WEBVTT - Surveillance Special: Trump's Trade Tariffs 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jailey. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.880 Bloomberg dot Com, and of course on the Bloomberg You 0:00:27.960 --> 0:00:31.320 get lucky and we are lucky on Surveillance. Today scheduled 0:00:31.440 --> 0:00:34.040 was Edward him and his course Ever Corps vice Chairman 0:00:34.400 --> 0:00:37.560 and uh Iconic with his I S I and his 0:00:37.760 --> 0:00:41.080 daily economic reports. What you don't know is Mr Hyman 0:00:41.120 --> 0:00:44.720 knows the Newtonian mechanics out of engineering at Texas and 0:00:44.840 --> 0:00:49.480 wandered by the Manstachusetts Institute of Technology a few years ago. 0:00:49.560 --> 0:00:51.600 He joins us this morning, and of course I should 0:00:51.600 --> 0:00:54.920 mention ed you're a board member of the China Institute. 0:00:55.040 --> 0:00:58.360 You are an inter nationalists. Let me show you the 0:00:58.400 --> 0:01:01.360 President's tweet of ten minutes ago. Bring it up if 0:01:01.400 --> 0:01:05.520 you would. And this is absolutely extraordinary. When a country 0:01:05.600 --> 0:01:08.160 is losing many billions of dollars on trade with virtually 0:01:08.280 --> 0:01:11.240 every country it does business with, trade wars are good 0:01:11.880 --> 0:01:15.080 and easy to win. Example, when we are down one 0:01:15.080 --> 0:01:18.080 of your billion with a certain country, they get cute 0:01:18.440 --> 0:01:22.640 don't trade anymore. We win big. It's easy you and 0:01:22.680 --> 0:01:25.360 I read Jacob Weiner a million years ago. This is 0:01:25.400 --> 0:01:27.520 not easy, is it. I'm good to see you. We 0:01:27.600 --> 0:01:30.440 do a great job on this show, but I didn't 0:01:30.480 --> 0:01:34.200 expect this, and I find it really scary. How will 0:01:34.240 --> 0:01:37.240 adjust your view on the American economy? I gotta see 0:01:37.240 --> 0:01:40.240 how it plays out. But the problem is not what 0:01:40.280 --> 0:01:44.199 we do, it's what they do. Is what retaliation comes 0:01:44.240 --> 0:01:47.400 back with. And once you go down this road, uh, 0:01:47.440 --> 0:01:51.240 it gets uh problematic because you can go tip for tat. 0:01:52.040 --> 0:01:54.920 So uh, I just have to sort of go through 0:01:54.960 --> 0:01:57.200 these next few days and see what the tip for 0:01:57.240 --> 0:02:00.800 tat is. But uh, it's it's pretty bad. Within the 0:02:00.880 --> 0:02:04.120 news full last night, the wonderful news that the vice 0:02:04.200 --> 0:02:08.560 Chairman of Economics and Monetary Theory, maybe Richard Clarida of 0:02:08.639 --> 0:02:12.079 Columbia University, all of us can agree that as an 0:02:12.160 --> 0:02:17.440 intelligent appointment for the Fed, how does the federal respond 0:02:17.720 --> 0:02:23.040 if we implement these trade uh, these trade tariffs against 0:02:23.040 --> 0:02:26.080 these nations. The only thing I can go back to 0:02:26.280 --> 0:02:30.000 is a ninety nine Smoot Hawley and then the depression. 0:02:30.639 --> 0:02:33.919 That was sort of my forming views on this topic. 0:02:34.440 --> 0:02:36.519 And so I've always assumed that, you know, trade wars 0:02:36.600 --> 0:02:40.480 were really bad, and then we're talking about Milton Freeman 0:02:40.480 --> 0:02:43.480 a minute ago. Uh, well, Nixon's trade we showed it 0:02:43.520 --> 0:02:48.639 in the last hour, Nixon's speech on terrorists of one. 0:02:49.720 --> 0:02:53.160 But you know after when you when you were in 0:02:53.240 --> 0:02:56.959 nine the equivalent of the Fed funds rate was six 0:02:57.160 --> 0:03:00.079 six was pretty high, and the ol CORB inverted and 0:03:00.120 --> 0:03:03.400 then you had a depression. So I would think that 0:03:03.600 --> 0:03:06.840 if we start to get a trade war, uh, that 0:03:07.000 --> 0:03:10.160 it will put pressure on the Fed to be more 0:03:10.240 --> 0:03:14.160 cautious on raising rates. It'll be difficult because you could 0:03:14.200 --> 0:03:17.760 get inflation picking up from higher prices. Although if it's 0:03:17.800 --> 0:03:20.120 just steel, it's