State of the Union: Senators Cruz (R-TX) & Cantwell (D-WA) 2/24/26

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0:58Bring in show music, please. This is Squawk Pod, and I'm CNBC producer Cameron Costa. On today's episode, gearing up for the president's State of the Union address. Joe is in D.C. on Capitol Hill with senators from both sides of the aisle. First, Ted Cruz. I'm not a tariff guy, but I will say President Trump has changed my mind on one aspect, which is I think tariffs are an incredibly effective lever point for the president. Then what Democrats are hoping to hear on tariffs tonight with Washington Senator Maria Cantwell. In a dream world, I would love the president to say, I hear the courts and I'm going to go to Congress and I'm going to have a discussion with them about trade and about how to get markets open, about how to get soybeans into Asia or apples from our state.

1:51Plus, Wall Street's fears of AI disruption keep rattling the markets. And the bidding war for Warner Brothers' discovery just keeps heating up. It's big enough and interesting enough for us to spend a lot of time talking about, which we do. It's Tuesday, February 24th, 2026, and Squawk Pod begins right now. Stand, Andrew, bye. In three, two, one, cue Andrew. Good morning and welcome to Squawk Box right here on CNBC. We are live at the NASDAQ market set in Times Square. I'm Andrew Osorkin along with Joe Kernan who is in Washington, D.C. this morning wearing a suit no less ahead of tonight's State of the Union address.

2:34Becky's off. We got a whole bunch of things going. No pocket square, Joe Kernan. No pocket square. No, but take a screenshot. This never happens. I know. I know. You without the jacket, me with the jacket. I feel like, I mean, I feel totally inhibited. I could be a totally different person. Well, we'll see how that works out. We can only hope. We're coming off some drops of more than 1 % for all the major averages. And in focus for investors, renewed fears of an AI disruption in the tech sector. Cybersecurity stocks were hit particularly hard. IBM lost 13 % on worries that Anthropa could poach some of its business.

3:11It was IBM's worst day since October of 2000. And we should mention that one of the catalysts for all this was a blog post by Cetrini Research laying out a hypothetical scenario in which AI pushes U.S. unemployment much higher and changes how payments are made. That hit bank stocks with J.P. Morgan down more than 4 percent, although I should say later in the evening, CEO Jamie Dimon said he thought the latest AI fears were overblown and that the bank would be, in his words, quote, a winner in AI. Andrew, we've talked. We've got to talk more, but we're sleepwalking into this, kind of, and we just fall back on the every previous disruption always led to initial fears that were replaced by more jobs and more productivity.

4:00One of these times that may not be the case. Now you're coming around. No, I've believed this for a while. I'm worried. And not about us, because we're... No, you used to give me this Malthusian argument is what you would tell me. No, no, Malthusian about things like oil. Not about this. All along, I'm thinking, what are travel agents going to do? What are truck drivers going to do? It just worries me. And then you saw Sam Altman the other day saying, hey, you know, humans use a lot of energy and food, too. So it's not just, I mean, he sounded like he's already turned into one of the machines.

4:37Did you hear that the other day? Did he said that, Andrew? I did, but interestingly, and I think we've talked about this, the blue-collar job may be the most protected job, maybe more protected than the white-collar job. It's clear to me the white-collar job goes first. Right, and you got a blue shirt on. You think that's going to help, but here I am with, you know, headed out of here. President Trump's looking at new ways to levy tariffs in the wake of his defeat at the Supreme Court Friday. The White House reportedly considering hitting products like batteries, cast iron, chemicals, and telecom equipment with tariffs.

5:12The Wall Street Journal says the levies would be imposed under 232, that section of the Trade Expansion Act of 1962, which allows for tariffs based on national security risks. And the tariffs are not impacted by last week's Supreme Court decision. the president has already made use of section 232 in his second term to tax products like steel and aluminum. And Andrew, it will be interesting tonight. I don't know how many of the justices will be in the front row, but holding their breath, we'll see what the president has to say. The other day, I forgot to mention when we were talking about the Supreme Court, I forgot to mention, remember Chuck Schumer?

