The President's Daily Brief - PDB Situation Report | February 15th, 2025: Trump's Crackdown Triggers Cartel Retaliation & Global Tariff Fight

Episode Date: February 15, 2025

In this episode of The PDB Situation Report: Mexican drug cartels are reportedly planning to target U.S. law enforcement as the Trump administration escalates its border crackdown. Former DHS Senior Advisor Chuck Marino joins us to assess the threat. The White House is rolling out reciprocal tariffs against key global trading partners, marking a significant shift in U.S. trade policy. What’s President Trump’s strategy, and how will it impact the economy? Kenneth Rapoza from the Coalition for a Prosperous America joins us to break it down. To listen to the show ad-free, become a premium member of The President’s Daily Brief by visiting PDBPremium.com. Please remember to subscribe if you enjoyed this episode of The President's Daily Brief. YouTube: youtube.com/@presidentsdailybrief Beam: Visit https://ShopBeam.com/MIKE and use code MIKE for up to 40% off. Learn more about your ad choices. Visit megaphone.fm/adchoices

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All right, let's get briefed. We'll begin today's show with a disturbing new threat at the border. Mexican drug cartels are reportedly planning to target U.S. law enforcement as a Trump administration ramps up its crackdown. I don't think that's going to go well for them. Former DHS senior advisor Chuck Marino joins us to break down the threat posed by the cartels. Later in the show, the White House is rolling out reciprocal tariffs against global trading partners, signaling a major shift in U.S. trade policy. So, what's President Trump's strategy and, well, importantly, how will it impact the economy? Kenneth Raposa from the Coalition for a Prosperous America joins us to break it down. But first, today's PDB spotlight.

Border agents are on high alert after a new memo from the Rio Grande Valley Sector Operations Center warned of potential cartel attacks on U.S. law enforcement. The Texas officials have been warning that cartel violence could escalate in response to the Trump administration's border crackdown. Just two weeks ago, cartel members opened fire on border patrol agents in Fronton, Texas, where they were attempting to smuggle a group across the river. Now, reports indicate that cartels have authorized the use of weaponized drones, I kid you not, to attack U.S. law enforcement, with threats against ICE. agents circulating online. The Department of Justice under Attorney General Pam Bondi has unveiled a

sweeping directive aimed at dismantling cartel operations. But how serious is this new threat and what can be done to counter it? Well, I'm glad you asked. Former DHS senior advisor Chuck Marino and author of terrorists on the border and in our country joins us now to discuss. Chuck, thanks very much for taking the time and spending a little bit of your day with the situation report. Absolutely, Mike. Good to be with you. Thank you, Matt. You may think differently after a little while. But let's talk in general terms. Give me your assessment, if you could, of the current situation down on the southern border. Well, I think we see President Trump keeping his word in terms of sealing up the border and going after those national security threats and criminal threats that were allowed to come in the past four years in the Biden administration.

I wish I had a set number that I could give you about who's been allowed in, but as you know, that number fluctuates on any given day depending on who you talk to. We have a lot of bad actors that have made their way into the United States. This is confirmed. We see it each and every day, whether it's suspected terrorists being rounded up in New York, L.A. and Pennsylvania or these criminal aliens that are continuing to prey on American citizens here in the country. So I think we're in the right direction. I like that the cartels have been designated finally as foreign terrorist organizations. They've never been as powerful as they are

right now based on the policies of the Biden administration, both financially and operationally. And there's nothing that comes to the southwest or northern border that's not touched by the cartels. Yeah, it is interesting. Your initial comment about the numbers, how many people can't I think that's confused a lot of people over the past handful of years because it really is. It depends on what article or what statistics you're reading. It's obviously in the millions, but, you know, that number seems to bounce around depending on who you're talking to it. I think it's been confusing for the general public in terms of getting a handle on it.

With the foreign terrorist designation, what do you think? Why did it take so long to come up with that? You know, we were locked in in previous administrations to this thinking that we were dealing with solely a law enforcement problem. And never thought about expanding how we were defining the problem. And I think that limited the resources that we were bringing to the specific problem of the cartels. And it was limited to the FBI. And pretty much that was it, just law enforcement at the federal, state, and local levels. Now, with the the foreign terrorist designation, you know, you can bring a whole of government approach similar to what we're seeing now by declaring a national emergency at the southwest border with the cartels falling into that too. With this increased focus on the problem down at the border with the Trump administration, the cartels making these threats, right, saying they're targeting law enforcement and the

U.S. military. What do you make of that? How serious do you take this as a potential threat? Well, I take it very serious. I can tell you right now that this is what we see happening down in Mexico with the cartels taking action, violent action, against many government officials down there. And that is because, not because they want to rule the country of Mexico, it's because they want to keep the Mexican government out of their money-making business.

