The Geopolitical Fallout of Trump’s Tariffs — with Ian Bremmer

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0:01:20 Buying a house has long been considered the best way to build wealth
0:01:22 and move into true adulting.
0:01:23 Isn’t it?
0:01:26 I mean, at least that’s what society wants us to think.
0:01:27 Got to get a Birkin.
0:01:28 Got to get a home.
0:01:28 You know.
0:01:29 Okay.
0:01:32 The handbag you can probably manage without.
0:01:34 But what about a house?
0:01:38 Surely that’s actually good, right?
0:01:42 We’re going to find out this week on Explain It To Me.
0:01:47 New episodes every Sunday morning, wherever you get your podcasts.
0:01:51 Episode 343.
0:01:54 343 is the area code serving Eastern Ontario, Canada.
0:01:57 In 1943, nachos were invented.
0:01:59 How do you get 12 babies into a bucket?
0:02:00 A blender.
0:02:02 How do you get them out?
0:02:04 Nachos.
0:02:07 Oh, why does that make me laugh?
0:02:08 Anyways.
0:02:11 Go, go, go!
0:02:21 Welcome to the 343rd episode of the Prop G Pod.
0:02:22 Okay, what’s happening?
0:02:24 I am back in New York.
0:02:26 The dog is back in the city.
0:02:27 He’s howling.
0:02:28 I’m going to…
0:02:28 Where am I going tonight?
0:02:31 Because my social life is obviously on your mind.
0:02:33 I’m going to Silicon…
0:02:33 What’s going on?
0:02:36 I keep thinking S.U.P., Silicon Valley Bank.
0:02:38 No, I’m not going to a bank that over leveraged
0:02:40 and almost took down the global economy.
0:02:42 I’m going to San Vicente Bungalows.
0:02:44 A total HQ of douchebaggery.
0:02:45 I used to go…
0:02:47 I went a couple times in L.A.
0:02:50 And they just opened here in New York.
0:02:51 They opened in the Jane Hotel.
0:02:53 And I think it’s going to be a great summer for them
0:02:54 because the Jane Hotel has…
0:02:58 The Jane Hotel has beautiful outdoor space.
0:02:59 At least they used to.
0:02:59 I haven’t been there yet.
0:03:00 Anyways, going tonight for the first time.
0:03:01 I’m very excited.
0:03:02 And it is crazy.
0:03:05 All of these private members clubs have opened.
0:03:06 Let’s go through each of them.
0:03:08 There’s Casa Cipriani downtown.
0:03:10 Now, let’s go with the original gangster.
0:03:11 Zero Bond.
0:03:13 Best crowd, I think, in New York.
0:03:14 My favorite because it’s in walking distance.
0:03:16 And I like the owner, Scott Sartiano.
0:03:18 And it’s just got a good vibe.
0:03:20 Very curated group of people.
0:03:21 Sort of, I don’t know.
0:03:25 Just, I think, kind of the original gangster after So House.
0:03:28 So House came in and said, we’re a Lexus.
0:03:30 Then they became a public company and said,
0:03:32 we’re going to go Toyota because we need to sell more.
0:03:34 We need to be more about volume than prestige.
0:03:40 And Scott saw an opening and got a beautiful space and created a very kind of curated group
0:03:42 and just, I think, just printed money.
0:03:44 And then a bunch of people who were probably members said,
0:03:51 I like the idea of owning one of these and backed restaurateurs or hospitality folks.
0:03:54 And they all, none of them obviously talked to each other.
0:03:58 Because if they’d all known about a dozen of them were going to come online in a 12-month period,
0:04:02 they wouldn’t have done it because they’re probably all going to put each other out of business
0:04:04 or at least substantially erode their margins.
0:04:06 Anyways, then Casa Cipriani opened.
0:04:12 Casa Cipriani is the, you know, it’s the Loro Piano or the Armani.
0:04:13 It’s a super rich kid.
0:04:15 I don’t know who’s funding that thing.
0:04:18 But they’ve spent tens if not hundreds of millions of dollars.
0:04:19 It’s in a weird location.
0:04:20 It’s downtown.
0:04:23 But you do feel, and by the way, I went there.
0:04:27 I had some drinks and some appetizers and a light meal.
0:04:28 And I was with some friends.
0:04:29 It was two or three of us.
0:04:31 And the check came and it was 700 bucks.
0:04:36 And I said, I asked the manager, I said, how can anyone afford this?
0:04:37 Because it’s all young people there.
0:04:39 And he said, well, one, none of the women are paying.
0:04:41 I’m sure that’ll trigger some people.
0:04:42 But he said, none of the women are paying.
0:04:45 And two, most of the young men here are not paying either.
0:04:46 And I’m like, how’s that?
0:04:47 And he said, they have their parents’ credit cards.
0:04:49 Supposedly, it’s a lot of trust fund kids from New Jersey.
0:04:51 Trust fund kids from New Jersey.
0:04:54 Now, that’s on the new season of Sopranos.
0:04:55 They’re not mobsters.
0:04:56 They’re trust fund kids.
0:04:57 Jesus.
0:04:58 That would be interesting.
0:04:59 Anyways, that’s Casa Cipriani.
0:05:02 And then the Crane Club opened.
0:05:05 The Crane Club was opened by the Tao Group.
0:05:08 The Tao Group, they’re sort of the nightclub guys that were really good business people that
0:05:10 actually made real money.
0:05:13 And they had, I think they opened, I think they were the guys behind Avenue.
0:05:18 And then they opened what became the highest grossing per square foot restaurant in the world,
0:05:19 Tao Las Vegas.
0:05:21 And they were bought by MSG.
0:05:23 These guys are smart.
0:05:24 They’re great operators that work really hard.
0:05:30 Jason and Noah, who I knew back like 25 years ago, if I tried to get into a cool party,
0:05:32 it’s like, does anyone know Jason or Noah?
0:05:33 Anyway, it’s good for them.
0:05:34 And they made real money.
0:05:36 And they opened something called the Crane Club.
0:05:39 That is, I don’t know how to describe it.
0:05:40 It’s sort of a mix of all of them.
0:05:43 I went there on Saturday night.
0:05:43 They had a DJ there.
0:05:45 When the DJ starts playing, I just don’t know.
0:05:46 It just sounds like a DJ.
0:05:51 It’s like, okay, I could just let me stream my iPod and I’ll save you some money.
0:05:57 But anyways, they’re the ones you would probably bet on long term because they’re such good operators.
0:06:03 The hot one, though, right now, the one of the moment is a place called Chez Margot,
0:06:06 which has sort of this French underground libertine.
0:06:07 I don’t know what the term is.
0:06:13 I don’t know the Louvre and opened an underground club with the cool nephew or something.
0:06:16 No windows, very European feel.
0:06:19 And that has, that is somehow, and it’s kind of exciting because they,
0:06:23 I don’t know if I would call them sort of, if people would have bet on it,
0:06:25 but that’s the hot one right now.
0:06:28 And then the new one is San Vicente Bungalows.
0:06:30 Supposedly, the Almond opened up in Midtown.
0:06:30 I haven’t been.
0:06:32 I’ve heard it’s just old men and their mistresses.
0:06:33 Is that too harsh?
0:06:34 Anyways, I haven’t been there.
0:06:35 Don’t know.
0:06:36 Jazz bar is supposed to be nice.
0:06:37 Anyways, I’m excited.
0:06:38 I’m doing that.
0:06:42 It’s a really interesting lesson in economics and competition
0:06:47 because you pay $5,000 to go essentially pay for a meal.
0:06:50 So it’s an outstanding business model when it works
0:06:53 because the shareholders can better plan.
0:06:57 And instead of trying to focus on all their money on marketing
0:06:58 to get people in the door,
0:07:01 they can focus on the relationship and do programming
0:07:04 because essentially the economics are the following.
0:07:09 They try and break even on the food and the beverage and the hotel,
0:07:12 and then the membership is just straight profit if it works well.
0:07:16 And because the membership is hopefully a recurring revenue model
0:07:17 that is more predictable,
0:07:21 these things get higher valuations than just a restaurant
0:07:22 and are more sustainable.
0:07:24 But the key is, and this is what’s so powerful,
0:07:26 but the membership model, the key is getting renewals.
0:07:27 And so what do you do?
0:07:28 You start investing in the relationship
0:07:31 as opposed to just trying to get more people in the door.
0:07:34 That’s why a retailer trades in one to two times revenues
0:07:38 and software companies that are recurring revenue pay at six to eight.
0:07:40 So it’s sort of the software of hospitality.
0:07:42 I just made that up and I’m really proud of myself.
0:07:43 That was good.
0:07:44 That was good.
0:07:46 And I didn’t even do any math this morning
0:07:48 and I came up with that all on my own.
0:07:50 The other part of the economics here though
0:07:52 is the dark side here.
0:07:55 And that is, I never invest in anything that sounds cool.
0:07:58 A friend of mine approached me about a member’s club two years ago.
0:08:00 It was going to be for artists and musicians.
0:08:01 And I said, it sounds great.
