He Said, He Said: The China-U.S. Trade Talks 4/25/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, are the U.S. and China in trade talks or not? It's a he said, he said between the Trump administration and the CCP. An interview with President Trump in Time magazine, now at odds with comments from the Chinese embassy. Who's saving face? And what's really happening in the U.S.-China trade war? Axios White House reporter Mark Caputo on the confusion. I don't trust our government. I've never really trusted our leaders, but I trust other governments even less. So who's telling the truth here is anyone's guess. And Nick Burns, former U.S.

0:41ambassador to China under President Biden, tells us what's at stake. Strategically, what both countries have to figure out, particularly the United States, is do we want to see a decoupling? Plus, an atlas full of trade talks and the impact on American businesses. and Apple is planning to move America's entire supply of iPhones to India. It doesn't necessarily get the phones to be manufactured back in the U.S. It's been a week. Tuesday, that was like a year ago. It feels like a year ago. But we are finally at Friday, April 25th. Squawk Pod begins right now. Stand Becky by in three, two, one. Cue, please.

1:21Good morning, everybody. Welcome to Squawk Box right here on CNBC. We are live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Andrew Ross Sorkin. Joe is off today. And I think we can all breathe a little bit of a sigh of relief here. TGIF, we made it to Friday. It seems like the weeks are getting longer, especially if you're watching the volatility in the stock market. Yesterday, volatility was down. If you were watching the VIX a little bit closely there, stocks were higher. This is something to watch. A morning where we're not coming in with hundreds of points, either up or down on the S &P 500 or the Dow or the NASDAQ, any of these futures.

1:57So maybe we're getting a little bit of a breather here. I don't know if I'd hold that thought for too long today, but we'll see. The NASDAQ is up more than 5 % as we head into the final trading session of the week. Take a look at what you're seeing here. The S &P is up by about close to 4%, and then the Dow up by close to 2.5%. Meantime, this is pretty interesting. Apple now planning on moving the assembly of all 60 million plus iPhones that are sold annually in the U.S. to India, potentially by the end of next year. That's according to the Financial Times. They're reporting that in order to do this, Apple would have to double the number of iPhones that it currently assembles in India.

2:34Now, the Trump administration announced lower tariffs on India than on China earlier this month. And Apple has been ramping up capacity in India, but it still assembles most of its phones in China. It doesn't necessarily get the phones to be manufactured back in the U.S. But nonetheless, there's also questions, even over the last 24 hours, as to whether we, the U.S., are going to get a deal first with India. That's the other thing that seems to be in the water. South Korea is another country that negotiations, at least if you're listening to news reports, the Treasury Secretary has indicated that could come sooner rather than later as well.

3:10And all kind of circling. Although when you hear about trade talks with China, there's still a lot of questions if those are even taking place because the two sides don't seem to agree on even that. But it does seem that all of this action is moving companies to at least think about stuff. The fact that Apple, I don't know if we think Apple's actually doing this or we think Apple's just contemplating this or mapping it out. My guess is they would probably try to do it sooner rather than later. They have made a big move since COVID to try and diversify their supply chains, too. So we'll see where things land with this.

3:39What I've always wondered about Apple as it relates to China and manufacturing is they still have a big market share in China itself. Right. And they're not talking about moving that production. Right. But I've always wondered if, in fact, they really do start to move. I mean, if they move all of the U.S. the phones that were going to go to the U.S. to a place like India, does that change the dynamic at all inside China? Meaning the popularity of the of the of the company. Well, their sales in China have been down. Right. But does it go even farther down? What does that do to the whole? Yeah, it's a delicate dance going on.

4:13Yeah, it is. Let's talk a little bit about the latest developments on the trade front. China today denying that it is having any tariff negotiations with the United States. China also making statements to that effect yesterday. But then in the early afternoon, President Trump told reporters that the U.S. has been meeting with China. Well, they had a meeting this morning. So I can't tell you, it doesn't matter who they is. We may reveal it later, but they had meetings this morning and we've been meeting with China. Separately, Bloomberg is reporting that China is considering suspending its heavy import tariffs on some U.S.

