That Wack-Ass Tariff Formula
01:05:15 Share

Hello!

Welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. I'm here with Elizabeth Spires of The New York Times. Hello. And Emily Peck of Axios. Hi. And we are going to be talking about tariffs, of course. We are going to talk about the big announcement and its effects. We are going to talk about what it did to the dollar, which is kind of weird.

We have Mark Joseph Stern coming on to talk about what is going on in big law and the big judicial crisis that is happening in the wake of various White House executive orders. We have a Slate Plus segment on Broadway and ticket prices and actors and Hollywood. It's a good week this week, so tune in. It's all coming up on Slate Money. ♪

This message is brought to you by Apple Card. Apple Card is a no-fee credit card that gives you daily cash back every day. That's 3% back at Apple and 2% back on every purchase made with Apple Card using Apple Pay. Apply for Apple Card in the Wallet app on your iPhone today.

subject to credit approval. Variable APRs for Apple Card range from 18.24% to 28.49% based on credit worthiness. Rates as of January 1st, 2025. Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch. Terms and more at applecard.com.

Wow, this house is cute. But can I really get in the game in this economy? I do have savings and I am responsible-ish. I should bury it. I'm being wild. But what if I'm not being wild though? Could I actually score a... Kick off your home buying journey with Zillow's new buyability tool. It makes it easy to find out what you can afford so you can get off the bench and on to the playing field with confidence. Check your buyability only on Zillow.

All right, guys, there's only one thing we can talk about this week, even though we're going to talk about other things, but we have to talk about tariffs. Emily, you've been covering all of this for Axios.com. What happened?

Oh, people don't know? I'll tell you. Bring us up to speed very quickly. So for a long time, we've known this was coming. Trump announced that April 2nd, not April 1st, would be Liberation Day, where he would announce broad tariffs on the whole world. He didn't want to do it on April Fool's Day, P.S.,

So everyone knew this was coming. There was tons of reporting. It's going to be 20% tariffs across the board. The administration even does a background call with reporters before Trump starts speaking. And they say, it's just going to be 10% across the board tariffs. And reporters are like, oh, wow, that's less. That won't be so bad. And they're like, there'll be some more targeted tariffs that are higher than that. Cool, cool. Then

Trump gets up and he has signs listing many countries, including ones most people have never heard of and ones no one lives on. And he has a chart that says, this is how much these countries charge us in tariffs. And this is how much in my generous, generous position, I will charge them half. They're reciprocal tariffs, but I'm taking half off. It's a half off sale. Everyone gets a 50% cut. Except the problem is the tariffs are

That they said the other countries are charging us are totally made up numbers based on a whack. Can I say whack ass? You can say whack ass. A whack ass formula that they may or may not have devised on chat GPT to calculate a number that is

Absolutely not the tariffs these countries charge, but it's some other crazy thing. It's what they're calling the tariff and non-tariff barriers, which by sheer coincidence just happens to be exactly the same as the size of the trade deficit. Weird. Weird. Anyways, then they list on the next column, they say these are the tariffs we're going to be charging the US.

These other countries, again, a whole, whole lot of countries and some wild tariffs like Vietnam, I think is like 46%. China's 34%. I mean, big numbers. And these are China 34% tariffs, by the way, on top of the 20% tariffs that they had already announced, which themselves were on top of like the 10, 12% tariffs that were existing. Like the China tariffs are just getting piled one on top of the other.

Yes. And so after that, and then I'll stop talking because I feel like Elizabeth needs to talk. After that, the markets reacted and it was bloody. The end. Okay. So I have a theory about why this is happening. And part of it has to do with, you know, Trump not really understanding tariffs in the first place. But I think he looks at all of this like it's a real estate deal. So he thinks of transactions as kind of like a one-off thing. And then you come back to the negotiating table and everything just starts from scratch.

And international relations just don't work like that. And so when he does this thing where he's like, we're going to have a tariff and then the tariff's there for five minutes and then he pulls it away, what it does is it just reduces the confidence of our trading partners that we can be reliable in these negotiations. Yeah, but Elizabeth, this is a very optimistic take, which is that the tariffs are going to be here for five minutes and then he's going to take them away. Like the...

Mood music from the White House in the wake of this Liberation Day announcement is very much like these are not negotiable.

To be fair, no one really believes them. The markets don't really believe them. They will probably come down a bit in some cases, case by case, yada, yada. You know, the Chinese tariffs will come down in response to a TikTok deal. I don't know what the hell, right? But the big picture is that the overall tariff that America imposes on imported goods, which was

has historically been in the range of 2% to 3% if you blend everything, is going to rise to well over 15% and probably well over 20%. This is completely unprecedented in the history. This is bigger than Smoot-Hawley, for people who remember. Yeah, and I don't think they're going away, although I would point out that a couple of weeks ago, you were saying these things aren't actually going to happen, and now they are, and

She nailed you on that. I think he might pull back on some of them, but I think we're kind of fucked here. I agree that most of these tariffs, well, there will be a lot more tariffs going forward than there were in the past. And there is absolutely no consensus over how long they will last, whether they will last weeks or months or the entire rest of the Trump administration or years.

if you believe some of the more Trumpy people I've been talking to, like the most of them will survive even into any hypothetical future democratic administration, just like the original Trump tariffs on China were kept in place by Biden.

that this is the end of globalization and that now we have reached this very kind of like weird protectionist, isolationist world that is going to make everyone on the planet poorer, is going to probably cause a recession in the United States, and is quite probably going to cause a global recession just because so much of the world relies on America's role as being the consumer of last resort. The global economy is...

needs all of this trade to happen. And if it doesn't happen, that's really, really bad for the global economy. Yeah. I mean, one thing that is going to happen or will happen that the Trump administration doesn't care about, everyone always talks about American jobs being

being gutted by globalization, et cetera, et cetera, which isn't really accurate. Some American jobs were, a lot of American jobs were lost, but not all of them. And many more were created like in the tech industry. But anyway, good jobs were created overseas, right? All clothing is made now in Vietnam, Cambodia, China, wherever. And we can definitely get into a debate about like conditions for workers in those countries, but undoubtedly, and I'm sure Felix knows this

more than I do. But like people started making money that hadn't made money before, thanks to globalization, like they have jobs and, you know, standard of living went up. Like, look at China. The greatest reduction in poverty in the history of the planet was bringing hundreds of millions of Chinese people out of poverty. And

You can credit the Chinese government with a lot of that, but you have to credit the U.S. consumer with a lot of that as well. It was U.S. consumers' money who really did a bulk of that work. Right. And that all goes away. I was on the BBC this week, and while I was waiting to go on, I was listening. They had a woman working in, I think, a Cambodian factory, and she was like,

I would like to send a message to the world, to the United States, like, please get rid of these tariffs. Like, I need to work. Well, you know, the MAGA constituency, first of all, doesn't care about that. Right. Of course not. Those are other countries' people. They don't matter. But they do care about, and they still really buy the idea that this is going to bring back manufacturing to American shores because they think about it in the way that Trump does. You know, they just simply do not understand how tightly integrated the global economy is.

