In this episode, Lisa and policy expert EJ Antoni delve into President Trump's tariff strategy, examining its motivations and implications for American workers and consumers. Lisa expresses uncertainty about the effectiveness of these policies amidst a chaotic economic landscape. EJ provides insights into the complexities of reciprocal tariffs, the challenges of American manufacturing, and the broader economic consequences. The Truth with Lisa Boothe is part of the Clay Travis & Buck Sexton Podcast Network - new episodes debut every Tuesday & Thursday.
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Episode Transcript
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Speaker 1 (00:00):
All right, So for today, we're going to dig in
to President Trump's tariff strategy. We'll explore what's driving these policies,
how the markets are reacting, and what they mean for
American workers and consumers. We're going to talk about the
potential for price hikes. What do we need to know
about that? Also some of these mixed messages, some of
(00:21):
these mixed signals. Think about you know, Peter Deavarro sort
of worse Elon Musk and I want to pack what
President Trump's goals are, What does he want at the
end of all this?
Speaker 2 (00:32):
What's the objective here?
Speaker 1 (00:33):
So to do all this today, We're going to talk
to EJ. And Tony.
Speaker 2 (00:36):
We fought him on the show a bunch.
Speaker 1 (00:38):
Really smart guy. We've talked about tariffs with him before
as well. So I just want to have a nuanced, broad,
unbiased conversation. If I'm being perfectly honest, I don't know
what the right strategy is here. I understand President Trump's
long term objectives with wanting to try to bring manufacturing
back home here, you know, these reciprocal tariffs, wanting to
(01:00):
feel like we're being taken advantage of by other countries,
wanting more fair trade practices. All of that makes sense
to me.
Speaker 2 (01:06):
Is this the way to do it?
Speaker 1 (01:07):
Though?
Speaker 2 (01:08):
I don't know.
Speaker 1 (01:09):
So we're going to lean on policy experts like EJ
and Tony to walk us through this and to try
to dig in and to figure out what's going on,
what matters, and where is this all heading. So stay
tuned for EJ and TONI.
Speaker 2 (01:28):
All right, EJ.
Speaker 1 (01:30):
I was just telling you I don't know what the
hell is going on, and a lot of really smart
people I tend to look to and towards for economic
advice are all over the place and are all saying
different things. So it seems right now that we've just
got a lot of chaos and everyone's trying to figure
out what's going on and where this thing is heading.
(01:51):
So let's just kind of start I just want to
have sort of a broader balance, just kind of try
to figure out what's going on and where this thing
is heading to the best of our ability. I guess,
so far, what do you make of President Trump's tariff
strategy so far? Let's kind of just start from there
big picture?
Speaker 3 (02:10):
Sure, well, Lisa, I mean, the reason why it feels
so chaotic is because it is right you know, what
did the president promise us. He promised us reciprocal tariff.
So let's I guess, let's get our definitions down. What
does that even mean. Essentially, it's a kind of economic
golden rule where you hold up a mirror to other
countries and you say, look, you have all of these
(02:30):
tariffs and also non tariff barriers in place that are
making it difficult or impossible for our exporters and for
our American workers to sell stuff in your country, and
that hurts our workers and that's not good. So much
of what we've seen for decades now around the world
that has been labeled as free trade is really just
a kind of unilateral free trade where other nations have
(02:53):
access to the American consumer market, which is great for
our consumers.
Speaker 4 (02:57):
Don't get me wrong.
Speaker 3 (02:58):
That is great because it means that we can buy
cheaper stuff and we have more money left over to
buy more things.
Speaker 4 (03:04):
So that's good.
Speaker 3 (03:05):
But the problem is those other nations LISA haven't given
us the same courtesy where our producers have access to
their consumer markets, and so that has locked out a
lot of American companies where they can't compete overseas, and
it's forced plenty of them out of business. It's helped
create what we call the rust belt, and it's helped
not only reduce employment here at home, but also reduce
(03:28):
real wage growth. All of those are very real effects,
and you can't dismiss them. At the same time, they're
not the primary cause. The main reason why we have
a rust belt today is because of over taxing and overregulation.
That's been the real killer of American manufacturing. So it's
not as if trade is the number one problem facing
the American worker. And it's not as if these unfair
(03:51):
trade practices are the number one reason why we have
essentially why we have the rust belt. The number one cause,
again has to do with mistakes our government has made
here at home, not necessarily mistakes that other governments have
made abroad. Now, again that's not to dismiss the issues
with unfair trade practices. Canada makes it so difficult for
(04:15):
our dairy farmers and our factory workers to get things
like cheese or automotive parts into Canadian markets that it's
actually easier for many of our exporters, Lisa, if you
can believe this, it's easier for them to sell their
stuff in Russia than it is in Canada today.
Speaker 4 (04:31):
I mean, that's obscene.
Speaker 3 (04:32):
We're told that Canada is a friend and ally you
know there are friendly neighbor to the north, except they
have severe penalties in place. And so what happened was
the President said, look, we're gonna have reciprocal tariffs, and
we're going to use that as a negotiating tool to
force other countries to get rid of their tariff and
non tariff barriers, whether that's quotas or currency manipulation, or
(04:55):
in the case of China, that would also include things
like utilization of slave labor or subsidiz of industry where
they can then dump artificially cheap products in foreign markets
and force those foreign companies out of business, whatever the
case may be. So we're going to say, all right, Canada,
you either drop your tariff and non tariff barriers or
we're going to put these huge tariffs to match on
(05:17):
your producers, on your exporters. They're trying to get stuff
here to the United States. And the whole reason why
this tariff announcement was delayed until April second was because
we were told the Commerce Department needs time to figure
out the math here, right, and they need time to calculate,
all right, what is the equivalent tariff to all of
the tariff and non tariff barriers other countries put in place.
(05:40):
Because that's something that's honestly least a very very difficult
to calculate for a couple of reasons. You know, when
you put a quota in place and you say you're
only allowed to import this amount of dairy into our country, well,
how much dairy would we import if that were not
in place? That's difficult to figure out. Also difficult is
all the survivors bias. In other words, if if a
(06:02):
country were to impose, let's say, a ten percent tariff
and therefore absolutely none of a certain product could be
sold by American manufacturers in another country. If you do
the math and you say, all right, how much are
American manufacturers paying in that tariff? Well, none, right, because
none of their product is subject to it because they
can't sell any So you have certain things that you
(06:24):
need to account for. Again, it's very cunsteded, and it
made sense that it would take them so long to
calculate it, I guess, you know.
Speaker 1 (06:31):
And the math's been called in a question which you know,
I don't know if that's fair or not, it probably
isn't given the fact that, you know, we've got a
media that isn't honest, and a lot of the experts
over the years have proven to not be experts, and so,
you know, I think that's part of why we're sortive
in this era of confusion, because you know, very few
people have been honest over the years. And you know, admittedly,
(06:54):
you know, Trump's been right more than the experts have been,
so you know, you want to give deference there with that.
Speaker 3 (07:00):
But that's a big that's a big part of the problem, Lisa,
has been the math that you know, the whole reason
again why we had to wait till April second, was
supposedly to get the math in order, and then they
show us the math, and it turns out they basically
made up the numbers. You know, when they first announced
this ten percent baseline tariff, the futures markets for stocks
(07:21):
initially rallied about one point five percent, and then they
show these charts with all these crazy tariff rates that
have no semblance of any relationship to reality, and that's
when futures tumbled and the markets have been down ever
since then. The problem is they didn't even actually look
at tariff and non tariff barriers like they told us
they were going to. We were promised reciprocal tariffs, and
(07:44):
that's not what they delivered the Trump administration. I'm not
saying this is the president's fault. It was someone under
him obviously who did this report. But whoever it was
who compiled this gave us a bunch of phony numbers.
They literally just looked at the trade deficit and they
didn't even include services. They only included products, And so
they gave us these these phony bologny numbers again that
(08:06):
have nothing to do with the country's tariff and non
tariff barriers. So this isn't even an argument of are
you for reciprocal trade or not? Are you for a
free trade or not? This is an argument of are
you for basic math or not?
Speaker 1 (08:20):
You know, I guess the way my mind works is
I'm okay with like a little bit of chaos if
I know there's a strategy, if there's sort of like
a plan, if there's an outline, if it's you know,
like that's why you know, I've been sort of against
with what's going on in Ukraine and giving them all
this money because there's no, what's the long term plan?
Speaker 2 (08:38):
Like can they win? What's you know?
Speaker 4 (08:40):
Like I don't like just questions, yeah.
Speaker 2 (08:42):
Yeah, yeah.