And right now, whether it's the U.S. military on the Southwest border or CBP and ICE finally being allowed to do their jobs, we're doing the same thing. And so I highly expect that we will see an increase in violence. However, it won't last very long. I think you could see the military playing a significant role either in cooperation with Mexico or doing something unilaterally along the lines of special operations. Yeah, it would seem like a serious lapse in judgment for the cartels, which, as you pointed out, all they're focused on, it's like any group like that. It's the revenue streams, right? They just want to keep the jack-in-law. So you would think it'd be a serious lapse in judgment for them to decide to target U.S. law enforcement or, you know, the U.S. military in any serious manner. But you mentioned unilateral action, and I wanted to touch on that. What do you think are of the chances? You designate the cartels as foreign terrorist organizations. That does a you said, that gives you a very wide playing field here. What are the chances in your opinion that the U.S. could take unilateral action if they don't have the necessary liaison support from the Mexican government? Yeah. Well, I think we've seen so far in the last four weeks, just like their first term in office, the Trump administration plays hardball when it comes to diplomacy. And it usually takes place publicly, which puts the country, you're conducting diplomacy with in a trick bag because you box them in. And so now what's going to

happen here is I can imagine that the Trump administration, and we've already seen it with the threaded tariffs, there will also be put on notice that should anything happen to any of our personnel along either one of our borders, that there's going to be action taken by the United States. And so you're starting to see Mexico. They don't want to see that happen, starting to step it up in terms of their military presence. Now, the problem with that is their military has become as corrupted as their law enforcement institutions. So they're not a very reliable tool in Mexico's arsenal any longer since they started being used by President Calderon for law enforcement action. So, you know, we may have to do this unilaterally. It depends

on the situation that takes place. But I'll tell you, it's only going to take one time. and then the new president of Mexico is going to be put on against us. Yeah, I think it's still unclear. I mean, again, I take your point. They have stepped things up in the face of the potential tariffs that they were staring at. And so they have sent reportedly thousands of additional troops to the border on the Mexico side. It is interesting. I mean, you point out the corruption.

The corruption, obviously, in Mexico with law enforcement, it's been endemic. But there's very little trust between the Mexican population and law enforcement. The Marines, on the other hand, the Mexican Marines and the military, it tended to be, if there is a trusted institution, you know, they're it. So I'm just wondering, I guess, are you optimistic that we could see sort of long-term cooperation in a serious manner on the trafficking front, on the issue of smuggling people, weapons, drugs, across. the border, or do you think this is just sort of a temporary show by Shinebomb by the Mexican president? You know, I hope that they think it's time for collaboration, you know, not unlike what we did during planned Colombia.

Now, granted, the FARC in Colombia actually wanted to run the country, right? They were a political organization. They still are, but they were conducting acts of terrorism to destabilize the government of Colombia. And they asked for the assistance of the United States. We treated them as an insurgency, and we were able to help Colombia regain control of that country. Now, yeah, we're not dealing with an insurgency with the cartels, but they are acting a lot like terrorist organizations. And so we might as well treat them as such.

And I think Mexico would be wise to take us up on our offers of assistance to help them combat this problem. I think it's gotten way beyond their control or their ability to control. This is going to be maybe a strange question, and I don't want to get overly political, but there's a lot of people that wonder, what was the reasoning behind the previous administration, the Biden administration's policies with the southern border, with the borders in general, in terms of almost what you could call an open door policy. Any insight from your perspective as to why they went that route? You know, my one consistent assumption has been having to do with the demographics of the Democratic Party, unfortunately. And the support I give to that conclusion is let's look at the number of things that played out in front of Congress where you had a district of Columbia, for example, you know, pushing for the right to vote for illegal immigrants. Let's look at these other cities like New York that were pushing along the same lines. We were seeing it throughout most sanctuary cities where they wanted to give that right. The problem with the Biden administration was I think they started that effort too late.

But I believe that was always their sole purpose for allowing what they did. That sits. Okay. Yeah. I want to pick up on that. If you wouldn't mind, we're going to take just a very quick break. will be right back. Chuck Moreno, former senior DHS advisor, author of a terrific book. If you haven't read it, if you haven't picked it up, I don't know what you're doing with your time. Go out and get it. It's called

terrorists on the border. And in our country, we'll be right back with more of the situation report. Hey, Mike Baker here. Let me talk to you about something important. And that would be sleep. Look, we've all been there, right? Tossing, turning, struggling to get quality sleep. I get it. When you don't sleep well, well, frankly, it's not just about feeling tired the next day. day. It makes you foggy at work, you're short-tempered with people that you actually like, and it kills your energy. I've been there, and I needed something that actually worked. That's where Beams Dream Powder comes in. Look, this isn't some gimmick. This is a science-backed, healthy hot cocoa that actually helps you sleep better. I've tried it, I use it, and it's made a real difference. And it

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If you want to try Beam's best-selling Dream Powder, get up to 40% off for a limited time when you go to shopbeam.com slash Mike. Mike A.E and you use the code Mike at checkout at shop beam, B-E-A-M-D-A-M- dot com slash Mike and use the code mic for up to 40% off. Welcome back to the Situation Report. Joining us once again is former DHS

senior advisor, Chuck Marino. Chuck, you talked in the last segment about the potential, not saying it's going to happen, but the potential for unilateral action by the U.S. military against the cartel. What do you think that could look like? Yeah, I don't think this would be a mass invasion of Mexico.

