Squawk Pod: Berkshire Hathaway CEO Greg Abel & sec. Lutnick Blames Canada - 09/02/26 | Audio Only

Bring in show music, please. >> Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pot, two big interviews you don't want to miss. Up first, Bergkshire Hathaway CEO Greg Ael joins from Japan where the conglomerates nearly $400 billion portfolio includes big stakes in the historic trading houses there. >> It was really a long-term proposition that we saw this as a long-term holding. and he lets us in a little on the surprising shift, Berkshire's new investment in Alphabet. >> I called Warren and I said, "We had a significant opportunity to invest in continue to invest in Google, but in a in a with a significant block." >> Then a newsmaking interview with Commerce Secretary Howard Lutnik from the G20 Innovation Summit. When it comes to the breakdown in trade talks between the US and our neighbor to the north, he says, "Blame Canada." Friday at 4:00 the Canadians call and say they start adding crazy ideas to the mix and uh and we say, "What are you doing?" And I said to one of the ministers, "Are you actually trying to blow this up?" And his answer to me was, "I'm not allowed to say that." And they blew it up for political reasons only. >> It's Wednesday, September 2nd, 2026. A super sized squawk pod begins right now. Stand back by in three, two, one, queue up please. >> Good morning everyone. Welcome to Squawkbox right here on CNBC. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan. Andrew is out today. Energy prices are higher. If you want to take a look right now, you'll see that WTI is trading at $9043 a barrel. Brent is actually above $95 a barrel at 9508. And then Treasury yields uh rising not only here but across the globe. A lot of concerns that those higher oil prices are going to lead uh to situations where uh central banks have to actually raise rates to fight fight inflation. What you're watching this morning with the 10-year is a yield of 4.812%. That is the highest level we've seen for that yield in close to three years. November of 2023 was the last time we saw levels like this. At that point it was 4.935%. The 30-year this morning is at 528. The 2-year is at 440. And again, these expectations kind of getting built into the market that rates will have to rise not only here in the US but around the globe. If you were watching the Japanese 30-year, it is at its highest level in 30 years this morning in terms of what we've been seeing there too. And year after year, it's to me it's strange that negatives for the market seem to build up seasonally, just by coincidence, in late August and early September. And like clockwork yesterday, September 1st, big, you know, 300 plus point declines in the NASDAQ and the Dow leading us into later September, leading us into >> October. >> October, the horrible October. There's no doubt that seasonally it's just kind of interesting the way that happens. We've had so many sort of uh sickening uh September um markets. It also reminds me back hearken back to Tom Lee who thinks he's bullish looks at earnings, looks at all these things, thinks we end above 8,000 on the S&P for the year, >> but it's not a straight shot up >> interrupt interrupted by a 10 to 15% draw down. Now, I'm not a smart man, but we we got like 3 months left. They're not coming to that. No, we got four. >> That's major volatility if that plays out. >> And if you're if you're like, "Oh, well, you know, it's going to be a 10 or 15% correction. We just sit back and maybe we buy it." It doesn't work that way. It it makes you think, "No, this is more than a garden variety correction." So, I don't feel like going through this gut-wrenching sell-off. But >> I think the VIX has been really moderate, though. I think 16 is where it's been trading recently. I don't know where it is this morning. >> What's the average rise in the VIX in September? >> I >> 9%. I just read that. Yeah. >> Okay. 2.8% on the vol. You know, it's up 2.8% 16.8. But >> but it has been >> nine. I could deal with uh you know 30. Yeah, something like that. Berkshire Hathaway first invested in Japan's five main trading houses just over six years ago and it consistently increased its position. Bergkshire now owns more than 10% of each of the top five. And the company's CEO, Greg Ael, is in Japan right now. He joins us for a business update and what he's seeing there. And Greg, it's great to see you. Thank you for joining us. >> Morning, Becky. Great to be on Fox. Although I I I see it's evening there in Japan as we would anticipate. Um Greg, let's talk a little bit about what you're doing there, why you're in Japan right now. >> Yeah, it really serves a a couple great purposes. First of all, upon arriving uh I was able to go visit uh Tundaloy. It's one of our operating units here based in Japan. It's part of uh IMC, a company that makes tool bits. So spent the afternoon up in Fukushima with our team there and it's really amazing story. We we acquired it back in 2008 and over that period of time really built a business from from uh scratch. It came out of Toshiba but a relatively small company and uh three a number of significant plants up in Fukushima. So spent the day there touring it. We have 1500 employees in Japan and really just really unique. Here's a company that has just under $240 million of sales in Japan and an incremental $400 million internationally. So, very small group just doing remarkable things and it's a it's a great way to start a trip. And then obviously been visiting with our each of the five trading houses in Tokyo Marine >> that uh purchase we first found out about six years ago. Uh I think the purchase of those five trading houses that you all originally bought into at the time when we found out I think it was around 5% that you owned of each of the trading houses. You had made a deal with them you and Warren Buffett that you wouldn't buy more