Tariffs, Tariffs, Tariffs

feel like the world. Let me be careful about this, right, this is not like of the magnitude of like the start of the pandemic, for example, But we're gonna spend the bulk of time talking about is a huge story. It's like gonna be remembered as one of the events at least in line with like the nineteen eighty seven stock market crash I think. I mean, this is like a fundamental change in the United States's relationship with the

rest of the world. Right, people now think a recession is fifty percent or more likely, and that's and that's a big deal.

markets are down right now. We have tariffs across the board, including on penguins, and China is threatening retaliatory tariffs and we're saying, well, fuck you, China, We're gonna give even more teriffs to China. And like it's just evolving into

this madness. And people who were supporting Trump, like very vocally, even some of those voices have come out and said, hey, whoa hold on a second, like the Bill Ackmans of the world, right, who have been just like go go Trump, or all of a sudden like whoa, whoa, whoa, whoa, whoa, what's happening to the economy? What are you doing? Maybe it's time to take a step back, slow down, take

a pause. And those voices actually have been so loud that there was even a fake fake news yesterday where Evan Reuter's ran a headline that market started trading on that there was going to be a ninety day pause.

there are parts of the center are funny. I always believe in kind of keeping your wits about you, and I mean, let me contextualize first, like these market swings, so as tapping this, the SAB five hundred is up two and a half percent today, so that reduces the game from peak in early February or the loss to about twenty percent from twenty three or whatever it was. It's at least twenty three percent is the average tariff right now that we're imposing on the rest of the world.

But still a really bad swing, especially considering that, like investors assume that Trump would be good for the market, and they assume that he probably would implement some terriffs, certainly on China, probably some ten percent dish tariffs across the board, with lots of cronyism and loopholes. Right, but this is like on top you know, markets have assumed for a long time that Republicans are good for Actually

it's a little more complicate than that. Right in twenty sixteen, the market thought overnight that Trump winting would be bad for stocks, the reverse course, literally overnight. So like the market after Trump one in twenty sixteen went from being way down to way up in fact the next day. But now Wall Street has completely lost confidence in Trump.

And as you mentioned, I mean Elon, who literally a few days ago was pictured in a hat saying Trump is right about everything, is now kind of publicly subtweeting Trump, critiquing Trump advisors like Peter Navarro and reportedly corn To the Washington Post is also working behind the scenes to try to get Trump to reverses hera So credit credit to Elon, Right, it changes a lot for him to see that shit's

going wrong. But like, but you know, if he's reversing course and Bill Lackman is reversing course and like very little elite support and the few like Silicon Valley VC types who are defending Trump looked fucking ridiculous, right, You know, I could name names if I wanted to, but you guys are fucking idiots. That's the only only way to put it. Anyway. How do you feel, Maria, Well, I mean you check your investments you have yeah.

it ride right. Look for the long term, this is really I hate using the word unprecedented, right, because you know, we've had major economic downturn moments like this, but I think it is unprecedented, at least a lot of the experts are saying it is in the sense that it's

completely self cost. Right. There's no external thing that is actually precipitating this market crash, which is what has happened every other time, you know, during COVID nineteen eighty seven, like all of these times, the seventies oil shocks, right, all of these shocks were kind of huge global events that ended up doing tremendous damage to the stock market in the short term. This is something that doesn't didn't need to happen, right, Like, this is something that is

entirely self cost. It's just Trump making this decision. And apparently, according to some of his advisors who are speaking anonymously, he is in his I don't give a fuck stage

where he's not listening to advisors. He's golfing, and he's saying, you know what, this is what I want to do, and this is what I'm going to do, and I don't care if all of my closest advisors are telling me, I'm taking the economy, which is a huge, huge shift right from Trump Part one, right where he really cared about the market and was really sensitive to what the

market was saying. And it's also a shift from what we saw in the early days of his presidency in Trump Part two, where you know, he was actually threatening tariffs and then going back and we even had you know, a Risky Business episode where we were talking about kind of what kind of game theory is this right where you where you where you threaten something and then people give fake concessions that aren't really concessions and you're like, Okay,

just kidding, Like I've asserted my dominance. Let's continue on. And now he's like, you know what, No, Like, I'm going to do this for real. I'm going to do this big. I don't care about the math. Obviously, we know Trump never likes to say he's wrong, so he's not going to say he's wrong this time around. They're people He's like, oh, they just need to acknowledge the mistake. No,

he's never going to do that. But it seems like there's been some sort of fundamental shift in the way he's thinking about the strategically where he's just like, fine, I'll tank the economy, no paid, no gain, but we don't even know what the gain is. No.

