#170. Cameron Johnson: Trade War 2.0
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Hey, it's Cameron Johnson, live from Shanghai and the Honest Drink Podcast. Yeah. Welcome back for Emergency Podcam. Thanks for taking the time. Right now, one single word, what pops in your mind? Chaos. Favorite American president in all your life that you know. In all of my life? Yeah.

Why do you have to come up with the difficult questions at the beginning of the podcast? Damn, was that difficult? I thought it was going to be like a pocket one. Can you even name one? I guess it would probably be Lincoln because he essentially unified the nation from when it wasn't unified previously. What would Lincoln say about tariffs? Good question. Good question. Don't know. All right. I'm Justin. I'm Howie. I'm Eric. This is The Honest Drink. And please welcome back Cameron Johnson.

Check, check, check, check. It's called The Rump Shaker. Why is that song in my head now? Why'd you have to do that? Now you gotta go YouTube. I haven't heard that song since high school. You know the song that's been in my head all week?

It's the end of the world as we know it. R.E.M.? Yeah, R.E.M., yep. Oh, wow, what a fitting song. Well, I'm actually writing a sub-stack on it. That is the title. It's the end of the world as we know it, and I feel fine.

Um, Cameron, man, uh, thanks for taking the time to come back and do this little emergency pod with us. Good to be back. You know, it's, uh, it's, it's exciting times as they say, so it's always good to be back and talk to people who are interested, but also who care about this stuff because it affects everybody, right? Yeah. And so, you know, we did an episode not too long ago, a really great episode and so much as usual has, uh, has occurred between then and now and so much upheaval, so much chaos, uh,

Kind of just want to get your take on it and just educate ourselves a little bit and our listeners and talking about maybe just an overall framework of how maybe we should be

viewing and contextualizing everything that's going on right now, I think that would be helpful because I think for most people, all we have to base on is just the narratives and messaging that we're seeing in the media headlines from different administrations and from the China side, from the American side. From Beijing, basically, the messaging has consistently been there are no winners in a trade war. They've consistently said that. It's a lose-lose proposition, but

From the White House, the messaging to me at least seems to have been that no, there are kind of winners and losers in this. And I think that's what they're trying to do. They're trying to renegotiate trade deals and come out the winner. Six months ago, there were concerns and there were challenges, but this didn't happen, right? Essentially, what we're seeing is the end of the world as we know it, to quote REM. The post-World War II order is dead.

Bretton Woods is dead. And so maybe it might help to look at why did this happen, right? And so the first is really, number one, when you talk to policymakers in the US, for example, they say, well, the US has lost 5 million jobs and over 90,000 factories. We have to get that back, right? It's a national security issue. We have to give the average American a real shot at a middle class life, you know.

pick a fence, you know, house, right? Two cars, kids could be able to go to college, that kind of thing. And ultimately that the American dream that we grew up with is no longer accessible to the younger generation. Um,

Part of that is also, you hear this argument on occasion, is that making things actually gives you the ability to innovate more, right? Because you have it close, so you can actually engage in those ecosystems much faster than currently. Second is, it's a balancing of the trading system, right? Trade deficits. If you produce a computer in China and you sell it to the U.S., the U.S. gives you dollars, you give dollars.

the US gives China dollars, China gives the US a computer. But over time, they can throw out of whack your economies. And so, for example, last year, the US imported about $440 billion worth of goods from China, and China imported about $145 billion from the US. So the gap is about $295 billion, $300 billion.

Now, in a single year, that may not matter, but when you talk about year after year after year after year, that can become a problem. Why? Because China builds up all of this, all of these dollars, and the U.S. is just consuming, right? So the U.S. is going, wait a minute, we're giving you all of this money, you're giving us products, but there's a balance here, right? The next, the third, and this is what you hear Trump talk about a lot, countries are cheating us, right? They're taking advantage of the U.S., such as, for example, China.

American beef is not allowed in Europe or Australia because of the hormones that we have in American beef. South Korea, Japan, and the EU restrict U.S. cars.

Right. Whereas the U.S. does not restrict cars from these countries. You also have currency manipulation. Right. So countries will purposely make their currency less valuable. So then it's cheaper for them to export, for example, into the U.S. And fourth, and this is kind of the big one that you hear again and again, we cannot have is national security. We cannot have critical industries in the hands of Chinese or others because they may at some point cut us off.

And so when you look at, those are the four major areas that, at least in the threads, that when you look at the U.S. discourse and the political establishment, those are the things they're saying why this is now happening. Part of it also is that a realization if we don't do something now, we'll never be able to do it. And we can get into those kind of details a bit later. But that's kind of the framework of why the U.S. now is doing this. Then we had Liberation Day a couple of weeks ago, less than two weeks ago now.

And essentially by putting tariffs on everybody, right, it essentially forced the conversation globally into, wait a minute, this is no longer about the U.S. wanting to reshore or to do different things. This is actually about the U.S. trying to take advantage of the current system for itself. Now the Americans would view it and say kind of in those four areas I mentioned earlier, right?

But the world, to your point, kind of reacted negatively, right? Every country in the world, even the one with the penguins, the McDonald Islands off of Australia, they have a 10% tariff, right? Vietnam had a very high tariff, or China had 34%, Cambodia, Lesotho in Africa, I think had the highest at 50. Okay, so again, the US is trying to use that as a particular part of leverage. Now, what

happened is is that china's like no we're not going to take this it's one thing to put a couple some tariffs on you're making a point right we understand that if you saw china's reaction they had a very muted response they didn't launch its broadside against the u.s they had some minor restrictions on rare earths even those are only um domestic they're right they're not extraterritorial meaning they're not outside of china they didn't restrict or ban u.s products

But with the new U.S. tariffs, China had kind of said, all right, we're having enough. So China put on reciprocal 34% tariffs. The Trump administration then responded and said, well, you shouldn't have done that. Shame on you. Here's an additional 50%. Boom. Now we're at 84%.

Okay, and of course China's like, all right, you want to play this game? Fine, now we're at $84,000. Right, and so all this ends up this weekend where the US is essentially 145% tariffs and China has 125% tariffs. And as of late last week, the US was kind of like, please call us so we can make a deal. And the reality is that both sides have leverage. Okay, this is the reality.

But they have leverage in different areas. The US has leverage to say, wait a minute, we are your biggest consumer market for most countries, so we should get better terms of the deal. China would say, we produce all of your critical inputs, your APIs for your medicines, your rare earths for your semiconductors and your automotive cars, a lot of your automobile parts, all this stuff for Christmas, all of these kinds of things. So they both have positions of leverage over each other.

And essentially what has happened is, and there's many strains, there's many theories going on about why Trump did the pause last week. The 90-day pause? The 90-day pause. Some will say the U.S. market became too untenable, right? Because you saw the gyrations in the stock market and the bond market. So the administration had said, we're going to stop, we're going to pause, and then we're going to refigure. Others would say by pausing and then negotiating with these countries, usually on a one-on-one, right? Bilateral instead of multilateral.

the US is better to get leverage not only over them, but ultimately to go after China with them, right? To get a better deal, right? So these are some of the theories that are going on as to what's happening. At the moment, the practicality of what has happened is, if you are Boeing, which is one of the largest US manufacturers and job creation companies, you can no longer sell planes to China for a long time.

that's really going to hurt a lot of manufacturing and industry in the U.S. If you're the U.S.,

it means that your critical inputs to things like semiconductors, for example, the TSMC fabs in Arizona, this is now much more expensive and more complicated, right? Because now you not only have tariffs, but also you have export controls and licensing now that you didn't have previously. So both sides have a bit of leverage over each other. And now at the moment, it's kind of a bit of a, I wouldn't say it's a chicken game between each other, but they're both kind of just stuck. And now we have to see what happens. Now,

On Friday evening, so Saturday our time yesterday, the Trump administration did come out and say electronics, things like phones, batteries, computers, and so on, these are exempt. Now there's a big debate if they're exempt from everything or just exempt from up until 10%. So we'll leave that to the future.

But there are some who say, now this is the opening that the U.S. has given to China, then for China to say, okay, now we're going to also back off. But we'll have to see what happens. As of Sunday today, we're not quite sure where that will happen. But at the moment, this is the status. And to your point, it's not good to have the two worlds, not just powerful countries, influential countries, the two biggest economies, the two biggest militaries. This is not a good situation to be in.

No. Between each other. No. Would you say the amount of leverage each country has over each other is roughly equal? Or is there one side that has much more leverage over the other? At the moment, it's in the eye of the beholder, right? Because it's less about leverage over each other, but what the actions now of the other is going to be doing. For example...

The U.S. is putting these exemptions for electronics and other things. So now if China then also does something similar in the coming week, then you're going to start to see, all right, now we're not on the brink anymore, right? Now we're just starting to negotiate and feel each other out. That's a very different situation. How likely do you think that is to happen on the China side?

I think it's 50-50 at the moment, right? I think part of it is we're seeing President Xi, he's in Vietnam now, he'll go to Cambodia and Malaysia, right? So he's also, the Chinese are also trying to assess what's going on, right? What is the appetite for countries and what's, of course, no country has an appetite for a trade war, but

Again, what is the appetite for what's going on in terms of how is this going to shift the balance of power? How is this going to shift supply chains? How will this affect the Christmas run that's coming up? So at the moment, it's very much TBD. Ken, why do you think that there was this sense of urgency to just literally press the reset button or...

just flip the table, right? Because imagine that this is just one big chess match, right? And everyone's sort of playing it and it's all very, very incremental and subtle and different regimes, countries have different timeframes in terms, like some are more patient than others. Why do you think that Trump decided to just like literally unilaterally reset the whole, like all of the rules? Like what was the sense of urgency there?

It's a good question. I don't have a perfect answer. I think part of it, it depends how you view strategy. On the one hand, you could say the strategy is we're going to throw chaos into the system. Boom, everybody's in the same boat. Everybody 10%. The ones that have the biggest trade deficits with us, you're much higher, right? And we're off to the races because then everybody's in the same boat. So now they all have to come to you and negotiate, right? If you just put tariffs on China, essentially, which is what happened now. Now Chinese suppliers can go into Vietnam and say, guess what we're going to do for the Christmas rush? We're going to throw chaos into the system.

we're going to expand our factories or we're going to figure out a way to get this stuff through Vietnam into the U.S. The discussion is countries are using the U.S. consumer and businesses as a way to propel themselves and build themselves up better. So the U.S. should get something for that too, right? They're trying to also send a message of the previous trading order, the WTO order,

Is dead. Like we're not going to tolerate the fact that all these countries can quote unquote take advantage of us and take the end, accept that. Yeah. They also, if you look at the political constituencies in the US, you also see a lot of people who were middle class a generation ago who are no longer middle class now.

