00:00 Speaker A

President Trump’s shifting economic and tariff policies are fueling economic uncertainty. Yahoo! Finance’s senior columnist, Rick Newman, joins us now to talk about some of the biggest risks ahead. Rick, we are less than two weeks away from liberation day. So how do you look at the main risks to the Trump agenda at this point and, I guess, I would follow with are these self-inflicted, in many cases in your view?

00:31 Rick Newman

I wonder if we’re going to make a national holiday out of liberation day on April 2nd for people, uh, not in the weeds on this, uh, April 2nd is the day that Trump says he’s going to unveil a long list of what he calls reciprocal tariffs. So where he feels that other nations unfairly, uh, treat treat American exports unfairly, he’s going to do the same thing to them that they’re doing to us. That could be a mixture of new tariffs, uh, you know, quotas, other ways to keep products out. Um, Trump says this is quote, “The big one.” As if all the tariffs we’ve seen imposed so far are just kind of an appetizer. Now, of course, as usual, nobody knows if this is mostly a bluff, meant as, you know, meant to gain leverage in trade negotiations or if we’re really going to see some sizable tariffs here. But if Trump means it, um, some analysts think that markets are very unprepared for this. And we could see, you know, tariffs as high as 50% or even 100% on some big product categories. Um, and it’s probably going to be the usual mix of a million different things, impossible to keep track of some of them go into effect right away, there are negotiations all over the place hard to keep track. So we don’t know but, um, you know, I think a big question for markets, Miles, is, is it just uncertainty that is, um, you know, kind of keeping stocks depressed? Are we actually seeing losses in the economy? Um, and it’s tilting more and more toward we’re actually seeing losses in the economy, that we’re losing output, for example, that we’re not going to get back. And, uh, maybe investors are starting to say, you know, other stock markets are looking pretty good. Germany is up more than the United States, China’s up more than United States, maybe I should go there. So there’s a lot going on and I don’t think it’s realistic to think this, that this chaos is going to end anytime soon.

03:26 Speaker A

Yeah. So we, you know, you talked to the reciprocal risks there on, on the rest of the Trump economy, talked a little bit about the stock market. Interestingly, he doesn’t want to talk about it as much but we’ll save that for another conversation. Something else you flag as a risk is, uh, layoffs rising and it really raises to my mind the, the question the, the statement of fact that we haven’t had an extended cycle of folks losing their jobs in this country since the financial crisis. We had a brief blip during COVID, but it has been multiple presidential administrations since we have seen a kind of grinding job loss. And while economists are not looking for that, it feels like we’re inviting, to some extent, some of these challenges into the economy with the uncertainty around tariffs and other things.

04:28 Rick Newman

I, I think you put it well Miles. So, you know, uh, we thought inflation was a thing of the past, uh, until 2022. We hadn’t had it in 40 years and suddenly, oh yeah, inflation can, can be pretty lousy. And, uh, you know, we are a consumption driven economy and consumption means people have to have incomes. So there are, you know, there’s, there’s starting to be some talk in the auto industry, for example, of, uh, of coming layoffs because they’re just not going to be able to keep up production at the levels they’ve had for the last several years. So you lose a few jobs here and you lose a few jobs there. And at what point does that start to hit consumption and lower overall economic growth. And, uh, you know, we’ve been talking about this a lot on Yahoo! Finance, Goldman Sachs and many other forecasters have been downgrading their outlook for, for economic growth and raising their outlook for inflation. And, uh, you know, again, when you lose economic growth, you don’t just get it back. It doesn’t just come back, uh, the next quarter. Um, so if you, if people lose their jobs, they’re losing income, they’re losing purchasing power. I’m, I’m not, I don’t want to be alarmist, like this is not necessarily going to snowball into a recession in six months, but why would you be doing this in the first place? I mean, you want every tenth of a percentage point of economic growth you can get and you want the unemployment rate to be as low as possible. So, you know, this is the pain that Trump and his economic advisors say we might have to go through in order to get whatever this mysterious gain is on the other side. And I, I’m just not hopeful that this is going to end well.

07:05 Speaker B

Well, Rick, uh, just to put you on the spot, I know you’re not hopeful, uh, he’s been keeping us on our toes this entire time. Uh, is there any part of you that thinks this is just purely a negotiation tactic or is liberation day really going to happen and we need to really pay attention to what happens on this final day?

07:35 Rick Newman

I mean, go back to the market outlook when Trump took office on January 20th. I mean, the prevailing view on Wall Street without a doubt is that, you know, um, there are going to be, uh, there’s going to be a little bit of additional tariffs, but mostly, this is just going to be posturing to get trade negotiations. And very clearly, uh, markets got, uh, much more severe tariffs than they anticipated. That was the main reason we got a stock market correction. I mean, remember stocks did go to record highs during the first three weeks Trump was president. And markets, at some point, at that point, they said, “Wow, maybe he really means it about tariffs.” And we’ve never heard Trump or his economic guys talk about, “Oh, we have to detox the economy, we have to have some pain before we have the gain.” This is a different Trump. So, uh, I think that this, there’s this shift in sentiment underway that maybe we need to take Trump more at his word on tariffs, uh, and be a little less optimistic that they’re just going to be symbolic.