1 00:00:02,480 --> 00:00:16,360 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:18,040 --> 00:00:21,160 Speaker 2: Hello and welcome to another episode of the All Thoughts Podcast. 3 00:00:21,280 --> 00:00:22,599 Speaker 2: I'm Tracy Allaway. 4 00:00:22,440 --> 00:00:23,640 Speaker 3: And I'm Joe Wisenthal. 5 00:00:24,800 --> 00:00:27,520 Speaker 2: Joe Another Day, another emergency podcast. 6 00:00:27,880 --> 00:00:30,880 Speaker 3: We're gonna do a lot. This is a fact, this is. 7 00:00:30,840 --> 00:00:33,960 Speaker 2: The I should just resign myself to this inevitability. 8 00:00:34,040 --> 00:00:34,240 Speaker 4: Right. 9 00:00:34,680 --> 00:00:38,760 Speaker 3: The story of the tariffs, the market reaction, the global 10 00:00:38,800 --> 00:00:41,560 Speaker 3: reaction is the central story of our time, one of 11 00:00:41,640 --> 00:00:45,400 Speaker 3: the biggest stories of our entire career. I think, perhaps, 12 00:00:45,479 --> 00:00:48,199 Speaker 3: depending on how they could go, a bigger story than 13 00:00:48,280 --> 00:00:51,400 Speaker 3: the past two big stories of the Great Financial Crisis 14 00:00:51,840 --> 00:00:54,240 Speaker 3: and the COVID shock. We're going to be doing a 15 00:00:54,280 --> 00:00:56,360 Speaker 3: lot of episodes about what this all means. 16 00:00:57,320 --> 00:01:00,040 Speaker 2: This is what is mind blowing to me, because in 17 00:01:00,120 --> 00:01:03,120 Speaker 2: two thousand and eight happened. I remember thinking this was 18 00:01:03,200 --> 00:01:06,280 Speaker 2: the biggest thing that ever happened in modern finance and 19 00:01:06,360 --> 00:01:09,240 Speaker 2: the modern economy. And then in twenty twenty, I remember 20 00:01:09,280 --> 00:01:12,480 Speaker 2: there was a very vibrant debate about whether or not 21 00:01:12,720 --> 00:01:15,440 Speaker 2: the pandemic and the market selloff would end up being 22 00:01:15,560 --> 00:01:19,119 Speaker 2: the central crisis for a new generation. And I think 23 00:01:19,120 --> 00:01:23,080 Speaker 2: in retrospect it certainly was a lot more people remember 24 00:01:23,120 --> 00:01:25,280 Speaker 2: twenty twenty than they remember two thousand and eight. Now 25 00:01:25,680 --> 00:01:28,160 Speaker 2: and here we are, you know, just five years later, 26 00:01:28,600 --> 00:01:32,360 Speaker 2: having another discussion about how big this is inevitably going 27 00:01:32,440 --> 00:01:35,080 Speaker 2: to be. So on that note, we are recording this 28 00:01:35,280 --> 00:01:39,880 Speaker 2: on Friday, April fourth, the market is selling off yet again. 29 00:01:40,200 --> 00:01:44,360 Speaker 2: We had Trump's new tariff announcements. Those were released on Wednesday, 30 00:01:44,400 --> 00:01:48,680 Speaker 2: April second, Liberation Day. Investors have been I mean, I 31 00:01:48,720 --> 00:01:54,040 Speaker 2: would say pretty much panicking since then. Yeah, and what's more, overnight, 32 00:01:54,200 --> 00:01:57,160 Speaker 2: coming into Friday morning, we've started to see some reaction 33 00:01:57,280 --> 00:02:01,120 Speaker 2: from other countries. Notably China is one of the US's 34 00:02:01,120 --> 00:02:04,800 Speaker 2: biggest trading partners, and they say they're instituting a thirty 35 00:02:04,840 --> 00:02:08,919 Speaker 2: four percent reciprocal tariff on US goods. So things seem 36 00:02:09,000 --> 00:02:10,440 Speaker 2: to be escalating totally. 37 00:02:10,520 --> 00:02:10,680 Speaker 4: You know. 38 00:02:10,720 --> 00:02:13,720 Speaker 3: I'm just gonna make one short comment here, which is 39 00:02:13,760 --> 00:02:15,760 Speaker 3: why I think this might be end up being a 40 00:02:15,800 --> 00:02:19,400 Speaker 3: bigger story than the Great Financial Crisis potentially, and that 41 00:02:19,520 --> 00:02:23,200 Speaker 3: is banking crisis happen. They happen around the world, they've 42 00:02:23,240 --> 00:02:25,239 Speaker 3: happened in the US. They've even happened in the US 43 00:02:25,320 --> 00:02:28,480 Speaker 3: between massive crises, and there is a playbook, and there's 44 00:02:28,520 --> 00:02:31,000 Speaker 3: a response and you try to reflate the economy and 45 00:02:31,040 --> 00:02:34,960 Speaker 3: you stuff like this. This is different because this is 46 00:02:35,000 --> 00:02:40,720 Speaker 3: a policy choice purposely aimed to completely reorient America's relationship 47 00:02:40,720 --> 00:02:44,480 Speaker 3: with the rest of the world and reorient the internal economy. 48 00:02:44,919 --> 00:02:47,400 Speaker 3: And so it's very different than sort of like, oh, 49 00:02:47,440 --> 00:02:49,200 Speaker 3: you have a run on the bank, which happens for 50 00:02:49,320 --> 00:02:51,000 Speaker 3: we had one in March twenty twenty three. We had 51 00:02:51,000 --> 00:02:53,440 Speaker 3: a run on the bank. You know, this is very 52 00:02:53,480 --> 00:02:56,880 Speaker 3: different in terms of the entire relationship of both the 53 00:02:56,880 --> 00:02:59,840 Speaker 3: internal and the external economy, and it may end up 54 00:02:59,840 --> 00:03:03,160 Speaker 3: being more consequential for better or worse. 55 00:03:03,480 --> 00:03:06,080 Speaker 2: Than I don't disagree with you, but I'm just gonna 56 00:03:06,080 --> 00:03:08,080 Speaker 2: say one thing. Number one, that's not a short comment. 