Return to Transcripts main page

The Situation Room

Trump Trade War; Interview With Senior White House Office Trade and Manufacturing Adviser Peter Navarro. Aired 10:30a-11:00p ET

Aired March 05, 2025 - 10:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[10:30:00]

(BEGIN VIDEO CLIP)

HOWARD LUTNICK, U.S. COMMERCE SECRETARY: When I leave here, I'm going to go talk about it with him. And I think, early this afternoon or this afternoon, we expect to make an announcement.

And my thinking is, it's going to be somewhere in the middle, so not 100 percent of all products and not none, somewhere in the middle, because I think Mexico and Canada are trying their best. And let's see where we end up. So I do think somewhere in the middle is a likely outcome.

(END VIDEO CLIP)

PAMELA BROWN, CNN HOST: I want to bring in CNN White House reporter Alayna Treene and business and politics correspondent Vanessa Yurkevich in New York.

Alayna, let's begin with you. What more can you tell us about this Trump-Trudeau phone call today?

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Well, look, Pamela, it's still unclear when exactly that is going to happen. But, of course, it comes after we heard some of the harshest language we have yet from the Canadian prime minister.

But one thing that I find just very interesting is, of course, what is actually -- what this tariff announcement that Howard Lutnick is referring to is actually going to look like. It seems like he is saying that they're going to keep that 25 percent blanket tariffs on Canada and Mexico, but there could be some new exemptions for automakers, perhaps, and other different products.

Now, one thing to keep in mind here is that I know from my conversations with White House officials that both they, but also the president himself have been closely monitoring what's going on with the stock market. If you look at the last two days, the Dow dropped about 1,300 points.

We also know that some -- Donald Trump is someone who is very much fixated on that, in addition to the overall state of the economy. Now, another key thing to keep in mind is what Howard Lutnick said in his phrasing of all of this. He called this a war, a drug war, not a trade war, basically a war on fentanyl.

Now, I asked National Security Adviser Michael Waltz about this because of that and said, what is going to happen with tariffs? It seems like there could be some sort of agreement that is reached today. Listen to what he told me.

(BEGIN VIDEO CLIP)

MIKE WALTZ, U.S. NATIONAL SECURITY ADVISER: We have seen incredible movement on the part of the Mexican government, but we need to see more on Canada. We're talking about additional border security, their border czar, cutting off fentanyl, but also things like Arctic security, northern bases, and other pieces that we need to see as part of this tariff negotiation.

So -- but I don't have anything to add in terms of the timing or what may or may not happen today.

(END VIDEO CLIP)

TREENE: So key words there from Waltz is that he called it a tariff negotiation. That is exactly how the president views this, Pamela, and views tariffs more broadly.

So it did seem like he was almost hinting that there could be something later today, but had no details. And, look, I do find it as well just very interesting that this does come after the president last night in that joint address to Congress really dug in on tariffs.

So it's very unclear what we could be seeing from any sort of announcement later today.

BROWN: We will wait and see.

Vanessa, the tariffs have rocked the U.S. markets in recent days, as allegedly was talking about. How are the markers responding right now?

VANESSA YURKEVICH, CNN BUSINESS CORRESPONDENT: Well, it's mixed. If you look at the Dow, that's up slightly, but the Nasdaq and S&P down slightly.

And I would say mixed is the right word because they're getting mixed messaging, as Alayna just noted. You heard from the president last night essentially saying that he might escalate the trade war. And then you heard from Howard Lutnick this morning saying that they could meet in the middle.

And he also talked about exemptions, exemptions for the auto industry. I want to see if we can bring up just the Big Three U.S. automakers and take a look at how they're doing. At last check, we saw -- there they go. We saw that this news from Howard Lutnick this morning that there could be an exemption from the auto industry actually boosted those stocks, GM, Ford and Stellantis.

But investors are also looking at the overall economy. Just this morning, we got a report from ADP -- that is the private sector payroll service -- that showed that private sector hiring was less than expected, 77,000 jobs added. Later, this week, on Friday, we're going to get that big government jobs report.

