Speaker 1: Pushkin. Welcome back to Risky Business, a show about making
Speaker 1: better decisions. I'm Maria Kanakova and.
Speaker 2: I'm Nate Silver. Today on the show, we're gonna mostly
Speaker 2: talk about a Sorry.
Speaker 1: No, I'm laughing because you, Nate, you got this. Today
Speaker 1: on the show, we're mostly talking.
Speaker 2: About tariffs and the I think you can call it
Speaker 2: now a crash that we've seen in the market since then,
Speaker 2: although as we're recording this on Tuesday, the eighth markets
Speaker 2: I believe are up there at least up in the
Speaker 2: pre market trading. And we'll also ras Maria about what
Speaker 2: happens when you support Duke in your bracket.
Speaker 1: That's why I had started laughing at our introduction, because
Speaker 1: I yeah, I knew it was coming. I knew it
Speaker 1: was coming. Let's just get it out of the way, Nate.
Speaker 1: Let's let's start with that. I lost. I was gonna say,
Speaker 1: I graciously admit defeat, but no fucking way, I'm not
Speaker 1: gonna be gracious about it. Monty, and I challenge you
Speaker 1: to a rematch for next year.
Speaker 2: Accepted.
Speaker 1: I was completely I mean, it was a route, it
Speaker 1: was a route. I was rooting for Duke. Everyone, everyone
Speaker 1: I rooted for lost but not only that, Nate, you
Speaker 1: chose Florida out of spite and who won?
Speaker 2: What can you say? I actually had money on Houston
Speaker 2: last night, so Florida was just the icy on the cake.
Speaker 2: But like, look, did you watch the game? It was
Speaker 2: spectacularly it was funny, Shoddenfruda. If you're a Duke hater, yeah,
Speaker 2: the golden boy, Cooper Flag will live with this for
Speaker 2: the rest of his life. Yeah.
Speaker 1: The Duke game, I was like, what's going on? I
Speaker 1: had to text Monty. I was like, what has happened
Speaker 1: right now?
Speaker 2: Why?
Speaker 1: Why is this happening?
Speaker 2: I was down at the hard Rock Seminal casino. I
Speaker 2: had just ended the day of a poker tournament and
Speaker 2: got to watch it with a bunch of drunk for
Speaker 2: Lauderdale Arie bros. Who also seem to be reading for Houston.
Speaker 1: Sometimes that's the best way to watch games, right, both
Speaker 1: both Duke and Florida, And like big games, there's an
Speaker 1: energy watching them during poker tournaments. There really is because basically,
Speaker 1: I think over half the room I think it's fair
Speaker 1: to say, usually has money on the game.
Speaker 2: So the is very hot. Yeah, by the way, the
Speaker 2: tournament didn't go great. Other well, I mean it's hard
Speaker 2: to like, it's hard to play poker when you're distracted
Speaker 2: by big things that are happening. And so every moment
Speaker 2: I'm playing. I cashed one K, and then the two
Speaker 2: main tournaments that came for I didn't cash, which is normal,
Speaker 2: but still it's like hard to play poker when you
Speaker 2: feel like the world. Let me be careful about this, right,
Speaker 2: this is not like of the magnitude of like the
Speaker 2: start of the pandemic, for example, But we're gonna spend
Speaker 2: the bulk of time talking about is a huge story.
Speaker 2: It's like gonna be remembered as one of the events
Speaker 2: at least in line with like the nineteen eighty seven
Speaker 2: stock market crash I think. I mean, this is like
Speaker 2: a fundamental change in the United States's relationship with the
Speaker 2: rest of the world. Right, people now think a recession
Speaker 2: is fifty percent or more likely, and that's and that's
Speaker 2: a big deal.
Speaker 1: It's a big deal. It's a huge shift. Congratulations on
Speaker 1: cashing one tournament night.
Speaker 2: You know I did. I will give myself credit for this.
Speaker 2: I literally mean cashed. I was the first player in
Speaker 2: the money. I literally played for thirty seconds after I
Speaker 2: made the money, So that was that was ideal and
Speaker 2: then uh, and then and then but meanwhile the economy
Speaker 2: is falling apart, So let's talk about let's talk about
Speaker 2: terrorist Mariya. This might be a little bit streaming of consciousness,
Speaker 2: but it's a big story obviously of the of the week,
Speaker 2: if not the year.
Speaker 1: Yeah, it's a huge story. I mean as of now.
Speaker 1: So I think we always try to be very careful
Speaker 1: to say one we're taping, but with this story, I
Speaker 1: think you have to be extra careful because there's so
Speaker 1: much volatility, so much movement. So we are taping. I'm
Speaker 1: on the West coast, Nate is on the East coast.