Speaker 1 (08:42):
And so right now with this, it's sort of like
what is the objective of the White House?
Speaker 2 (08:48):
Do we know that? Like? What's the end goal here?
Speaker 3 (08:51):
So, Lisa, that what you just put your finger on
is exactly the reason why financial markets are seeing such
insane volatile why stocks are going up and down, why
yields are going up and down, even gold things that
would you know, typically be considered safe haven assets. Everything
is just an absolute turmoil right now because the goalposts
(09:11):
keep moving, and you have folks, whether it's the Commerce
Secretary or we have Peter Navarro or other people, they
come out and they say one thing, and then later
they say something else, and they contradict themselves or they
contradict each other, and so we can't get a sense
of what exactly.
Speaker 4 (09:28):
Are they after.
Speaker 3 (09:29):
Do they really want free and fair trade or do
they want to get rid of the trade deficit? You know,
you can't and another thing, Lisa, you can't say simultaneously
certain things like tariffs are going to bring in all
of this revenue, but we're also not going to see
any additional cost to the American consumer, and we're also
(09:50):
going to see this huge incentive to build stuff here.
Well why, I mean, if these costs aren't really going
to be borne by anybody, then what's the incentive to
move production here?
Speaker 4 (10:02):
Right?
Speaker 3 (10:02):
If American consumers have a choice of alternatives, then the
only reason they would choose the American alternative is if
the foreign alternative gets more expensive. So there's just there's
too many things that are, too many messaging points, too
many talking points that are contradicting each other from the administration,
and so people can't get a sense of what the
(10:22):
end goal is because if we at least had that,
we would know where Trump was going eventually. But again,
there's just so much chaos right now, and there's so
much moving of the goalposts. We're having a hard time figuring.
Speaker 4 (10:34):
It all out.
Speaker 1 (10:35):
Yeah, and you've got you know, people like Peter Navarro
and Elon Musk at each other's throats as well, you know,
putting out different messages. Yeah, I mean, I understand the
concept of wanting to bring manufacturing home, and I understand
that this was a pivotal part of America first, and
like we even saw it during COVID with China threatening,
(10:56):
you know, to withhold pharmaceuticals from the United States, like
we don't want to be leaning on enemy nations like
China or antibiotics and things like that. So I mean,
I understand the benefit in the need to have a
strong manufacturing base here in the United States.
Speaker 2 (11:13):
Does this you know?
Speaker 1 (11:14):
And I can see how like NAFTA pushed manufacturers over
to Mexico because labor was much cheaper for them, or
I could see how China is entry in the World
Trade Organization moved a lot of cheap goods into the
United States.
Speaker 2 (11:27):
Does this get us to.
Speaker 1 (11:29):
A point where manufacturing is beefed up in the United States.
Speaker 3 (11:36):
That's a very very good question, and it's going to
depend on whether or not the administration and also Congress
can get a lot of other things across the finish line.
I think part of part of the reason why we're
seeing so much pain in markets right now is also
the fact that we've done things a little bit out
of order. In my opinion, Lisa, you know what would
(11:56):
have been I think better is if we got the
tax cut across the finish if we saw much more deregulation,
if we saw much more, much more of a push
to increase energy production and maybe most importantly, huge cuts
in spending. You know, right now, the Doge boys have
done a great job with highlighting a lot of abuse
(12:17):
and corruption and fraud and waste. And we've made some cuts,
but we need massive cuts. So basically what the Trump
administration has done here, and again it's not all their
fault because Congress has been seriously delayed in you know,
in getting the tax cut, you know, in getting that
bill through. But whatever the case, we have basically taken
a middle class that was already drowning and thrown them
(12:38):
an anchor before we actually built them a boat. And
now the result is that we're all on pins and
needles to wait and see can they get their act together,
both the administration and Congress, to get all these other
things across the finish line. Because it's not as if
tariffs are some kind of silver bullet. It's not as
if tariffs alone are going to bring back manufacturing. It's
(12:59):
not as if tariffs are going to rebuild Youngstown and
Gary and Detroit. We need a lot of other pieces
to fall into place for tariffs to actually be effective. Otherwise,
if all we get are the tariffs. Then it basically
is just going to be a tax increase and there's
not going to be many positive effects that come from it. Again,
(13:21):
how we started the conversation, Lisa was describing that what
has really created the rust belt has not just been
bad trade policies.
Speaker 4 (13:28):
Has that contributed? Yes?
Speaker 3 (13:30):
Is that the primary cause? No, the primary cause is
all the excess taxation, regulation and spending by our own government.
Speaker 4 (13:40):
So that has to change.
Speaker 1 (13:41):
I want to tell you a little bit about a
skincare company named Genusel about its origins. It's a great story,
it's heartwarming, and most importantly, it's true.
Speaker 2 (13:52):
So picture this.
Speaker 1 (13:53):
A lady named Philis walks into the neighborhood pharmacy in Colonia,
New Jersey, and she asked the pharmacist for an antioxidant
cream for her wrinkles. Now, the pharmacist tells her, look, Phyllis,
I don't have exactly what you're looking for right now,
but let me compound one for you. Come back tomorrow.
Phillis picks up the cream. She goes on to use
it for three days. She goes to a dermatologists appointment,
and the dermatologist, just by looking her thinks that you
(14:16):
know what, Phillis has probably had some work done, but Jen,
she'd just been using this cream. So Philis then goes
on to tell everyone, everyone about the pharmacy, about the
pharmacist who makes this magical cream that helped her wrinkles.
And that's it, believe it or not. That's how Genucell's
Skincare was born. And that was twenty five years ago.
(14:36):
Jeniucell since then has shipped millions of orders.
Speaker 2 (14:39):
Yet they still have that same.
Speaker 1 (14:40):
Philosophy, the same philosophy of antioxidants, the same natural base,
the same chiff in the kitchen type philosophy. And now
celebrating twenty five years later, Genucell is offering the best
pricing since phil has walked into Georgia's pharmacy. Right now,
you can save over seventy percent off Genucell's complete skincare package,
featuring things like the genus Cell under eye Bags and
(15:02):
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give you immediate effects for results in minutes. I mean,
look five, ten, even fifteen years younger guaranteed or your
money back. Go to genusl dot com slash Lisa. That's
genusl dot com slash Lisa. Every order includes free shipping,
and you can use Lisa l I s A at
(15:24):
checkout for an extra discount. That's GENUSLL dot com slash Lisa.
That's Genus L G E n U s E L
dot com slash Lisa. You look at some of the
promises made on the campaign trail, and he did promise
to bring manufacturing back, and so I think it's noble
(15:45):
that he is following through on his promises, like you
know a few politicians do these days. But he also
promised to drive down cost and so you know, I
do worry about what impact this has on inflation and
has on you know, the cost of goods if that's
passed down to consumers through these you know companies, uh,
(16:05):
you know, feeling the brunt of it. And then also,
you know, I agree with wanting to help the American worker,
but like if the economy crashes, you know, no one's
helped from it. So I mean, you know, what, what
what do you think the ultimate impact of this all
will be on the American tax payer?
Speaker 4 (16:23):
Great?
Speaker 3 (16:24):
Great question, Lisa, you know, and this goes to this
goes to I think some of the people who are
you know who are very pro Trump right and support
his agenda, and I do too. I just think that
we need some tweaks to the methodology here. But you
have a lot of folks who are cheering on the
collapse and oil prices right now without thinking, hey, why
(16:45):
are prices collapsing. It's not because regulation is down and
so it's cheaper for these folks to produce and bring
their product to market, so they can bring more of
it to market, and that increase in production and competition
is driving down prices and that will eventually drive down
prices at the gas pump. That's all great, but that's
not what's happening right now. Everyone is panicking that we're
going to have a severe recession, and so they're anticipating
(17:09):
much less oil being sold and much less oil being produced,
not more, and so you're seeing some of these big
swings in markets right now, and again it's not a
sign necessarily of good things. It's a sign of bad things.
This is where we need to be careful of assessing
not just what is happening, but figuring out why are
(17:30):
things happening. And it speaks to the fact that you
can't just be an ideologue here and say tariffs are
always in everywhere good or tariffs are always in everywhere bad.
It needs we need a much more intellectually rigorous analysis
in order to answer questions like the one you just asked,
What does this mean for the American taxpayer? If all
(17:50):
we get are these massive tariffs in a trade war
without getting all of the other things I mentioned, the
pro growth policies, the supply side policies, if those things
aren't put in place, then it means a recession. It
means blowing out the deficit even more. It's already two
trillion dollars a year. It'll get worse because tax revenues.
