WEBVTT - Tariffs, Take Three: The Dumbest Round Yet | Off the Clock 0:00:00.200 --> 0:00:02.400 One of the things I'd mind most about the president 0:00:02.600 --> 0:00:06.960 is there are traditional nineteen sixties forms of masculinity, but 0:00:07.000 --> 0:00:08.800 this is a bloke who's really willing to look at 0:00:08.840 --> 0:00:11.560 another man and say, I think you're handsome. 0:00:11.160 --> 0:00:13.280 You're beautiful, Yeah, you're beautiful of that. 0:00:13.640 --> 0:00:21.639 Yeah. The work week may be over, but the economy 0:00:22.000 --> 0:00:25.520 it never takes time off. I'm justin Wolpher's and this 0:00:25.680 --> 0:00:29.600 is off the clock unwinding the week's economic years. There's 0:00:29.680 --> 0:00:32.400 no one I would rather do it with than my 0:00:32.640 --> 0:00:36.960 good friend, superstar economic journalist Stacy Vanix Smith. 0:00:38.440 --> 0:00:40.400 Thank you, Justin. I'm very excited to be here with 0:00:40.479 --> 0:00:44.400 you once again. I am a calmnist of Bloomberg Business Week, 0:00:44.400 --> 0:00:47.519 co host of the podcast Everybody's Business, and as always, 0:00:47.560 --> 0:00:50.400 extremely thrilled to be here with you talking economics on 0:00:50.440 --> 0:00:51.000 a Friday. 0:00:51.640 --> 0:00:53.840 What else we could do at the end of the week, 0:00:55.200 --> 0:00:57.080 he so, what are we gonna do? We're going to 0:00:57.120 --> 0:00:59.720 pick through the recent economic years and we're here to 0:00:59.720 --> 0:01:02.400 tell the folks at home what you should actually be 0:01:02.480 --> 0:01:05.960 concerned about, what you can safely ignore, and maybe along 0:01:06.000 --> 0:01:09.960 the way we can find some silver linings. Stacey, We've 0:01:09.959 --> 0:01:13.080 got to packed episode, so strap in. We're gonna start 0:01:13.080 --> 0:01:16.399 off with the latest round of tariffs. And forgive me 0:01:16.400 --> 0:01:18.479 if you think you've heard this episode before, it's actually 0:01:18.560 --> 0:01:21.000 a new episode. It's a different round of tariffs. We 0:01:21.080 --> 0:01:22.920 can talk about what makes them different, what makes them 0:01:22.959 --> 0:01:25.360 more of the same, why maybe these are going to 0:01:25.400 --> 0:01:27.039 stick around, And we're going to dig into the FED. 0:01:27.680 --> 0:01:29.720 We're going to go and talk to Handsome Kevin and 0:01:29.760 --> 0:01:32.880 see how he's doing over there, and then we'll get 0:01:32.880 --> 0:01:38.160 back to the most recent GDP numbers. GDP stands for 0:01:38.200 --> 0:01:42.039 gross domestic product, not gus d platypus. These numbers came 0:01:42.080 --> 0:01:45.440 out on Thursday, so huge week for economics. What do 0:01:45.480 --> 0:01:45.759 you reckon? 0:01:45.800 --> 0:01:49.760 Stacy, Absolutely, and don't forget Justin. At the very end 0:01:49.800 --> 0:01:51.320 of the show, we're going to have a little bit 0:01:51.360 --> 0:01:54.880 of a competition. It's chart versus chart. I don't know 0:01:54.920 --> 0:01:57.080 what possessed me to say yes to this, since you're 0:01:57.080 --> 0:01:59.120 an economist, you spent all day looking at charts. But 0:01:59.200 --> 0:02:01.480 I said yesterday and I think I'm gonna win. I 0:02:01.560 --> 0:02:03.800 think I have the chart to end all charts. 0:02:04.000 --> 0:02:06.040 I mean, the thing is chat versus chat. White for 0:02:06.080 --> 0:02:08.320 this that wrongs with art versus art because a good 0:02:08.360 --> 0:02:13.560 chat is art. You have the comparative literature genius. You 0:02:13.680 --> 0:02:16.360 have that entire rights out of the brin so I 0:02:16.440 --> 0:02:19.080 reckon you have you thought about your colors? 0:02:20.960 --> 0:02:23.480 My color is like the color of the chart, Yeah, 0:02:23.800 --> 0:02:27.560 the art of the chart. Yes, and I stand by 0:02:27.600 --> 0:02:28.680 the color that I chose. 0:02:29.040 --> 0:02:31.200 Well, so minoring a platypos economics theme. 