What the Trump's Tariffs Mean for You, Today and For The Future
Short term loss for long term gain. That's what the people voted for and that is what Trump is delivering. Charlie talks to economist Oren Cass about Trump's tariff reveal and and why there are more things that matter than just the day-to-day fluctuations of the stock market. Watch ad-free on members.charliekirk.com! Get new merch at charliekirkstore.com!Support the show: http://www.charliekirk.com/supportSee omnystudio.com/listener for privacy information.
President Trump is trying to rebalance the global economy with tariffs.
It is a risky move, one that voters voted for.
We discuss.
Email us as always freedom at charliekirk.com.
Subscribe to our podcast.
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The stock market does matter.
62% of Americans have something that they have worked hard for in the stock market.
Should not be diminished.
Should not be minimized.
Now, markets did know that this was coming.
Markets knew that there was going to be some sort of a recalibration.
There's going to be some sort of a Hiccup and you're seeing you're seeing it and experiencing it The President Trump ran on tariffs and let me bring you into the room of the calculus if he knows that he wants to do tariffs to get better trade deals and rebalance the deficit if He knows he has to rebuild American manufacturing on one side and he also simultaneously knows that he is going to have Which
one would you do first?
Would you do the tough stuff first?
Or the easy popular stuff first.
So President Trump, knowing he has to do tariffs and that people voted to have him do tariffs to reindustrialize the country and onshore jobs.
He said and has decided that.
To do the tough fight first.
Get it out of the way.
Shock and awe.
Now, out of all the tariffs that President Trump has applied, the ones on China are the most bold of them all.
The boldest, I should say.
You see, the Chinese Communist Party could very well go into an economic depression over this.
Now, whether or not we will go into a recession, we will see.
But the Chinese Communist Party is so reliant and so dependent, they are so married to the American market, that they require unfettered free trade, even though we do not have free trade with the Chinese Communist Party.
We are not able to open our banks in China, many of our goods and services and our products.
We're not able to import many of our vehicles.
It is not a reciprocal market.
Every U.S. tech company is restricted in China.
Out of all of the tariffs that President Trump has issued, the one that is making the markets the most jittery, the one that is making the markets most nervous, is China.
The Chinese Communist Party is showing its hand.
They know that this could mean the end of the current Chinese Communist Party uptick over the last 25 years.
They know it, they sense it, and they feel it.
But understand the sequence of events because what's coming after this is going to be almost nothing but good news.
You start with the tariffs, and then what is coming next?
Deregulation, drill baby drill, oil permits, and then no tax on tips, No tax on Social Security, extending the Trump tax cuts, major middle-class tax cut, heavy machinery depreciation.
So you start with the stuff that is going to kind of be a little bit of a gut punch to the markets, and then you build your way up from there.
All the while what tariffs do is they are a forcing function to re-domicile companies to the United States.
These systemic changes will help us long-term.
President Trump is looking to implement a long-term systemic change to help make our country stronger.
But it will undoubtedly come with some bumps and some hiccups and, for some people, some short-term economic pain.
What is going on here, what is unfolding on the markets, which right now is a red bloodbath, is a moral question.
Are we willing to delay the immediate sugar high of gratification, even though we know it is unsustainable and bad for us, to break through on the other side to have a vibrant and strong and long-term durability?
That is the question in front of us.
And ever since the Greenspan put, ever since the tradition of easy money and the influx of Artificially low interest rates?
The stock market has gone up and up and up and we have seen us enter into an era where we don't make stuff but we certainly consume it.
You cannot print wealth and the trade deficits coupled with our national debt have left us in a rather precarious situation.
You know how easy it would be for President Trump to just punt, to delay, and not confront this problem head-on?
America has for decades operated on a plan of trading U.S. dollars for things produced in other countries.
We trade paper for goods.
We trade paper for goods.
If people ever decide they don't want the paper anymore, we are helpless.
China makes things.
They engineer them.
