Exploring Trump's Tariff Strategy

Office Hours: What Is the Plan Behind the Trump Tariffs?

Estimated read time: 1:20

Summary

In this lengthy and often humorous debate, the Academic Agent and Dan from the Lotus Eaters dive into the intricacies of Trump's tariff strategy and its broader implications. The discussion navigates through various lenses – economic, geopolitical, and strategic – to assess whether these tariffs aim to revive U.S. manufacturing or address broader global challenges, especially relating to China. The conversation oscillates between skepticism and support, with both parties presenting diverse perspectives on Trump's true objectives and the potential outcomes.

Highlights

Academic Agent and Dan engage in a marathon dialogue on the merits and risks of the Trump tariffs. 🥊
Dan argues the tariffs address strategic vulnerabilities, especially against an overreliance on China. 📈
Academic Agent raises concerns that mismanaged tariffs could lead to economic pain for American consumers. 😬
Debate touches on the historical precedence and future implications of such protectionist measures. 📚
Humor and light-hearted exchanges pepper a serious discussion, making for an engaging conversation. 😂

Key Takeaways

Trump's tariffs are sparking heated debates. Are they a strategic realignment or reckless maneuver? 🎯
The U.S. aims to reduce dependency on Chinese supply chains, particularly in critical sectors like pharmaceuticals and military goods. 🛠️
There's skepticism about whether U.S. manufacturing will truly benefit, given economic fundamentals and global interconnectedness. 🤔
Some believe Trump's strong-arm tariff tactics could jeopardize U.S. economic stability and global standing. 🌍
In the end, it's about finding the balance between short-term pain and long-term gain. Balancing geopolitics and consumer realities is tricky! ⚖️

Overview

In a lively discussion, the Academic Agent squares off with Dan from the Lotus Eaters to dissect Trump’s much-debated tariffs. They explore whether these tariffs aim to reignite American manufacturing or if they disguise broader strategic objectives, particularly regarding China.

Dan argues that Trump's tariffs serve to correct strategic vulnerabilities in U.S. supply chains, particularly military and pharmaceutical, and bring manufacturing back onshore. Academic Agent is skeptical, questioning whether these tariffs are even capable of delivering the promised outcomes, or if they will merely paint Trump as a deceiver if economic conditions worsen.

Despite the intense debate, there are moments of levity and humor, keeping the conversation engaging throughout. Both parties ultimately agree that while the intentions may vary, the real impact of Trump's tariffs, and whether they'll revive America’s industrial might or strain its global relationships, remains to be seen.

Chapters

00:00 - 01:00: Video Introduction: Office Hours The chapter titled 'Video Introduction: Office Hours' appears to serve as an introductory segment, presumably focusing on the concept of office hours. However, the available transcript snippet, "years of course confusion precious," is too limited and abstract to glean meaningful content or intent behind this chapter's summary. The words suggest a discussion that might touch on themes relating to longstanding practices, potential misunderstandings, or valued time within educational contexts, but specifics are notably absent.
01:00 - 02:00: Introduction of Discussion on Trump's Tariffs The chapter introduces a special office hour session focusing on Trump's tariffs. The speaker, joined by Dan from the Lotus Eaters, sets the tone for a dynamic discussion, likening it to a tussel and humorously mentions having 'boxing gloves' on, signaling a debate or deep dive into the subject matter of tariffs imposed by Trump.
03:00 - 05:00: Contradictory Justifications for Tariffs: Nationalism vs Negotiation The chapter delves into the conflicting reasons behind the implementation of tariffs, particularly during Trump's administration. It contrasts nationalistic motivations, which often emphasize the protection of domestic industries and jobs, with negotiation-based justifications that view tariffs as tools for leveraging better trade deals. The discussion features a juxtaposition of perspectives, reflecting both support and criticism of tariffs, underlining disagreements on their economic impact and underlying purposes.
05:00 - 09:00: Trump's Strategic Negotiation with Tariffs The chapter discusses Trump's strategic negotiation tactics using tariffs. The speaker reflects on a previous show featuring Dan, Bo, and Harry, where different perspectives were shared on the topic. The speaker agrees with some of Dan's points but notes differences in their conclusions. The conversation highlights the complexity and varied interpretations surrounding Trump's use of tariffs in negotiations.
09:00 - 15:00: Impact on Manufacturing and Economics The chapter discusses the unexpected agreement of the speaker with Rory Stewart during an autoplay of a video. Although initially disliking Rory Stewart, the speaker finds common ground with him after listening to a conversation between Alistair Campbell and Rory Stewart.
15:00 - 20:00: Economic Perspectives and Concerns This chapter, titled 'Economic Perspectives and Concerns,' discusses shared viewpoints among various economic and political commentators. Notably, the conversation highlights an unexpected alignment of opinions across diverse individuals, including Rory Stewart, Ben Shapiro, Jeffrey Sachs, Alistair Campbell, and Richard Wolf. Despite differing backgrounds, there is a consensus that economic principles remain consistent regardless of who articulates them. The chapter sets the stage for a deeper exploration of these economic tenets.
20:00 - 25:00: Global Economic Considerations and Reactions The chapter begins with an informal and casual introduction, as the speaker waits for more people to join a discussion on global economic considerations. The speaker expresses appreciation for the audience and acknowledges their support, contrasting this with a playful jab at a colleague, Dan Tubs, who is humorously criticized for allegedly not valuing the audience as much. This sets a lighthearted tone for the chapter.
25:00 - 30:00: Potential Political Fallout and Strategies The speaker expresses affection for their audience, though admitting that some members irritate them. They clarify that the annoyance isn't directed at everyone.
30:00 - 35:00: Debate on Global Supply Chains and Self-Sufficiency The chapter explores the topic of global supply chains and the concept of self-sufficiency. It discusses the complexities and dependencies involved in international trade and the balance nations strive to maintain between relying on the global market and fostering their own domestic industries. Challenges such as political tensions, transportation issues, and economic policies are considered. Furthermore, the text includes a humorous anecdote about a personal experience with a viral tweet about seeing the moon in the afternoon. This anecdote serves as a metaphor to suggest unexpected occurrences can capture public interest and affect broader discussions about globalization and self-reliance.
35:00 - 40:00: Historical Context and Comparisons The chapter discusses the global interaction and cultural exchanges on platforms like Twitter, highlighting a personal anecdote where the author faced humorous critiques from an international audience. It showcases the diversity of languages and perspectives that emerge in an online setting, emphasizing the universal nature of certain experiences and common cultural references.
40:00 - 45:00: Future Prospects and Economic Strategies The chapter humorously discusses the presence of the moon during lunchtime, emphasizing a surprising and memorable experience. The author reflects on the uniqueness of seeing the moon in such a setting, noting how it usually isn't visible at that time of day due to typical atmospheric conditions. The reaction of both the individual and the crowd adds to the amusement and novelty of the situation, suggesting themes of perception and common assumptions about natural phenomena.
45:00 - 50:00: US Debt and Impact on Global Power Discussion about online backlash and being criticized globally, possibly for controversial statements or opinions.
50:00 - 55:00: Military and Strategic Considerations in Tariff Policies The chapter discusses the enduring news story around tariffs that has been in the news cycle for two weeks, indicating its significance in current affairs. The author highlights their personal involvement in exploring tariff policies, mentioning their work through podcasts and recordings. There is a mention of a project called 'Brokenenomics' which aims to explain the basics of tariffs, with plans to delve deeper into the macroeconomic aspects in future discussions. The chapter indicates a connection to Islander magazine, suggesting possible upcoming content or collaboration.
55:00 - 60:00: EU Reactions and Global Relations The chapter titled 'EU Reactions and Global Relations' discusses the strategy behind producing limited quantities of items so they become collectibles. Some items have even appeared on resale platforms like eBay for significantly higher prices, as evidenced by an item selling for $200. The chapter includes a conversation suggestion with a person named Rory regarding the excellence of a particular cover. It concludes with a call to action, mentioning a promo code and introducing dark synth music by Peter Manderson.
60:00 - 65:00: Geopolitical Implications of US Tariff Policies This chapter explores the geopolitical consequences of the tariff policies implemented during Donald Trump's presidency. The discussion includes an analysis of how these tariffs affected international relations, trade, and economic strategies of other countries, as well as the broader implications for global economic stability.
65:00 - 70:00: Conclusion and Political Messaging The chapter titled 'Conclusion and Political Messaging' seems to focus on promotional content. It mentions a discount promo code ('Mandy') offering 25% off all courses at an academic agency. Furthermore, it highlights the speaker's admiration for a country where they have spent much of their adult life. The subject briefly touches upon 'foundations of economics', suggesting a discussion in that area as well. However, the transcript provided is incomplete and cuts off abruptly, indicating there may be more content not summarized within the given text.
70:00 - 75:00: Questions from Audience and Responses The chapter "Questions from Audience and Responses" discusses a session where the speaker addresses various questions from the audience related to economic concepts. The speaker mentions encountering basic economic misunderstandings from people and attempts to clarify them. There is a technical issue with an echo during the session, and the speaker, Dan, acknowledges it while trying to manage the discussion flow. The chapter involves eight points made by the speaker, each met with eight counter-points.
75:00 - 82:00: Final Thoughts and Conclusion of Debate The chapter titled 'Final Thoughts and Conclusion of Debate' begins with the suggestion to outline the basic positions of the debate. The speaker proposes that they should first present their points, followed by the counterpoints, and then conclude with a summary of their positions. Technical issues are mentioned, indicating that an echo might be problematic, and assistance might be needed. Despite potential audio issues, the chapter aims to summarize the key points of the debate.

