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Good morning, everybody.
It is a gloomy day here in Washington, gloomy fitting the mood of the global economy in Crystal.
So what do we have today?
Yes, indeed, Trump is doubling down on his tariffs, no sign of some big negotiation or walk back insight, and global markets already in freefall this morning. This is before the US market's officially open. So we decided to spend the whole show basically talking about tariffs because this is such monumental news with such massive cascading effects for everyone here.
And globally. So we're going to start with just the details of where we are, what we know. Jeff Stein is going to join.
He's going to weigh in on his latest reporting of how this tariff scheme was developed. And also big fight developing between two Trump supporters, Bill Ackman, who has now come out against the tariffs, and Howard Lutnik, who of
course is the Commerce Secretary. We also have the very latest polling about how Americans are feeling about all of this, with the caveat being all of this polling really occurred before the massive market movements, before these massive announcements, so getting early indications though about how nervous Americans are about this direction. Elon appears to be breaking with Trump over tariffs and specifically getting into a bit of a battle
with Peter Navarro. Protests have also broken out nationwide. These are not just about tariffs, but about overwhelming sort of resistance among the Democratic base to Trump and Elon and everything that's going on. So we wanted to take a look at that as well. Was the first really big nationwide organized resistance to Trump two point zero, and we're going to have a nice discussion debate between Rocanna and orn Cass should be interesting to get both of their perspectives.
Grow us not some neoliberal like Free Trader. He has a nuanced view on tariffs. I'm interested to hear or and explain exactly how he feels about everything that is going on and how this plan is being implemented right now as well.
That's right, or the more serious person that we could find that will actually defend some of at least what is going on here, So we wanted to make sure we did that. Yeah, as Crystal said, though, it's going to be a tariff special here. Thank you very much to all our premium subscribers out there. By the way, the best way that everybody could help with our show right now is really just like subscribe and to share it, especially if you're listening on the podcast is texted to
a friend. Especially, I know tariff's very sensitive subject and a lot of people are trying to wrap their heads around what's going on. So that's why we wanted to really dedicate this to everybody, and it is I think best listened to as a whole. All right, let's go ahead and start with the tariffs, is Crystal said, Let's go put this up there on the screen, major movement in the Asian and the European markets, basically a massive implosion of all of the stock value across the globe
since the announcement of the tariffs. For those who are watching, you can see various stock indices across the world that are down. The minimum is in China down five percent, although things changed actually just since we made this graphic. The Hong Kong Stock Exchange having its worst days since
nineteen ninety seven in some fifteen percent drop overnight. Germany down almost ten percent, Canada down, the UK down, the United States down over fifteen percent in the Japanese Nicky Index, I believe, with one of the worst days in the history of that they even I think had to flip their circuit breaker to set yeah trading over in Japan. So you can just see what is occurring globally. No sign from Donald Trump yet that he is backing down.
He spent the weekend in Florida golfing. We'll return to that in a little bit on Air Force One, though he did take a few questions.
Here's what he had to say, the pain in the market.
At some point, you're unwilling to tolerate this idea of you're a threshold.
I think your question is so stupid.
I admit I think it's a I don't want anything to go down, but sometimes you have to take meticine to fix something. And we have such a horrible We have been treated so badly by other countries because we had stupid leadership that allowed this to happen. They didn't get it spoken when.
They look at the fact that we have.
A billion dollar trade deficit. When you look at the trade deficit that we have with certain countries, way over a billion per country. With China, it's a trillion dollars, and we have to solve our trade deficit with China.
We have a trillion dollar trade.
Deficit with China, hundreds of billions of dollars a year with us with China, and unless we solve that problem, I'm not going to make a deal.
Those comments would make sense, Crystal. I thought there were just tariffs on China. Maybe some of us could get behind that, but that's not really what's going on here. We got to basically it's average some thirty percent tariff across the world, including fifty percent or whatever on Vietnam. Multiple countries calling the White House over the weekend might be a bit difficult because the President is down golfing in mar A Lago. He did win his golf championship though.
Congratulations. Well some good too, That's great, that's right. Let's put this up there on the screen.
This is his latest from truth social We have massive financial deficits with China, the European Union, and many others. The only way this problem can be cured is with tariffs, which are numbering tens of billions into the USA.
They are already in effect and a beautiful thing to behold.
The surplus with these countries has grown during the presidency of Sleepy Joe Biden.
We are going to reverse it, and reverse it quickly.
Someday people will realize the tariffs for the United States of America are a very beautiful thing. So there is still yet no major movement there by the White House. In terms of where we are here in the United States, things are a bit all over the place. As we said, the Japanese Index and the Hong Kong Index just absolutely got destroyed overnight the United States markets. It's roughly like two point five percent as of US right recording. Right now, we can put that on the screen just in terms
of where everything is. The Nasdaq was down by about two point eight percent. It honestly could extend much much worse. It was even worse whenever the futures did open this morning.
Nobody really quite knows.
If, though, that the S and P does fall today more than four percent for a third day in a row, it will be the first time since the Great Depression.
And I think that's one of those.
Where it's always difficult to contextualize history, you know, when it's actually happening. But the truth is is that we are in one of the five great market crashes in modern American history from the Great Depression, not just me saying that the data indicates this is the worst crash,
not a listens March of twenty twenty. And then finally, you know, to get to the inevitable retort, they're like, well, why doesn't matter, and it's like, well, even if you don't own any stocks, and that's fine, I think fifty eight percent of Americans do. But for the rest of the country and the bottom of the income scale, the market and the liquidity in that market and the decision making being driven by those companies that will affect one
hundred percent of us. You know, you could have owned zero stocks in two thousand and nine and you still would have suffered the consequences because you would not have any access to the company wants to hire you, doesn't have any access to cash, they have no market, they have no liquidity, they have no ability to borrow. They're going bus. You know, these capital markets, for better or for worse, and I think for worse now do absolutely rule our entire lives.
And we'll talk about that.
I think more in terms of tariff strategy, and what I think the biggest flaw in the overall roll out in the strategy was is that fact is is that we're basically asking private markets to you know, act in a way that we believe is beneficial to the state, but with no real incentive, you know, both to the company for the employer to minimize any sort of short term not even short term, long term economic pain.
Now at this point that's another thing.
