Trump announces a new set of tariffs on China and other countries, and the markets take a dive. What does this mean for the economy and the stock market? Is this a good or bad thing? What are the risks? And what are the benefits?
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00:00:26.000Well, it was a bit of a fraught weekend.
00:00:28.000The stock futures dumped all over the place.
00:00:31.000The market was set to open as of Monday morning down, pretty much across the board.
00:00:37.000Markets prepared for a bloodbath, according to the Wall Street Journal.
00:00:41.000In the United States, contracts tied to the tech-heavy Nasdaq 100 led the declines down more than 5%.
00:00:46.000In Japan, the Nikkei 225 dropped nearly 8% shortly after open actually hit the circuit breakers, meaning they had to shut down trading for a little while.
00:00:53.000Bitcoin and oil prices fell sharply as well.
00:00:56.000Now, remember, Thursday and Friday were terrible days on the stock market.
00:00:59.000U.S. stocks lost $6.6 trillion in value during that two-day washout after President Trump announced that giant tariff regime that he called Liberation Day.
00:01:07.000And it appears that many traders are better.
00:01:09.000The biggest problem here is that the Trump administration has not made it clear what exactly they want to accomplish with these tariffs.
00:01:23.000This has been my point the entire time.
00:01:24.000There are times when tariffs can be useful.
00:01:26.000In fact, out of three times, tariffs could theoretically be useful.
00:01:33.000Okay, so, theory number one as to tariffs.
00:01:35.000One, tariffs are important to protect important industries, like, for example, defense industries, because you need to produce that stuff here at home instead of producing it elsewhere, and so you actually protect and give effectively artificial subsidies to American defense industries.
00:01:49.000Two, tariffs are designed in order to leverage other countries.
00:01:54.000Either because those countries are our enemies and we want to do harm to them, or because we wish to get other countries to lower their own tariffs.
00:02:00.000And the end goal is a lower tariff regime.
00:02:02.000And then there's the third possibility.
00:02:04.000And this is the possibility that is retailed by President Trump and many other members of the administration.
00:02:08.000And to be perfectly honest, all of these various rationales for the tariffs have been put forward.
00:02:14.000The third one is the one that's really problematic and the one that the economy is currently reading, that the markets are currently seeing.
00:02:19.000And that is the idea that tariffs are good.
00:02:23.000Tariffs themselves are good and make us rich.
00:02:25.000That somehow, the simple fact of taxing product as it comes in, which is a tax on consumers, because again, people aren't going to ship us product if nobody's buying it on the other end.
00:02:35.000They'll just stop shipping us product.
00:02:36.000So, it is a tax on American consumers.
00:02:38.000The idea that this is inherently good and makes the American economy strong is wrong-headed.
00:02:43.000The idea that it is going to result in massive reshoring of manufacturing is also untrue, as we'll talk about In a little while.
00:02:49.000And this is why Bill Ackman, investor extraordinaire and ally to President Trump, put out a statement over the weekend saying, quote, The country is 100% behind the president on fixing a global system of tariffs that has disadvantaged the country.
00:02:59.000But business is a confidence game and confidence depends on trust.
00:03:02.000President Trump has elevated the tariff issue to the most important geopolitical issue in the world and he's gotten everyone's attention so far so good.
00:03:08.000And yes, other nations have taken advantage of the U.S. by protecting their home industries at the expense of millions of our jobs and economic growth in our country.
00:03:14.000But by placing massive and disproportionate tariffs on our friends and our enemies alike, Take a timeout.
00:03:31.000Figure out what it is that you want to do here.
00:03:33.000He says, I don't know of one who will do so.
00:04:03.000Again, this is Bill Ackman, who is a Trump supporter.
00:04:05.000When markets crash, new investment stops.
00:04:27.000The president is losing the confidence of business leaders around the globe, the consequences for our country, and the millions of our citizens who have supported the president, in particular, low-income consumers who are already under a huge amount of economic stress, are going to be severely negative.
00:04:39.000This is not what we voted for, says Bill Ackman.
00:04:42.000The president has an opportunity on Monday to call a timeout and have the time to execute on fixing an unfair tariff system.
00:04:53.000Okay, that is a flashing red light that Ackman is aiming at the President of the United States, saying, stop, for the love of God, stop.
00:04:59.000Or, at the very least, take the off-ramp.
00:05:02.000And so, today is going to be a very big day for the President, not just because of what the markets do, but because of what he could say.
00:05:08.000So, Prime Minister Benjamin Netanyahu of Israel is visiting.
00:05:11.000The reason this is important is not just because of all these security-related concerns in Gaza and Iran.