not that big of a piece of 0:03:20.160 --> 0:03:22.600 the Economy's not that big a deal. But then there's 0:03:22.600 --> 0:03:24.000 any number of ways to go here. I've got a 0:03:24.040 --> 0:03:27.440 Paul Krugman comment on this from weeks ago. You assume 0:03:27.520 --> 0:03:30.799 maybe strong dollar for a bit, and then does this 0:03:30.960 --> 0:03:35.040 devolve into lower economic growth and a week dollar policy 0:03:35.600 --> 0:03:39.480 that the president doesn't see. I don't know, it's too 0:03:39.560 --> 0:03:42.720 early to tell. I can't tell whether it's uh, you know, 0:03:42.800 --> 0:03:46.200 more posturing on the administration's part or not. But I 0:03:46.280 --> 0:03:52.240 didn't expect this and it's unsettling. Uh, and introduces a 0:03:52.320 --> 0:03:54.520 new uncertainty that we didn't have, and then puts the 0:03:54.560 --> 0:03:56.920 FED into play that wasn't there before. Here's what I 0:03:56.960 --> 0:03:58.520 want to do. I want to go out with this warning. 0:03:58.600 --> 0:04:00.800 Must reader. We got so much going on today. The 0:04:00.880 --> 0:04:03.520 new slow is extraordinary. What do you have for me? Riley? 0:04:03.600 --> 0:04:05.440 Bring up one of the essays that our team has 0:04:05.440 --> 0:04:08.960 worked one. This is Navarro knows is Paul Kruegman. Excuse me, 0:04:09.080 --> 0:04:12.040 We've got Paul Kruegman up. Let's stay with that. This 0:04:12.240 --> 0:04:15.040 is a really wonderful essay. How does the country make 0:04:15.080 --> 0:04:19.239 its eventual transition from trade deficit to trade surplus? Trump 0:04:19.360 --> 0:04:22.480 tariff that people expect to see rescinded by a future 0:04:22.720 --> 0:04:26.040 saying president would drive the dollar up temporarily, but the 0:04:26.120 --> 0:04:31.120 prospect of future depreciation would inhibit investments. This is so important, 0:04:31.279 --> 0:04:33.800 ed Hyman, that Professor Krugman says this is a one 0:04:33.880 --> 0:04:37.640 off that if this president goes through with this, later 0:04:37.839 --> 0:04:41.400 presidents will reverse these tariffs as proposed. Do you have 0:04:41.520 --> 0:04:45.720 faith in that? No. First, I'm living in the present 0:04:46.160 --> 0:04:50.320 and I'll deal with markets and investors, and uh, maybe 0:04:50.400 --> 0:04:51.920 the next president will do it. But I gotta get 0:04:51.960 --> 0:04:56.040 through this this year and next year. And uh, it's 0:04:56.160 --> 0:05:00.320 it's a it's a difficult situation. I will say that 0:05:00.480 --> 0:05:04.120 the U. S. Economy is doing exceedingly well. I saw 0:05:04.160 --> 0:05:08.520 your chart this morning. It looks exceedingly bad. But no, 0:05:08.680 --> 0:05:11.640 but you mentioned disposable income doing really quite well income 0:05:11.880 --> 0:05:17.080 and uh the unemplumber claims this week extraordinary. Okay, well, 0:05:17.120 --> 0:05:19.200 let's come back Edeyman with us with just just as 0:05:19.240 --> 0:05:22.240 I said, folks, amazing newsflow. Massive shout out from me 0:05:22.320 --> 0:05:25.000 and Francy to our team. It's blown everything up in 0:05:25.080 --> 0:05:32.160 the last eighteen hours. This is what gives us goose 0:05:32.200 --> 0:05:35.240 pumps here at Bloomberg Surveillance. When don't we have guests 0:05:35.360 --> 0:05:39.080 of esteem and always of controversy who really make an 0:05:39.120 --> 0:05:42.520 effort to join us on historic days like today. Jeffrey 0:05:42.560 --> 0:05:46.279 Sachs is at Columbia University. He has been way out 0:05:46.400 --> 0:05:49.440 front on the dumbing down of America. He has been 0:05:49.560 --> 0:05:53.000 way out front on any debate of climate change, whether 0:05:53.160 --> 0:05:57.000 you agree or disagree with him, But far more is 0:05:57.120 --> 0:06:02.560 his foundation of international economics. He is again at Columbia 0:06:03.160 --> 0:06:07.080 University and joins us from Bogata Columbia UH this morning. 