4/8/25: Markets Rebound Expecting Trump Negotiations, China Preps All Out Trade War, Elon Begs Trump To Stop Tariffs

Summary

Breaking Points with Krystal and Saagar Episode: April 8, 2025 Title: Markets Rebound Expecting Trump Negotiations, China Preps All Out Trade War, Elon Begs Trump To Stop Tariffs

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Introduction

Breaking Points with Krystal and Saagar dives deep into the escalating trade tensions between the United States and China, analyzing President Donald Trump's latest tariff strategies, Elon Musk's appeals to halt these measures, and the broader economic implications. Hosted by Krystal Ball and Saagar Enjeti, this episode provides a comprehensive overview of the current trade landscape, market reactions, and potential future developments.

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1. Tariffs and Trump's Negotiation Stance

Krystal Ball opens the discussion by emphasizing that while tariffs are the primary focus, they will also touch upon other significant developments. President Trump's recent comments have stirred considerable attention:

• Trump's Firm Stance on Tariffs:

  • Krystal Ball [02:08]: "We're not looking at a pause in tariffs. We have many countries coming to negotiate deals with us."
  • Ryan Grim [04:41]: "Despite calls for negotiations, Trump is doubling down on tariffs, signaling a firm commitment to his trade strategy."

• Internal Mixed Messages:

  • Krystal Ball [05:07]: "Some in the administration say negotiations are on, while others claim tariffs are permanent."
  • Ryan Grim [05:57]: "Tariffs can be both permanent and negotiable, leading to market uncertainty."

2. Elon Musk's Appeal to Reverse Tariffs

A significant portion of the episode centers on Elon Musk's attempts to influence President Trump:

• Musk's Direct Appeals:

  • Krystal Ball [41:03]: "Elon Musk made direct appeals to Trump to reverse new tariffs, bypassing key White House advisors like Peter Navarro."
  • Ryan Grim [42:48]: "Musk is frustrated because Trump only responds when it serves his political narrative."

• Impact on the Trade Coalition:

  • Krystal Ball [45:25]: "Musk's opposition highlights cracks within the MAGA coalition, showcasing differing priorities among Trump's supporters."

3. China's Countermeasures and Economic Maneuvering

China's response to the U.S. tariffs has been both strategic and aggressive:

• Escalation of Tariffs:

  • Trump's Statement [24:46]: "China issued retaliatory tariffs of 34% on top of existing ones. If they don't withdraw by April 8th, the U.S. will impose an additional 50% tariff effective April 9th."

• Strategic Control Over Resources:

  • Ryan Grim [27:18]: "China controls over 90% of rare earth minerals essential for U.S. industries. They can halt exports, crippling U.S. technological advancements."
  • Krystal Ball [27:19]: "China's centralized control allows them to swiftly counteract U.S. economic measures without the bureaucratic delays the U.S. faces."

• Economic Resilience:

  • Krystal Ball [30:01]: "Despite aggressive tariffs, China continues to bolster its economy by lowering borrowing costs and injecting liquidity to sustain domestic demand."

4. Market Reactions and Economic Forecasts

The fluctuating market sentiments reflect the uncertainty surrounding the tariff negotiations:

• Immediate Market Impact:

  • Ryan Grim [06:07]: "S&P 500 futures are up 2.5%, and the Nikkei index rose about 6% on hopes of tariff relief."

• Expert Opinions on Recession Risks:

  • Larry Fink, CEO of BlackRock [19:23]: "Most CEOs I talk to believe we are currently in a recession."
  • Krystal Ball [20:19]: "A CNBC poll showed 69% of CEOs expect a recession, attributing it directly to Trump's tariff policies."

5. Supreme Court Ruling on the Alien Enemies Act

The Supreme Court has delivered a significant ruling favoring the Trump administration:

• Legal Implications:
  • Krystal Ball [02:08]: "The Supreme Court handed the Trump administration a big win on the Alien Enemies Act, strengthening its controversial policies."
  • Ryan Grim [03:40]: "Expert Pisco breaks down the ruling's implications for both immigrants in El Salvador and the administration's approach."

6. Impact on American Manufacturing and Employment

The tariffs' long-term effects on U.S. manufacturing and job markets are a central concern:

• Decline in Domestic Shipbuilding:

  • Ryan Grim [30:49]: "The Chinese state shipbuilding corporation built more commercial ships by tonnage in 2024 than the entire U.S. shipbuilding industry has since World War II."

• Future of American Shipyards:

  • Krystal Ball [32:50]: "With tariffs imposing $1.5 million per port call on Chinese ships, American shipyards, which currently have only 23 operational ships, face existential threats."

• Economic Disruption:

  • Ryan Grim [34:37]: "Imposing massive fees on shipping will lead to supply chain disruptions reminiscent of the COVID-19 pandemic, fueling inflation and economic instability."

7. Societal and Political Ramifications

Beyond economics, the tariffs and trade policies have broader societal impacts:

• Public Sentiment and Unity:

  • Krystal Ball [27:19]: "Unlike China, where 95% of the population is satisfied with the government, the U.S. is deeply divided, hindering cohesive policy implementation."

• Impact on Consumer Goods and Living Standards:

  • Ryan Grim [32:54]: "Tariffs will lead to higher costs for consumer goods, making products like iPhones more expensive and reducing overall living standards."

8. Future Outlook and Potential Scenarios

Krystal Ball and Ryan Grim explore possible future developments:

• Potential for Recession:

  • Krystal Ball [52:06]: "Most CEOs expect a recession caused by Trump's policies, which could lead to job losses and reduced economic growth."

• Long-Term Trade Dynamics:

  • Ryan Grim [38:40]: "China's comprehensive control over crucial resources and strategic economic maneuvers make it a formidable opponent that the U.S. struggles to counter effectively."

• Political Coalition Cracks:

  • Krystal Ball [45:25]: "Elon Musk's opposition and other internal disagreements indicate potential fractures within the MAGA coalition, possibly weakening Trump's trade agenda."

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Notable Quotes with Timestamps

• Krystal Ball [02:08]: "We're not looking at a pause in tariffs. We have many countries coming to negotiate deals with us."

• Ryan Grim [04:41]: "Despite calls for negotiations, Trump is doubling down on tariffs, signaling a firm commitment to his trade strategy."

• Krystal Ball [27:19]: "China's centralized control allows them to swiftly counteract U.S. economic measures without the bureaucratic delays the U.S. faces."

• Larry Fink [19:23]: "Most CEOs I talk to believe we are currently in a recession."

• Ryan Grim [34:37]: "Imposing massive fees on shipping will lead to supply chain disruptions reminiscent of the COVID-19 pandemic, fueling inflation and economic instability."

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Conclusion

This episode of Breaking Points paints a bleak picture of the current U.S.-China trade war, emphasizing the aggressive stance of the Trump administration and China's strategic countermeasures. With market volatility, impending recessions, and societal divisions, Krystal Ball and Saagar Enjeti highlight the multifaceted challenges facing the American economy and its global standing. The discussions underscore the complexities of trade negotiations in a polarized political landscape and the far-reaching consequences of protectionist policies.

