Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Acule. He's down by a third of one percent.
Speaker 3: It was a bit higher, up by four basis points
Speaker 3: the ten year four twelve forty three under Savannahs this morning,
Speaker 3: donald Trump's favorite word.
Speaker 4: And these companies don't make their cars and products here,
Speaker 4: then they will pay a tariff for very stiff tariff
Speaker 4: when they send their products into the United States. We're
Speaker 4: going to call this policy build it in America plan.
Speaker 4: We brought the rate down and you saw this from
Speaker 4: close to forty percent to twenty one percent. Now we're
Speaker 4: going to get it down to fifteen percent, but only
Speaker 4: if they build it in America.
Speaker 3: So here's the latest global markets pricing for Donald Trump's
Speaker 3: plans to overhaul the US economy through steep tariffs and
Speaker 3: big tax cuts, including cut in the corporate tax rate
Speaker 3: of fifteen percent. At a post of the Pedis Institute
Speaker 3: issuing a word of caution rting, the Trump approach weaponizes uncertainty,
Speaker 3: but uncertainty is a difficult weapon to control, and it
Speaker 3: will backfire on whoever wields it too widely. Adam joins
Speaker 3: us now for more and welcome back to the program
Speaker 3: Sir always important to spend some time with you and
Speaker 3: think through some of these issues.
Speaker 2: Let's just talk about that quote a little bit more.
Speaker 3: What do you mean when you say it's a difficult
Speaker 3: weapon to control and will bank fire on whoever wields
Speaker 3: it too widely?
Speaker 1: Thank you, John for having me back on surveillance. I
Speaker 1: think the issue is that you do two things that
Speaker 1: don't necessarily work in economics when you threaten a lot,
Speaker 1: but it also is harmful to you. The first is
Speaker 1: you create uncertainty, not just in the minds of that
Speaker 1: corporate CEO or that particular government you're negotiating with. You
Speaker 1: create uncertainty ripple effects throughout a whole bunch of other governments,
Speaker 1: a whole bunch of other companies, and they start to
Speaker 1: self ensure they don't just get scared to do what
Speaker 1: you want of the same they don't necessarily do what
Speaker 1: you want them to do. The second problem with this
Speaker 1: uncertainty weaponization that Trump is big on, or at least
Speaker 1: it's one way of rationalizing Trump's policies, is that you
Speaker 1: actually have to implement it to be credible. You can't
Speaker 1: just threaten it. So a lot of people talking in
Speaker 1: the markets a lot of pundits, a lot of people
Speaker 1: even affiliate with the campaign and say, well, this is
Speaker 1: all just about negotiating posession. Trump will threaten these terrors,
Speaker 1: Trim will threatn these taxes, and that will induce the
Speaker 1: reassuring to the US. But you can't do that unless
Speaker 1: it's credible you're actually going to do it. And the
Speaker 1: only way to do that is to actually implement the policy,
Speaker 1: so you get the harm up front and you don't
Speaker 1: necessarily get the benefit. One of the ironies JOm, for
Speaker 1: people you and I have others on this program talk
Speaker 1: to and talk about, is that the more the market's
Speaker 1: bet that Trump A will win but B will not
Speaker 1: actually do these crazy things, the more it is incumbent
Speaker 1: on him to have to do them.
Speaker 5: But Adam, when you hear from some Trump economic advisors,
Speaker 5: what they say is that it will be used as
Speaker 5: a carrot and stick approach, meaning maybe two and a
Speaker 5: half percent of the sixty percent they want to do
Speaker 5: on China, but two and a half percent every month
Speaker 5: until they get Hijinping to the table. Because what they
Speaker 5: say is that there needs to be fair trade between
Speaker 5: China and the United States, and they do not view
Speaker 5: trade right now between China and the United States is fair?
Speaker 5: Do you view trade right now what China is doing
Speaker 5: as fair?
Speaker 1: No? But I also don't view it as something you
Speaker 1: whine about. I mean, this is the thing that both
Speaker 1: the Biden team and the Trump team have done. Is
Speaker 1: they if they had been Georgia playing against Texas, you know,
Speaker 1: the top two in the football, the college football, they
Speaker 1: would have spent their whole time whining about the referees
Speaker 1: and wan a call went against, the north of the
Speaker 1: crowd went against, and they would have packed it up
Speaker 1: and gone home. That's what they're doing for packing it
Speaker 1: up and going home. But real players in the major
Speaker 1: is which the US economy should be. If you have
Speaker 1: to win, you win even if the referees are skewed
Speaker 1: against you, even if the crowd's rooting against you. You
Speaker 1: don't get so caught up in excuses and small deterrence.
Speaker 2: Okay, but the Biden administration.
Speaker 1: Capt trade it is too small.
Speaker 5: Sorry, Well, the bidendministration kept those tariffs on.
Speaker 2: So what would you what would be your.
Speaker 5: Idea for both of these campaigns to try to level
Speaker 5: the playing field.
