A Taut Trade Friendship & A Temporary Relief for Autos 3/6/25

0:00Bring in show music, please. This is Squawk Pod, and I'm CNBC producer Cameron Costa. On today's podcast, following the tariffs, the tick-by-tick, the retaliations, and the end goal. If the goal is to bring manufacturing and everything somehow back to America, most of the CEOs that I've been talking to this week say this would have to go on for like two years. A month-long tariff pause for autos and a frustrated neighbor to the north, Candidate for Canadian Prime Minister Karina Gold joins us. We have had such a long-standing, important relationship as Canadians and Americans. Let's work together.

0:42These tariffs are not the way to do it. Plus, where do swing voters stand 45 days into the Trump administration? Pollster Frank Luntz held a focus group on the president, Elon Musk, and the communication out of D.C. and to the rest of the world. What President Trump is trying to do has significant support and it continues. What they're critical of is the way that he communicates it. It's Thursday, March 6th, 2025, and Squawk Pod begins right now. Stand to Andrew by in three, two, one, Q Andrew. Good morning. Welcome to Squawk Box right here on CNBC. We are live at the Nasdaq market site in Times Square.

1:25I'm Andrew Ross Sorkin along with Joe Kernan. Becky's off, but we've got a lot going on. You and I have not seen each other in a little bit, so we've got a lot to talk about. But we've got the blue thing. We've got the blue shirts. Blue shirts, red ties. Similar ties. Purple ties. Is this blue or purple? I can't tell. Is it purple? That's a purple tie. Okay, it's purple. Purple with some lavender. I think you would wear this tie. I would, actually. I think you would. That's not always the case. That's true. we have issues about ties. Yeah, we do. And a lot of issues about a lot of things. Let's go over where we are.

2:04Okay, tariff headlines are a lot to keep track of this week, so let's recap. 25 % tariffs on Mexico and Canada, plus an extra 10 % on China, went into effect on Tuesday. Commerce Secretary Howard Lutnick came on Squawk Box and said it was about a drug war more than a trade war. Of course, if they can stop the flow of fentanyl and they can prove to the president they can stop the flow of fentanyl, then of course the president can remove these tariffs. For what it's worth, Peter Navarro, a trade and manufacturing counselor to the White House, said the same thing this week. Lutnick, for his part, has been calling the tariffs, quote, fluid in multiple interviews over the past week, presumably leaving the door open for changes.

2:50And changes came, but we'll get to that. Canada's Prime Minister Justin Trudeau called President Trump's 25 % tariffs, quote, dumb. He highlighted the country's work to curb the flow of fentanyl over the border and then retaliated with 25 % tariffs of Canada's own. China did the same thing, announcing a 15 % tariff on imports of things like chicken, wheat, cotton from the United States, as well as a 10 % tariff on dairy, pork, soybeans and other produce coming from the U.S.

3:25U.S. stocks sold off on fears of a trade war, and they were led by automakers who were concerned about prices throughout their supply chains. Retailers like Target, CEO Brian Cornell, said costs are going to go up for consumers, too, and very soon. We know for certain categories, like fruits and vegetables, where during this winter season, we depend on Mexico for a significant amount of supply. I know those are categories where we'll try to protect pricing, but the consumer will likely see price increases over the next couple of days. Now, automaker leaders from Ford, GM and Stellantis jumped on a call with President Trump.

4:03And after that, Trump granted a one month pause on tariffs on cars coming into the United States from both Mexico and Canada. So in the mix, we've got fentanyl, autos, and the$200 billion a year that President Trump says we're losing to our northern neighbor. Phew. Okay, let's get back to Joe and Andrew. I've got some issues. I have some issues. And I don't know why you don't just say what you mean and mean what you say. The whole fentanyl sort of, I think it's red herring, especially for Canada. Yes. I saw your interview with Mr. Lutnick where you asked the question. But do you know that why not talk about milk, 270 percent, cheese, 245 percent tariffs, butter, 200.