00:05:15.000But more specifically with regard to the tariff war that's dominating the news, Netanyahu has already offered to go to zero.
00:05:21.000Zero tariff rates with the United States.
00:05:23.000Now, to be fair, Israel already had zero tariffs on 98% of all product coming into the United States and has had a free trade agreement with the United States for 40 years.
00:05:31.000This, again, is why it was rather frustrating when the Trump administration put out a ridiculous chart last week, and it was a ridiculous chart, suggesting that, for example, Israel had a 33% tariff and non-tariff rate on the United States.
00:05:41.000That's not true by any possible measure.
00:05:48.000President Trump can take the off ramp here and get to zero with Israel.
00:05:51.000He should do the same exact thing with Vietnam.
00:05:53.000Vietnam also has a free trade agreement with the United States.
00:05:56.000That free trade agreement means that the effective tariff rate that Vietnam has on American goods is actually quite low.
00:06:02.000Even if you were to look at the very elevated version of the Vietnamese tariff rate on American goods, including, for example, their value-added tax, which is like a 10% value-added tax, The reality is Again, that's like a very high-end estimate.
00:06:18.000That chart had Vietnam at a 90% tariff rate with the United States, which of course is not true.
00:06:23.000So I asked our friends at Perplexity, our search partners and sponsors, quote, what is the effect of Vietnamese tariff rate on American goods?
00:06:29.000Not the tariff rate President Trump listed, including their value-added tax.
00:06:33.000As long as we're going to put in non-tariff additions, the value-added tax is where essentially they tax their consumers for buying any goods.
00:06:41.000And what is their tariff rate on American goods under our free trade agreement with them?
00:06:45.000And perplexity says, Vietnam's effective tariff rate on American goods, including the value added tax, is significantly lower than the figures cited by President Trump.
00:06:52.000According to the 2025 National Trade Estimate Report, Vietnam's average most favored nation applied tariff rate was 9.4% in 2023, with agricultural products facing an average of 17.1% and non-agricultural products 8.1%.
00:07:06.000Now, realistically, we're not sending all that many agricultural products to Vietnam, I believe.
00:07:09.000When factoring in VAT, which is typically 10%, the total effective tax burden on American goods averages around 19.4% for agricultural products and 18.1% for non-agricultural products.
00:07:20.000Under the U.S.-Vietnam bilateral trade agreement and subsequent frameworks, Vietnam has made commitments to reduce tariffs on certain American goods.
00:07:25.000Recent negotiations suggest Vietnam is willing to lower tariffs to 0% on American imports as part of a potential bilateral agreement with the U.S., although that deal has yet to be finalized.
00:07:35.000And that's the thing that President Trump should do.
00:07:50.000However, that would require the president to believe not the sort of tariffs are good for America on their own version of what tariffs are good for, but the other two.
00:07:59.000The tariffs are there to actually protect industries that are important to America and also to get other countries to lower their own tariffs.
00:08:06.000And that is, it is absolutely unclear what President Trump is thinking at this point.
00:09:15.000If you're talking about these tariff rates on countries maintained as they currently stand, if they are implemented, as President Trump and team are saying they will be just a few days from now, if that happens, you are talking about an economic catastrophe, like a serious, serious economic problem.
00:09:30.000And even if on the other end there is a brand new world, we still have not heard what exactly that brand new world looks like.
00:09:44.000No one knows what the hell is actually going on.
00:09:47.000There are people who are hopeful, like Bill Ackman, that what this all is is a sort of 4D chess game in order to leverage other countries to open up their tariffs.
00:09:54.000Fine. If that's the case, sounds great.
00:09:56.000Cool. I think the rollout sucked, but that's fine.
00:10:39.000We have been treated so badly by other countries because we had stupid leadership that allowed this to happen.
00:10:46.000They took our businesses, they took our money, they took our jobs, they moved it to Mexico, they moved it to Canada, they moved a lot of it to China, and it's not sustainable.
00:11:08.000And eventually it's going to straighten out and our country will be solid and strong again.
00:11:12.000Okay, now that sounds like he wants long-term tariffs.
00:11:14.000We've got hundreds of billions of dollars pouring into our country and it's going to continue pouring into our country and we've been screwed by the Canadians and the Mexicans, which again, we have not.
00:11:22.000The President of the United States negotiated the USMCA in his first term.
00:11:26.000Our tariff rate with the Canadians is extraordinarily low.
00:11:29.000Except for oil, we have a tariff surplus with the Canadians.
00:11:33.000And when he says we've been screwed by China, that's true in terms of IP, and I'm very much in favor of the harsh penalties on China.
