All-In with Chamath, Jason, Sacks & Friedberg
The Great Tariff Debate with David Sacks, Larry Summers, and Ezra Klein
Fri, 11 Apr 2025
(0:00) Bestie intros! (0:58) Reacting to Trump targeting China and postponing all other reciprocal tariffs (21:21) Measures for success of tariffs, debating the impact of letting China into the WTO (46:14) Is the US being exploited on trade? Was free trade a mistake? (1:02:01) Recession chances, How the Trump administration gathers information (1:19:39) Future of the Democratic Party, Abundance agenda, DOGE (1:51:00) The Besties recap the debate and Chamath recaps the Breakthrough Prize Ceremony Follow Larry: https://x.com/LHSummers Follow Ezra: https://x.com/ezraklein Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@theallinpod Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg Intro Video Credit: https://x.com/TheZachEffect Referenced in the show: https://truthsocial.com/@realDonaldTrump/posts/114309144289505174 https://x.com/WhiteHouse/status/1910058352278708638 https://www.wsj.com/politics/policy/why-trump-blinked-on-tariffs-b588aea8 https://breakthroughprize.org
Chapter 1: Who are the guests and hosts in The Great Tariff Debate?
He's got a new book with Derek Thompson, Abundance, and he co-founded Vox in 2014. And he's our guest here today before Trump ships him to El Salvador. Please welcome Ezra Klein.
How are you, sir? Glad to be here in my final hours of freedom.
Okay, great. Good to be here. Sorry, sex. And with us, of course, Larry Summers, economist, former Treasury Secretary under Clinton, former Director of the National Economic Council under Obama, and the President of Harvard from 2001 to 2006. Thanks for coming, Larry. Good to be with you. Okay, we have a lot to get to here. So we might as well talk about the big news of tariffs.
Chapter 2: What recent tariff changes did Trump announce and what was the market reaction?
It's day 80 of the Trump presidency, a second presidency, his second term. And Trump tweeted that he paused tariffs for everyone but China on Wednesday. Basically, let me just queue up the details, Larry, and then we'll get your take on all of this.
Just one week after Liberation Day, Trump announced on Truth Social that, in effect, he was raising tariffs against China 125% based on their lack of respect, quote unquote, instead of negotiating, and that he was pausing reciprocal tariffs on all other countries for 90 days. And markets ripped 10% after he posted this. And today, Thursday, when we taped,
There's been a massive sell-off on Wall Street, so the rollercoaster ride continues. What it will be on Friday when you consume this podcast is anyone's guess. S&P is down 5% today. For context, the S&P was at 5,700 pre-liberation day, so about a 9% drop after these wild swings. And in fact, this has been historic volatility. Here are the top
Sell-offs in history, as you can see, three of them came during Black Monday in 1987. Three of them came during the financial crisis. Three of them came during COVID. And coming in 11th is Trump's tariffs. Also, in the gainers, you have these big rebounds. Wednesday's 9.5% recovery was number three. The administration says this was all part of a master plan. We'll hear more about that later.
And that they laid a trap for China. They laid a trap. Besant has been the spokesperson during this retreat or... whatever we're going to call the pause, and quote, this was driven by the president's strategy. He and I had a long talk on Sunday, and this was his strategy all along. I don't think we need to play the clip. That's the gist of it.
The White House account then tweeted in all caps, my favorite way to tweet, do not retaliate and you will be rewarded. Wall Street Journal, on the other side, posted a story about why Trump blinked.
They chronicled the decision as being affected by Jamie Dimon, who went on Fox to express fears of recession while saying the tariffs were valid and that he knew that Trump and cabinet would be watching him on Fox. Other banking executives who felt they didn't have a lot of influence in this administration, according to the Wall Street Journal, started lobbying Republican lawmakers.
that the Trump tariff plan would tank the economy. The White House chief of staff, Suzy Weil, started receiving calls from executives and lobbyists expressing concerns. And the Wall Street Journal reports that Trump was influenced heavily by Besant. They were flooded with worried calls from Wall Street and that the president was lobbied to find an off-ramp.
Trump ultimately relied on his instincts, according to the administration. Larry, is this 4D chess? Or is this something else? What are your thoughts?
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Chapter 3: How do experts evaluate the economic impact of Trump's tariffs?
The more protectionism, denying the independence of the central bank, fiscal irresponsibility, breakdown of traditional boundaries between government and business, substantial cronyism as a strategy, authoritarian tendencies towards the opposition, lack of total respect for the judiciary. Keep going, Larry. Keep going.
What we're seeing is a pattern of America being governed on the kind of Juan Peron Argentina model. And that sometimes produces some benefits for some people in the short run. That sometimes generates popularity for it. Peron kept coming back in Argentina. But ultimately, it's extremely costly for a society.
