Speaker 1: What's going on? Thank you so much for listening to
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smartphone or tablet, and again, thank you so much for
your support. Let me quote Mary Catherine Hamm who says
she has a trade deficit with Bojangles, and that's not
inherently bad. She buys biscuits from Bojangles. She gives the money.
Bojangles has no need for her podcasting skills, as she says,
Bojangles doesn't require anything that she has except for the money,
So she gives them money. She buys the biscuits. She
is happy with the purchase. Her life life is enriched
by having the biscuit and maybe some chicken. I don't know.
But that's the trade, a voluntary trade that is a
trade deficit for her two Bojangles. Does that mean that
somehow or another Bojanngles needs to be taxed for selling
the food to her that she wants. Right, If you
don't think that the product being sold here has a value,
then don't purchase the product. But Americans do put a
value on lower cost goods like televisions for example. Right,
you can buy a TV for three hundred dollars. It's
nicer than any TV you've ever owned for way more
Americans like that. That improves their standard of living. They
have nicer things, right. I mean that's the idea of
free trade. So and fair trade. Will I should also
point that out too, because it's got to be fair.
And if you're dealing with a country that keeps slapping
tariffs on American imports and you want to make an
argument that they're not behaving fairly, they're keeping us out
of their markets, then yeah, I'm open to having actual
reciprocal tariffs, like if you want to make that specific
of an argument. But all those countries now that that
now have a ten because he Trump put a ten
percent baseline tariff on everybody. So like they're they're like,
there's an island. Have you heard about this? Let me
see here, I'll pull it up here. There is an island,
herd Island and McDonald heard Island and McDonald Islands has
a population of zero they got slapped with tariffs, has
a population of zero and is inhabited only by penguins.
So like, I don't understand why is that one in
the list? How did that one make the list? There
was another one. I forget what it was called. All
it is is a is like eighteen people there and
it's like a weather station facility, and they got hit
with the tariff. And that's the kind of thing that,
you know, when I'm looking at the structure and the
nature of the tariffs, it makes me wonder was this
thing done by AI or something like? How like how
did they figure some of these some of these tariffs?
And then like we have a formula that we used
in order to do this. It was my understanding that
there would be no math, right, and so now I'm
doing math like man, guys. And apparently the formula is
trade deficit divided by imports. That's it. So it's not
looking at currency manipulation. It's not looking at you know,
non tariff protectionism. It's not looking at things that I remember.
The big one years ago was like something about Japanese
baseball bats. Remember this one where they wouldn't allow any
of the Louisville Slugger bats to be sold in Japan.
And they didn't ban them, they didn't tariff them. They
just set specifications for the bats that made the Louisville
Slugger basically unnecessary and unwanted in Japan. And like that's
that's another way that you go about, you know, engaging
in this form of protectionism. So that apparently was not
that's not the accounting it was. They just looked at
the trade deficit between the two countries and then they
divided it by imports and they came up with a
percentage and that's how they and that was the number
they used for the tariff. Like that seems pretty arbitrary.
That's not reciprocal. What are we doing? All right, go
back to the phones here, Steve, Welcome to the show.
Thanks for hanging on. Hey Steve, Hey, I'm good. What's up.
Speaker 2: I'm listening to your arguments. The bow Jangles ones doesn't
make any sense to me. Why not talking about nation
states and not a transaction. When you think of Adam
Smith and what he talked about in the Government thanks Nations.
Speaker 1: It does make sense when trying to when I'm describing
a trade deficit, it is it is analogous. You have
a trade deficit with the restaurant that you're buying.
Speaker 2: Food from, right, Okay, but we're talking about nations now. Overall, Yes,
it's strategic to have manufacturing in the United States. I
understand that because if you can't produce anything, you will.
You can't make tanks one day and you can't make
armaments one day.
Speaker 1: I agree.
Speaker 2: And they've been the globalists have been hollowing out our
country now for fifty years at least, and we don't
make anything here. We have assembly plans. And when you
don't have capital investment in our country, well, there are
jobs created by high value jobs where people can go
out to restaurants to do all those other things because
they're able to make a good coin, and people in
this country are not. People are struggling and what they
spend is wholly due to customer. We say, you know,
like our needs has posed your own ones? Are you know,
we used to be able to travel in things. You
can't do that anymore because most people just have to
support their family and get them fed.
