China sounds downright Reaganesque and is acting like a more stable, attractive trading partner than the country that launched a trade war. And even though Trump loves play-acting businessman, and calling CEOs by their first name, no one on Wall Street and no one who studies economics likes his continuing tariffs—they know they hurt American companies and American consumers. And the uncertainty is paralyzing. Meanwhile, the GOP will use fancy terms to try to paper over their budget, which would hurt the working class and dramatically increase the deficit—all for tax cuts. University of Michigan's Justin Wolfers joins Tim Miller. show notes Justin's pod, "Think Like An Economist" Tim on the "Raging Moderates" podcast Tim on the podcast, "Breaking Points" The New Orleans antique store Tim referenced
Chapter 1: Who are the hosts and guests in this episode?
Hallo und willkommen zum Buller-Podcast. Ich bin euer Host Tim Miller. Wir gehen tief auf Tariffs und die Wirtschaft heute. Wenn ihr meine Gedanken über einige der anderen Themen des Momentes möchtet, ich bin lately ein Podcast-Slut. Ich war heute auf Breaking Points. Breaking Points ist der Horseshoe-Podcast zwischen Bernie und Maga-Typen. Und also... That's interesting.
We got to talk about the New York airport, David Hogg, the DNC drama, the Biden book, my political journey. So that could be interesting. If that's not your cup of tea, I was also on with Scott Galloway. I was guest hosting Raging Moderates. Hey, man. Hey. Ja, sicher.
One of my very dearest friends is part of the Labor Party government that was just reelected. Very interesting election for Americans to hear about, partly because I suspect there's not been a lot of reporting. So you go back four months ago and the opposition conservative party was in the lead in all the polls.
Chapter 2: How did Australian politics react to Trumpism?
The leader of that conservative party, bloke by the name of Peter Dutton, decided he'd sort of run as a bit of Trump-lite. He, in particular, sort of anti-woke. Und dann hat er angefangen, sich darin zu lehnen. Woke hat Australien gewählt?
Ich wusste nicht, dass Woke untergegangen ist.
Oh Mann, es ist überall. Die Leute haben es als elektronische Strategie gesehen. Er hat die Medien getötet, die in Amerika aus der Bühne waren und immer noch sind in den stärksten Demokratien. And Australians didn't react very well to that. He decided that he'd include a Doge-like element in his election platform. And he still was in the lead. And then Trump got elected.
Not only Trump got elected, Trump started his term. And the utter chaos that MAGA... was enough the Aussies looked at it and all of a sudden said they didn't want this. So they nicknamed this bloke Timur Trump. And he really only went 10% of the way down the Trump agenda, but it was enough that the Australian electorate was like, we're not having any of this.
So the left-wing party, the Labour Party, ended up not only getting re-elected, which, by the way, remember, we're on a run of incumbents getting booted out of office all around the world, but also an enormous swing towards them.
So you assess that. I sometimes wonder, as Americans, we're solipsistic, and as a never-Trumper, I've got TDS, so sometimes I'm projecting that it's more about Trump than it is, but you assess that it was really quite a bit about Trump.
It was about an Australian running on a Trumpist agenda at a moment where that didn't appear well. Look, Tim, I worry about the same thing, about me seeing things poorly from over here. So I consulted experts on this, which was my family group chat. Okay. And they were quite convinced. And it is actually the standard story now in Australia is running as Timu Trump turned out to be a mistake.
Right now, Trump has determined two major international elections, Canada and Australia. Even as he moves the US to the right, he's moving the rest of the world to the left.
It's a cold comfort, but we'll take it where we can get it. Do you have any concerns that you're going to get hassled at the airport coming back in and out?
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Chapter 3: What are the real effects of Trump's tariffs on trade?
There's a little bit of a carve out for plane parts as well, yeah. But for consumers, the only consumer facing good... Das Einzige, was die Verkäufer aufgehoben haben, waren britische Autos, die günstigste von denen ist eine Mini.
Die Mini ist sehr populär in Mega-Amerika. Du siehst viele Minis bei den SCC-Tailgates. Du siehst viele Minis bei den SCC-Tailgates.
Du siehst viele Minis bei den SCC-Tailgates. Du siehst viele Minis bei den SCC-Tailgates. Du siehst viele Minis bei den SCC-Tailgates. Du siehst viele Minis bei den SCC-Tailgates. Du siehst viele Minis bei den SCC-Tailgates. Du siehst viele Minis bei den SCC-Tailgates. So the press reported this as if it were a walk back. But actually I think they got it wrong.
