WEBVTT - What Happens If Trump Doesn't Pull Back on His Trade War? 0:00:02.560 --> 0:00:07.080 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.039 --> 0:00:13.960 The administration is very nimble and flexible, and Trump himself 0:00:14.080 --> 0:00:17.599 he has a sense of how hard to push the economy, 0:00:17.800 --> 0:00:20.759 and he tends to pull back from the brain if 0:00:21.120 --> 0:00:24.720 things get really bad. At this moment, the hard data 0:00:25.160 --> 0:00:27.760 are not causing them to want to pull back. 0:00:37.000 --> 0:00:40.360 I'm Stephanie Flanders, head of Government and Economics at Bloomberg, 0:00:40.600 --> 0:00:42.879 and welcome to Trump Economics, the podcast that looks at 0:00:42.880 --> 0:00:45.880 the economic world of Donald Trump, how he's already shaped 0:00:45.920 --> 0:00:48.680 the global economy and what on earth is going to 0:00:48.720 --> 0:00:53.200 happen next. And this week, after a lot of discussions 0:00:53.240 --> 0:00:56.400 and conversations with people, I wanted to sort of step 0:00:56.440 --> 0:01:00.480 back and come back to our correspondence and economy to 0:01:00.600 --> 0:01:07.280 ask where are we in Donald Trump's trade war. We're 0:01:07.280 --> 0:01:10.400 taping this on Tuesday, June third, and just this morning, 0:01:10.760 --> 0:01:14.679 the OECD, the Organization for Economic Cooperation and Development, released 0:01:14.680 --> 0:01:18.440 a fresh warning that the US president's trade policies have 0:01:18.560 --> 0:01:22.319 formerly tipped the world economy into a downturn. I thought 0:01:22.319 --> 0:01:24.560 that gave us an excuse if we needed one, to 0:01:24.640 --> 0:01:28.200 consider where things stand in Donald Trump's war on the 0:01:28.280 --> 0:01:31.880 old fashioned global trading system. What impact it's had on 0:01:31.920 --> 0:01:35.160 the real economy so far, particularly in the US, and 0:01:35.200 --> 0:01:39.319 how that court challenged last week to Trump's whole tariff 0:01:39.400 --> 0:01:46.200 strategy has added another layer of uncertainty. With me is 0:01:46.240 --> 0:01:49.360 Anna Wong, chief US economist for Bloomberg Economics, who many 0:01:49.360 --> 0:01:52.360 of you have heard many times before. Before she worked 0:01:52.360 --> 0:01:54.640 for US, she worked at the Federal Reserve Board, the 0:01:54.760 --> 0:01:57.440 US Treasury, and the White House Council of Economic Advisors 0:01:57.520 --> 0:02:01.720 during Donald Trump's first term. Josh Wingrove also a regular 0:02:02.000 --> 0:02:09.400 senior reporter for Bloomberg who covers the White House. Josh Anna, 0:02:09.600 --> 0:02:11.359 always great to have you. I think the last time 0:02:11.400 --> 0:02:12.600 we had both of you on it was a very 0:02:12.600 --> 0:02:15.560 good conversation. Looking forward to it, Josh, we will talk 0:02:15.680 --> 0:02:20.360 about that sort of bombshell International Trade Court ruling last 0:02:20.360 --> 0:02:23.640 week in a little bit. But taking that to one side, 0:02:24.200 --> 0:02:27.760 just remind us where we are in the various ceasefire 0:02:27.880 --> 0:02:31.679 pauses negotiations in this trade war. 0:02:32.440 --> 0:02:34.680 Well, as we sit here, we have about a month 0:02:35.080 --> 0:02:38.920 until the expiration of several deadlines that that court case 0:02:39.000 --> 0:02:41.920 is going to intersect with. But we also have tariffs 0:02:41.919 --> 0:02:46.440 in place right We've got tariff's on steel, aluminum, autos, 0:02:46.520 --> 0:02:50.919 auto parts, coming on several other products that are enacted 0:02:51.000 --> 0:02:53.440 under different authorities that are not touched by that ruling. 0:02:53.440 --> 0:02:56.919 In our scene is much more legally durable. Those are 0:02:57.520 --> 0:02:59.720 not going anywhere. No one really thinks they're going anywhere. 0:03:00.000 --> 0:03:00.680 That they're going up. 0:03:00.720 --> 0:03:03.920 In some cases, Trump is announced exactly steal and aluminum. 