April 10, 2025 • 35 mins
Nate and Maria discuss Trump’s latest round of tariffs. What is the strategy here, if any? What should other decision-makers – like Elon Musk or the United States’ Congress – do to intervene? And how should the average American react?
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:15):
Pushkin. Welcome back to Risky Business, a show about making
better decisions. I'm Maria Kanakova and.
Speaker 2 (00:30):
I'm Nate Silver. Today on the show, we're gonna mostly
talk about a Sorry.
Speaker 1 (00:37):
No, I'm laughing because you, Nate, you got this. Today
on the show, we're mostly talking.
Speaker 2 (00:42):
About tariffs and the I think you can call it
now a crash that we've seen in the market since then,
although as we're recording this on Tuesday, the eighth markets
I believe are up there at least up in the
pre market trading. And we'll also ras Maria about what
happens when you support Duke in your bracket.
Speaker 1 (01:06):
That's why I had started laughing at our introduction, because
I yeah, I knew it was coming. I knew it
was coming. Let's just get it out of the way, Nate.
Let's let's start with that. I lost. I was gonna say,
I graciously admit defeat, but no fucking way, I'm not
gonna be gracious about it. Monty, and I challenge you
(01:27):
to a rematch for next year.
Speaker 2 (01:30):
Accepted.
Speaker 1 (01:31):
I was completely I mean, it was a route, it
was a route. I was rooting for Duke. Everyone, everyone
I rooted for lost but not only that, Nate, you
chose Florida out of spite and who won?
Speaker 2 (01:46):
What can you say? I actually had money on Houston
last night, so Florida was just the icy on the cake.
But like, look, did you watch the game? It was
spectacularly it was funny, Shoddenfruda. If you're a Duke hater, yeah,
the golden boy, Cooper Flag will live with this for
the rest of his life. Yeah.
Speaker 1 (02:05):
The Duke game, I was like, what's going on? I
had to text Monty. I was like, what has happened
right now?
Speaker 2 (02:10):
Why?
Speaker 1 (02:10):
Why is this happening?
Speaker 2 (02:13):
I was down at the hard Rock Seminal casino. I
had just ended the day of a poker tournament and
got to watch it with a bunch of drunk for
Lauderdale Arie bros. Who also seem to be reading for Houston.
Speaker 1 (02:27):
Sometimes that's the best way to watch games, right, both
both Duke and Florida, And like big games, there's an
energy watching them during poker tournaments. There really is because basically,
I think over half the room I think it's fair
to say, usually has money on the game.
Speaker 2 (02:41):
So the is very hot. Yeah, by the way, the
tournament didn't go great. Other well, I mean it's hard
to like, it's hard to play poker when you're distracted
by big things that are happening. And so every moment
I'm playing. I cashed one K, and then the two
main tournaments that came for I didn't cash, which is normal,
but still it's like hard to play poker when you
(03:02):
feel like the world. Let me be careful about this, right,
this is not like of the magnitude of like the
start of the pandemic, for example, But we're gonna spend
the bulk of time talking about is a huge story.
It's like gonna be remembered as one of the events
at least in line with like the nineteen eighty seven
stock market crash I think. I mean, this is like
a fundamental change in the United States's relationship with the
(03:26):
rest of the world. Right, people now think a recession
is fifty percent or more likely, and that's and that's
a big deal.
Speaker 1 (03:34):
It's a big deal. It's a huge shift. Congratulations on
cashing one tournament night.
Speaker 2 (03:39):
You know I did. I will give myself credit for this.
I literally mean cashed. I was the first player in
the money. I literally played for thirty seconds after I
made the money, So that was that was ideal and
then uh, and then and then but meanwhile the economy
is falling apart, So let's talk about let's talk about
terrorist Mariya. This might be a little bit streaming of consciousness,
but it's a big story obviously of the of the week,
(04:01):
if not the year.
Speaker 1 (04:02):
Yeah, it's a huge story. I mean as of now.
So I think we always try to be very careful
to say one we're taping, but with this story, I
think you have to be extra careful because there's so
much volatility, so much movement. So we are taping. I'm
on the West coast, Nate is on the East coast.
So for me, it's eight am on Tuesday, And as
(04:23):
of now, markets are down I think eighteen percent from
peak in February, right, So that's that's huge. And global
markets are down right now. We have tariffs across the board,
including on penguins, and China is threatening retaliatory tariffs and
we're saying, well, fuck you, China, We're gonna give even
(04:44):
more teriffs to China. And like it's just evolving into
this madness. And people who were supporting Trump, like very vocally,
even some of those voices have come out and said, hey,
whoa hold on a second, like the Bill Ackmans of
the world, right, who have been just like go go Trump,
or all of a sudden like whoa, whoa, whoa, whoa, whoa,
what's happening to the economy? What are you doing? Maybe
(05:07):
it's time to take a step back, slow down, take
a pause. And those voices actually have been so loud
that there was even a fake fake news yesterday where
Evan Reuter's ran a headline that market started trading on
that there was going to be a ninety day pause.
Speaker 2 (05:21):
Well, a guy named whose last name is Bloomberg, like
Walter Bloomberg, like twet tweets and all like if your
name was like Johnny Reuter's or I am look this up.
The surname nyt like I don't know night or how
you pronounce it is apparently the rare Cambodian surname. Right,
So if you're the last name knit, right, you can
be like knit mit tariffs to be rescinded tomorrow and
(05:44):
then and then cause that major disruption in the stock market. Yeah, look,
there are parts of the center are funny. I always
believe in kind of keeping your wits about you, and
I mean, let me contextualize first, like these market swings,
so as tapping this, the SAB five hundred is up
two and a half percent today, so that reduces the
game from peak in early February or the loss to
(06:05):
about twenty percent from twenty three or whatever it was.
It's at least twenty three percent is the average tariff
right now that we're imposing on the rest of the world.
But still a really bad swing, especially considering that, like
investors assume that Trump would be good for the market,
and they assume that he probably would implement some terriffs,
certainly on China, probably some ten percent dish tariffs across
(06:28):
the board, with lots of cronyism and loopholes. Right, but
this is like on top you know, markets have assumed
for a long time that Republicans are good for Actually
it's a little more complicate than that. Right in twenty sixteen,
the market thought overnight that Trump winting would be bad
for stocks, the reverse course, literally overnight. So like the
(06:48):
market after Trump one in twenty sixteen went from being
way down to way up in fact the next day.
But now Wall Street has completely lost confidence in Trump.
And as you mentioned, I mean Elon, who literally a
few days ago was pictured in a hat saying Trump
is right about everything, is now kind of publicly subtweeting Trump,
(07:11):
critiquing Trump advisors like Peter Navarro and reportedly corn To the
Washington Post is also working behind the scenes to try
to get Trump to reverses hera So credit credit to Elon, Right,
it changes a lot for him to see that shit's
going wrong. But like, but you know, if he's reversing
course and Bill Lackman is reversing course and like very
(07:32):
little elite support and the few like Silicon Valley VC
types who are defending Trump looked fucking ridiculous, right, You know,
I could name names if I wanted to, but you
guys are fucking idiots. That's the only only way to
put it. Anyway. How do you feel, Maria, Well, I
mean you check your investments you have yeah.