than 9.9% without their permission. I think all of those houses have appreciated having Bergkshire as a shareholder. You now own more than 10% in each of them. A lot of that's been because those companies have been buying back shares too. But what what is your long-term plan for these trading house positions and what kind of partnership do you have with these companies? >> Yeah, you're absolutely right. It goes back to six years ago. We actually announced it um US time. It was Warren's 90th birthday and uh the next day it was announced in in Tokyo and in Japan that we had acquired just over 5%. And at that time we communicated it was really a long-term proposition that we saw this as a long-term holding and we look forward at that moment to building a relationship with each of the five companies. Three years later, we attended uh we're we're here in Tokyo in 2023 and we met with each of the companies and that was part of building the relationship because one we were very pleased with the underlying investment at that time. At that point in time our our investment percentage had clicked over the 7% and uh and the and the businesses were performing well as you highlighted. they were purchase really managing their capital well, purchasing shares back in uh increasing their dividends and and their overall performance continued to improve and then you're absolutely right, we we highlighted and and and requested their approval that we could we go over 10%. Because up to that point, we'd always highlighted we would stay below 10 and only exceed it if uh the five management companies or the five trading companies agreed to us exceeding the 10%. And then upon receiving their approval, we went above 10% and it's really one a long-term investment that we intend to hold uh for many decades. And then uh secondly, we've been building really strong relationships with each of the companies and looking at other opportunities here in Japan and for that matter abroad. And those are just exceptional discussions that each visit uh we continue to build on the prior discussions and look at incremental opportunities. A >> and Greg, I'll I'll bring up the relationship with Tokyo Marine and the percentage that you've bought into that. There have been some reports recently suggesting that the Japanese insurer is on the look for a purchase, maybe even looking at Australia's Suncorp or Canada's IA as a potential purchase acquisition. These reports suggest that they would do this with Bergkshire's balance sheet backing it up. Can you tell us anything about what may be happening with some of those talks and whether Berkshire would back financially those acquisitions potentially? >> Yeah, the we have a Right before our uh annual meeting, we announced the transaction with Tokyo Marine and it's an exceptional opportunity because they are a great partner and we were absolutely thrilled to be able to reach an agreement with them where we have 2 and a half% of their quota share of their book uh i.e. what they're underwriting. We have a 2 and a.5% interest in the company and then we announced a strategic partnership. But what I would highlight is that strategic partnership is very broad and uh either of us can bring ideas back and forth to each other. Uh there's no obligation to act on it, but if it were to make sense both for Tokyo Marine and for ourselves, of course, we'd love to uh to pursue a a transaction with them. And as you would guess, we're not commenting on any of the uh the specific companies you noted. >> Okay. Uh, Greg, one of the things that you all did when you started making these moves into Japanese equities was to start issuing bonds in Japan, uh, yen denominated bonds. And I think that's been a pretty profitable position for you all because of where interest rates have been with Japanese bonds. We are talking this morning about how the Japanese 10-year bond has now yield is now yielding the highest levels that we've seen in 30 years. I I I believe just according to the latest um to the to the latest filings that you all have something north of 15 billion dollars worth of Japanese yen denominated debt. Um how does that stand? Will you still issue that debt? What are the maturities on some of those things? And what does it mean to see higher interest rates in Japan? >> Yeah, it's very uh it's very topical obviously here in in Tokyo and in Japan uh in the newspapers. I I will say, Becky, I found it interesting. Not a single one of the trading companies uh raised it as a a fundamental challenge right now. And because they're still when you think about they're talking about the Yeah. >> But but they're still relatively modest when you think about it. I I think the >> 10-year hit um >> uh 30 year high and it's >> Yeah, it went right to 3% as you're highlighting. Um, so I think they see it as very manageable. And then from our perspective, you're right, we we have a uh a bond port a debt portfolio there in yen that pretty much reflects the cost basis of our investments and the tenure or the remaining life on that debt is a little more than uh five years. And so we still have a a significant carry i.e. the difference between the dividend and the interest we're paying. But I would highlight that uh we would envision still raising debt as appropriate uh in yen. And at the same time, we do see the underlying companies uh earning performance growing. We do see an increase in dividends likely over the coming years and continued share repurchases. So yes, there's an incremental cost, but clearly within the uh various trading uh houses, we do see nice increases in the underlying uh returning capital they're delivering back to to shareholders. >> Greg, we we spoke with Warren Buffett back in July um right here on CNBC and talked to him about a lot of things, but one of the interesting things he brought up was the Berkshire portfolio. Obviously, you're running things. Um he