good morning sense of things it’s Jeff

and Ron here once again for another

episode of the sense of things podcast

and on today’s show Ron and I are going

to talk a little bit about tariffs Ron’s

done some research on tariffs and how

they been used in history in our country

so this is I think perfect timing for

all of this type of stuff I’ll go over

some fun stuff at the beginning and then

I’ll finish up with a little bit of

economic data some economics from this

week that we’ve heard and just things to

keep our eye out for so hold on we’ll be

right back on and just a

[Music]

[Applause]

[Music]

second hey everybody it’s Jeff and Ron

here Ron how you doing my friend good

morning Jeff never a dull moment is we

say um I understand today uh they’re

going to be announcing some reciprocal

tariffs we got some good topics uh it’s

very topical today going through a

little bit of history on tariffs but all

good we had a CPI number I think you’re

going to talk about that Y and our

markets are just whipsawing I think

we’re just creating a base and going

sideways for a while yeah absolutely and

I know we just got PPI numers so I’ll go

over those that just came out so similar

story there all but what I wanted to do

was get us kicked off here with what I

call the misuse of funds starting to

educate our audience on some of the

things that we just don’t do good with

money so first off 60% of people have

bought something online while under the

influence and have regretted it

afterwards I don’t know if you’ve ever

but I know I have once or twice I have

not but you know what all this is just

2.0 of doing this because back in the

day before the internet people that

couldn’t sleep or were drinking were

buying crap off of QVC on TV it’s the

same thing now you can do phone and and

back in the day when you had to call an

800 number to do all that but yes it’s

not changed at all and I guarantee for

history people have done the same dumb

things

absolutely all right coffee budget we

spend more per year the average person

spends more on coffee per year than they

actually spend on their

retirement not a surprise there I don’t

think well I I heard there was a uh stat

years ago that people spend more time

planning a vacation than they do talking

about their finances or retirement on an

Andre Bas absolutely but they put in

some good time like in that last oh I

don’t know two or three months prior to

retirement that’s when they put some

planning into place and really get it

going I used to have a thing that I

stuck on my on my wall that was it was a

I think Far Side cartoon or something

like that where the guy walks into into

his financial planner’s office and sits

down and said I’ve saved nothing for

retirement it’s your chance to be a hero

genius yeah I don’t care how big of a

cape he has it ain’t happening yeah it’s

just not gonna happen subscriptions

people lose a massive amount of money

every year on just subscriptions that

they’ve completely forgotten about it’s

interesting to me that all these the

concern from all these big TV channels

and all that was hey we’re going to be

losing all this ad revenue and

everything to streaming services how did

they change it they don’t even put onto

their channels the new shows go onto the

streaming platforms that you have to pay

for which is amazing to me actually this

is good timing I just got an email

yesterday I have I’ve had YouTube TV for

two and a half a little over two and a

half years I was ticked off that after

the first year my Major League Baseball

Network got taken out cuz couldn’t deal

with the contract now I just got to

notice yesterday Paramount and any

Paramount Associated channels may be

gone within a month or so because

Paramount can’t make money on their

streaming service so they want to stick

it to YouTube TV so if that goes away I

forgot how I think it’s four or five

channels and I guarantee I’m watching

one or two of those are recording

something off of it it’s frustrating as

how they should all merge and be done

with it I’m right there with you I think

this is become an even bigger mess than

anybody would have ever expected real

quick and Disney has lost money since

day one on ABC ESPN all that streaming I

don’t know how they’re losing money I’ll

be very blunt between all of the right

fees and Commercial I I don’t know how

they’re losing money but apparently even

Iger coming back for what the third or

fourth time he can’t solve it either no

so they just got to merge they just got

to merge and be done with it our

streaming Bill will get back up to where

the goddamn cable bill was that’s exact

I and honestly I think it’s getting

there I I was looking at my Netflix bill

the other day and I just I’m going

through this major okay review all

expenses and all that and I looked at my

Netflix bill and I’m like holy crap it’s

$30 now why would it be $30 I thought

it’s one subscription and you get three

connections no it’s there’s three

different levels and apparently I was on

the highest level and I’m like okay I

don’t need that let’s go down one all

right I did thank you I got a look check

that before yeah cuz I had never changed

anything and all of a sudden it I

thought it was like around 17 it was

like up around $30 and I I thought it

was like 17 all right I’ll let’s Jack

that back down all right pet spending

Millennials spend more on their pets

than they do on their health insurance

well that’s a given

yeah you got little National totally

spoiled dog day going on there love it

all right last one Lottery dreamers it

turns out that people that win the

lottery typically are completely broke

in five years so they don’t well they’re

like athletes exactly yeah exactly the

same thing yeah all this money comes at

them and they’re just doing the snow

money baby with that said let’s stop

sharing here for a second let’s go on to

your stuff on tariffs

man all right so here we go so I I need

to get this out of the way

just

saying thank you I just sent out a video

if I had more time I would have done

something obviously the Super Bowl I

mean they had more viewers this year

than ever people said it was boring but

not if you’re an eagle fan but people

could go out there and do a search on

YouTube German TV explaining the

