Verdict with Ted Cruz - April 04, 2025


Tariffs, Tariffs Everywhere-What Will it Do to the US Economy, Inflation & Jobs


Episode Stats


Length

37 minutes

Words per minute

165.6843

Word count

6,156

Sentence count

513

Harmful content

Misogyny

3

sentences flagged

Toxicity

5

sentences flagged

Hate speech

10

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Sen. Ted Cruz (R-Texas) joins me to talk about the impact of President Trump's new tariffs on nearly every country on the planet, and what it means for the economy and the country's jobs.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
00:00:00.000 This is an iHeart Podcast.
00:00:02.620 Guaranteed human.
00:00:05.460 Welcome.
00:00:06.120 It is Verdict with Senator Ted Cruz, Ben Ferguson with you.
00:00:09.120 It's nice to have you on this Friday morning.
00:00:11.060 And Senator, everybody's waking up today.
00:00:13.580 They're looking at what's happening with these tariffs.
00:00:16.140 They're looking at what's happening on Wall Street.
00:00:18.320 There's no doubt, no matter who you are, there's a lot of anxiety, concern, angst.
00:00:23.560 Those are the words I've been hearing from friends about what's happening right now.
00:00:27.660 So let's break it all down for listeners and talk about where we are and what is happening,
00:00:34.080 what your concerns are, what you think is happening, and what is being said by your colleagues in D.C. as well.
00:00:41.020 Well, on today's podcast, there is one topic and only one topic, and that is tariffs.
00:00:45.240 And I will say I believe this week may well prove the single most consequential week in the Trump administration so far,
00:00:52.860 and it may be the most consequential week in all four years of the second term of the Trump administration.
00:00:58.740 I think this week is consequential as a policy matter, and this week is consequential as a political matter.
00:01:05.340 I think there are enormous risks.
00:01:07.540 There is the potential for upside, but there are enormous risks.
00:01:11.740 And so what we're going to try to do on this podcast is break it down,
00:01:14.380 because a lot of people are trying to figure out, okay, what am I supposed to think about this?
00:01:18.960 What's this going to mean?
00:01:19.920 What does this mean for my job?
00:01:21.180 What does this mean for my family?
00:01:22.880 What does this mean when I go to the grocery store?
00:01:24.740 What does this mean when I buy goods for my family?
00:01:27.740 And the answer is a lot.
00:01:31.040 And so we're going to break it down and try to explain what it means and what's likely to happen next.
00:01:37.600 I think this podcast, in terms of the impact on the country,
00:01:45.280 I think is as consequential as anything we ever talked about.
00:01:48.920 So let's start with what the news is.
00:01:51.740 This week, on Wednesday, President Trump announced massive tariffs.
00:01:58.800 Tariffs on virtually every country on earth.
00:02:01.040 A 10% baseline tariff on everybody.
00:02:04.520 And then specific tariffs country by country.
00:02:07.860 And I'm going to go through really quickly, but there are a lot of them.
00:02:10.320 So on China, 34% tariffs.
00:02:13.500 On the European Union, all of Europe, 20% tariffs.
00:02:16.440 On Vietnam, 46% tariffs.
00:02:18.520 On Taiwan, 32% tariffs.
00:02:20.760 On Japan, 24% tariffs.
00:02:22.620 On India, 26% tariffs.
00:02:24.240 On South Korea, 25% tariffs.
00:02:26.500 On Thailand, 36% tariffs.
00:02:28.480 On Switzerland, 31% tariffs.
00:02:30.760 On Indonesia, 32% tariffs.
00:02:32.760 On Malaysia, 24% tariffs.
00:02:34.380 On Cambodia, 49% tariffs.
00:02:36.300 On the United Kingdom, 10% tariffs.
00:02:38.800 On South Africa, 30% tariffs.
00:02:40.460 On Brazil, 10% tariffs.
00:02:42.180 On Bangladesh, 37% tariffs.
00:02:44.680 On Singapore, 10% tariffs.
00:02:46.760 On Israel, 17% tariffs.
00:02:49.380 On the Philippines, 17% tariffs.
00:02:51.840 On Chile, 10% tariffs.
00:02:53.700 On Australia, 10% tariffs.
00:02:55.400 On Pakistan, 29% tariffs.
00:02:57.960 On Turkey, 10% tariffs.
00:02:59.960 On Sri Lanka, 44% tariffs.
00:03:02.540 On Colombia, 10% tariffs.
00:03:04.300 On Peru, 10% tariffs.
00:03:06.780 On Nicaragua, 18% tariffs.
00:03:09.760 On Norway, 15% tariffs.
00:03:12.120 On Costa Rica, 10%.
00:03:13.240 On Jordan, 20%. 0.86
00:03:14.600 On Dominican Republic, 10%.
00:03:16.200 On United Arab Emirates, 10%.
00:03:18.360 On New Zealand, 10%.
00:03:19.560 On Argentina, 10%.
00:03:20.700 On Ecuador, 10%.
00:03:21.740 On Guatemala, 10%.
00:03:23.000 On Honduras, 10%.
00:03:24.680 On Madagascar, 47%.
00:03:27.640 On Myanmar, or Burma, 44%. 0.84
00:03:30.400 On Tunisia, 28%. 0.58
00:03:32.500 On Kazakhstan, 27%.
00:03:34.540 On Serbia, 37%.
00:03:36.340 On Egypt, 10%. 0.71
00:03:37.860 Saudi Arabia, 10%.
00:03:39.380 El Salvador, 10%.
00:03:40.700 The Ivory Coast, 21%. 0.90
00:03:43.700 Laos, 48%.
00:03:45.520 Botswana, 37%. 0.97
00:03:47.280 Trinidad and Tobago, 10%.
00:03:49.100 Morocco, 10%.
00:03:50.340 This, collectively, is the highest rate of tariffs the United States has had in place since 1930, in 100 years.
00:03:57.040 That is enormously consequential.
