he [Music] [Music] [Music] came [Music] future feel [Music] [Music] you you're watching tvpn it is Thursday April 3rd 2025 we are live from the Temple of Technology The Fortress of Finance the capital Capital this show starts now we have a great show for you today it's a terrible day in the market stocks have plunged the dollar sinks after Trump's tariff Blitz the NASDAQ
down 4% S&P down 3% DOW Industrials plummets 1300 Points bad news but we're going to take you through it and it's a little bit of a defense day a little bit of a manufacturing day we're calling it America America day was the best word we could uh find for it um we got a bunch of people joining the show uh we're going to kick it off with power over at
hadrien he has been beating the drum on American manufacturing a lot of people thought he was crazy thought it could never be done now he has a pretty sizable Advantage it's kind of crazy to watch so excited to hear him talk about what the tariffs mean for his business what they mean for other businesses and break down how he's taking advantage of
the new tariff regime then we got Delian and a ton of other uh defense investors we got some absolute dogs John we yeah we also have the the CEO of plaids coming on talking about the fun ra that just brought dropped today and of course Scott woo from cognition is coming back for his second tvpn appearance this is a guest record for us John I think do we
have 10 I think we got 10 uh it's all in A Hard Day's Work uh JD Vance uh chimed in on the tffs he says we need change uh he's uh he has a quote here he went on Fox and Friends says a lot of people have gotten Rich from American companies moving overseas but American workers have not gotten rich and frankly American companies have not gotten
wealth from increasing growth of foreign competitors manufacturing overseas and so this is kind of the trade-off like I think we'll go through this again and again again but you know most economists would say that these tariffs are net harmful to humans or like the global economy but of course there are always winners and L losers Within These whenever these rules like you know
pencil out and so yes Nike is getting hit really hard they manufacture abroad they sell to Americans they're going to be hit particular but You' been running that's and only you just you throw the America logo on there and hope that people bought them well today you have a serious economic advantage and so you're probably pretty happy and you're a winner and Trump and JD seem to be
saying you know that's who we're speaking for that's who we're representing with these there's also this argument that over the long term this will be better for America maybe this is even better for Humanity as a whole uh we're going to hear from various people hear them out and see what they have to say I think you and I were talking about this when we U were
working out this morning um just that you know it's it I'm not entirely blackpilled on these I'm also not entirely we're in a golden age a lot of the timeline seems to be much more split than we are which is kind of odd I mean I feel like I I one of those things nothing is going to ever be as bad or as good as you think it is yes but to on my point it's like
I experienced the studio gibli moment very much in tune with the timeline like the timeline was like this is the greatest thing ever and that's what I felt I was like this is the greatest thing I've ever I'm having so much fun I'm in tune with it and then and then as the as the mood shifted to like what is the meaning of this slop is the are there negative consequences I was
engaging with that too and I was and I was interested in those arguments and I don't know if I agreed with all of them but I was I was here for it and with the Tariff stuff uh I feel a lot more split and and a lot of the hot takes that I've seen I haven't been like oh this is this is my belief like this is now my take um it's one of those things we're clearly
running an an experiment on the economy yep and we haven't seen the results yet yep so it's dramatic yep it's thrilling it can be scary yep but I me largest it's the largest drop in the stock market in more than five years since March of 2020 yeah yeah since Co and at the same time I remember those drops and they were more significant and more and
more scary and crazy in my opinion because there wasn't as much signaling going into them like this is very much a human decision that could be reversed whereas Co was felt like something that couldn't be just oh yeah actually we're we're we're changing course and so the stock market should immediately go up it it wound up going up really quickly and
bouncing back um yeah and the wild thing is the market is the S&P 500 is up 4.3% over the past year MH so we're still over the past 12 months over the past 12 month but it's down this year right this year's not been good so far cuz we had the Trump pump at the end of over the last 6 months and 7% over the last month but uh for the prior 12 months it's up but just this one move wiped 2.7
trillion in market cap off of the Dow Jones uh and and the US market broadly uh and I think that you know what JD is trying to say is like yes that the 2.7 trillion was eviscerated and eliminated from the market caps of these companies but we hope that more than 2.7 trli is distributed in the forms of better and high payer and more high paying jobs for
Americans it's an experiment we'll see how it goes and we will hear everyone's interestingly Nvidia was uh is down almost uh 7% today even though even well semiconductors are excluded okay uh so probably a smart exemption but uh yeah I mean a lot of these things feeling the the kind of second order ramifications where you know a company that does business abroad is going to be more
