USTR Jamieson Greer & a GPU Lifecycle 8/24/26

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0:32Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts. Bring in show music, please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, trade talks between the U.S. and Canada collapsing. U.S. trade representative Jamison Greer on the developments and on the friction.

1:14We set about to finalize it. And then in the last hours, I think there were things that the Canadians just, you know, they wanted more. Plus the impact for American consumers. This is 5 % of imports from Canada. It's 0.06 % of our overall consumption in this economy. So there's no possible way it can really affect U.S. well-being. Then where do all the GPUs go when a chipmaker rolls out a new model? Sprout is recycling and refurbishing chips. And CEO Shelley Lee is seeing a server lifecycle much longer than we originally expected. One of the things that these big chip makers didn't intend for is making a chip that lasts six, seven, eight, nine years.

1:58And so what we're seeing now is, you know, these GPUs are made really, really well, but they're sitting in data centers that just absolutely run them to the ground. But first, the other big stories of the day, including NVIDIA's interest in perplexity, an economic D-Day for Iran, and bonds, bonds, bonds. After Treasury yields surged to levels not seen in nearly 20 years, Treasury Secretary Scott Besant said last week that the department would double its government debt repurchases. Today, Treasury officials told our own Steve Leisman how they plan to fund the buybacks. Using the Treasury general account, essentially its rainy day fund would provide the Treasury with considerable firepower to influence long-term bond yields.

2:44It is Monday, August 24th, and Squawk Pod begins right now. Stand Becky by in 3, 2, 1, cue it please. Good 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 Joe Kernan and Andrew Ross Sorkin. Gang's all back together here. Let's take a look at what's been happening. Wow, threesome. That's us. Yeah. Three is company. Trump administration is getting ready to lay out new economic penalties against Iran in a Financial Times op-ed Treasury Secretary Besant called today's economic D-Day. That's what he's calling it for Iran, echoing language used by President Trump last week.

3:26Besant says after decimating Iran's military capabilities, the U.S. is, in his words, entering the endgame. He writes that those who fear that the danger of defying Tehran ought not to discount the cost of testing Washington. The president has created the conditions to leverage every agency, every authority and action that many assumed would never we would never summon. Any remaining tie to Tehran will hasten the economic ostracism of countries and entities, whether that tie be purposefully constructed or just willfully ignored. Yesterday, Iran's foreign minister dismissed the threat of new U.S.

4:09sanctions as a sign of desperation. Iran's Persian Gulf Strait Authority also warned that vessels violating its transit rules in the Strait of Hormuz could face penalties, including future ship seizures. Now. This is targeted at China, basically. Well, that's going to be the very, I mean, I'm fascinated like everybody else to see what he's going to say at 2 o 'clock because the idea that China is going to listen, I don't know, maybe they will listen. I hope they listen. I mean, I don't know what I hope for, but it seems very hard to believe that China is going to turn around on this issue. I wish we really knew what's going on inside Iran right now.

4:53I mean, we hear anecdotally 350 percent inflation and no water and no food. And, you know, you can, depending on, you know, which network you watch. So a network, actually our former network, we're not part of NBC anymore, are we? NBC's correspondent said that the president is claiming without evidence. She put that in there and you'll meet you, whatever. But she put that in with just stuck it in herself without evidence. Trump is claiming that Iran is having some economic problems, which I just I love. I mean, editorial. I mean, I guess I do it, too. The U.S. imposing new tariffs on Canada following the collapse of trade talks.

5:33Canada vowing to respond and Megan Casella joins us now with the latest. Good morning to you, Megan. Good morning, guys. 50 percent tariffs are now in effect on some 20 billion dollars worth of Canadian exports to the U.S. Now, this will hit products ranging from wine and furniture to cement and dairy. Canada is vowing to retaliate dollar for dollar. Their new tariffs will be on sectors including steel, paper and agricultural equipment. All of that set to take effect just after Labor Day. Now, Canadian Prime Minister Mark Carney, he said in a Saturday press conference that this was a step that Canada never wanted to take.