00:04:01.320 That is, as a policy matter, a huge deal, and as a political matter, a huge deal.
00:04:09.280 Now, we're in a partisan political environment where right now the world is turned upside down.
00:04:16.780 We are very much tribalized where each side is on their team.
00:04:23.720 So Democrats right now are lighting their hair on fire.
00:04:26.040 Democrats right now are saying this is a catastrophe.
00:04:30.360 This is destroying America.
00:04:31.920 It's the worst thing that ever happened.
00:04:33.600 And a lot of the media is echoing that.
00:04:35.640 Now, that is producing a lot of Republicans, who are naturally defending the president, saying this is great.
00:04:41.800 This is fantastic.
00:04:43.420 This is a day of liberation.
00:04:48.220 And they are celebrating that.
00:04:50.200 I will say it's a fairly odd dynamic because the two worlds are inverted.
00:04:56.980 So a few years ago, Republicans were the party of free trade.
00:05:02.220 Republicans were the party of let's lower tariffs.
00:05:06.060 Let's have more trade with the world.
00:05:07.720 That produces more jobs here at home.
00:05:09.940 That benefits American producers.
00:05:13.720 Democrats were the protectionists.
00:05:16.640 You think of the Dick Gephardt Democrats, the Democrats who wanted big tariffs against other countries.
00:05:24.000 And so it is a bizarre dynamic that the two sides have switched.
00:05:30.900 And they are essentially giving opposite talking points.
00:05:36.940 My view, look, I want to set aside the talking points.
00:05:41.180 I want to talk about what is likely to happen.
00:05:44.360 The big, big question, there are two big questions.
00:05:47.500 Number one, how are other countries going to react?
00:05:50.260 And number two, what is the Trump administration going to do in response?
00:05:53.940 Now, there are two broad scenarios, one that is very, very good, one that is very, very bad.
00:06:00.640 Here's the good scenario.
00:06:02.380 The good scenario is other countries freak out.
00:06:05.960 That is clearly happening.
00:06:07.060 Just every country I listed is freaking out right now.
00:06:09.780 And in response, other countries come rushing to the White House and say,
00:06:15.560 we want to negotiate a deal and we're going to dramatically lower our tariffs to U.S. goods coming into our country.
00:06:23.940 That may well happen.
00:06:25.000 We're seeing some of that starting to happen.
00:06:26.700 It may happen in a massive cascade.
00:06:30.040 If that happens, that would be a very good thing.
00:06:32.740 Now, the second question is, if other countries dramatically slash their tariffs,
00:06:37.500 let's say other countries zero out their tariffs.
00:06:39.860 They say all U.S. goods will come into our country with zero tariffs.
00:06:44.360 Then the second big question is, what does the Trump administration do in response?
00:06:48.420 And if the Trump administration, in response to other countries slashing their tariffs, zeroing out their tariffs,
00:06:56.040 if the Trump administration responds by dramatically cutting these tariffs, lowering them dramatically on this side,
00:07:02.640 that would be a home run for America.
00:07:05.680 I would be thrilled.
00:07:07.080 I would be celebrating.
00:07:08.200 And that could happen.
00:07:09.060 Look, look, Trump is, this is throwing a long ball deep into the end zone.
00:07:14.600 And if 30 days from now, 60 days from now, 90 days from now, the world we're looking at is a world where our trading partners across the globe
00:07:22.460 have slashed their tariffs on American goods and services,
00:07:25.060 and the Trump administration has responded by slashing these tariffs they've just announced,
00:07:30.740 that will be a great outcome for the American economy.
00:07:34.220 It will be a great outcome for farmers and ranchers and small businesses and manufacturers and jobs and workers.
00:07:39.780 I will celebrate.
00:07:42.180 And if that happens, I will say, Donald Trump had a vision on trade that very few people in the world saw,
00:07:48.940 and this was a friggin' home run.
00:07:51.520 So the best case scenario is to see more headlines like we saw tonight, which is, for example, 0.75
00:07:57.160 Communist Vietnam panics over Trump tariffs, sends Deputy Prime Minister to Washington, D.C.
00:08:01.520 with an emergency delegation.
00:08:03.540 And I'll go to a Trump family member.
00:08:05.860 Eric Trump put out an interesting tweet where he said, those that get here quickly and get a deal done will get the best deal.
00:08:15.060 And those left at the end, it's going to hurt.
00:08:18.600 And so it's pretty clear that's the strategy that you also just mentioned could be, in theory, best case scenario.
00:08:25.120 Look, and if that's what happens, hallelujah.
00:08:27.980 That is a great outcome.
00:08:29.520 And listen, we've all seen Donald Trump's negotiating style is frequently to pick up a two-by-four, smack someone in the head with it, and then negotiate down from that.
00:08:40.160 And so if that's what's going on, yesterday was a two-by-four.
00:08:44.500 It was unquestionably a two-by-four.
