Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Hello and welcome to another episode of the All Thoughts Podcast.
Speaker 2: I'm Tracy Allaway.
Speaker 3: And I'm Joe Wisenthal.
Speaker 2: Joe Another Day, another emergency podcast.
Speaker 3: We're gonna do a lot. This is a fact, this is.
Speaker 2: The I should just resign myself to this inevitability.
Speaker 4: Right.
Speaker 3: The story of the tariffs, the market reaction, the global
Speaker 3: reaction is the central story of our time, one of
Speaker 3: the biggest stories of our entire career. I think, perhaps,
Speaker 3: depending on how they could go, a bigger story than
Speaker 3: the past two big stories of the Great Financial Crisis
Speaker 3: and the COVID shock. We're going to be doing a
Speaker 3: lot of episodes about what this all means.
Speaker 2: This is what is mind blowing to me, because in
Speaker 2: two thousand and eight happened. I remember thinking this was
Speaker 2: the biggest thing that ever happened in modern finance and
Speaker 2: the modern economy. And then in twenty twenty, I remember
Speaker 2: there was a very vibrant debate about whether or not
Speaker 2: the pandemic and the market selloff would end up being
Speaker 2: the central crisis for a new generation. And I think
Speaker 2: in retrospect it certainly was a lot more people remember
Speaker 2: twenty twenty than they remember two thousand and eight. Now
Speaker 2: and here we are, you know, just five years later,
Speaker 2: having another discussion about how big this is inevitably going
Speaker 2: to be. So on that note, we are recording this
Speaker 2: on Friday, April fourth, the market is selling off yet again.
Speaker 2: We had Trump's new tariff announcements. Those were released on Wednesday,
Speaker 2: April second, Liberation Day. Investors have been I mean, I
Speaker 2: would say pretty much panicking since then. Yeah, and what's more, overnight,
Speaker 2: coming into Friday morning, we've started to see some reaction
Speaker 2: from other countries. Notably China is one of the US's
Speaker 2: biggest trading partners, and they say they're instituting a thirty
Speaker 2: four percent reciprocal tariff on US goods. So things seem
Speaker 2: to be escalating totally.
Speaker 4: You know.
Speaker 3: I'm just gonna make one short comment here, which is
Speaker 3: why I think this might be end up being a
Speaker 3: bigger story than the Great Financial Crisis potentially, and that
Speaker 3: is banking crisis happen. They happen around the world, they've
Speaker 3: happened in the US. They've even happened in the US
Speaker 3: between massive crises, and there is a playbook, and there's
Speaker 3: a response and you try to reflate the economy and
Speaker 3: you stuff like this. This is different because this is
Speaker 3: a policy choice purposely aimed to completely reorient America's relationship
Speaker 3: with the rest of the world and reorient the internal economy.
Speaker 3: And so it's very different than sort of like, oh,
Speaker 3: you have a run on the bank, which happens for
Speaker 3: we had one in March twenty twenty three. We had
Speaker 3: a run on the bank. You know, this is very
Speaker 3: different in terms of the entire relationship of both the
Speaker 3: internal and the external economy, and it may end up
Speaker 3: being more consequential for better or worse.
Speaker 2: Than I don't disagree with you, but I'm just gonna
Speaker 2: say one thing. Number one, that's not a short comment.
Speaker 2: Number two, you're right. This is an entirely self inflicted
Speaker 2: own goal basically by the Trump administration. Like it is
Speaker 2: their decision to do this, and they presumably knew what
Speaker 2: the results were going to be, right, they decided not
Speaker 2: to hold the tariff press conference while the markets were open.
Speaker 2: They knew that coming out was something that was worse
Speaker 2: than a lot of professional economists and analysts had expected,
Speaker 2: was going to have this impact on the market. And
Speaker 2: here we are. So this is something that the administration
Speaker 2: has chosen to do. Obviously, there's lots going on. Obviously
Speaker 2: we have a lot of questions. Who do we turn
Speaker 2: to when we have trade questions? We do, in fact
Speaker 2: have the perfect guest. We're going to be speaking with
Speaker 2: Brad Setzer, senior fellow at the Council on Foreign Relations
Speaker 2: and a long time trade expert. One of our favorites
Speaker 2: to talk to. The last time we saw him was
Speaker 2: actually at our pre election event at a live show
Speaker 2: in New York, and Brad, I remember speaking to you there.
