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NEIL: ALL RIGHT, YOU KNOW,
BOOMERS ARE UPSET ABOUT THIS
TARIFF TALK.
SO YOU MILLENNIALS ARE ARE LIKE,
WHO CARES?
LIZZIE McDONALD HERE, CHARLIE
BRADY, CHARLIE GASPARINO AND
STEVE LOEB.
AS A BOOMER, STEVE, ARE YOU
WORRIED?
>> I'M, LIKE, FLUMMOXED.
WHAT --
NEIL: NO BIG WORDS HERE.
[LAUGHTER]
>> I'M SORRY.
I MEAN, I CAN'T BELIEVE IT.
I MEAN, CHINA, YES --
>> CHINA!
>> IT'S DONE SO MANY THINGS
WRONG, AND THEY'RE EATING OUR
LUNCH.
BUT WE DON'T ATTACK OUR FRIENDS
BECAUSE OF THIS.
I MEAN, BASICALLY --
NEIL: CANADA IS ONE THAT'S GOING
TO GET HURT.
>> CANADA'S GOING TO GET HURT,
EUROPE'S GOING TO GET HURT.
IF HE WANTS TO GO AFTER CHINA,
FOR GOODNESS SAKES --
NEIL: ISN'T THAT HIS POINT, THAT
WE'VE BEEN LETTING THIS RIDE FOR
TOO LONG AND WE'VE GOT TO DO
SOMETHING?
>> YES, FAIR TRADE, RECIPROCAL
TAX.
I'M JUST SURPRISED HOW THEY DID
IT.
IT CAME OUT VIA LEAK --
>> WHEN BUSH TRIED IN 2002 --
>> IT BACKFIRED.
>> THE WTO SAID $2 BILLION IN
SANCTIONS ON THE U.S., AND THEN
HE PULLED IT BACK.
NEIL: DEMOCRATS DIDN'T THINK IT
WENT FAR ENOUGH, THE
REPUBLICANS --
>> THE E.U. WENT TO THE WORLD
TRADE ORGANIZATION AND GOT $2
BILLION IN SANCTIONS AGAINST THE
U.S --
>> LOOK AT THE RECORD OF THE
REAGAN TARIFFS THAT TRUMP ALWAYS
TOUTS.
>> RIGHT.
>> NOT SO GREAT.
I MEAN, AUTOMOBILE SALES WENT
DOWN, PRICES WENT UP.
THEY STILL LOST, THEY STILL LOST
JOBS IN THE CONCERN.
NEIL: BUT I THINK THE ONE HE'S
REFERRING TO IS HOW REAGAN WENT
AFTER THE JAPANESE ON DUMPING
CHIPS.
THAT DID GET --
>> YEAH --
[INAUDIBLE CONVERSATIONS]
SOLAR PANELS ARE OKAY TO GO
AFTER TOO, BUT WHAT HAPPENED
WITH BUSH, LIZZIE, YOU'RE RIGHT.
THERE WAS, YOU KNOW, A FINE
IMPOSED BY THE WTO, BUT ALSO
WHAT THE CHINESE DID, THE
CHINESE HAVE AN ELECTORAL MAP.
I'M CONVINCED EVERY CHINESE
KNOWS WHICH STATES TRUMP WON.
SO WHAT ARE THE CHINESE GOING TO
RETALIATE?
ON SOMETHING CALLED SORGHUM.
I DON'T EVEN KNOW WHAT IT IS,
BUT IT'S A VITAL PRODUCT MANY
TEXAS, KANSAS AND STATES THAT
WENT MORE TRUMP.
IT'S NOT --
NEIL: I HAVE NO IDEA WHAT YOU'RE
TALKING ABOUT, BUT YOU'RE SAYING
THERE'S GOING TO BE --
>> I'M SORRY.
NEIL: NO, NO, A TIT FOR TAT
RESPONSE.
>> YEAH, THAT IS THE PROBLEM.
>> CARVEOUT TOSS GET AROUND
SOMETHING --
NEIL: OKAY.
WHAT DO YOU THINK?
>> LIZ REFERRED TO THE TIMING OF
IT, AND IT ACTUALLY SHOULD GET
THE BAD TIMES AWARD BECAUSE THE
MARKETS WERE ALREADY ON EDGE --
NEIL: BUT HE DOUBLED DOWN ON IT
THIS MORNING, CHARLIE, THAT
TRADE WARS ARE EASY TO WIN.
>> WHY ARE THEY EASY TO WIN?
NEIL: I DON'T KNOW WHERE HE GOT
THAT.
>> I DON'T EITHER.
