Shawn Donnan
Appearances
Apple News Today
As Trump’s tariffs take hold, how much pain can Americans handle?
If you have a recession in the United States, that by definition means Americans are buying less stuff, that the market in the United States is less attractive than it was otherwise. And so you may have companies also saying, well, hang on a second, maybe now's not the time to invest.
Apple News Today
As Trump’s tariffs take hold, how much pain can Americans handle?
If I'm going to be spending billions of dollars to build a factory in the United States, I kind of want some certainty about where we're going, what it is that I'm investing in.
Apple News Today
As Trump’s tariffs take hold, how much pain can Americans handle?
What happened in 1930 after the Smoot-Hawley tariffs went into place is that we saw countries all over the world retaliate. And that just brought global trade to a halt and led to the deepening and the lengthening of the Great Depression.
Apple News Today
As Trump’s tariffs take hold, how much pain can Americans handle?
The labor unions have traditionally been pretty supportive of tariff policy. But one of the things we're seeing this time around is even some protectionist parts of the conversation, those communities, we're seeing people say, well, hang on a second, this may be just going a little bit too far too quickly.
Apple News Today
What is the market mayhem all for?
And we're starting to see in the global economy the impact of that. We're starting to see global trade start to slow down. We're seeing companies cancel shipments, orders from suppliers in China. While President Trump scaled back, his tariffs on 60 or so countries, he's only scaled them back to a 10% baseline that, again, did not exist there a week ago.
Apple News Today
What is the market mayhem all for?
There's also a 25% tariff on imported cars that's still in place. There's more sectoral tariffs to come. And over the week leading up to the scaling back, we really had an incredible reaction in global financial markets. Something like 19 or 20 trillion dollars in value was wiped out of global financial markets. Just to give you an idea, you know, the U.S.
Apple News Today
What is the market mayhem all for?
economy is about a 30 trillion dollar a year economy. I mean, that's wiping out two thirds of the U.S. economy from global financial markets. It's enormous. And then the night before scale back, just in the kind of last day, The market reaction turned into the bond markets. And what we saw was the yields on U.S. treasuries go up very, very fast.
Apple News Today
What is the market mayhem all for?
And that immediately started ringing a different kind of alarm bells. And that seems to have been what caused President Trump to back down. Now, come to the end of this week and I say, look, the story in the financial markets is not over. It's going to drag on for some time. And the tariffs are still there.
Apple News Today
What is the market mayhem all for?
Look, I mean, it depends who you listen to, right? I mean, the White House very quickly started to focus on the number of countries who have come To them, you know, wanting to negotiate new deals and therefore this was the art of the deal and President Trump got the leverage he wanted. He's getting the result that he wants. This is all the plan.
Apple News Today
What is the market mayhem all for?
A lot of reporting at the same time indicated that even some senior economic experts. Did not know this was happening, that the scaling back was happening. In fact, Jameson Greer, the U.S. trade representative, was up on Capitol Hill. And there's pictures of him kind of in the middle of testimony, kind of looking at his phone and going, oh, OK, things have changed.
Apple News Today
What is the market mayhem all for?
In theory, he should be the person. driving U.S. trade policy or certainly one of the people, you know, in the meetings and at the forefront of that.
Apple News Today
What is the market mayhem all for?
It's almost like he learns from the rest of the world, you know, what someone has done on his portfolio. And that's been a feature of Donald Trump and and how he manages the economy and trade policy going back to his first term. Now, the risk of this, of course, is that Donald Trump somehow gets emboldened by one day's gains, right?
Apple News Today
What is the market mayhem all for?
What we saw on Wednesday after he made the announcement was the biggest increase in in the Dow Jones and the S&P 500 that we had seen since 2008, right? You know, this is an enormous movement. Now, there's a lot of people who also tell you that that's not a sign of a healthy market, right? Markets should not be swinging around like this.
Apple News Today
What is the market mayhem all for?
And, you know, the United States is supposed to be, and its financial markets are supposed to be a kind of beacon of stability, a safe haven in a storm. And over the last week, they've been anything but.
Apple News Today
What is the market mayhem all for?
Look, that's a very good question, but we're only going to be able to see the answer to that when we actually see these deals and how meaningful they are and so on. Donald Trump has a history in the past of kind of proclaiming victory and claiming that he has just secured a magnificent deal. When you scratch under the surface, it's less than that.
Apple News Today
What is the market mayhem all for?
So some of the issues that Donald Trump wants to solve in a matter of days with these tariffs are issues that have been there for decades and have been pretty intractable. Now, if he's able to solve those issues, I think a lot of people in the United States will say that's great.
Apple News Today
What is the market mayhem all for?
I think a lot of people in the United States feel like one of the consequences of globalization has been the loss of good-paying factory jobs. That's a completely legitimate complaint. There are communities around the United States that have been decimated by deindustrialization.
Apple News Today
What is the market mayhem all for?
There's a lot of those communities, in fact, and Donald Trump has built his political support in part on votes in those places. The question is how you do it. During the Biden administration, the idea was industrial policy. We're going to give subsidies to companies to kind of end tax breaks and everything.
Apple News Today
What is the market mayhem all for?
And we're going to find other ways to encourage them to make stuff here in the United States, whether it's semiconductors, electric vehicles, other green energy kind of products. They kind of focused on targeted industries. Donald Trump's idea is to instead throw up this kind of defensive wall.
Apple News Today
What is the market mayhem all for?
And there's a lot of people, you know, at companies and I hear from manufacturing companies and also economists who say, well, that's OK, we get it. But a lot of the things that we need to to build here in the United States are components that come from overseas.
Apple News Today
What is the market mayhem all for?
And if you put up tariffs on steel, well, then what ends up happening is domestic steel prices also go up because they no longer have that competition from overseas. And that makes building a factory here more expensive. We know that there are fewer young people coming into the workforce every year just as a result of demographics.
Apple News Today
What is the market mayhem all for?
We also know that there's a huge amount of baby boomers who are exiting the workforce just as a result of demographics. We know that Donald Trump is cracking down on immigration as well. So who's going to work in these factories is another issue. And then there's other issues like permitting and so on. So – We're not going to know for two, three years how successful Donald Trump's strategy is.
Apple News Today
What is the market mayhem all for?
But we do know now that there are all these barriers that are there and that those aren't necessarily being addressed. And in some cases, they're being made worse by Donald Trump's policies.
Apple News Today
What is the market mayhem all for?
Look, I think the kind of victory capitulation narrative is I would just kind of set that aside. They're just blips on a policy trajectory that is taking the United States towards high tariffs, towards a new era of protectionism. that Donald Trump is deliberately pursuing.
Apple News Today
What is the market mayhem all for?
And the real story in the weeks and months, possibly even years to come, is going to be how the United States manages that shock, whether we go into a recession here in the United States, whether the world goes into a recession as a result of these things, or whether it finds a way through. Now, hopefully...
Apple News Today
What is the market mayhem all for?
Some of these negotiations that are going to come, whether as a result of victory or capitulation, you know, maybe take you away from some of the worst case scenarios. But the U.S. is still going to be a more closed economy than it was a week, 10 days, two months ago.
Apple News Today
What is the market mayhem all for?
So, look, I think the most important thing to remember is that at the end of this week, we have much higher tariffs in place here in the United States than we did before this week. The Yale Budget Lab was out this week with a new analysis. It says the average tariff rate on goods coming into the United States is now at its highest level since 1909.