75. Trump’s Act of War: Tariff Liberation Day

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Hello, and welcome to the Rest is Politics U.S.

with me, Anthony Scaramucci.

And me, Katty Kaye, in the land of recession, Anthony.

Yeah, it's a land of liquidation, actually.

So it turned out that the Liberation Day of Mr.

Donald Trump,

this is the Thursday morning after it.

Trump has just dropped the hammer on global trade.

He calls it Liberation Day.

Us here on Wall Street call it Liquidation Day.

And we're going to be talking about tariffs, big, brutal tariffs aimed at over 100 countries.

China smacked with a 54% total tariff.

The EU at 20%.

And of course, even allies like Japan are north of 20.

It's hard to really discern exactly what they are.

I'll get into that with people if they're interested.

We're getting hit left and right.

And guess what?

The markets are freaking out.

And your erstwhile partner has been up since 4 a.m.

trading these markets, trying to protect Skybridge Capital customers from sheer insanity, while the cabinet members and the Senate, although I do respect Rand Paul for what he said last night on Fox News, that this is absolute insanity, is what Rand Paul said.

And of course, he's 100% right.

But the markets are freaking out.

Gold's at a record high.

Stocks are tumbling.

World leaders, I guess they're furious, Caddy, but they're also like, wow, the president of the United States is not well, and he has willing accomplices that want to do something very destructive to the world.

So before we dive into all of this, Caddy, Dom and Fiona, our producer, said you were going to explain everything.

And so, you know, I need you to explain to me.

So, I'm going to shut up and I'm going to let the very brilliant Caddy Kay explain

what the hell is going on in my wonderful country.

Look, I think what we are seeing is the consequence of 30 years, 40 years of Donald Trump's ideological view that any kind of trade deficit that America runs with any other country is a rip-off for America.

He doesn't buy the argument that Americans buy something from the Philippines and that is a fair trade.

He thinks that is the Philippines ripping off American consumers.

And what he did yesterday was part of him and his teams, and he is surrounded by people in the White House who have this very ideological purity about tariffs, and they want to transform

global trade system at whatever cost.

And the President has said this to the American people.

There is going to be pain, but he also believes that this is going to get better, that manufacturing will come back to the United States, that jobs will come back to the United States, that they will raise revenue.

That's another reason that he's given, basically, three reasons he's given.

Bring back manufacturing to America, bring back jobs to America, and raise revenue from foreign countries who are selling their goods into the United States.

I would add one other reason to this, and I was texting late last night with somebody who worked right through the first Trump administration who pointed out, look, this can change.

I mean, to make you feel a little better on Wall Street, what Donald Trump says is a decision is only a decision for as long as it's a decision.

There are rooms for negotiation and rooms for changes in this very draconian package of tariffs that have been implemented on every single country in the world because there is a 10% minimum tariff now, a cost, a price of entry, if you like, on doing business with the United States.

But that he said something interesting, this former official, which is Donald Trump needs to prove that he is right

when everyone says he's wrong.

So every economist that you speak to, all of your Wall Street traders will say this is, as you have said, this is a disaster for the American economy.

It's going to raise prices.

It's going to reduce competitiveness for American producers, it's going to hurt American consumers, and it could possibly tip the country into recession.

Donald Trump doesn't believe that's the case, and in a sense, he's daring the world economic system to prove him wrong.

And I think the fourth reason for me, the kind of important psychological reason, is that this is hubris.

This is arrogance.

on the part of this group in the White House who says, all of you globalists have got it wrong for decades.

You were the ones that told us that free trade deals were right.

You were the ones that said that American jobs would survive opening up our business to China, opening up the global economy.

You got it wrong then and you're getting it wrong now and we need to prove that we are right.

I don't know that this necessarily lasts because I don't think Donald Trump is going to want to see the country go through a total bloodbath but it's almost like this is a chance for him to prove he's right when everyone has said he's wrong.

What does it look like from Wolf from the sunny position of a financial trader?

Well, I'm just happy to keep my hair at this point.

I'm just hoping it'll stay on top of my head.

And thank you, by the way, for joining us this morning because I know this is not an unbusy day for you.

So I appreciate you making the time.

Hopefully the hair will stay on top of my head.

And

I got some good.

I was in London, as you know, this past week, and I got some good podcasting feedback that people like my lists, Katie K.