Office Hours: What Is the Plan Behind the Trump Tariffs? Transcription

00:00 - 00:30 years of course confusion precious
00:30 - 01:00 Well hello everyone and welcome to a special office hours today where I'm joined by an Augusta guest here Dan from the Lotus Eaters And as advertised this is going to be the Trump tariff tussle You can't see me but I've got my boxing gloves on here Dan I'm ready to go I've
01:00 - 01:30 got a copy of Thomas Soul's Basic Economics in one hand and I've got a I've got a a pair of brass knucks in the other ready to Well I have I have the gloves off and I'm certainly not going to be using economic basics Um all right So uh if you're wondering we have uh we we we somewhat disagree on what the effect of these Trump tariffs is going to be um even what Trump is
01:30 - 02:00 trying to do and uh what's going to happen etc And uh you know before I came on air Dan some really quite worrying things happened because I watched your uh coverage with uh Bo and was it Harry when you did the show on that Um and I listened to your analysis and I was "Okay yeah Dan is making some good points He kind of like sees the same things as me but he's coming out with a different conclusion so that's going to be interesting." But then it autoplayed
02:00 - 02:30 You know when YouTube like auto plays Yeah And uh Alistister Campbell and Rory Stewart came on uh couple of weeks back I made a My argument I made a video called Why I Hate Rory Stewart If you remember I do And that the worst of all things happened is that well I was kind of away from my desk so it kind of played So I was basically just listening to these two and I actually started agreeing with Rory on what was being said You're in an
02:30 - 03:00 interesting situation because you are now agreeing with Rory Stewart Um who's the other one um the the war guy Ben Shapiro uh Boomers Um Jeffrey Sachs Yeah Alistister Campbell and uh and various other and various other people Uh Richard Wolf Um and the reason I'm agreeing with them is because uh well I mean economics is still economics It doesn't really matter who's who's saying it or doing it Um and we'll go into the
03:00 - 03:30 specifics soon Just going to allow people to trickle in here before we get going Dan Um I mean I just like to say uh I love I've always loved my fans here Uh it's great all of you fans here I do this for you Uh if it just wasn't for scumbags like Dan Tubs who doesn't appreciate the audience he's always trash talkinging you behind the scenes whereas I'm always sticking up for the little people Dan any any messages for the crowd before we before we get going
03:30 - 04:00 well no I I love my audience as well It's just some of the Uards that irritate me But um you know I'm not I'm not talking about all of you just you know some of you Um I I will also uh I will Yeah it's great to be back here in uh you know sunny Gil Sunny Guilford Um before we get going I do have a sale on at the moment a spring sale It's been gorgeous weather actually Uh do you know what happened the other day Dan um I was in the car and uh little Triple A was
04:00 - 04:30 like "Oh daddy it's the moon." I was like "What shut up It's lunchtime Moon's The moon is not out And And sure enough the moon was there in the sky So So I stopped and I took a picture and I just said "Oh I've never seen the moon at 1:30 p.m before." That tweet Dan got a million views on Twitter And I only noticed like a day later I was like "What the hell's going on here?" Because it only had like 300 likes And um literally I I reached the front page of
04:30 - 05:00 the internet the front page of Twitter And if you go on that tweet it's literally just hundreds thousands of people from all around the world dunking on me saying "What is this guy like he's never been outside before Oh don't you even know that the moon comes out oh look at Britain They never have a sunny day." Like people in Spanish and like German like every language you can imagine The M Well on the on the plus side with a tweet like that you've got the mortgage paid this month The MS
05:00 - 05:30 found it absolutely hilarious and then like sided with the crowd and literally was like "Yeah they're right You know haven't you ever been out before moon's always out." I was like "What what's going on here?" I mean I've seen it at like 4 or 5:00 p.m Never seen it at lunchtime before It's just that it was a very very clear day so you know usually you don't see the moon at lunchtime I I can't remember if I haven't It's not the sort of thing I'd mentally make a note of to be honest Yeah But it's really
05:30 - 06:00 it's if if you want to laugh go through the quote tweets of that because you'll see like literally me being dogpiled by the entire world like "Oh look at modern assassinated man out of touch with nature." And it's just every single dunk imaginable you know Um any I have a spring sale on 25% off promo code Mandy I'm going to have to subject you to it Uh but before I play it down anything you want to promote sir uh oh broconomics I guess Um so um I I I
06:00 - 06:30 work at the Lotus Eaters Uh we do a daily podcast I'll be on tomorrow and I might come back to this tariff thing because you know it it won't go away It's it's been in the news cycle for two weeks which is basically an eternity these days That's a that's a very enduring news story Uh and I've got a brokenomics coming out today which I recorded last week on the basics of tariffs And I might even do a second one where I go a bit deeper into the the macro side of things which we're probably going to get into here today Great Uh yeah Now I should mention Islander magazine is something I've
06:30 - 07:00 contributed to every single time I don't know if that's on sale at the minute or anyone's coming out whatever It was but it's sold out We We only make We only get a very limited supply of them because we want them to become collectibles In fact I've seen them appear on um eBay for $200 Last one was gorgeous I have to say have a chat with Rory You see Rory around the office telling me that cover the last cover was excellent Anyway promo code Mandy ladies and gentlemen Get ready for some dark synth Peter Manderson And when
07:00 - 07:30 we come back we're going to do the uh the tussle the Trump tariff tussle Country in which I have spent so much of my adult life and admire so much Admire so much Admire so much Admire so much Admire so much Admire
07:30 - 08:00 Promo code Mandy 25% off all courses Come on down Academic agency every single course 25% off promo code Mandy country in which I have spent so much of my adult life and admire so much great um and uh yeah foundations of economics people uh I reckon a lot of
08:00 - 08:30 people need that course because uh I'm seeing a lot of really silly things being said like really kind of economics 101 stuff um but Dan I'm getting a lot of people saying there's a um there's an echo So I don't know if uh it's possible to like I don't know if it's why that's coming through but when you talk there's an echo So I'm just uh so I don't know how we want to do this Dan because I I wrote eight points that I've got You had eight counter points but why don't we
08:30 - 09:00 just set up the basic uh positions here i think probably worth me going through uh my points and then I think it follows that your counter then sums up what your position is as well That that's fine If if the echo is absolutely insufferable I'll have to go and get my man who knows about the buttons to come and have a look Okay But so chat keepers advised if it's if it's really bad or if it's just you know normal background winging Uh all right So in terms of uh my points
09:00 - 09:30 here I've got eight points Uh not there Dan's points I've got eight points here um which I'll I'll go into So first thing is I don't even one of my problems Dan is that uh MAGA supporters people who support Donald Trump don't actually agree on why this is being done in the first place Half of the people are saying that it's being done for economic nationalist
09:30 - 10:00 reasons to bring back manufacturing yada yada yada um or to destroy globalism uh and the other half of people like Scott Grier and various other kind of Trump talking heads basically have said actually no it's a negotiation strategy to get all of the other countries to drop their tariffs right actually resulting in freer trade rather than uh rather than this kind of economic nationalist uh platform that other
10:00 - 10:30 people are talking about to me those two things those two positions are fundamentally contradictory They're at odds right because um you know if it's actually going to result in freer trade then all of this other stuff we're talking about is moot right so point one is if it's a negotiation strategy if Scott Ker is right or if all those other people are right then this is just another slimy GOP play to trick the Rubes yet again Okay and you can have
10:30 - 11:00 your fell for it again badge Okay that's point one Second point is should I shall I address point one or or you want to go yeah let's do it like let's do like let's do it like that It'll be fun Let's go one one Yeah I'm not sure they are mutually exclusive because I mean it's not like we're talking about there is a single trade good um and therefore it has to be one or the other you have you have multiple different fronts and what this is really about is a strategic realignment and there are certain industries uh defense and
11:00 - 11:30 pharmaceuticals semiconductors being the key ones that you do want to bring back um things like coffee and trainers are you know by the buy whatever they can either cost a little bit more or you can do a deal on them or the case of Madagascar which is probably the best example Madagascar just produces vanilla um it doesn't buy much from the US because their subsistence farmers they buy a little bit of machinery and chemicals from the US you know what's the point of having whatever it was 74% tariffs on Madagascar I can well see
11:30 - 12:00 those being negotiated down but the key thing is I mean it is trying to achieve a number of things which we'll get to when we come to my points but on the on the aspect of is it a realignment or is it negotiation well it's going to be a realignment where it matters and it's going to be a renegotiation where frankly it doesn't all right so the I was muted by the way and people are still talking about an echo But but anyway uh second point is if Trump is serious about re-industrialization right if it is
12:00 - 12:30 actually uh a bid to bring back the factories bring back manufacturing uh the tariffs right would be strategic and targeted like you were just talking about not a back of the [ __ ] right back of the [ __ ] packet blanket calculation which doesn't even represent tariffs right i mean of all of the two bitcony things I've ever seen right the the actual formula was trade deficit okay trade deficit divided by total imports
12:30 - 13:00 times 100 divided by two right i mean this is literally the US government of America saying "Oh um actually it's too difficult It's actually too complicated to figure out what tariffs are being put on us We've only got all of that data right in front of us." Uh instead what we're going to do is uh just do this arbitrary crude simplistic calculation that results in you know
13:00 - 13:30 ridiculous numbers like putting a 90% tariff on Vietnam you know it's just like yeah it's not strategic that is the opposite of strategic that is like okay here are some numbers we've just made up so so so two points first of all the crucial point is my man who does the buttons is back and pressing buttons so hopefully the echo thing will will get sorted out because he knows about these sort of things Um second thing I I think it's a very definition of strategic because um on on one hand the trade
13:30 - 14:00 imbalance is the thing that they're looking to address and what they're effectively saying is look this is based it's derivative from the trade imbalance and they're they're putting it out to the trade partner you know find a way to get this down How you do that is up to you Um if it's um if it's a strategically important good we might opt it out of these tariffs Um if it's a uh trade line of which we're not particularly interested in we don't see that there's trade lines going back then fine we we could do some negotiations or
14:00 - 14:30 there can be other negotiations but essentially it's putting the onus on each individual country to come up with something that works in their particular circumstances Now it it's it feels like what you're suggesting is that the US government should have gone through and rigorously worked out in each and every case what the what the end position of the negotiation should have been where they should have got to Well you can still get to that from here but if you started at that position you would have denied yourself the negotiation process about to go through So over over 70
14:30 - 15:00 countries at this point have reached out to America and said "Look we're looking to do a deal." If you had started at the end point you would have you would have denied yourself that and you would only end up with the tariff relationship outcome at the end of it You would denied yourself the ability to take anything else into consideration during that negotiation process So you're fundamentally stronger by going via the negotiation process Yeah Yeah but I mean it's led to absurd situations like tiny little African countries that nobody even even heard of
15:00 - 15:30 which you know happen to have you know some tiny you know the tiny amount they actually do export you know on paper looks like a very big number So they've been hit with massive tariffs I mean I I I I heard in one place uh America's actually put a tariff regime on an island which is inhabited by penguins Dan Right This is to me that is not the definition of strategic That is just lazy isn't it it's literally just lazy to say "Oh right We're going to put a
15:30 - 16:00 blanket We're not actually going to look at what each of these countries is doing We're going to just haphazardly apply it blanket across the board See what happens." Yeah But the big trade imbalance the trade imbalance is the thing that they want to they want to address So if you start from the position of where there is a trade imbalance we want to address it You're putting the onus on them to find a solution around it and quite possibly have negotiations of of of how you mitigate these things So you kind I well
16:00 - 16:30 where would you start from if you were going to do these if you're not if you're not starting from the big picture of the trade imbalance is the thing we want to address in most cases and actually I think the broader view is actually strategic rather than this this tactical stuff If you're not going to start there where do you start well I mean I don't even think that a trade imbalance in the first place is the thing to focus on as I'll get on to I mean maybe I should maybe I should get to some of my later points but I mean
16:30 - 17:00 you know well I I I agree the trade imbalance is not the primary issue here but um I mean let's just talk about let's just talk about Thomas Soul basic economics right there's a whole section in international trade on there and he's got a couple of pages devoted to the fact that trade deficit because the word deficit sounds bad People think it's bad right but that's not actually all it means is you have given money in exchange for goods right they get money
17:00 - 17:30 you get goods in exchange I have a trade deficit with the bloke I bought my lunch from for example Okay it's not necessarily a bad It just means you have bought stuff So essentially what you're saying is it is bad when you buy stuff when you when you buy more than you sell right that is that is a bad thing And uh what Thomas Soul says is that like listen can't base policy on the fact that you don't like the sound of a word
17:30 - 18:00 right i mean the the inverse of this which which Trump by the way has also done in um in his first administration is is when Soul talks about um oh the dollar is weak or the dollar is strong Right well strong sounds good and weak sounds bad During his first administration Trump was boasting about how strong the dollar is because he likes the sound of the word strong Right i mean I I just I I honestly don't think that we're dealing with like you know super genius 40 chess I genuinely think that Trump since the 1980s just has
18:00 - 18:30 these kind of you know never picked up an economics textbook type view that oh weak sounds bad I want the dollar to be strong deficit sounds bad I want there to be a surplus Yeah I mean it's certainly true that rich countries could import from poor countries and this is you know Ricardian 101 global wage arbitrage Um but what I would say is don't confuse the ability to run trade deficits with the wisdom of doing so And I get that the imperial logic you know
18:30 - 19:00 shields them from the effects of that but only to a point And it does not shield them from the long-term consequences of that and the inefficiencies that can arise as a result of it So I mean yes on an on an individual country country level it doesn't particularly matter if you're running a deficit against I don't know um Vietnam as long as you're running a a surplus against Cambodia Um but the US is running a across the board deficit You know its overall deficit is significant And how are you going to fund that well the only reason the only
19:00 - 19:30 way that you're going to fund that is by selling down assets which is exactly what is happening So the wisdom of this long term especially when you're supporting it effectively through money printing I think the long-term effects of this are actually quite harmful even if one particular country to country trade may not matter that much Why why don't we get to these next two points then because they're about this Um first thing is I think Americans have had a good thing going right and one of the things that annoys me is the dishonest
19:30 - 20:00 framing of Trump's arguments here Okay they have been getting goods like stuff whether it's iPhones or slop whatever whatever whatever the thing is Okay they've been getting that stuff practically for free in exchange for worthless dollars Monopoly money basically The framing that other countries are quote unquote taking advantage of them is dishonest sick and wrong Okay Uh the total size of the US debt is a measure of its imperial power
20:00 - 20:30 The total size of its imports is a measure of its purchasing power The goods it receives are like um are like all of the other countries of the world that we're talking about are peasants sending tribute to a fat king Okay Besides all of that most of the trade deficits are because the USA is rich i.e it has a lot of money And those countries importing for example Vietnam are using Vietnam because that had a 90% tariff slapped on it are poor right even
20:30 - 21:00 Germany relative to the USA is poor Okay we think of Germany the third the world's third biggest economy is rich but actually compared to the 27 trillion US economy it's poor So focusing on the trading imbalance between the USA and Vietnam is a waste of time because Vietnam has practically no purchasing power whatsoever You're essentially asking for the fat king to make things for peasants to buy Okay If
21:00 - 21:30 you're focusing on fixing the trade the trade imbalance between Vietnam and USA you're saying what uh I have I have lost youa I don't know if you can still hear me Can you hear me now Dan sorry Can you hear you now i can hear you now Sorry I uh I knock my mic Yeah What what I'm
21:30 - 22:00 saying is if you're focusing on the trade imbalance right between USA and Vietnam you're talking about like what can a country with 27 um 27 trillion dollars okay of an economy that's the USA what can that make that people in a country which has total economy 450 billion or 400 billion that's the total size of the Vietnamese economy right you've gone you've gone super echoey to me I don't know if
22:00 - 22:30 that's on my side or your side You notch your mic again or something I don't know I Oh you know you're back you're back to normal Um yeah Okay So um I I get the points that you're raising about Vietnam and I totally get why that's a big problem for the president of Vietnam and of Nike but it's it's less clear to me why that should be a primary consideration for for President Trump
22:30 - 23:00 Well well well the the point is Dan is that focusing on the trade imbalance between those two things what can America produce that people in Vietnam are going to be able to afford to buy the average worker in Vietnam has no money So you can make stuff in America all day long but you're not going to be able to fogg it to the Vietnamese That's why the factories are in Vietnam Yeah So I mean that's why when we come
23:00 - 23:30 to my point you see I really pivot to the strategic layer of this stuff because I I just don't think it is about Vietnam It's about this whole thing is primarily about China It's it's it's China the whole thing Um the issue you got with the country hold on Dan Sorry If China's the whole thing then why has Trump slapped tariffs on all of its European trading partners why has he slapped tariffs on its on its immediate neighbors why is that tariffs on every single on the the penguin island
23:30 - 24:00 you know so so the reason is is because otherwise you well he is trying to achieve a number of things What this is effectively is about is a reordering and that reordering is driven um primarily by China The need to do it is is from China but it still needs to be a global reordering So it can't be applied to China alone But specifically in the case of Vietnam is if you put you know high tariffs on China and you don't put it on anywhere else they will just redirect everything through countries like Vietnam The reason why Vietnam has such
24:00 - 24:30 a large trade imbalance with the US at the moment as it is is because on the previous round of tariffs and the focus on China what they did is they just relocated all the textiles from southern China into Vietnam And the the growth in textiles in Vietnam has driven this this big trade imbalance Now what Trump needs to do is he needs to get this global reorganization which we'll come to when we get on to my points a little bit later but he's got to also cover the countries of which it is going to go via the other thing your point you raised
24:30 - 25:00 about Europe is he is going to need to move in this new framework he is going to need to move people into basically good lists and bad lists now this is something that the US has done before or they dropped it they had a they had at one time um I think they called them buckets I can't remember whose conception this was but the green bucket a yellow bucket and the red bucket the green bucket was allies The yellow bucket was going to be independent countries which at the time was things like in uh India and then the red list would have been the Soviet Union It's effectively a return to that but it's starting from a position of we're just going to apply this um at the strategic
25:00 - 25:30 problem of of trade imbalances and then we're going to enter into a negotiation process and what will almost certainly happen is the people then start getting siloed into those buckets Now does that mean that Vietnam can come down yes it probably can um it's never going to come down that low because it's so close to China that it can be used to simply redirect goods from from China via Vietnam Uh that's also the justification for the penguin thing that you know somebody could set up a pontoon there and redirect stuff there Now um I don't