push watching them do this and do it in

German it’s not a once watch you’re

going to watch two or three times and

send it actually I did send it to you I

texted it to you you did text it to me I

just noticed that I uh you got to watch

it you want to show it next week

fantastic all right just saying Hey

listen this has only happened twice in

my life I love you like a brother but

I’m sorry as a lifetime Cowboys fan I

couldn’t root for the Eagles ever oh

okay hold on hold on I got to make a

Cowboys comment so I do not want Jerry

Jones to ever sell the team or ever to

die because since he’s been

GM do you know how many playoff off wins

you’ve had since your last Super Bowl

the last 29 years it’s not very many

four yeah four yep and I I would tell

you this asked I have not heard one

intelligent sports reporter asked Jerry

Jones the following question If you

hired a a GM Jerry and they only had

four playoff wins in 29 years would they

still have their job yeah absolutely not

no that’s all I have to say about owners

that that meddle with their teams yeah

just let let somebody else run it and

then you can fire them and get somebody

else in there y so I’m not going to be

reading everything because people could

pause the podcast and read it but I

think this is important that I think

people are just listening either to the

current Administration or have their own

impressions of what has happened in the

past but a tariff is a tax on Import and

Export of goods tariffs are a form a

trade regulation that protect a a

domestic industries from unfair

competition so before I get into

anything I remembered it was about three

four five six years ago I can’t remember

now that CA uh milk from Canada was

coming in and the Northern State farmers

were really ticked off because they were

undercutting their price and they

weren’t able to make money so there was

a tariff put on uh Canadian import milk

for a period of time I don’t know if

it’s still in place I don’t know how

long it lasted but that’s the purpose of

it is to protect right yeah so there’s a

lot of things here I’m not going to read

all this you could pause and read it but

this is all good stuff I called from the

internet I didn’t create any of this but

they’re levied on the value of imported

goods so you don’t want to here’s the

whole thing it’s like the laugher curve

people could look that up too you don’t

want to do too much because then you’ll

stifle trade but you don’t want to do

too little because it potentially may

hurt you so it could be on any product

VAR byproduct country or trade agreement

so looking down here into why tariffs

are used as I just mentioned it helps uh

domestic Industries compete with foreign

competitors remember that whole thing

four or five years ago about all the

China Steel that was coming into the us

but it wasn’t coming in directly from

China it was going into the Mexico it

was going into other countries and then

coming in and then our us steel

companies were having a tough time

competing because all they were doing

was just dumping steel here to bring

down the cost of Steel which work great

if you were building houses and and

buildings

but not so good if you’re a a steel

company absolutely and then the last one

here is 100% I don’t care what anybody

says tariffs not can but most probably

will increase the cost of imported goods

so everybody talks about we got to keep

bringing Manu facturing back here to the

US from China that’s great do you want

to pay $300 for a pair of sneakers

Because by the time you get done with us

labor and Unions that’s what a pair of

sneakers are going to cost instead of 40

or 50 bucks now is that right or wrong

Hey listen that’s a conversation for

another time but this is you know how

they work how they’re used and the

potential impact on consumers let’s go

to the next one

so I’m going to give three examples that

I yanked from the internet and two of

them are old one of them is fairly new

so in in 1789 the this was the first

tariff enacted by the newly formed US

Government right after the Revolutionary

War it aimed to raise revenue for the

federal government and protect emerging

American Industries because we were just

burgeoning and creating and it help pay

off Revolutionary War debt so that made

sense right it’s a basically a rebuild

from the war by the way once this whole

Ukraine Russian thing is ended I wonder

who’s going to fit that rebuild yeah I

think one of the negotiations I’m

hearing is they’ve got a lot of rare

earth minerals so there’s a hopefully a

little nice tradeoff there of okay we’ll

help because we were gonna have to put

money into it anyhow but at least we can

get something out of it of value instead

of just giving money it’s okay let’s do

some trade and and we’ll make this work

I agree I never heard of this one the

moral tariff in

1861 obviously this was for the right

before the Civil War named after US

Representative Justice Smith moral this

tariff aim to protect American

manufacturers from foreign competition

and generate revenue for the federal

government and have played a crucial

role in the funding the union efforts

during Civil War are we getting a

pattern here about war and funding and

covering debts and whatever now the

third one is a little bit more current

uh this was the op I I I don’t remember

this one maybe you do I don’t either so

President Obama imposed a 35% tariff on

tires imported from China to boost the

domestic Tire industry the Tariff was a

response to Surge in Chinese tariff

Imports that led to job losses in the US

Tire industry I was not aware of this

obviously this was coming out of the

financial crisis where they try to

impose every program to stimulate the

economy and get home building and

everything going again but again this is

what it’s used for it’s is it used to

punish I don’t know your thoughts on

that but the answer is yes it is but

nothing else it’s a negotiating tactic I

think that’s more than anything I think

it’s a good negotiating tactic when

you’re the largest economy out there

what allows you to negotiate a little

bit and say okay if you don’t want to

come to the table because you look at

Canada yes they’re close friend they’re

neighbor but they have literally crushed

our Timber industry in the Northwest

