[Begins in progress]
That happens a little bit over time when these actions are announced. But in the end, it's not a question of exemption or not, but covered or not, and the covered or not is a technical and legal matter.
Do you think though -- but just to clarify that, would iPhones, for example, be something that would be covered and that as a national security?
I'm the PhD economist, so the specific matters go to the technical experts, to the legal experts of the president.
A question of China, they're limiting exports of rare earth minerals? Are you concerned about that? What kind of impact do you think that could have on America?
The rare earth limits are being studied very carefully, they're concerning, and we're thinking about all the options right now.
They're concerning how and what options are you considering?
Rare earths are a part of lots of the economy, it's a little bit of the value add in the US economy, but a crucial part of the value add. Yes.
Kevin, there are thousands of small and medium sized American businesses that rely on Chinese exports. How is the White House recommending that they stay afloat if they suddenly have to pay 145 percent more to get their goods out of port?
The Secretary of Commerce in particular has a massive team of people and also a small business administrator that are taking calls of small businesses, understanding their concerns and thinking about how best to address them, including by finding other suppliers that are not on the current list that China is on.
They say that they have tried to move their production out of China, but that's a process that takes six months, maybe a year. What can they do until then?
It depends on which product and that's why there are different experts helping the people.
Kevin, do you feel like there's been mixed messages coming from the administration from announcing the exemptions, now saying there will be tariffs announced on semiconductors sometime this week? Do you feel like there is mixed messages from the White House right now?
I don't think so. I think that the team members of the president haven't been surprised by news, but I think that because of the normal development of things, like when you say we're covering this and then the technical staff has to come out and say, well, what exactly is this? If you have a semiconductor that is a toaster with a semiconductor, a national security matter or not, there are people that have processes to decide those things and those are ongoing.
And that's been the case for trade practice, for trade law for as long as I've been in Washington, which is 40 years or so.
Has the president said he isn't worried about allies getting closer to China. But right now, China's president is meeting with leaders in Vietnam. Spain has said that they would like to potentially grow closer to China. Should the White House be concerned that this is pushing our allies closer to China?
The White House is concerned about China, period. Yeah.
Can I ask -- Citigroup downgraded [Inaudible] US equities this morning and slashed the S&P 500 index target? Do you have a reaction to that?
Just before I came in, equities were up a lot. I think the equilibrium policies of the president are going to be very, very good for the country and for equities. If you think about it, we've got a massive tax bill that includes both individual side things for workers and lots of corporate things that would be a positive price shock for markets when realized if there's uncertainty about the tax bills.
The dereg is really good for companies. It cuts like all this regulatory red tape that they have to spend money on and so on. And so, I don't see how in the long run a year from now the policies that we're looking at are viewed as anything other than a big positive for equity markets.
Just for clarity for people that are seeing this back and forth between these on and off again tariffs, will there be any exemptions on any electronics?
What we're talking about is coverage. And so, what's going to be covered -- and pretty much everything's going to be covered. The question is which law applies. And so, if there's something that has a national security effect on things, so if we buy it from some other country, then we might be unprepared in time of war if they were to turn off that thing, then that's going to be in a 232 bucket.
But then we've got the reciprocal bucket, which is kind of most everything else. And so, I think that it all has been very carefully designed and makes a good deal of sense. I've got a last question, guys, but I'll let you go again.
Can you give us a sample of what --
Two questions.
Quickly, sorry about that. Can you give us an example of what should be re -- could be reshored quickly under these tariffs and this whole policy?
Sure, one of the things that is being reshored amazingly quickly right now is auto production. Auto production was -- capacity utilization was at about 60 percent a couple of months ago. And they're adding extra shifts now to make the autos in the US just as the president suggested. Last question.
Thank you so much. Spanish prime minister visited China last week, for the Spanish media and he got a lot of criticism from the administration. Could he face some consequences after the visit? And the economy minister is coming here tomorrow to meet with Secretary Bessent.
That will be a foreign policy question for the president, but I'm just economic policy, guys, so I don't get engaged in things like foreign policy discussions with prime ministers. So, thank you very much, guys. Thank you. Have a good Monday.
Thank you.