Speaker 1: From UFOs to psychic powers and government conspiracies. History is
Speaker 1: riddled with unexplained events. You can turn back now or
Speaker 1: learn this stuff they don't want you to know. A
Speaker 1: production of iHeartRadio.
Speaker 2: Hello, welcome back to the show. My name is Matt,
Speaker 2: my name is Noel.
Speaker 3: They call me Ben. We're joined as always with our
Speaker 3: super producer Andrew the try Force Howard. Most importantly, you
Speaker 3: are you.
Speaker 2: You are here.
Speaker 3: That makes this the stuff they don't want.
Speaker 4: You to know. Buddy, friends and neighbors, fellow conspiracy realist,
Speaker 4: We're finally doing it. It's the tariffs episode up and
Speaker 4: up until a few months ago. It's fair to say
Speaker 4: no judgment that many of us in the crowd this
Speaker 4: evening spent years without thinking of tariffs. Unless you're like
Speaker 4: a business tycoon or you play very specific board games.
Speaker 5: Why why are you thinking about tariffs? I guess I
Speaker 5: mainly remember it from really early, like middle school civics classes,
Speaker 5: the same ones where you kind of learn about, you know,
Speaker 5: the separation of church and state and checks and balances
Speaker 5: and all of that good stuff.
Speaker 2: Well, you're it's highly likely that you learned about this
Speaker 2: in school. The thing we're going to be talking about
Speaker 2: today because it was a pretty big deal. Uh, at
Speaker 2: least a nice little what do we say, guys, some
Speaker 2: kind of bullet points. You're as you're learning about tariffs,
Speaker 2: you likely learned about these this specific legislation.
Speaker 3: Yeah, Miss Grimspife says, this sentence will be on the
Speaker 3: test is that as you shoot out for the rest?
Speaker 3: What was that a real teacher you had?
Speaker 5: It's illegal for you to ask, Miss Grims did you
Speaker 5: go to Hogwarts?
Speaker 3: All right? So I went to a couple of Hogwarts. Yeah,
Speaker 3: But let's be honest, though, you know, I think it's
Speaker 3: fair to say, you guys, that most of us, at
Speaker 3: least in the United States, we have had a at
Speaker 3: best a loose understanding of what a tariff means, how
Speaker 3: it works, and why the average person should care. But recently,
Speaker 3: this relatively dusty, dry aspect of what we call the
Speaker 3: dismal science has skyrocketed back into the zeitgeist. Fans of
Speaker 3: the new US administrations many many ongoing recent declarations regarding tariffs,
Speaker 3: They'll say it's great for America. Critics will say that
Speaker 3: these moves financially could endanger not just the US, but
Speaker 3: in doing so, endanger the world. Overall, put simply, what's
Speaker 3: going on here? You know, let's ask ourselves that at
Speaker 3: the beginning.
Speaker 2: Well for sure, for sure, and you know, we probably
Speaker 2: haven't thought about tariffs much, especially people who are around
Speaker 2: our age or maybe even maybe even our parents' age,
Speaker 2: haven't really thought about tariffs because a lot of this stuff,
Speaker 2: you know, when you think about the North American free
Speaker 2: trade agreements and other major things came into play, but
Speaker 2: other agreements that came into play where tariffs were largely
Speaker 2: removed or reduced to increase global trade and you know,
Speaker 2: connection globally so that so all ships would rise. It
Speaker 2: is strange to see everybody kind of on the planet
Speaker 2: moving in the opposite direction.
Speaker 3: Maybe, I mean, that's right, that's the question protectionism versus globalism.
Speaker 3: That's the large brush way of putting.
Speaker 5: And I guess I've always struggled personally with like the
Speaker 5: difference between like duties and important export taxes and some
Speaker 5: of the stuff that's already part of the equation, and
Speaker 5: how tariffs are different, and why it's always talked about
Speaker 5: as such a negative kind of adversary of thing like
Speaker 5: slapping tariffs on things. The language around them always kind
Speaker 5: of feels like fighting words.
Speaker 3: It's weirdly violent, you know when we see that often
Speaker 3: in corporate parlance as well. Aka, you guys are crushing it.
Speaker 3: So what is going on here? I got a side
Speaker 3: note for us. Are ads on podcasts? Are they like
Speaker 3: the podcast version of tariffs? Are they levied on the listener?
Speaker 2: Yes? I think you're right.
Speaker 5: Well, I mean, it certainly is a thing that requires
Speaker 5: you to give some of that precious attention to something
Speaker 5: else that you maybe weren't necessarily wanting to in order
Speaker 5: to get the thing that you were wanting.
Speaker 2: Yeah, in this specific episode you were You have to sorry,
Speaker 2: your podcast player is going to do this. You have
Speaker 2: to listen to forty percent of the next episode as
Speaker 2: you listen to this one.
Speaker 3: It's only fair. We're gonna pause for a word from
Speaker 3: our sponsors, and then let's start at the beginning. Here
Speaker 3: are the facts, all right? What the Hecker tariffs? The
Speaker 3: actual definition, the easiest at base definition. A tariff is
Speaker 3: at heart a tax. It is a tax place by
Speaker 3: a recipient country upon goods supplied from another country. They
Speaker 3: go across international borders, They're not taxing the other country.
Speaker 3: They're taxing the forces that import whatever that good or
Speaker 3: material may be.
Speaker 5: Right, and a duty, like I was saying, I'm never
Speaker 5: gonna not giggle, and they say duty, It is hilarious, hilarious. It's,
Speaker 5: you know, unquestionably hilarious. It is similar, but it is
Speaker 5: a fee that is based on what the product is,
Speaker 5: certain qualities of a product, and you're usually set on
Speaker 5: a permanent basis by international trade agreements.
Speaker 3: Yeah, like the wto the World Trade Organization. They're always
Speaker 3: swinging around, swinging elbows around, but this doctoring, if you will, Yeah,
Speaker 3: to try to maintain or to aspire to maintain some
Speaker 3: sort of rules of the road. I love that you're
Speaker 3: pointing out duty because yes, it's a tremendously funny word.
Speaker 3: But also also a tariff in general is going to
Speaker 3: be against a specific material, the idea of that metal, steel, aluminum,
Speaker 3: those are always big ones. Or it will be against
Speaker 3: the affine levied against importing goods from an origin country.
Speaker 3: So are too defining factors are where does it come from?
Speaker 3: And what is it? And the most common type of tariff,
Speaker 3: at least currently is what's called an import tariff. So
Speaker 3: you are bringing stuff from outside, we want our vigoroush
Speaker 3: There are export tariffs, which means you have to pay
Speaker 3: more if you, as a company bring something away from
Speaker 3: your origin country. But those are super rare here at
Speaker 3: least because they're forbidden by the US Constitution.
Speaker 5: So really quickly, guys, I think this is something that
Speaker 5: I've been struggling with, and I imagine that maybe some
Speaker 5: folks out there have as well. Based on an infographic
Speaker 5: that I just found on dclcore dot com about supply chains,
Speaker 5: it's a blog about this kind of stuff. A tariff
Speaker 5: is a type of tax added to imports, and I
Speaker 5: think the goal of it is maybe what distinguishes it.
Speaker 5: The idea is that it is a means of controlling
Speaker 5: how freely a particular type of product or good can
Speaker 5: be imported into a country. And it's a little more
Speaker 5: specific and kind of at the whim of the country
Speaker 5: in question. A duty, on the other hands, the type
Speaker 5: of tax added to imported products based on these rates
Speaker 5: established by international trade negotiations.
Speaker 2: Nice.
Speaker 3: Nice, that makes sense, okay, And throughout history this is
Speaker 3: understandable because look at your base beginning game of Civilization
Speaker 3: right the Fantastic Empire Simulator as a video game. Throughout
Speaker 3: the span of human history, pretty much every country is
Speaker 3: limited in one way or another when it comes to
Speaker 3: making stuff at home. You might not have mission critical
Speaker 3: resources for your territory and your people. You might have
Speaker 3: a bunch of stuff that helps otherwise, right, you might
Speaker 3: have a bunch of fossil fuels for an stints, but
Speaker 3: you might not have a bunch of potable water or
Speaker 3: arable land wherein you can or from which you can
Speaker 3: create food. So you also may not then, as now,
Speaker 3: have the domestic ability to produce goods and services that
Speaker 3: your public requires. And let's remember, we want our public
Speaker 3: to either be happy or frightened, preferably both, because that
Speaker 3: will promote compliance. Sorry, that sounds evil, but that's how
Speaker 3: it works.