00:11:38.000But the problem is, if you tariff everyone, everyone, including China, you know what all the other countries do, as we'll talk about in a moment?
00:11:45.000They actually reorient toward China, because China is perfectly willing to do free trade deals with all these other countries, while the United States is shutting them out.
00:11:51.000Well, speaking of pain, you're feeling the pain every time you pay your cell phone bill.
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00:14:48.000By the way, it is not true that they are not importing American cars.
00:14:51.000Tesla is one of the best-selling cars in Europe.
00:14:52.000Why? Because they have all sorts of greenhouse gas emission rules in Europe that we don't have in the United States, which means Tesla's a hot seller in Europe.
00:14:59.000In some countries in Europe, it's actually a hotter seller than it is in the United States.
00:15:03.000As far as the idea that foreign car companies don't do business with the United States, that's not true.
00:15:08.000If you look at companies like Honda, a huge percentage of a Honda is made in the United States, in American factories.
00:15:16.000Okay, so, there's sort of a battle inside the administration over messaging, and this is, again, one of the things that is roiling the markets is, who's standing up for the position that says, let's get to zero?
00:15:27.000Again, we keep being told there's a 4D chess position.
00:15:30.000There are basically two 4D chess positions that are being presented.
00:15:32.000One 4-D chess position is President Trump is using leverage in order to get everybody to go to zero.
00:15:36.000Okay. If that's the case, people should be making that case.
00:15:39.000The other 4-D chess position is this is all an engineered recession designed to jam down the yields on the bonds, thus to increase the bond market effectively so we can refinance our debt and take, what, a couple hundred billion dollars off our national deficit?
00:15:55.000Again, I think the logic there does not stack up.
00:15:57.000I also don't think that's what President Trump is thinking.
00:15:59.000So inside the administration, There are a bunch of voices who have now been deployed on behalf of this particular position.
00:16:05.000The one who is obviously most pro-tariff is Howard Letnick, the Commerce Secretary.
00:16:09.000Secretary Letnick, a big fan of tariffs.
00:16:11.000And he is saying the tariffs are coming.
00:16:13.000And no matter what you want, no matter what you like, the tariffs are indeed coming.
00:16:20.000To be clear, April 9th, the so-called retaliatory tariffs, the reciprocal tariffs, I should say, are those coming or are they open to negotiation?
00:16:43.000To which the markets say, price is right horn.
00:16:46.000It turns out the markets do not like that because the tariff regime as it currently stands is the single greatest increase in taxes because tariffs are a tax in modern American history and they are the single greatest increase in trade war.
00:17:01.000Since the Smoot-Hawley Tariff Act of 1932.
00:17:04.000I mean, you're going back almost 100 years to get to the kind of tariff rates that you're talking about right now.
00:18:10.000That's why they're going to build in America the greatest economy in the earth.
00:18:13.000All the companies are going to come and build there.
00:18:17.000There's significant problems with this, as we'll explore in a moment, including the fact that when you build a factory, you need to have, wait for it, parts from other parts of the globe.
00:19:10.000Meanwhile, Scott Besant, who I believe the Treasury Secretary is significantly less, shall we say, committed to the tariff regime than the Commerce Secretary, but he's the one out retailing it.
00:19:21.000Here he was trying to walk this back a little bit, at least give President Trump the possibility of an offer.
00:19:26.000I'm saying it could be permanent, could be a negotiating tactic.
00:19:33.000Well, I think that's going to be a decision for President Trump, but I can tell you that as only he can do at this moment, he's created maximum leverage for himself.
00:19:43.000And more than 50 countries have approached the administration about lowering their non-tariff trade barriers, lowering their tariffs.
00:20:47.000We saw with President Reagan when he brought down the great inflation and we got past the Carter malaise that there was some choppiness at that time.
00:20:58.000But he held the course and we're going to hold the course.
00:21:03.000And this has been years in the building, years in the management.
00:21:07.000Yeah, I mean, there's only one problem.
00:21:09.000And the difference is that Donald Trump inherited an economy where the inflation was too high.
00:21:15.000Typically, if the inflation is too high, that means you have to increase the interest rates, which is the actual thing that Paul Volcker did as the head of the Federal Reserve under Ronald Reagan.
00:21:23.000In order to break inflation, he had to increase the interest rates, which increased the unemployment rates.
00:21:28.000Then the interest rates went – then the interest – the inflation went down.
00:21:32.000The interest rates could drop and then inflation.
00:21:33.000That's the way the Reagan administration works.
00:21:35.000That is nothing like what we were talking about here.
