CNBC Transcript: Treasury Secretary Steven Mnuchin Speaks With "Squawk Box" Today

WHEN: Today, Wednesday, June 27, 2018

WHERE: CNBC'S "Squawk Box"

Following is the unofficial transcript of a CNBC interview with Treasury Secretary Steven Mnuchin on CNBC's "Squawk Box" (M-F 6AM – 9AM) today, Wednesday, June 27th. Following is a link to video of the full interview on CNBC.com: https://www.cnbc.com/video/2018/06/27/treasury-secretary-steven-mnuchin-tech-china-cfius.html?play=1/.

All references must be sourced to CNBC.

ANDREW ROSS SORKIN: OKAY KAYLA, THANK YOU FOR THAT. WE NOW HAVE THE TREASURY SECRETARY THIS MORNING FROM THE WHITE HOUSE. TREASURY SECRETARY STEVEN MNUCHIN, THANK YOU FOR JOINING US – LITERALLY JUST MINUTES AFTER THIS NEWS BROKE. IT IS VERY GOOD TO SEE YOU. THE MARKET’S RESPONDING POSITIVELY, MR. SECRETARY, THIS MORNING. IN LARGE PART, I IMAGINE, BECAUSE THE EXPECTATION HAD BEEN THAT THE RESTRICTIONS WOULD BE MORE SEVERE. CAN YOU WALK US THROUGH HOW YOU GOT TO THIS PLACE?

STEVEN MNUCHIN: WELL FIRST OF ALL, IT’S GOOD TO BE HERE WITH YOU. AND I’M GLAD TO HEAR YOU JUST GOT A VERY LONG UPDATE ON MY PRE-BRIEFING. SO YOU’VE HEARD A LOT OF THE ISSUES ALREADY. BUT WE’VE BEEN VERY CAREFUL IN REVIEWING THIS ISSUE. REVIEWING THE ISSUES THAT AMBASSADOR LIGHTHIZER RAISED IN THE 301 REPORT. TECHNOLOGY IS A VERY IMPORTANT ISSUE. I DO CHAIR THE COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES KNOWN AS CFIUS. WE’VE BEEN WORKING WITH THE HOUSE AND SENATE ON UPDATED LEGISLATION TO STRENGTHEN THOSE CONTROLS. WE ARE VERY PLEASED THAT IT HAS BEEN PASSED ON A BIPARTISAN BASIS. YESTERDAY 400-2 AT THE HOUSE. I MEAN THAT’S JUST AN OVERWHELMING BIPARTISAN RESPONSE. WE’VE LOOKED AT THE ISSUE OF PROTECTING TECHNOLOGY IS VERY IMPORTANT. AND WE WILL USE THESE NEW TOOLS VERY CAREFULLY. AND WE DETERMINED AND WE RECOMMENDED TO THE PRESIDENT AND WE WERE UNANIMOUS IN HIM ACCEPTING OUR RECOMMENDATION THAT AS SOON AS FIRMA PASSES, WHICH WE EXPECT TO BE QUICKLY, THE PRESIDENT WILL SIGN IT, MAYBE PART OF THE NDAA, AND WE WILL HAVE THE NECESSARY TOOLS TO PROTECT INVESTMENTS, WHETHER IT’S CHINA OR ANYBODY ELSE. WE ARE NOT SIGNALING OUT CHINA BUT WE WILL PROTECT TRANSFER TO CHINA AS WE WILL TO OTHER IMPORTANT AREAS.

SORKIN: MR. SECRETARY, THE PRESIDENT ALSO SAYING IN HIS STATEMENT HOWEVER, THAT IF THE LEGISLATION IS NOT PASSED, HE SAYS, “I WILL DIRECT MY ADMINISTRATION TO DEPLOY NEW TOOLS DEVELOPED UNDER EXISTING AUTHORITIES THAT WILL DO SO GLOBALLY.” WHAT IS HE REFERRING TO?