So when I say three things or four things,

people like the list.

So I'm going to, I have three.

I prepared three for you as I was sitting here waiting for trade confirmations at 4.30 in the morning.

I said, what the hell am I going to say when I get on this podcast?

So

here are three things I'd like people to consider.

Number one, the legendary investor, Warren Buffett, in his mid-90s now, liquidated his portfolio about six months ago.

And again, not the entire portfolio, but he raised over $350 billion of cash.

And he said that if we are going to impose these tariffs, that this would be a declaration of war.

And so I just want to give people a little bit of history here.

The last time the United States did something this stupid was in the 1930s.

Herbert Hoover, Smoot Harley, we raised tariffs like this.

We crippled the entire world's trading system.

And we had a deep recession turned into a global depression.

And it led to the systemic rise of fascism.

So we're going to talk a little bit about the Orban nature of this in a second.

Second thing I want to say is that when you do things like this from America, which are this unpredictable and are this unstable, you are now changing the calculation of risk in the global society.

So now you're saying to yourself, okay, the American government and the policy walks there

used to be bipartisanly predictable.

Yes, a little more taxes for Democrats, maybe a little less taxes for Republicans, but generally bipartisan predictable.

This is outside of any standard deviation measurement.

This is four or five sigmas away from anything that the Americans have put together in the last 80, frankly, 90 years.

And so this is going to make the risks in the market go up.

I just want everybody to understand that.

The last point, even if your person that you're speaking to is correct, if Trump reverses course now and he says, you know, I've got this wrong, I'm going to reverse course.

Well, he won't ever say he's got it wrong.

He'll say the other countries have capitulated.

Yeah, something, some nonsense that will come out of Trump's mouth.

It doesn't matter, Caddy.

It doesn't matter.

The damage, the trebling damage has been done.

People are now looking around saying, okay, is this really what's going to happen now in the United States?

Okay, I got it.

50% of the people voted for him.

He's got willing bobbleheads.

I would call them sycophants, but just look at my head.

If you're on YouTube, you can see my head.

You have willing bobbleheads.

You've got guys that know better.

Lutnik knows better.

Besent knows better.

By the way, I heard last night that Besent was taken out of several of these meetings.

And I don't want to bore people on a political podcast of how they went through these tariff calculations, but they are ridiculously bizarre.

They took the trade deficit as part of the function and they said, well, this is a trade barrier.

A result, this country has a 70% tariff on us, so we're going to apply a 35% tariff to them.

It's not even logical what they did.

There's no way to explain it.

They sent the Secretary of the Treasury out last night to try to defend it.

He couldn't.

You've got Howard Lutnick on CNBC as I'm speaking.

He's trying to defend it.

He cannot.

This has done systemic damage.

This is not something you can look at and say, oh, Trump got on the wrong side of the bed and he did this.

And then the next day he did that.

No.

You're now telling people that you're a very malevolent guy and there's obviously something sinister behind what he's doing and we should unpack that for people.

What is the potential sinister thing that this man's trying to do to his own country and the rest of the world?

Let's get at that into a second and there's a very interesting quote that he said yesterday that I think is worth repeating.

But just quickly on that calculation thing, because there's a lot of confusion about how that calculation was come to and I want to just clarify and see if I've got this right compared to what for what you you just said.

So, let's say, let's take our lobsters, our nice main lobsters.

I sell you 10 lobsters every year.

You buy from me three lobsters every year.

Does that mean in this calculation that I have 70% tariffs on you?

Is that what this is?

Is that how they came to this calculation?

It's sort of how they did it, but it's a little bit more like this, okay?

Let me see if I can describe it to you.

The tariff on China is 67%.

The EU tariff on that board that he was holding.

It looked like a game show.

He looked like the evil Moses holding up the 10 evil commandments.

But the reality is that he took the $401 billion

of imports from China, right?

And then he minused the $137 billion of exports.

And so if you take those two numbers, you get 67%.

Right.

Okay.

And so that's where he came up with the tariff number.

Yes, because it's no, he's not thinking this is a free and fair trade deal.

And I understand there are countries around the world that put barriers to entry on American products, either through their currency manipulations or because they have just tariffs themselves.

I get that.

But he's not, what Trump just fundamentally doesn't understand is: look, Americans buy a shitload of sofas.

They buy a lot of

stuff for their house, and maybe the Chinese just buy less American stuff.