Tax receipts to the treasury are going to go down,
(18:12):
but expenses are going to go up because in a recession,
the tax based shrinks and so you get less tax revenue.
At the same time, more people become dependent on social
services as they lose their job, for example. And that's
particularly true right now, Lisa, because of the very terrible
economy frankly that was left to Trump by the Biden administration,
(18:34):
where you have a record amount of consumer debt. You've
already seen delinquencies, for example, start to go up on
mortgage payments. That traditionally is something that only happens as
people start to lose their jobs as unemployment goes up.
But what we've seen under Biden was even though unemployment
stayed low, people still weren't able to afford their mortgage
payments because they were spending all their money on groceries
(18:56):
or their transportation costs, or insurance, whatever the case may be.
So the economy was already in a fragile position. And again,
if you don't get those those supply side policies, that
those pro growth policies in place, it's going to mean
a lot of pain for the American taxpayer. And you
have to wonder, is the Federal Reserve going to come
(19:17):
to the rescue again in the form of buying government
debt and printing money, which is going to set us
off on the inflation rollercoaster all over again, which again
that's another sign of pain for the American tax payer.
Speaker 1 (19:29):
And you know, look, I'm trying to enter this conversation
with humility because this is not my beat. I'm not
an expert in this. And also, you know, there are
questions about, like are the markets overreacting to this is
the media overreacting to this? I mean, because we've seen
we saw big dips under the Biden administration as well.
You know, we saw the clients and you know, I
(19:51):
think it was the s and P five hundred dropped
to thirty or three thy six hundred and sixty six.
By October twelve, twenty twenty two, we saw a decline
about twenty three poin point six percent. So we've seen
dips under the Biden administration as well. So it's like,
how is this different than that? And like why, you know,
are we over you know, are we unnecessarily.
Speaker 2 (20:11):
Overreacting right now? Or the market's over you.
Speaker 1 (20:13):
Know, unnecessarily overreacting right now. I guess you know, I'm
also trying to figure that out.
Speaker 3 (20:18):
At least those are great, great questions and a lot
of a lot of what you have to remember.
Speaker 4 (20:24):
Well, let me put it this way.
Speaker 3 (20:25):
I think the most important piece of context is the
fact that when we look at things like stock markets,
we're trying to predict the future, and nobody's got a
crystal ball. So you know, you're always even if you
have clear signs out of Washington, you're always going to
have some degree of volatility. You're always going to have
markets going up and down, and sometimes you will get
big moves because nobody knows the future. And what ultimately
(20:48):
justifies stock prices are the future earnings of companies, and
so once those future earnings finally roll around, then we
decide whether or not those stock prices were justified. But
at that point it doesn't matter because now you're looking
at the new future earnings that are going to be
coming down the pike, So again you're dealing with the future,
so you're automatically dealing with a certain level of uncertainty.
(21:10):
The question of whether or not markets are overreacting has
to do with whether or not you believe that a
lot of things are already priced in. In other words,
what is the probability of recession today? Have the market
sufficiently priced that in? And if you believe that they
have not priced in sufficiently a high probability of recession,
(21:32):
then you sell. And if you think they're pricing in
too much of a probability, then you buy. And that
may sound like an oversimplification, but that's fundamentally what's going
on here. And the market is made up of literally
billions of participants from around the world. Who are all
trying to figure this out together, and so the prices
(21:53):
that we're seeing, you could say, are the collective wisdom
or lack of wisdom of all of those market participants. Unfortunately,
I think at this point there is probably still more
room to the downside. That's not financial advice, that's just
simply you know, my opinion. I think there is a
ton of volatility that still needs to be sorted out.
(22:15):
We are still looking for direction in terms of not
just what the administration Washington is going to do, but
how foreign governments are going to respond.
Speaker 4 (22:24):
As soon as.
Speaker 3 (22:24):
You're talking about reciprocity, you're immediately talking about an added
degree of volatility, because it's not just a matter of
what is Trump going to do, it's a matter of,
you know, what is the president of Mexico going to do?
What is the president in China going to do? What
is the governor in Canada going to do? What is
Vladimir Putin and Russia going to do?
Speaker 4 (22:44):
Et cetera.
Speaker 1 (22:46):
Well, you know, I mean I look at pulling sort
of me I look at the stock market's a little
bit like pulling, you know, which is you know, that's
more my background of politics and pulling where it's sort
of like a snapshot in time, and as you pointed out,
sort of like of trying to predict where we're going
with things. You know, I've heard a lot of people say,
(23:08):
you know, look, Americans just kind of need to take
this on the chin, you know, uh, long term gain
for short term pain, and and I understand that to
a degree, but I don't think we should discredit the
fact that you know, look, there are a lot of
elderly people who have a lot of money tied up
in the markets right now, and they might not be
super wealthy, and you know, they're worried about their retirements
(23:30):
and or they want to retire and they might.
Speaker 2 (23:31):
Not be able to.
Speaker 1 (23:32):
And so you know, I guess, you know, I guess
in all of this, and you know, in every different direction.
And I appreciate the balance that you're bringing this conversation,
but I kind of wish that that's where the conversation
would remain. Everywhere is just trying to, you know, sort
of have a broader, more balanced viewpoint on all of this,
(23:52):
because there are people suffering, and I don't think that
should be dismissed exactly.
Speaker 3 (23:56):
Lisa, that's a great great point. Just as we should
not just miss the plight of the folks in the
Rust belt who have lost their jobs over the course
of several decades, now we also should not dismiss the
plight of people who have money in the market like
in retirement. I personally know probably half a dozen people
now who were planning on retiring in the very near future,
(24:19):
one of whom was literally planning on retiring this year
and now can't because of how much they've lost in
financial markets. So, you know, and we can debate the
wisdom of whether or not they should have had money
in equities so close to retirement, but frankly, fixed income
took such a toweling under Biden that a lot of
folks were forced to get out of that and get
(24:39):
forced back into equities. So we don't want to be
dismissive of anyone's financial pain. Again, doesn't matter if it's
because they lost their job or it's because they lost
their shirt in the marketplace. And it's really disturbingly so
when I hear people on our side, allegedly on our side,
who are cheering on the market decline and are saying
(25:00):
things like it's about time Wall Street, Uh, you know,
took one on the chin or felt some pain. I
don't want anybody to feel pain. This whole idea of
you know, of class warfare, that's a Marxist talking point.
We don't need Wall Street to go down in order
for Main Street to go up. The only the only
one that needs to go down is K Street. It's
(25:21):
the lobbyists in d C who are who are frankly
hurting a lot of Wall Street and all of Main Street.
Those are the folks that that I want to see, uh,
you know, not do well, because it's only when it's
only by taking from Main Street, by taking from Wall Street,
that Washington does well, that K Street does well, you know,
the lobbying. So look, at the end of the day,
(25:42):
if Main Street is doing well, Wall Street will too.
There's no reason why they have to be opposed. What
we saw under Biden, though, was a huge wave of
inflation that caused everything to get more expensive. So yes,
your Groceri's got more expensive. They went up in price,
your rent, your rent that went up in price, Your
insurance went up in price. You know what else went
(26:03):
up in price, home prices, they went through, the roof
equities went up in price. A lot of the gains
that we've seen in the market for several years now
have simply been inflation. It has been the dollar going
down that has driven up stock prices, not entirely, but
that's been a large portion of it. So Wall Street
does better a lot of times in periods of rapid
(26:25):
inflation because all of these assets appreciate in price. That
means that Main Street really really takes it on the chin,
but Wall Street can ride it out a lot of times.
Speaker 4 (26:35):
I don't want that.
Speaker 3 (26:37):
I want Wall Street to go up because people on
Main Street are getting bigger paychecks that can buy more,
and when they can buy more, corporations do better, and
that's causing corporate our names to go up. That's a
much better alternative, and that's traditionally how this country has
grown as compared to simply inflating up corporate profits. So again,
(26:58):
this economic restructuring that they're aiming for and that the
Treasury Secretary Scott Besson has talked about a lot, is
about building the economy for Main Street and the trickle up,
if you will, going to Waltall Street as opposed to
hyper fixating on Wall Street and using methods like inflation
(27:18):
to artificially boost corporations by and to be fair.
Speaker 1 (27:22):
Like I got so angry during COVID, like I refuse
to do the whole like we're all in this together,
because we weren't, you know, And I thought that was
the biggest BS talking link. So you had all these
people and what you know, people like Martin colder If
and a lot of these guys came on my podcast
calling the laptop class because you had a lot of
these people who were totally they weren't impacted at all
during COVID. They had their jobs, they could work from home,
(27:44):
and then you had like small businesses and the middle
class suffering.
