Is Trump Folding on “America First”? The Real Story Behind the Trade Pause

Trump just pulled it on his economic plan to bring jobs back to the US, and we're going to explain why and why it's important. Hey, guys, how are you. Greetings from Florence, Italy. We're excited to be here with you guys. It's late, but let's get right into this because we were on the news here reports things very differently than our scene, of course, in the United States. And yesterday we were in the UK and it said Trump's made a mess of everything. So everybody seems to be pissed at Trump over here. But I will tell you what they did today is I think it's a more civilized way of a divorce basically, right, because you know, as we know, as you guys might know, we've been trying to do business in China, bring our products in China for a long time, and the goal is always been to bring manufacturing back to the US. So Trump's goal, right, and of course he is the one who's driving this, right. What do you think? Yeah, I mean, right now, US and China have struck a ninety day trade agreement, so we're dropping our one hundred and thirty percent tax on our tariff on China, and we're changing it to thirty percent. They're changing ours to ten percent. I think ours was one thirty as well, or right around there. And so both countries have decided that for ninety days they're going to call it truce. I personally think this is going to be permanent because I think they're both I think Trump's backing down basically, and this gives him a way out since China is agreeing to it. But that's basically where they're at right now, because they both realize how much economic pain, especially Trump, that this was going to cause the US and to China. So and I don't think it's gonna he's backing down at all. So I mean, if you guys go back to the book that I read, we're all real estate people, a lot of us here the Art of the Deal nineteen eighty seven. Like one of the very very first things in that is aim very high, and I just keep pushing and pushing, and so the one forty five, of course China matched it. Now we're at thirty and ten. I think I think are the numbers fetanol a little bit higher? But I don't think I think we're at the I think this is the very beginning of a negotiation. So what do you think it's going to end up at if you think it's going to work out, because you know, we're now basically back to where we started essentially. Well, I think you got to go back and take a look at what's happening here. And and you know, right or wrong, the last twenty presidents over the or I should say, the last US presidents over the last twenty years, have been frustrated because China's refusal to open its markets to the US products. That's actually a huge issue, and among other issues including Chinese intellectual property IP, the theft and and all that stuff that's been going on for years. Trump's trying to crack that and and I think the win this week, if I was to say anything, it's that they are now open to the US entering their market. And and so I think that I think this is going to be a series of really really small moves. And I think that the one forty five was was was was really high but one okay, I think that that was a high mark. And and I think I think he's going to keep pushing. And I don't think that by the way, I I I really believe that China needs US more. I know it will take a hit, but if you take a look at the short term issues, uh, it appears that that China felt the impacts much much quicker. I'm not saying that we wouldn't. Yeah, I don't know. I don't know if Trump's plan was to get our products into China. I thought it was that he wanted to bring the US manufacturing back and stop buying products from China. But either way, you know, I don't think that Americans really want those jobs. I think a lot of those jobs want to go to Ai anyways. But what I think is interesting is, you know, China was very leveraged on US. You know, we imported five hundred and seventy billion dollars worth of Chinese products in twenty twenty three, so it was a major hit to their economy. They were laying off about a third of the factory workers. We're going to get laid off if these tariffs continued in China. So I don't think that Gigiping could continue to do that. But I also think that he's Communist party. He doesn't need to worry about being reelected or Trump does. And I don't think Americans wanted to go through that pain. You know, I've been watching you know, different social media videos of people ordering things in that were you know, maybe a two hundred dollars outfit and getting a two hundred dollars tariff, and they weren't happy. And I just think that's going to affect voting base. And I think that people around Trump for telling him like, Americans don't want that most of I mean, I'm not saying it wouldn't be good for America, but the people that vote don't want that. A majority of the people are uneducated. They like buying things, they don't want things more expensive. Well, I think we just got to go to what was said. So if you look at what Trump said, he said, the biggest thing to me is opening up China. I think would be fantastic for our businesses US if we could go in and compete. And then Bassett said, we want a more balanced trade, and I think both sides are committed to that, adding that the Trump administration would push for China to open up more to US goods. China's trades surplus with the US top one hundred billion last year. So I think that this whole move was just opening the door a little bit for the US to be competitive and actually sell goods and services in China. So that's what I think this is. Well, what's interesting is so if you look at it now that we're down to a ten percent tariff on China, you know, I know Trump said he wanted to bring jobs back, but that's not going to really bring jobs back in the US. I mean, businesses would be better off paying ten percent of a tariff than bringing jobs back. So what it'll probably do is caused businesses to maybe offshore to different markets like Taiwan and Vietnam, those kind of things. But it's probably not I think Trump is backing off bringing jobs back to the US. You're not really hearing that rhetoric. I think that it's going