conservative so they might buy less gpus because they're like you can play all this out to you know a lot of a lot of goods that are Chinese are bought on meta and so maybe meta makes less money because there's people less advertising less e-commerce products because e-commerce is hit so hard by this and there's just a whole bunch of different
knock on effects uh so very complicated but um uh uh Max Meer had a good uh the uh what is this the Norman Rockwell painting of the man standing up saying something contrarian says putting 17 to 34% tariffs on highquality Industrial Machinery from Japan Germany and Israel Holland Etc will hurt American reindustrialization and make it more difficult to operate factories and
produce Goods in the United States hard to argue with this we got to talk to uh to Chris about this because he he buys the horley uh uh like CNC the six access thing that he that they have like copy pasted 25 times in there in their massive uh facility and I'm sure the prices of those machines are going to go up uh but maybe there will be a car out
at some point again this was just one of those like here's how we're thinking about it a lot of it did go into effect very quickly but uh all this stuff is always up for negotiation it's the art of the deal baby uh this was a funny one uh from AF post so apparently Trump has levied a 10% tariff against the herd and McDonald Islands which are inhabited only by penguins and so if you're a
penguin in in the McDonald Islands good luck selling Goods to America Penguins I mean the it's going to be 10 traditional Legacy Media has taken a Victory lap on this one USA Today says penguin seals and other Wildlife y only inhabitants of two islands hit with Trump tariffs NPR Trump's tariffs are so far reaching they include several remote
uninhabited islands yep um I'll come out and say it I will say it if you're if you're Switzerland and you just got hit with 31% tariffs maybe we'll see Rolex some manufacturing out to the herd McDonald Islands yeah I mean I I think that it's a little bit edgy to say but penguin rid on American hard work for years and they got to pay their fair share so if you're a penguin get ready
to pay some taxes the external re Revenue Services coming for you um anyway very very funny story um I liked Atlas creatine cycle this is a great one get ready to learn how to put together iPhones buddy I love it just I can't wait I can't wait the thing is if you can put them together if I could know how to put this thing together I could also know
how to potentially take it apart yep and then I could swap the battery out every so that's why they Outsource manufacturing they don't want they want you to replace your own I get it that's a good this a good conspiracy theory like that so we go through some of Joe WIS Joe wisenthal dropped a a beautiful blog post in the iconic orange Bloomberg uh font because
he of course is delivering his newsletter not just through email but also through the Bloomberg terminal as any self-respecting Financial journalist should um we should really start syndicating on the Bloomberg terminal that would be ideal I don't know what it takes but we got to make it happen uh he says uh once again I'm just going to list random thoughts that are going
through my head right now I want to start with Nike actually at at the time of this typing uh the stock is down 14% pre-market as far as I'm concerned Nike is the perfect specimen of American capitalism the profitable design work is mostly done in the US the manufacturing is done in countries like Vietnam and the whole brand exists as it does
because the US is a global Powerhouse for exporting culture like Star athletes it just makes perfect sense for the stock to get nuked like this as both its basic business model and the American brand values get trashed other American Apparel Brands like Lululemon and Deckers are similarly getting clobber this morning speaking of Nike in Vietnam
in his chart book today Adam TW notes that 50% of Nike's products are made in Vietnam and of course the Vietnam shift Ryan Peterson pointed this out that a lot of companies were trying to be proactive about relocating from China also Manufacturing in China has got more expensive that wasn't just tariff risk that was geopolitical risk as well and just and just uh economic
factors in China like like as China has more yeah gotten more skilled like it's more expensive to manufacture there so yeah stuff has moved airpods are made in Vietnam famously um and that there are half a million people in the country working for the at at at least 155 factories that make Nike Goods now we're slapping massive tariffs on them but the
question is to what end do we think there are hundreds of thousands of people in the US eager to work in sneaker and t-shirt Factories at the wages that sneaker and t-shirt factories pay t-shirt factories pay are there people eager to work in sneaker factories even at good wages do we think that the US has the level of robotic capability to replace these factories
without having to hire a lot of workers and if not what is the administration trying to accomplish I think the Steelman here is like is like there's a learning curve to the robotics capability where if you don't have the facility in America at all it's very hard to get the reinforcement learning data to train the robots and so yes it makes sense to potentially in the very
long term if you're super a AGI pilled um you should overpay for human training data essentially and and yes maybe those uh maybe because of American working conditions the output would be lower the prices would be higher but if the tariffs lead to a situation where you're willing to take that trade that puts us on the learning curve to develop humanoid robotics again I'm just steel