Speaker 1 (07:54):
No, no, no, no, I mean that this is one
of those moments where you know, usually the the right
answers don't actively trade. Right, you're not you are not
a day trader, and that's I think true for for
most people. Right, if you're not a professional, just let
it ride right. Look for the long term, this is
really I hate using the word unprecedented, right, because you know,
(08:19):
we've had major economic downturn moments like this, but I
think it is unprecedented, at least a lot of the
experts are saying it is in the sense that it's
completely self cost. Right. There's no external thing that is
actually precipitating this market crash, which is what has happened
every other time, you know, during COVID nineteen eighty seven,
(08:40):
like all of these times, the seventies oil shocks, right,
all of these shocks were kind of huge global events
that ended up doing tremendous damage to the stock market
in the short term. This is something that doesn't didn't
need to happen, right, Like, this is something that is
entirely self cost. It's just Trump making this decision. And apparently,
(09:05):
according to some of his advisors who are speaking anonymously,
he is in his I don't give a fuck stage
where he's not listening to advisors. He's golfing, and he's saying,
you know what, this is what I want to do,
and this is what I'm going to do, and I
don't care if all of my closest advisors are telling me,
I'm taking the economy, which is a huge, huge shift
right from Trump Part one, right where he really cared
(09:28):
about the market and was really sensitive to what the
market was saying. And it's also a shift from what
we saw in the early days of his presidency in
Trump Part two, where you know, he was actually threatening
tariffs and then going back and we even had you know,
a Risky Business episode where we were talking about kind
of what kind of game theory is this right where
(09:50):
you where you where you threaten something and then people
give fake concessions that aren't really concessions and you're like, Okay,
just kidding, Like I've asserted my dominance. Let's continue on.
And now he's like, you know what, No, Like, I'm
going to do this for real. I'm going to do
this big. I don't care about the math. Obviously, we
know Trump never likes to say he's wrong, so he's
not going to say he's wrong this time around. They're
(10:11):
people He's like, oh, they just need to acknowledge the mistake. No,
he's never going to do that. But it seems like
there's been some sort of fundamental shift in the way
he's thinking about the strategically where he's just like, fine,
I'll tank the economy, no paid, no gain, but we
don't even know what the gain is. No.
Speaker 2 (10:26):
Look, I'm reading this book on Joe Biden called Fight
by Jonathan Allen and Amy Parns. It's a new book
that's out. That's very a very good book about how
people all around Joe Biden saw how Biden was losing
his fastball and his curveball and his breaking pitch and
(10:47):
his change up and everything else, right, and he was
really not performing very well at all. But Democrats got
stuck in a position where he was you know, he
was going to be the nominee anyway. But the point
is that, like when you get old and Trump is
the same age, now somebody as Biden was at the
start of his first term, you get even more stubborn.
You know, Can I be honest, Maria, you can. I
(11:10):
kind of miss Jared Kushner. I kind of miss.
Speaker 1 (11:16):
That's not where I thought that sentence was gonna go.
Speaker 2 (11:21):
I kind of miss having these more or less normal
Republicans right who who were close to Trump and trying
to steer them the digression and hey, you want to
win reelection, Hey you don't want to like undermine because
I think now, like all the other stuff that Trump
is trying to do, the cultural backlash and whatever else
right where. You know, I might agree with parts of
it and disgree with other parts of it, but like,
(11:42):
that's all gonna be jeopardized if people are like, you
won an election on inflation, and now you're tanking the economy,
particularly through by the way, people have this weird abstract
discussion online about like, okay, well, who has investments in
the stock market. Actually, by the way, about sixty percent
of people do have investments in the stock market, so
it's a pretty common thing. But also, like, you're gonna
(12:02):
about to make a bunch of shit much more expensive.
Children's toys are gonna become much more expensive because they're
made in countries like Vietnam in Southeast Asia that are
heavily taraffed. Right, you want to furnitu your home. A
lot of furniture is made abroad. You want to you know,
buy some yard, I mean all this stuff. You want
to buy avocados for your fucking burrito, right, Like all
(12:23):
this stuff comes from like foreign countries. I think actually
Canada and next come, now, have some of the more
exemptions in other countries. But like, it's gonna make stuff
notably more expensive to have people love the idea of
you love to have your nice American manufactured nikes, right, Well,
they're gonna cost a hundred bucks instead of one hundred bucks, right,
(12:44):
I can afford that, you know, I have a partner
who is a fan of nice shoes. Right. But, like,
this is gonna hit consumers hard. And although Silicon Valley
stocks are down more than the consensus, so are a
lot of consumer staples. It looks very recessionary. Booze and
tobacco stocks are up though, which is also a sign
(13:04):
of like despair. McDonald's is up, Taco bill.
Speaker 1 (13:09):
Up right now, When you when you see that those
are the stocks that are up, you start being nervous.
And then when you see things like the price of
copper is down, right, Like that is a very good
marker of recession as well, because it means that demand
has is going is going to go down. You know,
we've also seen in the last week with the kind
of the FED conference and the FED announcements that like,
(13:31):
you know, the FED isn't a really tough spot as well, right,
because like what what do you do right when when
inflation is going to go up? And you know you
but you, but you've got this person in the White
House who's making these decisions about tariffs, where like what
do you do? It's like a rock and a hard place, right,
Like keep rates the same, lower them, raise them, Like
(13:55):
there's there's no good answer here, and the FED is
supposed to kind of come in and try to stabilize
things and try to calm the worries. And there's you know,
if when we're talking about the game theory, when we're
talking about like the long run and what is the
strategic thinking here? I don't know, right, Like this is
one of those where like there's no good choice, right,
(14:15):
like which box are we trying to get to while
the tariffs are at this height? Like I don't think
we're just in a part of a game tree that
like I don't know how to resolve it. Well, maybe
there's some brilliant economists out there who does. But all
the brilliant economists I've been reading have no idea how
to get out of this mess. If Trump does not
back down.
Speaker 2 (14:38):
We'll be right back after this message. Yeah, Maria, I
think that we're in a real pickle, right, you know,
in part because like i mean, Trump claims this is
for negotiating leverage. And by the way, Zimbabwe did rescind
(15:04):
it's tariffs. It's relatively minor terriffs in the United States,
if we're starting at the back of the eye off
a bit and moving upward. But like, but there are
a few things here, what is that, Like this tariff
policy may literally have been implemented by an intern using
chat GPT. If you ask chat GPT or other large
language models, hey, come up with a quick formula to
(15:27):
determine tariff rates. Right, It'll sometimes just say, oh, let's
just look at the trade deficit. This is actually very stupid,
Like we have a big trade deficit with Vietnam because
they're a kind of lower middle class economy relative to
the rest of the world, where fairly productive about producing
toys and electronic equipment and you know, and certain types
(15:47):
of food stuffs, and there are things which we then import.
But the GDP per capita is I'm just gussing, like
four thousand bucks a year or something, and so like
not a big market for American made consumer goods. They're
also near China, Thailand, Japan, Korea, et cetera, where cheaper
to import, right and so like, so like you know,
that's a win win the unless you're concerned about unfairly
(16:07):
ebor practices, which is usually not the price of the right. Right,
that's a win win that they make stuff, We pay
for this stuff, We give them jobs. They do not
buy that much of our stuff. But that's okay, right,
I mean Trump literally doesn't realize that, like a trade
def it's not inherently a bad thing. So it's the
clumsiness of that rather than like if you had said
we're gonna have fifteen percent tariffs across the board, right,
(16:32):
the market would have reacted to that, but not so
negatively as these haphazard things. And by the way, the
fact that like this terraffs are these are going to
cause us so much pain, give us less leverage beyond
a certain point, right, because that it kind of becomes
a game of chicken where we have to like prove
that we have removed the steering wheel and now can't unflinched.
(16:54):
By the way, notwithstanding that they're contradictory rationales. So or
you'll see the Peter Navarro fucking idiot types I'm sorry,
Peter Navarro. You know, you'll see idiots like Peter Navarro
who are like, we actually need this for America's long
term growth or whatever else, and others say no, just
a negotiating ploy right, which are different. One is kind
of considering these are bad, but we want to actually
lower tariffs, and ones say no, tariffs are gonna be
(17:14):
want reshoring of American enterprise will through some kocamane scheme,
we will reduce deficits, even though if we go into
recessions that entails more spending and worsening the fiscal picture
long term. But it's contradictory and other countries to be like,
you know what, fuck you Donald Trump, right, we think
that eventually you'll be forced to blink by the market,
(17:37):
or eventually by Congress, which does is supposed to have
in the constitution authority for tariff policy specifically and for
funding the government generally. Now Congress also being idiots like
not quite in the same way that per Navarro is,
but like has delegated more and more authority to the executive.
