as we cue the frank. it's tuesday, september 18, 2018 "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. ♪ >> good morning, everybody welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at u.s. equity futures. you will see there are green arrows across the board, despite the ratcheting up of the trade war with china you can see the dow futures are indicated up by 63 points. s&p futures up by 7. the nasdaq up by 22. yesterday stocks were down nasdaq was the loser, down by 1.4% even the dow suffered its biggest loss since august 30th

still we're talking about modest declines it sells youtells you about the trajectory of stocks and where we have been overnight in asia, the nikkei was up by 1.4% stocks in china were also higher the shanghai was up by 1.8%. finally check out what's happening in europe. you will see in the early hours, for the most part markets are trading higher the dax and cac are up ftse up by 0.2%. look at treasury yields in the united states. yesterday at this time we were above 3% for the ten-year. that's where we stand rite now as well. >> we will get to china in a second an update on the damage from florence the storm has been blamed for 31 deaths the majority of victims in north carolina the governor said some areas have not seen the worst of the flooding yet and roads in the

eastern part of the state remain dangerous. tornadoes ripping through virginia yesterday leaving a path of destruction and killing at least one person. property damage totals expected to top 17 billion to $22 billion, though that number could raise based on further flooding our top story in the business world, president trump will impose 10% tariffs on 2$200 billion worth of chinese imports. those taxes will rise to 25% at the end of the year. m ylan mui joins us from washington with more. >> reporter: not only is president trump announcing those new tariff s on chines good he also threatening another round the rate is 10%, they go into effect on september 24th and on january 1st the rate will rise to 25%.

the u.s. chamber of commerce is slamming the move saying today's decision makes clear that the administration is concerned and did not heed the numerous warnings from american consumers and businesses about rising costs and lost jobs on main street companies had been lobbying to be removed from a draft list, but only some products were dropped like smart watches and fitbit and also off the list, rare earth elements also off are bluetooth devices, chemicals used in manufacturing and child safety items like bike helmets and car seats. president trump called china's trade practices a grave threat to the long-term health and

prosperity of the u.s. economy president trump expressed hope that he and president xi could reach a solution he said he has great respect and affection for the chinese leaders, but as eunice yoon was reporting earlier t looks like the talks are no longer going to be moving forward. and china has said it has no choice but to retaliate. >> so that means what? if talks don't progress, we wait and see what happens maybe this threat of hiking to 25% by the end of the year gets something sparked somewhere on a back channel >> it's not clear what the off-ramp is for some of these tariffs. the 10% rate was put in place to give companies time to sort of get used to the tariffs before they rise to a higher level on january 1st. we will see if it also gives negotiators some breathing room in order to come back to the table. meanwhile, however, china has already said that it has $60

billion worth of u.s. imports that it is willing to tax at a 25% rate if this round of tariffs moves forward. now that it has, we will see if beijing makes good on its threat and then how the president responds >> ylan mui, thank you very much a programming note, wilbur ross will join us at 6:45 a.m. eastern time to talk about these new tariffs. sticking with the theme of trade, macy's ceo sounding off on a trade war with china. here's what he told courtney reagan last night in new york. >> we do expect that there's going to be more tariffs, and it will start to effect a department store retailer more significantly because of the apparel pieces that will be part of it. what i can say is we've been working with our own supply chain. we've been looking at our own private brands and prepared for this >> he also added it's too early to tell how tariffs will affec the average consumer as well

fedex was also talking last night. the stock could be down 5 or 6 points this morning, it's in the mid 250s i was looking at some stories written today. from the "wall street journal" and reuters, fedex sounds the alarm on tariffs just beneath that. fedex down plays u.s./china's trade spats and impacts on business >> those headlines could be both accurate it's not just china. i think they're more concerned about nafta. many people will say nafta is the bigger nod >> i did some math >> on the tariffs? >> fedex said so far it affects 10% of the products in china it handles. and china represents 2% of its revenue. >> oh. >> so i quickly deduced that's 10% -- 0.2%

that's fairly small. and we played some frank i also suggested this -- ♪ >> sinatra is more classic, fly me to the moon >> you're not a dino fan >> i'm more of a frank fan >> they're all part of the same cultural sort of -- not a great one, by the way. >> let's move on another frank story. spacex -- this plays into it because of the report. it's all -- >> bring the pop culture into the show you can. >> ronan farrow yesterday, woody said i wouldn't be surprised if

ronan is not my son. >> woody even said if that's the case, that's horrible because what she has done and put us through on this. >> and i think she also said that it might not be woody's, but it doesn't mean it's frank's either it's crazy you know, this is hollywood. >> let's get back to outer space. >> yes >> we have signed the world's first paying space tourist the passenger is the pill billionaire founder of a clothing operator, yusaku maezawa. >> ever since i was a kid i have loved the moon just staring at the moon fueled my imagination it's always there. it has continued to inspire humanity that's why i could not pass up this opportunity to see the moon

up close ♪ >> the mission is set for 2023 before then elon musk says the company is planning orbital flights to begin in two, three years. he plans on testing the flights before sending people. that's a good idea >> not with himself in it. >> i don't want to talk tesla again this morning yesterday, you know, you sort of -- you're sensitive with that i'm negative now on tesla for a totally different reason >> what's that >> his brother's hat he was wearing the hat has the again this morning what's his name? >> the interview he did yesterday. >> the hat has the nevnever com. i don't care about the pot smoking, production problems, i'll negative on it because of the hat. the hat looks so dumb. it's propped on top -- why does he wear it i'm elon musk's brother, come

talk to me >> first of all, kimbal musk is an entrepreneur. he is it restaurants, farm to market stuff >> why can't you just say okay, i don't like the hat either? why do you have to push back i'm just playing around. just kidding yanking your chain just kidding >> i think he looks handsome >> but it never comes off. i like it a little i want to wear it once when i go out. why always hi, i'm elon musk's brother. who are you? >> i'm going to start wearing a hat like that. >> oh, boy >> i wish you would. >> tomorrow. >> i don't care about the joint or any of that now i think there's something crazy with the whole family. >> okay. let's get you caught up on the broader markets now. joining us now is katherine vera

from bulltick capital markets. also here on set is joe little from blackstone. welcome you both to the table. i will go to you first >> i learned in the army the hard way never to correct anyone on the pronunciation of my last name i corrected a drill sergeant once, it did not end well. >> joe is a drill sergeant, i'm not. >> you were in the army -- >> army resolves >> volunteer >> all through college eight years. >> is that a good -- that's a great part of your background. >> yeah. >> discipline. patriotism >> yes speak to this, everybody is trying to make sense of these tariffs, what the tariffs mean to the market who has the upper hand in all of this. where do you stand >> i think there's a fundamental misunderstanding or an underestimation as to what the

tariffs might mean what we're going to hear today from people is they'll say 2$200 billion worth of goods at a 10% tariff, it's $20 billion, what' the big deal, we're a trillion dollar economy, what does that matter >> our supply chains are so interwoven and connected that the law of unintended consequences will matter here. what the tariffs will do is drive inflationary pressures higher you heard it in a review of the headlines last night and even going back the last couple of quarters or two, companies are talking more and more about input price pressure not mentioning tariffs directly, but they're one in the same issue. if you restrict any amount of goods, you push prices higher. the big risk is when we get to the other side of this, we will look another this and say this is the inflationary catalyst

>> to this point they have been raising rates based on a strong economy. if they're raising rates based on inflationary pressures you worry that puts a halt on the economy? >> yeah. that's a stag flaflationary environment. there are good forms of inflation and bad forms of inflation. if you think about this tariff as opposed to the binary thing like, hey, you will charge a rate here, charge a rate there, if you think about it, it's more like chess the opening move of chess, there may be 400 possibilities, the second turn, up to over 70,000 the third turn, up to 9 million possibilities. given how our supply chains are so interconnected out there, this is much more like a game of chess than anybody out there is willing to acknowledge >> katherine, what do you think? >> that's a great analogy. i will take the opposite side of

that i think there's a lot in the media about how this will derail the ur.s. economy. it's less of an impact on the economy than inflation i agree with that. and i agree inflation is the biggest threat to this rally if you do a quick calculation, china, 19% of u.s. imports imports 70% of u.s. consumption. a 10% increase in prices is a difference in cpi if it impacted the entire import basket of about 0.16 points. so, yeah, if this were -- if the entire package were to go through, and it could or it could not, it may be a negotiating tactic, were it to go through we would see an uptick in inflation. would it cause the fed to jack up rates i think the fed is reluctant to do so especially with a flattening and potentially

inverted yield curve i think this is a fed that will take its time. and they will watch and see how things play out. i will contend that i think a lot of this and history has set a precedent is a negotiating tactic to get some progress made on tariffs and a freer and fairer trade scenario. >> let's take that on its face what are you laughing about, joe? >> nothing >> what happened >> nothing >> i missed the joke but -- >> that's not fair >> i don't know what's going on. >> i missed it, too. >> run ahead i will tell you after. i promise. nothing related to this. >> we're human >> we'll learn about it after. let me ask you this on china who do you think has more ability to win this battle at least in the short-term >> i think the u.s. has the ability to manage this better than china

i think china has more at stake. what china has at stake is a massive population of people, 400 million people earning middle income. and if you think about a country, any developing country out there it's easy to go from low income to middle income but hard to make the jump from middle to high income. china put 400 people in middle income through low-cost manufacturing, but they need technology, innovation, and if you look at the heart of what these tariffs are aiming to do, they're basically telling china to slow down innovation. >> final question, is there a proxy for this battle that we should be looking at yesterday somebody said apple is the proxy. if there's one stock to look at on a daily basis that would be impacted, it's apple i'm not so sure it's apple >> i would not agree with that either if you look at the first round of tariffs, it was like nuclear reactors, offset printing

presses and tires. i don't know if there is one particular good proxy out there. it will come down to whatever industries have the best lobedy group and can get taken off the list i would say in general look for references to enput priinput prs >> katherine, is there a proxy >> i think it's emerging markets. emerging markets are in correction territory sthaif be they've been beaten up in the currency section especially with the yuan we've seen a recovery in recent days i am recommending actively long positioning in emerging markets and in equity and fixed income i think for institutional investors it's a good place to

