Tariffs, Tariffs Everywhere-What Will it Do to the US Economy, Inflation & Jobs

Summary

Podcast Summary: Verdict with Ted Cruz

Episode: Tariffs, Tariffs Everywhere – What Will it Do to the US Economy, Inflation & Jobs
Release Date: April 4, 2025
Host/Author: Premiere Networks
Title: Verdict with Ted Cruz
Co-Host: Ben Ferguson

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Introduction

In the April 4, 2025 episode of "Verdict with Ted Cruz," Senator Ted Cruz and co-host Ben Ferguson engage in a comprehensive analysis of President Donald Trump's sweeping tariff announcements. This episode, titled "Tariffs, Tariffs Everywhere – What Will it Do to the US Economy, Inflation & Jobs," delves into the immediate and long-term economic and political ramifications of imposing the highest tariffs the United States has seen in nearly a century.

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1. Overview of the Tariffs and Immediate Impacts

Timestamp: [00:31] – [08:18]

Ben Ferguson opens the discussion by detailing the extensive list of tariffs introduced by President Trump. These tariffs span a wide range of countries, including:

• China: 34%
• European Union: 20%
• Vietnam: 46%
• Taiwan: 32%
• Japan: 24%
• (Continues listing other countries with specific tariff rates)

Ferguson emphasizes that these measures represent the most significant tariff escalation since the 1930s and underscore the administration's aggressive stance on trade.

Notable Quote:

Ben Ferguson [01:06]: "This collectively is the highest rate of tariffs the United States has had in place since 1930 in 100 years. That is enormously consequential. That is, as a policy matter, a huge deal, and as a political matter, a huge deal."

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2. Potential Scenarios: Best-Case vs. Worst-Case Outcomes

Timestamp: [08:18] – [24:51]

The hosts explore two primary scenarios that could result from the tariff implementation:

• Best-Case Scenario:

  • Global Reaction: Foreign nations expedite negotiations to reduce or eliminate tariffs in response, potentially leading to a cascade of lowered tariffs.
  • Economic Boom: If successful, this scenario could spur significant economic growth, benefiting American farmers, manufacturers, and workers.

  Notable Quote:

  Senator Ted Cruz [08:18]: "It could be massive, but the downside could be massive."

  Ben Ferguson [08:51]: "If Trump in turn slash these tariffs they've just announced, that will be a great outcome for the American economy."

• Worst-Case Scenario:

  • Retaliatory Tariffs: Other countries may impose their own tariffs on American goods, igniting a trade war reminiscent of the Smoot-Hawley era.
  • Economic Downturn: This could lead to job losses, increased consumer prices, and heightened inflation, potentially driving the U.S. into a recession.

  Notable Quote:

  Ben Ferguson [10:52]: "The average prices of all of their cars will go up $4,500. That when you go and buy an American car from a big American company, that you will pay, they said probably starting in June."

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3. Economic Implications and Specific Sector Impacts

Timestamp: [16:51] – [37:40]

Ferguson delves deeper into the economic ramifications of sustained tariffs:

• Automotive Industry:

  • Price Increases: Both foreign and American car prices are expected to rise significantly, with projections of up to $4,500 increase per vehicle.
  • Supply Chain Disruptions: The intricate cross-border manufacturing processes exacerbate the impact of tariffs, leading to compounded costs.

• Inflation and Consumer Costs:

  • General Price Levels: Tariffs act as a de facto tax on consumers, leading to widespread price hikes across various sectors.
  • Tax Foundation Analysis:
    • Revenue Increase: $3.2 trillion over the next decade.
    • GDP Reduction: Shrinkage of 0.8%.
    • Household Impact: An average tax increase of over $2,100 per U.S. household by 2025.

Notable Quotes:

Ben Ferguson [16:51]: "Those are immediate hits... That's freaking people out now. And so the consequences of this are real."

Ben Ferguson [35:12]: "If these tariffs stay in place, if they don't change, we're facing very real and I think very detrimental consequences."

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4. Political Ramifications and Future Elections

Timestamp: [24:51] – [37:40]

The conversation shifts to the political landscape, highlighting how the tariff decisions could influence upcoming elections:

• 2026 Midterm Elections:

  • Potential Swing: Severe economic downturns could lead to a Democratic takeover of the House and possibly the Senate.
  • Impeachment Risks: A Democratic majority may initiate impeachment proceedings against Trump, leading to heightened political instability.

• Public Choice Theory:

  • Concentrated Benefits vs. Diffuse Harms: Tariffs benefit a small group of producers while imposing widespread costs on consumers, creating a political environment where the benefits are heavily visible to a select group, overshadowing the broader societal harms.