57 00:03:08,400 --> 00:03:12,519 Speaker 2: Number two, you're right. This is an entirely self inflicted 58 00:03:12,600 --> 00:03:15,880 Speaker 2: own goal basically by the Trump administration. Like it is 59 00:03:15,960 --> 00:03:20,400 Speaker 2: their decision to do this, and they presumably knew what 60 00:03:20,440 --> 00:03:22,600 Speaker 2: the results were going to be, right, they decided not 61 00:03:22,680 --> 00:03:26,800 Speaker 2: to hold the tariff press conference while the markets were open. 62 00:03:27,120 --> 00:03:29,240 Speaker 2: They knew that coming out was something that was worse 63 00:03:29,280 --> 00:03:32,480 Speaker 2: than a lot of professional economists and analysts had expected, 64 00:03:32,560 --> 00:03:34,760 Speaker 2: was going to have this impact on the market. And 65 00:03:34,840 --> 00:03:37,200 Speaker 2: here we are. So this is something that the administration 66 00:03:37,360 --> 00:03:42,160 Speaker 2: has chosen to do. Obviously, there's lots going on. Obviously 67 00:03:42,200 --> 00:03:44,520 Speaker 2: we have a lot of questions. Who do we turn 68 00:03:44,600 --> 00:03:47,800 Speaker 2: to when we have trade questions? We do, in fact 69 00:03:47,800 --> 00:03:49,800 Speaker 2: have the perfect guest. We're going to be speaking with 70 00:03:49,920 --> 00:03:54,240 Speaker 2: Brad Setzer, senior fellow at the Council on Foreign Relations 71 00:03:54,320 --> 00:03:57,320 Speaker 2: and a long time trade expert. One of our favorites 72 00:03:57,360 --> 00:03:59,320 Speaker 2: to talk to. The last time we saw him was 73 00:03:59,360 --> 00:04:03,040 Speaker 2: actually at our pre election event at a live show 74 00:04:03,160 --> 00:04:07,240 Speaker 2: in New York, and Brad, I remember speaking to you there. 75 00:04:07,480 --> 00:04:10,120 Speaker 2: There were a lot of concerns about what Trump could 76 00:04:10,120 --> 00:04:13,840 Speaker 2: do on trade. How has the reality shaped up to 77 00:04:14,120 --> 00:04:15,119 Speaker 2: expectations here? 78 00:04:16,120 --> 00:04:20,760 Speaker 5: Well, look, Trump did campaign on an agenda that was 79 00:04:20,880 --> 00:04:25,640 Speaker 5: tariffs and more tariffs. He campaigned on a ten percent 80 00:04:25,680 --> 00:04:29,520 Speaker 5: across the board tariff and prohibitive tariffs on trade with China, 81 00:04:30,040 --> 00:04:32,800 Speaker 5: and at times he did suggest that ten percent was 82 00:04:32,839 --> 00:04:38,960 Speaker 5: the minimum. That said, a lot of people close to Trump, 83 00:04:39,000 --> 00:04:41,520 Speaker 5: a lot of people who found their way into the administration, 84 00:04:42,360 --> 00:04:47,360 Speaker 5: were sending different messages privately to people in the financial markets. 85 00:04:48,040 --> 00:04:51,279 Speaker 5: People like Scott Bessett were talking about how the Trump 86 00:04:51,480 --> 00:04:55,200 Speaker 5: Trump's plan was escalate to de escalate the tariffs were 87 00:04:55,200 --> 00:04:58,960 Speaker 5: a negotiating tool, they weren't a tool to up end 88 00:04:59,040 --> 00:05:02,599 Speaker 5: the global economy. I think what the announcement on Wednesday 89 00:05:02,640 --> 00:05:08,000 Speaker 5: showed is that the decision of the administration, not surprisingly, 90 00:05:08,440 --> 00:05:11,440 Speaker 5: was to follow President Trump's instincts, not the instincts of 91 00:05:11,520 --> 00:05:15,520 Speaker 5: his more moderate advisors, to go all in, and that 92 00:05:15,640 --> 00:05:18,080 Speaker 5: the goal really is to, as you guys suggested at 93 00:05:18,120 --> 00:05:22,839 Speaker 5: the beginning, to radically restructure the US and global economies 94 00:05:22,920 --> 00:05:27,200 Speaker 5: using tariffs as a tool, with some flexibility, perhaps negotiate 95 00:05:27,240 --> 00:05:31,560 Speaker 5: at the edges, but fundamentally this is a test of 96 00:05:31,560 --> 00:05:34,720 Speaker 5: what you can and cannot do with tariffs, and there 97 00:05:34,839 --> 00:05:38,279 Speaker 5: was very little restraint I would say a part for 98 00:05:38,960 --> 00:05:43,240 Speaker 5: strangely enough, Canada and Mexico USMCA on the level of 99 00:05:43,279 --> 00:05:45,320 Speaker 5: the tariffs. So the tariffs are set at levels which 100 00:05:45,360 --> 00:05:47,440 Speaker 5: are just going to frankly be painful. 101 00:05:48,560 --> 00:05:51,120 Speaker 3: You know, Tracy mentioned that we talked to the night 102 00:05:51,160 --> 00:05:53,680 Speaker 3: before the election, and one thing that's interesting about talking 103 00:05:53,680 --> 00:05:56,520 Speaker 3: to you is you are not a sort of naive 104 00:05:57,360 --> 00:06:01,600 Speaker 3: you know, all trade it fine, fair economists, yeah, or 105 00:06:01,680 --> 00:06:03,760 Speaker 3: just like you know everything was fine in the global 106 00:06:03,800 --> 00:06:07,040 Speaker 3: trading system, and you've been talking for years that like 107 00:06:07,120 --> 00:06:10,279 Speaker 3: this is an unhealthy relationship that the US has with 108 00:06:10,400 --> 00:06:13,039 Speaker 3: China specifically, and that night that we talked to you 109 00:06:13,080 --> 00:06:15,919 Speaker 3: before the election, and you're like, the answer is to 110 00:06:16,040 --> 00:06:20,719 Speaker 3: really deepen the trading relationship with our allies, our friends, 111 00:06:20,720 --> 00:06:22,800 Speaker 3: so that would be Europe, Canada and so forth, and 112 00:06:22,880 --> 00:06:27,080 Speaker 3: really build up a coherent open trading block that would 113 00:06:27,160 --> 00:06:29,839 Speaker 3: stand to something different to China, which you've said, which, 114 00:06:29,880 --> 00:06:32,599 Speaker 3: as you've said, has had unfair trade practices for a 115 00:06:32,600 --> 00:06:35,520 Speaker 3: long time. Trump says the same thing, we haven't. So 116 00:06:35,560 --> 00:06:40,159 Speaker 3: what are the consequences of closing it, fragmenting what you 117 00:06:40,279 --> 00:06:43,479 Speaker 3: saw as the potential open trading block to counter China. 