For listeners seeking an in-depth analysis of U.S. trade policies and their implications, this episode offers valuable insights into the ongoing economic tussle and its potential trajectory.

Transcript

[Ryan Grim]

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[Krystal Ball]

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[Ryan Grim]

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[Krystal Ball]

Independent media just played a truly massive role in this election and we are so excited about what that means for the future of this show.

[Ryan Grim]

This is the only place where you can find honest perspectives from the left and the right that simply does not exist anywhere else.

[Krystal Ball]

So if that is something that's important to you, Please go to BreakingPoints.com, become a member today and you'll get access to our full shows unedited ad free and all put together for you every morning in your inbox.

[Ryan Grim]

We need your help to build the future of independent news media and we hope to see you@breaking points.com Good morning everybody. Happy Tuesday. Have an amazing show for everybody today. What do we have Crystal?

[Krystal Ball]

Indeed we do. So we are not spending the entire show on tariffs, but we are spending just the vast majority of the show on tariff. So we're going to give you the very latest. Trump made a bunch of comments yesterday where the markets are all that good stuff We've also got new reporting. Apparently Elon Musk and Scott Bessant made personal appeals to Trump Besant to change the messaging on tariffs. Elon Musk to change the actual reality of the tariffs, we're taking a deep dive into China's response and what that could mean for them and for us and for the world. CEO of a clothing company is joining us to break down specifically just nuts and bolts how he's thinking about the tariffs, how it will impact his business so we can get kind of like the granular real world impact in a sense of that same time Bibi was at the White House yesterday. Yes, Trump pushed his chair in for him. No worries, all taken care of. This comes on the same day that we learned that the Israel really killed an American citizen in the West Bank. So there's obviously a lot to discuss there. Trump also announced in that sit that same he wasn't calling it a press conference, whatever he called it anyway, Oval Office spray he announced direct talks with Iran. So this comes at a time of deep concern that we could be headed towards a war. So maybe, maybe this is an off ramp. We can all be really hopeful about that. And the Supreme Court handed the Trump administration a big win yesterday on the alien enemies act. YouTuber Pisco, who happens to also be an attorney with deep knowledge of these issues, join us to break down what exactly this ruling means, both for the people who are already in El Salvador and for the future of the Trump administration's use of this controversial approach. So lot to get to as I said in the show today.

[Ryan Grim]

Yes, that's right, jam packed. But thank you by the way to all of our premium subscribers. We really appreciate you and you guys got a taste of what some of it looks like. We had our AMA yesterday where we fell for the trolling from Mr. Walter Bloomberg who has a completely fake account. But we all lived that live and so that's what you're missing out on. Although we did post a little bit of preview breakingpoints.com if you can't afford a premium membership or anything like that, don't worry, you can just help us like and subscribe the video or take this podcast. If you're listening to it, send it to a friend. It's really helpful. Take your favorite episode, maybe the yesterday's the tariff episode. I thought that one was particularly good. As Crystal said, let's go ahead and get to the tariffs. Some major comments from Donald Trump. Doubling down, tripling down, quadrupling down. Despite a lot of the cope that is out There right now, while he was in the Oval Office, he, here's what he had to say. Would you be open to a pause in tariffs to allow for negotiations? Well, we're not looking at that. We have many, many countries that are coming to negotiate deals with us and.

[Krystal Ball]

They'Re going to be fair deals.

[Ryan Grim]

We're going to have one shot at.

[Krystal Ball]

This and no other president is going to do this.

[Ryan Grim]

What I'm doing. And I'll tell you what, it's an honor to do it because we have.

[Krystal Ball]

Been just, just destroyed, what they've done.

[Ryan Grim]

To our system, sending millions and millions.

[Krystal Ball]

Of cars into the US but we don't have a car that's been sold to the European Union or other places. But let's go for the European Union. And it's not going to be that way. It's got to be fair and reciprocal.

[Ryan Grim]

It's got to be fair. It's not fair.

[Krystal Ball]

If you look at what's happening, you got to see this. Today I said we're going to try and get groceries down, right? An old fashioned term, but a beautiful term, eggs. So when I got in, the press.

[Ryan Grim]

Went absolutely crazy the first week.

[Krystal Ball]

They said eggs have quadrupled in price.

[Ryan Grim]

I said, I just got here. Tell me about it.

[Krystal Ball]

And Brooke Rollins and our team did a great job. And eggs are down now 79% and they're all over the place. Do you expect any of these deals to be made before April 9th? And secondly, there have been some mixed messages from your administration. You're talking about negotiations and yet others in your administration are saying that these tariffs are actually permanent. What is that? Well, it could be. It can both be true.

[Ryan Grim]

There can be permanent tariffs and there.

[Krystal Ball]

Can also be negotiations because there are.

[Ryan Grim]

Things that we need beyond tariff.

[Krystal Ball]

We need open borders.

[Ryan Grim]

You know, we almost had a deal with China. They can be permanent or they can be held for negotiations.

[Krystal Ball]

They can be permanent and they can be negotiations. That clears that up for us.

[Ryan Grim]

This is part of the problem. That's why the markets are all over the place. We can go ahead and put the current screenshot of the markets. The current S&P 500 futures are up some 2.5% and the Japanese Nikkei index rallied about 6% last night on the hopes of tariff relief. But the thing is, is that the message is incredibly unclear and everybody is just grasping for straws because for all of the talk of negotiation from Secretary Besant, from Donald Trump, there, there's also the undertone of also it may not matter at all. And what the Timeline of that obviously still has massive ramifications as all of these tariffs continue to come into place. For example, if you're a country and you're watching Peter Navarro talk about the removal of reciprocal tariffs from say Vietnam, you really have no idea what to do. So let's take a listen to that. When you have a country like Vietnam, let's take Vietnam. When they come to us and say we'll go to zero tariffs, that means nothing to us because it's the non tariff cheating that matters. Let's do Vietnam, Joe. They sell us $15 for every $1 we sell them. About $5 of that 15 is China trans shipping to Vietnam to evade their tariffs.

[Krystal Ball]

I think the thing we're all trying to understand is then if there are.

[Ryan Grim]

Going to be negotiations and you're saying zero is not enough, what is enough? Zero is a small first start. Okay, but then what is enough? And let me ask you. But related to that, but let me answer that question. Let me answer. Let's take them one at a time. We got plenty of time. So what is enough? Okay, you take any given country, they're like fingerprints. They all cheat us in a different way. So here are the things they cheat us on. Some of them engage in currency manipulation. Some of them have a hefty VAT tax. All of them dump into our markets. All of them engage in heavy export subsidies and government subsidies. All of them put up these phony technical and phytosanitary barriers to our ag products and our autos and everything in between. Many of them steal our intellectual property. A lot of them run sweatshop labor, including forced child labor. They have pollution havens. So when you say to me, what do we want from them? We want fairness. So negotiation and zero is not enough. This is the difficulty now what are we doing here? I would also point out, yes, it is true, Vietnam is a haven of trend shipping. Part of the problem is that we actually told companies we're like don't produce in China, you should go to Vietnam. Yeah, we part of the reason.