25:30 - 26:00 know whether that's true or not but the point is that the the Vietnam is is not the primary consideration here The Penguin Island certainly isn't the consideration here All right Well let's let's carry on going through these points Uh so this the the the next thing is that a lot of people I've been arguing with especially uh you know red hatw wearers MAGA supporters and so on have been arguing that the US could uh become self-sufficient that the whole point of this is to move manufacturing back to
26:00 - 26:30 the USA Okay My argument is simply that um this is facious right the the idea that America could become self-sufficient right it clearly isn't true because if it could be it would already be self-sufficient um if the USA could meet its own demand it wouldn't have to import 3.38 trillion dollars of goods every year even allowing for things like coffee right which the US cannot make Trump tariff
26:30 - 27:00 coffee too by the way Clown Uh but anyway let's continue It will be practically impossible to reproduce the supply chain that manufactures those $3.38 trillion worth of goods at a price point of $3.38 trillion Right that the whole reason that supply chain exists in the way that it does is that it gets the price point of the end of the consumer product down The structure of production including all of the intermediary goods
27:00 - 27:30 many of which are made by China by the way probably requires more workers than there are people in the USA period I mean this is just standard division of labor stuff right the division of labor for all of the products in the entire structure of production right we're talking about millions of people there that went into making you know when you when you consider the factory that make the that made the screws and the factory that made the rubber and the factory that made this All right that's a lot of people You're not going to be able to
27:30 - 28:00 reproduce that entire supply chain within America Uh especially given uh and I might as well say the the the next two points here because they're related the costs of operating in America Okay So so there are two fallouts of this One is one is the the underlying issue as to why uh companies like Nike outsourced in the first place This is the this is this point here right so besides all of the things I've said the fundamental issue
28:00 - 28:30 is not about trade policy Okay it's about the combination of labor costs and freedom of capital That is the American government at some point in its history allowed massive corporations like Nike or Apple or whoever to set up factories in Vietnam Why did the Nike set up the factories in Vietnam in the first place it's because a US worker costs $1,000 a week Okay that's the median wage for a worker in America versus in Vietnam it
28:30 - 29:00 costs about $90 a week There's no way around this Like the labor costs are why you have factories in Vietnam factories in China factories in all these different places And simply saying "Oh I'm going to stick tariffs on you and we're going to rectify this trade You know we want to rectify this trade imbalance." Is not going to create a magic wand situation where wages in America go down to wages in Vietnam So there still they still have
29:00 - 29:30 um you know there's still a good reason for the factory to exist in third world places And the final point then um is this one here which is the political fallout Right trump has got a small window in which he is a you know able to act here Okay people used to having lots of stuff for practically nothing are not going to like being poorer Okay And they will be poorer Trump Whatever you want to say about Trump he's not Julius Eve
29:30 - 30:00 Okay julius Eve was a spiritual critic of modernity of capitalism of materialism and so on and so forth Okay what Trump did is he promised the American public a golden age When people see that they're not going to get a golden age they're going to go back to the Dems They're going to go back to liberalism They're going to start listening to Gary economics or whoever okay and the right wing around the world will be totally discredited That's the political fallout So you're going to get people who are poorer It's not going to
30:00 - 30:30 bring the jobs back and um and it's going to discredit populists economic populism people who supported Trump people who were for this because the public will just see oh if you go that way all it's going to do is make me uh you know poorer and I still don't have a job So um and and then the final point is historical but but on that on that Dan before you come before you come back on it I do have this um uh clip from
30:30 - 31:00 Jeffrey Saxs where he lays out all of this uh kind of in kind of a neat fiveminute package Okay I think it's it's worth me playing this to truly outline the consequences of what I've just said there Uh if you want to interject you can just say pause and I can pause it and you can come in Yeah But it's I think it's worth listening to Saxs here because the promises that have been made on the back of essentially trade policy to me are
31:00 - 31:30 fantastical But let's see what uh what what Sax says who's a professor of economics at uh wherever he is Stanford or Yale or whatever balance has deeper roots than trade policy Trade policy doesn't end the imbalance Okay let's wipe that slate clean That was the motivation given That was the argument The argument is we're being ripped off
31:30 - 32:00 We will therefore stop the ripoffs by imposing tariffs and that will end the ripoffs defined as a trade imbalance which isn't a ripoff to begin with Now there are other arguments that are given of course another argument is this will raise the living standards of Americans and notably of industrial workers This too is fundamentally false because
32:00 - 32:30 US workers actually have living standards in part because they can buy goods from abroad that are relatively inexpensive You raise the price of those goods several thousand dollars really raising living standards of American workers The answer is in general certainly not Well what about the wages of the workers just in the
32:30 - 33:00 industrial sector where the protection will be greatest will you raise those wages probably not Even there even in the limited part of the economy understanding that the industrial employment is only around 10% of the US labor force Most people work in the service economy and their incomes are really going to go down in real terms because of the inflation on imported goods But what about the protected
33:00 - 33:30 industrial sector surprisingly even there the wages are likely to go down in real terms because production in the United States is actually complementaryary to production abroad In other words certain parts of the production process take place in Mexico or take place in China or take place in Vietnam or take place in Canada and then those intermediate products are imported
33:30 - 34:00 to the United States and turned into finished goods It's claimed that this is hollow hollowed out the US industrial sector Not quite So what it has done is put the lower skilled lower wage work abroad so that Americans can earn more in the higher productivity parts of the value chain In other words what is being
34:00 - 34:30 produced in Mexico or in China or Vietnam is not the same thing that's happening in the United States And what's happening in the United States is higherend production more skilled work typically workers with the much more educational attainment The laborintensive uh low productivity work is being done elsewhere That is being uh brought into the United States uh at an intermediate
34:30 - 35:00 stage Now suppose you say no no we're not going to do that anymore Americans have to do all of it That's not going to raise their living standards That's going to push workers into the labor intensive lowkilled sectors in this value chain That lowers living standards It doesn't raise it It also makes American industry completely uncompetitive with any other country
35:00 - 35:30 that uses an international value chain Take another country that does the lowcost production work in lowcost places finishes the skilled work in skilled places That's going to be a lower production cost than what the United States is going to end up with taking advantage of the global division of labor So in the end living standards in the US will fall even in the
35:30 - 36:00 industrial sector In other words Trump is breaking things He is Yeah you you get the idea there Yes I get the idea It's classic boomer um let let them meet flat screens um kind of approach Uh the assumption that because it's working for a you know the the top 10% of the population who are you know doing the the the as he calls it the higher skill design type jobs that we can sort of generally No hold on No
36:00 - 36:30 that's not what he said What he said was those people who are working in factories right now that 10% of workers in US manufacturing if you have a look at the actual jobs they do okay in a in a highly automated international supply chain they are near the top of that supply chain and all of the lower the lower skilled work is done Like I'll give you an example right for all of my life or most of my life my dad worked in a in a in a factory for Fords Okay Uh
36:30 - 37:00 which was uh which was located in BGEN What did they actually do in that factory okay And and those jobs that that that were in that BEN plant which is no longer there by the way it's been sold off to the Chinese incidentally Well what what that plant did is it took all the parts from all of the other parts of the supply chain from uh cheaper places from cheap from Eastern Europe from uh some parts from Germany
37:00 - 37:30 some parts from elsewhere It put together the engine right they they produced engines in that Ford plant Then the engine that they put together was sent to Germany and the engine was then put into the cars and a and a made in Germany stamp was put on it That is how that supply chain worked Now what that meant was is that those people who worked in that Ford plant or that per person uh those people right at the end of the supply chain in Germany had quite high wages but the lower jobs like
37:30 - 38:00 making the screws and all the little plastic parts and so on uh lower down the sort of job done by the the guy in this meme here uh was being done in some third world place that we don't need to think about So so I I I do get all of that Um but it's m it's based on a misconception of of of what this is trying to achieve is it's not trying to achieve full or turkey It's it's not trying to be uh a complete economic isolationist What it's trying to do is achieve resilience in key sectors and
38:00 - 38:30 address the broader um imbalance And actually there's a layer above that which is some of the arguments I'm going to be coming on to into a minute But I I they are not trying to achieve full independence with this So you can still have those supply chains Um the the focus has been very much on you know elements of strategic importance You know like I mentioned it's the it's it's the it's the military supply chain It's it's pharmaceuticals it's semiconductors it's things like that Um also your
38:30 - 39:00 points about I mean didn't you talk about um political realism at one stage about having their sort of you know costs go up slightly um if we go by the book when you apply a tariff 4% of it goes to the producer 4% is absorbed through the currency through um um adjustments in the currency and about 2% ends up in the consumer and yes um a bit more is going to land on the consumer as a result of this especially in in areas that are not strategically important which is going to be a large amount of their consumption So yes your price of
39:00 - 39:30 the coffee might go up a little bit and your price of your trainers might go up a little bit but you know what is the alternative because we cannot just assume that the that the US is at a steady state equilibrium and again I'll come on to that more when we come on to my points that the current situation is untenable there does need to be a readjustment And I mean more broadly to you know some of the people on the right making this argument I observe that they are often the same
39:30 - 40:00 people who have spent the last 10 years complaining about line go up politicians and this is a deviation from line go up This is not trying to maximize the lowest possible price point in your night store or your coffee rope It's trying to achieve something more strategic than that So the moment we get a break from line go up politician you know you've got to accept that there will yes there will be some sacrifice to this but the alternative doing nothing and assuming that the equilibrium is
40:00 - 40:30 going to be maintained that I think is a fallacy and that will not hold up but you know currently a lot of those intermediary goods that you were talking about Dan in the supply chain those critical ones are produced by China just slapped a massive tariff on China they've retaliated ated by slapping a massive tariff back All that's going to do is increase the cost of the entire supply chain around the world making all
40:30 - 41:00 goods more expensive for everyone So so two two key points here and and this is this is certainly something that that that Jeffrey Sax is falling into the trap Don't judge this stuff by the headlines Um there are going to be hyperbolic headlines and when it comes to Trump and Z they're going to be coming out with their talking points and they've all got to look like a strong man There is more alignment on the back end of this than you might appreciate in terms of some of the currency things that I'll be coming on to talk about Um secondly on the point of oh it's just
41:00 - 41:30 going to push up the cost of stuff that you need from China So let's talk about some of those things that you need from China Um China dominates the majority of key medications that are used in America All sorts of heart medications diabetes medication And if you're saying "Oh well it's just going to push up the cost." Well that that is the problem You you do you want to be in a situation where China can decide to turn off your ability to import heart medication or diabetes medication and a whole slew of other things No you need to get that
41:30 - 42:00 relocated back into the US You know this was something that became extremely obvious during the the COVID period In fact during the COVID period there was a um I I forget his name because it's a completely unpronouncable but a senior well- reggarded um Chinese politician was just saying "Let's just cut off the US from um a whole bunch of the medications that it needs." That is clearly a problem and it's clearly why that needs to come back on Another data point um 2018 the Pentagon commissioned a study in which they found that the US
42:00 - 42:30 military would be rendered um ineffective at hundreds of different points along its supply chain if it were ever cut off by China Now given that the main geopolitical rival is China you cannot put yourself in a situation whereas if you ever go to war with your main geopolitical rival that they can basically shut down your military by not supplying it So evidently things like pharmaceuticals and um
42:30 - 43:00 military components or munitions whatever it is that clearly needs to come back to the US So so that so yes it's going to push up the cost in the very short term longer term what it will do is is those key sectors the things being targeted will move to the US and that's a good thing but to so to sum up people are going to be poorer they are going to be worse off but it's worth it to not be relying on trainer um they they are going to be poor compared to what because compared to
43:00 - 43:30 what they've been used to because they see the I've seen a lot of people right say oh well we don't need Land Rovers oh we don't need Nintendo Switches is oh we don't need cheap tat from Amazon but again economics 101 these things are being sold in huge quantities because people want them but we are they are you what I'm saying is the reality is is that at the moment they're used to having this stuff on tap and you want to
43:30 - 44:00 turn the taps off Okay Now you could say well it's politically worth it It's strategically worth it it is uh for the good of the military-industrial complex whatever it's worth it What I'm saying is just admit that it is actually going to make people poorer and that's going to take some readjustment because now uh the American public are going to be have a lower living standard than they're used to because they're not going to have all the modcons on tap You know I I I mean the the
44:00 - 44:30 our one of our [ __ ] politicians came out the other day and said "Look look the era of having a cheap TV is over Forget about it Globalism is done You know we're going to go but it's going to go basically you're going to be worse off You're going to be poorer This this system we're dismantling it So so you're going to own nothing and you're going to be happy." So so the the big assumption here is that those taps were going to remain on forever if these tariffs weren't done Um we are at the point where in very soon there is going to
44:30 - 45:00 have to be a realignment one way or the other Now it is easy to think because if you judge it on living memory that the current set of conditions are perennial that the um exorbitant privilege is just a fun an immutable law of physics and it's always going to be there It is not Now if you look back over a longer period a period longer than longer than a single human lifespan reorderings in the global system do occur and they tend
45:00 - 45:30 to occur every sort of 80 to 100 years So just about within the reach of a human lifespine but only once And what the problem that you've got with a sort of boomer crowd like Jeffrey Sachs is they're looking back over their lifetime and they're seeing this long period of stability and they're thinking okay well this is just going to last for you know until my grandchildren are my age It is not going to last until that time So the dangerous assumption is that this was an option and that those taps were going to stay on forever So yes compared to the
45:30 - 46:00 assumption that nothing was ever going to change yes the cost of your Nintendo Switch is going to go up a bit but it was necessary as a readjustment But you know Jeffrey Saxs is probably old enough to remember the ' 70s I can't remember the 70s when he read about it right but what happened in the 70s what happened in the 60s and 70s in this country the British government did all sorts of protections did all sorts of Keynesian policies the post-war post the postwar consensus they called it to try to keep British manufacturing going
46:00 - 46:30 through uh and what what actually was the result of that Okay I remember watching Milton Freriedman videos uh where he's in 1980 going around a British steel plant saying look the the British government is subsidizing this steel factory All of these people are in this factory making steel and it's just not gonna be it's going to be sold at a loss or basically nobody wants it Okay What saying was there if you can bring
46:30 - 47:00 manufacturing back but who is who you're not competitive anymore That's the whole reason why manufacturing moved to those places is because in the west you were no longer competitive to run the factory in Sheffield or to run the factory in Detroit That's that's why the de-industrial de-industrialization happened in the first place And there was an attempt to protect all those industries in the 60s and 70s and it didn't work That was Thatcher and Reagan was all about that It it did it didn't
47:00 - 47:30 work And now what you're saying is let's go back to that so we can once again stockpile rusting steel that nobody wants because it's too expensive because we can't get our steel to a price point that's competitive with China No that's that's not my point The the the issues with the 1970s were not a product of of the policy attempted at the time that you know you got to go back another 30 years to see why Britain was in the state that it was in the 70s the 70s were just catching up the reality of it And the global reorganizations that I'm
47:30 - 48:00 talking about similarly happened at a at a you know sort of 30-year period earlier to that you know these things are infrequent uh when measured in in lifespans but they do come around fairly persistently every sort of 80 to 100 years and we're at the point now where we are looking at another one of those coming up Um what was what was your second point on uh well I I can just read my last point Dan if you want which is the the final one because because we've talked about
48:00 - 48:30 historical situations here A lot of people have said well look at what America did in the 19th century Look at what it did in 1870 Look at what it did in 1910 Look at what it did in 1950 and so on Okay All of these arguments I think are facious again because the circumstances were so different in in the late 19th century when there was that tariff regime uh during that period Um I mean it incidentally the USA ran a trade deficit for most of the 19th century It finally managed to become you
48:30 - 49:00 know an export economy in the in the late 19th century Basically during the early part it was teching up right It was it was ramping up in much the same way that the so-called tiger economies were doing in our lifetimes like South Korea or um you know those other Southeast Asian nations They also you know were doing that you know because they were what do they call them infant infant industries So they had to have
49:00 - 49:30 robust tariffs in place otherwise they would have been steamrollered by the the European industrial powers at that time Okay during that time it was an emerging power Okay it essentially acted as the Southeast Asia for the European imperial powers During the whole period of the British Empire America was basically the number one provider of grain Remember the repeal of the corn laws Well who who stepped in to sell the grain you know that was your uh you know American grain
49:30 - 50:00 American wheat American cotton corn whatever was coming in o over that time uh in the late 19th century they they were able to switch over to to manufacturers uh and they they started getting competitive in that time Then the world wars happened which meant that Europe was a captive market for America to sell its stuff into right in in the 1930s and then especially in the 1950s there was a captive export market
50:00 - 50:30 because Europe was in in flames It it had two world wars So that there was a massive rebuilding process Um and and America not just martial aid but through its export economy was able to sell lots of stuff So So I I get all of that but what's what's the core argument here well the core argument is is you cannot b you cannot base policy today based on stuff that they were doing in the ' 50s or in the in the 1870s Uh because it's
50:30 - 51:00 it's what it's a broken wind It's a broken window fallacy basically saying um right we need to do stuff in in a situation where uh you know most of the developed world had suffered a world war right I mean you can't you can't recreate that and it only lasted up until about 1975 okay okay but I'm not making that argument I'm not aware of anyone in well I I'm saying I faced that argument from various mega people so that's one that I put in there because Americans love to point to like historical precedent or
51:00 - 51:30 you know Alexander Hamilton and all this sort of stuff I mean Alexander Hamilton had to put in robust uh uh tariffs and protections in place because if he hadn't the British who he just defeated in a in a revolution would have just steamrolled it in and taken over their industry in space of 5 years This is a very different circumstance The circumstance right now is America is the number one economy in the world right and it has the greatest purchasing power