Right. And this is where you hear the talk about, well, fentanyl, right, has risen in drug use in some of these areas, right? The Halloween out of towns, the Halloween's out of industry, right? The Rust Belt in the US, right? Particularly, you know, kind of in the Midwest, you know, up through Pennsylvania and that kind of thing. So they want to stop all of that. And so this is, yes, it may have been a bad haphazard, but in their mind, now everybody's on, the whole world's on notice now that the status quo is no longer acceptable and the US isn't going to tolerate it.

So now, because that bar has been set, now we can move on to the next phase. So there's a little bit of level... So he wants to level the playing field a little bit. But it's interesting that he's using tariff as this way of... I mean...

impacting like foreign policy right because there's a lot of different things that he could you just invited all these countries to go talk to him but it was interesting that there's this victim mindset where it's just exactly i was gonna say that yeah like they're like you mentioned that the u.s at least in your mind is not going to accept the status quo anymore but didn't the u.s create the status quo in the first place excellent question the answer is yes and again it

The problem is, is there's no unified thought on how this happened or why it happened to some degree. For example, we talked to some, and we talked a little bit about this on the last podcast we did, Podcast 168, for those of you who didn't know. Cameron Johnson. After World War II, the world had to be put back together. And one of the ways they did that, for example, was the Bretton Woods Agreement. And essentially, the Bretton Woods Agreement was a financial agreement between the winning powers,

And essentially, it fixed exchange rates across the board with countries, right? Remember that currency manipulation is one of the issues that the administration is talking about. It also set up the IMF and the World Bank. Okay, so that was the Bretton Woods Agreement in 1944.

And so one of the things now that they're talking about is a Bretton Woods 2.0 agreement, what is now affectionately referred to as the Mar-a-Lago Accords, right? To your point where all these countries will get together and essentially tariffs are a way to get countries to the negotiating table to get a deal. Well, it becomes a little bit blurry for me. Trump makes a big deal about the deficits, right? Trade deficits, right?

To Eric's point, using the word victim, the Trump administration makes it out to be that America is the victim in a lot of these trade deals that has going on. But at the same time, throughout all these years, America has also become the richest country in the world based off of all these trades. And when you put tariffs on, especially with poorer countries, like, for example, like Lesotho, and you're talking about trade deficit,

America is the biggest economy in the world and its largest consumer base. It's going to be consuming a lot of things. A poor country like Lesotho, what are they going to consume? What are they going to be buying from you? Even if you, putting aside the fact that even America doesn't really produce a lot of things anymore. But even if they did, a poor country like that, what are they going to be buying from you? They don't have the buying power you do. And so to claim that

a trade deficit is unfair and that America, the richest country in the world, is the victim in all this. I just don't understand. I don't know how to line this all up. Sure. And I think, well, this is part of the issue, right? This is something we're all grappling with. I would say, and again, there's a lot of writings and different things going on, right? So take my words for whatever it's worth and you should do your own research as well.

The U.S. would say, yes, we are the richest nation in the world, but that's partly because a lot of countries took advantage of us. And even though we were trying to be more magnanimous, for example, we opened up our markets to developing countries, right? Particularly, this is one of the things they talk about during the Cold War, right? Where they...

if you would indulge me for just a moment, some of the history after World War II, because again, the world had to be put back together again, right? How do you actually do that in an effective manner? So one of the ways they decided to do it, if I can find it, unfortunately. No, please. And I like that you're going back to World War II because...

I think we do have to understand the history because this didn't just start yesterday, right? After World War II was really kind of the rise of American supremacy and hegemony in the world, both as a military power, but economically as well.

Is it correct to frame it that way? Maybe that helps. Let's take a quick history down trade lane, as they say. And if you'll indulge me for a few moments, because I think, to your point, it's important, right? How did trade develop and why did we get here? And now, in the 21st century, how do we deal with it? So I'd like to take you back to the year zero.

The Roman Empire is at its height. The Han Dynasty is in its 206th year. And humanity has just discovered the seismograph to gauge earthquakes. Wait, what? Back then? Yep. Yep. It was invented by the Chinese. A seismograph? A seismograph. Wait, what year is this? Zero. This is around the year zero in the Han Dynasty. So when you look at trading history, right? So ancient trade routes, we've all heard of the Silk Road, right? That was established during the Han Dynasty. It connected the Asia, the Middle East, and Europe. Right.

you know, they changed goods, silks, spices, metals, all kinds of stuff. Then you had kind of the Roman Empire, which was the next phase, because of its extensive road networks all over Europe, the Middle East and Northern Africa, right? And they were importing silks from China and spices and also through India, right? So you had kind of this connection, right, this trade. Then you had kind of the Indian Ocean trade, which is more maritime, right, where a lot of ships going on between Asia, right, into the Middle East, into Africa, into Europe,

And then next you had kind of the, what I call, upgraded maritime trade. And this is called the Age of Exploration, basically the 15th to 18th century. European expansion, right? The Portuguese and Spanish were going all over the world, trading in all kinds of things as well. The transatlantic trade between Europe, Africa, and the Americas, where they were exchanging goods, people, unfortunately, and raw materials. And then we also had the maritime navigation. Well, with maritime, how, I mean...

Who invented the compass, first of all? So there we go. The Chinese invented the compass again during the Han dynasty, right? And this revolutionized sea navigation, enabling longer and more effective voyages. It's like China 2, US 0. That's right. So, you know, and it's interesting. Well, the US wasn't even around back then. Yeah, exactly. That's the point. This is part of, in the broader discourse on the US-China relationship, these are some of the things that I try to look at. We understand, listen, the US has been here, they're the hot upstart countries.

right? They're sexy, they're big, everybody loves them, everybody's giving them their money. But there's also, you know, the old gray hair who's been around a long time, who's been there, done that, who has a lot of

knowledge and resources and ability to do stuff that you wouldn't think. Right. And so this is, to your point, this is, Eric, as you. It's like LeBron on the court. He's still got his like, you know, he's got little tricks. So these are some of the things that I try to bring up and say, like, if you could find a way to marry both of those, like the stuff humanity could resolve, it's just unbelievable. Yeah. Right.

So then on top of that, next you had kind of the Industrial Revolution, right, which is getting more into the modern age. And that basically happened in the 18th and 19th centuries with technology, technologically having advancements, right, rise of trade on an unprecedented scale globally. You went from local, right, I'm going to produce this locally in my little town or area. Now it's global.

And part of that also was steamships. Before we had kind of the age of the sail, right? And now all of a sudden you have steamships. So you could basically go further, faster, with a lot more goods. So this is kind of the beginning dawn of globalization. I think beyond that, really when you look at trade, trade is not just a function of how do I get point from A to B, but it's also the amount of stuff I can do, and the different kinds of stuff.

And so what the Industrial Revolution really did is it provided mass production and a factory system, standardized products, faster product cycles, and increased demand for raw materials. So you need raw materials from all over the place. What are you going to do? This is where we saw the age of empires, right, and the expansion.

Then you had the transportation revolution. We already talked about steam engines. Then you also had railroads, right? That are now linking everything up together. So you're reducing transportation time. You're lowering the cost of shipments because now you can ship a whole bunch of stuff much cheaper. And you're also expanding markets. Again, you're going beyond just the local. I'm going to ask a quick question here. So throughout all of this is one of the arguments that you're making is that like the whole pie gets bigger. Like over this now 1900 years since zero, right?

Are we saying that all of the countries collectively in general are getting richer and bigger and stronger? Or is it like, you know, is there some zero-sum element to this? There's definitely a zero-sum element to this. But again, I don't think the world became the world we know it as of today until the late 19th century. And part of that is because we became global.

Right. Steam engines could take, you know, a parcel from Paris all the way then into Cairo. Today's argument by those in the U.S. would say that globalization did not benefit the middle class because they took our factories and our jobs. And because of that, then our country actually, even the overall... Well, ask Elon about that. Well...

They took it from one place, but just moved it to another place. So it hurt one population of people, but improved the lives of another population. Yeah. And this is where you get into, when you go below just the surface level, you get into much deeper, right? So, you know, the average American spending power actually has increased somewhat because they've had cheaper goods from overseas, particularly from China. So in that regard, is it actually something where their lives ultimately were

were much more affected. Now, the current administration would say yes, because you took away agency, you took away their ability to have a good day's work and come home and be proud of themselves. They fell into despair. This is why you see the increase in drug use. This is why you see more suicide rates and these kinds of things. So they view all of these things together, that ultimately the globalization of the world led to affecting

are negatively affecting a wide swath of the American electorate, and this is why you see the rise of Trump. It's great that the Wall Street guys and Elon did great. That doesn't mean anything for a good third of the country, if not more, right? Now, I would have a different view on it. I would say partly it's also the failure of our education system,

In that when you have 60% of Americans who can't read above a 6th grade and read a level or do remedial math, that's a far bigger issue, for example, than saying, you know, my factory job went somewhere else. Because education ultimately will resolve most of these challenges in terms of finding jobs or being, you know, able to do and maneuver in different ways. Although that's a much, that's a different conversation than what's currently ongoing. But is that the goal is to just put as many people in the U.S. factories as possible? Like in the long term? It feels like the world is...

the world is shifting. You've got AI, you've got all this stuff, right? And the trade deficit doesn't even look at services. So if you look at the bigger picture, it's like you're just taking goods, products, and you're saying US has $440 billion, imports $440 billion, China buys $145 billion. But that's just the physical goods. And then you look at the stuff that the US is really good at, like software.

or higher level financial services, et cetera. But I'm just curious, what is that end game strategy if ultimately we just want to put people in the factories? That doesn't feel like that's where humanity is going. Well, this is ultimately, to your point, part of the challenge in the discussion is at what point is it, now we can stop and do other things, right? Because the reality is in today's world, the average American will not be in a factory.

