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Good morning, everybody, Happy Tuesday. Have an amazing show for everybody today. What do we have, Crystal, indeed we do.
So we are not spending the entire show on tariffs, but we are spending just the fast show. I'm deriff, so we're going to give you the very latest. Trump made a bunch of comments yesterday where the markets are all that good stuff.
We've also gotten your reporting.
Apparently, Elon Musk and Scott Bessett made personal appeals to Trump Bessett to change the messaging on tariffs. Elon musk to change the actual reality of the tariffs. We're taking a deep dive into China's response and what that could mean for them and for us and for the world. CEO of a clothing company is joining us to break down specifically just nuts and bolts, how he's the ame out the terrors, how it will impact his business, so we can get kind of like the granular real world
impact in the sense of that. At same time, Baby was at the White House yesterday. Yes, Trump pushed his chair in for him. No worry, it's all taken care of. This comes on the same day that we learned that the Israeli killed an American citizen in the West Bank.
So there's obviously a lot to discuss there.
Trump also announced in that set that same he wasn't calling it a press conference.
Whatever, he called it edible offspring.
He announced direct talks with Iron So this comes at a time of deep concern that we could be headed towards a war. So maybe maybe this is an off ramp. We can all be really hopeful about that. And the Supreme Court handed the Trump administration a big win yesterday
on the Alien Enemies Act. YouTuber Piasco, who happens to also be an attorney with deep knowledge of these issues going to join us to break down what exactly this ruling means, both for the peace people who are already in now Salvador and for the future of the Trump administration's use of this controversial approach.
So a lot to get to. As I said in the show today.
Yes, that's right, jam packed. But thank you, by the way, to all of our premium subscribers. We really appreciate you, and you guys got a taste of what some of it looks like. We had our Ama yesterday where we fell for the trolling from mister Walter Bloomberg, who's a completely bake account. But we all lived that together live, and so that's what you're missing out on. Although we did post a little bit of preview breaking Points dot com.
If you can't afford a premium membership or anything like that, don't worry. You can just help us, like and subscribe the video or take this podcast if you're listening to it, send it to a friend. It's really helpful. Take your favorite episode, maybe the Yesterday's the Tariff episode. I thought that one was particularly good. As Crystal said, let's go
ahead and get to the tariffs. Some major comments from Donald Trump doubling down, tripling down, quadrupling down, despite a lot of the cope that is out there right now. While he was in the Oval Office, here's what he had to say, Well.
We're not looking at that. We have many, many countries that are coming to negotiate deals with us, and they're going to be fair deals. We're going to have one shot at this, and no other president's going to do this what I'm doing. And I'll tell you what, it's an honor to do it because we have been just just destroyed what they've done to our system. Tending millions and millions of cars into the US. But we don't have a car that's been sold to the European Union
or other places. But let's go for the European Union. And it's not going to be that way. It's got to be fair and reciprocal. It's got to be fair. It's not fair. If you look at what's happening, you're going to see this today. I said, we're going to try and get groceries down right, an old fashioned term, but a beautiful term. Eggs. So when I got in the press went absolutely crazy. The first week they said eggs have quadrupled in price. I said, I just got here,
tell me about it. And Brooke Rowlins and our team did agree. Job and eggs are down now seventy nine percent and they're all over the place.
Do you expect any of these deals to be made before April ninth? And secondly, there's been some mixed messages from your administration. You're talking about negotiations and yet others in your administration are saying that these tariffs are actually permanent.
What is that actually, Well, they can both be true. That can be permanent tariffs and they can also be negotiations because there are things that we need beyond tariffs. We need open borders. You know, we almost had to deal with China.
They can be permanent or they can be held for negotiating.
They can be permanent and they can be negotiations. That clears that up.
For us as part of the problem. That's why the markets are all over the place. We can go ahead and put the current screenshot of the markets. The current s and P five hundred futures are up some two point five percent, and the Japanese nik Index rallied about six percent last Night on the hopes of tariff relief.
But the thing is is that the message is incredibly unclear and everybody is just completely grasping for because for all of the talk of negotiation from Secretary Besent from Donald Trump, there there's also the undertone of also, it may not matter at all, and what the timeline of that obviously still has massive ramifications as all of these
tariffs continue to come into place. For example, if you're a country and you're watching Peter Navarro talk about the removal of reciprocal tariffs from say Vietnam, you really have no idea what to do.
Let's take a listen to that.
When you have a country like Vietna. Let's take Vietnam.
When they come to us and say we'll go to zero tariffs, that means nothing to us because it's the non tariff cheating that matters. Let's do Vietnam, Joe, they sell us fifteen dollars for every one dollar we sell LAMB. About five dollars of that fifteen is China transshipping to Vietnam to evade their tariffs.
What we're all trying to understand is then if there are going to be negotiations, and you're saying zero is not enough?
What is enough?
Zero is a small first start?
Okay, then what is enough? And let me ask you but related to them, well, let me.
Answer that question.
Let me answer. Let's take them one at a time. We got plenty of time. So what is enough? Okay?
You take any given country that are like fingerprints. They all cheat us in a different way. So here are the things they cheat us on. Some of them engage in currency manipulation. Some of them have a hefty vat tex. All of them dump into our markets. All of them engage in heavy export subsidies and government subsidies. All of them put up these phony technical and fido sanitary barriers to our ag products and our autos and everything in between.
Many of them steal our intellectual property. A lot of them runs sweatshop labor, including forced child labor. They have pollution havens. So when you say to me, ed, what do we want from them?
We want fairness, So negotiation and zero is not enough.
This is the difficulty. Now what are we doing here?