0:03:03.919 --> 0:03:05.720 The aluminum one in particular, seemed like kind of on 0:03:05.760 --> 0:03:08.680 a whim, will double this week to fifty percent from 0:03:08.680 --> 0:03:12.120 twenty five percent. Let's assume for a moment that those 0:03:12.320 --> 0:03:16.239 court cases are not successful and those tariffs remain in place. 0:03:16.480 --> 0:03:20.080 Those are that's a battle over AIPA authorities. That's what 0:03:20.120 --> 0:03:23.239 Trump is used to pain with the broadest brush possible 0:03:23.240 --> 0:03:25.560 and hit every country with tariffs of at least ten percent. 0:03:26.360 --> 0:03:29.519 The deadline of July ninth means those go up from 0:03:29.600 --> 0:03:32.079 ten if you don't have a deal. So for those 0:03:32.160 --> 0:03:35.480 about five dozen countries including the EU as a block, 0:03:35.560 --> 0:03:38.240 including China including others, they would snap back up if 0:03:38.240 --> 0:03:39.080 there's no deal. 0:03:39.040 --> 0:03:40.880 To those rates that were on the big sort of 0:03:41.080 --> 0:03:43.040 menu board that he had in them. 0:03:43.040 --> 0:03:45.600 Or somewhere in between. It's it's murky, and it's I 0:03:45.640 --> 0:03:49.160 think deliberately murky. But up not ten is the point. 0:03:49.280 --> 0:03:52.520 So they're threatening, saying, hey, make a deal now, or 0:03:52.520 --> 0:03:55.400 you're going to have a number higher than ten come July. 0:03:55.520 --> 0:03:58.360 Of course, the other countries, you know, basically all of 0:03:58.400 --> 0:04:01.080 them are sending signs of you know, fusion, hesitation. Some 0:04:01.160 --> 0:04:03.360 are looking at the court ruling and wondering why they 0:04:03.360 --> 0:04:05.480 would play their best cards right now when it's just 0:04:05.480 --> 0:04:07.200 so uncertain what authority Trump has. 0:04:07.520 --> 0:04:10.400 We had all those claims about how many countries the 0:04:10.520 --> 0:04:13.600 US would do deals with in that ninety day period 0:04:14.640 --> 0:04:16.320 sort of went up every time they talked about it, 0:04:16.320 --> 0:04:18.560 but I think it was like seventy or something, seventy 0:04:18.640 --> 0:04:21.000 two or something. Anyway, just remind us how many of 0:04:21.040 --> 0:04:22.719 those have actually been done. 0:04:23.160 --> 0:04:25.760 One, we've got one deal with the UK group. 0:04:25.640 --> 0:04:27.440 Well, and actually, if you're sitting in the UK now, 0:04:27.480 --> 0:04:30.000 you would say even that has not actually been sorted out. 0:04:30.080 --> 0:04:33.159 So Josh has reminded us that this is an unholy mess. 0:04:33.480 --> 0:04:36.520 And we could definitely spend another twenty minutes talking about 0:04:36.560 --> 0:04:39.960 the variation. But Anna, obviously a lot of the focus, 0:04:40.200 --> 0:04:43.599 or a lot of the interest is on how all 0:04:43.680 --> 0:04:46.680 this activity and the tariffs that are already in place 0:04:47.440 --> 0:04:50.920 is affecting the real economy. Talk us through the economic 0:04:50.920 --> 0:04:52.599 impact that we're actually seeing so far. 0:04:53.360 --> 0:04:58.760 Yeah, so the trade war version two genuinely started in February, 0:04:58.920 --> 0:05:02.960 so now we have basically three months worth of price 0:05:03.080 --> 0:05:07.080 data and activity data to engage its impact. So in 0:05:07.120 --> 0:05:10.760 these three months, generally what happened is we see deflation 0:05:11.200 --> 0:05:16.400 or even disinflation. For example, in the April inflation number, 0:05:17.040 --> 0:05:22.160 Powells prefer inflation gauge is supercore. Actually saw deflation, So 0:05:22.240 --> 0:05:25.440 what's going on there? It turns out that the services 0:05:26.000 --> 0:05:34.120 categories are particularly discretionary services categories like travel, airfares, hotels, 0:05:34.520 --> 0:05:40.120 car rentals are all going down. So basically the decrease 0:05:40.440 --> 0:05:46.400 income optimism and general pessimism of economy is directly and 0:05:46.480 --> 0:05:50.960 immediately translating to lower demand for these goods and as 0:05:50.960 --> 0:05:55.400 a result overwhelms whatever tariffs passed through in the goods 0:05:55.400 --> 0:05:59.160 sector in terms of inflation impact. So on net inflation 0:05:59.279 --> 0:06:00.880 impact has in disinflation. 