doubles by 2018. i sales force owns 1% stake and uber is 5% of the revenue and making the fundamental. >> highs of the day. and moving higher as we speak. joey >> corvo has come back from the february swoon it has momentum. >> a name. >> uaa. >> have a good weekend "power lunch" starts right now. >> here is what is on your friday menu. the money was taking another hit. not at bad as earlier, but still fears about a global trade fears spilling on wall street. stocks sliding for the fourth straight day, but will we see an epic comeback by the end of the day. stay tuned to find out all weighing in the tariff plans. some cheers and a lot of jeers but where the hidden mine fields and unintended consequences. we'll debate and at the end of the day, what it means for you, your job, your family's economy, we've got a

jammed two hours happy friday, i'm brian sullivan and "power lunch" begins right now. welcome to "power lunch. i'm courtney reagan. stocks trying to stage a comeback the dow was down 393 points below the moving average and more than half of the s&p went into correction territories or greater. that means 10% down or more from the most recent highs. but it is positive the nasdaq trying to stage a comeback fighting to carve out some gains. steel stocks, they were up big yesterday. you know why they are up again this hour. ak steel prices are higher by more than 1.5% and century aluminum up 3.5%. >> and we have sh covered -- have this covered from all angles china and the reaction and canada its in steel country usa.

are they hopeful that these new taxes will mean more jobs and how did all this go down politically and what does it mean for you and your money? we begin with your money and another selloff, though nasdaq has come back as courtney mentioned. and the dow is down a third of 1% let as kick off with bob pisani life at stock exchange. >> the tariff panic is a mess for the last 24 hours but it may be abating with europe closing we had a lot of pressure selling in europe, closing near the lows take a look at the s&p 500, that is when we closed at 11:30 eastern time and it is straight up we've moved 20 points in the s&p since the european close for proof. >> we've had heavy trading and so spain and italy and france, you could all buy these in etf very heavy volume and all

three -- and i think that is further evidence europe was part of. this looking at the vix, what a mover around, 22 or so at the open went to 26 and just been collapsing ever since the european close that is a 25% spread in a day's trade. and sectors, looking like the growth fell apart so semi and banks, ten-year is moving up this morning after 11:30. and tech doing well and industrial stilt -- still lagging but you have boeing and others holding back in the dow so the new risk for the market we've known about powell and the whole issue of the rate hikes. i think that is still number one. now we have new risks, economic risks from the tariff and political risk with the white house turmoil and then we had corolla talking about maybe withdrawing some liquidity in

2019 and on that the japanese market dropped so several new risks we didn't hear about even just a few days ago. back to you. >> thank you a lot to cover because a lot has changed. just over 24 hours ago trump dumped a bomb ripping through the markets. we are here with the incredible tick tock of how all of this came to pass kayla. >> it was a fast and furious just 12 hours where the president overrode his own advisers to take matters into this hands as after midnight there was no decision on the announcement the confusion continued through the morning on thursday with advisers believing they talked the president out of making an announcement since there was no supporting documentation at 11:00 a.m. the president convened a group of steel and aluminum ooi aluminum and then told them his decision and then went to a meeting. they waited for half an our at which point the president came

back and the press pool was summoned the president then went around the room as executives defended tariffs and when a reporter asked about his decision about ten minutes into that spray, that is when he decided to go ahead and make that public announcement in the meeting, gary cohn was said to defend the many companies and consumers whose costs will go up as a result of the tariff the response to cohn in the room, that is a small price to pay. that is an argument that was echoed by the commerce secretary on cnbc. >> in any war, there may be a few casualties and that comes wen -- with the nature of the best. >> i was told the white house would be hard-pressed to finalized by a march 10th rally next saturday in the works but the president clearly wanted to make that announcement and h did, brian >> he certainly did. kayla, behind the scenes a historic 24 hours. thank you very much. well beyond the markets, more questions today about the

possible ripple effects of the president's administration eamon javers is live at the white house with more. >> reporter: that is right you heard kayla walk through the chaotic rollout yesterday and part of the reason is the chaos surrounding this white house and all of the key leadership within the white house. take a look at this graphic of the key players inside of the white house with questions surrounding their tenure we'll go down the line john kel yirvly, chief of staffs incommand but spent several weeks pushing back against rumors that the president wanted somebody else in the job in the wake of rob porter scandal and gary cohn, questions about his role going forward, given that he got rolled on these tariff and in that meeting kayla told you about yesterday and h.r. mcmaster, pushing back that they are considering replacing him as national security adviser at the white house because he doesn't get

along with the president the president has been mocking and tweeting against his attorney general jeff sessions, no indications that sessions will leave but questions surround that relationship between sessions and the president of the united states and of course jared kushner, a lot of questions about whether hes and his wife ivanka will continue in their roles going forward in this white house. due to questions about the personal finances and jared's interactions with off-shore financial entities at the same time conducting business here at the white house. so all of those people facing questions now at a time in which the white agenda itself is under question you remember they began the year talking about doing something about welfare reform, talking about infrastructure, both of those big agenda heigitems are d tht water is not treading water. so questions where the white house goes from here back over to you. >> thank you. there is a lot to cover we have another volatile day not done yet but well off sessions lows for now.

so how should the trade troubles play into your investing plan. with us quincy crosby from prudential and jeff scholtz the from clear bridge investments. quincy, you were the assistant secretary of commerce under george h.w. bush so what was your first reaction when you heard the tariff announcement yesterday or whatever we want to call it. announcement or not. the plan as of now, how did you feel about that and do you think the market overre acted now that we've seen them come back today. >> i think on wall street did, i worked in trading and derivatives and market reaction versus government. i worked in a republican administration i'm pro-trade. i think it is healthy. but i have to say that you do want a level playing field there is no doubt about. it you want a level playing field and there are times in which you have to renegotiate certain clauses or perhaps even certain

treaties that said, the president campaigned on this i can tell you that our trading partners most likely had talking points white papers were written on the president's campaign promises and now perhaps he comes through with that. the biggest question for the market will be -- where does this go, to nafta or if this market could close higher with heavy volume today it tells you investors think it might be rhetoric back and forth and a lot of confidence because going into the weekend you'll hear from the trading partners. >> does it tell you we shouldn't be worried from potential inflation because of tariffs. >> yes it is all going to the consumer. the consumer is going to have to pay more for items this is passed on to the consumer

but if it just stays with this, we have a little about the of a pre -- a precedent with washing machines that was the first but the keyis for the market you sell first and ask questions later and that question is does this evolve into a full-fledged trading war because then you go way beyond steel, way beyond -- >> what is the answer? what is the answer. >> the answer is -- >> will it in. >> no, the answer is we just don't know and the markets don't like the uncertainty. >> so jeff, if you don't know and markets don't like uncertainty, what are you doing today for your portfolio do you need any trades in there in case there is a trade war. >> i don't think a trade war will materialize the short-term selloff is overtaking the long-term fundamental of the kpli and i think the threat of trade wars will be with the markets for the next month we need to see what the retaliation steps from the trading market but much more important ruling with section

301 and not supposed to come out until -- >> what is it -- >> what are you talking about. >> tell us what section 301. >> it is the potential allegations that chinese companies have stolen ip from americans companies over the last 25 years and this is specifical spesispe specifically targeted to china and the numbers are big in retaliation. >> if it is found that they did and many people out there might agree it is perhaps happened from time to time on a mass scale, they would retaliate against us in some way that may be a bigger threat -- because chooina is not a big import or exporter of steel to the united states. >> correct that is a bigger threat. if you think about different areas of the u.s. economy, that could be potentially be tripped up by this agriculture, boeing obviously is a big beneficiary of chinese trade. >> john deere and caterpillar.

