Treasury Secretary Scott Bessent & New York City Mayor Eric Adams 7/7/25

0:00Bring in show music, please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, a tariff boomerang, potentially. Treasury Secretary Scott Besant issued a warning to countries who have not reached a trade deal with the U.S. by August 1st. Their tariffs may revert to what they were back in April. Secretary Besant tells us the warning has proved fruitful already. We've had a lot of people change their tune in terms of negotiations. So my mailbox was full last night with a lot of new offers, a lot of new proposals. So it's going to be a busy couple of days. And the heated city election that has made national headlines.

0:47New York City Mayor Eric Adams joins us on his platform and his competitors, including Andrew Cuomo and Zoran Mamdani. Finding ways as the mayor to put money back in the pockets of broken class people, I know how to do. He does it. This is a class exercise. Right now, we need expertise that we don't lose the success we made in this city. Plus, on the national stage, a new political party under Elon Musk taking shape. Can you become someone who can influence parties when you have such close margins on both sides? It's Monday, July 7th, 2025, and Squawk Pod begins right now. Stand Becky by in three, two, one.

1:30Cue, please. Good Monday morning and 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. Let's start this morning with trade. President Trump saying he has now signed letters to 12 countries outlining the various tariff levels they would face on goods that they export to the United States. He said the, quote, take it or leave it offers would be sent out today. Now, he didn't name those countries set to receive the letters. Late last night, the president posted on Truth Social the following.

2:03He said any country aligning themselves with the anti-American policies of BRICS will be charged an additional 10 percent tariff. There'll be no exceptions to the policy. The leaders of that bloc include Brazil, Russia and China. They met over the weekend in Rio de Janeiro. So we're going to have to keep our eyes on that. Meantime, earlier yesterday, Treasury Secretary Scott Besson providing a little bit of color on this, saying countries that don't make trade deals with the U.S. by August 1st can expect tariff rates to return to the levels announced back in April. Now, Besson said the U.S. is near several deals and to expect to see several big announcements over the next couple of days.

2:43Of course, we got the Vietnam deal last week. Secretary Besson is going to be able to join us this morning. We'll be able to talk to them about all this, ask them all the questions that we want, so send them in if you've got some. Lots of folks in the manufacturing and retail world who are very concerned about what this means. Some who don't even really understand what the Vietnam deal actually ultimately means in terms of what the true tariff rate is. Originally, we were going to be seeing those new tariffs, the deals either done by July 8th or 9th, so this was going to be the deadline week. This pushes this off a few weeks.

3:14Kind of pushes it. Well, they're saying it's not an extension of the deadline. That's the same. The letters are going out. Either do it. But it kicks in, actually. It does. On August 1st. As Congress debated President Trump's tax cut and spending bill last week, Elon Musk threatened to start a new political party. And now the bill is law. And Musk says the America Party has been formed. He didn't provide any details, but has vowed to boost his political spending to unseat lawmakers who voted for the bill. In a long post on True Social yesterday, President Trump wrote that he's saddened to watch Elon Musk and his words go completely off the rails, essentially becoming a train wreck over the last five weeks.

3:59And he said the one thing that third parties are good for is the creation of complete and total disruption and chaos. and he mentioned Ross Perot in the past shares the Tesla this morning and can see down about significantly down about 6%. I mean, I guess the question becomes if you can target a few senators and a few House seats, can you actually become the, you know, Kyrsten Sinema vote? Can you become someone who can influence parties when you have such close margins on both sides? But it is So who's who's a better for? Who's it? Does it help Democrats? Does it help Republicans? Obviously, there's there's that question.

4:42So it helps. There's the other question of just how much influence. I mean, look, I follow Elon. We all follow Elon very well. There's some people who love him. There's other people who hate him. There's other people on the day. But as a result, the question is, how much influence will he be able to have beyond the money piece of it? Because, look, the money works to some degree, but it's really there's this other element to it. By the way, the shareholders of Tesla, they don't like it. That's a whole separate matter we should talk about at some point. So it's not so clear that if you're just going to throw money, by the way, even if you got them elected, do they vote the way you want them to vote?