Speaker 1: Well, but I think the point is the Biden administration
Speaker 1: and the Trump administration kept on those terraffs and it's
Speaker 1: had absolutely no effect. The so called Phase one tariffs
Speaker 1: on China deal, which Trump had had no effect in
Speaker 1: terms of what they were buying or selling. Both the
Speaker 1: Biden and the Trump administrations claimed the Chinese are still
Speaker 1: stealing ip, still subsidizing, still doing this and that. So
Speaker 1: you can say, oh, well, then they if this didn't work,
Speaker 1: let's try it tenfold. But that's the key difference here
Speaker 1: is that Trump this time is talking repeatedly on the
Speaker 1: record in the platform about doing tariffs at ten to
Speaker 1: twenty times they level he did last time, and doing
Speaker 1: them across a whole range of countries, not just China,
Speaker 1: at a much higher level at Chinese, talking about multiple
Speaker 1: food and so it's going to have much worse effects
Speaker 1: on the US economy. You can shrug it off. It's
Speaker 1: not good. It's attacks on people. Companies that were affected
Speaker 1: by the tariffs lost valuation, as the New York Fed
Speaker 1: study showed, it was inflationary for people. But the big
Speaker 1: thing is Harris has at least said repeatedly. Vice President
Speaker 1: Harris has at least said repeatedly tariffs are attacks. There
Speaker 1: are regressive tacks that are working people more, which is
Speaker 1: full and true, and she's not going to do across
Speaker 1: the board Terraffs. I still wish she in her administration
Speaker 1: if they're in reconsider this whole approach. But nonetheless, there
Speaker 1: is a very big difference between stopping the tariffs where
Speaker 1: they are now and only using them in specific cases
Speaker 1: at China, which is bad but minor versus across the board,
Speaker 1: huge Terraffs.
Speaker 6: There's a big, bigger question here, Adam. And this is
Speaker 6: the reason why the whole concept of tariffs has been
Speaker 6: and resonating with a lot of people, which is their
Speaker 6: whole swass of the US economy, that feel left behind
Speaker 6: by globalization by moving manufacturing overseas and would welcome the
Speaker 6: manufacturing and some of the industrial prowess to come back
Speaker 6: to the United States. Is there a proposal to increase
Speaker 6: production in the United States in a sustainable way with
Speaker 6: the staff that we currently have.
Speaker 1: I think the answer, Lease is no. I mean, I
Speaker 1: might push back at you at that political perception because
Speaker 1: it's not really grounded in reality, but certainly there are
Speaker 1: people who are obsessed with having domestic manufacturing and we
Speaker 1: have manufacturing. You know, you talk about Apple, you talk
Speaker 1: about Nvidia, you talk about all these companies that are
Speaker 1: worth much much more, as somebody tweeted this morning, than
Speaker 1: the companies that make stuff. You know, these are the
Speaker 1: companies that design stuff, that do R and D, and
Speaker 1: so then you can say, well, what about the terrible
Speaker 1: things that are happening. There aren't that many terrible things
Speaker 1: that are happening. We have the highest labor force participation
Speaker 1: rate in forever, we have one of the lowest unemployment
Speaker 1: rates in forever. We have income growth much higher than
Speaker 1: it's been. We have fewer people in poverty than it's
Speaker 1: ever been. So this constant refrain that we're losing because
Speaker 1: our manufacturing has moved up and up and up in
Speaker 1: value and become more productive and therefore needs less workers
Speaker 1: on the floor is falsehood. So then you say, okay,
Speaker 1: but the how do we buy off the angry people? Well,
Speaker 1: that's how you get Trump, and that's not good. And
Speaker 1: so at some point you have to appeal to people
Speaker 1: that they maybe shouldn't be so angry, or that they
Speaker 1: maybe should adjust. And the reality is we can't drive
Speaker 1: the entire country about what's happened in a few counties
Speaker 1: in a few states, and that's part of our politics
Speaker 1: that year after year, a majority of the country clearly
Speaker 1: has views on whether it's gun control or globalization, or
Speaker 1: the economy or healthcare. And it gets stemy by very.
Speaker 6: Small Adam, Where does national security fall into this at
Speaker 6: a time we're an increasing number of the goods that
Speaker 6: we're talking about could potentially have some national security components.
Speaker 1: That's a much more serious issue, Lisa, And that's the
Speaker 1: one which is genuinely difficult and people are wrestling with.
Speaker 1: I mean, you can imagine it seems a bit of
Speaker 1: a stretch, but you can't imagine, for example, if we
Speaker 1: do buy Chinese evs that there would be planted bugs
Speaker 1: and controls and things in there that could be dangerous.
Speaker 1: Not clear what that the economic res hunts, however, is
Speaker 1: the way to get around it. That doesn't mean you
Speaker 1: should let everything in. But we see right now there's
Speaker 1: news reports now about all these weapons the Russians are using,
Speaker 1: all these things the Chinese are using, where you can
Speaker 1: see that asml TSMC, all these companies that we're protecting
Speaker 1: are still selling and producing in China. And that's in
Speaker 1: the very narrow spectrum of focusing on just the chips
Speaker 1: and just these critical industries, with the full weight to
Speaker 1: the US government, allies, and you still can't maintain the
Speaker 1: sanctions and the controls. So again it's like the terrorists.
Speaker 1: You just keep upping and upping and upping it, saying, well,
Speaker 1: we didn't try hard enough, ye, Or do you.
Speaker 2: Think Adam is a tough spot?
Speaker 3: The conversation you and I'll continue, we'll all continue with
Speaker 3: you through to election. Down beyond Adam posting there the
Speaker 3: Peterson Institute