Speaker 1: So for me, it's eight am on Tuesday, And as
Speaker 1: of now, markets are down I think eighteen percent from
Speaker 1: peak in February, right, So that's that's huge. And global
Speaker 1: markets are down right now. We have tariffs across the board,
Speaker 1: including on penguins, and China is threatening retaliatory tariffs and
Speaker 1: we're saying, well, fuck you, China, We're gonna give even
Speaker 1: more teriffs to China. And like it's just evolving into
Speaker 1: this madness. And people who were supporting Trump, like very vocally,
Speaker 1: even some of those voices have come out and said, hey,
Speaker 1: whoa hold on a second, like the Bill Ackmans of
Speaker 1: the world, right, who have been just like go go Trump,
Speaker 1: or all of a sudden like whoa, whoa, whoa, whoa, whoa,
Speaker 1: what's happening to the economy? What are you doing? Maybe
Speaker 1: it's time to take a step back, slow down, take
Speaker 1: a pause. And those voices actually have been so loud
Speaker 1: that there was even a fake fake news yesterday where
Speaker 1: Evan Reuter's ran a headline that market started trading on
Speaker 1: that there was going to be a ninety day pause.
Speaker 2: Well, a guy named whose last name is Bloomberg, like
Speaker 2: Walter Bloomberg, like twet tweets and all like if your
Speaker 2: name was like Johnny Reuter's or I am look this up.
Speaker 2: The surname nyt like I don't know night or how
Speaker 2: you pronounce it is apparently the rare Cambodian surname. Right,
Speaker 2: So if you're the last name knit, right, you can
Speaker 2: be like knit mit tariffs to be rescinded tomorrow and
Speaker 2: then and then cause that major disruption in the stock market. Yeah, look,
Speaker 2: there are parts of the center are funny. I always
Speaker 2: believe in kind of keeping your wits about you, and
Speaker 2: I mean, let me contextualize first, like these market swings,
Speaker 2: so as tapping this, the SAB five hundred is up
Speaker 2: two and a half percent today, so that reduces the
Speaker 2: game from peak in early February or the loss to
Speaker 2: about twenty percent from twenty three or whatever it was.
Speaker 2: It's at least twenty three percent is the average tariff
Speaker 2: right now that we're imposing on the rest of the world.
Speaker 2: But still a really bad swing, especially considering that, like
Speaker 2: investors assume that Trump would be good for the market,
Speaker 2: and they assume that he probably would implement some terriffs,
Speaker 2: certainly on China, probably some ten percent dish tariffs across
Speaker 2: the board, with lots of cronyism and loopholes. Right, but
Speaker 2: this is like on top you know, markets have assumed
Speaker 2: for a long time that Republicans are good for Actually
Speaker 2: it's a little more complicate than that. Right in twenty sixteen,
Speaker 2: the market thought overnight that Trump winting would be bad
Speaker 2: for stocks, the reverse course, literally overnight. So like the
Speaker 2: market after Trump one in twenty sixteen went from being
Speaker 2: way down to way up in fact the next day.
Speaker 2: But now Wall Street has completely lost confidence in Trump.
Speaker 2: And as you mentioned, I mean Elon, who literally a
Speaker 2: few days ago was pictured in a hat saying Trump
Speaker 2: is right about everything, is now kind of publicly subtweeting Trump,
Speaker 2: critiquing Trump advisors like Peter Navarro and reportedly corn To the
Speaker 2: Washington Post is also working behind the scenes to try
Speaker 2: to get Trump to reverses hera So credit credit to Elon, Right,
Speaker 2: it changes a lot for him to see that shit's
Speaker 2: going wrong. But like, but you know, if he's reversing
Speaker 2: course and Bill Lackman is reversing course and like very
Speaker 2: little elite support and the few like Silicon Valley VC
Speaker 2: types who are defending Trump looked fucking ridiculous, right, You know,
Speaker 2: I could name names if I wanted to, but you
Speaker 2: guys are fucking idiots. That's the only only way to
Speaker 2: put it. Anyway. How do you feel, Maria, Well, I
Speaker 2: mean you check your investments you have yeah.
Speaker 1: No, no, no, no, I mean that this is one
Speaker 1: of those moments where you know, usually the the right
Speaker 1: answers don't actively trade. Right, you're not you are not
Speaker 1: a day trader, and that's I think true for for
Speaker 1: most people. Right, if you're not a professional, just let
Speaker 1: it ride right. Look for the long term, this is
Speaker 1: really I hate using the word unprecedented, right, because you know,
Speaker 1: we've had major economic downturn moments like this, but I
Speaker 1: think it is unprecedented, at least a lot of the
Speaker 1: experts are saying it is in the sense that it's
Speaker 1: completely self cost. Right. There's no external thing that is
Speaker 1: actually precipitating this market crash, which is what has happened
Speaker 1: every other time, you know, during COVID nineteen eighty seven,
Speaker 1: like all of these times, the seventies oil shocks, right,
Speaker 1: all of these shocks were kind of huge global events
Speaker 1: that ended up doing tremendous damage to the stock market
Speaker 1: in the short term. This is something that doesn't didn't
Speaker 1: need to happen, right, Like, this is something that is
Speaker 1: entirely self cost. It's just Trump making this decision. And apparently,
Speaker 1: according to some of his advisors who are speaking anonymously,
Speaker 1: he is in his I don't give a fuck stage
Speaker 1: where he's not listening to advisors. He's golfing, and he's saying,
Speaker 1: you know what, this is what I want to do,
Speaker 1: and this is what I'm going to do, and I
Speaker 1: don't care if all of my closest advisors are telling me,
Speaker 1: I'm taking the economy, which is a huge, huge shift
Speaker 1: right from Trump Part one, right where he really cared
Speaker 1: about the market and was really sensitive to what the
Speaker 1: market was saying. And it's also a shift from what
Speaker 1: we saw in the early days of his presidency in
Speaker 1: Trump Part two, where you know, he was actually threatening
Speaker 1: tariffs and then going back and we even had you know,
Speaker 1: a Risky Business episode where we were talking about kind
Speaker 1: of what kind of game theory is this right where
Speaker 1: you where you where you threaten something and then people
Speaker 1: give fake concessions that aren't really concessions and you're like, Okay,
Speaker 1: just kidding, Like I've asserted my dominance. Let's continue on.
