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Speaker 1: Good morning, everybody, Happy Thursday. We have an amazing show,
Speaker 1: so you can be to press show for everybody today.
Speaker 4: What do we have, Crystal, Yes, the present show.
Speaker 2: We've got all the details for you about quote unquote
Speaker 2: Liberation Day, plus the early morning market reaction best we
Speaker 2: can tell, plus the our own reactions of what this
Speaker 2: is going to mean and what is going to mean
Speaker 2: for you. None of it good and all of it
Speaker 2: insane and all of the things. So get into all
Speaker 2: of that and spend some significant time breaking it all
Speaker 2: down for you as best we can, but there is
Speaker 2: a lot of other news as well that we want
Speaker 2: to get to. Trump is saying that Elon will be
Speaker 2: out soon. He's saying that to his inner circle. Is
Speaker 2: in our circle is then leaking it to the news media.
Speaker 2: So that is pretty interesting. The wake of that big
Speaker 2: Wisconsin defeat. We also have a new deadline for potential
Speaker 2: TikTok deal or sale. We'll tell you who is lining
Speaker 2: up to be part of that process. I'm taking a
Speaker 2: look at massive cuts both to mind safety and also
Speaker 2: to some of the programs to prevent, identify research and
Speaker 2: treat black lung, real betrayal of a group of voters
Speaker 2: who were quite key to Trump's victory, especially back in
Speaker 2: twenty sixteens, and breaking all of that down for you.
Speaker 2: Z is going to join us to take a look
Speaker 2: at the extremist group that is claiming to be behind
Speaker 2: the list of students who are being targeted right now
Speaker 2: for removal by the Trump administration based on their pro
Speaker 2: Palestine sentiment.
Speaker 4: So a lot going on in the world right now.
Speaker 1: Yeah, that's right.
Speaker 3: Let's just go ahead and start with the tariff's guies.
Speaker 3: I mean, I stayed up well past my bedtime thinking
Speaker 3: reading and doing as much as I possibly could here.
Speaker 3: I'm going to save my gas reaction before we break
Speaker 3: down all of the news, Let's just go ahead and
Speaker 3: start with the announcement. I watched the entire thing, so
Speaker 3: you don't have to.
Speaker 1: Let's take a listen, big Price.
Speaker 5: From seventeen eighty nine to nineteen thirteen, we were a
Speaker 5: tariff back nation in the United States, was proportionately the
Speaker 5: wealthiest it has ever been. So wealthy, in fact, that
Speaker 5: in the eighteen eighties they established a commission to decide
Speaker 5: what they were going to do with the vast sums
Speaker 5: of money they were collecting. We were collecting so much
Speaker 5: money so fast, we didn't know what to do with it.
Speaker 1: Isn't that a nice problem to have?
Speaker 5: What do you think, Marco? Good problem? Marco would love
Speaker 5: that problem. But we don't have that problem anymore. But
Speaker 5: we're not going to have it very much longer. I
Speaker 5: will tell you. But they collected so much money they
Speaker 5: actually formed a commission to determine what they were going
Speaker 5: to do with the money, who they were going to
Speaker 5: give it to, and how much. Then in nineteen thirteen,
Speaker 5: for reasons unknown to mankind, they established the income tax,
Speaker 5: so that citizens rather than foreign countries, would start paying
Speaker 5: the money necessary to run our government. But likewise, an
Speaker 5: old fashioned term that we use, groceries. I use it
Speaker 5: in the campaign. It's such an old fashioned term, but
Speaker 5: a beautiful term, groceries.
Speaker 1: It says a.
Speaker 5: Bag with different things that it groceries went through the roof,
Speaker 5: and I campaigned on that. I talked about the word
Speaker 5: groceries for a lot. And so we're going to be
Speaker 5: charging a discounted reciprocal tariff of thirty four percent. I think,
Speaker 5: in other words, they charge us, we charge them, we
Speaker 5: charge them lest So how can anybody be upset? They
Speaker 5: will be because we never charge anybody anything. But now
Speaker 5: we're going to charge European Union. They're very tough, very
Speaker 5: very tough traders. You know, you think of European Union
Speaker 5: very friendly. They rip us off. It's so sad to see.
Speaker 3: It was nearly an hour, Longe, and that chart, ladies
Speaker 3: and gentlemen, is exactly how the entire world learned about
Speaker 3: what the tariff right would be.
Speaker 1: And I will tell you so. My wife is a
Speaker 1: trade expert.
Speaker 3: We were sitting on the count we're watching this together,
Speaker 3: and we both audibly gasped whenever we saw what it
Speaker 3: actually was. And let's go ahead and put this up
Speaker 3: there on the screen. It is the craziest thing. Okay,
Speaker 3: let me take the hyperbole out of it. This is
Speaker 3: the most extraordinary tariff action in over a century, probably
Speaker 3: the single most economically impactful action that a president of
Speaker 3: the United States has ever made in terms of direct
Speaker 3: intervention into the economy. So there you have these quote
Speaker 3: US discounted reciprocal trade tariffs that are there on the right.
Speaker 3: Thirty four percent for China, twenty percent on the European Union,
Speaker 3: forty six percent for Vietnam, thirty two percent on Taiwan.
Speaker 3: Just a side note, Taiwan is listed there as a country,
Speaker 3: so that's interesting in.
Speaker 1: And of itself.
Speaker 3: Twenty four percent there for Japan, twenty six percent on India,
Speaker 3: twenty five percent on South Korea, thirty six percent on Thailand,
Speaker 3: thirty one percent Switzerland. A lot of this is listed
Speaker 3: as either major US trading partners and or the amount
Speaker 3: of bilateral trade that we do each year. Now, I
Speaker 3: want everybody to pay attention to the way that the
Speaker 3: column is designed. It says tariffs charged to the USA,
Speaker 3: including currency manipulation and trade barriers, So there was immediate
Speaker 3: discussion of how did they actually find this, How did
Speaker 3: they come to this list not only of countries but
Speaker 3: actually of the rate themselves. All indications right now is
Speaker 3: that they literally used either chat GPT or some Wikipedia
Speaker 3: form to find the number of countries in the world.
Speaker 3: A perfect example, let's put this up there on the screen.
Speaker 3: One of the islands that was listed is the Herd
Speaker 3: in McDonald's Islands. It's inhabited only by penguins. Yes, it
Speaker 3: is part of Australia, so they could have just said Ripping, Yes,
Speaker 3: the small Bard, Small Bard, what is it? The most
Speaker 3: the highest north like place that's populated by humans, I believe,
Speaker 3: So that is included a Guinea Bissal. Now you'll notice
Speaker 3: the overall regime basically works this way. The tariff is
Speaker 3: calculated based upon some of this I'll call it extraordinary math.
Speaker 3: For now, that extraordinary math comes to a figure which
Speaker 3: they for example, like in the China case, where they
Speaker 3: come up with this number of some sixty seven percent.
Speaker 3: That number is then divided by two because Trump says
Speaker 3: that we're going to be kind, and that is the
Speaker 3: quote discounted reciprocal tariff that is being placed on these
Speaker 3: other countries.
Speaker 1: Now, in the.
Speaker 3: Case where we do actually have a trade surplus, the
Speaker 3: baseline assumption is that that trade surplus is still being
Speaker 3: impacted by non trade barriers and or you know, things
Speaker 3: like currency manipulations to a baseline of ten percent. Now,
Speaker 3: the reasons and why that is so extraordinary is that,
Speaker 3: if you'll remember, even during the campaign, Trump had discussed,
Speaker 3: you know, a ten or a twenty percent tariff that
Speaker 3: would be put into place that actually would have been
Speaker 3: less than where we are right now. So let me
Speaker 3: just go ahead and show you, guys, for example, what
Speaker 3: the current actual tariff is overall. Let's go ahead and
Speaker 3: put what is an A six please up on the screen.
Speaker 3: A six can show you that the current tariff regime,
Speaker 3: which previously was roughly around one point five percent, is
Speaker 3: now quote off the scale of the graph that we
Speaker 3: are even showing you now the way that they arrived
Speaker 3: at this math. As I said, and you really need
Speaker 3: to buckle in because this is kind of nerdy, but
Speaker 3: let's go and put a seven please on the screen.
Speaker 3: Immediately people were like, where the hell did this come from?
Speaker 3: James Surguecki says, this quote just figured out where these
Speaker 3: fake tarif rates come from. They didn't actually calculate tariff
Speaker 3: rates plus non tariff barriers as they said they did. Instead,
Speaker 3: for every country, they just took our trade deficit with
Speaker 3: that country and divided it by the country's exports to
Speaker 3: the United States. So, for example, we have a seventeen
Speaker 3: point nine trade seventeen point nine billion trade deficit with Indonesia.
