Catherine Rampell (3:44)

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Kara Swisher (4:02)

Katherine, Bill and Raj, welcome. Thanks for being on on.

Raj Bala (4:05)

Great to join you.

Catherine Rampell (4:06)

Yeah, it's great to be here.

Dave Cohen (4:07)

Thanks for having me.

Kara Swisher (4:07)

What have you guys been doing? You've been busy. Is there something happening in this country? Oh, right. Trans fencers. If I was watching Fox News, there's a real issue with trans fencers this week.

Raj Bala (4:18)

They're the real reason stock markets have gone down.

Kara Swisher (4:20)

It's a heinous situation with the fencers. Anyway, we're talking a week after President Trump's tariff announcement which has sent markets, businesses and governments around world do a tailspin. We all know this. It's obviously the only story right now. Literally minutes before we started speaking, Trump announced a 90 day pause on what he's calling reciprocal terrorists. Except for China. So let's just back up a little bit. What word would you use to describe what's been going on since Liberation Day? Catherine, you start then Bill, then Raj.

Raj Bala (4:49)

Insanity.

Kara Swisher (4:50)

Insanity day. Okay. All right, Bill.

Catherine Rampell (4:53)

Grift day. Ultimate grift day.

Dave Cohen (4:55)

I'd call it incarceration day. That he's incarcerating the American economy and the population in a xenophobic, autarkic economy.

Kara Swisher (5:05)

Wow, those are some big words. Okay, Bill, explain your grifter day.

Catherine Rampell (5:09)

Yeah, Carol, I get a lot of stuff on a daily basis from traders who are actually like on the floor in the options market and they cannot believe the timing of various options trades that are netting the People who make them hundreds of millions of dollars based on the volatility. And obviously, I mean, the volatility has been out of control for the last week. And if you know what he's going to say, either on the upside or the downside, you can make options bets based on that and make a ton of money. So I think it's the ultimate grift.

Kara Swisher (5:47)

And the SEC is supposed to enforce these things, right?

Catherine Rampell (5:50)

Well, the SEC is supposed to. You'll notice that the SEC chairman has been incredibly silent since this administration began. He hasn't said a word.

Kara Swisher (5:59)

All right, Catherine.

Raj Bala (6:01)

I will say that if anything, the government seems kind of pro defrauding people right now. They basically announced that they'll stop enforcing crypto fraud, amongst other things. But that's a separate issue. It's just like, it's so dumb. It's all so dumb. And I feel like the people around Donald Trump have to know how idiotic this multi front trade war is and how much poorer Trump is making not just his voters, but the entire world. And roughly the only way I can explain it is that we're dealing with a madness of King George type moment. Maybe Trump is trading on the volatility and certainly there's a lot of money to be made if you know what he's going to do from one minute to the next, which only he seems to know. But all of his explanations for what he is trying to do are completely incoherent and self contradictory and come back to, well, he's just like tariffs for a really long time. Yeah, exactly. He doesn't have to have any real objectives, he doesn't have to have any game plan. He doesn't have to have any way out of this. He's just doing what he wants to do.

Kara Swisher (7:17)

All right, let's start how we got here. Trump declared that the trade deficit and the supposed flow of drugs constitute a national emergency. This is something he's been talking about a long time. It's not just hyperbolic language. It's his defense for being able to enact them under what is known as the International Emergency Economic Powers Act. That move is already being contested. Raj, can you explain what IEEPA is and whether bilateral trade deficits are the reason for using it?

Dave Cohen (7:42)

Sure. And the answer to the second part of that question is no. The 1977 International Emergency Economic Powers act, the present Carter era law, was designed to fill a gap in our nation's national security laws. The Trading with the Enemy act dated from 1917, but required a declaration of war and of course, we haven't seen that since the Second World War for the President to take sanctions or other measures against enemy countries. So Congress gave President Carter and some subsequent presidents the authority to act against a problem. And the problem in the statutory language is very particular. It's got to be an unusual and extraordinary threat. Both it's conjunctive unusual and extraordinary threat to the foreign policy economy or national security of the United States. Now, the unusual and extraordinary threats that subsequent presidents, including Carter, have used have been cases like Iran, Saddam Hussein's Iraq, I think General Noriega in Panama. It's never been used to impose trade sanctions, not on issues of fentanyl or immigration, and certainly not on bilateral trade deficits. And to argue that bilateral trade deficits are a national security threat when in fact they are the product of many macroeconomic factors, including very high consumption and very low savings rates in the United States, is folly, and it's an abuse of the statute. And Congress would do well to reject the unitary executive theory of presidential authority and reassert its constitutional duty under the foreign commerce Clause and under the IEPA to say, no, this is not an unusual and extraordinary threat. You cannot use the statute this way.

Kara Swisher (9:33)

Katherine, one of the big criticisms from economists has been the math the administration has used to arrive at these recip. Again, I'm putting reciprocal in quotes.

Raj Bala (9:41)

It's a propaganda term.