I would also point out, yes, it is true Vietnam is a haven of transhipping. Part of the problem is that we actually told companies were like, don't produce in China, you should go to Vietnam.
Yeah's part of the reason.
One at that situation, we literally wanted that to happen because Vietnam is a much better ally to us and actually has pretty good relations.
So now what Another example of that is Apple has moved some significant portion of their iPhone manufacturing to India.
Yeah, I know, same.
Reason, because they were, Okay, you guys aren't happy with China.
We got it, we got it.
India's an ally, We'll move some of our production there. India got hit while they're like fifty percent tariffs as well.
Tariff that's right.
So yeah, I mean all of this, many of these dynamics were actually created by intentional American policy to move manufacturing out of China to other allies. And now it's like, okay, well they're going to have huge tariffs as well. You could see from the stock market they are clearly betting that Trump is bluffing. They are betting that no, he doesn't really mean it when he says that they're you know, permanent.
And this is, by the way, according to the reporting from Jeff Stein, from Andrew ross Erkin, from other people, who are talking to, you know, people in and around Trump's orbit. He's saying the same things publicly that he's saying privately. He's saying, no, I don't intend to roll these all back. And not only do you have Peter Navarro there who says, no, zero percent tariffs.
That's not good enough, that's not good enough.
You also had Trump in that press conference saying the EU had offered zero for zero tariffs, also not good enough. So I'm not sure what gives them the confidence that they feel like he's imminently going to, you know, announce some oh fifty countries have made a deal and look at these amazing things that I want.
Maybe maybe they're right.
It's certainly possible Trump has put tariffs on and backed off, you know, in just the past few months we have seen this all play out. But I do think the market is not pricing in enough uncertainty about how Trump may ultimately handle this, because I think he's loving all of it.
I think she loves being in the what.
Are they call it, the catbird seat and having all of these people have to come to him, and CEO's calling him and begging for relief and trying to petition, the king and all of these countries blowing up his phone.
He loves this. So, like I said, we'll see.
I also think it's important to keep in mind, you know, in the same way that Trump after like he does January sixth, he basically gets away with it. He has all these criminal charges, he's found guilty of multiple felonies, he still gets elected president of the United States.
He has zero f's to give.
Like he thinks, all these people told me I was wrong before and they were proven wrong, and here I am, and they don't know anything. And rather than having people like, you know, a serious people like Bob Littheiser in there, he has like clowns like Howard Letnox. So he intentionally constructed a circle that was never going to tell him no on anything that he's ultimately doing. And Peter Rovarro
probably has a similar mindset. I mean, this is man who was in prison for contempt for refusing to testify to Congress about again January sixth. So he has really emerged as the most sort of like ideological, hard line pro tariff figure within the Trump administration. And so I think his mentality probably plays into this dynamic as well.
There's no question. I mean Navarro.
Also, people need to remember the origins of the first term. He was effectively banned from the Oval office for almost a year the first year of the Trump administration, when Trump really handed a lot of the reins over to Jared Kushner, to Gary Kohne, to a lot of those types of folks which did everything they could to keep him out of that, out of the decision making process.
Even during COVID there was a lot of Navarro efforts to try and to bring some manufacturing not have so much reliance on PPE and personal protective equipment for hospitals, ventilators, things like that. Jared Kusher completely put the kybosh on that. Will Kusher's not here at this time around, neither is Gary Cohne. Trump does see a central failure of his presidency to not be able to many of those first things in the first term, and so he wants to listen.
And then second is I have noticed this the best way for people like Navarro and others Bannon, etc. They can everything can be forgiven if you were willing to back him on stop the steal. In the two cases, those two cases I just mentioned, they literally went to jail basically, rather than to turn and to try testify against Donald Trump. There can really be no greater expression of literal loyalty. At the same time, what the markets are hoping and grabbing onto right now is this right here,
let's put it up there on the screen. So Secretary Bessant apparently flew to Florida to lobby Donald Trump on the tariff message over the weekend, and this explains some
of the talk that we saw yesterday. Secretary Besson urged Trump quote to focus his message on negotiating favorable deals or risk the stock market creating further Bessant, who quote landed with the President White House on Marine one Sunday night, told Trump that Mark Kid would remain in peril unless he started putting more emphasis on talking about his endgame with the tariffs winning deals with other countries. So that's part of the reason at least the word negotiation has
crept back up into the White House lexicon yesterday. But it's one of those where it's so muddled that people really are grasping at something I do not see right now. For example, they've said, oh, well, we've had all see we've had leaders of seventy some countries call the White House.
First of all, it sounds super inefficient.
But the second is, how are you going to get this resolved on a reasonable enough timeframe?
I want people to understand the stake.
So a friend of mine, Ryan Peterson, the Flexport guy, the CEO of Flexport, you know, he just revealed yesterday. Quote on April seventeenth, the US Trade Representative's Office is expected to impose fees of one point five million per port call for ships made in China, and for five hundred thousand to a million if an ocean carrier carries a single ship made in China, or even one has
on order from a Chinese shipyard. Now, who does anyone want to guess how many ocean containers ships were built by the United States of America last year?
The answer is zero, Just so everybody knows.
Quote, there are actually only twenty three American made and crude container ships in the entire world today. They are all servicing domestic ocean freight. They are quote tiny compared to today's mega ships, and they are not even allowed to.
Sail to overseas ports.
So what do you think is going to happen if you make a company pay a million five every time they dock.
What are you gonna do.
You're gonna dock less or no, or you're gonna dock once. So what does that mean? That means a lot of these smaller ports, Baltimore and a few others. Yeah, see you longshoremen, good luck. I hope that you enjoy not working.
They'll just go to one big port. They're gonna to l truck everything.
Even worse, what happened during COVID.