>> apple. >> a lot of kpz. >> so i think that will weigh on investor sentiment and until we get visibility, i think the markets are trading in a choppy pattern and waiting to find what the potential inflection point could be. >> the market is coming back 129 points down. down 400 at the low. quincy, there is now in the last three or four weeks at least three new things for investors to think about rising interest rates and prospect of accelerating rising rates. more inflation and as you just pointed out, tariffs don't help inflation. and now the possibility of trade retaliation. does it change the fundamental case for investing in -- let's take small and large caps. >> the pillars for going into the market have changed dramatically it is a regime change. you have central bank and perhaps also the european

central bank and bank of japan, pulling liquidity, ever so slowly but nonetheless out of the market trade war possibilities. >> so does it translate then into -- >> yes. >> -- let's say you had a basic portfolio of 60% equity and 40% fixed income, does that mean you will pull back to 58% equities or what? >> you are going to take some profit from your winners there is no doubt. and it may favor u.s. focus sectors, financials and small cap. those should be the beneficiaries. >> as opposed to big multi-nationals. >> yes until we know the effect but you are going to see it happen in the market there is no doubt about it for the most case financials, especially those most domestically focused, they are the beneficiaries of a steeper yield -- >> of higher rates. >> and domestic growth >> thank you both for joining us thank you. on deck, will the dow close

out what is looking like an epic turnaround on a friday could be end the day higher? remember the dow was down over 300 points today you have to stay tuned to find out. plus should stocks really fear a possible trade war, when nothing is official yet? we'll take a close look at the battle to come -- or not >> here is a can of coca-cola. coca-cola has three cents worth of aluminum in it. so if that goes up 10%, that is three tenths of a cent i just paid $1.49 for this can of coke. it doesn't mean anything so all of this hysteria is a lot to do about nothing. s only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income.

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and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back to "power lunch. fears about tariffs slamming stock and if the president does fire a first shot will other countries fire back, and how would they fire back steve liesman is looking at areas that could be target for retaliation. >> thanks very much. we got early word and learning already, take a look at harley-davidson over here. bourbon, ke -- kentucky bourbond in the last couple of hours the european union said this is the products they would retaliate against and these three.

the european commission president saying the e.u. is considering $3.5 billion in duties on u.s. import. there is a long history of specific product retaliation and sometimes it is linked to big export like vehicle orz machinery and aerospace and other times at the iconic brand or political connections of a product. harleys made in wisconsin, home of paul ryan and bourbon from kentucky home of mitch mcconnell. after then president bush imposed tariffs in '02, orange juice and harley faced tariffs and in '09, u.s. and mexico embattled and they had one on pork and fruit and vegetables. this is what we were told earlier today about retaliation. >> this is scare tactics by the people who want the status quo, the people who have given away jobs in this country, who have left us with an enormous trade

deficit and one that is growing. >> maybe but canadian prime minister justin trudeau called it unacceptable and yesterday they threatened retaliation. >> steve, thank you. let's dig deeper with michael froman under president obama and now with the council on foreign relations. welcome. good to have you with us. >> thanks for having me. >> you have spent time around this very issue of steel, steel dumping and i guess my first question for you is, do the people in the steel industries here, many of those executives and the aluminum industry, do they have a point? is the playing field not level do we need reciprocity. >> i think there is a real issue about overcapacity in steel and aluminum production around the world. it is hurting our industry and it is important to have a strong

aluminum and steel nuri steeliny and the problem with that is that it doesn't hit china. it hits canada, as you noted and it hits south korea and mexico and germany and japan. some of our closest partners and allies and china isn't a major exporter of steel and aluminum to us. so they get off more or less scott free. >> the number 11 in terms of the gross imports from outside countries. but one of the steel executives we had on yesterday pointed out that in truth if you just look at that number, you are not -- not capturing the entire picture because a lot of that chinese steel comes in to this country through other countries. >> well, if there is a real trans problem and we could work with other countries on that the challenge is that it is very hard to work with other

countries to build the kind of coalition you need to put pressure on china to prevent the transshipment from happening and at the same time imposing tariffs on their experts and you've heard from the europeans and canadians and mexicans and make it clear they need to retaliate and as you reported, when they do that, they tend to focus on iconic american brands, big exports or politically sensitive sectors. so it could broad sectors of the economy from agriculture to airplanes, to harley davidson motorcycles. >> but it could. it doesn't mean it will. we don't have anything signed yesterday. nobody is saying it couldn't turn into something but do you agree with the idea that at least perhaps right now there may be a touch of overreaction >> well, i think it does depend, as you say, on what ultimately gets rolled out. the president yesterday suggested that no countries would be excluded. they've talked about putting

tariffs in the department of commerce property on all steel imports and all aluminum imports xg, i think we'll see a lot of lobbying by foreign governments and industries to say let's exclude some countries and products and narrow the tariff and it will be interesting to see how much that gets done between now and when this is announced. >> the canadian prime minister staying the steel and aluminum tariffs are unacceptable and does this mean renegotiating nafta and if this doesn't go through. >> it is not a atmosphere of real give and take and compromise is necessary. we have to remember that other countries have politics too. and they can't be seen as bending to the will of the united states at the same time the u.s. is imposing taxes on their exports. and so it makes it more difficult to get them to be more flexible at the negotiating table. >> thank you very much we appreciate your time.

michael froman former u.s. trade rep. >> thanks. well the democrats certainly do not agree with the president on much, if anything but up next, where representative marcy captor likes the potential tariffs and called the steel market rigged the house democrat will join us after this we got a yes! what does that mean for purchasing? purchase. let's do this. got it. book the flights! hai! si! si! ya! ya! ya! what does that mean for us? we can get stuff. what's it mean for shipping? ship the goods. you're a go! you got the green light. that means go! oh, yeah. start saying yes to your company's best ideas. we're gonna hit our launch date! (scream) thank you! goodbye! we help all types of businesses with money, tools and know-how to get business done. american express open.

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and right now off 168 which is about three quarters of a percentage point the s&p 500 basically flat and the nasdaq inched into positive territory. and footlocker tanking, beating profit estimates and saying revenue was below forecast jcpenney down on a revenue miss. and gap soaring and raising the dividend and giving a stronger than expected out look for 2018. to sue herrera for a news alert. >> and this is a statement from the imf, the international monetary fund regarding the tariffs. jerry rice, the spokesperson for the organization, said, quote, the import restrictions announced by the u.s. president are likely to cause damage, not only outside of the u.s., but also to the u.s. economy itself. including its manufacturing and construction sectors which are major uses of aluminum and steel. we are concerned that the measures proposed by the u.s.