GO AHEAD, CHARLIE.
>> THE LAST TRADE WAR THAT I CAN
REMEMBER WAS RIGHT BEFORE THE
GREAT DEPRESSION.
[LAUGHTER]
SMOOT HOLLY.
THAT'S THE LAST TRADE WAR, AND
IT WAS REALLY BAD.
NEIL: WELL, THERE WAS OUR TRADE
WAR TO GET YOU OVER HERE, AND WE
SWAPPED A PLAYER --
[LAUGHTER]
OH, THAT'S DIFFERENT.
>> BUT, YOU KNOW, HERE'S THE ONE
THING I THINK THE MARKETS ARE
WORRIED ABOUT RIGHT NOW, THAT
PRESIDENT TRUMP JUST DOESN'T GET
BASIC ECONOMICS.
YOU REMEMBER DURING THE
CAMPAIGN --
>> I AGREE.
>> JUST LET ME MAKE THIS POINT.
DURING THE CAMPAIGN HE MADE SOME
CRAZY REMARKS, BUT ONE THING
THAT -- NOW, IF HE SAID THIS
NOW, IT WOULD REALLY DESTROY THE
MARKETS.
HE SAID HE WOULD RENEGOTIATE THE
DEBT IF IT GOT OUT OF HAND.
NOW, YOU COULD DO THAT WITH THE
TRUMKA SEE KNOWS THAT ARE
JUNK -- TRUMP CASINOS THAT ARE
JUNK BONDS, AND I THINK MARKETS
ARE STARTING TO LOOK BACK AND
SAY, YOU KNOW, THIS GUY HAS SOME
WEIRD ECONOMIC THEORIES --
NEIL: BUT IN THE AGGREGATE, THEY
LIKE HIS MESSAGE.
THEY LIKE THE CUT DOWN IN
REGULATIONS, THEY LIKE THE TAX
CUTS, RIGHT?
>> RIGHT, THAT'S ALL GOOD.
NEIL: BUT HE STEPPED ON THAT --
>> RIGHT, EXACTLY.
>> SO MUCH SUCCESS RIGHT NOW
YOU'VE GOT CONSUMER CONFIDENCE
AT A TEN-YEAR HIGH,
MANUFACTURING ACTIVITY HIT A
14-YEAR HIGH YESTERDAY, WE FOUND
OUT.
THE MARKETS ARE UP --
NEIL: SO WE SHOULD ALL --
>> THEN HE COMES OUT WITH THIS
COMPLETE DUD OF TARIFFS THAT YO
PUN LIKES.
>> THE OIL AND ENERGY SECTORS
ARE EVEN NOW SAYING THIS'LL KILL
JOBS.
EXXON IS MOBILE MAY DIAL BACK
EXPANDING A REFINERY IN
BEAUMONT, TEXAS --
NEIL: ELECTROLUX IS CUTTING BACK
ON AN INVESTMENT --
[INAUDIBLE CONVERSATIONS]
>> AS LONG AS HE GOES AFTER
NAFTA.
SEE, THAT'S THE WHOLE THING.
>> THAT'S SCARY.
>> IF HE GOES TIT FOR TAT ON
TARIFFS, IT MAY BE BAD, AND ALL
THAT STUFF YOU SAID OBVIOUSLY
TRUE, BUT SUPPOSE HE INDULGES
HIS INNER PROTECTIONIST WHICH
APPEARS HE IS, LISTENING TO
WILBUR AND THAT OTHER LOONY
TUNE, NAVARRO, AND GOES AFTER
NAFTA.
THAT WOULD BE CATASTROPHIC.
>> QUICKLY, NEIL, THE OTHER
THING TOO IS THIS IS SHORT-TERM
GAIN FOR POSSIBLE LONG-TERM
PAIN.
AND WE'VE ALWAYS TALKED ABOUT
HOW TRADE WARS CAN LEAD TO
SHOOTING WARS.
WE'RE IN A NEW WORLD OF CYBER
WARS.
I MEAN, YOU NEVER KNOW HOW A
COUNTRY'S GOING TO RETALIATE,
AND TO BROOD IT ABOUT SO LOUDLY
LIKE THIS AND JUST HAVE --
TO IT, THOUGH, THE WORLD WORRIED
ABOUT WALKING ON EGG SHELLS AND
ALL, BUT AT LEAST HE'S -- IT'S
ABOUT PEOPLE --
>> NEIL, I MEAN, I COME BACK TO
IT.
ONE OF THE MOST SURPRISING
THINGS I LEARNED, AND IT WAS
FAIRLY RECENTLY BECAUSE I'VE
STUDIED CHINA, AND I THOUGHT I
KNEW A LOT ABOUT IT.
