| | Hi, my name's Phil. |
| | I like talking about politics. |
| | So just as Trump's latest capitulation on tariffs, you would expect, will calm the markets a little this week, he's come out with statements which seem almost designed to introduce even more chaos to the system. |
| | He's said that the tariff exemptions aren't really exemptions and that new special tariffs will be applied to smartphones, computers, semiconductor stuff soon. |
| | His commerce munchkin then changed the story on the reason for the tariffs. |
| | Although there are just a few small problems with the position they're now trying to adapt. |
| | In fact, one of them just exposes how dumb Trump and everyone around him really is. |
| | But first, for daily news and commentary, please hit the subscribe button to stay notified. |
| | So when Trump backed down again at the end of last week and announced tariff exemption for like smartphones, computers, semiconductors, he sneaked it out on the quiet to no great fanfare. |
| | Unlike the first capitulation early in the week where it was all over Truth Social. |
| | So it took a little while for it to be reported on, but it was noticed. |
| | And now that everyone is reporting on it, Trump has obviously decided that the loss of face is too great and has come out fighting by saying these exemptions will be short-lived. |
| | Why are they any lived? |
| | That nobody was getting off the hook, he said, that he would launch an investigation into the entire semiconductor sector and electronic supply chain. |
| | Interesting that he uses the word supply chain. |
| | I have news for him on that front, but that may have to wait until tomorrow now after this latest tantrum. |
| | So his commerce munchkin, Howard Lutnick, added to Trump's statement by saying that there would be separate new duties for these tech products. |
| | We're going to have special tariffs, new tariffs with blackjacks and hookers and everything on the Chinese stuff in the next two months, he said. |
| | Within the next two months. |
| | So lots to unpack here. |
| | First of all, of course, it demonstrates two things straight away. |
| | First, Trump is actually worried about losing face over his tariff misadventure. |
| | It might even suggest he fears a loss of face more than the potential for a 1930s-style depression. |
| | So America needs to watch out for that. |
| | And the rest of the world, as I urged yesterday, needs to protect itself pretty quickly. |
| | We have less than three months. |
| | Trump does not look like he is planning on quietly backing out of this one. |
| | The second thing we know is that Trump has no plan. |
| | To all those claiming 4D chess, it is now undeniable. |
| | Why the exemptions right now, if nobody is getting off the hook? |
| | And why are the new targeted special tariffs having to wait for up to two months? |
| | Hasn't it all been worked out? |
| | Because Trump is now flying by the seat of his pants. |
| | He thought it would be easy. |
| | Slap the tariffs on, the rest of the world would shrug its shoulders and get on with it. |
| | Some companies would set up production in America and all would be well with his 40-year-old grand scheme. |
| | But no. |
| | The fact he is having to change it like this proves that nothing is going according to plan. |
| | The fact that they have exempted tech products from Asia, including China, proves that they are scared of inflation on these products. |
| | Even though, frankly, like we're talking about luxury items largely here. |
| | Why are they worried about the cost of an iPhone going up, but not essentials? |
| | But also, the fact that they want to revisit tariffs on tech items, but have acknowledged it may take up to two months, means they're going to have to change their approach in a very big way. |
| | And it will take time to work it out. |
| | After all, two months, two months to fine-tune tariffs on tech products. |
| | It didn't take two months to come up with the entire global so-called plan. |
| | I mean, let me tell you what I think's happened. |
| | So, they realised that making these products more expensive is going to hurt more than expected, but they're not enjoying the headlines about backing down. |
| | So, they tried to back down quietly. |
| | It didn't quite work. |
| | So, they've insisted that these exemptions are not what they appear, but they don't know how to square the circle of needing these products, but not looking foolish. |
| | So, they've given themselves a couple of months to come up with something without considering that maybe it wasn't possible to navigate through this self-inflicted shitstorm. |
| | It's exactly like Brexit. |
| | Exactly like Brexit. |
| | The Tories had no plan for it. |
| | None at all. |
| | It was get it done for the sake of keeping the party together, stopping it splitting, and we'll worry about how to implement it afterwards. |
| | It's exactly the same. |
| | But then there was another thing. |
| | A change of argument. |
| | Lutnik suggested that they must bring semiconductor-based production to America for national security reasons. |
| | Now, this can be argued. |
| | However, there are a few small problems with the thinking, but let's go with the bits that make sense. |
| | So, chips, smartphones, computers, things like this. |
| | You can absolutely regard it as an essential resource. |
| | Not so much like the iPhone. |
