What in the World is Happening with Your 401(k) & Tariffs?? | Jessica Yellin with What We Need to Know

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Welcome back to We Can Do Hard Things.

This conversation with Jessica Yellen is all about how to make sense of the the fact that your 401ks are crashing, that the markets are in free fall all over the world, and

why that is happening and what you can expect next.

We recorded this on Wednesday morning and literally the moment we ended our recording, Trump, who had insisted that these tariffs that we're talking about were here to stay and that he would be unswayed and he wasn't backing down and this was not a bluff, quote, I know what the hell I'm doing, end quote, announced a 90-day pause on tariffs to our most friendly countries.

Turns out, I guess, he was swayed.

We talk a ton in this podcast about how uncertainty is the enemy of business and the markets and the economy and ultimately our own houses and our own budgets, and how our credibility in meaning what we say and saying what we mean as a nation in terms of policy and plans to the rest of the world is at stake with all of this tomfoolery.

It is welcome what Trump did in pausing the 90-day period for the most friendly countries, but it also underscores exactly what we're talking about here on this podcast that you're about to listen to, about the administration's literal miscalculations and the incredible damage that they're doing to the reliability of the information on which markets and economies and families depend.

It's also important to note that this 90-day pause that just got announced is only on the highest tariffs.

And we talk about that in the podcast.

They include tariffs on our top trading partners, but we're nowhere near out of the woods.

They've kept in place 10% across the board, and they raised tariffs on China to 125%.

And we talk about in this podcast, the implications of that beyond even the economy in terms of international relations and a trade war with China.

So listen up.

It's all evidence of the same and hear what you need to know for your wallet and your 401k and your bottom line in terms of what the hell is going on in DC.

Thanks.

Welcome back to We Can Do Hard Things.

This is Amanda and Jessica, and we are here to do what we do once a week, which is to tell you what in the world is going on in the world and to tell you

the biggest news you need to know and why it matters and to

shoot it to you straight so that you can receive what you need to know and not spend the rest of your week on a roller coaster with your nervous system going up and down.

We are just going to tell you what we need to know this week.

And we are doing it with Jessica Yillen.

She is the founder of News Not Noise, a pioneering Webby award-winning independent news brand.

And if anyone's paying attention, independent news brands are what we need.

She's dedicated to helping you manage your information overload.

The former chief White House correspondent for CNN and Emmy Peabody and Gracie award-winning political correspondent.

What is super helpful to everyone is that she has on Substack a page called News Not Noise, where you get all of her clarity

and

super brilliant reporting, where you can find out what you need to know about everything that's going on that day and really thoughtful analysis to see how it applies to your life.

She's also doing these very cool interviews.

So, this week, we are talking a lot about the tariffs and the market tanking this week.

And she gives you the story behind the story.

So, this week she had on Harvard professor and Obama's top economist, Jason Furman, who really goes into the economics and the implications for the global markets and the ripples across the world of what is happening from the White House.

So, check it out, NewsNot Noise on Substack.

And today,

we are talking about

the upheaval, the mayhem,

the

WTF of

the tariffs.

So the initial tariffs went into effect over the weekend, and the giant tariffs went into effect this morning.

This is Wednesday, this morning at midnight, including the ones that are astonishingly high, like the 105% tariff on China.

Those we will just begin to see the reaction to today.

And

this whole thing has resulted in about a 10 drop in the stock market and which is actually a 20 drop since the height of the market which was a few months ago since trump took office the height of where it was with him to where we are now is about one fifth

of

the stock market

value one fifth one five twenty percent which is trillions

trillions with a t

of people's 401ks, of people's investments just evaporating as a result of this.

So we're going to figure out from Jessica what the hell, why this happened, what is happening, what is the long game, is there an off-ramp off of this madness?

But first, Jessica, why tariffs?

What

is happening here and why?

That is the right approach.

That was a very perfect setup because part of this is just the whims of one man.

And it's quite mind-boggling to investors, you know, sophisticated market watchers, basic economists, and folks at home, right?

One of the most confusing things right now is that Trump has been promising to do tariffs all along, right?

He promised it through the campaign and he also has been talking about tariffs since the 80s.

He loves tariffs.

And so he announces these and the market plunges and the world goes haywire and everybody's shocked and panicking.

And lots of folks are asking me, why?

Why is everyone reacting this way when we knew it was coming?

And the reason is twofold.

One is a lot of, there's a lot of research that shows people who are behind Trump think that his most extreme policies somehow won't apply to them.

It's a psychological thing that they'll get to carve out.

And second,

no one expected them to be as high as they are.

It is irrational, self-destructive.

Economists have called this the greatest self-inflicted wound on the economy by any president in American history.

Wow.

And the people, he's been talking about tariffs for 40 years, and he was talking about them leading into his first presidency.

And

what was the rate of tariffs in his first presidency?

Because I think that's also a clue that we thought he was going to be, since he's been talking the same game, we thought he have the same cards to play in the second presidency as the first, which is demonstratively wrong.

So these are Jason Furman's numbers.

This is what he does.

He said, in the first Trump administration, the total average tariff increase was 1.5%,

1.5%.

So far, the average tariff now is 22%.

That's what Trump has done.

But in some cases, as you point out, it's 50%.

Those are on friendly trading partners.