They design them.
they have tens if not hundreds of millions of people that are in the manufacturing sector and We believe the propaganda from the free trade absolutists That you are somehow liberated and an enlightened economy if you do nothing But brain work,
but no body work as the vet great Victor Davis Hanson said in our program Instead you need both you need both the brain and the body of an economy in fact Despite what all of the experts and the prognosticators told us, we are about to see the greatest hardware demand that humanity has had since the Industrial Revolution.
Almost all of the wealth that has driven the stock market over the last 10 years, outside of Apple, Apple is the exception, Has largely been software breakthroughs.
Tesla could be the other exception.
But you look at Google, you look at Amazon, you look at Meta or Facebook, you look at Netflix.
So much of that is software breakthroughs.
It's applications, social media, data companies.
Now Nvidia to their credit does do a fair amount of hardware.
But it's coupled with some software If we are serious about entering this golden era of America, we have to strip ourselves of the old economic alliances and worldview, the allegiances that have plagued us for quite some time.
And the easy decision, the simple decision would be delay it.
Extend the good times.
Who cares?
Draw down the inheritance.
It's not our problem.
And understand that during COVID, during the lockdowns, we saw on display the instant gratification moral issue.
The instant gratification during the lockdowns was print as much money as you can, flood the zone with cheap money, inflate the market, Who cares if your 15 year old grandkid is going to commit suicide?
Who cares if they're going to get fat?
Live for the moment.
We baby boomers have earned it and we are going to sell our kids off and it doesn't matter if they'll be indebted and sick and helpless and abused.
That was the moral decision made during COVID.
Now we are finally embracing A delayed gratification strategy.
One that built the West.
And it is not necessarily going to be warmly received by the people that are used to sugar highs and dopamine hits.
This is the tough stuff.
And on the other side will be a country that can last another 250 years.
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you you This is the great Rick Santelli from CNBC, who of course had the original Chicago Tea Party rant.
Let's play Cut 364.
Ultimately, if you live in the US, or you live in Europe, or you live in China, ultimately what goes on at home is very important.
We are the most dynamic economy in the world.
And much of that money we spent was in debt.
The debt was financed by foreigners.
Some of that money.
They enabled us just like the Fed enabled us with those capital accounts.
I'm saying there is a dark side to the trade deficits.
In a different way, I think, than Trump looks at it, I look at it like it does.
It does underscore and underpin a type of financial behavior that in the long term, That financial behavior that Rick Santelli is pinpointing beautifully is that We will import piles of plastic that we do not need.
We will no longer make stuff here.
And regardless of the consequences to our own citizenry, we will continue to trade paper for stuff.
Paper for stuff.
You see, the one advantage that we have is that when a trade war escalates, is that traditionally, The country that is in the trade deficit will almost always win the trade war because we have far more cards than the country that is in the trade surplus.
So China is actually very reliant on us right now.
So much of their material wealth has been built on trading with us.
And we have not decided to do anything about it.
And also understand, it is easy And quite honestly, intellectually lazy to blame Donald Trump for this.
Blame the people that created the mess.
He is attempting to fix it.
And it's going to take a Herculean effort to go through the fact that a lot of people are losing money right now.
And I am not diminishing that.
I'm not minimizing it.
A lot of people are losing 10-15% of their earnings.
I believe they will get it back and then some because of the tax cuts, the deregulation, the drill baby drill, the no tax on tips, the tax bill is going to boost the psyche and the mentality and you have to look long term.
But he is attempting to fix the inherited broken global trade order.
We have sold our wealth away.
And we're starting to see a reinvestment of foreign direct investment of building and manufacturing, well over five trillion dollars that is going to be spent in this country.
And remember, when Ronald Reagan was president, there was a short-term economic dip before the massive roaring 1980s.
This is Stephen Miller on Laura Ingraham, play cut 366.
All of that manufacturing, all of that industry, was ripped apart by our elites, shipped to foreign countries, and then they sent us the bill.
They said, you have to protect Korea, you have to protect Europe, you have to protect Canada, you have to protect Japan.
