Trump Wins. What's Next for Tech and The Economy? — With Dan Primack and Ana Swanson

Summary

Big Technology Podcast: “Trump Wins. What's Next for Tech and The Economy?” – Detailed Summary

Release Date: November 6, 2024
Hosts: Tomer Cohen and Michael Kovnat
Guests: Anna Swanson (New York Times, Trade and International Economics Reporter) and Dan Primack (Axios, Business Editor)

The bonus edition of the Big Technology Podcast, hosted by Tomer Cohen and Michael Kovnat, dives deep into the implications of Donald Trump's decisive victory in the U.S. Presidential election. Featuring insightful discussions with Anna Swanson and Dan Primack, the episode explores the potential shifts in the economy, technology sector, and international trade policies.

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1. Election Results and Key Factors [00:47 – 05:37]

Tomer Cohen opens the discussion by outlining the election outcomes: Donald Trump secured 277 electoral votes, with projections indicating an increase. The Republicans gained control of the Senate by flipping three seats and have a strong chance to win the House, signaling a potential Republican sweep and an end to the anticipated gridlock.

Michael Kovnat emphasizes the role of inflation as a critical factor influencing the election, noting, “people are all paying more for groceries” despite positive economic indicators under the Biden administration. He underscores that the sticker shock from increased prices resonated more with voters than the abstract improvements in GDP growth and job numbers.

Anna Swanson concurs, interpreting the results as a “rejection of an incumbent party,” driven by public dissatisfaction with the economy's direction. She highlights that while macroeconomic data under Biden has been strong, the public's perception is marred by higher prices and uncertainty, making Trump's straightforward messaging on tariffs and immigration appealing.

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2. Trump’s Economic Policies and Tax Proposals [09:55 – 15:10]

Tomer Cohen raises questions about Trump's proposed tax cuts, particularly their feasibility and impact on working-class voters. Michael Kovnat responds by explaining that while Trump's tax cuts have historically benefited the super-rich, their extension will depend heavily on Republican control of Congress. He notes, “Trump needs Congress for that,” indicating the uncertainty surrounding the implementation of further tax reductions.

Anna Swanson adds that Trump's approach to tax policy appears more reactionary, often “crowd testing” policies based on popular support rather than structured economic planning. She highlights the substantial financial implications of Trump's proposals, such as eliminating taxes on tips, overtime, and Social Security benefits, raising concerns about their impact on the U.S. deficit and national debt.

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3. Impact on Trade and Tariffs [16:19 – 24:03]

The conversation shifts to Trump's stance on tariffs, a cornerstone of his economic philosophy. Anna Swanson explains that Trump views tariffs as a powerful negotiation tool, aiming to balance the strength of the U.S. dollar against global trade dynamics. She notes, “there are a lot of contradictory views about currency,” within the Trump administration, reflecting uncertainty about the practical application of tariff policies.

Michael Kovnat expresses skepticism about the full implementation of Trump's ambitious tariff plans, suggesting they might primarily serve as negotiation tactics rather than fully enforced policies. He observes, “tariffs seem to be a way to help how to win,” rather than stemming from a detailed economic strategy.

Dan Primack contributes by discussing the market's immediate reaction to the election results, noting mixed stock performances like Nvidia rising by 2.5% while TSMC fell by 3%, indicating investor uncertainty regarding the future trade landscape under Trump’s potential policies.

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4. Stock Market Reactions and Federal Reserve Concerns [24:03 – 36:40]

Tomer Cohen highlights the initial positive movement in the S&P 500, attributing it to market certainty post-election. However, Michael Kovnat cautions that the stock market's rise has been ongoing for two years, partially reflecting the strong U.S. economy compared to global counterparts.

Anna Swanson delves into concerns about the Federal Reserve's independence. She points out that Trump's history of questioning the Fed’s autonomy could undermine its ability to manage inflation effectively, especially if his administration pursues inflationary policies like extensive tariffs and tax cuts. This tension poses risks to maintaining economic stability.

Michael Kovnat emphasizes the potential conflict between Trump’s policies and the Fed’s mandate to control inflation, suggesting that any direct interference in monetary policy could disrupt the delicate balance of managing inflation and employment.

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5. Big Tech, Antitrust, and AI Policy [29:15 – 35:08]

The discussion shifts to the technology sector, focusing on antitrust issues and artificial intelligence (AI) policy. Anna Swanson expresses uncertainty about Trump’s approach to AI, noting his silence on the subject. This uncertainty leaves tech companies in a precarious position regarding future regulations.

Michael Kovnat highlights the ongoing scrutiny of big tech under Lina Khan’s leadership at the FTC, questioning whether Trump’s administration will adopt a more lenient stance towards large conglomerates. He speculates that Trump might allow more mergers to pass, contrasting with the Biden administration’s stringent policies.

The guests also discuss the potential impact of AI advancements and the lack of clear policy direction from Trump, which could either allow AI to flourish unencumbered or lead to significant regulatory hurdles, affecting innovation and economic growth.

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6. Elon Musk’s Potential Influence [38:16 – 42:54]

Elon Musk emerges as a significant figure in the conversation, given his influence in both technology and policy circles. Michael Kovnat speculates that Musk could become an influential player in the Trump administration, particularly through his ventures like SpaceX and Tesla. However, he cautions that Musk’s recent investment in Twitter (now X) has not been successful for investors, indicating potential future conflicts.

Anna Swanson considers Musk’s role in U.S.-China relations, noting that Tesla’s manufacturing ties in China could position Musk as a mediator in trade tensions. However, she also points out the complexities of relying on a single influential individual to navigate international trade dynamics, especially with China’s control over critical supply chains.

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7. Bull and Bear Cases for Trump’s Economy [43:24 – 47:42]

In evaluating the future of the U.S. economy under Trump, both guests present optimistic and pessimistic scenarios.

Michael Kovnat outlines the bull case as inheriting a robust economy with significant tailwinds, including leadership in AI and other technological advancements. Conversely, he warns of the bear case, where Trump’s penchant for disruption and impulsive policy decisions could lead to economic instability and unpredictable outcomes.

Anna Swanson echoes similar sentiments, highlighting the bull case centered on stable economic growth and manageable trade policies. The bear case includes potential tariffs igniting trade wars, critical supply chain disruptions, and increased international instability, particularly concerning regions like Taiwan and Russia.