5:53Remember that one? We know where you are, We're coming after you guys. You have started a whirlwind of problems. I mean, this is. Well, it's going to be interesting to see how many empty seats there are, because there's a whole view. I don't know if you've read about all these Democrats that may not come at all. And interestingly, some of the Supreme Court justices didn't always come. So, again, I wonder whether they're all going to come and how that's all going to work. It'll be very interesting to see. Well, it'd be nice if you don't want to come, don't come. That's fine. But I hope that there's no heckling or guys, you know, shaking their cane, that there are people ripping things up or, you know, in the past, there's been some decorum that's been.

6:35And we would far be it from us to ever violate any decorum, Andrew. I mean, I'm thinking of Marjorie Taylor Greene on the other side. Remember that? Yeah. Paramount Skydance reportedly sweetening its offer for Warner Brothers Discovery. Reports say that Paramount aimed to address some of Warner's concerns about financing with that new bid. Unclear right now, though, how much the offer is worth. Now, Paramount previously had bid$30 a share in cash for Warner Brothers Discovery. If Warner's board now favors the new deal, Netflix will have four days to respond. Reports had said Variety had put that number close to$32 a share.

7:14We'll see whether Netflix comes back, how high they can go, and what comes next, Joe. I imagine Netflix bids higher. That's my guess on this. But if Netflix wins, then it becomes, I imagine, a year or two year long soap opera about whether the government's going to allow the deal to go through. If Paramount wins, then I imagine the expectation is that they've won. Everyone should be interested. I was I was thinking, Andrew, we're so interested because we're in the media. and it actually, we have almost, we don't really have skin in the game, but because of Versa and because of, you know, the interplay between cable and streaming and new media, legacy media, I mean, we're watching so closely, but I think, I don't think it's just us.

8:01I think it's big enough and interesting enough for us to spend a lot of time talking about, which we do, right? Well, to me, it's just, I agree with you, but I think it's really like the end of Hollywood. There's the AI piece. Possibility of that, yeah. All of it. It's just a shift in all of it. Cheese will be next. Coming up on Squawk Pod, ahead of the president's State of the Union address tonight, our Joe Kernan sat down with Senator Ted Cruz in the Russell Rotunda in the U.S. Capitol. Top of mind for many in business and, in politics, tariffs. The Supreme Court decision, I don't think, is going to have much consequence other than a bunch of chaos and litigation.

8:43because there are a host of other federal statutes that let the president impose basically the same tariffs. And so in terms of our trading partners, I don't actually expect the other countries to do a whole lot different. You'll have individual companies filing lawsuits.

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11:06Welcome back to Squawk Pod, the morning before the president's State of the Union address. Here's Joe Kernan in the U.S. Capitol in Washington. Joining us now is Senator Ted Cruz. He's the chairman of the Commerce Committee, member of the Foreign Relations Committee. Is there anything else? You talk commerce, you talk foreign? Judiciary as well, and rules. I stay busy. Yeah, it seems like it's all, but we can talk to you about anything, obviously. And the first thing I said to you when you sat down, we've had conversations in the past, and many Republicans in their previous lives, pre-Donald Trump lives, were not big fans of tariffs.

11:45And I said, you have been somewhat mixed in the past on our conversations about it. But you said used in the right way, and maybe the way the president has used them, it can be something that you're behind, that you support. Look, that's exactly the way I would put it. As you said to me before we started, you said you're not a tariff guy. And I agree with you. I'm not a tariff guy. But I will say President Trump has changed my mind on one aspect, which is I think tariffs are an incredibly effective lever point for the president. And he's shown that in the last year, that through the threat of tariffs, he's opening up foreign markets.

12:19And there are two camps within the administration. One camp wants the president to use tariffs as leverage to reduce tariffs from our trading partners to remove non-tariff barriers, to expand trade. That's the camp I'm in. I think that's the right camp to be in. There is another camp in the administration that just loves tariffs, that wants them high forever and is fine with other countries having high tariffs. I think that's a very bad policy outcome. But there is an irony, Joe. Donald J. Trump could go down as the greatest free trade president of modern times, which is not what one would expect.

