Podcast Summary: "Trump’s Tariffs: Big Talk or Big Action?"

Podcast: Exchanges
Host: Allison Nathan, Goldman Sachs
Guest: Jeff Gerrish (Former Deputy U.S. Trade Representative; Partner, Shagri & Associates)
Date: March 4, 2025

Episode Overview

This episode explores President Trump's recently announced tariffs and the prospect of even broader tariff actions in his current term. Allison Nathan interviews Jeff Gerrish, former Deputy U.S. Trade Representative, delving into Trump's objectives, the nature of current and potential future tariffs, and the implications for markets, manufacturers, and trading partners. The discussion emphasizes whether Trump's tariff announcements are strategic negotiation tactics or signal a profound shift in U.S. trade policy.

Key Discussion Points & Insights

Trump's Objectives for Tariffs

[01:01 – 04:10]

• Addressing Unfair Trade Practices & Trade Imbalances:
  Trump uses tariffs to counter what he perceives as unfair treatment and significant U.S. trade deficits with other countries.
• Rebuilding U.S. Manufacturing & Protecting Jobs:
  A primary goal is to bring back manufacturing and jobs to the U.S.
• National Security Concerns:
  Tariffs protect strategic sectors (e.g., semiconductors, pharmaceuticals, PPE) to reduce reliance on imports, especially from China.
• Negotiation Leverage:
  Tariffs are a tool to pressure for favorable trade agreements, seen previously with China, Japan, and in USMCA talks.
• Foreign Policy & Geopolitical Leverage:
  New this term—tariffs are used to influence non-trade issues (e.g., immigration with Colombia, border security, and even threatening Denmark over Greenland).
• Raising Revenue:
  Tariffs are considered a way to offset proposed tax cuts, though not as a replacement for income taxes.

"The President really has several goals...to address unfair trade practices and correct significant trade imbalances...to rebuild US Manufacturing...to protect national security...to gain leverage for negotiations...address non trade, non economic foreign policy...and to raise revenue."
(Jeff Gerrish, 01:01)

Perceptions and Misunderstandings about Tariff Policy

[04:10 – 05:09]

• Misconception of Randomness:
  Contrary to outside impressions, there is a deliberate strategy. Trump's approach appears chaotic but is methodical and aimed at achieving specific goals, often pushing negotiations to the limit.

"I think the first thing that's misunderstood is the fact that there is a plan and a strategy...Even though it appears...erratic or haphazard, the President is showing that he's not going to go softly here."
(Jeff Gerrish, 04:19)

Negotiating Tactic vs. Genuine Tariff Implementation

[05:09 – 07:26]

• Tariffs on Allies (Canada, Mexico):
  Often used as leverage for deals on issues like border security and drugs. The goal is often to extract enough concessions to "declare victory," but details on requirements remain unclear.
• Auto Tariffs (25%):
  Historically effective as negotiation leverage to drive investment into U.S. auto manufacturing and likely to be used similarly; real risk remains if negotiations stall.
• Steel & Aluminum Tariffs:
  Strong commitment here, rooted in national security and industry health; expecting tougher implementation, fewer exemptions, and broadening to derivative products.

"I think it's more in the realm of negotiating tactics...But it's been unclear...what exactly Canada and Mexico need to do to satisfy the president."
(Jeff Gerrish, 05:32)

"Oh, I think he's very committed to that...We're back in a situation where steel companies are suffering losses...the President is very much focused on being strong and extending those tariffs."
(Jeff Gerrish, 07:33)

Prospects for Broad New Tariffs

[09:27 – 12:32]

• Global Baseline/Reciprocal Tariffs:
  Trump is signaling an intention for universal tariffs (10-20%) across all products or reciprocal tariffs based on trading partners' rates or non-tariff barriers.
• Addressing Trade Deficits:
  Focus has shifted from China alone to widespread deficits with other countries (EU, Vietnam, Mexico, etc.).
• Complexity of Implementation:
  Determining equivalent tariffs for non-tariff barriers (often opaque) will be challenging but remains a priority for the administration.

"He could do that a few different ways ... [For] the global baseline tariff ... of 10 to 20% ... minimum across the board tariffs ... The more recent announcement ... was on potentially putting in place a reciprocal tariff system ... a fundamental change to the global trading system."
(Jeff Gerrish, 09:37)

Market Perspectives and Warnings

[12:32 – 14:57]

• Market Skepticism:
  Investors may doubt Trump will take such radical action, but his record suggests a willingness to follow through, especially with a hawkish trade team.
• Imminent Policy Developments:
  Key reports due April 1st could trigger a new wave of tariffs; the bulk of actions are yet to come.

"I think it's just such a radical change and I think the market may not expect that the President would be willing to take such an action. But I think that's a miscalculation because the President ... tends to do what he says he's going to do."
(Jeff Gerrish, 12:45)

"I am confident that the bulk of the tariff developments still lie ahead. I think what we've seen so far is really just the beginning..."
(Jeff Gerrish, 13:56)

Embracing Uncertainty

[14:57 – 15:37]

• Uncertainty as a Tool:
  While the business world dislikes unpredictability, Trump and his team see it as a lever to restore manufacturing and jobs.

"They know it and they embrace it because they think that it will bring back more manufacturing, bring back more companies, bring back more jobs to the United States. The only way to gain certainty is by doing that..."
(Jeff Gerrish, 15:08)

Legal Outlook on Tariffs

[15:37 – End]

• Legal Challenges Expected:
  According to Tim Brightbill, most announced tariffs seem to be within presidential authority, and legal challenges will likely face uphill battles.

Notable Quotes (with Timestamps)

• “I think everyone needs to really buckle up here because things are just getting started and it's likely to be even more unpredictable than the first term.”
  (Jeff Gerrish, 00:14 & 13:56)

• “The President, especially in the trade and tariff realm, tends to do what he says he's going to do.”
  (Jeff Gerrish, 12:45)

• “He wants to try to do this in a way which removes the limitations on the impact of the tariffs. Now, I think he's going to get a lot of pushback on that...”
  (Jeff Gerrish, 08:33)

Timestamps for Key Segments

• Trump’s Tariff Policy Goals: 01:01 – 04:10
• Strategy vs. Perceived Chaos: 04:19 – 05:09
• Tariffs as Negotiating Tactics: 05:32 – 07:26
• Steel/Aluminum Tariffs Commitment: 07:33 – 09:27
• Broad/Universal Tariff Discussion: 09:37 – 12:32
• Market Sentiment and Warnings: 12:45 – 13:56
• Embracing Economic Uncertainty: 15:08 – 15:37
• Legal Perspective on Tariff Authority: 15:37 – End

Conclusion

This episode provides a deep dive into the Trump administration’s evolving and aggressive stance on tariffs, clarifying motivations, dispelling misconceptions about strategy, and warning investors about likely policy shifts ahead. The main message: expect significant, potentially disruptive changes, and as Jeff Gerrish repeatedly states, “everyone needs to really buckle up”—the most impactful tariff actions may be just beginning.