water" i actually saw it, taking home the top prize the oscars which i also saw like the first hour, coming your way, anyway, we'll talk about it. monday, march 5th, 2018. "squawk box" begins right now. ♪ >> announcer: live from new york where business never sleeps, this is "squawk box. >> good morning, everybody welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernin and mike santoli who is in or andrew glad to see you. >> glad to be here >> he's going to be with us for three hours, also our guest host is bob doll.

it was a rough week last week, bob? >> sure was. >> ready for this week >> we can handle it. >> i know you do things while we're on the set here. were you b are you buying today >> yeah, i don't think the bull market is over but we're in the refreshers and the positives hurt we have seen the highs and lows already. we're going to bounce around we got good news earnings. not so good news and trade noise that we need to talk about obviously >> let's take a look at u.s. equities last week was a rough week for the dow. down by 3% nasdaq off by 1.1% this morning, you can see green arrows for the dow and nasdaq. dow indicated up by nine points. nasdaq up by 12 points s&p down by 1 point right now overnight in asia, rough trading there. the nikkei down 0.6%

hang seng was off by 2.25% as we've been awaiting the election results in italy, you can see the stocks in italy are off by just over a half percentage point otherwise, you're looking at green arrows with the dax in germany, 0.9 percent the cac in france up .4. and results coming in from italy's election yesterday no party appears to have won a clear majority a center right bloc has gained the most seats in parliament but that group does not contain the anti-establishment five-fastar movement now many will attempt to form a new government and appoint a new

prime minister we'll get a vote later from rome i don't know, it's no way to run a country. box i'm pr bob, how many premiers have they had? >> they've averaged three. the pizza is good. >> i don't know if everything runs on time >> some stuff does, but none of it matters you know, when you're looking at the emelfi coast or that could -- couldn't that adopt all former -- wouldn't you do that by now and say, you know what, maybe they got a better idea >> i doubt they think that i'm looking at you, santoli. >> santoli surrendered the

voting right 100 years ago >> poppopulism, we know that >> a static factionalism, that seems what they're up for? >> do you live with more mom here >> no. >> to her regret >> that's mostly over there, right? >> she'd happily have him. >> that's moms everywhere. >> that's moms everywhere. >> i'm planning a trip there again. it's my favorite place really is. >> they say one reason for that is it's so hard to get a mortgage that's not the only reason but you can't get clean title to anything like, nobody knows who owns something. >> i don't think you can start a business -- but you know, when you're talking along like in -- when -- i don't want to bring that up. >> you said they could borrow -- i thought you were going to say they could borrow all of this

money to plug any holes because they can after the election, the italian popped a little bit but came back >> do you have a favorite or north or the coast >> the coast, not too far from -- >> yeah. >> when you're there, if you like somewhere better, it's a matter of opinion at that point. >> agreed. >> i talked so long, my story's gone >> that's right. that's because we have cnbc reporters who are spanning the globe to bring you coverage of the president trump's tariff announce leslie picker in steel country in ohio. philip beau is covering the cars and we will start with kayla tausche in washington with this. kayla, it sounds like a white house still divided on what's

happened here. >> they are, and they say the president is the final decider and he has made his decision that hasty announcement that came, rippling through nafta talks. lawmakers are trying to smooth over relations with the u.s.' north american neighbors as the administration digging in its heels. kevin bready visiting mexico an telling leaders that mexico and others should be excluded. brady say it will be top and center when the three countries meet today before they make public remarks on camera participants say there's been some technical progress. and the tariff decision could weigh more heavily on the next round. by that time, the details of the u.s. policy will be formalized and retaliation from canada and mexico could be in effect and could change that dynamic. a senior administration official tells me the final announcement

will come this week. the white house's trade and industrial policy tells cnn there's no plan to exclude allies >> there will be an exemption procedure for the particular cases that we need to have exemptions so that business can move forward but at this point in time, there will be no country exclusions. >> the president in a tweet last night saying this, he said the u.s.' friends even have, quote, taken advantage of the u.s. for many years sorry, it's time for a change. guys, back to you. >> right thanks to kayla tausche. right now, let's get to leslie picker in steel country. she joins us now from ohio that's called steel country. god's country, another name for ohio what can you tell us >> reporter: well, i would agree with you there, joe. we're here in the mission

control center of timkensteel's newest facility. paley right behind me is m monitoring the screens to make sure the machines are doing their jobs for high-caliber steel. this facility invested about $50 million to build this is a few years ago. but in recent years they really have been struggled financially. they've had to shrink their workforce by 12% these are jobs paying about 72,000 aids yea$72,000 a year tminnesota timberwolveti tim timken was invited to the white house. and now, we've spoken with several employees here at the facility they're cautiously optimistic about the plans of it. but it's unclear at this time exactly how they will be investing or hiring, moving forward.

because the plan has not yet been signed into law yet guys. >> thanks, leslie, timken, i know, little ball bearings >> reporter: that's actually a separate company they spun that one off a couple years ago. this is timkensteel. >> okay. all right. see, a lot of things that i think are outdated people tell me that a lot. >> reporter: you got to come back, joe. >> yeah, i do. i do i go south, though go south thereof but, anyway, down in the land of the chile skyline. let's get to the broader markets there. coming up with the first negative week and three for the major indexes. joining us john lynch chief investment strategist. and bob doll, the chief

strategist at levine asset management let's have you weigh on this because bob told us he may have seen the lows for the year >> i think bob makes a good point. in 2011, we had august and october. 2015, we had, what, august, october and february of '16. i think investors need to be patient because we're going to to have situations like this that could extend the bottom end process but it could be that february 9th was low >> now, you we rioriginally saw concerns in the markets as we watched interest rate picks up now, you have this underlying concern about potential trade issues perhaps with any situation how do you look at the fundamentals because we still have strong earnings and a decent economy >> for the fundamentals, we're going to get services reports.

the manufacturing, the best in 12 our 13 years. and profits probably a 40 or 50-year high in consumer confidence so we're trying to emphasize the benefits of the most recent tax cut. we're going to hear from randal quarles later on today he'll probably give indication about improved lending capacity. so any gradual increase in rates will benefit the sector as well. so, we still see some positives on the trade issue we're just really mindful of have to find the balance $150 extra per car outweigh the still lack of threatening wage gains? when i say threatening wage gains i know january was an ugly number but historically we have to see that effect on wages before the fed gets scared >> bob, you called this trade noise. we don't know what happens from here going after people not only that we think are bad trade partners but allies with good trade like

canada and eu. what happens with this >> picking a fight with canada is really not a good idea, pretty important to us, as we all know does this threaten the nafta talks which are already a question mark. look, a tariff is a tax. do we really want to put taxes on people. you're drying ing trying to hep and end up hurting other people. >> larry kudlow was on with us last week. saying when we want to punish a country like north korea, we swap sanctions on them we're blocking ourselves out from the rest of the world >> that's what i think look, there's a lot-back and forth within the administration. it's the president who is going to decide at the end of the day. and he seems to have made his decision the history of tariffs that are broad-based are not real good for economies. that's what has us concerned

>> as far as the market goes, bob, this came along with somewhat an immediate focus of the market it's going to happen potentially we'll get the details this week. as long as the ten-year stops going up the stock marketis going to be fine, right? the ten-year hit 2.85, today, we're at 2.84. is the market seizing on it or do you think it changed the trajectory or is the market turning around >> great point i think we're turning. look, put it in perspective. we had how many years of rising earnings and pes it was beautiful we all know the reason why now, it's a mix. we have good fundamentals but pes are under pressure rising inflation it's not like we have a high interest rate but that's not just great news when pes get to 20

when a subbase for inflation, you can talk about a 20 pe, no longer, that's the problem it's a tug-of-war right now which makes it harder. >> john, which sector s or stock do you like? >> sure. following bob's point. with the pe cycle, consequently, given the tax cuts and likelihood of regulation, we're trying to position our portfolios back to value for a lower pe and in fact opportunities. we're looking at small cap to benefit from the lower tax rate and to reduce legislation. from a sector standpoint, we're looking at financials, industrials and technology unfortunately, all three of those took it on the chin on thursday over the long term, we think it will benefit financials. we think repatriation will benefit technology when you think of infracture

spending, that benefits the tax as well. >> bob, you said you're buying what are you buying? >> within the portfolio, just taking the edge off had so much things that looked like microsoft and apple. scaling back and buy a little at&t, for example, just a little more defensive a little more balanced a little more risk adverse from where we might have been >> you mean the charts going straight >> yeah, and they benefit from rising earnings and rising pes if you take the pe story off, you've got to be a limb mottle value-oriented >> bob, thank you for joining us a developing story out of italy. a news agency there reporting that italy's party leader matteo renzi has decided to step down after the election rout. it's the italian ftse down 0.6%.

coming up, reaction from china to president trump's tariff decision. we'll get a live report from beijing where government officials have gathered for the people's congress. and later the former governor/senator evan bayh will join us with the trade impact. interestingly, guys in ohio, pennsylvania, indiana, singing a little different tune than everybody else we'll see what governor bayh said we'll be right back. gglobal bonds, and high-dividend strategies. sure, these are investments.

but they're not what people really invest in. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they want out of life, and maybe even more. a few years ago, me and my wife was actually saving for a house. but one day we're sitting there and we decided that, something needed to be done about what was going on in our inner-city. instead of buying a house, we decided to form this youth league. these kids mean everything to me and i just want to make sure i give something positive to do. ♪ ♪ wow, that's amazing. that's a blessing right there. to know that someone out there cares and is passionate about what we're trying to do in our communities. you excited? yes. yeah, we're gonna to look good right? yup. awesome. alright come on, bring it in man. love these guys right here.

alrigsure. e on, momwhat's up, son?alk? i can't be your it guy anymore. what?