Speaker 1: So how do teariffs? So how do tariffs correct all
of these problems that you've just outlined.
Speaker 2: Well, because we're reassuring our industries, right, So do you
know how I said this earlier?
Speaker 1: We are America is the second largest manufacturing nation on
the planet. We manufacture more than you can disagree, but
it's you'd be incorrect. It is the second largest behind China,
and then the third place is Japan and it's not
even close. So like we we're number two. We also
have about half a million unfilled manufacturing jobs in America
every month.
Speaker 2: I hear what you're saying, But we assembled. We don't
make things hardly anymore. We have what's the difference expensive
made in Canada in Mexico, But what is really produced here?
What what are we doing? We're just putting parts together?
Speaker 1: Yeah, we yeah, we have higher we have higher tech manufacturing.
We have higher we have higher technology manufacturing. Now, if
you want to go back to an assembly line, right
kind of mentality and put everybody on an assembly line
and high or more workers when you don't really need to, right,
that's why I mean, that's the whole point of you
using importing pieces of the stuff that you want to assemble.
You manufacture something someplace else because people don't want those jobs.
It could be done cheaper in a poorer country, like
that kind of thing, and then you import that in,
you assemble it all, you do the high tech assembly
in America, and you pay those people way more money
to do that stuff. So it's sounds, but it sounds
so it sounds like you want to It sounds like
you want to go back to a time where people
were working factory line jobs. Is that it?
Speaker 2: Absolutely, yes, you need that in this country. It's a
strategic advantage. When we were the arsenal of democracy, we
were able to produce. We can't do that now. We
don't have that part of our economy anymore. It's been
hollowed out and shipped off shore.
Speaker 1: But you're talking about so wait, hang on a second,
are you talking about military contry.
Speaker 2: I'm talking about all of it.
Speaker 1: Well, because our military production facilities are all still here
and they're scattered all over the country in important congressional districts.
We're not importing that stuff. We're exporting that stuff.
Speaker 3: Some of it.
Speaker 1: Yeah, So yeah, I'm not that's not persuasive to me.
I appreciate the call, Steve. All Right, So spring is
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do have a bunch of email, or well I have
those two. I have email, I have tweets. I got
some callers, and I have a lot of audio, and
I spent time getting this audio for you people, And
you're gonna listen to No, I'm just kidding. I mean,
if we I mean, if I can, I will in fact, here,
let me do this. This is former US Senator Pat Toomey.
It's a doo me and uh, I don't know anyway.
Listen to his He was at a conference or something
and this was like a month ago.
Speaker 4: Okay, this, I'm afraid he's going to take us down
a bad path. Dominic. I think that we're going to
experience more aggressive tariffs than a lot of people think,
because the president really believes that what he really wants
to go after is the trade deficits what he really
objects to, and from all of my arguments with him,
I'm convinced that he believed, and if you listen to
his language, he believes that if you have a trade
deficit with another country, that is the measure of the
amount that country steals from you. And that of course
disregards that we get something when we purchase products from
other countries. Correct, but this is the way he views it.
He thinks that the Canadians are ripping us off because
we buy some more goods from them then they buy
from us. By the way, the difference is fully explained
by oil imports that are quite useful and important to us.
But this is where we are. We're going to have
to relearn this lesson. I do think the markets are
going to respond very poorly if I'm right. And on
April second, we discover that we're having a more aggressive
round of tariffs that we expect, and then there'll be
fallout in the real economy as well, So at some
point this gets pulled back. I worry about the damage
that's done.
Speaker 1: Right, So that's that's my concern too, is that this
is rooted in a belief that Trump has that if
there is any deficit, that that means we're getting cheated,
and I don't agree with that. I view it as
we are purchasing stuff that another country is making that
we want a lot of. We get those goods and services,
and we are a wealthier nation with more disposable income,
so we are spending more money on those things. You know,
we don't have. We don't we don't grow bananas. Honduras
grows a lot of bananas. We're going to have to
now grow a bunch of bananas. I guess I don't know.
All right, we talked about comparative advantage as well, so
like that's one of these other terms in economics that
like a, Honduras has a better climate for growing bananas
and that's their comparative advantage, and so they stick with
growing bananas and export the bananas and make money off
of the banana sales, right, unless you want to say,
put the Americans into the fields and you know, start
working the banana farms. So all right, let me go
back to the phones. Gary, Welcome to the show. Hey Gary, Hey,
ba hey, yeah, yeah, Yeah, what's up?