0:06:07.320 --> 0:06:09.560 Professor Sex, thank you so much for the effort to 0:06:09.680 --> 0:06:13.760 join us UM this morning. Twenty years ago you wrote 0:06:13.800 --> 0:06:16.880 two essays for Foreign Policy. One was a brief history 0:06:16.960 --> 0:06:21.719 of Panic and the other was Unlocking the Mysteries of globalization. 0:06:22.320 --> 0:06:26.560 Is President Trump's trade action his effort and a good 0:06:26.640 --> 0:06:32.920 effort against the new globalization. This is one of the 0:06:33.040 --> 0:06:37.720 most reckless policies tom one can imagine, and he is 0:06:37.839 --> 0:06:43.240 going to have major adverse reverberations. As it is around 0:06:43.279 --> 0:06:47.279 the world. We probably shed maybe it is a trillion 0:06:47.360 --> 0:06:51.800 dollars of stock market capitalization in the last twenty four hours. 0:06:52.400 --> 0:06:56.640 That is a pretty good sign of UH market sentiment 0:06:57.440 --> 0:07:01.520 and the few of what Trump has done. He's smashing 0:07:01.800 --> 0:07:05.400 the global trade rules and it's very, very dangerous. We 0:07:05.520 --> 0:07:08.000 have done a little bit of the history, Professor Sachs, 0:07:08.080 --> 0:07:10.640 the history that you're expert in this morning, going back 0:07:10.680 --> 0:07:13.520 to the courage of Sir Robert Peel in the corn 0:07:13.640 --> 0:07:17.760 Laws of eighteen forty two. Call it Nixon's effort in 0:07:17.880 --> 0:07:22.160 nineteen seventy one on a ten percent import text. Let's 0:07:22.160 --> 0:07:26.320 go to Nixon. What did Jeff Sacks learn in studying 0:07:26.440 --> 0:07:32.160 the Nixon tariffs of the early seventies. Well, when Nixon 0:07:32.400 --> 0:07:38.120 uh not only raised the tariffs but broke the Bretton 0:07:38.160 --> 0:07:43.720 Woods exchange rate system unilaterally. It led to a decade 0:07:43.760 --> 0:07:49.120 of chaos. Uh. And I would go back to nineteen 0:07:49.200 --> 0:07:52.320 thirty in fact, Tom uh and you know the history 0:07:52.400 --> 0:07:57.640 well of the Holly Smokes tariff of July. That was 0:07:58.000 --> 0:08:04.040 another uni ladder US actions uh, smash in the face 0:08:04.160 --> 0:08:10.520 of world trade, and it had devastating consequences for pushing 0:08:10.640 --> 0:08:17.680 US deeper into what became depression, prolonging the Great Depression, 0:08:18.480 --> 0:08:22.760 intensifying it. And I'm not saying that that's the inevitable 0:08:22.840 --> 0:08:27.520 consequence of this dumb move of the of the Trump, 0:08:27.920 --> 0:08:32.800 But this is a dumb, dangerous, reckless move, and it's 0:08:32.880 --> 0:08:39.040 based on it's based on a level of economic illiteracy 0:08:39.200 --> 0:08:43.559 that is absolutely shopping and that is shown by his 0:08:44.040 --> 0:08:48.120 morning tweets. Uh. He really believes that if you are 0:08:48.240 --> 0:08:52.280 running a trade deficit, it means that you're being swindled 0:08:52.800 --> 0:08:58.439 by the surplus countries. It's a kind of it's a 0:08:58.600 --> 0:09:04.040 kind of illiteracy. Don't even imagine. Uh. That is now 0:09:04.760 --> 0:09:08.559 a few held by this confused man who happens to 0:09:08.640 --> 0:09:11.800 be president of the United States, and then he tweets 0:09:11.840 --> 0:09:15.240 this morning that the trade war is the simplest thing 0:09:15.280 --> 0:09:19.040 in the world to win, because he also views everything 0:09:19.240 --> 0:09:23.720 is winners and losers, whereas trade is about win win 0:09:24.040 --> 0:09:29.479 and closing trade is about lose loose. So I'm I'm astounded, 0:09:30.640 --> 0:09:36.600 Tom that we don't have uh any institutional break right now. 0:09:37.960 --> 0:09:41.560 I would expect and I would uh, well, we'll see, 0:09:41.760 --> 0:09:44.000 I would expect people like Gary Collen to leave the 0:09:44.080 --> 0:09:47.959 White House because he really wanted to do, and that 0:09:48.160 --> 0:09:53.080 with this kind of shocking behavior. On that note, let 0:09:53.160 --> 0:09:57.559 me bring in my colleague Pimples. Yeah, Professor Sex, just 0:09:57.679 --> 0:10:00.280 to play devil's advocate here. Is it possible that this 0:10:00.520 --> 0:10:04.839 is part and parcel of a negotiating tactic, and that 0:10:05.160 --> 0:10:08.959 what tariffs can be imposed, tariffs can be removed, and 0:10:09.360 --> 0:10:13.320 that there will be further negotiations that we don't know about, 0:10:13.720 --> 0:10:17.080 but that this is a new tactic in the way 0:10:17.200 --> 0:10:21.120 that the administration is indeed dealing with what it perceives 0:10:21.200 --> 0:10:27.080 to be unfair trade practices against the United States. Well, 0:10:27.200 --> 0:10:30.160 I know what it perceives that the unfair trade practices. 