Catherine Rampell
Appearances
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
But they could be deciding, you know, this will be painful for Washington and that's why we'll do it. I don't know.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Sorry, this is like a much more technical discussion than I was expecting.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Fewer hot takes and more boring.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
That's the correct intuition. And Trump is apparently about to find that out. Because again, he was not anticipating this. He had been bragging, I think even as recently as yesterday or the day before, he's like, see, we're getting interest rates go down. And it's like... look at the chart, chart not match words, which is quite a common phenomenon, obviously, for Donald Trump.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
But it's really hard to lie about these things. I saw this great quote the other day from an economist at JP Morgan, of all places, who was saying that the thing about the stock market is Is that it can't be bullied, intimidated, deported, primaried in the next election or otherwise censored. Right. Like Trump has no power here to get it to to. you know, confess the outcome that he wants.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And it's like a real-time voting box, essentially. Sometimes it gets it wrong and sometimes it gets it right. But at least in real time, you know, Trump can't force it to do what he wants. And now we're getting real information out of the stock market, which is obviously contradictory to the happy talk we're hearing from the White House.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Yeah, I saw bits and pieces of this a few days ago, and I needed a special decoder ring to figure out what the origin of the crazy was. I feel this way with a lot of Trump-related talk, that he'll say something that's totally confusing, and then I end up spending way more time trying to figure out what his logic or intention was than he spent putting thought into what his proposal actually was.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
I used to have a rule for myself. It's like, Don't spend more time thinking through the thing that Trump said than he did because it's like an exercise in frustration and futility. In this case, yeah, I think what people are proposing is, again, that if Trump tanks the stock market, then bond rates go down, right?
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Which is what I was saying, like, very initially happened and normally what you would expect to happen because people sell their stocks, again, they put it into bonds, and then that pushes bond rates down. And then maybe...
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
because we're talking about government borrowing, when those interest rates go down, we can refinance the national debt, just like Donald Trump would refinance one of his properties, right? If you're a real estate investor or a homeowner, for that matter, and you're borrowed at a very high interest rate. You're excited when rates fall because you can refinance.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And so that maybe he could use that as an opportunity to not like negotiate our debt down, but just like when it rolls over, roll over it at lower rates or refinance otherwise. Anyway, I think that's the theory of the case. First of all, I don't think that's like nearly as plausible. Even if markets did what you would normally expect, right? which is, again, having interest rates fall.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
I don't think that's remotely plausible. But again, we are seeing the opposite happen. Instead, we are seeing treasury rates increase, maybe because nobody wants to invest here, maybe because people want to hold cash, maybe because they're worried about inflation.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
All the things that I was talking about before, you know, we don't know which of them it is, but whatever, we will soon probably, but whatever the cause is, the outcome means it becomes much more expensive for the federal government to borrow. And so, in fact, this will worsen our debt obligations in the United States. And they're already on a totally unsustainable path.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And nobody wants to do anything about it. If anything, Republicans on the Hill are trying to increase our debt through the coming tax cuts. Yeah. So whatever this kooky theory is not going to happen. Virtually the opposite is likely to.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
She's not the only one. She was actually citing a study that looked at what Donald Trump's effect on the economy would be if he put in place his full agenda. And I also said last year, if he put in place his full agenda, yes, this would be devastating to the global economy. But we should not assume that's the base case, right? Because Donald Trump says a lot of things that he doesn't carry out
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
A few thoughts on this. The AP reported today that, yes, foreign leaders have been calling the White House and no one is answering their calls. And also that they don't even know what to offer Trump. Right. They don't know what concessions he's demanding. And I think that's the problem here.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
He does not know what concessions he is demanding or even if he wants concessions, because half of the time he's. he or his underlings say, no, no, no, this isn't for negotiation because we need the revenue, right? We need the tariff revenue to help pay for corporate tax cuts or other, you know, personal income tax cuts or what have you. Getting rid of capital gains, as you mentioned before.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
So they need the revenue. They don't want to negotiate down the tariffs and or they want the tariffs to stay in place because that's the only way to encourage companies to move their manufacturing back to the U.S. Also a flawed premise for different reasons. But in any event, so sometimes they say it's permanent. Sometimes they say it's temporary.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
If it is temporary, if they are negotiable, what is the end game? What is he trying to get out of it? And how do you negotiate with someone who does not know what they want? That is the fundamental problem right here. At one point, members of the administration had said, oh, the goal is to get other countries to lower their tariff rates.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
So then, you know, they'll lower them and then we will lower them as well. And then we'll have freer trade. Right. That was one proposition for how this could go. Sounds nice. But the countries that have offered to have, in fact, 0% tariffs, I think Vietnam may have been one of them, they said, no, we don't want that. So it's like, what do you even give him?