0:08:01 I’ll be a member.
0:08:04 But I don’t invest in anything that sounds really sexy
0:08:09 because there’s typically a disproportionate or overabundance of capital,
0:08:11 which means the return of that capital gets driven down.
0:08:13 I think that’s exactly what’s going on here.
0:08:17 And that is, there are just too many of these things opening up.
0:08:20 And I don’t know how many people are going to be able to afford $5,000
0:08:22 to go pay for dinner.
0:08:25 They are smart in the sense that they also price discriminate.
0:08:27 I think price discrimination is really interesting
0:08:30 because I think pricing is the most difficult thing in business.
0:08:31 It’s the thing I have struggled with most.
0:08:32 And that is,
0:08:39 William Sonoma in 1995 hires my firm Profit to do their internet strategy.
0:08:42 And I don’t know whether to price it at $200,000 or $2 million.
0:08:46 I just could never figure out pricing or launch a product.
0:08:48 You know, any of the companies I’ve started,
0:08:50 I just always really struggle with pricing.
0:08:52 I think pricing is artisan because it sends a signal.
0:08:54 But at the same time, you want to have a great value proposition
0:08:56 such you get to a certain level of scale.
0:09:00 But pricing your product at a premium sends a signal about what it is.
0:09:01 I think it’s more the business model.
0:09:04 And I finally figured out going to recurring revenue to see above members clubs.
0:09:05 But I think these guys,
0:09:09 unfortunately, there’s just way too many of them.
0:09:11 And there are really interesting kind of lessons in branding.
0:09:14 The other thing that’s sort of a bummer, I would argue,
0:09:18 is that when I first got to New York when I was 22,
0:09:19 I worked at Morgan Stanley.
0:09:23 And there was places you could go
0:09:26 and there was some insecurity about whether or not you’d get in.
0:09:28 And the value proposition now that I have more,
0:09:32 I have more money, but I’m less handsome,
0:09:33 dramatically less handsome.
0:09:36 Oh my God, I was a tall drink of lemonade back in the day.
0:09:36 That’s right.
0:09:38 All the hair, all the hair.
0:09:41 I was a solid six, a solid six.
0:09:45 And you go with some friends and you’d go to Lotus or Pangaea or whatever.
0:09:49 And they’re, or I used to go to the tunnel, I think it was called, or Obar or Surf Club.
0:09:55 And you’d walk up and you’d push like the women in front or the coolest guy and hopefully know the doorman.
0:09:58 And he’d look at you, size you up and then let you in.
0:10:02 But anyone or almost anyone could get into these places.
0:10:08 And now I find that this giant velvet rope is being strung across all of New York and London nightlife.
0:10:11 And if you’re not a member and you can’t afford it, you can’t get in.
0:10:14 What they do is price discrimination, though, and that is they have junior memberships, which is smart.
0:10:18 So ugly old guys like me, if I pay five grand a year to go spend money on drinks,
0:10:21 and younger people under the age of 30 spend two grand.
0:10:23 I think price discrimination is really interesting.
0:10:25 The airlines are the best price discriminators.
0:10:31 You can be sitting next to someone who paid five times or a fifth of what you pay based on price discrimination.
0:10:32 Oh, you’re staying over Saturday.
0:10:33 That means you’re not a business traveler.
0:10:36 That means you’re probably paying, which makes you much more price sensitive.
0:10:40 So we’ll give you a much lower fare if you’re staying for the Saturday night.
0:10:41 Oh, you’re booking last minute.
0:10:42 It’s probably on business.
0:10:42 See above.
0:10:43 Someone else is paying.
0:10:45 We jack up the rates.
0:10:47 And these guys are learning about price discrimination.
0:10:54 The thing that bothers me is that more and more people are being, or the wealthy are sequestering
0:10:56 from the middle class.
0:10:59 And that is we are going further and further behind velvet ropes.
0:11:04 I basically won’t go anywhere now that’s not a members club because I want to know I’m going
0:11:04 to get in.
0:11:06 I want to be treated really well.
0:11:07 And I want to go somewhere.
0:11:10 I mean, all my exploration vibe has gone away.
0:11:15 And I worry that it’s just taking younger people and people who don’t have as much money.
0:11:19 We’re further and further sequestering from each other, which means we have less empathy
0:11:21 for them, less mixing.
0:11:24 Also, young people can’t afford this shit.
0:11:25 And I’m going to end here.
0:11:29 And that is I think the government should be subsidizing third places through tax policy.
0:11:34 And that is if you can show that you are getting a ton of people under the age of 40 into an
0:11:39 environment where they’re together, whether, I mean, obviously churches and religious institutions
0:11:41 have tax exempt status.
0:11:47 But there’s a place called Putt Shack in the UK that brings together young, obviously kids.
0:11:51 But at night, a lot of young people go or the Topgolf or bars or pubs.
0:11:56 40%, get this, 40% of nightclubs in London have closed since COVID.
0:12:02 One of the things I like about London is they zone a beautiful piece of real estate just for pubs.
0:12:08 So you can buy a pub for fairly little money in an amazing neighborhood in Marlebone or Mayfair,
0:12:11 but you can’t do anything with it except you have to keep it a pub.
0:12:15 And I love that because I think more people need to get out, be around each other, and quite frankly,
0:12:19 drink more and make a series of bad decisions that might pay off.
0:12:25 And I worry that this trend towards members’ clubs is further sequestering people with money
0:12:31 from people who don’t have money and also less mixing and also we’re pricing out young people’s
0:12:35 ability to meet, to demonstrate excellence to each other, maybe to have a drink or two,
0:12:41 bring their inhibitions down and say, hey, I think you’re ridiculously hot.
0:12:42 Will you go to the movies with me on Sunday?
0:12:47 Speaking for a friend, when I look back on all, and this is kind of embarrassing.
0:12:48 Is it embarrassing?
0:12:51 What do I do that’s not embarrassing?
0:12:53 Seriously, what do I do?
0:12:54 What do I do?
0:13:01 Anyways, when I look back on all of my friendships, a decent proportion of them and a vast majority
0:13:05 of my romantic relationships, alcohol has played a role.
0:13:11 And what has definitely played a role is being in environments with strangers in a safe place
0:13:16 where we all felt some sort of agency and comity of man.
0:13:18 And there’s just fewer and fewer of those places.
0:13:22 We are sequestering behind a velvet rope in our society.
0:13:24 And quite frankly, it’s not a good thing.
0:13:26 Okay, enough of that.
0:13:30 In today’s episode, we speak with Ian Bremmer, the president and founder of Eurasia Group,
0:13:32 the world’s leading political risk research and consulting firm.
0:13:36 It’s Ian’s 12th appearance on the show.
0:13:36 Love, Ian.
0:13:37 Love, Ian.
0:13:38 He’s Canadian.
0:13:40 He doesn’t know it yet, but he’s Canadian.
0:13:44 We discuss with Ian Trump’s tariffs, U.S.-China relations, the latest developments in Iran,
0:13:47 and the war in Ukraine.
0:13:48 He’s my Yoda.
0:13:49 He’s my Yoda.
0:13:50 Right?
0:13:51 Wait.
0:13:54 So these are my two imitations from movies.
0:13:55 I just spawned this.
0:13:55 All right.
0:13:58 First, this is Darth Vader from Star Wars.
0:13:58 Okay, get ready.
0:14:01 Trust your feelings.
0:14:03 You know this to be true.
0:14:04 All right.
0:14:06 That’s imitation number one.
0:14:09 Big hit with my eight-year-old son when he was eight.
0:14:10 Not so much anymore.
0:14:11 All right.
0:14:12 And here it is, my second impression.
0:14:13 Dr. Evil.
0:14:15 How about no?
0:14:17 Oh, that’s so money.
0:14:20 That is so money.
0:14:21 All right.
0:14:26 With that, here’s our conversation with Ian Bremmer, the president and founder of Eurasia Group.
0:14:40 Ian, where does this podcast find you?
0:14:48 I am in New York at my office and in the middle of the milestone that we are dealing with.
0:14:49 There you go.
0:14:51 So we’ll bust right into it.
0:14:58 There seems to be an obsession with how Trump’s tariff plan is impacting the markets and how it might impact U.S. consumers.
0:15:02 Talk a little bit about if and how it sort of reshapes the world order.
0:15:07 Specifically, what are the geopolitical ramifications in terms of our relationships with other nations?
0:15:07 Yeah.
0:15:20 I mean, this is yet one more component of something you and I have been nibbling around, which is the reputational capital of our country, right?
0:15:40 I mean, other countries around the world align with us and do our bidding in part because we’re strong and in part because they believe that we are like we’ll actually do what we say because they have a level of trust and confidence that we will act as we say we will act going forward.
0:15:57 And we’ve done an awful lot to shake the ladder over the past weeks, whether it is the way we treat judges or law firms or universities or green card holders in the United States,
0:16:17 or whether it’s the way we treat territorial integrity in Denmark and Greenland and Panama, in Canada, or it’s the way we treat our treaty obligations, our tariff obligations, our trade relationships, our partners, our allies.