Manning here I'm not I'm not fully convinced of that um I think broadly and and this is what I'm hoping to get from a number of our guests today is for America to reindustrialize we need to lead with Innovation right we don't have the Skilled Manufacturing labor base that is gonna allow us to onshore all this stuff overnight even if you know you could immediately snap your fingers
and yeah have the facility so it needs to be Innovation I heard a very a very hot take at some sort of reindustrialize conference uh where someone was saying like I'm extremely bullish on American manufacturing but I don't think it's ever coming back I think we're going to rebuild it with robotics from the ground up and we will be a manufacturing
Powerhouse but it's not going to be American labor Le it'll be Innovation and Technology Leed and that's an interesting like that has its own problems you got to Grapple with but I thought it was interesting uh anyway and to be clear that still creates jobs because somebody needs to oversee the facility and it's not you're you're not
going to have end to end autonomous factories emplo thousands of people opening ey is still hiring software Engineers same with anthropic yeah and you could imagine a lot of different higher leverage operations where you're puppeteering 10 robots at a time and doing tele operation a lot of interesting paths to uh making American manufacturing great uh so he says um oh
you want to keep going this we have two minutes okay I was going to move on to sheal uh he says $1 was worth one Euro at the beginning of the year the dollar is declining in value now worth 90 cents your European summer just got more expensive well hopefully for the VCS that were planning trips they can get another fund closed before then and just
make up for it management fees uh should we talk about Jeremy Sai uh very successful entrepreneur who runs a company that the whole plan was direct from the factory yep to delivery to American consumers so why by the Aires bag when you could buy a identical bag from a facility that was built in and it's even less Hermes is maybe not the right example but it's like a luggage
and Stu Restoration Hardware towels you know will give you the same towel or the same quality of towel for a fraction of the price and so he says consumer prices are built with percent targets not absolutes meaning cost increases are exponential if the cost is 10 and the price is 50 to maintain product margin a $1 cost increase equals a $5 price increase a $5
cost increase equals a $25 price increase these are multiplicative and so he's he's arguing that this will lead to Consumer inflation um which of course is is a risk uh taking the other side of this argument Sean Maguire he says uh that this is the first long-term thinking president in my lifetime he's obviously supportive and it seems like he's excited about it I'm excited to
talk to him about how he's processing this and and playing that this is playing into you know short-term pain long-term gain and uh that's what you know you got to be oriented around if you believe these are good policy decisions and Paul mer Lucky came out and support as well uh he said unprecedented Embrace of protectionism they say no reciprocal tariffs are the
opposite the whole point is to encourage free trade rather than lopsided free trade we currently have with so many countries it's very simple if they charge us we charge them and so this would be an interesting long-term play what if this triggers a reduction in tariffs and and and Trump says yeah we're going to stick with reciprocal and as you lower your tariffs we'll lower
ours and all of a sudden we go to a truly free that would be a very interesting outcome I don't think a lot of people are expecting that are pricing that in but uh I think Palmer is saying that that that that could be a potential outcome here anyway we got uh we got Chris power coming in the building I wanted to play this video first uh do we have the video we're cultivating Chris
power yeah we're cultivating Chris power in America I wanted to hear how would letnik talk about the tariffs and give us a little breakdown and then I think Chris could get could do some analysis for us um let's see what else is going on there's some more posts here Tyler Cowan did not love Liberation day uh he said uh Trump's reciprocal tariffs
impose hundreds of billions of dollars in new taxes on Americans without public Congressional input so arguing that they should not come from the executive branch they're based on secret calculations okay I think we got the video Let's play it on the show now what happened to the world is the global governments have backed taking our factories away from us I mean there's
nothing about Taiwan that they should be making semiconductors there's nothing about Korea they should be making all of the appliances and the electronics of the world what's happened is they had a policy of their governments to Let's back our companies and let's take this business from America while America is not paying attention so our factories
went overseas but what you're going to see is the most modern factories of the world come back here we are going to start on one of the great training programs of the world to teach our employees what tradecraft is you know how to build factories and not the old kind of factories I'm talking the most modern the most high-tech factories when
you say HVAC what we're talking about is cooling a high-tech semiconductor plant probably one of the coolest jobs you can have right mechanics fixing robotics that's what's coming to America the coolest factories the highest Tech factories they're all coming home and Donald Trump is bringing them home and he's going to create a Renaissance of high-tech Manufacturing in America