Speaker 2: There were a lot of concerns about what Trump could
Speaker 2: do on trade. How has the reality shaped up to
Speaker 2: expectations here?
Speaker 5: Well, look, Trump did campaign on an agenda that was
Speaker 5: tariffs and more tariffs. He campaigned on a ten percent
Speaker 5: across the board tariff and prohibitive tariffs on trade with China,
Speaker 5: and at times he did suggest that ten percent was
Speaker 5: the minimum. That said, a lot of people close to Trump,
Speaker 5: a lot of people who found their way into the administration,
Speaker 5: were sending different messages privately to people in the financial markets.
Speaker 5: People like Scott Bessett were talking about how the Trump
Speaker 5: Trump's plan was escalate to de escalate the tariffs were
Speaker 5: a negotiating tool, they weren't a tool to up end
Speaker 5: the global economy. I think what the announcement on Wednesday
Speaker 5: showed is that the decision of the administration, not surprisingly,
Speaker 5: was to follow President Trump's instincts, not the instincts of
Speaker 5: his more moderate advisors, to go all in, and that
Speaker 5: the goal really is to, as you guys suggested at
Speaker 5: the beginning, to radically restructure the US and global economies
Speaker 5: using tariffs as a tool, with some flexibility, perhaps negotiate
Speaker 5: at the edges, but fundamentally this is a test of
Speaker 5: what you can and cannot do with tariffs, and there
Speaker 5: was very little restraint I would say a part for
Speaker 5: strangely enough, Canada and Mexico USMCA on the level of
Speaker 5: the tariffs. So the tariffs are set at levels which
Speaker 5: are just going to frankly be painful.
Speaker 3: You know, Tracy mentioned that we talked to the night
Speaker 3: before the election, and one thing that's interesting about talking
Speaker 3: to you is you are not a sort of naive
Speaker 3: you know, all trade it fine, fair economists, yeah, or
Speaker 3: just like you know everything was fine in the global
Speaker 3: trading system, and you've been talking for years that like
Speaker 3: this is an unhealthy relationship that the US has with
Speaker 3: China specifically, and that night that we talked to you
Speaker 3: before the election, and you're like, the answer is to
Speaker 3: really deepen the trading relationship with our allies, our friends,
Speaker 3: so that would be Europe, Canada and so forth, and
Speaker 3: really build up a coherent open trading block that would
Speaker 3: stand to something different to China, which you've said, which,
Speaker 3: as you've said, has had unfair trade practices for a
Speaker 3: long time. Trump says the same thing, we haven't. So
Speaker 3: what are the consequences of closing it, fragmenting what you
Speaker 3: saw as the potential open trading block to counter China.
Speaker 5: Well, obvious point is elections do have consequences. Look, I
Speaker 5: do think that trade with China is very difficult for
Speaker 5: most countries that aren't just commodity exporters. If you look
Speaker 5: at China's pattern of trade over the last six years,
Speaker 5: China's imports of manufacturers increased on average by fifteen one
Speaker 5: five billion dollars a year, essentially nothing. China's exports of
Speaker 5: manufacturers over the last six years increased on average by
Speaker 5: one hundred and seventy five billion dollars a year, ten
Speaker 5: times as much so. China became an economy, particularly in
Speaker 5: respond because of the way it responded to COVID because
Speaker 5: of the real estate crisis, that was exporting but not
Speaker 5: importing when it came to manufacturers, and China's trade surplus
Speaker 5: surge to be in about a trillion. It's a little
Speaker 5: over a trillion dollars now about a percent of world GDP.