you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. chinese officials have gathered for the national peoples congress and as you'd expect, trade has been a big topic, especially after last week. eunice yoon joins us now from beijing. with more, hey, june thieunice >> hey, joe. the national people's political congress sets the policy for the year and the congress spokesperson kicked it off by saying that china did not want to engage in a trade warm with the u.s. but

it also wasn't going to be sitting idly by and watch it get damaged. 96 to the trade, economic forecasts and targets were also a major talking point. this is a day when the premier gives the chinese equivalent of the state of the union address to the country and he unveiled the gdp growth target up around 6.5% and the inflation target up around 3%. but what economists were really focused on was the reduction of the budget deficit target from 3% to 2.4% this is the first time that china has done this since 2012 now, that, of course, implies that the government is going to be paring back its stimulus to prop up the economy. that's why it was such a point of interest. in addition to that, tax cuts was also a major talking point

because the premier said they're going to be reducing the tax, the equivalent of 1% of gdp. the background of this is that china has been very concerned about the tax cuts in the united states and what it might mean for china's competitiveness. now, the premier didn't say anything specific about president trump's tariffs or the trade overall. although he did say that the country was going to reduce the capacity of steel. and would be opening up certain sectors closed to forners such as manufacturing, education-month-old care, care forced elderly and new energy vehicles there aren't a lot of specifics here so we still don't know whether or not this is going to directly affect or open things up for american companies. but it should be changing the environment. now, in addition to that, the political front, the lawmakers were introduced to the

constitutional amendment that would end the term limits for the president. that vote is going to happen on march 11th and most of us know how that vote is going to go. >> yes it's a good chance, prospects are looking good, eunice thank you. >> i think president xi jinping -- exactly, he will be able to stay in power. >> yes, okay we're going to move on to other votes and elections. and yes, i'm referencing the academy awards the big winner at last night's 90th academy awards "the shape of water" winning the prize for best picture gary oldman was basically a shoo-in. we had an oscar -- my family is into it. we had who do you think will win and who should win we had each. gary oldman was one of the few that i picked should and would win for his performance in "darkest hour. and pretty good idea that makeup

was going to win too frances mcdormand won best actress. i wanted sally to win for "the shape of water." not only was she mute and couldn't talk, but she had to pretend that she was in love with the creature from the blue lagoon, from amphibian man which is what the subtitles show amphibian man is what they call him. >> we women are good at that >> loving freaks, you're good at, right? anyway, frances mcdormand won for her performance on "three billboards outside of ebbing, month. they split it up a bit, they did give it to sam rockwell. she thanked every single person in the building before she asked all of the female nominees in the room to stand. finished with her reference to diversity in film contracts.

and that continued when three of harvey weinstein's accusers took to the stage and introduced a segment highlighting the performance of film. and kobe bryant making an oscar winner for disney basketball with the pixar coco. >> you watched more awards than i did. >> i did netflix grabbing the golden statue for best documentary for "icarus. that's the one that andrew liked. >> oh, that's right. >> it's about the doping in russia >> right. >> gives an early nod for that >> yes, he did mention that. i saw almost every best picture. >> i'm amazed. i'm impressed. >> i know. i bought some, because i'm

obsessed >> i was wanting the preshow then kyle wanted to watch "the incredibles. >> how about "lady bird" >> no, haven't seen that >> they're good. >> i'm jealous, i would like to see all of these movies. we're not at a point in our household where we can watch those kind of movies >> go down and watch on the big screen with the popcorn. the first time i saw "the shape of water" i'm like, what is this i liked the creech from the blue lagoon >> but scott liked it. >> yeah, we all liked. it's sweet and michael shannon from "board walk empire" plays this -- >> have you seen it? >> no, i didn't. there's a horrible guy in there. it's great, sentimental. she's in "blue jasmine" the

woody allen. i think cate blanchett won best actress for that as well >> she did >> i'm impressed i'm impressed. by the way, who won the pool in the family >> i don't know because i went to bed finally i was the only one who had best picture. >> but every category was the same >> yeah. but i did the best picture and best director. i knew it was going to be guillermo. when we come back, nafta negotiations were already complicated. but the president's tariff announcement raising more questions than answers steve liesman is in mexico >> former governor and senator evan bayh is here to talk about the announcement on steel country. and as we head to break take a

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♪ welcome back you're watching "squawk box," live from the nasdaq market site in times square. ♪ good morning, everybody.

welcome back we've been watching the u.s. equity futures and after a rough week last week with the dow down by 3%, you're going to to see that things are moderating at least this morning we had been in positive territory earlier for the dow and nasdaq pap that's not the case the dow is down by 34 points nasdaq down 2 1/2, s&p down by 6 points below fair value. the latest round of nafta talks wraps up in mexico city body but president trump's tariff announcement may click indicate things. steve liesman is in mexico >> reporter: it's a little tough, as you can imagine, becky, to strike a trade agreement with the threat of a trade war hanging over negotiations all of the negotiators are saying this is a pretty important comblikcomapplicant a

you say. kevin brady, chairman of the house ways and means committee was down here yesterday. we caught up with him. and he wants cooler heads to prevail including he urged the president directly to exempt our two trading partners in nafta. >> and i think countries like canada and mexico who are terrific customers for our american-made steel fit that bill for exemption my thought is, let's everyone take a deep breath here. let's see what this final ruling by the president is. and then we'll address it from there. >> reporter: so, getting two ideas here from the gauche negotiators. one is plough ahead. the president has done it before with nafta talks one is you just can't do it

until you know what is in the agreement. you can see why, when you look at how important steel is to both canada and mexico, they are number one and three importers to the united states, guys so, that's a really critical aspect of why the trade agreement and the steel tariff seem to be interlinked becky. >> steve, one of the things that people have said is why not go after the chinese more directly. and the people on the other side say, okay. this is going after china, because they're putting a lot of their steel and aluminum either through mexico or canada and that's why it looks like we get more from canada how do we sort of deal with that because i know part of the nafta talks is to deal with rules of origin >> reporter: that's a big point for sure one of the big parts of nafta talks and a sticking point we'll talk about that more in the next hour, becky the canadians and mexicans are pointing that out. the idea of the tariffs of steel

coming through can is a pretty big reason why the administration wants anybody to be all inclusive the trouble is, becky, what will happen, u.s.-made steel products will become more expensive that will give an advantage to canadian and mexican steel products so you can actually, according to several articles i've read, really increased the trade definici deficit? >> hey, leisman when did you get to mexico city >> reporter: a few days. do you have something for me to visit? >> no, the phil play ed in the open it was an nbc broadcast you could have gone to say high to dan hicks and peter jacobsen >> reporter: i should have >> phil is back to putting back

like to ever in his life he almost won it on the playoff hole outright. it was great it was really great to watch and phil's won -- i think this was his 48th win but it was emotional because he hasn't won in a while and he's 47 years old. and that doesn't sound old, does it it, leisman? >> reporter: you know my attitude towards golf, joe, i fly fish the ponds in the courses. i thought were you going to talk about steel and the putters to bring it back to the topic at hand >> you know that's not a priority for me. if i go off topic it's -- you know anyway, you know that move you do, there's a terrible move in golf if you're casting, so, you don't even want to -- don't even take up the game because you'd already be horrible probably from that motion

>> caller >> reporter: yeah. >> thanks. we're going back to trade. let me read this, president trump not backing down on his tariff on steel and aluminum joining us now former indiana senator evan bayh, indiana was ranked number 21 for steel production for the 47th year in a row. i try to get animated about these tariffs. dan damico a couple years made a case -- not on tariffs but just on what happened with china. and how they really did this and how really unfair it is to people who had these great jobs before for some reason, i know it's the wrong thing probably but it feels good to get a little bit of retribution you've got a statest government that never -- they've got to

juice their gdp to 6.5% or whatever and then we're the ones that get screwed, our workers i get it but we're probably cutting off our nose to spite our face. >> we have to be globally competitive for free and open markets but what do we do when other countries have an artificial advantage not because we don't produce quality products >> their steel is not even as good as ours >> exactly with the growth. concerned about political instability, observing people coming off the agricultural sector and it's hollowed out steel. and when they're doing that because of illegal ub subsidiesn things that don't have anything to do with competition when other countries cheat and seek an artificial advantage, we

have to stand up >> this will affect things at the margins. the question is whether it triggers a broader trade war, number one and then the trading system. both of those things would be bad. we were talking before we came on air, the big question is intellectual property theft. if our country moving ford the more innovative parts of the economy, we inrest in r & d. processes, products and those are stolen from us, that's a big problem. and that decision will be made later this year. the estimates are we may lose up to $200 billion annually becaus of that. >> if you're going to do this, if there's a justification for doing it with steel and aluminum, why don't we do it with clothing? why don't we do it with furniture, with don't with do it with electronics? because these are all areas where you've seen domestic

production drop even more rapidly? >> so, the question is whether those industries have shrunk because of natural competitive forces, lower wages in other countries, things of that nature would they have a comparative advantage. or whether those industries have shrunk artificially because of predatory policies. >> but you could say the same for teal, is it because of automation or dumping policies from other countries? >> probably some of both but there's no question -- china continues to add combaeapacity, though there's a global glut >> there's a piece in the journal, it impressed me, one of the editorials about a big steel producer in vienna, austria. used to have 1,000 employees to make 500 tons of steel now has 14 employees because of automation the ceo of that steel firm said

we have to forgot about steel as a core employer. automation has made it it's never coming back. is this is akronistic view that we can bring those deals back? >> there has been that change in steel for many industries in technology to replace people becky has seen that in our state. there are no longer guys covered in soot. there are those guys just monitoring things. some of that has taken place naturally but some artificially as well. can i mention one name, this is part of the steel announcement there's another area where steps like this might be justifiable you do need to retain some capacity in key critical times because in times of conflict you're not vulnerable to the disruption of your supply chain. you need to look at the data to

determine whether that was legit or an excuse >> is it a mistake for the u.s. to throw it's weight around as the biggest economy? because when trump says we can win trade wars i see what he means because everybody needs to trade with us. and if they don't like it -- if we slap tariffs on cars coming from out of this country, i mean, if they do retaliate against the nibbinitial steel t, and we do something like that i know everybody has to lose, but they lose more than we lose. >> we have to have some rules, right? if there are no rules and people can cheat rampantly, people and things break down. >> where are we? >> i think we stand up and say we're not going to be patsies anytime. when other countries actually have a policy going after

workers in sectors - and you're not running for anything right now, right? >> my wife wouldn't let me come home, joe. >> you're just doing this because -- >> it's good policy. >> it's just watch the newspaper. this is like the biggest following in the world >> we have agriculture, cummings engine, eli lilly. you have to compete. you can't be a protectionist. but when we're being penalized with an artificial advantage our country has to do something. >> then you see the big thing with cohen and navarro >> as usual, the truth lies somewhere in the middle. >> what's first? >> the job approval rating at 12%. i'll take that any day of the week all right, when we come back this morning, president trump has already announced tariffs on steel and aluminum could european cars be next? phil lebeau will join us to break down the impact of auto

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time now for "the executive

edge" and we'll start with french financial giant axa is buying xl group for $15.3 billion. axa is offered at and $56.45 a share. axa says it's accelerating its existing plans to spin off its large u.s. life insurance business that will be in a public offering coming up, president trump training to tax european cars for retaliation for trade of cars phil lebeau will tell us how cars like vw could react we'll be right back.