said that you're the decision maker, but that you all talk um frequently almost daily and that the position that was initiated in Alphabet he said was his. I just wonder if you could talk a little bit about your relationship with Warren, how you all are doing and how you're managing that portfolio at this point, the stock portfolio for Berkshire. >> Yeah, great. Um well, a great example of it is uh Warren turned 96 on Sunday. Uh, so before I left to come to Tokyo, stopped in, had a had a great celebration with Warren as he as he turned 96 with his family and and friends. So we had a a very nice afternoon. Um, after that uh flew here to Tokyo and uh and and Warren absolutely loves uh the uh the Japanese investments and the companies we've uh invested in. So, it's I could tell it wasn't easy for Warren that off I went to Tokyo, but um yeah, we have a great working relationship in that we discuss a variety of things on a uh regular basis. So, we would had some discussions even on Sunday about our uh our Japanese investments and um I talked to him earlier this morning just to give them an update on on how each of the meetings went and how the companies are performing. But it's a it's a very much a just a a dialogue we've always had. We love talking business. We love talking about what we're seeing uh across our our portfolio. And you're absolutely right uh relative to the uh alphabet position. Warren initiated that uh probably close to 15 months ago or a little bit more. And uh so we initiated the p the the uh the initial purchases in Alphabet. We continued or he continued and we discussed it then and continue to discuss it. Uh initiated a variety of purchases and then I want to say in late May I received the call uh on a Sunday morning to see if we wanted to particip participate in their upcoming equity offering. uh uh really no terms or amount were set and I said well I'd get back to him right away and uh very much consistent with how we managed Berkshire but also how we uh the governance around it. I called Warren and I said we had a significant opportunity to invest in continue to invest in Google but in a in a with a significant block uh discuss the size uh they hadn't set the size but recommended that we consider 10 billion and Warren Warren and I discussed the size we discussed the size of discount uh and I'd recommended 6 and a half% discount and we were comfortable with that and we went back to them and and highlighted we would be interested in a a block on those terms and then ultimately uh consummated the transaction. >> Why do you like Alphabet? I think from the fund just from a real high level obviously we don't discuss the underlying specifics of any of the concepts and and in and around any of our equity investments but the one thing that is unique with Alphabet and I guess we do see this across our other businesses but number one obviously uh we all are seeing and feeling the impact of AI so we knew it was going to have a significant impact on on America and and and businesses is we have a lot of visibility from within our companies as to how we're using AI, what type of benefits it's delivering. So that brought uh incremental interest and then we saw Google as a significant player. Now there's a lot more to Google than what I just said and why we like it. But those were the fundamental reasons as to why we uh took a serious look at uh at Google and now have uh um a significant investment in it. >> Well, let me ask you a little more about AI and the data center buildout that's taking place. You're somebody who spent decades working in infrastructure building at Kwit and and and also at Berkshire Energy. So you understand one of the key um places that's seen as a a limiting factor for AI buildout and that's energy. Where are we right now in ter of the terms of that data center buildout? Where do you see opportunities um specifically for Bergkshire? >> Yeah. So it's really interesting as they continue to announce all the data centers and data center sites. I've sort of always had a strong view that energy would be the constraint. I and and there be energy we can produce the energy. It's do we have a how long it would take to get the sites prepared and and being in a position they could serve the uh data centers and I continue to see that as a big constraint will come to one of the other challenges. So um and and but we do still see it as a significant opportunity for Bergkshire and Bergkshire Hathaway Energy in that uh for example if you look at Iowa where we have a number of data centers uh I want to say last year approximately 8% of our load came from data centers and we see incremental load coming on both customers requesting it and and what we can serve but we've really operated ated to some pretty basic principles right from the from the get-go and we've shared that with each of the hyperscalers. We've and it's really policy. We've we've discussed with our state, our governors and and our regulators and we highlighted we are interesting we are interested in serving these hyperscalers. One if there was no impact to the uh the rates of our other customers and in fact we've pretty much taken the approach there has to be a net benefit to our customers. The communities have to understand the impact on on water and that has become much more manageable as they uh uh uh address that use you know the technologies are available to minimize water use and then and then lastly the the communities have to be open to having the the the data center in their community. We have we we we we we very much believe in the fact that you have to be a a welcomed member of the community. Now that's a decision the data center has to make but we we can uh encourage them to seriously evaluate where the reaction from the communities and I I know you've had many discussions around it. There is a lot more push back in the communities uh across the US. We have