I think this would be a lot of using special operations to go after a lot of these locations where the cartels are embedded. You know, it's really, as you know, amazing how these cartels all mirror paramilitary organizations now. And that goes back to the previous point. made about when they would send out the military to solve a law enforcement problem at the time several years ago, and only half of the troops would come back, not because they were being killed by the cartels, but because they were abandoning ship, they were being offered more money to go work with the cartels, and they were taking with them their training, their equipment,

their vehicles, and so now we've got all these paramilitary organizations. So I really do believe that if we were to go into Mexico, it would have to be special operation. both on the ground and in the air. Maybe identifying high-value targets, you know, taking out maybe for leadership. I mean, the problem there, I think we've seen, and I spent a fair amount of time during the drug force and counter-narcotics operations, it's a little bit like counterterrorism. Occasionally, it can get very frustrating. It seems like they've got a bottomless well of new recruits. So you take out someone at the top of a cartel, they've got any number of lieutenants that are.

are just dying to take that top spot. So it could be a fairly lengthy target list, but, you know, I'm not saying it's not worth trying. Yeah, I mean, look, if we look at the deaths of Americans at the hands of the cartels, I mean, it morphs what we've seen from traditional terrorist organizations within our own borders. If you start to take into account the number of fentanyl deaths, the amount of criminals that are being trafficked into the country. We haven't even touched yet, Mike, that, you know, 3,500 percent increase of predominantly single males that are Chinese nationals that were trafficked into the country, direct flights from China to Mexico, of course, touching the cartels and being trafficked into the United

States. You and I can guess all day long what those intentions may be. Well, I don't want to sound like a cynic, but I don't think they were all innocent individuals looking for a better life. A lot of them were, no doubt about it. But you'd have to be pretty naive to imagine that whether it's the Chinese regime, the Communist Party, in terms of an intelligence concern or other organizations, you'd have to be naive to think that during the last four years when we had essentially an open border policy and there was just chaos down there, that groups wouldn't look to take advantage of that, right? If I was running an Intel service and I saw how porous that border was and I wanted to put some assets in the country, just,

you know, just maybe just sleeper agents or individuals to do some recies on high value targets, you know, absolutely, absolutely. Absolutely. I agree with you. And based on the amount of, migrants that we've seen from special interest locations, right? You know, we talk about it all the time. The vetting's only as good as the systems you're vetting against. And you mean to tell me these special interest locations have systems that we can vet against? Look, if somebody didn't previously come to the attention of U.S. law enforcement or an intelligence agency or the military, they're going to be a ghost to us. And in many cases, the Biden administration knew that, and they were still letting them in.

You know, I called this when they brought in the first wave of refugees from Afghanistan during the botched withdrawal, and they said that all 5,000 of them were thoroughly vetted. Then why was the FBI looking for 2,500 of them the following week within the United States? It just doesn't sell. And I think in their own towns, it just the American people aren't buying it anymore. And that's why the election went the way it did. Yeah. And speaking of vetting,

from your perspective, what needs to be done to improve that process, right? Because it's not like we shut the border, nobody comes across. You still, you know, that's important. You still have to have an immigration policy that allows people to come through in a defined and legal manner. But, you know, again, from your point of view, what do you think needs to be done to improve the vetting process? Yeah, well, we've got to start collecting a lot more data.

We've got to help some of these locations establish, you know, business programs where they're able to actually capture some of this information from their own countries of origin. And this is where Remain in Mexico comes into play and why it was so important. You know, it becomes a forced mechanism to pause the process. Yes, you can claim asylum. You know, we've got to look at parole programs, you know, the HCMV parole program, the TPS. that was exploited, that was being fraudulently used by the cartels and others.

It actually had to be shut down for a period of time by the Biden administration. They immediately started it back up. We have Trenda Aragua to thank for that program. And so, you know, it's round and round we go. But we've got to start collecting a lot more data points, both on our own end and have better capabilities to ping against because some of these people you're just not going to be able to vet. No, I mean, there's just no, there's no either liaison with their home country. We don't have a relationship with it. They don't have, you know, an infrastructure or databases within that of the

country. And so it was always, to me, it was frustrating. It was, I suppose, kind of oddly amusing in a way sometimes to listen to, you know, Mayorkas and others talk about how these millions of individuals are all being vetted before being released into the country and knowing from CBP and others when they would talk about, you know, off the record, how poor the vetting ability was, not because they didn't want to do it, not because the officers didn't want to do it. They just don't have the ability, the resources, the information infrastructure. Yeah, I mean, look, when we look at the policies under the Biden administration, I mean,