| | It doesn't matter whether people get the latest iPhone. |
| | But America, in general, needs computers and chips for more than just a personal phone, right? |
| | And being reliant on a country with whom relations could well break down, like if they invade Taiwan, for example, that's not a great position to be in. |
| | For example, when Russia launched its full-scale invasion of Ukraine, Europe had to pretty much stop trading with Russia. |
| | Now, there is still a lot of off-the-books trade going on. |
| | But the need to at least look like we were cutting them off certainly reduced trade a great deal. |
| | So, do you know what? |
| | If America wants to argue that it needs to avoid being reliant on trade with a country at odds with them in terms of global security issues, I can totally accept that. |
| | Not going to ridicule that line of thinking. |
| | However, there are just a few small problems with the natural trajectory of this thinking. |
| | First of all, if that production returns to the United States, the cost of production massively increases. |
| | The reason for these exemptions is that Trump was scared of the impact of mass inflation on iPhones. |
| | That does not go away if you bring production home. |
| | Secondly, Trump has been savagely cutting research programmes and attacking academics and universities, driving some of the country's brightest minds away. |
| | You know, absolutely clamping down on freedom of speech. |
| | Freedom of speech is no longer allowed. |
| | Do you know, a judge, a state judge this is, there's a federal case, a state judge has ruled that it is perfectly constitutional, apparently, for the US government to decide to deport someone who disagrees with US foreign policy. |
| | Peacefully disagrees with it, legally disagrees with it, full rights to settle in the UK, in the USA, sorry, but it's still fine to deport them for disagreeing with US foreign policy. |
| | You know, free speech, y'all. |
| | So, in future, there's a good chance that actually it will be Chinese tech, which will be the superior products. |
| | America is not going to develop cutting-edge technology by driving its best minds away from the country. |
| | America may end up being, to digital technology, what Bulgaria was to car production in the 1980s, right? |
| | And third, the elephant in the room. |
| | Why is no one addressing this? |
| | So, Lutnik is arguing that these products need to be made in America, not China, for national security reasons. |
| | Okay, fine. |
| | What about the raw materials needed for production? |
| | What are you going to make them out of? |
| | Fairy dust? |
| | Where are these American-based factories going to get their raw materials from? |
| | China controls about 80% of the world's supply of the minerals needed. |
| | And if you're thinking, ah, they'll just get them from their theft of Ukraine. |
| | Not that simple. |
| | First, it'll take a long time, and I mean years, to set up those supply chains. |
| | Second, it's a war zone, which Russia, at China's behest at any time, could plunge back into chaos the second they need them to. |
| | The bottom line is America has no secure source of the raw materials needed for semiconductor technology, nor does it have a plan to get one. |
| | If the United States considers the production of these products a top national security issue, and I can go along with that, then the best thing it could have done was to act as a world leader in stable geopolitics and present a robust deterrent to China invading Taiwan, which is pretty much the only thing they're likely to do which could disrupt that trade. |
| | These latest moves by Trump and his idiot sidekick have more holes than one of his golf courses. |
| | All we actually know is that Trump is panicking and desperately trying to find a way to get his general tariff strategy to do some good, even if it has to be substantially changed. |
| | It's clear that he's not ready to lose face and give up on the concept just yet, which means that he is just going to add to the overall level of uncertainty for investors, for exporters, for importers, for manufacturing businesses in America as well as abroad. |
| | Remember, manufacturing businesses already in America are facing higher costs because of these tariffs. |
| | In the UK, the government announced yesterday they were suspending tariffs altogether on a range of goods that we don't produce anyway, and to help our businesses to keep their costs down. |
| | So we're trying to help our own businesses, as well as look at ways in which we can work with other markets to mutual benefit to dodge this storm. |
| | Trump is just swinging his tariff sledgehammer around, smashing everything in its path, including American businesses. |
| | Remember that the fall in the American stock market is a manifestation of American businesses becoming less valuable in the eyes of investors. |
| | A less valuable business is one that is selling less. |
| | If it sells less, it produces less. |
| | If it produces less, it doesn't need as many workers. |
| | That's your 4D chest right there. |
| | Trump's next book should be entitled How to Fool's Mate Yourself. |
| | But there we are. |
| | Those are my thoughts. |
| | Let me know yours in the comments below. |
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| | Thanks for watching and until next time, I'll see you later. |