Watch CNBC's full interview with NEC Director Kevin Hassett

Key Concepts

• Chips Act
• Sovereign Wealth Fund
• Equity Stakes
• National Champions
• Fannie and Freddie
• Section 232 Investigations
• Non-Tariff Barriers
• Federal Reserve (The Fed)
• Inflation
• Tariffs
• America First Agenda

Intel Equity Stake

• The Deal: The US government, under President Trump, has negotiated a deal with Intel where the government receives a 10% equity stake in the company in exchange for Chips Act funding.
• Rationale: The administration was not satisfied with Intel's progress in meeting the requirements for receiving Chips Act money. The equity stake is viewed as a return for taxpayers, rather than simply giving money away.
• Non-Voting Shares: The equity stake will not include voting rights, ensuring the government does not interfere with Intel's business operations.
• Sovereign Wealth Fund Analogy: This deal is seen as a step towards establishing a sovereign wealth fund for the US, similar to those in other countries.
• Future Equity Stakes: The administration suggests that more such deals could be expected in the future, potentially in other industries beyond chips.
• Special Circumstance: The Intel deal is considered a special case due to the large amount of Chips Act funding involved.

Sovereign Wealth Fund and National Champions

• Shift in Approach: The move towards equity stakes represents a shift from simply providing subsidies to companies without any return for taxpayers.
• Not Picking Winners and Losers: The administration claims it is not in the business of picking winners and losers, but rather maximizing the value of taxpayer dollars.
• Precedent: The US government already holds equity in Fannie and Freddie, and the administration is exploring options for that equity.
• Demand for Intel Chips: Improving Intel's future requires increasing demand for its chips, either through better chip design or finding new customers.
• Government Influence: The administration does not expect to directly pressure tech companies to buy Intel chips.
• Historical Rewrite: There is a question of whether the Biden administration should have taken equity stakes when the Chips Act was first implemented.
• Tariff Regime: Tariffs are expected to incentivize companies like Intel to onshore production, increasing their profitability.

The Fed and Monetary Policy

• Jay Powell's Speech: The administration welcomed the tone of Fed Chair Jay Powell's speech, viewing it as data-driven and accurate.
• Inflation: The trailing six-month inflation rate is around 1.9%, indicating that inflation has decreased significantly.
• Economic Strength: The economy is considered strong but not excessively so.
• Rate Cuts: The administration believes it is appropriate for the Fed to consider cutting rates, aligning with market expectations.
• Powell's Future: It is considered unlikely that Jay Powell will be reappointed as Fed Chair.
• Search Process: Secretary Bessant is leading a thorough search process for Powell's replacement, with a decision expected in a few months.

Section 232 and National Security

• Section 232 Investigations: The administration is conducting Section 232 investigations to protect national security interests.
• Rare Earths and Magnets: The administration views it as unacceptable for potential adversaries to have a chokehold on the American economy, particularly in areas like rare earths and magnets.
• Trade Patterns: The administration is studying US trade patterns to identify areas that need to be secured for national security reasons.

Trade and Non-Tariff Barriers

• UK Trade Deal: The UK has already largely completed its trade deal.
• Non-Tariff Barriers: The administration is focused on removing non-tariff barriers, such as regulations related to genetically modified food or the use of Roundup.
• Trade Deal Benefits: Trade deals are expected to open up markets for US products, such as cars and agricultural goods.
• Intel Deal as Improvement: The Intel deal is presented as an improvement over the Biden administration's original commitment, benefiting US taxpayers.

Tariffs and Automobile Manufacturing

• Automobile Tariffs: Concerns are raised that the current tariff structure may be creating silos, making it difficult for US automakers to export cars competitively.
• Export Opportunities: The administration believes there are significant opportunities to increase exports.
• Regulatory Harmonization: Harmonizing regulations with countries like Korea and the EU is seen as key to opening up markets for US products.
• Retooling Costs: Retooling factories to meet different regulatory standards can be costly and impractical.

Conclusion

The interview covers a range of economic and trade policy issues under the Trump administration. Key takeaways include the government's new approach of taking equity stakes in companies receiving subsidies, the focus on national security through Section 232 investigations, and efforts to remove non-tariff barriers to promote trade. The administration also expressed its views on the Federal Reserve's monetary policy and the importance of harmonizing regulations to boost US exports. The Intel deal is presented as a model for future government investments that benefit taxpayers.