You know, you and I have had experienced this. You rely on the president who sets national security strategy to, you know, take his number one responsibility of protecting the country and providing for the safety and security of the American public, seriously. We don't expect a president, as Biden did, to implement policies that actually undercut the entire homeland security apparatus that was created after September. 11th, 2001. We don't expect to see policies that undercut the CIA, the FBI, and every other law enforcement agency that's tasked with protecting the homeland. So, you know, the past four

years were unprecedented in a lot of different ways, not only in the number of threats that they allowed to come right across our borders, but the way that they just undercut the entire mechanisms that were established to keep the country safer. Yeah, and I don't think. that despite the election, despite the Trump administration coming in, I don't think Democrats necessarily across the board have learned the lesson because it looks like state leaders, you know, Governor Kathy Hochland, New York, leaders in Illinois, they all seem to be under the impression that individual states can determine immigration policies, rather, you know, rather than it being a federal mandate and it's the job of the federal, you know, government

to decide what the immigration policies will be. It seems like we're still going to get, and the Trump administration will get pushback from a number of states who decide, oh, we're a sanctuary state. You know, you can't take that away from us, regardless of what the federal policies may be. Anyway, that's, I, okay, you know what right now, Chuck,

I'm going to get off my soapbox, because I want to talk to you about spy plane. You're right. What do you make of the recent activity along and near the Mexican border in terms of U.S. surveillance, aerial surveillance. Yeah, you know, those were shut down under the Biden administration. They used to use the old spy blips along the southwest border. And one of the first steps he took is he was standing down all these executive orders

from the previous Trump administration. Those were one of the programs that he shut down. I think it's a valuable resource. I think we're able, again, if we're collaboratively, working with Mexico, which, you know, I'm keeping my fingers crossed is exactly what's happening. That's providing a wealth of information to both Mexican officials as well as to U.S. intelligence and law enforcement agencies. I'm all for it. I like this stepped up approach. This is where the military support is phenomenal. It's allowed to assist and free up CBP

resources to focus on, you know, securing that order and put it. handcuffs on people and turning away those that need to be turned away. So I like this whole government approach. I'm a big fan of it. And I think it's being done right right now. And they're not going to leave any resource on the table. So good for the Trump administration. Yeah. And you would think that, again, you know, it will have to wait and see. But you would think that the Mexican government, you know, under Claudia Scheinbaum, would look and go, okay, if we did have a robust liaison relationship with the U.S. against the cartels on the issue of narcotics trafficking and people smuggling, et cetera, that, you know, everybody wins. But history tells us that

typically what Mexican administrations tend to do is manage the problem, right? They're managing the cartels to a reasonable level. You know, I think we saw with the Vincente Fox administration that they actually tried a fairly robust effort to take on the cartels. That led to a massive increase in violence in Mexico, and I think the population eventually got fed up and said enough. So I don't know that we're going to see anything different, but you have to make the effort. Because as you pointed out, look, I mean, the number of fentanyl deaths in the U.S. as a result of cartel operations, setting aside Chinese regime, the Communist Party's involvement in in fentanyl trafficking is astounding. And so we have to do something. So I'm fully on board with

you. I agree with you. This couldn't have happened soon enough. I like the foreign terrorist designation, the aggressive action, the inclusion of the U.S. military. It's about time that we have an aggressive approach towards the cartels that have done so much damage in this country. Yeah. No, look, you're right. I mean, I try and break it down even plainer than that. And I say, look, if the cartels are willing to work with China to kill hundreds of of thousands of Americans with fentanyl. What makes us so naive as to not think that they're working with terrorist organizations or other adversaries to infiltrate the United States? Again, it comes down to making a buck. And so they're going to work with whoever they need to work

with. So, you know, I like the aggressive approach. I think if Mexico gets on board, we can make a big difference against the cartels down there in Mexico because they've expanded so much that They have just as much power with respect to all the trafficking across our northern border as well. While we don't see the numbers that we saw at the southwest border, we saw the same diversity of threats, just at a slightly lower percentage. So it wasn't that the threat was as largest down at the southwest border, but we were still facing the same range of threats. Yeah, it's going to be a lot easier to secure that northern border as soon as Canada's the 51st.

state. So, yeah, yeah, you know what, I still don't know that the Canadians are fully on board with that concept yet. So we'll have to, wow, see, but I don't know. Chuck, if you'll come back, Chuck, in the future, I would actually like to shift our focus north, talk about that as well as some other issues. Listen, Chuck Marino, former DHS senior advisor, you can pick up his book, terrorists on the border and in our country. It's on Amazon. Just, whatever you're doing right now, stop, go get the book. Check, thank you very much for joining us here on the situation. Thank you, Mike.

Thank you. Pleasure. Next up, the Trump administration. Well, it's hitting back on trade. Unvailing reciprocal tariffs on global partners. Yes. I'll say that once more. Unvailing reciprocal tariffs on global partners.