Speaker 1: And now he's like, you know what, No, Like, I'm
Speaker 1: going to do this for real. I'm going to do
Speaker 1: this big. I don't care about the math. Obviously, we
Speaker 1: know Trump never likes to say he's wrong, so he's
Speaker 1: not going to say he's wrong this time around. They're
Speaker 1: people He's like, oh, they just need to acknowledge the mistake. No,
Speaker 1: he's never going to do that. But it seems like
Speaker 1: there's been some sort of fundamental shift in the way
Speaker 1: he's thinking about the strategically where he's just like, fine,
Speaker 1: I'll tank the economy, no paid, no gain, but we
Speaker 1: don't even know what the gain is. No.
Speaker 2: Look, I'm reading this book on Joe Biden called Fight
Speaker 2: by Jonathan Allen and Amy Parns. It's a new book
Speaker 2: that's out. That's very a very good book about how
Speaker 2: people all around Joe Biden saw how Biden was losing
Speaker 2: his fastball and his curveball and his breaking pitch and
Speaker 2: his change up and everything else, right, and he was
Speaker 2: really not performing very well at all. But Democrats got
Speaker 2: stuck in a position where he was you know, he
Speaker 2: was going to be the nominee anyway. But the point
Speaker 2: is that, like when you get old and Trump is
Speaker 2: the same age, now somebody as Biden was at the
Speaker 2: start of his first term, you get even more stubborn.
Speaker 2: You know, Can I be honest, Maria, you can. I
Speaker 2: kind of miss Jared Kushner. I kind of miss.
Speaker 1: That's not where I thought that sentence was gonna go.
Speaker 2: I kind of miss having these more or less normal
Speaker 2: Republicans right who who were close to Trump and trying
Speaker 2: to steer them the digression and hey, you want to
Speaker 2: win reelection, Hey you don't want to like undermine because
Speaker 2: I think now, like all the other stuff that Trump
Speaker 2: is trying to do, the cultural backlash and whatever else
Speaker 2: right where. You know, I might agree with parts of
Speaker 2: it and disgree with other parts of it, but like,
Speaker 2: that's all gonna be jeopardized if people are like, you
Speaker 2: won an election on inflation, and now you're tanking the economy,
Speaker 2: particularly through by the way, people have this weird abstract
Speaker 2: discussion online about like, okay, well, who has investments in
Speaker 2: the stock market. Actually, by the way, about sixty percent
Speaker 2: of people do have investments in the stock market, so
Speaker 2: it's a pretty common thing. But also, like, you're gonna
Speaker 2: about to make a bunch of shit much more expensive.
Speaker 2: Children's toys are gonna become much more expensive because they're
Speaker 2: made in countries like Vietnam in Southeast Asia that are
Speaker 2: heavily taraffed. Right, you want to furnitu your home. A
Speaker 2: lot of furniture is made abroad. You want to you know,
Speaker 2: buy some yard, I mean all this stuff. You want
Speaker 2: to buy avocados for your fucking burrito, right, Like all
Speaker 2: this stuff comes from like foreign countries. I think actually
Speaker 2: Canada and next come, now, have some of the more
Speaker 2: exemptions in other countries. But like, it's gonna make stuff
Speaker 2: notably more expensive to have people love the idea of
Speaker 2: you love to have your nice American manufactured nikes, right, Well,
Speaker 2: they're gonna cost a hundred bucks instead of one hundred bucks, right,
Speaker 2: I can afford that, you know, I have a partner
Speaker 2: who is a fan of nice shoes. Right. But, like,
Speaker 2: this is gonna hit consumers hard. And although Silicon Valley
Speaker 2: stocks are down more than the consensus, so are a
Speaker 2: lot of consumer staples. It looks very recessionary. Booze and
Speaker 2: tobacco stocks are up though, which is also a sign
Speaker 2: of like despair. McDonald's is up, Taco bill.