Speaker 3: It's exports to US are twenty eight billion. Seventeen point
Speaker 3: nine over twenty eight equals sixty four, which Trump claims
Speaker 3: is the tariff rate Indonesia charges US. Now, let me
Speaker 3: just briefly explain also why that doesn't make a hell
Speaker 3: of a lot of sense.
Speaker 1: The idea behind this is that the trade.
Speaker 3: Deficit itself, divided by the number of goods is somehow
Speaker 3: an approximation for what a reciprocal tariff is. That is
Speaker 3: just simply not true. For example, the entire way that
Speaker 3: this is being sold is and I wouldn't even blame
Speaker 3: people if it says reciprocal tariff. For people to say,
Speaker 3: for example, oh my god, Vietnam charges the United States
Speaker 3: and ninety percent tariffs on goes.
Speaker 1: That's completely not true.
Speaker 3: Actually, Vietnam just yesterday said that they were going to
Speaker 3: take all reciprocal tariffs away. This is a baseline assumption
Speaker 3: that the mere existence of a trade deficit with any
Speaker 3: country in the world, not just China, Japan, South Korea,
Speaker 3: the manufacturing powerharp houses Mexico or Canada, which are exempt
Speaker 3: from this, just by the way, those are currently still
Speaker 3: under USMCA standards. That assumption there is that the trade deficit,
Speaker 3: the mere existence, is one which is against the United
Speaker 3: States and requires a corrective action known and being classified
Speaker 3: as a reciprocal tariff. It is not a reciprocal tariff.
Speaker 3: In fact, it does not even include currency manipulation. There
Speaker 3: is a case to be made that it is the
Speaker 3: way that you could roughly approximate it for China. Maybe
Speaker 3: we can talk about that a little bit later, but
Speaker 3: in the interim, what we can tell you is that
Speaker 3: there is no way to describe this as like. Even
Speaker 3: saying extraordinary is not capture it. We are talking about
Speaker 3: a fifty four percent tariff on China. Because these tariffs
Speaker 3: will stack on top of the three oh one tariffs
Speaker 3: that have already been put in place. That's fifty four
Speaker 3: percent on the one of the largest trading partners I
Speaker 3: think number three for the entire United States of America,
Speaker 3: not to mention consumer electronics, consumer goods, et cetera.
Speaker 1: Vietnam is our numbers or eight trading partner.
Speaker 3: The vast majority of retail goods in the textile industry
Speaker 3: enter the.
Speaker 1: United States from Vietnam.
Speaker 3: The other issue that we really see here is that
Speaker 3: none of this is paired with any tax credits and
Speaker 3: or capital injection. The rough estimate off the top as
Speaker 3: of this morning is that this will impact roughly four
Speaker 3: hundred billion dollars worth of goods in the United States.
Speaker 3: An additional four hundred billion that's what the overall revenue
Speaker 3: that that would raise you would then have to see,
Speaker 3: and a corrective action of roughly I mean, that's almost
Speaker 3: what half of the original tart bill going back to
Speaker 3: two thousand and eight two offset. Now, in the immediate term,
Speaker 3: what's going to happen is that you are watching a
Speaker 3: significant amount of these goods that are going to effectively
Speaker 3: be tariffed at these crazy rates starting tomorrow and next week.
Speaker 3: Tomorrow in next week is when all of this stuff
Speaker 3: starts to go into place. As all of that goes
Speaker 3: into place, the absolute massive shock to the supply chain
Speaker 3: is going to be extraordinary. Now, the current market reaction, guys,
Speaker 3: let's go ahead and put that up there. As you
Speaker 3: guys can see, it's roughly around three point three percent
Speaker 3: is the S and P five hundred right now? The
Speaker 3: Nasdaq futures down by about three point eighty four percent,
Speaker 3: et cetera. The Secretary of the Treasury was pressed immediately
Speaker 3: after the press conference in the White House, being asked
Speaker 3: what can other countries do? What exactly does this all mean.
Speaker 3: Here's what he had to say, guys, Let's go ahead
Speaker 3: and play a five.
Speaker 1: It was a big day.
Speaker 6: The President calls it liberation Day. You know, we showed
Speaker 6: the markets before, but if you saw the post market reaction,
Speaker 6: it was kind of down across the board. You know,
Speaker 6: people are looking at their four oh one case and
Speaker 6: they worry about it.
Speaker 4: What do you say to.
Speaker 7: Them today, Brett, I say that what we are doing
Speaker 7: is we're setting the stage for long term economic growth.
Speaker 7: That we were on our way to a financial crisis.
Speaker 7: You know, I used to teach a history of financial
Speaker 7: crisis and with a gigantic government spending, it was unsustain
Speaker 7: You look back in nineteen ninety eight, you look back
Speaker 7: in seven right before it looked great that everything collapsed.
Speaker 6: China is at thirty four percent added to the twenty
Speaker 6: percent already, so that's fifty four percent on Chinese goods.
Speaker 3: Are they going to come back with something.
Speaker 7: Big, Well, well, we'll see what they do. Is my
Speaker 7: advice to every country right now is do not retaliate.
Speaker 7: Sit back, take it in, Let's see how it goes,
Speaker 7: because if you retaliate, there will be escalation if you
Speaker 7: don't retaliate. This is the high water market, and I'm
Speaker 7: trying to be Secretary of Treasury, not a market commentator.
Speaker 7: What I would point out is that especially the nas
Speaker 7: Nas deck peaked on Deep Seat Day. That so that's
Speaker 7: a mag seven problem, not a MAGA problem. They don't
Speaker 7: like terrorists, then why do they have them?
Speaker 4: And should we view these as permanent?
Speaker 7: That again, I think we're going to wait and see
Speaker 7: how this.
Speaker 3: Not inspiring at all? No clear instructions there for other countries.
Speaker 3: And that is one actually where it makes the least
Speaker 3: amount of sense, because you had two countries Vietnam and
Speaker 3: Israel both before who were like, okay, no reciprocal tariff,
Speaker 3: no worries, and then of course they still get hit
Speaker 3: with the reciprocal immediately, and they were trying to figure out, like,
Speaker 3: what are you talking about. You know, we just said
Speaker 3: that we won't have reciprocal tariffs. This is one where
Speaker 3: you basically are putting people in a situation where you
Speaker 3: don't have any clear instructions for how other countries are
Speaker 3: supposed to be able to respond. For example, I mean,
Speaker 3: I'll be honest, this is the one that makes the
Speaker 3: least amount of sense within all of this is the justification,
Speaker 3: for example.
Speaker 1: Of a VAT tax.
Speaker 3: So as we'll recall, if you've ever been to Europe
Speaker 3: or elsewhere, they use a value added tax kind of
Speaker 3: like a sales tax, but it's applied across the board
Speaker 3: to all goods that are sold in the country, and
Speaker 3: so they're using the VAT as a justification for the
Speaker 3: US goods are treated unfairly. It's like, well, not really,
Speaker 3: because that would imply, for example, that we could negotiate
Speaker 3: some scenario where let's say where you or I were
Speaker 3: buying something made from China on Amazon.
Speaker 1: I'm sure we've all done that at some point before.
Speaker 3: But then the Chinese could negotiate with the United States,
Speaker 3: and thus the state of Virginia where I live. Every
Speaker 3: time I order something and then that would not be
Speaker 3: subject to the Virginia sales tax. Right, It's like, no,
Speaker 3: the sales tax is just applied to all of the
Speaker 3: things that are sold in your state, and no offens or.
Speaker 3: But so there's so much that is happening here right now.
Speaker 3: I don't even really think that the market reaction fully
Speaker 3: captures it.
Speaker 4: If anythink Mark what happens when it opens.
Speaker 3: What I think, crystal is that the market is so
Speaker 3: a gas at this idea of where things are. Like
Speaker 3: nobody in their wildest dreams actually could have come up
Speaker 3: with a fifty four percent tariff on China or forty
Speaker 3: six percent tariff on Vietnam. Yeh, Look, there are some exclusions,
Speaker 3: for example, on Taiwan, like on semiconductors, the auto teriff
Speaker 3: rate is actually excluded. It's still just twenty five percent,
Speaker 3: which is still crazy, still a lot. And the what
Speaker 3: I just come back to is not only are you
Speaker 3: literally seeing the most extraordinary again, even extraordia does not
Speaker 3: capture it massive tariff that is put into place on goods,
Speaker 3: but the lack of commensurate action on the other side,
Speaker 3: there is no even acknowledgment of the immediate pain that
Speaker 3: many of these businesses will begin to feel tomorrow and
Speaker 3: within the next week, and then the follow on effects
Speaker 3: of that. So politically it's crazy, but beyond you know
Speaker 3: what this all could mean. The only bull case and
Speaker 3: this is why I think maybe even the market is
Speaker 3: where it is is they're like, this is just so insane.