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♪ ♪ over the weekend president trump threatened to tax european cars in response to trade barriers that make it harder for the u.s. to sell cars in europe.

phil lebeau joins us now with more i'm interested to hear your thoughts here, phil. >> well, joe, we should point out a spokesperson for angela merkel said they do not want an escalation of a trade war. if there were increased taxes on european vehicles built there and then exported over here to the u.s. and bought by americans here, here's some perspective. last year there were a little over 1.2 million that were imported from europe that's about 7.3% of the market. the majority of these, they come from germany although the u.k. has a large presence and you have a smattering from other countries around europe. when you look at what we're looking at in terms of european autos and those that are built there, how much of a tariff is it right now they pay a 2.5% tariff you buy a $50,000 bmw that was built in germany, you're going to pay 2.5% tariff on that

what is that, $1250 on it. they would like to see it where perhaps potentially the trump administration would like to see equal of what we pay if a vehicle is sent to europe, a 10% tariff european automakers are expanding in mexico. if they do build in mexico to send it to the united states and avoid any tariff at all. you have audi opening a plant in 2016 and dame ler's entry level a class and then bmw is moving some of the 3 series from south africa to mexico that would primarily be feeding into the united states that's scheduled to open next year take a look at shares of the german automakers. keep in mind that the geneva motor show starts this week. we will be hearing from executives on the sidelines of that show. no doubt most of them will say, look, we don't want to see an

escalation of a trade war. clearly that would have a huge impact for those automakers selling here in the u.s. >> phil, thank you very much we'll talk to you in a little bit. in the meantime, nafta talks resuming over the weekend. president trump just tweeting we have large trade deficits with canada and mexico. tariffs will only come off if new and fair nafta agreement is signed he also says also canada must dot, dot, dot, we'll see what happens with that. joining us to discuss this is bruce hayman, the former ambassador to canada >> good to see you. >> you heard what phil was saying it makes americans sit up and say, why do we pay a 2.5% tariff on their goods but they pay a 10% tariff on ours making our

cars that much more expensive? >> look, we want fair and free trade not just free trade. and when it comes tocanada, which is an area of my expertise, the trade relationship we have is balance. the president keeps jumping up and down and talking about this deficit. in goods and services the u.s. had a trade surplus. even if you look at just goods, the amount of deficit that we operate under is just very small. it's our second largest trading partner. >> agreed. agreed >> so i think poking at canada is the wrong thing. >> here's the problem. when we have had that conversation we've understood that we do have not a big difference between the trade going back and forth between these two countries but people will say if you look at canada and you look at mexico, because of nafta you do get other countries dumping their goods in those countries and then they pass through our borders as a way of them avoiding any way of having to negotiate with us. how do we make sure we change

that i know rules of origin have been a huge sticking point for nafta. is there a way to find a common ground >> i think there is. it's staying at the table, negotiating it out there are multiple rounds where a lot of progress has been made. nafta needed to be updated it's 25 years old. when the president says he threatens to tear it up on a repetitive basis, meaning walking away from the table which he's done on other agreements in the world. i think that would be a folly for us too important of a relationship to walk away with. i agree with you, we have to deal with steel dumping that is taking place by the chinese. you know, friendly fire on all of our allies as a result of this approach, which was not vetted throughout the administration, i think is a huge mistake and canada is absolutely right i think in this particular case to seek an exemption >> bob, your thoughts on what

this means for the market? >> the uncertainty does not bode well if things are coming down from all of the noise in the last week, we'll be okay. trade will dominate this week until friday >> ambassador, thank you for your time this morning we really appreciate your joining us. >> always a pleasure. >> bob, thank you for being with us for the hour. great to see you. >> thank you. coming up, we'll bring you reports from around the globe on the fallout from president trump's planned tariffs. continued coverage of that our guest host for the next hour will be carlos gutierrez former u.s. commerce secretary he's a dashing figure, i will say that quk x"ilbeig bk.

gloves are off president trump's tough tariff talk dominating global market moves. is a trade war looming full team coverage and what it means for your money straight ahead. up in the air. italy headed for a hung parliament we are live in rome with the details and what it means for europe's second largest economy. amazon and google are facing off again. why nest products are being pulled from the e. commerce giant as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city this is "squawk box." good morning and welcome back, and everyone, to "squawk

box" here on cnbc. live from the nasdaq market site in times square. i'm joe concern than along with becky quick and sitting in for andrew this morning is mike santoli. today's guest host for the hour, carlos gutierrez former commerce secretary, former kellogg's ceo was that your idea >> no, no, that was before my time. >> really? okay but you kept it? >> yeah. yeah >> first u.s. equities future are negative too large at this point. tough to trade high jer some people calling global trade war. i always -- you know, if the ten year goes down because we're putting a little -- putting the brakes on this over heated global economy, maybe it's good. i mean, in terms of that, that is a positive.

>> good news. >> that's a warped way of looking at it. >> it depends on how you define it is it strong economic growth or is it over heating >> exactly. >> all how you look at it. executives are looking at the president's tariff announcement and how it will affect the global economy the president tweeting this morning, we have large trade deficits with mexico and canada. nafta, which is under renegotiation right now, has been a bad deal for u.s.a. massive relocation of companies and jobs, tariffs on steel and aluminum will only come off if new and fair nafta agreement is signed also, canada must treat our farmers much better. highly restrictive mexico must do much more on stopping drugs from pouring into the u.s. they have not done what needs to be done. millions of people addicted and dying. by the way, mike has been looking at this. thoughts on what this might be >> one way of reading this some are reading it as it's a conditional thing, right

before he wasn't saying -- >> the tariffs are here, period. but this is a way that it could be rolled over. >> these are terms that are kind of realistic in the context on negotiations of nafta is totally unclear. >> but admitting there could be roll backs as -- >> there might be some daylight or something like this >> okay. we've got team coverage this morning. steve liesman is in mexico he's covering nafta talks. phil lebeau is in chicago. he's been looking at steel tariffs in the automakers. leslie picker is in canton, ohio, talking american steel jobs and manufacturing we will start this morning with eamon javers with the latest from the president eamon? >> reporter: good morning, becky. the question this week and for the white house is details of the announcement the president made spontaneously last week now it's up to the bureaucrats to flesh out some specifics. over the weekend white house officials were insisting that the plan for now is for no exceptions for particular companies and no exception for particular countries to be involved in all of this, but

they did also signal that there could be some changes, not clear where this will land this week here's wilbur ross this weekend on sunday shows talking about the tariff announcement and asking what changes might come here's how he described it. >> what he has said he has said. if he says something different it will be something different i have no reason to think he's going to change. >> what does this mean you said well he may say this, he may say that. >> no, i didn't say that i said, he is the one who has made the decision. he has made a decision at this point 25 and 10. if he should change his mind, then it will change. >> reporter: so the decision is made for now but could change. the commerce secretary, wilbur ross, saying the president is the one who makes the decision here the president did side sort of here with the nationalist wing of his staff the globalist wing, you can imagine, will be in over drive trying to narrow and con strain

the impulse towards tariffs. peter navarro said he expects this to be finalized by the end of this week or the latest next week we'll wait and see how the staff handles this and what other announcements could be coming from the trump administration. for more let's go over to leslie picker. >> reporter: that's right, eamon. we're here at mission control at timkins steel. these monitors this building here opened only in october after sitting idol for about a year during what the ceo describes to be the worst and longest downturn during 2015-2016. much of that is due to oil prices their end customers are largely in the energy space. as a result they had to shrink their work force by about 12% and their utilization was less than 50% during that period.

now while they've been ramping up a bit in 2017 with the recovery in the oil industry, they're still not back to 2014 levels the coe attributes that largely to global trade. he points to some numbers, specifically 700 million metric tons of steel over capacity exists in the world today. 425 million of that is from china alone. and demand here in the u.s. is only 94 million. so he's been seeking help from several government agencies over the last year or so and was invited to the white house last week ahead of that surprise announcement, guys. >> kim timkin, i like that that's all right is that where it came from initially, one of his -- i don't know that's interesting. >> reporter: it was. it was >> okay. there you go that makes sense then. >> referee: yeah yeah >> thank you, leslie let's bring in our guest host

for the next hour. former commerce secretary, former kellogg's ceo, carlos gutierrez. mr. secretary, thanks for being here. >> thank you always a pleasure. >> let's talk through. what do you make of this so far? >> i think it's unfortunate. i think it's extremely unfortunate. if you go back to 1953 was when steel and aluminum jobs peaked these jobs are in a long-term decline, and to suggest that we're going to bring back these industries i think is a little bit naive. so as an asian minister asked me several weeks ago, why if that you're focused on bringing back industries that have been in decades long decline instead of creating new industries? and i think that's a very valid question so -- >> but wait a second part of the decline, is it because we have had unfair trade policies, disadvantaged american industries and american workers?

