Trump declares it was Liberation Day, and we are going through everything tariff related you could possibly imagine. First, your reminder: We exist to cut through the noise and bring you the unpleasant facts that others will not, including ad-free daily shows, investigative journalism, and live chats with my producers. No filter, no nonsense. The Daily Wire is where the real story lives.
00:00:56.000April 2nd, 2025 will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again.
00:01:13.000This is one of the most important days, in my opinion, in American history.
00:01:19.000It's our Declaration of Economic Independence.
00:01:28.000The president's vision of international trade is, I'm sorry to say, mistaken.
00:01:33.000The president seems to believe that international trade is a zero-sum game.
00:01:37.000Here is the president explaining that actually the United States is a victim of everyone else when it comes to international trade over the past several decades.
00:01:44.000Nearly a century later, in the face of unrelenting economic warfare, the United States can no longer continue with a policy of unilateral Okay, for their military.
00:02:04.000We pay for everything they have to pay.
00:02:07.000And then when you want to cut back a little bit, they get upset that you're not taking care of them any longer.
00:02:12.000But we have to take care of our people, and we're going to take care of our people first.
00:02:16.000so he's actually making a separate case here, which is that people should pay their own way when it comes to their welfare and defense spending.
00:02:51.000It's something people like to believe.
00:02:52.000It's that yesterday was economically better than today.
00:02:54.000And then you look at all the stuff around you, and you look at the phone in your pocket, and you look at the computer before you, you look at the internet, you look at the fact you can literally order any product at any time from anywhere on earth, and it arrives at your doorstep in two days at a price you can afford.
00:03:05.000And you think to yourself, would I rather live in 1980 when the only person with a cell phone was Gordon Gekko on a beach holding a shoebox to his head?
00:03:14.000When central air conditioning was kind of a rarity when the cars, if you were lucky, had electric windows.
00:03:32.000But we are talking here about economics.
00:03:33.000We're not talking about the life of the spirit within.
00:03:36.000We're talking about economics, which is the distribution of goods and services.
00:03:40.000So, I need to start by showing you a few charts that show you That America, in fact, does not suck and has not sucked for several decades economically.
00:03:49.000Because this is a myth that all politicians like to tell.
00:03:52.000Number one, there is this notion that American de-industrialization has been happening.
00:03:58.000That America has been hollowed out by de-industrialization.
00:04:00.000That we are not actually manufacturing anymore in this country.
00:04:26.000We are manufacturing more because we have better robots.
00:04:28.000And they are doing much of the work that people seem to have a very warm and fuzzy feeling about, but that they would never want to do themselves.
00:04:35.000I notice a lot of people, why can't I have a factory job just like 1955 Ford or something?
00:04:39.000Yes, I'm sure that you wanted to be in a non-air conditioned factory Riveting all day.
00:05:12.000Not because people became lower middle class or poor, but because a huge number of Americans went into the upper middle class.
00:05:20.000The number one change in the status of American families in terms of income from just before 1980 to about 2015 was a 16 percentage point increase in the upper middle class.
00:05:35.000And by the way, everyone got richer, including the poor, because the stuff you can get as a poor person in America in 2025 is way the hell better than the stuff that you could get as a poor person in America in 1980.
00:06:11.000I know this cuts against the conventional political wisdom, which is the American economy sucks and it's because everybody is cheating us.
00:06:19.000Now, one of the things that President Trump is predicating his tariff war upon is the idea that trade deficits are inherently bad.
00:06:25.000A trade deficit is where we import more stuff than we export in terms of value.
00:06:30.000Now, as I've pointed out before, You have a trade deficit with literally every business that you do business with unless they are buying your product.
00:06:36.000So, I have a trade deficit with my local Publix.
00:06:59.000Trade deficits They're an accounting procedure, trade deficits.
00:07:04.000You label something in export and you label something in import.
00:07:08.000But trade itself is about mutual benefit where you wouldn't do the trade in a voluntary system.
00:07:12.000So the idea that every trade deficit someone is getting screwed is a zero-sum view of how economies work and it's not true.
00:07:20.000As Thomas Sowell points out, the eminent economist, quote, if the goods and services available to the American people are greater as a result of international trade, then Americans are wealthier, not poorer.
00:07:29.000Regardless of whether there is a deficit or a surplus in the international balance of trade.
00:07:33.000In fact, I can name you a period in American history where there was a fairly large surplus in America's balance of trade.
00:08:13.000So if we're exporting oranges to Europe and they're going to send us apples in return, the best way to ensure That no trade imbalance takes place is we should send our oranges out of the country and we should sink the ship before it ever gets to Europe so they can't send us apples back.
00:08:27.000Then we have a large export on our ledger and no imports.
00:08:46.000The reason I'm bringing up trade deficits is because this is how President Trump is calculating His Liberation Day tariffs.
00:08:52.000According to the Washington Post, President Trump said Wednesday he will impose a new 10% tariff on all imported goods, along with higher import taxes tailored for each of about 60 countries.