[Krystal Ball]

That's what we wanted that situation.

[Ryan Grim]

We literally wanted that to happen because Vietnam is a much better ally to us and actually has pretty good relations. So now what?

[Krystal Ball]

Another example of that is Apple has moved some significant portion of their iPhone manufacturing to India. Yeah, I know, same reason. Because they were okay, you guys aren't happy with China. We got it, we got it. India's an ally. We'll move some of our production there. India got hit whether like 50% tariffs as well.

[Ryan Grim]

50% tariff. That's right.

[Krystal Ball]

So, yeah, I mean, all of this, many of these dynamics were actually created by intentional American policy to move manufacturing out of China to other allies. And now it's like, okay, well, they're going to have huge tariffs as well. You can see from the stock market, they are clearly betting that Trump is bluffing. They are betting that, no, he doesn't really mean it when he says that they're permanent. And this is, by the way, according to the reporting from Jeff Stein, from Andrew Ross Sorkin, from other people who are talking to people in and around Trump's orbit. He's saying the same things publicly that he's saying privately. He's saying, no, I don't intend to roll these all back. And not only do you have Peter Navarro there who says, no, zero percent tariffs. That's not good enough. That's not good enough. You also had Trump in that press conference saying the EU had offered zero for zero tariffs. Also not good enough. So I'm not sure what gives them the confidence that they feel like he's imminently going to announce some, oh, 50 countries have made a deal. And look, these amazing things that I won, Maybe they're right. It's certainly possible. Trump has put tariffs on and backed off in just the past few months. We have seen this all play out. But I do think the market is not pricing in enough uncertainty about how Trump may ultimately handle this, because I think he's loving all of this. I think he loves being in the. What do they call it, the catbird seat, and having all of these people have to come to him and CEOs calling him and begging for relief and trying to petition the king and all of these countries blowing up his phone. He loves this. So, like I said, we'll see. I also think it's important to keep in mind, in the same way that Trump, after he does January 6th, he basically gets away with it. He has all these criminal charges, he's found guilty of multiple felonies. He still gets elected President of the United states. He has zero Fs to give. He thinks all these people told me I was wrong before and they were proven wrong, and here I am, and they don't know anything. And rather than having people like, you know, serious people like Bob Lighthizer in there, he has, like, clowns like Howard Lutnick. So he intentionally constructed a circle that was never gonna tell him no on anything that he's ultimately doing. And Peter Navarro probably has a similar mindset. I mean, this is a man who was in prison for contempt for refusing to testify to Congress about again January 6th. So he has really emerged as the most sort of like ideological hardline, pro tariff figure within the Trump administration. And so I think his mentality probably plays into this dynamic as well.

[Ryan Grim]

There's no question. I mean, Navarro, also, people need to remember the origins of the first term. He was effectively banned from the Oval Office for almost a year, the first year of the Trump administration, when Trump really handed a lot of the reins over to Jared Kushner, to Gary Cohn, to a lot of those types of folks which did everything they could to keep him out of that, out of the decision making process. Even during COVID there was a lot of Navarro efforts to try and to break some manufacturing, not have so much reliance on PPE and personal protective equipment for hospitals, ventilators, things like that. Jared Kushner completely put the kibosh on that. Well, Kushner's not here at this time around. Neither is Gary Cohn. Trump does see a central failure of his presidency to not be able to do many of those things in the first term. And so he wants to listen. And then second is, I have noticed this the best way for people like Navarro and others ban in, et cetera, everything can be forgiven if you were willing to back him on Stop the Steal. In the two cases, those two cases I just mentioned, they literally went to jail basically, rather than to turn and to try to testify against Donald Trump. There can really be no greater expression of literal loyalty. At the same time, what the markets are hoping and grabbing onto right now is this right here. Let's put it up there on the screen. So Secretary Besant apparently flew to Florida to lobby Donald Trump on the tariff message over the weekend. And this explains some of the talk that we saw yesterday. Secretary Bessant urged Trump, quote, to focus his message on negotiating favorable deals or risk the stock market cratering further. Besant, who quote landed with the president White House on Marine One Sunday night, told Trump that market would remain in peril unless he started putting more emphasis on talking about his end game with the tariffs, winning deals with other countries. So that's part of the reason, at least. The word negotiation has crept back up into the White House lexicon yesterday. But it's one of those where it's so muddled that people really are grasping at something I do not see right now. For example, they've said, well, we've had leaders of 70 some countries call the White House. I'm like, first of all, it sounds super Inefficient. But second is, how are you going to get this resolved on a reasonable enough timeframe? I want people to understand the stakes. So a friend of mine, Ryan Peterson, the Flexport Guy, the CEO of Flexport, he just revealed yesterday, quote, On April 17th, the US Trade Representative's office is expected to impose fees of 1.5 million per port call for ships made in China and for 500,000 to a million if an ocean carrier carries a single ship made in China or even one has on order from a Chinese shipyard. Now, does anyone want to guess how many ocean containers ships were built by the United States of America last year? The answer is zero. Just so everybody knows, quote, there are actually only 23American made and crude container ships in the entire world today. They are all servicing domestic ocean freight. They are, quote, tiny compared to today's mega ships and they are not even allowed to sail to overseas ports. So what do you think is going to happen if you make a company pay a million five every time they dock? What are you gonna do? You're gonna dock less, go somewhere else or you're gonna dock once? So what does that mean? That means a lot of these smaller ports, Baltimore and a few others. Yeah. See ya longshoremen. Good luck. I hope that you enjoy not working.

[Krystal Ball]

They'll just go to one big port.

[Ryan Grim]

They're gonna go to la. Even worse. What happened during COVID Does anyone remember all of that nightmare in the port of Los Angeles?

[Krystal Ball]

That's what caused in part massive inflation.

[Ryan Grim]

Massive inflation. So it's like you can see this stuff coming from a mile away. And guess what guys, that's coming in nine days. Does anybody think that that is going to be solved in nine days? And this is a country, China, which has actually called our bluff multiple times. We're about to talk about this in a little bit on China. I think what I would really hope everybody from this show can take away is to get away with the boomer mindset of these are some backwards. No, no, no. We are dealing with a hyper sophisticated global powerhouse, one that has levers of power that we could only dream of in the United States of America. And so when I look at this and then I see the President talking about a 104% tariff that is going to be played not only on all Chinese goods, But then this $1.5 million port call, I am looking at a literal mass explosion of supply chain disruption, Covid level supply side inflation. And then also, do we not want more union worker jobs, not just in Los Angeles, I want them in Baltimore, right over here.

[Krystal Ball]

That's right.

[Ryan Grim]

They're gonna skip it. And no one's gonna say, oh, you're giving into the Chinese guys again. You know, the problem is we have not spent any money building ships or boosting our shipyard industry for 35 years. They have been pouring money into. They beat us just because they paid for it. We can't just come in at the very last minute and be like, oh, sorry, you know, all 35 years of rectifying decision or, you know, bad decisions and all of that. We expect all this stuff to over. Do you know how long it even takes to build a ship? I beg people to go and look at these things. I took a trip once down to the Panama Canal. You can't even wrap your head around how big some of these mega container ships are. Some of them are so big they still can't fit through the canal. That's what we're talking about.

