The stock market just had its worst day since 2020, and Trump’s proposed “Liberation Day” tariffs are at the center of the storm. The administration is arguing that these sweeping international tariffs will be a win for American workers—promising to bring manufacturing back home, reduce the trade deficit, and generate revenue. But history—and economics—tell a more complicated story. Today, Nicole is joined by investor, author and podcaster James Altucher to break down what these tariffs will mean for the U.S. economy. Together, they dig into the real-world impact on inflation, jobs, trade relationships, and the markets. Is this the beginning of a new era of economic strength, or a fast track to recession? To check out James' podcast, click HERE. To subscribe to James' newsletter, click HERE. For all other James things, go HERE.
Chapter 1: What triggered the recent stock market plunge?
It's in response to Trump's Liberation Day tariffs, sweeping international tariffs that I'm going to dig into today. Trump says these tariffs will be good for American workers, that it will bring manufacturing back home, lower the trade deficit and generate revenue. But will it?
Chapter 2: How do tariffs affect global trade and inflation?
Because when you start digging into what happens after big tariffs hit, you start seeing phrases like supply chain shock, inflation spike, and my personal favorite, global trade war. Tariffs can be a double-edged sword. They're meant to protect domestic industry, but they can also hike prices for consumers. They can rattle markets, as we've seen.
They can strain relationships with global trading partners, too. And while it's easy to say buy American, it's a lot harder to do when your grocery bill jumps and that iPhone you were planning to upgrade to suddenly costs 20% more. So today I'm going to ask the big question I think we all are thinking, will these tariffs help the U.S. economy or hurt the U.S. economy?
Chapter 3: Will new tariffs help or hurt the U.S. economy?
And to help me unpack all of this, I'm joined by my friend, investor, author, money rehab alum, James Altucher. James argues that these tariffs might not be the inflation bomb people are afraid of, and that they could, in fact, create new leverage for the U.S. in future trade deals. I play devil's advocate, of course.
And then James and I zoom out and talk about what these tariffs could mean for the stock market, for jobs, inflation, Bitcoin, and of course, the big one, a recession. James Altucher, welcome back to Money Rehab.
Nicole, so happy to be here. This reminds me of those 5 a.m. moments when you were hosting that 5 a.m. show on CNBC. And you would wake up for it. I would wake up. So I'd wake up at like 3.30. I lived an hour away. I would get over there. And I loved every minute of it. It was always such a pleasure hanging out with you on TV.
Who knows if the three people that were listening really paid attention, but we had so much fun.
all of Europe was awake all of Asia was awake it was just the U.S.
that was like getting up that's true yeah I should realize there's a there's a global world out there big bad world out there all of your adoring fans all over the world well we're talking on liberation day whoo how was your liberation day I you know I don't feel like it was any different than yesterday like I don't feel liberated do you feel liberated I I mean, I feel scared.
I actually, can we look at our portfolios for a second today? What is your portfolio down today? You know, I tell people like don't mourn paper losses, but I do still.
Well, you know why? It's not necessarily the paper losses. It's the fear. Is this going to continue? Like, are we in trouble? And it's not like, is this stock going to be okay? It's more like, am I going to be okay? because every stock on the screen is down, right? The S&P is down 5%. I don't know the last time it's been down 5%. It feels bad. It feels like March, 2020 or December, 2008.
Like one of those periods where you feel like capitalism's gonna be dead.
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Chapter 4: What historical context is relevant for understanding tariffs?
Okay, let's look at, what is it? You didn't answer.
Well, I don't really, I only own stocks that I had invested in privately that are now, that then went public. So I'm significantly up on investments like this, but like one stock I own is 11% down today. So it doesn't feel good looking at it, but you know, a weird thing happened to me yesterday, which is I ordered off of Uber Eats And the driver was dropping it off and I was outside.
And she said to me, hey, can you give me advice on my career? Like, what should I do to have success?
