The President's Daily Brief
PDB Situation Report | April 5th, 2025: Trump's Economic Gambit & China Flexes On Taiwan
Sat, 05 Apr 2025
In this episode of The PDB Situation Report: President Trump announces sweeping new tariffs on foreign imports, signaling a potential overhaul of U.S. trade policy. Kenneth Rapoza from the Coalition for a Prosperous America joins us to explain what these tariffs mean for American industries and consumers. China completes two days of military drills surrounding Taiwan, sending a clear warning to the island's new president. Steve Yates from the Heritage Foundation breaks down the strategic messaging behind China's military maneuvers and what it means for the future of U.S.-China relations. To listen to the show ad-free, become a premium member of The President’s Daily Brief by visiting PDBPremium.com. Please remember to subscribe if you enjoyed this episode of The President's Daily Brief. YouTube: youtube.com/@presidentsdailybrief Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Who is hosting the PDB Situation Report and what is today's agenda?
Welcome to the PDB Situation Report. I'm Mike Baker, your eyes and ears on the world stage. All right, let's get briefed. We'll start things off today with a major shakeup in global trade as President Trump announces sweeping new tariffs on imports. He did that on what's now called Liberation Day.
Industry analyst at the Coalition for a Prosperous America, Kenneth Raposa, stops by to give us his take. Later in the show, China just wrapped up two days of military drills around Taiwan and labeled the island's new president a, quote, parasite. Well, that's not complimentary. It's the latest escalation in cross-strait tensions.
Chapter 2: What are the key details of President Trump's new tariff announcement?
Our old friend Steve Yates of the Heritage Foundation, he's going to join us to explain it. But first, today's Situation Report Spotlight. In a Rose Garden address on Wednesday, President Trump unveiled a series of sweeping tariffs aimed at reshaping U.S. trade policy.
Now, the plan includes a universal 10% tariff on all imports set to take effect on April 5th, with higher country-specific tariffs such as 34% on Chinese goods and 20% on European Union products beginning on April 9th. Are you keeping track of all this?
The announcement sent shockwaves through global markets, causing significant declines in stock futures and raising concerns, of course, about potential inflation and recession risks. Now, critics argue that these tariffs could increase consumer prices and disrupt international supply chains. But my next guest has quite a different outlook.
Joining us now to give his perspective on the new tariff regime is Kenneth Raposa from the Coalition for a Prosperous America. Ken, thanks very much for joining us here on The Situation Report. Hey, thanks for having me back. Now, I'm going to ask you to take both sides of this argument, because frankly, I'm not smart enough to really understand the whole tariff situation.
Chapter 3: What are the potential benefits of the new tariff regime according to Kenneth Raposa?
And I would play devil's advocate, but I don't think I'm clever enough to do that. So let's start with why... What's the positive side of this tariff regime?
Well, the positive side is that you are going to entice companies to manufacture goods in the United States. And that might mean that they're investing in new greenfield manufacturing plants, like we heard recently from Hyundai when they said they would invest in steelmaking in Louisiana. That's unheard of. They're only doing that because of the tariff threat. Also, maybe a gesture of goodwill's
to hope that the Koreans weren't going to be tariffed, but that's another story. So that's one reason why you do it. And if you and I, let's say, here's another reason. If you and I, other than the Greenfield project, right, this would be a brand new manufacturing plant to make whatever it may be, Starlink satellites. You and I have a factory. We spent millions of dollars to build this factory.
We built it in 1980s. It got all the good equipment. It's ready to roll. We can make 100 widgets a day at this factory, whatever the widget may be. But we only make 60 widgets a day, maybe as low as 50. And the reason why is because import penetration from all these countries that, I wouldn't say abuse the United States, but think of the United States as their country, as their market.
So you and I that spent millions of dollars on this factory floor and all this equipment, we're not firing on all eight cylinders. We're firing on maybe four. So what happens is all of a sudden, you and I are starting to get orders from Boeing and Ford to make that widget. And now we're hiring a third shift. And now we're putting those machines back to work. And so that's the good thing.
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Chapter 4: How do tariffs affect prices and supply chains for large and small businesses?
That's the best case scenario, right? That's the best case scenario that would happen with tariffs. You have to keep them permanent in order to make that happen. Businesses, like markets, they need certainty. So Trump can't be willy-nilly about this.