that's why America's going to win he's news maxing he's on Newsmax and he's uh giv the p for why these tariffs are good we're going to hear from Chris power who's in the temple of Technology talking about these tariffs how you doing he's back we're cultivating I would argue that we are sitting in a high-tech Factory but it's nice to see you on the show again fantastic um uh H
how did you process the news give us the high Lev breakdown I I think it's incredible for all manufacturing businesses and I think the push back you're seeing from people who've got uh crappy e-commerce businesses built on the backs of Chinese teu textile facilities are are the problem I mean what happened since the 70s through the '90s is we offshored all manufacturing
to developing countries because we didn't want to deal with it and all great power conflicts hang off the back of commercial manufacturing being able to Pivot to defense when it really matters and leik is absolutely right and what people Miss is China especially but all developing countries are not just cheaper in labor they've been actively
subsidizing you know basically to make it free energy Capital Equipment labor and when they export manufactured goods to the US uh often they are you know they're getting refunds of the government of 30 to 50% through this kind of export tars so this is not you know us raising tariffs unfairly it's just leveling the playing field for what's already been happening I mean
often what we see with competitive Chinese prices for CNC Machining is that the cost of the raw material we can buy is more than the part that China is selling to a US manufacturer and that's just all through subsidies right of all these key areas and these export tariffs and what that's done to the country is you can think about this as kind of like
a balance sheet right it's kind of like what um you know deep Seekers doing that obviously doesn't cost a cent per query they're subsidizing it so they draw the consumer into that platform they gain all the leverage over open AI it's the exact same thing with manufacturing and then what happens over three decades is you opt all the skills and the Capital
Equipment to developing countries and then when we go into a conflict they've got all the manufacturing capacity so I think this is a very accurate response to the forced de-industrialization of the us through aggressive trade policies from China over the last 40 years and this is just barely making it even now yes are some goods and services going to
be more expensive 100% what this is going to cause though for American manufacturing and bear in mind I would say 90% of what American manufacturers Buy even if their revenue is on the NASDAQ is offsh so we're flowing 90% of the volume from NASDAQ revenue or Nike shoes to developing countries and paying them to do our stuff and then they're subsidizing it by 50 or 60% so what
you'll see from here is this forced reindustrialization of the US because now we're going to have to build more factories more factories more factories more factories in the US which is going to cause this now huge boom in manufacturing skills and talent to serve those factories and because our skilled labor in the country is aging out because you know we told all the kids in
the 80s and 90s that if you didn't have a four-year college degree you're an idiot is now we have to build factories that are highly Advanced used to tent to the people and are exciting for kids to get into and it's not about replacing jobs it's just going to be different jobs you know you're going to be a robotics technician you're going to be
running 10 machines at once versus like you know doing absolutely everything with your hands and this is the way we prepare for you know 2029 and this is this is the strategy right as you tariff everything we bring back manufacturing to the Us in the next four to 5 years you're going to see the greatest reindustrialization of the country so that we actually have the skilled trades
on Shore so that you know God willing we don't get into a conflict but if we do we might have a hope of doing it because you can turn a dishwasher facility into a missile Factory pretty quickly um and I think everyone who's kind of complaining about this is like you know kind of part of the problem where oh we don't want to deal with manufacturing
here oh my like teu my my you know shitty rapper over teu and my e-commerce business but yeah that's the you're part of the problem you've been like trading dog and cap pictures on the internet for 30 years and we gave away the farm to China like what are we talking about this is a real country you know we're going to make stuff in America um we've
been pushing through this through Nia and obviously through hadrien for for a while and I think the Administration has got it absolutely correct um the second thing I think people Miss of I've heard a lot of complaints about targeting Vietnam targeting Taiwan what people Miss is a lot of the Chinese manufacturing volume so they out of the you know kind of export controls is they
just ship it across the bridge to Taiwan and then sell it to an American company it's kind of like fenal coming from China through Mexico so this whole cluster of Southeast Asia manufacturing often behind the scenes you know it's like a Taiwan CNC is kind of a a dodgy wrapper over Chinese CNC you know to use the technal um so I I think yes it's
going to hurt some industries that have based their business on selling high- price Goods to Consumers while they've got a cost of goods of $5 in China or Vietnam yeah uh 100% but for the country it's an incredibly good thing and the jobs in the Midwest and in places like Ohio we're going to go through the roof because we're going to have to reindustrialize based off this balance
