'Could not be more stupid': Scott Galloway on Trump's tariffs
By: Anderson Cooper | Scott Galloway
S E E D E D C O N T E N T
Transcript:
We're now just a little more than 3.5 hours away from a big escalation in what has developed into a trade war between the world's two largest economies. An extra 50% tariff on Chinese imports, on top of the 34% extra imposed last week, in addition to the 20% — originally 10% — in all perspectives.
Now from Scott Galloway, NYU professor, host of the Prof G podcast, and co-host with Kara of the Pivot Podcast.
So, Scott, to the president, does it make any sense to you or any more sense to you now than it did before? I mean, what is the endgame? Do you see this as a route to some negotiation by country?
It would be difficult to think of a more elegant way to reduce prosperity globally than these levels of tariffs. These are more than ten levels of tariffs, and the first administration, on a gross level, they're actually greater than the tally, than the tariffs levied in the Smoot-Hawley era that led us into the depression, where we lost a third of our GDP and unemployment was at 25%.
If we're looking to alienate the largest trading partners in the world and shove them into the hands, or the arms, of China, Japan, South Korea, and China having talks for the first time in a while — if we're looking to reduce our power, our prosperity, take our markets down, this is literally the most elegant way I could think of doing this.
I, Anderson, in graduate school, I was a graduate student instructor in macro and microeconomics, and we used to talk about tariffs the way I imagine they talk about leeches in medical school, saying, “Can you believe they ever did that?” So I don't know what the endgame is other than somebody who believes he's a great dealmaker and can go country by country and figure out a better deal. But we've lost so much credibility that I think the structural long-term damage here is really significant. Beyond tariffs, the structural long-term damage to America's reputation, to faith in our economic system — the reputation of America means risk, innovation, IP, great universities, it also means consistency and rule of law.
And in the last, literally, the last ten weeks, rule of law has been thrown out the window. Whether it's defying court orders or having essentially a used car sale at the White House, it appears we're no longer engaging or holding up rule of law. And we seem totally inconsistent. The tariffs are on, they're off, they're on, they're off. Global trade has been this enormous unlock for the U.S. economy and our prosperity. And any time we take it down, we get especially hurt.
This is the definition of stupid — doing something that hurts you while hurting others. This could not be more stupid.
And so, to the argument that the administration makes, which is: this is to bring American manufacturing back, to have iPhones manufactured here in this country, to have great jobs for people here — the notion that somehow we're just dying from manufacturing. First, we're the second-largest manufacturer in the world behind China. We have a lot of manufacturing. The Cato Institute did a survey about manufacturing. Well, 80% of Americans think we should have more manufacturing, but about 1 in 4 or 1 in 5 have any interest in going to work in manufacturing. There isn't a lot of people looking to go work at a plant in Lansing, Michigan.
Dave Chappelle summarized it perfectly: "We want to wear Nikes, not make them." We have outsourced the most underpaid jobs. Now, some people we've left behind, but this notion, Secretary Lighthizer, that there are millions of people looking to drill in these screws and iPhones. If these tariffs go through, your iPhones are about to go from $1,300 to $2,500 to produce in the U.S. would cost $3,500. So, we're not going to bring back iPhone manufacturing.
These companies produce products on average 50 to 80% less expensive than we do, and we reinvest that prosperity in higher value-add products. We import energy from Canada, we refine it, we add value to it, and we sell it at three times the cost. So, the notion that all these great jobs are going to come flowing back to the U.S. is nonsense.
America doesn't want these low-paying manufacturing jobs. The basis of trade is that you do a great job of producing something for a lot less money than we do. We do another great job of producing things at a lower cost. And you can — it tends to be — our products are high-value add, very high-margin. Nvidia chips have 50-60% profit margins. Mercedes operates an 8% profit margin. So for every dollar we make, we effectively get a maximum exponential shampoo effect, or echo effect, of much greater value.
Global trade has been the unbelievable unlock for global prosperity and massive prosperity in the United States.
What do you make of Elon Musk's criticism of the administration, in particular? Some of the folks around the president, Peter Navarro in particular. I called him a "sack of bricks" and a "moron."
You know, I like it. It makes for good theater. I think Elon Musk is going to fade to black. I predicted three weeks ago that within 30 days, he would be out of government, and because the bottom line is, he could not have anticipated this type of blowback. And I think what really sent chills down his spine was when the province of Alberta and Poland, the nation of Poland, said that they were reconsidering their Starlink contracts. His brand has been so damaged by the sales plummeting in the iPhone and Starlink, which is his growth area and now constitutes more of his revenue. And Tesla — he's going to leave the administration because this has not gone well for him. He is seen as someone who is not empathetic, someone who has usurped constitutional power illegally, and it is really damaging his brand.
So, you know, the fight between him and Peter Navarro, that's good theater. He's going to be gone. He's out.
You've been very transparent on your podcast about the millions of dollars you've lost in the market in a 48-hour period last week. Obviously, you know you're able to take a hit. Luckily, there's a lot of people who are depending on their retirement savings to make ends meet right now, thinking about retiring, who are now thinking, "Well, I can't retire." What are they supposed to do right now?