0:02:32.440 --> 0:02:35.640 Oh, mine are in the theme of the that the 0:02:35.680 --> 0:02:38.079 government put them in. But I still stand by the 0:02:38.320 --> 0:02:39.320 right and beige. 0:02:39.440 --> 0:02:44.040 Fantastic. Let's get into it. Tell me Number one. 0:02:43.960 --> 0:02:48.359 Tariffs all right, justin So, Okay, a lot has happened 0:02:48.520 --> 0:02:51.200 with tariffs since we last talked. I know you've done 0:02:51.200 --> 0:02:53.200 a bunch of videos about this already, and I'm very 0:02:53.200 --> 0:02:55.040 excited to kind of break things down with you a 0:02:55.040 --> 0:02:58.600 little bit. I was wondering if kind before we dive 0:02:58.639 --> 0:03:01.360 into this, you can kind of lay out what is 0:03:01.400 --> 0:03:05.040 going on with this leadst round of tariffs, as well 0:03:05.040 --> 0:03:08.160 as also the kind of the Canada specific tariffs that 0:03:08.240 --> 0:03:10.480 also happened. Can you kind of just get us up 0:03:10.480 --> 0:03:12.280 to speed economically speaking? 0:03:12.560 --> 0:03:16.320 Yeah, So to folks at home, strap in, because there's 0:03:16.320 --> 0:03:20.000 a lot going on, all of it highly informed after 0:03:20.120 --> 0:03:22.840 decades of careful research by one of the most thoughtful 0:03:22.840 --> 0:03:27.840 administrations in our nation's history. Stacy, do you guys have 0:03:27.919 --> 0:03:28.920 sarcasm in Idaho? 0:03:30.840 --> 0:03:35.920 You know, Idaho is a more of an earnest place, Okay, 0:03:35.920 --> 0:03:38.360 and I have often been accused of being too earnest, 0:03:38.960 --> 0:03:41.520 But I live in New York, where sarcasm is just 0:03:41.680 --> 0:03:42.400 the you know. 0:03:42.720 --> 0:03:45.040 I'm going to give it the Idaho treatment. We have 0:03:45.160 --> 0:03:49.000 had two sets of tariffs by an administration that has 0:03:49.040 --> 0:03:51.960 an approach that it believes in, and if at first 0:03:52.000 --> 0:03:55.920 you don't succeed, try try again. And so I feel 0:03:55.920 --> 0:03:59.520 like President Trump has been talking with your father, and 0:03:59.640 --> 0:04:02.480 so after his first round of tariffs has ruled unconstitutionally, 0:04:02.520 --> 0:04:06.040 came back with a second round of tariffs that actually 0:04:06.040 --> 0:04:08.240 just hit its xpery date. And now we're up to 0:04:08.280 --> 0:04:11.960 the third round. And I'm sure your father, being a 0:04:11.960 --> 0:04:14.600 true American, hates Canadians, and so he's got an extra 0:04:14.720 --> 0:04:17.280 round of tariffs to just really have a go with 0:04:17.400 --> 0:04:19.600 those terrible people north of our border. 0:04:20.160 --> 0:04:23.560 Definitely does not heed Canadians. I forgot Comedians. 0:04:24.080 --> 0:04:26.280 I just went back to sarcasm again. I'm not very 0:04:26.279 --> 0:04:30.919 good at earn all right, Okay, let me try and 0:04:30.920 --> 0:04:35.640 explain what's going on. The starting point is two starting points. 0:04:35.720 --> 0:04:38.839 The president loves tariffs, he has a theory about why, 0:04:39.880 --> 0:04:45.920 and the Constitution says that the Congress owns tariffs. So 0:04:46.640 --> 0:04:49.160 the problem with that is if the Constitution says you've 0:04:49.160 --> 0:04:51.040 got to go to Congress, there's actually, by the way, 0:04:51.200 --> 0:04:53.520 it's not a problem, a very nice opportunity. And this 0:04:53.600 --> 0:04:56.839 is Idaho earnest where he could just go to the 0:04:56.839 --> 0:04:58.880 Congress and he could say, I've got a really good idea, 0:04:59.360 --> 0:05:02.040 why don't we have tariffs, and they'd pass a law 0:05:02.120 --> 0:05:04.360 and then we'd have the tariffs that have gone through 0:05:04.360 --> 0:05:08.320 this system of government, and there'd be checks and balances, 0:05:08.360 --> 0:05:12.719 and our related politicians would all weigh in. I'm just 0:05:12.760 --> 0:05:16.680 a bill from Capitol Hill. Can you sing that for me, Stacy? 0:05:17.360 --> 0:05:22.279 I mean no, but I know the song said you 0:05:22.360 --> 0:05:23.560 can't do that to people. 