00:08:47.060 And virtually every trading partner of America is reeling right now.
00:08:51.560 If the result is everyone cuts tariffs and we have massive more American exports and farmers are sending our crops and our livestock abroad and manufacturers are sending our goods abroad and service providers are sending our services abroad, that's great.
00:09:08.500 Now, let me give you the downside.
00:09:11.240 There's another way this could play out, which is other countries get pissed off and they jack up tariffs and they impose retaliatory tariffs on American goods.
00:09:21.020 And the tariffs Trump put in place remain in place.
00:09:26.100 And I've got to say, if we're in a scenario 30 days from now, 60 days from now, 90 days from now, with massive American tariffs and massive tariffs on American goods in every other country on earth, that is a terrible outcome.
00:09:38.700 It's terrible for Texas, which obviously I care about deeply.
00:09:41.960 And it's terrible for America.
00:09:43.780 It will hurt jobs and hurt America.
00:09:45.980 And there is a very real risk of that.
00:09:47.940 In the past, we have seen when one country jacks up tariffs, it can provoke a trade war where each country accelerates tariffs and the result would do a couple of things.
00:10:01.280 Number one, it would destroy jobs here at home and do real damage to the U.S. economy if we had tariffs everywhere. 0.98
00:10:07.720 Number two, and this is a virtual certainty, inflation, this is going to have a powerful upward impact on inflation.
00:10:18.040 And let's take, for example, all right, let's take cars.
00:10:21.620 You know, Trump has announced a 25 percent across the board tariff on cars.
00:10:25.840 Yeah.
00:10:26.700 What does that mean?
00:10:27.820 That means if you go and buy a new car, you're going to pay a hell of a lot more for that new car.
00:10:34.300 And by the way, if you buy a used car, you're going to pay a lot more for the used car because when new cars go up, used cars go up, too, because that will impact the pricing across the market.
00:10:45.520 Now, what is interesting, you might say, well, wait, wait, wait.
00:10:48.120 This is just a tariff on foreign cars.
00:10:52.380 So what do I care if a bunch of fancy foreign cars, their prices go up?
00:10:56.700 Well, you know what?
00:10:57.160 A lot of Americans choose to buy foreign cars.
00:10:59.700 So if you're choosing to buy a foreign car, your prices are likely to go up.
00:11:03.980 They may not go up exactly 25 percent, but they'll go up pretty close to 25 percent.
00:11:08.720 If you look at what happens when a tariff is imposed, who pays it is is dependent.
00:11:14.540 For those of you all who remember your econ class, it's dependent on price elasticity.
00:11:19.980 So sometimes the burden of the tariff is paid by the company.
00:11:25.160 And by the way, if it's if it's paid by the company, depending on the price elasticity, that means the company is making less profits and they may well be letting letting workers go and ending jobs.
00:11:37.080 But for many goods, it will be paid by the consumers and the immediate impact will be prices going up.
00:11:42.940 But let's take cars again.
00:11:44.780 It's not just foreign cars that will go up.
00:11:47.480 All the American cars, their prices are going to go up, too.
00:11:50.380 If everyone if all their competitors prices go up 25 percent and it's not quite that simple because it will be less than 25 percent, but it will be in that neighborhood.
00:11:58.860 You're going to see every other car price go up that much as well.
00:12:01.580 And there are weird impacts given how how the American supply chain works.
00:12:08.560 So, for example, I was talking with with one of the major U.S. car manufacturers yesterday.
00:12:17.780 You think of sort of the poster child.
00:12:20.460 If you ask, you know, just the guy on the street who's benefiting from all these tariffs, they'd probably say their immediate answer.
00:12:27.420 They'd say American car companies, GM, Ford, Chrysler.
00:12:30.140 They're going to do great.
00:12:30.820 Well, one of the big three told me last night that the impact of these tariffs will be the prices, the average prices of all of their cars will go up four thousand five hundred dollars.
00:12:43.620 That when you go and buy an American car from a big American company that you will pay, they said, probably starting in June.
00:12:50.640 And I asked why June.
00:12:51.880 And they said, well, there's some lag in the supply chain.
00:12:54.260 So they've made cars that they've sold to their dealers.
00:12:57.220 And so it will be the cars they're selling to their dealers.
00:12:59.920 It'll be about June when the prices go up.
00:13:01.820 But they were they were predicting last night.
00:13:04.040 Forty five hundred dollars is what the price of a car will go up.
00:13:07.600 And what is interesting also.
00:13:09.680 So this is this, as I said, was one of the big three car car makers.
00:13:12.600 They said they thought this would end up hurting them more than it helps them.
00:13:18.240 That's what they told me last night, in part, because if you look at the current supply chain of how a car is made.