118 00:06:44,960 --> 00:06:50,680 Speaker 5: Well, obvious point is elections do have consequences. Look, I 119 00:06:50,720 --> 00:06:54,400 Speaker 5: do think that trade with China is very difficult for 120 00:06:54,520 --> 00:06:58,960 Speaker 5: most countries that aren't just commodity exporters. If you look 121 00:06:59,000 --> 00:07:03,279 Speaker 5: at China's pattern of trade over the last six years, 122 00:07:04,080 --> 00:07:08,920 Speaker 5: China's imports of manufacturers increased on average by fifteen one 123 00:07:09,120 --> 00:07:13,520 Speaker 5: five billion dollars a year, essentially nothing. China's exports of 124 00:07:13,600 --> 00:07:17,560 Speaker 5: manufacturers over the last six years increased on average by 125 00:07:17,600 --> 00:07:20,280 Speaker 5: one hundred and seventy five billion dollars a year, ten 126 00:07:20,360 --> 00:07:25,400 Speaker 5: times as much so. China became an economy, particularly in 127 00:07:25,640 --> 00:07:28,119 Speaker 5: respond because of the way it responded to COVID because 128 00:07:28,160 --> 00:07:31,080 Speaker 5: of the real estate crisis, that was exporting but not 129 00:07:31,160 --> 00:07:34,680 Speaker 5: importing when it came to manufacturers, and China's trade surplus 130 00:07:34,760 --> 00:07:38,160 Speaker 5: surge to be in about a trillion. It's a little 131 00:07:38,160 --> 00:07:41,520 Speaker 5: over a trillion dollars now about a percent of world GDP. 132 00:07:42,000 --> 00:07:45,440 Speaker 5: It's manufacturing surplus is two percent of world GDP. These 133 00:07:45,480 --> 00:07:50,240 Speaker 5: are really unprecedented numbers, and so you know, my view 134 00:07:50,400 --> 00:07:53,520 Speaker 5: was that, hey, we don't have to abandon all the 135 00:07:53,560 --> 00:07:57,880 Speaker 5: benefits of trade. We can maintain the benefits of relatively 136 00:07:58,040 --> 00:08:02,880 Speaker 5: integrated trade among like minded I guess I don't like 137 00:08:02,920 --> 00:08:06,640 Speaker 5: that term, actually amongst countries that have similar economic systems, 138 00:08:07,200 --> 00:08:13,160 Speaker 5: similar politics, and that that was a better way of 139 00:08:13,200 --> 00:08:15,760 Speaker 5: both putting pressure on China, because the pressure is really 140 00:08:15,800 --> 00:08:20,000 Speaker 5: on China, and also avoiding the costs that come from 141 00:08:20,080 --> 00:08:23,520 Speaker 5: fully disengaging from the world economy. I think the choice 142 00:08:23,640 --> 00:08:26,000 Speaker 5: was made was essentially an American to go with in 143 00:08:26,040 --> 00:08:29,840 Speaker 5: America alone policy, where we're going to give up a 144 00:08:29,840 --> 00:08:32,960 Speaker 5: lot of the benefits of trade with our neighbors and 145 00:08:33,000 --> 00:08:36,199 Speaker 5: with long standing friends. And I think the net effect 146 00:08:36,240 --> 00:08:37,680 Speaker 5: of that. Yes, it's going to put a lot of 147 00:08:37,679 --> 00:08:40,840 Speaker 5: pressure on China, the tariff's on Vietnam or in some 148 00:08:40,880 --> 00:08:44,040 Speaker 5: ways tariffs on indirect Chinese exports as well, But it 149 00:08:44,080 --> 00:08:46,520 Speaker 5: does so at a very very high cost, and it 150 00:08:47,080 --> 00:08:49,880 Speaker 5: sort of gives up the benefits that I thought the 151 00:08:49,960 --> 00:08:52,320 Speaker 5: US had for being at the center of a much 152 00:08:52,360 --> 00:08:54,920 Speaker 5: bigger block than China was going to be at the center. 153 00:08:54,960 --> 00:08:58,280 Speaker 5: We've kind of the vision here is at least shrinking 154 00:08:58,320 --> 00:09:00,800 Speaker 5: to within North America and maybe ranking to within the 155 00:09:00,880 --> 00:09:04,120 Speaker 5: United States. That's just fundamentally a different vision, and I 156 00:09:04,120 --> 00:09:06,719 Speaker 5: think it's a more costly form of disengagement. 157 00:09:23,080 --> 00:09:26,040 Speaker 2: So you mentioned Vietnam there, and I think this is 158 00:09:26,080 --> 00:09:29,640 Speaker 2: one of the big differences between tariffs this time around 159 00:09:29,679 --> 00:09:33,440 Speaker 2: and tariffs in the first Trump administration. So we did 160 00:09:33,440 --> 00:09:36,840 Speaker 2: see a lot of production that basically circumvented the China 161 00:09:36,960 --> 00:09:43,240 Speaker 2: tariffs post twenty eighteen, that increased production in places like Vietnam, 162 00:09:43,360 --> 00:09:46,200 Speaker 2: lots of Chinese components going into Mexico and then finding 163 00:09:46,200 --> 00:09:50,280 Speaker 2: their way into the US from there. Is there any 164 00:09:50,360 --> 00:09:54,800 Speaker 2: wriggle room left in the current constellation of the new 165 00:09:55,080 --> 00:09:58,480 Speaker 2: export limitations the new tariffs. Is there any wriggle room 166 00:09:58,559 --> 00:10:02,920 Speaker 2: to kind of reorient and potentially American imports that way, 167 00:10:03,120 --> 00:10:06,080 Speaker 2: or are there ways maybe to I don't know, figure 168 00:10:06,120 --> 00:10:10,600 Speaker 2: out lower tariff bands by like arbitraging between one country 169 00:10:10,840 --> 00:10:13,640 Speaker 2: and another, or are they so sweeping that a lot 170 00:10:13,679 --> 00:10:15,760 Speaker 2: of that ability has just been wiped out. 171 00:10:16,360 --> 00:10:20,880 Speaker 5: There are two potential arbitrages that have opened up if 172 00:10:21,000 --> 00:10:25,520 Speaker 5: Wednesday Night is maintained. So the first is there are 173 00:10:25,520 --> 00:10:29,000 Speaker 5: a set of countries, generally countries which have now relatively 174 00:10:29,080 --> 00:10:32,800 Speaker 5: balanced trade with the US that only got the baseline 175 00:10:32,800 --> 00:10:37,920 Speaker 5: ten percent tariff. So if you reoriented your supply chains 176 00:10:37,960 --> 00:10:40,760 Speaker 5: and took the increase in shipping costs and found a 177 00:10:40,800 --> 00:10:44,520 Speaker 5: bunch of, say workers in Brazil, you could employ those 178 00:10:44,559 --> 00:10:48,760 Speaker 5: workers in Brazil to put together components from China and 179 00:10:48,880 --> 00:10:50,719 Speaker 5: send them to the US and only pay a ten 180 00:10:50,760 --> 00:10:55,040 Speaker 5: percent tariff. That's better than Vietnam's forty five percent tariff 181 00:10:55,080 --> 00:10:59,400 Speaker 5: and the fifty five percent tariff ballpark China that any 182 00:10:59,400 --> 00:11:02,640 Speaker 5: good from China faces, with some goods facing iron tariffs. 