5:17It's not like you would own these politicians or have them in your pocket at that point. It's pretty mercurial. I mean, that is not that has not changed. And whenever Walter's in Isaacson, he talks about it. I mean, the original blow-off was a total train wreck, you know, with the Epstein stuff. And then it seemed like things quieted down, and they were friends, not friends again, but there was like a detente. Now it's full-on out in the open. But what about the Tesla shareholder today? Or the SpaceX shareholder? Or the anybody shareholder? You have to wonder the implications with this. Both in terms of just weird.

5:51Government contracts. Well, there's the government contracts, but there's also his own focus. I think there were a lot of shareholders who were actually quite happy that he was back in the saddle. He was sleeping back on the floor. He was doing his thing. People have talked a lot about when he gets back into a corner, he comes back. By the way, there's an interesting story in The Wall Street Journal this morning that says how Tesla is struggling in China now because companies like BYD and other car makers are doing all sorts of new advanced work that we all think Tesla is so advanced. They are very advanced here in the United States.

6:23Apparently there, it's not anymore. So there's a lot of work to be done just inside Tesla unto itself. And so and that and that doesn't even start with the conversation as you're reflecting about, you know, what you think regulation and policy is, government contracts and everything else. CNBC's Philip Bowe is here to talk about investor reaction. Understandable, because I think a lot of people are saying, what's he doing? Where's he going with this? And Tesla investors, to a large extent, have always given him a lot of rope to go off and to do and to say whatever he wants to say, because their belief is, look, the man has come up with some incredible companies, whether you're looking at Tesla, whether you're looking at SpaceX, and has done things that a lot of people scoffed at in the past.

7:04But now that he's revisiting the idea of politics in terms of forming a political party, it raises a bunch of questions. I mean, look at his comment in terms of, you know, what he wants to do with the American Party when he posted on X saying when it comes to bankrupting our country with waste and graft, we live in a one party system, not a democracy. Is that by itself going to bother a Tesla investor? No. But he wants to form a party, which then raises the question, wait a second, what are you doing with your time and your attention? You're trying to form a political party. It would, in theory, target two or three Senate seats, eight to 10 House seats.

7:46And the goal is to have enough leverage that they could steer legislative talks, whether with the Democratic Party or the Republican Party. Not surprisingly, Donald Trump said that Elon Musk is off his rails, is off the rails in terms of his comments. So this is one of those things, guys, where you look at it from a Tesla investor perspective and you sit there and say, what about Tesla? We wanted you to work on Tesla. That's what we think Elon Musk is best at. And that's the reason that shares are under pressure right now. Yeah, I mean, this is, look, his intensity and his unwillingness to ever take no for an answer to to be shut down by things as part of why he's so successful.

8:29Without a doubt. But correct. There are questions as to the limit of that and knowing how to prioritize and what he should and shouldn't be going after that I think are the big issues here, too. Yeah. And I think Dan Ives summed it up best with his note that he put out. Now, Dan Ives, look, let's be clear here. He is a Tesla bull through and through. He thinks that Elon Musk is going to go much farther and Tesla is going to go much higher. But in his note, he said what I think a lot of people believe in terms of when they look at Tesla as an investment. There is a broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.

9:07Like, Becky, over the weekend, four or five different people in different situations, you know, whether I was out at an event, out at a store and stuff, they would stop me. And they always ask about Elon Musk. You know what they all said? Pretty much the same thing. What is he doing? What is he doing? And that is at the heart of the questions surrounding Elon Musk and Tesla. And that's why the stock is under pressure, because people are sitting there saying, are you focused on full self-driving and fixing, you know, the concerns about sales slowing down? Or are you more concerned about politics?

9:42That is the question. Phil, thank you. We'll see you again soon. You bet. Coming up on Squawk Pod. The Trump economic agenda, as I've said many times, it's a three-legged stool. It's trade, it's tax and it's deregulation. What each leg of that stool looks like, according to Secretary Besant. Plus, while President Trump raises pressure on the central bank, the Treasury Secretary keeps up his relationship with Fed Chair Jay Powell. He comes to Treasury. I go to the Fed. The Fed's food is much better, so I enjoy breakfast over there. And we have very lively and far-reaching discussions with a lot of mutual respect.

