Frankie gets arrested in the streets of New York City protesting Elon Musk's Tesla stores. President Trump strips the Deep State of their top-secret security clearance. D.C. Mayor Bowser is nervous about losing federal funding. Marco Rubio announces USAID is getting audited, and the stock market is taking a dive.
00:13:57.440If anything, the private citizen, John, should be happy because we're probably going to get less audits throughout the IRS.
00:14:02.480But in what world, John, should people be angry that this man wants to cut the damn deficit that we've been living under for the last 20 something years?
00:14:13.820Well, if you were a federal government employee or if your job depended upon federal contracts and you were supremely confident about job security, given the fact that you have a nearly $2 trillion federal budget deficit, this confidence would reflect either stupidity or insanity on your part.
00:14:37.900You had to be braced for this particular type of shock.
00:14:41.420It was going to happen sooner or later.
00:14:43.820My goodness, if the company I was working for was losing nearly $2 trillion per year, I don't think I would be very confident about job security.
00:15:00.840It brings people back to reality that there has to be adjustments made with government spending so that we are no longer borrowing at such a pace that in the not too distant future, just meeting the interest cost on federal debt that now approach $1 trillion would have the effect of, you know, basically crippling federal government finances.
00:15:28.280And in turn, doing immense damage to U.S. financial markets as well as the U.S. economy.
00:15:35.700John, there's a reason I use Jamie Dimon.
00:15:37.560I don't like the guy, but he does a very good job.
00:17:51.280One can be revenues for the government.
00:17:54.120Two can be to make trade fair, because a lot of our trading partners do not treat us fairly.
00:18:01.280And three, President Trump uses them for negotiating, as he did with Colombia, as you're seeing with Mexico, with Canada, with the fentanyl crisis that we're having.
00:18:15.280So there is a chance that the tariffs could bring in a substantial amount of revenue for the government.
00:18:23.360So, for instance, a 10% global tariff would bring in $2.5 trillion over 10 years.
00:19:01.600If tariffs are so bad, why didn't he get rid of them?
00:19:05.160Well, Biden realized that China deserved tariffs, given the fact in part that, you know, they've been exporting fentanyl to Mexico that eventually makes its way into the United States.
00:19:18.800I mean, Trump is using tariffs, I think, largely as a negotiating tool early on.
00:19:25.080And it's conceivable that when Trump begins to look more closely at reciprocity, that is trying to level the tariff playing field.
00:19:37.180For example, if Europeans impose a 100 percent tariff on exports of light trucks from the United States, then perhaps we should increase some tariff on European exports to the U.S.
00:19:52.520to try to get Europe to lower the tariff that they impose on U.S. exports to Europe.
00:20:01.000You know, it's conceivable that this effort to lift tariffs in the United States might eventually lead to widespread reductions in tariffs if other countries open up their markets to production from the United States.
00:20:20.040You know, it's really it's a complicated process, but, you know, European consumer would be better off if they could go ahead and purchase one of those nice SUVs, nice light trucks manufactured in the U.S.
00:20:34.000I mean, we probably you know, there are again European companies like BMW that manufactures automobiles, other types of vehicles in the Carolinas.
00:20:45.740Why not export some of those to Europe if they could lower the tariffs that are now imposed on such exports?
00:20:53.820John, the way I see it is America's been taken advantage of for so long that nobody even realizes the average person doesn't realize what what the economy, how it works, what it looks like.
00:21:39.900He lets the American people know he's very transparent.
00:21:42.000This is what we're doing and this is why we're doing it.
00:21:44.800Yet we're getting blowback for putting the same amount of tariffs on these countries that are tariffing us.
00:21:50.140It's almost like these people who are against it are anti-American.
00:21:54.040You know, it's not only a question of tariffs.
00:21:56.280Consider China with that country's production of what are now very cheap electric vehicles.
00:22:02.120So one of the reasons why the EVs in China are so cheap is because of heavy government subsidies.
00:22:09.800So we also have to take that into consideration when we're trying to come up with an effective tariff policy.
00:22:18.640But, you know, John, you made a very important point, and that is I think the Trump administration would be they'd get a boost if they went ahead and explained to the American people why it is that the international trade has become an unlevel playing field for the United States.
00:22:43.160It's why U.S. producers are put at such a disadvantage.
00:22:47.940Maybe you need a half dozen examples and use that to explain to the American people what the Trump administration is trying to do by supplying U.S. manufacturers, U.S. producers with this level playing field in international trade.
00:23:08.020Yeah. You know, you brought up a very, very good point, and it's about China being able to produce things so much cheaper than us.
00:23:14.860I was at a funeral last week, and I saw a close family friend who's retired down to the Dominican Republic because he simply can't afford to retire up here.