Both guests agree that while the immediate economic indicators are favorable, the long-term implications of Trump’s policies pose significant uncertainties and risks.

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8. Closing Thoughts and Recommendations [47:50 – End]

As the episode concludes, Anna Swanson and Dan Primack provide listeners with resources to follow their work. Swanson encourages following her articles at the New York Times, while Primack promotes his "Pro Rata" newsletter at Axios for in-depth business coverage.

Tomer Cohen wraps up by teasing future episodes, promising a return to the podcast’s core focus on technology, after this foray into political and economic landscapes.

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Notable Quotes with Timestamps:

• Michael Kovnat [02:45]: “Inflation clearly was a massive factor here because... people are all paying more for groceries.”

• Anna Swanson [03:59]: “People are not happy with the way the economy has been going.”

• Michael Kovnat [07:49]: “Trump is promising lower taxes kind of across the board.”

• Anna Swanson [09:55]: “Trump just sort of crowd tests policy and sees what's popular...”

• Tomer Cohen [15:51]: “Does Congress care at all about fiscal responsibility on any of this, or do they not?”

• Anna Swanson [16:21]: “Trump has consistently misunderstood or at least misstated publicly how tariffs work.”

• Michael Kovnat [22:45]: “He doesn’t really have anything deep, deep inside.”

• Anna Swanson [26:48]: “There’s a lot of uncertainty there for me, and that's one of the things I think I'm going to be most focused on.”

• Michael Kovnat [35:08]: “If Trump wants to have a greater say, what the reason why it really matters is the Fed is supposed to be politically independent.”

• Anna Swanson [40:45]: “China is the source of almost all of the world's critical minerals and car batteries.”

• Michael Kovnat [42:54]: “Trump has really embraced him so far. So he's going to play kind of a role.”

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Conclusion

The episode provides a comprehensive analysis of the potential economic and technological shifts following Donald Trump’s election victory. While the immediate outlook appears positive, driven by strong economic indicators and market confidence, underlying uncertainties related to tariffs, tax policies, Federal Reserve independence, and international trade dynamics present significant challenges. The guests emphasize the need for cautious optimism, acknowledging both the opportunities and risks inherent in the forthcoming administration’s policies.

Listeners gain valuable insights into the complex interplay between political outcomes and their ramifications on the tech sector and broader economy, making this episode a crucial listen for those interested in the future landscape of technology and economic policy.

Transcript

[Tomer Cohen]

After Donald Trump's decisive victory in the US Presidential election, we'll break down what it means for tech, the economy and the world. That's coming up right after this.

[Michael Kovnat]

Hey, I'm Michael Kovnat, host of the Next Big Idea Daily. The show is a masterclass in better living from some of the smartest writers around. Every morning, Monday through Friday, we'll serve up a quick 10 minute lesson on how to strengthen your relationships, supercharge your creativity, boost your productivity, and more. Follow the Next Big Idea Daily wherever you get your podcasts.

[Tomer Cohen]

I'm Tomer Cohen, LinkedIn's chief product officer.

[Michael Kovnat]

In my new podcast, Building One, I interview some of the best product builders.

[Tomer Cohen]

Out there, people at the intersection of dreaming and building and learning.

[Michael Kovnat]

Together, you and I will learn from their experiences.

[Tomer Cohen]

If you're just as curious as I am, follow Building One wherever you listen and check out the conversation on LinkedIn. Welcome to Big Technology Podcast Bonus edition. We're here talking the morning after the election. We didn't think we would have a winner at this point, but we do. Donald Trump has won decisively and we're going to talk about what it means for the economy, for tech and for trade moving forward. We're joined today by two great guests. Anna Swanson is here. She's a reporter covering trade and international economics for the New York Times. Anna, welcome.

[Anna Swanson]

Thanks for having me.

[Tomer Cohen]

And we're also joined by Dan Promack, the business editor at Axios, who has been here for the day after Sam Altman was fired, the day that Silicon Valley bank imploded, and now the day after the election. So Dan, you're our go to on Big News. Great to see you again. Thanks for being here.

[Michael Kovnat]

Good to be here.

[Tomer Cohen]

Okay, let's talk quickly about what exactly happened last night. Just setting the scene. Trump has been declared the victor by basically everyone. He has 277 electoral votes already. According to the New York Times, that number will go up. The Republicans also won the Senate, flipping three seats already and they have a great shot to win the House. So so much for gridlock. It's looking like it's going to be a Republican sweep. And I'll just say personally, at the very beginning of the night, CNN had an exit poll that showed a 20 point swing toward Trump among independents in Georgia. That came up at like 7:30pm Eastern. And as soon as that happened, it was like pretty clear that it was going to be a win for Trump. And now we have it. So I think that this election turned on two issues really. And I'm, I welcome pushback from the guests, but I think the economy and by that is really inflation and immigration, that's kind of where I think this election turned. So I want to go to you, Anna and Dan. What's your read on what happened in the election?

[Michael Kovnat]

Sure, yeah. No, look, inflation clearly was a massive factor here because when you look at the exit polling and how Trump gained kind of across demographic, right across geography and across demographic, one thing that kind of everybody shares in common throughout the entire country is that they are all paying more for groceries. We all get food, we all are paying more for it. And even though the economy by almost all objective standards has been very good under the Biden administration in terms of job growth, in terms of GDP growth, etc. And in some, some ways better than it was for Trump pre Covid. You know, that sticker shock clearly was on a lot of people's minds and was something that Harris was unable to overcome. Now, Trump never really explained how he was going to change that. And I've heard some people suggest this idea that, well, prices will now go back down to where they were four years ago, which would be disinflation, which I don't think any economist thinks is a particularly good idea. And Anna can speak much better to this. But kind of where Trump is going, at least with what he said on the campaign trail in terms of tariffs, there is a general economic consensus that that will simply lead to more perhaps heightened inflation. Whereas right now it has been going down over the past year.

[Tomer Cohen]

Yeah, and we're going to get to that right away. But Anna, first of all, your broad thoughts on what happened in the election.

