ukraine. following that oval office blowup between president trump and volodymyr zelensky last friday. today it's tuesday, it's march 4th, 2025, and squawk box begins right now. >> good morning, everybody, and welcome to squawk box right here on cnbc. i'm becky quick along with joe kernen andrew is off today. but as joe mentioned the us equity futures right now seem to be taking things in stride at this hour. you're going to see the dow futures are off by about 16 points. the s&p futures down by three. the nasdaq down by less than a point. it does come after the s&p 500 worst day of

the year yesterday. it was a decline of about 1.75%. it came after president trump announced that these tariffs would be, in fact, taking place, that it looked like there was no room for change or for negotiation. and immediately you did see a bit of a sell off that happened. joe, i don't know how you kind of take this and put it in context with some of these issues. i think the market for some people, it was a bit of a wake up call thinking, okay, this is really going to happen when nobody had been thinking about that to this point. i'm not sure if everyone still believes it. and chuck robbins was there was a sound bite from chuck robbins just in the last hour or so, talking a little bit about how maybe they think it's going to come off at this point and that maybe still be what investors are thinking right now, too. so we'll continue to see that impact on the market. >> journal says look, if journal's got to go, he says, if you say if you want to see your end game is renegotiating the u. smk if that's what you want to do, then do it. you just you know, this is going to add quite

a bit of cost to, to suvs even, that are assembled in north america. the whole fentanyl thing. and we're going to have the commerce secretary on howard lutnick and i mentioned this yesterday. a us customs seized 43 pounds of fentanyl at the canadian border. and that could kill millions of people. but that compares to 21,148 pounds at the mexican border. they say it's assembled up there. they've got a lot of when you ask them about it, they've got a lot of i don't know, it almost sounds like an excuse. i'm not saying it is completely because we don't. 1 pound of fentanyl is too much to get in. but but. >> it's 500 times at the 500. >> so that. they're they're friendly partners for the most part, i don't know how long it lasts. and i don't know what his i don't know how long he's going

to, you know here the mainstream media just hyperventilating about a one and three quarter point move in the in the s&p. we were up 600 was one and three quarter points. >> the question. it's not a huge drop. but i think the question is what's the end game right. like is this a fentanyl thing for real. is this what you're trying to shut down? is this we want to build american factories here because that's a much longer term process that's going to take years, that these tariffs would have to be in place before you actually see companies put that much money to work, get the factories up and running along those types of things. so i think it's just confusion. you did see the vix spike a little bit yesterday and there were questions about that too. and the other thing i was thinking about on the way in this morning is just that. remember back in january 20th when all this took place, all we heard for most of the next month was just this talk about animal spirits. and i think the questions, the uncertainty surrounding this, the question would be is does it kill animal spirits that were kind of unleashed by the thought that

this was going to be such a pro-business administration? >> well, it's also you want to do these things to try and get look, you want to try and get the border secure. that's going to be some near-term pain you're going to see on the nightly news every night. you know, you're going to hear that schools are people are coming to schools to take parents away from. they're going to hear that you try and get the trade imbalances in order near term. that's going to cause pain. you try and shrink the size of the federal government. look what goes on there. i mean, the hyperventilating that goes on with with happening there. you do any of that stuff near term and you're going to i mean, look at drudge on any given day. i mean, the world is literally ending how long and i don't i don't look at drudge, actually. but if you happen to by accident hit it up. it's just i mean, you get the bruise on his hand and he's going to be, you know, they're just so ridiculous at this point. don't know what happened to that whole outfit,

but we'll see how how long this this goes. he's not you know, there's a there's a midterm coming in two years. nobody i don't think any republican wants to get shellacked in the midterm. but he's not running again. and this may be the time where he, you know, he all he cares about is the stock market going up. and, you know, inflation being low and interest rates coming down. i think eventually it will affect some of his thinking but maybe not right away. right. >> yeah. rates by the way are did come down. interest rates overnight. i think yesterday they were looking at the lowest level since october for the two year and maybe the lowest level since december for the 30 year. yeah. yeah. >> like negative. it was at 4%. i don't know you know, how can it go from 4% a month ago to -2% in. well we know how it can from, from from what's happening. i don't know how real either numbers. here's we're

going to actually talk about the numbers. president trump hitting canada. you're going to be here at in a little while right. i think there's a delay and everything else. and it's i don't know i don't i don't i don't feel the same. i feel all alone i have stick. >> it's terrible being, it's terrible being apart from each other. but we'll be reunited in, in a matter of 30 minutes probably. >> and you're only you're close. you're close. right. i don't have to worry about blocks away. you know, congestion pricing. is that already gone? don't worry. >> about back. >> you go. you don't. you have to go through a toll or something. even on foot. okay. president trump yeah. hitting canada and mexico with 25% tariffs on imports to the us. doubling tariffs on chinese goods to 20%. president saying that the three countries that failed to do enough to stop the flow of fentanyl into the us and retaliation came immediately from china, mostly on agricultural products, the country announcing us imports of soybeans and corn would be

subject to additional tariffs of ten and 15%, respectively, starting in about a week. china also announced export and investment restrictions for more than two dozen us firms. canadian prime minister justin trudeau said his country would respond immediately, with 25% tariffs on about $20 billion worth of all us imports and more than 80 billion additional dollars worth of imported goods in about three weeks. if the new us tariffs are still in place, canadian energy will be the subject or will be subjected to a 10% us tariff under new american rules and mexico's economy minister economic minister said. president claudia sheinbaum was expected to announce mexico's response during his news conference this morning at 8:40 a.m. eastern time. we're going to talk about all this, as you saw earlier with commerce secretary howard lutnick. so don't miss that.

>> and that's right. that's going to be the conversation in the morning. we do have some more details on china's new retaliatory tariffs as well. the country saying it will hit american chicken, wheat, corn and cotton with a 15% tariff. soybeans, pork, beef, fruit and vegetables. and dairy and fish products will also be subject to a 10% tariff. one us firm specifically targeted by china is medical equipment maker illumina. the country announcing a ban on the company's genetic sequencers. china accounts for about 7% of illumina sales, and you can see that that stock is off by about 3%. the trump administration, meantime, is pausing military aid to ukraine. a white house official telling nbc news that the us is reviewing its assistance to make sure it's contributing to a solution in ukraine's war with russia. that move comes just days after a public disagreement in the oval office over the war. on friday, as you have to know, by this point, ukrainian president volodymyr zelensky was believed to be coming to the

white house to sign a deal providing the united states access to critical ukrainian minerals. but in a public argument, president trump and vice president vance criticized zelensky, saying that he hadn't shown enough gratitude for the billions of dollars in aid that the us has supplied since the war broke out. president zelensky did not look like he was ready to sign any deals, and looked like he was negotiating in front of the media that was there as well. trump again criticized zelensky yesterday after an associated press report quoted the ukrainian president as saying that the end of the war with russia is very far away. in a post on truth social, trump said zelensky's comment was the worst thing that he could have said and said america will not put up with this for much longer. >> yes, i saw something from two years ago that said something like thousands of thousands of deaths on both sides. the territory hasn't changed one inch. that was two years ago, and i don't know what's changed since then in terms of the territory, but. war always is,

is awful. there's no doubt. and there's no one's denying who started it and who's at fault or anything else. but it's got to end. got to stop one way or another. it's, you know, spending money on defense and on, you know, i mean, i think putin's got 1000 nukes or something. i don't know how many we have. there's things that you hope are never used, and you wish you didn't have to build them. and now we're you know, every time we send another couple of billion, it's weapons being used up, and we're depleted over here. be nice to stop spending it on the weapons and stop using the weapons. both of those would be good. i think that's the. well, the other. >> huge announcement today is what europe is going to do in terms of stepping up its own defense spending. and that's something. we're watching play out too. >> yeah, what a concept. they've been you know, they've been benefiting in sort of one way from from you know, we are the leading western nation and we do like to lead. but at some point you don't want to be taken advantage of. i don't think so. what time are you coming back?

you know, i need to talk to you off camera about why are chicken wings not surging in price? but eggs are. i have the answer to that. do you know the answer? >> no. does it have to do with why they call them? >> no broilers versus they're totally different chickens. >> oh, totally different types of flocks, i guess. well, the other thing is, is one chicken can only contribute two wings, but one chicken can. i've said that before. >> i would like to genetically alter that. i don't see what's wrong with it. why have a two wing chicken when you can have a four or an eight wings? it'd look a little weird, but it'd be better for chickens. be better. >> and this might be something where i don't want the genetically modified version of this. >> supposedly. i know i said that yesterday, chernobyl farms, which, by the way, is in ukraine. how weird is that? >> yeah. >> but yeah, the broilers, you can repopulate those flocks really easily. the egg layers, they. i don't know, they got to

be trained. >> well, they have to. i don't know. >> harder. >> squeeze. squeeze harder. all right. >> i can't imagine trying to do that day in and day out. coming up, a retail bellwether target. target is set to report fourth quarter results. we'll bring you those numbers. the minutes that they cross then speak exclusively with target ceo brian cornell ahead of his company's investor day. but nex, making sense of the market selloff that kicked off march. and what you need to know for your portfolio. jpmorgan asset management's gabriela santos is going to join us. stay tuned to watching squawk box on cnbc. >> this cnbc program is >> this cnbc program is sponsored -what've you got there, larry? -time machine.

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fiduciary financial advisors at smart asset. com. >> investor anxiety over the new tariffs from the white house, leading to a reversal in stocks monday afternoon from a big up session on friday which is seems so long ago. joining us now with her view on the current state of the markets, gabriella santos, j.p. morgan asset management chief market strategist for

americas. it's a. it's the best of times. it's the worst of times i think. and that's your point. if there weren't some of these external things happening, the base case is still pretty solid in terms of earnings and margins and the economy and everything else. but you don't know at this point how all this is going to play out. >> i think that the first thing that we do have to appreciate in moments where there is a lot of change, is the actual underlying momentum coming into this moment. and we ended 2024 with real domestic final demand growing 3%. we had been surprised over and over with the resilience of the economy, especially the consumer. and we had most importantly, a broadening in earnings growth. with the magnificent seven growing earnings 15% in the fourth quarter, finally seeing margins start to improve again. so that's really, really important. this is a resilient economy with good momentum. that said, i think the markets are

now trying to figure out exactly the decimal points for this year, which is a lot of function of a lot of crosscurrents in policy. and we do seem to be starting to see a cooling in the economy. but it's a cooling. it's not cool. so it's more just trying to figure out the contours around the edges. how does all this change in tariff and trade policy affect sentiment, affect capex, consumption margins, revenue growth? how does the change in government spending also affect confidence? maybe employment? so how do all these different puzzle pieces fit together? >> i wish it was just decimal points and you're turning decimal points to the right. that's right. of the to the right. >> yes to the right of the period. >> to the right of the period. >> when it starts affecting according to the atlanta fed, it's actually affected numbers to the left of the decimal point and gdp. >> and that to us seems like a bit of a we don't want to

overreact to what happened in two trading days. is the atlanta fed gdp now went from 2% to -2.8%. so there are two separate artificial issues here masking that underlying change. the first related to the import surge that we seem to have had, we're going to get more trade data this thursday. what seems to have happened is a big surge in imports of gold, which is the ba, does not include in its gdp calculation. so just a mechanical thing there. and then the second one is related to sentiment. there has been a big decline. for example yesterday ism manufacturing. but that's soft data. we have to actually see what's really happening in the underlying hard data. that's why this friday's jobs report will be so important. and i think it can be a relief for investors to see that. our expectation is we're still creating over 150,000 jobs. so there is still a continuation of momentum. it's more of a

cooling. it's not cool. and for us the underlying momentum is closer to 2%. >> if you are right. >> the administration could make the case that if its decimal points, this is when you'd want to make some of the moves for the long term to correct some of the imbalances that that they see, whether it's trade, whether it's the size of government, whether it's government spending, you might be you might be just feeding into the impulses of the administration to do it now instead of some other time. >> and i do think it's going to depend on exactly how much we see all at once. it is starting to. >> how long it. >> lasts and how long it lasts. i do think there is somewhat of a consensus in the market right this second that maybe especially these 25% tariffs on canada and mexico are not persistent. we'll have to see the scope of the change, how long it lasts, and whether it's just these more recent developments that's affecting negatively the supply and the

demand side of the economy, or whether we start to get some of the other policy aspects that are actually pro and boosting the supply side and the demand side of the economy and how those two interact. i think for the short term, while there is still uncertainty about this, what we saw in 2018 is a period of multiple contraction to try to factor in these different possible outcomes. and then eventually, if they are persistent, maybe start to factor that in into earnings estimates. so i would say just two quick implications here. the first is really that we had been talking about going into this year. just taking a look at the portfolio drift that might have happened in portfolios. a lot more exposure to risk. i see you see bonds doing their job with yields moving lower. the ag moving higher 2.5%. so having some real growth diversifiers in there. and then the second is not turning too much to the cyclical trade quite yet. it's

too early for that. it's usually out of a recession. so for us it's diversifying within the market but much more of a quality factor tilt. for now. >> we were going to have howard lutnick on the he does just bowl right. he always has an answer for everything and just, you know, headlong into these things. but is it fentanyl. is it dairy in canada. do we want factories built here or there? i don't know what. i'm not sure exactly what the end game is. is it renegotiating the usmca and just not sure. we need to be clear on when we are able to take things off and what the you know, is it really fentanyl? i gabriella, thanks. >> are there concessions to closing. >> the loop. >> for china? that's important. china is a discussion. >> we're all over the. >> place and they all have different factors. we'll talk. you know, she's you're in becky's seat. you're going to have to vacate. she's coming back. i'm vacating. oh, don't.