Speaker 3: It's obviously a negotiating tactic kind of in the way
Speaker 3: that Canada and Mexico are. But here's even if that
Speaker 3: is to be true. Even if that is to be
Speaker 3: true in one month from now, we'll have a grand
Speaker 3: deal with China or something. In that interim one that's
Speaker 3: one month of economic activity where you had a fifty
Speaker 3: four percent tariff on the vast majority of consumer goods
Speaker 3: that are entering the United States of America. One month
Speaker 3: of a bad down month. Many of these companies operate
Speaker 3: on what a four or five percent margin? Just think
Speaker 3: about that. What do you think that the what is
Speaker 3: the other forty some percent is going to go? The
Speaker 3: forty seven percent, Well, they're going to cut jobs.
Speaker 1: They're good, you know.
Speaker 3: That's that's the issue is that unless you literally are
Speaker 3: just pumping money into the economy in the way that
Speaker 3: they did, let's say with the agricultural tariffs, and they
Speaker 3: offset that immediately. There's no plan here, There's not even that.
Speaker 3: Last I checked, the White House is active. The GOP Congress,
Speaker 3: I mean, is actually trying to take away the tax credits.
Speaker 3: The manufacturing asker is cut forty five x. That's right
Speaker 3: in the US tax code.
Speaker 4: So you are and and undoing the chips.
Speaker 1: I was going to say, at even put the chips outside.
Speaker 3: So even with that capital injection would require what it
Speaker 3: would require a New Deal style program of thousands of
Speaker 3: bureaucrats to actually have to sit there and to dole
Speaker 3: this money out and to make sure that it's not
Speaker 3: in front. Well, what are we also doing doge at
Speaker 3: the same time. So we genuinely would have been better
Speaker 3: off with a ten percent tariff, Like I'm not kidding
Speaker 3: because right now ten percent right now now, the approximate
Speaker 3: terror rate is now some thirty two percent. If you
Speaker 3: average everything out, we would have been ten times better
Speaker 3: off with a ten percent tariff. Here's the other thing too.
Speaker 3: Let's say if these stay and you are a company,
Speaker 3: what are you going to do? You're looking at these
Speaker 3: reciprocal teriff regimes or whatever. Already much of the trade
Speaker 3: out of Vietnam is because of the original China teriffs.
Speaker 3: That was actually a good idea, right, because Vietnam is
Speaker 3: much more a US ally, he get it out of China,
Speaker 3: great win win for everybody. It's one of those where look,
Speaker 3: if we even want to presume let's say, manufacturing jobs
Speaker 3: coming back here as well to America. Really, what this
Speaker 3: encourages is actually a gaming of the tariff market. And
Speaker 3: even my friend Orrin cast who is generally i would say,
Speaker 3: supportive of this overall thing. He even wrote previously in
Speaker 3: his report that selective tariff application across the board like
Speaker 3: this will cause one of the most corrupt lobbying campaigns
Speaker 3: in the history of mankind. You know, to have each
Speaker 3: one of these individual countries, they can game things with
Speaker 3: each other. We've lived in the era of transshipping, etc.
Speaker 3: But even worse is that now it all just comes
Speaker 3: down to, likeas Donald J. Trump and the people around
Speaker 3: him to potentially get offset or not. And there are
Speaker 3: trillions of dollars on the line right.
Speaker 2: Now, and Sager looking at this, that thing, you just
Speaker 2: lay it out. That's the point, Like there is no one,
Speaker 2: honest who can make a legitimate economic case for this.
Speaker 4: One does not exist. I mean, it's a good thing.
Speaker 2: We can all say retarded again, because there's no other
Speaker 2: way to classify what has been done here. If you're
Speaker 2: considering it on the merits of an economic plan. The
Speaker 2: TLDR is, that's not.
Speaker 4: Really what this is about.
Speaker 2: This is the same effort to consolidate power that has
Speaker 2: been a consistent theme of Trump two point zero. Whether
Speaker 2: it's the university crackdown, whether it's the media crackdown, whether
Speaker 2: it's the judicial attacks. All of this has to do
Speaker 2: with giving Donald Trump more power. So it's not just
Speaker 2: countries that will come hat in hand begging for this
Speaker 2: or that exemption.
Speaker 4: It's not to the lobbyist.
Speaker 2: You're right, they got to be the happiest people on
Speaker 2: the planets right now because anyone who has an in
Speaker 2: is suddenly going to be astronomically valuable. But every single
Speaker 2: company is going to be coming to Donald Trump pat
Speaker 2: in hand, you know, like all the oligarchs lined up
Speaker 2: behind him at the inauguration begging for their carve ount
Speaker 2: and exemption. This is an incredible tool of power for
Speaker 2: him because not only does he get to reward those
Speaker 2: who are appropriate least either sycophantic or you know, cut
Speaker 2: him in on whatever deal it is that he wants
Speaker 2: or you know, buy enough of his crypto shit coin
Speaker 2: or whatever it is. Not only does he have the
Speaker 2: power now to reward those sycophantic allies, but he also
Speaker 2: has the power to punish those who would dare dissent.
Speaker 2: So top line, I think that's the best way to
Speaker 2: think about what's going on here, because you're right, when
Speaker 2: they release this chart, everyone's going through this list of
Speaker 2: parted like what these countries supposedly the teriffs they have
Speaker 2: on us, and everyone's going this is just made up?
Speaker 2: Like that was the initial instinct, is that they just
Speaker 2: literally made stuff up, and then a couple of people
Speaker 2: online were able to crack this ridiculous code and the
Speaker 2: you know, insane, insane calculation that they did.
Speaker 4: I think it is all but confirmed that they just typed.
Speaker 2: Something into chat GPT to get this, not only because
Speaker 2: of the you know, places that are not even populated
Speaker 2: that are on this list, but also because if you
Speaker 2: ask chat gpt like, give me a really basic way
Speaker 2: to calculate tariffs.
Speaker 3: That's my only injection is that I actually use chat
Speaker 3: EPT to come up with the formula.
Speaker 1: Yeah, they said, and it's actually not that hard.
Speaker 3: What they did is they typed in what is the
Speaker 3: easiest way exactly because they.
Speaker 2: Has the capability to do something that's actually more complex
Speaker 2: than this. And if you say you have to say,
Speaker 2: like give me the most basic, like basically the dumbest
Speaker 2: way to do this, and this is the answer chat
Speaker 2: GPT we'll give you. Just to drill down on because
Speaker 2: I know there's a lot to process here, Just to
Speaker 2: drill down on your point about why that calculation of
Speaker 2: just assuming that if we have a trade deficit with
Speaker 2: a country that they're quote unquote ripping us off. Arnau
Speaker 2: Bertrand gave a great example on Twitter. He's like, think
Speaker 2: about the country of Lesotha. This is one of the
Speaker 2: poorest countries in Africa. They are also part of a
Speaker 2: trading block including South Africa and other African nations, like
Speaker 2: a regional trading block that has a consistent uniform tariff policy.
Speaker 2: So you would think then that Lesotho and South Africa, okay,
Speaker 2: if they have a uniform tariff policy, that they would
Speaker 2: then be hit with the same level of reciprocal tariffs
Speaker 2: not true, because we have a large trading deficit with Lesotho.
Speaker 2: Why because they put they're a very poor country. We
Speaker 2: import things like diamonds and other minerals from the country,
Speaker 2: things that you know, by the way, we don't. There's
Speaker 2: no way for us to jut up some domestic diamond
Speaker 2: industry here.
Speaker 4: So what are we doing to start with?
Speaker 2: But the reason they don't buy a lot of things
Speaker 2: for us is because they're really poor and they can't
Speaker 2: afford iPhones and Tesla's or anything else. And yet they're
Speaker 2: going to be hit with this massive tariff now, which
Speaker 2: is going to be incredibly destructive to them because of
Speaker 2: that what they consider to be Trump considers, based on
Speaker 2: this chart, to be them ripping us off in this
Speaker 2: trade and balance. That's how insane this whole thing is. Okay,
Speaker 2: if you wanted to truly bring manufacturing back in certain
Speaker 2: key industries, which I think makes sense, you think makes absolutely,
Speaker 2: you would want extremely intelligent people with an extremely concerted,
Speaker 2: specific plan of how you're going to do this and
Speaker 2: what is the commensurate industrial policy you're going to use
Speaker 2: to make sure that you're not only imposing the tariffs
Speaker 2: and you know, putting this, you know, ring around that
Speaker 2: in but they're also providing the government support, whether it's
Speaker 2: tax credits or subsidies or whatever it is, to actually
Speaker 2: induce industry to invest here. That is not what's going on.
Speaker 2: In fact, we're going in the total opposite direction of
Speaker 2: that with Doge and the austerity push that we see
Speaker 2: right now. So this is going to cause massive pain.