0:10:30.240 --> 0:10:33.440 Donald Trump thinks, as he even wrote this morning says 0:10:33.480 --> 0:10:37.400 we're running a trade deficit against nearly everybody. We must 0:10:37.440 --> 0:10:41.199 be being cheated by nearly everybody. But it's the kind 0:10:41.320 --> 0:10:45.959 of duh. Why are we running a trade definite against everybody? Well, 0:10:46.080 --> 0:10:48.520 that's because we don't save in our country. We have 0:10:48.679 --> 0:10:53.120 a saving investment deficits we borrow from the rest of 0:10:53.200 --> 0:10:58.600 the world. And done is very way opposing. The question 0:10:59.200 --> 0:11:02.920 exposes the silliness of it is if every country that 0:11:03.040 --> 0:11:06.240 we run a bilateral trade does it is somehow doing 0:11:06.440 --> 0:11:11.800 us wrong. He just doesn't get it. Uh. Maybe it 0:11:11.880 --> 0:11:16.160 won't spiral out of control, though, And China has been 0:11:16.240 --> 0:11:20.920 extremely mature in its response, which is just to say 0:11:21.040 --> 0:11:24.959 we hope the US does not undermine the international trade rules. 0:11:25.360 --> 0:11:29.040 European Union was far more direct, saying that there will 0:11:29.120 --> 0:11:32.559 of course have to be retaliation, uh, and that this 0:11:32.840 --> 0:11:36.520 is how we just Many others have noted that it 0:11:36.720 --> 0:11:40.640 is a complete break of post World War two practice 0:11:40.720 --> 0:11:46.440 to invoke national security to slam against the international trade rules. 0:11:46.880 --> 0:11:51.559 So the answer Kim is yes, maybe it won't be 0:11:52.440 --> 0:11:55.920 so bad in the end because some grown up someplace 0:11:56.080 --> 0:12:00.160 will turn this off. But not because there's any being 0:12:00.679 --> 0:12:04.200 clever in this. Just because this is an idiotic move 0:12:04.360 --> 0:12:09.079 that is very dangerous. And and and Mayet tamped down 0:12:09.480 --> 0:12:12.760 because most of his advisers are telling him that this 0:12:12.960 --> 0:12:19.480 is a dangerous that this is a dangerous move. Jeffrey 0:12:19.559 --> 0:12:22.559 Sachs with us from Boga to Columbia. We are honored, 0:12:22.640 --> 0:12:26.120 Professor Sachs at your effort to be with us. And 0:12:26.200 --> 0:12:28.839 there is a rumor once at Columbia that Sachs was 0:12:28.920 --> 0:12:33.640 so angry teaching trade economics to a graduate class that 0:12:33.800 --> 0:12:36.600 he took a copy of Dougger wins Against the Tide 0:12:37.040 --> 0:12:39.400 and threw it by some guy's ear, hit the wall, 0:12:39.440 --> 0:12:41.920 and he said, shut up and read this this weekend, 0:12:42.000 --> 0:12:45.720 jeff Sacks. As you know, Douglas, Irwin and Dartmouth wrote 0:12:45.760 --> 0:12:49.360 a classic decades ago Against the Tide. You and I 0:12:49.440 --> 0:12:53.240 can dip into that with President Trump and learn about trade. 0:12:53.720 --> 0:12:59.160 Let's begin with the English mercantilis literature. Jacob Winer wrote 0:12:59.200 --> 0:13:03.200 the classic what the essay on this is America now? 0:13:03.880 --> 0:13:07.720 Is mercantilist? With President Trump is they were in England 0:13:08.200 --> 0:13:17.360 many years ago. Well, yes, Trump has some uh strange idea. 0:13:18.240 --> 0:13:23.360 First of all, that again, if you're running a trade deficit, 0:13:23.600 --> 0:13:28.160 you're im cheated. So this is his first point. Second point, 0:13:28.240 --> 0:13:34.800 and this is also part of this is the terrible 0:13:35.320 --> 0:13:40.360 worldview that the United States is both in a position 0:13:40.440 --> 0:13:45.280 to and should act to rush China. The China is 0:13:45.600 --> 0:13:50.880 the big