>> if you go back to 1953 the wto wasn't around, china wasn't making steel for the world this is a long-term decline very much the way you would see in textiles you know, we've picked up textiles from england, started in new england, went to the carolinas, farther south to central america. it's the way of the world. >> potentially, but while i understand that we may not be able to do anything by doing this, it does make a lot of us feel like wait a second, when you see things like a car that's imported here, we will pay 2.5% tariffs on but a car that's imported to the e.u., they'll pay 10% on is there a way to level the playing field? what were the reasons why these things were originally set up where there was an imbalance and has there been enough of a shift over time to suggest that there should be some rejiggering of some of these >> there may be, yes, some improvements, adjustments like nafta. let's improve nafta. let's modernize nafta?

>> well, there wasn't an ecommerce chapter when nafta was started 25 years ago, and there are things that we can update, even labor standards, environmental standards, but that doesn't mean kill nafta protectionism has never worked, and it's just very odd the other thing is, you know, 150,000 workers in these two industries, but the impact is on everyone else. we are talking about the impact on pricing and secretary ross, who i have a lot of respect for, talked about cans, only two pennies. if my cost of product has 10% steel, the cost of the product, i need to raise prices 2.5%. that's -- you know, to keep margins the same and if i don't raise prices 2.5%, i lose margins that's just the way the math works.

that's one input you can imagine the rest of the inputs, and that's just one product. this is so much bigger than beer, right? so it's the international trading system it's people -- countries who we have been dragging kicking and screaming into the world market and away from protectionism, all of a sudden they're saying national security? okay, we can do that we can do that, too. so i think that's the bigger fallout is what happens to the international trading system and do we all go back to being protectionist nations? that's not good. >> bush did it who was his commerce secretary when he did it >> evans my dear friend evans. now it didn't really work. >> no, i know. >> it was a time to restructure. it was the beginning of china and the wto, the industry structured, but jobs kept declining. >> what about this, and just this as a -- just to throw it out there. is there any way -- i mean, when you read trump's tweets, its he

like, yeah, that would be good if we could -- yeah, that would be good if they -- yeah, that would be good if they listen and change some of what they do for us and i think for years, you know, our economy is so large and we're so wealthy thehere th think sometimes they think you can afford it. that's the way it should be because you're the united states and we can afford it it's no longer for our workers, that no longer makes it. is there any way that this doesn't go in in the way that it's been put forth and we get some concessions before it goes in and all of a sudden there was a method to the madness. >> i was thinking about it i think that is unlikely. >> that may be what the president is thinking. >> right because you have the european union already reacting, you have others already reacting. >> they get 10% on the cars. why? >> let me give you a number. if you add up all of our trade a

2k3wr50e78 greemts -- >> yeah. >> -- we have a $12 billion -- that is part of a regional supply chain so free trade agreements have been very good for this country. we talk about china. we don't have a free trade agreement dmien so, you know, we need to get this straight and i think that sometimes a one sentence point simplifies a little bit too much. >> our policies have really been from the orientation of our consumer's wing, right so, in other words, if we put the 10% on the cars, it's going to be more -- >> right right. >> the other issue, too, is if you're going to build a plant that uses aluminum or steel, where are you going to go? because steel prices will go up in the u.s now manufacturers have a bit of an umbrella with this 25%.

would you build that plant in the u.s. or would you build it elsewhere? and that's the other thing, it's a self -- self-inflicted wound it's an unintended consequence it's not the place to build a factory if you're using steel. imagine the steel that goes into the factory, just the process. >> all right secretary gutierrez is going to be with us for the rest of the hour we have much more to talk about. all right. coming up, special reports from mexico city where nafta talks are ongoing today. checking on the futures this hour, now down 56 on the dow s&p down just under 7 and nasdaq almost flat lining we'll talk 'lta a little bit negative wel lk markets when we return you're watching "squawk box" on cnbc it's all yours. wow! record time. at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living.

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pay per gig and unlimited. choose by the gig or unlimited plus for a limited time get a $250 prepaid card when you buy any new samsung. xfinity mobile. it's a new kind of network designed to save you money. click, call, or visit an xfinity store today. welcome back time to talk markets art steinman and ed campbell i guess if there's one thing that you can always say with certainty about the stock market, uncertainty is not your friend normally. okay is it just -- is it definitely

true that tariffs are now creating uncertainty so it's going to be hard to move higher, art? >> i think that's a good way to characterize it because we don't know how it's going to go. oftentimes we see very declarative, simple statements come out of the white house that sound very definitive. of course, you know, the devil's in the details and the nuances change we don't know what's going to happen are there going to be carve outs, are there going to be exclusions what kind of retaliation is there going to be. all of that creates uncertainty. >> ed, is it possible that the 10 and 25% numbers could slow down global economic conditions? i mean, is that really -- or does it have to really -- >> well, i think the economic impact of -- as steve measures it are very small. >> if there's retaliation, we

retalia retaliate. >> that's the key issue. >> is that possible? >> is this the opening to a trade war or is this a measured, isolated action? >> we've got it. but what do you think, is it or isn't it >> i don't think we know yet we need to see how things develop. >> if we actually stick with it, we make no exclusions for any other countries or any of our trading partners, would that be the beginning of a trade war >> i think the rhetoric that we're hearing is concerning. if it does invite retaliation, then, you know, we could be going down that path like i don't think we know as of yet. we haven't seen the executive order. the president could back off of this the proposal could be changed, but it is uncertainty and, you know, i think you're seeing it hit the markets in that way. >> carlos is right on the mark the supply chain that we have with canada and mexico means that we're very integrated it's very integrated manufacturing. i think you have to do some sort of an exclusion or a carve out

even in the worst case >> i just wonder, we've got hundreds of billions of dollars kind of handed over in tax cuts, not handed over but basically they're going to the bottom line potentially in cash flows, so there's a way to absorb these impacts. what does it mean for investor psychology it is one more thing on the list of, well, that's not going to get better for us, right whether it's interest rates or credit spreads all of these things that are going into this and incrementally it's less great. i wonder if that's where trade fits right now >> i think trade protection is the dark side of the trump agenda for financial markets and we've already seen the goodies in terms of tax cuts and deregulation and, you know, investors continue to hope that trump's bark is worst than his bite here. >> the administration clearly wants to wall off this country and that's a very general statement, literal and figurative in a lot of different

ways at the margin that rolls back so much of the progress that we've made over decades, but i think it's going to be incremental there are going to be exceptions and the bark is going to be worst than the bite. at the margin, not good. the heated rhetoric about a trade war i think is probably over blown >> i'm glad you said that and you changed it because i think the corporations previously were handing it over, too, and now -- i mean, to give them back their own money. but you felt it. you felt it. yeah, you felt the -- >> we are handing it >> like we've had a great year the stock market, tax reform okay >> look when we were up whatever it was in january, we all knew there was going to be a reversion to the mean schoomehow otherwise we were going to be up 35% since the election

somehow the fundamentals catch up with the technicals we are flat on the year basically. >> the thing is, if it works the way it's stated and intended, it's to the net negative of corporate profits and pd multiples. if it works. >> we have workers getting paid more, you know what i mean >> if it works the price of steel and aluminum will go up in the u.s. >> and even more broadly speaking, right? you have wage inflation and it's going to be absorbed by companies supposedly. >> do you think it's possible to say, okay, enough is enough to china or enough is enough to the bad actors >> it's not a matter of enough is enough. there's a global overcapacity in steel and china, for their part, has already announced that they're taking down steel production, they're taking capacity offline right now. >> not in response to this. >> not in response to this they had already done that >> that's not a nefarious, deliberate thing. >> they do plenty of other nef fair rouse things.

they're bad actors. >> this is the result of giving the provincial leaders power and they'll build steel plants. >> none of our guys are working. >> it's not a deliberate chinese policy to cheat the way the administration characterized it. it's individual regional decisions. >> they're china first make china greater they're doing what we're finally doing here they've been doing that for years and years. they are taking care of their owns. >> i think we've made ourselves pretty great. >> we have we have. >> globalization has been good for our country. >> no doubt. >> businesses. >> but when people say it should be america fifth, sixth, seventh, that's stupid every country looks out for its own people. >> if we want to look out for ourselves, consider there's two american workers on the heroes on the chevy truck commercials manufacturers and who else farmers. they're not putting wall street guys with ties on the commercials. clearly the area we're most vulnerable if you start getting

retaliation is american agriculture which is unambiguously an enormous winner. >> we export 1/3 of what we produce in agriculture imagine that >> that's incredible with a .1% of the people that used to be in agriculture. >> that's why the economy changes. agriculture used to be the bulk of our economy the world changes and we have to change with it i hate to say that, but that's reality. >> there are -- you're absolutely right keeps going back to cutting off your nose despite your face. might feel good but the unintended consequences come back to hurt the people. >> the greater good. >> that's why if something good comes out of negotiations and it all comes off the table, maybe there was a method to their madness. >> i think nafta is looking better. >> exactly >> thank you thank you both secretary gutierrez, we've got you for the rest of the morning. coming up, amazon sparking a fight with google after the

break. and then a lot of tease. trump, trade, taxes. unr al norquist, president and fodefor american tax reform joins us "squawk box" will be right back. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪ mikboth served in the navy.s, i do outrank my husband, not just being in the military, but at home. she thinks she's the boss. she only had me by one grade. we bought our first home together in 2010. his family had used another insurance product but i was like well i've had usaa for a while, why don't we call and check the rates? it was an instant savings

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welcome back, everybody. amazon opening a new chapter in the ongoing fight with google. it will stop selling things like smart thermostats. it was absorbed into google after being a stand alone unit amazon has refused to sell the google home device and pixel smartphone they've pulled the fire television and echo devices. a little bit of back and forth you may not be surprised. coming up, the ealinscatg trade fight. the president may hit european automakers with higher taxes we'll hear more about that after the break. "squawk box" will be right back. (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter.