00:09:01.000His advisers say maintain the largest barriers against U.S. products and a sharp turn toward the kind of protectionism the United States abandoned nearly a century ago.
00:09:08.000So President Trump said that for decades, our country has been looted, pillaged, and plundered by nations near and far, both friend and foe alike.
00:10:34.000And so I made the mistake of actually looking up some of these statistics.
00:10:38.000What are the actual average annual tariff rates that are charged on American goods by countries like, for example, Japan?
00:10:45.000Or Taiwan, which this chart says is charging us a 64% tariff rate.
00:10:49.000And it turns out there is zero correlation whatsoever.
00:10:52.000Those are not, in fact, the tariff rates that are being charged on American goods going into Taiwan or Japan or India or any of these other places.
00:10:59.000Well, listen, I don't love these tariffs, as you may have noticed, but Doge continues to do some good things, like cut the fat from decades of bloated government spending and corruption.
00:11:06.000Pure Talk, the cell phone company I use for business every day, they're cutting the fat from the wireless industry.
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00:13:06.000And this is where the trade deficit comes in.
00:13:08.000It's coming from taking the trade deficit of that country and dividing it into the imports that the United States is taking in from that country and then calling that a tariff rate.
00:13:21.000Hey, that has nothing to do with the tariff rate.
00:13:24.000Zero things to do with the tariff rate.
00:13:26.000The reason, by the way, that we have a tariff...
00:13:29.000So, according to this chart, according to this chart, for example, Madagascar is charging us 93% tariffs and we ought to charge them 47% tariffs.
00:13:54.000The GDP per capita in Madagascar is like $530 a year.
00:14:00.000Our trade deficit with Madagascar is a few million dollars.
00:14:04.000Is the idea we have to chisel out of the people of Madagascar extra dollars for American products or we are getting screwed by the great and powerful people of Madagascar?
00:14:24.000Yesterday, Israel, which already had almost no tariffs on the United States, 99% of all goods coming into Israel had no tariff on them from the United States.
00:14:32.000That was something that Israel did in the 2000s because they used to have high tariffs.
00:14:35.000And what ended up happening is that Israelis would come to the United States, load up their bags with a bunch of American-made goods, and then take them back with them to Israel to avoid the tariffs.
00:14:43.000So, Israel just got rid of all the tariffs.
00:14:45.000Yesterday, Israel announced zero tariffs on any American goods.
00:14:49.000The Trump administration hit them with a 17% tariff anyway, claiming that they had a 33% tariff rate on American goods, which clearly is not true.
00:14:56.000Why? Because it turns out that we buy more stuff from the Israelis than the Israelis buy from us.
00:15:53.000It turns out that the supply chains all across the planet are incredibly complex, and if you like the products that you have, at the quality that you have them, and at the price that you have them, you're not going to get to keep them.
00:16:03.000Anybody who tells you that you can is telling you the same kind of falsehood that Barack Obama said when he said, if you like your doctor, you can keep your doctor.
00:16:10.000You don't get to keep your Xbox at the same rate with the same quality.
00:16:18.000Well, Tyler Cowen points out, quoting Scott Lincecum over at Cato, Trump's reciprocal tariffs impose hundreds of billions of dollars in new taxes on Americans without public or congressional input, because that's actually what happens.
00:16:29.000I have friends, for example, who import product to the United States and then sell them.
00:16:34.000Why? Because they can't get the product in the United States.
00:16:37.000So, for example, I have a friend who's in the jewelry business.
00:16:41.000And this friend in the jewelry business imports products that are not capable of being manufactured Or found in the United States from abroad.
00:16:49.000So it's not like there's an import substitution you can just buy from an American.
00:17:33.000That is what we would call a tax increase.
00:17:36.000Okay, these secret calculations that are not so secret anymore because it turns out that actually they just have nothing to do with tariffs at all.
00:17:46.000This idea that President Trump is doing this based on legislation that suggests that there is a national emergency on the basis of trade deficits.
00:17:59.000There is no national emergency that justifies a unilateral tax increase of the size that the administration is attempting to levy down on the basis of a trade deficit.
00:18:10.000Because we buy more stuff from Madagascar than the Madagascase buy from us, that is not a good reason to declare a national emergency because it ain't a national emergency any more than it's a national emergency that I buy more stuff from my publics than they buy from me.
00:18:26.000By the way, there are already free trade commitments that are now being breached by the Trump administration.
00:18:31.000We have free trade commitments with many of the countries that we are currently slamming with tariffs.
00:18:35.000Again, it's going to cost American consumers.
00:18:37.000It will cost American producers who use inputs from other countries.
00:18:41.000And most importantly of all, if this is supposed to somehow screw, for example, the Chinese, precisely the opposite is about to happen.
00:18:50.000Why? Because many of the countries that are about to get absolutely hammered are countries that exist in Southeast Asia.