trend, so we have to somehow now stop 0:13:51.000 --> 0:13:55.040 our cooperation and trade with China. That's of course the 0:13:55.160 --> 0:13:59.280 subtext of all of this as well. He's are incredibly 0:13:59.440 --> 0:14:06.280 naive US, but worse than nine, they're they're dangerous. And 0:14:08.160 --> 0:14:13.800 I think the markets are signaling basically immediately two percent 0:14:13.960 --> 0:14:18.840 off the global activities yesterday and today. That's a about 0:14:19.520 --> 0:14:23.480 a trillion dollars of the par boss. But this is 0:14:23.600 --> 0:14:27.520 just a stupid idea, which I think is by now. 0:14:27.680 --> 0:14:30.480 Right now, let's move forward to this conversation with Professor 0:14:30.600 --> 0:14:32.080 Sax And I want to make clear I'm going to 0:14:32.200 --> 0:14:36.480 send out across my social media against the tide. In 0:14:36.560 --> 0:14:40.120 Intellectual History of Trade by the good professor from Dartmouth. 0:14:40.160 --> 0:14:42.400 I read it years ago and it's it's one of 0:14:42.440 --> 0:14:46.320 those books, pim Fox. It was written years ago, dugger, 0:14:46.400 --> 0:14:48.200 when I think it was like twenty two years old, 0:14:48.880 --> 0:14:51.440 and and it's an extraordinary book. Pen Fox. Why don't 0:14:51.440 --> 0:14:53.560 you jump in with Professor sax Well, I just want 0:14:53.600 --> 0:14:56.960 to understand Professor sax maybe the history of these tariffs 0:14:57.040 --> 0:14:59.640 and the tariff reductions that took place because of the 0:14:59.680 --> 0:15:04.920 World Trade Organization, and whether the consequences of lowering industrial 0:15:05.080 --> 0:15:10.120 tariffs was something that was not foreseen, because it seemed 0:15:10.160 --> 0:15:14.560 as though the plan to reduce agriculture trade restrictions were 0:15:14.800 --> 0:15:20.840 not really fully understood either. Well. I think the reductions 0:15:20.920 --> 0:15:25.400 of the trade barriers expanded trade and expanded the world economy. 0:15:26.240 --> 0:15:31.480 What they also did was shift labor markets and income 0:15:31.560 --> 0:15:36.640 distribution within the United States. They were especially good for capital, 0:15:37.240 --> 0:15:42.000 especially good for high tech, and if we were a 0:15:42.120 --> 0:15:45.280 fair society, we would be sharing the benefits of this 0:15:45.520 --> 0:15:50.400 expanded US and world economy more fairly. But there's nothing 0:15:50.640 --> 0:15:53.600 untoward about what's happened with trade. Trade expanded the world 0:15:53.680 --> 0:15:57.240 economy just as as it should. And if you try 0:15:57.320 --> 0:16:01.720 to close down trade, well we'll close an important part 0:16:01.800 --> 0:16:05.160 of world economic growth. That's why the markets are down 0:16:05.240 --> 0:16:07.920 so sharply right now, because this is bad news for 0:16:08.160 --> 0:16:13.320 the world economy. Jeff, how should Democrats respond? There's gonna 0:16:13.360 --> 0:16:15.920 be a roaring battle over this, But what is the 0:16:16.080 --> 0:16:20.800 intelligent free trade response? Of Democrats, is they are so 0:16:21.040 --> 0:16:27.640 fractious this two thousand and eighteen. Well, Democrats have also 0:16:28.160 --> 0:16:31.680 had this protectionist street, of course, and some Democrats in 0:16:31.760 --> 0:16:34.120 the Midwest have already said this is good, it will 0:16:34.160 --> 0:16:39.200 protect our steel industry. This is a very naive of politics. 0:16:40.400 --> 0:16:45.080 A smart approach for both parties would be open trade 0:16:45.640 --> 0:16:50.160 and fairness in our society, making sure we have good education, 0:16:50.640 --> 0:16:55.920 good skills, help for those who are uh A are 0:16:56.080 --> 0:17:00.160 hurt by international trade, and those are real grouts, but 0:17:00.320 --> 0:17:04.600 can so many are benefited, the winners can help the losers. 