Speaker 5: Yeah, I mean, it's a political mechanism no matter how
Speaker 5: you look at it.
Speaker 2: Yeah. This country has an interesting history with tariffs, in
Speaker 2: the desire to put tariffs on goods from other countries,
Speaker 2: specifically agricultural products, at least historically, where there's been a
Speaker 2: lot of desire to prevent other agriculture goods from coming
Speaker 2: into the country because you know, if you look at
Speaker 2: the at least the center of the United States, there's
Speaker 2: so much agriculture going on there, and well we'll talk
Speaker 2: about the history of the Great Depression and some of
Speaker 2: the you know, climate problems that affected the United States
Speaker 2: and our ability to create agriculture products. And then you know,
Speaker 2: we did an episode on We did an episode right
Speaker 2: on agriculture and the amount of money the US government
Speaker 2: pays farmers to grow food and like specific types of food,
Speaker 2: a lot of this stuff, at least again just historically
Speaker 2: with the United States, tariffs have to do directly with
Speaker 2: that same stuff, protecting farmers and those products.
Speaker 3: So as a result of the abundance of some riches
Speaker 3: and the dearth of others, every country on the planet
Speaker 3: has trade agreements with other countries. Yes, even the bad
Speaker 3: guys and the pariah states like and the DPRK, they
Speaker 3: have intense trade agreements at this point in history, as
Speaker 3: we record this evening, countries have to trade to exist
Speaker 3: as a modern state. There is no way around this.
Speaker 3: This is not arguable, it is negotiable. But outside of
Speaker 3: North Sentinel Island, everyone is playing this game. And the
Speaker 3: bag of badgers here is to that earlier point about
Speaker 3: the World Trade Organization. International trade agreements can be super dirty.
Speaker 3: The politicians and the you know, the kingmakers and so on.
Speaker 3: They're selling a shiny often something packaged as an ideology
Speaker 3: to their local population. But then they're going back and
Speaker 3: trying to create the weirdest covenants. You could imagine. There
Speaker 3: are no good guys in this sphere, you know. Imagine
Speaker 3: like in your own life, have you ever signed one
Speaker 3: of those rent to own griffs or a gym membership
Speaker 3: that made it very difficult for you to get out
Speaker 3: of the membership? Have you signed an unfair NDA that
Speaker 3: That's kind of how trade agreements go. They're often in balance.
Speaker 3: Everyone wants an edge, and they push hard to leverage
Speaker 3: that edge, not always to the benefit of their greater populace,
Speaker 3: often honestly for the profit motos of powerful demographics, you know,
Speaker 3: certain trade organizations, lobbyists, tycoons, business owners, politicians right.
Speaker 5: Well, and a lot of the rhetoric right now around
Speaker 5: a potentially looming trade war with the United States and
Speaker 5: you know, multiple other countries, is this notion that we
Speaker 5: as the United States, have been ripped off for too
Speaker 5: long by Mexico, by Canada because of you know, the
Speaker 5: amount that they're taxing us for imported goods that we
Speaker 5: rely on. And it is just that, right, it's rhetoric,
Speaker 5: and it's not always verifiably true the way that it's
Speaker 5: put forth.
Speaker 3: Let me put let me put a further piece on
Speaker 3: the board here. Some very wholesome things can indeed have
Speaker 3: damaging effects, even with the best of intentions. For instance,
Speaker 3: we haven't done an episode on this, but you'll see
Speaker 3: a lot of clothing drives in Western Europe or in
Speaker 3: the US in particular, and the idea is that, hey,
Speaker 3: you know, I've got a good jacket. I don't wear
Speaker 3: it anymore. I want someone who can't afford this jacket
Speaker 3: to have it. So now I'm donating a thing. But
Speaker 3: then when it reaches the end user, those purportedly charitable
Speaker 3: donations just get resold. What I'm saying is the game
Speaker 3: is dirtier than people imagine interesting, so trade agreements are necessary.
Speaker 3: They can often be unfair, and when a given nation
Speaker 3: state five any agreement disadvantageous, they have this toolkit, like
Speaker 3: a Batman utility belt, of a bunch of entirely legal
Speaker 3: moves that they can deploy. And tariffs exist for two reasons. Primarily, first,
Speaker 3: protected domestic industry. Like we're saying earlier, a great example
Speaker 3: of this would be the cartoonish tariffs that modern day
Speaker 3: Japan imposes on all rice imported from abroad. It's something
Speaker 3: like four hundred percent. If you import rice from another country,
Speaker 3: you pay, you, the importer, pay four hundred percent to
Speaker 3: the government of Japan.
Speaker 5: Well, and if I'm not mistaken, during the first Trump administration,
Speaker 5: he imposed a pretty steep tariff on the import of
Speaker 5: steel and aluminum. And when that happened, it did seem
Speaker 5: to promote more domestic reduction of those materials. But then
Speaker 5: there was a byproduct because of the hikes in prices
Speaker 5: that took place, you know, under that new situation, and
Speaker 5: therefore it almost was like a zero sum game kind
Speaker 5: of right.
Speaker 3: Yeah, the price the price discrepancy was egregious in that point.
Speaker 3: You know, we're talking about protectionism, which sometimes can sound
Speaker 3: like a bad word like globalism. The thing is, for
Speaker 3: our case of Japan, without those heavy tariffs on competing
Speaker 3: rival producers, Japan's domestic rice cultivation would collapse almost overnight,
Speaker 3: right within a decade or so.
Speaker 2: So let's just really game that out. Japan makes a
Speaker 2: lot of rice and it costs a certain amount of money.
Speaker 2: Let's say, per I don't know what it would be
Speaker 2: per bag of rice right that you would sell. You
Speaker 2: can get much cheaper rice theoretically from neighboring countries, let's
Speaker 2: say China, just a little way from Japan, because it's
Speaker 2: produced so cheaply compared to the rice that's being produced
Speaker 2: in Japan. But if that happens, as you're saying, Ben,
Speaker 2: the folks making rice in Japan don't have a job anymore.
Speaker 2: They can't make rice because you can get it so
Speaker 2: cheaply from China. But not if you put in this,
Speaker 2: as you said, protectionist thing of a tariff against the
Speaker 2: Chinese rice. So now it costs even more or the same,
Speaker 2: probably a little more to get the rice from China
Speaker 2: than it would to just you know, go down the
Speaker 2: street and get it from a local rice producer.
Speaker 3: It is price fixing.
Speaker 5: And I think that holds true of the aluminum and
Speaker 5: steel example too, where even though more aluminium and steel
Speaker 5: was being produced domestically, it was more expensive, and therefore
Speaker 5: that cost was passed on to consumers, which is always
Speaker 5: what happens. And I'd love to talk more about that
Speaker 5: when the time comes, But it ended up being basely
Speaker 5: zeroed out any any positive growth that was you know,
Speaker 5: could have resulted.
Speaker 3: From that negative v net positive. So first, the first
Speaker 3: reason a tariff exists is to protect a domestic industry.
Speaker 3: The second is to make revenue. A revenue focused tariff
Speaker 3: imposes costs on exporters and then takes that little vigorous,
Speaker 3: that little percentage, and generally is going to add it
Speaker 3: to a murky i'll say it, a murky petty cash
Speaker 3: or general fun thing for a given receiving government. Over
Speaker 3: the long term, if everything works out this protectionism approach,
Speaker 3: it will shore up domestic interests. That's part of why
Speaker 3: you know, an old school traditional cheesemaker in Italy can
Speaker 3: still make a living with parmesan. Right, We've got all
Speaker 3: sorts of stuff in the European Union and that says here,
Speaker 3: this is what makes parmesan real and this is sort
Speaker 3: of the baseline price at which this stuff exists. But
Speaker 3: generally speaking, tariffs do not hold an immediate direct benefit
Speaker 3: for your Jane and John Blue jeans, wherever they may exist.
Speaker 5: Because of that old expression we passed the savings on
Speaker 5: to you. Well, the opposite is also true, if not
Speaker 5: more true.
Speaker 2: Well, yeah, because imposing a tariff is a it's a move,
Speaker 2: it's a chess move in a It's not a trade
Speaker 2: war necessarily, right, but a tariff is making a play
Speaker 2: and everybody else then responds to that.
Speaker 3: Really, yeah, the feedback loops are real. You know. First,
Speaker 3: why would you make a tariff right knowing it's not
Speaker 3: immediately benefiting the overall public. First, it is a response.