Uh, you've, you've heard, uh, Larry's, uh, take on all of this.
Larry's giving it about a B plus on the Harvard grade scale, which might be inflated.
I'm not sure. Sacks, obviously in the administration, you cover two things, AI and of course, crypto. and you're a member of the pod, so let's get your take on what happened this week with these tariffs. Even the most ardent supporters of Trump have felt this is chaotic, not well executed, not communicated well.
What is your take, Sax, on how this was executed, and could this have been done better?
Well, I think what happened, if you go back to Liberation Day was only eight days ago, it was April 2nd. If I had told you on April 1st, that Donald Trump would find a way to get the entire world to eagerly embrace a 10% tariff on the American market, and not only would they not complain, but they'd actually be relieved that it was only 10%, you would have said that would be an April Fool's joke.
If I had told you eight days ago or nine days ago that Trump would find a way to accelerate the United States' decoupling from China, which is something he's long wanted to do, and that Wall Street would basically breathe a sigh of relief over that, you would have said that there's no way that could happen.
If I had told you eight or nine days ago that President Trump figured out a way to assert a presidential power in a way that gives America extraordinary leverage over virtually every country in the world, you would have said, well, I don't believe it. I don't, you know, what is that power? And he proceeded to do that.
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Chapter 4: What are the arguments for and against bringing China into the WTO?
I think something I'd love to hear from David, it's very hard to break the pattern of being a podcast host, I would like to hear what the measure of success in two years is. Right? We can sit here and speculate about the effect of these, and I'm much more on Larry's side than what I'm hearing from Chamath and David, but What are your measures?
What in two years, if manufacturing, employment or whatever is below X, will you be unhappy? If GDP is, what is a sort of objective yardstick where we could come back in 700 days and say, did this work out or was this a bad idea?
I would say probably the biggest thing would be whether the U.S. can reindustrialize to some extent so that we're not completely dependent for our supply chains on a potentially hostile adversary.
And what is the measure of that? Is it the quantity of manufacturing we're making? Is it the share of manufacturing?
I don't think it's a hard thing to understand. You know, during COVID, we learned... I'm just asking you to set it very tightly.
Okay.
I am saying it concisely. During COVID, we discovered that we were horribly dependent on a supply chain from China for some of our most essential products, for pharmaceuticals, for other medical gear that we needed during COVID.
Sure. So what would be, if you were to put a metric on it?
Just as one example, but we've also learned that our entire supply chain for all sorts of industrial products now is dependent on China and other countries.
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Chapter 5: What should be the measure of success for US trade policy in the next two years?
Hold on. We haven't finished the debate about China and PNTR, okay? But my question predated that debate.
Yeah, we're trying to get to that. Listen, you're trying to change the subject. Let's just finish up on this topic. No, no, no. We're trying to move forward. That's all.
We're trying to finish up on this topic, okay? Okay, we'll let you get the last word. Obviously, Larry is very passionate about this. Okay, you can have the last word. So, March 9, 2000, Bill Clinton announces PNTR at Johns Hopkins. It's a very famous speech. You can tell us about how it got written. Anyway, Bill Clinton promises several things. He makes a number of arguments for PNTR.
He does not think that this does nothing. Larry, your argument is that Bill Clinton didn't do anything. You're saying that somehow it happened under Reagan or something like that? That's not what Bill Clinton was arguing. He said, number one, there'd be huge economic benefits for the U.S.
He says, quote, by this agreement, we will increase exports of American products, he means to China, that will create American jobs. Okay, did that happen the way we intended? I don't think so.
Number two is, he believed that- Have you looked at the data on export flows from the United States to China? It actually did happen at a quite substantial rate.
But with huge trade deficits for the United States. You're arguing that they did not act in a discriminatory way towards our products. This idea that Americans could just do business in China the way that they could do business here is ridiculous. Anyone who tried to do business over there knows you had to create a JV, you had to get a local partner, give them 51%.
It was extraordinarily difficult. We were discriminated against, Larry. It was ridiculous to try and claim that somehow this was an equal relationship. And we imported far more from them than we ever exported to them. So Bill Clinton was wrong about that. Number two, he said that signing PNTR and bringing China to the WTO would promote democracy in China.
that we would export one of democracy's most cherished values, economic freedom. Did that happen? I don't think so. He said this would strengthen global trade by ensuring China adhere to international trade rules, reducing trade barriers, and resolving disputes through WTO. Did that happen? I don't think so.
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Chapter 6: How do supply chain dependencies affect US economic and national security?
And the Trump administration, I think, believes something, depending on who's talking, more like that the entire supply chain needs to be onshore to America specifically.