Everyone's like, oh, well, he could cut a deal, and he could cut a deal and things could sert, just like, yeah, they could. But you know, in the interim, there are a lot of companies, even in this week that will pay literally millions of dollars in tariffs. You can't just take millions of dollars off of somebody's bottom line and expect nothing to happen.
I mean, it just doesn't really work that way. Yeah, I mean that's where I continue to fall.
Even if this is a short term strategy, there's a lot of pain in that short term strategy for millions of people, not to mention them. Level of uncertainty in the markets, in the overall pocketbooks, the amount of consumer spending that's going to shrink as a result of this genuinely cannot be overstated.
Yeah, it's I don't think anyone really knows how massive the fallout is going to be. Like, there is no limit to how bad it could be. And yeah, Trump could walk back from it at any time. I mean he walked back from the you know, the height of the Canada and Mexico tariffs. This man, he's a mad man.
He's all over the place. But there's a big debate on econ Twitter at this point of like we may already be past the point of no return in a certain respect because let's say today he comes out and says, you know what, I've deals with fifty countries good enough, We're rolling this back to you know, a lower level, and we'll revisit it a month from now, which is
kind of the playbook that he's been running. Do you think if you are someone making decisions for a major business, a major manufacturing concern, like, is this going to give you confidence to want to invest more in the United States of America?
Of course not, of course not.
I mean if you're running any company, including our own, by the way, thinking about how things are going to go, and you know how people are feeling with a potential recession coming and how their premium membership budget is looking at this point like you are going to freeze in place at best, and at worst you're going to start saying, you know what, these people, this project that we had going, that we were hopeful for for the future, this is
just not the environment to do it in. So in some ways, even if at this point Trump were to come out and say, just getting guys, you know, late April Fool's joke, Liberation Day is over. Who is going to want to invest in this climate? And you know, I used to get really irritated with all the like uncertainty talk because this was used against you know, any sort of like progressive economic policy that would benefit working
class people or whatever. But at certain point, you really do as a business owner, as an investor, as someone who is an executive in a company, you need some sort of stable policy climate in which to make decisions. And you will not have that with this present period.
You will not have that with this president. And I think given the you know, seesaw nature of American politics, I think there are a lot of countries and a lot of companies here and around the world that are saying, I don't know if we'll ever have that with the US again.
Period.
You know, a couple things that I just wanted to emphasize from Trump's comments and why they sent the markets into such a free fall. You know, last week, of course there were significant market losses, but I think we both had the feel of like it actually.
Could have been worse.
Oh, it could have been much.
Worth And the reason for that is because there was still a hope on Wall Street of like Trump's going to come on on Sunday before the future's market opens and he's going to announce a bunch of deals and he's going to step away from this and instead he makes this comment sometimes you have to take the medicine number one and seems to not care at all about the nuclear bomb that he's dropped on the global economy, which just on like a personal level, thinking about this
person's psychology, I cannot wrap my head around someone who would drop this level bomb and then just go I'm gonna go play golf, I'm gonna go host a fundraiser at mar A Lago like insanity. But so he says that in no indication of making these deals, and the in fact, he told his surrogates, I don't want you to say these are a starting point for negotiations. No,
these are in place, and that's that. And then the other thing he said that was so disconcerting is he's holding onto this idea that if you have a trade deficit with any country, no matter what the dynamics are, Like we talked about Lesotho last week, right, this poor African nation that we buy diamonds for and they're too poor to afford our products, and in his mind, that means that Lesotho is ripping us off. Okay, idiotic, stupid, like the most Kindergarten level of understanding of trade you
could possibly imagine, but he reiterates that. And it matters not only for understanding how stupid the policy is, which most people I think already understand, but it also matters because what deal can Lesotho make with us that's going to fix that problem?
There isn't one.
So, you know, countries that had, in anticipation of Trump loving tariffs had rolled back their terrri straight trying to get ahead of it, say like Israel is one example of that, like, look, we don't even charge you any tarffs.
They still got hit with tariffs.
There is no deal that you can make with virtually any of these countries that's just going to close the trade deficit overnight.
That is not how this works.
And so that was the other thing that made a lot of investors go what the fuck because that indicates there are no grand bargains or deals. This is not just a negotiating tactic. May really be serious about moving forward with this, and it is just as nonsensical as it appears on its face when you're looking at you know, the Penguin islands and this stupid formula that we're going to talk more about that they may not even be applying correctly. It really doesn't matter to him what the
carnage is, what the fallout is. You know, he has this idea and has had about Terris number one and number two.
He likes that.
He likes that the whole world is jumping at his moves. He loves that all these countries are having to call and scramble, that all these companies are going to come on bended knee to try to get their car ount to try to get their exemption. And he loves that he can do all of this apparently without having a consult a single person.
I mean, the power to raise.
Revenue and institute tariffs is supposed to be with Congress. He's using eyepen in a very similar way to how he's you know, using these sort of like national security or national emergency car bounds to claim extraordinary powers from SOLFF. That's what he's doing here with tariffs. There will be court challenges. I don't know how that will go. I don't think anyone knows really how that will go. But
he also likes. What he loves about this is that it all comes down to him, and he can be the dictator and he doesn't have to ask anyone for anything. And all the chaos around him doesn't bother him one bit.
Well, I mean, why would it bother him?
As you said, it's very you know, it's something that feeds his own conception of what's going on. But what I just simply cannot move away from is there's genuine, like massive pain not even being done necessarily to billionaires or companies or anything. That's like real folks who have retirement accounts who are watching these just evaporate. I mean, look, let's also contextualize it correctly. You know, one year of gains in the S and P five hundred are erased.
That means basically, if you had money over the last year and you were chunking it away into your four oh one k, and you were doing everything that you're supposed to do, that money's gone or it's you know, it's now it's actually down. And if you look at over at the five year period, who was a common talking point, oh my gosh, the SP five is up over one hundred percent. Well now it's down to eighty two. So now we're already back to twenty twenty four, you know,
style valuation. Let's wait another week. What are we going to go back to twenty twenty three. You know the backward clock that's ticking here for a lot of people, layers of what preciseable percentage of the country which is over sixty five, and size of percentage even more that are over seventy. I was telling you this morning there are a lot of people who are on retirement to
have mandatory withdrawals, you know, from their IRA accounts. So what if you're literally forced to sell at the bottom. I mean, that's a that's a horrible thing to be inflicting on people. Finally, as you and I just want to really stick on this point with the capital markets, the way that this is being basically rolled is we're implementing this massive tariff and so if you want to build here, you have to move here. We will not compensate you at all in the interim. We are not
giving you a tax break. In fact, Steve Manution, the former Secretary of the Treasury, was onto CNBC on Friday, and I actually thought he gave a great answer.
