Kevin Hassett on Trump's Tariffs, US-EU Trade, and Onshoring Supply Chains

US-EU Trade Negotiations and Tariffs

• 🇺🇸 President Trump has delayed a 50% tariff on the European Union until July 9th, aiming to put "America First" in trade relations.
• 🇪🇺 Negotiations with the EU are described as "intractable" due to the aggregated, differing objectives of member countries, making consensus difficult.
• 💡 The US seeks to eliminate non-tariff barriers, such as differing automotive regulations, to facilitate easier trade.
• 🤝 The delay is seen as a chance for calmer heads to prevail and for the EU to determine its objectives, with potential for more deals this week.

Apple's Supply Chain and Onshoring

• 📱 A potential 25% tariff on iPhones could significantly increase costs, making assembly in the US prohibitively expensive ($3,000-$3,500 per phone).
• 🏭 The administration's goal is to onshore manufacturing and reduce US dependence on Chinese imports, encouraging faster supply chain shifts.
• 📈 Companies often exaggerate the negative impacts of tariffs to negotiate them down, while the underlying economy remains strong.
• 🍎 Apple may be granted reprieves if they present a credible, long-term plan for moving production to the US, potentially starting with assembly.

Trade Deals and Global Markets

• 🇮🇳 Progress is being made with India on trade, with discussions involving high-level officials and potential for a deal close to the July 9th deadline.
• 🌍 The US aims to open foreign markets to American goods, which has been a significant challenge, but progress is being made in these negotiations.
• 📈 The market reacts quickly to trade news, showing volatility, but the administration believes progress will lead to positive outcomes.

US Economic Outlook

• 📊 The US economy remains strong with robust job numbers and inflation moving towards the Federal Reserve's target, even before tax cuts.
• 📉 A significant tax hike was averted by the passage of the tax bill, preventing a potential recession that could have cost billions in revenue.
• 💰 The administration is optimistic about the economic impact of the tax bill, anticipating strong growth once it is fully implemented.