Does anyone remember all of that nightmare in the Port of Los Angeles.
That's what was in part massive inflation.
Massive inflation.
So it's like you can see this stuff coming from a mile away and guess what, guys, that's coming in nine days. Does anybody think that that is going to be solved in nine days? And this is a country China, which has actually called our bluff multiple times. We're about to talk about this in a little bit on China.
I think what I would really hope everybody from the show can take away is to get away with the boomer mindset of these are some backwards No, no, no, We're dealing with a hyper sophisticated global powerhouse, one that has levers of power that we could only dream of
in the United States of America. And so when I look at this and then I see the President talking about a one hundred and four percent tariff that is going to be played not only on all Chinese goods, but then this one point five million dollar port call, I am looking at a literal mass explosion of supply chain disruption, you know, COVID level supply inflate, supply side inflation. And then also, do we not want more union worker jobs, not just in Los Angeles.
I want them in Baltimore right over here.
That's right, we don't.
They're gonna skip it, and no one's gonna say, oh, you're giving into the Chinese guys again.
You know, the problem is we have not spent any money building.
Ships or boosting our shipyard industry for thirty five years. They have been pouring money into They beat us just because they paid for it. We can't just come in at the very last minute and be like, oh, sorry, you know, all thirty five years of rectifying decision or you know, bad decisions and all of that, we expect all of this stuff to open. Do you know how long it even takes to build a ship. I'm telling I beg people to go and look at these things. I took a trip once down to the Panama Canal.
You can't even wrap your head around how big some of these mega container ships are. Some of us so big they still can't fit through the canal.
That's what we're talking about, saying yeah, and I mean listen, you're still also relying on capitalists to take a look at that, you know, state of affairs and be like, oh,
that makes me really want to manufacture in the US. Like, first of all, as we've discussed at nauseum at this point, like with the on again off against guys of madmen, the next administration may do total something totally different no one is going to And also courting a global recession, like a lot of big investments don't really get made in when you have a recessionary environment and you know, the chaos of it means that, yeah, everybody is just
going to freeze into place. So when you don't pair it with any sort of concerted government spending and directed effort at industrial policy to you know, strongly encourage the capitalists to do the thing you want them to do, then you are unlikely to get the results that you want, because you can't just wave a magic wand and suddenly
there are a bunch of American containerships. Also with regard to that, I saw that yesterday and it also triggered for me like, okay, okay, Well, that does not seem like an administration that is ready to back off of their maximalist, like terrorist protectionist position. That seems like an administration like a president who is all in on this direction. So you know, again, look, maybe the Wall Street maybe they're going to be right. Maybe they're going to prove
Jeff Stine wrong for once. By the way, there were people in Jeff Stein's timeline yesterday who were like, thank you. You know, I saw youim breaking points and I listened to you, and I saved a bunch of money by you know, moving things around or taking money out of the stock market, et cetera. But maybe this time Justine is going to be wrong and the Wall streeters are going to be right.
But I don't know where.
They're getting their confidence.
A couple last things we have the Larry Fink he uh sounded off about how you know, he thinks very likely we are all ready in a recession. This is the CEO of Black Rock. Let's go ahead and take a listen to what he has to say.
Are we.
Headed for recession? Are we in a recession?
You know, most CEOs I talked to.
I would say we are probably in a recession right now, right now, right now.
And it's not just him, so he says most, not just him, most CEOs I talk to think we are in a recession right now. You can rust shure. This is a man who talks to a lot of CEOs. Let's put this CNBC to They're like pulling of their the CEOs that are in their network. Once CEO said, this is the Trump recession with tarff price increases, job losses coming, and a majority of the CEOs that they reached out to sixty nine percent expect a recession.
Three quarters of.
Those CEOs expect a recession to be moderate or mild, So they're not saying great depression kind of thing, but rather than severe. But you know, this still is an extremely pessimistic view of the economy and directly directly attributable to the policy decisions of Donald Trump.
Yes, and this also right now you might say, don't you hate black Rock and all each other people. Yeah, but guess what they are? The market, Larry Fink literally is the market. So we should listen to what because again, you may not like these people. You may like to see him cry, and I think that's great as long as it doesn't affect you. But the problem is and the way that our world is set up today, specifically our country, our capital markets, those people when they say
there's a recession, it becomes a self fulfilling prophecy. Those people are going to go from ten billion to five You're going to go from what negative five to minus five thousand, And that's a lot more dismaying for a lot of people.
That are out there.
All right, So let's dig in specifically on China. This is obviously a major part of the dynamic here, major impetus for the launching of this trade war. And Trump issued this on true social yesterday. Let's put it up on the screen, he says, yesterday China issued retaliatory tariffs of thirty four percent on top of they're already record setting tariffs, non monetary tariffs, a legal subsidization. I can't say that of companies and massive long term currency manipulation.
Despite my warning that any country that retalities against the US by issuing additional tariffs above and beyond their already existing long term tariff abuse of our nation will be immediately met with new and substantially higher tariffs. Therefore, if China does not withdraw is thirty four percent increase of their already long term trading abuses by tomorrow that would be today now April eighth, the US will impose additional tariffs on China of fifty percent effective April ninth, that
would be tomorrow. Additionally, all talks with China concerning their requested meetings with US will be terminated. Negotiations with other countries which have also requested meetings will begin taking place immediately. Thank you for your attention to this matter. So, Sagara, assuming that these new tariffs on top of the original tariffs go into place, you're talking about in more than one hundred percent tariff.
One hundred and four specific yes.
Specifically one hundred and four percent on China.
