--:-- Sean Rameswaram: Johnny, the last time we spoke, you were toying with the idea of outfitting your entire family, all four of you, with Quip electric toothbrushes.
--:-- Johnny: It's something that I'm willing to invest in. Again, we have kind of a spotty relationship with toothbrushing in our family, meaning we're not the most consistent and we'd like to be.
--:-- Sean Rameswaram: And for the two weeks that I owned a Quip electric toothbrush before I lost it in Hong Kong, I was on a routine and going through this revolution. So, yeah, I'm willing to invest a little bit in order to get my dental hygiene in order.
--:-- Sean Rameswaram: at getquip.com slash explained.
--:-- Sean Rameswaram: Definitely. Right now, there is a cargo ship racing the clock to cross the Pacific Ocean. It's called Peak Pegasus. And Peak Pegasus is carrying a boatload of soybeans. It's trying to get them to China.
--:-- Sean Rameswaram: Peak Pegasus is gunning it, because tonight, at the stroke of midnight, the trade war begins.
--:-- Matthew Yglesias: Matthew Iglesias, you write about the economy here at Vox. You'd never know we're about to go to war. Trade war. Trade war. Trade war with China is about to start on Friday when a long list of imports from China are going to be subject to new taxes by the United States.
--:-- Matthew Yglesias: And China is striking back with a similarly long list of American exports to China, which will also be taxed.
--:-- Sean Rameswaram: I think people have heard about all sorts of things being taxed by one side or the other. But what specifically is the U.S. putting tariffs on right now?
--:-- Matthew Yglesias: Well, so this is this is different from the steel issue. There is a very long list of technology-related Chinese products that we are going to put tariffs on supposedly because the Chinese are stealing our intellectual property.
--:-- Matthew Yglesias: I have the list in front of me. It's 28 pages long. But it's everything from parts of nuclear reactors to parts of machinery for making paper pulp to self-propelled machinery with a 360-degree revolving superstructure other than backhoes, shovels, clamshells, and drag lines.
--:-- Sean Rameswaram: So the point is this is not stuff that a normal American person would buy directly.
--:-- Matthew Yglesias: Trump is trying to hurt Chinese manufacturing while not making normal Americans feel the pain in an immediate sense.
--:-- Sean Rameswaram: And who comes up with this list and how did they come up with it?
--:-- Matthew Yglesias: The U.S. Trade Representative's Office wrote a list of about $50 billion worth of Chinese exports. Then there was a public comment period. They took $16 billion worth of stuff off the list. So they would hold that in reserve.
--:-- Matthew Yglesias: And then China has its own team, which has developed its own list of American products, which we'll get tariffs to.
--:-- Sean Rameswaram: Tell me more. China is primarily targeting American agricultural products.
--:-- Matthew Yglesias: This is also a very long list because it's like blueberries, but also apricots, but also strawberries. But the big items on the Chinese list are pork, soybeans, and something called sorghum.
--:-- Matthew Yglesias: Sorghum is a cereal grain, and it's actually the fifth most important cereal crop in the entire world. Which I understand is used as animal feed.
--:-- Sean Rameswaram: And this is going to hurt American farmers.
--:-- Matthew Yglesias: Yes, it's going to hurt farmers. Pork farmers will be hurt a lot. And the sort of big industrial agriculture operations in the Midwest will be hurt a lot.
--:-- Sean Rameswaram: If I'm getting this right, the U.S. is taxing a lot of industrial, specialized Chinese tech that won't really hurt Americans.
--:-- Matthew Yglesias: And that's how they were designed.
--:-- Sean Rameswaram: The Chinese are going to be taxing a lot of agricultural products to definitely hurt Americans, right, to hurt farmers.
--:-- Matthew Yglesias: Right. I mean there's sort of two ways to think about it.
--:-- Sean Rameswaram: Now, Americans will pay the price for taxes on Chinese imports. But the idea is to avoid it being directly things that you buy, right?