0:05:24.360 --> 0:05:28.040 I'm just a bill, bill from on Capitol Hill, and 0:05:28.040 --> 0:05:30.520 I didn't grow up at America, so I don't know the rest. Okay, 0:05:31.680 --> 0:05:33.359 that's what he could do, but he doesn't like that 0:05:33.440 --> 0:05:35.400 because he doesn't like bills, doesn't like Capitol Hill, or 0:05:35.400 --> 0:05:37.880 they don't like him. So what he needs to do 0:05:37.920 --> 0:05:39.599 is he needs to find a time in the past 0:05:39.600 --> 0:05:43.080 where Congress has said said, you know what, we want 0:05:43.120 --> 0:05:45.200 to give the White House this power of a Tariff's 0:05:45.560 --> 0:05:48.200 first attempt was to say it's an emergency. But the 0:05:48.200 --> 0:05:50.520 emergency powers that didn't use the word tariff, and there's 0:05:50.520 --> 0:05:53.200 not an emergency. The Supreme Court said all of those 0:05:53.200 --> 0:05:55.880 first deliberation day tarifts for illegal were paying them back. 0:05:56.760 --> 0:05:56.960 Then. 0:05:57.360 --> 0:05:58.880 He says, we're in the middle of a balance of 0:05:58.880 --> 0:06:02.560 payments crisis. Hey, fun fact, the United States the balance 0:06:02.560 --> 0:06:06.159 of payments right now is zero dollars. It's been zero 0:06:06.200 --> 0:06:09.040 dollars for many decades in a row. The balance of 0:06:09.080 --> 0:06:14.040 payments always balances when your currency floats. That's one for 0:06:14.160 --> 0:06:18.040 the one for the textbooks right there. Anyway, that was 0:06:18.080 --> 0:06:20.000 a power that says he's allowed to impose tariffs for 0:06:20.080 --> 0:06:23.280 six months. The sixth, the last day came up, and 0:06:23.320 --> 0:06:26.480 all of a sudden, he discovered and I'm now going 0:06:26.520 --> 0:06:29.240 to be sort of Brooklyn sarcastic if I may, he 0:06:29.279 --> 0:06:32.240 discovered a deep or maybe I'm being Odaho Earnest, a 0:06:32.320 --> 0:06:36.520 deep and abiding passion for the worlds oppressed people around 0:06:36.560 --> 0:06:40.480 the world who are enslaved in forced labor, situations, and 0:06:40.520 --> 0:06:44.159 there's nothing the President cares more about than that. What 0:06:44.200 --> 0:06:46.320 he is discovered is that there's a power where if 0:06:46.400 --> 0:06:49.479 the United States faces some form of unfair competition, he 0:06:49.520 --> 0:06:52.760 can levy tariffs. So here's the theory of the case. 0:06:52.800 --> 0:06:55.359 We're now putting tariffs on Australia, on Canada, on the 0:06:55.440 --> 0:06:59.240 United Kingdom, on every country, on eighty countries around the 0:06:59.279 --> 0:07:03.320 world based on this forced labor. Now, no one is 0:07:03.360 --> 0:07:06.200 saying Australia has forced labor, which is good because we don't. 0:07:07.520 --> 0:07:11.040 What they're saying is Australia is a bit sloppy and 0:07:11.160 --> 0:07:15.480 might sometimes import some goods that involve forced labor, and 0:07:15.520 --> 0:07:18.400 then they might export those to America, and it's unfair 0:07:18.440 --> 0:07:24.720 that American workers have to compete with Australia, which might 0:07:24.840 --> 0:07:27.920 accidentally occasionally use forced labor. By the way, it doesn't 0:07:28.600 --> 0:07:31.720 look here's the real problem. When a grape comes across 0:07:31.720 --> 0:07:34.559 a border, it doesn't actually say produced with forced labor 0:07:34.600 --> 0:07:37.280 on it, and so it's very hard to figure out 0:07:37.400 --> 0:07:39.960 what's going on. Okay, So then the President has put 0:07:40.040 --> 0:07:44.600 tariff's on eighty countries based on the theory that they're 0:07:44.600 --> 0:07:48.520 a bit sloppy and policing forced labor. It's great that 0:07:48.600 --> 0:07:52.640 he does that. What this It's transparently obvious that this 0:07:52.760 --> 0:07:56.240 is not actually about forced labor. Almost every country faces 0:07:56.280 --> 0:07:59.560 the same tariff of ten percent, some get ten percent 0:07:59.640 --> 0:08:01.920 or towven half percent. The difference is if you're less 0:08:01.960 --> 0:08:04.800 sloppy on forced labor, it's a very small incentive to 0:08:04.800 --> 0:08:10.200 actually care about the issue at all. So that's now 0:08:10.200 --> 0:08:13.920 in place. Surprising by the way it a place to 0:08:13.960 --> 0:08:16.960 eighty countries, you might say eighty what's going on there? 