Howard Lutnick: How America Can Hit 6% GDP Growth in 2026

Yeah. Yeah. When you're on these things, like, it's amazing. Right. You are where real conversations happen. We went to see Putin. So I get on Air Force One at 5:00 a.m. He gets on at 5:45. We fly to Alaska.

So we're talking about... then we're there for four hours with Putin, and then we fly back. Now, Marco Rubio and Steve Witkoff go take a nap because we have to wait for Zelensky to wake up to call Zelensky, and we have to wait for the European leaders to wake up, right? Because it's the middle of the night. So I stay up with the president, and we're just chatting, like we're just chatting, watching golf. I mean, we just... like, it's a lot of hours.

So then Zelensky wakes up. So they get on the phone with Zelensky, and he talks to Zelensky on his phone. And then when he calls the European leaders, when they get up, they want to have us on a secure call. So there's three secure handsets in his office. So he's on one, Rubio's on one, and Witkoff's on one. And I'm just sitting on the couch.

In Air Force One, in his office in Air Force One. So I'm just sitting on the couch, and I've been up for like 20 hours, okay? And the president's been up for 20 hours, but he's on the phone and the European leaders are talking. So I'm just sitting there, and they're all on handsets, so I can't hear a word that anybody's saying. And I'm just sitting there. So I... I fall asleep. Okay. So I'm just sitting there. They're talking on the phone like right there, and I fall like this. So I'm like that. So Witkoff elbows the president, right? Points to me, and then the president unrolls a Tootsie Roll and [laughter] like tries to throw it into my mouth. Yeah. [laughter] He hits me in the face. I'm like... I wake up. He goes, he goes, 'Howard, while you're napping, we're trying to settle world peace.'

So overall, you know, I have a goal, which is I want to be the cabinet secretary who has the most fun, right? And so I set out with that goal. And which means I am outcome driven, right? I don't really buy into 'I worked really hard at something and it failed.' If I worked really hard and it failed, it's a fail, right? If I got lucky and it just all fell into place and I did nothing, it's still success, right? [laughter] Because the outcomes are what matter, right? You know, you're not telling people how hard you worked and failed, right? So, how you get things done in government is fascinating. It's just different. What happened is most people who've ever been in government tend to be incremental. They come in, they say, 'How did this work?' So someone explains how they work, and they try to move the ball 10% forward. They don't really rethink it entirely. And so my objective was to come into this department, which is an awesome, incredible, diverse department, and really think through its powers and its possibilities, reimagine them, rethink them, hire people, and then mold those people to think outside the box. And so the first three months was really getting people to think, 'Can I really challenge this? Can I really do this? Can I really try to do this?' And then trying to convince everybody around me that this is an okay way to do it. The way it was done yesterday isn't right. It was just what they did yesterday. You're not even saying it's wrong. You're just saying it's not you.

Well, look, in the beginning, we cut, you know, 20%. Like, I walked in the door here with 52,000 people in this department, and now there's 40,000 people in this department. So the idea is, if you're going to cut 12,000 people, you have to do it fast, right? So that everybody understands the next shoe is not going to drop tomorrow, right? And find where we had programs that just were like, this program was started in 1978. You'd be like, why are we doing it now? We had a department that was supporting advanced manufacturing set up in 1986. What were they doing as advanced manufacturing 40 years ago as opposed to what people are doing now, right? So it was really not taking out what's the core. And so we did that quickly, and then, you know, I went and met every bureau, had town halls. I went to their offices, and I basically told them where we were going, what we were doing, and why. What I learned about government is the people here are very narrow experts. They're amazing, their knowledge of this particular topic. So there's not generalists in government, but you have someone who's great at this, someone who's great at this, someone who's great at this, someone who's great at this, and then your job as the secretary is to weave that blanket together, right? So that these specialists succeed. And so when you give them tasks that maximize their capacity, they get jazzed, right? And so I'm getting amazing output from this department because they're jazzed because someone appreciates their capacity and is driving it to success.