was going to be the nominee anyway. But the point is that, like when you get old and Trump is the same age, now somebody as Biden was at the start of his first term, you get even more stubborn. You know, Can I be honest, Maria, you can. I kind of miss Jared Kushner. I kind of miss.

right where. You know, I might agree with parts of it and disgree with other parts of it, but like, that's all gonna be jeopardized if people are like, you won an election on inflation, and now you're tanking the economy, particularly through by the way, people have this weird abstract discussion online about like, okay, well, who has investments in the stock market. Actually, by the way, about sixty percent of people do have investments in the stock market, so

it's a pretty common thing. But also, like, you're gonna about to make a bunch of shit much more expensive. Children's toys are gonna become much more expensive because they're made in countries like Vietnam in Southeast Asia that are heavily taraffed. Right, you want to furnitu your home. A lot of furniture is made abroad. You want to you know, buy some yard, I mean all this stuff. You want to buy avocados for your fucking burrito, right, Like all

this stuff comes from like foreign countries. I think actually Canada and next come, now, have some of the more exemptions in other countries. But like, it's gonna make stuff notably more expensive to have people love the idea of you love to have your nice American manufactured nikes, right, Well, they're gonna cost a hundred bucks instead of one hundred bucks, right, I can afford that, you know, I have a partner who is a fan of nice shoes. Right. But, like,

this is gonna hit consumers hard. And although Silicon Valley stocks are down more than the consensus, so are a lot of consumer staples. It looks very recessionary. Booze and tobacco stocks are up though, which is also a sign of like despair. McDonald's is up, Taco bill.

has is going is going to go down. You know, we've also seen in the last week with the kind of the FED conference and the FED announcements that like, you know, the FED isn't a really tough spot as well, right, because like what what do you do right when when inflation is going to go up? And you know you but you, but you've got this person in the White House who's making these decisions about tariffs, where like what

do you do? It's like a rock and a hard place, right, Like keep rates the same, lower them, raise them, Like there's there's no good answer here, and the FED is supposed to kind of come in and try to stabilize things and try to calm the worries. And there's you know, if when we're talking about the game theory, when we're talking about like the long run and what is the

strategic thinking here? I don't know, right, Like this is one of those where like there's no good choice, right, like which box are we trying to get to while the tariffs are at this height? Like I don't think we're just in a part of a game tree that like I don't know how to resolve it. Well, maybe there's some brilliant economists out there who does. But all the brilliant economists I've been reading have no idea how to get out of this mess. If Trump does not back down.

chat GPT. If you ask chat GPT or other large language models, hey, come up with a quick formula to determine tariff rates. Right, It'll sometimes just say, oh, let's

just look at the trade deficit. This is actually very stupid, Like we have a big trade deficit with Vietnam because they're a kind of lower middle class economy relative to the rest of the world, where fairly productive about producing toys and electronic equipment and you know, and certain types of food stuffs, and there are things which we then import. But the GDP per capita is I'm just gussing, like four thousand bucks a year or something, and so like

not a big market for American made consumer goods. They're also near China, Thailand, Japan, Korea, et cetera, where cheaper to import, right and so like, so like you know, that's a win win the unless you're concerned about unfairly ebor practices, which is usually not the price of the right. Right, that's a win win that they make stuff, We pay for this stuff, We give them jobs. They do not

buy that much of our stuff. But that's okay, right, I mean Trump literally doesn't realize that, like a trade def it's not inherently a bad thing. So it's the clumsiness of that rather than like if you had said we're gonna have fifteen percent tariffs across the board, right, the market would have reacted to that, but not so

negatively as these haphazard things. And by the way, the fact that like this terraffs are these are going to cause us so much pain, give us less leverage beyond a certain point, right, because that it kind of becomes a game of chicken where we have to like prove that we have removed the steering wheel and now can't unflinched. By the way, notwithstanding that they're contradictory rationales. So or you'll see the Peter Navarro fucking idiot types I'm sorry,