[Anna Swanson]

Yeah, so definitely. So when I started seeing the results, I immediately just kind of read this as, you know, oh, this is really the rejection of an incumbent party. I mean, people are not happ with the way the economy has been going. And it's a little bit ironic because on paper, as Dan was saying, the economy looks pretty good. I mean, growth is really strong. Inflation has come back down. There are a lot of metrics where the US Economy is ticking along pretty well, especially compared to the rest of the world. But inflation, the experience that people have is not based on the year over year rise in inflation. It's just that prices are much higher than they had been. And I also think there's kind of this sense of, you know, uncertainty, general uncertainty with the world, with the US Economy, you know, certain groups that are just not seeing the kind of progress and the growth that they did before. And I Think, you know, Donald Trump had a very appealing message for a lot of those people. He provides a lot of, like, very simple answers, you know, in terms of I'm going to solve this through taking a tough approach to other countries on trade or on immigration. You know, whether or not those can really translate into economic policy proposals and whether those will accomplish what he says they will. I think you need to have a lot of skepticism there. But, you know, clearly people just were not happy with the direction that the country has been going. And that's mostly what that answer was about from me.

[Tomer Cohen]

Yes. And so we're going to get into some of these solutions, especially trade. We've been talking about that a lot on the show lately. But let's just go broad again and think about sort of what Trump might deliver to his voters, who, I mean, I totally agree that they're feeling this. I mean, we're all feeling the impact of inflation, even if it's tailed off. You know, let's say it's at 2%. Now, will you add that to the 8% last year? And prices are 10% higher almost across the board. And so now I'm wondering how Trump, who's been elected basically as an agent of disruption, trying to break that system, break the incumbency, is going to deliver. And especially for the working class voters who came behind him, I think they were talking about, one commentator on CNN talked about how it's the revenge of the working class. And so let's talk a little bit about the policies here. So today the immediate reaction is the stock market's going up, right? The s and P500 is up almost 2%. Uh, it seems like Trump is going to extend his tax cuts, which helped, I believe, the super rich. So I'm curious, Dan, from your perspective, how is Trump going to deliver from his. For his voters?

[Michael Kovnat]

Well, first, yes, his tax cuts did help the super rich. They helped others, too. But they primarily, you know, on percentage, help the super rich. You know, one thing which is a huge outstanding caveat right now, it looks like Republicans have a very good chance of maintaining the House, but that's not determined yet. We still have a bunch of races, particularly in the West, California, Washington State that we don't know yet. And when it comes to anything in terms of tax policy, not tariffs, which somehow Congress has kind of offloaded to the executive. But when it comes to actual tax rates for corporations or for individuals, Trump needs Congress for that. And if Democrats, even by one or two votes, can maintain that or not maintain, can take the House, then kind of all bets are off in terms of tax policy. But what Trump wants to do, particularly if he has both houses of Congress, he wants to further lower the corporate tax rate, which he already lowered in 2017. He hasn't said too much about individual rates, but he has kind of done. He had a remarkable campaign of basically offering everyone a tax cut. Right. No more taxes on Social Security benefits, no more taxes on tips, no more taxes on overtime. Honestly, if he thought journalists were a good enough voting bloc, he probably would have said no taxes on journalists. Like, if we could have delivered some votes somewhere that mattered to him.

[Tomer Cohen]

Yeah, I don't think we were his target demographic. Right.

[Michael Kovnat]

I mean, so the question I think really becomes, and I think I already know the answer, but the question really becomes, does Congress care at all about fiscal responsibility on any of this, or do they not? My guess is they do not. Based on basically past history, at least GOP Congress passed history. But the question is usually, you know, what will be the pay for? There's already been some talk. Some of those pay fors could be rescinding parts of the ira, could be rescinding parts of the CHIPS act or completely eviscerating the CHIPS Act. But, but that's, but he is promising, he's promising lower taxes kind of across the board and again, including for corporations. As for the stock market going up, it is, that is, I think, more reaction to knowing the idea that you now know who's going to be the president. Remember, it went up after Trump was elected in 16. It went up after Biden was elected in 20.

[Tomer Cohen]

Right, Dan? I mean, the stock market does go up after elections, but one, because it has the certainty. That's typically the behavior. But one of the things it likes is gridlock. So how do you read the fact that the s and P500 is going up the way it is and it looks like the Republicans are probably going to sweep.

[Michael Kovnat]

I mean, the s and P500 has been going up for two years. You know, it went up two years ago before anyone even knew that Trump would be the nominee, let alone that Harris was going to be the nominee. It went up for most of this year. The S and P, we're in the midst of a massive bull market, which again, goes back to the original point about the economy. And admittedly the stock market is not the economy. They are not synonyms. But the markets have been going up because the US Economy, particularly, as Ana said, compared to the globe, is really strong and has been, which I'm sure is causing people to pull their hair out at the White House right now.

[Tomer Cohen]

Right. Anna, let's talk a little bit about some of these taxes. So Dan brought up the fact that they are going that Trump is planning to or talking about rescinding taxes on tips, rescinding taxes on overtime, and rescinding taxes on Social Security. What do you think about whether those plans are going to go through, the feasibility of those plans? And actually like the question I asked of, like, whether he can deliver for the working class voters, it seems like if he pushes those through, he might.

[Anna Swanson]

Yeah, yeah. So these are really interesting policy proposals that he kind of, you know, picked up. It seemed like really in response to politics, something that somebody would suggest to him at a certain time. And he was like, oh, yeah, that's a good idea. Right. Very appealing to a certain voting bloc. But that's kind of the way he makes policy. He just sort of crowd tests policy and sees what's popular and then turns to lawyers and the question of politics to see if it can actually practically be done in Washington. And I think so. On these specific taxes on tips over time, Social Security, I hit up a colleague of mine, Andy Duran, who covers tax for us and got his kind of expert opinion on it. And he was saying he thinks it's kind of an open question. So even if Republicans keep the House and have this trifecta power of leadership in Washington, because those ideas are really expensive and lawmakers are already trying to figure out how to afford the extension of the 2017 tax cuts that Trump signed when he was last in office, that's going to be a major task for this next administration. So I think the expense of those is a big issue. And some of Trump's advisors apparently are already looking at ways to scale back some of these campaign promises and make them more targeted. And as Dan was saying, a lot of this really hinges on whether or not Republicans have control of the House as well. If Democrats have control of the House, I think they have the ability to block more of these tax proposals than otherwise.