Speaker 5: Okay, I have a few things on it. I think one,
Trump's the first person to address what we had happened
through NaSTA and free trade with China. Yeah, and you
did a good job of explaining the difference between free
trade and fair trade because in the reality is, we
exported six million jobs from America from the nineties to
two thousands. We sent them overseas. When we sent them
to we sent child labor and slave wages. So we're
buying cheap electronics made by people either in factories where
they have nets to keep them from killing theirself, or
anytime you have kids.
Speaker 6: You know.
Speaker 5: Now he's the famous example of it. Yeah, of their labor, labor,
abuse of labor overseas. So I think part of it
is addressing that.
Speaker 1: And I'm fine with that, Yeah, I know, and I'm fine. Yeah,
I'm fine with using tariffs as a weapon to get
countries to not use child and slave labor.
Speaker 5: Right. And many people when they say free, free trade,
they never want to address that we export our middle
class and that we're benefiting from labor exploitation of other countries.
They're fine with that as long.
Speaker 2: As they get cheap TVs.
Speaker 5: And I think it was that's it that said let
them eat flat screens. In other words, we're importing cheap
stuff from other countries and it's wative of them. But
where I don't think our middle class and as a whole,
we're better off than we were in the nineties.
Speaker 1: We we we we we do have in total a
higher standard of living. I mean, I think a lot
of people don't realize that. I mean the the average American,
like the I think a poor American has a higher
standard of living than a middle class brit for example,
their own homes and stuff like.
Speaker 5: That's but we did that in the in the nineties also,
and we had less people working multiple jobs. Now you
have people doing uber and you know, door dash and things,
and you want to count that as productivity. But I mean,
are those people doing that because they have to because
they don't have a job that provides for them. But
it's you've been You've been in North Carolina since early
two thousands, so you saw, you know, we our cotton mills,
our country plants, every thing. We destroyed economies in this
state and in South Carolina. And then at the same
time you have the opioid epidemic hitting at the same time.
Speaker 1: Well, I hope you had epidemic hit a little hit
hit about a decade later. But no, I get your point.
I mean this is these are.
Speaker 5: Now in the early two thousands, you started having oxy
cotton everywhere.
Speaker 1: Yeah, but that when And NAFTA was in the early nineties, right.
Speaker 5: Right, But the China, I believe was in the early
two thousands.
Speaker 1: Well, the most Favored nation status for Yeah, Look, you're
not going to get me to defend NAFTA or or
the Chinese trade deals. And look Donald Trump renegotiated NAFTA
and now he's slapping them with more tariffs.
Speaker 5: Right yeah, And I mean his message is muddied. I
think if he was more discipline and he was like, hey,
we're going to do ten percent and we're going to
bring back a percentage of manufacturer because you look at
South Carolina. You look at what BMW's done for South Carolina,
right account with them and everybody else. They transformed that economy.
You have a port, you have an inland port, they
do like five percent of the state's manufacturer and it's
connected to BMW.
Speaker 1: Yeah, I believe it. I believe it. Garret I Carolina. Yeah,
I gotta run great points, sir. I appreciate the call.
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and make memories that'll last a lifetime. Bruce, Welcome to
the program. Hello Bruce, Hi, Hey.
Speaker 3: Yeah, I have experience in a couple of areas on
this I work for the Department of Economic Development in
Iowa and I work for Wells Fargo as ninety person,
and frequently what a Department of Economic Development would do
is give grants to companies to hire people. So many
of the grants, like will Starvogetz, are you come from
the taxpayers, just you know, to give jobs people, which
is a good thing to simulate an economy. But we're
kind of doing this passing the taking the can down
the road. My family also worked in the cotton mills
in Alabama, and I have to know, I'm kind of
sad when I drive through town here, I see a
lot of these cool building, brick buildings that used to
be in the mill community, and that whole industry left.
And then I guess the home decoration, you know, the
furniture business. A lot of that went to China too,
so we lose those. But then we need government money
to come in and give people jobs like a well
Fargo you know, or wherever, and not to I'm just
saying there's something nicked.
Speaker 6: I know.
