Money Rehab with Nicole Lapin - The Latest on China and How Lighter Tariffs Will Affect Your Wallet with Fred P. Hochberg

Episode Date: April 25, 2025

After a wave of not-so-great headlines on tariffs, we finally have some good news: the Trump Administration is signaling cuts to the new tariffs on Chinese goods. But what does that actually mean for your bank account? To follow the money trail, Nicole brings back Fred P. Hochberg—former President of the Export-Import Bank and Acting Administrator of the Small Business Administration—who has spent his career at the intersection of business and public policy. Fred and Nicole break down how tariff policy should work to benefit Americans, what happens if these cuts don’t happen, and how it all could affect prices (yes, including what you’ll pay for Christmas presents this year). Fred's book is an amazing read to understand the current moment! Check it out here: https://www.simonandschuster.com/books/Trade-Is-Not-a-Four-Letter-Word/Fred-P-Hochberg/9781982127374

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Bank NA. Spot me eligibility requirements and overdraft limits apply. Out-of-network ATM withdrawal and OTC advance fees may apply. Late payment may negatively impact your credit I'm Nicole Lapin, the only financial expert you don't need a dictionary to understand, it's time for some money rehab. Well we have had some good news on tariffs slowly trickling in after a whirlwind of some not so great news. On April 11th, President Trump paused reciprocal tariffs on Chinese electronics. Now he's apparently thinking, President Trump paused reciprocal tariffs on Chinese electronics. Now he's apparently thinking about making significant cuts to tariffs on Chinese goods pretty much across the board. All of this revolving door of policy has implications, of course, on all of us and how we should be saving and spending. So do help me follow the money trail and bringing in Fred Hochberg. He is back on money rehab. Not only has he

helped scaled major businesses in the private sector, he's also worked at the intersection of business and public service. Fred was the president of the Export-Import Bank of the United States in the Obama administration. He was also the acting administrator of the Small Business Administration under President Clinton. So he's maybe the best person in the world to be talking about this stuff. Today we talk about what tariff policy should be in order to benefit Americans, what will happen to the economy if tariffs don't change, whether rolling back Chinese tariffs will have a negative impact on American industry, and what we already know about the cost of Christmas presents this year. Here we go.

Fred Hochberg, welcome back to Money Rehab. Excited to be here. So much to talk about. So much to talk about. You are the man to break all of this stuff down for us. Holy smokes. Just like how are you feeling about this? This feels like maybe you're Super Bowl.

This is a very stressful time because I think everything many of us believed in about how our economy works, how we work with the rest of the world, who our friends are, who's not so friendly to us, feels like it's all been turned upside down. So it's very hard to sort of keep your head straight and people to make plans, particularly small business owners who need to make plans, particularly small business owners who want to need to make plans. It's hard to do it in this environment. For sure. Everything is changing by the day we're talking Thursday, April 24th. This episode is going to come out tomorrow. Even with a one day turnaround, there could be significant news or tweets or whatever that come

out about US China tariffs. This is all an active conversation. It seems like the president is now, the latest news is he's strongly considering lowering tariffs. The numbers are unconfirmed, but right now they're floating around 50 to 65%. What do you think about that? Do you think a 50% tariff on Chinese goods

is gonna be better at achieving some of these goals. China is a different beast. Well, one tariff is a tax. It's nothing more. It's a fancy word, but it's a tax. So a tariff is always a tax. And the tax is generally paid for by the people who consume it ourselves. So if it's clothing or sweatshirts, and interestingly, women's clothing is at a higher tariff rate than men's clothing. Not cool. Often called the pink tariff. So that is a burden on working class Americans and particularly on people who are trying

to pay their bills week to week, day to day. It's a real challenge on them. But companies are the ones that are paying for this, right? But that assumes they're not going to pass it on to you. Why would they not pass it on? I mean, if you remember a few years ago when the gas prices were very high and sometimes you took a Lyft or an Uber, there'd be a fuel surcharge. Why?

