Breaking Points with Krystal and Saagar - 4/3/25: Krystal And Saagar React To Trump Tariff Mayhem, Market Chaos After Liberation Day

Episode Date: April 3, 2025

Krystal and Saagar discuss Trump's insane tariff math, markets react to Liberation Day.   To become a Breaking Points Premium Member and watch/listen to the show AD FREE, uncut and 1 hour early visit: www.breakingpoints.com   Merch Store: https://shop.breakingpoints.com/See omnystudio.com/listener for privacy information.

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We've got all the details for you about, quote, unquote, Liberation Day, plus the early morning market reaction, best we can tell, plus our own reactions of what this is going to mean and what it's going to mean for you. None of it good and all of it insane and all of the things. So get into all of that and spend some significant time breaking it all down for you as best we can. But there is a lot of other news as well that we want to get to. Trump is saying that Elon will be out soon. He's saying that to his inner circle. His inner circle is then leaking it to the news media. So that is pretty interesting in the wake of that big Wisconsin defeat. We also have a new deadline for potential TikTok deal or sale. We'll tell you who is lining up to be part of that process. I'm taking a look at massive cuts, both to mine safety and also to some of the programs to prevent, identify, research, and

treat black lung. A real betrayal of a group of voters who were quite key to Trump's victory, especially back in 2016. So I'm breaking all of that down for you. Zedd is going to join us to take a look at the extremist group that is claiming to be behind the list of students who are being targeted right now for removal by the Trump administration based on their pro-Palestine sentiment. So a lot going on in the world right now. Yeah, that's right. Let's just go ahead and start with the tariffs, guys. I mean, I have, I stayed up well past my bedtime thinking, reading, doing as much as I possibly could here. I'm going to save my aghast reaction before we break down all of the news. Let's just go ahead

and start with the announcement. I watched the entire thing, so you don't have to. Let's take a listen. A big price. From 1789 to 1913, we were a tariff-backed nation, and the United States was proportionately the wealthiest it has ever been. So wealthy, in fact, that in the 1880s, they established a commission to decide what they were going to do with the vast sums of money they were collecting. We were collecting so much money so fast, we didn't know what to do with it. Isn't that a nice problem to have? What do you think, Marco? Good problem? Marco would love that problem.

But we don't have that problem anymore, but we're not going to have it very much longer, I will tell you. But they collected so much money, they actually formed a commission to determine what they were going to do with the money, who they were going to give it to, and how much. Then in 1913, for reasons unknown to mankind, they established the income tax so that citizens, rather than foreign countries, would start paying the money necessary to run our government. But likewise, an old-fashioned term that we use, groceries. I used it on the campaign. It Likewise, an old-fashioned term that we use, groceries. I used it in the campaign. It's such an old-fashioned term,

but a beautiful term, groceries. It sort of says a bag with different things in it. Groceries went through the roof, and I campaigned on that. I talked about the word groceries for a lot. And so we're going to be charging a discounted reciprocal tariff of 34%. I think, in other words, they charge us, we charge them, we charge them less. So how can anybody be upset? They will be because we never

charge anybody anything. But now we're going to charge. European Union, they're very tough, very, very tough traders. You know, you think of European Union, very friendly. They rip us off. It's so sad to see. It was nearly an hour long. And that chart, ladies and gentlemen, is exactly how the entire world learned about what the tariff rate would be. And I will tell you, so my wife is a trade expert. We were sitting on the couch. We were watching this together.

And we both audibly gasped whenever we saw what it actually was. And let's go ahead and put this up there on the screen. It is the craziest thing. Okay, let me take the hyperbole out of it. This is the most extraordinary tariff action in over a century, probably the single most economically impactful action that a president of the United States has ever made in terms of direct intervention into the economy. So there you have these, quote, U.S. discounted reciprocal trade tariffs that are there on the right.

34% for China, 20% on the European Union, 46% for Vietnam, 32% on Taiwan. Just a side note, Taiwan is listed there as a country. So that's interesting in and of itself. 24% there for Japan, 26% on India, 25% on South Korea, 36% on Thailand, 31% Switzerland. A lot of this is listed as either major US trading partners and or the amount of bilateral trade that we do each year. Now, I want everybody to pay attention to the way that the column is designed.

It says tariffs charged to the USA, including currency manipulation and trade barriers. So there was immediate discussion of how did they actually find this? How did they come to this list, not only of countries, but actually of the rate themselves? All indications right now is that they literally used either chat GPT or some Wikipedia form to find the number of countries in the world. A perfect example, let's put this up there on the screen. One of the islands that was listed is the herd in McDonald's Islands. It's inhabited only by penguins. Yes, it is part of Australia. So they could have just said Australia. They're ripping us off, yes. The Svalbard, Svalbard, which is, what is it?

The highest northern place that's populated by humans, I believe. So that is included. Guinea-Bissau. Now, you'll notice the overall regime basically works this way. The tariff is calculated based upon some of this, I'll call it extraordinary math for now. That extraordinary math comes to a figure, which they, for example, like in the China case, where they come up with this number of some 67%. That number is then divided by two because Trump says that we're going to be kind. And that is the, quote, discounted reciprocal

tariff that is being placed on these other countries. Now, in the case where we do actually have a trade surplus, the baseline assumption is that that trade surplus is still being impacted by non-trade barriers and or things like currency manipulation. So a baseline of 10%. Now, the reason why that is so extraordinary is that if you'll remember, even during the campaign, Trump had discussed, you know, a 10 or a 20% tariff that would be put into place. That actually would have been less than where we are right now. So let me just go ahead and show you guys, for example, what the current actual tariff is overall. Let's go ahead and put, what is it, A6, please, up on the screen. A6 can show you that the current tariff regime, which previously was roughly around 1.5%, is now, quote, off the scale

of the graph that we are even showing you. Now, the way that they arrived at this math, as I said, and you really need to buckle in because this is kind of nerdy, but let's go and put A7, please, on the screen. Immediately, people were like, where the hell did this come from? James Sturgecki says this, quote, just figured out where these fake tariff rates come from. They didn't actually calculate tariff rates plus non-tariff barriers, as they said they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country's exports to the United States. So for example, we have a 17.9 billion trade deficit with Indonesia. Its exports to us are 28 billion. 17.9 over 28 equals 64, which Trump claims is the tariff rate

