0:00

I use New York Times cooking at

0:02

least three to four times a week.

0:04

I love sheet pan bebimbop. It

0:07

said 35 minutes. It was 35

0:09

minutes. The cucumber salad that soy

0:11

ginger and garlic. Oh my God,

0:14

that is just to die for

0:16

it. This turkey chili has over

0:18

17,000 five-star ratings. So easy,

0:20

so delicious. Instructions are so

0:22

clear, so simple, and it

0:25

just works. Hey, it's Eric

0:27

Kim from New York Times

0:29

Cooking. Come. President

0:32

Trump's announcement of universal

0:34

tariffs on the whole world,

0:36

including the European Union, is

0:39

a major blow to the

0:41

world economy. For Australia these

0:43

tariffs are not unexpected, but

0:46

let me be clear. They

0:48

are totally unwarranted. The system

0:50

of global trade anchored on

0:52

the United States, that Canada

0:55

has relied on since the end

0:57

of the Second World War, is

0:59

over. The consequences will be

1:01

dire for millions of

1:03

people around the globe. Well

1:06

this is a tragedy. It

1:08

is also the new reality.

1:13

We're coming on the air because

1:15

the stock market is plummeting in

1:17

response to President Trump's escalating trade

1:19

war. The Dow, the S&P 500, and

1:21

the NASDAQ were all down more than

1:24

3% at one point. Retail stocks

1:26

in particular really selling off

1:28

Nike, Adidas, Lulu Lemon. Global markets

1:30

are also taking a hit. My fear,

1:32

I gotta say, my fear is that

1:34

stocks are down and they stay down

1:36

for a protracted period of time. From

1:42

New York Times,

1:44

I'm Michael Bobaro.

1:46

This is the

1:48

daily. On Thursday,

1:50

the fallout from

1:52

President Trump's sweeping

1:54

new global tariffs

1:56

reverberated across financial

1:58

markets and foreign

2:00

capitals, spreading fear,

2:02

and in many

2:04

cases, fury. Today,

2:06

we try to

2:08

make sense of

2:10

Trump's strategy and

2:12

its consequences with

2:14

three of my

2:16

colleagues Peter Goodman,

2:18

Natalie Kitroev, and

2:20

Gina Smilik. It's

2:22

Friday. April 4th.

2:30

So Colleagues, welcome to the roundtable.

2:32

Peter Goodman, thank you for being

2:34

here in the studio. Great to

2:36

be here. Natalie Kitora, thank you

2:38

for joining us from Mexico City.

2:40

Thanks for having me. And Janice,

2:42

I don't know where in Europe

2:44

you are. I am in Brussels.

2:46

Sunny Brussels. Thank you for joining

2:48

us from Sunny Brussels. We have

2:50

assembled the three of you because

2:52

you have tremendous experience covering the

2:54

three regions of the world that

2:56

are at the center of this

2:58

historic and historically disruptive moment. Trump's

3:01

sweeping global plans for terrorists, what

3:03

he's calling liberation day for the

3:05

US. Peter, you have covered Asia

3:07

for years and years for the

3:09

time you lived there for many

3:11

years. Gina, you are covering Europe.

3:13

Natalie, you are economic authority on

3:15

Mexico, but really in some sense

3:17

North America. So my first question

3:19

to the three of you, with

3:21

24 hours to reflect on what

3:23

the president just announced, how big

3:25

a deal. is this. I want

3:27

to start with you Peter. It's

3:29

honestly difficult to convey how big

3:31

a deal this is. This is

3:34

an astonishing development. It is a

3:36

development that takes direct aim at

3:38

the mode of globalization that has

3:40

dominated most of our lives. I

3:42

mean we have grown up in

3:44

a world where we've been invited

3:46

to imagine that place really doesn't

3:48

matter. If you've got container ships

3:50

that can... bridge the oceans and

3:52

you send factory production wherever it's

3:54

cheapest or most efficient. factory in

3:56

Ohio is the functional equivalent of

3:58

a factory in China. And whatever

4:00

you think about these tariffs and

4:02

how they're going to play and

4:04

whether they're going to fix the

4:07

problems that have popped up and

4:09

emerged from trade policy, this is

4:11

clearly taking direct aim at that

4:13

sense of place isn't supposed to

4:15

matter. And that entire era. That's

4:17

right. And where we essentially make

4:19

policy on the strength of the

4:21

argument that the consumer must be

4:23

served, and the consumer wants cheap

4:25

stuff, and cheap stuff has in

4:27

the last few decades come in

4:29

from places like China, Mexico as

4:31

well, and this is a reorientation

4:33

of policy that at least, you

4:35

know, on its face is about...