morgan stanley

good morning again welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, a u.s. security panel is ordering the delay of the broadcom/qualcomm

showdown they're telling them to put off their annual shareholder meeting scheduled for tomorrow broadcom's 12 nominees are up for vote tomorrow. broadcom is blaming qualcomm they say they filed with cfius to stall this. starboard adds two more nominees to the newell board. starboard owns about 4% of newell last week carl icahn said he has taken a large position in newell and argued that shares were undervalued. deal news for you this morning, french financial giant axa is buying insurance group xl group for $15.3 billion. that's a 33% premium to xl's closing price on friday. president trump said tariff talk surely to violate the nafta talks in new york city

steve liesman joins us with more hi, steve. >> reporter: hey, joe. negotiators from mexico, canada, united states down here now for the difficult talks on nafta they were difficult and complicated before the tariff threat on thursday they became more difficult and complicated after the tariff threat and now just this morning maybe they became more difficult and complicated after president trump tweeted out, quote, tariffs on steel and aluminum will only come if new and fair nafta -- if a new and fair nafta agreement is signed. this is the first time he's linked the nafta talks with the steel and aluminum tariffs it maybe diminishes the possibility as several lawmakers, including on the republican side, wanted canada and mexico to be exempt. that seems less unlikely even -- there's tons of politics swirling around, you have

mexican elections, the canadians seem unlikely to take steel tariffs lying down congressman sandra levin yesterday, we talked to him and he said american families, they're probably going to understand what the president is doing here >> and the typical family gets it people don't understand all of the complexities of trade but they do get when jobs are lost and wages are suppressed >> reporter: now goldman sachs puts all of this together, all the complications, all the points of contention around the nafta talks and they think that the president eventually walks out. they wrote in a research paper over the weekend we continue to expect negotiations to stall on major issues, like rules of origin and government procurement. there's a good chance that this could eventually lead the president to announce he intends to withdraw from nafta that would be another issue for markets and companies to contemplate if there's actually

a nafta withdrawal this is the seventh round. there's an eighth round scheduled for april. also later today we'll hear from all three sides, the canadians, mexicans and the united states they'll be taking questions from reporters. we'll get our first chance to get the direct reaction to these steel tariffs and the linkage to the nafta talks later on this afternoon, guys. >> steve, thank you very much. our guest host this hour is carlos gutierrez, the former commerce secretary what do you think of that idea that the president could announce that he's pulling out of nafta, does that -- >> i think that's -- i would have said there's a good probability today, i would say 50-50. i think it's looking a little bit better -- >> that nafta gets renegotiated? >> yes there seems to be some renegotiation on rules of origin reasonable rules of origin not national rules of origin the steel and aluminum tariffs in a way do create national rules of origin because you're

going to have more u.s. content in u.s. products, and i think that's why he's making the lij ca linkage. that's why he's talking this way. i'd be concerned about linkage we've made linkages before if china helps us we'll help them with north korea at the end of the day it's tough to do. >> it's tough to do but it's the way the world works. if we're working together well on one area i might be willing to compromise with you. >> on nafta i can see how it makes sense. you're going to have u.s. rules of origin increase if we keep these in place, but then as navarro said, you start making these exceptions and where do you stop so i think the president's in a bit of a bind here he may make an exception for some products but i don't think he can pull back all the way >> let's continue this conversation president trump keeping pressure on trading partners over the weekend including on european automakers and phil lebeau joins us right now with that part of the story. phil >> becky, this was the tweet, i

should say, that got a lot of people talking over the weekend. it came from president trump where he essentially said, you know what, if you're going to talk about perhaps some retaliatory tariffs against u.s. products and barriers on u.s. companies doing business there, meaning europe, we will simply apply a tax on their cars which freely pour into the u.s they make it impossible for our cars and more to sell there. big trade imbalance. he's right about the trade imbalance. he's right about the fact that vehicles coming from the u.s. and europe are taxed at a 10% rate while it's only a 2.5% rate coming here to the u.s they're not pouring in for free. however, 1.25 million european made vehicles were sold here in the u.s. last year that works out to about 7.3% of all u.s. sales, the majority of them coming from germany there's also a large component coming from the u.k. and a smattering of other countries in the e.u. where vehicles are then built and imported to the united

states keep m mind, we built all of the german executives and they'll have some commentary regarding the german autos being taxed at a higher rate coming here. take a look at shares of volkswagen they have plants here in the united states. they're building suvs for the u.s., north american market. a lot of their cars still coming from europe here to the united states guys, back to you. >> what's japanese and korean imports, phil? what percentage? >> reporter: what -- >> what percent? >> reporter: the tariff -- >> no, what percent. if it's only 7% from europe, what's -- >> reporter: japan is about i want to say 9% off the top of my head korea is about 4 or 5% off the top of my head, so that's how many of their vehicles we import from there obviously if you look -- and mexico is the largest area outside the united states where

vehicles are built and then sent to the united states but obviously under nafta there's a far different -- there's no tax. canada is number two. >> it doesn't seem like we're buying 80% domestic cars. >> reporter: no, we're not. >> what's the -- >> reporter: about 55 -- about 55% -- joe, about 55% of what we buy in the united states in terms of automobiles is built here 55%. >> built here. >> bmw exports from here. >> reporter: correct. >> it's not a simple -- yeah >> reporter: as does mercedes. they export to markets around the world. >> phil, thanks. move on here we keep talking about it will the president's tariff move offset some of the positive momentum from tax reform joining us is grover norquist.

we've talked about some of the nuances, grover. you're very definitive about how you feel about this, and hearing that sandra levin was in favor of the tariffs made me rethink that as far as an enemy of my enemy. i guess maybe i'm shifting to your side a little bit more now when you look at who's actually pro tariff but for you it's as simple as it's a tax and it's going to hurt -- it's going to hurt the united states more than it helps the steel workers? >> yeah, look. tariffs are taxes p. for 50 years from monroe to lincoln. the only tax we had in the united states were tariffs and then we sold our federal land. those are the only two sources of income for the federal government so we've had tariffs. tariffs are taxes. and they are very disruptive trade wars are civil wars. the winners and the losers are both americans if you have a tariff to help the steel industry, it raises the

price of steel, but there are 5 or 6 million people directly and in other industries who are damaged. the wounded, hurt, killed, jobs killed, it's not us fighting it's the german and japanese this is a civil war. more people get damaged than get helped in these tariff wars. so it is my hope -- my hope that the president is sending a signal to the rest of the world. we signed a lot of trade deals because we're the biggest guy on the planet, back to world war ii, you were on your back. it's time to have a little more equal trade agreements that we need to negotiate but this singular throwing a punch i'm not sure helped because we're not in charge of how the rest of the world reacts. >> although, you know, for a long time we've been saying there's bad actors all over the place and we've done nothing >> yes. >> and, i mean, is it possible that 24 is just a shot across

the bow that never really gets necessarily doesn't come to its full consequences and there's some -- there's some negotiations or there's some concessions that are made that are actually positive and it doesn't go all the way through can you see that this is like a posturing >> that is the best possible outcome and it's certainly my hope the president has throughout his life been a negotiator he has staked out a position and moved towards it he wanted a 15% corporate rate, we got 21. i don't think we'd of gotten 21 down from 35 if he hadn't said 15 before the president said 15 during the campaign. the rest of the republican party is at 25 so there is something to be aid for going out there and saying, listen, rattling the cages and disrupting things. this can get carried away, okay? this is a war of choice like iraq trade wars are wars of choice. you didn't have to do them so you really better have played

it out in your own mind as to how this gets to lower tariffs and less regulation across t bohe board because i don't think the white house has done enough on reducing the costs on aluminum and steel. a lot of the damage to aluminum and steel is not done by somebody in another country selling the stuff less expensively, it's done by our own regulators and certainly by our own tax policy the tax policy has been largely improved but the regulations not yet. >> >> so that's interesting. let me ask you this, grover. since we're such a big trading partner for so many other countries and such an important one, do you think that we have the notion that we can win trade wars because they need us more than we need them and that the pain, while we suffer some, that it's going to be greater else where and eventually they'll come around and come to our way of thinking? is that an error to think that

way as well, that we win trade wars because we're so important to other partners? >> well, when we went into iraq and afghanistan that was the theory, we're bigger than they are, but, still, the costs can be very deep in the united states when you start a trade war. it is my hope because people would like to be able to trade more and better with the united states and we have a great deal of leverage and we need to use it wisely. there's a lot of frustration the obama administration, previous administration put all sorts of crap inside trade deals because they were doing social policy and pushing an agenda that they couldn't pass and they'd rather do that than helping american industry and american jobs. i get that i understand it. there's a lot of reasons for people who want a robust free trade throughout the world to be very disappointed in our history of some of these trade agreements that were captured by politics we need to focus on a strong and

vibrant america and american economy. a lot of that is the more free trade we have, the more open trade. we can win any of those fights if they're fair fights, we just need to work on getting other people's tariffs down and opening up other markets, not closing our own. >> right all right. we've got to go. we stay or leave nafta just give me two-second answer stay or leave? >> we'll stay in nafta because it's made us the largest free trade zone in the world. >> okay. >> and that's helpful. >> i think secretary gutierrez i think is leaning that way now, too. all right. thanks, grover >> you've got it thanks for having me. >> do people call you super grover >> not my daughters. >> no. >> everybody else does. >> that name is taken. >> they call him dad. >> all right thanks joompt when we come back, what the election in italy means for the stability of the european union we will discuss that next. right now take a look at the european markets at this hour.