That just makes me feel smart saying it. What's the end game? And how could it reshape the economy? Well, I'm glad you asked. Kenneth Raposa joins us next to break it down. Stay tuned. USAA knows dynamic duos can save the day, like superheroes and sidekicks or auto and home insurance. With USAA, you can bundle your auto and home and save up to 10%.

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Sign up for your $1 per month trial at Shopify.com slash special offer. Welcome back to the Situation Report. On Thursday, President Trump announced the rollout of reciprocal tariffs, trade policy designed to impose equal duties on foreign nations that tax American goods at higher rates. In simple terms, well, if a country charges steep tariffs on U.S. products, the U.S. will now do the same in return. The move is aimed at leveling the playing field for American businesses and pressuring trading partners to negotiate fairer terms. However, these tariffs apparently won't go into effect immediately. The new tariffs come on top of duties that Trump has already imposed on China, Canada, Mexico, and other nations, particularly in the steel and aluminum industries.

notably, Trump's tariffs on Canada and Mexico are currently on pause after both countries agreed to step up efforts to curb illegal border crossings and drug trafficking into the U.S. So, what's the broader strategy behind these tariffs and how will they impact global trade and the U.S. economy? Here to give us some insight is Kenneth Raposa from the Coalition for a prosperous America. Again, thanks very much for taking time here and joining us on a situation report. Hey, thanks, thanks, having me on. I appreciate it. Let's talk tariffs. And let's pretend I'm not a rocket scientist and that somehow I don't understand all about tariffs,

which, of course, I don't. But talk to me about the impact of the tariffs. I mean, you'd start from wherever you'd like. What we dealt with early on with Mexico, Canada, China, or about this latest announcement of tariffs relating to our current trading partners. tariffs is harder than rocket science because rocket science, we know where we're going, and we could communicate with the border you want and void the two satellite right here from the United States, but yet we can't seem to figure out how to manage trade or how to tariff

a certain country, so you have an industry in the United States. So it is a lot harder than rocket science. Now, as far as the tariff story goes, there's three fraud strategy to Trump tariffs, right? You have what I call the help of brother out tariff or the tariff threat, which you saw over the past two weekends, where Trump would say, we have a national emergency at the border with fentanyl and drugs. We are asking you, you're our friends, you're Mexico, you're Columbia, you have a free trade agreement with you guys. We're asking you to help us out. You don't want to help us out? Okay. We're going to hit you at 25% tariffs and maybe you'll change your mind.

They did change their mind. So now there is no tariff, and we have supposedly more policing at the border. We add the Colombians taking in their migrants, and we'll see how that goes over a month. That was the deadline that Trump gave to see to reassess the situation. That's one way that we're going to use tariffs. The other way is as a revenue, and that would be a lower tariff of 10 to 15% across the board. Now it would basically wipe out all the free trade agreements we have because even Korea, which had a free trade agreement with the United States, would now be faced with 10%.

for imports, whatever we import from Korea. And the idea there would be that the government is raising revenue and that revenue would be used to enable the government to extend something like the Tax Cut and Jobs Act or, of course, lower our fiscal budget deficit, which is about $2 trillion today. And then the third is what we heard out today, which is more of a balanced trade situation, right? It would go after certain countries. We've already had this with China, for example, when Trump was elected the first time. We have tabs on those guys. The balance trade issue, which is what we've heard today from the White House,

is where you're telling the country, look, we know that we're the big guys, we know that we're the consumers, we know that we love to shop until we drop in the United States, and there's never going to be equal trade among us, right, because we're a bigger consumer than you are, but we don't want to have a growing deficit. We don't want to go from a $2,017, $16 billion deficit,

with Canada to a record-breaking $70 billion one. We don't want to go from a $100 billion deficit in goods with the world to a $2024 record-breaking $1.2 trillion good deficit. We want to see some stabilization. Maybe it's some countries going the other way, because that's not the case. Those countries are going to face tariffs. So one thing Trump said today was, as an example, pay, if the Europeans want to import a Jeep Wrangler from the U.S., it's a 10% tariff at least, not to mention the VAT tax, value-added tax on top of that. But if we want to import a BMW convertible made in Germany, it's a 2.4% tariff. So in the idea of the reciprocity, we will say, okay, we're going to hit that convertible