That is something that investors will be looking at also. But we know the president will be watching that very closely and his administration will be taking a look at what those job numbers show. Government positions, as we know, have been eliminated in recent weeks. That could show up in that key report on Friday, Pamela.

BROWN: All right, Vanessa Yurkevich, Alayna Treene, thank you so much -- Wolf.

WOLF BLITZER, CNN HOST: Important developments, indeed.

BROWN: Absolutely.

BLITZER: Up next, President Trump's senior counselor for trade and manufacturing, Peter Navarro, joins us live here in THE SITUATION ROOM. We will talk about those tariffs and possible exemptions.

(COMMERCIAL BREAK)

[10:38:59]

BLITZER: There's more breaking news we're following here in THE SITUATION ROOM.

President Trump and the Canadian prime minister, Justin Trudeau, are expected to speak this morning amid a growing trade war between the United States and Canada.

It's a crucial conversation, Pam.

BROWN: Yes, it is crucial. And it comes after President Trump's commerce secretary suggested that he could back off some of the tariffs on Canada and Mexico.

So let's talk about that.

Joining us now is President Trump's senior counselor for trade and manufacturing, Peter Navarro.

First off, I want to talk about...

PETER NAVARRO, SENIOR WHITE HOUSE OFFICE TRADE AND MANUFACTURING ADVISER: Hey, great to be on set. I just love your new set here, and congratulations on the morning show.

BROWN: Thank you very much. We appreciate that.

NAVARRO: Yes, ma'am.

BLITZER: Thank you.

BROWN: It's been -- we're in a few days in, and it's been a very newsy ride so far. BLITZER: We hope you will be a frequent visitor.

BROWN: We certainly do.

NAVARRO: Any time.

BLITZER: Thank you.

BROWN: So, speaking of newsy...

NAVARRO: Sure.

BROWN: ... of course, we're all waiting to see what's going to happen with these tariffs, what's going to happen with the call today between Trump and Trudeau? What can we expect to happen from that call? Do you expect a deal to be struck?

NAVARRO: Well, as the boss says, let's see what happens. It's really not my place to get ahead of the president on this.

[10:40:04]

What's interesting to me as I watched all your coverage this morning is that there was no discussion, for example, when you're talking about tariffs and inflation, that petroleum prices have fallen very significantly, and we have had mortgage rates fall very significantly, which are all part.

So, this is a big picture attack on inflation. And the other thing, and what I have done a really deep dive on, and I think your viewers would really benefit from understanding, as the secretary of commerce said today, it's a drug war.

And here's the issue, fentanyl. It's been called a slow-moving weapon of mass destruction. And it's -- I think it's the most insidious material that's ever been invented, because it's very low cost, it's highly addictive, and extremely potent.

(CROSSTALK)

NAVARRO: So here's the thing I think people don't really understand about this.

It's not just the fentanyl that kills directly. It's laced into methamphetamine, cocaine, and heroin. It's -- heroin's like five times more expensive. So they put it in there basically to up the high, increase the addiction.

But here's what people ought to know.

BROWN: Right, but I want to just follow up with you on this. Go ahead.

NAVARRO: But let me just say the other part...

BROWN: OK. NAVARRO: ... which is the buried lede. Ambien, Xanax, all these painkillers, Vicodin, these all now are being spiked, spiked with fentanyl.

The DEA, the Drug Enforcement Agency, got 80 million pills.

BROWN: OK, but I have to jump in here, because I have to...

NAVARRO: Sure. Jump in.

BROWN: And I want to let you speak, but I also...

NAVARRO: But I want to remind everybody why the president is doing this.

BROWN: No one thinks it's a good thing for fentanyl to cross the border.

NAVARRO: Over a million people have died from this, most of them prime age.

BROWN: No one wants fentanyl crossing the border.

NAVARRO: Right.

BROWN: That is true, but you heard what Justin Trudeau said.

NAVARRO: So let's always remember why the president is doing this.

BROWN: You heard...

NAVARRO: Sure.

BROWN: Well, Justin Trudeau, for his part, said, this isn't about fentanyl, that's a false pretext. Less than 1 percent of fentanyl crossing the border comes from Canada.

He said there was a 97 percent drop, according to the CBP, he said, from December to January because of what Canada has done to try to crack down on fentanyl.