00:18:56.000So if you want to know what the actual tariff rates are that these various Southeast Asian nations are charging the United States, the answer is not what President Trump is putting up there, which again is rooted in the Trade deficits that we supposedly have with these various nations.
00:19:09.000If you want to know the answer, I did.
00:19:11.000So I asked my friends at Perplexity, sponsors of the show, what are the actual effective tariff rates Southeast Asian nations have against American goods?
00:19:17.000Not the Trump statistic, which is rooted in trade deficits.
00:19:20.000Also, please make a chart correlating the trade deficit or surplus those countries have with the United States with their GDP per capita.
00:19:26.000So, according to Perplexity, The actual effective tariff rates imposed by Southeast Asian nations on American goods vary significantly across countries.
00:19:33.000The figures cited by the Trump administration appear to be exaggerated and based on trade deficits rather than real tariff structures.
00:19:39.000According to the WTO, Vietnam's average most favored nation tariff rate is approximately 9.4%.
00:19:45.000Now remember, according to the Trump statistic, the average tariff rate that's being charged by Vietnam, the effective tariff rate, is 90%.
00:19:50.000Okay, so 10 times what the actual tariff rate is, is what the Trump administration is claiming.
00:19:55.000Asian nations like Indonesia, Malaysia, Impose average MFN rates, most favored nation rates, of 7.5% and 5.6%, respectively.
00:20:04.000Those numbers are far lower than the inflated numbers presented by the Trump administration.
00:20:08.000Now, as to trade deficits that we have with these various countries, the answer is, because they're poor, they generate cheap product, like in Vietnam, your t-shirt's probably made in Vietnam, and they have no money.
00:20:17.000So we run a $95 billion trade deficit with Vietnam.
00:20:30.000Precisely? That $95 billion trade deficit?
00:20:32.000Because we want to buy their t-shirts?
00:20:35.000Same thing with, say, the Philippines.
00:20:37.000We have a $5 billion trade deficit with the Philippines.
00:20:40.000And the GDP per capita in the Philippines is $3,700.
00:20:43.000Meanwhile, Singapore, right, which Singapore is getting hit with a 10% tariff, by the way, for no reason, because we actually have a trade surplus with Singapore.
00:20:50.000They have a $10 billion trade deficit with the United States.
00:20:56.000I mean, obviously, according to this logic, we're screwing them.
00:20:59.000If they have a trade deficit with us, it must be that we're jobbing them in some way.
00:21:03.000The reason that they can have a trade deficit with us is because, wait for it, their GDP per capita is $72,000.
00:21:11.000Say again, none of this is rooted in economic reality.
00:21:15.000And the biggest problem is there's no way to sort of get out of the box that's been created by these statistics because If you were saying, lower your tariff rates, and if the tariff rate is already zero or close to it, where do you go from there?
00:21:29.000So one of the things that happened during the pandemic is knowing that the Chinese were bad actors, many producers started shifting their supply chains out of China and into other nearby countries, like, for example, Vietnam.
00:21:41.000Believing the United States would punish China, but not Vietnam.
00:21:43.000Well, now the new tariffs slam Vietnam with a 46% tariff.
00:21:48.000So, why don't you shift your production back to China?
00:21:50.000More importantly, if you're the EU and you're now getting racked by the United States with a gigantic tariff, or if you're Canada and you're getting absolutely ravaged by an American tariff, you need markets for your goods.
00:22:03.000Maybe to a country that is perfectly willing to militarize capitalism on behalf of fascism, the Chinese.
00:22:09.000The Chinese are about to make extraordinary inroads in Southeast Asia.
00:22:13.000They're about to make extraordinary inroads in Europe and in Canada.
00:22:16.000Because it turns out when America withdraws from the world and basically declares a trade war on literally everyone, including, by the way, an island with no people.
00:22:57.000Okay, so, it- What exactly is this designed to do?
00:23:03.000Again, it is predicated on a bad idea of how international trade works.
00:23:09.000If, I've said this a thousand times, this is not coming from a place of, I want Trump to fail.
00:23:12.000It's coming from a place of, if he engineers a recession based on these sorts of tariffs, which seems increasingly likely if you were to stick with this, if he were to do that sort of thing, all of the amazing things that need to happen and that he is pursuing and that his administration is filled with good people who want to do, all that stuff goes by the wayside.
00:23:29.000A bad economy kills everything around it.
00:24:02.000It's... It is frustrating at the very least, because this has not been well justified by literally anyone, including members of the Trump administration.
00:24:11.000JPMorgan put out its forecast, quote, on a static basis, today's announcement would raise just under $400 billion in revenue or about 1.3% of GDP, which would be the largest tax increase since the Revenue Act of 1968.
00:24:24.000We estimate that today's announced measures could boost PCE prices, By 1 to 1.5% this year, we believe the inflationary effects would be mostly realized in the middle quarters of the year.
00:24:32.000So, in other words, inflation will start ticking up again fairly significantly.
