Trump Tariff Sell-Off Deepens 4/4/25
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I'm CNBC producer Katie Kramer, and this is Squawk Pod. Market turmoil, reaction to Trump tariff policy rippling around the world. This is the first time that it's been like self-inflicted. There's no Wuhan virus. There's no 2008. There's no financial crisis. And retaliation. China punches back.

Market historian Jeremy Siegel, who has watched the Dow for decades, lays it plain. I think this is the biggest policy mistake in 95 years. A possible pushback in the U.S. Senate, Democrat Maria Cantwell on the bipartisan charge to limit the president's tariff authority. No administration should be able to have this big a hand on something that is our responsibility.

And we hear from a manufacturing CEO facing the specter of higher costs, Snap-on's Nick Pinchuk. One of the good things about the tariffs, and I don't think there's many good things, is the fact that it puts in rather harsh perspective how hard it is to manufacture. It is Friday, April 4th, 2025. Squawk Pod begins right now.

First up today on the podcast, the U.S. stock market's headed for another brutal slide after China retaliated with new tariffs on U.S. goods. The country is set to impose a 34% levy on all U.S. products. This comes just two days after President Trump announced a 34% tariff on Chinese goods. That is part of a wide-ranging policy, including a 10% baseline tariff on almost everything.

We got into all of that today with our Squawk Box trio, Joe Kernan and Becky Quick at the Nasdaq Market site in Times Square, and Andrew Ross Sorkin joining Remote from Seattle.

One of the things that I was thinking as I was looking at the price of gas and I was looking at the 10-year, there was part of me saying, isn't this what he said he was going to do? Just not that he was going to get there this way. A permanent regime, a permanent tariff regime is not something that would be good for the United States or the world, I don't think. If everybody today said, all right, you're right, Uncle,

We're going zero, zero. You go zero, we're going zero. That I could see. But if we're going to wait around for a protectionist world to bring all everything that we lost over the past 50 years, if we think we're going to be able to bring that back. And I understand we lost 60,000 factories. I understand. I just don't know if you can ever get back there. And I don't know if this is the way necessarily that you do it.

The question right now is what is the actual impetus, the rationale for doing this? Because if it's a negotiation, if it's what you say, maybe that could be considered a good thing. Having said that...

The Trump administration has said repeatedly this is about taxes. This is about our deficit. This is about bringing down the deficit and doing it in a different way and changing the structure of our tax system. If that's the impetus for this, if that's the rationale, that's a very different rationale. And so you could claim success on one end and failure on the other. And so I think it's very hard to even understand. And I think that's why a lot of a lot of economists are sitting around going, this doesn't make sense because there's.

There's too many competing pieces to this. There are. There are. There's another one, and that is trying to finally deal with China in a significant way. But dealing with China means that the rest of the world, when we get tough like this, the rest of the world is going to leave us behind in making deals with China.

And then you throw TikTok on top of that. The TikTok deadline is tomorrow. The president said yesterday that they have a deal that's very close. But in order to get the Chinese government to sign off on that, you may have to ratchet back some of these tariffs. There's a lot of complicating things that are swirling around right now.

If you're thinking about bringing jobs back here to the United States, you know, Howard Letnick said on our air yesterday that maybe we bring those jobs back here and make some of these things with robotics, too, which makes you wonder how many jobs you would actually create in this scenario. For people that aren't setting up the robotics systems. Right. I don't know if the world ever goes back to the glory days of... It could get better. When you think about globalization, guys, and that...

You had UAW guys that want a decent living at $30, $40, $50, $60 an hour. And in other countries, you can do it for $2. That comparative advantage is what all economists say

Makes trade better for the entire world. And it's true. It opens up global trade. We've had seven decades of rising global trade, and we've been a large part of the global GDP. But it has hollowed out our own people. It has hollowed out our middle class. I just don't know whether that was inevitable. Obviously,

President Trump and for a long time Democrats were railing about what was happening and trying to figure out a way to to deal with that. I have some good news and some bad news for you, Andrew. And I am not in any way going to put a lipstick on the pig that we're looking at right now. But here's a here's a two year chart of the of the S&P.

which at least it puts it in perspective. Number one, we've had some great gains recently. We know that. We were down at $2,200, $2,300 during the pandemic. We got up to $4,700, and then it backed off all the way back. It backed up all the way down to $3,600. The good news is we've had great market action. The bad news is

I mean, look how far that could, we'd all be, we may not be coming into work by then. We might be so disconsolate. We're just staying in bed when we got down to about 4,800. And then if it's going to 4,200, which I hope it's not. And this is the first time that it's been like self, almost self-inflicted. There's no Wuhan virus. There's no COVID.