be >> our thanks to katherine and j joe. >> always do fedex out with quarterly results. the delivery giant missing profit expectations coming in at $3.46 a share but raising full guidance joining us is jack atkins from stevens. part of the problem, this is why i don't know if it's a problem or not they missed by a wide margin but 48 cents was about accelerating the pay raises which totaled about 2$200 million. the pay raises were announced at the time of tax reform, right? isn't this what we wanted for a while to share some of this prosperity with employees as well and workers >> that's right. i think there was a mismodeling on the sell side you think about street expectations for fedex, you have those merit raises which were

pulled forward into the first quarter, you had bonus accruals which did not occur last year in the business because of the cyberattack. you put that together, it created a difficult quarter for consistent modeling. that's what we were concerned about going into the print and that's what happened >> if you look at that chart, jack, i can't help but think we started talking tariffs at -- at the beginning of the year, or the markets, you know, have been sideways basically fedex was on a roll for five years, going up into the high 200s and it's been treading water what do you attribute that to, the economy for that period is growing at an average of about 3% yet fedex has stalled. why? >> so much of the improvement in

fedex this year in share price and earnings for the past three, four years is due to the fact that this company has been successful in implementing profit within its express segment. the next phase of the profit improvement plan is largely dependent upon successful execution of the integration of the tnt acquisition. that was derailed last june with the cyberattack. when you combine that with tariffs and tariff talk, it put an overhang on the stock we think as the company executes on its tnt synergies over the course of the next several quarters, that should put the company in position to see the stock higher >> jack fsh, let's say we doublh 200 billion and we go to 25%, when does it become a factor, tariffs, for fedex and for the results? >> it's not a positive now you heard fedex last night on the conference call refer to the

fact that 2% of its business is in that china to u.s. trade lane they think with the current tariffs, about a quarter of that is impacted by sort of what's going on at the moment but clearly when we look at the data, we are seeing a slowing of global trade that's a concern for us. the longer this drags on, the greater the potential this could bleed over and impact a global company like a fedex or u.p.s. all right. thank you. i've never branded myself. i don't do facebook or twitter maybe that hat is branding >> you do twitter. >> but i have never taken it seriously. do you think branding could be -- >> i tell you what, you know who he is when you see him it works >> if andrew does go along with that thank you. >> that's not good what do you mean >> not a good look

>> no, you're too big for that they increased your face >> maybe a different hat >> you said you might start doing that do you like that look or not >> i have to get the whole get-up there you are. >> you know what i thought of? >> that's good >> i immediately thought of mid night cowboy i did. >> yeah. >> you would be popular around >> thanks. >> yeah. yeah >> i can't save you. it's his tease >> yeah. >> do bulls get ticks? do you know? >> i'm sure they do. >> do they >> i'm sure. >> bull tick bull tick. >> i think it means an upside momentum move. >> bull tick okay okay careful with that. coming up, cnbc took apple's new phones for a test drive.

if you're deciding whether to upgrade, don't go anywhere and later don't miss our interview with wilbur ross he will be here at 6:45 a.m. eastern to talk about the new tariffs on chinese goods don't forget that the past can speak to the future. ♪ ♪ i'm going to be your substitute teacher. don't assume the substitute teacher has nothing to offer... same goes for a neighborhood. don't forget that friendships last longer than any broadway run. mr. president. (laughing) don't settle for your first draft. or your 10th draft. ♪ ♪ you get to create the room where it happens. ♪ ♪ just don't think you have to do it alone. ♪ ♪ the powerful backing of american express. don't live life without it. ...you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers

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cnbc learned that amazon plans to launch as many as eight

new home smart devices powered by alexa these include a microwave, an in-car gadget and high-end audio equipment like an amplifier and receiver some will have alexa built in. others will connect to ale alexa-enabled devices. amazon is expected to unveil some of these items later this month. and the iphone xs and x max may not be available until the end of the week, but joining us now is todd hazelton, and he has these phones that nobody else has. >> yes >> you like these. >> i love them thank you. my favorite phone, the best iphones ever made, but the hardest question for apple is to prove why you need to upgrade from last year's devices this is not a huge upgrade from that you have the gold, the larger

6.5 inch screen, but a lot of things under the hood are big advancements bigger speakers. water proof. >> back that up. >> i put it in the pond yesterday. >> water resistant, yes. >> so three feet of water for 30 minutes. >> 30 minutes? >> yeah. >> is it that one? >> it is this one in the pond. >> wow you may have a tough time convincing people who already have the x, i don't have that yet. i'm going to jump over the x to one of these >> that's what i think shoe do if you have the money, you want the best iphone, grab the iphone xs max i like the bigger display, otherwise check out the iphone

xs or if you want a cheaper model, wait until october there's another one coming out that is not water resistant, but it's still a good phone. >> how much is that one? >> $749 >> is it much zippier than this? >> if you're coming from 7, y you will see a difference. >> what do i do with the button? >> slide up from the bottom of the screen >> we'll do a tutorial later >> i think that's what we're seeing from apple, moving away from the home button the 8 is being sold, but it's not the one they want you to buy. they want you to move on to this, the xr and the xs. we might see that with the ipads, too >> is the camera that much better. >> the camera is awesome >> i'm seeing some of your e-mails. that's all right >> i have some sample photos

now when you take a portrait mode picture, you can adjust the background blur after the fact it makes it look like a professional photo these blew me away over the weekend. >> i want this let me ask you something, we did a story about how amazon is trying to reach more products to be in the home to be all over everywhere they're trying to do the same sort of ecosystem that apple has built up how do you see that battle playing out? who has the pole position? >> in the home, amazon is winning that with alexa, they have a huge ecosystem of partners where alexa is in everything from smoke detectors to light fix choreurchur -- fixs which is kind of creepy. why do you need alexa in a smoke detector >> have you ever had a smoke

alert that won't stop beeping? >> yes >> sometimes even the batteries, it goes haywire. >> or if you could ask it which one is chirping. >> that's a good point if you could use it for diagnostics. >> which one needs to have the battery replaced because they all beep. >> good point. >> or to you're remodelling, they leave one, and close it up. for two months we couldn't find it it's like the edgar allan poe thing. you think you might be going insane to hear that every 30, 40 seconds. dogs, you can barely hear it for dogs, it's like the world is ending they're like besides themselves. what's her name, mabel that's the pup >> most important thing, battery life >> really good hour and a half longer on the iphone x

that's on the xs max >> cool. thank you. >> thank you for having me when we come back, if you are not familiar with the oa billion freud that involves hollywood, wall street and politics, it's called billion dollar whale that's after the break. and then wilbur ross will join us to talk tariffs. big news making headlines today. before we go to break, a look at the s&p 500 winners and losers ♪

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>> welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back u.s. equity futures are up again, everywhere i've seen it we're slapping tariffs we never just gently introduce a tariff >> never ease into a tariff? >> if it's the act of a trade war -- >> the skirmish, ease into a trade war. maybe yesterday was the reaction

the dow was off 92 that was weird 200 billion. this is what we get? i don't know what the market still figures that it won't be long lasting >> they think it's a negotiation. >> i guess i don't know >> okay. our next guest this morning spent three years investigating what they're calling the biggest heist in history they have a new book out i have read it "the billion dollar whale," the man who fooled wall street and the world following jho low. joining us are tom wright and also bradley hope. welcome to you both. you guys have been writing about this for the "journal" and then decided to start working on this you had written some of this in the paper, but it feels like you unearthed so much more as you

were going along tell us the story. >> it's an amazing true crime story. this 27-year-old malaysian, called jho low, con vinvinces te prime minister to set up a sovereign wealth fund, steals it uses it to build a hollywood empire gets to know leonardo dicaprio, they make "the wolf of wall street" with stolen money. he buys hotels, buildings all over new york, dates miranda kerr and becomes a player. nobody knows the truth about him. >> do you think he's a psyc psychopa psychopath what is your psychological profile of him >> there's a theory he was being chased by a hole behind him, like bernie madoff he was getting overextended, that's why we saw the size of the thefts getting bigger. >> was he a believer, he believed he would make it to the promise land, and that he would

make the money back and it wouldn't be stolen or he knew all along he knew what he was doing. >> the amazing thing about jho low he doesn't have an end game. he keeps stealing and stealing at one point people are asking for the money back in malaysia, where he's from, he gets a big loan from deutsche bank, instead of filling the hole, he buys a 2$250 million yacht called equanimity it's crazy >> why do you think he was so good at convincing all these other people that he was legit or was it that he to some degree was legit because he had the money to spend >> i think he was the ultimate stage manager. he knew exactly what everyone needed to hear in order to get them to believe and to take part in it. he also understood the way you need to lure in people with this idea of hollywood celebrities, you know, these big parties. it gave him the allurement. >> he had the cover of a prime minister he ran a sovereign wealth fund

they have more money than equity funds. when you're dealing in that official money, people don't ask questions. compliance totally broke down here >> who gets left holding the bag? what's the end result? >> the malaysians are left with the debt it wasn't stolen savings, it was stolen debt. that debt will not be paid off until 2039 >> what's your relationship been like with jho low? >> i mean, i guess you would say it's somewhat antagonistic we have tried to get him to explain more about what happened in this. he hasn't wanted to. >> he made a massive play to try to stop our book from being -- >> that's where i was going with this in the uk, he's tried to stop the book's publication completely >> jho low is living into china, as we know from sources, probably protected from the chinese government he has a lot of this money that he stole he's not able to use the u.s.

financial system because there's a doj probe into this matter he's able to still use his money and hired big law firms to represent him including schillings in the uk, who have been sending legal letters around telling independent book stores they should not hold this book what does leonardo dicaprio think now, you think >> i bet they felt conned. they saw this guy come in with huge amounts of money, willing to fund these big films without questions asked. that was alluring for them now they're probably wishing they had done some due diligence. >> in the book, leonardo dicaprio and 22 playmates hang out with jho low in the palazzo hotel in vegas jho low stole the money, he said i have 4$400 million, i will hel you make money at that time, leonardo dicaprio was facing problems with warner brothers it has blown up for him. >> is there a lesson in this,

especially for all these big institutions that somehow were conned do you think there was a way to have known in advance? >> all along there were red flags that people could have kept following there was auditors that could have seen -- gone further and seen there was a fiction that was covering up some of these thefts >> the big question is about goadma goldman. goldman is the focus of a criminal probe by the department of justice what did they know what >> what do you think he knew >> he's plea bargaining with the department of justice. >> he has billions left? >> he has a lot. we don't know for sure >> he has the yacht still? >> the yacht was seized in indonesia. it's now in malaysia. >> he can't be extradited? >> there's no extradition treaty

between china malaysia >> is he still living the life of luxury? >> as far as we know >> crime pays. >> he is living the life >> "the billion dollar whale," tom wright and bradley hope, thank you for joining us >> out today when we come back, our newsmaker of the morning will join us to talk tariffs. commerce secretary wilbur ross will be with us after a quick break. later we will talk tariffs and american manufacturing with the ceo of motorcycle and atv maker polaris. and jay timmons will also join us stay tuned, you're watching "squawk box" on cnbc

