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

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[00:00:27] Trump just folded on his economic plan to bring jobs back to the US and we're gonna 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 are seen, of course, in the United States.

[00:00:53] 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.

[00:01:18] And the goal has always been to bring manufacturing back to the US. So, you know. Trump's goal. 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 90-day trade agreement. So we're dropping our 130% tax on or tariff on China and we're changing it to 30%. They're changing ours to 10%.

[00:01:46] I think ours was 130 as well or right around there. And so both countries have decided that for 90 days they're going to call a 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 China.

[00:02:14] So and I don't think it's going to he's backing down at all. So I mean, if you guys go back to the book that I read of we're all real estate people, a lot of us here, the art of the deal on 1987. Like one of the very, very first things in that is aim very high and I just keep pushing and pushing. And so the 145, of course, China matched it. Now we're at 30 and 10, I think I think are the numbers. Fentanyl a little bit higher.

[00:02:44] 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 what's happening here.

[00:03:02] And, you know, right or wrong, the last 20 presidents over or I should say the last US presidents over the last 20 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 all that stuff that's been going on for years. Trump's trying to crack that.

[00:03:29] And I think the the win this week, if I was to say anything, it's that they are now open to the US entering their market. And so I think that I think this is going to be a series of really, really small moves. And I think that the 145 was a was was was really high. But 134 or 145 percent. What's the one percent? 134 percent. OK, I think that that was a high mark.

[00:03:59] And and I think I think he's going to keep pushing. And I don't think that I by the way, 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, it appears that that China felt the impacts much, much quicker. I'm not saying that we wouldn't. Yeah, I don't know. Well, I don't know if Trump's plan was to get our products into China.

[00:04:26] 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 2023. So it was a major hit to their economy.

[00:04:52] They were laying off about a third of the factory workers were going to get laid off if these tariffs continued in China. So I don't think that Xi Jinping could continue to do that. But I also think that he's a 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 and that were maybe a two hundred dollar outfit and getting a two hundred dollar tariff.

[00:05:22] And they weren't happy. And I just think that's going to affect your voting base. And I think that people around Trump are telling him like Americans don't want that. Most of them. 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.

[00:05:49] I think would be fantastic for our businesses, U.S., 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 U.S. goods. China's trade surplus with U.S. topped 100 billion last year.

[00:06:10] So I think that this whole move was just opening the door a little bit for the U.S. 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 10 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 U.S.

[00:06:35] I mean, businesses would be better off paying 10 percent of a tariff than bringing jobs back. So what it'll probably do is cause businesses to maybe offshore to different markets like Taiwan, Vietnam, those kind of things. But it's probably not. I think Trump is backing off bringing jobs back to the U.S. You're not really hearing that rhetoric. I think that it's going to be tapered down because 10 percent tariffs aren't bringing jobs back to the U.S. No, no, no. I agree.

[00:07:03] I mean, that that is where we are now, but it's 90 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 what he wants, but I don't think I think he's backing off of that. 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 is what he was looking for at this point.

[00:07:30] So you think that he wanted to bring U.S. products into China? Well, if you just look at the actual words that he used. Well, I don't like to look at the words that Trump uses. The biggest thing to me is opening up China. That's exactly what he said this week. So 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.

[00:08:00] 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 90 days. But I think that I think he shot high and 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 categories. Well, China is in the red category and Vietnam is not.

[00:08:29] So I think that if you take a look at this and you just Google what I did, who loses and China loses by a long shot. They need us. We're at. Let's see the number here. 580 billion of exports per year. That's that's a huge number. Right. And I'm telling you now on the on the flip side of that, they they do. We owe them a trillion dollars.

[00:08:59] 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.

[00:09:26] But I do know that the bond market support. Yeah. Right. Yeah. I don't know. 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 we both know companies, manufacturing businesses and people that are already looking to go to other countries.

[00:09:54] 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. Now, if you're a U.S. company and you've been making stuff there and manufacturing them here like like 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.

[00:10:25] And 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 is is is contracted the first time in a long time. And and obviously that's kind of our measurement of growth. And that is the first sign of a U.S. 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.

[00:10:54] 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 U.S.?

[00:11:24] It's hard to know. 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.

[00:11:52] 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, Powell 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 tariffs are going to be lowered or disregarded for now, then the Fed can start focusing on unemployment.

[00:12:20] And that might give us lower rates sooner. Well, that's another point. What happened this week with the result today, I should say, is that the 10-year Treasury yield was up about 8.2 basis points. And it said 4.45 last I looked. So that was also not necessarily good for real estate investors. And now, of course, you know, that's good for bonds.

[00:12:44] 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 Powell said, I'm not expecting a meeting with the president anytime soon. So there's no love lost between those two. He's got another year. And, you know, that people are predicting that rates are going to come down a little bit.

[00:13:11] But we did a whole thing on the U.S. debt, which is huge. As you guys know, there's a big, big number this year. Maturing. This is tough. That was back from 2010, 2011, 2012. We actually have maturing debt in the U.S. that we have to renew at these higher prices, higher interest rates. Higher interest rates mean higher costs.