And he slapped a 104% or 5% tariff on China, which is going to lead to a trade war with China.

And one of the reasons the tariffs are so extraordinarily high,

I just want everybody to just breathe for a minute and like take this in, is bad math.

Quite literally, they fucked up.

And Trump is obsessed with this.

He's surrounded by all these aides who are not, they know history.

History shows that tariffs are bad for our economy and other economies and lead to other bad things.

And they've tried to dissuade him from doing this policy.

So he surrounded himself with only the very few policy people who are so deeply loyal to him that they do what he wants.

And they came up with the wrong formula.

And I'm not even kidding.

Peter Navarro, his trade advisor, who was exposed in 2019 for writing books, citing an expert for a lot of his policy, who was a fictional person.

The expert wasn't real.

He made up the person?

Yes, he made up the person.

So he made up an expert, attributed quotes to his made-up expert, and then relied on his made-up expert for his expert book.

Isn't that convenient?

Yeah, it's such a like great workaround to having facts.

And that's the expert who's advising us on the global economy right now?

Yes, you understand correctly.

Okay.

So this person, Peter Navarro, helped develop a math formula.

They base it on a paper, an academic paper, saying that this is how you should calculate our trade to rectify our trade imbalances.

And the academic who wrote that paper said they did the math problem wrong.

They miscalculated, causing an enormous error, an extra high tariffs.

There's also evidence that they used chat GPT or an AI chat bot to calculate a lot of this stuff.

Like when Trump came to the lawn at the White House and announced all this, he had these poster boards where he listed every 60 countries we're targeting with extra high tariffs.

And there was literally no rhyme or reason to this.

One, they weren't alphabetized.

They weren't in order of friendly to unfriendly nations.

It wasn't numeric, like it was chaos.

And

the blowback has been enormous for a couple of reasons.

One is because these tariffs are extremely high, and we can talk about what that does.

The other is it's based on nonsense.

And so you can't, like, how do you negotiate a deal to back out of nonsense?

Like, you can't accept his foundational premise because it's based on nothing.

And so people, especially in the business world who rely on numbers and math and, you know, things that are indisputable to make decisions are looking at this going, what is this?

Yeah.

When you just said it's based on a miscalculation, it's like you couldn't imagine a bigger macro miscalculation in terms of like how this is going to work.

But the fact that it's also based on a literal miscalculation is astonishing.

And that makes sense because people are saying this isn't even people who are pro-tariff, people who are saying we should have tariffs are saying this is so

outlandishly out of touch with anything that could ever actually work that we don't even understand what's happening.

Yes.

We don't even know what.

And those are the pro-tariff people.

So can you just for a hot second tell us, like, let's assume this was based on something.

There are reasonable people who think reasonable tariffs are a good idea.

And

why?

So let's use the case of China, for example.

Let's say that the U.S.

imports a ton of stuff from China, factories made in China, and we send a ton of business in there.

Right.

So they have jobs and they have revenue and economic activity because Americans are buying so much stuff that's made in China, which is true.

But then let's say China doesn't allow the U.S.

to sell a lot of goods into China.

That's a trade imbalance.

And that's true, right?

That's why people are mad at China in particular.

One of many reasons.

China also is known to steal intellectual property, Chinese businesses, from the U.S.

So there are a lot of reasons why that is a hostile trading relationship.

And there are arguments to take steps to combat that.

And one way one might combat that, a responsible government, is to slap a tariff on goods goods that are coming from China that's a little bit of a lever.

And it says, hey, China, if you're not going to let us sell more American stuff in there, you're going to steal our intellectual property.

We're going to make it harder for your folks to make money off of America.

And it gives us leverage.

And if you want that to go away, you have to change your practices.

So let's sit down and talk about that.

You can see, I've oversimplified it, but you can see how in that scenario, it makes sense.

Right.

It's kind of leveling the fields for people

to have a more, and the ultimate goal of this, like if you look around the Rust Belt, if you look around America, like the people who have been disenfranchised, the people whose communities and economies have kind of disappeared because the manufacturing has disappeared.

These are the people who feel left out of the global economy and who free trade has, you know, those jobs have gone elsewhere.

So there is a reasonable argument for, is there any way to get this back?

But this is a long term to get people to build manufacturing in America isn't on the turn of a dime.

You need certainty, right?

Well, I would actually think about that differently.

Okay.

And it's a great question because this is what Trump claims is that what I just described as a trade gap or a trade deficit, you'll hear those terms.

They get more money out of us than we get out of them is the argument.

And there are many arguments for tariffs.

One is we want to have more opportunity to sell to other countries if they're selling a lot to us.

That's what Trump mostly says is the purpose for it.

But he also gives other reasons.

And one reason is he actually thinks that rather than evening out that gap, it will bring jobs back to America and reopen factories here.

So that's a separate explanation.

All his explanations contradict one another and cancel each other out.

If you do one, you're not going to get another.

What you've brought up is one of the things he talks a lot about: this will bring manufacturing back to America.

But the bottom line is Americans mostly don't want the kinds of jobs that are overseas in China right now or in Bangladesh.

That's why they are over there.

We are able to buy much less expensive clothing and goods, et cetera, because they don't have our labor laws and they require human beings to do things we would never stand for here.

