WEBVTT - Trump Tariff Defeat Throws Trade Deals Into Doubt 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.840 us live on YouTube as right. 0:00:27.880 --> 0:00:34.400 Prasad with this magisterial book, The Dooload of Cornell on Trade, Professor, 0:00:34.600 --> 0:00:36.760 what is a single thing you would say to a 0:00:36.800 --> 0:00:42.320 freshman class at Cornell this morning about this court decision? 0:00:44.479 --> 0:00:49.200 It is a very important accession of the Court's authority 0:00:49.400 --> 0:00:51.920 in terms of making sure that the separation of powers 0:00:51.960 --> 0:00:56.040 between the executive branch, the legislative branch, and the judicial branch, 0:00:56.440 --> 0:00:58.240 you know, stays in place. There has been a lot 0:00:58.320 --> 0:01:01.320 of concent about the rule of law and what is 0:01:01.360 --> 0:01:03.040 being done to that. But it's very good that the 0:01:03.080 --> 0:01:05.479 Supreme Court really put its foot down and made it 0:01:05.520 --> 0:01:08.839 clear that at least the state authority that President Trump 0:01:08.880 --> 0:01:12.400 has been using to invoke tariffs against the broad range 0:01:12.400 --> 0:01:14.640 of trading partners, that's not quite on. 0:01:15.520 --> 0:01:18.240 You do this, You get on planes and you go 0:01:18.600 --> 0:01:23.280 advise the French, the Germans, you advise Singapore. What is 0:01:23.319 --> 0:01:27.440 your advice to the continent of Europe, is they respond 0:01:27.520 --> 0:01:31.440 to this trade bombshell patience. 0:01:32.200 --> 0:01:34.280 I think the key issue right now is how this 0:01:34.400 --> 0:01:37.039 is going to play out. The Trump administration has made 0:01:37.040 --> 0:01:40.680 it abundantly clear that it's going to use other tools 0:01:40.680 --> 0:01:43.759 that it has in its arsenal in order to reimpose 0:01:43.840 --> 0:01:47.279 tariffs at one level or the other. But the question 0:01:47.360 --> 0:01:50.240 of how effectively they can do it, how broadly they 0:01:50.240 --> 0:01:52.320 can do it, and how quickly they can do it, 0:01:52.720 --> 0:01:56.680 I think it's really on the table right now. Many countries, 0:01:56.720 --> 0:02:03.120 including economic areas the European Union, have in fact been 0:02:03.560 --> 0:02:06.400 engaged in negotiations, have set up trade deals for the 0:02:06.480 --> 0:02:09.840 US already, and some of them have gotten better deals 0:02:09.880 --> 0:02:13.519 because of this core tooling. Some of them have gotten 0:02:13.560 --> 0:02:16.400 worse deals. But I think the reality is that nobody 0:02:16.480 --> 0:02:18.919 quite knows right now what the trade landscape is going 0:02:18.919 --> 0:02:21.640 to look like, what sort of tariff measures are going 0:02:21.680 --> 0:02:24.240 to be in place. So I think right now waiting 0:02:24.320 --> 0:02:28.000 is probably the best thing to see how it does settles. 0:02:28.520 --> 0:02:32.280 So as far as this, if I'm a you know, 0:02:32.360 --> 0:02:35.320 some of the countries trading partners in the US, I mean, 0:02:35.400 --> 0:02:38.200 if I've already struck deals, what do I do here 0:02:38.200 --> 0:02:40.320 do I come back to the US and say, hey, 0:02:40.320 --> 0:02:41.639 we need to renegotiate. 0:02:42.400 --> 0:02:44.600 I'm not paying thirty percent here, I want the ten 0:02:44.720 --> 0:02:45.639 or to fifteen percent. 0:02:45.880 --> 0:02:48.320 What happens here, That's right. 0:02:48.400 --> 0:02:52.320 Many of these countries have made economic concessions and it 0:02:52.400 --> 0:02:57.600 has caused them some political capital within their own countries. 