00:24:35.000The resulting hit to purchasing power could take real disposable personal income growth in both the second and third quarters into negative territory.
00:24:41.000And with it, the risk that real consumer spending could also contract in those quarters.
00:24:45.000This impact alone could take the economy perilously close to slipping into recession.
00:24:49.000That's before anyone else tries to punish us for punishing them.
00:24:53.000This is before, according to JP Morgan Accounting, for the additional hit To gross exports and to investment spending.
00:24:59.000Headlines about retaliatory measures by U.S. trading partners are already coming out.
00:25:02.000We expect to learn more in coming days.
00:25:04.000The somewhat confusing nature of today's news, coupled with uncertainty over how long these tariffs will remain in place, should make for an even less friendly environment for investment spending.
00:25:12.000We plan to revisit our forecast later this week.
00:25:15.000By the way, you know who else is upset?
00:25:20.000We are going to bring manufacturing back to the United States.
00:25:22.000Here is a statement from the U.S. Needless to say, today's announcement was complicated, and manufacturers are scrambling to determine the exact implications for their operations.
00:25:34.000The stakes for manufacturers could not be higher.
00:25:36.000Many manufacturers in the United States already operate within margins.
00:25:39.000The high cost of new tariffs threaten investment, jobs, supply chains, and in turn, America's ability to outcompete other nations and lead as the preeminent manufacturing superpower.
00:25:47.000Manufacturers build things in America to sell around the world, and manufacturers in America Share President Trump's goal of supporting manufacturing investment growth and expansion here at home.
00:25:56.000To empower manufacturers to drive the economy, the administration should minimize tariff costs for manufacturers investing and expanding in the United States, ensure tariff-free access to critical inputs manufacturers use, secure better terms for manufacturers by negotiating zero-for-zero tariffs.
00:26:11.000So in other words, bring the tariffs down, not increase them.
00:26:15.000That's the National Association of Manufacturers saying that.
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00:28:26.000Make sure to check out the million-dollar triple lock protection details If you look at that, China, first row, China, 67%.
00:28:52.000That's tariffs charged to the USA, including Currency manipulation and trade barriers.
00:29:37.000We charge 2.8% for so many things that other countries are charging 200%, 300%, and 400% for.
00:29:46.000If imposing tariffs and protective barriers made nations poor, then every country on earth would be racing to eliminate these policies, and China would be the first in line.
00:30:11.000It shows that actually the countries that have, for example, as a general matter, the lowest tariff rates are also the countries with, wait for it, wait for it, wait for it, the highest GDP per capita.
00:30:22.000Why, it turns out that richer countries have been steadily lowering their tariff rates.
00:30:26.000And many of the poorest countries on earth have really, really high average tariff rates, including, by the way, Madagascar and Burundi and the Central African Republic.
00:30:34.000Why, it's almost as though Tariff rates actually decrease wealth because tariffs increase prices and reduce trade and all the things the tariffs are designed to do.
00:30:49.000President Trump suggested that the tariffs are kind and they are generous and they are friendly.
00:30:53.000Here he was saying that the tariffs are kind because it's only half the rate that other countries are charging us.
00:30:57.000But as we've already discussed, and herein lies the problem, those aren't the real tariff rates.
00:31:03.000For nations that treat us badly, we will calculate the combined rate of all their tariffs, non-monetary barriers, and other forms of cheating.
00:31:12.000And because we are being very kind, we're kind people.
00:31:16.000But we will charge them approximately half of what they are and have been charging us, so the tariffs will be not a full reciprocal.
00:31:29.000Those are not the real tariff rates, and this is why it matters.
00:31:31.000Okay, why does it matter how the calculation is done, right?
00:31:33.000The reason it matters is because if the goal was to get other countries to lower their tariffs, which I am totally fine with, I would love it.
00:31:41.000If that was the goal, then you can't tariff countries that have no tariffs on us, or we already have a free trade agreement.
00:31:47.000If you are using trade deficits to calculate a fake tariff rate and using that as the margin of tariff on those countries, There is literally no way for them to forestall the tariffs you are putting on their country, other than by presumably getting the people of Madagascar to somehow buy millions of dollars of American product.
00:32:05.000Or the people of Ethiopia to buy billions of dollars of American product.
00:32:09.000GDP per capita in Ethiopia, 950 bucks a year.
00:32:12.000By the way, the actual tariff rates among the biggest countries in the world are actually Fairly low.
00:32:18.000According to the World Trade Organization, the United States has a trade-weighted average tariff rate of 2.2% in 2023.
00:32:24.000That's compared with 2.7% for the EU, 1.9% for Japan, 3.4% for Canada, 3.3% for China, and 1.7% for Switzerland.
00:32:36.000I mean, if the goal is to get the tariffs lower, then maybe we should do that.
00:32:41.000Maybe that should be the actual goal here.
00:32:45.000Well, Scott Besson, the Treasury Secretary, He was asked about all of this, and his basic perspective is, it's not clear how long these tariffs are going to last, how they're going to be implemented.