And in fact, China is trolling us.

Well, there's this viral video going around right now, and it claims to be from China that makes fun of America showing American, it's AI, American workers doing the kinds of jobs that Chinese workers are now doing in factories over there, leaning over sewing machines, getting their fingers punched by the needle, you know, trying to sew clothing, trying to screw tiny little iPhone screws into the back of an iPhone.

Since we've globalized our economy, American workers aren't taking those jobs.

And one of the reasons we have so much cheap stuff and we're able to buy stuff cheap is because we're essentially getting the advantage of workers who don't have the kind of labor laws we do.

So, A, those jobs aren't likely to come back to America, nor do American workers want those jobs, nor would those jobs help bolster our economy for the future.

And in fact, one of Trump's top advisors, Howard Luttnick, his commerce secretary, has said, if those factories come back to America, robots will do those jobs.

Interesting.

But even the, if you look at the auto industry, for example, where he's keep saying, oh, then we're going to bring this stuff back to America.

And this is, I'm thinking about this from in terms of like trying to go to war, a trade war with China, that what businesses need more than anything else, they can handle bad, they can handle good, but they need certainty.

And what America never has is certainty, especially under Trump, because what you need, these are long-term things.

If you're going to bring an auto plant to America, you need to make sure that the assumptions you're operating under, that if you're doing that because of tariffs, those tariffs are real and are going to exist for the next 20 years, right?

Because you don't make that kind of decision without having certainty.

And it strikes me as like, if we want to, our system is allegedly responsive to the people and what the people want, which means that someone who's in support of tariffs could be out of office in three years.

China has total insulation from that.

They can make the decisions they want to make and they can have certainty.

And this is not someone that you want to go to war with

on the certainty question.

Yes.

Can we take that in a few parts?

Yes.

First, let's do the auto thing when you said if you want to bring autos back, I just want to establish this.

Manufacturing companies are not going to bring their factories back.

We keep saying it'll bring them back.

Maybe it'll bring if they win that.

No, they've said they will not because of the certainty thing.

Because why, if you're the CEO of a company, why would you spend the hundreds of millions or even billion dollars it takes to move out of other countries where you've built your manufacturing plants, rebuild it here, figure all that stuff out, knowing that Trump will be gone in four years, everyone else hates tariffs, and tariff regime is probably going to be over by then and Americans won't take the jobs.

They're not going to do it.

So moving factories back isn't a thing.

It's just not.

In fact, Microsoft was going to open open a new factory.

Like there are a bunch of places that were on track to open places that they've now mothballed.

In every instance, the opposite of what Trump says he wants the effect to be has happened.

So that's not going to happen.

And I want to tell everybody here, in case you haven't heard this, you will hear people say, well, this is going to be great for American-made products, like American cars.

There is not a single car that is wholly made in America.

So even the most American of all trucks or whatever has parts that are made in Canada, parts that are made in Mexico, parts that come from overseas, metal and stuff that's brought in.

So

every vehicle is going to be impacted by tariffs, and that's true of many other things.

Oddly, and maybe not coincidentally, Tesla is one of the few car companies where most component parts are made here, but even Tesla has some made overseas.

Okay.

And it's taking a beating because of China.

It has manufacturing plants elsewhere.

So manufacturing is not coming back here.

Then I just want to point out, we have also slapped tariffs on some of our most reliable trading partners, our friendliest nations, our closest allies, like the EU,

Swiss watches, wine that we get in from Europe, countries that give us almost all of our coffee.

diamonds, like you name it.

These are not countries that are doing those inequitable practices I was talking about with China.

And in fact, for example, and Jason talks about this in our interview, one of the countries where we have a trade deficit is Madagascar.

Madagascar, our trade deficit is entirely because we buy vanilla from them.

And they don't have the money to buy that much that we make, right?

Or Bangladesh, they make a lot of the clothing we buy is made in Bangladesh because it's a very low underdeveloped country, low income.

They can't buy our goods, but we buy a lot from them.

So our trade gap is big,

that gap.

But it's not because they're taking advantage of us.

It's because we're different sized economies.

And how do you rectify that?

Trump has slapped massive tariffs.

Is Trump going to slap tariffs on every country that has a trade gap?

They can't level that out.

And Jason points out the way to level out our trade gap with, for example, Madagascar is by eliminating vanilla flavor.

So do we want to just stop buying vanilla so that we have a zero trade gap with Madagascar?

It's ridiculous.

Right.

It assumes that a trade gap is a problem when actually that was to our benefit to be able to get reasonably priced vanilla.

Correct.

No one's getting hurt by that.

And so we're all getting a course in like econ 101,

including the president and his trade advisor.

So the most frequently stated reason by Trump that he's doing tariffs is to make sure we have a zero trade gap with all other countries, which is not a thing we want.

And so he slapped these incredibly high levels of tariffs on countries where we have this inequitable gap.

But a lot of that is because we're getting goods from Cambodia, we're getting goods made in Vietnam, Bangladesh, et cetera.

So there's going to be a gap.

So then this all leads to your question about uncertainty.

And yes, there is nothing business hates more than uncertainty.

And there's nothing the stock market hates more than uncertainty because you can't plan, you can't strategize.

from an investor perspective, but also like if you're an entrepreneur and you're deciding, you know, what is my revenue going to be in three years?

