Kevin Hassett & Cooking a Hot Dog Split 7/14/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. The president spends his weekend threatening new tariffs and investors bet it may be more bark than bite. And our country's making a lot of money, a lot of money. Another noisy story in D.C. Will there be a new Fed chair named while the current one is still on the job? Kevin Hassett, one of the president's top economic advisors, could be in the running. He tells us where he stands on central bank independence. I think that we definitely need to rethink the way the Fed's acting. We 100 % want independent monetary policy, but it sure looks like they need more congressional oversight on things like the way they built their buildings.

0:43And where tariff policy meets monetary. The Federal Reserve should be independent. The president has the right to voice his opinion. And the bottom line is that the Federal Reserve has been very, very wrong on this tariff issue. Plus, the rest of today's news that got us squawking, bank earnings kick off this week, and is a breakup brewing at Kraft Heinz. By the way, ketchup, a great business. Why ketchup is such a great business, I do not understand. You're going with the ketchup instead of the ketchup. Ketchup. I said ketchup. The ketchup. It is Monday, July 14th, 2025. Squawk Pod begins right now.

1:21Stand Becky by in 3, 2, 1, cue, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the NASDAQ market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. Yay, we're all here. We're happy. It's like the halfway point of the summer, isn't it? July 15th? Is that what? The question is really, when do you think this? The summer doesn't really start until June 21st. No, it's the 14th. When do you think the real summer? Right, you're not just June, July, and August. But if you just do June, July, and August, it's July 14th. Yeah, but my kids don't get out of school.

1:55They can get out of school. So it'll be Christmas. It'll be Christmas next week. It'll be Black Monday. Black Monday is coming up this Monday. At this rate. Black Monday. No, no, no. Or Black Friday. We want this to stretch as long as possible. Black Friday. Black Monday was another thing. We're enjoying the summer. We're just getting into it. We have tariffs pouring in at levels that we have never seen before. And they've only just started. That's really a small portion. It's mostly from cars and aluminum and steel, a little bit of lumber. But they'll really start in about another week. And then in about a month, they'll come in at levels that are extremely strong.

2:36And our country's making a lot of money, a lot of money. President Trump raising trade pressure on Mexico and the European Union. that took place over the weekend. Megan Kinsella joins us now with the latest on where all of this really stands. Where are we? We are right in the thick of it, Andrew. Good morning, guys. So two new warning shots fired to those two trading partners this weekend. The president vowing to impose 30 percent tariffs on all of their exports to the U.S. as soon as August 1st. Now, we did hear Mexico's president, Claudia Scheinbaum, and the head of the European Commission, that's Ursula von der Leyen both vowed to continue negotiations with the U.S.

3:18in the hopes of reaching a deal by early August. But von der Leyen also warned that the EU will be ready to retaliate with their own tariffs by early next month if the president moves forward with this threat. Now, this follows the president's threats against Canada on Friday. And then given the duties he's already imposed against China this term, take a look here. All four of the U.S.'s largest trading partners, Together, they sell about 60 percent of everything the U.S. buys from abroad. They are or will be facing tariffs of at least 30 percent by early next month if all of this holds. The question, though, does remain whether these will actually be imposed in a few weeks or whether they're a negotiating tactic.

3:57Here's what Kevin Hassett said about that yesterday. These tariffs are real if the president doesn't get a deal that he thinks is good enough. But, you know, conversations are ongoing and we'll see where the dust settles. The president later in the day addressed the same idea. And he said when it comes to these deals, guys, the quote was, maybe I'll change them. Maybe I won't. Guys. Well, but that's been sort of the story the whole time. The question that I have is how much of this is, how much leverage does the president have at this point? And does the other side or these other sides call the bluff if you think it's a bluff?

4:33Yeah, it's an interesting question. I mean, very clearly the first response by all of these countries, most of them that we've seen now over the past week or two has been to say, well, we're going to keep negotiating because by doing this in tandem with extending the deadline, maybe he's raising the stakes slightly for some countries from where they were. But it wasn't moving too much except to emphasize he's saying now, I really do mean this and we have to get it done by August 1st. So they feel the deadline pressure. They are there negotiating, but repeatedly now from major trading partners, we've heard that their national interest still comes first.