>> worry. >> don't worry. she's gonna. she's not staying. i told. >> her i'm not. i'll be back shortly. yeah, i told her, but. >> in the meantime. in the meantime. we've got target ceo brian cornell, who's going to be joining us straight off that company's fourth quarter results. don't go anywhere. squawk box will be right back. >> our restaurants have been in business for 17 years. american technology and innovation are a part of everything we do, from helping us attract new customers to facilitating deliveries through websites and apps. i'm really excited about what artificial intelligence can do for small businesses like ours. this game changing technology can make us smarter and more efficient. advancing open source ai will make our economy and

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learn more at beauty.com. >> all right welcome back everybody. target just reporting those earnings are coming in at $2.41 a share. that was pretty steep. beat over the street's expectations of $2.26 a share. revenue came in at $30.9

billion. and that also beat estimates they were around $30.8 billion. same store sales were up by 1.5%. that about matches the guidance that the company issued back in mid january. if you're looking at the fourth quarter operating margins, they came in at 4.7%. that was slightly higher than the street expected. and as for the guidance for the full year, the company is saying that it sees earnings somewhere between 880 and $9.80 a share. that's about in line with what the street's expecting. the company also expects comp sales to be flat in 2025. the street was looking for a gain of 1.6%. we're going to talk a lot more about that in just a moment. you can see right now the stock is up by just over 5%. so that's a gain to $127.29 a share. in the release, target says in light of ongoing consumer uncertainty and a small decline in february, net sales combined with tariff uncertainty and the expected timing of certain costs within the fiscal year, the company expects to see meaningful year over year profit pressure in the first quarter relative to the remainder of the

year, so unsure what's going to happen in the first quarter, but still giving guidance that's in line with the street for the full year. joining us right now to dig into this all in depth is target ceo brian cornell. and brian, it's great to see you this morning. >> thanks for joining us. >> so very strong numbers for the fourth quarter. what happened. >> well i think the team. >> delivered a really. solid holiday season. and you talked about the results. but it was great to see the comp sales grow. it was driven by traffic, which was really important. and it was led by categories like apparel and beauty. really strong performance in toys and books and our digital performance just gets stronger and stronger. up over 7% led by same day services that grew over 25%. our target plus marketplace continues to perform really well. so the team did a really nice job of connecting with the consumer during the holiday season, and we're just building on the momentum we've seen in recent months. that traffic growth, it's the ninth straight month that we've seen traffic grow, and you see traffic up 2%

during important holiday season was a real bright spot. >> so traffic is here. you guys are pretty optimistic about the full year, but you do have some concerns for the first quarter. and i think that might be what the street's reacting to. right now. the stock is up by about 8/10 of a percent. so you always see some fluctuation right when the numbers come out. excellent fourth quarter. really good guidance for the full year. but questions about what's happening right now in the first quarter. what first of all, what happened in february in terms of sales. what did you see? >> becky i'll go back to something you and i have been talking about actually for several years now. and it's just the state of the consumer. and i think we've seen a cautious consumer for quite some time now. you know, there shopping carefully. they're making sure they're stretching their budgets as carefully as they can. we know that that's a consumer who's been looking for value, but is also celebrating the key holiday moments like they did during november and december. we saw that in february. we actually had record performance around valentine's day. that consumer wants to make sure they're there. they're in target stores, they're shopping online. they celebrated that moment. but we also saw extreme cold across

the country. and actually, as we've seen, temperatures warm up for categories like apparel, we've seen a pretty good spike. but it is a consumer right now that i think is under pressure. that's not new news. you reported consumer confidence has taken a downturn in recent weeks. and i think there is some concern about tariffs. and i think there's a number of americans right now that understand what a tariff is and what it might mean for them. so i think that cautious shopping behavior that we've seen for quite some time now continued in february. >> in terms of february. how much of a the cautiousness you saw from consumers was from the weather, how much of it was from the fires and floods that we saw in different places across the country? how much of this is the consumer kind of having spent everything in december and maybe reining in some spending a little bit after? >> i think it's all the above. i think you've really summarized it. but i also recognize it's one month. we're excited about spring and the easter season. we expect easter perform just like it did in valentine's day. so there's a lot of obviously time in front of us, but you

described all the factors we're looking at in february from fires and floods and extreme cold to just consumers that are, you know, looking at their credit card bills and saying, i might pull back just a little bit, but we've got a really optimistic outlook for the full year. and in a few hours, we'll talk about our confidence in the next five years. and sitting here today, i'm very excited about where target sits as we think about the next five years and how we build on the momentum that we built in our business. >> i've just been watching the stock as you've been talking. it's over your shoulder and it's gone from up over 5% to down a couple percent to now just around the mid line it's up by 2/10 of a percent. and again this is a lot of bouncing around. but i think the investor is doing the same thing with every stock on a daily basis. at this point i'm trying to figure out what is the impact right now and the uncertainty that comes around. tariffs have raised a lot of questions. how do you see the tariff in terms of a how your business handles it and b what you think it is the impact to the consumer?

>> yeah, we always start with the consumer, becky, as we think about the implications of tariffs. and we've been working on this for quite some time. we had a very experienced team. this is not the first time we faced tariffs. but it's really understanding where we go from here and the impact that will have on consumers. so we'll watch it very carefully. we'll see how things unfold. i think for anyone in our space today, we're looking for certainty. and, you know, hopefully over the next few weeks we have a better understanding of how things are going to move forward and we've got to react accordingly. >> so if the certainty is okay, all goods coming from either china or mexico are going to face 25% tariffs. and if you're coming from china, it's going to be 20 or 25% from these two countries, 20% from china, what does that mean in terms of what you're bringing into this country, what you saw? >> well, i'll start with half of the goods we sell come from the united states. and over the last few years, we've gone from over 60% of our imports coming from china to 30. and we're on a path to get it down to 25. so we've

diversified our supply chain to give us more optionality. and i think that will serve us well as we go forward. but we always want to make sure we're delivering great value to the consumer. and, you know, over the last couple of years, you and i have talked about the importance of making sure we're delivering value. it's a consumer that's on a budget. we want to make sure we delight them with great new items, but also the value they're looking for that affordability every time they shop. so we'll continue to make sure we lean in and do everything we can to control prices, provide that value, and continue to delight them with newness along the way. >> so what did your team do to prepare for this potential eventuality? i mean, there were a lot of people who still didn't think this was going to happen. it's midnight has come and they are in place as far as we know at the moment. >> we've done a lot of scenario planning and we've tried to understand what are the different options that we might have to face. we'll go back and understand the implications of canada and mexico. we've been looking at that. we know for certain categories like fruits and vegetables, where during this winter season, we depend on mexico for a significant amount of supply. now, those are

categories where we'll try to protect pricing, but the consumer will likely see price increases over the next couple of days. over the next couple of days. so those go in. >> instantaneous supply chains. you think about all the fresh produce. you know, we depend on mexico during the winter. we're going to try to make sure we can do everything we can to protect pricing. but if there's a 25% tariff, those prices will go up. >> for things like what? strawberries, avocados? bananas. what are we talking about? >> you've got that list, right? >> is that so? >> those are some of the key items. >> and those prices could change within days in the. >> stores certainly over the next week. >> brian, this is something you think about for target all the time. but you are also the head of the business council right now, the chairman of the business council for what's stepping in for this. so you must have been talking to lots of your peers, other business leaders. and i wonder what conversations you've had with the administration about this. >> well, i won't speak for the other ceos, but as i said earlier, i think we're all looking for clarity and certainty, and we operate much better when we understand. all right, what are the issues we're

facing, what are the steps we have to take? and i think coming out of today, we've got a better understanding of kind of what might be in front of us. so i think for most business leaders, they're looking for certainty and clarity. and you'll modify your business strategy and your tactics along the way. but again, we're going to understand what's going to happen. we're going to look closely at the consumer. we want to make sure we protect our brand in this environment and deliver that value. and while short term there may be some pressures, as you'll hear from me today, i'm really excited about the next five years. >> i want to stick with this issue for a little bit. we can talk about the next five years too, but just the idea that business leaders would prefer certainty is that the case, even if the certainty is that you're going to be facing 25 or 20% tariffs, or would you rather face maybe a little uncertainty? maybe we use this as a negotiation and that we see what comes. >> well, we'll see how that unfolds. but one way or another we need to understand what are the operating conditions, how do we react? how do we take care of the consumers? we serve our teams, our brand. so i'll always

on the side of certainty. >> and you mentioned that this is a very experienced team. you've dealt with tariffs from the last trump administration. what happened then? how much got passed on to consumers? how much did it impact your profit margins? >> well, it's when we started to make some changes in the country of production and de-risking our supply chain, looking at different options, bringing things back to the western hemisphere. so we're actively been pursuing some different changes in our supply chain to give us more durability and flexibility to meet the changing environment we're in today. >> so that's an interesting point to we've been trying to figure out ourselves. is this a negotiation tactic? is this something that really is going to be driving or hopefully drive factories to be produced here, producing things here in the united states, you have made changes to your supply chains that you didn't stop and change or go back on any of those things. you're continuing to make progress. it doesn't happen overnight. but is this a push that really is going to lead to more production in the united states long term, do you think? >> well, i think that's the goal of the administration. and if

that happens, we'll have more opportunities to buy products made right here in the usa. you know, certainly that's going to be interesting for us, and we certainly encourage that. but we'll continue to modify our supply chain and give us as much flexibility as possible. >> what do consumers think about tariffs? what do what have you learned. what do you know about that. >> yeah. well i'll give you a couple of facts. you know i like numbers. i mean only a couple of months ago, only about 20% of america actually understood what a tariff was. now that number is close to 50. and i think they understand what that means. the fact that it could have an implication on them, on the prices they pay. so i think going back to the state of the consumer, yes, they've been cautious for a while. they've been shopping really carefully. weather's been extreme. overall confidence has dipped down. but i think that lingering tariff conversation that they hear about almost every night on the news or every morning when they're watching, you know, that's certainly in the back of their minds. >> and in the back of their minds. that does what to their behavior. are they spending less money as a result, or are they thinking, okay, this is okay. we'll deal with the pain for a

little while. if it leads to more jobs in the united states, how how far down do they dig on the tariffs? >> i think we see a very cautious consumer right now, but one that still celebrates those key holidays. they're still looking for newness, but they're shopping on a budget and they're looking for affordability right now. >> so what does the next five years look like for target? what's what's the game plan? >> well, i'll start with one of the things that we're going to talk about today. and we operate in a $4.2 trillion retail market. and we're a $100 billion plus player. but the top ten players in retail in ward one of them still only represent 38% of the business. so when we sit here today, we see significant opportunity. and a lot of that opportunity is in what i'll call target categories. it's in apparel, it's in a home. it's in those hard line categories where we really excel. so we see a lot of opportunity to grow market share, accelerate our top line by billions of dollars. and sitting here today, i feel great

about our strategy, the scale we've built, the kind of capabilities we have in place and the team that we have, and we'll talk about that today. but it's really when, you know, target's at its best when we bring all of those things together, use the magic mix of our national brand partnerships, our $31 billion own brand business, and then all the emerging brands that we sell. when we bring those together with our digital capabilities and the investments we've made, so that when you order, i can have a ship shop or one of the 300,000 across america, bring that item to your home in two hours. it's really about how we unpack our strategy, our scale, and all the capabilities we've been investing in for years to drive future growth for our company. >> let me ask you just about the uncertainty in this quarter, but why you feel so confident about the rest of the year? and i guess people would say, look, you've you've had times where you felt good about the rest of the year or thought you'd be getting through things maybe more quickly than you have. why

are you so confident about it this year? >> well, i think i've been sitting in this chair for 11 years now, and i've seen lots of different cycles, and these cycles will come and go. but when i look at the underlying capabilities in our business today, the investments we've been making for years, you know, in capabilities and services in our stores, last year, we talked about a pipeline of adding another 300 stores to the 2000 we have across all 50 states today. so i just see this horizon in front of us where we can continue to grow. we can continue to take market share, delight consumers along the way, and just extend that tarzan magic across the country. >> you feel like you have more control of your own destiny at this point. >> i certainly do, and we're going to focus right now in the near term. we'll control the things we can control, but we're going to continue to invest. we'll talk about investing 4 to $5 billion of capital in our business again this year, continuing to make sure we're investing in stores and digital capabilities. we're really excited about our retail media business. rondell. our we expect to see that double in the next five years. our marketplace target plus is $1 billion

business today. i expect that to be a $5 billion business in five years. and our target circle 360 business that delivers those items to your home. i think we'll see that continue to grow in a significant way in years to come. so in some ways, i think we're just getting started. >> you know, you have managed through a lot, a lot, everything from the covid pandemic to differences you've seen along the way, issues you've had with the supply chain, issues you've had with logistics and getting things through. what is the thing you worry about the most right now? what are you spending the most time with your team working on? >> i guess i always focus on two things the consumer and taking care of our team. taking care of the 400,000 team members across the country that execute that strategy. so how do we make sure we're supporting them, staying close to the consumer but controlling the things we can control. and in an environment where there is a lot of uncertainty. staying calm, staying focused, leveraging the experience we have to make sure we're playing the long game. >> okay. brian cornell, i want

to thank you very much for spending the time with us this morning. >> always good to be with you. thank you for joining us. >> great to see you. and very quickly, if you look at target shares right now, it looks like they are up by about 3.5% to $125. joe, we'll send it back over to you. >> okay. thanks. beck. coming up, american airlines making a bid to revive an all but dead alliance with jetblue. details on the airlines play after a break. and stay tuned over the next two plus hours for a great lineup of guests here on squawk box. palantir co-founder joe lonsdale, house majority leader steve scalise, the ceo of toymaker mattel, on the possible impact of tariffs and all, topped off by commerce secretary howard lutnick. we're coming right back. >> the most. >> challenging engineering project in the history of the human race is our nation. >> golf has never been closer to the heart of this country. >> straight down. exists thanks