Speaker 1: Up right now, When you when you see that those
Speaker 1: are the stocks that are up, you start being nervous.
Speaker 1: And then when you see things like the price of
Speaker 1: copper is down, right, Like that is a very good
Speaker 1: marker of recession as well, because it means that demand
Speaker 1: has is going is going to go down. You know,
Speaker 1: we've also seen in the last week with the kind
Speaker 1: of the FED conference and the FED announcements that like,
Speaker 1: you know, the FED isn't a really tough spot as well, right,
Speaker 1: because like what what do you do right when when
Speaker 1: inflation is going to go up? And you know you
Speaker 1: but you, but you've got this person in the White
Speaker 1: House who's making these decisions about tariffs, where like what
Speaker 1: do you do? It's like a rock and a hard place, right,
Speaker 1: Like keep rates the same, lower them, raise them, Like
Speaker 1: there's there's no good answer here, and the FED is
Speaker 1: supposed to kind of come in and try to stabilize
Speaker 1: things and try to calm the worries. And there's you know,
Speaker 1: if when we're talking about the game theory, when we're
Speaker 1: talking about like the long run and what is the
Speaker 1: strategic thinking here? I don't know, right, Like this is
Speaker 1: one of those where like there's no good choice, right,
Speaker 1: like which box are we trying to get to while
Speaker 1: the tariffs are at this height? Like I don't think
Speaker 1: we're just in a part of a game tree that
Speaker 1: like I don't know how to resolve it. Well, maybe
Speaker 1: there's some brilliant economists out there who does. But all
Speaker 1: the brilliant economists I've been reading have no idea how
Speaker 1: to get out of this mess. If Trump does not
Speaker 1: back down.
Speaker 2: We'll be right back after this message. Yeah, Maria, I
Speaker 2: think that we're in a real pickle, right, you know,
Speaker 2: in part because like i mean, Trump claims this is
Speaker 2: for negotiating leverage. And by the way, Zimbabwe did rescind
Speaker 2: it's tariffs. It's relatively minor terriffs in the United States,
Speaker 2: if we're starting at the back of the eye off
Speaker 2: a bit and moving upward. But like, but there are
Speaker 2: a few things here, what is that, Like this tariff
Speaker 2: policy may literally have been implemented by an intern using
Speaker 2: chat GPT. If you ask chat GPT or other large
Speaker 2: language models, hey, come up with a quick formula to
Speaker 2: determine tariff rates. Right, It'll sometimes just say, oh, let's
Speaker 2: just look at the trade deficit. This is actually very stupid,
Speaker 2: Like we have a big trade deficit with Vietnam because
Speaker 2: they're a kind of lower middle class economy relative to
Speaker 2: the rest of the world, where fairly productive about producing
Speaker 2: toys and electronic equipment and you know, and certain types
Speaker 2: of food stuffs, and there are things which we then import.
Speaker 2: But the GDP per capita is I'm just gussing, like
Speaker 2: four thousand bucks a year or something, and so like
Speaker 2: not a big market for American made consumer goods. They're
Speaker 2: also near China, Thailand, Japan, Korea, et cetera, where cheaper
Speaker 2: to import, right and so like, so like you know,
Speaker 2: that's a win win the unless you're concerned about unfairly
Speaker 2: ebor practices, which is usually not the price of the right. Right,
Speaker 2: that's a win win that they make stuff, We pay
Speaker 2: for this stuff, We give them jobs. They do not
Speaker 2: buy that much of our stuff. But that's okay, right,
Speaker 2: I mean Trump literally doesn't realize that, like a trade
Speaker 2: def it's not inherently a bad thing. So it's the
Speaker 2: clumsiness of that rather than like if you had said
Speaker 2: we're gonna have fifteen percent tariffs across the board, right,
Speaker 2: the market would have reacted to that, but not so
Speaker 2: negatively as these haphazard things. And by the way, the
Speaker 2: fact that like this terraffs are these are going to
Speaker 2: cause us so much pain, give us less leverage beyond
Speaker 2: a certain point, right, because that it kind of becomes
Speaker 2: a game of chicken where we have to like prove
Speaker 2: that we have removed the steering wheel and now can't unflinched.
Speaker 2: By the way, notwithstanding that they're contradictory rationales. So or
Speaker 2: you'll see the Peter Navarro fucking idiot types I'm sorry,
Speaker 2: Peter Navarro. You know, you'll see idiots like Peter Navarro
Speaker 2: who are like, we actually need this for America's long
Speaker 2: term growth or whatever else, and others say no, just
Speaker 2: a negotiating ploy right, which are different. One is kind
Speaker 2: of considering these are bad, but we want to actually
Speaker 2: lower tariffs, and ones say no, tariffs are gonna be
Speaker 2: want reshoring of American enterprise will through some kocamane scheme,
Speaker 2: we will reduce deficits, even though if we go into
Speaker 2: recessions that entails more spending and worsening the fiscal picture
Speaker 2: long term. But it's contradictory and other countries to be like,
Speaker 2: you know what, fuck you Donald Trump, right, we think
Speaker 2: that eventually you'll be forced to blink by the market,
Speaker 2: or eventually by Congress, which does is supposed to have
Speaker 2: in the constitution authority for tariff policy specifically and for
Speaker 2: funding the government generally. Now Congress also being idiots like
Speaker 2: not quite in the same way that per Navarro is,
Speaker 2: but like has delegated more and more authority to the executive.
