Deep Dive
Shownotes Transcript
So, you know, you're saying that we don't want to be invested in China when China tries to invade Taiwan, because that'll obviously hinder us. But a lot of people say, well, if we start to pull out of China, all our manufacturing out of China, then that will anger China and that will make China more likely to invade Taiwan. I mean, the way that I would approach that is China has basically demonstrated time and time again that they will get angry no matter what you do.
And they will get angry if you do anything but bend the knee. So to a degree, it's like that I would consider that just the cost of doing business myself. And look, the way that I would think about it, China has made it clear for some time that that.
They intend to retake Taiwan one way or another. It's widely known that Xi gave his generals that, you know, 2027 is the deadline that we need to have the capacity to retake Taiwan if I choose so. And so whatever we may do is effectively a side story to the goals that they've set themselves and what they're working towards.
So does it maybe speed it up by a few months? Possibly. Does it fundamentally alter the story in any way? No, it doesn't. Now, you mentioned earlier that the first round of tariffs in Trump's first administration didn't really change much. Do you think this new amped up trade war is going to make a permanent difference?
A lot of that is going to come down to what President Trump negotiates out of that. Let me give you a simple example. Let's say that President Trump has basically tariffed every country that we import from as the United States.
So let's assume that President Trump basically comes back in 30, 60, 90 days and says, okay, we have struck agreements with every country except China. Okay. Probably doesn't really change that much on multiple levels. Okay. Really doesn't change that much. Okay.
Let's assume now that President Trump comes back and says, okay, I've struck agreements with these five Asian countries, Canada, Mexico, a couple in Latin America, and then a couple of specific European countries. That would be a significant change. Here's why. One of the things that happens is that as the benefits, as countries come together to engage in free trade,
the benefits get diluted. It's kind of like having Kool-Aid. If you keep adding water, the benefits get weaker and weaker. So it simply doesn't taste like Kool-Aid anymore at some point.
If President Trump, however, says, I've picked up these 10 countries that we're going to trade significantly with, and let's assume now that there's agreements about how we're going to deal with China, how we're going to deal with non-tariff barriers, etc., etc.,
That would be a major change because now these countries are benefiting enormously from access to the American market, privileged access over other countries. There's a little bit of a tighter security agreement to some degree. And honestly, the world in which we live in, there would be an agreement for that. And let me give you a comparison.
Post-World War II, when we started signing agreements like GATT and the WTO, when we started creating some of these international organizations, when we started creating NATO, basically, these organizations were created not magically and not for no reason whatsoever. They were basically created because a small group of countries were worried about the Soviet Union.
And so they agreed to work together to a common good. They were going to share benefits and costs, and they existed for a specific purpose. I forget the exact timeline, but I want to say up until something like 1992, a couple years after the Berlin Wall fell,
I want to say something like GATT, the precursor to the WTO, only had something like 40 or 50 countries as members. It's only been since 1992 that you saw this explosion. And so the benefits there were tightly contained and everybody agreed what to do. I think you could make a strong argument that we live in a similar type of world where
Today and there's a strong argument to say we're going to concentrate those benefits and share those burdens Together with countries that agree on what the threats are so that we can also share the benefits of free trade security arrangements Whatever rather than trying to have effectively an almost universal umbrella Do you think we can find ten countries to do this? I I think
The big question of something like that is going to be Europe, because Europe, for multiple reasons, is deeply split. In using round numbers, I think there are a small handful of countries that would side with the United States with little questions asked.
And I think there are really the powers that be in Europe, however, the much bigger countries, they are almost anti-American. And just to give you a simple example,
Countries like Poland, Czechia or the Czech Republic, some of the Baltics, the Finns, I think deeply recognize the problems of Russia and China.
However, the larger countries, for the most part, are not in that camp. Germany, France, Norway, Spain, who is the Spanish prime minister, signing a number of deals with China and probably flying back to Spain from Beijing right now. And so what's going to be very interesting with what the president does is what happens with Europe.
Theoretically, those countries can't strike their own agreements with the United States. I wonder if that will hold. I think other countries, absolutely, there will be at the very least a small group of countries that the president can strike an agreement with. Mexico and Canada, for whatever problems they have, I think will come around, for lack of a better term. I think South Korea and Japan
I don't know if Vietnam will reach that, let's say, same level of partnership, but I think Vietnam will be happy to strike an agreement because they're deeply concerned about China as well.
So, in short, I think, yes, you're probably right that there will be different levels, for lack of a better term, of the type of agreement that the president strikes. And I think it is very likely that there will be some type of privileged group of countries. I think we should definitely have Taiwan in there because that would... My apologies, yes. Taiwan, absolutely, as well, yes.
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