Notable Quotes:

Ben Ferguson [24:49]: "I think in the middle of a recession and people are hurting badly, they punish the party in power... you might even face a Democrat Senate."

Ben Ferguson [27:40]: "It is going to be the single biggest determinant of what the 2026 midterm elections look like."

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5. Administrative Stance and Future Policy Directions

Timestamp: [35:12] – [37:40]

Ferguson examines the Trump administration's perspective on tariffs, suggesting a possible commitment to maintaining high tariff levels as a permanent economic strategy:

• Leverage vs. Economic Policy:

  • Leverage Tool: Tariffs are used as leverage to secure policy gains, such as border security agreements with neighboring countries.
  • Permanent Economic Policy: There's concern that tariffs may be entrenched as a long-term strategy, leading to sustained economic strain.

• Business Community's Reaction:

  • Shock and Adaptation: The sudden and broad implementation of tariffs has caught the business community off-guard, prompting manufacturers to reconsider supply chain strategies, albeit with significant lag times.

Notable Quotes:

Ben Ferguson [29:31]: "The President believes, and many members of his administration believe that tariffs are just a fabulous feature of the American economy."

Ben Ferguson [30:56]: "If these tariffs stay in place, if they don't change, we are facing very real and I think very detrimental consequences."

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Conclusion

Senator Ted Cruz and Ben Ferguson conclude the episode by underscoring the high stakes involved with President Trump's tariff policies. They stress the critical need for listeners to remain informed and engaged as the situation evolves. The discussion highlights the delicate balance between leveraging tariffs for political gains and the potential for severe economic backlash that could reshape the American economy and political landscape.

Final Notable Quote:

Senator Ted Cruz [35:04]: "If the outcome of this is a multi-trillion dollar tax increase on American consumers, I think that that is really consequential and really, really harmful."

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Key Takeaways

• Magnitude and Scope: The tariffs imposed cover a vast array of countries at unprecedented rates, marking a significant shift in U.S. trade policy.

• Economic Risks vs. Rewards: While there's potential for economic growth through improved trade terms, the risks of a trade war, increased consumer costs, and potential recession are substantial.

• Political Consequences: The tariffs could become a pivotal issue in future elections, potentially leading to significant shifts in political power and increased instability.

• Long-Term Policy Implications: There's concern that tariffs may become a permanent fixture in U.S. economic strategy, leading to sustained negative impacts on various sectors of the economy.

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Listeners are encouraged to stay tuned for ongoing coverage and analysis of these developments, as Senator Ted Cruz and Ben Ferguson continue to provide insights into the evolving economic and political landscape.

Transcript

[Narrator]

Something unexpected happened after Jeremy Scott confessed to killing Michelle Schofield in Bone Valley season one.

[Gilbert King]

Every time I hear about my dad is, oh, he's a killer. He's just straight evil.

[Narrator]

I was becoming the bridge between Jeremy Scott and the son he'd never known.

[Gilbert King]

At the end of the day, I'm literally a son of a killer.

[Narrator]

Listen to new episodes of bone Valley Season 2 starting April 9th on the iHeartRadio app app, Apple Podcasts or wherever you get your podcasts.

[Senator Ted Cruz]

Welcome. It is Verdict with Senator Ted Cruz, Ben Ferguson with you. It's nice to have you on this Friday morning and center. Everybody's waking up today. They're looking at what's happening with these tariffs. They're looking at what's happening on Wall Street. There's no doubt, no matter who you are, there's a lot of anxiety, concern, angst. Those are the words I've been hearing from friends about what's happening right now. So let's break it all down for listeners and talk about where we are and what is happening, what your concerns are, what you think is happening, and what is being said by your colleagues in D.C. as well.

[Ben Ferguson]