And that is the price of doing business.

You're going to end up with a trade deficit.

But I mean, listen, if William Buckley were alive today, great conservative, he would say that the trade deficit is a sign that we're drawing resources, pulling them into this country, and the country is growing.

He was not concerned about the trade deficit.

Donald Trump, in his infinite wisdom, his Derning-Kruger syndrome, where he thinks he's smarter than everybody else, but he actually isn't, he gave lectures on Oprah Winfield's show 40 years ago saying that we needed to tariff the world.

He's now got the opportunity to do what he was saying.

Remember, Gary Cohen stopped him.

Stephen Mnuchin stopped him.

In the first Trump administration.

There was nobody in the room.

There were no willing accomplices in the room that would allow him to do what he's doing right now.

But just remember something about this.

And I don't want to overly confuse people.

But if you trade weight the tariffs in terms of the proportion of stuff that's coming in and the proportions of this coming out.

And

the EU ministers will tell people this in Europe.

The trade weighted tariffs in China for the United States are about 4%.

In the EU, the calculation is roughly 3%.

And of course, Vietnam is a little higher.

It's around 6%.

But the point is they're not the numbers.

that Donald Trump said they were.

He took the amount of things that we're importing, he subtracted the amount of things that we're exporting, and then

he did division.

I'm sure someone had to do it on a calculator for him because he probably can't divide at this point in his life.

And he came up with those numbers.

Now, there's reasons why Robert Lighthizer, you may remember him, Caddy Kaye, he was the U.S.

trade representative.

He wrote the book that No Trade is Free.

He wrote the book, No Trade is Free.

There's reasons why he's not in the administration.

You can't even explain this to your counterparty.

Okay, so obviously,

would you, as a rational person, would you like to have a good relationship with your trading partner?

Anthony,

I know you're upset about this, but if you bang the table, our poor listeners are going to get their ears banged in as well.

How do you know that that's not my heartbeat, Caddy?

It could be my heartbeat just blowing through the

cavity of my chest.

It corresponds with your hand.

I mean, it may be an extraordinary heartbeat you have, but it's corresponding with your hand.

You're doing Italian, Caddy.

So I sit on my hands.

This is hard for you.

This is very hard.

If I sit on my hands, I'll be silent for the rest of the podcast.

All right, but I'm just not going to bang the table anymore, but I'm just going to let you know that there's no rationality to this.

And let me flip it back to you.

If you were my trading partner, wouldn't you want to have a good relationship with me?

How could you show up with manufactured numbers like this?

There's no, so Caddy, I'm coming into the room.

I say, Caddy,

your tariff on me is 66%.

And you look at me like, what?

Where are you getting that number from?

Yeah.

I mean, I think that's reaction that you're having already.

I've got a text from that just actually as we've been recording this, an official from the European Union texted me to say, look, make no mistake, there will be retaliation against this.

We will respond to this.

We're assessing it at a moment, but the tariffs vary wildly across the European Union and the types of numbers that Donald Trump has imposed now on all the countries of the European Union make it almost impossible for leaders not to respond.

I mean, he's put political leaders, particularly anyone running for re-election, right?

I mean, just look at Markarney up in Canada, but anyone who's running for election or is in a politically vulnerable position has no choice at this point but to respond in some form.

So you can expect this official at the EU is saying that there will be a firm and proportionate response from the European Union.

But the bigger point that you just made about allies, I think, is the critical one.

If Donald Trump believes, and I don't even know that he does believe this in this term in the way that he believed it in this first term, that China is the kind of big existential threat to the United States, then why are you putting tariffs on Japan of 24%?

Why are you alienating these small but vibrant Asian economies?

Cambodia has a tariff of 49%, Vietnam of 46%, Sri Lanka of 44%,

Australia has been tariffed, a key ally in the region.

You would think that if you want to really isolate China, which is probably the biggest offender when it comes to having an unlevel playing field in the trade world, then you would want your allies on board with you,

not only the European Union, but Asian allies as well.

I think this

move, we've mentioned this before, the push around the world to have your own security umbrella now, including nuclear capabilities, will be accelerated by what Donald Trump announced in the Rose Garden yesterday.

That if you are in Japan right now, if you are in South Korea right now, if you are some of the European countries that are looking at this right now, to what you said earlier, America is no longer a reliable ally.