0:06:01.200 --> 0:06:03.560 So disinflation is when you just have a fall in 0:06:03.600 --> 0:06:07.400 the inflation rate, and deflation is when prices are falling. 0:06:07.480 --> 0:06:09.039 I mean, the headline from what you're saying is we 0:06:09.080 --> 0:06:13.400 all expected inflation, but actually so far, because this kind 0:06:13.440 --> 0:06:18.920 of supply side shock also affects confidence and activity, that 0:06:19.000 --> 0:06:21.599 effect is actually more visible than the inflation effects. 0:06:21.640 --> 0:06:24.400 Sor right correct so far, yes, But. 0:06:24.560 --> 0:06:27.920 In terms of expectations, I think we are seeing people 0:06:28.080 --> 0:06:31.000 expecting inflation to pick up as a result of tariffs. 0:06:31.040 --> 0:06:34.400 And of course Donald Trump would claim that economics in 0:06:34.440 --> 0:06:36.960 the real world works differently from people expect and he's 0:06:37.040 --> 0:06:39.560 kind of proven that by doing things that were supposed 0:06:39.560 --> 0:06:41.400 to be very costly and have actually done all right. 0:06:41.480 --> 0:06:44.080 And I'd have to say, listening to you so far, 0:06:44.560 --> 0:06:46.719 you know, everyone said there was going to be inflation. No, 0:06:46.880 --> 0:06:50.240 inflation's gone down. Everyone said that the economy be really hurt. Well, 0:06:50.279 --> 0:06:52.280 if you look through the kind of ups and downs 0:06:52.279 --> 0:06:55.040 of the first two quarters, which are very distorted by 0:06:55.080 --> 0:06:58.479 this import activity, the economy doesn't seem to have been 0:06:58.680 --> 0:07:01.839 very adversely affect And in fact, everyone predicted the dollar 0:07:01.880 --> 0:07:03.839 would go up as a result of tariffs, and in 0:07:03.880 --> 0:07:05.640 fact it's gone down significantly. 0:07:05.920 --> 0:07:08.240 So that was very surprising that. 0:07:11.360 --> 0:07:14.760 So he's right, the colnivists just don't know anything, and 0:07:14.960 --> 0:07:16.640 he can reinvent the rules. 0:07:17.480 --> 0:07:20.400 And Stephany is too early. It's also too early in 0:07:20.440 --> 0:07:23.040 the game going back to the import front running, so 0:07:23.080 --> 0:07:27.400 we have until July where nothing happened. Everything can carry 0:07:27.400 --> 0:07:31.600 on as usual. However, after this front running is over, 0:07:32.120 --> 0:07:36.360 the question is will the firms restock at higher prices? 0:07:36.680 --> 0:07:40.040 And if they do, then ultimately the firms will have 0:07:40.080 --> 0:07:42.160 to decide should they pass it through or should they 0:07:42.240 --> 0:07:45.840 just eat those in terms of profit compression. So the 0:07:45.880 --> 0:07:49.200 firms did not need to have that stark choice right now. 0:07:49.440 --> 0:07:51.800 We are not in that period. And this is why 0:07:52.880 --> 0:07:56.280 you have FED Governor Chris Waller talking about how it's 0:07:56.520 --> 0:07:59.680 kind of hard to see what is truly what truly 0:08:00.800 --> 0:08:03.480 how is it impacting inflation until after July. 0:08:04.000 --> 0:08:06.000 I just wanted to signal this banana was But also 0:08:06.040 --> 0:08:08.600 note that like Trump is bragging about this, right they're 0:08:08.840 --> 0:08:09.560 they're bragging. 0:08:09.800 --> 0:08:12.080 Probably it's not Biden's economy anymore. 0:08:12.160 --> 0:08:16.480 Right Exactly, they are bragging about low gasoline prices, which 0:08:16.480 --> 0:08:18.559 by the way, are at a rate where US drilling 0:08:18.640 --> 0:08:23.360 is heavily disincentivized. There are signs of uncertainty, if not 0:08:23.440 --> 0:08:27.960 even pullback that Trump is looking at a political positive. 