This is the administration during the 90-day pause doubling down on the 10% tariff with the rest of the world. Basically everyone's now been told and it's becoming increasingly explicit, every country is getting a 10% tariff. Full stop. Not a negotiation. So now, here's the part I want you to see going full circle. We impose this tariff, causes total chaos.
So then he says, just kidding, it's just leverage for negotiations. We go into the negotiations and he refuses to negotiate over it. Says, just kidding, it's a baseline for everyone. So within 35 days, we're full circle. The difference is, I think the PR has been somewhat better for the president this time. Then we move into China. So China...
Es ist so, dass der Präsident glaubt, dass es ein politischer Gewinner ist, China selbst zu verletzen. China sagt, fuck you. Zwei Polizisten in der Schule. Und es ist so, dass es so ist. Ich gehe höher, ich gehe höher, ich gehe höher. Und dann sagt China an einem Punkt, du bist auf 145% Tarif. Das ist verrückt. Ich brauche nicht mehr höher zu gehen. Wir sind schon nicht auf dem Markt.
Wir haben aufgehört. Ich meine, wir könnten bis zu infinitiv Prozent gehen, aber was ist der Punkt? This causes huge economic disruption in both countries. Because basically, any company that uses any input from China is being told, you're not getting it. That's what a 145% tariff is. And the Chinese have the same problem to a slightly lesser extent. So this is sort of like COVID, right?
Remember COVID, suddenly you couldn't get stuff. Right. So we have now a White House-caused COVID supply shock. It's bad for both countries. So they decide that what they'll do is negotiate. Now it turns out the most punishing thing was that the White House was imposing a 145% tax on Americans who imported from China. You don't need to go to Geneva to cut taxes on Americans.
You can do that from the comfort of your own home. Maybe you need to go there for political cover. So we all go over to Geneva. Und jetzt Tarifen auf China. Der Tarifhike von Trump auf China ist bis zu 30%. Wir hatten eigentlich 8% von Trump, Biden und der Geschichte vorher. Also jetzt ist der übrige Tarif auf China 38%, was in jeder anderen Ära, wie wir es sagen würden, unglaublich hoch ist.
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Chapter 4: How did the US-UK trade deal under Trump really work?
Es ist teuer für mich, mit dem Peruvian-Farmer zu arbeiten. Also werden wir es nicht machen. Seine Tochter wird mein Textbuch nicht kaufen, ich werde sein Quinoa nicht kaufen. Also, wenn wir Tarifen entfernen, erzeugen wir mehr Kooperation in der Welt. Wer gewinnt? Beide Seiten. Also, wer hat aus der Deeskalation gewonnen?
Wer hat aus dem Fakt, dass die Amerikaner reduziert wurden, bis der amerikanische Regierung die amerikanischen Menschen für das Bauen von China bezahlt hat? Die Amerikaner, weil wir jetzt mehr Dinge kaufen können und einfacher kooperieren können. Und die chinesischen Leute. Wer gewinnt von dem Fakt, dass die Chinesen ihre Tarife reduzieren? Chinese and Americans. So both sides won.
It's a beautiful moment. And I hope the Trump administration understands this as being one of their great achievements.
I don't think they are going to see it like that. I will say, just to share the burden, my version of the cable news question is when Trump says something crazy, they ask me, do you think this will have any impact on his voters? I'm like... I don't know. And for starters, it's May 2025 and they're not going to have to vote again until 2026.
And God willing, they might never have to vote for Trump again. Fingers crossed. You know, if they are voting for Trump again, probably isn't it going to be a free and fair election. So it's kind of an irrelevant question. But, you know, anyway, that's everybody's got to do their business.
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Chapter 5: What is the impact of tariffs on US-China trade relations?
Okay, I'm going to think about that. Okay, never too late. It's true what they say about the gay agenda, trying to convert people here too.
I am, I'm grooming you right now. Watch out, Ron DeSantis.
You know that most of my interviews don't go this way. Well, I'm a little different. I'm noticing. Okay, so how is it going to affect people? Here's a real simple thing I think your audience should try. If your grandma and grandpa are alive, call them. And if not, call your parents. And if they're not alive, I'm sorry. Ask them how many toys they had growing up.
Und dann, wenn du ein Vater bist, schau dir an, wie viele Türen deine Kinder haben. Und wenn du kein Vater bist, schau dir an, wie viele Türen deine Niesen und Brüder haben. Oder deine Gottkinder.