4:37

We got to make stuff in

4:40

the United States. There are a

4:42

lot of reasons to doubt whether

4:44

it'll work, whether it will satisfy

4:46

the people it's aimed at satisfying,

4:48

but that at least in broad

4:50

strokes is the policy. Globalization is

4:52

bad, making stuff at home is

4:54

good. Natalie, how big? I mean,

4:56

I was going to say, Michael,

4:58

that you might forgive the three

5:00

of us. I think we're all

5:02

either current or former business reporters

5:04

on this roundtable for being really

5:06

worked up about all of this.

5:08

You might think that we're, you

5:11

know, a little bit excited because

5:13

this is our sandbox that we

5:15

play in, but it's a huge

5:17

deal. It's not just a huge

5:19

deal for markets, which we're seeing

5:21

a massive reaction in global markets,

5:23

but it's a huge deal for

5:25

the way that Americans live their

5:27

lives, as Peter is saying. We're

5:29

talking about a total reconfiguration of

5:31

the trade order, and that is

5:33

not just an econ nerd concern.

5:35

So it's huge. Gina, any argument

5:37

that this is not a big

5:39

a deal as these hyperbolic colleagues

5:41

of yours are claiming it is.

5:44

I'm joking. No, no argument at

5:46

all. I think this is a

5:48

massive deal. I had someone earlier

5:50

actually tell me that this is

5:52

one. of those before and after

5:54

days. You know, we're going to

5:56

remember the world before today and

5:58

we're going to remember the world

6:00

after it. And it just sort

6:02

of, you know, this is a

6:04

moment that is going to fundamentally

6:06

reorder the global economy potentially. And

6:08

I think at the same time,

6:10

I mean, I'm sitting in Europe

6:12

right now where this is part

6:14

of what is really a multi.

6:17

pronged assault on the transatlantic relationship.

6:19

This is part of a sort

6:21

of decoupling that is happening between

6:23

the US and its trading partner,

6:25

the European Union, which has, you

6:27

know, for 80 years been among

6:29

its closest allies. And so I

6:31

think it's hard to overstate what

6:33

this means diplomatically and not just

6:35

economically. Okay, so now that we

6:37

have absorbed the bigness of this

6:39

all, I want to ask you

6:41

all to help make sense of

6:43

this as a... And Peter, one

6:45

of the things becomes very clear

6:47

when you look at these tariffs

6:50

is that as universal as they

6:52

appear, they are seemingly pretty targeted

6:54

at a familiar trade foe of

6:56

the Trump administration, and that is

6:58

Asia. Look, it's always been about

7:00

China. principally. And that's because China

7:02

is the world's factory. It's a

7:04

place where enormous amounts of investment

7:06

went chasing cheaper wages. In the

7:08

free trade era. Yeah. In the

7:10

free trade era. I mean, China

7:12

has become the dominant purveyor of

7:14

all kinds of things, from auto

7:16

parts to chemicals, to sneakers and

7:18

clothing and exercise bikes. So if

7:20

you come at things as Trump

7:23

does from the standpoint that a

7:25

bilateral trade deficit, which is a

7:27

fancy way of saying We buy

7:29

more stuff from you than you

7:31

buy from us. If you come

7:33

at it from the standpoint that

7:35

that's bad in a sign that

7:37

you're getting ripped off, which is

7:39

a concept that economists take real

7:41

issue with, then China stands out.

7:43

But it's not just China. Look

7:45

at this chart. Vietnam now hit

7:47

with a new tariff that represents

7:49

46%. Well, Vietnam is effectively in

7:51

extension of China. This is precisely

7:54

because in the first Trump administration,

7:56

when Trump unleashed these tariffs, a

7:58

lot of big companies like Walmart,

8:00

to pick an obvious example, but

8:02

really every company that sells it

8:04

in the North American market. Well,

8:06

we don't want to pay all

8:08

these tariffs to China. Seems like

8:10

this US China divorce thing is

8:12

real. We better go find another

8:14

lower wage country. And moreover, Chinese

8:16

companies moved a lot of investment

8:18

into places like Vietnam and they

8:20

just exported their model to these

8:22

other countries. took a side door

8:24

out of China into their neighboring

8:27

economy, set up shop there, same

8:29

problem with trade imbalance. That's right.

8:31

And so when- So this is

8:33

meant to catch that? This is

8:35

meant to catch that and divert

8:37

production to friendlier places from the

8:39

Trump administration standpoint. Got it. So

8:41

the goal, if we think about

8:43

the focus on Asia, is to

8:45

make it far more expensive for

8:47

goods to come from Asia to

8:49

the United States, thereby discouraging that-

8:51

Trade scenario where all that stuff

8:53

comes from those places that's right

8:55

in the first place. That's right.

8:57

Okay. That's a strategy that I

9:00

think I can wrap my head

9:02

around Natalie What in your mind

9:04

is the strategy here for the

9:06

North American side of that equation?