0:08:17.400 --> 0:08:20.080 Or slightly over eight sixty economies when you include all 0:08:20.080 --> 0:08:22.280 of the euear that's going to be eighty something. You 0:08:22.320 --> 0:08:24.400 might say, way, only eighty something one of all the 0:08:24.360 --> 0:08:27.280 world's countries. Will They discovered with Liberation Day that if 0:08:27.320 --> 0:08:29.760 they try and list all the countries, sometimes they make mistakes, 0:08:30.680 --> 0:08:33.920 like the Herd and McDonald Islands home to penguins, which 0:08:33.960 --> 0:08:37.840 they put very severe tariffs on home literally only to penguins. 0:08:38.559 --> 0:08:39.560 And so by. 0:08:39.440 --> 0:08:41.360 Focus, I feel like the penguins had it come. 0:08:41.240 --> 0:08:46.360 In they did. Son's a bitches always trying to outdress 0:08:46.880 --> 0:08:50.600 the president, miss business casual and what is a penguin 0:08:50.600 --> 0:08:51.360 where they think. 0:08:51.200 --> 0:08:54.400 They are in tuxedos. Of Yeah, that's very funny, Ustards. 0:08:55.679 --> 0:08:58.080 That's where we're at. Now here's the weird thing. It 0:08:58.160 --> 0:09:04.599 might actually be legal because not a lawyer. Basically, the 0:09:04.640 --> 0:09:06.760 law says you have to find evidence of unfair competition. 0:09:06.840 --> 0:09:08.520 So then what you do is you open an investigation 0:09:08.600 --> 0:09:11.040 and you investigate. And you'll be very surprised that when 0:09:11.080 --> 0:09:14.520 President trumpass Howard Lutnik in the Department of Commerce and 0:09:14.559 --> 0:09:17.679 the US Trade Representative to investigate whether something he hopes 0:09:17.760 --> 0:09:19.559 is true is true, they come back and say it's true. 0:09:20.520 --> 0:09:22.920 But the courts tend to give that a great deal 0:09:22.960 --> 0:09:25.960 of difference. They think, well, presidents wouldn't just make things up. 0:09:25.960 --> 0:09:29.400 They do very serious investigations. So it's very likely that 0:09:29.440 --> 0:09:33.240 these will turn out to be legal. So all of 0:09:33.280 --> 0:09:34.960 this very long story, they say, we used to have 0:09:35.000 --> 0:09:37.600 tariffs around about ten percent. We now have tariffs around 0:09:37.600 --> 0:09:42.680 about ten percent. How excited are you about that, Stacey? 0:09:44.600 --> 0:09:48.600 It's really interesting. I mean, it's interesting that there's been 0:09:48.640 --> 0:09:51.199 so much movement to stay the same. It's like a duck, 0:09:51.400 --> 0:09:53.160 you know, it's like sort of sitting on the surface. 0:09:53.200 --> 0:09:56.079 It's like the one constant is that we have tariffs 0:09:56.120 --> 0:09:58.600 and that the sort of feet underneath the surface or 0:09:58.600 --> 0:10:03.200 the reason for the tariffs. It's really interesting that it's 0:10:03.200 --> 0:10:08.280 sort of the result its results oriented and not process oriented. 0:10:09.760 --> 0:10:12.360 It's also interesting to sort of hear it from this 0:10:12.400 --> 0:10:15.760 perspective because I hadn't actually really thought about it from 0:10:15.800 --> 0:10:17.320 this way. But it's just like, I want to put 0:10:17.360 --> 0:10:21.640 tariffs in please by any means that I need. 0:10:21.480 --> 0:10:23.440 To, you know, And I think that's a critical part 0:10:23.440 --> 0:10:26.120 of the economics of this. So the President actually had 0:10:26.120 --> 0:10:28.079 a theory of the case. The theory of the case 0:10:28.200 --> 0:10:32.760 was going to be I'm going to use tariffs as leverage, 0:10:32.920 --> 0:10:35.040 and that's what he did with Liberation Day. He would 0:10:35.080 --> 0:10:36.880 point at the Brits and you say, here's the tariff 0:10:36.880 --> 0:10:38.439 coming for you. There's any one way to get out 0:10:38.440 --> 0:10:40.560 of this, and that's to come and kiss the ring 0:10:40.600 --> 0:10:43.760 and offer me some concessions. They pretended they came to 0:10:43.760 --> 0:10:44.480 a deal. They didn't. 0:10:44.520 --> 0:10:44.679 Really. 