4:51goods, including medical equipment, plane leases and some industrial chemicals. Other sources said that Chinese companies in key sectors have been asked to submit customs codes to authorities of the goods that they would like to see escape tariffs. On the potential deal front, Treasury Secretary Scott Besson saying that the U.S. and South Korea had a successful meeting on trade. A deal will reportedly be pursued by early July. Of course, July is when the 90-day mark comes up. So they're trying to get this trade deal done before the holdoff on those additional tariffs imposed by President Trump would actually kick back into effect.

5:26And speaking with reporters, President Trump also expressed confidence at reaching a deal with Norway. This is some big news in tech land. It's having an impact on shares of a whole bunch of companies in tech land. Shares of Google parent Alphabet, they are higher in the pre-market. This is after the company beat earnings and revenue estimates for the first quarter. Now, overall revenue grew by 12 % year over year. That was also ahead of expectations. But I think what's got people excited this morning is two things. Alphabet's saying it's going to buy back$70 billion of its stock, raise its dividend by 5%.

5:59And then in a very reassuring move for investors, the company affirming its AI build-out plans and said it was still on track for$75 billion in CapEx spending this year. Let's show you what CEO Sandar Pichai had to say on the earnings call. In surge, we saw continued double-digit revenue growth. AI overviews is going very well with over 1.5 billion users per month, and we are excited by the early positive reaction to AI mode. There's a lot more to come ahead. Another highlight for Alphabet, it said that Waymo, The autonomous driving unit that it has now is providing more than 250 ,000 paid passenger rides per week.

6:38That is five times, five times as many as this time a year ago. And I remember talking to Sundar back in last November, and we talked about, you know, could Waymo become an independent company? I mean, I think that's— What did he say? He said everything's open. So I think long term it's possible. Well, Waymo could become a massive business, and if it becomes a massive business, you could see that become its own business. One of the things that was so good about their ad revenue was that the margins weren't hurt. They've been layering on this AI, and there were a lot of people who thought maybe margins would come down as a result of that.

7:14That wasn't the case. That's a very positive sign, too. Hugely positive, because here we were talking to the CEO of Perplexity yesterday. Everyone was talking about market share and what's going on. And the other idea that they're going to continue spending just also suggests not just their own confidence, but also means that NVIDIA's and the entire sort of ecosystem is going to continue at least to pace for now. Paramount Global and the FCC, they're in talks now to secure regulatory approval for that merger with Skydance Media. It's according to the Wall Street Journal. They're reporting that one discussion involves a commitment that the company would continue to abstain from certain diversity initiatives.

7:49Now, the FCC chairman, Brendan Carr, has urged the media companies to limit their DEI policies as a precondition for the agency to consider M &A. Of course, the other big piece is this ongoing lawsuit between the president and 60 Minutes. We will see where that goes. Bill Owens being asked to step aside at 60 Minutes and the repercussions that have gone through the organization as a result. Bill Owens, who ran 60 Minutes. For decades. Who is an amazing journalist. I've known him for a very long time, and he, I don't know if he was asked to. I think he actually pulled the plug himself. Well, no, he said in a meeting that he was asked to step aside.

8:28To step aside. Yeah, he said in a meeting with all of the producers. Oh, I didn't realize that he had, I thought that he had sort of done it as a protest. No, he was asked to step aside, but he said, he told the journalists at 60 Minutes in that meeting to stay with it and to stay on. He thought it would be a turning point for the company. We'll see. Yahoo and its owner Apollo Global would bid for the Chrome web browser if a court forces Google to divest it. That's according to testimony from a senior executive at Yahoo's search at Google's antitrust trial yesterday. Last year, a judge ruled that Google illegally monopolized the search market.

9:07The court is considering a package of changes proposed by antitrust enforcers as a remedy, including the sale of Chrome. earlier this week, the head of ChatGPT said that OpenAI would also be interested in buying Chrome, but Andrew, you mentioned Perplexity, CEO, who was here yesterday. He said they don't want that Chrome to be sold because right now Chrome is the part that actually operates very well and allows all kinds of competitors like Perplexity to participate. I think he's concerned if it gets sold that it would not be as open. Well, that's the question. Would it be an open platform? I don't know.