not had any specific site rejected to date and we're continuing to move forward on the on the various sites we have under construction. And our sites would be the energy infrastructure, not the data center site. Uh but it has to be done on the terms and conditions I I just highlighted. >> You know, uh Greg, there if you don't define a narrative, if if there's a vacuum, then other people are going to define it for you. There's a piece in the journal today uh just about the data centers. Protect the earth. Build more data centers. Uh their need for reliable power drives innovation while AI helps develop new clean technology. It just points out this could be a once in a generation opportunity to clean up the electricity grid and to learn how to improve water quality with across the board and accelerate technologies, right? uh that that you know that the people that don't like this, they're behind a lot of these technologies and you could act there's a need for so much power. It could actually generate the the type of change that that they're looking for. But if you don't if you don't sell it that way, they're going to sell it a different way. I guarantee it. >> No, Joe, you're absolutely right. I mean the narrative around these is so critical and it continues to evolve. So it it really did start from the impact on rates and were you impacting other customers. You can see they've as you've just highlighted they've moved on from that narrative. I would say that the water narrative is very strong coming from the data centers and and how they minimize the use and now there's starting to evolve to you know other narratives. I think a very strong nar narrative on the side at least in in Iowa where it's still a strong farming community. Um when we see both the energy infrastructure put in place and a data center put in place in in an individual county or community. um the tax relief specifically on property taxes and also revenues that come into the county to support other services um schools, uh police, fire. Uh it's very very substantial and that and that's equally has to be part of the narrative and and make sure people recognize the the benefits that come with uh with that type of development. Hey, Greg, let let's uh shift gears a little bit and talk about housing um specifically in the United States. Obviously, since the last time we spoke with you, you all bought or you bought u the made the acquisition in Taylor Morrison for $6.8 billion. We also saw in the latest filings that came out, you had increased the stake in LAR. So the these are just some of the ways the Bergkshire kind of plays into housing, but you have so many different places that you are kind of measuring how the housing market is doing from the paints that you sell, from other things that go into housing building, but also from the real estate portfolio um and Bergkshire Hathaway real estate that follows through all of that. What do you see happening in the housing market particularly as interest rates and mortgage rates are rising in the United States? Yeah, it's really interesting because it was uh an important part of the discussions with Taylor Morrison and the discussions I had with with Cheryl, their their CEO. um in that when we looked at housing and and and housing specifically in North America, we were taking a very long-term view that that that American dream will continue to exist. And five years and 10 years from now, this will be a a very strong asset for Berkshire, i.e. Taylor Morrison. And I'll I'll come back. We did combine and are combining some of our operations from Clayton Homes. We had 15 uh site what we call site builders but home builders uh over in Clayton Homes. They're now joining the Taylor Morrison team. But the conversation we were having, Becky, was that we didn't see any type of immediate recovery or any type of uh hockey stick there that we did see it from Berkshire's perspective that it was going to be a bumpy road for a while. And obviously uh as you're discussing it with people in the industry there's and and we've got a great leader in Cheryl and brings uh great optimism but you can see as we discuss it uh we don't we don't envision a quick recovery there but we do see it as an industry that we definitely want to be invested in and we're invested in for the uh for the long term. And Greg, just when you look at the economy in the US, around the world, how are things doing from a business perspective? How's the consumer doing? >> Yeah, it's really interesting. I mean, here in Tokyo, um, incredibly vibrant. You can feel um, a great deal of energy. And when I met with the with the five companies, uh, the trading houses, very strong results they're having and and feel very good about their businesses. Um and that would be a number of them are resourcebased but a number of the businesses also have what they call nonresource businesses and they're performing um very well. If you look across our businesses and our results through the second quarter again very strong in our larger businesses including our manufacturing businesses. So you can see there's still still strong demand, but I think you do feel the the the customer there's a consumer that is still clearly um feeling the pain and struggling and having to stretch a lot further to with that with that dollar and and I think that does exist. There's no question when we look at the underlying results. But at the same time, the fundamentals around the the economy uh at least from what we're seeing through the through the second quarter remain very uh very strong. >> Greg Ael, Greg, thank you very much for joining us this morning, this evening in Tokyo. Um we appreciate it. >> Thank you, Becky. Thank you, Joe. Have a great day. Thank you very much. >> Thanks, Greg. >> Again, Greg Ael, the CEO of Berkshire Hathaway. >> I like um right at the beginning, I like the way you said, "Yeah, it's dark. We were