Because factories will automate, even if they're reshored, they will automate and have robotics far more than they would people. What was the percent? Because I saw a percent and I don't want to

sort of misquote this, but I, I, I glanced at some figures and it was like that decades ago, it was like 25% of Americans were in factories and now it's like 8% or something like that. Do you have any data around that? Because even if it's 25% to 8%, what about the other stuff? Like a lot of these arguments are not rooted in like facts and data. What is the middle class, right? How many jobs are there? And if you look at like, what, what, where's the money being made? It's like,

generative ai like all this technology so we want to go back to the to the cave cave age i do have a question isn't it a misconception that america doesn't have manufacturing or as a non-manufacturing country it's isn't it the second biggest it is it is the second biggest country the challenge though is they would say um and you're right eric that

It is roughly, let's just say, just under 10% of the overall. And even before it was, what, 25%? Yeah. It wasn't like it was 90% to begin with, right? In our parents' generation, right? So they weren't, let's say, in the 60s and 70s, it was definitely probably in the 20-25% range, right, give or take. I think part of the issue, again, their response would be, well, one, jobs and factories were stolen, and two...

it doesn't matter, they still need to have jobs. And that the service industry, particularly software and stuff, has only benefited a small part of people, or a small amount of people. So if you look at Ray Dalio, he did a thing recently on CNBC, for example, where he talked about, it's essentially 3 million people in the United States, and then around that periphery are probably 10 plus million people that are ultimately benefiting from a lot of these growths in terms of, you know,

efficiencies and wealth creation and so on and so forth. The U.S. population is about 340 million at the moment. So that's tiny. You know what would be helpful, right? I mean, we're starting to unpack certain things rather than just the surface level stuff, right? Because...

I think, you know, Howie, you made this point before the show started, which I was saying, like, I'm finding all the information overwhelming because it's so easy for anyone to just post something on X or whatever it is without really any kind of competency behind that. So basically people are just expressing opinions and anyone can do it.

but there's no facts or evidence behind it. I think it'd be helpful just to look at, look at the breakdown of like the US population and then what are all the different industries people are employed in? Where are these industries going? What will things look like in 20, 25, 30 years? Because you could have made the same argument for like fucking farms. Do we all wanna go back to the farms?

It feels like there's this nostalgia for a time and I can get human emotion of a nostalgia, but there's some things that are never going to come back and you don't want them to come back. I don't want to become a farmer. I don't want to be a fisherman. So I get the feeling that this nostalgia you're talking about

is really what politicians are saying. Like, do you think that people on the ground in America really want to work in factories? Like, is that a sentiment? They're selling them that lie, though. No, but is it true? Like, I'm asking. Like, that's a real question. Like, is there a large population of disenfranchised Americans who are feeling like, oh, like, I wish manufacturing come back so I can work in a factory? Yeah. I mean, you all bring up good points. I mean, one other thing that, you know, the average, you know, there's about six, seven million American males now who are out of work.

who don't want to work. To your point, at the moment, there's 500,000 manufacturing jobs open in the U.S. So you would figure that if there really was going to be a lot of reshoring, that those jobs would be taken. Therefore, you need to invest more to expand capacity and hire more people in manufacturing. And you bring up a good point. The U.S. population, in many ways, even since their founding, has been very restive. And now we're getting to the point... What do you mean by restive?

We don't like the things the way they are. Or we're constantly thinking we need to change something because it's not working. And I think to your point, you're getting your point about the current people wanting to work in factories. You're getting to the point where now you're having year after year after year people who are educated, particularly at a high school, with the inability to get any other job except for low-level service jobs because they can't read and write and they can't do math. And so...

Some of the discourse has been, well, if these people have factory jobs, right, you can learn some of those skills or you become more of a skilled laborer, you know, you're a skilled technician and you can kind of work your way up and you'll have a good middle class job. Well, even if that happens for a small portion, you're going to still have millions of people who year after year are now graduating with the inability to actually handle or work in today's world. And you're going to see a more and more restive population as that continues to grow.

Now, I'm not saying that that is what the thought of the current administration, that's not at all, but I'm just saying when you forecast out, right, 2030, 2035, 2040, unless the educational apparatus in the States, particularly for K-12, is transformed radically, you're going to have essentially two generations at that point who graduated...

with a lower level educational standard than what currently they need to hold even a medium, you know, a mediocre job that does well. To me, that's a massive threat to the United States and the supremacy that the U.S. has in 10, 20, 30 years, right? And imagine you become more and more isolated and insular. And then all of the other places around the world are like educating their people and they have, you know, they don't want to work in factories. They actually want to do whatever the

you know, whatever the most advanced jobs at the time are, they start moving up the value chain. They start being able to do things that we can't. And then we, we become less and less competitive. I, it almost, I know this, there probably isn't, this is probably not a good parallel because they're too different, but it just seems like, like China, didn't China go through this whole thing where it was just basically like, we're going to shut out. We're like the most advanced in the world, but we're going to shut ourselves off. And,

They refused to trade and then, you know, and then we saw what happened in the 1800s and with all the opium wars. But I don't know if there's any parallel there or if you have any knowledge of sort of what happened to China and when they became sort of like isolationist. Well, I think broadly when you look at being more isolationist, in the short term it may help you, but in the long run it does not, right? Regardless of the situation, right? Yeah.

And I think to your point, part of it is because today is a globalized world. If you are isolated, you're not very effective, right? And even with all of the current ongoing trade wars and the tariffs, even countries, you know, countries have challenges with what China's doing. They're never isolating themselves, right? And part of that is because in today's world, you cannot isolate yourself. Because if you do, guess who wins? The other guy.

And so this is part of the ultimate debate on that. I don't think there's a perfect answer other than we know that tomorrow the world will be more integrated than we are today, and the day after tomorrow will be more integrated than tomorrow, and so on and so forth. That is ultimately an irrefutable fact or an irreversible process. And so...

It is understandable for an American administration to say, wait a minute, guys, we also want to export stuff and our farmers have, you know, good beef and you're putting up these barriers that are ridiculous and that, you know, science isn't, you know, it's proven null and void and so on and so forth. It's another to kind of blow up the entire trading system to think that you can negotiate. Because part of the effect of that is, is now all these countries are going to start negotiating with each other. You don't think Vietnam and China have already had some kind of conversation and said, wait a minute,

What happens if the U.S. does this again? And this is kind of the other point that I, particularly when I'm discussing in the U.S., you fired your broadside already. And even though it's 90 days, who's to say in 90 days that it quote unquote isn't good enough and then all of a sudden you're going to put tariffs on again? Or who's to say you do come to an agreement and then in two years you're like, yeah, I don't really like that. Boom, all of a sudden tariffs again. You already pressed the nuclear. It's like you're already finally in, you know, that term finally in. It's like you...

like normally it's like you you maintain face but you're literally like you just flip the table you press the nuclear option so no one's ever going to trust you again because they know that you are willing to do anything and imagine there's other countries out there that are like hey we have technology we have scientists we're going to help you let's work together but we're like no we we want to sell you more beef like what where's the where's the um the appeal in that argument

So I want to interject for a second because I have this one thought in my mind that I just can't get out. And I just want to throw it out here and have a discussion about it. Are we even having the right conversation? Because if you think about it, right now we are, well, at least from a small detail of what we're talking about of bringing manufacturing back to the States. And that's one of the biggest issues.

rhetoric that's being shared to all the people of America. Maybe we should not talk about those talking points that are shared in the news because it's probably...

set on purpose to lead a certain narrative. 100%. I do feel that it is leading like a herd mindset, at least domestically. Like we're taking the bait. Yeah, we're taking the bait right now. It's like NLP, right? They're actually just saying that to brainwash people. Well, there's a distraction. It's like, oh, look over here. So what I'm trying to get at is, let's just say at face value that

Technically, the idea of, yeah, we want to bring manufacturing back. That's why we're cutting them off. And we want to build up our own manufacturing. So we're going to be good. Think about the future. Where's the future heading? You already mentioned it. We're going robotics. We're going automation. Factories are not going to need all these people.

That's fact. It's already happening. It's already been happening. It's just going to get even more incredible as the future comes closer and closer. So to me, that narrative never made sense. So I always doubted. I was like, I don't understand that. That doesn't make sense at all. So to me, that's not the truth. It's a misdirect. It's a 100% misdirect. So what I want to talk about, and I'm not smart enough to be able to talk about this, but let's bring it onto the table. What could be

some real narratives that they are talking behind closed doors. Like this is their real game. It's just like, there's so much...

action or words or things that are going on that don't seem like they're very focused and targeted on what would actually help America be great again. If you really think about it, if the goal is to make America great again, then what would the actions be to do that? Let's like steel man that. Well, at the Honest Drink podcast, that's why we're here, to do that. I think you're right in how you've really hit on it. Once AI and robotics, even to

Let's just say even it's 10% more than what it is today. It's going to revolutionize everything that we know, right? And now just imagine, you know, a generation from now. I think part of the issue is, you know, for example, when you talk about what would it take to build that stuff in the U.S., right? Let's look at the ecosystem we talked about last time, right? Advanced infrastructure, right?

talent and educational apparatus, government support, raw materials, and or the ability to process technology. Those are the five you need. Yeah. And it's different than the masks thing because now we're talking about, right? And I think that's a good thing because if you're just saying like make like the old school stuff like masks, then China is going to have a massive advantage. But if we're talking about making like the new shit, then that's where you have to innovate. Also, don't forget this time who's surrounding Trump.

It's all the technologists that are leading AI around him. Besides Elon, but you also have Sam Altman also amongst his little entourage, right? I mean, what do they know? I'm not trying to cause conspiracy theories or anything like that, but what kind of conversations are they having?

Right. And I don't know if they're part of that because, you know, Navarro, Besant and Lutnik, like those guys are old school, like nobody's business if you've listened to them. Right. So those, like that's his inner circle. But it's also very telling that with the most recent exemptions on a lot of like the tech, phones and computers and chips and stuff like that. Who is that helping? I mean, that's directly helping the tech industry. Yeah.

Yeah, I think you've all brought up good points. I think one of the ways to look at what's happening in the current administration, broadly, Eric, kind of to your point and how to your point, is who are the constituencies they're working at, right? So when you look at the

The cattle industry, right? For example, when they keep bringing up the beef, that's very much targeted towards agriculture, right? Farmers, right? Beef hands and so on and so forth. And yet when you look at the current exemptions as of Friday night, our time, Saturday morning, or I guess Friday night. Let's just make a quick note here for our listeners. We're actually recording this on...