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And this comes back to what I was saying before, what we alluded to before, how do you find an off-ramp? When Trump announced what feels like years ago, but I guess was only a couple of months ago, tariffs on Canada and Mexico, he had some like fig leaf about how this was about immigration and fentanyl.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And it is true that with Mexico, at least, we do have a lot of people coming over the border without permission. We do have fentanyl coming over the border illegally. With Canada, neither of those things appears to be true. In fact, we send more fentanyl to Canada than they send to us, so it seems.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
In any event, the solution, the Canada solution, I'm using air quotes for people who are only listening to this and not watching. The solution that Canada came up with was like, we're going to have a fentanyl czar. And also, even though there's not really a fentanyl problem.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And so, you know, there's certainly a chance of Armageddon, but who knows what he's actually going to do. And then there were obviously people on Wall Street who were even, who were much more sanguine even than that, who like heard Armageddon. Donald Trump say again and again, I'm a tariff man. I'm going to put 10% tariffs on every product around the world.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
The other concession, also in scare quotes, that Canada made was we're going to invest more money in border protection, except they had already announced the same amount of money back in, I want to say, December, December or November. Like before Trump took office, they had some plan to invest like a billion dollars.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
I forget what the number was, but it was some large amount of money in their border and, you know, increasing the tech or something like that. And so, like, they just offered up these things that were either existing plans or fake. And Trump was like, victory! And, you know, he's really good at repackaging the status quo as a victory.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Although, in this case, the status quo before all of this was arguably much better because Canada didn't hate us before. But whatever. They didn't actually have to do anything, but they came up with something that... kind of sort of had the veneer of scratching the itch that like appeased Trump, the things that he was complaining about.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
But now Trump has done this on virtual, you know, imposed tariffs on virtually every country around the world. Are they also going to create fake fentanyl czars? I don't know. Clearly, reducing tariff rates is not actually what they're looking for. What is it that he wants from them that they can offer? And if he won't take their calls...
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
It's very funny to me, as an aside, that, like, all he cares about is people calling him. Like, how lonely is this guy? He's like, oh, they're calling me all the time. But, you know, they're calling him because they want to know what the... F their – you know, like what is it that he's looking for so that he doesn't drag the world into another global recession or depression? And they don't know.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
They're not calling because they want to be his friend.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
There is no hope there. Whatever outcome he is trying to achieve, and again, it is unclear what that outcome is, whether it's revenue or a manufacturing renaissance or whatever, more fentanyl czars. It's not clear that any of this will happen. Meanwhile, Congress is according to the Constitution, is supposed to be regulating commerce with foreign nations. Really?
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
But all they absorbed was, what was that, corporate tax cuts? And so markets were more joyful and euphoric even.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
They are supposed to be in charge of trade.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Nothing. That's the problem.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
There are a few different ways that Congress could intervene here, right? There's this one piece of legislation that says, basically, the president has to give 48 hours notice before he imposes tariffs. Whoop-dee-doo. It tells you how much notice they got this time around. And that I believe the tariffs can only last 60 days, and then Congress...