Indonesia charges us. Now, let me just briefly explain also why that doesn't make a hell of a lot of sense. The idea behind this is that the trade deficit itself divided by the number of goods is somehow an approximation for what a reciprocal tariff is. That is just simply not true. For example, the entire way that this is being sold is, and I wouldn't even blame people if it says reciprocal tariff for people to say, for example, oh my God, Vietnam charges the United States a 90% tariffs on goods. That's completely not true. Actually, Vietnam just yesterday said that they were going to take all reciprocal tariffs away. This is a baseline assumption that the mere existence of a trade deficit with any country in the world, not just China, Japan, South Korea, the manufacturing powerhouses,

Mexico, or Canada, which are exempt from this, just by the way, those are currently still under USMCA standards. The assumption there is that the trade deficit, the mere existence, is one which is against the United States and requires a corrective action known and being classified as a reciprocal tariff. It is not a reciprocal tariff. In fact, it does not even include currency manipulation. There is a case to be made that it is a way that you could roughly approximate it. For China, maybe. We can talk about that a little bit later.

But in the interim, what we can tell you is that there is no way to describe this as – like even saying extraordinary is not – Does not cover it. Capture it. We are talking about a 54 percent tariff on China because these tariffs will stack on top of the 301 tariffs that have already been put in place. That's 54 percent on one of the largest trading partners, I think number three, for the entire United States of America, not to mention consumer electronics, consumer goods, etc. Vietnam is our number eight trading partner. The vast majority of retail goods in the textile industry enter the United States from Vietnam. The other issue that we really see here is that none of this is paired with any tax credits and or capital injection.

The rough estimate off the top as of this morning is that this will impact roughly $400 billion worth of goods in the United States, an additional $400 billion. That's what the overall revenue that that would raise. You would then have to see a corrective action of roughly, I mean, that's almost what, half of the original TARP bill going back to 2008 to offset. Now, in the immediate term, what's going to what, half of the original TARP bill going back to 2008 to offset. Now, in the immediate term, what's going to happen is that you are watching a significant amount of these goods that are going to effectively be tariffed at these crazy rates starting tomorrow and next week.

Tomorrow and next week is when all of this stuff starts to go into place. As all of that goes into place, the absolute massive shock to the supply chain is going to be extraordinary. Now, the current market reaction, guys, let's go ahead and put that up there. As you guys can see, it's roughly around 3.3% as the S&P 500 right now. The Nasdaq futures down by about 3.84%, etc. The Secretary of the Treasury was pressed immediately after the press conference in the White House being asked, what can other countries do? What exactly does this all mean? Here's what he had to say. Guys, let's go ahead and play A5.

It was a big day. The president calls it Liberation Day. You know, we showed the markets before, but if you saw the post-market reaction, it was kind of down across the board. You know, people are looking at their 401ks and they worry about it. What do you say to them today? Brett, I say that what we are doing is we're setting the stage for long-term economic growth. We were on our way to a financial crisis. You know, I used to teach a history of financial crises. And with that gigantic government spending, it was unsustainable. You look back in 1998, you look back in 07, right before it looked great, everything collapsed. China is at 34 percent, added to the 20 percent already. So that's 54 percent on Chinese goods.

Are they going to come back with something big? Well, we'll see what they do. My advice to every country right now is do not retaliate. Sit back. Take it in. Let's see how it goes. Because if you retaliate, there will be escalation. If you don't retaliate, this is the high watermark.

And I'm trying to be a secretary of treasury, not a market commentator. What I would point out is that especially the NASDAQ peaked on deep sea day. So that's a MAG7 problem, not a MAGA problem. They don't like tariffs, then why do they have them? And should we view these as permanent? Again, I think we're going to wait and see how this plays out. Not inspiring at all. No clear instructions there for other countries. And that is one actually where it makes the least amount of sense because you had two countries, Vietnam and Israel, both before who were like, OK, no reciprocal tariff, no worries.

And then, of course, they still get hit with the reciprocal immediately. And they were trying to figure – they're like, what are you talking about? We just said that we won't have reciprocal tariffs. This is one where you basically are putting people in a situation where you don't have any clear instructions for how other countries are supposed to be able to respond. For example, I mean, and I'll be honest, this is the one that makes the least amount of sense within all of this is the justification, for example, of a VAT tax. So as we'll all recall, if you've ever been to Europe or elsewhere, they use a value added tax, which is kind of like a sales tax, but it's applied across the board to all goods that are sold in the country.

And so they're using the VAT as a justification for the U.S. goods are treated unfairly. It's like, well, not really, because that would imply, for example, that we could negotiate some scenario where, let's say, where you or I were buying something made in China on Amazon. I'm sure we've all done that at some point before. But then the Chinese could negotiate with the United States and thus the state of Virginia, where I live, every time I order something. And then that would not be subject to the Virginia sales tax, right? It's like, no, the sales tax is just applied to all of the things that are sold in your state, and no ifs, ands, or buts. So there's so much that is happening here right now. I don't even really think that the market reaction fully captures it. If anything, the

market- Yeah, well, we'll see what happens when it opens. What I think, Crystal, is that the market is so aghast at this idea of where things are. Nobody in their wildest dreams actually could have come up with a 54% tariff on China or a 46% tariff on Vietnam. Yeah, look, there are some exclusions, for example, on Taiwan, like on semiconductors. The auto tariff rate is actually excluded. It's still just 25%, which is still crazy. Still a lot. Still a lot. And what I just come back to is not only are you literally seeing the most extraordinary, again, even extraordinary does not capture it, massive tariff that is put into place on goods, but the lack of commensurate action on the other side.

There is no even acknowledgement of the immediate pain that many of these businesses will begin to feel tomorrow and within the next week. And then the follow-on effects of that. So politically, it's crazy. But beyond what this all could mean, the only bull case, and this is why I think maybe even the market is where it is, is they're like, this is just so insane. It's obviously a negotiating tactic, kind of in the way that Canada and Mexico are. But even if that is to be true, even if that is to be true, in one month from now, we'll have a grand deal with China or something. In that interim one, that's one month of economic activity where you had a 54% tariff on the vast majority of

consumer goods that are entering the United States of America. One month of a bad down month, many of these companies operate on what? A 4% or 5% margin. Just think about that. What do you think the other 40-some percent is going to go, the 47%? Well, they're going to cut jobs. That's the issue, is that unless you literally are just pumping money into the economy in the way that they did, let's say, with the agricultural tariffs, and they offset that immediately. There's no plan here. There's not even that. Last I checked, the White House is, the GOP Congress, I mean, is actually trying to take away the tax credits, the manufacturing tax credits called 45X in the U.S. tax code. So you are, and- And undoing the CHIPS Act.