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a partnership with jetblue violated a federal antitrust law. the so-called northeast alliance between the two airlines was designed to help them coordinate flights and pull revenue. in november, a federal appeals court upheld a ruling blocking the partnership. america now wants that ruling overturned. in a statement, american airlines said the northeast alliance was designed to increase competition and expand customer options in the northeast, which it clearly did during the time it was allowed to operate. coming up, what is haunting the fed as central bankers prepare to face a u.s. economy with new tariffs front and center, steve liesman will take us inside the fed's calculus. one squawk box comes right back. >> to you did it. you took. >> an idea on a napkin, built a successful business, and made it look easy. but at us bank, we

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for free. visit otter.ai or download the app. >> a key question for markets how will the fed react to new us tariffs? senior economics reporter steve liesman joins us with a look at that angle of the story. how can they react when you don't know how long it's going to last, steve. and i would think they'd have to wait for some data points since they by definition are data dependent. would they take some preemptive? would they make some preemptive moves? i can't imagine. >> no. the preemption right now, joe. >> is the talking. >> and the gaming. >> out and trying to give. people sort of a heads up of how they're thinking about this. we got some of that yesterday. tariffs will create this double edged growth scare potentially depress economic activity at least for a time while raising prices. and that could sort of tie the fed's hand to its

ability to respond. the fed officials seem to be telegraphing just what joe said. it's going to be difficult for them to cut rates into a tariff induced rise in prices. at best, they're saying they need to be patient to see how the price increases work through the system. >> i'm going to be trying to parse out what our price level effects from what our inflation effects or what our first round effects, price level effects from second round effects onto other prices and potentially wages, etc. right. i want to try and understand what is happening. if we're only observing price level effects. which are expected to phase out over time, then a look through strategy may be the right thing to do. >> that was alberto mussallem, president of the saint louis fed. so if that's the case and the fed would likely look through the tariffs, inflationary effects. but if inflation expectations rise, mussallem and other fed officials suggest the fed may have to respond by keeping rates where they are or even hiking.

markets have boosted the probability of rate cuts amid weaker economic data, and this increasing concern about tariffs. there's an 85% probability now of a first cut this year in june, and a 78% chance of a second cut in september. all that might be optimistic and presumes weakening growth with no lasting inflationary impact. krishna guha of evercore isi says the road to that june cut would run through moderate tariffs. that means backing off the current levels against mexico and canada, coming with something other than that, weaker job growth and declining inflation and of course, contained inflation expectations. mussallem and other fed officials have brought up the mistakes the fed made in the 70s, where monetary policy did not respond correctly to inflation. so they've made clear they're not going to be making that mistake this time. >> it is, by definition, i think tariffs are it's like the worst of both worlds there. stagflationary aren't they. >> at least for a time. they could be. you know joe, the

other side of that is they're supposed to be some investments in the us that would come from that. i think there's a big difference in timing. you just don't build factories and hire people and do domestic manufacturing. the other the other problem, joe, is that one of the commentaries i read yesterday suggested the problem with today's tariffs are that they make likely and even necessary the next set of tariffs, which are coming in april. so unless you do those tariffs, you make the north american supply chain much more expensive. you price it out. >> because you know the inflation. you'd want to raise rates for a weakening economy, you'd want to cut rates. so it's just it's like you're in a pickle. you're in a between a rock and a hard place. >> exactly. and the trouble, joe, is that you remember powell famously brandishing the 2018 fed staff study about how to respond to the tariffs. then the context is different now, and that's something that bothers the fed. you have higher inflation. you just had a bout

of inflation. you're starting at a point where you're above the target. so the concern here and you've seen this in some of the surveys of inflation expectations, even while the market measures of inflation expectations are relatively low. the survey measures are high. so the fed has to watch that. and that's really going to determine how they can respond. if inflation expectations remain under control. they can respond with rate cuts to weaker growth. >> right. >> okay steve thank you. do you think we'll be talking about tariffs in six months. i don't know. you know. >> joe that's an important question because some of the folks at the nabe conference i've been at think this is just another bluff. this is another kind of kind of come off it i don't know. so maybe not. >> that's what. >> that's what the cisco ceo is saying. >> this morning. yeah. i mean we'll see. >> right. >> when we come back, the tariff impact at the corporate level, we're going to talk about the white house's latest move against china and what that

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>> cnbc spotlight delivers the best videos of the day right to your inbox. top stories. key highlights hand-selected daily by cnbc experts. sign up now for free. go to cnbc.com. spotlight. >> it's 7 a.m. on the east coast and you're watching squawk box on cnbc. i'm joe kernen along with becky quick beamed in. it was weird. it was i heard the music go in there. you were just. yeah, just like star trek. andrew is off the day. among today's top stories, 25% tariffs on imports from canada and mexico went into effect overnight, as well as an extra 10% tariffs on chinese goods. and that's on top of an existing 10% from a month ago. more on that story in just a moment. the futures right now have turned a little bit further south, now

down 66 points after we did have a weak session yesterday. the trump the worst s&p drop of the year one and three quarter points percentage points. the trump administration is pausing military aid to ukraine following last week's tense meeting with president zelensky at the white house. white house official telling nbc news that the u.s. is reviewing its assistance to make sure it's contributing to a solution in the war. ukraine's war with russia. and shares of target have been swinging between gains and losses. the company reported strong earnings in the holiday quarter, but warned that profits could be pressured in the current quarter in the last hour. ceo brian cornell said consumers could see the impact of tariffs within days in the form of higher prices on things like produce. talk more about the new u.s. tariffs that are now in effect. megan katselas in washington was more. good morning. >> hey guys. good morning. so

this is trump's most aggressive trade move yet. this is far bigger than anything we saw during his first term. and there was a lot of hope. and i would say even expectation that we would not get to this point, that we'd see another delay. but as of 12:01 a.m, the 25% tariff on mexican and canadian goods, as you just laid out that 10% tariff on canadian energy and the extra 10% on china, those are all now in effect. so this covers well over $1 trillion in trade. and that's before you start to count in the retaliation. so it's upending not only decades of what has been fairly open trade across north america, but it also tears up president trump's own north american trade deal that had been a signature accomplishment of his first term. so now all three countries preparing to respond. canada has put out a list of about 170 $107 billion us dollars and us exports, mostly consumer goods and food that will start to see tariffs. they're also discussing some non-tariff measures, things like cutting off exports of electricity and of nickel,

potentially ending some contracts with elon musk's company, starlink. china's also putting up 10 to 15% tariffs on us goods, mostly food, and putting 25 american companies on various trade blacklists. we do expect to hear more from mexico's president later this morning. we might get some specifics on retaliation then. but guys, i would say the big question for today is also whether we hear anything more from the white house and whether a strong market reaction could start to lead, could lead trump, i would say to potentially pull back, guys. >> yeah. >> we different countries, different rationales. fentanyl, you know, make things here, renegotiate. yeah usmca. we've got a lot of different you know some could stay on, some could come off. thanks megan. we're going to talk about all this with commerce secretary howard lutnick is going to join us at 8 a.m. eastern time. >> 848. >> 48 4840. >> all right. it's okay. what

did i say? >> 830 you. >> say eight. >> well, i want people on i mean, preparing for. >> it could come as early. >> as eight, don't you? how long does it take to pop the popcorn and you got to melt the butter? it's true. right. >> got a little time. >> pull the drinks, mix the margaritas. >> popcorn may do it. >> for me. squeeze the lemon lime. >> yeah. >> when we come back, we've got much more on the impact of tariffs. royal bank of canada ceo david mckay will join us. straight ahead. and later, house majority leader steve scalise will share what he expects from president trump's address to congress this evening. it is the first joint session of congress that he'll be addressing since his second term began. stay tuned. you're watching squawk tuned. you're watching squawk box and this is cnbc. ♪ in any business, you ride the line between numbers and people.

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amazing and is something that we get to use every day. >> president trump hitting canada in mexico with 25% tariffs on imports to the united states. canada responded with 25% tariffs on about $20 billion worth of us imports and more than 80 billion additional dollars worth of imported goods in about three weeks if the new us tariffs are still in place. joining us now, david mckay, president and ceo of royal bank of canada, which has $982

billion in assets under management. what's your s&p target? that's not why you're here, is it? >> no it's not. >> do you know what your analysts are thinking? do we talk about that. >> it's all up in. >> the air right now. >> based on what's. >> going. >> on in geopolitical world. >> what do you think is the is the rationale and the stated reasons for this with canada? you were talking off camera how obviously you're you know, canada is very close to the united states in terms of trade, friendship, history and everything else. do you think it's fentanyl? do you buy that that it has to do with that? that seemed like a talking point. >> to your point, fentanyl is an issue on both sides of the border, and there's some borders. where on a per capita basis, more canadians are dying from fentanyl. so it is absolutely an issue on both sides of the border. and we've got to do everything we can to others in the financial services sector on any money laundering or just at the border, making sure it doesn't cross. and i think canada has done a good job in responding to that, as has

mexico. but i think the bigger issue here is trade, obviously. and the president signaled us that wants to be a little more isolationist. it feels and they make more in america. and i think to me that just runs contrary to what 100 years of success in america is the multilateralism, the trade, leveraging the strengths around itself. and that draws capital into the us is the kind of the center of innovation and center of capital. so this playbook that we're running, we haven't run before. and i think it's risky for sure. and the markets are reacting that way. i mean, we have. >> we have we have had nafta. we've had a renegotiated nafta under usmca. so there are things around the edges that maybe aren't perfect. otherwise we wouldn't need these these trade deals to even things out. do you think canada at this point is does anything unfair in terms of trade and tariffs prior to what we're seeing right now that would cause president trump to look up and say, you know, i

don't like this, whether it's dairy or lumber or what, what's the most egregious things do you think? >> let's start with the facts that the balance of the trade agreement is $400 billion. go back and forth each way each year, almost $500 billion. the trade is balanced, and therefore that's the most important message. there's not one side. whereas the deficit that america sees with mexico or china trade is balanced. and that's the most important in every trade agreement. what's he talking about? some winners, some losers. so but when you start with balanced trade, it's good for when. >> he says we're subsidizing canada to the tune of $200 billion every year. what number is he referring to? there's not an imbalance. >> we don't know. trade is balanced between the two countries at the end of the day. so trade deficits, not a subsidization as it is because there's benefits that accrue each way. you can take that excess capital and reinvest it in another part of your economy if you're not making that specific item. so it's the uncertainty, joe, that this creates, right. >> what does he want? but what could canada do? what could

canada do other than the fentanyl. what do you think he wants to hear from? from canada that i don't know. they're going to they're going to move some factories in canada down into the united states or. >> it's not canada's choice to do that. >> it's no. canada supplies 25% of the oil consumption in the united states. 25% of the uranium consumption is we think about electrifying our economy and growing. you've got to rely on your most trusted partners, like canada, to supply you with. it's too inflationary. it's too expensive to create that. and yesterday i just had a discussion with a global mining ceo in asia, and we talked about the tariffs and whether he would put long term capital based on the tariffs. he said, i can't make a 15 year decision on the basis of potentially tariffs for four years. so when you think about even trying to attract capital in to build smelters, to build these capabilities, whatever sector happens to be in that is not a proven strategy as well. so what do i think canada can do here? we can't

