‘He’s an economic moron’ | Scott Lucas slams Trump team claim tariff pause ‘brilliant master plan’

A good analysis that should be easy for people to understand.   This is lengthy but Lucas provides a very detailed chronological analysis of Trump's tariff fiasco and how it affects the USA in the global market.

S E E D E D   C O N T E N T

Transcript Summary (by ChatGPT)

The discussion centers on the Trump administration’s escalating trade war with China and its broader implications for the global economic system.  Professor Scott Lucas argues that Trump’s approach is not strategic but driven by a combination of ego, misinformation, and a lack of understanding of basic economics.

Key points include:

• Tariff Escalation: Both the US and China significantly increased tariffs on each other's goods, with China responding to a 145% US tariff by raising theirs to 125%. China has signaled that further increases are meaningless and is refocusing on other global markets.
• Departure from Multilateralism: The Trump administration is dismantling post-WWII multilateral economic structures, such as the WTO and IMF, favoring bilateral trade deals focused on US advantage—a shift from win-win to win-lose economics.
• Manipulation Accusations: Trump’s social media post urging people to buy stock in his media company (DJT) just before announcing a tariff pause led to a 21.7% stock spike. This raised concerns about insider trading and market manipulation, especially since the SEC has been weakened under his administration.
• Internal Division: There's a split within Trump’s team between hardline protectionists and more measured economic advisors. The stock market’s sharp decline forced a partial policy retreat, but conflicting messages continue.
• Global Fallout: The aggressive tariff strategy risks isolating the US economically, pushing other nations (including allies like India, Japan, and the EU) toward closer cooperation with China. A prolonged US–China trade war could cause a global GDP drop of up to 7%.
• Conclusion: Lucas characterizes Trump’s trade policy as economically reckless and driven by a bully mentality that is backfiring internationally. The cost of these actions, he warns, will be borne primarily by American consumers, workers, and businesses.

Transcript:

Lucas:  Trump's legacy is a wannabe bully trying to rip apart the international system and the US system to get personal profit in terms of power and, yes, money. His legacy is as a wannabe bully who is being undone by the fact that he is an economic moron.

Interviewer:   So today we’ve seen the trade war between China and the US ramp up again as China announced that it would be raising additional tariffs on US goods to 125%, which is up from 84%. I mean, Beijing wasn’t playing around when they said that they would fight. They’re serious about it.

Lucas:   It’s now a case of pick a number—any number—in terms of the specific tariffs. What happened overnight is that the United States, the Trump administration, went up from 125% already to 145% on China. They said the extra 20% is because of fentanyl-related Chinese products going into the United States—using that rationale.

The Chinese, who were already at 84% like you mentioned, said, “Okay, fine, you’re not going to push us around—we’ll go to 125%.” What the Chinese actually said was quite interesting. They said, “Look, we’re not going to respond to any more increases from the United States,” because the numbers are kind of meaningless now. Chinese goods going into the United States are going to be so expensive as it is. That’s kind of the done deal.

So what you have is Beijing effectively saying, “All right, what you've got is now a total break in trade between China and the US.” They're telling their companies there’s no need for you to be thinking about exporting to the US now. The US is now talking about how they can find alternative markets for their exports, which raises some very interesting questions about relations within Asia—including with India.

They are now talking about subsidies for their companies to find domestic customers rather than having to export their goods. They’re intervening in their currency markets, where they may be able to devalue the yuan—what we call the RMB—to make it cheaper for exports to be sold abroad to other countries apart from the United States.

In other words, China has always had this advantage if it came to a trade war with the US, in that it has a centrally planned economy—it has a centrally organized economy. Now they’re going to use all the levers at their disposal, both to prop up their manufacturers and producers within the country and to find someone other than the United States to take their products.

Interviewer:  It’s an interesting point, because Macron has said that it’s terribly dangerous to think China could one day replace the US. I mean, Trump must be aware of the security threats that may potentially pose.

Lucas:  Well, here, let’s start off with the reality about where we are in terms of the global economic system. We are now at a point where the Trump administration is leaving the US-led economic system established after World War II. I mean, they simply are walking away from it.

And probably I need to explain that for viewers because that’s quite a dramatic statement to make. But the fact of the matter here is that the Trump administration is no longer recognizing the multilateral organizations and the multilateral processes—not just for trade, but for economic affairs. They already had begun to distance themselves from some of what the International Monetary Fund does, what the World Bank does. They, of course, have shut down US agencies involved in economic programs abroad, whether those be humanitarian programs or economic development programs.

