What Trump wants: More tariffs, less Epstein

0:02So, did you hear about the big news out of Canada? I don't know. Is it about tariffs? Yes, there is some tariff news out of Canada. But what I'm really talking about is that former Prime Minister Justin Trudeau had dinner, what looked like maybe a romantic dinner, with pop star Katy Perry. What do you think? I did hear that. I wasn't invited. I don't have strong feelings about Justin Trudeau's dating life. No. Or Katie Barry's. I mean, that's totally fair. I don't know. I'm Team Orlando Bloom. Always have been. Dating back since middle school. Wow. That's a deep cut.

0:49From the newsroom of The Washington Post, this is Post Report's weekly political roundtable. I'm Colby Echowitz. It's Friday, August 1st. I'm joined this week by The Post's global economics correspondent, David Lynch. Hey, David. Morning. And we're also here with White House reporter Kat Sekresge. Hey, Kat. Hey, thanks for having me on the show. So with Congress in recess and the president out of town, Washington was a little emptier this week, but still predictably chaotic. In a week that he announced a blockbuster trade deal, a bunch of new tariffs, and traveled abroad, one name was still top of mind for Donald Trump.

1:26Jeffrey Epstein. The president has tried and failed to get the public to think about anything else than his former friend, the deceased sex offender, Jeffrey Epstein. So we're going to get into that. And then, of course, Trump's ever-changing tariffs policies. As we've discussed on the show, we're going on four weeks of Trump trying desperately to move on from the Epstein story. It clearly isn't working, Kat. And this week, it just continued to dog him. So can you briefly remind us how we got here and what was new this week? Sure. So, I mean, really, this is a saga that started in some ways in June when Elon Musk was leaving the White House and tweeted, I'm going to drop a really big bomb.

2:09The reason Trump hasn't released the Epstein files is that his name is in them. And so that kind of brought more mainstream attention to the Jeffrey Epstein case again. And then back about four weeks ago, the administration announced that they planned not to release any more files related to the case. And this was a huge blow to members of Trump's MAGA base who really believed that the president and many of his allies at the DOJ would use their power to release these files that are at the center of a lot of the conspiracy theories that have defined modern GOP politics. And so obviously Trump has kept saying, you know, let's move on, let's move on.

2:56And yet there's been more this week. What happened this week? President Trump repeatedly was asked about the Epstein case when he was on the road in Scotland. Whether he was meeting with the president of the European Commission or boarding Air Force One, reporters were keeping questions about this in the news. You have said that you have not been briefed on the Epstein files, or your name has not appeared in the Epstein files. But doesn't the AG have to tell you if your name is? Well, I haven't been overly interested in it. You know, it's something, it's a hoax that's been built up way beyond proportion.

3:37I can say this. And so he disclosed a bit more about his account of why his longtime friendship with Jeffrey Epstein dissolved. We also saw there was a lot more attention this week on convicted sex trafficker Ghislaine Maxwell, who was an associate of Jeffrey Epstein. And there were some efforts to have her testify in front of Congress. Her lawyers said that she would be willing to do that in exchange for immunity, but ultimately it didn't seem like the congressional committees would agree to those conditions. And there's also a question of whether or not Trump will pardon her. Yes. And that was something he was repeatedly asked about.

4:22And he didn't give a definitive no to those questions. And so they will likely continue to remain in the news. And Kat, what was the reason that Trump gave for why he terminated his friendship with Epstein? So the reason that we heard from him this week was he claimed that Jeffrey Epstein, who was a member of his Mar-a-Lago club, was poaching employees from the spa there. And when you say employees, these were young girls. Young girls who were working in the spa there. And so he claimed that this happened once and he told him to cut it out. And then he said it happened again and that he then proceeded to kick Jeffrey Epstein out of the club.

5:06And this is a different account than what was reported during Trump's first term around why his relationship with Jeffrey Epstein broke down. At that time, our investigative team here at The Washington Post did some stories about how a real estate deal in Palm Beach several years after these poaching incidents that the president was talking about was really the final nail in the coffin of that relationship. and President Trump was asked about, you know, these differing accounts and why the story has changed. And he responded, calling the reporter who asked fake news. You know, the Post did this fascinating poll this week.

5:45It found that most Americans are paying attention or at least some attention to the Epstein file news and at least one in four paying like a lot of attention to it. David, this is not your beat. You have been focused on... And I'm not one of the four, I should say. Well, that's great. That's what I was going to ask you. You know, your focus head down on tariffs and trade, but have you been following this news? Does it surprise you how it's captivated America? A little bit. I don't know that we've learned anything particularly new. It just seems like a story that won't go away. It's a sore that people continue to pick at.