to be type or down because ten percent tariffs aren't bringing jobs back to the US. No, no, no, I agree. I mean that is where we are now, but it's ninety days. So but I do believe that jobs and factories coming roaring back. This is Trump's words into the country is exactly what Trump wants. It is really want. But I don't think I think he's backing off of them. He's backing off, but I think he's looking for a little wins. I think he aimed high with the high number and he backed down, and so just opening the door to get our products into China is what he was looking for at this point. And so you think that he wanted to bring us products into China, Well, if. You just look at the actual words that. He used, well, I don't like to get the biggest. Thing to me is opening up China. That's exactly what he said this week. But do you think that that was a ploy to just kind of get everyone off of his back because he didn't want to admit that his plan wasn't really working. That well, it could be. I mean his actual words were, I think it would be fantastic for our businesses if we could go in and compete. That's what he said. So if you're using his actual words, that's what he said. So you know, here we are, obviously, and he did back down for ninety days. But I think that I think he shot high up and I think he's going to keep chipping away and I don't think he cares if our stuff goes to Vietnam or some of the other countries that you know, remember how he went red, yellow, green, and he basically put the countries in different cattle corries. Well, China's in the red category and Vietnam it is not. So I think that if you take a look at this and you just google it, I did, who loses, uh, and China loses by a long shot. They need us that we were at. Let's see the number here, five hundred and eighty billion of exports per year. That's that's a huge number, right Uh. And I'm telling you now on the on the flip side of that, they do we owe them a trillion dollars right so, yeah, seven percent of our of our debt. So that's a big deal. So it's it's but I still think it's I think I think this is at the very very. Beginning, somebody said, Ray said bonds, it was all about the bonds and the debt Trump had to lay off. You think, I don't really understand it to that level how that worked with the bond market. But I do know that the bond market is important, right Yeah, I don't know all. I well, I know that first of all, if you take a look at it, the stuff that we get from China we could actually get from other places. And there are we both know, companies and manufacturing businesses and people that are already looking to go to other countries. So China is already losing momentum here. I mean people that used to just have factories in China, people that used to ship stuff from China. If you're a US company, you've been making stuff there and manufacturing them here. Like a lot of the big names, you're looking for other sources right now because you can't. You can't. You don't know where this is heading, and things have slowed down. Businesses are not quite sure what this administration is going to do on both sides, and so I think this is just a way to avoid a global recession right now. You know, it does look like that our GDP has contracted the first time in a long time, and obviously that's kind of our measurement of growth, and that is the first sign of a US recession, you know. Yeah, And I think both countries realize they need each other. You know, I don't think that either want to admit that because they don't really care for each other. But you know, we really need China for our cheap goods, and honestly, now that people can't really afford homes and they you know, are having trouble saving money. You know, the last thing that people want is to then be squeezed on their everyday purchases that they want to make. But then also, China needs us because we supply so many of their jobs. So I think that both Trump and Ping are looking at this like they can't stand each other, but they have to work together. Now what does that mean for the US. It's hard to know. Oh, you know, it's going to be hard to bring jobs back into this country without pain. And you know, nobody wants to go through it. And I'm not saying we shouldn't go through it, it's just people don't want to go through it. So it'll be interesting to see, you know. I know that the stock market has really contracted since Trump started all this. I know that people were worried about inflation. I know that the businesses were unsure what to do, and to your point, businesses are still unsure what to do. So we do think that there's going to be higher levels of unemployment because we are contracting and businesses don't want to expand right now. And because of that, Pale might lower interest rates sooner than later. Because I think he was really scared of inflation due to these tariffs. But he also has to watch unemployment. So now that you know, if the teriffs are going to be lowered or disregarded for now, then the FED can start focusing on unemployment and that might give us lower rates sooner. Well that's another point. What happened this week with the results today, I should say, is that the tenure treasury yield was up about eight point two basis points and it said four point four five last I looked. So that was also not necessarily good for real estate investors. And now, of course you know that's good from odds, so I think you know. But it also was coming off the heels of the FED basically saying they're not going to do any changes last week, which I'm sure is I think Palal said I'm not expecting a meeting with the President anytime soon. So there's no love loss between those two. Uh, He's got another year, and you know that people are predicting that rates are going to come down a little bit. We did a whole thing on on the the US debt, which is huge. As you guys know, there's a big, big number this year maturing. This is tough that that that was back from twenty ten, twenty eleven, twenty twelve. We actually have a maturing debt in the US that we have to renew at these higher prices, higher interest rates, higher interst rates, mean higher costs. That means that a lot of the work that Trump's been doing on the