I was going to say, even put the CHIPS out of sight. So even with that capital injection would require what? It would require a New Deal style program of thousands of bureaucrats to actually have to sit there and to dole this money out and to make sure that it's not- Well, what are we also doing? Doge at the same time. So we genuinely would have been better off with a 10% tariff. Like, I'm not kidding. Because right now, 10%, right now, the approximate tariff rate is now some 32% if you average everything out. We would have been 10 times better off with a 10% tariff. Here's the other thing, too. Let's say if these stay and you are a company, what are you going to do? You're looking at these reciprocal tariff regimes or whatever. Already, much of the trade

out of Vietnam is because of the original China tariffs. That was actually a good idea, right? Because Vietnam is much more of a US ally. You get it out of China. Great. Win-win for everybody. It's one of those where, look, if we even want to presume, let's say, manufacturing jobs coming back here as well to America, really what this encourages is actually a gaming of the tariff market. And even my friend Oren Kass, who is generally, I would say, supportive of this overall thing, he even wrote previously in his report that selective tariff application across the board like this will cause one of the most corrupt lobbying campaigns in the history of mankind. You know, to have each one of these individual countries, they can game things with each other. We've lived in the era of trans shipping, et cetera. But even worse is that now it all just comes down to like pleasing Donald J. Trump and the people around him to potentially

get offset or not. And there are trillions of dollars on the line right now. And Sagar, looking at this, that thing you just laid out, that's the point. Like there is no one honest who can make a legitimate economic case for this. One does not exist. I mean, it's a good thing we can all say retarded again, because there's no other way to classify what has been done here if you're considering it on the merits of an economic plan. The TLDR is that that's not really what this is about. This is the same effort to consolidate power that has been a consistent theme of Trump 2.0, whether it's the university crackdown,

whether it's the media crackdown, whether it's the judicial attacks. All of this has to do with giving Donald Trump more power. So it's not just countries that will come hat in hand begging for this or that exemption. It's not just the lobbyists, you're right. They gotta be the happiest people on the planets right now because anyone who has an in is suddenly gonna be astronomically valuable. But every single company is going to be coming

to Donald Trump, hat in hand, like all the oligarchs lined up behind him at the inauguration, begging for their carve out an exemption. This is an incredible tool of power for him, because not only does he get to reward those who are appropriately either sycophantic or, you know, cut him in on whatever deal it is that he wants, or buy enough of his crypto shitcoin or whatever it is, not only does he have the power now to reward those sycophantic allies, but he also has the power to punish those who would dare dissent. So top line, I think that's the best way to think about what's going on here. Because you're right, when they released this chart, everyone's going through this list of purported, like what these countries supposedly

the tariffs they have on us. And everyone's going, this is just made up. Like that was the initial instinct is that they just literally made stuff up. And then a couple of people online were able to crack this ridiculous code and the insane calculation that they did. I think it is all but confirmed that they just typed something into ChatGPT to get this, not only because of the places that are not even populated that are on this list, but also because if you ask ChatGPT, give me a really basic way to calculate tariffs. That's my only injection, is that I actually use ChatGPT to come up with the formula that they said.

And it's actually not that hard. What they did is they typed in what is the easiest way. Exactly. Not how do you do it. Has the capability to do something that's actually more complex than this. And if you say you have to say, like, give me the most basic, like basically the dumbest way to do this. And this is the answer chat GPT will give you. Just to drill down on, because I know there's a lot to process here, just to drill down on your point about why that calculation of just assuming that if we have a

trade deficit with a country that they're quote unquote ripping us off. Arnaud Bertrand gave a great example on Twitter. He's like, think about the country of Lesotho. This is one of the poorest countries in Africa. They are also part of a trading bloc, including South Africa and other African nations, like a regional trading bloc that has a consistent uniform tariff policy. So you would think then that Lesotho and South Africa, okay, if they have a uniform tariff policy, that they would then be hit with the same level of reciprocal tariffs. Not true, because we have a large trading deficit with Lesotho. Why? Because they're a very poor country. We import things like diamonds and other minerals from the country, things that, you know, by the way, we don't, there's no way for us to gin up some domestic diamond industry here. So what are

we doing to start with? But the reason they don't buy a lot of things for us is because they're really poor and they can't afford iPhones and Teslas or anything else. And yet they're going to be hit with this massive tariff now, which is going to be incredibly destructive to them because of that, what what they consider to be what Trump considers based on this chart to be them ripping us off and this trade imbalance. That's how insane this whole thing is. OK. I know a lot of cops and they get asked all the time, have you ever had to shoot your gun? Sometimes the answer is yes. But there's a company dedicated to a future where the answer will always be no.

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She was still somebody's daughter. She was still somebody's sister. There's so many questions that we've never gotten any kind of answers for. If you have a case you'd like me to look into, call the Hell and Gone Murder Line at 678-744-6145. Listen to Hell and Gone Murder Line on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. If you wanted to truly bring manufacturing back in certain key industries, which I think makes sense, you think makes sense.