Let's just also unpack this word manufacturing because I feel like it's one of those words that kind of oscillates between two different things. And people use it to mean one thing when in fact they're referring to something else. One thing it refers to

is well-paid, unionized, working-class jobs at GM in the 1950s, or the kind of industrial manufacturing that involves actually relatively high-skilled work. Another thing it refers to is

making t-shirts and socks and, or even just picking fruit, right? Like work that is almost never unionized. It's almost never well-paid and that almost no one in America wants to do, even if it were well-paid.

And I feel like a lot of the debate about whether tariffs can bring manufacturing back to America sort of conflates these two things. And people are saying tariffs will help bring back good jobs. And it's like, well, the jobs that you're tariffing are not the good jobs. They're the bad jobs. That's right. Well, that depends on where you live, because there are huge swaths of particularly the Southeast and the Midwest where a lot of the manufacturing base is stuff like making T-shirts and

But I do think that most of the discourse really revolves around things like auto manufacturing. If you look at the American manufacturers who are making t-shirts, like that's not jobs, right? The big increase in...

apparel and those manufacturing sectors has been in automation. So you get increase in dollar volumes, you get increase in output, but you don't get an increase in employment.

Yes, exactly. I was going to say I had a piece this week. U.S. manufacturing has actually grown over the past 10 years. It's a growing industry. But employment in the sector has stayed basically flat. That is because it's very technologically advanced and they don't need as many people. And it's hard to believe that the jobs that do need a lot of people that are now all overseas and making those very poor people a little less poor would actually come back here if an

big if companies might want to just pay the tariffs rather than pay workers in the meantime. But I think longer term, like looking longer term, if that manufacturing did come back to the US, it would also be highly automated and require fewer people. And in the end, it's not 1985, it's 2025. And manufacturing works a lot differently than whenever the administration thinks America was great. And like you

You can't go back, you know, you can't go back to like the triangle shirtwaist factory or something like that. We live in a services-based economy. If you just think about everyone you know, how many of them are involved in making things? It's small, right? Most, like, obviously we're journalists. We make content. Yeah.

We make content. But, you know, this is two thirds of the economy of services rather than goods, right? If you work in healthcare, you're not in manufacturing. If you work in insurance or financial services, you're not in manufacturing. Most of the growth in employment in America over the past 50 years has been in services. And

That has made America richer. And those are the jobs that people want. And we have made a lot of money by doing this kind of bargain where we will do sort of high value added work that makes lots of money. And then we'll take the money and we will spend it on commoditized goods. And the commoditized goods will just take from wherever they're cheapest.

To your point, the Trump administration's nonsensical tariff calculations did not include U.S. exports of services at all. And I think this is part of the narrative that the administration needs to spin for its base, which is that we do manufacture goods. And, you know, the average Trump supporter, I think, doesn't really understand how that works. They don't

Do you believe, despite being small government people, most of them, that the government can coerce multinational corporations to operate potentially at a loss within the borders of the U.S. just because the president says so? Is one of the reasons we have a majority-like service-based economy because...

goods are so cheap. Like Americans can spend on other stuff because our TVs are $40 or whatever. And so if tariffs change the equation and they make the stuff lots more expensive and more and more consumers spend more and more of their money on the stuff, then it stands to reason that we'll move away from being a services-based economy.

It's true that the relative prices of goods and services will move. We are never going to go back to a world where more than 50% of consumption is on goods rather than services. That's not going to happen. So you say. So certainly, insofar as inflation that is caused by tariffs is overwhelmingly going to be in the goods sector rather than the services sector, what that means is the prices of goods go up relative to services. And so just...

mathematically, the percentage of the economy that is goods rather than services goes up because the prices are higher. That's true, but on some level, like consumption is a fixed pie. We can't increase. In fact, we're probably decreasing the pie of consumption given the effect on the economy as a whole.

And there just isn't that much money to go around to just find a whole bunch of extra money to spend on goods. And yeah, will people take fewer holidays and those kind of things and reduce spending on services that way? Sure. But are they going to consume less food?

Are they going to consume less housing? Probably not. Yeah, they're going to consume less stuff. And maybe that's good. Maybe there's a lot of people on the left and progressives that think like we buy too much anyway, right? Isn't there always someone on your feed saying like, I'm not buying anything this year. I wrote a whole story about apparel, right? And the way in which, you know, there's a bunch of environmental people who are like, we consume way too many clothes. And if we wind up buying fewer clothes as a result of tariffs, right?

probably a good thing. Right. Except for like poor people who need cheap clothes to buy clothes and aren't just like hoarding a bunch of stuff from wherever. But we should talk about stocks because they went down. Emily, is this important? I don't know.

I don't know. Well, it's important to me if I'm just being honest because I have a 401k like most Americans. Well, not most Americans. What is that, 40%? Most Americans have retirement accounts. Well, 62% of Americans own stocks in some form. There you go. 62%. So, I mean, it could be important, but...

breaking. Stocks go down and they also go up. So I don't want to be a doomsdayer. I feel like there has been this narrative of, wow, look how bad this tariff announcement was. You can tell it was really bad because stocks went down. And I had a long conversation this week with a woman in Brussels about the end of America as the global hegemon.

And she was like, this tariff announcement really marks the point at which America was like, we are going to pull back from the rest of the world and not care about the rest of the world. And it,

And it's important not to understate that. But really, the point at which that happened was the Munich Security Conference. And, you know, J.D. Barnes coming out and saying, like, yeah, we're not going to protect Europe. You can ignore your Article 5 of NATO and all the rest of it, right? The end of the...