Okay, how much will sales grow?

So do I need to buy a new piece of equipment now?

How much should I spend?

Should I get a new equipment or used equipment?

Should I finance it, pay it up front?

All these decisions are based on being able to plan one, three, five, 10 years out, right?

When you have this much uncertainty, you can't plan.

So what do you do?

You stop investing in new equipment.

You don't open that new plant.

You don't launch a new product line, you don't hire people.

And the market reflects all this.

So we all talk about the stock market as not the real economy.

The best description of the stock market I've heard is it's a bet on the future of our economy.

Right.

When the stock market's falling, investors are betting that our economy is not going to be good in the future, in the near future.

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Okay, so there's so many things about this that are affecting, like, that's all the business, the global space.

Let's talk about the person who's listening to this.

And there is a couple ways I think it would be cool to do a little econ 101 in terms of like the way you listener will feel this, both from a

why has my 401k gone down 10%

to, you know, when you go and try and buy a phone in a couple months, why has my phone gone up to X the price?

So what we're saying here, and correct me where I'm wrong, but in the case of like, why has my 401k gone down 10% just because Trump said this crazy stuff about tariffs?

That is about what Jessica is talking about with uncertainty.

Because if I am a company that does part of my business in one of these countries that's going to have a tariff, then I have to decide, is that product

that used to

cost $100

to make under my current arrangement, I have to decide now it's 200.

Am I going to charge the American people 200 for that?

In which case the demand for my product goes down.

Okay.

So that doesn't even help me because I raise my price.

A, that means you listener are paying double, but that doesn't even help the company because the demand goes down.

Or

do I, I, company, eat that cost, which by the way, they're not going to, but do I eat part of that cost?

In which case, if I only pass along half of that cost to the consumer, but I eat half of it, my profits go down, which means now I'm worth less to the investor, which means my stock has gone down.

And the way that that ripples out is if all of these companies are now worth less in our view, because they're either going to have less of a demand or their profits are going to be less, then that means they in turn are investing less in other businesses.

It's less advertising.

It's less building.

It's less investment in maybe they were going to invest in a new line of business.

They're holding that back because of the uncertainty, which affects affects every other business, which is why

you are down 10%.

Is that correct?

Yes.

Okay.

And everything's going to cost more.

I have a friend who's an interior designer who's like, well, I can't, you know, teak is going to be through the roof now.

The price of teak wood is going to be through the roof.

Like all the stuff that we buy anyway, costs go up for stuff that we haven't even thought about.

Not like we're all going out to buy teak, but maybe.

Right.

Because the whole idea is theoretically, these people are going to feel the pain.

These other countries are going to feel the pain because they're going to have to pay more.

But in actuality,

what has 100% always happened is that if there is

more to pay, the end consumer pays more.

Yes.

And also there's a lot of stuff we just buy that are imports.

Right.

So that we're going to just be paying more for the stuff we want.

And our companies, and yes, when companies have to do it for parts, they're going to pass that on to the consumer.

But it's just like, we're going to make everything cost more for people outside the U.S.

So those people outside the U.S.

are going to make everything cost more for us.

So we're in this game of chicken where everybody's just inflating everything because we're at war and at trade war-ish, and it makes no sense.

And so all of that ends up costing all of us

more.

when we shop for basic things and for major things.

And it feels like this goes way beyond the actual markets and dollars.

This feels feels like it goes into like the global structure.

Because am I right that when he announced that this was happening, so China, we have decided they are hostile economically and security-wise.

Like this is an operating assumption of America, right?

From the government.

So we want some independence from them.

We want to level that trading situation so we're not enriching them.

but

right before these tariffs went in effect there was a meeting with china japan and south korea to decide how they were going to jointly deal with this hostility from america like this is creating alliances

that are actually

not good for us to have out in the world.

We are seeding this animosity into the world where people are aligning to decide how to deal with

what can only be described as like a tantruming,

misguided.

I mean, this is a deeper threat than the economy, as if the economy isn't deep enough.

Yes.

So first Trump did these across the board 10% tariffs.

Then he said, I'm targeting.

I think it's 60 nations with extra high tariffs because these are the worst offenders.

To him and that guy who had the fake expert, the worst offenders are places that have the biggest trade gap with us.

So that includes places like China, where it's because of hostile retaliation and limit barriers, and places like Cambodia and Vietnam, where they just, it's what we described before.

They're not buying as much from us as we are from them.

And we slap these major tariffs on places like countries through Europe, who are our closest trading partners.

Our economies are interdependent.

One of the shocks of this is that it's always been understood nothing like this would happen because it's like we're fraternal twins, like conjoined twins.

And if you cut one, we suffer too.

Why would America do that?

But we did it.

And so we have, it's an economic attack, right?

It's not a military attack, but it's an economic attack.

And one of the critiques of this is that trade wars have often coincided with military wars because it's another tool of hostility against other nations, a way to harm other nations.

And yeah, so what we've done is, for example, the EU is saying, basically, we'll make a deal with you if you make a deal with us that we can agree to.

But if not, we're slapping tariffs on some of the stuff you really like.

So get used to paying a lot more for European wines and for chocolate and for Swiss watches, et cetera.