6:16And the White House has seemed remarkably clumsy in trying to do away with a story that is on the right, but actually across political affiliations have been concerned about for years because, you know, putting aside the various conspiracy theories and what this might mean for the president politically, you know, this guy was a pretty bad actor. And his, you know, henchwoman, Ms. Maxwell, who's been convicted of helping him procure young women to abuse and take advantage of sexually for years in a way that destroyed many lives. But we knew that. So the amount of time we're spending on it now seems unusual or unexpected.

6:58Yeah, yeah. I mean, Kat, you mentioned that Trump was abroad. He was overseas. You actually, you were with him. And not even an ocean could distance him from the Epstein saga. But what was he doing overseas? What was he trying to accomplish on this trip? Well, the trip originally was supposed to be a golf trip for the president, and he was going to be golfing at some of his clubs there in Scotland, and he was going to be having a ribbon cutting for a new golf course that was opening at one of the properties there. But as we often see with this president, the responsibilities of his public office and his business life began to blur.

7:42And that was really on display when we had this unusual situation where the president of the United States is in Scotland. And then he ends up playing host to the prime minister of the U.K., Keir Starmer, at one of his properties. And also you had the president of the European Commission coming there. So it's like they're on his turf, even though he's on their turf. I mean, what's so interesting is that the meeting comes on the heels of an announcement of a trade deal with the European Union, right, imposing all these new tariffs on the EU. David, what exactly did the EU and the U.S. agree to this week?

8:24What they agreed to was something not as bad as could have occurred from the European perspective. The trade framework that the president has worked out with the EU will see tariffs imposed, a 15 % tariff on all goods that we import from Europe into the United States. So that's going to make products more expensive for you and me and for American businesses here in the U.S. The EU has also agreed, and the details are, as is often the case with these quote-unquote agreements, very fuzzy and not yet legally binding. But they've agreed, the EU has, to spend$750 billion on American energy products and to invest an additional$600 billion in projects in the United States.

9:13Now, whether that money will ever materialize is anybody's guess because the president has a documented track record of exaggerating the scale of deals that he's reached in the past. And there's no EU tariffs on U.S. goods, as I understand. Well, in terms of this deal, no. As a matter of fact, the EU has agreed to reduce its already low tariffs on our industrial products to give us other market access considerations that could produce some incremental additional sales for American business. I mean, this deal seems really stacked in the favor of the United States. What does the EU gain from this?

9:57They're giving us money? I don't understand. Well, yeah. Well, they might give us some money at some point. Okay. If I were a betting man, and I shouldn't be in the betting business, but I think it is a factor to report that people are skeptical of those$750 billion,$600 billion numbers. Because we have to keep in mind the EU can say, yes, we're going to encourage our private sector to do this. But Europe is not, whatever people might think of Europe, Europe is not a state-directed economy. So this is very much an aspirational goal. But from the European perspective, they looked into the abyss of a trade war with the United States, of an open exchange of retaliatory tariffs that could escalate out of sight and do damage to both sides.

10:49And they said, no, we don't have the stomach for that. And they got a 15 % tariff, but they had been threatened with a 30 % tariff. So everything is relative. This is not as bad as it could have been from their perspective, but it's certainly worse. Before President Trump took office, tariffs were on the order average of about 2.5%. I mean, Kat, you were, like I said, you were with him in Europe. And it's, you know, this is all happening. You know, you're there with him while these major U.S. allies are acknowledging really that Trump has kind of forced their hand and they're forced into this bad deal.

11:24Like, what was the mood or the energy around Trump and those leaders that he was meeting with? Well, it was really striking to watch, particularly with the European Commission president, Ursula von der Leyen, the difference in tone when she was with Trump versus giving a press conference on her own terms. In the room, heading into the meeting, she talked about, we have the opportunity to create the biggest deal in history. And you're a master negotiator and was really appealing to Trump's ego and his sense of himself as a dealmaker. We have a trade deal between the two largest economies in the world.

12:03And it's a big deal. It's a huge deal. It will bring stability. It will bring predictability. That's very important for our businesses on both sides of the Atlantic. Then she goes and gives her own press conference. Yes, we should not forget where we came from. And is much more deflated and talks about how this is the best she could get. 15 percent is not to be underestimated, but it is the best we could get. I think it really shows kind of the competing tensions for these world leaders when they're dealing with Trump, where they're trying to appease him. They're trying to keep things calm and, you know, be able to reach some semblance of a deal.