183 00:11:03,080 --> 00:11:07,360 Speaker 5: So opportunity number one is basically move production or at 184 00:11:07,440 --> 00:11:11,439 Speaker 5: least final assembly to countries that already have balance trade 185 00:11:11,480 --> 00:11:14,760 Speaker 5: with the US and thereby only have a ten percent tariff. 186 00:11:15,080 --> 00:11:17,840 Speaker 5: Note the ironing that if these countries become centers for 187 00:11:17,920 --> 00:11:22,480 Speaker 5: final assembly, bilateral trade will no longer stay balanced. It'll 188 00:11:22,520 --> 00:11:28,720 Speaker 5: quickly shift the other big exception again for now, and 189 00:11:29,000 --> 00:11:31,480 Speaker 5: it doesn't apply to autos, and it doesn't apply to steel, 190 00:11:31,520 --> 00:11:34,120 Speaker 5: and it doesn't probably won't apply to pharmaceuticals, and it 191 00:11:34,160 --> 00:11:37,800 Speaker 5: probably won't apply to some other sectors. Is that for now? 192 00:11:37,840 --> 00:11:39,800 Speaker 5: And I mean I do find it a bit shocking 193 00:11:39,840 --> 00:11:44,240 Speaker 5: given how much emphasis President Trump has placed on Canada 194 00:11:44,280 --> 00:11:47,200 Speaker 5: in the first two months of its administration. For now, 195 00:11:47,920 --> 00:11:51,440 Speaker 5: most trade with Mexico and Canada, outside of autos is 196 00:11:51,480 --> 00:11:56,199 Speaker 5: still relatively low tariff. It has to be us MCA compliant. 197 00:11:56,760 --> 00:12:01,280 Speaker 5: You can generally achieve that the USMCA compliance. You know 198 00:12:01,320 --> 00:12:03,400 Speaker 5: a lot of people weren't doing it because there was 199 00:12:03,440 --> 00:12:07,080 Speaker 5: no advantage in say electronics, because electronics tariffs were zero 200 00:12:07,559 --> 00:12:12,040 Speaker 5: inside USMCA and zero for Vietnam. Now there's a huge 201 00:12:12,080 --> 00:12:14,079 Speaker 5: incentive to be the USMCA compliant. 202 00:12:14,520 --> 00:12:15,240 Speaker 2: So if you can do. 203 00:12:15,280 --> 00:12:20,760 Speaker 5: Us MCA compliant production assembly in Mexico, there's no really 204 00:12:20,880 --> 00:12:23,679 Speaker 5: right now, but it'll probably change over time. Limits on 205 00:12:23,720 --> 00:12:27,120 Speaker 5: how many Chinese parts can be included in that operation. 206 00:12:27,920 --> 00:12:29,559 Speaker 5: For now, you get around the tariff. 207 00:12:29,840 --> 00:12:30,000 Speaker 2: Now. 208 00:12:30,040 --> 00:12:32,880 Speaker 5: I think there will be a renegotiation of USMCA that 209 00:12:32,920 --> 00:12:35,040 Speaker 5: will make some of this a bit harder over time, 210 00:12:35,800 --> 00:12:39,440 Speaker 5: but that at least is the opportunity that would be 211 00:12:39,640 --> 00:12:44,600 Speaker 5: open for now if nothing more changes. But it doesn't 212 00:12:44,640 --> 00:12:47,280 Speaker 5: feel fully consistent with the president's intent either. 213 00:12:48,360 --> 00:12:51,840 Speaker 3: You know, you've been talking about trade for your entire career, 214 00:12:51,920 --> 00:12:55,680 Speaker 3: et cetera. You know, on that Wednesday announcement, every country 215 00:12:55,800 --> 00:12:58,120 Speaker 3: got a tariff slapped on it, and it was basically 216 00:12:58,200 --> 00:13:03,920 Speaker 3: a strict function of the amount of surplus then divided 217 00:13:04,120 --> 00:13:08,559 Speaker 3: by exports and then divided by Yeah, so China, for instance, 218 00:13:08,720 --> 00:13:11,200 Speaker 3: trade surplus of two hundred and ninety five billion last 219 00:13:11,280 --> 00:13:13,960 Speaker 3: year on exports of four hundred and thirty eight billion, 220 00:13:13,960 --> 00:13:16,040 Speaker 3: a ratio of sixty eight percent, and then they divided 221 00:13:16,080 --> 00:13:17,800 Speaker 3: by two and that's how they got thirty four percent. 222 00:13:18,000 --> 00:13:20,079 Speaker 3: And that's how they did it every country down the line. 223 00:13:20,120 --> 00:13:23,400 Speaker 3: And the theoretical idea here seems to be that if 224 00:13:23,400 --> 00:13:26,760 Speaker 3: we run a bilateral trade surplus with you any country 225 00:13:26,760 --> 00:13:29,720 Speaker 3: in the world, then that must be some proxy for 226 00:13:29,800 --> 00:13:32,719 Speaker 3: the amount that you're cheating, either through tariffs or non 227 00:13:32,800 --> 00:13:36,560 Speaker 3: tariff trade barriers or currency manipulation or something like that. 228 00:13:37,000 --> 00:13:40,280 Speaker 3: This seems to be the intellectual logic. And what I'm 229 00:13:40,360 --> 00:13:44,720 Speaker 3: curious from you is, in all your knowledge of sort 230 00:13:44,720 --> 00:13:48,040 Speaker 3: of the theory of world trade, is this something that 231 00:13:48,080 --> 00:13:51,080 Speaker 3: people have talked about. Is a reasonable way or a 232 00:13:51,120 --> 00:13:55,439 Speaker 3: reasonable proxy to measure the amount with which a country 233 00:13:55,720 --> 00:13:58,000 Speaker 3: quote cheats in the rules of free trade? 