The Ben Mulroney Show - Donald Trump swears his pivot was the Art of the Deal... Sure.

Episode Date: April 10, 2025

Guests and Topics: -Donald Trump swears his pivot was the Art of the Deal... Sure with Guest: Dr. Eric Kam, Economics Professor at Toronto Metropolitan University If you enjoyed the podcast, tell a friend! For more of the Ben Mulroney Show, subscribe to the podcast! https://globalnews.ca/national/program/the-ben-mulroney-show Follow Ben on Twitter/X at https://x.com/BenMulroney Enjoy Learn more about your ad choices. Visit megaphone.fm/adchoices

Okay, Martin, let's try one. Remember, big. You got it. The Ford It's a Big Deal event is on. How's that? Uh, a little bigger. The Ford It's a Big Deal event. Nice. Now the offer? Lease a 2025 Escape Active all-wheel drive from 198 bi-weekly at 1.99% APR for 36 months with $27.55 down. Wow, that's like $99 a week.

Yeah, it's a big deal. The Ford It's a Big Deal event. Visit your Toronto area Ford store or Ford.55 down. Wow, that's like $99 a week. Yeah, it's a big deal. The Ford, it's a big deal event. Visit your Toronto area Ford store or Ford.ca today. Welcome back to the Ben Mulroney Show. Thank you so much for joining us. You may be listening on the radio, you may be listening on your phone, you may be listening on your tablet,

wherever you find us, we say thank you. Thank you for helping us build the Ben Mulroney Show into something that will hopefully have legs and be enjoyable for our listeners for a long time to come. Well, yesterday was a doozy. It was a doozy after way too long of Donald Trump trying to reshape the world order in his image and trillions upon trillions of dollars in investment in value in the stock market evaporating over the course of almost an entire week. He finally pivoted yesterday. Let's call it a pivot. He pivoted yesterday, partially reversing course on his

global trade war. But he's sadly not offering any changes to the tariffs hitting Canada. So yesterday he announced an immediate 90-day pause on the levies that were slapped on with the highest duties under his reciprocal tariff regime. The White House later clarified that even though he was taking those back, there's still the 10% baseline tariffs that will remain on all countries. Now he had said he was gonna hold fast on this plan. And then all of a sudden he just pivoted. He pivoted and changed his mind.

He claimed, well, let's listen to him. Why did Donald Trump change his mind? I thought that people were jumping a little bit out of line, they were getting yippy, you know? They were getting a little bit yippy, a little bit afraid of line. They were getting yippie, you know, they were getting a little bit yippie, a little bit afraid unlike these champions because we have a big job to do. No other president would have done what I did. No other president.

I know the president. They wouldn't have done it. And it had to be done. What was happening to us on trade, not only with, you know, if you look at it, not only with China, but China was by far the biggest abuser in history and others also. So he claims and his team claims that over the course of a few days, over 70 countries reached out to his government, to his administration to renegotiate their trade relationships with

the United States. And he views that as the success that he was looking for. And that's why he paused. It's not because millions of Americans saw their investments in their 401k disappear. It's not because the stock market was on the verge of a halt. It's not because bond markets were gonna collapse.

None of that is true according to his administration. It's because he got exactly what he wanted. The plan went, everything went according to plan. That's his, and listen, don't take my word for it. Listen to his White House press secretary. Excuse me, Raquel, if I could just add to what the secretary said, many of you in the media clearly missed the art of the deal.

You clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China when in fact we've seen the opposite effect. The entire world is calling the United States of America not China because they need our markets, they need our consumers, and they need this president in the Oval Office to talk to them. And that's exactly why more than 75 countries have called because the United States of America

is the best place in the world to do business. And as the president has shown great courage, as the secretary has said, in choosing to retaliate against China even higher. Okay, that's what they're peddling. That's what they're trying to spoon feed us. That's one argument. Here is the counterpoint offered by Jessica Tarlov, who is the lone Democratic voice in

a sea of right leaning pundits on Fox News. Here's what she said. Trump even admitted that it wasn't the art of the deal or be cool. He said he was watching the bond market and that's what decided this. He had to cave. I think CNBC's Steve Leisman, he said he didn't just flinch, he ducked. There are trillions still lost. And our very own Charlie Gasparino has been on for the last couple of hours saying that he wished it weren't so, but that the truth is that the White House capitulated. We still have tons of tariffs on, even our closest trading partners. They still don't make any sense. There's have tons of tariffs on even our closest trading partners. They

still don't make any sense. There's a lack of clarity on the specific numbers for Mexico and Canada. Yeah, let's not forget, nothing has changed for Canada, right? We are in the exact same position today as we were yesterday. So thank you, Liberal government for really steering us through this difficult time and being the only people who could get a great deal for us. Well done. Well done. Thank you, Mark Carney.

Thank you to your team. Really appreciate it. I'm sure the automotive sector is thanking you today. Oh no, they're not because nothing has changed. But if we go back to Donald Trump for a minute, I subscribe to the Jessica Tarloff theory because what has actually changed? You've gotten a lot of phone calls.

I'll believe you when you say 75 countries have called. Have you struck a deal? No, you haven't struck a deal. A phone call is not a deal. A phone call doesn't change the tariffs. A phone call doesn't change the back and forth trading arrangement. Nothing's changed.

But what happened was the market was going to collapse and it was gonna collapse due to a self-inflicted wound. It's the first time I've ever seen it in my life where a decision by one person caused trillions of dollars to evaporate into thin air. And a lot of the people who voted for Donald Trump saw their life savings disappear. Now it's coming back for sure over the course of,

if you have a long enough investment horizon, if it's far enough in the future, you can weather almost any storm. But a lot of the people who were affected are seniors on fixed incomes and they've got their 401k in the United States and some of them don't have a long time horizon. Some of them have a few years left and they depend on that.

And I think he was feeling the pressure. He was absolutely feeling the pressure. Howard Lutnick has been the guy who's at least until recently, the guy going out and selling the tariff theory around North America, the commerce secretary. And he was asked by Fox News' host, Brett Baer, if this was by design or if it was a walk back. So Mr. Secretary, tonight you can definitively say this was not a walk back.

This was not something that the bond markets were cratering and you were worried about it. No. That this is part of your plan. There's a lot of folks saying there were just mixed messages that really left the markets jittery. Donald Trump is the best negotiator that there is. He understands how to do these things. he gave these were crystal clear instructions no

Negotiating till two days ago. He would be willing to negotiate but broadly And then yesterday was I'll do bespoke and bespoke. That's what launched it I mean every country wanted to come and talk to us. Okay, so a couple of things we do this show while the markets are open and we've tried to follow the news wherever it goes and sometimes you hear a rumor and you've got to see if it's real. Most of the time when it comes to Donald Trump, even the most outlandish rumor may be true. So you got to follow every single thread that presents. And every time there was a rumor that he was going to pause the tariffs, there was an uptick

in the market. And then when his team would come out and say, absolutely not, the tariffs are staying on, the market would plummet. So you cannot tell me that the markets did not play a role in this decision, especially because up until a couple of days ago, Donald Trump was fervent that he was not going to remove these tariffs. And then all of a sudden he does. And that was part of the plan.

All right. Listen, I don't look a gift horse in the mouth. If he's going to pause his tariffs, okay. All right. That's fine. But the second thing that I want to talk about was how this all went according to plan and Donald Trump saw everything and everything is clear to him. So then explain this next interaction between Trump, Lutnick and a reporter where Trump is surprised when the reporter tells him that the EU had

announced tariff increases that they didn't know anything about. Mr. President, the EU also announced increases in terrorists today. Why not? Shreya had timing for them. That's good timing. Why not? They didn't put them in. No, they threatened them, but they picked a later date,

which our expectation is it's going to be later still. OK, I'm glad that they held back. They can explain anything away. If you are the master and the creator of your own reality, then you make all the rules. And according to the people in this administration, this was all done by design. All right, listen, like I said,