0:02:58.040 --> 0:03:00.680 So I think countries do want to stick with the 0:03:00.720 --> 0:03:03.640 trade deals if this core ruling leaves them in a 0:03:03.680 --> 0:03:07.000 better position. But there are many countries who struck trade deals, 0:03:07.040 --> 0:03:09.480 made these concessions, and now find themselves in a worse 0:03:09.560 --> 0:03:14.200 position because Trump has imposed these tariffs across the board 0:03:14.280 --> 0:03:18.600 using Section one two two, and that is certainly going 0:03:18.680 --> 0:03:22.239 to mean that renegotiation is needed. But the reality is 0:03:22.280 --> 0:03:25.399 that the US administration has limited capacity to deal with 0:03:25.440 --> 0:03:28.680 all of this at the same time. But certainly if 0:03:28.720 --> 0:03:31.120 a country has struck a trade deal and now is 0:03:31.160 --> 0:03:34.160 in a worse position, then before the deal they need 0:03:34.200 --> 0:03:37.280 to make a pitch for renegotiation or at least for 0:03:37.320 --> 0:03:40.480 the Trump administration, you know, to adhere to the terms 0:03:40.480 --> 0:03:43.280 of the deal and give them exemptions from this broad 0:03:43.360 --> 0:03:47.400 fifteen percent tariff that Trump has now applied across the 0:03:47.440 --> 0:03:51.080 board for countries set there in the midst of negotiations. 0:03:51.240 --> 0:03:54.480 Certainly it gives them a stronger bargaining hand because the 0:03:54.520 --> 0:03:59.360 Trump administration clearly cannot apply tariff's villy nilly across the board. 0:03:59.400 --> 0:04:01.720 So I think those those negotiations are probably going to 0:04:01.720 --> 0:04:02.760 take a bit of a pause. 0:04:03.560 --> 0:04:03.800 S far. 0:04:03.920 --> 0:04:06.440 One could argue that, if nothing else, this Supreme Court 0:04:06.520 --> 0:04:11.400 ruling just reintroduces, I guess, a level of uncertainty into 0:04:11.520 --> 0:04:15.560 trade global trade like we had back almost in April 0:04:15.600 --> 0:04:19.600 of last year. How do you think global trading partners 0:04:20.160 --> 0:04:23.719 will proceed over the coming months given the Supreme Court ruling. 0:04:25.200 --> 0:04:27.680 The level of uncertainty, as you've pointed out, Paul, is 0:04:27.839 --> 0:04:32.520 just enormously elevated right now, because, yes, Trump's actions with 0:04:32.640 --> 0:04:36.719 tariffs are quite you know, peremptory mercurial, and you never 0:04:36.839 --> 0:04:38.640 quite knew what was going to happen in terms of 0:04:38.680 --> 0:04:40.880 the levels of tariffs, who would be subjected to them. 0:04:41.240 --> 0:04:43.799 But there was a sense that at least some certainty 0:04:43.960 --> 0:04:48.000 was returning to the process with some tariffs being taken off, 0:04:48.040 --> 0:04:50.520 some trade deals being struck. All of that is off 0:04:50.560 --> 0:04:53.920 the table right now. The more interesting question is how 0:04:54.040 --> 0:04:57.280 businesses are going to respond because to them now the 0:04:57.360 --> 0:05:01.599 landscape hascome completely uncertain, and the presumption is probably that 0:05:01.640 --> 0:05:04.440 they're going to retreat from trade and try to protect 0:05:04.480 --> 0:05:06.160 themselves from further on seventday. 0:05:06.160 --> 0:05:08.040 At the moment, that's right, I want to go as 0:05:08.080 --> 0:05:10.240 we're to finish up here, and folks, I can't say enough. 0:05:10.320 --> 0:05:10.920 I'm gonna say it. 0:05:11.000 --> 0:05:15.159 With Zwaran the Doom Loop, I'm like he's got Circe 0:05:15.320 --> 0:05:18.320 from the Game of Thrones in chapter one. I mean, 0:05:18.360 --> 0:05:20.599 I had no idea as far as Circe from the 0:05:20.600 --> 0:05:24.240 Game of Thrones was doing economics. She was. She was 0:05:24.279 --> 0:05:28.839 at Cornell. She was so so difficult at Cornell. She 0:05:28.880 --> 0:05:33.279 melted snowduts, just like in show. I look at the 0:05:33.320 --> 0:05:37.240 Doom Loop here and for me it's Apple lawyer up. 0:05:37.680 --> 0:05:40.400 They had eight hundred million and one point one billion, 0:05:40.440 --> 0:05:44.159 maybe one point four billion, some model of three point. 0:05:44.160 --> 0:05:46.200 Two billion in tariffs. 