[Krystal Ball]

That's insane. Yeah, and I mean, listen, you're still also relying on capitalists to take a look at that state of affairs and be like, oh, that makes me really want to manufacture in the U.S. first of all, as we've discussed ad nauseam at this point with the on again, off again, this guy's a madman. The next administration may do something totally different. No one is going to. And also courting a global recession, a lot of big investments don't really get made in when you have a recessionary environment and the chaos of it means that, yeah, everybody is just going to freeze into place. So when you don't pair it with any sort of concerted government spending and directed effort at industrial policy to strongly encourage the capitalists to do the thing you want them to do, then you are unlikely to get the results that you want because you can't just wave a magic wand and suddenly there are a bunch of American container ships. Also, with regard to that, I saw that yesterday and it also triggered for me, like, okay, well, that does not seem like an administration that is ready to back off of their maximalist tariff protectionist position. That seems like an administration, like a president who is all in on this direction. So again, look, maybe the Wall street, maybe they're going to be right. Maybe they're going to prove Jeff Stein wrong for once. By the way, there were people in Jeff Stein's timeline yesterday who were like, thank you. I saw you on Breaking Points and I listened to you and I saved a bunch of money by moving things around or taking money out of the stock market. Et cetera. But maybe this time Jeff Stein is going to be wrong and the Wall Streeters are going to be right. But I don't know where they're getting their confidence. Couple last things we have, Larry Fink. He sounded off about how he thinks very likely we are already in a recession. This is the CEO of BlackRock. Let's go ahead and take a listen to what he has to say.

[Ryan Grim]

Are we headed for a recession? Are we in a recession? Most CEOs I talk to, I would say we are probably in a recession right now. Right now. Right now.

[Krystal Ball]

And it's not just him. So he says most, not just him. Most CEOs I talk to think we are in a recession right now. You can rest assured this is a man who talks to a lot of CEOs. Let's put this CNBC did their like polling of their the CEOs that are in their network. One CEO said this is the Trump recession with tariff price increases, job losses coming and a majority of the CEOs that they've reached out to. 69% expect a recession. Three quarters of those CEOs expect a recession to be moderate or mild. So they're not saying Great Depression kind of thing rather than severe. But this still is an extremely pessimistic view of the economy and directly attributable to the policy decisions of Donald Trump.

[Ryan Grim]

Yes. And this also now you might say, don't you hate blackrock and all these other people? Yeah. But guess what? They are the market. Larry Fink literally is the market. So we should listen to what. Because again, you may not like these people, you may like to see them cry. And I think that's great as long as it doesn't affect you. But the problem is in the way that our world is set up today, specifically our country, our capital markets. Those people, when they say there's a recession, it becomes a self fulfilling prophecy. Those people are gonna go from 10 billion to five. You're gonna go from what? Negative five to minus 5,000. And that's a lot more dismaying for a lot of people that are out there texting. Privacy policy and terms and conditions Posted at TextTerms US texting the rules for recurring automated text marketing messages Messages iterates mail apply replace stopped out consult a doctor prior to use wow, you look amazing. What have you been doing? I'm sure you've heard of Ozempic, Wegovy.

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[Krystal Ball]

All right, so let's dig in. Specifically on China. This is obviously a major part of the dynamic here, major impetus for the launching of this trade war. And Trump issued this on Truth Social yesterday. Let's put it up on the screen. He says yesterday China issued retaliatory tariffs of 34% on top of their already record setting tariffs, non monetary tariffs, illegal subsidization, I can't say that of companies and massive long term currency manipulation, despite my warning that any country that retaliates against the US by issuing additional tariffs above and beyond, beyond their already existing long term tariff abuse of our nation will be immediately met with new and substantially higher tariffs. Therefore, if China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, that would be today, now April 8th, the US will impose additional tariffs on China of 50% effective April 9th. That would be tomorrow. Additionally, all talks with China concerning their requested meetings with us will be terminated. Negotiations with other countries which have also requested meetings will begin taking place immediately. Thank you for your attention to this matter. So Sagar, assuming that these new tariffs on top of the original tariffs go into place, you're talking about a more than 100% tariff on 104 specifically? Yes, specifically 104% on China.

[Ryan Grim]

Yes. Man, that must be really tough actually for the enforcers because you can't just double it whenever you come to the price. You actually have to multiply for the 104. All right, all right, let's go through some of the thing. And this is again, we need respect for China. We can be in terms of onshoring and all of this and we can acknowledge many of the sins of the past about stealing technology, trade barriers, currency manipulation, all of that is old news. Now. We are living in 2025 in a world where they have one of the world's best car companies, are a net exporter and have some of the best manufacturing, high tech and low tech in the entire world. So let's go and put this up there on the screen from the Financial Times. I was genuinely amazed reading through all of this. The Chinese know exactly how to destroy us and they have a whole of government approach. They don't need to, you know, mess with the Federal Reserve. They don't have to deal with Congress. They are basically doing everything we would want to do if we wanted a coherent tariff strategy. So let's start with the first thing. Not only did they impose the 34% reciprocal tariff or, sorry, yeah, 34% in terms of what we put into place. They immediately also held back several things that they could use for maximum pain on the US So, first example is control of rare earth minerals. Some 90% of rare earth minerals, so called rare earth minerals, as Ryan likes to say, come from China. At the very least, the finished refined products, over 90%, all of them coming to the United States, require an export license. Those export licenses, yeah, you can basically say goodbye to that. If something like this goes into effect, even with the tariff, they'll simply just not export it. Number two, there was a theory that this would destroy the domestic Chinese economy. Well, unlike this stupid country, what are the Chinese doing? They're saying, okay, well, we control our central bank and it's all controlled by a single entity, the ccp. We will then move to immediately lower borrowing costs for all domestic business in China. We will basically facilitate a boom in terms of liquid money. Number two, we will pump as much money into the domestic economy as necessary to boost domestic demand and spending and to make sure that our citizens do not have a decrease in quality of life and that business circle remains squared. Those are all of the things that they are doing and can do. Like this. All of those. We have to rely on some sage in the Federal Reserve to wake up from his nap three months from now, hope and pray. We also, if we want any stimulus, what do we have to wait for Mike Johnson? Yeah, I'm sure we're gonna get on top of that tomorrow.

[Krystal Ball]

They're going the opposite direction.

[Ryan Grim]

They're actually gonna consummate. Right, exactly. So let's think about who you would rather be. Would you rather be the person who has, like, full control over your entire economy, has deeply studied its enemy, who has studied now four years of stupid sanctions on Russia, which is the greatest training playbook in the history of mankind for the Chinese, or would you rather be, you know, we just had this. Or you're going to hear a segment with Andrew Chen. The country which mindlessly scrolls TikTok and which buys Shein and Temu products and is literally addicted to it. I think I know which one I'd rather be.

