🏛️ Trump's tariff threats are negotiating leverage and get settled down

“I do think ultimately many of these countries are going to capitulate to some degree and we're going to end up with some negotiated settlement that's going to hopefully not be too short-term impactful on the economies and the people and the jobs that are dependent on trade.”

“Because, yeah, Trump brings up tariffs every 48 hours and then it doesn't seem like any of them land. So I don't know. I'm still on my 72-hour Trump rule, which is whatever he says, wait 72 hours and then maybe see if it actually comes to pass.”

“Well, I think the tariffs will be a plug. Are they coming? Absolutely. The quantum of them? I don't know. And I think that the way that you can figure out how extreme it will be, it'll be based on what the legislative plan is for the budget.”

“I encourage people to use my 72 hour rule and look out what happens 72 hours after Trump says something spicy, because a lot of times he's just, he says a lot of things.”

“Listen, Trump's negotiating, right? ... He's using this to negotiate. ... And I think it's a reasonable thing to use to negotiate and force them to do that.”

“I think what tariffs allow us to do is rebase the long-term reliance on the US dollar. It allows us to rebase our ability to fund our own deficits. And it allows us to rebase the long-term ability for American companies to be economically vibrant.”

“Tariffs aren't being done in isolation. They're being done along with a coordinated policy effort to reduce income taxes and another policy effort to reduce government spending. So those are three actions, three legs on a stool. So tariffs, reduced income taxes, reduced government spending, and they are related to each other.”

“And to Chamath's point, this has all got to become predictable. You cannot put tariffs on off every week or else how does your friend, Dave, who wants to do the LED lighting where you're encouraging to do LED lighting, know if they should build a factory and invest 10 million in that?”

“getting them to come down 20% or 10%, getting them to come down anything is a win. He can't say that because he loses all his leverage.”

“Everyone now understands or views this as an exploitable moment, which unfortunately means that tariffs may not work, or they're actually going to have to stick, which can be really ugly.”

“Should there be exceptions? Probably. Should there be waivers in very specific and narrow cases? Absolutely. But I think that that's where these guys are going.”

“I actually think people are starting to realize he's going to do something here with these tariffs. They're not just a negotiating position.”

“coupled with, for the first time in a hundred years, a significant change in the policy for tariffs for goods flowing into the United States, and whether that will reduce spending by consumers or drive up the cost of products by consumers.”

“if you look at Shein and Timo before this podcast, I wouldn't looked up that their prices are up by 27 percent or something like that. And so when you used to be able to get a garment for $18, you're now paying $37 and Zara is like $75 for an equivalent.”

“And so I think the out is, oh, you know, maybe it's not going quite the way we hoped. We're going to declare kind of, hey, we have a series of grand bargains with these countries, declare a victory. Maybe tariffs on American goods are slightly lower, tariffs here are slightly higher, feels more fair.”

“Here's what tariffs do. Tariffs are a level setting mechanism that fixes a historical imbalance. Look, the reality is that we have had meaningfully lower tariffs for products coming in than those reciprocal tariffs exist for our products going in to these other countries. That's true. And the one thing I'll say about Donald Trump is you may not agree with the tariffs, but he's been incredibly consistent.”

“So they did that basically as a way, in my opinion, it looks like, and I'm just trying to take a read on this, that they're using this as a way to anchor for negotiations going forward, ... Now everyone takes them seriously. Now everyone shows up to the negotiating table, and now they can actually negotiate and then announce a series of win after win after win and say, we got this set of countries to capitulate today.”

“I think the most likely result of these tariffs is that within the next few weeks, the headlines are not good. President Trump starts driving trucks through the center of the tariffs. And then he starts getting wins from various parties outside that allow him to find an off ramp on some of these tariffs.”

“One, Trump has had a 40-year view on tariffs. They're going to go through with this and they're going to see it through. I don't think you're going to see this grand capitulation. Two, they are okay with the volatility in the equity markets.”

“He will tell you what he's going to do. He told you he was going to do these tariffs. He's done them.”

“So I think that the Morologo Accords, this sort of Bretton Woods 2.0, is the outcome, Ezra. It will basically use tariffs as a way to get these governments to a table and allow us to negotiate a much fairer economic quid pro quo.”

“And now basically every country in the world, except for China, is coming to Washington seeking to negotiate a new trade deal for the United States on better terms for the US.”

“And what I would be told, like the counter argument, was, oh, you libs, you always take him literally when you should be taking him seriously. I had Vivek Ramaswamy on my show. He said, he's not going to do that. That's just a negotiating ploy. And this was the common line from Trump allies on Wall Street. And then I watched as he began doing not just that, but layering a series of them bilateral tariffs on top of that plan.”