Speaker 3: It's opportunity, it's lower costs, you know, for labor. It's
it's always playing some kind of game behind the scenes.
And I don't know how long we can keep doing that.
That's that's my point, right.
Speaker 1: So, right, So, the the concept has always been the
proverbial rising tide lifting all boats. Right, That's always been
the idea that if another nation is developing, they don't
have the wealth, but they can do they can do work.
That when we were not a developed nation, that we
were developing, right, that we were growing, and so we
had a lot of low skilled labor jobs. But as
the country became wealthier and wealthier and educate more educated
and all of that, then you have people that don't
want to do the jobs. The jobs don't pay enough
because at the end, right, you've got like let's say
a textile company, they're making T shirts, and if you
have to pay people more than the cost of the
products you're selling, right, you're going to go out of business.
So you have to be able to contain your labor costs.
And if you are in a wealthy society with a
high cost of living and high standard of living, then
that's then going to mean you cannot produce the product
for a price that doesn't bankrupt you. And that's why
you would ship your production into a to another country,
right to make these goods that are low skill, labor
intensive and you can find people that to them, that
is a better uh, that's a better option for them
to take that job than in a country like ours.
Speaker 3: Right, right, And so that would be I think, I
think it would be great if you know, we let's
say we would help Mexico do some manufacture for cheaper labor,
but they wouldn't be sabotaging our country with you know,
the drugs, right and their issues.
Speaker 1: Right, and if you use the tear if Trump is
using the tariffs in order to try to extract concessions
on you know, non economic things like you know, the
war on drugs and the cartels. Again, like I understand
that being a useful tool.
Speaker 2: Yeah.
Speaker 3: The only thing I would say about the kind of
industry though, it's kind of I think it may be
unique in this way. The mom Mom was really proud
of working for the mills. She had little samples of
the cloth they made. The quality was amazing, much better
than the stuff that we get from China. Yeah. But anyway, well,
there's a lot of I have a lot of pride.
I don't know how other people feel they lived in
this area.
Speaker 1: But oh yeah, no, absolutely. I remember when the mill
up in Kannapolis closed and I went up there as
a reporter and you know, spoke with the people that
were up there and like, yeah, and here, but here's
the thing. If the if people purchasing the product don't
care about the high quality of the fabric that they
they're willing to buy something that is of a of
a lower quality. That again, that's the market telling you
that they don't value that kind of quality in a
T shirt. They they're totally fine buying a T shirt
for five bucks that they will wear for a year
or two and then throw away. And you know, you
may personally not like it or object to that and
the wastefulness of it or whatever, but the market is
sending those signals. And the market is you, the market
is me. The market is just all of us deciding
what we wanted any given moment.
Speaker 3: You know, well, I appreciate to me.
Speaker 1: Yeah, thank you, yes, sir, thanks for the call, Bruce,
I appreciate it. So let me play some of these clips.
This is Scott Besson on CNN with Caitlin Collins. He
said Trump has been a proponent of tariffs for a
very long time, and the calculations were determined based on
the tariffs. Other countries have on American goods and services.
Speaker 6: As important or sometimes more importantly? What are the non
tariff barriers? Is their currency manipulation? And is there unfair
subsidy to labor or finance cost?
Speaker 7: Yeah, and when you look at this on the reciprocal
tariffs themselves, how did you come up with the calculation?
Essentially in terms of what this looks like for each country?
Because obviously we're looking at the numbers here, there are
different ones.
Speaker 1: How did I let me just stop right there, just
ask the question. Don't explain all of this stuff, Just
how did you come up with the calculation? That's the question?
And she asked it, and then she's backfilling, giving him
all this time to think about his answer. Just ask
the question and put him on the spot. You'll get
a better see.
Speaker 7: Some of the countries disputing some of these reciprocal terror
saying that's not actually what we charge. What would your
response to that be?
Speaker 6: Well, I can tell you USTR has the volumes of
data and they've been doing it a long time, so
and all this will probably be challenged in court. And
I think that USTR and Trump's first administration won over
four thousand lawsuits so I think the data is very robust.
Speaker 1: Okay. Next up, can nations negotiate on these tariff rates
that are set?
Speaker 6: Well, I think the mindset is let's just see where
we are and then we'll see how President Trump feels.
Speaker 3: About all this.