0:16:25 I mean, all of these things were basically saying to everybody else around the world, look, we’re stronger than you are.
0:16:29 So that’s all that really matters is what we say and you’re going to do it.
0:16:41 And it can be arbitrary and capricious and we can change our mind, you know, three times before breakfast as, you know, as through the looking glass days, right?
0:16:46 That’s kind of where we find ourselves is through the geopolitical looking glass.
0:16:51 Who do you think, well, let’s talk about outside of the U.S., who are the biggest winners and the biggest losers?
0:16:56 And let’s just assume that we agree that Ukraine is probably a loser so far.
0:17:00 But I’m just with respect to tariffs, who do you think the biggest winners and losers are abroad?
0:17:06 You know, Scott, the biggest winners are nobody.
0:17:32 I mean, honestly, if you’re looking at the last 50 years that created this unparalleled period of global growth, improved efficiency, lower prices, and an emerging global middle class that unlocked human capital that everyone in the world could benefit from, you’re undoing that.
0:17:41 So, I mean, some countries are going to get hit in the face and knocked out and others are just going to have a glancing blow and they can keep walking.
0:17:42 But you wouldn’t call the latter winners.
0:17:45 You just say they aren’t really losers.
0:17:49 So in that regard, there are a lot of countries, I think, that’ll be just fine.
0:17:54 I mean, India, for example, in this environment will be just fine.
0:17:58 They’re taking a hit from the U.S., but it’s not going to matter much for their growth.
0:18:05 Maybe, you know, sort of 20 basis points, max half a point to GDP for a very strong growing economy.
0:18:12 They’ll benefit from all of the unwinding between the U.S. and China and a lot more people will end up going in.
0:18:15 So on balance, like net-net, India should be OK.
0:18:19 Gulf states, everyone has to work with them no matter what.
0:18:20 They’re rich.
0:18:21 They’re pretty diverse.
0:18:21 They’re stable.
0:18:26 You know, Trump is going out there shortly, going to visit Saudi, UAE, Qatar.
0:18:28 You know, they feel pretty comfortable with him.
0:18:30 That’s going to be fine.
0:18:33 They can deal with, you know, a slight increase in tariffs.
0:18:37 The longer term, there are some winners.
0:18:39 There are some big winners.
0:18:58 The Mexicans and Canadians long term are winners because they will find ways to ensure that USMCA gets renegotiated and that will create more post-crisis tested resilience for the most important integrated common market in the world.
0:19:16 And China long term will also benefit because the United States will have given up so much reputational capital and China will be able to take advantage of that, particularly in the global south, but also to a degree in Asia, the Japanese, the South Koreans, to a degree in Europe.
0:19:19 But in the near term, China gets hit really badly.
0:19:23 In the near term, Mexico and Canada get hit really badly.
0:19:28 In the near term, the United States is the comparative winner, and I expect that to be reflected in the markets.
0:19:42 So I think it’s hard to argue that international trade or free trade over the medium – there’s some short-term losers in specific industries, but over the medium and the long term, I would argue it’s probably been the biggest economic unlock of the last hundred years.
0:19:49 And that it’s not a zero-sum game and that, you know, prosperity elsewhere, we make something really well.
0:19:51 They make something really well for less money and we trade.
0:20:06 I wonder if actually sooner rather than later, I see the biggest winner is China because I would imagine and I believe Chinese diplomats and economic ministers are roaming the world saying, you may not love us, but you can count on us.
0:20:25 I think they’re going to scoop up so much trade that it’ll not only replace what they lose from the U.S., it’ll net-net that it’ll be a positive actually pretty soon in terms of – I mean, I just saw that Japan and South Korea are having discussions with China for the first time in a while.
0:20:29 I wonder if China is a really big winner here, your thoughts.
0:20:32 I think it’s the right question to ask, Scott.
0:20:40 I always like our conversations because you immediately get into the important issues and want to, like, thrash them out, right?
0:20:43 And I take the other side of that.
0:21:02 First of all, on the Japan-South Korea-China discussions, which were discussions among their trade ministers, they certainly, in an environment where the U.S. is raising tariffs with reckless abandon and may not be willing to undo them, at least not immediately,
0:21:12 these are countries that trade a lot with each other and need to make sure that that trade is comparatively frictionless or at least has less friction to it.
0:21:18 So I do think there’ll be more coordination, but they won’t coordinate policies vis-a-vis the U.S.
0:21:30 because the Japanese and South Koreans still really need the U.S. in technology and particularly in security, and they don’t trust the Chinese on that, and that’s not going to change.
0:21:47 But the more important point is that China is seriously underperforming economically, and if the United States is getting involved in a trade war with China, in other words, if the additional 50 percent actually gets implemented,
0:21:55 and I know that Trump says it’s happening as of midnight on the day that you and I are now speaking, he could easily decide, you know what, we’re going to talk to them.
0:21:56 They just called me.
0:21:58 They just set up a call.
0:21:58 It’s going to be great.
0:21:59 It’ll be fine.
0:22:01 You know, I’ll make it okay.
0:22:02 Maybe he suspends that.
0:22:07 Maybe he kicks down an hour, but let’s assume that what he said actually stands and he actually implements that.
0:22:13 That is a trade war that the Chinese can afford a lot less than the Americans can.
0:22:15 They have a lot less leverage.
0:22:17 They do have more patience.
0:22:20 Maybe they have more political stability in the long term.
0:22:27 They certainly have a leader that’s going to be in place for a lot longer, but their domestic economy is not working.
0:22:29 Their population is not buying.
0:22:35 They don’t want to spend because they don’t trust the government and they don’t have consumer confidence.
0:22:54 They are manufacturing a lot and they’re dumping and they’re dumping in a way that is going to be much harder to do, given all of these U.S. tariffs, not just against China and against the Japanese and South Koreans, but also against all the countries that the Chinese are exporting to and through to the United States.
0:22:57 Some of the countries that got hit the worst were in Southeast Asia.
0:23:01 Those are precisely the countries where the Chinese are exporting and getting into the U.S.
0:23:03 Well, that’s going to get closed down.
0:23:05 So I think they’re in trouble.
0:23:09 I think that there is going to be a lot of capital flight.
0:23:11 They’ve got about three trillion in reserves right now.
0:23:18 Last time they got a serious financial crisis, they were from four point five, went down to three in six months.
0:23:25 There is an argument to be made that their economy is going to be truly and unprecedentedly tested.
0:23:31 So I think in the near term, they’re actually in a lot of pain.
0:23:45 And I think that they’re going to be careful in not doing further tit for tat against the Americans like the immediate 34 percent announcement that they made in the hopes that that was going to calm it down.
0:23:48 I would take the other side of the China bet.
0:23:50 I think that’s super interesting.
0:23:52 And I think you’ve changed my you’ve changed my view.
0:23:55 I thought China really was the big winner here.
0:23:59 I mean, but I think you’re right that they’re going to be the big winner, but they have to be patient.
0:24:04 They have to be able to get through getting really hit in the face by the most powerful country in the world.
0:24:07 And it just ain’t going to be easy for them long term, though.
0:24:14 I mean, you know, you can just imagine not only on the stuff we’re talking about now, but U.S. leaves USAID, shuts it down.
0:24:15 Like who’s dominant?
0:24:17 Who’s the dominant trade partner of every global South country?
0:24:19 That’s China, right?
0:24:23 Who’s going to be able to pick up much more influence over that part of the world?
0:24:23 China.
0:24:30 U.S. leaves the Paris Climate Accord, says that, you know, climate’s not something we’re paying attention to anymore.
0:24:35 Who’s leading the world in transition energy, sustainability and supply chain?
0:24:36 China.
0:24:39 Who’s going to drive the COP summits going forward?
0:24:39 China.
0:24:51 So, I mean, I can absolutely see there is a light at the end of the tunnel for the Chinese, for our principal adversary, that’s actually really quite dangerous for us.
0:24:56 We have to be very careful about that, especially because it’s not like they don’t know how to do new technology.
0:25:00 You saw DeepSeq and that announcement.
0:25:02 I mean, they’re very capable.
0:25:03 They’re going to build data centers.
0:25:06 They have cheap energy available.
0:25:10 I mean, they’re going to be competitive with the U.S., even in artificial intelligence.
0:25:19 So we’ve got to be careful, and we’re the ones undoing our Chips Act, right, which makes no sense whatsoever, especially if you’re trying to get more manufacturing in the U.S.
0:25:23 Like, we don’t want to build – we don’t want to make sneakers.
0:25:29 We want to make semiconductors, and you’re ripping up the one thing that we have that’s going to drive more semiconductor production in the U.S.
0:25:31 I don’t know why they’re doing that.
0:25:36 But the Chinese, long term, I think, do have lots of opportunities.
0:25:37 I’m just worried about them right now.
0:25:41 We’ll be right back after a quick break.
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0:28:10 The Nintendo Switch 2 is basically guaranteed to be the most interesting gadget of 2025.
0:28:13 And we learned a lot of new stuff about it this last week or so.