He can't say there's going to be a tariff on Monday and then on Friday he says, oh, I changed my mind because so-and-so country said they're going to import more chicken. That's not how it works. So you have to be very serious. and show these countries what's going to be permanent.
Except, I mean, to your point, though, it seems like up to this stage, it has been a little bit, and I've never really, I don't think I've ever said this on the air before, but willy-nilly. I think I can say that. I think I'm not too old to say willy-nilly. I don't even know if I've ever said that before. Well, that's okay. Every now and then I channel my mom. Look at this.
We're breaking new ground. We're breaking new ground. Breaking ground. Breaking ground. Yeah. So... So let's leave that to the side just for now because I want to revisit that. But maybe for the sake of everybody watching, can you give us a layman's explanation as to how tariffs work?
So let's pretend we're at Walmart. Everybody knows what Walmart is. And Walmart has to fill its warehouses with goods that you and I buy. And it's springtime. So of course, since the end of the holidays, they've been buying patio furniture and things like that. So they are calling up They're factories that they work with in South Asia, obviously, Southeast Asia and China.
And they're saying, I need 100,000 orders of this Adirondack, plastic Adirondack chair. Okay. Well, that plastic Adirondack chair used to cost $10 for Walmart to import. And now with tariffs, maybe it costs... Let's say all things being equal, it's 20%. So let's say now it costs 12, right? So 20% of 10, that's a $12 tariff. So Walmart might say, oh, that's too much money.
Actually, Walmart will say that because Walmart just wants things cheap. And Walmart's going to say, I don't want to pay that. And then the Chinese or the Asian company that makes that plastic adder on that chair is going to say, well, a deal's a deal. And then Walmart's going to say, well, instead of me importing 100,000, How about if I import 150,000 of them instead? Can you give me a deal?
Oh, yeah. Okay. I'll lower the price 10%, right? So, the tariff, in other words, what I'm trying to tell you is that $100 chair tariffed at 10%, just to make it very simple math, does not mean the chair costs $110, right? That's not what it means. Because of what I just explained to you, Walmart can set prices. Walmart can force its clients to lower prices.
They can also tell their clients, I'm going to buy more, increase volume. Can you lower price for that reason? So there's many ways that the price change. So it's not a direct percent. It's not like $100 becomes $10 more out of your pocket. That's not how it works. But not every company is Walmart. Not every company is Walmart. So now let's look at the small company.
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Chapter 5: Why does Kenneth Raposa argue tariffs are necessary for U.S. industry and labor?
Yeah, I mean, I do think that one of the, and this is obviously one of the things that people who are pro-Trump administration are, you know, they always cite is the fact that, you know, he's a disruptor in part because... to some degree, he doesn't care, right? He's not a traditional politician, right?
So, I think, you know, traditionally, you get a pack of politicians in there and they'd look at this and go, well, the potential for recession, well, the potential for pain on the consumer's part, and from a political perspective, it's tough to tell the consumers or the voters that life's tough and you just got to deal with it. And so, I think
I do like the fact that there is this element of let's just try it. It's like with cutting waste and fraud out of the government, right? I mean, people talked about it for decades, generations, and nobody ever tries it because of just the general dysfunctional nature of Washington, D.C. But getting back to the tariffs,
It sounds like, from what you're saying, it sounds like there's a number of ways that that additional cost can be absorbed, possibly absorbed by the manufacturer, maybe absorbed by the consumer. So it's not one size fits all and it's not as simple as saying, as you pointed out, the prices are going to increase, therefore the consumer is going to pay more. Am I missing something there?
It's not easy.
This is harder than rocket science. A rocket might have 10,000 pieces in it, but we import tens of thousands of items and we have tariff codes for tens of thousands of items. So this is harder than rocket science, really. And it's not going to be easy, but we cannot be afraid.
The United States, since the days of Ross Perot back in 1990s, and I know you're a Gen Xer, I'm pretty sure you are, and you know who Ross Perot is.
Watch yourself there. Easy, easy. I feel like I've just been insulted on my own part. Come on, Ross Perot. The giant is something. Maybe I'm a millennial, Ken. You don't know that. Maybe you are. Maybe I'm a baby boomer.
If you're a millennial news junkie, you would know who Ross Perot is. Since that time, though, the electorate has said The free trade deals, NAFTA, for example, eh, not so sure it's great for us because blue collar labor, which dominates the United States, right? We're not all software engineers and doctors and lawyers or Wall Street brokers, right?