Speaker 7: Okay. So it's essentially up to President Trump if he's
in the mood to negotiate with some of these ques.
Speaker 6: Well, I mean, it's not the mood, it's how how
are we seeing things. I think the real thing is
going to be and that he's going to gauge the
tariff level by It won't be necessarily to calls from
the leaders. It's going to be the calls from industry saying, okay,
how can we get these off? And he's going to say,
you can get it all. Bring your factory to the US.
Speaker 1: Okay. So there's the repatriation argument to bring the manufacturing back.
Here's another one of my concerns though, is that whenever
you start doing these tariffs, industries, businesses and such they
start clamoring for through lobbyists, through a for relief for exemptions,
and so the big companies and the ones who have
the most power the most access, they get exemptions and
smaller operators do not. That's also part of what happens
with tariffs. All right, if you're listening to this show,
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Back to this interview that Scott Bessen, Treasury Secretary, did
with Caitlin Collins on CNN, and Besson said that when
you've got these other countries that have been doing it
to us for a long time, and he says, if
they're so bad, then why do they do them to us.
Speaker 6: One of the messages that I'd like to get out
tonight is everybody, sit back, take a deep breath, don't
immediately retaliate. Let's see where this goes. Because if you retaliate,
that's how we get.
Speaker 7: Escalation, and then it becomes a full fledged trade war.
Speaker 6: In your view, not a trade war depends on the country.
But remember that the history of trade is we are
the deficit country. The deficit country has an advantage. They
are the surplus countries. The surplus countries traditionally always lose
any kind of a trade escalation. So I, as a
student of economic history or a professor of economic history,
I devise against it.
Speaker 1: Okay, body, just relax. We're putting these massive tariffs on you.
Just don't respond. This is what I mean. Like, the
messaging here is not inspiring confidence. He was then asked
why the global ten percent baseline that's not very targeted.
Speaker 6: Right, go back all the way to Alexander Hamilton. Alexander
Hamilton used them to raise revenue. He used them to
protect the industry. And President Trump is at at the
third leg of the stool, which is strategic. So you know,
if we are thinking about a ten percent global tariff,
and let's assume we we import about three trillion a year,
so that's three hundred billion, and that's a substantial revenue
raiser that could then be used for working Americans on
no tax and tips, no tax on sod security, no
tax on overtime. And for those buying autos they can
and reduce their bills because interest on American made cars
will be tax deductible. So this is really a working
class the tariff and tax plan.
Speaker 1: Yeah, he didn't stick that landing very well. Yeah, I
don't understand, like you're gonna go, okay, so you're going
to know, tax on tips and all these other things,
but the people paying for the tariffs when this stuff
comes into America, they're going to be paying the tariff
because tariffs are taxes, unless, of course, they can get
the the companies to eat those costs, right, those other
companies located outside of America that they're going to have
to absorb the costs, they're going to take lower profits. Right,
So three hundred billion dollars in revenue to the US
government coffers, that's what he says. Who's paying that? We
don't know American consumers. The company that's importing it into America.
Will American company raised their prices to meet the importers prices? Right? Like,
if my competitor is an overseas company and they just
got nailed with a tariff, so now their product coming
into America is more expensive, Can I raise my price
closer to theirs? You know, I'll still keep it a
little bit lower, but I now can get bigger profits. No,
So what does that mean for the consumer that was
getting my product at a lower cost before? Now I'm
raising my price to meet the foreign companies? See what
I mean? This is also complex, And this is the
other part about this kind of approach that worries me,
is that I am a believer in free market capitalism
because it is free, it is you, it is me,
it is us all at the same time, different times,
making all sorts of decisions, sending all sorts of market signals, right,
creative destruction, all of that. And it is the fatal
conceit of bureauets and experts, technocrats, progressives generally that they
can control this stuff. This was the problem with communism,
is the problem with communism and Marxist economies and such
is that they think that they can orchestrate all of
these things from the top down. And that's the beauty
of the free market is that it doesn't require top
down central planners. This is the wisdom of the crowd,
right that everybody together is going to be smarter than
even the smartest guy at the very top that's making
decisions for everybody. They cannot possibly know all of the
inputs for every single purchase. Finally, oh, as more Americans
this is still scot pssent or best and as more
Americans buy goods that are not taxed with these tariffs,
right to avoid the tariff and avoid these products coming
in or the products just don't get imported and we
just don't have access to them. That's the other thing here.