Yeah. Like, I want to be clear. This really hurts people. In terms of financial advice, I've got a lot of emails saying, "What should I do?" My advice for anybody right now is to do the following: nothing. You don't make decisions when you lose someone you love. When you have a financial catastrophe or something really bad happens, I don't think you make decisions in the moment because you're not thinking straight. And also, this guy is so unpredictable, he could announce tomorrow that the tariffs are off, and stocks could go up — the Dow could be up 2,000 points tomorrow. And then you'd really hate yourself.
What I would consider doing is the following, Anderson: if you think you're just diversified because you're in an S&P index fund, you're not. You need to be geographically diversified. And that is the re-rating. We're talking about where the U.S. may not be able to outrun the multiple contraction in stocks. In my opinion, U.S. stocks are due for five years of decline. You may want to think about taking some tax losses and then diversifying into other geographies — Asian, Latin American, and European stocks. But you never want to act out of panic, because usually, the same emotion you're feeling is what other people are feeling. And if you had followed advice from famous CNBC people in 2008 and said, "If you can't stand the volatility, get out," and then the markets rip back and recovered all of their losses within 14 months, you’d be kicking yourself.
Think, talk, think about the hit to your mental health.
So, what do you do right now? You do nothing in the short run. You do not have emotional panic. You talk to people and maybe think about diversifying across geographies, not just across the S&P.
Scott Galloway, thanks so much.
Thank you, Anderson.
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Stupid indeed. So is believing that Trump is some kind of genius and this will all magically just work.
combine the 7 trillion trump added to the national debt his first term, the wealth in america that vaporized due to his incompetent mismanagement of the pandemic, and the wealth he has destroyed in america with his latest boneheaded tariffs move. compare that total to our national debt. throughout his entire life the man has never known the value of a dollar, especially when that dollar wasn't his ...
Yea, but that was all Obama's fault.....
/s
thought Obama had US in the Black, where Trump Red it as Back, back of the bus for you, Barrack Hussein Obama, I've found you were actually born to an African momma, in Nigeria or something and i'll be releasing my findings any decade now
A bit more insight into how damaging Trump's tariffs are.
Trump is not imposing taxes on others. Americans will pay his tariffs!
Which will end up in the pockets of billionaires.
trumpski's setting the stage for the next classic tried and true republican deception. while he throws everyone but the millionaires and billionaires into the depths of a recession, unemployment, and inflation, there will be only one way to save america. eliminating gov't safety nets and deregulation, while giving tax cuts to the so called job creators, the rich ...
or tariffs on Russia, gee, who would have thought ....
Trump threatens tariffs, the stock market plummets.
Rich people buy stocks...
Trump backs off the threats, the stock market rises, rich people sell the stock...
Wash, rinse, repeat...
All he is doing is transferring wealth from the lower class to the upper class and what does the poor and middle class right wing do? Cheer.
Pathetic.
meh, not like the SEC is going to do anything, it's probably staffed with trump fellators by now too ...
For 4 straight years, the right wing complained about the cost of EVERYTHING....even though Biden lowered inflation...
Trump takes office, imposes tariffs and the cost of good goes through the rook and the Nutters on the Right?
"So"?
Fucking hypocritical bastards.
It is almost as if they, they project upon others the exact thing they are doing, and quite guilty of...
lol, Biden did not lower inflation.
Fact - Covid era inflation rates dropped significantly under Biden.
Trump has given us deflation. Our retirement accounts deflated...
I know Joe Biden lied all the time about this, that doesn’t make it true. When he was sworn in, during the middle of the Covid era, inflation was 1.4%. That is an actual fact.
when he left office, in January 2025, inflation was 3% and rising. That’s another fact.
Demand only exceeded supply after COVID-19 subsided...
The FACT remains that the inflation rate dropped in 2024.
You know it. I know it. Everyone knows it. Quit denying it!
I stated facts. Good luck challenging them.
Could you be any more obvious in moving the goalposts?
Inflation came way down before Trump came back. Hold on...
short term memories ...
starting to look like old dementia don wants to see himself on TV every day with a new crisis, decree, or narcissistic brag ...
If we are winning why did the stock market go down 1000 pts today?
The damage is already done. Investors have now seen the market drop precipitously. People covered shorts and others bought in when the prices were low. Others were likely thinking happy thoughts and bought in.
However, a little bad news and the already shaky investors bail yet again. The level of confidence in the market has been shaken and people see how easily a PotUS can screw things up. The one thing that we can count on (at least until midterms) is that the market will be volatile and depressed.
If Trump does not back off this China insanity we are guaranteed shit earnings and the fallout that will ensue. Even then, the market is going to be much lower than it was when the idiot took office.
And we can almost bank on the idea that Trump supporters will never, ever recognize any of Trump's failures. This, JR, is what I mean by pure (vs. strategic) partisanship: flat out ignoring reality in order to stupidly defend political failures.
Only now the partisan insanity (or Trump cultishness) it is at a level that is frankly worse than I have ever imagined.