of trade equation that's just massively correct um I think it's an incredible thing for the country it's certainly incredible thing for the business and I can't say enough good things about how seriously the administration is taking the reindustrialize the country and not through subsidizing companies they're just recreating the dollar cost of the
market to incentivize all these global companies and American companies to invest in manufacturing because now the price equation is such that people need to buy American and then let the private markets invest behind that market signal I think it's a brilliant strategy because otherwise they would have had to spend you know a trillion dollars subsidizing a handful of companies to
build in America and now they kind of get that investment for free and you're going to see this huge multiplier effect of every hundred people who work in a factory great you need a coffee station you need like support and Trade Services you know you're going to get towns built around these factories more housing and more construction and that plus
deregulation is a huge bone um what do you um in your world you know obviously semiconductors were excluded from the tariffs but uh a lot of industrial Machinery from places like Japan Germany Holland um weren't excluded uh do you think that that kind of uh those kind of products should be excluded from the tariffs to order in order to help you know uh hadrien obviously purchases
machiner from from countries outside of the US just because you have to we have to I I don't think anything should be excluded uh we said this on the last show is that you know why does us not make CNC machines or Foundry machines anymore we offshored it because they got subsidized so like let's out a tot the stack and you know for our business yeah
my capex just got 15% more expensive but our capex is kind of free because we just use leverage debt and financial engineering anyway but I think people miss the fact that you know American manufacturers are somewhere between 40 and 200% higher than China right and we see this because a lot of our customers do Source things to China and they competitively bid us if they can't if
they're not forced to manufacture in America right and right now we are as a business because we're highly automated often 30% more expensive than China so you add the Tariff back on that and now you've got like a 20 billion Machining Tam in the US now becomes 100 because all the US companies are going well why wouldn't I resore this because now my
parts just got 50% more expensive yeah so like let's just bring it back to America you know how are you thinking about uh poly Market has the chance of a US recession just jumped to almost 50% there's kind of a narrative that like the best case here is maybe it's taking some medicine short-term pain long-term gain is that a reasonable framework to
think about this or do you think that there's a way that we avoid any of the short-term pain other than of course the the the market sell off today I I think we're going to take some shortterm pain but I I think that's really like do you care about the S&P 500 or do you care about what actually underpins GD GDP which is jobs in like the American
hotland who like you know can't get food or you know I mean look I'm Australian right but like here's a great example American farmers have not been able to export beef to Australia haven't sold a dollar of it because it's banned we as a country I'm saying this now America Imports $29 billion of Australian you know beef and Cattle products it's like okay all the American farmers are
getting screwed so like I don't know we should probably be eating American beef um realistically though knowing knowing the administration I think what you're going to see is they are forcing a very hard reset to reset the economy which means deregulate Tara up rebuild United States so we have the productive capacity but bear in mind the interest
rate is extremely extremely high right right now M uh it hasn't really been leveraged down and inflation and and by the way reindustrialization is a deflationary event yes it might make some goods and services come up what you'll see is like wage growth and jobs growth behind it so the the balance of inflation comes down a little bit what I expect to happen is that everyone
complains for about 3 to six months and I don't know what the interest rate is sitting at now but bear in mind I think it's like four or 5% on the Fed rate you can Notch that down one one and a half maybe 2% over the next kind of three four quarters and you're going to we're going to get back to Zer mode and then the S&P will come up as you know
everyone puts their cost of capital in the spreadsheet so yeah I think we're taking some short-term TR pain I think we've been I think the you know Federal Reserve and the Bureau of Labor Statistics have been lying to the American people for the better part of two to three years I think we're already in a recession it's just like we're fudging with the numbers and not talking
about it um but realistically no I I think the boom starts in like two quarters or so um as the federal budget gets cut with Doge people are going back into the economy and being productive tariffs come up and there's a bunch of volume and activity happening in the country that's producing real GDP like jobs and factories and then I think you took down the interest rate like one or
two% and I think you got three years of like Zer mode of cost of capitals going down and all the valuation is going to go up I think it's going to be a banger we just got to like sit here for a quarter or two it's going to be great is is part of the issue that uh tariffs and trade balances are just so complicated that it it's almost impossible for