[Michael Kovnat]

Can I. Alex, let me add one more. I forgot there was one more. Also, Trump flip flopped on his own salt cap, which is the tax that mainly hits people in high tax states, particularly in the Northeast, on property owners in those places. That was something that was put in as part of his 2017 tax cut to pay for it during the campaign. Trump basically said, we don't need that anymore. So again, there's a lot of questions about how Congress is going to figure all of this out, no matter who runs it?

[Tomer Cohen]

Definitely. And I'm thinking about, like just the bare bones of the policies. If there's no tax on tips, I'm just going to be demanding to pay, be paid in tips from now on and not take any other type of salary or payment. Dan, I'm curious if you think the discussion about Harrison Biden being interested in taxing unrealized gains played into this at all, or was that sort of just a Wall street thing that was confined to those type of folks?

[Michael Kovnat]

Well, first, I agree with you, Alex, and I assume all of our venmos will be included on this podcast somewhere. Just tip us, please.

[Tomer Cohen]

Tip after January 20, 2025. Thank you.

[Michael Kovnat]

The unrealized capital gains thing. So this was something that became such a large deal, particularly on Twitter slash X and wasn't such a real deal in big light. In such a big deal in real life. Even if Harris had gotten through and even if she had gotten it passed, which again, this was originally a proposal in a Biden budget proposed proposal, nothing that became law, nothing the White House really fought for, and it was specifically on very, very wealthy people. You had that. I think it was $100 million in liquid assets, or if not liquid assets, I'm sorry, you had to have about $100 million in assets, not including, say, real estate. So it was going to impact a very small number of people. There was a lot of carve outs and exemptions if you had illiquid securities. So if you were a startup founder and your stuff didn't trade, you kind of got pushed out and didn't necessarily have to pay it. Did it have an impact? I think it had an impact because it. How can I say this? I think it mobilized certain very wealthy people, particularly some venture capitalists, who this probably would have impacted. And I think it got. I think got misstated. I think a lot of people looked and said, wait a minute, if I have a stock portfolio and I have, you know, $10,000 in the stock market and it goes up $1,000 next year, am I going to have to pay for that? And that nuance, which wasn't even really nuance, it was just the basic facts that got lost in a lot of stuff I saw on Red. It was simply, you're going to get taxed on unrealized gains, period. And I think understandably, that freaked a lot of people out. And the Harris campaign did a lousy job responding to it because they simply didn't respond to it.

[Tomer Cohen]

One last tax question before we move on. Do either of you have Any thoughts about whether the Trump what the fallout will be or the impact of the Trump tax cuts being extended? Because it seems like once he's in office, he'll extend these cuts.

[Anna Swanson]

I mean, I think it creates really big long term questions for US Debt and the deficit. Right. So we've been having these fights over deficit and budget limits in Washington. And a lot of President Trump's proposals are just really, really expensive. Right. And the tax cuts are the prime example of that. But there are others that are really expensive as well. And the question is just, you know, how long are other countries going to continue to want to buy our debt service, our debt? You know, the US Economy still looks like the strongest economy in the world and a real safe haven for assets. But as we continue to run that up, that debt up, you know, will that situation begin to change? So I think there are some serious long term considerations with that.

[Michael Kovnat]

It's also worth noting Trump, Trump and his 2016 campaign against Hillary Clinton. He pledged that he was going to literally eliminate the national debt within eight years. He said that now he exploded the debt again pre Covid spending, which pushed it even higher. And ultimately he's a debt guy. He's a real estate developer. Real estate development is all debt all the time. I mean, so I think that despite his promise, which obviously was a silly promise and unfulfilled, like, I don't think that when you think of debt hawks in D.C. trump is ever going to be one of them. He built his entire career on debt.

[Tomer Cohen]

Right. So I know it's supposed to be disconnected, but explain to me how the dollar is strengthening after we're going to see all this spending. Anna, what do you think?

[Anna Swanson]

Well, I do know the dollar dynamics when it comes to trade. So I mean, I think the implications for trade is that if Trump is launching various tariff wars, then you have other currencies that are falling against the dollar and making the dollar stronger. Maybe I'll let Dan tackle some of the other aspects of the dollar, but.

[Tomer Cohen]

That'S a good explanation.

[Anna Swanson]

There are actually some interesting, you know, there are some interesting differences between how the Trump team sees the interaction between the dollar and trade and how economists actually see it. So I have some question marks actually. For what? That, you know, what their attitude is going to be toward a strong US Dollar and what they might try to do about it.

[Tomer Cohen]

Wait, can you explain the differences between the Trump team and economists on that? Seems like an important issue.

[Anna Swanson]

Yeah, definitely. Yeah. No, I think this is a really interesting issue. So economists generally assume that when you impose a bunch of tariffs on foreign products, that makes those foreign products more expensive, it reduces demand for foreign currency, and it strengthens the US Dollar. The Trump team doesn't think that that is the case. They don't think that that has been true historically. And in his book, Robert Lighthizer, who is kind of the chief architect of Trump's trade policy, actually proposes imposing a universal tariff on foreign goods to kind of equal out, you know, equalize the effects of a US Dollar that is even too strong. So I think there's kind of a lot of contradictory views about currency there that are really interesting. They really want the US Dollar to be the reserve currency, but they think that having a strong dollar is a problem for U.S. trade and U.S. trade deficits. So it seems like there are a lot of other contenders to be the treasury secretary that might be more likely than Robert Whitehizer, but he is a name that's floated in that group. And so for me, that raises really interesting questions about what they might want to do about currency in the dollar.

[Tomer Cohen]

And, Dan, you've been writing about. We're not really sure what Trump is going to do. It's sort of like he will skate to the puck effectively based off of what is most convenient. He has promised big tariffs, and we're going to get to the implications of if he implements them with Anna in a moment. But do you think he's going to implement these tariffs? I mean, 20% across the board, 60% from tariff, from. From China, or do you think it's more of a negotiation ploy?

[Michael Kovnat]

I think it's probably more of a negotiation play. Look, he did. He didn't play. He did put some tariffs on when he was in the White House, but much more limited than what he's been talking about on the campaign trail, I think. I kind of think it's both. Like, I don't believe that Trump, and this kind of goes across a lot of things, really has hard and fast political philosophies or principles outside of figuring out how to win. And in this case, tariffs seem to, from his perspective, be a way to help how to win. It helped kind of, in his mind, offset all the tax cuts he was offering. But ultimately, I think, you know, he doesn't really have anything deep, deep inside. He also does believe tariffs are a solution because he really believes they punish other countries, even though most anyone who looks at them believe they punish the people ultimately who are buying the products.