Speaker 2 (27:48):
And I thought that was such BS.
Speaker 1 (27:49):
I would refuse to say we're all in this together,
and said it was like the biggest bunch of BS.
So it's like I just I want, you know, rising
tide to lift all boats. I want everyone to do
well in the economy. I want a strong, robust to
a mayor, I do believe, and having a strong manufacturing
base here in the United States of producing our own goods,
being self reliant. But I don't want Americans to be
(28:10):
punished in the process.
Speaker 2 (28:14):
I guess you know how do, Like, what's the path
forward here?
Speaker 1 (28:17):
Like, how how can we build a stronger main street America,
stronger middle class and the middle class by the way,
I also got gutted during COVID because of lockdowns, because
of all those you know, the punishment that they had
to endure during all of that with you know, lockdowns
and draconian policies. So I guess, how do we build
(28:37):
a stronger middle class and have a policy where you know,
a rising tide lifts all boats.
Speaker 2 (28:43):
Very long winded way to get to the question, but.
Speaker 4 (28:47):
Well, at least it's a great question.
Speaker 3 (28:49):
And your entire analysis of of COVID and what happened
there was spot on you.
Speaker 4 (28:53):
You're absolutely right.
Speaker 3 (28:54):
That was another case where we gutted the middle class,
you know, for the benefit of a handful of people.
You know, some of that was Wall Street Shore, but
we forced every mom and pop store in the country
to close down and said everyone now has to go
shop at Walmart. You know those stores can stay open.
Speaker 4 (29:08):
Right.
Speaker 3 (29:08):
Well, wait, wouldn't it be better if we were all
dispersed among a lot of different stores instead of all
being crowded into the same location whatever. So much for
following the science but so your analysis is right, and
it's a great question. Here's the answer. What really truly
afflicts us are all things that we've done to ourselves.
(29:29):
In other words, if you get rid of the bad
public policies that have caused these self inflicted wounds, the
effects of all the bad policies will go away. So
what does that look like? It means again, massive deregulation.
You know, people think that the manufacturing sector the big
thing hurting us right now is competition from overseas.
Speaker 4 (29:50):
I mean yes and no.
Speaker 3 (29:52):
Yes, and so far as people can make stuff cheaper
than we can hear, but why is that? You know,
the American worker has three times more capital at his
fingertips than his Chinese counterpart. In other words, instead of
putting together something with hand tools, the American worker has
power tools. He should be much more productive, and even
though he gets paid a lot more than his Chinese counterpart,
(30:13):
he should still be competitive. He's not because of the
regulatory burden that he faces. So, Lisa, let's say the
typical manufacturing employee in this country makes like fifty or
sixty thousand dollars. The average regulatory burden that the manufacturer,
the employer faces is like another fifty or sixty thousand
(30:33):
dollars a year, So in terms of the cost to
employ this person, it could easily be twice as much
as the person's salary. And that's before we even start
talking about any kind.
Speaker 4 (30:44):
Of benefits package.
Speaker 3 (30:45):
That's a huge regulatory burden that has made it cost
ineffective to employ people here and to build stuff here,
and that's been a big reason why we've had to
drive manufacturing overseas. Now, on top of that, we have
other things like the fact that we treat for tax purposes,
we treat things differently if they were made overseas versus
(31:06):
made here, which is just absolutely stupid. We literally are
giving a tax advantage to someone who shifts their factory
over to Mexico. So that's a great reason why you
should have something like a border adjustment tax instead of
this flat ten percent tariff. You would have essentially you
would tax imports but tax exempt exports, so that things
(31:27):
are only getting taxed once and you're getting rid of
the artificial tax advantage that you've created by making stuff
in a factory in Mexico, let's say, instead of in Michigan.
So getting rid of the regulatory burden, getting rid of
these crazy tax differentials, also getting overall tax rates back down.
That would be huge. But in order to do a
(31:48):
lot of that, you got to get the government spending down.
I mean, at one point we actually financed all of
our government spending Lisa just with tariff and it'd be
great to get back there, but you'd have to cut
the government down from about twenty percent. But if you
really want to get income taxes down, which is what
(32:11):
we need to supercharge growth, you got to cut government spending.
I mean, there are other policies that we can do
that would really help boost growth and help lower costs.
Speaker 4 (32:21):
Here.
Speaker 3 (32:22):
Energy production is a key part of that. Energy is
a ubiquitous input throughout the economy. It goes into everything
we do and everything we buy. So if you reduce
its cost, you reduce costs literally everywhere. And if you
can increase domestic energy production, I'm talking actual energy here,
not things like solar and wind that are net losers,
(32:42):
but actual net generators of energy. That's coal, that's oil,
that's natural gas. If you can do all of that,
you will drive down prices. You will have an anti
inflationary effect, a deflationary effect that will be very positive
on growth. It'll help increase really incomes, not just nominal incomes.
That is the recipe for restoring the middle class, not
(33:05):
you know, some kind of class war where we go
after Wall Street and try to redistribute income. Not something
where we try to create an economic autarchy here in
this nation and we try to shut out foreign competition.
I have every faith that the American worker and that
American businesses can compete on the world stage if we
give them a level playing field. And it's not just
(33:28):
a level playing field in terms of tariffs, it's a
level playing field in terms of taxes and regulation here
at home.
Speaker 1 (33:34):
You've got to take a quick break more with EJ
on the other side, you know, before we go just
you know, I know the president's all about leverage, and
you know he tends to kind of he talks about
this in the art of the deal sort of you know,
you pick a more extreme position to move the other
(33:56):
side to, you know, something that you're okay with a more.
Speaker 2 (34:02):
More acceptable position.
Speaker 1 (34:05):
How much of not laying out sort of clear desires
and clear goal points is that a negotiation strategy or
do you think they're just still trying to figure out
what exactly they want from this.
Speaker 3 (34:18):
I unfortunately, I think some of it is they're they're
trying to figure out what they want. But I think
you also might have too many cooks in the kitchen,
so you have different people saying they want different things,
and it's creating more uncertainty, not less. You know, I
think the art of the deal component here is essentially
you know, the whole reciprocity argument, right, it's saying to countries, look,
(34:42):
you know, we're gonna do to you what you do
to us. But I'm I'm I'm very generous. This is
Trump here, I'm very generous, right, I will reduce all
of these tariffs if you if you reduce your trade
barriers as well. The problem with this kind of ra approach,
where you have no idea where these tariff rates come from,
(35:05):
you have no idea what the goals are, is that
it makes it difficult for other countries to even come
to the negotiating table in the first place. In other words,
Canada doesn't know what they're supposed to do. We're hearing
it's about tariffs, but then we're hearing it it's not
about tariffs, it's about trade. Deficits, and then we're hearing
it's about national security, and maybe it's about a little
(35:25):
bit of all of those things. But then we need
that to find, you know, we need to hear from
this administration these specific products it's important for us that
we make them here. Or maybe it's important for us
that we have a certain percentage of our microchip production
made here. It's important for us that we have a
certain percentage of our aluminum and steel production made here.
(35:47):
Let's get that, Let's get that out there. Let's figure
out what exactly the goal is, and then then you
can incorporate in art of the deal component where you say,
all right, what we really want is half of our
steel production made here. So the president doesn't come out
and he asks for half. He comes out and asks
for seventy five percent, And now the other major steel
(36:09):
making countries around the world come to the table and
are like, mister President, that's a lot.
Speaker 4 (36:13):
We don't know if we can meet you there.
Speaker 3 (36:15):
What if we just go to fifty percent instead of
you making seventy five percent of your steel?
Speaker 4 (36:19):
Is it okay if you only make fifty And.
Speaker 3 (36:21):
Then Trump says, ah, well, okay, I guess that's enough rights.
That would be I think how we can do the
art of the deal here, But until we get some
more substantive goals, I think it's going to be really,
really difficult to move forward. Now that being said, we
are seeing some progress, right The Treasury Secretary was able
(36:42):
to confirm fifty countries have called the White House asking
for some kind of deal. As of right now, only
a couple of them have been willing to actually make
any kinds of concessions. But again, hopefully with a little
more direction out of the White House, those fifty countries
are not just going to be saying we want to
make a deal. Hopefully there'll be a concrete deal.
Speaker 2 (37:04):
Right ej Antoni, appreciate your time.
Speaker 1 (37:06):
Would love to have you back on as we try
to continue to navigate this and see where it's going
and pray that the outcome is positive for the country
and that President Trump's vision is correct. So we appreciate
you taking the time to come on the show.
Speaker 3 (37:20):
Lisa, my pleasure as always, thank you for having me.