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Chapter 6: What are the non-tariff barriers and trade imbalances affecting U.S. trade policy?
So there's a lot of other issues that the Trump administration has looked at. And then, of course, the other issue would be balanced trade. So where are the countries that we have a huge trade deficit with. Of course, the EU is the second only to China, which is big, but declining because of the tariffs of 2017. In the UK, we have a surplus.
So I was actually kind of surprised with the tariff on there. But I believe that the reason for the tariff on the UK is because they might become a transshipment point for the European Union in some way, right? With the European USA, you know, our multinationals in UK, we'll ship it through there or whatever, but the UK has a 10% tariff.
Again, the reason why it's higher is because a lot of these countries, especially in the emerging world, like India and China, they want to protect their own industry. They want their industries to grow and they want to protect labor, okay?
I don't know if you've ever been to India. Why wasn't there pushback from previous administrations against this? It's very simple.
It's very simple because the consumer is king. We have to be able to fill our garages, not with cars. We have to fill our garages with ski mobiles, canoes, children's play sets, toys no one uses, skis that have been known as used, 50,000 pairs of shoes. That's why they want you to buy all these things. No one buys like the United States. No one's ever going to be a consumer like the United States.
The average American consumer has a $6,000 revolving debt on their credit card. In the UK, I think it's $2,000. In Japan, it's zero. So, I mean, that's why they'd have a complaint. They wanted the United States. The United States is the free market. There is no other free market but the United States. Yeah, Singapore has zero tariffs. Okay. Singapore. Okay.
California is like... I mean, the Massachusetts economy is probably bigger than Singapore. So, I mean... You know, whatever. Good for them, right? So, you know, they never complained because they thought that as long as Americans could buy cheap goods in their shop until they drop, then Wall Street was fine with that. And of course, the Capitol Hill was fine with that.
And so, you know, but look, a happy consumer is a happy voter, you know, so maybe there's a connection. Or a happy voter, you know, but we have not always seen that though, have we? Because the consumer has been very happy for a long time.
You know, consumers have been very happy for a long time and there's been unrest in this country politically because of the, because of global trade, because of how that is set up and because politicians are not listening to what Americans are saying on that issue since the 1990s. Where we are today is because of that, you know?
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Chapter 7: How has the U.S. consumer-driven market influenced trade policy decisions historically?
And all we're saying is, can we please be a consumer of our own goods? Not all, not 100%, but some. Can it be possible? We don't have antibiotics in this country that we make, at least not in big numbers. We have one company that makes amoxicillin, which is a pedicillin, which would have saved you from COVID if you had it in 2011. I can count one company on my hand.
So Ireland is going to cry about all that because they're the big pharmaceutical guys because they lowered taxes or whatever the tax rate is in order to attract all American pharmaceutical companies there. Look, what if you didn't have all of these medications? What if your country didn't have it? What would you think about it?
If you want us just to be totally import dependent, this is a terrible idea. So the United States is saying, we're still going to trade with the world. We still want to buy your BMWs and Jaguars, okay? That's not going to end, but we want you to invest in our country. If you don't want to, and the American consumer decides he's not going to buy the BMW, okay? He's going to buy a
a Tesla instead or whatever, then that's their prerogative and that's you. You failed. And I will say this, I believe BMW has a factory in Mexico, so they could stop crying because they could just ship cars from Mexico to the United States.
Yeah. You've given us the best case scenario earlier in the conversation. Give me the worst case scenario.
Okay. Well, I did give you a worst case too because I said, again, using our amazing widget factory, I said that if we require parts from Vietnam and Southeast Asia in order to make our widget, and we're just a small company with 10 guys running the show, that we are going to be in trouble because we can't tell those guys, hey, let's up the ante.
And instead of buying 1,000, we're going to buy 2,000 because maybe we don't have the money to do that. We got to go to our banker and we got to get out a loan to do those things for our suppliers to say, okay, I'll lower the price for you because you're increasing your volume. We might not be able to do that.
And so when we order those goods from a customer and our customer broker is going to call us up and say, hey, Ken, you just ordered $100,000 worth of goods that's coming out of Maersk ship on June 1st. And you owe us, you got to deposit $100,000 with customs. Right. You know, that's going to be a problem. That's going to be a headache for us. That's going to be a big headache for us.