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president trump announcing tariffs on 2$200 billion in chinese goods. joining us from washington, commerce secretary wilbur ross thanks for joining us. do you -- we've been talking

about these tariffs and an off-ramp, how it works the markets are up today they were off yesterday. we are trying to understand the response on whether the markets don't believe it will be long lasting or whether, as the president said yesterday, there has not been large effects on prices at this point how do you see it? how long will this last? will the worst-case scenario come to pass or is this all a bargaining ploy? >> there's a whole lot of questions in that. but the purpose of the tariffs is to modify china's behavior. especially in technology transfers and other abuse of tactics such as subsidies and market limitations the real purpose is not to end up with tariffs. the real purpose is to end up with a level playing field so that american firms can compete properly >> who speaks for the

administration right now, wilbur who would i ask about the ongoing negotiations is it treasury secretary mnuchin? other people say navarro has a lot of sway into the president's mind you're there what's -- is it a -- is everyone putting their heads together how is it working? >> it's very much a collaborative effort we meet at least once a week as a trade group. we meet at least once a week in the oval with the president. so this is not a rash thing. this is a carefully thought through exercise that's why, as you know, the original list had some 6,000 items on it. now it's been trimmed. the reason it got trimmed is we had six days of public hearings, there were 350 witnesses testifying, and we had over 6,000 submissions, ideas about

which products to add then which to subtract. the important thing for everybody to understand is this is not a shot from the hip this is something carefully thought through. >> mr. commerce secretary, it may not have been a shot from the hip, but it does seem like there's randomness as to what made it on the list and what didn't i can understand highchairs being taken off, maybe you don't want to raise prices on baby goods for americans who will need some of these items, but why did things like smart watches not go on? >> we were trying to do things that would be the least intrue evidence on the consumer there was no particular need to do smart watches at this time, to do bluetooth or anything like that so we went item by item, trying to figure out what would accomplish the punitive purpose on china and yet with the least disruption in the u.s.

>> mr. secretary, if china doesn't blink and if we don't blink, do you see the actual possibility that we could have 25% tariffs on a half trillion dollars -- all the goods coming from china if we don't get what we want, are we willing to go to the mat and have 25% tariffs on everything coming from china what do you think the effect on the global financial system or global trade how would that play out? >> as for the latter question about global trade, now the eu and japan have joined us very much in the pursuit of behavior modifications on the part of china. we have jointly issued three trilateral proclamations against china since the old tariffs went into effect. in addition the eu and japan

have both asked to join us in the wto consultation process against china and the eu has also found its own separate one. so it may seem strange, but the imposition of these various tariffs has actually brought us closer together to those two major allies than we were before >> mr. secretary, average american family making $50,000 a year, let's say. how much do you expect these tariffs will impact them meaning, have you done the math so you know what an average family in america will pay once these tariffs go into effect >> well, you can do the numbers this way if you have a 10% tariff on another $200 billion, that's $20 billion a year that's a tiny, tiny, tiny fraction of 1% total inflation in the u.s because it's spread over

thousands and thousands of products, nobody's going to actually notice it at the end of the day. >> i think it's $61,000 now. $62,000, actually. you're back living a few years ago. back in that last update yeah >> it's 6,000 objects are the ones these tariffs will be on. actually, a bit less than 6,000. >> and at that point, the difference between what china's able to respond with versus, you know, what we're doing, is it $100 billion how much is it at that point >> well, china doesn't have enough imports from us to make a reciprocal tax >> that's what i mean. >> we sell them less than $150 billion a year so in that sense, they're out of bullets. and that's why they had announced before that if we actually did impose the $200

billion as we are doing now starting on september 24th, that they would match it with $60 billion. their rationale was that our 200 is about 40% of their total exports to us. $60 billion is about 40% of our total exports to them. >> just to be -- oh, sorry go ahead >> but they don't have enough imports from us to match the whole 200. >> just to be clear, if they do what they will do with the response of $60 billion, our administration has already said it will go ahead with the entire rest of the tariffs. that's the plan. if they follow through, we will follow through with this next move >> well, there's also the feature these tariffs start out at 10% on september 24th, but they go to 25% automatically on

january 1st. so what we're trying to do is to have an incentive to have near term, constructive discussions about the big issues. >> so did this latest move affect the -- whether vice premier lu is coming are there still low level negotiations going on to try to bring him here for higher level talks? >> well, this shouldn't be very surprising to the chinese. there was plenty of advance warning. as i mentioned, there were thousands of witnesses who sent proclamations and comments into us >> do you know if they're still coming >> we'll have to see we'll have to see what the chinese reaction is. >> we don't know okay. >> mr. secretary, i'd also read in the analysis that part of the reason for saying that we would start at 10% and move up to 25%

was not just for the chinese for trying to motivate them for some of these talks but also to give u.s. companies time to prepare for some of that what do you expect or anticipate u.s. companies will be doing are you thinking of companies like a walmart trying to figure out how much they're going to raise prices or are you thinking of companies like apple where you're talking about potentially moving the supply chain >> well, i think it all depends. the manufacturers who have very lengthy international supply chain undoubtedly will be giving some reconsideration to just how they want that constituted a walmart really has to make a somewhat similar decision, but their decision is from what end producer to buy things >> are we going to do nafta before this other stuff is finished? are we going to have canada on board? what do you think? where are we on this >> well, the ustr already filed

with the congress the notice regarding the transaction with mexico >> okay. >> and very shortly, the details of that should be released to the public after we're through the consultation period with the congress the filing also indicated that we're totally happy to have canada join if they wish and if they don't, we will go ahead, simply, with mexico >> so we're going to let you go. we only have a few minutes left. you think we're going to hear today, tomorrow -- will we hear this week about whether it's still on with china? in terms of delegations coming over here. >> as i said in the beginning, our purpose is to have constructive negotiations with the chinese to resolve the fundamental issues so the question about whether or when to have a discussion is very importantly in their ballpark it's a little disappointing that

the earlier tariffs haven't resulted in more constructive dialogue, but we hope these will >> secretary, thanks again for coming on this morning we appreciate it whenever you do come on the show >> thank you very much for having me on >> secretary wilbur ross coming up, brian sullivan is in huntsville, alabama, with polaris ceo. and later, we'll talk tariffs with jay timmons he's ceo of the national association of manufacturers we'll be right back when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you. a reliable income that lets you retire, without retiring from life. thatower of fic.

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a new round of tariffs for china. >> the purpose of the tariffs is

to modify china's behavior >> china promising to fight back we'll get the latest from washington and beijing and find out how the markets are reacting that's straight ahead. are manufacturing jobs in jeopardy ceo of polaris joins us to talk about tariffs on steel and aluminum also what it means for his business plus a new documentary about faith, hope, and science film maker ken burns and john noseworthy join us the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome to "squawk box" here on cnbc we are having fun. that's the good news i'm andrew ross sorkin along with becky quick and joe kernen.

take a look at u.s. equity futures at this hour they are higher after falling on news of trade tariffs imposed on china. we'll have a lot more on that topic in a moment. fedex shares, they're falling in premarket trading. fedex reported a profit of $3.46 a share. falling short of the $3.81 consensus estimate you're looking at that stock right now primarily due to a move to accelerate pay raises following pay reform this involves a lawsuit over merchant fees. it was settled in 2012, but that settlement was thrown out by the courts going to be paying an additional $600 million brings the total amount of that settlement to $6.2 billion most of which, by the way, has already been paid. you're seeing that affect the stocks only marginally

and keep your eye on the association of home builders they're going to release their index at 10:00 a.m. this morning. that index expected to fall slightly for september the united states -- we just had secretary ross on. as i said, the commerce secretary about the decision >> the purpose of the tariffs is to modify china's behavior especially in technology transfers and other abusive tactics such as subsidies and market limitations the real purpose isn't to end up with tariffs real purpose is to end up with a level playing field. >> eunice yun joins us from beijing. did you watch secretary ross when he was on >> yeah, i did i did. >> i -- anything that raised

your eyebrows on what he said? i mean, are they ready to go to half a trillion on -- 25% on half a trillion. it's like, i don't know -- they're not bluffing, i don't think. i don't know what that means >> yeah. there were a couple of things i was thinking about because earlier today a prominent official at the chinese securities regulator actually said that president trump's tactics won't work and he also said that the economy here is strong enough to be able to handle more of the tariffs. in fact, he said that if president trump does go ahead and impose tariffs on everything that the chinese send to the united states, it would still only hurt the chinese economy by 0.7%. so they are ready to continue. as you had said before, go to the mat on this issue. he also brought up something else you guys were talking about on negotiations. he said that the trump tariffs in this new round had poisoned

the atmosphere of these negotiations and that's also what the commerce ministry said today a little bit less strong they said that there's now new uncertainty in the negotiations. so everybody that i was talking to here in business people or in the government thought that it is really unlike ly that the vie premier is going to go to washington as he was set to do next week to talk with mnuchin they said he would lose way too much face. also one of my sources in the government had said that he has already lost a bit of standing because from the rank and file he's being blamed for some of the issues china has with the united states. so the risk for him is really, really high at this stage. >> there's a lot of people that have com on the show in the past and said, you know, we do need

to do something about intellectual property theft, but i disagree with the way the trump administration is doing it they're not getting allies involved we all need to band together with the eu and japan and everybody else and put up a united front to do this. and wilbur ross seemed to indicate that they've done that. i wonder if some of the criticism from people that want to do it but think we're doing it the wrong way, i wonder if they're addressing that right now. do you get the feeling -- does china know it's not just the united states now? >> right and so there are actually a lot of people ear, as well, in the business community saying they agree with this approach in fact, i was talking with the u.s./china business folks. they were saying that they believe china does have to be -- the issues of ip and technology have to be addressed with china, but they just don't agree that tariffs are the way to go with this i've heard many times before that people say that the united states should collaborate with its neighbors.