[Tomer Cohen]

Yeah. So, Anna, I'm curious what you think about that? Do you think that there's more will within the Trump camp to implement the tariffs. I mean, you've written about it. He said tariff is the most beautiful word in the world. It's more beautiful than love, more beautiful than respect, which we know he values both of those very much. So I'm curious what your read is on the tariff situation.

[Anna Swanson]

I guess I would, yeah, kind of like respectfully debate that a little bit. I mean, I do think that tariffs are kind of a long held core value for him. Like there's something that he's talked about for decades since, you know, looking at Japan in the 90s, he's talked about tariffs as a tool. I think they're just really core to his economic philosophy. And yes, he's found that like they are a useful political tagline too. So he's probably kind of exaggerating what he would do in his rallies to kind of rile people up. And his campaign has proposed a bunch of different things. Again, he's kind of like floating and crowd testing ideas and then going to take those back and see what works. But he's proposed a 60% tariff on China, 10 to 20% tariff on all, you know, most foreign products, tariffs of, you know, 100, 200% or more and products from Mexico. They've talked about making tariffs reciprocal with other countries, removing permanent normal trading relations for China. So there are a lot of different policies out there. Do I think all of those are going to happen? No, but I do expect that they will try to do some of those. And I think, you know, there's just sort of growing support in Washington for the idea of something like removing permanent normal trading relations with China, which would increase China tariffs. There's also a lot of dissatisfaction in the Trump camp with the way that putting tariffs on China has kind of been like a whack, a mole case that has forced businesses into other low cost countries like Vietnam and Mexico. And now we see trade deficits surging from those countries. They're not very happy about that. So hence this idea of a universal tariff on everybody. So it is definitely something that I take quite seriously. And as Dan mentioned earlier, the executive also has a lot of authority, two level tariffs. I don't know, you know, exactly which they're going to do. But I think he clearly does see them as a very powerful tool, a tool he likes to use not only in terms of its economic sense, but also in negotiations. My first thought when I woke up this morning actually was, I wish I would have taken a vacation while I had the chance. Because I think I'm going to be pretty busy. Yeah, I mean, can I add though.

[Michael Kovnat]

When I say that, I guess what I mean, yes, he's talked about it for a long time, but he has consistently, at least since his time in the White House, he's consistently misunderstood or at least misstated publicly how tariffs work. And this hasn't been a one off thing that he screwed up in a press conference or that he corrected later. He's repeated it over and over and over again. This idea that for example, if you put a tariff on, I don't know, Chinese aluminum, that the Chinese government sends the US Treasury a check every time somebody in the US Buys aluminum from China, it's not how tariffs work. And so I struggle with this concept of how deeply he really believes in something when he so fundamentally misunderstands how they work.

[Tomer Cohen]

He also talks about it as like a negotiation tool. Like I think listening to his rallies and his appearances on podcasts, the thing that he's most proud of with tariff is saying to companies, if you do build a manufacturing plant somewhere else, you're going to get my tariff, so you better build here. And we'll see. I mean that will obviously continue. It was a feature of his, of his first term. But you know, what's interesting is that we've been talking about tariffs on the show as a theoretical thing and now it's, you know, it's clear that Trump has won and he's going to have a lot of leeway to do what he wants. And we're starting to see the reaction play out in the stock market. And that to me has been kind of interesting because there are some movements that I'm not fully understanding and maybe we can talk about them here. So I mentioned before that the S P500 is up today, you know, significantly on the news and Nvidia is actually outperforming. So Nvidia, which relies on Taiwan semiconductors to, to make the, to make the chips that it designs, Nvidia is up 2.5%, but TSMC is down 3%. Dan, do you think the stock market is just like, all right, well they'll be making them in the US or can you explain that movement at all?

[Michael Kovnat]

No, because I can never really explain a one day move in the stock market unless there's something material coming. Like look, U.S. steel stock at least as of pre market was way up. Trump has said he opposes the takeover of US Steel by Nippon Japan's Nippon US Steel is a disaster of a company if it doesn't get acquired. Like the only reason the stock was trading where it was was because most investors thought the deal would go through. So I think you've got short term paint fume highs from a lot of people right now from the certainty. And I think you just need to wait a couple days and look if that kind of untethering between those two companies continues, then I think it's something to read into right now. I think we're just so early, we're a few hours into this at this point. Let's wait and see how this plays out. Yeah.

[Tomer Cohen]

Ana, what do you think about the US Reliance on tsmc? And I mean the Biden administration was already planning to put to double the tariff from 25 to 50% on semiconductors. And Professor Deardorff and I on Wednesday, on, on Tuesday. No, we released it Monday. We were talking about how like maybe near term there's no real big difference between Harris and Trump, but long term, could you end up in a situation where like the US And China really sort of go at it from a trade perspective that it leads to some risk of China intervening in Taiwan and then you see the problems. So you've been reporting on this pretty deeply. What's your, what's your read on the semiconductor situation now that we know that Trump is going to be in office?

[Anna Swanson]

I would say first, like just the idea of like doubling those tariffs. You mentioned Biden doubling the tariffs. I don't think that that actually really does much of anything because it's just, it's just on semiconductors that are imported directly into the United States, not on chips that are imported into the United States as part of other things. And the US Basically doesn't import that many single chips. Those chips go into supply chains in Asia that are made into other things. So that tariff I think was kind of more for show. People do talk about the idea of putting some kind of component tariff on chips where if you import an electronic with a Chinese chip in it, you could still hit that with the tariff, but we're not doing that right now. But on that bigger question of Taiwan, I mean, it's a really interesting one. So Trump has made some remarks earlier this summer and then again recently really calling into question US Support for Taiwan, saying that they should pay their own way. But I think it's also when it comes to China, he's just really very erratic. I mean, the other quote that I really liked is that he said something about Xi Jinping, the Chinese leader would not challenge him because he knows I'm effing crazy. So I think that tells you that's.

[Tomer Cohen]

A good chunk of Trump foreign policy.