[00:13:36] That means that a lot of the work that Trump's been doing and his team has been doing for some of these cost-cutting measures, I would say, like Doge, as an example, you know, comes roaring back on this reset of the debt. So because a lot of this debt was at 1%, 2%. And so that's another big one.

[00:14:01] 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.

[00:14:30] 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.

[00:14:47] So when 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, we'll be eventually insolvent if we have to keep paying over five percent on all the debt that we have. It's too much.

[00:15:14] And there is one positive thing that came out of this, and that is the U.S. 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 are in France and the U.K. this week. And, you know, so when we're exchanging money, we're seeing the difference.

[00:15:37] And that is good because our dollar buys less here as it got, as you guys know, 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 a very interesting number to follow.

[00:16:01] 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 said they have the inflation under control now and they want to start working on the rates and the unemployment numbers. Yes. And I'm telling you guys, I think this is the beginning of a brawl, personally, with China.

[00:16:28] You know, Trump's always been about chalking up wins. You take a look at when he threatened, you know, domestically the security clearances. He won concessions from the law firms. He branched billions of dollars in the government funding, as we already know. And he flexes power over a lot of the top government universities. Whether you like it or not, this is what he's done.

[00:16:54] 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 imbalance. The last 20 to 25 years, the U.S. presidents have not cracked the Chinese market for us supplying products and services there. And I think that that's what this week was.

[00:17:23] If I was to look through all of this, I'm telling you, I think that's the win for the week. I think it's a 90-day pause. And I still think he's going to come hard at China after this. But does he have any legs to stand on to come hard at 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.

[00:17:52] And the markets don't want that. So that's his voter base completely because it's people that own stocks and 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 tariffs? Well, I think that that's a simple argument. I get it. But I think you've got to look at what he wants. And what he wants is he wants manufacturing back in the U.S.

[00:18:18] 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 U.S. 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 even the U.S.? We have friends that are doing this right now.

[00:18:47] Now, just in the last 90 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.

[00:19:11] But if you're going to take a look at his overall objective is to make America great again, which is 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, Trump's Republican, right? And Republicans now want to bring manufacturing back to the U.S., but they don't want unions.

[00:19:41] 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? Yeah, but that's more democratic, you know? So 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.

[00:20:06] 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 U.S., not always. But, you know, you start to look at the pieces and they're made all over the place. He's trying to bring it all back. By the way, I was just looking today in that book, the great print or the big print.

[00:20:34] But they had a chart in the back, 1949. 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 50s, 60s, 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.

[00:21:04] 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 $2 a day, which, by the way, they do. You can believe that. It's a crazy number, but it's true. You know, you can have stuff made in other parts of the world and make better margin and sell to the consumer cheaper. That's just the reality of it.

[00:21:32] And so tariffs, like them or not, balance that out. And, you know, if you're just following Trump's agenda, which is just trying to get those jobs back to the U.S., again, I'm not disagreeing. I'm not saying it's not going to be inflationary. 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 you want. 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 to win. Right. He always has to have a win.

[00:22:00] 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.

[00:22:26] 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, they're 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 going to be interesting, you know, because I've listened to a lot of the Republican shows and the Democrat shows and all the different ones.

[00:22:53] And even a lot of the Republican shows I listen to is critical of these tariffs. 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 90 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.

[00:23:19] Well, if you guys are confused like I am and Danielle is, I will tell you, I'm super excited. We got Jim Rickards coming to Limitless this year. That is insane. Like he just does not speak very much. I would highly recommend that you Google him. He 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.

[00:23:48] 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 going to be asking. Yeah, it's interesting. What could we expect from all of this? Right. It's going to be interesting because it's still two months away. Limitless is July 31st in that the Gaylord text in again. And the 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.

[00:24:17] 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 they 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're going to sprinkle these tariff things in. We'll see. But hopefully you guys will see us there.

[00:24:45] We're excited about having Jim Rickards this year for sure. Absolutely. And if you use code Ken10, you can get 10% off. Yeah. Hey, and don't forget our podcast. Yeah. We got a podcast every Thursday. We're also streaming it on YouTube. Started to put the podcast on YouTube. 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 not live, but they're on YouTube now.

[00:25:15] And you can watch the whole thing there too. So good debate today. Yeah. It's going to be interesting. Like, you know, I'm not against Trump, but I'm not even against the tariffs. It's just a matter of, is he going to keep committing to bringing jobs back to the U.S.? 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 to be a trade war that was starting to heat up. Both sides digging their feet in.

[00:25:45] Two of the world's biggest economies. I will say China's very different than it was 50 years ago. It now has a full middle class, you know, kind of a lot like, you know, America. And, but it has sent shockwaves around the world, including other countries, including the U.K., which we just flew out of today. Yeah. 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.

[00:26:16] We were laughing the other day. This lady had one that said, you know, Trump's making a mess 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. And so this is the news all over the place because, you know, as they say, when the U.S. sneezes, the world gets a cold. And that's certainly, even though this is a little bit more of one, it is a very interesting time. Right. Absolutely. Well, thanks, you guys, for listening.

[00:26:46] And we'll see you next week. See you. See you. See you.