Speaker 2: I mean not just you know, stock market is going
Speaker 2: to be a mess. Obviously people's four oh one k's
Speaker 2: are going to be a disaster. But this level of tariff,
Speaker 2: which you're right is somewhere if you average it all together,
Speaker 2: we're talking about something around a thirty percent tariff. This
Speaker 2: is a massive regressive tax that is going to hit
Speaker 2: the working class and the poor the hardest thousands of dollars.
Speaker 2: Additional that, working class people will have to pay to
Speaker 2: buy food, clothing, medicine, nearly everything that Americans consume across
Speaker 2: the board. The economic fallout here is impossible to wrap
Speaker 2: your head around and the pain that it will cause
Speaker 2: ordinary people. So I mean, that's that's where we are.
Speaker 2: And just to give one more example, like I mentioned,
Speaker 2: you know, we can't get up a domestic mining industry,
Speaker 2: like this is why it's always I've always opposed this
Speaker 2: idea that he pushed relentlessly on the campaign trail of
Speaker 2: We're just going to do a flat tariff across the board,
Speaker 2: and you're right, it would be superior to what we
Speaker 2: to what he actually ended up with, which is in
Speaker 2: complete insanity. But that never made sense because there are
Speaker 2: certain things like Jeff time I was talking about Chilean
Speaker 2: sea bass, like you literally cannot produce Chilean.
Speaker 4: Sea bass here.
Speaker 2: We don't want to increase certain industries, either because it's
Speaker 2: impossible or because it's like a low end industry that
Speaker 2: it's not even beneficial for us to have in our country.
Speaker 2: So he wants to make this comparison to the early
Speaker 2: nineteen hundreds and William McKinley, you know his economic history.
Speaker 2: That could be a whole other segment in and of itself.
Speaker 2: The insanity of that. But if we can put up
Speaker 2: put up the last element here, guys A eight, the
Speaker 2: Smooth Holly tariffs. So last time we had anything approaching
Speaker 2: this was the Smooth Holly Act in nineteen thirty, which
Speaker 2: is widely seen as gravely exacerbating the Great depression. What
Speaker 2: he just announced yesterday would go far beyond even where
Speaker 2: tariffs were under the Smooth Holly Act. Smoot Holly Act,
Speaker 2: when you average everything out, it is about twenty percent.
Speaker 2: This is roughly thirty percent that we're talking about, wildly
Speaker 2: out of line with any other developed nation around the globe.
Speaker 2: And again, I think it is difficult to imagine how
Speaker 2: severe the economic fallout is going to be from this
Speaker 2: and the complete insanity entailed in developing and announcing this policy.
Speaker 3: Yeah, and this is actually I hate doing this because
Speaker 3: I feel like I have to start parrotying like Milton Friedman.
Speaker 1: Or like all these people actually totally disagree with even this.
Speaker 3: You know, people as you and I know, there are
Speaker 3: certain neoliberals who would cry Smooth Holly anytime that you
Speaker 3: would have even.
Speaker 1: Let's say a five or ten percent.
Speaker 3: Sure, there are certain people out there who would make
Speaker 3: the case for TPP for any of these other trade partnerships,
Speaker 3: et cetera, purely based on GDP numbers, And I don't believe.
Speaker 1: That at all.
Speaker 3: I am one hundred percent pro tariff, even on China,
Speaker 3: it would make sense maybe I have a twenty five
Speaker 3: percent across the board tariff. In fact, the formula. I
Speaker 3: think the formula actually only makes sense whenever it's applied
Speaker 3: to China. But fifty four percent overnight with no planning
Speaker 3: and no tax relief and no monetary relief for the
Speaker 3: said consumer, absolutely not. I'm telling you this as a
Speaker 3: person who is an autarchist and a marcantilist in his heart.
Speaker 3: I do not want to rely on the rest of
Speaker 3: the world for all of these things. I want to
Speaker 3: see booming manufacturing and a complete inversion of the American
Speaker 3: social contract where everything is decentralized and we have no
Speaker 3: retirement except for betting on the stock market. But that's
Speaker 3: that's not what this is, right Like, this is basically
Speaker 3: trying to reform the whole system with the bluntest possible
Speaker 3: It's like the Federal Reserve. Actually when we think about inflation.
Speaker 3: This is basically using this extraordinary teriff rate as a
Speaker 3: corrective for so many different parts, interlocking parts of American society,
Speaker 3: of the way that American business works. As in, if
Speaker 3: you're going to do this, you're actually not only hurting
Speaker 3: people's pocketbooks, they're four to oh one k's. But and
Speaker 3: let's even move past that, because what sixty percent of
Speaker 3: the country doesn't have retirement. The reason why it's not
Speaker 3: about the stock market. It's about liquidity. It's about the
Speaker 3: fact that a business is about to take some extraordinary
Speaker 3: amount of hit on its bottom line just to remain
Speaker 3: basically profitable, or even to maintain a semblance of margin,
Speaker 3: they have to have layoffs. There's just no other way
Speaker 3: to get around it. Now, what did we do during
Speaker 3: COVID Whenever we had a policy where we acknowledge let's say, lockdowns,
Speaker 3: We're like, okay, we're gonna have lockdowns.
Speaker 1: What did we do?
Speaker 3: We had PPP loans and others that went out the
Speaker 3: door build hundreds of billions, if not trillions of dollars.
Speaker 1: Yea designed to offset that.
Speaker 3: Now, you can argue against that in the first place,
Speaker 3: your argument would be we never should have done the
Speaker 3: lockdown in the first place. Okay, But I would say,
Speaker 3: if you're gonna do it, then you absolutely should have
Speaker 3: unemployment relief right and all that. But there's no acknowledgment
Speaker 3: right now of any of that. That's my This is
Speaker 3: effectively like the same as lockdown without any of the
Speaker 3: unemployment insurance that CARES act or a way to think
Speaker 3: so you have to think about the sledgehand. And this
Speaker 3: is where people like me, I think, actually have the
Speaker 3: more responsibility because I want to defend American manufacturing tariffs.
Speaker 3: I want America's working class at better wages to be
Speaker 3: I want to solve that but much better social contract
Speaker 3: where yes, these chip cheap stuff from China, t MoU
Speaker 3: Shean and all of that, it's a disaster. It's making
Speaker 3: all of us actually materially worse off in the long run,
Speaker 3: even though we may have more abundance of stuff.
Speaker 1: That's actually that's a good critique of abundance, right.
Speaker 3: But just bringing it full circle, this calculation of itself
Speaker 3: is a lot like many of the other aspects of
Speaker 3: this White House, where it's just sheer stupidity. That is
Speaker 3: where I cannot just sit here and absorb it, because
Speaker 3: in this one, these are people's lives, These are people's retirement.
Speaker 3: People kill themselves during recessions. Go and I've talked about this.
Speaker 3: Go look at the suicide rate from the grade. It
Speaker 3: is the highest that we have ever seen. Go and
Speaker 3: look the divorce rate and the social impact of what
Speaker 3: massed economic pain does to the American soul. And also
Speaker 3: let's think about what has happened every single time since
Speaker 3: after two thousand and nine.
Speaker 1: We had a choice.
Speaker 3: We could bail out the banks and we could just
Speaker 3: continue our financialized economy, or you know, we could have
Speaker 3: done something different homeowners. We could have changed in the
Speaker 3: way that our financial system works.
Speaker 1: And that was a chance to actually readrite it. But well,
Speaker 1: we didn't do that.
Speaker 3: So all of our recent economic history tells us that
Speaker 3: in this interim amount of pain, the American consumer and
Speaker 3: specifically the people who are poor and the bottom fiftieth
Speaker 3: percentile of overall income household are going to only increase
Speaker 3: their amount of precarity. We have a housing crisis. We're
Speaker 3: putting huge amount of tariffs on things that go into housing. Now, okay,
Speaker 3: you can do that, you really can, and you can
Speaker 3: encourage lumber, et cetera. But what do you need to
Speaker 3: see on the other side of that huge policy to
Speaker 3: make sure that that is that is offset. And so
Speaker 3: I think even when you look at Trump voters or
Speaker 3: many other people people like me who are supportive of
Speaker 3: big even big tariffs, so targeted tariffs, things that make sense,
Speaker 3: things that are actually designed. You know, if you look
Speaker 3: currently like I said, the Vietnam one. That's one that
Speaker 3: makes absolutely no sense. We encourage these companies to move
Speaker 3: to Vietnam specifically because to get out of China. Now,
Speaker 3: it's not a perfect solution. I'd rather be here, but
Speaker 3: it's probably better in the interim. Now, let's say you
Speaker 3: phase in a five year overall plan. It's going to
Speaker 3: phase up to that, and in the interim, we're going
Speaker 3: to give you a tax credit to offset the cost
Speaker 3: of moving that here. Okay, I think you know people
Speaker 3: will say fine, yeah, and even the market reaction all
Speaker 3: of that, this is not this is not even the
Speaker 3: same universe like what we're seeing.