You know, there's no derivatives. The market reaction was the same as a global pandemic. There's no 2008. There's no financial crisis. And I don't know if you use the excuse, this is the time to do it, to try to reset the

how we do it maybe. Ed Yardeni was very interesting yesterday. He's the guy who coined bond market vigilantes. Yesterday he was talking about stock market vigilantes. Sorry. He was talking about stock market vigilantes. And that's maybe what you're starting to see. By the way, we do have some breaking news right now from China.

the finance minister saying that it will impose additional tariffs on US goods from April 10th at a rate of 34 percent. This is, yeah, and you're watching the market drop on this news. The futures are off by 650 points for the Dow right now, 80 points for the S&P 500, the Nasdaq 263 points. China's commerce ministry is announcing restrictions on some rare earths as well.

but this was kind of the next show uh... this is what scott bassett the treasury secretary here in the united states urging caution everybody don't yet don't do it as selling other countries to not puts retaliatory retaliatory tariffs back but uh... it sounds like that is exactly what china is going to be doing so you can watch things ratcheting up right now for one second i i said you know what i'd rather not have a plus two hundred or plus three hundred futures

Right now, because... Do you have a minus 625? That's what I mean. I'm not looking for anything. Because whenever it looks like an anemic bounce, you know it's going to be sold. Anemic bounce would be better than another leg down. But the anemic bounce usually leads to another leg down, and the washout comes with something. What this...

What this reminds me of, though, and you go back and you look at Smoot-Hawley back in 1930, and people talk about now how these tariffs in many ways actually are more expansive and at higher rates. So if history is the guide and you looked at global trade rates, global trade numbers, 1930, and then looked in 1931, this goes to the retaliatory issue that we're talking about here. Global trade dropped in 12 months by 60%.

That's the number. That's the data. And so when you look and see what the risk is that this all portends, which is manmade, completely self-made, that's the risk in front of us. Maybe history is not the guide and somehow this administration is right. You're doomed, not damned, doomed, damned, damned, to repeat it. If everybody...

Everybody gets together and says we're going 0-0. That's the best outcome. A tariff-heavy world, I just don't think is something you aspire to. And maybe Trump is aspiring to that because of what you pointed out, that it's a way to replace some of the burden of income tax.

with tariffs. That's also a bygone idea from long ago when it worked. And there's no reason to think that that necessarily would work again. Okay. Again, China saying 34% tariffs on all imported goods from the United States. If you're looking at a list of what they import from us, first up is agricultural products. They're a major importer of things like

soybeans, corn, wheat and other grains, machinery and equipment from the United States, including industrial machinery, vehicles and parts, electronic equipment, including semiconductors and integrated circuits, mineral fuels,

The trade deficit in 2024 with China was $295.4 billion. But those are going to be the sectors where maybe you should start looking at some of these things, too. We should probably take a look at soybean prices when we get a chance on some of these things. And we will do that. And Jeremy Siegel, Andrew, you got Jeremy Siegel. You're going to lead data in the next block. He's a historian, market historian, and he's kind of a calming voice at times.

Joining us to discuss this, Jeremy Siegel, Professor Emeritus at Finance at the University of Pennsylvania's Wharton School of Business and Chief Economist at Wisdom Tree. Good morning to you, Jeremy. We're always trying to get your wisdom in moments like this. You're often a calming voice. I don't know if you'll be a calming voice this morning, but as you see what's taking place with these tariffs, do you anticipate the market to turn around or is this a falling knife that continues to fall?