0:10:44.760 --> 0:10:46.880 That's a different story for a different day. But that 0:10:47.040 --> 0:10:50.200 was the idea. Now here's the thing. These tariffs come 0:10:50.200 --> 0:10:53.160 out of an investigation. The investigation have found every country 0:10:53.200 --> 0:10:56.080 except America is a bit sloppy when it comes to 0:10:56.080 --> 0:11:00.920 forced labor. Now, when President Trump called the British Prime Minister. 0:11:01.160 --> 0:11:03.240 First of all, it's a different blowke answering the phone now. 0:11:04.559 --> 0:11:07.680 But secondly, he can't point at him and say, unless 0:11:07.720 --> 0:11:09.600 you do a bunch of favors for me, this is 0:11:09.640 --> 0:11:13.880 your tariff. These are basically uniform tariffs and they're based 0:11:13.920 --> 0:11:17.320 on this false idea, which means the President now has 0:11:18.200 --> 0:11:21.439 no when to be clear about that, no leverage against 0:11:21.480 --> 0:11:25.040 any individual country. So what's happened is the President says 0:11:25.120 --> 0:11:27.719 I want tariff stumps his feet, tells his lawyers to 0:11:27.720 --> 0:11:30.160 get them for him, and they got them for him, 0:11:30.160 --> 0:11:31.840 but they're not the ones that actually do the job 0:11:31.880 --> 0:11:35.600 he wants to do, which is a rather way of saying, 0:11:36.160 --> 0:11:38.200 I know this is going to be studying. This is 0:11:38.240 --> 0:11:39.920 the dumbest set of tariff yet. 0:11:40.280 --> 0:11:42.320 Wait, he can't individualize them. 0:11:42.480 --> 0:11:48.000 Nope, why not because it's based on a legal foundation. 0:11:48.080 --> 0:11:52.439 The legal foundation is unfair competition from this particular country, 0:11:52.679 --> 0:11:55.440 and that legal foundation comes from the Commerce Department. Having 0:11:55.480 --> 0:11:59.240 done an investigation and having found that every country is 0:11:59.280 --> 0:12:00.120 bad on forced life. 0:12:00.920 --> 0:12:02.800 Couldn't you say, like, oh, as it turns out the 0:12:02.880 --> 0:12:04.959 UK isn't as bad as we thought, but Australia is 0:12:04.960 --> 0:12:07.800 still super terrible, So we can keep Australia's tarif simply 0:12:08.040 --> 0:12:09.319 and und So. 0:12:09.400 --> 0:12:14.079 At some point you might hope that the lawyers. This 0:12:14.120 --> 0:12:15.720 is where I'm glad I don't have a law degree, 0:12:15.720 --> 0:12:22.040 because then i'd be a lawyer, but one might be 0:12:22.160 --> 0:12:26.959 required at this point that you're absolutely right. There must 0:12:27.040 --> 0:12:29.560 be some way that you could pretend your whole way there. 0:12:30.040 --> 0:12:32.800 But as far as I can tell, he doesn't really. 0:12:33.160 --> 0:12:34.760 At some point the courts are going to say this 0:12:34.840 --> 0:12:37.240 is utterly preposterous. You just met with the British Prime 0:12:37.240 --> 0:12:39.280 minister and he slipped you a bottle of whiskey in 0:12:39.320 --> 0:12:41.880 a gold bar. While of a sudden, do you think 0:12:41.920 --> 0:12:45.120 that they're good on forced labor and so? And you 0:12:45.160 --> 0:12:48.920 could even if you weren't confident of my theory there, 0:12:48.960 --> 0:12:50.800 And to be honest, I'm not because I'm not a lawyer. 