Kara Swisher (9:42)

It's a propaganda term. What's the word you would use?

Raj Bala (9:45)

I don't know. I would just say his. Tariffs.

Kara Swisher (9:49)

Tariffs, okay. For countries in whom we've had trade deficits, even conservative think tanks are calling them unserious. You've been looking into the genesis of this calculation. Talk a little bit about what you've learned.

Raj Bala (9:59)

Right? So this equation makes no sense in that it has nothing to do with reciprocating what other trade barriers countries are imposing on US Products. They came up with this formula that is essentially the trade deficit with a country divided by the imports from that country. And then they threw in a bunch of other Greek letters to make it look like it was fancy econometrics, you know, to give it some like, sort of pseudo statistical justification. But that's all it is. And the goal of it seems to be what tariff rate would we need to set to zero out the trade deficit with that country? The formula won't even do that. But let's say that was what it did. That should not be our objective anyway. There are plenty of countries that we need to buy stuff from that don't need our stuff because like they might be the only place that makes vanilla, like Madagascar produces the lion's share of vanilla in the world. We're not going to become farmers of vanilla beans anytime soon. The same thing with countries that produce coffee that are tend to be in climates with lots of jungles and things like that.

Kara Swisher (11:09)

And they don't buy stuff from. They don't necessarily want anything we have to sell.

Raj Bala (11:12)

Right. And they may be too poor to afford the things that we're good at.

Kara Swisher (11:17)

Right.

Raj Bala (11:17)

Producing.

Kara Swisher (11:18)

They don't want to buy our cloud services at this point.

Raj Bala (11:20)

Yes. Or. One of our big exports, by the way, is higher education. We have historically had a lot of international students. That counts as an export. It's a very important service in the United States that produces in and of itself a trade surplus. But we're killing that, too. In any event, this is not a worthy goal to try to zero out the trade deficit.

Kara Swisher (11:41)

That's the premise in the first place.

Raj Bala (11:43)

The premise in the first place is, is wrong the way to achieve that objective. You know, the numbers themselves, they're wrong, too. And it's very interesting because nobody in this administration wants to take credit or rather blame who did it?

Kara Swisher (11:57)

Who, who did this?

Raj Bala (11:58)

What I have heard is it's probably Peter Navarro, who's like the only PhD holding economist in the world who hates trade, as far as I can tell. And it seems likely that he's the one who came up with it. He produced, for example, the Project 2025 chapter on trade. So it's probably him. But he went on TV and said it wasn't. He said it was the Council of Economic Advisors. The Council of Economic Advisors chair said, nope, not me. The Treasury Secretary said, nope, not me. Everybody knows this is a huge embarrassment. So of course nobody wants, Nobody wants ownership of it.

Kara Swisher (12:33)

Let's hand it to Navarro anyway, bill. The world's 10 richest people are upset about this math happening. They're pretty good at math, actually. They reportedly lost a combined $172 billion in the first three days. Warren Buffett was up on top this year, though, because he had moved everything into cash and decried the trade deficits. Coming. Business leaders now close to Trump are rallying publicly against these tariffs. Bill Ackman is warning about an economic nuclear winter. Elon is calling Trump's top trade advisor, Peter Nabarro, bad names, including, oh, I'm not going to repeat it. Moron is the one I will use, which I agree with. But Trump and his team have been telegraphing these new terrorists. Secretary Howard Lutnick has been trying to sell the business leaders on this America first agenda for months. Why are they acting now like this is shocking?

Catherine Rampell (13:18)

The idea that this wasn't to be anticipated if Trump returned to the White House is completely disingenuous. So, you know, while I applaud, I mean, I don't know if I applaud, but I mean, I'm amused by Bill Ackman's Volt face here, if that's how you pronounce that word. And now he's critical of the economic agenda and he's the one that was pushing the 90 day pause. But the idea that this wasn't anticipated is completely fatuous and ridiculous. And for these business leaders to suddenly say, as it's, you know, affecting their pocketbooks, as it's affecting their stock prices, it's affecting their hedge fund positions, as it's affecting their liquidity in the debt markets, which is the real problem here, Kara, big time. The backup in 10 year treasuries, the backup in the junk bond market. As always, the big problems occur in the bond market, not the stock market, even though the stock market gets all the headlines. But the fact that they're now retracing their steps and calling for a pause, calling for a reversal. This was entirely anticipated. When you bring this guy back, this is the one thing that he was talking about through the campaign. Unlike his attack on law firms or letting criminals out of jail by giving them pardons or wiping out the federal government workforce, I mean, this is something he was talking about. So to pretend that now you are shocked, shocked that there's tariffs going on here is, you know, awful.

Kara Swisher (14:55)

So are they getting what they want? I mean, Lutnick's been trying to sell them on this.

Catherine Rampell (15:00)

No.

Kara Swisher (15:00)

You know, and obviously Elon and others are, have lost an enormous amount of money.