Absolutely. commensurate industrial policy you're going to use to make sure that you're not only imposing the tariffs and, you know, putting this, you know, ring around that industry, but they're also providing the government support, whether it's tax credits or subsidies or whatever it is, to actually induce industry to invest here. That is not what's going on. In fact, we're going in the total opposite direction of that with Doge and the austerity push that we see right now. So this is going to cause massive pain. I mean, not just, you know, stock market is going to be a mess, obviously. People's 401ks are going to be a disaster. But this level of tariff, which you're right, is somewhere, if you average it all together, we're talking about something around a 30% tariff. This is a massive regressive tax that is going to hit the working class and the poor the hardest. Thousands of dollars additional that working class people will

have to pay to buy food, clothing, medicine, nearly everything that Americans consume across the board. The economic fallout here is impossible to wrap your head around and the pain that it will cause ordinary people. So, I mean, that's where we are. And just to give one more example, like I mentioned, you know, we can't gin up a domestic mining industry. Like, this is why I've always opposed this idea that he pushed relentlessly on the campaign trail of we're just going to do a flat tariff across the board. And you're right, it would be superior to what he actually ended up with,

which is complete insanity. But that never made sense because there are certain things, like Jeff Stein was talking about Chilean sea bass. Like, you literally cannot produce Chilean sea bass here. We don't want to increase certain industries, either because it's impossible or because it's like a low-end industry that it's not even beneficial for us to have in our country. So he wants to make this comparison to the early 1900s and William McKinley. You know, his economic history,

that could be a whole other segment in and of itself, the insanity of that. But if we can put up the last element here, guys, A8, the Smoot-Hawley tariffs. So last time we had anything approaching this was the Smoot-Hawley Act in 1930, which is widely seen as gravely exacerbating the Great Depression. What he just announced yesterday would go far beyond even where tariffs were under the Smoot-Hawley Act. So the Smoot-Hawley Act, when you average everything out, is about 20%. This is roughly 30% that we're talking about. Wildly out of line with any other developed nation around the globe. And again, I think it is difficult to imagine how severe the economic fallout is going to be from this and the complete insanity entailed in developing and announcing this policy. Yeah, and this is actually, I hate doing this because I feel like I have to start parroting like Milton Friedman or like all these people I totally

disagree with. Even this, you know, people, as you and I know, there are certain neoliberals who would cry Smoot-Hawley any time that you would have even, let's say, a 5% or a 10% tariff. There are certain people out there who would make the case for TPP or for any of these other trade partnerships, etc., purely based on GDP numbers. And I don't believe that at all. I am 100% pro-tariff. Even on China, it would make sense to maybe have a 25% across-the-board tariff.

In fact, the formula, I think the formula actually only makes sense whenever it's applied to China. But 54% overnight with no planning and no tax relief and no monetary relief for the said consumer? Absolutely not. I'm telling you this as a person who is an autarkist and a mercantilist in his heart. I do not want to rely on the rest of the world for all of these things. I want to see booming manufacturing and a complete inversion of the American social contract where everything is decentralized and we have no retirement except for betting on the stock market. But that's not what this is, right? Like this is basically trying to reform the whole system with the bluntest possible. It's like the Federal

Reserve, actually, when we think about inflation. This is basically using this extraordinary tariff rate as a corrective for so many different parts, interlocking parts of American society, of the way that American business works. As in, if you're going to do this, you're actually not only hurting people's pocketbooks, their 401ks, but, and let's even move past that because what, 60% of the country doesn't have retirement. The reason why, it's not about the stock market. It's about liquidity. It's about the fact that a business is about to take some extraordinary amount of hit on its bottom line just to remain basically profitable or even to maintain a semblance of margin. They have to have layoffs. There's just no other way to get around it. Now, what did we do

during COVID? Whenever we had a policy where we acknowledged, let's say, lockdowns, we're like, okay, we're going to have lockdowns. What did we do? We had PPP loans and others that went out the door. Hundreds of billions, if not trillions of dollars designed to offset that. Now, you can argue against that in the first place. Your argument would be we never should have done the lockdown in the first place. Okay. But I would say if you're going to do it, then you absolutely should have unemployment relief, right, and all that. But there's no acknowledgment right now of any of that. That's my, this is effectively like the same as lockdown without any of the unemployment insurance,

the CARES Act, or a way to think. So you have to think about the sledgehammer. And this is where people like me, I think actually have the more responsibility because I want to defend American manufacturing tariffs. I want America's working class to have better wages, to be, I want us all to have a much better social contract where yes, these cheap stuff from China, Ti Mu, I want us all to have a much better social contract where,

yes, these cheap stuff from China, Timu, Xi'an, and all of that, it's a disaster. It's making all of us actually materially worse off in the long run, even though we may have more abundance of stuff. That's a good critique of abundance, right? But just bringing it full circle, this calculation in and of itself is a lot like many of the other aspects of this White House, where it's just sheer stupidity. That is where I cannot just sit here and absorb it, because in this one, these are people's lives. These are people's retirement. People kill themselves during recessions. I've talked about this. Go look at the suicide rate from the great. It is the highest that we have ever seen. Go and look at the divorce rate and the social impact of what

mass economic pain does to the American soul. And also, let's think about what has happened every single time since. After 2009, we had a choice. We could bail out the banks and we could just continue our financialized economy. Or, you know, we could have done something different. Homeowners. We could have changed the way that our financial system works. And that was a chance to actually rewrite it. But we didn't do that. So all of our recent economic history tells us that in this interim amount of pain, the American consumer and specifically the people who are poor and the bottom 50th percentile of overall income household are going to only increase their amount of precarity.

We have a housing crisis. We're putting a huge amount of tariffs on things that go into housing. Now, OK, you can do that. You really can. And you can encourage lumber, et cetera. But what do you need to see on the other side of that? Huge policy to make sure that that is offset. And so I think even when you look at Trump voters

or many other people, people like me, who are supportive of even big tariffs, targeted tariffs, things that make sense, things that are actually designed. You know, if you look currently, like I said, the Vietnam one, that's one that makes absolutely no sense. We encourage these companies to move to Vietnam, specifically because to get out of China. Now, it's not a perfect solution. I'd rather it be

here, but it's probably better in the interim. Now, let's say you phase in a five-year overall plan. It's going to phase up to that. And in the interim, we're going to give you a tax credit to offset the cost of moving that here. Okay. I think people will say, fine, yeah. And in the interim, we're going to give you a tax credit to offset the cost of moving that here. Okay. I think, you know, people will say, fine. Yeah. And even the market, the reaction, all of that. This is not, this is not even the same universe of what we're seeing. No, not at all. Not at all. And the other thing to go back to your point about, okay, let's say, let's say that he, a month from now is like, JK, we're going rolling these back. We made a great deal, blah, blah, blah. At the end, after that, you still have an absolute madman economic terrorist who is the president of the United States.