Beamer with a 10% tariff and that or something equivalent, just like you're doing to our guys. So, you know, that's the free prompt strategy. And that's what we saw coming out of Washington today with the tax that would come on, come down the pike in April to balance trade with the biggest big partner. Okay. Now, for a frame of reference, I mean, you've dealt with this issue for quite some time. from your perspective, good, bad, I mean, where do you fall down on the whole issue of tariffs? Okay, so I work for the Coalition for a Prosperous America. They are in favor of tariffs because their members are companies who are impacted by trade from companies who have low-cost labor, lower taxes, weaker environmental regulations than we have

here, and if they want to exist as a company, if they want to exist as a going concern, they need some sort of protection. They're very in favor of tariffs. The same thing with a lot of our members who work in agriculture, who are beef ranchers, for example. We have re-traded agreements in New Orleans of countries like Mexico. We're importing more beef than we ever did before. A beef that you have on the shelves in the grocery store. Probably came from Mexico or Brazil. Probably didn't come from Oklahoma or your local farmer unless it's labeled as such. Right? So these guys want to have a, you know, I don't want to use a level playing field, because there's never really going to be a level playing field when you have the strongest

currency in the world. Obviously, our dollar goes much farther in Mexico. If you want to build a beach house and we only have a million dollars, we're not going to be able to build it in Malibu, but we are going to be able to build it in Colombia or a margarita island in Venezuela. That's for sure. So because the dollar goes, is much stronger for us, we could buy, it's much easier for us to import. If you want to have a strong dollar, you want to have the dollar be the world currency and the world reserve currency, then you have to have some sort of protection if you also want to have industry and people who produce things in the United States. Otherwise, as time goes on, as we have seen, it's going to be a market just increasingly imprecated by imports. And that's

going to lead to layoffs and more treatment centers in upstate New York and other areas instead of people working. Okay. Now, On the other side, you know, those against tariffs, from their perspective or from that perspective, what's the number one, let's take the top downside to tariffs? Well, the top downside to tariffs, of course, would be, let's say, for example, I'm an auto industry, right? And I have to import an engine from my contractor in Canada. Right now it's duty-free. So now there's a tariff. I'm importing the engine.

The guy I'm importing it from, the customs broker is going to say, well, that $5,000 engine is now trapped at 25%. You have to fork up that money ahead of time. Now imagine if I'm importing a thousand of those engines. Now I've got to fork over hundreds of thousands, if not millions of dollars to pay for the tarp to my customs broker. Now, I might be able to reach an agreement with my bot, with my customer on the other end, and say, what if I buy more volume or can I take on a loan?

So the tab is a little less impacted than the 25%, meaning that $100 tab to 25% doesn't always mean that the good is going to be all of a sudden $125, what I'm trying to say. But for a company like that, like the auto industry in particular, that tags that sends things back and forth across the Mexican and Canadian border all the time, multiple times for the same item, it would be a big headache for those guys for sure. And what about the consumer? The tariffs in general. I know I'm simplifying all of this.

I know there's a lot more complexity to it than I'm giving it. But I think, you know, in general, if you talk to the average person on the street, if you accost somebody, I'm not suggesting you would cost anybody. But if you stop somebody on the street and you talk to them about tariffs, I think they're probably, you know, in my camp, which is, all right, I don't really know that I understand the concepts very well. So, you know, I have heard people talking about the downside being consumers end up paying the price. Okay, well, let's look at it like this. Do you remember the China tariffs when Trump was first in the office? You remember those, obviously. And you don't remember that, you know, like, did that really meet a higher cost for you? We all heard about inflation in 2021 and 2022, which was because of COVID and the lockdown and money printing, right? So your insurance went up, your health insurance went up, your table bill went up, your group costs went up. None of these eggs, for example, went up. We all heard about that. So many things that went up that drove inflation, gasoline, these were not things that we import. It's certainly not things that we import from China. And China was the main source of our tariffs in 2018.

And of course, they were in the Biden presidency as well. So tariffs against China, our number one trade partner, did not lead to inflation, okay? It's not measurable. And even Janet Yellen, I've heard your secretary before our new one, Scott the Zen, said the same thing. It's not measurable. Now, recently the Boston Federal Reserve came for a report, and the report was, let's pretend there's going to be a 25% tariff on Mexico and Canada.

Let's pretend there's going to be a 60% tariff on China. I think if I remember top of my head, it was a one-time increase of the inflation rate of 0.8%. percentage point. So let's, what does that mean? That means that if your inflation would normally be without those tariffs, 2% now it would be 2.8%, okay? 2.8%. Now it would be a one-time, one-time thing. Now, we can argue, oh, no inflation is good. Okay, I get it. Life is very complicated. But what if I told you that your inflation is higher, but your income is higher, right? You're making more money. You're now working, they're now hiring more people at general motors. People have now

have the economy is better. It's more producing and making things. And I think rather than working part-time jobs in retail and in travel and tourism. So there's always a payoff, right? You can't, we can't sit back and be and not be active. We can't, we can't be inactive because we're afraid of something happening. That's not what leadership is. You can't be afraid if you take action that you're going to break something and something's not going to go right.