[Krystal Ball]

Yeah. Which at the center of our social contract is these cheap goods. Like, our public has not been primed to be willing to experience any pain around consumer goods, as you know. I mean, we saw in inflation how much that hurt people and how much of a major political issue it became. And Sagar, to add to your list, you know, another thing that the Chinese government has going for it and I fully understand it's an authoritarian government. It's hard to know exactly what public opinion is. But Harvard did a study of public sentiment vis a vis the government, and it's extremely popular. I'm talking like 95% saying I'm either satisfied or highly satisfied. They have a lot more unity around their government than obviously here. Trump is very divisive. He is, he's quite unpopular. He's net underwater at this point. You have massive protests that were happening in the streets last weekend. So you have a society that is not at all bought in on this project whatsoever. And I think that also gives them a tremendous advantage in terms of what they can ask their public to accept. And we also, I think a lot of our mental models are very outdated. I was just thinking about the example of BYD. Like BYD, this giant Chinese automaker, seller of EVs globally, and hybrid models as well. And we don't buy their cars. They don't rely on the US domestic market. And guess what? BYD is growing like gangbusters. They are now selling more cars than Tesla does. In 2024, they sold 4.27 million vehicles. So it is an instance of, hey, guess what? They didn't need us. They didn't need us for this company to be successful. They didn't need us for this company to grow wildly. And they have the whole rest of the world that they can sell to. And I think your point about Russia is also a really important one just in terms of how I've been thinking about this. Every mainstream economist thought that the devastating sanctions we put on Russia would be so destructive to their economy. I mean, we really tried to give them the financial death penalty.

[Ryan Grim]

That's why we don't even have tariffs on them because we have no trade.

[Krystal Ball]

That's right.

[Ryan Grim]

Yeah. We literally cut them off.

[Krystal Ball]

All out economic warfare against Russia. And guess what? Like, I'm not gonna say it didn't hurt them, and they also have the wartime economy to help to compensate. But it did not. It did not end them. It did not destroy them. They were able to figure it out because they had been thinking for a while and planning for a while, knowing that we are fickle and that they are an adversary, and knowing that this eventuality could be playing out. China has also been thinking and preparing and is in a much better position to shoulder such an economic blow than Russia is. So I think that if the Trump people think that they're gonna be able to bully and punish China into submission here, I think they are completely wrong.

[Ryan Grim]

About that 100%. So let's return to the shipbuilding thing that I was thinking about. Nice little statistic here from our friend are no in 2024 alone CSSC, the Chinese state shipbuilding corporation built more commercial ships by tonnage than the entire US shipbuilding industry has built since the end of World War II. Okay, so let's let that sit in. Let's say that we have, you know this trade war 1.5 million port call in America's shipbuilding industry which is defunct and basically rotting from rust. We're gonna spin that up miraculously over a where we'll continue to produce nothing. As I said in 2024 we produced not one. They produced more in one year than we did for the entire period of the last 75 years. And we eventually miraculously are able to churn one out. We are still 75 years behind where they are now this. Let's again think about capital markets and efficient market hypotheses and all of these other things. I will remind you of my favorite stat from Joe. The Hong Kong or the Chinese stock exchange in Shanghai is flat to 2009. We are up over even with the dip some 100 to 80% just over the last five years. Are you more materially wealthy as a country by having that 80% bump in the S&P 500? Obviously no. We are a massive service based dominated economy. And I agree of course with the idea of bringing back manufacturing. However, you cannot just simply flip a switch. The amount of money it would require to reach even 10% of the CSSC's shipbuilding capacity would make Mike Johnson and Rand Paul have a heart attack. That's just to reach 10%. They don't agree. That's the truth. So if you don't agree then just simply condemn us to our current fate of consuming onlyfans and pornography and sports betting and Temu and Shein. But don't do some half assed shit.

[Krystal Ball]

Which is what we do. That's the worst of all words right now.

[Ryan Grim]

Because now we're just gonna be poor and addicted.

[Krystal Ball]

Poor addicted. And your wages are gonna be lower. You're gonna have less of a safety net. Like it is the worst of all worlds. It's taking things that were bad and making them worse. That's the direction that they are headed in with all of this. We have to say though Sagar, they are borrowing some from Chinese thought. There's some strong Maoist sentiments being expressed from the Treasury Secretary himself, Scott Besant. This was pretty entertaining to listen to. He went on with Tucker Carlson, take a listen.

[Ryan Grim]

What we are doing, on one side the President is reordering trade, on the other side we are shedding excess labor in the federal government and bringing down federal borrowings. And then on the other side that will give us the labor that we need for the new manufacturing. And we're going to re lever the private sector. So the private sector in essence has been in recession during the Biden years. And this is an opportunity to right size the federal government and unleash the private sector again.

[Krystal Ball]

So what he's talked about is how these federal government workers who were laid off, you know, the people who were like researching cancer or whatever, they can now go to work in the new factories that are being brought online. Which again, very reminiscent of the efforts.

[Ryan Grim]

To, you know, Cultural Revolution.

[Krystal Ball]

Cultural Revolution put the intellectuals and the scientists to the reeducation camp, sent them into the factory. Of course, to your point, there's no actual investment in creating those factories. So the factories aren't actually going to come. It's just going to mean we're going to have less cancer research and people will be poor.

[Ryan Grim]

Yeah, it is funny. Although if you read the Three Body Problem, you do know that there are of course benefits as somebody who wants aliens revealed to be to the United States. That was the only benefit of the Cultural Revolution from that book. Sorry, I guess I just spoiled it. But whatever.

[Krystal Ball]

Yeah, it's still worth reading.

[Ryan Grim]

It's been out since 2006. They made a Netflix document or a Netflix thing about it at this point, I can't get it anymore. But you should read the book. Yeah, it's amazing. And again and almost to defend Mao and all these people. They even had a program at least to facilitate that. They had the Red Arm, whatever it was called, the Red Guards and others to facilitate the movement of these mass intellectuals in state capacity, et cetera. And they had quotas and they had a system. It didn't always work, obviously you had to come up with these fake things. I do recommend if anybody ever wants to, you should read Ezra Vogel has a biography of Deng Xiaoping. And Deng specifically was purged and was one of these people who was purged and actually sent to go work in a factory. And his period during the Cultural Revolution and the Great Leap Forward is absolutely fascinating to actually go and to study it eventually informed the modern Chinese model of where we are today. So yes, if we would like to repeat the mistakes of China, I guess we can. Maybe our Deng is somewhere out there. He's a fired NIH worker who will Be stitching. What was it? Screwing the tiny little screws.

[Krystal Ball]

Yeah, the little, little screws into the iPhones.

[Ryan Grim]

Fifteen years from now he will come and save us. Or she.

[Krystal Ball]

So, well, he's going to be replaced by a robot. So anyway.

[Ryan Grim]

That's right. Also according to Lutnick, maybe we need an AI Dingja. Honestly, we. We could do worse than AI Dinghy.

