Peter Orszag
Appearances
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Well, I don't know what he knows and what he doesn't know. But what I would say is I agree with you. I mean, what I have been saying internally is we need to make sure we are not presenting false conviction here in terms of what will happen because fundamentally people don't know. I do think once we get through... this stage.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
So let's assume that there are a set of deals, the variance in outcomes may be less extreme. And so it's not that businesses can't decide under uncertainty. They do that all the time. The world is an uncertain place. That happens all the time. It's just the levels of uncertainty here were so extreme that it was very, it was freezing people in their tracks. So I think
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
what the administration presumably would want to do is bring that level of uncertainty back into kind of a manageable range. And that's one interpretation with these different factions within the administration, what just happened today.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
I'd say it's too early. I mean, you know, it's been roughly a week. It's not very long now. It's not very long. And I've done a lot of CEO level discussions and most of them just wanted to talk through what might happen, what the scenarios were.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And they were just at the beginning of, you know, let's put things on hold for now, but not getting to the, and therefore this means that or what have you. In general, not always, but there are usually not that many decisions that need to be made in the span of a week. So the question becomes, the longer the uncertainty persists, the more economic damage there would be.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And some of it becomes irreversible, not just on the corporate side, but in terms of the foreign investor attitude towards the United States and what have you. So I think right now we're at another period of peak uncertainty because the uncertainty has come down, but we don't know whether it will persist or not.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Or are you more optimistic about it? The administration now has an opportunity, whether it's realized or not, to lay out a little bit more sort of what they're trying to accomplish and provide... What people had hoped would happen on April 2nd, which is, okay, this is actually the deal. This is what we're doing. Go on with your lives. So you could adjust.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Among CEOs and boards, I think people have some understanding of a change in the dynamic with regard to China, but... Canada, Mexico, Europe, that part was a little bit, you know, befuddling because it wasn't clear what the theory of the case actually was.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Well, I think there were two parts here. I mean, there's the theory of the case, if it's executed in a particular way. And I want to come back to what that means. And then there's if it's executed in a different way. And I think what we've done is shift from kind of scenario two a bit into scenario one. And so what do I mean by that?
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
One way of thinking about it is the chair of the Council of Economic Advisors, Stephen Moran, put out in November of 2024, a guide to remaking the world trade system in which he identified
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
what the underlying objectives of this set of policies are, and maybe we can come back to that, but then also highlighted that there was a significant risk of adverse market volatility and adverse economic effects unless it was implemented in a particular way. And what were the key attributes of implementing in a particular way? It was graduated implementation and forward guidance.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Graduated implementation means baby steps, step by step, a little bit at a time. And forward guidance means you signal way ahead of time what you're doing in those baby steps to give markets and businesses and consumers plenty of time to adjust. And I think what we saw over the past week is it was not implemented that way. It was not graduated. It was all at once.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And it also took effect in a matter of days, not even months or quarters.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Okay, so before we do that, I think we need to step back even one step before that, which is to acknowledge that over the past two or three decades, the so-called Washington Consensus, the idea that
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
basically free markets and unfettered competition whenever possible, that that was the best system possible, that that's been discredited because many people have not experienced the benefits to the degree that people think they should have or at all. If you look at life expectancy in the United States,
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
For roughly two-thirds of Americans, life expectancy has been flat to down over the past two or three decades. So before we get to the what, we have to start with the why. And it's because there is a deep level of frustration. You've written about this, and maybe we can get to some of the solutions that you propose. I don't think I'm an optimist. Yeah, thank you very much.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
We can flip the table here. But you have to start there. So you have to acknowledge that there's a lot of frustration, that there's a lot of anger. People searching for a solution. So the Washington consensus has been discredited, but there's been no intellectual framework that's coherent that has replaced it.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
No, no, it's not. And in fact, I think, you know, most of the evidence suggests that most of what was going on had to do with technology and other factors and not trade per se. But what I would say is the easy kind of... The market will always solve everything and everywhere, which is a caricature of what was actually policy over the past couple decades. So it's unfair.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Yeah, I think that's right. It is a caricature, but I think it's not unfair to present that as being a kind of meme. And I would also point out that China in particular, as opposed to Canada or Europe, plays a different role in that story. But there's anger and a vacuum between
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
That's true, but I think it doesn't change the fact that there was a vacuum, and so... My only point is he ran on this agenda and he won on that agenda. Then the question becomes, well, what is beyond just saying trade has caused harm to certain parts of the population? What's the pathway forward?