00:21:37.000President Trump is actually pushing policies that create more price inflation in the markets and calling on the Federal Reserve.
00:21:45.000To lower the interest rates so as to inject more money into the economy.
00:21:48.000So that is an apples to oranges comparison.
00:21:50.000Meanwhile, Kevin Hassett, who's the head of the National Council of Economic Advisors, he's trying to rebut something that President Trump put out on Truth Social.
00:21:59.000So President Trump put out on Truth Social a video saying that he was purposely crashing the market.
00:22:03.000And again, President Trump on Truth Social, he kind of posts stuff, like kind of whatever he's feeling like that day.
00:22:07.000If you see something that's pro him, he posts it.
00:22:09.000It's not necessarily an indicator of his actual policy.
00:22:14.000He's not purposefully crashing the market.
00:22:15.000Again, remember, that was an actual going theory, that he was purposefully crashing the market in order to push everybody from stocks into bonds, thereby lowering the yield rate, increasing the demand for bonds generally, and allowing for the lowering of interest rates on the repayment of our debt, right?
00:22:29.000That was the kind of sophisticated 4D chess theory.
00:22:32.000Kevin Haas is like, no, that's not what's happening.
00:22:34.000Is it his strategy to force the Fed to lower interest rates and that the market crash was part of that strategy?
00:22:39.000We understand the Fed is an independent agency.
00:22:40.000We respect the independence of the Fed.
00:22:42.000But the President's allowed to have an opinion.
00:22:45.000Absolutely, the President's allowed to have an opinion.
00:22:47.000But there's not going to be any political coercion over the Fed, for sure.
00:22:50.000So that is his strategy, tank the market so the Fed lowers interest rates?
00:23:16.000I got a report from the USTR last night that more than 50 countries have reached out to the president to begin a negotiation.
00:23:23.000But they're doing that because they understand that they bear a lot of the tariff.
00:23:27.000And so I don't think that you're going to see a big effect on the consumer in the US because I do think that the reason why we have a persistent long-run trade deficit is these people have very inelastic supply.
00:23:38.000They've been dumping goods into the country in order to create jobs, say, in China.
00:23:42.000Okay, and then Hassett says that job numbers will go up.
00:23:45.000If the tariff regime stays in place, the job numbers will go up.
00:23:49.000Okay. That's looking back, but looking forward, Salantis did say this week they were laying off workers.
00:23:55.000The reason that they were starting it in the last two months was they anticipated the tariffs that were announced this week, and they're starting to ramp up in anticipation of that.
00:24:03.000I would expect that the jobs numbers, and I'll come back and talk to you about it when they come out, are going to go up by even more now that the tariffs are in place.
00:24:13.000And what had to be the funniest moment of the weekend, in what appears to be a rather dismal economic cycle.
00:24:19.000Howard Lutnick was asked about the herd of McDonald Islands.
00:24:21.000You'll remember that that chart that President Trump held up contained the herd and McDonald Islands, which are islands that have no people on them.
00:24:28.000We are apparently putting 10% tariffs on the penguins that live in the herd of McDonald Islands.
00:24:33.000I will say that this particular excuse, I am skeptical.
00:24:39.000What happens is, if you leave anything off the list, the countries that try to basically arbitrage America go through those countries to us.
00:24:49.000Any country, like we had tariffs, the president put tariffs on China.
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00:28:03.000He's been a big tariff advocate for years.
00:28:05.000And the Tesla CEO ripped Peter Navarro as someone who ain't built bleep.
00:28:09.000And then when asked about his Harvard PhD in economics, he said, that's a bad thing, not a good thing.
00:28:14.000And then he posted a quote from economist Thomas Sowell that said, in every disaster throughout American history, there always seems to be a man from Harvard in the middle of it.
00:28:23.000He then suggested that Navarro had an excess of self-confidence, writing, quote, results in the ego brains greater than one problem.
00:28:32.000Meanwhile, Musk himself suggested that he wants a zero tariff situation, which, again, this is the this is the good explanation for why you would do the tariff game.
00:28:41.000I urge the president to do precisely what Musk is saying here.
00:29:55.000The reality is that Navarro's trade prescriptions, which is this giant trade war where he believes the tariffs are in and of themselves good, not to get to zero.
00:30:22.000He's able to wipe away the BS of sort of prior assumptions on a variety of issues and cut straight to the heart of the matter.
00:30:28.000But that's only if someone is providing him the data.
00:30:31.000It's only if somebody is telling him the truth about what exactly is happening.
00:30:34.000And right now, because President Trump is such an outsized man on the national and international stage, that's creating a climate of fear right around him, which means that the feedback loop may in fact be closed.