Well, first I want to pick up on what you said, Andrew,

about the Smoot-Hallway tariff. I think this is the biggest policy mistake in 95 years. And what is interesting is on the Republican Senate's website. So if you go to senate.gov and look up tariffs, this is what they say. It was on June 13th, 1930.

that the Senate passed the Smoot-Hawley tariff, describing it as among the most catastrophic acts in congressional history. Now, this is the Republican-controlled U.S. Senate.

And it said, despite the fact that a thousand economists wrote a letter to Hoover saying, veto it, he did not veto it. And then it goes on saying the results were, and to use their words, disastrous. So disastrous that the American public voted the Republicans out of the House, the Senate, and the presidency two years later. Now,

To be fair, the Fed screwed up badly afterwards as the economy sunk as a result of this. And they're not going to do that again because they've learned that lesson. I don't know why Trump didn't learn the lesson of the Smoot-Hawley tariff.

Because I know the Fed learned the lesson of its mistakes in 1930, 31, and 32. That's one reason why the great financial crisis did not turn into a great depression.

We flooded the banks with liquidity, which we did not do 95 years ago. But very honestly, I mean, they say it all. I mean, I wouldn't be surprised if President Trump scrubs this passage out of the website because this is on the Senate website.

republican website uh... the good news i mean i think the fed is going to be lowering interest rates i think they after lower interest rates

as a result of this global shock. And yes, there will be higher inflation to be sure. But this is, you know, you know, Joe described as his self-inflicted wound, unforced error, like did not have to happen. Supply shock.

Powell himself said at the March FOMC meeting, you know, we're going to see through the inflation impact of this. Now, some will object to it. But nonetheless, I think that actually at first I thought there was no chance of a May cut in rates.

Now, I think that chance has been increased dramatically. I mean, unless, you know, Trump makes a dramatic reversal on the tariffs. I think the question, therefore, becomes the following. If, in fact, you think the Fed is going to try to mitigate what has turned out or at least thus far looks like a manmade conundrum or whatever we're going to call it,

Do you wanna own this market or do you think that right now, given everything that's going on, it still has a lot more to go if in fact this is gonna continue this way? Do you wanna be in this market or do you say everything's now on sale? I don't know the answer. - If you're a long-term investor, you're staying in the market. I'm staying in the market.

If you're a trader, there are storms ahead as long as these tariffs remain. And I mean, this is what just happened, what, 10 minutes ago is the nightmare result, the retaliation. And by the way, you know, trade is a much more important part of the global economy than it was 95 years ago when the Smoot-Hawley tariff was put on.

So the implications are potentially a lot worse. So short run, very stormy.

If you're a market timer, which I don't advocate, as we all know, 95% of non-market timers do very badly. You know, you keep your powder dry. If you're a long-term investor, you know, these tariffs are not going to be forever by any means. And, you know, there will be brighter days, to be sure. And, you know, the American economy is...

is basically going to be the greatest economy in the world as it has been over the last 20 or 30 years. Jeremy, I think you bring up this very good point about this being the nightmare scenario with China responding. I think the bigger question is, does that embolden other nations to do the same? Perhaps it does.

Nobody wants to go first, but yeah, I mean, they go first and that could do that. And bold and others, as you said, many of the European nations have sort of wait and see, you know, I mean, when this will end, who knows? We might Trump might have to wait until public opinion polls come out on this. I don't think they're going to be favorable. Maybe he'll reverse himself. Yeah.

declare a little victory so you can get some phone calls to some and there's going to get some, you know, selective reductions saying, oh my goodness, this is a mistake. You know, let me, let me try to declare victory. So, let me warn short sellers at the, you know,

It's also a very risky proposition. But staying as it is, if you're in a recession, the normal recession produces a bear market. We are not in a bear market now. Not yet. Jeremy, China has less staying power than we do. I just don't know if that's what we want to want to do in terms of a standoff. I mean, they're...