(17:57):
It's occurred under both democratic and Republican administrations. Right, And
so there are lawsuits to stop Trump's tariffs. I'm not
a legal scholar. I don't know whether most of it
is legal and some of it violence principles. But Congress
does have the power to pass a lot saying stop this.
They will ultimately need two thirds majorities because Trump has
threatened and I think I believe would detail these threats.
(18:20):
They also need, by the way, to get on the
floor in the House, because the floor of the House
is more partisan. Right, the House Speaker Mike Johnson doesn't
want to put to me on the floor. You have
to do what file. It's called a discharge petition where
it takes thirty days. You get to get a bunch
of signatures, and then you're required to do that, right,
And that usually happens when the opposition party Democrats almost
(18:44):
have a majority in the House, but not quite, and
then a small number of sanaders or representers rather in
the governing party sign on. Then you're forced to like
actually take a measure to the floor. Right, and so
that would be at best like three days away. But yeah,
the economy goes into a recession, then I don't know, right.
People would say it's a high risk, high reward, bet,
(19:04):
I'm not sure what the reward is.
Speaker 1 (19:06):
Yeah, that's that's kind of the other part of it,
like what is the reward? But I was gonna I
was going to ask what you think that because to
me it seems like a pipe dream, this whole congressional
action thing, Like, yes, technically Congress can do something, but
do you have any kind of thoughts on how likely
that actually is, because to me, it seems like there's
just no way they're going to get sixty seven right
(19:26):
in the Senate. There's no way that the House is
going to work. Like. It seems to me like I
don't know what has to happen for Congress to actually
like get its shit together and be like, no, this
is not going to stand.
Speaker 2 (19:36):
I think the Senate is not. So You've already had
some Republicans sign on to different resolutions in the Senate
disapproving of Trump's tariffs, either generally or on canademics so specifically, right, Like,
I don't think sixty in the Senate, which would at
least pass a filibuster, is so hard. I'm not even
sure sixty seven is that hard. Right, It's the House.
(20:00):
It's the House where you know the first one third
of districts are really read because of jerrymandering and population
self sorting. Right, the House leader has not been on
board with this, although you know, you did have some
races last week, two special elections where Democrats outperformed Trump
numbers by about like seventeen points, right, the loss. But
(20:23):
these are districts that are extremely red in rural parts
of Florida. And so if that's true, then like, you know, look,
you'd be talking about like an epic route. I don't
want to put numbers on it and then get quoted
or misquoted later on. But like if you're like a
business deciding whether you know your restoration hardware, which I
mentioned because it's a bougie stock, but also the company
(20:46):
was hit hardest the first day after the tarif announcement, right,
their supply change is very big.
Speaker 1 (20:51):
During the call, during.
Speaker 2 (20:53):
The call, he also, you know, it's also like I said,
it's kind of bougie. You know, I don't really you
don't really need anything for restoration harder. Let's be honest, right,
it's not a store for necessities.
Speaker 1 (21:03):
I have a couch from there.
Speaker 2 (21:06):
You do good? I did. We can afford some rah furniture.
But like, if you're in a recession, those extensive couches,
you know, are as important as your Marlboro Reds and
bud Lights and McDonald's. And I'm somewhat joking, but like
you do see downshifting in consumer preferences from the upper
middle brow to the upper lower brown kind of everything
everything in between, and the luxury in for that matter too. Right,
(21:29):
So sorry, I lost between of foot what we're talking about.
Speaker 1 (21:31):
We were talking about that. We were talking about the
house and how likely it is that we can actually
get something down there. You were saying that one third
of the districts are incredibly conservative.
Speaker 2 (21:42):
If you're talking if your company planning for Okay, let's
let's reshore our supply chain restoration hardware. Let's find a
bunch of artisanal furniture makers in Knoxville, Tennessee, and Williamsburg,
Brooklyn in place like that, and long term will get
some costs down and it'll be good.
Speaker 1 (21:58):
Right.
Speaker 2 (21:59):
The problem is that like these terraffs could be rescinded
at any time, If not now, then in twenty twenty
six after the midterms. If not then then in twenty
twenty eight, when at this point I think I'd consider
Democrats a little bit over fifty percent to retake the
White House, right, So like, it's not like the sort
(22:20):
of long term stability that you would want. And in fact,
the public is against this policy and it might lead
to fewer tariffs in the very long run, but an
abdication of reliable American leadership and responsibility. So it's just
it's just kind of a mess.
Speaker 1 (22:36):
It is a mess. We were also talking about kind
of what the long term is. Now. There's one theory
that I've seen that seems at least worthy of consideration.
I don't want to say, you know, plausible, but worthy
of discussion, and that's that the long term here is
just like an autocratic poaragram, right, that the idea is
(22:59):
like we tank everything and then we give concessions to
the people who are nice.
Speaker 2 (23:02):
To think you've been nice. I don't buy this at all.
So I was wondering.
Speaker 1 (23:06):
That's why I said, I'm not going to say plausible. Yeah,
that's why I phrased it the way I did.
Speaker 2 (23:12):
I buy that Trump has strong autocratic tendencies. I buy
that some of the stuff he's doing on immigration and
free speeches, you know, autocratic. Right, And there was January sixth,
of course, right, I don't think this is a strategy
that you'd implement if you wanted to gain I mean,
I think this jeopardized the whole Trump agenda, right, and
(23:32):
this is at least going to have, like Congress habits
back up and the markets have its back up. And
you know, I've rarely seen everyone from maybe there are
a few people on the left that have eccentric views
about terrorists. They can go discuss some one blue sky.
That's fine with me, right, But like, you know, I
haven't seen the kind of what I call the Obama
base right, which is like everyone from the center right
(23:56):
who is pissed off at Bush to the left as
united against something as they are against Trump right now, right,
And like those are elites, those aren't rank and file voters.
Yet We've seen some decline in Trump's popularity ratings, but
like it will take some time for that to cycle through,
and maybe they can be averted if we somehow avoid
an economic downturn. But like this weakens Trump's powers a lot. Right,
(24:20):
people are willing to go along with a lot when
you're providing for them, right, and your checks are cashing
and goods are cheap and things like that, Right, even
in autocracies, economic crises can topple dictators, right. I think
the people who are worried about democratic backsliding are correct
to be worried about it. About I think the theory
(24:41):
is kind of the opposite of what this is likely
to do.
Speaker 1 (24:44):
Yeah. No, I think that that is people trying to
impart a goal and kind of an intentionality here where
there's none right, where it's just like a kid being like,
I want to do this. I want to be I
want to be the bully, and I'm going to do
this and you can't stop me. You try to stop
me right now. So I tend to agree with you
(25:06):
that that it seems a little bit too far fast,
that this is one of those levers and we'll be
back right after this. I'd love to shift the lens
(25:27):
a little bit, so so Trump. I think we've talked
about the fact that this it's very difficult to know
what the long term game theory of this is and
probably none right that he's just taking the economy doing
this and kind of inflicting a lot of damage. But
what about kind of the the other end of it,
Us as consumers or people who actually have power talked
(25:49):
about what Congress can do. But in this case, like obviously,
you never, you know, to take a poker analogy, you
never want to make decisions when you're tilted right, when
you're kind of when you're really upset, when you're suffering
big losses. You know, if you're looking at your portfolio
going down downtown, you know, these are things that are like,
you know, you've lost a big poker hand, your your
(26:10):
chips are dwindling, and that's not usually the time to
make big swings and to try to think logically. But
in this particular case, like this is one of those
things where not panicking and just kind of also sitting
back down and just letting it all play out might
not be the right strategy either, right, they kind of
(26:32):
don't just don't just do something. Stand there types of things.