renegotiate the parts of the usmca that aren't working, whether it's dairy or other small. there are tweaks to the overall. when you're in balance, you're not going to make material change. but certainly i think the country is open to looking at it both ways and trying to see if there's a way to improve it, certainly willing to accelerate that on the scale. >> there are long term decisions that are going to have to be made. and i guess i wonder from canada's perspective, seeing you, the us, as a long term ally and good friend, where you have been sending us so much of our oil, you all haven't done things like build pipelines so that you could send it elsewhere. is that changing at this point? is that a long term? yeah. funding that you think canada is going to put toward. >> great question. so in the category of let's not let a crisis go to waste. so canada has hasn't been able to do some of the bigger investment projects, get them approved through our processes, and we are determined to do that. so this is a wake up call for the

country. we are not going to let this crisis go to waste. so one one option for us and one opportunity is inter-provincial trade barriers within our own provinces. we have barriers to trade. we're going to get rid of that. that's $200 billion of economic growth for us. we have to get more pipelines to the west coast to asia or lng is needed there. just completed tmx and a lot of that is actually going into us refineries. but that can also go to asia. so there's other markets for our uranium, our rare earth minerals, our lng or oil or our potash. like if you just significant investments in potash, 25% of that potash is consumed by us farmers. the end of the day, if you're going to grow more food, you're going to need that potash. you can't do it all yourself. so you need partners. and i think that's what's made america great over the last 100 years, is building these multilateral partnerships around the world. that's allowed you to focus on what you do best and let let us provide

resources, content, tech, whatever we happen to, to sell to the us. i think there's a reason for it. at the end of the day, there's a reason, i think into canada. >> i think trump thinks that trudeau is too woke too. i think it just makes him mad. and what's going to happen in turn, houses? i know its popularity is not great north of the border either at this point, is it? >> well, we're going through an election process now, so democratic process will take its form. we're going to elect a new leader of the liberal party. they'll immediately become prime minister. and then we expect them to call an election sometime within the next six months. but maybe as soon as as a couple of weeks from now, and we'll go through that democratic process and we'll choose a new leader for the country, and we'll have to move these policies forward to really prosper in the long term. and there's so much that canada has resources, great universities, great people, access to market, free trade agreements with multiple countries, not just the us, asia, europe. so as we think about this is an opportunity for canada to diversify what it what

it does really, really well. so we will find new markets for our products, but we still view america as our closest partner. there's so much we can do together. i think we're stronger together. we've proven that for 100 years. that model works and i don't think we should disrupt that. >> last time you were on, did i say mckay? >> you did? yeah. >> okay. this time, because you're like bones, but it snuck up on me. >> all right? golf. i'm a big golfer like you are. >> are you? bones is a good golfer, too. yeah. in addition to. obviously. >> we're a big sponsor, so i'm very involved in the sport. >> i know i see all the guys that you that you sponsor too. and then you have the tournament as well. yeah. all right, we're friends. i, i'm not sure what he wants exactly. i think i'm sure that's all going to be fine. >> we're stronger together. >> it's all going to be fine eventually. probably. even if you're not a state. i think you said that you're too liberal to be. we could. we could do a trade. minnesota goes up there and we'll take the western

provinces. does that sound reasonable? >> i think we're a proud, independent country. i don't think people get the number of electoral votes. you have to give us any. >> right? >> that's what. >> i mean. >> there wouldn't be many in the western provinces, i don't think. all right. >> thank you. thanks. thanks for inviting me. >> okay. >> when we come back, what does the future hold for us? house energy and commerce committee member, congressman jake austin, also former u.s. aid global health assistant administrator doctor atul gawande will join us next and check out shares of best buy. those earnings coming in at $2.58 a share. that was better than the $2.40 that the street was expecting. revenue came in at 13.95 billion, and that beat expectations. two same store sales were up by half a percent. that was much better than the 1.5% decline that the street had been expecting. but the stock is down slightly. it's off by about 8/10 of a percent. this morning we're going to talk

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>> as president trump gets ready to address congress and the nation about foreign policy, trade relations and spending cuts, some grim predictions are coming from former usaid officials about the future of that agency. joining us right now is house energy and commerce committee member, congressman jake klaus. also, former usaid global health administrator, assistant administrator, doctor atul gawande. doctor gawande will be the congressman's guest at the president's address this evening. and, congressman, i guess welcome to both of you. first of all, i guess the first question is, why are you bringing doctor gawande tonight? >> good morning. >> thanks for. >> having. >> us on. >> i'm bringing doctor gawande because. >> he is an eminent. >> surgeon and public health expert who can help humanize the effects of trump's lies about usaid. donald trump is telling two lies to the american public about usaid. first, he's trying to claim that he can pay for his tax cuts for the rich by cutting investments in global public health and basic research

funding. when in fact, those investments are a small fraction of the federal budget. he's actually going to pay for these tax cuts for the rich by taking an ax to medicaid, which funds at home care for seniors and primary care for 40% of american children. he doesn't want people talking about that. so he wants to distract americans by focusing on foreign aid. the second lie that donald trump is telling the american people is that somehow this funding for global public health is wasteful with the funding for basic research here at home is wasteful. in fact, there are few returns on investment that are higher impact than funding science and public health. and if you doubt that, ask the 200,000 kids globally who are going to get polio and be paralyzed next year if we withdraw funding, and that instability and chaos that will sow overseas, or ask the kids in texas and georgia who are getting measles right now because rfk has helped derail measles vaccination campaigns. >> doctor gawande, i see you nodding at that. why don't we talk about what what happens with foreign aid being cut back,

what you see, actually playing out on the health of the globe and the nation? >> yeah, we saw just last week the termination of over 90% of the staff of usaid and of the contracts of usaid. this wiped out the entirety of the global malaria program, the entirety of the global tuberculosis program. three quarters of an hiv program that is keeping 20 million people alive, including 500,000 children. so you're going to see a surge of these diseases that we have helped held at bay. there are other things usaid does that protects food security, reduces instability in countries, and it is now a massive pullout and abandonment of these efforts. and it's we're seeing the damage already. when you do a surgery on the us government with a chainsaw, we're seeing the results and it's a debacle. >> is there any effort underway

to go back? because look what we see publicly, at least on x that's put out there is some of the usaid dollars that are spent on far more questionable things than trying to fight things like malaria and polio. is there any effort afoot to try and go after some of those very programs, and make sure that they can stay in place? congressman. >> cherry picking examples of spending in order to throw the baby out with the bathwater is a time honored tradition in washington, d.c. i can talk about how the department of defense spends tens of thousands of dollars on toilet seats, or millions of dollars on alaskan king crab, but i'm not talking about defunding the entire pentagon. i think the military is important. i think the military occasionally spends things unwisely. there is no federal program that i'm aware of that has zero waste, fraud or abuse. but there are also very few federal programs that have a higher return on investment than basic science and global public health. and we saw the impacts

of that and how it affects americans here at home. just five years ago with covid, when lack of monitoring and lack of global public health infrastructure helped create a pandemic. >> i guess part of the frustration comes with the idea that there is a lot of waste and fraud that takes place, and how do we get at that without how do we get out of that effectively without killing some of the programs you're talking about? >> well, let me jump in a little bit on this. there have been six years of inspector general reports going back to the first trump administration and the current the biden administration. they reviewed and audited 94% of u.s. aid spending. they found 0.3%. that was questionable. they recruit half of that. so the notion that there is extraordinary widespread fraud, this is a program that i led global health on half the budget of my

hospital system up in boston, and they were reaching hundreds of millions of people and saving people's lives by the millions. there probably is ways to make it more efficient, but i can't find a better buy for american security and for humanity. >> if it's not fraud, they will say, look, i'm just looking right now. some of the expenses that people would find very questionable things like money, $1 million to boost french speaking lgbtq programs in west and central africa through the state department, $15 million for condoms in different areas. i mean, those are the types of things that rile up the public. how do you get at some of those problems that may not be things that the american electorate are thrilled about. funding. whereas you probably would have a much higher american public turnout for things like holyoke measles. and look, maybe not for everybody. it may not be something that was voted

straight up or down, but you could probably make the case for the return you get and the safety we get back here in this country as a result. >> well, let me jump in on that. the 50 million for condoms supposedly in gaza, $0. >> even 15. >> million for condoms. zero taliban. >> yeah, $0 went for that. what we saw instead. and, you know, we can talk, for example, about transgender hiv programs are caring for transgender people who are extremely high risk of getting hiv and transmitting hiv. you can't do an hiv program without without addressing populations that men who have sex with men, transgender populations and so on. excising them like we've done now means that these diseases are going to come back. and these can be cast in ways that make it sound like it's wasteful. but in reality, this is the work that you do when you take reality seriously. >> so, doctor gawande, tell me

where you think we'll be in a year if these programs aren't instituted just from a global health perspective? >> well, the at this point, the damage to the agency is done, the expertise lost. we already see projections that it's in the hundreds of thousands of deaths that we have, increases that we'll see return of polio, that we'll see, surges of measles. all these things are already happening. we have a death from measles in texas for the first time in years, and this is now only getting worse unless we take supporting these institutions, getting them back on track. >> you mentioned. >> that the concern that the damage is already done, right? >> you mentioned the damage is already done. these people are gone. is there an ability to even hire them back? how long do you think it would take to rebuild some of that expertise? >> part of the debacle of surgery with a chainsaw is they're now saying, oops, you know, i'm seeing and hearing a

lot of reports coming in that the that i was used to make the choices about what was cut and now trying to undo this enormous damage because of course, it was not successful in safeguarding the different components. i don't see us being able to, you know, you these aren't things you turn on and off with a light switch. we've lost expertise, capability and most of all trust in countries around the world that we are a reliable partner. rebuilding trust is going to take devoted energy and time. i don't see this president offering to do that. >> doctor gawande and congressman auchincloss, thank you both very much for your time today. we appreciate it, and we hope to hear updates from you. >> good morning. >> thank you. >> coming up, a check on the biggest pre-market movers, including a downgrade on tesla. that's next. stay tuned. you're watching squawk box. this is cnbc.

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>> physicians mutual. >> physicians mutual. >> welcome back to squawk box i'm frank holland. tesla shares this morning they're lower. as analysts at bank of america. they lowered the stock's price target from 4.90 down to 3.80. you can see shares are down over 2.5%. that downgrade on price target due in part to tariffs. analysts also cutting the ev makers 2025 production forecast from 16.7 million down to 16.1

million. they say tariffs could lead to a supply shock very similar to covid for tesla. again, shares down more than 2.5% year to date, down more than 30%. we're also looking at shares of nvidia this morning. taking a look there also lower in the premarket falling more than 2% after falling nearly 9% yesterday. tariff concerns hitting the entire chip sector. and nvidia seems to be having its own trade issues. there are concerns that shipments to singapore are being illegally smuggled into china after the arrest of three people in singapore accused of misrepresenting the final destination of us made servers. take a look at shares of nvidia again, down about 2.25% year to date. shares of nvidia down more than 17%. and this morning we're also watching shares of walgreens moving higher on a report. the troubled drugstore operator could be taken private, according to the journal. a $10 billion private equity deal with sycamore partners. it could be finalized as soon as thursday. shares right now you can see, are up over 4.5%. sycamore is expected to keep the retail business and then spin off or sell off other parts of the

company. if this deal is completed, it would end nearly a century of walgreens shares being publicly traded. again, shares. right now they're up just over 4.5%. becky, back over to you. >> wow. that is something to watch. frank, thank you very much. we will see you in just a little bit. when we come back, palantir co-founder joe lonsdale will join us with his take on president trump's push for a crypto reserve. first, though, the nasdaq 100 closed down more than 2% yesterday. as we head to a break, here's the biggest pre-market winners and losers this morning. you can see astrazeneca at the top of the list, up by about 1.9%. >> thank you for calling. please hold. >> when you. >> talk to your. >> custodian, does it feel like you're not being heard? >> thank you for calling. please hold. >> now that's better. trey palmer doesn't. >> have a massive. >> call center. >> instead.