6:09We take this step reluctantly. Reluctantly because we recognize that some of these measures will raise costs and reduce choice for Canadians. reluctantly because we recognize that some U.S. companies and some U.S. states are innocent bystanders in a dispute that they did not want. Reluctantly because this trade dispute is preventing Canada and America from doing so much good that we could do together. Now, as for what exactly led these talks to fall apart, the U.S. side says that there was a last minute demand from Canada to make sure that the auto tariff relief they were prepared to offer on cars would be extended to light trucks as well.

6:49Canadian Prime Minister Carney also said that the U.S. made demands aiming to limit Canada's ability to strike trade deals with other countries. He called that unacceptable. He also suggested that a lack of unity on the U.S. negotiating team complicated talks as well, and that fueled some chatter over the weekend of this reported divide between Commerce Secretary Howard Lutnick and the U.S. Trade Representative Jameson Greer. And guys, the question now is how long this might go on. One round of tariffs on about 5 % of what the U.S. buys from Canada, that won't have a huge impact on its own. But if the tit-for-tat continues, and given that there are no talks currently scheduled between the two sides, it's hard to see any of this being resolved anytime soon.

7:29There's also a suggestion at one point that the U.S. was asking Canada to eliminate French from some of its districts. Did you see this? Yes. Carney alluded to this as well. Without giving too many specifics, he said, you know, this is an infringement on our sovereignty. It was things like in a streaming service, for example, allowing French language offerings at the top or on labeling using French language in addition to English language. We don't have too many specifics on what exactly the U.S. was asking for there. But Canada called that a red line and said it wasn't something that they would even be asking for the language change.

8:08Because if they become part of the United States, they've got to speak English eventually. Megan, do you know why? Yeah, I don't know exactly. There are different different views of this. Was it a power play by the United States? Was it a misunderstanding or an overrepresentation by Canada of what exactly the U.S. wanted? We just don't know. Even the piece about no trade deals with other countries, the U.S. says that wasn't what they were going for. They were actually just going for trying to promote the U.S.-Canada relationship more, and Canada viewed it as something more extreme. It does seem like throughout this whole thing, on a number of issues, putting the pen to paper made everything a little bit more extreme than Canada wanted.

8:47So there were some key demands that really messed things up at the end, but overall the U.S. was just looking for more than Canada was willing to give. Here's what I think part of it may have been. The United States pushed for concessions regarding Canada's and Quebec's French language laws, labeling them as trade barriers for American businesses. I think that was part of what the the journal always points out some some interesting stuff from both sides. He's complaining about the trade deficit and they point out we'd have a trade surplus if we weren't importing so much heavy crude. So we'd have a supply.

9:23And it's well suited for our refineries here. So it's something that makes sense. The other thing the journal points out is they're talking about light trucks and that, you know, Carney wanted it on light trucks. Ford produces some trucks. So you're basically hurting Ford by by putting a tariff on, you know, winning it. Anyway, we will have Jameson. The energy piece of this, Joe, is huge. Yeah. The energy piece. Yeah, I was the energy piece where they supply almost all of the natural gas to the United States. We're a huge buyer of all of Canada's energy. And Carney made the point the U.S. wouldn't want Canada to stop selling that, especially given everything going on in the Middle East right now.

10:01That's an area where this could get a lot dicier if the tit for tat continues. OK, is that part of, Megan, the the the tariffs that they the reprisal tariffs that they were talking about starting September 8th? It was beyond that crude oil as well. So you could see additional inflation there. Carney did not initially lay out energy as one of the categories, but they do say they're still figuring out exactly what the tariffs will hit. So we just don't know quite yet. We should know in the coming days. I'll say, too, though, that Carney was emphasizing both in his press conference and then there's some reporting to this effect as well, that they're looking for ways to not impose maximum damage at first because they think they might be in this for the long haul.