Speaker 2: It's occurred under both democratic and Republican administrations. Right, And
Speaker 2: so there are lawsuits to stop Trump's tariffs. I'm not
Speaker 2: a legal scholar. I don't know whether most of it
Speaker 2: is legal and some of it violence principles. But Congress
Speaker 2: does have the power to pass a lot saying stop this.
Speaker 2: They will ultimately need two thirds majorities because Trump has
Speaker 2: threatened and I think I believe would detail these threats.
Speaker 2: They also need, by the way, to get on the
Speaker 2: floor in the House, because the floor of the House
Speaker 2: is more partisan. Right, the House Speaker Mike Johnson doesn't
Speaker 2: want to put to me on the floor. You have
Speaker 2: to do what file. It's called a discharge petition where
Speaker 2: it takes thirty days. You get to get a bunch
Speaker 2: of signatures, and then you're required to do that, right,
Speaker 2: And that usually happens when the opposition party Democrats almost
Speaker 2: have a majority in the House, but not quite, and
Speaker 2: then a small number of sanaders or representers rather in
Speaker 2: the governing party sign on. Then you're forced to like
Speaker 2: actually take a measure to the floor. Right, and so
Speaker 2: that would be at best like three days away. But yeah,
Speaker 2: the economy goes into a recession, then I don't know, right.
Speaker 2: People would say it's a high risk, high reward, bet,
Speaker 2: I'm not sure what the reward is.
Speaker 1: Yeah, that's that's kind of the other part of it,
Speaker 1: like what is the reward? But I was gonna I
Speaker 1: was going to ask what you think that because to
Speaker 1: me it seems like a pipe dream, this whole congressional
Speaker 1: action thing, Like, yes, technically Congress can do something, but
Speaker 1: do you have any kind of thoughts on how likely
Speaker 1: that actually is, because to me, it seems like there's
Speaker 1: just no way they're going to get sixty seven right
Speaker 1: in the Senate. There's no way that the House is
Speaker 1: going to work. Like. It seems to me like I
Speaker 1: don't know what has to happen for Congress to actually
Speaker 1: like get its shit together and be like, no, this
Speaker 1: is not going to stand.
Speaker 2: I think the Senate is not. So You've already had
Speaker 2: some Republicans sign on to different resolutions in the Senate
Speaker 2: disapproving of Trump's tariffs, either generally or on canademics so specifically, right, Like,
Speaker 2: I don't think sixty in the Senate, which would at
Speaker 2: least pass a filibuster, is so hard. I'm not even
Speaker 2: sure sixty seven is that hard. Right, It's the House.
Speaker 2: It's the House where you know the first one third
Speaker 2: of districts are really read because of jerrymandering and population
Speaker 2: self sorting. Right, the House leader has not been on
Speaker 2: board with this, although you know, you did have some
Speaker 2: races last week, two special elections where Democrats outperformed Trump
Speaker 2: numbers by about like seventeen points, right, the loss. But
Speaker 2: these are districts that are extremely red in rural parts
Speaker 2: of Florida. And so if that's true, then like, you know, look,
Speaker 2: you'd be talking about like an epic route. I don't
Speaker 2: want to put numbers on it and then get quoted
Speaker 2: or misquoted later on. But like if you're like a
Speaker 2: business deciding whether you know your restoration hardware, which I
Speaker 2: mentioned because it's a bougie stock, but also the company
Speaker 2: was hit hardest the first day after the tarif announcement, right,
Speaker 2: their supply change is very big.
Speaker 1: During the call, during.
Speaker 2: The call, he also, you know, it's also like I said,
Speaker 2: it's kind of bougie. You know, I don't really you
Speaker 2: don't really need anything for restoration harder. Let's be honest, right,
Speaker 2: it's not a store for necessities.
Speaker 1: I have a couch from there.
Speaker 2: You do good? I did. We can afford some rah furniture.
Speaker 2: But like, if you're in a recession, those extensive couches,
Speaker 2: you know, are as important as your Marlboro Reds and
Speaker 2: bud Lights and McDonald's. And I'm somewhat joking, but like
Speaker 2: you do see downshifting in consumer preferences from the upper
Speaker 2: middle brow to the upper lower brown kind of everything
Speaker 2: everything in between, and the luxury in for that matter too. Right,
Speaker 2: So sorry, I lost between of foot what we're talking about.
Speaker 1: We were talking about that. We were talking about the
Speaker 1: house and how likely it is that we can actually
Speaker 1: get something down there. You were saying that one third
Speaker 1: of the districts are incredibly conservative.