And the chances of this leading to long-term manufacturing investment in the United States are pretty small because, hey, it takes you five to ten years to get a factory up and running, in which time you've had midterm elections, a presidential election, potentially another midterm election, potentially another presidential election, and America has shown it has the capacity to seesaw.

It's no longer, like you said at the beginning of the program, it's no longer level.

So even if you wanted to make your long-term strategic investment planning based on what happened yesterday, you'd be foolish to do so because these tariffs could go.

So why would you suddenly invest billions in a factory in Iowa?

It doesn't make economic sense, but it does an awful lot of security and trading damage to America around the world.

Again, if you're going to do this and you're going to make the argument that they're going to now invest and put factories in the U.S.

after you're being this unfriendly to them,

they're not going to do that, Katie.

I wouldn't do that.

Think about it from a capital allocation perspective.

What was in here, though, was a high, high level of meanness.

He went to some of the smallest countries in the world, countries that the United States has tried to help foster democracy and economic growth.

We are one of the richest, still frankly, the richest country in the world.

And

there was a benevolence to our soft power in certain areas of the world.

It's a flawed country.

I'm not saying that it's the end-all-be-all.

We've got problems we have to work out.

But there were State Department and Treasury directives to help the world.

Imagine even Bono, the legendary Irish singer, would tell you that George Walker Bush did an enormous amount for Africa, dumped a lot of money into Africa to try to save lives and things like malaria and other levels of pestilence.

Trump has gone through the list, and literally he is not Ebenezer Scrooge because there's no hope for Trump, but he's Jacob Marley.

He's Dickensian.

He's a mean guy living in a rich manor house where he wants to close off the manor house now, and he wants people to pay to enter the manor house.

And there's no benevolence about him.

And I'm telling you, as an American, it'll hurt our businesses around the world.

It'll hurt our physical standing around the world.

It will hurt our troops around the world.

He's lost the plot of what America is to most Americans.

And so I don't understand how we got here with this specific issue because I would have thought there were willing people.

And I will praise Rand Paul, who's generally a sycophant to Donald Trump.

Rand Paul got up and said, okay, this is absolutely terrible.

He conjoined with the Democrats.

He caucused with them.

I think Murkowski did that as well.

Perhaps Susan up in Maine did that as well.

And they're going to try to stop the tariffs with Canada.

But this is an act of war.

And

this is Donald Trump as Victor Orban.

Let's take a quick break and we'll come back and talk about what we think is going on in terms of the politics.

What if I don't want to take a break, Caddy Kay?

What if I don't want to take a break?

As long as you don't bang the table, you have to take a break because we have to hear from the people who pay the bills, and we will be right back.

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Welcome back to The Rest is Politics US.

I'm Catty Kay on the week of Liberation Day in the capital of the liberated country.

Katty, you're saying this with too much enthusiasm.

I'm almost,

I'm Anthony Scarabucci, but I just got to let everybody know I do not feel liberated today.

I feel liquidated.

I don't feel liberated.

I've heard lunacy day, liquidation day.

Liberation Day is not a word that's being used very much.

Okay.

Before you get going, could we send out an all-points bulletin for Howard Ludnick?

I'm paging.

Commerce Secretary?

Yes, I'm paging.

Paging in the Rose Garden yesterday.

He was called upon.

I don't believe that was him, Katty K.

I think that was like a Putin-esque body double.

There's no way that could have been Howard Luttnick.

So I am paging with the real Howard Luttnick, please fly down to Washington.

Because the real Howard Luttnick hated Taros, and the real Howard Luttnick was like a Wall Street guy that had like Gary Cohen, Steve Mnuchin, common sense.

So just paging Howard Lutnick, if you're out there, please return to Washington and replace your body double.

So he's been taken over by Putin and put into this kind of model of himself.

I know.

It could be an interesting thriller.

It could be, you know, if you want to co-write a thriller with me, it's right up there with a good plot.

Well, look, I think what's worth talking about in this half is a couple of things.

One is, what do some politicians think this is really doing to America?

What is the big picture on the politics?

Because I've had a couple of very interesting texts come into my phone overnight.

I'm sure that they've been sucked into some signal group by people in the Pentagon already.

But anyway, that's what a couple of people have raised independently with me.

And then the other thing is,

how long and how far is Donald Trump prepared to allow the pain to go before he reverses course if he does reverse course?