5:05They'll retaliate if they have to, even though they recognize the White House wants to move higher if they do that. So they know what's on the table now. It's all been laid out there. But they're still holding firm and saying that doesn't mean we're just going to give you everything that you want at this point. I'll also say what he is doing, though, that's very serious. Even though these country specific tariffs are kind of on hold, we do know the sector specific ones are moving forward. That makes things a little bit more grounded in reality here. We're starting to have an impact. We heard about copper and potentially about pharma last week.

5:38We know there are five other of those investigations ongoing. So you have to kind of look at all of it at the same time. And Megan, there's these reports this morning that the EU's van der Leyen may be reaching out to Canada, to Japan. I don't know what what exactly that would mean if they're talking about retaliating together or if they're just looking for other strategies, potentially other markets for some of their goods. What what what's the potential there? Yeah, that's a great point, actually, is that that's the other impact here. Just the uncertainty alone, whether or not these tariffs ever take effect, is we're now hearing from a number of trading partners about strengthening their relationships around the world.

6:14That was Canadian Prime Minister Mark Carney's first response when they got threatened on Friday. We also heard it from von der Leyen over the weekend. She was celebrating a new trade deal with Indonesia. They're mostly looking at, as far as I know, at strengthening their relationships with each other, not as sort of a unified response by all of them. And they can all impact U.S. markets individually. So they don't have to ban collectively for that. But they are trying to boost their own trading relationships so that when the U.S., if the U.S. stops buying as much from any of them, they're already looking elsewhere to buy and sell goods.

6:47Brazil and China is one example we were talking about last week with the steep Brazil tariffs. Canada and the EU, the EU and Indonesia, all of these other countries getting closer together, even just because of the uncertainty with the U.S., they feel like they can't plan in advance. They don't know what things are going to look like a month or a year from now. OK, Megan, we're obviously going to be watching this so very, very closely. And we are going to be speaking with Kevin Hassett. So many questions for him. Joe. Yeah, unfortunately, economists are getting more bullish. No, maybe they'll be right.

7:19But, you know, recession at this point, recession risk seen cooling. Inflation also seen cooling at the same time. So the stagflation combo. So not only are we not seeing that from the tariffs. And is your comment that if the economists start to think that things are actually good, that that actually is probably bad? Yeah, I wish they felt the way they used to. But you're going to start saying, and we already saw some of it, you're going to see President Trump start to say, not only did it not hurt things, the tariffs, he's going to start saying that it actually is helping things. All the money that's being raised right now, and it's billions and billions of dollars.

7:55If there's no inflation and if the economy is chugging along, you know what's going to be key? And I don't know what's more important, what these companies say. And we're going to get it this week. We're starting with the banks. What they say about maybe we don't see any really bad effects like with the economic numbers yet. But we're going to see what their outlook is and what they say. Is that more important or do we do we just with bated breath wait for every inflation number and every labor? I think earnings. But there's earnings is going to be good. Almost by default, you'd have to think it's inflationary.

8:29The question is whether the economy is so good that it's absorbing, if you will, the inflation. And then the second piece is so much of the stuff that was brought in the country is front loaded. And whether we do hit this new wall later. I don't know. It's not August 1st. Most of the tariffs aren't in. They're definitely higher. But as far as why we haven't seen inflation yet, everybody talks about shelter. Shelter was such a big part of inflation, and that is cooling off drastically. And then you've got oil prices that have stayed below 7%. So you could see, theoretically, that could have been transitory the first time.

9:04And we were headed for 2 % anyway. Maybe we were because it was all supply chain related and COVID related. So maybe this whole... Now it's transitory. Maybe this whole obsession that Jay Powell... And maybe he's still fighting last year's... That's why, you know, we'll see. We'll see what happens. The economy looks good. I don't know if I'd cut. Just because you'd want to save dry powder. President Trump, again, criticizing the chairman. The president spoke with reporters after arriving back in Washington last night from the Garden State. Well, I think if Jerome Powell stepped down, it would be a great thing.