0:08:28.040 --> 0:08:30.640 So they are celebrating these things even if you look 0:08:30.640 --> 0:08:33.120 at the trade data and think, well this is kind 0:08:33.120 --> 0:08:35.400 of like a crash diet, right if I stop eating 0:08:36.000 --> 0:08:39.360 for a month and might bemidrops. Like, is that is that, like, 0:08:39.840 --> 0:08:41.880 you know, harbinger of a long term thing or is 0:08:41.920 --> 0:08:44.920 that just me making bold choices? So we'll see how 0:08:44.920 --> 0:08:47.880 this shakes out. But like Trump is and his allies 0:08:47.920 --> 0:08:50.840 are proud of this. They are boasting about this. He 0:08:51.000 --> 0:08:55.400 loves the tariff revenue. He believes it is driving domestic 0:08:55.760 --> 0:08:59.320 investment in factories. And I think that people maybe still 0:08:59.320 --> 0:09:03.720 haven't really wrap their head around how an evangelist he 0:09:03.880 --> 0:09:06.679 is on this tariff issue. When the question of like 0:09:06.760 --> 0:09:09.160 legal flights and are these teriffs going to stay or not? 0:09:09.679 --> 0:09:12.640 So everyone you talk to around Donald Trump, he loves tariffs. 0:09:12.880 --> 0:09:15.400 There's going to be tariffs. If it's not this authority, 0:09:15.400 --> 0:09:18.920 it'll be another. It's going to be bumpy, but they're 0:09:19.000 --> 0:09:19.560 going to be there. 0:09:19.840 --> 0:09:21.520 Yeah. On the trade thing, it reminds me there was 0:09:21.559 --> 0:09:23.880 that old learn about I. I've been training my donkey 0:09:23.960 --> 0:09:26.000 to not need any food, just as I'd trained him 0:09:26.000 --> 0:09:28.600 to not need any food Adoly died. So we might 0:09:28.640 --> 0:09:32.480 see that on the trade front. But Anna Josh is mentioning, 0:09:32.760 --> 0:09:35.679 I guess there's a sort of macro micro thing because 0:09:35.840 --> 0:09:39.280 macro we're still not seeing some of the impacts that 0:09:39.320 --> 0:09:41.840 we might have expected to see. And you've said too 0:09:41.880 --> 0:09:45.760 early to say, but you know, micro, we also have 0:09:45.840 --> 0:09:47.520 a lot of stories and we have a lot of 0:09:47.679 --> 0:09:51.360 reports from companies who are doing their sort of earnings 0:09:51.360 --> 0:09:55.200 forecasts and things saying this is really affecting our ability 0:09:55.280 --> 0:09:57.720 to get components, or at least we're having to really 0:09:57.880 --> 0:10:01.679 think about rethink how we make stuff. I mean, how 0:10:01.760 --> 0:10:03.800 much are we seeing that in terms of changing the 0:10:03.840 --> 0:10:05.400 way companies are operating. 0:10:05.960 --> 0:10:09.559 Yeah, I think that's the surprising part to me personally. 0:10:09.640 --> 0:10:16.200 So ISM Manufacturing just release their semi annual survey that 0:10:16.400 --> 0:10:19.840 asks manufacturing firms what are their plans in the next 0:10:19.880 --> 0:10:24.920 six months, And interestingly, there are a pretty substantial list 0:10:25.120 --> 0:10:29.800 of US industries that's reporting they're going to increase the 0:10:29.840 --> 0:10:34.000 operation capacity in the US. And some of those industries 0:10:34.000 --> 0:10:37.960 would surprise you because it's for example, it's things like Apparels. 0:10:38.160 --> 0:10:41.000 I mean, why would one think that US would be 0:10:41.080 --> 0:10:44.840 bringing back Apparels. And we also know that Apparels was 0:10:44.880 --> 0:10:47.280 one of the most hardest hit by these terraffs on 0:10:47.920 --> 0:10:49.400 China and Vietnam. 0:10:49.440 --> 0:10:51.960 So that would be the answer, but you wouldn't necessarily 0:10:51.960 --> 0:10:54.120 expect the US to do it. But it has been 0:10:54.200 --> 0:10:56.640 the sector that's been hit particularly. 0:10:56.160 --> 0:11:01.520 Hard, exactly exactly, and the metals industries where seeing some 0:11:01.720 --> 0:11:06.360 increase in employment in the metals industry, which is consistent 0:11:06.520 --> 0:11:09.960 with what we saw in twenty nineteen and twenty eighteen too. 0:11:10.280 --> 0:11:11.840 I mean, just one of my questions for you was, 0:11:11.920 --> 0:11:14.680 are the administration worried about the economic impacts we're seeing 0:11:14.840 --> 0:11:17.480 as you've just said, they're actually quite excited so far 0:11:17.559 --> 0:11:19.600 about some of the positive impacts. 