anybody to fully understand much less somebody who's just sort of passively reading the news or not involved in it because I've gotten messages today you know I got a message from my mom uh who is who was you know just basically seeing everything red just being like uh this is bad you know and so like there's this sense of this you know people are
going to have this emotional reaction to the market because it's the most like real time indicator of of sentiment but do you think the administration could do a better job sort of communicating you know JD Vance was on TV earlier C I think he had uh some some pretty good Cals around tariffs broadly but do you think there needs to be better communication on why this is happening
and and how there there might be some you know uh you know it very well could have a you know very positive long-term impact yeah and I I think they can be communicating to the American people a little bit better I think the communication that's come out is actually pretty good it's just that it hasn't reached many people and you're right they just see like stop go down
you know um but I think over the next six to months I think it's going to be incredibly positive both for you know S&P and DOW Jones and D NASDAQ and for the actual underlying real economy um but yeah you know it's like you feel pretty bad going to the gym for the first four weeks when you're a little bit overweight and then you start
feeling good in the first four weeks feel pretty bad because you're like wow this is really tough and then you realize like okayy I'm just out of shape you know we're getting repping two plates yeah yeah you get to and then we'll be repping plates you know J palal will drop the hammer and we'll we'll be we'll be deadlifting you know J
the on top exactly uh how has your has your phone been ringing off the hook from investors that maybe passed two years ago saying reindustrialization is not going to be a thing anybody anybody cap I no comment on whether or whether or not we're getting calls from customers trying to Resource massive volumes from China or accelerating our Factory build outs and I also got to
drop in uh a minute and I'm not going to make any comment about about future potential fundraisers in case the SEC whacks me on the head with the bad on yeah it's been great having you we we got to have you on more regularly to kind of track this story as it develops uh this is fantastic thanks so much for uh taking the time to join and and thanks for having me back to Capital to
Capital keep cultivating Chris power over at hadrien we'll talk to you soon bye uh in the meantime let me tell you about ramp uh time is money save both easy use corporate cards bill payments accounting and a whole lot more all in one place head over to ramp and we have a ramp investor coming on the show next Delian asparuhov is joining uh partner at Founders fund
co-founder of vaa he'll be joining many people have called him a global export expert on tariffs trade Wars real war yeah you know the list goes on yeah I mean he's really dialed in he's no's he's dialed in he's also an investor in eight sleep nights that fuel your best days turn any bed into the ultimate sleeping experience go to eight sleep.com tvpn for uh an eight sleep do
it get a get an eight s i fantastic I put up 100 last you did you're killing Jordy I really well we gotta ask we we got to ask Delan how he'd do how he did um because I know I know he's on one and I know he hasn't been traveling I got a 95 I was a little bit low on time Pro of work look at this I got the 885 95 you got 100 100 100 look at this
need to be this I was like a hair's breath away if I had gotten two more minutes of sleep I would have gotten 100 two more minutes uh but you know had to keep the had to keep the alarm at 5:40 a.m. got to get up gotta get in the gym got to start repping you get you get up an hour after me an hour after you yeah but you go to bed two hours before
me so you know works out true uh anyway um somebody's got to be up late just texting to get 10 guests on a single episode yeah it's not easy exactly it's hard work um anyway we we uh yeah one thing I one thing I wanted to ask Chris that we didn't get to was uh what what does Nike do here do they figure out how to make shoes in America I know they have probably some americanmade shoes
but it certainly it's got to be less than half a point of uh of their uh Revenue okay Delian is out he we we just messed up the invite got double booked but let's go through more tariff reaction because I want to talk about um Tyler Cowan's Liberation Day post uh because I think he gives I mean obviously uh Chris power at hrin lays out a very uh like a very
reasonable and bullish scenario uh and as someone on the ground building a factory um it makes a ton of sense like it's his thesis that he's had for years uh the thes wasn't actually predicated on massive correct Global tariffs right no uh it was more so predicated on we should make things in America specifically products uh necessary uh for defense manufacturing right
Aerospace sort of super critical Industries uh but it is interesting to hear the other side of this uh kind of the more uh buttoned up economists take and so uh Tyler writes that markets have responded accordingly with the Canadian currency hit especially hard in Sp andp future sinking immediately and we saw the market actually did sell off quite a
bit I'm not exactly sure where it is now maybe you can hop on public.com and check that out Investing For Those who take it seriously go to public.com and sign up um uh because I I actually would love to know like what how is the market trading during the day obviously we saw it opened down 5% and some stocks were hit very hard but I'd like to know overall how things played out um S&P is