10:23They're not worried about egg prices over there.

10:29You're listening to Squawk Pod from CNBC. Here's Joe Kernan with Becky Quick and Andrew Ross-Orkin. Join us now for the latest on tariffs and the recently passed budget bill and more, Treasury Secretary Scott Bessent. Mr. Secretary, thanks for joining us. The big, beautiful bill, deficit concerns, debt concerns. You have made the argument in the past that this will address the deficit, and you see deficits in future years coming down from whatever it is, 6 % of GDP. How do you argue that that's going to happen? Tell us again. Well, good morning, Joe. And look, we inherited a mess. And I'm not sure where all these deficit hawks were when Team Biden was blowing out the deficit.

11:14So last year, it was 6.7 % of GDP, which was the highest it had been when we weren't in a recession, weren't at war. We don't have a tax collection problem. We have a spending problem, and we are trying to get that under control. We are also trying to accelerate growth because changing the growth trajectory upward solves a lot of the deficit problems. Mr. Secretary, I asked the question that, you know, not all deficit spending is equal, I don't think. Would you argue that if a deficit resulted from lower tax rates or from extending the tax cuts, whatever you want to call it, if it can cause some growth, is that superior to the deficit or is it less deleterious than the deficit you get just from Green New Deals or IRAs?

12:11or whatever you're talking about, the government, just transfer payments and the like. Well, Joe, you're exactly right. Does the spending create more growth? And is the GDP growing faster than the deficit? One of the things that I agreed with Secretary Yellen on, the important number is the debt to GDP. And we intend to bring that down. We also intend to, we cut spending on the IRA. There's substantial pullbacks. A lot of those were uneconomical, stranded assets. And the Trump economic agenda, as I've said many times, it's a three-legged stool. It's trade, it's tax, and it's deregulation. So, you know, I also believe that the substantial amount of deregulation that we're doing is going to accelerate economic growth.

13:06And the important thing, too, is we're going to have economic growth in a non-inflationary manner, unlike we saw in the previous four years. Okay, let's move on to trade. And it's amazing how quickly things move. I know yesterday you said by Wednesday we might have a couple of more deals to announce. I know it's Monday. It's not even 9 o 'clock yet. Can you give us any idea whether that's likely? Is India, is that in the mix? Can you break any news for us here that something's going to happen in the next 48 hours? Yeah, we are going to have several announcements in the next 48 hours. And, Joe, I think what President Trump is concerned about is the quality of the deals, not the quantity.

13:55As you could imagine, as he started herding the cats and trying to get everyone across the finish line, when he said that there's a chance that countries could boomerang back to their April 2nd reciprocal tariff levels, we've had a lot of people change their tune in terms of negotiations. So my mailbox was full last night with a lot of new offers, a lot of new proposals. So it's going to be a busy couple of days. But importantly, too, that President Trump has said that they would the countries would not go back to the reciprocal rate until August 1st. Mr. Secretary, a question on behalf of a number of viewers who are in business importing things from Vietnam, and they want to know the following.

14:47They say this 20 percent, is that on top of existing duties? Is it 20 percent overall? What is the actual number? Because I think there's a lot of folks who are still confused or trying to do some planning here. Andrew, 20 percent overall. 20 percent overall. So there's nothing that's not tacked on to something else before that. No, this supersedes all the other tariffs. Now, you know, there may still be some of the 232 tariffs for specific industries. But in terms of generalized, it's 20 percent. Mr. Secretary, I think you took, or at least it was interpreted, it was a softer tone on what's going to be included in the letters that go out on Wednesday.

15:28What can we expect? What are they? Are they, is it ultimatums and the president's way or the highway with some of these numbers? Or are there details on, I don't know, sort of staking out positions and letting these countries know what, you know, where they have more work to do? No, they're pretty standard letters, Joe. It's just thank you for wanting to trade with the United States of America. We welcome you as a trading partner. And here's the rate unless you want to come back and try to negotiate. The one thing I've noticed that, you know, a lot of people that don't want any tariffs and are the most critical of the entire approach to trade are the ones that seem most disappointed when the president doesn't follow through on the tariffs that he's promised.