12:51And I'll tell you what changed my I mean, look, I think back to the George W. Bush administration. President Bush was a big advocate of free trade. But our trading allies were not beating a path to Washington saying, let's lower our tariffs and open up our markets. With Trump, they are. The threat of tariffs incentivizes them, and it's a really powerful tool. Do they second-guess a lot of the agreements or a lot of the concessions made after the Supreme Court decision on Friday? You know, I don't think so. I think the Supreme Court decision was unfortunate. I think it's going to cause a lot of chaos, a lot of litigation.

13:26I think you're going to see billions of dollars of litigation drag on for years. That's unfortunate. You're a constitutional lawyer. I think the decision was wrong. You think it was wrong? As a statutory matter, the statute, IEPA is the statute they were interpreting, gives the president the power to regulate importation. Here's what the Supreme Court said. The president can ban imports. He can say no German automobiles are allowed in the U.S., but he can't impose a dollar tariff on it. And I think Justice Kavanaugh in dissent had the better of the argument. I think Justice Thomas in dissent had the better of the argument that with foreign policy, this is a power of the president.

14:01But here's the point that really matters. The Supreme Court decision, I don't think, is going to have much consequence other than a bunch of chaos and litigation because there are a host of other federal statutes that let the president impose basically the same tariffs. And so in terms of our trading partners, I don't actually expect the other countries to do a whole lot different. You'll have individual companies filing lawsuits, but the president will be able to use that same leverage. As Justice Kavanaugh said in dissent, he said, look, the court basically said this was a box-checking exercise, and the president checked the wrong box, that he used one statute when he should have used another.

14:36I don't think it's going to change the fundamental economic policy. What will we hear tonight about Iran and the president's objectives or plans there? Look, I think the president's leadership on Iran has been incredible. The decision to bomb Iran's nuclear facilities was the single most important national security decision of the president. That took some serious... It took enormous cojones, as humans would say. Exactly. Look, and it was a spectacular success. We are at a moment, Joe, where in the next six months we could realistically see the regimes in Iran, Venezuela and Cuba all fall, and we could see them replaced with governments that want to be friends with America.

15:18Now, let me be clear. There are a thousand ways that can go wrong, so I'm not being Pollyannish about that. But if that happened, that would be the biggest geopolitical shift since the fall of the Berlin Wall. And so, tonight, I expect the president to talk about historic successes over this last year because it really has been an extraordinary year both in national security and foreign policy but also in domestic policy. How would you, if you were the president, how would you approach Iran? Is it a limited, another limited strike to try to prevent nuclear enrichment and to say we're serious? Do you go beyond that?

15:54Do you hope that somehow organically it happens? Because when you break it, when you own it and you break it, we know what's happened in the past. So I talked to the president last week about this and what I urged the president, I said, listen, the regime has never been weaker. They are teetering. There are real-world consequences to losing a war. The Ayatollah lost to Israel in the 12-day war. They are weaker. The regime is weaker than it ever has been. And what I've urged the president, do not miss this opportunity. If the Ayatollah is removed from power, it will make America much safer. This is the leading state sponsor of terrorism in the world.

16:30The Iranian regime is responsible for murdering hundreds of American servicemen and women. They fund terrorists all over the world. And so what I've urged the president is, number one, support the protesters and arm the protesters. Let the people of Iran give them the ability to overthrow their government. And number two, I think there's a very real possibility we will see, potentially in a matter of days, limited strikes. What we're not going to see is boots on the ground. We're not going to see a ground presence of American troops there. But I think there's a real possibility of targeted strikes that are designed to support the Iranian people who are protesting, not designed to put America in the middle of it, but designed this regime.

17:10The Ayatollah, when he chants death to America, I believe him. We have seen new highs in the stock market, although obviously yesterday was difficult. GDP might have been higher if there hadn't been a shutdown, but it's positive and expected to by some this year with some tailwinds to be better than it's been in recent memory. Employment is basically, we're at full employment at 4.3 percent. Inflation is above the Fed's target, but it's 2.4 or so and down a little bit from when the president came in. The border's closed. Yet, yet, polls, whether you believe them or not, or just the general feeling of Americans about affordability or about the direction of the country.