Well, on today's podcast, there is one topic and only one topic, and that is tariffs. And I will say, I believe this week may well prove the single most consequential week in the Trump administration so far. And it may be the most consequential week in all four years of the second term of the Trump administration. I think this week is consequential as a policy matter, and this week is consequential as a political matter. I think there are enormous risks. There is the potential for upside, but there are enormous risks. And so what we're gonna try to do on this podcast is break it down. Cause a lot of people are trying to figure out, okay, what am I supposed to think about this? What's this gonna mean? What does this mean for my job? What does this mean for my family? What does this mean when I go to the grocery store? What does this mean when I buy good. My family? And the answer is a lot. And so we're going to break it down and try to explain what it means and what's likely to happen next. I think this podcast, in terms of the impact on the country, I think is as consequential as anything we ever talked about. So let's start with what the news is this week. On Wednesday, President Trump announced massive tariffs. Tariffs on virtually every country on Earth. A 10% baseline tariff on everybody. And then Specific tariffs, country by country, and I'm going to go through really quickly. But. But there are a lot of them. So. On China, 34% tariffs on the European Union, all of Europe, 20%. Tariffs on Vietnam, 46% tariffs on Taiwan, 32% tariffs on Japan, 24% tariffs on India, 26% tariffs on South Korea, 25% tariffs on Thailand, 36% tariffs on Switzerland, 31% tariffs on Indonesia, 32% tariffs on Malaysia, 24% tariffs on Cambodia, 49% tariffs on the United Kingdom 10% tariffs on South Africa 30% tariffs on Brazil, 10% tariffs on Bangladesh, 37% tariffs on Singapore, 10% tariffs on Israel, 17% tariffs on the Philippines, 17% tariffs on Chile, 10% tariffs on Australia, 10% tariffs on Pakistan, 29% tariffs on Turkey, 10% tariffs on Sri Lanka 44% tariffs on Colombia, 10% tariffs on Peru, 10% tariffs on Nicaragua, 18% tariffs on Norway, 15% tariffs on Costa Rica, 10% on Jordan, 20% on Dominican Republic, 10% on United Arab Emirates, 10% on New Zealand, 10% on Argentina, 10% on Ecuador, 10% on Guatemala, 10% on Honduras, 10%. On Madagascar, 47% on Myanmar or Burma, 44% on Tunisia, 28% on Kazakhstan, 27% on Serbia, 37% on Egypt, 10% Saudi Arabia 10% El Salvador 10% the Ivory Coast, 21% Laos 48% Botswana, 37% Trinidad and Tobago, 10% Morocco, 10%. This collectively is the highest rate of tariffs the United States has had in place since 1930 in 100 years. That is enormously consequential. That is, as a policy matter, a huge deal, and as a political matter, huge deal. Now we're in a partisan political environment where right now the world is turned upside down. We are very much tribalized, where each side is on their team. So Democrats right now are lighting their hair on fire. Democrats right now are saying, this is a catastrophe. This is destroying America. It's the worst thing that ever happened. And a lot of the media is echoing that now. That is producing a lot of Republicans who are naturally defending the president, saying, this is great, this is fantastic. This is a day of liberation. And they are celebrating that. I will say it's a fairly odd dynamic because the two worlds are inverted. So a few years ago, Republicans were the party of free trade. Republicans were the party of let's lower tariffs, let's have more trade with the world, that produces more jobs here at home, that benefits White House, that benefits American producers. And Democrats were the protectionists, you Think of the Dick Gephardt Democrats, the Democrats who wanted big tariffs against other countries. And so it is a bizarre dynamic that the two sides have switched, and they are. They are essentially giving opposite talking points. My view, look, I want to set aside the talking points. I want to talk about what is likely to happen. The big, big question. There are two big questions. Number one, how are other countries going to react? And number two, what is the Trump administration going to do in response? Now, there are two broad scenarios. One that is very, very good. One that is very, very bad. Here's the good scenario. The good scenario is other countries freak out. That is clearly happening. Just every country I listed is freaking out right now. And in response, other countries come rushing to the White House and say, we want to negotiate a deal and we're going to dramatically lower our tariffs to US Goods coming into our country. That may well happen. We're seeing some of that starting to happen. It may happen in a massive cascade. If that happens, that would be a very good thing. Now, the second question is if other countries dramatically slash their tariffs, let's say other countries zero out their tariffs, they say all US Goods will come into our country with zero tariffs. Then the second big question is, what does the Trump administration do in response? And if the Trump administration, in response to other countries slashing their tariffs, zeroing out their tariffs, if the Trump administration responds by dramatically cutting these tariffs, lowering them dramatically on this side, that would be a home run for America. I would be thrilled. I would be celebrating. And that could happen. Look, look, Trump is. This is throwing a long ball deep into the end zone. And if 30 days from now, 60 days from now, 90 days from now, the world we're looking at is a world where our trading partners across the globe have slashed their tariffs on American goods and services, and the Trump administration has responded by slashing these tariffs they've just announced, that will be a great outcome for the American economy. It will be a great outcome for farmers and ranchers and small businesses and manufacturers and jobs and workers. I will celebrate. And if that happens, I will say, Donald Trump had a vision on trade that very few people in the world saw, and this was a frigging home run.

[Senator Ted Cruz]

So the best case scenario is to see more headlines like we saw tonight, which is, for example, Communist Vietnam, panics over Trump tariffs, sends deputy Prime Minister to Washington, D.C. with emergency delegation. And I'll go to Trump family member Eric Trump put out an interesting tweet where he said, those that get here quickly and get a deal Done will get the best deal and those left at the end, it's going to hurt. And so it's pretty clear that's the strategy that you also just mentioned. Could be, in theory, best case scenario.