00:30:45.000As Politico reports, Capitol Hill Republicans, corporate America and White House allies are terrified about what's next in President Trump's escalating trade war.
00:30:52.000But they fear Trump's wrath even more.
00:30:58.000Lobbyists who are quietly prodding the same lawmakers to defend their interests don't want to have a target on their back or their clients.
00:31:03.000Even some Trump world confidants, alarmed about the terrorist impact, are hoping someone else intervenes.
00:31:09.000An official in the energy industry said, quote, hearing angst and frustration from all quarters, but no one wants to be first out of the box saying anything negative about Trump's decision making.
00:31:17.000Okay, well, a good leader, and President Trump is a good leader, a good leader...
00:32:04.000Unemployment, says J.P. Morgan, will reach 5.3% next year.
00:32:08.000Kasman says the size and disruptive impact of U.S. trade policies, if sustained, would be sufficient to tip a still-healthy U.S. in global expansion into recession.
00:32:16.000The tariff shock will likely be magnified by its effects on sentiment and through potential disruptions to global supply chains.
00:32:23.000Now again, that is the worry that everyone is currently fearing.
00:32:28.000That recession is on its way because if economic activity slows, if investors pull their money out of the markets, if there's less investment, fewer IPOs, less innovation, if all that happens because everybody is afraid of what comes next, then you will get an economic slowdown and it will affect everyone.
00:32:46.000As Bloomberg points out, there's a major problem with the possibility of debt default.
00:32:53.000Donald Trump's global trade war is already priming financial markets for the next wave of corporate default.
00:32:57.000A Bloomberg News measure of distressed debt worldwide swelled the most in at least 15 months this week, sending more than $43 billion of bonds and loans to levels that make it challenging to refinance.
00:33:07.000Few expected Washington to go after so many of its key trading partners with such high duties.
00:33:14.000The pile of distressed debt in the Americas region has now surpassed that in Asia Pacific for the first time since August.
00:33:21.000Robert Schwartz, Portfolio Manager at Alliance Bernstein said, quote, Retailers are getting smacked.
00:33:25.000If you're a retailer, you try to diversify into Vietnam or the Philippines.
00:33:28.000Those tariffs were not priced in until this week.
00:33:32.000Michaels, for example, the Arsene Kraus chain, have been working with its suppliers on pricing and sourcing in preparation for the announcement.
00:33:38.000This week, its bonds due 2029 tumbled almost 10 cents on the dollar.
00:33:56.000The owner of luxury department store chain Saks Fifth Avenue is one of the biggest additions to the distressed universe.
00:34:01.000According to Bloomberg, a $2.2 billion bond that it issued less than four months ago to finance the acquisition of Neiman Marcus is now trading at 73.5 cents on the dollar and yielding 16 percentage points more than treasuries.
00:34:12.000So people are buying up the corporate debt because what they realize is that perhaps that corporate debt, maybe these companies come back, but people are freaking out because most companies have to operate on the basis of rotating debt.
00:34:25.000Most companies, again, do not have a Scrooge McDuck giant vat of cash in the back that they dive into every night.
00:34:31.000Most of them are operating off credit to get to payroll because the way that the cash flow works in pretty much every company, you use debt to pay the payroll, and then, kind of like your credit card, and then...
00:34:41.000All the money comes in, used to pay back the debt.
00:34:44.000What happens when, for tariff reasons, this cash stops coming in?
00:34:48.000Now the debt starts to get really, really dicey.
00:34:52.000This is just another reason that margin calls are getting steep.
00:34:56.000So margin calls, hedge funds, are now being hit with the worst margin calls since 2020, since the COVID crisis.
00:35:02.000This according to the Financial Times.
00:35:04.000Wall Street banks have asked their hedge fund clients To stump up more money and security for their loans because the value of their holdings had tumbled, according to three people familiar with the matter.
00:35:13.000Several big banks have now issued the largest margin calls to their clients since the beginning of the pandemic in early 2020.
00:35:19.000For those who don't know what a margin call is, here's the simple explanation.
00:35:22.000Let's say that you want to buy $10,000 worth of stock.
00:35:25.000So what you do is you drop $5,000 in cash, you buy $5,000 with cash, and you borrow $5,000 worth of stock from the broker.
00:35:32.000You get a loan, $5,000 worth of stock from the broker.
00:35:36.000And... Because the broker's lending you the stock, you have to have some collateral.
00:35:46.000So now your margin's 30%, because $8,000, the value of the stock, minus the $5,000 loan, which means $3,000, which is 30% of, again, the original purchase.