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And that's where I think the Moran paper is interesting because it is putting forward a somewhat deep and controversial perspective that deserves serious debate, which is the United States has occupied a place in the global economy I personally think it has been a benefit. And in fact, it's been called the exorbitant privilege, which is that we are the reserve currency.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
We are the pillar of the global economy in the sense of it's the dollar that's used for the majority of international trade transactions. It's the dollar that has been where other central banks hold a disproportionate share of their assets. reserves. And what Moran is raising in this paper is the question of whether we want to be the reserve currency for the world.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
So he is taking what has been called the exorbitant privilege and raising questions about whether it's actually a privilege at all.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
If we want the world to stop buying anything, Chinese telecom infrastructure or Russian oil or whatever, our ability to influence entities that are not even connected to the United States is dramatically higher because... the whole infrastructure runs through us.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
That in order to move money from point A to point B, you typically are going through some intermediary that touches the United States and boom, we can intercede at that choke point. New book is out that delineates those choke points. And that gives us the ability to influence things that otherwise we would have trouble influencing.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
You know, companies in Europe or Africa that don't even have anything to do with the United States, but they do have to do with a bank that then has a intermediary that has something to do with the United States. That's one benefit.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Another benefit is that our borrowing costs are lower than they would otherwise be because the dollar and treasuries in particular are seen as the safe asset, the reserve asset, if you will. And so it's really hard to estimate this, but maybe... somewhere between 25 and 75 basis points of lower interest rates.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And by that, I mean, you know, instead of it being 4.5, it would be 4.25 or maybe 4% borrowing costs. So that adds up over time, especially because we now have a very substantial debt as a share of the economy. So those interest costs are quite significant. And I think the list goes on.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And another way of looking at this is international investors have over-indexed on the United States, probably in part because of that fundamental role that we play in the global economy. So if you look at the share of dollars in stocks that people allocate to the United States relative to other countries, it's higher than it, quote, should be based on our GDP or other metrics.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And that's in part because of this special role that we play.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
The downside is that when you are that reserve currency, your exchange rate tends to then be higher than it would be. In other words, the dollar is more expensive than it would be. You can think of it as because of that extra demand that other countries have for... dollars as opposed to yen or euros or whatever, that higher exchange rate then means exports are more expensive.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And one way of thinking about it is there's something that academics called the Triffin dilemma, which is if other countries need your dollars to do their stuff when they trade, that means you need to be supplying dollars to them. And logically, the only way that that can happen is if you're running trade deficits, because when you run trade deficit,
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
You're effectively importing more than you're exporting. And the difference is that you're supplying cash or dollars to the rest of the world as a result. And so the argument that the CEA chair is laying out is to the extent that you think trade deficits are harmful and decline in manufacturing in particular is harmful, this is a cause of part of that. And so is it really worth the other benefits?
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Well, I think there are two questions. First, is it achievable? And it depends on what question you're answering. But if you're saying, could we get back to 30% of employment being in manufacturing as it was in the 50s, from today's level, no. And in fact, I think Paul Krugman on this very show last week pointed out just the math is very difficult, even if you eliminate an entire deficit.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
even if you eliminated that and it all went into domestic production, you take the manufacturing share of GDP from about 10 to let's call it 15%, you're not going to have 30% of employment off of 15% of the economy unless you're doing really unproductive things, point one. Point two is, is that shift actually something that we want?