[Ben Ferguson]

Look, and if that's what happens, hallelujah, that is a great outcome. And listen, we've all seen Donald Trump's negotiating style is frequently to pick up a two by four, smack someone in the head with it, and then negotiate down from that. And so if that's what's going on, yesterday was a two by four. It was unquestionably a two by four. And virtually every trading partner of America is reeling right now. If the result is everyone cuts tariffs and we have massive more American exports, and farmers are sending our crops and our livestock abroad, and manufacturers are sending our goods abroad, and service providers are sending our services abroad, that's great. Now, let me give you the downside. There's another way this could play out, which is other countries get off and they jack up tariffs and they impose retaliatory tariffs on American goods. And the tariffs Trump put in place remain in place. And I gotta say, if we're In a scenario 30 days from now, 60 days from now, 90 days from now, with massive American tariffs and massive tariffs on American goods in every other country on earth, that is a terrible outcome. It's terrible for Texas, which obviously I care about deeply, and it's terrible for America. It will hurt jobs and hurt America, and there is a very real risk of that. In the past, we have seen when one country jacks up tariffs, it can provoke a trade war where each country accelerates tariffs. And the result would do a couple of things. Number one, it would destroy jobs here at home and do real damage to the US Economy if we had tariffs everywhere. Number two, and this is a virtual certainty, inflation. This is going to have a powerful upward impact on inflation. And let's take, for example. All right, let's take cars. You know, Trump has announced a 25% across the board tariff on cars.

[Senator Ted Cruz]

Yep.

[Ben Ferguson]

What does that mean? That means if you go and buy a new car, you're going to pay a hell of a lot more for that new car. And by the way, if you buy a used car, you're going to pay a lot more for the used car, because when new cars go up, used cars go up, too, because that will impact the pricing across the market. Now, what is interesting, you might say, well, wait, wait, wait, this is just a tariff on foreign cars. So what do I care if a bunch of fancy Foreign cars, their prices go up. Well, you know what, A lot of Americans choose to buy foreign cars. So if you're choosing to buy a foreign car, your prices are likely to go up. They may not go up exactly 25%, but they'll go up pretty close to 25%. If you look at what happens when a tariff is imposed, who pays it is dependent. For those of y'all who remember your econ class, it's dependent on price elasticity. So sometimes the burden of the tariff is paid by the company. And by the way, if it's paid by the company, depending on the price elasticity, that means the company's making less profits and they may well be letting workers go and ending jobs. But for many goods, it will be paid by the consumers and the immediate impact will be prices going up. But, but let's take cars again. It's not just foreign cars that will go up. All the American cars, their prices are going to go up too. If every, if all their competitors prices go up 25%. And it's not quite that simple because it will be less than 25%, but it will be in that neighborhood. You're going to see every other car price go up that much as well. And there are weird impacts given how the American supply chain works. So, for example, I was talking with, with one of the major US Car manufacturers yesterday. You think of sort of the poster child. If you ask, you know, just the guy on the street who's benefiting from all these tariffs, they'd probably say their immediate answer. They'd say American car companies, gm, Ford, Chrysler, they're going to do great. Well, one of the big three told me last night that the impact of these tariffs will be the prices. The average prices of all of their cars will go up $4,500. That when you go and buy an American car from a big American company, that you will pay, they said probably starting in June. And I asked, why June? And they said, well, there's some lag in the supply chain. So, so they've made cars that they've sold to their dealers. And so it will be the cars they're selling to their dealers. It'll be about June when the prices go up. But they were, they were predicting last night $4,500 is what the price of a car will go up. And what is interesting also, so this, as I said, was one of the big three carmakers. They said they thought this would end up hurting them more than it helps them. That's what they told me. Last night, in part because if you look at the current supply chain of how a car is made, so many cars, many cars. The big three companies make cars in America. Many of them make them in Texas. But if you look at the supply chain, it's very odd. But the way it works right now is that parts, say the drivetrain or the chassis or different parts of the car will go back and forth across the Mexican border. So they'll build part of it in America, they'll send part of it to Mexico and build. They'll send part of it back to America. And it goes sometimes three, four, or five times back and forth before they fully complete a car. Every time it crosses the border from Mexico, those tariffs are stacking on top of each other. So this US Car company told me they actually thought that foreign car companies would benefit more than they would, because if you just build the car in Germany or Japan and you send it over here, you pay one tariff, whereas these guys are getting hit on each part that is going over and back and over and back on the supply chain. And they thought they would end up. It's why they were talking about having to raise prices, $4,500 each. One of the undeniable impacts of these tariffs is the prices that Americans are going to pay are gonna go up significantly, and that is painful. Now, what are some of the good outcomes? Because President Trump has acknowledged, he said, look, there may be some pain, but it's worth it. If we end up in the outcome I started with, which is foreign countries slash their tariffs on American goods, and we in turn lower the tariffs that the Trump administration just announced, that's a great outcome, and we will see a big economic boom from that. And so I'm hoping for that. I'm rooting for that. I will celebrate and praise the administration if that's the outcome, but if it's not, here's one thing to understand, and I think I'm seeing a lot of sort of Republican cheerleaders that are kind of reflexively defending what the White House is doing. And listen, I love President Trump. I'm his strongest supporter in the Senate. I think he's doing incredible things as president. But here's one thing to understand. A tariff is a tax, and it is a tax principally on American consumers. So when I read out all those percentages, I said, you know, X percent on this country, that actually gets it wrong. So when I said, for example, 20% on the European Union, it's not actually the EU that pays that. It's, you Ben Ferguson if you go buy anything from the eu as the consumer, you're paying that tax. And so the effect of this is trillions of dollars of increased taxes on American consumers. If these, if these tariffs stay in place. This is the biggest tax increase we have seen in a long, long time. I gotta say, I am not a fan of tax increases on American consumers. I'm not a fan of tariffs. And so if this is leverage to lower tariffs, great. But if the outcome is tariffs stay in place forever, that is going to do a lot of harm in the American economy.