Now, what they are effectively saying is, “Look, we’re not going to be part of the World Trade Organization. We’re not pursuing this through the WTO,” which was again the organization that the US led in establishing—through, for example, the Kennedy Round on tariffs in the 1960s and then the revised General Agreement on Tariffs and Trade under the Clinton administration in ’94.

What the Trump administration is doing is they are pursuing an approach which says: We go with bilateral approaches to each country, and we try to get the best arrangements for ourselves with each country. In other words, we try to get money from them, or we try to get advantages for our products rather than their products—advantages for our manufacturing rather than theirs.

So rather than treating trade as a win-win within this system established after World War II, they’re establishing this as a win-lose relationship.

Now, if the US is going to act outside of the global economic system which it formerly led, what happens then?

China, for years—this is no secret—has been trying to establish an alternative economic system. China, of course, is one of the largest countries in the world, so therefore it’s one of the largest producers in the world. It has one of the largest manufacturing sectors in the world, one of the largest agricultural sectors, and has made vast leaps in technology. We know all of that.

But the Chinese currency—again, internationally known as the RMB—is not convertible. You can’t take money out of China in RMB and get pounds or euros or dollars for it. That’s where the US has always had an advantage: the world’s reserve currency—the currency that backs up the euro, the pound, the international system—is the dollar. It’s been that way for decades.

And now that may no longer be the case. Indeed, the Trump administration has even discussed withdrawing the dollar as the world’s reserve currency.

So what do you do then? Who do you trade with? Who do you interact with?

China has to be part of that possibility.

And to bring it around to what Emmanuel Macron was saying: in recent years, there had been this sort of competitive approach, where the United States had been saying, “Don’t trade with China, don’t deal with China—they’re a security threat.” Not just Trump said that. Biden folks said it.

Now, given that Trump is the threat, Europeans have to make a choice: do you continue to refrain from trading with China—establishing investment deals with China—or do you go back now and establish deals with them, because they’re going to be wanting them with you? China’s going to be approaching the EU. Can you afford to keep them at arm’s length?

And that will not just be a question for the Europeans—it will be a question for India, for example, one of the world’s largest economies, which has felt threatened by China in the past, but is now saying, “Well, if the US is going to act this way, we may need to look at economic cooperation with Beijing in a way that we weren’t even considering a few weeks ago.”

Interviewer:  And do you think that implies that Trump, in some ways, is depending on countries like the UK and the EU to not fall back on China, for example?

Lucas:  Now, the main reason why Trump U-turned—and it was a significant retreat earlier this week, where he said, “Okay, all these big tariffs like 20% on the EU, and 45% on other countries, 23, 26% on Japan”—why he retreated on 10%—the major reason, which we can talk about, was the crisis in the US bond market.

But one factor here is that the Trump administration has decided, “Okay, we’re going all-in on China, we’re going to fight China.” Then they need support from other countries. They need support from the EU, they need support from India, they need support from Latin American countries or from other Asian countries—even as they are punishing those countries with the 10% tariff that remains, or with the tariffs on steel and aluminum.

So yeah, there is a factor here, which is backing off of the highest tariffs on some of these countries to try to get them on your side versus China.

The problem here is, as long as the Trump administration still has those tariffs in place that it has imposed—and let’s, by the way, give a figure here to explain this to you—the highest tariff rate on the United States, I believe in average weighted tariff, is India, around 10 to 12%.

The effective US tariff rate now globally is 27%. Even if you take China out of the equation, the effective US tariff rate on everyone else is 11%.

The US has now become one of the leading tariff punishers in the world, at the same time that it's saying to the other countries, “Oh well, you know, we may be hurting your car industry, your steel, your aluminum—but you still should work with us against Beijing.”

Interviewer:  And we can see that the Trump administration—they’re trying to play this off as being some sort of brilliant master plan from Trump, and that this pause on the high rates of tariffs—that was all part of this plan, that was all part of his strategy all along.

I mean, I think it’s interesting because if I think back to a few weeks ago when we had that Signal group chat leak—it was dominating headlines—and now, since so much has happened, it feels as though it’s almost water under the bridge. You know, no one took the hit for what happened there. It feels like a distant memory.

So I kind of wonder: how damaging is this pause on tariffs actually going to be for Trump’s legacy?

Lucas:  You know what Trump’s legacy is? And I’m going to say it—’cause why not? Let’s get to the YouTube comments. Let’s just say exactly what he is at this point:

Trump’s legacy is a wannabe bully trying to rip apart the international system and the US system to get personal profit in terms of power and yes, money. His legacy is as a wannabe bully who is being undone by the fact that he is an economic moron.