234 00:13:58,880 --> 00:14:02,040 Speaker 5: The simple answer is, as you know, Joe, no, this 235 00:14:02,120 --> 00:14:05,640 Speaker 5: felt like a group of economic advisors who had put 236 00:14:05,640 --> 00:14:08,080 Speaker 5: off doing a term paper until really late at night 237 00:14:08,600 --> 00:14:11,640 Speaker 5: and were scrambling to come up and then use chat 238 00:14:11,679 --> 00:14:15,880 Speaker 5: GPT right, perhaps, but I mean, essentially, it certainly seems 239 00:14:16,160 --> 00:14:20,640 Speaker 5: from the tiktoks that the President himself asked for tariffs 240 00:14:20,640 --> 00:14:23,800 Speaker 5: on not just fifteen countries, but seventy countries or something, 241 00:14:24,200 --> 00:14:26,280 Speaker 5: and people had to come up with a formula because 242 00:14:26,320 --> 00:14:29,440 Speaker 5: it was clear that USTR and others didn't have the 243 00:14:29,480 --> 00:14:34,119 Speaker 5: capacity to do true assessments of all of the countries 244 00:14:34,480 --> 00:14:37,200 Speaker 5: that were covered by this announcement. But it does feel 245 00:14:37,240 --> 00:14:40,240 Speaker 5: like a term paper that went horribly wrong because it 246 00:14:40,320 --> 00:14:42,600 Speaker 5: was written at four in the morning and had to 247 00:14:42,600 --> 00:14:47,960 Speaker 5: be submitted at six. There are some obvious weirdness that 248 00:14:48,040 --> 00:14:52,400 Speaker 5: comes from this formula. The most significant of which, in 249 00:14:52,440 --> 00:14:58,000 Speaker 5: my view, is that small Asian economies that generally have 250 00:14:58,120 --> 00:15:03,600 Speaker 5: current account deficits, they're trade deficits overall, often run surpluses 251 00:15:03,640 --> 00:15:07,080 Speaker 5: with the United States because they're relatively poor, they don't 252 00:15:07,120 --> 00:15:10,400 Speaker 5: can't afford many of our goods, and they can still 253 00:15:10,480 --> 00:15:14,000 Speaker 5: produce clothing more or less for the US market. So 254 00:15:14,120 --> 00:15:17,560 Speaker 5: hence we put really quite heavy tariffs on a country 255 00:15:17,600 --> 00:15:21,440 Speaker 5: like Sri Lanka, on a country Bangladesh, you know, countries 256 00:15:21,480 --> 00:15:25,880 Speaker 5: where I don't think there was any significant concern about 257 00:15:25,920 --> 00:15:28,840 Speaker 5: the pattern of trade. I'm sure there were some concerns 258 00:15:28,840 --> 00:15:32,560 Speaker 5: about sweatshops and labor rights and so forth and so on, 259 00:15:32,960 --> 00:15:35,120 Speaker 5: but no one was sort of in the US economy 260 00:15:35,240 --> 00:15:38,520 Speaker 5: was you know, hey, hey ho ho, competition from Sri 261 00:15:38,640 --> 00:15:42,160 Speaker 5: Lanka has to go. This was just a function of 262 00:15:42,720 --> 00:15:46,200 Speaker 5: a formula applied without thought, and so you end up 263 00:15:46,200 --> 00:15:50,560 Speaker 5: having heavy tariffs on countries that are just producing clothes 264 00:15:50,760 --> 00:15:54,280 Speaker 5: which realistically won't be produced in the US. So there's 265 00:15:54,320 --> 00:16:00,240 Speaker 5: an element of pure pointlessness that comes out of this formula. Now, 266 00:16:00,280 --> 00:16:02,600 Speaker 5: I will say that there is some value in looking 267 00:16:02,640 --> 00:16:05,360 Speaker 5: at bilateral trade patterns. I mean, I've certainly learned a 268 00:16:05,360 --> 00:16:08,280 Speaker 5: lot from trying to understand why the US runs such 269 00:16:08,320 --> 00:16:11,720 Speaker 5: a large deficit with Ireland. I think the answer is 270 00:16:11,720 --> 00:16:14,240 Speaker 5: not that Ireland is an unfair trader. I think the 271 00:16:14,320 --> 00:16:18,280 Speaker 5: answer is we have a tax policy that incentivized American 272 00:16:18,320 --> 00:16:21,760 Speaker 5: companies to produce in Ireland, to reduce their US tax 273 00:16:21,840 --> 00:16:24,480 Speaker 5: rate from twenty one to ten and a half percent. 274 00:16:24,560 --> 00:16:27,160 Speaker 5: And so in some cases you can learn from the 275 00:16:27,200 --> 00:16:30,240 Speaker 5: pattern of bilateral trade. I certainly think you can learn 276 00:16:30,240 --> 00:16:34,240 Speaker 5: something from looking at global trade surpluses, not bilateral trade surpluses. 277 00:16:34,680 --> 00:16:38,000 Speaker 5: And the global surplus is pointing to a problem with China. 278 00:16:38,560 --> 00:16:40,760 Speaker 5: China really has been growing on the back of net 279 00:16:40,800 --> 00:16:44,360 Speaker 5: exports for the last four or five years. China's trade 280 00:16:44,400 --> 00:16:47,640 Speaker 5: surplus with the world really is big. And in a sense, 281 00:16:47,680 --> 00:16:51,960 Speaker 5: the bilateral deficit with China now understates our reliance on 282 00:16:52,040 --> 00:16:55,600 Speaker 5: Chinese supply because of all this re routing through third countries. 283 00:16:56,200 --> 00:17:01,200 Speaker 5: But just using this simple formula produced some obvious absurd results. 284 00:17:01,640 --> 00:17:03,400 Speaker 5: And you know it was done late at night because 285 00:17:03,440 --> 00:17:06,480 Speaker 5: we ended up tariffing islands that only produced penguins. 