April 13th. April 13th. Okay, so everything is as of... It's a Sunday. As of today. Who knows what the news will be tomorrow. So, you know, when you look at those constituencies, right, those constituencies, to your point, are generally around Trump, right? They're also the most products that are bought, right?

When you look at the aggregate value, it really is the electronics and related things that are actually bought by Americans. And that's one of the reasons I would argue that they are currently exempted. It's because, one, you have powerful constituencies behind them, and two, they're the most value-add products that Americans buy.

you know how to your point when you get back into the five parts of the ecosystem if you want to develop homegrown us drones if you want to develop homegrown robotics and so on you would force all of those companies to produce in the us because then you are talking about circuitry you're talking about design where you're talking about all these processes that are going to build this out into a supply chain ecosystem where you can actually natively build this up into the us now are they going to do that no i don't think i think to be honest um

Manufacturing news, we know it will never return to the U.S. because they do not have those five core parts of the ecosystem. You do not have enough government support to do it. Even now, the Trump administration is changing the way the CHIPS Act has been rolled out. Now, if you remember, the CHIPS Act was $100-some billion, $250 billion, I guess, total, but about $60 billion were targeted towards, we're going to build domestic chip fabs and factories in the United States. They're already changing some of that.

On top of that, you have the talent in the ecosystem or the education apparatus, which we just talked about. You are not going to have people who can design or make robots at scale in factories at scale if they can't read and write and read tech manuals.

The other thing is, is you don't have the raw material. Where are you going to get all the steel? You're now terrifying all the steel and everything else. Where are you going to get the components, the electronics, right? The various component parts, all that stuff comes from China. Okay. You're going to develop in the States? Probably not. At least not in the next decade or two. Well, and just to make a quick comment on that. So let's say like if kind of connecting this to what you're saying, Howie, right? So what is the real goal versus like the... The rhetoric. The rhetoric, because...

The U.S. political system requires rhetoric because there's a difference between your constituency and your electorate. And these are all sort of different things, right? So let's say that your goal for whatever is to, okay, I'm going to bring some type of manufacturing back in these advanced areas.

areas, right? Well, then you just have to look at all the different actions because if they don't line up, like if the steel can't get into the country, then that means you're shooting yourself in the foot. So it's like any company that like has a strategy, you've got to look upstream and downstream as far as like all the different pieces in place. Do they support your strategy or do they not support your strategy, right? If it's a human being, you say, I want to get more fit.

You can work out like all you want, but if you don't sleep well and you're eating junk food all the time, then you're compromising your ability to execute on that strategy. And you would think that people in the administration, these are like this, you know, supposedly, you know, you've got, you have access to the smartest people in the world.

I mean, like supposedly, right? The best and brightest, whatever. And historically the US has had some really smart people run things, right? So you would think that then they understand that like whatever the broader strategy is, then all the pieces underneath, right? The goals that you set, right? The tactics, they all have to sort of line up because if they don't, then you're fighting against yourself, right? Or like a sports team. If your goal is to do a certain thing, but all the players are not bought into the strategy,

then the strategy is not going to work. And it feels like there's a lot of holes in this strategy right now based on your framework or conception of what it takes to build a supply chain, those five key elements. Yeah, they definitely don't view it in the way that I do. I think part of it to your point is that some of the discourse is if we shake the tree enough, we'll get enough of the wins that it'll be okay.

So, for example, when you look at, okay, we're going to renegotiate different trade deals with different countries. Well, if those countries turn around and say, okay, now we want some natural gas from you. Now we want some oil. We want some beef. We want some soybeans. We want this. We want that. You know, then the U.S. can say, great, now it's a win.

Right. And it's very short term. Transactional. To some degree, to some degree. And so to your point, this is where I get into and I, it is unclear what the actual strategy is. Now there might be one, there may not be one. Depends again, it's very much in the eye of the beholder, right? Well, if I was to give the administration the benefit of the doubt, right? And talking about the discourse and kind of what you guys have been saying is that like, oh, you're saying you want to bring all this back on shore, right?

Yet the evidence is there that the means to do it just aren't there, right? And there's very little discourse into how to actually implement all those things. It's more discourse about what other countries are doing, right? I think in their mind, they can't really address what they need to do yet until they solve the China problem in their eyes. And I think the China problem is that there is this place, China,

That is such an attractive manufacturing base for so many of their big companies that can do it quicker, cheaper, better, all those things that have so many advantages that they cannot yet invest in themselves when there's just this elephant in the room that is just clearly the better choice right now. And so they need to address that and pull China down, make it less attractive through all these economic means.

And then by doing that, once they get rid of or at least minimize the China advantage, then they can go back and start addressing their domestic needs without having that as an option. It could very well be. But we don't like sacrifice in the United States. And if that was the case, then the administration would have told these various companies and said, tough, deal with it.

Because that's essentially what came, you know, the last week they've been telling everybody until both the pause and then on Friday night when they gave these exemptions for the electronics. Last week you did have the Treasury Secretary come out and say, you know what?

This isn't about you guys on Wall Street. This is about the common man, and they need to have a job. The USTR ambassador was testifying before Congress, same kind of thing. We need to take some short-term pain in order to work this out. And the minute the market jumped up and down and screamed, they're like, oh, okay, so sorry, so sorry. We're not going to do that. They got yippy. Yeah, and I agree with you. A little queasy. Yeah.

This is ultimately where I get back into when you talk about if you really want to do this stuff, by their deeds you shall know them. Actions speak louder than words. If you're going to do it, then you need to do it. But this back and forth, and it's not only ineffective, people call bullshit on it. I was in...

last week actually during, during Liberation Day. And all of these guys said, nobody thinks any of these tariffs are going to be here in five years because the American economy wouldn't work. And where are these people going to get all this stuff? Where are they going to get the Christmas lights? Where are they going to get their dinosaurs?

where the summer fair is going to get all their little knickknacky products. I love that. We're going to get the dinosaurs. Yeah. Well, that's what they said. And I'm like, that's a great point. And they're like, none of this is going to be there. They're not going to make this stuff in America or Mexico for that matter. So let me ask this, right? Kind of building on what Justin says. So first of all, like based on everything we've talked about, I don't think this is about jobs because I don't, I just don't think this is really about jobs in the long term. And ultimately I think it goes back to the original idea

you know, sort of issue that we were talking about, you know, a lot last year, which is just like, this is about supremacy between China and the U S I mean, ultimately it's, it's that simple. It's the U S needs to be able to have a long-term strategy to stay number one. And all of this stuff is just kind of part of all that fallout. Right. And, and if China continues to dominate the world and have manufacturing, what is that? What's the implication for the U S we can't, if, if,

If we got into a war, right, US versus China, and then everything shuts down in terms of everything that we depend on China for, then we're fucked.

Right? You've just hit the nail on the head. I mean, it's just the US-China thing. At the end of the day, that's it. Yeah. This is an argument that continues to go on and on to your point about, guys, if we don't do it, we're no longer going to be number one. And if we're not number one, then China's going to control everything and control us. Yeah. And it's like the China problem in their eyes, I feel. I think it's a real problem for them.

and that's like to eric's point it's like it's just it's about that it's about that competition it's this existential threat it goes back to meersheimer it goes back to like graham allison it's like but like but like okay let's let's start looking forward in the sense of okay it is what it is we will have our opinions on it right or wrong if we look at the tariffs right

can we learn anything from the history of tariffs and how superpowers or countries have implemented tariffs throughout history and how effective or non-effective it has been in the past? I think that could be really telling for us maybe to how we might predict what might happen here. So that's a good question. Tariffs have kind of played a role in the global trade, even trade, no matter where you are throughout history. And this goes back to the ancient times, right? So for example, in Rome, um,

tariffs were used primarily to generate revenue rather than to protect local industries, right? So this is a new form of taxation. The Roman government often would impose a 25% tariff on imported goods, you know, silk, pearls, spices, these kinds of things. And it would help fund public expenses. It's a tax then. It is. Because whenever you put a tariff on it, it's just another word for taxing your own people. And Trump has been touting they've been making a lot of money off the tariffs already. Yep.

Yep. Already? Yeah. He's been saying we've been making so much money off these tariffs. $2 billion a day. We're making so much money. Yeah. So in the Roman Empire, at least, this led to higher prices for some goods and a lot of black markets.

This is one thing that tariffs do lead to is huge black markets. Just like how prohibition leads to the rise of the mafia. I said the same thing to Anne yesterday. Oh, really? Yeah, prohibition. Long distance high five. So then we fast forward again because this is also a history podcast. During the Middle Ages, tariffs were used by feudal lords to control trade within their territory and to collect revenue from merchants. So again, Eric, to your point about it is a tax. Yeah.

So tariffs were imposed on goods transported through toll points, bridges, and so on and so forth. And they were also political because it allowed rulers to control the trade routes, right? But also boost the local economy. In the 17th and 18th centuries, it kind of evolved to where colonial powers would use them to protect their industries and the wealth they would extract from the colonies, right? Now, during this time, did this all work out in favor of these powers? Yeah.

To some degree, because they can, again, they control the means and the process, right? Part of the issue, again, gets back to earlier conversation about the U.S. does not control the means, right? The production means in the process. So they're trying to tear and tax their way back to getting that back into their control. So it got a little bit of Alcon. So like, you know, after Bretton Woods and then WTO, like China, right? It's like, it's gotten out of control because now, you know,

you have these independent actors like China, whoever, right? That now are their own agents. They can do whatever. And so the U S lost a lot of control over this too. It feels like. So basically they're just walking back this idea of globalization. Is that how I can see it? Yeah. So when you, and when you fast forward, even to the industrial revolution, right? Um,

For example, the U.S. used tariffs to protect its manufacturing sector even then. This gets kind of back into the 1890s tariff discussion. We want the McKinley tariffs back because it allowed us to protect industry, our economy boomed, and so on. But to your point, Eric, particularly in the WTO era, which is kind of the mid-'90s to present, it was a global framework established. It was really the first kind of global trade framework

body set up and basically it was designed to regulate trade, good services, IP, so on and so forth. And kind of the interesting thing that happened there was that they had a dispute resolution mechanism to enforce trade agreements and resolve conflicts. The WTO? WTO did. But this is where the US will go back and say, wait a minute, we had all of these issues, we filed it, either we were treated unfairly or even when we won...