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
So in this whole trade debate, by the way, we have completely ignored the fact that it's all about trade in goods. So this whole discussion has been about the trade deficit in goods. But the U.S. is a net supplier of services, net surplus in services to the rest of the world. And this raises the question of, are manufacturing jobs actually better than services jobs?
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And why are we having a trade debate that leaves out If this podcast, advertising on this podcast or some other aspect of the podcast generates revenue abroad, that is an export of a service. Backbone of the American economy.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And it's actually interesting because once you buy into the thought that trade imbalances can only reflect... restrictions or cheating or what have you, then the logical question is, well, are we running the surplus in services because we're cheating? I don't think so. But that is, you know, why is it any different for goods versus services? So it raises a bunch of different questions.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Thank you. Thank you. Thank you.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Thank you. Thank you. Thank you. Thank you. Thank you.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Well, look, I guess before this pause, so just taking the previously published tariffs by country, the Yale budget team had estimated that the revenue impact would be something like $300 billion a year. So if you want to shave that down and assume everything's just 10% outside of China, I mean, maybe it's $150, $200 billion a year.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
That's something, but relative to deficits that are 10 times that size, it's certainly not a panacea.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
I do think what you're going to see on the tax cut is the possibility that something very unusual happens, which is either the Senate parliamentarian rules in a particular way or the chair of the Senate Budget Committee just goes around the parliamentarian, both of which are possible. in a way that basically makes the extension of the existing tax cuts look like it's cost-free.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
It doesn't matter if you're six feet because you were at three and you went up or you just stayed at six feet. You're at six feet.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
You might slightly reduce the debt problems by reducing some of the burden of defense spending and what have you. There would be an offsetting role on the cost of the debt. Well, fundamentally, because foreign investors may be less interested in buying U.S. debt in that world. I think this is a really important debate to be having, which is, do we want the U.S.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
to be at the center of the global economy or not? That is, I think, a fundamental underlying philosophical or sort of fundamental debate that is being kind of papered over a little bit by the to-ing and fro-ing over tariffs. But at the heart of it, that is a deep question. I personally think we are better off if we're at the epicenter of the global economy, but that's a debate to be had.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
I will give you an inkling, which is actually, I mean, you're aware that I was a big part of the beginning of the Hamilton Project. And so going back to a Hamiltonian perspective, I think might be interesting. What are the aspects of a Hamiltonian perspective? It has...
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
the recognition, and I think this is something that the Democratic Party has not done a good job at, and it's something that I've tried to live in my own life, people can criticize it, but that fundamentally, there are significant benefits that come from effective business or effective commerce, that there is no other way of organizing production in society that beats having
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
commercial enterprises doing most of it. So that is a core part of the Hamiltonian philosophy that at least significant parts of the Democratic Party seem to have wandered away from, at least in the caricature. A second part, though, is coming back to trade. It's not unfettered free trade that's at the heart of that vision. It's something that's a little different.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
It's a little mercantilistic and it might start to stretch too far in that direction. And then there's a part on the role of the federal government and obviously on fiscal matters and what have you that I think could be the... the makings of a new vision, but I have not... That sounds very Biden-esque to me, though.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Maybe, but the boundaries weren't well-defined, in my opinion. And I'd also say, this may be an unpopular thing to say with some of my former colleagues, but I would say I think the part on actually business can be good for society, that part was absent from the sort of the rhetorical framework.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
But as you know, words matter a lot in policymaking. So, yes.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Everyone cares a lot about, you know, whether what they're doing is seen as productive and good. And yes, I take your point, but it's not just the business community. I think everyone gets all worked up.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Well, there's both the carrot and the stick or the impediment and the push. But I think you're right that a lot of what is going to happen over the next decade, frankly, comes down to technology. And someone at one of the recent gatherings I was at said it this way, that tech trumps tariffs.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
