Bulwark Takes - Tim Miller: Why is Trump Making China Stronger?

Episode Date: May 14, 2025

Tim Miller joins Scott Galloway as a guest host on Raging Moderates. They unpack how Donald Trump’s reckless tariffs and trade war have pushed the U.S. economy to the brink, rattled global markets, and handed major strategic wins to China while American consumers to pay the price. Watch the full show here: Raging Moderates

Hey, y'all, it's Tim Miller. Yesterday, I had the pleasure of guest co-hosting the Raging Moderates podcast with my father figure, Scott Galloway, Prof G. And I am so jealous of their brand, Raging Moderates. It sounds good. It was a great chat, wide ranging. Wanted to show you a couple of clips from it here,

and then you can head on over to their YouTube if you want to see the full video. Hope you enjoy. I know you will. I love PropG. I love that guy. It's a great show. Check it out. Let's move on to the tariffs here. All right. So back in Washington, Fed Reserve Chair Jerome Powell, Chairman Powell warned that Trump's escalating trade war could drive the US towards stagflation. It's probably a word you don't know because you're too young. You haven't had it since the 70s.

I read about it in the history it. You've read about it? Well, I mean, as a Reagan fan, you know, in high school Republicans, people talked about, you know, how he ran against stagflation. So I'm familiar with it in that context. So it's this toxic mix of rising prices and rising unemployment where basically interest rates go up and the economy slows down. And it's sort of stagflation is sort of a step or a bridge to a depression. But on Thursday, Trump announced a new trade framework with the UK that lowers tariffs, but only on luxury cars, including Rolls-Royce and Bentley. Well, thank God. Toys, including Barbie. And plane engines, I think, got thrown in there too. I think Rolls-Royce has given us some plane engines too. Toys, including Barbie and Hot Wheels, will face a percent tariff. Then over the weekend,

there was a surprise detour. The U.S. and China agreed to a 90-day truce, temporarily rolling back some of the steep tariffs that had been hammering both economies. By May 14th, the U.S. will slash its tariff on Chinese goods from 145 to 30 percent, while China will lower its own tariffs on American products from 125% to just 10%. The move helped calm global markets, but it's anyone guess if the pause will hold. They now have 90 days to make a deal. What do you think will come out of this? What's your impression of what's happened as of this morning, Tim? I think for starters, obviously Trump linked and had very serious concerns about the economy. I mean, if you just look at the broad contours of this, so 30% tariff now in China is 20 percentage points higher than it was under Biden, right? So it was at 10 and now it's up to 30. like added the 20% tax on consumers who consume Chinese goods in exchange for nothing,

right? Like in exchange for nothing. I mean, the Chinese didn't even, there were some, I guess, promises around fentanyl or something, but they didn't, in the past, in the first Trump term, when they did the tariffs to China, there was also a deal where they were buying our soybeans. And maybe that will come over the next 90 days. I don't know. But as of right now, we still have increased – we still put a 20% essentially sales tax increase on Americans for nothing. Just so that Donnie could feel tough for a little bit. So how does it go from here i don't i mean i think

that i'd be interested in your take on like i noticed the markets are up quite a bit today i i just generally think it's maybe my pessimistic nature that like the markets and business leaders have been like a little bit too sanguine about like kind of where we're heading. I think that this is going to be like relatively ugly. This move away from a total trade embargo on China has like walked us away from the brink of like a worst case scenario economically, at least temporarily. But even still, and if you would have went to any of these people in October and said, hey, I'm from May 2025. And here's what the economic outlook is going to look like then. We're going to have a 10% across the board tariff on everybody, 30% on China increased. The tax bill that you guys were counting on is going to be floundering in Congress,

and we'll see what happens with that. But we haven't really made any meaningful progress of it yet on May. And GDP growth will be down to zero. I feel like everybody would think that was... I feel like business people outside of politics would say that that's almost a worst case imaginable scenario. And that's where we are now, but people are kind of spinning it as a positive because it ends up being better than what the worst case scenario was that we were staring down the pike of had they kept the 145% in. So I don't know. What do you make of that?

So he's pulled the knife out of the back sort of halfway. That's the good news. The bad news is the injury is going to take, I think, decades to heal because even worse than the tariffs themselves, which obviously increase consumer prices and slow the economy. I think the most lasting damage here is that we have now become the land or the economy of toxic uncertainty. And that is people don't even know how to plan their businesses. And the US S&P trades at a price earnings multiple of around 26, meaning for every dollar of profits that our great American companies generate, the world rewards us with $26 in value, which flows right into not only the pockets of shareholders but employees. It lowers interest rates.

We can borrow money at a much lower rate. The U.S. dollar is kind of the reserve currency because everybody wants to buy American stocks, so there's greater demand for dollars. And the U.S. being the reserve currency globally literally lowers on average the interest rate that you pay across your student loans, your mortgages, and your car loans somewhere between half and 1%. So that's just literally hundreds of billions of dollars in cost savings that the Americans enjoy because of the fact that our markets trade at a higher multiple on earnings. Now, why do they trade at a higher multiple?