00:32:53.000As we'll get to in a moment, there are already exemptions that are being put out there for the tariffs by the Trump administration, like immediately.
00:33:02.000These are our closest allies, South Korea, Japan.
00:33:06.000When you look at those countries and the tariffs that they're being charged, if they're calling, what would you say to those nations who may have concerns about how to To lower these numbers?
00:33:16.000Well, I would say they've been doing it to us for a long time.
00:33:20.000And if they don't like tariffs, then why do they have them?
00:33:26.000And should we view these as permanent?
00:33:28.000Again, I think we're going to wait and see how this plays out.
00:33:34.000We're going to wait and see how this plays out is the hope of all markets everywhere, because the markets are sending pretty strong signals.
00:33:40.000They don't like it very much, by the way, by the polling.
00:33:42.000Again, this notion that Americans are just, they hate foreign trade.
00:33:49.000What do you think foreign trade means for America?
00:33:51.000Do you see foreign trade more as an opportunity for economic growth increased through U.S. exports or a threat to the economy from foreign imports?
00:34:13.000So what exactly is the Senate going to do?
00:34:15.000Well, the Senate voted on a resolution that says that they're going to try to seize back power from the executive branch over tariffs like this.
00:34:22.000It would require action in the House to actually stop this.
00:34:25.000I doubt that that's going to happen anytime in the near future.
00:34:28.000The Republican Party is, of course, very much split over this.
00:34:31.000Nobody wants to go up against the Trump administration on this.
00:35:31.000But the tell to me here is, again, I go back to this.
00:35:34.000If the idea is to get other countries to lower their tariffs, if this is raise the tariffs to lower the tariffs, then why are we charging tariff rates on countries that don't have tariffs against us?
00:35:45.000And so the question becomes what this actually looks like in practice.
00:35:48.000Now, I've been a little bit catastrophist about this because I'm taking the Trump administration at their word.
00:35:54.000The reality is I don't think that this thing gets implemented anything like it is currently being retailed to the public.
00:35:59.000I think in reality, the Trump administration is likely to bull those holes right through this tariff regime in the areas that it figures is going to most hurt Americans, and it's likely to try and leverage headlines out of various foreign nations, suggesting they're going to invest in America to the tune of some billions of dollars before lowering the tariff rates again.
00:36:19.000Because, as I've said before, I do have faith that President Trump actually responds to headlines and responds to the news.
00:36:25.000He lives in the world of reality, and it would not be living in the world of reality for him to simply ignore if markets hate all of this, if costs start going up, If a recession is imminent.
00:36:34.000He does not want to preside over a recession.
00:36:36.000Which is why, again, I think this policy is misbegotten.
00:36:38.000I also think President Trump is not going to implement it as currently stated.
00:36:42.000So, what does this actually mean in practice?
00:36:44.000Well, the White House quietly put out a fact sheet yesterday to all of its embassies talking about what exactly President Trump is doing.
00:36:52.000So apparently, the tariffs will remain in effect until such a time as President Trump determines the threat posed by the trade deficit An underlying non-reciprocal treatment is satisfied, resolved, or mitigated.
00:37:01.000So he can unilaterally decide, hey, we solved the trade deficit, all done.
00:37:18.000Also, there are some very key goods that are not actually going to be subjected to the tariffs, including, by the way, steel and aluminum articles and auto and auto parts.
00:37:27.000Already subject to Section 232 tariffs.
00:37:30.000Copper, pharmaceuticals, semiconductors, and lumber articles.
00:37:33.000Okay, well, this, and this shows you the bizarreness of this sort of tariff regime.
00:37:38.000One of the things that the tariffs were allegedly designed to do was reshore manufacturing of key components.
00:37:46.000Semiconductors are basically the oil of the 21st century.
00:37:48.000They're the thing no one can operate without.
00:37:50.000So if you actually wanted to reshore, through tariffing and protectionism, manufacturing of semiconductors, You would leave the tariffs on the semiconductors, but he doesn't want to do that because it'll radically increase the price of every product that uses a semiconductor, ranging from your phone to your fridge.
00:38:06.000All articles that may become subject to future Section 232 tariffs, bullion, and energy, and other certain materials that are not available in the United States.
00:38:14.000So we're still going to be importing that Canadian gas, presumably.
00:38:17.000Which, by the way, is the reason we have a trade deficit with Canada.
00:38:20.000We have a trade surplus for literally everything else, except for gas.
00:38:25.000Like, if you take away the gas in the American balance of trade with Canada, we have a surplus with Canada.
00:38:32.000Meanwhile, USMCA-compliant goods will continue to see a 0% tariff.
00:38:38.000Non-USMCA-compliant goods will see a 25% tariff.
00:38:41.000Non-USMCA-compliant energy and potash will see a 10% tariff.
00:38:47.000Again, I do not think this policy Is the long-lasting, durable, strictly imposed policy that is currently being laid out by the White House.
