitting here over a year ago when the tariffs were put in place, you'd be saying the exact same things, quoting the exact same people. These people who are putting out this information are the same multinational corporations that have shipped off our jobs to China, we've lost over 70,000 factories to China, over 5 million manufacturing jobs. I'm just telling you, we're not seeing this in the data.
China devalued their currency over the -- over -- since we put the tariffs in place by almost 10 percent. We're talking about putting 10 percent tariffs on the remaining $300 billion of goods. We're just getting back to where we were before China started manipulating their currency. So --
WALLACE: So you're saying that the Tax Foundation, that the Consumer --
NAVARRO: I'm saying that --
WALLACE: The Consumer Technology Association are lying?
NAVARRO: I'm saying that they said the same kinds of things, these same groups said the same kinds of things when the tariffs began. We're just not seeing it, Chris.
But you do raise a good point. Let's suppose that their arguments are right. What are we willing to pay for the Chinese to stop hacking our computers to steal our trade secrets? What are we willing to pay for them to have stopping stealing our intellectual property, forcing technology transfer? And I'll tell you the reason. There's a number of reasons why the president decided to take the action he did. He has always had the door open to negotiations, but when we don't see reusable progress, when they renege on the deal and when they don't keep their promises -- they promise -- they promised, Chris, to stop putting fentanyl in our communities. By the end of this week, over 1,000 people are going to die from made in China fentanyl. The president says that's not acceptable. And the president says that China can't keep taking this apart. And, yes, he's taken swift and decisive actions, hasn't seen any, in terms of consumer price impacts, and, guess what, the people are behind him. Within hours, Chuck Schumer came out and supported the tariffs.
WALLACE: Well, in fairness, Chuck Schumer has been a hardliner on China for a long time.
Let me get back, if I --
NAVARRO: He's not the only Democrat, though, Chris.
WALLACE: Let -- I understand.
NAVARRO: And 80 --
WALLACE: Let me get back, if I can --
WALLACE: To this question of prices, because, you know, I don't know who would -- well, as I -- I know Patrick Moynihan has said, everybody's entitled to their own opinion --
WALLACE: They're not entitled to their own facts. And, again, the ex --
NAVARRO: Show me the facts, Chris.
WALLACE: I -- all right. Well, I thought I had. I'm -- I'm --
NAVARRO: You show me press releases and you show me predictions that haven't been true since we put tariffs in place.
WALLACE: OK. May -- would you give me a chance to show you.
Fed Chairman Jay Powell said 26 times on Wednesday that one of the reasons that he was cutting interest rates, 26 times he said is because of our trade difficulties with China. Here he is.
(BEGIN VIDEO CLIP)
JEROME POWELL, CHAIRMAN, FEDERAL RESERVE: We also feel like weak global growth and trade tensions are having an effect on the U.S. economy. You see it now in second quarter. You see weak investment. You see weak manufacturing.
(END VIDEO CLIP)
WALLACE: Goldman Sachs reported in May the cost of U.S. tariffs have fallen entirely on U.S. businesses and households with no clear reduction in the prices charged by Chinese exporters.
And here's your -- here's your --
NAVARRO: You going to give me a chance here to respondent?
WALLACE: I -- I -- I am.
NAVARRO: I mean let -- let me -- you're throwing the Fed out --
WALLACE: I'm trying -- but, wait a minute, let me --
NAVARRO: And you're throwing Goldman Sachs out.
WALLACE: I understand why you would want to interrupt. Let me simply -- put up the number.
WALLACE: Put up -- put that up again, please, Robin. Thank you.
Look at this chart from the Trump Labor Department. That shaded area is the period of time since the president, in early 2018, started imposing tariffs. The yellow line shows that the consumer price of tariff goods has risen dramatically since the president started imposing them. The blue line, which is non-tariff goods, the cost of them has fallen. That's the Trump Labor Department, Peter --
NAVARRO: So --
WALLACE: Saying, on a macro and micro level, that tariffs cause consumer prices to rise.
NAVARRO: So let's take them one at a time and do me the courtesy of not interrupting me.
Let start with the Federal Reserve.
I find it ironic that Jay Powell of the Fed would come on and blame trade tensions when, in fact, Jay Powell is singularly responsible for losing at least a point of growth on the GDP by raising interest rates by 100 basis points and engaging in what's called quantitative tightening. He cost us over a point of growth. And here's why. Higher interest rates suppress investment directly and they indirectly suppress exports --
NAVARRO: By raising the currency.
WALLACE: I -- I'm going to -- I'm going to move you along because I -- I took one sentence to talk about Jay Powell.
Goldman Sachs, what's your response to that?
NAVARRO: My point with -- look, the Fed is the single greatest obstacle right now to strong growth in America. We had a 25 percent basis point cut.
NAVARRO: And we had an end --
WALLACE: I -- I -- I - -you know, we can talk about the Fed. I'd rather talk about tariffs.