00:23:22.820He built a beautiful home, John, for $290,000, fully furnished.
00:24:22.840Yeah, and how do you go ahead and capture that, if you like, stolen intellectual property from the United States?
00:24:30.740In the case of EVs and other nation-developing industries, I think we perhaps have an argument to have some sort of protection from foreign competition over the near term.
00:24:47.740Another factor we want to consider that we haven't mentioned yet, and that is national security.
00:24:53.800I mean, does it make any sense for the United States to be overly dependent on imports for pharmaceuticals, to be overly dependent on imports of steel, of aluminum, other industrial materials, never mind rare earth metals and so on?
00:25:13.940So we have to establish some sort of strategy to help assure that the U.S. has adequate production capacity in the event of a national emergency, especially a war, that would deny the United States access to these badly needed materials from overseas.
00:25:38.960Oh, you mean like masks and gowns from China and pharmaceuticals that we weren't able to get during the China virus, John?
00:25:46.540Before we get into it, I want to take up the recession talk on the other side of this quick break.
00:25:50.480But before we get there, I'll tell you what my one issue is with President Trump and the tariffs.
00:25:55.560I think what he's done with the tariffs is a great idea.
00:25:58.380China and Mexico need to stop the flow of drugs and migrants into this country.
00:26:19.060In my opinion, the market will recover, I think, historically.
00:26:21.900But by taking them on, putting them off, saying, this is only tariffed on this, this is only tariffed on that, where reciprocal trades are going in, tariffs are going in this time.
00:26:33.120I think these nations look at us and say, well, why are we even going to take you seriously in the first place when you've put them on three or four times and you can't leave them on?
00:26:41.300That's my only beef with him on the tariffs.
00:26:47.300And it's almost as if Trump should have other spokespeople on this matter related to tariffs.
00:26:52.980So besides just himself, appoint somebody in charge and come up with a clear cut strategy.
00:26:59.080You know, you could be you could use a surgeon's scalpel when looking at the tariff issue.
00:27:05.460You don't have to be ham handed with tariffs and just apply a 10 percent or 15 percent, 20 percent tariffs to all imports from a specific country or a certain set of countries.
00:27:17.180So look at it that way. But if you keep changing your mind, if there's all this uncertainty surrounding the outlook for tariffs will lead to reduced capital spending.
00:27:29.420You know, my goodness, if I begin to sense that tariffs are pushing the price of an auto of an auto higher and that that increase in price may only be temporary because tariffs will eventually have to be rescinded.
00:27:49.880Why should I buy the auto? So this is it's a confusing situation and neither the consumer nor businesses like heightened uncertainty.
00:28:02.800Yeah, I think if John, if he would have put them on when he said he was going to February 1st, I think everything would have bled out by now.
00:28:08.860The truth of the matter is, I don't think Canada can last very long with them on.
00:28:13.660I don't think Mexico can last very long with them on.
00:28:15.820So if he would have put them on February 1st, as he said, we're now at March 10th here, I think it would have probably figured itself out by now.
00:28:22.760And a deal would have been made between Mexico and Canada.
00:28:25.340Your thoughts before we go to a quick break.
00:28:26.660Well, you know, my thought is you have to really think this through clearly, because ever since tariffs became an issue towards the end of January,
00:28:34.960I think since then a stock price index for the auto industry, when I last looked, was down by 30 percent.
00:28:43.220Let's not forget that the production of automobiles in the United States is very interdependent on cross-border production.
00:28:52.780OK, a lot of parts are sent into Canada.
00:28:55.240They come back to the United States, back and forth, likewise with Mexico.
00:28:59.480So you have to be extremely careful as to how you handle the imposition of tariffs on certain goods, certain materials.
00:29:10.000It could be. And what will happen, unfortunately, is that if you have this, I don't know, a 20 percent tariff placed on imports from Canada,
00:29:19.240then the Korean automakers, my goodness, Hyundai, Kia.
00:29:23.060Boy, they have a golden opportunity to seize market share in the United States as the prices of autos from the big three automakers increase significantly, perhaps by 25 percent.
00:29:35.640This thing has to be well thought out. Quit rushing into matters, sit back, do the analysis and then come up with the best strategic application of tariffs.
00:29:49.520Haste can make waste. Haste can do more damage than waste certain times.
00:29:56.220Oh, man. That's what my grandmother used to tell me. Haste makes waste.
00:29:58.960It's a it's a famous quote, John. I want to take a quick break here. I want to come back with you.
00:30:03.120I want to talk about a little bit of a recession and what we can expect.
00:30:06.720I think that's what the audience all wants to know.
00:30:08.900America wants to know what we can expect on an economic outlook from you.
00:30:13.920We're coming right back with John Lonsky, folks. Stay with us.
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