0:11:20.040 --> 0:11:21.760 I think that for them it is always sort of 0:11:21.760 --> 0:11:24.800 two steps forward, one step back. They're excited until they 0:11:24.800 --> 0:11:28.240 have to have, for instance, a somewhat hasty cease fire 0:11:28.280 --> 0:11:32.480 with China in Geneva, right like, everything's going great until 0:11:32.559 --> 0:11:36.680 we have these hastily arranged and deals to claw everything 0:11:36.720 --> 0:11:38.920 back and take the pressure off the market. So I 0:11:39.000 --> 0:11:43.720 think that's sort of where they're at. They continue to 0:11:43.760 --> 0:11:47.240 project sort of a Trumpian confidence, if you will, but 0:11:48.160 --> 0:11:51.760 constantly the pressures to come back from it are just 0:11:52.120 --> 0:11:53.640 going to be there. So I think the question is 0:11:53.640 --> 0:11:55.680 like with the EU with Japan, with South Korea, with 0:11:55.720 --> 0:11:58.160 major trading partners on which there really has not been 0:11:58.920 --> 0:12:02.520 a lot of progress locations of progress. What happens if 0:12:02.520 --> 0:12:05.240 there's no deal, like how high does Trump go to snap? 0:12:05.640 --> 0:12:07.960 At the same time, we had a lot of noise 0:12:08.000 --> 0:12:11.200 about China's going back on its side of the bargain 0:12:11.360 --> 0:12:15.160 with this deal, and we had the sort of very 0:12:15.320 --> 0:12:19.000 rapid fire thing around doubling the steel and anominum tariffs. 0:12:19.240 --> 0:12:22.200 So how did you read any of that? Insofar as 0:12:22.240 --> 0:12:24.760 there is an underlying strategy. 0:12:25.040 --> 0:12:27.800 On the China thing, I think it is teeing up well. 0:12:28.040 --> 0:12:30.240 As we sit here, we expect to be or at 0:12:30.320 --> 0:12:32.880 least the Americans expect to be a call between President 0:12:32.920 --> 0:12:35.560 and She and President Trump at some point this week. 0:12:35.720 --> 0:12:37.600 All they've said is this week, a couple of officials 0:12:37.640 --> 0:12:39.640 have said it publicly. We just don't know when that 0:12:39.800 --> 0:12:42.760 will be. Those complaints appear to be heavily linked to 0:12:43.160 --> 0:12:47.319 export controls around critical minerals that the Americans said publicly 0:12:47.360 --> 0:12:50.720 would be like, you know, flowing freely, and China just 0:12:51.240 --> 0:12:54.080 had a different view on that. So, whether it is 0:12:54.200 --> 0:12:57.800 China renegging or an outcome that is different than the 0:12:57.800 --> 0:13:01.000 publicly stated desired outcome of the Americans, is that open question. 0:13:01.040 --> 0:13:04.720 I think on the steel aluminum, I mean, I don't 0:13:04.960 --> 0:13:07.800 It's difficult not to see it as like a reaction 0:13:08.000 --> 0:13:09.840 to the court ruling. He almost felt like he wanted 0:13:09.840 --> 0:13:12.160 to flex his muscle and you know, enact Terris where 0:13:12.559 --> 0:13:14.480 he could. And we should note, of course that they 0:13:14.480 --> 0:13:17.400 renounced at US steel in the context of him celebrating 0:13:18.080 --> 0:13:21.680 the sale of US steel to Japanese, the Japanese company 0:13:21.800 --> 0:13:24.440 Nipon Steel, which he's not framing as a sale, but 0:13:24.559 --> 0:13:26.280 essentially he's flipped his view on it. He used to 0:13:26.280 --> 0:13:28.800 oppose it, he campaigned against it. Now he's blessing it 0:13:28.920 --> 0:13:32.120 with certain you know, strings attached. So he's he's sort 0:13:32.120 --> 0:13:36.120 of like washing down the reversal with oh, by the way, 0:13:36.120 --> 0:13:38.679 I'm giving you more tariffs, which for Nipon Steel is 0:13:38.720 --> 0:13:41.120 probably not bad because now they've got a great foothold 0:13:41.160 --> 0:13:43.480 in the American industry and they will be terror free 0:13:43.600 --> 0:13:44.760 for stuff made at US steel. 