Speaker 5: It's manufacturing surplus is two percent of world GDP. These
Speaker 5: are really unprecedented numbers, and so you know, my view
Speaker 5: was that, hey, we don't have to abandon all the
Speaker 5: benefits of trade. We can maintain the benefits of relatively
Speaker 5: integrated trade among like minded I guess I don't like
Speaker 5: that term, actually amongst countries that have similar economic systems,
Speaker 5: similar politics, and that that was a better way of
Speaker 5: both putting pressure on China, because the pressure is really
Speaker 5: on China, and also avoiding the costs that come from
Speaker 5: fully disengaging from the world economy. I think the choice
Speaker 5: was made was essentially an American to go with in
Speaker 5: America alone policy, where we're going to give up a
Speaker 5: lot of the benefits of trade with our neighbors and
Speaker 5: with long standing friends. And I think the net effect
Speaker 5: of that. Yes, it's going to put a lot of
Speaker 5: pressure on China, the tariff's on Vietnam or in some
Speaker 5: ways tariffs on indirect Chinese exports as well, But it
Speaker 5: does so at a very very high cost, and it
Speaker 5: sort of gives up the benefits that I thought the
Speaker 5: US had for being at the center of a much
Speaker 5: bigger block than China was going to be at the center.
Speaker 5: We've kind of the vision here is at least shrinking
Speaker 5: to within North America and maybe ranking to within the
Speaker 5: United States. That's just fundamentally a different vision, and I
Speaker 5: think it's a more costly form of disengagement.
Speaker 2: So you mentioned Vietnam there, and I think this is
Speaker 2: one of the big differences between tariffs this time around
Speaker 2: and tariffs in the first Trump administration. So we did
Speaker 2: see a lot of production that basically circumvented the China
Speaker 2: tariffs post twenty eighteen, that increased production in places like Vietnam,
Speaker 2: lots of Chinese components going into Mexico and then finding
Speaker 2: their way into the US from there. Is there any
Speaker 2: wriggle room left in the current constellation of the new
Speaker 2: export limitations the new tariffs. Is there any wriggle room
Speaker 2: to kind of reorient and potentially American imports that way,
Speaker 2: or are there ways maybe to I don't know, figure
Speaker 2: out lower tariff bands by like arbitraging between one country
Speaker 2: and another, or are they so sweeping that a lot
Speaker 2: of that ability has just been wiped out.
Speaker 5: There are two potential arbitrages that have opened up if
Speaker 5: Wednesday Night is maintained. So the first is there are
Speaker 5: a set of countries, generally countries which have now relatively
Speaker 5: balanced trade with the US that only got the baseline
Speaker 5: ten percent tariff. So if you reoriented your supply chains
Speaker 5: and took the increase in shipping costs and found a
Speaker 5: bunch of, say workers in Brazil, you could employ those
Speaker 5: workers in Brazil to put together components from China and
Speaker 5: send them to the US and only pay a ten
Speaker 5: percent tariff. That's better than Vietnam's forty five percent tariff
Speaker 5: and the fifty five percent tariff ballpark China that any
Speaker 5: good from China faces, with some goods facing iron tariffs.
Speaker 5: So opportunity number one is basically move production or at
Speaker 5: least final assembly to countries that already have balance trade
Speaker 5: with the US and thereby only have a ten percent tariff.
Speaker 5: Note the ironing that if these countries become centers for
Speaker 5: final assembly, bilateral trade will no longer stay balanced. It'll
Speaker 5: quickly shift the other big exception again for now, and
Speaker 5: it doesn't apply to autos, and it doesn't apply to steel,
Speaker 5: and it doesn't probably won't apply to pharmaceuticals, and it
Speaker 5: probably won't apply to some other sectors. Is that for now?
Speaker 5: And I mean I do find it a bit shocking
Speaker 5: given how much emphasis President Trump has placed on Canada
Speaker 5: in the first two months of its administration. For now,
Speaker 5: most trade with Mexico and Canada, outside of autos is
Speaker 5: still relatively low tariff. It has to be us MCA compliant.
Speaker 5: You can generally achieve that the USMCA compliance. You know
Speaker 5: a lot of people weren't doing it because there was
Speaker 5: no advantage in say electronics, because electronics tariffs were zero
Speaker 5: inside USMCA and zero for Vietnam. Now there's a huge
Speaker 5: incentive to be the USMCA compliant.
