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

Lutnick describes his approach to leading the Commerce Department by completely reimagining its powers rather than making incremental improvements. He reduced headcount from 52,000 to 40,000 by eliminating outdated programs, then motivated remaining specialists by maximizing their capacity for high-impact outcomes.

• •Cut 12,000 positions (23%) quickly to avoid prolonged uncertainty and removed programs dating back to 1978-1986
• •Government employees are narrow experts, not generalists - secretary's role is weaving their expertise together
• •Outcome-driven approach: success matters regardless of effort, failure is failure regardless of hard work
• •Visited every bureau for town halls to explain vision and get specialists excited about maximizing their capacity

Lutnick explains the fundamental economic imbalance: in 1985, the US had net ownership of $148B globally; by 2024, foreign entities owned $26T more of America than vice versa. This reframes tariffs not as protectionism but as rebalancing who owns America's productive assets.

• •Trade deficits allow foreign entities to buy America with dollars earned from selling to US consumers
• •The 'supermarket analogy' fails: sustained deficits mean the producer eventually owns the inventor's island
• •Countries offering $200B investment deals are 'just buying us' - not solving the ownership imbalance
• •Trump's country-specific tariff model is more complex but more nuanced and effective than universal tariffs

Lutnick details the unprecedented Japan trade agreement where Japan finances $550B in US infrastructure (nuclear plants, etc.) as LP, splits cash flow 50/50 until principal+interest is repaid (~30 years), then America gets 90% of ongoing profits. Japan's dividend is reduced auto tariffs (15% vs 25%).

• •Japan's closed market: 94% of cars driven are Japanese, culturally and economically impenetrable
• •25% auto tariff would 'choke' Japanese manufacturers; negotiated down to 15% in exchange for financing
• •Japan raises $550B from domestic bondholders, funds US projects, gets paid back over 30 years
• •After payback, US gets 90% of cash flow indefinitely - estimated $30B/year revenue to Treasury

Lutnick exposes China's mercantilism model: 50 provinces each build multiple electric car companies with government subsidies (free power, capital), creating massive overcapacity. They then dump products below cost globally to destroy foreign competitors and create dependency.

• •China gives free electricity to steel producers, enabling $250/ton production vs $700/ton in America
• •50 mayors × 2 EV companies each = 100+ companies competing, all government-subsidized
• •Dump EVs in Europe at $15K (cost: $30K) to destroy Volkswagen and other manufacturers
• •Turn economic chaos into international leverage by making countries dependent on Chinese supply chains

India was positioned to be second deal after UK but missed their three-Friday deadline when Modi didn't call Trump. Meanwhile, Indonesia, Philippines, Vietnam, Malaysia closed at higher rates. India now wants original terms but the 'staircase' has moved - each successive deal requires better terms for America.

• •Trump does deals like a staircase: first deal gets best terms, each subsequent deal must be higher
• •UK had two Fridays to close (Starmer called Thursday afternoon), India had three Fridays
• •India's internal politics prevented Modi from calling Trump in time
• •Other countries closed at higher rates; India now 'on wrong side of seesaw' wanting old terms

Lutnick and RFK Jr. teamed up to force pharmaceutical companies to give US Most Favored Nation pricing. Using tariff threats as 'the hammer,' they achieved Ozempic/Mounjaro at $149 vs thousands, Merck giving away top drug for free, and mandatory reshoring of production.

• •US pays $1,000 for drugs that Europe pays $175 for (Europe threatens not to buy unless near-cost pricing)
• •232 tariffs gave Commerce 'hammer' power: waive tariffs if companies give MFN pricing + reshore
• •Ozempic and Mounjaro now $149 on Medicare/Medicaid instead of thousands for general sale
• •Merck giving away #1 drug globally for free; total savings: $2.535 trillion per year

Lutnick argues America's immigration lottery is backwards: we pay for people to win entry rather than selecting economic contributors. Gold Card program ($1M-$5M investment) ensures immigrants are top-quartile earners, not bottom-quartile welfare recipients like current average green card holders.

• •Open borders worked pre-1914 because government gave nothing - welfare state requires closed borders
• •Average American earns $60K/year; average green card recipient earns $40K (bottom quartile)
• •Gold Card: $1M investment + extensive vetting ensures top-quartile contributors
• •First week: $1B in Gold Card applications; rigorous $15K vetting process per applicant

Lutnick reveals 2026 focus on eliminating ~$1 trillion in annual fraud by cross-referencing government databases (Medicaid/Medicare vs income) using modern technology. Multiple departments (Commerce, HHS, DHS) collaborating to build detection systems that were never implemented before.

• •Government never cross-checked Medicaid/Medicare eligibility against actual income (honor system)
• •Flag-of-convenience shipping fraud: Liberia flags allow tax avoidance on high seas
• •Multi-department collaboration (Commerce, HHS, DHS) building technology to detect fraud at scale
• •Estimated $1 trillion annual fraud elimination could fund Social Security without benefit cuts

Lutnick projects 5% GDP growth in 2026 (potentially 6% with rate cuts) driven by $18 trillion in committed capital deployment, construction projects launching, and fraud elimination. Q4 2025 will show artificially low growth (~1%) due to government shutdown accounting quirks.

• •Q3 2025: 4.3% GDP (Lutnick predicted 4% when others said lower)
• •Q4 2025: ~1% reported (but actually 2.5%) due to furloughed workers reducing GDP despite being paid
• •$18 trillion in committed capital being deployed: Micron in NY, auto plants in Detroit, etc.
• •6% growth achievable with Fed rate cuts - would create abundant high-paying jobs without inflation

Lutnick transformed Biden's CHIPS Act from 10% subsidies into equity deals. TSMC deal: threatened 100% tariff, removed DEI requirements, increased commitment from $60B to $165B+ plant. Intel: converted $10B subsidy into 10% government equity ownership.

• •Biden approach: give 10% subsidy (e.g., $6B to TSMC worth $1T market cap) with no ownership
• •TSMC contract had 20 pages of DEI requirements (blind contractors, specific demographics) - declared breach
• •Negotiated $100B additional investment to waive DEI, growing to $165B+ total
• •Intel: converted $10B giveaway into 10% equity stake - can fund Social Security with proceeds

Jensen Huang convinced Trump that selling China chips better than their domestic production (but not US's best) would reduce funding to Chinese competitors. In exchange for export licenses on H200s, Nvidia pays 25% tariff on chips tested and approved by Commerce before export.

• •Jensen's argument: giving China better-than-domestic chips reduces investment in Chinese national champions
• •H200 has fewer flops but more memory than H100 - Commerce tests each chip before export
• •25% tariff on all H200 exports as 'throwaway' condition for helping Nvidia
• •Trump heard multiple opposing views before deciding - doesn't just listen to last person in room