Steven Mnuchin: No Concern Over Economic Slowdown

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CNBC Exclusive: CNBC Transcript: U.S. Treasury Secretary Steven Mnuchin Speaks with CNBC’s Hadley Gamble

WHEN: Today, Thursday, February 28, 2019

WHERE: CNBC’s “Squawk on the Street

The following is the unofficial transcript of a CNBC EXCLUSIVE interview with U.S. Treasury Secretary Steven Mnuchin and CNBC’s Hadley Gamble on CNBC’s “Squawk on the Street” today, Thursday, February 28th. The following is a link to video of the interview on

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MORGAN BRENNAN: Welcome back. As President Trump travels back from Vietnam, his Treasury Secretary Steve Mnuchin is on a trip of his own in Europe. He joins us live now from London along with our own Hadley Gamble. Hadley.

HADLEY GAMBLE: Hey, Morgan. That’s right. I’m joined now by U.S. Treasury Secretary Steven Mnuchin. Steven, welcome. It’s great to see you.

STEVEN MNUCHIN: Thank you. Great to be here with you.

HADLEY GAMBLE: I wanted to kick off by asking you about the fourth-quarter GDP numbers. Not as bad as some are expected but many are worried, concerned, that the geopolitics, the government shutdown are really going to weigh on first-quarter numbers as well. Are they right to be concerned?

STEVEN MNUCHIN: I don’t think they should be concerned. The fourth quarter was dragged down slightly by the government shutdown. I think we still had very healthy numbers, year over year. If you look at fourth quarter to fourth quarter, it was over 3%. Otherwise it was slightly under 3%. But we’ve been talking about sustained 3% economic growth and the outlook in the United States still looks strong.

HADLEY GAMBLE: In terms of these U.S./China talks, so much concern about the geopolitics here. There’s been a lot of noise surrounding around whether or not President Trump really has the patience to see this one through. “The Financial Times" wrote a big article on this. A lot of concern of whether or not we would try too quickly to get a deal signed. Can you give us a timeline on what we’re going to see?

STEVEN MNUCHIN: Well let me put this in context. These discussions had have been going on for two years since the first summit that President Trump had with President Xi where he made clear that trade was at the top of the agenda. And we’ve made a lot of progress over the last few months. Last week I sat in meetings with Ambassador Lighthizer and the Vice Premier Liu He. We made a lot of progress, I think we’ve commented on, we’re working on a 150-page document – this is a very, very detailed agreement for some very significant commitments. And these are structural commitments, but we still have more work to do. And we hope to -- to make progress this month, and if we do there would be a Summit between the two presidents.

HADLEY GAMBLE: In terms Lighthizer versus Larry Kudlow, for example, we heard from him just a little earlier on the day on CNBC. He was very, very positive about making sure we got the China trade talk just right. And Lighthizer has come out and said he is concerned that the details -- the devil is in the details, as they say. Who is right?

STEVEN MNUCHIN: Well, let me just comment that there’s been a lot of chatter about different parts of the administration. Let me just emphasize. We are completely united on these discussions, whether it’s myself or Ambassador Lighthizer or Secretary Ross or Larry Kudlow or Peter Navarro. We are all working very closely together, and we have -- we have a common vision in executing and getting a real agreement.

HADLEY GAMBLE: And walk me through some of those details, in the sense of the mechanism to make sure that the Chinese are going to continue to comply on the outcome of this deal. Because at the end of the day one of the things, as you know, so many have commented on President Trump’s withdrawal from the Iran nuclear agreement. He said again and again that the reasons behind that was it was not a comprehensive agreement, that real there was no way to make sure that the Iranians are complying. How are you going to make sure that the Chinese continue to comply?

STEVEN MNUCHIN: Well, the President thought that the Iran agreement was a bad agreement. That was the real problem. It didn’t encompass many issues such as ballistic missiles. It had Iran in terms of exporting of terrorism. And our Iran sanctions have worked they have had a real impact and we couldn’t be more pleased with that strategy. Now the President has insisted all along on our China discussions, and he’s been actively involved. We meet with him several times a week. This will be a real agreement. This has to be real structural changes. We’re dealing with everything from intellectual property protection to technology transfer to financial services, non-financial services, currency, and we spent a lot of time on a real enforcement provision. So let me just say the deal is not done yet, but we’ve made a lot of progress.

HADLEY GAMBLE: And walk me through what is going to happen in terms of tariff financing on the U.S. side. Because I know that yesterday, you met yesterday in Paris with Emmanuel h Macron. That was the subject of your talks. What is something that the United States is moving forward on with the French here? Because we’ve seen of late them adding, in terms of the European Union, Saudi Arabia for example, to a watch list. Where is the U.S. there?