Because the cost went up and they have to pass that on to consumer. So yes, the tariff is first paid by the importer. If you're importing things from China or Vietnam or any of these countries, and then the importer has two choices. They could either absorb it or pass it on to the consumer. And in some cases, they're able to go back to the supplier overseas and say, hey, I need a little relief here. We can't absorb all of this. Now, you know, you could probably absorb five or maybe a 10% tariff.

Cause you could say, well, listen, maybe my supplier, they will cut their costs by two or 3%, I'll have a little less profit margin and the consumer may pay a few more percent. So we spread the pain. But not with 125 or 145 percent, or even a 50 percent tariff is much more than anybody can sort of eat and particularly on short notice. I think part of the challenge we have on our economy right now in general is it's very hard to respond so quickly to these dramatic changes. So right now, it seems like China has a lot of leverage. They're saying, hey, we're not even talking.

What are you guys talking about? Like, come to us when you have no tariffs. How do you think the US Sino relations are playing out since you were part of the administration? They've only gotten worse. They are I would say, started under President Bush in the early 2000s, and then continued by President Obama, we would meet with the Chinese once a year, once a year they they come to the United States and then the other year we go to Beijing.

Did a lot get accomplished? Some, not a lot, but at least we were talking on a regular basis. We all knew each other a little bit. And I think that provided some support. Once President Trump came into office in 2017, that ended. President Biden did not pick it up. So we've had a long period of time where there is not a regular dialogue between people in the United States at the government level and the people who are running China. Obviously,

companies are, because you have different companies that are operating, American companies in China or selling to China. But on the kind of the official back and forth that's ended. So I think that makes things really hard because it's very easy to misunderstand a move. Like you just said, China said, well, it's up to the United States to make the first move. And the President Trump says, it's up to the President Xi Jinping to call me first.

Probably what will happen is some lower level employees, some mid-level employees below the level of the president, they'll start some kind of dialogue and say, well, conversations have begun without indicating who called who first and who started the conversation. And ultimately, we have to get to a point like that. Yeah. I mean, it's all playing out on the national stage. This is like a lot of drama. I've not seen anything like this before. I'm assuming you haven't either. It sounds like to you know, the president's walking back of these tariffs comes

after meeting with CEOs of Walmart and Target and Home Depot and Lowe's. Do you think it's possible for the US and China to even strike a deal? Do you think you will be better or worse off? How it's how is it going to affect Americans? Well, in 2020, before the election in January of that year, President Trump signed an agreement with China, mostly about buying a lot of our agriculture and commodity exports, you know, soybeans, wheat, things

like that, that we were selling a lot to China. China didn't really follow through on those purchases. So if I was to guess, my guess is we will find some way to agree with China that they will buy more of our goods, commodities, soybeans and so forth. We will continue to buy some things from China. We will reduce the tariffs. But the big issue between both countries has always been we don't like them stealing our intellectual property like stealing software that Microsoft and other companies make.

So we are concerned about that kind of theft of our intellectual property and the things that really innovate our economy. And they don't like the fact that there are certain goods that we will not export to China because of national security or their high-tech products. So what they'll say is, we're not gonna do a lot until you can sell us

anything we want. We'll never agree to that. And they're probably not gonna agree to not stealing our intellectual property. So at some level- But you mean chips and stuff like that. Yes, and well, even if you're a company and you're operating, I mean,

when I was in visiting China more frequently, even if we were making, say, medical equipment there, I would say most manufacturers did not put the latest technology into China because they were afraid of losing it. So it might be one, two or three generations older x-ray machines, MRI machines and so forth where they were less afraid of losing what made their products unique. So where do you think this thing is going to land? And what's the difference between what we send to China

and what they send to us? So we certainly have what's called a trade deficit with China. We import more things from China than we export to China. And there are a number of reasons. We're much more of a consumer economy. We are driven by the American consumer. The consumer is like 80% of our economy. That are driven by the American consumer.