00:13:24.480 So many cars, many cars, the big three companies make cars in America, many of them make them in Texas.
00:13:30.760 But if you look at the supply chain, it's very odd.
00:13:33.580 But the way it works right now is is that parts, say, the drivetrain or the chassis or different parts of the car will go back and forth.
00:13:42.600 Across the Mexican border.
00:13:44.900 So they'll build part of it in America.
00:13:46.300 They'll send part of it to Mexico and build the send part of it back to America. 0.89
00:13:49.100 And it goes sometimes three, four or five times back and forth before they fully complete a car.
00:13:54.060 Every time it crosses the border from Mexico, those tariffs are stacking on top of each other.
00:13:58.580 So this U.S. car company told me they actually thought that foreign car companies would benefit more than they would, because if you just build the car in Germany or Japan and you send it over here, you pay one tariff.
00:14:11.380 Whereas these guys are getting hit on each part that is going over and back and over and back on the supply chain.
00:14:17.500 And they thought they would end up up.
00:14:20.060 It's why they were talking about having to raise prices forty five hundred dollars each.
00:14:24.520 One of the undeniable impacts of these tariffs is the prices that Americans are going to pay are going to go up significantly.
00:14:30.820 And that is painful.
00:14:32.920 Now, what are some of the good outcomes?
00:14:34.920 Because President Trump has acknowledged he's he said, look, there may be some pain, but it's worth it if we end up in the outcome I started with, which is foreign countries slash their tariffs on American goods.
00:14:45.760 And we, in turn, lower the tariffs that that that the Trump administration just announced.
00:14:50.820 That's a great outcome.
00:14:52.180 And we will see a big economic boom from that.
00:14:56.020 And so I'm hoping for that.
00:14:57.880 I'm rooting for that.
00:14:58.800 I will celebrate and praise the administration if that's the outcome.
00:15:03.280 But if it's not, here's one thing to understand.
00:15:06.460 And I think I'm seeing a lot of sort of Republican cheerleaders that are kind of reflexively defending what what the White House is doing.
00:15:14.380 And listen, I love President Trump.
00:15:15.700 I'm a strongest supporter in the Senate.
00:15:17.400 I think he's doing incredible things as president.
00:15:20.280 But here's one thing to understand.
00:15:21.880 A tariff is a tax and it is a tax principally on American consumers.
00:15:27.120 So when I read out all those percentages, I said, you know, X percent on this country.
00:15:32.160 That actually gets it wrong.
00:15:34.700 So when I said, for example, 20 percent on the European Union, it's not actually the EU that pays that.
00:15:44.300 It's you, Ben Ferguson.
00:15:45.900 If you go buy anything from the EU as the consumer, you're paying that tax.
00:15:49.940 And so the effect of this is trillions of dollars of increased taxes on American consumers.
00:15:57.760 If these if these tariffs stay in place, this is the biggest tax increase we have seen in a long, long time.
00:16:06.780 I got to say, I am not a fan of tax increases on American consumers.
00:16:11.780 I'm not a fan of tariffs.
00:16:13.520 And so if this is leverage to lower tariffs, great.
00:16:17.700 But if the outcome is tariffs stay in place forever, that is going to do a lot of harm in the American economy.
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00:16:55.160 So let's talk timeline here.
00:16:57.480 And you obviously have had a lot of conversations with the administration, but also with your colleagues.
00:17:04.260 Is there any guess of what this timeline could look like?
00:17:08.740 Is it truly dependent on the other countries that you mentioned?
00:17:12.640 I mean, I go back to that headline of Vietnam and then rushing to D.C.
00:17:17.600 They obviously know that this is something they don't want to deal with for a long time.
00:17:23.380 And here's the reason why.
00:17:24.740 Vietnam is among the world's most trade-dependent nations, right?
00:17:28.240 Their export equivalent to about 90% of their economic output.
00:17:32.800 And guess what?
00:17:33.460 The U.S. is the most significant customer.
00:17:36.940 So they've got to fix this.
00:17:39.200 We have a lot of leverage, I think, with Vietnam.
00:17:42.680 That's why they're rushing to America. 1.00
00:17:44.800 Okay.
00:17:44.960 So you're right about that.
00:17:46.820 And listen, we're trying an experiment that hasn't been tried in really 100 years.
00:17:52.660 The last time we really saw this tried in earnest was the Smoot-Hawley tariffs.
00:17:58.300 And the Smoot-Hawley tariffs, look, history has not been kind to the Smoot-Hawley tariffs.
00:18:02.600 They were a major contributor to the Great Depression.
00:18:05.540 And what happened in response to the Smoot-Hawley tariffs is my scenario two, the bad scenario, which is other countries put retaliatory tariffs in place.
00:18:15.640 You had a trade war and it ended up hammering jobs and driving up inflation.
00:18:20.180 Now, I will say we're in a very different world from 1930.