Speaker 4: No, not at all, not at all.
Speaker 2: And the other thing, to go back to your point
Speaker 2: about okay, let's say let's say that he a month
Speaker 2: from now is like, JK, we're going rolling these back.
Speaker 2: We made a great deal, blah blah blah. At the end,
Speaker 2: after that, you still have an absolute mad man, economic
Speaker 2: terrorist who is the president of the United States. So
Speaker 2: how much confidence do you think any business is going
Speaker 2: to have in their investment decisions, in their you know,
Speaker 2: desire to hire and expand, like no, because at any
Speaker 2: time he could walk back out with another chart and
Speaker 2: blow the whole world up. That's that's what we're talking
Speaker 2: about here. So you know, of course I'm not going
Speaker 2: to say it wouldn't matter at all if he rolls
Speaker 2: back these tariffs, But in a lot of ways, this
Speaker 2: is like the damage is done, and I truly believe
Speaker 2: that there is not a single honest way to defend
Speaker 2: the economic impact of these They will make think all
Speaker 2: of us poor.
Speaker 4: They will not have any.
Speaker 2: Intended, you know, effect of bringing back manufacturing, raising wages,
Speaker 2: et cetera. It simply is an effort for Trump to
Speaker 2: have more power and consolidate more authority.
Speaker 4: And that also brings me to I mean, I don't know.
Speaker 2: What the courts will say, but I think that this
Speaker 2: is also wildly illegal because the power of the purse
Speaker 2: and the power to tax and raise revenue is supposed
Speaker 2: to lie with Congress. And so now if the courts
Speaker 2: and there will be challenges, and I know there's already
Speaker 2: groups that are alreaty, groups that have filed and are
Speaker 2: looking at filing, et cetera.
Speaker 4: And really almost anyone.
Speaker 2: In the country would have standings to see I think,
Speaker 2: because everyone is so impacted by this. But you know,
Speaker 2: like I said, I don't know what the courts will say,
Speaker 2: but if you think about it philosophically, he is completely
Speaker 2: overturning our entire economic model, and he's claiming the power
Speaker 2: to do it unilaterally. That is the power of a king,
Speaker 2: that is the power of a monarch, that is the
Speaker 2: power of a dictator. And so it's he's using the
Speaker 2: same tactical approach that he has with many other efforts
Speaker 2: in his presidency, including his you know, the Alien Enemies
Speaker 2: Act and other ways that he has tried to grab
Speaker 2: and consolidate power. Is basically he claims that we are
Speaker 2: at war or we're facing this grand crisis, and that
Speaker 2: that justifies effectively, you know, wartime power consolidation, and you know,
Speaker 2: we're not quite a martial law, but that's the sort
Speaker 2: of that's the direction, that's the cheat code that he
Speaker 2: has been using in order to just do whatever it
Speaker 2: is that he wants to do with no input from
Speaker 2: Congress whatsoever.
Speaker 4: And I don't do not.
Speaker 2: Think based on the fact that in the Senate yesterday
Speaker 2: you had a few Republicans who voted along with the
Speaker 2: Democrats to say no to the terrorists on canon in particular,
Speaker 2: it's just a resolution have any impact. But that was
Speaker 2: a sign that there are plenty of Republicans who are
Speaker 2: also very uncomfortable with this particular direction. But you know, again,
Speaker 2: in my view, this massive worldwide tariff scheme that completely
Speaker 2: upends our economic model, it is wildly illegal for the
Speaker 2: president to be able to do this just on its own.
Speaker 2: Congress needs to reassert themselves. And like I said, we'll
Speaker 2: see where it goes in the court system. But I
Speaker 2: will say that, you know, previously the courts have given
Speaker 2: the president pretty wide latitude, which is why you know
Speaker 2: I wouldn't I wouldn't count on them to save us
Speaker 2: from this insanity.
Speaker 3: Well, see, this is where the legality of it all
Speaker 3: really does matter. Because what did we all remember with
Speaker 3: Canada and Mexico?
Speaker 1: What was that about?
Speaker 3: It was about fentanyl text right right? Well that here
Speaker 3: I didn't even hear the word fantastic.
Speaker 2: So I'll tell you he's not claiming fence. And all
Speaker 2: this time he's invoking the i e e. P. A
Speaker 2: to declare a national emergency citing large and person annual
Speaker 2: US goods trade deficits as a threat to national and
Speaker 2: economic security. So and he's claiming that as an unusual
Speaker 2: and extraordinary threat.
Speaker 4: That's the language.
Speaker 5: You know.
Speaker 2: Typically, the way that these provisions were thought of at
Speaker 2: the time was like you're at war or you're going
Speaker 2: to sanction a country, something along those lines, versus just
Speaker 2: you know, basically, here he is like it's a crisis,
Speaker 2: because I feel like it's a crisis, and so I
Speaker 2: can do whatever I want here. So it is possible
Speaker 2: that the courts will look skeptically upon that, especially because
Speaker 2: you know a lot of these judges, even you know,
Speaker 2: at the Supreme Court level and elsewhere, they're very h
Speaker 2: you know, pro business, they're very like, you know, pro corporate,
Speaker 2: and we're actually selected through the Federalist Society for these
Speaker 2: very libertarian economic views. So it is possible that the
Speaker 2: courts look at this and say, you know what, this
Speaker 2: is just this is too far. But as I said before,
Speaker 2: there's certainly no guarantees there whatsoever.
Speaker 1: Yeah, that's right.
Speaker 3: So just again to just dig down on that, AIPA
Speaker 3: strategy is one that was obviously has been used.
Speaker 1: Trump has stretched it to its definition.
Speaker 3: He was able to get away with it on Canada
Speaker 3: and Mexico not just because of fentanyl, but because they
Speaker 3: were never actually in place long enough to face major
Speaker 3: court scrutiny this And this is where I want to
Speaker 3: make at least that one case where I think the
Speaker 3: only bowl case for this is that this is the
Speaker 3: opening negotiating tactic, right, is that every country in the
Speaker 3: world can just say, come forward, hat in hand. They
Speaker 3: can't raise tariffs. That's what the Trump administration has made clear,
Speaker 3: and they just have to say, okay, what can we
Speaker 3: do for you. But you know what somebody made a
Speaker 3: really good point is that we forget in this case
Speaker 3: then that other countries have politics too. Look at what's
Speaker 3: happened in Canada. Trump has basically turned the entire nation
Speaker 3: of Canada from being on the verge of electing a
Speaker 3: conservative to becoming the most like hyper patriotic liberal. Trudeau,
Speaker 3: in a way, resigned far too early. He would be
Speaker 3: one of the most popular right now if you have
Speaker 3: just stayed this guy, Mark Carney, he's cruising, you know,
Speaker 3: to wherever the next power is. But I actually think
Speaker 3: about places like India or even China. You know, everyone's oh, China,
Speaker 3: it's not a democracy.
Speaker 1: No it's not.
Speaker 3: But what you think the CCP doesn't incorporate public opinion
Speaker 3: into its actions. What have they been selling their people
Speaker 3: for a long time they actually have. The irony is
Speaker 3: is that all of this is actually based on the
Speaker 3: Chinese model. It's just that the Chinese model is smart
Speaker 3: and also doesn't have to contend with four year elections,
Speaker 3: and so it can plan over a twenty five year period.
Speaker 1: And they have been telling people.
Speaker 3: Over and over again that these ties between the United
Speaker 3: States and US are economically precarious, that we as a
Speaker 3: great power, can no longer be tooled around by the
Speaker 3: Western imperialist states, that they're not reliable partners. That's why
Speaker 3: you need to sacrifice and put up with our surveillance
Speaker 3: capitalism so that we can at the same time, yes,
Speaker 3: build you this, but give you flying taxis and drone
Speaker 3: deliveries and as cars. And that's a very useful social
Speaker 3: contract for them. But I also think about India. India
Speaker 3: has now been slapped with a twenty six percent tariff,
Speaker 3: and it's like, well, in any world where you were
Speaker 3: going to quote counter China in the Asia Pacific, what
Speaker 3: would you want to do. You would absolutely want to
Speaker 3: consolidate power amongst the non Chinese dominated powers of India,
Speaker 3: South Korea, and Japan. The those three nations that I
Speaker 3: just listed, which are actually pretty decent allies to the
Speaker 3: United States spend plenty on defense. If they're able to,
Speaker 3: like in the case of South Korea and or India,
Speaker 3: what are they going to do? India is the largest
Speaker 3: democracy in the world. These are very you know, they
Speaker 3: don't love America, especially after how Biden treated them for
Speaker 3: the whole Ukraine situation.
Speaker 1: They feel very upset about that.
