00:00:00
well on Sunday president Trump announced
00:00:02
25% tariffs against products coming from
00:00:05
Canada and Mexico as well as 10% tariffs
00:00:08
coming from product from China president
00:00:10
has said that it is connected to the
00:00:12
level of fentanyl making its way into
00:00:14
the us there have also been questions
00:00:17
around immigration but there are many
00:00:19
questions to be asked as to how this
00:00:21
will impact all of the parties involved
00:00:23
including Americans due to the expected
00:00:25
retaliatory tariffs by both of our
00:00:27
neighbors Jeremy seagull Wharton is
00:00:30
Professor of Finance joins us to talk it
00:00:32
all over Jeremy great to have you on the
00:00:33
show thanks for your time thank you Dan
00:00:36
happy to be here thank you all right so
00:00:39
let's start right at the get-go um
00:00:41
president Trump announces these tariffs
00:00:43
what are your
00:00:44
thoughts uh not a good
00:00:47
idea I think it's not good economically
00:00:50
and it's not good politically and I'll
00:00:53
I'll explain that uh in just a moment uh
00:00:57
first of all you know as we're talking
00:01:00
you know they don't supposed to take
00:01:01
effect till midnight you know there may
00:01:03
be brinksmanship here you know by
00:01:05
tomorrow they may be gone a lot of the
00:01:07
effect obviously depends on how long
00:01:11
they're they're going to be on um but uh
00:01:15
you know uh this is uh this is is going
00:01:20
to uh it it's certainly not going to
00:01:24
tank the US economy it's not going to
00:01:26
put us in the recession uh if they last
00:01:29
let's say two two or three
00:01:31
months um um even without retaliation a
00:01:34
few tents off of GDP a few ten up on the
00:01:39
CPI Consumer Price Index but here here's
00:01:42
where I I think uh we have to think
00:01:45
about here and that's a political effect
00:01:47
um we're going to get a rise in price in
00:01:50
in gasoline we already see Futures up uh
00:01:53
three or four cents gasoline is the most
00:01:56
visible price you know everyone's
00:01:58
talking about avocados and the up coming
00:02:00
Super Bowl and guac and uh people love
00:02:04
to talk about this the mainstream media
00:02:07
let's face it which is who are not
00:02:10
Trump's friends are going to get on
00:02:12
every single story that every penny and
00:02:15
all the rest uh and so there's there's
00:02:19
there's going to be a lot of negative
00:02:22
press um because I don't think people
00:02:25
say you know what I'm I'm I'm paying for
00:02:27
more for my guac because of something on
00:02:30
fentol and Canadian borders uh I don't
00:02:33
know if that's going to ring with them
00:02:35
uh secondly there's going to be certain
00:02:37
congre now here's where the critical
00:02:39
thing this is what's critical in my
00:02:42
opinion um the Republicans have a very
00:02:46
narrow margin in the house uh they want
00:02:49
to pass this huge Omnibus Bill they
00:02:52
cannot afford to lose anybody you know
00:02:56
let's face it one two at most there
00:02:59
there's a lot of congressmen and women
00:03:03
in districts that are going to be very
00:03:05
affected by this negatively and they're
00:03:08
going to get some negative
00:03:10
feedback uh speaker Johnson's going to
00:03:12
hear about this I expect speaker Johnson
00:03:15
to go to Trump and said uh you know um
00:03:17
let me just tell you you want to pass
00:03:19
this bill we're having uh some you know
00:03:23
we may lose four five six votes and it's
00:03:25
dead right I mean there's where the
00:03:28
rubber hits the road real if you want to
00:03:30
know the truth where uh where the
00:03:32
political pressure I mean first of all
00:03:34
it is very sad commentary on our
00:03:38
government system that Congress who was
00:03:42
uh supposed to given the sole rights to
00:03:45
impos tariffs in the Constitution gave
00:03:49
those rights away to the president of
00:03:50
the United States by the way the first
00:03:52
law
00:03:54
1962 but by the way with a
00:03:57
overwhelmingly Democratic House and
00:03:59
Senate passed it signed by Kennedy and
00:04:02
um to give him the right uh in National
00:04:04
Emergency which was what he called there
00:04:06
have been other bills subsequently that
00:04:08
have given him the right in of fair
00:04:10
trade practice of else but basically
00:04:13
Congress I think Congress wants those
00:04:15
rights back yeah but they can't get them
00:04:19
back because even if they even if if if
00:04:22
if if they say hey they pass a try to
00:04:25
pass a law don't forget uh Trump has
00:04:28
veto power over that law and they don't
00:04:30
have two-thirds to overturn that by any
00:04:32
means so they gave up a big issue um uh
00:04:37
you know that's water under the dam as
00:04:40
far as that's concerned um so the
00:04:43
there's I I think the political impact
00:04:45
here is what's important particularly in
00:04:47
terms of uh passing the Omnibus and tax
00:04:52
bill that the Republicans want to do
00:04:56
because let's face it I mean Trump came
00:04:58
in with pretty good
00:05:00
uh approval ratings an Era of Good
00:05:03
Feeling squabbles among the Republicans
00:05:06
have have been uh at a low let us say uh
00:05:10
since the presidency uh why does he want
00:05:13
to you know uh uh stir the Hornets Nest
00:05:17
here uh because uh he won't get his
00:05:21