9:40And it'd be interesting to know whether all of these companies that would bid for it, whether they would have to somehow say they would keep it open. And whether if you say you're keeping it open, that means you're really keeping it open if you're doing something else. Right. By the way, I was late rushing in here today. Oh, we were all late. For a good reason. We were all late. Andrew was helping me out by kind of dragging things out at the top. It was for a good reason because Andrew was inducted into the Cable Hall of Fame last night. And we all got to go. We all stayed up too late. We all stayed up too late to party and to watch it.

10:09Passed our bedtime. Well, thank you. Thank you for coming. It was a very well-deserved award. And I'm very glad that I got to see it last night. And huge thanks to you and to Joe and to the whole Squat crew and the whole CNBC crew for giving me this opportunity all these years. Well, it has been amazing to watch what you have accomplished. We've been sitting together for just over 14 years. And it has been amazing to see what you've accomplished, not just here. Thank you. But in the broader world of what you've pulled together between deal book and the cable world, but also the amazing programs you've pulled off with billions and too big to fail.

10:45Thank you. Thank you. Cheese will be next. Coming up next on Squawk Pod, a report that President Trump has spoken to President Xi, but no confirmation from China. Axios' Mark Caputo is well-sourced and unconvinced. Now, is this the P.T. Barnum showman of him? Is he in denial or is he genuinely serious? That's one of those eternal questions with Donald Trump that, again, I can't answer. Whatever's real, one thing's for sure. Donald Trump has been aiming to make a deal for nearly 40 years. 1987 is the first time he gave a political speech in New Hampshire talking about other countries ripping us off and needing to have better trade deals.

11:27We'll be right back.

11:32Welcome back. This is Squawk Pod from CNBC. Up and Andrew, Q. I'm Andrew Osorkin. Becky Quick. Joe is off today on this Friday morning. Got a lot of news, though, to tell you about. In an interview published this hour, President Trump telling Time magazine that he is still convinced tariffs are necessary. He said, quote, the bond market was getting the yips, but I wasn't. And he said he would consider it a, quote, total victory if the U.S. still has tariffs as high as 50 percent on foreign imports a year from now. Now, on China, President Trump says that President Xi has called him and that his administration is in active talks with Beijing to strike a deal.

12:14He said he expects to have a full slate of deals announced over the next three to four weeks. So he's now put a timeline on it. He says that he's in talks with China genuinely. But he also said that he wants tariffs and he would be fine, more than fine, with more than 50%. I would imagine, I don't know when this interview was conducted, but if this was yesterday, I mean, if we're in real time, I would think that would scare you. I mean, I think it would scare the market. That's concerning because I would say most market participants you talk to say that they would understand 10 % tariffs and be able to manage around that.

12:49Higher tariffs, particularly 50 % higher, would be a really big deal. And I've been doing some reporting around the conversations that the big retailers have had with the president earlier this week, trying to figure out their concerns and what they're raising to the president on it. Look, one of the issues is if you keep the tariffs as is at 145 percent on China, that's going to be very serious things. For a family that has a baby, you're required by law to go buy a baby seat, a car seat. Right now, that costs$350. In a few months, if that's still 145 % tariffs, that's going to cost$720. So that's a big price pain point for families that are trying to get by with this.

13:29If you look at bananas, we import almost all of them from Costa Rica. Avocados, we've mentioned in the past, coffee. It just starts to layer on and on. And the total cost for the basket, particularly for Americans who might be living paycheck to paycheck, is going to be something they really sit up and take notice to. Now, we have seen lower inflation numbers that have come in. But those are backward looking. And from what I'm hearing in the not too distant future, in the very near immediate future, you could see big pickups in the inflation numbers just based on the tariffs as they stand today.