00:18:24.400 1930 was 100 years ago or 95 years ago.
00:18:27.860 Today, the American economy is the largest economy in the world.
00:18:32.160 So we have massively more leverage than we did 100 years ago.
00:18:37.220 What that means is that if we have a tariff and another country has a tariff, the tariff we're imposing will hurt the other country in all likelihood more than it hurts us.
00:18:48.940 Because our market is a bigger deal.
00:18:52.200 And so foreign countries, foreign companies facing massive tariffs will get hurt more.
00:18:59.140 And so one of the positive consequences of the tariff announcement is that we will see more foreign companies announcing new plants in America, saying we're going to build in America.
00:19:11.220 Because the easiest way to get around the tariffs is build your products in America.
00:19:14.800 That's a good thing.
00:19:15.460 I'm all for bringing manufacturing back to America.
00:19:19.320 Now, I will say the process of building a new plant is slow.
00:19:23.900 It can take years.
00:19:25.240 It can take years just to get permitted, to find the land, to build the plant, to build the factory.
00:19:31.100 That can take years.
00:19:32.640 And in the meantime, everyone's prices go up.
00:19:35.740 So we are seeing, look, we're seeing new factories being announced in the United States.
00:19:41.340 I think that's great.
00:19:42.040 I want as much manufacturing as possible coming back to America, coming back to Texas. 0.75
00:19:46.560 But none of that happens quickly.
00:19:49.560 You simply can't build a car factory in a couple of months.
00:19:54.140 It doesn't work.
00:19:55.900 In most places, you can't even get the damn permits in less than a couple of years, much less pour the foundation, build the factory, put the machines in and hire the workers. 0.55
00:20:06.740 So there is real time involved. 0.80
00:20:10.900 But an unquestionable benefit of this will be more manufacturing in the United States.
00:20:17.700 Now, look, let me give you another basic economic principle.
00:20:21.740 And this is right at the heart of the debate between protectionism and free trade.
00:20:25.680 And it deals with there's a school of economic thought called public choice theory.
00:20:30.740 And it looks at how political decisions are made and the basic principle of protectionism.
00:20:37.520 If you put big tariffs to protect an industry, let's say steel tariffs, big tariffs to protect steel.
00:20:43.380 You have concentrated benefits, which is steel manufacturers in the United States get real benefits from that.
00:20:50.580 And you often have diffuse harms.
00:20:54.400 In other words, lots and lots of people are hurt, but they're hurt less acutely than the beneficiaries are benefited.
00:21:02.900 Now, as a political matter, let me tell you how politicians respond to that.
00:21:06.280 If you have a bunch of people that are benefited intensely, they're really motivated and they care about supporting you.
00:21:13.440 And they're really excited because they're like, wow, you just gave me a huge, huge benefit.
00:21:18.760 And the people who are harmed, like with steel tariffs, the people who are harmed is everyone who's buying steel.
00:21:24.680 So oil and gas, you're putting pipelines, you're drilling wells, railroads, you're putting railroad ties, building manufacturers,
00:21:32.040 you're putting steel in building, you know, soda and beer manufacturers, you're putting either aluminum or steel, depending on what the cans are made of.
00:21:41.760 But everyone who's using steel is the companies are paying more, the consumers are paying more, but it is diffuse across a lot of people.
00:21:50.140 So public choice theory will tell you that politicians will care more about the concentrated benefits than the diffuse harms,
00:21:56.460 even though if you measure the aggregate harms, there are in many instances much, much larger than the concentrated benefits.
00:22:05.640 But the aggregate harms are spread out over a ton of people, whereas the benefits are concentrated in a much smaller group of people.
00:22:12.400 That's the economics behind what's going on here.
00:22:15.700 The consequences of this, I think what happens on these tariffs, let's talk about politically,
00:22:24.040 is going to be probably the single biggest determinant of what the 2026 midterm elections look like.
00:22:30.520 If these tariffs result in massively higher prices, result in driving up costs for U.S. companies, result in job losses, and put us into a recession.
00:22:42.340 And to be clear, if the tariffs remain in place and we have retaliatory tariffs, that is a very possible outcome.
00:22:52.220 If we go into a recession, particularly a bad recession, 2026 in all likelihood politically would be a bloodbath.
00:23:00.740 You would face a Democrat House, and you might even face a Democrat Senate.
00:23:05.220 Look, we've got a 53-47 majority in the Senate.
00:23:07.520 But if we're in the middle of a recession and people are hurting badly, they punish the party in power.
00:23:13.420 And to be clear, if that happens in 2027, in January of 2027, the Democrat House that gets elected will immediately impeach Donald Trump.