Speaker 3: A tariff is often response to some earlier similar move
Speaker 3: somewhere across the board. It's a tag back on an
Speaker 3: unfair trade agreement right. Second, it's part of this carrot
Speaker 3: versus stick exercise to push compliance toward arrival. Third, most importantly,
Speaker 3: and I have to say this, I know tariffs are
Speaker 3: very unfair historically, and we'll see how they went wrong
Speaker 3: in the US several times. But tariffs can maintain sovereignty
Speaker 3: and independence, like in the case of Japan, in the
Speaker 3: case of Western Europe as well. There is a hard
Speaker 3: limit on arable land, so you could do you have
Speaker 3: two things you always want to produce with self sufficienc right,
Speaker 3: two things you always want to have within your border,
Speaker 3: ideally food and potable or drinkable water. So Japan or
Speaker 3: the EU is often fighting to raise the cost for
Speaker 3: other countries' imports so that they never become dependent upon
Speaker 3: those imports. Right like the rice example. What if what
Speaker 3: if things go south between China or other actors in
Speaker 3: the East Asian sphere, Right like, now Japan doesn't have
Speaker 3: rice because they allowed the country to become dependent upon imports.
Speaker 5: Ben wasn't the Boston Tea Party, you know, that inciting
Speaker 5: event that largely led to the American Revolution, you know,
Speaker 5: between the colonies and Great Britain a result of tariffs
Speaker 5: that were slapped on tea.
Speaker 3: Well, also colonialism for sure.
Speaker 5: But I mean that just goes to show that something
Speaker 5: that could be maybe considered a trade war, something that
Speaker 5: you know, doesn't seem to be an outright act of
Speaker 5: hot war, can certainly lead to that, you know, given
Speaker 5: tenuous situations and relationships between countries.
Speaker 3: For sure. Man, And if you're playing d game, then
Speaker 3: you're incentivized on a sith lord level because at the
Speaker 3: same time you maintain your sovereignty and your independence, you
Speaker 3: are prioritizing at the at the top levels, right you are.
Speaker 3: You are prioritizing the idea of making other countries or
Speaker 3: entities dependent upon you. Right this, this idea of chip
Speaker 3: import export is one of the things that has preserved
Speaker 3: the current political situation in Taiwan. You want the enemy
Speaker 3: to need you, you shall never need the enemy. I
Speaker 3: know that sounds like a line from Rudyard Kipling, but
Speaker 3: it's true though.
Speaker 5: That is the fine line between you know, a copasetic
Speaker 5: more or less relationship between countries that maybe don't particularly
Speaker 5: agree ideologically, and something much more serious and sinister.
Speaker 3: M Yeah, cons and pro real quick. The big con
Speaker 3: for tariffs wherever you go, whenever you've been there, tariffs
Speaker 3: can suck for the general population. Think of the average
Speaker 3: cost of groceries. You know, if you've been abroad recently,
Speaker 3: or if you've been reading the US news, you know
Speaker 3: a single egg in the US may cost way more
Speaker 3: than an egg and say Nicaragua or different parts of
Speaker 3: the world, just as petrol in the United Kingdom is
Speaker 3: going to cost way more than the same amount of
Speaker 3: gas in tarad It's just a matter of how these
Speaker 3: things are negotiated. The big pro of course, is independence.
Speaker 3: Just like in the case of Japan, if the EU
Speaker 3: didn't have its specific regime of tariffs, then the agricultural
Speaker 3: industry and a lot of those places will collapse. And
Speaker 3: that's why we're foreshadowing the role of agriculture here. Tariffs
Speaker 3: are essentially as weird as it's right now. Tariffs are
Speaker 3: essentially a big government argument, right that the state shall
Speaker 3: interfere with an otherwise free global market. And it's odd then,
Speaker 3: and maybe a little bit confusing to see so many people,
Speaker 3: for one reason or another, supporting tariffs, even when those
Speaker 3: run counter to the rest of their personal ideologies. So
Speaker 3: in the modern day, tariffs by hook or by crook,
Speaker 3: protectionism or revenue, they're widespread. They're widespread, and you hear
Speaker 3: a lot of noise or we have heard a lot
Speaker 3: of noise about tariffs in the United States right now.
Speaker 3: We're actually going to check live before we end the episode,
Speaker 3: because the news keeps going back and forth. This is
Speaker 3: not a new thing. The new thing is overall kind
Speaker 3: of the new thing for the past few centuries has
Speaker 3: been having a problem with tariffs. This is a continuing conversation.
Speaker 3: There is a pattern at play, and that pattern exists
Speaker 3: because this is not the first time Uncle Sam has
Speaker 3: played this game. I'm doing a cadence toward an ad break.
Speaker 5: So let's do that thing, and then we write back
Speaker 5: with a deeper dive into tariffs and what's going on
Speaker 5: in the world with them?
Speaker 6: Right now, here's where it gets crazy, all right, true story, folks,
Speaker 6: fellow conspiracy realist friends and neighbors.
Speaker 3: The United States, like pretty much every country before it
Speaker 3: and since, has always been kind of in a situationship,
Speaker 3: we could call it, with tariffs. The first tariff law
Speaker 3: in this country is passed in seventeen point eighty nine,
Speaker 3: like almost immediately after the US became a thing in
Speaker 3: the beginning, and for the vast until like the eighteen
Speaker 3: hundreds or so, for a while, tariffs were the primary
Speaker 3: source of revenue for this country. That was where he
Speaker 3: made eighty forget eighty ninety percent of federal revenue.
Speaker 2: Yeah, for the government itself.
Speaker 3: Yeah, for the government itself. And right now, obvious question
Speaker 3: is at the case in twenty twenty five, not really,
Speaker 3: Most government funding now comes from income and payroll tax, right,
Speaker 3: that's pretty accurate. It's a bubber because April's on the way.
Speaker 3: But why what changed? It turns out there are a
Speaker 3: few historical incidents that put a kind of sour pallor
Speaker 3: a bad vibe on the idea of too many tariffs,
Speaker 3: and our story in that regard, our historical precedent begins
Speaker 3: in the early nine eighteen hundreds.
Speaker 2: Yes, with the Fortney McCumber Act in nineteen twenty two.
Speaker 2: This is this is this is only important. It's a
Speaker 2: bullet point for the other act we're going to talk about.
Speaker 2: But this was an act that raised tariffs on imports
Speaker 2: into the United States up to an average of about
Speaker 2: forty percent. So anything coming into the US because of
Speaker 2: this thing in nineteen twenty two, you have to pay
Speaker 2: an extra forty percent on it.
Speaker 3: And yeah, this is the big idea of Joseph W.
Speaker 3: Forty and Senator Porter J. McCumber.
Speaker 2: There was a little bit of retaliation that occurred because
Speaker 2: of that. But for six years until the Great Depression started,
Speaker 2: it was great.
Speaker 3: I mean, they didn't know the Great Depression was on
Speaker 3: the way, for sure, You're right, it was and it
Speaker 3: was you know, if we exercise empathy for the context
Speaker 3: of their time, they were post World War or what.
Speaker 3: So they were trying to or their teams who were
Speaker 3: doing the real work. We're trying to figure out how
Speaker 3: do we calm these crazy turbulent economic waters post the
Speaker 3: biggest war that we know about. And Joe, our buddies,
Speaker 3: Joe importer. They said, you know, like you were saying earlier,
Speaker 3: if we raise a tax on imported goods, will protect
Speaker 3: US businesses and factories and farms. You know, mom and
Speaker 3: pop blue jeans will be just fine. History, as you
Speaker 3: pointed out, proved those assumptions incorrect. It was like nineteen
Speaker 3: twenty seven, five years after the initial rollout, all the
Speaker 3: other trading partners of the US, like your big frenemies, France, Spain, Germany, Italy,
Speaker 3: they all retaliated. There was a feedback loop created. Spain
Speaker 3: went the hardest on the paint. Their numbers were like
Speaker 3: a forty two percent tax on literally anything from the
Speaker 3: United States, it did not matter what that product was.
Speaker 3: France super pissed off Henry Ford because they said, if
Speaker 3: you want an American automobile, guess what you're gonna pay
Speaker 3: for it? Twice yep.
Speaker 2: Yeah, automobiles have always been not the biggest or one,
Speaker 2: not even the top five of the things exupported by
Speaker 2: the United States. But automobiles have been a big deal.
Speaker 3: Yes, very much so, and remain that way. We're talking
Speaker 3: in a different country about how we hoped to get
Speaker 3: the opportunity to see some really kick ass Chinese automobiles
Speaker 3: that are not allowed to be sold in the United States.