US hegemony, the deliberate ending of US hegemony is something that the Trump administration has been doing for a while. And this is part and parcel of something that has been doing for a while. And this just happens to be a part of it that the stock market cares more about than the defense industry.

and security part. But like, it's all part and parcel of the same thing. And if you want to be a little bit sanguine about these things, as we're recording on Friday morning, the stock market is still up for the year. Like year on year, it's still up. So I want to ask you this, Felix. Yeah.

You said this is America pulling back from its role in the world, which is true. Is this our Brexit? Yeah, absolutely. It's our Brexit in two different ways. Just like Britain exiting the European Union, this is America exiting the world. Yep. But it's also just a self-inflicted move of complete stupidity, right? That makes absolutely no sense.

And now people are talking about what was it called? The moron premium that you have to add. Moron risk premium. The moron risk premium that you have to add to all American assets just because there's a complete moron in charge and you have no idea what he's going to do. And, you know, this is something that people applied to Liz Truss.

You remember her who lasted less time in office than the head of Lettuce. But yeah, now it's being applied to Donald Trump and you can understand why. You cannot assume that there's anything logical going on in that head and you have to therefore mark down the value of your US assets just because there's so much extra risk associated with them now. Slate Money is sponsored this week by Shopify.

When you think about businesses growing their sales beyond their forecasts, you think about a product with demand or a focused brand or influence-driven marketing. But the often overlooked secret is actually the businesses behind the business making selling simple. And for millions of businesses, that business is Shopify.

Nobody does selling better than Shopify. It is the number one checkout on the planet. And the not-so-secret secret is that Shopify with ShopPay can boost conversions by up to 50%, meaning way fewer carts going abandoned and way more sales. So if you're into growing your business, your commerce platform better be ready to sell wherever your customers are scrolling or strolling on the web, in your store, in their feed, and everywhere in between.

Businesses that sell more sell on Shopify. Upgrade your business. Sign up for your $1 per month trial period at shopify.com slash money, all lowercase. Go to shopify.com slash money to upgrade your selling today. Shopify.com slash money.

This message is brought to you by Apple Card. Apple Card is a no-fee credit card that gives you daily cash back every day. That's 3% back at Apple and 2% back on every purchase made with Apple Card using Apple Pay. Apply for Apple Card in the Wallet app on your iPhone today.

subject to credit approval. Variable APRs for Apple Card range from 18.24% to 28.49% based on credit worthiness. Rates as of January 1st, 2025. Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch. Terms and more at applecard.com.

So the absolutely crazy, unprecedented, weird stuff isn't confined to tariffs. We're also joined by the one and only Mark Joseph Stern, who covers all manner of things jurisprudential for tariffs.

Mark, welcome. Thank you. Happy to be here. Tell me what is going on with big law. Is there a fight between the White House and half of the biggest law firms in America? Yeah, I mean, I think fight would be putting it mildly. The White House has targeted a bunch of millions

major law firms for huge penalties, issuing a series of executive orders directed at firms, including Paul Weiss, Perkins Coie, Jenner and Block, that would prevent those firms from having any contracts with the federal government.

literally lock them out of government buildings and revoke their security clearances, which would prevent them from representing a lot of people who have business with the government or who are being prosecuted by the government. And if these orders are allowed to take effect, it would hugely diminish the bottom lines of these firms. I mean, they have millions, if not billions of dollars on the line. Yeah.

So you're saying that government and government-related business for big law firms is running into the billions of dollars? Yeah, yeah. I think that's not an overestimate. If you put together all of the individuals whose cases involve the government, whose cases touch on the government, who are being prosecuted by the government. I mean, some of these firms do, of course, criminal defense work.

And the corporations, too, that would sort of be affected collaterally by this because, and we'll get into this, they want to keep their contracts with the government. They do not want to face further persecution down the line. I think you're looking at a total dollar figure that runs into the billions.

I just want to make sure I understand what you're saying here. When you say the corporations who don't want to face further persecution, are you referring to the law firms or the law firm's clients? I'm referring to the law firm's clients. So I'm saying that it's not just that the law firms are going to not be able to represent specific clients.

clients because of the direct consequence of these orders. That's a huge problem. A ton of these law firms have clients that do business with the government, that work with federal agencies, that are being sued or prosecuted by the government, that have mergers and acquisitions deals that they'll no longer be able to work on because of these orders, because they'll be totally iced out of anything involving the federal government. But I'm also saying that beyond that,

There are a ton of corporations that are signed up to do work with these law firms, and the work might not directly bear on the government at this moment, but those businesses are going to say, we want a law firm that's in good graces with the current regime, and we are going to bail if we believe that our lawyers...

are on the outs with the White House and are going to face retaliation across the entire executive branch. And so I think if you include those numbers, I mean, obviously this is all sort of back of the envelope math, this clearly runs into billions. The ban on the lawyers from these firms going to federal buildings, does that mean they can't go to federal court? Yeah.

So I don't believe that the administration could legally do that. They have targeted specifically federal agencies, executive office buildings, the physical spaces where the federal government carries out its business. They have not purported to try to keep them out of an actual federal courthouse. I think that would raise an entirely different set of constitutional issues. But

The problem, of course, is that meeting with clients, doing business with clients often requires going to FDA, SEC, all of these places where the work happens, and they will be told at the door, you're not allowed in, you can't even see your client, which raises a whole other host of sixth amendment issues. And these firms have lobbying practices too, right? Yeah, yeah, that's exactly right. And so they're, in theory, they're lobbyists. And of course, there are a lot of lawyer lobbyists.

those would also not be allowed into federal buildings and they would have their security clearances revoked. So if they're working on a case that involves some level of secrecy and they need to see some kind of classified information, they wouldn't be able to do it. And so they wouldn't be able to represent that client anymore. Their client would basically have to drop them and go somewhere else because their lawyer wouldn't be able to argue the full scope of the case because they couldn't see it. Now, the general consensus is,

among jurists seems to be that these orders are illegal. Would you agree with that? Yes, I would. So if it's illegal, there's nothing to worry about, right? That's definitely how it works these days, Felix, right? So first of all, let me walk through the law and then let me walk through sort of like the practical realities.