Assuming that this leads to the kind of catastrophe that you were talking about in the first half.

I'm a little wary of this because I find analogies with other countries and analogies with other political systems always make me a little nervous because, obviously, America is a big, complicated country.

And it's a bit easy sometimes to say, oh, this is the kind of beginnings of autocracy in America or the end of democracy in America.

But I'm just struck by the fact that I've had a Democratic former congresswoman who actually was born in Vietnam texting me overnight.

Stephanie Murphy, she'll be happy for me to say this.

She texted me.

When the communists took Vietnam, they eliminated the intelligentsia, they engage in overt corruption, they wrecked the economy, and they got more power because of it.

Look at Hungary, look at Turkey.

A weak economy, suffering electorate is by design, not a bug of authoritarianism.

I thought that was such an interesting comment because Congresswoman Murphy is somebody who is super bipartisan.

She is very fair in her assessments.

She is not prone to hyperbole.

I've also had a Senate staffer, similarly, very centrist, very straight down the line, texting me about how the erosion of the power of the Senate and Congress is part of the design of the weakening of the state.

And if you're trying to create a powerful executive and put all of the power in the White House, which I think is one of the things that Donald Trump is doing with Doge, it's one of the main aims of Doge, then weakening the economy, making the people suffer economically,

helps weaken the organs of the state as it should be functioning and puts more power into the hands of the presidency.

I don't know how I feel about that, honestly, but I'm just struck by the fact that these two comments came into my phone overnight from people who I respect from the center of American politics who are clearly worried about what they're seeing.

I believe it actually, but I want to push back on myself and I want to push you back a little bit because I think what's happening right now is if you say something like that, it's so sacrilegious to the ideal of what America has been, to the spirit of democracy, the peaceful transfer of power, the general consensus on policies like containment, general consensus on policies like free trade, you know, Ronald Reagan, the champion of free trade, Bill Clinton a champion of free trade.

And so you say to yourself, okay, I'm going to get on this podcast this morning and say the age of America is over and there's a man in America that's trying to burn down America.

He's Nero.

He's trying to burn down America, weaken the system, weaken the economy to take more control.

It sounds sacrilegious to me.

And so am I being too emotional and dramatic to suggest that it's happening, Caddy?

Or am I being rational to suggest, okay, this is inside the potential thought process in the Venn diagram of what Donald Trump's doing, this is one of the boxes that we have to take seriously.

Yeah, I mean, I had always thought two things.

One is that I didn't think Donald Trump had a big strategy like that.

I think he wanted to have vengeance on the 2020 election, show that he could win for a second time.

And I remember you and I discussing this before the election.

There was a scenario we both believed was possible where he would win in 2024 and then just go down to Florida, play golf, doesn't actually want to deal with the running of American government.

But we've both been surprised by the degree to which this is a far more ideological and rigorous administration than it was the first time round.

And he has surrounded himself with ideologues, not with people who are more conventional politicians who attack to the norms and conventions of democracy, but people who really do want to upend the system.

People like Stephen Miller, people like Peter Navarro,

who are with him in the White House, talking to him all the time.

And the people who are more conventional seem to have very little voice or very little access to the President's ear.

So you know he's getting a feedback loop of this.

And we know that he's always had a flirtation with authoritarians because he would like to be able to act like they do without the checks and constraints.

We heard that in the first administration.

He wanted to be able to do what Erdogan did in Turkey.

He wanted to be able to do what Putin did.

He loved the military parade that he saw even in France.

So I guess you could put all of that together, the ideology that he has, the attraction to authoritarianism that he has, and a sense of, okay, well, why not make America more like this?

And then just last week saying, actually, maybe I'm not joking about trying to run for a third term.

And then underpinning that, I mean, I think if you pushed him on this, he would still say, look, what I am trying to do here is make America a stronger, more independent country, and this will work.

He probably wouldn't buy the fact that this is going to make America weaker.

He would insist that this is going to make America stronger in the long term, which gets us to the question of how far has he allowed the pain to go?

How long will he allow the pain to go?

How deep and how long will he allow this pain to go on for?

And he's already said there is going to be pain before he changes course.

I mean, if he's totally ideologically ideologically committed to this, the logical conclusion, well, he lets it go right up until the end of his term.

I mean, if we are in a recession for the next four years, he hopes that J.D.