And we tried to do things to rectify the situation, for example, against China. It was never done or it was done in a haphazard way. And so we were still, even though we went through all the processes and we obeyed the rules and regulations, they still didn't. This is why you continue to hear, particularly in the U.S. discourse, you know, China cheats, China doesn't follow its agreements. China does this, China does that. How much truth is there to that claim, though?

It's in the eye of the beholder. You could say in some cases that's true. In other cases, it just depends on your definition of what actually happened. Well, just look at all the industries that used to exist in the US and now they're in China. And so, I mean, I think there's got to be some truth to it. How do they become so competitive so quickly? A lot of it will also be, though, in terms of IP, right? And for those of us who've been here long enough, we remember...

Let's just say CDs and DVDs that may not necessarily be, have gotten through legal means and so on and so forth. Exactly. And so essentially the U.S. has felt that the WTO as an organization, even though it was purported to, you know, abide by more free trade rules and to help, you know, a global burgeoning trade system actually completely failed. Right.

And so why would we... It lacked the power to actually enforce the rules, right? Or it had the power and did not enforce the rules, right? And so basically, this is why kind of, you know, you had the GATT, which is a general something trade agreement after World War II, basically with the...

you know, with NATO, Japan, right, South Korea to some degree, Australia, the Americas, right? But again, that didn't include half the world. The WTO was kind of the new mechanism in the 90s to unite the whole world around a global trading system that was robust, that everybody would kind of win from. And if there were challenges and disputes, it had a dispute mechanism. But when certain countries felt that

that dispute mechanism wasn't actually just one way or the other. They said, screw it. And now this is one of the reasons why we're in the situation we're in. And so the U.S.'s way now to rectify many of these injustices is we're going to put on tariffs and essentially hold people

the market of the US as a hostage to you that if you don't do as we say or give us fair market access or whatever the negotiations end up being country by country, then you're going to lose. Ken, let me ask you this question. This is interesting because there's different angles to it and you can't just think about one angle. But let's say that this system is not

as fair as it could be. And I've heard that commentary recently as well. Then if let's do a thought experiment. So, cause like Trump is very, let's say creative or unusual in his tactics, right? Maybe his goals aren't necessarily different than, you know, Biden or Obama or whoever, right. In some sense, like they, they all want to make America stronger, but certainly his tactics and the way he communicates them, right.

seem quite different, right? So if it was like another more conventional president, let's just say there was another president that was trying to implement something, a more fair trade system, how would he or she do that? Like what would a conventional president do? Like would they go, like how do you do that? You go talk to the other foreign leaders, like you go to the WTO and put pressure on them. Like what is the conventional tactic of

And, you know, like, is Trump just doing this because none of that shit worked before? Yeah, I think it goes back into the constituencies of the U.S. The constituencies of the U.S. are no longer interested in trade.

Beyond maybe North America meaning when you look at the unions when you look at farmers definitely are but when you look at the unions when you look at the electorate that says this globalization stole my factory job and I've been you know I've had low-paying jobs for the last 20 years right those kinds of things so that's such a small percentage of folks But that is the people who are loudest and who would drive the voting blocks right in many regards, right this

This is kind of what they get, you know, the East and the West and then the flyover country, right? All of those kinds of discussions. And so to your point, it would be any president. It wouldn't just be Trump is doing it differently. But make no mistake that if a Harris administration was in charge, we would also be in a similar path. Now, it would definitely have different flavors and stuff, and they probably wouldn't blow up the current trading system as we know it. But the reality is, is that the constituency is just other constituencies.

They've been around for at least a decade since the end of the Obama administration. And there is a huge, these are not small populace, you know, populations. These are large parts of the population that feel not just aggrieved, but also what am I going to do now? Right. How am I going to get a job? How am I going to compete against a cheap Chinese dinosaur?

Or how am I going to... What's unemployment in the US? Unemployment is a 4%. So I don't get it. What does that mean? Who are the people, though? Well, the people would go, just because you're employed doesn't mean you have a great, fantastic job and you're able to provide for your family. The other trick of this is, and this is something that is rarely discussed, but that I do try to bring up, particularly in my discourse in...

not just the US, but also Europe, we've had 30 to 40% inflation since 2020. So even if you had a job, let's say in 2018, 2019, and you, you know, whatever you work in a McDonald's, maybe whatever, your dollar went a lot farther, right? It now no longer does, right? When you have $10 carton of eggs, when you have all of these different challenges, they don't really care,

about that. They want somebody to stand up and say, enough is enough. We're getting screwed because I'm getting screwed. Somebody needs to do something about it. And this is why, again, you hear the Trump administration says, we are being treated unfairly. We need to... Now, we can debate whether that's right or not, but to a large portion of the American electorate, that's very attractive. So the rhetoric resonates. Yeah, he's speaking directly to them. Right, yeah. But what he's really trying to do or the underlying message is not that.

What I think, right? Yeah. Well, and in some ways it's very much in the eye of the beholder, right? By them taking in all of these, you know, they took, they're negotiating with Japan, with Vietnam and so on. By bringing these countries in, they can position and say, see, we're standing up for you. And maybe they get a few concessions, right? For example, U.S. rice cannot go into Japan. I think it's like 700% tariff or something. Things like that. So some rice farmer somewhere will probably be happy.

But is the average American who lost their job 15 years ago because the factory moved overseas or to Mexico, are they then going to get a job? They're not going to go into the rice farm. What happens to them? And so this is, to your point, this is part of the challenge, at least in the American situation at the moment, is how do you deal with... And of course, you have all of these year after year, you have these graduates out of high school who cannot...

operate read or write in today's world effectively? And how do you deal with that? And so you're seeing compounding problems and they are trying to address some of these challenges for sure. But I think, how to your point, they're not looking at, we don't know what the underlying is, but the underlying probably isn't going to fix the issue either. Part of my interest is, and I'm going back to the US in the summer into DC is, okay, now that you've done this, what happens in five years? Because if it doesn't work,

Then what are you going to do? Because then all these countries are going to go, we already did this with you and China's offering a better deal. Guess where we're going to go? We're going to go to China. And I bring this up every time I talk to somebody and they say, well, nobody wants to deal with China. I say, last year, 51 African heads of state came to Beijing to talk to Xi. 51. Every single leader of Africa, except for the one who sent his number two, came to Beijing.

They are not going to DC. They are not going to London. They are not going to Zurich. They are not going to Tokyo. They are all coming to China. And so at the end of the day, when you forecast out 5, 10, 15, 20 years down the road, where are the new markets for global products, right? Asia, Southeast Asia, India, the Middle East, and Africa. And when you have a whole continent who in 2024 comes to Beijing, that should really tell you where you stand. Mm-hmm.

With this 90-day pause, with the exception of China, on the U.S. tariffs, do you think many of these countries are going to come and kind of bend the knee in Washington and come up and try to negotiate? What do you think the attitude and mindset and willingness for all these other countries to do that is right now? Oh, I think if you're a Vietnam or Cambodia, I mean, you're very interested, right? Because you can't blow up your economy, right? But it also depends on what the U.S. is actually asking for.

If the U.S. is asking for and saying, we want more access to your markets, we want you to discriminate less against American firms. If you have local procurement regulations, you can't say, sorry, American firms, you're not allowed to apply or bid. Right.

I think you might get some headway, right? And you might get a lot of headway also in energy. Energy is a huge issue, particularly with the ongoing Ukraine war, right? So you might get some headway with lower gas prices as they are, or natural gas and oil from the U.S.,

But if part of the deal is, listen, you can't take any investment or deal with China, then I think it's a no go. Right. But if you're Vietnam, if you're Cambodia, if you're Thailand, right, if you're parts of the Middle East, you have to have China. You cannot not have China. Right. The most fascinating part of all of this is really the discussion with Europe.

And what happens with Europe, because Europe has really been pro-US, particularly for the last, for many years, of course, but particularly the last couple with van der Leyen in as kind of the head of the EU. And they had herself and Li Cheng, the premier of China, had a call last week. And it was a very interesting call, basically saying, you know, we want to find a way to deal with each other. That call would not have happened before April 1st.

And this was before the announcement of the 90-day pause, right? Right before? That's a good question. It happened last week. So, you know, last week's a bit of a blur, so it may or may not have been. Don't blame me. Well, I heard that the EU was ready to place reciprocal tariffs on the US, but then they paused that themselves once the 90-day pause was announced. So they did put reciprocal tariffs on, and then they may have done some of them, or held off on some of them, yes. And so...

To your point, the most fascinating thing for me is it's less about, yes, if I'm Vietnam, absolutely, I'm going to go and say, what do you need? How can we fix this? Because you have to. The U.S. is your dominant primary market. But at the same time, now I'm going to go and say, great, how can I sell this stuff into India? And how can I sell this into Africa and the Middle East and parts of Europe? And how can I diversify? If you remember that in the last 10 years, it's always been diversified. So instead of ABC, it's going to be anywhere but China. It's going to ABA anywhere but America. So-

We talked about a little bit, you had hinted at kind of the common man before. I want to take this down from a very high kind of political structure and level of discussion down to Main Street, where like the real everyday people, right? Just like us, people who have work in companies who might own their own small to medium-sized businesses, both in America and in China.

If the current situation stays as is, what is the impact on everyday people on both sides? Like how much pain and how quickly are they going to start feeling this pain? And what is that going to, how is that going to look?

So in China, it's at the moment it's mixed. And part of that is because we don't quite know the effects, right? Companies that may have had, for example, a factory or two here, but maybe they had a couple of factories, let's say in Vietnam or Thailand or something. So they may be better able to weather the storm, right? But single, you know, small mom and pop factories, maybe they were part of the, uh, Sheehan supply chain, right? They're making fast clothes or maybe they're making like, I saw a couple of the dinosaur guys, which is interesting. Um, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and,

You know, they are very worried. Some of the products, even at 125, 150%, they can still sell. But there'll be almost no margin. So that creates its own set of problems, right? They're already generally at lower margins, but there's a general understanding of, you know, sometimes you just have to bite the bullet. But others are looking for new markets. As I said, ABA, anywhere but America. We don't want to deal with the Americans. They're too mafan. They're too much trouble. We want to go somewhere else, do something else. Yeah.