He was like, look, of course we can have tariffs. I mean, you know, I'm pro tariff.
I know you are in some cases yeah as well, Yeah, you know what that needs to be paired with a dollar for dollar manufacturing credit and or infusion from capital of Congress, which would mean what for Apple. Let's say we want Apple to build an iPhone here in America or build more of it. Okay, let's say five to fifty percent of it something like that here in the United States.
Well, that's going to cost X, Y, and z.
We will then acknowledge that we can have Apple pony up some of that cash. Congress and then others the administration will say we will also kick a tax credit or a break to make sure that you don't fire people in the interim and you don't rehab it on our overall equities markets, which is what we're currently having.
There's none of that.
Actually, the Congress wants to remove manufacturing tax credits right now so that they can pay for a permanent extension or whatever.
Some of these corporates. That's that's why I want people to understand.
That's right.
So the problem is that not only do we have a massive teriff regime in place, we are actually currently have a gop led Congress which wants to reduce the amount of social spending that there is while extending corporate tax rusts and not increasing manufacturing tax credits, which would actually benefit all of the stated goal of bring things over.
And that's why I'm just like, this is so it's not even stupid.
Stupid is something that doesn't necessarily bear consequences.
This has massive consequences.
And you know that's another thing too, where you know the administration is really banking on like, oh well he said he was going to do just like, well, okay, hold on a second. Nobody nobody, And this is why the markets crashed as they were ever floated a thirty five for forty percent tariff.
Nobody floated.
When you say reciprocal tariffs, that's a word, it has a meaning, it has a definitional term, right, And that Bess Crystal. With the actual calculation from what I can tell of whate reciprocal tariff would mean, even with currency market manipulation and all, that is maybe five to ten percent. Whenever it comes to China, on Japan, it would be five. Actually it might even be zero if you factor in a few other things. Do you know why he decided not to do that because the number was not big enough.
So that's where this is ten times out of step. Even with allegedly many of the things that he sold on the campaign trail, and that is why you are seeing the level of freak out. And look, very soon, real voters, you're all going to start you were going to feel this in a very real way. Screw retirement. We're talking layout. We've already seen it. We've already seen Stilantus layoffs nine hundred people in Michigan.
We've already seen people freeze investment.
Just wait, start asking around for people who are like, yeah, we had a project and it got pulled. You're going to see consultants go down if the pharma tariffs eventually do go into place.
Oh my god, just good luck.
You know, to the entire US consulting industry, a centure and those of people. Do I love those industries, No, but there's a lot of people who work there and they propel a lot of people there as well. If we want to change things, we need tax credits, we need capital infusion. Currently is a four to five hundred billion dollars raised on people. If you take that out of money out of the economy, you've got to put it back in at the same time.
But they don't, they don't want to do any of that.
Yeah, that's right.
So we're looking at some you know, an eight level liquidity crunch and also this final you know word here there.
This our economy is leveraged to the hilt. We learned nothing from two thousand and eight.
When you start to drop fifteen to twenty we're talking margin calls at the top of Wall Street, We're talking you know, these major fortune five hundred. They are levered up to the hilt, maybe not one hundred times like they were during two thousand and eight. But we've really learned very little about debt crises and all this because there's been you know, a deck fifteen years of cheat
money that is all going to end. And when you pull all that back out of the economy, I can't even begin to describe, like what the layoffs and the unemployment situation and all that's going to look.
Like, isn't it Warren Buffett who says when the stock market goes down, you find out who's women without Yeah.
That's right, it's true. Yeah, it's scirically true.
Everybody is.
I was reading an article about how everybody's making calls around to try to figure out what the equivalent and of like the Lehman brothers this time is some entity that's really at the center that's overleveraged at this or that, or you know, it could also be some gigantic manufacturing concern that had, you know, move forward with all these investments potentially related to the the Inflation Reduction Act and the Chips Act, which by the way, like they weren't enough,
those things were working to increase significantly. You can look at the Joe, We're going to show the chart when we talked to rowan Orn manufacturing infrastructure investment in this country. And not only are they not doing the analogous thing for whatever industries that they want to build up, but Chips Act is being de facto rolled back because Doge went in and like cut half the staff that was implementing this.
And again it has been.
Very, very successful the IRA because it focuses on things like you know, EV batteries and green energy. Like Trump doesn't like that, so that's being hacked hacked at as well. So like the things that were actually working to increase
manufacturing investment in this country are being killed. There are no corresponding to tax crist and by the way, with this level of across the board tariff even that, like what you're going to subsidize everything in the entire You're going to subsidize banana production and coffee being production and diamond mind product, like it still would be insanity given the way that they're moving forward. But there's none of that either. In fact, there's an austerity push on the
other side. And then you know, even if you think about the advanced manufacturing that we have here, are so many of they're either raw materials or the parts that they're sourcing come from overseas, so they're being hit with those arrafs when they're trying to import things to you know, assemble a complicated final product.
And so no, I mean.
There, I think this is much more likely to it to negatively impact, to damage significantly the manufacturing, investment production that we do have, than it is to spur any sort of a renaissance.
Last thing.
And I'll say, I mean, I'm sure I'll have many other comments that I can make today and I will make in the future, et cetera. But you really do have to look at this as class warfare. And I know that this is being framed it's like, oh, this is going to be great for the working class, nonsense.
Trump has said he wants to get rid of the income tax, and certainly, even if he doesn't achieve that maximalist goal, he's going to extend the Tax Cut and Jobs Act, which is a gigantic tax cut for the richest people in the country, and he wants to move towards funding the government through tarifs. Terrafts are a regressive tax. They hit the working class way harder than they hit rich people because the working class, of course, spends much more,
as a larger percent of their income on goods. So when prices are going up for groceries and toilet paper and clothes and medicine and everything else in that you could think of in the fresh fruits and vegetables, like so much of what is consumed to your comes from overseas, that is incredibly, incredibly regressive and it is going to hurt working class people. It's going to devastate them now obviously, like the rich people are getting hurt right now in
the market as well. But the impetus here and why he always talks about McKinley, because what was the state of taxation under McKinley. It was all effectively teriffs. There was no income tax in place, and that is the direction that he wants to move things in. So you know, it's I always want. I think it's really important to talk about the specifics of what the formula is and how it's being implemented and how it doesn't make sense.