I mean, on the legal side, these firms have really strong arguments under the First Amendment and under the Sixth Amendment. They are being punished for representing certain clients who the administration doesn't like, for hiring certain individuals who the administration doesn't like. So, for instance, they represented Jack Smith. They hired Mark Pomerantz. These are people who had investigated Donald Trump criminally. Those are

are seemingly acts of free association and free expression that would be protected by the First Amendment to take on a particular client or to work with someone on a set of issues that in theory should be a form of protected association and speech that's covered by the First Amendment. And beyond that, you know, of course, the Sixth Amendment guarantees a right to counsel in every criminal trial. And as I just mentioned, like this very,

very plainly applies to criminal cases and locks these firms out of representing criminal defendants because of the identity of their lawyers and who their lawyers have associated with. And so it has all of these disastrous downstream effects for the Sixth Amendment right to counsel. So those are the main arguments that have been put forth. There's also these due process arguments that the orders are very vague, that they don't provide proper notice and hearing. And the lawyers understandably threw spaghetti at the wall, but I think those are the main arguments that

In terms of what's going to happen, I mean, we've already seen a handful of federal district judges block parts of these orders. This will reach the Supreme Court in some capacity. And I am a cynic about the Supreme Court. I think this is obviously a very conservative Supreme Court that shares much of Trump's agenda. I don't know that a majority of justices share this particular agenda. I mean, the White House is going after people who have worked with John Roberts.

who have worked with Brett Kavanaugh, who know and socialize with these folks who are part of the same world of elite lawyers and who have not, by sort of traditional standards of our guild, done anything wrong. They have done everything right and they are still being penalized for choosing to represent certain clients and associate with certain people.

So I do think there is a good chance that because this is illegal and because it so brazenly goes against sort of the ethos of the legal profession that even the Supreme Court shares that it's not going to stand up in court. What makes these firms that are capitulating to Trump believe that settling with him is actually going to get Trump off their backs? So look, I think if you peer out at the firms that are capitulating and the firms that are fighting...

So wait, let's zoom back a bit because we haven't quite covered this. Who's capitulated, who's fought, and what form does the capitulation take? So the capitulators include, I think most prominently, Paul Weiss, which is a major corporate law firm that has now agreed to do millions of dollars in pro bono work for the Trump administration, defending the Trump administration's policies and priorities.

No one's entirely sure what that looks like. It might amount to combating anti-Semitism, which is what the White House suggested, but it might involve even sort of deeper representation, like say defending the ban on transgender troops or defending the shredding of USAID and the halt of foreign aid. Why would the Trump administration want that work to be done on a pro bono basis?

Well, because the Justice Department has been totally gutted and people have either fled or been fired. And they have the same three mediocre lawyers showing up in case after case, basically saying to judges, we don't have the bandwidth to deal with all these lawsuits. I mean, there have been well over 100 lawsuits now. There are all these temporary restraining orders.

And the Justice Department is a ghost town. A bunch of people jumped ship before January 20th. A bunch of people have been pushed out since then. These offices are half-filled at best. The folks who would be defending the government aren't there. And even beyond that, the Justice Department has revoked this longstanding rule that you could sort of step back from a case if it violated your morals, your conscience. So people know if they stay, they're going to have to make terrible arguments. And so they're leaving.

And it's quite rational, I think, for the Trump administration to say, well, what if we can just coerce some of these big law lawyers to do the work for us on a pro bono basis? This is the first thing that I didn't understand. I thought that they were just saying we will take pro bono cases that are broadly conservative stories.

something, rather than we will actually represent the executive branch of the U.S. government. I see nothing in this order and in this compromise or settlement or capitulation or whatever you want to call it that actually limits it to pro bono work that happens to align with the policies of the White House. I think that is how Paul Weiss and some of these other capitulators have attempted to spin this.

But it seems to me very clear that there's no sort of bright line between defending the Trump administration's priorities and defending its actual policies in court. Right. And at this point, if you are running Paul Weiss and you get a phone call from the White House saying, oh, we need a lawyer to defend this, it's really hard to say no.

Absolutely. And also, there's a lot of different ways that those two paths can sort of intersect. Like, for instance, filing amicus briefs in support of a position that the Trump administration has taken. Stepping in and working with the Trump administration as outside counsel to defend certain policies, which I think is...

almost certainly going to happen. What about how these deals cut off the possibility of those firms doing pro bono work that like directly is in conflict with the Trump administration, like taking on a lot of immigration cases, which I feel like happened in the last Trump administration. Oh, really? Did they like hobble themselves on the other side of pro bono? This is a point of ambiguity. Yeah.

So, and again, part of the issue here is that there's not like one document that says indisputably precisely what the two sides agreed to. And just to give one example here, the New York Times has reported that Paul Weiss, when it made the settlement with Trump, didn't promise to ban DEI.

in its practice. But when the White House announced its iteration of this agreement, there was this massive DEI ban that sort of took Paul Weiss by surprise. Paul Weiss. Yeah, yeah, I know. Can you believe that the Trump administration is not a reliable negotiating partner? It's just stunning in 2025. So there's not any sort of

extreme, obvious, explicit ban on doing work that is contrary to the Trump administration's interests. I think that would probably be a bridge too far. The message has been sent. It's a message. I mean, all of this is being done in retaliation for people representing Trump enemies or being Trump enemies themselves. And they've made that clear. It stands to reason that you shouldn't do that lest you become the recipient of the next executive order.

Of course, of course. These firms are so big and their client lists are so broad. It seems like even the firms that are making deals with him, if he gets irritated, he'll find the one client he doesn't like and just scrap whatever deals they made, right? Yeah, I mean, the deals...

if you can even call them that, give Trump ongoing leverage over the firms to renegotiate, to renege, to do whatever he wants to keep them on the side of the administration. And that's going to have devastating impacts on the pro bono work that these firms used to do. I mean, this is very obvious, but like, you know, immigration, not a lucrative field if you're defending migrants or undocumented people, something that historically big law has stepped in to kind of fill the gap with. This is

say, hey, we can lend out some of our lawyers to argue this policy is unlawful or unconstitutional. That happened a lot during Trump's first term. I completely believe that part of the unspoken promise of this settlement is the firms that capitulate will not be doing that. They will not be stepping up to the plate. So, okay, so that's the capitulators. And then on the other side, we have...

The fighters?