Peter Navarro. You know, you'll see idiots like Peter Navarro who are like, we actually need this for America's long term growth or whatever else, and others say no, just

a negotiating ploy right, which are different. One is kind of considering these are bad, but we want to actually lower tariffs, and ones say no, tariffs are gonna be want reshoring of American enterprise will through some kocamane scheme, we will reduce deficits, even though if we go into recessions that entails more spending and worsening the fiscal picture

long term. But it's contradictory and other countries to be like, you know what, fuck you Donald Trump, right, we think that eventually you'll be forced to blink by the market, or eventually by Congress, which does is supposed to have in the constitution authority for tariff policy specifically and for funding the government generally. Now Congress also being idiots like not quite in the same way that per Navarro is, but like has delegated more and more authority to the executive.

It's occurred under both democratic and Republican administrations. Right, And so there are lawsuits to stop Trump's tariffs. I'm not a legal scholar. I don't know whether most of it is legal and some of it violence principles. But Congress does have the power to pass a lot saying stop this. They will ultimately need two thirds majorities because Trump has threatened and I think I believe would detail these threats.

They also need, by the way, to get on the floor in the House, because the floor of the House is more partisan. Right, the House Speaker Mike Johnson doesn't want to put to me on the floor. You have to do what file. It's called a discharge petition where

it takes thirty days. You get to get a bunch of signatures, and then you're required to do that, right, And that usually happens when the opposition party Democrats almost have a majority in the House, but not quite, and then a small number of sanaders or representers rather in the governing party sign on. Then you're forced to like actually take a measure to the floor. Right, and so

that would be at best like three days away. But yeah, the economy goes into a recession, then I don't know, right. People would say it's a high risk, high reward, bet, I'm not sure what the reward is.

going to work. Like. It seems to me like I don't know what has to happen for Congress to actually like get its shit together and be like, no, this is not going to stand.

self sorting. Right, the House leader has not been on board with this, although you know, you did have some races last week, two special elections where Democrats outperformed Trump numbers by about like seventeen points, right, the loss. But these are districts that are extremely red in rural parts of Florida. And so if that's true, then like, you know, look, you'd be talking about like an epic route. I don't want to put numbers on it and then get quoted

or misquoted later on. But like if you're like a business deciding whether you know your restoration hardware, which I mentioned because it's a bougie stock, but also the company was hit hardest the first day after the tarif announcement, right, their supply change is very big.

abdication of reliable American leadership and responsibility. So it's just it's just kind of a mess.

back up and the markets have its back up. And you know, I've rarely seen everyone from maybe there are a few people on the left that have eccentric views about terrorists. They can go discuss some one blue sky.

That's fine with me, right, But like, you know, I haven't seen the kind of what I call the Obama base right, which is like everyone from the center right who is pissed off at Bush to the left as united against something as they are against Trump right now, right, And like those are elites, those aren't rank and file voters. Yet We've seen some decline in Trump's popularity ratings, but like it will take some time for that to cycle through, and maybe they can be averted if we somehow avoid

an economic downturn. But like this weakens Trump's powers a lot. Right, people are willing to go along with a lot when you're providing for them, right, and your checks are cashing and goods are cheap and things like that, Right, even in autocracies, economic crises can topple dictators, right. I think the people who are worried about democratic backsliding are correct to be worried about it. About I think the theory is kind of the opposite of what this is likely to do.