Catherine Rampell (15:05)

Yeah, well, you know, we both know that Elon's going to be just fine even having lost a lot of money. Scott Besant's going to be just fine having lost a lot of money. Howard Lutnick's going to be fine having lost a lot of money. Even Donald Trump, whose DJT stock has, you know, plummeted.

Raj Bala (15:21)

I will say though, even though there as, as of our time recording this, markets have, have had a bit of a rally. Even if people are ultimately made whole for like a week or two Anyway, for the 90 days that these tariffs are paused in their, in terms of their 401ks, there will still be a lot of real economy damage. Right. So it's not just about the hit to people's savings. It's also that when these, some of these tariffs have already gone into place that will raise prices for consumers, they will become poorer as a result of that. Beyond that, even if companies don't like start laying off workers entirely yet because they're pausing, they're still pausing.

Kara Swisher (16:05)

They're pausing and not spending.

Raj Bala (16:07)

They're not spending, they're not hiring. That's bad for workers too.

Dave Cohen (16:10)

Carrie There's a carelessness to this. At the end of the Great Gatsby, F. Scott Fitzgerald talks about careless people expecting the rest of us to pick up their mess. And without sounding ad hominem, there's a lot of carelessness and sloppiness in the trade policy. There's a carelessness, for example, that not all trade non tariff barriers are alike. Some are legitimate expressions of the sovereign rights under international law, the EU to not want beef hormones. Some are more problematic. But then there's a carelessness in the failure to use the tools that the United States set up ever since the founding of the GATT in 1947 to use the tools that the GATT treaty and other WTO treaties allow. And there's also a carelessness in not using what President Kennedy set up to help workers. People who I grew up with in Milwaukee in the late 70s who were dislocated from trade and that's trade adjustment assistance to fund trade adjustment assistance to help these dislocated workers is not something that the administration is even thinking about.

Kara Swisher (17:19)

So it also is unclear what the goal of these tariffs are. On one hand, Trump keeps saying he wanted to make countries make a deal. It's his strange real estate guy and bankrupting casino voice. Essentially, Navarro has been saying this is not a negotiation. Carolyn Levitt, the White House press secretary, said the tariff level will be brought down to a universal 10%. These mixed signals are problematic at best. Is there wanting to make a deal because someone at one point, Chris Murphy, was saying this is to ruin democracy, he's purposely crashing the economy so he can be king, which seems a little too planned for him. Let's start with you, Raj. What happens with mixed signals, especially when things had been so organized. And then Catherine and Bill, in studying.

Dave Cohen (18:05)

The executive order and dating back to the first Trump administration, all those executive orders and then the America first Inauguration Day memo. The common thread I see is despite all the different explanations that are given, I find it a xenophobic autarkic goal. And what I mean by that is there's a complete distrust of foreigners, foreign countries and you see that in the consistent and sometimes, if I may say, racially charged rhetoric that foreigners in foreign countries are cheats.

Kara Swisher (18:45)

Ripping us off, ripping us off, ripping us off.

Dave Cohen (18:47)

Right.

Kara Swisher (18:47)

When in fact Navarro and Trump talk a lot about the international trade system is broken. I think Navarro wrote that in his.

Dave Cohen (18:55)

Op ed and I would give that op ed, not in an ad hominem sense, an F in my international trade law class because it's so filled with falsehoods, mistruths and a failure to give the whole picture. And the autarkic part means not autocracy but a U, T A R K Y. A desire for an economy that has almost no trade, that is self reliant. And history does not treat xenophobics or autarkics very well. And if you want a modern day analog, you've got North Korea. So I think that's really the goal, to onshore everything. We can't trust anyone with our national security.

Kara Swisher (19:39)

Bill, how do you look at these messages? Because one of the things is Navarro talks Vietnam, for example, is Joffre to lower its tariffs to zero as an example of non tariff cheating which is related to China in some way. Talk about the messages that are happening here, Kara.

Catherine Rampell (19:54)

I think he needs to win over other nations. He's created these false dichotomy of somehow that everybody's taking advantage of us and picking our pocket. It's just called trade. You know, in a trade, both parties find a way to win or else they don't do it.

Kara Swisher (20:11)

So Catherine, you write about this a lot, this idea of Trump's mentality. Can you.

Raj Bala (20:16)

Maybe he's just lonely, I don't know. He seems so excited that all these foreign leaders are calling him and wanting to talk with him. Although apparently, according to Politico, the White House is not answering the calls. And then the foreign leaders don't even know what to offer because Trump can't articulate what concessions he's demanding. But that's a separate issue. Remember he was like, everybody wants to be my friend now I think it was right after the inauguration he was saying, oh, all these CEOs used to criticize me, now they wanna be my friend. So I don't know. But the central issue is he does not know what he wants. Sometimes, as you point out, Kara, this is a negotiating tactic. But it's not even clear what he's hoping to get out of these negotiations. Right. He has not articulated what the objective is. As you point out, there are countries that have said, okay, we'll bring our tariffs to zero. How about that? You know, tit for tat, 0 for 0. And he shot that down. And then there are other people in the administration, including Trump himself sometimes, who have said we need these things to be permanent because we need the revenue, we need all of this beautiful tariff revenue to help offset the cost of our tax cuts, which will be a legislative thing that will be a big fight later this year. So maybe it's about that, maybe it's about creating this manufacturing renaissance in the United States. And so that also requires permanent tariffs. I don't think that would happen for a whole bunch of reasons, including the fact that we're tariffing the inputs that American manufacturers need to produce their stuff, whether it's auto parts or steel or anything else. But it's really unclear what the objective is. And it becomes very difficult for other countries to negotiate with someone who does not know what he wants.