MNUCHIN: WELL WHAT HE’S SAYING IS WE EXPECT THIS TO PASS QUICKLY, BUT IF FOR WHATEVER REASON IT DOESN’T, AND AS I SAID I THINK WE’LL EXPECT THIS TO GO INTO CONFERENCE AND BE A PART OF THE NDAA WHICH IS VERY IMPORTANT LEGISLATION, BUT IF THIS DOESN’T GET PASSED QUICKLY, THE PRESIDENT CAN USE AND DIRECT US TO USE EXECUTIVE AUTHORITIES TO EFFECTIVELY USE THE SAME TOOLS WE WOULD UNDER FIRMA BROADLY AS WE’VE DEFINED.

SORKIN: RIGHT. MR. SECRETARY, AS YOU KNOW, THE MARKET HAS BEEN ON QUITE A ROLLER COASTER OF A RIDE THIS WEEK, IN LARGE PART DUE TO SPECULATION OVER EXACTLY WHAT YOU MAY ANNOUNCE TODAY. I WANT YOU TO JUST LISTEN TO THIS AND RESPOND, MR. SECRETARY. BECAUSE AFTER YOU TWEETED ON MONDAY ABOUT TRADE, TRADE ADVISER PETER NAVARRO CAME ON CNBC AND SEEMED TO CONTRADICT YOUR COMMENTS. AND I JUST WANTED TO PLAY FOR YOU WHAT HE SAID SO WE CAN ALL UNDERSTAND HOW WE GOT TO TODAY.

PETER NAVARRO: THERE’S NO PLANS TO IMPOSE INVESTMENT RESTRICTIONS ON ANY COUNTRIES THAT ARE INTERFERING IN ANY WAY WITH OUR COUNTRY. THIS IS NOT – THIS IS NOT THE PLAN/ ALL WE’RE DOING HERE WITH THE PRESIDENTS TRADE POLICY IS TRYING TO DEFEND OUR TECHNOLOGY WHEN IT MAY BE THREATENED. SO THIS WHOLE IDEA THAT SOMEHOW THERE’S GOING TO BE INVESTMENT RESTRICTIONS TO THE WORLD, PLEASE DISCOUNT THAT.

SORKIN: BUT NONETHELESS, HE SEEMED TO THEN REVERT – AND I DON’T THINK WE HAVE THE FULL CLIP -- HE SEEMED TO THEN REVERT TO TALK ABOUT CHINA. WHAT’S GOING ON INSIDE THE ADMINISTRATION OVER THE PAST SEVERAL DAYS? – BECAUSE IT FEELS LIKE WE’VE GOTTEN MIXED MESSAGES.

MNUCHIN: WELL, IF THERE ARE MIXED MESSAGES, AGAIN, THAT’S SOMETHING THAT’S UNFORTUNATE. BUT LET ME JUST START WITH, YOU KNOW, UNFORTUNATELY WHAT HAPPENED OVER THE WEEKEND, THERE WERE LEAKS SAYING THAT THE PRESIDENT HAD MADE A DECISION. IT WAS COMPLETELY NOT TRUE AND WHEN THE PRESIDENT AND I DISCUSSED THIS, HE SUGGESTED I TWEET OUT ON BEHALF OF HIM, AS I DID TO CLARIFY THAT THAT DECISION HAD NOT BEEN MADE. THOSE LEAKS WERE NOT HELPFUL TO THE MARKETS, OR NOT HELPFUL TO THE PROCESS. WE THEN SAID AND I SAID IN THE RELEASE WE WOULD BE COMING OUT SHORTLY WITH A FURTHER STATEMENT. WE REVIEWED THIS AGAIN YESTERDAY WITH THE PRESIDENT. WE WERE ALL UNANIMOUS IN THIS RECOMMENDATION. I THINK WHAT PETER WAS REFERRING TO WAS THERE WOULDN’T BE SOMETHING SPECIFICALLY DESIGNED, BUT AGAIN, HE DIDN’T WANT TO PRE-ANNOUNCE EXACTLY WHAT THE FINAL DECISION IS. BUT YOU -- AGAIN, I THINK THERE’S A LOT – THERE’S BEEN A LOT OF TALK ABOUT DISSENSION. LET ME BE VERY CLEAR. YOU KNOW, THIS ECONOMIC TEAM HAS WORKED TOGETHER FOR A LONG PERIOD OF TIME. LARRY AND I WORKED ON THE CAMPAIGN. PETER WAS ON THE CAMPAIGN. SECRETARY ROSS AND I HAVE KNOWN THE PRESIDENT FOR A VERY LONG PERIOD OF TIME. HE WAS ON THE CAMPAIGN. AMBASSADOR LIGHTHIZER SPEAK -- AND I SPEAK ALMOST EVERY SINGLE DAY. SECRETARY ROSS AND I WERE INTEGRALLY IN RECRUITING HIM HERE. THE PRESIDENT WANTS TO HEAR DIFFERENT VIEWS. AND THAT’S AN IMPORTANT THING. BUT WE WILL COME TOGETHER WITH RECOMMENDATIONS TO THE PRESIDENT. AND I THINK THIS IS A PERFECT EXAMPLE. AND THIS ISN’T A QUESTION ABOUT BEING WEAK OR STRONG, THIS IS A QUESTION ABOUT PROTECTING TECHNOLOGY. WE HAVE THE RIGHT TOOLS UNDER THIS LEGISLATION TO PROTECT TECHNOLOGY. BUT THE TRADE ISSUES AND YOU KNOW, WE’RE EXCITED. THIS IS THE SIX-MONTH ANNIVERSARY OF TAX CUTS. WE’RE EXPECTING A BIG SECOND QUARTER GDP NUMBER. LET ME JUST SAY I HAVE NO ADVANCE NOTICE OF WHAT IT LOOKS LIKE.