9:08

Well, okay. It's not totally clear

9:10

exactly what the aim is here,

9:12

but as Peter just said it

9:14

sort of seems as though a

9:16

big motive of these tariffs is

9:18

to shut down Asia as a

9:20

source of manufactured goods. And the

9:22

tariffs that were announced on Wednesday

9:24

did not include Mexico and Canada.

9:26

Notably and obviously by design. Right.

9:28

There is this sense among some

9:30

of the analysts that I've been

9:33

talking to that the goal here,

9:35

or at least a potential effect,

9:37

is to strengthen the North American

9:39

trading bloc. So where do you

9:41

go if it's not Vietnam or

9:43

China? You potentially go to Mexico.

9:45

I mean, obviously, Trump's ideal is

9:47

that you to the United States,

9:49

but even if you don't go

9:51

to the United States, a potential

9:53

outcome here is that there is

9:55

more incentive for manufacturers to make

9:57

their stuff in Mexico, in the

9:59

United States, or in Canada, and

10:01

there's a potential gain there for

10:04

the North American trading block, which

10:06

is that it gets preferential treatment.

10:08

We don't know if that's what's

10:10

going to happen, but it certainly

10:12

seems as though, as you said,

10:14

Michael, the design might lead us.

10:16

Now that's complicated of course because

10:18

of what you're saying is true

10:20

that Trump is trying to create

10:22

a much stronger North American kind

10:24

of trading block. He's been going

10:26

about it in a very strange

10:28

way given how much he's been

10:30

attacking both Mexico and Canada and

10:32

threatening tariffs on them individually even

10:34

before this. So if we're all

10:37

supposed to be operating as one

10:39

vast... beloved set of partners, it

10:41

hasn't been feeling that way. No,

10:43

for weeks he's been smacking Mexico

10:45

and Canada in the face. I

10:47

mean, there are 25% tariffs that

10:49

went into effect on Thursday on

10:51

finished vehicles. We expect the same

10:53

tariffs to go into effect on...

10:55

auto parts in the beginning of

10:57

May. There are tariffs on steel

10:59

and aluminum. That really hits Canada

11:01

Heart. It also hits Mexico. There

11:03

are 25% tariffs on all goods

11:05

that don't fall within the USMCA,

11:07

the free trade agreement between the

11:10

three countries. This is a huge

11:12

economic burden on these countries and

11:14

a big, big hit to their

11:16

trading relationship with the United States.

11:18

And so it would seem as

11:20

though this potential world in which

11:22

the trading block of North America

11:24

is strengthened also comes with real

11:26

downsides for the two major trading

11:28

partners in that arrangement. Can I

11:30

throw a wonky point at you?

11:32

Sure. So I think it's worth

11:34

remembering that there's so much integration

11:36

between the US Mexican Canadian economies

11:38

that when we buy a finished

11:40

good. for Mexico, something like 30

11:43

cents on the dollar, the value

11:45

that could, actually made in the

11:47

United States, you know, with American

11:49

labor. The counterpart number for China

11:51

is three cents on the dollar.

11:53

And Chinese state policy is directed

11:55

at driving that number as close

11:57

to zero as possible. So it's

11:59

been true, you know, going back

12:01

to the first Trump administration, that

12:03

if we assume, and there are

12:05

a lot of reasons to debate,

12:07

what's the real objective, what does

12:09

Trump really want to do? Just

12:11

for the sake of this conversation,

12:13

it's about bringing production back to

12:16

the United States, generating jobs in

12:18

the United States. Well, it's always

12:20

been true that Mexico and Canada

12:22

are the potential solution, I'm putting

12:24

in air quotes, to our, also

12:26

air quotes, China, to our, also

12:28

air quotes, China, problem. And we've

12:30

gone through a very bewildering couple

12:32

of months, which seemed like, oh

12:34

no, maybe Mexico is the enemy

12:36

to the Trump administration. But that's

12:38

not really the case. production and

12:40

better for the American economy by

12:42

far. This is creating opportunities for

12:44

America. This is starting to make

12:47

a lot more sense to me.

12:49

Gina, where does Europe fit into

12:51

all of this? And what does

12:53

the US get from hitting our

12:55

allies in Europe with tariffs? And

12:57

I'm sure I'm ignorant. What kind

12:59

of jobs are going to be

13:01

coming from Europe back to the

13:03

US in manufacturing? So I think

13:05

there are several reasons. I think

13:07

one is that there are these

13:09

strategic goals. The Trump administration wants

13:11

to get Europe to bend on.

