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Chapter 1: What happened when the Trump tariffs finally took effect?
Folks, covering the news in the markets, well, it is fast and furious like drinking out of a fire hose, but here is the thing. The Daily Wire, what we are about is fact. We're going to bring you fact from a conservative perspective, and that means we're going to be honest with you. We are not going to BS you. The Daily Wire gives you what matters.
All the angles, every fact, every time with unfiltered daily shows from the best in the business and the best in investigative journalism. You deserve the whole story. Don't settle for narrative. Subscribe to facts. Go to dailywire.com slash subscribe already. So unsurprisingly, the markets started the day down in pre-markets. The Dow Jones Industrial Average was down almost 1,000 points.
The S&P 500 was down about 2% as well. Frankly, I'd be a little bit surprised if it doesn't go lower today. And the reason I say that is because, of course, last night at 12.01 a.m., all of America's tariffs went into place. Now, how do those tariffs actually work? It takes a little while for them to kick in in practical ways.
the way that these tariffs typically work is that there is a process, the product arrives at a port of entry, and then there's essentially a record that is kept of what has just been imported. And then the company that brought it in has somewhere between 10 and 30 days to actually pay the tariff on the good. And so there's a bit of a delay effect given this process.
With that said, you're going to see prices adjust very, very quickly because everybody can see the tariff train coming down the road, how it's going to impact their business. So all the talk about how this is just for the stock market, it's just the Dow Jones, stop talking about the S&P 500, talk about Main Street and real business. Once the tariffs are in place, it hits everybody.
So far, the markets are a good way of aggregating human knowledge in the moment. As Benjamin Graham, the Warren Buffett mentor, suggested, in the short term, markets are a voting machine. In the long term, they are a weighing machine. We are now currently moving from voting to weighing.
So if the last several days have been about voting, about the markets saying what they think is going to happen, now the rubber hits the road, now the pedal has hit the metal, and we're going to find out what these tariffs are actually going to do. The tariffs hit last night at 12.01 a.m. According to the Wall Street Journal,
US stocks ended Tuesday in a downswing, capping a volatile session that began with hopes of newfound clarity on the president's tariffs policies. Now, remember, I talked yesterday and the day before about the fact that there are basically two different and widely variant rationales that have been given for the trade war. One is that we are attempting reciprocality.
What we want is for everybody to go to zero. It's sort of Elon Musk, Scott Besson's idea. If we're going to do a trade war, the goal is to get everybody to come to the United States on bended knee. We go to zero tariff policy, and now free trade rules the roost. That is rationale number one. Then there is the second rationale. which is, in fact, restrictionist.
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Chapter 2: How do tariffs practically impact markets and businesses?
He's the chief economist at American Compass. And again, his policy has been very interventionist with regard to the economy.
I did an interview with Oren, it must've been seven or eight years ago at this point, in which we discussed the fact that there really kind of were no in principle limits on what he thought the United States government should do with regard to propping up particular parts of American industry. He has a piece today titled, Stop Freaking Out, Trump's Tariffs Can Still Work.
But what it really is, is a plea to President Trump to not go as fast, not break as many things, and to negotiate off-ramps. When even Oren Kass is telling you, Mr. President, that you should really take this slower, you probably should take this slower. Oren Kass writes this, going from zero to 60, he's talking about China here, which we'll get to in a moment.
He says, going from zero to 60 so fast is unnecessary and unwise. The most determined company could not shift production so quickly. A better approach would be to raise the Chinese tariff in three steps. 20 percentage points now in a year and in two years, which is actually quite slow, right?
And for Congress to legislate this by revoking China's permanent normal trade relations status, as was the bipartisan recommendation of the House Select Committee on the Chinese Communist Party.
For the trading partners who have already come forward to negotiate, little would be lost and much saved if Mr. Trump thanked them with a six-month grace period in which to bring their best offers to the table.
So again, here you got Oren Cass, who's a proponent of this tariff regime, agreeing with Bill Ackman, who certainly is not a proponent of the tariff regime because Cass understands that Leroy Jenkins-ing this thing, running into the middle of the world economy and slapping everybody in the face is actually not a particularly wise policy.
He says, those who fail to deliver could be hit with half the Rose Garden tariff rate and be given six more months to get it right before the full weight lands. Businesses would have time to assess their risk and plan accordingly, facing a landscape in which the obvious imperative is to start investing in the United States.
And he says, whatever path President Trump chooses, he could greatly increase the odds of successful negotiations and the largest possible U.S.-led economic bloc by explaining exactly what he wants. And Orncast sounding very much like I sound here on this show. Clarity would be good. Gradual implementation would be good. What exactly are we looking for would be a useful thing here.
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Chapter 3: What are the different rationales behind the Trump tariff war?
And these countries, which have seen the United States over the course of the past two decades, abandon Hong Kong, Afghanistan, Iraq, Ukraine, among others, the Kurds. They're going to start thinking maybe we need to triangulate. Maybe the United States is no longer the world's global hegemon. Maybe it's not that powerful anymore.
At the very least, we need to hedge our bets until you're actually strengthening China while you're attempting to fight China by smacking everybody who's not China. just on a geopolitical level. That is risk number one. Then there's risk number two. And this risk is quite real. That risk is, let's say that you really isolate China's economy. Let's say you get what you want.
Everybody around China isolates China to the largest possible extent. But you haven't done what you need to do in order to solidify the Taiwan Strait. Why at that point would not China go for taking Taiwan, figuring it's got nothing to lose? If you box them in so strongly, and again, I'm not saying this isn't a catch-22. It is a bit of a catch-22, which is why...
a slow, more incremental, well-thought-out policy that allows the reshoring of key industries from China to Vietnam, to India, to other countries, including the United States. A gradual tightening of the noose that doesn't at any point give China the reason to just go and grab Taiwan and destroy the entire semiconductor industry for planet Earth. That's the other danger.
You go too fast and you can provoke China into doing the thing. Now, again, it would be up to China whether to do that or not. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
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