MICHELLE CARUSO-CABRERA: GOOD TO KNOW.

MNUCHIN: BUT THE ATLANTA FED IS PROJECTING 4.7%. I HAVE NO IDEA WHETHER IT WILL BE THAT HIGH. BUT A YEAR AGO, PEOPLE WERE LAUGHING WHEN WE TALKED ABOUT 3% GDP. WE HAVE AN ECONOMY THAT’S HERE BECAUSE OF THE PRESIDENT’S TAX PLAN AND THE PRESIDENT’S REGULATORY RELIEF. AND WE’VE ALWAYS SAID, TRADE IS PART OF THIS SO --

CARUSO-CABRERA: MR. SECRETARY, I DO WANT TO ASK YOU MORE ABOUT TRADE AND THIS DECISION THIS MORNING. THE COMMITTEE ON FOREIGN NVESTMENT INTO THE UNITED STATES HAS HERETOFORE HAD A VERY, VERY STRICT MANDATE WHICH WAS TO PROTECT THE SECURITY OF THE UNITED STATES BY PROTECTING OUR TECHNOLOGY AND MAKING SURE WE DON’T LOSE IT. WHAT IS GOING TO CHANGE ABOUT THE MANDATE OF CFIUS WHEN THIS LEGISLATION PASSES?

MNUCHIN: WELL, WE’VE HAD VERY BROAD ABILITY TO INTERPRET THAT. AND WHAT I WOULD SAY IS OVER THE LAST YEAR AND A HALF, WE’VE BEEN VERY AGGRESSIVE IN USING CFIUS. ALTHOUGH THERE’S ONLY A FEW CASES THAT HAVE BEEN BLOCKED, WHAT IS COMMON IS WE TELL COMPANIES WHEN THEY’RE GOING TO BE BLOCKED AND I’M SENDING IT TO THE PRESIDENT AND THEY DECIDE TO WITHDRAW. SO WE’VE BEEN VERY AGGRESSIVE. THERE’S CASES IN THE PREVIOUS ADMINISTRATION THAT MOST LIKELY WERE PASSED THAT IF WE HAD REVIEWED, WE PROBABLY WOULD HAVE TAKEN A MUCH MORE AGGRESSIVE VIEW ON. BUT THE PURPOSE OF THIS LEGISLATION IS THAT THERE ARE AREAS THAT WE CAN PROTECT. JOINT VENTURES, TO THE EXTENT WE TURNED DOWN A TRANSACTION, COMPANIES WERE ABLE TO DO JOINT VENTURES. CRITICAL TECHNOLOGIES. WE HAVE A BROADER ABILITY TO DO THAT. DEFINING NON-PASSIVE INVESTMENTS. REAL ESTATE THAT’S CLOSE TO MILITARY FACILITIES. CRITICAL INFRASTRUCTURE. THIS GIVES US MANY MORE TOOLS THAN WE HAVE TODAY.