16:24So when it appears that he's trying to do deals and trying to, I don't know, negotiate from a position of strength, they're the first ones to criticize him for not following through with the really draconian tariffs that we all hope doesn't come to pass. Well, Joe, as I've said over the past few weeks, TDS, which used to mean Trump derangement syndrome, has turned into tariff derangement syndrome. And we, this same group was pulling for the economy to slow, for inflation to pop up. None of that has happened. None of that has happened. And as a matter of fact, we're taking in substantial tariff income, which I don't like the CBO scoring, but some Democrat made the mistake of asking the CBO to score tariffs.

17:15And over the 10 year window, that's$2.8 trillion based on the current deals. And I can tell you that the deals that are coming out will be slightly higher than that. So, again, I don't like CBO scoring, but$2.83 trillion over the 10-year window substantially eases the deficit. Mr. Secretary, you are an incredibly busy man. I think your portfolio is more expansive than any Treasury Secretary I recall ever seeing. I just wonder, what job do you think is more important to the markets, to the economy? Would it be Treasury Secretary or Chairman of the Federal Reserve? Look, they're both very important jobs.

18:02I am busy as Treasury Secretary. Becky, I think you're asking which is more important for me to do? I am. Okay. Look, I will do what the President wants, but I think that we are making great gains here at Treasury. We've had a busy five, six months out of the blocks, and we've got a lot to do. passing the one big beautiful bill on July 4th was an incredible achievement by the president, by Speaker Johnson, by Leader Thune. But now Treasury is tasked with the implementation. Mr. Secretary, as you think about interest rates, we've heard from the president talking about what he would describe as too late, Powell.

18:49Powell is not going to be in this job in a year from now, no matter what. And one of the conversations we had with Steve Leisman last week was the idea that maybe the market has already built in almost the shadow Fed idea that you raised about a year ago before the election in terms of how the market thinks. Do you think that interest rates, to the extent they have been kept down, irrespective of what the Fed is doing, or at least the expectations of what the market thinks, is a function of that? Well, Andrew, I always say markets live in the future, and I think markets may be pricing in that perhaps the president's right, the rates should be lower.

19:29I would say that the market's pricing in lower, I think it's two cuts for the rest of the year, and then the two-year, the overnight and the two-year are inverted. So maybe the market's just pricing in the economic fundamentals. And sure, a different Fed share is a kind of forward guidance. But as I reiterate to people all the time, it's not just the Fed share. It's a committee. By the way, what are your lunches like with Jay Powell these days? Well, it's breakfast. And we have a libel exchange. We do a home game and away game. He comes to Treasury. I go to the Fed. The Fed's food is much better, so I enjoy breakfast over there.

20:13And we have very lively and far-reaching discussions with a lot of mutual respect. They can spend as much money as they want on breakfast at the Fed. They're printing. I mean, it's like anything goes. They're not worried about egg prices over there. Are people actually leaving tariff offers for you on your voicemail? Or were you, was that? They're coming in a lot of different ways, Becky. Fast and furious. Yeah. At this point, you're still Treasury Secretary, so I need to ask you about the dollar. And it actually is sort of an issue that, you know, the markets are at new highs, equity markets, the bond market has been behaved after the big, beautiful bill.

21:04But people looking to nitpick or looking for something to really be concerned about. Talk about the dollars behavior over the since the beginning of the year. I think it's the worst start of a year in 30, 40, 50 years. Was it overvalued, Mr. Secretary? Was it was this long due? And given the recalibration in global trade the president's trying to affect, is this to be expected and actually welcomed? Well, Joe, I was in the investment business 30, 40 years, and more than half my gains came from currencies. So I think I have a good box to stand on here when I talk about currencies. And I can tell you that it's natural for currencies to go up and down.

21:54And what we've seen is not out of the ordinary, maybe the speed with which it happened. But again, these days things seem to happen much faster. After the bottom in the stock markets on April 9th, we had the fastest recovery from a 15 % drawdown in history. And I would point to President Trump's first term. Over the first year, the dollar went down about 7 % when tax cuts and job backs were passed in December. then over the ensuing few years the dollar went up. And the value of the dollar could mean that other countries' currencies are strengthening. The index that you're referring to is the DXY.