Kara Swisher (22:04)

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Catherine Rampell (26:00)

I think Jay Polofsky's theory of the case is at least while the trade war was raging, was that we're now in A, quote, tripolar world. Europe, the Americas, and Asia and these trade wars. This tariff plan benefits China immensely, bolsters Asia on the new world order. And we're just sort of shooting ourselves in the foot here. And Trump is sort of. Has been the agent of that. Was the agent of that in the first term and is now acting as the agent of that in the second term.

Kara Swisher (26:37)

Well, he's certainly helping China.

Catherine Rampell (26:38)

They're one of our largest creditors. So you're playing with fire here. Kind of, yeah.

Kara Swisher (26:42)

So, Catherine, back in March, you posted on Blue sky about China, Japan and South Korea agreement on promoting regional trade in response to the tariffs. Talk about this global trade realignment, essentially.

Raj Bala (26:54)

Historically, those three countries, South Korea, Japan, and China, have not had warm and fuzzy feelings for each other.

Kara Swisher (27:01)

Right.

Raj Bala (27:02)

There's a long history of tension and resentment. Yeah. Among those three countries, much of which is not related to economic issues. And the fact that Trump was able to unite the three of them is really remarkable. It's impressive in a way that they hated Trump so much that they had their very first economic dialogue in, I think, five years and came up with this new trade pact. So this is good for China, this is not good for us. And I think that one way to frame whatever reordering of world trade we are trying to achieve would be something like we're trying to alienate China and get more countries on side with the United States because of values unrelated to trade, but also values related to economics and trade. And we actually had a plan to do this under Barack Obama. He negotiated a multilateral trade deal which everybody seems to have forgotten, called the Trans Pacific Partnership. And the whole idea of this, as. As Obama said it at the time, was to make sure that China did not write the rules of the road. And what did Trump do? As soon as he got into office, he tore up that trade deal. This was his first term. So now, if that is our object, we have a game plan for doing it. We've thrown it out. Instead, we are doing virtually the opposite, which is alienating all of our closest friends, including South Korea and Japan, which have been important to us geopolitically and economically. We are driving them into China's arms. We are doing effect. I mean, yes, we are tariffing Chinese goods, and that will not be great in the near term for China's economy, but we have revealed ourselves to be such an unreliable friend or trading partner that the alternative is starting to look a lot more.

Kara Swisher (28:54)

China was. Was in. And China was in an economic distress, which helps them in this case.

Raj Bala (28:59)

Yes, they could have sat back, you know, us politicians could have sat back and basically let the Chinese economy implode. They were having a lot of trouble until this. And again, the trade war with the United States will not be an unalloyed good for, for China. I don't mean to suggest otherwise. It will cause problems. But meanwhile, they're gaining lots of new friends.

Kara Swisher (29:19)

Raj, talk about that. Because it's not just the global economy, regional security and our national security, which this was supposed to be done to help our national emergency, allegedly we had.

Dave Cohen (29:30)

Is Catherine, absolutely rightly puts the best program in the Trans Pacific Partnership to contain, for lack of a better word, China on national security matters. And it was a devastating mistake to our national security as well as our economy to pull out of tpp. Now, second point I think I would make here is India. We have been wooing this world's largest nation, the world's largest free market, democracy, religiously pluralistic country, off of its Cold War mentality from the Indira Gandhi era that was very closely aligned with the former Soviet Union. And the Obama administration was fairly successful at doing that. India chose not to join the Chinese driven RCEP Regional Comprehensive Economic Partnership. They didn't come into TPP, but they started doing bilateral FTAs, including with some of our allies like the UAE or Australia. But they were trying to do things that we wanted to see happen and now to hit them with the kind of tariffs that we're hitting. If you're thinking in what's going on in South Block, the government area in Delhi, they're thinking, wow, the Americans really aren't reliable at all.

Kara Swisher (30:53)

Right? So in a lot of ways this is a trade war, obviously, but it's also a war on globalism. Let's move into what this framework, what he's trying to do here, this new age of protectionism. Let's assume for a minute the goal here is to really rebuild American manufacturing, build up a working class, which seems, I don't believe them, but nonetheless, it seems to be in their heads in some movie fashion. Commerce Secretary Howard letting, for example, says that the terrorists, I can't believe he said this, but the terrorists will lead to trillions of dollars of factories being built in America. Let's listen to what he said on Face the Nation. Even though he's a clown.