0:28:16 Some of the games that are coming out, some of the specs of the new device,
0:28:20 and the fact that it’s going to cost $449.99.
0:28:24 Except maybe it’s not, because the other thing going on right now is tariffs.
0:28:28 And tariffs threaten to change just about everything about tech.
0:28:34 What it is, how it’s made, where it comes from, and crucially, how much we have to pay for it.
0:28:38 So that’s what we’re talking about on The Vergecast all week, wherever you get podcasts.
0:28:48 So this has dominated the headlines, and I find that the U.S., we’re narcissists.
0:28:55 We want to talk about ourselves, and we also, I would say, struggle with or suffer from an idolatry of the dollar.
0:29:00 So if the NASDAQ goes down, you know, that dominates the headlines over anything else.
0:29:06 Catch us up, for those of us who have been distracted from what’s going on in Ukraine and in Gaza.
0:29:12 Give us a sense for what has happened over the last four, eight weeks,
0:29:18 as we have been totally distracted with discussions of the market falling 10 percent.
0:29:24 Well, let me start with the biggest news this week, which is what’s happening in Iran.
0:29:32 So you probably saw that the Israeli prime minister, I can make a transition here, just came to the Oval Office.
0:29:40 And, you know, he had said, we’re proactively taking all of our tariffs off the United States, zeroing them out.
0:29:44 And Netanyahu, of course, thought his great friend, who doesn’t really like him,
0:29:47 but nonetheless has certainly been a big supporter, Donald Trump.
0:29:54 He’s going to come to the Oval, and the U.S. will announce that those tariffs will also be removed.
0:29:55 And that did not happen.
0:30:02 Instead, what happened was the U.S. said, we’re going to keep them on.
0:30:07 And by the way, you should be really appreciative because we spend so much money in aid for your military,
0:30:10 billions of dollars a year, by the way.
0:30:18 Also said, Turkey, Erdogan, my great friend, so trusted, really appreciate what he’s doing for us in Syria,
0:30:20 which, of course, the Israelis are on the other side of.
0:30:29 And then said, by the way, we’re going to open direct negotiations with Iran, with the Iranian government,
0:30:31 which, by the way, is not actually true.
0:30:39 The Iranians said they would do indirect talks through Oman, but that if those initial talks went well,
0:30:42 they’d be willing to do direct talks with the U.S., which is new.
0:30:47 It is actually a concession and is exactly not what the Israeli prime minister wanted to hear.
0:30:57 So, I mean, his his meeting in the Oval wasn’t quite as bad as Zelensky’s a month ago when Vance beat him up and everyone went nuts.
0:31:03 But it was it was the worst trip that Netanyahu has had to the United States since the war.
0:31:04 There’s no question about that.
0:31:05 I mean, you know, long, long time.
0:31:07 Barely registered in the Western media.
0:31:08 Yeah.
0:31:08 Yeah.
0:31:09 Well, I figured I mean.
0:31:17 And so you now have the United States saying they’re going to start negotiations with Iran directly.
0:31:22 And they’re going to see if I mean, Iran’s in a very, very weak position.
0:31:37 One of Iran’s remaining proxy fighters in Iraq, the Islamic resistance in Iraq that has been part of the attacks on U.S. troops and others in the region.
0:31:43 They have said that they’re going to voluntarily disarm because the Americans said they were going to blow the crap out of them.
0:31:46 So you’ve got the U.S. fighting the Houthis.
0:31:49 That was the whole signal gate thing from a couple of weeks ago.
0:31:54 And that hasn’t been very successful so far, but certainly trying to deal with that.
0:31:56 Now you have the Americans.
0:31:58 Hezbollah is gone.
0:31:59 Israel took care of them.
0:32:04 Hamas has obviously been blown up consistently over the last year plus.
0:32:10 And now you have the U.S. going to the Iranians and saying we’re willing to negotiate.
0:32:14 And if it doesn’t work out, there’s going to be hell to pay.
0:32:18 But the intention is not is not to engage in military strikes.
0:32:30 The intention is to try to see if you can do something better, something bigger and broader and more lasting than the JCPOA, the nuclear deal that was signed under Obama.
0:32:32 That was a multilateral deal.
0:32:33 This would be a bilateral deal.
0:32:41 But that’s probably the most important thing that has changed in the last few weeks on the geopolitical front.
0:32:43 Ukraine.
0:32:44 Ukraine.
0:32:54 So the Ukrainians, I mean, the news today is that there were two Chinese citizens that the Ukrainians captured that were fighting with Russia.
0:32:56 It’s a non-issue.
0:32:59 It’s not like the People’s Liberation Army had sent them there.
0:33:03 There are Americans that citizens happen to be fighting in Ukraine, too.
0:33:06 And it’s that’s because they have the right to leave and travel and whatever.
0:33:13 The Ukrainians have accepted the ceasefire terms provided by Trump with no conditions.
0:33:14 The Russians have not.
0:33:15 The Russians have not.
0:33:22 And that is something that is increasingly irritating Trump.
0:33:26 He’s been more than willing to engage directly with Putin.
0:33:37 There’s been a lot of back and forth between Putin’s advisors and cabinet, including the head of his sovereign wealth fund, Dmitriev, who just actually came.
0:33:50 He was sanctioned and has a visa suspended, but he was just allowed to come in an exception made a few days ago to the White House, where he had good conversations with Steve Whitcoff, the special envoy and others.
0:34:00 So the Russians are very interested in doing a deal with the Americans and getting investment from the Americans and pulling sanctions off, of course.
0:34:06 But they have not been willing to accept American terms for a ceasefire.
0:34:14 And Trump has now said a couple of times, you know, I’m not I’m running out of patience here.
0:34:31 So you need to accept a ceasefire and it doesn’t require me pulling sanctions off and it doesn’t require Zelensky leaving office because he’s there and you’ve got to deal with them or else I’m going to put much tougher sanctions against Russia.
0:34:42 He has not yet at least said or else I’m going to send much more military support to Ukraine, something he had said before he was elected, hasn’t come back to that.
0:34:57 But certainly Zelensky’s position with Trump in the U.S. today is dramatically better and more normalized than it was when he visited the White House in that shambolic meeting a few weeks ago.
0:35:00 What’s actually happened on the ground over the last couple of months in Ukraine?
0:35:04 They’ve lost a tiny amount of territory.
0:35:10 The Russians continue to make territorial gains, but every month they’re making smaller and smaller gains.
0:35:13 And so you would say that the front lines have mostly held.
0:35:27 The exception is that small amount of territory inside Russia around Kursk that the Ukrainians had suddenly quite surprisingly taken with the cost of about 40,000 men being redeployed to that area.
0:35:34 Most of those men have now had to withdraw and the Russians have retaken almost all of their territory.
0:35:41 You said on a previous broadcast that, you know, this was just not sustainable for Ukraine.
0:35:46 And I like the Lincoln quote that you can’t win a war without public support and you can’t lose a war with it.
0:35:50 Has the mood changed at all in Ukraine?
0:35:59 I mean, at some point in its buff of World War II history, it strikes me that Russia’s core confidence is this willingness to endure a lot of pain.
0:36:06 Do you see any evidence over the last couple of months as this kind of meat grinder continues to grind on that this war is losing support in Russia?
0:36:12 Or is it the same as it always was and you still hold to Ukraine as, you know, running on borrowed time?
0:36:16 I hold to both, but there have been small shifts in Russia, less of a shift.
0:36:23 The Russians have just finished yet another call up of of reservists, of troops, hundreds of thousands, which they do every year.
0:36:25 But they had no problem in getting those numbers.
0:36:31 They’re also spending a lot more money on getting troops to the front.
0:36:40 They’ve increased the bonus salaries dramatically, you know, sort of 50x what the average Russian worker could expect in an entry level job.
0:36:53 And that’s made a difference to certainly no demonstrations on the ground in Russia or any opposition to what you’re seeing, despite the fact that they’ve, you know, had like a million casualties, which is just an astonishing number, right?
0:36:54 Again, not dead.
0:36:57 I mean, dead is more in the hundred thousand plus.
0:37:09 But I mean, still, I mean, the impact that has on society in Russia is so meaningful and it just shows how much control Putin has over the country, over the information networks, all of that.
0:37:11 Now, for Ukraine, it’s interesting.
0:37:17 Militarily, they’re still going to run out of steam come summer.
0:37:23 And certainly they’re having a harder time with their own raising of reserves.
0:37:35 And, you know, they’re, they’re only, they still haven’t, I mean, the age of the call up, I think, went down from 28 to 25, but it’s, they have been very reluctant to go to 21 or 18.
0:37:37 They’re just, it’s enormously unpopular.
0:37:39 And that’s problematic for them.
0:38:02 Olenski’s popularity, which had been trending downward somewhat, though it was still like in the 50s, 60s, is now back up to high 70s on the back of that trip to the White House, where he stood strong and refused to end up signing what was seen as an exploitative critical minerals deal.
0:38:09 And giving back as, as good as he got effectively from Trump and Vance.