--:-- Matthew Yglesias: You're not going to go to the store and see that nuclear reactors are 15% more expensive unless you're a real weirdo.
--:-- Sean Rameswaram: Whereas the Chinese are doing the opposite. Like they want to make a direct dramatic impact on politically powerful groups of Americans right
--:-- Sean Rameswaram: So there is a ship full of soybeans in the Pacific Ocean right now trying to reach Chinese shores before the tariffs come online.
--:-- Matthew Yglesias: And they believe that the farm sector has a lot of clout in the US Senate and will be able to prevail upon Trump to back down, whereas Trump is trying to hurt Chinese industry without having an obvious disruption on the American economy.
--:-- Sean Rameswaram: What are the countries saying to each other about this?
--:-- Matthew Yglesias: The United States and China certainly communicate quite a bit.
--:-- Sean Rameswaram: Yeah, so the Chinese public posture is saying they don't want this trade war. They're not going to fire the first shot.
--:-- Matthew Yglesias: China has already made preparations. As long as the United States issues a so-called tariff list, China will take necessary measures to firmly protect its legitimate interests.
--:-- Sean Rameswaram: They are still hoping that this will somehow all get called off before Friday.
--:-- Matthew Yglesias: The United States is taking a very aggressive posture. They're saying, look, we have a big trade deficit with China.
--:-- Sean Rameswaram: So at the end of the day, if U.S.-China trade spirals all the way downhill, this is going to hurt the Chinese economy more than the American economy.
--:-- Matthew Yglesias: So the Trump administration feels they have the upper hand.
--:-- Sean Rameswaram: And how do the Chinese feel about it and how do Americans feel about it? I mean, especially American farmers who, of course, supported Donald Trump.
--:-- Matthew Yglesias: American farmers are getting quite alarmed by this.
--:-- Sean Rameswaram: How worried are you?
--:-- Matthew Yglesias: Well, it's a matter of concern when your largest soybean export customer is having negotiations with your government.
--:-- Sean Rameswaram: Rural, white, working class people were big supporters of Donald Trump.
--:-- Matthew Yglesias: Of course, his desire to have trade conflicts was not a well-kept secret during the campaign.
--:-- Sean Rameswaram: But I think they were taking him seriously rather than literally.
--:-- Matthew Yglesias: I'll tell you what, folks, there's got to be consequences.
--:-- Sean Rameswaram: But it turns out he meant that literally.
--:-- Sean Rameswaram: And there's a lot of alarm in the American agricultural sector.
--:-- Matthew Yglesias: China, you know, also is bracing for impact.
--:-- Sean Rameswaram: They have been moving to reduce the price of their currency, moving to start purchasing more agricultural products from Brazil and other countries and sort of try to weather the storm.
--:-- Matthew Yglesias: But Donald Trump still has super high approval ratings amongst his base, right?
--:-- Sean Rameswaram: Is there any sense of if this does get real and nasty and people start to really suffer under it, is there a sense of who can outlast the other, who can withstand a trade war better?
--:-- Matthew Yglesias: Yeah, I mean there's different ways of thinking about it, right?
--:-- Sean Rameswaram: The Trump administration's view is there's a big trade deficit. And so China needs exports to the U.S. more than the U.S. needs exports to China.
--:-- Matthew Yglesias: That's one view.
--:-- Sean Rameswaram: Another way of thinking about it is the United States is a democracy whose officials are accountable to the public and need to respond to short-term problems whereas the Chinese can sort of ride it out for the longer haul.
--:-- Matthew Yglesias: If Trump has to come to Congress and say, oh, we need a new law to help out all the soybean farmers.
--:-- Sean Rameswaram: Well, some people in Congress are going to say like, no, like you created this problem.
--:-- Matthew Yglesias: I'm not going to give you extra money to solve a problem of your own creation, right?
--:-- Sean Rameswaram: Being dictator is probably easier than being president.