But I also think we have to keep in mind the bigger picture of what he is actually trying to accomplish, and I think among those things are again consolidating power and power grab and I also think it is shifting the burden of taxation on to working class people, shifting the burden of funding the government on to working class people. And you know, if he sticks with this plan is going to be devastating for so many.
And the market, the market matters.
I don't want to say that it's like, oh, who cares that if the market is crashing, real there is real pain there as sober as indicating. But the market is also just the first indicator of how catastrophic this is going to be. Look At how regular people fared
in coming out of the housing crisis. Look at how regular people would have fared in the COVID crash had there not been a massive government infusion to support people you know, look at how regular people fail fair in any recession, any massive market crash, and there is no indication that there is some major government program coming to help support people through these times. In Trump's words, we
just got to take the medicine. I think that's a good place to transition to Jeff and talk with him about his reporting.
He's been so.
Good on this issue, even going back to the camp and you know, he was one who was saying, like, listen, guys, he talks about tariffs a lot, and you're right that you never laid out this particular scheme, but he did lay out pretty maximalu's tariff ideas. I don't think Wall Street ever took them seriously. They thought they were getting their tax cuts and that this was just like a
negotiating tactic. And you know that would be something like the level of tariff imposition from his first term maybe amped up a little bit, but I don't think they ever took that particularly seriously. And Jeff has also done a fantastic job digging into the behind the scenes and surprising no one. It really was Trump who said this
is the way that I want to do it. Some of his advisors had been working on some more sophisticated level of tariff plan, and he said no, no, no, And the decision making went up to the hours before he made the announcement there at the White House. So with that being said, let's go ahead and get to economics. Chief Economics report is at his name now, I want to give him his fancy name. He's got a fancy title at the Washington Post now chief economics reporter. Jeff's time from the Washington Post.
Joining us now the chief economics reporter for the Washington Post. Jeff Stein, great friend of the show. Good to see you, Jeff. You've been number one to be reading this week as we enter and post liberation.
That's in every week.
Yeah, that's right, all the reporting skills I learned. We're here on breaking points.
Ah, that is absolutely not true. All right, let's go and let's go ahead. Jeff's reaction. He's gonna break down not only Donald Trump's role behind all of this. He will reveal the truth behind the fake formula. None of us, many of us, have paid notice to the fact that many of the tariffs were being put into place on some unpopulated islands. The USCA secretary was actually asked about this or sorry, The Secretary of Agriculture was asked about this over the weekend.
Let's take a listen. We'll get reaction.
Why are you putting import tariffs on islands that are entirely populated by penguins?
Well, I mean that, Come on, Jake, Obviously, here's the bottom line. We live under a tariff regime from other countries.
We have too long is the.
Idea that America goes first? I mean, come on, whatever, listen, the people that are leading this are serious, intentional, patriotic, the smartest people I've ever worked with. I did not come up with the formulas.
So Jeff, who came up with this formula? Where where do this thing come from? You've got the story. We'll put it up there, but you can talk well while we show off your work.
The weird thing about that answer, with all these respect to the Agriculture secretary, is like, if I was a Trump Cabinet official, I feel like I could have given a somewhat cojent response. Like the reason that these tiny little islands were hit by the tariffs is in.
Part because there's some.
Concerns that they could be vehicles for transhipment, right, like, if you're a foreign country and you're trying to just send something to a country that you know, the tiny middle island, then you reincorporate, say that that that good is now from that island and then send it onward.
That's what I would have said if I was the Agriculture secretary, even though the idea that a substantial proportion of trade could be rerouted through an island with like fall penguins and no people on it is probably overblown, Like that's what you could have said in response, even I mean, according to the trade expers I've spoken to, even more kind of shocking about this formula that they use to determine country specific terrors, which are different than
the universal one that they applied on all countries, which we can talk about sort of the criticisms of and the very strong criticisms of the country specific tariffs hit countries based on essentially their trading deficit with the US. And so you have countries like Lesotto, which is a big minner of diamond exporter to the US, which is an incredibly poor country. Of course we buy more from
Lesoto than they do from US. That has nothing to do with the thing that the White House and Trump are talking about as being the impetus of this global trade war, right because they're saying, look, which there is some truth to this part that the US has, you know, is a global purchaser of stuff across the world, that we have a global trade imbalance, which is all true, that it is you know, particularly bad with some countries like China, and that they want to do something about it.
But Lesoto is not a net center of exports to the US because they have nefarious currency arrangement or high terror farriers our exports because it's an incredibly poor country, Like it would make no sense for Lesoto to be buying more stuff from US than we do from from them.
So that's like the I think the.
Overarching frame and the question to your question, Stager, like why do they do this? We had reporting last week about how the Trump administration's sort of top economic minds had weeks been working on a formula that was narrowly about sort of the thing the problem that they're ostensibly trying to solve, which you can debate whether it's worth solving, but this issue of US buying more than we sell to the rest of the world, and they had a
plan that took into account. They had several plans that took into account all kinds of currency manipulation factors and tariffs, and they were coming up with sophisticated measures to deal with that. I cannot prove who wrote the more crude formula that was widely mocked that Trump, as we reported, personally selected, but I do know that it bears striking resemblance to a number of public state public formulas previously endorsed by Peter Navarro, who is sort of the most
ultra maximalist trade hawk in Trump's orbit. And so I'll just leave that observation there.
Yeah, to get from you the reaction from Bill Ackman, who is now very unhappy with these tarifs, and of course he's been a big Trump supporter. He's also accusing Howard Lutnick of profiting off of the crash of the stock market. If we could put before up on the screen, guys, this is what part of what acca He's famous for these freaking way too long posts on Twitter. But in any case, this is a portion of what he had
to say. He said, business is a confidence game. The president is losing the confidence of business leaders around the globe. The consequences for our country and millions of our citizens who have supported the president, in particular low income consumers who are already under a huge amount of economic stress, are going to be severely negative.
This is not what we voted for.