Catherine Rampell (31:29)

Remember the army of millions and millions.

Kara Swisher (31:31)

Of human beings screwing in little, little.

Dave Cohen (31:34)

Screws to make iPhones?

Catherine Rampell (31:36)

That kind of thing is going to come to America. It's going to be automated and great Americans. The tradecraft of America is going to fix them, is going to work on them.

Kara Swisher (31:45)

They're going to be mechanics, there's going.

Catherine Rampell (31:46)

To be H vac specialists, there's going to be electricians. The trade craft of America are high school educated Americans.

Kara Swisher (31:53)

The core to our workforce is going to have the greatest resurgence of jobs.

Catherine Rampell (31:58)

In the history of America to work.

Dave Cohen (32:00)

On these high tech factories which are.

Catherine Rampell (32:02)

All coming to America.

Kara Swisher (32:04)

Okay, Bill, please take this on. How likely is it gonna be that companies are gonna be able to completely change their business? They're just not coming to America. I don't even understand the screw thing or the robots. I think they might wanna replace people with robots. Talk about this idea and I'll take it at face value. Bring the companies back here.

Catherine Rampell (32:23)

I think that little segment should pretty much be the end of Howard Lutnick in the second Trump administration. So you're gonna let me get this straight. You're deporting, you know, hundreds of thousands, millions of workers, people who came here who are willing to take jobs that other Americans basically aren't willing to take. And at the same time that you're doing that, you're hoping that manufacturing jobs are gonna come back, which, as we discussed before, companies just don't open plants because the President says, oh, it'd be a nice thing for you to do to open a plant. They study it for years. They closed it for a reason, they moved it overseas for a reason for them to open it back up or to build a new plant. De novo is a like 5 to 10 year planning cycle looking out over 30 years, doing spreadsheet analysis, net present value calculations, cost of capital. I mean everything goes into this. It does not happen overnight. So that's not gonna happen anytime soon. I'm sorry. And then the idea that Americans are going, and there's been a lot of memes in my TL lately, Kara, you know, showing one in particular a, a job of the hut, like Donald Trump, you know, sewing some underwear in a sewing plant in, you know, Terra Haute or wherever, which I got a kick out of. I mean, Americans don't want to do these jobs and they haven't shown that they want to do these jobs. So what the jobs they want to do is, you know, working at Google, working in the cloud, you know, service jobs, McKinsey, whatever it is, they don't want to be chipping away underground in a coal mine. And you know, so called, these so called manufacturing jobs that have left for a reason and are very unlikely to come back. Certainly not in any timeframe that These tariffs are gonna exist.

Kara Swisher (34:34)

So Catherine, Treasury Secretary Scott Bessant made it sound like he thought the fired federal civil servants.

Raj Bala (34:40)

I was just gonna make that point.

Kara Swisher (34:42)

Yeah, talk about Besant's idea that we're gonna take the federal workers they're firing and make them screw in Apple iPhone. I don't even understand.

Raj Bala (34:51)

Oh my God. This is dumb on so many levels. First of all, we are a services based economy today. We are really good at services. Whether we're talking about software services, higher education, science, legal, legal, finance, like insurance, we are really good at services. And yes, we used to have a.

Kara Swisher (35:15)

Lot which you have a surplus in, but go ahead.

Raj Bala (35:17)

Yes, we used to have a lot of manufacturing jobs. We don't anymore. That was a really hard transition, particularly for the communities that were essentially factory towns. And there is this weird manufacturing fetish that is not unique to Donald Trump or to the Republican Party. By the way, Democrats are like obsessed with bringing back manufacturing and like tariffs themselves, which has complicated their messaging on all of this, which is a separate issue. But we're really like, like we don't need to be making sneakers here, right? We don't need to be making tube socks. I saw another Trump surrogate say like, oh, we'll just make the tube socks here and Americans will absorb the $1 more. First of all, be a lot more than a dollar. Second of all, why do we want those jobs? But the federal workers thing is a really good case in point of all of this. The idea that cancer researchers, HIV researchers, air traffic controllers, nuclear inspectors, the idea that they're skills would be more productively employed on a factory floor, which they.

Kara Swisher (36:20)

Want a robot put into robots. But go ahead.

Raj Bala (36:22)

That's another turning whether it's like overseeing the robots, screwing in the screws as we heard Lutnick say at one point, or using their hands to stitch the Nike sneakers themselves, I don't know. That's a, it's such a ludicrous idea. And it just tells you how backward their entire vision of this economy is. We're not going to have zero trade deficits. We're not going to suddenly start making all of the stuff that we used to make here. Nor should we want to. We should be thinking about how do we strengthen and make more competitive the things we are already good at, which is services and particularly high skilled services.

Kara Swisher (37:02)

Raj, you're from Milwaukee. You grew up around factory workers. Is it realistic to think there could be some rebound? Would it benefit American workers?