12:49But then they have to go back and present that to their own countries and their own people and explain, you know, why they landed where they did. And so that was a really stark example of that over the weekend. I mean, it's kind of governing by bullying a little bit, right? Well, it is. You know, he's taken, to give him his due, He has adopted a very different approach to trade, as it goes without saying, I suppose, than his predecessors. The way trade deals used to work was sort of a very genteel assemblage of 100 or so diplomats would get together. They'd negotiate. We'd all do it together. This would go on for months and years of exchange of legal documents and make your eyes glaze over.

13:32And he has turned it into he's going to deal with one country at a time. He is going to bring the full force of the giant U.S. market to bear on that other country. So in most of these negotiations, he very much has the leverage. And he's not afraid to use it. And, you know, many of these countries are our allies in Europe, South Korea. And implicit, sometimes explicit, is the worry that if we don't agree to a deal with this American president, he may pull out his security guarantees. So he is very much putting the hammer down on these countries. Now, his view is that this is going to rebalance global trade in the favor of the United States.

14:17The open question is what sort of bruises does this leave behind? That, OK, you can twist the arm of the Europeans or the South Koreans or the Japanese, and you can squeeze out some commercial advantages. But what resentments have you left behind and what message have you left with these countries about the extent to which they can or cannot depend on the United States as an ally? And David, to your point, like it's not just the EU, right? He's threatened China and Canada with high tariffs, South Korea, Japan. And he initially gave countries a deadline of today, of August 1st, to either make deals with him or to face these high tariffs.

14:58But things have changed a little bit on that front, too, right? So can you give us a snapshot of where U.S. trade policy stands and what countries have made a deal with Trump? Yeah, we've had a handful of deals that have been negotiated and announced to date. And again, I don't want to belabor this, but these are not full-blown, legally binding trade deals of the sort that we might remember from NAFTA in the mid-'90s that brought together the U.S., Canada, and Mexico, sort of trade deals that are like the size of a phone book. These are two or three pages of kind of agreed things that we're going to continue to talk about and work towards.

15:35But he's done that with Vietnam, Japan, the European Union, the United Kingdom, the Philippines, a handful of others. After his trade advisor, Peter Navarro, once promised 90 deals in 90 days, we didn't quite hit that target. We hit about seven or eight in 120 days. But last night, the president put out a couple of executive orders. In a nutshell, they've now sketched out a sort of three-tiered system of tariffs. If the countries that we're running a surplus with, which the president likes, that means we sell to them more than they sell to us. They get a 10 % tariff. countries that we have a modest trade deficit with, which the president doesn't like.

16:20He doesn't like these deficits, think they hollow out American manufacturing. We hit goods from those countries with 15 percent, and then everybody else gets higher sort of custom-designed tariffs for their particular relationship with the United States. Some of these go up to 40 percent. Are those tariffs going into effect today? With the exception of Canada, which the president's irked at over a couple of issues, No, they are set to now take effect a week from now on August 7th. And is there a chance that he then pushes that deadline again? I mean, it seems like we... I'm out of the business of predicting what the president's going to do.

16:56But what I will say is, you know, if you're one of those countries that has not yet made a deal, you do now have a window of seven days to come back and try and avert these tariffs from taking effect. I mean, he's open for business on the dealmaking and always will be, I suspect. I mean, on that point of the dealmaking part of this, like, Kat, is it working? Because it kind of seems like it is. Like, he threatens a country with these massive tariffs, like David was saying, and then they kind of meet him somewhere in the middle. At the end of the day, it's always it seems like it's a bad deal for the other country and a good deal for America.

17:33I think Trump is presenting these as good deals for America. And for Trump, they're in line with his goals. The question is, is it really a good deal for Americans? Because he puts these messages out saying, oh, you know, X country is going to pay us a 15 percent tariff. But the countries aren't paying that. Consumers are paying that most likely because the tariffs are paid by American companies when the goods arrive in our ports. And most likely they're going to pass those taxes on to consumers. And so when he talks about this in the context of winning, it really raises the question, who's winning?

18:16Trump's agenda is winning, but are the American people? Well, guys, let's pause there. And after the break, we're going to talk more about tariffs and how U.S. consumers might be seeing price hikes because of them. We'll be right back. Thank you.

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19:18So during the 2024 campaign, Trump was hammering President Biden for inflation that occurred during his administration. You know, people couldn't afford things. Are prices going to go up because of these tariffs? I mean, how does this impact inflation? The administration says no. And Treasury Secretary Scott Besant has already said what he calls the quote-unquote inflation propagandists have been proven wrong, which I think is a premature judgment. We've already seen some slight uptick in the inflation metric that the Federal Reserve looks at, which is something called core PCE. PCE. I won't bore you with the details, but we got numbers on that yesterday.