4:49Why not just say this is why not do the reciprocal thing with that? Why? It's almost an excuse to pick on. I don't know. The automakers or and then the 200 billion. No one can figure out what he means by that, that there's a 200 billion shortfall. it's not even that's not even what the trade imbalance is i don't even know what that number is uh... at this point i'm sorry to hit you with all this anti-administration just right out of the box and your pushback is starting immediately or what that would be weird if you push back on on me saying i don't like some of this stuff you want to do that that's the beauty of uh...

5:26we never know because we never agree on it over again and now i think you're right i don't know what look i don't the thing that i can't figure out about this is given which is happened with the autos, meaning pushing that out. You just continue to extend this situation. From a negotiating standpoint, at what point do companies, if the goal is to bring manufacturing and everything somehow back to America, most of the CEOs that I've been talking to this week say, this would have to go on for like two years before you'd actually make the decision to do it. But the question is, is it politically palatable for anybody to do this for two years?

6:02And maybe that is the right thing. Maybe on the other side there's a rainbow. I don't know. And I can. It's cheaper to make things other places. So but I can understand how we should we should have Americans with these great jobs. I can understand. Right. That maybe things cost a little more, but people aren't going to like just get comfortable with that idea that things might be a little more expensive. As far as Canada, I think we take some responsibility for being having so many drug addicts in this country. I mean, I'm not blaming it on them. But 40 pounds of fentanyl versus 22 ,000 pounds coming up through Mexico.

6:44I don't know. How do you get to do they need to get to zero in Canada? Maybe there's more. Maybe that's maybe that's all. I don't know enough about it. Maybe that's all we were able to to seize at the border. Maybe there's a lot more coming in. But it just seems to me, and I saw Navarro on again yesterday, and they're just going to hammer that, stick to that, hammer it so that they can keep them on. And here's where I'll get to. It reminds me of the Democrats and the way they will say something again and again and again that they know is not true. And it doesn't matter because it becomes a talking point.

7:18And I don't like it. I wish neither party would do it. Let's talk about the automakers, though, because this is, of course, the central issue, at least at the moment. President Trump granting now automakers a one-month reprieve from the new 25 percent tariffs that were imposed on Canada and Mexico. Shares of Ford, GM and Stellantis all ending the day on Wall Street much higher. In statements, the three companies thanking Trump for his support. At a news briefing, the White House press secretary saying that Trump was open to providing additional exemptions from tariffs. The reports say Canadian Prime Minister Justin Trudeau unwilling to lift Canada's retaliatory tariffs unless the U.S.

7:54rescinds all of its new levies. Now, late yesterday, the agriculture secretary, Brooke Rollins, told Bloomberg the president is considering tariff exemptions for some agricultural products from Canada and Mexico. So all of a sudden we're starting to see the carve out system, right? You know, if you do this, you do that. And this was what we all thought. You know, when Apple announced that it was going to spend 500 billion dollars in the U.S., you can imagine that they're going to hope there's some kind of carve out for them later. We're going to talk a lot more about this very topic because it is, in fact, moving the markets this morning.

8:26Tariffs, the economy, everything else. Guess who is going to be here? The Treasury Secretary, Scott Besant, tomorrow to discuss all of this and more. Squawk style. Squawk style. I think he's going to be sitting right there. The same place where he sat prior to getting the appointment for Treasury Secretary. During the campaign. And, you know, the great thing about Scott is that he managed money and knows the market implications of all this stuff. So peanut butter, 295 percent. Canada tariffs. You know, then you've got things like lumber, 20 percent, shoes. The reciprocal tariff stuff, I kind of...

9:02Get behind. You could get behind that argument. I could kind of get behind that. It's like, you know, you're doing it to us. What do you want? What do you want from us? We're not patsies. Elon Musk meeting privately with GOP lawmakers on Doge's cost-cutting efforts. Tesla CEO held gatherings separately with Republican senators and House members, part of nearly two of the two hour Senate meeting focusing on the presidential process known as a rescission package. The White House could potentially send one to Congress to codify Doge's spending cuts within out needing without needing. I should explain the 60 votes in the upper chamber.