They're doing this now, but they're in no position to do this either for a long period of time. We could outlast them. Well, we could outlast them, but in the meantime, you have a recession. Our nose is gone, just by the way. I want to comment on one thing that's really important and something you said, Joe, earlier. If we did eliminate all tariffs...

all foreign countries and, you know, indirect, direct,

we would still have the U.S. a trade deficit with the rest of the world. I know. Yeah. And so this idea that a trade deficit, I mean, that is stuck in Trump's head, that a trade deficit is inherently bad, is just absolutely wrong on every single measure. You know, the reason we're a world reserve currency, we have to have a trade deficit to get the capital abroad so they buy our bonds, right?

And Trump, in fact, said two months ago, remember he said to developing countries, don't you try to develop any currency other than the dollar. We want the dollar to be the reserve currency. How does the dollar become a reserve currency?

only because, you know. There are some, there are, I mean, cheaper oil that, I mean, eventually that these are, they're happening for all the wrong reasons, but much lower interest rates. You don't want a lower interest rate because there's going to be a recession. I know, I know. That's the worst reason in the world. But some of these, and deregulation, some of these things will offset some of the tariffs, but obviously. Of course, but they always do. I mean, that's the way the market economy works. When there is a recession,

interest rates go down to cushion what the effect will be. But that's not... We haven't seen any reason to think we're going to hit a recession yet, Jerry, unless it's self-fulfilling from what's happening. The stock market could cause a recession, obviously.

But people are still, they're at 40%. It's just not the stock market. It's the uncertainty of capital plans, investment, higher prices on consumers. I mean, you know, the stock market isn't going to negative, but there are a lot of reasons for potential recession if these tariffs stay on. So you're predicting that? You're predicting that, Jeremy? Chances are way higher? If these stay on, I think...

the probability of a recession has probably moved above 50%. Not a certain... Jeremy, here's then the question. And maybe this is a political question or it's a political calculus question.

What would it take for the president effectively to walk back from where he is? And how quickly could that happen? I mean, that's what you're suggesting that that would be the only scenario that would solve what you're describing here, because I'm looking at this and he's made a look. He's made a big commitment to this. This has been something it's been.

that he's wanted to do for 30 years. And I just don't know whether you have the people around him that are going to tell him, you got to step off and you may have to eat crow or at least pretend that it's a win some other way. I don't even understand it.

Yeah, public opinion polls, if they turn negative, it gets a lot of negative feedback. You know, he'll walk it back. He'll get some concessions from some countries and they'll say, you know, we'll reduce our tariff on butter and a couple other things.

things and he'll turn defeat into an apparent victory, but it is not going to be a victory because the shock of this sort of massive tax cut coming on suddenly with no pre-negotiations, no congressional input, and that uncertainty I think will reverberate for a number of years

in the economy, even if two weeks from now,

He removes it. Now, if he removes it, we won't have a recession. We'll have a slowdown. But it's a negative, you know, building trust, building certainty. I mean, long-term economic plans, depending on knowing the regime you are in and the rules of the game and the tax structure you are in, when that's all thrown to uncertainty, it just throws a wet blanket over your decisions of,

So, you know, if he reverses it, that's going to be great. That's certainly a positive. But, you know, this is going to reverberate for quite a few months, if not years, through the world economy. Jeremy, we want to thank you for your wisdom this morning, your perspective and all this. We'll see where it all heads. Clearly, at the moment, at least it looks like it's heading down. But

Maybe there's some other piece to this that we don't understand. There can be reversals. Yeah. Cheese will be next.

Still to come on Squawk Pod, is there any congressional recourse against the president's tariff policies? Well, Democratic Senator Maria Cantwell of Washington state has rounded up her colleagues in a bipartisan act to reassert the legislative branch in these tariff negotiations. I definitely think there'll be some actions in the courts, but I think the thing here is, has the president misconstrued the authority? We'll be right back.

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Our next guest has now introduced bipartisan legislation to give Congress more power over the tariffs that we're talking about. Join us right now with Senator Maria Cantwell of Washington State. She is a ranking member of the Commerce Committee and a Finance Committee member. We're having a debate here around the whole country and world about these tariffs right now. You've watched all of this happen in the context of executive orders so far. What are you trying to do and what kind of support do you have for it?