Because you live in a big, fancy house. Why did she say that?
Yeah, it looks nice. Let's just say that. And I said, without thinking about the markets, I said, the thing is, And you know my story, like I've been broke many times. And then- How many times? At least four. Okay. Like dead broke. I've had ups and downs, but like dead broke and then- Like zero money. Then dead broke again.
And I said to her, which is the key thing I learned, is that the main skill is how quickly can you bounce back from adversity? Like you can't look backwards. You have to always be looking for- the opportunity, even in bad moments, even in moments like we're experiencing right now, because there's always opportunities. Like the economy is bigger than ever.
There is more money in this economy than ever. And I'm not saying you can just tomorrow turn your financial life around, but you could set yourself on a track and that alone feels good to make positive progress, to move forward. It took years for me to kind of stop wallowing in the badness and start moving forward towards the goodness.
Yeah, I mean, no, I know you've had some bouts of depression during those troughs and coming back out of it is definitely really hard. I lost my house, as you know, earlier this year, which was a personal trough for myself.
But what I realized through that is that the things that I thought were security, like a house, you know, some people think a job, a certain amount in your portfolio, all of those things that I assumed would give me safety and security actually didn't. No, but in a second.
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Chapter 5: Are current tariffs similar to the Smoot-Hawley Tariff Act?
Yeah. So let's talk about it. First off, let's set the historical stage, like what historically has happened and when have tariffs been bad? Because there has been a period when they've been bad. So first off, for the entire first half of the United States from the founding of the United States until 1913, 97% of the United States revenues came from tariffs. We didn't have any federal taxes.
So all the revenues came from tariffs. And during that time, you know, we had the industrial revolution, like the US went from being small country to the basically just about the biggest economy in the world next to the UK. And then around World War I, which is right after we surpassed the UK, And I know this is a very different period than now. Nobody has to correct me on that.
Obviously, it's very different. But historically, tariffs was the main source of revenues, at least for early America. And there was zero inflation then. So tariffs are not really connected to inflation, despite... what people are saying and we can get to why in a second. But then federal income taxes started. It was a constitutional amendment.
I think it was the 16th amendment and Woodrow Wilson was the first president to introduce income taxes. And then slowly the US started shifting their revenues. Now almost all the revenues come from income taxes and very little comes from tariffs. But in 1929, which is a familiar day to people is the beginning of the great depression.
There was a tariff act passed, the Smoot-Hawley tariff, which put a huge, like a 60% tariff on everything, like everything imported. So Herbert Hoover, the president, he just did not want any foreign country to interfere with American industry. So he was completely a protectionist and isolationist. He didn't want trade. He only wanted us selling to other countries.
He didn't want anybody buying from other countries. So he put this huge tariff on everyone else, on every other country. And then every industry collapsed because there were no buyers. And all the other countries put big tariffs on the U.S. And there was a Great Depression.
Right. But you argue that Trump's tariffs are more strategic in comparison, right?
Yeah. So first off, let's look at 2018. Trump was president before, as we all know. And he put pretty big tariffs on Chinese products in 2018, Mexico, Canada. Europe, he put a bunch of, if people remember, he put a lot of tariffs on many, many products and pretty big tariffs as well. In some cases, bigger than the tariffs he's putting on now. And what was the result? Well, inflation,
was around 1.7%. So it was inflation was almost deflation. I talked to a Federal Reserve governor around that time who told me that what worried them at night was not inflation, but deflation because they were trying really hard to create inflation. and there was none.
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Chapter 6: Can Trump's tariffs achieve strategic objectives?
Totally. But they're not like printing money for funsies, right? So riddle me this. Printing money is a downstream effect of a ton of other macroeconomic factors, whether it's war or layoffs or unemployment. You know, people start borrowing money. Interest rates go down. Inflation goes up. Isn't that a possibility? No.