0:05:46.520 --> 0:05:50.320 His tim Cook can assue the United States of America 0:05:50.520 --> 0:05:51.640 to get that money back. 0:05:54.000 --> 0:05:56.520 That's going to be a long and very complicated role 0:05:56.640 --> 0:06:00.760 because certainly I'm traveling all the refunds, all the tariffs 0:06:00.760 --> 0:06:03.359 that have already been paid, and sending out refunds is 0:06:03.360 --> 0:06:07.520 going to be a massively difficult administrative process, although some 0:06:07.680 --> 0:06:11.039 argue that, you know, it's quite easy to just turn 0:06:11.080 --> 0:06:14.760 the money back, given that the US administration has a 0:06:14.839 --> 0:06:19.400 very clear indication of who paid tariffs and when. But 0:06:19.560 --> 0:06:22.080 I think there is going to be again some holding 0:06:22.120 --> 0:06:25.040 off on this because the numbers involved are really large 0:06:25.040 --> 0:06:27.279 at the moment, and it's sort of entirely clear this 0:06:27.360 --> 0:06:30.760 administration is that capacity to turn things around or wants to, 0:06:31.400 --> 0:06:35.360 because again with new tariffs coming into place, and some 0:06:35.440 --> 0:06:40.560 of these decisions now likely to rest on what tools 0:06:40.560 --> 0:06:44.280 the administration decides to use. I think all the uncertainty 0:06:44.279 --> 0:06:46.920 with the tariff landscape means that corporations are not going 0:06:46.960 --> 0:06:49.720 to be jumping up and down to get the tariffs back, 0:06:49.800 --> 0:06:52.800 especially the large ones. For the smaller ones that live 0:06:52.960 --> 0:06:55.239 day to day, it's a much more important issue because 0:06:55.240 --> 0:06:56.200 they need that money. 0:06:56.600 --> 0:06:56.840 Yeah. 0:06:57.880 --> 0:07:02.039 I don't disagree with that anyway. Shape for an asurpisade. 0:07:02.120 --> 0:07:05.880 Thank you so much for joining us, Stay with us. 0:07:06.120 --> 0:07:09.360 More from Bloomberg Surveillance coming up after this. 0:07:16.600 --> 0:07:20.200 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:07:20.240 --> 0:07:23.400 weekday afternoons from seven to ten am Eastern Listen on 0:07:23.480 --> 0:07:26.920 Apple Karplay and Android auto with the Bloomberg Business app, 0:07:27.080 --> 0:07:29.120 or watch us live on YouTube to. 0:07:29.160 --> 0:07:32.720 Short a visit right now with Torston Slock with Apollo 0:07:32.760 --> 0:07:36.760 Global Management. He has spent the weekend and has wonderful 0:07:37.120 --> 0:07:41.400 continental europe experience. Torston, how do you think the continent 0:07:41.520 --> 0:07:46.120 will respond to tear us? The zeitgeist over the weekend 0:07:46.760 --> 0:07:50.480 is Britain hammered, China, Brazil, etc. 0:07:50.880 --> 0:07:53.760 I mean, how does the EU adjust? 0:07:54.760 --> 0:07:57.160 Well, the European Commission put out a statement yesterday where 0:07:57.160 --> 0:07:59.760 they clearly said that they were going to honor the 0:07:59.800 --> 0:08:01.560 train deal, but at the same time way were of 0:08:01.560 --> 0:08:05.840 course asking questions about well, what are the exact conditions 0:08:05.880 --> 0:08:08.600 for what we're doing going forward. So the Europeans have 0:08:08.680 --> 0:08:11.400 already stated that they are going to honor the trade deal. 0:08:11.400 --> 0:08:13.400 They expect the US to honor the trade deal. But 0:08:13.440 --> 0:08:15.840 it's very clear that this is indeed injecting a whole 0:08:15.880 --> 0:08:18.200 new level of uncertainty. Also on the Europeans Pod. 0:08:18.400 --> 0:08:20.840 With your work at Apollo Global Management. 0:08:21.400 --> 0:08:25.200 Is there a sum market reaction to what this does 0:08:25.360 --> 0:08:26.240 to confidence? 0:08:26.520 --> 0:08:27.920 Say out of the fourth of July. 0:08:29.320 --> 0:08:31.240 Well, the channels now is of course that Section one 0:08:31.240 --> 0:08:33.679 two two tariffs, the fifteen percent. They only count for 0:08:33.679 --> 0:08:36.320 one hundred and fifty days, and then it remains to 0:08:36.360 --> 0:08:38.520 be seen whether they will be continued by Congress. So 0:08:38.640 --> 0:08:40.719 in that sense, that's a whole new level of uncertainty. 