Well, Andrew, I know you're in Seattle today because I tuned in earlier and saw you in front of the Space Needle, so I hope you're getting some coffee and maybe going to REI. But I think we're the antithesis. Seattle, Washington is the antithesis of this approach. We're a place that believes in trade, believes in exports, believes in innovation, believes in collaboration, believes in innovation.

trying to get the door open in the markets. And you're going to visit Microsoft today for their 50th anniversary, and that's an example of that. It's hard to get these markets open, but they've figured out how to do it, and it's challenging. It's not always what they actually want every time, but they keep forcing the door open. So what we're trying to say is that's a better approach. Senator Grassley and I are trying to say

that the Congress should have some say in this. It is our constitutional duty. It is Article 1. And that so much has been taken by this administration and this approach that we should reassert ourselves in this debate. Senator, behind the scenes though, tell me what you're hearing both from other senators but also from members of the House. Because whatever you do in the Senate, you know, may not have enough support in the House.

Well, usually the House is the first to retreat because they're two-year terms. So my job at first is to convey to my colleagues why this is so important. We modeled this after the War Powers Act, when an administration went too far with their authority that was really a congressional authority to declare war, and in the Vietnam War went too far. So Congress passed a bill, the War Powers Act, to say, no, you have to come to Congress to get these things approved.

And we're saying now that these trade deals should be reviewed. I'm sorry, trade deals are generally reviewed by Congress and approved. This should be the same on the tariffs. So we want to reassert ourselves. And we can see the impact that's being caused here. It's such a huge economic impact to the country. It should be something that Congress debates.

What do you think the legality is of the tariffs unto themselves? I mean, do you think a court might seek to block this? Well, there's a—oh, I definitely think there'll be some actions in the courts. But I think the thing here is, has the president misconstrued the authority? And there's a lot of people who—even the courts are telling us, Congress, we need more clarity here. We need more clarity. And so we're listening to that. And we're trying to get into the debate on that to reassert ourselves.

Are you getting any sense from members of the other side of your aisle in Congress, for example, saying, you know what, we're not supportive of what the president is doing and we're going to be trying to back channel to him, given where the markets are and everything else and what our constituents may be saying or anxiety or worries about these tariffs? I mean, are you seeing any of that? Because I think none of this is going to change, despite all the economists who seem to think this is a terrible idea.

None of this is going to change. There's no off ramp unless people are going to put some form of pressure on the president. I don't know even if that pressure is applied whether he would accept it. Well, we added a half a dozen members last night to our bill and we're going to keep talking to people today to say, and I think they're going to wake up to this market reaction and say, yes, we should have some say in this. This is our constitutional duty and responsibility. And I

I think regardless of the Trump administration's approach, I have had conversations with my colleagues who are saying, you're right. No administration should be able to have this big a hand on something that is our responsibility. And so, you know, now not everybody wants to stand up and put their name on a bill, but I think that people are starting to see that this is huge economic consequence to something

The Constitution says that it's Congress's responsibility not just on interstate commerce, but on foreign commerce. And that is why we are trying to reassert ourselves. Senator, what did you, as a Democrat, what did you make of the fact that there were so many union members sitting in the Rose Garden when the president was announcing these tariffs, applauding what was happening?

To some extent, tariffs, maybe not this extensive, but tariffs have been a part of the plank, not of the Republican Party, but of the Democratic Party.

Well, I think that I represent a part of the country that is the third most unionized state in America, and that is basically because of aviation. And while those workers always want a fair deal, they also want a lot of sales. And aviation probably represents one of the biggest economic opportunities for our nation moving forward. There's a world demand for 40,000 airplanes over the next 10 years.

So when you ask those workers, do you want to capture that market or do you want France to go to China and build Airbus there and maybe have the Chinese speed up their aviation development? I guarantee you the answer to that is no. Senator, we're going to leave the conversation there. We're going to try to all figure this one out together. And we do hope to talk. Well, we're going to keep. We're going to keep. Well, thank you. Thank you. We're going to keep working here to get more members. Thank you.