And I’m going to say it again—the world’s supposedly successful businessman—who, by the way, had six bankruptcies—does not understand the basics of economics.

So let’s go to your question then—that he was some type of genius in having to retreat on tariffs.

I was in studio working with Irish television on Wednesday night when this came about, and I sat there and I knew this line was being spun by the White House. “What an incredibly great move! Isn’t he wonderful?”

And there was a Trump representative who was on the TV show that night—the former US ambassador to Greenland—Denmark, who still wants the US to seize Greenland by the way, that’s another story—and she was trotting out all these lines about how skillfully he had done this.

And Trump himself told the media a day later—he told them on Thursday—he said, “I’m a weaver. I’m a weaver of stories. I can weave so well. I’m a genius.”

Okay, time to cut through the spin—and that’s a polite word for what it is.

Here’s what happened, and you will make of it whether or not Trump had planned this all along...

And it gets us—and if you forgive me—we need a few minutes here because it’s a story that brings out not just Trump, it brings out what’s happening within the Trump administration.

April 2nd is Liberation Day, and Trump brings out the magic chart. The magic chart with all those numbers that he has the Commerce Secretary bring up. “Howard, bring up the chart! Bring up the chart!” And it’s like:

“China has 64% tariffs—or 68%—so we’re going to put a 34% tariff on them and so on.
The European Union? 39% tariff—so we’ll hit them with 20%.
Japan? 46% tariff—we’ll hit them with 23%.  Poor Lesotho in Africa apparently has a 100% tariff on US products—we’ll hit them with 50%.”

Like okay... what did Lesotho do to you?

The Heard and McDonald Islands—which is uninhabited except for penguins—we’re going to give them a 10% tariff because I guess the penguins are making some type of product that’s flooding the US market?

You know—that chart was nonsense.

And I need to explain what I mean by that. If you don’t call him an economic moron, economically illiterate—all you had to do was look up the effective average weighted tariff and you would find out what.

Now let’s leave China as a special case—because China is not whiter-than-white when it comes to trade.

The European Union’s average weighted tariff on US products in 2024 was 1%.
One.   Not 39.   One.

The Japanese average weighted tariff in 2024 on US products was not 46%.  It was between 3 and 4%.

Australia got hit with a 10% tariff—even though they have an effective free trade agreement with the United States—and they have a 0% tariff on this.

What happened?

What we know now is—the Trump administration did not base the magic chart on what tariffs are on other countries. They took the trade balance in goods. If the US had a trade deficit in goods, they divided it by the amount of imports that the US took from a particular country.

So let’s say, for example, that Britain had given a hundred billion dollars of exports to the United States, but let’s say the United States had a $25 billion deficit in goods. They would have said:

“Oh! That’s a 25% tariff on US products.”

That is nonsense. A tariff is not a trade balance.

What a trade balance or imbalance is, is when you buy more goods than you sell—and American consumers like to buy stuff. That’s what it comes down to.

So none of that chart had anything to do with tariffs. What it had to do with was a US goods deficit.

But here is why it continues to be nonsense.  A trade balance is not just made up of goods—it’s also made up of services.

The US, to a lot of countries, has a huge trade services surplus—technology, support for other companies, right?

The US, for example, has a deficit with Ireland in terms of goods—which is around about 100 billion euros. But it has a massive surplus in services to Ireland, where the US has an overall trade surplus with Ireland of 93 billion euros.

So using Trump’s logic, Ireland should be putting tariffs on the United States.

But of course, they just took a number from the European Union, slapped it all in.

So what I’m telling you is: from the very start, this project had nothing to do with tariffs. It has nothing to do with reciprocal tariffs. It was an attempt by the Trump people to get money—not from other countries—but to get money from American consumers and manufacturers and from farmers, who would have to pay the tariffs.

See, that was the strange thing—they weren’t even getting money from China or the EU or whatever. They were taking it off of Americans and presenting it as a great victory against all these other countries.

Interviewer:  I mean—it was about three hours before Trump announced this pause that he posted on his Truth Social platform and said, “This is a great time to buy.” And now we’ve got the Democrats accusing Trump of market manipulation. They’re calling for Congress to investigate. Meanwhile, we’ve got Trump allies denying this charge.

What do you make of that?

Lucas:  At 9:37 a.m. Washington time on Wednesday, Donald Trump goes on social media and says:  “Now is a good time to buy. Now is a great time to buy. DJT.”  Okay … in all caps.

There’s an important backdrop to this. We now know that it appears that Trump made his decision that he would have to pull back on the tariffs in part because of pressure from Republican senators—some of whom had been on Fox TV the previous night telling him to back down.