bills passed if he does so you mentioned
00:05:25
gasoline Futures uh already seeing a
00:05:27
tick up yeah uh for consumer in general
00:05:32
how quickly and how would they see these
00:05:36
tariffs start to have an impact well on
00:05:38
gasoline right away there are many gas
00:05:40
stations that price immediately off
00:05:42
Futures I mean that that's their formula
00:05:45
I mean even before they get it they they
00:05:47
price off
00:05:48
Futures uh so you know we could see a
00:05:51
couple pennies two or three pennies four
00:05:53
pennies within two or three days on
00:05:57
gasoline now what super markets do about
00:06:01
guac um uh well let's say avocados not
00:06:06
and and and guac is a derivative there
00:06:08
of course I mean that's up to them 80%
00:06:11
of our avocados come from can uh from
00:06:13
Mexico uh so obviously the price of the
00:06:16
remaining ones would go up there will be
00:06:18
a run on them I think if if uh if firms
00:06:21
keep the prices you might see sell-offs
00:06:24
on on them if they don't raise the
00:06:27
prices so this has the ability to to
00:06:31
have I mean this is not going to change
00:06:34
anyone's you know a fundamental
00:06:36
Financial lifestyle but it's the visible
00:06:40
stuff that media that social media love
00:06:46
and it's GNA just feed into it day after
00:06:50
day after day um and not I think at all
00:06:56
to the benefit of President Trump so
00:07:00
let's also throw in the component of the
00:07:02
Federal Reserve last week not cutting
00:07:04
rates uh and and what kind of impact and
00:07:08
this has been a back and forth talking
00:07:10
point especially since the president
00:07:12
brought up the idea of tariffs in the
00:07:14
first place of what kind of potential
00:07:16
impact tariffs just maybe larger scale
00:07:20
would have on the impact on inflation
00:07:23
that we're seeing right now yeah well it
00:07:26
you know if it is um um longterm if
00:07:31
there is
00:07:32
retaliation um and then of course Trump
00:07:35
is even you know saying that he could
00:07:37
raise these rates um then you're going
00:07:40
to have a tick up in the rate of
00:07:42
inflation now there is a big debate
00:07:44
among Economist and the FED whether a
00:07:47
tick up of inflation due to tariffs
00:07:49
should uh re be a response because it's
00:07:53
it's not excess demand it's really an
00:07:55
external supply side issue where the FED
00:07:58
might say well this is going to pass
00:08:00
through I'm I'm not going to try to you
00:08:02
know make things worse by tightening
00:08:04
credit uh that would uh so I mean even
00:08:07
even I would say let that pass through
00:08:10
it's a oneshot
00:08:11
increase um so uh uh obviously if they
00:08:16
tried to raise rates as an excuse that
00:08:18
would certainly bring the eye of trump
00:08:21
on them but don't forget the the next uh
00:08:24
meeting is not until March 19th so we
00:08:26
you know we basically have uh you know
00:08:28
you know six seven weeks
00:08:30
right now before and we'll see how this
00:08:33
all settles out uh by then is it your
00:08:37
belief then that that there's more of a
00:08:39
chance that the tariffs that were
00:08:41
announced are are a better chance of
00:08:44
shortterm than they are longterm it
00:08:47
seems to make political sense to me that
00:08:50
they're
00:08:51
shortterm um because otherwise I think
00:08:55
uh uh you know he will hear the
00:08:58
feedback um and he's going to get the
00:09:00
feedback both from legislators uh uh and
00:09:04
and the public um who are not going to
00:09:07
like all these stories about uh
00:09:11
increases in some of their favorite
00:09:14
foods it's just it's just the type of
00:09:17
stuff which the news media loves to eat
00:09:20
up how much pun there no yeah exactly
00:09:24
how much how much does Canada and Mexico
00:09:26
retaliate do you think I think that
00:09:29
depend depends on the length of time um
00:09:32
really I think they're set to retaliate
00:09:35
I mean I've already heard that you know
00:09:37
some you know some Canadian uh liquor
00:09:39
stores have taken American liquor off of
00:09:41
the shelves you know this is us you know
00:09:44
we bu we make good liquor ourselves so
00:09:46
there's going to be a little bit already
00:09:49
even you know of unofficial
00:09:52
retaliation um you know hey just don't
00:09:54
buy American Goods even if we don't
00:09:56
retaliate I mean you know I mean that
00:09:58
that that was almost you know maybe
00:10:00
maybe that's some of the source of why
00:10:02
Apple phone sales have been weak in
00:10:05
China there was that bu you know by uh
00:10:07
non us Goods so there there's going to
00:10:10
be some of that I don't think I mean
00:10:13
right now uh there's going to be a few
00:10:18
retaliations that are in a fraction of
00:10:20
it and I think everyone's sitting down
00:10:22
to see in the next few days whether you
00:10:25
know uh Trump is uh going to settle this
00:10:29
deal how much do the markets react to
00:10:32
this I think it totally depends on how
00:10:34
long but let me say as long as these
00:10:37
tariffs are in effect and are not
00:10:39
lowered it's very hard to see the stock
00:10:41
market going up Jeremy always great to
00:10:44
get your thoughts and your Insight thank
00:10:45
you very much thank you Dan you got it
00:10:48
Jeremy seagull uh Wharton ameritus
00:10:50
professor of Finance