We have done this, as you said, with some of the nations in Asia, and it was remarkable to see avowed adversaries, Japan, South Korea, sit down with China about trade.

That just...

It's unthinkable.

Now, I will say since then, South Korea and Japan have said they'll make deals, not retaliate, and figure out a a way to get out of the trade war with the U.S.

so that China is isolated against the U.S.

But that's not true in the rest of the world.

And one of the more consequential results is countries like throughout Europe have used the dollar as what you're going to hear a term called the reserve currency, the global currency, the default currency.

All that lingo really means is when you're making deals across countries, we're going to make the deal in dollars, not in your currency or mine, because dollars are the most trusted, stable currency out there.

And that makes the U.S.

extremely powerful.

It makes the dollar strong, meaning one dollar gets you more stuff on the world than other countries.

And

people are moving away from doing that.

Already they're doing that.

Yes.

Instead of trading in dollars and doing deals in dollars, they're looking to do deals in other currencies.

And so you're going to hear people say the dollar is losing its strength, dollar is weakening, people are, there's this really weird lingo de-dollarizing.

It just means that they're going to say, we trust America less.

It's too erratic.

Another piece of this is, and this is part of the conversation, why isn't Congress acting?

Why isn't Congress acting to stop him?

America's government isn't working properly.

They're not as stable and trustworthy.

And so we're moving away from relying on them as the safest economy in the world.

That takes a hit on our treasuries.

You know, if you're invested in treasuries, you're going to see this have a hit there.

And that hurts our payments back on our debt, the cost of borrowing.

It just ripples across the board.

And it does the exact opposite from what Trump says tariffs will do.

It's going to make everything cost more, our debt be more expensive, et cetera.

You're like, why?

Well, stupid is as stupid does.

The only explanation for this is either he has a very nefarious

intent that we don't know about that makes this logical, or he does not understand

what he is doing.

There's the only two things because it is wrong.

There is not a person other than Navarro who is saying

that what he's doing is correct at the rate that he's doing it.

Howard Luttnick.

Oh, a Luttnick conversation.

Okay, great.

That guy too.

A lot of stock in that guy, no pun intended.

But what is super scary is that it's like a game game of chicken.

Nobody knows how this is going to end because it either continues and the market goes down and down and down and people move away from America as a source of

stability

and reliability from an economic perspective, or we find some kind of off-ramp, but like he is not demonstrating that he is susceptible to all all of the feedback he's getting from billionaires, from Republican lawmakers, from he's not moving his position.

So

is there indications that he will move the position?

And if not,

will Congress do its job?

Because sitting back and letting someone who doesn't understand what they're doing single-handedly tank the global economy is just a criminal level of neglect by the rest of our government.

So is there any indications that they're going to act?

So there's a couple of theories and scenarios, right?

It's Trump.

We can't know.

He's saying no.

He's tripling down.

I think he, I hate saying he truthed, he posted on Truth Social.

He truthed.

Be cool.

The other day, he said, the operation's over, the patient is healing.

You know, there was this impression the first term that he was very responsive to the market falling.

And if the market fell, he'd he'd back off.

Yeah.

That that was the one check on his power.

The one check on his power is if the markets get mad at him, he will fall in line.

And his very wealthy investor friends from New York, he doesn't want to piss off Wall Street, but now he's got new friends in Silicon Valley.

So maybe he's like, you know, looking for different cues.

So, right, he's immune right now to the pressures coming at him from Wall Street, from many of these investors.

And some of his top donors have gone nuclear on him.

They're having open fights and attacking his members of his administration.

Elon Musk is in an open fight with Peter Navarro, calling him like the stupidest man on earth or something.

And then Peter Navarro is saying, you don't make cars, you assemble them.

And the White House is like, boys will be boys.

That's a quote.

Yeah, boys will be boys.

Like, that is what fucking got us here, by the way.

But go ahead.

And now you also, for the first time, and we can come back to this, you do see members of Congress also who are Trump loyalists, hardcore die-hard Trump loyalists saying a red alarm, stop, stop.

And they're backing legislation to stop Trump's power, to enact tariffs, to roll this back, and to exert pressure.

What we do see for the first time is some of Trump's most stalwart supporters breaking with him.

I mean, Mitch McConnell?

When in what world did we think Mitch McConnell was going to stand up and be a quasi-hero?

Like, what universe are we in?

And Chuck Grassley, who is one of the senators who was in on January 6th, was trying to put in new fake electors for Trump and change the results on Jan 6, co-authored legislation with a Democrat to take Trump's unilateral power to enact tariffs away from him, even though constitutionally he probably doesn't have that in power, but to give Congress the right to take these back, right?

So one of Trump's closest allies and a whole bunch of conservative Republicans have signed on to that.

So let's just keep that on the side.

You're saying, so what could happen from here and what are the possible ramps?

One is there's this notion that maybe all Trump's trying to do is get leverage to negotiate deals.

And we already said, you know, I said Japan and South Korea have said they want to negotiate.

Trump has said he keeps bragging, 50 nations have called to make a deal, 70, 90, you know, like chest thumping about that.

His quotes are, they're calling me, they're kissing my ass, they're begging me.

This is the level of the way that this is a personal,

this is what he's saying about the international diplomacy for the global economy.

They're calling me, they're kissing my ass, they're begging.