Speaker 3: In this case, there are nationalists people, they have a democracy,
Speaker 3: they can vote. How to exactly is nir Indermodi supposed
Speaker 3: to respond? Same in South Korea and Japan. These are democracies.
Speaker 3: These are places which have actual politics. They are not
Speaker 3: going to just sit down and you know, take this
Speaker 3: line down up in the interim you might have some negotiation, etc.
Speaker 3: But every time in the past where we've tried to interview,
Speaker 3: let's say, in the South Korean case, there was this
Speaker 3: whole thing that happened with FAD missiles. This is going
Speaker 3: back a decade or so. Well, the South Korean populace
Speaker 3: was not very happy with the United States over that
Speaker 3: and in fact went in a very very different direction.
Speaker 3: Things ended up going crazy because of the whole North
Speaker 3: Korea situation. But I'm just giving examples about how balance
Speaker 3: in that region in particular is so important. And that's
Speaker 3: another reason I feel so galled, is that if you
Speaker 3: look at the Asia Pacific, that is where you see
Speaker 3: the highest tariffs that have been put into place. This
Speaker 3: is a place what do I always say here, fifty
Speaker 3: percent of global GDP is going to be there in
Speaker 3: the next five years. You know, what are we trying
Speaker 3: to say here that we're going to have the highest
Speaker 3: tariffs in the fastest economically growing part of the world,
Speaker 3: where the biggest population is and where all of our
Speaker 3: economic future lies. The idea that you know and listen,
Speaker 3: I would again love to be in a situation where
Speaker 3: we're not reliant on them or any of that. But
Speaker 3: you cannot release, for you cannot reverse forty five years
Speaker 3: of policy in a single tariff related action.
Speaker 4: Right, which is effective with a single chart.
Speaker 3: With a single chart, with the chart which is chat
Speaker 3: chipted and not even chat chipted correctly. Like I said,
Speaker 3: I did it in five minutes. I said, chat chipet,
Speaker 3: come up with a formula for me that balances reciprocal tariffs,
Speaker 3: currency manipulation, and non teriffair give it to me in
Speaker 3: five seconds, and then I was like, go ahead and
Speaker 3: calculate this for Japan.
Speaker 1: You know what it said on Japan. Based on this formula,
Speaker 1: I would not put any more terrorts on Japan. So
Speaker 1: there you go. So what does this.
Speaker 2: Mean We should be cheering for the AI of Reliance
Speaker 2: to take us over super intelligence come and save us
Speaker 2: because this is not going very well.
Speaker 1: No it's not.
Speaker 3: I mean, look, maybe they'll roll this tape a year
Speaker 3: from now and say, oh, you look like a joke
Speaker 3: because you're you know, panicking or concerned troll. I mean
Speaker 3: that's basically the MAGA response right now. Oh you guys
Speaker 3: don't get it. There's a grand and a master plan.
Speaker 3: But listen, what is it under what has happened with
Speaker 3: Canada and Mexico. You cannot claim that because we keep
Speaker 3: saying they're on, then they're off, and they're on and
Speaker 3: they're off. And look, it's funny, you know, from the outside,
Speaker 3: but I personally know of companies that have had to
Speaker 3: spend millions of dollars while those while those tariffs were
Speaker 3: in effect let's say, even for one day, yeah, or
Speaker 3: for even one week. Ye, Like when you're moving billions
Speaker 3: across the border. It's not all fun in games here.
Speaker 3: And sure, if we were then to make that up
Speaker 3: and say the government is then going to, let's say,
Speaker 3: give you a tax break on this in the future,
Speaker 3: I would say fine, because then I know then that
Speaker 3: no American is going to lose their job as a
Speaker 3: result of it. But no messing with people's jobs, messing
Speaker 3: with people's retirement accounts and all that. That's that is
Speaker 3: the forest bridge for me.
Speaker 2: Yeah, really no, that's that's absolutely right. It's easy to
Speaker 2: lose sight of these are real human beings and you
Speaker 2: are screwing with their entire lives, with their entire lives.
Speaker 2: Let's go ahead and move to the you know, immediate
Speaker 2: reaction from CNBC, which was like, holy hell, this was
Speaker 2: worse than any of us could have possibly imagined. Let's
Speaker 2: go ahead and take a listen to what they end.
Speaker 8: Is market reaction after hours. I've never seen anything like it. This,
Speaker 8: I think fair to say is worse than the worst
Speaker 8: case scenario of the tariffs that many in the market
Speaker 8: expected the President to impose. You laid out a number
Speaker 8: of the percentages there, and there's some question of how
Speaker 8: the administration calculated the percentages that they're responding to in
Speaker 8: each of these cases, are they adding in value added taxes?
Speaker 8: He talked about, you know, non tariff barriers as well,
Speaker 8: So I think while many were hoping that this would
Speaker 8: eliminate uncertainty, there's going to be more uncertainty in the
Speaker 8: market and from those watching policy tomorrow on, well, you know,
Speaker 8: if countries push back on how these non tariff barriers
Speaker 8: were calculated, will there be wiggle room here? Exactly when
Speaker 8: do these go into effect? How quickly are companies going
Speaker 8: to have to adjust their pricing? So many questions.
Speaker 4: Worse than the worst case scenario is there.
Speaker 1: It's actually watching it live. It was. It was pretty extraordinary.
Speaker 3: Yeah, this is where I have to balance, Like, look,
Speaker 3: it's always fun to see Wall Street elites and all
Speaker 3: of them panic, But that's my point is that it's
Speaker 3: really not about them, and in fact, they're a straw man.
Speaker 3: Because anybody on CNBC, any hedge funder or whatever, they're
Speaker 3: going to be all right, okay. But you know who's
Speaker 3: not going to be alright? Somebody who company has a
Speaker 3: liquidity crunch and then fires ten percent of its workforce overnight.
Speaker 3: I mean, that's another problem with America and I would
Speaker 3: love to fix this. We are massively over financialized. Many
Speaker 3: of these companies are running on razor thin margins and
Speaker 3: are constantly borrowing.
Speaker 1: You know, I learned this, for.
Speaker 3: Example during the financial crisis, where the CEO of gees like,
Speaker 3: we can't make payroll because they're constantly borrowing, like it's
Speaker 3: called like commercial paper or something, in order to make
Speaker 3: their payroll. And you're like, wait, what, like how do
Speaker 3: you operate a business?
Speaker 4: And they they literally couldn't call commercial.
Speaker 3: Paper that's why they could not make payroll, and their
Speaker 3: CEOs calling Bush being like, we need to bail out
Speaker 3: tomorrow otherwise we're.
Speaker 1: Going to die.
Speaker 3: Well, you know, not much has changed on the commercial
Speaker 3: books since that time.
Speaker 4: Around gotten work where we're financially we're have.
Speaker 3: More financialized, yeah, more leverage, more reliant on liquidity.
Speaker 1: By the way, what's overlaying all of this. We still
Speaker 1: have relatively you.
Speaker 3: Know, intern modern times higher interest rates, so the borrowing
Speaker 3: cost is very high at the same time that you
Speaker 3: may need let's say bridge or something. You know, where
Speaker 3: is the Federal Reserve here, Howard Lutnick said this morning,
Speaker 3: don't worry, we're going to have lower interest rates.
Speaker 1: You can't say that. You can't guarantee that at all.
Speaker 3: You might be right, because you're probably going to induce
Speaker 3: some sort of economic contraction. But you know, when you
Speaker 3: have what four or five six percent interest rate and
Speaker 3: you have overall contraction, I mean, you're just setting us
Speaker 3: up for stagflation.
Speaker 2: That's right in the interim well, and that's where the
Speaker 2: federal reserve will be in an absolute bind because on
Speaker 2: the one hand, yes, you're going to have a drop
Speaker 2: in GDP and in growth that would push you in
Speaker 2: the direction of cutting interest rates. On the other hand,
Speaker 2: you're likely you have significant inflation because of the tariffs,
Speaker 2: which would put you in the direction of lifting interest rates.
Speaker 2: So that's why stagflation, in addition to being economically devastating,
Speaker 2: it's very difficult to deal with because it pushes the
Speaker 2: federal reserve in both directions at once. So certainly there
Speaker 2: are no guarantees that interest rates are going to be
Speaker 2: cut whatsoever. And know, every reasonable thinking person is now
Speaker 2: also massively increasing. There are odds that we are going
Speaker 2: to face a recession. Mark Sandy, who's the analyst for
Speaker 2: Moody's Analytics, went on News Nation and said he thinks
Speaker 2: it's hard to imagine at this point that we will
Speaker 2: be able to avoid a recession.
Speaker 4: Let's go ahead and take a listen.
Speaker 9: To him, Big Mark Sandy Ann, who's the economist at
Speaker 9: Moody's Analytics, who's recently gone to forty percent odds of
Speaker 9: a recession happening by the end of this year in
Speaker 9: the United States. So after listening to the President, you
Speaker 9: want to go hire or lower than that.