Because if there's a fixed supply of money, let's say you're not printing any money. Let's say all you have is $1,000. And let's say you buy food, oil, gas, a place to live, and books to read. I'm just making this up. And let's say... you know, gas, the price of gas goes up. Well, now you're gonna have to make a decision.
Maybe you move out of your apartment and get a cheaper apartment because you're gonna need gas to go to work. So you just have a thousand dollars. You have a fixed amount of money. So some prices go up, like gas goes up. Let's say there's a gas shortage for whatever reason. So some things go up, but then you have to take away money from other things. So the price of other things go down.
That's what happens with tariffs if there's fixed money. You could borrow money, but there's only so much you could borrow. Then you have to pay the money back. but printing money creates new money. And what they did was they printed money and they just gave it to people, which I'm not saying that was good or bad. Like people were struggling in the pandemic, but they just gave that to people.
And some people really needed it, but for some people it was just extra money. So these people just bought more things. And so then the prices of everything go up. It was just like, if suddenly everybody has like double the amount of money, then prices will double. So that's exactly what happened.
Like suddenly there was just all this extra free money for many people and they started buying more things. They were willing to pay more money for things. People recognize this. So suppliers charged more. That's almost, if you look at almost every time there's like periods of inflation, not just in the US, but in any country, it's when money, just free money happens to be around.
Well, I mean, maybe that happens in a vacuum, but the federal government is not just printing money for their health. I mean, in economic times when people are upset and they're crying recession, like now, maybe they're printing money. It's not just because they can. I mean, listen, if I could print money, I totally would.
But I think we should step back because I think we need to really just discuss what Trump actually did this week. Hold on to your wallets. Money Rehab will be right back. You know what I say about financial progress? Every step, even baby steps, get you closer to the finish line of your financial goals. When you open a time checking account, you are one step closer to a better financial future.
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Chapter 7: Will tariffs generate significant revenue and jobs in the U.S.?
And Intel and Taiwan Semiconductor, they just announced they're going to spend $200 billion building tech facilities here to avoid tariffs. So we're already in one day. We're already seeing the results. Like $700 billion just announced in 24 hours is a huge impact on the economy.
It's a lot of billions of dollars, for sure. I mean, I thought it was a negotiating tactic, too, and I'm still waiting for, it to manifest that way for Trump to say, psych, just kidding, we're good.
We'll all cancel it out. Think about a negotiation with your job. Let's say someone's at a job and they want to negotiate a higher salary And let's say they're really truly willing to leave. They say to their boss, I'm leaving, see you later. And the boss says, wait, wait, wait, let me make a counter offer. And the right response is, well, I'm leaving, see you later. And you walk out the door.
You gotta really show people that you're serious in a negotiation or else they take advantage. And I'm not talking about Trump, I'm just talking about every negotiation in the world. If you show you're scared and you're not afraid to do what you say you're gonna do, you're gonna lose the negotiation. So this is my theory of what Trump's doing. He said, let's just do this first.
And yeah, there's gonna be a lot of people afraid, including the leaders of foreign countries and the CEOs of major companies and the stock market, unfortunately. and then i'm just going to be silent for a while and and see what happens so we already see like hundreds of billions of dollars worth of announcements canada and mexico clearly are negotiating with us by the way in 2018
With Mexico, we put all these tariffs on. Then by 2019, all the tariffs were dropped. Mexico dropped all their tariffs against us.
I know, but they're like our homies. Yeah.
Mexico and Canada. China, in 2020, agreed to spend $200 billion on purchasing stuff in the U.S. They agreed to start prosecuting theft of intellectual property, which was a big problem between China and the U.S. So with every country, we have strategic... and financial issues. And Trump is just laying it all out and putting it on the negotiating table.
And his argument is, oh, I just want fair trade. But he wants other things, too. He wants some strategic objectives. By the way, I'm not saying he's going to achieve those. We're just kind of getting into his mind right now. And like rather than rather than saying, oh, he's trying to destroy the country. This is what he's trying to do.
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