--:-- Matthew Yglesias: You know, another way of thinking about it is that the U.S. is focused on, I would say, a sort of unclear set of negotiating objectives.
--:-- Sean Rameswaram: That's advantageous in the sense that Trump can sort of declare victory and go home.
--:-- Matthew Yglesias: On the other hand, it's hard to win when you're not clear on what it is you're trying to do, right?
--:-- Sean Rameswaram: I mean, what China wants out of this is for Americans to keep buying stuff and for them to keep buying American stuff.
--:-- Matthew Yglesias: It's difficult to know how we are going to feel certain that the Chinese are not doing industrial espionage or whatever else it is we're concerned about.
--:-- Sean Rameswaram: Coming up in a minute, it's hard to predict who might win this trade war, but is the United States already losing?
--:-- Sean Rameswaram: This is Today Explained.
--:-- Sean Rameswaram: So you've got, there's four of you. We know you a chrome man What about the wife What about the two boys What kind of toothbrushes are you gonna to go for for them
--:-- Johnny: People at home might not be familiar with all the options there are So I a kind of a chrome guy because I a little bit of a gearhead
--:-- Sean Rameswaram: And so I like fancy stuff when it comes to like gear.
--:-- Johnny: Yeah. And so I am kind of upgraded to the $40 chrome instead of the $25 kind of starting toothbrush.
--:-- Sean Rameswaram: My family, my little boys, I have a two and a five-year-old and then my wife. are not as kind of snobby about gear as I am.
--:-- Johnny: So I think I'll probably just get them the standard one, and they'll be very happy with it.
--:-- Sean Rameswaram: Great. You got colors in mind?
--:-- Johnny: Whoa, I haven't even thought about colors.
--:-- Sean Rameswaram: They've got lots of different colors at getquipped.com.
--:-- Johnny: I should start thinking about colors.
--:-- Sean Rameswaram: Also start thinking about free refills, because a whole lot of them are going to be coming to your house pretty soon.
--:-- Sean Rameswaram: That's right.
--:-- Sean Rameswaram: Well, you know, I tell the story that a couple of months ago we put tariffs on washing machines coming into the country because they were dumping the machines all over the place.
--:-- Sean Rameswaram: And we had lost our manufacturing abilities for washing machines. Now we have plants being built, put a 30 percent tariff on and we have plants being built.
--:-- Sean Rameswaram: and nobody's seen that in many, many years and it's happening at a rapid pace.
--:-- Matthew Yglesias: John's making this argument that more tariffs will lead to more manufacturing in America.
--:-- Sean Rameswaram: Is that a reasonable argument to be making?
--:-- Matthew Yglesias: It's probably true in the long run that if we could not import manufactured goods, we would have more Americans making manufactured goods.
--:-- Sean Rameswaram: I'm not sure that it would be good to have more Americans in manufacturing jobs and everybody paying higher prices for things.
--:-- Matthew Yglesias: I think the bigger issue is that in the short term, it's just it's disruptive.
--:-- Sean Rameswaram: There are people working in all kinds of fields who rely on Chinese imports to do their job.
--:-- Matthew Yglesias: If you are using Chinese-made lathes and Trump is cutting you off from them, it's going to take a while for America to build up that whole supply chain.
--:-- Sean Rameswaram: And what does everyone do in the interim?
--:-- Matthew Yglesias: And in the interim, Harley Davidson is getting hit by some of these tariffs and they're saying they're moving some of their production to Europe.
--:-- Sean Rameswaram: The iconic motorcycle brand said it was making the change to avoid losing up to $100 million a year due to new European Union tariffs.
--:-- Matthew Yglesias: Wouldn't the great irony of this be American manufacturers moving abroad to make stuff?
--:-- Sean Rameswaram: Yeah, I mean, it would be hugely ironic if the upshot of this is for not just motorcycles, but the sort of crown jewels of American manufacturing in airplanes and things like that, moving abroad so that they are not subject to these kind of trade tensions.