[Narrator]

Something unexpected happened after Jeremy Scott confessed to killing Michelle Schofield in Bone Valley Season one.

[Senator Ted Cruz]

I just knew him as a kid.

[Narrator]

Long, silent voices from his past came.

[Gilbert King]

Forward and he was just staring at me.

[Narrator]

And they had secrets of their own to share.

[Gilbert King]

Gilbert King I'm the son of Jeremy Lynn Scott.

[Narrator]

I was no longer just telling the story. I was part of it.

[Gilbert King]

Every time I hear about my dad is, oh, he's a killer. He's just straight evil.

[Narrator]

I was becoming the bridge between a killer and the son he'd never known.

[Gilbert King]

If the cops and everything would have done their job properly, my dad would have been in jail. I would have never existed.

[Narrator]

I never expected to find myself in this place. Now I need to tell you how I got here.

[Gilbert King]

At the end of the day, I'm literally a son of a killer.

[Narrator]

Bone Valley Season 2 Jeremy.

[Gilbert King]

Jeremy, I want to tell you something.

[Narrator]

Listen to new episodes of bone Valley Season 2 starting April 9 on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. And to hear the entire new season ad free with exclusive content starting April 9th. Subscribe to Lava for Good plus on Apple Podcasts.

[Senator Ted Cruz]

So let's talk timeline here. And you obviously have had a lot of conversations with the administration, but also with your colleagues. Is there any guess of what this timeline could look like? Is it truly dependent on the other countries that you mentioned? I mean, I go back to that headline of Vietnam.

[Ben Ferguson]

Yeah.

[Senator Ted Cruz]

And then rushing to D.C. they obviously know that this is something they don't want to deal with for a long time. And here's the reason why. Vietnam is among the world's most trade dependent nations. Right? Their export equivalent to about 90% of their economic output. And guess what? The US is the most significant customer. So they've got to fix this. We have a lot of leverage, I think with Vietnam. That's why they're rushing to America.

[Ben Ferguson]