00:35:58.000So if you're following me, what that means is that a decline in the stock now means that you have to invest more money in order to shore up the loan, in order to make clear to the broker, That you're not going to default on your loan.
00:36:09.000Because if the stock goes down, how are you going to pay them back?
00:37:09.000At the same time, surveys of households and businesses report dimming expectations and higher uncertainty about the outlook.
00:37:17.000Survey respondents point to the effects of the new federal policies, especially related to trade.
00:37:22.000We are closely watching this tension between the hard and the soft data.
00:37:27.000As the new policies and their likely economic effects become clearer, we will have a better sense of their implications for the economy.
00:37:33.000Meanwhile, Larry Summers, who you'll recall is the former Secretary of the Treasury under Bill Clinton, who suggested to Joe Biden that inflation was going to break out because of his overspending.
00:37:44.000Here's Larry Summer saying, guys, inflation's coming again.
00:38:07.000Markets are looking at all of that and they think...
00:38:11.000Companies are going to be worth $5 trillion less than they thought before these tariffs started.
00:38:19.000And that's just the loss to companies.
00:38:21.000If you add in the loss to consumers, a reasonable estimate would probably be something like $30 trillion.
00:38:28.000Now, meanwhile, you know, all the talk about how we're going to build all these new factories here, as I mentioned before, the problem is you're going to build a new factory.
00:38:34.000You know where you need stuff from, not America to build those new factories.
00:38:37.000According to The Wall Street Journal, roofing products manufacturer IKO North America has been on a factory building spree in the United States with one plant completed and four more under construction.
00:38:46.000After President Trump launched a barrage of tariffs on U.S.
00:38:49.000trading partners, the math abruptly changed.
00:38:51.000Chief Executive David Koschitzky said IKO's just finished factory in Texas now faces higher prices on steel.
00:38:58.000The company will continue with the projects, but tariffs will make them significantly more expensive.
00:39:08.000Companies are now double-checking the numbers on planned factories or halting them altogether.
00:39:18.000The cost of the things that you are buying is about to skyrocket, which means less money left over for you to spend on other products, goods, and services in the United States.
00:39:26.000Remember, if an iPhone gets a lot more expensive, that's money that you could have spent on other cool stuff that you were going to buy in the U.S. And now you no longer can, according to the Wall Street Journal.
00:39:34.000Apple's big moneymaker is a global patchwork.
00:39:36.000It has components sourced from all over the world, brought primarily together in China, where electronics manufacturing has been perfected for over a generation.
00:39:43.000Moving the process to the U.S., not cheap, definitely not easy.
00:39:48.000The iPhone 16 Pro, cost for a 256 gigabyte version, is $1,100.
00:39:53.000The cost of all the hardware inside was about $550 to Apple when the phone was introduced.
00:39:58.000Throw in assembly and testing, and Apple's cost rises to about $580.
00:40:03.000Even when you account for Apple's advertising budget and all the included services, there's still a big profit margin.
00:40:08.000Now, factor in the tariff for goods from China.
00:40:17.000Well, there's a problem, because first of all, the device has a lot of foreign parts, and you have to pay the levy on the foreign parts.
00:40:23.000Then, a manufacturing move to the United States would be a massive mammoth undertaking that would take years.
00:40:28.000The assembly ecosystem in China is labor-intensive.
00:40:30.000It wouldn't make sense in the United States.
00:40:33.000By Lamb's estimate, the assembly labor that might cost $30 per phone in China could cost $300 in the United States.
00:40:38.000If every single component were made in the United States, then you would be talking about an increase of thousands of dollars in the cost of your iPhone.
00:40:51.000So, does that sound like a great deal to you?
00:40:54.000For the American worker, it turns out every American worker is also an American consumer.
00:40:59.000So the question is, what other countries are also going to do?
00:41:02.000Because we're not the only country with agency here.
00:41:03.000So are other countries going to play along?
00:41:05.000Are they going to go for a bilateral deal?
00:41:07.000President Trump, one of the reasons, again, he should be signaling to Israel, Vietnam, Taiwan, these are all countries that have come and said we want 0% tariffs.
00:41:14.000He should signal to them, yes, because if he doesn't, all these other countries are going to start reorienting toward China and they're going to start doing so incredibly quickly.
00:41:23.000Okay, so, Other countries are going to have to respond.
00:41:25.000And again, the question here is how they respond.
00:41:28.000And part of that is going to be whether the president actually accepts them coming on bended knee and giving him the thing that he supposedly wants or maybe he doesn't want.
00:41:42.000The trade deficit is how much money we are spending that other countries are not spending on our product.