The consumer is like 80% of our economy. That's not the case in China. China, it's really, it's an export driven economy where they push out the exports. One way to keep all those over a billion people employed. And so they are often exporting far more than they can consume. And also China, unlike us, at least unlike us up to now, And so they are often exporting far more than they can consume.

And also China, unlike us, at least unlike us up to now, would prefer to not import anything. We are much more open. We would like to export more. And as you know, that's how we met. I was running the Export Credit Agency under President Obama. But we're also open to importing things, whether it be fruits and vegetables. One of the things I often talk about is bananas. We don't grow bananas in America, but we consume more bananas per capita than any other fruit or vegetable out there. Oddly, 27 pounds per person. That's a lot of bananas every year. Well, that's bananas. I don't know if I can assume 27 pounds of bananas.

That's a lot of bananas. Right. So where this ends, I think that we will find a way to de-escalate a little bit. We can find ways that we will sell more to China. They'll sell more to us. We can find some way to reduce some of the tariffs. I think they're not gonna go to zero. And it's hard to know, Nicole, what is President Trump trying to do? If one, we've heard one thing about high tariffs is, it will bring more companies to manufacture and make things in America.

So that, okay, we wanna have more things made in America. We've also heard, we actually want other countries to negotiate with us and reduce their tariffs. So are we trying to reduce tariffs or keep them high? And are we trying to use tariffs so we don't pay income tax? So we're getting a lot of mixed messages, which I think is why the market keeps going up and down because it's trying to understand where are we going with this thing. It's not clear. Yeah. And a lot of investment banks have come out and talked about how these crazy tariffs and China's 125% retaliatory tariff are, first of all, are you surprised with

how tough they've been in the negotiation? No, I'm not. And you know, what we always have to remember is, you know, even though it may not, it's not a democracy in China, but he has to be accountable to people in the political party, in the communist political party. And it's not like he can back down and lose face. Donald Trump doesn't want to lose face. Xi Jinping doesn't want to. That's why all this silliness, I'm sorry to say, but who's going to pick up the phone first? Nobody wants to feel like I'm calling because I need help. So they say, no, you call me. No, you call me.

You we've all been around at some point, somebody has to sort of stand up and say, you know, this is a game of chicken. We got to move. We got to move forward here. So a lot of. Eyebanks are now saying, and the IMF are slashing growth forecasts saying that, you know, there are higher chances of recessions because of all the tariff drama. So if nothing changes, do you think there's going to be a recession?

Do you think the writing's on the wall? I think it's highly, highly likely. When people are unsure about the future, They cancel vacation plans. Maybe they could say, we'll go out, let's maybe go out to dinner one last night a week. Maybe we'll take a vacation. We'll drive to the beach versus fly someplace else. So I saw already this morning American Airlines cut its forecast for the year because of concern about people pulling back. People, I spoke to a friend of mine who's got his eight year old car. She said, you know, I spoke to a friend of mine who's got his eight-year-old car.

She said, you know, I think I'll wait till next year. I don't, you know, we really need to buy a new car this year. So those things begin to cause a recession because it feeds on itself. People say, well, gee, maybe I should consume less or buy less. So what happens? Companies start having layoffs as Stellantis did,

which runs Chrysler. They had a layoff because they're concerned about demand drying up. So that becomes a concern. If airlines pull back, then all of a sudden they delay orders from companies like Boeing, and that also then causes layoffs. So it has a ricochet effect. It all, it feeds on itself. So that's when people are confident and optimistic, they spend money. When they're concerned, nervous and anxious, they save money. That is for sure. And I think that people, you know, and the markets are just having whiplash every single

day and really craving some certainty. China, of course, is dominating a lot of the news and I think people realize that so much of our stuff does come from China and so the trickle down is serious and the talks are just escalating, but a lot of other countries have come back to the table, which I'm sure you're not surprised by. What about Canada and Mexico?