10:40They're not expecting trade talks to get back off the ground with the U.S. until after the midterm. So they want both sides, at least especially on Canada's side, to be able to withstand this. So they're not going for maximum damage right away. Would you say the total number of goods that could, because 20 billion is tiny. Would you say the total was? And don't we think that it doesn't go there and that this is just another bargaining ploy to eventually, you know, get one more thing that the United States wants? Probably. Art of the deal. We're going for the maximum and then we'll pull back a little bit.

11:14It's a$900 billion trade relationship between the two sides. When you look at two-way trade, this is$20 billion in goods. So 5 % of what the U.S. buys from Canada right now. Canada says the retaliation will be dollar for dollar. Small potatoes right now. The concern on both sides is how far it goes. Doesn't involve potatoes at all, though. That was just an expression. That's true. Idaho is safe. OK, Idaho. Good. And we're going to get to talk about all of this a little bit later in the broadcast with U.S. Trade Representative Jameson Greer and get at that very issue of whether there was any daylight between him and Howard Lutnick, as some of the reports had suggested.

11:51That's exciting. California Attorney General Rob Bonta is now canceling a meeting with Paramount Skydance representatives that was scheduled for today. Bonta had told The New York Times that Paramount had misrepresented in leaked details of a meeting that his office held Friday with the company. Now, California and other states are suing to halt Paramount's more than$80 billion merger with Warner Brothers Discovery. Last night, The Wall Street Journal had reported that at today's meeting, Bonta was planning to ask Paramount to divest some of its cable channels and promised to keep its movie studio separate from Warner Brothers.

12:28That unto itself, the second portion of it, I think, is a non-starter for the Ellisons, which is to say the idea that you would somehow keep Warner Brothers and Paramount separate would be very, very challenging in terms of understanding the math of it. They also need to keep, as we've discussed, so many of the cable channels, even if they are not, quote, unquote, strategic to the company, because they still produce an extraordinary amount of cash, which is used to pay down, or at least the plan, and based on what they've committed to so many of the lenders, a plan to pay down the debt. And so all of this becomes very, very complicated.

13:01Of course, the ticking fee starts in October. So there is a real urgency, at least on the part of Paramount, to try to push this along. It's also unclear whether actually Bonta would ultimately win. So if there is an argument to try to settle, the question is, what does that settlement even begin to look like? And it's not going to be a quick or easy settlement when you've got situations like Bonta canceling the meeting that was scheduled for today. Well, that's because this whole thing has become so political on all of it, on all sides. From the start, probably. Our senior economics reporter, Steve Leisman, joins us right now with some new details about the Treasury's plans to buy government bonds.

13:42Steve, good morning. Good morning, Becky. CNBC has learned that the Treasury could use its near$1 trillion dollar general account to help fund its recently announced plans to increase purchases of government bonds on the long end. According to senior Treasury officials, using the Treasury general account, essentially its rainy day fund would provide the Treasury with considerable firepower to influence long-term bond yields. That would address one of the market criticisms of last week's surprise announcement to double the size of buybacks on the long end to at least$4 billion. Treasury Secretary Scott Besson said on CNBC last week, such operations could be even larger, and the Treasury had a big toolkit.

14:21But the Treasury did not detail a funding plan. Market participants, they assumed the Treasury would sell short-term bills to buy the long-term debt. That could still be the case, and the officials would not say how much of the TGA would be used. But they were clear it could be available. Ten-year bonds were treated from an initial rally when the plan was made public, in part because of skepticism about whether the Treasury's resources were too limited. Using the TGA could change that. Besson has built up the TGA to around$950 billion compared with a stated goal under the Biden administration of around$550 to$600 billion.

14:56One downside is having somewhat less money on hand in the event of a new debt ceiling battle, but the next battle isn't until sometime in the first half of next year, and a small amount of TGA could go a long way, would not necessarily be of concern to markets. The Treasury officials countered criticism that the surprise announcement was a departure from the practice of being, quote, regular and predictable with bond auctions. They said no change had actually been made to the regular auction schedule, and markets have been given three weeks until the first enhanced buyback operation on September 9th.