Speaker 2: So if you can do.
Speaker 5: Us MCA compliant production assembly in Mexico, there's no really
Speaker 5: right now, but it'll probably change over time. Limits on
Speaker 5: how many Chinese parts can be included in that operation.
Speaker 5: For now, you get around the tariff.
Speaker 2: Now.
Speaker 5: I think there will be a renegotiation of USMCA that
Speaker 5: will make some of this a bit harder over time,
Speaker 5: but that at least is the opportunity that would be
Speaker 5: open for now if nothing more changes. But it doesn't
Speaker 5: feel fully consistent with the president's intent either.
Speaker 3: You know, you've been talking about trade for your entire career,
Speaker 3: et cetera. You know, on that Wednesday announcement, every country
Speaker 3: got a tariff slapped on it, and it was basically
Speaker 3: a strict function of the amount of surplus then divided
Speaker 3: by exports and then divided by Yeah, so China, for instance,
Speaker 3: trade surplus of two hundred and ninety five billion last
Speaker 3: year on exports of four hundred and thirty eight billion,
Speaker 3: a ratio of sixty eight percent, and then they divided
Speaker 3: by two and that's how they got thirty four percent.
Speaker 3: And that's how they did it every country down the line.
Speaker 3: And the theoretical idea here seems to be that if
Speaker 3: we run a bilateral trade surplus with you any country
Speaker 3: in the world, then that must be some proxy for
Speaker 3: the amount that you're cheating, either through tariffs or non
Speaker 3: tariff trade barriers or currency manipulation or something like that.
Speaker 3: This seems to be the intellectual logic. And what I'm
Speaker 3: curious from you is, in all your knowledge of sort
Speaker 3: of the theory of world trade, is this something that
Speaker 3: people have talked about. Is a reasonable way or a
Speaker 3: reasonable proxy to measure the amount with which a country
Speaker 3: quote cheats in the rules of free trade?
Speaker 5: The simple answer is, as you know, Joe, no, this
Speaker 5: felt like a group of economic advisors who had put
Speaker 5: off doing a term paper until really late at night
Speaker 5: and were scrambling to come up and then use chat
Speaker 5: GPT right, perhaps, but I mean, essentially, it certainly seems
Speaker 5: from the tiktoks that the President himself asked for tariffs
Speaker 5: on not just fifteen countries, but seventy countries or something,
Speaker 5: and people had to come up with a formula because
Speaker 5: it was clear that USTR and others didn't have the
Speaker 5: capacity to do true assessments of all of the countries
Speaker 5: that were covered by this announcement. But it does feel
Speaker 5: like a term paper that went horribly wrong because it
Speaker 5: was written at four in the morning and had to
Speaker 5: be submitted at six. There are some obvious weirdness that
Speaker 5: comes from this formula. The most significant of which, in
Speaker 5: my view, is that small Asian economies that generally have
Speaker 5: current account deficits, they're trade deficits overall, often run surpluses
Speaker 5: with the United States because they're relatively poor, they don't
Speaker 5: can't afford many of our goods, and they can still
Speaker 5: produce clothing more or less for the US market. So
Speaker 5: hence we put really quite heavy tariffs on a country
Speaker 5: like Sri Lanka, on a country Bangladesh, you know, countries
Speaker 5: where I don't think there was any significant concern about
Speaker 5: the pattern of trade. I'm sure there were some concerns
Speaker 5: about sweatshops and labor rights and so forth and so on,
Speaker 5: but no one was sort of in the US economy
Speaker 5: was you know, hey, hey ho ho, competition from Sri
Speaker 5: Lanka has to go. This was just a function of
Speaker 5: a formula applied without thought, and so you end up
Speaker 5: having heavy tariffs on countries that are just producing clothes
Speaker 5: which realistically won't be produced in the US. So there's
Speaker 5: an element of pure pointlessness that comes out of this formula. Now,
Speaker 5: I will say that there is some value in looking
Speaker 5: at bilateral trade patterns. I mean, I've certainly learned a
Speaker 5: lot from trying to understand why the US runs such
Speaker 5: a large deficit with Ireland. I think the answer is
Speaker 5: not that Ireland is an unfair trader. I think the
Speaker 5: answer is we have a tax policy that incentivized American
Speaker 5: companies to produce in Ireland, to reduce their US tax
Speaker 5: rate from twenty one to ten and a half percent.