Yes, man, that must be really tough actually for the enforcers, because you can't just double it whenever you come to the price, you actually have to multiply for the one oh four sure, right, let's go through some of the things, and this is again we need respect for China. We can be in terms of on shoring and all of this, and we can acknowledge many of the sins of the past about as stealing you know, technology, trade barriers, currency manipulation.
All of that is old news.
Now we are living in twenty twenty five in a world where they have one of the world's best car companies, are a net manufacturer, a net exporterer, and have some of the best manufacturing high tech and low tech in the entire world. So let's go and put this up there on the screen from the Financial Times. I was genuinely amazed reading through all of this. The Chinese know exactly how to destroy us, and they have a whole
of government approach. They don't need to, you know, mess with the Federal Reserve, they don't have to deal with Congress. They are basically doing everything we would want to do if we wanted a coherent tariff strategy.
So let's start with the first thing.
Not only did they impose the thirty four percent reciprocal tariff or sorry that yeah, thirty four percent in terms of what we put into place, they immediately also held back several things that they could use for maximum pain on the US. So first example is control of rare
earth minerals. Some ninety percent of rare earth minerals so called rare earth minerals as Ryan likes to say, come from China, at the very least the finished refined products over ninety percent, all of them coming to the United States require an export license. Those export licenses, yeah, you can basically say goodbye to that. If something like this goes into effect, even with the tariff, they'll simply just not export it. Number two, there was a theory that
this would destroy the domestic Chinese economy. Well, unlike this stupid country, what are the Chinese doing? They're saying, Okay, well, we control our central bank and it's all controlled by a single entity, the CCP. We will then move to immediately lower borrowing costs for all domestic business in China. We will basically facilitate a boom in terms of liquid money.
Number two, we will pump as much money into the domestic economy as necessary to boost domestic demand and spending, and to make sure that our citizens do not have a decrease in quality of life and the business circle remains squared. Those are all the things that they are doing and can do like this, all of those we have to rely on some you know, stage in the Federal Reserve to wake up from his nap three months from now, hope and pray. We also, if we want
any stimulus, what do we have to wait for Mike Johnson. Yeah, I'm sure we're going to get on top of that.
Tomorrow.
They're going in the opposite.
We're actually going to cut it right exactly. So let's think about who you would rather be. Would you rather be the person who has like full control over your entire economy, has deeply studied its enemy, who has studied now four years of stupid sanctions on Russia, which is the greatest training playbook in the history of mankind for
the Chinese. Or would you rather be you know, we just had this, or you're going to hear a segment with Andrew Chan the country which mindlessly scrolls TikTok and which buys Sian and Temu products and is literally addicted to it.
I think I know which one I'd rather be.
Yeah, which at the center of our social contract is these cheap goods, Like our public has not been primed you be willing to experience any pain around consumer goods. As you know, I mean we saw in inflation how much that urt people and how much of a major political issue it became.
And socger to add to your list.
You know, another thing that the Chinese government has going for it, and I fully understand this authoritarian government. It's hard to know exactly what public opinion is, but Harvard did a study of public sentiment visa VI the government, and it's extremely popular. I'm talking like ninety five percent saying either satisfied or highly satisfied. They have a lot more unity around their government than obviously here. Trump is very divisive, he is pretty he's quite unpopular, he's you know,
net underwater at this point. You have massive protests that were happening in the streets last weekend. So you have a society that is not at all bought in on this project whatsoever. And you know, I think that also gives them a tremendous advantage in terms of what they can ask their public to accept. And you know, we also, like I think a lot of our mental model are
very outdated. I was just thinking about the you know, the example of BYD like BYD this giant Chinese automaker, seller of evs globally and hybrid models as well, and we don't buy it their cars like, they don't rely on the US domestic market.
And guess what.
BYD is growing like gangbusters and they are now selling more cars than Tesla does. In twenty twenty four, they sold four point twenty seven million vehicles. So it is an instance of Hey, guess what, they didn't need us. They didn't need us for this company to be successful. They didn't need us for this company to grow wildly, and they have the whole rest of the world that they can that they can sell to. And I think your point about Russia is also really important one, just
in terms of how I've been thinking about this. You know, every like mainstream economist thought that the devastating sanctions we put on Russia would be so destructive to their economy. I mean, we really tried to give them the financial death penalty.
We don't even have tariffs on them because we have no trade that's right. Yeah, we literally cut.
Them off all out economic warfare, yes against Russia, and guess what, like, I'm not going to say it didn't hurt them. And they also have the wartime economy to help to compensate. But it did not end them. It did not destroy them. They were able to figure it out because they had been thinking for a while and planning for a while, knowing that we are fickle and that they are in an adversary, and knowing that this
eventuality could be playing out. China has also been thinking and preparing and is in a much better position to shoulder such an economic blow than Russia is. So I think that if the Trump people think that they're going to be able to bully and punish China into submission here, I think they are completely wrong about.
One hundred percent. So let's return to the shipbuilding thing.
I was thinking about a nice little statistic here from our friend Arno. In twenty twenty four loan CSSC, the Chinese State Shipbuilding Corporation, built more commercial ships by tonnage than the entire US shipbuilding industry has built since the end of World War Two.
Okay, so let's let that sit in.
Let's say that we have you know, this trade war one point five million port call and America's shipbuilding industry, which is defunct and basically rotting from rust. We're going to spin that up miraculously over a five year period where we'll continue to produce nothing. As I said, in twenty twenty four, we produced not one. They produced more in one year than we did for the entire period of the last seventy five years, and we eventually miraculously
are able to turn one out. We are still seventy five years behind where they are now. This let's again think about capital markets and efficient market hypotheses and all of these other things. I will remind you of my favorite stat from Joe Eisenthal. The Hong Kong or the Chinese Stock Exchange in Shanghai is flat to two thousand and nine. We are up over even with the dip some one hundred to eighty percent just over the last five years.