a little bit, so so Trump. I think we've talked about the fact that this it's very difficult to know what the long term game theory of this is and probably none right that he's just taking the economy doing this and kind of inflicting a lot of damage. But what about kind of the the other end of it, Us as consumers or people who actually have power talked

about what Congress can do. But in this case, like obviously, you never, you know, to take a poker analogy, you never want to make decisions when you're tilted right, when you're kind of when you're really upset, when you're suffering big losses. You know, if you're looking at your portfolio going down downtown, you know, these are things that are like, you know, you've lost a big poker hand, your your chips are dwindling, and that's not usually the time to

make big swings and to try to think logically. But in this particular case, like this is one of those things where not panicking and just kind of also sitting back down and just letting it all play out might not be the right strategy either, right, they kind of don't just don't just do something. Stand there types of things. But how do we you know, how do we kind of square that circle? And how do we react without tilting right, without overreacting? How do we try to navigate

this environment where there's just extreme uncertainty? And as I think you're making a really good point when you said, like we don't know, right if we knew for with one hundred percent certainty, these tariffs are going to stay for the next two years at least. Okay, then you can make decisions in that context. But we don't know right Like as of now, we know that Trump says he's not backing down, but we don't actually know what's going to happen. We don't know what the reactions are

going to be. We see certain signs, we see Europe banding together, you know, we see the rest of the world actually trying to figure out what do we do now? But how do you think about it? Right? How do you think about it when you're trying to make your own decisions and try to be a good player as opposed to a tilted player.

good protections. I mean, you know, look, sometimes in a recession things become cheaper at least I mean, it might not be a terrible time in X months to look at housing if you don't own well, because housing is something where people are it's cyclical and like people are you know, really reluctant to make like big ticket purchases and like a downturn and you know, should not be

substantially affected by foreign goods, right. I mean, I'm sure you're importing some building materials from abroad, but like you know, most lumber we're cutting down right here in the United States, Maria, so like, But apart from that, I mean, I think you're like a little bit defenseless, apart from like having to reason with yourself about like, oh am I a person who is annoyed because this cuts into my retirement savings. But I basically can live my life as I want to.

Or if you're someone where like it kind of has causes a threat at short term time horizon is right, if you're a small business owner that relies on imported goods of different kinds, and or middle class customers who are seeing their pocket books pinched. Then like, it's not it's not great right now, right, I mean, probably should shift you to having more of a long term focus, I guess. But the long term provides a lot of uncertainty too.

old American this, the supply chains are incredibly complicated. And you know, the people saying that, oh, well, bring manufacturing to the US, I don't think they realize what that actually means, right, Like, there's a reason that that manufacturing has shifted. I don't think people want a factory in their backyard. I don't think people want to be working

a lot of those factory jobs. I mean, I don't think that those supply chains, and even if all those things are like, yes, absolutely, let's change the supply chains. How long does that take? Right, like in the immediate term? Like that that is not that is not something that we can do right away. So as individuals, like we're relatively powerless, not powerless, but we just there is no good advice in the sense that we don't know what's going to happen. Do you think that there are people

who can do something right? Like, who are the people who might be able to influence something other than Elon Musk? Maybe unless kind of this result in Elon Musk being thrust out of the inner circle because he's subtweeting Trump and talking about how he thinks that we should have free trade. So who are people who might actually make a difference where they're decision making right now actually matters.

I don't know, I don't know. You know, call your fucking congress person, right and say, like, especially if you're somebody who's donated, or if you're somebody who runs a small business in that district, say this is gonna fuck me up. Where this is not going to help the working class, right, this is not going to help the middle income consumer. Yeah, I mean, let you know, let

Congress know. To be honest, I think they probably do know that, frankly, but like because they are aware of what's going on in their district and this is not some abstract cultural warfight. But Congress is responsive to to don't call somebody not in your district, right, Yeah, pick up the phone with the person who's who represents you and let them know how you feel.

And this is one moment where I think that across the board, we're seeing people, you know, people really not happy, and this is I think this is also actually an interesting opportunity to try to reach kind of the everyman and say, look, you know, Trump isn't working for you, because this is something where I think you can actually reach a lot of people across the divide and say, hey, look, no, this is not this is not good for your average American. This is not good for like bottom line of Joe

from from where from Where's Joe from Pennsylvania? Okay, Joe from Pennsylvania. That this is not good for his for his pocket for his bottom line, for his retirement, for his ability to buy food, that that this is just not good all around. And so that might be one silver lining if people actually do finally mobilize and get Congress to get off their ass and do something and stand up to Trump and say, look, these tariffs are not good for the country and not good for the

global economy. And if we want America first. You know, you don't want you don't want to have to have America alone and everyone else against us.