Up next on Squawk Pod, a CEO who already makes 80 percent of his products in the USA, but says tariffs aren't the only response to America's problems. The CEO of toolmaker Snap-on, Nick Pinchak. You can have a pendulum that does this, that says, OK, we're going to find the best and cheapest goods. That's an important thing that helps promote our economy. But it can go too far and make you more vulnerable. It did go too far.

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Welcome back to Squawk Pod on what's turning out to be an historic chapter in U.S. market history. Up and Andrew, cue.

You are watching Squawk Box on CNBC. I'm Andrew Ross Sorkin, along with Joe Kernan and Becky Quick. Let's get a real-time read on how businesses are dealing with President Trump's tariffs, the retaliation, and the impact on consumers. Joining us now, Snap-on Chairman and CEO Nick Pinchuk. It's been a while. It's good to see you. Good to see you, Joe. You're an American-made company, mostly. Mostly. Eighty percent of what we sell off the vans here is made right in America.

And we tend to make in the markets where we sell. So generally, if you talk about the fog of tariffs, which is what we have now, we're resistant to the effect. We're not immune. So it'll affect us, but over time we'll adjust to it. I think it was the 16th century, someone came up with a method to someone's madness, and we still use it today.

Do you see a method to what's happening right now, any positive outcome? Well, your guess is as good as mine. I'll tell you one thing. The National Association of Manufacturers, as do we, we don't think the tariffs were necessary. We don't think they alone can impel resourcing.

The real motivation behind this was already established when Xi Jinping closed Shanghai for six weeks during '22, and people realized that the long supply chains and depending on a single country was probably not the best thing to do because that country could interrupt the prosperity by intent or by happenstance. So even in those days, right after that I was meeting with an industrialist and people were saying, "We want to reshore." But the problem is he needs skilled labor.

The regulation here is difficult and the general view of the government sometimes, you know, kind of shares or even doesn't even think manufacturing is important. They see a different social vision where transaction is more important than creation. One of the good things about the tariffs, and I don't think there's many good things, is the fact that it puts in rather harsh perspective how hard it is to manufacture.

People are talking now, well, if I have to restore, it's going to take me years. No kidding! You know, it's difficult to do that. Assembly is one thing, and it's difficult, but trying to fabricate products is another. You need the know-how, you need to understand about the product, and you need the skilled labor. So one of the things about this is, interestingly, it underlines why it was so important to reshore.

Right. But, Nick, is there a way to do this with a carrot as opposed to a stick? And I think we've been talking about that carrot for a very long time. I'm telling you, that's true, Andrew. I'm telling you, that's the thing. The thing about it is we didn't need the tariffs. Now, manufacturers would say certain tariffs...

like the tariffs against fentanyl, maybe, or the idea that China is subsidizing its own companies over the state-owned enterprises or providing material that's at a lower cost than even Americans in China can buy. And we've seen this ourselves, says that, okay, there could be tariffs punitively, but the idea of broad tariffs isn't necessary. What really the problem is,

We don't have the skilled labor. People still think of manufacturing as dark, numb, and dirty. And the idea that manufacturing gives you the ability to keep your family warm and safe and dry and has a pride and dignity to it is lost. And the government just needs to do that. The other thing is, manufacturers would say, there's a lot of weight in regulations.

National Association of Manufacturers says that the average manufacturer pays $25,000 per year per employee. Small companies, $50,000. I was just in Asia yesterday, and one of the things our company said, one of the difficulties of dealing or competing with local companies in China is...

is they have better access to lower cost materials and they don't have the regulation compliance that a company like snap-on which wants to protect the brand name has the optics of all that has to protect so regulations are a problem the ability to find skilled labor is a problem because of there aren't enough schools to do it but also there's the idea of the image and the government needs to celebrate manufacturing for the special american calling it's always been

rather than say, ah, it's a consolation prize. I would have expected you to be, to embrace the tariffs a little more. We've heard it from the UAW. We've heard it from other places because it's going to give you an advantage. I was going to, that was going to be my question was, we do see BMWs and Mercedes, every other car here. We see no