Dave Cohen (37:10)

It depends on the factory, the sector. One good example of a Success story was Harley Davidson, which benefited from safeguard action under our section 201 escape clause. It won relief behind tariff and non tariff walls. And actually it didn't even need the full span of the relief three or four years. It needed only one or two to then revamp the famous American iconic hog against competition from Kawasaki. But in other instances where those kinds of remedies have been tried, bicycles, for example, textiles, shoes. The success story has not been there. In other words, the remedies or.

Kara Swisher (37:57)

It's been very small.

Dave Cohen (37:57)

It's been very small. Let's think about how young people overseas in India or in China or in, you name it, other countries. Are they actually aspiring to work in shoe factories? No. They also want to be management consultants, journalists, commentators, lawyers, teachers. And we're already ahead in that game. So it's wrong headed to fail to appreciate the blessed position we're actually in and see that others want to be like us.

Kara Swisher (38:33)

All right, so every week we get a question from an outside expert. This week I got a doozy for you. I called conservative economist Oren Kass, who we had on the show a couple months ago. He just wrote a piece in the New York Times essentially saying if only it had been different, it would have worked. So I'm gonna give him the benefit of the doubt here and let's listen and then you each get to answer his question.

Dave Cohen (38:54)

Hi, I'm Oren Kass, founder and chief economist at American Compass. And my question is about what you think the Trump administration should actually do. It seems to me a lot of people are criticizing Trump because they don't like tariffs, because they don't even think the US should re industrialize. And so it's not surprising that the administration isn't really interested in their specific advice. But if you were to start from the same frame of reference where the President clearly believes this is the correct direction to go in the correct set of goals, he obviously campaigned and won election on that message. He wants to move away from globalization to rebalance trade to rebuild manufacturing in America. And he wants to impose consequences on nations that are obstructing that and are free riding on the United States. So what would you recommend? What would you actually like to see them do better in pursuit of their goals as opposed to just wishing it was a different administration?

Kara Swisher (39:49)

To be fair, Oren was wishing was doing that piece. I want you to answer this if you could. Kazarin, you can go first, then Raj and Bill. All right, you're sitting with Trump. What would you say to him? And you're listening to what he wants to have happen. Besides saying no, what would you say?

Raj Bala (40:05)

I would say if you want to compete with China, if you are worried about this so called Sputnik moment that we are facing in China, stop gutting our science and research institutions, stop defunding scientific research, whether we're talking about research done within the US Government or outside of it through grants which have also been frozen. And invest in tech, invest in basic research. Generally, I think that all of Trump's objectives with regard to trade are wrong. But if he wants to win the 21st century, maybe that's the one common ground that I would find with Donald Trump. The way to do it is not by waging trade wars with all of our friends. It's to get our friends together to try to reign in China and then to invest internally again in the high skilled services that we are good at, including science and research and technology, which have historically been America's golden goose.

Kara Swisher (41:13)

Raj.

Dave Cohen (41:14)

All right, I would first encourage a conceptual shift and then I'll give five specific policy shifts. To the extent that the President is concerned about national security, I would encourage that the national security threat to the United States is and always has been poverty and marginalization in other countries. We saw that with 911 and who the foot soldiers of Al Qaeda and later ISIS were. And President George W. Bush understood that we can enhance peace and our security through greater trade. And in fact, George W. Bush had a famous quote After 9 11, the surest path to greater wealth is greater trade. And so the national security threat is not the foreigner per se against the US it's the poverty of the foreigner. Are we safer off living next to an impoverished neighborhood? I mean, it's a very simple real estate analogy. The five things that I would suggest, appoint the appellate body members to get the rule of law going again at the WTO. Rejoin the TPP, the original TPP. 11 US we were the 12th have been waiting for us to come back in and the UK would certainly love to have us in. Third, make sure you renew the USMCA in July 2026 when it comes up for renewal. Fourth, focus on the Made in China 2025 industrial policy. That's the real threat to US manufacturing, if you're really concerned about it. And finally go back to what had been again, President Kennedy or President Carter. Restore goodwill in the developing world. That's our biggest market. You know, 80% of the WTO members are developing countries. That's where a lot of purchasing power is or will be. India case in point, if we have goodwill, if made in America or Americans are well regarded as they once were, that will enhance our security.

Catherine Rampell (43:22)

Okay, Bill, I really, as a history major, I really appreciate Raj's historical perspective throughout this conversation. That has been enlightening. First thing, I mean, I don't agree at all with the tariffs is the most beautiful word in the English language. So that's the first thing I would say to Trump is let's move away from that. I would take this whole conversation offline. In other words, don't make it the biggest story in the world day after day after day. Get it out of the headlines. If you really want to renegotiate these agreements, trade agreements with all these countries, 160 of them, however many there are, take it literally offline, go into some conference room in some office building that's now got plenty of space in it in Washington and get your pointy headed accountants and policy wonks to sit there with the foreign trade ministers of other countries and just hash it out day after day. Grind, grind, grind, grind, grind. Stop politicizing it. Stop moving markets. You really want to do this? Then do it in the grind, good old fashioned way. And then you'll achieve it. And then once you've achieved your great victories, Donald, then we can announce them.