--:-- Matthew Yglesias: And what's the president's reaction to Harley Davidson been?
--:-- Sean Rameswaram: He has criticized them on Twitter, as he tends to.
--:-- Matthew Yglesias: The president's overall view is that the trade deficit is really bad.
--:-- Sean Rameswaram: And because the U.S. has a big trade deficit, if global trade goes to zero, that's beneficial for us on net.
--:-- Matthew Yglesias: I don't think that that's true. It doesn't make a lot of sense.
--:-- Sean Rameswaram: But it's something he says a lot, and I think he says it because he believes it.
--:-- Matthew Yglesias: I'm not sure if Xi Jinping is criticizing Chinese industry in all of this, but the president is, right?
--:-- Sean Rameswaram: I mean, he's literally talking smack to Harley Davidson on Twitter and in speeches.
--:-- Matthew Yglesias: Harley Davidson, please build those beautiful motorcycles in the USA, please, OK? Don't get cute with us. Don't get cute.
--:-- Sean Rameswaram: How does that affect American manufacturing? Are companies feeling threatened to make the decisions that are in the best interest of companies?
--:-- Matthew Yglesias: I think corporate decision makers are a little bit confused.
--:-- Sean Rameswaram: And politically, what you see is dissension in America.
--:-- Matthew Yglesias: Donald Trump is obviously a very controversial figure in American politics.
--:-- Sean Rameswaram: And you see abroad, whether it's China or democratic countries, Canada, European Union, we see a lot of solidarity in those places.
--:-- Matthew Yglesias: Nobody is saying to Justin Trudeau, oh, you really ought to back down and give Trump what he wants in Canadian politics, right?
--:-- Sean Rameswaram: Whereas in the US, like Trump has a powerful office but a more tenuous political position.
--:-- Matthew Yglesias: Like some members of his own party are critical of him on trade.
--:-- Sean Rameswaram: Some Democrats maybe quietly favor some of these moves but nobody in the Democratic Party is going to go out and clap for Donald Trump.
--:-- Matthew Yglesias: And that's because he's the one who's starting all this trouble.
--:-- Sean Rameswaram: But Democrats, Democrats are into trade wars too?
--:-- Matthew Yglesias: Yeah. Before Donald Trump arrived on the scene, the main proponents of this kind of tough on China trade policy were Midwestern Democrats.
--:-- Sean Rameswaram: You know, guys like Sherrod Brown from Ohio, representatives from Michigan, other places like that.
--:-- Matthew Yglesias: So I think that you would find that labor unions and sort of labor aligned Democrats in the Rust Belt are probably sympathetic
--:-- Sean Rameswaram: And what about the Democratic socialists Where do they come down on this How Bernie feel
--:-- Matthew Yglesias: This is actually really interesting Bernie Sanders has been like a longtime critic of free trade and a proponent of changing NAFTA, pulling out the WTO, things like that.
--:-- Sean Rameswaram: I believe that it is high time to rethink our trade policies so that they begin to work for the middle class of this country and not just the CEOs.
--:-- Matthew Yglesias: Polls tend to show that Bernie Sanders' supporters are actually very open to trade.
--:-- Sean Rameswaram: And you don't see as much of that kind of anti-trade rhetoric coming from the newer cohort of like social democratic politicians out there and running.
--:-- Matthew Yglesias: So there's a little bit of a tension between Sanders' personal politics and where that movement is going.
--:-- Sean Rameswaram: Looking at this trade war situation now, there's been a couple of volleys back and forth and it's about to be a reality tomorrow.
--:-- Matthew Yglesias: Is there an argument in favor of President Trump's policy here?
--:-- Sean Rameswaram: You can make a case for what he's doing legally.
--:-- Matthew Yglesias: I would say the main thing is that he's doing so many different things on trade that it's easy to see an argument for any one of them.
--:-- Sean Rameswaram: But it's hard to see what the overall strategy is here because with each country, he has a unique complaint.