We won't take your cars, we won't take your agriculture, we'll take away your steel industry, your aluminum industry, your copper industry, your electronics industry.
So what President Trump is saying is, these are the injustices you have to remedy.
This isn't just about moving around some lines on a ledger.
This is about This is another important point.
I think at its core a lot of Americans appreciate certain forms of trade and importation.
If your country is full of great artisans and craftsmen, and you're importing something that is incredibly unique, something that that nation is known for, for example, Colombian coffee, fair enough, or Canadian maple syrup, French wine is a great example.
The tariffs are not targeted towards that.
I mean, they might be caught up in that, but the essence of the tariffs is not trying to go after Italian olive oil.
It's not trying to destroy the native cultural export of a certain nation.
No, instead, what we have a problem with is trading when a nation becomes an industrial mill of unnecessary piles of plastic, unnecessary amount of garbage, That then floods our streets, our communities, and we have no attachment with what we're actually buying.
We become so hyper-materialistic.
We are not here to try and stop French wine from coming to the United States.
In fact, though, I will say the wine producers in Fredericksburg, Texas and Napa Valley would love that.
Instead, we want American products, the stuff that we're good at making, Which is a couple things here or there to be able to go into other nations without penalty or tariff.
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Email us freedom at charliekirk.com to help us make sense of the tariffs and the philosophy behind them is Oren Kass, the chief economist at the American Compass.
Oren, great to see you.
Oren, what is your take on President Trump's tariff announcements?
But even more broadly, let's start with why are tariffs a good idea for the United States of America to implement?
Well, at the end of the day, I think tariffs are important because making things matters.
I've found you have to start all the way back there because we've gone through, you know, 30 or 40 years where economists and policymakers said making things doesn't matter.
We're going to have a free trade system where we are perfectly happy if all of our manufacturing jobs go to China.
They'll make cheap stuff for us and we'll find something else to do.
And what we've seen is that's a terrible model.
It is terrible for working people who see good jobs leave and not-so-good jobs replace them.
It's terrible for the economy.
We've seen less innovation, lower growth, and it's certainly terrible for our national security.
If you can't make stuff, you can't defend the country with bowling alleys.
The entire argument for free trade and just saying we don't care where things get made If that's not right, then, in fact, you probably do need some sort of tariff.
You need a finger on the scale that says, all things equal, we would rather things be made here.
And by having a tariff, you change prices a little bit so that people deciding where to build, where to make things, will think harder about doing them here in America.
What do you have to say to critics that will say, well, tariffs are a tax and it will raise prices on Well, tariffs are a tax, but at the end of the day, you have to raise revenue from somewhere.
So if you have more revenue coming in from a tariff, you can also reduce some other tax instead.
You can also reduce our enormous deficit.
If you want to.
So I don't think we should choose, yes, we do want a tariff or no, we don't, based on the fact that it's a tax.
We should think about the goal that we have.
And if the goal that we have is to encourage people to find ways to make things here, then we do want that to show up in prices.
And what we've seen historically is that when you actually do this, The result is that people do come make stuff here, and once people invest here, they can make it very efficiently.
I mean, look at Japanese cars.
You know, they all used to be imported from Japan.
It was the Reagan administration that basically forced Japan to send Honda and Toyota to come build cars in America instead.
No one's walking around complaining that Toyotas and Hondas are too expensive.
We're happy that we have them investing here, and hundreds of thousands of jobs as a result.
The consensus of Wall Street right now is that these tariffs will create a bitter ongoing trade war of which there will be no resolution.
Comment on the details of these tariffs, President Trump's strategy, and any feedback you might have.
Well, I think it's important to notice that there are kind of three different tariffs that he's pursuing.
One is China.
And, you know, he has at this point come in and put very high tariffs on China.
They're getting up toward 50 or 60 percent.
He has also endorsed Trump—and this is a bipartisan position at this point—that we should revoke what's called permanent normal trade relations, that we should sort of permanently say we don't want free trade with China.