00:38:56.000I think President Trump is going to see how the markets react.
00:38:58.000He's not going to like it, and he's going to start punching holes through this pretty much as fast as possible.
00:39:02.000But Democrats finally got their talking point.
00:39:05.000All they had to do was wait, and now they got it.
00:39:07.000So Democrats are saying the recession is a-coming.
00:39:10.000It is recession day, says Hakeem Jeffries, the House Minority Leader.
00:39:13.000Remember, Republicans have the barest of bare majorities in the House.
00:39:17.000Democrats just won the Wisconsin Supreme Court, which means Not a single administrative action has been done by Donald Trump, House Republicans, or Senate Republicans to lower the high cost of living in the United States of America.
00:39:47.000In fact, Republicans are crashing the American economy in real time and driving us to a recession.
00:41:58.000So, the proof is going to be in the pudding.
00:42:00.000If the prices go up, if your business is having trouble making payroll, if consumption goes down, If investment goes down because investors are freaked out because they're getting whipsawed like nobody's business.
00:42:10.000Again, I was talking with investors pretty much all day yesterday, given what was going on.
00:42:14.000And the number one thing that I was hearing from major investors is, I don't know what the hell is going on.
00:43:54.000So if that's the reaction across the country, that is not going to be great.
00:43:58.000Okay, so the question is going to be how the markets take this as it sinks in.
00:44:02.000What's going to happen over the course of the next week?
00:44:04.000Is President Trump going to send out surrogates, like the Treasury Secretary, to walk some of this back to try and point out where an off-ramp is?
00:44:11.000Or is he just going to keep doubling down on the theory that it's short-term pain for long-term gain?
00:44:15.000If so, he's going to have to explain how short-term the pain is and what exactly the long-term gain is, because that has not even been spelled out at this point.
00:44:22.000If the idea is that other countries are just going to reshore to the United States to take advantage of our markets, In some way, but we will leave tariffs on stuff that they export to us.
00:44:33.000Or they could just form trade blocs themselves and then go make time with the Chinese.
00:44:49.000So I want somebody to lay out that plan.
00:44:50.000Seriously, you've heard me on today's show pretty animated about how I don't think that this is particularly good policy.
00:44:55.000So, What I would love is for somebody to make the case as to why this is actually excellent policy, why this is going to be salutary for the United States, why this is going to benefit the people of the United States en masse.
00:45:05.000And if you're going to call for sacrifice from the American people, the question is, what is the thing on the other side of that sacrifice that is better and good?
00:45:34.000If the case is that we need to reshore, then what we should be doing is targeting the places where we want to reshore the most and understand that there are costs to doing that to consumers and to businesses, because that, of course, is very real.
00:45:46.000But I have yet to hear an actual explanation of what I've heard so far from people inside the administration.
00:45:51.000Unfortunately, I wish this weren't the case.
00:45:52.000What I've heard so far is a lot of casting of various aspersions at foreign countries for engaging in trade with us, regardless of whether they are good or bad, because we're treating Canada the same way we're treating China here.
00:46:07.000And this is why I think the markets are confused.
00:46:21.000We need to hear an actual narrative, not a bunch of talking points that are generated for a cork board that is filled with statistics made up by some sort of AI.
00:46:30.000Well, joining us online to discuss everything economics related is Representative Jody Arrington, of course, from Texas.
00:46:35.000He is the House Budget Committee Chairman.
00:46:37.000Representative, thanks so much for joining us.
00:46:42.000I do want to get to the budget, the big, beautiful bill and all that.
00:46:46.000Obviously, I'd be remiss if I didn't start with the big economic news, perhaps of the decade, which would be the President's announcement of his tariffs.
00:46:53.000Yesterday, the markets reacted quite poorly.
00:46:55.000This morning, obviously, Dow Jones Industrial Average dumped 3% on open.
00:46:59.000Similar numbers from the S&P 500, the NASDAQ down almost 5%.
00:47:04.000Do you think that they are geared toward the lowering of tariffs in other countries?
00:47:07.000What are you hoping President Trump is going to achieve with this?
00:47:11.000I hope past is prologue and that the same strategies that were applied in President Trump's first term that were successful in resetting the trade arrangement or relationship with our trading partners Happens in this round, and I suspect it will.
00:47:28.000So we just need a level playing field for manufacturers, for farmers, and for our workers.
00:47:34.000And I think that's a pretty basic principle that we should rally around the President for.
00:47:39.000We've had our manufacturing and industrial base hollowed out over the years.
00:47:45.000We've suppressed worker wages in this country.
00:47:48.000We've left economic activity and growth on the table.
00:47:53.000All because we've allowed other countries to take advantage of our low barriers to entry or access to our markets, while they've used tariffs and a lot of non-tariff barriers to effectively tax our products going into their markets.
00:48:12.000There will be pain and some disruption on the front end, But in the long run, we have to do it.