Vance gets in, commits himself to this continuing policy, and this is the path he wants to put America on irrevocably.

He doesn't want anyone else to come into power and turn it back again.

He wants somebody only in his image who's going to keep these policies going because he genuinely believes this is the way to make America stronger again.

I guess the reason I'm reacting the way I'm reacting is there's only one way that this can sustain itself.

And that is if he has

a mini Trump.

Okay, so maybe it's Donald Trump Jr.

is going to come in and try to run the presidency after this or Eric Trump or something like that.

I mean, I know J.D.

Vance is auditioning to try to out-trump Donald Trump, but he doesn't have the personality to galvanize the people.

I don't think this is the majority of Americans.

I think there are 10% of the Americans that said, you know what, I can't go with Harris.

Sorry.

And I don't understand what the Democrats are doing.

They're in disarray.

It was okay the first term.

It kind of was nuts with the tweeting, but we survived it.

I'm going to hold my nose and vote for him.

Now that 10% of those people, many of which are on Wall Street and some of them I know from my hometown, are like, okay, wow, that was a mistake.

But still, the Democrats really didn't provide me with a great set of choices.

But I don't like Donald Trump at this point.

His approval rating on trade now is down to 36%,

so I want him out.

But the question is, if Trump says an Orban-esque thing, hey, man, I'm in, I got in,

and now I'm in.

You know, a ridiculous statement to say, Caddy, but I'm going to say it to you.

The country would have been better off with Trump being re-elected.

If he was re-elected in 2020, he would have still had a lot of Republican holdovers that would have constrained him.

We wouldn't have had the unfolding nightmare of the January 6th situation, and we wouldn't have Donald Trump challenging as he is now the election integrity of the entire system.

So, the weird thing about it is him not getting re-elected and then him coming back into power has made him an even bigger villain.

And they also spent four years out of power very carefully coming up.

How to take over Congress, how to take over the donors, how to take over Washington, which is clearly what we're seeing play out.

We haven't mentioned, and we should do before we go, these because it gets on what you were just saying.

To your point, Anthony, I mean, there were three elections in America this week for the Wisconsin Supreme Court, two races in Florida.

Democrats did better than expected in Florida.

They won in the Wisconsin Supreme Court race.

We'll talk about that more in the Q ⁇ A.

But it was a suggestion that there is a fight back now against Trump, that there is some sort of repudiation of Donald Trump's policies.

And I wonder at the end of this week, looking at the combination of the tariffs and what the market response has been, those elections in Wisconsin and Florida that Democrats did better than expected in, the poll ratings that you've just said showing that Donald Trump's approval ratings on trade are sinking, the fact that Joe Rogan has gone on a podcast and said, look, I have serious questions about these deportations that the White House is enacting.

Do you think Donald Trump is getting to the end of this week and thinking, I'm on the right path, this is where I want to be, everything is going great?

Or do you think any part of him is thinking, wow, maybe I need to start reining it in a bit because I don't like the way my approval ratings are going?

No, I think he thinks he's on the right path.

I think he's very happy.

He took $800 million for himself out of his meme coin.

He's telling people he's going to sell his $2 billion stake in Truth Social.

I think he's cashing in for himself.

Remember, the two things that Trump cares about are intention, which he's getting a lot of that.

Everyone talks about him, and money.

And so I think he thinks this has been a very successful couple of months for him and that he may or may not go in a different direction here.

He has his minions out this morning saying, come to the table and negotiate.

And if you're the first one to come to the table to negotiate with us, you'll be treated more favorably than other people.

Like the big bully is on the block.

I don't know if you ever saw It's a Wonderful Life, but it's like if Potter took over the town and turned it into Potterville.

Potter's there now.

The George Bailey hero figure is gone.

That represents quintessential America.

And now we have literally this idiot Donald Trump who is as if Forrest Gump got married to Jacob Marley and they had a baby named Donald Trump.

And he's sitting there now.

I'm just telling you who he is, okay?

And I just want to tell you how stupid he actually really is.

We have a British Indian Ocean territory that's actually the designation of a country, and there's nobody living there except U.S.

troops.

They're at a base called Diego Garcia,

and he's taxing the American military base 10%.

So this is the meanness of Donald Trump.

He's gone down to every minuscule country in the world, even countries that have no people.

Somebody said last night, you know, the penguins have been ripping us off, Caddy K, so we've got to put a 37% tariff on them.