Speaker 2: If you're talking if your company planning for Okay, let's
Speaker 2: let's reshore our supply chain restoration hardware. Let's find a
Speaker 2: bunch of artisanal furniture makers in Knoxville, Tennessee, and Williamsburg,
Speaker 2: Brooklyn in place like that, and long term will get
Speaker 2: some costs down and it'll be good.
Speaker 1: Right.
Speaker 2: The problem is that like these terraffs could be rescinded
Speaker 2: at any time, If not now, then in twenty twenty
Speaker 2: six after the midterms. If not then then in twenty
Speaker 2: twenty eight, when at this point I think I'd consider
Speaker 2: Democrats a little bit over fifty percent to retake the
Speaker 2: White House, right, So like, it's not like the sort
Speaker 2: of long term stability that you would want. And in fact,
Speaker 2: the public is against this policy and it might lead
Speaker 2: to fewer tariffs in the very long run, but an
Speaker 2: abdication of reliable American leadership and responsibility. So it's just
Speaker 2: it's just kind of a mess.
Speaker 1: It is a mess. We were also talking about kind
Speaker 1: of what the long term is. Now. There's one theory
Speaker 1: that I've seen that seems at least worthy of consideration.
Speaker 1: I don't want to say, you know, plausible, but worthy
Speaker 1: of discussion, and that's that the long term here is
Speaker 1: just like an autocratic poaragram, right, that the idea is
Speaker 1: like we tank everything and then we give concessions to
Speaker 1: the people who are nice.
Speaker 2: To think you've been nice. I don't buy this at all.
Speaker 2: So I was wondering.
Speaker 1: That's why I said, I'm not going to say plausible. Yeah,
Speaker 1: that's why I phrased it the way I did.
Speaker 2: I buy that Trump has strong autocratic tendencies. I buy
Speaker 2: that some of the stuff he's doing on immigration and
Speaker 2: free speeches, you know, autocratic. Right, And there was January sixth,
Speaker 2: of course, right, I don't think this is a strategy
Speaker 2: that you'd implement if you wanted to gain I mean,
Speaker 2: I think this jeopardized the whole Trump agenda, right, and
Speaker 2: this is at least going to have, like Congress habits
Speaker 2: back up and the markets have its back up. And
Speaker 2: you know, I've rarely seen everyone from maybe there are
Speaker 2: a few people on the left that have eccentric views
Speaker 2: about terrorists. They can go discuss some one blue sky.
Speaker 2: That's fine with me, right, But like, you know, I
Speaker 2: haven't seen the kind of what I call the Obama
Speaker 2: base right, which is like everyone from the center right
Speaker 2: who is pissed off at Bush to the left as
Speaker 2: united against something as they are against Trump right now, right,
Speaker 2: And like those are elites, those aren't rank and file voters.
Speaker 2: Yet We've seen some decline in Trump's popularity ratings, but
Speaker 2: like it will take some time for that to cycle through,
Speaker 2: and maybe they can be averted if we somehow avoid
Speaker 2: an economic downturn. But like this weakens Trump's powers a lot. Right,
Speaker 2: people are willing to go along with a lot when
Speaker 2: you're providing for them, right, and your checks are cashing
Speaker 2: and goods are cheap and things like that, Right, even
Speaker 2: in autocracies, economic crises can topple dictators, right. I think
Speaker 2: the people who are worried about democratic backsliding are correct
Speaker 2: to be worried about it. About I think the theory
Speaker 2: is kind of the opposite of what this is likely
Speaker 2: to do.
Speaker 1: Yeah. No, I think that that is people trying to
Speaker 1: impart a goal and kind of an intentionality here where
Speaker 1: there's none right, where it's just like a kid being like,
Speaker 1: I want to do this. I want to be I
Speaker 1: want to be the bully, and I'm going to do
Speaker 1: this and you can't stop me. You try to stop
Speaker 1: me right now. So I tend to agree with you
Speaker 1: that that it seems a little bit too far fast,
Speaker 1: that this is one of those levers and we'll be
Speaker 1: back right after this. I'd love to shift the lens
Speaker 1: a little bit, so so Trump. I think we've talked
Speaker 1: about the fact that this it's very difficult to know
Speaker 1: what the long term game theory of this is and
Speaker 1: probably none right that he's just taking the economy doing
Speaker 1: this and kind of inflicting a lot of damage. But
Speaker 1: what about kind of the the other end of it,
Speaker 1: Us as consumers or people who actually have power talked
Speaker 1: about what Congress can do. But in this case, like obviously,
Speaker 1: you never, you know, to take a poker analogy, you
Speaker 1: never want to make decisions when you're tilted right, when
Speaker 1: you're kind of when you're really upset, when you're suffering
Speaker 1: big losses. You know, if you're looking at your portfolio
Speaker 1: going down downtown, you know, these are things that are like,
Speaker 1: you know, you've lost a big poker hand, your your
Speaker 1: chips are dwindling, and that's not usually the time to
Speaker 1: make big swings and to try to think logically. But
Speaker 1: in this particular case, like this is one of those
Speaker 1: things where not panicking and just kind of also sitting
Speaker 1: back down and just letting it all play out might
Speaker 1: not be the right strategy either, right, they kind of
Speaker 1: don't just don't just do something. Stand there types of things.