15:26Treasury may not have to use much at all of the TGA to move the bond market. Even the threat could be enough, though markets could, of course, test Treasury Secretary Scott Besson's resolve. Becky? Steve, this is a senior Treasury official telling CNBC this, telling you this. Is this kind of the Hank Paulson school of thought where you wanted to let the markets know you have a big bazooka in your pocket so that you don't necessarily have to use it? Hey, there's a gun here and we'll shoot it if we need to. Exactly. I think that's a nice analogy, Becky. And what's interesting to me is that the Treasury has always had this bazooka.

16:06It was kind of interesting to me that the markets didn't figure out they had it. I think it was a question of whether or not Treasury Secretary Scott Besant would use it. And this, our reporting makes clear they would. It's already funded, right? The question is, do you want the TGA at$950? Do you want it a trillion? If you go down to$800, is that the worst thing in the world? I don't know. You have a debt ceiling battle that may happen, I think, as soon as February, but perhaps as late as May, depending upon how the finances work out. This has been there. And I was surprised last week. The Treasury didn't tell us it was part of what they were considering.

16:45But, of course, it was there. And I think it was, Becky, the idea that the Treasury sort of been very clear about wanting this thing near a trillion. But my reporting suggests with people in the market that 800 or 900 is not the end of the world. Yeah, this is a don't test me moment. We know you don't fight the Fed. This is Treasury saying you don't fight the Treasury either. That's a great way to put it. And what's interesting is, so they said they're going up from two to at least four. The demand from the market at these auctions has been around 20, 20 billion on offer. So there is a demand out there for markets to get liquidity for this.

17:22So the Treasury Secretary is actually meeting the market demand on this, liquefying the off the run, providing liquidity to off the run, that could help treasuries on the run and modestly reduce. It depends on how much they want to use. So we'll see what happens if they give us a further announcement about perhaps how much of the TGA they would use. But this kind of makes clear to the market that there is a big toolkit out there, as the secretary told us last week. Hey, Steve, one other question, this idea of asymmetric information that Bestin's talked about, that he knows something from last week when he made this decision that the rest of the market doesn't.

17:59We're trying to signal that we think that this is a thinly traded area of the market, that we're in August and there's been a lot of corporate issuance that's influenced the market. And we believe that there are many underlying factors that the market is not looking at. And we are going to make a market in these. We routinely do buybacks and we're going to increase the size of the buyback. And, you know, Sarah, I would note that it could be more than the four billion per issue. What do you think that is? Well, you know, I've been puzzling over that. And I want to look at that word. I have the transcript of his interview up in front of me here.

18:46It wasn't exactly clear to me what he was talking about. But the thing is that the Treasury does have visibility about trade in the market that perhaps the market doesn't have. So I am interested as to what he's seeing. But the other thing he did say, Andrew, if you'll remember, was this idea that this is thin trading in the summer. And he wants to slow things down. I don't know that he wants to come up with a market price that's different from the one the market would arrive at on its own over time. But I think there was some concern of accumulating illiquidity in markets. I did look up. These off the runs didn't blow out much, but they have been relatively wide.

19:26So you could argue there was a need for liquidity. And I don't think the Treasury is going to stop the market from going where it wants to go. I think there's a question about the speed with which it gets there. And I think the asymmetric information is him saying, I can see the trades and it doesn't look all that rational in me relative to economic fundamentals. That is a beautiful backdrop, Steve. And we are reminded that you're out at Jackson Hole for the other big news that we're waiting for this week. We look forward to lots of guests, lots of talk and all of it leading up to Kevin Warsh's big speech.

19:58Well, just to be clear, I'm in Aspen, Becky. I'm on I'm on the way to Jackson Hole at another conference right now. Taking the slow train there. Not bad. That is not a green screen. See, it probably is. It is a green screen. Yeah, because that's the whole green screen. Joe, it is what you wanted. Like a lot of things in TV. Like a lot of things in TV, Joe, it is what you want it to be. It is. There you go. In the whole world now. Yeah, we're all nice. Exactly. But that's not the Tetons, is it? No, that's Ajax. For a second, I was thinking, is that a different angle for the Tetons or something?