0:38:19 So if there were elections in the near term, and constitutionally there can’t be because there’s martial law because a big piece of their territory is occupied by foreign invaders.
0:38:23 But if there were elections today, it’s very clear that Zelensky would win.
0:38:33 And I think that that actually put, makes it easier for him to start negotiations with the Russians and not fear that he’s going to be ousted domestically.
0:38:39 So he actually has somewhat more flexibility diplomatically, even though his military position hasn’t improved.
0:38:43 That meeting was such a low point for us, us being in the U.S.
0:38:55 Let me outline what might be a Pollyanna scenario, and you tell me where, if there’s anything, you know, if there’s any veracity or any hope that this might come to fruition.
0:38:59 The EU is a $19 trillion economy combined.
0:39:01 Russia is a $2 trillion economy.
0:39:02 It’s smaller than Canada’s economy.
0:39:17 That if the recognition that the military umbrella of the U.S. no longer applies, that we’re not going to weigh in, and that we have become an inconsistent, sclerotic partner, that, you know, rich Uncle Sam cannot be counted on.
0:39:18 He’s lost his shit.
0:39:27 And the EU, for the first time, Europe becomes a union, increases their defense budget, as they’ve announced, from 1.9% to 3%.
0:39:30 They don’t have the surface-to-air capabilities.
0:39:33 They still need the U.S., but they do have a great manufacturing base.
0:39:40 French, U.K., and German companies, you know, if Germany makes an amazing car, they should be able to make an amazing tank, and they do.
0:39:45 And they’re able to actually push back on Russia without the aid of the U.S.
0:39:48 And, you know, glory to the EU.
0:39:54 Am I being, am I smoking my own crack pipe here?
0:39:56 No, no.
0:40:07 I mean, there’s definitely a lot more that the Europeans can and should be doing, and they’ve become more unified around the EU because of Trump.
0:40:09 I mean, Trump is a great unifier.
0:40:14 He’s unifying the Canadians, who, you know, now the liberals are likely to win.
0:40:18 Polly Eve, the conservative, was a slam dunk.
0:40:29 And Trudeau, of course, after 10 years, had lost all of his credibility, and yet the Canadians have completely unified against the United States.
0:40:34 Mexico, Claudia Scheinbaum, 85% approval ratings right now.
0:40:48 Anger with the EU, much stronger now, favoring the EU, spending more, supporting their own defensive capabilities, supporting investing more in technology,
0:41:01 And hitting the Americans back on tariffs because of what they see coming from the U.S., not just in terms of economic policy, but also in terms of undermining their own democracies in Europe,
0:41:11 Algorithmically direct support from Elon, from Vance, from others, for people like the AFD, who are considered a neo-Nazi party in Germany, and support for Russia.
0:41:16 So, right, so all of those things are making the Europeans do more.
0:41:18 But is more enough?
0:41:20 Is more enough?
0:41:28 Because, Scott, the Europeans have not spent on defense for 40 years, right?
0:41:29 Almost 40 years.
0:41:32 And so it’s not like, okay, now they’re going to spend 3%.
0:41:37 Okay, so how long is it going to take them to get to the point they can defend themselves?
0:41:43 Now, defending themselves against a $2 trillion Russian economy, frankly, isn’t all that hard.
0:41:46 Russia will do asymmetric things.
0:41:48 They will engage in cyberattacks.
0:41:50 They will engage in espionage.
0:41:51 They will blow up critical infrastructure.
0:41:52 They’re already doing that.
0:42:00 They’ll use a network on Telegram to order a whole bunch of local citizens to commit crimes, arson, vandalism, you name it.
0:42:03 But they’re not going to send tanks into the Baltics.
0:42:05 They’re not going to send tanks into Poland.
0:42:06 They get crushed.
0:42:09 So that’s not what I’m worried about.
0:42:20 But can Europe rebuild fast enough that they could defend the Ukrainians in a Russian war that the Russians are completely committed to?
0:42:23 And the answer there, I think, is no.
0:42:25 I think that answer is no.
0:42:55 And I also don’t know whether the Europeans spending more on defense are going to stay aligned enough to allow them to become independent from the U.S. defensively in five and ten years’ time, given that there is a vastly greater level of security concern in countries that are not economically performing well, unlike the United States, that aren’t productive, that don’t have big tech.
0:43:08 I mean, if you’re Spain or Italy or even France, how much are you prepared to spend in your tightly contested budget on long-term defense?
0:43:11 Are you willing to spend the way the U.S. does?
0:43:12 The answer is probably not.
0:43:13 What about Germany?
0:43:18 They’ve made some enormous announcements to get rid of their debt break.
0:43:22 But the new government that’s coming in, assuming they can put the government together.
0:43:26 And by the way, everyone assumes that Mertz is going to have no problem putting that government together.
0:43:30 There’s like probably a 10% chance that he fails in constructing a government, right?
0:43:33 And then we’re in a very, very different place.
0:43:41 But assuming he does in the next month-ish, the fact that they have the debt break gone doesn’t mean that they’re going to spend all that money.
0:43:46 It doesn’t mean they’re prepared to actually change EU borrowing rules to allow them to.
0:43:48 It’s going to be a very weak government.
0:44:16 So as I look forward three, four, five years, I still see a significant likelihood that in many of the countries you’re talking about, we’re going to end up with more Trump-aligned, Orban-aligned, Mille-aligned, Bukele-aligned governments that get elected in in Europe, which weakens the EU, which makes it harder to talk about a collective security among the European states themselves, a coalition of the willing.
0:44:18 We’ll be right back.
0:44:30 So we want to introduce you to another show from our network and your next favorite money podcast, for ours, of course.
0:44:36 Net Worth and Chill hosts Vivian Tu is a former Wall Street trader turned finance expert and entrepreneur.
0:44:41 She shares common financial struggles and gives actionable tips and advice on how to make the most of your money.
0:44:47 Past guests include Nicole Yoder, a leading fertility doctor who breaks down the complex world of reproductive medicine and the financial cost of the economy.
0:44:54 And divorce attorney, Jackie Combs, who talks about love and divorce and why everyone should have a prenup.
0:44:57 Episodes of Net Worth and Chill are released every Wednesday.
0:45:01 Listen wherever you get your podcasts or watch full episodes on YouTube.
0:45:02 By the way, I absolutely love Vivian Tu.
0:45:04 I think she does a great job.
0:45:15 We’re back with more with our good friend, Ian Bremmer.
0:45:18 So you brought up Canada.
0:45:20 I’m curious to get your thoughts on Prime Minister Carney.
0:45:22 Well, he’s a friend.
0:45:26 I mean, I’m completely biased in that regard.
0:45:27 I’ve known him for a long, long time.
0:45:28 You strike me as very Canadian.
0:45:34 He’s, look, I mean, he’s, I don’t, most Canadians don’t strike me as very Canadian.
0:45:36 No, no, no, no, you strike me as Canadian.
0:45:37 Oh, me?
0:45:39 Oh, 100%.
0:45:39 You’re very…
0:45:40 What the hell does that mean?
0:45:42 I think I’m almost offended by you saying that.
0:45:43 What do you mean by that?
0:45:47 Super friendly, super nice, educated, pretty easy to get along with.
0:45:48 Okay.
0:45:50 Exceptionally Caucasian.
0:45:55 If you said, like, a bit of a weenie, I would be really a little upset, you know, that would be…
0:45:57 How do you get 100 drunk Canadian fraternity brothers out of your pool?
0:45:59 Hey, guys, would you please get out of the pool?
0:46:01 I love, by the way, I love Canada.
0:46:02 I was conceived in Canada.
0:46:03 Let’s bring this back to me, Ian.
0:46:04 Okay, good.
0:46:04 I was conceived.
0:46:05 You were, where in Canada were you conceived?
0:46:06 In Toronto.
0:46:10 And then my parents were sick of the weather and seven months pregnant.
0:46:14 My mom loaded up her Austin Mini Metro with my dad and they moved to San Diego.
0:46:19 I’m actually thinking, and I’m going to rope you into this, I want to do an I Love Canada
0:46:20 tour and I want to get together.
0:46:22 Yeah, I would be good for that.
0:46:22 You would.
0:46:28 I’m thinking Toronto, Montreal, Montreal in the summer, Vancouver, pick a fourth city,
0:46:30 but I would like to do an I Love Canada tour.
0:46:32 Anyways, you’re signed up and you’re included.
0:46:33 What do you think of Carney?
0:46:37 Well, look, again, I mean, I say it because…
0:46:38 As a fellow Canadian.
0:46:39 As a fellow Canadian, yeah, exactly.
0:46:50 He is, I mean, intellectually, economically, he is a generational mind for Canada on the global
0:46:50 stage.
0:46:54 When he was Central Bank Governor in Canada, when he was Central Bank Governor in the UK,
0:46:56 right?
0:47:04 Through Brexit, this was a guy that was respected incredibly highly by every other major interlocutor,
0:47:12 by the entire G7, by all of the CEOs of the financial institutions, by the central bankers.
0:47:14 I mean, they all have a lot of time for him.