CARUSO-CABRERA: ARE THERE ANY TRANSACTIONS OUT THERE THAT YOU WISH YOU COULD HAVE DONE SOMETHING ABOUT? I MEAN, EVERYBODY’S AWARE OF, FOR EXAMPLE, WHAT HAPPENED WITH LATTICE SEMICONDUCTOR. THE WHOLE SITUATION WITH QUALCOMM. EVEN SKYBRIDGE AND HNA. ANT FINANCIAL. THERE HAVE BEEN PROMINENT DEALS THAT HAVE BEEN STOPPED BY YOUR COMMITTEE. IS THERE ANYTHING OUT THERE THAT YOU WISH COULD HAVE DONE BUT COULDN’T UNLESS YOU HAD THIS LEGISLATION?

MNUCHIN: WELL, I’M NOT GOING TO COMMENT ON ANY OF THE SPECIFIC DEALS BECAUSE THAT WOULD BE INAPPROPRIATE. THIS IS A CONFIDENTIAL PROCESS. BUT I WOULD SAY THERE HAVEN’T BEEN ANY DEALS THAT WE WANTED TO BLOCK THAT WE COULDN’T, IN TERMS OF WHOLE DEALS. THERE ARE SITUATIONS WHETHER THERE COULD BE JOINT VENTURES OR OTHER THINGS THAT WE NOW HAVE EXPANDED AUTHORITY THAT WE ABSOLUTELY WILL USE. BUT AGAIN, I THINK WE’RE GOING TO USE THIS CAREFULLY. AND AS I SAID EARLIER, I DON’T EXPECT THIS TO HAVE ANY SIGNIFICANT ECONOMIC IMPACT ON THE OVERALL ECONOMY. WE HAVE A VERY LARGE, OPEN INVESTMENT POLICY. AGAIN, PASSIVE INVESTMENTS ARE WELCOME. WE’RE TALKING ABOUT A SMALL PART OF THE ECONOMY, THAT CRITICAL TECHNOLOGY, CRITICAL INFRASTRUCTURE, THAT WE INTEND TO PROTECT.

MICHAEL SANTOLI: ASSUMING AS YOU NOW EXPECT THIS LEGISLATION WILL PASS TO STRENGTHEN CFIUS, SO THIS IS ONE SIDE OF THIS WHOLE TRADE DISCUSSION, WHERE DOES THAT LEAVE THE PROCESS IN TERMS OF ANY KIND OF NEGOTIATION WITH CHINA? I THINK THE MARKETS ARE CONTENDING AMONG OTHER THINGS WITH IDEAS THAT THIS IS AN ONGOING PROCESS. WE’RE TRADING VOLLEYS AND THREATS AND THERE’S NOTHING PLANNED IN TERMS OF COMING TO ANY TERMS.

MNUCHIN: WELL, THE PRESIDENT HAS BEEN VERY CLEAR ON TRADE SINCE THE CAMPAIGN. HE WANTS FAIR TRADE DEALS. HE IS A FREE TRADER WITHEN BUT HE WANTS FREE AND FAIR TRADE. AND I THINKL, AS YOU KNOW, WE’RE TRYING TO DEAL WITH NAFTA. THAT’S AN OLD AGREEMENT. HOPEFULLY AFTER THE MEXICAN ELECTION, WE’LL MAKE PROGRESS ON THAT. IN REGARDS TO EUROPE, THE PRESIDENT PROPOSED A FREE TRADE AGREEMENT. NO TARIFFS, NO TARIFF BARRIERS. IF EUROPE’S REALLY IN FAVOR OF FAIR TRADE LET THEM RESPOND TO THAT ONE AND OPEN THEIR MARKETS. AND AS IT RELATES TO CHINA, YOU KNOW, THIS IS AN ONGOING ISSUE OF WE WANT FAIR AND RECIPROCAL TRADE. AND I’M NOT GOING TO COMMENT WHERE DISCUSSIONS ARE, BUT I WILL SAY ANY TIME THE CHINESE WANT TO MAKE A PROPOSAL, I’M AVAILABLE TO LISTEN.