anticipating it would be dark there >> trying to think of what word but >> I was too explain as well but no but if it think if it had been like we'd be totally >> thrown for a loop >> we'd be totally thrown >> so what word would we >> I don't know anyway I thought about that and said Becky >> Captain obvious that's what you thought right >> cheese will be next >> coming up on Squackpod a lively interview with Commerce Secretary Howard Lutnik. He's at the G20 with tech leaders like Jensen Hong and Sam Alman. >> Well, you know, one of my favorite things is when people talk about data centers using water. The number one product in America that uses water is cattle. Cattle. I mean, data centers don't use water. They're data centers. This is propaganda by our adversaries to try to slow us down. >> Plus, more on what caused the collapse of trade talks between the US and Canada. Stay tuned. Welcome back to SquawkPod from CNBC. The center of the business and financial world has been in North Carolina in recent days as US Treasury Secretary Scott Bessant hosted a multi-day meeting of the finance ministers of the world's 20 largest economies. Today, the AI race comes into focus at the G20 Innovation Summit hosted by Commerce Secretary Howard Lutnik in Chapel Hill. A number of tech titans are expected to speak about global competition, the spectre of AI regulation, and the impact that looming tariffs have on US companies ability to innovate. Secretary Lutnik joined us first on CNBC from the sidelines of this event. Joe Kernan takes things from here. Jensen Wong, Sam Alman, and Alex Karp are among the CEOs attending the G20 Innovation Summit. This is in Chapel Hill, North Carolina. Our next guest is hosting them. Let's bring in Commerce Secretary Howard Lutnik. What's the deal, Howard? It's good to see you, Mr. Secretary. Uh fireside, do things just do people talk more with the fireside, Chad? Have Have you ever figured out why that's the the best format for conducting something like this? Because you're going to do it today. I know. uh with Jensen, Sam Alman, and others make him feel more comfortable. >> So, no, the the G20 ministerial. So, you've got the 20 leading economies of the world coming and all the ministers like to talk. So, uh I've decided to mix it up and have uh Jensen Wang from uh Nvidia, uh Sam Alman, Alex Karp, Tom Brown, one of the founders of Anthropic, and they're going to come and talk AI. And I think the concept of the fireside chat, it's just a an easy way to talk and hit the key topics that the all the ministers around the world are interested in hearing. >> Yeah, really serious subject uh matter though. We were just talking to Greg Ael about the narrative around data centers and you know the midterms coming up. Both parties somehow, you know, far be it from from our political parties to to seize on something before an election, but both of them seem to think that there's some political points to be scored being anti-data center. But a little education might might change that. >> Unbelievable. You know, one of my favorite things is when people talk about data centers using water. The number one product in America that uses water is cattle. Cattle. I mean data centers don't use what are the data centers this is propaganda by our adversaries to try to slow us down right we've got the greatest chips in the world we've got the greatest economy in the world data centers are really worldclass production build a data center produce huge economics right and that economics will go to the community that surrounds it so I think those who are inviting to data centers will win them and their economies and those communities will just be better off. It's obvious, black and white. >> The uh I know Elon criticized some of the regulations, not here necessarily, but um some in the EU. It it it's a um fine line to walk, isn't it? What what do we need to do here in the US? It can't just be, you know, no regulation, no guard rails. How do we how do we strike just the right balance? Well, the Trump administration came out with export uh control letter uh to Anthropic. When Anthropic released a model that didn't have proper safeguards to the broad community, uh we issued a letter that said, "Come on, you got to withdraw that product until you get it right." They did. So, it took them about two weeks. So, I think the marketplace and these great AI frontier models, they understand that there's two versions they go out with. You go out with an unguardile model and that goes to the cyber community, right? All the protection, the banks, insurance companies, all the people who want to protect themselves get an unguardile model and then the broad world should get a guardrailed model, which means if you ask it a nasty question, it shouldn't let you have the answer. So, I think I think the market's gotten it right. I think these companies have gotten it right. And uh I'm pretty I feel pretty good about where we are today. And I think we found the way. Remember, America leads in the frontier. We are the ones building the greatest models in the world. And we want to keep that American innovation way out on its front foot. You're you're always involved with with the president and the administration on tariffs and the like. The latest brewhaha uh with Canada. I want to hear some of your comments there. But I mean, the prime minister, Mark Carney, would just really like like the administration to stop doing these mean memes and to stop throwing shade and and I just wondering could could you agree with me today to be nicer? I mean, it's just there's no place for this in in diplomacy, is there, Mr. Secretary? >> Well, I think if you if you look at the way Canada has treated the United States, right? So Mark Carney talked to President Trump. let's say a week before I was in the room with him and they had a nice conversation and they set the path to work it