0:47:20 I mean, he’s the one Canadian that Macron seriously respects at a high level.
0:47:26 Christine Lagarde thinks the world of Mark Carney, you know, all of that.
0:47:32 And I mean, at a time when the Canadians are facing an unprecedented challenge economically
0:47:37 from their most important trade partner, you understand why so many people are suddenly
0:47:39 flipping towards him.
0:47:45 And, you know, until very recently, we really thought Paulie Ebb was going to win because,
0:47:51 again, the liberals have so outlived their welcome in Canada.
0:47:56 But it’s interesting, bringing Carney in and getting rid of Chrystia Freeland, who was the
0:48:01 deputy prime minister, is what the United States didn’t do and what the U.S. needed to do,
0:48:01 right?
0:48:06 You had Biden, who had completely outstayed his welcome and was completely incapable and
0:48:07 incoherent at the end.
0:48:13 And instead, they brought in someone who was basically undifferentiated from Biden.
0:48:14 When asked, what would you do differently?
0:48:16 The answer was absolutely nothing.
0:48:19 This is an anti-incumbent wave, people.
0:48:21 You can’t run an incumbent.
0:48:26 And Biden ran an incumbent and lost, even against a very unpopular Trump.
0:48:31 And the Canadians are, got rid of their incumbent, got rid of the deputy.
0:48:34 Now they’re running an outsider who’s probably going to win.
0:48:42 And I think he’ll actually, he’ll end up having a fairly unified Canada, even though it’s a
0:48:43 different system.
0:48:44 It’s a parliamentary system.
0:48:51 And he might have to govern in coalition because everyone in Canada is so incredibly angry at the
0:48:57 United States, so incredibly unnecessary, the fight that the Americans have decided to pick
0:48:58 with them.
0:49:03 I mean, part of the problem I have with what Trump is doing is that he is picking every fight
0:49:04 simultaneously, right?
0:49:09 So like, if you want to go and reorganize the global trade order at a time when the U.S. economy
0:49:17 is particularly strong, then you should also be leaning into U.S. industrial policy at home.
0:49:19 So don’t get rid of the CHIPS Act.
0:49:20 Expand the CHIPS Act.
0:49:22 It was too small to begin with, right?
0:49:24 Don’t go after American universities.
0:49:28 Expand funding in American universities because you need the best talent from around the world
0:49:31 not to stay there, but to come to the United States.
0:49:33 Don’t undermine rule of law.
0:49:36 You need people believing in rule of law and contracts.
0:49:39 You want, in other words, make the consistent bet.
0:49:44 But the only consistent thing is that Trump wants to beat up on everybody all at the same
0:49:45 time.
0:49:52 And that, unfortunately, even for the most powerful country in the world, is going to end up hurting
0:49:52 us a lot.
0:50:01 And beating up on the Canadians was, you know, really, among a lot of stupid things, it was
0:50:02 the stupidest thing that we could do.
0:50:03 Yeah.
0:50:08 The people, you mean the people who hit us in the Iran hostage crisis, largest undefended
0:50:08 border?
0:50:10 Just talk about head up your ass.
0:50:11 I agree with you.
0:50:16 I love that saying that I’ve been quoting a lot.
0:50:18 It’s attributed to Churchill, but I think it was actually Victor Hugo.
0:50:24 The only thing worse than fighting with your allies is fighting without them.
0:50:28 We’ve essentially decided we’re not even just going to fight with allies because we’re, to
0:50:29 your point, fighting with all of them at the same time.
0:50:31 We’re now fighting without our allies.
0:50:37 I apologize for hopping around here, but you mentioned that a lot of nations, unfortunately,
0:50:39 or the world seems to be headed towards people like Orban.
0:50:42 I’ve actually been quite inspired by some of the protests in Hungary.
0:50:43 Do you think that’s more show?
0:50:46 My sense is that’s pretty powerful.
0:50:46 What are your thoughts?
0:50:48 Yeah, absolutely.
0:50:54 I mean, you know, Orban has, first of all, his economy has performed very badly, and so
0:50:56 the people are angry about that.
0:51:06 His corruption and his willingness to control with a group of oligarchs, key industries, as
0:51:14 well as the media, is something that is not appreciated among rank and foul Hungarians, specifically
0:51:14 not in the cities.
0:51:16 Again, it’s kind of like Moscow, right?
0:51:18 When you had problems with Putin, it was only the urban center.
0:51:21 They did very well in the rural areas and the smaller towns.
0:51:28 Hungary, it’s the same thing, but in Budapest itself, very easy now to rally large, large groups
0:51:30 of Hungarians, specifically against Orban.
0:51:32 So he’s doing very badly.
0:51:38 But, I mean, you know, getting rid of him in an environment where he controls so much of
0:51:44 the judicial power, so much of the media power, so much in how elections are conducted, you
0:51:47 just don’t have the checks and balances there, so it’s much harder to get rid of him.
0:51:52 Look, Turkey, there have been really big demonstrations in Istanbul, not in other parts of the country
0:51:59 because they haven’t been allowed, and Turkey has just taken a complete big step, a leap into
0:52:01 full-on dictatorship, right?
0:52:08 Where they have arrested the opposition leader who was about to announce his own run for the
0:52:12 presidency and was the one guy that could have beaten Erdogan, and now he’s not going to be able to run.
0:52:14 And you know what?
0:52:16 Trump says Erdogan’s his best friend.
0:52:19 The Europeans need him, so they’re not complaining very much.
0:52:21 He’s going to get away with it.
0:52:27 So, as we wrap up here, let’s come back home, and I think of you as someone who’s an expert
0:52:32 on geopolitics and domestic politics isn’t your focus, but you’re able to do something I think
0:52:36 99% of us are not able to do, and I’m certainly not able to do, and that is you’re able to separate
0:52:38 your emotions from the facts.
0:52:45 How do you see this shaping up as Trump’s current policies so far are shaping up for,
0:52:51 and I know it’s early, for 26 and the general fulcrum or the general power structure between
0:52:53 the Democrats and Republicans right now?
0:52:53 Any observations?
0:52:54 Yeah.
0:52:57 Well, first of all, I mean, you’re very kind to say that, Scott.
0:53:02 I don’t know that I can always separate my emotions from my analysis, but I try to at least
0:53:05 be aware of when they’re hitting it, you know, and be honest about it when it comes.
0:53:08 It’s like when you just asked me about, like, you know, Canada, and I’m like, okay,
0:53:11 well, let me tell you, like, I’ve got an emotional connection there.
0:53:18 On the United States, you know, I think that Trump has an opportunity here.
0:53:19 I don’t know that he’s going to take it.
0:53:29 You know, you and I both know that the Republican voting base is no longer the free trade, certainly
0:53:34 not neocon, U.S. lead the world thing.
0:53:41 It is working class, middle class, especially non-college educated, and especially men.
0:53:44 And, you know, you talk to a lot of these people.
0:53:47 You inspire a lot of these people, especially young people around the country, which I really
0:53:48 appreciate.
0:53:52 And I think that Trump needs to lean into that.
0:53:56 So, you know, this, the markets are taking a hit.
0:53:57 Okay.
0:53:59 And portfolios are getting hit.
0:53:59 Okay.
0:54:02 Well, a lot of the people I just mentioned don’t have portfolios.
0:54:02 Right.
0:54:10 So, what, what, what, what you, if you made that a feature, you would then also say, we’re
0:54:16 not doing the extended tax cuts for the highest bracket.
0:54:17 We’re going to snap those back.
0:54:22 And yeah, there’s going to be inflation and these tariffs to rebalance.
0:54:27 We’re going to have to, the corporations are going to get hit because they’ve taken advantage.
0:54:28 They’ve taken all the profits.
0:54:34 The foreigners have taken advantage that they’ve done so well, but what about our own
0:54:35 middle and working classes?
0:54:40 We’re going to redistribute the sales tax that we collect on these tariffs.
0:54:43 We’re going to redistribute it, that to the poor and the middle class.
0:54:47 And, um, I don’t think he’s going to do that.
0:54:51 And I look at, you know, I look at what I was going to say, who are we talking about
0:54:52 here?
0:54:57 Well, you know, at the end of the day, there’s a real, it’s not like Trump used to be a Democrat.
0:55:00 It’s not like he has an ideological, ideological true North.
0:55:02 Like, I mean, he’s going to make his money anyway.
0:55:07 So why not go with the people that really love him and deep MAGA, right?
0:55:12 I mean, these are people that actually are hurting that he needs to do more for.
0:55:13 And that can’t just be throw paper towels at them.
0:55:19 But, you know, when I look at, um, what we’re seeing from make America healthy again, and the,
0:55:24 uh, the food assistance snap, you know, I see, okay, we’re going to nudge, we’re going
0:55:30 to allow, um, certain States to, uh, not give those benefits for like, you know, soda and
0:55:31 for junk food.
0:55:31 Okay.
0:55:32 I’m fine with that.
0:55:36 I mean, we, I’d love to bring down our type two diabetes in this country and obesity, but
0:55:39 they’re also reducing the benefits.