NAVARRO: Do you want to know what I say to him?

I say to him that 12 pounds of fentanyl coming across the borders, which is what they got, is enough to kill three million Americans. I would say to Mr. Trudeau that he has allowed Mexican drug cartels to embed themselves across Canada, bring up their little pill presses, and manufacture these fake prescription drugs, which then find their way.

So, I think Mr. Trudeau, it would be really useful if he just toned stuff down. He's campaigning right now.

BROWN: So, why -- so you see this as a war on drugs, but what if the practical effect, as he says, is a trade war with our top trading partners? Because that is what he is saying this is leading to. NAVARRO: OK. Let's -- again, the rhetoric of the trade war, again, I

think what's really important for people to understand is why the president has embarked on a mission to restructure the way the trading world works.

The problem is that every country in the world which we trade with has higher tariffs and higher non-tariff barriers. And Canada is absolutely no exception to that. They stick it to us on lumber. They stick it to us on dairy. They stick it to us on a wide variety of products.

And the president will not tolerate that anymore. So I would just -- I watched the conference yesterday with Mr. Trudeau. He's calling the president dumb. He's calling him Donald, instead of respectfully the president. And we're all talking trade war. It's not about that.

BROWN: And what was the president's reaction to him saying that?

NAVARRO: I wasn't there when he was doing that. But I can...

BROWN: Do you know after what his reaction was?

NAVARRO: I do not.

BROWN: OK.

NAVARRO: And I don't -- I don't involve myself in that.

My job, Pamela, is to basically look at the chessboard, look at what the president is trying to do. And this fentanyl stuff, it's like -- it all comes from China, OK? In 2019, the president tweeted, President Xi promised to stop the fentanyl. He hasn't. OK, that was in 2019.

And, look, here's -- it is.

BROWN: Let me -- we talked about the fentanyl.

NAVARRO: It comes over on these Chinese ships.

BROWN: I just want to make sure...

NAVARRO: Do you know who own the ports in Mexico?

BROWN: OK, but I want to keep the conversation -- because we did talk about fentanyl at length.

NAVARRO: Sure.

BROWN: And no one wants fentanyl killing Americans. I think we can all agree on that.

NAVARRO: But it will continue to do so unless Mexico and Canada...

BROWN: But let me just be clear, because the response to the fentanyl has a real impact on Americans.

So, the response to -- as you say, this is a drug war.

NAVARRO: It is. It's a drug war, yes.

BROWN: The response, though, to this drug war, as you say, could have a real impact on Americans.

You have Best Buy...

NAVARRO: They stop dying.

BROWN: ... you have Target saying prices could go up.

Automakers are very concerned, as you know.

NAVARRO: Yes.

BROWN: Parts are always going across the border with Mexico and Canada.

[10:45:01]

What kind of compromise, as the commerce secretary said, could we expect as soon as today on this? Will there be carve-outs for automakers? Will the price, the 25 percent, go down? Help us better understand.

NAVARRO: I don't bargain on the public airways on behalf of the president.

BROWN: But you know businesses hate uncertainty. We're seeing that with the stock market.

Why all this uncertainty?

NAVARRO: Why do -- why -- we have had two days of volatility in markets, and everybody's hair is on fire. Nobody's really...

BROWN: Well, no, it's not just that.

NAVARRO: Nobody's...

BROWN: You have the ADP, private sector hiring dropped off dramatically in February because of policy uncertainty and the slowdown in consumer spending.

Consumer sentiment is down over 3.5 years. So, it's not just the last two days. There's overall a feeling of uncertainty, I'm sure you well know, among consumers.

NAVARRO: The most important uncertainty, Pamela and Wolf, the most important uncertainty right now is whether we're going to be able to get the tax cuts in the bill.

That is a critical part of the next 10 years. If we do not get that tax cut, we're going to have one of the biggest tax hikes we have seen, which will almost certainly drive us into a recession. And the president's working really hard on that.

With respect, I don't know if you know this, but when we run a trillion-dollar trade deficit, one practical result of that is to shave about a point-and-a-half off our real GDP growth rate. Did you know that? It's a direct subtraction because our factories are not producing. They're over in Germany producing.