0:17:04.680 --> 0:17:07.560 That's the first principle of international trade, going back to 0:17:07.640 --> 0:17:11.680 David Ricardo uh and the two centuries ago and pauls 0:17:12.160 --> 0:17:16.480 In a century ago. So the basic point should be 0:17:16.680 --> 0:17:21.080 for both Democrats and Republicans, the international trading system has 0:17:21.160 --> 0:17:23.639 been good for the world. It's been good for peace, 0:17:23.720 --> 0:17:26.720 has been good for the US economy, it's been good 0:17:26.800 --> 0:17:32.119 for the global economy. But of course all functioning marget 0:17:32.160 --> 0:17:36.960 economies need to ensure fats need to ensure investments in 0:17:37.920 --> 0:17:41.800 skills and infrastructure, and so we need that kind of balance. 0:17:41.920 --> 0:17:44.119 We don't have any balance right now. We have a 0:17:44.280 --> 0:17:50.840 president railing against the world and positively hurdering who wanted 0:17:51.160 --> 0:17:55.720 the reaction which would be extremely dangerous for everybody. Uh 0:17:56.400 --> 0:18:00.840 and is quite possibly going to happen. Well, we have 0:18:01.080 --> 0:18:06.639 the protectionists who aimed for you know, very narrow games. Uh. 0:18:06.800 --> 0:18:13.640 And people should remember economic protectionism has Jeff, unilateralism has 0:18:13.680 --> 0:18:16.560 been a disaster. Okay, Jeff Sex, thank you so much. 0:18:16.600 --> 0:18:23.760 We really appreciate it. From Bogata, Colombia this morning, what 0:18:24.119 --> 0:18:27.440 is sporting is futures as we speak, new lows for 0:18:27.480 --> 0:18:30.040 the day, three days down in a row. That was 0:18:30.080 --> 0:18:33.600 a great band. Three days down, um and Uh, futures negative, 0:18:33.600 --> 0:18:37.200 twenty two down, futures negative to five Right now, John Ferrell, 0:18:37.240 --> 0:18:39.879 would you suggest that the break we saw this morning 0:18:40.200 --> 0:18:42.240 was off the tweet you're gonna read right now. Yeah, 0:18:42.280 --> 0:18:43.600 we were soft and then we got a whole lot 0:18:43.680 --> 0:18:45.600 softer when this one came out on Twitter from the 0:18:45.640 --> 0:18:48.320 President of the United States. When a country is losing 0:18:48.359 --> 0:18:50.840 many billions of dollars on trade with virtually every country 0:18:50.880 --> 0:18:54.240 it does business with, trade wars are good and easy 0:18:54.720 --> 0:18:57.080 to win. Trade wars are the one thing people are 0:18:57.080 --> 0:18:59.280 concerned about this morning. And when the President says they're 0:18:59.320 --> 0:19:01.080 good and they're easy eats of win. Well, it's gonna 0:19:01.119 --> 0:19:03.159 hot and concern, and you saw that reflected in the 0:19:03.280 --> 0:19:05.960 market very quickly. Our team working on getting in a 0:19:06.040 --> 0:19:08.280 great set of guests, many of them waking up into 0:19:08.359 --> 0:19:12.000 this as it was happening last evening right now, Mark Chandler, 0:19:12.080 --> 0:19:14.000 where this thrill down? Whether this with the Brown Brothers 0:19:14.359 --> 0:19:19.240 Harriman easy to win John Mark, Mark Chandler. How do 0:19:19.440 --> 0:19:22.560 you win or lose a trade board? You need our 0:19:22.600 --> 0:19:25.840 tillery And as I think, here's how I would read 0:19:25.880 --> 0:19:28.720 this is that I sort of take a chump seriously 0:19:28.920 --> 0:19:31.240 at his art of the deal, and I think about, like, 0:19:31.800 --> 0:19:33.280 I want to gonna buy my tis not a car 0:19:33.440 --> 0:19:35.680 for HEAs in college doing good, doing well. I was 0:19:35.680 --> 0:19:37.360 gonna get in a car. We we've got a used 0:19:37.359 --> 0:19:39.480 car lot and a car lot dealer comes up to 0:19:39.560 --> 0:19:41.119 us as my sun kicks out the car. And the 0:19:41.200 --> 0:19:44.240 first thing I do is complain about the car. I 0:19:44.320 --> 0:19:46.399 complain about everything about it, and then my son kicks me. 0:19:46.400 --> 0:19:48.040 He says me, but Dad, I want to buy that car. 0:19:48.480 --> 0:19:50.399 I said, yes, This is negotiations, and I think this 0:19:50.480 --> 0:19:52.920 is what chump is doing. It's it's a bluster and 0:19:53.000 --> 0:19:54.680 which is a none of these kind of things, He says, 0:19:54.680 --> 0:19:57.280 it's mostly bluster. A trade war is not easy to win, 0:19:57.520 --> 0:19:59.680 it's not desirable, and it's not right that we're gonna 0:19:59.680 --> 0:20:01.800 trigger it trade war. Mark, you are perfect to talk 0:20:01.840 --> 0:20:04.639 to us about with your sense of political history and 0:20:04.760 --> 0:20:07.600 folding it into economics. Moments ago, the President of the 0:20:07.720 --> 0:20:11.720 United States a short tweet, we must protect our country 0:20:11.920 --> 0:20:15.840 and our workers. Our steel industry is in bad shape. 