“part of the art of the deal here, so to speak, is an opening salvo, which is bold. And some people would say maybe it's too extreme, but it's basically an opening bid to shift the conversation completely. That would create tremendous leverage to get deals done. And isn't that exactly what's happened? Isn't that the way it's played out?”

“set your anchor point as far away as you possibly can, if you want to get maximal leverage in a negotiation. I don't know what's farther away than 145% tariff. So it's clearly a point, as Sacks said, for negotiating to a deal that seems like one that would have been impossible or implausible if you started from a 0% tariff beginning point in negotiating.”

“we've gone from minus two to maybe plus one, and China's gone from plus four billion a day to maybe zero or minus one. And I think that's what instills the leverage that is required to get the deal done.”

“Yeah, I mean, the bleak scenario, which is, I don't really think it's going to happen. I think that the administration doesn't want this to be their legacy, that they created a policy that just kind of tanked small business and supply chain. So I don't actually think this is going to happen.”

“If we're sitting here in nine months and you're saying this and there are no deals, I would say that you're right. What Howard Lutnick said last week, and again, we may have all gotten caught up in the knuckle tattoos and we missed this, but he was very clear. We have a country, a deal is already done. We're convening parliament. It's going to be the first of many. So for all we know, there's like 30 deals that are waiting in the wings, and the first one will set the tone.”

“President Trump shifted the conversation away from this globalist consensus and he's now redefined the debate but it is now up to Scott Besson, the Treasury Secretary, Howard Ludnick, the Commerce Secretary, Jameson Greer, the US Trade Rep and so on, the Trump trade team to now negotiate these deals, stick the landing and I agree with you to the extent that the sooner that is done the better because it is good to provide business certainty.”

“I don't think that'll happen. I don't think that'll happen. I think we will end up in like I'm with Ryan, like we will end up in a good spot because we'll iterate through this. My only point is there's an alternative path that could have occurred.”

“I feel now there's a chance when you look at the next year or two, at some point tariffs goes away. Trump makes this big deal with deregulation, the tax breaks sort of cancel out the tariffs.”

“what we're seeing is that for one of our friendliest allies, for one of our best trade partners, we are keeping in place a 10 percent tariff rate. So if that holds with other trade deals, and that becomes kind of a standard across the board as they get more of these trade deals done”

“So to create maximal leverage and accelerate outcomes, it seems like a lot of this trade hype got everyone to the negotiating table. Now the hard work is being done to figure out the details of these deals.”

“And now maybe, as I think a lot of people are predicted, he found an exit ramp. Maybe that was the plan all along.”

“The tariffs was a way of ripping the band-aid of all this globalist free trade nonsense. And now we need to reset this in a methodical, calm way.”

“the 10% tariff rate that we still have on the rest of the world is more than quintuple what it was at the very beginning of this process. The average tariff rate, not to use a number David doesn't like, but the average tariff rate right now is higher than it's been any time since the 1930s.”

“I'm not going to use the term taco, but it does seem like we've shifted from shock and awe to maybe, like, kind of bore. It's kind of boring, like, and that does seem to be Trump's approach, right, in negotiations. Big bang and then fall back to a reasonable position. So I think we're in the reasonable position phase.”

“any time that the media tries to sow doom or spread panic about the Trump administration's policies, that's a good time to buy.”

“He starts with a bang and then he falls back to a reasonable position that the markets can digest. So you just have to take a 90 day view of everything he's doing and then you'll be fine.”

“And ultimately, don't we look at the tariff situation and say, despite the shock and awe of the opening salvo, it's quite a boring position now. It just seems to be reciprocity and reasonable reciprocity at that.”

“I would say for everyone but China. You know, it is, and you know, we're, we've clearly reached some sort of deal with China, you know, rare earths for H20s and MI308Xs.”

“Jameson is back now as the US Trade Representative and I'm very optimistic that we're going to see more trade flourish. President Trump knows how to do this. I've been with him in the trade negotiations. He knows exactly how to navigate this.”

“we said at the time that all of that was happening and Larry Summers was on the pod preaching doom, is that all of that was an opening bid. It was all the start to a negotiation. And we had to see where it ended up and that the administration still had to stick the landing. But I got to say based on EU, Japan and South Korea, this is looking really good right now.”

“the shock and bore playbook is basically, Trump says something completely outrageous, shocking, everybody goes crazy, the media loses their mind, business leaders lose their mind. ... Trump comes in, sees all the stuff, and then he starts making these micro tweaks. So it's on the finish line, it's in the red zone, five-yard line, Trump comes in, and then he sticks it to them again with three or four extra asks, and then they wrap it up, and that this is becoming really effective.”

“I would just say he showed his hand in April. He looked into the abyss and if it is clearly not working, he showed that he will change it.”

“Otherwise, China is able to sort of climb out the window, which is, I think, what they've done on everything from Nvidia chips to TikTok to their actual tariff rate, which I believe is now lower than the tariff rate we have against Canada.”