So someone who's in this world said to me, he's doing terrorists because he can.

It's like one lever he feels he has unilaterally where he can exercise control.

So one theory, and a lot of his like, you know, wealthy investors are praying this is what it is, is that Trump will cut these deals, find ways to cut deals, and then back off the very highest tariffs and leave us at like a 10% across the board tariff for the duration of his administration.

And that way you would have more of what we talked about earlier, predictability.

Now, the problems of this are it's very hard to negotiate tariff deals with 60 countries.

Like that's one deal is hard.

60 at the same time is unthinkable.

A lot of these places are pissed.

And if they're rip shit, they're not going to give you good terms.

Europe has already indicated that they're not going to make it.

They'll do a deal, but it's not going to be easy, right?

And even then, you're left with these 10% tariffs, which are

also toxically high for an economy.

It's better than a 50% tariff here and

whatever there.

And it creates predictability.

So people are trying to coax him into that position, right?

So that there's some baseline that makes sense.

You can plan around.

But that also assumes that they want to make the deals.

China isn't going to give him that win.

China knows that in this game of chicken, if he keeps this up, he's going to tank his own economy.

Yes.

So why wouldn't they just wait until he does that?

Well, think of China as a different case.

So the question is, can we make deals with our friends and the places where we have like open trade and good relationships and where I said that we're conjoined economies, right?

Europe and with Cambodia and Vietnam and places where we do a lot of business.

China is a hostile actor, economic actor, and there is a lot of argument that there is room for some sort of trade, you know, action with them, not at this level, but we are inevitably heading into, we are in a trade war with China and in an economic confrontation that will remain.

What they're hoping is that the rest of these countries, where it's less hostile, can be carve-outs and that there'll be deals so that you focus the attention on China.

Now, the level we've gone in at is way too hot and worryingly tense.

The fear is that'll lead to actual military confrontation, which we can put aside.

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Another scenario that's important to acknowledge is they're trying to pass this legislation in Congress right now, right?

That's going to be Trump's big, beautiful bill.

Tax cuts for the rich and tax cuts for business and all these other things thrown in, right?

They have to figure out how to pay for some of that.

Just legislatively, the way it's built, you have to pay for some.

One theory is that the tariffs are really just a way to say, we're going to make a lot of revenue, we, the U.S.

government, and that is going to be the way we're going to pay for this bill.

So, quite by coincidence, Trump and his team say that this tariff regime is going to raise more than six, maybe $7 trillion over 10 years.

Oh, which happens to be, how much do they need, Jessica, for the bill?

How much?

$7 trillion.

No,

that's so,

what's a coincidence.

I know.

Well, Ron Lava is really into it.

Ron Lava.

That's the made-up guy for Navarro.

So in that scenario, In theory, they could pass the bill and then say they've paid for it if Congress allows it as a pay for.

And then Trump can say, oh, wait, we made some deals.

We're going to get rid of tariffs.

So maybe it's a head fake just to pass their legislation.

And then the extra theory is maybe, you know, Trump wakes up one day and is like, I'm done.

I'm tired.

I'm going to say I had some wins and I'm going to take it back because he's like that.

Yeah.

Cause he's going to have to claim it as a win no matter what he does.

Okay.

And we just wait and see is what we do.

Well, right now, what you're going to see for the next week is other countries slap their retaliatory retaliatory tariffs on us, escalations, see what products are implicated.

And for anybody who wants to know what you shop for in your life, that's going to start costing more and how soon.

And check out my next sub stack.

I'm going to get into that in

the real practical nuts and bolts of how you can do the next period of time.

But what we have to see from there is what kind of pressure changes.

For the first time, like I said, some of his donors are really turning on him.

We're seeing resistance in Congress, which is important politically, because once this halo of love for Trump among his most ardent fans is sort of burst, you can't go back to that initial love fest.

And the question is, will this get serious enough and impact regular Americans severely enough that you'll get enough Republicans in the Senate and the House to pass legislation revoking Trump's tariff power.

In order to do that, he said he'd veto any legislation.

You need a huge margin in both houses to have a veto-proof majority.

Like 20 Republicans need to vote for it in the Senate.

I think it's like 70 or 90 in there.

Yeah, I think like 67 or it's like you would need two-thirds, right?

All Democrats plus a huge number of Republicans.

We're not there yet, but you're starting to see them come.

And you can imagine potentially a scenario in which it gets so bad that they're like, hey, whoa, no.

Then there's also the possibility the courts say this is unconstitutional, but don't hold your breath.

And is that because in order to do these tariffs, he had to declare a state of emergency?

Yes, that would be the challenge, right?

That this is not a state of emergency that allows you just unilateral mayhem over the economy through tariffs.

It's just like what we see him doing in other categories where we all know that he's not allowed this power.

This was not set up for the president to have this much power.

It's just that he's taking it and it's it's already having an impact and you don't have enough people standing up to him in Congress to stop him.

So who's going to, you know, pull that lever and how and how soon and all that?

And one of the challenges is even if Congress does do its proper role, by then we've shown the world we are bad at math, completely reckless, shoot from the hip.

And we have a president who knows what he'll do next.

Right.

And it's don't take us seriously.

We're damned if we do, damned if we don't.