I mean, these are our homies. What do you think about our long-term relationship with them? Mexico seems to have, instead of putting retaliatory tariffs in, is trying to find a way that the president and the White House feels like they've won without giving away too much. Canada has taken a more strident approach. I live in Florida.

We've already seen a reduction in Canadian tourists coming to Florida, which is a major, helps drive our economy. A large part of the foreign visitors to places like Florida and Disney World are from Canada. And we forget, Nicole, that services, whether it's airplanes, foreign visitors, buying meals, going to Disney World,

spending money on hotels, that's an export. The export is a service. It's a meal, a hotel, an Uber ride, you name it. So we often just keep talking about tariffs on goods and we forget so much of our economy is services. It's like, well, this podcast, for example. We are a great service to America as a matter of fact. Exactly. So do you think tourism from Canada from where else is going to get affected?

Oh, I think from Europe. I think, you know, right now we're not the most, if you think about it, if you're in Canada, in Toronto or Montreal or you're in Europe, and you're thinking of going to America for a vacation, people are going, why? Look what they're doing to us. So, you know, even that little bit of pushback, as well, maybe we'll go next year.

Maybe we shouldn't go this summer. So again, these things all, you know, they have a few less tourists. Next thing you know, hotels have need for less bellmen, less chambermaids, less people working in the restaurants. It all feeds on itself. But also the perception. I mean, Fred, you are one of the most dapper gentlemen

I know and such a good diplomat around the world for many, many years. What do you think the perception now of the US is with all of this? How has that changed? And how has that affected? It's hard to tell you. It's not doing great things for the dollar either. Right, not doing great things. I was with the Gallup people, Gallup poll just the other day.

And it's a little, it's so, you know, it's hard to get such fresh data just this, you know, this quickly. Generally speaking, foreign views of America have been higher under democratic administrations than Republican, which surprised me. I mean, they just tracked it and looked at foreign perceptions of the United States over a 20, 30 year period.

And they just graphed it when it goes up or down. It tended to go up when there was a Democrat and the White House tended to go down when there was a Republican in the White House. So that there's a certain ebb and flow to that. And those numbers always bounce around. I think right now, I think it's without question a concern. You know, I wouldn't be surprised if some countries start requiring visas from Americans just to make it a little more difficult. There are a lot of ways

people can retaliate and make everyday citizens feel it. And certainly, they're figuring this out. We're putting with on our American farmers, American things like bourbon and other American spirits that we export. There's a lot of concern about the kind of tasks we could do that could be imposed there by off by foreign buyers. Who who do you think would impose visas? Oh, it could be it could be some places. It could be in the EU. But, you know, for

example, I just was in India and they certainly have a visa and a complicated visa process. It was very complicated. So, you know, we are, as Americans, are frequently accustomed to being able to just travel with our passport, no questions asked. That period may be drawing too close for a while. That's really interesting. Hold onto your wallets. Money rehab will be right back. And now for some more money rehab.

Just stepping back to the goal of all of this and bringing manufacturing back to the United States, in theory, this sounds amazing. In practice, do you think it's going to work to help the middle class? And these are the goals. I think everybody wants to get behind that idea, but is it possible? Well, two things are, I think one, if we're looking for better jobs for Americans, which we always want and we want more, we have our economy is twice the size of the European Union.

And 15, 17 years ago, we were the same size. So we're growing much faster. Some of the number of those benefits aren't trickling down, aren't being felt by more working class Americans. We have a huge shortage of jobs in manufacturing already, something like 500,000 job vacancies in manufacturing. The problem is we say we want manufacturing, and then if you ask people or parents, would you like your son or daughter to work in manufacturing,

it's like 75, 80% say no. So we would like manufacturing, we just don't want to do it ourselves. Why do you think that is? I think it's not seen as high level or uplifting work. Where we actually have a huge shortage right now is things like electricians, plumbers, carpenters. We need to build a lot more houses. We need a lot more. And those jobs are more sophisticated,