Speaker 5: It's interesting too, especially nowadays, that automobiles, I mean, you know,
Speaker 5: back in the day, they already represented such a conglomeration
Speaker 5: of various materials that in and of themselves were subject
Speaker 5: to these kinds of tariffs and taxes like ste and
Speaker 5: aluminum like we were talking about. But now all of
Speaker 5: the chips and electronics inside of them, I mean talk
Speaker 5: about like paying for things twice, right.
Speaker 3: Yeah, yeah, and those are in all cases you mentioned
Speaker 3: there and old These are highly sophisticated pieces of work. Right.
Speaker 3: This is not the same as a handful of sand.
Speaker 3: So it's very carefully curated process. Haand so with our
Speaker 3: buddies earlier exploration Fordney McCumber their tariff policy, we also
Speaker 3: see some new characters in the chat. It's about let's say,
Speaker 3: late nineteen twenties, nineteen twenty nine for an act that
Speaker 3: goes in force on June seventeenth, nineteen thirty. They're these
Speaker 3: two members of the US Congress who say, look at
Speaker 3: all this bad stuff that's happening regarding tariffs. You know what,
Speaker 3: we'll fix it more terriffs. Right, So they say let's
Speaker 3: double down. Let's raise these tariffs on more goods. This
Speaker 3: will help protect us in these global economic wins. We're
Speaker 3: talking specifically about Senator Reed Smoot of Utah and a
Speaker 3: Congressman from Oregon named Willis Hawley. At the time, they're
Speaker 3: both big deals. Smoot is in charge of the Senate
Speaker 3: Finance Committee. They are still It's a position that is coveted,
Speaker 3: highly contested, and controversial. Today Hawley as a representative, he
Speaker 3: heads up what's called the House of Reps Ways and
Speaker 3: Means Committee, which is a powerhouse, one stop shop for
Speaker 3: a lot of economic legislation.
Speaker 5: You hear about down in the news all the time,
Speaker 5: you know, surrounding these types of conversations like I don't
Speaker 5: know the name of a lot of committees, but the
Speaker 5: Ways and Means Committee is one that is more or
Speaker 5: less a household name.
Speaker 3: Wouldn't you guys say, I love it. I love the
Speaker 3: plot twist, you know, the idea that someone had a
Speaker 3: means committee, or the idea that someone had a ways
Speaker 3: committee and then somebody dropped in and said, and mean,
Speaker 3: we have ways.
Speaker 5: To make you talk, mister Bonds, and the means.
Speaker 2: To execute on those ways.
Speaker 5: I don't understand the distinction between ways and means. By
Speaker 5: the way, it seems a little redundant, which I know
Speaker 5: what you're saying, Ben.
Speaker 3: All right, So together these guys Smoot and Holly, they
Speaker 3: create the Smoot Holly Tariff Act. It is the last
Speaker 3: piece of legislation up until recent times to set concrete
Speaker 3: tariff rates on imports from abroad. And you might you
Speaker 3: might recognize this if I could play a quick clip
Speaker 3: from the eighties, I think there's a reference we might
Speaker 3: all enjoy or at least recognize. Is that okayick? Yeah, yeah, okay,
Speaker 3: here we go.
Speaker 7: In nineteen thirty, the Republican controlled House of Representatives, in
Speaker 7: an effort to alleviate the effects of the anyone anyone is.
Speaker 2: That ben Stein?
Speaker 7: Yeah? Anyone? Anyone? The tariff phil the Holly Smoot Tariff Act,
Speaker 7: which anyone ready or lowered, trying to get my money
Speaker 7: the federal government.
Speaker 3: All right, we'll stop it.
Speaker 5: There was that from Winn Benstein's.
Speaker 3: Money from Faris.
Speaker 5: Oh shoot, sorry, I couldn't see the video.
Speaker 3: I just heard the audio.
Speaker 5: Remember that that that show he had It was like
Speaker 5: a question, Yeah.
Speaker 2: That's why he got the job.
Speaker 3: I think very I is that why he got his
Speaker 3: political entry as well.
Speaker 5: Yeah. Man, he's always struck me, maybe again because of
Speaker 5: that scene is so professorial. But did he really have
Speaker 5: a background in that stuff or was he just kind
Speaker 5: of like, I'm not a professor, I just play one
Speaker 5: on TV.
Speaker 3: I mean, Ronald Reagan didn't even play a president before
Speaker 3: he got elect Good point, Ben, it's a good point.
Speaker 6: Uh.
Speaker 3: He is a lawyer, he is, Yeah, I r oh
Speaker 3: okay cool. So he does have so he does have
Speaker 3: a juris doctorate from Yale. I think he's a Yale educator.
Speaker 2: In guys, Let's jump back to uh smooth Holly, which
Speaker 2: is h A W L E y. And every time
Speaker 2: I look at it, I want to say it differently
Speaker 2: and it's not. I know it's not, but my brain
Speaker 2: says something else. But anyway, let's talk about Herbert Hoover
Speaker 2: and as he's running for president to be elected as president, right,
Speaker 2: he is running were part of his campaign says hey,
Speaker 2: I'm gonna I'm going to increase the tariffs on agricultural
Speaker 2: products from other countries. I'm going to support you farmers.
Speaker 2: He's a Republican, k it, He's uh, this is a
Speaker 2: major not a major reason he got elected. But it's
Speaker 2: one of the big reasons he got elected. I've got
Speaker 2: your back, basically, folks in the agricultural industry here within
Speaker 2: the United States. Uh. And then these other folks come
Speaker 2: through and they're like, well, what if we just did
Speaker 2: what you want to do on agricultural products and just
Speaker 2: do it on the whole thing across the board.
Speaker 3: Oh, I'm glad you're mentioning this. Yeah, there's a great Uh.
Speaker 3: There's a great book by a Dartmouth economics professor named
Speaker 3: Doug Irwin.
Speaker 7: Uh.
Speaker 3: He also has a great MPR interview regarding exactly what
Speaker 3: you're talking about. You know, Congress sets out to write
Speaker 3: this tariff bill that's going to protect farmers and agriculture.
Speaker 3: But then as soon as people are talking about the
Speaker 3: money carousel, like you were saying, a ton of other
Speaker 3: industries say, yeah, well hey, way, but you know, we
Speaker 3: make clothing pins, you know, we make all, you know,
Speaker 3: flip flops. Whenever those were in Why can't we get
Speaker 3: some protection for our products too. They're touching the congress
Speaker 3: folks who control the districts of these businesses right or
Speaker 3: where these manufacturing interest are based. And all of a sudden,
Speaker 3: people start horse trading. I'll vote positively right for your
Speaker 3: tariff on clothes and clothing pins or textile mills or whatever.
Speaker 3: If you support my tariff on I don't know, cows, cheese,
Speaker 3: case dia, I skip breakfast, something like that. So, all
Speaker 3: of a sudden, all told, in a very short span
Speaker 3: of time, Congress ends up raising more than eight hundred tariffs.
Speaker 3: This will affect the American public. This also is great
Speaker 3: largesse for the people making the decisions on the legislative floor.
Speaker 3: So we see this feedback loop, this snowball effect. Everybody
Speaker 3: is getting exceptional treatment, which is not how the definition
Speaker 3: of exceptional treatment works.
Speaker 2: Yeah, yeah, absolutely, And you can see why because so
Speaker 2: nineteen twenty eight, that's when Hoover is campaigning right, making
Speaker 2: these promises about just agricultural tariffs. Then the stock market
Speaker 2: market crashes in nineteen twenty nine, and everybody, as you're
Speaker 2: talking about man, everybody says, hey, we need help too.
Speaker 2: It's not just the farmers. We all need a little
Speaker 2: extra something.
Speaker 3: Yeah, Like we're the mule lobby, you know what I mean.
Speaker 3: We just smacked down the US camel core. We need
Speaker 3: more support for mules. I'm doing references.
Speaker 6: I know you are.
Speaker 3: Now.
Speaker 5: Check out the ridiculous Hisstory episode on the Camel Core
Speaker 5: featuring Jonathan Stricklin of Tech Stuff Theme.
Speaker 3: Who, by the way, says Hi, Matt. He said, you're
Speaker 3: the best part of stuff they don't want you to know.
Speaker 3: And he made sure to make eye contact with me
Speaker 3: and Noel when he said deep uncomfortable eye contact. Didn't
Speaker 3: even blink. It was weird. I think he took some
Speaker 3: vising in advance. I think he rehearsed.
Speaker 2: Well, I disagree with him.