And, you know, I think if you want to find a line that divides the two groups, and it's hard because there's a lot of overlap. There's not one single thing that makes it clear why some capitulated and some are fighting. But the capitulators have a ton of corporate clients that are interested in like transactional litigation, mergers and acquisitions, kind of boring but incredibly lucrative corporate stuff that usually doesn't even wind up inside of a courtroom, but that does actually

frequently require a stamp of approval from the federal government. So maybe they're looking at a merger or an acquisition that's going to need a green light from the FTC and the Justice Department. Maybe they are working with clients who are under the thumb of the SEC and they want to get them out of the SEC's bad side.

In those cases, if you're one of these firms, you don't want your clients to read in the newspaper that you're suing the Trump administration and that you're antagonizing and vilifying the Trump administration, that the Trump administration hates you and is going to have ongoing good reason to hate you. You are going to want to assure your clients, pat them on the head and say, don't worry, we are taking care of this.

The Trump administration is going to love us. We're doing free work for them. So your merger, it's going to get approved. Your securities fraud complaint from the SEC, it's going to get dismissed. All that stuff is going to go away because we're friendly with the Trump administration. The other side of this, the Jenners, the Wilmer Hales, they are not

as involved with that work. I would say they're more DC than New York located, which is kind of an interesting little twist. They certainly are involved in some of this corporate side work, but they also have a maybe bigger portfolio of other stuff that gives them more of, I guess you could say diversified investments that hopefully ensures for them that even if some of their corporate clients bail because they don't want to piss off the Trump FTC, that they'll still have other very expensive clients who can pay the bill.

Skadden and Paul Weiss, they're the ones who Skadden paid $100 million. $100 million, right. $40 million. This isn't real money. This is just like we multiply the $3,000 an hour we bill out by the number of hours we're working. Fair enough. But these are New York deal-making firms. They don't care about taking a stand. They just want to make money, do deals. I mean, all of these companies, all of these firms have...

a constituency of lawyers who want to take a stand. There's a broad range of opinions within each of these firms

None of the richest firms in the country, like the top 10 of the Amlaw 200, none of them have signed on to the amicus brief in the Perkins Coie case. And only a few in the top 50 that the Times points out. It's like rich firms are like, we like our money. Yeah, exactly. And they like their deals getting approved. Yeah, yeah. My point is not that the senior leadership of the firms has made the decision to sign on to the fight. My point is that within the firm...

especially in the sort of lower reach of associates. Like there is a broad range of opinions and that's true in all firms. But my question is, to what degree does it matter that they aren't signed on? Is it important on some level that every single firm and every single lawyer in the country stand up for basic rights

fundamental rights of lawyers? Or is it enough that you have some firms in D.C. that are fighting the good fight and it doesn't matter if they don't have the support of everyone? So, I mean, there's obviously a collective action problem here. I would say to your question, it's less of a problem if the big rainmaking firms don't sign on to some brief. It's more of a problem if those big rainmaking firms are behind the scenes trying to poach clients

from the firms that are fighting back by saying, hey, your firm is antagonizing the Trump administration. That's not going to end well for you. You should come over to us. We're going to play nice or at least keep our mouth shut. And so you can rest assured that we're going to stay in the government's good graces. Now, Paul Weiss claimed that was happening. There's been some reporting to the contrary. The way I read the New York Times piece, it was that Paul Weiss said,

rivals were trying to poach Paul Weiss' lawyers who disagreed with the capitulation. That is also a possibility. And I guess I should say, lawyers often bring their clients with them. So we're not actually talking about two different things here. I think if you poach lawyers, you're in effect often poaching their clients. And if you're trying to bring clients over, you might well be bringing lawyers over as well. There's sometimes a package deal, especially at a firm where there's

partner who has a longstanding historical relationship with a particular client. So yes, I guess I will revise what I said too. If those big firms are reaching out to lawyers and clients at other firms, the ones that are under the thumb of the White House, the ones that are being targeted and saying, come over to us, we'll treat you well, we'll get your deals approved and we'll make you lots of money. That is the kind of betrayal that

could really hamper a collective response to this. And it's much more important and would be much more devastating than the fact that top 10 big law firms are keeping their mouths shut and refusing to sign on to something like Esprit. Also, don't you think that Perkins Coie is in a unique position here because a lot of their business really is government business and they are considered the premier business.

law firm for campaign finance for Democrats. Exactly. Yeah. And so they are going to have to be working with the Federal Elections Commission constantly. And if they can't step foot in the FEC's building, if they can't have any kind of contact with the FEC, then that's going to be catastrophic for

Perkins Coie, but you could sort of run that formula on a lot of these different firms that might specialize in a particular area of government practice. And I'll also just add one other thing that we mentioned, the DEI issue. The administration has also threatened to launch these investigations into the

and hiring practices of firms that don't capitulate and basically say, you hired too many black people, you hired too many women, we're going to launch this investigation. And so in addition to the more obvious agencies like FTC and SEC that I mentioned, the firms that are capitulating want to keep the EEOC off their back.

I question whether the EEOC has any legitimate basis to launch such an investigation, but Trump has very much taken control of that agency and I think he could direct it to do so. And can I make one sort of like wonky point here that's a little bit- We love wonky points on Slate Money. So I think what this shows is the extreme danger of this unitary executive theory that Trump has been peddling, that the Trump administration has been peddling, which is this idea that the

president has total absolute control over every agency within the executive branch. This is something the conservative legal movement has been pushing for a very long time. Trump has really asserted it in a very muscular way. I think the Supreme Court is likely to embrace it. And it sort of demands that all of these agencies yield to the president, that he can fire their members, that he can direct their activities and veto their decisions. And we're

What that has allowed him to do is essentially take over traditionally independent agencies like the Securities and Exchange Commission, like the FTC, like the EEOC, and weaponize them for his own personal vendettas. And so rather than be assured that the EEOC is broadly enforcing civil rights in this country...

We know that Trump is weaponizing it to persecute law firms that aren't capitulating to his pressure. Rather than know that the FTC, the Federal Trade Commission, is protecting against anti-competitive practices and abusive monopolies, we know that he is firing its Democratic members and demanding that its remaining Republican members go after law firms and corporations that he doesn't like. And if they don't, if they don't do his bidding, then he asserts the right to just

fire them and replace them with lackeys. That is really dangerous. Congress designed these agencies to be immune to that pressure, but the Supreme Court has been consistently removing those safeguards against partisan interference. And we are now seeing a president who's 100% willing to take advantage of that, to exploit that, and use these agencies against his perceived enemies and antagonists. And it's very, I think, authoritarian.