will defacto, expand the circumstances under which countries use the national security rational to justify broad based import restrictions. we encourage the u.s. and its trading partners to work constructively together to produce trade barriers and resolve trade disagreements without resort to such emergency measures you are up to date that is what the imf thinks of these pending tariffs. >> thank you very much and important to get their perspective on this as well. so the president is getting some support from some in the rust belt joining us is marcy kaptur and you are representing the ninth district which is northern ohio, not the rust belt but steel is an important industry. i know you've testified at the commerce department. you have been urging secretary ross to continue this investigation into what is going on with steel. particularly when it comes to

illegal dumping. i presume you've done a lost economic studies on why you think this tariff, if it goes through, will be economically helpful to the constituents that you serve. >> first of all -- thank you very much. i congratulate secretary ross at the department of commerce and the president and his staff for being serious about america's growing trade deficit. where we have exported jobs and imported foreign product for a very long time over a quarter century regions like my own have been heavily armed by this unreciprocal trade across the board. almost in every sector steel has been particularly hard hit. i represent alcoa, u.s. steel, republic steel, arsonol and fiat chrysler and general motors and ford and ohio in canada and the

nexus for automobile and steel industry and we have to have markets that are open and free when markets become controlled or the united states becomes a dump market, and jobs are wiped out and entire platforms are wiped out, we lose our defense industrial base. so i give them a lot of credit for being at the scrimmage line with this proposal they are receiving input over the next several days. they didn't announce the details and i think those are to come. i feel like they are at the scrimmage line and will move up the field. >> we don't have very many details at all no details. >> that is correct. >> because it hasn't gone through. >> nothing has gone through. people are overreacting, but i think the administration has been correct in saying, now tell us what you like and don't like. i will say that the president's trade leader, bob white heiser and gary cohn, peter navarro, these individuals have a lot of experience in this market and wilbur ross -- >> but gary cohn opposed it.

>> in the steel -- >> he was a strong opponent of this, gary cohn. >> but that is good. because there was -- as with franklin roosevelt and you have pro and con in the room and you try to find the best way forward. the ball has to be moved up field. i have hundreds of steel workers who have been pink slipped and plants shut down and i also come from places that represent and manufacture america's army tanks up here in michigan. we can't afford to loose the steel production platform of this country so we have to find our way through the thicket and begin to rebuild critical industries just as with our automobile industry. >> and there are those who criticize this action as being a, quote, blunt instrument because it doesn't discriminate between types of steel imports or countries like canada, which is the largest exporter of steel to the united states

would you entertain the idea that maybe a more targeted set of actions again the real dumpers is needed here or comfortable with the idea this is a blanket tariff going across all of the imports >> i think that it has to be a fair set of measures they have to be intelligent and well thought through we know that china manufactures 2,300 million metric tons of steel annually the market could only absorb 1300 that means there is a tremendous over-supply and our people have taken the brunt of the beating there are many closed markets in the world. try to get chinese steel into japan and see how well you do. so we have to figure out how to work in a very unlevel playing field globally i think this is gives us an opportunity to do that and in one of america's fundamental industries you can't go to war without a steel industry. >> and this is a delicate

political dance for you because cleveland steel works is owned by a british company in luxembourg and republic steel is from a company based in mexico so while the steel plants are in your district, the corporate ownership are in areas that could be hurt. have you heard from them >> well we have heard from them and i think that if you really look at the way the market functions, right, the canadian and mexican imports are on a different platform than chinese dumping or to third world countries, whether it is vietnam, or russian steel coming in in different ways so i think we have to distinguish between countries and the way they behave. with the chinese, the odds are they will manipulate the currency to cut whatever impact from that tariff so we're not dealing with players who play by the rules. for those that play by the rules, they should be in a different category i agree with you.

>> if it is blanket, you are awfully close to canada. you mentioned ontario key to the industry. >> just across the lake. >> yes you'll have to contend with that thank you very much. we appreciate you joining us congresswoman marcy kaptur >> and stocks falling for another day on fears about the impact of the tariffs. the dow down triple-digits, 190 points and nasdaq into positive territory. we have the trade story covered from all over the globe. our reporters are in selte country in canada and in china and we'll hear from them next on "power lunch." no, please, please, oh! ♪ (shrieks in terror) (heavy breathing and snorting) no, no. the running of the bulldogs? surprising. what's not surprising? how much money aleia saved by switching to geico.

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and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. during storm season we want our customers to be ready and stay safe. learn how you can be prepared at pge.com/beprepared. together, we're building a better california. hello, i'm sue herrera here is your cnbc news update for this hour. the nor'easter battling the east coast causing major flooding take a look at that. that is the hoboken train terminal in new jersey which is a commuter in and out of new york city. many are now without power snowy and windy conditions forcing the geneva switzerland

airplane to shut down. and heavy snowfall in that city, closing roads and public transportation systems israeli police questioning prime minister netanyahu and his wife as part of a corruption investigation. investigators entering the residence this morning and left five hours later reports say that his wife sara was being questioned at another location at the same time. and the pga said tiger woods has committed to play next week in the valspar near tampa, florida. since returning from a fourth back surgery and also play in the arnold palmer invitational the following week i hope he doesn't overdo it. that is the news update this hour >> sue, thank you very much. we continue to use the global reach of cnbc to bring you the reaction to the president's tariff and canada is the biggest steel

exporter jackie de angelis live in wheaton, pennsylvania, looking at whether the tariffs will help or hurt producers and we begin in beijing with the reaction from china eunice. >> thanks so much. well china is urging the u.s. to exercise restraint when it comes to trade at a regular press briefing the foreign ministry said beijing has strong discontent for washington and said that countries are suppose -- not supposed to take trade restrictions un latterly and there is belief they won't retaliate because the tariffs probably won't have a whole lot of impact on china at all. according to the steel makers and the aluminum producers, they just don't sell enough directly into the united states and in fact, when you look at the numbers, less than 3% of u.s. steel imports are from china. chinese aluminum makes up about 6% of u.s. alum flim imports

and also we spoke to the china iron and steel association and they went one step further saying the u.s. is probably going to be hurt the most compared to china. in fact the officials said the tariff was a stupid trade protection measure and i spoke to a former chinese official who had said to me that if the trump administration was trying to hurt china, they kind of missed the mark and in fact, this is going to be more detrimental to traditional u.s. allies such as south korea and japan. one of the thing, i heard you talking about section 301. and this is the investigation that the trump administration has into whether or not china engages in the cyber theft as well as intellectual property theft and people here believe that china could retaliate based on the results of that investigation because it touches upon something that is really important to china's economic competitiveness in the future.

and that is i.t. and intellectual property. >> very interesting. thank you very much for that report. the biggest exporter of steel to the united states is not china, as she just told us it is canada and deirdre bosa is live in vancouver with that part of the story. hi. >> reporter: hey, it is indeed not just steel, but aluminum as well so the response here in canada has been swift and firm as well. prime minister justin trudeau weighing in and saying that the idea that canadian steel and aluminum poses a national security risk is nonsense and tariffs are absolutely unacceptable he has received assurances in the past that canada could be exempt but the idea of exemption became more uncertain over nafta. so trudeau is saying that he will push for an exemption much like canadian industry has been doing and will continue to do. it is doing at the moment. so right now this is where

canada stands. it is bracing for the impact of not just tariffs, but the potential of a larger trade war. trudeau also mentioned today at a press conference that the measures are going to hurt them, the u.s., more than they are us. canada, here is why. canada is the largest market for american goods and the most vulnerable industries are the ones that export the most to canada. they include vehicles, auto parts, machinery like semiconductors and agricultural products so eunice and the chinese government taking about how these policies could hurt allies and that is very much the thought here in canada back to you. >> thank you very much now let's bring in jackie de angelis live in wheatland, pennsylvania and here is the question is it possible that u.s. pro -- producers themselves could be hurt by the tariffs. >> it is and i'll get to that in a second let me start by saying the overall reaction here, even though the stocks have seen