9:39Multiple senators telling NBC News that Musk was surprised to learn there was a viable legislative path to making Doge cuts permanent. Senator Lindsey Graham telling reporters that Musk pumped his fist and danced when he heard. The news so decision is just for me is a little too close to recession The precision the words you know and we are that he's talking about recession a lot now talking about rescission He has been removing P cards. These are purchase cards These are credit cards that that are in the government hundreds of thousands of credit cards that apparently have been you know That people have in the government.

10:12I didn't see that and that they're like Thousands of these things that they're just turning turning the cards off because they aren't sure that the cards are actually attached to other people. And, you know, sometimes a credit card could have like a subscription or something on it. Look, this stuff, as long as they're not turning off the wrong cards, I'm actually happy somebody's doing. Right. And the criticism that comes from what he's doing. Some things that they're turning off or have turned off, they realize, holy crap. Right. Probably don't want to turn off this, you know, whatever. We've seen some things rescinded quickly.

10:48It's not perfect. It's not perfect. Maybe that's the way to do it. Turn it off and see what happens. Probably not the best way, but I don't know. Tees will be next. Next on Squawk Pod, we'll speak to one of our friends from the north, Canada Prime Minister candidate Karina Gold. She weighs in on the tariff battle, the border, and our long-standing friendship on the rocks. We just don't understand why we're being attacked like this when we have only ever been a good friend, ally, partner and neighbor to the United States.

11:25Welcome back to Squawk Pod from CNBC today with Joe Kernan and Andrew Ross Sorkin. Here's Andrew. The Trump administration saying it's going to exempt automakers for one month, that is, from recently imposed 25 percent tariffs on Mexico and Canada. But Canadian Prime Minister Justin Trudeau reportedly will not lift retaliatory tariffs on the U.S. if President Trump leaves any tariffs on Canada in place. Auto trade between the U.S., Mexico and Canada totaled$345 billion last year. Joining us right now is Karina Gould, former Canadian government House leader, who is now liberal leadership candidate for Canadian Prime Minister.

12:01And welcome to the broadcast this morning. My question to you is, what do you think the tariffs that the U.S. is imposing on Canada are really about? We've heard about fentanyl over and over again, but there are reasons, and they're not being articulated by this administration necessarily, but there are lots of tariffs that Canada already has on the U.S. Well, look, I don't think that these tariffs have a real objective in the sense of what Donald Trump is talking about. if he's talking about fentanyl. I mean, it's minuscule amounts that come from Canada into the United States. But if that's what he cares about, well, then let's put together an inspection team at the border to inspect every truck that goes south for fentanyl and every truck that comes north for illegal guns.

12:47That's one of the issues that we have as Canadians. So look, at the end of the day, these tariffs are unjustified. They are ill-conceived and they're hurting not just Canadians, but they're hurting Americans and they're going to make the price of everything more expensive for American citizens. You didn't answer about it. The question was about the tariffs you already have. What about the tariffs on the U.S.? Meaning we talk about peanut butter or milk. The butter. I've got a long list, Karina. Well, OK, but in fairness, what we're talking about with that is really minuscule. And there is not a trade imbalance when it comes to Canada and the United States.

13:29We have the free trade agreement between Canada, the U.S. and Mexico that has served our countries very, very well. It has enabled prosperity on both sides of the border. And so let's keep building things together. Let's keep doing stuff together. But why do you say there's not you just said and I just want to make sure that we're all on the same page. Maybe that's a polite way to put it. You said there's not a trade imbalance. Where do you get that from? Well, that's correct. So the numbers that the president is putting out is just simply not true. When it comes to Canada and the United States, we build things together.

14:05We do stuff together. This is good for American businesses and it's good for Canadian businesses. And let's keep building things and be strong together. That's something that we should be working towards as Canadians and Americans. And that is what has enabled North American prosperity. And I hope that that's something that we can continue to do. So as it relates to fentanyl, do you just think the president is lying to the public? Well, there's no data to back up what he's saying. But what I will say is that we care about fentanyl. It's a scourge in our society as well. So we have put in place strong measures in Canada.