China is an adversary.
China is not a market economy.
And so I would expect to see that trading relationship go downhill.
And frankly, I think we should want it to go downhill.
That doesn't concern me at all in terms of what the long-term strategy is.
The second piece is the kind of global 10% tariff.
And that's the piece that I think fits the view that I was describing at the beginning, that if we have a preference for making things in America, then we should want to have some sort of tariff that puts a finger on the scale.
And if other countries want to do the same thing, I think we should say that's reasonable.
Tariffs at that level will create some friction that I think we should want in the system that encourages domestic production.
It's not going to ruin the global economy or whatever else.
And then the third piece, which I think is the most complicated, is what they're calling these reciprocal tariffs, where they went country by country and looked at how big a trade deficit do we have with the country, how big is the imbalance, The bigger that imbalance is, the bigger the tariff we're going to put on you.
I think my interpretation is that that is clearly what I would call a negotiating tariff.
What they're saying is, look, if we can get trade back to balance, we would love to get rid of these tariffs.
We would love to have no extra tariff on you and have balanced trade with you.
What we're not going to tolerate anymore is this situation where we have highly imbalanced trade.
I think what you'll see, and what will be in the best interests of other countries, They would much rather work that out and have balanced trade than have a trade war.
That's better for them, and it's better for us.
What I hope we're moving toward and what the Trump administration is pushing toward is, look, we can have a big free trade zone of market democracies that all commit to balanced trade, that have very low tariffs, and that keep China out.
That would be a much better economy for the United States, and I think it would be a very good arrangement for our allies as well.
So, if President Trump decided to ignore this problem and do nothing, I'm curious what would actually end up happening, which is the further deindustrialization of America.
You've been studying the Reagan years, and in order to get inflation under control, they sparked a recession.
Tell us any parallels that we might see in the ensuing prosperity that happened.
Yeah, I think it's really interesting to look at how all the sort of, you know, what I call very serious people who spend their time pontificating About our politics, they usually say, oh, you know, our democracy is broken, politicians don't make hard choices, they won't accept costs or ask people to make sacrifices to pursue the common good.
And here you have the Trump administration doing exactly that.
They're acknowledging that there are costs to this, but they're saying it's worthwhile because we have very big challenges, and it is going to take real effort to get out of them.
I think the last time we really did that was when Ronald Reagan came into office.
We were in this period of what was called stagflation.
Inflation was very high, growth was very low, and And what Reagan and the chair of the Federal Reserve, Paul Volcker, did was they shocked the economy.
The interest rate went up to 20%, if you can imagine that.
Unemployment went up to about 10%.
The S&P 500 went down 40%.
This was all early in Reagan's first term, and it actually took a long time to turn back around.
By 1984, on Election Day in 1984, the market was lower than it had been So,
what would you consider to be A good resolution with some of these negotiating tariffs.
No tariffs at all.
No boundaries or barriers.
There's a debate right now of what does success look like?
Because some of these tariffs are so extremely high.
Is that going to be the new normal?
In your estimation, for the American worker, what would be the best resolution?
So I think the best resolution is that we get to balanced trade, and what that means is that trade is working the way it's supposed to, the way that we have sold it to workers all along, right?
When you hear politicians or economists tell people we should have free trade, what do they say?
We're going to have better opportunities for better American jobs, making more things for the rest of the world.
We're going to specialize in the things we can make best.
Other places will specialize in the things they can make best.
That all sounds great.
I would love for that to be the case.
That's not what we got.
Instead, we got a world where we stopped making things, and those jobs and those factories moved to overseas.
The rest of the world made stuff for us, but we didn't get to trade that for stuff that we made for the rest of the world.
And that's not some weird fluke or magical effect.
It's really because of policies that other countries choose.
Policies That they are pursuing because they want to make things, they know that making things matters, and they want to sell them into the American market.
And so what I'd like to see us do is use these tariffs, the reciprocal tariffs for negotiations, to make it very clear that that kind of arrangement that was not good for Americans is no longer an option.