Are you more.
Materially wealthy as a country by having that eighty percent bump in the S and P five hundred? Obviously no. We are a massive service based dominated economy. And I agree, of course with the idea of bringing back manufacturing. However, you cannot just simply flip a switch. The amount of money it would require to reach even ten percent of the CSSC's shipbuilding capacity would make Mike Johnson and Ran Paul have a heart attack. That's just to reach ten percent.
They don't agree that's the truth. So if you don't agree, then just simply condemn us, you know, to our current fate of consuming only fans and pornography and sports betting and Timu and Schian.
But don't do some half assed shit, which is the worst work right now. Is now we're just going to be poor and addicted.
Poor, addicted, and your wages are going to be lower. You're going to have less of a safety net. Like it is the worst of all worlds. It's taking things that were bad and making them worse. That's the direction that they are headed in with all of this. We have to say those they are borrowing some from Chinese thought. There's some strong Mawist sentiments being expressed from the Treasury Secretary himself, Scott Bessant. This was pretty entertaining to listen to.
He went on with Tucker Carlson, take a lism.
What we are doing on one side, the president is reordering trade. On the other side, we are shedding excess labor in the federal government and bringing down federal borrowings. And then on the other side that will give us the labor that we need for the new manufacturing, and we're going to relever the private sector. So the private sector in essence has been in recession during the Biden years, and this is an opportunity to right size the federal government and unleash the private sector again.
So what he's talked about is how these federal government workers who were laid off, you know, the people who were like research and cancer or whatever, they can now go to work in the new factories for being proct online, which again very reminiscent of.
The efforts to your cultural revolution.
Cultural revolution put the intellectuals and the scientists to the re education camp, sent them into the factory. Of course, to your point, there's no actual investment in creating those factories, so the factories aren't actually going to come. It's just going to mean we're going to have less cancer research and people will be poor.
Yeah, So it is funny, although if you read the Three Body Problem, you do know that there are of course benefits, as somebody who wants to aliens revealed to be to the United States, so that that was the only benefit of the Cultural Revolution from that book.
Sorry, I guess I just spoiled it. But whatever the wor three it's it's been out since two thousand and six. They made a Netflix document or a Netflix thing about it. Get them. I can't get any more. But you should read the book. Yeah, it's it's amazing.
And again, you know, even almost to defend Mao and all these people, they even had a program at least to facilitate that. They had the Red Arm you know whatever it was called, that the Red Guards and others to facilitate you know, the movement of these mass intellectuals and state capacity, et cetera. And they had quotas and they had a system. It didn't always work, obviously, you had to come up.
With the fake things.
I do recommend if anybody ever wants to you should read Ezra Vogel has a biography of Deng Xiaopang and Dang specifically was purged and was one of these people who was purged and actually sent to go work in a factory and his period during the Cultural Revolution and the Great Leap Forward is absolutely fascinating to actually go and to study it eventually informed the modern Chinese model of where we are today. So yes, if we would like to repeat the mistakes of China.
I guess we can.
You know, maybe our Dang is somewhere out there. He's a fired NIH worker who stitching. Was it screwing the tiny little screw?
Yeahtle power bok into the iPhone?
Fifteen years from now, he will come and save us or.
She so well, he's going to be replaced by robots. So anyway, Also, according to Unk.
Maybe we need an AI ding job. Honestly, we could do worse than AI danger.
Listen, I'm coming around to the view that maybe we do need to just accept our fate with THEI overlords because the current human model is not going also all that great in my personal estimation. But I mean, look, people, I believe in humanity.
It's a joke.
I believe in humanity. I believe in democracy. But you can't help but look at the Chinese model and be like, this is obviously better, Like it's obviously working better than what we have right here. I'm not saying it would
work here, obviously, wouldn't. We don't have one billion Han Chinese seventy five or what more eighty years of psyop population to believe in all this, We're not not ethnically the same yes, there, we don't have a ten thousand year history or whatever two thousand year history of civilization and all that said, you can clearly see that there are major advantages to this like well executed authoritarian model, and that when we're going going up against them with
a lot of the weaknesses that we have as a result of like degenerate capitalism, that we really are like the caricature in some ways of what they think of us and how they justify their authoritarianism over their population. If you look at many of the results, our own consumer results are entertainment results. What Americans smen to choose to do their time. Obesity, you know, like the constant chase of dopamine hits. Like that is what this country
is ultimately all about. I was really thinking about that with cars, like what distinguishes the American car jeeps, which are pieces of shit with coolers and heated seats that are gigantic that break down.
Every two to three years.
Yeah, they're big, they're comfy, they have all these dumb ass features, tailgating seats right that they charge you seventy five thousand dollars and somebody who makes sixty grand years like, yeah, let me get a twenty five percent EIGHTPR on that, and I'll pay the monthly at a bare minimum rate for the next four hundred and twenty months.
I'm not even making this shit up. This is reality.
This is literally what America what it looks like. Or you know, you could have something different, but.
Well, I will steal Ryan's point is, like, listen, one of the reasons I love this country is like our rights, like the freedom of speech, and increasingly like you can't feel comfortable to speak out on some key issues like, for example, Israel Palestine and think that that right is still intact. So if we're going to not even have that, like, what are what are we doing here? What are we
getting out of this arrangement? At this point, let's go ahead and get to some of the cracks maybe that are emerging in the MAGA coalition.
We could put the first one up on the scrade.
This is certainly the biggest deal with regard to you know, who has the most power with Trump at this point. Washington Post reporting that Elon Musk made direct appeals to Trump to reverse sweeping new tariffs over the weekend as he was launching a barrage.