14:42Let's work together with the United States and make sure that we are keeping fentanyl out of both of our countries, because this is a crisis in Canada, and it's a crisis in the United States. And I think there's more that we can do together on this. But it's not about fentanyl coming in from Canada to the United States. There is very little fentanyl that goes south of the border. And so if that's the case, then let's work together to make sure that we are eliminating this scourge in both of our countries. Corina, the actual trade deficit with Canada was in 2024 with 63.3 billion. It's mostly energy.

15:19And we need that. And in terms of services, we actually have a surplus in the United States with services. But then there really are, I mean, you say the USMCA, you get above a certain point, and there's really crazy tariffs on a lot of stuff. And it's not minuscule. It's people, vegetables, 100%, fish products, 100%, 30%, shoes, 30%, cocoa, 30%, sugar, 265%. I mean, physician heal thyself, get rid of, why can't you get rid of those? And then, then you'd be in a much better position to say, we don't do anything wrong. Well, let's look at what we're talking about. I mean, in terms of the major things that we are trading between Canada and the United States, you know, The U.S.

16:07depends on Canada for so many things. I mean, let's look at potash, right? Canada provides 80 % of potash to the United States. That is something that you depend on. You talked about energy. This is something that is important for the U.S. market. Let's have that conversation. These are things that the United States is putting tariffs on that are increasing the cost of everything for everyday American citizens. let's make sure that we are having that conversation because at the end of the day, the president in the United States is making life more expensive for Americans. We would rather continue to have this relationship to be strong friends, be allies, as opposed to put the energy security, the food security, the national security at risk for both Canadians and Americans.

16:59We have had such a longstanding, important relationship as Canadians and Americans. Let's work together. These tariffs are not the way to do it. This aggressive economic action against Canada that has been your friend, your ally, your partner, our soldiers have fought and died together is not the way to go about this. Let's have a conversation. But this aggressive action has spurred Canadians who are generally a happy and kind people into a level of anger. What's the rest now, Karina, for all those tariffs that I've got 30 of them here. And I have people writing in saying that they can't even sell their products in Canada.

17:38They have to be marked up two and a half times in Canada just to sell into that country. What's the rationale? And that gives the perception that we're patsy, we're big, strong, biggest economy in the world down here. And you almost are benefiting from our largesse and our, that's what you hear from President Trump all the time, that were being taken advantage of. If you got rid of some of these tariffs, maybe there wouldn't be that perception. You'd have a much stronger arguing position. Well, I mean, I don't think that the United States can say that Canada is taking advantage of the U.S. I mean, we have such a strong economic relationship.

18:18I mean, look at the big three, look at the auto industry. I mean, this is a relationship that is symbiotic, that works well, that benefits people on both sides of the border. You know, we have natural resources that the United States depends on that we sell to the U.S. I mean, we sell our energy at a much cheaper rate to the United States than what we would sell for it around the world. So there is a very good relationship, a very strong economic relationship that people on both sides of the border benefit from. And that's the relationship that we want to continue with as Canadians. But right now we are feeling very attacked by this aggressive action.

18:59And I have seen this kind of patriotism in Canada where you have, you know, little old ladies going to the grocery store and choosing to buy Canadian products over American products. Because, quite frankly, we just don't understand why we're being attacked like this when we have only ever been a good friend, ally, partner and neighbor to the United States. Could you imagine removing any of the tariffs that you have on things like peanut butter and wine and beer and coffee and apparel? I mean, there is a list of things that Canada does have their own tariffs on. Well, look, we negotiated an agreement with the United States.

19:35We negotiated NAFTA. We recently negotiated KUSMA. And so that's the agreement that we have put in place. And I have to say that as Canadians, we feel that the relationship with the United States, the trust has been broken because when we sign an agreement, we mean it and we live up to those standards. And what we're seeing from the president right now is that, you know, his signature on that agreement isn't worth it. And so as Canadians, we're saying, hey, we came to an agreement. We made it. We negotiated these things already. And instead of you guys abiding by your end of the deal, you're now attacking us.