00:41:47.000And a tariff is them taxing the product that's going in, thus to reduce our imports to them and to make their own businesses more competitive through artificial means.
00:42:14.000They're a communist, authoritarian state with global ambitions, or at the very least, regional ambitions.
00:42:21.000According to the Wall Street Journal, even before Trump had announced an additional 34% duty on imports of Chinese goods, Beijing had vowed to strengthen domestic consumption, part of a larger effort to fortify its economy and keep its growth trajectory on track.
00:42:32.000Now, with Trump's latest shakeup of the global trading environment, economists say it is more critical than ever for China to find an alternative to exports as a driver of economic growth.
00:42:42.000According to Thomas Getley and Wei He of the research firm Geveco Dragonomics, they said this is the worst case trade scenario for China.
00:42:48.000Chinese policymakers will need to step up stimulus efforts in response.
00:42:56.000And when you tariff everybody else, a bunch of other countries might tend toward China.
00:43:01.000So, for example, a huge number of companies in recent years have reshored from China to Vietnam because China is our enemy and Vietnam is not.
00:43:08.000In fact, Vietnam has become one of the best capitalist growth stories of the modern era.
00:43:13.000There's a great book called In Defense of Capitalism that recently came out that traces What's been happening in Poland and Vietnam.
00:43:19.000Vietnam still titularly has a communist party that runs it, but it's actually a pro-America, very capitalist country at this point.
00:43:26.000Like Starbucks and McDonald's are there.
00:43:28.000As the Wall Street Journal points out, after U.S.-China tension flared in the first Trump administration and Trump imposed his first round of tariffs on Chinese goods, suppliers for companies like Nike and Apple doubled down on Vietnam to avoid the tariffs.
00:43:40.000Foreign businesses found Vietnamese officials to be pro-business and eager to give manufacturing projects a boost.
00:43:45.000And with Vietnam, where if China getting too powerful, Vietnam's geopolitical stance actually aligned with Washington.
00:43:51.000If you alienate the Vietnamese and you make it hard for them to produce, people are just going to reach over to China or Vietnam turns to China as its own possible export market.
00:44:02.000It means that all the countries we need to actually draw into our orbit are now alienated from us.
00:44:09.000Patricia Kim, China expert at Brookings Institute, says the tariff shock gives U.S. partners in the Indo-Pacific region An urgent need to hedge away from the United States.
00:44:17.000They're going to be looking toward each other and toward China.
00:46:07.000I don't think the American people are up for that.
00:46:09.000Stop telling people that their lives have to be worse because you are going to remake the globe and then not explain what exactly you're even trying to do.
00:46:23.000If you're going to do something this big, this earth-shattering, the kind of activity that has not been taken on the unilateral economic front for nearly a hundred years, we're talking about this kind of tariff activity.
00:46:34.000And even Smoot-Hawley, by the way, did not go as high as this.
00:46:37.000If you're talking about doing that sort of thing, you better have a damned good explanation that you retail to the American public.
00:46:42.000Because I can promise you, if people are freaked out, ignoring them or confusing them or telling them to hold on for dear life is not going to be enough.
00:47:15.000The Trump tariffs are likely to result in thousands of dollars in additional costs on the American people in terms of groceries and gas and goods.
00:47:26.000And at the same time, we're seeing the retirement savings of the American people plummeting as well.
00:47:33.000This guy is driving us toward a recession.
00:47:38.000Okay, so that's going to be their talking point.
00:47:56.000Here's Hakeem Jeffries going after President Trump for being on the golf course.
00:48:00.000At the same time that the retirement savings is crashing, the stock market is crashing, the economy is crashing, Donald Trump is on the golf course?
00:48:11.000And so, we have to continue to press our case aggressively on the economy, on healthcare, on social security, and we'll continue to do just that.
00:48:22.000Well, again, First rule of politics, don't do things that make you look bad.
00:48:29.000This is like the number one rule of politics.
00:48:30.000CNN jumped on President Trump for going and playing golf over the weekend.
00:49:54.000According to the Wall Street Journal, a stationary company in Florida on Thursday challenged the president's earlier 20% tariffs on China, but its legal arguments also apply to the Liberation Day tariffs.
00:50:06.000As I mentioned before, President Trump is using National emergency authority to declare this massive tariff war?
00:50:13.000I don't understand how it is possibly covered under the International Emergency Economic Powers Act.
00:50:18.000That sanctions law gives the president authority to address what is called an unusual and extraordinary threat.
00:50:24.000Well, with regard to Canada and Mexico, he tried to declare that it was fentanyl.