But how do we you know, how do we kind
of square that circle? And how do we react without
tilting right, without overreacting? How do we try to navigate
this environment where there's just extreme uncertainty? And as I
think you're making a really good point when you said,
like we don't know, right if we knew for with
(26:55):
one hundred percent certainty, these tariffs are going to stay
for the next two years at least. Okay, then you
can make decisions in that context. But we don't know
right Like as of now, we know that Trump says
he's not backing down, but we don't actually know what's
going to happen. We don't know what the reactions are
going to be. We see certain signs, we see Europe
banding together, you know, we see the rest of the
world actually trying to figure out what do we do now?
(27:16):
But how do you think about it? Right? How do
you think about it when you're trying to make your
own decisions and try to be a good player as
opposed to a tilted player.
Speaker 2 (27:25):
Practice your Canadian accents that when you travel to Vancouver
or whatever. Oh sorry, they don't think you're an American.
I guess it's part of it.
Speaker 1 (27:34):
I can start my a's at the end of sentences.
Speaker 2 (27:37):
No, I think you know. Look, if you're a business
that relies on a heavily domestic supply chain, I guess
you're somewhat okay. You know, Goodyear Tire because they're very domestic,
has seen their stock price too well, but also because
people replace their tires a Good Year when they're not
replacing their cars, right and so like, even like the
bullish cases are barish and like, you know, it's very
(28:00):
very broad based. Yeah, I don't know if they are
good protections. I mean, you know, look, sometimes in a
recession things become cheaper at least I mean, it might
not be a terrible time in X months to look
at housing if you don't own well, because housing is
(28:23):
something where people are it's cyclical and like people are
you know, really reluctant to make like big ticket purchases
and like a downturn and you know, should not be
substantially affected by foreign goods, right. I mean, I'm sure
you're importing some building materials from abroad, but like you know,
most lumber we're cutting down right here in the United States, Maria,
(28:45):
so like, But apart from that, I mean, I think
you're like a little bit defenseless, apart from like having
to reason with yourself about like, oh am I a
person who is annoyed because this cuts into my retirement savings.
But I basically can live my life as I want to.
Or if you're someone where like it kind of has
(29:06):
causes a threat at short term time horizon is right,
if you're a small business owner that relies on imported
goods of different kinds, and or middle class customers who
are seeing their pocket books pinched. Then like, it's not
it's not great right now, right, I mean, probably should
shift you to having more of a long term focus,
(29:27):
I guess. But the long term provides a lot of
uncertainty too.
Speaker 1 (29:30):
Yeah, well, even some you know, I was actually looking
at some supply chains because I was very curious about this,
and see, even some domestic seeming products actually have components
that that you wouldn't think about that are imported. Like
some domestic water have plastic manufacturers for their water bottles
that are not in the United States. So even things
that are you know, good old American water, like good
(29:51):
old American this, the supply chains are incredibly complicated. And
you know, the people saying that, oh, well, bring manufacturing
to the US, I don't think they realize what that
actually means, right, Like, there's a reason that that manufacturing
has shifted. I don't think people want a factory in
their backyard. I don't think people want to be working
a lot of those factory jobs. I mean, I don't
(30:13):
think that those supply chains, and even if all those
things are like, yes, absolutely, let's change the supply chains.
How long does that take? Right, like in the immediate term?
Like that that is not that is not something that
we can do right away. So as individuals, like we're
relatively powerless, not powerless, but we just there is no
(30:35):
good advice in the sense that we don't know what's
going to happen. Do you think that there are people
who can do something right? Like, who are the people
who might be able to influence something other than Elon Musk?
Maybe unless kind of this result in Elon Musk being
thrust out of the inner circle because he's subtweeting Trump
and talking about how he thinks that we should have
(30:56):
free trade. So who are people who might actually make
a difference where they're decision making right now actually matters.
Speaker 2 (31:03):
The one hundred members of the United States Senate and
the fourhund and threety five members of the United States House.
I mean, or but I always am a little bit
reluctant to like have calls to activism. But you know, look,
if you're a person, whatever your political orientation, sitting in
a Senate or House seat where there's a relatively safe
(31:25):
Republican member or for the matter, there's a Democrat who's
being a little you know, oh terrorist, maybe it's good.
I don't know, I don't know. You know, call your
fucking congress person, right and say, like, especially if you're
somebody who's donated, or if you're somebody who runs a
small business in that district, say this is gonna fuck
me up. Where this is not going to help the
working class, right, this is not going to help the
(31:46):
middle income consumer. Yeah, I mean, let you know, let
Congress know. To be honest, I think they probably do
know that, frankly, but like because they are aware of
what's going on in their district and this is not
some abstract cultural warfight. But Congress is responsive to to
don't call somebody not in your district, right, Yeah, pick
up the phone with the person who's who represents you
(32:09):
and let them know how you feel.
Speaker 1 (32:12):
Yeah. No, I think this is this is definitely a
moment for a call to action. There have been others,
but this is one where it could actually be effective.
Speaker 2 (32:19):
Right.
Speaker 1 (32:19):
It's it's not particularly effective to you know, call your
Republican Senate or a representative, like if you're a Democrat
and it's a democratic talking point, but something like this,
like I actually think that this could really be effective
because you know, they they worry, they need to be
they need to be supported within their districts as well.
(32:41):
And this is one moment where I think that across
the board, we're seeing people, you know, people really not happy,
and this is I think this is also actually an
interesting opportunity to try to reach kind of the everyman
and say, look, you know, Trump isn't working for you,
because this is something where I think you can actually
reach a lot of people across the divide and say, hey, look, no,
(33:04):
this is not this is not good for your average American.
This is not good for like bottom line of Joe
from from where from Where's Joe from Pennsylvania? Okay, Joe
from Pennsylvania. That this is not good for his for
his pocket for his bottom line, for his retirement, for
(33:25):
his ability to buy food, that that this is just
not good all around. And so that might be one
silver lining if people actually do finally mobilize and get
Congress to get off their ass and do something and
stand up to Trump and say, look, these tariffs are
not good for the country and not good for the
global economy. And if we want America first. You know,
you don't want you don't want to have to have
(33:45):
America alone and everyone else against us.
Speaker 2 (33:50):
Marie, I think we need to wrap this up because
I literally have a train to catch on going to Philadelphia.
Speaker 1 (33:55):
Are you going to Philadelphia for poker night?
Speaker 2 (33:58):
Not for poker, no poker, for an event at of Pennsylvania.
Speaker 1 (34:02):
Okay, we'll have a wonderful event, and if you want
to join me in Philadelphia in two weeks, I'll be
going there for poker. For the poker so.
Speaker 2 (34:10):
See if the partner gives poker permission. We'll see about that.
The series is coming up, which I intend to spend
a fair bit of time at, so we'll see maybe.
Speaker 1 (34:19):
All right, well, well that sounds good. Have a very
safe trip to Philadelphia, and I hope that we'll have
better news for our listeners next week when it comes
to the markets. But at this point hope doesn't get
us very far. Let us know what you think of
the show. Reach out to us at Risky Business at
Pushkin dot fm. And by the way, if you're a
(34:42):
Pushkin Plus subscriber, we have some bonus content for you.
We'll be answering a listener question each week that's coming
up right after the credits.
Speaker 2 (34:50):
And if you're not subscribing yet, consider signing up for
just six ninety nine a month. What a nice price.
You get access to all that premium content and ad
for listening across at Pushkin's entire network of shows.
Speaker 1 (35:02):
Risky Business is hosted by me Maria Kanakova.
Speaker 2 (35:05):
And by me Nate Silver. The show is a co
production of Pushkin Industries and Heart and Media. This episode
was produced by Isabel Carter. Our associate producer is Gabriel
Hunter Chang. Sally Helm is our editor, and our executive
producer is Jacob Goldstein. Mixing by Sarah Bruger.