Speaker 3: All right, Well, it's very kind to say. There were
Speaker 3: we have to point this out right. Even then, in
Speaker 3: the days of Hoover and Smooth Hawley, there were critics.
Speaker 3: It was a massive group of economists who said this
Speaker 3: is not going to end well, and they wrote an
Speaker 3: open letter and they published it in newspapers and they
Speaker 3: signed their names to it. It turns out these boffins
Speaker 3: were right. They were wrong about a lot of other stuff,
Speaker 3: but they were correct that this terra feedback loop would
Speaker 3: ultimately be problematic for the people living in the US
Speaker 3: at the time and other countries. Like we described, they retaliated,
Speaker 3: or you could say they were just looking out for
Speaker 3: their own interest, which is logically what they would be
Speaker 3: expected to do. So this wave of protectionism me firstism
Speaker 3: sweeps the planet right and other countries, even countries that
Speaker 3: were at loggerheads and were beefing, they teamed up against
Speaker 3: the United States. They were going, where this Hoover guy
Speaker 3: get off? You know what I mean, Let's make our
Speaker 3: own little club for trading, and the US can't be
Speaker 3: in it. As a result, there was an economic massacre.
Speaker 3: Disaster doesn't even begin to describe it. Hally and smooth.
Speaker 3: They lose their next elections in nineteen thirty two, but
Speaker 3: they're fine, just spoiler alert. They were fine. They got
Speaker 3: their bag and they walked out. They had some parachutes,
Speaker 3: perhaps with a golden variety. The consequences of their actions
Speaker 3: linger on for decades, well past the headlines as a
Speaker 3: long term, expensive catastrophe.
Speaker 4: Yeah.
Speaker 2: Well, and it's very strange because as economists look back
Speaker 2: on that specific act in those tariffs, it is really
Speaker 2: really difficult to separate the effects of those tariffs and
Speaker 2: the effects of the Great Depression overall, at least when
Speaker 2: you're looking at global trade across every country and everywhere,
Speaker 2: it's really hard to separate those two things, because the
Speaker 2: Great Depression definitely hit everybody really hard everybody. But then
Speaker 2: this when trying to figure out, well, how much retaliation
Speaker 2: actually affected let's say the GDP, the gross domestic product
Speaker 2: of the United States, and at least for a long time,
Speaker 2: it's been difficult to tell. The Cato Institute, which is
Speaker 2: something we've discussed before, they attempted in twenty twenty one
Speaker 2: to look at this and really separate the numbers out
Speaker 2: and figure out, well, how much was a retaliatory tariff
Speaker 2: from another country that was having a tariff imposed on
Speaker 2: it by the United States, how much did that affect
Speaker 2: the United States in turn? And again, like you come
Speaker 2: away after re eating stuff from really smart people who
Speaker 2: are looking at this and they're kind of like, yeah, well,
Speaker 2: it does seem like most people at least raised prices
Speaker 2: for US goods by a little bit, so hurting the
Speaker 2: United States in retaliation a little bit. But it wasn't
Speaker 2: fully retaliation in most instances. It was almost just like
Speaker 2: a knee jerk of reaction. It wasn't like we're gonna
Speaker 2: hurt you country. We're not, at least we're not seeing
Speaker 2: that from most countries at that.
Speaker 3: Time, right, Yeah, And it's because it happened in such
Speaker 3: an abbreviated time window, it's therefore difficult to parse what
Speaker 3: led to what, you know what I mean, like where
Speaker 3: does point A of a spaghetti strand go to point
Speaker 3: Z in the bowl of spaghetti?
Speaker 2: And every other country is attempting to bolster themselves up
Speaker 2: a little bit while, you know, while also dealing with
Speaker 2: those tariffs. So it's just as you said, would you
Speaker 2: see what you tell it both bullspigedy of stuff that's happening. Yeah,
Speaker 2: that's right, that's.
Speaker 3: Which noodle is the primary? What what is noodle prime
Speaker 3: in the bull of spaghetti?
Speaker 5: Or it's like if you're had one of those Asian
Speaker 5: dishes where it's like one giant noodle.
Speaker 3: You know, it's all related. Also, when I whenever I
Speaker 3: hear the Cato Institute, I hope I'm not alone in
Speaker 3: saying I immediately think of kato'klin. I'm always like, yeah, see, folks,
Speaker 3: he did stuff before the OJ than you know what
Speaker 3: I mean.
Speaker 5: Yeah, it's very important institutions. That is not a tired
Speaker 5: reference at all, right, hair though, guys, I mean, let's
Speaker 5: not forget the glorious main that Kato Kalin.
Speaker 3: Possessed and we should only judge people on external appearances
Speaker 3: one hundred percent.
Speaker 2: Just I want to read one quick thing from that
Speaker 2: their findings. It says it says that countries used quotas,
Speaker 2: which I don't really fully understand. But you can only
Speaker 2: pull in a certain basically of goods from the United
Speaker 2: States if you're another country. But the other thing that
Speaker 2: a lot of countries did was propose those strategic tariffs,
Speaker 2: which we're going to get into with. You know, some
Speaker 2: countries in the modern day right now, these strategic versions
Speaker 2: of this, but back then it was on things like automobiles.
Speaker 2: So like that's one of the reasons, as you said,
Speaker 2: Ford got so angry because other countries then looked at
Speaker 2: some of our most expensive products and just slapped extra
Speaker 2: stuff on.
Speaker 3: Those luxury goods. Are one of the first ones to go, Look,
Speaker 3: this doesn't mean we have to we're endeavoring to be fair.
Speaker 3: This does not mean all tariffs are automatically bad. We
Speaker 3: could argue that it means instead, tariffs are a very
Speaker 3: sensitive economic tool. If you press too hard in one direction,
Speaker 3: everything that you have built can snap out a place.
Speaker 3: As a result. You know what I mean because the
Speaker 3: other countries in the world. Guess what, The people who
Speaker 3: live there are just as important to themselves as you know,
Speaker 3: your king makers are to you. So obviously no one
Speaker 3: in the game is gonna say, yeah, that's fine, just
Speaker 3: crap on us a little. You know, we're into that.
Speaker 3: No one's gonna yeah, and that that's what brings us
Speaker 3: to the modern day. This is where we're getting to
Speaker 3: what some might call a conspiracy. Before we do that,
Speaker 3: I think we have one last ad break and we've
Speaker 3: got to get to the controversy here. It's been We've
Speaker 3: been getting a lot of letters, a lot of correspondence
Speaker 3: about it. So let's see if we can figure it
Speaker 3: out together. And we've returned all right, Look, we know
Speaker 3: not everybody listening to this show is in the United States,
Speaker 3: and regards wardless of where you're listening, thank you for
Speaker 3: your time. We, like everybody else, have witnessed this dizzying
Speaker 3: back and forth regarding tariffs. The current presidential administration, the
Speaker 3: returning Trump administration, has made a lot of headlines. Even
Speaker 3: up until as we're recording this evening, you can see
Speaker 3: all these blow by blows of reported proposed tariffs against
Speaker 3: any number of countries. Then those countries say, well, hey,
Speaker 3: you know, beat me your triforce. Well, hey you buddy,
Speaker 3: that's the Canadians. That's what they said.
Speaker 2: There was a specific bill signing that was a retaliation
Speaker 2: set of terroffts against US products, and they were like, oh,
Speaker 2: this is a beautiful law, this is the best laws
Speaker 2: as they're signing it. Sorry, that's just sorry. I guess
Speaker 2: it just reminds you of maybe the way current president.
Speaker 3: Talks sometimes, the great US President. Yeah, and then we
Speaker 3: see these walkbacks of these crazy pitches from the US.
Speaker 3: It just goes back and forth. And that's part of
Speaker 3: why we took our time with this episode.
Speaker 5: Eleventh, our walkbacks, which yeah, I was gonna ask you guys.
Speaker 5: I mean, I think we talked about this in the
Speaker 5: recent listener mail. Is this stuff calculated or is this
Speaker 5: just poor planning? Because it sure seems like is all this,
Speaker 5: you know, saber rattling. I guess, for lack of a
Speaker 5: better term, I think it applies here about we're going
Speaker 5: to pose these tariffs on our trading partners that have
Speaker 5: always been pretty historically good. Does Mexico and Canada, et cetera.
Speaker 5: And then at the last minute when the stock market
Speaker 5: kind of takes a hit because as we know, these
Speaker 5: tariffs are just going to get passed on to the
Speaker 5: end user aka US, the consumer. They're walked back, And
Speaker 5: I mean, I've just seen a lot of hay being
Speaker 5: made of is this is this intentional market manipulation or
Speaker 5: is this just bad planning?
