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Acule. He's down by a third of one percent.
It was a bit higher, up by four basis points the ten year four twelve forty three under Savannahs this morning, donald Trump's favorite word.
And these companies don't make their cars and products here, then they will pay a tariff for very stiff tariff when they send their products into the United States. We're going to call this policy build it in America plan. We brought the rate down and you saw this from close to forty percent to twenty one percent. Now we're going to get it down to fifteen percent, but only if they build it in America.
So here's the latest global markets pricing for Donald Trump's plans to overhaul the US economy through steep tariffs and big tax cuts, including cut in the corporate tax rate of fifteen percent. At a post of the Pedis Institute issuing a word of caution rting, the Trump approach weaponizes uncertainty, but uncertainty is a difficult weapon to control, and it
will backfire on whoever wields it too widely. Adam joins us now for more and welcome back to the program Sir always important to spend some time with you and think through some of these issues.
Let's just talk about that quote a little bit more.
What do you mean when you say it's a difficult weapon to control and will bank fire on whoever wields it too widely?
Thank you, John for having me back on surveillance. I think the issue is that you do two things that don't necessarily work in economics when you threaten a lot, but it also is harmful to you. The first is you create uncertainty, not just in the minds of that
corporate CEO or that particular government you're negotiating with. You create uncertainty ripple effects throughout a whole bunch of other governments, a whole bunch of other companies, and they start to self ensure they don't just get scared to do what you want of the same they don't necessarily do what you want them to do. The second problem with this uncertainty weaponization that Trump is big on, or at least it's one way of rationalizing Trump's policies, is that you
actually have to implement it to be credible. You can't just threaten it. So a lot of people talking in the markets a lot of pundits, a lot of people even affiliate with the campaign and say, well, this is all just about negotiating posession. Trump will threaten these terrors, Trim will threatn these taxes, and that will induce the reassuring to the US. But you can't do that unless
it's credible you're actually going to do it. And the only way to do that is to actually implement the policy, so you get the harm up front and you don't necessarily get the benefit. One of the ironies JOm, for people you and I have others on this program talk to and talk about, is that the more the market's bet that Trump A will win but B will not actually do these crazy things, the more it is incumbent on him to have to do them.
But Adam, when you hear from some Trump economic advisors, what they say is that it will be used as a carrot and stick approach, meaning maybe two and a half percent of the sixty percent they want to do on China, but two and a half percent every month until they get Hijinping to the table. Because what they say is that there needs to be fair trade between China and the United States, and they do not view trade right now between China and the United States is fair?
Do you view trade right now what China is doing as fair?
No? But I also don't view it as something you whine about. I mean, this is the thing that both the Biden team and the Trump team have done. Is they if they had been Georgia playing against Texas, you know, the top two in the football, the college football, they would have spent their whole time whining about the referees and wan a call went against, the north of the crowd went against, and they would have packed it up and gone home. That's what they're doing for packing it
up and going home. But real players in the major is which the US economy should be. If you have to win, you win even if the referees are skewed against you, even if the crowd's rooting against you. You don't get so caught up in excuses and small deterrence.
Okay, but the Biden administration.
Capt trade it is too small.
Sorry, Well, the bidendministration kept those tariffs on.
So what would you what would be your.
Idea for both of these campaigns to try to level the playing field.
Well, but I think the point is the Biden administration and the Trump administration kept on those terraffs and it's had absolutely no effect. The so called Phase one tariffs on China deal, which Trump had had no effect in terms of what they were buying or selling. Both the Biden and the Trump administrations claimed the Chinese are still stealing ip, still subsidizing, still doing this and that. So you can say, oh, well, then they if this didn't work,
let's try it tenfold. But that's the key difference here is that Trump this time is talking repeatedly on the record in the platform about doing tariffs at ten to twenty times they level he did last time, and doing them across a whole range of countries, not just China, at a much higher level at Chinese, talking about multiple food and so it's going to have much worse effects on the US economy. You can shrug it off. It's
not good. It's attacks on people. Companies that were affected by the tariffs lost valuation, as the New York Fed study showed, it was inflationary for people. But the big thing is Harris has at least said repeatedly. Vice President Harris has at least said repeatedly tariffs are attacks. There are regressive tacks that are working people more, which is full and true, and she's not going to do across the board Terraffs. I still wish she in her administration
if they're in reconsider this whole approach. But nonetheless, there is a very big difference between stopping the tariffs where they are now and only using them in specific cases at China, which is bad but minor versus across the board, huge Terraffs.
There's a big, bigger question here, Adam. And this is the reason why the whole concept of tariffs has been and resonating with a lot of people, which is their whole swass of the US economy, that feel left behind by globalization by moving manufacturing overseas and would welcome the manufacturing and some of the industrial prowess to come back to the United States. Is there a proposal to increase production in the United States in a sustainable way with the staff that we currently have.
I think the answer, Lease is no. I mean, I might push back at you at that political perception because it's not really grounded in reality, but certainly there are people who are obsessed with having domestic manufacturing and we have manufacturing. You know, you talk about Apple, you talk about Nvidia, you talk about all these companies that are worth much much more, as somebody tweeted this morning, than
the companies that make stuff. You know, these are the companies that design stuff, that do R and D, and so then you can say, well, what about the terrible things that are happening. There aren't that many terrible things that are happening. We have the highest labor force participation rate in forever, we have one of the lowest unemployment rates in forever. We have income growth much higher than it's been. We have fewer people in poverty than it's
ever been. So this constant refrain that we're losing because our manufacturing has moved up and up and up in value and become more productive and therefore needs less workers on the floor is falsehood. So then you say, okay, but the how do we buy off the angry people? Well, that's how you get Trump, and that's not good. And so at some point you have to appeal to people that they maybe shouldn't be so angry, or that they
maybe should adjust. And the reality is we can't drive the entire country about what's happened in a few counties in a few states, and that's part of our politics that year after year, a majority of the country clearly has views on whether it's gun control or globalization, or the economy or healthcare. And it gets stemy by very.
Small Adam, Where does national security fall into this at a time we're an increasing number of the goods that we're talking about could potentially have some national security components.
That's a much more serious issue, Lisa, And that's the one which is genuinely difficult and people are wrestling with. I mean, you can imagine it seems a bit of a stretch, but you can't imagine, for example, if we do buy Chinese evs that there would be planted bugs and controls and things in there that could be dangerous. Not clear what that the economic res hunts, however, is the way to get around it. That doesn't mean you
should let everything in. But we see right now there's news reports now about all these weapons the Russians are using, all these things the Chinese are using, where you can see that asml TSMC, all these companies that we're protecting are still selling and producing in China. And that's in the very narrow spectrum of focusing on just the chips and just these critical industries, with the full weight to the US government, allies, and you still can't maintain the
sanctions and the controls. So again it's like the terrorists. You just keep upping and upping and upping it, saying, well, we didn't try hard enough, ye, Or do you.
Think Adam is a tough spot?
The conversation you and I'll continue, we'll all continue with you through to election. Down beyond Adam posting there the Peterson Institute