that what happens five or 10 years from now will depend a bit on what we've been discussing, but it's going to depend probably a lot more on the evolution of these amazing new innovations in technology that we're all hopefully using in our daily life. I know I am.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
There are lots of different pieces that matter for that. And I don't want to delineate all the different parts, but I would say this. And Alex Karp from Palantir laid this out in a recent book. I think that there is a national interest in having Silicon Valley own the AI revolution, a national security interest and an economic security or an economic interest from that.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And then there are lots of things that follow from that. But the first thing is to recognize that that is what you're trying to do.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
I think I named two or three already in this discussion, but beyond the ones about Underground Empire and Smart Money and so on, maybe I'll add two. One is called The Catalyst by Thomas Keck, and it's all about the role of RNA and not DNA. in most of what happens in the human body. I think RNA has been seen as this kind of sidekick to DNA and it's DNA that drives everything.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And the story he tells is of the central role of RNA. Now, he also won the Nobel Prize for working on RNA, but it's a great read. And the second one is called Kaput by Wolfgang Manchu. It's about... the economic malaise in Germany and what's caused it, which goes back beyond just the Russian oil and the reliance on China back to a question.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
It's almost aligned with what we were discussing earlier about the role of technology in driving productivity in companies. Final thing I'd say that's an offshoot of that book is it's been common to basically say US companies are performing the best in the world and US companies are exceptional and European corporates have been underperforming.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
If you actually look at the data, which I did recently, it's really astonishing. There is a bit of a gap, but it's not even remotely what you would think. So I'll give you an example. If you look at something called return on invested capital, which is just a way of measuring the efficiency or how good a company is at its operations,
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And you rank companies in Europe, the 95th percentile European company by that rank is equivalent to the 92nd percentile US company. I think if you listen to a lot of the rhetoric, you'd think the 95th percentile European is like the 10th or 20th. And what's been happening this year is actually European stock markets have performed better so far. than the U.S. stock market.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
So the book is all about why German companies are terrible. There's also a bit of a broader European story that maybe they're not quite as terrible as the conventional wisdom suggests.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
It's very specific to technology.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
It's really in technology. The hyperscalers in particular are so far, you know, beyond what anyone else has accomplished. If you look across other sectors, much less true.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
I would say among CEOs and boards, a pause, a kind of, we're putting decision-making on hold because we can't figure out how this is going to play out. I think people often say markets don't like uncertainty and businesses don't like uncertainty. You saw that play out in real time, which is a deeply negative reaction to the level of heightened uncertainty that was in the marketplace.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
The treasury market was beginning to shake. Yeah. Can you describe what was happening there? Sure. Well, here's the backdrop. So I think we need to step back, and I will own having been a mistaken fiscal worry wart in 2008 or 2009, worrying about the fiscal path in an era when it turned out not to have been necessary to have those concerns.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And over the past 15 years or so, even I, former budget director, have gotten sick and tired of like, The endless worrying, the sky is falling, the budget's unsustainable, all of that. I kind of have zoned it out. Unfortunately, I think we need to get back into that mode because the situation today is much different than it was a decade ago. Deficits today are 6% or 7% of GDP.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
A decade ago, it was 3%. Interest rates are roughly twice as high as they were then. And the final piece, which brings us to your question, is just under $9 trillion of U.S. debt treasuries is owned by foreign creditors. And the argument has always been, they would never sell that because if they sold, They'd lose money because they'd create a reduction in the price by selling.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And also, there's no good alternative, that everything in life is relative and there's no point looking elsewhere because everything else is more unattractive than anything the U.S. could offer. The situation can change, though, if the U.S., if frictions between the U.S. and many key allies...