Speaker 3: Hey be made. I love the I've got to look
Speaker 3: up the etymology for that one. That's great, I missed
Speaker 3: that one.
Speaker 1: Yeah.
Speaker 3: Yeah, it's a good question because you know, supporters will
Speaker 3: argue these proposed tariffs or some version thereof, will help
Speaker 3: shore up domestic businesses, and the argument for the supporters
Speaker 3: is this ensures a path toward increased economic freedom and independence.
Speaker 3: Critics say these tariffs, at least in their current proposed forms,
Speaker 3: will not have that result. And part of their argument,
Speaker 3: just to give you where they're coming from, is that
Speaker 3: the US is not a new nation. It is a
Speaker 3: young nation, but it's not new to the game. We're
Speaker 3: not starting from scratch. We're looking at this cartoonishly complicated
Speaker 3: financial system that is so deeply entrenched and intertwined with
Speaker 3: the economies of so many other countries around the globe.
Speaker 3: Also tariffs are huge walk back. Now in the age
Speaker 3: of globalism, the US spent decades aggressively get to the
Speaker 3: earlier point about NAFTA right aggressively getting companies to move
Speaker 3: production overseas by hook or by crook. And you know,
Speaker 3: if you are the lead maker of shoe fee and
Speaker 3: you move your production overseas and you can sell shoe
Speaker 3: feet for a dollar less, people are going to buy
Speaker 3: the cheaper version. And that means that every other company
Speaker 3: making shoe fee, if they want to stay in the game,
Speaker 3: they have to figure out their own version of that.
Speaker 3: They have to go overseas as well. So a whole
Speaker 3: bunch of stuff was incentivized for decades to go overseas
Speaker 3: and just to stay in the game. Even the people
Speaker 3: who wanted their business to stay in the US had
Speaker 3: to go overseas in some capacity for at least their
Speaker 3: supply chain.
Speaker 5: And maybe I'm naive here, but I also just think
Speaker 5: it's fascinating how it is just a foregone conclusion that
Speaker 5: the stuff gets passed on to the concer because it's
Speaker 5: just the nature of capitalism where it's like, what are
Speaker 5: we going to do make a dollar less? Heck, now
Speaker 5: you're going to pay a dollar more. There's no benevolence
Speaker 5: in business, right, it just doesn't work. Like even if
Speaker 5: it could, it just doesn't.
Speaker 2: This is a really important point and we've kind of
Speaker 2: made it already and we've talked about it before the
Speaker 2: United States doesn't have state run industries the way a
Speaker 2: lot of other countries do, right, So we are talking
Speaker 2: about private industry industry at every point in this at
Speaker 2: least when it comes to stuff that is being made.
Speaker 2: We're manufactured within the US. If you're talking about raw
Speaker 2: goods that are coming in that are being tariffed, I love,
Speaker 2: Oh yeah, Trojan Rag sorry.
Speaker 3: Brought, but really yes, I like.
Speaker 2: You're talking about private industry that is then having to
Speaker 2: decide what to do with that extra cost, right or
Speaker 2: with that yeah sorry man? Or like we're talking about
Speaker 2: steel used as an example, nol whether to buy the steel,
Speaker 2: the cheaper steel from some other place that is no
Speaker 2: longer cheaper and be forced as a private industry to
Speaker 2: buy from let's say, US manufacturers, right, And that's the concept.
Speaker 2: But the whole point of the tariff, if it works
Speaker 2: right and people still buy products from the other countries,
Speaker 2: the US government that is not directly associated with any
Speaker 2: industry gets a profit.
Speaker 3: That's the issue. Yeah, I love that. We're talking about
Speaker 3: the playing field here, right. Sovereign Wealth Fund, for instance,
Speaker 3: subsidizes an airline. We just that. Yeah, I could say
Speaker 3: it because I've made it off.
Speaker 5: The plane listener right in I think on a recent
Speaker 5: listener mail talking about that Sovereign Wealth Fund and how
Speaker 5: in other countries it makes sense because they have state
Speaker 5: run industry and they can't turn a profit. But then
Speaker 5: since the United States, to your point, Matt, doesn't, the
Speaker 5: only way we can turn up profit quote unquote is
Speaker 5: by taxing the hell out of stuff and people or.
Speaker 3: Squeezing the poor. Yeah. Yeah, that's the thing. Yeah, we're
Speaker 3: we're walking through, We're crip walking through some pretty obvious logic,
Speaker 3: and it's a shame it got politicized. Anything in a
Speaker 3: supply chain that can be produced by a US company,
Speaker 3: if it can be produced at a lower version such
Speaker 3: that you can still save money even with cargo, ship
Speaker 3: transit or whatever that's going to be where you go.
Speaker 3: And as a result, the domestic version of those supply
Speaker 3: chains of old, they dwindle the atropy like unused muscles.
Speaker 3: So the argument then becomes Look, it is going to
Speaker 3: take some time for all these industries to shift back
Speaker 3: to some version of a domestic supply chain. It's going
Speaker 3: to be easier for some industries than for others, but
Speaker 3: it's still going to take a long amount of time.
Speaker 3: It's going to take a lot of elbow grease, a
Speaker 3: lot of money and effort to rebuild this stuff from
Speaker 3: the ground up in this complicated financial ecosystem. And in
Speaker 3: some cases, hey spoiler, that old supply chain does not exist.
Speaker 3: It is extinct.
Speaker 2: No, it does feel like it's a series of play
Speaker 2: and this guy's is me throwing spaghetti one giant, But
Speaker 2: it does feel like it's being set up to have
Speaker 2: some kind of state run industries or like something to
Speaker 2: be established in the future. Doesn't it a little bit
Speaker 2: like it's pulling stuff in because right now is the
Speaker 2: time when when folks are going to have to think
Speaker 2: about creating the steel plants again and creating the large
Speaker 2: manufacturing plants again.
Speaker 3: We burn the village to save the thing.
Speaker 5: And while we don't have state run industry, think about
Speaker 5: all of the government subsidies that so many private industries
Speaker 5: get almost to the point where we're participants, almost like
Speaker 5: partners in a way, and yet we're not. But it
Speaker 5: does seem like with all of the dismantling of certain
Speaker 5: government entities that's going on right now, maybe that is
Speaker 5: the direction things are going, especially with an administration that
Speaker 5: is so pro business. And then again, isn't that also
Speaker 5: what they might call socialism to have you know, I mean,
Speaker 5: it's it's weird.
Speaker 7: Right.
Speaker 2: Say that word. You're not allowed to say that word.
Speaker 3: Nobody guess in this country?
Speaker 2: Do you know what I mean?
Speaker 5: Though? It seems like a little bit of a weird
Speaker 5: gray area, and it's like, is socialism good or is
Speaker 5: it bad? And in terms of the ideology of this administration, see,
Speaker 5: it seems like it's good when it is as described
Speaker 5: in a way that they benefit from, and bad when
Speaker 5: it's somehow antithetical to what their goals are.
Speaker 3: It's illegal when you do it, it's smart what I do?
Speaker 3: You know what I mean? Like playing tag with children, yes, exactly,
Speaker 3: or with drunk college students. Part of the answer to that,
Speaker 3: before you explore the history here to the current day,
Speaker 3: part of the answer, I think is found in the
Speaker 3: question where does money from tariffs go? You know, like,
Speaker 3: wh're Japan, We're taking four hundred percent just off the
Speaker 3: top because your rice is in Japanese. The other countries,
Speaker 3: the countries making these materials, when it goes to the
Speaker 3: recipient country, they're not paying for it. That's sixty percent
Speaker 3: tax you know, are proposed on Chinese goods through various
Speaker 3: iterations of the Trump administration. The nation of China is
Speaker 3: not paying that. The people, the businesses in the US
Speaker 3: importing stuff from China, they're paying that. And when they
Speaker 3: pay that, they typically are going to pass the cost
Speaker 3: on to the consumer, unless there's some sort of subsidization program.
Speaker 3: But per Congress itself, Congressional Research Service shows us when
Speaker 3: an importer like Noel, you have a synths company, okay, right,
Speaker 3: and now there's some kind of teriff on materials you
Speaker 3: need to make your bespoke synths, and when you pay
Speaker 3: that tariff, that money that you are paying goes through
Speaker 3: US customs directly to the US Treasury into something called
Speaker 3: a general fund, so it's not assigned to anything specific.