WHAT THEY EXPORT TO US, MUCH
MORE THAN STEEL, MUCH MORE THAN
ANYTHING ELSE ARE ELECTRONIC
PRODUCTS.
AND THAT'S --
NEIL: DIDN'T THE PRESIDENT SAY
BEFORE HE BECAME PRESIDENT THAT
THESE GUYS NEED US A LOT MORE
THAN WE NEED THEM, AND LET'S
PROVE IT?
>> YES, EXACTLY.
>> THEY NEED US TO BUY THEIR
PRODUCTS.
NEIL: WHAT'S WRONG WITH GETTING,
WHAT'S WRONG WITH GETTING A
LITTLE MORE CHUTZPAH HERE?
>> WELL, BE HE TARGETED -- I
THINK LIZ MENTIONED, WHAT WAS
THE WORD, RECIPROCAL TAX.
THAT'S A LITTLE MORE OF A
REFINED SCALPEL AS OPPOSED TO A
BLUNT INSTRUMENT WHICH IS
TARIFFS.
NEIL PEOPLE UNDERSTAND BLUNT
INSTRUMENTS.
THEY UNDERSTAND.
>> TRUMP IS A BLUNT INSTRUMENT.
THERE IS NOTHING HE WANTS --
[LAUGHTER]
NEIL: PARDON ME, KETTLE.
[LAUGHTER]
>> DON'T I HAVE BETTER HAIR THAN
HIM?
NEIL: NO.
ALL RIGHT.
SO WHERE'S THIS GOING, GUYS?
[LAUGHTER]
YOU KNOW, A LOT OF PEOPLE LOOK
AT THIS AND SAY, YOU KNOW, MAYBE
IT'S ANOTHER EXCUSE MORE PEOPLE
TO SELL.
YOU KNOW, WE'VE COME BACK, I
THINK, 70% OF THE LOSSES AND NOW
WE'RE BACK, RIGHT?
WHAT DO YOU THINK?
>> NO, I THINK THIS IS JUST
ANOTHER HICCUP IN THE MARKET.
WE'VE SEEN CORPORATE PROFITS
ROSE 15% LAST QUARTER FROM A
YEAR AGO.
THAT'S A RECORD.
NEIL: YOU THINK IT'S STILL
SOLID, THE MARKET ITSELF?
>> I THINK IT IS, BUT WE DON'T
HAVE THE DETAILS WHAT EXACTLY
HE'S GOING TO DO WITH THESE
TARIFFS.
NEIL: I THINK HE'S WAITING TO
SEE WHAT THEY DO IN RESPONSE.
>> ALREADY THERE'S MASSIVE
RESPONSE COMING OUT FROM THE
E.U., CHINA'S THREATENING, YOU
KNOW --
>> 3.5 BILLION FROM THE E.U.
>> PEOPLE ARE GETTING UPSET
ABOUT THIS, WE GO INTO THE
WEEKEND WITH THIS --
NEIL: WHAT DID YOU GUYS THINK OF
WILBUR ROSS WHEN I SAW HIM WITH
YOUR COLLEAGUE AND FRIEND,
STUART VARNEY, AND YOU KNOW
WHERE HE WAS GOING.
WORRIED ABOUT THE COST OF A CAN
OF SOUP.
BY THE WAY, AS IF HE HAS EVER
GONE TO THE STORE TO BUY A CAN
OF CAMPBELLS SOUP, THAT'S FINE.
[LAUGHTER]
I THOUGHT IT WAS IDIOTIC.
>> THE POINT IS BRING ON THE
KEYSTONE PIPELINE --
NEIL: RIGHT.
OR STAND BY A SKYSCRAPER OR A
CAR.
>> HOW ABOUT A CAR?
YOU KNOW, THIS IS GOING TO RAISE
PRICES OF AUTOMOBILES.
I MEAN, HERE'S THE OTHER THING
THAT I THINK, LISTEN, THE
ECONOMY'S FUNDAMENTALLY FINE.
WE GOT ALL THAT.
THIS MOIL IS REAL PROBLEMATIC --
THIS POLICY IS REAL PROBLEMATIC
IF HE DOES -- OH, JEEZ, IS THAT
WILBUR?
NEIL: YEAH.
THAT SOLD IT FOR ME.
[LAUGHTER]
>> NOW I'M FOR THE POLICY.
IF HE GOES ALL THE WAY TO NAFTA,
I MEAN, LET'S SEE HOW FAR HE
GOES --
>> I THINK CHARLIE'S TOTALLY
RIGHT.