but also there were some interesting surveys that had been coming out from the american chamber of commerce as well as the u.s./china business council. so the chamber of commerce said three out of four companies now they've surveyed have said they expect to be hit by this latest round of tariffs two out of three think they're going to be hit by the chinese tariffs. and already, more than half say they have experienced what the chinese described as qualitative measures so these are tax audits, greater scrutiny and inspections they just fear that's going to get worse. >> well, i don't know. we're waiting for some type of big market reaction, if it's a full-blown trade war, it could happen any time, i guess but we shouldn't think, well, we're okay we shouldn't get complacent. markets are up again today they were down a little yesterday. but this is getting serious. >> joe, a couple -- if i have a couple more minutes, i mean,

i'll try to keep it to a couple seconds. so the expectation now is that china has said that they're going to -- they have no choice but to retaliate simultaneously. so now people here think that that means on september 24th, china is going to slap the tariffs on that $60 billion worth of goods even though they haven't set it yet. then the other measures are as i mentioned the fear about these extra qualitative measures then finally something new has come up. that was described by the former finance minister who said over the weekend that china could use export restraints. so these would be restrictions on chinese companies from selling important components to american manufacturers and something that's come up is the idea of the rare earths. so china is a huge supplier to the united states of rare earth metals and rare earth metals were taken off of the u.s.'s list so now there's been this talk of will china restrict rare earth metals which are used in

electronics, radars, as well as other products in order to punish the united states >> although if we were to go ahead with the rest of the threats, you'd be seeing everything on the list part of the problem is there are different time frames in these societies. china thinks it's helping and americans have a shorter time frame. that's like a 4,000-year-old civilization going up against one that's less than 250 years old. we want progress faster, want to see things moving. there's got to be a culture clash there. >> different time frames and also different political systems. the political systems that are clashing right now, you have president xi jingping who has a tight grip on pretty much everything versus president trump who still has to accommodate what the public thinks >> got to find some of these rare earth elements somewhere else up on that asteroid. send ben affleck he probably can't go right now

bruce willis remember, there's, like -- supposedly -- why are you laughing you can't go right now we've got to send other people up there imagine you had a gazillion dollars. elon is thinking of it asteroid mining. things like that >> eunice, thank you very much eunice yoon. let's talk about the impact on the markets. joining us is head of global equities research at nuveen. and the co-managing partner at douglas c. lane and associates why isn't the market reacting? what do you think, sarat >> i think a lot of this is embedded we've been talking about this for months this was expected. when we see earnings season, how is this going to play out? i think that's going to be an important part if costs to the consumer and industry companies are going to go up, that will be affecting the stock prices but at this point, it's still

going back and forth and we haven't seen the rubber hit the road >> do you think the market is betting a negotiation takes place and this doesn't come to fruition >> i think the market expected the 10% hit on the $200 billion but not the 25% coming in january. if you add it up together, it's about 3% to 4% to earnings for next year. but at the same time -- >> 3% to 4% on the s&p earnings? >> for next year i think that's actually manageable, quite frankly. but i think what you have to think about, let's hear what the companies have to say. let's see what kind of cost and restructuring they're going to do and i just feel like at these valuations, the market multiple has gone to 16 times this year so that's where i think we're pricing in a lot of it if we go up a whole $500 billion, that's probably an 8% to 9% hit to earnings. that's much more meaningful. we have to watch it and be

careful. but i listen to what fedex said last night they said china's slowing a little bit but they have pricing power and they had a good quarter ex-the compensation issue you mentioned earlier. so i think companies are ready and they're handling it for now. >> so i think the unintended consequence of something like this is to watch inflation if wages go up, that could have an effect on interest rates as well >> how soon would something that like play in >> i think to stephanie's point, if you see 25% in january, that could be pretty quick. if companies pass this on and it actually sticks, then you will see inflation. actually, the perception of inflation will cause interest rates to start moving. i think that could be a fear for the market >> this is a big difference if we're talking about three morntmornt months, a year, two years. how do you mark that >> i think the market is saying there's going to be a type of negotiation. in the short-term you get a 3%

hit, that could be a one time and there will be sectors that get hit more it's really a watch and see. but if it stays longer and if the chinese take a much longer view, this could have a longer term -- you could get a flat to down market. >> it's interesting what groups led yesterday. it was the cyclicals it was energy. it was growth that got hit so growth is actually a little bit more vulnerable. i still like a combination of growth and value but the valuations for some of these have got hit since march, the trills are down something like 15% to 20% on average. they expect by the fourth quarter. that's why low stocks are rallying they have a plan in place. >> thank you very much great to see both of you some major flooding is continuing in the carolinas

after hurricane florence contessa brewer joins us from lumberton, north carolina. she has the latest hi, contessa >> reporter: hi, joe the good news this morning is the lumber river is receding but it's still running at 22 feet. that is well above flood stage and it's still running at record flood stage. the record previously was 21.8 feet you can see it behind me it's not the only river of concern though the cape fear river is expected to crest tonight into tomorrow for fayetteville, especially, that's a massive concern the cape fear river is running already at 58.9 feet flood stage 42 feet. and in south carolina, we're not expecting to see the waccamaw river crest until saturday it will break flood records if it crests at its 18.7 feet let me show you the flood map the u.s. government puts out and shows you all of the creeks and the streams and the rivers that

are problematic across the region this is only the major flooding, okay and it's causing problems throughout south carolina. come back out to me live i want to show you why this river, the lumber river, is right where csx tracks cross you can see them behind me in many places, the flooding has washed out these tracks. we know there was a csx train that derailed on sunday about 70 miles from here, just wiped out. it was carrying chemicals. we have a drone shot from overhead amazing pictures that we got from jimmy edwards we met the guy who was leading a team to respond to it, and he was talking to me about the problems of trying to get where he needed to bring rocks to try to build those tracks back up. here he is marion clarke. >> it is hard. so much road closure you got to wiggle and szig and zag to get around. they say 38 is closed, but i see

people going that way, so i'm going to try it. >> reporter: still 357 major roads in north carolina closed it's still a major problem trying to get around, guys >> contessa, i've seen the estimates of damage ramp up as they are still calculating costs from this flooding as you point out is still on the way. i mean, when do they expect things to truly crest? is that later today? >> well, so you're looking at the cape fear river which crests but that doesn't mean the flooding subsides immediately. they won't know damage estimates until the flooding is over the waccamaw river which is sort of this northern south carolina river not expected to crest until later this week. we saw it flooding farms how do you calculate the damage to the harvest until it's over still ongoing. and by the way, for people trying to drive through i-95 north carolina, it's still not possible you still need to go way around north carolina if you're heading north or south on that major

thoroughfare >> thank you very much contessa brewer. when we come back, avoiding political pitfalls when starting a business bradley tusk has a new book out that tackles that topic and much more he is our guest after this break. stay tuned bcg quk x"n in"sawbo o cn your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. healthier brain. better life.

welcome back to "squawk box" this morning there are thousands of ways for a start-up to die. everything from lack of funding to a lack of vision. but political pitfalls might actually be the biggest buzz saw that can take out a disruptive start-up idea these days joining us right now is bradley tusk founder of tusk holdings. his new book is out today. "the fixer: saving start-ups from death by politics." he has helped many-a-company with this most famously uber welcome to the show this morning. congratulations on the book. >> thank you >> when you look at start-ups today and you look at the political environment, especially these tech companies, how much of them are needing to actually deal with the law and deal with politics and deal with

regulation and are some of them being developed effectively to skirt or part of the business model is to change the regulations? >> so first answer is a lot more than they think. right? so typically i think a lot of founders are mart on creating a new service and business the notion they take government politics seriously alludes a lot of them. i think as uber and airbnb, the notion has started ton dawn on people i meet with a founder and he or she says my goal is to evade the law and get away with stuff -- >> but that was the case in a couple of instances. >> what tends to happen is founder comes up with an idea. the law is silence as to it. if they would have thought of it, they would be entrepreneurs and not sbrbureaucrats. >> the ones that have been more successful, the ones we learn

about have been the ones that didn't blindly do things that they didn't know weren't approved they did things intentionally, quickly. doing things before the regulators could get wind of it. it's more of a beg for forgiveness. >> the book gets into that when do you ask for permission or forgiveness i think of the early days at uber and we took the beg for forgiveness approach we wouldn't exist today if we didn't take that approach, so yes. but there are others like fan duel they're not going to start off with betting licenses until we win them from each state and have the right to do it. >> at least -- appears if this a broader and related to entrepreneurs. just the idea of a sort of libertarian approach or take to business and to politics is that just silicon valley? do you think that --

>> i think many want to be left alone to be told what they can and cannot do. if you're going to disrupt the regulated industry, "a," laws get in the way and "b," when you take market share away from someone, they don't thank you. they punch you in the nose as hard as they can it's not just trying to evade and be sneaky. all of a sudden whatever it is, it's really powerful and got a lot of money, getting new regulations imposed and you can't compete. >> everyone talks about regulating big tech right now. whether it's facebook or amazon or whatnot are you of the view it's going to come to pass? >> some of it will many of those companies didn't on the front end so there was no social media platform like facebook so as a result, the kind of pressure most start-ups face today where they then have to figure out the framework, they

don't have to. then it was oh, we got to deal with this thing. yeah i think ultimately some form of antitrust is probably coming against some of these big companies. >> one other related question because we're talking about when it comes to benioff who just bought salesforce and amazon do you think they're doing things in the public eye, does it increase the risk for the company? >> it depends, right it seems to with amazon. trump is obviously unhappy with his coverage by "the washington post." i think in other cases like rupert murdoch has helped him politically on things like avoiding antitrust issues. so it depends on how you use it. >> thank you very much >> thanks for having me. >> the book called "the fixer: saving start-ups from death by politics." coming up, we've got the ceo of polaris on trade, tariffs, and the state of his business. then ken burns has a new

documentary. he'll be in. right now the futures have been up for most of the session. "squawk box" will be right back. really want to be there, but you can't. at cognizant, we're helping today's leading media companies

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♪ still to come this morning, are manufacturing jobs in jeopardy because of tariffs? brian sullivan has a preview of what is coming up on the show. brian, good morning. >> becky, good morning thank you very much. okay here is the quandary this ranger is made by polaris here in huntsville, alabama. we make it here, ship it to china. it's whacked with a 40% tariff if you try to make it in china to get around the tariffs they have, president trump may come after you. how do you fight free trade, fair trade, and balance out tariffs and trump? we're going to find out. the ceo of polaris is going to join us in a couple minutes. we'll talk about all those issues manufacturing, working in america, and being competitive around the world into everything,

and everything into the cloud. it's all so... smart. but how do you work with it? ask this farmer. he's using satellite data to help increase crop yields. that's smart for the food we eat. at this port, supply chains are becoming more transparent with blockchain. that's smart for millions of shipments. in this lab, researchers are working with watson to help them find new treatments. that's smart for medicine. at this bank, the world's most encrypted mainframe is helping prevent cybercrime. that's smart for everyone. and in africa, iot sensors and the ibm cloud are protecting endangered animals. that's smart for rhinos. yeah. rhinos. because smart only really matters, when we put it to work- not just for a few of us, but for all of us. let's put smart to work.