00:23:23.840 And we would spend the next two years of 2027 and 2028 with constant impeachment battles, constant investigations,
00:23:30.420 constant political attacks, all of the weaponization that we saw in the first term.
00:23:36.020 Deja vu.
00:23:37.180 That's what you're saying.
00:23:37.980 On steroids.
00:23:38.540 Not even deja vu.
00:23:40.160 Take the first term and put it on steroids. 1.00
00:23:44.300 And so the political consequences of getting this wrong, this was, this is a high-risk play.
00:23:53.320 The upside could be massive, but the downside could be massive.
00:23:57.100 Is this the highest-risk play so far from Trump's first term, second term combined so far?
00:24:03.820 Not even close.
00:24:05.620 By far, yes.
00:24:08.360 All right, so then I've got to ask you this question.
00:24:10.900 Behind the scenes, what are the conversations with your colleagues on a scale of 1 to 10?
00:24:18.920 How concerned are they over the scenario that you just described?
00:24:23.280 42.
00:24:24.240 Okay.
00:24:24.540 Look, there's another point that I think is important to understand.
00:24:29.140 So you and I did a podcast, I think last week, where we talked about tariffs.
00:24:32.900 And I talked about, I said, listen, the president uses tariffs for two principal purposes.
00:24:39.620 One is leverage, as an incentive to incentivize other countries to enact policies that benefit America.
00:24:46.980 And the clearest example of that is the threatened tariffs against Mexico and Canada,
00:24:50.840 unless and until they help us secure the border.
00:24:52.720 Now, using tariffs as leverage for something like that is very effective.
00:24:57.280 The president uses it really well.
00:24:59.200 And particularly using them to push securing the border, I am emphatically in favor of.
00:25:06.860 That is, it has proven successful.
00:25:09.440 It worked incredibly well.
00:25:10.820 In the first term, it produced the Remain in Mexico agreement with Mexico.
00:25:15.220 It produced the lowest rate of illegal immigration in 45 years.
00:25:19.160 Stopping the border invasion of the last four years is an acute national security and public safety imperative.
00:25:25.780 It is a mandate from the last election.
00:25:27.860 It is massively important for Texas.
00:25:29.620 So I'm all for using the threat of tariffs as leverage to get good policy that benefits America.
00:25:35.300 But there's a second component.
00:25:37.700 And this is an important thing to understand, which is Donald Trump and much of his administration believes in tariffs as an economic policy.
00:25:45.260 We've all heard Donald Trump say tariff is the most beautiful word in the English language.
00:25:50.280 And I do think the business community, so look, look, we had the stock market plummeted.
00:25:59.560 We saw massive losses in the stock market.
00:26:01.820 We may well see more massive losses in the stock market.
00:26:04.620 I think the business community was shocked by the magnitude of these communities, of these tariffs, by the breadth of them.
00:26:12.880 Look, as we talked about in our earlier podcast on tariffs, what I've urged the president is two things.
00:26:19.420 Number one, focus on China because delinking our economy from China is emphatically in America's national security interests and economic security interests. 0.55
00:26:27.680 And number two, focus on reciprocity.
00:26:30.400 And the reason I've said focus on reciprocity is the upside scenario I just talked about, which is by focusing on reciprocity, if you incentivize other countries to lower their tariffs and we lower ours, that's a win-win for America.
00:26:42.600 But the thing to understand, I believe the business community has systematically underestimated how much President Trump and the Trump administration views tariffs as an ongoing permanent feature of our economic policy.
00:26:57.700 I can tell you virtually every time I talk with the president, I talk with the president frequently.
00:27:02.160 He goes on at length.
00:27:03.440 Have you seen the billions of dollars, the hundreds of billions of dollars, the trillions of dollars we are raising and are going to raise from tariffs?
00:27:12.340 Now, I think a lot of people said, oh, he's going to threaten these tariffs, but he's going to lift them very quickly.
00:27:17.500 If he does that, great.
00:27:19.200 If he leaves them in place and we just have constant tariffs, that is a massive tax increase on the American people.
00:27:25.180 And I think many people are underestimating that that the president believes and many members of his administration believe that tariffs are just a fabulous feature of the American economy.
00:27:39.200 They they hearken back to William McKinley when he was president.
00:27:43.380 Now, now, look, we used to have before the income tax tariffs were the main source of revenue for the federal government.
00:27:48.300 And they want to go back to that scenario.
00:27:51.500 And I got to say, we're going to find out because, listen, President Trump believes in this.
00:27:56.360 I think in the first term he wanted to to impose policies like this.