They say, a social media post.
We covered this yesterday, criticizing Peter Navarro, one of the lead White House advisors for President Trump's aggressive tarra plan. Musk was going over that same officials head and making personal appeals to Trump. They attempted intervention, confirmed by two people familiar, has not brought success so far, no kidding. Trump threatened Monday to add new fifty percent tariffs on
imports from China, which we also just covered. Musk meanwhile posted a video to x in which the late conservative economists Milton Friedman, how did the benefits of international trade cooperation the impersonal operation of prices, as he put it, breaking down the sources of the materials that go into a simple wooden pencil. They go on to say that this is of course the highest profile disagreement between the
president and one of his key advisors. So, you know, Musk, as we point it out yesterday, has been kind of like posting a little passive aggressively on Twitter about this. We've known that he's look, he's the he was praising
Malay previously for rolling back tariffs. He said that thing publicly about how he wants there to be zero tariffs between the US and the EU and apparently is also trying to his pitch directly to the precedent's Yeah, are hitting his heat against the brick wall at this point.
Look, he's his problem is that Trump only cares about a few things.
Basically. Actually it may even be one. I'm not even particularly convinced he cares all that much about immigration.
But whenever I think he thinks that's politically beneficial for.
Him, yeah, does not. He does not actually pay attention.
He owntsources that to Steve Stephen.
Miller and to Tom Homan, and he's like, you guys, do a good job, and I'll back you up rhetorically, even though our deportations are basically flat to wherever the Joe Biden administration. But on trade, it's like the one thing that he does care about. So he's not going to listen to Elon and Elon confused that, you know, with Doge. As we said before, Trump never cares particularly about Doge.
It's all rhetorically useful.
Coalitionally, he can see there's some people who are jazzed up about it.
He's like, yeah, okay, well.
He likes that the Libs are freaking out.
I got it.
That's all they know he feels like the bureaucracy was opposed to him, so he feels like this is an enemy that's being sort of like defenestrated by Elon.
So it's useful for.
Him bingo exactly this time around.
Though, And actually we shouldn't rule out Elon's ego in this either. Guess who's nobody's talking about right now, Elon, unless it's as a what tertiary story to the tariffs? Doge is like what you know, for people to pay attention to politics, It's like, we're not even paying attention to dose right now.
We should.
It will come back, I can guarantee you that. But that just feels like a very been there, done that thing. And if anyway, if anything, this is Trump reasserting himself into his own presidency, but in a sense doing it and not only what I think will eventually become a very unpopular and poisonous move for his own presidency, but he's doing it in a way that splits the coalition
previously that was able to really bring him. He could be all things to all people as long as he was just kind of floating in the clouds.
He got the.
Tech right, the barstool right, Maga Wright, who obviously will back him no matter what. This is like the first time he's staking something out. And so, as you said, you begin to see the cracks that are forming. For example, here we've got Dave Portnoy. He says he's riding with Trump for now, but he said he's lost some twenty million dollars.
Let's take a listen.
I went super viral when I said I lost seven million dollars. I'd kill to be back to losing seven million dollars. I haven't even looked if I had to guess them down in these last three days, probably close to twenty I don't know, like ten to fifteen percent of my net worth poof. But I'm still here. That's the game. That's that's what I'm in. Like, Do I like it?
No?
Am I crying? Am I like?
Oh?
Whoa is me? I wish I voted for Kammalin? No? Do I wish this didn't go down like this? Yes? Am I in this to make money? Yes? Do I wish I had that money in my back in my investment?
Oh?
Yes, So we'll see, we'll cracks begin to emerge.
Yes, it's also sad, like everyone's going to over Democrats myself included in the mid terms theame oh did he say?
Thank? You?
Should say that that might have been in the rent we had only lost seven million, not the twenty million like Jesus Christ.
Well, it's going to get closer to forty to fifty million. What do you think that's going to be here, He's going.
To be putting his pronouns in his bio here Verty.
Yeah, I've seen that joke.
Bill Ackman will be doing land acknowledgments by that time.
Let's go to the next one here.
This is Kevin O'Leary from Shark Tank begging Trump to back off.
Let's take a lesson Kevin, your analysis of what's going on.
Please, it's all Euro right now, because this is the test case right here. I think this is a really huge opportunity for Trump to find an off ramp here in the administration because it's not Vietnam. That's not big enough. But EU has a huge aspect that is so important, and that's on automotive because if you think about how restricted it's been in Germany alone, or in Switzerland or
France about getting US cars into those markets. They've been so putatively oppressed with tariffs, and they're willing to wipe those out. So what you get to say is, look in the intern while we're building our own factories in the US. On whatever it is you want to look at, I'm going to show you how it's done with euro And the Eurozone has been brought to its knees. It's willing to go zero zero and open its markets up.
And that's the key steward, the idea that you would open up the Marcus and set the path for every other negotiation of the other fifty nine countries. Whether it's Penguin Islands or whatever, it doesn't matter. This is the opportunity. This is the moment. And if Navaral sees it that way and advises Trump, and whether Lutnick sees it, but
that's what the market is holding onto right now. The volatilities remain extreme, but this Eurozone deal is the beginning of a beautiful outcome, if you want to put it that way. And then you get to say to everybody, look, it was a lot of volatility, but I got us there.
This is the moment.
Yes, it was a lot of volatility, but I got there. It's like, yeah, I'm not thinking that's happening any.
Type this man, they're so like a beautiful That is part of the.
Yes when you deal with the think about for anybody out there. I'm sure this has never occurred before. You've ever worked for some shithead boss? How do you deal with it? And they're the most egomaniacal, annoying people on the playe.
You got to stuck up to them a little bit.