13:13

It wants them to change their

13:15

digital regulation policies. It wants them

13:17

to change some of their taxation

13:20

policies. And so I think the

13:22

goal is to negotiate on some

13:24

of that. I think there are

13:26

also a few key industries that

13:28

the administration cares about a lot

13:30

that do matter in Europe. Cars

13:32

are one of them. We definitely

13:34

see this desire to reassure the

13:36

automobile industry and there are some

13:38

really big car industries in Europe.

13:40

Think BMW. Think the outies of

13:42

the world. And so I think

13:44

in this sort of multi-pronged. trade

13:46

war, Europe is very clearly in

13:48

the crosshairs for reasons that are

13:50

partially trade and economic related and

13:53

partially actually quite a bit broader

13:55

than that. I want to pick

13:57

up on cars and the idea

13:59

of reshoring and Natalie and Peter

14:01

how realistic is the idea and

14:03

it's not just related to Europe

14:05

that through these tariffs the United

14:07

States is going to be bringing

14:09

more car manufacturing jobs back to

14:11

the US. We've talked at length

14:13

about the fact that cars are

14:15

made up of component parts assembled

14:17

all over the world. So this

14:19

gets really tricky, really fast. 30,000

14:21

parts in modern cars. Mine, it's

14:23

astonishing. I think that cars are

14:26

the most obvious place to drive

14:28

the re-shoring strategy. We will stick

14:30

you with tariffs if you don't

14:32

make your stuff in the United

14:34

States with a whole bunch of

14:36

caveats. Let's take a look at.

14:38

company like Hyundai. This is the

14:40

group that owns not only Hyundai

14:42

the brand but Kia as well.

14:44

This is a South Korean company.

14:46

Right. So they've spent significant amounts

14:48

of money setting up factories in

14:50

Georgia and they did that with

14:52

the understanding that they could tap

14:54

the global supply chain for their

14:56

parts and components. Now we're telling

14:59

them you're going to pay more

15:01

for steel, more for aluminum. We're

15:03

not sure what is going to

15:05

apply in terms of tariffs if

15:07

we're bringing electronics from Malaysia from

15:09

China. And so the net effect

15:11

of this could be, and we

15:13

don't really know how this will

15:15

play out, that Hyundai will say,

15:17

well, whatever we're going to do,

15:19

we're going to do it more

15:21

slowly. Maybe we won't add that

15:23

extra shift. In the US? Yeah,

15:25

I mean, you could see the

15:27

pressure to move faster to reduce

15:30

your import of finished cars from

15:32

Korea, replace that with your domestically

15:34

made cars, except again. You don't

15:36

know about your access to the

15:38

global supply chain. It's not like

15:40

you can just flip a switch

15:42

and suddenly all the stuff you

15:44

need to make a car just

15:46

comes back to the United States.

15:48

Right. I just want to recap

15:50

what you're saying. It's a little

15:52

bit complicated, very fascinating. A company

15:54

like Hyundai did exactly what we

15:56

in the US. say we want

15:58

a company from South Korea to

16:00

do, they move more manufacturing to

16:03

the US, then we just hit

16:05

them within the last 48 hours

16:07

with all these new costs through

16:09

these tariffs that are going to

16:11

kind of undermine the fact that they

16:13

moved here in the first

16:15

place. Exactly. And so here's

16:17

this policy that's supposed to

16:19

be about bringing jobs back

16:21

to the United States, creating

16:23

more jobs for blue-collar workers,

16:25

and we've taken aim. at

16:27

some jobs that are already

16:29

here. We have injected greater

16:31

anxiety, added more variables and

16:33

uncertainty to this large multinational

16:35

company that did exactly what

16:37

they were supposed to be

16:39

doing. Natalie, what Peter's describing

16:41

is a kind of paralysis

16:43

that might set in as companies

16:46

look at these tariffs and fear

16:48

that consumers are not going to

16:50

be biting in this moment. Is

16:52

that something you expect? I mean, I

16:54

think, you know, we're seeing a lot

16:57

of uncertainty, that's true, and uncertainty does

16:59

cause paralysis, but I think that we

17:01

have to keep in mind that America

17:03

is just... the most important consumer economy

17:05

in the world, and companies are already

17:08

trying to figure out how to secure

17:10

their duty-free access to that market, you

17:12

know, as much as they can. And

17:14

I agree that uncertainty rains, but I

17:16

just, I do think that there is

17:19

a motive now to figure out how

17:21

to make this work, just because you

17:23

want to be able to sell

17:25

to American consumers. Can I

17:27

complicate that a little bit? Please. Because

17:30

I actually, I think that is absolutely

17:32

the case. I think there's also a

17:34

more complicated dimension here though, which is

17:36

that I think we're going to see

17:38

both companies and countries trying to figure

17:40

out what other markets they might access

17:43

to replace American consumers. I think we're

17:45

seeing that a lot in Europe right

17:47

now. I think Europe, one of their

17:49

big strategies for dealing with this very

17:51

large problem that they have been presented

17:54

with is to go find new friends.