20:11So if you want to have a conversation, let's have a conversation. But this aggressive economic action is not the way to do it. You know, Canadians are known for apologizing, but we're not going to back down right now. And we're not going to apologize for defending our economy, our jobs and our way of life. But what we do want to do is continue to have a strong relationship with the United States. We've always, you know, liked being your neighbor. We've always, you know, wanted to come visit the U.S. But now what we're seeing is Canadians canceling their American vacations because they're so offended and aggrieved by this action that we would rather settle things at the conversation table as opposed to with how this aggressive action is going.

20:53And we will have to retaliate because, unfortunately, we've been forced to. Karina, I want to thank you for joining us this morning. Hope we get an opportunity to talk to you again. I don't know. As this all plays out. I don't know, Karina. You know, vacationing in the middle of January in Nova Scotia. I don't know. Or out in one of the Western territories. We'll see. We'll see. No tickets for you to Florida. Uh-uh. You're headed over. Get your skis. They would like to go to Florida, but they feel right now. All right. We'll see. We'll see how long you stick with this. We'll see. Thank you. Thanks for having me.

21:28See you later. Up next on Squawk Pod, how swing voters are thinking about President Trump's second term so far. Holster Frank Luntz asked average voters about Trump and about Elon Musk. He's regarded as being smart, regarded as being insightful. What they're questioning is, does he have too much power? And is he enjoying too much of the slash and burn? Winning or losing American hearts and minds right after this.

22:03You're listening to Squawk Pod. You're watching Squawk Box on CNBC. I'm Joe Kernan, along with Andrew Ross Sorkin. Becky Quick is off today, but we're carrying on. We're going to talk about President Trump's messaging in his first six weeks in office. We got a pretty good distillation of it all. I think we got to see most of it on Tuesday night in various forms when President Trump addressed Congress. Our next guest spoke to voters after that speech to try to get their biggest takeaways. Joining us right now is pollster and political strategist Frank Luntz. Frank, it's great to see you this morning.

22:36A lot of folks obviously watched this speech. For some, it was fabulous. For others, it was polarizing. For others, still, it was something else entirely. What was the biggest takeaway from what you learned from those who saw it that you polled? what was exceptional, and we talked to the right group of people. These are individuals who voted for Trump once and rejected him at least once. So they are the definition of swing voters. They didn't mind that the speech was incredibly long. In fact, they enjoyed it. They did mind that the president focused too much, they felt, on Joe Biden and on the past, whereas they wanted to hear more about the future.

23:13They did not like the Democrats holding up paddles and yelling and all that performance that I had been critical of Republicans when he did it to Joe Biden. Well, they didn't like the Democrats doing it to Donald Trump. They believe that this is a serious speech and it should be taken seriously. And as you see people standing up in the background, they don't want performance art. They want policy. The overall agenda, I want to be clear about this, what President Trump is trying to do has significant support, and it continues. What they're critical of is the way that he communicates it. They don't want a rally.

23:50They don't want 2024 back again. They want a different president. Now that he's elected, they want him to perform on issues and policy, not on politics. Frank, yesterday you spoke with more than a dozen voters across the country. I want to show some video from this, if we could, so people can see what's going on. My understanding was an even split between those who voted for Trump and former Vice President Harris in the election. And here's what they said about the influence, interestingly, of Elon Musk. What we're seeing is really smoke and mirrors. We don't really know how effective it will be, but we do know that he is an effective businessman.

24:32I think he's one of the smartest people in the world. But what makes you successful in the private sector does not mean that you can go in and clean out the government. I think every really I think everybody agrees that there's a lot of waste in the government. But we need all hands on deck. Tiffany from Texas. I think he's a great businessman. However, it reminds me of a kid walking in a room and just snatching stuff off of a table the way he's doing with the government. Frank, popularity of Elon Musk in all of this and to the extent that his popularity is either higher or lower than President Trump's, does it rub off either way?

25:10Well, I wouldn't use the word popularity. I would use the word credibility because his popularity has fallen significantly over the last few years. There was a time when he was the most popular business person in the whole country. But as far as credibility, he's regarded as being smart, regarded as being insightful. What they're questioning is, does he have too much power and is he enjoying too much of the slash and burn? Now, make no mistake. Americans are fed up with waste, fraud, abuse and particularly corruption in government. And they like the tone. I'm sorry. They like the process. It's the tone that they don't like.