Okay, so. So you're right about that. And listen, we're trying an experiment that hasn't been tried in really 100 years. The last time we really saw this tried in earnest was, was the Smoot Hawley tariffs. And the Smoot Hawley tariffs. Look, history has not been kind to the Smoot Hawley tariffs. They were a major contributor to the Great Depression. And what happened in response to the Smoot Hawley tariffs is, is my scenario two, the bad scenario, which is other countries put retaliatory tariffs in place. You had a trade war, and it ended up hammering jobs and driving up inflation. Now, I will say we're in a very different world from 1930. 1930 was 100 years ago or 95 years ago. Today the American economy is the largest economy in the world. So we have massively more leverage than we did a hundred years ago. What that means is that if we have a tariff and another country has a tariff, the tariff we're imposing will hurt the other country in all likelihood more than it hurts us because our market is a bigger deal. And so foreign countries, foreign companies facing massive tariffs will get hurt more. And so one of the positive consequences of the tariff announcement is that we will see more foreign companies announcing new plants in America, saying we're going to build in America because the easiest way to get around the tariffs is build your products in America. That's a good thing. I'm all for bringing manufacturing back to America. Now, I will say the process of building a new plant is slow. It can take years. It can take years just to get permitted to find the land to build the plant, to build the factory. That can take years. And in the meantime, everyone's prices go up. So we are seeing. Look, we're seeing new factories being announced in the United States. I think that's great. I want as much manufacturing as possible coming back to America, coming back to Texas. But none of that happens quickly. You simply can't build a car factory in a couple of months. It doesn't work in most places. You can't even get the damn permits in less than a couple of years, much less pour the foundation, build the factory, put the machines in, and hire the workers. So there is real time involved. But an unquestionable benefit of this will be more manufacturing in the United States. Now, look, let me give you another basic economic principle. And this is right at the heart of the debate between protectionism and free trade. And it deals with. There's a school of economic thought called public choice theory. And it looks at how political decisions are made and the basic principle of protectionism. If you Put big tariffs to protect an industry. Let's say steel tariffs, big tariffs protect steel. You have concentrated benefits, which is steel manufacturers in the United States get real benefits from that. And you often have diffuse harms. In other words, lots and lots of people are hurt, but they're hurt less acutely than the beneficiaries are benefited. Now, as a political matter, let me tell you how politicians respond to that. If you have a bunch of people that are benefited intensely, they're really motivated and they care about supporting you, and they're really excited because they're like, wow, you just gave me a huge, huge benefit. And the people who are harmed, like with steel tariffs, the people who are harmed is everyone who's buying steel. So oil and gas, you're putting pipelines, you're drilling wells, railroads, you're putting railroad ties, building manufacturers, you're putting steel and building, you know, soda and beer manufacturers. You're putting either aluminum or steel, depending on what the cans are made of. But everyone who's using steel is. The companies are paying more, the consumers are paying more. But it is diffuse across a lot of people. So public choice theory will tell you that politicians will care more about the concentrated benefits than the diffuse harms, even though if you measure the aggregate harms, they are in many instances much, much larger than the concentrated benefits. But the aggregate harms are spread out over a ton of people, whereas the benefits are concentrated in a much smaller group of people. That's the economics behind what's going on here, the consequences of this. I think what happens on this, these tariffs, let's talk about politically, is going to be probably the single biggest determinant of what the 2026 midterm elections look like. If these tariffs result in massively higher prices, result in driving up costs for US Companies, result in job losses, and put us into a recession. And to be clear, they're. That is a. If the tariffs remain in place and we have retaliatory tariffs, that is a very possible outcome. If we go into a recession, particularly a bad recession, 2026, in all likelihood, politically, would be a bloodbath. You. You would face a Democrat House, and you might even face a Democrat Senate. Look, we've got a 5347 majority in the Senate, but if we're in the middle of a recession and people are hurting badly, they punish the party in power. And to be clear, if that happens in 2027, in January of 2027, the Democrat House that gets elected will immediately impeach Donald Trump and we would spend the next two years of 2027 and 2028 with constant impeachment battles, constant investigations, constant political attacks. All of the weaponization that we saw in the first term.

[Senator Ted Cruz]

Deja vu. That's what you're saying.

[Ben Ferguson]

Steroids. Not even deja vu. Take the first term and put it on steroids. And so the political consequences of getting this wrong, this was. This is a high risk play. The upside.

[Senator Ted Cruz]

Let me ask you a question.

[Ben Ferguson]

Could be massive, but the downside could be massive.

[Senator Ted Cruz]

Is this the highest risk play so far from Trump's first term, second term combined so far?

[Ben Ferguson]

Not. Not even close? By far, yes.

[Senator Ted Cruz]

All right, so then I gotta ask you this question behind the scenes. What are the conversations with your colleagues? On a scale of 1 to 10, how concerned are they over the scenario that you just described?

[Ben Ferguson]