So tariffs, which have been a big conversation, there's two types of tariffs. There's general tariffs that's in front of the Supreme Court. And then there's sectoral, specific tariffs. Those that are specific, industry specific, are in this building. Okay. Yeah. And they're part of BIS, the Bureau of Industry and Security, right? And that is both where we have export controls. We don't want to sell our best chips to our adversaries. We don't want to sell whatever is the fill-in. That's the Bureau of Industry and Security, or do we want a license just to make sure you use it in this sort of way or that sort of way? Yeah. All of that is... and they have guns and badges. Right. So they have guns and badges. Yeah. Right. Because they have to protect and defend that. And they find people, and that's... and they also control the auto tariffs, the steel tariffs, pharmaceuticals, which we can talk about a bunch because it's been insanely successful driving down the price of pharmaceuticals in America. And so that's the Bureau of Industry and Security, BIS. Then you have ITA, which basically is the advocate for business, right? I'm the Secretary of Commerce. So that's like a fun job. Like, you're in charge of commerce. So we help companies sell things around the world. That's our job. And we help states sort of bring in business to build and grow here. So we're sort of the import-export assist model, right? So we're always helping Boeing, you know? So the guys, the senior executives of Boeing follow me around like a puppy because every time I do a deal, and if you look at my big deals, at the end it says they buy 50 Boeing planes, you know, they buy 100 Boeing planes. So we're always helping American companies sell overseas, and we're helping companies invest in America, right? Right. Help them with their permits. Help them with whatever they need to build and grow so we can grow our American jobs here. So those are two examples. Then we have NTIA, right, telecommunications, that includes spectrum, like how are we going to do 6G, like how are we going to do 6G, like how do the pieces fit together. That's our responsibility as the lead advisor, right? And then inside of that, of course, we have the AI, the Center for AI Advancement, right? So we study and then we put out reports. Like when DeepSeek comes out with their new model, right, and there's all this press about it, our department literally painstakingly studies it as compared to our models and publishes what's the difference, right? So that we actually... there's a standard of knowledge, not, you know, the press making this, that, or the other thing. So, and then we put out GDP, right? And we analyze. And what's interesting about GDP is people don't realize what we do is we use the census. So there's business census calling around to companies, and it's not really calling around anymore. It's more, you know, economic connection to companies through APIs and otherwise. And one of the keys for me is to get rid of everything that's manual that's left and make it all automated, make it all connected with APIs, make it all make sense that you can do it amazingly well. Create GDP, and then we put GDP out on the blockchain because if I'm publishing GDP, why not? Yeah. Like, where's the holdup?

I mean, how fun is that to say, why don't we do that? And then, you know, we go to the Oval Office, I chat with the president, he goes, 'Great.' And then we do it. I mean, the reason you want to work for President Trump is his intuition is so extraordinary and his knowledge base is so amazing that I can go in and talk to him about should we put GDP on the blockchain, and just before that he was doing something completely different, something completely different. And then he'll chat with you about three or five minutes, and it goes, 'That sounds great,' and then you just go do it. So it's really fun. We have the patent office, you know, and if you think of how valuable intellectual property is, how do we protect it? How do we defend it? What's the right way to think about it? So, and you have NOAA, which is, you know, we have inside of NOAA, of course, is the word atmosphere, right? It's oceans and atmosphere. What does that mean? Oceans and above 50,000 feet is space. Space commerce. So I have now the Office of Space Commerce, which I've taken out of NOAA and have put in my office so that I can reimagine how do we handle commercial satellites.

So the president in his first term, he's been talking about tariffs and how the trade deficit of the United States of America is really a ripoff of America. That people who don't weigh in very deep say, 'Well, you have a trade deficit with the supermarket, right?' You know, I mean, you're always buying from the supermarket, so you have a trade deficit with the supermarket. That's just silly, right? If you think about it, let's say there are two islands, right? One produces and one invents. So the inventor lets the other island produce and keeps buying it from that other island, pays them the money, and that other island uses the money to buy the inventor's island. And over a period of time, the producer owns the inventor's island, and the inventor works for the producer because he ran an infinite trade deficit and kept paying his money away. So what's supposed to happen? When I was in college, my, you know, freshman and sophomore professors basically said if you run a trade deficit, you'll keep taking your silly paper money and giving it to them and buy their wine and buy their cars and buy all their cool stuff, and sooner or later they're going to say, 'Hey, I don't want your stupid paper.' And your dollar would devalue. You wouldn't be able to buy their stuff, and it would all balance. And that's sort of free foreign exchange, floating currency theory. But what if you're America and you invent the light bulb, and then you invent the transistor, and then you invent the GPU, and you're just too darn smart. So what they do with those dollars is they come in and buy us. In 1985, we had net ownership of the rest of the world. So comparing the rest of the world's ownership of America and our ownership of them, that counts everything, their bonds, companies, stocks, everything. We were net an investor of $148 billion more of them than they owned of us. Fast forward to 2024, $26 trillion the other way. They own $26 trillion of us more than we owe them.