Speaker 1 (37:23):
That was ej and Tooni Economists with the Heritage Foundation.
We appreciate him for taking the time to join the show.
Appreciate you guys at home for listening every Tuesday and Thursday,
but of course you can listen throughout the week until
next time.
All right, So for today, we're going to dig in
to President Trump's tariff strategy. We'll explore what's driving these policies,
how the markets are reacting, and what they mean for
American workers and consumers. We're going to talk about the
potential for price hikes. What do we need to know
about that? Also some of these mixed messages, some of
(00:21):
these mixed signals. Think about you know, Peter Deavarro sort
of worse Elon Musk and I want to pack what
President Trump's goals are, What does he want at the
end of all this?
Speaker 2 (00:32):
What's the objective here?
Speaker 1 (00:33):
So to do all this today, We're going to talk
to EJ. And Tony.
Speaker 2 (00:36):
We fought him on the show a bunch.
Speaker 1 (00:38):
Really smart guy. We've talked about tariffs with him before
as well. So I just want to have a nuanced, broad,
unbiased conversation. If I'm being perfectly honest, I don't know
what the right strategy is here. I understand President Trump's
long term objectives with wanting to try to bring manufacturing
back home here, you know, these reciprocal tariffs, wanting to
(01:00):
feel like we're being taken advantage of by other countries,
wanting more fair trade practices. All of that makes sense
to me.
Speaker 2 (01:06):
Is this the way to do it?
Speaker 1 (01:07):
Though?
Speaker 2 (01:08):
I don't know.
Speaker 1 (01:09):
So we're going to lean on policy experts like EJ
and Tony to walk us through this and to try
to dig in and to figure out what's going on,
what matters, and where is this all heading. So stay
tuned for EJ and TONI.
Speaker 2 (01:28):
All right, EJ.
Speaker 1 (01:30):
I was just telling you I don't know what the
hell is going on, and a lot of really smart
people I tend to look to and towards for economic
advice are all over the place and are all saying
different things. So it seems right now that we've just
got a lot of chaos and everyone's trying to figure
out what's going on and where this thing is heading.
(01:51):
So let's just kind of start I just want to
have sort of a broader balance, just kind of try
to figure out what's going on and where this thing
is heading to the best of our ability. I guess,
so far, what do you make of President Trump's tariff
strategy so far? Let's kind of just start from there
big picture?
Speaker 3 (02:10):
Sure, well, Lisa, I mean, the reason why it feels
so chaotic is because it is right you know, what
did the president promise us. He promised us reciprocal tariff.
So let's I guess, let's get our definitions down. What
does that even mean. Essentially, it's a kind of economic
golden rule where you hold up a mirror to other
countries and you say, look, you have all of these
(02:30):
tariffs and also non tariff barriers in place that are
making it difficult or impossible for our exporters and for
our American workers to sell stuff in your country, and
that hurts our workers and that's not good. So much
of what we've seen for decades now around the world
that has been labeled as free trade is really just
a kind of unilateral free trade where other nations have
(02:53):
access to the American consumer market, which is great for
our consumers.
Speaker 4 (02:57):
Don't get me wrong.
Speaker 3 (02:58):
That is great because it means that we can buy
cheaper stuff and we have more money left over to
buy more things.
Speaker 4 (03:04):
So that's good.
Speaker 3 (03:05):
But the problem is those other nations LISA haven't given
us the same courtesy where our producers have access to
their consumer markets, and so that has locked out a
lot of American companies where they can't compete overseas, and
it's forced plenty of them out of business. It's helped
create what we call the rust belt, and it's helped
not only reduce employment here at home, but also reduce
(03:28):
real wage growth. All of those are very real effects,
and you can't dismiss them. At the same time, they're
not the primary cause. The main reason why we have
a rust belt today is because of over taxing and overregulation.
That's been the real killer of American manufacturing. So it's
not as if trade is the number one problem facing
the American worker. And it's not as if these unfair
(03:51):
trade practices are the number one reason why we have
essentially why we have the rust belt. The number one cause,
again has to do with mistakes our government has made
here at home, not necessarily mistakes that other governments have
made abroad. Now, again that's not to dismiss the issues
with unfair trade practices. Canada makes it so difficult for
(04:15):
our dairy farmers and our factory workers to get things
like cheese or automotive parts into Canadian markets that it's
actually easier for many of our exporters, Lisa, if you
can believe this, it's easier for them to sell their
stuff in Russia than it is in Canada today.
Speaker 4 (04:31):
I mean, that's obscene.
Speaker 3 (04:32):
We're told that Canada is a friend and ally you
know there are friendly neighbor to the north, except they
have severe penalties in place. And so what happened was
the President said, look, we're gonna have reciprocal tariffs, and
we're going to use that as a negotiating tool to
force other countries to get rid of their tariff and
non tariff barriers, whether that's quotas or currency manipulation, or
(04:55):
in the case of China, that would also include things
like utilization of slave labor or subsidiz of industry where
they can then dump artificially cheap products in foreign markets
and force those foreign companies out of business, whatever the
case may be. So we're going to say, all right, Canada,
you either drop your tariff and non tariff barriers or
we're going to put these huge tariffs to match on
(05:17):
your producers, on your exporters. They're trying to get stuff
here to the United States. And the whole reason why
this tariff announcement was delayed until April second was because
we were told the Commerce Department needs time to figure
out the math here, right, and they need time to calculate,
all right, what is the equivalent tariff to all of
the tariff and non tariff barriers other countries put in place.
(05:40):
Because that's something that's honestly least a very very difficult
to calculate for a couple of reasons. You know, when
you put a quota in place and you say you're
only allowed to import this amount of dairy into our country, well,
how much dairy would we import if that were not
in place? That's difficult to figure out. Also difficult is
all the survivors bias. In other words, if if a
(06:02):
country were to impose, let's say, a ten percent tariff
and therefore absolutely none of a certain product could be
sold by American manufacturers in another country. If you do
the math and you say, all right, how much are
American manufacturers paying in that tariff? Well, none, right, because
none of their product is subject to it because they
can't sell any So you have certain things that you
(06:24):
need to account for. Again, it's very cunsteded, and it
made sense that it would take them so long to
calculate it, I guess, you know.
Speaker 1 (06:31):
And the math's been called in a question which you know,
I don't know if that's fair or not, it probably
isn't given the fact that, you know, we've got a
media that isn't honest, and a lot of the experts
over the years have proven to not be experts, and so,
you know, I think that's part of why we're sortive
in this era of confusion, because you know, very few
people have been honest over the years. And you know, admittedly,
(06:54):
you know, Trump's been right more than the experts have been,
so you know, you want to give deference there with that.
Speaker 3 (07:00):
But that's a big that's a big part of the problem, Lisa,
has been the math that you know, the whole reason
again why we had to wait till April second, was
supposedly to get the math in order, and then they
show us the math, and it turns out they basically
made up the numbers. You know, when they first announced
this ten percent baseline tariff, the futures markets for stocks
(07:21):
initially rallied about one point five percent, and then they
show these charts with all these crazy tariff rates that
have no semblance of any relationship to reality, and that's
when futures tumbled and the markets have been down ever
since then. The problem is they didn't even actually look
at tariff and non tariff barriers like they told us
they were going to. We were promised reciprocal tariffs, and
(07:44):
that's not what they delivered the Trump administration. I'm not
saying this is the president's fault. It was someone under
him obviously who did this report. But whoever it was
who compiled this gave us a bunch of phony numbers.
They literally just looked at the trade deficit and they
didn't even include services. They only included products, And so
they gave us these these phony bologny numbers again that
(08:06):
have nothing to do with the country's tariff and non
tariff barriers. So this isn't even an argument of are
you for reciprocal trade or not? Are you for a
free trade or not? This is an argument of are
you for basic math or not?
Speaker 1 (08:20):
You know, I guess the way my mind works is
I'm okay with like a little bit of chaos if
I know there's a strategy, if there's sort of like
a plan, if there's an outline, if it's you know,
like that's why you know, I've been sort of against
with what's going on in Ukraine and giving them all
this money because there's no, what's the long term plan?
Speaker 2 (08:38):
Like can they win? What's you know?
Speaker 4 (08:40):
Like I don't like just questions, yeah.
Speaker 2 (08:42):
Yeah, yeah.
Speaker 1 (08:42):
And so right now with this, it's sort of like
what is the objective of the White House?
Speaker 2 (08:48):
Do we know that? Like? What's the end goal here?