0:08:41.040 --> 0:08:43.280 The other level of uncertainty also is that the fifteen 0:08:43.280 --> 0:08:46.320 percent is on the whole world and not on individual countries. 0:08:46.640 --> 0:08:48.760 So this is also raising questions about that it's no 0:08:48.800 --> 0:08:50.680 longer as targeted as it was before. 0:08:51.040 --> 0:08:53.079 It cannot even be targeted just to Europe or to. 0:08:53.120 --> 0:08:56.880 Say Korea or Japan. It is on literally every trade 0:08:56.920 --> 0:08:59.640 partner that the US has. So those two dimensions, both 0:08:59.679 --> 0:09:02.839 of the time length and also that on everyone, is 0:09:02.880 --> 0:09:06.840 indeed injecting uncertainty. I mean, well, of course many people 0:09:06.920 --> 0:09:08.720 might even have looked at this and say, well, Friday 0:09:08.720 --> 0:09:11.079 it was ten percent, now it's fifteen percent, And that's 0:09:11.120 --> 0:09:13.679 of course we're raising questions on their thoughts also about 0:09:13.720 --> 0:09:16.040 what is exactly the level of terrorists in particularly when 0:09:16.040 --> 0:09:17.680 we get two hundred and fifty days down the road. 0:09:17.760 --> 0:09:22.160 In Claudia Sampaul was blistering and saying that even these 0:09:22.240 --> 0:09:24.760 new tariffs could be legally. 0:09:24.440 --> 0:09:27.960 Challenged exactly so in TOURSA, what are our how do 0:09:28.000 --> 0:09:31.520 you think our trading partners will react here. It's just 0:09:31.720 --> 0:09:36.800 yet another kind of unknown thrown into the discussions of 0:09:36.880 --> 0:09:39.640 trade policy. How do you think they're going to react here? 0:09:41.000 --> 0:09:43.280 Well, I think that again the Europeans response, and I 0:09:43.280 --> 0:09:45.280 think also the fact that the Indian mission to the 0:09:45.400 --> 0:09:48.560 US to trade to do trade negotiations was canceled is 0:09:48.559 --> 0:09:50.480 telling you also that they are beginning to be at 0:09:50.559 --> 0:09:53.199 least some legal issues around both of course the existing 0:09:53.200 --> 0:09:57.360 trade deals, but also what might be the framework going forward. 0:09:58.400 --> 0:10:01.280 They are likely thinking about, well, if we signed a 0:10:01.280 --> 0:10:04.200 document today, is this going to change soon? 0:10:04.240 --> 0:10:04.560 Again? 0:10:04.640 --> 0:10:06.880 Are they going to be any legal issues? Ascodia Sam 0:10:06.960 --> 0:10:09.720 was saying that there one two two is actually under 0:10:09.760 --> 0:10:11.680 the conditions that there has to be a balance of 0:10:11.760 --> 0:10:15.840 payment crisis, which is very different from a trade crisis 0:10:15.920 --> 0:10:16.640 or a trade. 0:10:16.360 --> 0:10:18.080 Deficit and a balance of payment deficit. 0:10:18.440 --> 0:10:21.240 So from that perspective, there's also legal challenges likely going 0:10:21.240 --> 0:10:23.800 to come on this section one two two the tariffs. 0:10:24.000 --> 0:10:25.800 So that's why there's just a lot of things. The 0:10:25.920 --> 0:10:28.000 dust has really been whirled up. We really opened up 0:10:28.000 --> 0:10:31.280 the macroeconomic text boogainst national finance, because there's just a 0:10:31.280 --> 0:10:33.000 lot of things that now people need to think very 0:10:33.040 --> 0:10:35.080 hard about it, and I think that's what the rest 0:10:35.080 --> 0:10:37.040 of the world is trying to do at this moment. 0:10:37.520 --> 0:10:37.960 Torsen. 0:10:38.360 --> 0:10:43.200 Despite all the global trade uncertainty over the past fourteen 0:10:43.240 --> 0:10:46.880 fifteen months, the US economy performing well. How do you 0:10:46.920 --> 0:10:47.960 put that into context? 