The president has an opportunity on Monday to call a time out, have the time to execute on fixing an unfair tariff system. Alternatively, we are heading for a self induced economic nuclear winter, and we should start hunkering down. May cooler heads prevail before I get into the the attack.
Then on Howard at Nick Commerce Secretary, just would love to get your reaction to Ackman, you know, and his position here and saying, hey, you got to call a time out here or else we're headed for this economic nuclear winter, because you've been pointing out for a long time. Listen, guys, he's serious about these tarts.
Now.
Did he float this particular formula on the campaign trail? No, but he was floating some pretty maximus positions. And it certainly seems like people like Bill Ackman and a lot of the other Wall Street types who were excited about a Trump administration they thought they were getting.
Their tax cut.
They did not think that they were getting self induced global economic meltdown.
Yeah, I mean, just from a writerly perspective, I think the technical term here is burying the lead.
If you're saying we might be headed.
For economic nuclear winner, normally you don't put it at the bottom of six hundred words of text and after, you know, seven paragraphs of expository throat clearing.
It was very New York Times of him.
Yeah, yeah, no comment a post report.
I'm I think you know exactly as you're saying, It's been really remarkable to see.
Like, I don't think anything Trump.
Has done is really that surprising based on his campaign rhetoric, based on the reporting. I mean, I wrote a story in August twenty twenty three.
You can go look it up. I promise it's real.
It says in detail that that President Trump is seriously considering or plans to, if re elected, launch a global trade war that includes tariff barriers as high as sixty percent on China, which is pretty.
Close to what they ended up with.
That is, would include a universal tariff of up to ten or twenty percent, which is almost double what he in fact actually proposed in terms of universal tariffs. That includes these sectoral tariffs on entire industries now we haven't even seeing yet, right, So like for all the all the sort of financial carnage we've seen in markets, like some of the biggest measures that they're considering are not
even yet announced. So that's that's tear ups on all kinds of the same good that come in wherever they're from. And autos we've seen, but farm the Lumbard copper, et cetera. You know, as I've been pointing on Twitter, it's just it's hard for me to understand how some of the richest people in the world couldn't afford one hundred and
fifty dollars subscription to The Washington Post. And it makes me wonder, like why I didn't just start in investment service for these guys in charge like ten times my current salary, Because there were people who, you know, I have sources who are lobbyists who are paid four or five six times when I'm to give Wall Street advice on how to invest in, how to navigate Washington, and a lot of times our reporting was much closer to what actually happened, So I could ramble on about this for days.
Yeah, I've been I think it's a good point to be fair. So also, and despite you writing it, there were also a lot of people who worked for him telling a lot of those people just don't worry about it's not going to happen. So you know, it's not like he wasn't also feeding them a lot of what they wanted to hear during the campaign.
I guess that might be.
True, but like I definitely take it as a possibility that I'm just like not talking the right people.
But I don't know. I'm not like the best source reporter in America.
But you know, there are people who are like in the Trump circle who talked to me, and they have they have been like very clear, like for a year and a half or two years to me now that like you talked to Trump one on one about this stuff, like there is no or very little sort of like yeah, this is a bluff. Yeah, like this is a design
to get people to move. It's like I talked to a senator a couple of months ago and he said that he was like begging Trump to like not do the tariffs, and Trump was like.
Basically just said, we need to get back.
To where McKinley was over and over to this senator and the Center's like, what are you talking about? So, I mean, I think there is an element that are there are people goes to Trump who are saying to Wall Street, this isn't serious. But I also think people were just kind of seeing what I'm hearing things that weren't really even being said.
If that makes sense.
Yeah, they were hearing what they want to do. Let's go ahead and get the attack on Letning. Now he has since walked this back and apologized for it. But I think this is before b that we can put up on the screen here. So Ackman says, I just figured out why Howard lutnink Co, of course, is the Commerce Secretary and adamant Trump tariff defender on cable news, is indifferent to the stock market and the economy crashing. He and Canter that's his firm, are long on bonds.
He profits when our economy implodes. It's a bad idea to pick a Secretary of Commerce whose firm is levered long fixed income. It's an irreconcilable conflict of interests. Of course, this administration is rife with conflicts of interest. If you aren't cashing it in, you're in this administration. I don't know what you're doing. But you know, what did you make of this from Ackman? As I said, he did
walk this back and apologize. I think Letnik he must be doing his best in a very difficult position.
Whatever.
But you know, do you think there's is this fair critique of Lutnik at all? And also bigger picture, what do you make of these two you know, previously very solid Trump supporters. Lutink I don't think has weighed in, but Ackman attacking him directly.
Yeah, I don't know much about the internal, you know, positions of Canter Fitzgerald.
I do think it doesn't make a ton.
Of sense that that that this strategy on crashing the market would lead to an uptick.
In bond sales.
I mean that mostly affect the issuance, which is a US government function.
So it's it's hard for me to see like that really.
I mean, I guess you could see the price of existing thing outstanding bonds go up, but I don't know at a very minimum, Like I just would like to see a lot more any evidence at all of this.
Before even suggesting there's anything there.
I think on the political dynamic, I think it is really interesting that we're seeing an increasing number of people in the Trump orbit attack not the president but sort of people around him, like Elon Musk over the weekend went after Peter Navarro, who, as I mentioned, this sort of court to this whole strategy.
Bill Lackman.
They're going after not the president himself but the Commerce secretary. And there seems to be another element of like, this can't have been the president's fault.
Personally, so we need to find a stand in.
You know.
It's like the King, it could never be wrong. It's his advisor. So I think there is an elements of that going on, where people are trying to find maybe a fall guy that Trump can then be like, oh, this whole lapse was like this guy's fault.
It's all Trump guys.
This is like all being done by the President, like you see those clips of him in nineteen eighty being like Japan is ripping us off, it's him, you know. But if that's what they need to do to feel like they can sort of make clear to Trump that.
This has to change without hitting him directly, I think we're going.
To see more of that gives him a way to save face potentially of like oh what this guy gave me some terrible advice. Allry, Howard Lutnik, You're own right.
Last question for you then, Jeff, where do you think things are going to go for the next week? So the administration's cope is fifty different countries have called us and we're negotiating.
What does that mean?