Speaker 1: Hire.
Speaker 10: Those are big numbers, Connell, did you look at them?
Speaker 10: I mean, those are really large numbers. If you do
Speaker 10: the arithmeticket looks like a twenty percent effective terrorf rate,
Speaker 10: and that you know he's carving out it feels like
Speaker 10: it looks like because you see a Canada Mexico in
Speaker 10: the chart, no carving out at USMCA. So even with
Speaker 10: the carve out, you're I think you're a twenty And
Speaker 10: if that's actually what's implemented, and if you have any
Speaker 10: kind of retaliation, which I would anticipate, I don't see
Speaker 10: how we avoid recession.
Speaker 1: I really don't.
Speaker 9: On average, you say you're talking about twenty on average
Speaker 9: when you work out those numbers like what I was
Speaker 9: talking about, China's thirty four and so on in Japan
Speaker 9: twenty four. So you say it's about a twenty percent
Speaker 9: on average. So you say the odds of recession, you know.
Speaker 10: I hesitate to say, but it look feels like it's
Speaker 10: better than even odds at this point, I mean, I
Speaker 10: have to do the arithmetic and go look at it.
Speaker 10: And obviously a lot depends on if these are actually implemented,
Speaker 10: which is a open question given how these are on again,
Speaker 10: off again.
Speaker 1: And we'll see over the next few.
Speaker 10: Days how our trading partners respond to this. You know,
Speaker 10: if they are more circumspect and cautious, then.
Speaker 1: We can maybe breathe more easily.
Speaker 10: But if they're retaliate and kind or close to I
Speaker 10: really don't see how we avoid recession.
Speaker 2: Don't see how we avoid our resishment.
Speaker 3: Don't take that to the bank. But I think we've
Speaker 3: said this before. You know, the problem is that now,
Speaker 3: in an era of uncertainty, people go with who they trust. Now,
Speaker 3: do you necessarily want to live in a world where
Speaker 3: the ratings agencies and all of them are the people
Speaker 3: who are still trusted by Wall Street?
Speaker 1: No, you don't.
Speaker 3: Obviously, It's not like these economists and all of that
Speaker 3: are the greatest geniuses who haven't been wrong a lot.
Speaker 3: But if you have a lot of social capital, it
Speaker 3: can become self reinforcing. I've said this before. We run
Speaker 3: a business here. If if I had this level of
Speaker 3: uncertainty about what the future is, we're not hiring anyone,
Speaker 3: we're not doing anything new. In fact, we're taking this
Speaker 3: spending and we're.
Speaker 1: Going weighed down.
Speaker 3: You're in a stockpile as much cash as possible and
Speaker 3: just say okay, let's see.
Speaker 4: Let's see what it goes.
Speaker 1: Right, that's exactly right.
Speaker 3: No more credit, you know, nothing, any of that that's
Speaker 3: not good for We're all economic activity. Now, let's say
Speaker 3: that words tiny little small business compared to the overall
Speaker 3: US market. Now, let's say that you are JP Morgan
Speaker 3: or Goldman, Sachs or Toyota or GM or Ford. Another
Speaker 3: thing on here is that all of this is designed
Speaker 3: to bring back manufacturing. The problem that I see right
Speaker 3: now is that we are giving zero break to the
Speaker 3: manufacturers who are building things in America but have things
Speaker 3: that they have to bring in in order to make
Speaker 3: said finished product. That's the whole idea of like importing
Speaker 3: parts and then assembly here at home. It's actually one
Speaker 3: of the correctives that was applied by neoliberals in the
Speaker 3: case for why high tech manufacturing, et cetera is a
Speaker 3: good thing. Now, I don't think they've proven correct I
Speaker 3: would be fine with building more finished parts, et cetera.
Speaker 1: Here, what do I keep.
Speaker 3: Coming back to, do you know how much money that
Speaker 3: you need in order to build those factories? I mean,
Speaker 3: look at the TSNs plant in Arizona. The chipsack past
Speaker 3: years ago, it's still several years from coming online. This
Speaker 3: stuff takes a lot of time. It takes billions and
Speaker 3: billions and billions of dollars. It takes the actual competence.
Speaker 3: That's I'm just talking about chips I mean to think
Speaker 3: about textiles or any of these other things. And then
Speaker 3: we also should have an honest conversation, even as someone
Speaker 3: who is pro manufacturing, and I don't think that we
Speaker 3: should have it so that you must have a four
Speaker 3: year college degree or whatever to be able to make
Speaker 3: a multi six figure job. But this is again where
Speaker 3: I hate to sound like Milton Friedman. There are certain
Speaker 3: types of manufacturing which many Americans. It's not only that
Speaker 3: we don't want to do, it's that, you know, if
Speaker 3: you look at a basic level, it's not even something
Speaker 3: that we necessarily have the best competence at, and that
Speaker 3: if we did have it here could have.
Speaker 1: All sorts of downstream social effects.
Speaker 3: Now, the problem, I think is in nilibs have taken
Speaker 3: that way too far for all manufacturing, right, But it's
Speaker 3: not like the idea itself is not incorrect. So I mean,
Speaker 3: very difficult position here because I genuinely feel like I'm
Speaker 3: talking like Milton Friedman and I don't want to These
Speaker 3: people have been wrong.
Speaker 2: And that's part of what is so devastating here, is
Speaker 2: that they are ruining tariffs in terms of a policy.
Speaker 2: Like the next time anyone floats like, hey, let's do
Speaker 2: terrafts industrial, the public is going to be like, hell no.
Speaker 2: The last time this happened, we had a massive recession,
Speaker 2: we all got poor. I couldn't afford anything like no,
Speaker 2: we're not doing that again. And so for people who
Speaker 2: do think that, you know, there are certain key industries
Speaker 2: that it would be important to protect and to build
Speaker 2: up year in America. I mean, this was a big
Speaker 2: learning from COVID. I think that many people who had
Speaker 2: been more skeptical of tariffs also took in at that
Speaker 2: time is how fragile the nation's economy was because so
Speaker 2: many key supply lines had moved overseas. How we were
Speaker 2: unable to protect ourselves even with basic like ppe because
Speaker 2: that was also all abroad. These things are really important,
Speaker 2: and he is going to destroy the appetite to do
Speaker 2: any sort of actually intelligent terror plus industrial policy moving forward.
Speaker 2: But you know, to go back to this risk of recession,
Speaker 2: which is extremely real at this point. You know, it's
Speaker 2: not that there's no winners in recession. Coming out of
Speaker 2: the financial crisis of two thousand and eight oh.
Speaker 1: Nine, a lot of winners.
Speaker 2: Yeah, banks got bigger than ever, people who were at
Speaker 2: the very tippy top. For them, it was a buying opportunity.
Speaker 2: You know, assets were cheap, they could buy up all kinds.
Speaker 2: I mean, that's how we really got set on this
Speaker 2: path of having so many investor owned homes. A lot
Speaker 2: of that came out directly of the housing related financial
Speaker 2: crash out of COVID. We also the numbers the billionaires,
Speaker 2: the Elon Musks, the Mark Zuckerberg's, the.
Speaker 4: Jeff Bezos of the world.
Speaker 2: They got richer than ever coming out of the COVID
Speaker 2: economic crash and pain. So for the people who are
Speaker 2: I'm not even talking about like your average wall streeter.
Speaker 2: I'm talking about the people who are at the very
Speaker 2: tippy top. A recession is a buying opportunity to consolidate
Speaker 2: and buy up even more of our economy than they
Speaker 2: already have. And I think that's also important to keep
Speaker 2: in mind when you're looking at this and going like
Speaker 2: Jesus Christ, don't you know that you're causing a recession?
Speaker 2: Just remember that people like Elon Musk, for them, a
Speaker 2: recession is an opportunity. And what we've seen in certainly
Speaker 2: recent history with these crashes is it just makes the
Speaker 2: richest of the rich even wealthier and gives them even
Speaker 2: more power. You know, to go to your point Zager
Speaker 2: about the reshoring of manufacturing, even in an intelligently designed process,
Speaker 2: we also have to acknowledge the fact, and this was
Speaker 2: a point that actually the menswear guy was making online.
Speaker 2: If you're thinking about like bringing back textiles, do you
Speaker 2: think that's going to use the same number of people
Speaker 2: that it did in nineteen seventy two?
Speaker 4: Of course not.
Speaker 2: I mean, we are on the cusp of this massive
Speaker 2: AI revolution. Some of this is already some of that
Speaker 2: future is already here. So companies, even if they did,
Speaker 2: even if you did something intelligent, and even if they
Speaker 2: did bring manufacturing back here, it's not going to be
Speaker 2: the same number of jobs, the same level of wages.