In part because of pressure from his own donors, including the billionaire like Bill Ackman.

In part because other governments are telling him this is not working.

But we know that—in part—because at 8:00 a.m. on Wednesday morning, he watched Fox TV. And a guy named Jamie Dimon from JPMorgan—who’s one of the gurus of Wall Street—said:

“If you keep pressing on with these tariffs, you’re going to get yourselves into a serious recession.”  At 8:00 a.m.

9:37 a.m.—now we can’t be certain that he had decided for sure to pull the tariffs back—but he goes to tweet that in all caps. Now remember—“Now would be a great time to buy. DJT.”

He usually does not sign his tweets on Truth Social.

DJT—what is DJT? DJT is the three-letter label for Donald Trump’s media company on the NASDAQ stock exchange.

9:37.

The decision to pull back on the tariffs to 10% is made just after 1 p.m. from the White House—about three and a half hours later.

During the course of the day—beginning after the Trump tweet and before his announcement—stocks rise in Donald Trump’s company.

Just before the 1 p.m. announcement, there are a series of stock moves—what are called “puts”—which are to effectively buy the Trump stock. “Now—get it now.”

After the announcement, the stock soars further.

On Wednesday, Donald Trump’s stock—DJT—went up 21.7%.

If you bought that stock at the beginning of the day, you got a 21.7% profit by the end of the day.

Now the Democrats—and here’s one thing I’ll add to this—the Democrats immediately say:  “All right, this is market manipulation.”

They say:  “Look, a lot of Donald Trump’s friends made money off of this.”

Donald Trump is on film on Wednesday—after his announcement—with people in the White House, celebrating the fact:  “This person made 500 million. This person made 900 million. This person made a billion today.”

Okay—I’ve asked two senior specialists in financial firms here in Ireland—I won’t name them; I’ll keep this confidential—but I asked them because I actually was working with them on various projects.  I said:  “Does this constitute spreading market-sensitive insider information, which is a crime?”

And both those people said:  100%.

The first one said:  “Yeah, this is a buy sign. He issued a buy sign.”

So if Donald Trump was not President of the United States, he would probably be investigated by the Securities and Exchange Commission.

But here’s the stinger in this: the Securities and Exchange Commission since January has been gutted.

A lot of its staff have been fired—or they have been told to stop work, or to halt litigation—because it’s part of ripping apart US agencies.

So the SEC, even if Trump was not president, might not be able to investigate it—because they’re no longer effective.

Interviewer:  Obviously, to provide the other side of the argument here—Trump’s allies are denying these claims. So it would be interesting to see what comes out of this.

I mean, what I’m interested in is—obviously, this is a 90-day pause—but, you know, as we saw, Trump watched that Fox News interview and said that guy was a genius.  I mean, do we think that he’s actually going to go through with it all again after 90 days?  I mean, surely he should change his mind.

Lucas:  When they made the decision to slap the tariffs on everybody with the magic chart—with no clue, no clue about what it means economically and so on—the stock market reacted with the fact these guys are morons.  That’s what the stock market did on Thursday and Friday—it just suddenly tanked.

And we were talking about the most serious drops in the market since the pandemic, right? On all three major US stock exchanges—the Dow Jones, the S&P 500, the NASDAQ—they were all approaching what we call a bear market. That means being more than 20% off their top value. They just narrowly, I think, avoided it.

Now all three of those markets were plummeting on Thursday and Friday. So over the weekend, what you get is a division in the Trump camp that comes out in light of this.

There’s one faction in the Trump camp—let’s call them the “warrior protectionists.” They want to rip up the international trading system. They almost want to go to what is economic isolationism—that the United States can do it on its own, and they can do it by bullying other countries into giving them the trade agreements they want.

This includes Peter Navarro—who was very prominent in US media last weekend. This includes the US Trade Representative Jameson Greer. It probably includes another influential Trump adviser named Stephen Miller.

Now, there’s another group in the Trump administration who are much more measured in their approach—Treasury Secretary Scott Bezant, the head of the National Economic Council Kevin Hassett.

And their approach is:  “Yeah, we want to use tariffs, but we want to use tariffs as leverage—to get into trade negotiations in a much more measured way with the various focus.”

When the stock market went down over the weekend, those guys were like, “Look, you’ve got to pull back on this.”

On Monday of this week, Kevin Hassett went on to Fox Business and he actually said:  “There might be a 90-day pause in the tariffs.”

And the stock market went up like 4%. Boom. Just like that.

And then the White House came out and said:  “Oh no no no no no, this was misinterpreted.”

That’s because the warrior protectionists kicked back and said, “No.”