But it's interesting, in talking to some of the businesses, you know, several told me, listen, there can't really be any more movement in supply chains because we've already moved. As one told me, you know, they're kind of a, I wouldn't say they're a joint venture, but they basically, most of their clients are North American clients. So, you know, Canada, Mexico, US. And they said, listen, about 10 years ago, we started getting feelings or feelers that we needed to, you know, ABC anywhere but China. So we need to have other options. So they did, they opened up in Vietnam.

And basically their comment to me was, we've spent the last, better the part of the last decade being more quote unquote resilient, right? Having other options and other sources of material, having other suppliers, being in another location, right? So there's no single source or a single point of failure, right?

And we don't have any more money to do that. We have spent all the time, the money, the effort, the people to do this, and now we can't do it again. So if the U.S. thinks that all of a sudden all of us companies that are in there and all kinds of supply chain, the Walmart supply chain, the Costco supply chain, the Amazon supply chain, the Nike supply chain, if they think that now all of a sudden we're going to move back to the U.S., they're foolish because we've already spent them and we have no more money.

The other interesting thing that came out of some of this discussion was that a lot of the buyers felt – sorry, suppliers to the buyers felt that there's no way these tariffs can be on in five to ten years.

There's just no way because, you know, they're not going to be able to deal with it. It's like they're like, it's almost metaphorically like going on hunger strike and be like, okay, I'm going on a hundred hunger strike, but like, who's going to be able to hold out longer? Does the, does the trade deficit between America and China, uh,

disadvantaged the United States in that respect, in that generally speaking, American consumers are just more reliant on Chinese goods than Chinese consumers are reliant on American goods? I'd say that's true to some degree. The American consumer would buy more Chinese general stuff, for example, than the Chinese consumer would, right? But here, a lot of it is services, right? I mean, I was at the biggest Starbucks in the world yesterday there at Tai Kuhui. Packed. Packed!

Right. KFC. Packed. Right. We're walking through the mall. Packed. Right. Apple store. Packed. Right. So Chinese here, even though they don't have all the American brands, they have a lot and they're not really affected. So the way we consume here, the American brands, you know, we go to Disneyland, we buy an iPhone, maybe we go see a movie, right? We're eating at a KFC. We're not necessarily buying day-to-day products from America. Right. If you're in America, right?

It's kind of flipped, right? You don't necessarily have, you know, like there's no Huawei stores, things like that. But you will buy, you know, stuff from the dollar store that's made in China. Or you will go down to Macy's and buy something that's made in China, right? Or maybe you go to an auto parts store, right? And you'll buy a new carpet for your car, right? That may be made in China, right? So it just kind of flipped.

When you look at the iPhone, the actual Chinese content, right? The physical stuff in the iPhone is generally less than 10% of the overall iPhone, right? The chip comes from Taiwan. This or that comes from Korea. It comes from all over the place. And essentially it's assembled here. But the entire cost of that phone was a 450 bucks, let's say, is counted as part of the trade between the US and China. Mm.

Not that 8%. So to your point, and again, that's a little bit more technical for your listeners and everything, but these are some of the issues that also are going on. So for example, there was a company that came out, it was on Twitter or X this morning where they basically said, listen, we have $30 million in revenue. Our key inputs come from China to make this product. We're now not going to have this anymore. And one of the guys said, good, you should have bought it from America. Shame on you for not buying American.

It's like, okay, but if you don't have the ecosystem to support that manufacturing, that's not the small businesses problem. The small business is trying to do what everybody's trying to do, which is run a small business and be profitable, right? And have good workers and to continue to develop and grow, right? And it's interesting because like, it's not as simple as it appears on the surface, like 440 billion versus 145 billion. Because if you actually break down the 440 billion...

Where does that money actually go? Maybe a lot of that money actually is benefiting America. Yeah. Right? And so by like basically blocking that $440, you're harming yourself essentially. It's like, again, it's like a hunger strike. And most of those goods are electronics, which is why you just see the exemptions, right? And they're high value, right? An iPhone is, let's say, $450. Yeah.

If you put 145% tariff on that, that basically becomes, you know, once you add the margin, that becomes an unsellable product. And remember the wise American sage Dave Chappelle said, I don't want to pay $8,000 for my iPhone, right? And so to your point, you know, the stuff at Walmart is lower value, right? Because it services the lower parts. And Walmart is like the largest exporter, like...

Or importer to the US to begin with, right? One of them, yeah. So if that $440 billion, like how much of it is actually going through Walmart and Walmart's actually taking a cut? When you look at Amazon is similar, right? Costco to some degree. So the larger, I mean the- When you look at the big pie, most of it is like these big actors in the pie. It's not like evenly spread. That's right. I mean, the biggest users of aspirin in the US are Walmart, Costco, and the US government.

Right. Walmart, Costco, and the U.S. government are the biggest buyers of aspirin in the United States. And so, you know, to your point, now, of course, that filters down into the average consumer and so on and so forth. So when you look at how tariffs are going to play out, let's just say, let's assume that they stay on or there's no resolution. The average American, to your point, Justin, will basically face higher products, which means I'm probably not going to buy it. There's going to be some empty shelves in the store.

And I'm going to have a lower standard of living. So now instead of buying this really cool toy for my kid, now I'm going to have to buy a smaller, lesser toy. That's a drop in my standard of living.

Now, if I go to the store, I have to choose between, do I buy this thing that's five bucks or this thing that's 450 or the next thing to it is empty. Right. So we're going to start to see these things filter through the American system. And part of the challenge is, is we already saw a lot of that during the pandemic, right? Where there were shortages, whether it's with supply chain or other issues. And right. And again, when you look at lower, I don't know, lower class America, I'm not quite sure what the, what the term is, to be honest, but

You know, they've been hit pretty hard the last six, seven years. And now they're getting another hit because the tariffs are not going to be, the people who have wealth are not going to be the ones that are going to be affected by the tariffs. It's the mom and pop shops. It's the small SMEs who are like, listen, I need these very unique product inputs for my product and

The only place that can get it to me cheap is China because it's at scale. And I can't really make this in the U.S. No manufacturer in the U.S. is going to open up a small, you know, manufacturer base to produce a couple of random parts for a product. Yeah. Like a little niche, little cottage factory trying to make little things. That's right. Now a Chinese factory would, because oftentimes they do it, you know, they make similar types of parts for different customers around the world, right? So again, it just kind of gets into what actually do you want? Well, that's why it irritates me so much when like,

People will shame these American small to medium-sized business owners. Oh, like you should have just, you know, you shouldn't have bought from China. They should have just made it in America. Like the simplicity of that and the stupidity of shaming someone for that when there is no other option for them to do. And meanwhile, their business is going under. It's just infuriating to me. You're 100% right. And they often do it on an iPhone, which is produced and made where? From China.

So that's the ultimate hypocrisy in the argument. So I have a question, which is, maybe it's an observation and you can react to it, which is that, is it incorrect to say that US corporations are more profitable than ever? If you look at the top market cap companies, right? If you look like 40 years ago, I think if you look at the breakdown of like American companies that were among the top 30 in market cap, it was a very, very, very different list, right?

I think there's lots of Japanese companies on there. And then you look now, like 30, 40 years later, and you look at the top, most profitable companies in the world, I think you would find, we could look this up, that many, many, if not most, are sort of American companies. So it seems like America and our businesses are more profitable than ever, and people like Elon Musk and et cetera, Jeff Bezos, are richer than ever. And the issue is,

is being in, you know, from, from the current administration is that, oh, we're losing jobs to like other countries, et cetera. But maybe another way to look at it is we're actually just becoming, um, you know, the, the, the gap between the rich and the poor is just wider and wider and wider because of the education system, et cetera. And it's also an element of just the distribution of wealth.

So we're blaming other places. Meanwhile, US companies are basically exploiting workers all over the world and making profits more and more and ever. And it's just the imbalance that's happening. And that's really the root cause. Well, it's the US companies, the big ones anyway, that are giving away these jobs. So that's why I've never bought into the narrative that is repeated so often in the States, especially by politicians, is that China is stealing our jobs as if

China is coming with pointing a gun to your head to buy from me. No, US companies are running over here with their money and their deals and

to place orders to make things. They're always going to go to the next China. Yeah, the decision is on these U.S. corporations. That's where the action and decisions to do that are taking place. Chinese factories cannot force you to buy things from them, right? So this idea that it's like China actively stealing the jobs out of your hands away from you is just such a

a false statement, yet people really get riled up about that. There's so many false statements. Yeah, the anger should be directed at these large corporations who are actively giving away American jobs. Yeah, you have, you know, Vance saying, what,

borrowing money from peasants, right? Oh, God, yeah. But that's kind of with the narrative of China has sweatshop factories and we're an ass-backwards country. But that's the thing that's just so weird, right? Because now if you ask...

I mean, there was even, I remember watching an interview with Tim Cook and he was saying the reason why, you know, we're doing a lot of production in China and why a lot of people go to China for production is because the quality. It's the skill. It's the skill and quality that you can. And the variety of skill. It's not so much the cost anymore. Well, I just look at my shirts growing up, right? Yeah.

And I look at like, you know, whatever, like occasionally you get a nice, your parents would buy you a polo or an eyes out or whatever. Right. And if you just look over the years, if you get ready to keep all your shirts and where they were made, it's shifted over time. There was a period of time where lots of stuff was made in Taiwan and like Dominican Republic, Peru and India and Turkey and China. And it's not all made in China right now. Cause there's always going to be another China, the next China, whatever it is.

Yeah, I think you guys bring up a great point. I mean, you're essentially telling American companies that you have to be less profitable and spend more money and hire more people at higher wages than you would in other places. And I kind of get back into, okay, but is a shareholder going to tolerate that? If the CEO has to stand up and say, sorry, we're not going to make as much money next year because we're going to be hiring more Americans and reshoring,

Is the shareholder going to go, yay? Are they going to go... That's a great idea. Yeah, are they going to go, screw you, I need to maximize my shareholder value. You're out, buddy. See you later. You're fired. Right? And again, we saw this with the mask. And I get back into, you know, I was in a discussion last week and they asked me about this, you know, kind of reshoring and everything. And my comment was, listen, you had American firms and organizations who wouldn't pay a single penny more for a mask that

in the U.S. than China, and Americans died. How do you expect them to pay more now for things like chips or EVs and other things? And then the other part of that is we've already been down this road. So a company who, let's say they do that. Let's say, you know, pick your big multinational. They say, okay, great, we do want to support, you know, American jobs and everything. We'll have a factory here, and it'll be more expensive, but we'll figure it out through efficiencies and maybe some automation, but we're going to bring American workers in. Who's going to buy from them?