It's like having a kid where you're like, if you don't go to bed, you don't get screen time tomorrow.

And the next day you're like, ah, here's your screen time.

It's like, what happens the next time you tell him to go to bed?

We're screwed either way.

But if we hold the line, we're tanking the global economy.

So it's a lose-lose situation from our credibility perspective.

Yes.

Now, just one note of reassurance, which is everyone I'm interviewing on this and my reporting is like, America's still a great economy economy long term you know if you look around the world you want to scramble somewhere else you know history shows that we come back from these things and you know basically

big picture expectations are we're going to be all right shorter picture bumpy bumpy bumpy times ahead yeah Okay, two questions about the immediate term.

Yeah, if you have a long enough time to wait this out, odds are you are going to be okay.

Your 401ks will come back.

This is what history has shown us is eventually.

But if you're a retiree and you don't have that time, this is a tragic betrayal of the trust that people are acting in your best interests and care about you.

There's countless retirees that have saved this money, this small percentage that they have worked hard for every single year, and now they are in a fixed income situation and up to 20%

of what they have saved over their lifetimes is gone and they don't have enough time to catch up.

Like it's just such a betrayal.

It's like you're playing a game with people's lives.

It's awful.

And this is like the least of the games that are being played in terms of the games are being played with migrants, the games are that are being played with our national security at NSA.

It's really sad.

And for the immediate term, I know we're going to go to your sub stack to find out like about the different things we might be buying and what that means for us.

But like, for example, the auto people have come out and said that the average car will either go up anywhere between $2,500 and $12,000 of an increase.

Like that is what, if you're looking at a car right now and the prices that add between $2,500 and $12,000 for that exact same car you're looking at now.

Do we have any idea like when those prices are going to go in effect?

Economists think that even though tariffs are going into effect right now, it's likely that you and I won't start seeing higher prices at the store until June.

And that's because manufacturers and shops still have inventory to sell at the pre-tariff rate.

Think about it.

It's basically in the quote back room.

And so prices aren't going to go up for us until they have to start selling us goods and parts that they've bought at those new higher rates.

It does, however, mean that things like the Memorial Day sale might be canceled because businesses aren't going to want to try to clear out all the inventory they have at even lower prices.

The advice I've been given is don't rush out to panic buy and think about it.

You can't really stock up on things like mangoes and papayas anyway.

If you want to know where it is wise to start buying ahead and what goods might be hit most seriously by these tariffs, check out my latest sub stack.

We get into a lot of that there.

Okay, great.

And also, I mean, this is the kind of thing that I feel like you should call your member of Congress about this.

Like, this is the kind of thing that we can no longer, and they can no longer like throw up their hands and be like, what are we going to do?

It's Trump.

He's crazy.

They need to do something about reigning in

these actions because if this happens.

If this is actually a global financial crisis, this will be the third global financial crisis in

what, two decades, decades, three decades, in a very short period of time.

But the only one

for I don't know how many decades or hundreds of years that was single-handedly the unforced error and offensive intentional actions of one human.

Yes.

It's unbelievable.

Usually there are so many people trying to avoid a global financial crisis.

And this one was opted into

by someone's ego who thinks he knows better than the planet.

One reassuring note on that is if you compare it to say 2008 financial crisis, getting out of that required unwinding really complicated financial problems inside banks and investment firms and insurance companies.

And it took time and careful thought and, you know, huge government action.

Getting out of this is like convincing Donald Trump to change his mind so even if you could get him to undo it we're gonna still have consequences for from what he's already done but like backing out of it is not a hard proposition it takes action by Congress is what it really takes at this point yeah and I just feel like from a bigger perspective like America and our purported exceptionalism where we always think that we're going to fall forward where we always think that we can keep fucking up that we can alienate people, that we can treat people like trash, and that things are going to turn out well for us.

We've got to start paying attention because like, this is not, you already see it with brands abroad where like these people like, you are treating us like trash.

I don't want to go to your Starbucks anymore.

I don't want to go to your McDonald's.

The idea of like America and your brands being something special as opposed to something that is like, I don't like that and I don't like the way you are in the world.

This is something that we should just act like there are consequences for our actions and pay attention to them.

Amen.

Okay, people, that's what the hell with the tariffs.

Hopefully, we will find out that someone has managed to say really sweet things in Trump's ear and tell him how smart he is and be able to give him the out that he has made a brilliant tactical decision and that he has all these victories to claim so he can come out and lie to us about that and get us out of these tariffs that is what we're hoping so if you have trumps here please say something

say those things in the sweet way that egomaniacs need them to be said so they can stop terrorizing our family Is there other things we want to say before?

Yes, the Supreme Court issued two rulings on those immigrant men who were forcibly removed from the U.S.

Both of the rulings favor Trump, but there's some nuance to them.

One was in the case of the Maryland man who was taken to El Salvador's prison because of a quote administrative error.

A lower court had ordered him returned by a certain deadline, and the Supreme Court on an emergency appeal waved that away and said, you don't have to return him by that deadline.

But the expectation is from his own lawyer that they will order him returned.

They just wanted to take more time to issue a proper decision.

So they were just giving it a little more time.

The other, it's more complicated.

It's overall, can Trump use the Alien Enemies Act to forcibly remove these men at all?

And the Supreme Court basically said, we don't want to discuss that right now.