286 00:17:07,240 --> 00:17:07,880 Speaker 1: Yeah. 287 00:17:08,119 --> 00:17:12,080 Speaker 2: Yeah, make the penguins sign up for better trade terms, certainly, Okay, 288 00:17:12,280 --> 00:17:13,960 Speaker 2: So on this note. I mean this is actually the 289 00:17:14,000 --> 00:17:18,080 Speaker 2: thing that I find most depressing slash disturbing about all 290 00:17:18,160 --> 00:17:21,000 Speaker 2: of this. It's the arbitrariness with which some of these 291 00:17:21,040 --> 00:17:24,040 Speaker 2: seem to have be been designed. And I know I 292 00:17:24,080 --> 00:17:26,600 Speaker 2: wrote about it in the newsletter yesterday, so Joe's aware 293 00:17:26,600 --> 00:17:29,200 Speaker 2: of this. But like the example I've been reaching for 294 00:17:29,320 --> 00:17:32,639 Speaker 2: is Nahru. So you know, thirty percent tariffs on this 295 00:17:32,800 --> 00:17:36,640 Speaker 2: tiny island state in the middle of the South Pacific Ocean, 296 00:17:36,920 --> 00:17:40,480 Speaker 2: and they, you know, they export like one to two 297 00:17:40,560 --> 00:17:45,240 Speaker 2: million worth of pig meats and some computer parts every 298 00:17:45,320 --> 00:17:49,639 Speaker 2: year to the US. I just cannot fathom what the 299 00:17:49,800 --> 00:17:53,159 Speaker 2: US wants from a country like Nahru, or in what 300 00:17:53,359 --> 00:17:56,760 Speaker 2: way the US economy is at all threatened by a 301 00:17:56,800 --> 00:17:59,080 Speaker 2: country like Naru. And as you point out, Brad, it's 302 00:17:59,080 --> 00:18:01,879 Speaker 2: not like the islanders are suddenly going to be buying 303 00:18:02,200 --> 00:18:04,480 Speaker 2: a bunch of Fords from the US, right like they 304 00:18:04,480 --> 00:18:07,159 Speaker 2: have twelve miles worth of road What exactly are they 305 00:18:07,160 --> 00:18:10,080 Speaker 2: going to be buying from America? That disturbs me a lot. 306 00:18:10,119 --> 00:18:13,240 Speaker 2: But beyond that, you know, you might have realized already 307 00:18:13,359 --> 00:18:15,520 Speaker 2: Joe certainly has that. I'm a little bit cranky and 308 00:18:15,600 --> 00:18:20,040 Speaker 2: tired this morning, Joe's very exhilarated by watching a history 309 00:18:20,119 --> 00:18:22,920 Speaker 2: change in real time. I just got kind of kind 310 00:18:22,960 --> 00:18:25,960 Speaker 2: of sad and tired. But for my benefit, can you 311 00:18:26,000 --> 00:18:29,480 Speaker 2: maybe describe is there any path where you see this 312 00:18:29,720 --> 00:18:35,160 Speaker 2: going reasonably well or at least not completely terribly. 313 00:18:37,280 --> 00:18:37,720 Speaker 3: Well. 314 00:18:38,080 --> 00:18:41,240 Speaker 5: There are long parts. Is a path to de escalation. 315 00:18:41,840 --> 00:18:45,359 Speaker 5: The path to de escalation is one where you know, 316 00:18:45,400 --> 00:18:48,200 Speaker 5: in some sense, the Trump administration decides not to make history. 317 00:18:48,280 --> 00:18:50,760 Speaker 5: Joe's going to be a bit bored. Just doesn't turn 318 00:18:50,840 --> 00:18:53,159 Speaker 5: out to be the glow, the repeat of the global 319 00:18:53,160 --> 00:18:56,560 Speaker 5: financial crisis. It turns out to be a more ordinary 320 00:18:56,640 --> 00:19:00,320 Speaker 5: trade war, maybe with a few Trumpian flourishes and maybe 321 00:19:00,320 --> 00:19:05,040 Speaker 5: with a bit more revenue collection. But if the administration 322 00:19:05,280 --> 00:19:08,879 Speaker 5: concludes that it overshot, that they are worried about throwing 323 00:19:08,880 --> 00:19:12,280 Speaker 5: the US economy into a self induced recession, that they 324 00:19:12,280 --> 00:19:16,560 Speaker 5: don't have political support for this particular trade war, and 325 00:19:16,600 --> 00:19:19,679 Speaker 5: they want to back off, They've left a little space 326 00:19:19,720 --> 00:19:23,679 Speaker 5: to do quote unquote phenomenal deals. And so if there 327 00:19:23,680 --> 00:19:27,399 Speaker 5: are phenomenal deals done with China, with Europe, with Japan, 328 00:19:28,119 --> 00:19:32,040 Speaker 5: if there's some agreement that is reached with Mexico and 329 00:19:32,119 --> 00:19:35,840 Speaker 5: Canada that rolls back some of the auto protection, which 330 00:19:35,880 --> 00:19:39,679 Speaker 5: is actually significant in its own terms, even if the 331 00:19:39,720 --> 00:19:42,960 Speaker 5: rest of not the rest, but even if the consumer 332 00:19:43,040 --> 00:19:47,680 Speaker 5: goods and non metal based part of North American trade 333 00:19:47,720 --> 00:19:51,240 Speaker 5: is still relatively untariffed, if you reach deals with them, 334 00:19:51,440 --> 00:19:54,400 Speaker 5: reach deals with Southeast Asia, reach deals with the UK 335 00:19:54,640 --> 00:19:58,320 Speaker 5: and so forth and so on, you could generally perhaps 336 00:19:58,400 --> 00:20:01,439 Speaker 5: fall back to something that's closer to a ten percent 337 00:20:01,520 --> 00:20:06,600 Speaker 5: tariff across the board, which is significant but not as disruptive. 338 00:20:07,160 --> 00:20:10,440 Speaker 5: And then whatever your deal with China leaves you with, 339 00:20:10,920 --> 00:20:13,399 Speaker 5: you kind of play a trade war out with China 340 00:20:13,520 --> 00:20:15,919 Speaker 5: using the three zho one tool, and you really just 341 00:20:16,000 --> 00:20:19,639 Speaker 5: focus on China. So that is the most plausible path 342 00:20:20,000 --> 00:20:24,320 Speaker 5: towards de escalation. I think right now, though Joe's in luck, 343 00:20:24,400 --> 00:20:27,439 Speaker 5: we're on a path where the President does seem fairly 344 00:20:27,480 --> 00:20:32,040 Speaker 5: committed to changing the fundamental structure of the US and 345 00:20:32,119 --> 00:20:35,200 Speaker 5: North American economies. And if you want to achieve that 346 00:20:35,320 --> 00:20:39,240 Speaker 5: deep change through policy, you have to impose policies that 347 00:20:39,280 --> 00:20:42,840 Speaker 5: are are disruptive and painful and so and other countries 348 00:20:42,880 --> 00:20:46,359 Speaker 5: are going to react, and the US basically is taking 349 00:20:46,400 --> 00:20:49,040 Speaker 5: policy steps, then on one hand, risk throwing the US 350 00:20:49,040 --> 00:20:51,399 Speaker 5: into recession. And are almost starting to throw some of 351 00:20:51,440 --> 00:20:55,640 Speaker 5: our major trading partners into recession. And countries generally don't 352 00:20:55,680 --> 00:20:59,960 Speaker 5: want to be pushed into recession by policy choices made abroad, 353 00:21:00,320 --> 00:21:02,720 Speaker 5: So the natural reaction is going to be to try 354 00:21:02,760 --> 00:21:05,960 Speaker 5: to reduce your dependence on the US market. Now that's 355 00:21:06,040 --> 00:21:09,200 Speaker 5: really hard because the US is the only big, big, 356 00:21:09,240 --> 00:21:12,480 Speaker 5: big country that runs really big deficits, I guess along 357 00:21:12,480 --> 00:21:14,879 Speaker 5: with the UK. So it is just really hard for 358 00:21:14,920 --> 00:21:18,280 Speaker 5: all the surplus countries to find an alternative source of demand. 