Semiconductors from China will face a ‘special-focus type of tariff’: Lutnick

Summary

Highlights

• Howard Lutnick explains the upcoming special-focus tariffs on semiconductors 🎙️
• Electronics like smartphones will have temporary tariff exemptions while new tariffs are prepared ⏳
• New tariffs will aim to move semiconductor manufacturing to the U.S. 🏭
• The administration views these tariffs as critical for national security 🇺🇸
• Lutnick emphasizes reshoring to reduce dependency on China 🌏

Key Takeaways

• New tariffs are coming for semiconductors from China 🎯
• The U.S. aims to encourage domestic manufacturing in various sectors 🏭
• Smartphones and electronics to face temporary tariff exemptions 📱
• Tariffs aim at reducing reliance on China for key goods 🇨🇳
• National security cited as a primary reason for reshoring efforts 🚨

Overview

Chapters

• 00:00 - 00:30: Introduction and Exemption on Electronics In this chapter titled 'Introduction and Exemption on Electronics', the discussion is led by the interviewer who is joined by Secretary of Commerce Howard Lutnik. The main focus is on a recent announcement regarding an exemption on electronics such as smartphones and laptops. Secretary Lutnik explains that the exemption is part of a broader discourse where President Trump has previously highlighted critical sectors like pharmaceuticals, semiconductors, and autos.
• 00:30 - 01:00: Discussion on Sector Tariffs The chapter discusses the importance of maintaining sector tariffs that are non-negotiable in order to protect core national security items. The focus is on the necessity for domestic production of essential goods such as medicine and semiconductors. The COVID-19 pandemic highlighted the need for the country to produce its own medicine. Semiconductors are emphasized due to their current production in Taiwan and finishing in China, highlighting a strategic need for reassured domestic production.
• 01:00 - 01:30: President's Policies on Semiconductors and Pharmaceuticals The chapter discusses the president's upcoming policies on semiconductors and pharmaceuticals. These policies are notably separate from the reciprocal tariffs applied to other products. The chapter emphasizes that these sectors will have their own distinct consideration separate from the general tariff framework. There is a clarification regarding misunderstandings about exemptions, specifically addressing a notice that was released regarding electronics.
• 01:30 - 02:00: Exemption Details and Future Tariffs This chapter discusses the exemption of a wide range of electronics, including smartphones and certain components used to manufacture microchips, from reciprocal tariffs. This exemption is made in anticipation of future semiconductor sectoral tariffs. The chapter mentions that a notice regarding this move will be published in the federal registry within the week.
• 02:00 - 02:30: Clarification on Tariffs and National Security The chapter titled 'Clarification on Tariffs and National Security' discusses the president's initiatives to impose focused tariffs to boost domestic production in key sectors like pharmaceuticals and semiconductors. It emphasizes the need to reduce dependency on Southeast Asia for critical components like semiconductors, chips, and flat panels by reshoring their manufacturing to America. This strategy is aimed at enhancing national security by ensuring these vital products are produced domestically.
• 02:30 - 03:00: U.S.-China Relations and Trade Negotiations This chapter discusses U.S.-China relations with a focus on trade negotiations. It highlights the exemption of certain categories from reciprocal tariffs, yet their inclusion in the upcoming semiconductor tariffs. These tariffs are expected to be introduced in the next month or two. The discussion also parallels the semiconductor industry with the pharmaceutical sector, noting that both require special attention. The President is reportedly addressing these areas, implying the importance and strategic considerations in these negotiations. Additionally, there is mention of significant tariffs planned for electronics such as smartphones and laptops.
• 03:00 - 03:30: Vice President's Comments on Chinese The Vice President discusses tariffs on iPhones, indicating that although the current tariffs are temporarily suspended, they will be re-imposed in a different form soon. The focus is to incentivize industries like semiconductors and pharmaceuticals to bring their manufacturing to the USA, emphasizing the need for critical products like medicine and electronics to be produced domestically.
• 03:30 - 04:00: Tariffs and American Manufacturing This chapter discusses the importance of self-reliance in fundamental industries like medicines and semiconductors for the United States. It notes Donald Trump's efforts to address this issue by imposing tariffs on semiconductors and pharmaceuticals to encourage American manufacturing. The chapter suggests that these tariffs are an imminent policy measure expected to be implemented in the coming months, emphasizing a shift towards domestic production and reducing dependency on foreign countries like China.
• 04:00 - 04:30: Impact on Prices and U.S. Manufacturing The chapter discusses the impact of certain goods on prices and U.S. manufacturing, specifically focusing on national security exemptions that need to be made in America. The president is firm on not negotiating these exemptions away with other countries, emphasizing the importance of domestic production. Additionally, the chapter touches upon the ongoing negotiations with China, mentioning that there have been soft conversations with Chinese counterparts.
• 04:30 - 05:00: Constitutionality of Tariffs The chapter discusses the ongoing negotiations between the United States and China, highlighting the expectation that both President of the United States and President Xi of China will resolve their differences regarding tariffs. The speaker expresses confidence in a positive, thoughtful, and effective outcome for the United States, showing trust in Donald Trump's capability to handle the situation. It emphasizes a diplomatic approach to resolving trade disputes through intermediaries and direct leadership engagement.
• 05:00 - 05:30: U.S. Dollar Concerns and Conclusion The chapter discusses confidence in handling diplomatic relations with China, particularly between the U.S. and President Xi Jinping. It highlights a belief in the ability to reach a reasonable resolution despite current challenges. The chapter also mentions U.S. President's remarks on President Xi as a friend and acknowledges the pride of the Chinese people.