As Peter Navarro then went on to media throughout the rest of Monday and said:  “No negotiations. No negotiations.”

Now as late as Tuesday night, talking to the Republican National Committee and donors, Donald Trump said:  “All these countries, they kiss my backside.”   He actually used a different word—but you can fill that in yourself.

He said that on Tuesday night.

And I’m sorry, but I just need to tell you this because it just kicks all this stuff into touch—

What happened on Tuesday night going into Wednesday is there was a run on the US bond market.

And by a run, what I mean is: everybody was trying to dump their US bonds. They were trying to sell them.

Japan—twice—I’ve got this on high authority—Japan twice went onto the bond market overnight and they couldn’t find anybody to buy the bonds.

Now this is really unusual.   It’s really unusual because when the US stock market drops down, people usually go into bonds as the safe haven, right?

This didn’t happen.   This time, people said:  “We don’t trust US bonds. We don’t trust that they’re secure now.”

Instead, they were going into German bonds—German bonds increased in value, decreased in yield, increased in price significantly.

If you cannot sell US bonds—if the US government cannot sell US bonds—they can’t finance their debt.

And on Wednesday morning, as Jamie Dimon from JPMorgan was saying, “You’re heading into recession,” there were Trump advisers who went in and told Trump:   “This is the situation that you’re in now.”

You want to ask me what he’s going to do next?

What he’s done next is... mixed.

He has retreated on some of the tariffs—not all of them, but some. But at the same time, he can’t appear to be weak.   So he’s played the tough guy approach—specifically with China.

Right now, I’m speaking to you on a Friday.  What has happened since then?

First of all—China has not backed down.  Because China has not backed down, that meant that the rally in the US stock market after his retreat is gone.

The US stock market dropped back on Thursday—and it’s probably going to be lower today—because the prospect now is of a US–China trade war.  A protracted US–China trade war.

According to international analysts, for example at the World Bank, that would lead to a 7% drop in global GDP if they keep doing this.

US–China trade is 3% of all total trade. So it’s the knock-on effects—it hurts the Chinese economy, it hurts the US economy, and therefore they can’t buy from Europe, they can’t buy from Africa, etc.

7% drop in global GDP.  And that’s what Trump is embarking upon now.

What he’s set himself up for is—he’s going to hit another fundamental decision point, which is: as US consumers, as US manufacturers, as US farmers, and as the US stock market take a hit—does he back down again?

Can he afford to back down again?

And that means what you have is not a planned genius approach. You effectively have an approach which has come down to this:

Donald Trump and his inner circle—the warrior protectionists—were effectively the bully in the international playground.

And they went into that playground and said:  “Pay us. Give us your lunch money.”

Canada said no.   Mexico said no.  China said no.

Even the European Union—the weak old European Union—said no.

And what does a bully get done when he is punched in the nose?

He still has to act tough. But he either has to accept the fact that he didn’t win—or he has to try it on again.

And they’re trying it on again—with China.

And I can’t tell you how this comes out—because we’re in unprecedented territory.

Oh—actually, I can tell you how it turns out on a wider scale.  Sorry, Joe—let me just add this:

What are the Chinese going to do?

And this goes back to the question.

The Chinese are going to go to the other countries and say, “You trade with us.”

Earlier this week, Donald Trump threatened to put tariffs on pharmaceuticals into the United States.

Now that affects Ireland a great deal, which I could talk to you about. But you know who else it affects? It affects India—one of the world’s largest manufacturers of pharmaceuticals.

Guess what the Indians then started talking about doing?  “We might have to talk to the Chinese about how we respond to this.”

The Japanese and the South Koreans have said:  “We might have to consider how we coordinate a response to this.”

Although South Korea’s backed off just a bit.

Canada is now talking to the European Union about how they can increase their trade relationship with the EU.   And they’re talking to the Australians about how they can increase military trade.

What Donald Trump is doing, in effect, is—he’s not bullying people into paying America.

What they’re saying is:  “We’re all going to go to a different playground where the bully is not present.”

Now, there still will be sacrifice while that’s being done. It won’t be done overnight. But you’re talking about a reconfigured economy in which Donald Trump is putting the US to the side.

And that’s an unprecedented situation.

But the highest cost to that?

It’s not going to be paid by us in Ireland.
It’s not going to be paid by you in the UK.

The highest cost to that is going to be paid by people in the US.

Interviewer:   Well, it’s going to be interesting to see what’s happened by this time next week—let alone what might happen by Monday.

Scott Lucas, thank you for joining me on The Trump Report today.

Lucas:    Thank you so much, Joe. Stay safe—stay sane, if you can.