0:12:50.880 --> 0:12:52.600 You can actually see it in another way, which is 0:12:52.640 --> 0:12:55.680 the President is not making phone calls. He has not 0:12:56.240 --> 0:12:58.160 called the British Prime Minister, of the Korean or the 0:12:58.160 --> 0:13:01.200 Australian Prime minister over and said lets negotiate over this. 0:13:01.679 --> 0:13:05.120 So the White House is already acting as if these 0:13:05.160 --> 0:13:07.480 are tariffs that just are going to exist no matter 0:13:07.480 --> 0:13:10.120 what you know. 0:13:10.320 --> 0:13:13.240 One of the things I find really interesting about the 0:13:13.280 --> 0:13:19.480 fixation on tariffs is to me, it's it's sort of 0:13:19.520 --> 0:13:23.360 a testament to the power of the American consumer, because 0:13:23.480 --> 0:13:28.160 like US consumers, like essentially US buying stuff is not 0:13:28.200 --> 0:13:30.880 only like one of the most powerful forces in the country, 0:13:30.920 --> 0:13:33.480 I mean, it's most of the US economy. It's a 0:13:33.600 --> 0:13:36.440 hugely powerful force in the world. It's like sixteen percent 0:13:36.520 --> 0:13:40.200 of the global economy. And I think he figured this out, 0:13:40.280 --> 0:13:44.480 that this is this powerful weapon that people are so 0:13:45.800 --> 0:13:49.800 like the whole world's economy seemingly has become so dependent 0:13:50.000 --> 0:13:53.480 on the American consumer that to threaten to cut people 0:13:53.480 --> 0:13:56.800 off from that or to compromise that is just it's 0:13:56.840 --> 0:14:00.480 a huge threat. I mean, it's tantamount to like a weapon, 0:14:01.200 --> 0:14:04.040 and it's a weapon everybody's scared of, and you can 0:14:04.080 --> 0:14:08.480 just kind of wield it at will. But it hurts 0:14:08.600 --> 0:14:10.520 us too, I think absolutely. 0:14:12.160 --> 0:14:15.560 When you cut off the access of American consumers to 0:14:15.600 --> 0:14:18.640 foreign markets, that hurts folks in foreign markets and American consumers. 0:14:19.560 --> 0:14:22.040 But what's great, Stacey, we found something we disagree on. 0:14:22.720 --> 0:14:26.280 You have actually, I think very well described the view 0:14:26.320 --> 0:14:29.680 of the administration. We hold the American consumers perse strings, 0:14:29.880 --> 0:14:31.760 we can hold the world to ransom around that. You've 0:14:31.760 --> 0:14:34.320 actually heard that very explicitly from Stephen Miller. In fact, 0:14:34.360 --> 0:14:37.840 he gives numbers. Here's the thing that Miller misses. So 0:14:37.920 --> 0:14:40.320 if you look at consumpt the share of global consumption 0:14:40.360 --> 0:14:42.120 that comes to American consumers, you just gave a number. 0:14:42.120 --> 0:14:46.920 I'm sure it's right. The American economy is definitely a 0:14:47.000 --> 0:14:49.640 large one, but it's also one of the most closed economies. 0:14:49.680 --> 0:14:53.000 Closed means we trade less than other countries do, and 0:14:53.080 --> 0:14:55.600 so our share of global consumption is good, but our 0:14:55.640 --> 0:15:00.000 share of how much are we consumers on the gloves 0:15:00.000 --> 0:15:05.520 global market is substantially smaller. And you know, so I 0:15:05.560 --> 0:15:08.080 think our trade share of GDP is about thirty percent. 0:15:08.160 --> 0:15:10.240 It can be you know, twice that in other countries, 0:15:11.040 --> 0:15:14.080 which means that the weight of American consumers is large, 0:15:14.080 --> 0:15:16.520 but their weight in global markets is half as much. 0:15:16.560 --> 0:15:20.840 Because the truth is, folks from Michigan buy stuff from Idaho. 0:15:20.920 --> 0:15:24.400 They don't need to buy it from Ireland. I'm thinking 0:15:24.440 --> 0:15:28.960 about potatoes. And because we're so big, we're doing a 0:15:29.000 --> 0:15:32.680 lot of trade within US across states rather to cross countries. 0:15:32.760 --> 0:15:34.280 That's one of the reasons you think about US as 0:15:34.280 --> 0:15:37.480 being a somewhat closed economy. 0:15:38.120 --> 0:15:41.480 I mean another thing to consider is not only maybe 0:15:41.560 --> 0:15:44.480 are we not hurting other countries as much as we 0:15:44.640 --> 0:15:47.040 think we are, but I feel like we're hurting ourselves. 