down 4% today 4% so a little bit of a pop off the bottom maybe bouncing along the bounce as they call it potentially uh it's interesting you know uh be greedy when others are fearful potentially or maybe get everything out while you can who knows uh we don't give you Financial advice here we just uh Yap and you make up your own decisions uh
anyway with President Trump one never quite knows what one is going to get says Tyler Cowen so any assessment needs to be provisional but that is a big part of the broader problem high and persistent uncertain about the basic rules of the game and this was the question that I was going to ask Chris if he had a chance to stay on longer was okay I understand that you're excited
about the current like what happened yesterday the breaking news but and to be clear it's phenomenal for hadrien of course of course like I'm sure they will have more customer inbound today 100% than probably any other point 100 hist because I mean there there are young company they are using American labor they're based in California like things
are expensive there are a lot of places where even though Chris is great he's a great founder like there are just structural elements that make his product Less Price competitive and he wants to get there with software and Automation and eventually get to a place where he's completely price competitive he's always differentiated on Pace of play time if you're in Southern
California building a defense tech company or an aerospace an aerospace company and you need a part tomorrow hadrien will stay up all night get it done and you won't have any of the shipping times that's been the key differentiator but now it seems like he could potentially be more price competitive um but the question that I wanted to ask him and what we were
talking to Ryan Peterson about yesterday was is there is is what's going to happen with this rose garden and this reciprocal tariff framework you might have seen some of these like mathematical formulas floating around like is this enough of a framework to bring confidence to the market because there's a there's a huge difference between uh okay it's it's 20% it's bad
we're ripping the banding off Band-Aid off but you know that this is the end of the story it's 20% forever you can plan for that you can update your EXL models your financial models you can plan for that versus it's 20% today then it's 10% then it's 15% then it's 50% then it's 10% like chaos and un two people pointing a gun at each other you know sort of waiting no more no more yeah
James Bond day is over put the squirt gun down um and anyways it's like who who's gonna sort of uh make a move first going to BL first yeah and and what's interesting is that I think that I think that this is is potentially enough of a framework to understand where okay I all I need to do is Monitor you know what is the reverse tariff how much would it
cost for me to import my product to the country that I'm making in it making it in and then I can expect that that will be the Tariff that goes the other direction the question is just like is this a will these tariff rates stick around for years for four years at least or maybe eight years who knows or or is this going to be something where literally every single one of these
countries comes to the table and starts renegotiating immediately and we're seeing tariffs jump around all over the place week to week and we're seeing Oh turns out like Swiss Switzerland came to the table and they cut their tariff so that now Switz Switzerland R rates are lower and like all of these different things happening like you you imagine
that there's going to be big discussions between China Vietnam like the major countries but it could be all of the countries and so uh that uncertainty I think is something that businesses really really detest because it it makes it really hard to plan especially things like capex right yep so this is a good line like a game show host Trump
announced a series of tariff rates on many of America's major trading partners how did he come up with the rates it seems by a crude formula a given nation's trade deficit with the US divided by the nation's exports to the US there's a base rate of 10% to be applied to the UK Costa Rica and some other friendly Nations for India it is 26% for Japan it is 24% and for the
European Union it is 20% the most incom apprehensible are those on Vietnam the new tariff rate is 46% Sri Lanka 44% South Korea 25% Cambodia 49% and Taiwan 32% are those not some of the major countries we are expecting to hold China at Bay do we not want Chinese manufacturing to end up moving to those in other countries so we are less dependent on the Middle Kingdom what
could possibly and again uh Chris was highlighting that you know some of these countries are basically sort of producing goods and then you know passing them through China yeah yeah yeah he was making the argument that it was uh that some of these countries are kind of fronts I would be skeptical about the IDE about the idea that you know like 80% of what
we import from Taiwan is Chinese made at the source but I think his point is probably correct that there is some amount of of product pass through what he says what could possibly justify the fact that Taiwan which is the US Ally being threatened by China now faces almost the same tariff as China 34% is a very very good question Trump calls these reciprocal tariffs and the claim
is that we are taxing foreign Nations at only half the rate they are taxing our Imports the numbers are elery however some of them apparently made up Brazil at only 10% and others counting a vat as a net tax on American Imports which it is not in any case we will be moving into a future with higher prices less product choice and much weaker foreign