SORKIN: MR. SECRETARY, THOUGH, DO YOU PUT THIS NEW PROPOSAL – POLICY PROPOSAL TODAY ON THE TABLE AS PART OF THAT TRADE AGREEMENT? OR IN TERMS OF HOW YOU THINK ABOUT TRADE? VIS-À-VIS JUST THIS IDEA THAT WE ARE NOW IN THESE BILATERAL NEGOTIATIONS AND BY NOT SINGLING OUT CHINA, AT LEAST TODAY, NOT TO SAY WE LIVE TO FIGHT ANOTHER DAY BUT THERE IS ANOTHER FIGHT TO HAVE IN THE FUTURE.

MNUCHIN: WELL, WE ARE GOING TO SIGNAL OUT CHINA IN THE SENSE THAT WE HAVE A LARGE TRADE DEFICIT WITH CHINA AND WE’VE TOLD THEM WE WANT THEM TO TAKE DOWN STRUCTURAL BARRIERS SO THAT WE CAN HAVE FAIR TRADE WITH THEM AND OUR COMPANIES CAN DO FAIRLY. SO THAT IS STILL OUR OBJECTIVE AND WE SHOULD BE VERY CLEAR ON THAT. AS IT RELATES TO INVESTMENTS, THE PRESIDENT WAS VERY CLEAR. WE’RE GOING TO TREAT CHINA THE WAY WE’RE GOING TO TREAT OTHER PEOPLE AND TO THE EXTENT THAT WE WERE WORRIED ABOUT TRANSACTIONS, WE WILL BLOCK THEM. BUT WE ARE NOT GOING TO ON A WHOLESALE BASIS DISCRIMINATE AGAINST CHINA AS PART OF A NEGOTIATION.

CARUSO-CABRERA: STAFFING LEVELS, MR. SECRETARY. WHEN I’VE SPOKEN TO LAWYERS WHO HAVE BEEN INVOLVED IN THE CFIUS PROCESS, WHEN THEY SAW THE LARGE INCREASE OVER LAST SEVERAL YEARS OF CHINESE PURCHASES OF U.S. COMPANIES, ONE OF THE THINGS THAT WAS PROBLEMATIC WAS THE PROCESS TOOK SO LONG BECAUSE EVERY DOCUMENT NEEDED TO BE TRANSLATED, INTERVIEWS NEEDED TO BE TRANSLATED, FIGURING OUT WHO ACTUALLY OWNED THE CHINESE COMPANY WAS INCREDIBLY DIFFICULT. THEY SAID IT JUST TOOK SO LONG. WHAT ABOUT STAFFING LEVELS AND TRYING TO SPEED UP THE PROCESS OR RECOGNIZING THAT THIS IS A MUCH BIGGER ISSUE AND THEREFORE REQUIRES A LOT MORE RESOURCES?

MNUCHIN: WELL, I’VE SAID TO COMPANIES THEY SHOULD EXPECT THAT THE GOVERNMENT WILL BE RESPONSIVE. AND YOU’RE 100% CORRECT. WE’VE TOLD CONGRESS WE NEED A LOT MORE STAFFING FOR THIS AND THEY ARE ON BOARD WITH THAT. THAT IS PART OF THE LEGISLATION SAYS IT DOESN’T KICK IN ENTIRELY UNTIL WE HAVE THE APPROPRIATE STAFFING, BUT WE ARE MOST LIKELY TO LAUNCH A PILOT PROGRAM WHICH WE HAVE THE RIGHT TO DO UNDER IT AND WE HAVE THE APPROPRIATE STAFFING TO MAKE SURE WE PROTECT CRITICAL TECHNOLOGIES RIGHT AWAY AS SOON AS THIS IS PASSED.