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
has to renew them, otherwise they lapse, something like that, which, to be honest, seems like a pretty mild restraint on Trump's current, you know, insanity. So they could do that, even if they get enough Republicans to go along with it in the Senate.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
It seems very unlikely that that legislation will even come for a vote on the House floor, given things that Speaker Mike Johnson has said about, like, Trump's making great deals. We have to be patient. He knows what he's doing. OK, based on what evidence? No clue.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
last year shortly after the election because they didn't think at all that you know they seem to think that there was zero probability that he would do the thing that he said he was going to do and they would only get the goodies essentially and now we're seeing people absorb the reality
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
These are all girlfriends in Canada.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Yeah, this is not encouraging. There are so many... so many ways that Congress could intervene. So they could do the thing that I was talking about before where they say any of these tariffs lapse unless we renew them. They could just say there is not an emergency right now because the power that Trump is using is
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
to impose these global tariffs is by declaring an emergency because there's this law, IEPA, I forget what it stands for, but one of the E's must stand for emergency. And it basically says the president has some wiggle room to impose tariffs if there's an emergency. And they could just say there isn't one. That's it. And then we're done. And they won't even do that. It's bizarre. It's
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Before they then do anything to curb the president's emergency powers. He is the one single handedly causing this catastrophe. And whatever the founding fathers thought about Congress controlling power of the purse and regulating trade with foreign nations, etc.,
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
they clearly thought that having Congress and the president be separate branches would, would be sufficient to impose checks and balances on each other and the judiciary for that matter. And that's, that's not what happened. You know, now we have, it doesn't feel like we have multiple branches. We have multiple parties and we,
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
one of which is basically a cult at this point, so they're just too afraid to go against him. They know it's bad. They absolutely know it's bad. They will say so privately. Some of them will say that publicly, but they know it is making their constituents poorer, not just by tanking stock markets, but by... Raising prices, right?
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
If it's going to raise prices, that means their dollar goes less far. Their constituents' dollars go less far. They get poorer. If we have a recession and there are layoffs, their constituents lose their jobs, get poorer. All of these things are pointing in the same direction. Bad news. And at some point...
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
one would imagine those constituents, those voters are going to fight back and say, throw these bums out. They've screwed up my life. But they just, for whatever reason, they're not willing to face that right now.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
This is not an isolated example. There are so many industries, business owners, employees who are dealing with this new reality, these new constraints. Trump said China was going to pay the tariff, and that's wrong, right? China will still be hurt, to be clear. China will still be hurt, as will our trading partners.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Because even if, let's say, 100% of the tariff cost gets passed along to American consumers, and I don't think it's going to be quite that, but just for the sake of argument, let's say it's entirely paid by American consumers.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
American consumers will respond to those higher prices by buying less stuff, buying fewer of those special needs toys, fewer cars, fewer appliances, maybe fewer healthy groceries, produce, things like that that get tariffed, coffee, vanilla, whatever. Right. People will buy less stuff. And so that will hurt our trading partners.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
That will hurt everybody else in the supply chain, the retailers and wholesalers who also depend on bringing in those imports and then ultimately selling them to consumers. So it is true that other countries will be hurt, but so will Americans, the consumers and the businesses out there, whether they're selling toys or anything else.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And Kevin Hassett, who is the National Economic Council director.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
He went on TV this weekend and I was like screaming at the TV because he said, if you say that it's really only Americans who are paying the cost of the tariffs, why is our phone ringing off the hook from all of these other countries? Clearly, they must be paying the cost of the tariff and will be fine if they're the ones trying to make a deal and negotiate. And it's like, no, you idiot.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
How did you get a PhD in economics and never learn about this thing called deadweight loss? It's like when the price goes up. Yeah, somebody's going to absorb the price, but also the quantity of stuff sold goes down, and that's basically going to hurt everybody. That's going to hurt the sellers, whether it's a foreign manufacturer or whatever, foreign supplier.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
It's going to hurt the retailers, the wholesalers, and it's going to hurt the consumers. So it's just like he knows better. The people who annoy me most in this administration are less the people who are just like... Complete ignoramuses and liars and, like, just don't even bother learning the truth. And more so the people who really know better.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
They don't even need a PhD to know the answer to this question. They needed to have taken what you took. You said you took, like, introductory macro or whatever. Like, this is not hard to understand. Besant, Hassett, people like that, I just... They are the worst enablers, I think, because... Trump, I'm sure, surrounds himself with people who tell him what he wants to hear, and that's bad enough.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
But then some of these people seem like they have some credibility because they're a PhD economist or because they were a Wall Street titan that markets trust. And when they go on TV and lie about the economics here, I think that is so much more destructive than because it encourages Trump to keep on doing the stupid, stupid, stupid thing.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And it hurts any credibility they might ultimately have with markets who can see through this clearly. And as things get worse, we will need someone to go on TV and present a credible plan, I hope, for how to get ourselves out of this. And there's just no one left to trust.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Yeah, I feel like there's a lot of schadenfreude about random Trump voters who supported him thinking he was going to bring down prices or make IVF free or one of various other ridiculous promises that he made. And now they're getting what's coming to them. And that's not really how I feel. I feel like Trump lied a lot on the campaign during the campaign about what he was going to do.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Yes. So the word Orwellian gets overused a lot. Everybody and their grandmother has been called Orwellian at some point. But there's this famous line in 1984 that actually George Orwell had used versions of elsewhere as well, where he said something like it would get to the point where if the party said two plus two equals five, you would just have to believe it was so. And that is...