51:30 - 52:00 in the world right so so so the situation are you operating under the assumption that that position is unassailable and will continue indefinitely I I'm operating on the assumption that given that it is true right now okay given that it is true that America has the most amount of money in the world yes it's because uh there there's a debt element Yes there is uh the US reserve uh the dollar reserve currency status Yes all of those things But the fact is
52:00 - 52:30 is that the reason that it has trade deficits with a lot of other places is because it has the purchasing power and those places that are selling into it don't have purchasing power Right the reason that America was an export economy in the 19th century is because at that point the purchasing power was it there was greater powers in the world that had purchasing power Where was the purchasing power going to come from to buy American stuff
52:30 - 53:00 so so unless so unless you're making the autoartic argument wherein America just becomes completely isolationist and wants to make its own stuff I don't see how you're going to I don't see what trade policy is going to do with anything Nobody's advocating that It is it is it it would be a false assumption to say that is what full isolation is what's trying to be achieved is a strategic realignment around um core industries So if it's so strategic why has he used
53:00 - 53:30 this blanket approach and why does Trump never say that why does he just say "Oh you know the German be taking us for a ride all this time." And all I think Yeah I think you'll see when we get into my arguments is if if we if you look at the whole big picture it it it is actually quite complex and it's certainly not the kind of thing that you can stand on a podium and put out to the American audience and expect them to to get the whole piece It is a restructuring It is macro It is um
53:30 - 54:00 strategic But that's not an argument that you can make to the American public So that's why he's gone with you know all this stuff about reciprocal and they do it to us and we do it to them and it's not fair and all But just step over all of that That's just headlines That's to make it clear Trump is strategically lying to his supporters and to the American public because he cannot tell them the truth I just want you to say that Well I tell you what once we go through my arguments if you can tell me how to
54:00 - 54:30 boil that down to a series of sound bites that you can put out to the American public as a whole um then you you you are much greater master of messaging than I could ever be and probably anyone on Trump's team So I mean is is it lying when you simplify and you you bluster um I suppose you could suppose you could call it that So so like JD Vance it's a messaging
54:30 - 55:00 problem to sell it to the Rubes I just want to make that clear All right let's go through your macroeconomic argument and then uh and we'll see where it takes us Yeah So uh I believe my first point was that essentially look you've been picking up on the thing about the the dollar's exorbitant privilege that the ability that it can basically send debt abroad and then it can get actual real things in return I think I think that's kind of been a big point that you you've been making I wanted to make the argument that that is not immutable It's
55:00 - 55:30 not a law of nature and it is going to end in a period of a small number of decades from here Now the dollar doesn't actually die in my view from weakness It doesn't die from you know people not using it and in fact it's it's entirely the alternative that if the dollar is going to die it's it's from its strength It's because it's become too strong it's become um too much liquidity is is drawn out of the world system and debt cannot
55:30 - 56:00 be rolled and that is the core thing here with the second point I mean if you want to jump in there by all means but the US in my second point has 10 trillion of co era debt that needs to get rolled over next year that is a significant amount of debt now that debt is not getting rolled at the current levels you know if if the cost of refund and you got to remember this debt was initi taken on at rates of about 1% or lower because it was done
56:00 - 56:30 during that that low rates era and and the co era Vast amounts of debt was taken on Lots of it was done on a 5year time scale that is then rolling over over the course of this year Um if that is if the rates are not brought down then the interest expense for the US is going to swallow everything else Now you got to remember that the US interest expense at this point because this is one of the points that you raised higher up on your list you you you describe the dollar as essentially monopoly money that it's
56:30 - 57:00 it's free money Well that's true at the point of creation It's not at the point of debt servicing The US is currently spending a trillion dollars a year on servicing its debt costs And if it rolls over this current branch of 10 trillion debt that it's got to do over the next 10 years and it moves that rate from sub 1% up to something like 5% You're looking at an additional three four 500 billion dollar that gets added to the federal expenses Now at that point Elon
57:00 - 57:30 Musk might as well not bother doing Doge because everything that he's worked on is just going to get completely nuked by the interest expense that is being added on So so these are the first two points that this you h you you cannot look at this without looking at the debt situation which is an immediate and existential threat to the US government if it doesn't tackle this So so I I guess what I want to get in my head is that okay so the US has been able to get away with okay I what Michael Hudson describes as super imperialism I have a
57:30 - 58:00 uh I have a video called how the US how US debt is a sign of its power right um now one of the things it's been able to do is it's been able to say well we're going to buy this thing from you Let's say it's a phone for a grand Let's say you pay a grand Now we're going to do a shitload of uh money printing and oh whoops The uh the value of a dollar has decreased in real terms So the 10%
58:00 - 58:30 interest that you the debt that you bought when the dollar was worth this much has actually depreciated in value So yeah we can give you the interest back but oh whoops it's worth that much less now So essentially it's inflated it away That's why I'm saying that Americans have basically been getting stuff for free They've not been getting quote unquote ripped off They've been getting free stuff from the rest of the world Now how has the American How have the Americans been able to get away with
58:30 - 59:00 that for as long as they have when it comes to debt the ultimate question always is okay you and whose army if I'm in debt to somebody right if I leave it long enough and I don't pay my debt back still even now in the modern world the uh bank will send the baiffs round right the ba the baiffs will get involved and physically remove you from the you know if I don't pay them In the history of America it has gone to war several times
59:00 - 59:30 over debt repayments I think it was uh Liberia off the top of my head There there was some sort of war uh that was triggered because Liberia wasn't paying its debts Uh several wars in history it has been started over debt repayments Famously the mustache man Do you remember the World War I reparations he said "No we're not going to play it." Yeah What are you going to do now you army right and that led to World War II right that led literally one of the factors that led to World War II was
59:30 - 60:00 Germany Welshing on its World War I debt debt repayments Now in the American case okay let's just pretend it's like well it's still comes down to you and whose army and as long as America has the biggest army by some distance and is the impenetrable fortress blah blah blah what is China going to just like invade and like who how is anybody can recover their debts from just put your you just put your finger on the key issue Yeah I mean that that is the issue It it's
60:00 - 60:30 ultimately this comes down to um geopolitical and um military considerations as we just talked about a few moments ago The US military is dependent cannot operate without the US supply Chinese supply chains You know that 2018 report highlighted the US military breaks at hundreds of separate points if not supplied by China And we are literally in the process at this very moment of watching the US lose a war against Russia because Russia can
60:30 - 61:00 out outproduce the US when it comes to the key munitions and stuff like that So your point about um you know the the the the US has the dollar and it has this exorbitant privilege We cannot assume that is going to be persistent forever because that privilege is a function of the US military and the US military is being undermined because it doesn't have the ability for it to produce its own supply chains In a whole number of key
61:00 - 61:30 cases there is one Chinese shipyard that has outputed more commercial ships in one year than the US has in the entire period since World War II Now yes it's producing commercial ships at the moment but that same logic could apply to um military ships The Chinese are building a military which is designed to do one purpose because they do not go around the world bombing people because they're not having enough bomb sex or or whatever it is that the US military is up to these days The US is building their so the Chinese are building their
61:30 - 62:00 military for one purpose and that is to defeat the US They have the advantage on the manufacturing and the US military is dependent on Chinese supply chains So you've absolutely put your finger on the on the absolute heart of this issue Yes it is vital that the US does not lose its military significance and it will lose its military significance if it cannot supply its own military through its manufacturing efforts and then all
62:00 - 62:30 of that dollar stuff you're talking about goes away once the military advantage goes away So so just to recap what you've said Americans need to be worse off in the short term in order to in order to ensure that their military can still be supported I I I'm saying that Trump should not care if the cost of Nikes and coffee goes up a bit if the advantages that he gains from this
62:30 - 63:00 broader policy is to ensure that the US military is viable which means that US um US dominance or at least a top seat in a emerging multipolar world is not put at risk and at the moment it is at risk Car carry on Carry on Okay so um we we we kind of rather not cheap by the way Victoria Really bloody expensive
63:00 - 63:30 Anyway carry on We we kind of leapt onto some of the military points I was going to come to to later but I I started off making the point okay uh the US has a huge amount of debt that it needs to roll over in the next 12 months It's about 10 trillion's worth And if it rolls it all over at these new higher rates you might as well not bother with Doge because you know rolling it over um moving it from you know whatever it was let's call it 1% let's say that goes up to 5% Um you're looking at something
63:30 - 64:00 like 400 billion um of extra cost going on the um US P&L They're already spending 1 trillion a year The last thing they need is to be spending 1.4 trillion because it just wipes out any other methods that the the US has what the US has got to do is to get its um cost of refinancing its debt below its nominal growth rate Now why is this important because the US is at currently at the point where its economy its GDP is roughly the same size as its debt
64:00 - 64:30 pile So so they they roughly match at the moment Now that's very neat and handy for us for the following calculation Which one of those two is growing faster because if the debt is growing faster than the GDP the debt eventually swallows everything They go into a debt spiral If the GDP is growing faster then the debt becomes manageable It's still a significant problem It's been allowed to get to that point but at least it becomes manageable So the US has got to get itself in a position over
64:30 - 65:00 the course quite quickly actually over the course of the next year where it can refinance that debt at a viable cost And that's part of what this is doing Now why does um why does a readjustment matter here what's important well the the important factor is that the dollar needs to come down The dollar is too strong The dollar is a wrecking ball It's something that the macro people have been talking about for a long time I mentioned earlier that if the dollar dies it will be a result of its strength and not its weakness Now what do I mean by this about 50% of
65:00 - 65:30 global debts are denominated in dollars So there is a constant perennial need for there to be dollars in the system in order to refinance these debts The second aspect of that is that if the dollar is strong and the dollar has been very very strong over the course of the last few years it raises the effective refinancing cost of the world's debt So if they can get the dollar down and I tend to measure this by looking at the DXY which is a basket of the dollar
65:30 - 66:00 against a whole basket of other currencies If they can get that down what it does is it eases um financial conditions across the rest of the world allowing them to refinance their debt allowing global liquidity to increase You need global liquidity to increase China especially needs this at the moment because the the Chinese debt cycle is a little bit further ahead They need to get the dollar down because otherwise they can't refinance their
66:00 - 66:30 debt Once they start to refinance their debt that unlocks um the business cycle for them and unlocks further financial easing for them Global liquidity starts to raise that puts the US in a position where they are able to refinance their significant proportions of debts as well So in the short term um the big the big thing that they needed which was a weaker dollar that has already been achieved at this point and hopefully that will continue to go down So I think my third point was um something like um
66:30 - 67:00 you know China China needs a readjustment that will will give them a surge in global liquidity That's what I was talking about there Um feel free if you want to jump in before I move I I mean I I do have a quick question about all of this is that I mean okay all of this might make sense if if Trump and the US government were the only actors here but this is a like there's a very complex global financial system trading system connected which has knock-on
67:00 - 67:30 consequences to all of this Don't assume that they are opposed on that one What what I what I what I have observed Dan is that a lot of other economic blocks let's just say the EU was one very prominent example China is another example are being quite belligerent They're saying actually we're going to we're going to be retaliatory this We're going to we're going to we're not going to back down We're not going to we're going to meet you And there's even talk
67:30 - 68:00 uh within Europe Europe I mean I listen to all these uh Rory Stewarts and so on They were all saying like at what point do the European nations say like "Actually [ __ ] America It's a basket case." Uh China's the safer bet right now America's going down China's going up Uh let's just side with the Let's just everybody just side with the Chinese at this point Uh leave America do what it wants basically uh if I if it wants to like blow up the entire world's financial system it can blow itself up
68:00 - 68:30 and we will just go in because China currently has a manufacturing capacity etc etc That's one scenario Another scenario is what if the short-term pain that people are talking about is so intense that it actually just leads to uh a global financial collapse or just blows up the world economy um you know which some people have talked about in which case the devastation may be big enough that all of this stuff we're talking about is moot in the because if if the entire global economy blows up
68:30 - 69:00 how are you going to how are you going to do anything forget forget about refinancing debt how you going to pay for your anything the thing that I would urge people is is don't judge this stuff by the hyperbolic headlines um it's I I understand that there's a lot of postering going on I mentioned this earlier that that both Trump and Xi are going to do their their strongman thing where they take a pop at each other in public I I can tell you absolutely the world around they all understand that the dollar needs to come down because as
69:00 - 69:30 I mentioned 50% of global debts are denominated in dollars The Chinese they need the dollar down The US they need the dollar strength down So don't get don't get c caught up in you know what they're saying and the the spin that the headlines are putting on it they are all aligned when it comes to this aspect of driving down the DXY So I don't think anything that I've said in the first three points is is particularly significant I'm just making the point
69:30 - 70:00 that this is a prime goal We know it's prime goal because Scott Bessant has been talking about this for years and the entire macro community has been talking about the dollar wrecking ball for years Um Scott Bessant was he he was a he was a global macro hedge fund manager He actually originally worked for George Soros Um he in fact it was it was pretty much his idea to do the erm um trade that that that got the black the black Wednesday trade or the liberation day was the original liberation day trade Uh that was
70:00 - 70:30 actually Scott Besson's idea and he took it to his boss George Soros um and the contribution that George Soros made is that when he asked Scott you know how much do you want to do on this he said 100% of the fund and so said why not 300% of the fund now yes I know that Soros bit of a diversion I know Soros is um you know a literal demon these days but him and his team are bloody good when it comes to the finance they are they are you know absolute macro killers on that stuff so Scott knows what he's talking about him and the rest of the
70:30 - 71:00 macro community has been talking about getting this dollar down for a long time Um now they're doing it The world is aligned Don't get caught up on the fact that there's a lot of posturing in public Um so to be clear Dan it's all about China but China's also on board with all of this So there no there are different aspects of this So the first part that I'm talking about is is the need to get the dollar down That is a significant part of what this is trying to achieve because look what what monetary tools have you got you've got you've got interest rates and that's basically all
71:00 - 71:30 Western economies have been using throughout the last 20 years Oh we're just going to lower interest rates one more time or or maybe we've raised them a bit here You know they they've got basically got one lever and they pull they pull it up and down normally down Um are you going to get yourself out of your current situation by lowering interest rates well no you can't because inflation is you know a hair's breath from coming back and probably will if you lower inflation Can you can you can you raise interest rates uh well no because the debt costs are already
71:30 - 72:00 unviable So you've got one lever and it doesn't work You need a second mechanism and that this is what this is providing is a second mechanism So are is everybody aligned on the need to get a lower dollar yes And that is part of what this policy addresses So on this aspect there isn't going to be any push back because people are happy with it And this policy has already achieved a very fundamental and very important aspect of what it was trying to achieve After that I then need to come
72:00 - 72:30 on to the manufacturing and strategic side of things I just want to mention very quickly um uh people saying that uh Vonda Lion has backed down and so on That's not really what I'm seeing I mean the EU are uh basically setting up talks with China like nobody's business They're unveiling uh investment packages She's called for a negotiated resolution with China in the face of US tariffs Uh
72:30 - 73:00 Europe does not want to get off uh Chinese imports according to according to her um the EU is going to seek help from uh Beijing um to so what I'm saying is is that there are signs that the globalists are saying like actually like sod America we're going to we're going to actually partner with the Chinese to protect uh our economies uh you know if they're in debt or
73:00 - 73:30 whatever so be it uh if the world is changing we have to go with the winners basically it's going to be So so the all of that the EU in particular has a really difficult problem a really difficult problem because um they they can do what you're suggesting and go down the Chinese route but then they're effectively just going to come Chinese vassels if they follow the US and I suspect ultimately actually they will they're trapped in a race to the bottom because let's say the US agrees 0%
73:30 - 74:00 tariff deal So the so the only reason the EU functions at the moment is it's a customs barrier So it's basically a block of countries with a big wall around the outside with a with a with a tariff applied on it That's that's that's what the EU effectively is and it allows people within the EU to maintain a level of productive and efficiency that they they otherwise wouldn't Now um that you you might want to throw that back to me as to say okay well that's a weakness of the US system If you want to do that then I'll come back on on why I'm less concerned about it Ultimately
74:00 - 74:30 my answer is going to be because of strategic um particular supply chains which you want to onshore But okay the EU is facing the problems if they end up doing a 0% trade deal with the US well the US is just going to eat their lunch because the EU has got itself into a position where it is fundamentally uncompetitive Not just because of the US reason which is the high you know wage cost which you pointed to earlier Um I'm not that concerned about that because you can mitigate that through automation
74:30 - 75:00 But they're also incredibly inefficient because they've had this posited arrangement around themselves for a while But the more fundamental reason is they're is they're extremely overregulated You know the EU is basically a bunch of regulating bureaucrats rather than you know leaders You know they're they're not leaders They're not strong men They're they're regulators So if they enter into a deal with the US then there is going to have to be a race to the bottom of deregulation
75:00 - 75:30 um and competitiveness which the EU is fundamentally ill suited to doing But as you say the alternative is is going to China but then they're going to essentially get vasilized by like everyone else has I mean the total manufacturing output of the EU combined is $6 trillion The total manufacturing output of America is $2.5 trillion So it's a bigger manufacturing base than America So how on what basis would uh America necessarily out compete
75:30 - 76:00 Europe in manufacturers um cost of energy probably the be the big one Um you know you know Germany used to be an economy that was you know 5 trillion euros in size based off 50 trillion uh 50 billion of of cheap Russian energy and and they've decided to to cut themselves off at that Well they didn't decide America well blew up Nordstream But what if what I'm saying if there's a de if there's a decoupling of EU and US and they go in with bricks