more difficult, more challenging. And you're in a good six figure income if you're an electrician right now. If you're an auto mechanic right now, we should be encouraging more people to be taking those jobs. That's where there's a huge need and a real step up in income levels. You recently wrote, Fred, that as Trump doubles down on his America first rhetoric,

he is at best ignoring the most crucial fact about the American economy. It runs on trade. Can you explain how Americans benefit from trade? I think we will. One, we're the second largest exporter in the world. Second only to China. And a little over 20 years we were the largest exporter. And I would say my hunch is we may be the largest exporter when you include services again, because it's hard to track this service. Like our travel to other countries. Right. Or their travel to here, because my point is when foreigners come here, or students

come and study in American universities, that's a service export. They're spending money and getting an education. That's a service. So my hunch is we probably undercount some of that because it's hard to count. So that's part of the trade. So we are already, as I said, the second largest export in the world, but I believe we might even be number one. And that's like $3 trillion of exports. That's a large part of our economy. So that employs a lot of people and spreads a lot of goodwill because we have people working around the world. And frankly, entertainment is a huge service export. TVs, movies, music, live theater, sports.

There's a lot more interest in American sports, basketball and so forth, overseas right now. So those are things that one, bring us closer together with other people and also generate a lot of income. The other advantages of trade is we are open to import. We get the advantage of, I would say, the cars we have in America today

are far better than they were 25 and 30 years ago. We had a lot of foreign competition. And frankly, you may, you're too young. There was a time when you would get a car and you were afraid of getting a lemon, a car that was just always broke down. Yeah, there was that commercial. Yeah, you won't get a lemon. So we've benefited, I would say, the American car industry. I know we face a lot of competition, but we also now make cars that are world-class and desired around the world. So we benefit from a lot of trade. Boeing, one of our largest exporters at the moment, cannot export their jet planes to China.

That's one retaliation. Those are really high-paying jobs that are now in jeopardy. So we run on trade both benefiting Americans by the kind of choices we have, whether I mentioned bananas, fresh fruits, avocados, many things that we don't grow here. And also the innovation that comes from learning about products overseas. We all have an iPhone. The iPhone comes from like 43 different countries, whether it's the thing that tracks your steps, whether it's the thing that if you want to turn it sideways or portrait, the rare earth, the rare minerals come from the Congo.

So we benefit from that kind of trade. And I would even say you couldn't have an iPhone if you tried to do 100% from America. We don't have the capability. We don't have the raw materials. Yeah. So if the US is the number two exporter in the world, number one, maybe with services, who do these retaliatory tariffs actually hurt? Like, aren't they just hurting that country?

Well, I think there there's certainly the retaliatory are hurting that country. But, I think they're there. Certainly the retaliatory are hurting that country, but they're also yes, because we're not going to be able to export as easily into those countries. And I don't know, I would prefer foreign airlines by a Boeing plane, which will then be and the parts and services for the next 20 or 25 years

than an Airbus, which is made in France, Germany and the Great Britain. So China is saying we're going to get Airbus instead of Boeing now? That's right. They were buying both, but at the moment they said we're not going to buy any Boeing planes right now. That's not good. It's not good.

I met the people from Gulfstream. We used to finance a number of their jets into China. Well, they can buy Bombardier from Canada, or they can buy Dassault from France. And those are very high paying jobs. And with those kinds of things, unlike a banana or an avocado, the parts maintenance go on for 10, 20 years afterwards. So there's a long tail of extra services

and sales you make on those kind of products. Yeah, and these really complicated supply chains too. So with the iPhone coming from the Congo and I don't know, you know, Netherlands, Switzerland, Korea, and the United States. So how do these companies then navigate a supply chain? How can you price in for a P&L or as companies try to go raise money or go into markets? It's really hard to determine. I think when you've asked about a recession, I think that's what freezes the market. How do you make a decision on a new supply chain when you say, is that child going to be here for one month,

three months, a year? A day? A day, at the end of President Trump's term, you're gonna get turned around. So you stall people from making decisions. And when you do that, that actually, that's not for economic growth, that's economic stalling. That's just stopping things.

