SOTS 2nd Hour: Tariffs Deep-Dive with Commerce Secretary Lutnick, plus implications for Retail & the Autos 03/06/25

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Carl Quintanilla (0:59)

Market Insight and Analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Sara Eisen (1:12)

Good Thursday morning. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber, live as always from Post 9 of the New York Stock Exchange. Stocks in sell-off mode again. It's been a brutal few sessions here. The SMP is down 1.5%.

NASDAQ taking it harder, down almost 2%. There's a chip sell-off going on, fueled by the Marvell numbers. That's stocked down sharply, but it's broad-based. Every sector is lower right now. Even the consumer staples, which are holding up, are a little bit lower, but it is tech stocks that are leading us lower. Again, that's kind of been a theme. Cyclical stocks also getting hit pretty hard. Take a look at treasuries. Obviously, it's been a story of those lower yields. A little bit firmer today. The 10-year yield, 4.3%. Also, those higher German yields may be leading to some sort of global bond route. The 2-year yield, though, is a little bit lower, just below 4%, Carl.

David Faber (2:03)

We're going to talk to the Commerce Secretary, Howard Lutnick, in a moment, right after Wholesale Trade. Hey, Rick Santelli.

Rick Santelli (2:09)

Yes, I'll tell you, these numbers go right along with today's trade deficit. If you look at the January final read on wholesale inventories, it was up 8 tenths of a percent, up 8 tenths of a percent. Why is that so important? That's the biggest inventory wholesale increase since, yes, you guessed it, August of 22 And if you looked at this morning's trade deficit, it had a record number of imports, okay, up 10 percent to 401 billion, versus exports, which were 267 billion. Tariff front running is definitely having an effect here, and you can see it in all the numbers. Now, the sales side of this equation, wow. And this also gives us an idea why we're seeing these deficits skyrocket. The inventories are coming in, but the sales, they were down 1.3 percent. That is almost three times more than expectations in the other direction. We're expecting up half of 1 percent. We're down 1.3. In the rear-view mirror, though, to be fair, there was a big revision in December from up 1 percent to 1.4. So you can see, as we go more into 2025, that front-running dynamic just becomes exaggerated. The real key here is how it all turns out, because ultimately, if this is artificially negatively affecting what we may be looking at for GDP, when it reverses, it's going to have the opposite effect and it's going to boost the numbers. In both cases, the exaggerations probably don't really mean as much as the superficial numbers. Carl and the gang, back to you.

Sara Eisen (3:45)

Okay, Rick, thank you very much. And yeah, there are some expectations that we might see negative growth for first quarter, but a lot of it's skewed by front-running those tariffs, as Rick said. Let's get some reaction from the White House on President Trump's latest tariff moves. Commerce Secretary Howard Lutnick joins us now. Secretary Lutnick, welcome. Good to see you.

Howard Lutnick (4:05)

Great to see you.

Sara Eisen (4:07)

It's been a bit of a roller coaster. So we'll start with the latest news, which is the breathing room that President Trump is giving to the automakers a month now for those tariffs on Mexico and Canada. Why one month and why just the automakers?

Howard Lutnick (4:25)

So it's not likely to be just the automakers. I mean, the president is going to decide this today, but he's talking about it. But I think it's likely that it will cover all USMCA-compliant goods and services. So that which is part of President Trump's deal with Canada and Mexico are likely to get an exemption from these tariffs now.