20:02It has ticked up from the month before, and the month before had ticked up from the month before that. We're at about 2.8 % in the core PCE. Economists are starting to look at that and saying it's headed higher. It might be headed north of three. Now, to put that in context, the Fed wants it at two. They look at a 2 % annual increase in prices as effectively price stability. We can all sort of live with that. You start ticking north of that and it puts the Fed on hold. It keeps the Fed from lowering interest rates, which the president has been badgering them to do. So it creates a dilemma for the Fed.

20:42But there is an argument about the extent to which these tariffs are eventually going to pass through into consumer prices. And economists will give you different estimates of that. What types of products and goods are Americans going to start seeing potentially prices go up Well, with all of the tariffs that have been imposed starting earlier this year, we've started to see them slowly work their way into the system because companies in the U.S. had built up stockpiles of goods, had rushed to get goods into the country before the tariffs hit, and they've been selling off those non-tariffed items.

21:16So there's been a delay between when the tariffs started and when the price increases will start. But just this week, Procter & Gamble, a huge maker of consumer products that has brands that everybody knows, Tide detergent, Pampers, diapers, you know, on and on, said they're going to start raising prices on about a quarter of their products by a couple of percent on average to start with. Nike, another well-known brand, is looking at what they call, I think, surgical price increases later this year. Hasbro, the toy maker, has gone public as well. So these are, I think, Columbia sportswear, which people would know.

21:57So these are things that you're going to see and feel. And now the precise amount per product, it won't be uniform. If you hear that there's a 15 % tariff, that doesn't mean your goods are going to be 15 % more expensive. because that might be on an ingredient that goes into a good, so it's only a percentage of the total cost. Maybe the U.S. company gets the foreign manufacturer to eat some of it. Maybe the U.S. company shrinks their profit margins at least temporarily, so at the end of the day they only pass on to the consumer 3%, 4%. It'll vary per product and per market. Yeah. In addition to the possibility that prices could go up, there's also what David was saying, And, you know, he's antagonizing some of the United States' most loyal allies, right?

22:44I mean, it's leading to just even more angst against Americans abroad. There's already been angst about America abroad. Did you notice that feeling at all while you were with him from the public in the U.K.? Certainly. When I was in Edinburgh, there were protests against President Trump. And they kind of had a uniquely Scottish sense of humor about it. There was one protester who had a set of bagpipes and said, at least this bag of hot air has a purpose. So there's a lot of creativity. I mean, in Scotland, uniquely, Trump's mother is from Scotland and he claims that heritage and obviously has had a lot of conflicts over the years with his business.

23:24So, you know, when I was talking to people there, a couple of them said, like, we've known for decades that this guy is a problem. One person literally said, like, we hated Trump before it was cool. And so that was kind of a sense of the vibe there. But really, you know, as I've traveled with him other places as well, I went to Canada for the G7 back in June. And, you know, there it was so stark. Canada is not a place known for flag waving displays of patriotism, but Canadian flags are flying off the shelves. When you go to a grocery store there, items have Made in Canada stickers on them. And so you really see how this is reshaping the global economy and just general moods toward America.

24:09That's a perfect segue, Kat. The U.S. has always been a leader in the global community, right? And now some countries, it seems like they're going to start developing an economic system where the U.S. isn't the leader. I mean, how long, David, can the U.S. maintain this position of implementing, like, these big tariffs all over the world and still be considered the leader of global trade? Well, it's an open question because, you know, so far the U.S. is alone in embracing this very different economic model. That, I think, is part of the reason why you haven't seen much retaliation in addition to the leverage that the president commands is because retaliation would involve effectively taxing their own citizens, raising prices for their own citizens.

24:53And other countries are still largely in the camp of trying to increase or thicken their trade relationships with others. There's been talk of a trading system that would somehow arise up and isolate the U.S. or skirt the U.S. I think some of that talk is probably a little bit overstated so far. There's been some diplomatic moves and diplomatic initiatives that would knit together the EU and India or the EU in a Pacific trade deal that the U.S. had pulled out of during President Trump's first term. And if this continues over time, you may see that develop over time. None of this stuff happens like closing a book.

25:35And it's also what economists worry about in terms of the tariffs' effects on the economy is it's not going to be a cliff. It's more an erosion over time of competitiveness in the way that, you know, if you were going to run a marathon, you could do it, you know, the way you're sitting there now. Or I could give you a backpack with a 25-pound weight in it and tell you to run the Boston Marathon with that on your back. You'd be slower with the backpack, right? How much slower? I don't know, 30 seconds a minute? Probably more. Or 30 seconds a mile or a minute a mile? But over the 26th, by that 26th mile mark, you'd really be slowing down.

26:16And so the effects accumulate over time.

26:24Well, guys, this was such a great conversation. Thank you so much for coming on today. Kat, David, it's great to have you. Anytime. Thanks for having me.