Treading water a little bit. But you say that tariffs aren't all that bad. What kind of tariffs actually help Americans? Well, I mean, you sometimes can use a tariff you could say, we want to let the American companies get up to speed. So we're going to put a tariff in place to give them time to do so. I think there's a lot of agreement, Nicole, that when it comes to things like national security, we probably need to make that stuff here

just to make sure we have control over it, we can rely on it. Drones and whatever. Drones, the chips and all that kind of stuff. So we've had some hollowing out of what they call the defense industrial base, basically defense contractors. And there was a sense after the fall of the Berlin war, the nineties, we would have a peace dividend, we would need far less. What we've seen with what's gone on in Ukraine, what's gone on horribly in Gaza, potentially with Taiwan, we're going to

be spending probably more money on defense and armaments, not less in the next five, 10 years. So we're going to have the idea we should be making more of that here for more security reasons. So when we talk about, and by the way, I think a lot of people agree with that. That doesn't seem like a controversial move. I think you're right. The rest of it, do you feel like is just a bunch of negotiations that are going to calm down?

Well, that's our hope. But you know, if you're asking me to predict President Trump's next move, I would say you need to find someone a lot, lot, lot smarter than me to figure that out because I don't think that's very easy to do. But I think that generally, you know, we have a high tariff on women's clothing, children's clothing and footwear. And you know what? We don't make that stuff here. So why have a tariff on it? It's not like we're protecting an American company. We're actually just causing more consumers to spend more money. But the idea is that we could do that. It will just take a really long time. I don't think we want to go back to making sneakers and t-shirts

and sweatshirts as beautiful as the one you're wearing is. I just think we do better at making movies, television series, music, financial services, insurance, jet planes, things like that, than going back to making Disney World. Right. So when we talk about the trade deficit and we worry about the trade deficit, do you think it's even something to worry about? Certainly a bilateral trade deficit, which is saying a trade deficit between two countries does not really matter. Why does it matter?

In other words, my example, which I used in my book, which I'll plug, trade is not a full letter word. The iPhone in those days would come to land in America from China, comes from China, maybe it's $300. And we of course pay like $900, $800, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900,

$900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900, $900 Switzerland, Netherlands, United States, but it's called a Chinese import because the last stop was China. So partly focusing on the trade balance with US and China, and you put the iPhone in there, you go like, well, it's inflated enormously because a lot of the components, things that

are inside the iPhone, they came from other countries to China. So partly it's just how that stuff is measured does not really say a bilateral trade deficit makes much difference. What other misconceptions do you think are out there right now about trade? I mean, trade and- Well, one big one is-

Don't forget more than people will ever know about it. The deficits just don't really matter that much. We should be focused on our tax system. If we're worried about more Americans have not had the benefits of this strong economy that we have, well, we could look at our tax system. We could look at how much money we're putting into education, healthcare. President Biden did a lot on infrastructure. Those things improve people's lives,

reduce commuting time, make sure that we have, I mean, we were fortunate during the COVID pandemic that we actually had companies like Pfizer and other, which came up with vaccines at breakneck speed, never seen before. These are the things that actually improve people's lives. And as I said, we've talked about, we're a consumer economy.

The fact is we have the broadest array of products, food, services. You go to a supermarket, our supermarkets have more goods from more places around the world for us to choose from than anyplace else. I was kind of surprised Scott Besson, the treasury secretary, said, well, cheap goods are not part of the American dream.

I would beg to differ. I mean, if you can make your weekly paycheck go further and enjoy more food for the family, better food, nicer clothing because of imports, that actually does improve your life. Yeah, doesn't a lot of the wood come from Canada that we use in home building anyway? The white picket fence. Well, we already have a housing shortage, so that gets worsened by the kind of task

of putting on Canadian lumber. President Trump is right about we want it to be more fair. We want it to be a more level playing field. But fair is not easy. Did you say he's right? Well, I think, no, I understand. Yes, I'm not, in some areas, of course we would like a more fair trading system. Yes, and there are parts of it that were not fair.

