Billionaire investor John Paulson: Trump's tariff plans are 'well-founded'

Our next guest is billionaire hedge fund titan John Paulson. He joins us in his first Squawk Box appearance ever. John, of course, is the founder and president of Paulson & Company. He's also an advisor to former President Trump's presidential campaign. And we're thrilled to have you on the broadcast this morning. Thanks for joining us, John. Hey, good morning. Glad to be here. There's about a million things to talk about, including the markets and the Fed. But I want to start with this election. And I actually want to start with a headline that was made just yesterday by former President Trump, because I think we're all trying to understand his plans as they relate to tariffs. I'm sure you saw that one of the things that he said was that he plans to put a 200 percent tariff on John Deere tractors if, in fact, they were to move them and manufacture them in Mexico, as opposed to here in the U.S. Obviously, he has a broader plan around tariffs as well. What do you make around about this tariff plan? A lot of economists have questioned the level of tariffs that he would put on. I would also say other business executives have. And I would say just yesterday, Mark Cuban, in reaction to all this, said that he thought the plan was insane and a good way to destroy a legendary American company. So as an investor and somebody who's on Trump's side, what do you think of this? Yeah, I think Trump's tariff plans are well-founded. When you look at the economists, they like the concept of free trade. But we don't live in a free trade world. U.S. has minimal barriers to import into the U.S., but we face substantial, both financial tariff and non-tariff barriers when we try and export. So as a result, in 2022, we have a $1.2 trillion merchandise trade deficit. We've lost thousands of factories, millions of jobs to foreigners because of the unfair trade competition. So what Trump wants to do is create an American manufacturing powerhouse and using tariffs as a way to level the playing field. So in the case of Deere, we've seen we now have a merchandise trade deficit of $150 billion. With Mexico, many U.S. factories are closing U.S. plants, relocating to Mexico, taking advantage of the cheap labor and then importing the goods duty-free back in the U.S. What does that do for America? So by putting tariff, using tariffs strategically, we can strengthen American manufacturing and increase real wages for American workers. So what do you think of Deere's, for example, comment last night, which was to point people to the idea that there are certain types of manufacturing that they believe may even have lower value, if you will, lower value add, and that they want to sort of move up the chain. They want that to happen in the United States. They believe that the other manufacturing should happen elsewhere and that it would hurt ultimately the company if they weren't able to do it this way. Well, when you look at overall the policies, what you see is a hollowed out American manufacturing base, and we need to protect American jobs and protect American manufacturing. So the policies we have now are not leading to that outcome. We can't have American producers close at American factories and offshoring. July had another record merchandise trade deficit. So Trump's plan is to bring jobs back to America, bring manufacturing back to America, create incentives to produce in America, and that will result in more jobs and higher wages for Americans. And you don't think it turns into a tariff war, I ask, because we've had gotten emails from viewers, some farmers in the Midwest who said, look, what they worry about is actually that other countries are going to say, well, we don't want your exports or we're going to tariff your exports. And so that it creates this sort of a race either to the bottom or to the top in terms of cost. Yeah, that's the problem we have now. They've put in tariffs and non-tariff barriers for us, and we've done nothing about it. So it's it's a one way street and we have to make it a two way street and we have to protect American manufacturers the same way foreigners are protecting their domestic markets. We've also talked a lot about taxes on this broadcast, including not taxing tips. And we've had a number of interesting conversations with folks around the table. And I'm curious where you land on that. And one of the things that people say is, you know, what about a teacher or a nurse or somebody who is not paid an extraordinary amount of money, but does not get their pay in the form of tips? And yet a waiter or a taxi driver or somebody else who would be getting their their income in the form of tips, maybe the exact same amount of money would not be taxed in the same way. Yeah, I think the the Trump overall tax plan is to extend the very successful tax cuts he implemented in 2017 and to make them permanent. His tax policy reduced taxes for all Americans. And he he wants to continue with that policy. The proposals that he made today protect those that that are having the most trouble meeting expenses in the economy. And his proposals allow the American workers to keep more of their hard earned earnings. Give an example. Under Trump, real wages grew 7.7 percent. Under Biden, they've declined 2.1 percent. So the American worker is the most vulnerable. So the tax policies he articulated, no tax on tip, no tax on overtime, no tax on Social Security, they benefit the people that need the help the most to restore their income so they can meet the higher cost of living today.