NAFTA WOULD BE A VERY BIG DEAL.
>> THEY'RE APPROACHING IT LIKE A
ZERO SUM GAME.
>> YES.
>> AND IT'S NOT A ZERO SUM --
NEIL: BUT IF YOU'RE TOYOTA --
THE I'M SORRY.
IF YOU'RE TOYOTA AND YOU'RE
UPSET ABOUT THIS AND THEY ARE,
AND IT'S GOING TO ADD A LOT TO
THE COST OF A CAR AND THEY HAVE
PLANTS HERE IN THE UNITED
STATES, WOULD THEY GO SO FAR AS
TO RAISE THE COST OF THOSE CARS
TO THE DEGREE THEY POTENTIALLY
COULD, AND WOULD THEY EVEN GO
FURTHER THAN THAT AND SAY, YOU
KNOW ABOUT THAT ADDITIONAL
PLANT?
WE'RE NOT GOING TO DO IT.
>> YES.
BECAUSE WHEN YOU LOOK AT THE
PRICE ACTION ON THE TAPE AND
WATCH FORD GO DOWN PRACTICALLY
THE SAME, YOU CAN BET BOTTOM
DOLLAR THAT ALL OF THE CARMAKERS
AND THE INDUSTRIALISTS ARE
LOOKING AT THIS INTENTLY AND
SEEING --
NEIL: BUT EVEN'S LOOKING AT THE
STEEL OR LUMBAR NUMB AND --
ALUMINUM IN ALMOST ANY
PRODUCT --
>> UNLESS THEY CAN INCREASE
PRODUCTIVITY.
NEIL: SHOULD THE AMERICAN
CONSUMERS BE WORRIED ABOUT A
CORRECT HIT ON THEM ANYTIME
SOON?
>> YES.
>> THE ECONOMY CAN SLOW BECAUSE
OF THIS, NEIL, AND THAT WOULD
CAUSE HIRING TO SLOW.
NEIL: WHAT IF PURCHASES HAVE
NOTHING TO DO WITH THIS?
A TYPICAL BOX OF M AND Ms,
THERE IS NO STEEL OR ALUMINUM.
>> THE ECONOMY SLOWS DOWN --
[INAUDIBLE CONVERSATIONS]
>> LIZZIE WAS THE ONLY ONE THAT
GOT THAT.
>> THERE'S NO TRACES OF METAL IN
PUMPKIN SPICE?
NEIL: THERE MIGHT BE.
I THINK TO WILBUR ROSS'
BRILLIANT EXPLANATION, IT'S SO
TINY THAT YOU WOULDN'T EVEN
NOTICE IT.
>> THEN WHY ARE THEY DOING IT?
>> HOW ABOUT THE MASSIVE
MACHINES THAT MAKE THE COVERING
FOR IT?
I MEAN, STEEL'S PRETTY
PERVASIVE.
>> HERE'S A BEARISH WAY OF
LOOKING AT IT.
WE'RE GETTING SOME HIGHER
INTEREST RATES, WE'RE WORRIED
ABOUT INFLATION.
WE ARE ACTUALLY WORRIED ABOUT
BUDGET DEFICITS GROWING OUT, AND
ON SO TOP OF THAT HE GETS INTO A
TRADE WAR, THOSE ARE SORT OF THE
THINGS THAT GENERALLY CAN HURT
CONSUMERS, HURT THE ECONOMY,
HURT THE MARKET --
>> AND UNDO THE TAX CUT BENEFIT.
NEIL: THAT'S WHAT I WAS GOING TO
END WITH, JUST THAT.
>> A TRADE WAR WOULD DEFINITELY
OFFSET THAT AND UNDO IT
COMPLETELY.
NO ONE WINS IN A TRADE WAR.
>> JUST BASED ON THIS
CONVERSATION, I THINK THE
CHANCES OF THESE TARIFFS GOING
THROUGH ARE MAYBE 1 IN 100.
I THINK HE WILL CHANGE HIS MIND.
LOOK, HE CHANGED HIS MIND TWICE
YESTERDAY --
>> UNIVERSAL BACKGROUND CHECKS
NOW TOO.
>> YOU'RE NOT GOING TO SEE THESE
TARIFFS, THAT'S MY PREDICTION.
I HOPE I'M RIGHT.
>> WE SHOULD BUY THIS.
>> I THINK SO, CHARLIE.
I DON'T HAVE THE NERVE TO DO IT,
BUT I THINK --
NEIL: ALL RIGHT.
WE'VE ALL GOT TO RUN AND SEE IF
THERE'S ANY STEEL, ANY ALUMINUM