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italy's market going against the grain this morning it is in the red today after yesterday's nationwide elections signaled a hung parliament willem marks joins us from rome with more on all of this willem, good morning >> reporter: good morning, becky. no huge surprise here. the preelection polls indicated there would be a hung parliament that looks like exactly what we're going to get here in rome. the one surprise has been the movement over the last few months of campaigning. they've reached above the 30% threshold. really huge gains for them since they were founded back in 2009 they, of course, have been deeply euro skeptic. they suffer from that stance the question is whether the 31-year-old leader is going to be willing to engage in coalition negotiations with

other parties including lega. they've seen massive gains as well they've out shone their coalition partner. they have the largest potential block in the parliament. not big enough to form the 50% majority there will be a lot of horse trading over the weeks and months potentially to come. >> willem, thank you very much willem marx. joining us to discuss the trade issues is anthony gardner. the former u.s. ambassador to the e.u. ambassador gardner, thank you for being here today first of all, let's start with the election. >> thank you. >> let's start with the election first. what does this mean, the broader picture. >> a lot of people will confidently predicting that the populus challenge in europe has been basically overcome. that has been shown to be

incorrect obviously. half have been voted for radical extremist groups the other thing that's extraordinary has been mentioned by your correspondent. the center left policy party scoring worse. it really shows it's going to be difficult to travel out there. of being unwound >> i realized you are not in the business of recommending stocks one way or another we've had market strategists who have told us, look out there's so much uncertainty, markets don't like uncertainty would you agree with the general thesis that there's going to be an unknown situation for some

time to come in italy? >> i agree completely. for eight months actually i've been giving speeches around europe saying that the markets have seemed incredibly calm and have not priced, you know, the risks, geopolitical risks into their prices from the trade war risk to italian uncertainty and there are many other uncertainties that haven't been pricing in italy i wouldn't be surprised if people start -- if we see interest rates rise for italian debt the eye tralian stock market has already reacted negatively it's had ten years of zero growth and that's bad news for europe >> carlos gutierrez. just this five star parties strikes me as a unique phenomena. on one hand it's left but then it's also anti-immigrant, euro skeptic, and it seems to be borrowing from both sides. do you see that as an italian

phenomenon or something that you're seeing more around the eu >> it's a reaction against the established parties, and i can understand the frustration of many italians who are saying, you no he what, the system needs a good kick. we're not happy with any of the established parties because they haven't delivered jobs, particularly for the youth, and it hasn't delivered on growth. this party, you're absolutely right, is incoherent in many ways you've seen that they're not capable of properly running an administration you have rome, the capital city, which has been in the hands of the five star movement and has done a pretty poor job, but people are not thinking in those logical terms. they're saying the system needs a good kicking, and let's be clear, italy's not alone in this you've seen a reaction across europe and the united states of a large part of voters who say we may not agree for everything this party stands for but we want to shake things up. >> thank you >> ambassador, you know, we went into last year following the

brexit vote on alert in terms of -- at least from an investment perspective for the potential populus wave going through europe it seems as if we're not sure if there's broader implications for the long term which is economic relationships with the eu or anything else. what is the main take away for a u.s. investor in terms of what is happening right now >> well, as i said before, the populus threat continues many people were assuming, we just said it in terms of the french elections, it went well the austrian elections it was a greater threat that's been largely seen off the netherlands is saying people were assuming that europe was going to have -- chart a steady course what's the good news is that germany now has a government which will largely continue along the path we chartered before by merkel and then you now have a possibility of a franco german renewed alliance

pushing towards reform you know, general terms europe continues to be a place where populus parties are scoring well and some of those bigger picture reforms will have a difficult time getting implemented. >> ambassador gardner, thank you for your time today. >> thank you coming up, more from guest host and form jer sreectary caro gutierrez. "squawk box" will be right back. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management.

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our guest host for this hour has been secretary carlos gutierrez. thank you for being here. >> pleasure. >> we'd love to have you back soon. >> thank you. >> as we see more progress or lack of it. >> always a pleasure thank you. >> thank you, sir. still ahead on "squawk box" this morning, we are on washington watch and the latest developments in the ongoing tariff and trade battle. atlantic council ceo fred kemp will join us plus, what this all means for the emerging markets and steel prices then former senate majority leader george mitchell will join us "squawk box" will be right back. you know what they say about the early bird...

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new this morning, tough talk in a tweet president trump says tariffs will come off only if one thing happens. we have the details straight ahead. the world reacts live reports from across the globe with response to president trump's tariff decision coming up plus, the winner is -- >> "the shape of water." >> but who gave the shortest speech we will tell you who took home that prize as the final hour of "squawk box" begins right now. ♪ ♪

live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and mike santoli let's get a check on the markets. the dow's down it's been down most of the morning. it briefly traded higher indicated down about 79 points -- 76 points right now after a tough week where we lost 3% and the averages last week is basically flat now for 2018. >> it is. >> march, which caught me by surprise i was thinking it was still february over the weekend. >> things move quickly faster and faster. >> the older we get. >> right 1/49th of your life. >> versus --

>> treasury yields have moderated. if there's a silver lining to any of this, maybe it's that we're not at 3%, we're not at 2.9, we're at 2.84. >> 1/49th of your life, 1/29th of mine. >> exactly. >> the world reacting to president trump's plan to impose tariffs on steel we have large trade deficits with mexico and canada nafta, which is under renegotiation right now, has been a bad deal for u.s.a. massive relocation of companies and jobs tariffs on steel and aluminum will only come off if new and fair nafta agreement is signed also, canada must treat our farmers much better. highly restrictive mexico must do much more on stopping drugs from pouring into the u.s. they have not done what needs to be done. millions of people addicted and dying. we have full team coverage across the globe leslie picker is in canton ohio

talking american steel jobs and manufacturing. kayla tausche is live in washington we're going to start things out with eamon javers who is also in washington eamon, good morning. >> reporter: good morning, becky. today and the rest of the week the white house staff is going to be putting some of the details on the president's tariff proposal. he put it out last week without a lot of the paperwork behind it now the question is are there going to be any exemptions in the tariffs for particular countries or particular companies among others, staffers signaling, no, they don't believe the president's intent is to have any exemptions whatsoever this is a bit of a moving target throughout the rest of the week when they expect to have this process finished wilbur ross was on "meet the press" over the weekend and was asked whether the president might change his mind. here's what wilbur ross said. >> i've just said what he has said he has said if he says something different, it'll be something different i have no reason to think he's going to change. >> what does this mean

you just said, well, he may say this, he may say that. >> no, i didn't say that i sidaid, he is the one who maks the decision he has made a decision at this point, 25 and 10 if he for some reason should change his mind, then it will change >> reporter: so not exactly a shermanesque statement there from wilbur ross indicating there might be some wiggle room there. that's likely to set off a big lobbying debate this week. take a look at the president's tweet from yesterday the president seems like he's doubling down on this rhetoric not indicating any inclination to back off. we are on the losing side of this deal. our friends and enemies have taken advantage for many years our steel and aluminum industries are dead. sorry, it's time for a change, make america great again interestingly, we're going to see now also some of the diplomatic fallout from all of this as you guys have been talking about throughout the

morning. the united states and brittain talked yesterday theresa may and the president spoke over the phone both countries put out statements about what it was they discussed in the british statement we got some indication that the british expressed deep concern about u.s. trade moves in the u.s. statement though, guys, nothing about the deep concern expressed by the british. for more let's go over to leslie picker leslie >> reporter: eamon, that's right. the steel industry is not dead here in ohio don behind me is monitoring the machines that are hard at work heating and treating the steel as it goes through the manufacturing facility as you see behind me. don is one of 2800 employees at timkin steel, a number that has been increasing over the last year after about a 12% reduction in 2015 and 2016 during a very, very severe downturn the company says they are hiring

now with openings for journeymen, apprentices and engineers. timkin steel would likely ramp that up even more if the tariffs were enacted the company says that for every job timkin steel hires, another four jobs are created in the surrounding areas in other industries in ohio they're interested in the steel tariffs and what it could mean but studies show hundreds of thousands of jobs could be lost around the country if those tariffs were enacted that's because oftentimes when you get these u.s. tariffs on steel imports it causes the price of steel to go higher cutting into margins for companies that buy that steel and, therefore, impacting their financial health as well as a trade war could also be very damaging for the broader economy, guys. >> all right enjoy it while you're there, lesl leslie enjoy it -- coming back here, you know, and, you know, it's cold enjoy the salt of the earth

there, ohio. right? yeah >> reporter: i love it. >> joining us now -- >> reporter: thanks, joe. >> fred kevvie joins us with how the world is responding. he's the president and ceo of the atlantic council years ago, fred, the idea of this and it just would have been anathma. for some reason, i don't know. i don't know whether i identify more now with just taking a stance against china or just maybe i've been swept up with some nationalism or populism as well it's not as much of a slam dunk. is it with you, couldn't this be negotiated and say, we're mad as hell and we're not going to take it anymore and we want to get at least some concessions in the unfair trade practices we've been subjected to? >> that's certainly what president trump is betting i think you have to look at this on three levels. one of them is president trump's politics the second is the white house politics and the third is the

real economy, i think this real economy may be the least important of these three in trump's politics it is, just as you said, joe, there are winners and losers and if you have deficits you're a loser if you have surpluses you're a winner he is doubling down also, i think, changing the subject a little bit from some of the problems he's got. in the white house we were all in davos together. that was the gary cohn president trump with that very smooth pro business speech, invest in the united states. this is the peter navarro, maybe also wilbur ross, perhaps even the more true donald trump, but on the economy the fact is i think what your correspondent said in ohio is right. you could have more job losses from this than job gains you've got 200,000 employees in the united states that will benefit from this in smell tters and people that do the raw

materials. manufacturing jobs building cars or chicken coops, that's more like 6.5 million people according to heritage. there could be more losers than winners when you look at the real economy >> that's when i, you know, think more about it, the anachronistic view, if it is an archaic view of, you know, what we do in terms of jobs i mean, i guess at some point we could have tried to do things to help the farmers as they were going from, you know, a large part of the economy to where tsh i don't know what it is now. it's a fraction of 1% employment in agriculture same thing is happening in steel. it's almost like fixing the splice of the '70s and '80s. it's impossible to fix the world has moved, right >> look, you can negotiate

better conditions and platforms from which you can create jobs but you can't change technological change and the steel plant of the future just isn't going to -- isn't going to employ as many people. i think one of the most interesting things to watch this week in this town of -- if ohio is salt of the earth, this is where lobbyistsswell in washington and a lot of people will be lobbying for cutouts the president has said there aren't going to be any carve t ou outs, but people are focused on canada canada delivers 16% of the steel exports to the united states, imports into the united states that's the biggest producer and even the unions here, the steel unions are maybe lobbying for canada because it's just so integrated the pentagon considers the canadian aluminum a strategic asset. so i think you're going to see the lobbyists kick into high gear this week. >> fred, i know will