42. Okay, look, there's another point that I think is important to understand. So you and I did a podcast, I think, last week, where we talked about tariffs. And I talked about. I said, listen, the president uses tariffs for two principal purposes. One is leverage as an incentive to incentivize other countries to enact policies that benefit America. And the clearest example of that is the threat in tariffs against Mexico and Canada unless and until they help us secure the border. Now, using tariffs as leverage for something like that is very effective. The president uses it really well, and particularly using them to push securing the border. I am emphatically in favor of that. Is it has proven successful. It worked incredibly well in the first term. It produced the remain in Mexico agreement with Mexico. It produced the lowest rate of illegal immigration in 45 years. Stopping the border invasion of the last four years is an acute national security and public safety imperative. It is a mandate from the last election. It is massively important for Texas. So I'm all for using the threat of tariffs as leverage to get good policy that benefits America. But there's a second component, and this is an important thing to understand, which is Donald Trump and much of his administration believes in tariffs as an economic policy. We've all heard Donald Trump say tariff is the most beautiful word in the English language. And I do think the business community. So look, we had the stock market plummeted. We saw massive losses in the stock market. We may well see more massive losses than the stock market. I think the business community was shocked by the magnitude of these tariffs, by the breadth of them. Look, as we talked about in our earlier podcast on tariffs, what I've urged the President is two things. Number one, focus on China, because delinking our economy from China is emphatically in America's national security interests and economic security interests. And number two, focus on reciprocity. And the reason I've said focus on reciprocity is the upside scenario I just talked about, which is by focusing on reciprocity, if you incentivize other countries to lower their tariffs and we lower ours, that's a win, win for America. But the thing to understand, I believe the business community has systematically underestimated how much President Trump and the Trump administration views tariffs as an ongoing, permanent feature of our economic policy. I can tell you virtually every time I talk with the President, I talk with the president frequently, he goes on at length, have you seen the billions of dollars, the hundreds of billions of dollars, the trillions of dollars we are raising and are going to raise from tariffs? Now, I think a lot of people said, oh, he's going to threaten these tariffs, but he's going to lift them very quickly. If he does that, great. If he leaves them in place and we just have constant tariffs, that is a massive tax increase on the American people. And I think many people are underestimating that. The President believes, and many members of his administration believe that tariffs are just a fabulous feature of the American economy. They harken Back to William McKinley when he was president. Now, look, we used to have, before the income tax tariffs were the main source of revenue for the federal government, and they want to go back to that scenario. And I got to say, we're going to find out, because, listen, President Trump believes in this. I think in the first term, he wanted to impose policies like this, and I think many Republican senators talked him out of it, pressed him back, and said, look, there are real risks. Don't do this. I think in the second term, Trump feels unchained. He feels unburdened. He's like, screw it, let's go. And he believes it. I do not.

[Senator Ted Cruz]

By the way, that's where the threat could actually work. Right? Because every other country's looking at this saying, hey, like, surely he's not going to do it. He does it. They're like, well, he's going to flinch quickly. There's no indication he's gonna flinch, per se, quickly.

[Ben Ferguson]

Right.

[Senator Ted Cruz]

I think the real threat of it is the fact that he's actually willing to go through with it.

[Ben Ferguson]

Look, I want this to succeed. I want it to succeed. But my definition of succeed may be different than the White House's. My definition of succeed is dramatically lower tariffs abroad and result in dramatically lowering tariffs here. That's success for the American workers, American businesses, American growth, American prosperity, American. That's a great outcome. But look, I think we're gonna find out. 100 years ago, the US economy didn't have the leverage to have the kind of impact we do now. But I worry there are voices within the administration that want to see these tariffs continue forever and ever and ever. They don't want to lower them. They think they're great. And what is particularly, I think has startled some observers, it wasn't just directed at China. It wasn't just directed at bad actors. It was directed against everybody. That is the breadth of it is enormous and it carries upside, but it also carries real risk.

[Senator Ted Cruz]

All right, let's talk timeline. And your definition of short term or long term, what does that timeline look like? Because obviously people are trying to figure out weathering the storm, right? You talked about supply chain and the car is a great example. You don't feel the pain till, let's say, June. All right, so it gives us a few months for things to kind of work its way through, work it out. Is that a timeline of short term? And then after that it's considered. All right, this is long term. What is that timeline, in your opinion?

[Ben Ferguson]

Well, let's be clear. The timeline was immediate. So let me read from the Wall Street Journal headline, Trump Tariffs send dow to a 1600 point decline. Dollar slumps. Asian stocks hit for a second day. Fears of recession rise. And here's what the Wall street journal reports. Quote US markets suffered their steepest decline since 2020 on fears President Trump's new tariffs plan will trigger a global trade war and drag the US Economy into recession. Major stock indexes dropped as much as 6% on Thursday. Stocks lost roughly $3.1 trillion in market value, their largest one day decline since March 2020. Stock index futures drifted lower Thursday evening and stocks in Japan were hit for a second day as Friday training began. In Thursday's market plunge, The Dow industrials dropped 1679 points, or 4%. The tech heavy Nasdaq, which powered the market higher for years, was down 6%, pulled lower by big declines in Nvidia, Apple and Amazon.com, the S&P 500, which fell 4.8% and the other benchmarks suffered their sharpest decline since the early days of the COVID 19 pandemic. The dollar, meanwhile, tumbled with the Wall Street Journal dollar index suffering its sharpest decline since 2023. Now, those are immediate hits and understand, look, it's easy to say, okay, fine, you know that's just rich people. Look at this point, a majority of Americans have money invested in 401ks and IRAs. And so that's impacting everyone. And people don't necessarily follow their 401k on a daily basis. Many people see their 401k statement when it comes out at the end of the quarter. A whole lot of people are looking at that. And we'll see if that's a temporary one day hit, but if it continues to slide over the next few days, that's not waiting for six months to see the impact. That's freaking people out now. And so the consequences of this are real. And I want to be clear about something. Look, it used to be conventional wisdom in Republican politics that free trade is wonderful and we should just have no tariffs and lower tariffs. And that was almost every.