Because we saw that during the pandemic. All these companies had set up mass making and other parts of PPE, and nobody bought from them because they were too damn expensive. Yeah, there was a stockpile. It's not like there was a lack of stockpiles. But just to play devil's advocate, there weren't these tariffs back then. Now there are. Does that level the playing field at all? Well, I get back into, as a CFO, for example, if you look at medical syringes, medical syringes here can be produced at scale for about $0.02 a

So even if they're sold in the U.S. for, let's say, 20 cents is the lowest level and 50%, at least that's what Amazon tells me. So let's assume that you tariff it at 1,000%. Okay, now you're basically at par with whatever the U.S. has done. Have you moved the needle? The answer is no, because what the American company is going to do is they're going to say, great.

Now we got this, I'm going to raise my price by five bucks or whatever it is, X amount, and then I'm going to make it. Does that mean they're going to reinvest? Does that mean, it's TBD. And that's why I get into, if you're really going to build out the ecosystem and the scale for the supply chain, you can do it with Virgin.

products, right? You mentioned robotics. There really is no standard robotics anywhere. I mean, I'm talking about like future robotics, right? Humanoids, so on and so forth. China has some, US, you know, but in terms of scale, there really is none. So you could probably do that. It'd be very, very expensive, but you could probably do that. But if you're trying to build a supply chain outside of China, right? And again, I get back into this discussion. You are so sincere that you want to do this. For example, they talk about, we want to reshore pharmaceuticals and rare earth minerals, right?

There was a coal, the only cobalt mine in the United States closed a year or two ago in Idaho. If you are so sincere with your national security, why are you letting them close?

There was a producer of vaccines in the Carolinas that closed. The Wall Street Journal did something on this last summer. They closed. If you are so sincere about reshoring medical, what the hell are you doing? Why are you not offering all of these companies, listen, we will keep you open, tell us what you need, we're going to help you, we're going to find your customers, and none of that is happening.

And so this is why, when we get back into why would it not happen, that's why. Because none of those things are happening. And so when you talk about we're going to hire an American, we're going to, okay, great. Where has this happened? Nobody can show any examples of an American firm doing this. And this is a great example of...

the fundamental tension between how our system is set up. Like on one hand, the reason that America in many ways is great is because we have this incredible capitalistic, super uber competitive system where CEOs are just trying to squeeze like every cent, like every cent of margin, right? Like, like just they're, they're incredible, uh,

corporate managers, right? And it's that tension between then, okay, but what does the healthy society look like, right? How do we have affordable healthcare for everyone? How do we make sure everyone has a good job? How do we make sure that people have a good standard of living? And it's these tensions because the way the system is set up on one hand is to maximize profits. It's like the survival of the fittest and it's fucking ruthless. And if you're highly educated, you're connected,

right, and you have all these advantages for you, then you're much more likely to be at the top of the food chain.

And the reality is that lots of people in the middle and the bottom of the food chain are suffering. And the irony of it is that all the people that work for Trump are all at the top of the food chain. So why would you trust people that have every advantage in the world and who got to where they are by being arguably completely ruthless? Why would you trust them to look after your best interests? And so then the real question is if truly it's about

making america great again in terms of you know making sure that everyone has a good livelihood what is the best system for that is it like raising tariffs or is it like actually having domestic policy um that you know helps educate people and levels the playing field for them and gives them the ability the ability for them to be competitive because the way the system is set up right now

it doesn't seem like it's a very fair thing and it's getting less. Because one side is clearly winning. Yeah. And it's less and less fair. And it's just, you gotta be, I mean, you just gotta be skeptical when everyone who's saying that the middle class and lower class are important, none of them actually come from the middle or lower class. They're all billionaires. Well, they would say. You gotta be a little bit skeptical. J.D. Vance was a peasant. Yeah, they would say J.D. Vance. J.D. Vance was a peasant. Look at where he is now. Where did he make his money? Yeah.

Peasants. Right? And they're not saying... Borrowing money from peasants. What does that make you if you're borrowing money from peasants? Wouldn't that make you lower than the peasants? What J.D. Vance is not saying is let's get everyone into Yale or let's get everyone educated so they can work in Silicon Valley and make money. Because that takes too long. Cam, how will this change the world order? It's already changed the world order. We're looking at a vastly different world

post-April whatever. Even, let's say, in a month from now or after 90 days, Trump decides to remove all the tariffs. Will it still have changed the world order? Yes. Or will it just go back to the status quo? No, what we knew as the world order has completely shifted. And there's a lot of reasons. You know, it's interesting. When I was, I must have been about 11 or 12, my father came in to the house and

This is when the Berlin Wall fell. And he says, son, the world has changed. And then a couple years later, I think it was, I want to say it was around Christmas time of 91. Same thing. He walked into the house and he looked at me and he said, Russia has fallen. You will never have to go to war.

I had a very similar conversation with my son over a couple of days ago. And I said, son, the world has now changed and it will never look again the same. Wow. You said that to him? Yeah. And I said, I hope you don't have to have the same conversation as I just had with you, with your son in the future. Right. Because basically you're looking at 30 some years difference between my father and I having similar conversations with our sons. Um,

It is because one, the veil, right, the zeitgeist of the US has now been completely ripped off. Even before this, you could say, well, you know, to your point, Eric, you know, there's a lot of mystique, right? America is America. You know, it can do, it's the biggest, baddest dog on the block. It can do all kinds of stuff. But now that zeitgeist has completely shifted, I would argue it's essentially gone. The other thing is during the market, and again, I'm not a financial expert. So for those who listen and are, forgive me. Um,

But when the bond, when the 10-year bond in the U.S., which essentially affects everything from your car loan to mortgages to the amount of interest the U.S. government has to pay on its debt, when that started to fluctuate so rapidly, the government got scared. And this is one of the reasons why people think that they said, let's take a timeout and pause all tariffs.

That would not have happened even just a couple years ago. Because many people are worried now about the debt in the U.S. and everything that's going on and the instability. But now there's like the de-dollarization trend now. That's right. That's right. And I would argue it's less de-dollarization. It's more just we're not going to use as many dollars, right? And if we're going to take that contract and we have the option in dollars, yen, or euros, we may do yen or euro versus the dollar, right? So it's not necessarily we're not using dollars. We're just using less of them, right? Yeah.

And you also have a lot of countries who realize, wait a minute, this is not, the U.S. is no longer the beacon of the free trade world, right? This is no longer a place you can do business with fairly, even though the U.S. would argue that a lot of them have taken advantage of the U.S. But part of the goal of the U.S., part of the zeitgeist around the U.S. is we welcome everybody in all your business. And it doesn't matter. And sure, we're going to have problems, but you know what? We're going to figure out, we're going to negotiate, we're going to move forward because we're all in this together. Nobody feels that way anymore.

I think when you add on top of that, the fact that China said, now we've had enough, we're pushing back. China would not have done that in the first trade war, right? Even six, seven years ago. And I think kind of the third thing is, is that people realize now that the West, the US and the West broadly is no longer what it appears to be, right? It is no longer kind of the beacon, you know, the leader of the free world and all that stuff. It no longer is.

And some of my conversations, particularly in the last couple of weeks with people who are around Asia, right? Because that's more, that's where most of my work is. You can feel the change, right? Oh, well, maybe I need to go instead of, you know, dealing with the U.S. firm or U.S. dollars, I need to go deal in another, you know, type of currency or stuff. I never really heard that before. Yeah.

So there's a palpable feeling of countries and companies and people that things are now different moving forward. What if after the next four years, a new administration comes in, it's a brand new guy, completely, let's say, opposite from Trump, and there's a whole new fresh feeling coming?

Do you think, you know, the world will kind of have like collective amnesia again and go back to like the status quo and this goodwill with the United States just with a new administration in there? No, because you're seeing the rise of middle powers, right? You're seeing other options available. This is no longer a unipolar world. We're in a multipolar world, right? Even Secretary of State Rubio said that a couple months ago.

I think also what you're seeing is a realization that things can't be like they were, right? Because things are changing. The populations of Indonesia and Malaysia and Vietnam, they are wanting their own voice. Like we want a part of the pie. We want to be a piece of this. Again, that didn't happen 10, 15, 20, 30 years ago. Right? So you're seeing all of these things change. Now...

This is over time, this will essentially mean a degradation of US power, quote unquote. But I would argue it's far better to have everybody buy into the system than only a few people who control the system. Right. And you're seeing the shift in real time, right, in our own lives. Yeah.

And I think the other thing is, uh, kind of, we talked about a little bit about this before. People want to have their own agency. They want to have, you know, to have a growing, uh, middle or countries want to have a growing middle class. People want to make more money. They want to have, buy more stuff. They want to be more, you know, better off than they were, you know, yesterday, this kind of stuff. And so all of this is moving us to a different direction.

level or in a different stage of human evolution. Now where that goes from here, you know, that may be for another Honest Drink podcast, but the reality is in today's world, it is nothing like it was. Basically from January 1st onwards, everything has shifted. And what we knew of yesterday will never, ever return. Because the other thing is countries and companies won't trust what the US does.

Because the US is now, oh, we're going to do this. Now we're going to stop it. Now we're going to do it again. Right? And so countries are like, wait, I can't trust you anymore. Right? I simply cannot trust that the United States will not only do what it says it's going to do, but also treat me in a fair manner. And I don't think that necessarily is going to change in a future. I mean, sure, hopefully it could, because I think, um,

you know, as things change, hopefully, you know, we all learn from our mistakes and we get better. But when you look at when people do business, right, the US stock market has lost $6 trillion in the last couple, that is a massive amount of money. I mean, all of our retirements are now affected.