We may not like some things. You just might not
see anymore. I may not be available for purchase in
your local store because the tariffs are too high. But
if people now stop spending the money on those products,
doesn't that reduce revenue to the US government?
Speaker 6: Policy done properly is a shrinking ice cube, because what
will happen. We will start out with high tariff income,
but then as the factories come to the US, we
will have more business income, and we'll have more paycheck
income because American workers will be earning. So you would
see it's a rebalancing, So we rebalance away from tariffs
to more domestic income.
Speaker 1: So that's the idea, or an idea. We'll see if
it works. Great experiment going on here, and we are
all the guinea pigs. Let's see how it turns out.
Let me get to some emails. Robert says, how much
of these problems just go away when manufacturing companies come
back here? Isn't that the goal? I assume that's one
of the goals. But I have heard a lot of
different reasons for these tariffs. And you heard Pat Toomey
talking about his conversations with Donald Trump. Is that he
really just does believe that if there is any kind
of a trade deficit, it means that we're getting ripped off.
And I believe I disagree, and I believe that that
represents a fundamental misunderstanding of trade. I do like that's
because that's not what I gave the equation earlier. If
I go into a restaurant, I buy food, I'm not
getting ripped off. I'm buying something. That's it. The let's see,
Scott says, I didn't want to send you a link,
took a screenshot. These are the tariffs Canada had on
our products before Trump took office, two hundred and fifty
to three hundred percent on dairy products. And that's with
quote free trade. So as I understand it, the the
dairy tariffs kicked in after a certain level. I want
to say, so as to prevent flooding the market, right
and putting the Canadian growers out of business and all that.
And so if you want, and I've said this from
the beginning, if you're going to do actual free trade
agreements and you want reciprocal actually reciprocal trades, like you
tax us ten percent, We're going to tax you ten percent.
That's fair, right, But the figures that we have seen
and how they arrived at the numbers that they threw
out there yesterday does not seem reciprocal. The people who
have been crunching these numbers over the last sixteen hours,
they're like, this number is based on the defici, the
trade deficit divided by imports. It's like, that's not how
you would determine what the tariffs actually are. And this
gets very complex because you've got, like you say, you've
got you've got dairy, you got lumber, you got all
these different sectors that have different tariffs all over them.
That's not for everything, right, We're selling stuff in there
that is duty free, and they're selling stuff into us
that's duty free. But then there are other things that aren't.
So a global universal ten percent plus an additional twenty
percent or whatever it is that's not targeted. You know,
that's another that's another problem. Companies and countries move means
of production around the world. Tariffs must be anticipatory, says Bob,
and Seth says Pete. You can't trust people regarding the
tariffs on that Penguin island. You can't trust people that
wear tuxedos twenty four to seven. Trust me if I can. Okay,
let's see here, this is hang on. Kevin says, this
tariff move is meant to get other countries to drop
their tariffs and get US goods into other countries, thereby
spurring US industry. I'm ninety percent sure this is a
genuine move, because if it's not, it becomes a tax
on the poor and the sixty percent of US consumers
living paycheck to paycheck. The wealthy can deal with price increases,
but many more cannot deal with even a ten percent
increase in the cost of living. Yeah. Again, I said
this in the first hour, and if you're just tuning in,
you didn't hear it, which is I don't know how
this is going to shake out. I recognize my bias
is opposition to tariffs, because that has been the conventional wisdom,
the understanding of economists and everyone has been pretty much
in agreement that these things are like the smooth Hally
Act terr effect from nineteen thirty it was like, that's
the or thirty seven whatever. It was, catastrophic, prolonged, the
Great Depression reduces global trade, and in and of itself,
as a me if it's the end in and of itself,
like that's not a good thing. But if we're going
to run an experiment to find out is that really
the case. Well, we're gonna find out. That's what I
said from the very beginning. My bias is to be
very concerned at what I am seeing with the tariffs
and in the way that they've been conjured and the way
they've been applied, because the risks seem to be very,
very large. But if you can make them beneficial, if
you can extract concessions and turn this thing into a
positive for America, then okay, I will start thinking about
tariffs in a brand new way. All right. That'll do
it for this episode. Thank you so much for listening.
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