there by the way they’re not going to be

our 51st state but let’s move on that’s

just once again that’s a a joke I think

more than anything but they’ve literally

crushed because they have literally

dumped and subsidized their Timber

industry and it’s crushed ours up in the

Northwest so they’ve shuttered plants

left and right up in the Northwest and I

I think that’s it was something I had

watched years and years watching the

shows on Discovery Channel about the

about the timber industry and stuff like

that and you’re like my God we’re

building building like crazy and these

guys are talking about man they can

barely make it and all this and I never

could figure that out and it’s come out

that Canada’s been subsidizing their

industry and then dumping that timber

here so they got a lot of forest yeah

they got a lot of forest and yes that’s

a major export for them but the reality

is you know what we’ve got to protect

some jobs here um in our country too I

think it’s a good negotiating tactic

president Trump likes to negotiate

unilaterally and not these big wide

massive trade agreements so y I don’t

know I I I think some of these are more

of a threat than a reality but I think

there are going to be some that are put

in place and they’re going to stay there

yep and then the last one I remember

talking to a lot of people about this

years ago when Trump 1.0 was going on

with tariffs about tariffs were one of

the main reasons why the japanes jaes

attacked us and there were a couple of

very key points there I there was an

export uh Control Act of 1940 which gave

the president power to restrict the

export of materials and supplies that

could be used to war for in war efforts

it was aimed at limiting Japan’s access

to essential resources like oil steel

and other materials I do know that there

was another one for hydrogen it was

either hydrogen or helium you know what

I can’t believe I should have looked

that one up but there was one of those

that Japan needed and we did not give

them any that was one freezing Japan

Assets in 1941 us Froze all Japan Assets

in the United States this move

effectively cut off Japan from its

primary source of oil and other critical

supplies and then the denum mon and the

oil embargo this was the big one this

was the nail in the coffin for one of

the main reasons why Japan attacked us

in August 1941 us imposed an oil embargo

on Japan which severely restricted

Japan’s ACC ACC to

oil so what happened net result they

attacked us by surprise and retaliation

and here’s the interesting thing about

that last point if you go by World War

II Scholars and people that really

researched the well-planned attack on

Pearl Harbor is the one thing that was

part of their strategy and they did not

do because it was supposed to be a part

of the third wave they only did two

waves the third wave was supposed to

destroy all of the oil Reserves that was

right next to Pearl Harbor the reason

why it wasn’t done in the first or

second wave was because they thought all

the black billowing smoke from the oil

would cover the Pearl Harbor and they

wouldn’t be able to see the attack

that’s why it was supposed to be part of

the third wave so if they would have

done that the scholars would have said

all of our ships and our aircraft

carriers would have been so because they

would have needed that oil for the

attack on Midway and

help us in a Pacific War so I think that

was interesting how they they didn’t go

after those oil reserves in Pearl Harbor

and that would have come back to bite us

yeah I the way I look at some of this

though and being a historian myself this

was in response to the just horrendous

takeover of Manchuria and stuff like

that so it wasn’t that we just decided

to willy-nilly do this it was punishing

them for a lot of really bad action and

stuff like that yes we did it and yes it

did lead to it but quite frankly I’m not

convinced that it wouldn’t have happened

anyhow there was just too many again

that was the end of the Japanese empire

because after that they rebuilt and

became basically a democracy or however

you want to look at it yeah exactly and

we helped them do that it was one of

those things that you my dad is a

quality control engineer and it was

quality control Engineers that turned

Japan into who they are today they took

to to Quality Control better than we did

here in our country yep and today’s

lesson girls and boys is done for the

day there’ll be a pop quiz at the end of

this

podcast but you can stop it and review

the slides and stuff like that that is

correct just

a couple things before we end um of of

course this week has been all over the

fence with uh with the the markets and

what’s been going on largely due to the

CPI coming out a little hotter than had

been expected and oh surprise the FED

said that we’re probably not GNA change

interest rates or drop interest rates

anymore okay I don’t think that was any

surprise but the market seems to be

surprised by it jobless claims came in

today right on target I would expect

that number to increase pretty

significantly here in the next several

months as the federal government

downsizes uh that’s been a major driver

of new jobs so I think what we’ll want

to be looking at and what I did in last

week’s episode where I just did it with

myself that was I I think we’re seeing

employment and jobs reports where we’re

starting to see a little bit of movement

in the private sector H but I think

you’re going to see a massive drop in

the government numbers so you’re gonna

see jobless claims go up that shouldn’t

be a surprise and and the market

shouldn’t be surprised by that but I

don’t put the past them last but not

least PPI final demand came in today and

it was a little hotter as well so it was

at the top end of the consensus range

there so once again we’re seeing

inflation tick up a little bit and it’s

not necessarily A a tariff thing or

anything like that it’s really actually

stuff that’s coming down the pike and

certainly in the food world with uh the

egg prices and all that the other big

driver has been inflation in housing

again which has peaked itself up so so

some things to watch it’s not massively

out of control but I think things that

we need to keep our eye on going into

this year agree awesome Ron thank you