Speaker 1 (35:21):
If you like this show, please rate and review us
so other people can find us too. Thanks so much
for tuning in.
Pushkin. Welcome back to Risky Business, a show about making
better decisions. I'm Maria Kanakova and.
Speaker 2 (00:30):
I'm Nate Silver. Today on the show, we're gonna mostly
talk about a Sorry.
Speaker 1 (00:37):
No, I'm laughing because you, Nate, you got this. Today
on the show, we're mostly talking.
Speaker 2 (00:42):
About tariffs and the I think you can call it
now a crash that we've seen in the market since then,
although as we're recording this on Tuesday, the eighth markets
I believe are up there at least up in the
pre market trading. And we'll also ras Maria about what
happens when you support Duke in your bracket.
Speaker 1 (01:06):
That's why I had started laughing at our introduction, because
I yeah, I knew it was coming. I knew it
was coming. Let's just get it out of the way, Nate.
Let's let's start with that. I lost. I was gonna say,
I graciously admit defeat, but no fucking way, I'm not
gonna be gracious about it. Monty, and I challenge you
(01:27):
to a rematch for next year.
Speaker 2 (01:30):
Accepted.
Speaker 1 (01:31):
I was completely I mean, it was a route, it
was a route. I was rooting for Duke. Everyone, everyone
I rooted for lost but not only that, Nate, you
chose Florida out of spite and who won?
Speaker 2 (01:46):
What can you say? I actually had money on Houston
last night, so Florida was just the icy on the cake.
But like, look, did you watch the game? It was
spectacularly it was funny, Shoddenfruda. If you're a Duke hater, yeah,
the golden boy, Cooper Flag will live with this for
the rest of his life. Yeah.
Speaker 1 (02:05):
The Duke game, I was like, what's going on? I
had to text Monty. I was like, what has happened
right now?
Speaker 2 (02:10):
Why?
Speaker 1 (02:10):
Why is this happening?
Speaker 2 (02:13):
I was down at the hard Rock Seminal casino. I
had just ended the day of a poker tournament and
got to watch it with a bunch of drunk for
Lauderdale Arie bros. Who also seem to be reading for Houston.
Speaker 1 (02:27):
Sometimes that's the best way to watch games, right, both
both Duke and Florida, And like big games, there's an
energy watching them during poker tournaments. There really is because basically,
I think over half the room I think it's fair
to say, usually has money on the game.
Speaker 2 (02:41):
So the is very hot. Yeah, by the way, the
tournament didn't go great. Other well, I mean it's hard
to like, it's hard to play poker when you're distracted
by big things that are happening. And so every moment
I'm playing. I cashed one K, and then the two
main tournaments that came for I didn't cash, which is normal,
but still it's like hard to play poker when you
(03:02):
feel like the world. Let me be careful about this, right,
this is not like of the magnitude of like the
start of the pandemic, for example, But we're gonna spend
the bulk of time talking about is a huge story.
It's like gonna be remembered as one of the events
at least in line with like the nineteen eighty seven
stock market crash I think. I mean, this is like
a fundamental change in the United States's relationship with the
(03:26):
rest of the world. Right, people now think a recession
is fifty percent or more likely, and that's and that's
a big deal.
Speaker 1 (03:34):
It's a big deal. It's a huge shift. Congratulations on
cashing one tournament night.
Speaker 2 (03:39):
You know I did. I will give myself credit for this.
I literally mean cashed. I was the first player in
the money. I literally played for thirty seconds after I
made the money, So that was that was ideal and
then uh, and then and then but meanwhile the economy
is falling apart, So let's talk about let's talk about
terrorist Mariya. This might be a little bit streaming of consciousness,
but it's a big story obviously of the of the week,
(04:01):
if not the year.
Speaker 1 (04:02):
Yeah, it's a huge story. I mean as of now.
So I think we always try to be very careful
to say one we're taping, but with this story, I
think you have to be extra careful because there's so
much volatility, so much movement. So we are taping. I'm
on the West coast, Nate is on the East coast.
So for me, it's eight am on Tuesday, And as
(04:23):
of now, markets are down I think eighteen percent from
peak in February, right, So that's that's huge. And global
markets are down right now. We have tariffs across the board,
including on penguins, and China is threatening retaliatory tariffs and
we're saying, well, fuck you, China, We're gonna give even
(04:44):
more teriffs to China. And like it's just evolving into
this madness. And people who were supporting Trump, like very vocally,
even some of those voices have come out and said, hey,
whoa hold on a second, like the Bill Ackmans of
the world, right, who have been just like go go Trump,
or all of a sudden like whoa, whoa, whoa, whoa, whoa,
what's happening to the economy? What are you doing? Maybe
(05:07):
it's time to take a step back, slow down, take
a pause. And those voices actually have been so loud
that there was even a fake fake news yesterday where
Evan Reuter's ran a headline that market started trading on
that there was going to be a ninety day pause.
Speaker 2 (05:21):
Well, a guy named whose last name is Bloomberg, like
Walter Bloomberg, like twet tweets and all like if your
name was like Johnny Reuter's or I am look this up.
The surname nyt like I don't know night or how
you pronounce it is apparently the rare Cambodian surname. Right,
So if you're the last name knit, right, you can
be like knit mit tariffs to be rescinded tomorrow and
(05:44):
then and then cause that major disruption in the stock market. Yeah, look,
there are parts of the center are funny. I always
believe in kind of keeping your wits about you, and
I mean, let me contextualize first, like these market swings,
so as tapping this, the SAB five hundred is up
two and a half percent today, so that reduces the
game from peak in early February or the loss to
(06:05):
about twenty percent from twenty three or whatever it was.
It's at least twenty three percent is the average tariff
right now that we're imposing on the rest of the world.
But still a really bad swing, especially considering that, like
investors assume that Trump would be good for the market,
and they assume that he probably would implement some terriffs,
certainly on China, probably some ten percent dish tariffs across
(06:28):
the board, with lots of cronyism and loopholes. Right, but
this is like on top you know, markets have assumed
for a long time that Republicans are good for Actually
it's a little more complicate than that. Right in twenty sixteen,
the market thought overnight that Trump winting would be bad
for stocks, the reverse course, literally overnight. So like the
(06:48):
market after Trump one in twenty sixteen went from being
way down to way up in fact the next day.
But now Wall Street has completely lost confidence in Trump.
And as you mentioned, I mean Elon, who literally a
few days ago was pictured in a hat saying Trump
is right about everything, is now kind of publicly subtweeting Trump,
(07:11):
critiquing Trump advisors like Peter Navarro and reportedly corn To the
Washington Post is also working behind the scenes to try
to get Trump to reverses hera So credit credit to Elon, Right,
it changes a lot for him to see that shit's
going wrong. But like, but you know, if he's reversing
course and Bill Lackman is reversing course and like very
(07:32):
little elite support and the few like Silicon Valley VC
types who are defending Trump looked fucking ridiculous, right, You know,
I could name names if I wanted to, but you
guys are fucking idiots. That's the only only way to
put it. Anyway. How do you feel, Maria, Well, I
mean you check your investments you have yeah.