And that's for the manufacturers. That's for the importers. That's for the people on the business side. What about the consumers, right? Because, again, there's this concept here that, you know, what's happening, this tariff regime could send the U.S. and, you know, parts of the world into a recession. So, talk to me about that. And
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Chapter 8: What are the risks and worst-case scenarios of the new tariffs on businesses and consumers?
Yeah, I agree with you. Okay, so it's not going to be long-term pain like we're going to be suffering for years. You know what I mean? Going back to our widget factory, we might be suffering for a few months and hopefully we don't go out of business, honestly. I don't know. And I will say this, and maybe some companies will. Maybe some companies will go out of business. That is absolutely true.
Okay? But I will tell you this. There are many people who manufacture in the United States, like the United Oil Workers, who also went out of business. Tens of thousands, millions over the years because of the policy that has been in place since the 1980s. You can keep doing that. You can keep doing that. And Every passing year, you will have less and less opportunity for blue-collar workers.
They're not going to work for Bain. They're not going to work for McKinsey Group, whatever it's called. They're not going to all become doctors and brain surgeons. They're not going to work for Wall Street. And you know what else? What's going to happen? They're not going to work for AI companies developing software because they're not all geniuses.
And what's going to happen to that service sector on the tech side when China competes with Microsoft and Adobe and Intel? They might not compete with OpenAI in the United States market, but when the Vietnamese and the Brazilians want an AI platform, and the Chinese say, we charge you only $10. The Americans say, we charge $200. Ah, well, now the service industry is going to start to cry.
And they're going to understand what it's like that manufacturers have been dealing with for a very long time. They're going to understand the pain.
That's a really interesting... element of this, I think. And look, I think from my perspective, I think it's excellent. I think it's about time that the U.S. tries to rebalance the global trade situation. I think that's a very good thing to do. I think trying to onshore manufacturing, all of those things, I think it makes sense.
And I also agree with your very initial point, which is consistency is going to be important here. And it does look like right off the bat that there may be some negotiation going on for individual countries, perhaps. Yeah. But I also kind of like the idea that this is, in a way, you could argue it's apolitical, right? Our allies have been hit with the tariffs just like our adversaries.
Absolutely. So I think that's also important. Yeah. So I like the idea. I guess what I'm concerned about when I look at this is the downside potential impact on on the ability for this to go for the long term. As you said, it has to be consistent, it has to be long term. And if the economy heads south for a period of time, you know what the voters are like. And- Yep, it's possible.
That could create a real problem. Yeah. Possible. Anything in life is possible. Anything is possible, right? I mean, yes.
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Chapter 9: How does the long-term perspective on tariffs compare between the U.S. and China?
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Welcome back to the PDB Situation Report. China is once again turning up the pressure on Taiwan. This week, the Chinese military staged two days of war games around the island, deploying fighter jets, naval vessels, and long-range rocket units in what Beijing called a, quote, strong punishment for Taiwan's new president, Lai Ching-teh.
In addition to the military hardware, Chinese officials also deployed some, well, let's call it interesting propaganda, releasing a short animated video calling President Lai a parasite and accusing him of pushing the island closer to war. Lai, for his part, has called for peace and stability. But, well, China clearly isn't buying it.
So you ask yourself, what's behind this latest round of saber rattling and how serious is the threat? Those are all good questions. Joining us now to answer them is Steve Yates. He's a senior research fellow for China and national security policy at the Heritage Foundation. Steve, thanks very much for coming back on The Situation Report.
Pleasure, of course. This latest round of aggressive boycott exercises is very provocative. It would probably be dominating a lot of the news cycle if we hadn't had a major announcement about tariffs everywhere in the world, because I think this is the most provocative move to date by the People's Republic of China. Why do you say that?
Because it really drew a line that you could literally read from space that cut Taiwan off from Japan, from the Philippines, from the Pacific, and blocked traffic going north and south through the Taiwan Strait. And so, whether they have the capabilities to sustain this, whether they have the intent to hit and blow things up on the island of Taiwan, all those things are to be determined.
But I think this is basically auditioning for what kind of reaction do we get from Washington, Tokyo, others, and from Taiwan? And are we just able to slow cook this frog to where we're just going to take it by these exercises and cut off transit? Well, what kind of reaction are they getting so far? Has there been any reaction from the White House, for example?
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