0:13:45.200 --> 0:13:47.720 Anna. You know, Josh has mentioned that at least it 0:13:47.800 --> 0:13:50.800 may have an impact on other countries that you've now 0:13:50.840 --> 0:13:54.240 got this legal uncertainty around a lot of the tariffs 0:13:54.280 --> 0:13:57.760 that we're using. The AIPA legislation. The idea of an 0:13:57.800 --> 0:14:02.240 emergency that gives the president exceptional power. They push back 0:14:02.280 --> 0:14:05.200 on that, but how significant do you think that ruling is? 0:14:05.240 --> 0:14:07.120 Do you think it really sort of casts a question 0:14:07.200 --> 0:14:08.440 mark over all of these things. 0:14:09.200 --> 0:14:11.599 No, So, first of all, they're going through all the 0:14:11.640 --> 0:14:14.400 appeal options, and I think that the odds for a 0:14:14.400 --> 0:14:18.520 successful appeal is pretty high given that there is a 0:14:18.559 --> 0:14:22.720 president with Nixon's case. So in the nineteen seventies, Nixon 0:14:22.840 --> 0:14:27.560 also invoked the predecessor of IEPA's power, also presidential powers 0:14:27.600 --> 0:14:31.160 to impose a ten percent tariff, and he was also 0:14:31.320 --> 0:14:35.240 challenged by the Trade Court, but then he won the 0:14:35.240 --> 0:14:39.320 appeal because citing that the Trading with Enemy Act grants 0:14:39.400 --> 0:14:43.400 the president emergency powers. Odds are decent for him to 0:14:43.440 --> 0:14:46.320 win an appeal. In second even if he doesn't win, 0:14:46.800 --> 0:14:50.000 all he needs is to buy some time until he 0:14:50.040 --> 0:14:53.840 can switch over to these other options such as section 0:14:54.040 --> 0:14:56.240 three three eight, one, two to two, which allow him 0:14:56.240 --> 0:15:02.000 to immediately impose fifteen to fifty percent on anything immediately, 0:15:02.520 --> 0:15:05.720 and then he could use Section two thirty two and 0:15:05.800 --> 0:15:07.880 three or one, which takes longer, and all those are 0:15:07.920 --> 0:15:12.040 already in motion. So basically, I just think that ultimately 0:15:12.280 --> 0:15:16.680 the equal abround tariff, the endgame terroriff is still about 0:15:16.760 --> 0:15:19.400 fifteen percent in our baseline. 0:15:19.200 --> 0:15:21.680 Josh, is there actually an expectation that this could put 0:15:21.720 --> 0:15:23.520 an end to at least a chunk of the terriffs. 0:15:23.960 --> 0:15:26.320 I think they're not popping champagne yet. I think the 0:15:26.320 --> 0:15:28.920 most powerful sort of counterforce to Trump's tariffs have been 0:15:28.960 --> 0:15:30.640 the people that have done it sort of out of 0:15:30.680 --> 0:15:34.160 the public eye and have fought it in court rather 0:15:34.240 --> 0:15:38.400 than on the airwaves. So I think the silence is conspicuous. 0:15:38.440 --> 0:15:42.360 And I agree with Anna about the other powers here. 0:15:42.400 --> 0:15:45.200 But if I can offer the sort of contrarian take here, 0:15:45.280 --> 0:15:48.200 I mean Section one twenty two is capped at fifteen 0:15:48.240 --> 0:15:51.480 percent for one hundred and fifty days, so lower, much 0:15:51.520 --> 0:15:53.400 lower than he wants to go with some of these countries. 0:15:53.840 --> 0:15:56.400 Section three thirty eight, that's the fifty percent power that 0:15:56.440 --> 0:16:00.640 Anna referenced. It's never been enacted, it's been threatened, been used, 0:16:00.680 --> 0:16:05.160 So like the legal footing of that is by definition untested. 0:16:05.640 --> 0:16:08.840 Section two thirty two. They're already doing several investigations. There 0:16:08.880 --> 0:16:10.680 are only so many people you can fit in the 0:16:10.680 --> 0:16:14.080 tiny USTR buildings across from the eo B Friction three 0:16:14.080 --> 0:16:16.800 oh one, those take a long time as well. There 0:16:16.800 --> 0:16:19.240 are trade offs to this. There's a reason they used 0:16:19.240 --> 0:16:21.720 AIPA in the first place, or tried to use it 0:16:21.800 --> 0:16:23.640 in the first place. If they do pivot to these 0:16:23.680 --> 0:16:27.720 other authorities, they all come with sort of caveats that 0:16:27.800 --> 0:16:32.880 will either limit the height or term, or be unlegally 0:16:33.120 --> 0:16:36.440 questionable or untested in their own authority, or just simply, 0:16:36.840 --> 0:16:39.440 you know, pile more straws onto the camel's back at 0:16:39.520 --> 0:16:42.560 USTR and force all these investigations which, if not done properly, 0:16:42.600 --> 0:16:45.560 will be legally vulnerable. The whole point of view of 0:16:45.600 --> 0:16:47.000 two three two is that you've got to dot your 0:16:47.000 --> 0:16:48.280 eyes and cross your t's and then you get a 0:16:48.280 --> 0:16:51.480 pretty iron cloud terraff authority. If they start fast tracking it, 0:16:51.480 --> 0:16:54.320 they risk not doing that. So there's there's there's clouds 0:16:54.360 --> 0:16:54.920 on the horizon. 