If countries try to pursue that, they are going to see real consequences.
But there is another way that would be better for them, and it would be better for us, and it would look like them changing their policies.
Instead of pursuing policies to try to take advantage of the U.S., to try to take the jobs into their countries, to grow by exporting into our country and not buying anything from us, what they should be doing is asking, what are the policies we can pursue that create balanced trade?
Maybe that's like in the case of Japan.
We're actually going to tell some of our companies and create policies that Lead them to go invest more in America.
Maybe it's going to be they pursue policies to buy a lot more from America.
There's a lot they can do if we make it so that that's what they want to do.
And I think that should be the goal.
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So Oren, how many weeks of labor a year does it require a father or a dad in order to sustain a family of four in 2025?
So my best estimate, and actually we looked at this kind of before you got the biggest COVID inflation, because that obviously threw things off in a lot of ways, but if you take the kind of core basics of middle-class security, which I would define as health insurance, housing,
sort of, you know, typical average housing, transportation, operating a car, being able to pay for tuition at a public university in your state, and affording the food that your family needs, And if you ask how many weeks of work for the typical male worker does that take, in modern America now, it's well above 52. It's well above 60, in fact, which is a problem.
There are obviously only being 52 weeks in a year, and it didn't used to be that way.
If you go back and look at the 1980s, the sort of comparable package of stuff that you needed for middle-class security, you could buy with about 40 weeks of work.
In order for us to be able to restore that balance, what is required from an economic policy perspective beyond tariffs?
What else would you be recommending for this administration to embrace?
Well, I think for one thing, it's really important to focus on what I would call the supply side.
So, you know, tariffs obviously create an incentive to come in and build more here in the United States.
We also do a lot more to then help people do that.
Um, and some of that is things like better tax policy.
We need, you know, to deregulation.
We also need a lot of workforce training.
I think education is one of the most important places that, that we can be doing a lot better.
Right now we have a model that sort of just says, look, we're going to try to get you into college and, and we hope that works for you, but that's, that's pretty much all we do.
And the reality is that that does not work for the vast majority of people.
Uh, either they, they don't go to college at all, or they, they don't complete college.
Where even if they do, a large share, you know, can't find a job that's the kind of job that it's typically for people with a college degree.
And so I think what we need is to invest much more heavily in other pathways that actually connect people to jobs that help cover the cost of their training that, you know, put them into community college programs that actually give them real skills.
And obviously that's going to be very good for them.
That's going to ensure that, you know, those younger workers are getting pretty quickly to a place where they feel like they can start a family.
And it's going to be incredibly important for the employers, for these companies that we're asking, please come build here.
You know, I'm not sure we can do that and then just say, but all we have like for you to hire are college dropouts and English majors.
I think it will speed along this transition if we have the right program so that That we make sure we're preparing workers to be productive in this kind of economy.
Or in closing here, the trade, let's just say, situation has put a lot of our audience in a little bit place of anxiety.
Any message to them of everyday retail investors that are quite worried about the effects of the application of tariffs?
Well, if you're talking about an investment in the stock market, I think it's important to say that there is certainly a sort of adjustment going on here.
I mean, everybody knows that globalization was very good for corporate profits.
If the goal was to maximize corporate profits and telling companies they could just shut down their American operations, they could stop dealing with American workers, and they could just set up shop in China, There's no question that that drove a lot of profit and that drove a lot of appreciation in stock prices.
And so if we're turning that around, if we're reversing that, we should expect that to have an effect on corporations.
But just as it had a really negative effect on workers, I would expect this to have a much more positive effect on workers.
And the reality is that if you look at the long term, It's not that whatever is good for corporations is good for America.
It's that whatever is good for America is going to be good for corporations as well.
And if we can get our house in order and actually have a more productive economy, a growing economy, and a healthier nation and a healthier society, I think in the long run that's going to be plenty good for investors as well.
But we really do have to focus on getting our ducks in order first.