volatility is these people are cheering what president trump is doing. ear at zuckerman industries, they are talking about ramping up facilities idle they have 2300 employee and could add hundreds of more jobs and they say president trump is leveling the playing field a vp described that the industry is bogged down in anti-competitive policies the way they see foreign governments are offering competitor sub siddys that u.s. companies aren't receiving so sure they are having trouble competing. it was a big day for this company yesterday and others in the steel industry cheering the initiatives zuckerman told employees they will receive $1,000 bonuses when the tariffs are imposed. what is interesting, back to your point is that this is the type of company that could be impacted the most negatively it could be them, because they import steel actually from canada but they are saying they are still cheering the policy because they are looking at this from a long-term perspective and

they see growth and benefits for the employees and they see job creation here. we spoke to a couple of employees on the ground who said there are generations of employees working at this particular facility. they are cheering president trump because he's doing what he promised them he would do. >> certainly is. jackie, thank you very much. well our next guest manufacturers and supplies steel and aluminum to a number of fortune 500 companies and said he's been raising prices and passed them along this year because of commodity price hikes. and what will they do now after hearing the president's plan and what is the impact from green bay, wisconsin is alexco alski and a member of wipe yo and i'm in your town often ever summer. thank you very much for joining us so you hear the argument, that the consumer is going to get hurt because prices will go up from cans of coca-cola to automobiles. what do you make of that

argument and -- how much have you already been raising your prices >> yeah, so since november the price of --the crew index is u about 25%. now in our business, the steel comes in and the mills produce it and the service centers and cut it and we buy it in bundles. when it comes to our facility, our lasers cut it and bend it and repair it and turn it into turf equipment and for exits and bobcats, so the lion share is b. to b. and their custs are businesses so i don't think the consumer will see it relatively to the way we view the world. the second part is that within the whole supply chain of what we do, the steel input about 15 to 20% of the cost there is labor and overhead and engines, wheels and tires that go on to the whole goods

so i think it is an overreact in the market we have been raising prices but they are not massive or significant in any stretch of the imagination. >> i understand that you are probably in favor here of this tariff but many say the reason president trump may be able to get this through is because he can say that it is a national security threat to continue with the plan that we currently have in place with regard to steel imports and exports. so i guess i just don't understand and i'm not trying to be glib here, but what is the national security threat of importing steel from canada? >> i'm not in politics so i can't speak to the sections that are referenced and that sort of thing. in business, what i can say, is our customers will continue to challenge us if we see steel continue to go up. to figure out ways to take cost out. and that may be modifying the prod urk, using a thinner gage steel, using an alternate type of steel or maybe we do some things so the product could be robotically welded or fixturing. so i think companies are going

to do what any business would do when raw material goes up, they look at options to mitigate that cost impact and eliminate it certainly in my business, our customers look to us to help them with that we're a critical part of the supply chain and they lean on us to do those things so outside of the political, i'll leave that aside. i don't know if it is a national security threat but i'm safe here in green bay, if the badgers win, it might not be -- but outside of that happening, it is a safe industry from our side here in wisconsin but you will see large oems pushing back to come up with alternative ways to mitigate the cost impact. >> where do you get most of your steel. >> it comes from service centers. great question so the mills produce in coils -- and 40,000 pound huge coil of steels and sell them to service centers in wisconsin and they take the large coils and bundle them into sizes that go into our

laser cutter and machine equipment. >> but the origin of the steel. >> it comes from both. it is both foreign and domestic. >> do you have any idea what percentage is which? >> no, our service center -- >> it is -- >> we don't track it exactly. as long as it meets the specs that our customers require >> alex, thank you very much ceo of performance complete metal solutions. commerce secretary wilbur ross on cnbc laying out his case for why president trump's trade tariff proposal is much ado by nothing for the american consumer is he right. he brought props and check out the winners in the nasdaq 100 incyte, cell seen and regeneron. bioteches leading the way.

we're going to get you a quick check on the markets we recovered much of the losses. but the dow headed down again. we were down 331 points at session lows for the dow jones industrials. j & j is the biggest winner. mcdonald's, the biggest lor,se down more than 4.5%. "power lunch" is back in two e and invest for retirement since day one. why would we leave now? because i'm retired now. so? we're voya. we stay with you to and through retirement... with solutions to help provide income throughout. so you'll still be here to help me make smart choices?

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commerce secretary wilbur ross on cnbc earlier saying the reaction to president trump's trade tariff plan is completely overblown. will it have an impact on the american consumer? that's what we're going to ask robert shiller, yale university professor of economics we have talked to you about markets. we have talk eed to you about rl estate today, we'll talk to you about trade and tariffs. what is the effect of tariffs on the end user of goods, the american consumer?

>> well, depends on whether the end user is a steel worker or not. for most people, this goes all the way back to 1776, adam smith. it hurts most people because the production isn't where it's most efficient. you put distortions in trade, and it lowers -- it also has an immediate disruption effect. but it helps some people notably, people who own stock in steel companies, and maybe steel workers as well. >> the distortion comes about, and because -- by what mechanism? explain it to me >> it goes back to adam smith, as you talked about importing lime from portugal he put a big tariff on, and they said we can't afford that anymore. we'll try to make it in england. doesn't work very well the climate is wrong that's the kind of thing that tariffs do it makes production inefficient and you're drinking lousy wine

>> professor schiller, do you have any evidence that any tariffs have been successful in recent history or even not so recent history >> well, yeah, there was an increase in steel prices briefly under george bush. studies have shown it wasn't very successful in helping steelworkers you know, tariffs are generally low. they have gotten -- they have been trending down ever since the smoot-harley tariff in 1930. i think it's parts of our growth and prosperity, around the world. it's not just for us americans low tariffs helps the whole world organize itself better the unfortunate thing, though, is it does harm some american workers. we have to consider that >> are american consumers going to end up -- secretary ross was saying the effect on the price of a can of soup is going to be de minimis

the effect on an automobile price. i guess we're going to listen to him here just video of him. he's holding up a can of soup there. are we going to feel this as consumers? >> the amount of steel in a can of soup is probably not very big. but i wonder if this isn't just a first step, that trump has in mind raising other tariffs and even if he doesn't, there will be other countries who will retaliate, and they'll get bigger this has really been like a first shot in a war. that's what is worrisome the problem is it doesn't help -- that's what happened in the great depression >> professor, but again, i don't want to pick on china, but the biggest maker of pretty much everything now, but isn't the fact that china artificially ties its currency to our dollar in a form of subsidization do you agree at all that some countries, particularly, china do is a kind of market manipulation it's not a level playing field >> i believe there are some such

manipulations. peter navarro, who works for trump, wrote a book documenting them i understand that he's partly right, but he overstates it. he entitled his book "death by china. that's a little bit of an overstatement. i think it's good for the whole world if china prospers. we want to see everyone growing. and that helps bring peace and tra tranquility and more for us. >> appreciate it >> check this out, my virginia cavaliers last night hit an amazing buzzer beater. there it is, to beat louisville last night they scored five points in the final seconds, and the question is, can the dow do a comeback like that today? we have two hours to figure that out. virginia only had nine tenths of a second find out, the second hour of "power" right after this anywhere you like, apps

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welcome back, everybody. i'm taylor mathison. here's what's on the menu for the second hour of "power. the president announcing he's ready to impose tariffs on aluminum and steel >> and soup and soda, or soup and suds

commerce secretary wilbur ross using some props there campbell soups and budweiser breakfast of champions right there for the commerce secretary, to emphasize that consumers will not really feel an impact on these tariffs we'll question whether he's right or gnaw. >> the view from the great white north. mr. wonderful himself, canadian kevin o'leary will join us with his take on what the proposals could take and his take on the market sell-off. "power lunch" right now. tyler, we're finally paying canada back for all they have done to us, right? we'll ask o'leary about that i'm kidding. stocks staging a comeback in afternoon trading. the dow is down 155, but the dow was down almost as much as 400 points now, if the dow does close lower, it will be the longest losing streak since all the way back in september. your dow laggards, you have mcdonald's, caterpillar, boeing, and nike transport is getting hit now they're in correction territory.