00:50:28.000I think you can make the fentanyl case with Mexico.
00:50:30.000Hard to make that case in Canada when last year we seized a grand total of 43 pounds, which is a backpack of fentanyl at the Canadian border.
00:50:38.000When you say that the national emergency is trade deficits, I don't know how you can do that.
00:50:44.000I honestly don't know how that is upheld by a court.
00:50:48.000It seems difficult to suggest that you should be able to declare a national emergency based on trade deficits that amount to wiping $6 trillion from the books in the first two days in terms of stock value.
00:51:04.000So we'll see how that holds up over time.
00:51:06.000Meanwhile... Economic policy has bleed over into the real world.
00:51:09.000It turns out that trade policy does have intersection with foreign policy, more generally military policy as well.
00:51:15.000Obviously, China, for example, growing its influence, has some significant military ramifications.
00:51:32.000Kevin Hassett tried to explain why Russia was not actually listed.
00:51:36.000Obviously, an ongoing negotiation with Russia and Ukraine, and I think the president made the decision not to conflate the two issues.
00:51:43.000It doesn't mean that Russia, the fullest of time, is going to be treated wildly different than every other country.
00:51:47.000Well, it is pretty obvious at this point that all of the unicities toward Russia are bearing very little fruit with regard to Russia actually caving in, changing its position.
00:51:54.000Over the weekend, according to the U.S. Sun, NATO had to scramble fighter jets as Vladimir Putin unleashed a barrage of nuclear-capable bombers and ballistic missiles on Ukraine.
00:52:03.000Russia struck Central Kiev and other locations in brutal new strikes involving ballistics, cruise missiles, kamikaze drones, and aerial bombs.
00:52:10.000That came one day after a Russian missile strike on Vladimir Zelensky's hometown of Kerviri, killing at least 19 people, including nine children.
00:52:17.000The latest attack involved at least four 295 MS strategic bombers, with Putin's forces unleashing deadly KH-101 missiles from over the Caspian Sea.
00:52:27.000So again, this is all in the middle of Zelensky saying that he is perfectly willing to sign A ceasefire like today.
00:53:03.000Meanwhile, the Trump administration is actually doing a bunch of good things, and this is the thing that's killing me about this trade war that is, again, being poorly run out.
00:53:20.000Awesome. Get there, because there's too much other important stuff that is happening.
00:53:24.000So, for example, the Trump administration is absolutely kneecapping higher education.
00:53:29.000The Trump administration escalated its campaign against American universities, according to the Wall Street Journal, by preparing to pull five hundred and ten million dollars in federal grants from Brown University, while also laying out demands Harvard must meet to avoid losing billions in government dollars.
00:53:40.000The administration is freezing National Institutes of Health grants to Brown while investigates the Ivy League schools handling of anti-Semitism and DEI.
00:53:48.000Additionally, new developments emerged regarding Harvard after the government opened a review of nearly nine billion dollars in federal grants and contracts earlier this week.
00:54:35.000Global Change Research Program states on its website it has a budget of nearly $5 billion in 2025, it only lists two full-time employees.
00:54:43.000Mostly, the National Climate Assessment outsources its work to a group called the ICF, a massive government contractor that has an active contract to work on the report.
00:54:57.000It's said to be paid millions of dollars during the Trump administration to, quote, assist the nation and the world to understand, assess, predict, and respond to human-induced and natural processes of global change.
00:55:06.000That contract was first announced in June 2021 and described as a $34 million five-year contract to help with national climate assessments.
00:55:15.000So basically, it is a giant sop to a left-leaning organization.
00:55:19.000And now, Russ Vought, who runs the powerful Office of Management and Budget, is taking a look at this sort of stuff, which we should be doing.
00:55:28.000And this is the sort of stuff that has to be done.
00:55:32.000I was on the All In podcast last week, and one of the former members of the All In kind of team, Antonio, he is part of Doge.
00:55:40.000He's going through everything at Social Security, and they're coming up with giant lists of people who have been imported to the United States and given Social Security cards.
00:55:49.000And the vast uptake in the people who are being given those Social Security cards cannot be explained by simple legal immigration.
00:55:57.000It is because Joe Biden was importing people across the border.
00:55:59.000Doge is doing really important work, really important work.
00:56:02.000If that's getting obscured by a tariff war, the rationale for which is utterly unclear and the endpoint of which is utterly unclear.
00:56:10.000And all of that is resulting in significant losses across the economy.
00:56:13.000This is not what the Trump administration should be focused on.
00:56:16.000There are things that are really important to do.
00:56:19.000And if this is really important, then let's hear it.