Right. So when we call... So the beginning, so Donald Trump says we're getting ripped off. We need to fix this. Right. And sort of like these junior economists fight it and say no.

Yes. Once we own at least the same of them as they do of us, that's balance. We're balanced, right? And right now we're at a $26 trillion. Why would we... why would we have... So what happens is you call a country up and you say, 'I'm going to set a tariff.' They say, 'Wait, wait, wait. Before you set a tariff, how about this? We'll invest $200 billion in your country, and Toyota will build a factory, and Siemens will build a factory, and they'll all build a factory.' And I'm like, you're just buying us, right? You're literally buying us. I understand what's better for you, investing $200 billion in America or investing $200 billion... where's better than investing here? So what happens is that natural argument, which was always previously successful, falls on deaf ears. And I'm pointing over there because that's his office. Okay. The White House is like right there. And it just... he says you're only investing here because it's great for you. The answer is I want to rebalance, and that's what we're out to do. Build it here, sell it here. Fine. Fine. Or pay for the privilege of selling it here.

Well, the president on the campaign trail had two views. The debate, and he was really debating with the team and inside his mind. Does he want to set a universal tariff or a specific country-by-country tariff? Obviously, universal tariff, it's easy. You know, Tuesday morning you say, pick a number, 10%, shazam, right? But we settled on a country-specific model, much more complex, much more difficult, but much more nuanced, much more clever, and much tougher. And he couldn't do that in his first term because he didn't have believers around him. He had too many of the people who believed that sophomore professor's ideals. And even though we were out $26 trillion, you know, they thought that was too casual a comment. And so this administration came in with incredibly sharp people, me included, Jameson Greer, Scott Bessent, who were on side, on board, driving for these outcomes.

Okay. So let's spend some time in Japan because it's really fascinating. So when thinking about Japan, I reminded the president in 1853, Admiral Perry went with an armada and cannons and still had trouble opening the Japanese market, right? So the Japanese market for cars, as an example, 94% of cars driven in Japan are Japanese. They don't drive German cars. They don't drive Korean cars. They don't drive American cars. The only American cars really in Japan are Chevrolets driven by the Yakuza. So, you know, I mean, you can't come home with a Chevy and people think, 'Woo!' You know, you got a new job, did you? So, right. So it's a culturally, technically, and economically closed market. So even if you opened it technically, and even if you opened it economically, you may not be able to open it socially. So what we did is we said, 'All right, you're going to pay a 25% tariff.' Simple. You won't open your market, right? I can't get you to really open your market. So you just pay us 25%. And that's simple. We don't have to negotiate, you know, we just pay for the right, and the math will fix itself over time. So their leadership called and said we can't do that. And, you know, when someone says I can't do that, I'm like... And how... what did... when you say why? Yeah. So they explained why. They said, look, the way the Japanese auto manufacturers work is the government subsidizes the machinery that went to small manufacturers. So what they did is, let's say company A could have a thousand small companies, and they make the cup holder for this particular model, right? And so they have 50 people who work at this company who make the cup holder for Toyota. But the machinery was subsidized by the government, and so you have thousands, tens of thousands of these companies, and so they can't pick them up and move them to America.