[Senator Ted Cruz]

Can I ask you. This is a question. I'm just going to ask it because I know there's people listening. They want to know what the definition, your definition of free trade is.

[Ben Ferguson]

That used to be conventional wisdom. And I want to give Donald Trump credit for something really significant, which is he's changed the debate on trade fundamentally. And so I believe in free trade, but I also believe in fair trade. And so when I talk about reciprocity, Donald Trump has made a very clear point and it's a powerful point, which is many countries on earth have been taking advantage of the United States and have been imposing really high tariffs and barriers to US Goods while having free access to the American markets. And that is unfair. And so I love that President Trump is willing to use leverage to lower tariffs. I think that's great. And that really is a change in the debate. Ten years ago, there was nobody in the Republican Party making that argument. And that is the direct result of President Trump's leadership. That's a good thing. Saying we should be treated fair, fairly, that is a good thing. That is a very different proposition from saying doesn't matter if other countries lower their tariffs, we're going to impose tariffs on everybody because we think tariffs should be the principal vehicle of funding the economy. If the outcome of this is a multi trillion dollar tax increase on American consumers, I think that that is really consequential and really, really harmful.

[Senator Ted Cruz]

So let me ask you one other question, and that is if these tariffs don't change cinder, then what would the impact be?

[Ben Ferguson]

Well, let me share an analysis that a group called the Tax foundation did. Now, the Tax foundation is a think tank based in Washington. They're very good. They're economic experts. They analyze tax policies. They have proven to be incredibly accurate in terms of measuring the impact of taxes. Here's what the Tax foundation has assessed from the announcement this week. They say if these stay in effect, the average tariff rate on all imports will rise from 2.5% in 2024 to 18.8%, the highest average rate since 1933 under the tariffs announced for 2025. The consequence of those tariffs, they will cause imports to fall by slightly more than $900 billion in 2025, or 28%. So that's what they're predicting is that imports drop $900 billion 28% this year. They also say the newly announced tariffs on April 2 will raise $1.8 trillion in revenue over the next decade and will shrink US GDP by 0.5%. The April 2 escalation, they note, comes in addition to the previously announced tariffs, which will raise another $1.3 trillion in revenue over the next decade and shrink US GDP by 0.3%. Altogether. Trump's tariffs will raise nearly $3.2 trillion in revenue over the next decade AND and reduce US GDP by 0.8%. They further project the tariffs will reduce after tax income by an average of 2.1% and amount to an average tax increase of more than $2,100 per U.S. household in 2025. Now, to be clear, that's a prediction. If these tariffs stay in place, if they don't change, if the upside that I described happens, if foreign countries slash their tariffs and Trump in turn slash these tariffs, none of those numbers hold. Instead, I think we see an enormous economic boom. But if that doesn't happen, if these tariffs stay in place as an ongoing economic policy, we're facing very real and I think very detrimental consequences.

[Senator Ted Cruz]

It's going to be an interesting one, Senator. I think it's important that we have these conversations. Hopefully many of you listening understand this more and the ups and downs and what this will look like. It's going to be changing often and when it changes, we are going to continue to cover it day in and day out. So make sure you hit that subscribe or that auto download button Wherever you listen to this podcast, share it on social media. I hope this has helped you and I honestly hope that you'll share it with your friends so that they will share it and they can hear exactly what we did here today and the center. I will see you back here for our week in review on Saturday as well.

[Narrator]

Something unexpected happened after Jeremy Scott confessed to killing Michelle Schofield. In Bone Valley season one.

[Gilbert King]

Every time I hear about my dad is, oh, he's a killer. He's just straight evil.

[Narrator]

I was becoming the bridge between Jeremy Scott and the son he'd never known.

[Gilbert King]

At the end of the day, I'm literally a son of a killer.

[Narrator]

Listen to new episodes of bone Valley Season 2, starting April 9 on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.