and his team has been doing for some of these cost cutting measures, I would say, like Doze as an example, you know, comes roaring back on this, on this, on this reset of the debt. So because a lot of this debt wasn't one two percent and and so so that's another that's another big one in addition to all these tariffs and potential inflation, because I think everybody believes that inflation is going to come as a result of tariffs. We don't know exactly how much or how and where, although it is targeted at certain industries, and I think that's changing, you know, from month to month, it seems. But we will definitely see that, and I honestly can't see. I just read a book actually on my way over here called The Big Print, and I do recommend you read that. He talks a lot about where we are on the printing side, of the business, and when you just keep adding dollars to all of this, you know, it's unsustainable, especially with the debt we have so. Well, it will be interesting going from one to three percent to rates above five. I still think Powell potentially could lower rates in June and blame it on the fact that he's focusing on unemployment and no longer needs to worry about the inflation due to tariffs because they have a lot of this debt maturing in June, and we had talked about that last week. You know, will be eventually insolvent if we have to keep paying over five percent on all the debt that we have too much. And there's one positive thing that came out of this, and that is the US dollar did strengthen to a one month high against the euro and the yen. And it's interesting because we are here in Italy, we were in France and the UK this week and you know, someone we're exchanging money, we're seeing the difference, and that is good because our dollar buys less here as as it got as as you guys know what. It's been weak, but it is temporary. It's only been a month. Yeah, absolutely, and you know, I just think moving forward, what will be interesting is kind of watching the unemployment number. I think that number is going to be very interesting number to follow. Also, last week we talked about, you know, the government stop focusing on inflation and start focusing on the debt actually, and so that'll be interesting too, to start saying if they that they have the inflation under control now and they want to start working on the rates and the unemployment numbers. And I'm telling you, guys, I think this is the beginning of a of a a brawl personally with China. You know Trump's Trump's always been about chalking up wins. You take a look at it. When he threatened in you know, domestically the security clearances, he won concessions from the law firms. He branched billions of dollars in the government funding, as we also already know, and he flex his power over a lot of the top government universities. Whether you like it or not, this is what he's done. And I understand that some of it might be ethically and constitutionally questionable, but it is what's happening. And so what we have here is we have the trade and balance. The last twenty to twenty five years, the US presidents have not cracked the Chinese market for US supplying products and services there. And I think that that's what this week was. If I was to look through all this, I'm telling you, I think that's the win for the week. I think it's a ninety eight pause. And I still think he's going to come hard at China after this, and does he have any. Likes to stand on to come hard of China because people are saying that I'm not a Trump fan, like I voted for Trump, like whatever, But at the end of the day, does he have any room to stand because if he wants to go hard on China, that's going to create a bigger recession here and people don't want that and the markets don't want that. So that's his voter base completely because it's people that own stocks in real estate don't want that, and people that can't afford to buy things don't want things more expensive. So like, other than Trump, who really wants high terrace? Well, I think that that's a simple argument. I get it, but I think you got to look at what he wants, and what he wants is he wants manufacturing back in the US and as long as things can be made cheap somewhere else, that's a way to balance it out. So we're already seeing companies in the US are starting to manufacture things here and do things differently than they were as a result of the tariffs, because they're like, why would I have my stuff made in China if I can have it made somewhere else, potentially in the US. We have friends that are doing this right now now, just in the last ninety days. Of course, I don't know where this will all end up, but that is at the end of the day, that's what we're trying to do here. And so yes, short term pain, I can't disagree with you that it definitely has to turn into higher prices because the tariffs mean higher prices, whether if they still get it from China or higher prices here. But if you're going to take a look at his overall objective is to make America great again, we'll just try to get jobs here and try to get manufacturing here. This is how you do it. If you don't do it, companies will still continue to go to these cheap labor countries and have stuff made. But I have an interesting question, because you know the Trump's Republican right and Republicans now want to bring manufacturing back to the US, but they don't want unions. So are manufacturing jobs do they even pay that great? If you don't have unions, Like, are these even good jobs? You know, That's what I don't understand. Yeah, well I think that's another layer of government, a union, right, So. Yeah, that's more democratic, you know. So I'm in I'm not necessarily for unions. I'm just saying, are these good paying jobs if they're not unionized? Depends on what the jobs are, depends on you know, what they start bringing back, I suppose. But if you take a look at like just the automobile, I mean, remember when we took a look at that, Like, like the automobile gets the parts are made all over the place, and then it gets assembled wherever it gets assembled a lot of times in the US, not always, but you know, you start to look at the pieces and they're made all over the place. Ye trying