[Krystal Ball]

Listen, I'm coming around to the view that maybe we do need to just accept our fate with the AI overlords because the current human model is not going also all that great in my personal estimation. But people, I believe in humanity. It's a joke.

[Ryan Grim]

I believe in humanity. I believe in. But you can't help but look at the Chinese model and be like, this is obviously better. Like it's obviously working better than what we have right here. I'm not saying it would work here, obviously wouldn't. We don't have 1 billion Han Chinese, 75 or what more 80 years of PSYOP population to believe in all this. We're not ethnically the same. Yes. We don't have a 10,000 year history or whatever or 2,000 year history of civilization. And all that said, you can clearly see that there are major advantages to this like well executed authoritarian model. And that when we're going up against them with a lot of the weaknesses that we have as a result of like degenerate capitalism, that we really are like the caricature in some ways of what they think of us and how they justify their authoritarianism over their population. If you look at many of the results, our own consumer results, our entertainment results, what Americans spend, choose to do their time, obesity, you know, like the constant chase of dopamine hits, like that is what this country is ultimately all about. I was really thinking about that with cars. Like what distinguishes the American car, Jeeps, which are pieces of shit with coolers and heated seats that are gigantic, that break down every two to three years.

[Krystal Ball]

They're big and comfy.

[Ryan Grim]

Yeah, they're big, they're comfy. They have all these dumbass features, tailgating seats, right, that they charge you $75,000 and somebody who makes 60 grand a year is like, yeah, let me get a 25% APR on that and I'll pay the monthly at a bare minimum rate for the next 420 months. I'm not even making this shit up. This is reality. This is literally what America, what it looks like. Or you know, you could have something different, but.

[Krystal Ball]

Well, I will steal Ryan's point. He's like, listen, one of the reasons I love this country is like our rights, like the freedom of speech and increasingly like you can't feel comfortable to speak out on some key issues like for example Israel, Palestine, and think that that right is still intact. So if we're gonna not even have that, like, what are, what are we doing here? What are we getting out of this arrangement at this point?

[Ryan Grim]

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[Krystal Ball]

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[Ryan Grim]

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[Krystal Ball]

Yes, Zelti can provide Semaglutide or Tirzepatide, the active ingredients in Ozempic and other expensive GLP1s but for 80 to 90% less and shipped directly to your door.

[Ryan Grim]

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[Krystal Ball]

Let'S go ahead and get to some of the cracks maybe that are emerging in the MAGA coalition. In the MAGA coalition we can put the first one up on the screen. This is certainly the biggest deal with regard to who has the most power with Trump at this point. Washington Post reporting that Elon Musk made direct appeals to Trump to reverse sweeping new tariffs over the weekend as he was launching a barrage, they say. A social media post we covered this yesterday criticizing Peter Navarro, one of the lead White House advisers for President Trump's aggressive terror plan. Musk was going over that same official's head and making personal appeals to Trump. The attempted intervention confirmed by two people familiar has not brought success so far. No kidding. Trump threatened Monday to add new 50% tariffs on imports from China, which we also just covered. Musk, meanwhile, posted a video to X in which the late conservative economist Milton Friedman touted the benefits of international trade cooperation, the impersonal operation of prices, as he put it, breaking down the sources of the materials that go into a simple wooden pencil. They go on to say that this is of course the highest profile disagreement between the president and one of his key advisors. So Musk, as we pointed out yesterday, has been kind of like posting little passive aggressively on Twitter about this. We know that he's look, he was praising Milei previously for rolling back tariffs. He said that thing publicly about how he wants there to be zero tariffs between the US and the eu and apparently is also trying to make his pitch directly to the president, so far hitting his head against a brick wall at this point.

[Ryan Grim]

Look, his problem is that Trump only cares about a few things basically. Actually, it may even be one I'm not even particularly convinced he cares all that much about immigration. But whenever it comes to, I think.

[Krystal Ball]

He thinks that's politically beneficial for him, that does not happen.

[Ryan Grim]

He does not actually pay attention.

[Krystal Ball]

He outsources that to Stephen Miller.

[Ryan Grim]

To Stephen Miller and to Tom Homan, and he's like, you guys do a good job, and I'll back you up rhetorically. Even though our deportations are basically flat to wherever the Joe Biden administration. But on trade, it's like, the one thing that he does care about, so he's not gonna listen to Elon. And Elon confused that with Doge. As we said before, Trump never cares particularly about Doge. It's all rhetorically useful, coalitionally. He can see there's some people who are jazzed up about it. He's like, yeah, okay.

[Krystal Ball]

He likes that the libs are freaking out about it.

[Ryan Grim]

Bingo. That's all they care about.

[Krystal Ball]

He feels like the bureaucracy was opposed to him. So he feels like this is an enemy that's being sor. Of, like, defenestrated by Elon. So it's useful for him.

[Ryan Grim]

Bingo. Exactly. This time around, though. And actually, we shouldn't rule out Elon's ego in this either. Guess who's nobody's talking about right now? Elon. Unless it's as a tertiary story to the tariffs. True. Doge is like, what? You know, for people who pay attention to politics, it's like, we're not even paying attention to Doge right now. We should. It will come back, I can guarantee you that. But. But that just feels like a very been there, done that thing. And if any way, if anything, this is Trump reasserting himself into his own presidency, but in a sense, doing it. And not only what I think will eventually become a very unpopular and poisonous move for his own presidency, but he's doing it in a way that splits the coalition. Previously, that was able to really bring him. He could be all things to all people as long as he was just kind of floating in the clouds. He got the tech right, the barstool right. Maga, right. Who obviously will back him no matter what. This is like the first time he's staking something out. And so, as you said, you begin to see the cracks that are forming. For example, here we've got Dave Portnoy. He says he's riding with Trump for now, but he said he's lost some $20 million. Let's take a listen. I went super viral when I said I lost $7 million. I'd kill to be back to losing $7 million. I haven't even looked. If I had to guess, I'm down in these last three days, probably close to 20. I don't know, like, 10, 15% of my net worth. Poof. But I'm still here. That's the game. That's. That's what I'm in. Like, do I like it? No. Am I crying? Am I like, oh, whoa, is me? I wish I voted for Kamala. No. Do I wish this didn't go down like this? Yes. Am I in this to make money? Yes. Do I wish I had that money in my back in my investment portfolio? Yes. So we'll see. Will cracks begin to emerge?

[Krystal Ball]

Yeah.

[Ryan Grim]

It must be nice.

[Krystal Ball]

He also said, like, everyone's gonna vote for Democrats, myself included, in the midterms.

[Ryan Grim]

Oh, did he say that?

[Krystal Ball]

He did say that. That might have been in the rant. When he had only lost 7 million. Not the 20 million. Like, Jesus Christ.

[Ryan Grim]

Well, as we get closer to 40, 50 million, what do you think that's gonna be?

[Krystal Ball]

He's gonna be putting his pronouns in his bio here. Pretty good.