Speaker 3 (08:51):
So, Lisa, that what you just put your finger on
is exactly the reason why financial markets are seeing such
insane volatile why stocks are going up and down, why
yields are going up and down, even gold things that
would you know, typically be considered safe haven assets. Everything
is just an absolute turmoil right now because the goalposts
(09:11):
keep moving, and you have folks, whether it's the Commerce
Secretary or we have Peter Navarro or other people, they
come out and they say one thing, and then later
they say something else, and they contradict themselves or they
contradict each other, and so we can't get a sense
of what exactly.
Speaker 4 (09:28):
Are they after.
Speaker 3 (09:29):
Do they really want free and fair trade or do
they want to get rid of the trade deficit? You know,
you can't and another thing, Lisa, you can't say simultaneously
certain things like tariffs are going to bring in all
of this revenue, but we're also not going to see
any additional cost to the American consumer, and we're also
(09:50):
going to see this huge incentive to build stuff here.
Well why, I mean, if these costs aren't really going
to be borne by anybody, then what's the incentive to
move production here?
Speaker 4 (10:02):
Right?
Speaker 3 (10:02):
If American consumers have a choice of alternatives, then the
only reason they would choose the American alternative is if
the foreign alternative gets more expensive. So there's just there's
too many things that are, too many messaging points, too
many talking points that are contradicting each other from the administration,
and so people can't get a sense of what the
(10:22):
end goal is because if we at least had that,
we would know where Trump was going eventually. But again,
there's just so much chaos right now, and there's so
much moving of the goalposts. We're having a hard time figuring.
Speaker 4 (10:34):
It all out.
Speaker 1 (10:35):
Yeah, and you've got you know, people like Peter Navarro
and Elon Musk at each other's throats as well, you know,
putting out different messages. Yeah, I mean, I understand the
concept of wanting to bring manufacturing home, and I understand
that this was a pivotal part of America first, and
like we even saw it during COVID with China threatening,
(10:56):
you know, to withhold pharmaceuticals from the United States, like
we don't want to be leaning on enemy nations like
China or antibiotics and things like that. So I mean,
I understand the benefit in the need to have a
strong manufacturing base here in the United States.
Speaker 2 (11:13):
Does this you know?
Speaker 1 (11:14):
And I can see how like NAFTA pushed manufacturers over
to Mexico because labor was much cheaper for them, or
I could see how China is entry in the World
Trade Organization moved a lot of cheap goods into the
United States.
Speaker 2 (11:27):
Does this get us to.
Speaker 1 (11:29):
A point where manufacturing is beefed up in the United States.
Speaker 3 (11:36):
That's a very very good question, and it's going to
depend on whether or not the administration and also Congress
can get a lot of other things across the finish line.
I think part of part of the reason why we're
seeing so much pain in markets right now is also
the fact that we've done things a little bit out
of order. In my opinion, Lisa, you know what would
(11:56):
have been I think better is if we got the
tax cut across the finish if we saw much more deregulation,
if we saw much more, much more of a push
to increase energy production and maybe most importantly, huge cuts
in spending. You know, right now, the Doge boys have
done a great job with highlighting a lot of abuse
(12:17):
and corruption and fraud and waste. And we've made some cuts,
but we need massive cuts. So basically what the Trump
administration has done here, and again it's not all their
fault because Congress has been seriously delayed in you know,
in getting the tax cut, you know, in getting that
bill through. But whatever the case, we have basically taken
a middle class that was already drowning and thrown them
(12:38):
an anchor before we actually built them a boat. And
now the result is that we're all on pins and
needles to wait and see can they get their act together,
both the administration and Congress, to get all these other
things across the finish line. Because it's not as if
tariffs are some kind of silver bullet. It's not as
if tariffs alone are going to bring back manufacturing. It's
(12:59):
not as if tariffs are going to rebuild Youngstown and
Gary and Detroit. We need a lot of other pieces
to fall into place for tariffs to actually be effective. Otherwise,
if all we get are the tariffs. Then it basically
is just going to be a tax increase and there's
not going to be many positive effects that come from it. Again,
(13:21):
how we started the conversation, Lisa was describing that what
has really created the rust belt has not just been
bad trade policies.
Speaker 4 (13:28):
Has that contributed? Yes?
Speaker 3 (13:30):
Is that the primary cause? No, the primary cause is
all the excess taxation, regulation and spending by our own government.
Speaker 4 (13:40):
So that has to change.
Speaker 1 (13:41):
I want to tell you a little bit about a
skincare company named Genusel about its origins. It's a great story,
it's heartwarming, and most importantly, it's true.
Speaker 2 (13:52):
So picture this.
Speaker 1 (13:53):
A lady named Philis walks into the neighborhood pharmacy in Colonia,
New Jersey, and she asked the pharmacist for an antioxidant
cream for her wrinkles. Now, the pharmacist tells her, look, Phyllis,
I don't have exactly what you're looking for right now,
but let me compound one for you. Come back tomorrow.
Phillis picks up the cream. She goes on to use
it for three days. She goes to a dermatologists appointment,
and the dermatologist, just by looking her thinks that you
(14:16):
know what, Phillis has probably had some work done, but Jen,
she'd just been using this cream. So Philis then goes
on to tell everyone, everyone about the pharmacy, about the
pharmacist who makes this magical cream that helped her wrinkles.
And that's it, believe it or not. That's how Genucell's
Skincare was born. And that was twenty five years ago.
(14:36):
Jeniucell since then has shipped millions of orders.
Speaker 2 (14:39):
Yet they still have that same.
Speaker 1 (14:40):
Philosophy, the same philosophy of antioxidants, the same natural base,
the same chiff in the kitchen type philosophy. And now
celebrating twenty five years later, Genucell is offering the best
pricing since phil has walked into Georgia's pharmacy. Right now,
you can save over seventy percent off Genucell's complete skincare package,
featuring things like the genus Cell under eye Bags and
(15:02):
Puffiness sarahm also the x V Hydrating Moisturizer which can
give you immediate effects for results in minutes. I mean,
look five, ten, even fifteen years younger guaranteed or your
money back. Go to genusl dot com slash Lisa. That's
genusl dot com slash Lisa. Every order includes free shipping,
and you can use Lisa l I s A at
(15:24):
checkout for an extra discount. That's GENUSLL dot com slash Lisa.
That's Genus L G E n U s E L
dot com slash Lisa. You look at some of the
promises made on the campaign trail, and he did promise
to bring manufacturing back, and so I think it's noble
(15:45):
that he is following through on his promises, like you
know a few politicians do these days. But he also
promised to drive down cost and so you know, I
do worry about what impact this has on inflation and
has on you know, the cost of goods if that's
passed down to consumers through these you know companies, uh,
(16:05):
you know, feeling the brunt of it. And then also,
you know, I agree with wanting to help the American worker,
but like if the economy crashes, you know, no one's
helped from it. So I mean, you know, what, what
what do you think the ultimate impact of this all
will be on the American tax payer?
Speaker 4 (16:23):
Great?
Speaker 3 (16:24):
Great question, Lisa, you know, and this goes to this
goes to I think some of the people who are
you know who are very pro Trump right and support
his agenda, and I do too. I just think that
we need some tweaks to the methodology here. But you
have a lot of folks who are cheering on the
collapse and oil prices right now without thinking, hey, why
(16:45):
are prices collapsing. It's not because regulation is down and
so it's cheaper for these folks to produce and bring
their product to market, so they can bring more of
it to market, and that increase in production and competition
is driving down prices and that will eventually drive down
prices at the gas pump. That's all great, but that's
not what's happening right now. Everyone is panicking that we're
going to have a severe recession, and so they're anticipating
(17:09):
much less oil being sold and much less oil being produced,
not more, and so you're seeing some of these big
swings in markets right now, and again it's not a
sign necessarily of good things. It's a sign of bad things.
This is where we need to be careful of assessing
not just what is happening, but figuring out why are
(17:30):
things happening. And it speaks to the fact that you
can't just be an ideologue here and say tariffs are
always in everywhere good or tariffs are always in everywhere bad.
It needs we need a much more intellectually rigorous analysis
in order to answer questions like the one you just asked,
What does this mean for the American taxpayer? If all
(17:50):
we get are these massive tariffs in a trade war
without getting all of the other things I mentioned, the
pro growth policies, the supply side policies, if those things
aren't put in place, then it means a recession. It
means blowing out the deficit even more. It's already two
trillion dollars a year. It'll get worse because tax revenues.
Tax receipts to the treasury are going to go down,
(18:12):
but expenses are going to go up because in a recession,
the tax based shrinks and so you get less tax revenue.