0:20:16.359 --> 0:20:20.400 If you don't have steel, you don't have a country 0:20:20.480 --> 0:20:24.119 that's in all caps. If you don't have steel, you 0:20:24.280 --> 0:20:28.320 don't have a country, Mark Chandler, within your books, is 0:20:28.400 --> 0:20:32.000 this is Is this a president steeped in nostalgia? Or 0:20:32.160 --> 0:20:37.440 is that an accurate phrase for America two thousand thirty. Yes, 0:20:37.640 --> 0:20:39.200 I can't. I can't really go along with it. But 0:20:39.440 --> 0:20:41.159 here's what I would think the focus should be is 0:20:41.440 --> 0:20:43.879 think about a country like Canada. So we get the 0:20:44.040 --> 0:20:47.680 US gets about a sixth of its steel imports from Canada, 0:20:47.880 --> 0:20:50.560 but the US exports half of our steel to Canada. 0:20:51.720 --> 0:20:54.600 Canada said they run a two billion dollar year trade 0:20:54.680 --> 0:20:58.560 definity with the US on steel, and Canada's been recognized 0:20:58.600 --> 0:21:02.080 by US law and part of the US National Technology 0:21:02.200 --> 0:21:07.200 Industrial based for national defense. So with producing Canada was 0:21:07.240 --> 0:21:11.000 producing our allies, should that counts for production for the US. 0:21:11.480 --> 0:21:13.320 And I think that this is by the national security 0:21:13.320 --> 0:21:15.639 issue is so interesting and why it needs to be 0:21:15.720 --> 0:21:17.440 explored just the way I would. I would hope that 0:21:17.560 --> 0:21:20.280 some mayors in the US, mayors of US cities explore 0:21:20.320 --> 0:21:23.400 eminent domain. These are like areas of law that could 0:21:23.440 --> 0:21:26.040 be could be used to have some to do some good. 0:21:26.440 --> 0:21:29.520 And so I think what this there is unknown like 0:21:29.680 --> 0:21:34.119 unclear legal area about national trade, national security and trade. 0:21:34.359 --> 0:21:37.760 And hopefully by challenging it like this, it gets clear 0:21:37.920 --> 0:21:41.760 that countries cannot use these kind of pretenses for protectionism 0:21:42.040 --> 0:21:44.639 mark bottom line. When Tom read out those comments from 0:21:44.640 --> 0:21:47.160 the President of the United States, I didn't think about economics. 0:21:47.240 --> 0:21:50.439 I didn't think about the markets. I just thought about politics. 0:21:50.840 --> 0:21:53.560 If you don't have steel, you don't have a country. 0:21:54.000 --> 0:21:57.320 That sounds like a campaign message. That's not an economic policy, 0:21:57.440 --> 0:22:01.119 is it. That's a campaign message? This is politics. Yeah, exactly. 0:22:01.119 --> 0:22:02.760 I think there's most of a politicive. That's That's the 0:22:02.840 --> 0:22:05.280 unfortunate thing for me is that we have too You 0:22:05.320 --> 0:22:08.160 can break down the economy two parts, consumers and producers, 0:22:08.640 --> 0:22:12.600 and these kind of protections and favorite producers over consumers, 0:22:12.680 --> 0:22:14.639 and yet we're more of a nation of consumers of 0:22:14.720 --> 0:22:17.000 these types of things. How wow does this play with 0:22:17.040 --> 0:22:20.040 the base this morning? Mark, I don't think the base 0:22:20.160 --> 0:22:21.520 is going to be affected by this. I think that 0:22:21.960 --> 0:22:24.520 that Trump has a solid third, maybe a little bit 0:22:24.600 --> 0:22:27.320 more people who will vote for him almost regardless of 0:22:27.400 --> 0:22:29.320 what he does, as long as it's seem to be 0:22:29.440 --> 0:22:32.000 like sticking a finger in the eye of the elite 0:22:32.119 --> 0:22:35.320 or of the traditions or of establishment. But will it 0:22:35.520 --> 0:22:41.000 