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you not a crypto bro? you're distinguishing yourself from other crypto, bro. >> i gotta be careful what i put out. >> online, you know? >> you know. >> listen. >> i think there's a lot of great people in this administration that are 100% right, that the biden administration was ridiculous against crypto, right? i think gensler the sec was totally arbitrary. they wouldn't say what the rules were. and so this administration is corrupt to support it, put in clear rules, make it easy for everyone to have crypto. i personally don't think the government should be picking winners and losers. i don't think you should be putting up online certain coins that are all of a sudden going to shoot up 25%, and people can trade that and stuff. to me, that's not the right way to do it. >> you see a lot of the moves that the trump administration has is making. and actually we were just talking about that previous interview and, you know, you brought it up when you sat down as well. we can talk about usaid if you want. they're gone. so they can't defend what their points were. but it seems to me that maybe part of the weakness in bitcoin is that

every move that that the administration makes to try to stem the printing of fiat is a negative for, for bitcoin. i mean, if you do, that's true. isn't it true? >> if you have. >> a really sound dollar then you don't need the anti fiat thing nearly as much. and in the short term. >> if you got doge and you got, you know, trying to cut the deficit and everything else, those are all negatives for printing more money, which is what makes. >> the positive interpretation for sure. so i still think we're dealing with some inflationary forces in this economy. and there's still other complications that that could hit the market and that could do risk off. so there's. >> there's both here. but but. >> listen, i mean you just said these guys on discussing this usa stuff, which i thought i thought they were absolutely ridiculous. i think he cited 0.3% of it was fraud. it was hundreds of. >> millions that are wasted. >> some a recent cut from elon caused the death of an individual in texas from measles. i mean. >> the thing the thing no. nothing to do with it. i mean, the thing that we're seeing is

there's these there's these. entrepreneurs like george soros and others in. >> the policy world. it's a very kind of. >> sketchy type of entrepreneurship where they put a little bit of money up. they create a very political org. >> such as. >> internews, and then they then then they get hundreds of millions or billions of dollars from the government towards their political scheme, and then their political scheme goes around doing extraordinarily. >> much. of usaid is what percentage is this, things like that, though? is it a margin? >> we found we found billions and billions of dollars at least. and, you know, you know what we've learned about these ngo schemes? i come from san francisco originally, so i know this is you. have you always hide them the things that sound the best and you attack everyone? how could you question homelessness? we all want to help the homeless. and by the way, there's huge amounts of fraud in there. how could you question helping people who are poor in africa? so that's where they hide the nonsense. >> i was. i was going to say what they answered when i asked just about some of the, the, the programs that some people have raised questions about. so this doesn't sound like it makes any sense. they said, look, you have to reach some of these populations if you really want

to get at the root problems of it, they will say it's the only way to go after health on some of these issues, and that their complaint was this was done by ai, done by a hatchet, not necessarily done in a thoughtful manner. what's the response? >> well, you know, there's a couple of things here. first of all, i do think that people in the bush administration did save a lot of lives in africa doing some great things. now, it's one thing to put things in place and show people how to save lives. it's another thing. 20 years later, there's clinics in south africa. what is south africa spending their money on? they're giving money to the party of julius malema, who's calling to kill white people. he gets millions of dollars a year from this government. they're doing lawsuits against israel. you know, there's other things south africa is spending money on. let's take less of our money. we give to them, force them to fund their own clinics. now we showed them how to do it. there's no reason we should be funding a country that's wasting money on those crazy things. >> do you think that comes in and steps over because doctor atul gawande was saying he thinks we're going to be looking at thousands of deaths a year later. you think what happens is maybe more like what we're

seeing with europe today, talking about how they're going to spend more on defense. >> i think you need to force them to pick up some of these things and do it themselves. and at some point it's their responsibility. and at some point it's sad if they're not going to do it, but we've shown them how to do it and it's their country. and we have people in our country who are suffering, and we need to use our money for our things. at some point. >> i think we glossed over the why don't you like the reserve for bitcoin? i don't think. >> you know, i actually i think i think there are some arguments to do a just bitcoin reserve. i think i think choosing other winners in the space. i think he listed off a few different winners. i'm actually long some of those currencies. it's probably good for me if they do it from a financial perspective. i don't think that's the proper role of government to pick winners and losers. we've got to be very careful. this administration is very properly cutting hundreds of billions of grift in waste, like we're finding out that these far left democrats are basically a party of just stealing free money. our side should not be doing things that are feeding money towards our side and our friends. we should be doing things based on the role of government. >> yeah, taxpayer is a hell of a thing. if you're looking at i mean, just think of $1 billion. if you break that down. >> it's a lot of money. >> right. and then you get to hundreds of billions where

there's no really cap on the ability to tax. >> i mean, the stacey abrams $2 billion to her right before biden leaves office. she gives it to a bunch of her groups. right. it's like $7 billion to these, like, crazy environmental group, which is all california democrats. i mean, this is just scams. like, we're finding all these scams, we're turning them off. and let's not do anything on our side. let's let's let i mean, listen, if you want to use money to get them to turn off ngos in general, to do an honorable, principled use of like a anti-communist ngo, we can debate about that, but i don't think it should be going towards winners and losers. >> what happened on friday? how do you view that? >> zelensky oh. >> listen, i thought it i thought i thought all around it was kind of really unfortunate. zelensky needs needed to be prepped on on what jd vance and trump believe. i think our vice president and president have a certain view of the world. i respect a lot of how they see the world. and he came in and he disrespected them, and he he was used to getting his way, that he came in so arrogantly that it didn't work out. and it's a very unfortunate defense.

>> spending is too high, too low misspent. it's i was making a point that when you're building things that you wish you'd never had to use, and then you use them and you need to build more of them, and you're using them to kill people on both sides where the line of demarcation hasn't even moved in the last two years. it all sounds awful, but but we need to replenish everything that we've said we need. >> we need to. we need to buy things in defense through competition. we need to buy things over longer periods of time so you can build the factories. >> there. griff. there too. >> and of course, there's massive cronyism. this is the whole reason we're building. you know, obviously palantir and spacex kind of broke through and then anduril and soranik and others and are now breaking through and they're much, much better than what's there. but we need to make sure that the better technologies can win and that you have the buying signal over a longer period of time from defense. so we can do these things efficiently. i think i think these guys coming in to run defense are very good, and i think we are going to fix a lot of that waste.

>> as a palantir co-founder, what do you think of the stock down 20% over the last month? >> you know, i got my shares at about 0.7 cents. and so i'm really happy with with where it is now, i think i. think i think it's been it's been very listen, i love i think it was very underappreciated for many, many years. and it's really nice to be appreciated. now i think, you know, when, when, when, when it's when it's extremely popular. it's hard to say what it should be worth. yeah. >> you closing on your on your how many sixth core fund. >> avc six just closed officially announcing it's a we did $998 million cap and it's our biggest one i'd like to keep it under $1 billion. but it's this. this is the most exciting time to be investing right now. there's the stuff you mentioned in defense. ai services is a huge area. it's going to add productivity to our economy. this is a this is a really cool time to be in venture capital in america. >> all right. i have more to ask you about. i is it is there anything to the notion that trump is setting up not closer relations with russia, but but to somehow offset or drive a

wedge between russia and china at this point? >> i think that would be very smart, by the way. i think i think china, i think the ccp, unfortunately, is clearly our largest geopolitical rival. i think it's very scary how they operate. they've they've murdered friends of mine internally who are chinese. they've done a lot of terrible things. i think bill clinton was very smart to engage with russia. i have no you know, putin is not, in my mind, a good person. but it doesn't mean strategically, you shouldn't try to engage and you shouldn't try to separate those two. >> that does get conflated a lot that that trying to end the war or trying to talk to putin somehow you're forgiving him for all the atrocities that that we all know was. >> a lot of bad guys in the world. and we should we should understand them and know them and engage in order to get the best results. >> some bad guys have. how many nukes does he have? he's got at least a thousand, does he not? that's just a fact. >> i shouldn't let him bully us with that. but at the same time, you got to be reasonable. >> yeah, you got to be. you got to know that i don't know what the end game is for. for ukraine at this point anyway. joe. thank

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custom frames and counting. get started today at framebridge. com. >> tech giant apple hit with another round of china tariffs and additional 10% took effect today. steve kovach is here. he joins us to talk about that impact and what it means for some big stocks. >> yeah, this is the double whammy. 10% on. >> top of the 10% apple is already going through right now. and by. >> the. >> way this is coming. as tim cook ceo of apple, has been pushing so hard for relief last month, late last month, he met with trump in the oval office. and a few days after that meeting, they. apple announced on monday that there was this $500 billion investment in the united states that includes manufacturing for artificial intelligence servers that they'll be building down in houston, texas. and lists have been saying most of that spending is likely planned already. but still, that was the offer to trump. and before that,

tim cook made that $1 million personal donation to the inaugural fund and even attended the inauguration with all those other big tech ceos. and by the way, cook was the guy who kind of wrote the playbook for getting tariff relief from trump back in the first administration. and since then, we've seen so many of his peers in the industry take that playbook as well. analysts have been saying, though, that in that first round of tariffs, it would be low single digit percentage hit to earnings. so we'll see what they say for this round. so far no analysts notes on that this morning. but i'm expecting that to come in the next couple of days. and the big question. does this mean price increases for apple or does it mean they're going to absorb the cost? apple is not saying right now, but we've actually gotten a couple of hints of what the pricing strategy under these tariffs might look like. the iphone 16 e, which was announced a couple of weeks ago, that is up $170 from the previous model that it was replacing. and this week we're expecting a new macbook air and maybe a new ipad air. so watch for those to increase prices versus the

models that came out a year or so ago. that is going to be our best hint until we figure out something more formal from them. >> look, there are still business leaders who we've spoken with today and earlier who are saying, look, maybe this won't stay in place, maybe this will be negotiated. >> i think that's the hope. >> that's the hope. is that the strategy? >> yeah. then that's the hope. and i mean, i don't know what else tim cook can give besides $1 million of his own money, besides showing up at that inauguration besides, you know, saying this $500 billion investment, we're going to take some of those ai servers that we were making overseas. we're going to bring those to houston. they're going to start building iphones in the united states. so they can't do that. they're doing some chip manufacturing through tsmc in arizona. what's left. >> i guess the question is, has the market reflected the potential reality of tariffs staying in place for a while? >> not it doesn't seem like yet. because look, if the what the analysts have been saying is if it shaves that much off of eps, it just with that 10% throw on

the other 10%, throw in retaliatory tariffs. and by the way, it's not just apple. every pc maker pretty much makes computers over there. microsoft. this hurts microsoft in a way, because they collect all that revenue from those pc makers when they license windows. they've already warned of a tariff impact from that. so it's not just apple, it's anyone who makes stuff over there in the united states or in china and brings it over here. it's going to trickle down through a lot of it. >> steve. >> thank you. thank you. >> all right. coming up. target warning of first quarter profit pressure. the stock has bounced around this morning. it's unchanged right now. we're going to go through that report with an analyst next. plus another big hour squawk box. still ahea. house majority leader steve scalise mattel's chairman and ceo. and commerce secretary howard lutnick. stay tuned. we'll be right back. >> what drives your business? numbers. data? sales? sure. but

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khalid is now in two phase one clinical trials in collaboration with city of hope and northwestern university. >> hey, small business owners, pickleball is kind of like bookkeeping and. >> accounting, right? lots of strategy. >> lots of effort. and if you don't have the right partner, you just won't win. it's time to team up with a winning partner. call zendaya and let's get that win today. zendaya, the official bookkeeper. >> and accountant for small businesses. >> april 8th join the cnbc changemakers summit featuring powerful women transforming and redefining leadership in the world of business. request an invite at cnbc. changemakers. >> we've got a really optimistic outlook for the full year, and in a few hours, we'll talk about our confidence in the next five years. and sitting here today, i'm very excited about where target sits as we think about the next five years and how we build on the momentum that we built in our business. that was target ceo brian cornell, who

was with us in the last our holiday quarter. earnings and revenue beat the street's expectations, but target did warn that it is expecting a meaningful drop in first quarter earnings compared to the year ago period, as it deals with what it calls ongoing consumer uncertainty. that stock right now down by about $0.50. it's been up by over 5%. it's been down by a couple of percent bouncing around this morning. but joining us right now with more on target's report and the outlook is michael lasser. he is ubs retail analyst. and michael i know you were pretty bullish on the stock heading into this. what do you think after what brian cornell said this morning. >> we're still bullish becky. >> and there's. >> three takeaways. >> from this quarter. >> number one there in. >> the fourth quarter. the company. >> saw some. increasing strength in certain. discretionary categories. areas like. >> toys apparel. >> exactly. that shows that. >> as the. >> those areas. >> recover target's going. >> to be a. >> prime beneficiary. >> second its. >> profitability improved. >> meaningfully versus what was expected. >> in the fourth quarter. >> and that. >> should set it on a good

footing into next year. >> it also. >> set guidance for the 2005 calendar. >> year that. >> we think is very reasonable. >> it basically. >> said. >> look. >> we're going to. >> do what we did in 2024. >> from a sales perspective. >> and. >> our profitability. >> is going to improve. >> there's a lot. >> of uncertainty in the consumer environment right now. so the fact that target set reasonable expectations means the stock should set up well for this year and beyond. >> let's talk about those uncertainties, though. cornell laid it out for us this morning. it's questions about the tariffs. it's questions about how the consumer is feeling, whether they are going to come back in and be willing to spend again. and he even said that consumers could see higher prices as soon as this week in the next several days, if these tariffs do indeed go into effect on things like produce, because right now, this time of year, we're so reliant on produce coming from mexico. >> yeah. >> the consumer does not love uncertainty. and that is translating to more volatile trends. target also mentioned that february was a more