♪

good morning welcome to "squawk box" right here in times square mixed quarter for two companies that just reported this morning. general mills reported a quarterly profit of 71 cents per share. that's 7 cents above estimates revenue came in below street forecasts. the company did reaffirm its full year profit forecast. autozone profit coming in at $18.54 per share that compares to estimate of $17.92 revenue missed estimates however, autozone same store sales up 2.2% compared to a year earlier. >> won't split their stock anymore. why doesn't anyone split their stock anymore? when did everyone decide to be berkshire hathaway what did they earn $18 a share? >> yeah. two familiar names in the test preparation business. buying the test prep business of

baron's. terms of the deal did not disclose kaplan formerly owned by "the washington post. that's an interesting deal there. >> berkshire hathaway is 3 324,000. >> they're getting expensive aren't they? >> they're up there. they started down in the 30s yeah all right. one company watching the trade wars very closely is polaris brian sullivan joins us from huntsville, alabama. he has a special guest good morning again >> good morning. we wanted to come to huntsville because this is where the polaris ranger is made all made in america sold mostly to americans made by americans with mostly american parts but yet still impacted by tariffs. let's find out why joining us chairman and ceo of polaris scott wynn >> thanks for being here we have a wonderful workforce here make great products but certainly dealing with a few

issues with the latest trade war. >> okay. let's talk about this. here we go you said something to me that was very interesting which is even if you buy parts that are made in america for your rangers, you're getting whacked on the cost side because manufacturers have decided they can raise prices >> well, the 232 tariffs raised the prices on imported aluminum and steel but the domestic suppliers or producers they had the opportunity to pass on price increases they hadn't been able to get for some time we saw almost an immediate increase in our steel and aluminum costs even though we were buying it domestically. >> so it's kind of a second derivative or second tier impact of tariffs your products aren't subject to tariffs here, but you're still seeing the cost increase >> well, you know, we buy roughly 80% of our parts here in the united states from domestic

suppliers. but the portion we buy from china is a big hit to us there's going to be another significant impact to us so we're taking a lot of efforts to communicate our concerns in washington to make sure they understand while we agree with the long-term goals of the tariffs, because certainly getting to freer and fairer trade is certainly in our best interest we just cannot have a disproportionate impact. >> okay. here's the challenge i see for you, scott, as a ceo if you sell that ranger behind us into china, you get hit with a 40% tariff immediately when it docks there, right they're not making it fair >> not at all. >> but if you make it there, president trump may come after you. are you afraid of retaliation because you have to make things overseas >> i think the president is

taking a very important step to get us to a freer and fairer trade goal in order to get to that step, he needs to make sure we get china to the negotiating table that's what he's working to do i'm confident in my conversations with the vice president and other parts of the administration that that's where we're going to go hopefully very quickly. in the interim, it is damaging to potentially our customer ifs we have to raise prices. >> did you communicate this recently to vice president pence? >> i did >> and what did he say >> he expressed confidence that we were ultimately going to is get to the other side of this quickly. >> what is the other side, scott? >> i think the other side is where the 40% tariff on our rangers going into china will be reduced or eliminated. and the subsidies going to the chinese companies from the government would also be eliminated that's ultimately what they're working towards. i'm all for that i think the president's goals are perfect aligned with the interest of american manufacturers. >> but you are going to start

making some motorcycles in poland, correct? for the european market. >> we are. >> is that stealing an american job? >> absolutely not. so we built a plant in poland. we manufacture 90% of our offroad vehicles there we're going to start manufacturing motorcycles there just because it makes sense for us logistically. >> joe >> just wondering, if i got a gift certificate, i don't know what i'd use it on at polaris. you know what i mean it could be a snow mobile. it could be -- i don't know. one of those three-wheel deals can ki ask you -- >> what is joe going to do with a snow mobile? get in here with a question. you don't need a snow mobile >> i would go for one of each, joe. >> it's an r&d question. i want to know is scott working on anything that flies yet >> that flies? you know, i started my career in the aerospace industry, joe.

that is not an -- we'll never go there. >> no? too dangerous? i mean, there will be drones where people go -- and taxis and all that it's a natural for polaris >> it is going to be a wonderful market for somebody, probably, but not polaris. >> by flying, maybe we'll get that slingshot over 100 miles an hour >> jet packs are not feasible either i want to fly. there's nothing you can do >> our razors can jump a long way. that's as close as we're going to get >> speaking of the razors, can you raise prices if costs go up because suppliers are able to charge you more because the tariff goods go up so they jack their prices up too. can you pass that through?

>> our impact in 2018 is going to be about $40 million from tariff-related costs we're pasing some of that on but we're in a competitive industry one of the concerns is our competitors are either japanese or canadian based. they're sourcing parts from japan which aren't tariffed. or they're sourcing into mexico. also avoids the tariffs. >> so you're a company that wants to make stuff here in huntsville american products for americans sold to americans with american parts. but you're still getting squeezed on the cost side. you've got a national, international audience right now, scott what is your message to the administration about being able to keep jobs in america but accomplish their goal of getting china to play fair >> well, i think the goal is just to get to the other side of this quickly i mean, they are doing a great job of setting us up for a good

negotiation. we just need that negotiation to happen the impact on our business, our customers, our business, our employees. we have over 5800 manufacturing employees in the united states we need to keep those jobs and add to those jobs. >> what did you think when you saw what happened to harley-davidson? president was love love love, all of a sudden he's attacking harley executives saying maybe they should leave america. what did you make when you saw that >> our approach is we are not going to close plants and move jobs overseas. we talked about setting up motorcycle manufacturing in poland, but we're adding jobs in spirit lake while we do that so we're not -- i think it's just about how you do it >> so that is spirit lake, iowa. scott wine, polaris. we are here in huntsville, alabama. if you took one of these rangers onto the green, maybe use it as a golf cart instead, what would the reaction be? would they -- >> we're still looking -- andrew

and i have been looking for a vehicle with a side car, right >> well, we've been debating who would sit in the side car. >> we don't know >> you and andrew -- >> now, wait a minute. >> you and andrew, how about this you and andrew go for a little -- >> you can't do the -- you didn't even know what one down and five up was. >> no, i don't >> so i'm driving. i'm driving. scott's like, get me out of here. >> by the way, these are only made -- joe, you'll love it. these are only made in sticks. only a manual. there is no automatic. >> that's what i mean. so i'm driving so andrew's in the side car with one of those -- >> that's pretty cool. >> -- the helmet. >> with the scarf. >> yeah. >> okay. all right. brian, i like that tell scott i'm disappointed because i want to fly, but the side car might do it anyway good job, brian. those are a lot of tariffy questions though i want to know about the future. you know what i mean

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our next guests tell the tale of how a minnesota institution successfully navigates the changing demands of the u.s. health care landscape. let's welcome documentary film maker ken burns whose new film is called "the mayo clinic: faith, hope, science." also president and ceo of mayo clinic dr. john noseworthy it's great to see you both >> good morning. >> ken, i think of the documentaries you've done. you take on huge nation topics to the nation's best yud with the national parks why the mayo clinic? >> i think it fits right in. it's a quintessential american

institution. it could have only been created in america it's obviously like the subjects we've done, the delicate subjects we've done on war are about life and death situations. and the thing is doctors think about things being counterindicated everything about the mayo clinic is the opposite of what we expect from hospitals and health care and for profit, non-profit, all that sort of stuff so when you learn the origins story which has begun with a group of nuns and this small family practice on the edge of the frontier and you realize they're named the best hospital in the united states meaning the world you want to know what's the secret sauce with mayo, there's no secret sauce. they're willing to share everything with everybody at all times. they're not holding things to the vest they are sharing it. they put their doctors on salary, no unnecessary tests and procedures the care from the beginning to the end is focused on the patient. seems obvious, but in our health care system, it's usually the doctor who's the center of things or it's the administrator

looking over the doctor's shoulder or worse than that, the insurance person looking over the shoulder mayo puts the person first when they ought to. in an environment we're still struggling to get it right it ought to be one beacon we lean towards simple answer, it's a hell of a good story. >> what got you to the story >> i went there to get a tune up an annual checkup. and i was so impressed stuff that we normally take for course -- you know, i had my blood taken at 7:00 a.m. but 8:30, 9:00, all the doctors had those tests. not a week later i began to delve into the history and learned the story of this devastating tornado that ripped apart rochester and how the sisters of st. francis and the mayo, the father and his two young sons, sort of came together and made a pact mother alfred had a vision from god she was to build him a hospital there in the corn field and that it would become well

known for its medical arts and he's kind of an agnostic he says, sure, you'll never be able to do it. she goes, if you do it, will you be its chief surgeon he said yes. the result is the mayo clinic and st. mary's hospital which is still there to this day. and they are still at the cutting edge literally and figuratively of the best in health care. what could be a better story >> dr. noseworthy, we've known you for years as a steward of the mayo clinic. we know what a fabulous institution it is. no better praise than hearing it from ken burns and telling all of this. what's different about the mayo clinic and why isn't it replicated in more places? >> thanks, becky it's good to be back as ken has said, i think we're founded in our values which is collaborative teamwork we learned that from the franciscans and our founders and we have a system of delivering care, an engineered system of delivering care. so physicians, nurses, pharmacists, who are people of

service that are supported by an engineered system to allow them to be better doctors, better nurses because of the system >> and shared information and making sure everyone's on the same page. >> we've shared everything forever. that's a hard culture to replicate. because it is so well established. that's why people come and work there and stay there others who come who we ru krecr those about themselves and not the patient, they don't fit and go elsewhere >> in terms of how selective this is, you make harvard look like an easy walk-on >> i wouldn't say that >> well 50 out of 3,000 applicants just opened up as part of the school of medicine's inaugural class. that's pretty selective. >> well, it is selective i think one of the interesting things your viewers might be interested in is when a physician is recruited to mayo clinic, regardless of where they came from, they're not full members of the mayo clinic staff until they've been there for three years and people vote them