Kara Swisher (44:44)

Will be back in a minute.

Catherine Rampell (44:52)

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Kara Swisher (46:25)

All right, a couple more questions before we go. Economic experts have said again he's talking about smashing the current economic and geopolitical order. Peter Navarro has said he thinks this will all result in the Dow bouncing back but topping 50,000. He's pointing not just to tariffs but to a package of tax cuts. So Catherine, you've said this isn't just GOP math. You called it Orwellian. I'd love you to talk about the sort of their plans on future cause. It is linked to the tack patches that Republicans are trying to push through that connects to the tariffs. And at the same time they're starting their attacks on Jerome Powell. Now that Fedsher says the tariffs will lead to higher inflation and lower economic growth. He's made it clear he doesn't think it's time to cut the lower interest rates. Trump clearly disagreed. Posting on Truth Social this would be a perfect time. And then in caps, cut interest rates, Jerome, and stop playing politics. So I want each of you to take each of these parts. Bill, you first.

Catherine Rampell (47:19)

Well, I hear a lot about the sotto voce agenda behind all of this, which is to try to give cover between generating, as Besant said, $600 billion of revenue from the tariffs and between that and your friend Elon's trillions of dollars of expense cuts out of the budget will create trillion and a half dollars to give us air cover to extend the Trump tax cuts which you know, are so important for the billionaires who are really laboring in this environment and are struggling to put food on the table every day and need this tax cut. So that's, you know, giving them the political air cover to do that. And then this idea that we talked about a little bit of, of all of these treasury bonds that need to be refinanced. And so if you can make it seem like the economy is going into a recession, then the 10 year treasury bonds will, the yield will lower, which is what happened. But it's completely reversed now. Completely reversed. And it's a total disaster. So that plan isn't working. And I don't think the first plan is working either. So all of which is to say I deferred Raj and Katherine on, you know, some of these macro issues, but it's not working.

Kara Swisher (48:43)

So Catherine, talk about Navarro saying the Dow will bounce back to top 50,000 and how these tax cuts figure in, in this big beautiful budget bill.

Raj Bala (48:53)

Apparently I think it is always dangerous to make predictions about where the stock market is headed. But this seems particularly dangerous given that virtually all the things that Trump is doing will be bad for the economy, not just the trade wars, but fighting with Jay Powell. The tax cuts will, you know, if they reduce corporate taxes, that will return value to shareholders, which should increase stock prices. That's. But we kind of already saw that factored in shortly after Trump won the election. So it may be the case that at least we'll recover some of the ground that has been lost since then. I don't know. I think the, the bigger issue is, in the long run, it'll be really bad for the economy in the sense that debt is already on an unsustainable path. These tax cuts will cost a lot of money. You referenced a piece that I wrote recently about the Orwellian nature of how they're trying to get these tax cuts through. That was about essentially Republicans declaring that they can rewrite the rules of arithmetic. Historically, there were like these neutral referees, the Congressional Budget Office, the Joint Committee on Taxation, the Senate Parliamentarian institutions that Americans generally don't think about, maybe they're not even aware of. But they were there to make sure the math added up, essentially. And Senator Lindsey Graham, recent, who is the Senate Budget Committee chairman, recently said, none of that matters. Basically, the tax bill will say what I will cost what I say it costs. So I was referring to this famous George Orwell line in 1984, that if the party declares two plus two equals five, you know, then, then you just have to believe it is so, something along those lines. And that's effectively what they've done. They've said these tax cuts will cost nothing, when in fact, they will cost a lot of money. They will worsen our debt, and in the long run, that will crowd out private investment and be very bad for the economy.

Kara Swisher (50:51)

All right, so, Raj, will you talk about this idea of the interest rates and what impact it has?

Dave Cohen (50:58)

Absolutely. I mean, first, as someone who was privileged to work at the Federal Reserve in New York, as a lawyer, I never saw this kind of encroachment on Federal Reserve autonomy. This is pretty much unprecedented and it raises a long term problem in terms of the full faith and credit of the US and the sense of trust in the Federal Reserve on the interest rate. I see three possible effects. I mean, higher interest rates are, of course, attractive to foreign investors. Secondly, the higher interest rates result in a diminished incentive for debt financing for corporates. And then third, consumers, to the extent they are invested in interest denominated assets for their retirement. They rely on at least not a tanking in interest rates. So there's somewhat cross purposes, but this is for the Federal Reserve to decide. And there's, there's a deeper point here that is the real focus of the Fed should be on monetary policy. And the President is inverting a discussion that we had solved back in October 1979 when Paul Volcker was Fed chair that we weren't going to do interest rate targeting, we were going to focus on monetary policy. So I'm a little perplexed by that. A final point I'd make on it was this more fiscal policy is the administration is headed to reducing the policy space it's going to need for what may be Keynesian deficit spending if we're in a recession and already we're seeing the possible need for a bailout for farmers. Well, how does that bailout happen? It happens through funding through the Commodity Credit Corporation of the Department of Agriculture. It's distributed through the now eviscerated usaid. So I'm not sure where that budget bill is headed in relation to these misguided tariff policies that we've been talking about.