i've known him for years he's not an idiot and navarro is a smart guy. how is it that they're so convinced that this is something to push hard for and stake their reputation on when so many people, free market types, just dismiss it out of hand as being, you know, wrong minded >> i think it's hard to argue that the u.s. hasn't had some unfair trade deals, and whether it was hillary clinton or donald trump, they both campaigned on that the first thing president trump did was pull out of the trans-pacific partnership talks where, by the way, the other 11 are now going forward. they're going to sign it this week in chil chile wilbur ross has felt that he's been on the bad end of a lot of these deals. the question is how do you negotiate these and get a better outcome and how do you do it sort of strategically,

thoughtfully, conceptually one has a little bit of a feeling on these tariffs that this is encased in a broader sort of trade strategy that helps the united states across the board. it's more tactical than strategic. we'll see how that unfolds and how does this influence the nafta talks that are ongoing with canada. >> the president already was tweeting that, you know, these won't come off unless we get some movement on some of these nafta issues i don't know, the whole globalist versus populist or nationalist stance globalist, you know, maybe you get taken advantage of from time to time. you so much want to be part of the global community and i think that's part of what's happening here you can be taken advantage of when you're the biggest -- you know, when you're the biggest economy in the world it's almost maybe there's times when you say, okay, you can

take -- get a little bit more from us because we have so much. i don't know, but i don't know whether you want to posture though with policy because it can come back and not really work correctly >> well, that's -- you know, you don't really know. the president said the trade wars are easy to win. >> right. >> it sort of all depends what your leverage and your ammunition -- >> you see what he means if you don't want to trade with the -- who has more to lose if you don't trade with the united states >> that might be right on the one hand, but if you look at canada, we have almost zero deficit with them. >> i know. >> $12 billion total deficit, and we send to them $43 billion worth of cars every year and so trade -- the president sees a lot of things in zero sum. >> right. >> and where he's right is we're the biggest economy, we should be able to do bigger deals, i agree with that. where i don't agree is the zero sum trade where you raise a tariff on one end, you have no

impact on another end. it's a net win you have to take a look at these things because we're a manufacturing country and consumer country, will the workers in these industries come out better or will the consumers, workers, manufacturing industries come out worse? that's the question i'd be asking. >> by the way, we have no control over that. we can control what we dish out. we can't control what the reciprocal actions may be. >> that's absolutely right i mean, i'm not sure i think the european -- the european union has been expecting this for some weeks, maybe months already, they've been bracing for this. so they have a $3.5 billion sort of comeback on this with harley-davidson and kentucky bourbon and levis among other things, and that's supposed to be, in their view, the equivalent of what they'd lose on steel and aluminum. >> those are very targeted think about where those things are built. from the heads of both the house and the senate.

>> i think harley-davidson is paul ryan's district. >> paul ryan's state for sure. >> yeah. >> bourbon, we know where that goes, the majority leader. >> absolutely. >> thanks. >> all right thank you very much. >> you're welcome. here's what's making headlines at this hour "the wall street journal" reporting that amazon is in talks with big banks including jpmorgan about building a branded checking account that it could offer its customers. the goal would be to create a product that would appeal to younger customers and those without bank accounts. the report says the initiative won't involve amazon becoming a bank. the talks are still early but it won't be the first time that amazon and jpmorgan has teemed up. they've issued amazon branded credit cards since 2002. then the two companies are working alongside berkshire hathaway on an initiative to tackle rising health care costs for their employees. apple could launch a cheaper macbook air this year. this is according to a closely followed analyst who's known for his accurate insights into the technology giant's products.

they did not provide any details but they expect the rollout of the cheaper laptop would happen in the second quarter. the current 13 inch macbook air starts at $999 in deal news axa is buying insurance company xl group for $15.3 billion. that offer is valued at $57.60 a share at the 33% premium to xl's closing price on friday. axa says it is accelerating its existing plans to smin off the large u.s. life insurance business in a public offering. a lot still ahead on "squawk box" this morning. coming up, we have a live report from mexico city that's where the latest round of nafta talks are wrapping up. how will president trump's announcement impact the negotiations we have the details right after the break. plus, what will a potential tariff war impact economies? "squawk box" will be right back. is the monolithic view of emerging markets obsolete?

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bouncing around. right now red arrows across the board. these declines are pretty mild dow futures down 24 points the dow saw a week down of 3% last week. the nasdaq looks like it will be down by 4 points here. take a look at europe wherefore many of these averages that have already been trading through the morning we've seen green arrows. you can see the dax is up. it's the biggest gainer up by more than .8 of a percent. then there's italy with the election ru89sz that haesults t coming in there. down .8 of a percent. president trump tweeting in part that steel and aluminum tariffs will not come off unless in his words they have it off in mexico city, the tariffs. >> reporter: top negotiators are here in mexico city for the second round of nafta talks.

another round next month it's supposed to be before the mexican elections. the tariffs that were threatened on thursday and now the tweet this morning all complicating part of the mix of a very difficult negotiations a lot of issues outstanding. yesterday ways and means committee kevin brady was here with a congressional delegation. he was arguing for canada and mexico to be exempt from the steel and aluminum tariffs and arguing that the u.s. would benefit from a free trade agreement. >> done right, these free trade agreements turn trade deficits into trade surpluses, and we think especially here in nafta with our two biggest trading partners, there's tremendous up side i think there's big wins for the u.s., mexico and canada. they have been making some progress we were told but i want to show you some of the sticking

points that are out there. the first one top of the list is issue of auto content. the u.s. administration wants that percent to go up to 85% from 62% there are issues about regulatory and labor practices trying to make those more equal across borders there's the nafta expiration the u.s. wants to get ready for the thing to expire in five years. canada and mexico seem opposed to that. then there are industry specific issues like telecom, energy and other things we're going to learn about what the top negotiators think about this they're going to give statements and take questions from the press. we'll see just how this steel and aluminum tariff issue folds into the already complicated issues of rethinking nafta guys >> steve, thank you very much. steve liesman for us in mexico city. when we come back, the big winners from the academy awards including who took home a special prize for the shortest speech and a programming note for you, tomorrow right here on "squawk

box," dallas fed president rob kaplan will join us at 8:00 m.a. eastern. you are watching "squawk box" here on cnbc

big winner at last night's 90th academy awards "the shape of water" winning a prize for best picture francis mcdorman won for her

performance in "three billboards." i saw "the florida project." i saw "lady bird." i've seen them all yeah check out this moment. host imy kimmel announced that a jet ski would be awarded to whomever gave the shortest acceptance speech. i didn't see "phantom thread." mark bridges won that prize. his speech was only 36 seconds long and helen muran, it was funny, because she was the presenter of the award and the other big story about helen muran -- >> the price is right. >> -- she took a shot on the red carpet i have confirmed that it was tequila. i have confirmed it was tequila. >> go, girl. >> she can do whatever. >> i think rita moreno was taking a drink during a tease, too. >> she's 86 and she wore the same dress that she wore 50

years ago. >> i did not say that. >> what an incredible star 93 years old looks 70 it was amazing i almost -- >> rita moreno -- >> almost made it worth while watching that. anyway, coming up, today's top stories plus the tariff impact cnbc is on the ground across the globe covering reaction of president trump's decision a live report from washington after the brk.ea so lionel, what does being able to trade 24/5 mean to you? well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise.

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any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing such good and important work for the environment. together, we're building a better california. good morning, everybody. welcome back to "squawk box" on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with becky kernen aconcer -- joe kernen and mike santoli. walmart plans on rolling out prepared meal kits there's a grocery war with amazon and walmart

walmart shares down by 13 cents but you wonder what this will mean for blue apron. results coming in from italy's election yesterday no party appears to have won a clear majority a center right block has indicated it gained the most seats in parliament. that does not include the top vote getter, the anti-establishment five star italy's many political parties will attempt to form a new government and appoint a prime minister a news agency in italy reporting that italy's democratic party leader decided to step down after the election check out the european markets earlier. only italy was down. as you can see, green arrows on germany, france, u.k. and spain but down in italy. check out the dollar, which we've been watching that closely. possibility of a trade war 1.23 >> trump's proposed tariffs are stirring up concerns around the

world. emerging markets in particular wavering on this news. joining us right now is richard kang, a partner at taiwan accelerator. he's on the index committee. richard, we've talked a lot about how this is something that could potentially really hurt canada because they import about -- or we import about 16% of our steel from that country, but what does this mean for china even though it's a much smaller percent on this issue? what does it mean, this potential, for tariffs and trade wars starting up >> their point be of view is very different now trump faces mid terms in 2018 and survival in 2020 my concern for portfolio allocators is that in china they're consolidating power around xi. they're no longer looking at five or ten years. i thinkthey're looking at 50 t 100 years by sort of recalibrating their political system that means that it's hard to gauge in the u.s. beyond two or four years and i think china's

focused a lot more not on jobs for their mass laborers in aluminum and steel, they're thinking of the world where ai meets driverless cars, where social media meets online shopping, where cryptocurrencies and blockchain are changing fin tech i think allocators have to think about that. >> we talked earlier this morning about how that means that intellectual property is really the big issue, that there's so much riding on that that's a much broader part of impact is that how you're kind of looking through this at this point? >> it's a different game over there. if you want to be facebook or google over there, good luck for me over there, i need to get a vpn that's working for me to do it. the chinese don't want to do that they want to do that over there. they're not allowed to bash their leaders like we can over here over there you want to listen to something about xi consolidating power, they're going to black

out youtube so you can't hear it if you want to be a european or american over there, get ready to learn to play the game over over there. >> richard, you're talking about playing the game fortnerer term coming to an investor looking at emerging markets that had done so welcoming into this recent rough period, what matters for that investor, for those economies which still are very export oriented even if they are kind of trying to transition away from it? >> yeah. so if you look at industries, sectors like commodities and industrials, you can't escape the pain of correlation. if it's up, it's good. if it's down, then it's painful, right? whether you're talking about steel in india or somewhere in brazil, korea, china, you're going to feel the same pain. same with commodity complex. when you get to technology, it's less correlated. anything that's newer is less correlated anything that's older is less

correlated cryptocurrency is the best example. 40% differential between seoul and korea. we're far from the 2009 lows we're near market highs. now is the time to be less of a hedge fund and more of an etf. >> that means what betting against some markets being prepared for the end of the bull market? what among those options >> being prepared for the bull market is definitely one being more sector oriented probably away from things zigging and zagging. probably in emerging markets that's not going to zig and zag like technology. because the s&p 500 is full of them is it the united states or china?