0:10:48.880 --> 0:10:51.240 Well, because in the background, while we've had the trade 0:10:51.240 --> 0:10:53.320 ball especially of course this diberation day, we've had a 0:10:53.440 --> 0:10:56.640 very strong boom in AI spending, and we've also had 0:10:56.640 --> 0:11:00.000 an industrial renaissance. The dustrial renaissance really was already started 0:11:00.360 --> 0:11:02.280 on the Biden with the Chips Act saying that semi 0:11:02.320 --> 0:11:05.680 conductors need to reproduce domestically. Of course, Trump has also 0:11:05.720 --> 0:11:09.040 focused on pharmaceuticals, need to produce domestically. That's also non 0:11:09.320 --> 0:11:12.200 focused on defense. Of course, need to also grow and 0:11:12.240 --> 0:11:14.600 this is us for a renaissance. This is indeed also 0:11:14.640 --> 0:11:17.000 something that's a tail into growth. And finally, let's not 0:11:17.040 --> 0:11:18.800 forget on January the first, we also got the one 0:11:18.840 --> 0:11:20.880 big beautiful bill, The one big bulti of Al bill 0:11:21.080 --> 0:11:24.160 was changes to tax laws that were done retroactively, so 0:11:24.200 --> 0:11:27.120 it actually took effect of first of January twenty twenty five. 0:11:27.520 --> 0:11:29.760 That means that when households get a tax refund here 0:11:29.800 --> 0:11:32.880 in April and March. Well, that tax refund, which normally 0:11:32.920 --> 0:11:34.960 is around three thousand dollars, that will not go up 0:11:34.960 --> 0:11:37.240 too roughly around four thousand dollars. So we have a 0:11:37.240 --> 0:11:40.680 fairly significant boost coming to consumer spending here in March, April, 0:11:40.679 --> 0:11:42.480 and May. And on top of that, we also have 0:11:42.600 --> 0:11:46.160 immediate expensing where companies can write down their capex expenditures 0:11:46.240 --> 0:11:48.840 right away, which is also a boost to capic spending. 0:11:48.920 --> 0:11:50.839 So the short answer to your question is, yes, the. 0:11:50.760 --> 0:11:52.880 Trade bill has certainly been a hit wind, but while 0:11:52.880 --> 0:11:54.760 that heatment has been playing out, we've had a number 0:11:54.760 --> 0:11:56.640 of tailwinds that, of course have been the reason why 0:11:56.640 --> 0:11:58.240 the economy has continued to do so well. 0:11:58.360 --> 0:12:01.319 Have you got a rationalization, tourist cinem a one point 0:12:01.360 --> 0:12:05.800 four percent GDP was due to shutdown. Did you bring 0:12:05.880 --> 0:12:08.840 down a real, real GDP view forward for the rest 0:12:08.880 --> 0:12:09.440 of this year. 0:12:10.679 --> 0:12:14.240 No, because also exactly as you're saying, Tom, this PA 0:12:14.400 --> 0:12:17.480 clearly said that the one point four number, if we 0:12:17.640 --> 0:12:19.920 take what the shutdown accounted for, there was roughly one 0:12:19.920 --> 0:12:22.199 percent is point, So that brings you to two point 0:12:22.280 --> 0:12:24.600 four which is higher than the Congressional Budget Office estimate 0:12:24.640 --> 0:12:26.319 of two percent, which is the long run growth rate 0:12:26.320 --> 0:12:28.920 for the US. So in that sense, the US economy 0:12:28.960 --> 0:12:31.480 outside of the shutdown, of course, was actually still doing 0:12:31.520 --> 0:12:33.920 reasonly well, and they slowly out of the label market. 0:12:33.920 --> 0:12:36.040 As you also have discussed so much, it really is 0:12:36.160 --> 0:12:38.960 mainly drawn by labor supply that has been falling and 0:12:39.040 --> 0:12:41.600 much so much labor demand. So that's why you can 0:12:41.640 --> 0:12:44.320 still have strong GDP and slower job growth. But slow 0:12:44.400 --> 0:12:47.000 job growth is not because of weaker labor demand, but 0:12:47.040 --> 0:12:49.760 it's really because the weaker labor supply. So taken together, 0:12:50.000 --> 0:12:52.240 the US economy actually continued to do well. That doesn't 0:12:52.280 --> 0:12:54.040 mean that there are still risks that we could hit 0:12:54.280 --> 0:12:56.880 the rough and not go down straight the fairway. We 0:12:56.920 --> 0:12:58.720 actually think the risk of