So how much confidence do you think any business is going to have in their investment decisions, in their desire to hire and expand? Like, no, because at any time, he could walk back out with another chart and blow the whole world up. That's that's what we're talking about here. So, you know, of course, I'm not going to say it wouldn't matter at all if he rolls back these tariffs. But in a lot of ways, this is like the damage is done. And I truly believe that there is not a single honest way to defend the economic impact of these. They will make all of us poor. They will not have any intended effect of bringing back manufacturing,

raising wages, et cetera. It simply is an effort for Trump to have more power and consolidate more authority. And that also brings me to, I mean, I don't know what the courts will say, but I think that this is also wildly illegal because the power of the purse and the power to tax and raise revenue is supposed to lie with Congress. And so now if the courts,

and there will be challenges, and I know there's already groups that are- groups that have filed and are looking at filing, et cetera. And really, almost anyone in the country would have standing to sue, I think, because everyone is so impacted by this. But, you know, like I said, I don't know what the courts will say. But if you think about it philosophically, he is completely overturning our entire economic model and he's claiming the power to do it unilaterally. That is the power of a king. That is the power of a monarch. That is the power of a dictator. And so he's using the same tactical approach that he has with many other efforts in his presidency, including his,

you know, the Alien Enemies Act and other ways that he has tried to grab and consolidate power is basically he claims that we are at war or we're facing this grand crisis and that that justifies effectively, you know, wartime power consolidation. And, you know, we're not quite a martial law, but that's the direction. That's the cheat code that he has been using in order to just do whatever it is that he wants to do with no input from Congress whatsoever. And I do not think, based on the fact that in the Senate yesterday, you had a few Republicans who voted along with the Democrats to say no to the tariffs on Canada in particular. It's just a resolution. It won't have any impact. But that was a sign that there are plenty of Republicans who are also very uncomfortable with this particular direction.

But, you know, again, in my view, this massive worldwide tariff scheme that completely upends our economic model. It is wildly illegal for the president to be able to do this just on its own. Congress needs to reassert themselves. And like I said, we'll see where it goes within the court system. But I will say that, you know, previously the courts have given the president pretty wide latitude, which is why, you know, I wouldn't, I wouldn't count on them to save us from this insanity. Well, see, this is where the legality of it all really does matter, because what did we all remember with Canada and Mexico? What was that about? It was about fentanyl, technically, right? Well, here, I didn't even hear the word fentanyl. So I'll tell you, he's not claiming fentanyl this

time. He's invoking the IEPA to declare a national emergency, citing large and persistent annual U.S. goods trade deficits as a threat to national and economic security. So and he's claiming that is an unusual and extraordinary threat. That's the language. You know, typically the way that these provisions were thought of at the time was like, you're at war or you're going to sanction a country, something along those lines versus just, you know, basically here is like, it's a crisis because I feel like it's a crisis. And so I can do whatever I want here. So it is possible that the courts will look skeptically upon that, especially because, you know, a lot of these

judges, you know, at the Supreme Court level and elsewhere, they're very, you know, pro-business. They're very, like, you know, pro-corporate and were actually selected through the Federalist Society for these very libertarian economic views. So it is possible that the courts look at this and say, you know what, this is just, this is too far. But as I said before, there's certainly no guarantees there whatsoever. Yeah, that's right. So just again, to just dig down on that, IEPA strategy is one that was, it obviously has been used. Trump has stretched it to its definition. He was able to get away with it on Canada and Mexico, not just because of fentanyl, but because they were never actually in place long enough to face major court

scrutiny. And this is where I want to make at least that one case where I think the only bull case for this is that this is the opening negotiating tactic, right? Is that every country in the world can just say, come forward, hat in hand. They can't raise tariffs. That's what the Trump administration has made clear. And they just have to say, okay, what can we do for you? But you know what? Somebody made a really good point is that we forget in this case then that other countries have politics too. Look at what's happened in Canada. Trump has basically turned the entire nation of Canada from being on the verge of electing a conservative to becoming the most like hyper patriotic, liberal. Trudeau in a way resigned far too early. He would be one

of the most popular in the country right now. If he had just stayed, this guy, Mark Carney, he's cruising, you know, to wherever the next power is. But I actually think about places like India or even China, you know, everyone's, Oh, China, it's not a democracy. No, it's not. But what you think the CCP doesn't incorporate public opinion into its actions? What have they been selling their people for a long time? They actually have. The irony is, is that all of this is actually based on the Chinese model. It's just that the Chinese model is smart and also doesn't have to contend with four-year elections.

And so it can plan over a 25-year period. And they have been telling people over and over again that these ties between the United States and us are economically precarious, that we as a great power can no longer be tooled around by the Western imperialist states, that they're not reliable partners. That's why you need to sacrifice and put up with our surveillance capitalism so that we can at the same time, yes, build you this, but give you flying taxis and drone deliveries and awesome cars. And that's a very useful social contract for them. But I also think about India. India has now been slapped with a 26% tariff. And it's like, well, in any world where you were going to, quote, counter China in the Asia Pacific, what would you want to do? You would absolutely want to consolidate power amongst the non-Chinese dominated powers of India, South Korea, and Japan. Those three nations that I just listed, which are actually pretty decent allies to the United States, spend plenty on defense if they're able to, like in the case of South Korea and or India. What are they going to do? India is the

largest democracy in the world. They don't love America, especially after how Biden treated them for the whole Ukraine situation. They feel very upset about that. In this case, they're a nationalist people. They have democracy. They can vote. How exactly is Narendra Modi supposed to respond? Same in South Korea and Japan.

These are democracies. These are places which have actual politics. They are not going to just sit down and take this lying down. Now, in the interim, you might have some negotiation, et cetera. But every time in the past where we've tried to interview, let's say in the South Korean case, there was this whole thing that happened with THAAD missiles. This is going back a decade or so. Well, the South Korean populace was not very happy with the United States over that and, in fact, went in a very, very different direction. Things ended up going crazy because of the whole North Korea situation. But I'm just giving

examples about how balance in that region in particular is so important. And that's another reason I feel so galled, is that if you look at the Asia Pacific, that is where you see the highest tariffs that have been put into place. This is a place, what do I always say here? 50% of global GDP is going to be there in the next five years. You know, what are we trying to say here? That we're going to have the highest tariffs in the fastest economically growing part of the world where the biggest population is and where all of our economic future lies? The idea that, you know, and listen, I would, again, love to be in a situation where we're not reliant on them or any of that. But you cannot reverse 45 years of policy in a single tariff-related action. Right.