Speaker 5: And so in some cases you can learn from the
Speaker 5: pattern of bilateral trade. I certainly think you can learn
Speaker 5: something from looking at global trade surpluses, not bilateral trade surpluses.
Speaker 5: And the global surplus is pointing to a problem with China.
Speaker 5: China really has been growing on the back of net
Speaker 5: exports for the last four or five years. China's trade
Speaker 5: surplus with the world really is big. And in a sense,
Speaker 5: the bilateral deficit with China now understates our reliance on
Speaker 5: Chinese supply because of all this re routing through third countries.
Speaker 5: But just using this simple formula produced some obvious absurd results.
Speaker 5: And you know it was done late at night because
Speaker 5: we ended up tariffing islands that only produced penguins.
Speaker 1: Yeah.
Speaker 2: Yeah, make the penguins sign up for better trade terms, certainly, Okay,
Speaker 2: So on this note. I mean this is actually the
Speaker 2: thing that I find most depressing slash disturbing about all
Speaker 2: of this. It's the arbitrariness with which some of these
Speaker 2: seem to have be been designed. And I know I
Speaker 2: wrote about it in the newsletter yesterday, so Joe's aware
Speaker 2: of this. But like the example I've been reaching for
Speaker 2: is Nahru. So you know, thirty percent tariffs on this
Speaker 2: tiny island state in the middle of the South Pacific Ocean,
Speaker 2: and they, you know, they export like one to two
Speaker 2: million worth of pig meats and some computer parts every
Speaker 2: year to the US. I just cannot fathom what the
Speaker 2: US wants from a country like Nahru, or in what
Speaker 2: way the US economy is at all threatened by a
Speaker 2: country like Naru. And as you point out, Brad, it's
Speaker 2: not like the islanders are suddenly going to be buying
Speaker 2: a bunch of Fords from the US, right like they
Speaker 2: have twelve miles worth of road What exactly are they
Speaker 2: going to be buying from America? That disturbs me a lot.
Speaker 2: But beyond that, you know, you might have realized already
Speaker 2: Joe certainly has that. I'm a little bit cranky and
Speaker 2: tired this morning, Joe's very exhilarated by watching a history
Speaker 2: change in real time. I just got kind of kind
Speaker 2: of sad and tired. But for my benefit, can you
Speaker 2: maybe describe is there any path where you see this
Speaker 2: going reasonably well or at least not completely terribly.
Speaker 3: Well.
Speaker 5: There are long parts. Is a path to de escalation.
Speaker 5: The path to de escalation is one where you know,
Speaker 5: in some sense, the Trump administration decides not to make history.
Speaker 5: Joe's going to be a bit bored. Just doesn't turn
Speaker 5: out to be the glow, the repeat of the global
Speaker 5: financial crisis. It turns out to be a more ordinary
Speaker 5: trade war, maybe with a few Trumpian flourishes and maybe
Speaker 5: with a bit more revenue collection. But if the administration
Speaker 5: concludes that it overshot, that they are worried about throwing
Speaker 5: the US economy into a self induced recession, that they
Speaker 5: don't have political support for this particular trade war, and
Speaker 5: they want to back off, They've left a little space
Speaker 5: to do quote unquote phenomenal deals. And so if there
Speaker 5: are phenomenal deals done with China, with Europe, with Japan,
Speaker 5: if there's some agreement that is reached with Mexico and
Speaker 5: Canada that rolls back some of the auto protection, which
Speaker 5: is actually significant in its own terms, even if the
Speaker 5: rest of not the rest, but even if the consumer
Speaker 5: goods and non metal based part of North American trade
Speaker 5: is still relatively untariffed, if you reach deals with them,
Speaker 5: reach deals with Southeast Asia, reach deals with the UK
Speaker 5: and so forth and so on, you could generally perhaps
Speaker 5: fall back to something that's closer to a ten percent
Speaker 5: tariff across the board, which is significant but not as disruptive.