alliances the tanking of the stock market and other possible asset price repercussions May tip America into recession and increased joblessness this is perhaps the worst economic own goal uh Tyler has seen in his lifetime I cannot think of any credential Economist uh Economist colleague Democrat Republican or independent who would endorse it and I
haven't even mentioned the risk that some foreign Nations will retaliate against American exporters damaging our economy all the more uh pav asparuhov had a great tweet about this he said texting all my close friends to go f themselves so I can learn to be more independent short-term painful but there was literally no other way it's a good it's a good it's a good
take that it's like we're not making a lot of friends with this policy folks this is going to be rough yeah and one could argue that if you truly are America First that means putting America above yeah our even people that are allies yeah PA PA's point is that at some point in you know when he was starting his company he basically had to tell his friends to F themselves so he
could he joking there but no of course but yeah I mean there was a little bit of that for sure uh I I think this gets to this interesting idea of like like like this America First stuff is is not just people people think about it as like you're either like a nationalist or a globalist right like you're either like you should be able to manufacture
anywhere it doesn't matter where the jobs go have every company be completely Global uh it doesn't matter where jobs are and then there's the other side which is like everything needs to be made in America and like I don't care about Canada I don't care about the UK but then there's this there's a there's a pretty wide middle here where you have something like the five eyes and like
all the different allies between I mean we we sell nuclear submarines to France right like like they're very very close Ally um and and this is what Alex karp talks about at palen here like the idea of the West and the idea that like like yes like if if if America go it alone and China builds a bunch of allies through the belon road and not only has
more than a billion people but also has a much larger economy when you bundle them together with Russia Iran all of Africa a bunch of other countries North Korea aside and like tons of other countries are like well if partnership with America is off the table all of a sudden partnership with with China seems a little bit more reasonable then America could get really really smoked
right and so there's this question of like how important are these alliances how important is it to have friends in the global Community I'm obviously all for making American jobs viable and and lucrative and fantastic um but I mean there there is a cost to some of this that I think uh Tyler's right to point out um so uh where did you f did you
leave off at uh damaging our economy all the more uh yes okay so you might think there is something to be said for a reciprocal reciprocal approach to tariffs usually it consists of cutting off your nose to spite your face but it can sometimes work it requires uh a president and Congress who is predictable and trustworthy that's now how that's not how foreign Nations view
the current Administration if you're wondering about the trade treatment of Canada and Mexico that remains cloaked in mystery the threatened 25% rate on those two nations from earlier in Trump's term violates the NAFTA redo that was negotiated by Trump trump himself uh why trust in reciprocity here oh and did I mention that tariffs according to the Constitution are
supposed to be that will in turn signal a willingness to negotiate again and we will be in for yet another round of tariff musical chairs but it's not a game there is real money and therefore real lives at stake here so he was not a fan and I think that I think that the Tariff musical chairs could potentially be the bigger issue and the bigger fear
here Bill Amman yeah the activist man posted earlier Sometimes the best strategy in a negotiation is is convincing the other side that you are crazy and it is very possible that uh Trump is uh being very effective there Logan had an interesting point he uh it was basically a meme that said I'm adding tariffs and it's a guy with a make America great again hat that says
this will create jobs Trump and then it's I'm removing tariffs he goes are of the deal I'm adding tariffs this will create jobs I'm removing tariffs art of the deal uh and uh I mean there like it it's it it sounds really crazy and copy but like how many times have you been in negotiation where there's back and forth like this does actually happen in real
life like it sounds stupid when you say classic negotiation strategy is to start and just be W you know completely extreme and then know that you may on negotiation strategy do you buy into that philosophy I I I have found and a lot of negotiation Consultants that I've talked to have kind of advocated more for uh come in with something that's first build Vision make sure you're
talking to the right decider like the person who can decide uh build a really Clear Vision of what you want the partnership or the deal to look like and then come in with something that's reasonable that you would accept never Bluff and get a deal that actually sticks instead of just wildly oscillating say I I think their budgets 100 bucks so I'm going to open with 300
and be prepared to negotiate down that's actually like a hard way to get a deal done but I don't know what do you think about negotiation generally no I strategy aim for deals that I think are fair and great for all parties involved and then I'm very explicit if I feel like it's drifting into a territory where it doesn't make sense um