00:48:19.000And the big piece of this that is probably underestimated and undervalued is our dependence on other countries for drugs, for computer chips, and other important products and materials for our national security or public safety.
00:48:34.000So all in all, this will be a huge boon to this economy and critical to our national security.
00:48:46.000Congressman, I do have to ask a couple more questions on that.
00:48:49.000One is, you mentioned semiconductors, you mentioned some of the other products that are national security related.
00:48:53.000He's already exempted, he says, semiconductors from the import tariffs, presumably because it would raise prices too much on so many of the products that we use.
00:49:00.000And I guess the other question is that the sheet that he put out yesterday, that the administration put out, labeling tariff rates at 70, 80, 90 percent in some of these countries, it appears that that was calculated by essentially just taking the trade deficits with those countries and dividing it into the imports to the United States from those countries and coming up with a percentage that really has nothing to do with the tariff rate.
00:49:20.000So for example, South Korea is listed on this particular form as having a 50% tariff rate.
00:49:25.000We have a free trade agreement with South Korea.
00:49:27.000We pay an effective tariff rate in South Korea of something like 0.8%.
00:49:30.000Even if you add their value-added tax on top, you're talking about like a 10% tariff, certainly not a 50% tariff.
00:49:36.000My problem with that calculation is I'm with you.
00:49:39.000I want them to lower their trade barriers, but it seems to me that if you're A country like, for example, Israel literally yesterday announced zero tariffs on American products coming in.
00:50:44.000We're not looking for isolationism or we're not looking for Chinese industrial policy where we're subsidizing our guys and blocking out competition from others.
00:50:55.000We believe in free markets and competition, but free markets and free trade don't exist if they're not fair On an apples-to-apples trade policy basis, and I think that's a good fundamental principle in trade policy and trade negotiations.
00:51:13.000And Congressman Arrington, one of the things that I think that people in the markets are worried about is that there's been a lot of whipsawing, a lot of kind of policy uncertainty so far, particularly in regards to this stuff.
00:51:21.000The investors that I know are kind of holding out their money, waiting to see where everything settles, which isn't an unreasonable position given the changes.
00:51:27.000President Trump is declaring these tariffs on a national emergency basis, and the national emergency that he's claiming is the trade deficit.
00:51:33.000It is difficult to see how a trade deficit amounts to a national emergency under the law.
00:51:38.000Where do you think the line of congressional authority lays with regard to tariffs as opposed to executive authority on tariffs?
00:51:47.000I think there are national security implications if we can't make materials that go into making war machines that protect our country and our allies like Israel.
00:52:00.000So that's one you have to watch closely.
00:52:03.000I think we all were surprised during COVID to find out that we couldn't get protective gear for our healthcare workers, or that 90% of our antibiotics, for example, were made in China.
00:52:16.000And then, you know, computer chips that run everything, effectively.
00:52:19.000We were a sole source provider with Taiwan.
00:52:23.000So you have to look at these things, I agree with, in terms of where is the national security or public safety nexus?
00:52:31.000And then on everything else, Ben, it needs to be the apples-to-apples fairness issue.
00:52:38.000And because I do think we've been taken for granted That's why we have a two to one, three to one deficit with the top 20 countries representing the top 20 largest economies in the world.
00:52:51.000So, Congressman Arrington, all of this makes it that much more important that the big, beautiful budget resolution actually get passed because the markets are already priced in, I assume, because pretty much everyone I'm talking to has.
00:53:03.000The permanence of the Trump tax cuts, if that were to disappear, there would be a massive market catastrophe.
00:53:10.000I think it's pretty clear to everybody that the big, beautiful bill needs to happen.
00:53:32.000We lifted 6 million people out of poverty.
00:53:34.000All of this was The comprehensive economic policy agenda, which included reset on trade, but it also was good energy policy, good tax policy, and work incentives, right?
00:53:45.000Work incentives for work-capable adults.
00:53:48.000So we've got to get back, transition from unbridled spending and failed economic policies to this agenda, most of which, to your point, is wrapped up in this budget reconciliation bill.
00:54:21.000Opening up energy production, deregulating the economy, work incentives, investment in military and border security, all in there.
00:54:29.000That's why it's one big beautiful bill, right?
00:54:31.000That is the full America First agenda for the most part and the most consequential piece of legislation in my lifetime, Ben.
00:54:38.000But we have to make sure that as we advance this and all the cost to it, we start to bend the spending curve that's driving an unsustainable debt.
00:54:51.000And Republicans have failed in the past to do that.
00:54:54.000And I want to make certain Not just for this great country, our economy, and our current security or defense readiness, but for our children, who are going to inherit the whirlwind of our recklessness, now to the tune of $36 trillion in debt, $2 trillion annual deficits, $1 trillion just to service the debt.
00:55:13.000Those are all deferred taxes on our children.
00:55:16.000So we have to have offsets, we cannot increase the deficit, and we've got to get our country on a sustainable and responsible path.
