Commerce’s Lutnick Says Trade Deal With India Likely, Offers TikTok Update

Commerce Secretary Howard Lutnick was in New York on Thursday. (Michael M. Santiago/Getty Images)

Key Points

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• Commerce Secretary Lutnick said the U.S. will sort out a trade deal with India despite tariffs and penalties for buying Russian oil.
• Lutnick offered details on the trade deal with Japan, which secured 15% tariffs by agreeing to invest $550 billion in the U.S.
• Lutnick said the U.S. is talking to China about a deal that could keep TikTok from being banned if ByteDance sells it.

Commerce Secretary Howard Lutnick in an interview on CNBC on Thursday said the U.S. would sort out a trade deal with India despite already imposing steep levies and a penalty for buying oil from Russia.

The U.S. has hit India, a key strategic partner, with some of the highest tariffs—50%, which includes the 25% penalty for its purchases of Russian oil. While China is a bigger purchaser of Russian oil, the U.S. hasn’t yet hit China with a similar penalty.

“We are going to sort out India. They have to open their market and they have to stop buying Russian oil,” Lutnick said in the interview. He noted that prior to the Russian-Ukraine conflict, India bought just 1% of its oil from Russia; now it is 40%.

His comments echo a social media post by President Donald Trump this week: “I am pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations,” the Tuesday post said. “I look forward to speaking with my very good friend, Prime Minister Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries!”

Lutnick also offered more details about the trade deal reached with Japan, which was able to secure 15% tariffs by agreeing to make $550 billion in investments in the U.S.

There has been a good deal of confusion over how those investments would work, but Lutnick said they would center on critical areas, such as pipelines and nuclear power plants.

“When the cash flow starts, we share the cash flow 50/50 until they get their money back. When they get $550 billion, then it is 90/10 in favor of America,” Lutnick said, suggesting 90% of the profits would accrue to the U.S. after the investment was paid back.

He added that Japan would be the one borrowing the money and the U.S. would pay it back. In return for the investment commitment, Japan was able to secure a 15% tariff.

Unlike Japan, though, Lutnick noted that the South Koreans haven’t signed their framework agreement, noting that “the devil is in the details.” That echoed the view of analysts who have said many of these framework pacts still are being hammered out.

The detention of 300 South Koreans working at a Hyundai construction site in Georgia during an immigration raid last week raised questions about U.S.-South Korean relations, as well as the administration’s push to encourage foreign companies to bring manufacturing to the U.S.

Lutnick said Trump would address the issue soon, noting that Trump’s desire to build “great factories needs the leadership of those who have built those in the past.”

To do so, Lutnick told CNBC the U.S. may use short-term work visas for foreigners to train Americans and then head home.

Over the past decades, China used a similar approach, inviting U.S. companies to set up shop there, allowing Chinese workers to get trained by Americans, and building on the lessons and technology to become powerhouses in an array of industries.

Lutnick expressed confidence that the administration would prevail in a fight over tariffs that has made its way to the Supreme Court.

The administration appealed two lower court rulings that Trump overstepped his authority in imposing sweeping tariffs using the International Economic Emergency Powers Act, though the most recent appeals court ruling was divided 7-4. Lutnick told CNBC on Thursday that split fueled his expectation of a 5-4 or 6-3 Supreme Court decision in favor of the administration.

When asked about the looming expiration for an exemption related to popular video-sharing app TikTok, which is owned by Chinese firm ByteDance, Lutnick said the U.S. is talking to China about a possible deal that could keep TikTok from being banned. He stressed that Trump liked TikTok, but said a deal would require China’s ByteDance to sell the company—and its algorithm—to an American company. The exemption is set to expire on Sept. 17.

Write to Reshma Kapadia at reshma.kapadia@barrons.com