Speaker 5: And then whatever your deal with China leaves you with,
Speaker 5: you kind of play a trade war out with China
Speaker 5: using the three zho one tool, and you really just
Speaker 5: focus on China. So that is the most plausible path
Speaker 5: towards de escalation. I think right now, though Joe's in luck,
Speaker 5: we're on a path where the President does seem fairly
Speaker 5: committed to changing the fundamental structure of the US and
Speaker 5: North American economies. And if you want to achieve that
Speaker 5: deep change through policy, you have to impose policies that
Speaker 5: are are disruptive and painful and so and other countries
Speaker 5: are going to react, and the US basically is taking
Speaker 5: policy steps, then on one hand, risk throwing the US
Speaker 5: into recession. And are almost starting to throw some of
Speaker 5: our major trading partners into recession. And countries generally don't
Speaker 5: want to be pushed into recession by policy choices made abroad,
Speaker 5: So the natural reaction is going to be to try
Speaker 5: to reduce your dependence on the US market. Now that's
Speaker 5: really hard because the US is the only big, big,
Speaker 5: big country that runs really big deficits, I guess along
Speaker 5: with the UK. So it is just really hard for
Speaker 5: all the surplus countries to find an alternative source of demand.
Speaker 5: The US has really been supplying a lot of demand
Speaker 5: to the global economy. But if Trump is determined to
Speaker 5: close the trade deficit and willing to do so by
Speaker 5: shrinking the US economy, and is more or less given
Speaker 5: up on the idea of growing exports as a way out,
Speaker 5: and then I think, a we're making history because we
Speaker 5: are carrying apart something that has grown up organically over
Speaker 5: eighty years, something that the US actually helped. It's a
Speaker 5: trite statement, but it is true. It's the system the
Speaker 5: US after World War two more or less created. And
Speaker 5: then the cost of that system, in Trump's view eyes,
Speaker 5: got to be too big, and so he made a
Speaker 5: decision to radically step away from current trade patterns and
Speaker 5: trade policies. I mean, this is a real break. It's
Speaker 5: a much bigger break than just doing a targeted action
Speaker 5: against China, which is his term one trade policy. You know,
Speaker 5: I'm not sure it's going to be bigger than the
Speaker 5: global financial crisis anything. I was unfortunately around then, and
Speaker 5: I remember, you know, the panic in New York when
Speaker 5: the big institutions were on the edge of going busts
Speaker 5: and the five percent fall in the US economy and
Speaker 5: the very very slow recovery. You just do normal economic analysis,
Speaker 5: you maybe get a shock of a third of that
Speaker 5: size from what we're doing now. We're not so integrated
Speaker 5: into the global economy. We haven't stopped all trade, We've
Speaker 5: just taxed it at a very high rate. But yeah,
Speaker 5: it will play out over a much longer period of time.
Speaker 5: A financial crisis, you know, risk disaster, but it forces
Speaker 5: you to respond quickly. This is a more slow moving
Speaker 5: and as you indicated, it's a result of a conscious
Speaker 5: policy choice. So therefore it has a very different dynamic.
Speaker 2: Lots and lots and lots and lots and lots of
Speaker 2: trade episodes to come in our future.
Speaker 4: We'll talk to you next week.
Speaker 1: Brad.
Speaker 2: Yeah, Brad, thank you so much.
Speaker 5: Well, let's talk about capital flows.
Speaker 6: Uh, you know, Canadian pension funds and Taiwan in the
Speaker 6: trade war and Taiwan, Taiwan the good old days they are.
Speaker 5: They are still interesting, Joe. They are still.
Speaker 2: The good old days of Taiwanese life insured mysteries. All right, Brad,
Speaker 2: thank you so much, Really appreciate it.