[Anna Swanson]

Yes, I think that tells you a lot of what you need to know about Trump foreign policy. So I covered the US China trade war during the first Trump administration, and it was just this really, like, bewildering mix of people with different policy perspectives. You know, President Trump, like, sometimes being very tough on China, but also, like, extremely transactional, willing to kind of trade things in order to make business gains, you know, watching out for Wall street buddies. So there's just a lot of things kind of going into the mix when it comes to China. I do think, like, both he and Washington in general are more hawkish on China than they were eight years ago. So you could see, I really think that there's sort of an open question of will we see some kind of conflagration with China in the next four years? I mean, I think that that is a really big risk, a trade war where China could put tariffs on American products or cut off certain critical supply chains where we depend on China for. So there's just a lot of, like, X factors and uncertainty there for me, and that's one of the things I think I'm going to be most focused on.

[Tomer Cohen]

Dan, I've been huffing the paint fumes of the market this morning. Meta is the one company that's down among the tech giants. Anything you can read into that?

[Michael Kovnat]

I will go back to my old one prior opinion. No, it's too early. No, I mean, like, look, Trump has antipathy toward big tech. Like, we know that. When I say that, I mean, you know, Silicon Valley, big tech matter, Google, etc. But no, it's frickin early. Who knows?

[Tomer Cohen]

Okay, I want to talk about the fact that Jerome Powell is likely going to be replaced at the Federal Reserve. You know, Khan likely isn't going to be the commissioner of the FTC anymore and whether these policies will increase inflation and of course, how Elon might be feeling today. So we'll do that right after this.

[Michael Kovnat]

From the minds of visionaries to the desks of disruptors. I'm Lars Schmidt, host of the Redefining Work podcast. Join me each week as we explore the new world of work through the lens of those shaping it. CEOs, HR leaders, investors, and more. Be a part of the conversation that changes everything. Subscribe to Redefining Work Today.

[Tomer Cohen]

And we're back here on Big Technology Podcast with Anna Swanson. She's a reporter covering trade and international economics for the New York Times. And Dan Pramak, the business editor at Axios. Okay, so Dan, first of all, with Lena Khan, she's probably not going to be the commissioner anymore. What do you think that means for this large moment of big tech antitrust?

[Michael Kovnat]

Well, let's start with the probably part. One thing that's interesting about this is that JD Vance is a fan of Lina Khan. He is, always has been. And so I assume she won't be re nominated as FTC chair, although you don't even have to re nominate her. She just kind of gets to sit there until someone gets nominated. So she'll be there for a bit. Right. And unless she quits. So let. But if she's not, if it's not Lina Khan. Yeah, I mean look, Trump is a, Trump is a fan of big business, by which I mean like big conglomerates. He, Trump has always been a bigger is better sort of person. And there's been some exceptions. Right. He tried to block the AT and T Time Warner merger, but generally he did not stand in the way too often of major mergers while he was in office. I would assume he probably would not do that again with again, with some particular exceptions. Like the AT and T Time Warner thing was really him being pissed off at cnn, it seems, is really why he tried to stop that one potentially. And you know, you mentioned Meta being down before the break. It's possible he would have problems if Google or Meta or one of those companies tried to do something that got significantly bigger. But the reality is the ofTC and Biden's DOJ have been very tough on mergers, not just in tech, kind of across the board. It's been true in healthcare, it's been true in transportation. It's been true in a lot of things. A lot more of these deals are going to get to go through, which could be a real bailout for a lot of venture capitalists, particularly in Silicon Valley, who have been unable, who've been unwilling to put their companies in the public market really out of cowardice and have been unable to sell them to big tech because Big Tech Tech has slowed down its buying appetite because it hasn't wanted to get caught up in, in regulatory troubles.

[Tomer Cohen]

Then you and I have also been talking about the fact that the administration has said that Trump has said nothing about AI. So where do you think they go on AI?

[Michael Kovnat]

I mean, I think that's the trillion dollar question, right. If you believe, and I do, and I think a lot of people do, that AI is kind of the driving tech and maybe economic force during the next Several years, that is during Trump's term in office. He hasn't said much about it in terms of any sort of whether that be regulation, whether that's in terms of kind of energy. I mean, you saw Amazon get knocked down the other day by the FERC in terms of wanting to put some nuclear power. Does Trump overrule that? He hasn't said much about this incredibly important topic. It did not get raised during the one debate that Harris and Trump had. It didn't get raised during the Biden Trump debate either. And so I think that's this huge, outstanding question, what he feels about this, if he cares about this. I mean, we talked about this as kind of a working class revolution election. Generally speaking, both the working class and white collar workers are both scared about AI in terms of job replacement. But he's been silent on it. So I, I think it's unclear who's going to get to determine that policy. Maybe that is Elon, which is also interesting since kind of America's leading privately held AI company is one that Elon is endlessly in litigation with.

[Tomer Cohen]

Right. And he has an AI company of his own, X AI and he's spending a lot of money there. So it's one of those things where like AI, if it can, it can continue on its path unencumbered or it can get hit with massive regulation that could basically stop the progress in its tracks and every possibility in between.

[Michael Kovnat]

And also, and also, and this also goes back to the antitrust thing to a certain extent. One thing Lina Khan has done over the past couple of months is she's been looking at these big partnership deals that companies like OpenAI and Anthropic have been signing with companies like Microsoft and Amazon to determine even though they've been investments and arguably kind of investments in kind rather usually than cash. It's been compute power. You know, are there potential antitrust or anti competitive issues with those agreements? We'll see who runs the FTC and if they pick that ball up.

[Tomer Cohen]

You know, what's interesting about our economy right now is that it's kind of rip roaring and it's even though a lot of people are feeling the impact of inflation. Like the inflation has gotten down to the point where the market is in really good shape. The Federal Reserve has begun lowering rates. And one of the things that I wonder if we do end up seeing some tariffs is like, is inflation just going to come right back? And I'm curious if that's something that you think is a possibility.

[Anna Swanson]

Yeah, no, I do think that Trump's agenda that he proposed in the campaign trail seemed very inflationary and tariffs were kind of one component of that. I mean, I think the other key thing to bring up with the Fed and inflation is that he's also repeatedly questioned the independence of the central bank and said that he should have a greater say in setting rates. And so, you know, does that undermine the Fed's ability also to raise rates and keep inflation down going forward? You know, it's not clear whether he actually has the legal authority to do that or, you know, what's going to happen to Powell. But Trump does have an economic adviser, Scott Besant, who has proposed, you know, a way to effectively kind of oppose point, a shadow chair to the Fed that could kind of undercut Powell's authority. So, you know, I think not only the economic policies that he's proposing are inflationary, but you have to think about what he would do at the Federal Reserve as well and whether that could have an impact on inflation.