At the same time, more people become dependent on social
services as they lose their job, for example. And that's
particularly true right now, Lisa, because of the very terrible
economy frankly that was left to Trump by the Biden administration,
(18:34):
where you have a record amount of consumer debt. You've
already seen delinquencies, for example, start to go up on
mortgage payments. That traditionally is something that only happens as
people start to lose their jobs as unemployment goes up.
But what we've seen under Biden was even though unemployment
stayed low, people still weren't able to afford their mortgage
payments because they were spending all their money on groceries
(18:56):
or their transportation costs, or insurance, whatever the case may be.
So the economy was already in a fragile position. And again,
if you don't get those those supply side policies, that
those pro growth policies in place, it's going to mean
a lot of pain for the American taxpayer. And you
have to wonder, is the Federal Reserve going to come
(19:17):
to the rescue again in the form of buying government
debt and printing money, which is going to set us
off on the inflation rollercoaster all over again, which again
that's another sign of pain for the American tax payer.
Speaker 1 (19:29):
And you know, look, I'm trying to enter this conversation
with humility because this is not my beat. I'm not
an expert in this. And also, you know, there are
questions about, like are the markets overreacting to this is
the media overreacting to this? I mean, because we've seen
we saw big dips under the Biden administration as well.
You know, we saw the clients and you know, I
(19:51):
think it was the s and P five hundred dropped
to thirty or three thy six hundred and sixty six.
By October twelve, twenty twenty two, we saw a decline
about twenty three poin point six percent. So we've seen
dips under the Biden administration as well. So it's like,
how is this different than that? And like why, you know,
are we over you know, are we unnecessarily.
Speaker 2 (20:11):
Overreacting right now? Or the market's over you.
Speaker 1 (20:13):
Know, unnecessarily overreacting right now. I guess you know, I'm
also trying to figure that out.
Speaker 3 (20:18):
At least those are great, great questions and a lot
of a lot of what you have to remember.
Speaker 4 (20:24):
Well, let me put it this way.
Speaker 3 (20:25):
I think the most important piece of context is the
fact that when we look at things like stock markets,
we're trying to predict the future, and nobody's got a
crystal ball. So you know, you're always even if you
have clear signs out of Washington, you're always going to
have some degree of volatility. You're always going to have
markets going up and down, and sometimes you will get
big moves because nobody knows the future. And what ultimately
(20:48):
justifies stock prices are the future earnings of companies, and
so once those future earnings finally roll around, then we
decide whether or not those stock prices were justified. But
at that point it doesn't matter because now you're looking
at the new future earnings that are going to be
coming down the pike, So again you're dealing with the future,
so you're automatically dealing with a certain level of uncertainty.
(21:10):
The question of whether or not markets are overreacting has
to do with whether or not you believe that a
lot of things are already priced in. In other words,
what is the probability of recession today? Have the market
sufficiently priced that in? And if you believe that they
have not priced in sufficiently a high probability of recession,
(21:32):
then you sell. And if you think they're pricing in
too much of a probability, then you buy. And that
may sound like an oversimplification, but that's fundamentally what's going
on here. And the market is made up of literally
billions of participants from around the world. Who are all
trying to figure this out together, and so the prices
(21:53):
that we're seeing, you could say, are the collective wisdom
or lack of wisdom of all of those market participants. Unfortunately,
I think at this point there is probably still more
room to the downside. That's not financial advice, that's just
simply you know, my opinion. I think there is a
ton of volatility that still needs to be sorted out.
(22:15):
We are still looking for direction in terms of not
just what the administration Washington is going to do, but
how foreign governments are going to respond.
Speaker 4 (22:24):
As soon as.
Speaker 3 (22:24):
You're talking about reciprocity, you're immediately talking about an added
degree of volatility, because it's not just a matter of
what is Trump going to do, it's a matter of,
you know, what is the president of Mexico going to do?
What is the president in China going to do? What
is the governor in Canada going to do? What is
Vladimir Putin and Russia going to do?
Speaker 4 (22:44):
Et cetera.
Speaker 1 (22:46):
Well, you know, I mean I look at pulling sort
of me I look at the stock market's a little
bit like pulling, you know, which is you know, that's
more my background of politics and pulling where it's sort
of like a snapshot in time, and as you pointed out,
sort of like of trying to predict where we're going
with things. You know, I've heard a lot of people say,
(23:08):
you know, look, Americans just kind of need to take
this on the chin, you know, uh, long term gain
for short term pain, and and I understand that to
a degree, but I don't think we should discredit the
fact that you know, look, there are a lot of
elderly people who have a lot of money tied up
in the markets right now, and they might not be
super wealthy, and you know, they're worried about their retirements
(23:30):
and or they want to retire and they might.
Speaker 2 (23:31):
Not be able to.
Speaker 1 (23:32):
And so you know, I guess, you know, I guess
in all of this, and you know, in every different direction.
And I appreciate the balance that you're bringing this conversation,
but I kind of wish that that's where the conversation
would remain. Everywhere is just trying to, you know, sort
of have a broader, more balanced viewpoint on all of this,
(23:52):
because there are people suffering, and I don't think that
should be dismissed exactly.
Speaker 3 (23:56):
Lisa, that's a great great point. Just as we should
not just miss the plight of the folks in the
Rust belt who have lost their jobs over the course
of several decades, now we also should not dismiss the
plight of people who have money in the market like
in retirement. I personally know probably half a dozen people
now who were planning on retiring in the very near future,
(24:19):
one of whom was literally planning on retiring this year
and now can't because of how much they've lost in
financial markets. So, you know, and we can debate the
wisdom of whether or not they should have had money
in equities so close to retirement, but frankly, fixed income
took such a toweling under Biden that a lot of
folks were forced to get out of that and get
(24:39):
forced back into equities. So we don't want to be
dismissive of anyone's financial pain. Again, doesn't matter if it's
because they lost their job or it's because they lost
their shirt in the marketplace. And it's really disturbingly so
when I hear people on our side, allegedly on our side,
who are cheering on the market decline and are saying
(25:00):
things like it's about time Wall Street, Uh, you know,
took one on the chin or felt some pain. I
don't want anybody to feel pain. This whole idea of
you know, of class warfare, that's a Marxist talking point.
We don't need Wall Street to go down in order
for Main Street to go up. The only the only
one that needs to go down is K Street. It's
(25:21):
the lobbyists in d C who are who are frankly
hurting a lot of Wall Street and all of Main Street.
Those are the folks that that I want to see, uh,
you know, not do well, because it's only when it's
only by taking from Main Street, by taking from Wall Street,
that Washington does well, that K Street does well, you know,
the lobbying. So look, at the end of the day,
(25:42):
if Main Street is doing well, Wall Street will too.
There's no reason why they have to be opposed. What
we saw under Biden, though, was a huge wave of
inflation that caused everything to get more expensive. So yes,
your Groceri's got more expensive. They went up in price,
your rent, your rent that went up in price, Your
insurance went up in price. You know what else went
(26:03):
up in price, home prices, they went through, the roof
equities went up in price. A lot of the gains
that we've seen in the market for several years now
have simply been inflation. It has been the dollar going
down that has driven up stock prices, not entirely, but
that's been a large portion of it. So Wall Street
does better a lot of times in periods of rapid
(26:25):
inflation because all of these assets appreciate in price. That
means that Main Street really really takes it on the chin,
but Wall Street can ride it out a lot of times.
Speaker 4 (26:35):
I don't want that.
Speaker 3 (26:37):
I want Wall Street to go up because people on
Main Street are getting bigger paychecks that can buy more,
and when they can buy more, corporations do better, and
that's causing corporate our names to go up. That's a
much better alternative, and that's traditionally how this country has
grown as compared to simply inflating up corporate profits. So again,
(26:58):
this economic restructuring that they're aiming for and that the
Treasury Secretary Scott Besson has talked about a lot, is
about building the economy for Main Street and the trickle up,
if you will, going to Waltall Street as opposed to
hyper fixating on Wall Street and using methods like inflation
(27:18):
to artificially boost corporations by and to be fair.
Speaker 1 (27:22):
Like I got so angry during COVID, like I refuse
to do the whole like we're all in this together,
because we weren't, you know, And I thought that was
the biggest BS talking link. So you had all these
people and what you know, people like Martin colder If
and a lot of these guys came on my podcast
calling the laptop class because you had a lot of
these people who were totally they weren't impacted at all
during COVID. They had their jobs, they could work from home,
(27:44):
and then you had like small businesses and the middle
class suffering.
Speaker 2 (27:48):
And I thought that was such BS.
Speaker 1 (27:49):
I would refuse to say we're all in this together,
and said it was like the biggest bunch of BS.