Speaker 1 (07:54):
No, no, no, no, I mean that this is one
of those moments where you know, usually the the right
answers don't actively trade. Right, you're not you are not
a day trader, and that's I think true for for
most people. Right, if you're not a professional, just let
it ride right. Look for the long term, this is
really I hate using the word unprecedented, right, because you know,
(08:19):
we've had major economic downturn moments like this, but I
think it is unprecedented, at least a lot of the
experts are saying it is in the sense that it's
completely self cost. Right. There's no external thing that is
actually precipitating this market crash, which is what has happened
every other time, you know, during COVID nineteen eighty seven,
(08:40):
like all of these times, the seventies oil shocks, right,
all of these shocks were kind of huge global events
that ended up doing tremendous damage to the stock market
in the short term. This is something that doesn't didn't
need to happen, right, Like, this is something that is
entirely self cost. It's just Trump making this decision. And apparently,
(09:05):
according to some of his advisors who are speaking anonymously,
he is in his I don't give a fuck stage
where he's not listening to advisors. He's golfing, and he's saying,
you know what, this is what I want to do,
and this is what I'm going to do, and I
don't care if all of my closest advisors are telling me,
I'm taking the economy, which is a huge, huge shift
right from Trump Part one, right where he really cared
(09:28):
about the market and was really sensitive to what the
market was saying. And it's also a shift from what
we saw in the early days of his presidency in
Trump Part two, where you know, he was actually threatening
tariffs and then going back and we even had you know,
a Risky Business episode where we were talking about kind
of what kind of game theory is this right where
(09:50):
you where you where you threaten something and then people
give fake concessions that aren't really concessions and you're like, Okay,
just kidding, Like I've asserted my dominance. Let's continue on.
And now he's like, you know what, No, Like, I'm
going to do this for real. I'm going to do
this big. I don't care about the math. Obviously, we
know Trump never likes to say he's wrong, so he's
not going to say he's wrong this time around. They're
(10:11):
people He's like, oh, they just need to acknowledge the mistake. No,
he's never going to do that. But it seems like
there's been some sort of fundamental shift in the way
he's thinking about the strategically where he's just like, fine,
I'll tank the economy, no paid, no gain, but we
don't even know what the gain is. No.
Speaker 2 (10:26):
Look, I'm reading this book on Joe Biden called Fight
by Jonathan Allen and Amy Parns. It's a new book
that's out. That's very a very good book about how
people all around Joe Biden saw how Biden was losing
his fastball and his curveball and his breaking pitch and
(10:47):
his change up and everything else, right, and he was
really not performing very well at all. But Democrats got
stuck in a position where he was you know, he
was going to be the nominee anyway. But the point
is that, like when you get old and Trump is
the same age, now somebody as Biden was at the
start of his first term, you get even more stubborn.
You know, Can I be honest, Maria, you can. I
(11:10):
kind of miss Jared Kushner. I kind of miss.
Speaker 1 (11:16):
That's not where I thought that sentence was gonna go.
Speaker 2 (11:21):
I kind of miss having these more or less normal
Republicans right who who were close to Trump and trying
to steer them the digression and hey, you want to
win reelection, Hey you don't want to like undermine because
I think now, like all the other stuff that Trump
is trying to do, the cultural backlash and whatever else
right where. You know, I might agree with parts of
it and disgree with other parts of it, but like,
(11:42):
that's all gonna be jeopardized if people are like, you
won an election on inflation, and now you're tanking the economy,
particularly through by the way, people have this weird abstract
discussion online about like, okay, well, who has investments in
the stock market. Actually, by the way, about sixty percent
of people do have investments in the stock market, so
it's a pretty common thing. But also, like, you're gonna
(12:02):
about to make a bunch of shit much more expensive.
Children's toys are gonna become much more expensive because they're
made in countries like Vietnam in Southeast Asia that are
heavily taraffed. Right, you want to furnitu your home. A
lot of furniture is made abroad. You want to you know,
buy some yard, I mean all this stuff. You want
to buy avocados for your fucking burrito, right, Like all
(12:23):
this stuff comes from like foreign countries. I think actually
Canada and next come, now, have some of the more
exemptions in other countries. But like, it's gonna make stuff
notably more expensive to have people love the idea of
you love to have your nice American manufactured nikes, right, Well,
they're gonna cost a hundred bucks instead of one hundred bucks, right,
(12:44):
I can afford that, you know, I have a partner
who is a fan of nice shoes. Right. But, like,
this is gonna hit consumers hard. And although Silicon Valley
stocks are down more than the consensus, so are a
lot of consumer staples. It looks very recessionary. Booze and
tobacco stocks are up though, which is also a sign
(13:04):
of like despair. McDonald's is up, Taco bill.
Speaker 1 (13:09):
Up right now, When you when you see that those
are the stocks that are up, you start being nervous.
And then when you see things like the price of
copper is down, right, Like that is a very good
marker of recession as well, because it means that demand
has is going is going to go down. You know,
we've also seen in the last week with the kind
of the FED conference and the FED announcements that like,
(13:31):
you know, the FED isn't a really tough spot as well, right,
because like what what do you do right when when
inflation is going to go up? And you know you
but you, but you've got this person in the White
House who's making these decisions about tariffs, where like what
do you do? It's like a rock and a hard place, right,
Like keep rates the same, lower them, raise them, Like
(13:55):
there's there's no good answer here, and the FED is
supposed to kind of come in and try to stabilize
things and try to calm the worries. And there's you know,
if when we're talking about the game theory, when we're
talking about like the long run and what is the
strategic thinking here? I don't know, right, Like this is
one of those where like there's no good choice, right,
(14:15):
like which box are we trying to get to while
the tariffs are at this height? Like I don't think
we're just in a part of a game tree that
like I don't know how to resolve it. Well, maybe
there's some brilliant economists out there who does. But all
the brilliant economists I've been reading have no idea how
to get out of this mess. If Trump does not
back down.
Speaker 2 (14:38):
We'll be right back after this message. Yeah, Maria, I
think that we're in a real pickle, right, you know,
in part because like i mean, Trump claims this is
for negotiating leverage. And by the way, Zimbabwe did rescind
(15:04):
it's tariffs. It's relatively minor terriffs in the United States,
if we're starting at the back of the eye off
a bit and moving upward. But like, but there are
a few things here, what is that, Like this tariff
policy may literally have been implemented by an intern using
chat GPT. If you ask chat GPT or other large
language models, hey, come up with a quick formula to
(15:27):
determine tariff rates. Right, It'll sometimes just say, oh, let's
just look at the trade deficit. This is actually very stupid,
Like we have a big trade deficit with Vietnam because
they're a kind of lower middle class economy relative to
the rest of the world, where fairly productive about producing
toys and electronic equipment and you know, and certain types
(15:47):
of food stuffs, and there are things which we then import.
But the GDP per capita is I'm just gussing, like
four thousand bucks a year or something, and so like
not a big market for American made consumer goods. They're
also near China, Thailand, Japan, Korea, et cetera, where cheaper
to import, right and so like, so like you know,
that's a win win the unless you're concerned about unfairly
(16:07):
ebor practices, which is usually not the price of the right. Right,
that's a win win that they make stuff, We pay
for this stuff, We give them jobs. They do not
buy that much of our stuff. But that's okay, right,
I mean Trump literally doesn't realize that, like a trade
def it's not inherently a bad thing. So it's the
clumsiness of that rather than like if you had said
we're gonna have fifteen percent tariffs across the board, right,
(16:32):
the market would have reacted to that, but not so
negatively as these haphazard things. And by the way, the
fact that like this terraffs are these are going to
cause us so much pain, give us less leverage beyond
a certain point, right, because that it kind of becomes
a game of chicken where we have to like prove
that we have removed the steering wheel and now can't unflinched.
(16:54):
By the way, notwithstanding that they're contradictory rationales. So or
you'll see the Peter Navarro fucking idiot types I'm sorry,
Peter Navarro. You know, you'll see idiots like Peter Navarro
who are like, we actually need this for America's long
term growth or whatever else, and others say no, just
a negotiating ploy right, which are different. One is kind
of considering these are bad, but we want to actually
lower tariffs, and ones say no, tariffs are gonna be
(17:14):
want reshoring of American enterprise will through some kocamane scheme,
we will reduce deficits, even though if we go into
recessions that entails more spending and worsening the fiscal picture
long term. But it's contradictory and other countries to be like,
you know what, fuck you Donald Trump, right, we think
that eventually you'll be forced to blink by the market,
(17:37):
or eventually by Congress, which does is supposed to have
in the constitution authority for tariff policy specifically and for
funding the government generally. Now Congress also being idiots like
not quite in the same way that per Navarro is,
but like has delegated more and more authority to the executive.
