Trump Says 'Tariff Has to Be a lot Higher Than 10%'

"The higher the tariff, the more likely it is that the company will come into the United States and build a factory in the United States so it doesn’t have to pay the tariff," Trump said. When interviewer John Micklethwait argued that would take many years, and consumers would be paying higher prices in the meantime, Trump said, no, it would be quick.

"In fact, I’ll tell you, you know, there’s another theory is that the tariff, you make it so high, so horrible, so obnoxious, that they’ll come right away," he said.

Trump said a 10% tariff on goods would bring hundreds of billions of dollars into the Treasury, reducing the U.S. deficit.

"But really -- so there’s two ways of looking at a tariff. You can do it as a money-making instrument, or you can do it as something to get the companies -- now, if you want the companies to come in, the tariff has to be a lot higher than 10%, because 10% is not enough.

"They’re not going to do it for 10. But you make a 50% tariff, they’re going to come in."

Trump said the possibility that he would win the presidency halted construction on massive automotive factories in Mexico, and he told a long story about a friend he knows that builds those plants.

"I said, 'I’m going to put a 100, 200, or 300 [% tariff], I’m going to put the highest tariff in history, meaning I’m going to stop them from ever selling a car into the United States.' So I just see the guy, by accident, I see him, he says, sir, 'they’ve abandoned,' and by the way, they built foundations, they were really rocking, they were going to do it. They thought that I was going to win, or maybe they’re just holding up.

"I tell you this, if I don’t win, those factories are going to wipe out this country. They’re the biggest factories ever built for cars, they’re going to wipe out our country. If she wins, and she won’t even, she doesn’t know what the hell she’s doing. If she wins, and she’s not going to be thinking about, I couldn’t, every speech I made having to do with cars, but every speech I made having to do with tariffs, I’d mention that our country is being threatened by Mexico.

"Now all of those things, beyond even the car companies, all of those things are now dead. They’re dead, I asked them, will they start? Probably not, they’re dead as a doornail. If she gets in, it’ll start up again."

The Commerce Department just proposed a rule that could ban the import of any car with even substantial Chinese minority ownership, whether built in Mexico, Europe or anywhere else, if it is considered a "connected car." The current U.S. trade representative has also said that she will be talking to Mexico about keeping Chinese investment out of the auto industry as part of the USMCA review. Both parties are trying to prevent China using Mexico as an export platform for cars to the U.S.

Micklethwait suggested to Trump that critics believe the biggest problem with his tariffs is that they are so widespread, they anger allies that the U.S. needs for geopolitical and economic reasons.

"If you look at the last Cold War against the Soviet Union, America won it in part because it rallied allies to it," Micklethwait said. "You’re talking about slamming allies with 30%, 20% tariffs. Isn’t this time you’re going to end up trying to rally the West, and you’re dividing it instead? Isn’t that the real problem with tariffs, even beyond all the problems due to the economy, where you keep on bringing up these individual examples, but the overall effect is going to be dramatic? How does it help you take on China?"

"It helps tremendously," Trump replied. "It helps tremendously because China thinks we’re a stupid country, a very stupid country. They can’t believe that somebody finally got wise to them. Not one president -- Bush, Obama, Barack Hussein Obama -- have you heard of him? Not one president -- not -- think of it. Not one president charged China anything.

"My question was about your allies, not about China," Micklethwait interjected.

"But our allies have taken advantage of us more so than our enemies. Our allies are the European Union. We have a trade deficit of $300 billion with the European Union," Trump said. "Our allies are Japan. I went to [former Prime Minister Shinzo Abe], and I said, 'Shinzo, we have to talk.' 'What?' 'Trade.' And he goes, I’ll never forget it. 'I know.' I said, 'What do you know?' 'I knew you’d come to me.' 'Why do you say that?' Because I can’t believe -- I wouldn’t tell this story if he was alive, actually. I said, 'I can’t believe how many years it’s been that nobody even negotiated with us in America.'