hitting the rough and not 0:12:58.800 --> 0:13:01.160 going straight to the whole here it has increased from 0:13:01.160 --> 0:13:03.360 ten percent to thirty percent. So we are watching the 0:13:03.400 --> 0:13:05.520 tail ridge to the opto very carefully, not only of 0:13:05.559 --> 0:13:07.800 course because of AI and what's going on with the 0:13:07.840 --> 0:13:10.640 trade ball, but also because of issues. Just as comment debt, 0:13:10.920 --> 0:13:13.280 interest rates could potentially see a quick move up and 0:13:13.320 --> 0:13:15.880 down because of the inflation surprise at imposting and all 0:13:15.960 --> 0:13:17.760 SAX saying inflation is going to go high. So that's 0:13:17.760 --> 0:13:19.839 a number of other things that could throw us off. 0:13:19.880 --> 0:13:22.240 But the bottom line is the economy continues to do well. 0:13:22.320 --> 0:13:24.679 Or is there can post and looking at wage inflation, 0:13:24.760 --> 0:13:27.079 that maybe the surprise of the year. Turst and Sluck, 0:13:27.480 --> 0:13:28.920 thank you so much with a puddle. 0:13:30.679 --> 0:13:31.400 Stay with us. 0:13:31.640 --> 0:13:34.839 More from Bloomberg Surveillance coming up after this. 0:13:42.120 --> 0:13:45.680 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:13:45.760 --> 0:13:48.920 weekday afternoons from seven to ten am Eastern Listen on 0:13:49.000 --> 0:13:52.640 Applecarplay and Android Auto with the Bloomberg Business app, or 0:13:52.800 --> 0:13:54.400 watch us Live on YouTube. 0:13:54.480 --> 0:13:54.920 It's one of. 0:13:54.960 --> 0:13:59.880 The most twisted parchments and economics out of Brown Universe, 0:14:00.679 --> 0:14:03.720 with all of the fabulous heritage there of William Poole 0:14:03.800 --> 0:14:07.240 and other giants as well. They're not to the crazy 0:14:07.320 --> 0:14:11.280 Mathewess Paul of San Diego, which is like the most mathematical. 0:14:11.640 --> 0:14:15.920 I mean, they're doing standard deviations in the hallways and 0:14:16.040 --> 0:14:19.360 it's nuts. Martha Gimblet survived at all. It has provided 0:14:19.360 --> 0:14:22.640 a leadership at the budget lab at Yale, and as 0:14:22.640 --> 0:14:27.680 we go from stumbling crisis to stumbling crisis, everybody is 0:14:27.760 --> 0:14:31.480 tuning in with more and more intensity to the academic work. 0:14:32.080 --> 0:14:35.080 This weekend they published a tour de force. I put 0:14:35.160 --> 0:14:38.480 one chart, figure five out. I'm going to translate it 0:14:38.560 --> 0:14:42.160 now with political viciousness for Martha Gimble. 0:14:42.680 --> 0:14:45.720 Martha, your distribution. 0:14:45.120 --> 0:14:49.520 Of tariff effect and then adjusted for the fact will substitute. 0:14:50.080 --> 0:14:53.720 And you take it after tex when you take the 0:14:53.840 --> 0:14:58.840 tariff analysis of the budget, lab after tax, after some 0:14:59.080 --> 0:15:03.680 form of rental housing measurement, after some form of basic 0:15:03.840 --> 0:15:07.880 food measurement, how is the bottom half going to survive 0:15:08.520 --> 0:15:09.320 these tariffs? 0:15:11.080 --> 0:15:14.840 You know, it's not going to be great for anyone, 0:15:14.960 --> 0:15:19.000 but tariffs are also regressive. It's much much worse for 0:15:19.120 --> 0:15:22.120 people at the bottom. And I think it's also important 0:15:22.160 --> 0:15:25.480 to keep in mind that this combines with the One 0:15:25.480 --> 0:15:28.520 Big Beautiful Bill Act from last year, which yes, you 0:15:28.560 --> 0:15:31.480 know does send money out into the economy, but is 0:15:31.640 --> 0:15:37.280 also regressive. And if you combine the effects of teriffs 0:15:38.000 --> 0:15:40.840 and the One Big Beautiful Bill Act, it's only really 0:15:40.920 --> 0:15:43.760 people at the top who are better off on net. 0:15:44.440 --> 0:15:46.720 And so if you're thinking about what's going to happen 0:15:46.760 --> 0:15:51.120 with consumer spending in the future, we're going to be 0:15:51.120 --> 0:15:54.120 facing consumers towards the middle and bottom who are a 0:15:54.200 --> 0:15:57.200 lot more constrained because prices are going up for them 0:15:57.200 --> 0:15:59.000 at the same time that they have less spending power. 