Which is effectively what— With a single chart. With a single chart. Yeah. With a chart which is chat GPT'd and not even chat GPT'd correctly. Like I said, I did it in five minutes. I said, chat GPT, come up with a formula for me that balances reciprocal tariffs, currency manipulation, and non-tariff. Give it to me in five seconds.

And then I was like, go ahead and calculate this for Japan. You know what it said on Japan? Based on this formula, I would not put any more tariffs on Japan. So there you go. So what is this actually all about? I'm cheering for the AI overlords to take us over. Super intelligence, come and save us because this is not going very well. No, it's not.

I mean, look, maybe they'll roll this tape a year from now and say, oh, you look like a joke because you're panicking or concern troll. I mean, that's basically the MAGA response right now. Oh, you guys don't get it. There's a grand and a master plan. But listen. What is it then? After what has happened with Canada and Mexico, you cannot claim that

because we keep saying they're on, then they're off, and they're on, and they're off. And look, it's funny, you know, from the outside, but I personally know of companies that have had to spend millions of dollars while those tariffs were in effect, let's say even for one day or for even one week. Like when you're moving billions across the border, it's not all fun and games here. And sure, if we were then to make that up and say the government is then going to, let's say, give you a tax break on this in the future, I would say fine, because then I know then that no American is going to lose their job as a result of it. But no, messing with people's jobs, messing with people's retirement accounts and all of that, that is the farthest bridge for me. Yeah, no, that's absolutely right. It's easy to lose sight of.

These are real human beings and you are screwing with their entire lives, with their entire lives. I know a lot of cops and they get asked all the time, have you ever had to shoot your gun? Sometimes the answer is yes, but there's a company dedicated to a future where the answer will always be no. Across the country, cops called this taser the revolution. But not everyone was convinced it was that simple. Cops believed everything that taser told them. From Lava for Good and the team that brought you Bone Valley comes a story about what happened when a multi-billion dollar company dedicated itself to one visionary mission. This is Absolute Season 1,

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She was still somebody's daughter. She was still somebody's sister. There's so many questions that we've never gotten any kind of answers for. If you have a case you'd like me to look into, call the Hell and Gone Murder Line at 678-744-6145. Listen to Hell and Gone Murder Line on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Let's go ahead and move to the immediate reaction from CNBC, which was like, holy hell, this was worse than any of us could have possibly imagined.

Let's go ahead and take a listen to what they had to say. Market reaction after hours. I've never seen anything like it. This, I think fair to say, is worse than the worst case scenario of the tariffs that many in the market expected the president to impose. You laid out a number of the percentages there. And there's some question of how the administration calculated the percentages that they're responding to in each of these cases. Are they adding in value added taxes? He talked about, you know, non-tariff barriers as well. So I think while many were hoping that this would eliminate uncertainty, there's going to be more uncertainty in the market. And from those watching policy tomorrow on, well, you know,

if countries push back on how these non-tariff barriers were calculated, will there be wiggle room here? Exactly when do these go into effect? How quickly are companies going to have to adjust their pricing? So many questions. Worse than the worst case scenario is their take. I was actually watching it live. It was pretty extraordinary. Yeah. This is where I have to balance, like, look, it's always fun to see Wall Street elites and all of them panic. But that's my point is that it's really not about them. And in fact, they're a straw man because anybody on CNBC, any hedge funder or whatever, they're going to be all right. OK, but you know who's not going to be all right? Somebody whose company has a liquidity crunch and then fires 10 percent of its workforce overnight.

I mean, that's another problem with America. And I would love to fix this. We are massively over-financialized. Many of these companies are running on razor-thin margins and are constantly borrowing. You know, I learned this, for example, during the financial crisis where the CEO of GE is like, we can't make payroll because they're constantly borrowing, like it's called like commercial paper or something, in order to make their payroll. And you're like, wait, what? Like how do you operate a business this way?

Yeah, and they couldn't roll their commercial paper. They literally could not roll their commercial paper. That's why they could not make payroll. And their CEO is calling Bush being like, we need a bailout tomorrow. Otherwise, we're going to die. Well, you know, not much has changed on the commercial books since that time around. It's gotten worse. We're more financialized. We're more financialized. Yeah. More leveraged. More reliant on liquidity. By the way, what's overlaying all of this? We still have relatively, you know, in modern times, higher interest rates. So the borrowing cost is very high at the same time that you may need, let's say, bridge or something. You know, where is the Federal Reserve here? Howard Lutnick said this morning, don't worry, we're going to have lower interest rates. You can't say that. You can't guarantee that at all. You might be right because you're probably going to induce some sort of economic contraction. But, you know, when you have, what, 4%, 5%, 6% interest rate and you have overall contraction,

I mean, you're just setting us up for stagflation. That's right. In the interim. Well, and that's where the Federal Reserve will be in an absolute bind because on the one hand, yes, you're going to have a drop in GDP and in growth. That would push you in the direction of cutting interest rates. On the other hand, you're likely to have significant inflation because of the tariffs, which would put you in the direction of lifting interest rates. So that's why stagflation,

in addition to being economically devastating, it's very difficult to deal with because it pushes the Federal Reserve in both directions at once. So certainly there are no guarantees that interest rates are going to be cut whatsoever. And, you know, every reasonable thinking person is now also massively increasing their odds that we are going to face a recession. Mark Zandi, who's the analyst for Moody's Analytics, went on News Nation and said he thinks it's hard to imagine at this point that we will be able to avoid a recession. Let's go ahead and take a listen to him. Mark Zandi, who's the economist at Moody's Analytics, who's recently gone to 40 percent odds of a recession happening by the end of this year in the United States.

After listening to the president, you want to go higher or lower than that? Higher. Those were big numbers, Connell. Did you look at them? I mean, those are really large numbers. If you do the arithmetic, it looks like a 20% effective tariff rate. And that, you know, he's carving out, it feels like, it looks like, because you didn't see Canada and Mexico in the chart, carving out USMCA. So even with the carve out, I think you're at 20. And if that's actually what's implemented, and if you have any kind of retaliation, which I would anticipate, I don't see how we avoid recession. I really don't.