I just want to ask one last question, if we could like zoom out on all of this. The Harvard Law professors wrote in their letter and everyone says, the rule of law is at stake. The rule of law is at stake. And like, I don't think lawyers understand that when they say that, people are like, say what now? Like, I don't think people understand what that means and how important that is. What I would say is the White House is coming after big law first. But if it works on big law, then big law is not going to be the end of it.

The administration is going to set a precedent whereby the government can marshal all of its extraordinary power and authority and discretion to punish lawyers who take on clients that the current regime doesn't like.

who hire partners and associates who the current regime disfavors. And the government can use that power to essentially prevent people who are facing real persecution by the state from obtaining fair representation, which is in theory, they're right under the constitution. This does not end with a bunch of big law firms in New York and DC. This ends with

somebody facing serious persecution and oppression from the government not being able to find anyone willing to represent them because every lawyer is scared that their career and their practice and their firm are going to be crushed by the government if they take on that case. And that goes against everything that the American legal profession is supposed to stand for.

And like the laws don't matter if no lawyer is willing to like, if you accidentally deport someone to El Salvador and they don't have a lawyer, like they're going to stay in El Salvador. Exactly. It doesn't matter if they do have a lawyer, they'll probably stay in El Salvador. But they have a little better chance. Setting aside that cynicism. I mean, yes, of course, that is fundamentally the problem that if the government can just accuse you of anything and you can't hire someone to defend you, then like the entire legal system collapses.

And I mean, this goes back to John Adams representing the British soldiers in the Boston massacre, right? This goes back to many of the framers of the Constitution were lawyers. And there's a gazillion quotes of them saying, you know, the one thing we definitely want to make sure of is that lawyers can represent unpopular clients without facing any kind of persecution from the government. Because without that, then the rule of law disappears.

It is so basic. When we talk about the rule of law in this context, that is what we're talking about. We are not talking about DEI. We are not talking about any kind of progressive agenda. We are talking about what would make John Adams aghast and what would make James Madison think something has gone horribly awry. It is that fundamental. And we are also, just to be clear, not just talking about representation. We are also talking about

the White House's ability to do things that are plainly illegal and to get away with it. Because like just signing these executive orders is plainly illegal. And yet it is having very, very real effects as we have discussed. And by the way, you know, who invented this whole move was Elon Musk. But we will talk about that some other time. Mark Joseph Stern, thanks so much for coming on the show. Thank you so much for having me on.

This podcast is brought to you by Progressive Insurance. Do you ever think about switching insurance companies to see if you could save some cash? Progressive makes it easy. Just drop in some details about yourself and see if you're eligible to save money when you bundle your home and auto policies. The process only takes minutes and it could mean hundreds more in your pocket. Visit progressive.com after this episode to see if you could save. Progressive Casualty Insurance Company and affiliates. Potential savings will vary. Not available in all states.

Today's episode of Slate Money is sponsored by Smart Travel, which is a new podcast from NerdWallet.

But if you want to travel like a savvy jet setter, that doesn't mean monogramming your passport. It means making smart decisions every step of your trip, which means knowing your options. Smart travel unpacks the facts like which booking sites actually save money, how to fly first class using points, and whether that fancy travel card is a smart investment. And it's also that you can save more on your next adventure.

Stay tuned at the end of this episode to hear the smart travel trailer and be sure to follow smart travel from nerd wallet so you can start traveling like us. All right, Emily, you've written about this. Yeah. The weirdest thing that happened on Thursday after the announcement of the tariffs on Wednesday afternoon was a significant drop in the value of the dollar. And, um,

Long standing listeners of Slate Money will remember our podcast with Paul Krugman where we went into some detail about how tariffs caused the dollar to strengthen and therefore yada yada yada. Was Paul Krugman wrong? That's

what I wanted to know because I'm a loyal and devoted reader of his sub stack. And I felt so smart coming off that podcast with him. Everyone should go listen. I think it was before the end of the year where he like broke it down and totally explain tariffs, reduced demand for imports. So that means there's less need for businesses to exchange dollars for other kinds of currencies. So on the currency markets, there's less dollars. So that's less supply. I

Demand stays constant. So the dollar strengthens and that offsets the cost of the tariffs. And I was like, oh, I think I understand because I really, I'm going to just admit like currency markets aren't my bag. I get confused by the charts a lot of the times. It's like very complicated, I think, if you're not in that world, but yeah.

whatever. So then I keep reading all these stories, dollar falling, Trump announcement, dollar falling, weakening, what is happening? So I was like, I will look into this mystery because I don't know if anyone else is confused, but I was confused. And it turns out there's some other people, well, not confused, but there were other pieces. I can tell you, I asked half a dozen people, does this make any sense to you? And the overwhelming response was,

Yeah, no, not really. Yeah. So, I mean, the TLDR, if you don't want to read my piece, though, it is Axios and it is smart brevity. So it's not very long. Basically, investors are worried more about a recession than anything else. They think economic growth will slow when economic growth slows.

slows, people spend less money, there is less demand for money overall, so a currency will weaken. But that doesn't fully explain why the dollar is falling. In this one index that we were looking at, a lot of people were looking at, which tracks like the EU and other major countries' currencies, and the dollar's falling relative to those currencies, right? If the recession theory is right, you'd expect all the currencies to drop and the line to

not to drop as much. The recession argument, which I think is probably the correct argument, is not just that the US economy will go into recession and that therefore the dollar is weakening. It is that the depth of

of a US recession will be much worse than the depth of the recession that this tariff policy will cause in the rest of the world. And so everyone else in the world will grow relative to the United States. And so their currencies will strengthen relative to the US dollar. And this is interesting because the United States is kind of an autarky, like we don't import very much.

Imports are like, what are they, 15% of total goods consumption, something like that. If you compare that to Germany, Japan, even China, their exports were a much greater percentage of their economies.

And their exports to the United States in particular are a very important part of their economy. And so there was this feeling that the effect of the tariffs in terms of the global economy could actually wind up being worse on the rest of the world than it was on America.