Speaker 1: But how do we you know, how do we kind
Speaker 1: of square that circle? And how do we react without
Speaker 1: tilting right, without overreacting? How do we try to navigate
Speaker 1: this environment where there's just extreme uncertainty? And as I
Speaker 1: think you're making a really good point when you said,
Speaker 1: like we don't know, right if we knew for with
Speaker 1: one hundred percent certainty, these tariffs are going to stay
Speaker 1: for the next two years at least. Okay, then you
Speaker 1: can make decisions in that context. But we don't know
Speaker 1: right Like as of now, we know that Trump says
Speaker 1: he's not backing down, but we don't actually know what's
Speaker 1: going to happen. We don't know what the reactions are
Speaker 1: going to be. We see certain signs, we see Europe
Speaker 1: banding together, you know, we see the rest of the
Speaker 1: world actually trying to figure out what do we do now?
Speaker 1: But how do you think about it? Right? How do
Speaker 1: you think about it when you're trying to make your
Speaker 1: own decisions and try to be a good player as
Speaker 1: opposed to a tilted player.
Speaker 2: Practice your Canadian accents that when you travel to Vancouver
Speaker 2: or whatever. Oh sorry, they don't think you're an American.
Speaker 2: I guess it's part of it.
Speaker 1: I can start my a's at the end of sentences.
Speaker 2: No, I think you know. Look, if you're a business
Speaker 2: that relies on a heavily domestic supply chain, I guess
Speaker 2: you're somewhat okay. You know, Goodyear Tire because they're very domestic,
Speaker 2: has seen their stock price too well, but also because
Speaker 2: people replace their tires a Good Year when they're not
Speaker 2: replacing their cars, right and so like, even like the
Speaker 2: bullish cases are barish and like, you know, it's very
Speaker 2: very broad based. Yeah, I don't know if they are
Speaker 2: good protections. I mean, you know, look, sometimes in a
Speaker 2: recession things become cheaper at least I mean, it might
Speaker 2: not be a terrible time in X months to look
Speaker 2: at housing if you don't own well, because housing is
Speaker 2: something where people are it's cyclical and like people are
Speaker 2: you know, really reluctant to make like big ticket purchases
Speaker 2: and like a downturn and you know, should not be
Speaker 2: substantially affected by foreign goods, right. I mean, I'm sure
Speaker 2: you're importing some building materials from abroad, but like you know,
Speaker 2: most lumber we're cutting down right here in the United States, Maria,
Speaker 2: so like, But apart from that, I mean, I think
Speaker 2: you're like a little bit defenseless, apart from like having
Speaker 2: to reason with yourself about like, oh am I a
Speaker 2: person who is annoyed because this cuts into my retirement savings.
Speaker 2: But I basically can live my life as I want to.
Speaker 2: Or if you're someone where like it kind of has
Speaker 2: causes a threat at short term time horizon is right,
Speaker 2: if you're a small business owner that relies on imported
Speaker 2: goods of different kinds, and or middle class customers who
Speaker 2: are seeing their pocket books pinched. Then like, it's not
Speaker 2: it's not great right now, right, I mean, probably should
Speaker 2: shift you to having more of a long term focus,
Speaker 2: I guess. But the long term provides a lot of
Speaker 2: uncertainty too.
Speaker 1: Yeah, well, even some you know, I was actually looking
Speaker 1: at some supply chains because I was very curious about this,
Speaker 1: and see, even some domestic seeming products actually have components
Speaker 1: that that you wouldn't think about that are imported. Like
Speaker 1: some domestic water have plastic manufacturers for their water bottles
Speaker 1: that are not in the United States. So even things
Speaker 1: that are you know, good old American water, like good
Speaker 1: old American this, the supply chains are incredibly complicated. And
Speaker 1: you know, the people saying that, oh, well, bring manufacturing
Speaker 1: to the US, I don't think they realize what that
Speaker 1: actually means, right, Like, there's a reason that that manufacturing
Speaker 1: has shifted. I don't think people want a factory in
Speaker 1: their backyard. I don't think people want to be working
Speaker 1: a lot of those factory jobs. I mean, I don't
Speaker 1: think that those supply chains, and even if all those
Speaker 1: things are like, yes, absolutely, let's change the supply chains.
Speaker 1: How long does that take? Right, like in the immediate term?
Speaker 1: Like that that is not that is not something that
Speaker 1: we can do right away. So as individuals, like we're
Speaker 1: relatively powerless, not powerless, but we just there is no
Speaker 1: good advice in the sense that we don't know what's
Speaker 1: going to happen. Do you think that there are people
Speaker 1: who can do something right? Like, who are the people
Speaker 1: who might be able to influence something other than Elon Musk?