359 00:21:18,520 --> 00:21:20,440 Speaker 5: The US has really been supplying a lot of demand 360 00:21:20,480 --> 00:21:23,439 Speaker 5: to the global economy. But if Trump is determined to 361 00:21:23,600 --> 00:21:26,440 Speaker 5: close the trade deficit and willing to do so by 362 00:21:26,440 --> 00:21:29,399 Speaker 5: shrinking the US economy, and is more or less given 363 00:21:29,480 --> 00:21:33,480 Speaker 5: up on the idea of growing exports as a way out, 364 00:21:33,880 --> 00:21:36,679 Speaker 5: and then I think, a we're making history because we 365 00:21:36,720 --> 00:21:40,520 Speaker 5: are carrying apart something that has grown up organically over 366 00:21:40,560 --> 00:21:44,720 Speaker 5: eighty years, something that the US actually helped. It's a 367 00:21:44,760 --> 00:21:46,879 Speaker 5: trite statement, but it is true. It's the system the 368 00:21:47,000 --> 00:21:50,119 Speaker 5: US after World War two more or less created. And 369 00:21:50,160 --> 00:21:52,760 Speaker 5: then the cost of that system, in Trump's view eyes, 370 00:21:52,800 --> 00:21:54,399 Speaker 5: got to be too big, and so he made a 371 00:21:54,440 --> 00:22:00,840 Speaker 5: decision to radically step away from current trade patterns and 372 00:22:00,880 --> 00:22:03,400 Speaker 5: trade policies. I mean, this is a real break. It's 373 00:22:03,800 --> 00:22:07,680 Speaker 5: a much bigger break than just doing a targeted action 374 00:22:08,520 --> 00:22:11,560 Speaker 5: against China, which is his term one trade policy. You know, 375 00:22:11,840 --> 00:22:13,240 Speaker 5: I'm not sure it's going to be bigger than the 376 00:22:13,240 --> 00:22:18,120 Speaker 5: global financial crisis anything. I was unfortunately around then, and 377 00:22:18,440 --> 00:22:22,200 Speaker 5: I remember, you know, the panic in New York when 378 00:22:22,240 --> 00:22:25,600 Speaker 5: the big institutions were on the edge of going busts 379 00:22:25,720 --> 00:22:28,520 Speaker 5: and the five percent fall in the US economy and 380 00:22:28,560 --> 00:22:33,600 Speaker 5: the very very slow recovery. You just do normal economic analysis, 381 00:22:33,680 --> 00:22:36,119 Speaker 5: you maybe get a shock of a third of that 382 00:22:36,320 --> 00:22:39,320 Speaker 5: size from what we're doing now. We're not so integrated 383 00:22:39,320 --> 00:22:42,720 Speaker 5: into the global economy. We haven't stopped all trade, We've 384 00:22:42,760 --> 00:22:45,760 Speaker 5: just taxed it at a very high rate. But yeah, 385 00:22:46,080 --> 00:22:48,840 Speaker 5: it will play out over a much longer period of time. 386 00:22:48,960 --> 00:22:53,000 Speaker 5: A financial crisis, you know, risk disaster, but it forces 387 00:22:53,040 --> 00:22:56,479 Speaker 5: you to respond quickly. This is a more slow moving 388 00:22:56,680 --> 00:23:00,480 Speaker 5: and as you indicated, it's a result of a conscious 389 00:23:00,520 --> 00:23:04,520 Speaker 5: policy choice. So therefore it has a very different dynamic. 390 00:23:05,480 --> 00:23:08,600 Speaker 2: Lots and lots and lots and lots and lots of 391 00:23:08,680 --> 00:23:10,919 Speaker 2: trade episodes to come in our future. 392 00:23:11,000 --> 00:23:12,000 Speaker 4: We'll talk to you next week. 393 00:23:12,000 --> 00:23:12,440 Speaker 1: Brad. 394 00:23:13,080 --> 00:23:14,640 Speaker 2: Yeah, Brad, thank you so much. 395 00:23:14,720 --> 00:23:16,840 Speaker 5: Well, let's talk about capital flows. 396 00:23:17,480 --> 00:23:24,280 Speaker 6: Uh, you know, Canadian pension funds and Taiwan in the 397 00:23:24,320 --> 00:23:28,960 Speaker 6: trade war and Taiwan, Taiwan the good old days they are. 398 00:23:29,119 --> 00:23:31,240 Speaker 5: They are still interesting, Joe. They are still. 399 00:23:32,720 --> 00:23:35,960 Speaker 2: The good old days of Taiwanese life insured mysteries. All right, Brad, 400 00:23:35,960 --> 00:23:37,600 Speaker 2: thank you so much, Really appreciate it. 401 00:23:38,400 --> 00:23:53,200 Speaker 4: Thank you, Joe. I guess, I guess. 402 00:23:53,240 --> 00:23:56,359 Speaker 2: On the plus side, we are making history. All of 403 00:23:56,400 --> 00:24:00,639 Speaker 2: it is very interesting from an economic intellectual perspect So 404 00:24:00,960 --> 00:24:02,800 Speaker 2: there is that, can you tell. I'm trying to make 405 00:24:02,800 --> 00:24:03,639 Speaker 2: myself feel better. 