0:55:44 They were also taking away what the Biden administration did to expand them.
0:55:44 That’s crazy.
0:55:47 Like you can’t hurt the poor people in this environment.
0:55:49 You got to help the poor people.
0:55:56 And so I think because Trump, I mean, Trump has gotten it right for the majority of the
0:55:59 country on the border and illegal immigration.
0:56:04 And he’s gotten it right for the majority of the country and on identity politics and anti-woke
0:56:13 ism, but he is failing most of the country on redistribution to the average American, to the
0:56:14 people like my family growing up.
0:56:16 He’s not helping those people economically.
0:56:22 And, and if he got the trifecta, then he would actually have a shot in the midterms.
0:56:27 Absent that, you probably expect the Democrats come back and take the house.
0:56:30 I think you are calling on his better angels.
0:56:34 I’m convinced that those first two are nothing but weapons of mass distraction from his ultimate
0:56:37 goal, which is to continue to enrich the 1%.
0:56:41 That that’s who he sees at the end of the day as his core constituency.
0:56:44 And that our tariffs don’t help them.
0:56:47 Well, they really don’t.
0:56:49 They hate him.
0:56:52 I mean, you know, you talk to like Steve Schwartzman, right?
0:56:54 And, you know, ask him what he doesn’t like about Trump.
0:56:58 And the number one thing he’ll tell you is I hate his trade policy.
0:57:00 And that was, that was months ago.
0:57:01 That was before the election.
0:57:04 Now, oh my God, these people, their, their hair’s on fire.
0:57:05 Right.
0:57:11 In my sense is tariffs are just blanket, are just blanket stupid and hurt everyone.
0:57:16 They especially hurt the poor because who spend a disproportionate amount of their money on
0:57:17 discretionary items.
0:57:22 That, sure, the wealthy will take a hit to their stock market portfolio.
0:57:27 But at the end of the day, I think the Republican Party and Trump’s genius is an ability to convince
0:57:33 the lower 99 that he’s serving their interests because at some point they might be in the top
0:57:33 one.
0:57:39 But if I upload my tax returns into ChatGPT and say, under the proposed Trump tax plan,
0:57:40 what happens to me?
0:57:44 And the answer is, you know, champagne and cocaine.
0:57:48 Things only get better for me based on his proposed tax policy.
0:57:49 I think tariffs hurt everyone.
0:57:49 It’s a fair point.
0:57:52 But they hurt poor people a lot more.
0:57:53 That’s just blanket stupid.
0:57:57 I wouldn’t argue that’s any sort of class warfare one side against the other.
0:57:59 Well, I guess I take your point, Scott.
0:58:03 And again, given that that’s why I’m saying in order to deal with that, you’ve got to do a
0:58:04 redistribution.
0:58:11 I do I do think that long term tariffs also have the capacity to as for the most powerful
0:58:15 country in the world to redirect investment in capital into the United States.
0:58:18 And I do think that there are blanket tariffs like this.
0:58:19 That never works.
0:58:21 When has no, no, no, no, no.
0:58:27 I’m assuming that you use them to actually negotiate and force weaker countries to do deals.
0:58:32 But we haven’t we, my understanding is since 2009, we’ve put in place more thoughtful individual
0:58:37 tariffs that are asymmetrically advantaged to us than any other nation, three times more
0:58:41 than Germany, five times more than France that we’ve been doing exactly what you’re talking
0:58:41 about.
0:58:45 Brazil gets tariffed 82 percent on their sugar.
0:58:47 Our sugar gets tariffed 12 percent.
0:58:52 Japan pays a 25 percent tariffs to put deliver trucks into us.
0:58:53 They charge us zero percent.
0:58:57 And we’re mostly I mean, there are there are counter examples to that, of course.
0:58:59 but also, you know, and that’s why we get so.
0:59:00 We’re not the victim here.
0:59:01 We’re the oppressed.
0:59:01 No, no, no.
0:59:02 We’re clearly not the victim.
0:59:07 And services, we run massive surpluses and our economy is tilted towards services.
0:59:11 And why would we want to go back to manufacturing given where the global economy is heading?
0:59:11 We don’t want to make Nikes.
0:59:12 We want to wear them, right?
0:59:13 What Dave Chappelle said.
0:59:14 Absolutely.
0:59:21 But my point here is that I don’t see Trump as necessarily needing to support the top one
0:59:21 percent.
0:59:26 I see Trump supporting himself and his family, you know, and a small number of donors.
0:59:27 That’s a handful of people.
0:59:29 He’s very transactional for that.
0:59:31 I get that.
0:59:35 But like, you know, if you want to go after you want to close the border and take out illegal
0:59:39 immigrants, like the easiest way to do that that could build a lot of support is go after
0:59:42 the corporations that are actually like bringing in all these.
0:59:44 Just tax the employers.
0:59:45 Just tax the employers.
0:59:50 But again, he doesn’t want to go after the employers or the corporations or those nice people
0:59:54 who are, that’s always been the case with immigrant.
0:59:59 I could go from, I think illegal immigration is the most profitable part of immigration.
1:00:00 We’ve turned a blind eye.
1:00:00 It’s a real problem.
1:00:04 So it turns out that we are more kleptocratic than authoritarian.
1:00:12 And that is probably, I guess, ultimately better for the American civilians, but not by much.
1:00:15 OK, respond to my conspiracy theory here.
1:00:21 Trump sets up essentially a Swiss banking account where you can put money in and the person who
1:00:25 puts money in can call you and say, by the way, I’m about to make you the wealthiest man
1:00:26 in the world.
1:00:30 What do you think about withdrawing support from Ukraine?
1:00:32 By the way, I’m also going to make you the wealthiest man in the world.
1:00:37 Maybe do something to thrust potential trading partners into our arms.
1:00:45 My conspiracy theory, Xi, China, and Putin, Russia, have committed to buying massive amounts
1:00:53 of the Trump coin in exchange for him levying a set of decisions that see just massive political
1:00:58 and economic advantage to Russia and to China.
1:01:00 I would ask the following.
1:01:05 If Putin and Xi had been elected president and vice president, what would be different about
1:01:06 what’s going on right now?
1:01:11 Yeah, me no like the Trump coin.
1:01:19 I mean, that is that’s obviously yet one more completely opacity driven means for corruption
1:01:21 and enrichment of Trump and his wife.
1:01:24 And this that’s not where the country should be heading.
1:01:30 I mean, the country would look very different if it was run by Xi and by Russia.
1:01:38 I mean, first of all, we wouldn’t be announcing 100 and 24 percent tariffs against China.
1:01:39 Right.
1:01:45 So, I mean, I think that let’s let’s take the China piece out of your conspiracy right
1:01:45 away.
1:01:52 He’s done a lot more with the Russians, but I have you don’t need if you don’t need a conspiracy
1:01:55 theory to explain something, don’t use one.
1:01:55 It’s additive.
1:01:58 And, you know, it’s complicated.
1:02:00 It’s it’s a complicating factor.
1:02:04 There are a lot of reasons for Trump to be doing what he’s doing with Putin, irrespective
1:02:05 of that.
1:02:05 Right.
1:02:07 I mean, he doesn’t like the EU.
1:02:14 He wants the EU to go away because they are a strong, coordinated group with trade competency
1:02:17 that undermines his influence on the global states.
1:02:21 He wants to deal with a bunch of individual smaller, weaker countries much more than he
1:02:22 wants to deal with the EU.
1:02:25 And by the way, Putin agrees with that completely.
1:02:29 So also when he meets with the European leaders, it’s like Obama.
1:02:31 They are educated.
1:02:32 They’re a feat.
1:02:34 They don’t respect him.
1:02:35 They snigger behind his back.
1:02:37 He got the intelligence on those conversations.
1:02:39 He knows what they really say about him.
1:02:43 Putin actually, like MBS, kind of treats him just like one of the guys.
1:02:49 So, I mean, Trump actually does enjoy talking with Putin more than he does enjoy talking with
1:02:54 Macron or or or Schultz or Starmer.
1:02:58 And so I think that gets you a fair amount of the way.
1:03:12 And then the fact it is true that if you look at the Riyadh conversations that the Americans had with the Russians a couple of months ago, Russia sent a couple of cabinet ministers, but also sent a businessman who was said to be an advisor to Putin.
1:03:23 But he also happened to have bought, coincidentally, a really expensive apartment from Trump that he spent a lot in Florida.
1:03:23 Oh, God.
1:03:24 How did we get here?
1:03:25 Literally, how did we get here?
1:03:26 Right.
1:03:28 So, I mean, I do.
1:03:39 I do accept, Scott, that like with MBS, which is where Trump is again making the first trip, that if there is a deal made with Russia, the cash register will be open.
1:03:49 That unlike the Europeans who can’t deliver money directly to Trump and family, you know, the Gulfies can and the Russians can and they will.
1:03:53 But I don’t think China is any part of that deal remotely.
1:04:09 Isn’t that, don’t we just start circling the drain when you allow certain levels of corruption that the incentives are just for everyone to be corrupt, that if you decide not to buy Trump coin or send Trump money, you end up on the wrong side of the largest person, the strongest military in the world.