17:56

They are just sort of making the

17:58

rounds, going all around the world. trying

18:00

to figure out who they can

18:02

buddy up with to try and

18:04

make sure that they have a

18:06

consumer market to sell their products

18:08

into. I think it was symbolically

18:10

relevant that Ursula von der Leyen,

18:12

the president of the European Commission,

18:14

was actually in Central Asia talking

18:16

about trade when this all went

18:18

down. Okay, well on that note,

18:20

we're going to take a break

18:23

and when we come back we're

18:25

going to talk about... What retaliation

18:27

we suspect is going to look

18:29

like from all the countries in

18:31

the regions you all cover against

18:33

the United States in response to

18:35

what we have just done with

18:37

these tariffs? We'll be right back.

18:55

My name is Thomas Giffenf. I'm

18:57

a journalist at the New York

18:59

Times. I served in the Marine

19:01

Corps as an infantryman. When it

19:03

comes to reporting on the front

19:05

line, a lot of the same

19:07

basics are at play. You're looking

19:09

at the map of where you're

19:11

going. If you're on a paved

19:13

road, if you're on a paved

19:15

road, if you're a hospital nearby,

19:17

is your body armor affixed with

19:19

a first aid kit? Does everyone

19:21

know where that first aid kit

19:23

is? We arrive at a military

19:26

position. I'm listening for drones, jets,

19:28

checking with a team. Has everyone

19:30

comfortable? And if they are, then

19:32

we proceed. Frontline reporting is dangerous,

19:34

but I think nothing is more

19:36

important than talking to the people

19:38

involved. You know, hearing their stories

19:40

and being able to connect that

19:42

with people thousands of miles away,

19:44

anything that can make something like

19:46

this more personal, I think is

19:48

well worth the risk. New York

19:50

Times subscribers make it possible for

19:52

us to keep doing this vital

19:54

coverage. If you'd like to subscribe,

19:56

you can do that at nytimes.com/subscribe.

19:58

Natalie, let's talk about how this

20:00

is all going to play out

20:02

over the next few months, specifically

20:04

in the form of retaliation and

20:06

the impacts of the retaliation from

20:08

the countries who have just been

20:10

hit with these tariffs and are

20:12

stewing over that and planning to

20:14

essentially fire back at us. Where

20:16

should we start? Who feels like

20:18

they have the best handle on

20:20

the coming retaliation? Probably Gina does.

20:22

Yeah, Gina, go. You're in retaliation

20:24

land. Yeah, we're in retaliation mode

20:26

already over here. So we were

20:28

early movers on the retaliation front.

20:30

Is it worth saying, Gina, that

20:32

the European Union is how big

20:34

a trading partner is to the

20:36

US when we think about the

20:38

meaning of retaliation? Huge. Enormous. When

20:40

you think about the EU as

20:42

a bloc, actually all 27 countries

20:44

that form it, it is the

20:46

US's biggest trading partner, essentially. And

20:48

when it comes to services, it

20:50

actually... buys a lot more services

20:52

from the US than it sells

20:54

into the US. When we say

20:56

services, what do we mean, just

20:58

to declare? When we say services,

21:00

we mean things like financial services,

21:02

you know, banking services, but most

21:04

importantly, we mean technology services, the

21:06

cloud. the Google searches, and the

21:08

reason that that's so relevant is

21:10

what we've seen so far is

21:12

that the European Union has very

21:14

much retaliated by announcing additional tariffs

21:16

on goods. It is said that

21:18

it's going to put tariffs on

21:20

things like whiskey and motorcycles and

21:22

women's lingerie and a whole list

21:24

of products. But what we know

21:26

from our reporting, what we're hearing

21:28

about from our sources over here,

21:30

is that they are also very

21:32

much considering slapping some kind of

21:34

trade barrier on services. This would

21:36

really be sort of crossing a

21:38

Rubicon that the European Union hasn't

21:40

previously crossed, but it could potentially

21:42

be really powerful and it could

21:44

have the real risk of escalating

21:46

this trade war pretty significantly. What

21:48

does it look like this crossed

21:50

Rubicon? Does that mean they're going

21:53

to tax our tech? That essentially

21:55

is what it might mean. So

21:57

we saw a French official today

21:59

suggest that this would be some

22:01

version of attacks on information services

22:03

on internet technologies. This is very

22:05

much the kind of thing. that

22:07

is clearly still under development. They've

22:09

been trying to keep it under

22:11

wraps. And so I think we're

22:13

still waiting for the final actual

22:15

retaliation to come through to try

22:17

and understand exactly what this would

22:19

look like in real life. But

22:21

like nice little tech economy you

22:23

got here. I hope nothing happens

22:25

to it. Exactly. But Peter, can

22:27

you explain why does that matter?