13:59Now, we've wound that down and we're giving that 90 day grace period. But these those tariffs could start to hurt very quickly in a matter of months. One note, because we were just discussing the timing of this interview. So published just now in real time. However, the interview took place on Tuesday. from what it's suggesting. Oh, man, that's completely, like Tuesday. That was like a year ago. It feels like a year ago. Now, if you go back and try to rewild... Tuesday was when he was taking down his tone on some of it. Right. Because it came after Monday's meeting at the White House. Well, so what's interesting is he took down his tone on Truth Social, I believe, on late Tuesday.

14:33Scott Besson was also trying to take... So the question is... Did this interview happen before or after? And time needs to tell us because... Hard to know. So we're going to try to get to the bottom of that. Things a lot, time. But there's the news. and the question is whether the market should take too much away from it, given the timing of when it took place and just how much of a rollercoaster this past week has been. Why would they spend three days before they put that out? I don't know. When the president tells you something, you better publish it immediately. Better publish it immediately.

14:59Our next guest here with his own insights into the drama inside the White House on tariffs and trade and so much more, Axios Trump White House reporter, Mark Caputo, you can weigh in on this. You know, you were there Tuesday, Wednesday, Thursday. Here we are on Friday. So think about where President Trump was on Tuesday compared to where you think he is mentally about all this right now I think mentally he's been in the same place the entire time And one of the problems that we spend is that we don't understand that when you look at what Donald Trump wants to do with tariffs He's been talking about stuff like this for 38 years And that's at least 38 years 1987 is the first time he gave a political speech in New Hampshire Talking about other countries ripping us off and needing to have better trade deals So look at him directionally, or as some people like to say in the past from 2016, take him figuratively, not literally in some cases.

15:47So directionally, this is where he wants to go. But when it comes to the specifics and the details, the devil is a sort of in them, and so is the noise. The signal is tariffs. The signal is better trade deals. But the noise is all of these specifics on the percentages. I mean, eventually, we're going to probably wind up with some sort of tariff when all of this is done. But when Trump says something like, you know, I don't care if it's 50 percent, you know, that's sort of the guy in the barstool quality of Donald Trump. I'm not saying he wouldn't do it because the guy in the barstool could ultimately get in a fight or do something kind of crazy.

16:21But generally speaking, he does have a circle of advisors around him and they are trying to channel this energy into a more productive outcome. But exactly what that looks like. Speak to this, though, and tell me what you speak to this and tell me what you actually know. According to this time piece, Trump is suggesting that he's in touch with President Xi. Since that interview, the Chinese government has said we've had no talks. And they've now said that pretty vehemently. So what's really going on here? Oh, I have absolutely no clue. I don't trust our government. I've never really trusted our leaders, but I trust other governments even less.

16:56So who's telling the truth here is anyone's guess. But again, what I would default to here is that Donald Trump wants some sort of tariffs and he wants some sort of deal. And until then, it's his world and we're living in it. OK, but let me ask you a different question in terms of and we've discussed this many times, negotiating leverage. Where do you where do you think the leverage really exists? We also were reporting this morning that Apple considering moving its Apple phone manufacturing, at least for those phones being manufactured for import into the U.S., might be able to move to China within a year or at least about a year and a half from now.

17:32that would, I would imagine, actually provide more leverage in some ways to the U.S. in its negotiations with China. I can tell you this is the mood and the attitude of the White House and of Donald Trump, according to those with whom I've spoken, who have spoken to him, is that they still believe that they have a measure of leverage. They believe that China's economy still heavily relies on the United States. And when people have talked to Donald Trump, they have told me that they're struck by the disconnect or the difference in the news coverage and the coverage of the stock market, the numbers, the falling dollar, the falling number of tourists, the falling number of people who believe that the economy is getting better, and the attitude of Donald Trump, which they say is rather buoyant.

18:19They say he's having a good time. And when you talk to him, he's like, you can't believe this. This is great. Japan's coming in for a deal. South Korea is coming in for a deal. Vietnam is going to do a deal. It's going to be great. Now, is this the P.T. Barnum showman of him? Is he in denial or is he genuinely serious? That's one of those eternal questions with Donald Trump that, again, I can't answer. What I could say is his team still believes that this can get done and it's going to be good. Whether they're right or not, we're going to say. Let me ask you a different question. It's a negotiating question.