76:00 - 76:30 or whatever they'll just say well all of that all of that stuff which was imposed on us by the Americans which was not advantageous from a European point of view we'll just get much cheaper energy from uh our new buddies in China and Russia and so on and uh lo and behold we don't have that energy problem anymore and we're we're a bigger manufacturing base in America Yeah So you know and now it's uh us versus you Let's see who can do it you know Yeah If if if I was
76:30 - 77:00 running the EU that's the first thing I'd do is is I'd make good with Russia and I'd get those taps reopened Um but we've just watched the panine over the course of the last few weeks of them basically saying that they're going to conscript all the young men of Europe and send them off to to die in a Ukrainian abattoire get get drone bombed from from Russia So if if they are capable of making that pivot um then yes potentially they've got a leg to stand on It would require a decoupling from from America as the hedgeim Yeah I'm
77:00 - 77:30 saying those chances how likely is that to actually happen how what I'm saying is it's a lot more likely if there's a global collapse due to the actions of Trump than it was if he hadn't done this basically Um or if he or if he said "Look this is about China so I'm going to I'm going to levy tariffs on these strategic uh goods these strategic items to stick one to China." Uh but he hasn't done that He what he's done is he's antagonized all of his allies all day
77:30 - 78:00 every day whether it's Denmark or Canada and he's basically said "No it's America It's us against the world It's us Americans and you Europeans Not only are you Europaws but somehow you've been screwing us over as well That's what he's been saying So you know I'm just saying there's a consequence There's a consequence to the Punch and Judy show and the rhetoric Okay it could be fake It could be for the Rubes or whatever but there are actual consequences to it because Europeans now are thinking "Hold on a second Are we better off with them or
78:00 - 78:30 are we better off with these guys over here?" Because these guys over here not only do they trade with us all the time but they don't like randomly attack us and randomly send JD Vance to give us moral lectures every two minutes They'll be like maybe the Chinese are better to do business with The Americans are unpredictable You know one minute they're blowing up Nordstream the next minute there's this nonsense It's not a serious country anymore You understand what I'm saying right yeah Carry and and
78:30 - 79:00 and maybe may maybe that is the um that that is the route they go down Sorry what was your what was your original point that I was about to respond to well well my original point was what if the short-term pain is so significant that it just melts everything down So these long-term plans won't even be possible because Trump has gone too fast too quickly Okay So yeah I mean in in the question how do you get this so again I'm going to have to come back to the point that the um that the
79:00 - 79:30 people stay in cope six trillion manufacturing output is bigger than 2.5 manufacturing output whichever way you look at it And that is because whichever way you slice it Europe has maintained manufacturing capacity I mean the Germans have been busily like wrecking it over the past couple of years but they still have a lot of factories And it's not just Germany It's like all of Easter eastern Europe and Czech Republic and nor North Italy is a industrial base as well and France has factories too Any anyway absolutely Let's let's see how
79:30 - 80:00 much they hold on to it if they continue on their policy direction of ever higher energy costs which which basically is the route they're going down at the moment I agree with you Pivot to pivot to um Russia Um open up the taps with them That would be a great thing I just I just don't see that happening at the moment Now on your other point of okay I if if we accept my argument that the current dollar privilege is not going to be maintained indefinitely because the dollar was too strong The dollar was
80:00 - 80:30 suffocating the system with its strength and people were running out of dollars They couldn't refinance their debt There was going to be a situation and global macro people were talking about it increasingly where at some point the dollar was going to be too strong too dominant too suffocating that it would force everybody else to go out and find an alternative for it Not because they necessarily wanted to because they were forced to because they were always dollar starved and they were always trying to refinance this debt So a great amount has been achieved through this Now if we're coming to the broader
80:30 - 81:00 reorganization thing and effectively what we're going to need is new Breton Woods at some point We're going to need that reasonably soon Um again this is something that Scott Besson has picked up on a whole number of times If you go and watch his interviews every interview that he gives at some point he will make the detour to say I think we're going to need some sort of new global accords and I'm ready to negotiate them Every interview he always manages to get that in because that is the view that they are going to be going towards Now the point that you're making to me is how do you get to that do you do it by being
81:00 - 81:30 all pal what what you essentially put to me is why don't you just go after China and then say to everybody else we're going to have a new um global accord come along to it Okay that is a tactic Um and that is a tactic that Trump did not choose to use The tactic that Trump used decided to use was let's tariff everybody Let's create a mo a maximum short-term pressure point Let's get this at the top of everybody's agenda and
81:30 - 82:00 almost certainly what will follow from this is a whole series of options and exemptions or readjustments to various countries and a commitment to come on board for a global um new global accords whatever they call it a new a new Bretonwoods some something like that is going to emerge out of this Now it is purely a question of tactics as to whether you feel the um convivial approach or the Trump maximum pressure approach is the best way to get to that
82:00 - 82:30 Trump being Trump has clearly clo chosen the the Trump way of doing it And possibly you're right the other way would have been better to get there I don't know but Trump's Trump so he's he's going to take his style So it's a gambit to try to maintain American hedgemony which may or may not work is what you're saying kind of in a way it's it's it's a recognition that that that that US hedgey was was not going to last In fact let me move on to my onto my sort of military side and my
82:30 - 83:00 strategic points and I I explain better Can I ask one one question before you get on to that because as we were talking I would notice a lot of comments in the chat and so on I guess number one question would be why is it bad for the EU to have protection protection protective trade barriers uh why is it bad for the EU to have that but good for the America to have that from the European point of view yeah So so that that was the push back that I actually recommended during that So um I mean again it's a bit like deficits It's not necess it's not fundamentally good or
83:00 - 83:30 bad in in in all cases The issue is is that it can make you lazy In fact there's there's a number of cases of laziness here The biggest case of laziness is actually the thing that we started talking about right at the beginning of the dollar privilege of the fact that the dollar can send so the US can send debt abroad and get real things in exchange That basically gives you a huge amount of cover to get very lazy on your government side and let spending get out of control and and that is an issue Um although from from the sounds
83:30 - 84:00 of it if you had the dollar privilege I mean that would be that would be awesome you should be using that to fund um genuine things you know building bridges and semiconductor factories and and all the rest of it things that added value to yourself That isn't actually what happened The US basically used that privilege to overconume and actually um consume at the expense of everything else growing their service sector and pushing all their manufacturing abroad Um returning to the point about the EU why why is it
84:00 - 84:30 bad when they Well it's not fundamentally bad It's not necessarily always bad but typically what has happened is they have got lazy and inefficient around a whole number of sectors because they've got this in captive internal market Now I am advocating this for the US Why am I advocating it for the US if I'm saying it's bad for the for the EU because what I think the US should do and I think what they are likely to do is to basically use it fundamentally as a tool for areas of strategic importance where they are being um
84:30 - 85:00 significantly underpriced at the moment by the U by by China and that's why they're losing those things So the reason that um China is is is dominating say pharmaceuticals and those military supply lines is because they have extremely low um cost of labor effectively slave labor is if the US is going to compete on these those uh that slave labor cost needs to be put at a point where it's not as fundamentally as appealing as it was before and the US
85:00 - 85:30 needs to automate in the rest of it So when you apply it to those strategic sectors that you absolutely must have back even if they end up being slightly inefficient and lazy because they've got tariffs around them fine if you got to that point but at least you've got them back in your country at that point and you're not relying on China who can then turn off your supply of heart medication diabetes medication or bloody tank shells whatever it is Should I move on yeah please do Okay So
85:30 - 86:00 um debt refi cycle Talk about that Why that's that's important Um strategic supply chains another key point This was cited in the executive order that Trump did with the tariffs That glo US share of global manufacturing I believe fell from 28.4% um in maybe 2005 I forget the number now Um down to 17.4% So it's lost 11 basis
86:00 - 86:30 points uh over the course of a little more than a decade And as I mentioned before we are literally watching the US lose a war against Russia because of its inability to produce munitions That manufacturing issue needs to be taken care of in these strategic points Now I won't go too much further on that because we basically covered it in the leadup to this in in response to other things Um and then finally my my key point that I make is that the US is not a superpower because of the dollar So I
86:30 - 87:00 think you had alluded to in some tweets that you know they're they're threatening the dollar system Now the dollar system is under threat anyway because it was too strong it was too suffocating and it was forcing people to find out uh find alternatives and the US wants to be leading that process rather than having people pushed out into something else from a strong dollar Um the other aspect is is the military power and again I talked earlier about the fact that their their um their military fails at dozens of different points because of this So so I've made these final two points already
87:00 - 87:30 in the leadup to this Uh the final thing I think I I mentioned on my list was that you have to judge this by the ability of the US to remain hegemonic or at least a um top tier competitor in a multipolar world That's how you judge this against the backdrop that the um dollar privilege and its head and its um uniolar status was always going to go away So don't judge it against the last 20 years Judge it against what the next
87:30 - 88:00 20 years would have been in the absence of this policy Uh don't judge it by whether the price of coffee and Nikes go up because that is not strategically important The other thing is strategically important Uh actually a final thing that I'll throw in on that is this this is not something that Trump alone is seeing Joe Biden saw this problem as well and his solution was to throw vast amounts of subsidies around Now I think that the tariff approach is
88:00 - 88:30 a fundamentally better one to get your strategically important industries back on shore than basically just throwing subsidies everywhere which is the Democrat solution Well what what Biden did is is he he had this massive infrastructure bill but unfortunately being Joe Biden and being America which is basically almost banana level republic corruption at this point the infrastructure bill didn't actually build tons of infrastructure or factories and the things that it should
88:30 - 89:00 have done It was just pork It was just pork barrel nonsense funding you know Biden funding his mates rather than which then drives up the cost of of government and then does not address the points that I started with is that the US is is in a debt crisis and it is going to go into a debt spiral if it doesn't address its spending side In order to get down its spending side a key element is going to be Doge is one But the interest expense is another fundamental thing So when you put
89:00 - 89:30 together the core elements the strategic realignment with the debt refinancing tariffs serves both of those mechanisms So therefore I think that it is a good policy And I think what people are going to have to come to appreciate this is a policy and it is not politics Yes there will be some politicking around the negotiation of things that are not strategic and are not gerine to the issue that it's trying to solve but this is fundamentally a realignment So my question is
89:30 - 90:00 Dan how using the mechanism of trade policy alone how uh is the American government without resorting to essentially Mussolini like directed economy tactics going to make American companies Nike as an example open up factories in America and sweat shops in America Yeah And How is it going to move how is it going to
90:00 - 90:30 do all of that stuff well it doesn't matter because that that's that's not that's not the primary consideration The consideration are going to be things like you know heart medications and munitions that and and semiconductors Those are the key things that they're going for Um the the Nikes it's neither here nor there I mean it's and like I said that is a problem for the president of Vietnam or the president of Nike But it it will also be the pro I mean I'm I'm sorry about this right you you can't just say oh uh that the price of like
90:30 - 91:00 let's pretend Jamal who who gets a vote believe it or not Jamal in Detroit gets a vote Yeah Mhm when he noticed the price of his favorite sneakers doubles or triples or they're just not available anymore and um the Democrat says "Oh that's the Trump tariffs that have done that Oh this is the Trump economy that's done that Oh you can't afford uh you know you can't afford to eat anymore You
91:00 - 91:30 can't afford your favorite sneakers and you can't even afford a Netflix subscription anymore." Um how it how is the American system uh because that will become a problem for quote unquote the American president if millions of people are suddenly disgruntled when they weren't disgruntled before because you fundamentally messed with the bread and the circuses which is historically if you want to get out your Joseph Tainter or you know Klein of Empire stuff when you mess with the bread and circuses
91:30 - 92:00 that's when you actually get political turmoil in a country So how is America going to manage that problem i I don't buy this thing that consumer goods are just like neither here nor there They may be from the point of view of so so they are state or the security state I do get you were saying right but that they are a political reality because when people talk about quote unquote the economy they talk about the price of things that they notice Those are the sorts of things people will notice And the upshot could well be that there's a
92:00 - 92:30 there's a blue wave in the midterms and President Gavin Newsome right and and you're banking on the fact that President Gavin Newsome is going to continue the road that Trump is going down uh and not respond to domestic uh discontent uh with uh the standard of living fundamentally being affected in the short term Right This is a problem Yeah But but again we're we're slipping
92:30 - 93:00 back into the assumption that everything would have remained as if if if nothing was done Um you know vast amounts of debt was taken on over COVID and that debt is coming due now Now it would be very nice if you know it were to just go away but that is not the reality of the situation we're in huge amounts of debt was taken on at virtually 0% rates or or quite often less than 1% rates and that debt is coming up over the course of the next 12 months and the bill for COVID
93:00 - 93:30 has to be paid now So what how are you going to tackle that so if all of this is saying um you know yes um is costs are going to be passed on to consumer costs were always going to be passed on to consumers COVID was not free The 2008 financial crisis uh a couple of iterations before that was not free All of these incredibly bad policy decisions that have been made over the year The bill is coming due for that So um sorry
93:30 - 94:00 to interrupt What's happened realistically politically is is that uh Trump has given cart blanch to the Democrats and to leftists around the world and to people like Rory Stewart to say and they'd have just some justification for this Trump wrecked your standard of living and he lied doing it as well He told you bare-faced lies because he promised a golden age and in fact he's double the cost of your sneakers Vote for Gavin Newsome and never let these populists in power again
94:00 - 94:30 So so what do you do against that political reality uh yeah I mean I I'm kind of doubtful that we really are looking at you know doubling or or tripling the the the price of of sneakers or or trainers or whatever You know like I said the the the economic where are they going to get well the well I I would imagine uh for something like the Nike stuff e and you know likes just simply aren't that important to me compared to the the bigger element stuff that we talk about
94:30 - 95:00 They are important to Jamal and Jamal get to vote Jamal does get the opportunity every 18 months or so to get as many free free Nikes as he as he wants because they they every so often go through a you know a a set of headlines that that basically allow undocumented shopping That aside um the economics books will tell you that the cost of a tariff will will generally be split um 4% for the producer 4% through currency adjustments and 2% ends up on the underlying consumer So let's look at the case of of
95:00 - 95:30 Nikes coming in from Vietnam whatever it was like a 70% tariff So if if if 2% out of every 10 um put it on 70% so there's 14 an extra 14% on the cost of Jamal's trainers to him Um so so to be clear the the the Nike trainers are still being made at Vietnam Well I I don't I don't know what I don't know what Nike is going to do I would imagine Um so it hasn't What I'm saying is it hasn't addressed the trade imbalance They're still being made in a
95:30 - 96:00 sweat shop in Vietnam Well I I I don't I don't think that um Trump is is is primarily concerned with with Nikes I think I think he's concerned with um a whole set of strategic issues around US power Um but nevertheless addressing the Nike point um yeah a a price increase on Nikes going up 14% is is not impossible Um but actually when you look at um more recent studies that have been done on the cost of of tariffs um actually more
96:00 - 96:30 of it tends to be absorbed by the producer um where where they're originating from So yes somewhere between 14% and a lower number than that might land on Jamal Um Jamal how are the costs how are the costs absorbed by the producer when tariff is in tariffs are applied in the country of sale not in the country because you because you because the whoever is importing it says um I'm going to import less stuff from you unless you lower your unit cost to
96:30 - 97:00 me Right so the tariff still gets paid but you know you just you just renegotiate and that and that typically does tend to be what happens the source you're actually increasing reliance on Vietnam then um no because the um marginal US consu producer it may not be for Nikes it may be for something else but the marginal US producer is now more viable than he would have been on something else are
97:00 - 97:30 probably a bad example for this but um I different I mean cigar humidifier things you whatever you you you know the things I I can imagine that's the sort of thing there's a whole bunch of US producers who are producing those competing with um cheaply put together Chinese or Viet Vietnamese alternatives in this case um you can see that the US one is more likely to get produced and but again we're we're talking at the level of
97:30 - 98:00 consumer goods none of the points that I've made have relied on consumer goods it has relied on the fact that the bill has come due for past polit political nonsense 2008 and COVID being the big ones and that there was always going to be a reduction in living standards when the cost came due and that this debt needs to be run now the system can now as Trump saves the deep state the system can then blame Trump for those decrease in living standards Yeah quite but quite possibly But I mean you know my my push
98:00 - 98:30 back on all of this stuff is given that there's 10 trillion of debt to roll over and you cannot do it at 5% not without putting it all on the Federal Reserve balance sheet and you can't use the mechanism of interest rates you've used before because you're boxed in on one side of the cost of debt and you're boxed in on the lower side by inflationary pressures Um and you've got to do a strategic realignment where you bring your uh critical supply chains back to the US out of China and you want
98:30 - 99:00 to have a renegotiation because the dollar strength is getting to a point where you can see the dollar dying from its own strength because it suffocates everything else So you need a Bretonwoods 2.0 You need to get everybody around a table What tool does all of those if not tariffs because fine you can criticize tariffs and you can certainly criticize the way that Trump did it as a sledgehammer as opposed to um a seduction You know we we're going to we're going to hit we're going to hit China but the rest of you we're going to
99:00 - 99:30 seduce into doing this new global deal And maybe they go for that maybe they don't But he chose to use the sledgehammer because he is going to force them It's forced it to the top of everybody's agenda And then he can have a negotiation is in negotiations with 70 different countries at the moment The EU are modifying their stance Um China's going to come on board because um they need to get they they need a they need a stronger yuan relative to the dollar because of their vast debt situation If not tariffs what mechanism would you
99:30 - 100:00 have used toward achieve all of these things and what you certainly cannot do is just assume that the way things were for the last 20 years we're just going to continue in the absence of this because as I say the bill has come due for COVID and the other policy mistakes So so if you're right Dan do you do you now expect the uh the upshot of all of this is that Trump is going to end up dropping or coming to deals with all of these
100:00 - 100:30 different places in terms of consumer goods and the upshot is only going to be protections around these couple of strategic kind of uh ring fence items that going to protect the military Is that what you expect to happen or so um he he is looking to hit a number of things He does like the idea of tariffs He always has like the idea and he likes the idea of bringing manufacturing home So no I don't I don't expect these to to disappear So so let's give some you know