00:28:03.360 And I think many Republican senators talked him out of it, pressed him back and said, look, they're real risk.
00:28:09.280 Don't do this.
00:28:10.420 I think in the second term, Trump feels unchained.
00:28:13.140 He feels unburdened. 0.92
00:28:14.160 He's like, screw it.
00:28:14.860 Let's go. 0.94
00:28:15.780 And he believes that I do.
00:28:17.740 By the way, that's where the threat could actually work.
00:28:20.260 Right.
00:28:20.500 Because every other country is looking at this saying, hey, like, this is surely he's not going to do it.
00:28:25.420 He does it.
00:28:26.040 Like, well, he's going to flinch quickly.
00:28:28.320 There's no indication he's going to flinch, per se, quickly.
00:28:31.440 Right.
00:28:31.620 I think the real threat of it is the fact that he's actually willing to go through with it.
00:28:36.760 Look, I want this to succeed.
00:28:38.400 I want it to succeed.
00:28:39.580 But my definition of succeed may be different than the White House's.
00:28:43.640 My definition of succeed is dramatically lower tariffs abroad and result in dramatically lowering tariffs here.
00:28:51.060 That's success for the American workers, American businesses, American growth, American prosperity.
00:28:56.380 That's a great outcome.
00:28:57.660 But look, I think we're going to find out a hundred years ago, the U.S. economy didn't have the leverage to to to have the kind of impact we do now.
00:29:10.800 But I worry there are voices within the administration that want to see these tariffs continue forever and ever and ever.
00:29:20.480 They don't want to lower them.
00:29:21.860 They think they're great.
00:29:23.700 And and what is particularly I think has has startled some observers.
00:29:28.140 It wasn't just directed at China.
00:29:29.760 It wasn't just directed at bad actors.
00:29:31.520 It was directed against everybody that that is the breadth of it is is is enormous and it carries it carries upside, but it also carries real risk.
00:29:42.660 All right.
00:29:43.220 Let's talk timeline in your definition of short term or long term.
00:29:47.980 What is that timeline look like?
00:29:50.020 Because obviously people are trying to figure out weathering the storm.
00:29:53.560 Right.
00:29:53.800 You talked about supply chain and the cars, a great example.
00:29:57.140 You don't feel the pain till, let's say, June.
00:29:59.580 All right.
00:30:00.320 So it gives us a few months for things to kind of work its way through, work it out.
00:30:04.400 Is that a timeline of short term?
00:30:06.460 And then after that, it's it's it's considered.
00:30:08.860 All right.
00:30:09.060 This is long term.
00:30:10.040 What is that timeline in your opinion?
00:30:11.960 Well, let's be clear.
00:30:12.860 The timeline was immediate.
00:30:14.080 So let me read from from The Wall Street Journal headline.
00:30:19.060 Trump tariff send out a 1600 point decline.
00:30:21.820 Dollar slumps.
00:30:23.060 Asian stocks hit for a second day.
00:30:24.900 Fears of recession rise.
00:30:26.080 And here's what The Wall Street Journal reports.
00:30:27.780 Quote, U.S.
00:30:28.780 Markets suffer their steepest decline since 2020.
00:30:31.500 On fears, President Trump's new tariffs plan will trigger a global trade war and drag the
00:30:36.220 U.S. economy into recession.
00:30:38.080 Major stock indexes dropped as much as six percent on Thursday.
00:30:41.640 Stocks lost roughly three point one trillion dollars in market value.
00:30:46.280 Their largest one day decline since March 2020.
00:30:49.380 Stock index futures drifted lower Thursday evening and stocks in Japan were hit for a second
00:30:54.060 day as Friday training began.
00:30:55.360 In Thursday's market plunge, the Dow Industrials dropped 16, 179 points or four percent.
00:31:02.340 The tech heavy Nags deck, which powered the market higher for years, was down six percent,
00:31:06.860 pulled lower by big declines in NVIDIA, Apple and Amazon dot com.
00:31:11.200 The S&P 500, which fell four point eight percent and the other benchmarks suffered their sharpest
00:31:15.800 decline since the early days of the COVID-19 pandemic.
00:31:19.140 The dollar, meanwhile, tumbled with the Wall Street Journal dollar index suffering its sharpest
00:31:23.840 decline since 2023.
00:31:25.540 Now, those are immediate hits.
00:31:27.640 And understand, look, it's easy to say, OK, fine, you know, that's just rich people.
00:31:32.240 Look, at this point, a majority of Americans have money invested in 401ks and IRAs.
00:31:37.460 And so that's impacting everyone.
00:31:39.480 And people don't necessarily follow their 401k on a daily basis.
00:31:43.720 Many people see their 401k statement when it comes out at the end of the quarter.
00:31:47.580 A whole lot of people are looking at that.
00:31:49.920 And we'll see if that's a temporary one day hit.
00:31:52.640 But if it continues to slide over the next few days, that's not waiting for six months
00:31:58.120 to see the impact.
00:31:59.380 That's freaking people out now.
00:32:01.720 And so the consequences of this are real.
00:32:05.900 And I want to be clear about something.
00:32:07.700 Look, it used to be conventional wisdom in Republican politics that free trade is wonderful