Speaker 2: They're going to look to automate as much of that
Speaker 2: process as they possibly can. So, you know, the whole
Speaker 2: thing is just outrageous. And then you know, the last
Speaker 2: thing I'll say with regard to the market reaction the
Speaker 2: freak own on CNBC, etc. Is like, you know, he
Speaker 2: did say this the whole campaign, not exactly this. This
Speaker 2: goes even beyond some of the things he was saying
Speaker 2: on the campaign.
Speaker 4: But I do think.
Speaker 2: That because he's all over the place, and because some
Speaker 2: of the things he said before his first term he
Speaker 2: never followed through with, etc. I think there was a
Speaker 2: tendency to hear from Trump what they wanted to hear,
Speaker 2: versus actually listening to what he was truly saying. And
Speaker 2: this is a note that of course Jeff Stein has
Speaker 2: been sounding consistently. He's been saying over and over again, Guys,
Speaker 2: they're serious about this. This is not just some negotiating
Speaker 2: tap you know that's gonna fade down over time. He
Speaker 2: thinks that he didn't do enough on tariffs in the
Speaker 2: first term, and that people who were there were holding
Speaker 2: him back, and this time he doesn't give a shit
Speaker 2: and he is going to go big. And again, think
Speaker 2: of how it benefits Trump himself and how much he
Speaker 2: will enjoy being able to dole out favors or issue
Speaker 2: punishments using the tariff policy as a weapon so that
Speaker 2: he can compel whatever sort of behavior he wants to compel.
Speaker 2: Because industry is you know, a lot of industry has
Speaker 2: sort of become pro Trump. You know, that's been part
Speaker 2: of the vibe ship, and certainly after he won, you
Speaker 2: had all of these oligarchs that were lining up behind him.
Speaker 2: You know, they were the intelligent ones who realized right
Speaker 2: away what time of day it was, that like, Okay,
Speaker 2: this is what this guy is doing, and if I
Speaker 2: want my business to succeed, I better be in his
Speaker 2: good graces. But industry can be another power center, and
Speaker 2: he does not want the possibility of having any rival
Speaker 2: power center. So I think that is really the core
Speaker 2: to understanding what otherwise is just madness on its face.
Speaker 3: Yeah, right, And coming back just finally, I think on
Speaker 3: the in terms of reaction and for all of this
Speaker 3: is just a general theory of how this can all
Speaker 3: play out in the future. I just think that the
Speaker 3: I think with returning to that idea, let's say, even
Speaker 3: with the ten percent tariff, you could even argue for
Speaker 3: a ten percent tariff, and the balance behind it would
Speaker 3: be this is that that would prevent any sort of
Speaker 3: gaming of transhipping, et cetera. And ten percent, while high,
Speaker 3: don't get me wrong, would also be more manageable thirty percent,
Speaker 3: which is where we're currently at, or forty or fifty
Speaker 3: in the case of some countries like Vietnam our number
Speaker 3: eight trading partner.
Speaker 1: That's not a world where he ran on.
Speaker 3: This is why it actually is completely out of step
Speaker 3: with even the rhetoric of the speech. The speech was
Speaker 3: about reciprocal tariffs trade Barrett, that's not what's happening, right,
Speaker 3: and that's actually what's driving me nuts. Do world where
Speaker 3: you do a reciprocal tariff, Okay, it's honestly not hard.
Speaker 3: Another one that they mentioned, for example, is and this
Speaker 3: is where my Maha folks should be on board. They
Speaker 3: were like, nobody's buying American beef in Australia. Yeah, you
Speaker 3: know why, because they think it's gross. They're like, not
Speaker 3: only are we afraid of mad cow disease, you guys
Speaker 3: use all these disgusting hormones. We don't want that shit
Speaker 3: in our country. In many other countries in Asia, for example.
Speaker 2: What Nick told me on Sean Hannity last night that
Speaker 2: it's because our beef is beautiful and this beef is
Speaker 2: very weak. If our beef was beautiful, passes for an
Speaker 2: argument on it.
Speaker 3: If our beef was beautiful, our people would beautiful. And
Speaker 3: we can just take a look at the obesity rates
Speaker 3: on that one. Go look at what an actual cow
Speaker 3: that you're probably eating looks like it's fucking disgusting. Okay,
Speaker 3: And that's my point is if you go to Asia,
Speaker 3: there's like this specific antibiotic or something, I forget it.
Speaker 1: It starts with an art something mean that we use here.
Speaker 3: They're like, we won't let you pois and our children
Speaker 3: whenever we ask them to buy American beef our pork,
Speaker 3: they're like, no, we're not allowing that. This is where
Speaker 3: our Maha folks should be on board. The reason that
Speaker 3: some countries don't allow us food is because they think
Speaker 3: it's filthy and gross, and they're not wrong.
Speaker 1: In many.
Speaker 3: So, for if we want people to buy more of
Speaker 3: our beef, you can you know why. You know at Costco,
Speaker 3: the healthiest thing meat you can buy Costco, it's from
Speaker 3: New Zealand. You know why because in New Zealand they
Speaker 3: it all has to be grassped and it all has
Speaker 3: to be antibiotic free. You could do that too if
Speaker 3: we want to. Now that would require a significant change
Speaker 3: in our food supply and all that. But that's where
Speaker 3: the stupidity of it is just maddening, because you know,
Speaker 3: we're at the same time that we want to make
Speaker 3: America healthy a grand what we want Australians to be
Speaker 3: as fat as No, we.
Speaker 1: Don't want that. It's like you don't want to export
Speaker 1: this crap to all across the world.
Speaker 4: Yeah, yeah, a lot of respects already.
Speaker 1: Yes we have.
Speaker 3: You're right, But my point is that, if anything, it's
Speaker 3: a bad cultural ill and perhaps the worst thing that
Speaker 3: we have exported to the rest of the world. So anyway,
Speaker 3: just coming back to it, this is ten times worse
Speaker 3: than any Actually, you cannot even honestly say that this
Speaker 3: is what people understood the tariff plan was, because it's
Speaker 3: not well, it genuinely is not.
Speaker 2: It does irritate me that some news outlets are still
Speaker 2: referring to it even as reciprocal terrors.
Speaker 4: It's not still Yeah, they're.
Speaker 2: Still taking up the Trump framing and language when it's
Speaker 2: like see for yourself, like use your own brain to
Speaker 2: characterize what's going on here, because you know, I have
Speaker 2: problems even with the reciprocal terrorist doesn't make sense for
Speaker 2: a variety room. It's not even worth getting into because
Speaker 2: that's not what we're doing here. That is not what
Speaker 2: we're doing here. This is I truly characterize this as
Speaker 2: economic terrorism. I don't think there is another accurate way
Speaker 2: to characterize this. He is blowing up all of our lives,
Speaker 2: the global economic system. And again now I'm sounding like
Speaker 2: Milton Friedman two, which is not my ideological but I
Speaker 2: will take the most neolib of neolib.
Speaker 4: Policies over this.
Speaker 2: I honestly will, because this is going to be a
Speaker 2: massive regressive tax on working class people. It is going
Speaker 2: to cause they've been running around, oh, short term pain
Speaker 2: for long term gain. There will be no long term gain.
Speaker 4: This is just about pain for what for what? There
Speaker 4: is no rainbow on the other side of this. It's
Speaker 4: just pain.
Speaker 2: It's just threatening a recession, and it's you know, it's
Speaker 2: hard for me not to see it's hard for me
Speaker 2: not to see this as anything other than a complete
Speaker 2: and utter disaster, absolutely of his own making. And last thing,
Speaker 2: I'll say, just about where we were economically going into this,
Speaker 2: Like it's not like the American working class person, the
Speaker 2: American consumer was on solid ground going into this. It's
Speaker 2: not like we have a buffer to be able to
Speaker 2: absorb these massive shocks. And so these politicians who are
Speaker 2: running around like, oh, you know, one of them was saying, oh,
Speaker 2: you know how it is when you renovate your home.
Speaker 2: It's a little incon venient having the painters there and
Speaker 2: doing the dry well. But the end, it's the end
Speaker 2: of the day. It's better people do not have that
Speaker 2: kind of luxury. You already had car loan delinquencies going up,
Speaker 2: spiking massively. You already had people were struggling to make rent,
Speaker 2: let alone be able to afford that. I'm the housing
Speaker 2: markets complete trash right now. You already had people who
Speaker 2: are saying, like, the prices are too high, I cannot
Speaker 2: afford to make ends meet at the end of the month.
Speaker 4: That is what Trump ran on the number.
Speaker 2: One reason people said they voted for him was inflation,
Speaker 2: and now he's on here saying, you know, oh, just
Speaker 2: take the pain.
Speaker 4: Yeah, prices are going to go up, do you. I couldn't.
Speaker 2: I couldn't care less if prices go up. Just I
Speaker 2: don't know what you even say at this point