You got to just say, oh, you know, you got the olatter their ego, you know, to be able to work them towards a solution and make sure they think it's their idea. That's basically what we're dealing with here. Trump is that boss for the entire country.
It's more how I felt with my kids when they were like four years old, to be honest with you and make them feel like it's their idea. Yeah, there you go, present them with choices, but only the choices you want them to go.
Yeah, it's a similar strategy.
Right thing, Go all right, let's now, let's go flip the coin.
What does it really look like for a lot of the supporters here, we got Fox and Friends back in Trump up.
Let's take a listen.
This is precisely what Donald Trump said he was going to do, which is always a shock when a politician does that, and it's what he's been saying for literally decades, that this is what needs to be done to save the American economy.
And I'll just bring up this go ahead.
Well, I was just going to say, you have to just let him do what he's going to do. Give him some time, because he is a businessman, he's a billionaire, he knows what he's doing.
And when does.
America say we're tired of paying the most, We're tired of paying and paying and paying and doing what every administration has done. When do we say we're standing up for ourselves and we're going to make free and fair trade. We're if you're charging us this amount, we're going to charge you that amount.
That is not what we're doing.
We're doing.
Gotta let the Yeah.
Actually, that's the real problem, is anybody because as you and I know, there are well meeting people out there and they trust their president, they voted for him, and he tells you it's a reciprocal tariff, and they're like, yeah, okay, it's a reciprocal tariff.
It's not a reciprocal tariff.
We can break it down, the fake formula and all of that all you want, but empirically it's not reciprocal.
It is something.
It's a trade deficit tax basically. Okay, you can tell about too if you want. Doesn't sound so it sounds a little different though.
I think whenever you do trade deficit tax, which is decades and we're trying to make up for this, this and this, and it's actually not reciprocal, and actually even if they drop the tariffs is zero, then we still are not going to take that int account. You're like, hmm, okay, all right, well I'm feeling a little bit differently about this now, aren't I. For example, we also have a new MAGA version of the World Economic Forum.
Let's put this up there on the screen. I genuinely love this one.
You do not need the new iPad, you do not need the new cell phone, you do not need the new video game console.
You want them. There's a big difference. If you look at the people.
Whinding about terrorifts, I challenge you to ask how their lives have been affected in any way. In other words, you will live in the pod and you will eat bugs.
You will eat the bugs, and you will love it.
I feel complicated, right because I kind of agree with him. I mean, is your life all that materially better because of the new iPad, the new cell phone, the new video game console, all the new products electronic products that we've been able to purchase since the Great Recession?
I don't think so. I think we're much for poorer country actually.
But you know, as we always say, if that's the only social contract that's on the table and you're going to screw with that, that's a big problem unless you're offering something very very different.
I mean, really, what you I think a good middle.
Ground or whatever for America would say, yeah, you can still have your iPad. We're going to try and build it here here all the steps that we're going to be able to do.
It's a win win.
You can still have your consumerism, we can still have it made here on the cell phone point, I mean, what do we really want me? I want competition. I want to see something interesting in something new. That's part of the thing that's exciting about BYD is finally you're like, at least it's different. I haven't seen a different new novel thing prop up technology wise, other than AI since the invention of the iPhone.
That's it.
And even with the AI thing, it's now all commoditized basically across the spectrum, and it all seems to be going the same way of monopolization and of being rolled up.
That's a great thing.
About America, about entrepreneurship, but we don't see a lot of that.
And I don't know, just looking at this, I just know in my bones.
Yeah, I did my whole rant about degenerate capitalism, but like that's who we are right now. And you know, it takes a literal cultural revolution to be able to move away from it. It took us seventy five years to get here. It'll probably take us, I would say, fifty to get out. You got to start small, and you got to give people buy in, otherwise this will be an aberration. My current prediction is that America will be the most neoliberal country on Earth in twenty twenty nine.
Like in twenty twenty nine, after Donald Trump is gone, we will be like the gen Z is going to be the most neo libbed Milton Friedman out.
That is generation so possible. I'm telling you, I'm calling from a mile away.
I mean, I think I can't remember who it was that made this point, but it was a good one. It was people's mental model is that Trump is trying to bring us back to the fifties or sixties. But he's that's not what he's saying. He has consistently this campaign and into this administration and at his inauguration he wants to bring us back to nineteen hundred. He wants to bring us back to the era of McKinley. That
is a very different landscape. You're talking about before the introduction of the income tax, which of course is aspirationally progressive, and which was put in place specifically so that you know, the government in the World War One and then World War Two would be funded more by the rich than Tariff's land, of course, squarely on the working class. He's just implemented with the tariffs, the largest regressive tax on the working class in American history. You're also talking during
the Gilded Age. This is a time before you have you know, child labor laws, is a time before you have significant union rights and labor organizing and workplace protections. This is before the New Deal, so you don't have the social safety net built out, you don't have even things like social security and medicare in place. So I do think it's important for people to have that mental model of that's the thing he's going for, not some
fifties or sixties ideal. And if we think about the time period when American manufacturing was at its height, I mean, first of all, the world was just a different places, right, much of the world was devastated by World War Two. It gave us this unique, you know, advantage where we
were sort of the only game in town. And the other two pieces of that that are often overlooked is number one, you did have a really strong labor movement, so people were able to achieve relatively high wages, relatively stable employment, and secure pensions too by the way, secure retirements. You also had, you know, the buildout of the FDR, social safety net, and housing was way more affordable, healthcare
way more affordable, education, way more affordable. And this was also before you have now this advent of increasing levels of automation, so that you know, the same factory can produce many much much more with many fewer human beings required, which is another thing that Latinix says. So you know, there's there's no going back either to nineteen hundred or to the fifties or sixties or seventies or whatever your you know, period of peak manufacturing American renaissance is going
to be. And the fact that they have no interest in I mean that Trump is busting unions. He's consistently been a union buster his entire life. He's taken that into this administration. They're cutting the social safety net. There are zero efforts in place to improve the cost of housing. In fact, the tariffs will only increase the cost of housing. No efforts in place to reduce the cost of education, no efforts in place to reduce the cost of healthcare.