If something does not go right about terribly wrong, you know, tariffs are not permanent. You could remove them, right? So all of a sudden, like I was telling you, if $100, 10 and 25% really was a 25% charge in addition to your $100 widget, which it is not, but if it was even close to that, you could always say, that's too much for our consumers, that's too much for our economy. They're now gone. So it's not permanent. But all the studies show, from the Boston Fed to the U.S. Industry Commission show that tariffs are not a major factor for inflation. It's money printing, right? Big problem there, government spending. Those are the main reasons for inflation, not air. Okay, no, very, very interesting. Look, we've got a number of other things to touch on. But first, Kenneth, if you don't mind, we've got to take a quick break,

and then we'll be right back with more of Kenneth Rapposum on the Situation Report. Thanks, yours too. What does Ravs stand for anyway? To me, it's the remarkably advanced vehicle. Really? To me, it's the runway-approved vehicle for its amazing. style. What about remarkably adaptable vehicle because of its versatile cargo space? Or really admired vehicle? Oh, or really awesome vehicle.

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Welcome back to the PDB Situation Report. Joining me once again is Kenneth Robozo, the Coalition for a Prosperous America. We've been talking tariffs. Now, I want to do a little bit of a shift here on focus because I read an article of yours. And hopefully, you know, people know you from the Wall Street Journal and from Forbes. You've done some great journalistic work in the past. You wrote a recent article that I found really fascinating. And it talks about and speaks to the dependency of the United States on China and India when it comes to pharmaceuticals.

And we all remember, because it wasn't very long ago during the pandemic, this did become an issue. people I think started to realize, wait a minute, you mean we don't produce medicines here in the U.S. and we had short supplies of a variety of medicines. And look, that's not the last pandemic we're going to see. I hate to sound cynical, but I'm sure there's going to be another pandemic. And when that happens, you'd like to think that we would have learned a lesson. But talk to me about this. Tell me a little bit more about this from your perspective. Sure. So when you think of the pharmaceutical market, right, there's two things, right? There's branded drugs, which would be like, you know, some new drug, right? Some new branded drug that just came out a year or two ago. This is where the pharmacy companies like Pfizer make all of their money. And then is the generic drugs, which are what most people take with. Somebody's on blood pressure medication or even something like Viagra. This is all generic medication now. So it's commoditize. It's lower cost. And the big pharmaceutical companies have decided that it's much easier. easier for them to either a contract manufacturer overseas, which India being one of the lead

spots followed by China, or just get out of the business altogether. And so then those players in India and China, namely India, become, you know, the brand, like Dr. Reddy or Cipla or Sun Pharmaceutical. These are all brands that they sound, they sound American, right? But they're not. They're Indian, Indian brand. So, and on the pharmaceutical side, I believe India is a a culture of more than half, at least 60%, maybe more, of our pharmaceuticals, generic pharmaceuticals. In order for them to even make these pharmaceutical goods, they rely on China for organic compounds and synthetic chemicals that go into your drugs, right? So China is a major component of the generic drug supply chain in the United States. And not only that, because of China's made in China,

a 2025 policy, they're also moving way up the value chain, and China is investing heavily in branded drugs and new treatment so they can become the FISA's and the avies of the world. And they're getting there. They're on par with a lot of our big biotech guys. For the U.S., what percentage of pharmaceuticals does the U.S. produce on its own? And then what percentage total is it dependent on other nations, especially as you pointed out, India and China? Well, for generic pharmaceuticals, it's about 80 percent, right? So about 80 percent of your generic farmer is overseas. And the majority of that comes from India, all the markets would be Israel is huge, with Tiva pharmaceutical.

That's an Israeli brand. And a lot of companies also from Ireland, believe it, believe it or not, a lot of those would be American companies at a contract manufacturing in Ireland. And these guys are a big source of Americans' trade deficit, Ireland, because of pharmaceutical drugs, actually. You know, one of the biggest sources of American's trade deficit is pharmaceutical drugs, because, as we know, Americans are on a boatload of drugs, right? No one knows on drugs like American. So we have a huge deficit. It would be great if we need.

Hey, we're number one. You say, right now we're a one. Yeah, right. That's not something in a new browser. Look at that. No, no. But I mean, okay, I know this is going to sound like an odd statement, but it seems like a national security issue. Well, so people say it is a national security issue, actually, because if you can't get things like antibiotics or when you had COVID, for example, when you couldn't. Imagine if you're in a situation with COVID and this could happen easily in the future, why not? when you go, we don't have the labs to make.

Let's pretend you thought the RNA vaccine was God's gift to mankind to save you from COVID. We don't have the labs to do those things. We don't have the innovators. Well, where are we going to get it? Well, we got to get it from China. We've got to get from somewhere else. And as you increase your purpose of imports, as you would increasingly depend on imports, then you lose the local lab talent to even want to get in the pharmaceutical business.

because it's just so small, right? It's just a branded guy, so we're doing R&D and try it for wonder drugs, you know? So it's very important to have a little mix of all of it. You can't just have the branded, the big wonder drugs that are here. You've got to have the generic drugs as well because these are the drugs that we take all the time. And these are the things that are going to keep you alive during surgery, for example, like, like, you know, anesthesia, for example. You know, we don't even make that in the United States.