0:15:47.040 --> 0:15:50.480 I've talked to a lot of businesses and about this. 0:15:50.560 --> 0:15:52.840 I mean, there's consumer prices. I think that's one place 0:15:52.840 --> 0:15:55.200 where it crops up. But another place where it crops 0:15:55.240 --> 0:15:59.520 up is especially small businesses just oftentimes are not operating 0:15:59.560 --> 0:16:01.440 with the time the profit. And in fact I spoke 0:16:01.480 --> 0:16:04.480 with there's a small business, Burlap and Barrel. They are 0:16:04.520 --> 0:16:07.240 a spice importing business. They're one of two small businesses 0:16:07.280 --> 0:16:10.320 suing the Trump administration. They sued over the first set 0:16:10.360 --> 0:16:14.000 of tariffs, and one a few hundred thousand dollars, and 0:16:14.040 --> 0:16:17.800 now they are suing again. So it's owned, it's co 0:16:17.880 --> 0:16:21.920 owned by Ori Zoharan Ethan Frish. And so here is 0:16:21.960 --> 0:16:26.120 what Ethan said about kind of where the cost of 0:16:26.320 --> 0:16:29.840 the tariff's lands for his company, Burlap and Barrel. They 0:16:30.360 --> 0:16:33.280 they're a spice company, so they import from dozens of countries. 0:16:34.880 --> 0:16:36.480 I think this year already we've paid like what like 0:16:36.520 --> 0:16:38.880 three hundred and fifty thousand dollars in tariffs even more. 0:16:39.960 --> 0:16:43.040 And so this was this was it was really meaningful. 0:16:43.280 --> 0:16:45.880 What we ended up doing is cutting costs wherever we could. 0:16:46.040 --> 0:16:47.360 And so that ended up being in like how do 0:16:47.400 --> 0:16:49.680 we cut costs on packaging, how do we cut costs 0:16:49.680 --> 0:16:52.600 on shipping? What ends up happening, I think a little 0:16:52.640 --> 0:16:55.520 bit ironically or counterintuitively, we realized is that the place 0:16:55.560 --> 0:16:58.360 where we could cut cost was not unsourcing the spices 0:16:58.480 --> 0:16:59.920 because they don't grow in America. 0:17:00.120 --> 0:17:02.840 It was in our cost in America. 0:17:03.760 --> 0:17:06.399 Yeah, so it's like not hiring when they would have 0:17:06.480 --> 0:17:08.640 hired someone and other things like that. So it's hurting 0:17:08.720 --> 0:17:12.040 the US economy and of course hurting their business and 0:17:12.080 --> 0:17:13.240 the profits that they can make. 0:17:13.760 --> 0:17:15.919 It makes a really important point there. And you know, 0:17:16.160 --> 0:17:19.280 I haven't been polite about the Trump tariffs. I'm not 0:17:19.280 --> 0:17:21.240 going to start now. I might have called them dumb. 0:17:22.680 --> 0:17:24.919 Another way in which they're dumb is they're across the 0:17:24.920 --> 0:17:27.879 board on every product. So if you had a rationale 0:17:27.880 --> 0:17:31.520 for tariffs that you wanted to bring manufacturing back to America, 0:17:31.520 --> 0:17:33.640 then maybe what you would want to do is tariffs 0:17:33.640 --> 0:17:36.439 specific the sorts of manufacturing that we're more likely to do. 0:17:37.680 --> 0:17:41.080 The joke I used to tell, I'm going to tell 0:17:41.080 --> 0:17:43.320 it again. So now the joke I do tell is, 0:17:43.480 --> 0:17:45.480 you know, tariffs on bananas are not going to bring 0:17:45.520 --> 0:17:49.000 banana factories back to the United States. And that's his 0:17:49.119 --> 0:17:52.760 point about spices. These are spices that literally aren't grown abroad. 0:17:53.119 --> 0:17:56.760 They literally cannot do what the President wants them to do. 0:17:57.880 --> 0:18:01.240 And so I think this comes to somewhat broadery issue, 0:18:01.359 --> 0:18:03.520 and I want to be thoughtful and careful about this. 0:18:04.240 --> 0:18:08.960 I think the current moment is telling us that the 0:18:09.080 --> 0:18:13.119 administration's policy isn't working. You might be drawn from that 0:18:13.160 --> 0:18:16.960 to conclude tariffs don't work. And even though I am 0:18:17.000 --> 0:18:18.520 not in favor of tariffs, I want to be more 0:18:18.560 --> 0:18:21.119 careful than that, because what we've had is a particularly 0:18:22.280 --> 0:18:25.520 poorly