18:50There's a great phrase called favored nation status. Corporations use it all the time, but it actually represents a favored nation status as in countries. To the extent that certain deals are made, maybe Japan or India comes in with one of the early deals, South Korea comes in with an early deal, it almost will set a benchmark in certain ways. And the question is whether other countries therefore then have more leverage or less leverage going forward. How do you see that? I could see I think it's easier for me to answer what I see as being the likeliest deals to come in first and those are the ones you mentioned Japan especially Scott Besson the treasury secretary it really loves Japan he wanted to be ambassador to Japan if he wasn't going to be treasury secretary according to people with whom I've spoken who were familiar with the transition and he has said whoever comes in first gets the best deal now obviously these deals these trade negotiations depend on nation to nation.

19:47Japan has various barriers to trade. But according to people who also represent Japan, at least one or two lobbyists with whom I've spoken, they say that they believe that things are going pretty well and they wouldn't be surprised if something is announced soon. Now, there are, again, those high barriers to trade in Japan itself. So how that sort of moves along isn't clear. The other issue is South Korea. We've had essentially no tariffs on them anyway. So it's probably going to be easy to negotiate a deal there as well. In addition to the trade aspect of this and the tariff aspect of this, there is a global security aspect to it as well.

20:20And this is part of the mixed messaging, so to speak, that you've heard out of the White House, which is not only does Trump want better negotiations, better deals, more money to come to the U.S. Treasury from tariffs, but he also wants to isolate China. So just as there's a most favored nation status that you're discussing, there's sort of a least favored nation status in Trump's mind, and that's China. He wants to isolate China as best he can. Mark, I want to thank you for joining us this morning. Appreciate it. Thank you. Up next on Squawk Pod, are the U.S. and China really ready to break up a decoupling?

20:56More on the trade talks with former U.S. ambassador to China, Nick Burns. Neither economy and really neither government can sustain a trade war like this at this volume. and this depth of seriousness for several months.

21:16You're listening to Squawk Pod. Here's Becky Quick. Our next guest has been on the front lines of managing the U.S.-China relationship, and joining us right now is Nicholas Burns. He served as U.S. ambassador to China in the Biden administration and has served six presidents, both Republican and Democrat, at in his decades-long foreign service career. He's now a professor at Harvard's Belfer Center. And Ambassador, thank you very much for being with us this morning. Thank you. What do you think is happening? Read between the lines for us here on the conflicts as to whether or not there are negotiations that are taking place.

21:50You know, I think that both governments are trying to figure out how do we climb down from triple-digit tariff, the triple-digit tariff battle that they're in. I think that neither economy and really neither government can sustain a trade war like this at this volume and this depth of seriousness for several months. So I would anticipate that both sides would want to reach out to each other, probably quietly, and begin the process of trying to define, is there a trade deal in the future? And I think the logic for each of them and self-interest from each of them will push them towards that. But the problem is going to be how to negotiate this, how to do it effectively, because I think it will take some time.

22:30We just heard from this Time interview with the president that was released just in the last hour and a half or so that he would like to see, the president would like to see tariffs as high as 50 percent a year from now, that he could see that being out there. This was an interview that was done on Tuesday, and the messaging coming out of the White House can change pretty rapidly. When you get your arms around it, the idea of a 50 percent tariff, is that sustainable for the two countries versus the 145 percent today? It would be enormously harmful to both economies if that's going to be the level going forward for the next couple of years.

23:07You know, China's our third largest trade partner. Our trade volume was$642 billion last year in goods and services. For China, we're the largest export market. And so 50 to 60 percent terrorists would have a significant cut in the trade balance between the two countries. There are upwards of 20 to 25 million Chinese workers who depend on making things, manufacturing to trade in the United States. There are about a million Americans whose jobs depend on trade with China. So those levels, and those were the levels that candidate Trump talked about in the 2024 election, 50 to 60 percent, I think would be highly destructive to this relationship.