"I said, 'Shinzo, you have to pay for your cars. You’re sending millions of cars. You don’t accept a car from us. You don’t have one car that you accept, and yet we’re selling 3 million, 4 million of your cars.' I said, 'Shinzo, on agriculture, you won’t even accept our agriculture.' And I renegotiated the whole trade deal from a little disadvantage because I was stuck with a bad deal. I mean, I got stuck. We have trade deals that were so bad that I said, 'Who are the people that are doing it? They’re either stupid or they’re getting paid off.' Okay? It’s one or the other. It’s very simple.

"We had the worst trade deals all over the world. South Korea -- I love South Korea. They’re wonderful people, extremely ambitious. They have a money machine. We protect them from North Korea and other people. North Korea is very nuclear. I got along with them very well. Kim Jong-un.

"But wait, they don’t pay us anything. And I said, 'This is crazy. If I didn’t put tariffs on -- you know, the car companies, they make most of their money [on] small trucks. I put tariffs on China, and I put 27.5 percent -- otherwise, we’d be flooded with Chinese cars and all of our factories would close.'"

Trump noted that during his administration, the Korean free trade agreement was reopened, and the 25% tariff on light trucks that had been scheduled to phase out was extended for many more years.

He said if foreign companies could sell trucks built abroad in the U.S. without facing those tariffs "you would be inundated. Every car company would be out of business. And I got calls from Ford. I got calls from everybody saying, 'Sir, I can’t believe you’re doing this for us. You saved our company.'"

"I saw trade deals that were so stupid that you’d have to be -- excuse me -- that were so bad that you’d have to be an idiot to sign them," he added. "And we signed them for years. We had -- we had -- I could tell you trade deals that I have never seen. I said, who would agree to this?

"They had to be corrupt. They had to be corrupt. And to make those deals, they had to be corrupt, because there’s no way a rational human being -- I always say either corrupt or extremely stupid, because there’s no way a rational human being would ever sign the trade deals that this country signed. And I got out of many of those deals."

Trump suggested his force of personality helps get results in ways that his treasury secretary could not. He told a story about speaking with French Prime Minister Emmanuel Macron after France has passed a Digital Services Tax that targeted large U.S. firms.

"I didn’t even like the companies, but I’m representing American companies," Trump said.

"So I said to [Treasury Secretary Stephen] Mnuchin, 'call him up and say, no way.' He did. And he came back to see me. He said, 'they won’t do it, sir. It’s too late.' I said to somebody else, 'you call him.'

"Then I said, 'let me do it.' And I called him. And I said, 'Emmanuel, you’re taxing American companies very substantially. You’re not doing it with other companies. You must think we’re stupid. It’s not going to happen.' 'But Donald, Donald, I cannot do anything. It’s too late. It was approved by a legislature.' I said, 'that’s okay.' Here’s the story. Every bottle of wine and champagne that you send into the United States, effective immediately and I’m signing it as I speak. I’m charging you 100% on every bottle of wine and champagne. You know, they like the wine and champagne, right? Every bottle of wine and champagne that comes into the United States of America has a tax on, starting on Monday morning, this was a Friday, of 100%.

"And that’s better than you’re doing, okay? And he said, no, no, no, you cannot do that. I said, I’ve done it. It’s already signed. On Monday morning, he goes, may I call you back? Yes, he calls me back in about three minutes. We have decided to remove the tax from the company. I did this all day long."

Trump acknowledged that he made exceptions for companies that came and talked to him, such as Apple, so that their products wouldn't be hit by 25% tariffs. Micklethwait said that's much harder for small companies to achieve.

"We do it for small businesses. I’ll give you another example. We have a man who I didn’t know, but he came to me. He was at a meeting, and he built kitchen cabinets. And he was, you know, pretty big in the business.

"That’s all he did is build kitchen cabinets. He said, 'sir, China and South Korea are building kitchen cabinets for one-third of what I can make them.' I said, 'what’s the quality?' 'They’re not as good, but they’re good enough. I can’t compete. I’m going out of business. I have 2,000 people that work for me. I’m going out of business,'" Trump said.

"I put a 25% tariff still on kitchen cabinets. I saw the guy two, three days ago. He said, 'I’m the man that saw you about kitchen cabinets. You saved my company when you did the tariff, and you saved thousands of jobs. And my company is now doing very well.' And he started to cry. He started to cry. He started to cry.

"And this guy hasn’t cried too much, I will tell you. He said, 'you saved my company.' There’s nobody that could have done that."