And yet, if you look at the dollar, the consensus seems to be the other way around, that the effect of the tariffs is going to be worse on America than it will be on the rest of the world. Well, also, you know, we are dependent on capital inflows to some extent to keep the dollar strong. And now the U.S. doesn't look like a particularly good investment for a lot of countries that would ordinarily be buying tariffs.

treasuries so right that's exactly the same argument right the reason why the u.s doesn't look like a good investment is because it's entering a recession it won't grow so much at the end of u.s exceptionalism you know the u.s stock market has massively outperformed every other major stock market in the world for the past decade or more and everyone's like well this is the end of that the big new hotness these days is like the german stock market or the japanese stock market that's what people are excited about that's where the capital is going to start flowing instead and so

those currencies are going to wind up outperforming the dollar. It goes back to the more on risk premium you were talking about. I mean, as people were putting it to me, like investors are like afraid a little bit of the US now because the policy regime is so erratic, like you can't trust it the way you once could. So, you know, they don't want their money here. Yes and no. I mean, I think that's true on one level, but also we have to be careful what we're talking about when we're talking about investors.

If you look at the stock market, what you are seeing is the level of demand for securities. How much is someone willing to pay for a share of Microsoft or Apple or IBM, right? The dollar doesn't really work like that. People don't invest in the dollar. It's not an asset in the same way that a stock or a bond is.

It's more the result of flows. And if you're investing in the dollar, what you're ultimately doing at the very least is buying short-term treasury bills and things like that. So really, dollar flows are rates bets. They're bets on interest rates much more than they are sort of a question of interest.

investing in the future of some asset. So you're saying that the dollar fell because people think that there's going to be a rate cut? Well, that seems to kind of be the case, right? One of the other things that I was looking at was something called five-year break-evens, which is basically what does the market think that the inflation rate is going to be over the next five years or 10-year break-evens. And both of them went down.

Both of them are in like the low twos at this point. And more importantly, on Thursday, they went down, which means that like everyone's talking about how tariffs are inflationary, right? Obviously they are inflationary because the cost of goods goes up.

But how is it that in the face of a massive tariff announcement that everyone expects to cause prices to go up, that the effect on inflation expectations is that expected future inflation is going down? Riddle me that. It's the same thing. Because people spend less money if goods are more expensive, so demand will go down. And when demand goes down, inflation goes down? No.

Maybe, or maybe it's a bet on the Fed cutting interest rates, or maybe it's just a bet on growth and this idea that on some level, all of this talk of stagflation notwithstanding, you tend to have more inflation when economies are running hot than when they're running cold. When there's more demand, there's inflation. The economy is running hot. But I think that...

You are absolutely right to be confused by this because it is a counterintuitive thing and it doesn't make a lot of sense. And so we can try and sort of muddle our way through to like a sort of ex post hypothesis about what might, what the market sort of anthropomorphizing the market here, like what the market might be thinking, but the market is not,

a thinking machine, right? It's just a number. And it could just be like, oh, that's weird. I also think the market is rational enough to kind of say maybe traditional economic theory doesn't apply because these across-the-board tariffs are so broad. Maybe more on risk premium is the more relevant theory here. More on risk premium definitely applies to assets. I just don't think it applies to rates.

But, you know, like it should cause rates to go up, right? If you're charging more of a risk premium, then that should cause rates to go up. And if rates go up, that's good for the dollar. That's not bad for the dollar. But if recession fears swamp everything, then rates go down, right? Because if we're in a recession, Fed's more likely to cut rates. That's what the market thinks now, I think. And if Trump tries to screw with the independence of the Fed, which he's perpetually trying to do. Oh, yeah. He just truth that Jerome should cut rates.

This is live breaking news as we're taping. He truths that on a regular basis. He said, cut interest rates, Jerome, and stop playing politics.

Are we going to replace our egg watch with a tariff watch? Dumb tariff watch. Dumb tariff watch. Wait, is that like being too, I was thinking about this. Is it too glib? People are going to be hurt by the tariffs. Yeah, but not just people, Emily. Also penguins. All right, Elizabeth, tell me about the penguins. So the penguins live in an island that Trump is tariffing because he didn't really think too much about these tariffs and said 10% for everybody, no wait, 25%, no, some number.

and just had a list of basically countries and territories. And a lot of these territories, or not a lot of them, but some of them are completely uninhabited islands. And one of them is inhabited, but by penguins. So effectively, Trump is terrorizing penguins, who I'm pretty sure have no opinions whatsoever about fiscal or monetary policy, but they are being punished nonetheless. All of their exports are being punished, but like...

Are penguins a source of valuable guano? I don't think they even are. I don't think so. I think there's really nothing you can export from penguins. They tear up the Heard Island and McDonald's, McDonald Islands, and someplace called... Well, I'll just go start with those two. Those are like somewhere...

In the Arctic Ocean near Australia, they've been uninhabited. No one ever goes there. And it inspired amazing memes of penguins saying, you know, we're formally preparing for war with the U.S. And then there's just a picture of like the cutie little penguins. Yeah.

It was so fun. They dressed up for their trade war. Incredible. One of the tariff places is a Norwegian territory. Maybe Felix can help me pronounce this. Svalbard? Svalbard? Yeah. Svalbard? Anyone knows Svalbard? It has 2,500 people and 3,500 polar bears. And women take their babies out for walks with rifles on their backs just in case.

I mean, this is why, you know, we need trades so that we can buy their polar bears. We must punish Svalbard. Well, we know polar bears are isolationists. Right, isolationists. So, yeah, I feel like there are a bunch of dumb tariffs. We are allowed a dumb tariff watch. Maybe just this one episode. Maybe it doesn't need to be a repeating thing. We'll see how it develops. Oh, I think there are going to be more. ♪

Missions to Mars, driverless cars, AI chatbots.

we're already living in the future. Well, Robinhood is built for the future of trading. Robinhood's intuitive design makes trading seamless. On Robinhood, traders have access to popular stocks and ETFs 24 hours a day, five days a week, so you can keep up with today's fast-paced markets, spot opportunities, and take control of your trades with tools like screeners, simulated returns, and

and strategy builder. You can now even trade your favorite assets all in one place. Robinhood offers competitive pricing with commission-free trades on stock and ETF options and some of the lowest margin rates among leading brokerages. The future of trading is fast, powerful, and precise. Experience it now on Robinhood. Sign up today.

Investing is risky. Robinhood Financial LLC member SIPC is a registered broker-dealer. Trading during extended hours involves additional risks. Other fees may apply.