united airlines, american airlines, delta airlines are your worst performers there, and big movers in courtney's world, retail foot locker the worst s&p performer, gap leading the index, and look at vista outdoors, siccing because the outdoor selling rei says it has put future hold on orders on things like bicycle hel mlts on hold because vista also makes guns rei taking a stand on non-gun products from a company that owns gun and ammunition makers that stock down 10%. >> an interesting move >> the president's proposed stairfes have been the debate of the day on cnbc. from wilbur ross to ceos to some of the biggest thinkers in business all of them have weighed in. >> it's no big deal, and it certainly isn't anything that should have taken 2.some odd

million dollars off general motors it's a tremendous overreaction >> the lower tax rates, deregulation, roll back of regulations, that stuff is boosting the economy as we sit here really good economic growth policy but tariff hikes are prosperity killers. they always have been and they always will be >> larry kudlow pooh-poohed the aluminum guy ceo talking about the impact on a price of a car larry doesn't know [ bleep ] about that i'm very disappointed in him >> it's all about giving a handout to the steel and aluminum producers on your screen in national security terms it makes no sense because it's hitting our military allies like western europe, like south korea and japan. it doesn't directly hit china. >> some fighting words in there, and the debate is just getting started with lots more ahead in the next hour. tyler. >> and now let's get a look at how the markets are reacting

that's where the debate is really getting waged in many ways bob and mike are standing by on the floor of the nyse. mike, you say trade is just one more thing for this market to worry about. there's inflation, there's interest rates, and others >> and all of that, tyler, is sort of rebuilding that kind of wall of worry when i think ultimately is going to be one of the sources of a rebound in this mark yes, all those risks that you would have come into the year knowing were possible to come to the foreground, have done so that's trade policy, that is maybe the fed getting a little more aggressive. it's maybe what is this fiscal policy, what the impact is on potential overheating. all these things that were really in the background are now out front. i think the market was slouching to the lower end of its range for two days before we got the shock news on the tariff yesterday. you had an overshoot perhaps yesterday. i will say and bob will echo this, yesterday during the day, for as ugly as the indexes were,

small caps outperformed and the small caps led this rebound today. >> russell is in positive territory. i agree with you i think there is new additional risk, including white house risk, turmoil, political risk that exists over there this is the problem i have with wilbur ross and his cute analogy with the soup can saying it's less than a penny. what is everybody getting so freaked out about? it is a big deal we have already pulled out of the transpacific partnership nafta is looking very iffy at this point we're clearly aggravating our allies south korea, canada, mexico, et cetera, over these tariffs this thing could get nasty very quickly, and it's big. it's bigger than less than a penny on a soup can. i think that's where mr. ross and i part ways. >> yeah. i think pisani, ross, santelli would be a wonderful showdown. thank you very much. >> mad money host jim cramer, you might have heard of him, he was pushing back on the barricades for stocks when it

came to steel and aluminum imports as well. listen to this >> in the end, i believe this market will settle down and the bear case is simply way too extreme. verging on hysterical. w while it produces a garden variety sell-off, that's the far more likely scenario >> let's bring in jeff and michael, president and portfolio manager. i agree with jim, but i'll take it an extra step, which is this. when i see -- doing this for 20 years, when i see the dow sell off a couple hundred points on a headline, i think some computer algorithm somewhere heard us or somebody say trade war or tariff, and it kicked in the sell order you're a portfolio manager, michael. were you selling stocks into the tariff story yesterday >> no, we actually did a little selective buying i would agree with you i think from our standpoint, we're long-term investors so trying to gauge any sort of

long-term trend on anything like the last few hours of yesterday is difficult to impossible i don't put much creed nls in that i think it was a headline risk for the day. i think the overall broader market impact may be much more muted than what we saw yesterday. but, you know, coming into the year, we foresaw four risks. the rate of interest rate increases, economic growth and inflation, geopolitical risk, and potential headwinds to growth from trade issues and those four risks are still out there. and they showed how they can rear their ugly heads yesterday. so i think while the positive case - >> but -- stronger than the negative case, you need to pay attention. >> specifically though, we'll get to that in a second, i want to go back to this move. we have seen lately a couple of days where the dow has gone down 300 points in a matter of minutes. there's no way that's human beings selling, is it, michael >> no, and in fact, i would argue that potentially you have, you know, the etf issue where a

lot of etfs balance out toward the end of the day you have very aggressive moves either up or down in the last hour or two of trading you can't discount the impact that sort of flow issue is having on the market either in the short term >> so jeff, is this reaction to trade moves overblown? michael very clearly laid out the four risks he sees is trade likely to be the governing one? >> at the moment, yes. one thing i want to go back, if you look at 2018, when you talk about volatility in the market, we have seen more 1% daily moves in '18 than we have seen in '17. again, volatility has been another risk that added to the list of four with inflation, interest rates, now trade volatility, and the political risk that's out there. but when you look at the grand scheme and the economy as a whole and the fundamentals of the economy, you continue to see earnings increasing, we'll

probably see somewhere around 19% earnings groet s growth thir maybe 12% from actual earnings, another 7% from the tax savings. you look at the unemployment at all-time lows. maybe going at 4% or lower we still have consumer confidence at all-time highs and it's a global recovery so when you look at everything as a whole, there's a lot of positive in the market, and when you see these days and these -- this volatility that's out there and these percentage moves, it's providing some opportunities to put that money back into work or at least reallocate your portfolio looking for small and medium-sized cap companies that should be doing a lot better this year. >> that was exactly what i was going to ask it sounds like you're not worried about a trade war. perhaps these markets present an opportunity. we saw tech sell off pretty mightily yesterday is that overblown? is that an opportunity to get in >> well, i think tech,

selectively on tech. when you look at -- if you just look at sectors in the economy, certainly we could say the large cap growth area has certainly been one -- is one of the highest areas of valuations right now. so when you look at tax reform or even if you look at trade, if we have some trade wars, which i don't believe we will, but if we do, smaller caps, medium-sized companies could actually provide some opportunities and i think, again, in addition to that, the tax reform is going to provide some additional upside momentum for the small caps that aren't undervalued but maybe have better valuation than some of the large caps do right now. >> got it. thank you very much. jeff and michael, thanks for joining us here today. >> thanks. >> thank you will the nasdaq falling 1.6% this week as the market sell-off intensified following the president's announcement of steel and aluminum tariffs names like google facebook, amazon, microsoft, closing in the red yesterday, down again

today. what impact do tariffs have on tech we asked the question to get us started. is the sell-off overdone let's bring in mark, analyst at rbc capital markets. thanks for joining us. i guess it's been a while, if ever, to talk about the impact of trade on technology, but what do you think happened yesterday with the sell-off in tech, and does it provide an opportunity to get into some names, even if selectively? >> you know, i can only think of one stock in the kind of the large cap internet space among the fang names, one of those stocks would be impacted by this but you have to play the scenario out a while that's amazon, because as any retailer, they are importing products, some of the products from china and selling it. something that would lead to a rise in import cases it could impact their business but for the other names, you know, the truth of the matter is unfortunately, china is pretty much zero for these companies, for facebook, for google, and