I mean we reported last week that the Trump White House sent out internal talking points to their people saying, do not characterize this as a negotiation. And Lutnik has a desine. They've all been saying, like, this is not going to be resolved in days or weeks. Is there a chance that in the back of his head Donald Trump is still thinking, like, tell everyone in my inner circle that this is not a negotiation so that we have higher leverage with the rest of the world as
the economy implodes. Like it's possible, But I don't really think so. And so far I've continually taken the like the under on the like Trump is bluffing by a lot, and I think people would be wise to continue to do so.
Yeah.
I do have one more for you, Jeff, just on the political temperature from Republicans. There is starting to be an effort for Congress to reclaim what should be its powers over leving tariffs.
Many Republicans have.
First of all, I mean they're terrified to go against Trump to start with, he has really consolidated control over that party. And second of all, they were comforting themselves with the idea of like, oh, some of them are even saying like, oh, he's going to use this as a negotiating tool to take teriffs down to zero, so this is actually free trade, Like this is you know, I'm totally in line with my Chamber of Commerce orientation here.
Increasingly that position is untenable. So do you think that there could be some significant breakage within the own part his own party, you know, among senate Senate Republicans in particular, from Trump and this tariff insanity.
Yeah, I think it's it's common, especially like if we get to Tuesday, Wednesday, Thursday, and we're in a bear market and the recession is.
Hitting, their need to be loyal to Trump will start to crack.
And I think you're seeing some signs that already, with this still somewhat tepid Commressional Review of Terror Policy bill moving forward forward to you're seeing more Republicans than would have been conceivable a few weeks ago sign up for that, but that's not really going to be enough to brain Trump in at all, just based on the text of legislation. Will more aggressive legislation be proposed if this gets worse, I definitely think so. I mean, it's incredible to think about.
You know, Commssional Republicans were furious about President Biden's unilateral four hundred billion dollars so student loan bailout, and Trump, by the White House's own accounting, is moving forward with a unilateral six trillion dollar tax fike, you know, more than ten times the size of the student loan bailout. The legal questions there are certainly different, but you know, I think a lot of Republicans in their bones are not okay with this, and you're going to hear from them pretty soon.
I agree.
All right, then, thank you for joining us. We appreciate it.
Thanks Jeff, I know you're super busy. We really appreciate it. Thanks you too.
So you're just talking to Jeff stin there about how Republicans may react to all of this, and they will likely be watching very closely the public reaction to what is going on in the markets and with Trump's tariff policy. Harry Enton took a look last week at the polling that we do have at this point about how Americans feel about this direction.
Let's go ahead and take a listen to that.
The Press secretary criticize the people she calls the naysayers when it comes to these tariffs.
Who are the naysayers?
The nay sayers are the majority of the American public. It's the American people who are the naysayers. Oppose new tariffs on other countries all goods. Look at this, fifty six percent of Americans opposed new tariffs on all goods. How about cars in particular, fifty six percent of Americans oppose new tariffs on imported cars in park car parts. Look, the bottom line is the American people oppose, oppose, opposed, No, no, no, they do not want new tariffs. I looked at a
ton of polling. You It's really hard to find any in which you find folks supporting new tariffs. Maybe against China, but against all other countries, especially our allies. No no, noose a pose a posts.
So Caroline love It again told Kate in that discussion that the president is is laser focused on reducing prices. What do voters say that they believe the tariffs will do to prices.
What do voters believe the tariffs will do to prices? At least in the short term? Tariffs will raise prices? Again, what did we get here? Ey two percent of Americans overall say that the prices will go up in the short term. How about among Republicans through Republican base. This was a shocker to me. Sixty four percent of Republicans believe that tariffs will in fact cause prices to go
up in the near term. And get this, just five percent, five percent of Americans overall believe that tarifs, at least in the short term, will bring down prices. You don't have to be a mathematical genius to know, mister Berman, that seventy two beats five.
So a lot of a lot of warnings there for this direction from the president and for his party. Put this up on the screen from you gov. This was a poll taken on April third, and they say that among US adults, only thirteen percent on March ninth through eleventh, and then nineteen percent on April third say that raising tariffs will help the average American. And there's a big partisan divide here where you know, there's a significant number of Republicans who say it will help, but even there
it's not a majory. It is a plurality at thirty nine percent. Among Democrats, it's only six percent think they will help independence, it's only fourteen percent. So there is next two zero confidence among the American public that this is actually going to be, you know, taking the medicine and on the other side, some grand utopio weight crber.
Yeah, that's right.
If you look at it overall, and we still have not yet seen the impact. That's actually the probably the most important point to underscore. This is where you start at. This is the market is the leading indicator. The price at Walmart hasn't gone up yet, right, you haven't actually been seen the layoffs. We just know that that it's likely coming unless there's some major impact. But in the interim, this is the baseline from which you're beginning with. So
that's really not where you want to be. Let's go and put the next one up there on the screen, though, and this is the word of caution for everybody who's out there who is hoping and praying for some big shift in the Republican base. I'm not so sure it says quote Republican skepticism of free trade service. When voters were asked whether tariff's help or hurt the economy, seventy seven percent said tariff's help create jobs and our beneficial.
Ninety three percent of Democrats that they raise prices in our negative force. The survey was taken before this market down on Thursday and Friday, but it is still, you know, an indicator of where things were beforehand. Trump successfully completely flipped that in terms of the Republican and the Democratic basis, how they thought broadly about tariffs, probably the.
Best idea of negative polarization.
But it does just show us that even with everything that there is right now, you and I all need to remember the level of trust that a lot of these Republican voters have in Donald Trump. They don't trust the media. They don't trust you know, the New York Times, the Wall Street Journal or CNBC.
If anything.
They liked seeing Jim Kramer and these other people panicking. Right there's a lot of negative polarization. In fact, the best argument I've heard that's pro tariff is everybody who was wrong about this, this, this, and this are the people who are upset about tariffs.
I sympathize with that.
You know, whenever you see yourself as I do, find somehow in agreement with people posting Milton Friedman memes.
Makes me cringe. I'm like, maybe I'm entirely wrong about this entire thing. I don't think so.
But obviously anybody who thinks they're right, you know, broadly does.
But that is the broader thinking.
You have an entire part of the American electorate which is negatively polarized against every institution.
Trying to tell them that this is wrong.