22:41The largest component of that is the euro. And one would expect that the euro would appreciate given the fiscal spend that we are seeing coming out of Europe, especially on defense and especially from Germany. The other thing that's happened, we have seen a substantial depreciation in the Chinese currency, the RMB versus the euro. So I believe that's down about 11, 11.5 percent on the year. And it's just hit an all time low. So, you know, I don't see people waving their hands in the air about the Chinese currency depreciating. Mr. Secretary, I wanted to ask you about China. About a week ago, President Trump referred to a potential deal over TikTok in the next two weeks.

23:26Some people looked at that and said that's an interesting chess piece as part of the larger negotiation with China. What is the timeline at this point with China? Can you give us any sort of sense of how things are going there? Andrew, one of the things that's not my portfolio is TikTok. So I can't speak to that directly. What I can speak to is I'm going to be meeting with my Chinese counterpart sometime in the next couple of weeks. We had good meetings in Geneva and London. We both approached it with great respect, the two largest economies. And I think there are things for us to do together if the Chinese want to do it.

24:06So we will discuss whether we are able to move beyond trade into other areas. Secretary, I know you have to leave. I was kind of clumsy in asking my question about just trying to talk about different types of deficits. Judy Shelton, I don't know what happens with the Fed. I don't know who's there in a year, but this is pretty eloquent. She sent this in. This has been one of her Wall Street Journal pieces. There is a difference between government overspending, which borrows from the future to pay for current consumption and tax cutting incentives now to spur more production down the road. Government borrowing to finance socialist redistribution isn't the same as government borrowing to invest in entrepreneurial capitalism.

24:52That's pretty well. I might tweet that out. You're free to tweet that out if you want to. Okay, but, and you know, Joe, the other thing too is that I think in the Tax Cuts and Jobs Act, which was made permanent, is the 100 % expensing of equipment. That's not talked about much. Which is very powerful. We also have a five-year window for 100 % expensing for factory structures and agriculture structures. So, you know, to take a tax hit on that is really, you know, you're really winding the spring and you are creating high after tax returns on capital, which increase productivity, which is what makes countries rich.

25:36Very good. Let us know. We're here if if if you want to get it out. You know, I think we count as disclosure, don't we? We count as fair disclosure. If like if you're leaving now and you get something in your in your email box or something, just call us back. Will you do that, Mr. Secretary? Let us know. After the president, Joe, you'll be my second call. Right. There you go. That's not bad. Thank you, Secretary Besant. Appreciate it. Thank you all. Tees will be next. Up next on Squawk Pod, New York City Mayor Eric Adams joins us. He explains his own campaign as an independent and responds to the platform of Democratic nominee for mayor Zoran Mondani.

26:21The foundation of him paying for free buses, he wants to tax 1 % of high-income New Yorkers. Mayors don't have that authority. You know who has that authority? Assemblymen. He's an assemblyman. And the governor already made it clear she's never going to do it. The city politics that have captured national attention right after this.

26:48welcome back to cnbc's squawk pod you're watching squawk box right here on cnbc i'm andrew rost working along with joe kernan and becky quick a lot going on after this long july 4th weekend joining us right now on the set this morning is new york city mayor eric adams a national debate playing out since Mondami won that Democratic nomination. Good morning. We're all trying to figure out where this is all headed. We're looking at Pali Market. He is still up relative to you. I want to understand what you thought, what you were thinking. You know, we all saw him come on, but really only come on hot 72 hours out, maybe, maybe a week out.

27:30And it sounds like you've been thinking about this a lot longer. Yeah, and remember the polymarkets also days out. It had Andrew above him. Six months ago, I was in a restaurant and I heard two young people talking about Madani. And then I was in a store purchasing something. I heard two young college students saying the same thing. I went back to my team. I said, Zohan is going to win this race. and we strategically knew that we should not be in a crowded Democratic primary. And then I decided I was going to run on an independent line. And everyone thought it was hilarious. They said, what are you doing?