Ich gebe dir meine Kinder. Ich kann dir ein Bild von meinem Kind schicken. Und es ist ein Wunsch. Ein Wunsch. Was kein Kind je gesehen hat. Sind deine Eltern noch mit uns?
Sie sind. Ja. Frag deine Mutter, wie viele Türen sie hatte. Ja, ich werde das machen. Meine Großmutter hatte etwa drei. Das ist kein Witz. Das ist wirklich ernsthaft. Das waren dünne Türen. Sie sind wunderschön und lasten für immer. But that's it. Like, go play with your blocks. What changed? What changed is the price of toys. Where do our toys come from? China.
So, it's very fashionable in left-wing circles to be anti-China or to be anti-cheap plastic stuff. It's also become fashionable in right-wing circles now.
I'm anti-China, but pro cheap plastic stuff. So I'm a man of contradictions, but we can continue.
So for the purposes of this conversation, all I care about is that you're happy that your kid has more toys.
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Chapter 6: Who benefits and who loses from Trump's tariff policies?
Yeah, right. So I'm genuinely unsure whether everyone's rushing to the ports right now or the 90 days means that they're going to wait and rush in 90 days. Genuinely unsure about that. And then you've got one more problem. The half life of a Trump trade policy is approximately one Scaramucci. So today we feel good that Trump is walking back from tariffs.
But remember, it was only, I think, seven days ago when Trump woke up in the middle of the night and realized that he liked American-made movies and tweeted he was going to impose a 100% tariff on all foreign films.
Oh, I thought you were talking about the time he was watching the movie about Alcatraz and then decided we were going to reopen Alcatraz. Another excellent idea.
I'm trying to stick to trade policy because that's something I know something about. Got it, okay. I've been to Alcatraz. But if there's just some random chance on any given day that the president just starts tweeting out the tariff button again, I mean, honestly, if I wanted to bet, what's the bet that this China thing lasts 90 days?
Chapter 7: How do tariffs affect everyday consumers and the stock market?
Chapter 8: What is the economic lesson from the recent tariff de-escalations?
Well, no, I'll give a different answer then, which is, there's a lot of research showing the average of many economists is better than any individual economist. Okay. So, it's almost never worth saying, what is your forecast, Justin? What you should say is, Justin, what is the consensus of economists? Okay. Calci is sort of like that. It's a prediction market.
So, in fact, Steve Bannon's point is an excellent one. I tweeted 15 minutes ago that Goldman Sachs has cut its recession odds to 35%. Goldman's at the bottom end, but it's absolutely true that the odds of a recession have fallen since the China deal. Now, let me come back and I want to repeat a point I made earlier. but saying it slightly differently.
Every time Trump steps into tariffs, everyone puts out new research notes saying that the odds of recession have gone up. And every time Trump retreats, they re-evaluate and they say the odds have fallen. And the bigger the retreat, the bigger the revision. So what this says is, yes, the chances of recession have retreated. They've retreated because Trump has retreated from Trumpism.
If he kept doing that, we'd be in great shape. Vor etwa drei Monaten gab ich eine Vorstellung, die ich glaube, eine nützliche Regelung ist. Vielleicht war es vor zwei Monaten. Wenn Trump völlig zurückgeht. Eigentlich lassen Sie mich den puren Hintergrund geben. Am 20. Januar hätte ich gesagt, die Chancen einer Rezession mit einer normalen amerikanischen Regierung wären 10%.
Es ist eigentlich niedriger als normal. Normalerweise gibt es eine Rezession rund um sieben Jahre. I said it was a 1 in 10 chance because the global economy wasn't going haywire. There didn't look to be a pandemic coming. Oil prices weren't going crazy. Things looked good on January 20.
Then Trump did a lot of stuff and Elon did a lot of stuff and people got very upset and consumer confidence crashed. Then at that point I said, if Trump were to fully retreat from the full Trumpism, the chances of recession would be 25%. And if Trump were to fully lean in, the chances would be 75%.
Just think of that as a spectrum and then think where we are on that spectrum and it's basically going to be some average of those two numbers. If you think we're halfway between the full Trump and no Trump, then you think there's a 50-50 chance of a recession. If you think the China back down is actually even bigger than that, you might say it's a 40% chance of recession.
I think that's roughly a useful way of thinking about this.
And some of the recession, I assume, the potential recession, I assume, could be in part because of, you know, again, still we've increased sales taxes essentially on Americans substantially over the last year. That's one. Meanwhile, the federal government's like firing people. So there's, you know, so that is contributing.
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