9:41I don't know that he's going to, but he should. Jerome Powell's been very bad for our country. We should have the lowest interest rate on Earth. And we don't. Vice President Vance also slamming the Fed under current chair Powell. This was an ex-post, Twitter post yesterday, responding to a post from economist Judy Shelton. Vance said that, in his words, the Fed has been totally asleep at the wheel, as President Trump says. They're too late, both in fighting inflation during the Biden administration and then in lowering rates. Now, National Economic Council Director Kevin Hassett says the Trump administration is looking into whether it does in fact have the authority to fire Powell.

10:23Meanwhile, the Fed has a new frequently asked questions page up on its website with some information about the two and a half billion dollar renovation project of the Fed. The facilities that is drawing criticism from the Trump administration. The page directly responds to some of those critiques. For instance, it mentions that the project is meant to renovate two historic buildings that haven't been significantly updated since back in the 1930s. One thing we found out, you know, I didn't I thought people should have led every newspaper and article about when we had this Treasury secretary on.

11:03The food's much better at the Fed. He can say that when he goes to breakfast and tell every week. Why wouldn't it be? I mean, print some more. No, look. Let's have caviar. It doesn't cost anything. I've eaten at the Fed. You've eaten at the Fed. I've eaten at the Fed and I've eaten at Treasury. Which is better. I think they're both pretty good. I don't know. At the Fed, you get those gold-flaked hamburgers that they make. It's not like that. That's not what's happening with this. It could. If you wanted to. We don't have any gold-flaked because Fort Knox is empty. Shares of Kraft Heinz in focus this morning.

11:43That follows a Wall Street Journal report late last week that the company is planning to break itself up by spinning off a chunk of its grocery business into a new entity that could be valued at up to$20 billion. According to the report, the remaining company would house sauce brands like Heinz Ketchup and Grey Poupon Mustard. Kraft Heinz was formed in 2015 after Berkshire Hathaway and Brazilian private equity firm 3G Capital combined Kraft Foods with H.J. Heinz. Those shares are down about 60 % since that deal. You can see they're up by about 1.7 % this morning. I mean, when you think about that big deal, everybody thought it did not work.

12:19By the way, ketchup, a great business. Why ketchup is such a great business, I do not understand. Because you need it on everything. You're going with the ketchup instead of the ketchup. Ketchup. I said ketchup. Ketchup, yeah. Ketchup, but Heinz ketchup, huge business. There you go again. Well, it's catsup. This is one spelling of it. But the question is why that brand is you can have a huge margin on ketchup. Yeah. But then everything else is so complicated. Yeah, well, it's a lot of the packaged foods that people aren't eating anymore. Right, all the packaged food stuff. Yeah, or they're eating less of, I should say.

12:55Meantime, we were watching shares of Tesla this morning. Earlier this morning, Elon Musk responded to a user on X, which asked Tesla investors if they support a merger between the car company and Musk's XAI. Musk responded no to that. Responded to another ex-user yesterday who said Tesla needs to be able to invest in XAI. Musk said, it's not up to me, or it's not up to me. If it was up to me, Tesla would have invested in XAI long ago. We have a shareholder vote on the matter. And over the weekend, the Wall Street Journal reported that Musk's rocket company, SpaceX, has agreed to invest$2 billion in XAI.

13:30on a Friday, Musk knocked down a report that XAI is looking for up to a$200 billion valuation in its next round of fundraising. Musk said XAI is not seeking funding right now. We have plenty of capital, but a lot of this was sort of speculation driven in part by the fact that XAI is now on the actual Tesla system. So you can actually get access to that. Now, separately, the team behind Musk's AI chatbot Grok issuing an apology. This is after the bot made an anti-Semitic post on X, a statement on Grok's X account, apologizing for, quote, the horrific behavior that many experienced. It attributed the offending post to a code update separate, though, from the language model that powers Grok and said the code in question has been removed.

14:16That's clear as mud.

14:20Tease will be next. Coming up on Squawk Pod, he is supposedly vying for Federal Reserve Chairman. National Economic Council Director Kevin Hassett joins us from the White House North Lawn, the independence of the Fed and the impact of President Trump's tariffs. Most people expected that if there were going to be a price effect, that it would be front-loaded before the U.S. supply chains adjust and more and more production is done into the U.S. Stick around. The man who might end up in charge of our central bank is right after this break.