for netflix in terms of revenue generator. for a variety of different reasons. and so it's kind of hard to see any fundamental reasons for the stocks to trade off on that. to your second question, yes, it does create better buying opportunities. and i'll start off with facebook i'll mention this one. if you just for cash, it trades at a discount to the s&p 500 next year's earnings, based on our numbers. i think this is one of the most attractive growth adjusted valuation stories across tech. maybe across large cap, and maybe across the s&p 500 it's our number one pick in the group. when you have these kinds of sell-offs, that's when we want to step in and be more aggressive on the stock. >> that makes sense with what you're saying the exposure to china being small to these tech players. perhaps to their detment to this point at least, but what about the other allies that this potentially would make angry what about those markets and how that interplays with these big tech companies >> it turns out these big tech companies aren't u.s. tech

companies anymore. they're global it's 50% of revenue for netflix, google, amazon, priceline, booging.com, that's all outside of the u.s., so anything that starts the ratcheting up of pressures and diminishes trade within companies, between countries or let's -- as governments step in and maybe regulate some of these assets, that's a negative for these names. as it turns out, some of the names like google, amazon, and facebook are in regulatory cross hairs. it doesn't help them if they're in further ones because of trade spats. that's really the issue. again, i think that's kind of a pretty remote issue affecting their fundamentals we look at these tradeoffs, the sell-offs as opportunity to buy more, particularly, though, if i go down the list, facebook and amazon, and then netflix in that order. >> snap ipo'd a year ago today hard to believe, actually. where are you there with that name for snap? where are you in your sort of

recommendation for snap at this point, a year in a lot of changes have taken place in that one year >> a lot of changes in our ratings too on this stock. i hope we have gotten it right, but we'll see. we have a buy on it. we call it a speculative buy $21 price target what we had it a couple new things in the last quarter they're starting to finally fix the android problem they had to me, that's kind of like the mobile blind sided issue that facebook had at the time of its ipo. snapchat went public not realizing most people around the world don't use apple. they use android, at least outside of the u.s they started to fix the problem. they have gone through a major change in how they sell ads to marketers, to advertisers. they introduced market-based, auction-based pricing. and the big controversy near term is they have done a major overhaul of their user interface, separating the social from the media i like to see companies that if they have problems are willing to take those kinds of risks, those big steps. we think on all three of those decisions, that the company has made the right decision.

hopefully now we have a positive pivot. we didn't have that for the first three quarters, and that's why the stock underperformed so much hopefully they're getting it right now. >> they need kylie jenner to get back onboard, too, i think thank you so much, mark. i appreciate your time >> here's what's coming up on the rest of the show president trump tweeting, the trade wars are good, and they're easy to win. is he right? pulitzer prize winning columnist george will weighs in. >> and the dow scraping, clawing, trying to make a comeback we were down nearly 400 earlier. will the dow pull a university of virginia like comeback? you know how much that hurt me, by the way, having to say that we'll find out we're back after this. you know what's awesome? gig-speed internet.

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him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. all right, president trump getting pushback on many fronts about his proposed steel and aluminum tariffs but here's what the president tweeted this morning when a country, usa, is losing many billions of dollars on trade with virtually every country it does business ith, trade wars are good and easy to win. example, when we're down $100 billion with a certain country and they get cute, don't trade anymore. we win big it's easy. and earlier today on cnbc, commerce secretary wilbur ross also downplaying the impact of a trade tariff bringing beer and soup cans to make his case, with a big grin on his face. joining us is "the washington

post" pulitzer prize winning columnist george will, also an nbc and msnbc news contributor >> good to be with you >> what did you think when you heard the president's tweet this morning? >> i boycott the president's tweets, but about mr. ross, who seems to me doesn't know much about commerce, which is his department's responsibility, he says the effect of these tariffs will be negligible he ought to talk to, for example, the ceo of whirlpool. whirlpool said between whirlpool's raid on washington, where it got protection against foreign imports, the ceo of whirlpool said they might lose as much as a quarter of a billion dollars off their profits because increased cost of materials, and he mentioned steel particularly this was at a time when the coming steel tariffs were utterly predictable, or secretary ross might talk to the people at electrolux, which is europe's largest appliance maker. it's rethinking, speak of a

quarter of a billion dollars, a $250 million investment in a factory in tennessee because the tariffs might make their products less competitive. before holding up soup cans and thinking he's addressing the issue, he ought to look harder at the real fax. >> the "wall street journal" wrote that, donald trump, quote, made the biggest policy blunlder of his presidency. it goes on to describe this news as a self-inflicted folly. what do you think? >> well, that's certainly not too strong, first. protectionism is a side that cuts down all that republicans are supposed to stand for. it's government picking winners and losers it's government industrial policy it is crony capitalism dressed up as a matter of principle. it is the government telling americans what they may purchase in what quantities and at what prices big government doesn't get much bigger than it gets under protectionism. >> but the president understands, doesn't he,

mr. will, that this policy would have lots of support in at least, i can think of three states that have been very important to him ohio, wisconsin, and pennsylvania >> except there are far more consumers in those states than there are consumers of steel than there are steel makers. there are about 140,000 steelmakers in this country. there are more than 40 times that many workers in pennsylvania, ohio, and elsewhere, more than 40 times those users in downstream steel using industries never mind the fact there are hundreds of millions of american consumers in all 50 states who are going to be hurt by this >> following on your reasoning, the "wall street journal" says, calls this another name for this is the trump voter tax, which raises your point, which is the

idea that this is going to hurt more than -- more of the trump voters than it is going to help. >> this is a tax increase. tariffs are taxes, collected at the border, and paid by american consumers. they're just particularly surreptitious and indirect and sneaky taxes >> let's talk a little bit, pivot just a bit, if we might. the last two weeks, things have come up in the national dialogue one, as a result of the parkland, florida, shooting, and now this on tariffs. that have taken away, it seems to me, some of the momentum such as there was momentum in the trump agenda a trump agenda that was built around tax cuts and so forth and there's a lot still of turmoil in the inner circle, in the white house staff, and the president, of course, ridiculing

his attorney general is the trump agenda now off track? >> well, the trump agenda keeps trumping on itself the president doesn't have the discipline required of a presidential office, which is to have a message and don't constantly step on your message by not letting it play out, by not giving it room to breathe. but that's a matter of discipline discipline is not the word that's comes to mind when one is speaking of the trump white house. >> george will, always great to see you. thank you for your time today. >> glad to be with you >> thank you again >> straight ahead, we'll tell you how tariffs could hit the housing market and affect what you pay for a home >> plus, growing alarm over a new threat to the auto sector. we'll tell you what it is. stay with us on "power lunch."