Speaker 3: It could go to all sorts of stuff. It could
Speaker 3: go to rebuilding bridges, it could go to better education
Speaker 3: for children. Maybe you know single payer healthcare or you
Speaker 3: know defense. So another question then is if it's general fun.
Speaker 3: Oh and I made a bad joke about defense, we'll
Speaker 3: keep it in. But the question becomes, could tariff revenue,
Speaker 3: for example, be used to set up programs that help
Speaker 3: recover domestic supply chains. That's you know, that's a little
Speaker 3: bit in the weeds. It is important because we know
Speaker 3: that it will take time. It will take time to
Speaker 3: recover those domestic supply chains. And even if you pull
Speaker 3: it back, as we're saying at the eleventh hour, there's
Speaker 3: still gonna be consequences. Like if the US does a
Speaker 3: bunch of tariffs and then has them in place for
Speaker 3: even just a year, and they say, all right, this
Speaker 3: doesn't work. You can't do take back seas on this stuff.
Speaker 3: You've already set things in motion which cannot be undone
Speaker 3: shout out to Gandalf and there you go.
Speaker 2: No, no, no, there you go. Guys. Just something I've
Speaker 2: thought about in the last few minutes here, just think
Speaker 2: about reasons that manufacturing goes to other countries. Right, We've
Speaker 2: talked before about cheap labor ends up being king in
Speaker 2: most places. It's one of the reasons that we've talked
Speaker 2: about in the past that the United States was so
Speaker 2: prosperous for a while there because we enslaved people, as
Speaker 2: you know, in major industries within this country, and we're
Speaker 2: not the only country that does that. And we've talked
Speaker 2: about prison labor, right and ways to get the cheapest
Speaker 2: labor possible, and how then it became cheaper to have
Speaker 2: manufacturing plants in places like Taiwan for a long time,
Speaker 2: in certain parts of China and other places, you know,
Speaker 2: across the world. It just makes me wonder, how do
Speaker 2: you bring back manufacturing to the United States and maintain
Speaker 2: some kind of cheap labor system, right, because that's the
Speaker 2: way you get products down to a price point that
Speaker 2: humans can actually afford them, because often it costs a
Speaker 2: lot of money to create things unless you're subsidizing it.
Speaker 2: It does make me worry that if all of this
Speaker 2: stuff starts going through and some of these plans and
Speaker 2: I am looking you know, I'm I'm I'm looking at
Speaker 2: a pretend crystal ball that doesn't exist, and nobody knows
Speaker 2: what's going to happen, But it does feel like some
Speaker 2: source of super cheap labor is going to need to
Speaker 2: open up.
Speaker 3: Yeah, we've got this in the notes too. I think
Speaker 3: it's one of those unspoken things that everyone is regarding. Right,
Speaker 3: and it's very logical walkthrough if cheap labor must exist, right,
Speaker 3: because there are two possibilities. Let's say a round of
Speaker 3: tariffs goes through. You have to make other products somehow worse,
Speaker 3: which can get dirty somehow more expensive, or you make
Speaker 3: it such that you bridge the gap by making your
Speaker 3: stuff cheaper or less expensive to create which loss spoke
Speaker 3: I mean in that case, but spoken artists in class
Speaker 3: could still exist. But the unspoken thing there, which some
Speaker 3: may call it more conspiracytorial, is what is the concept
Speaker 3: that this would exist or move forward in concert with
Speaker 3: other moves to create neo feudalism, to rediscover a peasant.
Speaker 2: Class, yeah, or make yeah create one.
Speaker 3: Yeah. And look, add to this the idea that many
Speaker 3: the fact that many US companies don't have the best
Speaker 3: reputation here we're abroad when it comes to price control.
Speaker 3: Prices spike during the pandemic due to supply chain shortages.
Speaker 3: A lot of cynical consumers, ourselves among them, to be transparent,
Speaker 3: they said, we said, these companies are keeping prices higher
Speaker 3: than they need to be, even after things slowed down.
Speaker 3: It's just so they can ride that wave squeeze out
Speaker 3: a little more profit. If there was a successful tariff outcome,
Speaker 3: would these companies bring the price down for the consumers?
Speaker 2: Oh? Well, how could you all of our systems based
Speaker 2: on growth?
Speaker 7: Right?
Speaker 2: It's if you had those anti traces, Yes, how how
Speaker 2: do you bring them down? And explain to your shareholders? Well, guys,
Speaker 2: we made you know, significantly less of this quarter, but
Speaker 2: that's because we rolled back those high prices that we
Speaker 2: needed at that one time. You know, like, how do
Speaker 2: you how does that ever work?
Speaker 5: You can't unless you fundamentally change the foundation of the
Speaker 5: whole system. That's that perma growth that's just expected and required,
Speaker 5: and if you don't see it, then you are failing
Speaker 5: as an industry or as a company.
Speaker 3: Right.
Speaker 5: It's unsustainable though too without screwing the end user at
Speaker 5: the end of the day.
Speaker 3: Well, to be as fair as possible, what we're showing
Speaker 3: you here, folks, is that at this point, both critics
Speaker 3: and supporters of tariff conversations, they admit there will be
Speaker 3: economic repercussions for the public. They just don't agree on
Speaker 3: the f following the severity, the window of time that
Speaker 3: domestic industry will need to retrofit, and of course they
Speaker 3: don't agree on whether the idea of tariffs is worth
Speaker 3: this financial pain in the keyster in the first place.
Speaker 3: The disagreements are so heated that some folks will allege
Speaker 3: tariffs are a purposeful move by the current administration to
Speaker 3: attack the United States, or maybe not a call coming
Speaker 3: from inside the House situation cough, Russia may be more
Speaker 3: thing to retaliate against industries that got on the wrong
Speaker 3: side of the current White House. We are recording this
Speaker 3: on Monday, March tenth. It's going to publish a week
Speaker 3: or so later and giving out quickly. All this stuff
Speaker 3: is happening. There's almost certainly going to be breaking news
Speaker 3: before or as this episode goes live. We do have
Speaker 3: to say a lot of what you're seeing is going
Speaker 3: to be presented to you as a stab shot of
Speaker 3: a moment in present time. Make no mistake. The Biden
Speaker 3: administration and the previous Trump administration when he was the
Speaker 3: forty fifth president, they both had an appetite for tariffs
Speaker 3: as a day to day tool in trade agreements, often unfair,
Speaker 3: and then as a stick to use in other tangentially
Speaker 3: related conversations.
Speaker 2: And a lot of that desire. The need to do
Speaker 2: those moves comes from what happened to the global economy
Speaker 2: after the COVID nineteen right where whole industries began to
Speaker 2: shut down and were completely reshaped and changed while both
Speaker 2: of those presidents were in office.
Speaker 3: So here's the deal, folks. Obviously, the president is supposed
Speaker 3: to put their country first. The US president is supposed
Speaker 3: to put the US sort of at the top list
Speaker 3: of priorities. That's their job. So critics aren't disagreeing on
Speaker 3: that sentiment. Everybody is on board with that. The bigger
Speaker 3: disagreement is on the approach and maybe unforeseen consequences. During
Speaker 3: when Maya Angelou was right, when people tell you who
Speaker 3: they are, you should believe them. Right, And during the
Speaker 3: first Trump administration, the team was extremely pro tariff and
Speaker 3: while campaigning on his second term, Donald Trump said, you
Speaker 3: know what, we're keeping tariffs. The Biden administration, by the way,
Speaker 3: continued a lot of those tariffs. This was not new stuff,
Speaker 3: it's continuation of the pattern. Guy just said, I'm gonna
Speaker 3: double down. I'm gonna levy a sixty or a twenty
Speaker 3: percent tax on or tariff on sixty percent of everything
Speaker 3: China makes or I'm gonna one hundred percent tariff everything
Speaker 3: from Mexico, twenty percent everybody else across the board, you
Speaker 3: know what, and if if you roll with them, screw
Speaker 3: you too. That's kind of how the campaign went. And
Speaker 3: then he also said we're going to hit American companies too.
Speaker 3: John Deere specifically is going to get a little slap
Speaker 3: on the wrist because you guys outsourced manufacturing. It's a
Speaker 3: good barnstorming thing to say when you are campaigning to
Speaker 3: get elected.
Speaker 2: Oh for sure.
Speaker 5: Yeah, But then where the rubber meets the road, I guess,
Speaker 5: and you actually try to execute things and then see
Speaker 5: real world negative impact. That's where my question comes is
Speaker 5: like when the stock market took such a hit when
Speaker 5: these terrorists were announced, was that as intended or was
Speaker 5: he really caught off guard and surprised by the way
Speaker 5: markets reacted and that's why the pullback happened. Is this
Speaker 5: all just kind of blustery, you know, rhetoric or does
Speaker 5: he really have a plan.