So to me, I think that they're a little nervous.

They're sending out floaters in the world now.

Please come and negotiate with us.

Let's end the tariffs, that sort of thing.

But I don't think Trump cares.

I think he is fiddling.

I think he's at the South Portico watching the country catch fire, and he's on his fiddle.

When we talked in the first half about what the ambitions were, bringing back manufacturing, raising revenue, creating jobs in America, and I said some of it was just for Trump about proving proving himself right, about showing other people that he was the one that had got this right.

However, many people, in fact, the more people who say he's wrong, the more people who say there is no economic theory of this case, the more he wants to show them that actually Donald Trump is the person who is right.

It reminds me in the first term of when I went into the White House and I had a conversation with Jared Kushner, who said, We are going to fix Middle East peace.

And the reason we're going to fix Middle East peace is because we have Donald Trump and no one can negotiate like Donald Trump.

He is the only person in the world who can get this right.

And that sense of hubris that Trump is the one who is always right, I think is combined with what you just said.

And it's why his minions are out there today saying, okay.

There is room for negotiation.

We can get some of these tariffs off.

But he is also the bully.

He's the one who wants people to come as supplicants to him, right?

They want him,

he wants the European Union.

He was so rude about the European Union in the Rose Garden again.

I mean, he really hates the Europeans.

More rude about the European Union than he was about anyone else that he put tariffs on.

But he wants them to come grovelling.

And that is what other countries, because the American market is the biggest market, because Americans do buy more stuff from around the world.

Other countries are going to have to wrestle with that now.

How much do they stand up to him?

How much do you stand up to the bully, like Mark Carney has done?

And how much do you decide you're going to go to his

table and take your hat off and bow your head and say, we will do whatever it takes.

And even if it's not a very big deal, you'll eat humble pie and that will get your tariff rate lowered.

And that's the choice facing America's allies right now.

But you know what?

Even if they do that, and even if they get those tariffs rate lowered, it leaves a bitter taste.

McKay, I know where you have to hop, but I just ask you this question.

What would happen if nobody came to the table?

What would happen if people said, okay,

America wants to be isolated.

America wants to be alone.

Let's figure out a way to trade.

It's 3.5%, 4% of the world's population.

Let's figure out a way to trade around America.

That takes time to put in place those trading arrangements, right?

To build up those new markets.

And in the meantime, your own economy could be hit and will still be hit by the tariffs.

And if you are facing an electorate that is getting unhappy, that has nowhere to sell their goods and still has high tariffs from America.

It's a political calculation that they'll be making.

It's interesting, while we've been recording this, I was texted a list from somebody at the European Union who's basically run through what everybody, America's trading partners, are planning to do.

EU preparing retaliatory measures if talks fail.

China firmly opposes tariffs, will respond.

Japan calls tariffs regrettable, promises swift action.

Germany calls for EU pressure on Trump.

South Korea orders emergency support for affected industries.

I mean, every country in the world, to your point about tiny islands that have no trade with America, every country in the world is trying to figure out how to respond to this.

And I guess that's what Donald Trump wants.

He wants the attention of the whole world.

And he got it.

He got it by standing in the Rose Garden yesterday and upending the global trading system.

People are asking me why some of my friends are pro-tariff and why I'm not.

And the simple answer is: once you start doing that, once you start that escalation, it takes years to go back and it takes years to reestablish trust with a whole group of trading partners.

And so it may sound good on paper to some people, but it has never worked historically in practice.

So Smoot and Hawley got together in the 30s and said, let's protect American workers.

We're going to have these protectionist tariffs on incoming goods.

It'll protect American workers.

And then what happened is the other side said, okay, we've got to protect our workers.

And so the goods stopped on both sides, and all workers lost their jobs.

There are all sorts of wars.

There are military wars, there are cyber wars, and there are clearly tariff wars.

And I think we're at the beginning of one.

We are going to leave it there.

And we will be back, of course, next week on Friday, but also on Sunday, if you'd like to join us for our founding members' QA.

We'll get into that Wisconsin race and what it means for the Democrats and how they're responding.

Join us for that if you would like to sign up.

The restispoliticsus.com to become a founding member.

We'd love to have you.

Thank you so much for listening, everybody.

Another busy week in Washington, D.C., the capital of Liberation Land.

See you next week.