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welcome back to "power lunch. here's what else is happening. blackrock announcing it's showing customers options to exclude stocks of gun makers

>> jcpenney announcing they have cut roughly 360 jobs after a restructuring. they're expected to create annual cost savings of $20 million to $25 million a former employee is suing google claiming youtube instituted a hiring freeze of white and asian men. >> thank you commerce secretary wilbur ross appearing on "squawk on the street" earlier saying that president trump's proposed tariffs were no big deal and he brought a couple cans to prove it is he right? we'll debate that with "power lunch.

hello, everybody i'm sue herera here's your cnbc news update at this hour. the reverend billy graham was laid to rest today a funeral service attended by president trump, vice president pence and their wives was held at the billy graham library in charlotte. some 2300 people in all were invited to honor the man known by many as america's pastor. >> billy graham that the world saw on television, the billy graham that the world saw in the big stadiums, was the same billy

graham that we saw at home amazon has told third party sellers it will soon start collecting sales tax on shipments to pennsylvania. it's the second state following washington and that is part of a new service called marketplace tax collection lawmakers in pennsylvania passed a bill last year requiring internet retailers to charge and collect sales tax. goodman is recalling more than half a million packaged air conditioners and heat pumps. the brands included are amanna and york international energy. the company says it received nine reports of the units catching fire. that is the news update this hour i'll send it back to you >> thank you very much >> markets are in the red, although we're well off the lows of the day the dow had been down nearly 400 points the dow has come back, down more than 160, but still much better. s&p 500 had dipped positive, but we're back negative. nasdaq is positive, up by 29 points health care, telecom, those are your leaders

utility and real estate are the laggards >> the oil market also set to close for the day and the week that's how it works on friday, is it not, kate? >> that's very true, brian we'll look at crude oil, closing higher by about a third of a percent. broke a three-day losing streak, but it's down around 4% for the week that breaks a two-week winning streak intraday wti also hit a low. that's the lowest level since february 15th. the drop in stocks yesterday, of course, weighed on oil as well, but we have seen a bounce back today. remember, the api did come out and say yesterday, the tariffs the trump administration plans to impose will raise prices for the oil and gas sector, so it will of course be one to watch as this shakes out >> thank you if the trump tariffs are enacted next week, they could well affect industries across the entire economy we have diana olick with a look at the impact on real estate and phil lebeau looking at autos, where some say we could see another shoe drop in the sector

diana, let's start with you. >> well, tyler, the cost of construction had already been rising take a look at the numbers for lumber, drywall, concrete, all at the start of this year, and they continue to rise. now, it's steel. it was already up close to 7% last year, and aluminum was up over 9%. now, i'm standing in a building developed by a major player in multi-family the ceo told me this will likely further exacerbate the cost of housing production, which may have unintended consequences with the respect to affordability of housing for the middle and lower class that, of course, because it would mean higher rent but he added that the market was actually kind of anticipating this, which already increased the prices so not a total shock to the system steel, though, is in every project, from rebar, metal framing for drywall, stair railings, brick supports, canopies even concrete, and aluminum is part of the electrical feeders, metal siding, windows.

there's less steel in single family homes but there will be a ripple effect there too. the chairman of the national association of home builders said given that home builders are already grappening with 20% tariffs on canadian softwood lumber and the price of key materials are nee record highs, this announcement by the president could not have come at a worst time he added that tariffs would heard single family housing affordability as well. back to you guys >> how quickly would one expect to see any effects of this begin to show up in renlts, in the prices of condominiums >> it would be for multi-family apartments and condo buildings, but renlts here coming in obviously, that would take a long time. if prices were to start to rise as he said had been priced in last fall, he started to see the prices go up construction for a building like this one is going to take a couple years you have to look down the road to higher rents for that but it all goes into that cost of construction, which we keep

harping on, is keeping both apartment prices and single family home prices high. >> all right, thanks diana olick. let's talk autos now with phil lebeau in chicago. there could be another shoe to drop in that sector. tell us. >> a lot of speculation there. when you talk about the auto industry and what the impact will be from higher steel or aluminum costs, almost everybody says the same thing, we source locally, we think the impact will be limited, with one exception. toyota came out and said we source locally, but overall, we think this would substantially raise costs and therefore prices of cars and trucks sold in america. and there is speculation that we could see perhaps an escalation of a trade war and perhaps tarkted tariffs at certain countries that build vehicles there and export them to the u.s. imported cars, what we bring into the u.s., they have limited tariffs. ah, but when we build a car here and send it to other markets, whether it's the eu or to china, there are much higher tariffs, which is why people aric looking at these numbers and saying,

well, where do we get the vehicles we're buying here and how much are we seeing of them 45% are coming -- 43% are coming from here in the u.s canada and mexico at 35%, then look at japan and germany and korea. germany in particular is what a lot of people are focused on, in part because people said there's a huge trade deficit between our autos shipped to germany and what's coming here to the united states take a look at shares of the automakers, all of them continuing to feel some pressure not as much as yesterday, but they're all feeling some pressure relative to where they have been in, and it's been a very rocky week for these guys >> all right, phil, thank you. >> thank you phil lebeau. >> for more on what the tariffs might mean for the oddo industry, let's bring in james, senior auto analyst at consumer -- i should say, james, the supposed tariffs, there are no tariffs right now they may never happen, but if they did happen, is there any impact on the car business >> yeah, and thanks for having

me i appreciate you saying that that's absolutely right. so we are, look, we're assessing and looking at history for precedent to understand how these get passed through, what cadence and what sort of magnitude. this is a particularly difficult time we have had eight years essentially of an auto recovery. we have record high prices we have many cases in the credit business, while the business is stable and widely available to most consumers, loan terms are as long as they have been and we have rising rates. when we think about monthsly payments, how many more pressures on cogs can oems pass through in the form of higher prices this is a very difficult time, then you layer into that off lease vehicles will come back in record numbers this year, next year, and beyond so we do think this is a particularly difficult time to pass through something like a steel or aluminum tariff >> fair enough, but here's my problem with this, james i mean, tyler, i think you just bought a car recently. everyone is moaning and groaning

about, i'm not supporting the tariffs in any way everybody is complaining about the cost of a car going up $50 or $500. the price of cars have doubled in the last 15 years well past inflation. have they not? all the technology, an average car now is like $36,000. and 17 million to 18 million are selling a year are consumers at all price sensitive? you have $50,000 kias. >> your money doesn't go as far anymore. look, i think, to some degree, i think you're right there's sort of a desensitization, but at the same time, we haven't had this surge in off lease where there's that true substitution risk, where you can get the almost as good as new kia or suburban or what have you, for 20% to 25% discounted and the ancillary issue there is as more used vehicles come back to market, residuals go down with used prices which makes lease payments higher.

i think this is a particularly difficult time, clearly, the oems have shrugged off other pressures, emissions, safety, infotain mentd, it added to the wall of worry for investors given how late we are in the cycle. >> i love my kia, james. but it is going to -- i know you weren't. it is going to come off lease, and i really align myself with your argument there. when all of these cars come off lease, many of them in very good condition, with low mileage, two and three years old, that's going to be competition for new car sales. so bottom line me here should i go anywherenear the three major u.s. manufacturers fiat chrysler, ford, or gm >> i think the reason you go, if you decide to invest in an oem, i think the reason you choose to is based on a relative valuation. who's more levered to the trucks and suvs that are a little less

price sensitive, a little more loyal customer base. fewer car sort of production issues and quite frankly, i do think domestics have an advantage here gm and ford both source 98% of their steel, i think it's like 95%, 96% of the aluminum from u.s. suppliers i do think they're in a better position on a relative basis to the import oem >> so then in the specific case of their stocks, which we just saw phil report, down 8% this week you would argue that maybe that reaction there, if it's tied to the tariffs, is overdone if they're getting 98% of their steel from u.s. sources and 95% of their aluminum. >> i think on the tariff argument, i think that's right it's hard to unpack, though. inflation conversation this week, and interest rate hikes and late cycle, and the narrative, by the way, at gm, is an advantage right now with respect to autonomous and that sort of side of it i do think it is a little unfair

if you tie the sell-off to tariffs. i think we do agree with that. >> james, thanks appreciate it. >> president trump's proposed tariffs could hit hardest right here in north america. cana canada, the top steel exporter to the united states, and the top importer of american steel going the other way. what could all this mean to trade between those two countries? we will ask mr. wonderful, oh, canada, kevin ley.o'ar "power lunch" back in two. anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird.