But let me explain, and I think we get lost, why they were so unfair. We wanted more company, more countries to be allied with us, to take some of our values, how we think trade should be done, rule of law should be done, how the global economy should be. And we said, well, one way we can encourage that is we'll be a market for their goods. They can more easily import, export their goods into the United States. So we got something for that. their goods, they can more easily import the export their goods into the United States. So we got something for that. We got after the after World War II, which is a long time ago, but we

wanted to rebuild a world that we would not ever see that again. And frankly, we've been successful at that, with the exception of this terrible war going on in Ukraine. until that, we really had not had a war in Europe or the United States for 70 odd years. That's a long period of time. It sure is, but can you connect the dots? Well, what I connect the dots is- For me, between trade and no war? The connect the dots is we found a way for the world to work together. We found the way, whether it be the United Nations, whether it be NATO, the North Atlantic Treaty Organization, whether it be other ways we worked for the other countries. I chaired the Export Input Bank, as you know, and it was started by Franklin Delano Roosevelt

in the 30s. But as a result, American products, we built water treatment, we brought power plants, we built, installed solar panels in India, things like that that improve the lives of people in those countries and created jobs here in America. So those are the ties that tie us together and make us work better together. So those things are advantages that we can, that trade has helped us and made for a more peaceful world. And those have frayed. I think they're definitely frayed. Well, certainly frayed because we are now going after our allies. I mean, that is why we would pick on Canada and Mexico to highly reliable allies, particularly Canada, which is whenever there's

been an armed conflict, they have been right there at our side. They have provided both military and troop support. And, you know, when I worked for President Obama, we had a lot in common with the Canadians and how we looked at trade of the rest of the world and how we would try and sell both Canadian and American goods. Yes, we were competitors, but we also could find ways to work together. That's gonna be harder right now. Yeah, there's some stuff that's just unnecessary,

like the Gulf of America. Yes. Probably unnecessary at this time. I had a friend who sent me a picture from his trip to Mexico and they went to a coffee shop and on the menu, they crossed out Americanos and they put Mexicanos instead. So, I mean, this is silly.

I mean, you find Canadians, you know, I've read booing when the American anthem was played during hockey games, things like that. That never happened. No, it didn't. So can we go to your old stomping grounds of the Ex-Im Bank of the US? If anyone doesn't know, it's the official export credit agency for the United States federal government. What's the deal with that agency right now? And how are they being affected by tariffs? Well, they've identified a new leader.

He has yet to been confirmed by the US Senate. So that's the next step. And as I mentioned, the Export-Import Bank is a tool we have when we're trying to export products overseas to create American jobs and those products or services, sometimes it's a lot of it happened to have been Boeing aircraft, but also 90 percent of the customers were small businesses. We can provide the financing if your local bank could not. And sometime, you know, when I was there, Nicole, two thirds of the work we did was in developing countries. And so it's harder to get a loan to do business there. So we would step in

because we said it's important for the US jobs. And we also want to make sure we have a footprint in those countries. The White House is now also saying that for later this year in the holiday season, there could be possible shortages. So if you can look a little bit ahead to how this is going to affect, I mean, I can't even think about the holidays right now, but is that real? Absolutely real. I mean, already there are ships that are coming from China with goods that are crossing the Pacific and they're deciding, do we dock or not dock? Do we dock in the United States because there'd be a tariff or do we send the ship someplace

else? You know, I was in business in the catalog business for 20 years, we would be making our purchase with all those things that we'd be buying to sell at Christmas, the orders are in. The orders are in now. And you're sitting there and saying, well, I don't know, is there going to be 145% tariff or 50% tariff or 10% tariff? at some point those goods become unsaleable because no one's going to pay that kind of extra cost to buy a Christmas ornament or something for the holidays or toys for the kids. So I would say it has a real impact because I think it's going to be slowing purchase decisions by whether it's the targets, the Walmart, the