0:16:55.680 --> 0:16:58.360 One thing that I thought was just worth mentioning, although 0:16:58.360 --> 0:17:03.360 that really deserves its own episode, is various clauses in 0:17:03.440 --> 0:17:06.600 the tax bill which seem to kind of extend the 0:17:06.760 --> 0:17:10.960 trade war or at least open a new front for 0:17:11.560 --> 0:17:18.480 Trumpian attax on the global trading and financial system, which 0:17:18.520 --> 0:17:22.760 is these clauses which would impose sort of punitive or 0:17:22.840 --> 0:17:27.840 much higher taxes on individuals and companies investing in or 0:17:27.880 --> 0:17:31.239 holding US assets, but who come from countries that are 0:17:31.280 --> 0:17:35.879 considered to have discriminatory or unfair tax regimes, regimes that 0:17:35.920 --> 0:17:38.560 are unfair to the US. You know, it's just another 0:17:38.640 --> 0:17:42.439 stick to beat other countries with, using the leverage of 0:17:42.640 --> 0:17:47.240 other countries' desire to invest in the US in various ways. Anna, 0:17:47.400 --> 0:17:49.800 There's been a lot of chatter about this, a lot 0:17:49.840 --> 0:17:54.200 of discussion and analysis on Wall Street. Does this constitute 0:17:54.240 --> 0:17:58.040 a sort of new front in Donald Trump's trade war? 0:17:58.119 --> 0:17:59.000 Do you take it seriously? 0:18:00.000 --> 0:18:03.640 Read to me that it's very much targeting EU. And 0:18:03.680 --> 0:18:06.200 we have known for a while that the Trump administration 0:18:07.200 --> 0:18:12.240 sees EU's non tear of trade barriers as almost as 0:18:12.560 --> 0:18:17.119 severe as China's barriers. So I think this is in 0:18:17.240 --> 0:18:20.200 part a way to get at the Digital services tax 0:18:20.640 --> 0:18:23.800 and the tax on intangibles, because even in the first 0:18:23.840 --> 0:18:28.520 Trump administration was very much against this, and yet OECD 0:18:28.720 --> 0:18:33.240 also has been supporting these DST and taxes on intangible 0:18:33.600 --> 0:18:37.440 and these taxes have been collected for almost like at 0:18:37.520 --> 0:18:40.119 least six years now. So I think it will be 0:18:40.240 --> 0:18:46.720 very hard to negotiate with EU on reducing these DST taxes, 0:18:46.760 --> 0:18:50.800 which disproportionately affect US tech firms. I mean, there's a 0:18:50.840 --> 0:18:54.280 reason why many of these tech firms are supporting the 0:18:54.320 --> 0:18:57.320 Trump administration this time around. So I just think that 0:18:57.400 --> 0:19:02.200 this is a very specific country targeting bill as opposed 0:19:02.200 --> 0:19:06.560 to a very broad range taxing on international inflows. 0:19:06.880 --> 0:19:08.960 I guess it's a chilling effect. I mean, we've talked 0:19:08.960 --> 0:19:13.760 in the past about how investors were so overexposed to 0:19:13.800 --> 0:19:16.720 some extent or sort of disproportionately invested in the US 0:19:16.840 --> 0:19:18.920 after years and years of the US doing better than 0:19:18.920 --> 0:19:22.080 other people other countries, that it doesn't take much for 0:19:22.160 --> 0:19:24.879 them to think, oh, I should tilt in the other direction. 0:19:25.040 --> 0:19:28.919 It should take some money out or reallocate. If that 0:19:28.960 --> 0:19:31.679 brings down the dollar, then made the administrations happy about that. 0:19:31.760 --> 0:19:34.439 But at some level, it's also going to constitute a 0:19:34.480 --> 0:19:37.800 decline in investment flows into the US, which he's supposed 0:19:37.800 --> 0:19:40.440 to you know, he wants to see more investments. Josh, 0:19:40.520 --> 0:19:42.280 do you think this clause is going to go through 0:19:42.320 --> 0:19:46.080 and do you think that it could be potentially quite damaging. 