14:55This is Squawk Pod from CNBC. Up and Becky, Q. You're watching Squawk Box right here on CNBC. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorkin. Now to the New York mayoral race. Multiple reports saying that former New York Governor Andrew Cuomo expected to announce plans to stay in the race as an independent with an announcement coming within days. He reportedly is going to be asking all the candidates except for Zoran Mandami to vow to drop out of the race if they are not in the lead by mid-September to avoid splitting votes. Now, the report says Cuomo will make that pledge himself.

15:30Of course, we had the mayor on our broadcast just about a week and a half ago now suggesting that Andrew Cuomo should be the one who should step out of the race. Clearly, if any of them are going to give Mandami a run for his money, if you will, one of them has to step out of the race. And right now, if you look at Polymarket, if you believe that that's a decent indicator of where things stand, Mondami looking at 70, look, about over 71 percent right now. And the other guy's down to like 14, 11 percent. Adams, it's a tough climate. There are a lot of people are deciding to back him. And there is some amenities in what, high teens or so?

16:09I thought I saw 14. I saw 14 for him and 11 for Cuomo. I don't know what the latest and greatest is. Well, even combined, that's not done. It doesn't do much. Yeah, it's crazy. You expressed some, you missed National Donuts Day? Was that, when was that? Apparently National Donuts Day was in early June. I want to say it was like June 8th or 9th. Where were you? I don't know. Because you never miss that. You never miss that. I'm not sure. Today is Bastille Day in France when they stormed. There's a lot of other ones. if you miss National Nude Day today, you give another chance. Today is National Nude Day.

16:47National Nude Day. National Nude Day. No, thank you. Nobody needs that. No. You know what else it is? Well, it happens to be National Nude Day. Speak for yourself, my friend. Yeah, exactly. Hey, I'm looking better nude. I don't want to see either of you. Okay, but it's also National Be Nice to Bugs Day. I'm not, don't clarify. But I will trade you. National Be Nice to Me Day. I'll trade you one National Nude Day for one National Mac and Cheese Day. I'll take that. National Mac and Cheese Day. Today. Oh, yeah. You can have all the National Nude Days. That's what I... I don't want any of them. I don't want any...

17:20I'm saying. I'm out of... Can you imagine walking around in Times Square if everybody was nude? It would... You've been to a Nude Beach? I've already been to Times Square. Awful. There's nobody... There's no upside to a Nude Beach. Maybe one out of a hundred people should be nude. President Trump announcing an additional or additional 30 percent tariffs on the EU and Mexico. Those are set to take effect August 1st. Join us now. National Economic Council Director Kevin Hassett. Great to have you on, Kevin. It hasn't been that long, but I see you a lot around. And I always wish it was with us. But we understand we we understand you've got a lot to say.

18:01I'll tell you, the thing I'd like to start with, we get so excited about pending deals when we keep hearing, last time it was I think by Wednesday we were going to have two or three big deals. And they don't come. Wouldn't it be better to just wait or something? Why does nothing, like India. We were sure India, we were going to hear about India. Can you update us on that? Or maybe you shouldn't update us because then we start getting our hopes up and then nothing ever happened. Right. The bottom line is that there have been ongoing negotiations with numerous countries and close to final deals that when the president reviews them, he wants more for the American people.

18:43We've got a guy who's the best dealmaker in history who made billions of dollars by, you know, squeezing everything out of deals. And he's doing that for the American people right now. And so talks are ongoing. We've got a deadline and we'll see how things land. But I know they're going to land in favor of the American people. CPI tomorrow, Kevin. And a day doesn't go by where we don't wonder collectively where the tariff effect is. And maybe August 1st, things get more, you know, more interesting. And if people don't come to the table and more more things happen. But at this point, we haven't seen the negative impacts either with inflation, really, or the labor market of tariffs.