(17:57):
It's occurred under both democratic and Republican administrations. Right, And
so there are lawsuits to stop Trump's tariffs. I'm not
a legal scholar. I don't know whether most of it
is legal and some of it violence principles. But Congress
does have the power to pass a lot saying stop this.
They will ultimately need two thirds majorities because Trump has
threatened and I think I believe would detail these threats.
(18:20):
They also need, by the way, to get on the
floor in the House, because the floor of the House
is more partisan. Right, the House Speaker Mike Johnson doesn't
want to put to me on the floor. You have
to do what file. It's called a discharge petition where
it takes thirty days. You get to get a bunch
of signatures, and then you're required to do that, right,
And that usually happens when the opposition party Democrats almost
(18:44):
have a majority in the House, but not quite, and
then a small number of sanaders or representers rather in
the governing party sign on. Then you're forced to like
actually take a measure to the floor. Right, and so
that would be at best like three days away. But yeah,
the economy goes into a recession, then I don't know, right.
People would say it's a high risk, high reward, bet,
(19:04):
I'm not sure what the reward is.
Speaker 1 (19:06):
Yeah, that's that's kind of the other part of it,
like what is the reward? But I was gonna I
was going to ask what you think that because to
me it seems like a pipe dream, this whole congressional
action thing, Like, yes, technically Congress can do something, but
do you have any kind of thoughts on how likely
that actually is, because to me, it seems like there's
just no way they're going to get sixty seven right
(19:26):
in the Senate. There's no way that the House is
going to work. Like. It seems to me like I
don't know what has to happen for Congress to actually
like get its shit together and be like, no, this
is not going to stand.
Speaker 2 (19:36):
I think the Senate is not. So You've already had
some Republicans sign on to different resolutions in the Senate
disapproving of Trump's tariffs, either generally or on canademics so specifically, right, Like,
I don't think sixty in the Senate, which would at
least pass a filibuster, is so hard. I'm not even
sure sixty seven is that hard. Right, It's the House.
(20:00):
It's the House where you know the first one third
of districts are really read because of jerrymandering and population
self sorting. Right, the House leader has not been on
board with this, although you know, you did have some
races last week, two special elections where Democrats outperformed Trump
numbers by about like seventeen points, right, the loss. But
(20:23):
these are districts that are extremely red in rural parts
of Florida. And so if that's true, then like, you know, look,
you'd be talking about like an epic route. I don't
want to put numbers on it and then get quoted
or misquoted later on. But like if you're like a
business deciding whether you know your restoration hardware, which I
mentioned because it's a bougie stock, but also the company
(20:46):
was hit hardest the first day after the tarif announcement, right,
their supply change is very big.
Speaker 1 (20:51):
During the call, during.
Speaker 2 (20:53):
The call, he also, you know, it's also like I said,
it's kind of bougie. You know, I don't really you
don't really need anything for restoration harder. Let's be honest, right,
it's not a store for necessities.
Speaker 1 (21:03):
I have a couch from there.
Speaker 2 (21:06):
You do good? I did. We can afford some rah furniture.
But like, if you're in a recession, those extensive couches,
you know, are as important as your Marlboro Reds and
bud Lights and McDonald's. And I'm somewhat joking, but like
you do see downshifting in consumer preferences from the upper
middle brow to the upper lower brown kind of everything
everything in between, and the luxury in for that matter too. Right,
(21:29):
So sorry, I lost between of foot what we're talking about.
Speaker 1 (21:31):
We were talking about that. We were talking about the
house and how likely it is that we can actually
get something down there. You were saying that one third
of the districts are incredibly conservative.
Speaker 2 (21:42):
If you're talking if your company planning for Okay, let's
let's reshore our supply chain restoration hardware. Let's find a
bunch of artisanal furniture makers in Knoxville, Tennessee, and Williamsburg,
Brooklyn in place like that, and long term will get
some costs down and it'll be good.
Speaker 1 (21:58):
Right.
Speaker 2 (21:59):
The problem is that like these terraffs could be rescinded
at any time, If not now, then in twenty twenty
six after the midterms. If not then then in twenty
twenty eight, when at this point I think I'd consider
Democrats a little bit over fifty percent to retake the
White House, right, So like, it's not like the sort
(22:20):
of long term stability that you would want. And in fact,
the public is against this policy and it might lead
to fewer tariffs in the very long run, but an
abdication of reliable American leadership and responsibility. So it's just
it's just kind of a mess.
Speaker 1 (22:36):
It is a mess. We were also talking about kind
of what the long term is. Now. There's one theory
that I've seen that seems at least worthy of consideration.
I don't want to say, you know, plausible, but worthy
of discussion, and that's that the long term here is
just like an autocratic poaragram, right, that the idea is
(22:59):
like we tank everything and then we give concessions to
the people who are nice.
Speaker 2 (23:02):
To think you've been nice. I don't buy this at all.
So I was wondering.
Speaker 1 (23:06):
That's why I said, I'm not going to say plausible. Yeah,
that's why I phrased it the way I did.
Speaker 2 (23:12):
I buy that Trump has strong autocratic tendencies. I buy
that some of the stuff he's doing on immigration and
free speeches, you know, autocratic. Right, And there was January sixth,
of course, right, I don't think this is a strategy
that you'd implement if you wanted to gain I mean,
I think this jeopardized the whole Trump agenda, right, and
(23:32):
this is at least going to have, like Congress habits
back up and the markets have its back up. And
you know, I've rarely seen everyone from maybe there are
a few people on the left that have eccentric views
about terrorists. They can go discuss some one blue sky.
That's fine with me, right, But like, you know, I
haven't seen the kind of what I call the Obama
base right, which is like everyone from the center right
(23:56):
who is pissed off at Bush to the left as
united against something as they are against Trump right now, right,
And like those are elites, those aren't rank and file voters.
Yet We've seen some decline in Trump's popularity ratings, but
like it will take some time for that to cycle through,
and maybe they can be averted if we somehow avoid
an economic downturn. But like this weakens Trump's powers a lot. Right,
(24:20):
people are willing to go along with a lot when
you're providing for them, right, and your checks are cashing
and goods are cheap and things like that, Right, even
in autocracies, economic crises can topple dictators, right. I think
the people who are worried about democratic backsliding are correct
to be worried about it. About I think the theory
(24:41):
is kind of the opposite of what this is likely
to do.
Speaker 1 (24:44):
Yeah. No, I think that that is people trying to
impart a goal and kind of an intentionality here where
there's none right, where it's just like a kid being like,
I want to do this. I want to be I
want to be the bully, and I'm going to do
this and you can't stop me. You try to stop
me right now. So I tend to agree with you
(25:06):
that that it seems a little bit too far fast,
that this is one of those levers and we'll be
back right after this. I'd love to shift the lens
(25:27):
a little bit, so so Trump. I think we've talked
about the fact that this it's very difficult to know
what the long term game theory of this is and
probably none right that he's just taking the economy doing
this and kind of inflicting a lot of damage. But
what about kind of the the other end of it,
Us as consumers or people who actually have power talked
(25:49):
about what Congress can do. But in this case, like obviously,
you never, you know, to take a poker analogy, you
never want to make decisions when you're tilted right, when
you're kind of when you're really upset, when you're suffering
big losses. You know, if you're looking at your portfolio
going down downtown, you know, these are things that are like,
you know, you've lost a big poker hand, your your
(26:10):
chips are dwindling, and that's not usually the time to
make big swings and to try to think logically. But
in this particular case, like this is one of those
things where not panicking and just kind of also sitting
back down and just letting it all play out might
not be the right strategy either, right, they kind of
(26:32):
don't just don't just do something. Stand there types of things.