00:55:24.000That's missing from the Senate's bill.
00:55:25.000That was in the House bill, and I made sure of it along with other colleagues.
00:55:30.000So at the end of this rainbow, we have to get to a spot that we reignite economic growth through all the policies we've talked about, including tax, but we're bringing the debt to GDP down.
00:55:42.000We're bringing the deficit to GDP down.
00:55:44.000Otherwise, we bankrupt the country and none of this matters.
00:55:48.000And we're not the leader of the free world.
00:55:51.000Our values aren't the dominant values that influence the world, and we can't support our allies, etc, etc.
00:55:57.000Congressman Arrington, I've said on the show that you co-authored with Phil Graham, former chairman of the Senate Banking Committee, the single most important op-ed of the last five years, which was this op-ed in the Wall Street Journal talking about how means-tested welfare programs are the thing that's bankrupting the United States.
00:56:10.000For the most part, Medicare and Social Security are paid for.
00:56:13.000For the most part, not in their entirety, but the thing that actually is rising dramatically continues to be the cost on the means-tested welfare programs.
00:56:19.000When you talk about the budget bill, what in your version of the budget bill was aimed at sort of bringing down the cost curve on those?
00:56:30.000If you just took the Medicaid, that's the largest means-tested welfare program.
00:56:35.000It doesn't have a work requirement for able-bodied adults, like all the other programs from the Bill Clinton welfare-to-work era that actually brought down dependence on welfare by 80%, but it's been gamed by states and others, especially California.
00:56:52.000So we have to close the loopholes there, and we have to put actual expectations for work-capable adults in these programs, like in Medicaid.
00:57:02.000If you just reviewed the roles This is a basic program integrity measure that everybody can understand.
00:57:07.000If you review the roles and make sure that those benefiting are legally eligible and they're not here illegally in this country or for other reasons aren't eligible, then you save 160 billion dollars just reviewing it twice versus once.
00:57:25.000You also have states and local special interests that siphon money away from these programs that have nothing to do with the beneficiary.
00:57:34.000So, it's broken, it's part of what's bankrupting the country, and we've got to act responsibly as we right this fiscal ship to focus on these welfare programs.
00:57:46.000Well, that's House Budget Chairman Jody Arrington doing good work on the Hill.
00:57:48.000Really appreciate your time, sir, and thanks for your insight.
00:57:53.000Meanwhile, there is in fact breaking news on the Joe Biden front, believe it or not.
00:57:58.000So, there is a brand new piece out from the UK Guardian.
00:58:03.000Suggesting, a new book, top Biden aides were perfectly well aware that Joe Biden was ailing during the 2024 election.
00:58:09.000Ron Klain served Biden from 2021 to 2023.
00:58:12.000And then he came back last June to run debate prep.
00:58:15.000According to Klain, in this new book, it turned out Biden, quote, did not know what Trump had been saying and couldn't grasp what the back and forth was.
00:58:22.000Left preparation and fell asleep by the pool.
00:58:25.000Obsessed about foreign leaders saying, quote, these guys say I'm doing a great job as president, so I must be a great president.
00:58:29.000didn't really understand what the argument was on inflation and had nothing to say about a second term other than finish the job.
00:58:35.000As described by Klain to a reporter, Chris Whipple, at one point Biden had an idea, quote, if he looks perplexed when Trump talks, voters would understand that Trump was an idiot.
00:58:43.000Klain replied, sir, when you look perplexed, people just think you're perplexed.
00:58:47.000The book is titled Uncharted, How Trump Beat Biden, Harris and the Odds in the Wildest Campaign in History.
00:58:54.000Well, I mean, yes, obviously Klain was hiding it.
00:58:59.000Klain, by the way, has been saying that Biden should have stayed in the race, which, again, is an easy sort of revisionist history given the fact that Harris then went on to lose to Donald Trump.
00:59:48.000I wonder why he dropped out and then Kamala Harris lost.
00:59:51.000Meanwhile, in other hilarious news, Jonathan Allen of Politico is now reporting that Barack Obama behind the scenes after Biden dropped out was actually working to scuttle Kamala Harris's presidential bid.
01:00:02.000This is another one of these new books called Fight Inside the Wildest Battle for the White House.
01:00:08.000President Obama absolutely did not think that Joe Biden should continue, according to our sources, close to President Obama.
01:00:15.000And he also didn't want Kamala Harris to be the replacement for Biden.
01:00:20.000He didn't think that she was the best choice for Democrats.
01:00:23.000And he worked really behind the scenes for a long time to try to have Well, it turns out that,
01:00:46.000I think that's a little excuse making by Barack Obama, but maybe he shouldn't have selected Joe Biden as his vice president, and then maybe he shouldn't have selected Kamala Harris as Joe Biden's vice president.
01:00:56.000He was very involved in that, actually, back in 2020.
01:01:00.000Alrighty, folks, the show continues in a moment.
01:01:02.000We are going to be talking about Elon Musk at Doge.