Trump threatens to rename New Mexico "New America"

David Pakman (0:00)

Welcome to The David Pakman Show, Bonus Show. This is a sneak peek at our premium paywalled content, the extra show our members get five days a week. If you like getting this extra daily coverage and you want all five full episodes every week on the day we do it, sign up today at Join Pakman Dotcom.

Welcome to the bonus show. It's great to be back in the studio. It is another day and another new series of tariffs on our historical allies. This time, Canadian tariffs, however, on US milk, perfume, golf clubs and other goods have taken effect. And as of this moment, the Dow Jones industrial average is down five hundred and sixty four points and declining rapidly. More instability. Now, listen, Pat, I assume that like is the case with most of this stuff at some point, maybe even today, because it is Tuesday, often it's Taco Tuesday.

At some point, they're going to come to some temporary agreement again and there will be a hiatus on some of these tariffs and it might be temporary or it might be permanent. Like you can never really keep track of exactly where we are. But I assume at some point we're going to see that again and the stock market will go back up a little bit and Trump will still say the policy is good. It's the same routine over and over again.

Pat (1:33)

That has been the pattern, right? And so it makes it so it's maybe not even worth it to follow the day to day, because we know that whatever Trump does, he's just going to undo the next week and then the retaliatory tariffs that Canada put in place, they're probably going to undo those as well. And it's pretty predictable because we know that really the only option Trump has is to talk to Paco because if he decides to double down, if he continues to go down this road, it's going to make the economy even worse. It's going to drive up inflation. It's going to make the farmers, for example, even more angry with him and consumers generally more angry with him. So he has to backtrack and you step away from it all. And you think this must just be market manipulation, right? That that must be the point of all this.

David Pakman (2:15)

It's the only I mean, I hate to say logical, but it can't possibly be that Trump is still convinced that this sort of stuff gives him leverage or the upper hand because it's proven not to. So then the only other reason I guess there's two possible explanations. It's market manipulation for his or for his friend's benefit or he believes that he has to save face. And if he stopped doing this sort of thing, it would show that he knows it didn't work. And so he has to just continue arguing that it works. Those are really the only two explanations I can think of.

Pat (2:53)

And of course, when he does taco, he claims that that's a big win as well. He was able to bring Canada to the negotiating table and come up with a deal, even though it's often worse than the deal that we had in the first place. Also, an interesting point to this is that Canada seems to be deliberately targeting industries that are going to affect Midwestern states and states that Trump historically has been able to do well in. So they're going after American milk, perfume, video game consoles, golf clubs, fishing rods, these sorts of things. They were considering lobster, but then decided to back away from lobster. And I wonder if that's because, you know, that's a big industry here in the Northeast.

David Pakman (3:28)

Yeah, we. One of the things that Trump definitely doesn't understand about this conceptually is that American companies rely on Canadian inputs for a lot of products. But also Canadian companies use American imports for a lot of products to inputs to finish products in Canada.

And Canadian companies usually have a number of alternatives for those inputs, whereas many of the American companies do not partially because of how our supply chains are set up. And so this is once again one of these things where Trump's lack of understanding doesn't diminish his confidence at all, but it can backfire in ways he doesn't even understand.

Pat (4:18)

Right, even if you buy into Trump's framework that when he imposes tariffs, it's actually the foreign countries paying it, you still have to come up with some sort of game plan, right? You have to think, okay, well, if our competitors, if other countries do X, then I'm going to do Y. You have to make it so that there are other tools still at your disposal and that you're going to end up coming away from the entire exchange ahead, right? Even if things don't go initially as planned. So Trump's not even capable of doing that. Obviously, he's not able to plan a few steps ahead because if he was thinking a few steps ahead, he would realize that, oh, this is actually going to backfire and not be so great for Americans.