In fact, some of the very mild reforms put in place by the Biden administration have been rolled back on that front. So that's the landscape that you're actually looking at here. But I did enjoy this particular This was more of a creative, I think, attempt to spin the tariffs in a positive light. Congressman Roger Williams, who apparently is a car salesman, says that one good thing about the tariffs is that now used cars are going to
be more expensive. So this CCS is a positive Let's take a listen.
To that, and people with used cars or used cars are going to be worth a little bit more.
And when they was worth more, they have more down payment, they have more equity, and they can make their payment lesson.
It was, so there you go, use cars are going to be more expensive. So you know, that's that's a good That was actually a.
Great landscape for all of us in twenty twenty ten. Oh that was awesome.
Yeah, at a time when car Loan defaults are actually spiking and at like I think like an all time high, they've definitely gone up significantly.
Let me just quickly split the difference on nineteen oh two's let's make the case for at least some of the time of McKinley.
You know, it was nice.
We were not the global pre eminent country that ran the entire world.
It was a lot cheaper, actually to be a country that was not.
McKinley was moving us in that direction.
Yes he was, but we weren't there. He was the taginning of the America. Let's take it.
Let's take it all the way back to let's say nineteen hundred, right in the beginning of the progressive era, literally pre the true expansion of at least the total expansionism that was eventually embraced with the conquest of Cuba.
And of the Philip Pildians.
At that time, what was America's like actual what was America's goal? America's goal was to to secure its place amongst the global.
You know, it was to have some respect. But it was not to replace the German Empire or the British Empire.
It was one which wanted some reciprocity in the world of trade. It was one where forty percent of our you know, so, or of our revenue at that time would come from customs duties. But broadly, it was a country very similar to some of the issues that we have now. We had major fights about immigration, We had big fights about the transition to industrial capitalism. We were an inward focused country that needed to hash out all of those types of problems before we eventually became this
player in the middle of World War One. I'd also say, and this is a common thing too, you know, yes, you know, we can talk about the nobility of income tax and all that, but the true necessity of income tax was to fund the war machine. I mean, it's not a surprise the first income tax ever instituted in the history of the United States is during the American Civil War when they need money, and so a lot of it was actually not just correcting some gilded age, you know, wealth and balance.
But that was part of it, that was part of the intellectual case that was made to the public about it, because.
The reason they needed the money in the first place was to build bombs and weapons, to send two hundred thousand Americans to die for what to preserve the British Empire during the First World War. That's why I get really annoyed at people who get so furious at the Americans of nineteen twenties and nineteen thirties for passing smooth
holly or for being isolationists. It's like, guys, literally two hundred thousands of two hundred thousand of their sons were murdered on the fields of France for like Woodrow Wilson's idealism, and you got taxed and you got a great depression.
What did you get out of that?
I mean, of course you're going to be somebody who is deeply skeptical of internationalism, of global trade. So anyway, I just think it's there is at least some things you can learn from that time of the simplicity of not being the seat of the global empire, some of the benefits of what could that be and you don't have to return to that era certain things about it
which were actually great. And you know, so I just think that there's often there's often this idea that we currently are living in where everything from that time period is like regressive and bad. But there were certain there are mental models which you can adopt, and you can look at from that time and say, yes, there are
certain things that we should aspire to. And I think one of the things that we should at least try to aspire to is to move away from having to fund let's say, I mean Pete Hexstath yesterday, so that the next Penagon budget is going to be one trillion dollars a trillion dollars.
Yeah.
Well, but and I guess that's why I see the I see things differently. You're right, the full American empire had not been built out, But that was the direction. I mean, McKinley takes the first big steps, yes, in that direction. And you know, just in terms of the system of taxation, tariffs are deeply regressive. They land if you are a working class person, much of your income is going to consumption. If you're a wealthy person, it doesn't. And that's why it's like, you know, all these like
flat tax libertarian people. That's why a flat tax is always wildly unpopular because people look at the fact of like, oh, I'm going to get charged the same thing as this billionaire. Actually, no, it's going to be a much larger percent of your income. And so, you know, the ideal of the income tax is that it would be progressive, that the burden would fall more heavily, you know, on the which people would
actually be taxed. We all know there's a million ways that there's loopholes, and it's not lived up to its aspiration. But Trump consistently talks about getting rid of the income and going back to that funding model altogether. And that would be a war on the working class. That would be requiring the working class to fund the one trillion dollar defense budget and all of the wars. Because it's not like they're rolling back, as we are about to
discuss in some of our later foreign policy blocks. It's not like they're rolling back American Empire. In fact, there's you know, many expansionist plans that this administration is pushing at this point, you know, the last piece I just wanted to quickly get to here, just in terms of where everybody in Maga world is shaking out. You have another one of the billionaire Trump donors who is upset.
Ken Lingo, and we could put this up on the screen from the Financial Times said to them, among other things, he said, I don't understand the goddamn formula. I believe Trump's been poorly advised by his advisors about this trade situation and the formula. They're no, dude, this is Trump's formula. His advisors have been doing everything they can except for to borrow to push him in a different direction.
But this is all him.
But again to your point, this is the way that they all deal with him because they don't want to get crosswise with the king.
When you have a monarch, this is what happens