Tariffs not to blame for jobs number, says U.S. Commerce Sec. Lutnick

Key Concepts

• Tariffs: Taxes imposed on imported goods.
• ADP (Automatic Data Processing): A company that provides payroll and human resources management software and services, often used as a proxy for private sector job numbers.
• Democratic Shutdown: A period when the U.S. federal government ceases to operate due to a lack of appropriations.
• GDP (Gross Domestic Product): The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.
• Inflation: A general increase in prices and fall in the purchasing value of money.
• Manufacturing Report: Data released on the performance of the manufacturing sector.
• Suppliers and Distributors: Entities involved in the supply chain of goods.

Trade Negotiations and Economic Data

U.S. Commerce Secretary Howard Lutnick discusses recent economic data, specifically the negative private sector job numbers reported by ADP. He attributes these figures not to tariffs, but to the Democratic shutdown and the deportation of individuals.

• Impact of Shutdown: Lutnick argues that the shutdown affected small businesses that do business with the U.S. government, leading them to slow down projects due to uncertainty about payment. This also impacted construction.
• Impact of Deportations: He suggests that deportations suppress private job numbers for small businesses.
• Rebalancing and Regrowth: Lutnick believes these are near-term events that will pass, with numbers rebalancing and regrowing. He anticipates "fantastic" numbers next year, driven by "jobs of building in America" and significant construction projects.
• GDP Projections: He forecasts "superb" GDP growth next year, exceeding 4%.

Tariffs and Their Economic Impact

The interviewer raises concerns about businesses struggling with tariffs, higher costs, and uncertainty, citing a recent manufacturing report where tariffs were cited as a reason for shrinking factory activity in November.

• Secretary Lutnick's Counterargument on Tariffs: Lutnick disputes the notion that tariffs are significantly impacting prices or job numbers.
  • Price Threshold: He states that prices do not move unless tariffs are above 15%.
  • Supplier/Distributor Absorption: He claims that suppliers and distributors absorb tariff costs, preventing price increases.
  • Inflation Levels: He points to inflation remaining below 3% and prices coming down, including energy prices, as evidence that tariffs are not the cause.
  • "Overstating" Tariffs: Lutnick believes the impact of tariffs is being "overstated."
• Attribution of Economic Slowdown: He reiterates that the economic slowdown is due to "idiosyncrasies" and the October shutdown, and expects things to improve significantly next year with growth in factories and construction.

South Korea Trade Agreement

The transcript briefly mentions a trade agreement with South Korea, where the general tariff rate on imports, including autos, drops to 15%, retroactive to November 1st. This detail is presented as a positive trade development.

Conclusion and Key Takeaways

Secretary Howard Lutnick asserts that recent negative economic data, particularly in the private sector job market, is primarily a result of the Democratic shutdown and deportations, not tariffs. He believes these are temporary issues that will resolve, leading to strong economic growth and job creation in the coming year, fueled by infrastructure projects. He dismisses the idea that tariffs are significantly impacting prices or manufacturing, citing a 15% threshold for price movement and the absorption of costs by suppliers and distributors. The conversation also touches upon a trade agreement with South Korea that reduces import tariffs.