So it's like I just I want, you know, rising
tide to lift all boats. I want everyone to do
well in the economy. I want a strong, robust to
a mayor, I do believe, and having a strong manufacturing
base here in the United States of producing our own goods,
being self reliant. But I don't want Americans to be
(28:10):
punished in the process.
Speaker 2 (28:14):
I guess you know how do, Like, what's the path
forward here?
Speaker 1 (28:17):
Like, how how can we build a stronger main street America,
stronger middle class and the middle class by the way,
I also got gutted during COVID because of lockdowns, because
of all those you know, the punishment that they had
to endure during all of that with you know, lockdowns
and draconian policies. So I guess, how do we build
(28:37):
a stronger middle class and have a policy where you know,
a rising tide lifts all boats.
Speaker 2 (28:43):
Very long winded way to get to the question, but.
Speaker 4 (28:47):
Well, at least it's a great question.
Speaker 3 (28:49):
And your entire analysis of of COVID and what happened
there was spot on you.
Speaker 4 (28:53):
You're absolutely right.
Speaker 3 (28:54):
That was another case where we gutted the middle class,
you know, for the benefit of a handful of people.
You know, some of that was Wall Street Shore, but
we forced every mom and pop store in the country
to close down and said everyone now has to go
shop at Walmart. You know those stores can stay open.
Speaker 4 (29:08):
Right.
Speaker 3 (29:08):
Well, wait, wouldn't it be better if we were all
dispersed among a lot of different stores instead of all
being crowded into the same location whatever. So much for
following the science but so your analysis is right, and
it's a great question. Here's the answer. What really truly
afflicts us are all things that we've done to ourselves.
(29:29):
In other words, if you get rid of the bad
public policies that have caused these self inflicted wounds, the
effects of all the bad policies will go away. So
what does that look like? It means again, massive deregulation.
You know, people think that the manufacturing sector the big
thing hurting us right now is competition from overseas.
Speaker 4 (29:50):
I mean yes and no.
Speaker 3 (29:52):
Yes, and so far as people can make stuff cheaper
than we can hear, but why is that? You know,
the American worker has three times more capital at his
fingertips than his Chinese counterpart. In other words, instead of
putting together something with hand tools, the American worker has
power tools. He should be much more productive, and even
though he gets paid a lot more than his Chinese counterpart,
(30:13):
he should still be competitive. He's not because of the
regulatory burden that he faces. So, Lisa, let's say the
typical manufacturing employee in this country makes like fifty or
sixty thousand dollars. The average regulatory burden that the manufacturer,
the employer faces is like another fifty or sixty thousand
(30:33):
dollars a year, So in terms of the cost to
employ this person, it could easily be twice as much
as the person's salary. And that's before we even start
talking about any kind.
Speaker 4 (30:44):
Of benefits package.
Speaker 3 (30:45):
That's a huge regulatory burden that has made it cost
ineffective to employ people here and to build stuff here,
and that's been a big reason why we've had to
drive manufacturing overseas. Now, on top of that, we have
other things like the fact that we treat for tax purposes,
we treat things differently if they were made overseas versus
(31:06):
made here, which is just absolutely stupid. We literally are
giving a tax advantage to someone who shifts their factory
over to Mexico. So that's a great reason why you
should have something like a border adjustment tax instead of
this flat ten percent tariff. You would have essentially you
would tax imports but tax exempt exports, so that things
(31:27):
are only getting taxed once and you're getting rid of
the artificial tax advantage that you've created by making stuff
in a factory in Mexico, let's say, instead of in Michigan.
So getting rid of the regulatory burden, getting rid of
these crazy tax differentials, also getting overall tax rates back down.
That would be huge. But in order to do a
(31:48):
lot of that, you got to get the government spending down.
I mean, at one point we actually financed all of
our government spending Lisa just with tariff and it'd be
great to get back there, but you'd have to cut
the government down from about twenty percent. But if you
really want to get income taxes down, which is what
(32:11):
we need to supercharge growth, you got to cut government spending.
I mean, there are other policies that we can do
that would really help boost growth and help lower costs.
Speaker 4 (32:21):
Here.
Speaker 3 (32:22):
Energy production is a key part of that. Energy is
a ubiquitous input throughout the economy. It goes into everything
we do and everything we buy. So if you reduce
its cost, you reduce costs literally everywhere. And if you
can increase domestic energy production, I'm talking actual energy here,
not things like solar and wind that are net losers,
(32:42):
but actual net generators of energy. That's coal, that's oil,
that's natural gas. If you can do all of that,
you will drive down prices. You will have an anti
inflationary effect, a deflationary effect that will be very positive
on growth. It'll help increase really incomes, not just nominal incomes.
That is the recipe for restoring the middle class, not
(33:05):
you know, some kind of class war where we go
after Wall Street and try to redistribute income. Not something
where we try to create an economic autarchy here in
this nation and we try to shut out foreign competition.
I have every faith that the American worker and that
American businesses can compete on the world stage if we
give them a level playing field. And it's not just
(33:28):
a level playing field in terms of tariffs, it's a
level playing field in terms of taxes and regulation here
at home.
Speaker 1 (33:34):
You've got to take a quick break more with EJ
on the other side, you know, before we go just
you know, I know the president's all about leverage, and
you know he tends to kind of he talks about
this in the art of the deal sort of you know,
you pick a more extreme position to move the other
(33:56):
side to, you know, something that you're okay with a more.
Speaker 2 (34:02):
More acceptable position.
Speaker 1 (34:05):
How much of not laying out sort of clear desires
and clear goal points is that a negotiation strategy or
do you think they're just still trying to figure out
what exactly they want from this.
Speaker 3 (34:18):
I unfortunately, I think some of it is they're they're
trying to figure out what they want. But I think
you also might have too many cooks in the kitchen,
so you have different people saying they want different things,
and it's creating more uncertainty, not less. You know, I
think the art of the deal component here is essentially
you know, the whole reciprocity argument, right, it's saying to countries, look,
(34:42):
you know, we're gonna do to you what you do
to us. But I'm I'm I'm very generous. This is
Trump here, I'm very generous, right, I will reduce all
of these tariffs if you if you reduce your trade
barriers as well. The problem with this kind of ra approach,
where you have no idea where these tariff rates come from,
(35:05):
you have no idea what the goals are, is that
it makes it difficult for other countries to even come
to the negotiating table in the first place. In other words,
Canada doesn't know what they're supposed to do. We're hearing
it's about tariffs, but then we're hearing it it's not
about tariffs, it's about trade. Deficits, and then we're hearing
it's about national security, and maybe it's about a little
(35:25):
bit of all of those things. But then we need
that to find, you know, we need to hear from
this administration these specific products it's important for us that
we make them here. Or maybe it's important for us
that we have a certain percentage of our microchip production
made here. It's important for us that we have a
certain percentage of our aluminum and steel production made here.
(35:47):
Let's get that, Let's get that out there. Let's figure
out what exactly the goal is, and then then you
can incorporate in art of the deal component where you say,
all right, what we really want is half of our
steel production made here. So the president doesn't come out
and he asks for half. He comes out and asks
for seventy five percent, And now the other major steel
(36:09):
making countries around the world come to the table and
are like, mister President, that's a lot.
Speaker 4 (36:13):
We don't know if we can meet you there.
Speaker 3 (36:15):
What if we just go to fifty percent instead of
you making seventy five percent of your steel?
Speaker 4 (36:19):
Is it okay if you only make fifty And.
Speaker 3 (36:21):
Then Trump says, ah, well, okay, I guess that's enough rights.
That would be I think how we can do the
art of the deal here, But until we get some
more substantive goals, I think it's going to be really,
really difficult to move forward. Now that being said, we
are seeing some progress, right The Treasury Secretary was able
(36:42):
to confirm fifty countries have called the White House asking
for some kind of deal. As of right now, only
a couple of them have been willing to actually make
any kinds of concessions. But again, hopefully with a little
more direction out of the White House, those fifty countries
are not just going to be saying we want to
make a deal. Hopefully there'll be a concrete deal.
Speaker 2 (37:04):
Right ej Antoni, appreciate your time.
Speaker 1 (37:06):
Would love to have you back on as we try
to continue to navigate this and see where it's going
and pray that the outcome is positive for the country
and that President Trump's vision is correct. So we appreciate
you taking the time to come on the show.
Speaker 3 (37:20):
Lisa, my pleasure as always, thank you for having me.
Speaker 1 (37:23):
That was ej and Tooni Economists with the Heritage Foundation.
We appreciate him for taking the time to join the show.
Appreciate you guys at home for listening every Tuesday and Thursday,
but of course you can listen throughout the week until
next time.
Host
Lisa Boothe
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