19:30Why is that? Is it because shelter has been a tailwind as costs come down or oil prices? Why is it that we haven't? Is it still coming or is it never coming, the bad effect on inflation? You know, the biggest, most interesting data item in this place, Joe, is the fact that the CEA put out a report, Council of Economic Advisors, that showed that import prices into the U.S. are dropping, actually dropping during all this. And my theory as an economist of why that is, is that Americans, because of President Trump's leadership, have recognized that when they buy an American product, they not only get perhaps a better product, certainly a better product most of the time, but they're also making their community stronger.

20:21And so there's, I think, a lot of patriotism in the data. The bottom line is people prefer American products. And so therefore, the demand for imports has gone way down, down so much that even with what tariffs have been there, where people would say, oh, they might increase prices at least a little bit. We've seen prices going down. The other factor, don't forget, is that if we have a trade deficit year after year after year with a country, then by definition, they're supplying stuff to us inelastically. And so if you have an inelastic supplier and you put a tariff on them, then the inelastic supplier bears the tariff.

20:53I think putting it all together, we haven't seen it in the data. And it's been long enough. It's been long enough, right? We've got hundreds of billions of dollars of tariffs coming in. The CBO says that we're now, with the things that are already in place, set for$3 trillion in tariffs over the next 10 years, just about. And all of that. And we haven't seen big market responses. In fact, the market's been going up. We haven't seen inflation responses. And we've got all that tariff revenue coming in. Imagine if we had a tax hike of that scale, how much upset there'd be. I talk about that. Yeah, I talk about that a lot.

21:26Everybody that hates the tariffs can't wait to raise taxes, but this doesn't count as raising any money. It's weird. You mentioned we have deficits. So we don't like countries, we have trade deficits. We got a surplus with Brazil. And I won't say I immediately said that we shouldn't be using tariffs for all these different reasons and Bolsonaro or whatever we're using it for. Because sanctions aren't the same as tariffs. I understand that. You're supposed to have a legitimate reason or emergency reason for it. But what about that? What about using tariffs for anything that you decide you want to do to try to modify some other country's behavior?

22:06What if they people start doing that to us with things they don't like that we do? Look, the president has made it clear that there are a couple of national emergencies. There is a national emergency with fentanyl and there's a national emergency because of the persistent trade deficit. And one of the problems with Brazil is, well, Brazil is trans shipping Chinese goods. I mean, it's not a, it's not a big stretch at all to think about where are the goods going to go with the sort of 50 ish percent tariff that we currently have on China. And so I think the president's right to draw a line in the sand.

22:36And again, we'll see what happens with the negotiations between now and August. Hey, Kevin, should the Federal Reserve, hey, it's good to see you. Should the Federal Reserve be working with the administration's plans or goals or should it operate independently? Oh, the Federal Reserve should be independent. The president has the right to voice his opinion. And the bottom line is that the Federal Reserve has been very, very wrong on this tariff issue. They've been saying it's going to cause inflation, saying it's going to cause inflation. And they've done that while the European Central Bank has been cutting rates a lot because inflation appears, by everybody's standards, to be just about under control.

23:13And so think about it this way. But Europe doesn't have the economy that we have. Kevin, Europe doesn't have the economy we have. We're in a much better position with economic growth. Oh, I'm sorry, Dick. If you look at their inflation and our inflation, it's almost spot on. It's almost exactly the same number. Right. But we have stronger economic. It's come down and it's come down. Yeah. But it's that the growth is coming from supply side effects of Trump policies, which is an inflationary. Kevin, I'm curious if you saw inflation goes down. I was curious if you saw this Golden Sacks report last week that effectively suggests that 40 percent of tariffs will be borne by U.S.

23:48either taxpayers and or U.S. corporations, 60 percent born by the foreign country and whatever businesses are there. Do you buy that in terms of what math have you done and how does that compare to what Goldman Sachs is saying? Well, well, I like first I haven't seen the report, but the numbers seem pretty wrong to me. Again, the way I think about it, when you're thinking about who bears the tax, you need to go back to thinking about the intuition of it as if you're just in your economics 101 class. If I buy a candy bar for a dollar and I put a 10 % tax on it, then the question is, do I go in and have to pay$1.10, in which case the person buying the candy bar pays the tax, or does the store say, oh, I'm going to not be able to get rid of all my candy bars, and so they cut it down to 90 cents and still sell it to you for a dollar?