SORKIN: MR. SECRETARY, SPEAK TO THIS ISSUE WHICH IS THERE ARE SOME PEOPLE WHO ARE GOING TO LOOK AT THIS AND THINK THIS IS BETTER THAN THE QUOTE, UNQUOTE, “BRIGHT LINES” THAT YOU COULD HAVE CREATED. BUT THERE’S OTHERS THAT ARE GOING TO SAY THIS CREATES MORE UNCERTAINTY. THAT PEOPLE WILL PROPOSE TRANSACTIONS AND NOT KNOW WHETHER THEY HAVE CROSSED THAT BRIGHT LINE BECAUSE THERE ISN’T ONE.

MNUCHIN: I DON’T THINK THAT’S THE CASE AT ALL. THIS DOESN’T CREATE MORE UNCERTAINTY. AGAIN, WE WILL PUBLISH REGULATIONS. WE WILL PROVIDE CLARITY. WE WILL -- YOU KNOW, I SPOKE AT THE COMMERCE DEPARTMENT THIS WEEK ON SELECT USA. WE’RE CLEAR THAT THE UNITED STATES IS OPEN FOR BUSINESS. AND WE’LL BE CLEAR ON WHAT TYPE OF BUSINESS WE’RE GOING TO LOOK AT CAREFULLY AND WHAT TYPE WE’RE NOT. I THINK – I THINK EVERYBODY UNDERSTANDS WHAT THESE CRITICAL TECHNOLOGIES ARE. AND THIS DOES PROVIDE CLARITY.

SORKIN: BUT MR. SECRETARY, FOR EXAMPLE, THE ADMINISTRATION HAS TALKED ABOUT CAR COMPANIES AND NATIONAL SECURITY, FOR EXAMPLE. THINGS THAT HISTORICALLY WE DIDN’T PUT IN NATIONAL SECURITY BUCKET AND HOW WE SHOULD THINK ABOUT THOSE BUCKETS.

MNUCHIN: WELL, THAT’S A DIFFERENT ISSUE. SO I WAS REFERRING TO THE CFIUS PROCESS. I THINK, YOU KNOW, THE PRESIDENT HAS DIRECTED THE SECRETARY OF COMMERCE TO LOOK AT THE ISSUE OF CARS AND NATIONAL SECURITY AND I’M NOT GOING TO PRE-JUDGE THAT. WE’LL WAIT FOR THE SECRETARY OF COMMERCE TO COME BACK WITH THAT REPORT WHICH I KNOW HE’S -- HE’S BUSY WORKING ON.

CARUSO-CABRERA: YOU DON’T THINK IT’S SILLY TO TALK ABOUT CARS AND NATIONAL SECURITY WHEN WE’RE ABLE TO PRODUCE 12 MILLION A YEAR AS IT IS?

MNUCHIN: AGAIN, I’M NOT GOING TO GO INTO ALL THE DETAILS OF THAT. WE’LL WAIT UNTIL WE GET THE SECRETARY’S REPORT. BUT I WOULD SAY ON AUTOS, JUST MORE BROADLY, YOU KNOW – AGAIN, WE WANT OUR CAR COMPANIES TO HAVE THE SAME FAIR OPPORTUNITIES. SO YOU KNOW, I’M PLEASED CHINA DROPPED THEIR TARIFFS FROM 25%, BUT THEY SHOULD HAVE DROPPED THEM TO 2.5% WHICH IS WHAT WE HAVE.

CARUSO-CABRERA: -- CAN I?—

MNUCHIN: SO LET’S HAVE FAIR TRADE AND RECIPROCAL TRADE.

SORKIN: THE REASON I RAISE THE AUTO ISSUE IS JUST IN TERMS OF HOW EXPANISVE CFIUS IS GOING TO THINK ABOUT ITS MANDATE UNDER THESE NEW RULES.

MNUCHIN: AGAIN, THE AUTO ISSUE IS INDEPENDENT OF CFIUS. SO, AGAIN, LET ME JUST BE CLEAR. THAT’S INDEPENDENT OF THE CFIUS PROCESS.

CARUSO-CABRERA: BACK TO CFIUS, ONE OF THE ISSUES OF GREAT CONCERN TO INDUSTRY, TO THE ADMINISTRATION, IS FORCED TECHNOLOGY TRANSFERRED TO CHINA WHEN A U.S. COMPANY DOES A JOINT VENTURE IN CHINA. ANYTHING WITHIN THE CFIUS PROCESS OR THE CFIUS LEGISLATION THAT COULD POTENTIALLY REGULATE A U.S. COMPANY INVESTING OVERSEAS?