22:29

When I think of Amazon or

22:31

meta, these companies getting taxed by

22:33

Europe, wouldn't on its face seem

22:35

like such a big deal. What

22:37

do I miss it? is like

22:39

the California of the world. It's

22:41

the one market that's big enough

22:43

that the standards that they set

22:45

affect the nature of business everywhere.

22:47

Europe's huge. I mean, you're talking

22:49

about 27 countries that extend from

22:51

Greece to Ireland. And if Europe,

22:53

if they start to take a

22:55

coherent approach to privacy and they

22:57

start to look at taxation, that

22:59

will be a significant problem for

23:01

a very big chunk of the

23:03

US economy. And that would open

23:05

up a vast new front in

23:07

this global trade war. Right, so

23:09

you're saying if Europe decides to

23:11

cut American tech out of Europe,

23:13

then suddenly the American tech industry

23:15

is really unhappy. And they're probably

23:17

going to tell President Trump that

23:19

the tariffs are the reason why.

23:21

That is effective retaliation. If they

23:23

threaten access, they threaten new taxes,

23:25

new regulations, that yes, that could

23:27

be further forced toward business leaders

23:29

saying, hold on a second, we

23:31

didn't sign up for tax-cuts and

23:33

deregulation and business as usual, we

23:35

didn't sign up for getting kicked

23:37

out of our potentially largest market

23:39

on earth. Mm-hmm. And I want

23:41

to just add, I think it's

23:43

not... an accident that Europe is

23:45

talking about tech in particular. I

23:47

think it's partially because that industry

23:49

is so affiliated with the White

23:51

House right now because they have

23:53

been doing this ingratiation exercise because

23:55

they've made friends with the Trump

23:57

White House. And so I think

23:59

the idea is if you hit

24:01

tech, you're hitting X, you're hitting

24:03

meta, you're potentially hitting... these big

24:05

tech companies that have got CEOs

24:07

who are really close to the

24:09

president and that might be an

24:11

effective way to really sort of

24:13

force the White House to come

24:15

to the negotiating table which for

24:17

Europe is the end goal. Can

24:20

I just go ahead Natalie? I

24:22

just want to throw a wrench

24:24

into things which is I hear

24:26

you that it is a well-designed

24:28

potentially strategy for retaliation but we

24:30

just don't know how effective it's

24:32

going to be because for example

24:34

These tariffs that are hitting the

24:36

auto manufacturers have been a big

24:38

deal for a long time now.

24:40

These executives are not happy. They

24:42

have been complaining about it. They've

24:44

been going to the White House.

24:46

What we've seen is that Trump

24:48

has been surprisingly resistant to changing

24:50

course even though there have been

24:52

big reactions on Wall Street and

24:54

by executives. And so I'm not

24:56

sure we know that these tech

24:58

executives kind of going to Trump

25:00

and complaining is going to really

25:02

make a difference here. I think

25:04

that's absolutely true. We don't know.

25:06

And in fact, it's not at

25:08

all clear. that there's an appetite

25:10

amongst business leaders who are afraid

25:12

to cross magga, whatever happens, tariff,

25:14

stock market, falling. But I think

25:16

it's fair to say that does

25:18

seem to be part of the

25:20

European strategy in terms of retaliation.

25:22

So the typical thing you retaliate

25:24

on is you go after bourbon

25:26

because you hit Mitch McConnell's home

25:28

state of Kentucky. You go after

25:30

grains because you hit the upper

25:32

Midwest and especially red states like,

25:34

you know, Indiana and then Nebraska.

25:36

And so this is. taking it

25:38

to a new set of Trump

25:40

allies if you go digital. Whether

25:42

it will work is a whole

25:44

other question. And I just want

25:46

to point out that there's another

25:48

big question here, which is, can

25:50

they even do this? You know,

25:52

it's not like Google has an

25:54

alternative in Europe. It's not like

25:56

they have services that can just

25:58

easily plop in and fill the

26:00

void that is going to be

26:02

left by some of these things.

26:04

And so there's this real risk

26:06

of how do you design a

26:08

response. that doesn't hurt your own

26:10

consumer base in a way that

26:12

makes it almost unsustainable to carry

26:14

this out. And so it's an

26:16

untried tool and it's going to

26:18

be really challenging for them to

26:20

actually use. What's going to be

26:22

the retaliation from China? And how

26:24

is that going to impact American

26:26

servers here? Well... The obvious place

26:28

China goes is agriculture. They go

26:30

after American farmers. Yeah, I mean,

26:32

China buys a ton of soybeans

26:34

from the US and they have

26:36

an alternative and that they can

26:38

look to South America, especially Brazil

26:40

and Argentina. There are other parts

26:42

of agriculture that would likely get

26:44

hit as well. Part of the

26:47

problem for China and this is

26:49

something that's been discussed on the

26:51

show is just that because of

26:53

the trade imbalance between the two

26:55

countries, China just... buys so much

26:57

less from the United States than

26:59

it sells, right? So there actually

27:01

are fewer products for China to

27:03

put tariffs on than, you know,

27:05

for the US. Like that's the

27:07

nature of the very trade imbalance

27:09

that Trump is trying to address.

