Canada’s Side of Tariffs, DoD Drones, & The Bond Market Speaks 8/25/26

**SPEAKER_1** (0:00)
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**SPEAKER_1** (0:58)
Bring in show music, please.

**Cameron Costa** (1:02)
This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, a zinger of an op-ed from legendary investor Stanley Druckenmiller.

**Andrew Ross Sorkin** (1:12)
This was a genuine rebuke of the Treasury Secretary. This is a genuine rebuke of the strategy.

**Cameron Costa** (1:19)
How the billionaire and former hedge funder views Scott Bessent's strategy to more than double the Treasury's buyback of government debt. Spoiler, he is not a fan.

**Joe Kernen** (1:29)
Everyone wants to raise more revenue. No one wants to do what is necessary. And that is to stop the spending the way it is now. That is the problem.

**Cameron Costa** (1:38)
Druckenmiller was once the Treasury Secretary's mentor, and today he's asking Bessent to absorb a lesson that Druck himself learned in his hedge funding career.

**Becky Quick** (1:47)
You can't fight the Fed. Does this mean you can't fight the Treasury? And Druckenmiller brings up, you can't fight the market.

**Cameron Costa** (1:53)
That big story, plus the White House's new global sanctions plan against Iran, it's called Operation Outcast, and the tariff tension between the US and Canada, with the Canadian minister responsible for maintaining that relationship, Dominic LeBlanc.

**Dominic LeBlanc** (2:09)
In those final hours last Friday evening, we concluded there was a gap that made the deal impossible.

**Cameron Costa** (2:16)
And finally, the Pentagon's multi-billion-dollar push into drones, with chief technology officer of the Department of Defense, Emil Michael.

**Emil Michael** (2:25)
These drones can be cheap to manufacture, cheap to produce, and can protect troops, frankly, from the gravest harms of being troop on troop warfare.

**Cameron Costa** (2:35)
It's Tuesday, August 25th, and Squawk Pod begins right now.

**Emil Michael** (2:40)
Stand Becky by in three, two, one, cue, please.

**Becky Quick** (2:45)
Good morning, everybody. Welcome to Squawk Box right here on CNBC. We are live from the NASDAQ market site in Times Square. I'm Becky Quick, along with Joe Kernen and Andrew Ross Sorkin. Two days in a row of gains for the Dow, and in fact, after yesterday's close, the Dow was only about 2.4% from an all time high. The S&P 500 and the NASDAQ closed down for two days in a row yesterday, or two out of the last three sessions yesterday. The S&P 500 this morning indicated up by about 32 after yesterday's close. It was about 2.1% from an all time high. And then the NASDAQ is off by about 4, 4.5% from an all time high. This morning, though, it's indicated up by 300 points. Energy prices, something we've been watching closely. They have climbed in recent sessions, but this morning they are down by about 3.4%, coming after some of this announcement of this Economic D-Day.

**Andrew Ross Sorkin** (3:32)
Iran now vowing retaliation against a new set of US sanctions. Iran's economy minister telling state television, the country is prepared for the economic hit. That followed the Trump administration announcing what it's calling Operation Economic Outcast to isolate Iran's economy after six months of war. But Treasury Secretary Scott Bessent stopped short of issuing secondary sanctions on Iran's trading partners, saying he didn't want to rattle the global economy.

**Emil Michael** (3:58)
We believe that a warning shot and a level set of expectations is appropriate. And if people do not want to meet our expectations, then we expect, and they should expect, that they will leave the dollar system.

**Andrew Ross Sorkin** (4:14)
Treasury Department did penalize a group of vessels and entities for violating US sanctions policy. Bessent said President Trump is making requests to world leaders to stop dealing with Iran and will lay out timelines to halt specific activities. All this, of course, raising lots of questions about what it exactly means to have an economic D-Day at all and just how far this could ultimately go and what those conversations in the fall will look like when President Xi Jinping arrives in DC. Because you could have as many conversations as you want with some of the countries in the Middle East, but it's China that's the ultimate story. And the other question is, is this the chip?