reduce economic output even by tens of points? And again, Mark, 0:22:41.160 --> 0:22:45.600 I agree with you that the specific threats maybe aren't 0:22:45.640 --> 0:22:51.080 that important, but there's gotta be not on effects in retaliation. Correct, 0:22:51.760 --> 0:22:53.240 they could be, but I think that the country are 0:22:53.240 --> 0:22:55.560 gonna hold off Italian to go through the w t O. 0:22:55.640 --> 0:22:57.680 But I do agree with you Tom at the economy, 0:22:58.000 --> 0:22:59.560 I sort of would think that when you look at 0:22:59.600 --> 0:23:02.080 the trunk month moving average in non farm payrolls, you 0:23:02.119 --> 0:23:04.240 look at twelve month moving out of auto sales, you 0:23:04.280 --> 0:23:06.920 look at the higher rates of delinquency on credit cards, 0:23:07.080 --> 0:23:09.080 and we've got a lot of symptoms already of late 0:23:09.200 --> 0:23:12.719 psycho economic activity, and these tear ups and this kind 0:23:12.760 --> 0:23:16.040 of uncertainty might be enough to do just further along 0:23:16.119 --> 0:23:18.960 the curve. Let's recast as quickly. I know John Farrell 0:23:19.000 --> 0:23:21.280 wants to dive in. What is your twelve month call 0:23:21.400 --> 0:23:24.400 on us g d P that you're using off your 0:23:24.480 --> 0:23:28.280 FX desk at Brown Brothers. Airman, we start the penciling 0:23:28.320 --> 0:23:30.440 in not far from what the feed is. The FETE 0:23:30.480 --> 0:23:32.560 I think is two point eight for this year, and 0:23:32.600 --> 0:23:37.119 we're about two point five slower growth. Excuse me. Chairman 0:23:37.119 --> 0:23:40.360 Pound wakes up Tuesday morning full of optimism and confidence 0:23:40.520 --> 0:23:42.520 guys in front of the house and says how great 0:23:42.560 --> 0:23:44.280 things are going to be through this year and how 0:23:44.359 --> 0:23:47.440 much better things are since December. How's Chairman Pound fitting 0:23:47.440 --> 0:23:49.639 at the end of the week. Yeah. I think he 0:23:49.680 --> 0:23:52.600 probably gives himself good marks for his presentation to Congress, 0:23:53.359 --> 0:23:56.200 having corrected the stuff of the stuff about the overheating 0:23:56.240 --> 0:23:59.919 and that there's no uh no signs of wage pressure accelerating. 0:24:00.080 --> 0:24:02.119 But I think this tear of stuff is as scary, 0:24:02.720 --> 0:24:05.560 especially some people who embraced like the free markets and 0:24:05.680 --> 0:24:09.000 the the global liberal trading system power. I think as 0:24:09.000 --> 0:24:11.239 part of that tradition, Chairman Pow we thought was going 0:24:11.280 --> 0:24:13.800 to be a low rates guy and soft on regulation. 0:24:14.119 --> 0:24:16.080 I don't see those two boxes being ticked over these 0:24:16.160 --> 0:24:19.240 last two days of testimon each arc, do you. I 0:24:19.280 --> 0:24:20.800 don't know. I'm not so sure. I mean the markets. 0:24:20.920 --> 0:24:23.399 I mean, for me, if taking Powell to convince the 0:24:23.480 --> 0:24:26.280 market that Yelling was right, Yelling told us in December, 0:24:26.359 --> 0:24:28.920 those dot plots showed us three rate hikes this year. 0:24:29.160 --> 0:24:32.160 The markets finally came around to it on Powell's testimony 0:24:32.200 --> 0:24:36.480 on Tuesday March. Chandler Jeffrey Sachs will join us later 0:24:36.600 --> 0:24:42.040 of Columbia University, an acclaimed international economist, and he's talked 0:24:42.080 --> 0:24:45.320 about and this goes more to more to ecology, the 0:24:45.480 --> 0:24:50.400 economics of a crowded planet? Is the planets so different now, 0:24:50.600 --> 0:24:54.959 so crowded that the template of trade of George Bush Sr. 0:24:55.560 --> 0:24:59.280 Can't work? Now? I don't know. I thought I wonder 0:24:59.320 --> 0:25:02.120 about like this overcrowded. This if her if her mother 0:25:02.240 --> 0:25:05.359 goes to her cupboard she's trying to feed three children, 0:25:05.480 --> 0:25:07.520 she finds that she has only two pork chops? Does 0:25:07.560 --> 0:25:10.359 she have too many children? And I think definitely the issue. 0:25:10.480 --> 0:25:12.520