Semiconductors from China will face a ‘special-focus type of tariff’: Lutnick Transcription

• 00:00 - 00:30 i'm joined now by Secretary of Commerce Howard Lutnik secretary Lutnik thank you for being with us this morning i really appreciate your time um so let's start with that news my pleasure let's start with that news uh late Friday that this exemption on electronics smartphones laptop computers and the like what's the thinking why the exemption well if you remember uh over the past couple of months uh President Trump has called out pharmaceuticals and semiconductors and autos he called them
• 00:30 - 01:00 sector tariffs and those are not available for negotiation they are just going to be part of making sure we reassure the core national security items that need to be made in this country we need to make medicine in this country we learned it during COVID we need to make it in this country we need to make semiconductors because if we don't own semiconductors here remember all virtually all semiconductors are made now in Taiwan and they're finished in China it's important that we reassure
• 01:00 - 01:30 them and so the president is going to come out with his policies uh on semiconductors and pharmaceuticals they're going to be outside the reciprocal tariffs and he was just making sure everyone understood that all of these products are outside the reciprocal tariffs and they are going to have their own separate way of being considered but but but wait a minute i'm I'm asking you about the exemption not about I mean the the notice that went out Friday night saying that electronics
• 01:30 - 02:00 a wide range of electronics including smartphones including components used to make uh microchips that these are now exempt from the reciprocal tariffs why that move well remember those products are going to be part of the semiconductor sectoral tariffs which are coming so you're going to see this week there'll be a register in the federal registry there'll be a a a notice put out that is different types of work so
• 02:00 - 02:30 we're going to do that we did that in autos the president's going to do it for pharmaceuticals and he is going to do it for semiconductors so all those products are going to come under semiconductors and they're going to have a special focused type of tariff to make sure that those products get reshored we need to have semiconductors we need to have chips and we need to have flat panels we need to have these things made in America we can't be reliant on Southeast Asia for all of the things that operate
• 02:30 - 03:00 for us so what he's doing is he's saying they're exempt from the reciprocal tariffs but they're included in the semiconductor tariffs which are coming in probably a month or two so these are coming soon you shouldn't think this is really outside of it really think of it as being included in the semiconductor space much like pharmaceuticals they require special attention and the president is on it so so you're saying that the the the the big tariffs on things like smartphones and laptops uh
• 03:00 - 03:30 iPhones all those iPhones built in China uh that those tariffs are temporarily off but they're going to be coming right back on in another form in a month or so or what what are you saying correct that That's right that's right semiconductors and pharmaceuticals will have a tariff model in order to encourage them to reshore to be built in America we need our medicines and we need semiconductors and our electronics to be built in
• 03:30 - 04:00 America we can't be the holden and rely upon uh foreign countries for fundamental things that we need we can't be relying on China for fundamental things that we need our medicines and our semiconductors need to be built in America donald Trump is on it he's calling that out so you should understand these are included in the semiconductor tariffs that are coming and the pharmaceuticals are coming those two areas are coming in the next month or two so this is not like a permanent
• 04:00 - 04:30 sort of exemption he's just clarifying that these are not available to be negotiated away by countries these are things that are national security that we need to be made in America the president's made it clear he wants negotiations with China uh have you had any conversations with your Chinese counterpart has there been anything between you and the Chinese i think we've had uh soft uh the
• 04:30 - 05:00 way I would say it is is soft entre you know uh through intermediaries and those kind of comments but we all expect that the president of the United States and and President Xi of China will work this out i I am completely confident as is he that this will be worked out in a positive thoughtful and effective way for the United States of America i mean Donald Trump has the ball i want him to have it he's the right person with it he
• 05:00 - 05:30 knows how to play this game he knows how to deal with President Xi this is the right person for the right role and uh I am confident this is going to work out with China yes is it in a tough spot now of course it is but that'll uh you'll see the all of that energy will sort of decline and we'll end up in a perfectly reasonable place with China i'm confident of that but can I ask you the the president's called uh President Xi a friend he said the Chinese are proud people uh c can you explain to me what
• 05:30 - 06:00 the vice president was saying not long ago uh when uh he referred to the Chinese people as peasants let me let me play the sound so you can hear it we borrow money from Chinese peasants to buy the things those Chinese peasants manufacture that is not a recipe for economic prosperity it's not a recipe for low prices and it's not a recipe for good jobs in the United States of America did the vice president go off message there i mean he's calling the Chinese peasants this is something that we heard uh the the uh that the Chinese