It's amazing the subsidies, the assistance, the... it's not a level playing field that everybody else does for their own domestic internal economy, but not on every product, right? But on many. I mean, like, you know, we set steel and aluminum tariffs. You'd say, like, why do you do the whole steel and aluminum thing? You'd say, well, if the Chinese give power to the steel producer free... Think of steel, right? It's like brown dirt. Yeah. So you process the brown dirt to make it iron ore. But you've all seen it's like dirt. And then you know how much power you have to put into that to melt it to make it look like one of those things we've seen on TV where you're pouring the iron ore. And imagine if I gave you the power for free. You'd be making your steel for 250 bucks a metric ton, right? And you'd say, 'How much does it cost in America? 700 bucks a metric ton.' So they're going to put our guys out of business, which means they put our guys out of business. And then Japan subsidizes it. Korea subsidizes it. So maybe they can do it for 400 bucks a metric ton. And meanwhile our... So we start with 40 steel blast furnaces. Now we have 10. And if we kept going, we were going to have zero. Zero. And then what happens is you become basically subservient. If you need steel, you want to build your own missiles, you have to call another country. Now they may be your allies like Japan and Korea, and you can call them, but you are not self-sufficient. So Donald Trump says we need steel, we need aluminum, we need copper, and we need to make our own semiconductors. Yeah. Right. We need to make our own pharmaceuticals. Right. Like, and once you understand this, right? And you really think about it. Donald Trump is not only is he completely correct, it actually goes to the... thank God, right? Like you study pharmaceuticals and you really study them and you say, 'Well, these generic pharmaceuticals are made in India.' Say, 'Oh yeah, good. India's our ally.' But the ingredients come from China. Exactly. So that if, you know, if there's one nut or bolt that you need and it comes from China, they don't send it to you. Right. Right. Like there were these things called magnets, okay? And magnets go in a car. The value of a magnet that goes in a car is 20 bucks. 20 bucks, right? You're buying a $30,000 car. It's a $20 part, right? But if they don't have it, the car... Oh, sorry. It can't work. Right. Right. Where do we get that part from? Well, China sells them. They buy the dirt, the ingredient for $55 a pound, and they sell you the finished magnet for $55 a pound. So no one's going to make the magnet if you could sell the raw material for 55 bucks. So they're basically just losing money, and the answer is right.

The answer is yes. The Chinese economy is one of overproduction. They have 50 mayors, provinces, and each of those provinces is trying to succeed. So each of those provinces wants to build an electric car company. And the government puts in all the money, builds the capital, gives them the power, invests. So if you're the mayor, you want the winning electric car company, because remember, China does not have oil and natural gas. So they have to build electric because they have coal, right? So they have to build electric. We don't. We're being fools to think that we should have batteries and everything that they make that we don't. That's just foolish. But they... So that means if you have 50 mayors and they all have what? One electric car company? Nah, no. They're probably going to have two just in case. So that's 100 electric car companies, and they're all trying to kill each other, subsidized by the government so they can cut their price 30%. Why? Because the government just says, 'Look, let's just try to undersell everybody else.' And then they make so many cars. What do they do with all these cars? Right? So then they dump them, and they take the electric car which cost them 30,000, and they sell it in Europe for 15,000. So you go to an electric car in Europe and say, 15,000 for this car. This is an amazing car for 15,000. That's because it cost 30,000. And so what happens is that has the effect of putting Volkswagen out of business, right? So what happens is it's their model, which is an attack chaos model, but the attack chaos model has overcapacity. And then they turn that overcapacity into an asset. Says, 'Let's dump the overcapacity. We're going to lose a fortune.' Okay, but the government's just paying. We're going to dump that overcapacity into America, right? Or into Europe or into anybody who'll take it, right? We'll put their industry out of business, and then we'll have them over a barrel. We'll turn our economic chaos into international prowess and leverage, right? So that's...