Speaker 2: Oh well, the way I think about it right now, guys,
Speaker 2: it's something that the Daily Show has pointed out, and
Speaker 2: a couple other I think some of the Late night
Speaker 2: folks have pointed out back in twenty twenty, right at
Speaker 2: the tail end of Donald Trump's first time as president,
Speaker 2: NAFTA was repealed or was removed. Right the North American
Speaker 2: Free Trade Agreement was taken away and a new trade
Speaker 2: agreement I think it's the United States, Mexico and Canada
Speaker 2: Agreement something like that. Yeah, the USMCA was put into place,
Speaker 2: and that was an idea of fixing that terrible agreement
Speaker 2: where we could where everybody is just trading freely together.
Speaker 2: Now there are more rules and tariffs and payments in place.
Speaker 2: Right and now with the second term, that agreement is
Speaker 2: being what has been talked about as it's to terrible agreement,
Speaker 2: like that's a terrible agreement between the United States and
Speaker 2: Mexico or the United States and Canada. We're getting a
Speaker 2: terrible raw deal here. But it is something that was
Speaker 2: negotiated and put together by that administration. So it's just
Speaker 2: very strange when we're thinking about why why some of
Speaker 2: these actions are taking place. That's weird.
Speaker 3: Ooh, can I tell you guys my favorite campaign promise,
Speaker 3: red tariffs? Do you hear this one? During the campaign
Speaker 3: for the to run for the office of the forty
Speaker 3: seventh President, of the US. The Trump campaign floated this
Speaker 3: idea that hey, if we raised tariffs enough, maybe we
Speaker 3: can do away with the income tax. Take it back,
Speaker 3: you know, pre like back to the eighteen hundreds. Add a.
Speaker 3: Multiple economists, a lot of conservative economists, by the way,
Speaker 3: didn't react well to this. They deemed it and this
Speaker 3: is a big disc from an economist. They said, it
Speaker 3: is well intentioned, but mathematically impossible.
Speaker 2: Yes, well, yeah, it is not mathing. What are the
Speaker 2: biggest exports of the United States? Yeah, well, war We've
Speaker 2: talked about that, or well, culture talked about that. But
Speaker 2: in reality, dollars to donuts. It's aircraft parts, gasoline, oil, uh,
Speaker 2: and uh what is it? Natural gas? Liquefied natural gas.
Speaker 2: And I think there's other, you know, other just manufactured goods.
Speaker 2: But it's just crazy, like those are the main things.
Speaker 2: It isn't you know, the John Deere's and stuff. But again,
Speaker 2: how are you how are you making a ton of
Speaker 2: money on that stuff? That's the stuff you're shipping out right?
Speaker 2: It just becomes so convoluted.
Speaker 3: How are you how how do we parse this right?
Speaker 3: And at this point, you know, obviously campaign promises don't
Speaker 3: consistently translate to action. But the Trump administration did and
Speaker 3: does seem set the follow up on at least some
Speaker 3: of these propositions. Collectively, they're called the second Trump Tariffs.
Speaker 3: They got into the conversation as soon as returning President
Speaker 3: Trump resumed office. He had already made trade war moves
Speaker 3: against China, like back in the day, years before you
Speaker 3: know where the Joe Biden presidency was just a twinkle
Speaker 3: in some aviator glassed eyes and Biden. Biden didn't roll
Speaker 3: them back. Yes, he rolled some back, but he he
Speaker 3: kept him. He kept him. And then when the Trump
Speaker 3: administration returns, there is nothing sweet about it, right, it's
Speaker 3: smash on site. He's like, we're doing another trade war.
Speaker 3: We're going against you know, these American neighbors, Canada and Mexico.
Speaker 3: He had three reasons, he said, First, tariffs are gonna
Speaker 3: make you guys get in line with all the drug traffic.
Speaker 3: And then second is a retaliation against your immigration policies.
Speaker 3: And then third, we're going to boost domestic manufacturing. Except
Speaker 3: for John Deere. I'm still mad at those guys. And
Speaker 3: that's where we see these tariffs. As we record now,
Speaker 3: I think it is two days from now, on March twelfth,
Speaker 3: a Wednesday, there will be a twenty five percent proposed
Speaker 3: tariff on steel and aluminum going back into play, and
Speaker 3: a lot of the big players in the US steel
Speaker 3: and aluminum industry they support this tariff.
Speaker 2: Yeah. Yeah, It's so complicated because so many of the
Speaker 2: end products, like an American made Ford or a Dodge
Speaker 2: ram or something like that, they get manufactured at the
Speaker 2: very end, put together all the parts in the US. Right,
Speaker 2: it's a US product, But the aluminum, the steel, all
Speaker 2: the other stuff that ends up in that via comes
Speaker 2: from other places. So it ends up making the cost
Speaker 2: of an American product go up twenty forty percent. I mean,
Speaker 2: it's just crazy. How maybe maybe it's just difficult for
Speaker 2: my mind to wrap around it because it is so intertwined,
Speaker 2: and you can't raise a price on one thing and
Speaker 2: just be raising a price on that one thing.
Speaker 3: America says, hold my beer, right, let's.
Speaker 2: Let's see, let's see it.
Speaker 3: Well you think what? Well? You think?
Speaker 8: So now I'm just picturing our nation as a guy
Speaker 8: in a stained wife beater, you know what I mean,
Speaker 8: standing at the edge of a pontoon boat and about
Speaker 8: to put a firecracker in his ass.
Speaker 2: And yelling at the people on the shore.
Speaker 3: Yeah you think I won't. So this is brought to
Speaker 3: you by Natty Light, the drink of legends.
Speaker 7: Uh.
Speaker 3: This this also so goes into the idea of a
Speaker 3: faint a gamble perhaps, right, we talked about this previously.
Speaker 3: Let me propose something crazy that I know nobody will
Speaker 3: agree with. Therefore I can normalize whatever actual crazy thing
Speaker 3: I want. It's a hardball negotiating tactic, similar to the
Speaker 3: halcyon days of nineteen eighties cocaine fueled Wall Street. In short,
Speaker 3: it's saying, we don't need to use the stick, but
Speaker 3: we should wave it around so that people know we
Speaker 3: can use this stick. And this is dangerous because there
Speaker 3: are people's livelihoods on the line. Critics and supporters all
Speaker 3: know this. The question is how trustworthy is the United
Speaker 3: States as a negotiating partner If we're going to say, hey,
Speaker 3: we're going to have these crazy tariffs and then you know,
Speaker 3: a few days after we impose them, we suspend them
Speaker 3: and can in Mexico, right, Like, how what kind of
Speaker 3: predictability can you glean from that? Other than a US
Speaker 3: admin is not to be trusted.
Speaker 2: I'll tell you what I've I've come away. I think
Speaker 2: this entire thing is a conspiracy to get us made
Speaker 2: maple syrup to become the thing. I think this is all.
Speaker 2: It's all trying to get that sweet Canadian maple syrup
Speaker 2: way too expensive, sorry.
Speaker 3: I mean just to spin up the manufacturing on the
Speaker 3: maple trees alone.
Speaker 2: Yeah, but you just you need time and you need
Speaker 2: it to be way too expensive to get the good
Speaker 2: stuff from Canada.
Speaker 3: Right, Well, we're not a fan of cartels, so let's
Speaker 3: bust that one, you know what I mean? Right? It
Speaker 3: is a cartel?
Speaker 5: And wasn't there a maple syrup heist? Speaking of weird multiple?
Speaker 3: Yeah, that's multiple? All right? We are we are getting
Speaker 3: the note that there is much more to the story.
Speaker 3: We want to hear your take on tariffs. Are they
Speaker 3: seen as a good thing in your industry? Be honest
Speaker 3: with us. Are they seen as a net positive, net
Speaker 3: negative somewhere in between? It's easy to understand why a
Speaker 3: lot of folks might see this as a conspiracy. But
Speaker 3: to what end? Is it the grizzly bluff and bluster
Speaker 3: sausage making deals of modern international trade? Or is there
Speaker 3: something else to play? Something they don't want you to know.
Speaker 3: Tell us your thoughts, find us on the emails, or
Speaker 3: find us on the telephonics, or find us on the
Speaker 3: lines the internet line lines, yeah.
Speaker 5: Exactly, or the YouTube's in fact where you can find
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