But how do we you know, how do we kind
of square that circle? And how do we react without
tilting right, without overreacting? How do we try to navigate
this environment where there's just extreme uncertainty? And as I
think you're making a really good point when you said,
like we don't know, right if we knew for with
(26:55):
one hundred percent certainty, these tariffs are going to stay
for the next two years at least. Okay, then you
can make decisions in that context. But we don't know
right Like as of now, we know that Trump says
he's not backing down, but we don't actually know what's
going to happen. We don't know what the reactions are
going to be. We see certain signs, we see Europe
banding together, you know, we see the rest of the
world actually trying to figure out what do we do now?
(27:16):
But how do you think about it? Right? How do
you think about it when you're trying to make your
own decisions and try to be a good player as
opposed to a tilted player.
Speaker 2 (27:25):
Practice your Canadian accents that when you travel to Vancouver
or whatever. Oh sorry, they don't think you're an American.
I guess it's part of it.
Speaker 1 (27:34):
I can start my a's at the end of sentences.
Speaker 2 (27:37):
No, I think you know. Look, if you're a business
that relies on a heavily domestic supply chain, I guess
you're somewhat okay. You know, Goodyear Tire because they're very domestic,
has seen their stock price too well, but also because
people replace their tires a Good Year when they're not
replacing their cars, right and so like, even like the
bullish cases are barish and like, you know, it's very
(28:00):
very broad based. Yeah, I don't know if they are
good protections. I mean, you know, look, sometimes in a
recession things become cheaper at least I mean, it might
not be a terrible time in X months to look
at housing if you don't own well, because housing is
(28:23):
something where people are it's cyclical and like people are
you know, really reluctant to make like big ticket purchases
and like a downturn and you know, should not be
substantially affected by foreign goods, right. I mean, I'm sure
you're importing some building materials from abroad, but like you know,
most lumber we're cutting down right here in the United States, Maria,
(28:45):
so like, But apart from that, I mean, I think
you're like a little bit defenseless, apart from like having
to reason with yourself about like, oh am I a
person who is annoyed because this cuts into my retirement savings.
But I basically can live my life as I want to.
Or if you're someone where like it kind of has
(29:06):
causes a threat at short term time horizon is right,
if you're a small business owner that relies on imported
goods of different kinds, and or middle class customers who
are seeing their pocket books pinched. Then like, it's not
it's not great right now, right, I mean, probably should
shift you to having more of a long term focus,
(29:27):
I guess. But the long term provides a lot of
uncertainty too.
Speaker 1 (29:30):
Yeah, well, even some you know, I was actually looking
at some supply chains because I was very curious about this,
and see, even some domestic seeming products actually have components
that that you wouldn't think about that are imported. Like
some domestic water have plastic manufacturers for their water bottles
that are not in the United States. So even things
that are you know, good old American water, like good
(29:51):
old American this, the supply chains are incredibly complicated. And
you know, the people saying that, oh, well, bring manufacturing
to the US, I don't think they realize what that
actually means, right, Like, there's a reason that that manufacturing
has shifted. I don't think people want a factory in
their backyard. I don't think people want to be working
a lot of those factory jobs. I mean, I don't
(30:13):
think that those supply chains, and even if all those
things are like, yes, absolutely, let's change the supply chains.
How long does that take? Right, like in the immediate term?
Like that that is not that is not something that
we can do right away. So as individuals, like we're
relatively powerless, not powerless, but we just there is no
(30:35):
good advice in the sense that we don't know what's
going to happen. Do you think that there are people
who can do something right? Like, who are the people
who might be able to influence something other than Elon Musk?
Maybe unless kind of this result in Elon Musk being
thrust out of the inner circle because he's subtweeting Trump
and talking about how he thinks that we should have
(30:56):
free trade. So who are people who might actually make
a difference where they're decision making right now actually matters.
Speaker 2 (31:03):
The one hundred members of the United States Senate and
the fourhund and threety five members of the United States House.
I mean, or but I always am a little bit
reluctant to like have calls to activism. But you know, look,
if you're a person, whatever your political orientation, sitting in
a Senate or House seat where there's a relatively safe
(31:25):
Republican member or for the matter, there's a Democrat who's
being a little you know, oh terrorist, maybe it's good.
I don't know, I don't know. You know, call your
fucking congress person, right and say, like, especially if you're
somebody who's donated, or if you're somebody who runs a
small business in that district, say this is gonna fuck
me up. Where this is not going to help the
working class, right, this is not going to help the
(31:46):
middle income consumer. Yeah, I mean, let you know, let
Congress know. To be honest, I think they probably do
know that, frankly, but like because they are aware of
what's going on in their district and this is not
some abstract cultural warfight. But Congress is responsive to to
don't call somebody not in your district, right, Yeah, pick
up the phone with the person who's who represents you
(32:09):
and let them know how you feel.
Speaker 1 (32:12):
Yeah. No, I think this is this is definitely a
moment for a call to action. There have been others,
but this is one where it could actually be effective.
Speaker 2 (32:19):
Right.
Speaker 1 (32:19):
It's it's not particularly effective to you know, call your
Republican Senate or a representative, like if you're a Democrat
and it's a democratic talking point, but something like this,
like I actually think that this could really be effective
because you know, they they worry, they need to be
they need to be supported within their districts as well.
(32:41):
And this is one moment where I think that across
the board, we're seeing people, you know, people really not happy,
and this is I think this is also actually an
interesting opportunity to try to reach kind of the everyman
and say, look, you know, Trump isn't working for you,
because this is something where I think you can actually
reach a lot of people across the divide and say, hey, look, no,
(33:04):
this is not this is not good for your average American.
This is not good for like bottom line of Joe
from from where from Where's Joe from Pennsylvania? Okay, Joe
from Pennsylvania. That this is not good for his for
his pocket for his bottom line, for his retirement, for
(33:25):
his ability to buy food, that that this is just
not good all around. And so that might be one
silver lining if people actually do finally mobilize and get
Congress to get off their ass and do something and
stand up to Trump and say, look, these tariffs are
not good for the country and not good for the
global economy. And if we want America first. You know,
you don't want you don't want to have to have
(33:45):
America alone and everyone else against us.
Speaker 2 (33:50):
Marie, I think we need to wrap this up because
I literally have a train to catch on going to Philadelphia.
Speaker 1 (33:55):
Are you going to Philadelphia for poker night?
Speaker 2 (33:58):
Not for poker, no poker, for an event at of Pennsylvania.
Speaker 1 (34:02):
Okay, we'll have a wonderful event, and if you want
to join me in Philadelphia in two weeks, I'll be
going there for poker. For the poker so.
Speaker 2 (34:10):
See if the partner gives poker permission. We'll see about that.
The series is coming up, which I intend to spend
a fair bit of time at, so we'll see maybe.
Speaker 1 (34:19):
All right, well, well that sounds good. Have a very
safe trip to Philadelphia, and I hope that we'll have
better news for our listeners next week when it comes
to the markets. But at this point hope doesn't get
us very far. Let us know what you think of
the show. Reach out to us at Risky Business at
Pushkin dot fm. And by the way, if you're a
(34:42):
Pushkin Plus subscriber, we have some bonus content for you.
We'll be answering a listener question each week that's coming
up right after the credits.
Speaker 2 (34:50):
And if you're not subscribing yet, consider signing up for
just six ninety nine a month. What a nice price.
You get access to all that premium content and ad
for listening across at Pushkin's entire network of shows.
Speaker 1 (35:02):
Risky Business is hosted by me Maria Kanakova.
Speaker 2 (35:05):
And by me Nate Silver. The show is a co
production of Pushkin Industries and Heart and Media. This episode
was produced by Isabel Carter. Our associate producer is Gabriel
Hunter Chang. Sally Helm is our editor, and our executive
producer is Jacob Goldstein. Mixing by Sarah Bruger.
Speaker 1 (35:21):
If you like this show, please rate and review us
so other people can find us too. Thanks so much
for tuning in.
Hosts And Creators
Maria Konnikova
Nate Silver
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