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And those allies then say, actually, if we're each imposing pain on one another, maybe I'm willing to tolerate the losses from selling my dollar reserves and also my treasury holdings. And, you know, that's one part. Then there are questions just about the most recent turmoil. And what you were seeing was some unusual behavior there. in the treasury market along two different dimensions.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
One was normally during these times of crisis, the exorbitant privilege of being the reserve asset, you're normally the safe place to go. So even if it's kind of something you did, there's a warning over the debt in the US, people get nervous, they go into treasury. So the interest rate goes down, even if the thing that's causing the riskiness is your own kind of doing.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Here, what was happening is that happened But over the past few days, what's been happening is interest rates on U.S. treasuries have been going up, not down, despite the other market turmoil. That's an unusual thing. And then there were other aspects of it. So not to get too wonky or too detailed, but basically when people suffer losses in stocks, they often have to make good on stocks.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
if they borrowed any of that treasuries are a very liquid thing that they could sell so there was kind of a a little bit of a feedback loop and there were other unusual things which we could talk about involving bonds versus swap rates we don't need to go into all of that but there were little tremors that were showing up in the debt markets that i i would be shocked if they did not catch the attention of senior officials in washington i mean trump
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Well, what I would put it is you have sort of different exposures. I mean, for most Americans, you'll have some money in the stock market, but the biggest asset you own by far is your house. And to the extent that mortgage rates are driven off of
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
the 10-year treasury rate or some underlying treasury rate, you can see a more direct impact on the financial condition of many people off of the bond market rather than the stock market. But I would say both are important. I don't know that one is more important than the other.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
The only thing I go back to that your comment reminds me of is don't forget that in the early 90s, James Carville didn't say, I want to come back as a stock market. He said, I want to come back as the bond market.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
I think splitting the world into China and ex-China probably makes sense for this purpose, just given the dramatically different tariff rates. So a 10% across the board tariff rate, and yes, there are some exclusions and this and that, but let's just call it 10%. I mean, remember we were at kind of two to 3%.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
So it will, when I talk about the underlying tectonic plates of the global economy, it will have an effect. The China part I think is more complicated because I suspect that if you ask me to bet a year out, the tariff on China is not going to be anywhere remotely like 125% or whatever it's going to land at now.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And instead what will happen is there will be some set of agreements with all the ex-China part of the world and then an attempt to reach some negotiated settlement with the Chinese that involves a higher tariff rate than we had before, but nothing like that. you know, what we're seeing right now. So there are two forces here.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
Yeah, and that in every discussion that I've been having with CEOs across the globe, pre this announcement, but I suspect a lot of it will continue because you can wait 90 days, see how it plays out. There were a lot of decisions on hold. And it was for a variety of reasons. You highlighted one, which we don't know the level of tariffs, but also we don't know...
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
The response of foreign governments, many foreign companies are under pressure from their own governments not to invest in the U.S. You saw President Macron say that explicitly, but others have said it more in private. So most of the corporate decision making seem to be on hold. And I would suspect that that is going to remain largely the case until there's more clarity. I'll give you one example.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
The administration had come out with a variety of these bilateral reciprocal tariffs. And one problem, along with others, in terms of creating uncertainty is you couldn't argue that was the worst case. Even the X percent, 17 percent on Israel, you couldn't argue that was the worst case because the administration also said that if a country retaliates, it will raise that tax.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
the tariff rate from the billboard. And that's exactly what's happened with regard to China. So they've shown they're willing to do that. So what was interesting today is administration officials, including the treasury secretary said, you can now be assured that what we showed you before is the maximum.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
There is some tension, I think some further clarity that needs to be provided of how that works with the simultaneous thought that if any country were to retaliate, we may go above what was put forward before. So these are the sorts of questions that over the coming days I think are going to need to be
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
answered in addition to whatever deals ultimately are cut before firms are going to feel confident that they can make some investment decisions. And then the second problem is one that I know you've identified and spoken about before, which is we do have elections in the United States and the policy structure can change.
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And so I don't know any company that's making an M&A decision or an investment decision for two and a half years. it's making these decisions over a much longer period of time. And so the other question is, how much of this will stick thereafter?
The Ezra Klein Show
Trump’s Tariffs, Market Panic and What Comes Next
And what I'd say, not to do the Lazard advertisement, but just really briefly, I created a geopolitical advisory team a couple of years ago, and the demand for that team is off the charts because you can't make a business decision today without taking these sorts of things into account for exactly the reasons that we're discussing.