20:35So I wasn't listening either, I guess, where you were. Tees will be next. Next on Squawk Pod, U.S. Trade Representative Jameson Greer on the collapse of trade talks between the U.S. and Canada. The White House's take on what happened, plus responding to a Politico report of friction between Ambassador Greer's office and the Commerce Department throughout the Canada negotiations. I understand it could be frustrating for Canadians that we have tariff authorities in two different agencies, but that's how Congress set it up. And so we work together. We'll be right back.

21:15You're listening to Squawk Pod from CNBC. Here's Joe Kernan. As you know by now, U.S. and Canada trade talks collapsed and new U.S. tariffs kicking in over the weekend. Canada now preparing its own retaliatory levies. And joining us now, Jameson Greer, U.S. trade representative. We'd love to hear, Mr. Ambassador, exactly what happened in your view. and I know you'll give an absolutely objective analysis of both sides and what went on. But how would you characterize the breakdown in talks? What caused it? Thanks, Joe, and thanks for having me on. And to your point, I will be as objective as possible, and I don't want to characterize anything that the Canadian Center did.

22:03That's kind of their thing. Just remember how we started with all of this. The Canadians over a year ago, they prohibited the sale of American wine and spirits in their stores. They put limits on how many autos could go into Canada. And even before that, they restricted the sale of U.S. dairy into Canada. So lots of new and longstanding issues with Canada. After about a year of asking them to eliminate these, they said no. So we proposed some very tailored tariffs covering about 5 % of what they send us. So pretty low amount in the grand scheme of things to have our own tariffs on those to counter out that retaliation.

22:39The Canadians came to us about a month ago. They said we'd like to negotiate. We didn't ask for it, but we said, OK, we're happy to move forward in good faith. And we did. And they did. We progressed to a point Tuesday night where we had enough agreement among the parties to announce that we had found the way to a deal. Then we set about to finalize it. And then in the last hours, I think there were things that the Canadians just, you know, they wanted more. We offered them the best access to the United States of any country in the world. Obviously, there's always going to be tariffs and there's going to be that protection for American workers and companies.

23:15That's the president's trade policy. That hasn't changed. But we sought to accommodate the Canadians by giving them, by cutting tariffs in half on steel, on aluminum, and extensively reducing them on autos and even on things like softwood lumber, accommodating some element of that, things that are sensitive for the Canadians. Simply, they wanted more. I don't know if it was political for them. It certainly doesn't make economic sense, but perhaps for political reasons, they have some by-elections coming up. I don't know, but they came in and they wanted more, and we weren't prepared to do that.

23:50So many ways to approach it. You can see the markets today basically unchanged, even though the headlines in every paper are that the U.S. and Canada are spiraling towards a trade war. Maybe a year and a half ago, that would have caused more consternation. I think in the back of people's minds, Jameson, that we think this is a just another negotiating step along the way to arriving at something. Are the markets wrong about that? Or is that how you view it at this point, that an agreement will be reached pretty soon? Well, Joe, I think the markets understand that this affects a very small amount of trade.

24:32Ultimately, I know I know the Canadians use histrionics like trade war and all these kinds of terms. We don't do that. I mean, the United States, again, we're set on our trade policy. The Canadians asked to come and negotiate with us a month ago. So, of course, if people ask, we do. So we don't have any issue proceeding with our trade policy as planned. And I think the market understands that. I think the market knows that at the end of the day, this is 5 % of imports from Canada. It's 0.06 % of our overall consumption in this economy. So there's no possible way it can really affect U.S. well-being.

25:08Right. I mean, we had we've been having great prints on inflation the past couple of months going down in June and staying flat here. Real wages for manufacturing workers going up. So we're on the right trajectory. The fundamentals are good. And I don't think this is going to affect anything. And that's why I think the markets are shrugging it off. I don't know the affordability issues. I think that's a red herring as well. In terms of this, I can't imagine. But can you confirm that Prime Minister Carney, it was a heavy and medium duty truck, not easing. Was that the straw that broke the camel's back when the U.S.