So we're going to allow him to keep using the Alien Enemies Act and to forcibly remove people using it.

However, that still has to be decided by a lower court.

So the overall issue will likely come back to the Supreme Court.

We don't know if that'll stand or not.

And crucially, they said, in every instance, these people must be given due process.

You cannot just grab them off the street, put them on a plane, and ship them away.

You have to give them notice in advance that they're being targeted.

They have to be able to have a hearing before a judge.

And those basic fundamental principles must be followed.

And here's what I want everybody to hear, because this is good news.

All nine Supreme Court justices agreed on that.

So we don't have a justice right now who is saying the law does not apply.

We're just going to ignore the Constitution altogether when it comes to due process.

So it's a very mixed ruling.

And there's some cause for optimism that the Supreme Court will uphold some of the most basic tenets of our Constitution.

I think, I don't know if this is my Stockholm syndrome and just my just absolute need to find some hope somewhere, but I know that the administration declared both of these sweeping victories.

I read them as actually the opposite of that.

I mean, the first ruling about Obrego Garcia, he was the one who was told previously, got a ruling from a district court that he could not be deported to El Salvador.

Then the lower court judge says, because of that, he must be brought back.

But the ruling on that was really just buying time.

It was in the form of a temporary injunction, which has a very high standard of irreparable harm, which clearly is happening in this case.

So it's bullshit that they didn't say was irreparable harm because when you're getting tortured in an El Salvador prison, I would consider that irreparable harm.

Yet courts don't, they don't want to go head to head on this right now.

So just saying, all we're doing is saying, we're lifting that temporary injunctions that's saying he has to come back right now, but

we are going to decide on this case.

Like this is not the end of the line.

And so they're going to be ruling at some point as to whether that lower district court judge can compel compel the administration to bring him back ultimately and by implication, maybe more of them.

So this is like a buying time strategy, which I don't think is correct, but I think there's a lot of reasons to be hopeful about that.

And then the other decision was a 5-4 decision where they were talking about also a temporary injunction about

Just can I, can Judge Boseberg, the lower court judge, have a temporary injunction that says you, Trump administration, cannot use the Alien Enemies Act on these migrants to get rid of them?

They didn't say that they could use it going forward, but they said in this case

that Judge Bosborg can't stop them from using it yet.

Right?

So it's not like it's like a preemptive thing.

Like there's no way in hell you could ever use that.

But they're not saying it's a clear path that you can use that going forward.

They were saying

we will,

and they almost certainly will substantively review this down the line.

They're saying that is the time where we're going to decide whether it can be used or not.

And it was a five-four decision just based on that.

So for me, that tips the scales pretty close to when they actually look at the merits of the case.

If four of them were willing to say, based on no merits, there's no way in hell you can use this Alien Enemies Act.

It suggests to me that they might find that they can't.

And as you said, that idea that, like, in no world can you do this without a hearing to me has so many implications because not that those hearings are ever just or right, but it says that I can't, as a Trump administration, round up 700 of these people, put them on a plane and get out of there because I know I'm going to have to face a judge on each one of these 700 people, which means I'm going to have to have a modicum of evidence, which means it's going to slow down the process.

It's a nightmare for them in what they're trying to do, which is just disappear all these people.

So I feel like that's a cause for a little bit of happiness.

Yeah, I agree.

The court, you know, showed that they aren't down with Trump's approach entirely, at least, and that with the most basic rights, they agree they have to be enforced.

And one of the things you said that it'll slow it down is really worth emphasizing.

One of the reasons so many undocumented people remain in the U.S.

currently is because there are so few administrative judges to hear these cases and it takes forever as is.

So, sure, they'll supercharge it and try to go fast, but it really does hamper their ability to do what they're trying to do.

And it shows us that the court believes that some of the constitution at least should stand.

So, there's that, y'all.

There's that.

Think about that while you lay your head on your pillow.

There are still some people.

And I think another happy thing we can leave with is: let us just please shout shout out that there is ways for us as a people to slow down

this process too.

It was this incredible community in New York where a mother and three children who were members of the school system there were rounded up.

and shipped to Texas in a detention facility.

The community rallied so much around these people who were part of their community.

The superintendent wrote an open letter saying, this is traumatic for this family that we know and love.

This is traumatic for our teachers.

This is traumatic for our other students.

This is not right.

They are valuable members of our community.

And the whole community came out, like 1,300 members of the community came out to stand outside of the vacation home of the Border Czar, Tom Homan,

basically in solidarity with this beautiful family.

And

the mother and the children were released and returned to the community.

And that to me is just such a moment of

we can't, in light of that, we cannot stand aside and be like, there's nothing we can do.

We really can

show up.

and be loud and stand in solidarity with people who

are victimized by this administration, whether it's migrants, whether it's government workers, whether whatever it is, there are countless communities right now that need us not to be quiet.

Beautiful.

All right, y'all.

Good luck out there.

Take care of yourself.

Breathe.

Let us keep our sense of peace and not let wild, ego-driven people disturb our peace to the extent humanly possible.

Jessica, any parting words?

Have a great week.

Try to, you know, remember this has happened in the background, but you're still living your life and I've been practicing my breathing and it really helps.

Good.

We'll do it.

All right.

Thank y'all.

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