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
quite close, if not exactly what Senate Republicans just did. Historically, what has happened is they get to say, okay, our bill can lose this much money because it's always losing money, at least when we're talking about tax cuts. Our bill can lose X amount of money and
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And then the Congressional Budget Office and the Joint Committee on Taxation, these sort of neutral referees get to say, okay, does it actually meet that or not? And then there's this person called the Senate Parliamentarian. It's like all of these trappings of... Whatever Senate procedure Senate parliamentarian gets to say your number equals their number or it doesn't.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And if it doesn't, it's much harder to pass the bill effectively. Right. Like if the things match, then they only need a majority vote. And Democrats have no way to kill the bill. That's why they're doing this special process so that they can now have a majority vote, can't be filibustered, et cetera. That is how it normally works.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
What Lindsey Graham, who is the Senate budget chair, has said is, nope, none of that matters. I get to decide how the math works. And I am deciding that tax cuts that we passed before and are set to expire, if we re-up them, they will be free. And that's it, right? Two plus two equals five. Or in this particular arithmetic, $4 trillion equals zero. That's what's happening here.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
It's a fancy way of saying Republicans... get to control the law's arithmetic. They get to rewrite the math and the normal checks and balances, you know, just looking at like in the spreadsheet, does this thing equal this thing? None of that matters anymore. So that's like the overarching takeaway that I would have on this, that they are just, it's truly Orwellian.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
They get to decide how arithmetic works. The specific thing that they're doing, which is what you were talking about with saying like, well, the old tax cuts are free. To help people understand this, why it makes no sense is it's like if you had a car lease and the lease ended, that's like saying the next lease won't cost anything because I got really used to having a car.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Even though, of course, the new lease will cost you something every month. But that's basically what they're doing with tax cuts. They're saying, we got used to having the tax cuts. If we have another round of tax cuts at the same levels, that won't cost anything. I think that the bigger long-term problem is they are now setting a precedent where
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
they get to decide, the majority gets to decide effectively how math works. That's alarming. There are a whole bunch of reasons why this is interesting, but including that, of course, Republicans and some Democrats were like apoplectic about the idea of ruining or ending other Senate norms, like ending the filibuster and things like that. And these are all related.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Like the norms only matter when Democrats are in charge, not when Republicans are in charge.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And normal American voters generally don't have the bandwidth to do a lot of in-depth research about, for example, what happens when you impose a tariff, right? Some of these things that he talked about were not super intuitive. Some of them were in terms of what effects they would have. Some of them were just outright lies, like the IVF thing.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Well, it means we don't need 180 new fentanyl czars. That's good news. Yeah.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
The economic demons are gone.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
But things like, oh, he's going to bring down prices and he's going to make China pay for the tariffs or whatever, right? I think the fact that the falsity of all of that didn't penetrate regular Americans is not entirely their fault. I think the media didn't do a great job in covering things. Probably the marginal voter who made the difference here, at least, is somewhat disengaged from politics.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
So for those people, it's easy for people to spike the football. But for those voters who thought they were getting one thing and are now enduring a bait and switch, you know, I don't entirely blame them. But for the people on Wall Street. They are paid to get this right.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Well, I don't know. My 401k doesn't look great. Democracy doesn't look great. But I have my health.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
They are paid to make accurate predictions, to read all of the white papers such as they are to figure out what Trump's proposals would be or at least the range of what they could be and then the range of outcomes. They're paid to know how tariffs work, things like that. And for them...
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
I have much less sympathy because besides the fact that like they clearly got the economics wrong, I think they also made some other Faustian bargains like, oh, well, we're going to get tax cuts in there for even if he does all of the other stuff. Forget the tariffs, like forget the destructive economic stuff.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
That's what I'm supposed to tell myself, right?