onto the staff they fit it's going to work out and when that happens, we have a 98% retention rate so they are hand selected for people who buy into the culture of sharing and putting the patient first. and that works >> ken, you're a story teller. tell me another cool story you learned there. >> as we're approaching the broadcast of this, the mayo clinic didn't have to open everything up to us. and we've had extraordinary access to their archives and operating rooms and surgeons and physicians and nurses and to their patients that are in the middle of a process that is life and death. and the last thing i would want would be a documentary film crew sticking a camera in my face asking questions during this process. and yet the culture john is talking about that they've created there is so special that our own modest little crew sort of fit in and we've made friends or lives among the patients. but particularly among the

surgeons and the physicians that we've met and gotten to know and it's been one of the most satisfying experiences i've had in my professional life. >> do you think -- i think cleveland clinic, i think anderson, i think mass general are they all different they all have different specialties? they're all -- i mean, you talk about health care in the united states these are the preeminent places in the world >> well, there are stand alone cancer clinics cleveland clinic and mayo clinic to give two other examples embed cancer care with everything else they do. it's a hybrid model. >> both clinical and research. >> yes and they are all great institutions we're all a little different. >> what you said makes me think it can't be replicated everywhere the fact you vote people on or off the island, not everyone is going to be filled in. it's not going to be health care for america developed that way >> well, i think it's a model that will work for certain

areas. our specialty is patients with serious and complex illness. and that works very well to get answers quickly for those patients so people travel, have forever your film shows that people have migrated there for those answers. and that's what we do particularly well. that's our model, becky. >> dr. noseworthy, i know your tenure ends at the end of this year we want to talk to you again about the stewardship you have there. hopefully you'll come back to talk to us >> i'd like to do that >> thank you for being on. again the film is called "the mayo clinic: faith, hope, science. coming up when we return, oracle stock taking a hit after 'rgog ing revenues that missed wee into talk to an analyst after the break. "squawk" returns with a big hour just ahead [ upbeat music ]

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is the world ready for me? through internet essentials, comcast has connected more than six-million low-income people to low-cost, high-speed internet at home. i'm trying to do some homework here. so they're ready for anything. oracle shares are down in premarket trading. the company missing revenue estimates in the latest quarter even though it beat as far as the bottom line goes where analysts were. joining us now, christopher everly at nomura this isn't the first time this has happened, right? >> right that's correct >> and similar reasons, too. >> i think kind of the big picture people need to realize is they're going through this megatransformation they're trying to move all of their applications and infrastructure from on premise to the cloud so this is kind of a slow-moving

process. it takes time to move all of these applications if you look at historically some of the other larger megacap companies that have gone through this process, they've moved much simply applications from on prem to the cloud most of the applications and technologies that oracle plays in data base being the largest, the comfort is not yet there to move those databases to the cloud. or the erp systems are yet to move and begin that transition, i think you'll see a big one behind oracle. >> recession lows back in '08, this has been a good tech stock. it's not really lagging all of its peers. it's almost $200 billion it was not a $200 billion company. >> and i think that's kind of --

you take a step back and look at it it's not going to be a high flying growth stock. but if you look under the covers, there are several of these application cloud businesses growing 40%, 50%, 60%. that's part of what we look at as we go through this transition, i think some of that will start to show through over time >> so they don't need to buy people >> and they're spending -- i spent $10 billion last quarter on buyback they spent over $20 billion in the last 12 months >> great we got to keep it short. chris, thanks. chris eberle of nomura that stock is down a couple of dollars this morning when we come back, jay timmons of the national association of manufacturers and nigel travis "squawk box" will be right back.

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challenge tesla in the market. plus fly me to the moon. spacex says a japanese billionaire will be its first-ever space tourist as the final hour of "squawk box" takes off right now ♪ live from the most powerful city in the world, 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 andrew -- you read the lead one >> yes now i'm onto this other one. >> all right the futures -- i read that lead one. the futures right now indicated up, up more. up 78 on the dow the 10-year back up now.

we need to get the exact feel for what kind of interest you're looking at meantime, let's talk about today's top story which is of course the trade war president trump putting 10% tariffs on $200 billion in chinese goods. we spoke with wilbur ross on "squawk box" earlier this morning. here's what he had to say. >> the purpose of the tariffs is to modify china's behavior especially in technology transfers and other abusive tactics such as subsidies and market limitations the real purpose isn't to end up with tariffs real purpose is to end up with a level playing field so that american firms can compete properly >> elylan mui joins us with mor.

>> chinese officials put out this statement to protect its legitimate rites and interests and the order in international free trade, china has no choice but to retaliate simultaneously. trump's tariffs will take effect on september 24th. that rate starts at 10% but it jumps to 25% on january 1st. thousands of products will be affected across almost every sector of the economy. companies have been aggressively lobbying the administration to get their product rest moved from a draft list that had been published over the summer. only about 300 items were dropped. that includes smart watches like the fitbit and apple watch also off were rare earth elements china is the biggest producer of those metals and they are critical components in electronics. also gone are bluetooth devices, chemicals used in manufacturing and child safety items like bike

helmets and car seats. the tariffs do seem to be going for further trade talks. chinese officials saying there is, quote, new uncertainty in this and america's protectionism cannot be -- president trump has promised to tax the rest of the goods that we get from china he's calling that phase three. >> okay. we'll be watching. i don't doubt it anymore joining us now jay timmons from the national association of manufacturers. we're slapping again wi we don't ease into these slap tariffs that's the operative term here you're behind this >> i think it's more of a punch to be honest with you. look here's the bottom line i was glad to hear what secretary ross says. the ultimate goal is not tariffs. the ultimate goal is to get china to play by a set of rules.

to quit stealing intellectual property and to play fairly. and when china talks about restoring the rules of international trade, they're not playing by the rules right now our issue, of course, is that tariffs drive up the cost of -- we want to see the administration successfully bring china back to the table for negotiations we've been calling for a rules based bilateral agreement for many months now. we want to see that done >> just philosophically, can we actually become an economy again that is really dependent on manufacturing? remember the narrative that that will never be what we are any more and -- >> wow, joe. talk about a slap. we are an economy that's -- >> i want to be. there's no magic wand.

we're not ever going to bring these back there's no magic wand. remember all those comments? >> it's all b.s. >> it is >> yeah. we got 500 jobs open in manufacturing right now. we are desperate to get manufacturing workers. manufacturing is growing in this country because of tax reform and regulatory reform. this tariff war, this trade war has the potential to set us back on those gains and we don't want to see that happen we want to see china play by the rules. i'm sitting here with a mighty mug that is manufactured or is a product of a united states manufacturer, the intellectual property is owned here in the united states by the mighty mug company. it is cheaper to send that mug from china because of an outdated 150-year-old rule on shipping rates than it is to ship it across the street here in this country. that's not fair. that is not fair to manufacturers here in the united states we've got to get these rules under control. china has got to come back to

the table. >> if they don't, then we just had polaris on and if it costs too much -- or harley-davidson, they've got to -- the tariffs sometimes are counterproductive if they cause companies to move off shore to build them. >> that's clearly a long-term concern. there's no question about that but look china needs to be isolated by the folks around the world, the countries around the world that want to play by the rules. that want a true system of international trade that is free and fair that's the important goal here to get the rest of the world to focus just as we are >> do you have any concerns? i have heard people behind the scenes complaining about it. how the tariffs are put on and aren't and how you get an exemption from that list we saw the list today that goes out does not include some of the 6,000 items that we had seen previously on it things like highchairs for babies and smart watches

how you figure out who gets an exemption and who doesn't. >> i really can't comment on how those decisions are made obviously we have manufacturers who are relying on inputs. you mentioned syst eed some of t the top of this story. they're trying to get those exemptions i don't know how those decisions are being made in commerce but if manufacturers have a concern about a product, we're going to be advocating for them. >> five years from now we will have how many more manufacturing jobs if we continue to successfully deal with some of these trade issues, do you think? this is a long-term sea change and what we saw for 20 or 30 years. >> we have been on an upswing the last several years that has been supercharged over the last few months because of

regulatory reform. i believe if we get these trade issues under control and we're able to deal with them successfully, the manufacturing sector in this country is going to continue to grow and to thrive we already predict by the year 2025 that we will have to fill 3 3.5 million jobs in manufacturing. some of that, of course, is due to attrition or folks retiring and that 2 million of those will be unfilled because we can't find the folks that have the right skills necessary to do those jobs so education and training is going to be an important component of building the manufacturing sector in the future >> you have some comments on the postal system in manufacturing >> yeah. that was my point on mighty mug, right? so there's 150-year-old agreement in place that allows china to act like a developing country like botswana. so they get the same postal rates as a very poor country china is anything but poor today. they should be paying the same

types of rates that a developed country like the united states is for international trade >> who oversees that >> i'm sorry >> who oversees that >> state department. there's an international if commission, but the state department can affect change there. we're going to include postal rates in it. if you take care of the intellectual property and china has cheated by stealing the intellectual property to produce these mugs manufacturers can compete with china. but right now in many cases, it's difficult to do that because of these outdated rules. >> what intellectual property did they steal to make a mug >> this particular mug -- i wish i could demonstrate it for you but it won't tip which is a good solution for me. i'm always spilling coffee on my desk this one will not tip. >> isn't that just design?

>> it's a design that is very specific to this mug it is intellectual property that is copyrighted here in the united states. it should be protected around the world, but china isn't allowing that to happen. so they're allowing this theft of intellectual property apply that across the board in many different products and suddenly you see we can't compete if another country is allowing the theft of our ideas and our products >> all right, jay. jay timmons, thank you dunkin' donuts manufactures doughnuts. >> they do >> jay, that's coming up >> i'm go doing get some of those. >> they're in front of andrew. >> it's not fair i'm trying to -- >> are you going to eat any? >> no. >> the only one you want is right here if i take it out of there, are you going to be upset? >> no. >> i don't want it >> i get excited see, aren't you happy? got to like it got to make some things.