18:01Can you explain the disconnect in the Biden administration? I didn't really agree with that because wages fell. Real wages fell during the Biden administration. So I understood why people felt that. But wages are rising. Real wages are rising again. Why the malaise? Why the angst? Look, on the question of affordability, people are understandably frustrated. We had four years of Biden inflation. That hasn't disappeared. The Trump administration has significantly slowed inflation, but it hasn't reversed four years of damage from Biden. That makes life more expensive for the average working American.

18:35Now, there are areas like gas prices have gone down significantly. That's a major area of success. I think the Trump tax cuts that we passed last year, many of them are going to go into full effect this year. That's going to be beneficial. I believe we're going to see significant new investment in the U.S. as a result of the president's diplomacy. I think that's significant. Illegal border crossings are down 99 percent. Murder rates are down 20 percent. Drug overdose deaths are down 20 percent. What I expect tonight to be, I hope, is for the president to give a calm, sober assessment. These are the successes we're winning.

19:10Don't pay attention. The media loves attacking the president. They hate the man. But if you look at the substance of what we're achieving, and I'll tell you, Joe, what I think will get a lot of attention tonight, are two provisions that I authored in the tax bill last summer. Number one, school choice, the biggest federal school choice provision in American history. And number two, the Trump accounts. I think those are the two most far-reaching provisions. School choice is going to unleash tens of billions of dollars of scholarships for kids all over America. Millions of kids are going to escape failing schools and have hope because of it.

19:44And the Trump accounts, you're going to see literally trillions of dollars that our kids are going to be able to invest. It's going to make a whole new generation of capitalists. Andrew. Senator, by the way, I agree with you. And I know the work that you've done with Brad Gerstner and others. And it's really quite remarkable. I had a different question just about a video that's gone viral around Kash Patel. And I know you've been a very big supporter of Kash Patel. And yet we saw him at the Olympics with the team. And by the way, that was an amazing game. And I think we're all I mean, it was one of those great moments for America as well.

20:17Having said that, you know, Kash Patel back in 2023 went after Chris Ray, who was the former FBI director and said he, quote, doesn't need a government funded G5 to go to vacations. Maybe we ground that plane. Fifteen thousand dollars every time it takes off. Just a thought. And so I'm curious what your view is of Kash Patel's use of that plane. not just to the Olympics, but around the country, because there's been a lot of questions about it. Well, listen, I'm a big fan of Kash Patel. I think he's doing a good job. I mentioned just a minute ago, murder rates across the country have dropped 20 percent.

20:54Violent crime is down. Terrorists are being arrested. Gang members are being arrested. Rapists are being arrested. Child molesters are being molested. That's a real record of success. Why was Kash at the Olympics? Because the FBI has an important job protecting security there. And I got to say, you know, it's interesting. You see Democrats right now who are paying focus groups saying, how do we connect with with real people? How do we not seem like a bunch of pofta elitists? And then then they turn around and get really mad. I can't believe Kash Patel was drinking a beer and celebrating with with the American hockey team after winning the gold.

21:30You know what? I would have loved to have been in that locker room. And I don't know a guy on planet Earth that wouldn't have been thrilled to be celebrating. I got to say, the American hockey team, that was 46 years after the miracle on ice. That was a great victory. And I was cheering along with Cash. And, you know, it was awesome when Cash called President Trump, put him on the cell phone. The president congratulated that team. I hope they come tonight. He invited them to come tonight. It was amazing. And look, Jake Hughes with the flag over his shoulder, the bloody teeth, that is one of the iconic moments in sports and history.

22:06And I think, Cash, congratulations on having the chance to celebrate with you. I'm jealous and wish I was there. All right. I was like, wow. I wish anyone would have wanted to have been there. It was really something. It's history. It happens once every 46 years. That's how long you have to. I can't wait for the next one, both of us, right? Senator, thank you very much for being on. Next on Squawk Pod, Democrat Senator Maria Cantwell, ranking member on the Senate Commerce Committee, weighs in on all that tariff litigation that's likely to ensue. Plus, how she's viewing the media bidding war for Warner Brothers' discovery.

22:49I want to go back to the eyeball world where you rent my eyeballs. I watch a lot of advertising, but I get this free content. We'll be right back.

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