And for all of us to go through something like that, and be like, oh, sorry, you know, we're just going to take a pause now. Like, what? You just screwed up a whole bunch of people's retirements. Do you think that the union workers of the FAW there working on the cars in Detroit are going to tolerate that long term? No. Do you think the California Teachers Union is going to tolerate? No. None of these people are going to tolerate this. But Cam, if all of this was just, you know, precipitated by the actions of one person, then why can't the U.S.,

rebuild that trust. You know, we have another set of elections and like the mindset and the mentality of the US in general does not represent what happened in the last couple of weeks. Then why can't that trust be rebuilt?

Well, I would argue that it does represent the U.S. in many regards. You know, there are huge constituencies in both parties who feel the exact same way. Now, the end result may have been a bit haphazard, but don't think for a second that there's just as many constituencies on the left and the right who also believe that people have taken advantage of the U.S., that also believe that China stole all of our factories, right? It's the same no matter what. Again, same direction, maybe different flavors.

I think the reality is that, to your point, we have not had our come-to-Jesus moment in the United States yet, or the realization that you can't really do this to your friends, or to your enemies for that matter, or adversaries, whatever you want to call it when they refer to China. And until that is rectified to some degree...

It's all known void. These situations are not just something where you can go to somebody and say, oh, so sorry, you know what we did for you? Ah, no, no, forget about it. We're going to go back to friends. No harm, no foul. That's right. If you want to do that, I'm going to say, okay, so where's all my money then that you just, you know, I sacrificed for? Right. The other thing is there's been a consistent drumbeat in the world that we want other options besides what the US gives us, right? For a long time, for all kinds of reasons, whether they be political, geopolitical, you

resource, whatever, you know, the power of the dollar sanctions, whatever, whatever, uh, thread you may want to pull on. And so this isn't just a, you know, no harm, no foul kind of situation. It's a situation where people will look at it and say, you're not reliable.

At least with China, I know what I'm getting and I know exactly where I got to go or, you know, Europe for that matter or Japan. But the U.S. is unpredictable. And that's not really going to change regardless of political party. Now, again, flavor may different, but the direction we're on. If it was the Harris administration, make no doubt they were going to put more restrictions on China for technology. They were going to continue to

uh, be challenged with trade, um, tensions. They were going to continue to try to tell countries don't deal with China, deal with us. You know, so there, we were on the similar trajectory already. The fact that it just happened to be that, you know, it was a bull in the China shop versus a maybe much more of a structured approach doesn't really matter to some degree because you're going to end up in the same position. Yeah. I think the, the great irony is that, uh,

The messaging from the states was that we can't be reliant on all these other countries, namely, especially China. But to your point, I think it's a lot of these other countries are now waking up to the fact that they were too or they can't be too reliant on America as a primary market.

In terms of this changing world order, and we'll wrap it up soon, but in terms of this changing world order, you're saying, and you told your son, look, the world will never be the same again. Do you think ultimately this change will create a healthier world order or an unhealthier, more unstable world order? Oh, we're definitely heading towards, you know, I still...

believe fully that we're going to be, you know, a united world one day. This gets us closer to that, but don't make no mistake, it's going to be messy along the way because we still have to figure out how to do that with each other, right? But, you know, kind of to your point, one of the things that I find fascinating is you are seeing the middle powers rise, right? You are seeing the Brazils, the Indonesias, the Malaysias, um,

the Mexicos, right? Italy, you are seeing these middle powers rise and say, wait a minute, we're now going to have a seat at the table. No longer will we be dominated by, you know, for example, in the UN by a group of five, right? We want to have a seat at this table, right? And remember, India is the most populous nation in the world. They have no seat on most boards in the world, right? So this is not a bad thing. This is actually a great thing because the more that that power becomes diffused, the

the less any one power can actually dominate or do something that can affect all the others in a negative way. It's more of a distribution of power now. That's right. That's right. So how does this change particularly China's relationship with other countries around the world? I mean, with the kind of the BRICS formation and everything like that,

How do you see all this that's happening now, assuming things stay the same or even escalate with the trade war? How does that affect China's relationship with the rest of the world? Well, I think that when you look at China's response, particularly the last, let's say, month or two, they really position themselves as, we're going to accept everybody. We want to do business with everybody. And as the US and perhaps others close,

to the world or have much more restrictions, we're not going to do that, right? They're kind of the beacon of free trade, so to speak. There's a lot of debate, particularly in the West, as to whether or not China can actually do this. But China essentially is positioning itself as saying, we want trade agreements with you. We want to be able to do business with you, right? Of course they want new export markets, particularly if the U.S. is closed off to them. That's absolutely true. But they also recognize the fact that as the U.S. becomes more isolated,

For example, if you are a mid-level or lower-level country, you want to get foreign direct investment, FDI. An American firm probably isn't going to be able to give that to you anymore because they're going to have to focus on the constituencies in the U.S. or North America.

Where can you get it from? From Chinese firms. So again, China's positioning itself and saying, we have companies who will invest in you. We have plentiful young talent, right? All of these college graduates who come out, maybe they don't necessarily have jobs in China or, you know, the kind of jobs they want so they can go abroad. We have the technology you want. We have the trading system you want.

So they offer four things that the U.S. currently cannot offer. And so to your point, it's much more about China's creating the system around it. Now, whether it's doing it purposely, strategically, again, that's up to debate. History will kind of tell on that, particularly since we're just new into this. But that's how I view China approaching it. Will it work? Will not? We'll see. Because a lot of these countries also have a challenge where they don't want to be flooded with Chinese goods that overtake their own industries and so on and so forth. But that...

That versus getting Chinese investment and technology and talent into their own country where they control it is a much better deal than what currently the US is offering. So longer term, if things continue on the trajectory that they're currently on, which of course anything can change, but if they are, China ultimately becomes more of a beneficiary in the end.

There's that saying that if your enemy is making a mistake, you don't stop them. That's right. That's right. Hey, I have a question. I don't know if you have the answer for it, but in that last statement that China gave, where I think it was something along the lines of, I mean, if America continues raising the tariff percentage, you know, China's not going to participate in that anymore because it doesn't even matter anymore. Oh, really? Yeah. And they said one line that kind of piqued my interest is,

And they said there are other ways to deal with this besides going tiff-a-tat with percentage numbers. What does that mean? I mean, when you look at, you know, there's a lot of things you can do besides tariffs, right? There's restrictions, there's bans, right? There's all kinds of things. So I think China, in a very Chinese way, basically said, we've had enough. We're not going to participate in this anymore. Right.

We also have other options. Don't think we don't. That's how I interpreted that. Yeah, because basically he was saying 145%, I mean, you can raise it even more. It makes no difference. It's already too high. It doesn't even matter. The train's already left the station. Yeah, because there's another number getting thrown around. I forgot who started it. They were like, yeah, America should push it to 400%.

Oh, that Kevin O'Leary motherfucker. Yeah, yeah, that's who it was, yeah. That guy is the biggest clown. Let us not besmirch people, even though it is your podcast. But I think to your point, but this is part of the challenge. Like, okay, but again, these people have money. What are you going to tell the small county fair, right, who's going to, that's going to occur in July or August where, you know, they buy these little knickknacky or stuffed animals that, you know, you throw the basketball and, you know, if you get it, you win. You know, all that stuff is now gone.

Right. And so that's really where it affects. Even on some products, like with the syringes, you could put a 400%. Wouldn't make a difference. Walmart or whoever's still going to buy that stuff. Right. Yeah. I mean, I think the bottom line is that this is not a, there's no panacea. Right. Like if you want to make America greater, you want to improve things and you want to

have us continue to be successful. There's no magic wand. There's no like, you know, silver bullet like tariffs and you just raise it and all of a sudden it solves everything, right? Maybe tariffs is part of it, but there has to be a coordinated long-term plan and strategy to

And nothing is guaranteed because you're in a very competitive world and everyone's gunning for you as well. And it's very complicated and all the other countries want to take care of their citizens. And so it just requires some, it requires a lot of leadership and lots of people coming together and debating and, you know, and, and making mistakes, et cetera. But just like, there's no way that like tariffs is just like, Oh, like boom, we just do tariffs and world is good again. Like it's just,

That's not how things work. Well, and this isn't, you know, this is one of many trade wars the U.S. has actually, you know, the first trade war the U.S. ever had. Does anybody know what that was?

No. The Boston Tea Party. There you go. Very good. Wow, Eric, you are good. Yeah, it was the Boston Tea Party. That was the first one, huh? It was the first because it was a dispute over the taxation of tea, right? So another one is about a century ago, 1930, the Smoot-Hawley tariffs, where the US raised tariffs on imports during the Great Depression, which prompted retaliation all over the world, which made basically the Great Depression become the real Great Depression after that.

And then there was an interesting one that happened in the early 60s called the Chicken Wars, where basically it was a dispute between the U.S. and Europe over chicken tariffs. The EU didn't want our chicken, or the U.S.'s chicken, and so the U.S. tariffed trucks and brandy. You can't live without that alcohol, right? So the U.S. has been there before, and they've always ended up resolving it. So I'm a little bit more...

positive that at some point something will happen in a more positive note but it's just it may be a while you don't need to crash global markets well that's true that's true that's true and there's a famous quote actually by a french philosopher political scientist in the early 19th century frederick bastiat called or said when goods do not cross borders soldiers will

And I think that's a very interesting way to look at how these trade wars can ultimately become other types of wars. So as long as there's goods trade, as you remember, I talked about the spread index of decoupling in the last podcast, Podcast 168, for those who want to listen. That's true. As long as we have Starbucks here, as long as we have Pandas in the States, as long as Raytheon keeps getting its parts, as long as ExxonMobil is doing business here, as long as Apple makes its phones and sells them here.

And Disney's in business. We're okay. And we got A&W, Root Beer. That's right. And we got, but the, I have to tell you the A&W, Root Beer supply lines, speaking of supply chains, those are cut now. So this may be the last year. That could be the first domino to fall right there. That could be. That could be, you know.

Cam, pleasure as always. Thank you so much for coming and sharing your wisdom. It's great. How's it feel this time? How's it feel? Well, all of you are here together, which is great. I get the full force of the Honest Drink podcast. That's right. The full load. Jesus. Oh, that was terrible. I'm going to tariff that. I don't want your load, man. You keep your load at the dock. You tariff that. 400%.

Cam, once again, thank you so much. Love talking to you. That was Cam. I'm Justin. I'm Howie. I'm Eric. All right. Be good. Be well. Peace.