Those kind of medications are very important. Well, and, you know, I mean, look at the issue of ADHD now with kids. right? And, you know, the requirement for drugs like Adderall or its equivalent, that was one that I remember, you know, story after story coming out of the pandemic when parents were panicking because they, you know, Adderall or its, you know, generic equivalent or whatever was in short supply. And again, you've, you've heard, what happens if, let's pretend, again, let's pretend. And these are not, you're not ridiculous assumptions. Let's pretend that you said, okay, I've Avaremectin and hydropsychloroquine. That is the cure. We don't need the vaccine.

Or doctors can use that. They can use that as a propylactic to COVID. Guess where all of that is made? It is almost entirely made in India. Now, if India also says we want to use these things, they have a billion people. They have three times more of our population. Do you think they're going to let a bunch of these life-saving pills disappear from their market to serve the United States? even if the United States was charged with paying $5 more pill, they probably wouldn't do that because they have an old national security issue to deal with, the national health emergency, for example. So it's important to make these things here, and we do not.

Now, China and India, as you pointed out, you know, it seems like they have a headlock on organic materials that, you know, active pharmaceutical ingredients. But to what degree are they moving into the space of innovating? research and development, creation of new, you know, high-priced drugs. Is that still the domain of the U.S. and maybe European partners? Yes, that is still the domain of the U.S., a high-end biotech, okay? But I will tell you that the large research guy, so Pfizer or Eli Lilly, if they're trying to go with new things like synthetic biology, for example,

I mean, this would be like a robotic arm, for example. example, and making it work with your skin, okay? If you're doing research in that, those guys partner with the Chinese because the Chinese just set up to do those things, okay? So China is also learning to do that, and they are going to be leaders in that, and the Chinese government wants to be leaders in that, as I said earlier, with the made-in-China 2025 policy where they made biobject a very important part of China's growth strategy. India doesn't have anything like that. India's more involved in the generic space, right? But China is involved in boom.

China is a beast man. China, if China sets off to do something, they get it done. You guys are no joke. And if they say they want to be leaders in something, they tend to be leaders in it. They get there. They have not failed yet. Well, you know what? I mean, that's if Xi Jinping and the Chinese Communist Party want something,

you know, that tends to be the nature of their organization. They'll get it done. They don't have to sit and bicker on Capitol Hill. It's a terrible system. I wouldn't wish it on anybody, but it gives them a certain advantage in terms of speed of movement. So is it getting, I don't hate to ask this question because I'm afraid I might know the answer. After the pandemic in particular, when we learned this lesson or when much of America started to understand the U.S. dependency on others for pharmaceuticals, Well, I will say it's getting better insofar as now it's a conversation whereas before it never won. Okay?

So, and it's only been a conversation in my view, maybe the last four years, right? Because COVID really in 2020, 2020, right? That's where it really became a conversation. So today, you had Trump saying, I want to bring the pharmaceutical supply tan home. I want to make more generic drug. I want to make more pharmaceuticals at home. We could obviously assume that that means generic, consider most of the drugs that Americans consume, including some basic things like a saline drip in the hospital, it's imported.

So we assume that he's not just talking about the branded drugs because a lot of those drugs are already made in the United States, or again, contract manufactured in Europe and Ireland in particular. So, yes, it is a topic of discussion. It is something that you hear more about on Capitol Hill. You have the President of the United States talking about doing it, right, making it so that you could do those things there. But again, like manufacturing anything else, you have to be.

incentivize and when you're making something that is low cost, like a generic drug that people think every day, how can you make it cost effective for a lab to produce that in the United States and not go broke? Or not need the U.S. government to give them a check of $100,000 a month in order to do it. So there's got this policy in place to make sure that can be, that can happen. None of those have become law yet, but wheels are in motion. It is a topic of discussion, right? But again, you have to make it so that those key drugs, those generic drugs, including those drugs that you mentioned earlier, like ADHD medication and others that are in constant short supply in this country, like kind of selling that are not made here,

for the most part, you can do it here and you can make some money, or at least not lose money. Yeah, it's important what you just said about, look, at least people are talking about it. I mean, that tends to be the first step. If you can shine a light on it, if you can get the the folks on Capitol Hill understand that it's important and that the American public will be expecting some sort of action. There's no telling how long that may take, but at least there's a conversation. So I take your point. Listen, you've written some very interesting pieces related to China. I'd love to have you back to talk more about those. I'd encourage people to go out and search for your articles. Very interesting stuff. Kenneth Raposa of the Coalition for

a prosperous America. Listen, thank you very much. I hope the next time call you, you'll pick up the phone and you'll agree to come on back to the Situation Report. Well, that's all the time we have for this week's PDB Situation Report. Now, listen, if you have any questions or comments, maybe you've got a humorous anecdote, maybe you've got a suggestion, you know, a polite one, well then please reach out to me at PDB at thefirsttv.com. Look, the highlight of every week, frankly, at the PDB headquarters secret compound is when Carl the mailman drops off another sack filled to the brim with your postcards, your emails, your faxes, your telegrams, you're still sitting telegrams, and every month, our amazing team,

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