406 00:24:03,920 --> 00:24:06,919 Speaker 3: Tracy were the best business in the world. This is 407 00:24:06,960 --> 00:24:08,399 Speaker 3: why we get up in the morning. But I'm just 408 00:24:08,400 --> 00:24:10,600 Speaker 3: gonna say one comment. There's not really much for me 409 00:24:10,680 --> 00:24:12,440 Speaker 3: to add. I don't have much to add to Brad. 410 00:24:12,480 --> 00:24:15,840 Speaker 3: But when he said that comment about how the formula 411 00:24:16,040 --> 00:24:19,479 Speaker 3: for the tariff announcement reminded him of turning in a 412 00:24:19,600 --> 00:24:23,160 Speaker 3: very bad economics term paper at four am, Yeah, the 413 00:24:23,200 --> 00:24:26,919 Speaker 3: only thing that I could remember was the time that 414 00:24:27,000 --> 00:24:30,439 Speaker 3: I interviewed for a job with Rubini Global Economics in 415 00:24:30,440 --> 00:24:33,600 Speaker 3: two thousand and seven, and Brad Setzer was my interviewer, 416 00:24:34,000 --> 00:24:39,560 Speaker 3: and I completely flopped that interview by basically talking about 417 00:24:39,840 --> 00:24:44,360 Speaker 3: the Argentine economy with the sophistication that he described the tariffs. 418 00:24:44,359 --> 00:24:47,360 Speaker 3: And I did not get that job. And so when 419 00:24:47,440 --> 00:24:52,200 Speaker 3: Brad says this is bad economics, I have personal experience 420 00:24:52,280 --> 00:24:55,640 Speaker 3: with hearing that from Brad. That's all I'm gonna say. 421 00:24:56,080 --> 00:24:59,080 Speaker 2: I mean, yes, it does seem to be bad economics 422 00:24:59,119 --> 00:25:00,960 Speaker 2: in terms of the terraff roll out. But this is 423 00:25:01,040 --> 00:25:03,880 Speaker 2: the thing that you know, Okay, yes it's exhilarating, it's 424 00:25:03,920 --> 00:25:06,479 Speaker 2: interesting to watch, but this is the thing that actually 425 00:25:06,520 --> 00:25:09,919 Speaker 2: bothers me because, as Brad points out, there are some 426 00:25:10,080 --> 00:25:14,359 Speaker 2: legitimate grievances over yes China trade, and you could go 427 00:25:14,480 --> 00:25:19,400 Speaker 2: about trying to fix those in a cohesive and potentially 428 00:25:19,760 --> 00:25:25,119 Speaker 2: effective manner, and instead we've chosen this weird wish list 429 00:25:25,359 --> 00:25:27,199 Speaker 2: of things that we want that don't seem to be 430 00:25:27,240 --> 00:25:29,760 Speaker 2: based on anything like rational. Here are some numbers that 431 00:25:29,800 --> 00:25:32,040 Speaker 2: we pulled out at four am in the morning as 432 00:25:32,040 --> 00:25:34,760 Speaker 2: we were cramming for this announcement or whatever. And we're 433 00:25:34,760 --> 00:25:38,880 Speaker 2: also targeting countries from which like there can't be anything 434 00:25:38,960 --> 00:25:44,120 Speaker 2: we want from like Curebos or Nahru, Like why exactly 435 00:25:44,160 --> 00:25:46,440 Speaker 2: are they even included in this thing? What are we 436 00:25:46,560 --> 00:25:47,080 Speaker 2: doing here? 437 00:25:47,160 --> 00:25:50,240 Speaker 3: Well, this actually is one thing, you're right that drives 438 00:25:50,280 --> 00:25:53,240 Speaker 3: me crazy, which is there's this whole game that gets 439 00:25:53,240 --> 00:25:56,520 Speaker 3: played where it's like, well, we need more manufacturing, and 440 00:25:56,720 --> 00:25:58,360 Speaker 3: you know what are we going to do? Be reliant 441 00:25:58,400 --> 00:26:00,720 Speaker 3: on China for all of our like se conductors and 442 00:26:00,760 --> 00:26:04,000 Speaker 3: batteries and stuff. That's actually really not great. And we 443 00:26:04,119 --> 00:26:06,840 Speaker 3: had a policy put in place by the last administration 444 00:26:06,920 --> 00:26:10,080 Speaker 3: that was specifically targeted. And look, I'll be very clear, 445 00:26:10,160 --> 00:26:13,280 Speaker 3: like I'm totally fine with disagreeing with like how the 446 00:26:13,359 --> 00:26:15,720 Speaker 3: chip sack rolled out, and I think there's reasons to 447 00:26:15,760 --> 00:26:20,000 Speaker 3: think like that is totally like, to my mind, ground 448 00:26:20,080 --> 00:26:22,800 Speaker 3: for debate. But the idea that no one was talking 449 00:26:22,880 --> 00:26:26,320 Speaker 3: about the national security implications of heavy reliance on China 450 00:26:26,359 --> 00:26:31,880 Speaker 3: for manufacturing goods up until Wednesday, that part is complete nonsense. 451 00:26:32,880 --> 00:26:36,399 Speaker 2: No, it's crazy. And also, I mean, we know that 452 00:26:36,640 --> 00:26:40,359 Speaker 2: central to Trump's world vision or his economic vision of 453 00:26:40,400 --> 00:26:44,760 Speaker 2: America is the centrality of private capital. Right, I want 454 00:26:44,760 --> 00:26:49,680 Speaker 2: private capital to fund in and build all these strategically 455 00:26:49,720 --> 00:26:53,720 Speaker 2: important industries for the US, like semiconductors, But at the 456 00:26:53,760 --> 00:26:57,080 Speaker 2: same time, the magnitude of what he's trying to attempt 457 00:26:57,160 --> 00:27:01,800 Speaker 2: all at once seems very ob going to scare a 458 00:27:01,800 --> 00:27:05,679 Speaker 2: lot of private capital away from building anything in the US. Like, 459 00:27:05,960 --> 00:27:08,240 Speaker 2: I don't really see why it has to be this 460 00:27:08,400 --> 00:27:12,760 Speaker 2: shock and awe approach to reorienting US trade when you 461 00:27:12,760 --> 00:27:15,680 Speaker 2: could be something that's much more strategic and done perhaps 462 00:27:15,680 --> 00:27:20,440 Speaker 2: like much more in coordination with a bunch of different constituents. 463 00:27:20,560 --> 00:27:22,200 Speaker 2: I guess of the American economy. 464 00:27:22,880 --> 00:27:23,439 Speaker 4: Don't that's me. 465 00:27:23,800 --> 00:27:26,920 Speaker 2: I'm going back to bed. Okay, this has been another 466 00:27:26,960 --> 00:27:29,879 Speaker 2: episode of the Odd Lots podcast. I'm Tracy Alloway. You 467 00:27:29,880 --> 00:27:31,560 Speaker 2: can follow me at Tracy. 468 00:27:31,320 --> 00:27:34,040 Speaker 3: Alloway and I'm Jill Wisenthal. You can follow me at 469 00:27:34,040 --> 00:27:37,959 Speaker 3: the Stalwart. 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