difficult month. we're hearing that across the board. there was some adverse weather in the last few weeks, but our belief is it was not just the weather that as all of these headlines continue to come out that is having an influence on the consumer psyche and their willingness to spend. now, if it is difficult for target, it's going to be more difficult for a lot of other retailers. and in that case, target stands to benefit from store closures. and the consolidation of retail. >> target hasn't benefited from anything in years. yeah. you've been bullish. you've been long the whole time. >> we've been bullish for the last few years. >> i mean it was $250 in 2022. we've had a strong consumer and a good economy for the last three years. and we hit a new low today in target at 119. so what what's the problem. >> so there's a couple of things. one, the consumer has been gravitating to consumable items over discretionary items. what drives the consumer to go

to target is something new something interesting and something discretionary. what drives something someone to go to? walmart is a stock up trip. so that is giving you a flavor for what is. >> it could have gotten into that business. >> what target's in that business. not in as meaningful way as walmart but. >> lower margin business. >> what else is lower margin? >> what else? >> shrink has been a meaningful problem that's probably cost it more than 100 basis points of operating margin over the last few years. so it has not been an easy environment for retail. if you look back. >> tell your clients just to hang on. i mean, did you what what's your you end up at 180 and it's now 119. >> joe, our advice to investors is this is a stock you are going to want to own for at least the next 12 months and beyond in our. >> is that. >> reliant on a strong consumer? because if other retailers benefit more when the consumer is under pressure and doesn't have discretionary funds, i

mean, you're assuming that it's going to be a strong consumer for the next 12 months to. >> we're assuming if it's not a strong consumer for the next 12 months, that is going to be more difficult for other retailers. and if you look at what's happened just in the last eight weeks, party city has gone out of business. joanne's has gone out of business. we're going to have to find a new place to go, to go get our crochet needles and our yarn target's going to be a prime beneficiary of that. those are going to accrue over time, especially as those categories come back in focus. we are not going to be in this malaise of the consumer indefinitely. it will get better. and as it does get better. target stock is five. >> year. >> chart michael. that's a mess right there right there. >> there's been some challenges without a doubt. and if we want to get critical of target there's two things. one it needs to make some more investments in its business in areas like supply chain logistics technology. >> and now it has tariffs.

>> and tariffs are going to be a challenge across retail sector. and the most likely case is that tariffs are simply going to be inflationary and that some retailers are going to be better positioned to handle that than others. >> michael, thank you. >> thank you very much. >> good to see you. it is just after 8 a.m. on the east coast, and you're watching squawk box right here on cnbc. i'm becky quick along with joe kernan. andrew is off today. our top stories. president trump hitting canada and mexico with 25% tariffs on imports to the united states and doubling tariffs on chinese goods to 20%. president trump saying the three countries had failed to do enough to stop the flow of the drug fentanyl into the united states, retaliation coming immediately from china, mostly on agricultural products. canadian prime minister justin trudeau said that his country would respond immediately, with 25% tariffs on about $20 billion worth of u.s. imports and more than $80 billion of additional

dollars worth of imported goods in just about three weeks. if the new u.s. tariffs were still in place. mexico's economy ministry said that president claudia sheinbaum was expected to announce mexico's response during a news conference this morning at 840 eastern time. we'll be speaking with commerce secretary howard lutnick about these new tariffs. get the view from the administration. what exactly it's looking for? is this a negotiation? is this a long term tariff that's expected to be in place to raise funds? we'll see. meantime, the trump administration is pausing military aid to ukraine. a white house official telling nbc news that the us is reviewing its assistance to make sure that it's contributing to a solution in ukraine's war with russia. that move comes days after a public disagreement in the oval office over the war. >> and president trump is set to deliver a joint address to congress this evening, topics that the president plans to talk about include foreign policy, tariffs, doge and immigration.

joining us now, house majority leader steve scalise. i guess you got a good seat. majority leader. >> it's going to be it's. >> going to be an exciting night. i'll be escorting the president. >> in to the house. >> chamber for what i think. >> is going to be. >> a real. >> invigorated speech by the president. he always delivers when it's, you know, when it comes to talking to american people about laying out his vision, how we get our country back on track. the theme is actually renewing the american dream, and it's been dormant for a few years. president trump has brought back a lot of hope. he's going to bring back opportunity. we have an agenda that we're laying out that we're actually starting to pass through congress, that once you see it implemented, it's going to work for those hardworking families who have been struggling. and i think president trump is going to get into a lot of those details that that is going to excite the american people, leaders. >> scalise, do you expect the president to be full steam ahead across the board on some of the

some of the things that that we talk about on a daily basis? and you see the world right now, if depending on where you're standing, you see how people are viewing some of the policies in the first six weeks, whatever you want to call it. would you see any anything like, well, we'll see how the tariffs work. we would like some progress and they may not be on for that long or any, any sort of comforter in chief for people that that maybe are watching so much change so quickly and are a little bit, i don't know, discombobulated by or fearful or do you, do you expect just i expect just full force, full steam ahead? i don't expect any of that. >> yeah. and i don't think people are fearful. i think they're excited. but as you pointed out, there's been a lot that's happened in just two months. and it's a contrast. think about this. we went through four years of a president where you wouldn't even see him for days at a time. the press. you folks couldn't

even talk to the president for months at a time because he wouldn't even do press conferences. donald trump has free will and press conferences all the time. i mean, you know, the moment you saw in the oval office with zelensky came because not only did they invite the press in for a few pictures, they actually took questions. and frankly, it exposed that donald trump's been trying to get peace. and he's trying to bring both sides together. and clearly zelensky didn't want a peace deal that day. maybe zelensky will. i hope he does for the people of ukraine. but donald trump had a deal on the table and zelensky didn't want to reach it. so, you know, you see that because the president is open and transparent. what i think you're going to see tonight is more of an opportunity to kind of sit back and look at the full vision over the next, you know, six months to a year, you know, what are the things we're going to do to help those struggling families. you know, president trump ran saying, we're going to make the tax cuts permanent, but also do things like no tax on tips, stop a massive multi-trillion dollar

tax increase that's coming if congress takes no action. we're now taking action working with president trump so that you can actually get more certainty in the economy. small businesses are sitting back waiting right now because after joe biden attacked every small business in america with rules, regulations that made it hard to create jobs, pushed more jobs overseas. president trump has already taken action to reverse some of those things to start bringing jobs back. but until we get a stable tax code, which we're going to do in these next few months, a lot of that money is still sitting on the sidelines. and i think president trump can give real certainty and calm by laying out what he expects congress to do to deliver and what he's going to continue to do with things like d.o.j. to root out waste, fraud and abuse. and as much as, you know, the washington elite class is seems to be having a tantrum over the idea that people actually have to show up for their jobs. everybody in america that's going to be watching tonight. they've been showing up for their jobs for the last three

years. it's only in washington where this parallel universe goes on. and finally, washington has to do their job like everybody else. >> congressman. but some of the uncertainty or headwinds of all the regulation on small businesses and corporations from the biden administration, some of that has actually been supplanted by by tariff talk. and i guess my question would be if you if the president were to continue to see the stock market underperform. and, you know, i'm not saying it's done that yet. it's down. i think the s&p is down less than 5%. we have pullbacks all the time. we have corrections of 10%. but if that were to continue if the gdp or the economy actually had a negative print i don't know if it will. but the atlanta fed is now talking about that. we heard from elon musk that there might be some near term pain through doge in some of the other programs. how much is the president prepared to watch

things like that happen before he might reverse some of these policies? that that might be great for the long term, but there may be some near term pain. >> well, i think the more president trump can lay out the vision to most americans who really, you know, maybe are getting their news sources from 1 or 2 places to really understand just what the long term range plan is, and also how it's going to work for families across this country. i've seen it. i've talked to the president about this, and he articulates things like reciprocal tariffs in a way that i don't think he's explained to the full country yet, where you've got a lot of countries that take advantage of the united states, and they have tariffs against us, and we don't have any against them. and he's going to put, let's say, a reciprocal tariff on a country equal to what they have on us. and then the minute that that country drops their tariff on us, we drop theirs on them. and so your ultimate goal is to have no tariffs by anybody against

anybody. if you have zero tariffs worldwide. that's where president trump really wants to go. unfortunately, a lot of countries take advantage of us with tariffs on us and we don't have any on them. that's what he's i think going to lay out in terms of the reciprocal tariffs, which most countries will face. what you're seeing with china, canada and mexico specifically is dealing with the fentanyl trade. and look, president trump was very transparent about this during the campaign talking about border security, talking about the drugs. china makes the fentanyl. they bring them into our country through mexico. and china is open and mexico and canada is open borders. and it kills over 150 young americans every single day. biden didn't do anything about that for four years. we're losing hundreds of thousands of great young people and nobody was doing anything. trump's doing something about it and telling these other countries, help us stop this flow of poison into america, or else there's a price to pay. and if they help us, those tariffs will probably go away as well.

but i think these countries now have to take a look inside and go, you know what? we have to stop dealing in drugs. you know, mexico is finally having a reckoning with the cartels, where the cartels seem to be running the country. that can't happen anymore. china has got to stop producing fentanyl to poison americans. imagine if we were making a product in america that was poisoning people in other countries, and they finally said, america, stop doing it. you know, we would have we should stop doing it anyway. but this is going to get their attention. >> leader scalise, is this more though about the fentanyl, or is this more about just feeling it's an unfair trade situation to begin with? if they agree to do more on the fentanyl front and trying to shut that down. you said you think this goes away. >> yeah, i think this is all about the fentanyl. and again, with other countries it's about fairness, reciprocal tariffs. meaning if they've got a 12 or 15% tariff on america and we're at zero, you know, why are they treating us unfairly. what

president trump is saying he would put a 10 or 15% tariff on them until they dropped to zero. and then we would drop to zero. so it's on those countries at that point to say, okay, we've been taking advantage of america for a long time. but trump trump's finally saying the game is over and now we've got to actually treat america like they treat us. we're treating a lot of our friends really well, and they're not doing the same to us when it comes to trading around the globe. let's let's get back to truly fair trade. everybody says they want fair trade. until you look at the rules and you realize we're the only ones treating other countries fair, and they're not returning the favor. let's get back to that. >> where's the big, beautiful bill? what is that? what what how's the progress right now? what's your timeline? >> yeah, the house finally passed our budget last week, which lays the foundation for that one big, beautiful bill. and again, think about this. this is the really big trump agenda that's going to kick start the economy. it's making

sure number one we secure the border. we produce more energy in america. that will lower costs for families. when you go to the grocery store, when you go to the gas pump, we also make sure that we don't have a tax increase on american families because every democrat voted no on that bill. what they did, they voted to put a $4.5 trillion tax on every american, not the millionaires and billionaires, by the way, over 90% of americans at the end of this year, if congress takes no action, over 90% of americans will pay more in taxes to the tune of thousands of dollars a year. and we're trying to stave that off. president trump, i think, will talk about that tonight. the bill is now over in the senate. they need to move quickly on it. by the way, they can't sit on this thing for weeks because the entire trump agenda rides on. getting that bill moved quickly, not at a slow pace. the normal pace of congress. we move the house bill expeditiously. the senate needs to do the same. the country's waiting. i mean, this was what the election was all about.