100:30 - 101:00 case points Let's pick up Madagascar So it is about N as well as about the I mean just to be clear it is about the consumer goods as well as about the strategic otherwise you would have answered that question straightforwardly and said yeah I expect him to come to deals with all these things that don't matter uh you know coffee likes iPhones whatever the only things that matter are pharmaceuticals and a couple of other so so yes I do expect that to happen with a caveat that I do not expect it to be um
101:00 - 101:30 a a broad free trade system across the world So some something like Madagascar who produces vanilla that's never going to take place in the US I can well see deals being done with Madagascar that bring that down but that that's going to be a relatively but it will probably happen Same thing will probably happen with a whole bunch of coffee producing nations Do I expect China and its immediate sphere of influence to ever go back to the level that it was before no definitely not on China for the reasons that we talked about It is a geopolitical rival and you have to get
101:30 - 102:00 strategic industries out of there But you also can't lower it on the strategic sphere around China because otherwise China will just well they just do what they did with the Nikes of just okay fine we're just going to move the factories from South China straight into Vietnam and we just we just basically ship it through there There'll be no difference So that whole sphere is going to maintain a higher level Uh and then something like um the European Union well they're big boys themselves and they're going to have to choose as we talked about earlier are they going to
102:00 - 102:30 become Chinese vassels are they going to stand on their own feet the only way that they can do that and be competitive is with a very low cost of energy which basically means they have to become best mates with Russia Maybe they can do that but their current rhetoric and the rhetoric for the last three years tells me that that is not likely to be a thing And therefore I suspect that in the end after making a lot of noise um and actually you you read Tony Blair's book didn't you yes What did he say about
102:30 - 103:00 whenever China is the EU is given a choice between China and and America he said they will always pick America in the end There might be some squawking but they will always go with America in the end And that is what I think is going to happen here as well that the the EU's problem is that they are going to have um this race to the bottom because they made because if they enter into a zero tariff arrangement with the US which JD Vance has talked about um they are so hamstrung by regulation that they're really going to struggle in that
103:00 - 103:30 Um and then you got the wider Anglo sphere outside of that Um I think that we will probably do well We're fairly close to them You know we're starting out with the 10% tariff I know that um New Zealand and Australia um are higher up on that They have separate geopolitical considerations that we can't we don't really have time to get into now that basically both of those are well advanced especially um Australia are well advanced to becoming Chinese vessels at this point That is another issue that Trump has got to turn his to attention to later on Um anywhere
103:30 - 104:00 else that you want to pick up on i mean um South America um that is probably the one of the better examples of somewhere between those two polls Um I expect somewhat higher tariffs to be the result of this and a whole bunch of deals to be done Um but again some of those have been creeping into um China's sphere of influence as well So so that's why I'm not giving you a simple answer because it really depends on what you're trying to achieve with each of these But to be to be clear as per your analysis Trump
104:00 - 104:30 doesn't really care about a US Madagascan trade imbalance ultimately So let's say when all said and done it's still Madagascar sells certain amount of tons of vanilla to America and basically doesn't buy anything American because they can't afford anything So that on paper that still looks like a massive trade imbalance He doesn't really care about that The rhetoric about balancing trade with all other nations is just like hot air according to you Is that
104:30 - 105:00 right well no Isn't No I can't I can't go so far as to say it is hot air because he does genuinely want to return manufacturing to the US I'm just saying that for me Madagascar is a good example for one where um the rate is is probably higher than you would have started at if you weren't doing the sledgehammer approach of maximum negotiation strength that he has picked So I wouldn't be surprised if that one came down Um or I don't know maybe maybe everyone just ends up pay how are any of these I mean I guess I come back to the how are
105:00 - 105:30 any of these places going to get their trade imbalance to par with America because that involves basically Madagascar Vietnam any of these places buying as much American stuff as they export but they can't do that because they don't have the money Yeah I mean going from memory Madagascar's um biggest imports are um chemicals and machinery Um I suspect not all of that
105:30 - 106:00 not all of those chemicals and machinery are coming from the US Some of them are probably coming from China So so they could do a deal where they say "Look we want to sell you lots of vanilla You want to buy lots of vanilla Um we've currently got some piffling sum which is huge for us but small for you uh buying Chinese chemicals and manufacturing And every so often we buy a we buy an airplane or something Um you know we we're going to re redirect these contracts to you Um also if you ever want to station a ship off our coast um
106:00 - 106:30 then fine you can do that and then then a deal is done there You may maybe that's how it works out But but but my whole case is you've got to look at this from the big geopolitical macro finance uh macro strategy view geopolitics view defense view That that's where I'm looking at it So I'm quite happy to go down into these um micro cases of what's going to happen with Madagascar or El Salvador or or whatever it is Um but I'm I'm just
106:30 - 107:00 fundamentally less interested in that because I just I just think that is not the driving focus here It shouldn't be our driving focus either but they could they could What the reason I'm drilling down into these specific examples is to make them more concrete is that what if they just say like "Yeah we're not going to do that We'll just sell our vanilla to somewhere else and we'll get the Chinese in because they can be trusted because like tons of countries could just decide to do that at this pivotal moment couldn't they?" Well I mean the the economic answer be there that
107:00 - 107:30 um because there is now presumably less marginal demand for vanilla coming from America that they will indeed sell some of it elsewhere and US consumers will decide how much they really really want vanilla flavored custard as opposed to strawberry flavored custard and whether they're willing to pay a very slight premium You got to remember by going from raw goods um produced in the country like that um to the actual finished good of your bowl of vanilla
107:30 - 108:00 flavored custard I mean is I I expect it to be a very small increase the the raw input goods at one side and and not going to be a significant factor on the rest of it You know a far more significant factor on the cost of your vanilla custody is going to be energy prices in in the US shipping up around the country You're assuming the supply chain remains intact to break up Well why why would the supply chain break up i mean it's now just it's now just got a high cost because what was viable 10 minutes ago is no no longer viable because he's stuck an 80% tariff on it Yeah but we
108:00 - 108:30 we're talking about um the supply of you know cheap agricultural goods You know seriously a bigger a bigger factor for some of these things is going to be the price of the global price of diesel for moving it around than it is for a bloody pot of vanilla So it's it's not going to break supply chains It's just going to increase the cost And when you factor it into the end product that you buy on a shelf um you know a dessert
108:30 - 109:00 in some fancy cafe in America that has a bit of vanilla in it the the amount of it that was the original input cost of the of the raw vanilla is is going to be very small So you know in that case I don't think the supply chain is going to break It's just going to raise cost a bit on it So so in the final analysis it hasn't ended globalism it's just made it more expensive Um a little bit of nuance around this So uh has it ended globalism as in has it ended global trade absolutely not No
109:00 - 109:30 that will continue Has it changed the mindset from we are going to focus on line go up the cheapest possible consumer prices um and if that means exporting every last bit of our manufacturing to China because they've got the lowest labor cost in order to do that If if that's what you mean by globalism then yes that has ended But I mean Jeffrey Saxs's basic point at the end of that clip I played was that let's just pretend the rest of the world
109:30 - 110:00 doesn't do that the places that maintain the cheap labor model will just be more competitive than America They'll just be more competitive And eventually if that es away at American power in the long run you end up with uh you know u what did uh FAX say the the chocolate pickle factory in America that nobody wants to buy the chocolate pickle So let let me tell you let me tell you why he's right and why it's it's a stupid thing to do
110:00 - 110:30 So let let's do it by economics 101 um you go to a university you get taught the um comparative advantage the whole stick Um that you get you get more of something Um if if if you just trade with people who for whom it is their comparative advantage they do better and you do better and you both maximize your overall position The line goes up the most Brilliant So let's do that Let's let's focus on line go up and get our unit cost down as low as possible and
110:30 - 111:00 maximize total GDP Brilliant Um Jeffrey Sax is right You're doing better Okay Now a war starts between you and China And you suddenly realize that your military is unable to operate now that all of a sudden the base layer of your military supply chains has been taken out Okay So you you've you've spent you spent 19 years being richer Uh and in the 20th year when you go to war with China they just
111:00 - 111:30 win So yes he's right But so what if you don't if you don't have that strategic resilience right so what did your argument is based on security trump has been saying he's going to bring jobs and industrialization back to America It's part of what Jeffree what Jeffrey Saxs is saying What I'm saying is if you end up building that factory in America and it is uncompetitive
111:30 - 112:00 it's just like a loss a loss enterprise which is good if you're making bombs I guess right for security but if you're making anything else all you've succeeded in doing and making chocolate pickle factories this is the basic like Keynesian issue from back in the 1930s or whatever Yeah Okay So so so that that is a good point So let let's address things which is so Trump also wants to address the broader point of of bringing manufacturing back and let's consider things that are neither um you know luxuries like Madagascan vanilla pods or
112:00 - 112:30 strategic essentials such as munitions and parts for your F34 whatever the plane things um let's you know your your cigar humidor or something you know get getting that brought back Um a lot of people have been sharing that clip that went around on Twitter of Ronald Reagan explaining why tariffs um don't work and why it makes you you poor and so on The thing that you have to bear in mind is if that was from an age when the key competitors to the US were countries
112:30 - 113:00 like France Germany England um you know Spain countries like that people who were producing stuff uh basically to a pretty high standard um something that lasts Um if there are any boomers in the audience at least some of you are going to be running a a dishwasher or a washing machine that's like 30 years old or freezer or something 30 years You try buying a product today that that lasts like that What we've got today is we've got basically very cheap Chinese tap built to last for the
113:00 - 113:30 minimum possible time period built by slave labor Now in terms of being competitive you're never going to be competitive in terms of your unit cost of labor China is always and Vietnam they're always going to win at that But where America can compete is with a bit of automation Now there should be things that come with this policy So there should also be and and actually this is going to be my biggest criticism of the tariff policy is it would have been nice to have an industrial strategy put
113:30 - 114:00 alongside it where you attack uh deregularization and also maybe you can make some tax changes So I don't know uh 100% depreciation on your capital investments in your um US um relocated industrial plant 100% tax depreciation year one things like there's a whole bunch of things that could have been done but what you will increasingly see is that the marginal producer so for I don't know um may maybe the US and China
114:00 - 114:30 are so far apart when it comes to curtain poles that it's still going to be cheaper just to pay the tariff and get Chinese curtain poles delivered but something where the US um has is at least approximately close now they've got that extra lift in order to get them back into the game But I mean all of your talk has been basically moving into a scenario where you you're going into an almost quasi war economy with China sounds like gearing up for war with China but you're still assuming they're
114:30 - 115:00 going to sell us curtain poles Well I'm I'm assuming so in my scenario where um you know in the 20th year we go to war with them um yeah for 19 years um they sell you curtain poles and in the 20th year you have to make do without curtain poles and if you have to make do in the 20th year without curtain poles I mean you're probably going to be okay If in the 20th year you have to go without munitions and part of your F-35 uh and heart medicine medicine and diabetes medication well in the 20th year you got a really big problem So
115:00 - 115:30 fine let them sell us curtain poles Um and if we ever get cut off then I guess we just have to deal with it as best we can So so I mean I just want to I just want to drill in because all of your analysis has been based on essentially saving like the military-industrial complex and American kind of security state I guess I'd call it right it it's been a core part but not the entire thing Yeah Whereas a lot of the talk I see on MAGA media has has been on
115:30 - 116:00 consumer goods and it has been on things like I mean I watched this one thing it wasn't Laura Ingram but it was like uh some like Newsmax you know that all the conservative American women are blonde like you know that it was like one of those and she was saying oh oh it's Japan has been screwing us over for so long She was saying uh for example Japan has a 700% tariff on rice On rice Can you believe it japanese not buying American rice They need to lower that So
116:00 - 116:30 you know so we can sell rice to Japan I mean I looked into that Japan produces 98% of its own rice And America imports America is the number one importer of rice into Japan 0.98% of Japanese rice is American Um and this conservative woman thought this was an outrage and wants Japan to buy more rice Right Are you saying that all of those exchanges that have been
116:30 - 117:00 happening up and down your timeline are fundamentally just smokeokescreen and a waste of time i Well I wouldn't accuse the individuals making it and that they they understand it at that level um you know we we we started out with this um of I said look when we get to when we get to my points and I build up my argument and my argument is is a multi-art thing It's the strategic layer It's the military layer It's the debt refinancing It's the bill come due It's the need for a um uh a new global system
117:00 - 117:30 to come together that that we've reached that point Uh and I did say look if you could summarize that argument in a way that you can get across in a in a 30-cond sound bite and brilliant Uh and and that is not what's being sold And I have pieced this together by I mean more than anything basically just following Scott Bessant for a long time reading I mean it's the easiest thing to do in the world China bad America good USA USA USA It's the easiest argument in the world So why not
117:30 - 118:00 well not not not really because it's because he's because he's gone for that sledgehammer approach of hitting everybody with tavs at the same time because he's also trying to get a um get the plan to buy American rice No no what he's trying to get is is a new trade deal Um there is there's going to be some there's going to have to be some reordering of the global system that is going to happen sooner or later because the dollar is not going to remain the um the primary and only system Throughout this conversation I've
118:00 - 118:30 tried to pin you down on what that's going to look like And you've rejected the idea of Nike opening sweat shops up in America And you've rejected the idea of Japan buying more California rice or whatever So what's it going to look like i mean these things these things aren't binary It doesn't have it's it's not US is not moving to a system of self-sufficiency you know on on Nikes I suspect they're just going to pay the tariff on them because it's still going to be cheaper with slave labor Or maybe I don't know
118:30 - 119:00 may maybe Knight discovers that they can put in some machinery into a factory in Kentucky and they can automate the process and with the with the um some deregulation um some tax advantage that will come through uh plus the comparative cost now against the against the tariffs it becomes viable to automate this and do it in I don't know But my broader point is I don't really care because that that for me is not what is driving this I I don't think
119:00 - 119:30 that that Trump is is doing all of this in order to to reshore night production I think it's for the reasons that I outlined So So what's the point of saying all the other stuff just to give uh talking heads or news maximum to talk about well I'm I'm not responsible for what they talk about So I mean they they they can frame this however they like Um you know more more than one thing is being is being hit here I see I see Okay
119:30 - 120:00 Okay Well I mean all I'm saying is is that if um if all that other stuff is simply just noise smoking mirrors punching Judy as per usual um then uh it doesn't come consequencefree right because the actual reaction to this around the world both within America outside of America in the markets and so on has been to say no this is actually like a fundamental
120:00 - 120:30 change in the structure of production So you know it doesn't come it doesn't come cost-f free No no there were there were there were loads of costs associated with this I mean there is there's going to be a whole bunch of people who had a um a supply chain that included a whole bunch of Asian countries that are now going to be you know have unviable businesses So so I mean let's talk about businesses that I have sympathy for But then but then it's going to be Donald Trump I voted for him and uh now I've
120:30 - 121:00 lost my job I was a fool to believe him Uh Gavin Newsome bring back America like we made it Ronald Reagan blah blah blah You know you know If if if that's what decides your vote then you know you know what what what can you do i mean it's it's and and on the point of the hysteria Yeah But I mean on the on the point about the hysteria around Donald Trump you got to remember that you know once he upended a box of of fish food into a lake while he was stood next to Abby and
121:00 - 121:30 you know the world went hysterical about that I mean the world is going to get hysterical hysterical about whatever it is that Trump does and he needs to hit the points the strategic the currency the world I'm talking about the bloke who lost his business due to these actions who's going to correctly blame Donald Trump for it and but you know go with the other side who who may have other ideas Well what's your alternative though i mean you you you need an alternative to the to all the points on my list If if not tariffs how would you
121:30 - 122:00 have done it how would you have messenger it better so I mean you're you're basically assuming though that the the US deep state wants to do this to save the military right trump is just a front for that Um no That's not what he's saying though isn't it it's not though How else how else would So so Donald Trump has unilaterally decided to do has unilaterally decided to try to save you
122:00 - 122:30 know the vestages of the American Empire uh on behalf of the deep state or the deep state's on board with this It's it's either going to be one or the other right no I I don't think you can you can you can simplify it to that Donald Why can't you simplify it to that because it's it's wrong when you simplify it to that level it's it's loses so much resolution that you know it's it's it's no longer functional Donald Trump has wanted tariffs uh for 30 or 40 years Um he did some in his first term They were significantly smaller than this and and
122:30 - 123:00 they actually basically worked Um he wanted more this time round Now what he probably would have found is that if he was the only supporter of it then it would have been like okay grandpa you know you can you can do a bit of tariffs and they would have applied it to some small element What we've seen is that the rest of his team has enthusiastically got on board because they recognize that they can achieve what they want to achieve So Scott Besson has got on board because he understands that he can use this to achieve his goals which he's been
123:00 - 123:30 talking about years of a lower dollar and a need to restructure the global financial system which is which is why he keeps bringing that up in every interview So he's got on board for that reason Trump was already on board because he just likes he just likes the name of them or whatever it is whatever reason it is that he's like them for 30 years that's the case Scott Besson comes on board for that and then the military guys come on board because they look at it and they realize that their um military supply chains are dependent on Russia so they come on board for it as well so once you got all of these
123:30 - 124:00 elements together that's why they're doing it and this is why it's multirong because it's trying to achieve different things Trump wants to hit it because of the manufacturing aspect Bessant wants hit it because he wants to get the dollar down and he wants a global reordering He he he wants a Bretonwood 2.0 Uh the military guys they want it because of the strategic supply chain stuff Now you can't you have to understand that there are three elements that are all driving this and you can't say okay well there's inconsistencies
124:00 - 124:30 between one or the other and therefore it does not hang together No there are there are inconsistencies because there are three different motivations and they have come aligned around a policy that can achieve enough of what they eat want and they can cohabit together That that's the that's the disjoint that you're seeing Well from what I what from what I heard from you it's going to achieve some of what Bessant wants It's going to achieve some of what the US deep state may want from the military point of view but it's not going to achieve what Trump wants which is the manufacturing bit At no point do you