American made cars in Germany. That's what we keep hearing from the Trump administration. And I'm just wondering whether that's a, maybe they don't wanna buy US cars. And now if we would protect our own domestic industry that makes inferior cars to what we're seeing from other areas,

that's just extending the problem that we have. It's not protection. It's the belief in the American worker. You see, I believe we do it every day. We lost 60,000 factories, Nick. I know, but that was because... What happened in that, I was there. What happened is that happened in the Carter administration. And what happened is the inflation in the Carter administration ignited the wage price spiral. And everybody moved offshore to escape it. And then what happened is...

the next level of competition was how can we make the supply chain more efficient thus the rise of supply chain management degrees in universities so it made it quicker but that now has become clear that that globalization created a disadvantage for american america made vulnerable to the into the ideas of the whims of other companies countries and put people in america in a situation where they were no longer creating things and adding value

in wide ranges. - We have to decide whether comparative advantage where that's what caused globalization 'cause each area

area of the world can do things better and more cheaply than we can do it here. And we should do the things we do here better than what they're doing. But are those days over? No, no. What I would say is this, Joe. See, the thing is, you can have a pendulum that does this, that says, OK, we're going to find the best and cheapest goods. That's an important thing that helps promote our economy. But it can go too far and make you more vulnerable. It didn't go too far. It didn't go too far.

And the results were a vulnerability and the hollowing out of the good jobs in America. So that created income inequality. There's a reason why, the reason why there's income inequality, there isn't enough value added jobs that are associated with manufacturing. Trump could have stuck with deregulation, extend the tax cuts, close the border, and he could have just ended it there. Sure, sure, he could have done this.

there's crazy things going on i'll tell you what if you run a company and things go to heck you know when the debris hit the proverbial fan everything everybody says sounds like it could happen or an idea that's what's happening in the fog of tariffs but one of the things that are being saying crazy stuff like japan we can't import to japan they don't buy american cars well

Aren't they driving on the right-hand side of the car? Are they gonna buy a lot of left-hand drive cars? Are we stamping our foot over that? So there's a lot of reasons for this. I think this could have been implemented in a much more thoughtful way. And actually, we didn't need broad tariffs. Like I said before, people already understood that reshoring was good. We saw it in the pandemic.

where manufacturers... They're already doing it, right. The manufacturers kept their posts while keeping our society from disintegrating. Yeah, we're reshoring to Vietnam, and now we screwed them over. So everybody that moved from China to Vietnam now can't... Well, a lot of them were Chinese companies. Do they have standard transmissions in those? Do you have to ship...

Does my right foot use the clutch? Do you know? I don't know. I used to drive one. I think your right foot still doesn't use the clutch. It's the same stuff. The whole thing is, this is going to create a lot of uncertainty. The other thing about it is it's going to create uncertainty in the grassroots economy.

One of the things about it is they were already uncertain. Our customers, because of the two wars, the idea of the inflation, the idea of the border, the tit for tat for China, were already cash rich because the garages were filled, but confidence poor. Now this is laid on top of it.

The whole idea of the rapid fire ideas, things like Greenland and changing it all in this galactic set of tariffs. And the whole idea that the administration has said, well, you know, we may have to have some pain. For the average guy, this doesn't sound good.

So has that hurt sales? Have you faced that? They've hurt sales in the United States for the grassroots people because we sell critical things. They need them to create the, you know, accomplish critical tasks where the penalty for failure is high. But they're unwilling to buy, they're reluctant to buy things which are longer payback.

like more expensive toolboxes. Toolboxes are $10,000 or a diagnostic unit, which can be $10,000. And they don't want to... They're smart people. They don't want to tie themselves to longer-term cash payments. So they move away from that. So we saw some reduction in that way. Our other two businesses that aren't at the grassroots level, that sell to the OEMs and sell to the garages themselves as opposed to the technicians, had record years. All right.

Good to have you on. Good to see you. Good to see you. That's Squawk Pod for today and for the week. We made it to Friday. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. Get the best of our TV show right into your ears when you follow Squawk Pod wherever you get your podcasts. If you've been listening for a while, let us know.

You can rate or review SquawkPod, write in Apple Podcasts, or send us a message on social platform X. Our handle is SquawkCNBC. We'll meet you back here on Monday. Have a great weekend. We are clear. Thanks, guys.

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