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u.s. stocks falling again today after a more than 400-point slide yesterday. after president trump's trade tariff proposal. canada, the number one exporter of steel and aluminum into the united states, and the number one importer, by the way, of u.s. steel, so what's the impact of these tariffs on our neighbor to the north canadian foreign affairs minister has already warned of, quote, responsive measures we have a canadian on the line, kevin o'leary. kevin, how are you >> great to be here. thank you. >> how do you react, first, as a canadian, to these tariffs on

canadian steel and aluminum? >> well, i'm a canadian. i'm also irish, but i'm an investor i touched down in los angeles, but i flew up to toronto to be there for the budget, which was brought down yesterday in canada, expecting some changes in it that i didn't see. but here's the challenge today so i have many interests in canada i have many interests in the u.s. many of them do business together let me give you an example in the automotive manufacturing space, companies like magna and the large automotive manufacturers they service, take a chassis, primarily made out of steel, back and forth across the detroit border seven times while completing a car now, it is not even -- there is no scenario where you're going to tax that thing 25% seven times. so the integration logistics built into the automotive

industry are incredibly complex and have been since the founding of nafta a long time ago as an investor, i have to look at my holdings now in canadian automotive part manufacturers and ask what is going to happen, what are the likely outcomes i sat down yesterday waiting to go through the budget with accountants and lawyers, expecting to see a change in the corporate tax rate in canada, which is at 26.7%, which was always much lower than the u.s. at 35% with the stroke of a pen, trump made canada incredibly uncompetitive. now i have to take that into account. let me give you examples in the last few months. shell moved $12 billion out of calgary to texas conoco moved out of canada because of a carbon tax and higher tax rates the country is shell-shocked right now. it's never anticipating anything like this would occur, but it's not only uncompetitive corporate tax wise, it has brutally high

taxes personally and now no competitive advantage in oil and gas. >> let me ask you -- >> believe me, there's a lot of people running around worried about this i'm one of them. >> back it up just a bit we'll get back to the business side of it you're a master marketer there's probably almost nobody better, except for maybe the gentleman in the white house here's what we were just discussing there's nothing signed yet we have been talking a lot about the media, about hope hicks's departure, robert mueller's investigation, fighting with jeff sessions. now what are we talking about? tariffs. trade, trade, tariffs. do you think there's part of this, which is trump, who may never go on signing this, just distracting us with a tariff talk is there a chance this doesn't happen >> well, you're raising a great point. if it's a negotiating tactic, it's definitely worrying because i can tell you most investors in canada are looking at this saying this is a crazy outcome because you have to remember, the number one trading partner of 38 states is canada

so we don't -- nobody wants a trade war on either side of the border but i'll tell you the way i look at it. i trust wilbur ross. he is a very intelligent guy i have watched him work in the debt markets forever in places like cypress and ireland he's not an idiot. he knows he will totally dismantle the logistics of the automotive industry with steel at 25% it could never happen. it would destroy so many jobs on both sides of the border i'm waiting to see what the next shoe and where it is and where it's going to drop, because even just that industry, hundreds of thousands of jobs are at stake for both sides we can't have mutually assumed destruction. that's crazy but as an investor, i have to be cautious, and i sat with all my canadian companies yesterday in toronto, canada, and i said, guys, i want contingency plans i want to know what the plan is here if this happens, what are we

doing? because i'm not paying 26.7% tax when i can pay 21% there's a lot of capital that's going to be leaving canada and it's a huge disappointment they brought the budget yesterday, i went to see it, what a disaster. there's lots of moving parts in this but you're right i can't believe trump would implement this it would be insane it would be insane >> so let's work on the assumption that some sort of tariff does come through here. let's talk about nafta >> nafta is a problem. but it's a problem for both sides. when we talk about nafta, lumber, we talk about milk, milk byproducts, dairy, all of these issues are mooutually assured destruction. if you go to the border states, we have the most peaceful border on earth >> for now

i'm joking >> i get what you're saying, but there's no way on earth we want to destroy -- if you're a state that has your number one customer is canada, you don't really want to go into a trade war at all because it's not good for either side. and there's so many products and logistics. it's not just steel and aluminum there's all kinds of other industries the tail for the f-35 is made in canada it's made out of aluminum and steel. the tail on the world's most expensive fighter. it's made in canada. now, are we going to tax that 35%? that's crazy all of these - >> that's a finished product, though that's a finished product. >> it's not considered a finished product because it's just the elements of the tail. i've been to the plant it's one of the most remarkable technologies on earth. each tail has its own serial number >> that's interesting. >> and x-rayed and all this stuff is built in canada for the manufacturers. in fact, i don't think anybody

in the white house thought this through yet. that's why probably, you're right, you can't just turn that into law and not have massive repercussions. it would be just -- particularly logistics and manufacturing across this border companies in waterloo, companies in, you know, vancouver that are integrated into their counterparts in seattle. all of this stuff is going to be a big problem. the tech centers half of the games that are designed, you know, for electronic arts are in montreal. so, you know, as an investor, i've been investing in all these companies over the years knowing they have great access to the world's largest market, the u.s., and their costs are 20% less the do you want your sales in u.s. and costs in canada that was the model now it's been turned upside down look, i -- >> finish your thought i'm sorry. >> i'm just saying, you're right, there's probably a second chapter to this. is trump a great negotiator?

is he flexing his muscle oh, yeah, baby, everybody feels it up in canada. >> kevin, thanks very much kevin o'leary, appreciate it. >> we're closing in on the final hour of trading. another wild week for wall street to say the least. we'll tell you where traders are seeing the most weakness straight ahead let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

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learn how you can be prepared at pge.com/beprepared. together, we're building a better california. time now for trading nation. t larry mcdonald, terra fear, much to do about nothing or much ado about something? >> it's definitely having an impact, you know, emotionally. but at the end of the day, in order for it to be contagion into the bond market, we haven't seen that yet. once other countries around the world retaliate, there's risks short term, there's a little panic. but if we see retaliation, you have to take it a little more seriously. >> mark, you called for a little drop are you still calling for over 3,000 on the s&p by year end

>> well, we were at 2850 by year end, brian, but right now, we're going to get to that from still a lower level. as we go through and we look at the charts right now, we still see a lot of extended stocks, next support levels will come in around 2600 and down around the 200-day moving around. not sure that will hold as i see boeing, caterpillar still out there. the relief rally for now is over we need to be looking for a retest of the february lows and probably lower than that. >> but higher after that. >> higher after that, correct. so, a move down and then a move up in the year 2850 your target. thank you very much, guys. go to our website, tradingnation.cnbc.com check please is next >> announcer: and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> when markets are volatile, resist the urge to use too much leverage leverage is a double-edged

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big week every week is big. we'll be in houston all week long at the energy research week we have the ceos of emerson, shell, warwick, general motors and a bunch of other companies

you've never even heard of a huge week next week in houston. we're coming home. we're watching the markets the s&p was positive for a second it's back lower. the nasdaq is still positive >> thanks for watching "power lunch. >> the "closing bell" starts right now. ♪ live from the new york stock exchange, this is the "closing bell." i'm kelly evans. >> i'm wilfred frost in for bill griffeth. >> the dow down 390 points at the low of the session we're covering the story from all angles and how it's impacting business around the globe. >> we're in beijing with china's reaction, in canada, and jackie is in wheatland, pennsylvania, reporting on steel in america. >> we begin with bob pisani, right here at the new york stock exch