Speaker 4: Thank you, Joe. I guess, I guess.
Speaker 2: On the plus side, we are making history. All of
Speaker 2: it is very interesting from an economic intellectual perspect So
Speaker 2: there is that, can you tell. I'm trying to make
Speaker 2: myself feel better.
Speaker 3: Tracy were the best business in the world. This is
Speaker 3: why we get up in the morning. But I'm just
Speaker 3: gonna say one comment. There's not really much for me
Speaker 3: to add. I don't have much to add to Brad.
Speaker 3: But when he said that comment about how the formula
Speaker 3: for the tariff announcement reminded him of turning in a
Speaker 3: very bad economics term paper at four am, Yeah, the
Speaker 3: only thing that I could remember was the time that
Speaker 3: I interviewed for a job with Rubini Global Economics in
Speaker 3: two thousand and seven, and Brad Setzer was my interviewer,
Speaker 3: and I completely flopped that interview by basically talking about
Speaker 3: the Argentine economy with the sophistication that he described the tariffs.
Speaker 3: And I did not get that job. And so when
Speaker 3: Brad says this is bad economics, I have personal experience
Speaker 3: with hearing that from Brad. That's all I'm gonna say.
Speaker 2: I mean, yes, it does seem to be bad economics
Speaker 2: in terms of the terraff roll out. But this is
Speaker 2: the thing that you know, Okay, yes it's exhilarating, it's
Speaker 2: interesting to watch, but this is the thing that actually
Speaker 2: bothers me because, as Brad points out, there are some
Speaker 2: legitimate grievances over yes China trade, and you could go
Speaker 2: about trying to fix those in a cohesive and potentially
Speaker 2: effective manner, and instead we've chosen this weird wish list
Speaker 2: of things that we want that don't seem to be
Speaker 2: based on anything like rational. Here are some numbers that
Speaker 2: we pulled out at four am in the morning as
Speaker 2: we were cramming for this announcement or whatever. And we're
Speaker 2: also targeting countries from which like there can't be anything
Speaker 2: we want from like Curebos or Nahru, Like why exactly
Speaker 2: are they even included in this thing? What are we
Speaker 2: doing here?
Speaker 3: Well, this actually is one thing, you're right that drives
Speaker 3: me crazy, which is there's this whole game that gets
Speaker 3: played where it's like, well, we need more manufacturing, and
Speaker 3: you know what are we going to do? Be reliant
Speaker 3: on China for all of our like se conductors and
Speaker 3: batteries and stuff. That's actually really not great. And we
Speaker 3: had a policy put in place by the last administration
Speaker 3: that was specifically targeted. And look, I'll be very clear,
Speaker 3: like I'm totally fine with disagreeing with like how the
Speaker 3: chip sack rolled out, and I think there's reasons to
Speaker 3: think like that is totally like, to my mind, ground
Speaker 3: for debate. But the idea that no one was talking
Speaker 3: about the national security implications of heavy reliance on China
Speaker 3: for manufacturing goods up until Wednesday, that part is complete nonsense.
Speaker 2: No, it's crazy. And also, I mean, we know that
Speaker 2: central to Trump's world vision or his economic vision of
Speaker 2: America is the centrality of private capital. Right, I want
Speaker 2: private capital to fund in and build all these strategically
Speaker 2: important industries for the US, like semiconductors, But at the
Speaker 2: same time, the magnitude of what he's trying to attempt
Speaker 2: all at once seems very ob going to scare a
Speaker 2: lot of private capital away from building anything in the US. Like,
Speaker 2: I don't really see why it has to be this
Speaker 2: shock and awe approach to reorienting US trade when you
Speaker 2: could be something that's much more strategic and done perhaps
Speaker 2: like much more in coordination with a bunch of different constituents.
Speaker 2: I guess of the American economy.
Speaker 4: Don't that's me.
Speaker 2: I'm going back to bed. Okay, this has been another
Speaker 2: episode of the Odd Lots podcast. I'm Tracy Alloway. You
Speaker 2: can follow me at Tracy.
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