to bring it all back. By the way, I was just looking today in that book the Great Print or the Big Print, they had a chart in the back nineteen forty nine. You take a look at the top number one city was Detroit, and then Ohio, which is where Daniel's from. It had four or five other cities in there, all based around auto manufacturing. So you know, we from you know, the fifties sixties. By the way, I'm not saying we can get back there. I'm not. What I'm saying is the country was built on America doing their own stuff, and then at some point we outsourced it all because things got more expensive here and we allowed it. And you know, and when half the world lives on two dollars a day, which by the way, they do, you can believe that it's a crazy number, but it's true. You know that you can have stuff made in other parts of the world and and uh and make better margin and sell to the consumer cheaper. That's just the reality of it. And so tariffs like him or not balance that out. And you know, if you just follow in Trump's agenda, which is just trying to get those jobs back to the US. Again, I'm not disagreeing. I'm not saying it's not gonna be inflation er. I'm not saying that things aren't going to be more I'm not. What I'm saying is that's what he wants. It is Yep, it is what he wants. I just don't know it's for sure what he wants. I just don't know if the economic because one thing about Trump is He's got a win, right, He always has to have a win, and he is he wants to be known for. He wants to be praised, like that's his thing. And so I don't know if he even can take an economic downturn, you know, himself, just his ego. But I also just don't know if the American people can, you know, because he would have to get everything down and then doing really well by the time the end of his term in order for you know, people to vote Republican. I think again, because I think this really is going to squeeze people because you have to remember, you know, when people can't buy basic things like houses, like cars, like you know, their living paycheck to paycheck. Now, if they can't go on Amazon and get cheap stuff, it's a big deal to some people, you know what I mean, Like they don't most people. Yeah, So I think that this is just really it's gonna be interesting, you know, because I've listened to a lot of the Republican shows and the Democrat shows and all the different ones, and even a lot of the Republican shows I listen to is critical of these terrorists. So it'll just be interesting to see, you know, does he really have a plan? Does he really understand it, because what it looks like is he's kind of backing down to me and we'll see at the end of these ninety days. But you know, it's it's almost like he's saving face because I think he thought a lot of countries were going to negotiate with us, and really, minus a small UK deal, nobody really has. Well. If you guys are good views like I am and danille Is, I will tell you I'm super excited we got Jim Records coming to Limitless this year. That is insane. Like he just does not speak very much. I would highly recommend that you google him. I first read his book called The Currency Wars, which is basically what we're doing right now. And he used to work in the government, And I'm telling you, this guy is incredible. And he has agreed to come two weeks ago. I don't think we've even put it out there yet, and those these are the questions we're gonna be asking him. Yeah, it's interesting, what could we expect from all this, right, it's gonna be interesting because it's still two months away. Limitless is July thirty first, and that the Gaylord Texan again, and then first and the second. In addition to that, we've got, of course George Gammon. We've got Robert Kiyosaki, We've got Jeff Snyder, We've got Brent Johnson. We've got some of the top economists out there that they're hopefully they all have opposing views. I mean that makes the panel the best, is when you go a big softball and you start arguing over stuff. And because Brent Johnson we had him on our podcast a couple of times. He's super smart about the Central Bank, the dollars and how all this works. But now we'll get to sprinkle these tariff things and we'll see but hopefully you guys will see us there. We're excited about having Jim Records this year for sure. Absolutely. And if you use Codeken ten you can get ten percent off. Yeah. Hey, and don't forget our podcast. Yep, we got a podcast every Thursday. We're also streaming on YouTube. Started to put the podcast on YouTube. We uh, some wise, somebody wise told us to do it. So they're live now on YouTube. They're not live, they're on YouTube live. Yeah, okay, so they're definitely that live, but they're on YouTube now and you can watch the whole thing there too. So good debate today. Yeah, it's gonna be interesting. Like you know, I'm not against Trump, but I'm not even against the terriffs. It's just a matter of is he going to keep committing to bringing jobs back to the US, because I don't think it's super popular, so I just will. It will be interesting to see what he does well. I think this was a major major event this week. It's a de escalation of what I would consider be a trade war that was starting to heat up, both sides digging their feet in two of the world's biggest economies. I will say China's very different than it was fifty years ago. It now has a full middle class, you know, kind of a lot like you know, America. But it has said shockwaves around the world, including other countries, including the UK, which we just flew out of today and got to Italy, and I'm telling you it's in US all over the news. It's funny because we're these newspaper people that are reading newspapers still, believe it or not, they do. We were laughing the other day's lady had one and said, you know, Trump's making a mass of our economy. And we were in London and I had to laugh as we were walking by. We were walking out of the park. So, uh, this is the news all over the place because you know, as they say, when the US sneezes, the world gets a cold, and that certainly even though this is a little bit more of one, and it is a very Interesting time right absolutely, well, thanks you guys for listening, and we'll see you guys.