MNUCHIN: WELL, I’M GLAD YOU BROUGHT THAT UP. THAT IS A VERY IMPORTANT ISSUE. SO ONE OF THE PROBLEMS WITH CFIUS BEFORE WAS WE COULD BLOCK AN ACQUISITION, BUT THEN THE COMPANY COULD FORM A JOINT VENTURE AND WE COULDN’T BLOCK THAT. SO COMMERCE WILL OVERSEE THE JOINT VENTURE ASPECTS. SO YES, IF SOMEONE SETS UP A JOINT VENTURE ON CRITICAL TECHNOLOGIES THAT WOULD HAVE BEEN A COMPANY THAT IS BLOCKED, THEY WILL ALSO BE PROHIBITED FROM TRANSFERRING THAT TECHNOLOGY THROUGH A JOINT VENTURE AND THE SECRETARY OF COMMERCE IS REVIEWING BOTH THE FIRMA LEGILSATION AS WELL AS POTENTIALLY EXPANDED EXPORT CONTROLS. IT IS VERY CRITICAL THAT WE PROTECT OUR CROWN JEWEL TECHNOLOGY AND WE’LL DO THAT IN ALL FORMS. BUT AGAIN, THAT’S A SMALL PART OF THE ECONOMY. I JUST WANT TO PUT THIS IN PERSPECTIVE.

CARUSO-CABRERA: BUT I DO WANT TO UNDERLINE THAT. A U.S. COMPANY CONSIDERING A JOINT VENTURE IN CHINA COULD POTENTIALLY SEE THAT DEAL BLOCKED BY THE EXPANDED RULES UNDER THE CFIUS LEGISLATION?

MNUCHIN: IF IT IS CRITICAL TECHNOLOGY AND THEY ARE TRANSFERRING CRITICAL TECHNOLOGY.

CARUSO-CABRERA: AND THAT IS NEW, CORRECT?

MNUCHIN: THAT IS NEW AND THAT IS PART OF THE LEGISLATION. AND AGAIN, THAT’S NOT JUST CHINA – THAT’S ANYWHERE. SO THAT’S PROTECTING CRITICAL TECHNOLOGY, WHICH AGAIN -- OVERWHELMINGLY BIPARTISAN SUPPORT FROM CONGRESS.

CARUSO-CABRERA: SO EVERY YEAR THE CFIUS REPORT COMES OUT, THE COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES HAS TO PRODUCE A REPORT ON -- AND IT’S MOSTLY NUMBERS. HOW MANY TRANSACTIONS WERE PROHIBITED FROM WHICH COUNRTIES, IN WHAT CATEGORIES, ET CETERA. THE MOST RECENT ONE -- EVERY YEAR IT ALSO HAS TO ANSWER THE FOLLOWING QUESTION: IS THE U.S. GOVERNMENT CONCERNED ABOUT A FOREIGN COUNTRY TRYING TO TAKE CONTROL OF A U.S. INDUSTRY? AND ALL OF THEM HAD UP UNTIL THE LAST ONE SAID THE ANSWER WAS “NO.” THE LAST ONE, THE COMMITTEE DECLINED TO ANSWER THE QUESTION. AND IT IS WIDELY BELIEVED THAT THE U.S. ADMINISTRATION BELIEVES THAT THE CHIP ESCTOR IS OF GREAT CONCERN AND THAT YOU ARE WORRIED ABOUT THE CHINESE TAKING OVER THE CHIP SECTOR. AND HENCE WHY THERE WAS A DECISION NOT TO ANSWER THAT QUESTION IN THE MOST RECENT REPORT. CAN YOU CLARIFY THAT?