124:30 - 125:00 throughout this have you addressed that well no I have I I said I expect Go on Well I'll address it now So um I I I expect some of it to be rolled back on but then I don't actually know You know we will find out over the coming months to what extent it is rolled back on You know Madagascar I expect that to be rolled because I just don't see why you wouldn't Um EU I think they will probably want to drive towards a zero tariff rate because actually that's better for the US because they will end up eating them if if you if you lower
125:00 - 125:30 that e outer EU trade war because the EU is so regulated up to the tits on you know everything that it basically can't move at this point So it's not as simple as anything but but yeah I of of those three legs of the stool um monetary military and industrial uh my current assumption is that the um the monetary and the military are more likely to get more of the things that they want because they because they have to
125:30 - 126:00 because it's not optional and that the manufacturing side will probably get less of what it wants But I don't know may maybe Trump really holds the line and he does force those countries to address the trade deficit and he does force companies to move back Now there is a delay at the moment because a lot of companies are looking at this and saying okay well I don't know to what extent these tariffs are going to hold up over time If I'm going to relocate a factory from Cambodia or wherever Indonesia to the US well if if I take
126:00 - 126:30 that decision today it's five years before anything rolls off the production line because there's a whole I mean the permitting process is going to take 18 months alone Uh which is why I say deregulation should be a part of this as a as a as a as a as a broader industrial strategy But it's going to take five years to get to that point And what I don't want to do is commit hundreds of billions to um this new factory if in two years time or or maybe even say five years time when when Trump is out of office the whole thing unwinds and these tariffs are no longer a thing So So the
126:30 - 127:00 worst element is that level of uncertainty that everybody expects him to roll back on it He's saying I'm not going to roll back on it I'm hinting that I think he's going to partially roll back on some of it but I don't know But maybe he sticks to it But whatever it is it would be great to find out what the what the long run position is so that everybody can make the right decisions But in any case there is going to be a lag on that industrial side because of those reasons Um but yeah I so I think everybody's going to get something that they want and there there
127:00 - 127:30 will be manufacturing wins I just don't expect it to be anywhere near what you've been talking about which is complete all turkey what you going to do in two weeks time when Trump signs a pile of new free trade deals with all these people and all your favorite slot merchants who were talking about economic nationalism this week will be running around saying you see I told you art of the deal it's the art of the deal now we've got the freest fairest trade deal of all time uh and basically you're
127:30 - 128:00 back to the you're back to where you were a month ago put just put globalism back together I mean what what are you going to do in two weeks time when that is almost certainly going to happen So so I mean to be clear are you are you suggesting what I've been saying which is there will be a whole bunch of targeted deals for the for the less strategically important stuff or or are you expecting him to resend them entirely across the board well I'm just expecting him to hold up a
128:00 - 128:30 deal saying "Look Vietnam dropped its tariffs We drop our tariffs Now we've got now we've finally got a free and fair trade deal blah blah blah blah and that's it You see what you're saying you see what I'm saying right now rather than it actually being economic protectionism which is what people have been talking about for the past week it's actually freer trade than what you had before Well I'm I' I've never advanced the argument is about economic protectionism So I I just don't have a dog in that
128:30 - 129:00 fight as as to you know whe whether they say that or not Um I see Yeah But no I my whole analysis with this is is I think there will be a whole bunch of deals that that get done in the meantime But I don't know maybe holds the line but when those deals are done the existing supply chain just carries on existing and nothing changes and manufacturing manufacturing does not
129:00 - 129:30 go back to America or create extra job jobs or uh or any of the other things that were promised So yeah but I but I am responding to your hypothetical of if that were to happen That that is not what I'm expecting I I expect there to be some expecting to hold the line and for this tariff regime to exist for the next four years Nope No What I'm what I'm saying is is I think there will be um some targeted role I mean this is what I've been saying the whole way through I expect there will be some there there will be some deals and it
129:30 - 130:00 will vary depending on the region and the um the considerations they got for that area So I do expect that the Asian region the area immediately surrounding China is going to end up in a different end position to the EU for example is going to end up in a different position to Madagascar or South America So I think there are going to be differences My base case is that there is some um rolling back of these and deals It's going to be exactly what you said is going to be oh um you know there is there's been a deal done with Guatemala or Madagascar or something and we we're
130:00 - 130:30 lowering the tariffs on this or there's a deal done with the EU that's going to lower the tariffs on and there might even be an amelioration on the um you know Vietnam in the immediate US orbit but I don't expect that area to go back anywhere close to where it where it started So it is going to change and there are going to be tariffs I I just don't know they're necessarily going to hold at this current level or whe they're going to moderate a bit in the middle But it's not binary It's not either But according to you the ultimate upshot has to be whatever happens America makes its own pharmaceuticals
130:30 - 131:00 and its own uh semiconductors or superconductors or whatever But those are the those are the things that matter Everything else is up for grabs Everything else is neither here nor there I I I wouldn't go so far as to say everything else is neither here nor there because like I said it's those three legs of the stool and the manufacturing aspect of it is important to Trump Um but yeah absolutely I I I would be shocked if the mainly people the reason people voted for him by the way But anyway carry on
131:00 - 131:30 Yeah but it's people didn't vote for him to you know save the deep state They said they voted for him because he promised to bring back manufact Well I I I don't think the ability to produce your own military supply chains and your own heart medication is doing the bidding of the deep state I think that is doing the the you know what what's best for the American people So so I I I would I would reject that framing Um but yeah I think I mean it is literally in the interest of the US
131:30 - 132:00 security state I mean that is who would ultimately care about these concerns I mean security state Yeah that they will be they they will care about it as well But I I don't I don't see a divergence there between you know your your average American And what I'm saying is is that people weren't thinking about that They were thinking about manufacturers bringing back jobs and manufacturing Yeah Trump has not been thinking about that since 1980 But
132:00 - 132:30 but there is I I sense you're trying to move me into into one of two poles One of which is there is going to be complete or turkey on one side complete economic isolation and all the manufacturing is going to return to the US or it's going to end up in a complete free state and and and I'm I'm rejecting either of those and and there isn't a conflict between rejecting those What you haven't given me is any mechanism for manufacturing to return to America because the fundamentals I outlined at the start haven't changed and all you've
132:30 - 133:00 said is yes it will cost more but it's worth it for security Well that addresses semiconductors it addresses you know uh pharmaceuticals and masks or whatever It does it does not address all those other goods that millions of goods that make up the economy So so I I believe that um I believe I have addressed that point I think I very much have addressed that point I'm saying on some goods um and maybe trainers as an
133:00 - 133:30 example um it will it will in the course of things it will be cheaper just to pay the tariff because you're relying on slave labor in Vietnam to do that I I don't know whether that is the case for trainers but may let's assume that it is the case But for cigar um uh humidors um the marginal cost of a US-made one versus a Chinese-made one has shifted in the favor of the US one And so that market is now predominantly going to be done in the US as opposed to China So I
133:30 - 134:00 again I just can't give you an eitheror position Either it's going to be all free trade or it's going to be all US I expect there to be a shift towards US manufacturing as a result of this But that I'm not going to give you a guarantee that that means that everything is produced in the US It is going to be it is going to be a mix So we are going to end up in the middle of those two extremes But we're just going to move a bit closer uh to US manufacturing everything rather than US manufacturing everything and complete free trade That makes sense
134:00 - 134:30 I see Well it's interesting times Let's see what happens We'll know one day Okay My my uh my sense is that uh if things get too painful in the short term it will just do Trump in and they'll blame everything on him and we'll end up with Democrats What What What's the metric of painful though because I know the boomers are really upset because their 401's K have gone down but that's setting up an interesting narrative where basically the more the boomers scream about their you know their their
134:30 - 135:00 401k being down the more it emboldens the the younger voters It's not just anything anything anybody cares about especially people who aren't into politics Anything they care about in their lives if they see it get significantly more expensive or it's not available anymore there's just a very easy narrative Oh it was Trump what done it He promised us the moon on a stick and he gave us nothing and now and I've lost my job and my business on top of it Whoopy do They won't be able They won't get their heads around anything else
135:00 - 135:30 other than Trump did this No I want the Democrats in Yeah Have the American people or Western people in general over the five years seen any inflation yeah Significant huge inflation So you're you're telling me that they're you know that they were they were f perfectly fine with the the rampant um you know doubledigit um 18 20% inflation that they they they got in 2020 2021 2022 is humiliated a bit now but you it only came for Trump That's
135:30 - 136:00 why they voted for Trump in the first place Okay And now and and now they're going to get selective um 13 14% um inflation on one or two if it if it ends up being that You're assuming it's that It could be much worse It could be an entire entire industries are blown up Yeah it could be But I mean I don't I don't I mean the the re the reason I came up with 14% is because I took the worst case scenario of applying um 20 basis points out of every out of every
136:00 - 136:30 hundred uh which is what the economics books say that you should look for although recent studies have suggested is actually less than that um of that ends up on the consumer And then I took Nikes from Vietnam and I took their 70% rate and I took two points out of every 10 Got to my 14 stuck them on pair of Nikes And you know that that's my worst case scenario For something else like vanilla pods the raw good input is going to be such a tiny aspect of your vanilla custard that I don't think it matters So
136:30 - 137:00 I I think actually yeah 14% is reasonably toppy for what they're what they're going to see Well unless unless of course um companies just decide because it is a great excuse just to do whatever you want with prices and then blame Trump So there'll be an element of that as well Yeah I mean one of one of the reasons I'm dubious is that we've been we've been down down these kind of roads before Like I mean we mentioned everybody sending the clip around about Ronald Reagan champion in free trade Reagan famously put massive tariffs on
137:00 - 137:30 Japanese cars I mean I remember when I was watching pro when I was watching pro wrestling in the in the 1980s a lot of the heels were Japanese because there wasn't you know Japan was big bad at that time But did those I mean did those tariffs were people still buy tons of Japanese cars in America it didn't like it didn't fundamentally uh it didn't fundamentally do the thing It didn't like Yeah No it did Japanese cars Yeah I mean I' I'd have to look into it I mean I remember looking at this ages ago but yeah those those
137:30 - 138:00 tariffs did work they did get a um a realignment deal and and more US um electoral I I'd have to look into the details but my my abiding impression and our followup maybe in a tweet or in a in a brokenomics or something I I'll look at how they did but my my remembrance is that actually no they did they did work fairly well no they did not result in um no manufacturing being done in Japan and all being done in China but that's not the metric to judge thing the metric to judge thing is um on the where it was at
138:00 - 138:30 the time and where it was trending to did it end up arriving in a different place to where it was trending to and did it where it arrive at be more preferable than where it was trending to but it it didn't fundamentally overturn the trade deficit which is the bottom line thing that Trump is predicated his entire reputation on he has made this about trade deficit Yeah Yeah But you you you can't you can't you can't make these things binary can't make it about but it is by if you if you stand up in front of the entire
138:30 - 139:00 world as the US president say here's a chart of all these things these countries have been treating us really badly and the problem is they we've got a trade deficit with them if you then put in a bunch of measures and do not overturn the trade deficit the trade imbalance to a trade surplus then loads of people are going to say look it didn't work that's I mean that's just a raw fact will do and they are doing it well I mean people say all sorts of
139:00 - 139:30 things but I mean I mean I you you can't judge this on um does it achieve 100% of the best case scenario and if it and if it gets to 98% then it's a failure I mean if if it gets you 1% closer to where you're trying to achieve it's some kind of a success whether you whether you bother crowing about it or not Well I mean aa when you get ill do you do you have a do you have a lemit when you catch the flu because it's not going to make you better It's but it is going to make you slightly better I'm just saying is realistically if it doesn't produce the
139:30 - 140:00 result Trump promised People will rightly say "It didn't do what you said Donald I've lost my job My mate lost my job His mate lost his job You didn't bring back jobs You didn't bring back manufacturing And uh you know you didn't bring down the prices." So so and you didn't overturn the trade deficit So what what you're talking about I I I don't I don't think the average American is going to be talking about the trade deficit as a whole I think I think um if if you're talking about Well they wouldn't they wouldn't have if it hadn't been put in front of their face but it's
140:00 - 140:30 at the front page of every single newspaper in the entire world The average person is going to be talking about trade deficit They are going to be the the opposition are going to be like the liberal media will and you didn't do it the liberal media will throw whatever line they can in order to to dunk on Trump and um his friendly media will support him on this Uh when it comes to the broader messaging of of how do you get this across to people um there will be a whole bunch of factories that
140:30 - 141:00 relocate some of them have already started to do it relocate from abroad to US So whatever happens from here he will be able to go around two factories saying "Look this factory exists because of me These workers they love me They they think Trump's great I'm the greatest Look at this factory blah blah blah blah." You you'll be able to create a narrative around this So I'm I'm I'm not concerned about his ability to message I see Okay All right But you but he couldn't
141:00 - 141:30 sell the message of actually this is all about China No because for him it's not So as we talked about right three legs to the stool The finance people want it for their reasons And I broke down what that was The the military people want it for their reasons They broke down it was And the um Trump the originator all of this he wants it for the manufacturing reasons And this is a coalition that's come together and they're all getting something of what they want Uhhuh Okay Well so that's why that's why Trump is
141:30 - 142:00 leading on the messaging of about is all about manufacturing If you listen to Scott Besson he's leading on this is all about a global restructuring and getting over dollar strength And if you listen to Pete Hexf he's talking about the military aspects of it You know they're all talking about what matters to them and and they are a coalition in this So so when you say you know why isn't why isn't Trump representing Scott or Pete's view well because he's got his own view for this but it's a coalition that has built this this policy Well if you're right Dan everything's
142:00 - 142:30 going to be hunky dory And uh if we get our visas in apply for a factory job over in America Um and uh if I if I'm right and unfortunately it's going to be pain and misery for everybody for you know and on top of it you're going to have to put up with the copes of everybody else when it doesn't work But let's see Let's see what happens uh a slight misrepresentation because what I've been saying throughout is that the cost of COVID and other policy misadventures has come due So pain was coming anyway Through what mechanism do
142:30 - 143:00 you um uh suffer the least pain possible but but it is still starting from the position that massive past bills are now up for being paid So I'm not I'm not saying everything's going to be hunky dory I'm saying that this is the best solution out of a bad set of options and but you have to try to sell what is effectively a downgrade and a loss for the American people as a win Is that what you're saying well the loss was
143:00 - 143:30 coming anyway because the bill has come due Um and like I say I'm not desperately concerned about Trump's ability to message because I think he's quite good at that So it's a type of managed decline in a way I I mean I'm just I'm just trying to strip away any BS around this and see it for what it is EMP US empire is going down It's up [ __ ] creek There needs to be a way to reorientate uh so it doesn't go fully tits up You need to try to sell
143:30 - 144:00 this So you know come up with this tariff thing and blame the rest of the world It's basically what's happened again I It's basically Come on I I feel Dan I feel that that is stripping resolution out of this picture to the point where I'm now looking at and saying I can't really tell what that is I mean I I wouldn't reduce the resolution No no let's just be straight a second America massively overspent and now it's blaming the rest of the world
144:00 - 144:30 as a cope and it has to win because America can't take a loss That's fine I'll go with you on that one then I'll go with you on that one Yeah Okay All right Good Okay Well at least we can uh at least we can agree on some things Uh there are some super chats and things Dan do you want to stay for them or do you have to go uh uh Well if if if they're super chats for this episode they are they're for this Yeah they're for this Okay I I won't I won't stay for the super thanks because I think they'll be old episodes and
144:30 - 145:00 stuff I'll I'll probably do those another time because we we've gone a bit long Um Studio Raina says "Dan what the hell was your idea about who should govern us do you plan to become a politician right So so the the issue here is that is the difference between is and ought Um what I was doing in that segment was saying what I think will happen because it is a repetition of the pattern that has always happened before whenever there's been a change of governance structure So I I was not advocating what
145:00 - 145:30 I want to happen I was advocating what I think will happen Um using the logic that's applied before as I laid out in the as I laid out in the segment Eyes that watch says tell Dan if he wants to be taken seriously you need to tie Ties are for waiters I'm an advocate of the Tony Blair no tie Yeah You know Tony Blair was the first politician to stop wearing Yeah Cole Car
145:30 - 146:00 Cole keeps doing this thing where he berates me on the podcast for not having a tie Um but he puts it on like 10 seconds before we're about to go on air and then he takes it off immediately after So he's not an authentic tie wearer No it's a bit You're a man of people It's a bit like during COVID where you could see them they put on the mask just before they went on stage So I'm not doing that and I'm not wearing a tie either Studio Raina says "I think the slop is to talk about economics when it's clearly a geopolitical move or pure
146:00 - 146:30 stupidity." Probably stupidity maybe Uh Tom says "Dan what are the odds that you see for the tariffs raising inflation leading to the Fed actually raising rates even with over 9 trillion dollars of debt maturing this year?" Hum number of things there I mean the the Fed currently has a a rather unfriendly um chairman in Jerome Powell He'll be gone before long Um no I expect I expect the Fed will raise rates but
146:30 - 147:00 there are there are a number of I talked about the legs of the stool of the terry There's a number of legs to the stool of financial conditions Um the dollar is something we very much talked about Oil prices which we didn't talk about um and rates and and actually um the dollar has been coming down Um you're seeing some downward pressure on oil rates is the third leg of that stool and that is lagging the other two and actually it's probably going to lag financial conditions and liquidity which are turning up at the moment So yes I do expect rates to come down but but it
147:00 - 147:30 will be it will be a little bit later you know it will lag to some extent Sorry I'm laughing as I'm just looked at the chat for the first time and people are saying things like uh AA wears his bicycle safety helmet 24/7 thinking I'm making [ __ ] live arguments and so on but I'm not I'm just like you have just pure economics You have you have arrived in a weird position where you know you it's basically you and Ben Shapiro and boomers I mean every everybody that you