But one of the problems and the reason I keep trying to push people to be very clear about their arguments and very clear about their metrics is that I feel like there's this King's Cup of what we're trying to achieve here, where one day it's that we're trying to achieve the reindustrialization of the American heartland. And the next we're trying to replace the income tax with tariff income.
And then the next we're just using it as all purpose surplus leverage against any country that does anything we don't like. And the next day we're, you know, using it for an entirely third purpose. And maybe we're just going to use it to isolate China, but to bring in our friends. But none of these, you can't do all of these things at once.
And it needs to be very stable if you're going to get companies to do these long-term CapEx investment decisions that take decades to play out. Nobody I know in the markets, no CEOs.
The fact is you guys didn't want to change anything. You guys didn't want to change anything about anything. I wasn't in the...
I wasn't in the Biden administration, number one.
I'm changing Ezra and Larry as a team. I would love to change all kinds of things.
You mean the Democrats didn't want to change anything?
Of course. Larry won't even admit that PNTR did anything.
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Chapter 7: Is the Trump administration's tariff strategy chaotic or strategically sound?
Can you name one product where restrictions were reduced? Okay, David, name it. Listen, you're mischaracterizing what PNTR did. We can play this like a grok game if you want. People can go ahead and grok this question and they'll get this answer. Look, the answer is that before PNTR, China was granted MFN on a year-by-year basis by Congress. Correct? Correct. PNTR made it permanent.
What does that do? It created a permanent new framework for trade relations between the United States and China. So it created permanence and it created a certain expectation. What did that enable? Massive investment by US companies in China. So all the bean counters from McKinsey started talking about outsourcing and just-in-time manufacturing.
They started moving the factories over there in a much greater way. You know, the Mitt Romney's and private equity, hold on a second, let me finish. The Mitt Romney's and private equity said, this is a great idea, let's move all of our manufacturing. Could we agree that whether or not it was the WTO move?
Hold on, the bankers on Wall Street got to financialize and securitize all sorts of new products, okay?
That was the result of PNTR. The thing we have to decide really right now as a country is if the thing that you all are trying to replace this with is better, right? If it will work. And so I want to go back to what you said a minute ago, David, when you're like, welcome to political coalitions. Larry has been in politics a long time. He was treasury secretary.
I've covered politics for a long time. I'm familiar with political coalitions. In fact, a lot of my book is currently about the problems in the way the democratic coalition with too many objectives all at once is Yeah. Got it. Yeah.
If the idea is that there are all these different players here who have all these different policy objectives that would connect to all these different policies and everybody's getting a little bit of them and Trump is kind of flipping back and forth through different versions of them, you could end up, despite, yes, whatever mistakes were made in the free trade consensus, which I do agree that we had, you could end up with a bad and next, not even consensus, just a bad next policy.
An unclear coalition that is fighting with itself and is making policy without a strong process can create not like nitpicky procedural problems, but actual damage and disasters.
Chamath, let's try to look forward here. This obviously has been a cataclysmic, chaotic, intense, whatever descriptor you want to use of the past week. Productive. Okay, sure. And it certainly created massive swings in the market. Is this all going to cause a recession? Is this too violent of an approach to markets?
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Chapter 8: What are the recession risks and future outlook related to tariff policies?
disclosures, and they figure out what the conflicts are, and then you have to divest them, okay? It's the same process that everyone goes through. So you're all over the place making all sorts of accusations here. So if you have some proof or you want to accuse someone, then why don't you just do it? But otherwise, what you're saying is just not true. It's not backed up by anything. Great.
They shook down Eric Adams. That's a direct accusation that happened in public. They shook down Eric Adams because they could put him in his pocket. That's a big deal, y'all. That is the way they are doing business here.
You guys are all over the map making wild accusations.
There have been a variety of OGE resignations because of their discomfort with being overruled by your colleagues in the Trump administration. So the suggestion that you have been held to the same ethical standards that I was held and that other members of previous administrations, including the Bush administration, were held, unfortunately, is not right. No, that's false.
All right. Well, there's two issues here.
You may not be familiar with my situation, but I had to divest. Hold on. I had to divest a lot, as I talked about in the show. In any event, you guys are all over the map making wild accusations. Two seconds ago, the shakedown was at the level of companies. Then all of a sudden, it was OGE and ethics. Then it was something about Eric Adams.
It's an integrated way of doing business. You guys are just making this up. Nobody's making... I like that you're like, who's Eric Adams?
We're not making... No, I know who Eric Adams is. I supported him. on this show.
It's a straightforward way that Trump does business at every level at which he operates. And so it is happening at every level of his administration. I know you don't want to hear it, but I don't, it's not that I, it's not that I don't want to hear it. It's not that I don't want to hear it.
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