27:11

What you're all outlining here is

27:13

just a huge dose of uncertainty.

27:15

And so I want to ask

27:17

each of you to think about

27:19

what the best case and the

27:21

worst case scenario is. from these

27:23

tariffs. Let's call it over the

27:25

next six months to four years.

27:27

I made up that window, but

27:29

just think big about how this

27:31

might play out. Okay, best case

27:33

scenario. We see companies. take the

27:35

hit in terms of their margins,

27:37

right? So Chinese suppliers, Mexican suppliers,

27:39

say, well, we want to maintain

27:41

our market share in the US,

27:43

so we will drop our price

27:45

to the brands that are buying

27:47

our stuff, and prices go up

27:49

a little bit, but not as

27:51

much as the tariff. And in

27:53

the meantime, the overall thrust of

27:55

the policy works and more investment

27:57

comes into the US, builds more

27:59

factories, we make more stuff in

28:01

the US, and then eventually the

28:03

suppliers follow their customers and we're

28:05

making the pea... parts of industry

28:07

in the US. and we get

28:09

more jobs in four years. That

28:11

is the rosiest possible picture you

28:13

can imagine. The worst case scenario

28:15

is that prices go up quite

28:17

dramatically and the result of that

28:19

is a so-called destruction of demand.

28:21

You know, oh you need a

28:23

car because your old car is

28:25

getting all. Well you go off

28:27

and you see the prices are

28:29

up quite a bit. The domestic

28:31

cars on offer are hard to

28:33

get because there's more demand for

28:35

that's driving their prices up and

28:37

you're hearing horror stories about how

28:39

hard it is to fix a

28:41

car. And so you just defer

28:43

your purchase and kind of muddle

28:45

through and meanwhile, you know, the

28:47

cost of everything from exercise, clothing

28:49

to groceries is going up and

28:51

just so you're buying less and

28:53

that leads to a good old-fashioned

28:55

recession where people lose jobs and

28:57

the economy slows down and people's

28:59

living standards decline. And by the

29:01

way, you know, the political implications

29:03

of that are likely to be

29:05

quite unpleasant. Natalie. So the best

29:07

case for North America and specifically

29:09

for the two trading partners for

29:12

Canada and Mexico is that the

29:14

tariffs that were already announced that

29:16

include a lot of goods. go

29:18

away or at least are significantly

29:20

reduced so that there is a

29:22

seriously preferential treatment to these two

29:24

countries while, you know, Trump does

29:26

whatever he wants with the West

29:28

of the world, you know, so

29:30

that you see a real strengthening

29:32

as we talked about of this

29:34

North American trading bloc, which would

29:36

hugely benefit all three countries and

29:38

You basically keep things the way

29:40

they've been, you know, free trade

29:42

in the North America lives. That's

29:44

the best case. The worst case

29:46

is, at least in Mexico, a

29:48

recession and a really damaging one.

29:50

I mean, we're talking about a

29:52

country that depends heavily on trade

29:54

with the United States. Millions of

29:56

jobs depend on it. This is

29:58

not something that can be easily

30:00

recovered by going to other markets.

30:02

And so you could really see

30:04

devastation across... the board, we're talking

30:06

about people potentially, you know, regressing

30:08

into poverty from the middle class.

30:10

Which has serious implications for the

30:12

US, given the border relationship in

30:14

migration between the two countries, we

30:16

would presume. Gina? So hopefully I

30:18

won't be run out of Brussels

30:20

for saying this, but I think

30:22

that the best case scenario for

30:24

Europe could actually be really positive

30:26

here. I think there's a world

30:28

in which some sort of negotiated

30:30

settlement... happens fairly quickly. You get

30:32

some tariffs down on certain products.

30:34

This is the optimistic. The administration

30:36

just wants to make a deal

30:38

scenario. Trade basically resumes. And in

30:40

the meantime. Europe has made this

30:42

whole new friend group. They've expanded

30:44

the posse. They have really sort

30:46

of had this moment of sort

30:48

of standing up and having political

30:50

will and figuring out how to

30:52

sort of grow some of their

30:54

own industries in a world where

30:56

they thought the US was really

30:58

going to sort of fade to

31:00

sort of fade to sort of

31:02

fade to a trading partner. So

31:04

they emerged from this a little

31:06

bit more independent, a little bit

31:08

stronger, and potentially coming from some

31:10

of the manufacturing stuff tied to

31:12

defense that's happening right now. But

31:14

I think there's a positive outcome

31:16

here. I think there's also an

31:18

extremely negative scenario, which is they

31:20

get locked in a sort of

31:22

tit-for-tat retaliation where both sides are

31:24

just escalating hoping that somebody finally

31:26

blinks. But it takes a really

31:28

long time for that to happen.