>> very good. all right. majority leader scalise, thanks. i might you know, i'm not going to be up that i might, though i'm going to watch part of it. i'm going to watch. come on. >> drink a little red bull. stay up. stay up a little bit later and you're going to you're going to like what you see okay. >> all right. thank you. >> all right. coming up we will talk markets. after the s&p posted its worst day since december 18th. and later tariffs on canada and mexico have begun and so have the retaliations. commerce secretary howard lutnick joins us to discuss the economic impact and what may come next. we'll be right back. >> the number of public companies is shrinking, while the number of private companies is increasing. at franklin templeton, we are expanding access to the growing opportunity in private markets, offering the potential for greater diversification and enhanced returns through our world class specialist investment managers. we are

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weakening in those futures. dow futures now off by about 140. s&p futures are down by 40. the nasdaq down by 161. let's get over to mike santoli. he's standing by at the new york stock exchange. hi mike. >> hey becky yang. >> getting to. >> some somewhat crucial. >> levels here. >> for the. s&p 500. >> in fact. >> we're indicated to open not. >> far from. >> yesterday's low. >> i mentioned. >> here. >> around this time. yesterday that friday's. >> little late. >> mechanical month. end rally,

about. >> a percent and. >> a half in the last several minutes of trading. it wasn't that it was artificial necessarily. >> but it. >> was. >> likely to get tested. so we are in the process of testing that. we also see. the 200 day average for the s&p 500 is not too far below here, a couple percent. 5720 the close on election day was like 5780 ish. so it shows you that we're kind of in the process of kind of rechecking all of these areas. now take a look at a couple of parts of this market. smaller stocks, more speculative stocks on a one year basis that have really just round trip. this is the russell 2000 small cap. this is the ipo etf. now a lot of those ipos are kind of stale. they're a couple years old. there haven't been many. but it shows you that untested and smaller companies are being considered somewhat suspect. we have this rolling economic growth scare. obviously tariffs applying a little bit of pressure in that direction. some other movements below the surface you'll see energy and materials also on a one year basis kind of backslid to unchanged ish as staples consumer staples have taken off

to the upside. obviously this also reflects a little anxiety about the economic outlook. you saw something similar here in late summer and fall staples going up. and you see the commodity related stocks going down. obviously oil prices coming down a lot. it really does underscore that this market has put inflation concerns largely aside, the bond market, saying that the commodity markets are saying that it's essentially about whether growth holds up. i would look, by the way, to see if some of those mega-cap tech stocks that have been in the doghouse start to act as a bit of a defense now that they've gotten a little bit cheaper, as well as financials, which have still continued to outperform. so those are a couple of the possible bright spots out there, becky. >> so mike tom lee was on yesterday before i mean right, maybe right at the turn of the of the year, even before inauguration, tom lee said the first the beginning of the year is going to be choppy. yeah, for a lot. you know, the new administration and new policies and, you know, all these things. but then he expected some better

action. so he was on yesterday. he said, you know we had that big run up on friday. it looked weak yesterday. we didn't know we were going to get as weak as it got. but he declined to say we had bottomed out yet. but he said i expected the bottom to be hit this week and so does some of the other people at his shop. what would cause things to bottom? what would be like the, you know, the climax or the crescendo, if you will? >> well, i mean, i think one thing you look for and just as strictly just kind of the technical, tactical stuff is for us to get truly washed out and oversold and people to start looking around and noticing bond yields have come down, some interest rates, sensitive parts of the economy and the stock market can find some footing. look, we have a jobs number on friday. if you get some kind of confirmation that the economy is hanging in there, that might partially do the trick too. but i also agree with the general point, which is if you didn't know anything going on in the news, you probably shouldn't be surprised at the way the market

has gone, not just the first year of a new administration, but also the third year of a bull market. what happens after a couple of 20% back to back gains in the s&p? you should probably have expected a little bit of this sort of choppiness. we are down 5% from the highs. we're a little bit negative on the year. so it's not as if we've sort of cut into muscle yet. >> yeah we did to 22. no 22 times earnings. we talked about all that stuff right at the beginning of the year. doesn't mean it's imminently going to pull back. but if i were, you know, heading into administration, taking over the beginning of this year, i'd be like, ooh, you know. >> well, hey, if they're still targeting the ten year, then they're in the money at this point. >> that's true. okay. all right. thanks, mike. >> joining us right now to talk more about what they're seeing in the markets is ironsides macroeconomics managing partner and director of research barry knapp. barry, let's let's talk this through. first of all, do you think the market has priced in tariffs that actually take

effect and stay in place. let's say for at least a number of months? >> first of all, i. >> think there's. >> more. >> downside for sure. i think. >> tom's as funny the second time i've gotten asked about tom in. >> the last. >> week, actually. >> but i. >> think tom's timeframe. >> is too short. >> i think that. >> the in terms of the volatility. >> well, in terms of the market bottoming right now, because we are going through. >> a really. >> complex transition from what treasury secretary yellen called modern supply side economics, which is industrial policy, government spending driven growth, government wages and employment growing three quarters of a percent faster than the private sector, something that's only supposed to happen during a recession, to try to spur a rebound in business confidence and more capital spending. and that was, to me, what was really shocking on thursday was that gdp revisions showed capital spending subtracting a half a percent from gdp when government

spending was adding a half a percent. and the two categories, which have just been absolute lower left to upper right for decades software investment, r&, investment, intellectual property products slowed to basically zero. so we've got to make that transition. and if you think about it from a timing perspective, you cut spending. there's an immediate impact on the economy, slow government employment. and it takes, you know, one quarter to three quarters to get capital spending to kick in, which will lead to the healthy broadening out of earnings that everyone's been talking about for the better part of a year. so this is a difficult transition. so, you know, a couple of weeks ago, after the reaction to walmart earnings, and i was talking to my old colleague michael lasser, you had on earlier in the lobby about it, that to me was a real sign that the market is very sensitized to weaker growth. and for me, the bigger problem is not our trillion dollar trade deficit, it's our $2 trillion budget deficit and trying to get that under control. so we're

going to have a couple of quarters of significantly weaker growth for the market to bottom, you know, 4 or 5 months before we get the deceleration of growth process to unwind. seems a little early for me. >> so it's kind of interesting. we were talking about it. earlier this morning, the idea that animal spirits was all anybody was talking about in january, early february, that businesses were ready to put things to work because this was the most pro-business administration they'd ever seen. right. i think talk around the tariffs has led to some uncertainty that makes businesses maybe pull in their horns a little bit. >> well, the way i monitor this and measure it is the regional fed surveys that, you know, just got finished last month. all the february surveys from kansas city, richmond, dallas, empire state, the whole thing. we had this big surge in six month forward capital spending plans from november through january, and they were traced about half of the increase in february. right. so businesses are sort of

saying, well, yeah, we want to put more to work. we want to hear certainty about tax policy. that's why the sequencing thing has always been an issue too, right? if you hit him with the stick and tighter trade policy before you finalize the better tax policy, then that creates. i hate the word uncertainty. it's like someone coming on and saying the market's going to be volatile. what does that mean? is it going down or not. you know but these capital spending plans took a hit. so it's certainly a valid point. and tariff and trade policy is undoubtedly the reason. >> so what do you tell people to do right now. should they invest in this market or not. >> well. >> so i think it's worth it. the growth scare soft patch and growth is worth at least 10%, probably 10 to 12, down 10 to 12. and with tens below 4% at that point we are going to get the fed to start cutting again. i'm in the camp. they're going to cut a full percent this year. >> even if inflation doesn't go along with. >> inflation is the first order effect. the second order effect is weaker growth. i mean it's a change in relative prices. inflation is always and

everywhere a fiscal and monetary phenomenon. so we're going to cut government spending. that's what the fed should be focused on not trade policy and not the first order inflation effect. so for me they will be cutting again by may, which is one of the corrective mechanisms for all this. so we have i actually would disagree with mike what mike said. not really disagree, but shade it such that if we do get a weak employment report, and goolsbee described the labor market as stable, full employment, totally disagree. it's unstable. we have churn, the turnovers collapsed. the demand is weak. if you look at the bottom quartile of workers, their wages are growing 4/10 of a percent slower than the top. that was 3.6% above in january of 2022. so you crushing low end wages labor markets weak. we get a really weak number and a very violent sell off. maybe at that point you get the fed to start pivoting back towards easier policy. >> happy or not.

>> now i'm happy because i live in vail, colorado. >> no, i know, but are you happy that we're going through some of this reckoning? >> i just think it was it was absolutely inevitable. >> and it will come out the other side. >> we need to transition this economy from government spending to really getting capital spending. >> come out better on the other. >> side. 100%. okay, 100%. that was totally unsustainable. and our bond market was on the verge of some big, big problems. and, you know. >> and you live in vail, so. okay. so you are happy. all right. >> thank you. i'm always happy. if i sounded angry at you. >> know. >> my intended tone. >> but, you know, 10 to 12% they're doing this. this bad stuff is happening this, that, but that. i needed some light at the end of the tunnel. >> that would be. that would be a good window, right? because we do need to get the fed back easing. we've talked about this before. they absolutely crushed small businesses, floating rate borrowers, you know, by not unwinding their balance sheet more aggressively and jacking short rates up, they caused a lot of pain for small businesses and people that live paycheck to

paycheck. we need to sort that out. >> okay, barry. thank you. when do you go back. >> a friday. >> okay. up next. that great snow this year right? yeah. up next when targets when target expects prices to rise. when they do after the new tariffs brian cornell's comments are next. and then the ceo of mattel is going to join us to talk tariffs and toy prices. squawk box will be right back. >> i came. >> crypto needs speed. solana executes transactions 28. times faster than ethereum. >> and. >> at a fraction of the cost. whether it's fueling meme coin mania or building. infrastructure for high frequency trading networks on wall. >> street. >> developers are. >> choosing the solana network. and now. osprey brings you a tradable ticker for solana. don't let solana fly by. >> you can start. >> investing in it right from your brokerage account or ira. >> osprey funds your trusted guide. >> to. >> select crypto. >> many probiotics. >> don't survive digestion. that

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people. >> took deep. >> sick to mean actually that you need less compute. >> from a. >> demand perspective. deep seek was fantastic. it opened. sourced the reasoning model. >> that's absolutely. >> world class. >> i has. >> become better. if you believe every customer experience is going to be reinvented by generative ai, then you're going to be building a lot of generative ai apps. even if you say i, i don't think this could be deflationary in the short run. it may very well be deflationary. you know, after 3 or 4 years. but most of us for now, we're spending more money on, not less. >> target earnings and revenue topping estimates. same store sales matching the company's guidance. we sat down with ceo brian cornell earlier and asked him about the tariffs and the impact potentially on prices. >> during this winter season. we depend on mexico for a significant amount of supply. you know, those are categories where we'll try to protect pricing, but the consumer will

likely see price increases over the next couple of days. >> over the next couple of days. so those are in. >> short supply chains. you think about all the fresh produce. you know, we depend on mexico during the winter. we're going to try and make sure we can do everything we can to protect pricing. but if there's a 25% tariff, those prices will go up. >> target says that it expects to see meaningful profit pressure in the first quarter relative to the remainder of the year. for the full year of their guidance is still about in line, where the street's expecting. at least it's the midpoint of the range. up next, we're going to talk retail and toys with the ceo of mattel. i should also point out that the ceo of best buy just said on the call that price increases are highly likely as the result of tariffs likely as the result of tariffs as well. squawk box ♪(voya)♪ there are some things that work better together. like your workplace benefits and retirement savings. voya helps you choose the right amounts without over or under investing. so you can feel confident in your financial choices voya, well planned, well invested, well protected.

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>> welcome back everybody. toy giant mattel is one of the many multinational companies bracing for the impact from tariffs on mexico and china. for more on that, and a little preview of the new york international toy fair, we want to bring in ynon kreiz. he's the chairman and ceo of mattel. and ina, thanks for being here. >> thank you for inviting me. >> i know you're in town for the toy fair, but you've got some interesting things that are happening just on the tariffs perspective. what does it mean for mattel? how how much of the toys that are made and brought in from places like mexico, canada and china? >> well, it's great to. >> be back in. >> new york. >> a toy fair the gallery looks amazing with new innovation and great product. and of course we are looking at the developing

scenario with tariffs. >> but as a. >> company, we've done a. >> lot of work over the last few years to position material with a very strong supply chain that is flexible and resilient and can respond to changing market conditions such as tariffs. >> i mean, this is an interesting point. we've heard this from every ceo we've spoken to. even brian cornell earlier this morning was talking about this. ceos and companies have been on notice, i would say, since pre-covid, maybe since the last trump administration. but then with the covid issues that came through to trying to make sure that they could diversify their supply chains. how are you working around this? what are you doing right now? where where do you bring things in from? >> well. >> this is a journey that we started six years ago. we make product in a mix of our own factories, as well as third party suppliers in seven different markets. china today represents less than 40% of our global manufacturing, with the us being about half. okay. and in two years, no one country will represent more than 25% of our global manufacturing. this

is not about china per se and not about tariffs. this is about diversity, diversification and managing a resilient supply chain that is flexible, modular, that can address different scenarios. >> where where do things stand right now just in terms of what it would mean for your profit margins this year? how do you guys play into this? i think there are a lot of people who are still hoping that these will be temporary, at it will be negotiated away pretty quickly. where do you come down? >> well, you follow the story over the last few years, and you saw that we took our gross margin from the low 30s to over 50%, with 340 basis point increase last year comping the barbie movie. so we continue to show improvement and strength in our operation. and this is what we do. we manage complexities. we know how to respond to different scenarios and continue to improve our business. >> the barbie phenomenon was pretty unbelievable. there was a lot of hype that went into that.

it didn't necessarily pay off entirely in the stock. the stock was up 8% over the last year, but that was a little below the s&p 500. but you have a lot more in the pipeline. what is it this year? masters of the universe. and you have the cars one as well. >> we're very excited about our film slate. we have two movies in production right now. masters of the universe, as you said, is in production in london. i've been to the set. it looks incredible. and matchbox is another movie that we're now producing with skydance. >> and with john. >> cena with john cena in the lead in the lead role. so great. and then we have 14 other movies that we are now developing with major. >> what does that mean for toy sales? do you produce after after seeing what happened with barbie, do you produce a lot of toys? assuming that those toys are going to be the hot hits? >> it's a combination. we run a very strong and high performing toy business, and the opportunity for us is to take our brands, iconic brands and extend them to other highly accretive business verticals in the entertainment industry. and

in a world where everybody is looking for big brands that rise above the noise and attract fans with a built in audience, it's a very strong position to be in and we're very excited about the reaction. the barbie movie was a showcase for the strength of our brand and the potential for mattel in films, and capture significant value outside of the toy aisle. and this is the this is the journey we're on. >> but does it lead to increased toy sales like barbie sales? and can you profit off of that maybe more quickly with the new movies that are out there? >> of course, it it will have a halo effect. barbie sales did increase with the movie, although the movie, the barbie movie was not designed to drive toy sales directly, but it did. of course, it's about creating a holistic experiences around our brands that will resonate in culture. and this is the job that we're. this is a journey we're on and the job that we do. >> would you develop a. sequel

to barbie or people writing scripts? is there? i don't know how it ended. i didn't see it. it's become human or something. can you not do that? >> well, you should you should see the barbie movie. well, you will enjoy it, i promise you. and of course, the our our goal is to develop film franchises. >> so you. >> will have not just about. >> a sequel. >> we haven't said anything publicly, but we did say that we're looking to create film franchises across all of our all of. >> our brands. >> i mean, jason came back 13 times. he died every time. well. >> barbie barbie has been on a journey for 65 years. yes. and barbie is in an excellent position. and of course, what the movie created was an entire cultural phenomenon. this was not a movie that was designed to sell toys. we never thought of it as making a movie. it was about creating a cultural event. >> it was cultural. >> although dead. although little girls headed, dressed up, headed, all. >> the older girls.