I don't look a gift horse in the mouth, although I'm not, I've got nothing to look, there's no gift. The Canadian situation is exactly the same. And I will say it again. Thank you very much, Mr. Carney, for that productive phone call that you had. That one phone call you had with Donald Trump. Thank goodness you did that because now at least things haven't gotten worse. I guess that's the standard we're working with now. If you've been listening to the show since the beginning, you know that I've haven't gotten worse. I guess that's the standard we're working with now. If you've been listening to the show since the beginning, you know that I've addressed

this next topic a couple of times, talking about Trump's reversal on most of his tariffs. None of the duties on Canada are changing, but there's only so much a guy with no knowledge of the financial markets can do with this story. So we're bringing somebody in who knows a thing or two about a thing or two. Let's welcome to the show Dr. Eric Kam. He's an economics professor at Toronto Metropolitan University. Eric, welcome to the show. Benedict, a good morning from North York General Hospital. Oh, that's right. How's your daughter? She's okay. Thank you. She's recovering from a ruptured appendix, but she will be okay. Well, please send her our best. And thank you for joining us,

despite the fact that you've got so much on your plate. It's not a problem, then. All right. Let's talk about what happened yesterday. As soon as soon as the pause, the 90 day pause in the tariffs was announced, an explosion in the stock market, like eight to 10% depending on the exchange. In all of your years, Eric, have you ever seen anything like this? No, I mean, this is a roller coaster, like we've never seen.

Economists in some way, shape and form live for this type of exogenous shock, because usually they're just things that we have in textbooks, and we don't have any real data to back them up, but here comes the real data. But as I've told you before, while we find these things interesting on some intellectual level, these are real numbers, and eventually they trickle down to the job market. And that's real unemployment. And those are real people looking for work. So I actually don't find

this funny or fun at all. I find it kind of terrifying on a macroeconomic level and a personal level then. Well, if you're in Trump world, this all went according to plan. This is was exactly what Donald Trump wanted to have happen. And that is the message that his team is selling to the world. But there the the counterpoint to it, I think was was said very well by Jessica Tarloff on Fox News. Let's listen to what she had to say to explain this pivot. Trump even admitted that it wasn't the art of the deal or be cool. He said he was watching the bond market.

And that's what decided this. He had to cave. I think CNBC's Steve Leisman, he said he didn't just flinch, he ducked. There are trillions still lost. And our very own Charlie Gasparino has been on for the last couple of hours saying that he wish it weren't so, but that the truth is that the White House capitulated. We still have tons of tariffs on even our closest trading partners. They still don't make any sense. There's a lack of clarity on the specific numbers for Mexico and Canada.

So we could go back and forth, Eric, about whether we believe the White House or the theory that Jessica Tarlough has. But I think the more important conversation is, what is the bond market? A lot of people know what the stock market is, but they don't necessarily know what the bond market is. And why was it that indicator that possibly

scared Donald Trump into pivoting? You know, the silver lining that is that we're talking about things that are so important. So everybody knows what a stock market is that buying and selling equities, but a bond market is where various debt instruments are sold by either corporations or governments when they want to raise money. Bonds are issued to raise what they call debt capital, to fund operations ongoing, or to seek new growth opportunities.

All it is, is really a big fancy IOU. Issuers promise to repay the original investment plus interest. What makes the bond market, of course, interesting as a part to the equities market is equities are very risky. Bonds are not risky. In fact, it almost would take an earthquake of catastrophic proportion to risk uncertainty in the bond market. Well, guess what? For arguably the first time in maybe ever, the bond market is at risk. And what do I mean by that is that we have a yield curve, which is how you pay out bonds. And for many, many centuries, short-term bonds pay out less than long-term bonds. And the economy is stable.