STEVEN MNUCHIN: Well, the real purpose of my trip was coming to London today and really focusing on the growth opportunities in Jordan and the strategic commitment we have to Jordan and to the region. As long as I was coming to London, I wanted to stop in Paris on the way. I had the opportunity to meet with the French Finance Minister Bruno Lamar as well as President Macron. We had very significant conversations on a whole range of issues. One of the things we did talk about is our joint support for terrorist financing, combating terrorist financing. I think, as you know, we’ve set up TFTC in the region, very focused on the Middle East in particular. But this is something we’re working globally on. Now one of the issues is the EU has talked about putting out a watch list. We really support the FATF work. Right now, the United States is the President of the FATF. But we very much support FATF work and the work that is going on there around the world to combat terrorism financing.

HADLEY GAMBLE: You mentioned the Jordan initiative. We’re here in London to discuss all of that and how much the UK is behind in supporting of Jordan going forward, not just in the in economic growth but in the sphere of security and immigration as well, with the refugee crisis. But, I have to ask you, a lot of questions about whether or not in spite of the fact that all this progress has been made, the fact that Theresa May’s government is under pressure, many wonder if these reforms will continue if she isn’t at the helm of the government. How worried about you about these Brexit negotiations and how long it’s taking?

STEVEN MNUCHIN: Well, let me just comment, the reforms that we’re talking about, everybody in the room is very committed to. Now it is also somewhat timely I’m in London, to talk about the Brexit issue. I just had the opportunity to have a bi-lat with Philip Hammond. I’ll have a meeting with Mark Carney tomorrow morning. I’ll have the opportunity to speak to the Prime Minister shortly after our session, so I look forward to talking to her, and the United States is supportive that there is a solution between the EU and the UK so that we don’t end up with a hard Brexit.

HADLEY GAMBLE: In terms of the IRS, we have to ask you about that, because at the end of the day there’s been a lot of criticism around the administration about whether or not the returns are really going to really be what they wish it to be. You’ve got some news on that for us today.

STEVEN MNUCHIN: Well, I’ll give you a little surprise breaking news here. So, people have been very focused on tax refunds. I think we’ve been putting out releases saying these are early numbers. We encourage you to look at the numbers as the get a little further down. 17% up week over week. Those are tax refunds are up 17% week over week. That basically gets us to the same level as last year. And I would just emphasize, even if people had perfectly done their withholding, and I think you know withholding is complicated, we encourage people to go to the withholding calculator, people really should be focused on they are paying lower taxes, and those lower taxes is money back into the economy and that’s why we have the economic growth we do.

HADLEY GAMBLE: And for President Trump, who has just been to the second summit in the South Korea with Kim Jong-Un, the question, of course, going forward: was anything accomplished? Not that much it would seem. Are you disappointed by the outcome of these talks?

STEVEN MNUCHIN: Well, let me say: Talks are very important. You can’t reach agreement without talks. And the President said sometimes have you to walk away from an agreement, take a step backwards to go forward. But I think the real answer here is the sanctions are working, and North Korea wanted release of the sanctions, and we said we’re not releasing those sanctions until they deliver on the commitment. So, I very much support the president’s trip and I very much support -- I’m sure there’s opportunities going forward.

HADLEY GAMBLE: Do you think we’re going to see a third summit?

STEVEN MNUCHIN: I can’t comment on that. We’ll see how it plays out.

HADLEY GAMBLE: Now, I have to walk you through things that we’ve been discussing here obviously with the London initiative. A lot of support for Jordan coming from the EU, coming from the French, coming from the Germans in particular, the UK, of course, as well. What kind of level of support are we going to see forward going forward from the United States? Because, as we say, this isn’t just about economic growth, this is also about regional stability.

STEVEN MNUCHIN: Well, I think, you know, the United States has been the largest supporter of Jordan. We will continue to do that. We have very significant contributions. We’ve have loan guarantees so looking forward to speaking to the Prime Minister and his highness directly later on. But we’re very supportive of what’s going on here and we thank the UK government for hosting it.

HADLEY GAMBLE: Finally, want to just bring it back to the U.S. at this point. There’s been a lot of conversation about initiatives by some of the progressives in Congress. And I’m speaking about Alexandria Ocasio-Cortez, among others. A lot of questions about whether or not they really have a handle on the economics. Because we heard the Fed Chair Jerome Powell coming over the last couple of days and he has essentially said that their vision of the economy is not one that’s actually based in reality. What’s your take on that?

STEVEN MNUCHIN: I would completely agree with Chair Powell. And, you know, we’ll continue to work with Congress to make sure that they understand the fundamental economic issues and what’s driving this economy and how the administration’s economic plans, whether they are tax cuts, tax reform, trade negotiations or regulatory relief are really working for the American people.

HADLEY GAMBLE: Treasury Secretary Steven Mnuchin, thanks so much for joining us.


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