147:30 - 148:00 hate is suddenly on It's like that meme with a rope You know the one I'm talking about the tug of war Yes No I mean well it's it's not it's not just all those people There were many other people who were saying these things too Um many other people from across the political spectrum left and right are are saying are saying what I'm saying Uh because let's just say what Trump has done is a would you agree Dan it's a highrisisk gambit what he's done and it
148:00 - 148:30 may not pay off um it's a pun with the with the caveat that doing nothing is even more high-risisk um yes I will agree and the thing that I will agree in particular is that his approach because he and we talked about it this earlier he could either do a targeted thing on China and then reach out to everybody else and says please come and have a um a re renegotiation of the global system Please do it You know we put on some really good sandwiches and then hope
148:30 - 149:00 that people turn up and and he decided to use a sledgehammer approach of whack this to the top of everybody's agenda so they have to confront it to give himself maximum negotiation position So yeah the the way that he's done it is the bigger risk and yes doing it is a risk but doing nothing is a bigger risk because of the threats I outlined Is it going to lead to World War II we didn't talk about that I know it's outside of scope but it puts us on a if this is very similar to the trajectory that led us to two world wars So the the
149:00 - 149:30 fundamental question here is is what do you think makes World War II more likely um the US and China um both being able to win it and it's a question mark or China definitely definitely being able to win it because they can just turn off the US military by turning off the supply chain you know are is that does basically do you think China would be benevolent in a position of absolute
149:30 - 150:00 dominance if it found itself in that well I mean the fundamental thing that led to the two world wars if you strip away all the ideology and all the rest of it is that um Germany was threatening British power basically okay in the world at that time Uh and also America saw a chance to you know bolster its position which it did Um but fundamentally there was a new threat right and that is unacceptable to any
150:00 - 150:30 power right the prospect of a threat uh this is the like the the geo what do they call it offensive realism according to M according to Mia Shima this is what great powers do and China could actually not be aggressive right China could take no aggressive actions and the threat that America perceives causes America to essentially like burn it all down so that it can like be lord of the ashes as opposed to China or whatever uh which is
150:30 - 151:00 what some some people are arguing this like that Richard Wolf I watched uh he was claiming this for example uh and and Jeffrey Sax actually later on goes on to talk about uh in fact John Mayard Kanes where he talked about uh canes made his name in 1919 uh when he was part of the negotiation team for the treaty of Versailles after World War I and he said what we've done here is going to make another world war inevitable and it did how you manage the
151:00 - 151:30 peace well right then leads to war and I I just straight up tell you that I don't know the answer but do you do you want to take a view on let let's say this wasn't done and that 20 years from now China had built up a significant military that was capable of defeating the US and the US military was dependent on Chinese supply chains what do you think would happen in that scenario would the Chinese benevolent or would they take advantage of their position of for
151:30 - 152:00 oh without doubt they'd uh they'd go for it They'd absolutely go for it I I I agree with that that I mean you you're basically in um you know uh Nash equilibrium type logic then you know um but a lot of geopolitics does come down to things like that Um so yeah it's tricky It's it's tricky The thing I would have liked America to have done from its own point of view is rather than go for this is to have spent the
152:00 - 152:30 past 10 years re-industrializing It's almost like they put the cart before the horse here Yeah Yeah But but how I mean Biden tried to do it by subsidies Trump's doing it through tariffs If you know if you reject both of those mechanisms you have to come up with a with another one Well I mean in the in the 1920s and 30s the uh the old uh the fascists essentially did it by uh basically forcing companies to do stuff
152:30 - 153:00 Yeah I I think tariffs are a better option than commander control economies but there is another option Chris O'Hanland says "What is your response to Gary economics?" uh I've I've I've done a segment on it BA basically there is a uh he is addressing he he basically says that wealth inequality is both the cause and the symptom and it's the measure and it's the metric whereas actually wealth
153:00 - 153:30 inequality is at the end of a whole chain of um uh economic drivers that get you to that point And so he's he's starting his analysis long after the process has begun and therefore his analysis will be wrong because he's not seeing the big picture Okay Uh Emanuel Peter says "What if the elite
153:30 - 154:00 failing to stop Trump let him loose like postrexit Boris wave punished populists give voters what they want hard to teach them um well so I I guess what he's driving at is is this bad policy because it's it's too much of what they want and they go too far kind of thing What's his key point there yeah I
154:00 - 154:30 think just that see you wanted this and it it's gone tits up So you know come back to the reservation and stop voting for these [ __ ] basically Um yeah possibly The Boris Wave was something fundamentally different wasn't it it was flooding our country with millions of people who shouldn't be here Whereas this um you know pushed if if there's no let up on the manufacturing aspect of the the three legs of the stool then it will mean that if you're a high earner you have to pay more for
154:30 - 155:00 your flat screens and if you're at the bottom of the pile you might get a job in a factory Eyes that watch 69 says "Tell Dan." Oh no We did that one didn't we uh uh Coney says Starmer has just come out doubling down on net zero Apparently he wants to quote win the net zero race Oh Jesus I mean you see this is the thing If the European leaders and star were serious they they'd scrap that overnight I don't know why they don't Uh Con says
155:00 - 155:30 are these tariffs designed to fail also thoughts on Thomas Soul's recent quote on these tariffs Uh I don't know what the rec I don't know what Soul's recent quote is He must be like 98 by now but if he's still putting out Apparently he went on the Hoover Institute I haven't seen that yet I haven't I haven't seen that one either Um uh legendary economist says Trump's tariffs could re replay devastating history He says that the the broad
155:30 - 156:00 tariff risks causing an economic downturn says says Soul And uh in fact he did the uncommon knowledge Bloody hell How old is Thomas Soul now i'll have to watch that just to see if like what he's looking like at the minute Um it's basically fossilized Yeah But I mean Thomas Soul is brilliant but he is still um you know an old fashioned libertarian and you know I've I've got some common cause of libertarians but you know be be careful Don't don't smoke too much of it Femboy Fantasia says "So
156:00 - 156:30 I laugh every time I hear that name Uh couldn't most of Dan's concerns be dealt with by focusing on on China we can deal with European fake friends more delicately." Uh we did talk about that didn't we Dan fair enough Um well it's not the approach he's taken is Dan's answer Frjamin Church says "The worthless dollars we export for foreign goods is what makes domestic goods unaffordable $500,000 houses and $12 sandwiches."
156:30 - 157:00 Yeah Yeah I agree because the the mechanism is is that you're going to you're going to print money uh you're going to you're going to where you're going to print money through the commissioning of debt that you send abroad that redenominates the um value of each of those dollars So yeah you can you can have as many streaming services and bits of cheap plastic tat as you want but you can't have anything of which there is a genuine limitation in supply such as such as houses So yeah in green entirely with that one Alex ammont
157:00 - 157:30 says I wonder why emp empires de-industrialize in the first place The later British emphasis on shipping and finance over manufacture for example or the rust belt being screwed in favor of China seems like short-term thinking The the trouble is and I've talked about this before is that economic policy is always a function of power politics Basically we talked about this before Dan there's an arc right early in the empire it's a high tariff
157:30 - 158:00 mentile thing both British Empire and American Empire followed this path then when you're when you're at a certain size free trade itself becomes a control mechanism because the the soft power control mechanism is being part of the free trade network Uh I did a I did a whole video on this uh recently but you covered it on the on your brokenomics with me Yeah I did Yeah your broken the brokenomics I did with you and then I did a subsequent video where I looked at I think it's called something like the
158:00 - 158:30 why the tariffs show the US empire is in decline and then on the downward swing they're like [ __ ] things are things are going badly we need to start trying to patch things up or we need to remember the things that made us great or you know um and then you know you start then having a high tariff environment which is what the British Empire did um late on you know in the in the 19 in the 20th century basically and then it was only a short time before the British Empire was no more So I I can well see one of your
158:30 - 159:00 books being written in in 30 years time that you know says something like um Trump brought in a tariff policy but it was really all about setting up for the coming conflict with China um and it was sold as you know this other thing you know I I think is a bit more nuanced close to that but I I can see that through the frame of which you look at things and the books you quote often site um that's how this will be portrayed in future is just a function of the geopolitics behind Yeah I mean you could also write a book
159:00 - 159:30 saying well yeah the thing is is that the the British brought in a high tariff environment because they had to compete with the Germans ultimately gearing up for World War II uh etc you know and this might be a bad analogy The parallels are scarily similar only the the scales are so much bigger now and nuclear weapons and so on which means that the prospect of America and China being at war I think is simply like too great for most people to even contemplate at the minute So well it
159:30 - 160:00 would be unfortunate but I don't I don't think the Americans are going to allow themselves to get into the or or continue to allow themselves to be in a position where it's simply unwinable for them Uh Frenchman Church says "America has a glut of low-skilled workers not employed in the high-skilled factories who would benefit from those jobs Carlile approves." Um yeah I mean I I will say the one bit where I disagreed with where where Saxs got a bit boomer I guess you'd say is that his de facto
160:00 - 160:30 assumption is Americans simply do not want those sweat fact those sweat shop floor type jobs or they don't want to work in a warehouse or they don't want to you know they don't want to do those lowskilled jobs and that's why they've been outsourced Um I I mean again it's a different conversation but my arguments for those things would not be economic It wouldn't I wouldn't sell that as a better standard of living I would say well you know gives you more of a sense of well-being to you know well I mean
160:30 - 161:00 there are a certain segment of the US population that I don't think the standard of living is the core consideration I think you want to be turning off food stamps you want to be turning off welfare um you want to be restricting their supply of corn syrup and DVLA jobs and they probably should be in a in a basic factory Studio Raina says "Okay so what happens if the US tells China they'll be nuked if they challenge US hedgeimony?" Honestly it makes more sense in these tariffs scorched earth Darren that's one for you
161:00 - 161:30 Um was he saying why why don't we just threaten to nuke China instead of doing tariffs yeah I mean you could try that I mean that that's not the approach that Trump has gone for You could try it but I I I again I what he's doing there is he's giving me an alternative which I've been asking for but um that is an alternative I I still think tariffs are better than that Friendman Church says I will live in Trump and be happy UTI 4321 says I
161:30 - 162:00 mean I I do think this is the MAGA version of you'll owe nothing and be happy personally but uh UTI 4321 says it's more like you know you're going to have to pay 14% more for your curtain rails and Nikes but you know your cousin that UTS4321 says America has been gi beads and shells for their assets who is wealthy the borrower who consumes or those uh that own the means of
162:00 - 162:30 production Ah okay So so let me let me address this point Right Okay So yes um US was was creating funny money sending it to China um and US uh chi Chinese peasants were producing stuff selling it to Americans um earning dollars that way through that cycle But then what were the Chinese doing the Chinese were basically sending that money back to the US and buying up the NASDAQ 100 with it And the the big industrial advantage that the US still maintains even though it's lost its manufacturing output is
162:30 - 163:00 its innovation layer And that innovation is largely captured in the NASDAQ especially the NASDAQ 100 Perhaps even more so in the MAG 7 but certainly in in the NASDAQ 100 as a whole And the Chinese have basically just been recycling this cash into buying up the NASDAQ So you're in the situation where you're basically funding consumerism through printed money in a process that ends up with the Chinese owning your most innative companies I mean it is the current situation That's
163:00 - 163:30 why I keep saying don't judge this policy against the current situation and think okay well there's going to be a little bit of extra cost in this and that we're going to upset people Judge it against the situation that the US was walking down And you know that is another aspect along with the military aspect that they've already talked about Studio Rena says my stance remains the same The managerial elite on both sides benefit from the status quo Nothing will happen Russia could react because they are less managerial than China and America Well
163:30 - 164:00 if if if Trump wanted to benefit the managerial class he would have just keep funding this through fugazi money until we get to the point where China can can win Atlas code says one people don't import uh don't import people for GDP line go up but don't impose tariffs because GDP line go down Reduced immigration is a tariff on labor I suppose you could look at it like that Yeah Fanboy Fantasia says the U the EU
164:00 - 164:30 has always worked hard to keep the US out and to displace it with for China Trump is accelerating that Ukraine did Nordstream I'm I take the Tony Blair line and I expect um U E EU to ultimately align with America But you know maybe they're surprises Maybe they will become Chinese vessels in the end Atlas Code says AA took an L when he said that his father's factory at the higher end of the production line was subsequently
164:30 - 165:00 purchased by China I typically glaze over uh AAA over Dawn Uh well I mean they didn't buy the factory The Chinese bought the parts came and disassembled them and took them back to China That's what happened Same same difference though isn't it i mean really Yeah Well but but I mean the point is that factory was no longer a goer for whatever reason Uh hunger was we didn't have we didn't have Trump tariffs Hunger says the whole I mean do you
165:00 - 165:30 think the Trump tariffs would have saved that factory i wonder A hunger says this whole debate can be solved by which economic strategy is healthier for a random nation in a paradox game Dan's here is a right and sound strategy for any game Studio Raina says I don't like Dan because he doesn't admit that the core issue is that the US sucks The US should have just let the British run stuff Depopulation Okay Uh I I I feel I feel a
165:30 - 166:00 great um and deep sense of pity for anybody who doesn't like me I mean you really are shutting yourself off from the light He also says Dan you realize the entire immigration solution was due to the US Aa is a British man and Dan is an American apologist Depopulation is the crisis Uh yeah I mean I agree depopulation is is a problem but I mean it goes to the over financialization and the fazing money aspect that we've been talking about So this moves us closer to
166:00 - 166:30 something where people are going to more likely to have a job and a home earlier in life and start a family Okay I've noticed you snuck in jobs coming back there During the debate you never once explained how those factories are going to come back but I'll let it go I'll let it go Atlas code says "Okay tariffs split the labor class from the yuppies Labor like tariffs yuppies do
166:30 - 167:00 not This is why Biden did not re reverse Trump's last tariffs." Uh Studio Rea says "Russia wins China EU and US managerial states will lead their citizens to depopulate Look at South Korea I'd wager China is at a similar point Germany needs to work with Russia No to us No And then another word that he says Okay Uh Con says "Thoughts on what a Marago exchange rate accord might look
167:00 - 167:30 like possibly with the US forcing vessel countries to peg their currency to the value of the dollar in exchange for low tariffs." Bloody good question and I've only really just started to think about that and I need to give that extra thought and I do need to come back in a future brokenomics of what Mara Lago might look like Atlas code says Europe has a 20% VAT USA has a 0% A VAT has
167:30 - 168:00 some effect on consumption Trump has said that increased tariff lower income tax This is a free move Um yeah be nice I suppose have to see how it plays out I I don't think that uh I mean you got to remember that America imports was it 2.38 trillion dollars or 3.38 trillion Uh whereas I'd imagine that the tax
168:00 - 168:30 revenues from income tax are significantly more than you'll get on the tariff Yeah Is it 10 is it 10 to five we've been talking for Yeah we've been talking quite a while here Uh do you want to go well no It's just that I notice everybody the the the office lights are getting turned off and people Yeah it is 10 it's 10 to 5 We're running late here Okay Well I I need to get out of here at 5 otherwise I'm going to be locked in Yeah Okay Studio Raina says Scott Bessant was part of the Soros crew by the way MAGA is brain rot slop Uh
168:30 - 169:00 Broman Hank says we're four months in There's an alternity to 2028 Uh Con says reassuring of American manufacturing will necessitate the eyes of the managerial state the continuation of the importation of infinity Indians to work in those new factories Cringew Walker says Trump's gambit is very risky for global standing for but the benefits for the core is
169:00 - 169:30 much bigger This makes Trump seem more like a Justinian figure Psalm 153 says "Who is going to clean Go Go on Uh Dan sorry No no I was I was just giving the thumbs up to my producer chap who um Yeah he's is bravely saying how many how many suits there's like three three four Oh go ahead Go go go ahead then Sam 153 says "Who is going to clean up the broken chairs and tables in the office after this one?" Thank you very much Sam3 It means so much Uh that's a
169:30 - 170:00 question for Dan really I guess it's your producer He's staying behind Uh devastator I I don't do any actual work here I just talk The devastator says "What's your perspective on Australia's future?" Um they are going to have um they are going to have to have a America is going to have to have a talk with them at some point because they've allowed themselves to become too entwined with China China I remember I did a video years ago called Why Does
170:00 - 170:30 China Produce so much steel uh it's got a whole a lot of views and during the course of that the uh the trade figures with Australia was scary and that was like five years ago It's scary I don't know what China does uh Australia does Um or how Australia remains part of the quote unquote west given its dependency because China could destroy Australia overnight basically Um Sheamus Ola says "Fo Fantasia is the new Coney current
170:30 - 171:00 year." Uh Frenchman Church says "People uh buy Japanese cars in USA because Toyota and Honda manufacture their cars for the US market inside the USA Tens of thousands of jobs." Well that was one of the consequences of the Reagan tariffs Uh incidentally uh Malcolm Mai says "If Trump triggers the market correction does that mean the US could be better positioned to make a V-shaped recovery?"
171:00 - 171:30 Uh yeah I'm I'm not getting caught up on the fact that stocks have moved you know whatever it is like 11% over the past few days I mean I'm I'm a crypto investor I'm used to I'm used to 70 80% moves one way or another in a year So so it doesn't phase me in the slightest On the broader point point of markets um I've been saying this brokonomics for a while Liquidity is coming through The business cycle is turning Uh markets I expect to be significantly higher by the end of the year So all the short-term noise will be forgotten
171:30 - 172:00 And I think that is it Oh no Oh hold on Oh shoot These ones I've done I think these are ones I've done Right I think they're ones I've done Okay Excellent There's I'm going to take it as done then Oh one one more Okay One more Remember how much farmland the undefined bought in O2 guessing that's the Chinese So yeah the Chinese have bought farmland in in Australia too Well thank
172:00 - 172:30 you very much Dan As always with debates I declare I declare total and complete victory blah blah blah But so do you People who agree with you will declare victory for you People who agree with me declare victory for me That's how debates always go But it was certainly interesting And you know kayfside I do actually think that the most convincing angle is the one that it's all about China and this is a geopolitical thing Uh that that was going to happen regardless with the president That's my kind of I agree with is it not possible
172:30 - 173:00 that the most convincing answer is is is actually my answer which in the military is a part of it But you know the the Scottbesson and Trump also have their reasons I I I am inclined to view that all of the Trump reasons are just uh are just noise as as even though he's been talking about it for 40 years Yes Okay Yeah I think that I think the Trump component of it uh ultimately won't lead anywhere But I think the military part that you're talking about and possibly the monetary part uh will
173:00 - 173:30 happen Th those are the two that I think that have more staying power in this because they're necessity rather than Yes campaign Right Well thank you very much for having me I got to go before I get locked in And excellent Excellent Dan And uh yeah you're going to chop this up and put bits of it on lotus heaters as well So that should be fun Exactly that Yeah they'll be carefully edited to make me look very clever Well uh great And I'll just remind
173:30 - 174:00 everyone uh promo code Mandy 25% off all the courses And I will see you again tomorrow Bye everyone What goes on in this town is none of your business As long as I'm living here it is Then maybe you shouldn't be living here Well that's easily fixed