Numbers round. Emily, do you have a number? Yes. Okay. Yeah. $562,500. That is the size of a check that went missing to a woman named Susan Spira who lost her home in the Los Angeles wildfires. And she was insured by California's fair plan, which is the insurer of last resort in California. And they are having trouble getting

handling the volume, I think, of claims that they're seeing. So people are not getting their checks. They're having a hard time getting paid out, et cetera, et cetera. And it speaks to a problem that's probably going to grow worse down the line. This is according to the Wall Street Journal story as more weather disasters happen and more insurers pull out of the places where the disasters happen.

Um, because this here show is a guide to the business and finance news of the week, I am going to say that my number is 228,000, which is the business and finance news of a month ago, but it did only come out on Friday morning.

This is, let's just say, the least impactful jobs report in memory. And I feel like we should note this just for the sake of noting how for decades, because I am old, I have lived in a world where the financial markets wait with bated breath for the jobs report to come out on the first Friday of every month. And they're like, this is the most up-to-date news about what is happening in the economy and how the economy is doing. And it turns out,

That in March, the economy gained 228,000 jobs, which is a very healthy number of jobs. And everyone's like, in a normal world, everyone would be like, oh, this is great. No refresh. Everything's awesome. Now, you know, the reference week in mid-March feels like it was a million years ago. And we're in a completely different world now and no one cares. Wow.

What is the new hot data point? So from the time of the 08 crisis to like, I don't know, 2019, really, the jobs report was the hot data point. Do you remember during the financial crisis, though, like what we really cared about was this thing called the TED spread? No, I don't. Oh, my God. That was a whole thing. It was like the spread of...

bank loans over treasuries or something. But yeah, everyone was obsessed with it. So anyway, there was Ted spread and then people were into the job number and then job number still COVID then inflation. CPI was the hot, was the hot indicator. Is that even a thing, a real thing? I can say that is the nerdiest thing I've ever said. Hot thing. Now,

What is the new hot economic indicator of the tariffs? Like, what should we be watching to be like, oh, the tariffs are fucking us over? Is there like a monthly report on how much tariff income the...

Oh, that's a good idea. There you go. Yeah, that could be interesting. That's something. There's something there. That's got to be somewhere, right? We'll go hunting for it. Yeah. Elizabeth, do you have a number? My number is 5.5, and that's the number of minutes the average person sits in the drive-thru line in the top 20.

top 10 major fast food chains. And this comes from the Washington Post's excellent data department. Apparently two thirds of fast food sales in the US come from drive-thrus. And so they were looking at what the fastest and slowest drive-thrus were of the top 10 largest chains. And the fastest was Taco Bell, which was 4.3 minutes to getting your food. And the slowest was Chick-fil-A, which was eight minutes. But the most interesting part was for the fast food companies who have implemented AI,

They've sped up weights by 11.5 seconds. But there's a giant asterisk beside that, which is that most of the companies that are implementing AI systems also install better speaker systems with them.

So it's a little unclear whether the AI is responsible for that 11 seconds or just having a better speaker system. The speaker systems are really bad on drive-thru. I don't use it much, but it's always like, this is how it feels. And you're like, are they hearing me? What's happening? That's genius. You're only supposed to change one variable to really understand the results. The conflating variables are always fascinating. I would vote better speakers. So I need to ask,

As someone who hasn't driven through a drive-thru almost ever. Ever. Aren't we in a world now where you just order on your app online and it just like is sitting there waiting for you once you get there? People still do the thing where they wait until they drive up to the speaker to speak in their order rather than just typing it in in advance. Yes. People still, she just said, people still go through the drive-thru. Yeah, I know. But can't you go to the drive-thru to pick up your order that you've ordered in advance?

Oh, I don't know. Can you? Yeah. You can. At some places you can. At Starbucks, you totally can. You could do that at Starbucks. I don't know about other. The other drive-thrus I go to, it's always like, oh, let's just get the fries. And then it's like on the way home. So I don't know. I don't have the experience. Someone who drives a car, help me with this. Yeah.

I think that is it for us this week. Thank you very much for listening to Slate Money. We have a really actually genuinely fascinating Slate Plus segment coming up on Broadway and plays and ticket prices. But other than that, thanks very much to Mark Joseph Stern for coming on to talk about law things. Thanks to Merit Jacob and Jessamyn Molly and Shana Roth for producing. And we'll be back next week.

With more sleep money. Today's episode is sponsored by Smart Travel, a new podcast from NerdWallet. I'm Megan Coyle. And I'm Sally French. We're NerdWallet travel writers who help you turn dream trips into trips you can actually afford. Because let's be honest, dream trips are usually synonymous with spending money. But my dream is to not spend much money at all. That's where Smart Travel comes in.

We break down the best ways to stretch your travel dollars, whether it's scoring an upgrade without selling your soul, decoding loyalty programs so you can actually get something out of them, or figuring out if that ultra discount airline ticket is too good to be true. It usually is. And while we're at it, we'll show you how to turn canceled flights into lounge dinners and free hotel stays. Spoiler, it involves a lot of patience and a little bit of research. But don't worry, we've already done the heavy lifting. Because

being financially savvy doesn't mean you have to skip out on an adventure. It just means you're the genius who paid less for it. Each week, we bring you travel news, expert insights, and even some of our own travel wins and mishaps, all so you can travel more while paying less. And hey, you'll even have some fun along the way. So if you're ready to make your travel budget work harder and smarter, follow Smart Travel on your favorite podcast app. First up, Smarter Travel. See you soon. I'm Leon Nafok, and I'm the host of Slow Burn Watergate.

Before I started working on this show, everything I knew about Watergate came from the movie All the President's Men. Do you remember how it ends? Woodward and Bernstein are sitting with their typewriters, clacking away. And then there's this rapid montage of newspaper stories. About campaign aides and White House officials getting convicted of crimes. About audio tapes coming out that prove Nixon's involvement in the cover-up. The last story we see is, Nixon resigns. It takes a little over a minute in the movie. In real life, it took about two years.

Five men were arrested early Saturday while trying to install eavesdropping equipment. It's known as the Watergate incident. What was it like to experience those two years in real time? What were people thinking and feeling as the break-in at Democratic Party headquarters went from a weird little caper to a constitutional crisis that brought down the president? The downfall of Richard Nixon was stranger, wilder, and more exciting than you can imagine. Over the course of eight episodes, this show is going to capture what it was like to live through the greatest political scandal of the 20th century.

With today's headlines once again full of corruption, collusion, and dirty tricks, it's time for another look at the gate that started it all. Subscribe to Slow Burn now, wherever you get your podcasts.