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
if he acts on all of these openly stated plans to weaponize government against his enemies, to curb civil rights, et cetera, that's a trade I'm willing to make. So like on multiple levels, the support from a lot of, not everyone on Wall Street, but the support of people on Wall Street and various other executives in corporate America, I am much less sympathetic to.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
The problem is they're not the only victims.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Even poor Elon Musk, as I've been saying, he invested $200 million into Donald Trump's campaign so that he and Trump could run government together. And it turns out, unfortunately, they suck at running government. And now he's like $130 billion poorer, right? Because Tesla stock has gone down.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
I think he lost like a quarter of his net worth since the beginning of the year or something like that. It's much bigger than 2%, whatever it is.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Yeah. To unpack that a little bit, usually when stock markets go down, it means people are selling off their stocks, right? And then they have cash, and then they dump that cash into bonds, so like treasuries.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Well, you're assuming colleges will still be around.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Okay? So they put the cash into bonds, right? When they buy bonds, the price of bonds goes up and their interest rate goes down. Sorry for all the technical steps, but this is just to explain that usually when equities fall, you see bond rates falling too. We are not seeing that now. Okay. And... Trump clearly expected it to happen.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And it did happen in like very initially at the beginning of Tariffmageddon. We saw rates come down a little bit and he was like, aha, see, I'm reducing interest rates and the Fed is behind. And because, you know, Trump loves low interest rates. But then, in fact, this weird thing happened that Larry's talking about where where long term interest rates went.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
That's not usually what you would expect. And so there's been some debate about why that might be happening. It might be that everybody's totally freaked out and they just want to hold cash. They're like, I'm not going to take my sellings from the stock market and put it into bonds. I'm just going to like hang tight and put it under my mattress or whatever. Could be that.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Well, it could be good advice if we didn't have high inflation, which may be what's going on here. So there are some questions about maybe it's that people are just holding on to the cash. Maybe it's that they're expecting higher inflation, which could happen as a result, sort of trend inflation could happen as a result of all of these tariffs.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
You know the tariffs are going to raise prices at least one time, like when they initially go into place. The question is, will they feed on themselves and will continue to have higher inflation going forward? And that's quite possible. Another possibility, which is what I think...
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Larry is raising, and there's some evidence for this, is that it's not that people are just like taking the cash and holding on to it. They're like, I do not want any money in the United States. So it looks like they might be investing it in like Japanese or Swiss or German bonds instead, which is not a good sign.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
That's great. They're good guys now. Yeah, they're good guys now. So, yeah, so it could very well be that people are like, screw that the U.S. economy is too risky. I do not trust this maniac who is in charge, who is potentially screwing up not just the U.S. economy, but the global economy. I want my money back. out. I will invest it in something else. I'm not going to hold cash.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
I'm just going to invest it in something else that looks safer by comparison to U.S. Treasuries, which is a really bad sign because historically, U.S. Treasuries have been considered the safest of safe assets. That's part of the reason why we enjoy the dollar as the global reserve currency because everybody trusts that The U.S. is safe. We're going to pay off our bills and blah, blah, blah, blah.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And that's like the benchmark for everything else. We are we are how you determine what is safe and then everything else is like a little bit less safe. But how much? So that's not what we're seeing right now. So, again, we don't know exactly what's happening. Given some of the evidence we've seen, probably Larry is at least partly right.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And, you know, really not a good long term sign, even if Donald Trump, for example, finds an off ramp here from these tariffs. And I don't know that he will because I don't even know what that would look like.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Even if he does, he may have permanently damaged the reputation of the United States geopolitically and economically.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Yeah, if people don't want dollars, that will make the dollar less attractive, and so the dollar value falls.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Well, yeah, if they'll even have us.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
I don't know. know. I don't know what your Wi-Fi signal will be like in federal detention.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Yeah, so that's definitely a risk. I don't know if we know yet how China's position has changed, but that's definitely a risk. And that's part of what I was talking about. Like people don't want any money in the United States and they may not want money in the United States because they think it's too risky.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
Like I said, they may not want money in the United States because they want to retaliate, right? They want to draw... If China dumps its treasuries, it's not intuitive, but like... treasury prices go down and rates go up. And so when like Larry was talking before about an emerging market, that's sort of what he meant that it's like people don't want to buy that government's debt.
The Bulwark Podcast
S2 Ep1017: Catherine Rampell: Trump's Tariffmageddon
And so it becomes much more expensive for that government to borrow because like they have to offer an increasingly higher interest rate to attract investors. So Yeah, so China has a lot of leverage here. China doesn't own as much in the way of treasuries as it once did, or at least as like a share of all of the treasuries out there.