0:19:46.640 --> 0:19:49.680 All indications are that it will go through, but you know, 0:19:49.840 --> 0:19:53.240 we're still waiting to see what the final PI looks 0:19:53.320 --> 0:19:55.600 like once they rebake it in the Senate and send 0:19:55.680 --> 0:19:57.520 it back to the House. They're still working with pretty 0:19:58.160 --> 0:20:01.520 skinny margins here, but there's not been a lot about 0:20:01.600 --> 0:20:05.240 cry about it. The Republican outcry has been focused on 0:20:05.960 --> 0:20:10.120 other things. And so yeah, I think that ultimately Congress 0:20:10.160 --> 0:20:13.520 is going to start trying to hand Trump more tools, 0:20:13.760 --> 0:20:16.320 which is a change in tune from you in a 0:20:16.359 --> 0:20:21.560 couple of months ago when Republican senators were objecting implicitly 0:20:21.680 --> 0:20:26.880 or explicitly to Trump's sort of capturing of teriff authorities 0:20:26.920 --> 0:20:30.280 that had historically rested more with Congress. So we'll see, 0:20:30.359 --> 0:20:32.240 remember the clock sticking in Congress, right, They want to 0:20:32.280 --> 0:20:35.200 sign this thing on July fourth, Independence Day, of course, 0:20:35.240 --> 0:20:38.480 so we can go from Liberation Day to Independence Day, 0:20:38.520 --> 0:20:41.880 which is fined for the tariff deadline. So I think 0:20:41.960 --> 0:20:45.160 you're going to see rhetorically a lot of continued sort 0:20:45.200 --> 0:20:49.359 of chest beating from the President and from the Republican administration. 0:20:50.359 --> 0:20:53.400 And I guess that's a positive for the President if 0:20:53.400 --> 0:20:56.480 he actually gets some tools that are not sort of 0:20:56.560 --> 0:20:59.280 questioned in the court and are legislated. And people have 0:20:59.359 --> 0:21:00.960 said all along, if you really want to do these things, 0:21:00.960 --> 0:21:03.560 you need to get Congress to legislate and give you 0:21:03.600 --> 0:21:06.960 the power explicitly. But is it also a reflection that 0:21:07.480 --> 0:21:10.960 the administration's not managing to do what it wanted to 0:21:10.960 --> 0:21:12.880 do with the tools it had. Do you think they 0:21:12.880 --> 0:21:13.800 feel like they're winning? 0:21:14.640 --> 0:21:20.560 So? I think that the administration is very nimble and flexible, 0:21:20.680 --> 0:21:24.080 and Trump himself be as a sense of how hard 0:21:24.119 --> 0:21:27.040 to push the economy, and he tends to pull back 0:21:27.040 --> 0:21:30.280 from the brink if things get really bad, as we 0:21:30.320 --> 0:21:34.240 could see in April, because the administration, the nec Kevin 0:21:34.320 --> 0:21:37.760 has it and stuff, doesn't do talk to CEOs of 0:21:38.119 --> 0:21:39.880 companies in the real economy. 0:21:39.920 --> 0:21:41.040 So I think that. 0:21:41.160 --> 0:21:45.040 They know that there's danger in there in their moments 0:21:45.040 --> 0:21:50.200 of diceiness. But right now, at this moment, and I 0:21:50.280 --> 0:21:53.360 do think it's reasonable to talk in moments because these 0:21:53.400 --> 0:21:56.879 things change day by day. At this moment, the hard 0:21:57.080 --> 0:22:01.520 data are not causing them to want pulled back. And 0:22:01.600 --> 0:22:05.160 this view may change this Friday with the non farm payrolls. 0:22:05.200 --> 0:22:09.760 If non farm payrolls, for example, shows really steep drop, 0:22:10.119 --> 0:22:14.920 then you would see Trump pouting a call of presidency immediately. 0:22:15.560 --> 0:22:19.880 And personally, I think there has been the whole taco trade. 0:22:20.440 --> 0:22:24.120 Trump always chickens out. I think Wall Street is too 0:22:24.320 --> 0:22:30.200 complacent on peak tariff. Having passed, my own interpretation of 0:22:30.320 --> 0:22:32.959 why there was a Geneva agreement between you Os and 0:22:33.040 --> 0:22:38.480