NAVARRO: Goldman Sachs. You want to talk -- you want to talk about Goldman Sachs?
WALLACE: No, I'd actually like -- I'd like to talk --
NAVARRO: Let's do Goldman Sachs. Now, let's -- let's be clear about Goldman Sachs, Goldman Sachs is the Wall Street firm that has been responsible for helping the export of millions and millions of manufacturing jobs off American soil.
WALLACE: And what about Trump Labor Department?
NAVARRO: And -- and Goldman Sachs helped shut down over 70,000 factories.
I haven't seen that Labor Department data. I'll go look at it. But what I can tell you is, all the data I've seen says that there's no appreciable --
WALLACE: Well, that's your own Trump Labor Department, sir.
NAVARRO: It's not mine, it's the Department of Labor and your stats. I'll look at them.
But my point here, Chris --
WALLACE: It's the -- it's -- it's the Trump administration.
NAVARRO: Yes, sir, but --
WALLACE: All right, I've got a little -- I've got a couple of minutes left. I'd like --
NAVARRO: But my point --
WALLACE: Can I move on?
NAVARRO: Sure, you can.
WALLACE: Oh, OK.
NAVARRO: But -- but I'm not --
WALLACE: What do you think are the chances that China will keep this trade war going until after the 2020 election to see who's elected?
NAVARRO: I think what's important now, Chris, is that we continue to negotiating process. Bob Lighthizer, Steve Mnuchin went to Shanghai. We were planning on having the Chinese come in September. I think the best thing to do is negotiate behind closed doors and not get caught up in the hype.
WALLACE: What do they have to do to -- obviously the reason -- wait, let me just finish -- the reason that they -- the president announced this new round of tariffs is because there was no progress in Shanghai. What do they have to do to get the tariffs eliminated?
NAVARRO: The seven deadly sins here basically. It's stop stealing our intellectual property, stop forcing technology transfer, stop hacking our computers to steal our trade secrets, stop dumping into our markets and putting our companies out of business, stop their state owned enterprises from heavy subsidies, stop the fentanyl, stop the currency manipulation. These are all structural changes.
WALLACE: So one last question and -- and we've got about a minute left and I --
NAVARRO: You would agree that those are harmful to this economy and those -- that needs to stop.
WALLACE: I would absolutely agree. I -- I would absolutely agree.
NAVARRO: So then the question is, how much, as a consumer, would you be willing to pay tomorrow to have that stopped if there were consumer impacts?
WALLACE: My only question to you, sir --
NAVARRO: No, no, we --
WALLACE: No, no, no, I'm answering -- I'm --
NAVARRO: That's -- that's a reasonable question to ask.
WALLACE: I understand.
First of all, I get to ask the questions --
NAVARRO: How much would you pay?
WALLACE: The point is you're saying I don't have to pay anything, that I -- that it's a free lunch and I don't believe it is a free lunch.
NAVARRO: But -- but -- but sure we're saying --
WALLACE: I believe, in fact, there is a cost to it --
NAVARRO: We're sitting here in -- we're sitting here -- we're sitting here and --
WALLACE: And maybe we would have a better discussion if we discussed what -- what the real cost is.
NAVARRO: We're sitting here in a 10 minute interview and you spend nine minutes on consumer price index and you let the Chinese get a free lunch basically on all the kinds of economic aggression they engage in. What I'm telling you is --
WALLACE: So let me ask you one last question in the 30 seconds I have left.
WALLACE: Given the fact, particularly fentanyl, and I'm particularly sensitive to that, that the president, President Xi, said to his face and Osaka, we're going to stop the shipment of fentanyl that kills Americans, and they didn't. Why does the president keep calling President Xi such a good man and a good friend?
NAVARRO: Because he values the relationships he has with world leaders and he believes that through those relationships we'll get to have better negotiation.
WALLACE: Even somebody that's allowing goods to come through, drugs to come through that kill Americans?
NAVARRO: So you can go down that route. President Trump values has relationships with world leaders around the world. He views that as an important way to have negotiations. But the bigger issue here is China. And we have bipartisan support for our China policy. The American public supports this president. I hope we can rise above partisan politics on this and also do things like pass the U.S.-Mexico-Canada agreement.
WALLACE: OK. But -- but we will talk about that another time. It's always interesting to have you here. Always spirited. Come back and we'll discuss the rest of the trade relationship.
NAVARRO: I'm glad you're such a -- I'm glad you're such a comparison shopper.
WALLACE: Comparison shopper? I'm not sure I --
NAVARRO: Yes, on prices.
WALLACE: Oh, OK. Well, good. I just think --
NAVARRO: Does somebody do your shopping for you, Chris?
WALLACE: When there's a price that -- that -- that is paid --
WALLACE: Let's talk about it and let's not pretend there's no price.
NAVARRO: Just -- just trying to leave -- just trying to leave on a light note and --
NAVARRO: China's paying the burden of the tariff war.