00:32:14.080 and we should just have no tariffs and lower tariffs.
00:32:16.560 And that was almost everyone.
00:32:18.240 Can I ask you, this is a question, I'm just going to ask it because I know there's people
00:32:22.900 listening.
00:32:23.820 They want to know what the definition, your definition of free trade is.
00:32:28.800 That used to be conventional wisdom.
00:32:31.800 And I want to give Donald Trump credit for something really significant, which is he's
00:32:35.940 changed the debate on trade fundamentally.
00:32:39.660 And so I believe in free trade, but I also believe in fair trade.
00:32:43.340 And so when I talk about reciprocity, Donald Trump has made a very clear point, and it's
00:32:49.100 a powerful point, which is many countries on earth have been taking advantage of the
00:32:53.140 United States and have been imposing really high tariffs and barriers to U.S.
00:32:57.700 goods while having free access to the American markets.
00:33:01.160 And that is unfair.
00:33:02.600 And so I love that President Trump is willing to use leverage to lower tariffs.
00:33:08.160 I think that's great.
00:33:09.180 And that really is a change in the debate.
00:33:11.480 Ten years ago, there was nobody in the Republican Party making that argument.
00:33:16.020 And that is the direct result of President Trump's leadership.
00:33:20.340 That's a good thing.
00:33:21.880 Saying we should be treated fairly, that is a good thing.
00:33:25.760 That is a very different proposition from saying, doesn't matter if other countries lower
00:33:31.000 their tariffs.
00:33:32.220 We're going to impose tariffs on everybody because we think tariffs should be the principal
00:33:36.520 vehicle of funding the economy.
00:33:39.040 If the outcome of this is a multi-trillion dollar tax increase on American consumers, I think
00:33:45.920 that that is really consequential and really, really harmful.
00:33:50.080 So let me ask you one other question.
00:33:52.060 And that is, if these tariffs don't change, Senator, then what would the impact be?
00:33:57.600 Well, let me share an analysis that a group called the Tax Foundation did.
00:34:03.200 Now, the Tax Foundation is a think tank based in Washington.
00:34:07.460 They're very good.
00:34:08.100 They're economic experts.
00:34:09.420 They analyze tax policies.
00:34:11.920 They have proven to be incredibly accurate in terms of measuring the impact of taxes.
00:34:17.120 Here's what the Tax Foundation has assessed from the announcement this week.
00:34:20.720 They say, if these stay in effect, the average tariff rate on all imports will rise from 2.5%
00:34:28.940 in 2024 to 18.8%, the highest average rate since 1933 under the tariffs announced for 2025.
00:34:38.600 The consequence of those tariffs, they will cause imports to fall by slightly more than $900
00:34:45.480 billion in 2025 or 28%.
00:34:49.200 So that's what they're predicting, is that imports drop $900 billion, 28% this year.
00:34:55.860 They also say the newly announced tariffs on April 2nd will raise $1.8 trillion in revenue
00:35:02.940 over the next decade and will shrink U.S. GDP by 0.5%.
00:35:10.220 The April 2nd escalation, they note, comes in addition to the previously announced tariffs,
00:35:15.840 which will raise another $1.3 trillion in revenue over the next decade and shrink U.S.
00:35:23.280 GDP by 0.3%.
00:35:25.420 Altogether, Trump's tariffs will raise nearly $3.2 trillion in revenue over the next decade
00:35:33.300 and reduce U.S. GDP by 0.8%.
00:35:37.000 They further project the tariffs will reduce after-tax income by an average of 2.1%
00:35:44.920 and amount to an average tax increase of more than $2,100 per U.S. household in 2025.
00:35:54.980 Now, to be clear, that's a prediction if these tariffs stay in place, if they don't change.
00:36:01.120 If the upside that I described happens, if foreign countries slash their tariffs and Trump in turn
00:36:08.200 slash these tariffs, none of those numbers hold.
00:36:11.540 Instead, I think we see an enormous economic boom.
00:36:15.760 But if that doesn't happen, if these tariffs stay in place as an ongoing economic policy,
00:36:21.260 we're facing very real and I think very detrimental consequences.
00:36:25.880 It's going to be an interesting one, Senator.
00:36:28.660 I think it's important that we have these conversations.
00:36:32.340 Hopefully, many of you listening understand this more and the ups and downs and what this
00:36:37.100 will look like.
00:36:37.860 It's going to be changing often and when it changes, we are going to continue to cover it
00:36:43.100 day in and day out.
00:36:44.780 So make sure you hit that subscribe or that auto download button wherever you listen to
00:36:48.980 this podcast.
00:36:50.740 Share it on social media.
00:36:51.960 I hope this has helped you and I honestly hope that you'll share it with your friends,
00:36:55.880 so that they will share it and they can hear exactly what we did here today.
00:37:00.260 And the Senator, I will see you back here for our week in review on Saturday as well.
00:37:05.740 This is an iHeart Podcast.
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