[Ryan Grim]

Yeah. I've seen that joke. Bill Ackman. And we'll be doing land acknowledgments by that time. Let's go to the next one here. This is Kevin O'Leary from Shark Tank begging Trump to back off. Let's take a listen. Kevin, your analysis of what's going on, please. It's all euro right now, because this is the test case right here. I think this is a really huge opportunity for Trump to find an off ramp here in the administration, because it's not Vietnam. That's not big enough. But EU has a huge aspect that is so important, and that's on automotive, because if you think about how restricted it's been in Germany alone or in Switzerland or France about getting US Cars into those markets, They've been so punitively oppressed with tariffs, and they're willing to wipe those out. So what you get to say is, look in the interim where we'll. While we're building our own factories in the US on whatever it is. You want to look at that, I'm going to show you how it's done with euro. And the Eurozone has been brought to its knees. It's willing to go 00 and open its markets up. And that's the key, Stuart. The idea that you would open up the markets and set the path for every other negotiation of the other 59 countries, whether it's penguin islands or whatever, it doesn't Matter. This is the opportunity, this is the moment. And if Navarro sees it that way and advises Trump and whether Lutnik sees it, but that's what the market's holding onto right now. The volatility remain extreme. But this Eurozone deal is the beginning of a beautiful outcome, if you want to put it that way. And then you get to say to everybody, well, look, it was a lot of volatility, but I got us there. This is the moment. Yes, it was a lot of volatility, but I got there. It's like, yeah, I'm not thinking that's happening anytime soon.

[Krystal Ball]

They talk to this man, they're so like, it'll be a beautiful moment.

[Ryan Grim]

That is part of the game. Yes. When you deal with it, think about for anybody out there. I'm sure this has never occurred before. Well, you've ever worked for some shithead boss, how do you deal with it? And they're the most egomaniacal, annoying people on the planet. You gotta suck up to em a little bit. You gotta say, oh, you know, flatter their ego. Flatter their ego. You know, just be able to work them towards a solution and make sure they think it's their idea. That's basically what we're dealing with here. Trump is that boss for the entire country.

[Krystal Ball]

It's more how I dealt with my kids when they were like 4 years old, to be honest. Honest with you. And make them feel like it's their idea.

[Ryan Grim]

Yeah, there you go.

[Krystal Ball]

Present them with choices, but only the choices you want them to go with. Yeah, it's a similar strategy. Right?

[Ryan Grim]

Bingo. All right, now let's though flip the coin. What does it really look like for a lot of the supporters here? We got Fox and Friends backing Trump up. Let's take a listen. This is precisely what Donald Trump said he was going to do, which is always a shock when a politician does that. And it's what he's been saying for literally decades, that this is what needs to be done to save the American economy. And I'll just bring up this. Go ahead.

[Krystal Ball]

Well, I was just gonna say you have to just let him do what he's gonna do. Give him some time.

[Ryan Grim]

Because he is a businessman, he's a.

[Krystal Ball]

Billionaire, he knows what he's doing. And when does America say we're tired.

[Ryan Grim]

Of paying the most?

[Krystal Ball]

We're tired of paying and paying and paying and doing what every administration has done. When do we say we're standing up for ourselves and we're gonna make free and fair trade? If you're charging Us, this amount. We're gonna charge you that amount. That is not what we're doing.

[Ryan Grim]

That is not what we're doing. You've gotta let the. Yeah, actually that's the real problem is anybody. Cuz as you and I know there are well meaning people out there and they trust their president, they voted for him. And he tells you it's a reciprocal tariff and they're like, yeah, okay, it's a reciprocal tariff. It's not a reciprocal tariff. We can break it down, the fake formula and all of that all you want, but empirically it's not reciprocal. It is something. It's a trade deficit tax, basically. Okay, you could sell it that way too if you want. Doesn't sound so. It sounds a little different though. Yeah, I think whenever you do trade deficit tax, trade deficit tax, which is decades and we're trying to make up for this, this and this, and it's actually not reciprocal. And actually, even if they drop the tariffs to zero, then we still are not going to take that into account. You're like, okay, all right, well, I'm feeling a little bit differently about this now, aren't I? For example, we also have a new MAGA version of the World Economic Forum. Let's put this up there on the screen. I genuinely love this one. You do not need the new iPad. You do not need the new cell phone. You do not need the new video game console. You want them. There's a big difference. If you look at the people whining about terrorists, I challenge you to ask how their lives have been affected in any way. In other words, you will live in a pod and you will eat bugs.

[Krystal Ball]

You will eat the bugs and you will love it.

[Ryan Grim]

I feel complicated, right, Because I, I kind of agree with him. I mean, is your life all that materially better because of the new iPad, the new cell phone, the new video game console, all the new products, electronic products that we've been able to purchase since the Great Recession? I don't think so. I think we're a much poorer country actually. But as we always say, if that's the only social contract that's on the table and you're gonna screw with that, that's a big problem. Unless you're offering something very, very different. I mean, and really, I think a good middle ground or whatever for America would say, yeah, you can still have your iPad, we're gonna try and build it here. Here are all the steps that we're gonna be able to do. It's a win, win. You can still have your consumerism, we can still have it made here on the cell phone point. I mean, what do we really want? Me, I want competition. I wanna see something interesting and something new. That's part of the thing that's exciting about BYD is finally you're like, at least it's different. I haven't seen a different new novel thing prop up technology wise other than AI since the invention of the iPhone. That's it. And even with the AI thing, it's now all commoditized basically across the spectrum. And it all seems to be going the same way of monopolization and of being rolled up. That's a great thing about America, about entrepreneurship, but we don't see a lot of that. And I don't know, just looking at this, I just know in my bones I did my whole rant about degenerate capitalism, but that's who we are right now. And it takes a literal cultural revolution to be able to move away from it. It took us 75 years to get here. It'll probably take us, I would say 50 to get out. You gotta start small and you gotta give people buy in, otherwise this will be an aberration. My current prediction is that America will be the most neoliberal country on Earth in 2029. Like in 2029 after Donald Trump is gone, we will be like the Gen Z is gonna be the most neo libbed Milton Friedman out generation.

[Krystal Ball]

So possible.

[Ryan Grim]

I'm telling you, I'm echo coming from.