A lot of reasons. We're more risk aggressive. Our technology is better. We have more of a zeitgeist or a culture of entrepreneurship. We have great universities, great intellectual property, but we also have rule of law and consistency. We're seen as good trading partners. We're seen as people we can count on. We're seen as a place where there isn't going to be a ton of corruption where you come and say, open a bunch of restaurants, and then the government shows up one day and says, sorry, we now own them. And that believe over the next several years, we're going to see a re-rating down of our price earnings multiple, which effectively increases the costs on all American businesses and consumers. And the market has sort of said this to a certain extent. The market has said, we don't really know what this guy's going to do and we don't trust him. 145% tariff. I mean, this is what a bad negotiator is. The first thing we need to do is dispel the myth that this guy is a good business person.

He would be wealthier if he'd taken his massive inheritance and invested it in index funds. His business career includes a trail of bankruptcies and unpaid subcontractors. He is an outstanding, to be fair, he's an outstanding reality talk show host, made several hundred million dollars hosting and envisioning a reality talk show. As a business person, he's not very good. And in terms of

negotiating, he's negotiating himself at this point. He put on 145% tariff. And then a few days later, without any counter from the Chinese, other than this is unacceptable and we're not even going to talk, he said they're unsustainable. It's like, well, boss, you're the one that did it. So to go to 145 and then to go down to 30, and effectively what you have is the Chinese are divesting away. This will keep the factories sort of humming in China. This will basically loosen up or cancel the trade embargo for the time being. But also in negotiation, you have to understand your leverage and the amount of leverage you have. And what is typical of America and Donald Trump,

we're under the impression we're much more powerful than we are. People think of us as, you know, we're the only customer at the taco stand here, and that without us, they go out of business. We're the third largest trading partner. The Association of Southeast Asian Nations and the EU are bigger trading partners with China. China has been divesting away from us. And this is kind of, I think this is good for them.

They get to continue to sell not as many products, but still not the shock that this trade embargo was going to implement on them. At the same time, they will slowly but surely continue to divest away from us. And that is what the whole world is doing, Tim. The whole world is rerouting their supply chain around the United States, not even because of tariffs, but because they don't know how to plan their business with us because of this toxic uncertainty. And I think that resupplying or that rerouting of the supply chain will take years, if not decades, to reheal. And I do think the Americans have taken for granted, the American public, of just how inexpensive our goods are because of the supply chain that runs through the U.S. of every major economy because they

trust us and think there's rule of law. And those things are no longer given with us. The scariest ad I've seen, organization did a poll of global citizens, took a statistically significant sampling. And for the first time in history, more people around the world think that China is a greater force for good in the world than the US, which says to me, people are much more inclined to do business with China than they are with the US. And as someone who has run businesses, I've run businesses my whole life. They've always been global businesses because they've been strategy and brand firms. When I walk in to meet with LVMH or Samsung, Tata Motors, we're taken seriously. And also, when they do business with us, they want to do business with us. If I'd started a brand strategy

firm in Pakistan or even in Thailand, they're just less inclined to do business with you because they don't know you. They don't trust you as much. They don't think you're as innovative. They probably don't think your employees are as good. They're not as confident you're going to uphold your side of a legal contract. The legal contracts aren't as easily agreed to because they're not as consistent with the kind of American or Western law. All of that we have had massive benefit from. And I don't think American consumers realize how much they benefited from that.

And they're going to realize it when everything just gets a little bit more difficult. Your thoughts? Yeah, no, I agree with most of that. I'll just defer to your expertise on the economy side of things. I concur with most of that. I'll just defer to your expertise on the economy side of things. I concur with that. I just like putting on my former Republican hat just on like the China hawk side of it. I remember we used to have kind of a Republican Party that was strong against communism and that felt like wanted to use more of a Reaganite policy, you know, in great power struggles. We've seen these guys basically fold in the face of China. And I just think broadly, more geopolitically, think about the advantages China has gained over the past five months. I mean, in addition to the stuff you just laid out, the fact that we've totally gutted USAID and we've eliminated any soft power we have throughout the world

and created a huge opportunity for China to fill that void. To your point on the economic trading partner side of things, I think that if you are one of those Asian countries like Thailand that you just mentioned, like, I mean, don't you feel like you can trust China a little bit more as a trading partner than you could have five months ago? For sure. Then you look at the policy side of things, talk about leverage and weakness. I mean, we completely fold on the Liberation Day tariffs. Meanwhile, we also completely fold when it comes to TikTok. And the US government puts into law a TikTok ban, but Donald Trump and this administration won't enforce it because they're afraid of the backlash from the American population. So like China has been so successful in infiltrating American culture through TikTok that, and the power of that is so great that the U.S. government is scared,

let's just be honest, scared to enforce its own laws when it comes to banning TikTok. China State TV this morning, I saw this, they put this out, the outcome of trade talks with Trump team shows China's firm countermeasures and resolute stance have been highly effective. China gets nearly all tariffs off for doing very little other than agreeing to talk. That's their spin this morning. So I just think across every metric, we have made China stronger over the past five months in ways that, as you say, are going to be hard to unravel. And there isn't really any evidence that we are trying to win a great power struggle with them. And I guess I would add just the last thing I'd say on it is, if you're China, it's hard for me

to get inside the head of Xi Jinping, and I don't know what their plans are with regards to Taiwan or their timing, but I just do not think they could look at America right now and think that we would put up any real resistance to their efforts to overtake Taiwan if they wanted to do it based on how we've acted with regards to Ukraine, how we've acted with regards to this trade war. So I just think that we've weakened ourselves pretty noticeably across a variety of different metrics vis-a-vis China.