0:16:00.080 --> 0:16:05.200 So, Martha, what did the Supreme Court ruling mean for 0:16:06.000 --> 0:16:09.160 the overall tariff rate? Is it HighRes it lowers the same? 0:16:09.520 --> 0:16:10.000 I don't know. 0:16:11.240 --> 0:16:16.200 Well, yes, that is an excellent question. That's partly because 0:16:16.240 --> 0:16:18.560 the tariff rate has been a lot of different things 0:16:18.800 --> 0:16:23.360 over the weekend. So we started at sixteen percent going 0:16:23.440 --> 0:16:27.000 into this Scotus ruling. Then scot Has ruled, it went 0:16:27.040 --> 0:16:32.440 down to nine. Then President Trump announced tariffs, but they 0:16:32.440 --> 0:16:34.760 didn't announce the exemption, so it looked like it went 0:16:34.800 --> 0:16:37.720 up to fifteen percent, and then they announced the exemptions, 0:16:37.760 --> 0:16:40.240 went down to twelve, and then he announced that we 0:16:40.240 --> 0:16:43.080 were going to fifteen and went back up to fourteen percent. 0:16:43.200 --> 0:16:46.680 So we've had like five different tariff rates in the 0:16:46.720 --> 0:16:49.720 space of thirty six hours. I should also note when 0:16:49.760 --> 0:16:53.160 I say, you know, twelve fourteen, he's using an authority 0:16:53.160 --> 0:16:55.440 that expires in one hundred and fifty days. Now they've 0:16:55.480 --> 0:16:58.720 said that they're going to put other tariffs in place 0:16:59.680 --> 0:17:02.720 that will, you know, in some way was replicate these 0:17:02.760 --> 0:17:06.880 tariffs That might be true at the overall effective tariff rate, 0:17:06.920 --> 0:17:10.600 that headline number. But if you're a business, you need 0:17:10.640 --> 0:17:13.360 to know, wait, exactly what products are going to be tariffed, 0:17:13.600 --> 0:17:18.120 exactly what countries are going to be affected, And they 0:17:18.160 --> 0:17:21.320 haven't provided clarity on that, and so what we're in 0:17:21.400 --> 0:17:24.560 is this big sea of uncertainty that we're all going 0:17:24.600 --> 0:17:25.919 to be sitting in for quite some time. 0:17:26.560 --> 0:17:30.040 So, boy, it's so hard for just to keep track 0:17:30.080 --> 0:17:33.120 of what the tariff rates are. Do we have any 0:17:33.160 --> 0:17:37.440 confidence that they're being collected accurately? Because I can't imagine 0:17:37.480 --> 0:17:42.120 some person, it's some loading doc, you know, figuring all 0:17:42.119 --> 0:17:43.040 this stuff out here. 0:17:44.960 --> 0:17:47.880 I will say, at one point in twenty twenty five, 0:17:47.960 --> 0:17:50.280 a reporter called me and said, do you know what 0:17:50.320 --> 0:17:53.000 the tariff rate is on this very specific product? And 0:17:53.040 --> 0:17:55.320 I said, I have no idea. That's a question for 0:17:55.480 --> 0:17:57.919 CBP And he said they were my first call. They 0:17:57.920 --> 0:18:03.000 said they couldn't tell me. It's very confusing, and you're 0:18:03.000 --> 0:18:05.000 trying to keep track of all these different things and 0:18:05.000 --> 0:18:09.000 when things land when they landed. This is it's really 0:18:09.119 --> 0:18:12.119 hard to do business under these circumstances. 0:18:12.160 --> 0:18:13.679 Give us a window, Martha, into this. 0:18:13.800 --> 0:18:17.200 How many experts at the Budget Lab of Yale were 0:18:17.240 --> 0:18:20.680 working on this magic Friday and into the weekend. How 0:18:20.680 --> 0:18:22.760 many people were making the soup? 0:18:23.640 --> 0:18:28.080 Yeah, we had four. So I will call in here 0:18:28.880 --> 0:18:31.960 John Rico, John Isln, Josh Kendall, and Mattie Lee. So 0:18:32.080 --> 0:18:33.960 everyone please take your local So. 0:18:33.960 --> 0:18:38.359 Like Uslin's got substantial like Berkeley, Maryland chops, he's worked 0:18:38.359 --> 0:18:41.200 at CBO. And that did the adults in the room, 0:18:41.280 --> 0:18:44.399 these young turks who are brilliant, do they see the 0:18:44.480 --> 0:18:49.600 same legal sequence ballet again of a court, an appeals court, 0:18:49.640 --> 0:18:52.399 a Supreme court, or for all our listeners and viewers, 0:18:52.440 --> 0:18:55.200 Martha Gimble, can we get this done faster? 