So what the president is doing is something that I think would be very useful to CNN. Do a deep dive on this. Do a whole day on how this trade issue impoverishes America. Do you know how much a trillion dollars of America will buy for foreigners, real estate or homes?

BLITZER: It will buy a lot.

But I just want to be precise. The prime minister, Justin Trudeau...

NAVARRO: He's coming here.

BLITZER: ... he was citing the editorial board of "The Wall Street Journal," a newspaper you know which is usually very conservative, very supportive.

It wrote in its editorial entitled "Trump Takes the Dumbest Tariff Pledge," and among other things, it quoted the Anderson Economic Group as saying, a 25 percent tariff on Canada will raise the cost of a full-size SUV for American consumers, an SUV assembled in North America by $9,000. That's a lot of money.

NAVARRO: Let me respond in a couple of ways here.

But, first of all, "The Wall Street Journal" is "The Wall Street Journal." It's not the Main Street journal. They are Republican when it comes to dereg...

BLITZER: It's owned by Rupert Murdoch.

NAVARRO: Yes, of course. They're Republican when it comes to deregulation and tax cuts.

"The Wall Street Journal" has maintained a policy since term one of the president's,Trump, that they hate our tariffs. They hate our trade policy. I myself was the target of the lead editorial, the lead editorial in "The Wall Street Journal," Navarro recession, based on my advocacy on behalf of the president of trade policy.

Guess what happened? Place stability and growth. So "The Wall Street Journal" is not credible. Anderson -- very interesting. One of the projects I'm doing inside my office at the White House is, my team has gone back and looked at everything journalists have said, everything think tanks have said, everything that Wall Street has said, the Goldman Sachs of this world, about the tariffs in the first term.

We did historic tariffs on China, which are still in place, by the way, and then solar, dishwashers, steel, aluminum. They all said the sky was going to fall, the markets were going to crash and inflation was going through the roof. What did we have? Price stability and growth.

What Joe Biden...

BROWN: You did have a increased price...

(CROSSTALK)

NAVARRO: ... had was the worst inflation we have had and a stagflation scenario since the 1970s.

Wolf and I remember that all too well. And inflation is and will always be a product of irresponsible fiscal policy accommodated by an irresponsible Federal Reserve. And the combination of Joe Biden and Jay Powell at the Fed led to what we are dealing with now.

BLITZER: Because "The Wall Street Journal" also said: "Mr. Trump is whacking friends, not adversaries."

NAVARRO: Wolf, when we trade with the rest of the world, we don't have allies. We have competitors.

Let's take Germany. Germany sells us eight times more cars than we sell them. It's not about our product quality or craftsmanship. It's about the fact that German tariffs on autos are four times higher, 10 percent versus 2.5 percent.

Plus, when you add the VAT tax, the value-added tax, it serves both as an export subsidy and a 19 percent additional tariff. Now, here's what happens. A Cadillac starts in Michigan at $50,000. By the time it gets to German markets, it's in the mid-$60,000s because of the tariffs and the VAT tax.

[10:50:06]

A BMW comes from Bavaria here, $50,000, they sell it to us, because of the way the VAT tax works is an export subsidy or low tariffs in the low $40,000.

BROWN: Let me just jump in, though.

NAVARRO: OK, do you see? That's a $22,000 differential because Germany, our ally, which also refuses to pay for NATO and buys a bunch of gas from Russia, right?

BROWN: Well, it is paying something, not the 5 percent the administration wants.

NAVARRO: Those are our allies. And I can go chapter and verse with South Korea and Japan.

BROWN: But I have to -- we have let you...

(CROSSTALK)

NAVARRO: Sure, go ahead.

BROWN: And I really want to be respectful of that.

NAVARRO: I'm just trying to respond. I'm just trying to respond.

BROWN: I understand. I understand. But...

NAVARRO: Let's throw "The Wall Street Journal" in. Throwing it right back.

BROWN: I understand. And we gave you ample time to respond to that.

NAVARRO: Yes.

(CROSSTALK)

NAVARRO: It's good.

(CROSSTALK)

BROWN: But I just want to -- just for our viewers right now...