31:30

And in the process, Europeans are

31:32

facing much more expensive products. They're

31:34

facing lack of access to services.

31:36

They are watching companies really do

31:39

layoffs because they are no longer

31:41

able to sell into the American

31:43

market. And that would all be

31:45

extremely painful at a moment where

31:47

Europe is already struggling economically and

31:49

already feeling a little bit isolated.

31:51

We've already had Brexit. Russia has

31:53

obviously taken a much more aggressive

31:55

and much less friendly tone toward

31:57

the West in general. I think

31:59

we could end... up in a

32:01

really bad place where they are

32:03

in a really unfortunate position and

32:05

potentially dealing with a big influx

32:07

of cheap goods from China all

32:09

at the same time. Did you

32:11

want to say something, Peter? Yeah,

32:13

I just want to add that

32:15

Think about the last great shock

32:17

that we experienced globally, the pandemic.

32:19

COVID. And we ended up with

32:21

shortages of goods. We ended up

32:23

discovering that our supply chains were

32:25

not very resilient. And a lot

32:27

of confusion, right? It was hard

32:29

to get stuff on container ships.

32:31

In the US, our railroad system

32:33

couldn't handle it. We supposedly ran

32:35

out of truck drivers. Our warehouses

32:37

got all messed up. I think

32:39

you wrote a whole book about

32:41

this. I wrote a whole book

32:43

about it. It's called How The

32:45

World Ran Out of Everything. It's

32:47

by the global supply chain. And

32:49

you know, this is a... You

32:51

write a book, you get to

32:53

say it. This is a self-inflicted

32:55

shock. This is a similar set

32:57

of unknowns where we are asking

32:59

virtually every large company on Earth

33:01

to take a look at... where

33:03

they're buying and selling their stuff

33:05

and think about moving it around,

33:07

absorbing very quickly a dramatic change

33:09

to the terms of trade. And

33:11

we don't know what's going to

33:13

happen, but we know that the

33:15

last time we had a big

33:17

shock, it was extremely disruptive. It

33:19

was traumatic. It was traumatic. And

33:21

that's the gamble that the president

33:23

has just made. That's the gamble

33:25

that the president is telling us

33:27

he is making. The

33:31

president is telling us

33:33

that if we go

33:35

through this period of

33:38

pain, we will come

33:40

out the other end

33:42

much stronger with many

33:45

more jobs, but so

33:47

much would have to

33:49

go right for that

33:52

to pan out. And

33:54

we know that immediately

33:57

what we're looking at

33:59

is enormous chaos and

34:01

upheaval. Thank you. Natalie,

34:04

always a pleasure. It

34:06

is, always a pleasure,

34:08

Michael. On Thursday, the

34:11

German automaker Volkswagen told

34:13

car dealers that it

34:15

would add an import

34:18

fee to the price

34:20

of cars sold in

34:23

the United States. It

34:25

was one of the

34:27

first and clearest examples

34:30

so far. of President

34:32

Trump's new tariffs turning

34:34

into price increases for

34:37

American consumers. We'll be

34:39

right back. President Trump

34:41

has fired six officials

34:44

from the National Security

34:46

Council after an extraordinary

34:49

meeting in the Oval

34:51

Office with the far-right

34:53

activist Laura Loomer who

34:56

laid out a list

34:58

of people that she

35:00

believes were disloyal to

35:03

the president. The sequence

35:05

of events suggests that

35:07

Loomer, who has floated

35:10

the baseless conspiracy theory

35:12

that the September 11th

35:15

attacks were an inside

35:17

job. is now wielding

35:19

more influence over the

35:22

staff of the National

35:24

Security Council than the

35:26

cabinet officials who officially

35:29

oversee them. Today's episode

35:31

was produced by Will

35:33

Reed and Moody. It

35:36

was edited by Maria

35:38

Byrne, Paige Cowat, and

35:41

Lisa Chow. contains original

35:43

music by Dan Powell,

35:45

Diane Wong, and Mary

35:48

Elizano, and was engineered

35:50

by Alyssa Moxley. Our

35:52

theme music is by

35:55

Jim Brunberg and Ben

35:57

Landsfer of Wonderly. That's

36:15

it for the the

36:17

I'm Michael Bobaw. See you

36:19

on Monday. This podcast is supported

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