MNUCHIN: NO, I’M NOT GOING TO CLARIFY THAT, BUT WHAT I WILL TELL YOU IS IN CONFIDENTIAL CLASSIFIED BRIEFINGS WITH THE HOUSE AND SENATE BASED ON INTEL INFORMATION, WE’VE GIVEN THEM MORE INFORMATION. SO AGAIN, I’M NOT GOING TO TELL YOU. BUT AGAIN, THE INTELLIGENCE COMMUNITY IS A MAJOR PART OF THE CFIUS PROCESS. AND AGAIN, JUST AS I’VE SAID, YOU KNOW, WE’RE PERFECTLY COMFORTABLE WITH THE ZTE SETTLEMENT, ON THE OTHER HAND, WHERE WE SEE CRITICAL TECHNOLOGY AND WE HAVE INTEL WE WILL USE OUR POWERS ACCORDINGLY.

SORKIN: OK. MR. SECRETARY, BEFORE WE LET YOU GO, JUST WANTED TO GET YOUR REACTION. YESTERDAY THE CBO REPORTED THAT THE DEBT TO GDP RATIO IS GOING TO BE AT ITS HIGHEST LEVEL, 78% BY 2028. THAT’S THE HIGHEST SINCE 1950. WHAT DO YOU THINK OF THAT?

MNUCHIN: WELL, AS I’VE SAID BEFORE, THE PRESIDENT AND I ARE CONCERNED ABOUT THE NATION DEBT. AND THE MAJOR CONTRIBUTOR TO THE NATIONAL DEBT OVER THE LAST EIGHT YEARS WAS THE COST OF MIDDLE EAST WARS AND OTHER THINGS. SO THE UNITED STATES HAS SPENT AN AWFUL LOT OF MONEY PROTECTING THE WORLD AND THAT’S WHY THE PRESIDENT IS VERY FOCUSED ON WHETHER IT’S NATO OR OTHER AREAS BURDEN SHARING. SO WE CAN’T AFFORD TO PAY FOR EVERYBODY’S MILITARY ALL OVER THE WORLD. I’M NOT UNCOMFORTABLE WITH WHERE THE DEBT TO GDP IS NOW, BUT THAT’S SOMETHING WE’LL KEEP AN EYE ON. AND AGAIN, IT’S SOMETHING – YOU KNOW, WE WILL REVIEW AND CAREFULLY LOOK AT. AND AGAIN, I THINK WE SHOULDN’T JUST TAKE THE 2028 PROJECTIONS AS THAT’S WHERE WE’LL END UP. THERE ARE ISSUES WE NEED TO DEAL WITH OVER TIME.

CARUSO-CABRERA: HOW’S LARRY DOING?

MNUCHIN: LARRY’S DOING TERRIFIC. HE’S HEALTHY. WE’RE THRILLED TO HAVE HIM BACK. AND I THINK HE’S GOING TO BE ON TV VERY SOON IF NOT TODAY.

CARUSO-CABRERA: WE CAN’T WAIT.

SORKIN: WE CAN’T WAIT. MR. SECRETARY, WE’VE GOT TO GO. BY THE WAY, OUR NEXT SEGMENT IS ABOUT HARLEY-DAVIDSON. SO I’M JUST -- I’LL ASK BEFORE WE GO, WHAT DID YOU MAKE OF THE ANNOUNCEMENT BY HARLEY-DAVIDSON THIS WEEK?

MNUCHIN: I WASN’T HAPPY ABOUT THE ANNOUNCEMENT. SO YOU KNOW, I WOULD JUST SAY IN EVERY SINGLE ONE OF THESE MEETINGS I’VE BEEN PART OF, I LISTENED TO THE PRESIDENT TALK ABOUT TARIFFS ON MOTORCYCLES. AND HE’S BEEN A BIG ADVOCATE OF HARLEY-DAVIDSON AND AMERICAN PRODUCTS SO I DON’T KNOW WHY HARLEY-DAVIDSON WOULD COME OUT AND NOW SAY THEY’RE MOVING PRODUCTION. WE’VE BEEN FIGHTING TO LOWER THEIR TARIFFS ALL OVER THE WORLD.

SORKIN: OK. MR. SECRETARY, WE’RE GONNA LEAVE THE CONVERSATION THERE. WE APPRECIATE YOU JOINING US RIGHT NOW RIGHT AFTER THIS NEWS WAS ANNOUNCED. THANK YOU AND WE’LL TALK TO YOU SOON.

MNUCHIN: THANK YOU.

SORKIN: YOU BET.

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