Kara Swisher (53:06)

All right, one last question for Bill. We've seen the impact on the stock market, but what do the expect on the business front now? Will it help or hurt mergers and acquisitions? What if you are running a what happens to all the mergers and acquisitions that were supposed to return? You and I have talked about it. They hadn't returned. Now are they really not going to really not return?

Catherine Rampell (53:25)

Yeah. I mean, as you know, Kara, Wall street was gearing up for the return of investment banking business. Go, go. Whether it's IPOs, debt and equity underwritings.

Kara Swisher (53:37)

Green light from Trump. Green light from Trump.

Catherine Rampell (53:39)

Green light from Trump. Throw out those jerks in the Biden administration who were blocking all of our great deals and now it's just going to be go to the races. Well, that is, you know, we saw in the first quarter, it's continuing now in multitudes. I mean it's, it's dead, dead, dead, dead. There's going to be a bloodbath on Wall street in terms of layoffs if this continues. And you know, as one very senior, very well respected M and a banker said to me the other day, it would be irresponsible for him to allow his CEO clients to do big deals now, given how uncertain the economy is, how roiled the financial markets are. You just can't do anything with IPOs.

Kara Swisher (54:26)

Same thing with IPOs.

Catherine Rampell (54:27)

You can't do IPOs, you can't do debt and equity underwritings, you can't do M and A deals, you can't price. You can't do anything. In this turmoil, whether the 90 day pause will somehow give him the off ramp so that maybe things can calm down and the volatility can be tempered, then that's potentially some saving grace for Wall street bankers.

Kara Swisher (54:56)

But he's made a pointless mess in.

Catherine Rampell (54:58)

Any case, even pointless self inflicted wound.

Kara Swisher (55:00)

And will they bounce back if he stops?

Catherine Rampell (55:05)

Well, I mean, he's still the mad king. So, you know, could the mad king strike again? Probably he will. So again, if I were advising, as I used to do for 20 years CEOs on whether to do deals, I would have them think long and hard. I mean, you can do a 1 billion or 2 billion dollars tuck in, add on or whatever, but a strategic merger, one that many people have been talking about in Hollywood forever, like Warner Brothers discovery merging with NBCUniversal. Absolutely not. No way.

Kara Swisher (55:37)

All right, last question for each of you. This is all, of course, a roller coaster and it's hard to predict what's going to happen next. It's hard to predict what's happening in the next five minutes with Donald Trump. But based on where we are now, give me your prediction. Where the economy is going at six months from now, very quickly.

Dave Cohen (55:53)

Recession, mild to moderate.

Raj Bala (55:57)

Oof. Always dangerous to make predictions, especially about the future. I think that's the Yogi Berra line. If we stay on our current path, which is escalating trade wars, fights with the Federal Reserve and basically no fiscal discipline, I think we are likely to have a recession later this year. I really hope we find an off ramp and I hope I'm wrong, but that's my fear.

Catherine Rampell (56:22)

Look, Karen, I think it literally depends on what the actions of one guy does. I mean, we were on a path, I think JP Morgan Chase predicted 60% chance of recession, you know, this year as a result of the tariff shenanigans of the last few days. Now there's a pause. Except for China, you know, is that gonna be extended? Like, you know, things get extended. If he somehow comes to his senses, which is very unlike Donald Trump, then I think the chances of recession go way down again and we can just try to pick up the pieces from this incident. But if he, you know, is determined, you know, as he gets, we know how he gets his back up and won't listen to anybody. If he's determined to follow through on this, then absolutely we will be in a recession.

Kara Swisher (57:16)

Yeah. He says to be cool, you guys.

Catherine Rampell (57:19)

Yeah, be cool.

Kara Swisher (57:20)

Great. All right. Thank you guys for coming. I really appreciate it.

Catherine Rampell (57:23)

Thank you, Cara.

Dave Cohen (57:24)

Thank you, Kara.

Raj Bala (57:25)

Thank you.

Kara Swisher (57:30)

On with Kara Swisher is produced by Kristen Castro, Russell, Kateri Yocum, Dave Shaw, Megan Burney, Megan Cunane, and Kalyn Lynch. Nishat Kirwa is Vox Media's executive producer of audio. Special thanks to Eamon Whalen. Our engineers are Rick Kwan and Fernando Arruda and our theme music is by Trackademics. If you're already following the show, you are not a moron like Ron Neva. If not, you are on Trump's tariff teams. So sorry. Go wherever you listen to podcasts, search for on with Kara Swisher and hit follow. Thanks for listening to on with Kara Swisher from New York Magazine, the Vox Media podcast network and us. We'll be back on Thursday with more.