out, right? Remember Canada came to us about seven eight weeks ago and said come on let's get a deal done and then you know a couple of days later they reach a deal the president puts out a truth saying we've got a deal president and we're in the room with him when he makes those conversations with Carney and then of course we negotiate the finer points it's over Friday at 4:00 the Canadians call and say they start adding crazy ideas to the mix and And we said, "What are you doing?" And I said to one of the ministers, "Are you actually trying to blow this up?" And his answer to me was, "I'm not allowed to say that." And they blew it up for political reasons only. So if you're going to mess with the United States of America and its economy, and you're right adjacent to our northern border, I think it was really disrespectful. We were treated disrespectfully. And I think when you treat Donald Trump disrespectfully, you know, he knows it. And that's what happened. They did it for politics. They're going to do it through their elections in Quebec and then they have an election in Alberta. And after October 12th, all of a sudden, the Canadians are going to treat us respectfully because their elections will be behind them. It's just it's sad. If you from my perspective, it's just sad the way Canada's treated us. >> Mr. secretary. We we heard from the president uh I don't know whether he was serious, but they said that that someone said um at the last minute you asked for for more stuff and he said um that sounds like me. It does sound like him, but but so that that kind of is counter to what what you just said that laying all the blame on Canada. Well, look, I met with the prime I met with the finance ministers and their trade ministers, you know, a dozen times. Uh, I literally with the president uh he spoke to Carney twice. I spoke to Mark Carney twice because I've known Mark Carney for decades and we had texting back and forth. There was nothing new when you're signing the deal at 7:00. There's not there's nothing new at 4:00. And they called me and they said, "Hey, we'd like medium and heavy trucks." Right? This is not an F-150 that you and I might drive. This is an F450 that's got like four wheels on the back. And and that would have cost America billions and billions of dollars. And they just and I said, "Really? Why are you saying the words heavy trucks Friday at 4:00 when you've never said it before?" And they sort of looked at the ground. They were trying to blow it up for these political reasons. You're watching them play politics in Canada and they're just using us. And it's it's really embarrassing actually. >> I I wonder it it is a little strange cuz the the Canadian people you know I see that you know I see news items that that Canada's GDP is rising but there's so much immigration that per capita GDP immigration is rising more quickly than GDP basically. So GDP has been either flat or down and and now this is not good for for what's happening. And if I were Mark Carney, I I don't know whether it would be I think you've made the point that it might be more about his and his party's political interests than for the people of Canada for for what's going on. They don't need this right now. Joe, you've got it. You've got it absolutely correct. This is about the Liberal Party and Mark Carney trying to use a kurfluffle with the United States to gain political leverage. They've got an independent party, the sovereign party vote in Quebec on October 5th. They've got an independence vote that starts the process of Alberta who always feels ripped off by Ottawa and the and the left of Canada. And you know, he's just trying to fight with us to try to gain that leverage. And the answer is Canada is the worst performing of the OECD. You know, you pointed out all the time they've got good people. They've got great resources. Why do they underperform? >> They deserve more. Canadians. >> Why do they underperform? >> How about this? Ontario with the great city of Toronto would be last out of our 51st states. And you say really Toronto and Ontario, they just don't perform per capita because they don't have the right tools. They don't have the right regulation. They don't have the right leadership. And look at this. They treat their biggest trading partner. so so poorly. >> Let me shift to something very serious. The 25th anniversary uh of September 11th where uh you know you had to come back from that and rebuild Caner. You lost your brother, twothirds of of your workforce. I know 25 years is a long time, but I I Are you are you still a little bit surprised at at some elements that feel free to publicly say that the United States deserved this or that we had it coming or now they're they're sanitizing all their social media accounts because they're running for office, uh, a lot of them. But, um, is should this be brought up? Should should their tweets be uh brought out in the open if they're running for senator in in Michigan or or I mean it's beyond the pale that this was acceptable at any time, but now they're all scurrying, you know, to make it look like they never said these things. >> These are horrible comments by these are horrible comments by people who really don't love America, right? They hate America. Who would ever say America deserves it? Why would Americans on American soil who are living the American dream go to work get murdered by jihadists from the Middle East and have someone running for office say the words that we deserved it? This is horrible. No one deserves this. No one deserves this kind of thinking. This kind of politics is horrific. It's harming and seeking to harm America. Right? These kind of thoughts are horrific and and they disgust me, sadden me, and outrage me because America is the beauty of the world. It's the light of the world. It wants freedom. It wants democracy. It wants freedom of expression, freedom of religion. I