Speaker 1: Maybe unless kind of this result in Elon Musk being
Speaker 1: thrust out of the inner circle because he's subtweeting Trump
Speaker 1: and talking about how he thinks that we should have
Speaker 1: free trade. So who are people who might actually make
Speaker 1: a difference where they're decision making right now actually matters.
Speaker 2: The one hundred members of the United States Senate and
Speaker 2: the fourhund and threety five members of the United States House.
Speaker 2: I mean, or but I always am a little bit
Speaker 2: reluctant to like have calls to activism. But you know, look,
Speaker 2: if you're a person, whatever your political orientation, sitting in
Speaker 2: a Senate or House seat where there's a relatively safe
Speaker 2: Republican member or for the matter, there's a Democrat who's
Speaker 2: being a little you know, oh terrorist, maybe it's good.
Speaker 2: I don't know, I don't know. You know, call your
Speaker 2: fucking congress person, right and say, like, especially if you're
Speaker 2: somebody who's donated, or if you're somebody who runs a
Speaker 2: small business in that district, say this is gonna fuck
Speaker 2: me up. Where this is not going to help the
Speaker 2: working class, right, this is not going to help the
Speaker 2: middle income consumer. Yeah, I mean, let you know, let
Speaker 2: Congress know. To be honest, I think they probably do
Speaker 2: know that, frankly, but like because they are aware of
Speaker 2: what's going on in their district and this is not
Speaker 2: some abstract cultural warfight. But Congress is responsive to to
Speaker 2: don't call somebody not in your district, right, Yeah, pick
Speaker 2: up the phone with the person who's who represents you
Speaker 2: and let them know how you feel.
Speaker 1: Yeah. No, I think this is this is definitely a
Speaker 1: moment for a call to action. There have been others,
Speaker 1: but this is one where it could actually be effective.
Speaker 2: Right.
Speaker 1: It's it's not particularly effective to you know, call your
Speaker 1: Republican Senate or a representative, like if you're a Democrat
Speaker 1: and it's a democratic talking point, but something like this,
Speaker 1: like I actually think that this could really be effective
Speaker 1: because you know, they they worry, they need to be
Speaker 1: they need to be supported within their districts as well.
Speaker 1: And this is one moment where I think that across
Speaker 1: the board, we're seeing people, you know, people really not happy,
Speaker 1: and this is I think this is also actually an
Speaker 1: interesting opportunity to try to reach kind of the everyman
Speaker 1: and say, look, you know, Trump isn't working for you,
Speaker 1: because this is something where I think you can actually
Speaker 1: reach a lot of people across the divide and say, hey, look, no,
Speaker 1: this is not this is not good for your average American.
Speaker 1: This is not good for like bottom line of Joe
Speaker 1: from from where from Where's Joe from Pennsylvania? Okay, Joe
Speaker 1: from Pennsylvania. That this is not good for his for
Speaker 1: his pocket for his bottom line, for his retirement, for
Speaker 1: his ability to buy food, that that this is just
Speaker 1: not good all around. And so that might be one
Speaker 1: silver lining if people actually do finally mobilize and get
Speaker 1: Congress to get off their ass and do something and
Speaker 1: stand up to Trump and say, look, these tariffs are
Speaker 1: not good for the country and not good for the
Speaker 1: global economy. And if we want America first. You know,
Speaker 1: you don't want you don't want to have to have
Speaker 1: America alone and everyone else against us.
Speaker 2: Marie, I think we need to wrap this up because
Speaker 2: I literally have a train to catch on going to Philadelphia.
Speaker 1: Are you going to Philadelphia for poker night?
Speaker 2: Not for poker, no poker, for an event at of Pennsylvania.
Speaker 1: Okay, we'll have a wonderful event, and if you want
Speaker 1: to join me in Philadelphia in two weeks, I'll be
Speaker 1: going there for poker. For the poker so.
Speaker 2: See if the partner gives poker permission. We'll see about that.
Speaker 2: The series is coming up, which I intend to spend
Speaker 2: a fair bit of time at, so we'll see maybe.
Speaker 1: All right, well, well that sounds good. Have a very
Speaker 1: safe trip to Philadelphia, and I hope that we'll have
Speaker 1: better news for our listeners next week when it comes
Speaker 1: to the markets. But at this point hope doesn't get
Speaker 1: us very far. Let us know what you think of
Speaker 1: the show. Reach out to us at Risky Business at
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Speaker 1: Risky Business is hosted by me Maria Kanakova.
Speaker 2: And by me Nate Silver. The show is a co
Speaker 2: production of Pushkin Industries and Heart and Media. This episode
Speaker 2: was produced by Isabel Carter. Our associate producer is Gabriel
Speaker 2: Hunter Chang. Sally Helm is our editor, and our executive
Speaker 2: producer is Jacob Goldstein. Mixing by Sarah Bruger.
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