[Krystal Ball]

A mile away, I mean, I think, I can't remember that made this point, but it was a good one. It was people's mental model is that Trump is trying to bring us back to the 50s or 60s. But that's not what he's saying. He has consistently this campaign and into this administration and at his inauguration, he wants to bring us back to 1900. He wants to bring us back to the era of McKinley. That is a very different landscape. You're talking about before the introduction of the income tax, which of course is aspirationally progressive and which was put in place specifically so that, you know, the government in World War I and then World War II would be funded more by the rich than tariffs. Land, of course, squarely on the working class. He's just implemented with the tariffs, the largest regressive tax on the working class in American history. You're also talking during the Gilded Age. This is a time before you have, you know, child labor laws. It's a time before you have significant union rights and labor organizing and workplace protections. This is before the New Deal. So you don't have the social safety net bill to. You don't have even things like Social Security and Medicare in place. So I do think it's important for people to have that mental model of. That's the thing he's going for, not some 50s or 60s ideal. And if we think about the time period when American manufacturing was at its height, I mean, first of all, the world was just a lot different place, right? Much of the world was devastated by World War II. It gave us this unique advantage where we were sort of the only game in town. And the other two pieces of that that are often overlooked is, number one, you did have a really strong labor movement. So people were able to achieve relatively high wages, relatively stable employment, and secure pensions too, by the way, secure retirement. You also had the build out of the FDR social safety net. And housing was way more affordable, health care, way more affordable, education way more affordable. And this was also before, you have now this advent of increasing levels of automation so that the same factory can produce much, much more with many fewer human beings required, which is another thing that, that Lutnick says. So there's no going back either to 1900 or to the 50s or 60s or 70s or whatever your period of peak manufacturing, American renaissance is going to be. And the fact that they have no interest in, I mean, Trump is busting unions. He's consistently been a union buster his entire life. He's taken that into this administration. They are cutting the social safety net. There are zero efforts in place to improve the cost of housing. In fact, the tariffs will only increase the cost of housing. No efforts in place to reduce the cost of education. No efforts in place to reduce the cost of health care. In fact, some of the very mild reforms put in place by the Biden administration have been rolled back on that front. So that's the landscape that you're actually looking at here. But I did enjoy this particular. This was more of a creative, I think, attempt to spin the tariffs in a positive light. Congressman Roger Williams, who apparently is a car salesman, says that one good thing about the tariffs is that now used cars are going to be more expensive. So this he sees as a positive. Let's take a listen to that.

[Ryan Grim]

And people with used cars, their used cars are going to be worth a little bit more. And when it's worth more, they have more down payment, they have more equity, and they can make their payment less than it was.

[Krystal Ball]

So there you go. Used cars are going to be more expensive. So you Know, that's, that's a good.

[Ryan Grim]

That was actually a great landscape for all of us in 2022.

[Krystal Ball]

Oh, that was awesome.

[Ryan Grim]

It was really awesome.

[Krystal Ball]

Yeah. At a time when car loan defaults are actually spiking and at like, I think like an all time high, they've definitely gone up significantly.

[Ryan Grim]

So let me just quickly split the difference on 1902. Let's make the case for at least some of the time of McKinley. You know what was nice, we were not the global preeminent country that ran the entire world. It was a lot cheaper actually to be a country that was not the.

[Krystal Ball]

McKinley was moving us in that direction.

[Ryan Grim]

Yes, he was, but we weren't there yet.

[Krystal Ball]

He was the beginning of the American Empire.

[Ryan Grim]

Let's take it all the way back to let's say 1900, right in the beginning of the Progressive Era, literally pre. The true expansion of, or at least the total expansionism that was eventually embraced with the conquest of Cuba and of the Philippines. At that time, what was America's like actual. What was America's goal? America's goal was to secure its place amongst the global. You know, it was to have some respect, but it was not to replace the German Empire or the British Empire. It was one which wanted some reciprocity in the world of trade. It was one where 40% of our, you know, so of our revenue at that time would come from customs duties. But broadly, it was a country very similar to some of the issues that we have now. We had major fights about immigration. We had big fights about the transition to industrial capitalism. We were an inward focused country that needed to hash out all of those types of problems before we eventually became this player in the middle of World War I. I'd also say, and this is a common thing too, yes, we can talk about the nobility of income tax and all that, but the true necessity of income tax was to fund the war machine. I mean, it's not a surprise the first income tax ever instituted in the history of the United States is during the American Civil War when they need money. And so a lot of it was actually not just about correcting some Gilded Age, you know, wealth imbalance, but that.

[Krystal Ball]

Was part of it. That was part of the intellectual case that was made to the public about.

[Ryan Grim]

It, because the reason they needed the money in the first place was to build bombs and weapons to send 200,000Americans to die for what? To preserve the British Empire during the First World War. That's why I get really annoyed at people who get so furious at the Americans of 1920s and 1930s for passing Smoot Hawley or for being isolationist. It's like guys, literally 200,000 of their sons were murdered on the fields of France for, like, Woodrow Wilson's idealism. And you got taxed and you got a Great Depression. What did you get out of that? I mean, of course you're gonna be somebody who is deeply skeptical of internationalism, of global trade, you know, so anyway, I just think it's. There is at least some things you can learn from that time of the simplicity of not being the seat of the global empire. Some of the benefits of what could that be? And you don't have to return to that era, but there are certain things about it which were actually great. And, you know, so I just think that there's often this idea that we currently are living in where everything from that time period is like, regressive and bad. But there are mental models which you can adopt and you could look at from that time and say, yes, there are certain things that we should aspire to. To. And I think one of the things that we should at least try to aspire to is to move away from having to fund, let's say, I mean, Pete Hegseth yesterday said that the next Pentagon budget is gonna be $1 trillion. Yeah, that's right, $1 trillion.

[Krystal Ball]

Yeah. Well, and I guess that's why I see things differently. You're right. The full American empire had not been built out, but that was the direction. I mean, McKinley takes the first big steps in that direction. And, you know, just in terms of the system of taxation, tariffs are deeply regressive. They land. If you are a working class person, much of your income is going to consumption. If you're a wealthy person, it doesn't. And that's why it's like, you know, all these, like, flat tax libertarian people. That's why a flat tax is always wildly unpopular, because people look at the fact of, like, oh, I'm going to get charged the same thing as this billionaire. Actually, no, it's going to be a much larger percentage of your income. And so the ideal of the income tax is that it would be progressive, that the burden would fall more heavily on the rich people would actually be taxed. We all know there's a million ways that there's loopholes, and this is not lived up to its aspiration. But Trump consistently talks about getting rid of the income and going back to that funding model altogether. And that would be a war on the working class. That would be requiring the working class to fund the $1 trillion defense budget in all of the wars. Because it's not like they're rolling back, as we are about to discuss in some of our later foreign policy blocks. It's not like they're rolling back American empire. In fact, there's many expansionist plans that this administration is pushing at this point. The last piece I just want to quickly get to here just in terms of where everybody in MAGA world is shaking out. You have another one of the billionaire Trump donors who is upset, Ken Langone, we can put this up on the screen from the Financial Times said to them, among other things, he said, I don't understand the goddamn formula. I believe Trump's been poorly advised by his advisors about this trade situation and formula that you love.

[Ryan Grim]

The formula.

[Krystal Ball]

No, dude, this is Trump's formula. His advisors have been doing everything they can except for Navarro to push him in a different direction, but this is all him. But again, and to your point, this is the way that they all deal with him because they don't want to get crosswise with the king. When you have a monarch, this is what happens.

[Ryan Grim]

Hey, Jenice Torres here and I'm Austin Hankwitz. We're the hosts of Mind the Business Small Business Success Stories produced by Ruby Studio and Intuit QuickBooks. Catch up on seasons one and two and join us for a brand new season of the podcast as we talk to small business owners about how they manage and grow their businesses with the help of platforms like Intuit QuickBooks. Listen to mind the Business Small business Success Stories on the iHeartRadio app, Apple.

[Krystal Ball]

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[Ryan Grim]

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[Krystal Ball]

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[Krystal Ball]

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