It's only going to harden their beliefs almost certainly at an emotional level. And really, I don't think that there will be any grand flip for them unless there is some serious economic fallout. And you know, as we just said, it's just not there yet. Yes, the stock market and all of that is there, but that's just you know, a prelude. If you think about h nine, what was the absolute bottom and the worst part of it, It's
not when the market drop by fifty percent. It's when people were fire sailing their houses and you know, people were showing up to occupy Wall Street. It takes some eighteen months for this stuff to really bleed into the overall economy, somebody goes to the bank, you know, or somebody goes to that bank there. People are not lending, there's a liquidity crunch this you know, rate crises and all this. So get fired from my job six months
later because cash reserves have fallen down. That's when the stuff really starts to roll. So we're still not there yet. I think people should buckle up.
Yeah.
Republicans are very much in trust the plan mode. Yeah, no doubt about it. Like you said, they don't believe anybody but Trump. And so if Trump is like this is going to be great, they're like, all right, well we'll see. Maybe it's going to be great.
I don't know.
And the question is, and if we could put the last element actually up on the screen here, guys, see five. The question is, once it gets from quote unquote just a market drop and you start to see even more companies laying off workers and prices are going up, and you you know, likely are in a situation of stagflation
and the economic disaster in ordinary people's lives. If we get to a place, god forbid where that becomes undeniable, does that change anything, and you know, the lowest approval ratings. This is a Nate Cone rite up. He says, Republican's tariffs suppose a risk like no other. Trump's political strength
is built on the economy. If it thinks he could drag his party down with him, he has a whole You know, look at the way that recessions have normally worked out for presidents, and this one, if we do end up in recession, will be completely self inflicted and there will be no ability like Obama in ten twenty twelve is like, Hey, I'm still trying to pull a down of this mess that these last guys left, you know, Biden.
Same thing with Trump coming out of the COVID crash, like I'm just trying to get things back together after these people screwed things up. Trump is not going to have that luck to like he owns this one hundred percent. There is no ability to be like, oh but Joe Biden, No, you are the one who did this and architect of this,
so it lands in your lap. So if there is a recession, it will undeniably be because of the singular person of Donald J. Trump, and Nate writes in this piece, he says the tariff announced Wednesday, how introduce a political problem of an entirely different magnitude for Trump and his party. No party or politician of recession proof. Historically, even truly dominant political parties have suffered enormous political defeats during major
economic downturns. In none of those cases, not even with the infamous Smoot Holly tariff, could the president be held responsible for the downturn as self evidently as today and whatever it may have felt like after the election, the Republican Party is not even close to politically dominant. Keep in mind, and this is part of why Trump is, I think, in such complete giving no fox about anything mode.
Is like he doesn't care about the Republican Party. He doesn't really care if it's a complete bloodbath in the midterms. He's doing whatever he wants anyway. And so you also have to keep in mind, as popular as he is with the base, he's not going to be on the ballot in the midterm elections. And we have seen consistently that his popularity with the Republican base does not sleep
over to the broader Republican Party. So yeah, they have to be looking at the results in Wisconsin have to be looking at the leader of their the undisplayed leader of their party intentionally. It appears crashing the entire economy and go oh shit, Like if we're in if I'm in a district that's less than Trump plus fifteen, I'm starting to get real nervous looking what is going on here.
I hate to say it, but you know who I see making big bets that I think are going to pay off, Ted Cruz. And I hate to say it, but I see him out there. He's counter signaling on tariffs. He's talking about tax hikes, he's trying to loop it into some of his old school conservatism. And Ted Cruz is a guy is hardline on immigration but anti tariff, one of those people who could credibly say I ran against Donald Trump in two thousand and sixteen. And I'm
not just one calling this. Other people are saying. They're like, I think he's going to challenge Shadey Vance for the nomination, and if you think about what the future of that might look like. Trump has already said he doesn't want to endorse an Actually he wants to run for a third term. But let's assume that he's just going to slip this one out and let people.
Dangle in the wind.
Well, you would rather be on the record against it. And I again, I hate to say it, because I think Ted Cruz is totally wrong. Ted Cruz is an actual on iroonic free trader, doesn't believe in tariff's at all. Who believes in you know, this Tea party libertarian vision. But let's be honest. I mean, the bad way that this is all being handled and rolled out, it's going to poison the well of tariff discussion for a generation.
Really sucks.
It's horrible.
I was thinking about it, you know, in terms of two thousand and eight, for people like us who really became politically aware at that time. Anytime I hear about leverage or credit default, I'm just like, no, you know, it's it's baked in for all of us who lived through all of that. Well, think about if you're you know, me, twelve years younger, what are you living through right man? If you're a college senior right now, Holy shit, can
you imagine having to graduate into this economy? I mean it'd be one of the those where if you especially you know, with the overall lee times for where we are, what we're only a month or so away from college graduation.
I think, what are they going to do? Yeah, I mean what are you going to do?
And there are a lot of signs, just like, oh nine law school applications are double what they were just from last year. That's a terrible sign. It means people are willing to leverage up to two hundred k in the hopes that things are better three years from now. By the way, news flash, it's not going to be. But as those people found out at that time, I know a lot of those folks that didn't end up working out so well for them. But all of the
signs are there. So you're graduating in a month. Okay, No, we're looking at occupy again. That's what happened last time eighteen months or so. And so the polling and the way that the base and all of that will be negatively impacted could genuinely poison the well on tariffs, not just for them, but for the entire country writ large. And it's again I hate this because politically we are such a yo yo nation.
We're just going to.
Flip back to some sort of Obama as you know argument, which is gonna make a lot of sense to a lot of people and who were willing to listen.
I mean, and it's unfortunate because there actually was a new bipartisan consensus around some level of intelligent trade protectionism.
You know, Trump and Trump could have claimed credit for that. Absolutely.
He started that interaction with the taries he put on China, which I supported, you supported. They didn't actually accomplish that much because they weren't paired with industrial policy, but they did open the door. And then Biden is able with Inflation Reduction Act in the Chips Act, which again no one is saying that this is like remade the economy and it was the end all be all, but these
were significant investments that were paying off. They genuinely were working for critical investments for industries that are going to be important in the future and important for national security. And Trump is blowing that up. And now you know that consensus about Arris. There's this western Pennsylvania Democratic representatives like represents an area around Pittsburgh, Representative Luzio, and we're trying to get him on the show. Actually I think
we haven't booked for this week. I want to speak with him, but you know, he comes from this like blue collar part of Pennsylvania and very like union heavy, et cetera. And he put out this video that was like, listen, guys, tariffs in certain certain circumstances, yes, but what Trump is doing is crazy.