• 06:00 - 06:30 uh say was ignorant and disrespectful i mean I haven't heard Donald Trump talk that way about the Chinese no I'm just going to uh step back and and and really just leave the vice president to let him defend himself he knows what he meant and we all know what he meant which is that you know the Chinese have basically attacked America and ripped us off by by undercutting our
• 06:30 - 07:00 businesses by the government of China assists their businesses to undercut our businesses drive them out of business and take that manufacturing over to China it's happened in pharmaceuticals it's happened in so many industries we feel it's steel and aluminum so many so the idea is if the government of China is behind their businesses imagine if the government of America the United States of America was backing your business i mean you'd be a killer in the
• 07:00 - 07:30 world so that's what the Chinese have been doing and finally Donald Trump is standing up to it saying "Look in order to make it fair for American businesses we have to put a tariff on China to level the playing field to take their government out of being a competitor we need to have medicines built in America we need to have those products here in America because we need them we can't have a war and be asking China to send over penicellin it's just it's not reasonable we can't rely on other
• 07:30 - 08:00 countries for semiconductors we can't rely on other countries for steel and aluminum these are national security issues and Donald Trump is going to make sure they're reassured we have the capacity to do it if you've seen you know an auto plant these days these are beautiful plants you know these new modern plants are amazing and the jobs they create for our American workers are amazing jobs and that's what Donald Trump is focused on bringing those jobs and those factories back to America and employing American workers he's on it
• 08:00 - 08:30 and he's going to bring them back the president also said there's going to be a transition cost transition problems i mean we are going to see higher prices in America as well it's like you can open a factory tomorrow to build iPhones or uh to to make sneakers uh shoes i mean we we we buy a lot of shoes in this country 99% of them are made elsewhere i mean do you are we going to become a nation of cobblers again i mean what this is going to mean higher prices
• 08:30 - 09:00 isn't it i mean have you seen I I I don't necessarily think so i think the idea is that we can manufacture here in America as I said there's a I saw Panasonic you know the battery company right japanese company they built an amazing factory in Kansas which they're opening now they they put it in the ground uh when Donald Trump was the president it's just finishing now 4,000 new jobs built from what they made deals with the community
• 09:00 - 09:30 colleges nearby and all the the local community and the local university they trained people for this 4,000 high-tech jobs in Kansas that is what's coming back to America you're going to see that production that that kind of high-tech factory is going to produce things here at very reasonable prices so I think this is going to work out plus our farmers are going to finally have access to the world's markets you know our farmers have never had the opportunity to sell corn in India so what's going to
• 09:30 - 10:00 happen as they sell more and more products prices will come down i mean Mr secretary gets lower prices you're going to see lower prices in America on lots of different products mr i mean right now we're seeing them effectively being locked out of a very large market especially people like soybean farmers in in China but let me ask you about the constitutionality of these tariffs as you know the constitution right there in article 1 section 8 makes it very clear the congress shall have the power to lay
• 10:00 - 10:30 and collect taxes duties imposts and excises congress has the power to impose tariffs not the president and the president has cited this 1977 emergency uh law uh that doesn't mention tariffs this is a law about sanctions uh about seizing foreign assets so how concerned are you and are you prepared to defend this in court as you know there's already at least one court challenge to
• 10:30 - 11:00 the constitutionality of these tariffs the president knows the law the president's uh general counselss know the law they understand this that Congress has passed laws that gave the president the ability to protect our national security we need to make medicine in America if you don't think that's national security you're not thinking it through we need to make semiconductors in America we need steel and aluminum in America we need to
• 11:00 - 11:30 manufacture in America if we just run gigantic trade deficits and sell our soul to the rest of the world eventually we are going to be the worker for the rest of the world we we're going to be the thinker for the rest of the world but they're going to manufacture and if someday they say "Gee we're not sending it to you we'll be nothing." So I think the president has national security in mind and he's here to protect America we need to reshore these things and we all know it it's vital for us to reshort it
• 11:30 - 12:00 and we know it mr secretary we're we're we're really out of time but a very quick question how concerned are you about what's happening to the US dollar we have seen the dollar at its uh at its you know having its worst week in three years there are concerns about a weakening dollar uh because of uh because of all this uncertainty how concerned are you about that i I am not I am not concerned about it we are focused on our tariff policy we are focused we have so many countries coming in to negotiate with us the
• 12:00 - 12:30 president has given us the ability let's go get these great deals done and we're on it and the president's on it and we're really really focused on delivering the best thing for the American people all right secretary Howard Lutnik thank you very much for joining us appreciate your time