>> i hope we do. >> we'll all be on ubi like in that spaceship. >> oh, from the cartoon? >> no, from "wall-e" just watching our stupid screens eating doughnuts >> yeah. all right. we have a few stocks on the move this morning to tell you about. it was a mixed quarter for autozone earnings beat the street but same store sales and revenue fell short that stock is off by 5.7%. general mills also posting better than expected profits but missing the mark the company did reiterate its full year forecast visa and mastercard signing an amended settlement agreement involving a lawsuit over merchant fees. it was originally filed back in 2005 the case was settled in 2012, but that settlement was thrown out of the courts. visa will pay an additional $600 million. mastercard, an additional $800 million. and that brings the settlement to $6.2 billion.

walmart rated outperform at bmo capital. the firm says walmart is positioned for profitability and then amazon plans to relate eight new elective -- the devices include microwave ovens and an in-car gadget details released this month. also ed ex-shares under pressure this morning falling short because of a move to accelerate pay raises that stock now is down by 2.25%. coming up when we return, don't be afraid to push back dunkin' brands' head is here we're going to do that next and maybe, maybe have another doughnut stay tuned you're watching "squawk" right here

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of the premarket session the s&p indicated up five and the nasdaq now up just under ten. dunkin' donuts likes to tell us that america runs on them but our next guest knows about dunkin' and he says the best businesses are actually powered by something else. joining us now is nigel travis, executive chairman of dunkin' donuts thanks for being here today. >> nice to be with you all >> we appreciate the doughnuts we appreciate the book but what does that mean? the best corporations run on pushback >> it really means that in any organization it doesn't have to be a big business. it doesn't have to be even a -- it could be a not for profit or a sports organization like i run in london. it allows people to have their say to push back and the whole idea is to get the best business solutions you can and to build a business that's sustainable.

over the last nine and a half years, we've done that at dunkin'. everyone has a say everyone's encouraged to have a say. it's about creating not just the challenge part of the culture but the culture at the same time so the book's called the challenge culture. but i divide it into two one is the pushback, the challenge. second is creating a positive environment or the culture and i think a lot of people out there think culture is one of those things you go to the hardware and say i'll have some nails and a culture. it isn't it's something that lives all the time it's something you have to create and it's a very positive environment. but right at the heart of it is this permission to push back and say you've got a different view. >> that sounds like decentralization you don't want yes men surrounding you. why is that important? what are a couple of examples or at least one example of where that decentralization allowing people to push back made you do something differently than you would have done otherwise? >> a good example is at dunkin',

i've run these meetings called coffee chats which are for people down the organization we always describe it as though it's a tv talk show. you can say anything you want about anything and it's not a q&a of nigel. one good example is we changed our whole family policy as a result of those discussions. i think that's a really good example of where we change the culture. we realize we were causing problems for a lot of our employees. so we changed it but we listen to people down the organization and i wouldn't say, becky, it's necessarily decentralization i think it's actually empowering people to have a say so you could have a centralized organization or a decentralized organization it's more the approach that you take >> it's bottoms up versus top down >> very much. >> so when people talk about challenging each other, it can sometimes -- even though you want to talk about keeping a positive environment, you say creates a positive environment the idea of each other is less

positive >> well, i talk a lot -- it has to be done in a civil way. i mean, it can get really nasty. i actually think having been on this show many times, you guys actually create a very positive challenge culture. because you challenge each other -- >> we do we can be challenging too. >> but you do it surrounded by humor. i mean, many times joe will poke fun at you or poke fun at me as he's done many times pointing out how i nearly killed myself on a snow mobile >> you did and we were talking to polaris would you -- i love snow mobiles, but you are a living example of what can go wrong >> and my 15-year-old son has never forgotten it >> turned it over on himself, right? which is possible if you're not careful. >> but the point is i think you have to allow people to make fun of you a little bit. i think that's one of the reasons we've been very successful at dunkin'. that's the environment we have i mean, you're not the god almighty

you are someone who can be approachable someone who's authentic. and i think it's the environment that's so important. >> nigel, you developed this theory in part from your experiences in places like blockbuster. what did you see happen there and what did that teach you? >> well, blockbuster is probably the greatest fun i had ten years i was there. we did a lot of good things. >> you did a hell of a job there, nigel >> i left in 2004, joe good pushback. >> there's a challenge with humor >> but the thing we missed, we had all these technologies coming at us just about every day. we regarded netflix at the time as a small regional chain that wasn't going anywhere. we could have bought it for $50 million. last time i looked it was worth $159 billion reed hastings has done a great job. was taking market share, but subsequent to me leaving we had activist shareholders come in, they focused on retail

thought the internet wasn't going to be a big thing. took all the investment away and as joe says, the end result was blockbuster went bankrupt in 2010 >> there's one left, supposedly. >> there's one left in oregon. payne who ran in alaska, he closed his doors a couple of weeks ago. but i still believe that blockbuster could be here today. look at how gamestop has continued. but the whole point of the blockbuster lesson, i think, becky, is you got to look forward. you got to anticipate the future and you've got to challenge the sta ktus quo as it is today i think we did that most of the time with netflix, we didn't do it early enough >> you were a ceo at papa john's too. any advice you'd offer them at this point >> i was there for four years. we had a great run while i was there. it was interesting working with john as you might imagine.

and what did it do was train me for my next ceo job. i think my advice -- and from what i hear, the board are doing this you have to try and get the franchisees, management, and the board in the same place. and my understanding through sources, you would say, is the board met with the franchisees recently i think that's a really good step you need to have a plan. because franchisees as i say in the book focus on one set of economics. the company focuses on another bridge that gap. and i think the board has done that i think they're taking the important first step and i think they have to get behind their ceo, support it, work with the franchisees because it's a fantastic concept that john invented in a broom cupboard probably the best pizza chain out there. i think it can be back to a great company. >> nobody is getting papa john's

tattoos. >> in russia the day we bought our club, we have several fans and my partner and my name on their bodies. >> and you don't have to give them free pizza for life >> no. we just have to keep winning unbeaten so far this year. >> i think my favorite comment was dissent is not dislocality interesting take the book is called "the challenge culture: why the most successful organizations run on pushback." thank you for being here when we come back, a billionaire is hitching a ride to space with elon musk. guess who thbiioiris ite e llnae

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welcome back, everybody. spacex has signed the world's first paying space tourist the passenger is the billionaire founder of zozo clothing company. japanese fashion guru mezawa he reserved the trip around the world and he is paying to take a group of artists with him. the mission is set for the year 2023 coming up, a live report from beijing as china responds this morning to the newest u.s. tariffs. plus we're going to hear from gary cohn on what he thinks about president trump's trade war. you've got to hear what he said. stay tuned you're watching "squawk box" on cnbc sometimes, they just drop in.

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all right. good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories front aend center this morning, there's a deal announced in the recreational vehicle industry. thor industries is buying irwin hymer. it will be the biggest maker of recreational vehicles. thor says the deal should close before the end of the year in another cross-border deal today, marsha mcclenen is buying jlt for $5.7 billion marsha mclennan is looking to boost its business looks now they're down by 7% athena health tumbling reportedly backed away from its potential $160 per share bid for the software company that's according to "the new york post"

right now chose shares are down by 10.5% today's top global market story, those tariffs president trump going to impose 10% tariffs for starters on $200 billion worth of chinese imports. the taxes will rise to 25% at the end of the year. eunice yoon joins us with more >> hey, joe. the commerce ministry said today that china has no choice but to retaliate simultaneously so that has raised expectations here that china is going to eventually hit back the u.s. with tariffs of their own on $60 billion worth of goods on the same day that president trump's tariffs kick in. that would be on september 24th. it's not official yet, but that's what the expectation is the ministry also didn't elaborate on what other countermeasures are. but one of the biggest concerns among the businesses here is that china is going to impose what they have described as

qualitative measures so that's what u.s. businesses usually interpret as more tax audits or problems at the ports for for their kcustoms approval, et cetera. the other idea kicked around a lot was discussed by the finance minister over the weekend. he said china could adopt export restraints these would be restrictions on chinese companies from selling important components to american manufacturers. and one of the items that could be on that list is rare earths china is the biggest producer of rare earths. the biggest supplier to the u.s. of these metals. and these are important. the commerce ministry also said that these tariffs from the trump administration are now creating new uncertainty about negotiations so earlier in the someday we had also heard from another

prominent chinese official out of the securities regulator who said that the tariffs poisoned the atmosphere around these negotiations and the negotiations that they're talking about are the ones that are supposed to happen next week between the vice premier and the u.s. treasury secretary. the people who i've been talking to -- were surprised by president trump's decision even though it had been telegraphed the discussions seemed to be going well >> okay. thank you for that we will see where all of this heads. meantime, we want to show you some video gary cohn weighed in on the policy last night. he was speaking at a reuters event in new york. this is what he had to say >> the president actually has some very fundamentally correct issues on tariffs. what the chinese have done to us

for the last two decades is just wrong. the ultimate goal we agree upon. the question is how you get from here to the ultimate goal. the president is trying what in in this room, even myself, might consider a very unpredictable path of negotiation to try and get the chinese to pay for the intellectual property, the technology they've been using. >> if we aren't getting paid by the chinese for what we've invented the global economy and globalization does not work. also reflected on the financial crisis and who should be held accountable. >> what laws were broken >> well, people lost their homes. people, you know, the banks took all these risks. >> what laws were broken >> i guess it's -- you know, is being, in some cases, reckless or stupid. >> who was reckless and stupid

was the waitress in las vegas who had six houses leveraged at 100% with no income, was she reckless and stupid? or was the bank reckless and stupid i'm not defending either, by the way. i'm saying the bankers should have done more due diligence or was the appraiser who appraised the house at the last sale because the last sale took place at 50% more than the prior sale and apprised everything who broke the law? >> cohn also commented on jamie dimon and his comments about being president. >> i think jamie would make a phenomenal president i think jamie would be a spectacular president. it's in many respects very similar to running a complex multinational global firm. it really is the problems are different, the magnitude of the problems are different. the impact is different. but jamie would be a phenomenal president. >> gary cohn making news there trying to avoid news on the

topics involved in bob woodward's book "fear." did not address the taking documents off desks and things of that sort >> scott mcneilly says the worst ceo in the country would be a better president than a non-ceo. jamie would be a great president. i don't know if you say your dad made money and i made mine >> relative to our current president? >> you finally convinced me that if a ceo makes a billion dollars, there's something wrong with it. and before -- >> i convinced you of this i have no problem with it. >> you think it's okay for a ceo to make a billion? >> absolutely. >> are you still doing that compensation every year. it comes out and you shame the people that make money >> i don't shame them. whap we do is we look at -- by