Like he's very clear, I oppose this thing that is being done.
Democrats will ript Liberals got living him to shreds for daring to say that in some instances tariffs are good and that's where that's where the Democratic Party is going to be, unfortunately, and that is where so much of the country is going to be because it's difficult to have this nuance like think, tariffs are a tool, right, they can be used in a good way, and they
can be used in a very bad way. But it's hard to have that nuanced conversation when they're being used to just intentionally crash the markets and blow up the whole economy.
Totally, I totally agree.
I can see it coming from a mile away, is that this negative polarization and increasing the way already the way that it is. The Democrats are done with tariffs, probably for an entire generation.
Keep going.
The dependents will join you there, and eventually the non MAGA part or whatever is left of the Republican party, and you'll find yourself at a supermajority who supports things.
Like TPP or whatever, you know, and we're.
Going to be right back from where we started twenty five years from now. And so this is where, look, you do need to blame the practitioners, where if you're gonna do something which is genuinely extraordinary, you have to do it right now. Nobody is saying Donald J. Trump is mister detail or any of that, but I mean, at a basic level, what people I think voted for is there's this idea that there's a senile old man in the White House.
We're going to restore things to normalcy.
And yes, we'll have our chaos in terms of Trump, you know, drum thing about Mika Brazinski's facelift. But but and p goes up, the gospel gas price goes down, the people around him seem to generally ish more competent compared to these Jake Sullivan type idiots or Anthony Blincoln. So fine, but that's not what you're getting now. Like you said, now you own this thing one hundred percent.
Okay.
You know, people say, like, oh, he's a world historic figure. He's making a huge bet and it is true. Trump is actually fundamentally a gambler. He believes that he can do this and he can get away with it. Obviously, he's ten times more successful than I am in politics, so maybe he's right. But it's one of those where you can see all of the building blocks for a crisis. I was talking thinking about this with Doge as well. At a certain point, it's no longer up to you.
Like I said before about that whole airline disaster, imagine if they had fired air traffic controllers and you had a crash. Even if you're not responsible that crash, you're getting blamed for that crash.
Same thing with what's.
Happening right now with the economic you know, with these economic the tariffs and a potential recession. Let's say that something totally out of the norm happens. Remember previous recessions that have sparked actual sell offs like this nine to eleven and the pandemic.
Who knows shit happens. That's one of the rules of running the world. Do you have no idea?
Russia invades Ukraine, boom gas market entirely implode. Same October seventh, changed the entire route of every shipping container in the entire world. You never you can't plan for such an event. So let's say he's got this grand plan and then boom, something happens.
You know in the world.
Now you're in that fortieth order consequence. But you are going to bear one hundred percent of the responsibility for that. And people don't forgive and you know, honestly, they shouldn't forgive you.
They shouldn't forgive you.
He screwed people's lives and if you get laid off as a result of them, well, I don't know what to tell you.
That's the number one thing you're not supposed to do.
Yeah, he said some really wild things too, Like he said there should be no supply chains.
They should all be in the US.
This is like, it's like the philosophy of North Korea, like unironically the philosophy.
As I've heard, my heart is in my heart, I am autarchist, which is what you're talking about. That's what the North Korean model is, And just why do we really need all of these other countries. That's where my heart is. That is not where my head and my stock portfolio. It's more the reality of all of the global supply chain. It would be great to get you know, twenty percent more autarchic, you know, be a nice little goal for us. But you know, look, let's be real.
You know, if we want to do that, it's going to take a billion dollars in investment. We're going to need actually not a billion, many many more than the hundreds and hundreds. Yeah, it's probably be a trillion dollars. And even that, maybe we'll get five ten percent. It's
a start at the very least. It's a philosophy. If anything, I think Trump is negatively polarizing US, and I think ten years from now, what you're going to watch is Trump is a lot like FDR in that, you know, he showed people what was possible in such a way that people are like, I'm not so sure about this. Donald Trump will be the very last president to have IEBA authority. I'm one hundred percent confident of that. Donald Trump will be the very last president to be able
to you know, alien enemies. That's getting some sort of you know, when the House takes credit just like they passed the twenty second Amendment, they're going to say and Congress has to approve by fifty or two votes or whatever, and a lot of the things that he's pushing right now. The legacy of that will actually likely be one of reaction and reassertion I think by Congress obviously could be totally wrong.
But yeah, well, last thought on this on the sort of broad historical sweep, I mean, in part because of the disaster of the Smoot Holly terraces and how they exacerbated the Great Depression. You know, progressives, FDR was a free trade guy. I mean, you know, moved very much in the direction of thing.
It's not a hundred like that's a very free freedman and monitorist.
But it did make the during depression worse. Like at that time it was terrible economic policy.
I'm still not ready to say it was. Well, okay, the.
Monsters it was the only thing, yes.
For and I do not think that is accurate. But this that's a much more nuance.
But you know, back to my point, it is widely believed and was widely believed at the time that Smoot Holly exacerbated the Great Depression, and FDR's whole you know push was to roll back trade barriers, and that helps, you know, begins an era in which the progressive position on trade was for a long time lowering trade barriers and lowering tariffs. And during McKinley's time also there was
actually pushback. It was somewhat divided depending on the industry and where you would doing, whether you're a farmer, a manufacturer, whatever. But you know, there was a long period in which the progressive position was a free trade position, and that changed, you know, over time. And this that's why, you know, I do think there is so there are so many facets to what is being done right now. It just
is impossible to wrap your heat around. And I can't think of another single policy move that has been made by a leader here or around the world. Maybe like you know, our decision to enter World War two, but that was sort of like made for us when we were attacked at Pearl Harbord, but that could have this
level of both domestic and global radical fallout. And the other thing that we haven't even touched on here is the rest of the world also is going to get a say, you know, the Europeans are getting ready to announce what their retaliatory tariffs are going to be, or what their response is going to be. China's already announced quite a significant response You already have had a shift
in the global power balance. You already had to move away somewhat from the dollar as well, and that too will have a massive global reordering effect, with consequences that are hard to comprehend.