Bloomberg Audio Studios, podcasts, radio news. Single best idea? Which way to turn here? After what we saw yesterday with the FED derby, I guess we could do the Federal Reserve. We had Glenn Hubbard on, you know, Frankly, he's on my short list to be the next chairman. We talked to him about the Fed. But with where tariffs are and where the numbers are working out, it's really a lot of math going on among tariff experts. We're going from three percent up to somewhere ten percent no higher,
fifteen percent no higher. It's a shocking move. Glenn Hubbard of Columbia Business School on our new tariffs.
Tariffs are attacks. They're not really inflationary. There one time changes in the price level. I wouldn't recommend them, but I don't think inflation is the biggest reason. I think the reason is you're taxing and distorting supply chains. You know, people forget two basic things. One, a tax on imports is actually a tax on exports, and the reason for that is two one movements in the dollar and second, the fact that American imports are largely intermediate goods. You
hurt manufacturing by doing it. The second point is it's not the current account, it's the capital account. All the current account is the mirror of the capital account. You can put all the tariffs you want on, You're not going to change the current account until you change the capitol account.
Bottle it. What you just heard was an absolute perfect dissertation from one of our leading students of the supply side. I can't say enough. Go back and listen to that two or three times. Glenn Hubbard on the linkage of imports to exports, and he absolutely crushes the Trump certitude of the current account deficit. Just gold there from Glenn Hubbard. I'll the auditorialize always on my short list of qualified Federal Reserve candidates. Francis Donald is with RBC, the Royal
Bank of Canada. Francis Donald here again on tariffs.
The full impact, the full story, the full study of tariffs. I don't think we're going to feel comfortable saying how meaningful this was on the US economy until late into twenty twenty six. Why, Because there's a significant process in play here. There was massive front loading into the economy. Inventories are very very high. Those inventories need to be depleted before we start seeing imports at those higher tariff levels, then you have to make an assumption of who's going
to end up paying for that. Is it going to be producers or the importers themselves? How much of that cost is going to get passed on to the consumer at the end of the story. So there are two most important macro questions in play right now for an economist is how long does it take for inventories to be depleted? We think about five months? Mary greatly which sector you're in? And how much is going to get passed on to the consumer? And if I am a tom,
let me push back, I hear a lot. I don't think consumers are going to take the brunt of this of producers or businesses are going to absorb the entirety of it. Is that really bullish? Do we really like the story that businesses are going to see all of the tariff impact that they won't pass it on to the consumer, Because if businesses are taking on that tariff impact, that means margin compression for them and they're going to have to cut costs an other way.
Francis Donald in market economics, what a great juxtaposition there. You have the academic economics of Glenn Albard, and they're the market economics of Francis Donald of RBC. I love how she goes to the X axis. She's taking the tariff impact way out from OMG, what happens in July out into late this year or even into next year. Very few are talking up that angle on podcasts nationwide
on Apple, on Spotify, indeed worldwide on Spotify. Thank you so much for that, particular in the Philippines, in the Pacific RIM, and on YouTube podcasts. It's single best idea.
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