On average, you're talking about 20 on average when you work out those numbers, like what I was talking about. China's 34 and so on, and Japan's 24 and so on. So you say it's about a 20% on average. So you say the odds of recession? I hesitate to say, but it feels like it's better than even odds at this point. I mean, I have to do the arithmetic and go look at it. And obviously, a lot depends on if these are actually implemented, which is an open question, given how these are on again, off again. And we'll see over the next few days how our trading partners respond to this. You know, if they are more circumspect and cautious, then

we can maybe breathe more easily. But if they're retaliating kind or close to, I really don't see how we avoid a recession. Don't see how we avoid a recession. I mean, don't take that to the bank. But I think we've said this before. You know, the problem is that now in an era of uncertainty, people go with who they trust. Now, do you necessarily want to live in a world where the ratings agencies and all of them are the people who are still trusted by Wall Street? No, you don't, obviously. It's not like these economists and all of that are the greatest geniuses who haven't been wrong a lot. But if you have a lot of social capital, it can become self-reinforcing.

I've said this before. We run a business here. If I had this level of uncertainty about what the future is, we're not hiring anyone. We're not doing anything new. In fact, we're taking this spending and we're going way down.

You're going to stockpile as much cash as possible and just say, okay, let's see what happens. Right? That's exactly right. No more credit, nothing, any of that. That's not good for overall economic activity. Now, let's say that we're a tiny little small business compared to the overall US market.

Now, let's say that you are JP Morgan or Goldman Sachs or Toyota or GM or Ford. Another thing on here is that all of this is designed to bring back manufacturing. The problem that I see right now is that we are giving zero break to the manufacturers who are building things in America, but have things that they have to bring in, in order to make said finished product. That's the whole idea of like importing parts and then assembly here at home. It's actually one of the correctives that was applied by neoliberals in the case for why high-tech manufacturing, et cetera, is a good

thing. Now, I don't think they've proven correct. I would be fine with building more finished parts, et cetera, here. What do I keep coming back to? Do you know how much money that you need in order to build those factories? I mean, look at the TSMC plant in Arizona. The Chips Act passed years ago. It's still several years from coming online. This stuff takes a lot of time. It takes billions and billions and billions of dollars. It takes actual competence. I'm just talking about chips. I mean, to think about textiles or any of these other things. And then we also should have an honest conversation, even as someone who is pro-manufacturing. And I don't think that we should have it so that you must have a four-year college degree or whatever to be able to make a multi-six-figure job. But this is, again, where I

hate to sound like Milton Friedman. There are certain types of manufacturing, which many Americans, it's not only that we don't want to do. It's that, you know, if you look at a basic level, it's not even something that we necessarily have the best competence at and that if we did have it here, could have all sorts of downstream social effects. Now, the problem I think is the Neolibs have taken that way too far for all manufacturing, right? Agreed. But it's not like the idea itself is not incorrect. So, man, I feel like a very difficult position here because I genuinely feel like I'm talking like Milton Friedman, and I don't want to. These people have been wrong. And that's part of what is so devastating here is that they are ruining tariffs in terms of a policy. Like the next time anyone floats like,

hey, let's do tariffs and industrial, the public is going to be like, hell no. The last time this happened, we had a massive recession. We all got poorer. I couldn't afford anything. Like, no, we're not doing that again. And so for people who do think that, you know, there are certain key industries that it would be important to protect and to build up here in America. I mean, this was a big learning from COVID. I think that many people who had been more skeptical of tariffs also took in at that time is how fragile the nation's economy was because so many key supply lines had moved overseas, how we were unable to protect ourselves even with basic like PPE because that was also all abroad. These things are really important. And he is going to destroy the appetite to do any sort

of actually intelligent tariff plus industrial policy moving forward. But, you know, to go back to this risk of recession, which is extremely real at this point, you know, it's not that there's no winners in recession. Coming out of the financial crisis of 2008, 2009, a lot of winners, banks got bigger than ever. People who were at the very tippy top for them, it was a buying opportunity. You know, assets were cheap. They could buy up all kinds. I mean, that's how we really got set on this path of having so many investor-owned homes. A lot of that came out directly

of the housing-related financial crash out of COVID. We all saw the numbers. The billionaires, the Elon Musks, the Mark Zuckerbergs, the Jeff Bezos of the world, they got richer than ever coming out of the COVID economic crash and pain. So for the people who are, I'm not even talking about like your average Wall Streeter. I'm talking about the people who are at the very tippy top. A recession is a buying opportunity to consolidate and buy up even more of our economy than they

already have. And I think that's also important to keep in mind when you're looking at this and going like, Jesus Christ, don't you know that you're causing a recession? Just remember that people like Elon Musk, for them, a recession is an opportunity. And what we've seen in certainly recent history with these crashes is it just makes the richest of the rich even wealthier and gives them even more power. You know, to go to your point, Sagar, about the reshoring, like, of manufacturing, even in an intelligently designed process, We also have to acknowledge the fact, and this was a point that actually the menswear guy was making online,

if you're thinking about bringing back textiles, do you think that's going to use the same number of people that it did in 1972? Of course not. I mean, we are on the cusp of this massive AI revolution. Some of this is already, some of that future is already here. So companies, even if they did, even if you did something intelligent, and even if they did bring manufacturing back here,

it's not going to be the same number of jobs, the same level of wages. They're going to look to automate as much of that process as they possibly can. So, you know, the whole thing is just outrageous. And then, you know, the last thing I'll say with regard to the market reaction, the freak out on CNBC, et cetera, is like, you know, he did say this the whole campaign, not exactly this. This goes even beyond some of the things he was saying on the campaign. But I do think that because he's all over the place and because some of the things he said before his first term he never followed through with, et cetera, I think there was a tendency to hear from Trump what they wanted to hear versus actually listening to what he was truly saying. And this is a note that, of course, Jeff Stein has been sounding consistently. He's been saying over and over again, guys, they're serious about this. This is not just

some negotiating tactic, you know, that's going to fade down over time. He thinks that he didn't do enough on tariffs in the first term and that people who were there were holding him back. And this time he doesn't give a shit and he is going to go big. And again, think of how it benefits Trump himself and how much he will enjoy being able to dole out favors or issue punishments using the tariff policy as a weapon so that he can compel whatever sort of behavior he wants to compel. Because industry is, you know, a lot of industry has been, has sort of become pro-Trump. You know, that's been part of the vibe ship. And certainly after he won, you had all of these oligarchs that were lining up behind him. You know, they were the intelligent ones who realized right away what time of day it was that, like, okay, this is what this guy is doing.