designed set of tariffs. This set you can't negotiate 0:18:25.560 --> 0:18:29.880 country by country. They're across the board, not product by product, 0:18:30.440 --> 0:18:33.120 and then they're particularly chaotic. They're on on Monday, off 0:18:33.119 --> 0:18:36.800 on Tuesday, on on Wednesday, off on Thursday. And the 0:18:36.880 --> 0:18:39.199 chaos then means that no one's going to adjust their 0:18:39.240 --> 0:18:42.280 behavior around a new law that just passed that's going 0:18:42.320 --> 0:18:45.480 to get unpassed. The very next day. All of those 0:18:45.480 --> 0:18:48.520 things are actually end up maximizing the harm that the 0:18:48.560 --> 0:18:53.040 tariffs do and minimizing the benefit. So, look, I can 0:18:53.080 --> 0:18:56.320 believe there's a world in which smart tariffs are smart. 0:18:58.200 --> 0:19:00.760 I'm not sure it's true, but I could believe it exists. 0:19:00.800 --> 0:19:03.200 But there's no world in which dumb tariffs are good 0:19:03.200 --> 0:19:06.280 for us. And so if you're a pro tariff person, 0:19:06.359 --> 0:19:08.399 I think the form of the argument you would want 0:19:08.400 --> 0:19:11.199 to take going forward is the real problem is and 0:19:11.280 --> 0:19:14.159 we have we haven't tried smart tariff share, and I 0:19:14.160 --> 0:19:15.160 think there's something to say that. 0:19:16.600 --> 0:19:16.840 Well. 0:19:16.880 --> 0:19:20.240 Another thing that kind of came up in the very 0:19:20.240 --> 0:19:23.160 beginning of our discussion is just all of the instability 0:19:23.160 --> 0:19:25.560 around it, because if you're a bit trying to operate 0:19:25.680 --> 0:19:28.919 a business, it is really hard. I mean, the tariffs 0:19:28.960 --> 0:19:32.439 are changing all the time. They're legal, they're illegal, then 0:19:32.440 --> 0:19:35.280 there are new ones that are that expire, now there 0:19:35.280 --> 0:19:40.040 are other ones. So one of my very favorite conversations 0:19:40.080 --> 0:19:44.240 about this happened with the seafood company. They import seafood 0:19:44.320 --> 0:19:47.159 from all over the world. I think they import like 0:19:48.800 --> 0:19:51.440 hundreds of thousands of dollars worth of seafood every year. 0:19:51.480 --> 0:19:54.440 But margins are really thin on seafood, and obviously timing 0:19:54.520 --> 0:19:57.760 is really of the essence. So I talked to this guy, 0:19:57.840 --> 0:20:00.639 Nate Torch. She's the co president of Sense, which is 0:20:00.640 --> 0:20:04.640 a sixty year old seafood importer. I think you will 0:20:04.720 --> 0:20:07.400 enjoy what he said about tariffs, although there's a lot 0:20:07.440 --> 0:20:09.840 of like not very funny truth in this. 0:20:11.960 --> 0:20:15.960 We're dealing in eighty million pounds of seafood a year. 0:20:16.640 --> 0:20:17.600 That's a lot of strength. 0:20:18.200 --> 0:20:21.560 And so I'm just a little microcosm of the real 0:20:21.680 --> 0:20:26.520 world global economy and imports into the United States. But 0:20:26.640 --> 0:20:29.960 it is not making stense and I don't know what 0:20:30.040 --> 0:20:32.360 my cost is going to be on containers coming in, 0:20:33.240 --> 0:20:36.520 and it's unreal. It's unfair. The fact of the matter is, 0:20:37.080 --> 0:20:40.960 I can tell you I don't know if I should 0:20:40.960 --> 0:20:43.760 scratch my watch or whine my ass right now. 0:20:46.720 --> 0:20:48.200 You know I'm going to scratch. 0:20:48.480 --> 0:20:51.040 Operate a business and not know what your costed. 0:20:52.240 --> 0:20:55.439 Anyway, which I really I feel like that is stuck 0:20:55.480 --> 0:20:58.040 with me all this time, because you know, for small businesses, 0:20:58.080 --> 0:21:01.000 it's just what do they do? Are the tariff's legal 0:21:01.080 --> 0:21:03.920 or the illegal? I think the instability maybe as damaging 0:21:03.960 --> 0:21:05.200 as the tariffs themselves. 0:21:07.320 --> 0:21:09.840 Yeah, no, what a colorful turn of phrase. Doesn't know 0:21:09.840 --> 0:21:10.960