Right now, what Trump has done with all of these tariffs is he sent the bond market upside down. We don't know which way the yield curve is going to go. We don't know what that spells for investors. And so he's almost managed to do the impossible, which is unstabilize or destabilize the most stable market that there is. And I think what happened is that even people around him, people that he trusts, people that he knows, wealthy people must have come to him and said, Donald, you have done the impossible. You are absolutely setting our financial system on the breaking point.

And you know, at some point, I'd like to believe that there's learning being done. And maybe even Donald J. Trump said, all right, maybe I overreached. And so I'm going to pull it back a little because I don't know any other explanation, Ben, for how you could destabilize the most stable market there is. Eric, I don't know a lot about a lot, but I do. I've heard many, many times that China owns a lot of America's debt. Is that manifested on the bond markets? It is. It is.

It is manifested on the bond market. China does own a lot of debt, but the biggest bond market in the world, and it isn't even close, is the one in the United States of America. That's the biggest bond market, and it's the one that all of the other bond markets look to in terms of setting their interest rates, right? It is that federal funds rate in the US that really dictates every other interest rate in the world. And so you can imagine that if the US's interest rate is being

bounced upside down, what it's doing to countries like China and Japan and India that hold a lot of US debt. I'm not even mentioning Russia. So this is the problem, Ben. It's just now an episode in the ultimate destabilization into the parts of the economy that everybody thought couldn't be shaken. Yeah, but I guess what I was trying to get at is I wanted to see from you if there was any truth to the rumor that China was selling off their bonds as a way to destabilize the market. I don't believe they would do that. I don't believe they'd risk their own economy to do that. This is way too high stakes a game. And I don't really think countries are willing to play games of chicken with their population and their investments. Ben, I think what you're seeing is a contagion effect around the world, starting in the United States of clear, widespread

panic that we haven't seen since the Great Depression. And I think many countries are putting pressure on the United States to say, can you please do us a favor and not destroy our economy? So, listen, getting a pause on the tariffs is better than having the tariffs, but it's still not the stability that global markets are probably looking for. How big of a problem is, again, the looming threat of tariffs being reapplied three months from now? Again, the looming threat of tariffs being reapplied three months from now. Like the looming threat of a global world war. I mean, it's exactly the same thing. You can't quantify these things, which is why economists find it really dangerous.

All you can do is qualify them and say that there is really not much has changed because we live in a world right now where things change hour to hour and minute by minute. It is going to take a long time to restore stability. Even if Trump got up tomorrow and said, I'm getting rid of tariffs forever, I promise no one's going to buy it now because everybody knows that announcement effects don't mean anything anymore in the United States. So unfortunately, it's going to take years for this to settle down. And I'm not exactly sure our financial markets have years to absorb that. So I hope things really cool down fast. But the real answer to your question is this is not going to go away anytime soon

because all Trump has done is reeled in the fishing rod. He hasn't thrown it away. Eric, in about a minute, talk to me about what's happened to the markets in terms of public trust. I'm seeing a lot of people being very cynical online saying this was the greatest pump and dump of all time. I think that these tariffs, anything Donald Trump said, he was actually had a lot of control over the markets, right? If you put the tariffs on, the markets went down. If you took them off, they went up.

And so a lot of people are feeling very cynical about the markets. Is there any impact if people do not trust the markets as much as they used to? Well, that's everything. I mean, markets are just a relationship between investors and consumers and the markets themselves. And so you have to let consumers they get to vacillate between their decisions between consumption and savings and firms have to vacillate between do we invest or do we save? And all of these things are dependent on the belief that they'll actually get their return

if they put their money in the market. So going back to our very first topic, even when hell has gone to a handbasket, then firms and consumers have said to themselves, well, at least I can always dump my money in bonds. They will always be safe and I know where I'm going. And now they can't even do that. That's the problem. You pulled the foundation out from under them. Eric, Eric, we got to run.

I wish all the best to you and to your daughter. We'll talk to you soon. Stay healthy,000. Whoo! There can only be one winner. Tune in to Renovation Resort every Sunday and look for the code word during the show. Then enter at homenetwork.ca slash watch and win

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