the way, everybody does this we look at what the compensation is of public managers. >> my only thing was you -- >> you were trying to make the term you were giving more credit to donald trump as a business person than jamie dimon. >> i was saying he shouldn't have said i earned my money and you didn't just because trump got his to start and built it up. i'm saying jamie would make a good president because he's one of the best ceos ever. but i'm just saying i think that was a cheap shot to say daddy's money. he apologized for it anyway and you've convinced me that ceos should be well paid, but they shouldn't be like the founder, they shouldn't be worth a billion dollars, andrew. i'm with you now let me move on from this you've convinced me. don't you want to convince me to your side of things? >> when i can. it's always an interesting context though >> i see why you did the gary cohn thing now because he was being pro-trump

trade policy i was scratching my head normally you would bury that >> i would not bury that >> you wanted to be able to say he didn't mention the stuff that was pulled off the desk. you wanted to get that in. >> i was just trying to add context to the evening >> i apologize i withdraw. >> if you changed your mind and you're on a team for something, people may not want you there given your statistics and runnings with sports teams you're on. the kernen curse >> that's right. go bengals they're 2-0. i'm thinking about it. >> they were 2-0 look out >> and the dolphins, i'm starting to check out the dolphins they're looking good audi unveiling its first all electric model phil lebeau joins us now from san francisco with a special guest. hey, phil. >> hey, joe. let me bring in scott keo. behind us is the etr o rkson you unveiled it last night

you believe this is going to hit the sweet spot of the market >> if the reaction from our dealers across america -- >> you opened it up for reservations last night. >> we did a special edition. that special edition is already sold out the reaction is quite strong >> the luxury ev market is poised to explode right now. which brings up the question, is there enough demand there? obviously tesla is the 800 pound gorilla right now when it comes to luxury evs. you think there's enough for you there? >> there's enough room for us. i'm not sure there's enough room for everybody, through there is for us we project in the next couple of years ev premium sales up to 350,000 units. so i think there's good room for growth but frankly to me it's simple. launch a really cool car that's what they want in the luxury market. this a super cool car. i'm convinced we're going to see the growth there >> you have yet to have this certified in the u.s you expect it to be somewhere in that 260, 270 mile range

somewhere around there, roughly speaking if it comes in below the model x which it's going to be compared to, will that hurt sales will people say i get more range potentially with the model x >> i don't see it that way i think there's a big focus on range, range, range. we have a very large battery the key thing for me is not how far is the range it's do you enjoy it from the first mile this car has room. the car's got technology the car can tow. if you look at driving habits, that's what you're focused on. i'm a fan on does it make sense at mile one. not at 250 or 260 or whatever it goes to. and this car, 100% is going to deliver. >> you get over 200 miles per full range, you believe generally speaking people are going to say, okay, look i have more than enough. >> exactly and again, when you speak to people who drive electric cars, what do they say >> i don't go to a gas station that's what they focus on. a lot of people focus on i'm going to milwaukee tomorrow. not that many people going to mach from new york they pick up their kids, go to

work this is a phenomenal vehicle for that >> this will be built in belgium. there's that potential given the trump administration that there could be a hefty 25% tariff slapped on this. that's another $15,000 to $25,000 depending on the model potentially could that hurt sales? >> look. 25% is a gigantic number let's not mess around with that. but the truth is we've been speculating about this for a long time. i'm a business person. we don't negotiate tariffs if i look at the -- dealers are making money, all the manufacturers are making money, consumers are getting stunning products at a good price the ecosystem works. at the end of the day, let the negotiators do what they do. we think the ecosystem works here well. all we want is transparency. we'd like to compete as well and let the politicians do what they do >> one last question we saw ceo of waymo at your event last night any deal in the works with

waymo? >> not that i know of. but it was good to see john. >> scott keogh, ceo of audi of america. they unveil their first all electric vehicle, the e-tron >> thank you for that. appreciate it very much. coming up when we return, a big night at the emmys the winners, the losers. we'll go through the list in a moment what if numbers tell only half the story? at t. rowe price, hundreds of our experts go beyond the numbers to examine investment opportunities firsthand. like a biotech firm that engineers a patient's own cells to fight cancer. this is strategic investing. because your investments deserve the full story. t. rowe price. invest with confidence.

welcome back to "squawk box. the 70th emmys aired on nbc last night. julia boorstin joins us with the winners and losers >> well, andrew. netflix and hbo tied for the most wins. that is a first. both of them hauling in 23 statues. hbo's 23 is down from 29 a years ago. netflix brought in three more wins than last year. this comes after netflix went into the ceremony with the most nominations. that was the first time hbo hasn't dominated the nominations since 2000 hbo did collect nine wins for "game of thrones." that's the most of any program one of those was for best drama. also got three for "west world." netflix was bolstered by "the crown" as well as "black mirror." other streamers racked up notable wins as well amazon had a big night with eight wins total it was the first streaming service to win outstanding comedy for "marvelous mrs. maisel." hulu brought home four with

"hand maids tale." disney is buying some good awards with its acquisition. fx network winning five total and fox winning three awards ratings for the show will come out later today. we'll have to see how the broadcast and its "snl" host scored with viewers. andrew >> great julia, stay with us, if you could. want to bring in ed guggenheim you look at the world of ott and streaming and last night, does it say anything about the streaming industry right now >> i think it obviously does something that probably isn't too surprising to many viewers but the momentum for streaming services and really advertising free services is tremendous. you look at the wins last night, that's great for the streaming services but really go back and look at the nomination the nominations for streaming services and online services are

up tenfold the biggest of any category. it really shows the appeal of programming on those formats >> and when you look at how all of them stack up and the possibility that apple could jump into the fray, do you say to yourself is there any barrier to entry in this industry? >> well, that's a great question go ahead, sorry. >> oh, no. please answer. then i'll jump in after you. >> thank you yeah i was going to say i think there is some barrier to entry which is there's a finite amount of talent out there i think the best creators, the best writers, the best directors, they are in limited supply and that's why you see more of these agreements from streamers like netflix to try to lock these leaders into multi-year contracts. >> julia >> in addition to locking them into multi-year contracts, i think it's worth noting that netflix spent about $8 billion this year on content

and a lot of that is on, you know, content that's sort of more mass, like the broadcast shows. a lot is on premium content designed to get the attention of award shows like the emmys to really show they're playing on the same level as an hbo now, netflix is spending a lot more on content than hbo hbo spent $2.5 billion last year this year netflix is spending $8 billion. but i think it's taken a lot time for netflix to get to this place. both by ramping up content and growing the variety and a number of deals it has with those premium content creators. >> but i think the larger question -- i think there's many questions going on in this industry right now but one of them clearly is this question of if you have a large enough checkbook, you know, does that -- is that the ultimate winner by the way, maybe netflix is ultimately now at that point because it has such a large checkbook. >> i think it still takes awhile

to get these deals started and to get everything under way. netflix has been so busy making deals with some of the big winners from last night. you look at ryan murphy. he won a number of awards. his shows won a number of awards for fx he's now locked up his next range round of shows with netflix. >> michael >> i think it is important to understand that format does matter as well okay so people enjoy using netflix. in addition to it's convenient and has been revolutionary to both the timing of when people can watch programming, the ease of which they can get it, the fact they don't have commercial interruptions. so you definitely have more streaming services coming in julia mentioned the $8 billion spend number it's actually $13 billion in cash so the amount that they're spending in cash before it's amortized is far exceeding that. you need to have money and you need to have format. but if you do, there's content out there. >> all right michael morris and

of course julia boorstin on the west coast in l.a. this morning. thank you, both. when we return, jim cramer will join us live from the new york stock exchange. stay tuned u e tcngsqwkox" right here on cnbc so, the whole world is talking about ai. big, bold promises like... it'll transform the human race! "squawk box" on cnbc but here's the thing. you don't live on mars. you build wind turbines. answer millions of customer calls a year. like this one: no, i didn't order this. it's terrifying. you run a real business with real roll-up-your-sleeves business needs. and that's why you work with watson. hello. so it can analyze weather data to help retailers increase foot traffic. assist thousands of online banking customers each week. and reduce delays for 25 million passengers. mahalo. watson isn't just the promise of ai. it's the real deal deep learning business ai. that knows your industry, protects your insights,

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jim cramer is joining us now and i thought i love the, 48 cents, i am sorry it was negatively impacted but it is about raising wages for a bunch of guys from tax reform, right >> thank you, thank you. s the this is a strong quarter and they're doing everything right and taking shares and delivering six days a week they're paying people more and since when is that not the american way you take shares and you do better and you pay people more this is america. they're doing what's right i felt the quarter was good. i know the stock is weaker i think people would buy the stock. >> we do it every three months and i have seen fedex opened eight points higher and closing at 10. crazy.

>> just the best >> ceo iconic. >> oh. i mean he was a little brief last night i like the big discourse he gives you. i am not saying the market is wrong. buy it when it is lael doreally. >> when does $550 billion worth of 25% tariffs, when does that cause people to take a step back and say i am going to sell something. does it ever or no >> i think that we just had that great interview with phil and 25% worldwide does matter. but, i think that the chinese uniquely have hurt us. sometimes you have to hurt some american companies in order to teach them lessons >> yes, we had comments with andrew and gary cohn when we first started talking

about it, people thought it was insanity the more and more guys you thin is free market, it is a way to do this and not get kicked around >> i think our company uniquely sold us out. that's ending. i think they get the chinese market and they'll try to refigure how they got to the chinese market i don't think it is all that bad. i know it is further away than what the president want. it is my view and the same view i had for 20 years >> when i asked wilbur ross about navarro, do you think he's behind the scene >> i think he's in charge. i have known that guy forever and i think that navarro understands we got full employment and great gdp if we are ever going to take these guys on. it has to be now the market is telling you that it is going to win

that's what this industrial telling you. i think our future when the chinese market turns, our future turns. >> i want to win >> winning is good >> you know, keep in mind, because a lot of people don't adpr agree with us. >> they want a tie they want to miss extra points and tied >> that was awful. anyway, thanks jim i think we are ready to take them out in a nano second. >> we'll see you in a few minutes. coming up on "mad moy,ne" don't miss the ceo of tilray and square you are watching "squawk box" on cnbc

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i call it my "comfortable future plan," and it's all possible with a cfp® professional. find your certified financial planner™ professional at letsmakeaplan.org. president trump just tweeting china has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me they have been take advantage of our trades for many years.

they also know that i am the one who knows how to stop it there will be great retaliation for china. coming up, tomorrow you don't want to miss this. we got kevin brady joining us on the set to talk about taxes 2.0. "squawk on the street" begins right now. ♪ good tuesday morning, i am carl quintanilla with jim cramer and david faber. the white house announces new tariffs on chinese imports futures are higher despite warning from chinese u.s. manufactures and farmers voices concerns as the u.s.