>> both. >> now is a time to prepare when to take that pill which might be vix. >> we saw how much turmoil can get inserted into the market when we suddenly saw volatility reemerge that seems like it's going to be here back to more volatility. what does something like these potential tariffs and potential other actions, what does that do to volatility? >> yeah, it's going to be high unfortunately the u.s. industrials, commodities, technology, they're all high components all moving in the same way you have to move to newer markets that are less connected to the global world. they are connected far more than before that doesn't work anymore. you have to be globally diversified. my suggestion is more tech than the older industrial commodity complex. be prepared for vix.

be prepared for newer asset categories for me, fin tech, blockchain infrastructure, ai anything related to data science, big data move towards there. those are yet to be efficient, yet to be correlated with the rest of the world. >> big issues with emerging market investing historically has been through the currency markets. if the dollar rallies, they get hit. those areas do you think they would be insulated from a move like that? >> no. whatever is coming because of the political storm starting with this consolidation of power with china, therefore, byte sides wanting to prove in this bipolar world that they own it, russia having been there, remain in there with, you know, rigging elections or whatever it might be, now is not the time for being an etf i'm a former etf guy i think it is the time to prove as a hedge fund your performance. these currencies are a good place to play. that's been a classic place for a macro fund manager

i think that's probably a better market to make money. >> richard, thank you for your time today >> thank you >> by the way, apparently that conversation was getting blacked out in china touchy >> really? >> yeah. >> even in at this enna man square oh, that's blacked out, too. up next, live report in washington we'll talk to george mitchell about president trump's decision and the response from the republican party "squawk box" returns in just a bit. ♪ mvo: with everything that is going on around us and in the nation, we need to work together. we need to do it more often to help people that need help. ♪ ♪ i'll stand by you. fvo: he's encouraged other people to look around

and notice one another and take the time for each other. that's his gift. ♪ i'll stand by you.

welcome back to "squawk box," everybody. we've been watching the futures this morning they have been, yeah, moderately lower, at least for the last hour or so dow futures down by 45 points. s&p futures down by 9. the nasdaq off by 6. of course, this comes after some big losses for stocks last week, especially the dow which was down by 3% over the course of last week. let's get to kayla tausche standing by in washington. she has the latest on the ongoing nafta talks. kayla, how should we be handy capping things at this point >> you should expect that the conversation has turned to tariffs, like many trade conversations across the world right now. the president's made his decision on what those levels will be, but now lawmakers and

international leaders are clamoring to amend the fine print to amend the disruption to allies across the world. french president emmanuel macron said there could be a world trade backlash nafta talks in mexico city, lawmakers led by ways and means chair kevin brady are trying to patch up relations with canada and mexico negotiators did make progress during this round despite tariffs derailing the conversation tariffs next month could be threatened with the final and retaliatory measures from canada and mexico potentially in place. brady told reporters he wants canada, mexico, other allies all exempt from the tariffs. that's a policy supported by the defense department, too. peter navarro speaking on cnn yesterday said that won't work. >> as soon as you start exempting countries you have to raise the tariffs on everybody else as soon as you exempt one country, then you have to exempt

another country and so it's a slippery slope. >> reporter: the president in a tweet says he'd consider taking the tariffs off if a new and fairer nafta is signed we'll see how the trade ministers when they speak later today, how they approach the topic and what they end up deciding guys, back to you. >> kayla, thank you. we will be staying tuned we have a lot to -- we have a lot to cover week in and week out, don't we? it's -- i like this business it's good that we chose this field i think, kayla don't you think? >> reporter: never a dull moment, that's for sure. >> hope that you live in interesting times. that's what they say joining us now, george mitchell. mid east peace envoy who is now chairman ee merry 't rmeritus wa piper law firm as so many things, you view a

lot of this differently. i heard earlier that congressman sandra levin thinks this is a great move by the president. a lot of the republicans do not like the move. i'm just wondering, do you have a more nuanced view of tariffs and these in particular? what's your take on this >> well, first, there's no surprise that there are differences. trade has been an issue on which the parties themselves have shifted positions over the past century several times and on which both parties are divided this is a big country and with only two major parties they are essentially loose coalitions so there's nothing new about differences within the republican party and within the democratic party on trade. my concern is that the stated target of this tariff action by the president is china he's said china is flooding the world with steel

the problem is that the principle victims of the specific action he's taken include canada, number one, which is an american ally, and that's why you have the pressure that you've just described previously of people trying to gain exemptions. and after canada the second most severely hit is south korea, and we're engaged, of course, in delegate approaches to try to figure out how to deal with north korea and the south is very deeply involved in that i think what troubles me most is the legal justification for the action, which is on national security grounds as opposed to specific trade grounds the problem with that is it leaves open for every other country to make their own unilateral declarations of national security and there by effectively ruin the trading

regime which the united states led the way and successfully created after the second world war and in a post world war ii period that's the long-term risk. the specific effect probably will be muted and i think that they'll figure out a way to make it easier on canada, south korea. >> when our bookers look for people to bring on the show to talk about certain areas you always come on the radar talking about china obviously, so you know as well as anyone the actions of that country in terms of trade for the past however many years you want to go back, and there's some justification for saying enough is enough, i would imagine, in your view. i don't know what the remedy is, but they kind of laugh, i think, at our -- i don't know what you'd call it, but we certainly haven't -- we certainly haven't stood up for ourselves in certain respects with china in

the past, right? >> that's beyond dispute the chinese have followed an historical pattern of countries that try to manipulate trade in their favor, including their own country. the technique was done by japan in the aftermath of the second world war. prior to that the principle restricting trade mechanism was tariffs. the japanese invented non-tariff methods of slowing imports while they pushed exports. and china has taken a page from that book and moved it a step further so there's absolutely no doubt about that the problem is that the remedy chosen by the president doesn't really have much adverse effect on china it's hitting others. it's as though after pearl harbor we invaded mexico it's a misdirection in terms of the response i do think we have to be much more aggressive and than we have

been in insisting that china, for example, enforce their laws on intellectual property one area in which the united states is indisputably the world leader and on which we suffer from their eager lack of laws or refusal to enforce the laws that exist. >> senator mitchell, one of the things that people who are free traders point to every time we have these conversations is the idea that this is not just about trade and making sure that we can sell our products over seas, it's also about security is there a national security argument to why things have been somewhat lopsided in the past? >> without a doubt during world war ii when the tide of war changed and an ally victory seemed inevitable, united states and brittain began the negotiations that culminated in all of the atlantic pacts, nato, ultimately the eu, many other world banks and institutions the principle objective was to

create a trading regime that would regulate and encourage world trade because they thought, and i believe they were correct, that the protectionists reaction to the recessions of the late 1920s and early '30s led to the slide into a deep depression that created the conditions for the rise of fascism where it had already risen in italy and came along to germany and led to the second world war in other words, they believed that trade wars can lead to real world wars they worked hard led by the united states to establish it so there's indisputably a strong national security element in the desire for greater trade that enhances the life of people in all of the countries that participate in the trade it can't just be one way, of course, you have these ins and outs the united states derives enormous benefit from the world

trading regime, but there are circumstances and countries such as we've just discussed, china, that are taking advantage of the system they've come into the world trade organization just recently and they havenot modified thei practices to an extent extent o compliance of the wto rule will require. >> okay, leader. i thought that was a fairly not hyperbolic discussion so the sun's coming up tomorrow, is that your prediction >> yes, that's my prediction, i had a glass of orange juice this morning and the sun comes up >> we'll get through this together, thank you for being with me. >> let's see what's coming up. when we return, jim cramer will

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it is time to get to the new york stock exchange, jim cramer, is joining us now. it is not as awful as it seems and not going to solve all of our problems with china. we just finally decided with senate former majority mitchell that the sun will come up tomorrow even if the tariffs will go into effect, do you agree with that? >> i do, i think there is a difficult narrative going on because china does not export directly to the u.s., somehow we got the wrong guy. china wants to put a lot of people to work in steel. if they decided to put a lot of people to work let's say in umbrella, we just simply have to

deal with the idea that they lower the world's price and that hurts everybody. if you hut pressure on everybody nae which china is doing right now we look at the number and hey, it is not china, maybe we are teaching canada a lesson but it is not the right way to go and you need the world pressure on them and not just us because they never listen to us. it is a good thing to put the world pressure on it >> we came out of the gates in january on tax reform and deregulation and we are off to the races. look, this cannot continue, it is going to be a reversion of the means. we reverted to the mean a little and now we are flat. >> yeah, i think -- it is a little unusual, you come in in the morning and not sure of

nafta, you are trying to negotiate nafta and putting a tariff on nafta. it is a little unclear and i would be wrong to say it is unclear. to sell off everything what you have is take a look at what happened on friday. everyone sold off anything and the rest of the day is so good i think that we have to be cognizant that not every stock is caught up in the mall and a lot of stocks are not. find the ones that are not >> how many movies did you see >> i have seen them all. >> you know, a lot of them were as i say nap time. kind of did not get through. >> well, that's kind of like through football season. >> the one abouts the water, yeah, that was an opportunity to grab a couple of wings there >> football season for you >> i liked it. we'll be back. thanks

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a full-tiinal look of the fs s&p 500 futures are off by 30. 10-yr note still yielding right

around 2.8%. mike santelli, thank you for being with us today. >> we'll see you 11:00 to noon >> no, the cnbc guy. >> make sure you join us tomorrow "squawk on the street" is next ♪ good morning and welcome to "squawk on the street," i am david faber along with jim cramer, we are live from the new york stock exchange. carl quintanilla has the day off. let's take a look at the futures. we are looking down across the board here dow jones, futures down 116.