--:-- Matthew Yglesias: So the Canadians, they're not buying enough milk. The Chinese are doing something with their intellectual property. The Germans have taxes on cars.
--:-- Sean Rameswaram: And it's just kind of all over the place, right?
--:-- Matthew Yglesias: If you picked one of these issues, I think you could make a lot of progress on it.
--:-- Sean Rameswaram: But it's hard to take everyone on on all topics simultaneously.
--:-- Matthew Yglesias: But that's exactly what we're doing.
--:-- Sean Rameswaram: So how big a deal is this first salvo tomorrow?
--:-- Matthew Yglesias: We shouldn't exaggerate, right? Trade war sounds really, really dramatic.
--:-- Sean Rameswaram: This is a big deal if you are an American pork farmer or work in a handful of other agricultural commodities.
--:-- Matthew Yglesias: It's a really big deal for your industry.
--:-- Sean Rameswaram: If you don't, you are probably not going to notice, right?
--:-- Matthew Yglesias: You're going to wake up Monday. Life is the same.
--:-- Sean Rameswaram: The big deal is what happens next.
--:-- Matthew Yglesias: Do we go from these $34 billion in tariffs and then we work something out and it all goes away and we say, oh, that was a funny thing that happened?
--:-- Sean Rameswaram: Or do we go to the $50 billion and then the $200 billion?
--:-- Matthew Yglesias: The more rounds you have of retaliation and counter-retaliation, the bigger deal it becomes and the harder it becomes for the administration to shelter ordinary American consumers from the impact.
--:-- Sean Rameswaram: Matthew Iglesias.
--:-- Sean Rameswaram: He's one of the hosts of the Weeds podcast from Vox.
--:-- Sean Rameswaram: I'm Sean Rameswaram from This is Today Explained.
--:-- Sean Rameswaram: Irene Noguchi is our executive producer.
--:-- Sean Rameswaram: Bridget McCarthy is our editor.
--:-- Sean Rameswaram: Noam Hassenfeld and Luke Vanderbilt produce the program.
--:-- Sean Rameswaram: Afim Shapiro engineers it.
--:-- Sean Rameswaram: And the retaliatory Breakmaster Cylinder writes original compositions for us.
--:-- Sean Rameswaram: Today Explained is blessed with two summer interns.
--:-- Sean Rameswaram: They are Catherine Wheeler and Bree Seeley.
--:-- Sean Rameswaram: and we are produced in association with Stitcher and are part of the Vox Media Podcast Network.
--:-- Sean Rameswaram: My name is Will Compernell.
--:-- Sean Rameswaram: I live in Long Island City, New York.
--:-- Sean Rameswaram: My favorite episode of Today Explained is Cambridge Analytica.
--:-- Sean Rameswaram: And everyone should follow at today underscore explained on Twitter.
--:-- Sean Rameswaram: Okay, before we go, Colors, the wife. Izzy?
--:-- Johnny: Man, I don't know. I think she's been into neutrals lately, so I can see her going for kind of just a clean, like, neutral, whether there's, like, a white or a gray or something.
--:-- Sean Rameswaram: I think she'd be into that.
--:-- Sean Rameswaram: And the boys, what are their names?
--:-- Johnny: So Henry, who's the five-year-old, has literally adopted red as his color.
--:-- Sean Rameswaram: So if we see something, a red car, he'll go, that car is my color.
--:-- Johnny: Perfect. Good thing you live in D.C. where all the sports teams also have endorsed red.
--:-- Sean Rameswaram: Yeah, I think that's a big part of it too.
--:-- Johnny: And the two-year-old. Is in the cliche terrible twos and will probably just hate everything that we give him.
--:-- Sean Rameswaram: I don't think he'll be pleased by any color.
--:-- Johnny: What's his name?
--:-- Sean Rameswaram: His name's Oliver.
--:-- Sean Rameswaram: We're sending our thoughts and prayers to all of us. Thank you.
--:-- Johnny: He needs them.
