00:00As we were talking about tariffs a little bit earlier, the senator from Virginia talked about Australia.
00:05I will point out that Australia has, well, we bought about $28 billion worth of Australian beef,
00:12and they've bought exactly zero of ours.
00:14So there's an opportunity to be able to improve that trade relationship.
00:17So that's one of the things I hope will come out of the trade negotiation.
00:20You will acknowledge there is, though, a trade, we actually have a trade surplus.
00:22We actually have a trade surplus with Australia, that is correct.
00:24But we'd like to sell more beef to them.
00:27So that's an opportunity.
00:28But one quick question on that, kind of just following up on Senator Kennedy's line of questioning.
00:34So if a tariff was put in place and the prices went up, wouldn't that be a one-time event, right?
00:43Because after that, it would be baked in.
00:45It's just a one-time thing.
00:48So it might well be, as I indicated in my opening remarks, it might well be a one-time event.
00:53But that isn't a law of nature.
00:55You know, we don't want to make sure of that.
00:57We were more sure of that back in 2018 because we'd had, you know, 40 years of low inflation.
01:04Coming off of a global inflation episode where we haven't fully returned to 2%, it's something just a question we will approach carefully.
01:12But if the tariff is only put in once and just maintains the flat rate there, then how could that be inflationary in the second year?
01:18Well, because it could be a process of many years.
01:21I mean, a couple of things are.
01:23One is, if it comes in quickly and it's over and done, then yes, very likely it's a one-time thing.
01:28Like an oil shock, a one-time oil shock where the price comes back down, it goes through the system.
01:32It doesn't raise inflation, it just raises prices once.
01:34But if you have a process that goes on multiple shocks for years, for example, or if the shocks are very large, that kind of thing.
01:42And I think, again, we have to be conscious of the current situation, which is people haven't seen 2% flat inflation for some years now.
01:51And it's different from what it was in 2018 when we had tariffs earlier, when we actually cut rates.
01:56So I'm not saying we're not reacting at all of this.
01:59It's just it's a risk we feel like as the people who are supposed to keep stable prices for the benefit of the American people.
02:06We need to manage that risk, too.
02:08That's all we're doing.
02:09We're not deciding what to do yet.
02:11So if Senator Warner's comment that a tariff is a tax, would that imply that then taxes could be inflationary as well?
02:17No.
02:18So what's the difference between a tax and a tariff then?
02:20Or do you disagree with Senator Warner's characterization that tariffs are not taxes?
02:25I wouldn't disagree with that, but it's not the language I use.
02:28Look, this is, as I say, one time could be the base case.
02:33But in a situation like this where the process could go on for a long time, where the effects could be large or small,
02:38it's just something you want to approach carefully in a world where inflation is not back to 2%.
02:43And that's our job.
02:45If we make a mistake here, people will pay a benefit, will pay the cost for a long time.
02:49And so we're just approaching the question carefully.
02:52That's all we're doing.
02:53You know that a majority of my committee has said that they do expect to cut rates between now and the end of the year in the remaining four meetings.
03:00So it's not that we're taking a strong view that it will be inflation and not a one-time cost increase.
03:07It's just that we're going to take a careful approach to that very critical question.
03:12Well, let me switch gears on you a little bit.
03:15Communist China is our single greatest threat to America's national security and financial independence.
03:21Now more than ever, the U.S. must ensure security or financial assistance against Communist China's malign influence.
03:26And in 2022, Senate Homeland Security and Government Affairs Committee released a report identifying efforts by Communist China operatives to infiltrate the Federal Reserve system.
03:35The report contained real-life examples of Communist China's attempts and tactics used to target Federal Reserve officials.
03:41In late January, a former senior advisor to the Federal Reserve was arrested on charges that he conspired to steal Federal Reserve trade secrets to benefit and advance Communist China's interests.
03:53This Wall Street Journal article from May 2025 details the potential ramifications of his actions.
03:57The kind of data and trade secrets that this Federal Reserve employee shared could allow Communist China to manipulate the U.S. market and gain advanced knowledge of changes to the federal funds rate.
04:08It could provide Communist China with an advantage when selling or buying U.S. bonds and securities.
04:14Chairman, has the Fed Reserve made any changes to strengthen its internal counterintelligence and security protocols since the development of these incidents?
04:22So that's an incident, and I would say we take it very seriously.
04:28We have quite elaborate and serious and strict provisions around staff access to information, serious protections for confidential information.
04:41We have background checks.
04:42We have annual training.
04:43We have many of those things.
04:44I don't know that we've made any fundamental changes, but we're certainly, you know, sorry, very sorry,
04:50to see something like this having taken place.
04:52And, you know, I mean, we're certainly looking at our at the protections we have in place.
04:58Great.
04:58Well, I have another question, and we'll just submit as a QFR, but I know the chairman said you've got a hard out, so I'll go ahead and yield back my time.