Well, with respect to China, if we blink, they will sell below cost in America and drive our domestic companies out of business, and then we will be beholden to them. That's sort of a simple math, right? I mean, if you think about it, they spend a fortune convincing everyone that they should be environmentally friendly and have an EV car. But if Europe doesn't make batteries and they say have all EV cars by 2030, then who are they going to buy the batteries from? They have to buy it from China. And now they need to buy it from China, which means what is their foreign policy with respect to China? It's very positive. That's all. Right. They trade economic, you know, basically I've gotten prowess over you so that you're going to let me do this, that, and the other thing. And eventually, you know, they're not playing with the same rules that we play. And so when you go around the world and you study the world, like Japan doesn't do cars by the same rules that we do. So they had to have cars be lower than 25%. 25% was basically a number that choked them. And so we analyzed together with them that 15% would be the number they could live with, right? And keep making cars and build more here. And then I said, 'Well, but why would we, since you're not really going to open your market? You're not really going to let us have access. How are we going to do it?' And then I spent months going back and forth with the Japanese and President Trump with different ideas. How about this? So if you suggested I got it right the first time, that would not be true. [laughter] I got it right. You know, I've always described my business success in life. I always came at it like this, okay? And then like this, this, like this, like this, right to success. Sooner or later, I got through. So what we came up with was $550 billion. This is not foreign direct investment. This is not Toyota building a factory in America. This is they literally will finance any project we want to build in America as long as it's like a good cash-flowing project. Nuclear, we want to build a hundred billion dollars of nuclear plants. They will pay for it. So what happens is they'll borrow the money on like a 30-year bond in Japan. So the Japanese government goes and raises the 550 billion from their domestic bond holders. From their domestic bond holders, right? So they're an LP to you, and you're the GP. Exactly the right thing. They're an LP. They give us the equity. We build the nuclear power plant, and then it starts selling power, and we split the cash 50/50 until they get back their money plus their interest. So that means in 30 years, the taxpayers of Japan broke even, and their dividend was a reduced tariff. That every day they had a lower tariff. They had more employment. They had this and that. And you know what? Their stock market's up 20s. Yeah. Up. Yeah. Not down. Yeah. Up. So, you know, that's the point, which is it didn't cost their taxpayers money over time, right? Now, it's pretty simple to understand how much we're going to make. You'd say, well, if it's 550 billion and their interest rates are pretty low, so let's say over 30 years you're going to get 650 billion. When we pay them back 650 billion, if you say to me, how much did America make? I would say 650 billion because we split the money 50/50. Yeah, exactly. And after they get their money back, because nuclear power plants last a long time, then the cash flow goes 90 to America and 10 to Japan. And when you say to America, is there an account? How does that money then get spent or allocated or... The only bank the United States of America has, as far as like the Secretary of Commerce sees, is called Treasury. Treasury. So we have accounts at Treasury, and all the money goes into Treasury. So all the tariff money goes into Treasury. All this money just goes into Treasury. So it reduces our deficit, and it reduces... it is taxes paid by others, right, for us to get our house in order, right? That's why the president talks about the External Revenue Service, right? In this case, you're going to make... you'd say, all right, well, over 20 years you probably make 30 billion a year, right? That's 30 billion a year. You know how much tax we'd have to raise on Americans to cover 30 billion a year. That's 30 billion a year just on those trades. And then you have the tariffs are 500 billion a year now. And they will grow over time to a trillion a year. And that money is not money we have to pay in taxes. And eventually that puts our house in order, that lowers interest rates, drives our economy, but most importantly, we don't have to pay.

Who paid for no tax on tips, no tax on overtime, no tax on Social Security? Right. Tariffs. Tariffs. So that's a... like that's a down payment, right? Right. But that's the idea. We should be able to reduce the tax burden from the bottom up. Yeah. Right. Help Americans who make less than $150,000, who earn overtime, who earn tips. Let's reduce their tax burden, right? Let's help America. And that's, by the way, that's 85% of America. It's not like it's a subset. And so I think the president is deeply focused on using the power of his administration to right a whole bunch of wrongs that have been ripped off about our country, and that we are the richest country in the world. And that means we don't have to take things away from people. Everybody assumes to balance the budget. If you asked a politician how you would fix Social Security, they would say take the retirement age out. Right. Right. Take away. They would never say we are the greatest country on the earth. We have the greatest economy on the earth. Can't we figure out ways to enhance our revenues to keep the richest country in the world should be able to give people retirement at 65? We shouldn't change a darn thing. And that is his thinking. Yeah. And that's why it's so much more powerful than any politician before. Politicians think all they have to do is give or take. Give or take. Give or take. Give or take.