And if I want my business to succeed, I better be in his good graces. But industry can be another power center. And he does not want the possibility of having any rival power center. So I think that is really the core to understanding what otherwise is just madness on its face. Yeah, right. And coming back just finally, I think, in terms of reaction and for all of this is just a general theory of how this can all play out in the future. I just think that the, I think with returning to that idea, let's say even with the 10% tariff, you could even argue for a 10% tariff. And the balance

behind it would be this, is that that would prevent any sort of gaming of trans shipping, et cetera. And 10%, while high, don't get me wrong, would also be more manageable. 30%, which is where we're currently at, or 40 or 50 in the case of some countries like Vietnam, our number eight trading partner, that's not a world where he ran on. This is why it actually is completely out of step with even the rhetoric of the speech. The speech was about reciprocal tariffs, non-trade barrier. That's not what's happening. Right. And that's actually what's driving me nuts.

Do a world where you do a reciprocal tariff. Okay. It's honestly not hard. Another one that they mentioned, for example, is, and this is where my Maha folks should be on board. They were like, nobody's buying American beef in Australia. Yeah. You know why? Because they think it's gross. They're like, not only are we afraid of mad cow disease, you guys use all these disgusting hormones. We don't want that shit in our country. In many

other countries, in Asia, for example. Letnick told me on Sean Hannity last night that it's because our beef is beautiful and their beef is very weak. That's what he said. If our beef was beautiful. That's what passes for an argument on this. If our beef was beautiful, our people would be beautiful. And we can just take a look at the obesity rates on that one. Go look at what an actual cow that you're probably eating looks like.

It's fucking disgusting, okay? That's my point is if you go to Asia, there's like this specific antibiotic or something. I forget. It starts with an R or something mean that we use here. They're like, we won't let you poison our children. Whenever we ask them to buy American beef or pork, they're like, no, we're not allowing that. This is where our Maha folks should be on board. The reason that some countries don't allow US food is because they think it's filthy and gross and they're not wrong in many respects. True. So if we want people to buy more of our beef, you can. You know why?

At Costco, the healthiest meat you can buy at Costco is from New Zealand. You know why? Because in New Zealand, it all has to be grass-fed, and it all has to be antibiotic-free. You could do that too if we want to. Now, that would require a significant change in our food supply and all that, but that's where the stupidity of it is just maddening because, you know, we're at the same time that we like want to make America healthy again. What? We want Australians to be as fat as us?

No, we don't want that. It's like you don't want to export this crap to all across the world. Yeah, I mean, we have in a lot of respects already. Yes, we have. You're right. But my point is that if anything, it's a bad cultural ill and perhaps the worst thing that we have exported to the rest of the world. So anyway, just coming back to it, this is 10 times worse than any. Actually, you cannot even honestly say that this is what people understood the tariff plan was because it's not. Well, it genuinely is not. It does irritate me that some news outlets are still referring to it even as reciprocal terror. It's not. Yeah, they're still taking up the Trump framing and language when it's like, see for yourself,

like use your own brain to characterize what's going on here. Because, you know, I have problems even with the reciprocal tariffs. Doesn't make sense for a variety of reasons. It's not even worth getting into because that's not what we're doing here. That is not what we're doing here. This is, I truly characterize this as economic terrorism. I don't think there is another accurate way to characterize this. He is blowing up all of our lives, the global economic system.

And again, now I'm sounding like Milton Friedman too, which is not my ideological, but I will take the most neolib of neolib policies over this. I honestly will, because this is going to be a massive, regressive tax on working class people. It is going to cause, they've been running around, oh, short-term pain for long-term gain. There will be no long-term gain. This is just about pain. For what? For what? There is no rainbow on the other side of this. It's just pain. It's just threatening a recession. And it's, you know, it's hard for me not to see, it's hard for me

not to see this as anything other than a complete and utter disaster, absolutely of his own making. And last thing I'll say just about where we were economically going into this, like it's not like the American working class person, the American consumer was on solid ground going into this. It's not like we have a buffer to be able to absorb these massive shocks. And so these politicians who are running around like, oh, you know, one of them was saying, oh, you know how it is when you renovate your home. It's a little inconvenient having the painters there and doing the drywall. But at the end of the day, it's better. People do not have that kind of luxury. You already had car loan delinquencies going up, spiking massively. You already had people who are struggling to make rent, let alone be able to

afford that. And the housing market is complete trash right now. You already had people who are saying like the prices are too high. I cannot afford to make ends meet at the end of the month. That is what Trump ran on. The number one reason people said they voted for him was inflation. And now he's on here saying, you know, oh, just take the pain. Yeah, prices are going to go up. I couldn't care less if prices go up. Just, I don't know what you'd even say at this point. I know a lot of cops. They get asked all the time, have you ever had to shoot your gun? Sometimes the answer is yes.

But there's a company dedicated to a future where the answer will always be no. This is Absolute Season 1, Taser Incorporated. I get right back there and it's bad. Listen to Absolute Season 1, Taser Incorporated, on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

I'm Clayton English. I'm Greg Glott. And this is Season 2 of the War on Drugs podcast. Yes, sir. Last year, a lot of the problems of the drug war. This year, a lot of the biggest names

in music and sports. This kind of star-studded a little bit, man. We met them at their homes. We met them at the recording studios. Stories matter and it brings a face to it. It makes it real. It really does.

It makes it real. Listen to new episodes of the War on Drugs podcast season two on the iHeartRadio app, Apple podcasts, or wherever you get your podcast. I'm Michael Kasson, founder and CEO of 3C Ventures and your guide on Good Company, the podcast where I sit down with the boldest innovators shaping what's next. In this episode, I'm joined by Anjali Sood, CEO of Tubi. We dive into the competitive world of streaming. What others dismiss as niche, we embrace as core. There are so many stories out there. And if you can find a way to curate and help the right person discover the right content, the term that we always hear from our audience is that they feel seen.

Listen to Good Company on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. This is an iHeart Podcast.