mean, there is no greater light in the world than America. And we have to carry that light forward. And we will. And I can't stand these grotesque people and what they have to say. Well done for bringing it up and pointing it out. And I think we should always point it out. >> Well, I hope you say that after uh we we talk about this next subject. So, US uh USA rare earth Howard, I understand this. Um you you ran Caner. You ran it well. You had a relationship. You did their IPO before you became commerce secretary. So, no surprise there. you you put it in a trust and your sons are now running uh Caner and you know there was a a pipe financing deal done where to get I think the financing from the commerce department um Caner was involved with raising some of the some of the uh equity and obviously they they they get a fee. So the perception is that you're sitting now at commerce and you're able to control what Caner is getting in terms of fees with your sons running that company. It it looks like a conflict of interest. How do you respond to that? >> It it's just not the the company. The deal was brought to me by Ken Mhus, someone you know well. I had no idea that Caner was involved with the company at all. It never came up to me. Uh I then passed it to my team. USA rare earths all the magnet companies the the ideas of doing these critical minerals and rare earths is a key thing for the United States to separate from China. China's weaponizing uh these critical minerals against the US economy. These are small businesses right in the larger scheme of the US economy. And I got to tell you, I I didn't put my my companies in a trust. My kids bought my companies. So, I am no longer involved in my old companies at all. My kids bought it from uh from me. They're they own it and I had nothing to do with uh that decision. And this is minor stuff anyway. You you know that I'm wellto-do. I don't worry about this kind of stuff. The only thing I care about is I'm serving America. And people saying this kind of stuff are just trying to, you know, throw throw dirt at me in the Trump administration. But all I care about is America. All I'm here to do is take care of America. >> The president, this family is well, you're both very wealthy, but uh that doesn't mean that that uh there can't be a perception that that both families are are benefiting from the positions you have. Now, let me just read a New York Times piece from June 28th. One or both families have financial ties to at least 14 companies that are actively working uh with the federal government on critical mining deals. All 14 of the companies have either benefited directly from offers of financial assistance from the Trump administration or have pending permit uh applications before the Commerce Department uh which obviously you oversee. Uh and the total amount of funding uh has been $ 8.9 billion. I can just tell you that if the Democrats take over, you're already hearing from like Schiff and Warren and Senators and Blumenthal. They want more information on all this stuff. Um, do you expect to be spending all your time in in the last two years of the administration if they take over dealing dealing with this, Mr. Secretary? >> No. Look, my old firm has 12,000 employees and did 12 billion dollars of revenue. It's going to be involved in all sorts of business uh in financing and Wall Street. It's a big successful company. And to suggest that I care at all or the president cares at all is just wrong. I couldn't care less about these things. All I care about is the bigger picture and about America. And you know what? If the Democrats uh send me letters, I will respond to the letters. But they don't matter since when you do nothing wrong, you don't worry about it and you don't care. You just answer their silly questions and you move on. This is a waste of time trying to create something that doesn't exist. I promise you. I couldn't care less about this. All I care about is trying to help America and help America succeed. I want to give you that that opportunity. I just want to shift back one just briefly to to the perception that that the US has grown at 1.5%. Can you can you really just give some some background on on what skewed that number and what is possible in the next couple of quarters because I hear some crazy numbers being bandied about but but imports and maybe it was oil or whatever skewed that down to 1.5 was if if you factor some of that out it's closer to above three isn't it? It is above three. If you just take a look at the GDP numbers, what happened is when the Supreme Court ruled against the president for tariffs and those tariffs came down, imports came flooding in. And the way we do GDP in America is we take our gross sales. So the like the big number of sales that every company in America America makes and you subtract imports. So when all those imports come flying in starting February all the way through the next quarter, that reduces the number of GDP by 1.6%. 1.6%. So it was going the other way. So if you took the quarter before and you added the quarter after, that's 1.85% GDP. That would put you well over 3% if the AIPA case with the Supreme Court had gone the other way. And you'll see the tariffs are going to be back in place right over the next couple of weeks. They'll be all back in place and you'll see imports start to fall and you'll see GDP rise. And just that calculus itself over one and a half points. You're exactly right. The um what else did I I did want to finish on something else. I just lost my train of thought. Uh uh listening uh to you. Oh, you might know a little bit about bonds and uh having been at Tanner. So, we we got we got global angst and global uh hand ringing and and we are at at least multi-year highs in in some of these uh areas. Um is this going to get out of hand in your view? and and you know you I can connect the dots between AI and how much money