>> dressed exactly right. it was fun. it was. >> and what you find is our brands really resonate in culture. people don't think of barbie as a toy. barbie is a pop culture icon and hotwheels is so much more than a car. so we have right now, as i said, other than the two movies in production, 14 other films in development that we've announced with major talent and of course, many more in the pipeline. >> and i have to say, every time i turn around, there's another cultural reference. sam altman was just talking about the spat that they're having with mark zuckerberg, saying he's going to launch their own ai app. he said, well, maybe we'll just do an uno reverse on them. and wouldn't that be funny? and you guys are uno. to which. >> of course, uno is another incredible brand that we own. just won the game of the year award at toy fair. uno had a record year and continue to drive innovation and be a cultural reference, as you say. and that that's the strength of the portfolio that we own. and the opportunity for mattel is to take iconic toy brands, continue

to grow our toy business, but expand, extend the business model to the entertainment industry across multiple verticals. it's not just film, and it's not just barbie, it's television, digital games, mobile games, location based entertainment, and across multiple verticals that are all driven by big brands. >> you know, we have to run, but is that a red eight ball that's standing next to or sitting next to the two barbies that are here? >> that's right. this is a collection of ruby red toy products that we are introducing a toy fair as part of our celebration of mattel mattel's 80th anniversary. >> congratulations. thank you. ina, thank you for coming on. it's really great to see you. >> thank you. thank you for inviting me. >> up next, commerce secretary howard lutnick and we're watching crypto prices this morning, dropping on concerns about god knows what. but it says here economic impact from tariffs on canada, mexico and china. squawk box will be right back.

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secretary, we hope to get that. no, we didn't, but but you were on quite a bit before it all became official. but hopefully this is beginning of a lot of appearances. and you can come in studio as well. it's good to see you. >> great to. >> see you. >> i think of cantor as more bond than stocks. if we were going to measure what's happening so far in the bond market, things are going swimmingly with the ten year. i'm not so sure about the stock market at this point. how much how much do you expect as far as a reaction to some of this stuff? and what is the president's and your tolerance for a dislocation, if you will, in the stock market? >> well. >> remember. >> the current. tariff policy. is a. >> drug related policy. >> there's opioids. >> pouring into this country. they're killing about 75,000

autopsied americans a year. so imagine if you lost. >> or i lost. >> one of my children with the first thing i do is worry. >> about. >> an autopsy. so the. >> president thinks there's multiples. of that. people who've died and there is no price for american deaths. so his view is we've got to protect american lives. and that's what these tariffs are about. so let's differentiate between today's tariffs which are about saving american lives. china makes the opioid products and then mexico and canada feed them into america. and that's got to end. they've done a nice job on the border but they haven't stopped the flow of fentanyl. and then if you want to talk about trade policy that starts april 2nd. and that's a very, very clear reset that these countries have used us and abused us. and that is going to change. but that starts april 2nd. so let's keep the two separate. and i'm happy to talk about either way. >> an ounce of fentanyl is bad. but it just sounds when you talk

about canada it sounds like an excuse. or at least people think it's an excuse. how are 43 pounds came across the canadian border last year versus 21,148 pounds across from mexico? so is it really fentanyl? i mean, i can give you and you can confirm whether this is true. the milk still 270%. cheese 249% butter. >> or poultry. >> 238 eggs. i mean, it's across the board. these are peanut butter. all this from canada, 295%. why use fentanyl as a. that would mean that you you could take the tariffs off if they did something with fentanyl and make no progress on all the tariffs or on all the tariffs that are coming from canada down here. >> remember, the process in america for tariffs is that the president launched a study. and those are the rules of tariffs in america. and that study is finished on april 2nd. so on

april 2nd, the president will have all the tools in his arsenal that he wants to do to reset tariffs. so he will be addressing all of those products in canada. the fact that, you know, canada has a national sales tax. another way to say it is a national tariff on our on our products. and we sell, you know, they import from us very little and we export and they export to us huge amounts. so the idea is that's going to be reset. but that starts april 2nd. now we just, you know, people say, oh, it's only a small amount of opioids. you know, they're only killing 75,000 americans. you shouldn't worry about that. i mean, the president is not going to take that laying down, okay? he's not this these things just have to end, and we need to see material reduction in autopsy deaths from opioid. and that's what the president is talking about. this is not a trade war. we are going to reset trade policy on april

2nd. you've got china has got huge tariffs on us. huge tariffs on everything with us and canada. you just talked about why do we produce cars in canada. they've had an invitation canada and mexico had an invitation to trade with the amazing economy of the united states of america. and they have abused that invitation. and the president is going to resent that. but that's april 2nd. that's not today. today's opioids april 2nd. i'll be here talking to you about how trade policy is going to change, and we're going to make it fair to americans. i know people worry about short term, but we are going to bring jobs. you are never going to see the amount of production come back to america than donald trump is going to bring back to america. trillions and trillions of dollars of production is going to come back to america, creating great jobs in america. and that's why americans elected donald trump, and he is going to deliver for them. >> secretary lutnick, let's let's just focus on the ones for

today that you're talking about, the ones that you say are related just to fentanyl, just because i guess we have a little more time to consider the others today. brian cornell told us earlier this morning on the show that shoppers at target could very well see increases in the prices that they're paying for things like produce and vegetables. because of the time of year. right now, they rely we rely on a lot of those imports coming in from mexico. so if that goes up by 25% today, by the end of this week or early next week, shoppers at target and other stores could see the increase immediately. on best buy. the conference call today. the ceo also said that those prices could go in fairly quickly. price increases could go in fairly quickly if these 25% tariffs kick in today. what what does canada need to do? what does mexico need to do. they were able to push off these tariffs the last time around in the 11th hour. is that possible to happen today. is there anything they could do to for the administration to say, okay,

we won't put these tariffs on today. at least we'll push it off and see what else happens. >> well, of course, if they can stop the flow of fentanyl and they can prove to the president they can stop the flow of fentanyl, then of course the president can remove these tariffs. but you've seen it. it has not been a statistically relevant reduction of deaths in america. it's just black and white. and we told them it was outcome based that i understand that canada says, oh it's only a small amount of fentanyl. you know, it can only kill 9 million americans. it's not that much. whereas, you know, the flow of fentanyl from mexico could kill everybody in america. i mean, you got to be kidding me. it's got to stop, and it's got to stop really right away. right away. and china's got to stop producing it. so i understand that there are threats. hopefully mexico will understand that this is not a trade war, right? this is a drug war. hopefully they understand that. we keep saying it again and

again and again. on april 2nd. we're going to have lots and lots of discussion on how to reset trade correctly. but that's april 2nd. i'm happy to talk about it now. but you know, we expect, for example, on april 2nd, we want car manufacturing to come back to michigan to come back to ohio. nafta gutted michigan and gutted ohio. and on april 2nd in that time, we're going to try to start bringing cars back. we're going to bring back those great jobs. we're going to bring back production of enormous amounts of things and make america a manufacturing center again. so, yes, there's going to be, as the president said on the campaign trail, there may well be short term price movements. but in the long term, it's going to be completely different. this is going to be the greatest america. we'll have a balanced budget, a balanced budget. interest rates will come smashing down. and i mean 100 basis points, 150 basis points lower. you're going to have

income taxes. no tax on tips, no tax on social security, no tax on overtime. this president is going to deliver all of those things and drive manufacturing here. and these things are important. >> the journal you know they don't like tariffs. and they've been sometimes they're nice to or positive about some of the moves of president trump but sometimes negative. they've never liked the tariffs. they got a piece today cross border some car parts and cars go back and forth eight times across the border are going to be taxed every time or after every time there's an estimate. anderson. economic group, that 25% tariff will raise the cost of a full size suv assembled in north america by $9,000, a pickup truck by $8,000. you wouldn't want to have that on very long, would you? >> can i ask you a question? why does why do cars that are sold in america get made in canada and mexico, as opposed to being

made here? seriously, part of it is you want to have a trade conversation. why why why why why shouldn't americans just wave a. >> magic wand and move everything immediately? it's going to take time. >> a big part of this was because of what was negotiated under the last trump administration with the new nafta, usmca. >> and usmca, the president has been crystal clear that he thinks that michigan and ohio, the communities of michigan and ohio, they've been ravaged by these ideas. and the concept is let's bring that production back. i've spoken to the car manufacturers. they have ample excess capacity in america, and they can move that production back. i agree with you. they can't do it in three months, but they can do it in six months. and you're going to see jobs created in america, cars in america. you build it here, you don't pay any tariff. and that starts on april 2nd. but today we've got to save lives. but on april 2nd, i think you're going

to see a reordering and a re, you know, negotiating with our trading partners and trying to make the world fair and reciprocal. you guys have no idea how bad the deals are that america suffers with everybody charges like you just you just said imagine dairy is 250% in canada. you guys don't think about that stuff. but it's unbelievable the way we get ripped off around the world and donald trump is going to level, set it, make it reciprocal and make it fair. but you can't kill americans and get away with it. you just can't. >> the we do we do want to reward friends. and i don't know whether you say punish our enemies, but what is what is china? are they friends? are they enemies? are they a security risk? are they the biggest, the second biggest economy on the planet? it's a very it's symbiotic. howard, how far do we want to push that? and how bad? i mean, how much pain are we going to be willing to take in inflation if, you know, if all of a sudden they hit us

right back, remember? >> so you made one comment. so inflation comes from a government printing more money. some prices can rise from this bottle of water. >> it can't happen. >> at all. >> no tariffs. tariffs do not two tariffs do not do not do not create inflation. printing money creates inflation. you have a balanced budget. there can't be inflation. it doesn't mean one product can be more expensive and one product can be less expensive. but china i'll give you an example. china has the highest tariffs in the world. in the world everything gets taft in china and they don't have inflation. in fact, they have deflation. india the second highest tariffs in the world. they don't have inflation. so this concept is just people whining and complaining and not being truthful. the fact is we need to protect america. why does china tariff everything. and we give them a free ride back here and they subsidize the opioid production. they subsidize opioid production.

>> can i just ask you very quickly, the american automotive policy council president just put out a statement on the tariffs. he said, we continue to believe that vehicles and parts that meet the usmca's stringent domestic and regional content requirements should be exempt from the tariff increase. our american automakers, who invested billions in the u.s. to meet these requirements, should not have their competitors undermined by tariffs that will raise the cost of building vehicles. is there a chance that they would get an exemption? >> well, look, that that is a discussion. the president's always thought about that, right, about usmca. but this is remember that the problem is this is an opioid related tactic. today we need to have opioids stop flowing into the country. on april 2nd. we're going to reexamine trade policy. but that comes april 2nd. and we understand that there are production in mexico and canada. but let me ask you a question. why don't you go ask those auto manufacturers what percentage of their parts are made in america, and it would shock you in a negative way to say that many of

the cars that they think are produced under usmca have less than 10% american parts, less than 10%. we've got to bring this stuff to america. it's got to be produced in america. >> the secretary will to be continued. hopefully we've got four seconds left. thanks for coming on today. we appreciate it. hope to see you again soon. >> that does it for us today. we'll see you tomorrow. bye. >> good tuesday morning. welcome to squawk on the street. >> i'm carl. >> quintanilla with jim cramer. david faber at post nine. of the new york stock exchange. >> futures do. >> lose some earlier gains as tariffs are. >> now officially in effect. >> china retaliates. >> bonds rally as now some retailers like target and best buy tell us when we can expect prices to rise. our roadmap begins with the president's tariffs against canada, mexico and china. but beijing and ottawa are retaliating. >> also ahead,