[Tomer Cohen]

Dan, what do you think about the state of the Federal Reserve? Are they going to have to raise rates again if tariffs get put into place, who might replace Jay Powell? What's your thought on that?

[Michael Kovnat]

Yeah, I mean, I think what Anna said is, is the, is the big question here is, is how much of a direct say does Trump try to have, which would be a, which would be a break with, you know, every president of our lifetimes, right. In terms of monetary policy, they don't have a say. They have a say in terms of who they nominate to chair the Fed. But after that, they're supposed to stay away and historically have stayed away. If Trump wants to have a greater say, what, what the reason why it really matters is the Fed is supposed to be politically independent for the sake of not making its decisions for short term political gain, whether that be raising rates, dropping rates, and it's always supposed to be balancing inflation and labor and job market. If Trump, for whatever reason does start to have some sort of say and decides that he wants to put in these tariffs and they're inflationary, thus he has to offset that not with something in Congress or not with another policy, but he has to offset that by changing rates at the Fed, it opens up this massive can of worms. And I don't think any of us really know where that would and also how that would impact jobs, because I said the inflation, labor balance is the Fed's job. And if Trump decides he needs to play with one of those, it could be at the expense of the other.

[Anna Swanson]

It's not just the tariffs that are inflationary. I mean, I think it's also, you know, tax cuts, deficit spending, also like the immigration plans. If he goes through with actually deporting, you know, tons and tons of people who are workers, economists say that that would push wages up immediately. It could lead to shortages. So there are a lot of different aspects that kind of feed into that inflationary picture as well.

[Michael Kovnat]

Yeah. Can I add to that with what you said, one of the big drivers of the big inflation, kind of the post pandemic inflation, were supply chain disruptions. Right. Like there was a lot. There was extra spending. There was a lot, but supply chain disruptions. But when we thought about those, most of the. Or a lot of those were kind of stuff coming in from overseas and literal disruptions, either because factories were closed in China or other places, there was problems at the ports, et cetera. Less of it was domestic. If you do have these massive deportations, you could have supply chain problems which drive inflation, but they could be domestic supply chain problems, you know, stuff factories in the US Just not able to operate at capacity, farms in the US not able to operate at capacity. And thus your product shortages could be domestic or primarily domestic.

[Tomer Cohen]

Well, I think maybe what we need to combat all this inflation is a, a government agency that looks at efficiency. You might call it the Department of Government Efficiency, call it doge, call it what you want. But it seems like on that note, that would be the department that Elon Musk would chair. On that note, Elon Musk is going to be pretty influential in this next administration. It seems like his purchase of Twitter was in some ways a success, if it helped. If it helped this outcome for him. So, Dan, I'm curious what you think we can sort of think about Elon the morning after. And was. Was Twitter, in your opinion, a goodbye? Do you think that he's going to actually be influential in this next administration? What do we think about when it comes to Elon? Because Tesla right now, I mean, it's just one number, but it's up 12% today. Yeah.

[Michael Kovnat]

And look, and a lot of people believe that with the Trump administration, Space X will be able to get even more contracts than it already currently has. Federal contracts than it already has. I mean, look, it. Was Twitter a good investment for Elon's influence. Yes. So for. Call it Elon Inc. Or the Elon conglomerate. Sure. If you were a lot of the folks who helped put in tens of billions of dollars to help Elon buy Twitter, including firms, including a lot of venture capital firms, Including Fidelity, other hedge funds. No, they're all down 70 something percent at least on paper on this. It was a disaster for them. Because even if Tesla does very well and SpaceX does very well and Elon gets it ego stroked even more, that doesn't help you when you're. What you have is stock in Twitter or X. You know, will he be influential? I mean, he will be influential. I predicted today on X, and I'll stick to this, that there will be a massive falling out between these two before the four years is up. Because I mean, you have to. Let's just say two narcissists and two narcissists don't want to both be the main character for four years. Something has to give at some point. Ultimately, Trump has much more power than Elon Musk does because he'll be physically in the White House. But this Office of Government Efficiency first, it's interesting to watch Tesla be up so much today, given that in theory that should be a busy job. Right? I know that this is a man who apparently can be CEO of an unlimited number of companies and have an unlimited number of jobs, but at some point something has to give. Secondly, when Elon has talked about this, he's talked about, I think he talked about removing $2 trillion annually from the US budget. That is more, I believe, than there is discretionary spending in the annual U.S. budget. I think I'm right about that. So I don't believe he's going to hit the numbers he thinks he's going to hit. Which like lots of things when it comes to Elon goes to how much does he actually understand what he is saying when it's outside of his direct wheelhouse.

[Tomer Cohen]

And what do you think about the Doge, as they call it?

[Anna Swanson]

Yeah, yeah. So I don't cover that many aspects of Elon Musk. I mean, some of it. But one thing that I'm kind of thinking about today is what happens with Donald Trump's policies toward China and will Elon Musk be any kind of influence on that? Because obviously Tesla's business, Elon Musk's business is really wrapped up in China and in interests there. So I wonder if he could be kind of a moderating influence. I mean, he's met. Musk has met with senior Chinese officials on various occasions. So that's one thing that I may.

[Tomer Cohen]

Be watching that is fascinating because Tesla, a lot of Tesla production happens in China. I don't think Elon Musk wants the US and China to be at each other's necks. And especially not in a sort of spiraling trade war.

[Michael Kovnat]

He's, he's in a tricky spot with Tesla with that. Right. Because you say he manufactures a lot there. We believe he sells a lot there. They don't break it out. So you don't know how many cars in China versus cars in the US the tricky part is what he does want is probably continuation of this new Biden policy, which is basically stopping low cost EVs from coming into the U.S. right. That he wants that because that's good for Tesla. Right. If you don't have a bunch of $20,000, pretty decent EVs showing up here. And, but on the other hand, as Anna said, he doesn't want it going reciprocally. He wants to continue being able to sell easily and manufacture easily in China. And then he also does want tariff stuff going on with Mexico because he wants Detroit, who wants to make some EVs in Mexico, have a hard time getting those cars into the United States. So he's got a kind of a chessboard and it's clear the way he wants to do it. Whether he can actually navigate all that with Trump is to be seen.