they're they need to raise and if interest rates go up or our own deficit our own not deficit but federal debt at at 40 trillion we don't need to pay even more uh to service that debt should we should we be worried and and do you agree with with the Treasury's move to to intervene and maybe try to orchestrate a drop in the 30-year yield >> I I think the market uh will stabilize in a more positive way than people imagine. You know, as the president sets his tariffs back in place, you're going to see the revenues from tariffs cross $300 billion a year, $400 billion a year, reducing the budget deficit. You're going to see the economy start to kick up again as we go back to above 3%. and the growth rate and the reduction in the deficit will not only stabilize the bond market will bring rates down. I think the way the president is playing Iran, right, there's not there haven't been American deaths. It's really just an economic choke out uh which the administration is now executing more broadly and I think it'll be very effective. So, I'm very optimistic that the bond market will treat us very well. It may take over the next couple of months, but you're going to see rates stabilize. You're going to see them come down and and I am very confident. You know, the world of rates between four and 5% is the common rate for the United States of America over the last 40 50 years. And I think I'm comfortable with where things are and I think what you'll see is rates stabilize and start to decline over the coming, let's say, six months. Secretary Letic, very quickly, Politico is reporting that the Trump administration is weighing a new round of sweeping tariffs on semiconductors and they say this comes despite warnings from tech companies that that move could doom US hopes of dominating artificial intelligence. That report also says that you favor a structure that would tie companies relief from the tariffs to investments in the US for things like US chip manufacturing. I is that true? >> Yeah, it's exactly right. And I mean look at the way the administration dealt with pharmaceuticals. We all worked together as sort of one government, right? We gave tariff relief to companies who built their innovative pharmaceuticals in America and did MFN. So that's what you should look for in semiconductors. If you build in America, we will give you tariff relief. And if you don't build in America, then you will pay tariffs. And that and that's pretty much a a very sensible way of doing things. And it's working. I mean, I have $1.2 trillion dollars of commitment to build semiconductors in America. When we walked in, we had less than 2% production of semiconductors in America. And now we're heading towards 40%. And if Intel is successful, which it will be, we're going to hit 50% when we leave. And that is very, very impressive. That's over $1.2 trillion of investment just in semiconductors alone. So, you've got to do a policy that creates the outcome that you're looking for. We will be successful in semiconductors. They're going to be built in America. Think about it. TSMC, the Taiwan Semiconductor Manufacturing Corporation, $265 billion semiconductor factory in Arizona and Micron, $250 billion of memory factories. That's over $500 billion from just two companies alone. And that's the Trump tariff policy at work. >> So th those tariffs are being considered, but they are not the end goal. The end goal is to induce, use it as a cudgel to induce investment in America. When when will we hear more about those tariffs? When will they be rolled out? >> Well, so they all of the companies know they're coming. They've all gone through it, right? The Taiwan deal said that they agreed, right? the trade deal that America did with Taiwan that I led uh agreed that Taiwan would bring uh 40% of their chip production to America and they're up to I think they're going to be announcing uh next week their next round of another 20 and30 billion dollar worth of investment in America. So, I think what you're going to see is targeted, thoughtful tariff policy that basically says if you build here, you don't pay, but if you don't build here, expect to pay to enter the greatest market in the world. just listening uh you know Jensen Wong and and what the things you were just outlining the idea that capitalism that that that people can look at it sideways and and not understand how exciting all this is and how we're the envy of the world and that you got you know really an entire group of people on in one party that I don't know it it's just beyond the pale you know denigrating September 11th and talking about socialism instead of capitalism. It's crazy. Will there be a fire uh at the fireside chat? Or is it just you you have to imagine the fire the fire? Is there There's no fire, is there? It's too hot. >> You know, you don't have to imagine it. You don't have to imagine the fire. The This is just two chairs in the front of a room. >> No, no. I don't know where they came up with this. Have >> you seen those logs on TV? Have you seen the logs burning on a TV screen? Get one of those for your fire. All right. Thanks. I think we're just gonna be talking. Thanks. >> All right. So, it's sort of imaginary fireside chat. I see you in a he robe and a with a pipe. Anyway, uh Mr. Secretary, thanks for all your time. >> I think I'm going to be wearing just like this. Thanks. >> Yeah. Okay. Good. Thanks for all your time today. It's good to see you. >> Thanks. >> We'll be right back. You made it to the end. That's our majorsized Squawk Pod for today. Thank you so much. Thank you for listening. Squawkbox is hosted by Joe Kernin, Becky Quick, and Andrew Ross Sorcin. Tune in weekday mornings on CNBC at 6 Eastern. Or get the best of our TV show right into your ears when you follow SquawkPod wherever you get your podcasts. Have a great Wednesday. We'll meet you right back here tomorrow. Now we are clear. Thanks guys.