1:04:11 Isn’t this just, isn’t this just a downward spiral?
1:04:20 I really don’t like the fact that the United States is setting the example for kleptocracy.
1:04:38 I don’t like the fact that the wealthiest man in the world, who you are no fan of, is, you know, occupying a position of authority in the United States, in the White House, at the same time that he is running and owning those companies, however well or badly.
1:04:44 And I remember when he met with Modi during the state visit at Blair House.
1:04:46 So, you know, part of the White House.
1:04:46 Right.
1:04:48 And he’s asked.
1:04:54 Trump is then asked in a press conference by a member of the journal, the media said.
1:05:05 So when when Elon met with Modi, was that in his official capacity or was it in his private sector capacity to advance his business interests?
1:05:07 And Trump, God bless him, actually answered honestly.
1:05:09 He said, I don’t know.
1:05:12 I mean, how could he know?
1:05:12 Right.
1:05:15 I mean, I neither both.
1:05:16 What does it matter?
1:05:17 Right.
1:05:19 And I mean, so we we have this.
1:05:21 It’s a very serious problem.
1:05:32 Most powerful country in the world and the most wealthy person in the world is conducting business and government affairs simultaneously interlinkedly.
1:05:33 Like, that’s not OK.
1:05:50 And he’s going after Schumer saying he’s corrupt and has fraud and and has no has no has given no evidence at the same time that he’s actually his companies are benefiting from billions of dollars of direct contracts from Pentagon and NASA.
1:05:56 I mean, that is that’s clearly a conflict of interest that we should have no part of.
1:05:57 Yeah.
1:06:01 And calling Senator Kelly an astronaut and an outstanding patriot a traitor.
1:06:04 But anyways, you’re you’re an amazing father, Elon.
1:06:08 Ian, give me give me something to be hopeful for here.
1:06:10 What have you seen recently that gives you hope?
1:06:13 Um, I’ve started this.
1:06:27 So I think the markets do create a level of honesty in people that we don’t necessarily see on a day to day basis.
1:06:30 So the adult in the cabinet right now is the Dow and the Nasdaq, isn’t it?
1:06:32 I mean, basically.
1:06:32 Right.
1:06:38 I mean, Jamie Dimon is saying he sounds a lot differently this week than he did at Davos.
1:06:38 Right.
1:06:42 And I don’t I don’t think that is courage.
1:06:50 I think that is, you know, his deep, his deep strategic revealed interest being, you know, made public.
1:07:03 And if we could do more of that, I mean, there’s got to be pain, there’s got to be crisis, but there might just be enough economic incompetence in all of this crisis to start hearing a little bit more pushback.
1:07:05 And I think that would be a useful thing.
1:07:18 Look, I mean, the fact that Elon is really at at at odds with Trump Navarro on the most disruptive thing they’ve done so far is helpful, frankly.
1:07:20 The most disruptive thing being immigration?
1:07:22 What are you referring to?
1:07:23 No, on tariffs, on tariffs.
1:07:23 On tariffs.
1:07:23 Excuse me.
1:07:24 Thank you.
1:07:36 Ian Bremmer is the president and founder of Eurasia Group, the world’s leading political risk research and consulting firm, and GZero Media, a company dedicated to providing intelligent and engaging coverage of international affairs.
1:07:48 He is also the author of 11 books, including the New York Times bestsellers, Us Versus Them, The Failure of Globalism, and The Power of Crisis, How Three Threats and Our Response.
1:07:49 We’ll Change the World.
1:07:54 He joins us from his office in, is it Midtown or Flatiron?
1:07:55 What would you call that?
1:07:55 A nomad.
1:07:57 It’s called nomad, officially.
1:07:57 Nomad.
1:07:57 Very cool.
1:07:58 Very cool.
1:08:01 Ian, it is always good to hear from you.
1:08:03 And let’s be honest, you are a Canadian spy.
1:08:06 You joined the ranks of Andrew Ross Sorkin.
1:08:08 I believe you’re working for the Canadian government.
1:08:09 It’s okay.
1:08:11 You will soon again be our allies.
1:08:17 Everyone can see me and Canadian spy Ian Bremmer and Andrew Ross Sorkin.
1:08:20 We’re going to do our I Love Canada tour.
1:08:20 You’re in.
1:08:22 You’re committing right now, right?
1:08:22 I am.
1:08:23 I am committing to you.
1:08:23 You get to pick the first city.
1:08:24 Is it Montreal or Toronto?
1:08:26 No.
1:08:28 If it’s I Love Canada, you’ve got to start with Toronto, of course.
1:08:29 Toronto.
1:08:29 All right, brother.
1:08:30 It’s always good to see you.
1:08:31 Okay.
1:08:31 Be good, man.
1:08:32 Thanks, Ian.
1:08:49 Algebra of Happiness on our other podcast, Prof G Markets.
1:08:50 I don’t know if you’ve heard.
1:08:51 I have several podcasts.
1:08:52 That’s right.
1:08:59 Anyways, on Prof G Markets, Ed Elson and I interviewed Gary Stevenson, who is this economist who’s sort
1:09:04 of blown up on TikTok, who is what I call a class trader, and I say that in the most complimentary
1:09:09 way, and that is he’s calling bullshit on wealthy people and is promoting what I think
1:09:14 is a basic truth, and that is, despite what the 1% and the incumbents will tell you, the
1:09:18 middle class is an accident, and if you don’t reinvest in it constantly through a progressive
1:09:22 tax structure and subsidies for the middle class, it goes away, folks.
1:09:23 It’s an accident in history.
1:09:26 It started from 1945 to 1995, maybe.
1:09:29 It’s been eroding since then, and if you don’t reinvest in it,
1:09:30 it goes away.
1:09:36 And I love this guy, and I think he’s fearless and out there spreading, I don’t know, God’s
1:09:36 gospel.
1:09:43 But he said something that really struck me, and that is that young men, I asked him what
1:09:49 advice we give to young men, that essentially, unfortunately, the likelihood that you end up
1:09:52 wealthy is a function of how rich your parents are.
1:09:57 And I always say it’s a function of when and where you’re born, but he’s right.
1:10:00 It’s more a function of how wealthy your parents are.
1:10:04 You can be born in any nation, and if your parents are rich, you’re probably going to do
1:10:05 okay.
1:10:10 You still have as much agency in the U.S. as any country in the world.
1:10:15 The mobility has not gotten worse here, but it’s not gotten better, and that is 11% of
1:10:18 the people in the lowest quintile make it to the top quintile.
1:10:20 That hasn’t gone up or down.
1:10:27 But what has changed is that if you’re the 89% that don’t make it into the top quintile,
1:10:30 you’re reminded 210 times a day that you’re failing.
1:10:35 There’s this notion that anyone can get rich with crypto, or we all know someone really
1:10:42 talented that ended up at NVIDIA at the right time, or becomes an influencer and makes a shit
1:10:42 ton of money.
1:10:48 But the vast majority of people don’t get that lucky or are just not that remarkable.
1:10:51 And there’s tremendous shame.
1:10:59 In Alain de Bouton, the British philosopher said that the downside to a meritocracy is that,
1:11:04 or the belief that we live in a meritocracy, is that if you don’t make it, that it’s your
1:11:06 fault, that you screwed up.
1:11:11 And what Gary said really struck me that there’s real dignity, and young men should feel good
1:11:15 about, can they find a way to make a decent living, take care of themselves, take care of
1:11:16 their kids.
1:11:19 They don’t necessarily need to have a plane.
1:11:20 They don’t even need to be wealthy.
1:11:26 But if they can put a roof over their family’s head, provide a warm, loving environment for them,
1:11:28 that that is something to be really proud of.
1:11:33 And as I think about it, I think these algorithms have been trained to tell young people, specifically
1:11:36 young men, that if they aren’t partying in St.
1:11:40 Bart’s and on a private jet, that they have fucked up.
1:11:47 That in a meritocratic society, in an economy with all these magnificent seven superstar companies,
1:11:49 that you should be rich.
1:11:51 And if you’re not, it’s your fault.
1:11:56 And most of the time, all of the time, it’s not your fault.
1:12:00 That a lot of your success for wealthy people is not your fault.
1:12:06 But if you’re not one of those people that manages to get to the top quintile, that there’s
1:12:12 real dignity, there’s real pride, and there’s real reward in being someone trying to live a
1:12:15 virtuous life that takes care of themselves and takes care of their family.
1:12:20 That that should be, we need to restore this notion that that’s enough and that there’s
1:12:23 real honor in that.
1:12:29 This episode was produced by Jennifer Sanchez.
1:12:30 Our intern is Dan Shallon.
1:12:32 Drew Burroughs is our technical director.
1:12:35 Thank you for listening to the Prop G pod from the Vox Media Podcast Network.
1:12:40 We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn.
1:12:45 And please follow our Prop G Markets pod wherever you get your pods for new episodes every Monday
1:12:46 and Thursday.
1:12:46 Thank you.
1:12:47 Thank you.