0:18:56.920 --> 0:18:57.280 I don't know. 0:18:57.320 --> 0:18:59.680 I mean, so the section one twenty two, which is 0:18:59.720 --> 0:19:02.520 the already that they're using right now, you've already seen 0:19:02.560 --> 0:19:06.840 people over the weekend debating whether or not it applies 0:19:06.880 --> 0:19:11.280 to this particular situation. And you know, once again, are 0:19:11.320 --> 0:19:15.000 these tariffs legal? So I assume that there's going to 0:19:15.000 --> 0:19:18.119 be litigation and we're just going to go through the 0:19:18.160 --> 0:19:19.399 whole thing all over again. 0:19:20.000 --> 0:19:23.400 Martha Gimblale with us a budget levity, and we continue here. 0:19:23.520 --> 0:19:27.439 Douglas Irwin of Dartmouth College definitive his book Against the 0:19:27.480 --> 0:19:32.800 Tides Change the landscape of tariff analysis thirty forty years 0:19:32.800 --> 0:19:34.560 ago with US tomorrow as well. 0:19:34.600 --> 0:19:36.560 Paul Sweeney with Martha Kimball. 0:19:36.960 --> 0:19:40.440 Martha, you know, how about some of these training quote 0:19:40.520 --> 0:19:45.520 unquote partners that have signed I guess, big reciprocal deals 0:19:45.520 --> 0:19:48.600 that are at rates perhaps higher than the ten or 0:19:48.640 --> 0:19:50.880 fifteen percent wherever we are. Now, what do they do? 0:19:50.880 --> 0:19:52.960 Did they come back to the negotiating table and say, hey, 0:19:52.960 --> 0:19:55.520 we want the better rate? What do they do? 0:19:56.640 --> 0:19:59.280 Yeah, that's a really great question. There was just reporting 0:19:59.320 --> 0:20:01.919 out this morning saying that Europe is putting their you know, 0:20:02.040 --> 0:20:04.800 deals on hold until they find out what on earth 0:20:04.840 --> 0:20:08.280 is going on. There's a lot of uncertainty at this point. 0:20:08.440 --> 0:20:10.800 You haven't asked me about refunds for people who have 0:20:10.920 --> 0:20:15.280 already paid merits as another source of uncertainty. You know, 0:20:15.400 --> 0:20:18.280 the court didn't really rule on that. The administration has 0:20:18.280 --> 0:20:21.719 heavily implied that they're going to fight any payment of refunds, 0:20:22.040 --> 0:20:23.520 So people are going to start sumer ring. 0:20:24.600 --> 0:20:24.800 You know. 0:20:24.880 --> 0:20:29.400 It's it's when you think about tariffs. There are negative 0:20:29.400 --> 0:20:33.840 economic effects that I think about with tariffs, But for me, overall, 0:20:34.359 --> 0:20:37.520 the biggest negative comes in through the uncertainty and people 0:20:37.560 --> 0:20:40.200 being unable to make decisions and not knowing what's going on, 0:20:40.920 --> 0:20:43.959 and we certainly did not see a decrease in uncertainty 0:20:43.960 --> 0:20:45.080 over My. 0:20:45.160 --> 0:20:48.080 Answer is, as an amateur, this gets decided at the 0:20:48.119 --> 0:20:51.080 ballot box, as it has back to eighteen ninety and 0:20:51.160 --> 0:20:54.119 frankly before that that was coming off the Panic of 0:20:54.160 --> 0:20:56.840 eighteen seventy two. They had the enjoyment of the Panic 0:20:56.880 --> 0:20:59.879 of eighteen ninety three three years later or basically then 0:21:00.440 --> 0:21:03.560 through the Republicans out of office. Martha Gimble, do you 0:21:03.600 --> 0:21:08.320 and your team see a political ballot back solution to 0:21:08.440 --> 0:21:09.680 our tariff discussion? 0:21:11.040 --> 0:21:14.080 You know, we're a nonpartisan group of economists, so I 0:21:14.080 --> 0:21:18.400