retailers and the local store, trying to make it. What do I buy and what will it cost? I have no idea what it's going to cost. So how far I don't know what's going to cost it. I don't know what it's going to sell for. Right. So just to clarify, a lot of major retailers are, you know, can you tell us what the calendar looks like for purchasing? Well, all those orders are in now. Those orders are in. It's almost May and a lot of those goods start getting on ships in July and August. And before we, when I was in the business, which was sort of a precursor to the Amazon, you know, our Christmas season started in July, August, we would send out

the first holiday catalog and people would buy. So those goods had to be in place before they placed the order. So those goods are already coming in and it's very, how do you, I don't know how to plan. I'm happy I'm not in that business today. I don't know how I plan because I don't know what to sell things for. So we talked about lumber coming a lot from Canada, steel, can you sort of paint? Well, and drywall for houses,

a lot of that comes out of Mexico. So in terms of just housing costs, which are already high with mortgage rates, you've got lumber and drywall, two key components that face some substantial tariffs and some uncertainty. I mean, the problem with uncertainty is it's really hard to plan. You know, if you cannot look at your iPhone

and say, is it gonna be hot or cold, rainy or windy tomorrow, it's very hard to get dressed. Sure, it sure is. But I wish we could, you know, have an app that we could check what the deal is here, just like we check the weather so we can't that's the so that's some of the challenges we face right now for sure we face a lot of challenges but what's going to be you know more expensive if I'm thinking okay I need a new iPhone should I wait or I need to get

a new TV I'm rebuilding my house do I get it now and not next week? Well, there's been a surge already in March purchases by consumers because of, I'm gonna get out ahead of those tariffs. So it's hard to know. My iPhone is ready to be replaced too. And I'm deciding, should I do it now? How soon do I cut it and get a new one? I should not be having to make that decision based on my fear that the price will go up

20%. I mean, at the moment, President Trump has said there's no tariffs, no additional tariffs on iPhones. But, as we know, that could change tomorrow. It could change tomorrow. Okay. So generally, are there materials that we should think about getting sooner or materials or things that we should be getting later?

Well, if you like imported wine and olive oil, you might buy that early before that, because there could be a lot of tariffs on that. That's an easy thing for them to tax. Or just buy American wine, if you like it, if you just stick with them. Here's the problem with tariffs also. If there's a tariff on foreign imported wine, what a lot of smart American comes to it, well, we'll just raise our prices. Yeah, we'll just imagine. We don't have to be, they will be a little bit less, but we'll have to be a lot less. So you're giving companies, American companies,

even in the areas like steel and aluminum, you give them an easy opportunity to raise their prices, which causes more inflation and slows our economy down. It's what sometimes people call it in the 70s. It's a confusing term, stagflation, where prices go up and also the economy is cooling at the same time. That's a really different. Sometimes prices go up because people are buying too much. Well, here you got a problem where prices will be going up and they're buying less. That's a bad situation. Do you think that's going to happen?

It's very likely. It's hard. Again, it's so hard to predict these things. I would like to be better for the listeners today. But let me say this. I think if you're listening to this podcast, it's certainly something that you need to factor in. And as you said, should I buy the iPhone now?

Well, if you can, maybe it is a good time to buy the iPhone because right now there is no tariff and we all know that could change. Well, you'll just have to come back, please, and thank you. Brad, we end, as you know, our episodes by asking our guests for one final tip that listeners can take straight to the bank. If somebody's worried about all of this rising prices, potential inflation or stagflation, or a small business owner,

what's a tip that you would give them today? I would say one tip would be is maybe just have a little bigger cushion in your savings account. Maybe you just put a little bit more money aside every week so that when there is a shock or a surprise because prices went up or unavailable, you have a little more cash around, a little more liquidity to pay for it.

That's probably not a bad thing to do in this environment. Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some Money Rehab? And let's be honest, we all Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com

to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video content. And lastly, thank you. Seriously, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.