[Anna Swanson]

Yeah, I wonder if China will see that as a lever though, because I mean, China is the source of almost all of the world's critical minerals and car batteries. I mean, there's just, just an incredible lock on that upstream EV supply chain from China. So that could be a really powerful level lever if we get into some kind of trade war situation.

[Tomer Cohen]

I'm just looking at the Rivian stock right now and let's see what it is down. Rivian's down 9.8% today.

[Anna Swanson]

Yeah, it looks like BYD is down as well. And Catl.

[Tomer Cohen]

So the market is basically saying that Elon is, is going to be a big winner here.

[Michael Kovnat]

Well, he should be, right? I mean, he, he was, he has, I mean you can decide how much credit you want to give to individuals. He played a real role in this election, financially and, and socially. Call it. He played a role. I mean, and Trump has embraced him repeatedly on the campaign trail. He's not treating him like a rich pest who you have to suffer in order to get, get his money. He has really embraced him so far. So he's going to, he's going to play kind of a role. He wants to play.

[Tomer Cohen]

It seems that the shouted him out again in the victory speech early this morning.

[Michael Kovnat]

He did. But again, remember, remember Trump in 2017 when he took office and remember all the people who were around him and how few of them were there just one year later.

[Tomer Cohen]

Well, basically almost nobody except the family.

[Michael Kovnat]

Correct. And Steven Mnuchin, he lasted.

[Tomer Cohen]

Ok, so before we go, I'd love to hear both your bull case and bear case for the Trump economy over the next four years. Why don't we go Dan first and.

[Michael Kovnat]

Then Anna, I'm on the spot here. All right. I mean the bull case is that Trump gets to inherit a really strong economy and there's not particular reasons to think that there's kind of a crash on the horizon. Right. Like, you know, he's getting something that's got a lot of tailwinds behind it and including technological tailwinds when it comes to things like AI which the US Continues to lead in. And if the next great global tech slash business trend is something the US Is leading in, that that's a really good tailwind to inherit and to be able to continue to foster. And clearly there were some things that Biden did that were kind of, if not anti business, definitely restricted business. On the other hand, the bear case is Trump revels in chaos and you don't always know where that is. You don't know what necessarily what he's going to do next. He doesn't necessarily know what he's going to do next. And leave aside market uncertainty, slash certainty, decisions that get made impulsively, which Trump often seems to make, can lead to pretty disastrous results.

[Tomer Cohen]

Right. And this is the spending, I mean, just one follow up to that. The spending going to eventually catch up. It doesn't seem like it has yet, but it has to eventually. Or maybe I'm wrong. I don't know.

[Michael Kovnat]

I don't know if it has to catch up in four years. But look, I mean, look, there's some basic, there are a lot of very basic math problems with what Trump has promised. Again, go back to what Elon said. Elon is somehow going to cut more money off the budget than exists in the budget. So like there's some, there's some basic math problems that have to get solved here Even, even if Trump, you know, follows through on a lot of his promises.

[Tomer Cohen]

Okay, Anna, what do you think? The bull case and the bear cases for the next four years?

[Anna Swanson]

Yeah, I mean, I would say something similar. The bull case is that, you know, his, some of these threats that he's just make, that he's making in terms of what he would do to the economy really are, you know, more about showmanship and bluster, tariff threats or just that threats, you know, it's something that he uses to extract Some concessions from other countries, but maybe not that actually disruptive to global trade. And again, I mean, trade actually is kind of a small percentage of the overall US Economy. Like we're a big economy and we're kind of isolated. So compared to some other countries, we're not actually as exposed to trade. You know, bear case, I guess immigration is a slogan and not something he can, you know, actually practically accomplish tax cuts, you know, go through Congress and end up being like a somewhat sensible policy process. I mean, I think the bear case, you know, for me, do we get into a big trade war? You know, I was just talking about critical minerals from China. Do we see really significant supply chain disruptions in various parts of the world? And then I think, honestly, do we see an actual war? Going back to the he knows I'm effing crazy comment. There's a lot of instability in various parts of the world. What do we see with Russia? What do we see with Taiwan? So, yeah, I don't want to be too negative this morning and rain on everybody's week, but I think that the possibility of real international instability is definitely something that we're going to be watching for.

[Michael Kovnat]

Can I give one more also then that's ties to Anna said on immigration. We've talked about undocumented workers getting deported and Trump said he's going to do that on day one. There's also this bigger legal immigration question Trump has tried in the past to tamp down on it. You heard some talk about that during the campaign. You know, long term for the US Economy, particularly when it comes to technology in Silicon Valley, that's an issue. Right. And I appreciate that maybe we won't need as many workers in the future because we've got bots to do everything for us. But like, it's a. It's been surprising. It was surprising to me that when a bunch of Silicon Valley venture capitalists were talking a lot about Trump's little tech positive agenda, that immigration rarely came up. Because not only do immigrants historically found a lot of companies, people who come from overseas to Stanford, MIT to Harvard, to these other US Educational institutions often stay here and become incredibly, not just productive members of society, but kind of transformational ones. Look, Elon Musk is one of them. So we'll see.

[Tomer Cohen]

Anna and Dan definitely want to let listeners know where to find your work. So Anna, do you want to tell people where to subscribe and find your articles?

[Anna Swanson]

Yeah, sure. So I write for the New York Times. You can Google me. It's a N A S w A N S O N Y T. I have all my articles up there and definitely appreciate everybody reading and supporting the Times.

[Tomer Cohen]

Great. And some, some great stories about Nvidia there and sort of broader US AI chips and making their way into the hands of people in China, even if we had some trade restrictions. So definitely recommend people check that out. And Dan, how can people sign up?

[Michael Kovnat]

Yeah. So business editor at Axios and I write the Pro Rata newsletter, which covers kind of deals and deal makers. You can get that at get pro rata.axios.com Great stuff.

[Tomer Cohen]

Highly recommend it. All right, everybody, thank you for listening. Thank you, Dan and Anna, for coming on the show. We'll be back on Friday with another show mostly focused on tech. We've done a lot of politics in the middle of this week. We'll go back to the bread and butter on Friday and then we'll have some fun stuff coming up for you next week. Thanks for listening and we'll see you next time on Big Technology Podcast.