NAVARRO: We're good. We can -- we have as much time as you want.

BROWN: Right. I appreciate you understanding that.

But just for our viewers, there is a lot of concern about prices rising as a result.

NAVARRO: I understand.

BROWN: You have Best Buy, you have Target saying prices will rise as a result of these tariffs on Canada and Mexico. Will you take responsibility?

NAVARRO: As they -- as they did -- as they said the last time.

BROWN: But this is more aggressive than last time. This is more aggressive. And they are -- so are you saying prices will not rise in...

NAVARRO: The question...

BROWN: Can you -- can you guarantee prices will not rise as a result of these tariffs?

NAVARRO: I think the president was right that there will be some disturbance.

But if I could...

BROWN: What does that look like? What does disturbance mean? How do you define that?

NAVARRO: Well, let me -- let me -- let me describe what's the normal adjustment process and why we didn't have inflation last time.

And it's not -- it's not the kind of Best Buy, "Wall Street Journal" view, if there are tariffs here, it goes right to consumers. That's not what happens at all. The first thing that happens is that the countries we tariff absorb most of that, because they have to sell here.

BROWN: The importers pay the tax. The importers...

NAVARRO: That's not...

BROWN: They might lose business. That is true.

NAVARRO: That doesn't appear in the data.

BROWN: But the...

NAVARRO: We know for a fact, for example, with China...

BROWN: Which data?

(LAUGHTER)

NAVARRO: ... that produces -- yes, there you go. I totally agree.

BROWN: OK.

NAVARRO: Damn lies and statistics, Mark Twain.

But -- but the issue is, the second thing that happens, besides their producers absorbing it, is the currency effects of the trade deficit. When we impose our trade policies, trade deficits fall, Pamela. What does that do? That brings the dollar down. What does that do? Imports are cheaper. People are better off.

Supply chains adjust, and they come here and invest.

BROWN: But, bottom line, you can't guarantee the prices won't rise as a result, is what I'm gathering. You can't guarantee that.

NAVARRO: No, I'm not -- I'm not -- I'm not going there. Let's see what happens.

BROWN: OK.

NAVARRO: And what I'm telling you is...

BROWN: OK. We have to go. We...

NAVARRO: ... that any discussion of prices should also include the fact that oil prices are falling dramatically.

BROWN: That's true. And oil prices are falling. And that is absolutely true.

NAVARRO: Mortgages are falling.

BROWN: Right.

NAVARRO: Drill, baby drill, deregulation, and DOGE are going to save a ton of money for the American people.

BROWN: OK. And, again, we will continue to track this and continue this discussion.

NAVARRO: All right, we will continue to talk about it. Let's see what happens.

BROWN: Peter Navarro, that editorial that attacked you in "The Wall Street Journal," did they also call you dumb, like they called Trump?

NAVARRO: I don't know, but probably yes. They don't like me.

(LAUGHTER)

BROWN: And you clearly don't like them either.

NAVARRO: No, they're "The Wall Street Journal," not the Main Street journal.

BROWN: OK.

NAVARRO: I'm a deplorable Main Street kind of guy, as I hope CNN represents too.

BROWN: All right.

(CROSSTALK)

BROWN: Peter Navarro, thanks you very much for coming on.

NAVARRO: My pleasure.

(CROSSTALK)

BROWN: We appreciate your time. Thank you.

BLITZER: Thank you very much.

NAVARRO: Yes, sir.

BLITZER: We will see you soon.

BROWN: We will be right back.

(COMMERCIAL BREAK)

[10:57:29]

BLITZER: Happening now: Ash Wednesday services are under way in Rome without Pope Francis at the lead. The 88-year-old pontiff was treated overnight with supplemental oxygen at the hospital where he's been treated for double pneumonia.

He's been in that hospital since mid-February. The Vatican says the pope slept well overnight, but that his condition remains -- quote -- "medically complex." BROWN: And coming up, we're following the breaking news out of the Supreme Court, the justices rejecting President Trump's request to keep billions in foreign aid frozen.

We're going to speak to a former USAID worker who was fired on what she makes of that ruling up next.

(COMMERCIAL BREAK)